to strengthen its enterprise i.t. and government units against stiffening competition from hp which bought another h. ross perot company several months ago. eds for $14 billion, ibm cisco, even oracle and sun. >> the addition of the perot systems capabilities will broaden the -- you know, ability for us to serve a much wider set of customers and certainly we'll take those capabilities to new geographies. so we think it's a very exciting opportunity. it's really all about growth. >> we're going to be a very strong team. we're going to win a lot of business. it's going to be a very exciting time in this next chapter for perot systems and dell. >> yeah. that sound earlier today right here on cnbc's "squawk." there had been talk dell was positions itself to buy palm. with palm's steep run lately, dell releasing its own smart phone in china and having to integrate perot, it appears

speculation over that is evapora evaporating. 80% of dell's business comes from corporate clients. this should bolster service business big time. stocks are lower as investors book profits from last week's run up and head to the fed meeting which starts tomorrow. the dow is in negative territory -- that's dell. we're going to show you the dow in a second and let you know how it's trading. there it is. down 67 points. about seven-tenths of a percent, three-quarters of a percent. 9753 the last trade. the dow down seven-tenths of a percent. a quick look at the nasdaq in negative territory. >> there's a lot to digest on this monday morning. you've got g-20. you've got senator dodd's plan which i know you and larry are going to get to shortly. i'll leave that for you guys. a lot of momentum, actually, a little bit to the downside here. 67 points down.

9753 being the level right now on the dow. i want to bring in mary thompson who's following all the intricacies of this market, the action. what do you say is really the reason or main reason why we're seeing all this weakness right now. >> of course, we're following on the back of the global pulloff. really there's a bit of a wait and see attitude in large part because the fed meeting and g-20, et cetera. there's housing numbers due out at the end of the week. decliners outpacing advancers by a margin of 3 to 1. this is one way to illustrate what's happening today. we saw a run up in gold. today we're seeing a pullback in commodities. the dollar has actually moved close to a two-week high as investors move into the dollar as a safe haven ahead of the g-20 and the fed meeting today. again, gold moving to a two week low as the dollar approaches a two week high. this, of course, is having an impact on other commodity related stocks and energy stocks as well as we see oil actually

trading below $70 a barrel. alcoa, u.s. steel, exxon mobil on the energy side and harmony on the downside. >> news out of caterpillar? >> yeah. caterpillar is coming out with its august retail sales numbers. for the three months ending in august on retail sales, down 48%. big drop in north america. down 57%. and also seeing weakness in asia. so that stock's under pressure. add to that we have potash, a fertilizer company warning for the third quarter and in general the ak cultural space is weaker today on the back of the news of those companies. >> thank you very much. i'm going to send it back over to larry. >> i'll take it, actually. senator chris dodd is proposing the merger of four bank agencies into one super regulator. but he doesn't want that to be the fed. both differ from what president obama envisions. how feasible is the plan? joining us now to discuss, "new york times" reporter and matt

mccormick from ball gainer investment counsel. if i have four things sitting on my desk and i toss them all into one bag, i don't know how that's an improvement. i understand some think this would streamline the system. you get rid of those inefficiencies by having that many people in one spot, don't you? >> the good is there are efficiencies to be had. there is overlap in the system already. the bad news is somehow these things are supposed to, or these different departments are supposed to act as a checks and balance on each other. they didn't. there's an argument that could be made we need to fix this. i'm not sure putting them all together as you said is necessarily the way to go. >> do we believe they're actually going to fire people? you say there's infesefficienci if we put them all together. >> i think that's the only way to do it. it's not just about the efficiencies in terms of the people. i'm talking about efficiencies

in terms of regulation. getting people to talk to each other. the amount of overlapping regulation where you basically have people doing the same job at various departments. all of those things really should go away. when you add on top of, you know, obama is now proposing this consumer protection agency, that's a gift grofifth group. i don't want to say there's too many regulators, because none worked the first time. >> when in doubt, regulate. rearranging the deck chairs on the titanic. that is the way i see this. here's what i'm not hearing, ma matt. i want to get your take. nothing to do with too big to fail and moral hazard which at the end of the day i think is the issue. what's your take on this? >> larry, i agree with you. i think the politicians, their first answer is increase regulation and more bureaucracy and throw money up on the wall and hope it sticks. when you look at the previous implosions in the economy,

