i'm michelle caruso-cabrera. major shift in the oil world. russia knocked saudi arabia off the throne as the world's biggest oil producer. we'll find out what that means for the u.s. and speak with the top analyst who said crude is headed to $175 a barrel. even conde nast, one of the biggest company magazines in the world are getting rid of four magazines, including "gourmet." here's what else is on the menu. i'm steve liesman. how about this for an idea? if you invest in a bank, you could actually lose money? that's the idea quoted by sheila bair. tim geithner at the same meeting says stay the course. i'm hampton pierceson at the supreme court where a business heavy docket greets a new business savvy justice and her high court colleagues on this, the first monday in october. let's get to the market action. latest read on the services part

of the economy giving a boost to stocks today. caterpillar, dupont among the winners. >> three to win advancing to declining stocks. two groups helping, financials, big industry. take a look at financials. those who say who cares about upgrades and downgrade? goldman moved the market. jp norgen, city grooup, bank of america all up as goldman upgraded large banks. the big banks' earning power is going to be greater than the regional banks. they also specifically upgraded wells fargo. those stocks all moving nicely here today. 2%, 3% or 4%. elsewhere a wear dollar. g-7 did not come out with strong support for a strong dollar. kind of in the middle kind of comment. as a result dollar has been weak today. big commodity names like alcoa, u.s. steel, even oil names like apache fall to the plus side

when the dollar is weak. tradertalk.cnbc.com. let me say, if the guys in the studio never heard of epicurious.com, if not, check it out. "wall street journal" saying brocade is for sale. up 17%. barons saying net ap. pool corp. up 2%. buying a privately held pool company in california. pet smart gets an upgrade to buy with a $27 target. follow me on twitter@mhuckman. right now we're looking at oil prices under pressure, i should say, by about $1 lower here. on some fundamental data. it's not the financial markets

that are leading the way today. yes, the s&p 500 is stronger and the dollar is weaker. but oil is still weaker today. that is because there's more focus on some of the fundaments. we're looking at saudis lowering the oil prices for u.s. buyers. looking at russia being the number one oil producer right now. 10 million barrels today, surpassing the saudis. in nigeria, militants accepting the government's amnesty offer. as to that geopolitical tensions with iran. you have oil prices right now at $68.77. down over a dollar. rick santelli, to you in chicago. thank you, sharon. if you look at a chart one month of the dollar index, keep in mind we've had two higher weekly closes. even though it's giving back some today. looks like it may be putting in a base. whether it's temporary or not, we'll have to do the numbers for the days ahead. the next chart, of course, is both a two-day and a year-to-date of ten-year note yields. realize we flirted with 3.10 interday friday.

3.20 not a low rate. maybe very close to the lowest rate in about five months. but we have been lower. just not on a closing basis. we just had a couple of bill auctions. even though the free month bill went for 7.5 basis points, in december it was lower. the six-month which went for 15 basis points today is the lowest yield for this move so far, which begs a couple of questions to be asked. now let's go back to michelle. >> all righty, rick santelli, thank you. president obama's economic advisers are looking at options for a new package of tax cuts. and other job creation plans. cnbc's chief washington correspondent john harwood. say it isn't so. john, tax cuts? >> reporter: i was able to report some news in my "new york times" column this morning, which is that because of what's happened with the employment picture being much worse than the administration expected, they are developing a plan to come up with some tax cut measures that they think may help stimulate jobs. now, here's the reason why

that's necessary in the view of obama advisors. look at the toll of joblessness. right now september unemployment rate 9.8%. mark zandy, the economist respected by both sides, tells me that's going to peak at 10.5%, higher than many people expected at the start of the administration, next june. for a total loss of 9 million jobs since the beginning of the recession. the political effect of that is obvious. if you ask americans what's the top priority for washington, it's job creation. more so than health care. if you ask them how are they going to judge whether obama's economic plan is successful and the economy's turning around, they're looking at the unemployment rate to fall. so the question is, what could you do to make that happen? there was a debate during the stimulus discussion earlier this year about tax credits for new hires. but the -- that idea was dropped because people decided that employers would play games with their payroll. the other question, of course, is how big a package they want to come up with, sue. because anything very large and

impactful is likely to cost a lot of money. they don't have a lot of money right now. >> i have a quick question, john. you said it could be unveiled by the president in his state of union address. that's far down the road. >> reporter: yes. but i talked to one adviser over the weekend, bill, who said the tentative plan is to do it for state of union or that's what we're looking at. but we may find pressure for action coming more quickly. you've got all these democrats who are running for re-election in 2010 who are feeling the heat from their constituents about where are the jobs? which is the republican mantra at this point in this campaign cycle. >> a huge shift in policy and thinking, isn't it, john? to go from spend, spend, spend, to create jobs, to tax cuts? >> reporter: a shift. but i wouldn't say a huge shift. there were some tax cut measures that were in the stimulus package. that is accelerated depreciation, loss carryback for employers, a first-time home buyer credit. some of those may be extended in this package. but the administration is looking for new steps so that

they can tell the american people, we're not resting on what we've done before. here's a new proposal. >> john, thank you very much. to the stock market. and might we be headed for higher stock prices? apparently so. but could that be dangerous? here's what he had to say on "squawk box." >> some of it is good news. it leads to higher stock prices. some of it is dangerous. because it led to a sharp increase in oil, energy, food and commodity prices. there's going to be a negative shock on the commodity importing. >> have stocks gone too far too fast or will tup coming earnings season keep the rally alive? joe b nice to have you here, gentlemen. joe, which is it? do we have much more in this recent run on the back of earnings or not? >> i think given the fact that earnings are on a declining scale in through the fourth quarter and analysts have celebrated the fact that it

wasn't worse than it's been, it seems to me that now they're going to suffer on the other side of it. that to say that ternings power is not there. in a very slow growth economy. they'll be cutting their estimates for next year as opposed to increasing them. the stock market right now is relatively fully priced. let's look to the bond market that's telling us yields are falling because there's an expectation that credit is going to remain tight and the economy is going to be in a recessionary bias for some time. >> we're looking at the ten year yield in less than 3.2%. when yields are going down it tells us the economy is getting weaker. are you worried about that? and has the stock market priced in too strong a recovery? >> i think we have priced in a much stronger recovery than what we've had. liquidity pumped in, it ha had to go somewhere. it went into asset prices. unfortunately on the employment side that continues to decline.

when we look at -- the liquidity is still there. we could see stocks go higher. the long-term outlook is pretty dismal. >> joe b., that outlook we're going to see earnings outlook surprised us. were you thinking that in march as well as the bottom and you never changed to bull, or did you go to bullish for a while and then went back to bearish? >> actually, in the course of the year we've increased equity exposure. not to 100%. we're at 50% at the current time, up from 35% in our balanced account. we have added some risk to our portfolio. but the troubling part of all this, of course, is that credit is still contracting. whether it's the supply or even the demand for credit. that's not supportive of an explosive upside bull market. same with employment. we continue to see unemployment growing as opposed to stop declining. the third part of this, of course, is that profits are still falling. we were down 30% in the last quarter. we're expected to be down by 23% this quarter over last year. and then the fourth quarter also segments will be lower still than last year except for financials which will cover a

lot of sins. that's not the basis for an explosive bull market to the upside. >> there hasn't been enough cost cutting in terms of payroll and expenses by the companies? no? >> no, no, no. that's why you had the market respond to at least they kept their margins, been able to show a profit. unfortunately it's on 12% lower revenues for the aggregate s&p 500. it's a lower level of profitability than we've seen before. >> we've got to go, joe. >> got to go, joe. you're depressing us. >> no, no. he's just laying out the plan. thank you, gentlemen. more coming. earnings reports start this week for the third quarter. what's the options market forecasting for that season? we have answers on the other side of the break coming up. financial regulation is front and center in our senior economics report. steve liesman is digging into that and the state of the t.a.r.p. a bit later, the president called a group of doctors to the rose garden this morning. is his push for taxing big

business to pay for health care a good idea? that's coming up on the power grid. get ready for the fast money halftime report. the best buying opportunities in today's rally. eseseseseseseseses

welcome back. we want to revisit the so-called fear indicator in the market. this goes back a year to the high we saw last year in the fall around 89 to the lows we saw earlier this summer around 22. then we saw that rise begin in august as it was anticipating what might have happened in september. which didn't happen. and today we sit at 27 and change. well off those highs from last year at this time. so what is the sentiment of this market as we head into earnings season now this week? wjv capital group director of derivatives investment strategy. what's the senmetiment as we he into earnings season? >> there's a lot of premium as people are nervous. i call it like a panic premium on the downside.

