still have to get involved. every time you see a little pullback, they get involved, the market bounces back. >> so much money still on the sidelines. i guess that would only create more of a bullish scenario. sorry, larry. did i take what you were going to say? i think that's very much a reality, that a lot of money hasn't come into this market yet. does that fuel an even more bullish scenario as we head out towards the end of the year? >> no question about it. a lot of fund managers have been sitting on cash on the side. they're going to lose their job unless they get involved. you're going so see more money come into the market as the year comes to an end. >> what are you laughing about, larry? i hear all this giggling. >> i just want to ask about banks. >> did michael moore walk in the building? is that it? >> actually, he has a huge guest tonight. that's one of the reasons wh he's giggling. he just found out he has an enormous guest at 7:00. >> we're going to get the president of the world bank. that's on "the kudlow report" tonight 7:00 p.m. eastern time.

>> that's it for "the call." i'm melissa francis. >> thanks for watching, everyone. let's go right to "power lunch." >> xerox shares fall 70% on its deal to buy affiliated computer services for $6.4 billion. wall street is encouraged by merger activity. stocks gain almost 2%. ohio takes the lead role in a lawsuit that could seek billions of dollars from bank of america. cnbc.com news now. i'm courtney reagan. and we welcome you to "power lunch." a love story. i'm bill griffith. >> indeed, it is. >> so far bulls are in charge this monday. stocks breaking a three-day losing streak. technology, the financials, consumer discretionary all moving higher today.

we're back to that kind of a market cycle. cisco has been leading the dow. we've got google ledding the s&p 500 and the nasdaq at this hour. >> thank you. we have a $7 billion deal in the biotech world. the sector has been a real performer this quarter. but investors may still be able to get into this red hot area of health care. we have the best in biotech coming up. i'm michelle caruso-cabrera. oscar winning director michael moore will join us to talk about his latest film "capitalism: a love story." not. last and at least. a major milestone for apple today. the company announcing its 2 billionth down load from the its apps store. i'm bertha coombs. xerox makes its biggest acquisition ever. the document giant in the $6.4 billion deal to buy atf. is m and a making a comeback? how many more deals are in the

pipeline. i'm phil lebeau. a big week for chrysler ceo after briefing the chrysler board about his five-year turn around plan for the automaker. now he's going to brief the president's auto task force. what's in his brief organize what to expect. the bulls are back in charge today. stocks are on track for a seventh straight monthly gain. the dow was on track for its best quarter in more than ten year. mary thompson kicks it off at the new york stock exchange. s is it all the deals? >> the dow jones industrial average of 138 points. today is the best day for the market in just about a month as the markets recover from a three-day slide. broad based rally today. advancers out pacing sliders by a margin of five to one. there are a couple of things today we're watching. of course, it's a merger monday. a lot of deals providing support to the market. we've seen some dollar weakness. that, too, has helped to drive

stox higher. also third-quart erwin doe dressing happening as well. xerox buying aw ing awaing awai computer. abot labs buying solvay. moving higher on that news. going to give it an important cholesterol drug. we're seeing something else happen. a continuing of the up performance of small-cap stocks today. it has outperformed the s&p 500 up 15.5%. outperformance on small caps accelerates in the last month and continuing today. >> we're up more than 2% here. i want to point out advances per v versus declines better than three to one. volumes aren't heavy. everyone's talking about cisco. i'd going to want to point out

spillover effects positive inside that note. a couple of stocks that we're also mentioning positively. broadcom up 3.4%. we talked a lot about -- it was on the menu. apple and the 2 billion downloads at the tech store. research in motion down 2.9%. you have a situation where the iphone is going into china and the uk. you have download news. research in motion after those earnings cannot get off the mat. continuing to struggle. we do want to look at another of the big names. google sup 1.7%. intel, all the chips up more than 2%. we're up 2.5% with intel. microsoft up 2.2%. and ebay up 1.9%. finally, zumiez the retailer up 6.4%. brian, as the nasdaq just

hit its highs of the session and the dow jones industrials and s&p 500 near the highs of the day there as well, we're looking at oil prices rallying and the momentum there gaining. we have oil prices now above $67 a barrel, up more than a $1.20 right now. and the weaker dollar also playing a role here. the dollar index was positive. and gave up all of those gains and has turned negative. that is another factor that is helping this rally in oil prices. in addition to that, the news from iran somewhat supportive as well. we have the latest headlines from iran's revolutionary guard saying two days of missile tests weren't successful. of course this after the discovery of those nuclear plants that iran has. on thursday the nuclear talks that will take place in geneva. also houston ship channel. news out of there, too. an oil spill, fuel oil spill closing part of that houston ship channel. again, it is more the dollar and stocks that has caused this

rally in the petroleum complex. >> thank you very much, sharon. let's start out with interest rates. the coupon supply next week, bills today. if you look at a ten-year note yield, yes, it's about ready to test 330. if you look at a year to date chart you can see whether it was july, whether it was september, or even more predominantly in may, we've been down here. it's going to be very interesting to see if we violate it as we continue to see more participants getting on. treasuries, sit a bubble? many are debating that. let's look at the foreign exchange side. dollar/yen is the story today. a decade and a half low. we're under 90. something you don't see often. but it's the yen, not so much the dollar in this case because look at the pound versus the yen. a very similar pattern. getting close in the low 140s, also challenging areas under 140 we haven't seen in over a decade. now it's also true on the euro versus the yen except with a

slight difference. that, of course, it's moving higher against the euro. in that case that chart is the euro. we've been lower. the european holding up a little bit better. we heard about the big deals that are giving stocks a boost. but what will continue to power those markets going forward? let's talk to our "power lunch" task force. vice president at wells trust arizona and president of secret of traders.com. welcome. nice to have you here. brent, i'm going to start with you. obviously the deals are an encouraging sign. and it has gotten some of the money to jump in to specific sectors of the market. but is that enough to trigger a wholesale entrance into the market of that trillions of dollars that's sitting on the sidelines? >> it's definitely a positive sign if companies are out there buying other companies and merging. it's a bullish indicator for us. what i find impressive right now

is the market breadth. advances versus declines has been very strong. the price trends have been holding. you look at the sharp price trends, intermediate price trends, long trends. they're all holding and moving higher. until we see some of that break down, i think the trend continues. >> let me ask you this. on the other side of the coin, rick is telling us that the ten-year yield is threatened 330 from above to go down. a lot of people would suggest that means we should be worried about the economy. what does that tell us? >> i think we should be worried about the economy. the fundamentals would tell you that investors out there would be worried. the problem is that the tech k nickales don't match up with the fundamentals. the trend has been higher for a good part if not all of this year. last week starting wednesday a little drop in the market. then m and a activity today that pushes the market even quite a

bit higher. i was standing at the s&p before i came out with you guys. we're watching floor traders in there really kind of get stuck short as we sit on the highs basically the whole morning. that's a situation where technically this market looks very good. fundamentally it doesn't look so good. that's why you see the play in the bonds. >> a short time ago people were saying acquisitions are dead. doesn't the spate of new acquisitions say investors think there are still cheap stocks out there? >> it could be companies just looking at the landscape right now trying to take market share while there's relative evaluations to take market share. like i said before, it's a bullish indicator. >> larry, you were saying you were in the s&p. in august we were all watching the vix go up, the fear indicator, anticipating maybe the fall would be a difficult one. it has been anything but difficult so far in september. only a couple days left here. are you guys starting to get sweaty palms about october? is that what's going on?

