Transcripts For CNBC Squawk On The Street 20091120

monday. "squawk on the street" is coming up next. >> censored, nothing positive. live from the financial capital of the world, this is "squawk on the street." good morning, everybody. i'm mark haines. >> i'm melissa lee in today for erin burnett. first, front and center, futures are down fairly significantly this morning. six points below fair value. s&p 500, about 45 points below fair value. on the dow jones industrial average, we have a lot of stories weighing on the market. disappointing earnings when it comes to eps, revenue numbers as well. >> we're watching the markets closely this morning. plus, should congress and the government accountability office be sweeping new powers over the fed? >> bill sponsored by representative ron paul has made its way through a key committee. this morning, what it could mean for the markets. >> and a new move against goldman sachs jind bonds pool. but first, let's get to the markets. 28 minutes before the open. we start with cool breeze here at the big board. >> the story of the day, the dollar has been stabilizing all throughout the week, ever since bernanke gave his speech on monday. the stock market rally than iffy. options expiration day, you wouldn't know it, the volume remains light this week. normally you would have picked up heading into options expiration. that's not happening right now. let's talk about earnings. homebuilder d.r. horton, reported greater loss than expected. orders rose 26%. we've been seeing the positive trends with the builders. they just can't make a lot of money off the houses. ann taylor, bottom line, down 6%. the bottom line was better than expected. revenues were light. this has been a problem with the retailers for a long time. also said sales in the fourth quarter would be a little bit below the third quarter? sorry. that's a bit of a problem. that's why the stock is trading down. traderattorne tradertalk.cnbc.com. analysts had been raising their estimates for a couple of months now on these big names. >> it doesn't matter, bob. dell was a disappointment. gross margins declined as well. nasdaq is going to open lower. mostly because of that disappointment in dell. here's dell down just about 7%. if there's a bright spot in the report, they do say they expect revenues in the current quarter to improve over the third quarter. so you got to hang you hat on something there, i guess. google shares under pressure as well. online book settlement winning preliminary approval. other big techs in the red premarket. microsoft, apple, among those shares giving some back. look at paul. there's an interesting story developing there. stock is off 2 3/4%. "wall street journal" says paul has cut the price of the palm pixie, the new smart phone, by 75%. amazon is telling the palm pre, the previous version, $79. that can't be good for margins when you talk about steep price cuts that looks to be under pressure at the open. let's go down to the my neks. >> the december and january contract. keep in mind january is where the liquidity is, as december will expire today. we have that january contract trading under $77 a barrel right now. of course, the strength in the dollar is the reason why we are seeing commodities across the board losing steam here this week. and we're also keeping our eye on the euro. the euro near a very critical level here. and if it breaks below this 148 level to 147 we could see further pressure on crude prices. meanwhile, gold holding up pretty well considering what is happening to the dollar. we're looking at gold prices that deutsche bank says will continue to overshoot toward the end of the year unless we see a risk of a short-term dollar correction. we're also looking at more central bank buying according to deutsche bank helping to prop up the gold prices. rick santelli, to you in chicago. >> we have an interesting breaking news in a way. the dollar index is great benchmark. everybody has grown very accustomed to it. something just happened in the electronic trade where it shot up a bit. i don't know if details yet. one thing we do know, i can't tell you about cause and effect with, you know, words and what the behavior is, but we all know that the short presence has been rather huge and highly successful. and we also know that 76, 75, 80 to 76 in the dollar index has to be where the buy stops are to neutralize the short positions. you know, it's shoourns. somebody electronically might have said, up some of these stocks. it's going to be interesting for the next half hour to see if this is a fat finger error or to see if something really liken tense is going on in the dollar index on this friday before a holiday week. back to you guys. >> thank you very much, rick santelli. well, congress is trying to gain more control over the fed. a proposal with the republican ron paul making it through the house financial services committee late yesterday. senior economics reporter steve liesman getting new information on that right now. steve, what do you have? >> melissa, thanks very much. i just talked to a staffer about this. surprise passage of the ron paul amendment last night to the regulatory reform bill that would allow audits of the fed's monetary policy. fed officials fear could be a major blow to the independence and threaten higher inflation. congressional staffer i talked to suggested barney frank will continue to look for opportunities to alter the paul amendment. what he said was, quote, the desire for chairman frank is to make sure monetary policy is truly independent. he will continue to work with his colleagues to make sure that there's no ambiguity there. there's statement that we just received from a congressional -- senior congressional staffer. what's all this coming from? a 1987 congressional exclusion bar the government accounting office from auditing