above their offering price, $20 for both of these stocks, both of them buying essentially debt instruments around commercial real estate. they don't own anything yet. they're just gathering money to go buy things. the reception has been poor. overall they've had a tough time of it recently. let me tell you why here. number one, not a lot of assets behind any of these companies yet. they're going to buy them. number two, there's a lot of uncertainty about where we're going in commercial real estate. leading to a tlot of institutional mistrust. and they're not sure that the reits may not be the right vehicle to invest in them. the rites coming out to buy commercial real estate haven't done very well. one issued last week hasn't done very well. crexus. let's talk about some other things that are out there. we're waiting and i hope you heard a few minutes ago, waiting for a 123 systems, a big lithium ion company, we're waiting for

it to begin trading at the nasdaq, $13.50, i'm hearing it could be trading initially around $16, $17. and finally, housing numbers, below expectation. here's what's important. the one group that's started to roll over a little bit larry and melissa, housing stocks have been down six to eight days in a row and are down again here, may be a leading indicator, maybe not. back to you. melissa, back to you. >> thanks so much. existing home sales fell unexpectedly in august, down 2.7%. the drop ends a four-month streak of gains. what does it mean for the recovery? joining me with more is dennis yessey, national director of real estate markets at deloitte and touche. dennis, how do you read these numbers? >> well, i read them that they're not unexpected, in a way, because the housing market takes a long time to recover. and we're not anywhere near the end of the crisis at this point in time. remember, it was only one month in august is kind of a funky month in home sales. >> is it, i mean, diana how do

you read the numbers? i expected august to still be strong in the back of summer and you expect fall to be a little weak. >> well, melissa, i hate to say i told you so -- that's a lie, i love to say it. >> yeah, own it. >> we were talking about how all the activity was on the low end of the market. and it continue to be there. 70% of home sales were below $250,000. and that inventory supply is drying up. i'm talking to people in california, they're saying there's not enough to keep pushing those sales forward. when you get above $250,000, you don't have the first-time home buyers taking advantage of the tax credit. and that number is dead. >> on the other hand, is there any doubt that all the measures of housing, all of them have bottomed? and in fact bottomed five or six months ago? >> i think what's interesting here is wall street has been so concentrated on following washington and bailouts, it forgot how to read an economics news release. i look at this report and say, you know what, what did we have, 7% in the prior month? let me double-hecheck on that.

so it trailed off this month. plus, you read the news release and you see the economists for n.a.r. saying the closings might have been delayed because there was such a surge through, the system couldn't process it. so when i lack at details, i do not see reason. >> no, steve, i talked to the chief economist and he said it could be a delay due to home appraisals and closings -- i'm not talking about the news release. i talked to him directly. i'm saying he said he is also seeing a lot of these sales not coming to fruition. a lot of these contracts are not signing, being canceled because of mortgage rates and mortgage availability and the appraisal costs. >> but 30% of foreclosures and 30% are first-time home buyers, so stls still a lot of that working through the system. it's off the bottom, not anywhere near where it was. it still requires government assistance, it's not the time to concentrate on this number. you can't look at the number and say the rebound in housing is

over. >> dennis, which one of these two is right? you're disagreeing. >> i think the rebound going it take a long time. i think we'll be bumping along the bottom and we could still go down a little bit further. you've got to look at all the fundamentals in the housing market at this time. the government has been propping it up. it's like a patient on crutches. we've got to find a way, the government's got to find a way to wean the patient off the crutches to really get the solid core of existing home sales as opposed -- >> or extend the first-time buyer credit. >> a big positive in this report that i want to point out is that inventories do continue to fall. and that's very important in this market. you're seeing still declining inventories, you're seeing it in the new homes as well. and that inevitably has got to stabilize things. >> can i make a case, first-time home buyers versus foreclosures. i want to ask you, larry, this idea, whether or not there's efficacy in the government program that seems to fund the first-time buyers and that seems to help whittle down of the foreclosures. it seems to me that's a government program that makes some sense. because you can pay me now or