>> it really depends on the government. government intervention will continue in my opinion to prop this market up and keep us going higher. when they step out, you know, you take away cash for clunkers. maybe at the end of the year the fed stops putting money in. that could be a totally different situation. without that situation, without the government stepping out of this, i don't think most people are worried. and we should be worried. but as long as the government keeps it foot in i believe the market will keep going higher. >> what about earnings? the comps for some of these companies are going to be pretty good one would think. what if we get some disappointment? >> there could be some catalyst to halt the rally we've had. earnings are certainly a component of that. i think this quarter we're going to see some relatively good earnings because the comps are so low. it's going to be pretty easy to beat the estimates. what i'd like to see long term from a fundamental standpoint is top line revenue growth. which that would be more longer term, bullish. i agree with the other guest.

it's kind of a paradox right now. we have long term fundamentals that are kind of shaky. the tech ns are strong. say what you will about michael moore. he knows how to open a motion picture. the oscar winning director joins us next to talk about his latest documentary. also this hour, president obama considering pumping $35 billion more to help the troubled housing market. is it good money after bad or not? plus two major multibillion dollar deals announced today. is deal making really back? get ready for the fast money halftime report coming up in about half an hour. "power lunch" is back in two minutes. for a smarter way to trade online. only fidelity lets you back-test your strategies against an entire portfolio of stocks.

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only a couple days left in september. so far it has not been nearly as fearful as september has historically been. w we're looking at a terrific quarter. today is no different. nasdaq and s&p charges higher as well. abbott labs. here's a unique situation. usually when a deal is announced by a company that's acquiring a company like abbott labs has done today, solvay company for $6 billion in cash, usually the stock goes down. not today. apparently investors like the deal. higher by 3.5% for abbott labs. so far so good for

capitalism, a love story. if you haven't heard about the movie you will be. it has set a box office record of sorts. already it was shown on only four screens in los angeles and new york. pulling in $306,000. that's a lot. the movie goes into full release on friday. now, since he was a regular back in the day here on "power lunch" many years ago, michael moore has gone on to win an academy award, earned critical acclaim and tens of millions of dollars. we all know about "fahrenheit 9/11" and "bowling for columbine." we're glad you're with us. you never write, never call anymore. >> you guys moved. ever time i go over to ft. lee, you guys are gone. now we're here. this place, you can smell the money as soon as you walk in here. you have a putting green out in the lobby of this building. an actual putting green. >> that's for when we have golfers come in and they need to -- >> did you see the hot tub in the bowling alley? i don't think of you guys so

much in the hot tub. >> why do i see another movie in the making? let's talk about this one here. in your words, i want to hear 30 seconds from michael moore what is this movie about? >> this movie is about the legalization of greed. and we call it capitalism these days. it's a system that encourages people to make as much money as they can any way they can. and never ask some basic questions. is this good for the people? is this good for the country? is there -- the moral issue of this never gets talked about. because, of course, capitalism isn't supposed to have any morals attached to it. it's supposed to be about making money. we're at a point now where the working people of this country have suffered enough. there is a boiling anger out there in the country. and you have, i think what i heard on this network last week, one in eight homes are either in

delinquency or foreclosure right now. there's a foreclosure filing. you cannot do that to -- >> if capitalism isn't the answer, what is the alternative? >> i think that we need -- the alternative -- first of all w, am so bored with the capitalism versus socialism debate. we're taking a 16th century economic idea and debating it with a 19th century economic idea. we are in the 21st century. we have got to be smart enough to develop our own economic order. and that's what we're looki ila right now. that's why i think part of the problem here is we've lost our compass. we don't have democratic values attached to our economy. the people have very little say as to what's going on. >> you seem to celebrate socialism and really look up to it in your film. we screened the movie and

watched all two hours and a few minutes of it. seems like you wish you lived in more of a france or sweden or a socialist state? >> well, if you saw the film, you know what i'm celebrating is christianity. because that's how i was -- >> jewish people on wall street, might strike them as a little insensitive. >> absolutely not. all the great religions say the same thing. whether you're jewish, christian, butchristia christian, buddhist, muslim, they all say the same judged by we treat the least among us. >> the -- treated million of people in africa with malaria prevention medicine for a dollar a case. there are plenty of examples of capitalist companies doing good things for the people because it's good for their image and it actually pads the bottom line. >> because it's good for their image and it pads the bottom

line. not because it's right. >> it's done. >> you mean by any means necessary? is that what you're saying? >> why worry it came from a capitalist -- >> why worry where the money came from, how we made it, what people got ripped off. >> what you seem to be suggesting is there should be no losers. nobody should lose in capitalism? >> there should be a very strong safety net so no one falls through the cracks. >> is that capitalism? >> that's not capitalism. capitalism guarantees the wealthiest 1% -- these are the statistics right now -- the weltiest 1% have more wealth than the bottom 90% combined. i'm talking about what they actually own. they own and control -- and they own and control our congress. and -- >> right. michael -- >> this simply is no longer a democracy when you are allowing the richest 1% to call all the shots. >> i know you're on a limited time schedule. >> i hope not. >> well, because, you know, you

have the movie and you're going to a lot of different places. there were some interesting points you made about wall street. you've obviously made a lot of money making different films, award winning films. i'm interesteding with after you what you found out about wall street and your experiences, do you invest? what do you do your money? has that changed a at all since you made this film? >> i don't want people who watch cnbc now to get nauseous as home. >> i'm just interested. >> but i have my money in a savings account. and a few savings bonds. i don't own a -- let me answer the question. i don't own a single share of stock. i don't invest my money in a system, obviously, that i don't believe in. more importantly, as i come from the working class, i have a high school education, i don't invest my money in something i don't understand. frankly what i always remember are the grandparents and parents saying if you ever do get any money, the best thing to do is invest it in your house. buy property. that's the thing that there's a

finite amount of. that's what i remember them saying. so it'll go up and down. but it'll never go to a dot com stock suddenly worth five cents. >> or zero. >> good luck with the movie. >> "capitalism: a love story" opening nationwide this friday, october 2nd. >> it's really a hate story. up next, a crucial week in congress this week as congress takes up health care and financial regulation reform. we're going to headline to washington for details. he's sitting right next to you. >> yeah, he is. he's a good guy. >> i know he is. >> i love this man. still ahead, we're going to speak with a father of video games. yes, indeed. he's going to tell us about the next big thing in the gaming industry. plus, best bets in biotech. right now up 143 points on the dow. we're back in two minutes' time.

