this etf tracks the value of the juan. also if you look at the dollar index. that's the power shares. bull index, that stock has also had, etf had very active trading. again, this is trading around currency and use exchange traded funds. tradertalk.cnbc.com. scott, how are we looking over at the nasdaq? >> we are flat right now. nasdaq up by less than one half of one point. apple remains a big story. all-time high for apple, up 0.6%. microsoft is positive and indel is to the plus side. take a look at tractor supply, though. interesting story because what possible implications there are for the broader economy, at least what this company sees is somewhat of a rebound here. the stock up 7%, the reason being, this is a large retailer.

44 states across the country here farm supplies, they sell to ranchers and things like that. they raise their guidance to 22 to 42 cents and the street was only looking for a penny. that's some optimism. let's go to sharon. >> not a lot of optimism at all when you talk about the greek situation and that's something that a lot of traders have been talking to me about all day. one trader said it's looking really bad and that's why gold is looking really good right now. in fact, gold prices just went through a key psychological level above 1150 just a few moments ago. we're looking at a lot of momentum buying going on in gold and as well as in gold etf. george gero points out that momentum buyers are very interested in higher closing prices and higher volume and increase in oep nntrust and we're seeing all of that and seeing gold prices rise as a result. energy prices, meanwhile, lower on the session but a lot of folks say that's consolidating gains right here in the mid-80s. oil prices above $86 a barrel

and we did get that energy department report and showed a bigger than expected increase and gasoline supplies a bigger drop an expected. rick santelli to you in chicago. >> thank you very much, sharon. of course, we all know we'll have an auction and the results ready in 57 minutes. will the fact that you're an investor and you're not going to get 4%, will that make you less aggressive? all interesting points. our chart of ten year, almost more interesting to watch a chart of the european ten-year because it just visually shows you that even though everything around you might be smoldering, the flight to safety distorts sovereign rates at a time when they have boat loads to still issue. it's an ongoing issue. despite everything going on with the greek instruments, it really hasn't taken off this level the last couple days. tyler, back to you. >> rick, thank you very much. the empire strikes back after months of being bashed. goldman sachs defends itself in an unusual letter to shareholders today. it was included in the company's

annual report. take a look at the "wall street journal" headline. it says goldman tells its side of 2009. is fighting back the smart thing to do or is this a case of too little too late? let's bring in our goldman sachs panel suzanne craig of "the wall street journal" she wrote that article michael gordon, and andrew stolicman partner at the stolkman law officers. sue, let me begin with you and approach this from a million directions but let me come at it this way. who is the audience here or put another way, does goldman really give a rats, you know what, about what the public or the financial paparazzi think of it? >> i think the audience are probably three constituents. one would be the shareholders and the second their clients and the third the regulators who seem to dive on them any time there is an accusation about them in the press.

they want to set it aside? >> did they? >> they did. they have been getting their points out and there is something about repetition and they'll keep saying it and it's their side of it and they want to keep getting it out in the public. >> you have been critical of the company and said that basically they had their bank saved by the government rescue of aig specifically. there is about a page and a quarter in this for mr. blankfein that talks specifically about the positions that goldman sachs had with aig, what they did and why. does their explanation satisfy you or does it seem disenginge s disingenuous? >> defacto received $13 billion that went from aig to goldman sachs. i know they're trying to put the best possible spin on this that they can. but at the end of the day they took $13 billion. >> that was exactly what that

money that was given -- aig was for was to make sure that aig could meet its obligations and it owed goldman that money. >> what annoys me goldman's attitude, we didn't need this money. we're above this fray. try not to put a spin job on it. >> excuse me, i want to call up a quote here from the letter about goldman's view towards the government. let's read it together because goldman is not exactly saying they didn't need the money any more. can we pull that full screen up on the screen? the government arrested the contagious fear that had engulfed the global financial system. goldman sachs is grateful for the indispensable role governments played and we recognize that our firm and our shareholders benefited from it. is this, sue craig, merely a tactical change in that company's position or does this really mean, thank you very much, taxpayers.

>> i think you have to separate the aig statement. should aig should have broadly failed it would have affected everybody including goldman. the aig issue is a little bit separate from that. they, obviously, benefitted in some way that their argument went back out to counterparties and the money went to other areas. thy they retained a small amount of it. we all would have been in a load of trouble. >> you're the image consultant here. was that enough that they said? >> the question is, is it too little too late? it was too little, but not too late. i think the letter, by and large, was either defiant or defensive, 95% of it. they needed to show more of that humility that they showed in the government section that tyler just read and they also should be a little bit more forward looking. suzanne talked about how over the past several months they have been trying to put forward what they're going to be doing differently going forward. that should have made its way into the letter also.

because there's such a big fish in the sea they can take a lot of pr bullets. >> it's time this company and wall street stood up and defended itself. wall street paid back t.a.r.p. at a profit and wall street helped get back on its feet. >> doesn't matter. it doesn't matter because there's now an implicit u.s. taxpayer backstop on all these firms. goldman sachs knows it and all these other firms know it, as well. >> they are feeling the pr heat, too. they admitted in their last earnings statement that pr is clearly affecting their bottom line. clearly, they're feeling the heat no matter that they returned all the t.a.r.p. money. >> michael, you say they didn't do enough, but do you think from a pr perspective this could backfire? >> no, i think it's a step in the right direction, but there are more steps they need to be taking. talk more about what is going to happen for them in the future policy wise. how will they do things differently and be a little bit more humble.

i know it's hard sometimes in the bubble of wall street to think about the larger public, but they haven't done a sufficient job of it. >> suzanne craig and to andrews point, it doesn't matter, the government is a backstop. goldman tries to answer that saying we do not operate this business with any expicitation of outside assistance. it may be, but does it even matter? perception is that they do have a government backstop. >> they have some, they have some backing, backing is maybe the wrong word, but they have some support that they're now regulated by -- >> no, you know what i mean. if we all went to hell in a hand basket again, they made clear they're not going to fail. >> that's the question. i think it's out there. they're saying they don't operate their businesses as if they're going to fail and hopefully that's more true than not. >> that's exactly what it means. in september 2008 goldman sachs

wasn't talking so tough. they gladly took $10 billion of t.a.r.p. money and now they are saying we didn't need it. >> they did pay that back. let's not forget that, but everyone seems to forget it. it's aig that hasn't paid it back. one agenda goldman is pursuing here, suzanne, they are defending the idea of a big mass scale multi-facetted firm that is not a strength to the system, it is a strength to the system. they seem to make that point a lot. >> they operate their business as if the government is not going to step in, i think that's fairly fair. but more importantly what they're trying to do is get across their point of view. they mentioned the words client or client in their 56 or 57 times that they are a client-focused business because there is obviously a lot on wall street that all they do is trade for the house. they are trying to get across their point that they serve their clients and that all their businesses sort of feed into that and they're not one big hedge fund. let them have it and their shareholder. >> thank you.

