lee. also, the decline in durable goods waning some. what the glass is half full or empty. durable goods, one of the components, inventories, levels have fallen for 12 straight months. at some point, those inventories have to rebuild. so, that could be one positive sign in all that. that said, you have a consumer base that really hasn't been willing to go out there and be the purchaser of all those goods. so is a little bit of a mixed bag there bob pisani with me on the floor. i haven't seen you in a while. >> haven't seen you at a while. a conference in california. you look terrific. >> thank you, so do you. >> everybody is freaking out about this 2% decline that we have hurricane the s & p 500. the rally's over. we have been here. do you know how many 2% declines in the s & p the march rally began? i mean, at this point, the average rally, the average decline is 2 to 4%.

we have had no correction, 10%. no correction at all since the s & p 500 started moving since march. >> people haven't bought into this rally. we are now quite a few months into it, and yet there is still sort of a crowd out there. >> the important thing is that suddenly, krengss are only 2 to -- corrections are only 2 to 4%. the worst one we had was in june or july, 9% decline.4%. the worst one we had was in june or july, 9% decline. there are analysts out there ned davis one of them, a huge following, his feeling is we will continue to get rallies but may be a little more moderate. the reason is the first third of a bull market is always the strongest part and it's likely we are through that first phase and that is a key point ned made and others made. remember, trish, september and october are very seasonally weak months traditionally, november, december, january get the moves up. at the end of recessions, we are

at the end of recessions, the big moves up tend to be a little more gradual here. as for the big question, how you value stock -- >> we haven't seen that as of late. we very much sort of baby steps. >> they are not -- as for the valuation question, which is hard to figure out, six months ago, getting a little bit easier, they are not overvalued but not cheap either. we are sort of right in the middle of that. so, the odds are rally continues but maybe more moderation. >> i hope you are right. thanks, bob pisani, good to see you. we want to head uptown, scott wapner. >> nasdaq sunder pressure, down by 10 points or so research in motion is clearly the story, down 15.5%. outlook particularly on the sales side was weak, a number of upgrades come in today. goldman sachs off the conviction violet and perhaps worse than that for the stock. deutsche bank cutting it to a sell. elsewhere, a mixed picture, dell and yahoo! negative.

google is negative. semiconductor index just under a bit of pressure, a fractional move, but something that was weak throughout the morning, so, come back a little bit, why the nasdaq has tried to come back as well. intel fractionally weak as well. call your attention to alos they are rah put ticks, the fda has given accelerated approval to the company's key cancer drugs. come to the wall, i don't have a deco for. this a stock, ipo today, open for trading perhaps in five minutes or so called shanda games, parent company out of interactive. here is the deal, largest u.s. ipo in 2009, largest u.s. ipo ever, ever of a chain niece internet company. the stock is actually, i think opening now 12.50 or so where the stock is going out, 83 million shares that did price at the top of the range. an interesting story. i will update the next time i see you where the stock is trading. it has opened and up about .2 of

1%. larry, i think i'm sending it back to you. another interesting ipo is story good for the markets. >> is indeed. thank you very much. loads of economic data out this morning. new home sales up .7 of a percent. consumer sentiment index higher for the month of september but durable goods orders lower in august. so, what's it all mean for the economy and your money? joining us now, mike duker, head economist russell investment, tom higgins, chief economist at peyton rigle. tom, start me off, what is most important and what are you thinking about? >> well, the month to month changes in the durable good numbers, highly volatile series, anyone to drew a conclusion that this is firmly bad news or firmly good news, i think they are misguided. the reality is if we look at the year over year changes and move the seasonal effects of month-to-month changes, the trend upwards and durable investments will make a positive contribution to gdp growth in

the third quarter. >> mike, do you agree with that? >> yes, the -- the number for the new home sales are a little bit below expectation. one thing that's kind of interesting about those numbers is that the new home sales are a little bit lower than starts for the past several months, so, makes you wonder a little bit how many half-finished homes out there, considering the inventory levels are low, 17-year low. >> durable goods numbers today, when you look at the -- what we know for july and august, we are still running above the second quarter. for both new orders and shipments. to so, will we get a positive business investment contribution? are these numbers telling us the truth? because, without business, going to have some issues here in q 3. what's your take on that? >> i think you are spot on, larry. if we long at that quarter-to-quarter change, going to get a positive contribution, not a large positive

