there's a story today about a guy just his head is spinning. his house is worth half of what his mortgage is, he lost $100,000 a year job, not coming back, and the people like him growing in ranks every day. alcoa is a $12 billion company. it's the quasi-dow stock. i don't know how long it's going to keep it in the dow. >> he certainly hasn't heard you complaining about it. we've been trying to get it out of the dow. >> my point is that earnings season does not start this week. and you two might be chomping at the bit to get your time, get over there. >> i want to -- >> go ahead because earnings season starts a week from today and i'll let you know that. >> in terms of our extended coverage. >> alcoa on thursday is not an earnings season. >> how about young brands later in the week? >> ge -- you mean when is comcast reporting?

>> it sure is. >> get me out of this. >> in addition to earnings, it's also a busy week on the economy. today we'll get the ism -- >> quite the priority it was. >> wednesday the fed provides its latest consumer credit data and we'll get weekly mortgage apps in oil inventory. nation's retailers get some same store sales out and the jobless claims, wholesale trade, b of e both with rate decisions and on friday international trade plus the labor department's latest employment data comes in jobs opening report and labor turnover survey. you know all of this geeky talk about the model and all this. >> all along i thought it was -- >> benchmark provisions. >> provisions matter. >> first desk is about companies, i thought it was about people and it's not. and we've had people saying there's all of these babies born that immediately add to the population and they want to put them to work apparently because they include them.

>> they don't care about the child labor laws. >> no. >> you're talking about revisions that could be showing 8 million jobs that have been lost since the recession began all the way back in december of 2007 and that's a big difference. >> and if it's a new normal, we're not getting back to the employment where we were three years ago for, you know, there's studies that say ten years before we get back to -- >> some say as early as 2014. >> 2014. >> five years down the road. >> which is in time for the rio games in 2016. >> yeah, exactly. >> summer olympics, although joe pointed out on friday it's hard to have a summer olympics we're you're in the southern hemisphere because it's winter. >> bingo. i guess saturday night live -- they did a little, the difference between rio and chicago, a beach bunny in a g-string versus some blue collar fat guy eating a hot dog. why rio instead of chicago? >> although some people said that it's going to mean less

money for the ioc. >> they don't care. >> this is a 10% to 15% discount off of what it would have been in chicago in terms of what the networks and advertisers would be willing to pay. >> same time zone and i think they thought of it. you want to see it live. >> we're not going to have you standing in front watching the fireworks. >> pretending it's not real. that's right. alan greenspan predicts the nation's jobless rate will likely hit 10% in coming months, he should know. >> the silver lining is at some point we're going to start to see an improvement in employment. but remember that unless there is a monthly increase of more than 100,000 a month, you still get the unemployment rate continuing. >> but the maestro, it's not called for. less than half of the stimulus

is in effect and the nature of the recovery is not clear. >> the watchdog is calling into question whether u.s. officials exaggerated the health of banks receiving bailouts last year. a new report released by the group today says the senior officials deliberately created the impression that the banks receiving aid were healthier than was the case. as a result of that bad information, t.a.r.p. inspector general argues that the government and its bailout lost public credibility when the financial crisis deepened. barofsky's going to be our special guest later this morning coming up at 8:10 a.m. eastern time. three more investment firms getting the okay to buy toxic assets. alliance bernstein have all raised the necessary $500 million minimum to begin participating. the total purchasing power of the five firms participating to just over $12 billion. we saw wilber ross also launch his own bid not long ago. >> amazing that -- what's the total we're talking about? we were supposed to ramp up to

$1 trillion. we were at $1 billion. >> the minimum's $500 million. bank of america is going to reportedly pick a so-called emergency ceo this week in case legal trouble forces ken lewis to leave even earlier than he was expected to at the end of the year. "wall street journal" says that work on the contingency plan began after he announced his retirement. the committee in charge is not the same as the six-person one looking for the permanent successor. and that is an old shot of him there. his eyes were still good at that point. >> darker hair. >> less gray. >> you saw nosara's call over the weekend? >> lewis was the inside -- >> it pointed out that, you know, quoted a lot of people saying that none of those deals would have been integrated properly. that he was the guy in there making it all happen, making it work. so i'm not sure i bought it.

he almost writes an opinion column. >> oh, yeah. >> it's almost a business op ed piece. >> i like his column. he comes out after years of following this stuff. he'll kind of latch on to an issue that will follow really, really closely. writing one column a week. more time to really dig into this stuff. >> you knew him from the journal or something? >> no. >> coming on our show. also citigroup investors, saudi prince is urging the u.s. government to sell the stake in the bank as soon as this year to try to boost investor confidence overall especially in the financial stocks. in an interview with emerging markets magazine he cautions that the withdrawal should not be done in a way that hurts the prices of u.s. banking stocks. goldman sachs will receive $1 billion if cit files for bankruptcy. the ft reports the payment results from a structure of a $3 billion finance package that goldman gave to the struggling lender back in june.

goldman would reportedly be likely to agree to postpone payment on part of that amount. benefitting from others' pain or helping in a time of need. your choice. >> good place. rio might be an hour ahead. but daylight savings time. >> well, i think it's the same -- is it an hour ahead or behind? >> a lot closer. 12 hours difference the exact opposite schedule. >> exactly. the g-7 finance ministers are warning against complacency as the economy struggles to pull itself out of this global recession in a pulling statement after weekend meetings in istanb istanbul. unemployment continues to rise, they say government stimulus efforts have worked, but maintain it's too soon to start winding down the measures. an international monetary fund committee announced plans to shift at least 5% of voting power from well represented countries to those with very little influence. but a number of aid agencies are brushing off the imf efforts to try to offer developing

countries more influence. they say this is grand standing. you can see the imf is looking at potentially finding some ways to attack all financial companies around the globe. >> right. the sort of pre-fund some disaster funds. >> that and the fdic, they'd have no profits left. >> and the cayman islands. also, antiga is looking at that too. foreign banks with large operations in london agree to the same bonus rules as domestic banks. the london telegraph says the uk's treasury minister is calling the leading global banks to a meeting to discuss the terms of that agreement. and it could include the likes of goldman, morgan stanley, jpmorgan, deutsche bank, and ubs. almost 10 minutes after the hour, futures as joe mentioned at the top are looking pretty good considering, you know, the weakness from last week. asia had a pretty decent morning although the nikkei is back to an 11-week closing low.

we're going to open up by about 40 points or 50 points this morning. oil i think last check was down below 70 and still is 69.54, down some 41 cents. inventory numbers especially on gasoline. 10-year note dip down, the yield got down to 3.1. dollar is down, as well. no big surprises out of the g-7 meeting in istanbul. more from roubini who was there this weekend. but for the time being, we're down below 1.47 euro and down below 90 yen. i want to get overseas and tell you what happened in asia where chloe cho is standing live. but first to london. good morning, steve. >> yeah, good morning. two reasons last week why this market found it hard to go anywhere but down one was waiting for the payroll and the second waiting for earnings from alcoa and the rest.

and the first reason, of course, meant the market went down and rightly so. they were much worse than expected. we're still waiting to see. because the european markets which fell on average around 2% last week are going absolutely nowhere today. and we are waiting for the earnings season, which was the catalyst from the second quarter. will it be the catalyst this time around? in terms of data on this side of the planet. the best numbers we've seen, actually, since april 2008. but again, that the rescissions to employment pmis and they were negative, i'm afraid. in terms of individual stories, could be a nice listing, actually on the new york exchange from two european companies, alpha and telenor in the mobile space, they could be having a $23 billion u.s. ipo on the new york market as they put their differences aside and decided to pull in the ukraine and russian operations. that's the story. let's go to singapore with chloe. mostly a weak picture over

here in asia. we have had jobs reports weighing on investors' minds and a lot of investors questioning the resilience of the economic recovery we have out here in asia, especially north asia, the strength of the yen also hammering a lot of the stocks there. first of all the nikkei, not performing well. take a look at the nikkei down by .6%. we also had comments from the japanese prime minister just a short time ago that the labor market will continue to worsen into the year end and that the economy has not turned around. of course, we have job figures from japan late last week, unemployment ticking slightly lower from an all-time high but job availability at an all-time low. only four to go around for every ten job seekers. south korea was the underperformer today, down 2.3%, the market playing catch-up after taking friday off. and in hong kong, the market did manage to stage a late-session

rally. but comments from hsbc's chief executive saying there could be more write-downs citing the possibility of a w-shaped economic recovery. and also central bank meetings very much in focus, as well. we've got the rba meeting tomorrow and the aussie market trade was weaker today but investors piled into the australian dollar betting on a 25 basis point rate hike tomorrow. we shall see and the shanghai composite still closed will only come back online friday. >> chloe in singapore. i want to get a check on the u.s. markets as we get ready for another week of trading. the chief investment strategist over at oppenheimer, and jpmorgan private wealth management. good to see you both. people want to say despite the lousy jobs number on friday, limited, asia's doing pretty well this morning these dips are

going to get bought and this is one of the first examples. do you agree? >> we do very much so. got back from a week in europe last week and european investors are still enamored with u.s. stocks. their markets are not doing as well. but they still see value in the u.s. marketplace and still think that rising tide will proceed. our issue with respect to the u.s. markets is i've said this before i'll say it again. this is the most reluctant bull market i've seen in my 20-year career. people don't want to believe it. that being said, i think we've had this big move off in april. i'm sorry march and april, a lot of constitutional investors we talked to did not participate in that move and they've been trying to scale back in. we think there's still a lot of up side with respect to the constitutional community getting involved. and that being said, we don't really see a lot of structured support from the private client side either. they're not there yet. especially given the fact that bond funds are still outsizing equity fund inflow.

