the automaker is taking advantage of toyota's troubles. this is "the call" on cnbc. stocks opens higher in optimism that greece and the european union was gaining momentum. where have we heard that before? but the rally ran out of steam as the dollar gained ground. the s&p is trading to the plus side. it is up half a percentage point, up 5.5 points at 1121. take a look at the dow right now. remember, 10,428.05 that's the break even point for the year. we've been crossing back and forth over that mark so far today. right now we're above it, of course, by a third of a percentage point and the nasdaq right now, take a look at how it is trading. it's up ten points by half a percentage point and we want to show you the dollar and see how that is trading. the dollar index is above 80 on the day, but it's essentially flat of the session and off the high of where it was earlier.

trish, what's happening on the floor? >> hey, we are watching the dollar for sure, melissa. one of the things that could be contributing to a bit of pullback we've seen with the rally and i don't want to overemphasize this because we're still up 32 points right now on the dow and the s&p and the nasdaq also in the green at this moment, but the kansas city fed president really striking a hawkish tone this morning in suggesting that interest rates should not be kept at a zero interest rate policy in the near future. so that could be contributing to a little bit of a pullback that we've seen. i am here on the floor with brian shactman. brian, we've seen a little bit of strength on the dollar and how is that contributing this morning? >> going back to honing. the market did move a little bit and the traders weren't that focused on it, the weaker dollar has been boosting commodities and boosting equities and not the case today. commodities are up and stocks are up, but traders do say, trish, that maybe that's holding back the rally from being a

little bit stronger. the bullish thing here is m&a and with cf and terra. the key is they were jumping back in. cf was out of the game and they're back in it in the higher bid with the private equity coming in into the m&a game so that's very, very bullish. >> talk to me about the sectors that are standouts and you have energy and you have financials. financials which in some way it's a bit of a surprise. we've had all of this talk of new regulation with the bill and financials are trading up. >> the financial regulation being under the fed's auspices are better than other options on the table and they were laggards yesterday so we're getting a bounceback there. bank of america, there will be a dutch auction for their warrants tomorrow and that's up pretty strongly and wells fargo isn't as broad based as well. suntrust super regionals are up 3%. and materials leading the way as well and these two sectors are number one and you have allegheny, international people and ak steel the best of all s&p

sectors. >> any news you can tell me about earnings? >> people aren't paying enough attention to some of these names. domino's pizza, they came up with new ads in the super bowl and they came up with testing in the new pizza. it's growing overseas and its sales are up and the stock is up, and bridgepoint education, huge growth in their numbers and revenues up more that than 90%. those are just great, great numbers. look at that stock. it's trading up better than 5% today. brian shactman, thank you so much. i'll send it back over to my colleague, larry kudlow. >> thank you, trish. >> so the senate is nearing a deal on financial regulation, the last sticking point the creation of a new consumer protection agency may be sitting inside the federal reserve. john harwood in washington with the latest. good morning, john. >> hey, larry. these negotiations are continuing and it's really about a fill soffic question and how should they be protected and is there a collision between the

need to protect consumers and the financial practices that firms can engage in and the need for those firms to be safe and sound. the prudential regulator versus the consumer regulator, so the highlights of that discussion are that dodd and corker negotiations which are the continuing bipartisan negotiations look like they may drag into next week. there are three potential homes for that consumer finance protection agency. one is the federal reserve which is a proposal that bob corker of tennessee is pushing right now. richard shelby, the ranking republican is using the fdic. the administration is more inclined to house that with treasury if it's want going to be a stand alone agency. >> probably some time next week the come they will mark this thing up in two weeks and we expect it to go to the senate floor and then things will percolate because the action within the senate banking committee is not going to be the

last word on this. a long way to go, larry. >> so, john, in terms of insightful news analysis who's going to win this? you mentioned treasury. you mentioned stand alone and you mentioned the fed. what are you betting on? >> interesting question, larry. at some level the white house and chris dodd in particular, since as you know, he's retiring from the senate, they just want to get a bill. how do we get republicans and make republicans cooperate or induce a larger number of republicans to cooperate? and so they'll get some pushback from the left if the regulator is made too week in that process, so i would bet that the thing ends up at treasury. that's how ultimately once you get barney frank and the house position reconciled with the senate position, i'm betting that it won't be independent. it won't be stand alone, but it will be within treasury. there's negotiating left to do. >> john har bood, putting his chips on the table.

