people and not from government. and, sure, last fall when we had lehman and aig we needed government intervention. but now people talking about a second stimulus, more coming from washington. let's just get to work. let's get washington off our backs, lower the burden that places on us and allow us to create jobs and grow the economy. >> governor, thank you very much. >> that does it for us. "squawk on the street" is next. live from a financial capital of the world, this is "squawk on the street." good morning, everybody. i'm mark haines. investors edgy. earning season about to officially get started. stocks sitting at ten-week lows. volatility spiking, indies ceee >> crude also extending some lossess a critics pile on

speculation. our own jim cramer calling oil futures a sham. branson britain calling for a clamp down on market stimulation. and considering position limits. >> didn't they tell us just a year ago that there was no speculation and n. that market? >> yes. >> i'm pretty sure they investigated and found no evidence of excessive speculation. >> it tends to come up more when prices go higher. $147 a barrel. there's sbpeculation. $70 a barrel, there's speculation. >> let's check the futures. up $140. good news. minus two, fair value. we're above fair value. we could get 20 points on the dow at the open. >> let's get to it and find out how this early morning news is playing out. we begin with bertha coombs at the big board. hey, bertha. >> thank you, rebecca. all that news has a lot of investors on edge. the only thing the bulls will tell you is yesterday's decline

came on low volume. a lot of folks waiting to see what's going to happen. of course, tonight after the close we get a report from al a alcoa. yesterday the stock did buck the downward trend after the ceo said that he did see some signs of the economy rebounding in china but they are expected to pose a third consecutive quarterly loss. family dollar, folks are trading down, looking for bargains there. their margins are better. outlook topped as well. ruby tuesday, they say things are still declining at a slower pace. they see stabilization in their business and they also did beat expectations. discover financial yesterday they announced they were pricing 500 million shares. they only managed to raise 480 million. not much appetite for that offering. they were also going to be watching the treasury offering this afternoon. rick santelli will have more on that. these days in the m and a world, the m.o.

nrg spurning exelon new higher takeover bid, saying that it's not what they expect. they are also boost their guidance. brian shactman is over at the nasdaq. boy, things are getting interesting in the operating system world. >> yes, they are, bertha. we're up positive right now in the premarket. of course, battered yesterday. you can just bite that grenade and toss it right at the wall of microsoft because google is going after them. operating system they're working on based on chrome. will launch sometime in the second half of 2010 gearing toward cheaper net books. we will see how it goes. google has the money. they've been trying to throw spaghetti on the wall to see what sticks. maybe this gets it. talking about my physical examples. amgen hitting it out of the park, breast cancer trial, just amazing results. up more than 15%. mike huckman our pharma reporter ports out it could move a lot of things today. apple, fec issing looking at disclosure issues with steve

jobs' health. no accusations are being levied. tractor supply, you don't look at this much. i can't go into this store and buy nothing, i buy something for my kids. unbelievable. upped their guidance for 2009. up 7.8%. they cut their dividend in half at paccar. let's go to sharon epperson. >> oil is $60 a barrel. how fast we get there probably will have something to do with those inventory numbers to come out at 10:30 today as well as how stocks fair in today's session. and also more talk about regulation. definitely putting a damper on prices. we did get the data yesterday from the america petroleum institute. gasolinesupplies, a huge build. opec out today talking about world oil demand not recovering to 2008 levels for five years. and then when you have france, britain, all talking about more regulation, that what some investors and they're likely not to want to be in this market.

rick santelli, to you in chicago. >> thank you, sharon. didn't aig have like hundreds of regulators? just a weird observation, how well did that turn out. a lot of bozos talkingbout mmodities that don't understand commodities. certainly we hope that they make the trading as fair as possible. of course it's the buzz today along with the buzz on the ten-year note option. it's a reopening. all that means is that you're adding to an issue that's already been issued, but it's still a ten-year. and the yields are down to the lowest levels since they've been out roughly since about, oh, 6 1/2, 7 weeks. it seems to card nate low with the level of the equity markets. it's all related. the option go well? many think it will. keep a very close eye on the yield curve. it's actually been flattening. long rates go down and short rates kind of peg to the wall. mark, back to you. >> thank you. declines across the board in asia following what happened

here in the united states. nikkei down 2.4%. hong kong, minus 0.8%. guy johnson, any raise of hope over there? >> one, germany. it is trading in positive territory at the moment. but in aggregate, mark, europe is trading lower. indeed, we are now down five days in a row. we are trading at ten-week lows. things do not look that rosy. let me show you the stoxx 600. over the last seven days you can see the gradual erosion of the stock market. we are moving down today on the stoxx 600. barclays is trading down. we have had today the white paper from the british chancellor, alex the darling rolling out the regulatory regime we will now have to live under here in britain in the financial sector. he's going to allow the regulators to impose contra cyclical rules to encourage

banks to take more capital in the good times. and give those regulators the power to curb pay when they believe it is having an i'm pat on the stability of the financial system. however, the opposition party, the conservatives are saying that they are going to rip up the rules, they're going to announce in westminster today they will give all the power to the bank of england. ubs is down by 1.2%. the swiss government is saying they may seize data at 52,000 accounts of u.s. citizens that are currently held by ubs to prevent them being handed over to u.s. authorities. rebecca, back over to you. >> thank you, guy. as we mentioned, the group of eight meeting over the next three days to tackle everything from regulation and reserve currency to oil and the environment. steve sedgwick is in italy with more. hey, steve. >> hi, rebecca. we haven't really got started on this meeting yet and beyond a reasonable doubt it's incredibly controversial for a whole host

of reasons. none the less the wells elite 3,000 plus journalists in a town that is essentially locked off security zone because it was the sign of an earthquake earlier in the year when over 300 people died. the old town is absolutely dead and everity. people are concerned because it doesn't have the facilities on the ground to host a major meeting. controversy, also, about his private life and the roles that his government is playing in the global economy. controversy about the g-8 itself as well and whether it is still the right forum to discuss world issues. of course, we had a very successful g-20 in april. in london gordon brown, what successful that was. president obama will be hosting one in september later this year. so there are question marks about what can be achieved today. some of the earlier ambitions of president obama including getting something concrete on the table about climate, it appears from early reports he's just not going to get that because the emerging nations

like china and india don't want to agree to anything concrete right now when the industrialized powers are major misses. >> thank you very much. more than 260 media, financial, and political leaders gathering today in sun valley, eye da hoe for allen and company's summer camp for billionaires. it's been nicknamed. erin burnett anchoring a special edition of street signs, live from there today, kicking things off with two special exclusive guests. american express ceo ken chenault. plus, jpmorgan chase vice chairman james lee jr. all begins on "street signs" 2:00 eastern time. up next, the trouble with jumbo loans in this morning's faber report. then we will go inside family dollar's better than expected third quarter. plus the word on the street and the buzz beyond.

