boat go back and forth as we broadcast throughout the day. we're going to outline the agenda, expectations and what it might mean for the dollar. john harwood will be with us in just a few minutes. first, beck, you've got the headlines. >> that's right, carl. the obama administration plans to start posting reports on the number of jobs created and saved by the $770 billion stimulus package. the wall street journal says this is in part of an effort to try and increase transparency. recipients of the transparency money won't be asking to differentiate between jobs created and jobs saved. former fed chairman paul volcker is pushing for tough restrictions for commercial banks. volcker, now an economic adviser to the president will testify before the house financial services committee today. he says commercial banks should be prohibited from running hedge funds and private equity funds. also, citigroup may be planning to dramatically scale back its

retail banking presence. the wall street journal says citi will concentrate on six metro areas right now, new york, los angeles, san francisco, chicago, miami and washington. the citi may reduce consumer lending to mainly credit cards and jumbo mortgages. sources tell cnbc that this report may be premature, although city is rethinking its strategy. by the way, if you want to take a look at shares of citi, right now, a little above the closing price of yesterday. 4:00 p.m. closing price yet was 4.52. of course, joe, this comes on a day when we saw big turn arounds in the market late in the day yesterday. >> there was a lot of scuttlebutt that the fed was going to start draining the money. that didn't happen. no indication of that and the market sold off, anyway, almost as if it was with -- >> it didn't matter what they were going to say. >> a little profit taking, maybe sell on the news. there is what we're looking at today, which we're above fair

value. that's okay, at least here. did you notice -- i mean, carl down in pittsburgh, the shot behind him, none of the lights changed, none of the -- >> you're thinking about the green screen effect again? >> i take hit word for it because he usually doesn't wear a jacket until it's for real. but i'm watching closely behind him. no cars are moving. to lights going on and off. it's very static. >> he think it's a little dark. he said you might be able to see a boat behind him. >> well, let's see something and assume it's not a screen -- >> where they're going fold it up right behind him. >> and we're not spending a lot of money. we're trying to pull back in this type of economy and it would be easier if he -- >> wait a second. you're supposed to be supporting the travel industry, supporting getting back to normal with business, you're supporting -- >> i tried to talk him out of going to where all those protesters were and groupies. >> did you hear how expensive those costs are for guarding this place? >> yeah. how much? >> millions and millions and

millions of dollars. and pittsburgh is still going to be left to make up the rest of it. i'm guessing he's probably not getting those two state troopers that rendell promised him. >> i believe you were in washington because there was a lot of banging. >> wasn't there? >> did you tell those guys? >> we asked them a couple of times. but you know what? it is knight nice to be up at this hour and have people around. >> did you go up and visit room 227? >> no. i meant to go and do that and check it out. i did have the robe, which i gave back. i didn't take it. >> because it's like the shining, what happened in room 227. >> the wid ard whose name will not be mentioned, voldemore. let's take a leigh at the futures right now. we're about 3257 points above fair value. this comes after that very strange turn that we saw yesterday in the markets. things are going well for the

bulls even after it came out with its report. right now, despite the losses we've seen overseas, you can see right now dow futures are higher by about 32.5 points above fair value. let's check, you know we've been in that tight range. this morning at the low end of that range, down another 28 cents to $68.69 for a barm of crude oil right now. after we heard from the fed, you might expect to see a little act in the treasuries. the 10-year note is yielding 3.417%. the big news, again, the fed saying that it's going to extend its mortgage backed securities program and maybe dial down the amount of money that it's spending. also, let's take a look at the dollar, see where things stand. right now, the dollar is weaker against both the yen and the euro. it's up slightly against the pound, but you're talking about 90.5 yen to the dollar and euro right now, 1.4774. gold prices, again, we saw some

big runs as the dollar has gotten weaker, but today you're not talking about much of a move. up by 1.60. so $1,016 an ounce. >> definitely staying above that 1,000, though. >> firmly. >> yeah. we'll see. it wouldn't take much. but -- >> $16 higher. >> to the overseas markets right now, we're rebounding this morning, but they seem to be responding to what happened late yesterday here. christine tan is in singapore and first to london where geoff cutmore has the latest out of europe. >> good morning, joe. you put your finger on the button there. the european markets have had a lot of head winds coming out of the gate this morning. let's show you the board. we are weak across the primary markets in the european session at this hour. and it's a little strange because there is nothing to frighten the children out there in terms of the information. all those and chemical else just leading, just to point that out for you, those sectors are in

positive territory. lloyd's of london, which is unlisted, but is a benchmark for the insurance sector coming out with a 39% increase profit, that was good. nothing to get too concerned about. richard ward coming out and saying he hopes the g-20 doesn't get carried away with the regulatory thick pencil. he's a bit concerned they may go overboard and curtailing banks, capital, adequacy ratios and their ability to generate profit. elsewhere, we have the retailer hennersy and moritz, beating expectations. a few people are scratching their heads and saying, look, the sales are starting to hit margins and the consumer is pulling a little bit going into this fourth quarter of the year. so that is a quick wrap on what the european session looks like at this hour. christine, let me send it ow out

to you in singapore. >> thanks for that, geoff. investors are staying cautious after the fed said it would slow its pure chances of mortgage debt. investors hear taking that to mean that the at the time fed could trim support for the economy. a little bit of caution in the marketplace to put pressure on interest rate sensitive stocks in hong kong. banks and property stocks there fell as a result. the hang seng losing 2.5%, the biggest loser today. over in china, the market managed to recoup early losses to finished 2.4% higher. in south korea, the market fell 1%. the market fed statement prompted investors to sell. one market finishing in positive territory was the japanese nikkei index after a holiday. closing 1.7% higher. back to you.

>> thank you, christine, very much. carl, joe is a little worried. he thinks you had some problem with the green screen behind you. >> really? >> yeah. it looks like it's fixed now. it looks good, carl. >> so i am literally at the desk with you right now, i just have the green screen -- >> no, maybe over where we put faber and he does -- >> well, how about if i did this? how about if i showed you a person sitting next to me, not with you. >> not if it's harwood because that could be a -- >> hey, joe? >> that's a different shot. that's a pretty big green screen. >> that's a hologram. >> hey, joe, it's worse than that. it's a green screen, but we're sitting in cincinnati and you didn't get to go. >> that's just low. that's just mean. our chief washington correspondent john harwood is here. joe, were you going to say something? >> no, no, i want to hear what -- wow, okay. i see the wear on the lower right, the reflections moving. i believe you now. i got it.

look, you can see it becky. >> and you wonder why the media has no credibility. because joe feeds the conspiracy theory. >> joe is just running it down day after day. >> yeah. this is exciting. 3,000 journalists, 12,000 delegates coming after the u.n. yesterday. some say this could away victory lap given the problems they had back in april, and others say this could be the most contentious g-20 yet. which will it be? >> well, i don't think it will be all that contentious. i think there's some issues which they will make rhetorical progress. the obama administration is probably feeling good coming into pittsburgh. it is true they've made a big concession on missile defense before which benefited russia. you'll hear a lot of talk about rebalancing the economy. there will be some sort of g-20 communique on that subject. it's not like an enforceable type thing. but you're going to have

discussion about trade and financial regulation where europeans are further along than the united states. >> is the headline going be stimulus stays in place? i think that is -- the bottom line is, they're going to say we did the right thing in april. that has helped pull the world economy out of a deep recession. but it's not yet time to pull back, so it's a stay the course kind of message. >> why is the dollar not on the agenda? and can some of these framework proposals, getting china to rely lex on ex ports, getting the u.s. to save mo more, are those going to be dollar negative or dollar positive? >> you know, i'm going to have to defer to becky and joe and you on that. i don't know what effect that's going to have on the dollar. >> some say, though, they leave that to the finance ministers in november because it's too much detail for world leaders at a g-20. >> right. >> we've got merkel, the german elections, we've got health care going on in this country, the british papers are holding holds

that the u.s. has denied to hold a bilateral with the uk despite their requests over ill will from the locherbie bomber. >> i think everybody realizes number one is the global economy. there will be distractions, protests, other stuff going on on the side. but everybody realizes that continuing the momentum, pulling the world out of this thing and trying to get on a sustainable recovery is the job that they came here to do. >> how does the g-20 put pressure on china and not make them feel like they're being singled out, like they're being picked on? >> well, that's a challenge. and one of the things that the chinese are working on and going to get is greater say in international financial institutions. that is one way to bring them further into the dent. and the united states is continuing to negotiate on this climate change issue ahead of

copenhagen. >> is that the toughest nut to crack? absolutely. >> later on, guys, we're going to take you to where some of these protesters and oergs are hanging out in advance of some of the marches we expect to see happen later on this afternoon. >> beautiful shot. >> it is. >> and john is right, that could easily be -- the cities are similar, like sister cities. but if you were in cincinnati, you wouldn't be in cincinnati, you will be in covington or new port looking over at cincinnati. >> and if we were in cincinnati, you would be pitching a diva fit right now because that's your hometown. >> you're right. but i feel better about the sports teams suddenly, so you're not going to get me today. the bengals are actually 0.500. >> wow. >> i know. it's a miracle. only two games, but -- >> ocho cinco. >> exactly. >> right now we go from pittsburgh to chicago to take a

trip to the futures pits. dave bahoric is standing by. he's with trade the news. >> good morning. >> we've been trying to figure out what happened yesterday. what is it that sent the markets and sent things headed south at the end of the session there. >> good question. to oversimplify things as we do in the pit, the markets seem to get exactly what was expected. markets tend to overdue things. we put in a high timingwise. 1075, 1075 half as the release came out and things were digested, the entire market shifted across the board. commodity commodities included. they went south. we went south with it. there seemed to he about profit taking. there was good, solid trade. the bulls weren't running and is hiding. the bears weren't coming out full force. 1048 half is half back on our work that we did last week.

so things to the upside are still intact in a very short-term medium. 1063 half in the stv is the daily pivot point and it looks like we're going to try to go up against the door and check that. the housing industry is hopefully getting healthy, although we hear of signs of another wave coming through with people losing their jobs, which ties into the jobless number today and existing home sales will be b anticipated this morning. and we'll take one day at the same time. this is a great country and we don't run and hide. we're going to work. >> i guess we should point out, too, dave, that the drop that you're talking about is only 0.83% drop. it's still the biggest drop we've seen since september 1st. you are talking about a real run. >> no question. and i think we all have to adjust to a new market. and we continue to have this

conversation and we will continue to have this conversation. but it's a new day. there are new factors, new forces in the market and you really become a student of the market, that's for sure. >> all right. dave, thank you very much. good to see you. >> thank you. thanks for having me. >> sure. talk to you soon. >> take care. still ahead, we'll have the business traveler's forecast for you, plus carl asks, why pittsburgh? a native's view of why world leaders are descending on western western pennsylvania and what they will find.