contribution, business investments probably running 7 to 8% according to those durable good numbers, court orders in particular. positive contribution, not huge. looks like consumer spending is stabilizing and that is what may be encouraging business to go out and spend more. >> tom, i think new homes number was actually pretty discouraging given that it was a positive number but at the same time, august was going to be that last push that last burst of home buying before the fall comes in. is it possible that is a harbinger of worst things to come? >> trish, if you look back since the bottom in housing, which was really earlier this year in terms of existing and new home sales, we are still up about 13 or 15% in terms of both new and existing home sales, i am not as concerned about housing being derailed, i didn't expect to move up in a straight line, a lot of incentives out there for people to go out and buy homes now, a lot of those incentives will fade as we head into next year, probably see housing

suffer a setback as we head into next year, i don't think that means the beginning of the end. >> mike, let me come back to you on the consumer sentiment number. okay a lot of people live and die with the consumer confidence numbers, had a positive number, we are trending in the right direction, how significant or is consumer spending underrated? i mean, maybe folks are feeling better out there. >> well, consumer spending is going to be the only way we are going to come out of, this get through this recovery, that is really going to be the engine that will get us through this. you know, this reminds me back in 1992 when alan greenspan would be asking for data such as what's the average age of the u.s. automobile fleet, he was looking for evidence the consumers would start to consume because they had to consume because they just were at a point where they had to consume. you know this is -- this is a new territory for us. we are in an area of double digit unemployment. you know, the first time we have been in double digit unemploy.in this circumstance where now we have people on defined benefit

pensions that wasn't true in 1982. we will also have -- pardon. >> just going to follow up. why with the double-digit employment, okay why are we getting more positive consumer confidence? that is an issue. 10% roughly unemployed, 90% employed, the stock market is rising. getting better sentiment numbers, a clear trend now for the last half a dozen months, so why do you reckon that is? >> i think that is exactly right. 90% of the people are still employed, therefore, you know, a lot of the u.s. workers felt like they have been under aerial bombardment the past year. they have been worried about the massive layoffs. now they sense the massive layoffs are coming to an end, therefore, they are starting to feel a little bit safer and a little bit better about their own position. now they still have to rebuild their balance sheets after the stock market declines and house price declines but at least about their own employment situation, a lot of people are feeling a little bit better now. >> leave it there, guys, thanks for joining us, trish.

>> we are going to discuss how your portfolio should be positioned in the final days of the quarter. first, heard little about trade policy coming from the g-20. is the world willing to curb protectionism or could trade wars be moving? that is straight ahead here, on "the call." we will be right back. 3 xwxwxwxwxwxwxwxwxwxwxwxwxwxwxww

goldman sachs putting out a note that oil is -- upping the demand for cash. trading higher, .3. gold, meanwhile is trading down by about two-thirds of a percent, a little more than 6 bucks, 992, not $1,000 anymore, trish. >> not. g-20 summit, president obama and the leaders of france and britain demand that iran fully disclose its nuke cheer ambitions or be held accountable for an impatient world. don harwood is in pittsburgh with the details. hi there john. >> all of a sudden, this g-20 gathering in pittsburgh has an entirely different cast than the one we thought we were covering when we came to town yesterday. and we learned that president ahmadinejad of iran didn't tell his whole story when he gave his speech to the united nations the other day because the united states, britain and france have now disclosed to the world that there is a secret uranium

enrichment facility that iran has been building and president obama today wand the roast of the world that they are going to push back. >> build another nuclear facility without notifying the iaea represents a direct challenge to the basic con pack at the center of the nonproliferation regime. >> what can cthe roast of the world do about it? the bush administration wasn't able to halt the program. agitation from vice president cheney we now know to potentially strike iran and tray to take those facilities out but that's not easy to do president obama has indicated he wants dialogue and we have got talks between the so-called p-5 countries, five permanent members of the u.n. security council plus germany that will take place on october 1st. but that's going to be from the point of view from the obama administration, a real put up or shut up time for iran and then we will see what the administration is able to do, whether they can get russia, now

