tv Squawk on the Street CNBC July 27, 2009 9:00am-11:00am EDT
final time for final stocks. time for gary kominsky. >> tax rest going up. >> taxes are going up. >> bernanke told you to think about your asset allocation. if you're invested in that, make sure it's an amount you are willing to have a significant volatility and risk to the principle and tax rest going up. so anyone who is an investor has to realize tax rest going up and that has irmplications akrod th board. >> except that only if you make money do you pay the taxes. >> i don't believe that. i believe that ultimately -- >> on the for tportfolio, i mea >> but everybody will be paying higher taxes in this country. >> people above a certain income
level. >> ultimately with all the money being printed, it will eventually flow down to the majority of the population. taxes, all this money that's being printed, we will have to raise taxes in order to somehow offset this. >> all right. someone tivoing this, joe? >> i want to give my nephew a shoutout. >> bar mitzvah coming up? >> yes, a bar mitzvah coming up. his dad is taping this out in california. >> present? >> happy birthday. >> do it again. >> happy birthday. >> thanks, gary. >> and taxes are going up. >> yeah, happy birthday. >> make sure you join us tomorrow. "squawk on the street" is coming up next. this is cnbc.com news now. >> technologies are acquiring scientific instrument maker varian for $1.5 billion in cash for $52 a share. that's 35% above varian's closing price on friday.
shares of aetna are called lower after quarterly earnings missed estimates and the company cut the full-year forecast. we'll get the latest data on new home sales at 10:00 a.m. eastern time. economists are anticipating an increase. that's cnbc.com news now. i'm courtney reagan. live from the financial capital of the world in the heart of lower manhattan, this is "squawk on the street" on a monday morning. last trait trading week of july. i'm erin burnett. it's good to be back. steve liesman is in for mr. haines this morning. >> how come i couldn't do the "live from"? >> i was eager to try to do it. >> you're good at that. >> nothing compared to mr. haines. we are looking at, yes, over 9,000. i know that happened while i was gone, steve. but a drift lower. looks like maybe at the open. verizon, aetna, honeywell, none of them inspiring the market. although we did get a pieces of
revenue growth. >> that's what it says on the prompter, steve liesman? >> i'm glad you're steve liesman. >> bernanke said he had to hold his nose throughout the bailouts of the banks last year. we're going to look at the futures right now. >> right now we'll show you a little bit tepid. so let's just say this. we are searching for direction. so a head like could come along, steve. >> yeah, but remember what we're saying here and what we said last friday. anything but a huge sell-off is a victory for the bulls here. it was a huge move last week. people said, oh, that's going to be gone in a second. it was not. it held on. even just holding our own is a victory. >> yes. look at historical valuations and they are above average relative to where we are. >> geo political front. opening ceremonies for the trade talks under way in d.c. this will be the first strategic and economic dialogue for the obama administration. the president is going to make a few comments in the next half hour. we'll bring them to you live.
but is fed chair ben bernanke's comments taking stage. the fed chairman taking the unprecedented step of holding a town hall meeting at the reserve bank, taking questions, just from ordinary folks. he used the town hall moderated by pbs's jim laher,saying if the fed didn't act, it was a great depression. >> 1959, people think the depression was created by the stock market crash. it wasn't. it was a normal recession. in 1931, a huge bank in the middle of central europe collapsed and that created a global financial crisis which then made the recession into a great depression. i was not going to be the federal reserve chairman who presided over the second great depression. for that reason i had to hold my nose and stop those firms from failing. >> exert is on his website. the full town hall will be broadcast over the next three nights. over the economic outlook,
bernanke says low inflation is because of insistent high unemployment. >> right now we're seeing growth in the second half of the year. but our best guess, and it's only a guess, is a growth in the second half of the year will be about 1% on annual basis. so that's not enough to bring down the unemployment rate. so our projection is the federal reserve, the members of the federal marketing exit tee, which is the committee that sets monetary policy, puts out forecasts or projections four times a year, which are publicly available. and our projections suggests that the unemployment rate will probably keep rising, probably a bit above 10%. it will peak early in 2010. >> bernanke supported the obama administration's stimulus plan. forecast to remain high, said it was fortunate that half of the stimulus kicks in next year. that was a criticism of some, by the way. he did support additional ones saying we needed time to see if existing plan works. erin, how do you think he did? >> i was pretty impressed by the little pieces you have shown.
one thing interesting, you and i was talking about earlier, what he's saying is letting it work jives with what nancy pelosi is saying biological weapon don't need another one. if anyone was going to say we needed one, it would be her. joe biden in the op-ed of the "new york times" saying is that everybody needs to back off of how much of the current money has been spent, he is saying 30% of it will be spent by next z t september. they are fighting back on the $787 billion. in the meantime, there's a lot of names to watch. top of the program, let's get straight to our market reporters. standing by for the run down, mr. pisani, how are you? >> hello, erin. 11% rise in the s&p in the last two weeks. a lot of guys down here are talking about the $200 billion in treasury debt coming this week and how much competition, if any, it will be for stocks money. half of that is short-term funding. maybe not controversial. a lot of that is pretty serious
money. see aetna today? this is a good example of how hmos are leveraged to health care reform and higher costs. full-year guidance, a little disappointing here due to increased claims and higher costs. what are they going to do about it? there's talk about raising all the prices for what they charge. but that may reduce membership. may not have any choice though. it's a real dilemma for them. corning, they beat the estimates and went out of their way to say they have notably improved from the first quarter. honeywell a disappointed. down 2%. earnings in line with estimates. revenues were a little bit light. they were cautious on the rest of the year. the ceo said they are not plan for any recovery this year. tradertalk.cnbc.com for more about. how are we at the snz. >> slight i higher open where the nasdaq is going to head today, bob. look at the wall. most large-cap techs are higher in the premarket, rim, apple, google, ebay. however, they are giving back even though it was added as a
short-term buy at the deutsche bank. it's to the upside today. set to announce changes to the listing business to make it easier for larger vendors to sell new products in greater volume. that's an interesting story we're following there. erickson down 1 1/2%. buying nortel's wireless business for $1.13 billion. beat out nokia in that auction process. perhaps there's concern about that price tag why the shares are under pressure. watching video game makers today. electronic arts, take two, activision, names you want to watch. video games sales plunged a record 29% last month. amgen reports the earnings after the bell. stock is up 1% premarket. let's go to sharon at the nymex. >> oil prices, yesterday's rally was the largest we've seen since may. last week was the biggest we've seen since last may. today we're seeing that rally go forth $69 a barrel. and part of what is growing there is the strength that we've seen in european and asian
equities overnight as well as weakness in the dollar. the dollar index and the dollar versus the euro falling to the lowest levels we've seen since june. watch that new homes sale data, perhaps we will get another indication of where the dollar is going from there. the weakness in the dollar and commodities across the board. copper a real standout to look at there. there's a belief with the strength that we've seen in equities, particularly in asia demand is coming back, demand will be strong in china forco copper. you are anyonewoinwood cliffs. >> at 11:00 eastern we're going to have an announcement of how many one-month bills we're going to auction tomorrow. $63 billion will be auctioned at 11:30 and 1:00, 20-year $6 billion tips. protected securities not long ago. just to be kind of oddball. they didn't have great liqu
liquidity. not a lot of depth. you can tell why everybody is talking about the dollar index. we are one thin dime away from trading dollar index levels you haven't seen all year. and interest rates, hey, over 3 3/4 on the ten-year. so we want to continue to watch how supplier, debt, weak dollar strong commodities affects everything going into supply. erin, back to you. >> thank you very much, mr. santelli. we were just remarking on this thing that happens every time rick comes to new york, which is he's very quiet. >> yeah. >> like he's on a sedative as compared to his normal trading for a bouillon. in asia, nikkei rising for the seventh straight session. longest winning streak in 20 clears. i believe, thee, steve, half the peak in 1989. hang seng is jumping 1.4%. it's at the 20,000 level since september. shanghai composite in china rising 1.9%. fourth gain in the row since
early june of last year. bob joins us from europe to see if europe will have any more hand marks of its own. hello. >> i've got to tell you 8 1/2-month highs during the session a little bit earlier. futures looking sul i can. that's surround husband around here. ftse 100 just seeing a little bit of red creep in here. china make it 11 sessions in a row of up territory, that would equal the best performance ever. 2% half the cac up seven krence. pearson, the only male newspaper in the uk, they say we're on track. headed where we thought we would be this part of the year. for the media stocks, they're doing well on the back of that. you heard about the dollar and commodity prices, up. utilities up a little bit as well. on the downside, we have weakness.