regulation did not stop the next one from occurring and certainly more regulation won't stop whatever issue is looming in our future. i think the real issue here and real introspection needed is loose monetary policy by the fed and i call it the moral hazard of senator dodd and barney frank who helped get us into this mess, i find it ironic the two chief cheer leaders who increased regulation are the two people that helped us drive this bus off the cliff. >> i don't see them pulling back, by the way, making loans to people that can't afford it. not documents loans -- it's like when in doubt, blame the bankers. okay. the bankers deserve some blame here. what about the rating agencies? what about fannie mae? what about freddie mac? what about the federal housing administration which is going broke because it's making no down payment loan? why don't they go after that stuff? >> all of these things i agree with you on, larry. i have a question for you. i would have imagined you would be supportive of the dodd legislation in that it actually does extensively reduce

regulation. >> no. no, no. i want competition. >> how does it reduce regulation? >> i want competition among regulators. you know what? it's bad enough we got to do this. i say let them compete with each other. >> that's exactly right. >> at least inside the government we could have some competition. listen, look at london. look at europe. they all had single regulators, andrew. they bombed out just as badly as we did. >> that's the point. melissa, you had asked how this is a reduction of regulation. in the end when you put everything together in one department, i think you actually will have less regulation. u i don't know if that's good or bad. it may be more efficient regulation. the problem is putting the power all in one place without a checks and balance, even though frankly it didn't work the first time. that's where i think what we're going to get in the end is council among all of these departments. in the end i think there will be a meeting of the minds of some sort. >> one thing this does is mutes the power of the fed a little bit. how much confidence do each of

you have in the fed? this is one place where larry and i really differ. >> i'm a little wary. i think the big issue going forward here is what coming out of this weekly meeting here of their policy of quantitative -- if bernanke is on record saying we're out of the recession, in my opinion there's no more reason to continue the quantitative easing. i think bernanke as well as greenspan were very loose on their monetary system. they are not one drn. >> that was the problem. >> i think that is the main issue here. i think also here, saying one council of regulators, putting more power with one government organization, it's not going to stop. you cannot regulate the economy and expect it to continue going forward. you cannot measure supply and demand, nor stop it. i think what's happening here, when you're looking at theeupho can't stop the next boom from happening. >> on the way out, i have a

little bit of political fun. mr. chris dodd is in serious trouble in his re-election race. he's losing by at least ten points to at least four or five people, including the woman that runs the wrestling federation. why is dodd going down this? connecticut has a lot of financial companies -- i don't get this. this part of it eludes me. >> to his credit i actually think this is what he thinks is the right thing to do. this is not going to be a popular thing among his constituents. that's obvious. this is a philosophical, ideological view this is the right thing to do. >> you don't think he's just trying to look good? he's trying to look like he's going to put a leash on the people in his state. look at the rest of the -- >> i don't know why you think this looks better, for example, than what the house and barney frank is trying to do which i think o stens bli leaves a little bit of power and this idea there's people minding the store. whereas the one regulator i think is more controversial. >> an odd story. financial services industry in

connecticut which has been hurt very badly, very badly with hedge funds going down and brokers going down and aig and all the rest, dodd got a deal with that. >> looks like he's coming up with a plan -- >> you're missing the point. a lot of the banks institutions and hedge funds would much prefer one regulator because they would tell you they're overregulated and they want the inefficiencies out of the system. it's not something completely unpopular with his own constituents in that regard. >> an interesting theory, andrew. i don't know if i buy into that. >> we've got to go. >> i don't know. sounds like shrinkage of the business. we got to stop. >> great discussion. thank you so much to both of you for joining us. larry, milton feedman had said he really didn't think the federal reserve was really worth much. in that you could actually have a computer do exactly what they need to do. >> i just have this view -- we've got to get out. you've got a bunch of regulators. i like to see them compete inside the government. i really do. some people disagree with me.