indicated willingness to go along with sanctions to do so and also china, which has been more reluctant. big foreign policy test for barack obama at this point, trish. >> indeed it s thank you so much, john harwood. one of the thornier issues face the g-20 leaders have world trade protectionism. as you know, the u.s. and china fighting over tire imports, tariffs there. can protection be avoided? we want to ask our guests. great to see both of you gentlemen. bill, i will start with you. what's your sense of this right now, china and the u.s. clearly very important trade partners vital to each other, vital to the world economy, all of a sudden, we have seen sparks here with this tire tariff. how much do you think that could perhaps balloon into a bigger problem? >> i don't know, i can't see it

in either country's best interest to be engaging in trade wars now. both countries need each other and both are critical to the world recovery. so the leaders have to get this thing tamped down and move beyond it. >> alan, do you think there is any chance here that this is, in part, somewhat staged in there is another issue going on, the currency issue and perhaps the tariffs are maybe detracting from the real thing that's happening behind the curtain there? >> i think that's an absolutely great way to look at it. these tire tariffs are really trivial, both in terms of u.s. economic growth, chances for economic recovery. the really big questions and challenges that lay before us, the main reason that the world got into crisis and that the u.s. economy is in such deep recession is that the global economy became so lopsided because of an import-obsessed and consumption-obsessed u.s.

economic strategy and an export-obsessed chinese economic strategy. unless this imbalance gets greatly reduced, the world will remain crisis-prone. and certainly, china's currency manipulation is a big reason why china has been able to rack up such enormous $2 trillion worth of foreign exchange reserves and trillion dollar trade surpluses. if that goes on, we are going to set the stage for another economic bubble and a bigger crash in the years ahead. >> well, bill isaac, let me pick up on that what about american currency manipulation in the dollar depreciated 15% in the last six months, all these bric countries calling for a new veer of currency. maria interviewed president lula of brazil, who talked about a regional currency. in other words, doesn't, bill isaac, doesn't the trade issue go hand in hand with the currency issue? >> it absolutely goes hand in hand. >> let me ask bill isaac, bring him in on there. bill what is quick take on this?

>> i agree, a whole lot of issues all wrapped together, including the way the chinese have been treated on some of their investments in the u.s. i think, for example, they got hit really hard when fannie and freddie went down. and i think that is in the background. there is a whole lot of cross currents here involved in this. not a simple matter. >> bill, do you believe a u.s./china trade war is in fact looming that this could grow bigger? >> oh, i don't -- i really don't think so because i don't think either country would find that in its best interests. the two countries really need each other right now and the world needs both of them. >> i want to go to alan. alan, i know you are no fan of china, let me ask you -- >> i know you are not either. >> well, sometimes i am, sometimes i'm not, but i prefer democracies, you are quite right. thank you for asking. let me go to you, my friend, you are our guest. what is the peer review stuff we read about? is this some multilateral

economic policing board? is the united states giving up its authority to this peer review board which might be the imf in drag? how do you read that? >> that is certainly something to worry about. there's been a lot of talk in recent -- as you've noted, in recent months about the need for a new global currency that somehow is going to magically cure what ails the world economy and reduce these mass imbalances. the problem with all of this thinking, and the reason i use that word magical is that that only work it is there is global economic consensus on issues like monetary policy and trade policy and exchange rate policy. >> are we getting there? are we making the headway we need to make? >> i see almost no signs of that and i look especially toward china. china needs, as everybody seems to agree, to rebalance its own economy more toward consumption, less toward exporting, but the problem is the chinese leaders politically can't do it, because

if they reduce their exportive soci session, they will increase unemployment dramatically that terrifies them, that could throw them out of power. >> bill isaac, china has lowered tax rates on capital and investment and business than the united states does. maybe we could take a page from them. what do you think? >> well, i happen to be -- i'm not -- i agree with you in terms of their form of government and the lack of democracy, but i would tell you that i'm a real fan of what they are doing with their economy. >> yeah. it is easy to do that, however, when you don't have a democracy. there is no one fighting you on it. >> it is easier, but i got to tell you, i've been in china many times over the past 25 years and it's stunning what is taking place there economically. and we could learn a few lessons from them. >> alan -- >> the problem is their stimulus program is going to mainly stimulate the chinese goods do