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i'm david faber. we all know that the rating agencies completely missed the boat when it came to the securitization made up of the awful mortgages given out in 2005 and 2006. something i detail in my new

book. but beyond that and as they play catch-up, of course, downgrading everything that never should have been aaa we watched in horror, many of the people who, of course, foreign investors who certainly bought many of those securitizations. interestingly, though, this morning and recently s&p as well, this morning moody's downgrading securitizations made up of jumbo loans that were not given out during the crazy years, but prior to that. 344, 61 jumbo residential mortgage-backed securities. the time period is interesting. '02 to '04. sweeping downgrades here significant in nature. and what i think is interesting, of course, is these were not jumbo mortgages given out during the height of the insanity. these are the mortgages that have been performing okay for recently. let's give you more of the details here in terms of the

downgrade from moody's. s&p, similar downgrade. a short time ago as well. $7.6 billion, the total. where did it come from? well, wells fargoed a had a lot these. bank of america, again, these were the originators. g mac, mortgage trust. adding up to $7.6 billion. jumbo, an interesting area right now. but why is the collateral deteriorating on jumbo loans that were given out '02 to '04. you know why, unemployment. that's the key reason here. people are losing their jobs and they run able to pay back their mortgag mortgages, even if those mortgages were actually loan to value that were somewhat reasonable and fico score was somewhat reasonable. people were documenting their answer there. we are seeing an increase in delinquencies both for prime and for prime jumbo. take a look at the latest numb

fwers. i believe we got from the aba. there it is. you can see, conforming prime, yeah, but look at jumbo prime. wow! that is ugly. that's pain. we're going to get more insight into that as we see the big banks start to report in the next few weeks as well. and the problem here in jumbo land, of course, i talked about before, nobody will actually securityize jumbo loans. you have a huge loans when it comes to jumbo, high-end inventory. take a look at that. that's a blue. get the picture, right? we'll see. unemployment, jumbos, downgrades, paying for the investors. and no mortgages available, at least none that will be secur y securityized. you've got to keep them on your balance sheet if you want to make them if you're a bank. rebec rebecca, back to you. >> thank you so much, david faber. meantime, family dollar set to open higher after reporting better than expected third quarter earnings.

also issuing a full-year forecast above the market consensus. and joining us to go inside the numbers. stacey, retail analyst. great to have you here, stacey. my curiosity is this. their profits were up 36%. is there more to this story than a companhich benefits in tough economic times? >> yes, there is. mean, this is aompany that's radioing out the acceptance of food stamps, rolling out technology to accept credit cards, which is helping your average ticket here. strong management company. and certainly you're looking at benefits year over year in april, up 58%. so that is driving the comp here. will continue to do so going forward. >> what do you do with the stock right now? >> i think you continue to buy it here. you look at this company. it's actually benefiting from a downturn as more people are on benefits and benefits per person are higher here. they're also redoing their stores to capture more of the middle income consumer which is working as well. based on the recovery story

here, you can see this stock easily in the mid 30s. >> is this a case of good management or is the market simply running in their favor? >> i think it's both here. you have a management team that's very strong. and on top of that, again, they're getting these tail winds from increases in benefits. >> so you are more favorable towards them, towards their competitors, is that fair? >> yes. i think if you look at family dollar, they're doubling the amount of stores that they accept food stamps in. 25% of their core consumer is already on food stamps. so they're getting more money in their possibility and they're giving them the ability to spend it in their stores where they're already existing. the other competitors out there are rolling it out a little bit slower. and certainly dollar general, which is private, already has it in stores so they won't see the same brand that you're seeing at family dollar. >> stacey, in your view, what's the tipping point? at what point in time or under what term does this stock become

potentially overly expensive? >> well, i think if you lookt the numbers going forward and you look aga at the potentl operating rgin on a low to mid single comp as well a some margin improvemenhere, you can see really above 7% operating margin recovery so that ctainly drives your numbers up into the high$2 range here. i think, you know, the stock definitely has legs here. >> are these companies like t c. when t economies recover, would you still wt to own this? >> when you come out of an economic downturn, because they also have a real exposure to discretionary items and consumables, what's selling right now is very low margin. that's actually hurting. coming out of the downturn they actually perform because the discretionary makeshift and recovery pops their margins way up. >> thank you, stacey. >> thank you. okay. up next, the word on the street

and the buzz beyond the trading floor. and later, yes, we can, the ceo of del monte foods joins us on how his company is thriving in a downturn. stock is up 30% year to date. you're watching "squawk on the street" on cnbc. we are first in business worldwide. today there's a way to savmore for retirement, with annuities from fidety. tuour savings into iom-- guaranteed, and get a rerement "paycheck" for li -- guaranteed.

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here. we're looking at a gain of maybe 20 points on the dow at the open. rebecca? >> thank you, mark. time to get the word on the street. i'm joined by allen valdue valdes. you're saying we're going to tread lighter here. >> usually that way. waiting for the earnings. not much is going to happen. we broke that 200-day moving average in the s&p yesterday. a lot of portfolio managers a little nervous out there. a lot of this will be waiting to see what transpires today. >> i have officials coming out saying essentially the worse of the crisis is over but it's going to be a gradual recovery. is that already built into this market? >> yeah. i see a lot of traders who agree that the worse is definitely over. we are concerned about what kind of bull market we have going forward. what's that going to look like. yeah, i think it is going to be a fragile market going forward but never the less we will start going forward. >> when you pose the question of

what the bull market will look like going forward. what we've seen over the last five sessions with oil prices going up. that is the reflation trade that helped us get those gains since the march bottom. in that new world, in that new bullish view, does the reflation trade still exist and how does it play out? >> you know, 100% right. oil was really, you know, the s&ps were up 38% this arch. oil was up 45%. oil is way off that level now. they took us up. now we're bringing us down. mobile and exxon, two big leaders in the dow. it's going to take the dow stocks back down. >> alan valdes, thank you. lu now let's get the buzz beyond the big board in san francisco, steve massocca, managing director of securities. doubts about whether the stimulus package is working and the economy, yada, yada.

what do you think? >> i'm starting to warm up to the market here. i kind of like it. i think we're getting a little over sold. i think we're going to go into an earning season here where magically these companies are going to beat the earnings estimates once again. you know, guidance and analyst estimates. surprisingly will be beneath us, as companies actually do. i think we'll get a rally out of earnings season based on most companies beating the estimates they've put out there. you know, then at that point, i think you have to, you know, sit back and reassess. >> all right. any particular parts of the market get your attention? >> i like technology. i'll tell you why. i think that technology is the -- technology spin continues. i think companies continue to spend on technology because it helps their bottom line by giving them more efficiencies. consumers continue to be interested in the myriad of new handheld devices that come out. so -- and then typically tech companies don't have debt. they don't have to worry about

anybody rolling their debt or any problems the credit markets. and they've backed off here. they ran up on sort of that story i just gave you. they ran up there probably a month or two ago. now they've backed down to an area where i think you buy them here. >> speaking of tech, what do you think about the story of google going after pc operating systems? >> i think it's old news. i think we knew this was coming. i don't think it's -- you know, the real next piece of news there is if google gets any market share. everybody knew this was going to happen. >> all right. steve massocca, thank you very much. have a great day. the final count down of the opening bell on the other side of the break now. so don't go away.

