reporters are standing by. bob pisani at the big board. good morning. >> good morning. we did lose about six points on the futures on that weaker than expected durable goods report. second day in a row disappointing economic news and dollar rally. elsewhere, kb home, earnings report in. down 5%. narrower than expected loss. the ceo said it's likely going to be some time before we see meaningful improvement in the economic conditions that are essential to our business and our growth. that stock down about 5%. elsewhere, we're growing but not as much as you might have hoped for. hewlett-packard is expecting the ip industry to go in 2010 but they are conservative. the stock is trade down 1%. airlines, all the capital raises the airlines have been doing recently. ubs upgraded the whole group. favorite pick is united airlines. goldman sachs making a lot of comments besides oil stocks. upgrade essentially the entire refining sector this morning. let's talk more about that

later. tradertalk.cnbc.com. when your stock is up more than 100% year to date you better have a earnings report and outlook that hits the expectations. research in motion did not. the outlook particularly on the sales side was disappointing and research in motion shares are getting hammered this morning. down 13 or almost 14% premarket. the stock was also down after hours yesterday. the focus clearly is on the other smart phone makers today. apple is weak. palm is weak, as is google behind me. i want to point out alos therapeutic up 10% as the fda granted an accelerated approval for the company's key cancer drug. let's go down to the nymex and sharon epperson. >> global oil demand forecast, obama accuses iran of nuclear facility and yet we have oil prices extending their losses for the third day here. it is a supply/demand picture. we have so much inventory is something that has caused oil

prices to slip more than 8% over the past two or three days. we are looking as well at the dollar. dollar relatively flat right now. those comments from fed governor from the "wall street journal" today that also affecting not only the dollar but also affecting gold prices. gold prices sliding today at a two-week low right now. keep in mind we have been above that $1,000 mark for quite some time. gold selling off this morning. rick santelli, to you in chicago. >> thank you, sharon. you know anybody who was involved in the options on tuesday, wednesday, and thursday, well, they're doing pretty well. yields are lower. prices are higher. all of the consumated prices in the option process. the yield curve and all matur y maturities right now versus yesterday's settlements are pretty much unchanged. we do see that rates at 8:30 eastern on the durables number did come off a bit. the long end of the market has the most volatility. the dollar is the big story. and, yes, sharon's right, it's virtually unchanged. maybe just down a smidge.

but, but, it is holding on to sizable gains and what could be a technical bounce. a lot of that is fuel. yes, by the weakness in the last several days of equities. back to you. >> thank you very much, rick santelli. we are taking a look inside the wall street convention center. you can see ben bernanke about to address the congressional black caucus foundation annual conference any moment. we will take the chairman's opening remarks live later on. he will be answering questions. maxine waters will be asking them. that's always a fun exchange to watch, isn't it, mark? >> yeah. >> she's a pretty fiery congresswoman. >> very interesting western. >> she is. >> never dull. >> exactly. as we are awaiting, let's bring in senior economic steve liesman. >> this is right up liesman's alley. >> he pulls out the popcorn. what are you looking for? what are we expecting?

>> relax, a little sun, a little tan, that's what i'm hoping for. ben bernanke's remarks are not all that market moving. what he says that use of many fed programs are winding down. i wand want to add that yesterday the fed announced a program for winding down the 84-day portion of the term option facility and talked about the tslf winding down. he says there's still an ongoing need for the other acronym that begins with a "t." this is the one where the fed takes the loans money to investors that are selling asset-backed securities for business, small business, credit card, and student loans. talf indirectly finances $3 million worth of loans to households, and $400,000 worth of loans to small business. three of the four new talf ag t agents are african-american and expect to begin in november. that is directly common to maxine waters right there. i want to say one thing about

the durable goods thing. a lot of economists are discounting this report because of the volatility of the report. i went back and looked how they behaved in the post-2001 recession. and i'll concede that the decline in durable goods orders is much steeper this time around. but we did have what we just have the same thing, two up months followed by a down month. it's not out of the question. and he says he's discounteding this report because of the volatility. i know the market doesn't like it. economists aren't ready yet to call the rebound in durable goods over because of the single four-year, guys. >> looks like ben bernanke is beginning. so let us go there. >> thank you. good morning. good morning. thank you for the opportunity to speak during the congressional black caucus foundation's annual legislative conference. congresswoman waters, i appreciate the invitation and your leadership in this area.

i'd like to few briefs with respect to diversity and i look forward to our dialogue afterward. as you know, in response to the financial crisis that began more than two years ago, the federal reserve has introduced various programs to improve the functioning of key financial markets with the goal of helping to restore the credit that our economy needs. many programs have been winding down as the markets improve. one program for which an ongoing need still exists is the term asset backed securities loan facility, or talf p. this program which was implemented this year was helped to restart various types of consumer and small business credit. securitization markets are an important source of credit and virtual shut down during the crisis reduced credit availability for many borrowers. since this inception, the talf has indirectly finance 3 million loans to households, not counting many millions of credit card accounts, and 400,000 loans

to small businesses. investors participate in the talf by receiving loans from the federal reserve to finance purchases of asset-backed securities. talf was designed from the start to be available to a diverse set of participants. talf loans to purchase asset-backed securities are available to virtually any u.s. domiciled firm and firms can participate with investments as low as $500,000. there have been 121 borrowers so far, including investors of all sizes. since talf has opened to all investment firms, we needed agents to work with potential borrowers. in march i participated at the t.a.r.p./talf asset summit that you organized, congresswoman. at that sim met we heard a her diverse set would bring in a more diverse set of borrowers. on that suggestion we recently announced the inclusion of four talf agents selected to increase the diversity of talf borrowers. three of the four new agents are owned by african-americans.

we expect these new talf agents to begin operations in november. in the area of procurement, the federal reserve uses various methods to reach women and minority owned contractors. we use washington to publicize our opportunities. on second 2nd, representatives of approximately 60 companies talked to board staff about contracting possibilities. we are a member of the national minority supply development council and we regularly attend national and local vender affairs and conferences including several this year on how to do business with the board. our procurement staff works with board operating decisions in all phases of the contracting process. in addition, our procurement policies require that nearly all contracts include a subcontracting plan to describe the vendor's commitment to provide small and/or minority and women-owned companies the maximum practical opportunity to participate in contract performance. the board's chief acquisition officer oversees compliance with the board's procurement to sis

and practices working with staff responsible to oupt reach for women and minority owned companies. finally, i would also like to mention briefly the partnership for progress. the federal reserve initial tive launched last year in recognition in the importance of healthy minority owned depository institutions to many communities in this country. it supports minor by-owned depository institution through outreach and assistance and training examiners to better understand the unique challenges faced by minority-owned institutions. they remain committed to diversity and inclusion in our programs and our activities and i appreciate the opportunity to have this dialogue. i begin, councilwoman, thank you for inviting me today. >> thank you very much. flee please, a round of applause for chairman bernanke. [ applause ] the chairman has agreed to entertain some questions and to

create some discussion here this morning. chairman bernanke, first of all, i want to thank you for responding not only to today's request but to all of the requests that i've made of you as we have attempted to organize minority firms to get involved with the tremendous opportunities that have been afforded by the federal government at this time in order to stabilize this economy and get it back on track. having said that, there is a history of a lack of involvement of minority firms in all of our financial agencies of federal government, whether we're talking about treasury or fdic or the federal reserve. that's why we have been making such a push in order to open up these opportunities. you this morning alluded to the fact that in the talf program you have opened up some opportunities, and i think

that's what you refer to as having four new minority firms involved. would you explain a little bit more what talf is all about, how it operates, and who these firms are. >> i would be glad to. just a word about what the talf is. in the united states a lot of our credit comes from what's called the securitization markets. these are markets where original left-hande left-ha lenders like banks can bundle together and sell them to investor. it's important because it provides new capital from the security markets into the credit channels that are so important to our economy. we set up the talf to try to restart the securitization markets because they largely shut down during the crisis and that made the credit crunch even worse than it otherwise would have been. initially we focused on consumer and small business type loans. we had been working with auto

loans, student loans, small business loans, a variety of consumer loans incruding credit card loans, to try to get credit flowing into -- into the economy. minority involvement with the talf occurs a number different stages. let me talk that for a second. first, obviously, you have the people who benefit from the credit extension, those who receive the credit. and again, we are trying as much as possible to put credit into the hands of individuals in small businesses, communities, and we have consulted with minorities in order to try to design those programs as well as possible. for example, we met with minority auto dealers to talk about their particular needs for credit, auto loaning and floor plan loans. we changed some of the rules based on those meetings and what we learned from those meetings.

