zblonchts zblmplts. okay, folks. dow up 123 points right now. all the indexes up more than 1%. and nine out of ten sectors are actually trading higher than 1% right now except for staples. it's interesting pip talk about this point. i want to make it again. the financials month to date are the loser of the ten sectors, up less than 1%. the industrials are up 7.5%. >> okay. and my little quirk here? my quirky data point? when you look at itos you got to

look around the world. in china you have about nine companies about to hit the market. have a great day. it's time for "the call." after three straight days of losses wall street stocks bounce back with gains over 1%. the dow business activity down 6.4 in september, less than augustest's 9.1 drop. trichet predicts a gradual economic recovery with subdued inflation. that's the cnbc.com news now. good morning, everyone. welcome to "the call." 90 minutes into trading here at the new york stock exchange we're watching the dow move higher, jumping by 123 points right now. as we are seemingly looking at the return of merger monday. today is making money monday right here on "the call." we're going to talk about ways to invest. >> rock and roll, trish.

i'm larry kudlow. techs leading stocks higher as apple announces another milestone. 2 billion downloads from its app store. the growing internet sector and how to make money now. >> i'm melissa francis. med tronic cio bill hawkins has concerns about where america's health care policy is heading. he'll join us live to talk about it. this is "the call" on cnbc. first in business worldwide. okay. stocks coming out of the gate higher on this monday morning. continuing to rise to triple digit gains. leading the way, tech stocks and the return of merger monday. plus the dollar index reversing early gains sending commodities higher. the dow is up 127 points. about 1 1/3%. the nasdaq right now also in positive territory. like we said, techs have a strong day. you can see the nasdaq there is up almost 2% on the day so far.

tris trish, happy monday. >> it's been three days since we've seen a real rally here in the dow, really moving quite, quite ahead with full speed here. up 128. as you were just pointing out, we're going to talk about merger monday and how that's affecting things. certainly a return of confidence in some ways on the corporate level which is leading to a return of confidence on the investor level. i want to bring in mary thompson who's tracking all the internals of this market. before we get to merger monday let's talk a little bit here about the weak dollar and how that's affecting stocks. >> you heard melissa francis mention it at the open. the dollar index coming into today's session actually was stronger. the dollar was weak against the yen. the index against the other currencies actually was moving higher. then what you saw actually was the dollar index start to weaken. that pushed stocks to their highest level. right now it's frtrading pretty much unchanged. you have this inverse relationship with the stock

market and dollar index. >> let's talk about all these mergers. xerox, johnson and johnson, abbott labs all making announcements this morning. what is that indicating about the confidence level at least on a corporate level? >> if you talk to anyone that say ceos are doing deals they say they're feeling confident. that has a ripple effect on the market itself. certainly there's a ripple effect with this xerox deal to buy affiliated computer services, as well. it's having an impact on some of the rivals for affiliated computer services. it's affected other i.t. companies. they operate in the same phase as affiliate does. this is another elemented play today. take a look at some of the stronger performing groups today. they are actually some of the best performing groups of the third quarter. reit up strong for the quarter, up 33%.

insurance is up 29% and housing up 28%. people getting in at the end. they want to make sure at least they have these stocks in their part folios to show their investors at the end of the quarter. want to head uptown to my colleague, brian, stand big at the nasdaq for a big day in tech. >> absolutely, trish. thank you very much. almost up 2%. about 40 points to the upside. i want to start with cisco. up grated to overweight at barclays. it's up 5.4%. for this stock in particular that is a huge move right now. it's had strength straight from the open. i want to talk about the tale of two anti-bankers. apple is so much more than that. research in motion down 2.4% pipt had a massive selloff late last week on its earnings. analysts came out and said buy the disk. it's not happening. it continues to get weaker. well below $70 right now. apple is up 1.5%.

