the first losing week out of the last three. bob pasani is at the new york stock exchange. >> important events today, existing home sales for august, down, not up. we were expecting it to be on the up side, highest in two years, that didn't happen. look at the home builders, they've had a great run. early signs of rolling over -- i don't want to make too much of it. a new 52-week high, it's now 10% off of the highs it hit last week. a little discussion about that. and disappointing home sales numbers came out. what really changed the market was the dollar. the dollar rallied big-time. remember, the dollar index set a new low last week. but as the number came out around 10:00 eastern, dollar rally and typically we saw declines in commodities like copper for example. as well as commodity-based stocks, so all of what we call materials, the steel stocks, aluminium stocks, all of those stocks and materials the weakest sector now in the s&p 500. and finally we noted this morning about the reit ipos

coming out, four of them scheduled for this week. two of them today, colony as well as apollo commercial. both priced at $20. and you see where they're trading now. more importantly, the size of the offerings were cut in half. the basic theory, what the street is talking about, still suspicion about commercial real 'state. and concerns that the people who will be buying these debt instruments, may not be buying with the right price. because we still don't know where commercial trade something going to end up. scott, how are we looking at the nasdaq? >> you can add technology to the list of sectors lagging today. the nasdaq is under pressure, down 1.5%. the focus is on research in motion with the earnings report after the bell. the stock is up better than 100% year-to-date. had nice run yesterday ahead of earnings and out of the gate today was positive. but turned negative by 2%. declines across wide i-held large-caps, apple yahoo and google. intel down 1.75%. and the interesting story we're following, electronic arts

shares selling off by 4% after an executive for microsoft said there's not a possibility of any deal here. there was options activity surrounding that. and shares of electronic arts actually over the past couple of days had risen in anticipation. speculation of a possible deal there. not going to happen. apparently according to microsoft. let me point out, a123, the lithium ion battery maker, the ipo at the nasdaq, $13.50 is where the stock went out. it's up 48%, trading shy of $20, let's go to matt nesto at the nymex. >> we're seeing oil down for the third time in four sections today. we have come off offalier lows. it looked like an early trade, we were going to test out $65. we got as low as $65.79, the lowest since july 31st. and we did test that, boy, i don't know where we would go from there. but clearly in the trading range. and also a natural gas inventories. but really the story with natural gas has been that huge month-long run-up.

we've seen the contract go from about $250, to almost $4. we're seeing the next-month contract also rallying here today. i would be remiss if i didn't mention the price of gold. below $1,000 again. we closed below $1,000, that will be the first time that we've done that since september 10th. let's get out to rick at the cme. >> thanks, matt. we have $29 billion, seven years in a little less than an hour. but there's something huge going on. i used to like to be a technician. i still practice behind closed doors. but something unique happened yesterday. i think you're going to be in for an equity correction for a very simple reason. it's called a key reversal. outside day. but what's more important. whether you're talking about the dow, whether you're talking about the s&p, or whether you're talking about the nasdaq, what we've seen is yesterday's range was similar to all of them. you had a key high in terms of the move and yesterday's move was higher than the previous day's high. yesterday's low was lower than the previous day's low. and yesterday's close in all three of those indices was below

the entire range of the previous day. what does that mean in english? >> that means that you could be in for stronger dollar, weaker gold. lower interest rates. because of equity followed through on the pattern. it could indeed create a correction, unless you believe what we were in was a correction. then it's a correction to the second derivative. sue, back to you. >> whoa! okay, let's talk about that right now. thank you, rick. a correction to the second derivative. let's talk to our guests about that. brett garth joins us, chief investment officer at c-biz. brett, i'm going to go to you first. a correction to the second derivative. but in essence, you know, rick is talking about a fundamental change in the way the market has been performing lately. and as i understand it, you're also worried about the inflationary scenario down the line. what do you think? >> absolutely. i think that we need to be a looking forward into what the risks are going to present investors. and that's inflation. i disagree with rick on the

correction to the second derivative. you know, we're not even out of the original correction. and i think we're going to see a recovery in the stock market through the rest of the year. the last two days not withstanding. we're going to have some of this volatility. but what rick described, was in my opinion, not a fundamental change. but a technical change. and i think a lot of that technical stuff just doesn't apply in 2009. >> evan, what do you think? >> i think we're back to trying to a statement of buying the rumor, sell on the news. yesterday the fed came out, said basically what everyone thought. things are beginning to stabilize. however, the key point was that inflation is going to be subdued for sometime. i think that's what you're seeing, the key reversal in the dollar today. >> even with the instruments we have going on? today we have another $29 billion in seven years. >> correct, i think we're going to continue. yesterday we saw a little weakness in the five-year option. i think we're going to see a continued trend in the

seven-year today. people focusing more on the shorter end of the yield curve. if you look at what's happened since middle august. the s&p is up almost 100 points. but the interest rate on the ten-year has been stuck in the frame of 330, to 350. >> brett, let's make it meaningful to individual investors. what do you like in this market? if you see more growth in equities, what would you buy here? >> well you want to be in equities that have the ability to grow and be early cycle. proved or -- performance. so that's technology. so i think you want to be long technology. and i would just stay on the inflation issue, just to touch on that again. that's a bit nearsighted. we're seeing tons of money come into this economy. we're seeing a rollover in the employment situation. we're going to have, we're going to have inflation. but, yeah, to actually technology would be a good investment in the current space for the recovery. >> all right. you're also protecting your portfolio, brett, though, right? >> yes. >> with dips? how are you doing it? >> you want to be in

treasury-inflation protected securities. you could be doing that through funds, vanguard or fidelity. if you like at a five--year security, and even if inflation is only 1%, you're going to outperform a straight treasury. and if inflation is at 3%, historical numbers, you're under 200 basis points over real treasury. >> evan, do you buy gold on the dip, just in case, to hedge? or no. >> i think we still have some room to go in the next week or so. i definitely think over the coming weeks, we'll see it spike back up. i think we have a few percent to drop. >> thanks, guys. >> coming up on "street signs" legendary investor, julian robertson, wait until you hear what he has to say about where interest rates are going. citigroup focusing on key areas and cnbc's mary thompson

joins us with more on that. dennis, people close to banks say reports of branch closings are premature and the bank has no plans to make any change to its retail footprint. instead sources say the main objective of the retail strategy to be presented to the board next month is to increase deposit by doing a better job of servicing their customers. the to that end, the bank plans to extend branch hours and improve their online and mobile banking functions. focusing on cities where the bank has a bigger share of the area's deposits. cities like new york, miami and san francisco. now will sources downplay mass range closings, analysts say even if a bank closed branchs in cities where its presence is smaller, like boston and philadelphia, citi would still or this would have a minimal impact on citi's branch network, as well as its deposit base. growing the base of course continues to be key for citi, in the wake of the financial crisis. deposits are more reliable source of funding. helping to lessen its reliance on the capital market. a 3.5%, citi's deposit base is a much smaller share of the u.s.

market than rivals like bank of america, wells fargo and j.p. morgan. and fragile financial position presents it from growing the acquisition. so for now it's focusing on growing the base from within. i did a back of the envelope calculation looking at the branches that could be closed. and what you see is a closure of about 3% of the total branches. and or excuse me, 12% of the branches and 3% of the deposits. if they pulled out of the cities -- >> you saved far more than you were lose in deposits if you were to pull back? >> what i'm saying is it's a small amount of their deposit banks that think of it, 12% of their branches, so maybe what you're looking at is increasing efficiency. but they're trying to say, no major bank closing. trying to drive efficiency to drive branches. >> thanks, mary. see you later. this week we've been asking you folks for your observations about the economy.

