welcome to "power lunch." it is a friday. i'll bill griffith. stocks are giving up earlier gains. we had a weaker consumer confidence. energy prices going lower. speaking of which, it's been one year ago tomorrow when oil hit the record $147 a barrel and what a ride we've had since then. should you be better on triple digit prices again? we have a bull-bear debate with oil sitting at $59 a barrel. >> looks better than $147. i'm michelle caruso cabrera. general motors coming out of bankruptcy at a staggering speed. we welcome our power player this hour joe lavorgna. people think the good news is a reflection of a weak economy. >> last week i say was worse. we had serious economic news.

employment numbers were terrible. the markets now are finally digesting that report. >> we'll be talking more about that. joe is with us the whole hour. let's get to our market reporters. stocks extending losses after that weaker than expected consumer confidence report. the dow on pace for its fourth straight weekly decline. it stocks, the best performers right now. bertha coombs kicks it off at the new york stock exchange. >> we are watching the dow here to see if it's going to hold that 8100 mark. we've seen a decline this week. part of it has been technical, testing of the s&p. today led by chevron leading energy stocks lower. chevron warning the second quarter that its refining margins have been hit hard by the high oil prices and the dollar weakness. ibm getting a downgrade at goman sachs even as it upgrades the hardwaresector for the weak all ten s&p sectors are down. as we take a look, housing sector has been the worse performer for the week. energy and materials, big drag. you know what's been doing well

surprisingly? the hmo. those are the managed care stocks you think would be under such pressure as we talk about house reforms in washington. >> this intraday chart of the nasdaq tells the story. if this does not get better, the nasdaq could be on pace to finish its worse week in two months despite a whole bunch of analyst bullish calls. goldman sachs raising its price target on apple, credit suisse. goldman put dell on its conviction buy list. it goes down. two calls out of thomas weisel. cisco is unchanged after the analyst said the cost cuts could go deeper than the company first forecast. finally, even with that weak consumer sentiment number, look at the restaurant stocks, in particular, california pizza kitchen on an upgrade out of raymond james. it's up almost 3%. now over to sharon at the nymex.

>> the second friday in jul of 2008, traders were breaking a sweat as oil prices were going over $147 a barrel. it's a slow friday today and we are looking at prices below $60. the biggest weekly decline since january. international energy agency saying they see demand sliding nearly 3% this year. big factor and we are also looking at what impact perhaps some of the long-only funds may have had on the slight. they are probably going to set a date for those positions limit hearings some time next week.xw a lot of index funds are the ones that are going to be in focus here and whether or not they liquidate some positions this week knowing that this was happening may be why we are under $60 a barrel. now to chicago. >> thank you, sharon. what a wild week and a wild couple days in the treasury complex. you look at this intraday chart

you notice we are down roughly ten basis points. as you look at the next several charts on the zoom, we are off about 20 basis points on the week and we are at the lowest yield should we close here in about seven weeks. all this may be the catalyst, as our guest wellpointed out was last week's weak employment report, dinging the psyche. one bright spot today was the trade deficit. smallest in ten years, $26 billion. good news there, it wasn't with bigger negatives on imports. imports were definitely down but exports were positive, 1.6. when we chart the dollar index, quiet week, yet close to unchanged. if you want to read one of the best historical pieces on how the government in many ways screwed up the housing market through the gscs, go to the website. it's a great report. committee on oversight and government report, housing policy in creating global

financial crisis of '08, interesting reading. back to you. >> i will get it. thank you. general motors coming out of bankruptcy at lightning speed. an incredible feat conferring the size and complexity of the automaker. ceo fritz henderson detailing how the new gm will look. phil lebeau behind the wheel for us in detroit with more. >> far leader general motors is what we are going to be seeing now that it's out of bankruptcy. take a look at what the new general motors will consist of. we know about the four brands, chevy cadillac, gmc and buick. they are stripping down the management of this company. 350 u.s. or 35%, i should say, of the u.s. executives are going to be leading the company, stripping out management layers, potentially flattening up the company. the focus now, customers, cars and culture. all of that is great. ceo fritz henderson admits, doesn't matter unless they can sell more cars. >> to win we need to stabilize and grow our business around the

globe. particularly here in the united states. that means building more of the gorgeous, high-quality, fuel-efficient cars, strux and crossovers the consumers want and getting them to the market faster than ever before. >> gm's vice chairman bob lutz ain't leaving the company. sticking around. was supposed to leave at the end of the year. he is going to take over marketing communications. after today's press conference he drove off in one of the chevy malibus with the new chairman of the company ed whitacre jr. we need to go from being defensive to being bold. cfo ray young says this is what we are going to hear from bob lutz more of in the future. >> i think this is indicative of what the new general motors is about. bob, as you know, sometimes unpredictable in what he says. he speaks his mind. he is a very, very transparent, as fritz indicated, any other oem in the world would love to have bob lutz as part of the leadership team. we are very fortunate bob, after

he understand what new general motors is about, said i want to be part of this turnaround. we are absolutely delighted bob is going to be an integral part of our management team. >> coming up later on "power lunch" at 1:20. you don't want to miss what he has to say. we know bob lutz can be candid. he can make comments that make people cringe within general motors. it will be interesting to see what he says now, that he is in charge of changing perception regarding general motors. >> we all like straight shooters. looking forward to that. >> stay there, don't move. joining us joe lavorgna. we want to talk about how important is the u.s. auto industry to the economy? especially right now? >> it's not that important. gdp is less than 2%, however the

big production increase scheduled for the second half of the year, about 45%, could add about .7% to the second-half gdc. .7% is not insignificant. it certainly helps. unfortunately the sector has shrunk so much. >> a 45% increase in production. that is an incredible amount of rope. >> went from a small base build. we had a massive collapse in production in the fourth quarter and in the first quarter of this year. this is payback. >> the incentive for the automakers would be to build these cars in such a fashion they will be attractive price-wise begin the state of the economy right now. wage levels will be high. benefits will be expensive even though they've gotten some of that off their books right now. >> one thing in defense of the auto business, nobody ever assumed we had 9.5 million units were annum which is where we were the last few months. no industry could survive. a lot of that was due to financing.

>> phil, what do you think when we talk about the level of sales people are hopeful we are going to get to? >> i think he hits on a key point there. as financing improves and most believe it should improve over the next couple of months, we are at the bottom in terms of auto sales. it's going to hit that 10 million mark chrysler and gm and ford need to break even. once it gets beyond that, these guys will be able to really ratchet up profitability, especially if we see sales go up 10.5 to 11 million, which is not unreasonable. we could see that in the next year. >> phil lebeau live in detroit. stay tuned for his interview in the next hour of "power lunch." >> we just learned about this a little over half hour ago. a bipartisan group of house law makers want president obama to investigate the federal reserve. we are talking three democrats, 14 republicans asking that the fed not be granted any new authority as a result of regulatory reform yet. they want any questions about

the fed's role in the b of a acquisition of merrill lynch last december, they want more answers about that deal. they say if it's determined the fed did overstep its authority at that time, it would be inappropriate to grant it new powers. what do you think, joe lavorgna? >> it's scary because the fed has been an independent organization and now they crossed over into the political domain in the sense of working so close with treasury. you have to hope there aren't any smoking guns, embarrassing e-mails that makes it less likely bernanke doesn't get reappointed. if something comes out in the next few months, those odds could fall. >> what if his replacement is larry summers who is very close to the white house? >> you want someone clear thinking who isn't going to bow to administrative pressure. >> it is clear ben bernanke is under fire right now.