pay me later. if the foreclosures end up being losses to the bank, it will hurt on the back end. if you can get first-time buyers to buy the foreclosures, it seems to me that's a strategy that makes sense. >> steve, i appreciate your courtesy, respectful and incisive questions, but my answer is no. i don't want the government to help them at all. i want them to stay out. i want prices it adjust and buyers and sellers to adjust. i i think that's the best way to get out of this. i think the whole housing situation has bottomed. i want to ask my friend, diana. you interviewed the fha commissioner yesterday, if i'm not mistaken. >> i did. >> are they going broke and what's the impact on the story from the cheap, ridiculous, 3.5% down loans. which makes my blood boil. because it tells me we've learned nothing. >> same problem all over again. >> how big a factor is the fha gone broke here? >> the fha claims it's not gone broke, and they're basing it on

what the estimates of what the defaults are going to be. if the estimates are incorrect, they could be in a lot of trouble. but their reports say they will be able to meet the default rates. but the fha share is during the crisis was 2.5%. now they're upwards of 25 to 30% going forward and they're getting even bigger. they don't even have the chief risk officer in place. why haven't they hired one in the last 75 years, i'm not going to ask that. >> dennis, let me get you to weigh in on the fha impact and just relate it to that. don't we put too many government-sponsored resources into housing, for heaven's sakes? what about manufacturing? what about transportation? i mean, i'm so sick to death of coddling housing with bad loans. >> larry, i think you're right. we could talk about this. but housing has always been used as the support program in the government. personally, i would like to see a little more of some of the dialogue move over to the

business investment side. shocking to me, that everyone keeps talking about recovery in the economy. 70% is consumer spending, that's what got us into trouble. the low-interest loan got us into trouble. i would like to hear more discussion about business investment and tax credit. those create jobs, which eventually buy the homes at this point. one other thing, one of the good side bar stories here is the banks continue to make money on the mortgages. the spread is very attractive. and maybe that and, that's probably the best news here. as the profits come rolling in, the banks get a little bit healthier. and the residential market is is a big money-maker for most banks. >> dennis, it sounds like you don't think the housing market has bottomed. >> i don't think it's bottomed. everything is relative. i think it's at the bottom, near the bottom, bouncing around. but i think there's a real possibility that you pull away the crutches too soon and unfortunately, larry, the government is the only one that can support the crutches. if you pull away those too soon, yeah, you could have a negative snap-back and that's what i'm worried about. >> i don't agree that it hasn't

bottomed. furthermore, you look at the major markets in california, nevada, arizona, florida, at low prices and i admit prices have dropped in some cases, 50%. sales have been rising for six, eight, 12 months. the market is working, if only we would let it. >> the market is working and some of the things that the government is doing make sense it me and some don't. i think the idea of providing financing to people willing to take risk when the private market itself has completely pulled back to a ridiculous degree from providing that service, makes sense to me. >> how about a 20% down payment? >> a 20% down payment makes sense. >> instead of this phony, 3.5% down payment. >> larry, larry, when you get buyers into the market even at 3.5% down, it's insured. if they're paying the insurance premiums and you're getting more home buyers into the market and sucking up these homes and you're getting them to own the homes which fuels the economy even more, because they renovate these homes, it's not a bad thing to get buyers into the

market. >> we overestimated the essential plan, of industrial policy in housing in history of the earth. >> we've got to go. we've got to go. >> why are we benefitting housing? help manufacturing. >> the eternity -- >> we have do go. >> diana, dennis, steve, thanks to all of you for joining us. we appreciate it. moving right along -- coming up, shares of a-123 open up for trading. we'll have comments from the a123 ceo. and according to a new plan that could change for a lot of bank branch ace cross the nation, new developments straight ahead on "the call." we'll be right back. 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.

