is where is the strong currency against which we would devalue? and i -- >> gold. >> i think what it probably needs some special drawing rights to be the new reserve currency. then there would be some ben benchmark. >> wasn't there a problem if you go to sdrs, though, you're looking at money that just be printed with nothing backing it it? >> as opposed to the restraint we're practicing? >> you own gold? >> no. >> i like things that live and breathe. >> if we're going down sharply, you're talking about a huge valuation in the dollar. you would put some there for a heck of it. >> gold is just a psychological commodity. there's plenty of gold in the world t doesn't have a lot of industrial use. it's really a psychological commodity. i think right now is kind of wrestling between gold and oil as to which is more of a psychological commodity.

>> interesting. >> so i'm just not a commodity player in that sense. >> all right. >> well, wilbur, thank you for joining us today. >> good to be on again. i hope you get over your cold. >> thank you. i'm feeling much better. we'll see you back here again soon. that does it for today. make sure you join us tomorrow. "squawk on the street" is next. live from the financial capital of the world in the heart of lower manhattan, this is "squawk on the street" on a tuesday morning are. we begin with breaking news. case-shiller report just out, still negative but showing signs of improvement, scott, the leading measure of home price shows the annual rate of decline in 10 and 20 city composites improved from last month, not dpird a year ago, but dpird last month. good morning, i'm erin burnett. >> i'm scott wapner. that does reflect the man behind

the case-shiller report um in three minute, but first the markets. >> has been a bit of a flat morning. we're awaiting confidence numbers as you well. >> big morning for data. let's get more on the markets as well. starting with bob pisani at the big board. >> a quiet morning down here, but very interesting stocks that are moving. walgreens up. pharmacy margins helped them out. big winner this morning though appears to be gwinnett, up 23% preopen. their third quarter earnings, bottom line is their guidance is terrific, well above analysts expectation. the consensus is 28 cents here. so cautious commentary from the company, nonetheless, the stock is moving on that. jpmorgan's jamie dimon announce management changes and jess

stacy is in line to be the next ceo of jpmorgan. there's a report in "the new york post" that john paulson is considering merging cit with indymac. just a report in "the new york post." mr. shactman, how are we looking at the nasdaq? >> premarket indicators we'll open up, but other indicators show we'll open down. jeffries has nasdaq down. broadcom got a boost from cisco yesterday and a boost on their own today. a report out of the dow jones that dell executive says they will exceed their predictions for q4.

baidu is testing a wireless service in japan. keep an eye on that stock. sequenom had a treatment for down syndrome, they fired their ceo, the head of r&d and the cfo steppeded down over that data. that's down 40%. >> democrats are set to introduce their climate change bill this week, set to carbon emissions and towards a greener sources. meantime china is is making a huge play to corner the financial global market it's getting set to make a $1 billion stake in nigerian oil. 23 different blocks that may be up for discussion. 16 are up for renewal. this would put them in direct co competition with many western powers like shell oil, like chevron and a number of others.

we're talking about 6 billion barrels of, fwhun six barrels of oil in nigeria. that's of course africa's largest oil producer and one of the major suppliers to the u.s. meantime energy prices here at the nymex are weaker across the board. we're going to get oil inventories coming out this afternoon and tomorrow to further pressure prices. rick santelli, do you in chicago. >> thank you, sharon. we know the dollar is at the epicenter of many issues that affect the market. put any monitor on it you want. inflati inflation, disinflation, expected inflation. but the reality is the dollar has temporarily bombed in the middle of last week and things like oil and crude oil moved down. on this housing negative, which was less negative, the new ca h catchphrase that describes much data including housing shows us that the housing response was interesting. the dollar/yen moved above 90. that's a bit of a dollar friendly. a good point to watch, interest

rates slightly higher and the equities paying attention to case-shiller improvening mar marginally. >> let's get to the case-shiller headline. more oppose news on the housing front. as we mentioned just a couple of mos ago, the case-shiller price index showed only two cities with month to month price declirngs the month we're looking at is july. only two cities prices were lower than in june. 19 of 20 cities have home prices above their lois. and 10 and 20-city composites of each up overall 3.6% from their lows. dpird a year ago they are still down double digit percentages. here in new york, the man behind the index, s&p's david blitzer. i know you've been emphasizing to us, you've got to focus on marginal improvement and yes, we're still down double digits compared to a year ago but compared to the month before we're doing a little bit better.

that is an agonizingly slow quote unquote improvement. >> it is slow, but clearly headed in the right direction. if you look at charts of eithers levels of the index or more prominently the year over year change, you see clear signs it's turning up, indeed as you menti mentioneded, 19 of the 20 cities are above the bottom of their trough. so that, if nothing else, is very helpful t will be slow. there is still a clear risk you pay have some backsliding at some point. so no guarantee we're home free and just sails upward forever from here, there could be some bumps along the load, but it it definite looks encouraging. >> the two cities that stuck out to me similar to last month was in july this year compared to last year where we're closest to break even, prices might turn positive are dallas and denver. price prices are only down 1.6 and 2.9 respective dpard a year

ago. do you think, david, we could have a plus sign yore on year in the next couple of months somewhere? >> there's one thing to be cautious about. these data are not seasonally adjusted, although we do publish that data as well. july is one of the strong months the year. as you move into reporting not august, but september, october, november, those months tend to be a lot weaker. that's where there is some concern that we could see something slip back. but overall, i think it's very good. the cities that were hardest hit, the sunbelt, continue to be hardest hit. in fact, if nobody goes back down to their trough, las vegas is the i don't know if i would call it the winner but the one with the deepest trough and not likely to be reversed at this point. they're they bottom, they are not just were, but are down almost 55%. from the peak. >> david, you mentioned, these are your word, perhaps some bumps along the way. when you look at the facts

delinquencies are still rising. foreclosures are still rising. you get into 2010 with resets. what's the impact going to be there on prices? >> well, foreclosure, i think is the thing to watch. we include foreclosures. they're part of the market. we have no doubts they should be included, but as the proportion of foreclosures goes up and down, prices move very much in response to that. a lot of the comments we've been hearing recently suggest that july had relatively few foreclosures for a whole host of different reasons so the foreclosure percentage may have gone down, which definitely would help the prices upward a little bit. >> but if you have some resets coming in 2010 and that forces foreclosures up yet again that has to have a pretty dramatic impact on prices? >> that's correct a. >> those are some of the bumps. the other bump i would mention is the incentives for first time home buyers, which expire at the end of november. that means december may have

some strange christmas presents so to speak. >> all right. thank you very much, david bl z blitzer. we always appreciate your being with us. >> thank you. let's take a look at what the markets in asia have done overmight. hong kong's hang seng rising 2%. nikkei adding 0.9 of a%. and shanghai composite bucking the you upward trend losing 0.3 of a%. going over to europe, the ftse, the cac and xetra dax are all under modest pressure right now. >> good french accent there. >> you like that? bonjour. merci. >> that's my french. >> translate. >> we're talking about m&a as we head into q4. plus the word on the street and buzz on the trading floor as we count you down to the opening bell.

using nanotechnology to convert plants into components. the first-ever hs hybrid. only from lexus. someday, cars will be engineered using nanotechnology to convert plants into components. the first-ever hs hybrid. only from lexus.