the fed's monetary policy. indeed, there are 19 other audits of it going on right now but not about monetary policy. the paul amendment which passed 43-26 repeals that exemption. ron paul in an interview last week on "squawk box" defended his bill. >> 75% of the american people say, yeah, we should know what's going on in the fed. so that's 75% of the electorate saying that we should do our job and look at the fed, is the reason why there's well over two-thirds of the members of congress supporting this bill. >> that's ron paul, 300 co-sponsors on one hand. cnbc is learning the opposition to the amendment including both former chairman of the fed, alan greenspan and paul volcker, in a rare signing, question with assure you this protection of internal deliberations in reaching decisions is indispensable in the federal reserve's conduct of monetary policy. the fed's concern, it's already going to be under political pressure. unemployment will be unusually high, most likely when the fed raises rates. there are fears this bill could increase that political pressure. up next, a check on yooieur markets and a wrap-up of the asian action. plus, gary gensler weighs in on potential regulation reform of over the counter derivatives. and let's take a check on futures. as we head to break, lower open across the board. crashes ] [ male announcer ] an all-wheel drive v8 hybrid. one of 12 world's first innovations. the lexus ls. inspiring an industry. a reactive pedestrian detection system. one of 12 world's first innovations. the lexus ls. inspiring an industry. we're back. let's check out asia overnight. jap japan, oh, we were down across the board. japan's nikkei dropped. hong kong down 0.8%. shanghai composite down 0.4%. first decline in six sessions. australia down 3.6%. louisabojesen in london, what's going on? >> goodness gracious, in london, slightly lower trade here this afternoon. lower across the board, in fact, except for a little bit of positivity coming through from belgium as well as the nordic region, from norway. but a main markets are lower by somewhere in the region of half a percent to 1%, give or take a bit. we're being dragged lower by the big financial service out there. the autos, some of the banks, some of the chemicals being act nif today's trade. overall, it has been a little bit on the ground with regards to big corporate stories. there are a couple that i do want to draw your attention to, include that of vivendi. we're hearing according to the latest reports that vivendi and ge, working towards coming up with a deal with regards to the price of the vivendi stake in nbc universal that they hold 20%, ge and comcast could be interested in i buying. they want to wrap up this deal, preferably by next monday. not reacting all that much at the moment. lower by 0.3%. back to you guys. at a hearing on -- thank you. at a hearing on capitol hill on tuesday, lawmakers discuss potential regulation reform of over the counter derivatives. chairman of the cfdc gary gensler was there giving his view on that subject and more. he is here with us right now. gary, in terms of conveying to lawmakers the number one priority here, there are so many aspects of reform, what is the most important thing you would like to see happen? >> well, i think we need to bring comprehensive reform to the over the counter derivatives market and the number one thing would be transparency. on the floor out here, securities, when they trade, the public know their price and volume. i think we need to bring this same reform to this large, unregulated market. >> in terms of issues out there for lot of traders, you know, one issue that always comes up on the "fast money" desk is what's going on and potential regulation of futures contracts, especially when it concerns natural gas or oil, because there are a lot of etfs used by retail investors and institutional investors alike that could be impacted by rules. right now we don't know what the rules of the game will be. >> well, the commodities futures trading commission is looking at publishing rules. we've had this tort and congress tells us to use it to set position limits. speculation in the markets is a good thing and needed to meet up with hedgers. but just to guard against concentrated speculation or excessive speculation and large positions. >> what do you think of the proposals that are on the table for financial regulatory reform? you know, there seems to be a theme here that we have too many regulators, but that we need more than one. >> well, i think that financial system failed and the financial regulatory system failed. even though there are some stability coming back, we can't take our focus off bringing real reform. there are big gaps in the system, like over the counter derivatives where we need to bring transparency to these markets and lower risk. >> is it possible, in the case of the over the counter der rifives, and the kind of derivatives that, things like that, you know, people forget prior to the '70s, there were no standardized options. isn't it possible that standardize these derivatives so you can trade them trarns parent oi on an exchange? >> absolutely. though we don't have good statistics we think well over half the market in these derivatives are standard enough to be cleared and hopefully then listed. and that brings great economic efficiency, promoting growth, all the market participants, whether you're a corporate treasury, i like, you'll see where the trades are. like on this floor. >> rick santelli has a question. rick? >> mr. gensler, you have a really tough job and i sympathi sympathize. you just said about half over the counter derivatives could be standa standardized. many traders are worried about the other half and the exemptions. transparency is a good thing, record keeping and who owns what. over time it will prove to be a big