to give you an example, these next ten days can be fun. you can make a lot of money. options expire on the third friday, next friday. not this friday. coming up a week from friday. google has a habit of always releasing earnings the thursday before the options expire. >> do they do that on purpose? is that what you're saying? >> i can't say they're doing that on purpose. but it's a lot of fun to be involved with the stock. they've done it consistently over the years. >> what's the play? >> the stocks trade you can see right around 490. they have the 560 calls trading at about a dollar. people are anticipating this stock can still go up $70 over the next ten days. really they're relying on that positive earnings release next thursday. >> scott, before that, the first one to lead off the parade will be alcoa. what's the options market anticipating there? >> as of friday's close we were looking at premiums suggesting we could have a 3% move in alcoa shares basically going either way. according -- if you looked at the difference between the call

and the put premiums, there's a slight edge going to the call side. meaning people are anticipating a little bit better expectations on the earnings, a little bit upside movement. >> you know, scott, citi is on your list. and the financials have had such an interesting run lately. what's the options action telling you about citi and what would your play be? >> well, basically, citi has been very, very interesting play. because the volatility is there. the stock has moved all over the board, basically, between 1 and 5 over the past several months. what we're seeing is people looking for the stock to try to go higher. i think that they believe that it's going to go up. but there's also a lot of cautionary trading going on in there in arbitrage land between the stock and the options. >> my apologies. i meant to address that to bill. we'll have you on next time to talk about citi. good shot there, scott. >> bill, what is citi going to do in your view?

>> citi's been pretty consistent recently. trading a little bit under 4 and going a little bit over 5. if i talk about google again and say there's an option out there for a dime, talking about a $500 stock at such a small percentage, you should not consider doing that. citi you can buy today at 464. a couple of the analysts are getting a little bit more positive on those stocks. you can write the five calls that expire next friday. they're only about 11 cents or 12 cents. that's 2% you're pulling in right away. if you go out to november, six weeks away, you take in about 30 cents, 35 cents, that's another 6%. they also release earnings next thursday before the markets open. you can make a lot of money over the next ten days as you're watching the options. die out as the stock's going up, make money on the options. hold on to the stock and roll into the novembers. >> i love rolling into november. thanks, guys. good to see you both. don't miss "options action."

we've got geithner on the global economy. a highly critical report on the t.a.r.p. money. and our steve liesman is doing to be all over those big stories. also, looking ahead, bank of america's sally krawcheck is here joining us live. could she be ken lewis's replacement? if not, who might it be? plus, what's it going to take to revive the thundering herd at merrill? back in a minute. welcome to the now network. population: 49 million.

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jabil circuit at a new high. $13.52. >> fdic's sheila bair speaking about financial regulation. we also have treasury secretary tim geithner out with some comments. and a new scathing report on the t.a.r.p. our steve liesman joins us to break it all down. >> put it all together. a novel concept here, dennis. losing money if you invest in banks. comments from sheila bair that

secured creditors and banks should face losses in the event of a failure. quote, skin in the game. treasury secretary tim geithner said now is not the time to scale back on governor assistance to the economy, repeating his warnings that history shows scaling back too early can make financial crises worse. it's not surprising that treasury announced additional funding for its public/private investment partnership early this morning. these partnerships are supposed buy toxic securetized assets. of the five who received, they rated the private equity. now five of nine public/private investment funds to come. here are the totals now. the new money is $7.7 billion. total of $12.27 billion.

they think by the end of the month up to about $35 billion, $40 billion out there. this morning the t.a.r.p. inspector general saying treasury last year undermined its own credibility saying that banks that received $125 billion in t.a.r.p. money were healthy when, in fact, regulators knew they were not. >> sheila bair. in other words -- >> i knew you were going to want to start there. >> bondholders should take a licking just like stockholders. >> this goes along with aun bun of other ideas. there should be a class of debt in there that either automatically crams down to equity or is part of the buffer for accepting losses. what's happened is that you and dennis and sue and bill are on the hook for this money when the banks go down. >> bondholders through the whole

process seem to have been preserved. why does the government step in and protect them? there's nothing about being a debt holder that says you've got to be protected by the government compared to a stockholder. >> because they are. they are not supposed to lose any money. >> is anybody going to sell toxic assets at this point? last year at this point, i could see that the motivation and the need for a t.a.r.p. of some kind. now that they're increasing the funding here, who's going to sell these assets? do we know. >> they've eased them off the market. there's not that same demand. >> steve, the first rule of the market, don't say somebody won't do something until you know the price they're not going to do it at. >> right. because there's always a price that they will do it at. >> there's always a price. take your question and then sort of answer it. which is that given that they have low cost government financing, right, and that they're basically leveraged three to one inside these funds, what is the price they can offer for these toxic assets? will it be one that allows supply and demand to meet to the

extent they can offer a price that would motivate the sellers to part with their dear toxic assets? >> they're not cutting losses, necessarily, sometimes, but they might be actually profiting. >> the thing i really want to watch this for, bill, is there a price of these toxic assets that is different from that this is reached by the market because of the default rates, but because of the lack of financing. i'm hoping this smaller version of the ppip is one that helps the private market with price discovery. in that sense it would be a good government program. that to many sounds like an oxymoron. >> for the record, she and bondholders did get very hurt. >> good point. here's a happy thought. how about taxing business to pay for health care? good idea or bad idea? watch the sparks fly on the power grid, coming up. b of a's sally krawcheck will be joining us coming up at the talk of the hour. we'll talk markets, the search

for a new ceo at bank of america. first the fast money halftime report is waiting in the wings. we're up 67 points on the dow. we're back in a minute.