>> you've read it, you read it, we all read it. did you sense the same level of defensiveness that some of the guests did there or was it more expository? >> it also seems like their audience to a large extent are regulators. they're saying this to their shareholders, but they really want washington to be listening to this message. >> the way they defined all their businesses, they buried with strategic advice trading and principal investment segment. trading, right? the big question here i wish they had answered more was let's really break down, i know you say you're doing most of your business for clients, but the fact is you have this principal investing and trading segment. how important is it to you? >> don't we know that? don't we know that? 10% of their revenues. didn't they make the point pretty clearly in there, okay, we'll get to the ts in just a moment there. we're in a good conversation here and we're going to keep it

going. the point is here they made was that the benefits they had by taking the other sides of trades had less to do with proprietary trading and more to do with market making and hedging positions that they had. right? fair point? >> yes. they had a big section about that. >> far less defiant than lloyd blankfein was when he appeared in front of congress six or eight weeks ago, i can't remember exactly when it was when he was taking on several members of the hill and he was notably testy. >> this is a very different tone. entirely different tone and they're taking a lesson from warren buffett and going straight to their shareholders. >> they're talking to an audience here of government regulators, shareholders and clients and they're making their case to them and i thought really rather well. >> investors and clients have done really well. >> now we're done and we can move on. grilling greenspan. there i am on the housing

bubble. plus -- >> at the auction. steve liesman live from the citi trading floor capturing all the action around today's ten-year note auction. the last few have been big flops. today's interest rate is key. then cnbc plays toxic avenger. we're buying a toxic asset and carefully deconstructing it to see what the experience is like and what we can learn. let's just hope we all don't grow a third eye. volcker pushing a back tax. states raising more income taxes. where is it going to end? all that plus the fast money halftime report.

welcome back to "power lunch" phil dudley making a significant speech about the role of fed policy and asset bubbles and he's saying, yeah, we know it's difficult to identify them and pop them, but that difficulty should not stop, is not grounds for the fed not to act. and he says he underlines three different ways that the federal reserve can pop asset bubbles using the bully pulpit. talking them down, regulations and then also monetary policy. but he says that using the bully pulpit are far better than monetary policy because monetary policy is a very blunt instrument. then he identifies a sort of

three-part test for the fed to make to pop an asset bubble. first, the asset bubble should come in when the risk of it popping is very high. it's higher, by the way, when it's a credit bubble and when the chance of success is good and, third, when the costs outweigh the benefit. this is something we'll have to watch as the federal reserve has been debating what asset prices should pay in policy and dudley saying the federal reserve should not shy from the task of popping them when it is necessary. dennis? >> all right, thanks, steve. massey energy says now it has identified 11 victims of the west virginia mine explosion and has recovered the bodies of seven. the company continuing to face major scrutiny days after that major accident. hampton pearson joins us with the latest. >> while the rescue effort goes on in west virginia, massey energy is under fire from both wall street and organized labor. with the labor department just announcing a special team to investigate the explosion.

in addition to the 10% hit the stock took yesterday, massey shares are losing more ground today. s&p is saying it might cut massey's bond rating already three ratings below investment grade because the mine disaster might trigger regulatory scrutiny. it is estimated it could lose $50 million in earning due to lost production at the west virginia mine. the coal mining giant continues to come under fire for its safety record at the upper big branch mine. today afl-cio omanager weighing in saying "massey mine and its ceo don blankenship have been cited for over 450 safety violations. massey paid over $1 million in fines in the past year alone. and has failed to pay out hundreds of thousands of dollars. >> it's not the safest coal mine

and at times it has been higher than the industry average, but it's a large mine and large mines with lots of people. you know, you get more viilations because you get a larger area to be inspected and a lot more people involved. that doesn't mean the mine is unsafe because every violation actually means an improvement in the safety. >> accompanying that labor department announcement within the hour of its investigation plan labor secretary hilda solice saying "25 hard working men died unnecessarily. the best way to honor them is do our job and find out what happened." michelle, tyler? >> do we know mr. blankenship has been called before congress? >> i don't think we know that or yet what shape a congressional inquiry will take. about an hour ago at a briefing on site, nick rayhall who chairs a natural resources committee on the house side basically said he will be involved in upcoming

congressional hearings. that's as far as we have gotten thus far. >> if congress is involved in calling people who have taken required writeoffs for health care costs they ought to call this executive in front of them who, if i heard them correctly, every violation means an improvement in safety. that is alice in wonderland logic. >> he is technically correct that we got into this yesterday. the way the system works when you are cited by the feds you get to make short-term fixes of the violations which, in essence, keeps you open but that also clogs up the system. couple other things to throw out for you guise. you know, a lot -- >>q any time i get a ticket for speeding going 90 miles an hour in a 35-mile-per-hour zone and the next week i drive at 25, it is an improvement in safety. >> that's a pretty good analogy. exactly what goes on. >> smart point, mr. blankmanship, way to go.

alan greenspan spent the morning on capitol hill defending his record before a panel investigating root causes of the financial crisis. mary thompson is live on capitol hill with the details. mary? >> hey, michelle, he just wrapped up about half an hour ago and if you were expecting any kind of mea culpa, you didn't get one. greenspan did admit to making mistakes 30% of the time during his 21 years running the fed but he wasn't more specific about it when asked if some of the mistakes ran up to the housing bubble and the financial crisis he said, i don't know. in the more than three hours of testimony, greenspan blamed long-term monetary rates. that alang with demand for securityized subprime mortgages. from european banks and fannie and freddie mack. >> the search in demand for mortgage-backed securities was heavily driven by fannie mae and freddie mac, which were pressed by the department of housing and urban development and the congress to expand affordable

housing commitments. >> greenspan said half the fed tried to slow subprime lending during the housing boom and congress would have thought it was craze so that and a role as a regulator not an enforcer and limits what the fed can do to prevent asset bubbles. >> regulators cannot successfully use the bully pulpit to manage prices and cannot calibrate regulation and supervi supervision. nor can regulators fully eliminate the possibility of future crises. >> greenspan also pointed the figure at rating agencieses as one of the causes slapping high ratings on risk y securityized gave investors a false sense of security. >> the ratings that were developed by the credit rating agencies were a major factor in the cause of the problem. >> greenspan was lotted for

given a lights out performance, of course, because the power went out during the latter part of that hearing. coming up later today we'll hear from a number of executives at citigroup. back to you. >> all right, got it, mary. thank you. feels like part of the nation, at least part of the financial markets want a frost nixon moment out of alan greenspan. i kept money too loose too long and i don't know if they're ever going to get it. >> if they didn't get it today, they're not going to get it. >> markets lower, dow is lower by about 38 points at the moment. >> sneaking up on dow, 11,000 for days and then backing off. what is the problem here? what is it going to take to break through? our market insider will tell you on the other side of the break. i drove my first car from my parent's home

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i think the market is going higher near term because i think the news near term is going to be good.

but my forecast for the year is that the market will end the year at about where it started. >> that was byron wien's bearish forecast for the market. will we see a dow 11,000 and if so will it drop shortly after that? let's gather our power lunch market insiders. lou, president and ceo of legend financial advisors and jack ceo of indexfuturesgroup.com. jack, let's start with you. what's keeping us from hitting dow 11,000? >> we're starting to lose momentum on this rally. couple things taking place. we're seeing lighter volume on the way up and we're seeing the breath of the market not as good as it was on say the last rally we saw or the last leg of the rally we saw six months ago and now you have competition for capital. we're talking about a ten-year yield that has gone up 42 basis points in the last 32 days. that is a big move and that will draw money away from what would otherwise be fuel going into

this overbought condition. >> we have been trading in a narrow range recently. what do you make of this range between 10,900 and 11,000? lou. >> frankly, it's -- we're in a situation where we had basically a 60% plus run up in the market and we should not expect great returns from this point forward. in fact, i would suspect we're going to have a lot more volatili volatility, similar to what we had this year going forward where we might go up 3% or 4% and then go down 9, 10, we'll recover, go up another 1% or 2% and then come back down. i think that's going to be a pattern -- i don't see any imminent fall of 20% or 30% near term. >> but, jack, this fraidy cat outlook the bears have been putting that out when dow was at 8,000 and now we're almost at 11,000. isn't it time that some of you guys out there got more optimistic, jack?