customer experience, to that end, sources say look for more of citi's 1001 branches to be open longer and to improvements in citi's online and mobile

banking efforts. these efforts to be concentrated in the cities like new york, miami and chicago. analysts say even if citi does close branchs in states where its presence is smaller, cities like boston and philadelphia, it would have an minimal ima pact on the firm's total deposits. deposits being a more reliable source of funding. while one of the nation's biggest banks, citi's is far smaller than bank of america, wells fargo and j.p. morgan. and the bank's own fragile financial state, keep in mind that the government owns 34% of citi presents it for growing deposits through a major acquisition as its rivals, wells fargo and j.p. morgan have done recently. so they need to grow internally. but in a way far different than a strategy outlined by the firm's ceo chuck prince, they were talking about expanding the

branch network and within those, serving clients would who was citi's over financial services, like brokerage and insurance. back to you. >> what's ahead for citi? let's bring in moisha orrinbuck. hello, what do you make of the pull-back from citi? >> i think that citi has been operating in a mode of kind of preserving capital and shrinking assets over the last several quarters, this is another piece of it. >> what happens here, domestically versus internationally? they have a big international presence. can they make it up overseas? >> well, this isn't as, i think as mary said earlier, this isn't about the funding aspect, it's about increasing efficiency. in branch banking, density is the name of the game and they don't have a lot of density in the market they're considering exiting. >> moisha, whenever i talk to people about citigroup, they say the thing about them is they

have great waterfront property around the world, a huge footprint. it sounds like this really damages us. >> i wouldn't say damages. i think these were markets a that they never developed of the and they might have tag ends that came to them through other acquisitions and the like. think they're thinking about rationalizing. >> is this the first of more things to come? >> keep in mind, citi out of almost $2 trillion in assets, segregated out about $100 billion of those, or 40% into businesses that they deemed noncore that they're planning to shrink or divest. >> what do you think the long-term prognosis? >> they've got to operate to some degree as though they're capital-constrained. it will prevent them from making major acquisitions in the near-term. >> would you say this is a good move in the right direction, you have hope for them. or a sign that they're circling the drain? >> well it's necessary. a part of a move to increase

profits. >> i don't know if that answered the question. >> how do you rate the bank? >> we have a mutual rating of a $4 price tarringorin target. >> does this push them into money markets, which could be risky down the road. >> they're trying to get core consumer relationships. it's easy to raise cd money. you could replace the cds relatively easily, by paying up a few basis points. so the key question is, can you generate real consumer relationship accounts. and in areas where you don't have that density. it might be difficult. >> we're going to leave it there, thank you so much for joining us. up next, g-20 is open for business, we'll head to pittsburgh for details on what's on the agenda. the biggest dilemmas facing the u.s. and the globe. how to ramp up regulation without killing a country's ability to compete. why regulation could change the world and where you should invest. you're watching cnbc, first in business worldwide. (announcer) when you buy a car

what are you really buying? a shiny coat of paint? a list of features? what about the strength of the steel? the integrity of it's design... or how it responds...in extreme situations? the deeper you look, the more you see the real differences. and the more you understand what it means

to own a mercedes-benz. the c-class. see your authorized mercedes-benz dealer for special offers through mercedes-benz financial. take a look at crude oil getting crushed today, down $2.50, more than 3.5%. deflation trade going on after the fed meeting, you can see it in gold as well. down more than $15, 1.5%.

and the core below the $1,000 mark. larry? leaders of the world's biggest countries are descending on pittsburgh, as they try to find a way to prevent another financial crisis. president obama is to host his first group of 20 summit and john harwood is in pittsburgh with more. hello, john. >> hey, larry. so far, it's mostly reporters and cops here. take a look at this live picture of the pittsburgh airport. you're probably not going to see in the picture, too many heads of state getting off airplanes, because they're not here yet. they're arriving later in the day. but when they do, including president obama, he'll come with a little momentum from the united nations sessions, he had a security council adopt his resolution on nuclear nonproliferation this morning. he had some, a boost from russia on iranian sanctions last night. but the main focus of this is on the world economy, the success in the view of these leaders of what they did at the g-20 in london, in april. and now they're trying to strengthen.

