good morning. turning back the clock at the masterses, tiger makes the run at the augustan. and the markets at this hour, the bulls make one more charge at dow 11,000 as "squawk box" begins right now. >> good morning. welcome back to "squawk box" here on cnbc. joe and becky are off today. we're joined by andrew ross sorkin of the "new york times."

good morning, appeared rue. >> good morning. >> and "fortune" editor andy wells is joining us, as well. >> two andrews on the set. >> have you ever been an andrew? >> yes. family calls me andrew. >> when you're in trouble with your middle name? >> yes. we don't have to go there. >> 18 major u.s. banks reportedly mask risks. >> what a shock. >> gambling in casa blanca. "wall street journal" says the firms temporarily lowered their debt levels before reporting in the past five quarters. this makes bank balance sheets appear less risky. this includes jpmorgan, citigroup and bank of america. trades by an average of 42% at the end of each period. i thought everybody knew this. >> are you shocked? >> no. i thought this was standard operating procedure. >> right. >> but you know, they're supposed to be a little better behaved these days, right?

>> well, i wonder. we're going to get jpmorgan starting next week. will they get away with it next week? >> the real question is, from a disclosure perspective, should they be required to show what their average is? there's no question that i think everybody knows at the end of the quarter, they always bring it down. it's a snapshot. but the question is, should they be required to disclose their average or the median number in addition to the end of the quarter number because then you would have a more realistic view. >> it should, but i think they're going to cry tmi, too much information, right? no. a snapshot is good enough. >> making a lot of news, the big story in the investing section of the judicial this morning, meantime, top fed officials closed as rates donald kohn says a gradual u.s. at the same time

as tame inflation. answering questions at an event in san francisco, kohn said he does not think the u.s. government will have trouble finding buyers for its debt despite rising fiscal deficits. >> speaking of the fed, banks rising from its emergency lending program in the last week. banks averaged $7.2 billion in daily borrowing for the week that ended wednesday. that is down from the previous week and a far cry from the $110 billion daily average in the fall of 2008 at the height of the financial crisis. >> time to go global this morning. it's suggested the country might increase interest rates as early as this month, but beijing will probably not appreciate yuan appreciation as soon as that. the yuan has been trading relatively flat against the dollar. now there's talk that perhaps it's not going to happen immediately. and there's more political

questions about what if china doesn't do it, does that make the u.s. look really, really bad? >> and there's questions about whether or not you create this expectation that's that the chinese feel that they have to do it and they put the brakes on and say, no, no, no. >> and you have to be careful about the noise factor here. we've been hearing this week after week and month after month. you're right, it's tied into diplomacy. geithner is just there. the chinese are going to do whatever the chiep he's want to do. obviously, they need to protect their own industry, making sure they're able to maintain large employment. that's critical for them, obviously. >> so one of the biggest stories of the week, do you think? oh, yeah. >> absolutely. about all the fear we had about whether or not we're going to see a trade war, would you agree that at least the chances of a trade war have been diminished? >> it does point to warmer economic times, right? at the very least. >> yeah. i think when hu comes, they're

signaling that's an easing of tensions big time and geithner going there. you know, it's a frenemy, right? and it's going to remain that way for a long time. >> and the question of the timing, who comes when, in two weeks? >> yes. >> and who is on first? >> it never gets old. >> the chinese make any type of announcement before he comes in terms of the timing or do you think they wait until after? >> no. i don't think they're ever going to really -- >> you think they're never doing it? >> it's just drip, drip, trip. they have to do it. they have to deal with their own inflation problems. >> but they have a terror of unemployment. they're going to balance it out. i think it's gradual. they talk it, with talk it, talk it. i don't think tllt be a massive 10% anything, right? no way. better times, right? >> let's check on the markets so far this morning, give you an indication of what the futures are telling us about the open, at least. they are indicating that we

would see a positive open, dow jones would open higher by more than 20 points and the nasdaq would open higher by roughly 6. price of oil, $86.14. lots of talk, but hasn't moved all that much as we approach this friday. gasoline is at 2.31. taking a look at the treasury yield on the 10-year, 3.88%. on monday, we were talking about 4.0%. and we were wondering if this was the big turn, the big rise. thus far, we've absorbed all of this debt this week. i don't know if greece and the flight to safety in there -- sgliets like 4 out of 10 and 11,000 on the dow, will they ever happen? >> we'll see. 93.68 for every dollar. euro is going to cost you 1.33. i guess i'm going too slow for them. the price of gold is higher by 5 bucks, $1,158. yahoo!'s chief technology officer and head of products is

stepping down. ari belose says he's leaving for personal reasons. carol bartz first became yahoo!'s ceo last year, among the changes, she combined various product changes and technology groups. we'll see if they get a new technology chief. >> let's admit what's really happening. >> which is? >> which is morale at this company is so low, it has been dismated. >> did carol bartz make it better or worse? >> morale or the company? >> from a corporate perspective, she probably made it better. but from a morale perspective, i know a lot of employees there that are unhappy. >> but i don't think they would be unhappier if carol bartz wasn't there. this is one of these -- we see this so often in business. can anyone fix this company? you know, competitive decisions change so quickly, it's a tough place to be right now. >> because of advertising or

search? >> because the mission changed. the mission went from being a technology oriented company, really filled by engineers who had passion about going up against the googles of the world, going up against the microsofts of the world, and effectively, they've seeded that ground. >> and now they're a -- >> it's a portal. remember that word? aol. >> it's a problem, right? google is search and they're supposed to be search. >> but still, there's massive eyeballs. there's tons of people who have finance.yahoo!.com. a lot of people have myyahoo! as their home page. all those eyeballs have to be valuable real estate in some aspect. >> they have a massive audience, but that's a given now. the market is what have you done for me lately and what are you doing for me six months from you now? the growth is not there. they can do a myriad of deals from microskovt, but where are you going to be two years from now? >> we're sxwering a period where

advertising is coming back. >> i love that. >> he's a magazine man, i'm a newspaper man. and you guys on tv? come on. bring them on. bring it. >> all right. amr's chief executive argues that consolidation is no silver bullet for what ails the airline industry. but the man who runs american airlines says mergers are inevitable and businesses would benefit from a smaller number of carriers. speaking at an event in las vegas, he declined to respond directly to a tie-up between us airways and united. >> shocked again. and the third time might be a charm on this one. they keep trying to do this. eventual eventually, it's going to happen. >> i actually think, by the way, i was worried that when the news broke, that we could have killed the deal. sometimes you worry that the disclosure itself does this. you about we talked about

american yesterday as to whether they need to somehow jump into this or not. i was making a lot of calls. i don't think that they're actually going to -- i don't think that they feel compelled to do anything and i think konlt mental is playing the wait and see game. this came as a surprise to them, by the way, to continental, which i thought was surprising. >> you know what we never mentioned yesterday? the new $45 fee not to check your bags, to bring a carryon and put it above. the only way to carry something on now without a fee is to put it under your seat. >> i hate this. now you have to rush to be first on the plane. it's horrendous. >> the agony of air travel continues, gets worse, and they'll make you pay for everything. that is outrageous. and that's going to be a nightmare getting on the plane. credit card swap, can i borrow 20 bucks from you? >> i'll pay you back on the next flight, really. >> economically, you divide up the payment fees.

you're paying to ride, you're paying for cargo? what? >> go greenhouse, right? >> unbelievable. meantime, chevron predicts that it's refining and marketing arm will return to profitability in q1. refining margins have finally improved. the energy giant expects earnings from oil and gas production to continue to grow. shares of chevron, up about 12% during the last year. we know about the crack spread, as becky likes to call it. >> does she like to refer to that? i hate that phrase. >> has been miserable, although we got crude today back into the 86 range. even though inventories this week were at a 10-month high, weird things going on. >> there's a lot of debate whether fundamentals are driving that price or if it's fundamentals getting back into the markets. >> those refining margins were table. they led to big losses through the majors. >> i cannot believe earnings season starts on monday. >> on monday.

yeah. >> all over again. >> christmas in april. >> that's what keeps these guys going, andrew. >> i know it. he know it. sports reporters, they get one super bowl. you get it four times a year. >> what do you consider the finals? >> i never thought about it that way. >> you mean the playoffs? >> yeah. you think there would be a progression. >> warnings season, preannouncement. >> congress is preparing to return to work on monday. thousands of conservatives will be gathering in new orleans for the leadership conference widely expected to be the unofficial kickoff for the 2012 race. john harwood joins us from d.c. a lot of speculation about new orleans, although people pointing out that neither romney nor ppolenti will be there, right? >> that's right. and you've had newt gingerich giving some red meat to the office. he talked about the socialist machine of barack obama, firing

up conservatives who are the ones that have the energy in this election season. and that's one of the challenges for democrats and president obama to try to fire up their base. health care helped a little bit with that to counter that energy on the right. >> so what carries the momentum for a prospective candidate going into -- let's say this fall. is it going to be continued opposition to health care? will it surround protectionism in china? what? >> i think it's likely to gravitate away from the health care issue and more toward spending deficits in the role of government. the thing that has moved a lot of the independents away from democrats is concern about spending in deficit and the contradiction that many people see, which is bailouts for auto companies, bailouts for wall street, where is my bailout is what you have a lot of middle class and blue collar americans saying. and republicans can play off that -- play off that sentiment.

and the answer the democrats have to offer is stick with us. our policies are getting better. look at those 162,000 jobs that were added last month and look at what is happening in the stock market. the obama boom in the stock market. and they're going to try to make the case that democrats have got things on the right track, you have to be patient. >> interesting. a lot of umbrellas between the arguments made politically here and those that are being made in the uk right now, meaning don't take a chance of changing horses in the middle of this race. another saying looking at the mess we were in physically, it's time for a fresh start in their case with conservativconservati. >> and democrats in the united states are opening david cameron blows his lead. elections in the uk are often bellwethers of where things are going. thatcher before reagan. >> they hire all of our consultants, right?