>> still some of us are nervous longs at this point. holding your nose and buying the market. that's exactly what we're doing. you're force under to. the market can stay overbought than somebody bearish can stay solvent. you have to maintain that discipline. having said that, you do need something that will continue to fuel the fire and, again, it's been the capital, it's been the overbought condition right now. >> lou, i'm sorry, i find it hard to believe that stocks were overbought when they were at levels we were at a decade ago. it's not overbought. we were at a near death experience. lou, you make me want to call dr. kevorkian. this has been much better than you have expected, isn't it? >> it's a great snap back but the fundamentals just aren't there. we aren't cheap by any means and we don't expect the market to produce 20% returns from this point forward by any means. again, we think it's going to be

a pretty voltile up and down scenario to gain a few percent before the next mortgage crisis hits, which is in the late fall, early winter coming this year. >> well, lou and jack, thank you both so much. dennis, i think you might have to call dr. kevorkian. >> oh, gosh. coming up next, we go off the chart to the stock that is up more than 230% since the march lows. >> at 12:45 eastern time get ready for the "fast money halftime report." we will be back in a flash.

now to a name off the charts that remind me of a name of shatner. priceline up 200%. here to break it down scott kessler. scott, you merely have a tepid neutral on this stock. why don't you have a buy if it's that great? >> the performance to some extent, look, this company capitalized on some great execution and, frankly, an economic recovery that you guys were just talking about was a lot stronger than folks had

expected. looking at it today we think the stock is fully valued and issues related to competition, execution, penetration of further markets. a lot of concerns that people might have when they're looking at a stock, based on our estimates. >> why isn't it a sell then, scott? >> our valuation models look at a target price that's appropriate for this stock over the next 12 months up $250 a share. it's $260 a share. so, that in our judgment is reasonably priced. don't get me wrong, if this stock gets much higher than we thought it would trade at we don't get -- >> one snag, you point out most of the profit comes from a european operation they bought, but with greece, europe, economy not so good, problem for them? >> right, well, that's something that people need to be aware of and appreciate because over 60% of their 2009 growth bookings were from europe. three quarters their operating

profit from europe in that year. basically what people should think about is whether or not they could continue to grow in europe as they have over the last couple of years. we think we'll see deceleration in growth and that could be an inflection point that could affect the shares and execution. >> good job, scott kessler, thanks very much. coming up another big treasury auction at the top of the hour. $20 billion in ten-year notes on the move. steve liesman is standing by with a special preview. in a few minutes, bernanke speaks. the fed chairman talking in dallas. we'll be all over that one.

we are making a big deal out of this ten-year treasury auction that happens 20 minutes from now because a key test of investor appetite. treasury will auction off $21 billion in ten years. translation, the u.s. government is going to borrow $21 billion today as it continues to finance the u.s. deficit. key question, how much interest is the u.s. government going to have to pay to get investors to lend it the money? this matters because the ten-year interest rate drives mortgage rates. if ingovernment has to pay more in interest, it has less money that the government would like

to use perhaps somewhere else. and when it comes to the equity markets, many fear that higher interest rates will hurt stocks because bonds become greater competition to stocks. let's go to steve liesman who is sitting at citi's trading floor in new york. give us a preview on this auction. steve? >> yeah, michelle, thanks very much. the appointed hour is drawing near and we have tyrone smith, head of government bond trading at citigroup joining us. thanks for joining us. >> no problem, steve. >> how is the market trading going into today? >> trading very well and good investor interest but the intermediate. >> the last couple auctions were sloppy, wouldn't you say? >> yes. >> how will this one show the government is not thering trouble. >> to all the other benchmark interest rates. investor sentiment and investor demand at this interest rate will be a gauge to how treasury auctions will go going forward. >> really demand for this

auction. how do you judge the auction and whether or not it's been successfully bid by the investor community. >> the two easiest indicators are the percentage of indrex. >> so, what would you be looking for? what would be a good number you're looking for there is a lot of demand? >> 3% bid to cover and in the area of a 35% or 36% indirect ratio. >> will the government have trouble placing this deficit or investors take it down? >> in our view we think the deficit, the overwhelming deficit argument is a bit overblown and if interest rates back up from these levels global investors will have interest in u.s. treasuries. >> thank you for joining us, i know you want to run and get back to your desk for the auction. i have to let this guy go, guys. we'll be here for the 1:00 auction coming up on the ten-year, $21 billion. small number, by the way, guys. >> i know. that's the sad part. 18 minutes from now, that is coming up, you want to tune in. still ahead, runs about $200

billion, the cio of credit suisse's private bank. where he is putting all that money to work. how powerful is viral advertising? posting the best video ads on the front page of youtube today. first, simon hobs and the gang with a fast money halftime report.

gold streaks ahead of other assets and more shorts pile on europe and greece now a real problem. minutes to go before details on today's $21 billion ten-year treasury auction are released and the central question, will 4% hold as the yield? good afternoon, i'm simon hobbs in for melissa lee. the fast money halftime crew joe, john, zach. joe, are you buying gold? >> absolutely, simon, you have to. we talked last night about correlations that break down. the euro is under pressure today yet. gold is rising 1151.60 right now as we speak off the high of 1153 and it looks like gold is breaking out again. >> john? >> well, exactly as joe says. when you do have a correlation that breaks, the dangerous thing simon is that everyone on the other side of the trade now has

to scramble to get protected and that's partly of what is going on today, it seems. joe's sighting is exactly what you'd see when that correlation breaks down and the people who are short gold are scrambling to cover. >> how far do you think it will go, john? >> well, again, it's going to depend a lot on what you led off with with greece. the correlation break down is independent of that. but, if we get bond yields up over 4% and/or more problems out of greece, if that problem is bigger, yeah, than gold could have another 70, 80 bucks in it here. >> brian, would you say that's correct? >> i think certainly gold could go much higher but i would say that the gold trade is not independent of greece, i think it's exactly because of greece. what is going on in the marketplace and what the market is telling us that people are looking for a safe haven asset. now gold breaking out. to me, when gold starts to trade higher, that's a sign that people are looking for safety. >> if that's the case, brian, why aren't they buying oil? another dollar denominated

asset? >> they are buying oil, first of all. oil is up almost $90 a barrel, just today they decided to switch to gold. >> okay, zack, do you want to pile in on this? >> i think gold's a fair trade. always the fear trade. people will start having these discussion about being worried about inflation but this is a short-lived phenomenon in my view. if you're in this, you have to be in it pretty quickly and out of it pretty quickly. >> you don't agree, joe. >> i hate to disagree with zack, but i have to. 1163 is the high for gold and that's where we're headed. india is doing it, china's doing it diversifying away of holdings from dollars. right now gold is the trade. you asked before about oil. oil has been going up. what is going on today is fundamental shift where you're seeing come back in the markets. the better trade right now is gold over oil. >> let's talk about stocks. zack, i was impressed to read

your op-ed in today's "wall street journal." until i got to in the fool paragraph that said none of the reasons the markets are likely to move up depend on robust economy or robust growth in europe. 55% of global gdp. are you sure? >> am i sure? you know, if i were 100% sure i would be somewhere else right now. but i am sure that global companies have been able to detach from their national economies and that too many still look to macro data for too much guidance on how companies are going to do. that is true about american investors and american stock. just means like companies like microsoft, intel, cisco and go down the list with 60% to 70% of their growth overseas and not in europe, they don't need a strong u.s. economy to do well. >> fortunately, in 11 minutes we'll get the much-awaited news on how today's auction of

ten-year treasuries when steve liesman is on citi's trading floor. what's the chances, steve? >> you know, the chatter is that its prr going to be a pretty good auction. that's the expectation, anyway. we're looking with trepidation at these results because the last two months were pretty sloppy and pretty lousy options. they had trouble replacing the five and sevens. the question is, is there trouble generally at the long end of the curve with interest rates set to rise. the last guest we had head of government trading here at citi thinks it's going to be a pretty good auction and the treasury market is trading up at 392 on the yield and that's down three basis points on the day. not too much concern on the markets going into this auction. >> our chart of the day it is, of course, off the 10-year note. brian, we should point out even with monday's challenge that 4% yield on the treasury has held. in fact, buying treasuries at 4% has been a pretty good rule of