>> we will work with the world's largest economies to chart a course for growth that is balanced and sustained. that means vigilance to insure that we do not let up until our people are back to work. that means taking steps to rekindle demand, so that global recovery can be sustained. and that means setting new rules of the road and strengthening regulation for all financial centers. that we put an end to the greed and the excess and the abuse that led us into this disaster and prevent a crisis like this from ever happening again. >> of course, there's the usual crowd of protestors, who have gathered in pittsburgh because they don't like the international economy. and they're not, they're not big on globalization. but so far, melissa, these people, who i know are not your peeps, are not exactly disrupting this meeting. we'll see what happens over the next 24 hours. >> i was pretty impressed with that protest. that takes a lot of strength to

hang there. john harwood, thanks so much. one of the big problems facing world leaders, coming up with reforms that won't create a competitive disadvantage. can it be done? let's ask howard scott professor, of international systems at harvard law school. and david malpass, president of ensima global. david, lets me start with you. it seems that the tension here is always countries coming together, looking for reform. because obviously we've had enormous problems. at the same time, you always have the switzerland, the lichtensteins out there, not doing the same thing and attracting money. because capital goes where capital is treated best. will they come together, or will there always be the outliars to attract the money? >> i don't think what the u.s. is doing will attract money to the u.s. that's been one of the problems in our financial system. so as the dollar weakens, as we push through more high capital standards on banks, the money wants to go out of the u.s. and the loser in that is small

businesses and also, the workers on the lower end of the income scale. that's why the unemployment rate is so high for young people and for minorities. because the capital is moving away from the u.s. >> hall, disagree or agree? >> i sort of agree. in some areas, we aren't coordinated internationally. if we were to oppose a significantly higher standards of hedge funds, they would go to london. however, in the key area of capital, this has been an international effort since 1988. it is globally coordinated. we act together. the issue is not so much people leaving the u.s. to go to london, because they're going to face the same capital requirements there. the issue is rather what should the capital requirements be. >> dave malpass, is one of the themes in the g-20 going to surface, that the sun is setting on the supremacy of the u.s. dollar? >> i think that's been happening for, for nearly eight years. so i don't think this g-20

summit will, will solidify that. think it's just going to continue the bush policies. they're basically thinking that this is a global rebalancing. but when they say that, when they talk about global rebalancing, what they really mean is a lower living standard through the united states. for years, people have been mad at the united states for having a higher living standard and that's being corrected. >> hall, let me put it to you because the chinese have been making waves on this, brazilians, indians, other countries, the russians, too many dollars being created by the fed. no particular exit strategy. they don't want to hold them all. is this going to be an accelerated or intensified issue, the dollar's supremacy? >> i agree, we need to worry about what the foreign countries think about the strength of the dollar. i think it was very significant on secretary geithner's last trip to china, trying to get a

kind of statement from china that they agree with our policies. that was somewhat unprecedented, looking for them to put their imprimata on u.s. policies. that reflects the growing power of china, particularly with respect to their level of investment in dollar-denominated assets. >> and i think that also the declining power of the u.s. as our living standards go down, we have less clout in the world and we have more need to worry about what china thinks and everybody else in the world. so it's part of the u.s. decline that is weakening dollar. >> but, hall, i mean i agree with the logic of what you're saying. but the forecast is really grim. we've heard this in the past. why would this be true this time? >> excuse me? say that again, i'm not sure i fully understood that. >> you know, we've heard forecasts like david in the past. and the logic makes sense, about what's happening with the dollar and how we're going to see the decline in the u.s. but we've heard this before. why would it be true this time? >> if you, if we expand beyond

the dollar and look at the united states' position in the world, it's gradually ebbing, as other, more substantial powers increase. i don't think that trend is going to be reversed. as our committee looked at capital markets in 2006, we sounded an alarm about loss competitived in. and that trend is going to continue to exist. just because there's more money or action, more power, outside the united states. >> dave malpass, to wrap this, why do you think gold is plunging after yesterday's fed meeting? and by the way, the dollar is inching up? is there something going on here? was the fed tighter in their policy statement than some people think? >> i think two things happened. one, the fed did slow its purchases of mbs and treasuries. so that looks a little bit like a tightening. but then i think the bigger thing is simply that we're probably going to have a fourth quarter slowdown. that's my -- i've got a forecast 0% growth in the fourth quarter. so that causes a pull-back or a little bit of a retracement or