so that just tells us that the private client remains very defensive. >> 40 billion in august alone. and are your clients telling you, we, look stock market's fascinating, we love watching but only from a distance? >> well, i think some are a little nervous, carl. but what we see here more and more evidence that this is not going to be a v-shaped recovery, more like a u-shaped recovery. keep in mind the labor market is improving relative to the prior quarter. it's just disappointing relative to expectations. the labor report, you can't put any lipstick on it, it was pretty bad. but given the fact it was sequentially better than the first and second quarter, i think we have to be somewhat -- >> although some of the real concerning signs were things like the number of hours worked dropped slightly. you had overtime hours that dropped. and those are supposed to be the signs that show employers are getting ready or would have to start ramping up hiring again. >> once again, it's a sign that it's not a v-shaped recovery. you need, you're absolutely correct. you need the workweek to start

increasing. at the first sign of an improvement, you're not going to see more hiring, you're going to see an increase in the length of the workweek. we want to see temporary work employment increasing, want to see the length of the workweek increasing. and those things still are not flashing encouraging sign that things are going to turn around very quickly. it was a very bad report. >> brian, data means feds even more on hold, right? >> right. >> obama's already talking about additional, you know considering additional stimulus. maybe the very risk trade carried in march is going to remain in place. >> couple things, bottoms are always processes. because the market went straight down last year and we've had a very healthy move this year. we've been acting in a linear fashion, straight up, straight down. and we have to think this is a process with respect to the economy coming back. that's number one. number two in terms of inflation, if you don't have wage growth, you're not going to have inflation. corporate america expenses come from the labor markets.

so the inflation arguments just continues to get pushed out. >> do you think that somebody made the point over the weekend that companies may be hesitant to spend but they've raised so much money in corporate debt this year that if they want to invest or they want to hire, they do have that option. >> they not only have that option from the amount of money they've raised but they certainly have that option from the level of profits that they're now starting to accumulate in the cash flow and all of the retained earnings they have right now. what they're waiting for is that spark. that spark that things have really started to turn around. and that is going to come, but a little bit much more slowly than perhaps we would've liked. >> this is a goldman note. i think either friday or even today talking about whether or not this real demand, the demand is going to sustain itself in 2010. they say so far limited evidence suggests production growth should slow in early to mid 2010. meaning the inventory we're building is temporary. it's fourth quarter first quarter phenomenon really. >> well, again, we're going to

have to really see real organic growth in order to say this is really sustainable. but at the same time, carl, you've got to be aware of the fact that policy makers are not tone deaf. they realize that things are going to soften a little bit. and that means that monetary policy may stay stimulative for a little bit longer. and even though you constantly hearing they don't want a second stimulus package, of course they don't want one, but if they need one, don't you think one is coming? >> hey, you know doug cass has been looking at this for a while and thinking it's going to collapse. he's very pessimistic when he sees the market. he says how do you explain investor sentiment being so positive when you like at the merrill is survey? how is that a reluctant bull? >> surveys are different than actually going out and talking to clients. and what we do is we meet with institutional money managers around the world. and we can judge not only by the way they're asking us questions but they're pretty clear about where they're positioned.

with respect to we'll say technology, which is the largest sector in the marketplace now in the u.s. best-performing sector year-to-date nobody believes is the move. that's a big deal. also with respect to -- they see their own inflows into their own companies and see they're not coming. and they had the bout with redemptions up until march or april. there still remains a very defensive tone. people are trying to play catch-up. that's what i would call a more defensive tone, reluctant bull. >> doug always wants -- he's saying you've got to ask these bulls, you've got to grill them. and it's like, when i get one on, i will. they're far and few between between the consensus people who have said, oh, no, no, there's no finance -- the bad things in the economy are staring everyone right in the face. i was the only bull i ever talk about who says yeah, if you're going to use indicators you're going to miss every bull market in history. >> this recovery, joe, is not

different than any other recovery. everything's a process. we had a process of a bottom in the stock market, process in the bottom of profits. now we're going to have a process in the bottom of the economy. the stock market is telling you that the economy's going to be better now. maybe it's not a classic v. but bottom line the economy is better today than it was a year ago. it's going to be better a year from now than today. >> he's copped to being totally wrong in the third quarter. my bet with him now is for the fourth quarter. >> wiping the slate clean. >> wiping the slate clean. stop arguing fighting the market saying the market's wrong and getting bitter about the market being wrong. so the fourth quarter's when we're starting the new one and i think he sold me -- i have no strong feeling what happens by december 31st. >> taking the opposite. >> taking the opposite side. brian, we have a guy coming on later to talk about treasuries, tips, inflation protected treasuries. do you think that tips are a

good investment right now if it looks like this inflation bump could be getting pushed further and further out? >> i would still hold. i would be very defensive with respect to that. we've had a huge move in treasuries in general. in equities actually are giving you yields now. not only from the earnings yield side but the dividends yield side. with inflation being pushed out more and more we believe, and the fed on hold, we would hold off on that trade. >> thank you. >> thank you. all right. if you have any comments or questions about anything you see here on "squawk," go ahead and e-mail us at squawk@cnbc.com. before we head to that break, let's take a look at last week's winners and losers.

industry heavy weights, t. boone pickens, donald powell, news makers and news breakers. it's monday, and "squawk box" is only getting started.

$20? time to take a look at this morning's upgrades and downgrades. barcla barcla barclays downgraded at ubs. i guess they've had a sell, i don't know for how long. that hasn't been working out too well. at this point they're going to a neutral, stock's up at least tripled. from its lows. general dynamics upgraded, upgrading the sector target,

upgrading the sector target increase to 80 from 52. the firm also jue grades the sector. petsmart upgraded from buy to neutral. price target is 27. i really need to know the difference -- how would you pick a petsmart versus a petco, do you know? >> i don't. >> either from a stock or to go where you need. is that a potential combination down the road where they just say, look, let's stop -- >> petsmartco? >> i don't want to give you tmi, but i need a new pooper scooper. what about them? that's why i need -- one of them is very large. >> by the way, ubs -- >> on barclays --

>> went to -- downgraded in may from a neutral to a sell. >> yeah, may. that's bad. we don't need to listen to that. do the opposite. sell. when we come back, making dollars and cents of the ad business. it's about flashy super models and glossy magazines, but offers a unique read on the economy. we'll talk to the ceo of the industry giant wpp sir martin sorrell. you're watching "squawk box" on cnbc, first in business worldwide.

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♪ good morning. welcome back to "squawk box" here on cnbc, i'm joe kernan along with everybody. becky's here, carl's here. u.s. equity future responding to the reunion up about 54 points. at least at this point in the day. not a whole lot of stuff that could throw us off track as far as earnings or government indicators. >> not a lot of data this week at all. >> do you have anything to talk about? you're standing up. >> you didn't want to go headlines from the control room. what if it's over here? >> no, no -- >> mark's right here. >> i'll do it from the control room with the green screen. >> no, i mean physically getting out of your chair? >> no. >> it's that simple, right? you decide. >> it entails putting those wireless microphones -- >> walk over to the chairs.

>> try walking through security at an airport with those things on. you're not going to get through. the government watchdog overseeing the t.a.r.p. is asking whether u.s. officials exaggerated the health of the banks as a result of the bad information, t.a.r.p. inspector general neil barofsky argues the government and the bailout lost credibility. barofsky will be our special guest at 8:10 eastern. the supreme court begins a new term today as sonia sotomayor will join the eight others. on the case docket, one that could loosen restrictions on corporate spending and political campaigns. and hsbc ceo warning of a second downturn. the bank's boss tells the fc he's cautious about growing too fast because he fears it could force the company to make write-downs. joe?

>> actually -- >> it looks dangerous. >> it does. >> you can't really see. >> looks like you've got something going on there. let's go to the cma of mf global. john, we're down i think about 4% to 4.5%. is this the beginning of 5%, 10%, or 15% as far as equities? or are we ready to go back up? what's your view? >> joe, i think if anything it may be a range tread. we may have another 5% to 5.5% of the downside. more than 10% between now and the end of october is a bit of a stretch. the market's probably a bit overextended. saw some window dressing last month. you have alcoa, i think leading off earnings on wednesday afternoon. the expectation's there for about 12 cents a share loss. so you'll probably see a little bit of pullback, a hangover, i think, from friday's number. the employment number and the macro data not being overly

concerning. and one thing i think traders across the board, fixed income, foreign exchange or equities are looking at this week is the consumer credit numbers from wednesday. as you recall, joe, in july, consumer credit not just fell out of bed but rolled down the stairs, on to the highway and got hit by a truck. it sort of spells a larger macro challenge for policy makers in the fact that unemployment continues to tick higher, yet consumer credit, both the supply of it as given by the banks and written by meredith whitney and the demand of it written by consumers continues to pull back. >> that was a pretty good showing on friday for equities, no? >> it was. but all things considered, equities performed pretty well. they did find their way to manage back close to uneven before giving back a little bit of those intraday gains going into the close. but again, i think it's going to be really tough here ahead of earnings season. and given the data points last week for money managers to come in and aggressively bid equities at these types of levels ahead

of the coming weeks. you'll probably see a range trade. but a lot of protection, joe, was bought in the form of vix futures and put options over the course of august and september. looking for this historically challenging time. the downside maybe a little bit further lower. >> if you had to buy one or the other, the ten-year or the s&ps? >> can i say neither? >> no, i would probably be a better buyer of stocks, joe, but i'll tell you, i would do it -- i'd be a little bit shy about it. at 3%, ten-year treasuries probably represent fair value so they could probably shoot -- overshoot that and trade 2.75. what you may hear in terms of the whole credit story, the expansion of the fed balance sheet and perhaps increased treasury issuance. you may see 2010 could look a lot like 2009 in which the back end of the curve sells off on the whole supply story but probably doesn't get above 4%.

>> thanks. sorry about rio and everything. i don't know. i don't know where you stood on that, but business as usual. at least you know your traffic's not going to be disrupted or anything like that. i don't think you guys could've paid for it to be honest with you. >> it would have been challenging. >> it would have been challenging, you've got the chicago machine, all the different -- that $20 billion who knows where a lot of that would've gone in chicago, right? scary to think of. >> jobs. >> that would have been good. >> 300,000 jobs gone. >> but it was 50/50 in the city for what people thought. >> that's because people who have to drive with the traffic. remember when they were talking about bringing them to new york and people thought, a lot of traffic. >> thinking about the g-string -- saturday night live had that. >> you're probably going to go to rio. that'd be my guess. >> probably not. we're going to take a quick break right now. when we return, sir martin sorrell of wpp group is our special guest. stick around. we'll be right back. please help me welcome a long-time friend of glencoe baseball.