catalyst to a lot of unraveling. our question is simple, you need to fluid margin on a daily basis in assessing what that margin needs to be is all but impossible in some of these digital type der rifives where they have no value no, value, no value. then they're in the money. capital requirements and having enough money setting aside before things get dicey. isn't that really the mission? >> well, i totally agree with you that we need to have significant capital set aside at the large banks, at the swap dealers to protect the markets. we didn't have that in aig. and every american has $600. that's $180 billion across the country. loan to aig, much of which we won't get back. we need capital and we need transparency. >> do you have any ideas how we can come up with a certain amount of cash every day, every week, just in case something goes wrong, because those numbers aren't going to sit pretty with the people doing these. they don't want that extra capital. it's all about the leverage. >> well, i don't think there's any free lunch. i think that our society, through the banking system, got highly leveraged. we need to address it through more capital. >> gary, i've got a question for you because obviously the mission of the cfdc is all futures contracts. that includes commodities. when it comes to one of the potential bubbles in the making and that is gold, we're having people come out saiding $2,000 an ounce, a big part of the rise in gold is if fact that there are a lot of etfs, mutual funds buying the actual asset over which you have no control, technically, because they're not futures contracts. >> that's right. >> does this concern you? do you think that there is room or need perhaps to regulate this area of the market because this looks like a potentially speculative area? >> well, i do think that all commodities relate to each other, and the futures markets relate to the cash markets. you're right. our jurisdiction is really just over the futures markets. that's why we're seriously looking at reimposing position limits in the energy products but we're also then would look to see what relation to the metals markets as well. >> so you could see an area of an opportunity here to get ahead of the problem by imposing or trying to impose some sort of regulation over the physical commodity because that impacts the futures trade? >> our jurisdiction really stops at the futures markets. >> so it's a hole? >> the cash markets are separate, that is correct. >> okay. gary, thank you very much for your time today. >> good to be with you, melissa and mark. in moments, the word on the street, the buzz beyond the big board. >> and then the first take from the second city with peter, market strategist and principle in chicago. i'll take a check of the futures markets as we hit the break. and we are still poised for a lower open. just about 45 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black. red, well, no one wants that. black on the other hand, has strength. black is always in style. it's what business looks best in. black is where growth and success happen, and it's easier to get there and stay there in ontario, canada, especially with our competitive tax rate. ♪ ontario, canada - the world works here. oh, yeah, we're back. we're live on the floor of the new york stock exchange. s&p is down 6.70. looking at a loss of maybe 50, 60 points on the dow at the open. not at all what gordon charlop told us to expect. you're on the floor. the man, the myth, the legend, dr. know, gordon charlop, managing director of rosenblatt securities as well as a cnbc market analyst. it takes forever just to introduce you. >> thank you. i would appreciate that. a little enthusiasm here. >> so many credits to your name. >> kind of like, i consider being here one of your credits. let's talk about this market for a second. >> by all means. >> the dollar still primary focus, mark. that's the fair of why you see the weakness in the futures. although, expiration here, to the buy side slightly. interesting, resilience in gold indicating we're maybe getting to the next cycle. guys are buying it because they think they have to buy it. that's something you have to keep an eye on. really, right now one of the more interesting things -- >> i'm sorry. finish that thought. >> i was just going to say that may be positive here is the treasury announcing last night about the sale of t.a.r.p. warrants, indicating they they be trying to pull out here. because those are the kinds of things we've been looking for. what is their extrication strategy. i would say overall, we're seeing pretty limited volume and volatili volatility. that's because the theme of the day from the guys up stairs seem to be don't do anything crazy, look to next year. >> great strategy, gordon. you talked so long i don't get to ask another question. gordon charlop, rosenblatt, have a great weekend. up stairs to melissa. >> thank you very much, mark. let's get the buzz beyond the big board right now in midtown, manhattan, art hogan, managing director at jefferies joins us. art, always good to see you. >> good to see you. >> jpmorgan this morning raising the s&p 500 target for the end of the year to 1160. you are still a bull here? are we running out of steam? >> no, 1160 is not -- it's just a spinning distance from where we are right now. if you look at what the driver behind raising a target on s&p 500 would be is a belief that the earnings estimates for 2010 are accurate. when we started earning season the estimate for the s&p 500 was like $71. closer to $75. probably nudges up a little bit there. if you put a 15 multiple on that you're already well beyond 1160. i clearly don't that's much of an issue now.ing that's really going to slow the momentum that we've seen. it's liquidity driven. the only time you get a bump in the road of late is when the dollar