>> yeah. on both sides of the race, in fact. we get the better deal, i think. >> you mentioned the thin rig stuff. i noticed this poll out, did you see this poll? >> yeah. >> about asking people what their views on what they expect out of financial reform? and you're right about the notion of no more bailouts is much more important to voters than any kind of agency that protects them from banks. >> well, and it's no accident that the way that conservatives and republicans have gone after finalray, which is a generally speaking a popular initiative, something the democrats think they can make some headway on is by saying, for example, the too big to fate was the prefunding legislation is a permanent mailout funds. that's the tactic they have taken. bailouts is the number one toxic word in american politics. let's hammer that word. that's what you see from richard shelby, the ranking republican on the banking committee who

still, by the way, negotiating with chris dodd trying to figure out what sort of a deal they can make, but saying this is a permanent bailout fund. >> john, are they getting traction on that? to me, the question is resolution authority and the bailout fund could end our too big to fail be held hostage by the banking system. but at the same time, on the other side, there's this argument that we're baking into the cake. how is this really -- >> well, andrew, i think at the end of the day, the democrats have the high side of this argument, that they're going to be the one withes who can say, hey, look at those guys there. forget about what they say. they're standing up for wall street. they're standing up for the people who got us into this mess. but you know, there's an argument and the yen and the yang and the argument and the counterargument in politics, republicans trying to minimize their exposure. i do think the democrats at the end of the day can compel enough republicans to go with them, that this is going to become law and they're going to win the argument. although the one point to make on this is on something as complicateded and big as

financial regulation reform, there's a lot of back channel lobbying and discussions going on that can water down a lot of the key provisions. there's still a lot of big fights over the derivatives piece of the senate bill. so there's more than one way for opponents to win in this argument. stopping the bill is one thing, but changing some of the key provisions is another. >> i haven't read any of the actual bills. resolution authority, it's one thing to have the authority to do something. it's the other thing to know how to do it. when these financial institutions are so big and so interconnected and have counter parties everywhere, okay, you're allowed to shut it down. wa do you do? i mean, are you going to -- you're going to poland, going to greece? how do you unwind them? first of all, we don't have resolution authority across the globe. but we would have this authority in the united states. the idea is that you would set up a council with 24 hours,

effectively of bankruptcy judges which would go in there and figure out, can we fund this thing? and the fed ended up funding lehman brothers for a week. people don't recall that. so they figure out a way, how to fund it using the prefunded -- >> what we would think of as almost dip financing. >> dip financing, if you will, and effectively, them they start unwinding it. but the question is, how do you jump ahead? >> funded by bank fees? >> in this case, they would be putting $50 billion into a fund on day one. >> and the concern, john, is how do we know that we get a commitment through that whole process that that bank is going to get shut down,ite? >> yeah. but they're trying to spell that out in the legislation to make it unequivocal that when you have a situation like that that requires the thing to be shut down, that the shareholders get wiped out, the management gets replaced and you've got that -- >> and not just shareholders, but bondholders? >> exactly. >> john, some have tried to

argue that this additional bank tax, that politically, the argument for it has been eroded by the fact that the government is making 8% on a lot of their investments in the banks. is that the read you get? >> that is the argument from the people who don't want to pay the bank tax. that is not the argument of the obama administration because their point is that yes, even though the government has made a profit on t.a.r.p., that when you look at the commitment that was made to the financial system, that that was salvaging the entire system, saving wall street from implosion. there are costs associated with t.a.r.p., some for auto companies, some for other elements of the bailout, but that ultimately, the people who benefited the most were the firms that got us in trouble in the first place and they ought to pay us back. >> i think, by the way, what we're going to see is the combining of this bank tax and the prefunding of the resolution authority. >> i agree with you. >> that's directionally where it's going. finally, john, real quick --

>> i think the crack spread is going to narrow. >> john, give us a grade for a second, if you could, bob rubin, what are they saying inside the beltway? >> i think when you have somebody like chuck prince eating humble, that goes over well. rubin kept a little more distance. i didn't have managerial responsibility. he's still -- you know, the guy was such a god in washington during the clinton years. you remember talking about the rubin dividend and what was going to happen when you left the treasury department? >> committed to save the world, too, right? >> yeah. exactly. he's not looked at quite that way. but he has the here of the ee bam ma administration team. i think his view is to get

through the inquiry process and deflect the barbs as much as we can. >> thank you for joining us, john. let's get red for the trading day ahead. guys, good to see you. allen sinai, let me start with you. was it decisive this week, the economic data? are things getting better? sure they are. they had to get better. we're in a sustainable and trenched recovery. once it gets going, it's self-sustaining. it's now hitting home as consumers start to spend more, as they should. this is not a great recovery expansion, but it's more than adequate. to support the tremendous werings that we're seeing in corporate america. >> does that mean when we start to get alcoa and everybody next week, that earnings season is going to be very strong?

>> it's magic in corporate america in terms of producing earnings. top line revenue growth is now coming on. they're going overseas. many s&p 500 companies could get money and they're keeping the labor costs way down, which is part of why we have so far the joblessness. >> for so long, we were talking about profit seems to be only coming from cost cutting. richard, sound wonderful. are we going to finally get 11,000 here? what's the hold up? >> i think we're going to go through the 11,000 and the 1200 on the s&p. the issue that we're going to have going into next week, mitchell, is that people are expecting the earnings to be good. it's going to be the outlook. and the two things that we have to look at, especially with alcoa, is you're going to start to see the demand equation. the issue is going to be this $85 oil. are the energy users going to start to warn that they have pressure from energy prices? it may not happen this quarter if energy prices stay this high,

it could go into next quarter. and then for multi nationals, it's $1.33 euro going to be an issue? >> what about interest rates and the potential for the rise? >> interest rates? i think the markets may get temporarily spooked by the 4% 10-year, if it goes through that, but we've been resilient. we've had a greek fiasco that has gone on for way too long. we've had a dysfunctional eu that's now through with the imf. and i don't know what the imf does any more. it's into the equation. it's like the united nations of bailouts. i think we've gone through a lot of on these things and the markets have absorbed it. i think another thing we should

look at is comments of asset flows from european investors. if their markets are so crumbny, maybe some of the support we're seeing is the weak euro coming back and supporting the dollar. that's something we're going to be looking at closely. >> allen, let me switch back over to you. you're in the sustainable recovery camp. i'm wondering about the color of your glasses. maybe too much rose-colored classes. i don't understand where the demand is coming from in the equation here and the consumer-strapped filled with debt. the housing market, you know, i think we're susceptible to following back down. i don't understand where the demand is coming from and how you can go out and say sustainable at this point so early. >> i'm smiling because rose-colored glasses, i haven't heard that about my outlook for about seven or eight years. so i'm really glad to hear that. >> you're being accused of it

again. look, i never promised you a rose garden. but you know what? that's enough. and it's the self-sustaining cyclical reinforcement of what goes on. the banks still compromised will be lending more money. consumer feds will be better six, 12 months down the road than they are now. consumer spending will be better in 2011 than 2010. despite the fundamentals being very bad compared to history, they are getting better. there will be more jobs growth. on the fiscal side, it's not going to fade. it's going to fade some. we only are out about half of the fiscal stimulus of the obama february 2009 plan. so a lot of that is still coming in. we just passed two programs about $200 million more. there are lagged effects and then there are lagged effects of the incredibly easy money which show up long after monetary

policy is easing. this is very familiar. it's already entrenched, in my view. >> are you not worried about housing, weakness in housing more than offsetting whatever strength we can muster in the second half of the year? >> you know, yeah, housing is weak and big ticket item buying isn't normally what it is. but residential construction is about 357% of real gdp. and in 2001 or 2002, it was 6% of real gdp. really, the load is on the consumer. the interest rates, though, and i think i said this on your consumer, we think interest rates on average are going to rise and we are calling it a fair market on the long data sovereign debt of the united states and a number of other countries, as well, because the sovereign debt problems for a number of countries is just awful and the u.s. is in that category.

but interest rates can rise a fair amount. earnings are going to grow for or five times earnings growth. forget nominal gdp. just watch earnings and, of course, interest rates. >> good morning to you guys. thank you. coming up, tiger woods returns to golf at augusta. meanwhile, fred couples turns back the time in the masters round. here is a look at yesterday's winners and losers.

good friday morning. welcome back to squawk here on cnbc. i'm carl quintanilla along with michelle crusoe cabrera and andrew ross sorkin. and andy sewer is our guest host here. making a couple of headlines,

saven haven buying is being cited related to volatile currencies. the crisis hit nearly it's biggest three-month high for gold. what is that price now? >> it's $1,157. >> you know, in the united states, when ash cashin says keep enough gold on hand to cross the border, we always laugh. but if you're living in greece, a good part of the world looks to gold and says, if they're going to run my currency into the ground, i want to have a backup. >> the imf will be coming along in days rather than weeks, that this is -- we are now at the last -- >> for greece. >> yeah.

>> we'll see. fed chairman ben bernanke receiving the hamilton award last night. he said the central bank's decisive response to the financial crisis prevented another great depression. >> in hollywood news, ron merkel and bob and harvey weinstein offered $600 million for disney's miramax. "glorious bastards" was a big part of whatever comeback they're putting together now. >> it's a comeback of sorts, but this has been a struggle for both, by the way. it was a strugigle on the miramx side, it was a struggle for the weinstein company. >> those guys are geniuses. they knocked heads with michael

icener, funding by a lot of people, that didn't work out too well, either. you get a little momentum from "glorious bastards" but basically that has not been a good situation at all. >> there is one winner, the weinstein brothers when they sold miramax. >> the good guys always win. >> ooh. okay. i'll leave that alone. >> meantime, the ft reports tony and ridly scott are interested in running metro-goldwyn-mayer. they're leading towards debt for equity zap in an attempt to restructure the studio and keep it independent. >> can i make one comment about this? we've been following this mgm story for months. and this quote/unquote auction, i will tell you, was a joke from day one. the entire goal of the auction

is what they call a test so they could go back to the bondholders and say, look, we can't get the money that you think we can so they could do this swap. >> it's like getting a bad appraisal for your home or something like that. >> unfortunately, we've reported every moment of it as if there is somehow this real auction taking place. >> right. but the problem is, it's springtime for hitler in germany, you create a hit because there's always someone who has money for hollywood. a french bank, perhaps? that didn't work out so well. >> petro dollars. yep. >> be careful what you wish for or don't wish for. >> because people like stars showing up at their parties. >> there's a word for that, but we can't say it on this show. >> round two of the masters today in augusta, that's where we find our sports business reporter darren rovell after, wow, what an average of golf

yesterday, daren. daily news leads with now that's playing around. the post leads with "tiger prowls again." but they both -- i love when they think together. "back with a bang" is the headline on the sports page. what was it like being there? >> it was amazing and how stupid we are thinking tiger wouldn't be able to concentrate. this is his safe haven. this is probably the best day since all this happened for him. i followed him around for a couple of holes. the crowd was all supportive, cheering him. i was smiling. on the sixth hole, he came up and they were cheering him as if it was a sunday in terms of the length of the applause. and he tipped his cap, he tipped his putter. he was appreciative of the crowd. best first round in his 16 tries here at the master. first time he's had to eagles. really amazing for tiger woods.