secondly, beyond the ultimate borrowers, we have, as i mentioned in my remarks, we have agents. agents are not paid by the federal reserve but they are companies which essentially facilitate the creation of these mortgagor other backed security which are then sold to investors. we began the process by using for our agents the primary dealers, which are the large companies, financial companies which interact with the fed and, in particular, manage the treasury options when the treasury sells large amounts of debt to the public. because those companies are required to underwrite very large treasury options, many billions of dollars, there are particularly large and sophisticated firms and typically publicly owned and they're to be used over large numbers of people. in consultation with congress and congresswoman waters and other members of the congressional black caucus we

recognized it was important to open up the agent's group to the minority-women owned company because we want to give them involvement and they can provide us to access to potential investors and borrowers in that community. so we did do substantial outrea outreach. the director of the talf program, bill nelson, is sitting on the front row and he did a lot of the work. and as i mentioned in my remarks, we added four medium size financial firms to our list of agents. three of whom are owned by african-americans. and that was, again, very helpful input that we got from a number of congress people and others in our outreach. third, are, of course, the investors. the people who buy the securitized assets and therefore provide the capital which flows into the credit system. now, there our main approach -- >> okay. i'm sorry. but we just -- we all have a

very short attention span and we're going to move on. >> we will monitor, though, this q and a and bring you, you know, developments. >> we don't have much hope for that. but anyway, the faber report. david's got a long attention span. just ask walmart. we've also got the ceo sara lee talking to david first on cnbc about the company's $1.9 billion in sales, $1 billion sale, the big deal today. stay tuned for that. when this school district added aflac to complement their employee benefits package, guess who became the new teacher's pet? aflac, aflac, aflac, aflac, aflac find out more at... aflac! for business.com and the duck says... aflac!

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welcome back. lever has agreed to purchase sara lee's personal care purchase for $1.9 billion. global body care and european detergents businesses. with us on the phone for a first on cnbc is sara lee's chairman and ceo, brenda barnes. ms. barnes, 1.7 times revenues, ten times ebita. investors seem to like the deal. why did you take it? >> we're very happy with the deal. we certainly see this as an opportunity to return value to our shareholders and felt that the attractive offer from unilever was going to do that for us. so we're quite pleased. >> you have been in the process of pairing down this company to core operations, food and

beverage. and you say in the press release, announcing this deal you also received significant interest in the remainder of your household business. can you give us any more information on that? is another deal coming soon? >> we intended to look at the entire segment for strategic review and the body care side and detergents that unilever purchase sd roughly 55% of that segment. we do have a process under way for the balance, and we're quite confident we will have something in the near future. >> you're saying significant interest, correct? that means a number of bidders are expressing interest, right?? >> yes, under way. >> why the billion dollar buyback? why not put all the money in the bank for now and give them still somewhat scary economic conditions? >> we happen to see our own company as a great investment so putting the proceeds p into buying back what we consider to be a good long-term growth vehicle is the way to go. and we have always been committed to return value to our shareholders. so we believe this is an indication of doing just that. >> so what's the strategy for

sara lee from here? let's assume that you do sell the remainder, pair down, shrinking your equity capital, essentially. is sara lee in that mode or are you also going to try and grow? >> we want to grow. i mean, that's what the -- all the steps we are taking are intepded to do. we think the best way to grow is to focus on our core business, very large, very successful international coffee and tea business and a very successful and large growing u.s.-based food company. and over last few years we've been doing a lot to build our brands, built capability, get a cost structure that is suited for the business and so we look for a long-term growth for sure. >> are you there with your cost structure? >> we're getting there. we announced recently we have on going efforts. we've been working out costs for the last five years and we have a new program that we expect to deliver few hundred million dollars over the next few years. we definitely getting there. >> organic growth after the

company after it is pared down where you want it? >> organic growth. we are gaining market share. our growth rate is throughout this entire economic climate have been doing quite well. and we also have talked about for the right acquisition we would be interested in it builds on our core and is a good value for our shareholders. >> stock look up today. how long to close these deals? >> likely within the fiscal -- within the calendar year 2010. we have to go through the proceeds with our works council, advise our employee base there, as well as eu regulatory clearance. >> brenda barnes, chairman, ceo of sara lee, thank you for being on the phone with us. >> thank you. next, the word on the street and buzz beyond the trading floor. plus, because you clicked, alcoa, the stock gaining about 150% since the haines bottom but pulling back about 4% this week. didn't sara lee work on haines?

time to jump into the blast furnace. we'll take a look "because you clicked."

all right. let's check out the futures. they were positive until we got that durable goods numbers. that took a little bit of the steam out of the market. about six points. so now we are more than four points below fair value. but still, that's only about 15 points on the dow. >> right. now let's get the buzz beyond the big board. art hogan, managing director of jefferies joining us for that. good morning to you.

>> hi. >> saying essentially economists are discounting the durable goods numbers today buzz of the volatility in this particular number. and yet that's what put the numbers down. is that an excuse to sell? >> i think we've been looking for a an excuse to sell. if you look at the numbers, existing home sales, we had a big july and disappointment this month. sad thing is true of durable goods. huge july move. cash for clunkers, first time home buyers. and same thing with new home sales. and again, the august numbers going to be disproportionately disappointing for the month of august. i think you're right in terms of it is an excuse to sell. we've been looking for an excuse to sale for the last 20% move in the marketplace. first it was going to be the month of september. now it's weak ee eer than expec economic data. i wouldn't put too much weight on it. >> at the same time, we had research in motion disappointing

revenue numbers. disappointing guidance in the third quarter. is that going to take the wind out of the sails? >> i would say yes if that happened in a vacuum but hewl t hewlett-packard was upbeat. they had good things to say across the software and storage. and margins and the business, et cetera. so i think a lot of things coming out of hewlett-packard may override what we're hearing at r.i.m. and their numbers. you're right, r.i.m. is one of the darlings but hewlett-packard had good things to say, too. >> from the standpoint of that, art, it's usually not a good thing. >> yeah, i think you're correct. but as you look at it, you know, put things in perspective. we've had two days in a row to the downside. it's a friday. we're coming into another day of economic data report and you pointed out futures aren't taking it that hard. i think it seems like we have a more orderly sell-off which is really more indicative of buyers

pulling back than massive panic of sellers coming in. we've had a sell-off every afternoon. volume has been just okay, just about average. it's not like that massive correction that everybody has been talking about, watch out for september. now we're going to have to watch out for october. >> so, i'm sorry, we're out of time. i just want to cap it off. it sounds like you're not overly concerned about downside risk at this point. >> i think we're going to see a pullback. i just don't know what the catalyst is to drive it. i wouldn't be surprised to see 10% downside, 15% downside out of october. >> thank you, art hogan at jefferies. here come the bells. at any moment, in ten seconds, in fact, you will hear the intense, big board, the president of panama, ricardo marcenelli.