>> absolutely. treasury secretary geithner has been grilled on capitol hill about regulating the financial industry and the stimulus. our hampton pearson is on the hill with details about that hearing that's been going on the past couple of hours. >> it is continuing. they are talking about financial reform and over-the-counter derivatives. however, he has been put on the hot seat by law makers concerned about what they see thus far a la of success of the economic stimulus. >> my n sense is and i think this is a consensus broad-based economist that there has bee substanti imovements in aesting what was the wor recession gbally we've seen in generations, and those the result the acons this congress took, the administration put iplace and complementary actis taken by governments arnd the world. >> today's disaointing consumeronfidence report and

anecdotal stories about banks not lending and consumers no spending also a coern of law make >> what theconomy is going through is a necessary and healthy adjustment as families and the government ofhe united ates goes back t living within their means. that is causing a greater contraction demd for credit than we normally see in recessions. you are seeing a very healthy increa in private savings behavior and partly in response to that. i think those are necessary healthy dynamics though they will produce a slower recovery. >> a preview of what president obama faces when he returns from his foreign travel, growing unease about the state of domestic economy. >> hampton, thanks very much. gm has been the big buzz today. next week it's going to be all about earnings. a very important earnings season coming up this next week. will the numbers bring out the bears or will it fire up the bulls? our task force trying to get you ahead of the game in a moment. >> still ahead on the power grid, pentagon officials are

considering banning smoking in the military. they say it's costing taxpayers hundreds of millions of dollars. is this the right thing to do though? plus, one year ago oil hit a record $147. >> remember it well. >> are we heading back to triple digits any time soon? we are minutes away from the "fast money halftime report."

dow industrial average lower by 61 points. investors looking closely for any indication that the economy is improving. that's why this earnings season may be the one most important in a few years. let's look ahead. tyler vernon, rob stein. good to see you, guys. welcome today. >> great to be here. >> thanks for having me. >> tyler, where are you right now in the scheme of things? it is clear we've been talking about this all week. after last week's employment report, the tone changed in the market. a perception maybe we were

seeing more green shoots. they've gotten decidedly negative. >> we never saw any green shoots. i really didn't like that terminology to begin with. at this point we think we need the consumer to be in the game to really turn things around. where the consumer stands, savings rates going to the moon, with the unemployment going to the moon, with foreclosure peaking up, wages falling, i don't think there is any way we are going to come out of this any time soon. we are pretty bearish on earnings here. we think technology and some other areas might do well. i think the theme is going to be less bad news. i think investors are looking for good news now and they are going to be disappointed. >> rob, if we do get bad earnings, do you think the earnings season is going to look bad and if so, will we get punished more here? >> it's not a market focusing on earnings. it is focusing on the overall economy, growth and jobs. the savings rate picked up. what's interesting, they are not saving the money, they are using

it to pay down debt. that is just a flaw in calculating the savings rate. that knocked three percentage points or more off gdp. >> is that bad, necessarily? people saving money and paying down debt? >> no. it's a good thing for the future and i like that. if you are talking about what does this mean for the market right here and right now, i'm the boring guy here. i think we are rangebound 10% around 900 s&p and depending on the news of the week, we can go above 900. if it's negative news, we go below 900. i think we just get used to this range for many, many months until we can see clarity from the recession being over. >> i think the one thing, if you wanted to make a bullish case, you could say a lot of the banks will have a very good quarter. i don't think people necessarily believe it. they didn't believe it in q-1. you look at the toxic assets banks have held. i think you see tremendous write-ups as spreads have come in dramatically. that might surprise the markets. that would be a bullish case.

>> let's make this meaningful to individual investors. let me ask both of you one thing would you invest in begin your respective views of this market? >> in sideways markets we think cover call strategies make a lot of sense. i would like at large blue chip companies i selling calls on these things to the sideways  market. >> rob? >> i would b biotech, or the oihd, oil service holders. >> nobody is buying stocks directly. >> no. >> thank you. coming up next, check this out. the pentagon is talking about banning all tobacco use in the military. >> that's going to go over well. >> the idea is to save money and protect soldiers' health. wait a second. you want to eliminate a key stress reliever for the folks who are fighting and dying for america? >> shares of yahoo rising on an upgrade from thomas weisel.

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the pentagon is considering cracking down on tobacco use in the military. that's the lead story in "usa

today." banning cigarettes would reportedly save money and prevent illness. so should soldiers be forced to kick the habit? joining us for the power grid deba debate, o two guests. steve, let me start with yo is this a good idea? no. it's not a good idea. it's a lot of nerve. these people sacrifice their freedoms, their wl being, their lives and they wanto smok they want to relax, it's an outlet for ress. this is just a contuaon over the femininizationf the military. >> what does that mean? >> the command in chief smokes. what's wrong with the people wanting to take a cigarette to relax. it's outrageous. >> we'll get to the femininization in the military in a second. julian, why do you think this is a good idea? >> we should be clear the white house is not taking a position on this issue, nor the president. i think this is coming from the health experts inside the

pentagon saying that smoking is costing $6 billion a year in terms of health-related diseases. >> that is in the u.s., not in the military. >> well, much of that is in the military, as well. it's creating in the military almost $1 billion in lost productivity and disease treatment. what the health experts are saying is this is undermining the health of the troops. nobody wants to take away a moment of relaxation and stress release fromhe troops, smong esn't help the troops. >> first of all, in the 12 extra seconds he had, he still didn't make his points, with a due respect to lian. >>our point was,steve? >> it's less than $1 billion the pentagon is claiming. it costs them because they give the privilege of smoking to gis. this is outrageous. we give more of that to the palestinians and hamas. this is an outlet for the troops. they lose their freedom when they join the military. now we have the end of don't ask, don't tell. now you are not going to be able to smoke. this is outrageous.