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welcome back, making headlines. brocade putting itself on the block. "wall street journal" says no deal is imminent, hp is interested. a $20 billion plan to build two large steel plants in india by 2015. the company's chairman tells the ft delays in getting landowners to sell in the country are tempting him to look elsewhere. and deere and company ratifying a new six-year contract. the agreement covers 9,500 employees and 17,000 retirees. >> carl, thank you. the media business has been reeling from a lot of ad noz

yum. joining us right now with his outlook is sir martin sorrell joining us from copenhagen. great to see you. >> good morning. good morning, becky, or good afternoon from copenhagen. >> i take it you're in copenhagen for the olympics. what's your thought of rio? 10% to 15% less, what do you hear? >> well, certainly the deals i think that have been done locally in brazil. there are other networks in the world like globo and they signed up before the decision. they've done deals in spain, i think before the decision, as well. so there are other networks in the world. but i think the rio decision by the ioc is a good one. it takes the games obviously from beijing to latin america

and it's the first time any latin america country has had the games. and i guess the issue in the longer run will be when will africa get a game? clearly it's an interesting decision from that point of view. and i think captures the spirit of the moment. it may not be something that goes down well in chicago for understandable reasons. >> right. >> but the u.s. will have another go again, i'm sure, in the near future. >> let's talk about what's happening in the overall ad economy right now. you had said recently that you were too optimistic looking at the first half. where do you see things right now? >> right. well, i said we were too optimistic, becky, looking at the year. forecasting revenues minus two for the year, minus four for the first half and turned out at minus eight. certainly july and august were less worse. i look at some of the comments from politicians and some business leaders about things turning around. we have not seen it. we may be a lagging indicator. i can say that july and august were less worse than certainly

may and june. although not as good as april. these are still negative figures. and really the economy should be better given the $12 trillion or so that governments have poured into resuscitating the economy and preventing another great depression. the rest of the year yet to see, i haven't seen the september numbers. the last third of the year, september, october, november, and december are the crucial months for us as we look forward to next year. we will be cycling easier comparatives in a sense, the numbers that we see have to get better because we cycle easier comparisons. so i think it's steady as you go. and i know you've been playing alphabet soup this morning and let me play some more. the best description i heard was from the treasury correspondent so called from there said it was a question of luv. l for westerner, u from the united states, and v for asia.

certainly latin america, brazil is one of the only economies in the first half of this year that grew. along with poland and russia and interestingly argentina. those were the only four of the top 20 where we saw significant growth. those economies certainly will have, i think, a v-shaped or a more v-shaped recovery. >> although you've also said, sir martin, no matter how things turn out, this is different than the past. the broadcast television that newspapers that magazines are very likely never going be the same again. what makes you think that? >> that's right. i think there are three things that we see are absolutely critical. one relates in a way to the rio decision. the first is that the bricks in the next 11, 25% of our business have to be a third of our business in very short order and that's where we see growth. i got off the plane two or three weaks ago, economists are

arguing, china's growing at 7% to 8%, goldman talking of them growing at 12%. becoming even more important. the second thing is digital, which i'm hearing copenhagen made a presentation to the isc this morning, the digital's 25% of our business, similarly has to be a third of our business. the new media are becoming more and more prominent, pc, online, mobile, video content. and last but not least, given this recession and given the fact as you say that it's different, certainly different to 2001 to the internet bust to '97 the asian and russian crisis maybe we have to go back to '91 too and even i'm not old enough to remember the great depression in '29. maybe we'll have to go back that far. but given the changes in consumption by consumers and corporates, consumer insight, corporate insight is critically important. so it's about new markets, about new media, and it's about consumer insight.

and those three strategic issues are going to become even more important. >> sir martin, it's great to talk to you. and we hope to see you back here in studio very soon. >> i'll be back in the u.s. very quickly. >> thank you, sir martin. anyway, coming up, water cooler talk. "squawk" style, our water cooler talk on friday i was in the blo blo blogisphere. >> i did see that. >> something i said. >> what did you say? >> i'm not sure. but we have a logo, becky. have you seen the logo? >> yeah. we'll head over to the chairs and sound off on the stories catching our attention this morning. i'll present something on an equal time basis after germany. we lost greece. so anyway, grab a cup of coffee and join us when we return. another day, another super sized star studded show. tomorrow, oil man t. boone pickens, wall street legend

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business channel we've been watching with some interest how well michael moore's movie does, $4.5 million. nowhere near first place, but only on 900 screens but pretty well. he does an interview in which he says he's tired of people just going to the movies and not entering the debate. he said i went through eight years of fighting the most disastrous presidencies this country has ever seen. you know what, folks, i'm not doing this alone anymore. if you're going to sit on the bench and wait for my next movie to come out and watch all -- obama fight all these crazy, he says if this fails he's working on fiction streets. >> he thinks he's carrying the world on his shoulder? >> yeah. >> i did read first the least

favorite interview he's done was the one he did on cnbc. >> we already talked about that? >> you did. >> he said this place reeked of money. he also mentioned we have this really little astroturf putting green in the lobby. mickelson has been out here and he made a point of talking about the putting green taking up space that could be used for an all you can eat buffet line. why waste a space when you can have a baskin robbins. capitalism -- he looks like he's doing okay. didn't he make -- >> $20 million. >> he didn't give the money away. he's gotten pretty fat and happy in a capitalism system. >> wearing a rutgers cap. >> people have been asking me

that. i don't think he's a rutgers graduate. i'm not sure where that came from. >> in germany we made a big deal, greek socialists in a landslide. greek socialists in a landslide. it's one of those countries where it's one of those parties you don't win a majority and you're swept into a landslide with 43% of the vote. they are sweeping into a recession later than other european countries. the last guy in four five years, they are still called democrat, center right, new democratic party, was trying to liberalize a lot of the economy and it's a tough time to tell people that there's doing to be less government help as you're going into the deepest recession the planet has been in in a while. these guys were thrown out on their ear.

i'll trade you one for germany. >> largest economy, that's a good deal. >> they point out in the ft the trend in europe has been during this period to go right, much further right. >> france. >> once again france going -- the right in france isn't going to be left of center in a lot of places. >> i want to talk about a story in the "new york times," galapagos islands, darwin formed his evolution there looking at the islands. apparently the islands are in trouble because of the huge tourism industry. people have been coming from the island, from the americas -- america, all over the place and coming, just their presence being there at this point is starting to actually threaten what's happened from everything

to the sharks -- >> you pick this story. >> no. i knew i would get your reaction. >> the blue feet. the birds with the blue feet. turns out setting up a real battle the ecuadorian people who have come there to help the tourism industry is being kicked out. the g is choosing the animals over the people. they are choosing all of the animals -- a turtle is worth more than a person. >> then they cut the erin andrews tape. >> they did. >> they did? >> they did that while i was away. >> they cut the -- >> ecuador. when we come back in a new york time minute, the state of real estate right now isn't really as bads the gloom and doomers suggest. we'll talk to two of the industries best and brightest bill rudin and steve roth.

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or click today. the markets, real estate and politics, trust chairman steve roth is one of new york's richest and most powerful men in real estate. bill rudin in an exclusive interview, we'll get their perspective of real estate now. >> playing the bull market. a five-star fund manager with a proven track record tells you what you should be adding to your portfolio. we've got all-star stock picks straight ahead. >> not letting inflation deflate your profits. we get tips on playing the bond market object the industry's

treasury strategist as the second hour of "squawk" begins right now. good morning, everybody. welcome back to "squawk box" right here on cnbc. i'm becky quick along with joe kernen and carl quintanilla. we have a five-star fund manager as our special guest. first carl has a look at this morning's headlines. >> thanks, beck. good morning, everyone. federal reserve chairman alan greenspan saying the jobless rate will probably hit 10% in the next months. >> the silver lining, at some point we'll start to see an improvement in unemployment. but remember, unless there is a monthly increase of more than 100,000 a month, you've still

got the unemployment rate at 10 plus. >> stimulus package not called for because half the first package isn't clear. emergency ceo this week in case ken lewis leaves early. he announced his retirement. the b of a board is under pressure to pick a replacement sooner rather than later, likely by the end of the month. urging the government to sell its stake to boost investor confidence at citi. he says it should be done in a way that doesn't hurt stock prices. futures looking pretty good. going to open to the upside after a decent day in asia. oil down below $70 a barrel at

69.23. ten-year, 3.2, up from 3.1 last week. dollar mixed down against the euro and pound and up against the yen at 89.94. gold holding in, $1,005, up from last week. >> head of one of the oldest and richest real estate groups in new york, joining us now on cnbc sklufr bill rudin, president of rudin management and chairman. non-profit organization, association for a better new york. another giant of the industry, steve roth. you guys probably know a lot better than we do what we're looking at here in the overall economy. we were talking off camera about whether we're seeing signs of life. you asked me. and i told you the people that i'm talking to that own a lot of companies, they are worried. they are saying they are not seeing a lot of activity. is that what you guys are --

>> there's no doubt this is a slow motion recovery. it's going to take longer than almost anybody is predicting, i think. >> and similar? >> in terms of commercial real estate in new york, you and i were talking before, we're seeing activities. that's a positive sign now as opposed to six months ago when there was no commercial leasing in the third quarter of '09 there were 12 major leases signed over 100,000 feet in new york city. >> these are tenants, not vultures coming in and buying the mortgages. these are happening. >> cv star, hank greenberg's company, molesque, an international investment bank, the gap, they are signing leases. >> what's happening after a vicious, very sharp downdraft, we are now in the process of seeking a bottom. that bottoming process can probably go on for two years,

maybe even longer. >> what does make mean -- >> three to five. >> what does that mean to get the customers back in? you have customers coming in but what prices are they paying? >> a dramatic decrease in prices. the world didn't come to an end. the stock market started recovering. people felt more confident about their own misses. and we as owners dropped our prices significantly, maybe 30%, 40%. so we started seeing activity. we've got a space, a lock of space in our premier building at park avenue, 300,000 feet. we have maybe a million feet of perspective tenants looking now. we're not going to make all those deals but they are out there looking somewhere bottom fishing, somewhere at the market, which we think is the market today. so we're optimistic there are things moving in the right direction. how long does that take is the

question. >> the commercial real estate has repriced. rents have gone down 40%. that's a decent number. >> i think so. >> but the psychology in the market is all changed. the brokers and tenants now feel that we're in a bottom. we're in a bottoming process and this the time to upgrade space and take long-term " - >> ten-year, 20-year commitment. >> what we want a tenant to do is renew for two years, so we can play the market as it goes up. tenants are saying, no, no, no. we want long-term now. that historically is what happens in a bottom. tenants want long-term, the psychology of the market has changed. brokers are saying let's rush to sign up deals. this is the bottoming process. we're in the beginning of it now, the heart of it now. >> you're also seeing some

expansion, some signs of expansion. we did a lease with a major law firm. they took an extra floor. some of these deals we talked about, some of them have growth factor in them. some are renewals. flight to quality. going to orthopedics that have equity to put back into the space to fund the commissions, to find the t.i. work. so you're seeing people taking advantage and moving from third avenue to park avenue, from other parts of the city to 6th avenue. so there's a lot of that going on. >> we took a look at this from a historical perspective. in the last cycle, which was in the '90s, the cycle lasted 18 years from peak to peak. not peak to trough but peak to peak. so 1988 was the top of the last cycle. 2006 is the top of this cycle, so that's 18 years. the way it worked was then, a vicious downdraft, from '88 to