thumb. >> it has. you look at that chart, you can see how important the 4% level is. not only was it about the peak that we hit last june,june, bute support level that really goes back to almost 2003. so you're talking about a very big level. you're talking about a lot of people involved here. >> simon, you know, that chart is another reason i think you should be fairly sang win about the prospects for equities. even at 4%, even at 4.25%, when you hear about california having unfunded mandates that require an 8% return, you've got a lot of institutions that absolutely need return and they just are not going to get it. >> joe, hold on here. >> yeah, before we get all giddy, let's understand, to me the important one is actually tomorrow, the $13 billion. that's the one where i have a little trepidation and wondering if you're going to see the demand there or not. >> steve, guys, i want to point out that my read of how bonds have moved relative to the economic data is that yields

have risen and prices have fallen as the data has been better than expected. i think the attempt to sell this as a supply side shock is a little bit oversold and not really the reality that's going on. there may be a choking by the markets on the supply. but that doesn't seem to be what's going on right now. yields have gone higher with the economic news. >> importantly, brian, you may add to your positions of treasuries here. >> well, right now coming into the auction, i am short treasuries. if we get a good auction, which would, for me, would be a 3-1 bid to cover, much higher, let's call it 40% maybe, i would reverse my position and go long. because i think what you're seeing here is people are looking for short assets. if i'm a bond investor that's not a bad yield to get. >> steve liesman, we'll see you at the top of the hour. palm, stock up over 12%.

john, what are you hearing in the auctions space? >> obviously i'm hearing a lot of buying. buy, buy, buy. because that's exactly what's going on in this one, simon. in the first 90 minutes of trade, palm just exploded on the rumor that lenovo was taking a look at this. nokia may step in here, or motorola. i have no position in that, although i bought along with the other guys, because this was very fast buying. like you say, stock coming down from 5.5% to 2.70, like that. >> you've got to be playing this surely. >> you know, i spoke to jon about this earlier, and unfortunately i didn't pull the trigger. jon made a great point when we spoke on the phone before, and that is, a lot of people are short palm. this is probably not a one-day event. >> peace in our time. senior white house players saying china is indicating it will move on its currency, as treasury secretary geithner lands there tomorrow to press the flesh.

zach, how will that change the way you position yourself? >> the headlines should be, i'm shocked there's gambling in casablanca. this has been the most telegraphed move in mankind. the chinese made it clear they intend to have the currency appreciate, much more slowly than american politicians want. this is good timing given that the treasury department will be a currency manipulator. >> what makes money on this. is it broadly irrelevant? >> this is about as broadly irrelevant to whether someone's going to profit in china. >> i would disagree, because if you look at what's going on, if they go to a crawling peg, what it signals is that china's becoming an easier place to invest. i'm not going to say it's an easy place to invest. but that's going to attract capital, which means u.s. dollars that have to be reinvested someplace which could hit the treasury market, which is why, again, i'm looking at the ten-year auction as fairly important. >> i was shocked to hear you're

awaiting the central bank meetings. difficult to make money on those, isn't it? >> i think the concern is really with the ecb. look, the reality is this with greece. we've done a lot of smoke and mirrors, but at the end of the day, no one's come in with a suitcase full of cash for greece. that's what they need right now. so there is a chance that there is a default over in greece. i think the market is pricing it in. it's one of the reasons the euro's under pressure. i think the fxe, if you look at it, that should trade from the short side. >> stay with us, guys. we've got a second derivative way to trade the airline sector on the other side of the break. we'll be back with the "halftime report" in a moment. as the mobile masses demand faster voice video and text, one stop stands tall, ready to tackle traffic. american towers chief tells us what's next. our daily newspapers declared all but dead. tell that to the stocks because they delivered profits.

"under the radar," stock resurrection, all that, and more, tonight, at 5:00 p.m. on cnbc.

okay. let's get a trade to go. zach? >> looking a bit at memc, microelectronics, which is wfr, makes solar -- thin-film solar. this is a name that plays that alternative energy space. a lot of people really got burned in this name in the past few years but it's doing quite well. >> kicking off with you, joe? >> be long the bear necessities of life. >> forgive me, the close, jon. >> i think the auction's going to be good. >> i would have to agree with my

two friends. >> brian, would you buy the market? >> yes. absolutely. especially if the auction's good. i buy them with both hands. >> gentlemen, thank you all. that is it for "halftime report." on "fast money," an interview with the ceo of american tower. but first, let's catch up with what's going on with "power lunch." >> simon, coming up on "power lunch," the grading of the highly anticipated and highly important treasury auction of $21 billion in ten-year notes. plus a whole lot more. the anatomy of a toxic asset. wonder who is buying that distressed debt? stick around to find out what we bought and what you can learn. the power of viral. the youtube ad has never been on tv, but viewed 70 million times. we'll talk to ad age on youtube and what it means for the future. plus, the tabsing disaster. after raising taxes on

upper-america, volcker wants to push that tax. are we being taxed to death? the second hour of "power lunch" starts right now. welcome, everybody, to the second hour of "power lunch." i'm tyler matheson. monetary policy is too broad to specifically address sources of asset price bubbles. >> i'm dennis neil. prices easing slightly today, $86 a barrel. >> i'm julia boorstin. 50 now 52-week highs today, including family dollar, auto zone. >> i'm michelle caruso-cabrera. $21 billion in ten-year notes, due out at any moment. steve liesman in new york in the middle of the action this morning. you called it a foxhole. >> reporter: yeah. that's where we are right now, waiting for the results of the ten-year, michelle. let's see if they've moved yet. how long does it take. we're looking for a $3.97 was

the one issue. we'll see how well bid this auction is. i guess we'll just -- let me introduce the head of interest rate straigtegy for citigroup. >> we're looking for the stock to rally over the next couple of days. >> what do you think about inflation? >> i don't think it's being factored in adequately. we've seen a steep decline in inflation in the last couple of months. >> and does that mean you're recommending the clients should be buying treasuries here? >> absolutely. particularly in the ten-year and longer years. >> steve? >> in the long run -- yes, michelle. >> ask him if he suspects a successful auction. define that, what yield is he looking for? >> you can hear her, right? >> absolutely. we're looking for it to come through at least come through by a basis point or so from where we were. >> wow, did i just hear 3.9? >> yes. >> wow. that's pretty aggressive.

right? what's the bit to cover? $3.72. wow. that's well above 2.19%, the average. anything in indirects yet? >> i don't see it. i'm looking. >> what do you have? 16 direct. 43% indirect. how do you grade this auction? >> it's close to an "a" auction. >> for the ten-year. >> absolutely. >> we haven't had a good long-term auction in "a" grade for a long time. >> that's true. i think that market is a little different. it's a different set of plans. >> let me be clear. i'm not usurping rick's grading here, i would never do that. but we have another expert here. what are you seeing here? you want to get rick on now? >> rick santelli, the citi guy just gave it an "a." what do you say on this auction? >> i never chew my tobacco twice. what i will point out, that is very interesting, that we saw the yields, put up the ten-year

chart, because the wi looked just like it. yields have been falling dramatically. the wi, which was trading in the 3.97% camp, was trading 3.96%, 3.94%. there was a short panic going into the end of the auction, where shorts were coming up. had nothing to do with greece. we're debating because the euro currency didn't move. so this is very key in a failure of 4%, to see that kind of a drop in yield, run in price going into the final part of the auction. i haven't seen anything like that in quite a while. >> rick santelli, how about 3.72% on bid to cover. every dollar available, people bid $3.72%. isn't that impressive? >> the last two auctions, 2.87% was the average bid to cover. to see so much morbid for, to see that activity in the wi, to see all of this at a time where the ten-year has been on the front page for higher yields, goes a long way to give you