coming up next, you hear the music. time to go on. stocks are down but not out. still focusing in on dow 10,000. we're going to discuss whether this is on the horizon for this year, dow 10,000, and how to position yourself for the possibility. and there's a small pullback in gold prices. does this signal the end of the gold rush? or is it a great buying opportunity all ahead of the g-20 meeting. in these turbulent times, you want a financial partner who promptly gets you... the information you need. at northern trust, our sophisticated technology... puts the most accurate information at your fingertips. so while you may find yourself waiting now and then,

it won't be for the numbers you wanted by 7am. ♪ northern trust. wealth management. asset management. asset servicing.

welcome back. stocks taking a breather today here. the drum beat for dow 10,000, what do you know, it continues. how long before that level is broken and when it actually is broken, what will that mean for stocks going forward? we want to ask our bull, portfolio funds president, and our bear, managing director at jeffries. when will we see down 10,000? >> i think we're going to see it before the end of the year, trish. i think we're going to continue to see momentum in earnings growth in q 3 and q 4. i think that's going to propel stocks further. it could be a bull to ride, yes, because we've come a long way so fast this year. i do think the economic trends are going to be one -- or are

ones of growth. i think that's going to propel the stock market further. >> craig, i know you've been a bear for most of september. part of august, or rather august and september. are you still on that side of the equation, and what makes you most nervous right now? >> well, i tell you, i think one of the things that's absolutely been really supporting this market is really an overused term. that's liquidity. we've seen ample liquidity provided for central banks. liquidity in the form of underinvested portfolios, especially on a retail basis. number three, incredible liquidity building up on corporate balance sheets finding its way in the m and a. i'm wearing the bear hat today. i actually think that i'm on the same page with your bull, thinking that 10,000 within reach here in the comes weeks. my bigger concern is what's going to happen when we start to see earnings results in the third quart ir. the bar has raised pretty dramatically. the expectation is for a much more significant improvement in the top line for corporate america. it's really imperative we

have -- >> okay. >> i've just been handed, guys, by steve grasso, dow 10,000 again, a baseball cap. these things are floating around. people getting pretty excited. we're awfully close right now. >> craig makes some interesting points about liquidity, mike. before we get to the earnings issue. you've got a fed meeting and you've got a g-20 meeting in pittsburgh. do you think there's going to be any indication, any statements, any announcements that might suggest an exit strategy from the massive liquidity fiscally and monetarily? >> it's one thing i'm looking for, larry. i think the early appointment of ben bernanke a month or so ago when it was announced takes the issue of him being reapointed off the table. and it allows the fed to act based on monetary concerns and maybe not as politically as maybe they might have otherwise.

but the other problem you have coming into 2010 is you've got mid-term elections coming up. i think there's going to be a lot of pressure on the fed to not make an exit strategy too soon and to keep rates low. so it's going to be interesting to see how the fed maneuvers that. on the other hand, there is so much liquidity. and they have to walk a tight line or a tight rope there to make sure they start to drain it out properly to make sure we don't choke off any growth we're starting to experience. probably one of the most interesting questions going forward. >> let me follow up with craig. craig, that was a great nonanswer from mike. he really dodged the question, craig. let me ask you. do you think there's a fed exit strategy from liquidity or do you think there's a g-20 exit strategy in liquidity? two big events coming up. they're both potentially policy deal breakers. what's your take? how are you playing it marketwise? >> i think what you're seeing from the fed and bernanke is a baby step strategy. by declares that we're probably out of the recession last week,

bernanke is really setting up i think the series of moves to start the great market expectations for some withdrawal of liquidity from the marketplace. some of that's going to happen naturally. a lot of these liquidity programs have preset expir ration dates. as we watch those expirations fall into place, i think we're still a -- >> we've got a board right up there on the screen, craig, that says you like technologies, materials and energy right now. how do you think those sectors play out as we approach 10,000 and thereafter? >> i think one of the underlying pli principles behind those sectors a view we're have a dollar that's going to be under pressure globally as investors take on more risk and the marketplace reflects the -- i like technology because there's a lot of non-u.s. based dollar revenue that comes into that sector. we like energy and materials because it's another good place

to hide from pressure on the u.s. currency. >> mike, will profits beat the street in q 3? profits beating the street in q 2 had a huge impact. real quick, buddy. >> i think they will. i think expectations are higher, too. i continue to expect profit growth. i think we're expecting more, we're going to see it, and that should propel stocks higher. >> great to see you. thanks for coming on. coming up, $1 million developer prize. we're going to talk live with ceo reid hastings about what's in the pipeline for the world's largest internet movie service. plus, not enough can be said about this year's runup in gold prices. can the gold rush continue and is the traditional safe haven investigati investment still a good buy?

