>> no -- i don't know. >> it's called deed rick coffee. rich peterson sent it to me. up 4,000%. >> what do they do? >> i guess they make coffee. >> grow it, distribute it, sell it? >> i would do a google search, but i don't think we have time. >> mine was -- we got these comments from fed president today seemingly echoing what we heard in the op-ed last week about the need from the fed to do something -- there may be a need before it becomes obvious. liesman was going through the whole list of fed speakers this week. i'm wondering if the whole thing was planned, the drum beat going to be big with the parade of speakers. >> good to have you with us.

thanks for watching. it's time for "the call." consumer confidence fell this month as americans worried about job security. a business round table survey says 40% of ceos expect to cut jobs over the next six months. and dallas fed president says the president must remove to accommodate monetary policy as soon as the economy shows signs of recovery. welcome to "the call." we have breaking news from the federal reserve. these proposing rules for tougher credit card standards. this comes as a result by passage of the credit card bill by congress this year. among the new rules would prohibit increases in the first

year the account is open. the new rules would prohibit increasing rates that apply to existing balances. it would prohibit creditors from issuing credit to consumers under 21 without a cosigner unless they show the ability to pay. the fed moving on what congress passes, one of really three separate actions the fed will take regarding credit card rules. melissa? >> thanks so much. turning to the stock market, an opening rally stalled. this is as americans worried about their jobs. the dow is down 38 points. the s&p right now is down about 1/3. trish, what's it like on the floor? >> the mood is pretty good. we are down 38. things were better when we got

the chase stiller home price out there. however, that was quieted by the consumer confidence number. folks are worried about job. we got that ceo business round table report out saying that 40% of ceos expect to cut jobs in the next six months. that's certainly what consumers are anticipated because that number shows people anticipate more job losses. that's to be expected. we're climbing out of a recession and you're not going to see an improvement in the job market until you're out. bob pisani with me on the floor with more reaction to these numbers. >> i think they're holing up and the markets are holding up well. the jobs number doesn't thrill me. i've been away.

>> do you ever work anymore, bob? >> let's take a look at where we're at. that number was the most important of the day. it was broad-based. not just california and florida. i didn't like the number because the percentage of people saying they couldn't get jobs was still high. earnings here, have you been watching the analysts reports? i'm seeing strong revisions upward for the third and fourth quarter. >> that's incredible. >> a big, leading indicator to me. >> one of the big fears out there is that maybe we will see a double dip recession. when you see earnings numbers looking to come in strong, that starts to quiet some of those fears. >> and often that's the good indicator of where we're going.

look at what's going on in europe. in england, new highs. france. u.k. three of the four bricks are at new highs. brazil, russia and india are at new highs today. only china is holding back. global markets are continuing to hold up well. >> we've got management changes at jpmorgan. the stock not really being affected. >> it was an interesting time to name potential successors. jeff staley, who ran the asset management part of jpmorgan, is being brought over to run the investment bank and the two fellows running that, there will be a few changes. steve black will become the executive chairman and bill winters will be leaving. staley, who's running the investment bank, will be the first in line. stealy has been there for many,

many years, but it's an interesting time to bring this up. >> thanks so much. we want to head over to julia boorstin on the west coast with breaking news on youtube and warner music. >> they've announced a revenue sharing deal. this comes after a nine-month standoff. warner pulled all of its videos off the site, saying they weren't being paid enough. this new deal covers the full catalog including youtube official videos and content. unlike some licensing deals that require a fee, this deal is a pure revenue-sharing deal and warner music will be able to sell their own ad inventory. now, they have deals with all four major music labels and they're also working on a presu premium channel on the site. >> thanks very much.