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[bell ringing] e way the stock market's been aing lately you may wonderf you've been doing the rig thing. is the advicyou've been gettinhelpinor hurting? are thfe you're paying real worth it? td ameritrade's fees arefai. theiresear is independent and unbiased their investment consuants are knowledgeable and there when you need them. so why not talk one? announce call today to schedule a investment check-up, visit a td ameritrade branch. you are watching cnbc's "squawk on the street." we are live from the financial capital of the world. the opening bell is going to ring in about one minute. welcome back. >> opening bell already rung,

however, on the oil trade. you know that one opens up at 9:00 a.m. it's been a big focus of a lot of people. six days, if today finishes out down, it's been six straight days of down move in the oil pit. >> we've been heading straight down since we got above, what, we got up to $72, i think. >> exactly. >> $73. and then right down the toilet. >> some people calling the top, and looking at the demand question and saying, listen, if the economy isn't necessarily going to recover at this speed, does it justify prices at that $70 a barrel level? and we're looking at something that really hasn't happened since september of last year, six straight down days in a row. >> you know, it's the shame to have to root for iowa. you know, i mean -- >> as a part of reflation trade. >> for consumers, right? lower gas, lower heating, lower everything. but there is that issue, what does it say about the overall economy. i can't get -- i can't get

comfortable rooting for them. all right, here we go. at the big board, del monte foods here for the annual investor today. talk to the ceo in a few moments at the nasdaq. the female health company, ticker fhco. >> all right. our market reporters are standing by around the country. bertha coombs starts things off here for us at the nyse. >> i just saw a headline cross. the markets seem to be coming to the realization that the economic recovery, global recovery is going to be weak. peter kenny at knight trading this morning pointing out this is expected to be the 11th quarterly earning season. the s&p earnings are going to be down. alcoa kicks things off tonight. they seem to be optimistic at least in comments from clinefeld yesterday. the outlook may not say much about demand for the steel makers. this morning's rio tinto trading

heavily. unusually trading to the downside. headlines out of china that forbes executives have been detained for spying, to the not for exactly related but that's one to watch today. and the commodities as we continue to watch today's economic recovery trade come off family dollar is one of the signs that the recession trades down the company is earning top. outlook is very robust. moving to the upside. pepsi bottling group also topping expectations on its earnings. and looking at its outlook at the high end of expectation which really raises the bar for pepsi trying to buy up its bottlers. also, raising the bar is nrg, rejecting exelon's bid by boosting its outlook, saying price continues to be too low. watch the casinos as well. the chairman of las vegas sands says this is better than people

think in las vegas. he's looking to raise money perhaps with an ipo of macaw holdings in hong kong. sap is 2r5iding higher today. it looks like they're business is bottoming here and they expect to see more traction statement. am tech is lowering its estimates on sap. and over at the nasdaq, the battle brewing between google and microsoft. >> bertha, we're up here half a percent. analysts came on "squawk on the street" just a little bit ago and said google launching an operating system is old news. whether you agree with that or not it's not to be dismissed because there are so many nuances to this story. one is that google has a mobile browser and there will be more of that, how do they handle that. in the next half hour i'm going to talk about just to what degree we will learn this is a direct goal at microsoft or a profit motive. we'll talk about that later. amgen up 16.4%. breast cancer drug trial was

great results. the best possible results. deutsche bank upped their price target to 60 bucks. oop, they're already there. research in motion, mixed picture. initiated but piper jeffries looked at some of their june sales and said, you know what, they're weaker at sprint and, at&t. carl icahn, they might jump back into delphi to go after their assets. they went out of it and might be back into it. first solar battered yesterday. they received an upgrade, equity to a buy. they're up 1.8. that 1.9%. that's it in the nasdaq. let's go to the center of the country and great santelli in chicago. >> oh, thanks. you know, if we look at interest rates, the yield curve was a big issue at one point. the difference between, for example, ten-year rates and two-year rates, widened out to historic proportions about a month ago. that's important. because if you can borrow at the lower rate and lend at higher

rates along the curve like certain financial institutions, that's a big benefit. it's not necessarily big benefit if you're a fixed income retiree of course because all of your incomen your money in the bank is probably more closely aligned to the short end. having said that, two-year rates are about the lowest. let's talk zones. since about the beginning of june. but tens and 30s are now at the lowest yield since about the third week of may. that will be important. the issue is cheapened up a bit. especially on the day of a ten-year note option which will price, of course, at 1:00 eastern. i'll be there with all the details. mark and rebecca, back to you. >> thank you so much, rick santelli. the weak economy impacting how some consumers spend their money. del monte foods seems to be benefiting from people buying more packed lunches, more treats for their animals and pets. fresh from the opening bell and first on cnbc, we're joaned by del monte foods chairman and ceo. a special guest. >> carly the golden retriever is

with us. >> it's great to have you with us, rick. >> thank you very much. >> getting up all the treats. >> it's great to be here. it's wonderful to celebrate our tenth anniversary on the stock exchange and it's great to be here on our investor day, successful one yesterday here in the city. >> your business has been successful in these tough economic times. >> both of our businesses, half our companies are consumer with the del monte brand and the other half is the pet business. and happily, both of them are doing very, very well. more people are having meals at home and humanization of dogs and pets is driving that business very, very well. >> yeah, people are going to take care of their pets. their kids and their pets. they're going to take care of. >> i think you're sequence is a little off, mark. >> pets come first. >> pets always come first. >> talk about the food business, del monte. you are not del monte fresh. >> correct. >> that is a different company. >> that's correct. >> okay.

what is in del monte? >> del monte is the -- today it's a combination of two businesses. one of them, about half of our sales are in the consumer business, the del monte brand and the other half is in pet products, pet snacks. >> in the human stuff, consadina, what else? >> collagen, s and w, and, of course, the mega brand del monte which is a billion and a half dollars in the united states. >> all del monte canned things are still in your company. >> correct. >> when it comes to the pricing pressure, how are you face that challenge right now? >> well, we only have taken prices over the last five years, we've only taken prices that reflect cost increases. and as a result of this last year where we've seen cost moderate, we've actually not taken any pricing. and we also said whatever inflationary costs we have, we'll take about 3% of our cost

to sales out of the business every year to offset inflation. >> in a tough economy, don't you lose business to store brands? >> the del monte brand is a very, very strong brand. i think it provides a very good value for our consumer. the trend that we see is a lot of migration from grocery to value channel. and happily, our products do very well in clubs, walmart, dollar stores, as well as in retail groceries around the country. >> and you're not necessarily dealing with some of those, as you mentioned, higher commodity prices right now. in terms of you're out look, for commodity prices, are you hedged, are you making sure that things are stable going forward? >> 50% of our costs this year are hedged. we have a lot of hedging we have to do for our pet business. and so we see this year as being a relatively moderate year. certainly compared to last year when ur inflation was 12%. >> thank you so much. of course, thanks to carly as well. >> great to see you all.

>> carlie has managed to scrounge several different meals here while we're talking. up next, oil down -- where are we? still down about a buck as opec releases its yearly world oil outlook. the only thing on the manipulation. it was a year ago they investigated and couldn't find manipulation. now all of a sudden there's manipulation under every bed. imf releasing a new report on the stability of the global financial system and an ad for slush, it sounds like the world is a bit more stable. a firstcnbc interview with the man behind the study that is straight ahead. you're watching "squawk on the street" here on cnbc. we are first in business worldwide. (announcer) it is the most advanced automobile

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we're back. call it the "e" victory for hank. the greenburg star international does not have to pay back aig for $4.3 billion in shares taken from the firm's retirement fund. standing by with the former aig ceo in a cnbc exclusive interview maria. >> thanks very much. i am indeed with hank greenburg, chair manned and ceo right off this victory. hank, great to have you on the program. >> good to be with you. >> you just came off of this trial. you testified for seven days, is that right? >> that's right. >> how was that? that must have been a physical test for you as well. >> it was grueling. it was gruling. >> can you tell us about it? >> well, you know, you're -- you're under pressure all day long. and but, you know, you have to do it. and i'm glad i did. i think it helped create what

the facts really are. >> obviously you're feeling good about this ruling by the jury. tell me really what the critical piece of evidence you think was that turned them, that made them come up with the idea that, in fact, you don't have to give aig this stock or this more than $4 billion. >> well, marie, there is no evidence whatever to support their contention. we had tons of evidence. david boise and his team organized it and presented it from 1970 all of the way through. there was no evidence whatever to justify their claim. >> and you started seco for what reason? >> you have to go back to 1970 when we were creating aig, a public company. a private company, cv starr and

company, aiuo is a network of agencies were sold ultimately to aig. a roundabout way, but ultimately to aig. and seco starr international, we changed the same from aiuo to starr international, got aig shares for that. a major part of the shares we got, all of us who own stock. >> several investors. >> yeah. were setting this aside so we can buy other companies. question control aig with these shares. there are many things we can do, includi including, if we wish to, always retain the right to do or not do something was our option since we owned the stock. >> it was a private company. >> yeah. we will create possibly an incentive program for senior people of aig. it was not a pension. aig had its own pension plan. and so we did.