correction in quite a few of the hot stocks. remember the game has been to borrow dollars and buy anything. because the feds, because there's no limit. and i think people are just going to, to pull back a little bit on that, on that strategy. >> okay. all right, guys, thanks so much for joining us, we appreciate it. interesting discussion. up next, watching the key breakthrough number. dow 10,000, is today the day? plus, what comes after the key level? >> and shares of aig have been on a tear this month. we'll discuss what's behind that move. who's been buying in and should you look to profit on this bail-out giant? all of that is coming up right here on "the call." um bill--

why is dick butkus here? i hired him to speak. a lot of fortune 500 companies use him. but-- i'm your only employee. we're gonna start using fedex to ship globally-- that means billions of potential customers. we're gonna be huge. good morning! you know business is a lot like football... i just don't understand...

i'm sorry dick butkus. (announcer) we understand. you want to grow internationally. fedex express

welcome back to "the call," i'm melissa francis, let's get you caught up on the markets now. the dow is down about 40 points on the day, sitting close to 9700. 97089 last trade. the s&p, 10,052.

and the nasdaq is a little off the lows of the session, down 21 points. well, the dow dip after hittings 9100. most wall street observers believe 10,000 is inevitable. but the big question, what happens afterwards? let's ask j.m.lansey. tell me how to say your last name. managing partner at ellicott management. thanks to both of you for joining us. again, j.m., i apologize, i'm going to start with you. i feel like 10,000 is a long way off. i know people are wearing the hats, getting excited about it. but 300 points? what you do you think? >> yesterday we saw some decent profit-taking after the fed statement. i think we went to about 9910. obviously came off, i think there's some nervousness about the g-20 this weekend. the unemployment report next week. some of the rumors of what the g-20 might say something about

attacks on trade -- a tax on trade. so i think right now we're just in this consolidation range. we're up 50% obviously from the lows. and you know, rates are zero. we're seeing good m&a activity. things are, things are getting better. we see stocks like the cruise lines and airlines are doing well. ethan allen, furniture stock is actually starting to percolate. so i think on the economic front, we could be positive and look, look ahead to 10,000 eventually. >> but peter, those are all good reasons that j.m. raised. but i want to come back to the fed meeting. stocks have fallen since then. gold has fallen a lot. the dollar has jumped up. it's a complete reversal of prior trends, peter. what do you make of it? still going on this morning, obviously. >> well, it's still going on. those are all very key factors. but i think what you're seeing is a very, very tired market. and i do think we'll eventually reach 10,000, but i think it's going to take a lot longer than people expect. if you look at the trajectory

over the last month and a half, we should be there already. we're not, we won't be there probably until sometime in the beginning of october, i would have guessed. and you know, from there, that's another story. but i think we're right now, we're in the consolidation phase, as jay said. and it's going to take time to get through this. we are looking at some positive things, but we're still, it's becoming tired. i know, you can see it by the days, the up days are very, they're mild. the down days don't really, you know, they don't really show any kind of huge pressure. so it's kind of like people are figuring out where they want to be. it is starting to get a little old in the tooth right now. >> j.m., do you feel that exhaustion? >> not really. >> i'm destined to call you the wrong name through this whole thing. i'll send you a fruit basket when this is all over. >> i don't think we're too tired. we're up 50%. everybody still waiting for the elusive pull-back so to speak.

you know, obviously 9900, 10,000, those are big psychological levels. i don't expect that we're just going to blow through those with ease. after being down 50%. but if you look at the market over the last ten years, we're basically flat. the question is, after this ten-year period of consolidation, are we going to go down? or are we going to go up? my feeling is we're going to go up and we're going to go up strong. >> how do you trade it? >> i think you stay long the materials, wherever i go there's a detour sign, there's a lot of asphalt going down, a lot of steel, a lot of concrete. i think a lot of the obama money, the the stimulus money is coming in, two to one, almost, because a lot of the contracts are coming in a lot less than they budgeted for. that's another positive. you know, basic materials, consumer discretionaries. the inflation trade is here. you cannot stay in cash at .11% in t-bills, so there's a lot of money that has to be put to work. these guys are just waiting for

