phil gross, founder of pimco, manages the pimco toldle return fund. ken hebron, steve leisman. okay, so bill gross, you're saying in terms of when the fed raises rates, obviously not today, but history tells a very specific tale. >> oh, it does. when it comes to the fed raising policy or rates, it is not that hard to figure out. during mild recessions -- we have more than a mild recession -- they've waited an average of four months after unemployment peaks. pimco's unemployment peaks well into 2010 so that puts the benchmark well into 2010. >> what would you say to that, ken? you think in terms of rates, that would put it even in the back half of 2010, at least? >> the economy has lost 7 million jobs so far in this downturn. probably will be another three on four months before we start seeing some job growth. i would expect the fed wouldn't tighten until we at least get 2 million to 3 million of those jobs back in the economy. some time late in 2010 at the earliest. >> ken heebner, you're an equity guy, as opposed to bill and ken. you're saying these programs, buying mortgage-b

really we at pimco think they're going to have to continue these programs. to the extent that they pull $1.5 trillion worth of purchasing power out of the market, which they provided for the past six to nine months, then interest rates will move up, mortgage rates will move up, and the economy will falter again. so this quantitative easing aspect of policy in addition to the low interest rates, we think, has to be continued. whether it's on the same size as the same sectors is debatable, but i think in the next statement, in the next meeting, you'll see some clarification there. >> interesting. all right, now on that front where are you investing right now? last time i remember we ended this segment with you throwing something out that surprised a lot of people. you said aceh. you said if you had to buy anything it would be aig or short term aig paper or its subsidiaries because it was yielding 10% to 15%. a couple weeks ago on fed day, what's your best idea now? >> well, the aig investments have done well. the stock's doing better and the bonds are doing mu

tony crescenzi of pimco. also want to bring you this latest development from the office of the attorney general, andrew cuomo. ken lewis's decision to step down will have no impact on our continuing investigation. so that is the press release, the statement from the attorney general of new york, andrew cuomo. again, we'll keep you abreast of all the developments as they cross. time now for today's edition of "pops and drops." pop here for nike. up 8% today. grasso. >> i think the move's over. i would stay clear of it for now. >> we've got a drop for biogen idec. down 2%. karen. >> you know what goes up must come down. sorry, carl. it's all right. you'll get it. >> we had a pop here for huntington bank shares. they are up 7% today. joe. >> deutsche bank upgraded them from a hold to a buy. i'm not going to get too excited about a regional bank given the current valuations. i would avoid the name. >> drop for sks. >> the comps have been lousy. nothing looks good right now in this stock. >> and we've got a drop h

. >>> pimco justice ruth bader ginsburg plans to be back to work today.n her office after receiving treatment from and media. she stayed overnight at the washington hospital center as a precaution. she underwent surgery for pancreatic cancer back in february. >>> the swine flu vaccine is expected to be available in the first week of october, and a gaithersburg company is working on 42 million doses. many meehedimmune's version of e vaccine is different than others. >> we are different in the sense that our vaccine is not injected but isn't intra--- but is intra- nasally injected. >> for kids, and the swine flu vaccine will be free. >>> johnson & johnson is recalling some infant tylenol. the recall covers batches of tylenol and in from drugs made from april and june of 2008. bacteria was found in the raw material of the ingredients but not in the actual finished product. for more information on this, call 1-800-962-5357. >>> imagine finding out you are pregnant and then two weeks later learning that you are pregnant again. this is what happened to julia c

how does that fit in with pimco's season?question about the hand-off between what we're seeing now, which is an inventory-led fiscal-led rebound in the economy to the more sustainable, self-reinforcing in production, income and spending. the inventory now is quite vigorous. it's helping the factory sector, reduction in layoff in factory sector, realignment of production to sales. it's what will bring some stability to the labor market. but again, we can't know whether there will ab successful hand-off to more sustainable forces of command. that's the question of 2010. >> what will be the first sign they give us some sort of indication as to whether or not that hand-off is going success fully? >> well, consumption, of course, watch the savings rate. income levels likely to be low because there's structural changes in the economy that will prevent job growth from being vigorous. the income figures and jobless figures will tie into that and be important. when the fed pulls back and starting to show the policy statement, we'll se