and because by doing that it benefited seco. if aig did well, seco did well. in fact, when i left aig, seco's net worth was $20 billion. shares are now worth $200 million. >> unbelievable. >> yeah. it's -- now, we always said we could discontinue any time we wished. we could make changes any time we wished. and we did. we made many changes. including i made it clear to our audit committee of aig that if aig were required to expense the incentive program, it would be discontinued because there would be know sense in doing that then. so to believe that these shares were held in trusts for aig was simply never the truth from the very beginning. no truth to that. the jury saw to that. the final decision rests for the

judge, obviously. he is a final determined factor. but i think the jury should be commended in the work they did in listening through the through entire three weeks and that and grasp the complexity of the case. >> they worked hard and really knew the documents that were most important. >> yes, yes. >> i liked what david boise said, look, if this was an incentive program how come it's not in any of the financial records. >> yeah. >> and the audits of aig. >> never. >> what about aig right now, hank? do you have any sense of how significant the lawsuits are, the legal ramifications surrounding aig right now? >> well, i think they're very considerable. look, i offered for months to go to binding arbitration on this and other matters we have with aig. it was rejected. i went to see the new york fed,

talked with them. i know that members of congress, the oversight committee were in favor of binding arbitration. it was rejected. why? who is benefiting from that? >> lawyers. >> yeah. i mean, i mean, you know, paul weiss is the law firm for aig, you know, they're the ones binding arbitration. they would have loved to keep this going forever. >> so in a situation that hasn't moved at all, paul weiss is making tens of millions of dollars on this whole thing. >> that is correct. >> let me get your take on this reverse stock split that aig went through a couple of weeks -- a week and a half or so ago. the stock has plummeted ever since. >> makes no sense. do you think you're fooling somebody by saying we're going to give you 1 for 20 and the stock is going to sell at $20 a share? and that's going to somehow put a floor under the stock? people are not that foolish. >> particularly institutional

investors, which is really the investors they're trying to get. >> yeah. >> the money from seco, what did you do with that? did you invest around the world? tell me how you invested that money and what you're investing in today. >> i'm glad we did. we sold some of the stock, aig stock. i wish we had done that for -- yes, we started two insurance companies out of both the stock that was, we called the acquired stock and the shareholders stock. there are two different categories. but we've invested in different countries. some in asia, some in the united states, some in russia. we've done business in these countries for years. i mean, we know the places that we're investing in. now, that doesn't mean that everything is doing well right now. obviously the world is going through an economic downturn and

it will take time. but they're pretty comfortable with what they're doing. >> hank, final question here. you mentioned, you wish you had sold the stock personally for yourself and obviously for some of your colleagues. what is the significance of this verdict for you personally? how much at risk were you? >> well, it doesn't make any difference to me because the money is not mine. >> it's seco's. >> it's seco's. i'm only 1 of 11 voting shareholders. so it's not for me. but ultimately the beneficiary is a charitable trust. and we want to build it up again so that it will go to a charitable trust. that's the whole purpose. the purpose was never that the voting shareholders would have this for themselves. that's not -- that was not the case. >> are you going to build it up the way you built up aig? >> i'm going try. >> talk a lot more about that coming up. we will continue our interview and that part of the interview

will be on "closing bell." thank you for joining us. we appreciate it. we'll send it back to you at the nyse. mark? >> thank you, maria. right now the markets are in positive territory, but oil is negative. coming up next, oil manipulation is certainly on the minds of traders, lawmakers and our own jim cramer. should you be concerned, too? >> our task force is going to break it down for you.

the oil futures market, it's a total as far afarce. even i, a certain amount of legal manipulation is inherent in the game because the regulators almost totally captured by the financial industry, even i am completely stunned and outraged by the phoniness of this oils future market which is a total travesty of a mockery of a sham. >> all right. hedging is words a little. that's cnbc's jim cramer. reeling about oil futures.

just how big is the problem of manipulation and is it possible to invest safely in oil? joining us, doug sandler, chief equity officer of riverfront investment group and sharon epperson joins us from the nymex. sharon, i want to start with you. correct me if i'm wrong, but didn't the government investigate twice and find no evidence of manipulation? >> well, you have a different regime now at the cftc and someone who really wants to take another look. and we have another issue that really becomes front and center when you talk about whether or not there's speculation. that is the amount of money that has flowed into commodity indices. that is probably something that they really need to take a look at. not necessarily who the participants are. they're going to look at thats well. look at the money and where that's coming from. >> doug, what do you think about investing in oil? >> well, i guess my thought would be, you know, the way you can tell there's manipulation is if it doesn't go your way.

that's a joke. i mean, people -- >> gi i get it. >> they call it manipulation when it's not doing exactly what they want it to do. i don't have good insight on whether it's manipulation or not. my feeling and what we get from retail investors all the time is what do we do with oil coming down. where should we position ourselves. integrated oil is probably the best and safest way to position yourself. you do need to own some energy. i think to integrate oil is one. haven't participated at all with the rise in oil prices. so basically where they were back in march. so i think that's a good potential. very oversold. multiples are cheap. somewhere around nine times earnings for the average integrated oil. these are companies like exxon and chevron. then you're get paid a $4.20 dividend in a lot of these companies. that's attractive in the dividend growth. as long as it's not too drastically down and we don't retest the $30 40rks lows, i

think we're you're going to make money on the integrated. >> sharon, i want to come to you on what the traders are saying right now about the measures, talking about imposing more strict limits on how big positions people can take. and in particular, third institutions out there like investment banks, like hedge funds. what do they see as being the price reaction if that should go through, not only in the near term but over the long term. >> well, lower prices and less liquidity in the markets, that is a big concern if that they're going to take their money elsewhere. whether it's over the counter market or foreign exchange. it's not like they're going to stop trading this global commodities. that is the concern of a lot of traders here. they're also very concerned about the fact that all of the talk about speculation really doesn't affect them. they're trying to work with the producers that they always worked with that are now being pushed out of the market by financial services firms that have come in and now invested in a commodity that they have

little interest in a few years ago. >> all right. sharon, doug, thank you very much. >> thank you. coming up, we're heading out to sun valley where the power in money in media and business are all meeting. erin is rubbing elbows with the big wigs. julia boar seen is, too. having theight tools is crucial being able to manage yoiabetes properly. it's very important fome to uh check my blo sugar before i go on stage