is the legislation that congress is closing in on viable? will it do any good? joining us now janet tavacoli, from tavacoli structured finance. and and the cnbc contributor and plus our own rick santelli. all right. janet, let me go to you. i frankly think this consumer protection thing is a distraction from the main issue of too big to fail, but let's do consumer protection. john harwood thinks it might sit inside the treasury. i think mr. bob corker wants it to sit inside the fed and the liberals and the democratic party want it stand alone. where do you come out on this? >> i come out of it where a lot of americans are coming out on it right now and that is we want consumer protection. what we don't want is another big, bloated, regulatory body that won't get the job done. we seem to have too many regulators and none of whom are really doing the job.

so it seems that washington is being tone deaf here. because what people are really concerned about is getting the job done. it's been 18 months after the bailout and we've seen no real financial reform. so there's a lack of confidence and the perception outside the beltway is that there's a lot of in-fighting and bickering and there is no clear discussion of what exactly this is going to do for consumers and then you get people going on national television like elizabeth warren saying that some of the credit card reforms have been thwarted. so people want more accountability and they don't care how it's done, but they want more clarity. >> speaking of accountability, bill, is this a matter of just enforcing the rules that we have on the book? that's one of the arguments that's out there that we already have a lot of rules and regulation, was there just nobody enforcing them. >> i think there are a number of issues here, but the banks

actually have very strong enforcement on them and it was the non-banks where we failed this last time around, largely. there were some problems in the banking industry and for the most part they're subject to very, very strong enforcement and the agencies have enormous moral a situation over the banks. they have thousands of examiners. it's the non-banks that we're not even addressing this legislation in a meaningful way which already have incredibly strong enforcement. they are not allowed to branch until they get it straight. or the non-banks were just ignoring for the most part. i don't understand that. >> that's not the perception among the people watching in washington, though. >> wait, wait, rick santelli, let me bring you in. one of the things that troubles me is we have not resolved the issue of resolution authority. in other words, rick, too big to fail. me, if you fail you fail.

now, in this legislation so far as i know in this legislation there's a government resolution authority, a government resolution authority, funded by $4 trillion in the house bill which sounds a lot like aig, fannie mae, freddie mac, government, taxpayers own it in perpetuity. some people think we should have a private bankruptcy court proceeding. how do you come out on this? too big to fail, who should run it and who should resolve it. >> i think fail is the only thing that works. if you want to get into intricacies. fannie and freddie had a lot more latitude on how to shut them down. that didn't work out well. i think it's a pre-log to how the epilog will turn out if we keep it in their hands. as far as other products go, i think the cost rises whether it's credit cards or different kinds of loans. >> right. >> we give the test to people to

drive. maybe we should worry about education and make people take a class before we offer them adjustable-rate mortgages. why should it deprive me? i understand how it they work? >> isn't that one of the main problems. could ultimately mean that credit is less available. >> well, credit should be less available for people who can't afford credit. one of the problems we have in this country is people who cannot afford the debt took too much on. >> whose fault is that? >> well, there is a lot of blame to go around, but i have to tell you, here in illinois, people were preyed upon. >> oh, man, we're all victims? wait a second. >> larry, i'm telling you -- >> how do you force someone to borrow money? don't borrow it. >> what i mean -- >> did they put a gun to the head of these people? >> what i mean by predatory lending, i mean people who were given documents where, you know, they didn't have great reading