>> steve sometimes has maybe dubious expertise when it comes to politics. not with health care issues. >> hold on. when you look at the stats, combat veterans, 50% more likely to use tobacco. 37% of soldiers and 36% marines. what they find is the individual whose go into the very worst situations are far more likely to smoke. it seems to me when you want to eliminate smoking, instead of answering the question, what help do they need to drives them to smoking, wouldn't that be smarter? >> it also might be smarter to make sure our va hospitals be fully staffed, that veterans get their benefits. steve didn't complain about that. the fact of the matter is it's true. the soldiers in the more stressful frontline positions tend to smoke. that stands to reason.

the question is smoking ultimately in the interest of the truths? all the health care experts inside the pentagon and the secretary of defense will come out on the side of that. >> this is the problem with nationalization of health care. the minute other people cost us money, we think we can tell them how to live their lives. you are too heavy, put tt cookie down. sts civil liberties. >> it's the nanny state. health care going to destroy our frdom just like captain trade. that's what barack obama's goa is. getting specific to our soldiers, how dare we tell these peopleho volunteer and risk their lives, you can't smoke because it's costing us less than the money we are giving to the palestinians. >> what does femization of the liry? >> it started uer bill clton. anything that is rough and tumble, anything that is masculine, anything that is military is bad. let's get women on the frontline. >> there is something sexist. me and melissa lee are tough

even though we are feminine. >> guys, that was a lot of fun. julian, thank you so much. steve. >>em's glad i'm staying this far away when you talk about femininization being a bad thing. crude slides down the last seven of the eight days. we are under $60. last week at $73. hard to believe a year ago oil was at $147 a barrel. should we expect a spike back to triple digits or is today's level the new norm? a bull-bear brawl on the other side of the break. >> and speaking of femininization, something we like that has been femininized in a big way is "the halftime report." >> coming up ahead on "the halftime report," we'll talk about ibm, big blue out with earnings. today off a downgrade from goldman sachs. we've seen bearish put spread buying on solar names.

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at the nymex, the slide of equities, the slightly higher dollar have oil prices on the decline, below $60 a barrel. poised for the biggest one-week decline since january. it's all about demand and the concerns about the demand heightened with the international energy agency reiterating they see demand sliding about 3% this year. add to that that we are also waiting to see what some of the big consumer names have to say next week about their demand outlook. earnings reports will be watched very closely. when you look at demand, you also have to look at gasoline and the refining margins, chevron said how weak they were in the second quarter. we are looking at a lot of supply and very weak demands for gasoline and distillate fuel supply also hurting prices.

>> that sounds like a recipe for higher gasoline prices to me, or has been in the past. where do we go on oil? we already canvassed our guests. john kilduff says $85 a barrel by year's end. addison armstrong thinks $70 a barrel. joe lavorgna, $40 a barrel. welcome, everybody. bearing in mind our last segment, let me k you what y aremoking right now? >> in all serisness onhat previous segmt, smokg is a er. these are ung people in the military. it should be banned. >> can you, john. he weighs in on all segments here. $85 a barrel,here is that going to come om? >>n economic rebound that will art to look forward to at the end of this year into 2010. for us, china, hopefully europe, as well. that's going to put pressure once again like we saw in 2000, like we saw in 2005, like we saw

last year on the global infrastructure. is there a structural deficit in my view. once the economy turns to normal levels. >> he makes the case $85 is driven by a strong economy. you say $40. is that based on a weaker economy? >> i said $40 as an outlier, i wanted to get some press. no given where we were earlier in the year, we were down below $40. if you believe the global growth story, china's demand will remain robust and oil prices will stay well fit. the reality is if the global economy is as weak as we think it is, i don't think oil will go up much. >> i'm right in the middle. i have to take john kilduff to task a little bit here. i cannot see in the things we look at every day and john sits in a very similar desk i sit at, where he thinks this demand is going to come from. >> he says china. don't you? >> china has already taken on as

much oil as they can. they've got no more storage to fill right now. they are building storage, but that takes time. their storage is full. >> their auto sales are going up 17%. i can't believe i'm arguing against you because i agree with you. >> they are booming, but they have plenty of capacity to meet that demand. china is not going to be the driver here. the problem is the u.s. and western europe, the oecd economies, we are about 15% above normal on supply in terms of days of forward cover right now. >> john, are you going to defend yourself here? >> i don't care about how much oil is in storage here. e fundamentals got ignored last year, 47. they g ignored recentl >> that wasn't abo fundamentals, john. >> i know. i'm saying it's forward-looking concerns, bill. we had a structural deficit. we weren't producing enough oil. we had refinery capacity stretched to the limit. >> prices go down because speculators are fleeing the

market knowing regulations are coming. >> that will make matters worse. it will be easier to get to $100. this is the most ridiculous thing i heard in a long time. we want more people in the markets, not less. >> i'm with john on that one. i will say any kind of new legislation that comes into the market, which has the effect of limiting liquidity, and that will happen if there are position limits. this is not something that will just impact speculators. it will be more critical for hedgers. they need to have cover. they need to be able to come into a liquid market and find a way to manage their risks. john is absolutely right. if there are new laws that change that, we are going to be in a much different situation in terms of volatility. >> are we going to look to the oil companies and opec to set a fair price for us all? >> i thought we did. >> no. absolutely not. opec doesn't have the power right now. the oil companies, look -- >> we'll be left with that if they run the 0 so-called

speculators out of town who are pointing the market down to $55 or $40. >> exactly. >> we've got to go, guys. thank you so much. have a great weekend. >> thank you. >> straight ahead, the top guns in media, technology and banking are all in sun valley talking business and deals. one of the biggest is there, google ceo eric schmidt. >> also american express up another 1.3%. saying things are looking less bad for the card company. ♪ sometimes the best w to get closer... is to t as far away from it all possible. don't let erectile dysfunction get in the way. ♪ viva viagra! viagra, amera's most prescribed ed tatment, can help you enjoy... a more satfying sexual experience. ready to talk to your doctor?

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from technology and media to consumer products and phenom shares. our julia borson has talked to the biggest names in town and joins us with the biggest. julia. >> well, here in sun valley, all eyes are on the biggest tech titans, microsoft and google. days ago google announced an operating system called chrome that will take on microsoft system head-on. schmidt told me he wouldn't predict whether google's new operating system will steal microsoft market shares or will be an addition, not a replacement. he is confident chrome's new approach will be hugely successful. >> microsoft is certainly a very, very successful operating system vendor.

it's probably the case people will continue to buy microsoft products for a while, and they'll buy these new netbooks. they are going some benefits that the microsoft offerings can't. they'll still want some of the applications that microsoft has. >> chrome operating system will allow users to access their information data-like, word document or music from anywhere, from any computer and it will be free of charge. schmidt says it's designed to increase users' use of the web which will increase google's ad business which is its bread and butter. that is affected by the global down turn. google is announcing earnings on thursday, but eric schmidt could tell us this. >> we are not immune because we know our advertisers are sophisticated. when consumers change their

habits online, they adjust. >> all the executives said the economy has been a somber note on the discussions. it's not all about talking shop. mornings in sun valley are for business and the afternoons are for outdoor adventures. this afternoon warren buffett and lebron james are going to be hitting the greens. buffett told me yesterday he does expect james to win this ballgame, even though the basketball star claims he never before picked up a set of clubs. >> warren buffett is like zelling. he is everywhere. he is auctioning off lunches, playing golf with lebron james. unbelievable. it's good to be warren buffett. >> absolutely. >> good job. we've been following this odd story of a group of congressmen, although three democrats, but 14 republicans who are asking the administration to investigate the federal reserve right now. crazy. >> it's amazing. we are in remarkable times. last september i believe we lost seven major firms within one

month. this is just progression of a very unique environment, to say the least. >> how risky is it if the fed becomes politicalized. why should people be worried or scared about that? >> we are seeing over $2 trillion of treasury debt. we are looking to foreign investors to buy that treasury debt. this will make it more difficult for people to have confidence in our markets. >> bottom line, they need to look independent. >> still ahead, gm out of bankruptcy. can they get back in gear? phil lebeau talks live to fritz henderson ter the "fast money lftime report." ( clunks ) coins splashing ) why toss out your money? switch to sprint. save $475 a yeith the simplyvething plan and t the ackberry curve 8330 smaphone for just $49.99.