'91. in '91 kempco went public. in '93 a flood of public offerings. '88 to '93, that's three to five years. that's exactly what has happened in this cycle so far. 2006 was the top. we're now 2009, there's been a flood of what they call reequitizing in the public markets. so we're exactly on track with the historic '90s cycle. interesting. >> how long before it got what you would call better again? >> the downdraft takes two or three years. public markets re-equityize. debt marks come back, roaring back. we just did $450 million ten days ago in a 30-year deal. that's a sign of really constructive debt markets. so the downdraft is say three

years. then the base building is another three, five, six years. the base building period is the time when -- the best time to do acquisitions. the time to buy economically and load up on capital, be prepared for buying, which is what we're doing now. >> done several things, raised secondary, done financing and now trying to raise private money. you talk about the talf financing you're working on and private equity raise, what you're going to do with that money. >> let's do talf first. we were all very enthusiastic when the government decided to open talf up to commercial real estate. they did that when? >> in march. >> okay. so in march. so that's eight, nine, months ago. now, we have a financing that is in the talf queue.

talf is -- it was very constructive when the government went from three years to five years in terms of talf. you have to remember from the government's point of view what they are trying to do is not make long-term finance into the private real estate market. that's not their job, they are trying to bridge this ill liquid period. we thought it was generous when they went from three to five. wouldn't you say? >> it was a big help. also extending the period until next year to get the deals done. i think we'll have to have that discussion again to extend it. >> from the point of reality, the government will keep extending until the markets get constructive. they have already shown they are trying to be helpful. anyway, what happens is talf is going to finance the aaa portion of a real estate loan. and aaa is defined -- we call it the new aaa, which is based upon

the new repriced lower values aaa. the first thing is that's a fairly low amount of finance by historical standards. by any event we have a package of 50-odd shopping centers all over the country, very diversified, very high-quality assets that we have a financing that comes through in march. so a, we have $2.8 billion in cash on our balance sheet and we will undoubtedly pay that financing off out of cash balance. b, we intend to refinance. to we're in the talf cue. we're working on it. we have already gotten through the rating agencies. have you to determine three rating agencies to determine the aaa. we've gotten the loan all sized up. we are now in the process of working with the feds to document it and get it all done. i will say it's a very slow

process. >> the good news is there was a refinancing done last week by a competitor of both of ours on a building on park avenue. >> i would say they are a colleague of both of ours. >> friendly competitors. >> we compete with so many people. >> friendly competitor. they did a five-year loan, not a talf deal with five or six mostly international banks, which was a positive sign. so we have this liquidity issue which we'll discuss later in terms of the credit markets. we're starting to see some positive signs there, if ddr and another gets their talf deal done -- >> the interesting thing about talf so far, i think it's three or four borrowers in the talf

cue cut out when alternative private market financing solutions came up. it's not impossible that is something the government wants to happen very much as well. >> steven, i saw s&p lowered the outlook on some of your debts. it's weird to me because you have so much cash on your balance sheet. it seems like it would be a good thing in this situation. >> i think s&p is basically wants us use our capital -- our spare cash to pay off some of our debt. but our credit is interestingly enough, our credit default swaps, notwithstanding what s&p might say, credit default are inside almost anybody else in the real estate industry. >> that's what i would think at this time having cash on your balance sheet is a good thing rainfall i agree with you. we have $2.8 billion in cash. i'm not going to get into criticizing s&p on national

television. >> can i ask you personally to come and -- maybe i'll do a workthrough bill. thank you. i'd like to hear a lot more. bill will stay with us steven is leaving. >> thanks. >> nice to see you. >> thanks for coming in. >> got any comments or questions. love to hear from you. our address is squawk@cnbc.com. when we come back, star studied morning, a fund manager that think dell and cisco should be in your pf. we'll ask too far too fast. you're watching "squawk box" on cnbc, first in business worldwide. up next, tips on tips. don't let inflation deflate your portfolio. we make buying bonds sexy. that's next on "squawk box." >> time now for today's aflac trivia question. what is the most popular name

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>> welcome back to "squawk." futures looking good after a decent morning in asia except for the nikkei, doing fairly well after that lousy jobs number friday. we'll see what happens later on today. the government overseeing t.a.r.p. wanted to know if they exaggerated the help needed. the banks were healthier. the t.a.r.p. inspector general argues the government and its bailout lost public credibility when the financial crisis deepened. he'll be our special guest this morning later on at 8:10 a.m. eastern time. >> treasury auction so-called dollars in tips, those are designed to protect investors against inflation. mike joins us. thank you for being here. for people who aren't familiar with tips, treasuries inflation protected. we've seen a lot of money rushing into this, $17 billion

this year up from $10 billion over the same time period last year. so why are people rushing into this right now? >> we're seeing retail fund get a lot of cash from individual investors. we're seeing foreign central banks allocate cash to the tips market for the first time in many years as a structural allocation. really, the reason behind all this is fears about inflation down the road, not over the next one or two years where we see disinflationary trends, really longer term where the impact from the monetary and fiscal policies stimulus could actually take hold and create a significant amount of inflation down the road. so we're seeing cash allocated to the tip sector really as inflation insurance. so the ten-year break even right now, the difference between nominal yields and real yields is 1.7% meaning if realized inflation comes in above, that then you win by being in tips

rather than nominal treasuries. so it's really cheap option as an inflation hedge right now. >> although there are some people who say we can look at the jobs numbers we saw last friday when you realize the government is probably going to have to be involved for quite a bit of time to come and that the fed is going to be looking at very accommodative rates. there are some people who say you should not get into tips, losing out what you should have earned if you were in stocks or junk bonds. >> right now the market is priced for incredibly low inflation, so tips market is priced for deflation over the coming year and very low inflation beyond that, about 50 basis points for the next two or three years beyond the one year of deflation. in other words, the market right now is very cheap. that's when investors should get in, not when inflation starts to pick up and the markets start to price that in.

you should get into the market while the market is still cheap. >> how much would you be telling someone -- how much of their portfolio should be in an average or model portfolio. >> first of all, the answer is not zero. so most investors have about zero inflation protection within their portfolio. so what we're seeing is structural allocation shift from zero to say 5 or 10%. not a huge allocation to the sector but just enough to get some inflation insurance in your portfolio. >> if you're worried about inflation down the road, what are other ways you could try to hedge inflation besides tips. >> one sector with a pretty strong correlation with inflation is commodities, so a broad-based gauge of commodities that give you some inflation protection from a near term perspective. we've done studies that have shown some sectors which many people think offer good inflation hedge, such as stocks over long period of time or gold

just don't provide an inflation hedge. they are used as a variety of hedges, so they don't necessarily protect your portfolio specifically against inflation. so it's really tips relative to other fixed income investments that offer the best correlation with inflation. >> mike, great to talk to you. we appreciate your time. >> thanks. >> coming up, guest host bill rudin on the state of banks and impact on commercial real estate. later, a fund manager betting big on big cap tech, names like hewlett-packard and dell top his stock picks when "squawk" comes back. >> when we return, we get you caught up with today's top business stories. find out what's moving the markets before you make a trade right on "squawk box" on cnbc. we are first in business worldwide. ♪

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welcome back to "squawk box." earnings season is upon us. next week, next monday ernest. we've got alcoa, aa, alcoa, like acne that's a good name to pick

for the yellow pages. alcoa a slow start, then the true flood of earnings when becky and carl will be spearheading earnings central. that will begin monday. earnings for s&p 500 -- can't i rest on my laurels at some point? >> gravitas. >> i can never get off this rat wheel. anyway, there's what's happening. really gets in ernest next week. you're on vacation next week. >> i'll be on assignment part of it and then might take a couple days, yes. >> total earnings swing. >> in addition to earnings, also a very busy week when you look at the economic front, today the institute for supply management. it releases service sector index for september. the fed will provide the latest

consumer credit data, weekly oil inventories. thursday get the nation's retailers. they are going to be reporting monthly same-store sales plus u.s. government releases wholesale trade. bank of england and ecb are announcing rate decisions. finally on friday we get international trade and the labor department's latest employment data coming in in the form of a job openings report and turnover survey. >> lots to think about. drop us a note. our address this morning, squawk@cnbc.com. still to come a five-star fund manager will share his stock picking secrets. we'll be right back. >> as we head to the break, here is a look at the widely held stocks. "squawk box" on cnbc returns after this. we are first in business worldwide. ( inspiring music playing ) someday, cars will be engineered using nanotechnology to convert plants into components. the first-ever hs hybrid.