levels to begin with and were completely incapable of understanding what was in the documents. >> still shouldn't sign them. >> where the appraisals were doubled where they were lied to about the terms of the actual mortgage. were told they would have a low fixed payment in perpetuity or guaranteed refinancing. >> we should sue them. it's a legal issue. >> this isn't the first time. if you recall, ameriquest actually was brought up on fraud charges and settled and that was a case where every state in the union sued them and that was several years ago. you have phamco, proven fraud and what we did was we released the brakes so there was a lot more fraud in these loan, and yes, you can blame the people who signed on the dotted line, but there was a lot of cynical, predatory behavior and then investment banks -- took a blind eye and securitized that garbage and we all know how that ended up. >> go ahead, rick. respond. >> here's what's wrong. it takes two to tango.

you can't cheat an honest man. if someone appraised your house -- you don't understand the dynamic. >> hang on! janet -- we let you go. let rick finish. >> listen, we cannot look at our citizens as stupid. and if they are stupid and they signed -- >> that's what you're saying. >> if they don't understand that's an issue that should be dealt with, but to carte blanche, make these rules and bure be onning rattize the entire system because of the short comings of those that are financially illiterate, deal with the issue, financial literacy. >> your way worked out well, didn't it, bill? >> the producers are going to kill me. i want to make one more pass, too big to fail. does this proposed legislation which has. a government resolution authority deal with too big to fail? will there ever be a failure? will we break this moral hazard nexus bill? >> larry, let me say something about too big to fail, but let me just make another comment on

the are issue. >> let me hear them. >> the mortgages that were made and were abusive and there were aye abusive mortgages for the most part virtually all of them were made by non-bank lenders who are not regulated. very little of that problem came out of regulated institutions and so i think we're really focused on the wrong sector here when we -- and much of this debate. as far as too big to fail, eric, i don't think we can ever eliminate too big to fail when we're in the middle of a crisis. -- >> probable -- >> it's called capitalism, people fail in capitalism. you know that. >> we've got to go. >> it's called free market capitalism. >> larry, let me just -- when we're in the middle of a crisis and everybody's coming down the government needs to stop the crisis. individual institutions can be allowed to fail, but not when we're in a crisis and we have everybody in trouble.

>> we've got to leave it there. thanks to all three of you for join us. >> i just heard the tail end of that conversation as i was coming upstairs and my hat's off to rick santelli. financial education definitely part of that solution. when we come back, fed chief ben bernanke says interest rates will stay where they are for a while and not everyone's agreeing with that. steve liesman with the story for now. >> general motors out with february sales as it announces a recall. we'll discuss blt automaker is taking advantage of toyota's problems. you're watching cnbc, first in business worldwide.

hi, folks. welcome back to "the call." i'm matt nesto. if you're a patriot and like to do deals, patriot coal is up another 7% today. that brings the tal toe 25%. the the rumored target du jour. i'm seeing fly on the wall and briefing. other traders are keeping an eye on patriot, pcx. it's $1 billion-seven in market cap. the call to put ratio is 6 to 1. traders looking to obviously get long the stock and at least the options, the calls to do so and also it's been in the news lately and beaten down because the federal number two mine,

their biggest mine is out of production right now as they deal with some safety issues on this one and it's looking to re-open as soon as possible, but we, like the street, will continue to watch pcx and if we get any details from any company looking to buy this company for real. we'll let you know, back to you. >> matt nesto, thank you very much for that. everyone on wall street is looking for clues on just exactly what the fed strategy is and specifically what the exit strategy is and whether or not the fed will tighten interest rates in the near future. our steve liesman sat down with the kansas city fed president for an exclusive interview. he wants to raise rates now, steve? give us some more. >> yeah. and our interview will continue now, trish. tom honing wants to raise rates sooner rather than later because 1% is still easy and zero distorts the economy. i asked him as our interview continues here what impact higher rates would have on consumers and businesses.