would i be, everybody. it's time for our business traveler's forecast. scott williams of the weather channel is here. what do you have fours today? >> good morning, becky. good morning, everybody. as we focus in on the threat for airport delays, we will be watching this slow moving frontal boundary. anywhere from shreveport, louisiana, to jackson, mississippi, little rock to memphis back up through the st. louis year, look for scattered showers and thunderstorms. use caution if you will be out and about on some of the various

roadways there. likely to see some airport delays due to some of the showers and the torms that we have moving in that vicinity. as far as conditions in parts of the northeast, fairly quiet. we saw showers move through philadelphia and long island. that frontal boundary pushing offshore. let's take a look at a few forecasts for you in parts of the northeast. we'll start with the big apple, look for partly cloudy conditions. temperatures stopping out in the 70s. a nice day will be on tap as we move into the big apple. what about the pittsburgh area site of this year's g-20 summit? look for the cloud cover to hang tough here. we will keep milder temperatures through the day. lower 70s by 3:00 p.m. maybe an isolated shower chance as we move into the evening hours around the pittsburgh area. speaking of pittsburgh, let's turn things over to carl. carl. >> scott, thanks for that. the president picked pittsburgh for this week's g-20 summit in part because of how it survived this recession. the city's unemployment rate is

under 8%. that's 2% below the national average. >> the leaders will see a much different pittsburgh than the steel city i grew up in. technology centers and green space line the riverbanks now. >> it's kind of brain center now than a brawn center. >> the steel mills where my father worked, mostly gone. more than 100,000 jobs were gone when that industry collapsed in the '80s. but now robotics, life sciences contributes $14 billion to the region's economy. what strikes me most about pittsburgh is its transformation over the past 20 years into a global leader in education and health care. that's where the jobs are. upmc, the university of pittsburgh medical center, the largest tenant in the city's iconic u.s. steel building and the region's largest employer. carnegie mellon university and the university of pittsburgh are

collaborating to create technological innovations which further advance the local economy. >> we're spinning off new companies from university-based research. those companies are rooting here and beginning to grow here. >> now small businesses like this dry-cleaners, in my family for three generations, may be the key to pittsburgh's growth. the new owner answers son, a local entrepreneur, is scouring forgotten neighborhoods for new business opportunities. >> it's about using what's already here and using it in a new way that it gets us the best bottom line. >> that has been pittsburgh's promise over the past 30 years and may be the key to its continued progress. sharon epperson, cnbc business news, pittsburgh, pennsylvania. >> we'll learn more about pittsburgh and the g-20 agenda throughout the morning and throughout the day. when we come back, we'll be joined by tony fratto, knows a thing or two about summits and world leaders. what happens behind the closed

doors, how they things get done. he's attended meetings with president george w. bush and today he's joining squawk. stay with us. could someone toss me an eleven sixteenths wrench over here? here you go. eleven sixteenths... (announcer) from designing some of the world's cleanest and most fuel-efficient jet engines...

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hard to do when so many things are happening. good morning. welcome back here to "squawk box" on cnbc. >> it's happening now.

>> and i'm joe kernen along with becky quick and carl quintanilla who is reporting live from the g-20 summit in pittsburgh. much more from carl, he's wearing that jacket and he still might be -- >> just promise me, you did a becky sandwich yesterday when she was in washington. you're not going to do that today. >> no, i just did. you've got to go -- go this way. there it is. carl, that is a great back drop. i don't know what it is, the lighti lighting, the back drop. he's returned to one of the 15 most -- no doubt about it. let's check the futures which are looking okay so far. we're up one this time. but if you add one to the 31, you get about 32 points. so we may at least get a bump at the opening after that weird late day sell-off yet yesterday, which may have been something, the start of something. who knows. we didn't get to 10,000.

everyone thought we would. wouldn't that just be like the -- >> it wasn't even a drop of 1%, but it was still the biggest drop since september 1st. >> most of the dow components were down, so it's almost like everybody decided to take a little off the table, but -- >> we'll see what happens today. we've got jobless claims coming out at 8:30 and that could set the tone for the market, as well. right now, though, let's take a quick look at the morning's top headlines. the fed may team up to ensure that its exit from quantitative easing does not spur inflation. the financial times reports the fed wants to use money market funds to try and that have bought during the financial crisis. this has a lot of people wondering how that would work. the financial times does offer some insight today on that. citigroup plans to dramatically scale back its retail banking presence. citi will concentrate on six metro areas. they're talking about new york, los angeles, san francisco,

chicago, miami and washington. this is a big turn around from its plan to try and really increase its retail banking around the country. but sources tell cnbc this report may be premature. they say that they are certainly considering the strategy, but we'll have to wait and see more on this, as well. by the way, microsoft is not in the game. the software giant says it has no plans to buy video gamemaker electronic arts. that the maker of the wildly popular madden nfl games, tiger woods golf and rock band. and that stock was up yesterday on a lot of rumors. but again, microsoft says it is not in the game for that. let's accepted it over to carl who is standing by in pittsburgh. >> thanks, beck. our next guest says the president must strike a delicate balance. tony fratto is a cnbc contributor. he jones me here on the banks of

alleghe allegheny. great to have you. this is your hometown. >> joe, you couldn't do this in cincinnati because you'd have to go to kentucky to get this shot. >> yes. that's what harwood said, you would be in cincinnati. i said, actually, john, to get that shot of the city, you would need to be in covington or new port. so i didn't know. we're kind of brothers, cincinnati and pittsburgh, very similar. except you put all the trash on those barges and send them down to us, down river. that's the only thing we get mad about pittsburgh from. >> but we collect championship trophies down here, too, joe. >> you're getting pummeled today, kernen. >> that was a dunk, that was a slam dunk. all right. sorry. >> you have been though these sorts of summits where everybody is out here reporting on stuff. tell us about a story like that. what is going on right now? >> well, what they're doing today, they're trying to get the language right on the communique

that goes to that fine line of what everyone can agree with. it was zer to do it when we were dealing with eight countries. a lot tougher when you're dealing with 20 countries. south africa, saudi arabia, argentina and the traditional -- you try to get language right on things like global rebalancing and bank regulation. >> is this general thinking that this g-20, this board of directors for the global economy as the journal called them is an effective tool or are bilaterals an effective weapon? good bilaterals are still an important weapon because we have large financial centers that matter so london and the uk's interest in financial regulation is quit callie important. their views on it carry a lot of weight, same thing with the europeans and the chinese. some of the other countries here who are not financial centers don't carry as much weight, but you need to do the hard work in the bilateral meetings. of course, president obama has a pretty broad international

agenda that he needs to discuss with these leaders while they're here. >> what are the big policy moves, to the degree that there are any, you think they're going to be inkra metal, what are some of the headlines going to be? >> well, they are going to be incremental. i've made the point that it's not a new story. people focused on the chinese and their views on global rebalancing. if you go back to chinese five-year plans and president hu jintao's comments, and other officials from china, they've been talking about the need to create domestic growth in china for a long time. >> and getting us to save more. they point the finger at us saying we don't save enough and we point the finger at them saying they don't spend enough. we need to make structure changes and some other asian surplus economies need to do the same. the chinese know it and they know that they're not going to do it overnight. they know they're going to take time to do it and so that may

cause continued frustration for a lot of countries like the united states. but we think the chinese are going to get there. they're just going to do it over time. >> talking about trade, they had the stand still provision a year ago where they said for the next 12 months, we're not going to do anything that restricts trade. now we're seeing worries about the same thing that made bretton woods happen. >> exactly. >> did the provision work? >> the stand still lasted exactly 12 months, right? it seems like it was timed perfectly to get to this chinese tire decision. there will be rhetoric coming out here today about the need to continue trade liberalization. they'll talk about doha and the need to get doha started. actions like the chinese tire decision make that far more difficult. >> why would you do it? why would you announce that two weeks ahead of this summit? >> they announced it at 9:15 on a friday. i think they were trying to bury the announcement as much as they

can. they have steelworkers out there who wanted this decision from the white house. i think they wanted to clear the deck on that. the problem now is that more are jumping on the deck on this decision. we see with other sectors like paper and textiles looking for the same relief. so it's a real problem. we don't want to see the global trade environment turn protectionist. so it's dangerous. i'm going to be paying a lot of attention to what the chinese and other foreign leaders say on that issue, on trade. >> it seems like there is a rift between france and germany where the economy is growing again, and the u.s., britain, we have >> i think tim geithner and the u.s. negotiators have done a pretty good job of staving off more radical ideas on financial regulation and bank pay. so thooeb leaders is trying to

get to a more rational way of dealing with this issue. i don't agree with every direction that they want to go in terms of reaching into the board rooms on bank pay, but they have been able to stave off some of the more radical ideas. it should be a long-term program to get global financial regulations. they can make a statement here on the need for it, but it's going to take time, also. i remind people, in basab two, the global banking standards, we negotiated that for eight years. >> which is about how old doha is right now. >> right. >> we come into the studio every morning and we all talk about the dollar. people come on our air and they want to talk about the dollar. why does the dollar not have a bigger platform here in pittsburgh this week? >> i think actually the u.s. administration hab done a pretty good job of getting other countries to stop talking about the dollar for a little while. you know, a lot of noise on the dollar right now is not good for the kinds of discussions they're trying to have.

it complicates what their goals on in terms of fiscal stimulus and in terms of this whole rebalancing issue. but it's hard to have a discussion about rebalancing without including the notion that currencies need to be flexible. that's the natural way to get some rebalancing. it's a difficult issue for the chinese to discuss. they don't like external pressure on that issue. >> sure. >> it makes it more difficult for them internally to make a reform that they need to do. so i think they've tried to dampen down dollar talk. >> joe, have you got something. >> i do. cover of the journal today, tony, paper is the next front in the china trade fight. three paper companies in the united steel workerss, which are the same guys, the tire guys, too, filed an anti-dumping case just before the g-20. it threatens to raise the tensions between the u.s., so it comes -- you know, are we going to have a me, too, environment where everybody, you know, wants

to get something from this administration in terms of, you know, anti-dumping? in your heart of hearts -- >> yeah. >> in your heart of hearts, do you really feel it's the start or something or is that just sort of rhetoric, you're a bush guy, is that just rhetoric? is something really going to happen or is it -- >> well, here is the thing, joe. they set a precedent here with china tires where the industry was not calling for protection. there were no -- no one said the chinese broke any rules or were dumping their chinese tires. all they said was the local u.s. economy industry was being harmed. so if you set that precedent, you're going to see a long line of other sectors coming in looking for the exact same kinds of protection. and if you do that, you ask the question in other countries, why shouldn't they do the same thing? and that's where the snowball starts. they set a precedent that now others can emulate and we're going to have a hard time

staving off in our own country. >> do you really think that 9:15 p.m., was that really taken into account, 9:15 on friday? everybody knows about it. >> absolutely. absolutely. >> because you used to do things like that? >> i never went at late at 9:15, joe. >> 9:10, 9:12. >> well, i didn't want to make you guys have to come in and work, you know, late at night. >> we've got to go, but we should mention, too, it's a good store for pittsburgh. it's going to shine a light on an economy that re inveinvented itself when no one thought it could. >> it really did. not on this river, the allegheny river, but you go over to the monongahela river, that used to be a rusting hulk of a steel plant. this city has transformed itself. you can see it's beautiful and the people here are incredibly proud to have this here so i give the obama administration

for bringing it here. >> baseball needs some progress. >> they really do. >> the reds are ahead of pittsburgh. tony, that's a city, it's like there's three rivers down there. it's amazing. >> that is amazing. >> united states weird. all right. >> if you have any comments on anything you've heard here this morning, e-mail us, squawk@cnbc.com. still ahead, ten years ago, the company declared bankruptcy. today, iridium satellite has a new lease on life. in this unusually volatile time, you want a financial partner... who is unusually prepared to help. the meeting with northern trust went well, didn't it? yeah, they get it. they really get it. a little more stability would be nice. northern trust offers the strength and expertise... that can only come from a 120-year track record... of thriving even in difficult times. they understand. roller coasters are for kids, not money. ♪ northern trust. wealth management. asset management. asset servicing.