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welcome to the "fast money halftime report." stocks are retreat as we head to the fourth straight week of losses. investors bracing for that big earnings season. how you protect and profit in this environment? let's get to the word on the street right now. our "fast money" crew today. jeff, let's start off with you. what levels are you watching here? >> we had a battle this morning at 88 in the spydrs. earlier the week it could not close below 88. i want to see continued weakness and see it close below 88. >> if we close that level here,

at's the play? >> the play actually is to wait until next week when earnings come out. the fact that the spdrs are under 88. it bounced off 87. it had a major bounce earlier at 87 and finished above 88. look for weak stocks like technology, like commodities and look at the breakthrough key levels. if they breakthrough key levels, be short as long as they are below 88 in the spdrs. >> chris, we are seeing a pullback in financials, not surprising given the surge we saw in yesterday's session. goldman sachs is not doing too poorly. it's down by only .25% after the upgrade it saw. do you see any buying opportunities begin the financings are reporting in the next couple of weeks? >> i think for traders, they can buy some of these with protection. i would not be a buyer personally of the financials because i think that the earnings are going to be decent. they are going to probably hit expectations, but not going to

blow people's socks off. therefore, there could be room on the downside for these stocks to give back gains here. >> what is the play in the options pit in terms of protecting yourself, protecting your gains potentially or protecting ainst losses on the s&p or thefinancials? i think volatility is  relatively low condering what we've seen over the last year. i'm long put spreading in case we do break those levels. i think that is a cheap way to play. you have something on for a month ago at ran p, it was right to protectourself buying puts also. whether it's protection or mark's direction, you buy the it. what we are seeing is a huge  risk aversion trade which started week a. we are seeing rotations out of things like stocks and into the u.s. dollar. that's going to continue as we think this recession is going to go longer. thgs like csume tngs you need versus what you want. >> i'm watching the financials. i love bank of ameri. citigroup is a big question mark

what is going to happen there whether they break up the company or viable as one unit. at the end of the day, i think a good trade is going into earnings and most of these fires is straddle. buy a straddle cause if the ne is fantastic andhey rip them higher, you are winner. if they don't work and go lower, you are a winner. that's an easy trade. >> let's move on to the next trade. oil extending declines today. eia saying they expect 2009 demands to contract. oil prices have fallen 18% since last week. chris, the theory had been that the whole oil rattling, sabre rattling about limitations on futures are causing some of the money to come out of the futures markets and go into equities. do you think that is partly behind the decline in crude this week? >> i think so. more is the concern that the economy is going to continue to weaken and potentially there is a second leg down we are going to see for the gdp. people are very concerned that

there's not going to be more powder to put forth that could cause crude oil as the economies around the world weaken, to sell off more. >> iuorio, what names areou  watching? >> i don't like anything about the oil right now. we tked about it before. >> thing. >> trade got crded. it seems tottract more eculators to the crude trade  thanhe other commodities. soon as demand clicks off just a little bit, all those evil speculators start heading for the exit doors. the mo on crude seems to be exacerbated by anything more so than the other commodities. >> melissa, we've seen what is going on with crude. what i've seen the last couple of months, they overshoot. it overshoots on the upside and downside. technically speaking, it comes down to 59 or 60, you can put a trade on, but you've got to manage your risk. put a stop in and put a stop in tight. this could pull back to this low

50s. if you are an aggressive trader, put i hate to be on the other side of a trade, but i will go ou on a anday i would be a buyer. >> you are going on the other side of a goldman trade. >> i will take a shot, but be honest. the best way to play this is with options. if you sell this, to me there is no doubt if they glower,ou will put to th stocks at a

cheaper price and if they go higher, they are put to the premium. wait to see what happens. don't guess on the earnings. it's like a coin toss. >> do you agree that investors should shift to the growth stocks? >> i think they will be more opportunities in the second half as the economy recoveries. yes, i think the safer play would be in an ibm, but more upside if the economy recoveries as expected in the names that have more upside. that's the smaller growth like they are referring to. >> the next trade is refiners falling. that's about $7 million a day. is it time it get out of the space and they join us on the fast line and always a pleasure to be with you. do they have around opportunity on the pull back?

>> i think you should not be a buyer. please don't. i hope i'm clear. >> what do you mean by that? >> this is a bad business to be in. the profit margins are getting squeezed and crude oil is falling away and demand seems to be inhibited at best. the only money made in the other business is to buy crude oil, store it and borrow enough money to carry it and earn the carry. that's it. being in the refining business is not a business you want to be in. if you look at a chart of exxon or chevron or the large oil companies, they gapped lower five days ago and gapped lower this morning and breaking any support that might anticipate. >> that's your message loud and clear. time for fast and furious heading into the close today.

investors fear it will be the next shoe to fall. >> i think the stocks have roo to pull become. with mortgage prices coming up, you have to be a seller. i like t. >> investors are lking for a safe haven. i think so f t  short-term. everyone has bee flyg into the long e of the cve a you cado that. if you tnk for the next couple of weeks it wille engue. later we start to get a ton of supply and you may want to switch over. >> out with earnings on monday and do you get into any of the rails? >> i will be short here. if there is more room for downside than upside disappointment. >> gold is trading at 142 and change. >> goldman sacks looking to cover the 135 level. >> that does it for us. do not miss an interview for the woman who started the second stimulus chatter.

up income on "power lunch" is an interview with the ceo of general motors. we will be back. >> a second stimulus some it's got traders running for safety. the person who sparked it sets the record straight and from big tech to high finance. mping up next we. your earnings playbook on e post market sh tonight. h meetin. that wouldave to fly. but then i spent so many nights... reing e-mails way too long. then i grerong. network video ca along. ♪ and so i'm back ♪ ntime to waste ♪ just click e mouse and get things de ♪ ♪ seeeople face-to-face ♪ i should have chged things long ago ♪ ♪his technology saved the da ♪ [ female announcer ] more collaboration, less cplication. learn more at cisco.c.