2 billion downloads in the app store. 85,000 applications. on top of that there is news the iphoill now be distributed in the uk and in china. it's going to be sold for more than $730 in china. but they want to go after that premium market. quickly i want to look at a few stocks. big names on the move, google up 1.7%. instel good for 2%. the whole chip sector doing well. microsoft up 1.6. quick on the chips, supply materials upgraded to buy at citi. that's good to the up site at 3%. just to go against the tech routine here quickly, goldman sachs chiming in on regional banks, especially in the northeastern part of the country. you can see the difference. niagara they have a buy. then you have hudson city. well, they have a sell on them. and they're down 1.3%. but, larry, in general tech is on the move and leadership today, we're up 1.9%. back to you. >> thanks very much. a big morning for m and a.

we got xerox, johnson and johnson and abbott labs all announcing new acquisitions. looks like merger monday has made its own comeback. what's that mean forsto stocks coming up in the fourth quarter. macroportfolio advisers. you going to buy? are you out there buying? i know you're a bear. are you going to buy now? >> well, we're bearish from a long-term standpoint. we've been playing this market on the long side because that's where all the action has been. merger monday is good. and we're going to see a lot more of this. because what businesses are doing, larry, is they're trying to capture more markets here. the reason they're doing this now is because the top line, the revenue growth is not materializing. it's not going to materialize for quite some time. the fed has pumped a tremendous amount of liquidity into this market. this is why you can't try to outguess this market. remember, 1999 was the last really liquidity driven market that we had. that market went far higher and

far faster than anybody thought. >> can i just ask you, with all this rig ma roll, you're the most bullish bear i know. you keep buying -- you keep telling me in the long run. you may be right in the long run. haven't you -- you've really been a bull. you've been a closet bull. >> we're going to play whatever direction the market is going. the trends have been higher. the reason i try to tell people not to be overly bullish, larry, i don't want to see people get stuck in the buy and hold mentality that really ruined them over the last decade. they didn't make any money with this buy and hold -- it became buy and rot. i'm just trying to tell people be very, very careful with this market because the liquidity's not there. you're not going to get -- i mean the liquidity's there. the revenues aren't there. you aren't going to get ultimate expansion without ultimately seeing revenue growth. >> mike, the dow is up 47% since its low back in march. we're on track to have our best third quarter since 1939.

where do you protect your profits right here? where do you look at your portfolio and say, all right, maybe i take some money off the table? >> certainly if you see some of the small-cap areas and mid-cap areas that have certainly been beefed up because what we're now seeing as the increased m and a activity, you're probably going to continue seeing that. we've been discussing this for months. i think what you've now got is you are getting confidence back. but, larry, as you pointed out before, massive amounts of cash have built up not just in the consumers pocketbook, but more importantly on corporate balance sheets. >> right. >> they've got to put that cash to work. >> where? give us some examples. >> wait a minute, wait a minute. there's no cash and coin in the consumer balance sheet. they're at -- >> that does not count the fact that mzm capital is now over $10 trillion. corporate balance sheets have an increasing amount of cash. they cannot put it to work. they are aggressively cutting

costs. you're right. they're still looking for top line growth. what we're going to find is that comes second or third in this game. it doesn't come in the first inning. >> why can't they put it to work? what are they going to do with it? >> they can put it -- what i'm saying is they're now putting it to work. they haven't been doing so. they're now putting it to work, probably going to continue to see the smaller and mid-cap areas be the things they buy. they're going to buy product lines. they're going to -- they already have their distributions set up. they can take over smaller and miz-size companies, cut their costs again. you're going to have another layer of productivity yanked. >> jim le camp, let me ask you about two headlines. profits are poised to surprise again. "wall street journal." the third quarter gdp is rising in rio and nominal terms. that means profits. that means top line. and toxic rally set to boost banks. okay. look at your indexes. prices are rising in the mortgage-backed index, the cdx index. both banks and industrial companies could rise on this