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corp. after winning shareholder approval last night. the combined entity will be called iridium communications. joining us now, matt desch. it's a reverse merger. it brings more -- explain why you're doing it. we know it says iridium, it's expensive to do what you're doing and there's been some problems in the past with funding. is that what this answers? >> it does. i mean, we've been growing very fast for the last five years and our satellite system today is about ten years old. it will last another six, seven years. we're going to launch another generation system in 2014 to 2016. so this gives us the financial flexibility to move forward, make the selection of suppliers and actually build the new system. >> we have seen -- i mean, you're putting satellites up to have a global network. you need to put satellites around the world.

we've seen russians -- we've seen how things can go wrong. it would be much easier to put up -- even if you have to make it a christmas tree, to put up a cell phone, to put up these pods, but you can't get global coverage that way. >> it's funny, people realize after 25 years now cellular phones have been out there, it still only covers about 7% to 8% of the earth's service. not just the voice phone, but a data connection, too, to a machine or aship or an aircraft, we want to be connected all the time. so we really serve that 92% of the world that doesn't have -- >> 92%. and you, for some reason, brought a small cell phone with you because your phones are much larger than that phone. well, they certainly used to be, but -- >> how did i set that up? >> thank you. i appreciate that little plug there. >> so that's a new iridium phone. >> that works anywhere on the

planet and it works -- you know, it's obviously used by remote workers and it's obviously used by first responders who respond to emergencies around the world. >> wow. but not used yet by jack bower because they still -- the tv producers still want a bigger phone to show that he's -- >> it's fun. all the movie producers asked for our old phone that was bigger so it's a little more satellite phone like, yes. >> so what happens to these -- they stop working? how many are up there right now? >> well, the way satellite companies work, you launch your satellites. you can't visit them again, so they have a lot of redundancies, so over time, they run out of fuel. our consolation is going to last well into 2016, '17, '18. but you want to launch a new one because you want to deliver a high quality service. >> how much of a round will be

need to finish the next again railing? >> well, because we're quite financially successful right now, we've obviously got the business model working. our great partners around the world are building us into so many devices were we are expecting to generate over half the cost ourselves of the network, so we may need a little debt in the future, but really we should be financially able to do that. >> i wish we had more time because i'd like to talk about who are your contractors that put everything up and how many misfires have had over the years. >> maybe i'll come back when we make that selection. >> today, congratulations on the reverse merger. you're back trading and that's the news today. >> we're back public. thank you. coming up, we have a unique session of chairs this morning. these are the stories that have us talking both on camera and off. plus, we will have more from carl in pittsburgh, too. >> as the g-20 fires up today, you'll hear a lot about protesters, the organizers, and you may wonder who they are.

they come from all over, all sorts of different groups, and you need sort of a base of operations. so a lot of them are staying on areas of land that are sometimes owned by churches, staying in tents, kind of a must-have if you're going to be here for a week and the hotels in town are charging $500 a night. you can see they have a place here to sign in volunteers, there's food and supplies, placards and so forth. some of them are protesting jobs, some of them are protesting on behalf of the homeless and some of them are taking aim at the g-20 saying it's part of the architecture that promoted the economic collapse. it's been raining today, it's expected to rain tomorrow, and that might make it more difficult, some say, some hope here in pittsburgh for protesters to do things like climb poles and gates and light tires on fire as one cab driver told me today. the rain has been god's way of telling pittsburgh, hey, i'll help you out. squawk continues live after a short break.

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welcome back. we are in the chairs this morning becky and joe at the studio, i'm at the g-20. the pittsburgh tribune really shows the positives and negatives of hosting an event like this. 48 hours of fame talking about pittsburgh and its ability to show off its new economy.

the lead picture are greenpeace protesters arrested yesterday. they dangled off of a bridge, the west end bridge not too far from here, put that banner up that said climate destruction ahead and dangled there for two and a half hours before they were arrested. fourteen arrests in total. they are now in the allegheny county jail. but guys, you know, everybody thinks back to the world trade organization, joe. you remember 1999 in salts where there were 600 arrests and 50,000 protesters. we've got to wait until later on today to see exactly how many turned out and what exactly they do. >> stop co2 emissions now. >> yes. >> promise you'll keep holding your breath? >> i can't. i'm part of the problem. >> you are. >> sorry. >> what else? >> it's this free speech that makes it -- don't they always say that. i love seeing those guys. i commend them.

>> we were shooting that tent city thing yesterday, i was thinking how much fun you would have had with us. people wearing the t-shirts with the symbol on the front, that kind of thing. i'm actually going to bring you back some leftist literature, too. >> thank you. it's working, carl. >> it is working. >> i had a tore i was going to do, and i thought better of it. because i feel more sensitive lately and i'm not going to do it. it was a poor guy passing out alcoholic anonymous pamphlets. he went into the police station to pass them out and he was twice the legal limit of alcohol in the police station and they arrested him. >> i thought you weren't going to say it. >> it is one day at a time. the poor guy probably wants not to drink and i feel bad for him, because he fell off the wagon. >> what are you going to do? >> that was it?

>> i'm letting you. >> all right. he's holding his breath. carl, we were talking just a little bit ago, you've got something happening with china, trade disputes going back and forth. it's just such an odd combination. china is definitely our frenemy, i guess you'd say. china's national english language newspaper. a picture of president obama shaking hands with president hu. at the same time problems from tires to today what we're talking about with paper companies now at the front of this. and it just shows interesting relationships we have with the chinese. anyway, we are going to have more in a little bit coming up. more of this morning's top stories. more from carl standing by in

pittsburgh, where leaders are gathering. we'll ask what high-level meetings could mean for your portfolio. the bottom line on the global risk when "squawk box" comes right back. you're watching "squawk box" on cnbc, first in business worldwide. uuuuuuuuuuuuuuuuuuuuuu

the leaders of the world's major economies gather in pittsburgh, with no shortage on their to do list. monetary policy and imbalances that could prolong a recession. carl quintanilla is live from pittsburgh to talk the issues of the day with top economic and political leaders. "squawk box" live from the g-20

summit begins right now. good morning, welcome to "squawk" on cnbc. i'm carl quintanilla in pittsburgh where world leaders are gathering to talk about a variety of top level issues. joe and becky holding down the fort at cnbc headquarters. great line of business leaders and politicians to share their thoughts this morning. 7:30 a.m. eastern minority whip eric cantor will join us from washington. he's following developments in pittsburgh carefully. then interview with kmergs commerce secretary gary locke. first to cnbc studios and beck for this morning's headlines. good morning, beck. >> citigroup may plan to scale back banking. citi is planning on concentrating six major metropolitan areas, new york,

los angeles and san francisco. but sources close to the bank tell cnbc that report may be premature even though citi is rethinking its former strategy. former fed chairman paul volcker wants tough restrictions. adviser to president obama will testify before the house services committee today. he said commercial banks should be prohibit freddie running hedge funds and private equity funds as well. and the obama administration plants to start posting reports next month on the number of jobs created and saved by the $787 billion stimulus package. "wall street journal" said recipients won't differentiate between jobs created and jobs saved but they will have to think about whether or not that money meant the job is still around. a look at the futures, it has been up 32 point above fair value and futures up one or two. now they are down 20. we're still up by about 11 points above fair value.

oil is back below 70 recently. today it's not doing a lot, down $0.61. gasoline prices have been coming down. i monitor those closely, so i can report on them. it has nothing to do with my looking for the cheapest price when i'm driving. i would never do that. the ten-year bond was interesting as yields fell based on what the feds said, they didn't say they were just going to pull the rug out from underneath all of us. i would hope not after what they are calling the great recession at this point. then gold -- dollars. you can't do gold unless you do the dollar first, down against the yen and euro. gold continues, up about a buck earlier, continues to trade above 1010 to 1014. let's get back to carl in pittsburgh. you're confirming my worst fears, carl. we keep showing you all over that city in an open collar like

here, there, walking and the camera has got you. you saw you yesterday morning at 7:00 in the morning today, did you do that today? did you go down there and work for eight more hours? >> while you were practicing your short game or whatever, i was at the airport. then yeah, i went and shot some stuff around town. did you like it? >> i do like it but you wonder why it doesn't seem that great to me to do all that stuff. seems like you had another eight hours or ten hours after you left here. >> it was a longer day than usual, joe. >> i want to thank you for doing that. >> when you do your first g-20 summit or when you go to doha maybe in the next year or two, you will see what it's like. >> okay. all right. i may be too old for that kind of thing. >> no, no, no. >> i don't think so. >> as you mentioned, joe, leaders in the biggest nations converging on pittsburgh and the g-20 summit. at a time when the world appears

to be recovering. john harwood joining us for a look at the agenda. not only can they point to the good things they did but the president comes in with some momentum because of what happened at the u.n. this week. >> he's trying to sustain the progress he got from russia in acknowledging they may support tougher sanctions against iran if the talks with the p 5 plus one countries don't succeed. obama is going to try to work that issue, climate change, financial regulation, paper over some of the differences he has with his european partners on capital requirements for banks and also executive compensation. >> one of the ideas developing, trade restrictions, a year after they said they wouldn't be doing that kind of thing. we heard about tires, today paper companies. that is a negative force going into the summit, is it not? >> i think it's negative. the question is how big a negative. i talked to trade analysts

coming into the meeting who said obama made a mistake with tires, was not helpful, we're seeing tit for tat with china. it's likely to be contained. this is what obama told me last week. he thought he was confident there was not going to be a trade war. >> i guess people will still ask then why. why and why then right before the summit would you want to go out there even if it was to weigh in a friday night announcement. >> the reason i think, carl, the president has got a domestic balancing act here. he's trying to push this health care legislation through congress. there's some disappointments to organized labor in that health care package. by taking this action against china, which he didn't have to do, it was a judgment call, he was sending a positive message to organized labor. he sent mixed messages on trade really since he became president. he ditched his campaign pledge to renegotiate nasa. that was positive from a free trade point of view. he's got to try to shore his left right now.