very little for the economic and financial imbalances that are plaguing the world economy. >> if you are free trade, would you say that stimulating the chinese economy domestically helps the world economy, too. it only does if it reduces the chinese -- >> got to leave it there we are totally out of time. i appreciate both of you coming on. we appreciate it. thank you. >> former fdic chair is coming back later on in the show to talk about the federal reserve what they should do as well. the gm road to recovery and what bob lutz has up his sleeve to turn business around. down 9,000 or down 10,000? which comes first. going to discuss make willing money despite this uncertainty because we are cnbc, first in business worldwide. ♪ look at this man

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sentiment report, many people believing that the recession may be finally coming to an end. none the less, weaker durable good orders acting as a weight. melissa? how is gm coping in the postbankruptcy environment? this morning, phil lebeau sat down with gm vice chairman phil

lutz to find out. >> it has been two weeks since general motors began the money-back promotion and wanted to check in to see if is this succeed to bringing people to look at gm vehicles in the show rooms? so far, the company says, hey, listen, we are pleased with the results much the money-back offer is increasing buyer consideration. this morning we talked to bob resultz, the vice chairman of general motors so confident in the success of this program, he believes fewer than 1% of those who take advantage of the program will bring their car back and ask for their money back. >> it is precisely in this undecided vote that we are up anywhere between 14 and 17% and had 1 million visits to the 60-day satisfaction website. what the dealers are reporting and so forth, exactly the effect we wanted. >> it moving the needle for the four primary brands left at

general shelters or for cad dirk chevy and gmc, edmunds.com is reporting greater interest, a slight decline at buick but really not much considertion there to begin with. edmunds believes that this is some traction that general motors needs to parlay in the future. >> they have been bringing out now for the last two or three years some pretty good vehicle bus for some reason, the market just doesn't seem to give them credit for that. so, this campaign is designed ton a estimate of confidence, take a risk out of buying the vehicle. i think they have to continue to kind of market along those lines, basically challenge people to give them a shot and hopefully they will like what they see. >> also points out that general motors, while it is certainly going to get consideration from those who already are predisposed to like general motors, the thing he points out, melissa, gm has to succeed in bringing in those people already looking at toyota and honda and making inroads there, although they have got a long ways to go check out the blog behind the wheel.cnbc.com for more on bob

lutz's comments. >> we will discuss whether gm is on the road to recovery, joining us is david connolly, senior correspondent at business week, along with phil. david, i almost fell off my couch last weekend when i saw the ad you can bring back the car if you don't like t so many arbitrage problems with this idea. are you to worried about this program or think it is a good idea? >> i'm not worry about the program. i think it is a perfectly good idea for the reasons bob said. it is driving people to search out joan mogeneral motors vehic the internet. that is what this program is about get more people to search on chevy, buick, cadillac and gmc. >> you think only 1% of people will bring the car back? >> yeah, i would guess, because, you know, among the reasons that you said it is so complicated to sort of do it that it will probably be a very small number. and besides which, a lot of these vehicles are excellent. i mean, the gm product has never

been better in its history. my thing is that what they really need to do, what they are not doing yet, is changing the conversation about these brands. they are really doing things in a very conventional way. even this program, i think it's just an extension of things that they have tried before and it's not really changing the conversation with people who may be the independent voter, if you will, in the consumer marketplace about chevy, cad look and buick and gmc and got to get people off the topic of general motors as a brand. >>. >> phil la worker the consumer market vote he is and i thought in the cash for clunkers business that gm did very poorly they just did poorly, ford did a little better, japanese kind of crunched it down and you can't just say the market is wrong. i'm an admirer of bob lutz but to say the market is wrong, people don't understand, the market is the market no real