the right time. and they haven't found it yet. so -- >> peter, what's your take on what j.m. is saying. easy fed money. a barn-burner of recovery that could surprise people when you look at the leading indicators. including profits. what do you make of it? is that still after this little correction, is that still a good scenario? >> well i mean long-term, yes. but i'm looking short-term. you know, i'm narrowing my focus down to three months. if you want to talk long-term, yeah, i do think there's a lot of good, positive signs out there. i think any time the heavy industries are starting to pick up and you see that in the different stocks in those industries, that's a good sign for the future, for the next six months to a year. but short-term right now, i'm just looking very -- actually i'm kind of like in the middle of the road. i can give you, i can make a bullish case or i can make a bearish case. i'm possibly more on the bearish side. >> how do you trade it? >> right now, i stay where i am. i don't do anything, i go back in my booth and look at sports

websites. where am i going to go? >> it's a nice way to make a living. >> my fantasy football team is horrible. so i've got to make some trades. >> we're going to leave it there. j.m., what am i going to send you, fruit basket, bottle of wine, cigar? >> all of the above. >> you got it. thanks, guys, thanks for joining us. up next, the poster child for government bailouts is this month's market outperformers. >> what's behind aig's outstanding stock rise? who's buying it? should you follow suit? find out next here on "the call." i

i. welcome back, aeropostale said the ceo will step down by the end of the year, replaced by two executives, mindy meade and johnson will replace him. what's the largest insurer in the world, aig now has become a symbol of last year's financial crisis. but some are finding ways to make money offer the bailed-out company. short-term traders in particular. the insurer's stock sup about

50% over the past week alone, down slightly today. the big question is -- should you buy on the aig run-up? or is it buyer aware? more to weigh in, scott redick, chief strategist. and damon vickers, hedge funds manager at nine-point capital partners. scott, you first, how dangerous is it? or is it fundamental? >> it's more of a technical story, a mechanical story. we've been following aig all summer long. it's an unbelievable vehicle to trade. it's very tricky, it moves very fast. it's not for anyone who is not a seasoned trader. at this point, aig is in the mid 40 range. i would watch it we're looking for another entry above the recent high of above 55. if that happens, you'll see another short sweep on the stock. >> damon, i'm reading that you recently predicted that the stock would go to 300? is that true? and how come? >> i think it has the possibility of getting there. we have no position in aig right now at all.

scott makes a good point, that if it gets higher, we'll likely buy it and we'll likely buy it higher. our entry price would probably be above 50.23 on a close. maybe it happens tomorrow. if the stock closes above 50.23 by the close tomorrow, we will re-enter the stock. but -- it's purely technical, this is a hot potato. >> that was bhi question, do you believe in the business at all? because one of, one of the big criticisms of this company has been that they have a really unfair advantage. that robert ben mochet is a great manager. they brought him in after the company was practically burnt to the ground ahead of him. he's got some really viable businesses in there. they're able to borrow money essentially for free. their cost of capital is nothing. and they have a competitive advantage. and while it may not be fair, it might make it a good stock going forward. >> you're a real bull, how many shares do you own? >> absolutely zero.

i'm just wondering, they've had an incredibly unfair advantage in business. >> these are all the good things. the benmosshiet is a really salt of the earth guy. i think that the stock traded as high as $55 a couple of weeks ago, is insane. but on a split-adjusted basis, this thing traded as high as at least $2,000, split-adjusted. if the stock goes to $100 or $200, that's not all that much. given the historic range. but it needs to break out. >> well, scott, let me just ask you on the fundamental side, if you talk to hank greenberg, these businesses have great value. the insurance business, both the life insurance, the casualty and the property insurance. they could be sold for good prices in a couple of years or you hang on to them and they're going to produce a lot of earnings. what's the fundamental basic profitability outlook for this company? maybe that's being overlooked. >> at this point, i don't think anyone really knows the fundamental capabilities of this