welcome back. catching up on that merger monday from yesterday. it is with that in mind that

we'll hit m&a yet again today. no new deals to announce, but a number of developments on existing deals, you'll be hearing more about it. especially because the risks arbs out there and many hedge fund managers are probably happy there are some new ones coming up because some of the biggest ones are get egg closer to their close. with that, i will mention specifically pfizer and wyatt. you may recall earlier this year, the biggest deal of the year. pfizer's purchase of wyeth. what did they get. the chinese antitrust approval. they only officially began the deal. anheuser-busch took them a long

time. this one went fare fairly well. pfizer says we've got an approval from the chinese authorities. we're still waiting. this is the key for australia, canada and u.s. in the u.s., the ftc is reviewing this deal, whaut is important here is this is likely to conclude quite soon. they continue to say fourth quarter of '09. any number of investors who are focused on this situation, and there are quite a few, believe it could close as soon as the middle of october. we are waiting for ftc approval but there seems to be widespread expectation that will come in the next two to four weeks that presents a fairly good irr on this deal. as much as you assume a let's say october 15 close, you get an irr still north of 58%. the spread did close this morning. we can take a look at wyeth stock price as we review the deal terms. the spread did close 30 cents on this chinese antitrust approval.

you never know about the chinese. they are knew to this and they are communists. who knows? but they got it. the deal, as i said, was worth 50.19. you may recall. it was $did 3 a share in cash. 5.98 a share of pfizer. let's look at pfizer. that stock has come back as we go through the deal terms for you. that stock. pfizer we will look at momentarily has come back quite nicely but not quite to the level it was. if you recall 2349 days following this deal. they got hit hard but have a look at pfizer. almost working its way all the way back. you see the lows so many of the stocks had in march. well see when it closes. when it does, an avalanche of cash is going to come out of this deal. where is it going to go? anybody want to buy xerox and acs? we'll have more on this. let's end there. of course after yesterday announce i announcing that deal to acquire it. xerox stock price got crushed. too wide to get a sense of where it will open, but we'll watch

that closely. it needs majority vote of xerox shareholders t is subject to fntsing conditions to the tune that xerox cannot become less than an investment grade credit. remember 18.60 a share in cash but 4.93 xerox shares for each acs share. the value of that deal got crush ed as xerox stock price did the same. scott, back to you. >> eight deals in the month of september alone. do you think it's more of a representation that companies are feeling better about the overall landscape or are companies just on sale, just seemed as better value right now than maybe they were in the past or a little bit of both? >> is it a little bit of both. but it is probably the lack of volatility in the rising stock market. you need confidence, of course, to do deals. in a way, the buyers has to be an optimist and there are more optimists now emerging. they may also be looking at their own business and saying,

we need growth. at the same time, we're not going to see an avalanche of deal deals, but we are seeing a willings in the part of sellers to get closer to their price and they are perhaps more willing to sell given what we've seen in the past. so a combination, but the key has to be sort of this market that has reached stabilization. >> all right. good stuff, dave. thanks. and the word and the buzz are next as we count you down to the opening bell. >> and s&p rolling out a new way to rate mutual funds, the question is should we trust any of the ratings agencies. first of all, i can't believe people are asking this question. we move along as if things are getting better and all the fundamental structures are not changing at off. we'll be back.

let's get a quick check of the futures here. this picture definitely improving over the last 10, 15 minutes or so. as that case-shiller index came outing some improvement. down here on the floor with bernie mcsherry. no big surprises but you'll take it incrementally when it come s to housing? >> absolutely. people have to be able to sell their house to move. people are been trouble changing cities. so all that kind of stuff is good. i'm still concerned about employment. i still think it's creeping up for a few months and as long as people are losing job, we went see a real recovery in housing prices. we'll take it for now. >> we were wondering if this is the start of correction that may be coming and we had this big day yesterday. is that thought in the rear view

mirror? are we pushing higher? >> i'm concerned we are outrunning ourselves here. there's still so much cash in the system. at the retail level, corporations have got it. central banks are flooding t we're seeing a bit of inflation in asset prices, particularly equity prices. hopefully the price can support them. >> which comes first, 9,000 or 10,000. >> i got close to being wrong. but i'm going to stick to the 9,000. >> when do you think that starts? >> i this under way. >> even with the move yesterday. >> the holiday and the light moving. the third quarter earnings are out next week. >> biggest day in ma for the averaging. biggest day in two months for the nasdaq. >> earnings are around the corner. i think they're going to disappoint. a lot of folks have been burned, any sign of bad news and people are going to stampede out of here. >> let's get the buzz from beyond the big board.

from chicago, pat from cardinal capital. you just heard bernie saying he's discounting the rally yesterday because it was a holiday. what do you think? >> i agree. yesterday was an incredibly light volume day, up all day without resistance because of the light volume. basically from our perspective here. t from the cboe, the s&p options on the s&p in that. people are been positioning themselves on what could be a correction. definitely seen a lot of put buy, call selling, quite possibility people are trying to hedge themselves that a correction may be under way. >> when you say correction -- >> pullback. >> talk about the pullback. >> probably more of a pullback. what we've seen throughout the endive this year and the beginning of next year, we've seen a lot of put buying, a lot of call selling. we've seen it really the markets rally a ton over the last couple of mochlts basically it it makes sense that people are looking for some sort of a pullback, maybe see the s&p dip below

1,000 again. taking chips off the table and protect themselves with option. >> any areas in particular that stand out to you as f you're looking at sectors or names that have stood out because of unusual activity. >> we look at the financials again, which is an area if this pullback is going to happen like everybody has been saying for the last couple of month, we feel like it will happen there. and also unusual put volume there as well. >> i know matt nesto said if you look at month it to date, that's the only sector down. but down a mere 0.4 of a% coming into yesterday. coming into today, consumer confidence in a couple of hours? >> that will tell the tale of the day as the rest of the week goes. traders were looking towards the unemployment number this week and the s&p 500 right now we're looking to be range bound until the number comes out at 9:00. we're looking at some pretty good support at the 1053 level at the s&p 500 futures and resittance of the 1067 today f

we can get outside of one of those number, we could have a strong move today. >> thanks a lot, pat, we appreciate it. we've got the final countdown to the opening bell coming up on the other side of this break. as of now, futures are closed, so it does look like a higher open. >> they definitely had a nice improvement there off earlier this morning. before the break, walgreens is out with numbers this morning, set to open sharply higher. about a 10% move here in shares of walgreens after better than expected earnings. this is "squawk on the street" live from the new york stock exchange. $$$$$$$$$$$$

bull market or bear, traders are always hungry for ideas. trading is all about strategy. and strategy... is all about information. heat mapping shows me where the money's moving. twenty five hundred stocks... one quick look. that's where the action is.

plus, this amazing gadget... it's called the telephone. i can call td ameritrade anytime and talk trades, strategy... anything. td ameritrade. built by traders, for traders. this is what i need. announcer: trade commission free for 30 days, plus get 100 dollars cash, when you open an account. you are watching cnbc's "squawk on the street." i don't know how you say street in french, but isn't spanish it would be clle. >> rue. >> rue. >> how do you say wall? >> faber? >> fa