anecdotal evidence of either recovery or continued recession in your area. as opposed to the government's statistics, that we all keep talking about. so we're wondering, what do we call these indicators? we want to do this down the road. we love this. this is a good indication of what your observations are out there. but what to call it? we want to get your thoughts on it what about the joe six-pack index? >> what does that mean? >> the regular person. >> and bob says, what about the semi-smart money index? >> go ahead, bob, you're smart enough. >> if you've got a name for it? send it to us, powerlunch@cnbc.com. when we come back, gm is putting it all on the line. the money-back guarantee on the cars, will that serve to pump up sales? some answers from gm's ceo, fritz henderson. and news on twitter we'll talk about after the break, they've raised $100 million from

t. row price. and goldman sachs is rounding in a record, $16 billion bonus tools. cutting compensation the way to reduce risk-taking? or will it make american firms less competitive? plus research in motion set to report earnings today, we'll dial in a that sector. and get ready for the fast money, halftime report.

one of the biggest laggards today is caterpillar. last trade on the stock, $51.51. gm's ceo is meeting with dealers as part of the company's plan to boost sales with a money-back offer. cnbc's phil lebeau joins us now with more. >> fritz henderson joining us from orlando. fritz, i know you're down there talking with some dealers as you're pushing this money-back, may the best car win offer with consumers. what's the response been in a little under two weeks you've been rolling out this promotion? >> the response has been good, phil. the response in the show room has generated a lot of interest. certainly it's generated the buzz we were looking for in terms of sending a powerful signal that we'll put our money where our mouth is. and finally with the dealers, we're back to, we're happy to be back in business, actually and

want to go back on the offense. this is a pretty good spirit. >> you want to go back on the offense. but i talked to people at some of the search sites, like edmonds.com. who are indicating that the people going over to toyota, the conquest buys have not been there with this program. what's your early take in. >> phil, first of all it's a program that's intended to -- we just launched the program. it's about consideration-building, staying on message, being consistent. and this is both a spring and a marathon. so two weeks it's been about generating interest and buzz. it's about in terms of generating true consideration and changing consideration, it's going to take more time than two weeks. >> so in other words, you may not be getting the conquest buys initially that you're hoping for. but you're indicating that this is for down the road?

changing considerations is not something that, you can see a little bit of progress. but there's the truth is, it's all about staying at it for some reasonable period of time. >> fritz you're rolling this out at a time, september sales are going to be pretty weak. where do you guys expect the industry sales to come out at? >> phil, september sales are very weak. at this point, it's always guesswork. this time, it's probably more guesswork than we would normally see. but i think the industry star, our guess would be anywhere in the high eights, to even low nines, so it will be a weak month in terms of new car sales. we're going to be way down. because september of last year was our strongest, our strongest month in volume and share. and so our year-to-year comp is going to be really, really weak. but the overall level of the industry, very weak. and our job is to try to get the best share we can out of the market. >> fritz, when you look over the next two years, yesterday,

mulally, who was in india saying the market will go up to 14% of sales in 2011, what's your take as far as 2010, 2011, are you as bullish as he has? >> we think it will be between 11.5, and 12 million units, so we think we'll begin to see an improvement in the marketplace. in terms of 2011, we wouldn't be quite as high as allen. but we think that the market will begin to recover from the lowest levels it's seen since post-world war ii on a per capita, adjusted basis? >> what do you say, 13, 13.5? >> that would be where we would typically see it. at this point, 2011, depends a lot on where 2010 is. you obviously make a guess and you make an estimate and you develop a forecast. but a lot of it will depend on what the trajectory is coming out of 2010. >> fritz henderson, ceo of general motors joining us exclusively from orlando where

he's meeting with dealers. there you have it, sue. we'll see more people focusing on 2010 and 2011 as you heard allen mulally yesterday. mr. mully saying 14.5 million. now you're seeing fritz saying closer to 13.5. but that's what people are going to start focusing on now. >> it will be very, very interesting to see how the 60-day car-back guarantee is going to work? >> it's either a masterful move or it could be a bureaucratic nightmare if people start bringing cars back. >> retail does it all the time. >> with much smaller-ticket items. >> i know you're making light of that. but -- >> one of the points is that here we did cash for clunkers to stir purchases. it worked incredibly well. and now, people are upset -- but the number was inflated by cash for clunkers. but that was our intent. we should be happy and celebrate. >> i would hope it would instill confidence. >> what's coming up? >> what's coming up is we've got

banker bonuses. economic recovery and trade. can any of them happen without each other? it's all on the agenda at the g-20 summit in pittsburgh and we'll go there live for the latest. plus rim r.i.m. reports earnings today, we'll dial into that red-hot sector. a strong year for gold as the dollar falls.

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here are some of the ipos coming to market recently, a123 systems, artoo global, colony financial and apollo commercial. those of you who use gmail, the google email system already know this. but the rest of us should know that gmail is having a technical problem that does not allow users to gain access to their contacts. this is the second technical glitch that g-mail has suffered this month. when you log on, i'm told what you're going to see there is a statement from google saying you may experience issues while this

ber siss. generally understated. >> generally understated the problem. >> is that okay? >> my computer is crashing, okay? >> we'll be talking next hour about some possible targets, m&a targets on google, as we speculate who might be the next acquisition target there. in the meantime, we've got the g-20 summit getting ready to go under way. they were waiting for the india delegation to deplane. they've arrived there in pittsburgh. our chief washington correspondent, john harwood joins us from there with a look at what's on the agenda, john? >> the gmail thing was a segue to the g-20. the leaders are beginning to arrive in pittsburgh. look at the pittsburgh airport, delegations from india, brazil have arrived. others are beginning to land at the airport. and president obama is going to come in here with some wind at his back because of victories in

the united nations in new york with the nuclear policy. but job one here in pittsburgh is strengthening the international economy. taking the accomplishments from april and trying to, where they had some new stimulus, strengthen it. >> 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. >> now, as usual, at gatherings like this, you've got protestors gathered who don't like globalization. don't like international economic policy. they're making their voices heard. but no big disruptions so far. the real question is going to be, whether there are any concrete developments on issues

like financial regulation, executive compensation and sustainable growth. at? point, guys, most people expect a general communication that doesn't resolve some particular problems, but they'll treat it as a step forward, anyway. >> yesterday we saw evidence from some protestors of greenpeace for example. is it quiet otherwise? are you getting much action outside there? >> not too much. you've got a very, very heavy police presence. difficult to move around the city. it's a nightmare for people who live here in pittsburgh. but so far, they haven't caused a lot of disruption. and we'll see when all the leaders arrive, whether the intensity ratchets up and whether we see some actual disturbance. haven't seen it yet, bill. >> john harwood in pittsburgh, thanks. goldman sachs is drowning in money, again, they've got a record $16 billion bonus pool. this as they g-20 leaders meet to discuss limiting compensation for bankers. coming up, 12:45 eastern,

it's the halftime report from the fast money gang. we're seeing heavy selling in the financials today, the day after, morgan stanley and goldman sachs setting a dnew 52-week intraday high? and also, we're under four hours away from r.i.m., research in motion, releasing its quarterly results, we'll tell you how the traders are betting because of r.i.m.'s forecast. all of that and more on the halftime report. first more "power lunch" after this.