>> exuberance from panama. >> he has a lot of fans here. >> at the nasdaq, representatives from the world economic forum. >> our market reporters are standing by everywhere you want to be, as usual. we kick it off with bob pisani on the floor. >> futures really lost about six points on the s&p on the durable goods number being low expectations. second day in a row now we've had disappointing economic news yesterday on the existing home sales. bear in mind now we get dates when you get disappointing economic news, the dollar tends to rally immediately, safe haven, and then we see the rest of the markets to the downside. kbtoys from the around the corner. down 5% preopen. they did post narrower than expected loss. that's good news. the ceo made very cautious comments, saying we likely some time before we see meaningful improvement in the economic ek conditions here. let's talk about sara lee, up 7% on that personal care deal that they had. you saw david faber talking to

the ceo with unilever and sara lee. important thing here about the overall markets here, as we've had a very good week for some revenue raising. some of the airlines and it's a result we've got some positive news with the airline fronts. hewlett-packard also doing some good things. important comments. they expect the i.t. industry to grow in 2010. but guidance, including revenue guidance is on the conservative side. that stock is opening on the downside. i membersed the airlines, let's go over here to amr. opening up 2% right now. we did get ubs upgrade of overall. remember, they have had very good capital raises recently. their stock has been trading better. goldman sachs open grading the refining group. positive comments on oil as well. trad tradertalk.cnbc.com. how are we at the nasdaq? >> down half%. research in motion following the earnings and outlook after the bell yesterday. the outlook particularly on the

revenue side was weak and the stock is just getting hammered this morning off the open here. down 15%. but as i've mentioned, the stock is up 100%, it was before this move, 100% year to date. so there was a lot to live up to. clearly there are a couple of notable downgrades. basket full of down grades, most notable, goldman and deutsche cutting it to a sell. appling looking at the other smart phone maker this morning, apple is down 3/4 of a persz. palm is getting a fractional move to the upside. motorola which trades down at the nyse has opened down 1%. google is weaker as well. focus on allos therapeutic, up 4%. fda gave the accelerated approval to one of the company's key cancer drugs. again, nasdaq opens weaker by half%. the story remains around research in motion and the disappointing outlook as the share is down 15%. let's go to sharon at the nymex. >> last two minutes as the stock market has opened, we've seen oil prices actually we rebound

here. oil up about 30 cents, above $66 a barrel. as the dollar index has weakened a little bit further. we were extending a two-day slide. looks like oil has rebounded a bit from the 8% slide over the past two days. goldman sachs out with a note today saying that they see oil prices reiterating their view that they would go to $85 a barrel by the end of the year. they're saying that oil demand growth globally will recover in the forth quarter and extend that through 2010 due primarily to not owing countries and the higher gdp forecast. we're also looking at stocks we relative to oil prices. london says that went you look at what has happened there you have to see how oil prices may, in fact, pull stocks lower over the short-term here. we are looking at correlation. the highest that we've seen since april. so again, a lot of times we're talking about stock leading oil

prices right now it might have oil set to potential i lead stock lower. rick santelli, to you in schalk. >> thank you, sharon. let's cover two points. we first look at the op-ed piece, of course, today regarding the fed may be mopping up some liquidity. you see that the markets are at least considering the possibility that what's in print may -- has a possibility to turn out to action. but it is a bit too early to tell. we'll be debate that all day. tens, minus twos, flattened. remember, if there is a mop in somebody's hand, it will show up in a flattening trade because short maturities may lead the yields higher, of course. second point is the dollar. the dollar index is down a bit. but it is obviously a bit euro sent trick and it's not down much. what is putting pressure in many ways is the yen. the yen is off to the side. it continues to perform well. but there's a caveat. they're on a fiscal year that

ends in march, which means the end of this month is the mid point of that. there are repeatry asian issues and a lot of dynamics there that might clean themselves up as we get into october. mark and erin, back to you. >> all right, thank you very much. >> thanks, rick. >> steve liesman? >> mark. >> thank you very much, rick santelli. thank you very much, whoever that was. right. markets opening slightly lower. expected that, 28 points. here to share than investors strategies are tyler bernen, money manager with built more capital. and doug maccay, president and ceo -- cio of broad leath partne partners. doug, where are you locates? >> cleveland. >> okay. the first word always goes to the person farthest west. so what do you think of the markets here? >> we've had a great run, 60% off the lows. i think the main message that i would like to give is that, year to date basis, we're just up about 18% on the s&p 500.

and at least historically speaking coming out of a recess, the market has averaged a 30% gain. i would argue given the severity of the recent downturn an even bigger number might be possible. so we're bullish. >> okay. >> we're somewhat a mixture. we think we're in a sideways ma market here. somewhat similar to the pattern of the '70s. from a fundamental standpoint, the market is way ahead of itself. the cash on the sidelines getting nothing in the money markets is going to provide a lot of supposed prort for us. we think we will be in a sideways pattern for quite a while through the earning seasons. >> tyler, you're not saying get out. you're saying use the market to your advantage. volatility index, that's hitting historically low levels, reverting back to the mean. therefore, buying protection on your position in the market is lower. >> yeah. let's face it, we have barely -- look at the period of time we've come off so quickly off the lows. so at this point, relatively

historic low, s&p is a great play for a lot of individual investors. and typically in sideways markets, even though vix is low at this point, covered call strategies make a lot of sense. if you can pick up 9%, 10% income in a given year and bring in a good dividend, strategies make a lot of sense. we're rolling out a lot of these new strategies. >> doug, a couple of weeks from no now we're going to be in earning season again. will it be enough for the market to have continued bottom line improvement with not so hot top line? or do we need top line growth, too? >> i think the message over summer earnings was a less bad is enough to boost things. six months into market bottom or often market bottom you typically see fundamentals start to improve. so i think this is the quarter where we need to and we will hear companies talking about things being better rather than just less bad.

>> so where would you put your money? >> i would still play on the cyclical side of things, although shifting within that. maybe moving away from the early cyclical, consumer discretionary names, more towards the later cycle plays, industrials in particular. i think defensive and health care, utilities and staples are likely b going to continue to lag through year end. there's some good values there but that's how we're positioning the portfolio. >> and for the record, tyler likes technology and infrastructure plays. thank you, gentlemen, very much. tyler vernon and doug maccay. let's get back to steve liesman, he's been monitoring the bernanke q and a. steve, we want to talk to you about what's the buzz on the floor today. that is assessment of what the fed needs to do and how aggressive it needs to be on its exit. >> it's unusual where the most important comments don't come from the fed chairman. he basically -- brach tackdrop

said the fed has been winding down programs because mortgage is improving but he's saying there's still an on going need for this term-assets back securities loan facility, where the fed helps investors do asset-backed securities. talf financed 3 million loans to households. 400,000 loans to businesses. and telling the congressional black cause cuss thcus that thr four are african-american. he took questions, of course, on issues of minority assets to fed contracts and issues related there. but the more important comments from fed governor who right after the fed said they were going to extend the purchases until 2010, and said we would have lower interest rates for an extended period, this was just on wednesday that kevin voted for this, david. now he's saying this, quote. policy will likely need to begin normalization before it is

obvious, it is necessary. translation, maybe before unemployment peaks. possibly with greater force. translation, not necessarily a quarter point increments. than is customary. so the idea being that kevin warsh is talking the other side of the statement of what the statement said here, mark. >> well, what does this mean, steve? you know? i mean, so far our experiences bernanke fed has been, they've been very clear, i think, particularly much more clear than they used to be. now, is warsh just going off on his own is this like the first warning shot that, hey, interest rates policy is going to change? >> mark, you've known me for many years and i either have the answer or i pretend to have the answer. >> you do that so well. >> thank you. >> if you can fake sincerity, you've got it made. >> but here i'm a little confused.