>> faber. >> i'm no francophile. we used to go for romantic dinners in paris once in a while, when we could jet off today. >> tmi. >> that was a long time ago. >> one thing, faber. >> housing, we're going to be talking about this morning, case-shiller we reported on, fannie mae monthly summary number force august which are always interesting to see how things are creeping up there, people's inability to repay mortgages. we'll have more on that and, we've got another gentleman on later in the show as well to talk about housing. seems to be something that's underpinning a bit of this rally here. we mentioned m&a here. i don't know, on housing, is it possible to go month to month, this overhang of shadow inventory. a host signs do point it would seem to a bottoming process if not true stabilization. >> you gut to wonder are what the -- how much they're really

going to discuss this whole potential extension of that new home buyer credit, right, the $8,000. my understanding is that if you didn't put in for your home, you couldn't get it anyway. you wouldn't close in time. everyone has said it's automatic they're going to extend it. maybe not. there's a big price tag. >> there's a big number associated with it and there are various studies of how much it actually cost. the realtors would like it see it actually increase, of course, to as much as $15,000, that's hard to imagine, but it would be interesting to watch. funny to think $8,000 would motivate people to buy a house w your average price is $250,000, it's a fairly significant percentage of the cost. >> right. scott, you had a one thing. >> it's a story very close to my heart or my live maybe. >> i suppose to joe and david's, too, now for their next little

soiree. >> that's right n paris. lowering prices on alcoholic beverages. people don't want to spend money at the restaurants. get a little buzz as they say, then go out to eat. >> oh, goodness. opening bells here at the big board. national ms society. bike traffic free fund-raiser and at the nasdaq, starbucks. launching the ready brew. >> their new instant coffee. >> instant? >> instant, yeah. >> sanka. >> they say it costs just as much as the brewed stuff in the

stores. >> but not as good as sanka. >> standing by here at the nasdaq and cme group. we start with bob pisani on the floor. >> the crowd here around the citigroup post here. case-shiller price index came out at 9:00. it took a few minutes to digest it. but it helps futures. we moved up four or five points. remember what happened, the third month in a row the number went up. the absolute number was higher than anticipated. so three months we're since january 2009, some kind of bottom is being put n the home buyer tax credit is expiring that may influence this. these are not seasonally adjusted numbers unlike the other numbers we have here. let's talk about stocks that are moving. a nice crowd around the corner for walgreens. up about 7%. their earns came out better than estimated. strong pharmacy margins helped. that stock is opening up 12 mrs. this crowd right here for

gannett up about 15, 16%, just opened here. earnings were terrific. guidance was above expectation. much lower newsprint costs really helped them out, that's an indication of what's going on. jamie dimon at jpmorgan making in management changes. here's the most important, jess staley who formerly ran the asset management division is going to be running the investment bank and that's a clear win. jess staley likely in line to succeed jamie dimon as ceo. brian shactman, how are we looking at the nasdaq? >> that little weight on your top, we were completely flat, now down 0.01%. apple was huge on the future of the flat right now. research in motion shed about 20% in a week's time after earnings.

cisco actually starting to the upside. jeff reese rising the target for yahoo! and starbucks launching a tv ad campaign. huntington bank shares to outperform at fbr capital. and also open highly halftimer, cappelli education has a price target now of 64.19 and strayer 250. now at 212.19. also a it thena health, rw baird upgrading to outperform. it's up 39.10 in trade. >> we were talking about chinese telling oil stakes. 6 billion barrels worth. they're going to focus on companies that already have stakes there. western companies like shell, exxon mobil, chevron.

we're also hearing analysts are anticipating this may be just a way to pressure their kpens to offer bigger stae, but the fact remains that china has made a big push to bet more natural rae source assets and this is one yeah where they're actually producing the oil already, not just exploring for those reserves. meanwhile, the amnesty offered, the nigerian government offered rebels expires october 4th. that should give a bid to oil price, but the lower dollar and anticipating another rise in u.s. inventories may keep prices lower but still above that $65 resistance level. rick santelli to you in chicago. >> thank you, sharon. the dollar index, is a bit euro centric. it had a horrible day against the yen. that index is hovering close to a three-week high. closed yesterday at a three-week high, since september 8th. dollar yen is definitely interesting, still trading just a bit bay low 90 even, pay attention to that historic

level. haven't spent a lot of time under it since the mid '90s. consumer confidence coming up. many believe it follows equities. some think it leads equities, but no matter what you think, it's going to be important, especially since it's been trending up. europe had a good business confidence number and interest rates are creeping up a bit, but let's put it in context. 20 minutes diego ago, we're under 330 with a 10-year note yield which means it's hovering at a four-month low yield. it's will go back to the judge. scott wapner. >> opening higher with us this morning. manager of the hennessey funds and in baultimore, david stevenson is a senior are portfolio manager with hardesty capital management. we've got the housing market report and housing show

something improvement here. we need the consumer though, right, to come along, that's the next piece of the puzzle to fall in line to dictate where the markets are going. >> i think consume er r is alre there a little bit, scott, but they're not in the high end, they're in the middle to low end. for instance, like the ross stores instead of going to a nordstrom to buy your niece a sweater she's going to outgrow, they're going go to ross. that's what i'm working with going forward is people are understanding how to spend their money better and saving at the same time. it's going through last different sectors just not only the retail secretator. >> but when in a recovery does the consumer actually have to really join the party? is it at the beginning or as we have seen in the past, say, maybe a little bit longer down the road? as long as the consumer shows up in a relatively short order. >> what you're having now is business is going to pick up the economy and i think consumer is

going to lag behind that just a little bit. because essentially what people are going to have to do in business is they're going to have to come up with information solutions. in other words, they've laid off all these employees, now it's time to improve their margins. you can do that through technology that's already existing sochlt' lot of money is going to be spent on the information technology side. so that's why companies like a broadridge is going to do well which is the old adp or consumer science, then the consumer follows. >> david, what about your view? you're not bullish or bearish? >> the market is pretty fairly valued in here based on 2009 and where we are in the economic cycle, but i do think though that if you're looking out to 2010. there's some debate as to when investors really start focusing on 2010 earnings but nonetheless, when you look tat, 2010, the market becomes much more atragtive at trading around 15 times. so in general, the market right now in '09 earnings, we think is pretty fairly valued but there could be more to go in 2010 if

the can economy continues to improve. >> david, you like google. i've got to admit a lot of people have come on here liking google. people think the economy is going not tank, think google is immune and people who think the economy is getting better think that google is going to benefit. is it truly just an invincible stock? >> no, it's not an invincible stock. we've seen their earnings pull in a quite a bit from the tremendous growth of prior year, but what we're thighing about with google is there's a huge and massive change in the advertisingtory that is pushing online and away from traditional print. and you're seeing that, i know, gannett has reported decent numbers today but the whole newspaper industry is in shamble, but the internet advertising really have growing, they are, by far, the leader and when you look at the growth rate there is and where europe compared to where the united states is, google is a really atragtive, really atragtive company. >> hey, neil, i look at your

notes here, if this is correct, you say you want to i void technology. you're one of the few people who come on air and say they don't like tech. why not? >> i don't see anything that's going to change the way we work or live in the near term. in other words, if you go back to the early '80s. personal computer changed weight we work and lived. the mid '90s, it was the internet. i don't see anything out there. i know anal is doing well, but it's doing well because it's taking all the technologies out there and repack. ing it into a nice product but it's a product. it's not going to change the way people live or or work. with the exception of what i noted earlier which is solutions to technologies for companies. >> they're sitting on a lot of cash though. >> balance sheets are nice though, i'll tell you. >> that but what are you going to utilize your cash for? are you going to pay dividends? that's good. but you've got to be able to use your cash for something. and if you don't have a barn

burner type of idea out there, it's not going to do you any good. >> thank you. up next, the kahuna and brain. >> that's right. but first, taking a look at what's moving on the s&p right now. gannett up big, the biggest newspaper publisher left alive estimated q3 results will beat the street s newspaper ad market getting better? walgreens, "the new york times," citigroup and cvs caremark all higher. we'll be back. >> today on street sign, ronald kirk gets an exclusive interview with the obama key man on trade with china. >> on street signs. national car rental knows i'm picky.