news, could you s news, could they not? >> absolutely they could. you're getting a lot of funny money type rallies. you're seeing the purchases of the mortgages. in the meantime, delinquencies are continuing to rise, foreclosures are continuing to rise and the shadow inventory of houses is still way too high. >> why are the prices of mortgage-backed security going up? you don't think the banks are buying back? do you think investors are seeing a better economic outlook so that these toxic assets are picking up value? these are market signals. that's all i'm saying. i don't know if they're right or wrong. they're market signals. >> there is some activity. there are going to be profits because productivities increasing. we've got zero percent interest rates. that's all good. the problem is ultimately in this economy, the horse that we have to bet on is the consumer. and right now the consumer is overstrapped. they've got wane refrigerator

perry riding this horse. that's too much debt. that's the horse we have to bet on. this market can go for a while. we're playing it on the long side. but we have all our -- we're looking for signs of a market crack at any time. >> mike, do you buy that? >> no, i don't. larry, look, this really comes down to all the points the other guest has made. they are valid points. that always happens at lows. it is always the darkest. it always has all the negative consequences. it always has all the negative comps. the fact is if you look at the previous 8 1/2 months through right now, we've had $11 from investors going to bond mutual funds for every $1 that's going into equity funds. that tells you they are scared to death. they're doing exactly what history says. they're buying the safest as they perceive it item. not the less risky item. in fact, right now, the less risky item is to invest in the growth and ingenuity of corporate america. >> a spirited discussion.

we appreciate it. thanks, guys. coming up next, gold prices. they are back on the rise after last week's pullback. we're going to talk gold, etf, and whether now is the right time to be buying into these. >> the oil and natural gas tan go go. you're watching cnbc first in business worldwide.

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take a look at crude oil. lost 8.5% last week. today trading higher by $1.24. almost 2% on the day. weak economic data facing off with that news out of iran. you can see right now it's giving oil a little bit of a boost. still pretty cheap at 67 bucks. i guess depending on who you ask. coming up, we're going to talk some more about oil versus natural gas. in the meantime we want to talk gold. gold prices moving to the upside after hitting a two-week low on friday. we want to head over to sharon epperson live at the nymex with more. >> hey, trish. one of the factors affecting oil prices and gold as well has been the dollar. today the dollar giving back a lot of its gains, barely unchanged. at the moment it's helping gold prices battle back towards that $1,000 mark. we do have gold right now right around $995 or so. keep in mind, we are talking about the first rise in gold prices in about four days' time. a lot of this has to do with

speculation, not so much demand for gold but speculation that are there are a lot of long positions in this market. they're looking at where the dollar is right now. the fact that the dollar fell to its lowest level in a year last week is what helped gold rally toward that $1,020 level. was not able to break above that mark in the trading. the highs that we're seeing of gold, the nominal all-time high was back in march of 2008. around $1,033. we're looking at this speculation, though, and the fact that the dollar is playing such a heavy role in all commodities as a reason why we're looking at gold prices toward this $1,000 mark right now. but it's going to be very interesting as we see gold attempt to get back above the $1,000 mark. perhaps go toward that nominal high that we saw in march of 2008, if we can really get there. the fact remains, though, that gold stocks have actually outperformed gold futures this quarter. if you look at where some of the big gold stocks are, we're looking at prices, an increase in prices of about 35% compared

to about 6% for gold futures over the last quarter. it's going to be very interesting to see whether or not investors want to stick with gold stocks or try to get the gold itself. >> indeed, it will be. stick with us if you would. we want to have you hang on for this discussion. the discussion being, is now the time to buy into gold? more specifically, gold etfs. i want to bring in editor of etftrends.com. you heard sharon talk about a nominal high of $1,033 hit back in march of 2008. do you think we're going to get there again in the near future? >> i think the perfect storm for gold seems to be lining up. sharon hit on a lot of the key points. the demand is there. there's also pressure as many don't believe the market's really going to continue to move on the equity side. they're using gold as a hedge. the supply is getting slimmer. so we've got this demand in emerging market countries where we have more and more of these