evidence that people are voting for gm yet. >> not a true test, larry, cash for clunkers is primarilier or was primarily geared for its fuel-efficient vehicles, the japanese auto make verse a greater presence, naturally -- >> big sales event, that was the biggest sales event. >> across-the-board sales event. larry, it was it not a straight across-the-board event. it was a pushing fuel efficient vehicles. >> i got to ask phil one more question before we go. >> just challenging, that's all. >> fritz henderson said yesterday he thought in 2010, car sales might reach 11.5 to 12 million vehicles. that is great news. aren't those the magic numbers, exactly what the industry needs to be profitable? >> it is, but keep in mind, he also said when asked about 2011 he said 13 to 13 1/2 million we asked him about this. mulally from ford said the other day in india, he think it is going to be perhaps as high as 14.5 million. regardless if this industry gets up over 13 million in terms of annual sales, definitely going to see better times for all of

the automakers. >> that would be huge. okay, guys. >> let's not -- >> okay. >> let's not forget gm has to get a good percentage of those sales. >> yes. without question. all right, thanks for joining us, guys. trish? >> okay. here we are. what is the level there, 9693. what do you think, down 9,000? 10,000, which one comes next? we will discuss how to invest despite all this market uncertainty. larry? all right, dissension within the federal veer of, how to implement an exit strategy. will slow and steady went race or do we need aggressive action now? big stuff. you're watching cnbc, first in business worldwide. in this unusually volatile time, you want a financial partner... who is unusually prepared to help. the meeting with northern trust went well, didn't it? yeah, they get it. they really get it. a little more stability would be nice. northern trust offers the strength and expertise... that can only come from a 120-year track record...

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welcome back to the call, everyone. the third quarter winding down, we are asking how should you be positioning your portfolio now? for the evens, we go to our bull, rather, how do you like that you are now bull, president of american capital and mike rubino. before i get to exactly what you want to be doing with your money, ask you quick questions just related to the news of the moment. first of all, paul, let me ask you, the iran nuclear standoff, would you say that is a cloud on the horizon for this market right now? >> if you are going to use the weather analogy, so will i and i

will say it is a chance of a very light sprinkle, but nothing to worry about nothing to change your plans over. like north korea, like syria, like libya in the '8, i think these are all tiny geopolitical events make news but have very little affect on the market for anything more than a day or two. >> mike, do you agree with that and also ask you, is wall street really expecting anything big out of g-20? >> i don't expect anything big out of g-20. in regards to iran it is part of the increasing, adverse, geopolitical cycle we have been experiencing since 2001. if we look back, we find there is 16 to 18 years of good geopolitical situations and about 16, 18 years of adverse. and we started adverse in 2001. we think it is going to continue to increase, just one step along the way. >> paul, let's talk profits and the economy, let's get your update. were you informed by today's numbers? are you a bull or a bear, my

friend? >> larry, as you know, i've been bullish for a while. and i think on balance, over the next year, we are going higher. in the inter rim, i think the best chance for the first significant correction since the bull leg began in march is coming up early to mid okay, last four to six weeks and go down 7 to 17%. other than that, it is a correction within an uptrend. it is going to be a place to buy. >> mike, why are we seeing so much resistance on these levels? a lot of people thought we were going to hit down 10,000 a little bit earlier. here we are treading a little bit lower today, why hasn't it happened yet, why the resistance? >> the biggest aspect of it is consumer spending and consumer spending has no chance of coming back with unemployment soaring and housing market continuing to deleverage on a nationwide basis. i don't see how people can be comfortable spending when they are worried about their assets being depleted. >> the consumer sentiment none

today showed a real increase. >> consumer sentiment means you feel a little bit better than the way you felt a few months ago that is fantastic, but doesn't mean anything is improving on a whole. >> paul, let me go back to your 7 to 17% correction. let's call it 20% in round numbers that is a big number that is not chopped liver. why are you saying that? on the tape, a technician, a great track record, he says there is no correction. so, where are you coming from on this? >> i would respectfully disagree. i think the biggest opportunity for the correction comes in october, a couple of reasons, larry. number one, you have some smart money taking chips off the table very quietly into openings into big up openings, number one, sentiment from option players getting a little bit overcooked. people are getting a little too giddy about the markets, never a good sign historically. a lot of people came into early september worried about september. i wasn't because everyone was worried about t people are