so, at national, i go right past the counter... and you get to choose any car in the aisle. choose any car? you cannot be serious! okay. seriously, you choose. go national. go like a pro. it doesn't cover everything. and what it doesn't cover can cost you some money. that's why you should consider...

an aarp medicare supplement insurance plan... insured by united healthcare insurance company. it can help cover some of what medicare doesn't... so you could save up to thousands of dollars... in out-of-pocket expenses. call now for this free information kit... and medicare guide. if you're turning 65 or you're already on medicare, you should know about this card; it's the only one of its kind... that carries the aarp name -- see if it's right for you. you choose your doctor. you choose your hospital. there are no networks and no referrals needed. help protect yourself from some of what medicare doesn't cover. save up to thousands of dollars... 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.

markets are higher right

now. starbucks is rolling out instant coffee nationwide t first tested the product in seattle and chicago. it comes complete with starbucks first-ever television ad. the roll out $21 billion. and penske will acquire gm saturn division this week. the detroit free press reports an announcement could come on thursday. the tentative deal was announced in june. and boo! consu consumers plan to spend an average of $56.31 on halloween this year. down from $66.54 in 2008. you didn't even flinch. >> that's a lot of money to spend on halloween. >> it is. >> it really is. >> candy is king. >> time to check in with kahuna and brain to see what's on their radar this morning. gentlemen, would either one of -- do either of you drink instant coffee? would you dry trithis new starbucks stuff? >> it's not usually good.

>> i don't drink it. >> as i said earlier, the one thing from france is that french pre press, right? you don't need the filter, it works again and again. press it in and it's pretty good. but i'm surprised starbucks -- and they're advertising on tv now? they're trying a lot of desperation -- not desperation, right? it's a tough world to sell a $4 coffee or whatever it is. >> you've got mcdonald's. >> it's the new normal and people are watching what they spend on it. >> steve liesman, breaking news. >> david, thanks very much. dallas fed president richard fisher kicking off, one of nine officials speaking this week. we're looking for him to do what he would do, whether or not he's echoing the comments of kevin worsh. he said the fed will move with alacri

alacrity, equal in speed or intensity to the easing process. he said the winddown process needs to begin when there are convincing signs of economic growth and banks can expand. they said they will stand deliver in a timely way. he talks about housing as well. saying there's a signs of a bottom but hey, the sector is still on life support there. is a limit, he says, to the life support that can be delivered to housing by the fed and congress. finally, housing went on to become truly robust until market forces are replace government. he repeats the plan for the fed to complete the $1.25 trillion mortgage purchases by qs 1 of 2010. that's one of nine speakers. pausch is speaking this evening. don kohn tomorrow. tarullo and lockhart.

that goes on. ben bernanke testifies in washington on regulatory reform. senator piamalto from cleveland. we've got the whole fed here. then finally on friday, speech by boston fed's chief fred rosengren. i'm looking for how many people that signed a statement or voted for a statement to say fed would be on hold for a unlimited period and then voted to say they need to tighten with alacrity and speed and intensity. >> we're not expected to know all those guys. a couple of those names were not exactly on my radar screen. you know them all, i guess. >> if you would like a special briefing on all of these members. >> like pianatlto, what is his sister? >> her story. smart person, doesn't do a lot of public speaking. >> that's why. >> unknown. she hasn't done the cnbc liesman interview why ch is why you don't know her.

that's why. you're right to call her out. >> that a puts someone on the map. >> exactly. >> maybe that will change. >> so gannett. gannett. >> your crack producer alerted me to that. >> well, she alerted me to it. >> it's hard to pick stocks at 9:30, because they have a delayed opening up, but gannett is up $1.72 at 11.69. >> the rumors of their death may have been greatly exaggerated. >> less than $2. they're going to do much better than their thought. 49 to 32 cents gap in the third quarter versus 29. but make no mista, the advertising market is still difficult bought our continued efforts to achieve efficienciie further consolidations company-wide along with significantly lower newsprint expense resulted in a another substantial decline in our

operating skperngs even though they guided third quarter profit high, they guided third quarter revenue lower. 1.31 to 1.32 billion versus an estimate of 1.37. if people are going to complain in this earnings season about no t top-line growth. >> but in this market. >> they'll take anything. >> the local at, market is quite difficult. it's not the easiest. >> you weren't here yesterday. >> i was not. "the new york times" by the way, up 10% an mcclatchey. $2.80. that was well below $1 and also up 12%. so this gannett news is helping. >> can you tell me about xerox that i don't know? >> it's going to need a vote of just xerox shareholders. >> might they say no to this? >> they might. a long way to go between now and then, but the early look is not that encouraginging given what happened to the stock yesterday.

>> it was a slow decline. when we had ursula verns on it was down 10, 15 cent, but up today. which is good. don't they have to do something? >> they probably have to do something it's a decent amount of money t has a financing condition if zer ro, got downgraded below investment grade it could be an out for them. a lot of times it's two third, but we'll see. we'll is he how it develops. >> bill day for walgreens today. up four bucks after better than expected results. >> you look tired. are you all right? >> i was about to say the same thing, you need a cup of instant starbucks. >> they're going to have a taste test, i think, coming up, where they're going to challenge people to kel tell the difference between the two. >> sanka and starbucks, in all seriousness. >> sanks not still out there?

>> if you can't take the difference there? >> erin, i've sworn off all morning joe since you wouldn't go to bat for me that one morning when you had the chance. >> oh, yeah, right. >> well, i gets we're going to move right along here. stocks on the move including an aerospace giant and a bank on the rise. >> plus s&p out with a new way to rate mutual funds to. of that's supposed to rely less on the single metric of past perform any, so will it make a difference? that's the big question.

i want to bring you a quick programming note today. howard schultz will be on at 3:00. the coffee maker as we've been talking about has introduced instant coffee. let's look at starbucks shares right now. down about 0.3 of 1%. >> let's get back to hq with matt nesto. >> let's start with the tipty top of the dow jones industrials ind index. thank you, jim cramer, for a long segment on boeing and value he sees in that company, particular lit pent-up demand and the fact that when the 787 does get airborne it will lead

to years of growth. citigroup higher today after dick bove rises the price target. it's a new company thanks to all the structural changes. cit, only $1.80 per share but percentage wise a big mover in the russell 1,000. note of saying john paulson may merge it with his indymac bank which he acquired from the fdic earlier in the year. guy, back to you. >> all right. thank you, matt. in the wake of a financial crisis many have called for greater transparency in the investment community and some of the most targeted anger has been pointed at the ratings agencies. well s&p, one of the people people point their fingers at says they're going to be part of the solution and start rating mutual funds rather than just looking at past performance which is supposedly no indicator of the future, bit it's all you get to look at. with us to explain is todd rosenblum at standard and poors.