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>> welcome back and time for the "power lunch" trade with oil prices fall, we are watching options tders out there. you are seeing the buying. what does that mean? >> it's first solar tha is betting on t prices to go  down. it has a lot of layers. e dollar got songer in the  last couple of weeks and the

commodities go down and crude oil goes down hard. the alternate names, people look down the chain for something to sell, but no one sold before. today they are buying on them and theapplied volatity is  cheap and insteadf selling the name out right. it's good with the dollar. >> also the follow-up, if you look on price action and volume through the 150, tracing from the $200 level and if it can stay under $150, this can definitely get down to the 125. >> that's it for us here at the halftime report. we will be joined by laura tyson, president obama's advisor on what here plans on and how she sees the stimulus. first "power lunch" looks ahead to an oil bond and equities into the triple flying. >> we have a lot coming up. tax havens.

good for the economy? 120 and first on cnbc, general motors ceo will talk and the companies emerge from bankruptcy. president obama headed to the country of ghana. we have smart investments in africa. power is back in 30 seconds. >> the securities and exchange commission charged the hedge fund manager in his term management with fraud. sell set a multibillion bonzi scheme operated by thomas putters. energy stocks leading a downturn when the price drops. dow and s&p top the lowest levels. they want president obama to investigate the fed in its role in merrill lynch. that's cnbc news now. i'm scott cohen.

welcome back. i'm bill griffith. we will have more on that. general motors out of bankruptcy at an incredible short period of time and a first on cnbc interview with fritz henderson n about 20 minutes. >> it's the showdown between ubs and uncle sam. the government wants names of thousands of american client who is may have evaded taxes using offshore accounts. are tax havens good for the economy? >> we are joined by our power player in the financial times and the chief economist is still with us as well. we want to spend time with you to tack about the economy and other developments, but there other stories we are tlg, including secretary quite mer who may be making his case about regulating over the counter derivatives and joining us, he took i'm time out on capitol

hill. the republican from texas is joining us and we hope that the democrat from massachusetts will be able to do that as well. congressman, we appreciate the time. >> thanks for having me. >> let me ask you about a letter circulating from a group of your fellow congress men, some of whom serve on the financial services committee and they are asking the administration to investigate the federal reserve and look for any undo activities in the bank of america acquisition before they allow the fed to take on new regulatory authority. are you in favor of this or not? >> i'm not sure how much confidence i have in administration to be deducting, since they fired one inspector general and clipped the wings of another. i don't think they have the best record and clearly there were more questions that need to be asked by the united states congress about this debt and the federal reserve ought to be paying attention to monetary policy, pure and simple and instead the administration is

trying to divert their attention and give them more responsibility, including systemic risk regulators. i'm against giving them any more authority. i don't need another excuse. >> the authority is one issue. what about the letter. were you given the option, calling for an investigation of the fed and ben bernanke when it comes to bank of america and merrill lynch some. >> i'm not personally aware of the letter and the facts are not known. i'm just saying i don't have a lot of confidence in the administration to help in in that regard. >> making the case for regulating the fuel theures markets especially the energy, are you in favor of that? >> i think improvements can be made, but so far we are nailing jello to the wall as far as the administration's proposs go. there no details. improvements can be made in transparency and improvements can be made with respect to

margins, but when we have to make sure is that we don't confusion the symptom with the kuz. for example, the only derivative that peopl can point to tt has going do with the economic turmoil is the credit deflt swaps of aig and they had full regulatory authority to regulate those. and credit default swaps you can't throw out the baby with the bath water. it allows people to lessen their risk which allows them to get more cred skpit that equals more jobs and the secretary can't answer and how manyobs will be lost by doing this. the market is doing this towards greater transparency and i'm not sure that mandatory transparency is not going to do more harm than good. >> i will calm all the talk does not sit well with you. my question is what about the rest of the house of

representatives. are the democrats going to go along with that? >> they have done well, whatever speaker pelosi is toldo do. they swaowed the 1.1 trillion stimulus plan and a budget that creates more debt in 10 years than the previous 220. the new national energy tax. >> is it politically feasible that the democrats would go along with the second one? >> i hope not. we are drowning in a sea of debt and listen, i kn the administration inherited tough times, but they are making them worse. 9.5% unemployment and an extra trillion dollars on the national debt. >> but if jobs continue to be lost and the economy goes lower, do those who are not in favor of a second stimulus risk being seen as obstructionives in trying to grow the economy? >> no. we are trying to stimulate the economy and they are trying to stimulate the government.

we are treeing to use that to lower tacks for enterprises and small businesses and tax relief for families. we have to zero out the capital gains tax and tax on jobs and enterpriseship for the next two years. we need to stimulate the economy and not big government. that's what the democrats are doing. >> you had to leave at 5 after and we appreciate your time. i know michael from massachusetts wanted to join us as well, but has been very busy as well. >> the volatility in aig continues it. the stock is higher and it has gotten pummelled since they did that reverse stock lit. they have seen a decline in the market cap. whoever decided that was a good idea, that's what you need a congressional investigation for. you don't fool any investor when it comes to that kind of stuff. they are going to drive that stock down, down, down. we start with bertha coombs.

>> we bounced off of the lows poised to go below 8100. we are off of that, a little bit up. a lost traders tell you they are taking a wait and see attitude. a lot of the data on the tape. big earnings from dow. johnson & johnson and bucking the trend and closed that acquisition of cougar, the biotech company. it's interesting if you look at the estimates for jnj. it's 1.08 to 1.14. look at the other three in terms of dow here. for jpmorgan, the loss of .7 cents to plus 70 cents. intel is the 1 to watch over at kantor fitzgerald. they have inventory and orders. that's a good time for the economy. >> the big topic today has been how much supply we had, but yet look what yields are doing. the topic of why or the reasons

put forth are the jobs report. if you look at a month to date chart and remember the jobs was put forth on the second. we are closed 09 third and came back on the 6th. you can clearly see on the chart that the tone of the market changed. rates moving down when we had supply. it's the perfect experiment to see the important issue. weakness in supply and the jobs report tilted towards weakness in the economy. >> thank you very much. speaking of weakness as we discussed here, the perception about the growing economy. or the less bad economy changed when we have the jobs report. for you, jobs are key in this market. >> they are key because household debt is at a record high level. unless you get income growth, the ratio has to come down through deleveraging. what we have seen more recently is the pull back in spending. the faults are growing.