>> it's hard to give a pony to one kid and not the other kid. they see that kid get one, they are going to want one, too. so much depends on your perspective. i was fascinated carl by the reporting from the u.n. general assembly yesterday. just looking at the "financial times" this morning they cast the speech to the general assembly a stern admonishment to get their act together, stop bickering. >> you can't bash us anymore all the time. >> then i watched fox news and said the president went and criticized their own country, criticized the united states for some of the bush administration policies. so some of it depends on your perspective. >> what would you imagine the big policy initiatives clarify. >> in it's going to be what you and i discussed an hour ago, which is sustain the interventions. they have been working. stay the course, do not pull out prematurely because we've still got work to do and continue your work on financial regulation where there's broad agreement on the general idea, a lot of discussion on the details and

then try to also make progress on climate change and see where we end up by the end of the year when they go to copenhagen. >> we talk about pittsburgh, first time g-20 has been held in a nation other than its capital. that's a local story on the one hand. on the other hand it does sort of offer obama a chance to show some of what wreef done right in this country, right? >> it does. some people think it's a bit of a difficult spot for obama in hosting the session that isn't going to produce the big break. gordon brown basked in april in london in the success of that summit. they came out, they greatly beefed up resources for monetary fund, special drawing rights, that sort of thing. here you're going to see less news, a status quo event. it's a mixed bag for a leader to be seen and engaged in international dialogue as opposed to taking care of the home folks. that's part of the rational, i

believe, for the chinese tire announcement. >> would you argue that the detour he had to make on foreign policy, afghanistan, u.n., g-20 has been helpful or unhelpful to getting health care done? >> i think it's mostly irrelevant. the actions in the senate finance committee, you do see the difficulty of getting through that process. they have got 500 amendments. now there's a dispute between the majority democrat and olympia snowe who they want and need in terms of her support over cvo scoring and when they can go ahead and move. so that nitty-gritty work, the president has been providing air cover with all this media blitz that he's been pursuing, but i don't think it's a big distraction. >> right. last question for investors who are wondering how is this relevant to their portfolio or trading. do you think we're going to come out of this with at least less uncertainty about policy or less volatility in currency markets. >> actually, i don't.

i think the communique is going to be broad and general enough that it will affirm the path we're already on but not settle the tough stuff like what are those capital requirement going to be. what is the nature of the limits for new incentives on executive compensation. i think all of that is going to be at some level worked out within each particular country and we've got on financial regulations, for example, months of work. that's not going to happen until 2010, even though the house reaction is small. i don't think that uncertainty will be for the administration. >> makes you wonder why we're here but there's still a lot going on. >> carl, let's stay on this shot. can you lean forward a bit as we take that shot of you and john together. >> right? >> nbc -- nbc. i'm looking at the chair behind you. nbc news. is that actually -- >> is that a problem?

>> fine. is that actually brian's chair you're sitting in. >> i'm being told by craig white, one of our photographers, that, yeah, one of these chairs will be brian's chair tonight. you know what, joe, i think that's why you didn't come. brian said he didn't want you sitting here. >> let me tell you something, harwood. if i were brian i don't think i would ever want carl to sit in my chair at all. >> you are not being helpful. >> i would just say -- >> stop talking now. >> keep carl quintanilla out of my chair. >> i didn't know what he was doing. he wouldn't tell me. he said watch me stir up some trouble. >> brian loves you, you're great. he's great. he has nothing to worry about. >> joe, i think scarborough feels the same way about you. >> chuck scarborough, you mean. wait a minute.

there's two charles scarboroughs. comments and questions, e-mail us on squawk@cnbc.com. coming up, dealing with the financial crisis on a global level. what are the risks to send it into a tailspin. head of research at the global political risk firm eurasia group. what the administration is doing to get consumers back on their feet. stay tuned, "squawk box" on cnbc, lo we use nbc chairs. first in business worldwide. >> time now for today's aflac trivia question. the first cd ever pressed in the united states was for which recording artist? the answer when cnbc "squawk box" continues. ve gotten by without aflac! is that different from health insurance? well yeah... ...aflac pays you cash to help with the bills that health insurance doesn't cover. really? well, if you're hurt and can't work, who's going to help pay for gas? ..the mortgage, all kinds of expenses? aflacc it's the protection you need to stay ahead of the game...

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now the answer to today's aflac trivia question. the first cd pressed in the united states was for which recording artist? the answer, bruce springsteen for his 1984 hit "born in the usa." welcome back to "squawk box," live governing of the g-20 focus. a major shift since the g-20 met in april. david gordon head of research for the eurasia group and former state director of policy

planning. david, good to have you with us. >> thank, carl. great to be here. >> you think there's more optimism surrounding the g-20 summit. oernld people are saying it's harder to do stuff now than april when it was crisis mode and all hands on deck. what's the difference between now and last spring. >> i think that's right. the first two g-20 meetings last fall hosted by president bush and last spring in london really occurred in a crisis atmosphere. they dominated the news. they dominated attention of all of the leaders who were there. today this meeting is important but it's really unlikely to lead to any major breakthrough. i think there have been a lot of discussions around many of the issues. you have three big issues on the table. each one having to do with a different element of the crisis. executive compensation for bankers that gets to the agreed

issue. bank capital requirements, gets to the issue of last regulation. then really interesting, u.s. proposals for rethinking the balance of the world economy that gets to this question of big imbalances between current account deficit countries and current account surplus countries. on none of these are we likely to see decisive action because the action has really moved to national capitals here. but i think even more significantly that if you're president obama, your time now is being much more dominated, your foreign policy national security time is really being dominated by afghanistan and pack tan on the one hand and iran on the other. >> that said, do you think we're walking into this summit with a trade war brewing on the side whether it's tires, whether it's paper? is free trade going to get an open forum here in pittsburgh or not? >> i think there will be

continued comments about the need for free trade, verbal commitments for free trade. same thin happened back in london in april and in washington last fall. the problem is president obama has to go out and make a trade speech. he's eight or nine months into office. he really hasn't laid out his position. i think the chinese are getting very worried about what's going on in the united states. i'm sure the obama administration has tried to tell the chinese that the administration is not going to let protectionist pressures here get out of control. whether that's credible or not in beijing is now the story. i do think that president obama really has to get out there and just tell the american people and tell the world what is his view on trade, how does he intend to keep the market forward and what are his pathways here.

there are tensions brewing particularly with china. >> how does the g-20 have a summit here where they can draw a framework for exiting stimulus around the world without spooking investors and traders everywhere into thinking these programs are going to end soon. how do they provide that balance? >> i really don't think you're going to see a lot of specifics on exiting. i think what you're going to see really is a commitment to continue coordination but actually exiting the crisis is really going to be determined by country circumstances in all of the major countries. >> even with sarkozy arguing the time for chitchat is over. >> sarkozy will be arguing in favor of strong limits on executive compensation. i think there's going to be a lot of rhetoric about executive compensation but i don't think you're going to see anything binding on any of the leaders. everybody is going to do

something on executive compensation but there's no way the united states is going to have the kind of strict limits on executive compensation that president sarkozy is calling for. >> right. for anyone who watches policy or markets or currency, these couple of days are kind of like drinking out of a fire hose. there's so much happening and so many big thoughts being thought. david, appreciate your insight. thank you for your time. >> thank you, carl. thank you very much. >> when we return, more of the stories making headlines. steve liesman with a look at what he says matters most at the g-20 summit. global financial regulations. "squawk box" is live in pittsburgh. we'll bring you more in just a moment. first as we head to the break, we're going to take a look at the most widely held "squawk" on the board there. stay tuned. "squawk box" will be right back.

you're watching "squawk box" on cnbc, first in business worldwide.

tonight, biography on cnbc examines ray crock, the mind behind mcdonald. his success didn't happen overnight. he sold everything from paper cups to mixers before finally meeting the mcdonald brothers. >> as ray approached his 50th birthday, his business began to slow down. ray was losing customers by the dozen. but one small restaurant in san bernardino, california, kept ordering more machines. crock had to see for himself the type of place that needed to churn out up to 30 milkshakes at a time. in 1954 he flew to california and met the two brothers who

would change his life, dick and mack mcdonald. >> you can catch an all new biography at 10:00 tonight eastern time. check it out. carl. >> any comments or questions on what you see at "squawk," we invite you to e-mail us. our address is squawk@cnbc.com. when we come back, nation's in the biggest nation in the world converging in pittsburgh at the g-20. steve liesman weighs in on the regulation dilemma affecting the summit. you're watching cnbc, first in business worldwide.

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good morning and welcome back to "squawk box" on cnbc. i'm carl quintanilla in pittsburgh. you're looking at a picture of the skyline. a great group of leaders and politicians to share thoughts. in a couple of minutes, minority whip eric cantor in washington, following the developments in pittsburgh closely. we'll hear from the republican side of the aisle and 7:35. first cnbc interview with commerce secretary gary locke. that's coming up at 7:40

eastern. first back to cnbc studios and to becky for headlines. >> thanks very much, carl. let's get a check on the mark. we've been watching this morning. the futures started out well above fair value. up 26, 27 points above fair value. remember, this is all coming after a day when the markets took an unexpected drop right towards the end of the session after trading well above through most of the session. they did turn down late in the day. some people wondering if it's the beginning of something you can see, that the futures are indicated higher. jobless numbers later this morning. just about an hour from now. that could help set the tone for the day as well. plus a busy day for initial offering. among stocks making debut. artio global investors, u.s. management arm. raised higher than expected for the offering, price of shares

