what was the question again, david? >> would a flat tax be better for the united states? as you might imagine from a cnbc audience, wow.

look at that. of course, our demographic is the highest demographic in television and that goes to the point the critics would make which is it would benefit those who are at the top of the income scale. >> exactly. >> i mean, you know, let's just be honest for you 86% out there. you're not getting a flat tax. i mean, i'm just going to state the fax. >> steve forbes has been a guest on this program numerous times discussing the merets on the flat tax and interesting to see those numbers. >> if you just play it out hypothetically if you were to do it and then you're going to be getting rid of. i'm not saying these are good things to get rid of or bad things. personal economy, how many jobs in america are linked to the bloated and ridiculous tax code that we have? it might be bloated and ridiculous.

>> is that necessarily a bad thing? you wonder about the revenue side and fairness. when was the last time we had significant tax reform in this country? it's been a long time. >> have we ever? >> yes, bill bradley back in the '80s. >> ronald reagan. good morning, everyone. welcome to "the call." i'm trish regan. 90 minutes into trading where we are watching this market march closer and closer to 11,000 on the dow. stocks are up, commodities are on the rise. why isn't this market doing even better, you might ask. we'll talk about it. >> haveila a little patience, trish. walmart is cutting thousands of items in its stores. we'll discuss whether it's a sign of strength or weakness. plus, fed president bill dudley says the fed should stop asset bubbles before they burst. can they? we'll discuss that, too. this is "the call" on cnbc.

all right, the dow is, once again, moving towards 11,000. this is as commodities push higher and more signs the economy is getting stronger and whole sale inventories rose by a larger amount than expected. in february sales increased for the 11th consecutive month. business sales so important the profits. right now the dow is up 0.3%. the s&p 500 is also moving up 0.25% and the nasdaq is doing the same. euro hit a session high gains to the dollar on talks of an eu rescue passage for greece, if we believe that. oil is about flat. trish, what's cooking down there as we move towards 11,000? >> well, we are moving. we might even see it today. could even be in this hour. we shall see. i want it get ahead of ourselves. you have a dollar that's weaker

today, that's in part why you're seeing that relationship between commodities and the dollar and this market moving higher in part because of that. but the reality still is is that people are feeling better about the economy, at least in the here and now. we know about all the long-term problems and we know people are concerned in deficits and washington policies and just in terms of here and now, things are feeler better. we have seen that with some of the economic data out as of late. you have aqua on, you've got aqua on, that is the color of the day. for the green, right? moving to 1 1,000. >> there is some green, perhaps not as much as some people would like in the face of continued fairly decent economic news, the market still having a tough time and the dow is getting to that 11,000 threshold. i want to bring you news on greece because certainly the greek situation remains in focuses down here. europe was higher today. the euro was a little bit stronger today and then eu

source was telling reuters of a possible eu agreement on the terms of emergency loans. they would be about the same, i guess, is what the imf tuerms were. it's not translating into our market but the greek market did pick up and rebound in the last 15 or 20 minutes or so. you can see that, look at the jump at the end of your screen, trish. athens composite pick up, it's up about 3%. again, not having a big impact here today. >> it is in terms of the dollar. you're seeing the euro trade higher and that has a direct impact on energy stocks. >> what that is doing is driving energy stocks higher. if you look at some of the energy names and chevron came out this morning and said it sees first quarter earnings better than the fourth and conoco phillips also getting a nice bump up on that. sets the table here on this friday to look towards next week and what the big stories are. clearly we have a kick off to

earnings season and alcoa kicking that off. it was downgraded for the second time this week today and that raises concerns that earning season may get off to a whimper, you know, rather than a bang. alcoa is expected by a couple firms at least on wall street to deliver disappointing earnings report. >> some discretionary stocks and retailers -- >> coming off where we had better than expected retail numbers. i want to touch on where you look at some of these stocks. jcpenney was upgraded after raising guidance yesterday. you'll see it's a standout on that chart to the upside is jcpenney, trish? >> larry, i'll kick it back over to you. >> all right, trish. day three of the financial crisis inquiry committee hearings into the financial meltdown. today's focus the gses and the people left holding that bag at fannie mae. diana olick joins us from washington with the very latest. hello, diana. >> hello, larry.