citizens that are entering the middle class. they've got money to spend. they're spending it on gold. now for the first time in years, the average investor has the ability to enter the commodities market via etfs. they can do it in two ways, as sharon said. both a spot price and one of the biggest etfs out there that's holding 650 tons of gold in stores, gld, is available. or you can play the miners. and with the miners right now, it takes them about -- i'm sorry. $350 to pull gold out of the ground. it's selling for $1,000 an ounce. there's a lot of profit there. >> tom, let me just go back to your point about emerging markets. i think that's an interesting one. i want to separate it from everything else that's happening in the economy. in other words, if we see a real significant turn in the economy, and we've seen some evidence of that, of course, right now, even bernanke coming out and saying that the recession has

technically ended, let's separate the emerging markets, assuming they're doing well and more people are coming in and buying gold. look at the overall world economy. as things start getting better, then why would gold continue moving higher? >> for a couple reasons. i mean, first of all, if we have more discretionary income, you're going to start to see more demand for things like jewelry. and people have surely cut back. but from a retail situation, that will increase tremendously. and you can't avoid what's going on in merging markets. you have hundreds of millions of citizens that after buying a cell phone, the first thing they might buy is gold jewelry. >> tom, can i ask you -- go ahead, sharon. >> right now we're looking at the level of gold prices being a bit of a deterrent for demand in some countries. particularly in india. really the dollar playing more of a role here. i wonder if investors, particularly retail investors getting into the gld really understand the impact that the

dollar is having on gold more so than any type of fundamental. >> that's a point, larry. go ahead. >> you're right. go ahead, larry. >> tom, i just want to ask you. how much is the rise in gold high to what i'm calling the dollar chaos theory. that is to say that the dollar world reserve system may be going down. you heard world bank president also challenge the dollar, which is odd from a former treasury official. maybe it's not inflation. maybe it's just fears that the dollar primacy and sup prremesys gone down. does that enter your calculation? >> absolutely. the dollar slide, we don't know when this whole thing's going to end. the hedge and threat of inflation could be right around the corner. we don't have a sense right now when inflation's going to kick in. but i think many on the street are betting that it's going to happen. and a great way to hedge it -- >> maybe i'll throw this question to both of you and to

sharon. i don't think i got a real clear answer from you at the beginning in terms of when could we potentially hit $1,033, that nominal high we saw last year again. you gave me the reasons why. but when? >> i think it's going to definitely happen between now and the end of the year. >> now and tend of the year. >> for a few reasons. again, we could see $1,100 by tend of the year. >> sharon, real quick, what do you think? >> if you continue to see the dollar fall to the lowest levels we've seen in the year you're going to continue to see gold prices rise. keep your eye on that dollar and the weakness there. we're going to hit that level. >> i call it dollar chaos theory. i mean it. it might not even be inflation. anyway, i don't want to get into that too much. thank you, tom. gl thanks, guys. up next, where to invest in the energy sector? should you buy traditional oil stocks or is natural gas the new hot sector to buy? find out next. plus, the ceo of medtronic has concerns about the nation's

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the right way alue.merfunds. return of merger monday, so it seems right now. on the dow powering away head by

triple digits. a gain of 126 points. you're lookingyuz at the live shot of the big board. fuel merger news. a few other things going on. melis melissa? oil and natural gas, major gains year to date. natural gas has actually been the one struggling. natural gas being a pullback while oil is on the rise amid geopolitical concerns about iran's nuclear testing. where should investors be placing their bets? in oil stocks, natural gas stocks? let's ask founder and president of the cap rock risk management. thanks so much for joining us. let me ask you first of all about one trend we saw a lot last week that has been worry mega. oil and gold falling at the same time as the dollar. there's been a little bit of a turn around in that today. we were worried that is that a sign of deflation? what is that? >> i mean, right now the big macroturn is the dollar. it's really dominating just not the commodities market but equity markets as well.