at pimco we debate that every day in terms of our investment community and we expect it's not going toasy task to follow. they are trying to replace and have replaced shadow banking system over the past 12 months, which basically allowed for lending of 4 to 5 to $6 trillion of assets now the fed is trying to make up for to the extent that hole is not filled and becomes a hole again, then we might see a recess, so to speak, a retreat in market asset prices and the fed has to be very careful. not just the feds but other central banks around the world. >> hey, bob. you mentioned earlier you get the scene there's still a lot of money on the sidelines, people waiting to jump back in. if i'm one of those people, where would you suggest or recommend they should be putting their money right now? >> i think they should still be betting on cyclical recovery, subpar recovery. i think you can own i'll call it risk assets be they corporate bonds or equities. i would stick with a higher quality. they have lag number one and valuations are not a lot of difference between the high-quality and low-qual

will that be managed by blackrock, pimco?hree independent trustees, which will have no connection with each other. they have to have professional management abilities. probably be former ceos. and the timeline will be december 2011, so we get an orderly exit, but i think what it does, larry, more than anything else, it ends the political interference we've all seen. probably it's reached with general motors. >> what has the reception been like? >> senator warner, senator carper, corker of tennessee -- >> but how about the company sns. >> oh, what is there -- i'm sorry. you know, i believe by and large, they want an orderly exit. really, i don't think they can successfully recover and pay the government back if the government is going to try to run their business and dictate their business plan. >> you see the lead article in the "wall street journal" and elsewhere. bankers face sweeping curves on pay. is that the kind of intervention by government that troubles you? >> larry, you start with the problem and the problem was we

we also have a tra steejic global adviser at pimco and a reporter at the new york times, extraordinary. and our commentator extraordinary, keith boykin, editor of "the daily voice" and a cnbc contributor. hello, gentlemen. mr. murphy, we welcome you. what did you hear from mr. geithner on taxes from that particular clip? >> well, glad to be here. i think this was just typical political double speak. i think the only thing i believed he ever said was when he admitted he never held a real job. we all know taxes are going up. he didn't give a definitive answer. he just tried to evade the issue. >> do we all know taxes are going up? >> well, we do know the bush tax is going to be repealed, which is part of what the president promised when he was running for office, the ke is whose taxes are going to go up and will there be any additional taxes on top of the repeal of the bush taxes. geithner didn't give us any direction on that. i don't think we're going to see a middle class tax increase. he said that very clearly. but the question is what will happen beyond the tax increases we already k

it's interesting, while pimco, regency and cbl are all reits, specialized and mack cali an office reit, but there's definitely some heavy selling going on, all down about 12% this week. to be fair, they're all up double digits since august 1st. cbl, the best of this pack, is up 55% during that period of time. so reits, they are in a tug-of-war right now. in fact, even if you look at the index today, half are up, half are down. >> and matt, they're going to be raising a lot more money in the next several months. >> they're trying. >> yeah. a secondary wave. in this one they're going to try to definitely buy some of that distressed real estate. thanks, matt. >>> we're coming right back with the closing countdown. >>> is protectionism becoming a big problem with the global economy? the president of brazil gives us his take in an exclusive interview. taking its rightful place in a long line of amazing performance machines. this is the new e-coupe. this is mercedes-benz. what's on the minds of independent investors? let's ask. when i trade, i want a straightforward price. they lure you in w