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we're almost halfway through the trading day, in the headlines, energy leading stocks lower right now. travelers and procter & gamble leading the dow lower. goldman sachs raising its price targets on a slew of retailers in the u.s. the three a's, abercrombie, american eagle and aeropostale. who would have chunk it? and expect it to continue, also spice maker, mccormick, posting better-than-expected results, the company raising lower end of

its 2009 profit outlook. >> maybe more people eating at home. all right, wall street powerhouse, goldman sachs, reportedly sitting on a record $16 billion in bonuses this year, according to reports out today. this of course as european leaders take a tough stance, they say they will, on banker pay at the g-20 summit in pittsburgh. would regulating bank pay help reduce risk or hurt fed business? on the power grid is our democratic strategist and republican strategists. you guys have 20 seconds to make your case. trent, et me start with you. regulating banker pay, good idea? >> no, bad idea. it will just scare banking talent away to singapore and london, and hurt the u.s. financial services industry and scare the talent from the regulated banks, like the 25 that the fed wants it take a look at, to other nonregulated aspects, that's a bad idea. it will just lead to more sort of the wild west atmosphere that may have brought us into this crisis in the first place. >> julie, why do you think this

is a good idea? >> well first of all, the trends point to bank executives and other states make much more than they do anywhere else, so we're not scaring anybody away to singapore. but the prime point is it should be paid to long-term success, it shouldn't be tied to taking outside risks with the taxpayers money. i would say they could go to town. >> a good point, trent, right? if we're the ultimate back-stop, doesn't that invite regulation? >> well, i agree with that. i don't think the taxpayers should be the ultimate back-stop and i'm a little bit concerned about the notion that all the banks are too big to fail. that's a terribly frightening concept and something we can not pass. but i do think if taxpayers are on the hook for you know, for instance merrill, i think the bonuses that were paid out did cause the population outcry and i think it was justified. >> what about, trent, the idea about some of the way the compensation is structured actually leads to higher and higher risk-taking and makes it

more likely that the taxpayer is going to have to bail them out? do you buy that premise at all? >> i don't think so. i think it's worth taking a look at. and i'm somewhat comforted that the adults at the fed are going to take a look at it. i'm somewhat terrified if the people behind me were looking at it. we saw what happened when we capped politician pay. i think we're got to be careful, not making knee-jerk reactions when we're trying to determine the cause of the crisis. >> he's sitting in front of the capital building, making reference to congress. >> we know the cause of the crisis and we know the outside risks, the derivatives trading was a big component of it. and the fed, have a lot to do with this crisis and leading up to it. so, look, the bottom line is this -- if in fact too big to fail did not exist, that would say these guys can go to town and do whatever they want, whatever their shareholders want. unfortunately, people including hank paulson determined we do have banks that are too big to

fail. if i have to back-stop them. i'd like to make sure they're not taking outside risks with my money. >> i agree with you. but i disagree that the american length r electorate will stand by. loathe to the politician that would stand for another big bank. if you have politicians on the right and on the left against further bailouts. >> it all comes back to too big to fail. so irksome, it makes us all crazy. that's what they're discussing right behind you, trent, on capitol hill today. thanks, guys, thank you. still ahead, breaking news, minutes away from a market-moving treasury auction, almost $30 billion in seven-year notes. when we come back, research in motion set to report earnings later today. we'll dial into the smart foen sector with our jim goldman, when we come back. (announcer) when you buy a car

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take a gander at the stock, red hat is up almost 12%, the biggest percentage mover in the s&p 500. they're at $27.83. the ceo will be on, because they're rising on the back of better-than-expected earnings. he'll be on "fast money" tonight. research in motion, the blackberry company reports earnings tonight. they've been on tear this year, will it deliver?

the cnbc bureau chief jim goldman joins us with a preview. >> good afternoon to you. year to date, the shares have been on a tear, yes. but over the past few months, research in motion has really watched the tech rally kind of from the sidelines. r.i.m. shares have done just fine for the past quarter, and at any other time, investors probably wouldn't have had much to complain about with a chart like this one. but compare r.i.m. to apple over the past three months and you see a dramatic tale of two companies. one rallying big-time and one not as much. and that's why today's report will carry so much weight. especially with so many price targs targets on the street. the key numbers tonight, $1 a share on about $3.6 billion in revenue. look for $ 4.1 new subscribers. and $1.05 a share on about $4 billion in revenue for the company's thicket. 4.3 new subs and anywhere from 9.5, to 9.8 million new

blackberries shipped. stronger-than-expected numbers from palm last week. tonight we'll get the r.i.m. report and it might serve as a proxy for the health and welfare of the entire cell phone sector. those r.i.m. numbers coming after the close. and we'll have complete analysis and all the news as it breaks. >> jim, you highlighted a lack of performance over the last few months, especially vis-a-vis apple. why do you think that is? >> i think apple has been generating so much attention. r.i.m. is largely a one-trick pony in the sector that it plays in, apple has more in the likes of mac and the ipod and the aps store. i think the r.i.m. story hasn't been told nearly as well by the company, by the investment community. and i think we'll get stronger numbers today, and that could send the stock up. >> plus the more buzz that apple gets, is the biggest threat to r.i.m. with the iphone. >> absolutely. >> thank you, jim. so we've been, we've spenltd

sometime kicking ideas around, what we should call the indicator. we've been hearing from you folks, your observations about the economy. from your perspective, anecdote allocators, rather than the statistical indicators we get from the government. what to call this? we figured we'll let you name this as well. so we've been fielding a number of responses. so far today let's run through of them. the one by far that's gotten the most numb of votes, the main street index. which makes sense, right? let's move on. that one from ron. >> i like the six-pack index. >> it's an obvious one. kevin says how about the boots on the ground index? >> too military. >> how about the real world index. >> no mtv. >> see how this works, guys? >> the morning meetings. >> the common everyday look out of the window index, from guy. >> no. >> jody says the recommendation, how about the taxpayer index. >> okay? so we were checking that one off

there. >> how about the sidewalk index. from vincent. >> i like that one. >> or the last one, the people's leading economic indicator. >> it sounds communist. >> it sounds like china. >> i like the off-the-grid index. >> keep them coming. >> are you surprised i'm critical? i'll bet the viewers aren't. >> we aren't. one more time, another big treasury option, $29 billion that the government is going to try to borrow. in this unusually volatile time,

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welcome to the "fast money" halftime report. the selling continues on the back of disappointing housing data. is it a sign of a turn lower or perhaps maybe it's your buying opportunity. our "fast money" crew today, the monster of monster.com. and of td ameri trade. and dr. j, are we going to think this was the turn lower, because this week we had a number of stocks hitting pre-lehman levels, 52-week intraday high. morgan stanley, google, apple, just to name a few. are we going to see the turnpike as the marking point, the watershed moment for the fall? >> you could see that, melissa, but you and i know they don't

ring bells at the top or the bottom of the market. >> unfortunately. >> that would be a pretty -- yeah. but on the other hand, there are a lot of signs out there that people are nervous as we approach 1100 in the s&p. people have been buying more and more protection by virtue of the index we track known as the vix, it's been moving up pretty dramatically in the last two sessions in particular. pushing up towards 25. highest level in a while. and i'd say that people are at least looking to hedge, if not looking to maybe get off the train for a little bit and let the next quarter begin. >> christopher, how do you interpret the market action, the price action. are things just as good as they were pre-lehman? >> no, they're certainly not as good as they br pre-lehman. and i would argue they're worse than they were pre-lehman. the price action in the last two days does feel different. we do feel like there's more true selling as opposed to a lack of selling and a little bit of buying.