blame it on private label securities and that is wall street getting heavy into the mortgage market. that is the message to explain the root cause of the mortgage crisis. >> it posed a financial threat because there was simply less business that was coming into our market. the business was going into another market. it posed a mission threat because many of the products that were financed by pls had affordability features and, so, it threatened our ability to meet our government mandated housing goals. it also threatened our relevance with our customers. >> now, according to fannie mae executi executives, they are through the critical run up on home crisis and fannie mae and its coert freddie mac were trapped and their private mission to make

money for shareholders. as the crisis elevated they were pulled into refinancing, warehouse lending and other seemingly desperate attempts to stop the building. >> fannie and freddie were pushed to earn capital, rescue more borrowers and cut costs. i sought to balance the fine points of mission in business in so far as i could understand them with the support of regulators and policymakers. that was no longer possible by september 6, 2008, and i am sorry for that. >> now, mr. mudd was also asked about that day in september of 2008 when fannie and freddie were placed into governorship and it seemed like the letter was something out of the past noting issues that had already been addressed. he said the letter was simply to force conservatorship. can fannie mae and freddie mac be fixed? joining us now is is sherry and howard glazer, former council to

the hud secretary during the clinton administration. i'm really quite skeptical here that mudd and them are blaming private label competition but the reality was fannie and freddie received a hud mandate during the '90s and a congressional mandate during the '90s and the 2000s to make unaffordable home loans and put them in their portfolios creating all matter of credit and interest rate risk and taxpayer expense. is this guy rewriting history? >> to some extent, and, larry, we can't be surprised at the blame game here. we saw it last month when tim geithner was in front of congress, too. 90% of that two and a half hour testimony and q and a who forced things to get so big and unregulated. the difference now all of these sort of problems that we've been looking at and this is an issue

examined for the last 30 years. hud was doing reports on privatizing 30 years ago and the difference is now that we've seen all these potential issues become reality so there's really no one left that can argue that there's not a conflict between the public and private mandates and the government backing is not a problem and they're not too big or too complicated and now is probably the time to start looking at change. >> so, howard, private profit and taxpayer risk in the event of failure. that is not a sustainable business model. what are we going to do about it and when are we going to do? >> you're right, absolutely a consensus that model doesn't work and one agreement that you saw between both the people testifying today is we all agree the model didn't work. the problem is what we're stuck with. you ask the question at the top of the hour, what do we do with them next. it's like asking if san francisco should be built on an earthquake fought. >> i think that's a defeatest,

okay, these are be government-run entities. why not spin them off and privatize them and put some investor money into all this? >> nobody in washington, even behind closed doors when you talk to people in the public talk about privatization we can't totally privatize because we can't keep the housing model stable. >> this has to be changed -- >> i'm not saying, larry, i'm not saying -- >> trish is going to the heart of it. if you don't change this model, then we are doomed to repeat the past. we know that. look at all the pressures to go back and buy up stuff on the market that they shouldn't have owned in the first place. the credit standards fell down, you know that, howard, you're an expert on this area. >> i'm not defending the model. what i'm saying is the housing market right now is so intertwined with fannie mae and freddie mac the housing market which really means the economy

which is really -- it's a transition that will take years and years. >> howard, we have a real estate market that was propped up for years. at some point, sherry, don't we have to take a little medicine here? >> yeah, but two things. first of all, i agree with howard to the extent that now is not the time to do that and we are in the middle of the crisis and we haven't defined how these entities will look like and we can't unwind them until we know what they're going to look like at the end of the day. tim geithner and the administration said they're not going to let us know what their plans are and for good reasons. all timothy geithner has to say is he's going out to the men's room and -- >> we have to wait. >> sherry, i am shocked, i am shocked that you are taking this woozy, status quo position. i am crushed on a friday morning -- >> i didn't mean to ruin your weekend. >> all the government bailouts

whether it's fannie or freddie or phony short-term tax credits or moratoriums on foreclosures have done more harm than good. only when market prices settle down to their proper equilibrium level that we'll see the sales pick up and the problem will get solved and we've seen this in california and we've seen this in florida and every place uncle sam goes the problem gets worse. why is fannie and freddie any different? you know better than this, sherry. >> it's time, it's time for change. but you know what i'm going to tell you, here's the main reason it's time for change, larry. that is, granted, we have a lot of problems now and those are incentives, but the real incentive is these models worked. they were started back after the depression to credit markets and they were and now, now we have a different environment, now we have global market credit markets moving around. we don't have barriers to, you know, the state banking barriers. >> sherry, you had politicians.