we see the dollar get through this 150 up to 154 there's no reason gold and crude oil won't continue to rally a little higher. it's a macroplay the dollar is dominating across the board. >> iran is the second largest producer within opec and exporter. that's exactly the type of geopolitical concern that really would have upset oil markets in the past. is this going to provide balance in the future or is it all scare and no actual substance? >> unfortunately i think we've gone through this song and dance so many times the market's become immune to it. i think the markets will shrug it off. again, i think everything's really all centered on the dollar that continues to weaken into year end. there's no reason why the dollar can't drive crude oil up to the $80 level. right now our target price for the year is about $80 on crude oil. >> what about the tremendous production of natural gas from shale? isn't there overproduction cooking there? >> certainly that's been the case. a lot of that is residual from we had $15, $14 natural gas last

summer. now you're down to levels we haven't seen in seven or eight years. >> right. >> eventually that production destruction is going to kick in. the big achilles heel in natural gas has been the inindustrial sector. inventories are extremely lean right now. forget these inventories being replenished. you could see an up tick in demand there. also calling for a cold winter going into the key heating regions. a lot of people are not even focusing on if you take a look at the winters of '07 and '08 we had average heating demand. we saw about 400 bcf pickup in demand just on that alone. >> tell me how you would really play natural gas, though. the volatility has killed a lot of traders out there. you mentioned it was in the tens, the teens. i remember when it was 15 bucks. then it dropped below three. it's a dangerous game to play.

is there a way to make money or do you avoid it? >> it's been a brutal year. you can take a look at the -- there's been issues with clarity. with the regulations and what limits they're going to put on there. a good way to play is focus on u.s. oil field service. 85% of the oil in the u.s. is not oil but natural gas. you could focus certainly on oil fields. >> why is that a better hedge? if natural gas goes down that companies get clobbered as well. >> and they have. that sector tracks very tightly and highly correlated to natural gas. >> why is that a better play than just buying natural gas? sounds like it's got the same risk? >> you can buy either one. the problem with natural gas, a lot of investors, the only way they can play it is the etf. if you have the ability to trade futures and commodities, you can buy -- not a commodity outright.

if you're an investor you've got some event risk, headline risk with the ung. you're going to have to switch over to these service things. >> are you sure oil prices aren't going to go down? >> they certainly could go down. >> if the argument is that natural gas is too low, but the reverse argument could be that oil prices are too high. i don't know. i'm just asking you. >> i think oil could easily get to $80. i think, again, the dollar -- >> that's up. that's not down. >> i know. i think $80 is where we're heading on crude oil. but i do think from a relative valuation natural gas can outperform crude oil even to the upside here. >> okay. we'll leave it there. thanks for joining us. appreciate it. coming up, medtronics chairman and ceo bill hawkins on why he has concerns about health care in america. he's going to join us live to discuss. first up, more than 2 billion downloads from the apple apps store. the growing wireless sector and which stocks you should buy now. ñ

welcome back back. i am trish regan. want to get you caught up on these markets right now. the dow up 1.4% at 9800. a gain of 135 points. what is fueling this is a seemingly, seemingly return of monday mergers. we've got abbott labs, xerox both announcing multimillion

dollar deals. when you see ceos buying it leads to investors having a little more confidence and doing buys themselves. nasdaq up 2%. here we are with our discussion. we want to talk about going wireless. apple hits another milestone, announcing its app store has seen more than 2 billion downloads. the stock is trading higher. a gain of almost 2%. $3.47 a share. what does it mean for these wireless wars and where should you be investing now? senior analyst at broad point and principal analyst at emerly group. great to see you guys. >> good to be here. >> apple clearly the leader in this space. it's also clear that we have very much hit a new technological age with people really downloading movies, downloading music, downloading everything on to their iphones. my question is, is there room for anyone else at this point in this space? how do you compete with apple at

this point? >> if you look at the market share numbers, both nokia and research in motion are actually larger. apple gets all the mind share. it's their marriagegins in reve. apple for the most part sell mostly consumer, they've picked up a little bit of business. the two companies to watch are probably research in motion and apple at the moment. >> larry, i know you wanted to get in here. i was asking the producer, actually, right while we were in the commercial break. does larry by any chance have an iphone or blackberry? >> no. >> i didn't think so. >> no. it could be too excessive. i'm addictive personality. that's my whole trouble. one of my many troubles. >> i give you credit for staying away, then. >> but i do -- i am online constantly. brian marshall, i want to ask you, what are the options here? we know this story. is it in the market?