information. the u.s. government's going to get away with issuing paper for a long time without a penalty. >> the dow has come off the bottom. i believe it's still down 21 points. >> let's bring in some trader reaction. bob pisani at the new york stock exchange. bob, what's the reaction down there? >> reporter: honestly coming off the low, this was a bit of a surprise when i called around and talked to the traders. the general feeling is with the fed out of the mortgage market, there's more other kinds of products out there. and that might put some pressure on the yeeltds. that was the concern down here. it hasn't really materialized. i've got to say, this is pretty impressive. the markets are coming off, but not dramatically now. the greece thing has been putting pressure on the markets this morning. >> i want to say this. the debate out of the market right now, as to whether or not we were gearing up for a leg higher in yields, or simply trading along the top of the radar, i just want to bring our guest in to ask him that question. does this suggest to you that the recent runup we had was simply along the top of the old range or are we really creating

the bottom of a new range? >> i think it brought it to the top of the old range. i think there are several things going on. as you mentioned, we have clearly a strong growth recovery, and inflation. they're washing each other out. >> guys? >> can i ask bob pisani, explain something for me, i keep hearing if it's a bad auction, that hurts stocks. but if it's a good auction, more investors want to put their money into bonds instead of stocks. why shouldn't a good auction hurt stocks? >> reporter: no, the concern is on the inflation front. that's going to impact the market. so at this point anything that's going to suddenly dramatically move yields up is going to be a bit of a headwind for the stock market overall. i think there's more than adequate demand for treasury at this point is a plus. the fed's out of the mortgage market now. there's a lot of mortgage supply out there. some of the product is cheap. there are a lot of people who

say let's go buy mortgage instead of treasuries. that might be more -- >> and this will bring down -- guy, this is important, this will bring down mortgage yields, i think. >> absolutely. >> wait a minute, while we have our citi person up. i'd like to ask a question. everybody's talking about the mortgages. i'd like to ask our expert, if i look at the march 16th levels last fed meeting, we had a 4.60% yield on the fannie which is 30 basis points higher, and whe had a 30 basis point runup in treasuries. the spread has hardly moved. freddie and fannie are still in the morning game. do you see easing when the spread hasn't moved at all? >> well, it did influence it in the past. it did influence it in the past. what we have seen is that as the fed has stepped away, it has been such a well orchestrated move, that the private sector moved in to replace the fed. >> the mortgage rates increased last week.

the spreads may be stable, but rates have definitely moved up. that was a bit of a surprise. >> let me interrupt, gentlemen, and bring in our -- >> we're very cheap to get off with a quarter point rise with the feds stepping out after having purchased $1.25 trillion. >> let's bring in bob, who has joined us for his monthly visit. he is the chief investment officer at credit swiss private bank americas. i almost, just because i knew how mad it would make rick santelli, say, if this auction was so good, that means we can keep borrowing as much as we want forever, right? it's okay. it's all all right, isn't it? just to make him angry. but this is good news for the bond market, right? >> it's good news for the markets overall. there's a whole sense that actually, again, number one, the markets are working again. think about a year ago the same time, nothing was functioning particularly well. there was no visibility. i think from the stand point of the bond market, it's a big

plus. it says that the dollar's got credibility, despite all of the debate around that. and that from the -- >> what's the action signal in this for the individual investor? >> i think that it's, again, one more step toward a move forward. we've had decent economic data that surpassed most people's expectations. you have an auction today that apparently went very well at a yield that's digestible, certainly. that tells me, i think, from an investment standpoint, there's opportunity there and that probably expectations have continued to be way too tempered. >> is this an inflection point? >> we've had so many of those over the last many months, we've had inflection point every time we go through earning seasons, job data reports. >> i hate that largely because i didn't write the book. but this is great. it shows people interest in bonds. doesn't it also show they're not interested enough in stocks? >> i don't think so. because again, we've seen a move up in stocks as well this year. and what it's telling you is that there's some health in the

economy. this is all about financing the debt of the u.s. government and the perception whether or not they can continue. the real debate out there, the real dialog we've seen since last year is, we've been trying to finance too much. how are we going to continue doing it, how are we going to continue spending at the rate we're doing. it's going to be paralyzing. today it's actually doable. >> let's go back to actionable. with all of that, and youed say, things look better than what most people thought, you do what? >> we've been very, very focused on the equity markets, and we have been since last year. as we went -- i think early this year when we started with the show, we talked about we would see a continuation of expectations being way below where we got the reports coming in. that has continued consistently. we think the earning surprises and data surprises will continue for a long time. it's partly a cyclical recoverly there. you've got all this investment that's held back. cash on the balance sheets of big companies. you add to that a lot of the

stories that we've talked about, all of the innovation going on, all the changes that are going on, that changes the whole long-term -- >> we haven't had a real run to show that yet. >> last year tech did pretty well. this year it's held back. that's an opportunity to just start positioning. >> we've been talking about the 11,000 resistant points over the last couple of days. what is your big picture over the market? >> you know, i think that we have a lot of reason to are constructive about the markets. there's still room left. we're just now -- we're done with the first quarter. earnings season in the next couple of weeks. we'll get a sense of what that looks like. nobody's really let loose on their estimates yet. i think that longer term as we look out, depends how you define long term, the next 12, 24 months are positive. >> do you buy cyclical stocks? smoke stack stocks? >> no, i said on the technology part it will be partly the cyclical play and partly this next play, which is transformational. all the changes we talked about, that the world is going through.

it's not necessarily the smoke stacks. although they may do well. but i think that it's around looking at the technology sectors, around, again, still the commodity sector. we're seeing a big, big change in demand globally coming from china, many of the emerging markets and even from the u.s. that's going to continue to put up upwards pricing. >> a lot of business spending you're implying here, government spending. >> and there can be. there are cash levels right now, cash has gone up by something like a third of the s&p 500 companies in the last two years because of tight credit. credit is loosening up. so they're going to do something with it ultimately. >> what are your favorite picks? >> we're really focusing technology and more specifically in the software area. there's huge moves that can be made there. on the consumer side, the consumer staples look interesting, any of the large companies with global reach ought to do well in this transformation we're in front of. looking at commodity related companies, there are real moves in front of us still. >> bob, thanks. good to see you.

see you next month. >> i'll be here. up next, a brand-new member of the cnbc family. it is not a new anchor or a reporter, it is a beautiful bouncing baby toxic asset. >> we're not kidding. we will tell you all about it, and why we bought it, coming up on the other side of the break.

some hedge funds prey on distressed debt and prs planted money, buying a toxic asset just to watch it die.

copying is the sincerist form of flattery, so we decided to test our own risk tolerance. melissa, francis and i were dying to buy a toxic asset. we weren't allowed to. so we sent jon and jerry to do it instead. jon? >> well, investors were hands-off these liquid securities for a while, but not anymore. and neither are we. they brought wall street to its knees. toxic assets, the securities that nearly crushed the global economy. remember those? over the past six months, wall street has begun buying residential mortgage-backed securities again. and at cnbc, we're also diving into that toxic pool. we're paying $2,100 for a tiny piece of our unamerican dream. a sliver of a bond worth just over $4.4 million. to pick our poison, we came here, to second market, a firm that specializes in illiquid assets. >> you want to buy a bond that has some security.