president obama gets back to the major issues on his domestic agenda following his meetings with the g-20 leaders last week at the united nations. health care and financial relation reform are front and center as are the olympics, we hear. we've got john harwood with what to look for this week. >> reporter: you thought president obama's schedule couldn't get any more crowded. but it has. first of all, this is the week that the president or the united states opens negotiations with iran as well as with the p-5 countries, five permanent members of the u.n. security council plus germany on that nuclear plant that was disclosed last week. the second thing president obama's got to tack sl this ongoing debate within his administration on the proper level of troops and strategy for the war in afghanistan which is becoming increasingly problematic from a military and political point of view. the third thing, of course, health care had been dominating the agenda before those two foreign policy issues rose to

center stage. but the senate finance committee is still acting, trying to plow through hundreds of amendments to health care legislation. the administration's hoping to finish that this week. and then president obama has now laid on a trip to copenhagen to lobby for the olympic games in chicago, his hometown, in 2016. it is an incredibly busy week for the president. you also mentioned financial regulation, which is moving -- not likely to be acted on by the senate this year. the same is true of climate change. we see the environment committee is planning to lay down their bill, barbara boxer and john kerry are cosponsoring. that's just the starting point for a long discussion that's not likely to be con clued until next year. >> i'm going to start with the olympics. that's a big risk for him. political capital, isn't it? >> i think they're taking the view that you've got to lobby for your hometown. you're lobbying for the united states. his wife was headed over already. he's laid on a quick trip. i do think there's a bit of a

perception chul risk for the president in that the end of the week is when those negotiations with iran are taking place. and one might ask why are you spending time on the olympic games when you're dealing with a nuclear threat from iran. but i think they've decided it's a quick trip, up and back. and he'll give it his best shot and see what happens. >> all right, john. thanks. john harwood in washington. president obama considering pumping $35 billion more into the troubled housing market. is it good money after bad? we're going to decide. at 12:45 eastern half, fast money halftime report. rally on our hands today. financials leading the charge. the best way to play may be in the asset management base. we'll give you the best ways to play. rim, the carnage continues today. heavy volume, heavy selling. rim is closing in its on 200 day losing average. is this your buying opportunity? we'll ask the traders. all that and much more coming up in about 15 minutes time. this is my small-business specialist, tara.

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welcome back. we are almost halfway through the trading day. in the headlines at this hour, stocks are in rally mode. it is broad based. tech, materials, consumer discretiona discretionary, all higher. cisco, chevron among the dow winners. it's merger monday. xerox buying affiliated computer for $6.5 billion or so. abbott labs striking a $7 billion deal to buy pharmaceutical business of be belgium conglomerate solvay. the obama administration close to committing 35 billion additional dollars to help state and local housing agencies provide mortgages to low and moderate income families. smart move or tossing good money after bad? guys, you know the rules.

both get 20, 30 seconds. i can never remember the difference. julian, you get the first 20 seconds. >> this is a good plan. bush administration backs support for local housing authorities. this is basically the government backing loans, backing mortgages through the bond market. if they didn't do it, what we would see is more injury being done to the housing market, particularly for the lower income housing and middle income housing. and if we didn't do it, we'd see more of the middle class going into bankrupt. it's a good thing. none will get paid back. >> tony fratto, why is this a bad idea. >> if we learned anything about the housing and financial crisis, the last thing we want is government getting deeper into distorting housing markets. hey, look. if we want to see a correction, we have a correction. we have housing prices down 20% to 30% in most markets. and mortgage interest rates low. people can afford to buy homes. >> did that in 15 seconds. julian, any response to that? if ever there were conditions to be able to buy right now with interest rates where they are,

now should be the time. >> the problem is, is that these local housing authorities that actually issue low-income mortgages, low-interest-rate mortgages in places like florida and california, they aren't doing that anymore. the reason for that is because the interest rates on municipal bonds have shot way up. and a lot of the intermediaries who actually buy the bonds aren't able to buy the bonds because of what the rating agencies have done to them. if you don't have the government coming in and acting with a bridge loan, this is money that's going to be patd back. the way the t.a.r.p. plan is getting paid back. tony opposed that. if you don't do that you're going to see major hemorrhaging in big parts of the market? >> dtony, do we know the money' going to get paid back? >> no, woe don't. that's one of the reasons why investors aren't buying up these bonds. they can go out and do it. if they want to make a case that these bonds are safe and they do a good job on mortgage origination, municipalities can go out and make the case and market their bonds.

investors will make a decision as to whether it's a good bet or not. if it is a good bet they'll buy them on a risk adjusted basis. if not they won't and maybe they shouldn't be doing these programs. >> that's the problem. the investors can't buy it because the rating agencies have downgraded their ratings at such a significant level they're not able to buy them in the secondary markets. that's why the government is stepping in as a lender of last resort. >> what about the government tony put forward. should the government be involved in social policy such as this? isn't that what got us in trouble with the first place with the sub prime crisis? >> i think that's because government wasn't involved early enough in the process. secondly in the same way tony opposed t.a.r.p. -- >> i didn't oppose t.a.r.p. i'm a strong supporter of t.a.r.p. >> you should have. >> good for you that you did. in the same way many republicans opposed the government stepping in there, and many republicans opposed the economic recovery

plan, these are temporary measures intended as bridge loans to get the economy out of the rut and people suffering the most, middle income and low income folks who otherwise won't be able to get mortgages. >> the problem is these programs like this are never temporary. the things that you do in a crisis to prevent a financial meltdown are one thing. you do them. you construct them to be temporary. what chairman frank and the obama administration are doing is setting up a program that will continue in perpetuity no matter how they design it. because congress will never exit this program. what we're doing with these housing programs is we are creating two classes of citizens in all of these programs. where we basically tax renters in order to provide a benefit to potential home buyers. we should let the market decide what americans want to do. do they want to rent? do they want to buy? they can make those decisions on their own. >> the fact of the matter is, is many middle income folks and lower income folks won't get mortgages without this plan. you said you support t.a.r.p. >> what about renters having to

subsidize home buyers? >> don't think -- i think the notion about renters subsidizing home buyers -- >> is it wrong? >> i think it's very, very, very attenuated here. what you're talking about is the government basically providing bridge loans to folks at for profit rates, below market rates, but for profit rates. like t.a.r.p. is beginning to pay back money in that program, you'll see the vast majority of people under this program paying back money -- >> thank you so much. good to see you. still ahead, apple announces its 2 billion downloads from its app store. the tech leaders in the market and why downloading people have nothing better to do with their time. two big deals on this m and a monday. are dealing making a comeback? is it sustainable?

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the dow up 142 points.

merger monday is back. two major deals. xerox buys affiliated computer services for almost $6.5 billion. abbott labs in a $7 billion deal. bertha coombs joining us with more on the new m and a lan scape. >> it's interesting. the theme behind both of these. perhaps about the landscape is biding your time. the ceo of abbott decided to take over the cholesterol treatment development partner. the move valued at nearly 7 billion u.s. dollars. xerox ceo calls the company's $6.4 billion awy sicquisition transformational. >> in the last couple of weeks in the world of m and a, as you can imagine, and if the world is going paperless, i think m and a

would be out of business. >> yeah. well, you got to wonder about the m and a business. xerox shares getting hit today on the news. s&p's rich peterson says we've had about $60 billion in deals announced in the past five weeks. but 2009 is on track for the third straight year of declining m and a volume. year to date we've seen nearly half a trillion. $500 billion in deals according to thompson roiter. but that's down nearly 40% from this time last year. just ahead of the financial storm. down more than 50% from 2007, which was the deal year peak. and the numbers are even more sobering when it comes to private equity and leverage deals. last week simmons agreed to be acquired by aras management. according to capital iq, a unit of s&p, we've only seen about $12 billion in private equity deals this year.

that's only about 3% of the total. about the same as what we saw last year. but take a look at how much it was back during the peak when credit was much more plentiful. of course, looking down the pipeline, time is ticking away for that deal -- or kraft want to buy cadbury. the uk takeover panel is expected to set a deadline for that for this week. this won't be one of those courtships that goes on forever. >> notice how they do it in the uk. a time limit. >> i like that. >> thanks very much. we must go. because we have a time limit. still ahead on "power lunch, apple announced its 2 billionth download from its app store. plus we speak to the so-called father of video games. and we have the best bets in biotechs. up next the "fast money halftime report." fithe same tools the pros use,