warsh is not just any fed bank president there. he's a fed governor very, very close to ben bernanke. we have been able over time to read his comments as being those as kind of curtain razors on bernanke's thinking here. what is tin tension of saying that rates will be low for an extended period? it is to influence the far end of the interest rate curve, which the fed has been successful in doing. what would be the affect of aing these remark, they would be to send them the other way. and so it's interesting to me that he is talking out the other side here and it's unclear exactly how to process these, mr. haines. i can't fake that. >> i think he's being sincere about that. >> i can't fake that. >> thank you, steve. >> pleasure. up next, nobody doesn't like sara lee, nobody doesn't like kahuna and the brain. actually there is one woman who really doesn't like joe. but then there's a couple of guys who really don't like me, so we -- >> it all evens out. >> no, everybody likes the

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welcome back. let's take a check of shares of research in motion. disappointed earnings yesterday. close down 12%. average selling price, new subscribers in the quarter, disappointment. third quarter, current quarter, i should say, revenue forecast is also disappointing. you take a look also at some of the component suppliers to the blackberry, they're also down sharply on the news. on to commodities corner. let's check on oil as the u.s. national secret iranian facility is months from going online. reaction, oil, not too great. higher 46 cents a bear approximately $66.45 the level

currently. also keep in mind we've had two pretty sharp days of declines for crude. take a check on gold today. it is still below that $1,000 an ounce level. $990, down just about 1%. i'm confused. >> why are you confused? >> well, i mean, brazil is apparently found a huge amount of oil offshore. >> but that's like a decade from going online. it's going to take a decade to bring that oil to the surface. >> why can't we -- >> you're going to have to. >> and also a big find in the gulf of mexico. >> also a decade away. anyway. >> but -- all right. time to check in with the kahuna and the brain. you know, not to get off on a tangent here, joe. >> tangent? >> get off on a tangent? >> please do. >> i was just wondering whether -- you know, we used to hear from certain e-mailers. have you heard from helen at all

lately? >> helen, no. >> i haven't heard from a guy who is my helen. >> it must be amaze for her to hear that, to know that there's really just, you know, she thought everyone was sending stuff like that in. but we did blow off sarkozy this morning. we had -- >> cool. >> we had the president and we heard everything he said, and then the minute sarkozy got to the mike we dumped out of it. >> i thought that was so smart. >> to dump out of it. >> did he speak in french or is english? >> we didn't even get -- >> did he bring his wife? >> that's what i was curious about. no, she was not there. she's been next to him, we would have seen her. >> we would have stayed with it. >> david and i were just talking about the lack of corporate -- of real corporate news because daiftd has been focused on the unilever. >> we had brenda barnes on. sara lee is an interesting story. $1.8 billion deal in in is of size. it is amazing how little true

corporate news there has been. not just m and a but in general. obviously we're not in an earning season if you look at sara lee. investors like this deal. 1.7 times revenues. they are becoming, joe, just all about food and beverage. >> this is a company right next to us, right? >> unilever. >> yeah. >> right next to where we are on trillion dollar mile, they call it, in inglewood cliffs here in new jersey. that's nice that they're doing that. what have you been talking about on "squawk box"? >> i was going to say that. that we had this morning, we had howard dean on for two hours and we sort of go back and forth with differing thoughts about a lot of different things. but we don't -- >> none of which have to do with unilever and sara lee, that's true. >> we will get back to a period, a lot of stuff. >> maybe we will. >> we're starting to see a little in the name. not the deluge that some people

are hoping for. that's not going to happen. >> i told you what i did for you. the news i picked out was walmart, five-year chart, because your big special which, you know, is following up on the most successful special documentary that cnbc had, the first walmart. people are still interested in walmart. >> 1.4 million employees in the united states. you might imagine thaechb just a small percentage of them watched that. >> david, the stock price is right where it was when you did your first documentary, unfortunately for shareholders. where was this five years ago? earnings have continued to probably at least double since then. >> yeah. >> the multiple has come down. >> what does that mean? >> i saw an interesting piece in barron's where a gentleman was trying to explain that and said you shouldn't even use multiples anymore. if a multiple is 10 or 20, don't use it. >> in this incredibly low interest rate environment where

you might expect the opposite -- >> have you talked about warsh's piece? >> liesman was talking about him. >> that was interesting after what they did. they voted one way two days ago. i think it's easy to figure out. they -- anyone who took the exit two days ago to say they're going to be free wheeling forever, they wanted to rein in in a little. >> i want to say one thing and end it up and probably come back to it. there is a growing cone census in the hedge fund community that rates are going to start to go up significantly. you heard that from julian robertson in erin's interview yesterday, out into the future. you can put on an interest rate swap that begins in five years, which by the way, you can, you might want to do that. >> he was still in a bad mood yesterday. julian still very pessimistic. >> was he really talking about eruptions? >> yeah, it was -- little disconcerting. the dow has come back from that -- what was that knee-jerk to the durable goods numbers. what did we open, 30 or 40

points. >> yeah. >> yeah, mark, the e-mail is, you shouldn't take us seriously. you don't read yours at all anymore do, you? >> he doesn't read e-mail. >> very little. >> you can't please all the people all the time. >> that one guy who, aileen with helene e-mailed you almost every day for years. and there was a guy who e-mailed me almost every day for years. >> yeah. >> and they're both gone. oh, well, i'm sure someone else will come along. >> no doubt. >> thank you, joe and david. have a great weekend, guys. because you clicked, alcoa. >> yeah. the stock up about 150% since my bottom. but at that rate, is steel, still in steel. we'll ask the analyst from wall street strategies, because you cliktd.

all right. we're back. this is live picture in los angeles. a refinery, firefighters battling this refinery fire near the pacific coast highway.

i'm sorry they're not telling me exactly where this is. oh, willimington. very industrial area. oil has picked up a little. maybe that's why. it was down most of the day. we'll get a live report from the nymex on oil in just a few minutes. as you can see, oil was down around 8:30 this morning by, what, about -- more than half a buck. now we're up about half a buck. >> okay. believe it or not earning season just a couple weeks away. that means alcoa is already on investors' radar. we've got all you need to know about the stock because you clicked. joining us now with his analysis, david silver, analyst with wall street strategies. david, alcoa earnings are coming up. sharp design yesterday. down 2% today. buying opportunity ahead of the earnings report? >> i don't think it is, not yet. the stock made a great move over the past six months.

basically since the lows in march. aluminum prices have gone through the roofr. the end markets are looking better than hey had six months ago. i don't think we've come far enough fundamentally to justify the movement in the price of the stock. >> you had me going there. everything you said was good until the very end. what more do you want? >> fundamentally, inventories are high. not just throughout the world. prices are, you know, it's tough to be in an environment with rising prices, rising inventory levels and production that's relatively flat. china is still increasing their production. they're putting more smelters online every month. but they're operating at about 75% of capacity. >> we've got to cut it there. thank you very much, david silver said fade alcoa. we'll be back with some data.