you had politicians saying -- hang on, guys. >> very dependent on foreign investors. they're not coming back unless they know there is some kind of federal backstop and this is the problem we face today. we all agree the model is flawed but what do you replace it with? >> say with a straight face that these models worked. howard, you know that, they did not work. they got us into the crisis we're in. we have to leave the there, guys. >> you have to have some kind of private involvement and you cannot have a sector and if you do it is disaster for 50 years. there is some way to ease into housing finance and private mortgage insurance which is what we used to have before fannie and freddies took us over with their portfolios. and we have to pay for it. you, trish regan, are financing this portfolio hedge fund. >> larry, you said it. you go!

when we come back, more signs pointing to economic recovery. >> i'm sorry. >> you're absolutely right, though. why aren't stocks higher. ? we'll debate it for you. walmart is cutting prices on thousands of items. we'll discuss whether it's a show of strength or a show of weakness.

welcome back to "the call." tracking shares of palm the stock is up again today. rumors continue on whether or not this company will remain independent of the latest, and you got to follow the bouncing ball here. a chinese website is speculating that htc out of taiwan might acquire the company. this is a translated article that you can get via google and also the chinese-based pcmaker had been named earlier in the week and stocks up 33% so far this week. its best one-week gain in a year and on a year to date basis it has been choppy and the stock long term has been struggling. $880 million market gap, trish. help yourself. >> thank you, matt nesto. everyone is in agreement the economy is recovering. all you have to do is look at oil, retail sales. why isn't the stock market

higher? i'm just greedy and i want it to do a little better. we want to bring in ned riley and joe market strategist. joe, i'll begin with you. one of the real issues here is that, and traders are constantly telling me this, is that you've got the here and now and you've got the long term and the bears are saying, you know what, we're concerned about these policies coming out of washington. we're concerned about these programs and we're concerned about these deficits and that's preventing them from really getting in with two feet. what do you say? >> well, they're right about that. the last time we were looking at 11,000, of course, was back in 1999. in that same ten-year period of time we had the same level of employment in our economy. we had no net new growth. during that period of time the united states has sacrificed its trade position globally to the likes of china and others so that they have gotten the competitive advantage. consequently capital goes else where and tough for us to create

internal value and now we see that basically big deficit spending by the government is creating the gdp that everybody is celebrating because the consumer is still on a contraction mode and that's why housing is a step function below where it was in previous recovery and auto is a step below and walmart is already looking to cut prices. this is not a good position to build a growth case. you may be able to make it outside the united states, but tough to make it right here. >> ned riley, so interesting to me. before we get to the evil effects of taxes and regulations and obama care and all the rest of it, which is kind of out there, several elections. we really see a v-shape recovery in commodities and a v-shape recovery in retail sales and in profits. i mean, this story is going to turn out much stronger in the under lining economy than i think almost anybody thinks, at least this year, ned. what does that mean for stocks if you buy into that v-shape

rebound? >> well, larry, i still think stocks are going much higher. i set a target of 14,000 on the dow before we have to worry about other things. that target has been there quite a while, as you know, larry. i really think that people are frightened. they are on the sidelines. joe was right, a consumer really isn't bouncing along and that is my second phase of economic recovery. that will be the area which will eventually bring us enough revenue here to kick profits even higher. the weak dollar doesn't bother me because our companies, the s&p 500, 40% of their revenue is generated from overseas and for the tech companies, 55 to 40%. >> should we be greedier here? i should qualify what i said earlier because i actually do think that a lot of these long-term problems are an issue for the market here. i think that is a very real fear. but, ned, for those bulls like yourself out there, when you look at this market and you see