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liquidator. big deals today. $14 billion, in fact, this deals today. joe, what do you say? >> don't do it. look at the tape. look at how we have resiliently come back. last week everyone was talking about this reversal we were seeing in the market. the market is strong right here. it is being powered by this m and a activity and the technology sector as well. when you roll up your sleeves and look at the m and a sector, very bullish for abbott labs and the entire sector. >> you mentioned names like -- >> yeah. i think a lot of people might have expected intuitively to see a lot of activity in the

investment banks seing sector. i think really what we're looking at is a lot of bullish activity in the secondary market. those have that brokerage. i think that actually is sort of boding well from now until the end of the year. people saying that there's going to be a lot of capital markets activity. >> josh and jay, what do you see in the options pitch that might indicate that bull market run is continuing? >> just like mike said, it's not just the focus of goldman sachs. you're seeing broad point. jeffries. that secondary group is all picking up. it's going to be a light volume day, melissa, because we've got yom kippur. when we had a two-day selloff like last week as strong as it was, especially for research in motion, you're going to get a lot of turnover.

that's good for the high turnover brokers as well as the one mike mentioned. where do you stand in terms of this is a pause in the bull run or start of a downturn we saw on fed day last week? >> i guess in honor of yom kippur, if you can't eat food, you might as well eat other companies. true, there is a lot of cash out there. it's going to be deployed. it's cash without leverage, which means it has a certain business rationale rather than this funny money, pay less, do a deal. the asset manager one, by the way, is quite interesting. at the risk of a profoundly statement of the obvious, as stock prices go up, asset managers' assets go up and they make more money. it's a high margin business. that's a kind of obvious one that hasn't gotten the kind of attention. the m and a story is vital. jeffries is interesting. >> we'll see if the companies have to atone for the deals they're making today. let's move on. topping the tape, technology shares.

shares of cisco up 5%. barclays upgrading the name to an overweight. mike, do you like cisco here? >> i always like to try to -- when i see a name rally, i always like to look for opportunities for it to pullback. i don't necessarily think you're going to get one here. if cisco's one of the names you want to own, i don't think it's a big problem to buy even though it's up 5%. >> dr. jay, you're seeing heavy -- >> you like at micron technology. symbol mu. i own it. 54,000 contracts trade today. normal activity just one fifth of that. same thing in applied materials. same thing in cypress semi. applied materials and cypress seemmy are both leaning towards the solar space which is kind of interesting. i'm going to keep an eye on the solar space because of their heavy involvement with solar. >> i would be careful about distinguishing between a frothy market where the semi names are very attractive and places like

micron which are kind of the low end, and specialty names. the problem is at some point that kind of bulk, heady market activity is going to roll over. even if the market doesn't. i think you're going to want to be in the more fundamentally driven names rather than the momentum names. but right now the momentum side is working as john talked about. >> speaking of momentum names, let's talk about research in motion. the carnage is continuing today. down another 2%. approaching its 200 day moving average. we'll see if that, in provides support for research in motion. joe, you have been active in these names in the past. what do you think of it here? at what level does it start getting attractive to you if it does at all? >> i don't know if that's the trade right now looking at where it's attractive. technically the momentum is to the downside. fundamentally there are a couple things that changes the story for research in motion right now. if you look again this quarter into nation sales, we're week. that was a second consecutive quarterly decline when other companies deriving revenue from

their international sales, why isn't research in motion doing that? and the inability to add new subscribers with the new products they have added. those are two concerns. >> you pulled the rtrigger on rm this morning. >> there are no one-day events in the stock market, and by that i mean the people that didn't sell on friday to that 17% decline were going to sell this morning. so i was waiting for them to sell it down and bought it at $68. unfortunately, now it's $67, and so i have been writing aggressively calls into this. the good news about the drop is volatilities did hold higher than they normally would post earnings, so i think you got a little shot here at -- like i say, when i'm looking around at technology stocks and i see this stock down 23%, 24%, i got to like it down here and that's why i took the shot. >> the thing is when this stock has taken drops on earnings news in the past, you usually have had plenty of opportunities in

the days and weeks that followed to get long, so i don't necessarily think it's important to reef in. i would agree with the idea that you would sell some calls on the upside because the upside has got to be limited in here. so that seems like a good way to try to enhance returns if you're going to stay long in it. >> let's move on and talk about a sector on the move today, the steel sector. goldman sachs downgrading it to neutral saying it believes steel prices could decline further. for more let's bring in the pit boss, the one and only pete najarian who joins us on the fast line. >> i think if nothing else, you better be aware of it. they were so right back in july. it was july 28th when they moved them from neutral to attractive and now they're putting them back down. they were talking back then about the faster recovery but also the leaner supplies. now they're starting to get concerned maybe supply is starting to exceed demands. i think you've got to follow -- everybody loves to demonize

goldman sachs but when we talk about profits, goldman sachs seems to be high on that list f they're pulling out, it's cause for you to look and re-evaluate. they shifted the buy rating for u.s. steel. the stock traded $51.65 lpast week. these targets are not two-month targets normally from these firms. i think it's a little ahead of itself. that's exactly what goldman sachs is playing on right now. >> just on this, i think you have to start being careful about the high cost of developed steelmakers and start to re-examine that theme of the steels of the china steelmakers who can provide in bulk at lower cost. >> pit boss, good to talk to you. i'll see you later on in the week. >> look forward to it, sister. >> time now for fast and

furious. we start with apple's price target being raced to 210. do you buy, joe? >> yeah, absolutely. you could own apple in particular the way rim is so weak it makes apple all that more attractive. >> nike, do you buy on this. >> i think a lot of people look at this and don't understand nike still derive most of their business in the u.s. back to school, also big sporting season. i think they will surprise to the upside. >> starbucks significantly higher. margins will be robust in the next two years, it is said. would you buy? >> i would prefer to buy this in the teens, and i didn't. they have international growth. i think it's a really interesting name. i'm not as sure the margins are going to be great but i think the business will be. >> cisco is higher. do you buy into this, mike? >> yeah, i think just like i was saying in rim, that one-day move, you don't necessarily

fight it. i would have to say even though it's up 5%, if you want to own, it you can buy it here. >> on tonight's "fast money," we'll give you the best stocks for the long haul. a little low money action. coming up next, the "power lunch" breaks down your best bet in the biotech space. stocks rebounding as corporations play let's make a deal. >> let's make a deal! >> should you buy alongside these contestants or is this a sign to cash out now? and it's a consumer play that's making the competition miss. a top-ranked analyst on whether nike can keep doing it. plus, is it time to set it and keep going it? guy has a slow money play for the long term on america's post-market show tonight.

welcome back to the "fast money" halftime report. time to call the close.

do you buy or sell in that rally. mike, kick it off. >> crude, i expect to be range bound, political pressures and inflation to the upside. near term fundamentals look weak, i'm selling. >> i'm stunned. i would say, look, it's a frothy momentum market, while momentum can be your friend, i just think you have to start being careful with that. >> we're going to cut it short for now. i will see the other two a little later tonight on the desk. that does it for us. tonight we look at the biotech space to see if more consolidation is ahead. up next, the next big thing in the video world. two wall street analysts unveil their top picks in biotechs. plus electronic games legend nolan bushnell joins us live. and do americans think the wealthy should be slapped with a tax rate of at least 50%?