crude oil right now down more than two bucks on the day. about 3% on the session. iea forecasting week demand in asia. dropping below 70 there. gold dipped below $1,000 earlier today, back up at $1,004. larry? gold off its lows. despite this morning's losses it

has been a great run for gold over the last year. up over 40%. investors looking for a hedge against future inflation, maybe other things. has it come too far too fast or is there still room to go higher? let's ask chief strategic officer t-3 live.com and portfolio manager at rwrogier. scott, about three weeks ago the g-20 finance ministers and central bankers met, i think in paris, i hope i have that right. it could have been london. to set the stage. gold rallied big time. because we didn't hear an exit strategy from all the liquidity. and there was a lot of talk that the dollar would no longer be the world's reserve currency. what are you looking for here? buy or sell gold on g-20 or what? >> i think right now gold's hovering above the 1,000 mark and it's been a great vehicle for those who've been invested already. once you get an excitable event like gold trading above 1,000,

you do see professional traders and investors take a little bit off the table. especially when you get an event like thursday. anyone invested in gold really needs to pay attention to the rhetoric coming out of thursday's meeting. >> we've seen this a lot in the past two or three years, that gold goes and it makes a run, maybe even breaks through and retreats. it seems like when we get to this point, it's just very happy. >> absolutely. you have to keep in mind gold is a commodity, that over the long term it typically will trade along the lines of how much it cost to get out of the ground. right now that's $500. there was a study done that says 8% of the bands for gold was coming from the new ets, makes it very easy for the individual investor to buy gold. we think the majority of the runup to $1,000 is speculation. we wait for the gld to go back to an 80 handle. >> scott, come back to that.

that's interesting. 80 handle on the gld. >> i don't think the 80 handle gets met. we might have a full on -- about 960. it's been a safe haven. also a great investment vehicle. first it was a safety trade. now it's turning into the inflation trade. the gold bugs do start to smell inflation, which should happen with all the money printing. you know that, larry. we should see further gains. right now the -- we don't want it to go too far too fast. >> i'm looking at a note where you say you think gold can go to 1,200 to 1,300 later this week. are you kidding? >> no. not this week. this year. must be a typo. >> that makes more sense. still seems like a really high number. >> not really. if you look at the weekly chart pattern of gold you'll see a pattern that indicates a move to 1,200 to 1,300. we think it's a great course for

investors. that emotion is reasonable over the longer term. >> steve, just on this gold as an inflation indicator, i think it's a good barometer. you may not. i appreciate that. i want to ask you about the rumor that won't go away. whether it's the u.n. or the g-20 or china or russia or brazil. that there's plodding and talking that the dollar should no longer be the world's reserve currency. could the gold move up in the last month or two be linked to those constant rumors that never seem to go away? >> buy on the rumor, sell on the news is the old adage. rates typically go up, which we think is the next direction of rates, that the dollar will usually correlate very well with that. we believe the dollar is going to become stronger over the next year. subsequently, gold will become weaker. we think the best inflation trade is to buy stocks, equities of smaller cap companies that are growing.

we think the market's going to put a premium on growth. and the ability to pass up that inflation to the customers. we think international small cap stocks is the best way to play it. etf, the dls, wizen tree international small cap. etf or dls had a 5% dividend yield last time. >> interesting. you want to respond to that, steve, real quick? or scott, you want to respond to that? >> i agree. i don't think anyone should just be invested in gold. i just think it's a good vehicle to have in their portfolio to diversify. i like the technology sector as well. your pricing and time and entries are always key no matter what you're trading with. right now gold became a little crowded over the past few weeks while everyone started talking about it. now this takes a breather and you rotate some money around. >> we got to leave it there. thanks, guys. >> you think that ben bernanke's never going to raise rates. they would almost by definition -- >> never going to raise rates?