"travel and leisure" and retail are all down. that's how we stand right now in europe. it's going to be a struggle to make it 11 out of 11. i tell you, steve, i think you could give steve ago at the live thing. >> ross -- o >> with that voice that he's got. >> apparently, ross, you're not allowed. i'm a freshman here at the anchor. there's a hazing of passion. >> to be fair, ross, he did a test one while someone else was talking. it was rather impressive. >> i understand there's a meeting going on in management to discuss whether or not i can do it at 10:00. stay tuned, i may yet do it, ross. up next -- >> you have a nice baritone voice. >> the a-team back in action with results from aetna and verizon. earnings cal. >> and the word on the street and the buzz beyond the floor, does this rally have legs? and the president, ceo of the u.s. chamber of commerce. why this plan is not in the best
we cannot talk earnings without talking to the command. >> it's forbidden. >> carl, what are you watching? >> we got some head winds today. all stocks are called lower. let's start off with aetna. the insurer are getting crushed this morning. stock called lower after the company came in ten cents below expectation. profit down nearly 30% on higher commercial medical cost, cutting their full-year profit outlook. the ceo williams says the company continues to see upward pressure onjected in early june. the results, in his words, very unfavorable versus expectations and says they're willing to forego membership growth for profits. we did have one dow component out this morning. verizon beat on the top line, beat on the bottom line. eps a penny ahead. they posted increases in revenues and subscribe irs and disclosed last week that it
added 1.1 million customers in the second quarter. that's lower than rival at&t's 1.4 million. and despite a decline in global handset sales, smart phone sales have continued to grow. verizon though does plan about 8,000 workforce reductions in the second half. they already had 8,000 reductions in the last 12 months. corning had a pretty good number. seven cents ahead. in april they saw a pick up in demand for lcd glass which held sales and earnings. the company seen some signs, recession affects on its businesses may be moderating. in the, they say a very strong holiday season is on the way. and notice words of the cfo by and large, he says, we have hit bottom. finally, there's honeywell, the company has earnings in line with expectations. revenue though, once again, it's like a recurring nightmare here. revenue did fall short of p estimates. cut their full-year revenue forecast. low end of reduced outlook.
the stock called lower. guys, really, today more so than most days we've seen so far, big companies and high-profile executives planning for a weak 2010, saying it's going to be as bad, maybe not worse than '09 but at least as bad. i'll be back in an hour with a new sidekick since joe abandoned me this morning. i think he's got some dental issues. >> dental issues? >> yeah. there might be a root canal involved today. we'll find out later on this morning. >> oh, wow. >> couldn't happen to a nicer person, but i'm not that person. >> either that or he is stretching the bounds of how to get out of earnings central. >> he really is. >> must really hate it. >> have someone punch him in the face on purpose this afternoon? >> i'll volunteer. >> i'm kidding! >> thank you, carl. next we're going down on the floor for the word on the street. >> and our special "squawk on the street" task force, the mid-summer rally from all angle
technical sentiment, crude and currency. tell you whether we're on the verge of a sell-off or just stuck in a labored march hire. >> sounds like we're talking about some -- something that happened somewhere else. >> right. >> we'll be back. announcer: some people buy a car based on the deal they get. others buy the car of their dreams. during the lexus golden opportunity sales event, you can do both. it's an opportunity today. it's a lexus forever. special lease offers now available on the 2009 is 250. special lease offers when a major hospital wanted to add on to their benefits package at no direct cost
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with the gold delta skymiles credit card. call 1-800-skymiles to apply. this is the official card... of the world's largest airline. you're watching cnbc's "squawk on the street" live from the financial capital of the world. p. >> futures seeking direction. a bit of disappointn't on the back of earnings this morning. you had honeywell and verizon and i know it's slim pickings. verizon did post an increase in revenue. >> which is not. while you were gone it was all these companies missing by revenue by beating on the
profits. >> which is a key point. you're not going to have an economy growing until revenues go up. >> right. >> we'll take it where we can get it. none the less, market is seeking direction. go ahead. yes. >> art cashin is here. >> is he? >> art, what do you think of last week? was it for real or are there doubts here? >> no, i think the two-week run was particularly impressive. it changed a lot of things. you have a buy signal. you broke out to a higher high. changed some of the charts. we are heavily over-bought now. i think there is a correction this week. >> by what metric, art? >> by looking at the number of stocks above their 10, 20, and 30-day moving averages. we're up in the 80s, 90s in some cases. so i think we get a correction. i don't think it will be severe. i think it will end somewhere around august 2nd or august 5th. and then we will start with maybe a very impressive head
fake rally before fall when we might get another leg down. and that's the year, folks. >> that's it. he's got it. >> exactly. question for you, art. what is the catalyst? i mean, if you want to take the concerned view, you say we're up 45% from the lows and maybe there was an over reaction when stocks first pulled off last fall. none the less, we're at a point where capacity utilization is low. it's hard to see where demand would come from. can we sustain this level? >> that's the key word, sustainability. and that will come home to roost eventually. but you got to remember that the markets are desperate. money sitting around earning nothing. and people looking for excuses to put them back in. steve pointed out several times last week that we kept returning to pre-lehman levels, when the world was falling apart, we're getting back uup. i think we'll see productivit productivity -- not productivity, but production leading this rather than
consumer demand for the first offer. that's why i say later on you'll get that "w." >> how much concern is there about the dollar? it's been weakening and something that's going to be hindrance to the economy and the markets in the future? >> that's a big wild card. it could even change as correction mode. the dollar is at a strong inverse relationship to the dow. oil and commodities. it is down at a very critical point. as i wrote this morning, critical point or in critical condition. if it breaks down from here it could get disorderly. >> let's be careful about what exactly the signal is here. buy the economy and buy the stock, that is not a negative opinion being voiced by the market. in general you would want to sell the securities in the country where you're not confident about that. >> the dollar is benefited be avariety of things. not the least is safe haven from time to time. the other thing is the huge amount of multi-national companies that are in our indexes. so what they're saying is, all
right, the dollar goes down and you're giving 40% of your revenue offshore, you're going to g better earnings. >> how low rates are, that everyone comes up with a headline every day, earnings are exceeding expectations. that's why the market is higher. that's what we have to do, come up with a reason. maybe the real reason is rates are so low and there's money swimming around and nowhere else to go so it's going into stock. that would make the market go higher but not make the case for staying higher, sustainability or demand coming back. do you think that's the real reason why the markets have gone higher? >> i think that's an important reason. that's one of the reasons where i'm looking for a possible "w" later on, late fall or mid fall sell-off as people begin to realize, wait a minute, as we saw in this earning season. we're getting by on cost cutting. we're getting by on this. the consumer is taking a walk. >> i take what erin sayss a support for the market. the more i see the money in the side lanes out there, the more support i get, i feel going
long. as long as that money exists, in order to go away, i would lack the confidence. when the money starts pouring back in, that's when it's time to go. >> there's no question about that. i think what you saw last week was not just short covering. it was maybe 40% short covering and the rest of it was hold your nose and buy them. oh, my god, it says art the money manager on the door, not art the money hoarder. >> putting it to work. >> i hold my nose. i don't think i really love them but i buy them. >> a lot of nose holding going on. >> bernanke with the banks and art buying stock. >> all right. art cashin, thank you very much. good to see you. >> good stuff. we have the final countdown to the opening bell on the other side of the break. we'll be back. welcome to the now network. population: 49 million.