home prices in july rose for the third straight month, jumping over 1.5%. consumer confidence in september fell. so, what's this say about economic recovery? let's bring in two top economists. we have diane and steve. steve, i hope i got that right. >> that was good. >> we also have diana olick. diana, looked like pretty good news out of schiller. >> prices are moderating. we have seen price drops as far as 19, 20%, now, 13%. the thing to watch for is when you talk about that month to month. s&p is not seasonally adjusted and home prices always go up in the spring and summer months. that said, we have to look at year over year and also, this market was being juiced by that first time home buyer tax

credit. >> diane, do you agree and how do you parse that with the consumer sentiment numbers? >> we're still in a rocky recovery. this is the very tenuous time for the housing market. we are seeing a bottom, fragile bottom, but the year over year numbers are what to look out. we're still down and we're going to continue to be down into 2010. what i worry about is the cyclical losses we're seeing from the home buyers that were in good shape hitting prime mortgages. they just don't have the jobs to service those mortgages. i think we're still going to have a very uphill battle. i think we will see an extension in the tax credit because it's been critical. >> steve, to you on the housing. a lot of these cities are now reporting consecutive, monthly

gains. boston, three months. denver up three months. chicago, up three months. san francisco up three months. looks like things are getting better. are you seeing it differently? >> in housing, things are getting better. we've turned the corner. how much momentum we get will depend on a lot of things. two, the level of government subsidized mortgages still coming into the market and three, the level of government subsidy in terms of first time home buyer credit. we've turned. we've bottomed. it's clear what type of upward momentum we're going to have is unclear, but gdp can account for 1% of growth. >> diane, what diz you think of the consumer today? >> we're seeing the bad news from the government, we've yet to see good news, which is jobs.

the self-feeding end of the recovery. that is the very lagging process. in this recovery, we see companies building cash on the balance sheets. we need a lot more cash than we did in the past. one point diana made in a past program is how hard it is to close on houzs. the fact don't have the ability to leverage inhibits our ability to hire as we did in the past. >> when you talk about the move-up buyer in the market, that's what's essential to recovery. getting those second move-up buyers. even the conforming jumbo loans. >> but steve, you had a big drop in prices. it seems to me, markets adjust. with low mortgage rates, the price drops have been huge and now, we're seeing monthly increases in sales. there's a lot of local, statewide sales that are rising,

particularly in the hard-hit states like california. isn't that a plus? >> no doubt the housing industry has turned. the real question is what's groing to happen to the consumer. when you look at the numbers, remember, the consumer is facing multiple problems. no balance sheet to go forward. they're building, rebuilding their savings. trying to rebuild their asset base. having a change in consumer credit card laws. whether or not they want to borrow to drive this economy forward. as a result of that, the consumer is the lynch pin in this and they're going to disappoint everyone. the real question is going to be whether we have top line growth or if it's all coming by cost-cutting. >> diane, consumer confidence and jobs. it seems to me you're not going

to get great numbers until we get that first monthly increase in payrolls. >> absolutely. i think we also have to take into account that we've come back from armageddon. the consumers bounced back, but we're still at recession level consumer confidence. i think we'll get the beginning of the gains, december, january, but we need more. >> thank you so much. trish? >> thanks so much. coming up next, it's a september to remember for the markets. but will october follow suit? a bull and a bear weigh in on where stock rs heading. plus, one of the few firms in investment banking that can claim victory against the financial crisis. we'll talk exclusively with the president of piper jafry. we'll be right back. eseseseseses

crude oil down about 11 cents. the dollar index popping a bit higher today. 77.28. september is turning out to be a good month for investors, but october has been a tough one historically. what can we expect as we head into the fourth quarter? we want to ask tommy williams

and dan fitzpatrick. guys, great to see you. dan, i'll pick it up with you. what are you anticipating as we head into what has traditionally been a pretty rocky month? >> i think earnings obviously are going to be the big tell, but i'm not seeing from a technical standpoint. i'm not seeing the weakness a lot of people seem to be finding. volume's been increasing for the last few months as the market's gone higher. i know hooim probably supposed to be bearish here, but for equities, i think we're going higher. >> you can be whatever you want, dan. >> i love that. i really do. >> at least not today, right? >> i think we go higher. there's a big dislocation between economic numbers and the economic outlook versus the market. the market knows everything i'm saying and really doesn't care.