26. makers of lithium ion car batteries a 123 came in higher, $13.50 apiece for shares. offering raised $380 million. mortgage real estate investment, colony function, raised short of estimates. commercial real estate finance, oppose lo, raised $2 million. holiday shopping around the corner. nintendo taking steps the video game console is a popular choice cutting the price $250 to $199.99. this comes three weeks after sony cut the price of its playstation 3 console as well. he is best known as the ceo of the company that makes blackberry. research in motion is pushing hard in his efforts to become a hockey team owner. he's pushing phoenix coyotes offering $25 million up front if the bankruptcy court approved

his $242 million bid. well, when leaders of the biggest countries in the world converge on pittsburgh today, executive compensation will be a very popular topic of conversation. while many favor regulations, no country wants to be more aggressive than its peers. steve liesman here telling us how it's creating a competitive imbalance for the markets. >> end of the day, scuttling or delaying all the regulations people say are necessary. becky, of all the lessons we've learned, one of the least controversial is the need for banks to hold more capital from london to washington to tokyo, leaders agree on the need for bigger buffers to protect banks in a crisis. so why isn't it done yet and why is behind the scenes simmering global battle over banks. here is the problem. countries are afraid to move and make things tougher on banks before other countries do. with higher capital ratios in the states, banks would be

globally uncompetitive. time geithner's testimony yesterday ahead of the g-20 summit said there is a real concern. >> we made it clear to the congressmen of the world that as we in the congress consider putting in place stronger rules, we need to make sure that the world outside does so, too, so that we have a level playing field of course more evenly and so that risk can't just my great to where it's going to be supervision oversights. >> while geithner says there's consensus, u.s. and european banking regulators have been arguing in the background over rules for foreign banks to raise more capital than u.s. institutions. that's call u.s. banks already hold more capital. some of that capital, a lot of it, for some u.s. banks, is taxpayer money. in fact, part of these discussions will take place in pittsburgh but in switzerland bankers meet under shadowy

auspices of the summit. eight years in the making and never full implemented. we can see this thing in front of us that we know we need to do, increase the capital buffer on the banks but we can't do it. i don't know if it's a prisoner's dilemma or beggar thy neighbor policy. >> getting the best deal, nobody wants to be the first. >> if they don't, then you end up really having the same situation as you had before. there are some really interesting ideas out there. bill dudley has one that says banks should hold debt that automatically converge to equity. certain ratios are met. he also thinks banks should have dividends that automatically cut off. another issue. remember during the crisis when bank a would not cut dividend because bank b hadn't cut it. meanwhile bleeding capital and paying dividend to shareholders. dudley suggested this idea of an

automatic dividend. these are ideas. one of the problems for whole bank for national settlement, it's not public. they do all this stuff between themselves and there's no transparency. that's a big issue. it's something you hear this -- you know, what do you call it desk thumping. what is the word, table pounding about executive comp. you know what, is that really the issue, executive compensation? didn't these guys all lose a lot of money in this? wasn't there a lot on the line for them to have really -- the issue becomes capital levels more than anything else. they make a big stink about executive compensation and not about the bigger issue, which is capital levels for the banks. >> we'll see you back in an hour's time. >> jobless claims, talk about the fed and what happened yesterday in that selloff, which to me by the way was dollar and oil.

oil fell -- the dollar rose. >> knee jerk. >> first like this. and then stocks. i don't know it was related to what the fed did. what i like, the credit markets behaved well. getting out and mortgage markets. bond markets as well. >> desk thumping. instead of table pounding, we could change all the expressions, come up with new -- >> you could. >> i'm sitting here in carl's chair, carl is in brian's chair and cantor is here. >> you never know. i've given up. while global leaders gather at the g-20 summit in pittsburgh, our next guest says the world is watching u.s. for proof of a recovery. joining us is congressman eric cantor, minority whip and member of the committee ways and means.

i don't want to get partisan, congressman, but do presidents usually go back on the prior administration and just sort of throw it under the bus typically? is that typical? >> joe, i wouldn't think it's typical, no. what i'd like to think any president would come in and want to lay out his vision to our allies in the world just like people run for office try to look at the vision they have for this country. right now there's an awful lot going on in washington. frankly we've not made as much progress as anyone would like. i'm hopeful somehow the president can signal we're going to set aside some of the blame game and try and get some of the problems resolved here in washington, because that's the only way i think he'll get some traction internationally. >> what do you make of the protectionist debate we've been having today, congressman? most people think it's going

nowhere. we can do a couple of things on the edges, tires here, paper there, china does a couple of things with chicken. do you really think it's going to turn into something as it eventually hurts the economy? >> i'm so hopeful it is not. i've always been a free trader and believed very much we are in this global economy and when we have american-based companies doing well abroad. that means more jobs at home. unfortunately that argument doesn't necessarily sell in some of the states suffering from very high employment. we've got to remember while those world leaders meet up in pittsburgh and we're here in washington, there are families across the country meeting, sitting down together trying to figure out whether they can get through the month and whether jobs can be here. really it doesn't come back to our focus and putting a priority and getting the economy going again. that means getting the credit markets straight. that means allowing for small business to access resources so they can begin the investment process again. we've got a lot, not to mention

the health care debate still hanging over this town. >> is there really a divide between the two parties? one would say you get jobs like putting cap and trade, you get green jobs. we're going to do green jobs. this the way to do it. also companies can't flourish while they still have this health care expense hanging over them. you've got to get that house in order to get jobs. are those a couple of steps removed or is the criticism we should still be focusing on the economy unjustified? >> no it's not a joke. first of all the notion that we have to overhaul the health care system in order to get the economy straight i think has been disproven at this point. there's no question health care costs have to be reined in. the real divide on capitol hill still remains around how we go about producing competition. there are democrats who believe very strongly in the fact that the public plan, the government

which will produce competition. those from the republican side of the aisle believe strongly if we put in place measures where the government can create a marketplace, we could see competition but we've got to add some flexibility to allow for some of the innovations to occur. that's a true divide. there's also this divide on cap and trade. there -- again, the proponents of cap and trade believe very strongly that washington ought to be prescribing, you know, what kind of fuel we use, cars we drive, how you turn on your lights. we're going to have to pay for that through some kind of attack whereas we believe if we can get the economy back in order, prosperity will yield better technology, which will yield better stewardship of the environment. >> the gop gets big bumps in the usa today. i need to read something else

right after i've finished it but it gets a big bump of donors in august. that's been a while since the gop raised more money than the democrats. do you think you've got a chance to gain some things back in 2010 or is it just wishful thinking. >> joe, i've said for a while now and some people have accused me of wishful thinking, i believe we're on track to take back the house november '10. we have a lot of work to do. a lot will tell you when there's a generic ballot, asked whether they would like republican or democrat, republicans are ahead by several points. i believe that is couched in the notion that america liked about government. right now there's one-party power in washington, unfettered ability to produce an agenda. most americans i feel believe the agenda being produced is

outside the mainstream. >> maybe in this huge battle between capitalism and the government, maybe a michael moore movie can go to the top and there's an in flekz point and we've taken it as far as we're going to go. >> well, listen, it really is about -- the debate here is very passionate as it is across the country about the future of free market capitalism. either we're going to continue to lead the world with the best, most sophisticated capital markets with transparency and ability to lead, produce innovation or we're not. if we don't, all the answers are going to have to come from washington. i think most americans do not believe that is the secret to our future success. >> all right, congressman. appreciate your time today. thank you. see you again soon. >> all right. when we return on "squawk," the man has to help implement the president's economic turnaround plan. we're talking about congress secretary gary locke. he's going to be joining us first on cnbc right after this.

plus we have much more from carl reporting live from the g-20 summit in pittsburgh. >> you know, one of the themes of this g-20 and any g-20 summit is the possibility or likelihood of security and protest being not just multinational corporations like mcdonald's but small businesses as well. later today there's a group that is scheduled to hold a mass march on this very street, penn avenue. they do not have a perm. so as a result a lot of small business owners are nervous. we talked to a couple had say they are nervous. some are boarding up their windows. makes you wonder if you owned a small business would you stay open knowing about the protest that is are planned. the cops have some special powers as a result of the city council that they can fine anyone who brings -- doesn't use but just brings pvc pipe, pad locks, chains, handcuffs, anything they think people can use to chain themselves together or create any kind of disruption. we'll talk more about security and a lot more as "squawk"

continues live thursday from the g-20 summit in pittsburgh. national car rental knows i'm picky.

so, at national, i go right past the counter... and you get to choose any car in the aisle. choose any car? you cannot be serious! okay. seriously, you choose. go national. go like a pro. welcome back, everybody. it is the final day of the national energy summit in washington, d.c. top ceos, lawmakers, politicians, everyone meeting there to talk about ways to try

and energize the future. joining us first on cnbc this morning is commerce secretary gary locke. he's delivering the keynote address. mr. secretary, thank you very much for being with us. >> my pleasure, becky. >> one of the huge issues at the energy summit are people talking about green jobs, trying to figure out ways that we could create more jobs. i know that the administration just announced it's going to start posting the number of stimulus created jobs the next month on the web. people will be able to track these things. when you look around, how many new jobs are we creating and what can we do to create more? >> well, we're really creating thousands of jobs right now. so many companies that have been receiving grants from the recovery act have been talking about the hundreds of jobs they will be providing us and creating just in the next few months with grants for battery research, for electric cars, solar cells, panels, wind

turbines, et cetera, et cetera. the key is providing incentives for new jobs to occur, because if we don't, china is going to create these jobs. china is right now spending hundreds of millions of dollars on energy efficiency and they are going to be creating all this technology and selling it to the world. we need to get into the game. we can truly be the leaders of the world and provide the jobs, good paying jobs for people here at home while addressing the climate energy needs of the entire world. that's why it's really important we focus on entrepreneurs. that's why today i'm announcing the creation of an office of entrepreneurship and innovation, because we know, quite frankly that entrepreneurs, companies less than five years old, have accounted for virtually all of the net new jobs created in the last 25 years. so this office will report directly to me. we're going to have a national advisory committee of the most esteemed entrepreneurs, venture capitalists in the country to

help create the policies and focus on what's needed to move these great ideas into jobs. >> you're just announcing this new office right now? >> we're announcing that today. you're the first we're publicly revealing it. >> which venture capitalists have you been talking to and will you be working with on this project. >> we know great venture capitalists and innovators. when you think about bill gates and dell and others who started virtually in garages, these are the people that have spawned incredible companies, thousands and thousands of jobs but they started as really small entrepreneurs. again, these new startup companies in the last 25 years, they started small but they accounted for virtually all of the net new jobs in those last 25 years. since then they have grown into large companies employing thousands and thousands of people. we need to really look at the policies and programs that can help translate new ideas to

great companies, startup companies, but also into economic growth. >> how can you cut through some of the red tape? is that the idea behind the office, help cut through democratic red tape, make it easier for them to flourish? >> we know, for instance, there is the so-called valley of death, where people have great ideas but don't have capital to move to the next level to really implement their ideas and get up and running as viable companies. we're going to look at those issues. also the notion of research and development that occurs in colleges, universities and federal laboratories, how do we translate that into commercial products and get those into the private sector as quickly as possible. what are just the policies that impede entrepreneurs, people who have great ideas from actually starting up a business. we'll be looking at all the red tape and beaurocracies, the whole systemic problem facing