>> i think -- >> never? >> in his lifetime. >> i guess he's not going to have much of a lifetime. >> i don't know. i see a lot of dollar sprinkling. president obama speaks on the economy. we'll discuss the road to economic recovery and cover obama's live event in upstate new york. netflix is having a quite a year with shares shader higher by 50% ands the company has an innovative way to keep technology tresh. the details are ahead in a first on cnbc interview with the cofounder and ceo of netflix. you're watching cnbc first in business. $$$$$$$$$$$$

welcome back. the head of the sec deliverin-- delivering a major policy speech. the reasons why. hampton? >> reporter: good morning, trish. fcc chairman says it's time to turn the principles of open access to the internet into policy. internet traffic is exploding, doubling every two years. telecom cable and wireless firms make the case that has to be managed as part of their return on their investment. president obama has put broad band access for all americans at the top of his technology agenda. his fcc chairman told the brookings institute that can't happen without net neutrality. >> we can see the internet

stores shut down -- the spirit of innovation stifled, a full and free flow of information compromised, or we could take steps to preserve internet openness, helping to preserve a future of opportunity, innovation and a vibrant mark place of ideas. >> eat up so much bandwidth that it slows access to the web for some users. there are also policy questions about just how far government can go in tells private companies what they can and cannot do with their technology investments. >> this is not about government regulation of the internet. it's about fair rules of the road for companies that control access to the internet. we will do as much as we need to do and no more to ensure that the internet remains an unfettered platform for competition, creativity, and

entrepreneurial activity. >> the first step in the fcc taking a broad look at technology gate keepers, the internet is now a global phenomenon. some question potential effectiveness of u.s. only policies. trish? >> hampton pearson, thank you so much. netflix has opened its recommendation systems, hoping to tap into the wisdom of crowds, improving on the rental service by mail service. quite a year here for netflix. take a look at the stock here. world's largest online movie vental servi rental service traying higher by almost 60%. today up three quarters of a percent. the company has some news to announce this morning as well. joining us from new york, and a first on cnbc interview is netflix cofounder and ceo reid hastings. joining me in the interview we have our very own julia boorstin live from the ad week media

event also in new york. welcome to everyone. mr. hastings, before we get to the netflix surprise, i want to talk to you about the business. there was a time when your business strategy was the only game in town. that's since changed with an increasing competition coming from rather cheap models. how will these models affect your subscription growth and what are you doing about it? >> there's going to be a lot of competition over the next couple years between apple and amazon and youtube and netflix through that open internet. and it's going to be a big time to be in business, very creative time for us, and a great time for the consumer. because all of us will be competing for the consumers' attention. >> earlier this month, time warner cfo -- go ahead. julia, you want to get in? >> yes. reid, one question about netflix services. i know one thing that really distinguishes netflix is the streaming service, the ability to go online and watch any movie

pretty much from that group that you've designated for streaming on demand. but now that youtube is talking about streaming movies and bulu keeps adding more content, are you going to change your models? right now you only offer older movies for streaming. what's the future of netflix streaming? >> we're continuing to expand with our dvd titles and with your streaming to make the service better and better. but you're absolutely right. there's going to be a lot of competition. really internet video is a huge growth story for the next five or ten years. we're one of the participants in that market. >> what are you seeing in terms of subscription growth right now. you have roughly 10 million subscribers. is that growing? is that decreasing? how is the recession affecting the consumer? your consumer? >> you know, we're so fortunate. i mean, we went public seven years ago. we were 700,000 subscribers. then we hit 3 million and 5

million and 7 million and 10 million. and we've continued to grow very steadily. about 25% year over year. so we're very thankful for that. >> reid, a question about one of your new competitors, red box. red box is expanding and now blockbuster is even trying to take on this kiosk business and open about 10,000 kiosks by the end of the next year. how is your business challenged by the kiosk business and how are you planning to react to it? >> well, it's great for the consumer. they've got so many choices now. they can rent dvds from blockbuster, rent them from red box kiosks or rent them from netflix. our big advantage is convenience. it's so great to get the movie delivered to your home whether it's by dvd by mail or streaming. it's just so easy. despite all of these new options in the market and new things coming, our growth has been very steady at about 25% year over year. we're very happy with the market