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mortgage applications were up nearly 11% last week, rebounding from a seven-month low. the fixed rate mortgage is unchanged. opec has cut its world oil demand forecast and has also slashed the five-year prediction on how much the members would spend on oil exploration. as for crude, trading lower for a sixth straight session ahead of the weekly inventory numbers. 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 it, second hour of "squawk on the street." welcome back, everybody. i'm mark haines. quick check on the markets for

you right now. dow up 14 points. s&p up almost 2. nasdaq about 2 1/2. >> all right. let's get a check on the markets from the floor. bertha coombs joins us now. what's your take? >> interesting here we're holding this level. everyone is watching this level in the s&p. people have been talking about what's called that head and shoulders that we have pulled back after spiking to a high. talking to one trader this morning said we are bullish that we're holding here at aits. the buying that we're seeing this morning and the selling, not much conviction. i think people are on hold waiting to see what we hear tonight from alcoa. we are seeing materials bouncing back. energy bouncing back. alcoa certainly lead that higher. claims out yesterday making some bullish comments saying he does see things starting to ramp back up in china. not necessarily sure if alcoa's earnings will have that much reflection for the steel makers

when all is said and done. watching that rio tinto this morning. interesting trading here. it was down earlier. there were these headlines about four of their executives being detained for spying. the australian minister coming out saying he doesn't believe that has anything to do with the fact that the rio tinto rejected them? >> china. >> remember, they rejected a merger with chinalco. they say they don't have anything to do with that, it doesn't seem. certainly something they're watching. i mean, rio tinto and china certainly very interesting relationship. >> not only huge implications for the stock but huge implications for the commodities market. >> exactly. >> let's head over to bryan shactman with a look at the tech trade and nasdaq. brian, a lot of talk this morning about google, about the possible operating system. does it have implications beyond microsoft? >> well, you know, it's interesting, rebecca. a lot of it will depend on

whether they give it away or charge for it. there's no doubt that in so many respects through going after microsoft here and the leaders of google, it's difficult because they're going to mass their destaned microsoft system. give it away free while the gloves are off. it's obvious. outside of search, google is looking, searching if you will, for ways to make money. so if they -- i think a lot of it is going to hinge on how they market this and how they distribute it. if they charge or not. >> all right. amgen, they had some test results. what's the analyst feedback on that? >> it's interesting because the stock pop is amazing for a company with the market cap. i think people -- deutsche bank raised their price target to 60. they might have already missed the boat on that. mike huckman pointed this out, it's a situation where this is a lot of etf. there's a broad market impact here not just on the single stock here. the quote that really tells it. this is the best case scenario when it relates to this drug for

breast cancer and amgen. that's why you're seeing the pop like you're seeing it today. >> brian shactman, thanks so much. mark, back up to you. >> okay. oil trading right now, still down. sharon epperson on the nymex with more. sharon? >> mark, besides the buzz about regulations, of course, traders here are just waiting to see what's going to happen at 10:30 with those inventory numbers. we have seen a six-day losing streak here for oil prices. this is the longest streak that we've seen since september. and as we look at prices lower here. we're going to see whether or not the eia data is in line with what they showed last night. analysts are looking for crude supplies to have declined. gasoline supplies to rise. and dislate fuels as well. we saw a huge jump from that api data. that could have a negative aft on the market. keep in mind we're looking at what is happening at brent crude prices and a lot of feeks wondering what it will do to brebt versus wtui prices. they see a stronger down draft

perhaps in the wti price, that and brent. mark, back to you. >> thank you very much. the g-8 summit kicking off today in italy. the global crisis obviously on the agenda. the most affluent nations working on strategies. the willing coordinated effort to help stop the bleeding or is it too late? doug smith is international economist at standard bank. doug, i'll start with you. is it too late for a coordinated world response? >> no, i think that central banks have been quite astute in their coordination globally. on the fiscal side, different countries have different situations, they feel differently about having -- about the size of the deficits that they have. but i think on the central bank front it's been quite remarkable coordination. >> is the g-8 meeting important? >> it can be at times. i'm not sure that what's coming out of this meeting is that

important. frankly, there seems to be no talk about the dollar, which is a bit of good news for the dollar. some people were worried about the possibility of talk of replacing the dollar as reserve currency. number two, they are talking about restoring public finances, sustainable levels down the road. that's good news. clearly that's not going to change any time soon because of the talk of fiscal stimulus is still very much alive. >> talk about the dollar. tony, with china not present, the president having to go back to his country where there's a lot of turmoil internally. do you see things being different, playing out differently than some had anticipated with china at the table? >> well, it certainly makes a difference. the g-8 is not the most relevant body that exists at the moment. but the crisis is so severe that any grouping of world leaders is important and very important to take even more coordinated action. the latest report from the

international labor operation talks about the possible loss of $51 million jobs worldwide. that has to address and spend in action taken to try to lessen the pain from that. >> doug, what's your take? without china at the table, the discussions over dollar. china had said a couple days ago they weren't going to bring up the dollar but they would talk about it if someone else did. without them at the table, does that make a difference for fundamentally what we can expect as an outcome from the g-8? >> maybe initially in terms of the communique. but the talk from china about are replacing the dollar or reviving another reserve currency isn't going to go away. maybe it doesn't come up this time. this is a scene that we're going to hear more and more about. whether it's some sort of move toward special rights or just a more relaxation of the regulations on chinese currency, which we have been seeing. so i think that the theme doesn't go away. it's maybe at the moment it's not -- it's not going to come up. >> tony, according to my notes here, you think the worse is yet to come with the global economy?

>> well, definitely. we made a projection that even if the depression would end today, if you follow the pattern of previous depression, it would take until 2015 to make up for all the jobs lost in this business cycle. so it's the worse in terms of jobs is definitely yet to come. and developing countries are just beginning to really feel the severe pain of this in terms of jobs. so hopefully the g-8 countries will do something about that, address that issue. >> does that mean the stock markets are ahead of themselves? >> the stock markets are always ahead of themselves. the traditionally jobs lagged behind from one to three years. so the -- but in this particular crisis, jobs are very important factor and has to be addressed. so hopefully -- the ilo came up with a very good document called the global jobs pact and called

on governments to work together with business leaders and with labor unions and other representatives of workers to come up with solutions for the crisis that don't affect the welfare of workers. >> we have to leave it there. douglas smith and tony, thank you both very much. >> thank you. >> thank you. more than 260 media, financial and political leaders also gathering today in sun valley, idaho, for summer camp for billionaires. julia boorstin joins us from there. hay, julia. >> in recent years, deal talk in sun valley focused on start-ups like youtube and facebook. this year the star belle of the ball is twitter. now in the spotlight is established media conglomerates. media giants, some of them here, have plenty of cash on their balance sheets which is fueling talk of potential acquisitions. time warner has $6 billion sitting on the sidelines.

acquisitions, one rumor is the giant had its sites set on dream works animation. time warner could be a seller. the ceo is looking to spin off aol. a number of attendees is any indication of interest, news corp is mounting on the chief digital officer john miller and myspace's new ceo. the company run by long-time rupert murdoch is sitting on $6 billion on cash. cash some speculate could be used to snap up twitter. but that's that company's ceo, evan williams, recently told me he's not interested in selling right now at any price. sony also has six attendees, in both the product and electronic side. the ceo tells me he isn't looking to shake up the business model. >> we're letting content and hardwa hardware. it isn't time to get rid of neither. we need the content, we need the hardware, we need the software. so we're changing the company

our own way. >> i'll be looking at some of the rising stars here at sun valley coming up on "the call." also taking a look at what the big media thinks of the m and a market. >>julia boorstin. our own erin burnett kicking off with american express ceo ken chenault, all starts on "street signs" 2:00 p.m. eastern time. up next, one of the head honchos of the imf, first on cnbc, to talk about a new report that says the world financial markets are getting more stable, but the report also says we're not out of the woods. then, from the imf to opec's world outlook to the g-8. we'll gauge what it all means for the markets and the national association of manufactures. president john angler on how to really stimulate the economy.