you need the income to make the burden less. >> what do you say to the people who say jobs are a lagging indicator. look at the other factor. >> that are has been the case. it is such a different downturn. if you look at the unemployment rate and all the capital, it turns out the rate is higher than they project, they have to raise more capital. that hurts lending and comes back to hurt the economy. unemployment historic sale a leading indicator. >> it's different this time. >> don't say that. if anything, we have sparked this debate in washington whether there is a need for a second stimulus package. >> that are goes to see how the markets are. we are talking about the recovery and now we are worried about the double dip recession after one report. i think the obama administration should keep their nerve and not launch into a second stimulus package when we don't know

whether we are doing a double dip. >> knowing the economy is mostly psychological, if they believe help is on the way, doesn't that help? >> people believe the help is on the way and it doesn't come because the republicans block it, they panic. >> if you have another one -- >> why would it work a third time if you go back to bush's program a year ago? >> exactly. good to see you. thanks for spending time with us today. appreciate his time. look forward to that as well. big court showdown on monday. the u.s. wanting ubs to give up the names of thousands of american client who is may be using switzerland as a tax haven. the swiss say no way. those numbers and names are going to be kept secret. >> a sleazy way out for the rich or are they good for the economy? we wilhave ahowdown on that foyou. ththththththththththththth

on a down day, technology is hanging tough. the systems. helping the nasdaq today. it's ubs versus the u.s. government. the irs is demanding the swiss banking giant turn over identities of thousands of american client who is may have evaded tacks through offshore accounts in switzerland.

but ubs and the swiss government of digging in their heels. cnbc is in zurich right now with more on the fallout. caroline? >> those are still a lot of uncertainty as to whether ubs will reach a settlement before monday. that's the day when the case is heard by a miami court. especially now that the swiss government is not move for example the position that a transfer would violate swiss law. most people on the ground expect that there will be a lengthy and painful trial. the general consensus is that the u.s. government isn't so interested in the monskpet settlement, but they want to get their hands on the sensitive client data and arrange a landmark decision as soon as possible. if ubs is found guilty, the consequences would be dire. ubs is at risk of losing its

banking license in the state and that could endanger the job of up to 30,000 people. most of what they worry about most is if washington may succeed at tearing down the swiss bankruptcy laws. >> that are would be big news are the tax havens good or bad for the economy? we have a senior fellow and tax reform analyst at public interest research group. dan, i'm going to start with you because you have the less conventional view. tell us why tax havens should be embrace and loved. >> tax havens are great endoities. they do two things. they help to lower tax rates and go back to 1980 before tax competitions swept the world and before tax havens were a big deal. the top rate was nearly 68%. corporate tax rates were nearly 48%. this is why the world economy

was in the toilet in the 1970s, but thanks to globalization and competitive pressure, what happened? tax rates have come down and down. >> tax competition is good for all of us, no? >> we have to step a step back. you think of the ramifications to taxpayers and corp rigzs who are paying taxes. if you air taxpayer and a teacher and your salary is reported to the irs. in essence, the folks who are taking advantage of the bank accounts are avoiding paying taxes. >> it's one thing to sing the praises of a tax haven, but there is no transparenciy in all of this. why not give up the names? if it's okay to have a tax haven, why wouldn't you want

your name published? >> that teacher in pittsburgh has a lower tax rate because of tax havens. the people who might be putting themselves at risk are helping that teacher. >> is it breaking the law? >> here's the key question. who is the best way of lowering tax evasion. they want to care down the swiss human rights policy of protecting privacy. that's way which i don't think will work. have a high tax nation sharing information with each other or the other way is to lower tax rates. we saw in the 1980s under reagan we had a dramatic increase from the rich when we dropped the tax rate from 70 to 28. >> this position is difficult at the moment when the econ me is in dire straights. it's difficult to defend when the americans have to rely on their tax receipts to pay for

common services. >> we have much too much government in washington. >> in the end, you have to think there is a lot going on in america at the moment. it sends the wrong message. >> if you look at it as a wholesale, the tax havens and the sax secrecy, it's wrong on so many levels and for so many groups. it's wrong for taxpayers and businesses big and small and don't have access to the lawyers and these taxes. >> what would the irs tell them? they would get nothing. >> do we have business being asked? >> it's a sovereignty issue.

>> we are getting away from the key issue and we saw what happened here when we had the parallel shadow markets and basically bringing the economy. >> sorry that related to this discussion at all? >> we get the level playing field and all that, but we are asking another government that has their own set of laws on the books. they want to change their lives. >> there laws to protect from being doubly tax and have the ability to. >> we would not do the same. the swiss government gave us the information about the swiss citizens, the irs would say we are not going to give it to you. should it be any different? >> i couldn't say that our system is perfect and needs to be looked into, but i don't think companies and individuals investing in the united states for the same reasons that we

do-over seas. >> the obama administration is trying to aspire to consistency. isn't that the issue to work from a top down position and get the government to cooperate? >> that's a terrible idea. >> add tax consistency? >> it detends on what cooperation means. if they agree to respect each other and income earned, income earned in america and america gets to tax it, that would be fine and we would have honest competition among nations and i don't want a global tax cartel for the benefit of competition to rape us with the tax rate for the spending in washington. do we want big government conspireing with each other or do we want smaller government and competition to help all of us?

>> it's long overdue and interesting to see how you are shifting the victims around here. the true victims are the taxpayers much they don't have the access to the same tricks and schemes and letting the pirates of the caribbean go off on their own and do what they do. the problem is that without strengthening through visiting, we have to do that. i think the g 20 and our congress and president are hopefully moving towards that. >> thank you very much. >> all right. you and i argue about this all the time. >> we disagree. >> straight ahead, gm is out of bankruptcy at lightning speed. can it pump up sales of chevies and saddies and start making money. we have a first on cnbc. >> in a few minutes, money bail

stars brad pit. sounds great, doesn't it. why would they cancel? now it's back on track. what's going on? we have the story of money, hollywood, egos ansuper stars still come. taki its rightful place in a long line of amazing performance machines this is the new e-upe. this imercedes-benz. what does that mean to surfing ceo? ummmm, tsunamin ah... t, a tsunami in business ah, kind of terrifying ... and you have to wat the um, management of your assets very carefully uhuh. you know, you ha to do things... athe speed of light these ys...

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welcome back. we are here with francesca from the times. there is a story going around that aig is going to approach the pay czar and ask permission

to pay more new bonuses to their top level employees and traders unwinding the mess over there right now. they don't have to go to mr. fine berg, but they are and it's starting to create an uproar. >> it is. this showing that they are learning how to play this game and going to him to get political coverage for the bonuses so that it doesn't create a firestorm like last time. >> you look at the 2.4 million and it's less than $200,000 per person? >> yes. >> for a journalist and everyone, but for wall street it's pitsdsy. >> they're have been burned so badly, but they pay bonuses. >> why don't they have to go on this? >> they apply at 2008 and they will have to go. >> all right. >> phil? >> let's go to standing by with

fritz hender and a first cnbc interview. >> we are here with fritz who is ceo of general motors. we will talk about ed whitaker jr.. 40 days is a fast in and out of bankruptcy. do you look back on this and say even i'm a little bit surprised that we got it done? 40 days? >> yes. surprised, but not shocked. we had first of all starting out with strong support from the buyer. >> the u.s. treasury. >> without the financing it couldn't have been done and without the support of the taxpayer, we couldn't be where we are today. then we were well organize and our team and a great team of advisors. we had a press in front ofs and you we worked around the clock, day in and day out to do it as fast as we could. >> in many regard rs, the easy part is over. the tough part is not over. you have to win back and prove