feeling comfortable. the reason i have a date early in october, earnings are coming out, terrific earnings season last time, a rarity when you get follow through season after season, the horizon it is going to be healthy, 17 to 7% isn't that much after a rally. >> we will take t we are going to leave it there, gentlemen. thank you. we appreciate it. good to see you. up next, dissent within the federal reserve, seems the exit signs are pointing in opposite directions, going to discuss that in today's "call of the wild." a flood of profit coming from the west coast drought. why some say mother nature is not the one creating the water crisis. all that's coming up right here on "the call." ♪ yes, you're lovely... ♪ what do you think? hey, why don't we use our points from chase sapphire and take a break? we can't. sure, we can. the points don't expire... ♪ there is nothing for me... ♪ there's no travel restrictions... we could leave tomorrow. we can't use them for a vacation.

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a really tough morning for research in motion. the makers of blackberry reporting diss a appointing earnings and gave an outlook that fell short of street expectati expectations. down 15, 16%, a tremendous run-up, but it is getting hit hard today. just two days -- the federal reserve two days ago said it would begin slowly unwinding and easing credit. fed governor kevin warsh be out in the "journal" today comparing

the past two years to a triathalon and saying we made progress, too early to declare economic victory just yet who is right, making a steady recovery or still have a long way to go? joining us now is bill isaac, former fdic chairman and also going to bring in cnbc's steve liesman and also rick santelli. rick, metly start with you, what do you think, a long way to go? what should we do from here? >> i tell you, talking about the op ed piece specifically -- >> yeah. >> if mr. warsh would have dissented on wednesday afternoon, i think that this would have left a bigger impression on me. owe didn't, because i think it is a fed rate hike scare instead of a fed rate hike forewarning. >> you agree with that? >> he stole it from the morning, that is my line. >> i did not. >> i will give you a hug when i see you. >> all right. >> shocked to hear this, steve

liesman, i thought you really got your rocks off on this, how important this is. >> i think it is important but i'm very, very confused, larry. this is two days after the fed did what? they said that interest rates were made low and extended for a period of time here, an extended period of time and they tapered out. they tapered, larry, the mbsome purchase. what is kevin saying, it could be an abrupt or a rougher or a harsher end to this thing. i don't know what period of time he is talking about, but as far as i know, the fed is going to keep interest rates low and be printing money until the first quarter of 2010. if he is telling me that is different, he needs to tell me that and not put it in an op ed in some greek language. good to know you have completely turned against him. >> not turned against him. >> sounded like it. sounded like it. i like kevin warsh. >> very distinguished american humanoid and former head of the federal deposit insurance corporation. one thing mr. warsh said if in

this op ed speech that interested me, bill isaac, he said "financial market developments bear especially careful watching." he is looking for leading indicators. he says, gdp and all that rigamarole is yesterday's story. look at financial market developments. do you have a thought on that? there is analytic content on this, despite what steve liesman has reported. >> bill, don't take the bait, bill, but anticipate the question. >> what about financial market developments which are forward-looking? >> i really -- i really -- i really think that there's two elements here, that he was referring to one is there rates and what's going to happen on those, the other is trying to unwind the liquidity the fed has been feed nothing the system and i think that we need to bear -- pay close attention on both fronts. at some point, rates are going to go up, i would agree with steve, i don't see it happening yet this year. >> but when do they -- >> they are going to have to -- >> but when do they unwind the

liquidity and how do you think they should do it? >> i think they are already beginning to unwind the liquidity, brought down a couple of the programs a little bit and i believe they will continue to waned those down gradually. we need to take sort of baby steps, take them down a little bit, see what happens, take them down some more, because we need to weep the markets off of these things. we can't keep them there forever. >> rick santelli, let me bring in another analytic point that kevin warsh made, bea sides lack agent forward-looking financial market indicators, he said the level of asset prices and he says associated risk premiums, okay? so he is trying to give hints, at least about his own discipline, how do you read that? what's he talking about rick? >> if he is trying to look at various components of the marketplace, various spread, various credit spreads, various libor or corporate spreads, i think it is slog, because i