share that we're winning. >> what would you say is next for your company? i mean, if you were to go out maybe three to five years, what is the next big thing? as you face all this competition from the likes of bulu or yahoo. what can you do to stay ahead of the curb? >> we've always faced a lot of competition. we'll continue to innovate like the netflix prize that we're working on right now to improve movie recommendations. we've made them much, much better. and our fundamental advantage is that we're completely focused on subscription movies. that's all we do. and that's why we're able to do it better. >> that's a $1 million prize. i want to be able to get that in quickly before we head out. tell us just briefly about this netflix prize. >> you bet. we were able to give away a million dollars today from a team of researchers around the world in an open competition to improve the netflix recommendations. and this team came up with innovative new methods to double the quality of netflix

recommendations. so we're really thrilled to give them the million dollars. >> okay. reid hastings. i bet they're thrilled to get it. thank you so much for joining us. julia, thank you for joining us as well. a quick break and we're back to discuss the road to economic recovery and just how far we've come. >> that's ahead in the president's speech on the economy in upstate new york. you're looking live at hudson valley. that is where president obama will speak, hudson valley community college.

t. oh please. you got the presentation? oh yeah right here. let me stow that for you, sir. thank you. you know, just to be safe i used fedex office print online. oh you did? yeah -- they printed and bound 20 copies of the presentation, shipped it to portland, they're gonna be there waiting for us. that's a good idea. yeah. you have a nice flight. thank you. (announcer) print online...you upload your document -- we'll take care of the rest. to its employee storbenefits package at no direct cost to the company...

it was a perfect fit. find out more at aflac!... ...forbusiness.com

and welcome back to "the call." given the choice between emmys and sunday night football, it appears the viewer has chosen sunday night football. n brk c sports saying this is the highest rated sunday night football broadcast ever.

the matchup last night, the new cowboys stadium, giants and cowboys. they got a 16.5 overnight rating. the final ratings will come in in a couple days. that's the best overnight rating ever. when compared to the emmys, between 8:30 and 11:00 p.m. eastern time it outrated the emmys by a 71% margin. this is the highest overnight rating for a prime time football game since a broncos dolphins game 11 years ago. back to you. >> darren rovell. too tired to shave. after making rounds on the sunday cautalk shows, president obama will deliver a speech at hudson valley community college. we'll take you there live as soon as it begins. in the meantime, let's talk about the economy. joining us now is chief u.s. economist at jp morgan. also chief economist at delta global advisers and also cnbc chief washington correspondent john harwood.

bruce, there are people out there talking w recovery, v rekory. where do you come down? >> think we're going to get strong growth. we're looking for growth averaging around 3.5% over the next year. that's not a v given how hard we went down. i think we're going to have strong growth. i think we're starting to see demand come on, financial conditions improving ands the global economy helping out. i think we'll have a year, year and a half of more growth than people expect. >> john harwood, how can president obama maintain to abc's george stephanopoulos that taxing gold plated insurance benefits by the companies is not a tax? in fact, it is a tax. don't you think that was the biggest downer yesterday? >> reporter: well, if you tax high plated insurance policiepo it definitely is a tax. they were also arguing over whether or not an individual mandate constituted a tax. i think you can justify george stephanopoulos's point there. the point is you've got to either buy insurance or pay. either way it costs you. but the argument on the other

side from the administration, as you know, larry, you've got to get everybody in the system. that will make the insurance market work better. public or private. >> we can discuss that another time. i'm just saying, a tax is a tax. >> i agree with you. >> i give huge credit to george stephanopoul stephanopoulos. mike, are you an optimist in the economy? >> i was watching obama this sunday. instead of explaining to the american people that he can balance the budget by providing a government sponsored not for profit option in the health insurance exchange, i really wish he'd traalked about the fa you cannot build a strong and healthy country and a strong and healthy economy on the back of a breaking dollar. that cannot occur. >> this is actually what makes me nervous about the economy, bruce. we're trying to have a conversation about the economy. everyone keeps talking about health care. isn't that a little bit of a problem with the recovery?