we're almost halfway through the trading day. in the headlines at this hour, stocks are headed higher on positive economic data on the services industry. financials are leading the rally. jp morgan, american express leading the dow. goldman sachs upgrading the big banks to attractive from neutral saying the earnings have surged but stock prices haven't. speaking of banks, bank of america sally krawcheck will join us next hour. conde nast is closing four magazines. president obama having a group of doctors to the white house today to push for health care reform on the very same day the medical device makers are grouping together to try to fight higher fees are senator baucus's health care plan. should big business be taxed to

help pay for health reform? squaring off, former clinton white house safer david goodfriend and jason lewis. host of the jason lewis radio show. jason, you get to go first. good idea or bad idea to tax big business to pay for health care? >> well, it's a bad idea. it's a $900 billion health care plan. they got to find the money from some place. they're going to subsidize people making $88,000 a year with health care subsidies. medicaid is expanding $287 billion. they're going to go after providers. they're going to go after insurance company. but they're not going to pay the bill. it's going to come out of consumers, employees and shareholders, none of which is good for the economy. it's a bad idea. >> david, why do you think this is a good idea. >> anybody who doesn't want health care reform and thinks things are great just the way they are, they won't support any kind of revenue measure. for the rest of us, the majority of americans know this is a good investment. and the costs are spread across a lot of stake holder. these device manufacturers were at the table along with

pharmaceuticals and others committing $2 trillion to the plan. they're going to share some of the costs. guess what? they get 30 million new customers. >> you hear that, jason? >> well, the pharmaceutical companies were bought off with the medicare doughnut hole. they're going to move people quicker into government funded pharmaceutical subsidies. you've got democrat of minnesota, al franken, democrat of minnesota calling this a tax and they've come out against it. i don't think that represents the democrat position. >> the point is they're going to have to pay more, but they're going to get so many more customers they're actually going to get more revenue. do you buy that, jason? >> no. many years ago it was said you don't benefit a business by taking away his money promising to give it back and more customer. it's still going to be a net loss for business. the only thing that's going to be left is a public option. call it a co-op. call it medicaid. that's the goal of this. you're going to undercut private insurance and intervene in the doctor/patient relationship. >> this is very interesting, if i may. because you notice that when my conservative friend here talks

about it, he talks about suddenly jumping to a public option when, in fact, what we're talking about is spreading risk across the whole country, bringing in more people to assist. ask yourself this question. why would 47,000 people a year be dying from lack of health insurance. >> whenever you talk about spreading risk across the entire population, you know what happens when you socialize medicine, right? you start to socialize people to say, you know what? you're costing me money. i have the right to deictate yor behavior. when we all collectively pay for each other we all collectively think we can tell each other how to live their lives. >> you're using the word socialized medicine like it's some sort of -- >> spreading the cost across the entire country. >> that's how private insurance works. private insurance. have one of the ceos on your television program. private insurance works because everybody pays premiums in. >> people pay different premiums based on their risk. >> if we're going to expand that

risk pool, that means that everybody's costs come down. >> david, you're missing the key component. first of all, the health care mandates are not going to pool enough money to pay for the community rating and the guaranteed issue mandate. the companies are not allowed to price risk by raising people or raising premiums for people that use more health care. >> david, you know what community rating is, right? what's community rating? >> i'm sorry. >> what's community rating. >> across the country you've got different variations in the kinds of costs. we saw this where mcallen texas has the highest cost whereas rochester, minnesota, has the lowest cost. if you're able to take breaest practices -- >> community rating is when an insurance company cannot charge different premiums based on the health status of the individual. somebody who smokes, they pay the same premium who somebody

who doesn't smoke. that's okay with you? >> and the geographic variations that our current system has which are unacceptable are not being balanced out in our private system. >> david, let's walk through an example, if we may. you've got an individual who might get fined on the health insurance mandate $750. he knows he can wait until he can get sick or she can get sick and get guaranteed issue insurance at a community rating. now, that $750 is going to be a heck of a bargain. the point is, you're not going to pool enough resources. because nobody's going to comply with the mandate. >> what's your alternative? what is your alternative? you don't have one. >> my alternative -- >> thank you, gentlemen. see you later. >> i was so impressed that jason's quoting john stewart mill. i'm not making this up. this is on this web page of a long list of john stewart mill quotations. conservatives are not necessarily stupid, but most stupid people are conservatives.

and jason is quoting him? >> you can find anything to support your case. coming up, strap yourselves in, guy. our next guest says oil's headed to triple digits. high triple digits. what's going to fuel that spike? find out next. bank of america's sally krawcheck will join us in the next hour. we have an awful lot to talk to her about. she's going to help revive the merrill lynch brand. also we'll talk about bank of america's search for a new ceo. she's been rumored as one of the names in consideration for the top job. we'll talk about that. using nay to convert plants into components. the first-ever hs hybrid. only from lexus. the first-ever hs hybrid. hey, it's great to see you're back after that accident. well...i couldn't have gotten by without aflac! is that different from health insurance? well yeah... ...aflac pays you cash to help with the bills that health insurance doesn't cover. really? well, if you're hurt and can't work, who's going to help pay for gas? ..the mortgage, all kinds of expenses?

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zblrjts stocks we're keeps an eye on. brocade communications higher today by more than 15%. now at $8.86. company is putting itself up for sale. one of the rumored suitors is hewlett-packard. the talk is that hue let looking for an enterprise company. brocade might fill that hole. hewlett is up. russia as overtaken saudi arabia as the world's biggest oil producer. that news is out today. plus a big call from deutsche bank's oil analyst, forecasting 175 bucks for crowd by 2016. paul joining us live from new york. >> thanks for having me again. >> let's start, obviously your call is incredibly interesting given the price point that you have by 2016. but tell us about the

significance of this -- this move by russia overtaking saudi arabia. what kind of long-term impact is that going to have on prices? >> the way we see it, it's telling you saudi is effectively underproducing. if they were to produce as much as they could, oil would be a lot lower in price. we think that the price of around $70 is, as they say, fair for both sides of the equation. but ultimately we do think that long term it's in saudis interest to try and bring prices down. the point of the note today is that with hybrids coming in, with the wchinese planning thei economy away from oil, natural gas being so relatively cheap, the long-term future for oil -- >> what raises it to $175 by 2016 if the long-term outlook is so negative? >> because governments now control the oil, including russia, you can't see reaction to oil supply to high prices.

there's no response. we need to break oil demand. the problem with doing that is prices are controlled in china. they're subsidized in the middle east. we need to break u.s. demand. at $2.50 a gallon, we're not doing that. we need to drag prices to the point where american consumers change their behavior and use less oil. at that point is about 7.5% of u.s. gdp. by 2016 that equals about $175 a barrel on a spike basis. >> did the emergence of russia, could that change your forecast, though? to this point, of course, saudi arabia has been very much a team player, willing to be a swing producer. i can't imagine russia would do that. >> i think that's a great point. i mean, russia's outperforming expectations right now. if they continue to, we could see much lower oil prices. particularly if iraq works out. i think you need iraq and russia to work out well. and then you can ask yourself really whether or not forecasts will be right. >> i love your point about how even though there's a spike in the price, you don't get a

response from governments that control oil in order to produce more. why? they're unable? they don't have the political will? they don't have the money for the infrastructure? >> yeah. that's feeding off itself. it adds to volatility which makes it harder to reinvest. that's how we get to the spiral situation once again. >> in the near term you're looking at about $55 for oil. correct? >> next year, yeah. >> thanks, paul. still ahead at the top of the hour, bank of america's sally krawcheck joins us. we'll talk markets, investing, b of a's search for a new ceo. all of that coming up. up next after this break, the fast money halftime report. we're going to get you up to date on the markets and big action plays, right now. fithe same tools the pros use, so you can be a disciplined trader. by selecting from eight advanced triggers, your order gets executed, even when you're busy. and with trailing stops to help you lock in profits and minimize risk,