and, you know, we thought it was going to be all about tiger woods and then it becomes all these other stories with fred couples and tom watson and there's a guy named phil mickelson in here, too. so this was already shaping up to be the moch watched golf tournament of all time as tiger came through. and i'm telling you now, if all the ingredients stay intact for all the days and through the weekend, this is unbelievable. >> how can he simply go back on to a golf course and play like that? because he's the best golfer in the history of the game, i know that. but don't you need to practice? how much practice has he had over the weeks, any indication? >> andy, he said he only practiced two days before his announcement in february. so that is when he started. and when he made that announcement, he said, i might not come back to the game this year. now win guess you've got to believe that he has that muscle

memory from playing since he was 2 or 3 and he kind of figures out the math of golf and that never changes. and as long as there wasn't too much heckling, the only distraction that came from the air would be, did you mean buddhism as a sign and he said he didn't see, but it is amazing. and then these other stories, it's going to get to him. fred couples at 50 years old wearing no socks and these eco type turf shoes. his best round in his 26 masters. that says a lot. since, of course, he won the '92 masters. and then tom watson at 60 ties for his lowest round of 67. the last time he had that was in 1977. remember, he has a replaced hip, so hopefully he got a good massage b over the night. he had his son on the bag, by the way, said that inspired him. and then, you know, you have the

koreans in there, yi yang, who beat tiger, k.j.choi, the field will be cut down to 44 players by the end of the day, plus anyone who is in the top ten of the leaders. but this will be an incredible golf tournament. i'm sure espn is pumped up to have it again. then cbs in the weekend. maybe cbs can start advertising tiger now, do you think? >> we'll see. we talked about the ad yesterday. they always say the masters begins sunday afternoon, really. but even at this early stage, who are you watching? is watson is a favorite, couples, what? >> no. i mean, i guess people don't give watson the benefit of the doubt because of what happened at the british open. i mean, is it just -- is it just so hard, couples would be nice. but i think people are watching tiger still, anthony kim is at 4 under par. it's way too early. there's a lot of guys up top.

but all the ingredients of an incredible golf tournament here. >> looking forward to it, darren. we'll be glued to the set. thank you, darren. >> are you not into golf? >> no, no. i might watch this target play. >> this is the best golf tournament in the world, though, and the drama this year is unparalleled. and one of those older guys coming back against tiger, that would be insane. >> he knows how to compartmentalize, that's for sure. >> men are like that. isn't that what they say? >> especially if your dad started teaching you these tricks before you could walk. >> come up, this morning's top stories. prices at the pump are on the rise. what does that mean for the american consumer and the u.s. economy? the ceo of salt oil joins us. with expedia, when you book your flight and hotel

at the same time, voilà, you could save up to 450 bucks. and that could come in pretty handy. where you book matters. expedia. because with national, i roll past the counter... and choose any car in the aisle. choosing your own car? now, that's a good call. go national. go like a pro. ♪

at the end of the day in sitka, alaska, everyone awaits the return of the fishing boats. ♪ their safe arrival is highly anticipated, ♪ as is something else. a shipment of natural sea salt from cargill,

essential for preserving the catch. we deliver the salt on precise schedules... and ship it efficiently all along the alaskan coast; saving the fishermen money, and their catch. this is how cargill works with customers.

welcome back. take a look. are we going to get to 11,000? have we had enough information about the economy right now? making headlines this morning, tribune agreeing with creditors on a plan to exit bankruptcy protection later this year. the publisher of the los angeles tribune settles all potential

claims stemming from the $8.2 billion leveraged buyout led by sam zell in one of his finer moments. >> one of the most upsetting transactions in the history of deal making, i think. >> tribune? >> the tribune deal. >> are you being a homer on a newspaper thing, right? >> you don't have any personal feelings about this. >> i know. why should you care about that deal more than anywhere other deal. >> i'll tell you why. >> because you're a newspaper guy. >> no. the employees got killed on that deal. they took the pension plans of the employees and rolled it into the deal. 12 months later, 18 moss later, the company goes bankrupt. >> does private equity do that frequently? >> not to the same extent. >> not to that extent. >> how many jobs have been lost through the private equity deals in this country over the past three to five years, right? >> by the way, i don't know if you saw the story in the "wall

street journal" this morning, and there were reports about this yesterday and the day before. hca, one of the big private equity transactions going public, kkr talking about taking toys are us public. so some of the big private equity deals, all of a sudden, it's not a quick flip this time. but you know -- >> that's not a good signal. >> it's interesting. is it a good signal, or not? >> i don't think it is. >> i think it's too early in the cycle to say it's a bad signal. when there's a flurry, when there's a bubble, it's definitely bad. but you're right, it's taken a long time for those to come out. they're still going to be competing against walmart. >> any comments or questions this morning, our address is squawk@cnbc.com. still to come, we'll get headlines inside and outside the world of business plus the

picture from the futures pits. i never as a woman thought i'd get a heart attack. just, out of the blue at 43. now i'm on an aspirin regimen because it helps me live the life i want to live. [ male announcer ] be sure to talk to your doctor before you begin an aspirin regimen. it's not a big deal to go to your doctor. it is a big deal to have a heart attack.

good morning. welcome back to "squawk box." here is what's going on outside the world of business. a diplomate from qatar who sparked a terror scare on a united flight wednesday will not face charges, but he is being sent home. al madadi was traveling reportedly to jail to visit a qatarry citizen who is in jail.

the suspects were detained at a routine checkpoint where harnesses and explosive vests were found under their vehicle's engine. and from the plains of south africa, scientists unveil two skeletons from a new species that they say links man's transition from apes to humans. that's your thought for the daip day. back in a moment with more "squawk box."

♪ well, look who's here. it's ellen. hey, mayor white. how you doing? great. come on in. would you like to see our new police department? yeah, all right. this way. and here it is. completely networked. so, anything happening, suz? she's all good. oh, my gosh. is that my car?

[ whirring ] [ female announcer ] the new community. see it. live it. share it. on the human network. cisco. boss: y'know, geico opened its doors back in 1936 and now we're insuring over 18 million drivers. gecko: quite impressive, yeah. boss: come a long way, that's for sure. and so have you since you started working here way back when.

gecko: ah, i still have nightmares. anncr: geico. 15 minutes could save you 15% or more on car insurance.

>> welcome back. we want to get you ready for this week's final trading session today. good morning, ben. what a crazy week it's been. i want to ask you whether you think guys -- and women, will go long into the weekend given concerns about greece and this notion that the imf could come along as a last resort rescuer sooner rather than later. >> i'm not sure if we'll see new initiative long positions coming in. one thing you can bank on is we won't see aggressive selling. very characteristically of this rally that we've been seeing was another event that happened this week. we saw a little bit of a sell-off wednesday afternoon which was met by more selling and continuation of that selling yesterday but then a very strong

rejection of that level and the s&p around 1172 even and the market showed more strength and more higher activity and that's just been one of the extreme characteristics of this rally that we've been seeing is short lived selling. >> i heard two arguments. one is that because we rebounded yesterday that you just can't keep this market down. the march to 11 k is undeniable. others say because the drop in the middle of the week was severe given where we have been recently that it's a sign we're overbought on a short-term basis. which is it? >> i don't know. i think that markets continue to rally still in overbought conditions. i think it's difficult to fade the market especially while we continue to make new highs on the year. the russell has been very strong which is a good indication of the broader market compared to the s&ps. a narrow range overnight but we still continue to trade in this positive territory. for the most part the market right now in my opinion still seeks value trying to figure out where value is and that's why we're in extreme vertical

development in the upside. it will overshoot value in an attempt to find it but it's anyone's guess at what point that will happen. we're waiting for a stopping price. until we start to breach the value zones we established on the way up, there's no credit or reason to sell this market and in addition to the fact that your risk is tough to measure when you go short a market. that's be an extreme vertical development to the upside and continues to make new year highs. we see lack of sellers coming into the market. it's not so much activity or presence of a high energy buyer it's just that we don't have anyone willing to step up and take a position short side. >> have a good weekend, ben. thanks. still coming up, this morning's top stories plus he served in congress and then represented the biotech industry and now jim greenwood brings his experience to "squawk box" as our guest host. then dr. debt makes a house call. doug dachille speaks out on fannie mae and freddie mac.

the financial crisis blame game goes on. "squawk box" returns on a friday morning.

over 20 million customers have put their faith in sun life financial. we should be a household name. and we will be. so you're suggesting that we change our name from florida, the sunshine state, to...? florida -- the sun life state. the posters will be so cool. sooner or later, you'll know our name. sun life financial.

stocks snap a two-day losing streak. retailers delivering some of their best sales in a decade and a fed official reiterating the fed's low rate stance. can the bulls continue the march higher? gearing up for the summer driving season. >> are we there yet? >> no. >> are we there yet? >> no. >> are we there yet? >> no. >> are we there yet? >> no. >> we get the prediction on

where prices are headed and what it means for your wallet. the ceos for two of the nation's leading biotech companies talks about changes the industry face thanks to health care reform. all of this and more as the second hour of "squawk box" begins right now. ♪ >> good friday morning. welcome back to "squawk" on cnbc. i'm carl quintanilla along with michelle caruso-cabrera. in studio is andrew. you are a well rounded individual. >> i'm old. >> i was going to say that. >> jim greenwood, former congressman from pennsylvania.

president and kraechceo of the biotechnology company. a bit of a rebound in europe and asia this morning. futures looking better as we get wholesale trade data later today. it's the last trading day before earnings season kicks off on monday. maybe bulls responding to good retail numbers we got yesterday and this notion that maybe greece could get help from the imf in the coming weeks. oil up 88 cents. we'll get more insight on where crude is headed this morning when we talk to joe petrowski. federal reserve officials are reiterating their commitment to low interest rates for an extended period. a gradual economic recovery marked by high unemployment will require low interest rates. as to when rates may rise, kohn

gave no hints. 18 banks lowered their debt level reporting in the past five hours. the move makes balance sheets appear less risky. boston scientific hired a financial adviser to help sell two units. the company is trying to raise capital after sale of implantable heart dedefibrilators. investors reacting positive sending shares higher. apple announcing it will launch a new operating system for the iphone, ipod touch and ipad. a game center will feature leader boards. there are over 50,000 games in the app store. it will attract new game development and it also includes an ad function and multitasking so that you can have more than one app open at the same time which was a complaint on the older devices.

shares of apple up nearly 3% since the launch of the ipad. andy has one right on the set. >> is this the first ipad on the set of "squawk"? >> it is. >> that's a rival site. >> you are just following -- >> the wi-fi here is fantastic. here's cnbc's website coming up. look at that. right. >> fast. >> wi-fi is fast. the device is doing great. realtime data. that's what life is all about. >> we don't give you a computer when you sit there. >> i wanted steve liesman's old clunker. where's that? where's steve liesman's old clunker? >> it's at the smithsonian. today we have a special guest that represents many in the biofuel community. jim greenwood, great to have you

back. we had you on when people couldn't talk about anything else. we did a summit in one of the other studios. we didn't know where it was headed then. now that it's law, what's your feeling about it? >> it's a mixed bag for us. the things we cared about most, the things we wanted turned out well. what was important was if we're going to attract investment into the future of health care in many ways, you have to get a decent return on that investment. we were convinced it would take 12 to 24 years after fda approval for us to recover our investment before the generics come in and use our data and replicate our products. the president said that should be seven.