we'll talk about that as well. we're back in a moment. apple says downloads from its app store are increasing at an accelerating rate. the total is now above $2 billion. a gain of over $500 million since july. it took four months for doan loads to rise from 1 to 1.5 billion. ohio's attorney general takes the lead role against bank of america. one of the largest securities lawsuits ever. that's cnbc.com news now, first in business worldwide. i'm bertha coombs. "power lunch" continues now for monday. welcome to the second hour. i'm bill griffeth. stocks are kicking off this new week in rally mode so far. mergers and acquisition activity, wall street upgrades, all gcombined to feed the bulls

the dow winners. plus is there still time for you to get into biotech? i'm michelle caruso-cabrera, the retail sector up 17% in the past three months. the international council of shopping centers out today with its holiday sales forecast. the outlook might surprise you. we will hear from the group's chief economist. >> i'm dennis kneale, chrysler's new ceo making the case for the u.s. auto make aers turnaround. >> big week, started on friday when he briefed the chrysler board on his vision for the company. it's him putting together a game plan for turning around chrysler over the next five years. now he's going to take that game plan and go before the auto task force. remember, the federal government still has a chunk of chrysler. he is going to be putting together this game plan, explaining it to the folks in washington. he's expected to update the auto task force this week. this is video from a couple weeks ago at the frankfurt auto

show. he briefed the board on friday about the plan and what is the plan? cranking out the fuel efficient cars and doing it quickly. chrysler's turnaround plan focuses on those fuel efficient models and what they call the "a" and "b" segments. "a" being the smallest models like a mini cooper. you want to get the cars in the segments where chrysler has been very weak. the focus will be on introduced some new small cars, but redesigning other models. for more on the vision and a peek in what the turnaround plan is all about, check out the blog, behindthewheel.cnbc.com. another big story over the last couple days is the fact that you're seeing more and more automakers ratcheting up production plans. there's the fact that fourth quarter auto industry production this year will top the fourth quarter of last year. that's the first time we've had a quarter over quarter,

year-over-year increase in production since seeing it go down last year. toyota is raising its global shares forecast by 3%. you should see all the auto stocks start to rally a bit. remember, your revenue, it trails production. as you increase production, you will see greater revenue and so that's what we're expecting to see from some of the auto stocks which have pulled back a bit over the last couple months, bill, but the expectation now is that you're going to see some of them start to move a little bit higher over the next couple months. >> we were talking during our morning meeting, we were trying to remember how much chrysler is into the government for and we couldn't come up with a number. >> it depends. are you counting the money allocated to them under the bush administration and then versus the money that has been set aside for, you know, as part of the bankruptcy -- >> i guess the question i'm leading to, is anybody talking about a payback at some point? >> listen, they're never going to get all the money back. they're not going to get it all back from gm and chrysler and

the government has said we know this is not likely going to happen. >> they are taking a haircut on some of the stuff already. >> but they are going to get a sizable chunk back, and, bill, the idea of repaying the government or the government getting its money back, that's a couple years down the road. i mean, for right now the main thing is stabilize these guys and grow. >> all right. thanks, phil. >> okay. >> see you later. among the market tests this week, we have economic data coming out. tomorrow look for the s&p kay schiller home price index. consumer confidence numbering coming out. wednesday the adp. thursday it's jobless claims, automotive sales, first day of october obviously, personal income and personal spending. the ism manufacturing index, construction spending, good lord, and then on friday, the day we wait for every month, the employment report. so plenty to come still this week here, right? >> yes, indeed. it will be an interesting report

card. let's get some perspective from julia coronado and steven stanley, the chief economist of rbs. as bill just mentioned, the jobs report is what everybody seems to be waiting for. you seem to think we're kind of going in the right direction, but i would assume we still have a long way to go. is the market prepared for that? >> yeah. i think, you know, people are definitely having low expectations as the last couple cycles have been so-called jobless recoveries. they were much less severe recessions though. i think there's room for people to be positively surprised if we continue to make progress. you know, our view is probably two or three more negative numbers and then we think we'll stabilize and ultimately we look for good job growth in 2010. >> julia, do you agree with that? if that is the case, a lot of people are saying the fed may have a little more wiggle room than they might have had, say, couple months ago. >> well, i would agree to some extent. we are seeing improvement. we do expect smaller job loss

for september than we saw in august. but we are dicking digging out y deep hole. of course, until we see payrolls of positive 125 or 150, the unemployment rate is going to be drifting higher, i think all of that does spell a subdued recovery and that's what we are expecting to see. >> steven, when it comes to the u.s. dollar, the reserve curr currency of the world, is that legitimate at this point? is there any other currency out there that possibly threatens the dollar? >> it doesn't feel like there's an obvious alternative at this point. if the u.s. has a pret dwty dec policy, if the federal government is able to deal with the deficit that we have, then i think the dollar remains the preeminent currency. >> do we have a decent dollar policy right now? >> we are the pre-eminent economy in the world. i think that's the big issue.

i don't think the government really has much of a policy in regards to the dollar. benign neglect is maybe the best description. the fact is if the policy isn't good in and the economy suffers as a result, that's where you start to get in trouble. >> i think to michelle's point, there isn't really another better alternative out there. it wouldn't be the swiss franc, wouldn't be the euro. >> it's not something we expect to change anytime soon. i think global investors are looking to hold a more disverse fied basket of currencies. nobody would benefit from a dollar crisis. that makes it unlikely to happen. there's some downward pressure on the dollar, but i think the status as a reserve currency is definitely well intact. >> steven, the u.s. government

always says it wants a strong dollar. is there any suspicions out there that the u.s. country ddoe about a strong dollar? >> i think it's probably something that becomes more of a risk now that we have such huge budget deficit. i think the other piece is the common refrain you hear as well. if we cheapen up the dollar, it will make it better for the trade deficit, which is a mantra that i'm not sure is really borne out over time, but that's certainly been one you have heard out of a lot of central banks. >> it would lift our exports. >> in the end doesn't it come down -- i'm going to sound like one of the crazy neocons, but it comes down to having a strong national defense. when you talk about the euro, they don't have basically national defense. the only other thing you would really have to worry about is the rise of china. >> yeah, and i think china definitely has very significant vested interests in the dollar.

i don't think they're looking to get their currency appreciate rapidly anytime soon. again, there's reasons to think the dollar should depreciate, but i think there's a lot of support underlying. >> before we let you both go, what's your best guesstimate on the jobs number on friday? what are we going to see there? >> we're at negative 175 and a 0.2 rise in the unemployment rate. >> we would come even closer to 10% at this point. >> yes, very close. >> steven? >> we're at minus 160 with a 9.7% unemployment rate. >> remain unchanged for you. >> yeah, yeah. >> we will see. thank you both. appreciate it. >> my pleasure. >> pleasure. >> we're coming up on the half hour mark it says here, but we have 20 minutes to go before that. >> we give them a lot of advance notice. also ahead, biotechs have been big winners this quarter, but which names in the sector are still the best ones for your portfolio. and also ahead, we have the

father of electronic games, the atari founder, nolan bushnell on his latest video game endeavor. >> what comes to american's minds when they think of walmart? details of a new national poll are coming up. this one is going to surprise you for sure.