entrepreneurs. one is health care. so many people that want to start up are afraid to. they work with a company with great health care benefits. if they go off on their own, how can they pay for these premiums, sometimes $25,000 a year for their own family. how are they going to pay premiums for their own employees to attract people from other companies, great companies, to form that team of ideas, inventors and so forth that will become the next microsoft, ebay, google. that whole notion of health care cost is a disincentive for people to start new companies. >> secretary locke, it's not just the new companies that have concerns about what's happening, but existing major companies, huge concerns about what's happening in terms of policy in this nation versus around the world. yesterday i spoke with chad holiday from dupont at that conference. they pointed out they have a brand-new solar plant opening. he's very excited. it's going to open a lot of

jobs. but that plant is opening in china, not the united states. the policies in china, tax incentives are much better than here in america. is there anything we can do to provide incentives to those big companies to make sure they continue to open plants here in the united states? >> in fact, that's part of the president's proposal. funds have been set aside, tax incentives and grants have be been made available under the recovery act. tens of billions will be available in the energy sector from research and development to actual grants to companies to get started. that's exactly the issue we face. competition from china. will these jobs consider here in america where we provide technology and equipment for people all around the world to address climate change or will the jobs be created in china instead? and a big factor in making china more competitive, or making the united states less competitive against china is the rising cost of health care. i mean, i have companies that

have told me this year alone, they saw a premium increase, a cost of providing health care to their employees jump by almost 30%. last year alone the average was 15%. there's no way that companies can be viable competitive when they are facing rising health care cost of 15% one year, 27 to 0% this year. what's it going to be next year? >> secretary locke, carl is standing by in pittsburgh where he's at the g-20 he has a question as well. >> good morning, mr. secretary. >> hi, carl. >> good morning. i wanted to get your take on security here in pittsburgh, which is probably the tightest in the city's history. you were governor of washington in 1999, we remember the uprising in seattle and the hundreds of arrests. why do these things draw so much organized protest and have we learned how to keep things from getting out of control? >> wellish obviously the wto

riots in seattle were a wakeup. it shows there's a lot of concern about globalism, a lot of misunderstanding about that. quite frankly a lot of the issues are to help developing countries. the poorest countries improve the standard of living for their people. so many of the population don't even have electricity, don't have -- are facing so much famine and poverty and disease. the issue is how do we help them come bought economic mainstream and at the same time protect jobs among the developing -- developed countries like the united states. it's in our humanitarian interest to help these developing countries and to allow for expanded trade but also fair trade. so there's so many issues that are in play, whether people are concerned about genetically modified organisms in foods, people concerned about losing jobs here, to a whole host of other issues, to political issues. you see them all converge when you have leaders from the major countries from around the world

gathering. >> secretary locke, i just had a quick question. we've had some guys on that are nonpartisan. david walker, a harvard professor, expressed some disappointment that the actual cost side, cutting down on the cost of health care, seems to take a back seat to adding 47 million new people. i hear what you're saying about getting the burden off of corporations but aren't you just really transferring a burden in a bloated system to the government which may or may not be better at controlling costs? >> we know a lot of the burden companies face in the rising cost of health care is because of the tens of millions of people who are uninsured. so when they show up at the emergency rooms, governments are having to pay for it. hospitals are charging off that emergency care that should never have been done in emergency rooms to people that pay the rest of the hospital bills which are insurance companies. there's a huge costship doing

on. so many corporations i've talked to said, yes, we they'd to drive down the cost of health care. that's why some corporations favor the government option to compete with the insurance companies, to keep the insurance companies from unnecessarily raising their rates. but the other issue is that they also feel that we have to take care of the uninsured because in the end it's government and businesses, through health care premiums, that are paying for the medical care more expensive than necessary for the uninsured. >> secretary locke, we want to thank you very much for joining us. >> thank you very much. up next this morning's stock to watch. "squawk box" will be right back. >> g-20 coverage --

when we come back on "squawk box," we are joined by pittsburgh financial services chairman and ceo james roar. we'll talk financial regulation, future of the banks, business in the steel city and what the summit means for pittsburgh. you're watching "squawk box" on cnbc, first in business worldwide. fithe same tools the pros use, so you can be a disciplined trader. by selecting from eight advanced triggers, your order gets executed, even when you're busy.

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plotting a course for growth. the leaders of the world's major economies gather in pittsburgh with no shortage of items on their to do list. "squawk box" is there. the global economy, financial

regulation, monetary policy, and the imbalances that could prolong a recession. carl quintanilla is live from pittsburgh to talk about the issues of the day with top economic and political leaders. "squawk box" live from the g-20 summit begins right now. welcome back to "squawk box" on cnbc. i'm joe kernen along with becky quick and carl quintanilla who is reporting from pittsburgh. the futures at this hour were back to showing a little bit of upward momentum after the selloff late yesterday. i think we were up about 30 points. now we're again at 32 points. we're down -- when the futures went down 20, we were only up around 10. now up to showing a 30-point gain. carl, you're doing something right down there. let's head back to you. there he is. now the sun is out. still a nice shot.

yeah. >> yeah, got a little more light. we are actually at the alcoa corporate center. i'm told we're on the paul o'neal terrace. that name ring a bell? >> he was a red, then really made a name for himself at the yankees. one of the sweetest swings that i can remember. i don't even remember him playing for the pirates really. >> right. right. too long ago. joe, the president is not scheduled to arrive here in pittsburgh until this afternoon but some other world leaders are already here. delegations from saudi arabia and indonesia both arriving yesterday. the global economy is obviously at the top of the agenda. member countries here amazing numbers. represent about 80, 90% of the global gross national product. 90%, 80% of world trade, 67% of the world population. but as often the case with global summits, leaders are going to be met by protesters.

yesterday we had greenpeace rappeling off a bridge. demonstrators could be seen with a banner, danger climate destruction ahead. reduce co2 emigs now. they hang there for hours before the police arrested them. they are in jail today. security is tight. downtown, sealed off in various restricted zones. the mayor said the cost of all this security could be upwards of $20 million. the federal government is going to provide about $10 million of that. pennsylvania is pitching in another $4 million. state police are going to have 1200 troopers in the heir area. pennsylvania national guard overseeing a task force of 2500 troops. we've got department of defense personnel. they are taking satellite pictures from the sky. a lot of businesses, schools, other operations are going to be closed. we're doing to, as we have been for the past couple of hours, outline the big agendas here, guys. expectations for the summit, what it might mean for the

dollar. talk about protectionism story bubbling up as the summit starts up today. we'll get to all of that later on this hour. beck, you've got top headlines this morning. >> i do. joe is speechless. he's been holding his breath every since -- reining in his co2. >> protesters are burning tires. they are green protesters. >> not environmentally friendly. >> i don't get it. >> anyway, go back to what you're supposed to be doing. >> i kind of like it, though, when he holds his breath. >> he's been doing it all morning. >> a change of pace. >> only if we could do that every day. >> did you see the e-mail, the guy that said you've got "nightly news" written all over you friend. i said, you're welcome. >> let's move on. >> we'll get back to you in a moment, carl. microsoft is shooting down rumors it wants to buy video gamemaker electronic art, company vice president bill spencer says even though ea

remains an important partner, microsoft has no plans to acquire it. that plain speak is affecting shares. it had run up on acquisition rumors. as you can see they are back down by almost 3% today in that trade down to 19.25. in the video game world, nintendo is cutting the price of its console from $250 to $199.99, below $200. that's two weeks after the rival playstation 3. "the wall street journal" says citigroup is planning a major scale back of its consumer banking operations to concentrate on six major markets. cities like san francisco, new york. sources are telling cnbc, though, that report may be premature, even though citi is in the process of rethinking its overall strategy it may not be a done deal yet. carl, back over to you. >> all right. thanks very much, beck. pittsburgh powerhouse pnc financial service has a keen eye on the g-20 obviously as world leaders tackle issues ranging

from economy to financial regulation. joining us this morning is the chairman and ceo of pnc james rohr. he joins me here on the terrace. we talk about what a big deal this is from pittsburgh. you just got back from london where the city is getting coverage you wish we could get locally. >> i was in london for a few days talking to our shareholders. we have about 12% of our shares owned overseas and europe, particularly. every single newspaper, every single ad, whether sky news or whatever it is, they were always talking about the g-20 and pittsburgh. the articles in the daily papers about pittsburgh were wonderful. i brought a bunch of them back. actually it would be nice if our local papers would write articles this nice about it. >> if only. >> it was really great. advertising we could in no way afford or buy. >> do you expect big news when it comes to things that matter to your company and investors. banker pay, capital requirements, things like that

or baby steps, microscopically. >> as always we take steps. hope fully we take significant steps moving towards a global financial market where we have a systemic way of looking at risks across the world, because clearly we made some big mistakes in the risk space that effected the entire world. i think that's very, very important. the way we looked at liquidity. we took liquidity for granted to a great extent for a number of years. last fall when the markets froze we lost people like lehman, bear stearns, a number of others, things that took place. we're wholesale funded or highly leveraged companies. clearly we need to look at liquidity differently, counterpart risks differently. that's what we're doing, i think will show up in higher capital requirements. >> people worry the urgency is gone or failing because things looked so much better than they did in april or last november. especially one thing to get the framework but one thing to start

implementation it. that takes time. by the time this gets going, people's fear will be gone. >> to some extent that's true but it's in all of our best interest to have the systemic risk move forward and think about certain risk categories differently than we did in the past. we don't want this to happen again. >> did you ever think an issue like banker bounces would be on the agenda. >> i didn't. i never get paid like some of the people get paid. >> shoot industry be worried? >> actually i think we have to make sure that compensation is reflective of the risk that's taken and how the risk is managed. i think we talk about inappropriate pay. if people get paid a lot of money and set the company up in a risk profile and cause it to fail later, clearly that's inappropriate. at pnc we've had a philosophy where we get paid for performance and a significant portion of pay ended up in stock. so if your net worth at risk

down the road, while the risks of playing themselves out over time, it really doesn't matter to us much. our compensation program has been reflective of the risk that's been taken in the country. >> when the moment comes, maybe not this summit but a future summit, where the framework is written up how to exit stimulus strategies, what's that going to do? have you seen models how it's going to react? >> we have to turn to chairman of the federal reserve, ben bernanke, has been fairly forthright talking about how they expect to cut back make of the stimulus programs. they have announced just yesterday i think they are going to be cutting back purchases and mortgages. like everything else, if we just pace it appropriately, i think we'll be fine. >> where they signal something that doesn't happen for a while. gives you time to get used to it. >> yes.

i think one of the things we made the mistake out of we made the housing prices. we didn't know the whole world bet on housing prices, which is a systemic issue, to the extent we don't understand the risk we take and make sure it's balanced, that's the place we have to get. >> are you seeing anything on the horizon? everybody is so happy about the tentative recovery. you don't hear many people talking about the few bombs that could still go off, the aftershocks, major aftershocks. do you think that is -- something like that is in the cards for 2010, 2011? >> not that i see on the horizon right now. i think we're feeling better that housing prices aren't falling the way they were. we're feeling better unemployment claims, although rising, are rising at a declining rate. we're feeling better that commodity prices are up, some people prebuilding inventories. all those things that would be indicative of a bottom i think are here.