some people thought it should be zero. congress ended up putting it at 12, which means it is great for the patients because now companies will invest in this cutting edge medicine. >> big picture what do you think about the bill? >> it's a mixed bag big picture. 32 million more americans will have access to health care. big picture there are some downward pressures on pricing for the industry. we have to pay fees to sell product to the government. i think if you are like i am and you have younger kids who are under 26, the ability to keep them on your policy is good. but i think the pay fors are questionable. i think everybody in america has to tan 24 hours a day in order to pay the tanning fee that's going to -- >> does it control costs? >> i think that remains to be seen. and let me just say this.

the fundamental problem with the bill is it didn't get away for the fee for service approach to health care and until you do that, you're going to continuously reward more procedures, more days in the hospital, more tests and so forth. that's not going to cut costs. >> when you hear critics argue that -- i'll call it the social elements of medicine that it incorporates into our economy will kill medical innovation do you push back on that? >> i think that the potential was there. from our point of view had the biostimulus gone wrong it would have killed innovation in biosimilars. you can not extract unlimited amount of funds from drug discovery business and have us continue to produce drugs. >> what do you think is next from a congressman's point of view what's next on the agenda. they come back from recess next

week. >> they are hell bent to get that done. it will be another huge lift. i think frankly from the point of view of the democratic party having lifted health care, which was nearly impossible, both the leaders in the house and senate and president feel empowered to move. >> do they have republicans by the throat? >> i don't think they have republicans by the throat. they have democrats by the throat. i think they have figured out how to get the job done. >> it's a lot less partisan than health care. how do you defend what? the gop has to do this tap dance where -- we talked about this defending business but wall street sort of is off on its own. it's a different part of business. not a lot of friends of wall street in capitol hill at this point because how are you going to defend -- what happened? >> it reminds me of the days where you mentioned i did investigations on enron and

worldcom and global crossing and congress said what do we do to fix this and the answer was -- >> it worked well. it addressed all of these wonderful issues. >> this is what you're alluding to with the box republicans are in. at that time ox lee from the house democrats control and democrats controlled in the senate and what happens is he was pushing for more and more controls. the republican party didn't want to get caught as being on the side of the corrupt corporations. bush was tied to enron. so we pushed way over the line of sensibility. >> is there a broader lesson that you can pass law after law after law and there will always be crooks. there will be ceos who have to sign off on their financials and they had no idea there -- >> there's an anti-greed provision in this new bill that goes away. >> we'll outlaw greed.

>> are you surprised after this crisis, you saw enron, worldcom, that whole generation, there was a number of poster boys for the cris crisis. people who were hauled away. orange jump suits. >> were you surprised there haven't been any orange jump suits yet? >> perp walks and that type of thing. >> i don't know this was about violation of the law so much. it was just about a whole bunch of other things. i don't think anyone has made very convincing arguments that it's against the law. i think what we are in danger of is creating a narrative. this commission is looking into what happened sort of looks like they already put the bunny in the hat and they are sort of -- they are going to pass the fix before they get the report from the commission. you would think they would want to start with a clean slate and say let's find out.

let's not think that we know -- >> that would be after the election. >> you will hear over and over and we heard it over and over which is it's not against the law to be stupid or greedy. and the prosecutions are tough. that's what they said about enron and it would be great to go and see and understand the status of various efforts at this point. it's not clear to me. maybe you know, andrew, what's going on there. >> i think people are now looking again hard on the lehman front. to the extent you're going to see -- i'm not sure you'll see handcuffs. you might see fines on the civil side. as you said it may not be legal or criminal to be stupid. >> and standard for fraud is very high. >> and in most of these people intend to do something wrong and deceive the public? that's the fundamental question.

>> and destroy their own self-net worth. >> there's responsibility when you're the ceo and salary and you're culpable but the league threshold there as you suggest is very, very difficult. there's not a lot of precedent there. you are fining them and censoring them and barring them and at the end of the day that's pretty much what you're going to get here. i think jail will be very difficult for that to happen with these guys. >>villification will occur. i don't think it rises to the level of criminal conduct. >> we'll talk about biotech and more abouted broad economy. jim is here for the next couple of hours. >> comments or questions about anything you see on "squawk box," e-mail us at squawk@cnbc.com. following critical comments on critical hill about fannie mae and freddie mac, their role that led to the financial crisis. we'll talk about that next.

later, the business of biotech. stay tuned. >> announcer: what billionaire moved into las vegas's desert in in 1966 and bought the whole hotel a short time later? the answer when cnbc's "squawk box" continues. aflac is not how do i fit it in my company's budget insurance. aflac is help protect and care for your employees at no cost to your company insurance. with aflac, your employees pay only for the coverage they want or need. and, the cost to you - nothing at all. if all you know about us is... duck: aflac! ...then you don't know quack. to find out why more businesses provide aflac, visit getquack.com.

>> now the answer to today's aflac trivia question. which billionaire moved into las vegas' desert inn in 1966 and bought the whole hotel a short time later? the answer, howard hughes. welcome back. yahoo's chief technology officer and head of products is stepping down leaving for personal reasons. she launched a management reorganization and combined various technology and product groups into one entity led by the cto who is now gone. >> the final day of the financial crisis inquiry commission hearings are set for today with fannie and freddie major top offic of discussion.

good to have you here, doug. fannie and freddie will cost us more than any bank, even the auto industry, and is anything going to come out of this? what's going to happen? >> i listened to your previous conversation. why haven't we seen orange jump suits and that's because you have to listen to testimonies we had over the last few days. what you needed to do was listen to testimony of the people who were involved in the business. when you his tonight people who were actually involved in the business, it seemed all of these people were doing the right thing. i listened to one person who was the head of mortgage finance at a bank. she was saying how she was involved in the business of buying these loans and then packaging them into securitizations and her organization did due diligence on the originators. i'm sitting there thinking about

due diligence on them? what was that? what exactly was due diligence. that was the essence of the problem. at the high level we created a product for which there were no necessary procedures but then you could basically say we did exactly what we needed to do. >> connect this back to fannie and freddie. >> that's a completely different issue. with fannie and freddie what we have is a situation where we have a policy by which we want to create making homes affordable and we thought the mechanism to do that, an efficient mechanism to do that was to create agencies that would do two things. right guarantees and buy mortgages with the intention of getting mortgage rates down. the problem is when you get

involved in the business of providing subsidies, by definition you're going to lose money. that's the definition of subsidy. doing something below cost. there should be no surprise that entities in the business of providing subsidies will lose money. the problem with fannie and freddie is we don't know how much money was lost due to subsidies versus how much was lost due to mismanagement. >> you have three choices with fannie and freddie. they go away. you nationalize them and make them part of the government. we can't put them on the federal budget because it would kill us. and then -- >> that's an interesting problem there. because that's the problem that all of the banks had. we're all worried about all these off balance sheet nonco nonconsolidated activities but our federal government relies on those accounting games. >> do we get to the point where

the u.s. government says we're not going to subsidize housing? >> there's two parts to that question. the first part to that question is policy. that's a decision to be made by our leaders. >> what's the answer? >> i'm not supposed to answer that. >> it's a political question. >> what i can answer is once you decide that you do want to -- that this is an important policy initiative and you want to provide subsidies, what i can tell you is the right way to do it. the right way to do it is you want to provide subsidies that have transparency and accountability. you just cut checks. you don't get involved in writing complex guarantees which you don't know how to value. put you at risk. and you don't know what your uncertainty is. you can't manage it. what do you is you cut checks. we've done it in the municipal market. look how we solved the problems with build bonds. we didn't have the federal

government guarantee the municipali municipalities. we had the government cut checks to the municipalities rather than write bond insurance on municipali municipalities. >> when congressmen talk privately about fannie and freddie, what do they say? >> the interesting thing in the mid 90s i was the chairman of newt gingrich's long range planning committee. i went to every chairman in the house and said what should we think about not tomorrow, not before the next election but ten years or more over the horizon? what should we think about? went to jim leach, chairman of the house committee. fannie and freddie. they'll fall apart. >> this is '94? >> we had warnings for years. >> i said, okay, great. that sounds like a project. what should we do to fix it? he says you can't fix it. it is so politically wired. they hire everyone's spouse. they are so politically wired you can't touch them. >> doug is right. it's a political question. a philosophical question. where do you stand?

do you believe the government should be in the business of encouraging home ownership or increasing home ownership in this country? is that the government's role increasing? >> here's the problem, andy. even if you start with good intentions historically happened fha first started and you had to have really high amounts of capital to get that first loan. it spreads all of the way down. >> what happened also is when congress passed the law to allow interstate merger of banks, they had community reinvestment provisions and groups like a.c.o.r.n. said if you don't put enough money in for low income housing, we'll object to your merger. >> if you want to change policy, the transition to get out of it now that we're in it is almost impossible. you think about what would happen to the economy. >> the issue i'm having is --

the problem is it isn't necessarily the policy. the problem was implementation of the policy. the problem is we wanted to create subsidized housing and do it in a nontransparent manner. we don't know how much benefit the homeowners enjoyed from 20 years of subsidies and we don't know how much the subsidy cost the taxpayer with undue risks taken. you don't know how much loss is taken place due to fact they provided below market rates, below market guarantees versus mismanagement of risk. >> this story that banks at the end of the quarter -- >> window dressing. >> do window dressing make balance sheets look better temporarily. >> they have regulatory capital rules based upon the balance sheet. as we know, there's a lot of risks that are done off balance

sheets. the problem is the regulations are still looking at flawed accounting metrics instead of going down the route of looking at risk metrics. you can't hide risk. it's harder to hide risk than assets on your accounting balance sheet. most of those things that take place at a bank are things to basically deal with the regulation due to accounting. >> it's also the old saw if you create a wall on wall street, people will figure out a way around it. >> we're doing that in the federal government. you're telling me that in the '90s we were worried about fannie mae and freddie mac. now look at what we've done. we've closed down fannie and freddie from getting aggressively involved in buying of mortgages but we've replaced that exact same function at the federal reserve and the federal reserve i would argue is doing it in a riskier way because they're not trying to hedge or manage the mismatch. when fannie bought it, they might have issued ten-year debt. now the fed is buying 30-year mortgages funding it overnight

in reserves. >> we'll print the money. >> you know, i was -- >> you did this. >> i didn't do that. i would never do that. >> is there a way around this -- >> there is a way around that. there's ways around that where you have to go down to looking at risks and not looking at accounting met ricks and you know what? the way do you deal with this problem is can you not solve this are regulation. regulating activities solves the problems that you have seen in the past. whether you regulated them or not, those won't happen again because people know those are a problem. >> aren't capital requirements important? >> capital requirements are definitely important. >> then it becomes a disclosure issue as we talked about in the 6:00 hour. >> it's not even capital. there are agents. employees have decision making. the problem with the banks is typically is incentive structure. bad decisions that lead to losses are a function of bad incentives. you have to look at the