durable goods orders dropped 2.4 pst last month. economists have been looking for a small increase. consumer sentiment improved this month. rising to 75.3 from 65.7 last month. and ge vice chairman bob lutz

tells cnbc they will return their car as part of gm's new satisfaction guaranteed program. that's cnbc.com news now. i'm courtney reagan. new home sales hitting the tape. rick santelli, what's the number? >> well, the number on the new home sales is 429,000 seasonally adjusted annualized unit. that's a minor improvement to revised 426,000. a bit below expectations. but, hey, it's up 0.7 of 1%. that isn't bad. it wasn't that long ago this series had the worst level. and you have to go back to july of '05 to see the peak at almost 1.4 million seasonally adjusted annualized unit. that puts it in perspective. michigan, 73.5. the best since january of '08. and how are those two both data points important affecting the

market? the equity still can't get into positive territory. and treasuries haven't moved large. it hasn't had a huge effect yet but it's a friday, david. you never know how these things can turn out especially with the correction that ensued starting wednesday on the equity side. back to you. >> hank around. let's bring in diana olick to get a reaction to that new home sales number. there are so many things we focus on when it comes to the housing market these days. that housing market is so far from many historic norm. how much should we be paying attention to a new home sales number? >> new home sales are very important. they don't make up as much as the market, only 15% of the existing home sales do, which was an very important number we saw yesterday. this is a slight disappointment. we did see the month revise down in july. i like to look at inventories. that is the key. we're still seeing inventories coming down. now to a 7.3-month supply. in july it was 7.5-month supply. what i'm seeing is price reduction continuing. in july we saw prices down year

over year 11%. august, we got them down 12%. that is what has to push the sales because, remember, august was really the end of that first-time home buyer tax credit opportunity for new construction. you had to sign your contract, get it in the gate, and then have the building for next four months in order to close on a finished home by november 30th, which is the expiration date. so i thought we would see a little bit more of a surge in august. people trying to get in under the wire on the tax credit. we didn't see that. again, interesting numbers. >> you mentioned inventory, diana. shadow inventory has become a big topic of discussion if the housing market. how big is that? >> huge. >> 7 million homes that are working their way through the delinquency pipeline. >> exactly. we know that the banks are having a lot of trouble getting all the homes through the pipeline. holding them in that 90 and 120-day bucket. there's a huge amount working its way through the pipeline. the question is hum are those

are modifications or foreclosures. a lot of folks think they're going to end up in foreclosure because we're not seeing a great rate. so if you see those homes coming through and becoming excess inventory over the next several months that's going to push your prices down again. and that's going to push supply up again. it's just not good for the health of the market. but, if we do see improvement in those modification programs, you know, hedge it a little bit, but again, we're also waiting to see what the redefault rates are on some of the new modifications. that data should be coming out around the turn of the year when we start to see three- six months down the road. >> diana, you did a great interview the day before, people were talking about it for hours with the new head of fha. what i want to bring up is, in various discussions, you pointed out that even with the unbelievably low paltry, almost insane 3 1/2% down, you defended that because you thought it would impact inventory. do you still feel that way? >> i'm not defending it. what i'm saying is that there is

no long area subprime mortgage market. it's gone. it's history. what the fha provides is to give people lower to moderate income the opportunity to buy a house. remember, these are not those subprime clones that were risky. >> credit scores have improved, as you pointed out. >> much stronger underwriting. if that's going to get more people in the market to suck up that inventory that's going to make the market healthier. >> diana, i guess i like to look at our own individual lives and hope our leaders have the common sense that many americans have. if you are selling a home and you had to finance the buy, would you take 3 1/2 down with even a good credit score? >> if i had insurance on it, look, these people are paying insurance premiums. >> who gets that insurance? >> they could be higher premiums with people with lower credit scores. fha is looking at higher credit scores. >> that's true. diana, i don't want to be pollyanna, but, you know, i wonder whether even with another wave of foreclosures, since

everyone tells us it's coming in 2010, i wonder that will force prices lower because we seem to have reached a price level where buyers are coming? >> we're reaching a price level at a certain level. when we did the existing home sales report yesterday i broke it down by price point. everything from zero to $250,000, great. prices are coming up a bit because there's lots of demand. there's a two-month supply in that price range group get over $250,000, forget it. that market is dead. prices are still coming way down. people can't get jumbo loans. it's a very bifurcated recovery. >> tax credit, was eight good thing or bad thing or does it not matter given the new home sales numbers? >> it matsers. the realtors say it brought in another extra 350,000 numbers. i don't know. i think it juiced it a little bit for sure. >> all right. we've got to leave it there, everybody. >> yep. all right. thanks, everybody. david, everybody else. let's find out how this morning's news is playing out.

second half hour of trading is under way. we have clawed our way back to the plus side after being down around 40 on the dow. bob pisani, what's going on? >> well, first time home buyer tax credit juiced things up so the national association of homebuilders is lobbying to have that extended. likely, you will see it will be. let's talk about the s&p here. down 2% from the intraday highs for the year. what was that, three days ago? a lot of whining and concerns? folks, 2% declines, give them two days of disappointing economic news on existing home sales and durable goods, no big deal here. let's talk about the whole last six months. 54% increase. s&p is 20% above its 200-day moving average. that is a very rare occurrence. it's a bullish shine for the signals for most of the traders i talked to still we remain on the bullish side. let's talk about homebuilders. kpb homes, more importantly, the kb homes observation. earnings reports were out. not as bad as expected but very, very cautious for the next several months. still they said it will be some

time before we see meaningful improvement in the economic conditions p. that's the ceo of kb homes here. finally, note the refiners all up on a big upgrade by goldman sac sachs. they had comments from isle. upgraded from big refiners. holly and big names there on the upside. tradertalk.cnbc.com. we're weak but off the worst level, down 0.2%. research in motion remains weak off that outlook. they'll have influential analysts coming on that you will want to hear from about research in motion m going forward. apple shares positive. palm is up. google is higher now. even the semiconductor index which was off about a percent or so has basically come back towards the flat line. you see some o oemponents within that, the likes of intel and sandisk. even though the chips are weaker off the worst levels at day. allos therapeutic, interesting story.

off the best levels. up 1 1/2% as the fda granted approval to one of the key cancer drug. the headline is the nasdaq coming back toward the flatt line. research in motion is still weak. sharon at the nymex. >> scott, the headline that traders here on the floor are paying attention to are coming out of west coast, out of los angeles. and in terms of the plant that was on fire this morning, you're looking at some live pictures, i hope, of this plant in the wilmington area. the coker unit there incorporated is has been has been effected. 62,000 barrels per day. we are seeing an impact in the product market. we are looking at live pictures of that fire that started at 5:00 a.m. this morning, west coast time, pacific time. no injuries right now. evacuations are under way. we're awaiting for a official comment from tesoro about this fire. the lift in oil prices almost a

dollar here. probably has as much to do with the dollar index dropping as it does with this fire. in fact, much more so probably with the dollar, with the stock market relatively flat. the dollar index is what folks are paying attention to. natural gas, options expire for the october contract today. we could see some more volatility. futures expire on monday. mark, back to you. >> thank you. r.i.m. tanking 15% this morning after reporting very disappointing reports. blackberry maker's outlook as we head into the holiday season. here now to go inside the numbers, tom ranked group analyst and research with citi. good morning, thanks for being with us. >> thank you, mark. >> how bad is it at rimm? >> this thing was up over 100% year to date. it needed a perfect report and guidance. it was a mixed bag. technology stocks presenting a mixed bag of results is definitely not what the market is looking for and what is needed. that mixed bag last night

definitely had a lot of concerns in it. >> so is it over for the stock, or what? >> we don't think it's over for the stock. what's pressuring it right now is the sales impact from a lower asp from some of their products coming out later in the year. importantly, gross margins and epfs are noting kraing and breaking down but the stock today looks like it is cracking and breaking down. there's a bit of a disconnect but we think throwing in the towel here is late and we think that, importantly because they're keeping more janes and etfs up and growing, that we are sticking with this stock here. we have a $100 target price. >> can the margins stay up? look at all the competition, iphone, motorola, samsung, everybody is coming after their space. >> you're right. everyone is coming after their space. it's important to note rimm represents 3% of the market. everyone is coming after the smart phone space. we actually think that the iphone and blackberries and many

of these can be very successful at the same time as a feature phone, the camera only, voice only phones, the phones that come people may use without live texting and e-mail on it are going to start to go away. we think the smart phone segment in total can out perform the market. but right now rimm is the one that has the target on it today. >> jim suva, thank you for sharing your thoughts. up next, the stock market up 48% since the march bottom. signs the economy is stabilizing after the worst worldwide recession since the 1930s. but, is the dollar permanently damaged? then, president obama sends a warning to iran. publicly demanding iran open up a secret nuclear facility to international inspectors. and meet the man who came to america with $20 in his pocket and today is a small business owner living the american dream. you're watching cnbc, and we are first in business worldwide.