>> i suspect that it will have a temporary effect from the announcement, but i think after that the effects on the level of interest rate would remain still so low in terms of staunchy demand or harming the economy very little and there would be a clear signal that we are addressing the inflation possibilities longer term, asserting that independence, and i think in that sense it could actually have longer term positive effects perhaps even on the long end as you assure people inflation is not going to be allowed to get out in front of us, and then remember there are savers. i get a lot of inquiries from savers saying what are you doing to me? i'm on a fixed income and so forth. there will be positive effects as well. >> what kind of impact do you foresee on the mortgage market when the fed stops buying

mortgages in the end of this month? >> i don't necessarily see any impact. i think the market should step in. it should. i don't think we should be the only bare of mortgage-backed securities at all. i think it's healthier for the economy to let it begin to function again. we have a lot of issues in this economy of ours, but i think we need to be turning more of it back to the marketplace so that it can allocate to where people really want to spend their money and where they have demand for homes or whatever it is. so, by allowing the interest rates and the markets to determine these things i think we're better off in the long run. if the treasury came to you in the federal reserve and said we need you to buy the debt and print money, what would be your reaction? >> i can't imagine a worst question to be asked of us and, no. we won't. you need to understand that we are independent. our goal is a long term, stable

prices and maximum long-term growth and to monetize the debt is to invite, i think, major inflationary problems down the road. >> we have more of this exclusive interview coming up at 1:20 in "power lunch" and then again at 2:00 we're talking about exit strategies and more about regulatory reform. larry, trish and melissa, hoenig doesn't call himself an inflation hawk. he calls himself a stability hawk. i basically agree with hoenig, i wish it was 2% and that would still be accommodative. >> okay. >> right. let me ask you this. looking at market prices, right now the dollar is very strong and that suggests no urgent need for the fed to tighten and two-year notes and five-year note yields and ten-year note yields are not rising substantially. i'd like the fed to follow the treasury market. the treasury market is not

really signaling that right now. what do you make of that? there's sort of a conundrum here. >> hoenig has become famous for talking about the republic and he has this reiches markup on his wall that in 1921 would have bought an apartment and in 1923 wouldn't buy a loaf of bread, and on the back he has the increase in the money supply for the public at that time. the point being he thinks it can happen very quickly and he believes policymakers need to get out in front of this and not wait for the market to tell him how to works. >> i know he's not painting himself completely as a hawk, but certainly sounds that way. in terms of where he stands, let's talk a little bit about the general landscape for the fed. we've got three vacancies now as a result of donald kohn announcing his retirement. what's your take, steve n terms of what we might see for the

overall picture of the fed? are we going to see more of a hawkish stance once these slots are filled? >> you know, i think what you will find is you will find regulatory supervisory hawks and maybe more policy dovish or neutral. i think hoenig is interesting in this regard. he thinks the regulators should be in the faces of the banks and had they been so there would be fewer problems during the credit bubble and he also thinks they should be tight or policy. so he may not be the right guy for the job as far as obama's concerned. two names came up and one is christina romer. >> another one is out in san francisco, janet elin is another one. assistant treasury secretary is inside of the treasury right now which our potential, lou alexander is the citigroup economist and very well regarded in monetary policy circles and allen krueger, who is the labor economist. >> do you think the administration is behind the

curve here? three vacancies and we know how long it it takes for an appointment to actually happen. >> it should have been more pro active and it had a let of problems with a lot of the appointments due to the senate and getting things up to speed is not that easy in this particular political environment and it is more important to have more now rather than less. >> his wymar republic. he's basically taking a monitorist view. he's saying the balance sheet is too big and that is turn around very rapidly. it's not an unemployment curve, it's really the balance sheet, right? is that what he's saying? >> it's a strict money supply argument and his argument comes from the idea that the fed could be politically pressured to monetize the debt. that's why that last question i asked him is so important. what would you say when the treasury came to you and he said i would say no. >> thank you. great, thank you. >> good interview, steve. thank you.