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today. my phone is ringing. whoever is calling is listening, please call back at another time. probably one of our producers. okay. i had two quick things i want to put in here. one, i was in europe -- >> what did you learn on your summer vacation, erin? >> i was in scandinavia. one, costs are incredibly high in certain countries in this world. particularly in scandinavia. it's just amazing when you think about the correction that is inevitable in terms of government out lays, even in places like that. the cost of living as people's income is under pressure. >> scandinavia have very high taxes, value-added taxes. >> 25%, i believe is what it was. i've never been anywhere -- >> that can happen. >> that was interesting. but i would say this, you know, they -- the richest person in norway, actually, one of the richest top couple left the country because of the taxes while we were there. there is no question, talking to
a few business leaders there, which i did have the opportunity to do even though i was on vacation, they are looking to the united states. and they are more negative in the sense they're looking for a double dip but they are looking to the united states for leadership. and they are more optimistic on the united states' ability to recover and lead than perhaps people here in the united states. that's something i found it everywhere i traveled. >> you also came back with a concern more about deflation than inflation? >> yes. i -- now, i understand there are people making the bet weights going a heck of a lot higher. there are real people making those bets. but when -- from everything that i've seen traveling, there is a real demand issue. there is a real demand issue. this is something you honed in on for a while. >> vacant hotels, empty -- >> capacity everywhere that you are. how the you make -- how do you not have the bigger concern of deflation right now rather than inflation? i know it's speaking to the choir right now? >> that inflation trade was out there. you made a lot of money real
quick quickly, but then you lost it in a hurry. >> alcoa is with us at the new york stock exchange. 50 years as a dow component. we are going to have an exclusive interview at 4:00 p.m. eastern today. at the nasdaq, u.s. chamber of commerce. ceo tom donahoe will be with news a couple of moments. >> market reporters standing by at the new york stock exchange, nasdaq, and new york mercantile. let's start with bob pisani on the floor below us. >> hello, friend. two weeks, 11% gain in the s&p 500. that's 11 points. everybody is obsessed with earnings and everybody is talking about how much competition in the treasury auctions might be to the stock market this week. fairly are you teen short-term stuff. this is pretty heavy competition for the stock market. let's talk about earnings. just opened $1.70. you know the story here. basically, lowered their guidance tort second quarter and the full year. they talked about increased claims overall.
the medical loss ratio, which is the cost of services that you provide, compared to how much money you're taking in, rose to over 86%. so it's a measure of profitability essentially. that's under pressure at this point. there is some issues here. the question is, what are they going to do about it? obviously they're tethered to the issues of health care reform. so there's a double whammy. there's talk about raising cost of the membership. that may reduce membership overall. they're stuck between a rock and a hard place. they're going do have a lot of choice here. let's talk about other stocks. corning had positive comments, beat on the top line by volume, which is what really matters. that's the important metric, up notably in the second quarter. they made some positive comments. corning had a nice move recently. it's down 4%. honeywell standing right next to aetna. the thing about honeywell is while they beat on the bottom line, top line was a little light. you know that story. that's fairly common. very cautious in their commentary. the ceo made noise saying they're not planning for any
recovery. and that's this quote for the rest of the year. tradertalk.cnbc.com. how are we at the nasdaq? >> we've opened flat. mixed picture across big cap tech. the 12 out of 13-day run to the upside is up 25% year to date. i'll run you through the large cap technology stocks this morning. it's either modest gains or losses. rim and apple higher. google is lower. microsoft is lower even though deutsche bank calls it added into the short-term buy list. microsoft had pretty disappointing earnings l.a. week. perhaps there's still negative follow through after a decent run-up in the shares. ebay is up 3/4 of 1%. set to announce changes to listed business, help larger vendors sell products. i mentioned when i last saw you the erickson news, down 2%. buying nortel's wireless business. they beat out nokia siemens in the process there. it's a look at what they're
paying is why the stock is under pressure. interesting story to fall today. the ndp group is showing that video games sales plunged 29% last month. that's a record of fall there. electronic arts is down. take two interaction is up. thought to be recession proof, perhaps not so much right now. amgen is out with its own results after the bell today and shares are higher by 1%. let's go to sharon at the nymex. >> it's optimism that has taken oil prices up about 14% in the past two weeks. optimism and the equities market has spilled over and let the momentum in the oil market as well. wait to see what happens on friday when we get that gdp report. will the optimism remain? we're looking at oil though touching $70 a barrel. here at the nymex it's over that mark in london for brent crude prices. a lot of traders here saying you've got to look at the technical levels and you've got to look at the dollar. that is what could take oil above the $70 mark even in the
light of the fact we have plenty of supply. it's the refined fuels that are leading this petroleum rally. we're looking at them as one of the refineries in the east coast having a snag here. a problem over the weekend leading to problems there. and again, the idea is with refinery runs coming down, we're going to have less tightness in supply. less of a supposly surplus. that's why we're see that in the pet troll numb products. >> thank you, sharon epperson. we're having changes in our company, something that will get a lot of talk in the media world. julia poor stin hia boorstin ha. >> that's right. reorganization of the broadcast in the cable television position, now jeff is the named chairman nbc universal television entertainment. he previously oversaw all the cable units while bill silverman has it.
silverman is leaving the company to form a new venture with iec. his deal -- >> you'llia -- oh we julia, sorry to interrupt you. i'm apologize. the president is speaking. we'll get back to you in a moment. here he is. >> thanks. >> this san essential step in advancing a positive, constructive, and comprehensive relationship between our countries. i'm pleased that president hu shares my commitment to a sustained dialogue to enhance our shared interests. president hu and i both felt that it was important to get our relationship off to a good start. of course, as a new president and also as a basketball fan, i have learned from the words of yao ming who said no matter whether you are new or an old team member, you need time to adjust to one another. well, through the constructive
meetings that we've already had and through this dialogue, i am confident that we will meet yao's standard. i want to acknowledge the remarkable american and chinese leaders who will co-chair this effort. hillary clinton and tim geithner are two of my closest advisers and they have both obtained extraordinary experience with working with china. and i know that they will have extremely capable and committed chinese counter parts in state counselor di and vice premier wong. thank you very much for being here. i'm also looking forward to the confirmation of an outstanding u.s. ambassador to china, governor john huntsman who is here today. john has deep experience living and working in asia and, unlike me, he speaks fluent mandarin
chinese. he is a republican and co-chair of senator mccain's program. i think that has his commitment to serving his country and the broad bipartisan support for public relations between the united states and china. thank you, john, for your willingness to serve. today we meet in a building that speaks to the history of the last century. it houses a national memorial to president woodrow wilson, a man who held office when the 20th century was so young and america's leadership in the world was emerging. it is named for ronald reagan, a man who came of age during two world wars and whose presidency helped usher in a new era of history. and it holds a piece of the berlin wall, a decade's long symbol of revision that was finally torn down, unleashing a global tide of globalization that continues to shape our world. 100 years ago in the early days
of the 20th century it was clear there were momentous choices to be made, choices about the borders of nations and the rights of human beings. but in woodrow wilson's day, no one could have foreseen the arc of history coming down with the wall of berlin nor could they have manage anyoned the conflict and upheaval of the years in between. for people everywhere, from boston to beijing, the 20th century was a time of great progress, but that progress also came with a great price. today we look out on the horizon of a new century. and as we launch this dialogue, it's important for us to reflect upon the questions that will shape the 21st century. will growth be stalled by events like our current financial crisis or will we cooperate to create balance and sustainable growth, lifting more people out of poverty and creating a broader prosperity around the
world? will the need for energy breed competition and climate change or will we build partnerships to produce clean power and to protect our planet? the nuclear weapons spread unchecked or will we for new consensus to use this power for only peaceful purposes? will extremists be able to stir conflict and division or will we unite on behalf of our shared security? will nations and peoples define themselves solely by their differences or can we find common ground necessary to meet our common challenges and to respect the dignity of every human being? we can't predict with certainty what the future will bring, but we can be certain about the issues that will define our times. and we also know this, the relationship between the united states and china will shape the 21st century, which makes it as
important as any bilateral relationship in the world. that really must underpin our partnership. that is the responsibility that together we bear. as we look to the future, we can learn from our past. for history shows us that both our nations benefit from engagement that is grounded in mutual interests and mutual respect. during my time in office, we will mark the 40th anniversary of president nixon's trip to china. at that time the world was much different than it is today. america had fought three wars in east asia in just 30 years. and the cold war was in a stalemate. china's economy was cut off from the world, and a huge percent sapercentage of the people lived in poverty. we had a dialogue of narrowed focus with a shared rivalry with the soviet union. today we have a comprehensive relationship that reflects the deepening ties among our people.