it has enough cushion below it, that's high in the capital structure. so that you're going to be more likely to get a return on your principal. >> reporter: the apple in our eye, an a-1 bond chockful of collateral in places like california, michigan, arizona and florida. so stay tuned to see what we do with our toxic beauty. >> this is it, right? >> it's beautiful. >> 272 pages, guys. >> this is mortgages in here. how many mortgages? >> that's right. dozens and dozens of mortgages. it ha a face value of about $31,000. >> the particular tranche we bought. >> just that little slice. >> $31,000 was the original price. what did we pay? >> $2,100. >> 88 cents on the dollar that we bought it. we bought it in the second market. how do you acquire one of these? >> second market is the biggest market that i know of for these kinds of assets. whether it's something like bankruptcy claims, or whether it's privately-held stocks.

not like google, but like twitter and facebook that aren't publicly traded, they trade over on second market. the fact that you've got buyers and sellers in one place -- >> it's a marketmaker providing some transparency. it's not regulated, though. >> not regulated yet, because these -- >> i love that. >> it's a lot better than, for instance, michael berry and those guys, mike lewis cites in his book, because those guys have no transparency whatsoever. they were dead right. it was being marked against them every single month. >> i want to bring back the graphics we were showing folks before. how many foreclosures thus far, houk delinquencies, et cetera. 27% are delinquent by more than 60 days. 19% in foreclosure. >> of the entire bond. >> we've already lost 2.6%? >> we haven't lost anything yet. second market did a great job, because the original offer to us was 94 cents.

so there's bids and offers. they acted as an intermediary. >> one of our big concerns is we're going to have to mow lawns at some point when all of these mortgages go bad. we're protected, right? >> we won't have to. that's right. all we can lose is what we -- >> i'm awful at that. >> we did not sell a dmaked put, which is what goldman, aig when they sold mortgage insurance before they passed that hot potato around. they had the obligation of the default. we don't have that. >> can we also look at the states with all this stuff is? >> that's why we got them so cheap, michelle. california and florida alone -- >> 23% california. michigan 16%. florida 7%. >> those are all the bad states. but that's, again, why this thing priced the way it did. >> what is the expected life span of our security and what's going to cause our sweet little baby there to check out? >> we hope we'll get checks. we'll follow up in the next few weeks and months. this might not be alive much

past the summer. if that's the case -- >> like a goldfish. >> that's right. >> are you going to talk about this on "fast money"? >> yes. >> excellent. >> we've got to get a name for it eventually. >> e-mail us and sut some names. >> he's heavy, too. >> back to you. >> that's what they should do with toxic assets, make them into ets for individual investors. viral videos. hot marketing tool. free of charge. >> think about it, you don't even have to buy tv time to connect with millions and millions of people. ad age magazine is putting the best of the best on youtube's front page today. we'll show you what's hot on the other side of the break.

welcome back to "power lunch." i'm scott wapner. i want to call your attention to shares of palm today. take a look, palm is up 20%. that's a move of about 75 cents or so in this stock today. but the stock is trading now $4.60. take a look at this chart. i want to show you the considerable volume that we are watching right now in shares of palm. there's been some speculation in the market today, some takeover chatter around this stock. it is really showing up in the volume. this is a market velocity chart here. you can see how it is flashing here, because volume in this stock right now is almost 2,000% heavier than it would be on a typical day. all around this takeover speculation that is in the marketplace today, normally we wouldn't report on such a thing in terms of speculation.

but it is impacting the shares up almost 20%. >> we all know youtube is a cultural phenomenon and everybody loves those silly laughing babies, sleeping cat videos, myself included. but it's youtube's impact on advertising that has companies taking note. because of that advertising agents have had a chance to edit youtube's home page today. michael, how did you pick the videos to go on youtube's home page? >> most of them have been in our top ten. every week we do a top ten of the most popular videos on the web. >> what have we got? >> evian, microsoft, gaming videos, stunts. yeah, just the whole gamut. >> we were looking at the baby video. 7 million viewings on youtube? >> 70 in the u.s. 92 worldwide. >> is this the best way to sell evian water. there's a pink screen with a slogan.

there's evian bottles they use as a slalom. >> the vw ad doesn't even have a car in it. how do these videos work if they're not showing the product that they're advertising? >> the hard sell does not work on the web. if you want to do that, do a tv ad. if you want to create entertainment, the web is a great place to do that. >> what is the new model of advertising that youtube created? >> youtube has caused a creative revolution in advertising. if you make something people want to watch, they'll pass it around, comment on it. >> yet i thought the internet and google was going to take away brand impressions and image in favor of if you click on it or not. do you click on it to buy it. that doesn't do anything for this. >> this is brand advertising. this is a whole new world for the internet. brand advertising is a little bit of an asset on the web. these are great examples of, you know, ways corporations can brand themselves on the web. >> does this allow companies to save money on those 30-send tv

commercials? does this replace that? >> it can. but not as much as you might think. there is media buy behind most of these ads. you know, you can create great creative for youtube. but unless you put a little money behind getting it to be a promoted video, it probably won't be noticed. >> one ad you picked out, a mobile home guy, was probably a great commercial for increasing his business. he said his wife's boyfriend broke his jaw. another guy hit him in the face wa crescent wrench four times. if you don't want to buy my mobile homes, to heck with you basically. >> this was like the funniest project to me that we included in the -- in our list. these are guys who went around on a volunteer basis, found these sad sack local businesses and created for them a local ad. >> can you calculate the return on investment on any of these ads? >> you can. increasingly, when you have 92 million or 70 million in the u.s. like evian does, that's a tv buy. you can use the same metrics

that you measure -- >> the frequency -- >> frequency, of course. and sales. sales lift. >> is it worth it? >> i think absolutely it's worth it. i mean, you know, the thing is, these views don't have overnight. they don't happen in one show. so this is like a year-long campaign. >> but how long before consumers start to reject it just by the fact that, you know what, you're trying to get this to go viral. it no longer has the grilty feel to it. >> i think the stunt thing is getting sort of played out. but story telling never goes out of style. that is what entertainment is about. that's how you inspire and change people's views. >> nicely done. >> great. thanks so much, michael. >> thank you. all righty. up next, bernanke speaks, the fed chairman about to talk on the economy in dallas. we will have the headlines for you on the half hour. plus, is los angeles broke? will city workers have to go to a three-day work week? we'll have it all for you in two minutes, live with jane wells.

welcome back to "power lunch." i'm bertha coombs. ben bernanke speaking to the dallas regional chamber about the economic challenges, past, present and future. he says the economy continues to operate well below its potential. the reduction in the deficit is neither practical nor advisable. the chairman says that shouldn't prevent us from presenting a credible plan that could actually lead to lower rates and help the economic recovery. ultimately with an aging population resulting in rising medicare and social security costs, bernanke said we're going to have to make tough choices which may include raising taxes and/or trimming entitlements. reducing the jobless rate later this year, he said he's particularly concerned that 40% of the unemployed have been out of the job market more than six

months because the loss of skills makes it hard for them to reenter and this will weigh on the recovery. housing, mortgage delinquencies are a concern on financial regulation. he said it's important not to impede sound lending practices. the fed policy actions he says has stabilized the economy and it is growing again, though he says we can hardly be satisfied with unemployment at nearly 10 prls. tyler? >> bertha, thank you very much. we'll be interplating that all throughout the afternoon. for more on today's market moves, let's head back down to the floor of the new york stock exchange. steve is there. i want to get your instant reaction to the bond auction, which at the top of the hour, priced bonds at 3.9%, the ten-years, and bid to cover indicating demand for the bonds pretty strong. what is your response to that, and what do your fellow traders see and say? >> reporter: if you looked at the guys interpreting it in the