is apple too high? is there a risk people are just exploding this stock and it's going to be too speculative? >> yeah. that's a good question, larry. clearly the stock's done very well. up over 100% year to date. we upgraded at start of the year at $80 to a buy riding. it's had a great run. we think there's upside left based upon our estimates next year. we think the stock is fairly valued at $210. we think apple will have a great quarter. it will be well received by the street. we think the stock has some additional legs here. a very large christmas season. historically december has been one of the strongest periods for apple. we think this year will be no different driven by the ramp of china for the iphone as well as the enterprise. so we don't think there's a grassroots effort building in the enterprise for the iphone and additional applications and products there. we actually think it's going to be a great next three months for apple. >> rob, can we -- can we say

that this is indicative of a growing economy here? i mean, when you see this kind of demand for technology products, what is that telling you about the macroeconomy? >> certainly it does indicate people have more spendable income. remember, with these smart phones it's not just the price of the phones. it's the price of the service. when people are concerned about making their bills or staying employed, they won't sign up to a large -- long service program. the fact they're willing to sign up for these service programs right now means they're getting more comfortable, going to keep their jobs, and getting more comfortable in terms of spending money. we like people to spend money. the more of them we get, the more recovery we're going to see. >> you're really betting -- i want to follow up on that. everybody is always telling us all day long the consumer's going to be weak. the d leverage consumer. that's why the economy is not going to recover strongly, blah, blah, blah. you're betting on the consumer. that's a whole different bet. in fact, this stuff is more expensive than your run of the mill consumer stuff, rob. what's your bet?

why do you go there? >> right now what we're doing is watching a trend. as the consumer getting more comfortable, they spend more money. as long as that trend continues to improve, we're in good shape. consumers talk to other consumers. the more comfortable they get, the more that comfort spreads from person to person and the stronger the recovery becomes. if they start going the other way, then we see that trend and then we would be much more conservative. but right now the consumer is actually feeling pretty good about things. that means the fourth quarter could be real powerful. >> brian, we've actually seen apple do amazingly well throughout this recession. a lot of analysts came on and said to me, this is a testament to the product. people even during a recession will still buy this product because they think it's a great product. can we separate the product from the overall economy? which is winning out at this point? >> definitely. i think apple has gained more dollars in the downturn. but i also think they've actually been the only company in technology where the consumers actually bought up as opposed to buying down. so in the downturn, consumers

were buying down, buying less -- you know, lower priced products. with apple with the price cuts that they've had, they've actually seen consumers go from a lower product to a higher product with the price cuts as it's been more attractive to the customer base. that's one of the few companies, if not the only company in technology that we've seen customers buying up as opposed to down. >> at this point you're seeing evidence of an improving consumer more so than just consumers saying, okay, i want that product? >> i think the consumer's gotten better over the past six months. if we look at some of the pc spends and purchases out there, clearly i think things have gotten a little bit better. i think apple has derived a disproportionate share of things. >> why did rim's numbers come out so bad? >> they're still doing well. relative to expectations it was clearly a disappointment. i think if we look at the last couple months we saw the launch

of the iphone 3gs, palm pre. that took interest away from rim. that's basically what happened to them in the quarter. >> okay, gentlemen. thank you so much. we appreciate it. >> thank you. >> pleasure. up next, the first on cnbc interview with the head of the world's largest medical device company. >> what does medtronics chairman and ceo bill hawkins say about the push for health care reform and what will it mean for his business? he's going to join us live only here on "the call." welcome to the now network. population: 49 million. right now 1.2 million people are on sprint mobile broadband. 31 are streaming a sales conference from the road. eight are wearing bathrobes. two... less. - 154 people are tracking shipments on a train. - ( train whistles ) 33 are im'ing on a ferry. and 1300 are secretly checking email... - on a vacation. - hmm? ( groans ) that's happening now. america's most dependable 3g network. bringing you the first and only wireless 4g network. sprint. the now network. deaf, hard of hearing and people with speech disabilities access www.sprintrelay.com.