think the very presence of the government in these programs, whether some not being used or sunsetting or not affects the spreads, so he has got a faulty indicator there and i think their mission is nearly impossible to thread the needle. and as i said, i like what he wrote. >> sorry. >> dissented, i would have cheered. >> i think what kevin war is talking about there, in the future, asset prices are going to be more and more a part of -- >> which one, which asset prices? >> i don't know. >> which one? >> i think risk spreads are a key. i think if you go back and look at things that were said backed by the fedder any 2006, 2005, it that risk spreads had gotten down to being completely abnormal and out of whack, the question is does that then cause the federal reserve to move? we have had other federal officials say this. what we don't know, what metrics they will use to start perhaps intervene when asset prices look like they are in bubble. >> quick, before they go want to ask you how you read the line what ever it takes to arrest the

panic, the refrain might be equally necessary to ensure the federal reserve institutional credibility. how do you read that? >> i think they prove to us on -- in trying to dell with the crisis that they were willing to do anything and everything. >> so what does that mean in the future? >> well, i think that they are going to think they are going to start unwinding these programs more quickly. >> talking tough. >> sounds painful. sounds painful, that line. >> talking tough? let's get right to the bottom line. he may disagree. >> ain't voting tough. >> sending the message to bernanke. steve liesman is completely deserted warsh. 24 hours, never seen such a turnaround. bill isaac, i neal to your reason on this. might warsh be sending a shot across bernanke's bow? >> rorschach test. >> i would say that we treat the fed as more monolithic than it is. we have a bunch of bright

people, kevin's one of them that contribute to the policy. they have their debates and put them out in public sometimes, i think that is what is going on here. >> go to the leave it there, guys. >> i can't believe steve liesman. >> either. steve was really harsh on them. have to owe him a phone call. all right. we are going to move on here to power lunch, coming up at the top of the hour. bill griffeth what do you have for us? >> hello, trish. oil has every reason to break out today, move higher, not the least of which is a lower dollar, but you also have an upgrade from goldman, the situation with iran which we will deal with. why isn't oil moving higher than it is today? we will talk about that coming up. an airline analyst says five airlines to buy. they shored up their balance sheet. raised 3.8 billion the first half of this year from all the fee also they now charge us. those fees, good idea, bad idea, love to hear from you today, e-mail us at "power lunch" at cnbc.com. we will kick it around on the airlines during the next two

hours. see you at the top of the hour, melissa. up next, the water is running dry in california but there is a flood of profit coming from the drought. jane wells is in simi valley with the story. jane? >> melissa, you know it wouldn't be california without a crisis, but how the drought is not completely a natural convenient and you are now being asked to help. we will have that after the break. in this unusually volatile time, you want a financial partner... who is unusually prepared to help. the meeting with northern trust went well, didn't it? yeah, they get it. they really get it. a little more stability would be nice. northern trust offers the strength and expertise... that can only come from a 120-year track record... of thriving even in difficult times. they understand. roller coasters are for kids, not money. ♪ northern trust. wealth management.

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the california crisis it continues and not just talking about the state's financial drop here, very little rain the last three years created a severe water drought and that is using up americans' tax dollars to pay for the federal disaster, but some argue it is not all mother nature's fault here. jane wells has the story for us from californiale. hi there, jane. >> reporter: hi, trish, what do the green lawn and my hair have in common? the color of neither is real. i will explain in a minute. by some estimates, the three-year drought cost farming alone over $1 billion and citigroup says the management of california's water problems will cost 1.6 billion a year by 2020, using a new term water bankruptcy. >> our water reserve levels declined drastically. >> reporter: part of this is a

man made disaster forcing water away from farms and homes to save struggling fish, some say. >> about a quarter, maybe slightly more than a quarter of the lost water is directly related to that. >> reporter: as a result, hundreds of thousands of acres of farm land have gone foul because the water is not available could drive up food prices. now, federal tax iers, you, will subsidize loans to farmers since the usda declared most of california a disaster area. wait, there's more. >> unfortunately, you shouldn't have your water hose on. >> reporter: down in so cal, most folks are ordered to only use their sprinklers a couple times a week and not at all during the day. water cop, darlene goodnum warns people they could be breaking rules, like this guy who used a hose to clean up dog do do. >> i understand that could you have used a bucket and came out with a mop or rags they can do