it's kind of flipping us off. >> some people are saying the data are coming in disappointing. how big a factor is that? >> i think what you're guest is trying to say is interesting. i think we're in an era of happyness. we want some kind of model that's given us the ability to predict the direction of the markets and it doesn't work that way right now. maybe it hasn't for a year at least. what we see is a psychology like a human being where the markets are being driven by things that are more psychological. we need dr. phil rather than warren buffett. >> what are we coming to? but tommy, realistically, you look -- yes. larry has a point. with some of the data like the data we saw today on the consumer side, not what people had been anticipating. however, when you look at some earnings estimates coming out

for the coming quarter, that's looking good. what's the real risk to the market here. is it double dip recession? >> it's probably being in cash right now. the problem is next year, when the big loans on hotels and big commercial properties come due and some of these companies won't be able to roll their loans over. so the "w" question won't be answered until the second quarter of next year, but looks like clear sailing the rest of this year. i'm also encouraged you have a bear on the program that talks like a bull. >> that's been his routine. i like him. >> i like him, too. >> dan, where are you investing? you're on the eve of the profits

report. right now, where are you going? >> you know what? >> energy again. >> i like defense. you've got north, even boeing, all the aerospace companies. boeing, just about up in a new 52-week high. nobodies talking about it. >> why? you got -- >> because i think there are other issues. >> walk through. defense spending, it's slowing down in washington. but what? why do you like these guys? the commercial side's getting better? >> the market doesn't care. i think the market's looking for value and a lot of these companies are still pretty cheap going forward. once again, we see these things in decline, defense spending, but there's still money coming into these stocks. i have this sense that there's

going to be a money rotation. i haven't talked to dr. phil yet. that's ultimately what we have, a dislocation between what the numbers are versus what's happening in stocks. i can't think of anything i don't like other than the dollar. i think it has to go lower. >> tommy, let's get your progrehere. what you like. >> one thing is municipal bonds in mutual funds. high yield municipal bonds. for a unit of risk, the returns are probably better there than anything else. they're coming out of recession and wanting to get busy. the number one selling product the first six months this year

was men's underwear so we've got consumer discretionary. >> you know what? i'm glad men out there are buying new underwear. >> we've got to run. what would dr. phil say about that? >> thanks, guys. up next, surviving throughout the financial crisis. we have an exclusive interview with the president of piper jaffray. plus, a new plan to replenish the insurance fund. this is my small-business specialist, tara.

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can you believe it? starbucks will begin selling instant coffee in all north american stores. shares trading down almost 2%. we'll have to see how that goes. starbucks ceo will be on live on the closing bell 3:00 p.m. eastern. piper jaffray not only

survived, but thooifed during the crisis. how did piper stay afloat and how is the company adapting to the changes. those are some of the questions we have for thomas schnettler, president and ceo of piper jaffray. how's business right now? >> business is definitely improving. we're seeing a much more broad-based interest in equity market. that has helped the business. i think we are seeing improved conditions in the new market, particularly back in the ipo market, which is just starting to come into its own. >> tell me about retail. are they back, are they scared, unscared? are there more buyers than sellers in your retail accounts?

>> we don't do retail. strictly an institutional business. >> give me your take on the equities market. >> we see more positives than negatives. there was a discussion about the confidence number this morning. basically flat. housing good. that's what kind of started the whole thing we've been through. we see that as largely positive. i do think corporate earnings will be better. >> top line or bottom? >> bottom. companies that really screwed their costs down tight, we have done that. there's leverage to be gained from that. i think we'll see some surprises there. >> since you don't do retail, i apologize for that. >> used to. >> what about investment banking business? we've seen a lot of ipos. just in general, investment banking the old fashioned way.