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shares of accenture up $1.69. citigroup upgrading the technology consulting firm to buy from hold. saying they expect a positive surprise ahead in margin expanse. health care reform is the lead issue dominating washington. but how do major players in the health care industry feel about obama care? joining us first on cnbc interview is bill hawkins, chairman and ceo of medical device maker medtronics. you run a company that produces cutting edge medical devices. how does the amount of money you're going to spend on

research and development change, you think, if the landscape in health care changes the way it looks like it's going to? >> well, today we spend about 10% of our revenues on r and d, which is about $1.4 billion. and going forward, our intent is to continue to invest in innovation. because we believe that innovation truly is the solution to part of what we're talking about when we talk about health care reform. >> can you afford to do it at the same rate? are you still going to put 10% into it? do you think your overall pie is going to get smaller or do you think it'll be unchanged and you'll still have the same level of innovation you always did? >> well, we do have concerns about a number of things that are being talked about in regards to health care reform. but we will strive to continue to invest. because innovation is the life blood of what we do. the cool things that we're developing like continuous glucose monitoring for insulin and some of the work we're doing in neuromodulation and things we're advancing in heart disease

is all predicated on research and development and on innovation. >> mr. hawkins, what about the baucus tax on medical device companies? >> first, let me just take a step back in terms of health care reform in general. we've been very engaged. and we do support the idea that we need to bring about some type of reform. clearly the idea of a tax when we're already today, as we purchase through medicare and if we try to bend the cost curve with medicare, that will impact us just in its current form. so the idea of another tax is something we do have some concerns about. >> what about the idea of slower payments, lower reimbursement rates, which is really shot full of this now? i would assume the stuff you produce, you're going to be first hit by these lower reimbursement rates? >> well, we are -- when reimbursement goes down, it directly affects us. if you just look at what happened in the last year as hospitals faced issues with their endowment incomes, it had an impact on us.

so we are directly tied to what happens to medicare. because that's how we get paid through hospitals who reimburse by different private and public insurance companies. >> you say -- you started your answer the way a lot of people do. that we do need some sort of reform. what do you think is broken and how would you fix it? >> first, the fact that americans, all americans, we do believe, should have access to some type of health care reform. there is a lot of discussion about access, which, again, we support that. but i think there's been probably too much discussion about cost and not enough about quality and things that we're doing and medtronic to bring about innovation and whether it's in the field of diabetes or heart failure or some of the neurodegenerative diseases with the ages of the population. so we need to reshape the conversation more around, i believe, quality and on some of the innovation that's going to improve people's lives going forward. >> you used one of the other catch phrases a lot of people like, which is bring the cost

curve down. how do you do that? >> look what we're doing in some of the innovation we're bringing forth. take diabetes, for example. today in our country we spend probably $200 billion on diabetes related illnesses. we know if we can keep people's blood sugar levels within a normal range we could cut that in half. medtronic recently brought force a continuous glucose monitor center that gives diabetic that information to be able to keep their blood sugar levels in that normal range. there's close to $70 billion to $100 billion right there. >> how do you get that to more people? does insurance cover it? do you give it away free? if that's the solution how do we get it out there? >> it's about creating awareness. getting the insurers to recognize the value of this technology. same thing what we're doing for heart failure. we have devices now that have

little monitors that determine whether people in heart failure are going to actually be in a mode that they're going to have to go back into the hospital. we can prevent those people from needing to go into the hospital. >> are you worried the thrust of this health care reform, which is a larger government footprint, is going to slow the growth of the private health care industry? whether it's drugs or biotech or medical devices or whatever? are you concerned about that? >> on one hand, if we can expand the pie and add whatever number it is that are not getting insurance, that's a positive. on the other hand, we are concerned that if the focus is so much on cost and it then finds its way down to our industry and the other life science companies like pharmaceutical, that will stifle innovation. yes, we do have concerns in the long run about that aspect of it. >> all right. we're going to leave it there. thanks for joining us. we appreciate it. "power lunch" is coming up