not want you to have that hose on between the hours of 9 to 4. >> reporter: some bea live restrictions on using sprinklers are behind a rash of major pipe bursts in southern california, including one which created a sinkhole for a fire truck, everyone only using their sprinklers two nights a week, may create drastic changes on ancient pipes. nice. the city is investigating. the drought is creating a flood of opportunities for entrepreneurs like the guy who painted this lawn green. he is hiring, hear from him on power lunch. basically, the homeowner here was either going to be fined by the water agency for watering her lawn enough to keep it green or feigned by her homeownerer's association for letting it go brown. trish, she paid $275, painted the thing. >> like a dye, i would assume they put on the crash? >> it is safe, like a dye. yeah, and it will last, like, you know, how often -- you know, last, you know, eight weeks or whatever. >> roots, right? >> in your front lawn. >> exactly.

>> okay. okay. >> jane, thank you so much. we appreciate it. well, switching gears here, sam walton's lower prices were the secret behind his retail stores. this sunday, biography on cnbc takes a look at the man who built that little chain store we call walmart. >> in 1961 he and helen bought a controlling interest in the bank of bentonville. it was a crafty move, enabling sam to lend himself money. in 1964, he opened the second and third walmarts. he steadily expanded at a rate of about two stores per year and by 1969, he had 18 walmarts within 300 miles of the first store. that year, he opened a walmart in the town he had effectively been run out of 18 years earlier, the store he had lost his lease on, lost its customers to walmart and soon, closed its

doors. >> well, be sure to catch biography on cnbc for the in-depth look at the life of sam walton, sunday night at 10 p.m. eastern, right here on cnbc. all right. a big break and then back for the last call. the list of stocks as we head into afternoon trading, that's coming right up. stay with us with. you are watching cnbc, first in business worldwide.

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watching all kinds of stocks here today. cannot look at sara lee and unilever, stock the best performer in the s & p 500 today. what caught my eye in this deal, hasn't been talked about that much is the fact of the dollar and that it played in terms of if unilever had done this deal just six months ago, would have cost them 12% or $250 million more. also worth a peek is the appetite for industry and industrials. is this call late? we are seeing the upgrade coming today on the sector it is one of the best performers on the month-to-day basis but weak in the near term. guys, back to you. >> thanks so much, matt.

that is it for "the call," i'm melissa francis, see you on street signs. >> thanks for watching, everyone, i'm trish regan. >> i'm larry kudlow, see you tonight on the kudlow report, 7 p.m. eastern. now, "power lunch" is up next. do the do not adjust your set it is power lunch. >> night time edition. >> slightly different set. don't ask. we don't get to that i'm bill griffeth. here is what is happening now, stocks steady today, energy stocks among the better performers, dow is on track for its third -- best third quarter since 1939. the s & p 500 is on course for the biggest huge gains since 1970, all of which we will talk b. >> i'm sue herera. we approach another quarter and month's end what is ahead for october and the next quarter how you should plate months ahead. >> i'm dennis kneel, goldman

sachs boosting the forecast and reports that iran has a second secret nuclear facility. what is that going to mean for oil prices ahead on the world? we will talk with a top analyst. >> i'm michelle caruso-cabrera. airlines raising billions when they charge for airlines and pillows. airline fees a good or bad idea? here is what sells on the menu. >> i'm john harwood in pittsburgh, all of a sudden, this g-20 meeting has a new headline, the new previously secret addition to the iran nuclear program. the question is whether president obama can mobilize the rest of the world to shut it down. >> i'm diana olick in washington, new home sales basically flat but inventories still coming down. can housing's recovery continue with the expiration of the first time home buyer tax credit? we will talk about t. >> i'm phil lebeau in chicago. general motors so pleased with the money-back offer generating interest from new buyer it is believes fewer than 1% of those