our countries have now shared relations for longer than we were estranged. our people interact in so many ways. and i believe that we are poised to make steady progress on some of the most important issues of our times. my confidence is rooted in the fact that the united states and china share mutual interests. if we advance those interests through cooperation, our people will benefit and the world will be better off. because our ability to partner with each other is a prerequisite for progress on many of the most pressing global challenges. let me name some of those challenges. first, we can cooperate to advance our mutual interests in a lasting economic recovery. the current crisis has made it clear that the choices made within our borders reverberate across the global economy. and this is true not just in new york and seattle but in shanghai and sensen as well.
that is why we must remain committed to strong bilateral and multi-lateral coordination. and that is the example we have set by acting aggressively to restore growth, to prevent a deeper recession, and to save jobs for our people. going forward we can deepen this cooperation. we can promote financial stability through greater transparency and regulatory reform. we can pursue trade that is free and fair, and seek to conclude an ambitious and balanced agreement. we can update international institutions to the growing economies like china play a growing role that matches their greater responsibility. and as americans save more and chinese are able to spend more, we can put growth on a more sustainable foundation because just as china has benefited from substantial investment and profitable exports, china can also be an enormous market for american goods.
second, we can cooperate to advance our mutual interests in a clean, secure, and prosperous energy future. the united states and china are the two largest consumers of energy in the world. we are also the two largest emitters of greenhouse gasses in the world. let's be frank, neither of us profits from a growing dependence on foreign oil, nor can we spare our people from the ravages of climate change unless we cooperate. common sensicals upon us to act in concert. both of our countries are taking steps to transform our energy economies. together, we can chart a low carbon recovery, we can expand joint efforts in research and development, to promote the clean and efficient use of energy. and we can work together to f forge it beyond. the best way to foster the innovation that can increase our
security and prosperity is to keep our markets open to new ideas, new exchanges, and new sources of energy. third, we can cooperate to advance our mutual interests in stopping the spread of nuclear weapons. make no mistake, the more nations acquire these weapons, the more likely it is that they will be used. neither america nor china has an interest in a terrorist acquiring a bomb or nuclear arms race breaking out in east asia. that is why we must continue our collaboration to achieve the denuclearization of the korean peninsula and make it clear to north korea that the path to security and respect can be traveled if they meet their obligations. and that is why we must also be united in preventing iran from acquiring a nuclear weapon and urging the islamic republic to live up to its international obligations. this is not about singling out
any one nation. it is about the responsibility of all nations. together we must cooperate to secure all vulnerable nuclear materials around the world which will be a focus of our global nuclear summit next year. and together, we must strengthen the nuclear nonproliferation treaty by renewing its basic bargain, countries with nuclear weapons will move towards disarmament, countries without nuclear weapons will not acquire them, and all countries can access peaceful nuclear energy. a balance of terror cannot hold. in the 21st century a strong and global regime is the only basis for security from the world's deadliest weapons. and fourth, we can cooperate to advance our mutual interests in confronting trans national threats. the most pressing dangers we face no longer come from competition among great powers. they come from extremists who would murder innocence, from traffickers and pirates who
pursue their own profits at the expense of others, that diseases that know no borders and those that breed instability and terror. these are the threats of the 21est century. that is why the pursuit of power among nations must no longer be seen as a zero sum game. progress, including security, must be shared. to increase ties between our militaries, we can diminish causes for dispute while providing a framework for cooperation. through continued intelligence sharing, we can disrupt terrorist plots and dismantle terrorist networks. through early warning and coordination, we can check the spread of disease. and through determined diplomacy, we must meet our responsibility to seek the peaceful resolution of conflict. and that can begin with the renewed push to end the suffering in darfur and to promote a comprehensive peace in sudan. all of these issues are rooted
in the fact that no one nation can meet the challenges of the 21est century on its own nor effectively advance its interest in isolation. it is this fundamental truth that compels us to cooperate. i have no allusion that the united states and china will agree on every issue, nor choose to see the world in the same way. this was already noted by our previous speaker. but that only makes dialogue more important so that we can know each other better and communicate our concerns with candor. for instance, the united states respects the progress that china has made by lifting hundreds of millions of people out of poverty. just as we respect china's ancient and remarkable culture, its remarkable achievements, we also strongly believe that the religion and culture of all peoples must be respected and protected and that all peoples should be freed to speak their
minds. that includes ethnic and religious minorities. in china as surely as it includes minorities within the united states. support for human rights and human dignity is engrained in mek. our nation is made up of immigrants from every part of the world p. we have protected our unity and struggled to pro effect tur union by extending basic rights to all our people. and those rights include the freedom to speak your mind, to worship your god, and to choose your leaders. these are not things that we seek to impose. this is who we are. it guides our openness to one another and to the world. china has its own distinct story that shapes its own world view. and americans know the richness of china's history because it helped to shape the world and it helped to shape america. we know that talent of the chinese people because they have helped to create this great country. my own cabinet contains two
chinese-americans. we know that despite our differences, america is enriched through deeper ties with a country of 1.3 billion people that is at once ancient and dynamic. ties that can be forged through increased exchanges among our people and constructive bilateral relations between our governments. that is how we will narrow our divisions. let us be honest, we know that some are wary of the future. some in china think that america will try to contain china's ambitions. some in america think that there is something to fear in a rising china. i take a different view, and i believe president hu takes a different view as well. i believe in a future where china is a strong, prosperous and successful member of the community of nations, a future when our nations are partners out of necessity but also out of
opportuni opportunity. the future is not fixed but at destination that can be reached if we pursue a sustained dialogue like the one you will commence today and act on what we hear and what we learn. thousands of years ago the great philosopher menches says a trail through the mountains if used becomes a path in a short time. but if unused, becomes blocked by grass in an equally short time. our task is to forge a path for our children to prevent mistrust or inevitable differences at the moment from allow that trail to be blocked by grass, to always be mindful of the journey that we are undertaking together. this dialogue will help determine the ultimate destination of that journey. it represents a commitment to shape our young century through sustained cooperation and not confrontation. i look forward to carrying this effort forward through my first
visit to china where i hope to come to know better your leaders, your people, and your majestic country. together i'm confident we can move steadily in the direction of progress and meet our responsibility to our people and the future that we will all share. thank you very much. >> that was the president introducing his first strategic economic dialogue with china's leaders, as you can see there. interest that he actually took on the whole issue of how we see china, how china sees us and emphasize he sees it as a partner rather than the threat and that the u.s. would not con train china's ambitions. >> but mentioned the minority issue, conflict between the u.s. and china and the -- market actually went up. >> you're pulling a mark there. forget to put your mike on. >> i'm trying to do my best to be mark haines. >> the u.s. chamber of commerce
launch $2 million ad campaign for a government-run health insurance plan. and react to what the president had to say on china after the opening bell is tom donahoe, president and ceo of the u.s. chamber of commerce. >> glad to be here. >> i know you're here to be talk about health care. did you think that the president struck the right note when it came to china and obviously you're coming from the business side. >> the future of the relationship between the united states and china is fund member tal mentally fast and an economic one. the president raised the right issues. i think the fact he took the lead on the economic dialogue and put it together with commerce and treasury is very positive and i look forward to the next few days. tomorrow night we'll be hosting a dinner with others for the delegation from china.