a lot of people point the fingers at issues particularly in the derivatives market with subprime. you're rolling out a new product to rate mutual funds for individuals. what's different? >> the industry standard has been to look at past performance to rank mutual funds. as you correctly noted, that's not indicative of of future results. so what should be? the underlying securities that are in the portfolio are just as important in our opinion as s&p as the past performance. so s&p's new mutual fund ranking looks under the hood at the securities in the portfolio to look at the quality, the valuation, the duration of the underlying securities to help investors know what their fund is owning and what's its best positioned going forward. >> so how do you -- how do you distinguish between you're not trying to give a forecast of what fund is going to do well, right? but it sounds like that's what you're doing? >> what s&p is doing is we're ranking funds using part of our input, our past performance

track record and part of it is leveraging the strength of s&p, which is as you're familiar, we have an equity research department here covering over 1,500 hundred stocks around the globe. we have a very strong track record of doing so and making that content available for mutual fund investors. so there's a mutual fund own at&t or qwest communications? it's important to know the difference in that. >> thanks very much. i know you rolled this out two weeks and now rolling it out in full. todd, thank you very much, appreciate it. if you want more, foe go to s&p's website for more information. moments away, breaking economic news, consumer confidence for september. >> we'll be back with that on the other side of this.

welcome back to "squawk." yes, we have september consumer confidence. 53.1. this is definitely less than an upwardly revised 54.5 last month. below expectations. but it still remains the highest level outside of last month going back to september of '08

which was 51 and change. so we've stalled a bit, breaking a run of improving nuns. but if you were to look that the this series back into the '60s, very rarely are we under 60 much less 50. just above is it is where we're hovering. what is going on with that number? the treasuries are rallying, the equity equities are breaking a decent amount considerings amount of net change. so the market is making sense and we are also digesting a slightly better housing number in the form of case-shiller. now back to mary thompson at the breaking news desk. fdic. what are they saying, what are we looking at, mary? >> the fdic wants to raise an additional $45 billion for the deposit insurance fund voting this morning on a proposal inquiring insured banks to prepay this year. their assessment for 2009, all of 2010, '11 and '12.

it increase by three basis points in 2011 raising the rates to 16 to 19 basis points from 12 to 16. this year, there will be no special assessment. the prepayments and future recessments will replenish the rapidly shrinking insurance fund. in june of last year, the dif held $55 billion in liquid assets, currently stands at $10.4 billion and will fall below mandated levels because of an increa an increasing number of failed banks. the number of failed banks is zpoekd raise along with the cost of dealing with them. projecting from 2009 to 2013 the cost will be $100 billion up from a previous forecast of $70 billion. most of the costs will be incurred either this year or next. the fdic is forecasting more bank failures because of continued deterioration in insured institutions specifically, asset quality

problems among these banks are not expect ed ed to abate any t in the near term. if approved by the board today, the public had 30 days to a comment on the approval and could be approved in november or december. >> thank you very much, mary. let's just take stock of where we are. dow down 24, now 25. we had been higher. not a big move. we went from plus to minus on the back of confidence data and fdic. it looks like the confidence data that moved but the fdic we'll continue to focus in on whether or not this is enough money and what it would mean for smaller publicly traded banks. let's send it down to bob pisani on the floor for your reaction so far. >> hi. consumer confidence, four 30i7b9s below expectation, that cost us eight points. we're at 1006 right now. nonetheless, specific news in certain sectors, all helping

those specific sectors. let me show you, for example. the newspaper industry, gannett's surprise gave positive guidance for the third quarter but there were chublgs on the street as they noteded much of the gains were due to lower n s newsprint cost, the physical cost of printing the papers were lower but that helped a number of newspaper, "the new york times" with a nice move today. same with the drugstores, walgreend earnings above estimate, stronger pharmacy margins helped boost their gross marches. sales up with in the quarter thanks it a rise in prescription same store sales. finally, the case-shiller numbers helped the home builders here. three consecutive gains in home prices. once we've had a chance to look at the numbers more carefully. good breadth, not just california or florida. we saw across the board. only two cities to the down side. so nice move up there. trader talk.cnbc.com if you want more. brian, how are we looking at the nasdaq? >> we were up 0.4 of 1% when that michigan number came out.

now 0.2%. now we've rebounded a little bit. but we are negative right now. a quick check on the the big names. research in motion, which had been hammered was catching more of a bid but still up 0.6%. oracle to the up side. yahoo! is down 0.3%. palm up 1%. barclays overgrading broadcom to overweight, there was a pop today up 2.8%. qualcomm more than a percent. just a look at big name laggards. dell is down. ebay down a full percent and amazon is down. this time lamar upgraded to overweight, advertising ticking up a little bit according to their analyst, up 7.3%. let's go to sharon at the nymex. >> dollar has been farming up

since that consumer confidence number came up soil prices are falling as well but right around $66 a barrel right now. we have been focusing a lot on the dollar trade. keep in mind as we get into the end of the quart, we may see more volatility due to that than anything else. but also paying close attention to what will happen with inventories and the market is going to expect a another increase in overall petroleum supplies. ab analysts looking for a slight decline in crude supplies but increases in distillate fuel supplies and already looking at oil and gas supplies in the u.s. 10% higher than a year ago. distillate fuel supplies up 31% from a year ago and a weak cash market weighing on natural cash price, november is the front month contract there. scott, over to you at the nyse. >> rebounding decisively this past quarter. the past week and a half feeling like 2007 with seven new issues making their debut including the

biggest of the year last week. so will the momentum continue? let's send it back down to bob pisani on the floor with a special guest. >> scott lotter is executive vice president of the new york stock exchange. he's in charge of all the listing, that's why we have him here. what's going on here? new ipos, a bunch of big names in the next few weeks. what's happening? >> what did you expect, volatile city down, people are coming back into the market. we saw a healthy calendar in april and june and now the calendar really picking up. >> all well and good. we know there are big names waiting to go public but isn't this dependent on how the markets looks and feels in the next month or so where if we move to the down side decisively, isn't a lot of this going to get pulled? >> we're all concerned about what the patient looks like without the medication. the ipos that have gone out so far have performed well so that's that lays a good foundation for ipo performance

over the next couple of months. >> big names coming. next week, asntander, the brazilian part of the spanish bank, they're in brazil, dual listi listing here. >> biggest of the year, $7 billion transaction listed here on the nyse. in brazil. behind that, dollar general, hyatt, dole, so you're seeing the calendar with earlier stage companies getting out. >> dollar general is currently controlled by kkr and they're going to be taking that public again and for hyatt, the printzker family has owned that for a long time. so lot of big brand names. what are we see currently? successful ones but real estate investment trust coming out the last few weeks and the reception has been eh. what's going on? >> you had a couple that struggled last week, but still pretty good performance. we see another one tonight. six to nine before the end of

the year, so probably the busiest of any act sector we've had. >> it seems to me there was a first wave. do they secondary? they need to shore up their blets and reits trying to buy assets. how is going to be down the road? the reception han mediocre? >> they're all capitalizing on opportunities. i think you're going to see real opportunity for them. >> scott cutler, you're going to be a busy man in the next few weeks. >> great. >> back to you guys. >> all right, up next, walgreens, we've been talking about this name a little bit. one of the biggest gainers on the s&p this morning. obviously there's a reason t did better than expected on bottom line. stock is up 10%. we'll go inside the numbers. >> more earnings analysis -- or abilityists forecasting a 20% decline for the s&p versus last year so with the quarter ending

tomorrow will we see more upside surprises? plus main street's view of the housing market with the head of one of the largest mortgage companies, "squawk on the street" is coming right back.