stock. all we know is that the forces of will have created a vehicle to change the perception of the company. when they did the reverse split on the stock this he wanted to put it back on the map so traders would get involved. right now, the whole entire flow to short and most of it is owned by the government. so the forces of will, if they want to keep thing in the public eye and create a good public perception, so it go higher and so the money could be paid back to the taxpayers, they're in a good mode right now. as far as aig in general, i don't know exactly what their profitability is going to be down the road, but it doesn't matter. >> david, do you disagree with that? >> no, i think he's making very good, articulate points. the government is behind the stock. but it's definitely a hot potato. it's not for the faint of heart. but if it gets higher and it breaks out, i think you want to get long in it. you want to be long gold as well. >> some people are surprised the company still does business. we'll leave it there. >> did you sneak gold in there at the end? >> i did.

>> did i hear gold? i just want to clarify that. thank you. >> power lunch is coming up at the top of the hour. bill griffith is coming up to tell us what's in store. >> speaking of hot potato, how about goldman sachs, with the $16 billion bonus pool to work with? good for them. but it could be a bad p.r. nightmare. and possible acquisition targets for google. speaking of naming names, we've got an economic indicator that you've been giving us all this week. things that you have observed, anecdotally, not statistically, about the economy. what do we call this indicator? we want to give a name to it and get more of your email on that. powerlunch@cnbc.com is the email address. plus gm ceo fritz henderson joining us at top of the hour. coming up, stocks on the manufacture and which ones to watch during the afternoon trading. and a nice pickup in activity for ipos this week. a new debut looking to change

our auto industry. all of that straight ahead on cnbc.

the ipo market is heating up this week. one stock making adieu on the nasdaq this morning is a123, shares of the company which

makes lithium batteries priced well above the market expectations, they're up more than $5, that was a good investment cnbc's phil lebeau spoke with them. >> i went to the headquarters in massachusetts about three years ago. could you see then these guys were keying this on the growth of lithium ion battery market. when they were introduced today at the nasdaq, as the company went with its ipo, a lot of expectations initially this was going bryce at about $8. that was the expectation. well it came in at $13.50, now coming in at over $19 a share. it brings up the question, how much growth in the future is there for lithium ion batteries amt cording to the attorney out of the a123 process spekt "us," it's expected to go to $74 billion by 2020. for a123, they're in the sweet spot of the market, providing batteries to seven different

auto companies around the world. from europe to acia also providing batteries for nissan's electric car lineup which will be hitting the market next yearth and they provide commercial and industrial batteries. this is the reason why the ceo, when i talked to him this morning said don't compare us with ethanol stocks, which were hyped last year. he believes the lithium ion battery market is far different. >> the batteries we've got today are in production. they work today. the distribution mechanism, by which you get the electrons in the car are already established. system of the challenges in the biofuel space, we've already overcome, or don't have to worry about them. so there's quite a big difference in terms of the implementation stage. >> if you look at shares of a123, trading over $19 a share. melissa, this has been the criticism of electric battery stocks or any stocks related to the electric battery market. people are saying, we're hyping it. just like we're hyping ethanol stocks from few years ago.

but most people who are familiar with the companies will tell you, far different structure as far as where these markets, these products go. and how they're related to the auto market, compared to ethanol stocks. one quick note, don't forget, coming up on "power lunch," an exclusive interview with fritz henderson, ceo of general motors talking to them about the their 60-day, money-back guarantee and a lot of other things. >> you make a really good point. i look at the stock of a company like pacific eth nom, which is one we had the ceo on. and i was saying good things about him. all kinds, it was at $42 in 200 6. it's now below a dollar. how do you think companies like this, how do they get out from underneath that? >> a couple of things, you have to remember, ethanol had a distribution model that's far different. as well as the production model. which is far different. these guys are, they've already overcome that. and their market, you can see that growth coming out there.