yourself. you have been given a second chance and you said it's all about the customers, cars and cultures. those sound good on paper, but you can change the culture? >> we think we can. the tough part is in front of us, but it's the fun part. dealing with the president in the last year and a half and essential in bankruptcy and the sacrifices and the very sacrifices people made have been tough. you have to be appreciative of the support we have gotten and understand people are sacrificing and make it worth it for people. general motors has to succeed. if you wng about it, it's the tough part. that's okay. that's what we should be doing. >> the skeptics say you guys have been changing culture and a faster company for years and every time you talk about this, the performance gets better, but never reaches the level it needs to. >> well, what we talked about

today, we have certainly had the capability and not only the balance sheet to win, but all the time we had to spend in the last five, 10, 15 years. we can spend time on being external and that will be a lot later with the organization that we announce today. far fewer people and i'm excited about getting back into the car business. >> ed whitaker jr., they said as long as he makes money for the company and how much money he makes. when do you get back in the black? >> i will deal with each of those. we have a new board that will be updating here early august. when we developed our viability plan and nothing i know that would change this. when we developed the plan and launched it in late spring around the bond exchange, it called above break even and a

profit before tax level on the adjusted basis above break even at 11. nothing i know today that would suggest we can't achieve that. we need to update the board on what our projections are and be explicit about it. with paying the loans back, they are due in 2015 and they don't have call protection and no penalty for prepaying early. what we want to do is pay them back as soon as we possibly can. >> why bring back and i don't mean that disrespectfully. bob is incredibly talent and perhaps is the most talented person in the car business with all of his experience, he also brings to a certain extent a double-edged sword. his candor is expressive and not sure he should have said that. >> bob is passionate and cares about the company as i said today. this is the only way i knew it

without preventing them from going through another round. he's a change agent and think the general motors of the future, we need to have people like that who know the company. he knows that we have to do that and know what is we can do and she passionate about it. i thought given what he wanted to do would be nuts not to do this. >> is there hesitancy or push back to take on an even bigger? >> zero. >> they were all in favor. >> there was no push back at all. >> interesting. >> the ceo from the second chance at winning back american auto bayers. now comes the tough part. you have to prove t. back to you. >> you will have him later today at 4:00 p.m. eastern time. we look forward to that as well. a couple of hours to go, but already we are looking ahead to next week. we will get you ready for the

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dow jones average up 3/4 of a percent. take a look. industrial stocks on the way up, stanley works got upgrades and are working higher. whirlpool in the positive and black and decker may be getting sympathy rise for the upgrade. let's see what's up for trading next week. time for the trader triple play. joining us we have rick from the jpmorgan futures and mark is president of m palazzo trading company. next week huge earnings season and most important we have seen in years with all the uncertainty about the economy and economic data. what's the biggest driver? >> we are taking cues from goldman sacks. the price perfection with the two sides of the camp. one of them betting to price perfection and a sell off into

earnings or coming out of earnings. the other half said it would be the catalyst. that's the key. forget about the other data. the only thing is jobs and goldman sacks. >> are you going to figure out all that other data? >> i will be paying close attention. you will see the inflation numbers be very influential and a sustainable ral for the last month, but as well if equity marks do not respond well and the financial part doesn't follow-through the way it did in the first quarter, you will see equities move lower. >> how much lower could the yield of a 10-year note go? >> a bounce around from 325 to 340 or so. to see it reach 325 and head down towards 3% would not be out of the question if inflation is tame and the earnings are poor.

>> wow. what happens if we see yields going down that low. that would be the response. what are you watching? >> you had an ugly week for oil and we are down about $12 for the week. a lot is on weak demand for diesel and for gasoline. even natural gas. there is a weak demand in the factory level and you had government intervention this week and they say they may be checking the big position limps going after traders and i think that has been very bearish for the market. you have seen a lot of people unloading positions because of that reason also. >> what are are you thinking about expectation for earnings? i'm getting a sense that the market may be optimistic and potential when the blue chips report. >> huh? >> i think you have to watch the technicals and i think chip

makers, you will see tech. you will see it do better. watch the 880 level. if we close above that, we will have a positive week next week. >> sorry that likely? >> is it likely? >> i asked you first. >> we have been hanging on. it is likely. all of my mutual funs eyeing that level in the s&p with and we held on. i think i feel positive that we are going to hear 870, 880. watch that level. >> i'm write together down. 880. thanks, guys. the latest crop reports from the usda expect farmers on to produce more corn and soy beans this year. the reaction from the commodities markets. >> actually they are off lows from a little while ago, but on the cme, they are down more than 2%. as you say, farmers are planning more of both, driving down

prices a year after they hit record ryes. they had a crop of 31/4 bushels. they have more than 12 billion and prices are dropping as the get readdicted a lot less coins for ethanol. a year ago corn was $7 a bushel and average $375 this year. it will be cheaper to feed livestock and lean futures up about a point. the usda predicts there will be more corn production as they spin and flood the market report. the reuters are saying processing margins remain so thin that 10% of pork production will shut down for a day including tyson plant.

jeffreys and company calls today's effects a neutral for the buy ratings on monsanto and du pont. >> the michael jackson memorial and now thinning hog. >> i am a one-woman news network. >> thank you, jane. time for the daily look at the most widely followed stories on cn cnbc.com. tell us what's clicking right now. >> this has been hot all week since early in the week when california's budget troubles came to light and a few groups started saying hey, if you legalized marijuana, everyone would be covered. we resurrected with the readers a gallery of medical marijuana. >> you have a gallery. we have a license with the sweet skunk going for $300 an ounce. that goes for $500 an ounce.

you can catch it on the website. what's hotter than marijuana? >> not much. >> pornography. we have a documentary next week. the buness of pleasure to set up for that. we have a slide show that looks at the high points in the industry and is pretty serious. they look at the movers and shakers and what the problems are. people have been diving into that for natural reasons. how do you top pornography? >> there is something hotter? >> more porn. we look at one of the major stars these days. that young late right there. that is jesse jane. she is quite the enterprise and how she handles her business and personal life too. very interesting and people should check it out. that's what we are about. >> something tells me they will. have a good weekend. you can watch melissa lee's special presentation. next wednesday 9:00 p.m. eastern time. we will not miss that. president

obama, he lands in ghana. in a few hours e americaning markets are one of the hottest sectors and what about the frontier markets. how to make moninvesting in africa. >> cominup. stick around welcome to the now netwo. population 49 millio right now, 1.million people are on a conferee call. 750,000 wish they weren't. - ( phones chirping ) - construction workers are making 244,000 next direct connect calls.