shares of walgreens ticking off. easily topping expectation.

this is -- i don't mean this in a bad way, but as bland and predictable a business as you can get. how could analysts be so wrong on their expectations? >> they have a restructuring program that's designed to add $1 billion to earnings via lower expenses and it kicked in a little earlier than expected. that's really what happened. they got a four set net contribution to earnings per share. i and others were looking for a penny or something. so that's what it s the market wigs conditions for retailers are still tough but when you got that much earnings power coming into the earnings stream earlier than expect id, you beat the numbers. also adds visibility for next year. that explains the stock being up 10% or soencht maybe analysts just got tired of walgreens missing their estimates. hadn't they missed for like five straight quarters.

so maybe the estimates were just really low. >> there was some gunshyness, i was higher than conson suss but i didn't think they would even hit my number. so because again the market environment very tough. but when you're doing something is that is big restructuring and it's working, and it kicks in, you know, it's hard to predict when it's going kick n but the take away here is it's kicked n their $1 billion cost savings equates to 65 cents a share to incremental earnings power that wasn't there a year ago when they instituted this. >> how about h1n1, what does mean to walgreens and also, shares of cvs are get agonize lift this morning off the back of those earnings. so what is h1n1 going to mean? >> as it looks right now, looking at number, you can see on the cdc, the centers for disease control, the number of outpatient visits to doctors for the flu is way up from normal. far above the trend line and so on. so it's pretty bullish.

first of all, visits are up to doctors, i think they're going to be prescribing a lot more antibiotics because it's affecting a much younger population than the typical flu. >> one question for you. i noticed this is an anecdotal question. that is bad, bath and beyond, and many stores now, has a huge pharmacy and they also have all of the shampoo and whatever else you might buy at the drugstore. the one i've seen is right across the street from a cvs. i'm curious whether that could move the needle for these guy? >> for bed, bath and beyond? >> no, for the cvs and walgreens of the world? >> well, they see a lot of competition, it's a pretty good category. you know, a lot of specialty retailers are trying to add a more consumable, which is is a good idea in this economy, but i don't think, you know, it's a

very tough business, the pharmacy business, it's 100% related to volume and the pharmacy's a very high cost structure business. so i'm not, i mean, drug stores are pretty well positioned, you've seen really very little new pharmacies added in the united states really over the last ten years. so it's not a very attractive business if you lack scale. so there's been very little new formation of pharmacies to be blunt. so i don't think that's a trend you can extrapolate to other company, it may work for bed, bath, but it's not a big new trend. >> thank you very much. we appreciate it. >> thank you. speaking of earnings, the kwaufrt quarter does end tomorrow. so far, 597 companies posting positive outlooks and 228 posting negative outlooks, will it end up being a blowout quarter? joinings is global head of

research with thompson reuters and the equity trading strategyist. >> let's start with you, because you're sitting right next to me. are expectedation that low are have they been ratcheted up? >> they have been ratcheted up, but i still feel they're going to outperform analysts expect air, it's the second quarter where they've done it where as in the past five or six quarter, krding to thompson rigeuters da, the expect igss a have been way off, there was a major disconnect. so i feel that analysts are in tune with corporate america performance. >> craig, perhaps this a question that will come better into play in the fourth quarter, but it may have some impact now that you have to be careful what these companies say in terms of how strong their earnings are, oh, it was a blowout quarter when you consider year over year, when you're looking become a year ago to the post lehman collapse, right. >> yeah, no question about it. and i think what's very important as we move into the third quarter rn eggs season and

juxtapose that against the second quarter earnings season, it was driven by a lot of cost production that was much greater than analysts expected, hence driving the upside earnings expectings. you didn't see the top line that the market is hoping to see more of here in the third quarter. so it boils down a question of earnings quality that is dictated by what you see happening in revenue streams in the third quarter here. the street really at this valuation level needs to see better revenue relative to plan. >> we can get revenue, but i mean last year things went off a cliff so again it gets to this point because you're comparing something so horrible you look good but you still stink. >> i totally agree with that bhu look tat, the s&p is projected to learn about $15 per share. up to about -- $17 in the fourth quarter. but craig was saying the same thing, the top line growth is not there. we're projecting an 11% decline

in revenues. how long is this going to continue. are companies going to continue to beat estimates? the headline number is always looking good. are investors going to take a step back and be like ahey, where is the top line jut be the interesting thing is the first quarter of next year, we're finally going to start seeing real top-line growth. we're looking at 7.5% top-line growth for the first quarter of to 2010. maybe that's what the markets are looking ahead, maybe they're looking ahead but i think we're a little bit ahead of ourselves, but there does seem to be light tend of the tunnel. >> in a sense, that means the forecast is very important. a lot of people know we're going to get growth this quarter but it's going to be companies saying once we've normalized our inventory, what does our forecast say about the real level of demand, right? that's going to drive the stock reactions this time. >> i think what you have right now is sort of a tenuous situation we're moving through

2009 a year with a lot of depressed numbers overall. we're in a period now where there seems to be some positive bias to the top-line numbers at least in the third quarter. but this is an important but, you've got corporate america not quite willing to stick their necks out on 2010 with respect to revenue guidance. so a lot of what you see out there in terms of south side projections are based on analysts taking their own temperature of the marketplace rather than corporate managers making a commitment to big growth if 2010. we probably don't see that until de deeper along, perhaps into the fourth quarter of the season. >> thanks very much. up next, signs the ad market may be coming back. david tackles that next in the latest faber report. later, china finds a home for some of its billions and guess what? it's right here in america. and it's not treasuries. will more cash be coming our way? and can we afford to shun it?

[barks] (man) if you think about it, this is what makes the ladders different from other job-search sites. [screeching] we only work with the big talent. [all coughing] welcome to the ladders-- a premium job site for only $100k-plus jobs and only $100k-plus talent. it would frustrate me. my bayer meter is very important. (announcer) only bayer's contour meter has programmable personal high low settings. it allows me to make sure that my diabetes is controlled as tightly as possible. (announcer) the contour meter, only from bayer. 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. it doesn't cover everything. and what it doesn't cover can cost you some money. that's why you should consider... an aarp medicare supplement insurance plan... insured by united healthcare insurance company. it can help cover some of what medicare doesn't... so you could save up to thousands of dollars... in out-of-pocket expenses. call now for this free information kit... and medicare guide. if you're turning 65 or you're already on medicare, you should know about this card; it's the only one of its kind... that carries the aarp name -- see if it's right for you. you choose your doctor.

you choose your hospital. there are no networks and no referrals needed. help protect yourself from some of what medicare doesn't cover. save up to thousands of dollars... 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.