helping businesses raise capital, debt and equity. >> well, again, the conditions are improving. the fixed income markets are operating more normally. the high yield market is back. corporate spreads have come in dramatically. on the equity side, the ipo market was closed in all -- for all-purposes for most of the year. it came back really starting in the second quarter. that pace will continue to quicken. although there isn't a enough in the pipeline to saturate demand right now. >> tell me how your business model has changed. a lot of the traditional investment banking business has changed. we have a lot of new regulation on the horizon. what's different for you now versus a year or two ago? >> we went into this downturn

conservatively capitalized. we were two times levered. we were very conservative going in. we have our costs in a position where we can be profitable in a difficult market environment. we've really looked at it as an opportunity to expand our business by taking advantage of the talent out there. our fixed income trading business has expanded significa significantly. our business in asia is well positioned. the markets are up. there's a lot of business there coming. >> are you picking them up from the people that were laid off from wall street? >> primarily. >> you're in new york, but in minneapolis? >> headquartered in minneapolis. next largest office, new york. >> can you stay independent? >> yes. >> how do you think regulation

is going to change your business model going forward? you didn't really address that part of the question and there's a lot of potential regulation on the horizon. do you worry about that? >> not for our business model. i think some of the things that really impacted the industry were less to how we run our business. i think capital adequacy and structure is where regulators ought to be focused. risks ought to be internalized to the companies who take them. our model doesn't do that. i hope that reform really focuses on those kinds of bigger picture issues. and i don't think that will change our business. >> on regulations, there's a story in this morning's "wall street journal" that a lot of firms are held to limits on short-selling. again, people would like to restore the uptick rule. >> i think there's a legitimate place in the market for short

sellers. maybe the list is the right compromise, but you know, people ought to be able to bet both ways in the market. i think it's a constructive part of the market. there can be abuses. the rule might be the right compromise between the two. >> you were sponsoring trading day, donates all your profits from a trading day to a charity. your business must be doing really good. >> piper jaffray is sponsoring trading day on october 21. bring your equity trades, we'll donate 100% of the commissions to you think. it benefits new york city youth. we're tremendously proud to partner with them and generate proceeds to really work with the kids in new york. >> thomas, thanks so much for joining us. trish? dick boef is out with new

bank upgrades. he's doing to name names and discuss the new plan to raise cash. and america's top ceos weigh in on the economy and is survey says they're not ready to hire. details are coming up. $$$$$

the fdic has approved a

proposal to add 45 million to its insurance fund. hello, mary. >> the fdic's board believes that relying on boards is going to boost the public's confidence in the industry. here's sheila bair. >> what we are going to do is tap the liquidity of the banking industry to improve our position without borrowing from the treasury. i never say never and there's much we cannot control for. while we are optimistic on the economy, if conditions worsen, we could have to tap our treasury line. but today is not that day. >> the fdic is projecting the cost for dealing with failed banks is now going to be $10 million. right now, the insurance fund has 10.4 billion in cash. putting that fund below levels.

the proposal aimed to do two things. to get the fund above mandated levels and give it add added liquidity to deal with more failures. assessments on insured deposits won't change next year, but will change from the current rate of 12 to 16. this year, there won't be special assessments. they say exceptions will be made for troubled banks should the proposal threaten their viability. they will now go out for public comment for 30 days. back to you. >> so should the banks bear the brunt of replenishing the fdic's fund? joining us now, we have dick bove and also steve liesman. great to see both of you guys. good to have you back, steve, on "the call."

dick, i'll start with you. before we get to the fdic, i want to talk a little bit about bank earnings because you've said that you anticipate the next three years and i quote, will be explosively positive for the banks. however, you're concerned about the near term and earnings picture in the near term. explain what you mean. >> the loan losses the industry's absorbing will remain high for the next two quarters. they should be some significant reserve building in the fourth quarter. most banks, i would say 60%, are going to lose money in the third and fourth quarters. next year, if the economy expands, then the loan losses are going to come down and earnings literally from 2010 to 2010 or 13 should triple. that's not difficult to see happen. all you're saying, all i'm saying is that losses will contract to a point that will

allow that to occur. >> so, dick, what does that mean if i'm an investor in financials. how should i approach this sector? >> pretty tough to make a decision. the companies are going to lose money in these two quarters and we're going to focus on where earnings will be in the next few years. we mostly want to buy companies already earning money. for us, that means you buy goldman sachs and morgan stanley. means universal banks like jpmorgan and banks of new york. >> dick, what should happen here with the fdic? should the banks be bailing out? >> they have no choice. you and i have car and home insurance. if the company loses money, they jump the premium and we have to pay the higher presumium.