clearly we have to bottom before we take off. that having been said, i think things like commercial real estate will take a fair amount of time to play out as opposed to residential housing. i think will be a drag on the economy for a period of time. not nearly the risk we had. i'm relatively optimistic. we look at our delinquencies. our 30 day to 90 day delinquencies have been flat for five months. not performing assets although increasing, increased at a slower pace in the second quarter and should increase at a slower pace in the third quarter as well. all of the things that would be indicative of a bottom i think are here. if you look at the past, the market comes back before the economy. >> sure. >> fed chairman says the economy is turned. then npa's -- provision peaks next, followed by employment chargeup. it would be nice if we followed that path. >> a lot of people saying the

market not paying attention to fundamentals. you're suggesting maybe it is discounting future fundamentals. >> i think it is indicative of the slowing of at the at the tereration. >> thanks for your time. we'll hand it back to you guys in the studio. >> carl, thank you very much. when we come back this morning, we'll be talking about breaking economic news. weekly jobless claims on the way. they are due in 16, 17 minutes time. before we get to that, though, we have a warning. next guest distinguished economist and author. has he a very serious message for all of us. he will tell us why he fears our world is about to get a whole lot smaller. oil prices are likely to drop or keep climbing, i'm sorry, to $200 a barrel. jeff reuben is our guest. "squawk box" will be right back.

crude was down, but $400 oil is not far off and could lead to

globalization of oil. that's not necessarily a bad thing. joining me jeff reuben, author of why your world is about to get a whole lot smaller, oil and the end of globalization. good to see you. you're a big time economist, at cibc world markets. a lot of your calls in the past have been met with a lot of scepticism and a lot came true this. latest one, let's assume you're right about this. tell us about the world we're looking at. >> i think we're going to quickly find that in a world of triple digit oil prices, distance cost money. that's going to challenge the very notion of a global economy where we produce something at one end of the world and sell it at the other end of the world. because i think what we're going to find is the saving on wage costs are more than going to be offset by the fuel cost of moving things around. i think we already saw a sign of

that happening. >> closer to work, might be a good idea to build mass transit, but we may keep a lot of jobs closer to home, too, and may not have this import, export-driven economy. the g-20 is occurring right now. that may be something that is actually on the decline rather than on the upswing. >> the g-20 may be a rearview mirror on how the economy operates because i think in the future economy we're going to see people much more focused on domestic market. while there will be international trade, we're more likely to trade with our regional neighbors than people halfway around the world. it's not going to make a whole lot of sense for america to import steel or food from places like china and it's not going to make a whole lot of sense for china to import from south america? >> doesn't sound great from the prospect of feeding the world. eventually i think you postulate

maybe the wars and future won't be about oil but food. >> there certainly is a strong linkage between food and oil. last year the u.s. imported something like $6 billion worth of food from china, a whole new meaning to having chinese food delivered. i don't think that's going to be sustainable or economically viable in a world of triple digit oil prices. of course that doesn't mean we're not going to eat. that means we're going to be growing more of our own food. that implies huge changes in the way we use land and really a renaissance of farming in north america. >> you've been called -- what have you been called, maverick? outliar. we know industries have invested in this kind of stuff, cambridge research. you've heard of murphy's law. check this "new york times" piece. as you're coming on, oil everywhere, it's a boom year for new finds. then it goes on to say, it's

normal for companies to discover billions of barrels of new oil every year but this year's case is unusually brisk and totalled about 10 billion barrels. there's your friend cambridge energy associate. recent years speculation about a coming peak and subsequent decline, people in the industry says there's still plenty of oil in the ground. could you be wrong? could you be an alarmest that doesn't take into account that technology might save us again and we could extract a bunch of stuff from hard to reach places? >> there's no question we're nowhere close to running out of oil. there's 165 billion barrels of oil in canadian tar sand, venezuela tar sand, deposited 5 to 10 miles under the ocean floor. what we're running out of, what we're already run out of, is the oil you can afford to burn.

for those sources can be in supply is a world of triple digit oil prices because we'll need those oil prices to make it economically viable to use those sources. so again, it's not a question of running out of oil in some absolute geological sense, it's the question of running out of oil that we can afford to burn, not only in our cars but running a whole global economy that involves transporting goods around the world. >> can we build a bridge to the future with hydrocarbons over the next 20 years. pay $7 a gallon, that would slow it down. hydrocarbons can't go away tomorrow. do we have 20 to 25 years to do this, or are you more pessimistic? >> well, in space of time that's exactly what's going to happen. triple digit prices of incent

change. it will require us to lay off. our rendezvous with triple digit oil is not 10 or 20 years but 10 or 20 months. the solution won't be to figure out a way to convert cow dung into rocket fuel the solution will be a way to use energy so running out of affordable oil doesn't because the economy as it has in the past. >> we'll watch oil. we need to talk more in the studio if you can do it. >> i can do it. my pleasure. >> if you have to walk, i don't know how you want to get down here. you don't want to go on a jet or something, start now. >> we'll find a way. >> coming up, we have breaking economic news minutes away. that always important weekly jobless claim. that number is straight ahead. "squawk box" will be right back.

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welcome back on "squawk box."

we're one hour from the opening bell. weekly jobless claims are going to be interesting. that's for sure. i'll have that in a half hour. we have lined up -- oh, my word looks at that. we have a sage, a wall street sage to help us with these numbers. to grow a white beard takes years and years. >> i thought you meant me. >> we have four wall street ceja sages. i was talking about santa claus. he's got a lot of good announcements. rick santelli, what happened, rick in you're on camera, don't bend over and do that? >> somebody dropped a dollar. we were all looking at it. what can i say. >> you bent over for a dollar, rick? i thought they were worthless. >> you're darn right. i will go out of my way to protect the dollar. >> that's only $0.73 on the floor at this point. jim is here and steve liesman as well. once these numbers come, we are

going to analyze them. also we're going to try to figure out what happened late day yesterday. that's a little bit confusing. rick, what's going on? >> survey says, 530,000 on initial claims. that's down 21,000 from a slightly revised 551. fuel continuing claims, the same trend is obvious, 6.138, we'll call it 6.14 million down from a higher revision of 6.26. but let's also keep in mind there's a lot of runoff issues concerning this data and it's going to change, because benefits have been extended. the response in the marketplace isn't that much. a little selloff in treasuries, a little rally inequities. both of those markets already have established their moves. the interest rate complex still mostly lower rates especially prepared to where it was before the statement. opening equities are lightly in positive territory.

>> all right. and jim, were you surprised to see equities move that quickly? >> yeah, no question about it. for a long time we try to figure out a fundamental reason why. there doesn't really have to be a fundamental reason why. why do we care why it happened, it did happen. it made a higher high, turned around made a lower low. call it any buzzword you want, overbought, due for correction. overall the market showed me it's weak. because it's such a well documented key reversal, it can't be that easy. it's going to pop up a little today just to kind of confuse the issue, then it will go lower. yesterday was better news for the market short-term, rick, much better news for the market than today's numbers. seems like committed to the weak dollar policy. actually taking a step further, right now branching into the area where they might be 2002, 2003 bubble creating policies. they don't seem to really stop what's going on.

i think they missed the mark a little bit. >> let me get dick's comments. we haven't spoken to you in a while. what camp have you been in when the most surprising strength in the market has been since july, when most of the nay sayers have been nay saying all along. have you been saying no fundamentals to back up this move since july? >> no, i've been an optimist. in march, said we'd get a recession trough near mid 2009. we didn't. this my ninth financial crisis we've had a full market after every other one. we've played out the classic cyclical. i think the market is rising, fundamentals, recession to recovery, declining profits to rising profits, zero fed fund rates, steep yield curve, low government yield, narrowing risk spread and a refinancing of risk as equities are offered into the

marketplace to strengthen the balance sheet. so this is a cyclical bull market. i'll let other people debate about whether three years from now we'll look back and see it was only a cyclical bull market, gee, it only went up 80%. to heck with that, this is a bull market for old-fashioned cyclical reasons. after the financial crisis, this happens over and over and over again. let me put it very bluntly. the bears were wrong. they had a wrong analysis, therefore the stock market rose. >> i'll tell you, for people that keep saying there's nothing to back it up, you just mentioned 10 or 15 things. it all seemed simple the way you said it. the market very effectively makes it different each time. made it look a lot worse to think two or three years the consumers are going to be dead, still be deleveraging. our problems are not solved. i've been following comments. he says, yeah, that's what the

market already knows. it's telling us something. do you think we need a pullback of 5 to 10%? how high in the s&p. >> i'm not a technician but given my analysis of the fund men's, this is a fundamental bull market. you can spend all day, which day to get the correction. there's a lot of money still left on the sidelines and a lot of good news as they validate that we have a simultaneous worldwide economic expansion. the fears of continuing recessions were dead wrong. we've made the term. this g-20 is a cyclical victory lap. these people going into the november meeting in washington were so scared they got on the case fast and they fixed the cyclical problem. and so to me this is a cyclical victory lap g-20. they turned the economy around. the financial crisis is over. the recession is over in the u.s. and globally a lot of other

long-term problems but for right now this is a lot better than most people thought they were going to be six months ago. >> steve, the claims -- are we finally seeing what we wanted to see? >> that's exactly what i was going to say. this is what we would expect to see if we had improvement in the payroll numbers. hadn't really shown up in any meaningful way in the claims numbers. you have an awful lot of noise in the numbers. labor day coming later in the week than normal. economists going into this number have said they really are interested in this one because it's one of the -- has the least amount of noise from the other data. this kind of decline of 21,000 along with the continuing claims decline, i just want to -- with respect to rick who has brought up the issue time and again correctly that we need to look at the total universe of continuing claims, extended benefit. i'll add those up for the 9:00. seeing the initial number,

seeing the number come down is a good thing. it points to a continual, even though slow, improvement in the jobs market. 20s and 30s you might expect if you were coming down and doing what people expect, 3 and 4% growth in the third quarter. >> so many people have said this is not a normal -- this was not a normal downturn, why should we look at the model. the model is looking up. >> i agree with that. a bearing on the concept of what the fed does. people have an idea of the recovery. well, what have you had this panic firing and all of a sudden people hire back. what if credit markets were to open up. one of things the fed is doing in the background is a whole series of things to prepare for t the piece. the idea of interest on reserves, even though we don't know what the details are, having that ready to shoot this huge amount of excess reserves out there on the boots of the