it feels like the sellers are getting more aggressive. >> you're watching littles on the s&p 500 what are you watching here, melissa? >> i just saw rick santelli talking about the chart path i was going to speak of today. i felt like he stole my prom date. yesterday we had a key reversal in the daily december chart, we made a new high yesterday. a new contract high, which was also the high for the move since the lows in march. and then we closed below the previous day's close. below tuesday's close. that is a key downside reversal. based on that alone, i am short the s&p right now and i'll put a stop just above yesterday's high. i want to be very cautious here. because we are in a bull trend. i will lower that stop. if i am not stopped out today. i will lower my stop tomorrow accordingly before a trade. i absolutely am short the s&p right now. >> caution, j.j., is a theme for all the other panelists so if a. and you're seeing the same caution when it comes to the financials, a sector in which

we've seen two notable 52-week intraday highs yesterday, morgan stanley and goldman sachs. >> absolutely. an one of the interesting trades we've seen is the october cycle, the 15 and the 14 put. aggressive buyers the last couple of days. particularly this morning, saw a lot of people coming in to buy those. the interesting thing about this index is more than 50% of the index reports earnings before october expiration. so john was just talking about hedging, this is a great way for people to hedge their financial holdings right now. and the other thing is, financials are the one sector that people feel leads us up or leads us down. so if there's a chink in the armor, this would be the first place for it to show up. >> i want to throw up this chart. we showed you guys the chart on the "fast money" yesterday. we thought it was worthwhile to pull it up today. because we've seen a lot of ipo action today. we've got a lot of secondaries, does it mean for the markets?

historically, trim tabs they mark market peaks. christopher, do you take the chart and say history will repeat itself this time around again? >> history is an indicator. if the companies are out there selling, and they feel like prices are fair enough, the bottom line is the public should be selling as well. >> home builders getting up, giving up their gains, the latest round of data shows an unexpected drop in new home sales. after goldman sachs upgraded the sector earlier. >> is this a sector you would be in currently? >> it's a sector that for the most part i've been getting out of. so i hate to say goldman, i think they're late, and/or early. they're late because the move has happened. or they're early as to something that could play out, melissa, later in the year. right here where the home builders are, i don't see a lot of catalyst to drive them higher in the short-term.

so that's why i would say they're upgrade today, and be more in line with citigroup's outlook. >> the next potential catalyst, is if they extend the first-time home buyer tax credit or some other sort of stimulus program. what do you take a look at any other home index, or whatever it is you want to look at? >> a week ago, we spoke about the fact that i was actually legging out of pulte homes. we recommended a buy in july. if you look at the index, there have been overextended and there's not enough fundamental news to fuel them from this point forward. it could happen first quarter, second of next year, but i think they take a breath here. >> goldman sachs, if you're listening, our panel says you're late. blackberry research in motion trading lower. j.j., are you seeing anything by way of the action auctions activity that makes you believe that people are optimistic or

pessimistic about their guidance? >> we've seen a lot of the out of the money call-buyers. the one thing i would tell people, instead of going out and buying the call at a high volatility, you're probably better off going out and selling the put-spread like the october 80-75 put spread. take advantage of the high volatility. so even if we move down. you could be wrong and make some money. if the number comes in as expected and the options get squashed, you can make some money, also and you're defining your risk to the downside. >> dr. j, who do you like j.j.'s trade? >> i do, and j.j. and i are long-time frechbds, smart guy, j.j. that's why he's not saying to sell the puts, naked as well. a lot of people are coming on and say sell the puts be out of the money puts. that's one of the dumbest trades you could make. especially if you have a big gap to the down side. so i would be a seller of the upside call spread, which i believe i will be doing. or a seller of the put spread, so you define your risk rather than having open-ended risk. >> let's move on to the next

trade. talk about oil, lower today by about 3%, what is the next benchmark for this commodity on the fast line? is addison armstrong, always pleasure to speak with you. how far are you looking we go? >> caller: it's funny. i was listening to your other guests talk about a key reversal. we got one yesterday in crude as well. and we traded down today. down to the 20-day or actually to the bottom of the bolinger bend. so we're hanging in there. 66 looks to be our short-term resistance, but if we get through 66, i think we go to 66.25 quickly. the inventory report yesterday out of the doe, which showed a much larger build in crude and products than was expected. >> quickly, addison, do you think we've seen the bottom in that gap? >> you know, yes. that's not to say that we're not going to see more weakness. but certainly i think that at $2.40 for the front-month

contract, we were severely oversold. and i think that's what led to the very sharp correction we've had. but i think that the near-term for natural gas going into the winter, is certainly not, not bullish. >> okay, addison, always nice it talk to you, addison arm strong. taking a pause here. fast money after beating estimates last night and scoring 13% today, today, red hat the ceo will join us. up next, "power lunch," what does the company do with the $16 billion in compensation fund. "fast money" report continues after this. um bill--

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welcome back to the "fast money" halftime report. time for your "power lunch" trade to go. dr. j, you're watching moody's. >> warn rwarren buffett has run the bell. he's sold twice in the last two months and the quarter is just ready to close out. it's going to be a miserable quarter for moody's. they've already lost 33% of their market wrap. that's about a half a billion dollar hit to warren buffett's 48 million shares that he still owns. normal activity is 3,000 put options a day, melissa. today we're approaching 50,000 puts in moody's as it breaks through 20 to the downside. volatility has doubled in the quarter. i look for the stock to test those march lows down around $16. i am short this name, and i remain short. >> you were short through the

put, correct? >> i am short through ownership of puts, yes. >> okay. good to know. that's your "power lunch" trade to go. time to call the close. let's go around the horn. do you buy or sell going into 4:00 p.m. eastern time? j.j., kick it off. >> i'm going to be a buyer based on r.i.m.'s earnings. >> staying short with my tight stock. >> christopher. >> i definitely would be short here again with the stop at yesterday's high. >> dr. j, bring us home. >> i'm looking for the market to trade to the downside for two days in a row as well so i'm short. >> that does it for us at the halftime report. tonight we will talk to the former commerce secretary, carlos gutierrez. coming up, instant reaction and analysis to the results of the government's seven-year auction. what else are you watching? we have a terrific next hour coming up. paul volcker not pulling any punches when it comes to the idea of too big to fail. also, congressmen from opposite sides of the aisle join

us live to square off on the issue of health care reform. and goldman sachs could be on tap for a $16 billion bonus pool, but how can the ceo avoid the backlash over his firm's riches? this is cnbc.com news now. mortgage rates remain at their layest since may. the average is 5.04% this week. lithium ion car batterymaker a123 is up. the treasury will close its first sales of toxic assets by september 30th as part of a public/private investment. we're first in business worldwide. i'm courtney reagan. time marches on. we've all been sitting here waiting patiently for you to come back. welcome back to "power lunch."

i'm bill griffeth. we're waiting now for news that possibly could move the markets, results of the $29 billion of seven-year notes. the latest treasury auction results are due out any minute. we'll bring you the numbers and the market reaction. >> i'm sue herera, stocks moving a little lower on news of a decline in existing home sales. but mcdonald's proctor & gamble among the companies bucking the trend. and twitter could be valued at $1 billion. i'm dennis kneale, google going to put some money to work and make a deal a month it says. we'll look at the companies that are potential targets and how you might play them. plus, we have just confirmed we have an official correspondent now that will check in one of our economic indicate observers out there. a man we're dubbing hot dog man. he'll be with us later this hour.