quick snapshot of what wall street did on his summer vacation. essentially from early to

mid-july to current times, a gain of about 16% for the dow jones industrial average. we are now less than 200 points away, dare i say it, from dow 10,000. up another 1.5% today. >> get the hat. >> get the hats out and the confetti. let's talk about the madoff family. for troubles for that family. trustees plan to sue his two sons, his niece, and his brother this week seeking the return of almost $200 million. irving picard cold told them it will charge lack of fiduciary duties among other charges. >> what does it have to be irving who is bringing charges right now? >> because it's easier. >> i'm not indicting anybody at this point, but it's interesting that it's coming from the trustee and not from the u.s. government. >> i think it's because it's easier basically, quicker. right? >> they work for the company,

they should have known it was going on. >> is it as easy to enforce? can you get the $200 million in this fashion? >> that i don't know. but you will get as much water from this rock as possible. >> okay. >> i agree with you completely. >> and i agree with you. >> i think it's blood from a stone, but i get what you're saying. >> let's get to the market reporters standing by. mary thompson at the new york stock exchange. >> we have dow up 140 points. this is the merger monday, of course, fueling the best one-day performance or the markets in just a month or so. we have been trading in a fairly narrow range since 10:00 this morning. keep in mind it's a broad-based rally. the number of advancing stocks at 2400 at the big board is basically the best level we have seen in a month. traders noting we aren't seeing a lot of resistance in today's session.

another theme in today's session is stick with the winners that have been winners for the third quarter. take a look at the cyclicals. they're among the best performers in the dow 30 up anywhere from 25% to 35% for the quarter. and they are among the best perfrs as well to date. as far as the sectors go, three of the best performers to date, tech material and consumer discretionary are among the five best performing sectors as we head to the close of the third quarter. it appear there is may be a little window dressing going on. financials, industrials, materials, consumer discretionary, and tech. now let's get a check on tech and for that we go to brian shactman. >> we settled into this range a little bit, too. up 2.1%. we've been in this range for a little while now. but still very strong. the two biggest stories cisco is up 5%. that's settled into a nice range upgraded at barkley's to overweight. apple hats a couple different

stories. the deals are in place to sell the iphone in the uk and in china before the year is out. plus, all the news of 2 billion downloads of iphone apps over 85,000 applications. pretty unbelievable. let's start with the chips on top of things. the philly semi-conductor index up 2%. intel up 2.4%. applied materials continuing some strength, up 3.5%. upgraded to buy at citi. mary touched on the broad-based element of this rally. starbucks up 4%. lululemon, up. t. rowe price up 3.7%. there's one huge name not participating today and it's noticeable. it's research in motion. down another 2%. you might recall the end of last week the earnings came out and it got absolutely crushed.

at one point we were looking at 90 bucks and up and now off the map under $70 a share. let's go to sharon at the nymex. >> we have about 16 minutes left in the floor session for trading precious metals. it doesn't look like gold will be able to break above that $1,000. a lot of what the traders are concerned about is the dollar. the dollar index having turned around, having turned positive now. it's been quite a roller coaster ride for the dollar. as the euro has gotten crushed, we are looking at the dollar index rising here. that's having impact on gold and oil, taking them off their highs of the session. we're still looking at gold up about $1 right now and crude oil having given back about 70 cents from the gains we had earlier, but still above $66 a barrel. meanwhile, natural gas in focus as well as we come to the close of trading today. around 2:30, that's when the october contract for natural gas

futures will go off the board. we have seen some pressure on that expiration day here. keep in mind the november contract could be under pressure as we have the cash market well below where the november futures are. keep your eye on that november contract. that will be the front month tomorrow. rick, what's going on with the dollar? >> the dollar is everybody's favorite trade these days because it's had so much movement and continues to actually move in a positive direction. but let's look at the whole puzzle. if you look at the intraday the s&ps and the point i'm bringing up, it's a big up day. but there has been some rotation, especially even prior to this chart before our time zone, but yet as you look at the chart for interest rates, there was a point in time where when stocks move higher, the yen moved lower. that's not happening. and, of course, treasury yields moved higher, and that isn't happening. it seems outside of an intention crisis environment, there's still a very compelling let's

keep our cash in a safe environment along with equity participation, and the dollar, well, if you look at the dollar index, what's interesting is it would be at a three-week high close should it close here and that close would be predicated around the 77 mark. now, let's go back to dennis. >> thanks, rick. biotechs join in today's rally. the sector is on a tear. it's up more than 30% in the third quarter, but so is everything. which names are likely to keep the momentum going in the months ahead? we've got two biotech analysts that will join us with their best bets. >> here is a look at how some b biotechs are trading. back in a minute. copd, but i try not to let it hold me back... whether i'm at the batting cages... down by the lake or... fishing at the shore. i'm breathing better... with spiriva. announcer: spiriva is the only once-daily inhaled maintenance treatment for both forms of copd,

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with an upside advance in the dow jones industrial average, some consumer discretionary stocks are participating with abercrombie & fitch, mcdonald's and "the new york times" all in the green. >> the biotech index which covers major components up more than 35% in just the last three months. there it is. what's driving this comeback? which stocks are the best bets right now? joining us, eric schmidt, who is not the ceo of google. he's the biotech analyst company. thanks for joining us today. >> thank you. >> joel, you like the smaller of the biotechs right now. you feel they're the better bet. >> i feel there's more upside there. as far as health care reform is concerned, the small cap biotechs exist in their own separate universe and they don't revolve around health care reforms. >> are you buying any of these because you think they're the

next takeover target? >> oh, sure. well, not for that exact reason. definitely you can look at companies with unpartnered assets that are viable takeover candidates and even companies that have ex-u.s. partnerships have been taken over by big pharma. >> unpartnered assets. >> eric, for the investor who want to buy biotech stocks, what should he look at. this is a company that has a great product versus a company that's going to get bought by big pharma. which is a better play? >> i don't know anything other than joel is a very, very smart person, i'll go with his picks on the acquisition sides. investors should look for fundamental good values here. take into account future cash flows. simple as that.

>> are you unafraid of the health care reform message? >> i think again joel is right here. health care reform has kept a lot of investors at bay. generalists just hate those headlines. they don't know what to make of them. at the end of the day whether health care reform happens or not, there will be money that comes back into biotech once it's all decided. >> are there some stocks you would stay away from? >> celgene. this is a small molecule company trading at the higher end of the industry average multiple, about 21 times next year. and we are concerned that this company won't meet some of the growth expectations that are out there. in fact, some call for an acceleration of growth driven by some data that's been coming out later this year. >> generally speaking, if you're somebody who wants to invest in biotech, you have to remember that in the end it's a high beta play, right? these are often times one trick ponies. they will move 20% in a day if a trial goes well and move down 20% if a trial doesn't perform,

right, eric? >> you're 100% correct. investors love growth in this space. it's a very risky space. >> joel, is this an appropriate time in the economic cycle for biotechs? are they an economic play at all? >> well, that's a good question. for the record'm honored to be on the screen at the time as eric. we did an analysis of biotech valuations over the last 20 years. we found that actually the best time to invest was during hillary care in 1992 and valuations haven't gotten to the low point since then until this year. so we think it's reasonable to invest across the board within the types of companies. i would argue for the smaller ones. i just think there's more upside and there's risk even for the larger companies, one we haven't talked about is amgen. while they have a new exciting compound, they also are at risk for some of their older franchises regarding health care

reform, specifically the drug epogen that reimbursement could get cut on that in a couple years. >> what about health care reform. you talk about the hillary clinton era of health care. can you compare the two in terms of how stocks are performing in those two periods of time as we look at health care reform pending now? >> it's very similar in both situations. when people don't know anything other than there's going to be reform in the specter of price controls, they sell first and ask questions later. as we're getting the details as they slowly come through, it's becoming more clear the biotechs won't be impacted as much. however, you have ma suture bioh companies. >> hope you guys can get together sometime. >> thanks a lot. >> what do we learn over and over and over, doesn't matter what sector.