the fdic is an insurance company. if they lose a lot because failed banks, then the remains banks have to see their presumis jump. there's no question the banks have to pay this money. >> steve, let's talk about that. is this the right time for this bank assessment? is it going to damage capital, hurt lending? >> i think to the extent that it's prepaying, it's not damaging. the way i would look at this is as a user tax. this is going to come out of the time cost of money imposed upon depositors. this won't be free for the depositors. this is like a gasoline tax. >> so it's going to hurt the consumer essentially? >> paying it and not going to pass it along. maybe dick has another thought on that, but i don't think the

banks are going to prepay money from two years down the road and not charge the depositors. >> dick, let me ask you, it's a separate issue, but it's related. how much capital to the banks have and do they need? is this the right time to force this? >> the banks have too much capital at the present time and the amount of capital in the banking industry has got to come down. that may sound ridiculous to you after what you heard last week from the g-20, but you take the common equity plus the reserves of the banks and divide it by their assets, they were only two years in the past 75 years in which that ratio was higher. that was 1935 to 1936. they've never had this much capital. so to ask them to increase their capital is asking for the economy to be hit. >> is there a double whammy

here? a two-fer tax all of a sudden. >> that's right. and it's going to go further than that. if the congress passes this, then the regulatory cost of consumer protects is going to go up. the one thing the consumer can be certain of is that the cost of financial products, credit cards, home equity loans, are going to go higher because of increased regulation, increased capital requirements and insurance. >> bad timing. this is bad timing. we're trying to get out of this. going to get hurt even more through these -- they're not lending as it is. it's very hard to get a mortgage these days. it's very hard to get a credit card these days because banks are so worried about these capital requirements. if they've got to have more in capital requirements or give more to the fdic, then isn't that going to compound the

problem? >> my question to you dick is it's like a double tax. i don't know what the timing is. >> it's a payment for service. >> but it does sound like a tax and i don't think this is the right time to tax banks in recovery. >> no, it isn't. the banks are so frightened at the present time. we're not just talking about increasing capital. we're going to tell them how that can be used. we want them to put it into liquid assets, which means not into loans. the government is really the lunatics running the asylum right now. they're really moving a lot too aggressively to stop the banks from lending even though they claim they want them to lend more. >> we've got to leave it there. out of time. thank you so much. coming up, stocks on the move this morning. which ones you need to watch. a new survey captures what america's top ceos think about the economy.

president and business round table joins us to reveal those details ahead on here on "the call." 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.

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breaking news on the madoff scandal. the securities and change commissions inspector general who issued a scathing report on the handling of the investigation is out with a new report with specific recommend da to improve the staff. there are 21 recommendations and the staff has 45 days to get back to david cotts with specific actions. they include a formal procedure for handling complaints. more training for s.e.c. staff members and one individual on an investigative team will have to

have specific experience in the subject matter they're investigating. that was one failure in the division in the many of the case over the years. the s.e.c. has implemented some procedures already, but not enough tr david cotts. he will be our exclusive guest on "power lunch." >> thanks so much. america's top ceos excepect sales to improve, but don't expect capital spending. this is according to to the quarterly survey. john cast lan is here to tell us more. when you ask how do you expect your sales to change in the next sixth months, 51% expected an increase. >> you're starting to see sales trend up. what you would expect coming out of a recession, but they've not

yet reached the level where you're driving capital expenditures. that's later down the road. >> the hiring plan is kind of a heartbreak in here. 40% decrease. i just want to know and ask your perspective, the increase is 13%. that was only 6% in the second quarter. does that represent improvement and the layoffs or decrease was 49%, so that has dropped. is there a shift? a turning point or am i just looking for good news? >> well, i don't think this is something you can quite labt at this point. we're seeing the sales are improving, but as you know, in times of recession, companies have had to improve their productivity to improve margins and bottom line. you're seeing those results now as they're able to do more with less in terms of resources, both equipment as well as employment. those are things that we would