>> he gave you a call a little bit ago? >> he did. he checked in, and he has some distinct observations on his part of the economy and what it says about whether the economy is growing or not. >> maybe we should call it the hot dog stand indicator. >> why are you pointing at him? >> i want to know if twitter is 1 billion bucks. >> especially if you're paying with google stock. >> stocks are still moving lower here today. i wonder whether this seven-year note auction is a market mover? i don't know. i think the market has made up its mind. stocks are moving lower. >> it's an odd issue witness an. seven year. >> do you want to be holding treasury that is only yield however much it is, how low it is, search years from now when you have talk of huge inflation coming down the road. >> the bid to cover is in. it's 2.79%, and we'll get the yield for you in just a second.

it looks like they're yielding a 3% coupon. i don't know how rick santelli will grade that. the market is down 50 points on the trading session. >> when rick santelli has wi that's the when issued. >> exactly. >> rick is ready. what kind of grade are we looking at here, rick? >> we're going to have to give it an "a." i think it's an "a." we have 3.005, let's call it 3%. 279 the bid to cover. now, remember, this is only the eighth seven-year. that also make it is a bit of a three-wheeled vehicle here, and considering the total average of all the bid to covers for the first seven at 248, 279 is pretty good. indirect was really high, but i'm more interested in direct bidding. guys, any number on direct? they don't have it yet. we'll come back. remember, direct bidding is the new high category to pay attention to because it's not the primary dealers. it's not those that go indirect. what it is is it's a new metric for those who may be putting money in the auctions.

>> talking about a lot more individuals. we talk indirect bidders we're often referring to the central banks of the year. >> yes foreign central banks and large institutional customers that may want anonymity. on the direct side the big financials go in because i really think they'd rather do some treasuries at this point than maybe money funds with all the question mark. and that treasury working paper was supposed to be out september 15th. they postponed it. okay. it was 6% on the directs. just by a quick down and dirty, the highest in the last seven auctions for directs was 7.6%. so once again not as pronounced as twos and fives which makes sense. the longer the majority, the guess it's not going to be a good surrogate for those looking to avoid money funds. >> thank you. appreciate it. >> the stock market has held lower. no real response there as far as the equity market to that seven-year note auction there. the winning streak apparently is over. new data out today showing that

existing home sales took a u-turn in august despite expectations they would continue to be on a roll higher. our real estate correspondent diana olick is in washington with details. >> reporter: bill, that's right. after four straight months of gains, existing home sales took that u-turn falling 2.7% in august. the street had expected an increase of about the same amount. now, inventories are coming down 10% in august to now an 8 1/2 month supply. prices down 12.5% from a year ago, but that's the smallest percentage decrease in ten months. realtors say the sales turnaround is not about demand, but about trouble in the home buying process. >> i had expected a much higher figure based on contract signing, so there are buyers who want to enter the market, are willing to enter the market but there are obstacles in the market that prevent closing to happen or perhaps just a delay closing. we may see a bump up next month. >> reporter: i want to take you inside the numbers so you can really see the action. it's all on the low end.

sales of homes in the 0 to $100,000 range and $100,000 to $250,000 are solid up. but turn the corner and they are down. the higher the price point, the worse it gets. 70% of sales in august were homes under a quarter of a million dollars. now, the realtors had expected a big boost in august because of the first-time home buyer credit. they are pushing for an extension. they say without it they could lose a lot of sales. they say half the home buyers they surveyed, first-time buyers said they would not have gotten into the market without that tax credit. for more go to the blog realtycheck.cnbc.com. too big to fail is the big phrase on capitol hill again as a house panel holds a hearing on systemic risk. what do you about institutions considered too big to fail. hampton pearson is on capitol

hill with the layest. >> reporter: a blizzard of hearings and a lot of heavyweights weighing in all over the capitol hill today. at the top of the list former fed chairman paul volcker. with an eye towards theg-20 this weekend in pittsburgh, volcker reminding laemakers that any domestic reform enacted will have international consequences. >> a lot of what needs to be done really does require a certain consistency internationally because these markets are global, and that just adds another complication. you can't have capital requirements, for instance, for american banks way out of line with capital requirements elsewhere. >> reporter: and, yes, the form he fed chairman said he's worried about the obama overhaul plan that it preserves the policy of too big to fail and the possibility of future bailouts. proposals designating some companies as broader to the financial system implies those firms will be sheltered by a

federal safety net. he said new rules should apply equally to banks and nonbanks. >> what needs to be done is extending that to the nonbanking world without the implicit promise and, of course, this is key, without the implicit assumption that federal money will be provided in the case of a failing institution. >> he also endorsed the idea of a national insurance chart tore guard against future aig-like catastrophes. that's not part of the current plan. also sounding the alarm, elizabeth warren, chairman of the t.a.r.p. oversight panel saying she's got deep concerns about a possible impact on the market and we have a banking and financial industry thousand that's even more concentrated than a year ago. back to you. >> hampton, thank you so much. another individual testifying on capitol hill, harvard economics professor and cato senior

jeffrey miren. also joining us is cnbc's steve liesman. professor, you were asked to present whether you think it's a good idea for the fdic to be able to shut down not just the regular banks but these big banks that a lot of folks think are too big to fail. what did you tell congress? >> i think it's a bad idea, but the crucial part is not that it's the fdic that would have the authority to resolve them. the crucial part that i disagree with is that the fdic would have access to taxpayer funds to be able to buy these nonfinancial institutions -- nonbank financial institutions' debts, to take equity positions, to make loans. in other words to bail them out exactly as we did with t.a.r.p., okay, back last fall, and so the crucial problem is in my view there should be no outside money put in, no taxpayer money put in. >> what do you do instead them? >> you let them fail. >> a la lehman. >> that didn't work out so well. >> i beg to differ.

i think what went wrong in l lehman failing per se. they were just one in a long chain of events where head the housing bubble, lots of institution that is were ripe for failure. second, the market was incredibly confused. first we didn't let bear stearns fail. then we do let lehman fail. then we bail out aig. so the market is incredibly confused about what the rules are. >> but professor miron -- >> would you let them all go? >> yes. >> and take on that ensuing credit crunch that we saw in lehman? if we let them all go -- >> i don't think the credit crunch came from lehman and certainly not lehman per se. the credit crunch came in large part because paulson and bernanke had just announced we're going to provide a lot of money so you guys don't have to take your losses. >> professor, there's not a lot that steve liesman and i agree on, but i think we agree on this. in the wake of lehman brothers, we have lots of sources telling us that you couldn't get anything done because everybody

was afraid of having exposure to lehman so credit wouldn't move. >> i think what he's saying is it's a loss of confidence not because lehman failed per se, but in the way it was handled. you let one stay, you let another go, nobody knows exactly what the rules are. am i right on that? >> exactly. when the t.a.r.p. was announced, they changed the rules and all sorts of other programs were being introduced. >> if we know ahead of time if you failure going to be allowed to fail, that is the rule, then people can act accordingly. >> we knew that ahead of time, don't you think, steve? >> i think the professor is sort of ignoring the facts on the ground as they were that fateful week. i mean, theoretically and philosophically i completely agree it's better to have these companies fail. which by the way lehman did and the idea that the credit crunch was caused by confusion to me is sort of again misstating what happened. what you had is a complete

inability of one bank to trust another bank. the seizure of the banking system. that was then filled by the government at the time, and any other result there would have meant a much worse and much more prolonged credit problem than we have had to this point. i don't see how the facts on the ground argue for letting these things fail, and i just want to know, does he completely oppose the concept of a resolution authority for anybody the fdic, the fed, or the government in general or is it just a matter of let's go back to i don't know what you want to call it, pre1913, pre-fed when you have lines for deposits at banks which effectively is what we had in the wholesale funding market whe were lines at the bank? >> there's so many things it's hard to answer them all. first, let me say certainly a lot of other instukess would have suffered huge losses, some of them would have failed. but that by itself is not bad. that's actually good. they had lousy bets, made bad