you could not see that with ethanol. ethanol, there was a lot of, yeah, we think the market's going to be there. >> phil lebeau, thanks so much for joining us. legendary salesman ray croc sold the concept of fast food to the world. here's a look at the man who built the golden arches. >> by 1965, croc had opop close to 700 restaurants in 44 states. in april of that year, donny deutsch's became the first fast food company ever to go public. stock was issued at $22.50 a share. within weeks, it climbed to $49 a share. making ray croc an instant multimillionaire. >> be sure to catch tonight's premiere of "biography" on cnbc, for a look at the rise of fast food across the globe. tonight on cnbc, 10:00 p.m. >> we're back with last call. >> and the list of stocks to watch as we head into afternoon

trading. you're watching cnbc, first in business, world wide.

all right, it's time for the call to action on stocks you need to watch during afternoon trading. let's go right other to cnbc's brian shackman with a look. >> hey, listen, can telecommunication hold up? obviously on a day like today, it's tough to find sweet spots. but take a look at the telecom s&p sector. it just went negative and there's a couple of companies i want to look at. it's fascinating what companies pop you. take a look at iowa telecom. it pays a 12% dividend. it's up 2%, with a huge dividend. take a look at queswest. the concensus target on qwest, about $4.50. since the letdown it's been up the last two days. so it's seeing some positive

movement. the material sector, the worst sector of the s&p is alcoa, down big. see how it trends, all the me l metals are down. and ak steel down 6%, i'm going to categorize the last two as do you pile on to the trade? or do you pile up the profits and get out? take a look at american greetings. hit a 52-week high. tremendous volume. their story is year over year, the revenue fell. but profit up 12-fold. up 25%. i don't know if that's going to hold up. the same with head hat. huge volume, all of these stocks, red hat double the normal volume. hit a new high. pulled back a little bit. they improved their profit as well. the same question, is it time to take your profits? back to you. >> brian, thanks so much. i think the move in gold has been so interesting since the fed meeting yesterday. >> talking deflationary downdraft. gold, materials, crb, copper, commodity stocks, oil, as you say. it's like something is cooking.

i'm not sure i understand it. because i didn't think the fed said tight money yesterday, not by a long shot. >> it almost seemed coincidental. as you talk to more people about it, there's not necessarily a good story for the connection. but still undeny yabl. you saw the dollar, more than 1%. >> on the other hand, good old-fashioned profit-taking, with time for some consolidation after a huge move. who knows? i don't know. i wouldn't bet against it. i wouldn't bet against gold. >> all right. that's it for "the call," i'm melissa francis. >> i'm larry kudlow, see you tonight on "the kudlow report." and now "power lunch" is up next. european unit lehman brothers is made the first of several claims against the u.s. parent company, that are expected to total $150 billion. that's according to "the wall street journal." gm's chief executive, fritz henderson said the u.s. car market should see modest improvement next year. and massachusetts governor, deval patrick has named party

chairman paul kirk to temporarily fill the late senator edward kennedy's seat. we're first in business worldwide, cnbc, i'm courtney reagan. i was beginning to think that the stock market only went up. what happened? >> think again. >> welcome to "power lunch," i'm bill griffith. stocks have been falling following yesterday's late selloff. procter & gamble leading the dow at this hour. and another treasury auction, at this time, $29 billion of seven-year notes, the result next hour on "power lunch." >> and we have a cnbc exclusive, general motors's ceo fritz henderson about his plan to boost sales through gm's money-back offer. and goldman sachs, $16 billion dilemma. new reports say the firm is set to have another blockbuster year for bonuses. the question is -- how does goldman keep employees happy without causing backlash in

washington? . and google, getting ready to do one acquisition a month. we'll look at some of the possible targets. and here's what else is on the menu. i'm john harwood in pittsburgh, where president obama is going to come from the united nations in new york with a little bit of wind at his back from some victory he is got on nuclear proliferation. can he keep it up in pittsburgh? it's likely to be at a high level of generality. which is why officials are playing down expectations. and i'm jim goldman in the silicon valley bureau. blackberry maker, research in motion plans to release earnings tonight. smartphones are the rage, r.i.m. is a sector leader, but it seems to be lagging the tech rally. that could change today. and diana oleic in washington, existing home sales take a u-turn. realtors say the demand is there, but road blocks are on the way to closing or pulling the numbers down. and the matter of the first-time home buyer tax credit won't cover it all. and energy leading stocks lower. major averages now on