10,969 today in the face of all this very good economic news and it's been a tortoise rally and do you say to yourself, gee, i want more, i think we deserve more. you're talking about 14,000. >> we deserve more. but i don't want it all to happen at one moment. i love people to be controversial and i like people to say, look at the deficit is an issue and inflation down the road is going to be an issue and the consumeser dead and turning over. this is the kind of stuff that bull markets are made of. you can go back to those periods and, clearly, deficits were an issue. this is the biggest one we ever had in our history. tax revenue is picking up. if obama doesn't do stupid things, we can clearly get tax revenue from the personal and from the corporate side that will diminish. >> be careful on that one. >> i would bet on that one, but the best thing you got going for you on that one, ned, there are a couple elections before the really dumb stuff.

the anti-investment, anti-business stuff kicks in. it could be changed. joe, i want to ask you something, i want to cater to your, you know, cautious concerns. if, in fact, you get a near term v-shaped boom and i'm talking 4%, 5%, 6%. >> you already had it, larry. >> that's where i disagree. >> let me tell you what i think it is. >> let me ask you about the interest rate implications. let me ask you about a common thing. if the bond market is in a bubble as some major investors like bill gross thinks, what happens if interest rates go up and bond prices come crashing down. how will that impact the stock market? >> well, the math is it will negatively impact the stock market and it will negatively impact the financing market and it will raise the hurdle for business and you will march from a weak economy to a disastrous economy where the cost keeps

rising because we have massive deficits with unfunded liabilities that complicate the problem. ned talks about 14,000 on the dow. the last time we were there, of course, we had 8 million more people working and three times as much productivity in housing and we were at a 17 million run rate for auto sales and we're at 12 now. the v was going from 9 in sales to 12. the v going from 300,000 units to 5. how do you get more of a v in the next 12 to 24 months when you're still not creating jobs, you already have two years of 0% interest rates. >> i think the v is not over for 2010. i'm not going to talk about 2011, 2012. >> you are running out of time, larry, this is april. the summer is upon us. >> we're going into earning season. >> the economy will not grow faster. >> i'm just amazed how good these numbers are. i want to ask ned raleigh the same question. if the ten-year treasury goes

from about, it's at 390 now, if it goes up to 3.5% or 5%, if you see a decline in the corporate bond rally. if corporate bond prices fall and corporate bond rates rise, how might that impact the stock market? these can create a more exuberant economy, which can drive rates up. is that good or bad for stocks? >> i think it's going to be good for stocks and i'll tell you why simply. we've had interest rates falling since 2008 and the market's gone into the tubes. the interest rate correlation for this period of time is irrelevant because we're looking at 3.90 which, you would admit is an artificially pushed down interest rate which the system will -- >> fought if you are susceptible to inflationary shocks. we're not out of the way with housing. wages are in a deflationary tendency without job gains. this economy is on tender hooks.

the commodity price thing is an aberrant kind of number and the fed's not looking at that and that's why in the fed release they talked about a longer period of time without rate increases and reduction in gdp and not increase and the next three quarters and fourth quarter gdp. >> i have to get out. producers are screaming. thank you very much. coming up -- >> larry, you have to come down to the new york stock exchange where you're not in their line of sight, right? >> trish, i want to get down there. coming up on "the call," the top federal players at the federal reserve. which players are the most influential. thousands of price cuts at the biggest retailer. is this actually a sign of weak?

welcome back, everyone. apple stepping up its rivalry with google to the next version of software that will power its mobile gadget. $750 million deal currently facing scuteny from regulators. moving on here to walmart, larry. >> all right, walmart slashing prices on thousands of prices in

an effort to reverse months of slowing sales. year to date the stock is up just over 3%. so, is the retail giant strategy a sign of weakness or might it be a sign of strength? let's ask hetha and brian research analyst wall street strategies. you know, you cut prices, you spur consumer sales and that's going to be good for profits. what's wrong with this strategy? >> well, it's not necessarily going to be good for profits. as we saw in the last year, sales at walmart have dropped 2%. and this price deflation that's going on took a really big bite out of food prices, as well as retail. i'm sorry, as well as electronic sales. that's going to be something to be concerned with with walmart. in addition to the fact that during this economic crisis, walmart sort of took customers away from costco and kohl's and