oh please. you got the presentation? oh yeah right here. let me stow that for you, sir. thank you. you know, just to be safe i used fedex office print online. oh you did? yeah -- they printed and bound 20 copies of the presentation, shipped it to portland, they're gonna be there waiting for us. that's a good idea. yeah. you have a nice flight. thank you. (announcer) print online...you upload your document -- we'll take care of the rest.

when most investors think of the carry trade they think of the japanese yen but the falling dollar is expected to keep falling. pushing the green back to the center of the carry trade. this means that global investors are increasingly borrowing dollars to fund higher yielding currencies and assets like stocks, commodities and emerging markets. is this necessarily a bad thing? does this mean the dollar is the new yen? here for a street fight, brian dolan and peter shift, president of euro pacific capital now run for a senate seat in connecticut. peter never met a green back he didn't like. and the author of how to profit from the economic collapse. peter -- wait a minute. brian, where are you? >> in new jersey. >> new jersey? >> yep. >> you're connecticut?

>> yes. >> first word goes to brian. brian, is the dollar the new yen or are we going to be the carry trade carrier? >> for the time being, it is. u.s. short rates are very, very low. they briefly dip below japanese rates last week. so the dollar is extremely cheap to borrow in. for that reason it is a funding currency for the risk trade. i don't expect that to turn around materially until sometime middle of 2010 when the fed begins to indicate that it's going to move to a tighter policy. >> and peter, i assume you don't think the dollar will strengthen until sometime in the next millennium. >> i don't know when it's going to strengthen. the dollar is not the new yen. unfortunate lit it's the new peso. from the perspective of being a funding currency for carrying trades, absolutely. the yen carry trade is over. the new japanese government is talking about the benefits of a strong yen for the domestic economy. the rate differentials that were keeping in yen in check is not there. the yen has gone higher.

the dollar is going to go lower which makes it ideal. not only can you borrow dollars keep and borrow a carry but the dollar is going to fall sharply. they're going to make a ton of money. the fernl reserve is in a box. either they're going to supply the carry traders with an endless amount of cheap dollars to borrow or they're going to put an end to this trade and aggressively raise interest rates and bring on a much more severe recession than anything we've experienced so far. >> at the same time, brian, i mean, isn't it a foregone conclusion, essentially, that the government will not allow the u.s. dollar to become the new peso simply because that would be so at the tidetrimenta trading partner, people like china who have their reserves in dollars? >> that's exactly right. so the u.s. is very interested in supporting the dollar. they're not going to let it fall out of control. and i believe the g-20 also is on board for that. we will expect intervention if the dollar did go into weaken

significantly. >> remember, though, a weak dollar -- >> significant amount of borrowing left to do and they're not going to be able to do that if the dollar is falling precipitously. >> we have to stop the borrowing. the weak dollar is bad for americans. it's not something that our trading partners have to worry about. they're going to be fine. it's americans stuck with the currency. >> their currency strength is undercutting their own recoveries. >> no, it won't. >> all been extremely vocal about that the it. >> won't. >> gentlemen, i'm going to blow the whistle right here because let's agree to disagree at this point. let's get to the trades. what sort of trades do you fashion based on your respective investments thesis. brian? >> sure. the risk trade is probably making a medium term top. the dollar is making a medium term buy. when i look to re-establish the commodity trade, buying on the dollar, a little bit lower, around the 77 to 80 cents area. buying the canadian dollar. when that's back around 1.13 to

1.15 against the u.s. dollar. >> peter? >> i already own the currencies, i own a lot of japanese yen. i think the chart looks fantastic. i wouldn't be looking for significant pull backs in the currencies. if they come, sure, buy them with both hands. but i think there's a much better chance that the dollar drops through a trapped door here. >>rd shorting the dollar, peter? >> i've been shorting the dollar for years. i do it because i own foreign currencies, precious metals, foreign stocks. the dollar is a fatally flawed currency. >> peter, we know that. gold at 1,000. buy it or hold it? >> buy it, hold it. the dollar is higher. we're still early on this bull market in gold. have you bought any gold yet, mark? come on, you can buy it. there's no policy at cnbc that you can't buy gold. >> i could buy gold. >> call me up. i'll get you some. >> will you get me a discount? >> i can't give you a discount.

>> well, then, forget it. >> the price is going to go up. it's a discount no matter what. >> peter, good to talk to you. brian, same thing. >> thank you. straight ahead -- >> oh, yeah, almost an hour now into the trading day. handful of stocks making some big moves, including one that adds some fries to matt necessanest's shake. >> what ind of shake? >> shimmy shimmy shake. >> bus, iran, accusing tehran of building a secret nuclear fuel facility for several years. we're live at the g-20 meeting, and that is next.

i want to take a lock now at stocks on the move. better to ask, and that would be

the one and only, matt nesto. matt? >> thanks. appreciate it. the stock was one of the worse in the s&p early. down 5 1/2%. now down only 50 cents, 2%. but it's still down about 12% so far this week. and now for five consecutive days. underperform to neutral at baml. both, massey is downgraded, lower 1% from neutral to overweight at jpmorgan. it's been volatile. mcdonald's, one of the best performers in the dow. 1%. initiated at out perform at bernstein and starbucks. it is also one of only a handful of stocks in the s&p 500 that just crossed above its 200-day moving average. mcafee, up 6%. text tron and industrials are hurting here today.

down 1%. it is neutral. check out the dish, fish on a dish as they sing. reiterated out perform at credit suis suisse. stabilization of their subscr e subscriber base is one of the reasons. melissa, back to you. president obama this morning revealing for the first time iran has been working on a secret nuclear facility in a heavily populated holy city in iran. that facility is only months away from becoming active. he spoke about it at the g-20 in pittsburgh this morning. >> iran's decision to build yet another nuclear facility without notifying the iaea represents a direct challenge to the basic con pact of the center of the nonproliferation center of the regime. >> it steepens a growing concern that iran is failing to live up to the international obligations. john harwood is on the scene at the g-20. what is your assessment, john? >> well, this is really taking

over this g-20 session, providing a real dramatic headline to this meeting that didn't really appear to have one coming in because the communique we expect the g-20 to issue on economic policies, fairly well-known. it's calling for balanced growth and a shift in the economic patterns of china and the united states. but this is something that president obama, i think, believes puts him on offensive, puts iran on defense coming up to these talks in october between the so-called p-5 plus one country, five permanent members of the u.n. security council plus germany. they're reyou inning ta innin n talks with iran. they are hoping to get momentum, momentum from sanctions from china and russia within the united nations to put a halt to that nuclear program. >> what is your opinion in terms of the catalyst for it to take place, will it be the october 1st meeting? >> i think it's going to be the

october 1st meeting. we've seen incrementally the changes along the way. i just left a white house briefing where administration officials said they informed medvedev at the bilateral meeting. and medvedev said that. it was a stein that russia was tilting with the united states against iran on this question. so i think we see some early dividend from this intelligence disclosure. we'll see whether china now comes along, the statements we've gotten so far from the chinese government don't indicate much of an appetite for sanctions. but this is a dynamic process and we'll see what happens over the next two weeks. >> okay, john. thanks so much for that update. john harwood, live in pittsburgh at the g-20 summit. crayola crayons, just a nickel in 1903. not only one of the most

recognized products but helped put the town of easton, pennsylvania, on the map. >> adds the years passed, the company flourished. at first, of course, production was slow. mup of it was done by hand, painstakingly packaging and labeling the crayons. >> children, children! >> reporter: the company offered crayons as a way to expand kids' minds and even reduce adult stress. >> introducing fast, fast relief for the tensions and discomfort sometimes associated with children. relief that can last for hours and hours. good old crayola crayons. >> louisville slugger and tobasco sauce, two otheral all-american brands put their towns famous. 10:30 tonight right here on cnbc. well if you believe there's more opportunity than risks in this market, have we got the friday trade for you. coming up, news to make the day

if you can sleep easy this weekend. you're watching "squawk on the street" on cnbc. we're first in business worldwide. could someone toss me an eleven sixteenths wrench over here? here you go. eleven sixteenths... (announcer) from designing some of the world's cleanest and most fuel-efficient jet engines... to building more wind turbines than anyone in the country... the people of ge are working together... creating innovation today for america's tomorrow. thanks! no problem!