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welcome to the fast money halftime report. we're getting to the heart of the action as it's happening. markets trading to the upside today following two straight weeks of declines with financials leading the gains today. where are your best buying opportunities? let's get to our crew. guys, a lot to talk about. i do want to talk about what has been moving interday. that is gold. joe, you pointed this out to us on our conference call today. gold hitting its intraday high today. what do you think is behind

this? >> i think the missing link is the commodity story throughout the morning. now you're seeing gold, you're seeing crude oil come off the lows. it just may be the talk about this u-shaped growth. remember, u-shaped growth means that the easy policy conditions remain in place. and that plays into the dollar weakness that we have talked about. >> this goes back to the comments of the doctor this morning on squawk box. in that we're not looking at a v-shape but we are looking at a u-shape? does that support joe's thesis? >> i think the letter alphabet soup of what the recovery's going to look like, who knows, is an interesting game that has very little to do with how stocks ought to be trading. because as earnings come out over the course of the next month, those are going to be driven increasingly by efficiencies on the one hand and global growth on the other. neither of which have a whole lot to do with the shape of the economic recovery going forward. >> that's a terrific point. i mean, my god. if we'd only been focusing on

the economic issues ahead of the last earnings season, you would have missed a heck of a rally. i have to agree wholeheartedly with zach there. >> i understand this point. but at the same time, we are seeing these moves today. i'm just curious, are you seeing any sort of positioning when it comes to the gold trade? there's an interesting article in the journal today saying it's no longer that safe haven. there's something else at work. if so are options traders, for instance, positions themselves, hedging their exposure? >> i think it does play into what joe identified. that is that if the doctor is right and we have that u rather than a sharp v, that could clearly give the miners and the gold stocks a pretty good boost. you've seen upgrades today for bhp builten and rio tintle. i wouldn't be surprised if that continues. >> just to be clear, melissa, i think absolutely you ought to be

in this commodity. the upgrade on bsp makes subtle sense. they basically get everything everywhere. that has very lit toll do with this debate over the shape of the recovery. very little of that's being driven by the u.s. story anyway. >> good point there. we should note the dollar index is at session lows right now. although down by just about a third of a percent. topping the pace today, financials. goldman putding capital one financial on its buy list. wells fargo among the names upgraded today. with all due respect to goldman sachs, we're coming off a quarter which the financials rose 25%. now we're having this call out. joe, what do you do? buy along with goldman sachs? >> i think you buy the large banks, the institutions we know will survive, the best, the jp morgans, wells fargos. after q 2 i think normalized earnings, the question about that was really challenged by everyone. and it was really suggested that q 2 was just a one off.

now goldman sachs celebrates a scenario where it's not just a one off. where normalized earnings can continue for names like jp morgan, for wells fargo. those are names you want to own. >> let's talk about goldman sachs itself. the estimates on goldman sachs had been rising as we head into its earnings. are you a buyer of a name like goldman sachs which has pretty much had a nice run? >> yeah. i mean, i'd prefer to be in somewhat of the names that have lied. although it's hard to find a lot of big cap financials that have lagged in this space. i think it's intriguing that everybody dumps on goldman sachs because of what they've benefited from the bailout. at the same time the entire market seems to jump whenever goldman sachs says jump. they clearly have an influence on the market moving. even if people don't like them. >> as much as everybody wants to call it government sachs, they still do move the market. >> i was going to also point out take a look at what could carry us out going forward in the next couple quarter. goldman positive on the big

banks. financials, that's something we know has to be at least flat if not rising. housing stocks. they made that call two weeks ago. i think they were late on that long term on both though, and that's -- that plays into a recovery that keeps moving to the upside against mr. ri ba a roubini. let's bring in dennis on the fast line. walk us through this chart. >> what you see is simply a chart of the nasdaq. nothing elegant. it depends on the thickness of one's pencil if i'm allowed to say that, but you look at the chart, it has held along that line, a very well-defined trend line from the march lows. touched it again in middle july. touched it again in the first week of september. got down to it, maybe even broke through it a little bit late last week, but this trend line has to hold or the bull market

has some difficulty. right now it is holding. i have my doubts, but these are the kind of things i think good traders look at. here is a trendline that really does have to hold. >> so is there a level, dennis, that your pencil has circled in terms of levels we must hold on this nasdaq? >> yes. it has to told friday's lows. >> it has to hold friday's lows. >> thus far it has. so let's see if it continues. excuse me. but you do have a market that's certainly having some signs of difficulty. if this rally today is not on strong volume, you have to remember the dow fell, what, almost 300 points in the course of three days. a rally of 90 points is really not all that terribly consequential. >> thank you for bringing your pencil on air. if you want to talk about the trade off this, it looks like a good day for technology. mike, what are you seeing in the options market in terms of tech and the willingness to go out on a limb when it comes to the tech etf or buy protection at this

point? >> well, you mentioned it at this top about brocade. obviously the fact they're putting themselves up for sale. one of the things i noticed was hewlett and oracle, two of the names mentioned as potentially acquirers, both had a fairly positive response. my take away is we may well hold because i don't see that much pessimism in that area right now. >> on the pencil discussion, i think if charts were so easy to read, we'd all be rich. the fundamentals in tech remain incredibly strong. these are catch-rich companies. i agree with jon about the buy on rimm. when it pulls back 20%, it's still selling double digit growth. there's a lot there to be in irrespective of whether or not you have a 200-day moving average that looks nice. >> have to talk about dr. j about brocade. is there still room to play that? >> you bet. but i'd be somewhat conservative

about it because the stock has moved over $1 already today, but like mike said, it's interesting that oracle and hewlett both have upside call buying in a situation where they're mentioned as the potential buyers. 70,000 calls against 3,400 normal. we're only halfway through the session. a lot of institutional paper in this stock. >> hold onto your pencils. going to take a pause. peter ship makes a bull case. coming up, a first on cnbc interview with sallie kracheck. santelli with his ear to the street helps us sort it all out. peter ship called the sell-off and now he's running for senate. tonight he stickses to his day job with the international trade to jump on. plus some of the best trades

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welcome back to the "fast money" halftime report. want to bring your attention to the gold chart. topped our halftime report with it and right now hitting session times. joe, we have to get the "power lunch" trade to go in but when you take a look at this move, you bought gold i believe when it was down below $1,000. what do you do with it now? >> i'm staying with gold. i think gold takes out the highs at $1,033. i think this commodity space is the trade until the end of the year. >> is there a belief that gold is trading on something other than this safe haven, what it has been in the past? >> i think gold trades as both reflationary and inflationary

investment tool, and i think the fact that the federal reserve now, if we have subpar growth, has to remain easy and accommodative. i think that's why you're seeing gold move higher. >> do you buy or sell into the closing bell? >> i will stick with the theme that crude oil is doing to remain range bound and say a buy in conoco looks attractive. >> that was a market that seems to be doing well and going up in spite of a lot of skepticism. i think that's good. if this became momentumy and rushed up to 10,000, i'd be nervous. >> dr. j? >> i'm a buyer in the close because i like the way the market reacted to the bad news friday. i like the way volatility is coming off. i'm a buyer into the close and looking for some bargains down here as the market rallies. >> and joe? >> melissa, i think it was a phenomenal response on friday. today you're getting the commodity trade participating as well. we're going higher for the remainder of today. >> we leave it here with the s&p 500 up by 1.2% being head liar

today right now by financials as well as energy. that does it for us at the halftime report. on tonight's "fast money," we have your earnings season preview. who to buy and who to ditch ahead of the results. coming up next, casino stocks have been on a tear, but is a run in sin city stock over? "power lunch" will debate that. we have a terrific show straight ahead. coming up on "power lunch," a special guest, sallie krawcheck, the new president of global wealth and investment management at bank of america. it's her first interview on tv since she took that job. she's with us live. that and much more straight ahead. this is cnbc.com news now. financial stocks are on the rise today helping lead the market a wholehigher. the supreme court has rejected a justice department appeal of a ruling that the government says will cost it $19 billion in lost oil company