now that the economy is getting better that customer may not return. >> brian, let's think this through a little bit. if you slash your prices that aggressively aren't you reinforcing your reputation as the world's biggest discounter? isn't there an opportunity that you can really get people to stay put to stay with you as opposed to maybe moving on to a bigger, better target? >> i think that is what you're seeing a little bit today, trish. i don't think it is as bad an announcement as people make it to be. so, i think this is a sign of acnologying that they may have lost a little bit of that middle income shopper that went to their stores last year. by no means am i willing to bet against walmart here. this is a good sign that they find signs to reduce costs throughout the supply chain. >> we're having this discussion currently about china and the

renminbi. >> that's another thing we have to be concerned about, prices will get raised a little bit. walmart, something that might support walmart is rising gas prices as we go into summer, as well as the fact that they have a billion, i'm sorry, not even a billion, they have $7 billion worth of cash on the brooks. i think that will really help them. >> you wouldn't bet against walmart because this is interesting this is a strategy that worked for them time and time again. >> it has. it is really going back to the sam walton model that he created so many years ago. at this point, how much more can you reduce costs? i'm not too sure. but they are better able to drive leverage through their business and this will help bring customers back and keep the margin story that happened last year, keeping that going. >> it's a big, i think it's a big tax cut for walmart consumers. that's the way i look at it. it's a big tax cut.

since i love lower taxes -- >> it's good news for everyone. when we come back, we'll tell you which fed members are moving the markets the most and we'll discuss whether the fed could stop these asset bubbles. supreme court justice john paul stevens making it official, announcing he will retire this summer. we'll discuss what impact his decision might have on business. stay with us, we are "the call."

a new list out highlighting the most influential players at the federal reserve. steve liesman joins us with a look at which hawks and doves have the most clout. >> with so much fed speaking and so little time, larry mier he annually publishes a short cut study looking at which members of the fed have the most influence and which way they move the market. ben bernanke, he gives the most speeches and has the most overall influence. judged by mier's criteria, the movement of the two-year note in a 2:25 window after the speech. no surprise there. a couple surprises appear towards the top of the list. dallas fed president while eliz bthd duke rounds out the bottom of the least influential. turns out fisher is up there because he gives a lot of speeches but plosser makes it to

the top because he moves the markets most per speech. he wins the power player of the year award. a coveted certificate that goes along with the prize. >> it's really quite beautiful and they get to hahang it on th wall. >> i've never seen it in the office of a fed governor or office. >> they may use it as a placemat. >> president obama's first appointee to the fed board and janet vellen along with bill dudley. we know how much they influence markets, which way do they influence market? are they hawkish or dovish? the biggest perceived dove, janices vellen moves markets up most per speech. the most neutral evans of chicago and i guess they're just bland midwesterners. at least for the doves nobody

moves rates down more than don kohn and bill dudley. so, there, lawrence and trish, your study of the federal reserve. >> interesting stuff. >> i don't know -- >> that is the study of birds, larry. >> we're birds. i just want to say, thomas hoenig, everyone has to read the speech he just gave in recent days. it is incredible and it's on target and it talks about the fed spurring another financial bubble, which will create imbalances that will have to be curbed. i'm sorry, trish, i just want to get that in. >> don't go anywhere. make sure he stays put, larry. speaking of bill dudley earlier this week he spoke about whether the fed can and whether it should prevent asset bubbles. take a listen to this one. >> despite the fact it's hard to discern bubbles, especially in their early stages. uncertainty is not grounds for inaction.