not expect to come back at this time and when we look at history, it's been 18, 20 months after the 2001 recession that we saw expenditures turn around. >> i was surprised to see the 40% think they'll see employment decrease. that means there's still layoffs. can you give us some color on that? >> that's what it would seem to indicate. not anything to say the recovery is here. if there is any news here, it is what had been expected to be a negative year is now minus .9. is that good news? well, it's not as bad news as it has been, but the real issue is to get the economy going, to get demand for our products and services so we can improve our employment outlook and our expenditures. >> i'm still on this number and

i thank melissa for this, your jobs decrease 40%, it was 49% in the prior quarter. what i'm asking you is that significant? >> nice try, larry. >> you're coming down nine percentage points. >> it is what it is. i don't think it's overly significant. >> i was looking for some kernel of good news. >> we can focus on the increased sales. >> thank you so much. interesting study. "power lunch" coming up at the top of the hour. bill giriffeth, what you got fo us? >> it was one year ago today that congress tried to pass the first version of the t.a.r.p. and it failed. the market fell almost 1,000 points. then a couple of colorful personalities. the host of "dirty jobs" will be here. he's spending the half hour with

us in the 1:00 hour. and also, dana white, president and co-owner of ultimate fighting. seems like a nice enough young man. we'll see you at the top of the hour. >> tell mike i said hi. we used to work together. we're going to take a quick break, then we are back. you are watching cnbc, first in business worldwide. we'll be right back. ll be engineered using nanotechnology to convert plants into components. the first-ever hs hybrid. only from lexus.

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it is time for "call to action" on the stocks you need to watch during afternoon trading. matt nesto is here with a look at them all. >> i've been champing at the bit to roll this out. walgree walgreens, it's interesting. if you look at their fourth quarter, the net was still down a penny from a year ago. walgreens, very, very strong, but it's also helping the dog of the industry groups and that is going to be the food and staple retail. not only helping that, it's helping the staples collectively. the best sector today and best

industry group thanks to wall greens. also worth a peek here today is the hottest stock in the s&p 500 today, this month and this quarter. it's not the staples retailers. it is gannett, folks. it's having a great affect on the newspaper group today. they forecasted a great quarter. about three weeks early. interestingly, there's an 18% short interest against gannett, which is up 225% so far in the third quarter. talk about sweating it. you're going to have to put newspapers on the floor if you're short gannett. take a look at cit. the "new york post," we tip our hat to them. it's moving the stock up to $1.85 is story is that john paulson may merge cit with his

acquired indy mac bank. after the close, a number of stories we'll be watching. a tip of the hat goes to zz. and nike strong ahead of those numbers. >> quick break and then back for the last call. and a look at why it's challenging to reform health care in america. this is my small-business specialist, tara. i know landscaping, but i didn't know how wireless could help my business. i just don't know how wireless can help my business. tara showed me how i could keep track of my employees in the field and get more jobs done faster. i was blown away. i'm blown away. only verizon wireless has small-business specialists in every store to help you do business better. we should get you a hat. now buy any blackberry, like the new tour, at our lowest prices ever, and get one free.

a new series debuts on cnbc. it will bring together the most talented leaders on bringing success to any company. tonight's premier has a look at leadership through the lens of health care industry. >> 75% of health care costs are

behaviorally reflected in some shape or form. obesity is the big driver today. in the past, it was smoking. with that, smoking plumeted in the u.s. you show that government can come in. in the same way, it's being debated how much should a company come in and yeert with a carrot, here are some airline miles, and that has been successful. if you don't don't cut down, it goes up. >> is that right? is that fair? >> there's much more from former senate majority leader and we have others joining us for tonight's primere. it's not obama care, how to reform the sy