gm sales are up 12% and not before they announced their own recall. >> we'll discuss whether the automaker's taking advantage of toyota's troubles. what about toyota's troubles? you're watching cnbc, we have no troubles because we're first in business worldwide.

general motors releasing sales for february, but not before recalling 1.3 million cars to fix power steering that could fail. phil lebeau is in chicago with the details. everyone's got a recall. >> there are tons of recalls that happen every single day and the vast majority of them are service bulletins and this one is getting more arc tension because of the climate out there right now. general motors recalling 1.3 million compact cars. the majority of these are cobalts made between 2005 and 2010. this news coming out on a day when general motors reported february sales that are weaker than the street was expecting. general motors reporting sales in increase of 11.5% last month and the street was expecting 24%. february is always a weak month so you don't want to read too much into these statistics and here's one stat that will get a lot of attention. the average transaction price in february up $4,000 per vehicle compared to a year ago.

that's the kind of number that wall street wants to see. as we take a look at estimates for the other two automakers of the big three. keep in mind, chrysler is expected to be down 13% and still working over a lot of the problems and ford with an increase of 30% is expected. the number everyone will be focused on, expected to come in at 10.4 million. it was the sales rate in january and if you go back to the end of last year you're looking at 11.5 close to 12 million as a sales rate. most are not too worried about the sales rate being at 10.4, january and february also very weak. the real focus will be in march and by the way, we're seeing incentives coming up for toyota and gm. we could see incentives there to ghost the showroom business. >> phil, stay with us. as gm recalls more cars, has the u.s. automaker taken advantage of toyota's troubles? let's bring in john conwits with global insights automotive group

and phil is still with us as well. john, it sounds to me like if you drill down this number for gm it's actually terrible. up 11% or 11.5% sounds good on the surface and the expected was 24% and they haven't been able to make hay out of toyota's problems at all. >> think that's right. one of the reasons for that is because gm has not gotten the quality seal of approval from consumer reports the way ford has. so if you've got a toyota buyer who is on the fence and saying i'm not comfortable with toyota, and i want something else and looks in consume are reports it says ford is the way to go. >> ford's the big winner, john. ford's the big winner, the company that didn't take t.a.r.p. is a big winner. >> exactly. >> that's a heck of a statement. i don't know if you saw mullaney's interview. he has hourly compensation, that includes wages plus benefits, he's got it all of the way down

to about $50 an hour. it was $75 a few years ago. he's at toyota levels, john. that's a heck of an achievement, is it not? he's done a tremendous job of ford and so have the guys that directly report to him. they've got a great team in place. >> phil, we're always dumping on gm, what can they do to pull it together at this point. >> think you're being overdram attic to say the numbers are not good for the month of february. >> really? you look at that transaction price, melissa. an increase of $4,000 per vehicle? that's going to be huge in the eyes of many on wall street. >> how do you get that done? >> because they've tightened on the inventory and that's a huge difference maker and the products are much better than they were in the past and some people will sit here and say ford's doing great. general motors is also succeeding relative to where it was last year. is it doing as well as ford in terms of if you were looking at a graph probabliant at this point, but they'll take where they are given where they were a year ago as they were sliding into bankruptcy.

>> john, do you buy that argument? >> think he's right. there's still time for general motors, and if you look at the performance of their newest products, the kind of products we're going to see many more of over the next several years, they're doing very, very well. >> okay. we're going to leave it it there. thanks to both of you for joining us. >> trish, over to you. >> thanks, melissa. when we come back, oil on its way up to 80 bucks a barrel. we'll talk about how it could impact the summer driving season, larry? >> airline stocks are on the rise and we'll have an exclusive interview with the ceo of hawaiian airlines and we'll get his take on the industry. that is right here only on "the call."