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welcome back to "squawk box," everyone. we've been watching the markets. in fact, futures are indicating a positive open.

dow futures higher by 46 points above fair value. this comes after a couple of down weeks for the market so we'll see where this leads us. we could know more about the future of bank of america very soon. charlie gasparino reports a permanent replacement for ken lewis is likely to be named within weeks instead of months with lewis retiring at the end of the year. the journal reports an emergency ceo could be named this week in case lewis is forced to leave his post earlier than planned. ford may have another interested buyer for volvo. the "financial times" says they have expressed interest joining china's automotive. led by former ford director and turnaround specialist. automaker mazda raising $1.1 billion by issuing new shares and selling shares it currently holds. they will use most of the money for research and development of new hybrid technology. >> come on over back to the set. we're here with bill rudin of rudin asset management.

spent part of the morning talking about worries of liquidity, some of the refinancings commercial real estate will have to do over the next few years. you do have an idea how to get money ready to go. >> definitely have ideas. i'm on the board of the real estate roundtable, national organization in washington of there's several ideas. one is expanding, black rock and others have committed a couple million dollars which the government matches. according to a report by jpmorgan if all nine pfib players step up you'll have $20 billion of purchasing power. we're recommending real estate new issues, you can buy legacy loans if you include new issues that will help start getting liquidity back in the real estate market. you're talking about trls of dollars over the next seven or eight years of commercial loans

that has been talked about on cnbc a lot. >> that's a good start but nowhere near. >> good start. another good start was the change in rules. i guess people were listening to us because we were talking about that. the treasury issued new rulings that now the borrower can have discussions before you go in default with the lender, servicer of loans on the cnbs loans. that's a positive sign. that will help create some more liquidity in the marketplace and won't start dumping loans back in the market. that's a good sign. >> foreign investment real property act which creates a double taxation for foreign investors. there are literally billions and billions of dollars of money waiting offshore to come and buy real estate in america. if you have some modification, if the government changes the rules and lessens the tax

implications for foreign investors, you will start seeing, i think, a lot of people buying. that relates to what we're doing to talk about with the governor in a little bit, the budget deficit. there's no activity. in new york, for example, mtra transit authority gets a significant amount of revenue from mortgage recording taxes. there has been no transactions at all. you need to start stimulating sales and refinancings to help create some activity. >> but you're talking about taxes going down on foreigners that did invest here. >> right now -- >> this is going to be tough -- you can't sell that now. >> headline will be america for sale. >> right now -- >> if a foreigner buys a stock, okay. they buy a gap or whatever, they don't pay tax in the united states. they only pay tax in their country. so why is real estate treated differently. >> do you think you could talk

this administration into lowering taxes? what are the chances that will happen. >> on foreigners. >> it's making it a level playing field with other investments in the united states. >> initially you would think tax receipts would go down. >> no, you would start creating activity which increases tax. >> wondering if you could get anyone else with you? >> i think there's been discussions in washington, and i think these are -- it's all -- there isn't one magic bullet that's going to change where we are with liquidity. if you do several things, it will help. that's one of the pieces of the puzzle. >> the old chicken egg thing. to leafy taxes you can raise economic activity. you can raise rates but if there's no economic activity you don't collect any. >> right. i was in a meeting the other day with a lot of real estate people in washington. around the room they are saying their foreign investors are looking for opportunities outside the united states because of this loss. so we're just skrks the law was

done in the '80s when everybody thought that the japanese was buying rock center, farmland. it's a different world. we're from a different world today. investment, does it have to go 100%? no. some adjustments will stimulate activity. >> can you ghese things cobbled together in time for the way it will hit us. >> we saw the remmick change happen. we're seeing the talf. the change in the pfib to include new issues. commercials are included, legacy loans. new issues, i don't think it's a heavy lift that could happen quickly. >> some people say time heals everything. when people started talking about it and a very immediate need for it, over time some of

the banks have been written down the loans to the point where they don't want to sell them. other things have improved that make those loans look a lot better. what if people say the answer is give it time and wait and see what happens. what would you say to that? >> i think that's part of the answer. i think you have certain programs modified. the president this weekend in his radio add talked about having his administration creating other job measures. i would look at the thoughts i articulated as in that basket of things they should be looking at. it's not a heavy lift to make some of these modifications. of course it's about the economy and jobs and stimulating growth. you have to do certain things to move it quickly. there are people out there hurting. the report on friday was very, very disturbing. you have to try to take steps

which the government has done. remember, a year ago we thought the world was coming to an end. so we're in a lot better place than we were a year ago. but can we do better? i think the answer is yes. >> let me get your take on new york presidential. there are some who are hopeful because bonuses back to some degree, better than ever in new york, maybe that provides cushion on prices. do you think that's true? >> i think similar to the commercial side there's been a floor reached on the residential side if you speak to some of the sales brokers there was tremendous activity in june, july and august, a record that's usually a slow month. i think prices have stabilized. you have, though, in the outer borou boroughs, a lot of activity done, underwritten, standards. manhattan, park avenue, fifth

avenue, i think the prices have stabilized and there is i think activity coming back. >> i wonder if you think people are in a rush to concludes deal because they are worried about a tax credit expiring or worried about interest rates rising down the road? >> i think people buying on park avenue aren't worried. >> $8,000 means nothing. >> the credit. in the outer boroughs that is an important thing. there's another example to extend that credit would be very important not just to new york but the entire economy. i think that will be positive. >> do you think we need a second stimulus package, the way we crafted it earlier in the year? >> i think secretary geithner talked over the weekend at the imf about learning from past mistakes of not applying brakes too soon. i would think that's a way to go. i'm not an economist. i'm not sure if another stimulus is needed, but i think have you to look at different programs and different ideas that could

help stimulate the economy. >> certainly not in favor of exits any time soon. >> i think the economy is not there yet. we have to keep interest rates low and liquidity. liquidity, not just for real estate but the small, medium-sized companies, another three banks went out of business on friday. so we're seeing this is a main street issue. the federal government is subsidizing these acquisitions and trying to turn around and sell them to other banks. we have to stop the bleeding to some degree, because the small owner can't get a loan in these small towns. >> bill is going to be with us for the rest of the program. when we come back, a special five star fund week, with a look at how you can profit from big name technology. we've got the fund manager joining us with his investment ideas right after this.

this is "squawk box" on cnbc, first in business worldwide. >> another day, another super sized star-studded show. tomorrow, oilman tboone pickens, black rock's money team unveiling its investment strategy only on "squawk box." newsmakers and news breakers, where business turns first. um bill-- why is dick butkus here? i hired him to speak. a lot of fortune 500 companies use him.

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futures looking pretty good after the down week last week, dow down seven out of eight sessions which we really haven't done since late february, early march. we'll see how we open later today. goldman sachs is going to receive dollars if they file bankruptcy, results from a restructure finance package goldman gave to the struggling lender in june. goldman would be likely to agree to postpone payment on part of that amount. >> actionable investment plays from money managers with top ratings. bernard manages needham aggressive growth fund. so far this year the fund is up 24%. let's get some three actionable

ideas in technology, which i guess we've all heard the story. they don't have a lot of debt and they are international. is that why you like them so much at this point? >> that's part of the reason but also there's a big fight between cisco, ibm to upgrade offerings but storage and educations and networkings. we hope there will be more takeover activity such as we've seen recently. personally like companies that actuate, can be taken over. >> i guess that's part of being aggressive. cisco just made a fairly large acquisition but they have made hundreds and hundreds. so give us the names and symbols. i think we're prepared to actually show some. positions you like right now. >> well, actuate, actu. >> okay. >> pmct.

>> those are the ones you're talking about in terms of acquisitions for software, right? >> correct. >> all right. what about consumer discretionary names? >> well, there's been a lot for consolidation. the weaker bankrupt, stronger, so i like the category leaders because i think they basically have much reduced competition. i am not hoping the consumer comes back strong any time soon. just a lot of operating leverage in this company. i like particularly dick's sporting goods. i like car max and i like also whole foods. >> really, kmx and dks and whole foods. we saw target and walmart. are those on your list, too, bernard. >> too big for my folder. they are doing great. there's no question about it. i think they are really leading

the charge towards integrating, insourcing, manufacturer of goods, a margin going forward. >> do you take any tops down analysis at all? would you say this the time to buy some of the names that you're talking about, or would you wait for the pullback that everyone is predicting? >> no. i think we're in the middle of the fair way. looking back at march, there were tremendous bargains to be gained. delivers an operation. i take it out of the picture as if it had not occurred. i know it's very difficult to do but it was really an aberration. people didn't trust any growth in china, our government and so forth so we're close to the far end. now i think we have a different, more reasonable environment, which still low interest rates.

myself i kind of look back to september 7 as a guiding light. i'm looking at stocks, basically 25% below the level we were then. i think the companies on the market are much stronger in terms of earnings power and interest rates are lower. so i think it's fair to be down 25 from september 7. >> you're a bottom's up guy. a common sense look at macro, middle of the fair way, maybe marked with an aberration and maybe still below. thank you, bernard. i appreciate it. you know, you put money to work. you've got your money where your mouth is every day. we appreciate your time. >> thank you very much. >> you're welcome. >> still to come on "squawk" this morning, special inspector general, watchdog appointed to scrutinize the $700 billion bailout spent. he will be our special guest. the man who prediktd the recession, in your yell roubini, why he thinks stocks have risen

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all right. let's look at stocks to watch. no yoko today. that's a positive. >> did you see her on the "the view"? i thought about you. >> i did see an snl rendition of joy behar and whoopi, both played by men. it was deep but hilarious, about the roman polanski case. hp or cal might be, brock aid's market cap $3.2 billion. citi investors, the prince -- do you want to do it, becky? ♪ >> no harm intended, from aladdin. ♪ >> a different guy. that was fast for john in odd yochlt we didn't plan that.

urge u.s. government to sell a stake in citi this year according to emerging markets. we have a call in to him. >> he's probably watching now. >> and he might not call. >> or he might. >> we're waiting to hear from you. the prince hasn't been on in a while. it's an overhang, people don't want to go into a bank where the government holds a 34% stake. >> we have stories that when he's on the road he checks ahead of time to make sure he'll be able to get -- >> he does, in whatever boeing beautiful modified jet he flies around, he has flat screen with cnbc. >> he's a huge investor. >> the harold ford ad. you have to do it. >> i'm your monkey. >> all right. fifth third removed from buy list, shares remain buy rated

with $11 target. hoould hewlett-packard, target raised 56 to 52, remains overweight rated. caterpillar, morgan stanley comments on caterpillar. the company raised target remains cautious believes a sharp rebound based on aging fleets is more likely in 2011 and 2012 not in 2010. finally general dynamics was upgraded to overweight from equal weight at morgan stanley. the target price increased all the way to 80. the old target was 52. the firm also upgrades sector rating to in line from caution. >> all right. let's take another quick look at the futures because again after two weeks of trading lower the futures this morning are indicating a sharper open. in fact last check was up by 45 points above fair value for dow futures. again, this is a busy week. earnings kicking off wednesday after the bell with alcoa.