royalties. cnbc.com news now. we're first in business worldwide. i'm courtney reagan. "power lunch" continues now. our second hour getting under way right now. i'm bill griffeth. stocks beginning the week in the green, helped in part by a couple economic reports, especially that ism number on the services sector showing expansion last month and bargain hunters have been jumping in after last week's sell-off. jpmorgan chase, alcoa, caterpillar, our parent company, general electric among the biggest winners at this hour in the dow. >> i'm sue herera. bank of america also among the dow winners today. it's new president of global wealth and investment management is a household name on wall street. sallie krawcheck joins us live for her first television interview. >> and i'm michelle caruso-cabrera, shares of las vegas casino operators have been on fire in the past three months. this comes at the same time that

the companies are scaling back their expansion plans. vegas casino stocks, still a good bet? we'll find out what to two analysts think. >> i'm dennis kneale. new revelations surface regarding the david letterman scandal. is cbs handling this and how can it stop advertisers from jumping ship? we'll discuss that all with a manage the guru it says here. >> indeed, we are. >> we have much to get to. joining us we're very pleased to welcome first on cnbc the new president of global wealth and investment management at bank of america the one and only sallie krawcheck. >> thank you. >> thanks for joining us today. >> glad to be here. >> wech much to discuss with you, but let's talk about what you brought with you. this is the are he launch of the wealth management brand. you did a quarterly survey of investors out there and their concerns. obviously, they'll want some help getting through these times. >> that's exactly what we're seeing. the relaunch for us is a

representation of the strength of merrill lynch. we've got the iconic bull, which is bigger and better and stronger than ever. really a representation of moving forward. it's been a tough couple of years for the industry and for the clients of the industry. i think people are getting a little tired of the rubber necking looking at the financial services and are saying help me repair what's happened. help me move forward. i'm concerned about falling off track with some of my savings. i'm concerned things are going to be more expensive going forward. a lot of concern about the cost of health care. help me get back on track. >> in the wake of a near failure of these institutions, we had a lot of small independent advisers come to us and say we have a lot of clients who don't want to be with the big banks, don't want to be exposed there. we're getting market share from the likes of the mare rels. is that true? >> it's not, actually. what you're seeing is counterintuitive to me or would have been as someone who covered this as an analyst. i would have expected if you laid out the scenario we saw,

declines would have flooded to the independent advisers. what you're seeing is after many years of double digit share gains, people are pulling back and are using some of the independent advisers less and the reason being what's important to them very much is that very personal relationship with their adviser, but backed by financial strength. are you going to be here going forward for me? people are looking for that reassure rabs. >> and merrill's own turmoil, being in the headlines almost daily, and congress investigating and who said what, when, and did they disclose it, is that having any impact on clients' willingness to open up accounts? >> you know, it feels like the momentum here is turning. what clients very much value and have for years is that relationship with their adviser. the company is a backdrop certainly and it's very important, but it's the relationship that is most important, and that while, you know, you did see some dip in the value of that for clients as we went through the string, it's come back and it's come back strongly. what we're seeing for an industry is for those companies where there's a financial

adviser relationship with a client, those advisers shielded the brand. they want that very personalized one size fits me relationship with the context of a strong financial services firm. >> you want one throat to choke. >> there you go. >> one -- the elephant in the room is who is going to replace ken lewis. your name is on the short list of who may replace ken lewis. >> do you think you will get it? >> do you want the job? >> slow down, guys. >> there's no way you'd come on our show right before -- >> let her answer, dennis. >> keep talking, keep talking. honestly i'm fully engaged in what i'm doing. merrill lynch, u.s. trust, these aren't just crown jewels of the organization, but crown jewels of the industry. and we have a lot of work to do. our clients have been through a lot. our focus, all of us, has got to be on restoring that trust. >> you talked about how important that relationship is

with the adviser, right? that's one of the reasons why we see different banks paying brokers from huge retention bonuses, the very controversial pay practices that everybody complains about, it's really coming down at the broker level because people are threatening to take their clients elsewhere. does it irk you when you listen to lloyd blankfein saying we have to change the way we do compensation because they don't have to worry about people leaving goldman. >> i'm sure very talented folks at goldman are getting plenty of offers from folks. i wouldn't say, must be so easy at goldman. what i would say, however, is that what we have to focus on is building a company not for next week or next month. one of the things i very much like about merrill, before i got to the company, i read in the press, everybody left. oh, my gosh everybody left, and there has in fact been a great deal of turnover at the top. but what i love is when i go out to the branches and office and i'm meeting with the advisers, there are people there with

length of service of 10 years, 20 years, 30 years, whose clients are with them an average of teens numbers of years. there's a lot of continuity. the right way to build a company going forward is to bring in people early in their career and build them up. the other thing great about the culture, we have fathers and sons, mothers and daughters, cousins who are in business together. >> are you hamstrung in paying bonuses to retain those people by the fact you have so much government money? >> right. that's a question we all have, is how is it running a company when you have ungle sam looking over your shoulder. >> with the advisers it's the client who is pay the advisers, right? they're paid through fee-based assets and commissions. we are by no means having issues in being competitive because these are paid by the clients. >> and if i may ask, going into merrill, you have been there how many months now? >> two months. >> you got bounced out of citi there, rudely, as i remember.

how much did you spend redecorating your office there? zippo? >> zippo. it's about this big and we spent zippo. >> are you amused by the attention. obviously, you're a high-profile woman on wall street for a number of years. the move to merrill lynch got a lot of people's attention. there was no secession plan announced, has been none announced at bank of america, and now with ken lewis announcing he's going to leave at the end of the year, your name obviously comes up. >> am i amused by the attention? you can't pay any attention to the attention because we really have got so much that we're looking to accomplish. if you get caught, you know, sort of -- caught in the speculation of all the stuff, you don't get your job done q i quite honestly. >> but again the role the government plays in all of that. are you happy they're there? do you sense there's a time when they're going to want to pull back and leave the company? the question becomes do you want to become the ceo of a bank that's still run by the government basically right now?

>> well you're going to ask this question 16 different whiches so i am going to keep dodging and weaving here. the government did a terrific job for the financial services industry and bank of america as well. we went through a downturn that's historic in its nature. thank goodness we have the luxury of sitting here today and second guessing the ceos and second guessing the government, was this move right, was that move right. it wasn't so long ago we didn't think we'd have the luxury of second guessing. in terms of is the company able to operate as it should with the government there? absolutely it is. >> but it comes down to what i'm interested in is regardless of whether you're the ceo or not, what is your vision for bank of america? say you do get the ceo job or say you do stay where you are in wealth management, what is your ultimate vision for bank of america? >> well, let me tell you the ultimate vision for wealth management in bank of america, one, we have to respect the culture that's been built, which is a culture of great pride,

client at the center, of great integrity. people say is the culture finished? it's not. we need to honor that and move forward. we have the ability to be what everyone talks about, which is to be the wealth management firm, not brokerage, but to really bring the financial capabilities to clients that they're asking for and need. so across banking, across investment management. >> even with the specter of lawsuits hanging over -- >> yeah, yeah, yeah. we're doing business for our clients every day, and we're moving forward. one of the things that's really impressed me about this company is they continue to invest in the wealth management business even during the teeth of the crisis, and they invested in things that clients say they want, which is help me understand my performance. help me understand what my assets have been doing. they invested in these things even during the spring of this year when it would have been very possible for people so say, never mind, we can't do it anymore. >> you're a good sfort for spor

dealing with these questions. and we have more. >> the market is in rally mode, up 92 points. nasdaq is up as well. just under 1%. and the s&p is up almost 1.25%. we're back in a minute. tuesday morning on "squawk on the street," where america's executives really stand on the economy and the markets. we have a new poll gauging their optimism and pessimism. want to make money? we're talking about a brand new way to trade commodities. and another five-star fund manager. now we're focusing on health care stocks. as the senate gears up for a key vote that could impact your money and your health. "squawk on the street" 9:00 to 11:00 weekdays. by selecting from eight advanced triggers, your order gets executed, even when you're busy. and with trailing stops to help you lock in profits and minimize risk, you can be confident in your strategy, no matter which way the market moves.