pits, they said okay. but we rallied since then. >> so do you think that it shows at the very least the idea that yields on bonds, i mean, if higher interest rates are a threat to stocks, and the interest rate on this ten-year was 3.9%, that suggests that interest rates are fairly quiet right now, right? >> reporter: that's absolutely correct. and i think, you know, it sounds a little blanket coverage when i say this, but i think no matter how you slice it, equities are going higher. >> where do you look for the trade to be in the rest of the day, in the next two and a half hours? >> reporter: the more these headlines trickle out with mr. bernanke, i think the market was sitting on its hands, i think you'll see the market inch higher. even though we're due for a sell-off, i don't think it's going to come today. >> thanks a bunch. we appreciate it. dennis? >> big cap, we don't need no stinkin' big caps. matt nesto is going to tell you why small is huge. >> let me show you one of the best performing small caps

today. we start off with spf, standard pacific, ladies and gentlemen. 4.6% higher here today on 350% of its average daily volume. there's a guy a little under the weather i bumped into in the hallway yesterday and this is what he had to say. >> now things have turned around beautifully at standard pacific. even as the sentiment on wall street is still very bearish. seven analysts covered it rated to buy, two a sell. there's plenty of room for the stock to go higher and the street changes its mind. >> yes, the madman himself, speaketh and the stock goes higher. it's gone from $1 to almost $5. one of the smallest of the listed home builders. half of their projects and revenues come from california and florida. when they reported their earnings back in february, their fourth-quarter numbers, they showed improvement in delivery, prices, orders, cancellation and the backlog. i've got to show you this one.

800% of the average volume in steris. the fda just approved a new product for them that will do liquid chemical sterilization systems. based in mentor, ohio. $2 billion market cap. nice move in this stock today. the second best performer in the mid cap index between the aforementioned palm which is on fire here today. there you go. small and mid cap action today. >> there you have it. this is michelle. >> i'll take it. los angeles says it needs to close almost all city departments two days a week or it could go break. jane? >> reporter: hi, michelle. the sti of broken angels, moody's has cut l.a.'s notch on more than $3 billion in debt after the mayor threatened to shut down non-essential city services two days a week. it faces nearly a $3 million budget deficit. they're in a standoff with the department of water and power. the city council has refused to give the rate hike it wants and

now the utility says it can't give the city the money it promised. joining me is wendy. thank you for joining us. my first question to you is, how much money does the city have? >> well, currently we are projecting a deficit of close to $212 million by the end of this fiscal year. we've made some improvements and ability to save money in layoffs and transfers out of the city of los angeles. but this week i indicated to the mayor and council that we needed to take money from the reserve fund to meet our financial obligations for our payroll and potentially vendors for the month of may. and that they needed to act in the next two weeks. >> my understanding is that reserve fund would be used up by the end of june 30th, is that accurate? >> that is the potential. we're getting new numbers from our city administrative officer that indicates we could have potentially more than that zero. but i've said that the reserve fund can't just be $30 million. it needs to be greater than that

to ensure that in case of a natural disaster, in case of a situation where our revenues go down even more, or unexpected expenditures, that we need to have that cushion. that's what a municipality needs to have, i think, to function properly. >> controller gruel, if the city of los angeles cannot pay all of its bills as of july 1st, where are bond payments in your priorities? >> well, bond payments are always the first thing that we take care of to ensure we are working with our bond companies and all the rating agencies as well. if we move the $90 million from our reserve fund into our general fund, we can meet those obligations. i think the biggest challenge is facing us next year with the potential of a $484 million budget deficit. we'll be waiting to see the mayor's budget to see how we can balance that budget. but in the city of los angeles, we have to live within our means and to be able to meet our financial obligations by the end of june.

>> are any bonds at risk? leasebacks or anything? should any bond holders be worried about the security of those payments? >> not at all. and i think we feel confident that we can meet those obligations. really, what i outlined this week was the fact that we had to move money from a reserve fund to meet cash flow. that's an important part of any city. we borrow money in the beginning of any fiscal year to get us through the times where revenue comes forward. we anticipate by moving this money, we will definitely meet those obligations. but i think the message we're sending is the importance of the fact that los angeles is going to look differently. we're going to have to downsize. we're going to have to look at what services are most important, like public safety and public works. that's the message, that it is not going to get a whole lot better. we have to continue to tighten our belt and be fiscally responsible. >> wendy grewel, thank you so much for joining us. we appreciate it. >> thank you for having me.

tiger woods in the world's top golfers, teeing off at the masters tomorrow. there are only three sponsors for this big event. dan rovell is standing by with one of them. darren? >> reporter: yeah, that's right. ibm has been a sponsor of the masters since 2001. we'll have an exclusive interview with ibm's rick singer coming up next on "power lunch."

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another beautiful spring day in new york city. and it looks like another beautiful day on the course for

tiger woods. he played another practice round today at augusta with mark o'meara, his friend and neighbor. followed by massive crowds, raising a few eyebrows after he broke out his cell phone on the 18th green. there's a joke in there somewhere. actually, he was videotaping o'meara's putting stroke. the masters is a tradition like no other. that's jim nanc's line. the same could be said about its business model. tloo are three official sponsors of the most prestigious tournament. darren rovell is in augusta with a special guest. >> reporter: thanks, tyler. the "wall street journal" reporting that tiger woods will be in a new nike ad coming out tonight featuring the voice of his late father earl woods. nike not confirming that report. ibm has been a sponsor of the masters since 2001. and joining me now is rick

singer, who is the vice president of client executive marketing for ibm. rick, only three sponsors. the masters, augusta national doesn't feel the need for any more? what's the value to you? >> well, you know, as we said before, it is a tournament like none other. when you walk through the gates, you can see what that means. our clients love the masters. they love golf. they're passionate about it. that's the places we want to go. so the fact there are only three, that makes it even better, because it makes it even more exclusive for us. >> again, the mast e, it seems like the guys at augusta national have no interest in necessarily making money. only four minutes of commercials per hour. you're in that time. there was a report that said because this could be the most watched golf tournament of all-time, that that could be a 43% in ad time value to the three sponsors. is this like buying the super bowl at a bargain basement price? >> that wouldn't make our media people happy.

but we'll see how the weekend plays out. there's a lot of good stories, as everyone knows. the star of this course, this tournament, is the golf course. and that's what really gets people excited. >> you don't get your logos all over this golf course. it's not like most sponsorships where it's about showing in front of the fans. but you do do a lot behind the scenes. what are some of those things? >> it's going to be an interesting year. we work closely with the augusta team here, especially billy payne, of augusta national. he wanted the website, especially, to replicate the experience of being at augusta national for the masters. if you walk through those gates, you know what he's talking about. it's the beauty of the golf course. it's the traditions of the tournament. and, you know, billy's point was, less is more. and just talked about it in his press conference. that's what we're trying to fulfill. that story, the things we're

doing, that plays well with our clients. it relates to their business, too. >> you went through the whole controversy in 2003 with martha burke, of course, protesting the no female members here at augusta national. i don't know if you call the tiger thing a controversy now, but how do they compare? >> i don't know. you know, we're here to deal with the business issues augusta national deals with. so because of all the interest this year, for whatever reason, you know, our focus is on how do we take this website, make it a better website. how do we deal with all the visitors coming. on tv, if they double the ratings, there are no issues there. but on a website, you have to be ready with an infrastructure that's going to deliver the people. that's where we have to be focused. >> not a lot of sports marketers have been proud of saying golf works, or sports marketing works and we're sending our people here. you have not been on that side. you have always said that we're proud and this works. why do you think, you know, others have been a little bit, kind of not wanting to say what

works, especially after the backlash last year. >> look, our clients love golf. our clients listen to us, because of golf in many ways. they want to hear the stories. other companies make their decisions, maybe they have financial issues, whatever. that's not our sifgs. we want to focus on what our clients are interested in, and that's golf, and that's the masters. >> rick, thanks so much for joining us. obviously a lot of people on the website to figure out how tifger's doing. thursday, friday, will he make the cut, make the final pairing on sunday. >> darren, thank you. the tax deadline a little more than a week away. americans are in shock at the increases and there's more to come. serious talk about a value added tax. are we all, especially the wealthy, are we being taxed to death. the power grid debate.