the very first of the dow components to report. talking about dow futures up 36 points above fair value. when we return, a look at top business headlines. coming up at 8:58 eastern, the man who called the recession nouriel rab any here with latest predictions. >> still ahead on "squawk box," political power players, new york governor david paterson and t.a.r.p. inspector neil brarofsy will be our guest. only on "squawk box" on cnbc, first in business worldwide. lea. say you want to backtest an entire portfolio of stocks. market experts show you how through fidelity's extensive trading knowledge center. and fidelity gives you free research

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more than just money moving across markets. it's about exchanging ideas across cultures, opening up to the world- continuing to innovate. you need to have a nimble organization that can innovate rapidly and constantly is willing to learn. speed has become so important. every aspect of business has to be able to demonstrate flexibility and agility. collaboration is the name of the game. we have at least half a dozen relationships giving us new products, new opportunities and wonderful new therapies. a great place to be is at the intersection of content and technology because from the creative side-- the possibilities are endless and the ways you can reach people

are extraordinarily exciting. our partnership has a long history. the new york stock exchange is where people look for companies held in high esteem around the world. nyse euronext powering the exchanging world we're in a new york state of mind. >> we're seeing activity. >> the man in charge of guiding the new york state through economic chaos will tell us about that challenge and his bid

for office. one year after the financial crisis we learn new details about the government bailout plan. t.a.r.p. inspector general neil barofsky will tell us what's inside this new report. too far too fast. >> no worries. >> nouriel roubini making new predictions about stocks and commodities. let's just say he's waking up the bears. >> bears are back. >> they looked a lot smaller from up there. >> "squawk box" begins right now. ♪ welcome back to "squawk box" on cnbc, first in business worldwide. i'm joe kernen with becky quick and carl quintanilla.

our guest is bill rudin, chairman of rudin management. he'll be with us the next hour. got a lot out of him already. we do see upward momentum of 50 points from last week, down a week before. that was after seven or eight weeks where we traded higher. obviously everybody waiting for that pullback that hasn't been involved, watching the world go buy. we'll see whether the 4 pours pullback turns into 5, 10, 15, whatever they are looking for. let's get to becky, who is not here. there you are this is a much better place for her. go ahead. >> listen up, everybody. bank of america is accelerating its search for a new ceo. charlie gasparino reports a permanent replacement will be named in weeks rather than

months. lewis is said to retire at the end of the school. saudi investors prince talal is urging the government to sell its stake in the bank as soon as it can to boost investor confidence. the saudi billionaire cautions the withdrawal should not be done in a way that hurts u.s. banking stocks. government watchdog overseeing t.a.r.p. is calling into question whether u.s. officials exaggerated the health of banks receiving bailouts last year. a new report says senior officials deliberately created the impression the banks receiving aid were healthier than was the case. t.a.r.p. inspector general neil wall street creating tough times for new york state, new york's governor in the throes of the ballooning deficit. dazed paterson join us on set

with bill rudin. governor, good to see you. >> good morning. >> so much has happened since the last time you were on with this. we want to talk about the economy, revenues and taxes. let's cut to the chase on politics. are you as committed to running today as you said you have been? >> i've been committed to running all along. i think a number of governors have the same problems i have. we have to balance budgets. i've had reduce $30 billion of deficit in my first 18 months of office, which is unprecedented. our deficit for the year 2009, 2010 accelerated at a rate no state in the country in america's history has had to address. we balanced two bunlgs during a recession. we continued to make all payments due on the state. we did all of this at the same time while trying to protect people who are below the line so. i think that when that story

gets told, as opposed to the other stories that get told, that i might have an opportunity to get back into this race and i think i will. >> and make your case. how are you balancing that political story that made you a national name in ways you probably didn't expect and also trying to manage the business. >> it was disappointing to me because i was just having the leaders of the legislature in to tell them we have a $3 billion budget deficit that has bulged in the middle of the year after we passed our budget in april. and because of that, we don't have the options that we've had in the past. different types of ways of relieving deficits, depleted resources, we don't have those options available us. what we want to do is bring legislature back as soon as possible and make the tough decisions because we can get past this next year. new york has a very, very good chance to move away from this recession and back into small

levels of prosperity. it's going to be very difficult and i know that different people have been on talking about this, an upturn in the economy. there was an upturn in the economy from 1933 and 1937 but we still called it depression because we had skyrocketing unemployment. new york city has 10.3% unemployment but it's almost a statistical anomaly if you count the people who aren't working against the people who are, it's 17% unemployment. our big priority right now is to create jobs. and we have more students that are imported into new york to go to school than any other state in the country. so we want to use that opportunity, our colleges and universities, to create an innovation economy focusing on information technology, clean, renewable energy sources, medical and scientific research and advanced technology. we just received $605 million

from the federal government we're using for these studies and we just received 54% of all the money the federal government has given out in advanced battery technology because we have what we call innovation economy matching grant fund if the federal government gives us money we add 10% on it. this program isn't in other states -- >> don't give away your secrets. is there another state that's done this the way you want to do it? >> i think california is a state that is really recognized in the power of universities and also massachusetts. but new york has always had the same i would say projection to realize that and turn it into economic development. but we're really making it a priority right now. >> governor, you had a ground breaking up in saratoga county with amd building a 4.2 billion semiconductor facility.

do you want to talk about that and other initiatives you've been able to accomplish over the last several months? >> we had amd, which is the biggest imported investment in a project that's ever occurred in this country. it's over $4 billion. in addition to that we brought yahoo! into western new york. we've expanded geico, saved 2,000 jobs and added another 500 by keeping cannon on long island. i'm going to meet with a company today that somebody is making a better offer but we're going to make them an offer they hope fully won't refuse. and the whole idea right now is that people were leaving new york state because the jobs were being relocated and quality of life was better in other states. now that the whole country is in recession, we're taking advantage of new york's workforce and this whole innovation economy that everyone is talking about because new york state lost a number of jobs

in the manufacturing industry upstate and also lost jobs from financial services down state. the reason we are ground zero for the economic recession is because 21% of our resources come from wall street taxes. when that went off the cliff, our budget deficit quadrupled last year. what we're recognizing now is what everybody recognizes in their own portfolio. you can't overinvest in one area, because if it fails you'll have a debacle. that's years of not diversifying. we think the way is to dwerifies our workforce, so we're not totally dependent on wall street. >> government you were facing deficits. i remember how steadfast you were in not using higher taxes to close the gap because you realize people can relocate to other lower tax states. i remember thinking, wow, you seem a little bit right of center on some of this stuff.

do you think -- is it purely your poll numbers that have the obama administration picking their guy cuomo or are you too far right. >> it's not right of center, it's just right. when you're trying to balance the deficit it's no longer ideological. i didn't think raising taxes was the best way to address a recession. when your budget deficit goes from $5 billion to $21 billion in eight months, when it's going up $83 million a day, you throw everything at the crisis. so my mind didn't change, my reality changed, even when i wen on television and told this country this would be the worst recession since the great depression, which i got ridiculed for, even then i thought there was going to be a $9 billion budget deficit, which at that point i thought how am i ever going to address that. it turned out to be $21 billion. so i'm not going to explain to

you what anybody else's fears and anxieties are, but i will tell you this. right now when everyone says they are coming out of this, what they don't understand is state governments are very depleted at this point. if we don't make the tough decisions, if we don't go in and cut the fat off these budgets in the midst of this crisis, this problem won't be over. but the opportunity is in our hands. i think the biggest mistake we're all making about the recessiones we deal with it almost like astrology, like you read about it in the newspaper. the point is we can manifest our own destiny if we find creative and innovative ways to recalibrate our workforce so we have different industries and we're not depending on the financial ones. >> where does tax revenue stand right now if you're looking at the receipts you're getting from wall street. >> they are down 36% over the last year. and this is what is so

frustrating. they were down 36% last year but we add add personal income tax which we thought the falloff would be 10 to 15%. it's still 36% meaning our revenues fell more than in 2009 than they did in 2008. >> we've had some people on -- despite all this pressure for you to quit the race, governor rendell says in the end it's paterson's decision. >> no, actually in the end, it's the people of new york's decision. the same poll that showed i was down said the people want to make that choice and i'm going to see they get to make it. when all these phantom people who say they are running for governor, they are going to have to answer the same questions i've been answering for 18 months. and by the way, if they wanted to show they were different and exciting and they were going to make albany a different place, why don't they answer those questions now. >> you're talking about mayor giuliani. >> i'm not talking about anybody in particular. >> cuomo. >> i hear about all these people running for office, if you had any courage, you want to be a

leader in the crisis, get up and say what you would do now. >> if your poll ratings go back up and you stay in, are you going to be able to work with the obama administration? are you going to let bygones be bygones, is there too much water under the brenlg? >> this isn't personal. they are concerned about democratic races all around the country. they have made that very clear. i don't see it as a personal issue. i see it as what has become an overall politicized process. the republican party has demonstrated in washington it does not want twork with the administration and i don't think they think it's personal either. they think it's good politics. the problem is we are so consumed with politics -- by the way this election everyone is talking about, it's 13 months away. how about the economic problems that are ten weeks away if we don't reduce our deficit. >> a ceo that had a unit where sales were lagging might not want to have the same person running that unit. i'm wondering, if you do lose, if the democrats lose new york, that is bad for the party, isn't

it? >> i think it would be bad for the party, but i don't think i'm hurting my party. i think i'm standing up for what my party's priorities are. i'm standing up for new york. that's what i thought a democrat would be about. some of the people asked me to get out of the race helped republicans when i was minority leader of the state senate and trying to win the majority. as they say in equityf you're looking to get fairness, come to the table with clean hands. i don't need a lecture from anyone about being a good democrat, i've been a democrat all my life. >> that moment about olympics off the record? >> no, i just heard about the olympics. that's off the record. same way my conversation with the white house is. >> all right. all right. >> appreciate your time. we hope you'll come back soon. >> thank you very much. >> governor of new york, david paterson. >> all right. up next, one year after bailing out the u.s. banking system, neil barofsky, special inspector general for the t.a.r.p. program on the new report headed to capitol hill, looks like

taxpayers won't get all that tax back. he talks to us after this. too much too soon too fast, famed economics professor nouriel roubini talking about the markets and giving the world new predictions about the recovery. he's talking to "squawk box" 8:50 eastern time less than 40 minutes away. "squawk box" will be right back. (announcer) when you need it fast.