we're trying to recover. we're on health care. could that derail things? >> not at all. i think there are big issues on health care both in the immediate sense of how we're going to implement reforms and perhaps, more importantly, how we're going to contain costs over the medium term. i think people just are not getting the power of the cycle that's working through here. this is not going to last for years. but it's going to last longer than people expect. four to eight quarters of pretty good growth lies ahead. >> wow. >> bruce, i think that's a great point. let me just ask you, melissa francis is pounding me this morning, bruce. i actually think the index of leading indicators a mare tors you economic forecasting tool. >> the stock market does not forecast the economy. >> she's killing me on this. i've got gruz bruise marks already. >> a lot of that has to do with the strengths in the stock market and how much money they're printing. that's a big factor. >> will you leave kudlow alone? >> i can't help it. i've been beating him all morning. we've got to go to commercial. we're going to come back.

the oral-b pulsar. welcome back. president obama about to speak live at hudson valley community

college in troy, new york. we want to bring back our entire panel as we await the president's speech. i want to jump back to this issue of leading economic indicators. because, larry, you were saying something earlier. i'm down here at the nyse. i didn't quite get all of what you were saying. we're seeing some real encouraging signs from these leading indicators. >> yes. i was saying i can barely talk because -- >> it's a fight we're having all day long. >> melissa francis has pummeled me so badly. >> larry is the last person who thinks the stock market is a leading indicator of where the economy is. >> look, i'm not a big fan of them as they're constructed. let's look at what's going on. demand is picking up. inventories are falling. the global economy is doing well. financial conditions are improve ing. the feds fund rate is about zero. you don't need to be a real deep

economist to recognize that arrow is pointing forward. >> that doesn't really answer the question. we're talking about the stock market as forecasting the economy. it's a difficult one to hang your hat on. >> well, isn't that exactly what the stock market, though, is supposed to do? let me throw this over to bruce again. i mean, well, you know, we're trying to anticipate here what's going to happen six to nine months out. so, i mean, people are -- they have real money on the line here, bruce. they're trying to make a decision based on -- they think things are going to get better. >> when we look at the financial conditions, real economy, you're looking to put patterns together. the stock market is a bottom up vote from what people are seeing in real economies. tells you something about sentiment. it's not the whole story. it is telling us something positive. it's consistent with what we're seeing in economic news and across a wide range of things that are going on both in the economy and financial conditions more generally. >> and mike pinto, if stocks are an indicator of the economy and business, to me, is gold a

leading indicator? >> of course it is. it's indication that the countries are storing the currency. since the beginning of this decade, if you measure the s&p 500 in terms of dollars, we're down nearly 50%. and if you measure it in terms of gold, we're down nearly 80%. and the u.s. economy gets further addicted to low interest rates. and you look at the flow of funds report, the v 1 says we are increasing debt at at 4.9% annual rate. where is the exit strategy. where is the ent to this phony economy. let's balance our trade deficit. >> i hear what you're saying. >> how about that? let's give our savers and retirees better than 1% for their savings. that's what i'm earning in the banks. >> all gold foreshadows is what specklators think it's going to do tomorrow. >> gold is foreshadowing the fact that the country is depreciating the value of our currency and its purchasing power. it's not only losing its value

against gold, it's losing its value against six other -- >> since melissa is insulting all these free market indicators -- >> melissa. you have to sit next to him. >> trish, i got bruises this morning. john harwood, let me ask you. in terms, coming back to president obama, is he going to tout the economic recovery, john? >> think he absolutely is. larry, all i can say is you've forgotten more about the relationship between the economy, the stock market, and economic indicators than i'll ever know. i'm bound to your expertise. >> john, let's talk politically. he's got some real incentive here to start talking up the economy. let's face it. folks out there in middle america, they're not necessarily wanting the sto i watching the stock market on a day-to-day basis. >> they're definitely not. >> how does he start to convey things are improving. >> cautiously and carefully. i think we're going to see that balance struck not just by president obama but the other leaders at g-20 in pittsburgh