banks of $700 billion start to work in the economy, that's the real inflationary threat right now. what fed needs to do is be prepared to neutralize this as soon as it comes out. >> end it there. we didn't go back and forth but everybody got to say what they wanted to say. >> not quite. >> okay. >> i would like to know, we all have great respect for him. >> here it comes. >> but has he ever heard of faj fdic, toxic derivatives, no regulations in a year and a half over the counter. in fact jenny mae is a warehouse for steal meat. any of that factor into the fact he's a huge optimistic and loves the fundamentals? just curious. >> look, if you have to prioritize the questions you ask. >> right, taxpayers at the bottom obviously. >> you see an awful lot of

people who have been bearish asking the wrong questions. >> not a question of bullish or bearish. i'm asking you a question, one observer to another, do you like at the subsidiaries and the toxic waste still inherent in the securities and mortgage market that are now owned by uncle sam via the taxpayers? doesn't that factor into anything at all? >> yes. i would define this as a pay me later world. we have decided to time shift demand. >> i don't like the word share at all. >> we have longer term problems that are the aftermath, the hangover of the way we have gotten ourself out of recession. there's no question that there are many prices we will have to pay in future years for what had to be done to get us out of the recession and to present a depression. but i would rather have paid the price of avoiding depression and having the pay me later hangover

that will be coming down over the course of time. if you're trying to make money, you have to prioritize the questions you ask. the question is, did the recession go into depression? no. has the recession ended and we've begun a worldwide economic recovery? yes. is monetary policy still easy? yes. it's a yield curve steep? yes. all of these things are reality. worrying about what's going to happen five years from now is the wrong -- worrying about what's going to happen five years from now, three years from now is not the way to success fully manage money today. >> it paid to be long for 55% of this market. don't get stuck like abelson. hope you're not like this on 14,000 in the dow. you'll be talking about the wrong way. >> i will continue to say that the price of equities is not telling you directly what the

economy is going to look like two or three quarters. >> rick, we've got to go. i'm coming back tomorrow with a look at fha's books and whether or not they really have all these risky loans. i'm going to check it out, rick. let's put the data on the table and have it out you and me, tomorrow, rick. this time. i will meet you here. let's talk about it at 8:40. >> mond you can catch jim on op action. >> talk about dollar interest rates, g-20 has a potential to be a market mover. check win a man whose firm has millions of dollars on the line. pimco's tones crescenzi will join us when "squawk box" continues.

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that's a live shot from pittsburgh where the g-20 is taking place. local leaders set to convene. we go from pittsburgh to newport beach. tony crescenzi. great to see you this morning. >> hi, becky.

>> we want to talk about g-20. before we do i want to talk tout about your reaction on the joblblclaims, down 20,000. equity markets certainly like that, picking up steam. in fact, some people including steve liesman say this is what you would expect to see if we were going to see a recovery and things getting better. what do you think about that? how does that fit in with pimco's season? >> to answer the question about the hand-off between what we're seeing now, which is an inventory-led fiscal-led rebound in the economy to the more sustainable, self-reinforcing in production, income and spending. the inventory now is quite vigorous. it's helping the factory sector, reduction in layoff in factory sector, realignment of production to sales. it's what will bring some stability to the labor market. but again, we can't know whether there will ab successful hand-off to more sustainable forces of command. that's the question of 2010.

>> what will be the first sign they give us some sort of indication as to whether or not that hand-off is going success fully? >> well, consumption, of course, watch the savings rate. income levels likely to be low because there's structural changes in the economy that will prevent job growth from being vigorous. the income figures and jobless figures will tie into that and be important. when the fed pulls back and starting to show the policy statement, we'll see how it affects the banking system, any drop in reserves after it happened after the fed is done with the program could begin to affect the banks sometime next year. there's a lot to play out. >> all right, tony, let's talk about the g-20 and what's happening. you say some of the most important thing they are doing, firm up regulations for the bank. what, in your opinion, needs to happen and what in your opinion is likely to happen. >> first of all it's important

to note the g-20 phenomenon, its ascending, it's descending. the area where you'll have the most cooperation solving short-term and long-term problems. what we're seeing here at the g-20 is a reregulation of the banking system worldwide. some of the proposals, you can see some of these on the bankers international seminar website will in terms of that lending and spending. for example, it's likely there will be increases or new leverage ratios, liquidity ratios, account cyclical cap offers and increases in the need for transparency and a level of equity at banks. so all these things will constrain bank lending, constrain bank credit growth and of course constrain nominal gdp. of course they are necessary. because of the extremes to which we went. there will be factors that

affect growth going forward for a while. especially banks right now already capital constraint. >> but we do need to do something, right, to try and prevent what happened last fall from happening all over again? >> that's right. these are good, long-term solutions. but what i'm saying here is that what we're seeing, though, is a reregulation of the banking system that will make it less likely we have a 6 to 7% type of nominal growth in gdp or balance growth. that's probably what we want in the long run. these measures, which you could see are putting more constraints on banks will be good in terms of balancing growth. >> tony, you don't fancy yourself as a stock market guy yet, though, do you, like all your other guys out there. like pimco they make determinations and start doing market timing inequities and say we're a total investment house. we're right about everything. the market went from 14,000 to

6,000, now it's back to 9,000. is the scenario you're painting mean 9,000 is expensive? >> i can't speak to the level of stock market now, of course, but as we look at pe, price to earnings ratios, they have been compressing for a decade. to use that measure on the stock market doesn't seem its overvalued from a historical perspective. i would say the pe compression we've seen is probably the type of thing we'll have in place for a while. it doesn't mean -- so long as the earnings part moves we can have price moves. earnings look like they will increase from what we can tell maybe as much as 15% is what the broad consensus forecast is for the next year, because companies have cut back so much on labor, for example. we can have increases in the stock market even in a constrained environment because companies have been good at cost-cutting, very big changes in the way companies run

themselves. >> you might get slapped down in the next meeting there. that's not the company line. you better get on board. you told me you were going to stay independent, right. >> company line is constrained growth. like i said, even if you have 3 to 4% nominal gdp growth you can have growth in earnings that propel the stock market. >> tony, we have to run. i know you're enjoying fashion island. you lucky dog. >> you'll have to go shopping with me. >> coming up art cashin on the floor, plus carl with much more from pittsburgh. >> the g-20 kicks off today in pittsburgh. seems like the city is taking no chances. you see sirens and flashing lights in cars all over the city. normally sidewalks here would be barricaded with barricades and sort of mid level.

sidewalks all through downtown. and that's not even counting the personnel. 1200 state troopers, 2500 national guard, department of defense personnel, they're taking satellite photos from the sky. it all costs about $19 million. and federal/state pick ping up $16 million of that. the rest is up to local authorities that is taking a chance that all of this is going to be worth it for the fact that pittsburgh is going to be put on the map as a result of the g-20. there have been some attempts on the river. in fact, some protestors did unfurl a banner over a bridge, and repelled up the bridge, unfurled the banner. was there for several hours before being arrested. we're told there's some sort of disturbance in that building right there. cops are beginning to come along the block, and people obviously start taking pictures and gathering on the corners. they remember the 990-to. they're hoping this will be nothing like that.

"squawk's" coverage of the g-20 in pittsburgh continues after this short break. an't predict our shipping costs. dallas. detroit. different rates. well with us, it's the same flat rate. same flat rate. boston. boise? same flat rate. alabama. alaska? with priority mail flat rate boxes from the postal service. if it fits, it ships anywhere in the country for a low flat rate. dude's good. dude's real good. dudes. priority mail flat rate boxes only from the postal service. a simpler way to ship.

time for the trader's edge. joining us is art cashin,

director of floor operations at ubs. art, what was yesterday? >> yesterday was all about the dollar again. i think they initially misread part of the thrust of the fed statement. and the dollar began to weaken. that allowed stocks to rally. we got the plus 80. dollar turned on a dime, so did everything else immediately after. so the dollar continues to call a tune here in the financial markets. >> really? even with the claims number, that might not last until 4:00, that low? >> that's a very critical thing. yesterday was a near textbook reversal. you took out the prior day's highs. in fact, you made multi-month highs as dennis gartman points out. you did it in higher volume. now, that set up two potential scenarios coming into the claims. one was if you open weaker, you could be setting up a gap trading, gapping down.

or now that we've got decent news from the claims, you start out with a rally and it becomes dr critical that you hold on to plus territory. it gives much more significance to what happened yesterday. >> i guess unlike a lot of around numbers, everyone figured 10,000 was a slam dunk. just like that market to get up close to that and if it were to turn down and start of a 5% to 10% pullback, 10,000 looks far away around 9,000. >> the market does whatever it needs to do to make the largest number of people to look foolish. >> exactly. you can be wrong a lot more -- the market can do the wrong thing for a lot longer. >> the market can remain irrational longer than you can remain solvent. >> yes. liesman said, desk something and and he meant that table pounding. we're trying to say things a lot of different ways, art. not conventional.

>> just stay away from chickens. all right. thank you. >> chicken plucking. >> you're right. thank you. carl? >> guy, when we come back, pittsburgh getting ready to welcome the president later on today and other world leaders as well 20, in all. we're going to look at the day ahead when we come back. pittsburgh's mayor is going to be on "squawk on the street" 9:50 a.m. eastern time. we'll talk to him about what this means for the city hosting all of these world leaders on the world stage. "squawk box" is coming right back.

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>> you know, it wasn't a funny then and it's not funny now. >> carl, great job. >> see him tomorrow back there, yeah. >> that does it for us today. we will see you tomorrow. "squawk on the street" is next. >> this is cnbc.com news now. first on claims front employment benefits fell 21,000 last week to 5,030,000. in an hour we get a latest figures in home sales.

analysts expecting a rise in august. goldman sachs raised price targets on retail stocks based on healthy september sales trends. among them, abercrombie, american eagle, j. crew, and gap. that's cnbc.com news now. i'm courtney reagan. live from the financial capital of the entire universe, this is "squawk on the street." good morning,er. i'm mark haines. we're looking at a higher open for stocks after weekly jobless claims unexpectedly fell. and that turned the futures ash. they were negative. >> good morning. i'm erin burnett. reports that citi will shrink its retail banking footprint may be a little bit premature, according to reports from mary thompson. she's going to have more on that coming up in a few moments. barney franks, house financial services committee, holding a hearing this morning on systemic risks.

we're monitoring it. we'll bring you any of the headlines. and the g-20, you can see pictures. barney frank on the top and he'll be sitting in the back, and the g-20 at the bottom kicking off in pittsburgh. executive compensation is a topic there. the mayor of pittsburgh is coming up in our next half hour. >> let's check the futures. they were negative earlier this morning. the jobless claims falling more than expected, boosted them to plus about four. and we were already 2 1/2 above fair value. so you're looking at 50, 60 points on the dow at the open. >> and let's get more on the jobless claims numbers. for that, steve liesman. steve, obviously context is everything. you provide that. does this give you any sense of when we get a positive number on payroll? >> that's a great question. exactly what my lead says there. you picked it right there. this better than expected jobless claims number paints a picture of a slowly improving