i think this is an important meeting but a lot more to come and lots to do. >> and do you believe that china is open for american business right now? he talked about how china is crucial market for american companies. obviously there are a lot of complaints put out there that china is not as open to american companies as they hoped. has china made comments explicitly since this administration took over on that front? >> well, china has made extraordinary progress over the last number of years. since the administration took over, both china and the united states have been an economic difficulties. but i see extraordinary opening of markets more people in the middle class in china with the ability to buy american products. but we need a global trade agreement as the president suggested. it would be the single biggest stimulus we could add to this and to the chinese economy. >> tom, you may have agreement with the u.s. -- with the
president's china policy, not necessarily with his health care policy. you're out there with pretty strong opposition to the administration's health care, especially the one in congress. what are your main points of opposition? >> first of all, we believe we should have a health care bill. there are things that need to be fixed. the problems in the congress are between the democrats who are all fighting with one another about a fundamental set of realities. the first is, if you listen to the congressional budget office, this bill is going to bankrupt the town. second, we really believe to have a federal plan competing with private plans and then taxing people that don't participate is a big mistake. and i think it's also important for us to understand that we shouldn't mandate companies to provide health care. we already cover 170 million people. and we're trying to cover more, but a federal mandate with high demands on it competing with a public plan is going to do
nothing except take people out of jobs and out of health care. it's time to do what we can afford to cover those people who aren't covered, to work very hard to improve the wellness issues, to go out and require people to have insurance. there are many things we can agree on, we want a plan but we don't want a federal mandate. >> thots thats not the look from the advertisement you guys are running. this advertisement the government already gets the shirt off your back. if congress passes new tax increases that hold on to your pants. pretty rough stuff there in the political r political arena, tom. >> well, come on. if you think about the costs, the congressional budget office says two things. first of all, none of this is going to bend the cost curve and reduce costs in health care. second, it's going cost you another trillion plus dollars over the next ten years. and by the way, what everybody agrees to over the last 50 years, every time somebody figured out what health care was
going to cost, it actually cost twice that much. >> tom, business doesn't necessarily all agree in opposition. they don't want health care necessarily. >> everybody wants a health care bill. they don't want a health care bill that bankrupts a country or the companies that protect our american citizens. >> tom, thanks very much. we got to move on here. tom donahoe, ongoing conversation here. also the topic of cnbc's newest meeting of the mind round-table series. take a look here. >> there was a vote taken in a committee about whether the congressman would agree that a their federal employee program would get into the public plan and they voted no because the federal employee program is an employee-provided plan. it's the federal government is the employer. as dr. frist 'csaid, it's a retroplan. >> this is going to be a great one, "meeting of the minds." health care airs tonight at 9:00 p.m. eastern and again tomorrow 11:00 a.m. breaking news on the economy. new home sales for june. the numbers announced just
moments away. plus, the first installment in our new week long series "social climbing, how social networking is reshaping our inner workings of our economy and our market." much more than just the iranian election. we'll get to the bottom of that. market recovering a bit. we'll take a brief break. bricking news on housing after that. ♪ (announcer) advanced medical imaging technology from ge is helping places like rural china fall in love with modern healthcare. ♪
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welcome back. we have breaking news. new home sales, expectation is to rise to 255,000 from 3.8. we're blowing the doors off that, up 11%. if you have the actual number, there it is right now. up 11% to 384. that was from a revised upward 346 the prior month. this number coming in very hot. much hotter than expected perhaps because mortgage rates cooled off during the period and maybe we had a little bit of bounce in some of the economic numbers. let me just double-check that. it's the highest since 390 in november 2008. so that takes down a couple of incredible lows that we've put in in this economy here. as we said, may was revised up to 346 and 342. let's see if there's anything else here.
anything above expectations which is right in the 255,000 range at 3.8%. let's go to our housing expert who knows a thing or two about this. diana olick in washington. what's your take on the numb brer bers? >> that's a big jump. we're seeing 384. remember on this data though from the u.s. department of commerce, there is a wide margin of error. we do see revisions a lot as we saw in the 346,000. that's an upward revision in last month's number from 342,000. what i like to look at though is that month of inventory number. i'm seeing 8.8 months of inventory down from 10.2. we've been see that come down. that's coming down because of the rise in the sales rate. not necessarily the actual number of sales -- actual number of homes on the market. 281,000 homes on the market, which is down from 292 last month. that's an excellent move in the inventory. what we're really seeing now is that the investors are getting into this market.
we've heard it anecdoteally that they're getting back in there and taking advantage of the prices. that's down from $234,300 one year ago. builders are giving incentives. no wonder the builder confidence number shot up last week. again, a really good report. >> diana, let me put you on the spot here. we're up four out of six months. we had an increase. the month supply is the thing you have harped on for a very long time here. 8.8 months. is our housing reporter, the cnbc housing reporter ready at this moment on this show while i'm anchoring, very rare occurrence, ready to call a bottom? >> let me answer the question, steve. i'm not ready to call a bottom in prices. i'm still not ready to call a bottom in sales only because of that one hitch in the market, which is foreclosures. we need to see those foreclosure numbers start to come down
instead of up because that inventory competes directly with the new home inventory and builders. builders are still concerned about rising foreclosure numbers. when you have rock bottom prices on foreclosures, many of which are new construction, you cannot call a bottom to it yet. again, good sign. >> i gave you the opportunity, diana. >> thank you for the chance, steve. >> you didn't take it. >> thank you, diana. let's get straight to our market reporters. market reaction to what steve i think fairly described as blo g i blowing the doors off the estimates. we now up about 25. interesting, by the way, bob, we're not moving more, considering the margin by which we exceeded consensus. >> well, dow was up probably 20 points from 10:00 eastern time. the homebuilders are moving higher if you look at d.r. horton or la nnar. these stocks didn't move, they moved 50% in the last, you know, since the bottom in march.
far out performing the s&p 500. remember the key argument, steve alluded to this, certain group out there want numbers, new home sales to be low, to work off the month supply that we had. 8.8 month, folks, that's moving in the right direction. that argument doesn't work we're because supply is slowly being worked off here. let me show you a couple of things. big moves up not just in the homebuilders but retailers have out performed the overall harkt. today a number of analysts are out saying the prices that moved a little fast, a little far, for example, lows by the conviction buy list at goldman, some of the stocks that move so fast they're hitting analyst price targets. coach was cut to hold at lazard. a little bit on the downside. on the hmo stock, we started weaker and they are still weak. getting, of course, lowering numbers from second quarter of the full year on higher costs. still holding up well given the very negative comments from aetna.
tradertalk.cnbc.com. how are we at the snz. >> the market got a jump here, too. we were down three or four points and rebound and higher now. almostle aing it flat mou. a little bit of a comeback here. mixed picture across tech. if there are losses mostly to the modest side. research in motion higher by 1%. research in motion was maybe a fraction mover to the upside just off the open. apple still higher. there's probably still some follow through here. remember last week, ugly earnings for microsoft and it weighed on the market. it was one of the reasons why nasdaq wasn't able to hold on to the winning streak 12 out of 13 days. keep an eye on ebay. nice bump today. up 3 1/2%. it helped large companies sell products in bigger volumes. erickson is dying nortel's business. video game makers certainly watching today after a report showing a record decline in sales. let's go to sharon at the nymex. >> stocks turning positive, the
dollar weakening after the new home sales data coming out. that had oil prices below $68 a barrel before that data came out. now back in positive territory. we are looking at oil also supported by the refined fuels and gasoline and heating oil with a number of refinery issues. we've been telling you about the latest one. natural gas is lower today even though we are seeing this hot streak in the north east and most of the eastern part of the u.s. we're seeing more normal temperatures and so that should weigh on cooling demand. we have natural gas sharply lower here. we're also looking at this report from jpmorgan. oil outlook saying they are looking for the bullish tone they have seen in the oil prices to moderate some during the economic recovery. they say the $60 oil is going to be the plip point where if it's above that mark we're going to see consumer demand impacted below that point. that's the cheap oil they're looking for. they're looking for a price
around 2009. erin, back to you. >> thank you, sharon. and stocks as we mentioned turning positive on the back of the better than expected new home sales results. barely positive, don't want to read much into it. up 12 1/2 points. is the rally for real? the gain that we've seen since the march low, is that going to last? the whole question of sustainability. to answer, our market task force, vice president of capital trust reporters and market research with tradition energy and cnbc contributor and phil ross with miller. let's start with you, phil. are there any canaries in the coal mine? >> we've had a huge rally in the lows in march, starting with big momentum. that suggests that the advance would be a medium term affair and now we've nearly duplicated that momentum with the last two weeks of the rally.