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welcome back to "squawk on the street." rick santelli here on the floor of the cme group. well, you know we know we have a ten-year auction today. $19 billion. everybody is going to be glued to that. let me tell you something, there's a lot of discussion today about cdos enhance with other leveraged loan products to create securities for the aaa rating to market to the public

and investors. sound familiar? it's not an old story. that's actually a new story. it's being passed around the floor. i think there's a bloomberg story that quotes several insiders saying that morgan stanley's going to be doing that in the near future. just kind of interesting. wonder what rating agency is weighing in on that. as far as the dollar in jade, everybody is watching the dollar. today it's been a little higher. it's been a little lower. it certainly hasn't moved a lot from a neck change perspective. rebecca, back to you. >> thank you. the imf just releasing the latest report on the stability of the global financial system and the picture its painting is a bit brighter. joining us with the details. jose, counselor and director of the monetary and capital markets department for the imf. great to see you, jose. the headline here is the policies have reduced systemic risks but there are sill vurn rablts. where are the vulnerable i believes in the system? >> there are a lot of

vulnerabilities and concerns that remain. one of these vulnerabilities has to do with the fact that the problems of the banking system had not been fully fixed yet. there's been an important progress that has been made, but remaining concerns continued to be there, concerning, for example, their assets, the need to raise more capital in a number of countries in order to put the banking sector on a very solid footing. and also there is a concern about financial markets because securitization markets remain impaired and they have only started to gain traction in where public intervention has been important. so we should not forget that in general the financial system has improved, but that this has been

due to the very significant support that has been provided by policies. so the financial markets still are unable to use their function on their own and public support on their side. so this is something very important concern. another area of concern is that in -- somewhere in the market there has been a very important accumulation of risk that has been transferred from the private sector to public sector. they are enorl moumous volumes issuance that is going to happen in the future. it's very important that this risk are also there. >> if i may interrupt. so what you seem to be saying and please correct me if i'm wrong, you are not yet seeing a revival of appetite of risk among private investors? >> no, we have seen a revival in the appetite for risk. and indeed, where there has been

a shift from safe haven like the dollar in treasuries to more cyclical equities like both mature and emerging markets and co commodities. so there has been an increase, coming back for appetite of risk. what i think is important to emphasize is that in order to put things on a more solid footing, it is very important that these remaining concerns and vulnerabilities are addressed, both in terms of banking system, securitization markets, insurance stability of the financing and so on in order to avoid it in the future. >> jose, thanks so much for being was today. >> thank you. coming up next, stocks on the move including tenant health care and peabody energy. plus, the faber report. david has his eye on the financials ahead of a flurry of upcoming earnings. don't wander off. so, katy kked off the conference call...

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welcome back. i'm matt nesto tracking the markets here. seeing things that are moving. have you seen health carrigan? it's the only pure play hostal stock in the s&p 500 in terms of health care facilities. it's a $3 stock but, hey, man, 11% hier today. up 15% so far this week. so keep an eye on tenet as the market adjusts to the ever-changing environment that is the obama administration's health care proposal. btu is peabody energy. goldman sachs takes it a buy from neutral here today. they say the company has a unique exposure to asia via its all stralian assets. the stock is up 6%. 7% on the news. they think chinese imports and steel demand are both going higher. whole foods up 6% here today.

coming off of a three-month technical low. stock getting a bid. all the supermarkets are higher. kroger, super value, safe way rising. ice, the enter continental exchange down 20% so far in july with another 7% slap down today. people with k. not get away from he's exchanges fast enough right now with this cftc mulling changes on energy, trading. and lastly, i did a little piece yesterday. my golly, it's working again today. the regional banks are trumping the goliaths. look at that. 2.6% versus 3%. what's going on? well, write-downs might have been write-ups. it might take another quarter or two. analysts are already loading the boat on some of those little bad banks. let's get over to little david fab whole is not little or bad. >> all right. thanks, matt. as matt well knows, hey, listen, you've got to stay tuned.

you've got to stay tuned. you never know. i'm not going to lie to you, it's not a lot going on. maybe a lot of people took vacation. it's quiet. not a lot of corporate news. a lot of people looking forward to earning season. particularly next week when we're going to start to hear from the financials. to matt's point, you know, we're going to get a sense certainly from the bigger banks as to what things look like. i sit here every morning and talk about commercial reals state and jumbo and prime mortgages. i talk about credit card delink delinquencies and incredible activity in the capital markets and lack of m and a. we're going to see how that all comes out perhaps when we start to hear from the nation's big banks next week. first up is goldman sachs on tuesday. and jpmorgan on thursday and big friday as well with bank of america, citi group and our own ge. what will it look like? there's a lot of different things to take into account. for example, goldman sachs, by the way, bernstein lowered their estimate for the second quarter numbers to 292 po $3 a share. at goldman you've got to

remember, when you pay back t.a.r.p. you had to take a charge associated with that. that may show up in the numbers. and may depress some a bit. we dealt with these one-time things before. we're also going to see strangely enough as credit spreads have tightened the cost of buying back your debt goes up. hence, your liability higher. you've got to take a charge for it. remember, it worked in reverse as credit spreads widened. we we're going to start just the opposite of that. jpmorgan also. you know, capital markets incredible. what's going on in credit cards? where is commercial real estate? jumbo, prime mortgages, how bad is it? we'll see. we'll see what the reserves are. but again, capital markets, business, unbelievable. aside then also in the investment bank, m and a which has been just in a complete and total doldrums. bank of america, earlier this week we got a note from cffb on that bank lowers the estimates citing credit card losses and

seeing as well about a $13 billion provision expense. also remember there, because merrill lynch's credit spreads have tightened, you could see as much as a billion and a half negative mark. it's a good thing in a way but they've got to take the hit for it. so that could be in there. a lot of noise around some of these numbers. citi group, well, citi group is a special case. in there we really wonder more about management and whether he will survive the u.s. government soon once the exchange takes place to own as much as 34, 35% of the common equity of that company. and finally, there's our own company, ge, $11 a share earlier today. there it is again. below $11 a share will get some sense as to how things stand at ge capital. not the to mention the industrial businesses. and our own advertising unfortunately from what i hear in the media world, rebecca, continues to be very, very tough right now in the media world. back to you. >> absolutely. thanks so much, david faber.

of course, if they were on vacation this week, a lot of folks will be back next week for that earnings cycle. coming up, from internal to the floor, we will get the mood of the market. plus, we're just minutes away from the all important energy data. and we'll take you live to washington where the vice president is set to make a big announcement that amounts to progress on the health care bill. make no mistake, you're watching cnbc's "squawk on the street" live from the new york stock exchange.

welcome back to "squawk on the street." i'm sharon epperson. the energy department data on oil inventories out any second now. prices under $62 a barrel. they are falling fast, which is because we saw a draw in crude supplies of 2.9 million barrels. draw in crude supplies, 2.9 million barrels. gasoline supply is up much more than expected. up 1.9 million barrels. up 1.9 million barrels. and distillate supply, up 3.7 million barrel 'the rise in gasoline much greater than expected. nearly double what the expectations were. anthony from grz energy joins me now to talk about the number. these bills in gasoline, four weeks in a row. this is time we're supposed to be see gasoline supplies come off. >> absolutely. this is something i'm looking at, gasoline supplies. it goes to show you we should be looking at fundamentals. the economy isn't getting any better any time soon.