incentives. the problem with banks opposed to traditional companies is traditional companies figuring out incentives balancing the interest of the owners with the activities of the agents taking the risks. there's only two parties there. when you deal with banks, there's a third party that needs to be represented at the table. that's the taxpayer. because the taxpayer is providing guarantees and capital support to these entities and when you have a situation where you need to balance the issues of shareholders, equity who want upside and taxpayers who want you to limit downside the traditional mechanism so dealing with that is regulation but regulations we know never work. it has to be at the level of the guy sitting there making a decision thinking about how he gets paid. he needs to think about when i do a trade when i take a risk, yeah, i get the upside but you know what? a portion of my compensation exposes me to the downside for which i can never enjoy the upside if the risk pays off. when you compensate a guy

sitting at a bank, don't give him only equity. give him debt. give him debt of the organization so that when he goes and takes a risk, he starts to think that he's in the -- >> make them eat what they sell. >> this is back to the idea of private partnerships and when you were a partner in these firms, you had your own money at risks. >> goldman, lehman. >> any good that can come from the commission today? any discovery that can happen? >> if you want to learn what was going on, you need to go down the food chain and ask the people at the low level. when i listen to those committee hearings, i ignore almost everything from the high profile people that everybody is paying attention to. you need to go down the food chain and understand what was the thinking going on of that person who is making decisions day-to-day? what were their incentives? those are the people who invested capital. not the guys at the top. >> i would love to see the

commission that doug is on. you wouldn't need a microphone. >> congressman, what would you do with that? >> they have subpoena powers. they can do that. they don't have to just listen to the big guys. >> you'll learn a lot more. >> the guy from citi was complaining he was listening to the consultants. that's comforting. they tell you everything is okay and you're the expert and how much do you make every year. >> $97 million. >> this is about rubber stamping. it's like rating agency. put triple-a on it, it's good. >> thanks for coming back in. good to see you, doug. >> he doesn't have enough passion. >> when we come back, tiger day two and then health care in the biotech industry. what some of the nation's most innovative companies are saying about reform and the effect on how they do business. we'll talk to two ceos and a discussion with jim greenwood in just a bit.

and still no one knows the sun life financial name. 145 years of financial stability that changes today. i hear you're the clown in charge. so, cirque du soleil becomes... ...cirque du sun life. because soleil means sun.... (gibberish) i'll take that as a yes... sooner or later, you'll know our name. sun life financial. hey can i play with the toys ?

sure, but let me get a little information first. for broccoli, say one. for toys, say two. toys ! the system can't process your response at this time. what ? please call back between 8 and 5 central standard time. he's in control. goodbye. even kids know it's wrong to give someone the run around. at ally bank you never have to deal with an endless automated system. you can talk to a real person 24/7. it's just the right thing to do.

welcome back. the idea of a merger between united and us airways not flying with two significant groups of their employees. pilots say they are opposed to a merger because it is unlikely to achieve significant benefits. flight attendants say they won't

support any deal that seeks to distract from contract negotiations. walmart cutting prices on about 10,000 items as it tries to halt slowing sales in the u.s. it's according to "the journal." stephen quinn said more price cuts could come in the months ahead with help from the retailer suppliers. and soft drink companies could lose $8 billion in sales this year. a study says 24% of consumers plan to spend less on carbonated beverages this year. only 18% plan to spend more. similar trends are being found with alcoholic drinks. 89% of those surveyed planning to spend the same or less on booze. >> if someone called me up and asked me, i don't know what i would say. >> you lie. i'm spending more on soda. >> i'm spending more on liquor. >> no one is going to admit that. >> round two of the masters today tee off in the 9:00 a.m. hour eastern time. here's a quick look at the

leaderboard. we have fred couples on top again. >> the old guys. >> watson. mickelson. tiger. two eagles which he has never done in the first round. the masters begins the back nine on sunday afternoon. what if someone shot a 66 and no one cared? that's close to what fred couples experienced as all of the attention was focused on woods. fans gave woods a pretty warm welcome. he played a strong round. finds himself near the top. two shots behind couples. tiger tees off at 10:35 a.m. eastern time and they are talking about super bowl type numbers. not exactly but perhaps in that neighborhood for saturday and sunday. >> if he's in the hunt. >> absolutely. >> great news for power lunch. all right. comments, questions, about anything you see here on "squawk box" e-mail us at squawk@cnbc.com and then biotech

buzz. we have two ceos joining us next for round table discussion. >> announcer: as we head to the break, here's a look at the widely held stocks. "squawk box" on cnbc returns after this. we are first in business worldwide.

biotech companies leaving uncertainty behind now that the health care bill has passed but the sector is trying to recover from the impact of the credit crisis. with us is richard pops and dr. ron cohen and our guests host today is jim greenwood. good to see you this morning. jim said he was relieved the way the health care reform bill went down. that when it came to protecting biotechs against generic, you wanted 14 and the white house wanted 7 and you got 12. >> good enough. instead of a big windfall for the industry, it's almost like

getting back to business of developing our drugs. >> he also said if you're going through hell, keep going. that's how a lot of people feel. >> it's enough time for you to make money on a new product? >> yes. it is. it's a reasonable amount of time based on what it takes to get there. we just had our first major drug approved to help people with multiple skroes is walk. we had to raise 6 million as a company to fund that work. once you get there you need to have a certain period to justify the risk and that kind of time and investment. >> you have another battle. it's a controversial drug. very exciting to help people walk but very expensive and we read that people are struggling to get their insurance companies to cover it because it's not curative.

it helps with one of the major symptoms. >> i guess there are a couple things embedded in there. first of all, people with ms have a lot of problems because the disease impairs their nervous system, brain, spinal cord, the things that enable us to do what we do. one of the major problems for people with m.s. is that they lose the ability to walk over time and we all take that for granted. if you think about it, everything we do -- almost everything we do, except maybe sit hearing talking but other than that if i want to get up and leave here and if i want to go to the restroom, if i want to make myself a sandwich or pick up my kids, every single thing we do relies on walking and there's never been a drug to help people with m.s. walk. it's not a trivial thing. it's a major jump forward. we actually have been very pleased with the insurance coverage. i'm not sure what that word is. >> i was reading press accounts where people said they were

struggling because it's expensive. >> when you release a drug, there's always pockets or places where you have to go and explain to the insurance company and really educate them about what the drug is because it's new and we're doing that. we're going out. but by in large we've actually been pleased by the access that patients have been getting. >> that gets to education part that gets to one of the disputes about how much money the industry needs to recover its investment. a lot of it is marketing which we like, right? we like it in magazines and television. on a big pharma level do they spend too much on ads? >> you know, i can't speak for big pharma company. i can speak for what we do as a small biotech company and we're dealing -- everything we do is working in innovator environment so the drugs we try to develop are pushing frontiers of medicine forward. if we're fortunate that one makes it through and makes a big contribution to a disease state, they are the kind of drugs that

don't require massive marketing campaigns because it's very clear that it's an innovator and we're not competing for market share necessarily against 15 other competitors. you have to educate physicians and educate patients and talk about the safety profile but by in large, these are things that are well demanded by patients. >> richard, let me ask you a question. to distribute your products do you have to align yourself with a bigger pharma company or how does that work exactly? >> it depends on the drug you develop. as ron said, we start at the molecule level and we spend a decade or so to get to the point where we have a commercial product and sometimes we wake up say what do we do now? if it's a product that will go to general practitioner when you go to the doc for your normal checkup, a product that will be written by that type of physician, then we probably need to partner with a large pharmaceutical company. if it's a specialty drug which

is much of what we develop where there are specialist dealing with particular group of patients, we can do that ourselves. >> what are you working on now? >> this is very interesting. >> we have a couple that are interesting right now. they are in both camps. one is a big new drug for type doctor diabetes where we are partnered with two other companies. big impact product. millions of patients. we also have a drug that's on the threshold of fda approval for second indication which is for treatment of alcohol dependence. >> like a shot once a week? >> once a month. >> that's the secret. if you have to rely on folks to take a pill every day or a shot every week who are addicted, they won't do it. >> this will kill their addiction? like methadone? >> it affects a receptor in the brain that reduces the effect associated with alcohol and blocks the receptive. >> if you're going to drink, you're going to get a shot you know where. maybe it works that way. i'm kidding.

go ahead. >> the science is fascinating. people think of alcohol dependence as a failure of will or put the cork in the bottle and you'll be fine. there's a reason why certain patients will drink 50 drinks a y, which happens in our clinical trials. 50 drinks a day every day because their brain is conditioned to respond to ethanol in a different way than my brain does. >> you pointed out binge drinking story is on the cover of "the journal." >> below the fold. u.k. drinking problem gets political. it's an epidemic in many countries and treatments are social treatments and counseling treatments rather than medicine. >> what's going to happen if they came to you would you do a deal? >> came to buy us? >> i haven't heard this. >> am i reading it wrong. have i got the wrong ceo or is it your company? it's ron's company. >> i was really enjoying

watching richard. >> leaving him out to twist. >> are you interested in a deal? >> we've never can comment nor do we on speculation out there our job is to go and develop the best drugs we can for people who need them. >> would a bigger balance sheet help do you that? >> a bigger balance sheet almost always is a good thing in our business because it takes a lot of money to develop the drugs that we are. we are fortunate that we fini finished with $700 million in the bank. that's a good position to be in. >> could i make an argument for smaller balance sheet, too? sometimes in biotech companies what makes you so good is being capital constrained. you have to be creative with your scientists and way you design clinical trials and which drugs you choose to pursue. >> that's how i feel about life in general. >> you don't hear that a lot. >> m.s., diabetes, alcoholism, the cost to society and these guys and companies working on drugs to alleviate these and cure these diseases and how

valuable is that to society? it's amazing. >> we talked earlier about the health care bill going to reduce the cost of health care overall and we're all skeptical about that. what's going to reduce the cost of health care is biotechnology industry which is going to reduce dramatically the incidents of chronic disease. if you don't do that, the mandatory spending of the united states of america is going to exceed revenues in about 20 years. exceed revenues. you can't tax your way out of that. you can't cut spending to get out of that. you have to reduce spending dramatically in medicare. >> alcoholism costs are amazing. look at the soviet union and russia. >> thank you so much. it was a real pleasure. we'll have more from jim in the next hour. >> in the meantime, any comments or questions, drop us a line. our address is squawk@cnbc.com. president obama announcing a plan to open huge areas for

offshore drilling. we'll talk to the ceo of gulf oil next after a break. as we go to break, take a look at crude this hour. back above 86 today. 85.98. you can see what it's done over the last couple weeks. "squawk" will be right back. >> announcer: you're watching "squawk box" on cnbc, first in business worldwide. most people try to get rid of algae, and we're trying to grow it. the algae are very beautiful. they come in blue or red, golden, green. algae could be converted into biofuels... that we could someday run our cars on. in using algae to form biofuels, we're not competing with the food supply. and they absorb co2, so they help solve the greenhouse problem, as well. we're making a big commitment to finding out... just how much algae can help to meet... the fuel demands of the world. tdd# 1-800-345-2550 that's why, at schwab, tdd# 1-800-345-2550 every online equity trade is now $8.95 tdd# 1-800-345-2550 no matter your account balance, how often you trade tdd# 1-800-345-2550 or how many shares...