decisions. they had assets that weren't as much as their books claimed. they needed to fail. giving them taxpayer money doesn't change the reality that those assets had fallen dramatically. in terms of what should the resolution authority be, again, it's not essential that it's a bankruptcy court versus an fdic or new fertion of fdic or something else. what's essential is taxpayer money doesn't go into it. the creditors have to face the prospect of taking the losses broadly and i don't think they generally expected that. the history of the u.s. going back a long time is creditors frequently get bailed out. that's what alan greenspan -- >> one point, which is that in general we have put a government guarantee around senior financial debt, and i agree with the professor, we must move away from that. i don't know how we do that and still have senior financial debt given in this country, but we must move away. >> it was an aesh temporarbitra

the sand. one of the few people who have told us that allowing lehman to fail was the right decision. >> g-20 leaders meeting in pittsburgh today. wherever they go protesters usually follow. cnbc's carl quintanilla is in pittsburgh. what's the mood there now, carl? >> reporter: one of the big fears for the city has been the degree to which there will be protests. this is where they're largely expected to begin. we are in one of the parks where they're allowed to assemble. what they don't have a permit to do is march about three miles to the area of the convention center. that's their plan and it's one reason a lot of the small businesses downtown have boarded up some of their windows. the big fears, of course, are that we wind up a situation like we saw in seattle in 1999. 600 arrests, 50,000 protesters. that's why the city is spending some $20 billion on security giving cops special powers to

find people who bring things like chain and pvc pipe to the convention center. here are some of the materials from some of the groups. capitalism is the crisis. resistance is the solution. and despite not a lot of numbers of people on the ground, there's a fair amount of organization online telling people what they should look out for if they encounter the police, things like offensive language by the cops, getting their badge numbers and so forth. we'll see how things turn out. it's scheduled to begin at 2:30 p.m. eastern time, and we'll see where things go from there. >> we sent ron insana ten years ago to seattle and he got caught in that whole -- >> i remember that. >> did you bring your gas mask with you today, carl? >> reporter: let's just say we're prepared. i would say the entire nbc news crew is prepared. >> just in case. thanks, carl. >> reporter: that's right. >> see you later. >> reporter: all right. we will take a break, come back, get back to the markets. a down day in the equity markets so far. we'll line up the all-stars, take the pulse of the markets in just a moment. also ahead, ratcheting up

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but we do have cell. we'll go to our market reporters. we go to matt nest o. >> we're seeing the dollar rally and that's putting all the commodities under pressure. i'm also watching natural gas very closely. we had the inventory increase earlier, and it was an increase, but it was not more than expected, and it wasn't as monumental as we saw in oil yesterday. so we're seeing natural gas rise here today and get close to its level. reminder, the october contract for natural gas comes off the board monday. so the next month, november, is really what people are looking at and where the volume is here today, and that's closing in on $5 now. up over $1.35 right now. natural gas also rallying back

here today. back to you. >> thank you, matt. let's go to bob pi sanaa with this week's cnbc 101 for you. >> good to see you. that's our weekly guide to investing. all this investigation by the commodity futures trading commission, speculator activity in commodities, it's not stopping new commodity etfs from being created. there's a new one that started trading today that's an interesting one. betting against oil. it's really an inverse oil etf. this is john highland's fund. he launched that extremely successful u.s. oil fund. that's really the gold standard for oil funds. the one that started trading today is the inverse of that. it's the united states short oil fund. the symbol is dno. in theory it tracks the front month futures contract on an inverse. if, for example, we are up 2%, the other one should be down 2%. let's take a look at oil today. unfortunately, this just started trading, this dno. we haven't updated our own chart. if you look at oil, loyoil is d

about 4%, about a two-month low in oil. if that's the case, we should see that dno about up 4%. wheel i can't show it to you, trust me, folks, it is up 4%. there is an inverse relationship with oil and that etf. that's our 101 for the week. back to you. >> we always trust in pisani. >> indeed, we do. >> thank you, bob. we're trying to come up for a name with this indicator we're sort of developing right now. anecdotal evidence from you folks directly, what you're observing about our economy as opposed to the statistical numbers that we get from the federal government. all kinds of suggestions today that you're e-mailing to us. here are three more. this one from doug, which i kind of like. how about calling it the "power lunch" indeindex. >> i'm all over that. doug, you are brilliant. >> that's about branding. ma marie has how about the working american index? paul says how about the nail gun index. here is a guy who is a contractor, which is a key indicator of the economy right

now. >> i like that. >> i think we could run with the "power lunch" indicator. >> we have more to show you, plus we will be talking on the phone with a correspondent, a guy on the front lines, we're calling him hot dog man. we'll get his take on how things are doing in his part of the country as well. wrangling continues on capitol hill over health care reform legislation. mandatory insurance. is that a tax on americans? we'll have congressmen on opposite sides of the aisles joining us next. >> let's look at how some of the nation's health insurers are trading today. it's all in the red, but of course everything today is down in the red. 's on the minds of independent investors? let's ask. when i trade, i want a straightforward price. they lure you in with a $5.99 trade, then charge you 15 bucks. you get a low price, but only if you make a ton of trades. at td ameritrade, every online stock trade

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-. american greetings up roughly 27%, a $4 gain to $19. better than expected earnings. they have announced cost cutting g campaign. >> that's probably another indicator for an upturning economy. the greeting card indicator. >> that actually is an indicator. >> yeah, it is. >> but we digress because we want to talk about health care reform. democrats and republicans have been duking it out on capitol hill the last several day hs in the finance committee. one of the sticking points is the issue of mandatory health insurance. some call it another tax on americans. is it or is it not and what about the final bill? congressman chris van hollen joins us. he's the chairman of the democratic congress campaign committee and dave camp is with us, ranking member of the ways and means committee. thank you for joining us.

>> thank you. >> representative van hollen, you're following i'm sure what's going on on the senate side. the house already has its bill. the senate wrangling in finance about the issue of mandatory health, about the public option, whether there will be one or not. are you watching aghast or are you encouraged? how are you taking it all in right now? >> we're following very closely what's going on. in the house all three committees have now reported bills. we're waiting for the senate finance committee to complete its work so we can see exactly what they come up with. what we're call moving together in the same general direction, which is to try to provide health care reform, comprehensive health care reform for all americans. >> very quickly, it doesn't look like there will be a public option out of the finance committee bill. is that a deal breaker? speaker pelosi thinks it is. do you? >> i can't speak to the senate finance committee. what i can say is the house bill will have a public option. there's a large amount of support on the house side to move forward with a public

option as a way to provide competition. >> representative camp, where do you come out on this issue of mandatory insurance and whether or not it's a tax on the average american? there was a tusel between george stephanopoulos and the president this weekend over the definition of a tax and whether or not it is. what do you think? >> stephanopoulos was right. clearly it is a tax. you're going to have to pay more to fund a government program, that's a tax. and i think everybody understands that. i think we've seen that in this debate where they will say things like your medicare benefits aren't going to change but we will cut medicare $500 billion. look, i think what we've got a real problem with is this whole idea that the administration is trying to intimidate health plans from letting people know what's actually in these bills. cms issued a gag order on all health plans from communicating with seniors that. reverses a long-time clinton administration policy that said, look, it's a constitutional right to know what's in this bill. >> you're talking about a letter

humana sent to its participants warning many could lose important benefits and services that make medicare advantage health plan so valuable. isn't it a little early to be sending a letter out. we don't even know what's going to be in the final bill? >> cbo has said the same thing, that's the congressional budget office that scores the legislation. why not be able to communicate what might be in these bills? >> but it's possible they won't lose -- >> let me finish. we have gone from rushing these things through to preventing people from having a discussion about it. >> representative van hollen, what frustrated a lot of people about that was the aarp was allowed to send out all kinds of information and they support what's happening in congress. >> i'm glad dave raised this issue. it's always bad for anyone to send out misleading information. in this case -- >> so humana was misleading but the aarp was not? >> this was absolutely misleading information.