we're looking at a well supplied oil market. right now it looks like a sell. >> fundamentals and speculation, that is the concern out here, with where prices have been in the recent weeks. >> absolutely. if i'm a speculator right now, which i am, in some sense of the word, i'm a seller right now. >> all right. there you have it. mark, send it back to you. >> all right. we want to keep talking on oil. jim cramer joining us now on the cnbc news line. good morning, jim. good to talk to you. >> great to talk to you, mark. >> you know, aside from the issue, what really annoys the hell out of me here is that, you know, when we were zooming up to $147, lots of people were saying, hey, this is liquidity speculation, yada yariyada, yad. to a man up and down the line, everyone denied it. now all of is a sudden, oh, it's speculation. why didn't they level with us a year ago? >> i think they were ideologically driven, mark. i think they were examining it

were free marketeers who believe that almost any regulation is harmful. we now have more rational people here willing to at least consider the notion there could be manipulation and speculation. i think it's welcomed to have a guy like beginsler who is actually a seasoned trader and understands things at the helm rather than a professor or someone who thinks that manipulation is inconceivable. >> every time you talk regulation, i'm no -- i'm no right wing nut case, but every time people start talking regulation, i get nervous. it has to be done in a way that doesn't spiteful or distort the market. >> we had regulations for years and years. the regulation was set by margin when they seemingly got out of control, the government would raise the margin limit or the exchanges would self police. we've gotten well away from that. we just don't seem to even identify the notion that if you raise margins substantially you can curb the people who are able to move oil ten bucks like we

found from that rogue trader list. >> jim, part of the regulation here is going to come down to how investment banks and hedge funds are classified. are they classified as speculators or as hedgers because in many cases they're classified as hingers right now when there's a argument to be made that they should be classified as speculators. my question to you is, how does one separate it out? how does one define what is manipulation of the markets versus what is a natural reason for the markets to go in a direction. i point to what's happening right now in prices. you know we got this bearish crude inventory report and what we're seeing as a result are prices coming down. so one could argue that you see the bearish follow through on a fundamental basis. >> i think it's a little bit like pornography and the supreme court. you can tell it when it's happening. the rest of the world is in a major slow down and the oil doubled in a short period of time. i think it's a question of being savvy, of actual lly making inquiries and finding out whether people are polluting.

we spli stopped really any sort of serious prosecution of existing rules. forget new regulation. about the notion about whether there is manipulation because the decided fact of the government had been the markets are too deep to have manipulation. that's turned out to be a total looi. you don't have a deep market that goes from 70 to 140. that's a manipulated market. i think gensler promotes common sense. ideology says stay away, the lrkt markets work. the markets completely mall functioned. none of the big major use them because they're what nape lated. >> what do we do? >> we go back to the idea that we have higher margin to make it so it doesn't matter. >> what about position limits? >> position would be effective. we have these things for options. we have these things for common stocks. common stocks are meaningless versus the national imperative of have -- or international imperati imperative. we care more about the

regulation of a company like exxon or the trading in occident occidental. we care about the crude that impact everybody's day-to-day life. it's common sense. the believe that no market can be manipulate and recognize that like stocks, commodities are manipulated all the time. >> all right, james, thank you very much. >> thank you, guys. >> jim cramer. tune in and catch "mad money." let's take a look at the markets and their internals. here to the plus side by, oh, you know, 0.4 of 3%. on the new york stock exchange. a draw on winners versus losers. the nasdaq probably slightly negative. am i right? no. slightly positive. >> 20/20. oil earnings, regulation. a lot fof investors to ug,le this morning. let's get the mood of the

markets. warren meyers, cnbc market analyst, and in st. louis, brian, managing director of wells fargo advisers. great to have both of you with us. brian, let's kick things off here. we have been treading water. next week, big flu deluge of financial earnings. what are you looking for in this market? >> june was a lackluster month coming off of three brave months. >> i'm sorry. we're having a little bit of trouble with brian's microphone. we'll try and get that fixed. warren, sending it back to you on the floor. same question over to you. started treading water here in the markets. we are seeing major moves in the commodities complex, oil prices to the downside. what's your near term outlook? >> i think there's a little bit of downward pressure that started a week and a half, two weeks ago in the overall market. we hads a tremendous run-up from the march lows through the end of june. 35%, 40% in some of the indices. the economic data that's been coming out really hasn't shown

huge turn around yet to sustain some of those gains. so i think there's internal or external pressure to have the market to come to a reasonable level. i'm expecting 10% to 15% on the s&p and the dow over the next few weeks. especially in light of, you know, earning season starting kicking off this afternoon. >> warren, key question. do you believe in the head and shoulders? >> i'll tell you, i believe that there are so many people out there that do believe in it, the fact that we have formed that shape and we actually yesterday on the s&p, you know, broke through that low, i think there's going to be enough people reacting to that at this time may be a self-fulfilling prophecy and you may get added pressure on this market based on that. >> i'm told we fixed your mike problems, bryan. same question to you, do you believe in the head and shoulders? >> you can't ignore the technicals. the bare bones look at supply and demand. looking at the head and shoulders i think you are in store for downside in the near

term. that's what our forecast is. big picture, we will see the economy recovering late this year boo 2010. in a positioning perspective look at a pull back in a lackluster trading type of period as an opportunity to add the portfolios. from that perspective we like large cap growth, particularly dividend growth type of names in that area. and if you look to be more tactical here recommend getting a little more cyclical and looking at industrials and consumer discretionary. >> warren, how do you feel about discretionaries right now? >> they had a flies little run. i think, again, on the significant dips. that's got to be one area we've got to put, you know, put some focus in. i think some of the smaller size, smaller cap financial banks is an area that looks like they're ready to pop a little bit. you know, i think this downward pressure that we're looking for is going to be tempered along the way by people seeing a drop of 5% and putting some money to work because they miss the upside from the march lows. so you're going to see a lot of

down and fapause and down and pausing going on. if you're selective and careful and you're mindful and spread it out over time you will have opportunity to get some nice deals. >> brian, prefinancial reports which all many of them come at least next week. how much do you dedicate to new positions this week versus a week after those reports are already on the table? >> i don't think there's any massive rush to be buying right here. technically, i think we talked about looks a a. little bit weak. you have an economy that has been insisting on a steady diet of less bad economic data and clearly looking at the action in june, that trading is wearing thin. you look at a market that's vulnerable over the near term and from that perspective i don't think there's any major call to action. one thing when you look at the preannouncement system, wasn't too terrible this time around obviously a lot worse in the first quarter. but even looking out over the next couple of quarters, earnings recovery does not look too spectacular. from that summer spethive, i don't think you're in any rush over this week. >> warren, brian, thank you for

being with us today. >> thank you. all right. coming up, the president of the national association in manufacturers. why the government needs to stop shoveling stimulus blindly and pay more attention to exports. plus, google going after mr. saucy. will they really take a bite out of microsoft's dominance in the operating system business. our jim "gigabyte" goldman along with the details. fidelity, traders learn fromhe pro say you want to bast an entire portfolioftocks. maet experts show you how through fility's extensive trading knledge center. fidelity gives you fr rearch from 1independent firms, with accuracy scores... help you decide which analyststrust. find out why more d more active traders for a smarr way