tdd# 1-800-345-2550 you pay what they pay what everyone pays: $8.95. tdd# 1-800-345-2550 and you still get all the help tdd# 1-800-345-2550 t you expect from schwab tdd# 1-800-345-2550 millions of investors. one price. tdd# 1-800-345-2550 at charles schwab... tdd# 1-800-345-2550 investors rule. tdd# 1-800-345-2550 are you ready to rule?

crude oil prices surging over the last couple months closing down. will the rally continue as we get into the summer driving season now just six weeks away? joining us today is joe petrowski. this should not be a surprise, right? is any part of it surprising to you? >> yes. it is surprising to the duration and extent prices have gone. we're a dollar a gallon higher than we were a year ago. given the fact that stocks are at a 17-year high in the refine market, it's surprising in its duration. >> all of the metrics that should argue for lower prices are there, right?

we have a stronger dollar. we have inventories at a ten-month high. is this about money flows? is this about oil that was unnaturally depressed earlier? what's going on? >> it's money flows. look at the open interest in the nimax contract. we're almost on crude within 75 million barrels of where we were in may of '08 before we did the final blowout move 247 and gasoline open interest on the nimax we're higher than we were at the may 2008 which was the beginning of four months of hysteria. >> we all know where that leads, right? when it's not about supply, who knows where the dollars flowing into that market would take us. give us a prediction for the next six months. >> i have given up trying to kiss a freight train but

fundamentals are to go down. there are some things -- i applaud the administration for opening up the drilling offshore but there are three things in this market that i would like to see our officials focus on because i'm seeing things at retail that are starting to make me somewhat concerned for the first time in a few months our average gallons per transaction have dropped and that generally indicates a stressed consumer. at a dollar a gallon higher than last year, that translates into $2,000 per household which is about a quarter of the federal tax revenue on an individual and this is hitting mostly people that are least able to afford it. the recovery retail sales, the consumer can hardly afford $3 and if we move much higher, we're going to have major problems in the economy. >> same dynamic taking place inside at convenience? >> you continue to see a shift of value away from standard

brands. whether that is just people deleveraging their balance sheet, continued unemployment or recent gasoline prices, you know, we can't identify that. >> doesn't exactly square with the retail numbers we've been getting. >> is that because of higher gas prices because they're strapped or because of higher gas prices? >> i don't know. what i do know is there are things developing in the marketplace -- for example, ethanol where it is now trading a dollar a gallon cheaper than gasoline and we are mandated to increase the amount into our pool to 36 billion gallons from about 10 and a significant part of 140 billion gallon market is very cheap and we cannot blame anymore in. i would like to because of the price but we don't have sufficient number of flex fuel vehicles and for many, many reasons, we can't blend above 10% ethanol into gasoline pool and we need legislative and

administrative relief to get that done. >> we have to go. i'm guessing you are not willing to say triple digit oil in the near term is not possible? >> in a technical market, fund flow market it's very possible. >> good to talk to you. we'll bring you back more as we get into the summer. good to see you again. >> thank you, carl. >> scary stuff. i found that insightful. >> it may be as we were trying to get to the bottom of it, the fact that higher gas prices are making people buy less. maybe the consumer is fine. >> can the market continue its rally? we'll break down all of the issues facing investors in the months ahead from the economy to the midterm elections. "squawk box" is coming right back. >> announcer: you're watching "squawk box" on cnbc, first in business worldwide.

stocks to watch this morning on a friday. a lot of them regarding retail. jcpenney after upping guidance yesterday is upgraded to buy list at goldman. the firm looks for upside after jcpenney upped their guidance yesterday. abercrombie & fitch target going from 37 to 50. >> good news for a company

struggling for a long time. >> they're jumping on the bandwagon after they reported sales. >> american eagle downgraded to underperform from a buy. the target there cut from 23 down to 18. >> that's a young look, andrew. american eagle. >> i heard about that. >> too young for you? >> you strike me more as a hot topic guy. >> that was most excellent. >> cargo pants. >> the buckle. >> i'm thinking paul stewart. >> lane bryant, something like that. >> carl, that's way off. >> we'll go to our strategy session and find out how both sides prepare for the midterm battle and when fed insiders speak, markets listen. we'll have a report on which players are most influential when they open up about interest rates and the economy. which ones should we really listen to?

a gop strategy session. we open up the floor to discuss the midterm elections and how the makeup of capitol hill could be much different by the end of the year. states of pain. >> ow. >> quit it. >> ow.

>> quit it. >> what's with this? >> ow. >> quit it. >> pennsylvania trying to close up a budget gap. the treasure of the keystone state will talk about making up the billion dollar difference. look in the mirror. who is the most influential inside the fed? they testify and give interviews and make speeches but some have more influence than others. a former fed inside er tell us who holds the string. "squawk box" begins right now. ♪ >> good morning. welcome back to "squawk" on cnbc first in business worldwide. i'm carl quintanilla along with michelle caruso-cabrera andrew

ross sorkin who we have to thank. this is our last show of the week. >> i have a new found respect for what you do every morning at this god forsaken hour. it's remarkable. thank you for having me. it's been a lot of fun. >> we'll have fun this hour. joe and becky will return on monday. our guest hosts include jim greenwood, former congressman from pennsylvania and andy serwer. always good to have you. markets rebounding from the weakness of the last couple of days. futures are up. europe has been up. a lot of hopes about retail numbers we got yesterday and fewer concerns, michelle, about whether or not greece defaults in the near term. >> and anticipation of earnings season next week which many people are hopeful about. here are some of the morning's top stories. 18 banks masked risk. the firms temporarily lowered debt levels just before reporting in the past five

quarters. this made the banks balance sheets appear less risky including goldman, bank of america and citi. top federal reserve officials are saying that low interest rates will be around for a while. fed vice chair don kohn argues that interest rates need to remain very low for an extended period. at 8:30 a.m., a report on the most influential fed players. steve liesman and former fed governor larry myer will bring us that at 8:30 a.m. eastern time. when somebody says something, do they matter areas someboversus somebody else. >> you asked this earlier this week. >> do people listen? >> does he have the chairman's ear? >> does he have the juice?

>> and if you remember, he was the one who was saying we're going to have to unwind $1.25 trillion. >> some of the biggest names in the gop have descended on new orleans to the leadership conference where they hope to rally support for mid terms which are not that far away. we have dana milbank for "the washington post", mike allen from politico.com and jim greenman. we want to start with this lead of politico this morning which i don't know if you can show that page. new pundits, prodigies or pip-squeaks? >> is that your headline, mike? >> we don't write the stories.

>> now we got that out of the way. >> what's going to be -- as we see congress come back next week, what's going to be the lead? are we going to talk more about what comes out of new orleans this weekend or will it turn? what are we going to talk about on monday? >> in washington it will be very much about financial regulatory reform. the president coming back from a trip abroad thinks he has a big chance to keep that momentum going. he's going to keep the foot on the gas. he wants to at the very least sign it by the second anniversary of the meltdown and that means probably getting some senate action over the next seven weeks. this is the longest legislative period of the year that congress has to work. they want to get something done. republicans are going to have a countermessage. they'll take april 15th, tax day, to use that to talk about things the president hasn't done and things that he's done to the economy that they don't like because republicans have a problem. the economy is getting better. they can't be out there rooting for a recession. >> dana, it's been written this week that setting deadlines on

legislation at least in the last few months has not been a winning strategy. by putting memorial day out there, is that painting yourself into a box? >> he needs to light a fire under people. he doesn't want to be embarrassed by ultimately putting a deadline out there. that gives him wiggle room. what strikes me at the moment is how little anybody has control over whatever is going on in washington. you asked what are we going to talk about next week. mike is right. that's the official business that's going to be on the floor but who would have thought we would spend our week talking about the governor of virginia and slavery or sarah palin talking about a school yard brawl with barack obama. so it's really a -- we're very deeply into a silly season here. they may actually get some stuff done despite it but both parties seem to be doing everything they can to avoid actual serious work. >> mike, you talked about the problem that the republicans may have with messaging that they

can't be rooting for a recession. isn't the same thing true with financial regulation? how do you be against it given what just happened? >> that's right. and they need to find some things that they can be for. there's no indication that republicans in the senate want to work with democrats. it's another case where they may be blowing a great opportunity. just today gallop has favorability of the democratic party. the same as republicans. the advantage has been erased. you have republican antics making headlines rather than what they're doing and in the season with a time of volatility in our country, republicans have an amazing chance. i ran into michael barone and we would get a republican house and democratic senate and looking at 2012 after 2012 could you have a

democratic house and a republican senate. so we're going into a period of extreme volatility where republicans really have a chance to make some hay but with problems the party is having and the resulting money problems they're going to get, they may leave seats and states on the table that they could have g gotten if they had their act together. >> when you talk about the importance of financial regulation reform, around this table we think it's very important but it's not really getting the hearts and minds of america involved. people are very angry but if this gets extended out through spring, through the summer, maybe even into the fall, what's the political calculous? >> the more strength opponents have as it gets drawn out because memories are short. if they got action on this very early in 2009, there would be a

lot of anger in the public. what you see hnow is historic revisionism. you had greenspan and ruben this week basically saying it wasn't anything that we did. turns out everything is fine after all. what's the big deal? i think pressure eases as they go along here. that's not to say they won't get this true. it certainly as you know has been watered down substantially along the way. that's another reason to set the deadline earlier. the longer it goes, the more job growth they say and people say it wasn't as bad as we remember it. >> we like to fix things when the fire is in the living room. the story in "the journal" today about bank debt and the way they massage it every time the quarter ends is one more reason why there needs to be some change, don't you think? >> absolutely. i suspect that -- by the way, this is the thing that will light the fire all over again. >> trying to sustain the political will. >> give me an assessment of where we're going with this election season? what recommendations would you

make to your former party? >> the republicans are actually ahead in the generic polling right now which is extraordinary historically and usually the republicans are a few points behind when they win they are a few points behind so you never want to connect dots a couple months apart and try to trend line all of the way to november. it's no slam dunk the republicans will win but they have to be for something and not just against everything. eventually they have the tea party folks that are not just mad at democrats but mad at the whole system and the whole political process and republicans will have to distinguish themselves for being for something concrete and solid. >> if the unemployment rate stays high even as jobs are being created, is there a way to distract the public on that alone? >> they are going to. they're going to try to talk about the fact that the

president's policies are hurting businesses and helping keep that rate high. that's why you will see the president a lot in coming weeks out talking about what has been done, what was done with the recovery. you'll see a number of new announcements about green jobs. he's going to try to keep the foot on the gas of financial regulatory reform to build a competence case. if you put aside national security and jobs put aside health care, one of the big themes in november will be confidence. who do we trust to run this government? he wants to get one more thing done. the unions will help with this. we're reporting this morning that the head of a union told me on april 29th he plans to have 10,000 to 20,000 union members and supporters marching on wall street flooding subways, down there in buses to try to keep pressure on banks and other

union announced it will do marches and invade bank meetings. >> not going downtown. >> flooding the subways always works. >> dark glasses. >> traffic could be as bad as during the nuclear summit in d.c. good to see you both. dana and mike, we'll talk to you later. how do you think wields the most influence at the federal reserve? we have a breakdown of the fed players that get most attention when they speak. up next, states of pain. focusing on pennsylvania. they need to make up a $1 billion deficit. doesn't sound that much in the context of things but treasury of the keystone state will tell us how to try to close that gap. "squawk box" is coming right back.