this week. their message is going to be the efforts we took to stimulate the economy, to get some liquidity into the economy, bolster the international financial institutions. in april in london are working but they're not working well enough that it's time to withdraw those interventions. and that's kind of a medium sort of half of one, half of the other message. and as long as the recovery is more or less jobless and unemployment keeps rising, he's got to be very careful about the tone he strikes. that he doesn't get too triumphal about it. >> do you think at some point we could hear talk about a second stimulus by him? >> i don't think so. when i interviewed him at the white house he said he was strongly inclined against a second stimulus on deficit grounds and the fact that the nearly $800 billion in stimulus that was passed earlier this year has been a time release kind of exercise. >> john, i'm sorry. how about a corporate tax cut? how about we put in policy for

these to grow the economy? the need to grow this economy has never been more salient. let's put in place growth policies so we can fund our unfunded mandates. >> whether it's a good idea or not, and i don't know the answer, don't hold your breath for that, there is a tax reform process under way. and the president has indicated that in the auspices of tax reform there may be a scenario where the rate would go down if loopholes get closed. but i think we're going to wait a while before we get both the results of that review and any legislative action on it. >> the effective rate has to go down. you agree with that. >> bruce, just to bring in you, you have a global view at jp morgan and the g-20 is meeting in bipittsburgh. is the global story a recovery? can you say that with confidence? >> i can say it with great confidence. part of the strength of what we're seeing in the u.s. reflects exports picking up. i think europe is picking up

alongside us for the first time since the mid 1970s. we all went down together. we shouldn't lose sight of the fact that growth now should be judged against how far we went down. we're not going to unwind all of our problems at all quickly, but we are going to get good growth in the u.s. we're going to get it synchronized across the globe. >> you and your team at jp morgan, you do cover the globe. mr. obama is about to speak. do you expect any real breakthrough stuff at this g-20, bruce, stuff that might be either real good or real bad? >> i think what we're going to get is some principles that people are going to be talking about. i don't think this is going to change in any particular way the macrooutlook. i don't think it's going to change policymakers. i think it's on the banking reform that's probably the most substantive agreement might be made here. >> we were just listening to joe biden. that is, of course, joe biden's wife. now we see president obama coming to the podium. let's listen in. >> thank you very much. thank you so much. thank you. everybody, please have a seat.

thank you. thank you very much. what a wonderful reception. it is great to be here. thanks for whoever organized the weather. i want to first of all say thank you to joe biden. who has been a teacher for almost three decades. and she spent most of that time in community colleges. she understands, as all of you do, the power of these institutions to prepare students for 21st century jobs and to prepare america for a 21st century global economy. and that's what's happening right here at hudson valley community college. so give yourselves a big round of applause. [ applause ] we've got some special guests here that i want to acknowledge in addition to jill. first of all, a wonderful man, the governor of the great state

of new york, david paterson is in the house. [ applause ] your shy and retiring attorney general, andrew cuomo, is in the house. [ applause ] andrew's doing great work enforcing the laws that need to be enforced. i want to thank the comptroller. [ applause ] speaker shelden silver is in the house. democratic conference leader, state senator john samson. albany mayor gerald jennings.

we've got three outstanding members of congress who are just doing great work every single day, maurice hin tri, paul tan koe, scott murphy, please give them a big round of awe plauz. [ applause ] president of hudson valley community college, andrew matanac is in the house. did i pronounce that right, andrew? and joyce ruby, executive director of tech smart who gave me a wonderful tour. thanks very much. now, you may ask, why are we here at hudson valley? we're here because this is the place where anyone with the desire to take their career to a new level or start a new career altogether has the opportunity to pursue that dream. this is a place where people of

all ages and backgrounds, even in the face of op sbstacles, ev in the face of personal difficult challenges can take a chance on a brighter future for themselves and for their family. i was just talking to the mayor of try. we were in a room, and he was saying how he had studied calculus in the room where we were taking the picture. and i had to inform him, i didn't take calculus. but he was testimony, he was an example, of what you can do. because of an institution like this. and i know that here in troy, you want and need that chance after so many years of hard times. communities like this one were once the heart of america's manufacturing strength. but over the last few decades, you've borne the brunt of a changing economy which has seen manufacturing plan