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right now the dow jones industrial average is up 90 points at 9577.68 on the trading session. that's the high of the trading day so far. we're still talking withback of america's new president of global wealth management sallie krawche krawcheck. joining us is charlie gasparino. >> you have beauty and the beast right here. >> there you go. you said it, not us. >> how are you doing sallie? >> how are you? >> we go way back. >> not that far back, charlie. >> well, i'm ageing myself i'm sorry. i speak to a lot of brokers who work for you guys who aren't too crazy about the environment.

are you going to be able to keep them from jumping ship, particularly bob mccann, yours president sesor is probab your going to go to ubs. >> i don't think anybody is happy with the market environment we've been through. i think for our financial advisers, the right question for them always and for the industry always is where can you do a great job for your clients? i think we need to telescope back a bit and realize our clients have been through a tremendous amount, and we as an industry and particularly we leaders of the industry really owe it to our clients to be moving the business forward, to be taking the lessons we've learned, and everyone has learned lesson, if they say they haven't, they're lying to you, and make sure we bring those lessons to bear for our clients. >> but doesn't it go beyond the market? it's more of a cultural shift we have. merrill lynch, an independent firm, has been bought by a bank

that's -- independent new york-based firm that's been bought by a bank that's located in charlotte, north carolina, and there's a cultural change. when i talk to the brokers, it goes beyond investors, whether they'll put money to work, they don't like the culture. >> well, i'll stop you there for a second. i think again the real question the advisers should be asking themselves is not what do you think of southerners, right? >> that's not what they're saying. it's what do you think of working for a bank. >> the right question is can you bring more capabilities to your client base, and what -- as i have been out and meeting, what these guys are seeing is that while everyone has been through a lot, there are more capabilities they have today than a year ago. merrill continued to invest during the downturn, which i think was a heroic move. invested in performance reporting and the online reporting, and today one of merrill's biggest investments they were planning to make was to invest in bringing more

banking capabilities to the clients. >> are you going to change the compensation system? there's lots of speculation you will get rid of the way the brokers are being paid to go to much of more of a salary and bonus-type system. >> yeah, yeah, yeah. >> not true? >> there's a whole sort of subgroup of reporting on all the stupid things sallie is going to do when she comes into the organization, and the first line of being a successful manager is don't do stupid things, and so, you know, trying to go and change the compensation, you know, trying to -- i have heard we're going to smash u.s. trust and merrill lynch together. we're not doing any of that stuff. what we want to do is, again, bring these great capabilities from this institution that we have to clients, honor the culture, very much honor the culture that's been built up over time of client first, high integrity, and bring these capabilities to clients to help them repair what's been a pretty difficult environment for them. >> zero change in the compensation system? >> no, no, no.

look, the industry tinkers wit on the edge. i think i have a good track record with compensation. >> one of the worries is, which i think is one of the things charlie is getting at, that you will lose brokers, and they're some of the most well-connected brokers on the street. if they do not like the culture and/or the compensation system, they will leave which would in turn undermine all of the efforts that you just laid out. how do you retain talent on that level? >> first of all, i know -- i read it this weekend in "the press" droves of financial advisers have left, and, in fact, for the industry there was a lot of turnover at the beginning of the year. in the past several weeks we have had -- it was 40-odd net new advisers in both trainees and folks from other firms last week. it was a teens number the week before, it was a single digit number the week before and the

mid-50s the two weeks before. what we're seeing is quite the opposite. people are joining the organization, joining the institution, and so again i think -- and you see it as exemplified by the advertising that we're bringing out today, people are ready to move forward. people are noting that this company has invested in their business, and you know what? for all the concern that, oh, my gosh, b of a is going to turn us into bank tellers, most of these super duper secret plan that the board didn't share with me, that's not the plan. respect the culture, bring more to clients. that's the goal here. >> the good news is you bought merrill lynch, the bad news is you bought merrill lynch. you have all these brokers. more assets under management. at the same time merrill lynch brought all these toxic assets with it. your part of the business has to accelerate and do bet irin orte order to overcome that other part of the business. >> i'd say the opposite if you look at the most recent result

tom montag's business is actually doing quite well. all of these can be very good businesses, but, yes, if you look at the wealth management business, again, without, you know -- by investing in the business and doing great things for clients i think we can certainly move it forward. >> ken lewis brought you in as we reported, first to report. he's going. this may sound like a stupid question, but you're going to stay, right? he's the guy that you brought you in. >> look, honestly, guys, this is not just the crown jewel, as ken has said, of bank of america, of merrill lynch. this is the crown jewel of the industry. i competed with these guys for years. what's better than this? nothing is better than this. >> so you have no plans to go -- >> i would say the ceo job but -- >> now, here is the thing. i know they put you through the wringer, but she didn't really answer. >> we didn't expect her to but we just kind of asked again. >> it's a yes or no. do you want it or not? >> i'm very much focused on the

job that i'm doing. i'm having a great time. we're working very hard. i'm very focused on the -- >> so you won't answer. >> keep asking and i -- >> i want to make sure you're not answering. >> before we let you go, i'll give you one more softball based on the surveys you were conducting. we keep hearing about the mythical $3.4 trillion of cash sitting on the sidelines that individuals and pensions have and others. the survey you conducted found that along all the demographic lines, everybody is concerned about their long-term goals, but yet they're sitting on all this cash. do you blame them? how do you convince people to get become into this market in such uncertain times right now? >> well, it's such a great question and such a great point. no, you can't blame them. people had the living bejesus scared out of them. things that weren't supposed to happen happened. what we need to do, the industry and i think we've done some excellent work at merrill and at u.s. trust, we need to help people realize we need to

realize standard deviation is not a resh sure of risk. we need to do more work on the alternative side. now how we talk about it about being a bunch of wealthy hedge fund players. to very much focus on liquidity. these are things we learned. plus the measured use of structured products to give people some of the upside without all the downside. these are tools we can bring to help people begin to move back into the market in a way they're comfortable. >> we're glad you came today. i hope you are, too. >> thank you. appreciate it. >> thank you very much. sallie krawcheck from bank of america's wealth management association. thanks, charlie, we'll see you later. >> still ahead, we'll check in with our market reporters. plus vegas casinos are shifting strategy getting ready for slower growth. is sin city still a good bet for