yet many people tell us, like stiglits, pimco tell us the u.s. is a high-risk venture right now.oth sides can't be right. either the dollar is big risk, yet when we sell a dollar, we're reducing our risk. it's very convoluted thinking. there's a good explanation why each direction it goes in. we're at the tail end of what will be a pullback in the dollar that really began in march. i'm looking for a little more room like rebecca is. then we get a stronger dollar recovery. >> let me just, you know, all due respect to nobel laureates, the u.s. dollar is still the currency of choice. >> but there's people like warren buffett say the days of the dollars are numbered. i don't agree with that at all. we've seen three months, or six months of the dollar downtrend. later this year we get strong growth. >> rebecca, what do you say about all that? >> i think there is a chance of that. that's why i'm focusing on selling the dollar against currencies that i think will do well if we don't see this capital. i'm focusing on asian currencies. i think those currencies will stay strong even if the

brian whalen, sandy, and tony senior vice president and portfolio manager at pimco although he did switch firms between a year ago when you saw him and now. good to have all three of you. it started with you, brian, and i mean -- i don't mean you individually obviously, but you were in the middle of subprime. you and i two years ago started talking almost every day about what was going on. you're still alive. you have thrived. where are you right now? is subprime, is that a place to make money? >> it actually is. it's been one of the asset classes that throughout the summer has lagged most of the other asset classes or at least within bonds. we've seen the prime mortgage-backed securities rally j anywhere from 25% to 30%. subprime is up in price but still significantly lagging. it comes with the most hair on it and requires the most due diligence. >> and you noted, brian, subprime right now is still trading at 30 cents on the dollar. if you had to say in your world what the biggest opportunity is today, what is it? >> the biggest opportunity today i think would rely -- it would be in the

you've seen large operations such as pimco starting to release the treasury holding. and i think that's going on for international investors, as well. the chinese purchases treasuries. treasuries are considered one of your safe haven options. it may not be quite as much of a safe haven as it used to be given the level of debt that's outstanding at this point in time, but it's still considered to be win of those spots. and those purchases are likely going to continue as long as rates kind of hang in there and don't fall to, you know, the absurd level that we saw earlier in the year. >> jason, as for questions that was e-mailed in and andy answered about the mutual funds and the feds that are teaming up with them to be careful about how quantitative easing happens and to avoid inflation, what do you think about that strategy? do you think that's going to work? >> you know, they need to take a strategy that does, you know, try to contain inflation and moves in a gradual manner in order to get the market back to a reasonable point, allow the economy room to move back to a

the bond king pimco's bill gross, head for the world's largest money management firm.be joining us too. everything on these two gentlemen. it's perfect time to catch up with them with gold over 1,000 and the dow topping 9,800. plus reaction to president obama's weekend health care reform push from former health and human services secretary tommy thompson. >>> also ed rendell who, by the way, is about ready to play host to the g-20 summit in pittsburgh later this week. "squawk box" is coming up at the top of the hour, we will see you then. >> and back from your west coast swing last week, as well. >> i am. it's much easier to do this show when we catch up with you in switzerland than in california. because in davos, it's in the middle of the day, california, 3:00 in the morning. >> yeah, yeah. you don't want to keep going west. it's great weather, but time zone. >> i've learned my lesson. i'll meet up with you in europe any time. >> that's a dee. thanks, becky. >> thanks to you. >> let's -- i was out in the west coast. i do fancy -- i think i need to go over there and s

in factish the one behind the current one where the petition was made is a pimco lawsuit.o see a lot of changes in the industry. >> one of the things that surprised me over the weekend, a story that made "the new york times" times sunday, new exotic investments. people talk about all the problems wrapping up commercial real estate loans, regular loans. now the new thing is life insurance. >> they say it's new, it doesn't. a 95-year-old man with triple bypass wants insurance. there's no reason why he shouldn't be able to get insurance. the core issue is whether or not the risk is properly assessed. if it is, everything follows from that. really comes back to the conflict, make sure there's an alignment of interest. head said everybody knows incentives are important mentioned in connection with executive pay but also the rating industry. >> critics say the problems is you can roll up life insurance policies, get the financing, repackage them and sell them all over the place. maybe in the end that ends up driving up life insurance policies because people will have priced the