everyone. i am trish regan. we want to get you caught up on the markets. we are still in the green right across the board. the market had gone into positive territory for the year for 2010, however, it pulled back in part because of that cnbc interview that steve liesman had with the kansas city fed president. he was striking a rather hawkish tone, so the real they eventually interest rates will have to go up here really started to seep into the markets and we saw a little bit of a pullback. i want to point out oil right now is back above the $ 0 a barrel level and is cnbc's sharon epperson is joining us from the nymex with the energy call on the reason for the move. hi there, sharon. >> hi, trish. once again we see this push to $80 a barrel. let's see if we can sustain it. it's happened several times over the last weekend and we were unable on sustain prices at

these levels and it seems investor demand continues to take crisis higher. you look at the cme volumes for february for energy, and they were up sharply up 5%, 12%. add to that the fact that it's been gasoline that's been driving this rally. seasonally, this is the time that traders put on that trade to bid gasoline and we're seeing that in action right now and in fact, even with the role thatry had on friday moving from the march to april contract, the rally that we've seen in gasoline prices and in fact, over the past month gasoline prices up about 9% on the wholesale level on the rbob contract. it shows we're seeing a number of refiners that have cut back on operations or have shut refineries and folks are saying that is the reason why we're seeing this bid even though fundamentally we're looking at gasoline supplies that are up about 7% from where we were a year ago. look at cash market as well because that has been quite strong over the past several

months as well and we're looking at east coast refinery shutting production as well as the total strike that had folks worried about gasoline imports and that also lifting the cash market and lifting the rbob contract and we're back here again above $80 a barrel. melissa. >> sharon epperson, thanks so much. i'll go back to phil lebeau who has breaking news. >> we've been talking to sources close to chrysler and those sources close to the company are telling when yous chrysler reports sales for the month of february in a couple of hours it will show flat year over year sales. on the surface that might not look too impressive, but keep in mind a couple of things and one wall street was expectation decline of 13% and it's better than what wall street was expecting and about ten of the vehicles will be showing substantial improvement year over year and month over month. this is a company that is slowly making progress. this is encouraging news we'll hear from chrysler later on. flat year over year sales. larry, back to you. okay, phil, making the chrysler

case. >> you don't look encouraged. >> what do i know? airline stocks are on the rise. we're going from cars to airplanes, but is the sector really in a recovery mode? hawaiian airlines ceo mike dunkerley will give us his take on the economy and the travel industry. we have an exclusive interview here on "the call" upon. >> and jay leno's return to "the tonight show." we'll talk about whether the king of late night's ratings were deflowned or he dethrowned letterman on the first night back. you're watching cnbc, first in business worldwide. we're back after this.

okay. welcome back, everyone. cablevision and disney are fighting over disney rights fees. disney threat take yank abc off television this weekend if the company does not agree to hike the fee it pays to carry the channel. stay tuned on that one. pun intended. cablevision down almost 1%. walt disney up just a bit, 0.3%, larry? >> thank you, trish. >> airline stocks on the rise.

analysts say the sector is on the road to recovery and poised for mergers. so the arc airline index is up 9% over the last month. hawaiian airlines seeing a big boost since last march, get this, the stock is up nearly 200%. today it is down a wee bit. ceo mark dunkerley joins us for an exclusive interview. you are merlin the magician, your profits are up fourfold over the past year, your share price is up 200%, how did you do it? >> well, thank you, larry. it's certainly nice to be in such a situation. it really wasn't me. a lot of hard work from it a lot of people in the business. bee have good employees and we have a measure of good luck we have the right strategy for the future. >> it was a terrible year for the industry as a whole? how did you buck the trend? did you have more passengers? had were you in a sweet spot around the world? give us the detills.