another state and another budget crisis. the clock is ticking on pennsylvania lawmakers to close a state budget gap between 750 million and 1 billion before july 1st. joining us is pennsylvania's

state treasure. on a $29 billion budget, a billion dollars doesn't seem so bad considering what the rest of the nation looks like. >> you're right. in fact, i would say we're sort of in a state of gain and not a state of pain to some extent in pennsylvania. i'm very proud of where we are. we have a much lower kind of business burden with business taxes than our neighboring states, new york, new jersey, maryland and ohio. and a much, much lower personal income tax rate and our comparative advantage will only grow. if you look at california with a $20 billion deficit. new york and new jersey each with $9 billion deficits. looking at 750 million to a billion isn't that bad. >> you have an underlying issue. everyone understand tax revenues have gone down because of the recession. the you had an unexpected huge spike in your public employee pensions of $4 billion. >> bingo. >> why did that happen? that's the problem we're having across the country. >> you're right. that's where i was going to head. this year i think that we've got

some approaches to get through this year quite nicely. we can broaden the sales tax and reduce it but make it fair to make up for this $1 billion hole. looking out into the future for the next 14 years, this pension trauma will remain with us and i'm one of those that believes that defined benefits are a good thing and that we maybe need to adjust benefits over time but sooner or later people grow older and we want them to have retirement security. there is a $46 billion problem in pennsylvania. >> why are you so committed to define benefits when all of private industry has gone to defined contributions. it helps the corporations know exactly what their issues are. it helps the employee know exactly how much money they're going to have down the road. why do public sector employees, many of them unionized, get to have a defined benefit? >> let me challenge one of the assertions embedded in there. absolutely the employee has no

idea how much money they'll have down the road. they know what the market value today is. they don't know necessarily what the market value tomorrow will be and what inflation rate will be and how it will correlate to their highest years, et cetera. >> public sector employees don't know if you'll go bust 20 years from now. >> as a rule looking back on american history if you take a look at retirement security, about 80% of american employees and scholar at notre dame wrote about this, 80% of american employees had relatively secure retirement plans in the 1950s and '60s. that's down to 20%. i don't think the solution is to pull everybody back. that said, i want to be very clear about this. you probably over time have to look at the spending side as well as the revenue side. we had some bad investment policy to answer your earlier question. using portable alpha which was cross dressed debt when i was running for the office. i'm a retired venture capitalist i said this is a bad idea.

when you take on debt it's dangerous. you need to know when you're doing it and there was embedded debt in that strategy. we've had very handsome returns at treasury since i took office because there are a lot of good investment opportunities out there. you can't have fantasy island budgeting when it comes to pension obligations that are trailing and fixed we need to figure out how we fund them and then we need to invest the money better. >> as i understand part of the problem here is that when the stock market was booming, pennsylvania decided we're making so much on our investments for the pension program, we can reduce what school districts and the state have to pay. so the school district contribution is like 1% of payroll. that's not sustainable. they'll have to increase that and do it gradually but have to increase what the school districts among others put into the system. >> and i think that's right. the school districts are sort of bellying up to the bar. i believe that's the congressman who i knew in my youth years

ago. >> that makes him feel really good. >> he still looks good. he's got an annoyingly full head of hair still. he's doing better than i am. i would -- a couple things i would add is that we also just frankly allowed people to vote themselves overly handsome pension benefits in some context and i think that there will be some roll back of that. we need to deal with reality. one of the things i want to say by the way while we're on a national show is pennsylvania is just a great platform for national businesses. if you look at new york with 9% tax rate at the top. new jersey at 10.75 at the top. look at us with only 3.07%. we talk about the millionaires and let's bring business leaders into pennsylvania and broaden our tax base with more wealthy people who are developing businesses like the ones that the former congressman represents and we can grow our way away from a lot of these

challenges. >> i love tax competition. >> that's why republicans won't go for tax increase because they're worried that if they impose more taxes on business when the recovery gets into full swing it won't apply to pennsylvania. >> you mention the national aspect, rob. are there states where you wish you had their balance sheets where you envy their balance sheets and others where you are like, i'm glad i'm not in their shoes. >> i'm delighted not to be california or new york. we are the only state -- pennsylvania is the only state in the northeast that's fiscally solvent. there was a terrific study done that says we are the seventh best fiscal status state in the country. and while others are raising their broad based tax rates to congressman's point, pennsylvania has not. it has met the challenges of the recession without doing that. i think that will bode very, very well for us competitively going forward. i think in the stapame way you

erie reinventing themselves, pennsylvania itself is a growth stock. >> i read that study and it scared the daylights out of me. >> when we come back, tiger getting ready for a second day two strokes behind the leader. a leader by the way who is 50 years old. the early surprises from augusta and we'll talk about whether couples has a chance here when "squawk" continues.

>> it's in the hole. it's in the hole. >> i can't watch that scene without thinking of joe because he can do that line of dialogue that sounds better than murray delivered it. round two of the masters set today for augusta. some of the surprises on top of the leaderboard. fred couples, 50 years old, says that to win this thing would be a pipe dream although he admits it's way to early to even talk about being in contention. darren rovell is there. before we get to couples or anybody else, i want you to walk me through your experience

yesterday and tell me what it was like following tiger around. how close could you get? what was the vibe like? tell us about that. >> the strategy is not to walk around with tiger. it's to stick with one hole. i got to the sixth hole when he was on the third hole. i waited there for 45 minutes. now, i was in the sixth row of standing people. there were five rows of people in chairs. i was in the sixth row of standing people. by the time tiger came on about 45 minutes later, he teed off on six. he gets to the green and there are then ten rows of people behind me. i can't see the ball going into the hole. i can see tiger. that's about it. that was the experience. about 18 rows deep by the time it got to the end and then went across to seven. i waited about an hour and a half to see nine minutes of tiger and tiger having an incredible best first round in all his 16 masters.

two behind couples. it was an amazing experience. tiger was smiling and i'm wondering -- the weather is a bit cold out here right now. nike told us that he's going to wear the green blade polo today. they script his clothing like a year in advance. >> like your mother laying out your clothes in the morning. >> i'm wondering if -- this green blade is a bit lighter than the masters jacket in terms of color. i've seen it i wonder if he'll go with the black mock turtle if they can switch it up. i know retailers wouldn't be happy. >> the steve jobs look. >> yeah. >> is he still carrying around gatorade? >> right. he lost his deal with gatorade and he had powerade the other day. >> at 50 years old, couples

plays the best round of his career at augusta. what do you make of that? given just the attention that the masters is getting, there's pressure on all of these guys. it's not just tiger. >> yeah. and fred couples said yesterday he didn't expect anything. keep in mind he's been getting plenty of exposure. he had that practice round with tiger on monday. i guess just being relaxed between couples and watson at 60 just not expecting anything being relaxed. of course, the pressure tightens up as you go along. then it is hard to take away the experience. couples obviously played plenty of golf and a lot of focus on the no socks on the shoes that look kind of weird. they are echo shoes we're told. we'll have to see if he can hold up. remember, there are 16 players within three strokes of the lead. a lot can move today. a lot can move over the weekend. >> did you actually see the

airplane dragging the sign tiger did you mean buttieism? >> it's going to get play out there and viewers will see it but people at augusta really didn't focus on it. i believe tiger when he said he didn't see it. i mean, the airspace is not restricted so we'll have to see if there are any challenges today but i did not see it. more of a news story out there. >> amazing the masters hasn't cleared the airspace. >> they're capable of doing that. >> i bet they tried. >> darren, we'll talk more during the course of the day. good to see you. >> by the way, we have coming up on "squawk on the street," we have the brands that have kind of benefited in the first round. it's interesting bridgestone, echo, we'll give you kind of a preview of who is doing well from the business standpoint here at the masters based on the golfers doing well.

>> it will be a gorgeous day in augusta. see you soon. thank you. next, power and influence. we see all kinds of feds speak but who do the markets listen to out of those people? we have a result of an exclusive study next.

compare a well equipped lexus es, to a well-equipped buick lacrosse. get inside each. and see what you find. if perfection is what you pursue, this just might change your course. meet the new class of world class. the twenty-ten lacrosse, from buick. may the best car win.

want to check futures ahead of the friday session. we've been hanging on in a tight range this morning ahead of not a lot of data. did you know the dow for the week is exactly where it began? 0.00 points away from where it began the week. >> i did not know that. but it certainly feels that way. >> you were here all week. >> i was here all week and nothing happened. >> what does that say? >> a couple quick headlines. a new bid in the mix for disney's movie studio. 600 million bid for miramax. imagine having your cell phone suddenly disconnected. millions of mexican citizens face that possibility this weekend. the government says citizens must register their cell phone lines by this weekend to keep them operational. it's all in an effort to fight

crime. but at last count 30 million lines remain unregistered. you may recall the february news conference where tiger woods made his first public apology for his behavior in florida which is back in the news today as goldman sachs seeks to foreclose on it. a bankruptcy court set a hearing for april 22nd to determine whether goldman, which holds 193 million mortgage can take that action. >> all stories converge. >> there's nothing they don't touch. >> everything. >> and the tiger clearly wouldn't boost fortunes. who knows. so which member of the fed has the most influence? the most power to move the markets and make business leaders sit up and take notice? we've been talking about this question all week. steve liesman, the professor, has the influential report. mr. professor. >> you don't understand about television is you being here is what happened this week. it's just an event.