now, you are looking at the real financial capital of the world that is washington. senate finance committee just moments ago started debating the public option amendment. this is the senate finance committee talking in more detail about max baucus' proposed plan. let's go to david faber. i thought this was bihourly. >> twice an hour? >> yes, meaning twice an hour. >> i don't think we've gotten to that yet. once an hour and then a couple of other things we do. >> if haines were here, he would be very upset, he thinks it's twice an hour. >> okay. he's usually -- let's not go there. all right. thanks, erin. joe and i, less than hour ago were discussing a nice move up in gannett. interesting when you see those kinds of move, of course, that

stock had been below $2 a share back during those darkest days in march when so many other stocks also made their yearly low, if not all-time lows. from the newspaper industry, it's about a lot more than simple economic downturn and some recovery we've seen. it's about seminal changes in the business, huge questions about their ability to continue to make money. but that being said, perhaps the analysts and even the investors that followed that didn't properly model where margins would be for the third quarter. things have gotten a bit better than they were for the second quarter and that is showing itself in these results or this outlook, i should say, from gannett, which tells us it will come in between 39 and 42 krenns for third quarter earnings. special charges in there as well. roughly 11 to 14 cents associateded with cost cutting that helped their margins. net income between $93 and $100

million. all of this adding up to a much better than expected picture for the company, which again is still under enormous pressure and is not talking about any great rebound in advertising but has done a good job cutting costs and the third quarter was probably a bit better than the second quarter. many of the models out there may have seen margins or things continuing to get worse. that was not the case. and then you take a look at gannett. you can see that march period of course where the stock dropped very, very low. let's leave it there. up a lot since then. and that is also the case for "the new york times" and even mcclatchey. now in both those cases, the stocks are off their highs for the day. as you can see, "the new york times" had been up 10% earlier. we've talked so much about the problems in what we call old media. moving to the web trying of course to take your advertiseers with you and take the same rates

with you while you continue to lose subscribers and you're still cutting down trees to print a paper every day. it's not a great business to be in. buyout packages announced. mcclatchey, suffering from that huge acquisition of knight-ridder, but that's been a huge quad druping from the bottom. so got that going for u mentioned xerox a number of times today. there's xerox, it they're happy to see that a few things to keep in mind. we've talk and them already, the majority shareholder vote is needed to acquire acs in that cash and stock deal and also have to keep their investment grade rating. within one week of closing date parents shall receive from s&p a reaffirmation of bbb minus or higher. from moody's a reaffirmation under their system what just be investment grade. as for acs, i believe that is

up -- well, we don't have t we'll take a look at it later during the course of the day. scott, back to you. >> david. speaking of deals. pfizer receiving chinese antitrust approval for the pending wyeth acquisition, up 30% since the march bottom. jeffrey kindler talks about the challenges ahead for this company including a $2.3 billion fine in tonight's new cnbc series executive vision. >> i very, very much regret the conduct that led to that conclusion. that involved a drug that was pulled from the market about four year ago. we act nothinged the misconduct. since the time that occurred, we've made significant improvements in enhancements our compliance systems as we sit here today, we engage in extremely robust training, with vi a compliance officer that reports directly to me. >> but does that change the culture and the values?

>> at great question, symons many. we're working on it all the time and reflecting it in people's compensation systems. we've taken disciplinary action against managers not because they've engaged in misconduct but concluded they've allowed a culture to exist we could tolerate. >> all right, executive vision tonight at 9:00 eastern. you can see simon hobbs and melissa francis there hosting. first, home prices up in july for the third ma month in a row. according to the case-shiller report we brought you. >> is main street feeling the improvement? we'll ask the head of mortgage masters, one of the country's largest privately owned mortgage companies. make no mista, you're watching c cnbc's "squawk on the street" live from the new york stock exchange. esesesesesesesesesesess

i'm mary thompson at the breaking news desk. the fdic board approve a proposal to boost the liquid asset fund by $45 billion through inquiring insured institutions to prepay their special assessments on insured deposits for three years. 2010, '11 and '12 by the fourth quarter of this year. traditionally voting to approve a proposal that would raise the assessment on the deposits here in the u.s. by three additional basis points in the year 2011.

the fdic board's voting to approve this to make sure this fund which basically deals with handling the insured deposits does not fall below federally mandated levels. that fund was at $10.4 billion again. this aims to increase that fund by $45 kbl t now goes out for public comment pour 30 days, coming at a higher cost to the banking industry. erin, back to you. >> thank you very muff, mary. i was cannoting to monitor that a lot of our viewers, investors and ceos alike paying very close attention to that in other headlines at this hour. the case-shiller index. we mentioned it up in july compared to june. hovnanian lennar and kb homes trading higher on the backs of that. not hard to hit a one-year high given yesterday was what -- today was the worst ever point drop for the dow.

one unusual volume we like to highlight is ralph lauren, trading within 68% of the 10-day average, scott? >> let's look at the markets and their internals right now. mixed picture, fighting for direction right now. the dow and nasdaq are really flat, modest gains to the down side. s&p 500, you could call that flat with a modest showing to the upside, advancers, de, almost even with the advance, fairly outpacing here at the nyse, here at the nasdaq as well. similar picture with declining issues fairly edging out advancing ones. over to david faber. >> thanks, scott. more evidence the housing market is stabilizing. case-shiller index, rising 1.6% in july, is the improvement being felt on main street? the ceo of mortgage mast, the nation's largest private mortgage company, thanks for

being with us. are you seeing evidence that reflective of or supportive of what case-shiller is reporting this morning? >> yeah, well, thanks for having me, first of all a we see lately a slight improvement from almost week to week, month to month. it's certainly not breaking any reports as we all know. but we just feel up here in the northeast where we have coverage in the ten states it's that getting better and i think we've really hit the bottom. >> give me some meat on that bone. when you say you're feeling it. what are you feeling, what are you seeing? >> we're seeing applications, especially for first-time buyers getting better month to month and i think that we have to thank the tax credit there which i hope they'll extend for that i think that this recovery that i see under way will fall flat on its face if we don't extend that for another six to nine, maybe 12 months, just as is. don't improve on it or change anything, just extend it as is. there's a lot of activity, but

we also have as we all know a lot of foreclosures till hitting, so it's touch and go. we definitely want to extend that that's a key thing. >> you certainly don't seem yew for ic to me. a lot of people saying there's stabilization in the market. do you believe that? >> i do. i'm sure there are many areas left in the country that may not feel that like southern california, florida, vegas, arizona, but you know where we do most of our business, we feel pretty be good about where we are. we're even see something small bidding wars on homes in the $300,000, $400,000 where people end up paying more than the asking price, we haven't seen that in years. >> let's talk about the securitization market. are you selling most of your norchs fannie and freddie? >> there that is correct. >> is there a private label securitization market out there these days? how about yum bow where there was no securitization activity and hence no willingness on the part of banks? >>s that a great question. we're seeing just in the last, i would say, couple of months, a

softening in the jum know a.r.m. market which again has been completely dead for i don't know, 18 months or something like. that some of the bigger banks have started taking some of those again and apparently for own balance sheet at least for now very strict underwriting guidelines but at least it's there and pricing is pretty attractive. citibank has come out, i'm hearing chase scumming out with a jumbo a.r.m. product that's coming out. >> so a little bit of signs of life in that market. >> yes. >> finally, as for the overall market, what are your expectations as we head into year end and early 2010, more of the same? >> i think the high-end market. i can only talk about the states that i know really well. >> the high d-end market still hurting, the low-end is not hot but it's good. and the middle end is getting

better. and as long as the rates stay down as i said now for the third time, we extend the tax credit, we're going to be okay. >> that seems to be key. mr. thomsen, thank you for being with us. >> thank you very much. thank you very much. interesting. necessary next, a billion dollar bet. this is just an amazing little twist and turn. we have trade wars going on. now hedge funds are going to china to court them ex, to get some of their money. useded to be you go to the middle east now people go to china. we're going to be inside that story. >> plus the google guide, fear envied. now that the stock trades near $500 a share, now a book hits the stores explaining the mindset. you're watching "squawk on the street" here on cnbc, first in business worldwide.