>> it was, it was bucking, our employees do an unparallel job of delivering the highest quality product that we have in our marketplace and we've controlled our costs. we've focused on getting the word out there about our company to consumers and as a result, it's all come together. >> are your prices lower? do you have more routes to asia? what's going on there? >> our prices are competitive. it's a very competitive business, which really gives consumers a lot of choice. consumers in our business are really, truly fortunate to have so much choice. it makes it all the more important that what you do with your business is provide value for money service and that's really where -- >> how much price discounting, just to follow up on melissa. how much price discounting do you have? i want to ask you about the margins. at some point the price has to play into the profits

calculation, is it down 5%, 10%, 20%? how does it work. >> the prices were down as a whole, reflecting the recession and the fact that demand was down in general so prices were down in this sort of 10% to 15% range for much of the year, but we saw a gradual improvement from our perspective in the price of airline tickets such that by year end we were a little bit above where we were last year. >> is is your workforce union or nonunion? >> we have 87% of our employees are unionized. it's a very unionized environment. >> i know a lot of invests are in the industry are anticipating a lot of consolidation. do you see that happening? >> consolidation has industrial lodge nick our business and there are barriers to getting consolidation done. so it's quite hard to say when it will happen. i think it's sort of out there generally in the ether of the industry. in the meantime, if you're a business like ours, i think what's important is to run a good business, take care of your

shareholders so you always have a choice of either participating or sitting out. >> it sounds like you're saying it's not in the immediate horizon. a lot of the action has been that people are thinking consolidation is right around the corner. you disagree with that, it sounds like. >> consolidation has been talked about as long as i've been in the industry, 25 years, and there is, as i mentioned this sort of logic to consolidation. it's very hard to get it done. this because of the government or the unions? >> or deregulation? is deregulation good or bad for you? has deregulation been good or bad for the airline industry? >> deregulation has been good for the airline industry and it has been terrific for the consuming public. there can be any scarce doubt of it. >> real ticket price has fallen and demand has decreased in the long haw, want in had recession, but over the long haul? >> real ticket prices have come down enormously and the number of americans who have traveled by air has blossomed and i don't have my finger on the statistecs, but it was something like less than a quarter of the

population had been on an airplane at the dawn of deregulation 30-odd years ago and today that number is well into the 80s, i should imagine. >> are you going to tokyo? and i want to ask you about asia and china, also. >> we've applied to gain the rights now available to fly to tokyo. we like our chances. at the moment in the middle of a government process for allocating these route rights. we think we have the best case of all of the applicants out there and as part of our growth strategy to develop the network into asia and that means more than just on. >> along the way, will you buy united? will you buy american? >> time will tell. time will tell. >> denial, denial. clearly, you can run it profitably and they don't seem to be able to, i thought i would ask and put that on the table. >> very kind of you to suggest that we can run them profitably. they're a big, complex businesses and we're focused right now on running ours

profitably. >> we have the special edition of "power lunch" coming up at the top of the hour and mr. dennis kneale is joining us now from sunnysunnyvale, california. >> carol barts is talking about yahoo and what she's done to fix it. we want to ask her about broadband? should it be a government-funded utility? i don't think so. isn't it time investors forgave tech stocks in the crash of 2000. yahoo is at $118 a share. we have the chief marketing officer and what is she doing to put the wow back nah yahoo and lastly, time to abolish the post office? something like a couple hundred million people use yahoo for e-mail. maybe yahoo ought to buy the post office. we'll see you at noon. >> that's an interesting thought. thanks so much, dennis kneale. >> when we come back, jay loan owe is back and nbc is holding its breath waiting for ratings and can he beat david letterman

head to head. >> there's lots riding on julia boors tin, when we come back, you're watching cnbc, first in business worldwide. welcome

with your daily realty check, i'm diana olick in washington. it's green for green. president obama is offering homeowners up to $,000 in instant tax rebates for retrofitting homes to save energy. the program could provide for small or extensive improvements that reduce energy use by 20%. equifax reports 8% of homeowners are behind on their loans up 4.4% from december and up 21% from a year ago. the driver, unemployment. the fdic reportedly plans to issue $1.8 billion in backed debt, it is a result -- it could lay a groundwork for future securitizations as the fed moves out of the mortgage business. checkup next at 2:50. until then go to blog at realtycheck.cnbc.com. >> we will. thank you, diana. jay is back where he once ruled the roost. unless you live on another planet you know the story here. a lot is riding on whether or not he can take back late-night