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to get started, and learn how secure retirement ince that won't go wn -- guaranteed. call fidelity at... for details about guanteed income for life, and change the way y think about your retirement saving president obama is in the air right now heading to began a. he will be there in a few hours. one of the fastest growing of all african economieeconomies.

what are the smart plays in that country and the rest of the continent, the frontier investments. the ceo of wilson communications, a marketing group to link u.s. businesses with the government of ghana and other african nations. we have an investment specialist in the frontier markets. thank you both. this is one of the faster growing economies. >> ghana represents an exciting opportunity. i used to give in ghana and there was when president clinton visited in 1998. we were promoting the top 100 companies in ghana at that time. they have a stable democratic government and have had five consecutive democratic elections. >> what are businesses are we talking about? >> a wide range. they had great tunes in agriculture and mining and opportunities in cocoa and they just discovered oil. i understand the oil feels there have the capability of producing three billion barrels of oil.

they have gold and dimons as well. >> a lot of commodities. do you have a similar assessment and what about the rest of africa? >> i think there. you are right to highlight the restores-rich sections. ghana is a great example of how it can change and evolve overtime. on nigeria, they are a country twice the size of california with 151 million, 40% under 14. that sounds like a consumer boom. in west africa, they have consumer related plays and teleplays. that gives me access to that demographic and consumer change. i like the stocks, but would rather have exposure to the consumer. >> you need a lot of patience when you invest to realize the kind of gains thaw both realized couldn't be had. >> one of the most important

things, they need an extreme makeover with business in africa. you have to go in not with the attitude that you know everything, we are bringing in american ingenuity and technology, but we have to listen and understand and learn about the culture. culture and family is important and the fact that president obama is visiting there with his family and the first six months of his presidency is very significant. ghana and the rest of africa is your $1 a day customer. there 900 million people and you can fit the united states into africa four times. a lot of people don't realize how vast it is. >> when you talk about investing there and are there adrs for the company that is listed in the u.s. and can benefit from africa? >> they are listed on the nasdaq called micc. it's a pan african cellular company with operations in the

mideast. there a few nigerian banks listed through their online accounts or brokers. there ways to play this. you do need to be patient. i think the next to 10 years will be defined by the consumer boom taking place in africa. those are the ones i think will work. >> whenever the list comes out every year with various organizations that do it, where is there the most corruption or the least? a lot of african countries, nigeria in particular come up high on the list and people get nervous. should they be? >> you have to do due diligence. that's the major thing. you have to look at regents of business. the one thing is to help africans help themselves. there a lot of opportunities in africa and it's the last real frontier. >> we're appreciate your time. thank you very much. >> thank you. >> we go back to jane wells, the

one-woman band playing another instrument for us. what do you have? >> a bigger instrument because of the budget crisis out here. the universal of california proposing that they will furlough tens of thousands of employees in an effort to cut the budget 20%. many will see the paychecks reduced. this on the same day when bank will stop cashing the ious and most state offices are closed as the first of now three furlough fridays. they are saying if you have to pay the state of california tacks, it will accept that iou and that defeats the purpose of bringing more cash whiles enning out ious. that's the latest. >> it is complicated. >> we saw you shake your head. >> amazing that it is happening in the united states. this is california and the governor is saying that they have solid credit.

that undermines his position. >> good point to make in the light of the discussion about africa. you would think it wouldn't be hard to get a movie made with brad pitt as the star, but stereo executives canceled money ball. >> now the mogul went to the bullpen for a new writer and the movie is back on track. we are talk brad and baseball. what's the problem? we will tell you when we come back. to stay on topf my game after 50, i switched to a complete multitamin with more. has gingko for memor and concentration. plus support for heart health. one a.

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it is one of the greatest books on baseball ever written. moany ball by michael lewis. is it ever going to make it to the big screen? the nonfiction account of billy bean had brat pitt and days before shooting was supposed to begin, they yanked it saying it needed more.

the west wing creator, aaron sorkin. hollywood reporter, good to see you. brad pitt seems to have a great team here. is this a reflection of how nervous hollywood is at the moment? >> no question hollywood is risk averse when it comes to making any budget project for an established brand like a star trek or transformers. this is the poster child for that situation where you had a star and an a-list writer and director all ready to go. it costs a lot of money to pull the plug, but with the script he turned in, they weren't ready and they were willing to take a hit on the front end to not risque movie that was not as commercial when it was completed. >> he will take another pass for the script. is this about how poorly baseball movies tend to do. >> based on movies they had a checkered record when it comes

to box office. with that said, this movie if done right is not an easy book to adapt. it is an underdog story and a team that didn't have a big payroll. but again it speaks to how difficult it is to adapt and get it done. no guarantee even with him on board this is going to be made or be a hit. >> what do you think about the change? why is it more marketable with him there. is that different? >> i was talking to a couple of sources and the consensus is that it's not so much that he brings something that they don't, they are probably two of the writers who are right behind him on the list of a-listers in hollywood, but it shows they will reach deep down into the lineup and go to every slugger they can. if sorkin doesn't work, they will pull the plug for good. it's the equivalent of bringing

that great slugger off the bench and in it at the bottom of the ninth. >> we're love cliches. george clooney, isn't it a baseball movie knocked around? >> george cloon he a couple of productions and the other interesting thing is he just move friday warner brothers to sony as far as his overall deal goes. that's another example about hollywood and warner brothers coming home for well over a decade and she not as bankable as he once was. >> what? is that possible? >> you look at a movie like leather heads and they don't work at the box office. they are very star friendly and willing to indulge a writer and director, he said not for us. we have to go with the big harry potter. >> they are great friends and the competition begins whochlt gets the baseball movie out first. thank you very much. when we come back, a new way of calling a bottom.

we will show you what we mean in a moment. >> you have to stick around for this. the marks in the meantime lower by 42 pots. the s&p off by about three. is all we humans get. we spend them tadmills. we spend thein traffic. and if we get lucky, really lucky, it dawns on us to gopend them in a world e a simple sunrise can still be magic. twenty-five thousa mornings. make sure some of th are pure michigan. yo trip begins at michin.org. what does that mean to a surfing ceo? ummmm, tsunami in ah... surfing is sort a thrilling prospect, but, a tsunami in busine is ah, kind of terrifyg ... and you have to watch the um, management of yo assets very carefully. uh-huh. you know, yohave to do things... at the speed of light these days... to staum ahead of the wolf pack.

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s this is the moment from his whole international trip. the photograph that has been making rounds around the world of president obama during the g 8 summit in italy standing next to french president car soezy. -- sarkozy. it would appear that president obama is -- how should we put it? admiring this young lady. >> i think you were going to call it. >> it appeared from the expression on sarkozy's face they found common ground. >> she is a 17-year-old from rio and she was one of the young delegates and the headlines with the photo is very funny. has barack obama been taking

lessons? >> this is taken from a video. of this encounter and i have not seen the video, but one of the producers said the video suggests the president was not doing what it would seem. >> it's just when you do the image capture. >> for appears that way. >> jump in any time. >> what are can i say? i'm italian and i know all about it. he is taking lessons. >> great having you with us. >> that's "power lunch" and thanks for joining us. >> "street signs" begins in third seconds. fritz henderson said gm would be nuts not to keep bob lutz as gm emerges from bankruptcy. gonzalez who oversaw has been appointed to a new 14-year term and they said