welcome back. we do want to take a check on rimm, very active stock and down 15% after releasing disappointing second quarter results. forecast in the third quarter, average selling prices light. and new subscribers also were light. meantime, in the headlines at this hour, three stocks to the

new 52-week highs this morning. pg&e, fidelity national information. meantime, watching shares of kb homes down 7% after posting a smaller than expected third quarter loss. and oil easing back down after spiking higher. now up 1%. 54 cents a barrel, the trade on oil. >> here's where the markets look. down dow industrial average has gotten back to the plus side by 3 and change. nasdaq still negative by 4 and change. s&p up just a fraction. internally, here's how we look. pretty much as expected. flat nature of the market, we're almost five there with advances and decliners on the big board. probably a wider margin on the nasdaq. yeah. about 200 more, not even, about 150 more down than up. >> okay. let's get your money ready for the weekend. time for the fan favorite. of course you're talking about the famous friday trade here on

the floor. we've got wayne kaufman, chief market analyst and in baltimore, jim hardesty. welcome to you both. jim, to go with mark farther away, you are. >> farther west. >> farther west. >> no matter what, somebody is farther west than here. >> baltimore is farther west. >> absolutely. okay. jim that means you kick it off with you. you know, on the fast money, the past couple of nights we say that the price action feels a bit different than we've seen retans r lukt ta reluctance to go in the market and this could be the turning point in the march lows. what's your opinion of where we are. >> we have ample amount of cash on the sidelines. we've seen a big surge in cyclical industrial stocks that now may be a chance for some of the laggers in the consumerles to come forth and take over the leadership in the market in the next several weeks.

i think this market is up, still firmly in place. >> do you think the upswing is firmly in place? one of the market leaders has been technology. technology was the first sector to close above levels out of all the s&pe sectors and yet we hav disapartment pointing numbers out of, are rimm and conservati. >> there's been three factors in this bull market. you've had tremendously quiddity, we've had the concept that companies are going to surprise on the upside because they've got tremendous operating leverage. and you've got investors who have been completely reluctant to sell their stocks. so far all three of those are still in tact. just the fact that we've had the last couple of days selling that investors are not letting go of the stock. this is similar to one i was on in august. working on an over bullish situation.

there was a tremendous amount of coal buying recently. that's not got to be worked off. my road map has called for a little dip here and then we do start to go higher. p. >> don't talk about a bearish rising wedge pattern. >> correct. >> sounds painful. >> it would be painful if it reaches fruition, if the trend line from -- >> reaches fruition. >> if the trend line from the march low that connects the july lows, if that trend line is broken to the downside, that's a bearish rising wedge. we had multiple wedges like that during the bear market. each time they were broken. each time that trend line was broken to the downside. stocks went considerably lower. we're watching for that. >> you like some pretty whole favorite names, procter & gamble, kimberly clark, john deere. >> we think the staples business, procter & gamble has done well in repositioning the

pricing point. ic that the health care bill, some action will be taken, whether it's to thewhich is ver ambitious, is accepted, i doubt. but just the conclusion of the debate over health care i think can be helpful to the whole sector. and johnson & johnson wouldn't of the leading sectors should be beneficiary. >> i'm sorry to cut you off. we have no more time. it's friday and we want to go home. let's hope that rising wedge doesn't meet our fruition. coming up, the faber report. david has more on the continuing saga now called spitzergate. >> and later, california's drought is entering its third year. causing a $710 million revenue loss for farms and some 35,000 jobs. but it's not all bad news. find out how some small businesses are actually using it to their advantage. stay tuned. you're watching cnbc, "squawk on the street."

okay. we're back. let's go to hq, david faber has this hour's faber report. david? >> thank you. you know we've been following this kraft/kat ccadbury saga. people take over, fight it out, the bankers fight. at the end of the day we sit and wait when kraft comes with the higher bid and formal offer. that being said, can't let this week go by without pointing out a couple of things. cadbu cadbury's ceo todd spitzer got himself in a little bit of hot water. he spoke apparently perhaps too forthcomingly. although now cadbury's said he was misconstrued at a bank of america conference earlier this

week. it took place in the uk. now, you know, if you're the ceo of a company that's under siege, you very well may benefit from having off the record or background conversations with reporters like myself and with investors. why you then are going to go on the record with an analyst is not completely clear to me why that was allowed to happen. but that caused the whole brouhaha. cadbury stock, though, hasn't given up much. they come out with a clarification on all of this from mr. spitzer who bank of america said indicated really putting it bluntly, hey, yeah, we're for sale. kraft has got to raise its price. this is the clarification. he does not believe kraft's proposal makes sense for cadbury and his comments should not be interpreted in any other way. all right. fine. if you say so. better be careful not to let him go in on the record kind of conversations from here. the takeover panel in the uk, we're still waiting to hear when

kraft is going to get its deadline by which it must make a proposal, put up or shut up. there's a look at cadbury. that's the adr, but still trading aabove the bid from kraft. there's a look at kraft. got to keep that stock price level there, guys. remember, 60% of the bid is in stock. key here. another key question is if they do come with proposal and they raise, will they increase the cash? all right. as for m and a overall, we had this deal to bang around for the last few weeks. but you know kn, you felt like september was going to be strong. maybe a tiny bit better than august and not as good as july. so there's a look. thanks to our friends at deal logic. we'll get the final numbers at the end of the quarter. morgan stanley will come ahead. but it's a dubious distinction in this environment as you take a look at the size of yields and

how many above. 10 billion, 27%. not bad. again, the number and total valium, well, not going to pay a banker a lot of money. that's for hur sure. mark haines, back to you. >> david faber, thank you. just add me to the man who came to the united states. he had 20 bucks in his pocket. now a small business owner, living the american dream. >> what an amazing story. jane wells is living the dream in doubt-stricken california. >> reporter: i'm in front of this lush green lawn. oh, really? up next, there is no drought of opportunities for entrepreneurs in california. that's after the break. vroom... vroom. okay, time's up. here ya' go ! that's a nice one, i made that. that's a piece of junk. yeah. i want the red truck. well, you can't have the red truck. see, that was a limited-time offer only. it's, ah, right here in the fine print. even kids know it's wrong to hide behind fine print.