>> so, can the fed really stop acid bubble is. along with mr. liesman himself. good to see you. i think it's sort of a given that the fed should certainly work to prevent ast bubbles but you make the point that they're incredibly difficult to decipher. explain. >> as particularly early in asset bubbles are associated with big economic inflection points. there's a new technology and financial innovations and prices are rising. it looks at that point to be about fundamentals. >> i don't think it's that hard, vince. i can remember looking at homes in 2003, 2004 and they'd hand you some sheet of paper and say, oh, this is what you could pay per month because you could get an adjustment rate mortgage and this is what it is and i'd say to myself, my god, what happens to your payment and i'm the kind of person that obviously knows

at some point you'll lock in your rate. but a lot of folks out there that maybe don't understand this and that had me very, very nervous. to me, that was an asset bubble, it was obvious, i think it was obvious to a lot of folks out there. how did the fed miss this one? >> i think there's a distinction between a regional asset bubble and a national asset bubble. chairman greenspan was giving speeches back in 2003 talking about how housing market is different than other markets and that there's not one national market. i think what the failure was, wasn't about monetary policy, more about regulatory policy. >> no, wait just a minute. wait just a minute. don't you walk away from monetary mistakes, i'm not going to let you off the hook, vince. the tom hoening speeches are related to this. if you have extended periods of

zero interest rate, what was the phrase in 2000, that you're sewing the seeds of some kind of financial bubble or financial imbalances. >> capital missalication and that those chickens will come home to roost and haunt us and i don't know why hoening. he's not necessarily predicting booms and busts and predicting inflation he's just saying look at the risk reward scenario. to me, that a crucial point, steve liesman. >> he's getting good hearing. did you see the markets sell-off in the half hour after he gave that speech. that was pretty important. the issue right now is that the federal reserve is convinced that easy and accommodative monetary policy is, the benefit of that outweighs the potential cost of whatever asset bubbles or capital missalication. >> we have heard and seen that movie before. vince, i want to ask you another

thing about this bubble. one of the mistakes the fed made was staying too loose, too low with their rates for too long and also too predictable. i want to raise this point. i don't think the marketplace should be so comfortable as to know that when the central bank starts raising the target rate we'll do it in one quarter, easy to discern, no problem. why not jar the market? why not make fed policy much more unpredictable in terms of its tightening like the paul volcker did in the 1980s. otherwise, it's a give away to wall street. >> so that's the legitimate criticism to me about the experience from 2003 to 2005, in particular. i think low rates were calculated risk that steve explained pretty well. the economy was otherwise not performing as well as it could be. it was a jobless recovery and more than that, early on, and then later on there was evident disinflation. >> hey, guys, let's not forget,

2007. i want to go back -- >> unpredictable fed. i want the market to be scared of the fed. i want the market to think the fed is some wild and crazy cowboy coming in that's going to shoot down these bubbles. that's the problem. no one is afraid of the fed any more. >> there's a school of thought at is by former boston fed president and she calls it constructive ambiguity and the idea is if you're somewhat ambiguous about policy, that ends up helping policy and not a lot of fans of that. >> i like that. an old friend of mine from the new york fed many, many years ago. just like the soviets, we're scared to death about ronald reagan. i want wall street to be scared to death about the federal reserve. this stuff is too woozy and too predictable. vince reinhart. >> that's right. i think the legitimate criticism from '03 to '05 is the fed was too predictable. in particular what it did was

encourage a short-term focus in markets and made trade not only profitable, but safe. >> that was bad. >> on the other end of that, 2007, they kept interest rates high as we were going into a massive, massive call. >> and, actually, that's a very good point. to be fair to tom hoening who has been consistent over the years. he is the low amplitude policymaker. he doesn't want rates to go up too high and doesn't want them to go down too low and the fed can provide a relatively stable background, not a predictable one. >> what's wrong with your theory is that you want a government agency to be random and capricious and that's the problem with it. >> no, i just want, i want a little cowboy monitorism. that's what i want. i want both guns drawn so the street can't predict all this stuff. coming up next after 35 years as a supreme court member, justice stevens is set to retire. we'll discuss what impact that's going to have on business.