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call or click today. check out shares of wells fargo. that's a nice percentage move for the shares. goldman sachs upgrading the stock to buy from neutral. the target increased from 35 to 31. goldman also raising its rating on the u.s. large cap bank sector now to attractive from neutral. kind of an interesting call from goldman which probably has more juice now than ever before in terms of when it makes a call. >> they got friday morning, right? they listed their non-farm payroll number to minus 250. cain almost exactly on that. >> yeah. >> the office of the special inspector general for t.a.r.p. releasing an audit to congress

this morning. in fact, joining us from washington, neil barofsky, special inspector general for the t.a.r.p. program. mr. barofsky, thanks for joining us. great to see you again. >> great to be back. >> why don't you tell us a little about this audit a lot of headlines out there at this point, one of which is you don't think this money, the t.a.r.p. money actually helps pull is back from the brink. is that your assessment. >> it's hard to look at t.a.r.p. in isolation. we look at things doing on at that time whether actions by the treasury, federal reserve, fdic. together i think they certainly had an impact in bringing us back from the brink. it's difficult to isolate the t.a.r.p. by itself, when you look at what it did to restore confidence and the government was not going to allow these nine institutions to fail i think it did have an impact. >> you also said maybe some of the comments at the time were probably not 100% accurate. i'm just trying to figure out,

were we on the edge of a massive chasm at that point in your view? >> certainly people who are the decisionmakers at that time, treasury and federal reserve did believe we were at the chasm. that doesn't excuse, as you said, some of the statements that were made that were not forthright or accurate about the health of the institutions. secretary of treasury hank paulson came out and repeatedly emphasized how healthy these institutions were and as a result this infusion of capital would get them lending again and restore lending. and as we've disclosed and describe in our audit, this just wasn't an accurate statement of the treasury, federal reserve has concerns about the health of some of these institutions. they didn't do a test, review. it wasn't a criteria when they made the decision to give this $125 billion throughout the health of these institutions. as we said in our report it raised expectations and hurt treasury's credibility. >> isn't it something that's a

lot easier to look in hindsight and figure out what's happening. i think back to those days and realize the decisions we're making in the course of days people were working for 72 hours on end without sleep. it's easier to look now and say here is where we maybe could have done better, correct? >> absolutely. that's part of why we were created, to look back and see where mistakes made. it's an important lesson to learn. for better or worse, there will be new bailout programs and rescues in the history of our country. it's important to look back and learn from these lessons. one of the key ones we learned from this, transparency, being honest with the american people is important not just for the sake of transparency but the long-term unintended negative consequences that come when we're not honest, not forthcoming. the bottom line is american people saw very shortly thereafter these weren't all healthy institutions. lending didn't increase.

so that hurt the credibility of the program. i think a lot of the unpopularity of the t.a.r.p. and criticisms of treasury can be remedied, make sure we look back and particularly in times of crisis let's make sure when we're making public statements they are accurate and truthful. >> kneel we've seen banks paying back t.a.r.p. money. you think it's inevitable we will wind up as taxpayers losing some of this money. >> this is another area of transparency. i think it's extremely unlikely we'll have a dollar for dollar return. i don't think the program is designed for a dollar for dollar return. $50 billion is not going to be recovered from the mortgage modification program. 20 to $25 billion is extremely unlikely. treasury has acknowledged there's a low likelihood of return on auto bailout. aig and citi are uncertain. despite profits from the capital purchase program from some of the resells, we have t.i.c.

going into bankruptcy. prochlts profits could be wiped out. we have to be up front. this is not a program designed to return dollar for dollar and i think it's extremely unlikely we'll see equivalent return or profit. >> what's your best guess what percent of money we might get back. >> it's impossible to make a determination now. until we see what this t.a.r.p. rolls out, the whole story isn't told yet on the t.a.r.p. we've got efforts to purchase toxic assets off the books of financial institutions. there's still head room. too early to tell. hope fully as much of a return as possible but i think that story still needs to be written. >> neil, we want to thank you very much for joining us. >> my pleasure. >> hope to see you again soon. >> when we come back, too much too soon too fast, that's

nouriel roubini's latest comment about the market. he's out with new predictions about the recovery. we'll talk to him at 10 till 9:00 eastern. take a look at crude below 70 at 69.23. "squawk box" coming right back. you're watching "squawk box" on cnbc, first in business worldwide. tdd#: 1-800-345-2550 if i'm breathing, i'm thinking about trading. tdd#: 1-800-345-2550 i always have my eye out for a stock on the move. tdd#: 1-800-345-2550 doesn't matter if a company sells computer chips tdd#: 1-800-345-2550 or, i don't know, fish and chips. tdd#: 1-800-345-2550 i'll look at all kinds of stocks before i settle on one. tdd#: 1-800-345-2550 if i think i'm onto something i'll check it out, tdd#: 1-800-345-2550 you know, see what other traders are up to. tdd#: 1-800-345-2550 when everything feels right though, tdd#: 1-800-345-2550 that's when i get serious. tdd#: 1-800-345-2550 and the minute i get into something, tdd#: 1-800-345-2550 i already know when i want to get out. tdd#: 1-800-345-2550 of course, every now and then i'll talk with somebody

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welcome back, everybody. citigroup investor prince talal is urging u.s. government to sell its stake in the bank this year to increase investor confidence. the saudi billionaire urges not to be done in a way that hurts stocks. we just received a call from them. they say they stand by their statement at citi and have nothing new to add past that. when they do they will give usa call. >> when we come back, focus from trading floor, fed. rick santelli and steve liesman will set up the week ahead. nouriel roubini with predictions on the economy after the weekend

with the ims in turkey. "squawk box" right back. you're watching "squawk box" on cnbc, first in business worldwide.

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welcome back to "squawk" on cnbc, first in business worldwide. we're an hour away from the opening bell on wall street. headlines, federal reserve chairman alan greenspan said jobs rate will likely hit 10% over the next months. >> silver lining is at some point we're going to start to see an improvement in employment. but remember that unless there is a monthly increase of more than 100,000 a month, you've still got the unemployment --

>> second economic stimulus called for because less than half the current package in effect and the nature of the recovery is not yet clear. goldman sachs will receive a billion dollars if cit group files bankruptcy. results from a $3 billion finance package goldman gave the struggling lender in june. likely agree to postpone payments, part of that amount. busy week on the economic front. ism services index plus a weekly mortgage -- fed providing latest consumer credit data plus weekly mortgage alp and oil inventories. thursday the nation's retailer reports same-store sales. jobless claims and wholesale trade. friday international trade and labor department survey on job openings and labor turnover. joe, back to you. >> okay, carl. very good. let's check the markets ahead of the opening bell. futures indicating a higher opening up at 22 points, we're

better than that earlier. >> higher. >> you know who that is. >> absolutely. that's rick santelli. steve liesman here joining us as well. find out what's on the radar this morning, rick. what's going on? >> i think in the thick of the markets we're doing to be paying attention to supply. it starts today in the form of tips and progresses every day this week culminating, of course, with the longer maturities on thursday. the 30-year bond. one thing i'm sure viewers are scratching their heads over, many traders have, that is there is very little upside in yield at least at this point due to supply and deficits but there's another force at work, of course, and i think that's a recycling of liquidity from banks, financial institutions into the same supply that we're discussing along with some question marks about some of the data last week and how it may look for the economy moving forward. >> okay. steve liesman, we heard from

governors we've never heard from before, never heard of, i should say, last week. what is the key data points this week. >> if you don't mind, i want to address one of the things we just talked about. the idea of no upside on yield. high frequency economics out with a report this morning seeing an upside in yield mr. santelli. they think the two and a half year note goes up 5%, staige stays that way on slow economic growth, lots of economic lagging, especially slow wage growth. that would be the key, the unemployment rate declining to the point we ever get back to having robust wage growth. that's one of the things i think one of the inflation that came out of the unemployment report friday. everyone focused on 250,000 over. at the end of the day that number was not the scariest number. almost in line if you take out the 50,000 of government job losses. it was right around 216,000 for the sector. the key, rick, was the slow wage

growth, 0.1%. that creates a market or debate about upside. >> when we say upside are you talking about yields going up or price going up. >> i'm talking about price going up. >> we're a bit at odds. your statement agrees with me it's upside in price, downside in yields. there is no upside to higher yields at this point. i agree with that. what i don't agree with ultimately on the back side is that you need the output gaps to shrink whether it's wages or production in general to actually see inflation push higher. i think that will all depend on whether the consumer is awake at any point in the next 24 months. >> more time for our guest host here? what does that do to your sense of refinancing and the kind of things that are needed in the market right now if there is this potential for yields to come down further. >> it's a two-sided coin.

if yields are coming down, it means the economy is intending to be weak. that means job loss continues, so we'd like to see rates come down. as we refinance and as opportunities present themselves, that is positive. if it's indicative of where the economy is, that's concerning. >> let me just give you the math that's out there in the debate right now. they are looking for 2% growth. the trouble is 2% growth is still -- depends on your number but a half a point to a full point below it they think what potential is. now, there's another debate out there, rick, critical for inflation which is what is the potential of the u.s. economy, has this credit crisis brought it down to we're now looking at several years worth of slow growth. the economy is humming, not 2.5, closer to 3%. >> i think slower growth is the key here.

what many are nervous about slow growth persist sz, dynamics change in terms of supply and some of the reasons investors are putting their liquidity into things like treasuries, that may change. so you may have a point where rates are going to move higher before the consumption really takes hold. that is the downside, i think, to the crossroads ahead. >> all right. we'll end it there. got somewhere to go from here. thank you, rick santelli. you used one of rick's, at the end of the day. >> did i say at the end of the day. one of the things you say you don't realize you're saying it. at the end of the day. >> thanks, rick, steve. >> take a look at the markets, keeping an eye on the futures. above fair value. a couple of weeks seeing down trades for the markets. this morning talking about dow futures up by 28 points.

we'll see where this heads today, what we saw last week with the dow and s&p down 1.8%, the worst we've seen for stocks since the beginning of july. again, things are kicking off on a more positive tone at least for the very early hours of this week of trading. coming up, too much too soon. nouriel roubini's prognosis for the markets. find out what so-called dr. doom is predicting now. next the smartest minds in morning business news joining forces to tackle the top stories of the day. "squawk box," "squawk box" on the street, mixing it up from hq to the floor of the new york stock exchange. you're watching "squawk box" on cnbc, first in business worldwide.