dow right now is up 7.25 points or so.

we've been mentioning gannett all morning long. "the new york times," cit group is ahead along with polo ralph lauren. >> polo ralph lauren. many u.s. head funds are heading to china to pitch their services to what's called the cic. that's short for the chooin investment corps. it is referred to as a sovereign wealth fund and shei ining shel out billions to united states hemp fund managers. the big question is this -- is this a sign that china now trusts american fund managers? is regaining face, may they allocate more money? joining now the president of the hedge fund research and scott wapner and david faber here as well. good to have you with us. >> good morning. >> what can we really read into the china investment corp giving money to oaktree? are they that special or is china going to sprinkle it around? >> it's difficult.

it's clear that the asian financial institutions will continue to play a role in ongoing and significant role in the recovery of the u.s. hedge fund industry. and if you look at some numbers it did put a proper context around it. take the overall size of the hedge fund industry being $1.5 trillion in capital. now total sovereign wealth fund capital globally is around $3 trillion, twice the size of that china's foreign rereserves around $2 trillion. so a third larger than the hedge fund industry in total. we're talking specifically about cic, their investment portfolio is reported to be around $300 billion, just over 20% over the size of the hedge fund industry and the largest u.s. financial institutions after losses in 2008 have declined to be just under $200 billion. so it's clear that those are -- that cic will continue to be significant in that respect. i think, erin, what's interesting to focus on is the

question of are u.s. hedge funds in any way perceived to be overreliant on this as a source of capital as the industry continues to recover? and i think there's a couple of reasons to not be concerned that that's actually the case. the first is that they haven't shown any evidence of being short-term or unreliable in nature. in many cases, they've looked to exchange in exchange for their commitment, they've looked at fee concessions or in some cases, equity stakes as well in order to emphasize the long-term nature of their portfolio. >> you have hedge fund managers going over there, looking for money t could be no more than why you ask a bank robber why they robbed a bank, that's where the money is. these guys going over there, that's where the money is. but who has the bigger motiver he here, hedge fund managers going there or china looking to get more clause, if you will, here. >> it's definitely two ways,

certainly sovereign wealth funds in general have been a big part of the growth fund industry not just in the last 10 or 15 years but in '02 through '07 when they put significant capital to work. on the sorry i'd side, they represent pretty valuable dye versification for the sovereign wealth funds and a good example of that is the very recently in au, as you know, the chinese act with the market entered a ferocious correction of over 20% in the month of august alone granted equities are still up 50% for the year, but in that month hemp funds focused on china whereas overall the hedge fund industry increased by 1.5% that is what sovereign wealth funds particularly the cic needs with $3 hundred billion in capital reserve. >> $3 hundred billion. that's interesting. this give us perspective of how

far we've come. the sovereign wealth funds were all we talked about. then criticism are and no one talked about them at off. now guess what? they're all back. >> back together again. >> shares of the mark haines does not name, up since mark's famous derriere. going inside two of the most envied and awe inspiring silicon valley entrepreneurs. but first, chris regan, what can you expect only on the call? >> we've got more coming up on the call, first of all a, as a cnbc exclusive, we're going to be talking with the president and ceo of piper jaffray, get a look at the markets and where he sees stocks heading. also where do the nation's ceos see this economy heading? that's a biggie. we've got the business roundtable third quarter 2009

survey out, you're going to hear about it first on cnbc, you don't want miss that. that's from right here on the floor of the new york stock exchange, all on the call at the top of the hour but first "squawk on the street" is back after this break. the first-ever hs hybrid. only from lexus.

someday, cars will be engineered using nanotechnology to convert plants into components. the first-ever hs hybrid. only from lexus.

another day of dollar strength would typically spell bad news for gold and other commodity, but not today. nesto, what is happening? >> erin, that's called a lated a aadd, bought if you look at the dollar index, it's definitely it's stronger today, but the commodities are moving. the dollar, we are at essentially a three-week high today. up for the third time in four days. you have to take these things in small bites. there is some fear in the markets and a lot happening overseas with the foreign governments. if you look at oil, check it out. boom. we're now positive. only slightly, but hey, we've

had a big move since we got that number. then you combine that, it was still pretty good. and then you look at the housing data and you have yourself a higher price of oil. another story on the commodity crops, you can see they're all trading higher today. the harvest for corn as i can see, is off to a very slow start. that means frost risk. because there are only 2% in illinois. typically this time in illinois, they'd be almost 30% harvested. >> thanks. let's look at shares of google. they're trading below $500 a share. we're talking google as the new tell-all book comes out about the google guys. it's called "inside larry and

sergei's brain." congratulations on the book. did you talk to the google guys? >> i talked to them a few times, but no formal interviews. >> how can you then get inside their brain if you didn't talk to them? i think it's a fair question, i don't mean to put you on the spot, but if you're talking about getting inside their brains, yet they didn't really spill anything. >> it's absolutely a fair question. i have followed the company for many years and followed everything they have said. did a lot of research on this. i talked to not only executives at the company including the ceo, but family, friends, university professors, people they have known in the past, people they've worked with in the present. everybody that i could get ahold

of and asking them the way they think. and why they do the things they do. >> if you think you've connected there, put us inside their brains. >> they are both very idealistic young men. they wanted to start google as a non-profit at stanford. they find the search engine is much too important to let it just be taken advantage of. to make it just a pure commercial, money-making organization. i liken it to the library of alexandria, where they tried to collect every written work in the world they could. they see this as that important. they're very idealistic, very interesting young men. of course, extremely smart. >> you say they wanted to start this originally as a non-profit.

>> yes. >> who or what made them change their minds? >> well, they have developed this technology at stanford and were adamant about it being a non-profit because advertising would influence the results too much. they tried to sell the technology to other companies, couldn't find any buyers. they were advised to just go ahead and start their own company. they were always interested in being entrepreneurs, but didn't think it would be the search engi engine, which was the technology they stumbled on at stanford. once they decided to get funding and start a company, then they decided to run it on their own terms. >> all right. thanks so much. >> thank you. >> good luck with the book. >> and up next, find out what we're watching for the rest of the trading day.

this is "squawk on the street." we'll be back. [ birds squawking ] [ moos ] [ man announcing ] if you think about it, this is what makes theladders different from other job search sites. we only want the big jobs. welcome to theladders. a premium job site for only $100k+ jobs and only $100k+ talent.

i'm nervous about her going away. (sunny) the bayer meter helps me become more independent. (announcer) only bayer's contour meter has programmable personal high low settings. i want you to be happy. don't cry. (announcer) the contour meter, only from bayer.

all right. we each have something on our radar and i believe you're first, faber. >> i thought the opening up however slightly of the jumbo skurtization market is interesting. we'll see whether it grows from there. the willingness of some banks and you need financing for jumbo. yet another little nugget on the housing front. >> my nugget is linked to coffee. this whole taste off we're going to have. did you know the best -- i hope we're having that. the best performing stocks, it's in the coffee group. that's your hint.