when do you buy? when things are the scariest. the worst moments are the best opportunities. >> blood on the streets. >> we don't have bloods on the streets today, we have a triple digit advance. what's driving the market and where are they heading for the rest of the day? steve grasso is on deck. and the holiday shopping season will be here before you knowt what's ahead for the nation retailers during this critical time? the international council of shopping centers is out for their holiday sales forecast. the group's chief economist will join us live. taking its rightful place

in a long line of amazing performance machines. this is the new e-coupe. this is mercedes-benz.

we got big buzz in tech land today, including news of apple passing the 2 billion download mark for its apps for the iphone. matt nesto joins us with a look at some tech winners. >> if you look, i'm going to call a hit, acs, apps, and upgrades. those three things are driving technology today. technology is still the place to be. a full 10 percentage points ahead of the second place materials group, and we'll call it 3 to 1 positive versus the broader s&p 500.

but if you look at the more near-term, the summer rally, the quarter to date, the month to date, it's kind of a middle of the pack group. the seasoned tech leadership in the short term is a very good indicator. what's going on besides those three things? the big disappointment was rim last week. but within the xerox and the dell, pirot, that's only $12 billion, $13 billion a deal. the amazing thing is there is a ton of cash and near cash on the balance sheets of these technology companies. just playing around, the big five tech companies, mike vo soft, apple, ibm, and cisco have together $120 billion in cash. just sitting there. looking for a home. i got a home for it. raise your hands all at once. >> we could take care of that. >> the other one is the application story. we've talked about this.

this is a nice thing. it's a wonderful thing. it's an accelerating thing which is an amazing thing this time of season, and then lastly cisco, intel, amat, qualcomm all upgraded. words like visibility, rising demand, improving margins all in those notes from analysts. and then lastly i put together a group called the 20% club. these for the month of september are all up anywhere from 20% to 37%. amd the best pore foerformer in september. that's the tech story here today. it's interesting. we've gone full circle, it seems, with market leader longer term once again trying to come back and lead, but if you look at the month, if you look at the quarter, fourth or fifth really for technology. >> i have been waiting for cisco to break out and it's finally kind of waking up. when you look at the list you just showed, cisco, intel, qualcomm, they make the guts that go into the stuff that other companies then make and

then you got on thor end accenture which provides the services to lash all those things together. >> if you're thinking jobless recovery that means productivity which means i do the work of two people in layman's terms. but the reality is typically technology plays a big part in that efficiency uptick. >> thanks very much, matt. we have a triple digit advance in the dow jones industrial average. let's find out whether it's going to hold into the close and go down to the floor of the new york stock exchange. there's steve grasso. one analyst sent me a note saying watch stocks as the dollar starts to reverse and move higher and the credit markets start to move a little bit. but do you think we can hang onto this advance even if we get significant strengthening in the dollar? >> i think we will hang onto the advance. i think he will go higher going into quarter end. we have people you don't want to say dressing up the window, but they're buying a lot of

positions they own already. >> is this a move to 1,100? >> you know, i don't know. october has scared so many investors. >> so did september. we were talking about that a month ago. >> we had a lot of momentum on our side leading into september, and i think the momentum has really lost a lot of wind. so everyone i speak to is extremely negative, but -- >> that's good, steve, you know that. >> yes,s actually good when you hear it. but there's a few technicians i speak with that are extremely bullish, and they're looking for 1100 going into december and quite possibly -- maybe we could be looking at 1150 because there's really no resistance on the way up. >> even an optimist worries about shouldn't there be some kind of correction coming at some point? the s&p up 50%, 60% since the march lows, steve. but all of these old axioms are fading away. they say sell in may, go away. we always new september was the

worst month. look what happened. >> everyone expects there to be the same rotation each and every year, and usually historically people are sheep. they follow the same trends. i don't think we'll see that this year. >> what would derail it? what would change your opinion? what would be a warning sign for investors to watch for? >> you have to see another major institution fail and we're not going to see that. you have to see housing not make any sort of a comeback, but i think the biggest things people are still looking at is the lagging indicator, which is the unemployment. that's what we're looking forward to on friday. did you see the younger americans unemployment rate is 52%? is there any clearer signal to lower taxes on corporations so maybe our youth could start getting hired? >> get rid of the minimum wage. >> maybe. >> when are you going to run for office? >> i'm going to parlay this governor into the real thing. i don't know if obama would

approve of me of new york either. >> thanks, steve. >> the holidays are once again fast approaching. there's a new report out that gives hope that this crucial time for retailers will not be as horrendous as last year. mike is here to tell us, he's the chief economist for the international council of shopping centers. they put out the report today. everybody get the party hats out. year-over-year sales, mike, are going to be up 1%. >> whoo hoo. >> not very strong definitely, but at least a lot better than we've seen the last couple of seasons. we are looking for probably improvement across most of the segments though it will in many respects still be considered a pretty sluggish performance. >> i have been doing this a couple years now, and i cannot remember a single year, i could be wrong, but i cannot remember a single year when we all looked ahad he had to christmas and said is it going to be a good christmas this year. we all come in with tremendous

trepidation. >> that's true. you're right. >> what about 1999? >> i think we all were saying, well, it's not going to happen, we have y2k. can you remember ever going into a christmas season saying here it comes, big one? >> rarely that's the case. but i think there are some fundamentals that have changed. i think that's what's important this time. compared with last year, we will see less discounting. that's, i think a big positive on the numbers. with it i think you will get some margin improvement certainly against last year which was an awful season. >> and -- sorry. let me check out your track record of forecasting. i remember some of the bleak forecasts last year for christmas and sales were down i think 2.6% from the year earlier. it wasn't that bad of a slaughter. what were you guys saying this time a year ago about your ch s outlook for christmas sales. >> we were not as pessimistic as we should have been.

at least i've been on the right side of the forecast according to "the wall street journal" forecast. i guess a year ago i was probably more pessimistic and this year i'm probably a little more op sti misstitimistic. i think what's important is the driver. >> what's the driver? >> i think the industry has seen a lot of change, a lot of store closings, ultimately that helps the rest of the industry. the industry has cut inventories so they won't be positioned for this heavy discounting. >> and the consumer kind of knows that, right? they've been told if you want it, you better get it now because it's not going to be there the week before christmas. >> still a lot of pessimism out there among the retailers. i think i'm probably a little more op at this mistati mimisti retailers i speak with. >> remember last year it was after the fall of lehman brothers, all that product in the store had been bought at a

time when the economy was booming, so they had supply on hand for a boom but we were in the middle of a bust. >> there was a sale at saks. >> 70% off. >> we're not going to get the big sales this year, michael? >> i don't think so. i think last year we saw a lot of unplanned discounting, and that's the key. this year it's certainly planned, but i think they can hold to it, especially with a low inventory. >> thank you, michael. >> thank you. >> we were out to dinner saturday night, local community in northern new jersey. actually this was in -- over the border in new york, in new york state. we walk out of the restaurant and the christmas lights are out on the street. >> they're all over. >> already? >> it was unbelievable. >> many the city just couldn't afford to take them down from last year. >> merry christmas already. >> we have nolan bushnell, the founder of atari, creator of the world's first video game, pong,

and he will tell us about his latest endeavor. this guy is a hero of capitalism. >> speaking of love stories. first, here is a look at how some video game publishers have been trading. all trading higher. back with nolan bushnell after this.