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nyse euronext. topowering thehelping to sexchanging world. world. microsoft starting to look like a lot like the goog with the search market bing and google is ready to return the favor, jumping face first into

the operating system world taking on the core of microsoft business with an operating system of its own. our silicon valley bureau chief jim goldman has more. hey, jim. >> rebecca, good morning. software industry smackdown, showdown, or is it? google has dabbled in the operating system world before with news earlier this year that it would try to migrate its mobile operating system android into a group of netbooks, the direct threat then to microsoft. then comes where google is operating google chrome in an effort to unseat his dominance and windows software. let's take a bit of reality check here. microsoft owns the operating system market and has been able to rebuff all comers including apple which has made significant strides in the marketplace but still only controls a fraction of it. people kind of laughed off microsoft search engine bing as being unable to do any meaningful damage to google's dominance. the same likely can be said of google's attempt to unseed microsoft's dominance in os, so

far. any real operating system software won't be available from the company until late next year. that's not to say the battle for soft care dominance won't be an interesting one. it will come down to what hardware makers will use fr either company. hp is reportedly interesting in android, could dell include chrome from google? what kind of pressure could microsoft exert? it's hardly a case of david versus goliath, more like goliath versus goliath. rebecca, back to you. >> thank you, jim. up next, the president of national association of manufactures on what the government needs to do to get the stimulus money to actually stimulate the economy. and why the country's export control system is hindering u.s. innovation and competition. but first, oh, trish. >> hey, mark, good to see both of you this morning. coming up on "the call" we're going to talk more about this oil speculation. we're actually going to be

discussing this with an oil trader and he's saying that the volatility in oil is actually going to prevent an economic recovery. it's a real problem for a rebound. so we want to get to the root of the issues. also in our call to action, commodity etf, they've been surging but if you think oil, gold are going down, is now the time to get out? one of the best five in this space right now, what should you be looking at? we will have ideas on that. plus, in "call of the wild" we're going to debate whether or not the wealthy should be paying for health insurance for every one else through an increase in tax. we have lot coming up for you all on "the call." but first, "squawk on the reet" is back right after this break. when i was told i had diabetes,

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we're back. increasing chatter on capitol hill about whether or not a second stimulus package may be needed. and then that's kind of a double-edged sword. oh, we're going to get more stimulus? good. oh, we need more stimulus? bad. meanwhile, a house committee on oversight and government reform

is meeting on whether or not the stimulus money already committet effectively. a lot of people say this, including our next guest. first on cnbc, governor john engler, president of the national association of manufacturers, former governor of michigan. governor engler, good morning. why do you think the stimulus money is not effective? >> because it hasn't been spent. only about $100 billion under i think charitable estimates, that's a little more than 10% of the $780 billion-plus that were appropriated back at the beginning of the year has really been out there. i think that's the subject of the hearing today, what's the holdup? and when you parse those numbers little bit, you find that a mere handful, just a few billion dollars on infrastructure, and that's why some of our members told administration officials that the stimulus is working, the one over in china, because they're pumping the money into infrastructure. we're not. >> well, even when this bill was

drafted, debated and passed, it was band loaded. we all knew that. >> well, certainly it always takes time, but you remember there was also a vigorous debate about the emphasis on what was called shovel-ready. well, the only shoveling being done is mostly at agencies. if you look at commercial -- i mean, it's just a lot of softness. we're still in a recession, you know? and the stimulus wasn't going to turn this around overnight, but it's hard to argue that it's really in the pipeline and making a big difference right now. it still, i think, has the potential to be very helpful, but we need to have the help and we also need to have an approach in washington, do no harm. let's not discourage in other areas, such as cap and trade do d last week. >> governor engler, you talk about the need for time, but in some cases, you don't have time in places like michigan, where unemployment is something like

14%. time is certainly of the essence. what's the fastest thing that we can do in this country to bring manufacturing jobs back online? >> well, i think bringing manufacturing jobs does take more time than say just spending on infrastructure, but if you spend on infrastructure, then suddenly, people need to buy bulldozers or pickups, and there's a lot of projects. senator voinovich made the point in ohio that they've identified more than $2.5 billion worth of projects ready to go. give them the $2.5 billion so they can let the contracts -- they've got less than $1 billion in the stimulus package and i'm not sure they've even received that. so, that's what you do is you look at what can be done now. we're ready to make major investments in upgrading the grid. that's a presidential priority. it's something we support. the capital's there. i think we ought to be building nuclear power plants. we could get that process sped up. there's a lot of things where the government actually controls

the permit. let people have permission to go forward and then let the capital be available out of the stimulus package. accelerate it. >> so, i hope what you're saying is we don't need to go the route of a whole new stimulus package. >> no, i -- >> we can retool the one we've got. >> absolutely. and we can do other things that are -- chairman overstar and the house of representatives is working on a reauthorization of the highway bill. you want people to really invest in equipment? give them a six-year blueprint of what we're going to do on rehabilitating the nation's infrastructure for highways and transportation. let them see that this isn't just a one-time mad rush to do something, but it's part of a program where we ramp up this investment over a period of years. senator boxer in the senate says, well, let's wait 18 months. we don't have 18 months to wait. so, there's a case where oberstar is right and i think boxer is wrong. >> now you mention the highways, it occurs to me -- you know, i've been reading for a decade or more that we need to spend $1

trillion on the nation's bridges. >> right. back when i was governor in michigan, we dedicated one penny of fuel tax only for bridges. we had some of the oldest interstates in the country. we said we need to start rebuilding these bridges. but even that was nothing more, really, than a good start, but it was a start, but we need to get serious all over america. and if we do that with a long-term plan, then people can actually hire, make commitment, get the kind of cranes and equipment that they need to do that work, and that will put people to work. >> i also want to get to your comments about the exports system here in the united states. >> sure. >> you say it needs to be completely revamped. >> i'm going to testify tomorrow morning in the house of representatives on that very point. we think that there's a lot of hi high-technology goods and products that we produce in this country that have international markets. today, because of a complicated, obsolete, 1950s-era export control system, we're losing out to german, italian, french competitors, japanese

competitors, and this is -- and we're saying we're controlling this for purposes of national security. well, our allies are selling exactly the same product, and that hurts american jobs and workers, and for what purpose? certainly not for national security. so, let's modernize this. let's have a 21st-century export control to replace the cold war export control act that we have today. >> governor, thank you very much for sharing your thoughts. >> always a pleasure to be with you. >> we appreciate it. governor john engler. >> thank you. and just quickly to note, vice president biden and hospital industry leaders officially announcing new payment overhauls. we will monitor the rest, bring you any headlines, but you see it there on your screen, vice president biden. up next, i find it hard to believe, but time flies when i'm sitting here with rebecca. it's time to wrap it up. last check on the markets, right after these words. ♪ on this endlesscean ♪ finally lovers ow no shame ♪

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ken chenault, all begins on "street signs" at 2:00 p.m. eastern. if you don't watch it she will complain to me. >> be there or be square. it's a good one. >> please. a final check on the markets. dow up 15, s&p up a fraction, nasdaq down a fraction. still kind of -- i guess we're waiting for earnings now. >> waiting for earnings. alcoa comes up later today and a lot of big ones next week as well. >> so, that's it. we're out of time. thanks for watching. i'm mark haines. >> i'm rebecca jarvis. have a great day. "the call" is coming up next. this is cnbc.com news now. >> oil is lower for the sixth consecutive trading session, remaining on the minus side even after the energy department reported a drop of 2.9 million barrels in its weekly inventory report. and general motors expects its vehicle sales in china to be up a little more than 20% this year. that's almost double what the company was predicting earlier this month. and us airways ceo doug pa