it's just an event. there is so much fed speak and so little time. 15 members of the committee which is two shy of what they should have all give speeches every other day seemingly more often. who do you listen to and when do they move markets and which way do they move them? larry myer annually publishes his answers by looking at each fed speech on the economy and how it moved the yield on the two-year note. here's the metric. in a 2.25 hour window from the speech. joining us is larry myer. former fed governor, i'm going to give it to you to give the awards. let's begin with the i move market awards and television coaching here. pause for effect, larry. >> all right. before i do that i think i have to explain what it means to be the most influential. this study is about who has the most influence on the markets. the markets seem to routinely

misunderstand who is the most important in terms of moving policy. so this is about moving the markets. now, the first award, the i move markets award goes as it virtually always does to the chairman. but the chairman gives more speeches than anybody else. twice as many as the next most frequent speaker. also this year we gave an award -- >> don't give another award yet. i want to look at all of the cumulative amounts. suddenly a guy we follow but not that closely, charlie ploser appears and dick fisher appears because he gives a lot of speeches, second to the chairman, i think. fisher is out there a lot. let's move on to the power player award. power player of the year. go ahead. >> in this we measure the impact per speech. that's very telling here. and this was a surprise because

the power player of the year is charlie plosser. it is fairly compressed there. there are a number of others that are close. the chairman just a couple basis points below but there are a few others that have a significant impact as well. >> just to be clear, what we're talking about here is average change in the two-year basically per speech and plosser has a way of getting out there and moving markets more per speech than bernanke but i see throw other guys that are interesting. tarullo newcomer of the year award. he's come from nowhere and has a huge impact and then there's yellen in san francisco and dudley in new york. why is plosser such a huge influence? >> that's interesting. don't have an answer to that. he was one of the earliest to be

extremely clear and forceful with a view that the fed should tighten sooner rather than later and to depart very significantly from the central tendency. now, the reality is that he's in that minority. he has very little influence. virtually no influence on decisions themselves but the markets nevertheless because of his clarity and forcefulness and being far away from the central tendency gives him a lot of weight. >> he's beloved by traders for creating unnecessary volatility essentially. let's move onto the mr. nothing award but you kindly call it market neutrality award. who gives as many speeches and has no effect at all, larry? >> well, i think this is interesting because we almost called this the don kohn neutrality award. he believes this is the way it should turn out. only the chairman should move

the markets. we gave it to eric rosengren from boston. >> who's that? i'm kidding. >> this is quite significant. president rosengren is one of the most dovish members of the committee. so you might think that the more you are out on the spectrum of hawk and dove, the more likely you would to move markets. >> let me just explain to people the chart that's up there now which is before we showed the cumulative change. minus two or plus two would be four. it wouldn't matter. did you move markets and by how much. now we show the direction of change. the average change per speech positive or negative and there's don kohn has the most dovish member of the fed. i read your report eight times. how is it possible that yellen, the most perceived dove on the board ends up influencing the rate positively when she speaks?

>> so i think what we have is a very unusual situation. very interesting though. all of the members other than bernanke, kohn and dudley move rates up. and that's completely offset by the other three. now, what's significant is the other three are basically the only ones that matter. okay. so the ones that matter move it down and offset everybody else who had an upward impact. >> larry, before we run out of time, give us the crib note version. 15 members. we report as much as we can here on tv on a minute by minute basis, the newspapers, how would you listen to these people? what's the crib note version of this? >> well, very frankly, the decisions are about where bernanke is. bernanke makes fundamentally the decisions. with respect to nonconventional policies, however, the markets pay attention to president dudley and i would say brian sack as well because these are

people at the new york fed managing the portfolio and know the most about it. but basically the only way you fundamentally influence a decision is by influencing what bernanke thinks. okay. so remember that bernanke walks into the room with eight votes in his pockets when the board is fully staffed. the board votes as a team. there are no descents. >> we obviously have money managers come on the show and they love it when what they say here winds up on the wires as someone who has given these speeches, don't you take some personal gratification in having moved a market one way or another? >> well, as you know one of the fmoc members called us a force of evil with respect to the committee because we give encouragement to members of the committee to move markets and win our award. we don't mean to do that. >> they love it. you know they do. >> is there a prize?

is there a 2010 buick that comes with this award or something? >> there is absolutely. there's a coveted certificate. it's really quite beautiful. they get to hang it on their wall. >> i have never seen it in the office of a fed governor or president, larry. >> i'm afraid the chairman may use it as a place mat. >> larry, thank you so much for coming on and sharing this really great work. somebody has to do this and figure out what matters amid this. this is exhaustive work done by larry. thanks again. >> that was great. when we come back this morning, florida senator george lemieux will take on the debt facing the nation right now making his way to the "squawk" set. we'll chat with him. >> announcer: the stock of the day sis on the way. is it in your portfolio? find out here on "squawk box."

want to bring your attention to one political note this morning. bart stupak of michigan will retire from congress rather than seek a tenth term. you may know stupak drew stinging criticism from opponents of the health care bill after he did vote for the bill in the end and led his caucus over abortion to vote for the bill. he's come under criticism by the tea party but he says attacks did not influence his decision and he could win re-election if

he tried. ap says he'll announce that decision at 12:30 p.m. in a news conference in marquette at northern michigan university. the federal government is increasingly thread bare purse has lawmakers from both sides of the aisle clamoring for some solution to the deficit as mid terms draw near. joining thus morning is senator george lemieux member of the congress committee and along with our guest host congressman jim greenwood. will the stupak be a canary in the coal mine as to what incumbents will face? >> you'll see more not running for re-election as the election grows near. it will be tough for folks who voted for the health care bill with kickbacks and deals behind closed doors. american people don't like it. >> even if the economy improves between now and november? >> you're an optimist. we'll see if the market impro s

improves. >> my guess is there was agony for him being where he was and made the deal with the president and come back and given his vote to pelosi. >> did not is difficult for the republicans to root against the economy at the moment? from a political standpoint, isn't that what has to happen? carl says the economy may get better. you turned around and said i am not as optimistic as you are. does have to be this way for it to work out? >> jobs is the number one important issue. we have 12.2% unemployment. the worst unemployment figure we've had since keeping records. it's difficult in florida. things are getting better. i talk to business leaders and they say there are signs of things turning around. we want the economy to get better. another thing, there's a lot of other issues that the people of america are concerned about. they're concerned about spending in washington and the fact that in 2011 we'll spend $3.8 trillion and only take in 2.2 trillion and keep adding to our national debt.

that's something that i'm really focused on in trying to get a handle on. >> the housing market obviously was a real part of your problem. overbuilding in the state and residential and commercial i should say. what should be done to try to prevent that kind of overbuilding in your state again? is there anything that can be done? >> i think we had a perfect storm of things that came together. we had four hurricanes in each year in 2004, 2005, eight to ten hurricanes. that caused a lot of remodeling, rebuilding, that already heated up an overheated housing market. i think that we have to watch these mortgages very carefully. we can't have these mortgages. no income no job. people have to put something down. you have to make sure people have skin in the game in these houses. >> isn't your proposal on the budget to go back to 2007 spending and try to keep it there for some period of time? >> it is. i'm new to the u.s. senate. i got appointed last year. i look at this with fresh eyes. i ran a business before. i was chief of staff of a gov n

governor in a state where we had to balance our budget. i really worry about for our kids and folks grandkids that we're going to have an unsustainable problem in this country with too much government spending. we're spending $200 billion a year now just on the credit, interest on all this spending. my proposal is put a mechanism in place that we'll go back to 2007 pre-stimulus. could you live on what you had in 2007? they would be happy to have that much money. we have an adult conversation where we won't spend more across the board than what we did in 2007. democrats and republicans have to come together on the floor of the house and senate and have debate about how to freeze spending. >> does that include entitlements? >> includes everything. >> >> you have to put everything on the table. t there are proposals about means testing social security. there's proposals about changing the retirement change.

all of those proposals should be considered on a table. politicians have been saying that for a long time and there's ways to be done with fraud and waste. we could do it with medicare. we have health care fraud in medicare. >> health care bill will take care of that. it's not. there's a billion or two in real savings in the health care bill. i used to be the deputy attorney general in florida. we went after medicare fraud in florida. it's the worst state in the country for health care fraud. i say take a page from the credit card business who stops fraud in a fantastic way by using these prescreening computer models. we could use that predictivenot modeling that credit card companies use. you have been somewhere. company calls you say did you mean to make that purchase. they don't pay if you don't verify. >> how do you convince the public that long-term fiscal spending issues are as much of a dire emergency as someone

running out of jobless benefits next week? >> i think the american people if you look at the polls right now, they are saying that there's concern about debt and spending as they are concerned about any other topic. we need to make sure that we get our fiscal house in order. they're concerned about their children. they don't want their kids to grow a world that in ten years we're going to have $22 trillion in debt. that's the president's estimate. >> i'm just saying, as a politician, cutting spending has never been a winning political strategy. >> i think -- >> you're telling me it's different this time? >> i hear it all the time when i go out and talk to folks in florida, that they're concerned for their children that we're no longer going to be the leader of the world, both economically and in other ways if we don't get our spending -- >> you pretty much have to change the entitlement beneficiary benefits into the future so that people, you don't hit them today, but you know, okay -- i mean, they've already done it with retirement age, social security. >> right. >> it's those kinds of trend lines. because as i said earlier, in 20 years, there's not enough resources available to the

federal government to pay for mandatory spending, and then that's game over. >> senator, it's good having you in. >> great to be here. >> it's going to be an interesting summer. >> we're going to introduce this bill next week. we need to have these conversations on the floor of the house and senate. if we did this plan, by 2013, we'd balance the budget. by 2020, we'd cut the national debt in half. >> we've heard those types of promises before. we'll see whether it happens in ten years. senator jorge lemieux of florida. thanks very much. coming up, the stock of the day, plus biotech in the new world of health care reform. i drove my first car from my parent's home

in the north of england to my new job at the refinery in the south. i'll never forget. it used one tank of petrol and i had to refill it twice with oil. a new car today has 95% lower emissions than in 1970. exxonmobil is working to improve cars, liners of tires, plastics which are lighter and advanced hydrogen technologies

that could increase fuel efficiency by up to 80%.

our guest host is the head of the world's larnlest biotech lobbying firm. last minute here. let me ask you something, some viewers are saying, used to be in congress, now he's working for the industry. >> right. >> this is part of the revolving door. >> i'm sure they say that. you know, and i got a little bit of that when i made my decision. i devoted my entire life to public service. i was a social worker, i was a state legislator. i was recruited out of the job, and i really had to make a decision for myself, is this still public service? and frankly -- >> does the biotech industry get

more advantage as because you used to work in congress? >> i hope so. >> and that's okay? >> you know, if i'm wildly successful, then the richard pops and the cohens succeed better -- >> the ceos of biotech companies -- >> right, succeed and we have more cures for more diseases. our motto is we want to heal, fuel and feed the world. and so, if i'm very successful and we've been fairly successful with congress, then these companies are going to do a better job, people won't have parkinson's disease and cancer and we'll feed more people and we'll get green energy, so -- >> how often does it happen where, because of your service in congress, you're able to apply it directly in your current job? is that a daily event? >> of course it is. i mean, i know what -- i've been on the receiving side of information for 24 years as an elected official. i know what members of congress want when you go to see them. first off, they want you to walk in and say this is what i'm looking for. >> yeah. >> because people walk in and they tell you a narrative for 25 minutes and you're going, what do you want? so, you know, i walk in and say,

look, this is -- and the reason we were successful with this biostimulus thing was, i walked in and said here's a molecule of aspirin, this is what it looks like, here's what a biologic is, here's how you make it. if this will cure this disease, do you want to help? sure. and it was actually real argumentative persuasion and not -- you know, nobody's going to give me a vote because i used to be their buddy. >> right. we've got a few minutes left. we will get the stock of day after a short break.