financial ray of light for debt-strapped blockbuster, the video rental chain has struck an

agreement with 20th century fox and sony to allow renting out dvds the same day they go on sale. that will give the beleaguered rental chain to climb out of a $1 billion debt hole. last month blockbuster said it might need to file for bankruptcy protection. the u.s. should maybe consider raising taxes to curb the deficit and adopt a value-added tax, ses volcker. are we already being taxed to death? michael is here with the center for american progress. tony is former white house deputy press secretary as well as a cnbc contributor. guys, good to see you. michael, let me start with you. what do you think of this idea of a value added tax? it's a consume, tax. people think it lands on the poor more than anybody else. do you like it? >> i think it needs to be studied a little bit more. i don't know exactly how i feel about it to be totally honest

with you. i think we do need more revenue going forward, no question about that. we'll have to keep all things on the table to figure out how to get out of the huge deficit. >> are we being taxed to death? >> no. in 2009, americans paid the lowest share of taxes as a share of gdp since 1950. no question that's just not true. >> that's because of the recession, tony? >> yeah, it's definitely from the recession. the loss of income from the recession. but look, if you take a look at the amount of income collected by the federal government, you ask yourself, who is paying for it, who's paying into that fund, it's the top 1% and 5% of all income earners. today the top 1% pay 40% of the burden of income taxes for the federal government while the bottom 50% pay less than 3%. >> michael, what do you make of that argument? that's usually the argument made, the wealthy end up paying the largest percentage of the base. >> that's always the argument made, what's not mentioned is that's where all the wealth is.

it's 1% of people, that's not where 1% of the income is. they pay a lot of income taxes that's because they have all the income. >> but they also pay more than their proportion of income. >> it's progressive. >> they're certainly paying their fair share -- >> the bush tax cuts, $700 billion of the bush tax cuts went to 1%, the top 1%. >> what about the income tax credit he expanded so dramatically, the bottom end of the tax range, nobody pays taxes down there. >> that's a nice little one. they pay lots of taxes. they pay payroll taxes, they pay sales taxes. >> and they get it back. >> it's true they pay other taxes. but if we're talking about the income tax, 45% of americans oef-a lot of them are getting earned income tax credit where it's redistributed, income from other classes. >> michael, what is appropriate? the top 1% should carry what percentage of all tax revenues? >> it's about where the income

is. i think whenever we talk about 1% of people, that's -- let me tell you something. >> define it and, in your utopia, how would it work out. >> in my utopia? we'd all just be happy and we wouldn't -- >> what percentage should -- based on your metrics should pay how much? >> progressive tax code and currently we're sort of flirting with the progressive tax code. look, the top 400 earners in this country, not 400,000, 400 who made on average $138 million, their tax rate actually went down over the past eight years. that's crazy. >> how much do they pay in taxes? >> they paid a lot more than they had been paying before. >> no, no, their effective tax rate was lower than somebody who made $100,000. is that fair? is that responsible? >> what's certainly not fair is that the top income brackets are paying such a huge share of the overall burden, michael. that's not something that's good for the country. and it's not an effective tax

system. because we're talking about, the very same people who are proponents that are paying progressive tax rates and believe there's no punitive effect from tax rates are the same people we should use higher taxes to keep people from smoking or using bags in the district of columbia. >> what about the argument that when you raise taxes on the wealthy, they find ways to -- they buy more munis, or find ways not to pay it and the government ends up with the same amount of money. >> this is an empirical question. in 1993, president clinton raised taxes and we got more revenue over the next eight years and balanced the budget. president bush cut taxes especially for the wealthy. we got less revenue. and we got huge deficits and we got middle income job creation. >> that was good. i like them both. >> bipartisan agreement there? i think not. >> what should we tax?

right? >> evidently everything. >> i would prefer to tax consumption. but i would like that. you said this. but instead of an income tax. >> right on top of it. it's just -- >> you're right. that's the problem. >> up next, i'm angry about something else. one airline is going to charge, not just for the luggage in the belly of the plane, for carry-on baggage -- >> and that is, can the other airlines be far behind? "food for thought" coming up in two minutes.

spirit airline ceo, brave man of the day, defends carry-on baggage fees up to $45, they go into effect august 1. smack in the middle of the summer, travel season. he appeared on "the call" earlier today. listen to him squirm. >> we all know boarding airplanes has become a crowded and often frustrating event. spirit is reacting to that by lowering fares, making the boarding process quicker and even for customers who choose to still carry on a bag, we've lowered fares by lower than the bag fee. everyone wins. >> that was pretty convincing. why am i so ticked off about this? there were a couple good points.

>> i give him credit, he's made a media event out of this. and got more advertising for his arm. >> does this ultimately make it easier to board an airplane? i fly all the time. the idea of having to pay for a little spot in the overhead bin, i can't imagine how they'll do that logistically. seems more of a nightmare for boarding a plane. >> you do see a whole bunch of big suitcases, you hate those. >> you hate those people. >> then you like that fee. >> i agree. i kind of like it, actually. >> i think it's disassembling the true cost of -- >> yes, i love that. >> there's an argument -- >> it's an airplane for people, not cargo. >> they did this original live because of rising fuel prices. and fuel prices plunged and they kept the fees in place. i say it put it into the ticket price. charge wa you pay for. >> remember when they were going to charge heavy people more? >> yeah. >> where were you on that? >> i think if a heavy person takes up two seats, they should

charge them for two seats, absolutely. >> i agree with that. >> costs more to fly them around. >> speaking of being overweight. >> you better pay me money to sit next to someone taking up two seats. >> four seasons restaurant, swanky restaurant in new york city, there's a naked person on the left. there's a bar lunch for $25. if you live in the midwest, can we tell you that $25 at the four seasons, cheap, cheap, cheap. you can't get out of there for 200 bucks. >> i think the next time we do "power lunch" from the four seasons, it's only going to cost $25 a head and she's going to be there. >> this is a sign that the recession is way over the market. they should have run this ad a year ago when times were really tough. >> this looks desperate. the naked lady? the cheap prices? i mean -- >> i have no problem with the naked lady. >> philadelphia did basically the same thing, cut prices because they weren't attracting

the same crowd. "street signs" with erin burnett begins now. good afternoon. it's 2:00 p.m. on wall street. stocks are well off the lows of the session. as the men who run and used to run the american economy speak today, alan greenspan said he was wrong only 30% of the time. ben bernanke said the economy "is not out of the woods yes." the man who thinks we could have another bubble if rates stay at zero wants his voice heard. his name is thomas hoenig. hoe's speaking in santa fe, new mexico, at this incident. steve liesman, what is the lone wolf saying? >> reporter: some very strong words from caps as city fed president, thomas hoenig about the need to raise interest rates. he said raising rates too late holds danger for us all. sees the economy in pretty good

shape. 3% gdp growth in 2010. consumer spending is growing at a solid pace. he's saying the forces necessary for a sustained recovery are also in place. inflation, likely remain low for the next year or two. but he repeats that the extended period language has outlived its usefulness. it's no longer warranted. artificially low rates from spending over savings and otherwise distorts capital markets, holding rates ort fishlly low for an extended period encourages bubbles. the concern about bubbles runs throughout this speech, erin. the fed, he says, too often delays raising rates, leading to higher inflation. and he calls for a policy reversal while the data are still mixed and wants a fund rate. i want to give you this one quote from the speech here to give you a flavor of what's in the speech. he says, "i am convinced that the time is right to put the market on notice that it must again manage its