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right now caterpillar is up $1.55, better than 3%. last trade $50.37. the company this morning says it is going to raise machinery prices by 2% in the year 2010 saying that the rise was caused by current industry factors and

expected general economic conditions. and the stock is responding. let's get some reaction on that and much more from our market reporters. we start out with bob pisani at the new york stock exchange. a pretty decent gain, bob. >> and caterpillar is up not just because of that, but because of what we're seeing going on elsewhere, like the dollar. but remember, folks, when the dollar gets weaker, you see commodity stocks, anything industrial names do better, including caterpillar. i think traders when we came in quite surprised the g-7 did not do much in the way of jaw boning the dollar up. it didn't really happen. so the dollar has been weak throughout the day. as the dollar hit the new lows today, there is your dollar intrae d intraday. look at alcoa. commodity stocks tend to do better. highs of the day as the dollar has been weaker. same situation with oil,

alumin aluminum. there's apache sitting at the highs of the day. same situation with gold. gold, copper, rallying. remember the earlier call earlier in the day by goldman sachs upgrading the overall banking group, specifically talking about the big cap banks over the regional banks. specifically upgraded wells fargo. tradertalk.cnbc.com. mike, at the highs of the day for the nasdaq as well. >> up 0.8%, almost 17.5 points. the story of the day continues to be the tech takeout talks specifically with "the wall street journal" report that brocade is up for sale. everybody is buzzing about the move today, but i wanted to put up this chart because this stock is up more than 200% so far this year. net app is up on a baron's mention this weekend that it too could be putting itself up for sale. even oracle is holding its own

up 0.2%. and finally a bunch of developmental drug data, i tried to say, is moving some stocks in biopharma on the downside. amicus in seattle, human genome sciences. sharon at the nymex. >> did you notice oil prices turned positive in the last half hour. we're looking at oil above $70 a barrel once again, and the dollar's decline has something to do with it. pay attention to what has happened in the gasoline market. gasoline futures leading the way in the petroleum complex. a number of refinery snags. having some shutdowns. that impacting perhaps gasoline futures as well as the los angeles cash market for gasoline which has seen a nice jump today. meanwhile, looking at natural gas that's also pretty strong today. that may be largely due to the natural gas etf which has

started issuing new shares for the first time since july. the volume there over 22 million shares trading so far today. rick santelli, to you in chicago. >> thank you very much, sharon. look at the intraday charts, and you will see not a whole lot of volatility and virtually unchanged. did go through $60 billion in 3 and 6-month bill issuance. what's noteworthy, the three-month bill -- actually the six-month bill also. what's the driving force behind this? they're going to be cutting down on bill issuance. maybe as much as half a trillion less. which means these are probably going to find a little more in a demand versus supply scenario. this will be dumped in maturities like a two-year. we had a tips auction today that went well. what does it mean?

>> thank you, rick santelli. the supreme court is back in session beginning a new term dominated by cases of major importance to corporate america. hampton pearson joins us from outside the supreme court with some details on some of the cases they're going to be hearing. >> reporter: the high court has already issued two rulings of interest to wall street today. first of all, the high court refusing to hear former qwest ceo's appeal of his insider trading conviction. the government's effort to collect royalties has been rejected by the high court. the justices agreeing with a lower court the interior department could not collect royalties even as roil prices and company profits were on the rise. two new rulings on what was already a business-heavy stock market. even opening the door to a partial repeal of sarbanes

oxley. the top business case at issue, can unique business methods be pate patented. the question before the justices is a commodity hedging strategy worth a patent. executive stay and shareholders rights collides in jones versus harris. >> the struggle for the court here is over what standards, if any, do they really want to write onto this statute to govern the compensation. it's a huge case for the funds industry, obviously, and for investment advisers. it's a huge case for shareholders because it will govern how much these people can charge. >> reporter: another huge case free enterprise fund versus pcaob. it involves the separation of

powers. that's an important line in the sand. by the end of this coming term we will know a lot more about how this high court views the whole issue of regulating business. bill? >> all right, hampton. thank you very much. meanwhile, at the white house the daily briefing apparently is under way and somebody asked spokesperson robert gibbs apparently about our john harwood's column in today's "new york times" saying that the administration was working on new stimulus strategies that might include a tax break of some kind and other things to try to stimulate job growth in this economy, and the white house is saying there are no plans for a second economic stimulus program. that's all we know at this point, but john wasn't exactly saying there would be a second stimulus program. >> exactly. >> they were just looking at measures to try to increase jobs, including some tax breaks. >> tax breaks meaning collecting less. it would not be stimulus, but it would be stimulative. it's a great idea. >> we'll continue to split hairs here. >> also straight ahead, a court

date for two former bear stearns hedge fund managers. we'll go to federal court in brooklyn. >> also charlie gaspari rino returns with more on ken lewis and the push to find a successor. 

take a look at shares of goldman sax up goldman sachs. up 3%. >> what could you buy the stock back for in march, like 80 or something? the only two wall street executives charged so far go on trial next week. they were in court today for a pretrial hearing. scott cohn is outside the federal courthouse in brooklyn for a look at what is at stake. scott? >> what's at stake with no one higher up the ladder charged with blame. even on wall street few people have heard these names, but

right now these two guys have the entire financial crisis on their shoulders, at least as far as the law is concerned. ralph managed those two bear stearns hedge funds that went bust in the fall of 2007 costing investors some $1.5 billion. bear stearns went belly up not too far after that. matthew worked for chiaffi as they managed these funds in the thick of the subprime melt down that they seem to know was going on long before investors did. they knew, it seems, according to the dime, that their funds were in trouble. april 22nd, 2007, in an e-mail matthew rights to ralph that the subprime market looks pretty damn ugly. that's an understatement. he says if the reports are true, i think we should close the funds now. but in a conference call three days later with investors, no sign of any of that. tannin tells investors we're

very comfortable with where we are. cioffi says we only have a couple million in redemptions. they face multiple charges. securities fraud, insider trading. they begin sending questionnaires to prospective jurors. one small victory for the defense. the judge says the government cannot introduce evidence of ralph cioffi's three ferraris a and country club membership. bank of america's board feeling pressure to find a replacement for outgoing ceo ken lewis. charlie gasparino, author "the sellout" broke the story over the weekend and he joins us again. >> what they're telling me is by the end of the month they will have a ceo or at least someone to take over from ken lewis when he steps down at the end of the

year. who that will be, i'm not quite sure, and i don't think they know right now. you have the internal candidates, there they are. you just had one of the internal candidates on the air, sallie krawcheck. i don't believe it's going to be sallie krawcheck. i think if you look at all the internal candidates, the one that possibly has a shot is brian moynihan because he's done so much. if you follow the insider baseball of bank of america, bank of america is -- and there is brian moynihan. >> isn't he another chuck prince. >> that's almost libellous to say. >> meaning he was a lawyer. >> he didn't screw up just yet. you could make that case and i have heard people make that case. there's kind of like this interesting power shift going on at bank of america where all the power obviously at one time was in charlotte, right? that's where ken lewis was, that's where hue mccall started the company. it was north carolina national bank. if you follow the sort of insider baseball, the power is

now starting to shift to boston. if you see some of the stuff going on, a lot of stuff is coming out of boston. they bought fleet bank, i can't remember when, but fleet bank is a part of this bank of america empire. if you look at one of the more influential members on the board, it's that guy chad gifford. i reported this last week, i hear gifford is saying that that's probably not going to happen. but what's interesting is the power is shifting to the boston subsidiary to this i go and moynihan comes from that boston branch. so that's kind of what's going on here. i still think when -- it will either be someone like gifford, an interim guy, an older statesman type taking it on an interim basis and a possibility of one of those six being chosen and when i say interim i say about a year or two based on the age of this person, but i still think there's a good possibility they go outside for a ceo and the reason why is because

investors and analysts are clamoring for someone outside. they don't think those six have the chops so to speak. i will tell you, i spoke with larry fink recently. i asked him if he wanted the job. he said no way. he's running a big firm. blackrock is the biggest money management firm. if they went to him, i wonder if he would say no. remember, larry wanted to run merrill. he went up for that job. in my book i talk about that, this sort of process of picking john thain who eventually became the ceo. at one point fink was actually promised the job right before they gave it to thain. all but promised, and then they gave it to thain. which was an interesting turn of events for larry. blackrock now is a very big firm. i don't know how he jumps from there to here, but i tell you there is growing, growing chorus from investors and analysts to