that buys you time, in my opinion, because big over-bought conditions, while suggesting a consolidation, also suggests that the final high is going to be a ways off. peak momentum almost always leads peak prices. so the systemry leads to september. >> are you bet og than? >> no, i like steve's comment on housing. there's a macro crew. the stock market looks better. there's money in the sidelines. sort of like housing. the housing number looked great but behind housing sales, there's delinquencies, foreclosures and bank real estate owns. there's a bunch of inventory behind housing. as the stock market goes higher and it feels better and money chasing the rally, there's still all the macro economic things that are bad. rising unemployment, raising taxes maybe and the health care bill that might be a big surtax on the economy. there's a thin rally in stocks. the larger economy doesn't look
that great. >> addison, a lot of economic da that this week, durable goods and gdp number. what does this rally need from the economic data to hold its own? >> i think, you know, you're going to have to see continued improvement on the jobless front. i think you're going to have to see perhaps a big jump in durable goods orders to solidify for people that this rally is for real. i think the canary and the coal mine, to erin's question, is the high price of oil. we're at levels now that aren't going to be sustainable. you know, for an economic turn around. there's no demand out there anywhere outside of asia that is driving these energy prices. if these prices remain stubbornly high -- >> what's driving them if there's no demand. >> there's no demand, but a lot of investor interest. people, investors, speculator, they're painting a rosy scenario for the future that i don't think is going to arrive. >> where would you put the price? how high does this thing go here? is it enough, as you say, to cut off whatever recovery we have?
>> in the short term you're going to see -- easily see a return up to the mid to high 70s where we were just about six weeks ago. and you know, that's when gasoline prices started getting up towards $3 a gallon, even above that in some parts of the country. then you really saw a dropoff in gasoline demand. this economy is being consumer driven is really of peril. >> what about on the technical side? do you have a way where you account for where crude oil prices is now? is that fully baked into your belief that we aren't going to have a pullback? >> i think crude prices are going to act the same way stocks are. people believe the economy is going to get better, going to buy commodities as well as stocks. so right now both are going up in anticipation of some better economic activity. for a while, that can be sustained. there will come a point when we will really have to see some improvement. that's probably the fall.
that's probably not the summer. >> right. brian, final question to you, though, this bet on commodities and the economy, shouldn't we then be extremely concerned with what we heard out of china overnight, from the head of the national bureau of statistics? the government official saying deflation is a bigger issue in china than inflation? this fear saying it there, should we not be afraid at commodities rally, longevity? >> you've got to be careful with china. what's going on in china and the official line. look at the rice and tprice and futures and what that is. there's going to be talk out of china. i think there's a global recession. it's a cure for the bubble that we've had. the thing i fear is the stimulus and the stuff we've put into the market might run us back up into the commodities. if you're a trader you with the trade and you stay with it. we could see a run in gold and oil and any other commodity just because we're looking for someplace for return. >> thanks very much to all three. brian, addison, phil.
>> and up next, rick santelli now playing for the e-team, i guess that means the earnings team? he'll join carl in earning central with more on your earning central scorecard. >> then on our new series "social network infiltrating the global political world as well as global corporate world." julia boorstin has a special report on now social networking is a crucial thing for business. and china, you heard the president speaking about it. we've got a theory on that. theory, i believe john hilsenrath will share it when we're back. announcer: some people buy a car based on the deal they get. - others buy the car of their dreams. - ( beeps ) during the lexus golden opportunity sales event, you can do both. it's an opportunity today. it's a lexus forever.
we're back with more from our earnings central command center. we didn't want general quiquinto it all by himself. >> he's anchoring "fast money" tomorrow night and wednesday. you know that, steve? >> rick? >> yes. >> all right. all right. >> it's going to be good. steve, you know the earnings action of far this morning is not all that hot. some numbers out of aetna and guidance out of honeywell wasn't terrific. we want to look at the dow components reporting so far. earnings per share. you've seen this map. 18 components, the green ones. one component, mcdonald's down
here. revenues, you probably already know, the picture is going to be more mixed. six dow components have beat. 12 have missed, the red. two have met expectation, verizon and boeing. overall, where are we? 184 s&p companies have reported more than 3/4, 77%, about 142 companies, have reported earnings above estimates. 14% or 20 companies have missed. 9% or 16 companies have come in line with expectations. so what do we do next? we go to rick santelli and get his take on earning season. i've been posing this question, rick, to joe. is the performance on the bottom line a testament to american productivity and the resilience of the american company or is it feeding off of the pain that will eventually be seen in jobless numbers down the road? >> i think it's a lot of cost cutting. you and maria always talk about the revenue side and that's
important, top and bottom line. but i also think there's another variable here. equity markets are almost the only game in town. even though maybe it's not going to put jobs on the table, which is my notion. i think you're going to see the unemployment rate go up and equity prices go up but it's not the same type of big positive at this point in a recession it once was. i think this is a new type of world we're? >> when you say unemployment go up, are you in the meredith whitney camp we're at twirn? >> i think 12 and 13 is highly possible. you could argue it right now, already 16 1/2. apples to apples, we're at 9 1/2. i think 12 is a possibility. i think gdp growth is higher equity prices. we all heard about the high frequency tradeses, they're momentum based. 3/4 of the volume is seemingly pushing it up. >> why wouldn't the positive vibe coming from a rising equity market, why would that not result in ameliorating the jobless problem? >> i think eventually it makes
sense if prices go up all the companies behind that should start to do better. i think the process is going to be a long time because they were wounded. inventoriwise, employmentwise and what may look like productivity is just two guys on assembly line, they're going to have to work harder because they're not going to hire anymore. >> caterpillar said, we can bring production back without bringing back the people we've already let go. >> that's not a tie nam midynamt to hear. my buddies in chicago called me up, median price month over month down 6%, year over year down 12%. all of that somewhat negated what's going on in the inventories. >> you know something, you're a lot more reserved -- i don't want to say reserved, erin. not as fiery as he is -- >> i'm absolutely fiery but this is doing it from the hospital. >> librarian. >> it is, it is. i said, rick, earlier, that you lacked a little bit of your regular abulien. >> because all of my buddy on
the floor are really loud. >> can we be clear that the aliens took rick santelli and left something in its place. >> let's say that something has a pretty dedrent tcent tie. social media is the biggest transformation to communication and advertising since e-mail. julia boorstin joins was the first of a five-part series today, taking a look at the power in social networking for companies and individuals. all right, good to have you. i think you didn't switch locations in the past couple of minutes. hi, julia. >> hi, erin. well, the global economy has gone social. connection, power and money for both companies and individuals. building their networks and leverages them. facebook is transforming business and interaction and relationships, while social communications through twitter is turning traditional media upside-down. and now billions of dollars are at stake.