the federal agency that oversees cms, a nonpartisan agency, called them out and not only did they provide misleading information, but they're using taxpayer dollars. let's be very clear here. these are the medicare advantage plans. they're getting 14% extra taxpayer subsidy over the regular fee for service medicare plans. their profits are going through the roof. it's just false to say that the only way they can -- >> you're cutting medicare advantage is not the same as cutting medicare even though it increases benefits for many, many seniors. >> absolutely. their soaring profits demonstrate clearly if they just play by the same rules as everybody else they can provide benefits and not have to keep the same profit. >> i have to jump in. these are profits based on taxpayer subsidy. 14% subsidy above what every other private provider -- >> i have to jump in here. >> that's unfair. >> what they put out is not misleading. cbo says medicare beneficiary

benefits are going to go down. they earn 4%. that's less than other providers in medicare. so to say they're getting these high profits it's just wrong, misleading, and untrue. so i think we really want to get to the facts. why not let them communicate as aarp does? why reverse this clinton era policy? i think there's a right to know. there's a constitutional right to communicate. they have really tried to hide what's in the bills. >> but isn't it interesting, it strikes me we have spent now in the last four minute interview, we have spent roughly half the time on what is essentially a side bar issue rather than discussing the merits of whatever is being discussed in congress and that seems to be the nature of this health care debate. we get off topic on so many tangential issues rather than discussing the heart of the matter to begin with. >> cutting medicare is not a side bar issue. you tell that to seniors. so i think to characterize whether medicare is being cut as a side bar issue is just -- >> our colleagues are continuing

to confuse the notion of cutting profits means taxing benefits. i understand why these guys want to protect the insurance companies. they're the people who right now are going to face a whole lot more competition under these various plans -- >> cbo says their benefits are going to go down. that's the congressional budget office. that's not me. >> they said the payments, including profits. >> i wish i had more time but we can't spend as much type as they did with moammar gadhafi at the u.n. yesterday. >> thank you. >> thank you both for joining us. >> thank you. representative camp did bring up the letter. >> the humana letter. >> he brought it up first. >> we're going to switch to a much less controversial subject, not. goldman sachs is said to be on its way to a $16 billion bonus windfall, but it also means a pr nightmare perhaps for the ceo, lloyd blankfein. how can he handle that backlash and satisfy his employees. we'll discuss the goldman profits versus products debate coming up. >> down 55 points for the dow

jones industrial average. 9692. could be a losing week if we keep on this stretch.

tack about an embarrassment of riches. new reports have goldman sachs looking at a potential $16 billion bonus windfall this year. as you probably know, david faber and our charlie gasparino have both been tracking this story since back in june when the bonus pool was pegged at about $11 billion. but the two big questions now is, one, how will goldman handle any pr backlash from congress and investors, and, two, what does this say about the new order on wall street? is it still about profits? more from rob cox now of breaking views and our own david faber. nice to have you here, gentlemen. david, i will start with you. it does seem like it's a difficult position for mr. blankfein to be in however, although he's tried to address issues in the past about how to handle the bonus issue with employees, but can he really escape any pr backlash? >> i think it will be difficult. certainly there was a great deal of it after the second quarter and those record numbers from goldman and when people got a look at just how much they're accruing for compensation. the percentage of which, by the way, has not really changed over

time, but the amount of which has given they made so much money in the second quarter. that being said, there's been a story going around, sue, that i have been trying to sort of track down, but right now it really is just theory and only theory that says that in response to that potential criticism and to try to take goldman out of the spotlight, the company in the second half of the year will accrue its compensation at a much smaller rate as a percentage of revenues. thereby, actually increasing its earnings per share significantly because you're not taking costs and putting them into compensation. that may prove true at some point. maybe they will end up the year below what has been the 46.7% average comp ratio they had posted for the last eight year, but that remains to be seen. we'll look at the third quarter numbers. at this point in the fourth quarter after speaking to a number of people at goldman, they say we don't know where we're going to accrue for the fourth quarter. we have to see what the fourth quarter is like. last year it was terrible and we ended up accruing barely anything for compensation. >> if they do that plan that

david was talking about, would that work in terms of getting rid of some backlash? >> i think it would a little bit, but you're not going to go from 46% to 20%. you're still looking at $11 billion that's already been accrued for the first half of the year. this is an embarrassment of riches either way you look at it. even if they accrued 40% in the third quarter and 35% in the fourth quarter, you're still talking about a lot of money. now, of course, it's great we have this company on wall street that's doing so well and making all this money and a lot of which those bonuses will be tax receipts. we shouldn't forget that. it's better to have an embarrassment of riches and a very successful firm like goldman sachs than it is to have a whole bunch of citigroups. >> a lot of that compensation will still be, although this is yet to be determined and bankers are focused on this, how much will come in the form of stock. so much of it will. >> thaes an important point. am i naive to point out the stock market was higher than it was when we started this

brouhaha? the economy has come back to some great degree on many levels. unemployment though is not better. my point is have people settled down a little bit that they might be able to accept this number more than they would have say in march of this year? >> it would be less controversial. >> i bet the congressmen will be a little more upset about it. >> those arguments are valid but i think when people start to look at what the averages are, will it be $600,000 per employee, will it be some number that's ungodly given 10% unemployment, it's hard to imagine there won't be a significant outcry. >> the political situation is one thing, but i think the feeling around the country perhaps is better than it was in -- >> not if that unemployment number keeps going up. >> it's a lagging indicator. >> some of this will be, as david points out, it will be how the bonuses are paid. i think lloyd blankfein -- >> no, no.

>> there's going -- >> you know how journalists are. they're going to drill it down to one little number, nobody is going to realize some of it was accrued from a couple years ago. >> there's going to be a big headline, but the important point here is that from the safety and soundness perspective, and that is ultimately what people should be worried about here, is goldman paying out this money so next year we have a big blowup or that kind of thing? i think the way they actually structure the payments and it will be important for goldman to shed a little light on how they're going to do that. >> no doubt. last year the most they paid was $250,000. they had a lot of people deferring comp. continue forget it was very similar for all wall street firms. they're just making more money. >> thank you, rob. >> we didn't even get a chance to do the profits versus products debate. you will have to come back for that. weaver wat're watching the meetings. right now the chinese delegation is arriving at the airport. they're getting ready to be

welcomed by the officials that are holding that g-20 meeting, and they should deplane shortly. >> deplane there. >> deplane, deplane. >> tonight, biography on cnbc explores ray crock, the man behind the most recognized brand in the world, mcdonald's. his success did not happen overnight. he sold everything from paper cups to mixers before finally meeting the mcdonald's brothers. >> as ray approaches his 50th birthday, his business began to slow down. ray was losing customers by the dozen. but one small restaurant in san bernadine kn bernadineow, california, kept ordering more machines. in 1954 he flew to california and met the two brothers who would change his life. dick and mac mcdonald. >> that is just a sample of what

you'll see on the premiere of "biography on cnbc. it airs tonight at 10:00 p.m. eastern time. the message from google's ceo, his company is back on the acquisition trails. ready to make deals every month. which names have the potential to end up on the buy list? meanwhile, wall street is a little bit on the down side, but trying to pare its losses. not having much success. we're down 60 points on the trading session. we're cnbc and we are first in business worldwide.

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google's ceo eric schmidt is flush with cash and so is the company and it's ready to go on a shopping spree. earlier this week he announced acquisitions are turned on again at google with a about a one per month rate at what they might be doing. what companies are in the crosshairs? john akin with majestic research has come up with a list of potential targets. i was thinking about this. you have some interesting names here. these are all privately held. >> that's right. so we think that google will be acquiring companies likely in three main buckets. bucket one is geographic expansion. bucket two would be as it relates to video search or video streaming. both on the mobile phone, the smart phone, and the pc. and then lastly, any specific ad targeting technologies that allow them to dove tail with the recent ad exchange they just lau launched. >> and you could see them going to eastern europe.