get someone outside of note, of experience, someone like the guy that runs bank of new york is another name i keep hearing. his last name is kelly. can't remember his first name. but these are the names i have been hearing lately. >> all right. fresh set of eyes is what you're hearing. thank you, charlie. programming note, tonight is special prime time series "the business of innovation" explores the changing dynamic of cities in the face of unprecedented global changes. we'll talk about smart grids and powering up cities for the future. michael, what do you think? talk to us about the smart grid and security. >> i worry about the possibility that someone winds up entering the system through cyberspace and potentially causes the kind of catastrophic thing you saw in the blackout. i worry about information tracking. does everybody know how much electricity you use? do they know when you're in the house, out of the house? you have to build it in a way so

as to make sure you take into account of that. >> the smart grid could collect the kind of information we need to reward good behavior. reward behavior like conservinc. reward time shifting so people use lelectricity when there isnt peak demand. those benefits for incentives are very profound. >> "the base of ennou vation" a airing tonight at 8:00 p.m. las vegas casinos shifting strategy. they're paying down debt and halting expansion. in some cases stocks have doubled in value. are they still a good bet? first though a look at how some va caegas casino operatorse been trading. plus signs across the board for las vegas sands, mgm mirage, and wynn resorts.

we're back after this.

welcome back. you've missed so much fun during the commercial break today. las vegas casinos gambling on that. the downturn by scaling back now their expansion plans, paying down debt. the question is will that strategy help sin city stage a comeback and is it good for investors? joining us right now we've got jake fuller, an analyst and we're expecting another analyst to join us as well. "the wall street journal" says today they quoted at least one casino executive saying they don't expect to break ground on

anything in las vegas for ten years. is that good or bad in your view? >> i think frankly we're missing the point. we've talked a lot today about strategy change and how we're going to scale back on development. there's still dramatic new capacity hitting the gaming industry over the next year, year and a half. you've got in las vegas $15.4 billion of new resorts opening up over the next 12 to 18 months. city center comes in december. maybe the fountain blue if it gets out of bankruptcy. it could be a 15% increase in capacity in las vegas. >> is there enough demand to meet that increased capacity? >> no, i think that's going to be a big problem over the next year. leisure travel definitely starting to rebound. corporate travel, the convention business, still very soft. you have a 15% increase in supply and you still have that convention business very, very weak in las vegas. >> jake, now that the casinos are over as michelle calls it

their edifice complex and not building as much, isn't the future in china, and not vegas? >> absolutely. i think that's why we're looking at vegas sands and wynn resorts. the chinese xe is clearly strengthening. they have eased travel restrictions. i think both las vegas sands and wynn make a lot of sense here. >> and sands moved in first, beat steve wynn in there. they're archrivals, sheldon e a adelson. >> what else do you like in the sector? >> those are the two i'm focused on. a big new casino in singapore in the first quarter of 2010. wynn resorts is opening in

macau. >> plus they're high spenders. i think per capita income in that area of the world is $3,000 or $5,000 a year and yet their average bet is $75. in the u.s. per capita $35,000 average bet $25. real high rollers. >> macau, your gaming win has been about $13 billion. las vegas strip, $6 billion. so it's already a big market. if you look in september, gaming win in macau was up 53%. dramatic turnaround. >> it will be bigger than las vegas from now on. >> jake fuller, thank you very much. >> straight ahead, we have more fallout from the david letterman scandal. what does cbs need to do to keep advertisers from jumping ship, if any of going to do that? and keep you up to date on the market. a strong session today. the dow back above 9500, gaining

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the ad slump claiming more victims today. conde nast announcing plans to shop publishing five magazines. according to publishers information bureau, gourmet's ad pages down 50% in the second quarter. >> she did such a great job with that magazine, but i think the hot dog issue was its down fall. >> the cover stories were always about being down market. >> it's called gourmet, not fast food. the question was between bon appetite and gourmet. gourmet has been between the 1940s. >> you said they're going to close modern bride and elegant bride. they already have bride magazine. they had gourmet and they had -- they have to choose. >> you need to consolidate your own brand.

it's a smort moart move by the company. the big problem with print journalists is they haven't cut their costs enough. let's go to another topic. we're calling it a saga now of david letterman's escapades with female staffers on his show and the recent attempt to blackmail him. it just doesn't seem to want to go away this story, especially when we keep talking about it. what should cbs be doing to manage the crisis and prevent advertisers from pulling out? joining us is eric, author of "damage control: why everything you know about crisis management is wrong." eric, should cbs be acting preemp preemptively or do you not reach out to advertisers until you have an actual problem? >> i think the second part of what you said. you know, there's a lot of crises that make a lot of noise but that don't cause quantifiable marketplace damage. there's no question that this is

making a lot of noise, but i don't see a lot of evidence that advertisers are or will be running away in droves. >> don't you sense though that everybody is looking at everybody else? the network wants to see what the ratings are going to do. the advertisers want to see what the viewers are going to say. the viewers are waiting to say what dave is going to say. everybody is waiting to see how this is going to play out. >> everybody is looking but the thing about these situations is you don't know there's a correlation between a catalyst like this and what ends up happening. i think that the big thing to watch for is whether or not there is litigation of a sexual harassment nature which drives more news catalysts out there, and i don't see evidence yet that that's going to happen. >> the alleged blackmailer came out swinging. his defense lawyer is out on "the early show" saying he can't wait to get dave in the hot seat and cross-examination him. >> we're going to put him in the

chair. >> and what are the implications of that? >> there is legal blackmail and illegal blackmail. what makes this situation unique is a lot of the cases of extortion that i have been involved with are technically legal because what ends up happening is you file a speaking complaint or you use an attorney to say if this ends up in litigation, here are some of things that are going to come out, but the important thing with regard to letterman is there's really no correlation between how much you come out and talk about something and whether or not the problem goes away. the big cliche is that you're always supposed to be talking about this stuff, but the fact is there's no reason to give it any more oxygen absent some other news catalyst because i think with entertainers, bad behavior is built into the stock price. >> all right. >> thanks, eric. >> good to see you again. >> and tonight could be a news catalyst with dave having steve martin on. we'll see how he deals with it. first show he's done since --

>> we'll see what happens. >> we have to go. >> take a break. we'll come back with more. "street signs" at the top of the hour. >> and mona lisa and the louvre. i was always going. having to go in the middle of traffic and just starting and stopping. having to go in the middle of a ballgame

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things are looking up.

michael moore's new movie opened nationwide over the weekend. did what, $4.8 million. >> they didn't love it. they must have read your review. one of his recent films did four or five times as well on fewer screens. >> it's his worst performance ever for an opening. i feel so terrible for michael moore. meanwhile, controversy in paris. controversy at the louvre because mcdonald's may be one of the first things you see depending what entrans yce you to the famed museum. >> isn't it great? that museum is way too large and intimidating. now mcdonald's fans will go in and feel extra comfort. i wrote a column on cnbc.com. >> france is becoming one of their biggest markets. >> there you go. >> who knew? >> they don't call them french fries for nothing? >> munching on a big mac while gazing at the mona lisa.

>> they're worried the odors will waft through different parts and they're not pleased. merark haines is on "street signs" coming up. stay tuned. i don't smell anything, but michael moore in an interview said those guys reek of money. i don't know what that means. hello, everyone. mark haines here in for erin burnett who is on assignment. will it or won't it? is the white house really telling the whole truth when it comes to stimulating the economy? we're live there in just seconds. the new fall of the roman empire. details from a report that claims the western world has reached the tipping point. find out what it means for the global economy and your money. and