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it's hard to look at t.a.r.p. in isolation. actions by the treasury, federal reserve, fdic, together i think they certainly had an impact in bringing us back from the brink. although it's difficult to isolate the t.a.r.p. by itself, when you look at confidence to send united states was not going to allow big sflugs toss fail it did have an impact. >> that was inspector general for t.a.r.p. neil barofsky speaking to us on the latest bailout plan. bank of america is likely to puck a replacement for ceo ken lewis sooner rather than later.

charlie gasparino is reporting they will be under pressure to pick one later this month. we are joining forces with the "squawk on the street" game. from the new york stock exchange, melissa lee and david faber on set with us. guys this gives us time to go around the horn and talk about this stuff. mark and melissa, you haven't heard what we've been talking about the in the commercial break ahead of this. david, there's been a little debate whether we'd go into this on camera. i don't have a problem talking about it on camera. >> i'd like to hear mark's comments on comcast ge. >> if i knew what you were talking about. >> comcast ge with universal. >> we talked about this friday morning. i think it is an interesting point. i was somewhat surprised to see it not given a bit more press over the weekend. regardless whether the comcast ge deal that we've described a number of times now actually occurs. again, on friday i reported

there are hopes they can complete a deal within the next two to three weeks. regardless from what i'm picking up from any number of sources close to ge, close to this deal, ge has made a decision that it is happy to allow control of nbc to pass to another entity. >> which means eventually -- >> i think regardless whether this deal occurs, perhaps go ipo vivendi, if that is registered and sold, based on what i've been hearing we can expect nbc universal will not be a part of ge over the long-term. >> even if this doesn't work out. is it 50-50? is that what you're hearing at this point? a lot of things to hash out? >> you get different views from different sides but i would put the odds higher based on having had conversations with people all over the negotiations.

>> david. >> yeah. >> let's cut right to the chase. the most important question to be answered here is what affect will this have on our stock options? do we wind up with something that has any value, because now we don't. >> how would that be different. >> that's mot going to change. that's going to be zero for a long time. >> i thought you were going to say does "squawk on the street" move to 9:30, programming changes. >> no, we like it. 9:00 is perfect. you guys get up in the middle of the night. we don't. >> you got that right. >> we were also talking about what changed and whether anything did change in the last year, david, on the notion that we went -- nbc went from being a valued asset that people liked the business mix, talked about the business mix, also the notion that it would just increase the percentage of profits that come from financial

services or from ge capital, which was something they were loathe to do, david. something changed in the last year. we talked about what it could have been. it could have been financial crisis highlighted maybe the need for more capital. >> $9 billion in cash. >> nbc used to be worth some said $50 billion, now 30 to 35. what is it in five years. >> you've got to invest in business over the next five years. >> do you want to invest there instead of energy. >> the network business is a difficult business to say the least. the studio has good years, bad years. it's no longer considered -- >> general take from the media over the weekend, ge shareholders would be getting a good deal. comcast depends on how they play it. >> so is cnbc, the baby, getting thrown out in the bath water here? i thought we were still doing pretty well. >> cable companies are the gems of the company. if you could figure out a way to peel them out and sell them

separately you could probably create more value. >> mark, did you switch from comcast toi fios or cablevision >> cablevision. >> i've got six tvs hooked up to comcast. >> huge revenue generator. >> what's that sucking noise i hear, joe? >> all right. melissa, what do you guys have coming up on the show today? >> friday session was interesting, snapz, go to the charts, technical analyst to see where the s&p is headed next. also got our five star fund series rolling out this week. today we're focusing on small caps. and later on in the show i think i will be taking a ride on an electric motorcycle. >> i want to watch that. >> and forget jon and kate, we've got john and john, john

from the "wall street journal" and hand some john harwood from washington. look at that, patricia edwards with us. lots of stuff. can't wait to get to it. >> all right, guys. we'll see you in a few minutes. >> nfc, i want to start right now. why don't you guys leave. >> let us know how that is, melissa. we'll see you in 15 minutes. in the meantime when we come back, he's waking up bears telling bulls they went too far. professor nouriel roubini brings latest predictions for the market and recovery. v-shaped or u-shaped. "squawk box" continues in two minutes' time. people are on spr 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.

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all right. coming up next, some predictions from nouriel roubini. find out which letter he's describing the current economy as, if you can guess. >> it's a no. >> find out what he's saying the market and commodities are heading. first check out gold prices. right around staying at 1,000, went down beneath, came right back up. "squawk box" will also be right back up. >> another day, another supersized, star-studded show. tomorrow, oil man t. boone

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welcome back. if you're watching the futures today you're going to see the

dow futures higher by 32 points above fair value right now. again, we've had two weak down weeks for the market. last week the dow was down, the worst week we've seen since the beginning of july. this morning things are starting off on a stronger note. we're joined now by an esteemed guest that has been a friend of "squawk" for a while. nouriel roubini is with the nyu school of business. nouriel, last time you were on we were going to call you dr. doom. you said don't call me dr. doom. i mom not a perma bear. you seem like you got a little bit less negative. after we read what you are doing now, can we call you dr. doom again? >> aim dr. realist. it's clear that the global recession the worst in the last 60 years is coming to and. now the main question is the shape of the recovery. the market and the consensus believe is going to be a v-shaped recovery. we're going to turn to potential

growth, in my view, is going to be more like a u-shaped recovery, below trend. that's also the view of the folks like mohammed, team co, the view of the imf. it's going to be dynamic. first, the labor market is still awful in the u.s. and advanced economies. that's going to be a drag on income and consumption. two, the u.s. consumer is shopped out, saving less. to save more, consume less, therefore reconsumption, 70% of gdp. growth is going to be dynamic. three, innovation is 69%. why would firm want to do lots of that when there's a capacity. in most v-shaped recovery, it's v-shaped not the other way around. banks and shadow banks. credit growth is going to be lenient and we're not going to be able to finance residential advancen't, consumer durable. five, the consumer is going to be dragged and the fiscal stimulus continues, emventually

they're going to lead. finally, globally, the u.s. is spending less all china, agermay and japan is not compensating for the falling u.s. demand. so globally, there is a glass of capacity and demand is going to be weaker. >> that's all you've got? that's it? seems like a pretty thin argument. i'm kidding! nouriel, that sounds like an "l," not an "u." >> no, it's not an "l." emerging market does not have the same kind of advancing vulnerability. those emerging market economies can grow at rebust rates but even their growth rate is going to be limited beity fact there is not the recovery of the u.s., countries like china, asia,

emerging markets have been using the united states as source of their exports. they are the mother of export growth and to switch demand from net export to domestic private demand. i do believe there's going to be a recovery. i believe there's going to be a double dip recession. there's a lot of vulnerability of a "w." but if the stimulus goes away and private demand doesn't recover, maybe all prices go towards because of this wall of liquidity chasing assets, there could be another double dip. it's not the main scenario. the main scenario is a dynamic recovery. i don't know how people can say this is going to be a rapid recovery to potential growth or above potential growth. i don't see the argument for it. >> dr. roubini, what would you recommend, you and the imf this weekend, what would you rec men to the policymakers to get the recovery to be more v-shaped and avoid the double dip? what would you be talking to secretary geithner and the

president about doing? >> well, i was over the weekend in eastern berlin and met many officials. and in my view there is a difficult demem la on the exit strategy because if on one side you take away the fiscal stimulus too soon you're like japan 2000 or u.s. in 1939, the double dip. taking the stem husband away right now and the recovery is still weak is a mistake. that could be made. on the other side if you maintain the stimulus margin and you run deficits keep on monetizing them, eventually that's going to lead to fiscal policy, including expected inflati inflation. that could again crowd out the recovery and the recovery of private demand. this wall of liquidity right now is chase iing assets. some of it is good news. it leads to higher stock prices. some is danger because it's a sharp increase in oil, energy, food. . >> right. >> that's why the risk i had in terms of policy.

>> secretary geithner mentioned over the weekend that, you know, he would recommend to policy makers not to relive the past and put the brakes on too soon. i think they understand the need to make sure that the -- they do not impose higher interest rates too soon. >> that's correct. but in other parts of the world, things are different. for example, in the euro zone, the acb is hawkish about warning about inflation and asset bubbles that would like to exit soon the i'm worried jer machine, large budget deficits, large deficits, public vet and banks too big to fail and too big to be saved. therefore the policy stimulus might be taken away too soon in places like you'euro zone or ja. >> do you you had factored in morl mo more liquidity in march? >> they're fundamental factors

we avoided because the policy stimulus near depression, therefore the exit prices would be higher. where it's v-shaped or u-shaped recover recovery, there is light at the end of the tunnel. investor moving away from less risky assets, short in treasuries to equities, commodities, emerging market asset classes. my point is while the economy is bottomed out and barely recovering since march, the asset price has gone through the roof. unless there's going to be a v-shaped recovery that the market is expecting, the flow of market news is going to be worse than expected in the next few months. we saw the number. ifm, consumption, durable goods numbers. if it's consistent with you, the market has to correct. if there's going to be a weaker recovery of revenues because of low growth and deflationary

pressure. you can cut the fat and reach the bone and meat. worse than expected top line revenue growth when you have the cost cut, supply on the farm side and the earning side and that could be a source of correction. maybe q-4, maybe q-1. for now, the wall of liquidity is still chasing assets. >> great, nouriel. thank you. we got it. too far too fast for the way the economic backdrop is today. thank you. >> thank you. >> we want to thank our best host, the bill rude den. n . not a lot of time to chat. thank you for coming in. see how the dmeshl real estate heals itself. >> things are looking better. a long way to go. >> make sure you join us tomorrow. "squawk on the street" is coming up next. live from the financial capital of the world, this is "squawk on the street."

good morn, everybody. i'm mark haines. >> good morning. i'm melissa lee in today for erin burnett. we have a lot going on this morning. we've got futures sharply hig r higher. meantime, goldman sachs upgrading walls fargo from attractive to a neutral. goldman adding capital one financial to the conviction buy list to include bank of america and jpmorgan. john harwood reporting this morning the obama administration is considering a new stimulus package. the supreme court new session starts today. on the agenda, many cases that will have a major impact on compensation, the financial markets, and regulation. and swine flu vaccinations start today for health workers in indiana and tennessee. let's hit the markets. we start with roberto