nearly 3/4 of internet users consume social media. >> it's really just breaking down barriers between people who are otherwise would be difficult to stay in touch with. >> 5 1/2 years ago facebook was a term reserved for cloenlg students. today that's hardly the case. the growing age is age 45 and up. >> we do have over 200 million users and growing quickly. >> reporter: it's biggest new consumer business in the world. 715 million people around the globe use social sites. that number growing consistently by double digits, far outpacing all other internet usage. >> if you can get them using these things, then you can do from there is powerful. >> reporter: now facebook attracted microsoft as an investor and ad partner in 2007 after news corp snapped up myspace in 2000 a for some $580 million. social chatter making its way on
microsoft new search engine bing including twitter comments in the search results. >> it's not about the triumph of technology or the triumph of humanity. it's what they do with it. >> reporter: facebook and fwiter are two flat forms aiming to change the word, news in censored countries. >> they're fun to be involved in because they affect people's lives. >> reporter: they're also a gold mine for thousands of companies and millions of individuals. >> you can use that network as a way to find the right resources people and information in order to execute your professional task faster and better. >> reporter: and new hope for a holy grail of marketing. >> the real potential end point of these networks is to be vendors of connections and information that are important to marketers. >> reporter: every major brand has a presence in social media, investing in ads and profiles. >> it's a great opportunity to be able to tap into the audiences and the opportunity to get some sort of display advertising message in front of
them. pretty tremendous. >> reporter: this year nearly 2 1/2 billion dollars will be spent on social networking ads with potentially billions more down the record with targeting ads. business networking destination linked in has been possible since 2007 but some sites like twitter are just starting to plan how to profit from their searchable realtime web chatter. >> we're figuring that all out now. >> linkedin co-founder says there's a demand more than ever because of social networking. they want to leverage all of their relationships to get a leg up in this economy. coming up tomorrow, i'll have a close look at facebook. i sat down with ceo as well as others to talk about how this company who is at a tipping point in the business, it's going to turn all of its popularity to real profits. back over to you. >> thank you, julia. and next, the u.s./china
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you're watching cnbc's "squawk on the street" live from the financial capital of the world. >> on k street, we saw this earlier. u.s./china trade dialogue has begun. the president introduced it on "squawk on the street." and ber nanch had that time hall talking about preventing the great depression. what does all this mean for his chances of being reappointed and what is going to happen this week in washington. it is still is the center of the world. john hilsenrath joins us, and michael pinto. jon hilsenrath, i want to give you a chance to say whether you think this dial lock between the u.s. and china, whether there's real meat there or whether there's going to be a whole lot of rhetoric and the crucial economic report we're going to get on friday.
>> i think it does really matter a lot. you're not going to see any big headlines coming out of this, any world-changing communiques. the fact is, the u.s. and china trade relationship and financial relationship is critically important. china's huge trade surplus with the united states, one could argue was a big factor in the global saving glut that put us in the crisis in the first place. there's a lot of discussion that has to happen at these -- at these meetings to get the u.s. and china in greater balance. from the u.s. side that means convincing the chinese to spend more domestically, get the consumer spending going. and also convincing them to keep buying our treasuries. from the chinese, it's a matter of talking to us about getting our deficit under better control. i think it's really important to have this dialogue. the longer it goes on, the greater the chance that we see the dollar in a stable situation. >> jon, real quick, what did you
make of bernanke last night? >> you know, it's interesting. bernanke is this kind of quiet, very academic guy but he does really well in these settings in which he's breaking things down. he taught a freshman economic class at princeton that was very popular. he's very good at explaining things in simple terms. and i think it helps him. you know, he's in the home stretch in obama's decision on whether to reappoint the guy. and when he goes out into these more open settings, he tends to do a very good job. >> mike pinto, do you agree? >> not at all. our economy, the american economy is based on the creation and building and servicing of asset bubbles. that's where your job growth comes from. it's very, very unhealthy. and ben bernanke has to unwind his $1 trillion in excess reserve, balance sheet has to be unwound. we have a national debt, nonfinancial debt of $34 trillion. that is a record. we're still growing our debt as a nation at a 4.1% annual rate.
and ben bernanke has to sell toxic sludge, mortgage-backed securities into this market. how can the economy not collapse back into a severe recession again as it did before when interest rates rise? >> that's the treasury department's problem, i think. >> it's a treasury's department. ben bernanke is montaging that debt. that groet is growing at an 8% annual rate year over year yet bank lending is almost flat year over year. all of our money creation is going to service our debt. >> we're trying to reflat? >> we are reflating. look at the price of oil and gold. we are reflating. >> mike, hold on. hold on. the fed is buying $300 billion worth of treasuries. the treasury is issuing some trillion dollars or more this year or next -- >> 1.84 trillion, plus the rollovers. >> bernanke has argued he's only, first of all, buying a portion of the treasure ris out there. second, he's argued is that he's
only restoring the traditional amount of treasuries on the fed's books. where do you get the word mon y monetizing from? >> not zimbabwe. >> i don't get the comparison to monetizing debt. >> any fer reserve prints money, and buys the mortgage-backed security, they're monday net tidsing the debt, whether they do a purchase agreement or coupon pass. that's monetizing the debt. >> you can monetize mortgage debt because they've bought up so much of the mortgage-backed securities market. you talk about money growth going through the roof -- >> i didn't say that. >> it is this money, it isn't being turned over. the trick for bernanke is to pull the money out when animal spirits start to revive. and they haven't at this point. banks are sitting on all this cash but they're not lending it out. you just said that yourself.
>> m-2 is growing at 8% year over year. >> the question is whether or not you can make a buck on the inflation trade. that's what i don't know. we have to break. >> we have to wrap here. i do want to highlight -- >> we will make a dollar. >> as we wrap, i want to tie up one thing. jon his selsenrath didn't a cha to look at, is friday. coming up, online community of doctors blasting its own, the american medical association. this a big split. what does it mean as we talk about obama's proposed health care reform legislation, who are these doctors, what are they saying, will it matter to our health care reform? we'll be back.
online community of doctors speaking out against the particular health care reform legislation under consideration in washington. this would be in direct confrontation with the american medical association. surmo is its name. has a membership of more than 100,000 u.s. doctors the ama does not speak for all doctors in the country. it's a traditional representative group for doctors. conducting a special survey for cnbc this weekend. they polled 3500 doctors. 94% of those surveyed said health care reform is impossible without tehe elephant in the rom being addressed, and that is the tort reform.
author of you may see in book stores on health care reform. since your sitting with us, daniel, let's begin with you. can you explain what surmo is and how many people are in it and how usually in opposition with the american medical association. >> that's right, erin. it's an online physician community, physicians, actually at one point had a strategic relationship with the ama and they weren't interested in supporting its members. within about 36 hours of the health hr-3200 bill coming out, a post hit the sermo community asking them whether they supported this bill or not. since then we've had about 11,000 physicians weighing in and commenting on the bill. 94% of those physicians are saying that they don't support the bill. >> is it because of the bill's -- how the bill addresses tort reform specifically or is there something else specifically that they dislike? >> i think that the physician
community's position on this is this doesn't really represent any sort of meaningful reform. this is more of the same. what's perhaps most intriguing with the survey results that were done on behalf of cnbc is that for the most part, the results are in direct conflict with a lot of the points that governor dean brings up in his book. the physicians make a very simple point which is this isn't health care reform, this is more of the same. it just doesn't make sense. >> howard dean? >> also a physician. >> he's got his book flagged here. >> so the question -- >> he does have your book flagged here. held it up with stickers right here. first of all, what about this issue that it can't be health reform without tort reform? >> you know, the truth is that tort reform does make some difference. but i think what really makes a difference is a changing of the financing of health care reform. and far be it for me to defend the ama. i've never been a member. if they did come out in favor of congressman waxman's bill which i thought was terrific, a move
back towards the center. with respect to sermo an online poll is no more representative than ama. >> perhaps i'll disrupt you for just is a second. last week you talked about at length what is so interesting in the communities, you pointed out that these communities, i think you said the dirty secret is they can put politics out of business. you gave the example of facebook, twitter, that they are creating real truth. for you to argue that these sermo community which authenticates and credentials every physician, knowing they are the u.s. physician and only person can vote once is quite disingenuous. >> let's talk about health care reform instead of sermo. if i offended you, i apologize. i'm talking about poll results. let's skip all that and let's talk about the substance of the