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okay, welcome back, everyone. greece's debt problems very much in the news this morning. ratings downgrade there and rumors of a possible new deal to help the european markets and help the euro. all the details from our london bureau. hey, carolina. >> hello, trish. that's exactly what is happening. very volatile day for greece today and lots of facts and rumors going on. let's start with the facts. credit rating fitch has just downgraded greece two notches from trouble b plus to triple b minuseses and keeping the outlook negative for greece and that's coming together with a new rumor that says eu officials are reaching a deal in terms of

how the loans for greece are going to work, especially on interest rates and how much are they going to use as interest rates for these low ones and this rumor, i say again it's a rumor because only anonymous sources are saying it and it's not official information coming at the back of another rumor that says greece is getting very close to requesting a financial from the eu and imf. larry, back to you. >> thanks very, very much. i'll just take it. john paul stevens announcing he will retire this summer. that gives president obama a second chance to reshape the court. so, john harwood joins us from washington with more on the resignation and a potential impact on business. hello, john. >> hey, larry. the question is how much will the president get to reshape the court with this pick. justice stevens, who was appointed by republican president gerald ford turned out to be one of those staunch liberals on the court. people on the left of center part of the political spectrum

love him, but the likelihood is that his replacement will not change the makeup of the court not all that much because it will be a liberal for liberal trade whether you're talking about elenaicationen who is the u.s. solicitor general or diane wood or garland. all of those would be justices to replace stevens. i think the real impact on business, larry, could come from the political oxygen that is taken up by the fight to replace justice stevens on the court this summer. that could be the death now for comprehensive energy and climate legislation that cap and trade, you and i discussed many times, that has been a long shot. that long shot got even longer. i was just talking a few minutes ago to boon pickens, the oil man who is pressing his own energy plan which involves natural gas. he has some concern about the extent to which the political tension is going to be consumed by this fight. i talked to a republican senator the other day who was asked

about what the political environment would be in washington this summer if we had a supreme court fight. he said, well, i think i may go to the middle east for a vacation. that gives you a sense, larry, of exactly what this is going to be like in the end, president obama is likely to get his choice, but it is going to be a fight and going to consume a lot of attention on this town. >> john, let me just ask you, there's, obviously, questions about the business impact of this change. i don't really know all there is to know about john paul stevens and speaking of trade is there epa court cases coming up regarding their ability to regulate carbon emissions. is that on the docket, john? >> i believe the supreme court has upheld the epa's authority -- >> once, a couple years ago. >> to regulate. there are challenges to that. and it's not an ideal route from the administration's perspective anyway but, yes, i think that is one of the issues that is going to be discussed or considered by the court over the next year or two. >> john harwood, thank you ever

so much. >> interesting times. when we come back, tiger woods roaring back at the masters landing among the players at the top of the le leaderboard. >> we'll head live to augusta, georgia, for the latest and look at what impact his return is having on tv ratings.

okay, welcome back, everyone. take a look at this market.

the dow jones industrial average just points away from that key 11,000 mark. we're now at 10981 up almost 0.5%. tiger woods back on the green at the masters. larry y did the same thing as you. in augusta georgia after shooting 4 under par yesterday cnbc sports reporter darren rovell joins us live from augusta and some of these tv ratings which have to be awfully darn good, darren. >> hey, trish, yeah, fred couples the 50-year-old is still leading this thing after six holes. he is 7 under par and ricky barnes after three holes is 6 under par and six guys including phil mickelson and tom watson who have yet to tee off at 5 under par and then tiger woods who just bogeyed the fourth. he is at 4 under par. augusta national restricts television coverage more than any other tournament which is amazing when you consider the fact that this is a tournament

that everyone wants to watch. only 15 hours and 30 minutes of total live television coverage allowed. it's amazing. espn had three and a half hours yesterday and catching the end of tiger's round and appeared to be huge. up 80% compared to two years ago. espn has the same time hilimits today, come on air at 4:00 p.m. eastern time and tiger teeing off 3 hours earlier they'll get less live action today. cbs takes over on sunday and allowed five hours for the final round. if tiger is close to the final pairing for saturday, this will be the all-time record. the top telecast of all time are all final round masters broadcasts. the 1997 masters was watched in 14.1% of u.s. households. that's a little bit lower than the 14.2% that watched monday's national championship game.

and both the 2001 masters were won by tiger woods. they set the over under of this telecast on sunday at 20.5 rating. that would be roughly half a super bowl in terms of total audience. those who think they have to see tiger, they can go on cbssports.com. they will broadcasting holes 10 through 18 when tiger gets there. as we head towards this dow 11,000, 10984 the latest level, larry. >> the stocks to watch as we head into afternoon trading. you're watching cnbc.

do we still get to go skiing?

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