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california's drought is in its third year. just another headache for the golden state but for others, it turned out to be lucrative. jane wells is in california with the story. jane? >> you know what, here's the deal, guys. three years into a doubt, everyone from farmers to backyard gardeners are having to decide what lives and what dies. but there is a flush worth of business, a flood of

opportunities for entrepreneurs in this economy. you're looking at public enemy number one in parched southern california. it banned daytime sprinklers in most cases. but finding people breaking the rules is as easys a shooting fish in a barrel. darlene is a water cop for the l.a. department of water and power issuing warnings and sometimes fines. >> you can't water your lawn between the hours of 9:00 to 4:00. >> reporter: what's a home owner to do? call brian cullingworth. >> you can see the change here. >> reporter: he used to make money painting dead lawns green at foreclosed homes. now though he suddenly got more work than he can handle painting the lawns of occupied houses. >> the drought has absolutely been a whole other avenue of business that we never pursued. >> reporter: business has more than tripled. he painted the lawn of dina's house. this dye job did the trick for 275 bucks. >> it's just not the right time

of year to be resodding anyways. we don't have the water or the money to be able to do it. >> reporter: and who needs the real thing? steve says revenues are up 25% for his california synthetic turf and lawn. even though fake grass can cost ten times the real thing. >> it will run between $7 to $8 a square foot for your average lawn install ligs. putting greens will run tleen $10 and $13. >> reporter: he says you will recoup your cost if knife years and the drought is great for business. what happens when it ends? >> that's something i haven't thought about. >> well, looks like he's not going to have to think about it for a while. it could be good business for nurseries because homeowners in l.a. can in some cases be paid for. swaing out their grass for things like cactus. next hour on "the call," how you can federal taxpayer are now helping us out. and melissa and mark, let me be the first to thank you. back to you. >> thank you very much, jane wells. >> can't wait to see somebody

trying to mow their cactus. from profiting from the california drought to profiting from wood. a furniture company in virginia thriving in a tough economy. they make kitchen cabinets by using recycled wood. thomas johnson is the founder. thomas, good morning. thank you for coming to the show. >> good morning. >> you came to the united states from ghana in 1993. you had $20 in your pocket but you did have a skill set, did you not? >> that's correct. >> how did you go about putting it to use when you got here? >> well, i -- when i got to the united states in '93, this country really helped me so i decided to find out what makes this country what it is. it's a t. greatest country in the world, the biggest, and yet everything moves. so i decided to study about this country. so i first wanted to know about

the know about the history of america. so, that really started every willing. i realized that the founding fathers came here with a spirit of hard working, discipline, determination to create something that today, those of us living can also enjoy, but i believe that if we don't embrace the same spirit of hard work and determination, dedication, people are going to lose what our founding fathers left behind. >> thomas, you make furniture and all your furniture is made here in the united states, because there's been a lot of furniture manufacturing that has gone overseas in recent years? >> right. everything is made here. we employ americans to make american-made furniture. what makes us set apart is because we recycle, we diverse what we do so we don't just making furniture. we make kitchen cabinets, we

make flooring. we install as well. so i think that with this kind of market, you have to be flex anybody what you do. so, that's why i think we are surviving this down -- economic downturn. >> you had a -- you had skills as a furnituremaker when you got here, right? >> that's correct. >> so i assume, first thing you found a job with somebody else and then at what point did you say, well, i'm going out on my own? >> well, at that time, i was working for a company that was a union company. and it happened when i was working so hard because of my prep unusual y'all background, i thought if a piece of work is given to me, the company had already charged, which means that they know their bottom line before they give to me. i had to work hard as far as keeping, making money, the company continued attorney ploy.

it didn't work for union workers. so, some of the workers complained about me. the president of the unit came by so at the end of the day, i wasn't feeling comfortable with the framework of working for a union company. so, i had to leave. and i happen to be given a scholarship to study at liberty university in lynchburg, virginia. >> that is a fantastic story that you have. best of luck to you and your company in the future. >> thomas a. johnson furniture, quite a story. >> yes. up next, a final check on the markets. >> but first, oh trish. >> hello, mark. okay, we got a lot coming up for you at the top of the hour, only on "the call." first of all, going to talk about fed governor kevin walsh and him saying the fed might have to hike interest rates before the need to do so is obvious.

discuss whether or not he is right on this one. also, a live report from g-20, talk about trade protectionism and discuss whether or not it can really be prevented. plus, we will be speaking live gm's vice chairman bob lutz, talk about gm's postbankruptcy strategy. all the news from the new york stock exchange, only coming up on ""the call"" at the top of the hour. first, "squawk on the street" is back right after this break.

want to take a check of the dollar versus the yen, this is a 7 1/2-month low. the dollar being part of the kerry trade. research in motion, on back of disappointing earnings is down by -- just last check, 4%, 16% now. new subscribers, 3.8 million. >> hammered. >> also look at the guys that make the components that go into

the black bury, jay bill circuits, they are also feeling the pinch today. plus, down by 1%, jabill down 6%. so, across-the-board, they are feeling the pain. >> but we talked to an analyst not giving up on the company, he felt that the stock had simply gotten ahead of itself and we had gotten a correction evaluation. >> stock doubled in the past six months, higher-priced phones are going to roll out this quarter. >> yeah, he was still -- not positive but he wasn't saying bail out and sell the stocks. >> right. david what are you watching? >> it's funny, not a lot of corporate stuff, more about the fed's ballooning balance sheet, those comments that leaseman was talking about earlier. almost every conversation i had these days, melissa, hedge fund managers, both big and small, they talk about inflationary pressure really getting out of hand down the road.

some people think it is two years, some people think it's five years. some people think it is not going to happen at all if they are right that would usher in a much higher rate and try to figure out how you play in that environment t is coming, certainly, hear this debate rage on for quite some time to come, but it is important. >> well, certainly, you know, we've talked about this before, rates and inflation. certainly, the falling value of the dollar is also inflationary. >> absolutely. >> something we have to be keeping our eye on, too. if the dollar continues to fall and, you know, we have peter schiff on and david, you know peter. >> yes, i know peater. >> and a candidate for senator. >> peter never saw a greenback he ever liked. nonetheless, you can't argue lately he has been right. he has been on a roll. i don't know where that leaves us. >> not sure where it leaves us. >> what's your sense, david, about warsh's comments?

i asked leaseman about this. is this a warning shot, a trial balloon? >> it feels that way and i don't know the answer if it is a trial balloon, improved comment. that's interesting, especially given the statement we got from the fed book just on wednesday. we will have to wait and see. mark no doubt this is a focus for so many money managers out there in terms of inflation and rates over the long haul. >> we got to go. >> we got to go. i will see you in a week and erin is back on monday. >> have a great day. this is cnbc.com news now. >> new home sales rose .7 of a percent last month, less than economists forecast, however the strongest number 11 months. shares of kb home are down 6% after the builder reported a bigger-than-expected quarterly ross. and conagra raised the dividend by 5% a few days after the company upped its earnings

forecast. that is cnbc.com news now. we are first in business worldwide. i'm court any reagan. good morning, welcome to the call, i'm trish regan live on the floor of the new york stock exchange, 90 minutes into trading, we are watching the markets strive to gain some ground here, down just 8 points right now on the dow jones industrial average. we are going to discuss this exactly, how your portfolio should be positioned as this quarter comes to an end in the face of all kinds of mixed economic news. larry? >> hello, trish, i'm larry kudlow. dissension at the fed, a day after ben bernanke says interest rates will stay low for a long time, fed governor kevin warsh says she might need to be raised sooner rather than later. well, we will discuss. >> and i'm melissa francis. we go live to the g-20 summit and talk about whether world leaders can agree to stop trade protectionism. easier said than done, right? this is "the call" on cnbc.

stocks trying to rally after better-than-expected consumer sentiment numbers, slight increase in home sales, federal veer of chairman bernanke said a spark of lending consumers and businesses will be extended to next year. look at how the dow is trading on the day it is negative territory, well off the highs of the session, not bad, down 16 points, 15 there the s & p down 2 1/2, a quarter of a percent. 1048, last trade there. nasdaq at 2096, down about a half a percentage point on the session. trish, happy friday. what is the mood like down there? >> happy friday to you, melissa. mood is fairly stable here. basically, we have a market that is trying to rally, positive territory earlier, you can see there, down 14 points there is news for traders to consider this morning, unive