reform. you have to have a public plan in order to make this work. this gives the american consumer to a real choice between two different models of health care reform. i would argue that this is real reform. and that without the public plan, then you're not really offering public -- >> again, i'm going to differ with you there, governor, for just a moment, if i might. if you take the issue that the physicians in the country are weighing, in in economics, you're right, is one of the ones that you think is most important. you talk about really the majority of your book. you have a paragraph of malpractice reform and the rest of it is socialized health care system and points out the u.s. is the only one that doesn't have that. one thing you don't want talk about in your book, one time you mentioned cpt codes. they're the billing codes used in this country for health care billing. and really any conversation on health care economics really has
to start andnd with that. what's fascinating about the cpt codes, howard, you know where they come from. they come from the ama. today less than 10% of physicians are ama members. 90% of the revenue comes from insurance companies. >> before we get to an argument on ama versus sermo, i think what you're getting at is we have a basically a pay-for-procedure model, that's how doctors in this country are paid. i'm sure you both saw this this weekend. what i thought was a very good article in the "new york times" profiling an hospital in upstate new york, doctors are paid by salary, not procedure. some doctors left that hospital because they needed to be paid more to put their kids through school. i don't know if you saw it but it raises the fundamental question of should we be paying doctors in this country salaries as opposed to pay them for providing more tests and procedures. >> the answer to that is absolutely yes. in massachusetts even more important than "the new york times" article was a very large panel of massachusetts medical
industrial types, including hospitals and doctors, who voted to do away with the fee-for-service system because the massachusetts plan is now, which i might add, does not have a public option, is now in deep financial trouble. i also might add british physicians -- primary care physicians get paid more than american physicians. i think salaried could do well for themselves if they are paid properly. >> do you agree that is a refrigerator four reform? >> governor dean is not attacking the reform. >> i was the one who asked that question. i'm asking it to you. would you support having doctors paid by salary as opposed to procedure? >> physicians need to be paid for a ray commence rate with the training and skill. this reform bill currently proposed does not iaddress that or the health care inflation. >> good to have you with us. >> thanks for having me on. coming up, the changing face
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bob pisani down on the floor of the new york stock exchange where there are change ace foot. this is where the floor brokers operate out of. they come over here, specialist. here's a floor broker. they put the orders in. they're going to reconfigure the floor a little bit. i'll talk to two guys who know exactly what's going on. lou is head of operations down here at the new york stoeorew y exchange. lou has been here forever. let me just swing over here to make this a little bit easier here. lou, what's this all about? why is the nyse considering -- this is a long-term operation. this has been here for 100 years. why are you going to change it? >> titsz next step in a series of changes that we made. you know, we change ourd system
to set customer orders to the post more quickly. now it's a physical change that we're going to commence. we're going to change all of these booths. they've been up for a long time. >> what are you going to do? is all of this going to be knocked down, desks here? what is all this going to look like? >> we'll do it in sections and we'll do it -- for instance, this section, we'll knock the entire section down, all of the way back to the windows. and we'll rebuild them. they'll look like trading desks. >> all of this is going to come down? >> yes. >> seats, they'll have chairs, they'll have high-speed networks. then they'll still have access to a market that doesn't have -- a market like the new york stock exchange with a trading floor which no other market in the world has. >> let's move over here. jonathan, your operation here. these are all jonathan's guys here. these are floor broker here's. jonathan, what are you going to get by knocking all of this
down? how is it going to help you out? >> we have a downstairs operation and up stairs operation. we have the traders and sales guys up here, along as up stairs. combining the two desks and bringing them up stairs downstairs is going to provide a better trading atmosphere for us. we're going to become better traders and brokers. >> explain to the viewer what's up stair trader does opposed to the guys downstairs. >> we do the same thing, trade equities and options down here and up stairs but having two separate desks kind of splits us apart. having everybody together, one team in the same location is going to make us better brokers. >> lou, who are you hoping to -- here's a guy that operating a median size firm. what about a big guy, a goldman, deutsche bank, do you think you have enough to offer them to entice them to bring up stairs operations down here on the floor? >> well, it offers an option again like no other market offers if ability to trade off the floor here but also some to
walk into the point of sale and to find liquidity with all the other traders on the trading floor. >> you know what the cynics are going to say. we're going to get e-mails that say, bob, floor trading is a dead operation. they're just raising the deck chairs here. it's not going to make much of a difference. >> they said that in 2007 when we went fast with your hybrid market and changed our model. we're still here. we have the highest market share of anybody in our group and we plan to be here for a long time. >> we plan to show what's going on. we will you the changes as they happen in the next several months. lou, jonathan, thanks very much. steve, back to you. >> bob, thanks. up next, potential commercial real estate crisis. are members of congress and others raising the alarm, serving as commerce carpenters of blood and death? or is it all much ado about nothing? who writes this stuff, erin? >> strikes back at you. >> meanwhile, there's no food down here.
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top of the hour, we are going to be talking to bill rudin, real estate big wig bill ruden in a cnbc exclusive interview. want to hear what his take is on the real estate market now and how it is going to look, more importantly, six moments from now. ben bernanke holding a town hall meeting over the weekend. in "call of the wild," we are going to discuss whether there is an effort on his behalf to increase currency or if this is an effort to save his job. plus, the dow up a whopping 4% last week. can this summer rally really continue here? we have a bull/bear debate you don't want to miss? all on "the call" at the top of the hour. first, head back to mr. leaseman. >> thanks very much, trish. total commercial outstanding debt in the u.s. estimated at $3.5 trillion. concerns are mounting as roughly $400 billion of that debt comes due this year alone. federal chairman ben bernanke was grilled about the issue last week before congress. are commercial real estate concerns justified or is it all overblown? go to harvey green, president of
ceo of markets and millie tap services, he has been in the business about four decades. so, harvey, give us a sense here is this issue overblown or is it right to be concerned that the next flash point in the economy? >> well, i think there is things to be concerned about in regards to the cmbs. i think to really cut right to the issue, i think the biggest issue that's going on right now is what is the government going to allow the special services to do in terms of extending, reducing in some instances, maybe principal, changing interest rates, pushing out the length of these loans. of course, the investors are very much against it. especially the investors stripped out on the cmbfs on the back end. i think that is one of the big issues that is kind of an undercurrent at market. >> harvey, if the debt can't roll, who takes the loss on this? does it go become to the banks? is it another hit to the banking? hedge fund investors take the
hit, the hit cop accept traited? >> well, it is across the boards, that is the issue right now in the sense that the special servicers, when they are renegotiating some of their loans, the bps and ap investors and cmbfsors saying i don't want to make the majority of the hit to on this? how are we going to cascade through who is going to take responsibles. first time we are seeing this market have to deal with foreclosure. up until recently, they never had the issue. it's almost been a nonstarter in terms of what's been transpiring. yes this is something that the princip principals, the borrowers, again, there is risk of return and some of these instances, some of those big pieces are going to see loss in terms of the principal, just have to be. >> they have made it eligible to legacy and new cmbfs. is that happening at all? >> i think it almost the
questioning is loosening of the debt, just saw where a diversified raised $600 million in a bond issuance. about 40% of the equity position in their assets right now and i think you are going to see more of that and i think what needs to happen is the net needs to loosen up, the banks need to step out and start making some more loans in the marketplace. it is not a question of whether these assets are valid. >> why do they need to? you would think in this kind of market, given the real doors are going under, retailers are going under, who occupied that space this would not be a time for banks to loosen up. >> well with, that's not necessarily the case. you have to take it on a case-by-case basis. the entire real estate market has not collapsed, many assets, core assets across this country, pieces of real estate that a lot of people would like to own that are well occupied that should be refinanced, if you will, in some instances and taking advantage of that is an opportunity to do
further things within the con fines of the real estate industry as it stands alone. again, the real estate industry in and of itself, the commercial real estate industry didn't have the issues. obviously, we are caught with the same economy, all of the things, unemployment and everything else occurring in the economy. the fundamentals are still there, haven't seen a lot of construction. as we said before, when we turn around this economy, real estate is going to come back very, very quickly. a lot of people would lake to take advantage of it. >> harvey, what about the one program that the government has out there right now which could help ameliorate some of the pain here? perhaps get more investors in to do some of this refinancing potentially? the tlaf? is this something that you think moves the needle here? >> no question. >> didn't move it so much on some of the other types of loans that other people were helpful about? >> i think it can. other kinds of debt are mostly depreciating assets, cars, this times in terms of real estate.
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