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on potential out-of-pocket expenses... with an aarp medicare supplement insurance plan... insured by united healthcare insurance company. call now for your free information kit... and medicare guide and find out... how you could start saving. word is leaking out about a hot new video game called battle swarm. you would think it comes from a team of t-shirted hackers in their 20s. instead, battle storm is the inspiration of 66-year-old nolan bushnell, who invented one of

the first video games ever, pong, and founded atari like 100 years ago. welcome, mr. bushnell. thanks for being with us. battle swarm is more than a finger twitch shoot them up game. tell us how it's different. >> well, video games are kind of split into two things, there's what we call realtime shooters, which is, you know, one to one, and then there's strategy games. this combines it so you can choose to be one or the other, and it's pretty fun, and the other nice thing about it, it's free to play, so you can play it as much as you want to, doesn't cost you anything. >> right, but you're doing -- >> but we do sell -- >> upsell, right? it's free to sell but then you lure me in and i start spending money for onscreen costumes and weapons, that is right? >> yes, that's true. we give you a lot of fun, but then we add a little extra way to allow you to spend some money. >> microtransactions, that's

what you feel is really the great growth area for video games right now, right? >> absolutely. i think that microtransactions are going to be the thing of the future. >> what age level is this designed for? is it for the college kids who might have more control over their own money or younger kids? what demographics are you shooting for, no pun intended, or 66-year-old guys, right? >> we have kids as young as 6 that love to play it. >> whoa. >> you would be surprised the skill set that some of the youngsters have. but on up really, it's ageless. >> nolan, when it comes to mi o microtransactions have you thought at bull the dire straits of newspapers and whether or not that would be a business model for them as well? >> i think microtransactions works for everyone. there's just so many things that i'm willing to pay a nickel for that i'm not willing to pay a dollar for, and when you can get

millions of people paying a nickel, it's a pretty good business. >> especially when you don't have to fill out a form every time and punch in my credit card number. you have made this game, i believe, for pc, rather than for xbox 360 for microsoft or playstation 3. am i right about that? >> that's correct. and it works on a lot of different pcs, you don't have to have a go fast machine that's necessary, but i think the worldwide web connected with the pc, that's good enough. >> is the era of the playstation 3 and dedicated game box, is that going to fade on us? >> oh, i think they'll be around for a good long time, but i think console games don't provide the bang for the buck that some of the new things are going to happen. battle swarm is just too fun and you just don't need to spend all that money. >> where am i going to find that? >> just go into battle swarm or

reality gap.com and you download it. that's how free it is. >> nolan, when i interviewed you several years ago, you told me one of your biggest regrets was you sold atari for too little money. what's the exit strategy here? and are you going to be smarter here if it takes off? >> i'm one of those guys who kind of loves the one i'm with. i love business, but i really like to sell them. you know, i like the innovative part. once they get big and successful, it's less interesting to me. >> i'm curious how plugged in nolan bushnell is now. what do you have in your pocket there? a blackberry, an iphone? do you own a kindle? what gets your juices flowing these days? what do you got there? what is that? >> i've got an iphone, a kindle.

i listen to audio books all the time. i play games a lot. and i'm constantly doing new business plans. >> where do you get your engineers from? mostly in the united states or more and more from overseas? >> you know, it depends. there's so many good things that are happening all over the world, and i kind of consider myself to be a citizen of the world. i have got a little group in shanghai that i work with. i have got another group in europe, and, you know, what you really want to be able to do is be a worldwide company immediately. >> is the u.s. staying competitive? >> pardon? >> is the u.s. staying competitive when it comes to engineering? >> no, it's not. the u.s. has a skill set that most of the rest of the world lacks and we're very creative, but in terms of number of engineers and some of the quality of engineers, quite

candidly the rest of the world is catching up very, very quickly and i'm -- >> who is the lead? china? or india? >> china and india in terms of gross quantity are beating us easily. but what we have to be careful of is that our quality right now is slightly better, but i see the gap closing at high velocity. >> nolan bushnell, thank you for being with us. we appreciate it very much. >> nice to meet you. >> what a hero. >> didn't he create chuck e. cheese, too? >> he sold that baby. and he said i like selling companies. >> so battle swarm. >> you're so right. do americans think the wealthiest should be slapped with a tax rate of at least 50%? that's just one of the questions being asked in a new national poll. and as we head out, here is a look at some new 52-week highs

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s&p financials and how they have been performing lately, up another 2.5%. is that -- that's the last couple months here, up 25%. >> yeah. >> that's how the financials have done. we're going to have an s&p financial 200 hat made. >> perfect. >> we have achieved that now. >> vanity fair and "60 minutes" out with their first survey on the american consciousness. mike hogan joins us with the interesting results. welcome to "power lunch." i was shocked. the company that they most focused on in your survey, walmart, best symbolizes america. >> how so? >> that's right. i guess there is two ways of looking at it, one, it's a home grown company that provides easier access to a middle class lifestyle. you can see it as a relentlessly

expanding corporation that puts mom and pop stores out of business. >> and goldman sachs only got 3%. >> i was surprised by the percentage that walmart garnered in that particular question. i mean, there wasn't anybody even close, google got a much lower result than i thought -- >> walmart was 48% and google 15%. >> how much of that is simply a reflection of the times we're in. do you think if you took the same question next year that the same answer would hold? >> on the one hand i think google and microsoft may have split the vote. if you put them together that's 28%. but still silicon valley is probably associated with california. wall street is associated with new york or maybe even with the kind of multinational elite, but walmart really is an american company. it's expanding overseas but it really sounds and feels american and there's one in every town practically. >> interesting. >> the percentage of people who believe that a tax of 50% or higher on the incomes of the

wealthiest millionaires, would you support it? 51% said yes. 45% said no. >> who are these people? >> it's the 90% of people who have the votes and don't have the wealth, i guess. if i were a greedy capitalist i would almost be happy with this result. >> you mean, it could have been a lot worse? >> i think so. the top 1%, there's only a few of them. they've got a lot of money. it's almost even at this point. >> what's the whole idea behind this poll? what is the american consciousness exactly the way you define it? what does who would you rather be george clooney or barack obama for an hour have to do with walmart, is that an american company or not. they'd rather be george clooney, but not by much. >> for a week. >> for a week. >> we're all accustomed to these polls that come out and answer standard questions which are useful for understanding how things are tracking, the president's approval ratings, the right track, wrong track stipe stuff. but this is an attempt to probe

a little bit more, a little deeper, and also be a little more playful but try to find out what americans are thinking beyond the questions we hear the answers to so often. >> what is the one thing people can't do without in a recession. >> they said the hardest thing to cut down is dining out. the easiest thing is alcohol. i don't know if they're actually drinking less or just buying cheaper booze. >> 33% surveyed say the toughest thing is dining out. i don't know if that speaks to the whole health care discussion or what? >> they go where they don't serve alcohol apparently. >> or byob, i don't know. >> i think they switched to xanax from alcohol. >> that could be. >> mike, it was fun. thank you. great insight into the american zeitgeist. be sure to watch ann encore presentation of "the new age of walmart."

thursday 8:30 p.m. eastern time right here on cnbc. >> that was a highly-rated program. it garnered a lot of awards and you guys are watching that one as well. we're getting ready for "street signs" at the top of the hour. more "power lunch" after this.

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