>> that's correct. yondex did about $300 million in revenue last year, grew 80%. that could be very interesting for them. the market leader in the czech republic is also very interesting for them. a companied known by the name of sezman. less likely are neighbor and the market leader in china. google is quite focussed in china in building the google site there specifically. >> their stock just hit 500 bucks again for the first time since august '08. will they be more likely to use stock or cash? >> i think it depends on the company and the deal. the bigger companies they will probably use some stock. it's very interesting, we're seeing a turn in the business from a fundamental perspective that suggest estimates too are too low. they might use stock very similar to what they did with youtube. >> in video search, could you see possibly everyzing and

viewclip, a mobile search platform and in the ad oriented category, ad bright and contera. so there's the first six months right there. do you think they can maintain a clip of 12 acquisitions a year? >> there's a ton of innovation going on out there. what we see is take video search, it's not just one company that's the answer here. it's a very complicated question, how do you index a video and understand who is saying what in that video, convert the speech to text. understand who the person in the video is, so understanding facial recognition and converting that to a name. there's a lot of innovation going here. i should mention that we also think that just in general there's going to be a lot of m&a in the interstate space. not just google. >> can we talk twitter. $1 billion acquisition of two twitter by google. will it happen? >> it's possible.

i think some of these others are more likely. that's why they made my list and twitter hasn't. >> what do you think google's price discipline is when it comes to acquisitions? >> most companies their stock price goes down. with googles, it goes up. >> she's saying are they a responsible buyer? >> i think the youtube acquisition is worth $1.6 billion, sure. monetizing 20% of the ads on a billion viewings a day. >> straight ahead, a major advance in the fight against aids. nbc news chief science correspondent robert bazell with details on that. plus, the latest on what businesses are doing to combat the swine flu. and we're talking about the first losing week in three. 9672 despite a pretty healthy auction at the top of the hour. in any given classroom of 30 students, at least one child

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an important milestone and some new hope in the battle against aids. the first evidence that an experimental vaccine may prevent hiv infection and also swine flu preparations are stepping up. nbc's chief science correspondent robert bazell joins us from new york with more on all of that. hi, bob. >> hello, sue. how are you? >> good, thank you. this is an important vaccine. >> the aids vaccine was given to 16,000 people in thailand and 31% of the people who were getting the vaccine fewer got infected with hiv than were getting it. that's not enough to make a vaccine. but it is something that's the first important development in what has been a miserable string of mail fur wasfailures. this is -- what this will do is reinvigorate the field and give people at least hope to get funding to go on with it. this is certainly not a vaccine yet. >> but it does take them in

reading some of the articles that are out there, it takes them kind of in a different direction than they were going in the past. it's only a 31% success rate certainly, but it does take them in a different direction. it may give them -- >> it takes them -- indeed. it takes them in a direction they don't even understand yet because a lot of things happened in this trial, and it's a trial of human beings, not monkeys or mice, another reason why it's important. they don't understand why the people who didn't get infected didn't get infected because they had the same amount of virus in their body as the people who did get infected. there are a lot of questions, but those are areas of research that could lead to further vaccine trials in the future. they're still years away for a vac keen trial. >> was this a killed virus v vacci vaccine. >> this was a combination of two vaccines. one attached to a virus called

the canary pox. one was made by a company that went out of business and gave the rights of the vaccine to a nonprofit organization. so this has not been an area where companies have made a lot of money. merck heroically spent a fortune and lost all of it trying to make an hiv vaccine. this is not seen by most drug companies as a money-making venture. just something that humanity needs so badly. >> a quick update on swine through preparations. our own company is doing a lot to get people ready and hopefully keep them from getting the swine flu. >> yesterday i attended a conference at the university of minnesota's center for infectious disease on business preparations and swine flu, and the challenges are immense. companies with huge supply chains that come from overseas are really worried a lot. i heard reports about companies developing products in asia that are having 30% absenteeism in

some of their plants at a critical time when they're producing things that need to be sold at christmas. so when you think about what companies particularly very large companies need to do, it's not just protecting their workers, which, of course, they need to do, but they also have to think about their supply chains and other logistical problems. >> wash your hands frequently. thank you very much, bob. we appreciate it. >> we've been taking your e-mail over the last week or so on what you're observing. we'll talk on the phone with a front line correspondent, if you will, hot dog man will join us in just a moment. >> translato . >> the stock market not doing too well. down about 70 points. we are cnbc. we are first in business worldwide.

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we can't use them for a vacation. you can use the points for just about anything. i know... ♪ the way you look tonight ♪ chase what matters. get your new chase sapphire card at chase.com/sapphire. in the last week in our efforts to get a sense of what's really going on in the economy beyond the government's statistics, we've asked your personal observations. you have send us e-mail. we want to start talking to you as well. on the phone is roger in illinois who you own a hot dog stand there in northeastern illinois, right, roger? >> caller: that is correct, yes. >> how is business right now and do you feel that your business is a good economic indicator? >> i think it is.

i don't think any business is actually recession-proof. i think more than anything right now i have seen a lot of businesses in my area fail, but i think right now i feel like i'm just in a little bit of a slump more than a recession. >> what caught our attention in your e-mail yesterday is the number of customers who asked if they could start paying for your hot dog was a credit card instead of cash and you complied. >> yeah. i complied with that because if i -- they would walk away if i didn't take the credit card. i thought, oh, gosh, i'm losing business. >> when did you install the credit card machine and now are you finding that more and more people are willing to pay cash? give us a sense of where we are in the economy based on your sales. >> yeah, right now i would say my sales overallare about 10% to 15% on credit card and the rest cash and that way i have been able to keep my customers coming back based on that fact and i have had the credit card service available for one year now. >> business picking up or is it

down still? >> it varies day to day. sometimes you don't know how to staff your people when you think it's going to be good, it's not. when you think it's not going to be good, it is. >> how many -- is this one stand? how many people do you have working in one stand or do you own a whole lot of stands? >> no i just have the one. and four people, two during the day, two during the evening. >> good luck, roger. >> thanks for talking to us. >> thank you for this platform. >> he likes the "power lunch" indes. >> >> "street signs" with erin burnett is now. >> see you tomorrow. this is cnbc.com news now. >> the treasury saw strong demand at the last of three auctions this week as it sold $29 billion in seven-year notes. capping $112 billion worth of note sales. the house has voted to eliminate next year's scheduled increase in medicare premiums. the bill now goes onto the senate. google now says the problem that prevented g-mail users from

accessing their contacts has been resolved. that's cnbc.com news now, first in business worldwide. i'm sharon epperson. hello, everyone. i'm erin burnett. we're live from the floor of the new york stock exchange. the dow is off 63. the market jitters are proof of nervousness. was the surge too much too fast? is our economy really healing or just pausing before falling off another precipice? we tackle those questions with hedge fund legend julian. in october 2007 right here on "street signs" mr. robertson called the great recession. >> i think we are going to have a doozy of a recession. i think that the credit

situation is worse than anybody realizes and i think we're getting little inklings of that. >> well, the market saw 366 points that day. it was the first big plunge of a market collapse. robertson made that call ten days after the closing high of the bull market, although no one knew that at the time. well, right now i have asked julian robertson what his outlook is today. >> you're in for some real rough sledding. i don't know quite how it's going to come about. i really do think the recession is at least temporarily over, but we haven't addressed so many of our problems, and we are borrowing so much money that we