television from rival david letterman. julia boorstin is in l.a. with the overnitratings and pretty darn good, julia. >> jay leno had a huge night beating david letterman by 80% in early ratings and attracting far more viewers than before he bid a temporary farewell to the tonight show last may. preliminary local market ratings are out. "the tonight show with jay leno" attracted a 14% share while letterman took 8% and jimmy kimmel drew just 6%. as we await national numbers, broadcasting and cable editor brent grossman projects leno drew 7 million viewers last night compared to 59 million he previously brought in on average at both the 10:00 p.m. and 11:35 p.m. shots. that compared to the 4 million viewers that compared to letterman and just 2.5 million that watched conan when he held "the tonight show" spot. >> 7 million is a big number for the late-night audience.

jay used to average 5 million. that's a big jump right there, but that's a lot of curiosity. what is he going to do his first night. so that was expected. i think he'll settle around 5 million where it used to be. >> leno kicked off his show with a parody of the wizard of oz, joking that his trip to prime time was all a bad dream. starting his monologue with the joke that he's your host at least for a while. the question now is whether leno will hold on to his viewers. it seems he'll at the very least continue to be to beat letterman based on where he's starting. this premiere week follows the olympics' high ratings and packed with big guests. last night he had jamie foxx and skier lindsey vonn and sarah palin and snowboarder shaun white. >> david letterman has certainly had his personal troubles. is there any expectation among the analyst community that perhaps jay can build off this momentum he saw last night and that perhaps some of the viewers were turned off by letterman? is. >> well, you know, it seems like everyone is saying that

everything will go back to business as usual. remember conan encouraged people to boycott jay leno and obviously that's not working. so it seems like it's just going go back to the ratings that leno had before and the ratings that letterman had before and it seems in neither of the drama that jay leno had or that letterman had is going to affect ratings at all and it seems like people are just fans of either of these hosts and they're going to stick with their show. >> okay. julia boorstin, thank you so much. >> a quick break and we're back with this morning's market action. >> and the list of stocks you need to be watching right now as we head into the afternoon session. you are watching cnbc, we are first in business worldwide.

hi, folks. welcome back to "the call." i'm matt nesto with "the call to action" with the stocks to watch in the second half of the trading day. check out the banks versus retailers here today. autoparts and components are number one, but the banks and strength that we're seeing in them is actually very, very

pronouninged. you can see up over 2% today and look at weakness in the retail sector today. that's disturbing. it's also affecting the entire consumer discretionary sector. check out the difference between staples, one of the worst performers today a one-penny miss is translating into an 8% giveback in the market here today. we're also seeing priceline continue to get bid up. amazon.com and then the dot com space also very strong here today. the flip side, if we take a look closer into the banks, the boffo banks, four regionals, zie orngs marshall and eisley, suntrufrt and fifth third up strongly. in financials, the stock to watch might be hartford insurance, this after the aig/pru uk deal and hart forred may be eyed by some as maybe looking to be part of some sort of a deal. and then lastly, some other standouts that are worth watching here today will be the gold index and the biotech, very strong here today.

the oil services and crude oil having a great day and we're seeing a bit of a comeback from the badly beaten and lagging semiconductor group. amd and one of the big performers. >> melissa, back to you. >> that will do it for us here on "the call." i'm melissa francis. >> i am trish regan. >> i'm larry kudlow and see you on "the kudlow report" at 7:00 p.m. eastern and now "power lunch" is is next. hello. i'm dennis kneale. this is "power lunch." today we've got an exclusive interview with carol bartz, the ceo of yahoo and she came in a year ago at a time of crieses and what has she done to fix this company and find the real yahoo and unlock that shareholder value? we have it coming for you in just a moment. sue? >> thank you, dennis. i'm sue herera, as