at the top of the hour. bill griffith, what do you have in store? >> thanks for asking. we have two larger than life personalities with us. first hour, michael moore will be with us here in studio. his new movie is called "capitalism: a love story." nolan bush. the father of electronic games. this is the guy who created pong. if you don't know what that is, ask your father. atarry. he's got a new game he's working on now. we'll talk to him about the future of electronic games when we see you at the top of the hour. i'm laughing to myself. it's probably good you guys have michael moore instead of us. that would be one hell of a fight. >> not a chance. >> i'd like to see that. an election victory for the head of europe's largest economy. >> speaking of capitalism, german chancellor angela merkel winning a second term. we'll go to berlin for a live report. national car rental knows i'm picky.

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well comb bacome back. german chancellor angela merkel is planning to engage in

coalition talks with the probusiness three democratic parties. news of the election is giving a lift to the german market. cn cnbc joins us live. >> reporter: good afternoon. what did we get from these elections. angela merkel returned to power. not a surprise. the free democrats, the liberals party voted in. bit of a surprise. because everybody or many had expected a continuation of the grand coalition. but also, both the big parties, angela merkel's and the social democrats, got punished in these elections. all the smaller parties, the free democrats, the environmentalist greens, the socialist left and, believe it or not, the pirates party all gained ground. which tells us that germany is going to become ever more complicated in terms of the political landscape. why is the stock market racing ahead? one of the things that might come out of this new coalition once we get it is that, indeed,

some of the energy companies, some of the utilities, will benefit. because the old coalition, two coalitions, as a matter of fact, had voted nuclear power out. the exit strategy to nuclear power. this new coalition, especially the liberals, want to extend nuclear power, at least want to extend the production from the nuclear power plants. of course there's also the hope that we get some tax cuts. the hope. >> let's talk a little bit more about that hope. is the expectation that, in fact, it could happen soon, those tax cuts? or does the administration really want to wait until there's more economic improvement in the country? >> reporter: let's face it. they would like to come up with tax cuts. even sweeping tax cuts. but we've all had the financial crisis, all had the recession. we've got bloated budget deficits.

before they've got some kind of counterfinancing or some kind of budget, the only thing we're likely going to get is cosmetic tax cuts. more tax cuts on the fridge js that will appease the liberal democrats, but not sweeping tax reforms that many would like to see. >> okay. maybe down the road. thank you so much. reporting live from berlin, germany. a quick break and then we're back for "last call." >> a list of stocks to watch for afternoon trading.

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time for last call on stocks you need to watch during the afternoon trading. joining us on the floor of the new york stock exchange, allen valdez. what are you looking at right now? this moment? >> we are looking at oil right now, larry. oil's had a nice run. all of the energy stocks, 12% of the s&p keeping that market up and keeping it flying today. >> really? do you think oil's going to continue to go higher?

it's actually relatively low compared to where it's been trading lately. >> it's just a trade, the dollar, oil, it's just been trading 65 to 75. looks like it's going to bounce itself back up to that $75 range before it wrecorrects again. >> anything else you can move on given the weak dollar? >> basically, the market. we like the market in general. we think the market is poised to go a little higher between now and tehe end of the year. it's going to keep this market going. >> what about the merger news today? how is that affecting you? >> we love it. any time companies are buying stocks, getting involved, we love to see that. in the past it's been very quiet. we love to see these corporations get involved. it spurs us to get involved also. >> what do you think happened here the last three days of the kwarer? we're on track to have the best third quarter since 1939. does that continue or do people see that and take some profits? >> i think continuous. august was supposed to be bad, it's been great. september was supposed to be bad, it's been great. i think it's going to