strengthens, in which commodities pull back a little bit. i think we should be okay heading into the end of the year. >> all right. when it comes to gold, art, we've had a number of people come out saying $2000 an ounce next year is in the cards. can that happen if the dollar goes into some sort of a correction, reversing the downward trend that it has seen? if there's some scenario where the short squeeze comes on, can we still have gold move higher? >> that's a fair point. if we do see that short slide that we're seeing in the dollar c correct for an extended period of time, then i certainly think that's going to put downward pressure on the price of gold. it certainly makes sense. i think there's a lot of fundamentals supporting this run in gold, not not the least of which central banks are buying it, not selling it. you're right, if we get any sort of support of the dollar here, even in the near term, then gold has got to pull back a little bit. but it's hard to imagine with us probably being the last central bank to break the monetary policy to see anything that's going to sustain a balanced or support of the dollar. >> art, i've got to ask you quickly about this article in the "wall street journal." i understand this may not be your direct department. an article about an equity analyst left ak accelerating on the stock and felt pressure because he put that accelerating there. internally, is there a culture in putting the accelerating a difficult thing? that has existed at wall street for quite some time? >> absolutely not. the rating on the stock list was well supported. i think that was illicited in the article. i think the pressure he felt was externally from both companies and competition, i don't think he had any internal pressure whatsoever. >> the pressure may have been on the company in which he put that accelerating? >> sounds like it. >> all right. art hogan, thank you for joining us. >> thank you. all right. we've got the final countdown to the opening bell on the other side of the break. all right. you're watching cnbc's "squawk on the street." we are live from the financial capital of world, the new york stock exchange. the opening bell is set to ring in three minutes. take a look at the headlines before the open here. house financial services committee passes a plan by representative ron paul to increase oversight of the federal reserve. homebuilder d.r. horton posed a narrower q4 loss. dell says pc sales are increasing with the release of windows 7. count you down to the opening bell, let's go to market strategist and principle with yastro order. we've got the dollar. feeling any sort of move higher that we might have had today. that relationship is back on? >> well, i think the interest rates are driving most of the dollar moves and i think interest rates now, the t-bills have hit zero are getting to be about as low as we expect interest rates to get. once you get interest rates as low as possible you have a hard time justifying selling the dollar anymore. you look for profit taking in the dollar. and maybe a nice rebound. you can also see with the geopolitical unrest out there, the united states has the advantages of being on the other side of the globe with the most powerful army in the world. and i think there's also attractiveness about being in u.s. assets just because it's a little bit of a scarier world this month than it was last month. >> all right. how do you interpret where we are right now in the market move? the dollar is moving slightly higher, but on the exchanges, we've had lower than average volume for much of the month of november. not really moving on much here, peter. >> no, we're not. again, you know, i've been looking at everything from the top down. and u.s. interest rates are amazingly low. that's because the fed has pushed them down. they're trying to keep interest rates low and spur the economy. but when the process of doing that what they dou is they drai the opportunities. no longer can you keep money on the bank or money on the sidelines. kind of a funny situation. my daughter put $100 into a kitty savings account and we've been there for almost a year and she's looking forward to get that quarter next week for having waited all year. these rates are pretty pathetic. it's forcing us to now take reckless risks in our lending. >> thank you very much, peter. >> here we go, the opening bells. here at the big board, china based hotel chain seven days inn. celebrating ipo today. at the nasdaq, it services provider ness technologies, as in elliott or loch. ticker nstc. >> thanks for the clarification, mark. i was confused. market reporters are standing by everywhere you want to be. kick it off with bob pisani here on the floor of the stock exchange. bob? >> here's a cloud peak, ipo here. and we priced it $15. $16 to $18 was the ipo. the ceo will come down and make the first trade. 100 shares, go over and do that. that will happen in the next couple of minutes. story today is simple. the stocks while they're open to the downside, futures came off their lows as the dollar came off the highs. that's been the story all week, all month, last three months ever since bernanke gave his speech on monday, dollar is stabilized. the stock market has been fluttering around. we've got an options iexpiratio date. you can go back a few years. it picked up. that hasn't happened this week here. let's talk about the homebuilder d.r. horton the trading down this morning simply because they had a greater loss than expected. but look internally. orders increased 26%. that was a lot better than most analysts expected. cancelation rate, 27%. still high but it's not increasing. ann taylor, down 6% preopen the whole morning. earnings better than expected. total sales were down 12%. here's the bad news, fourth quarter sales expected to be a little bit worse than the third quarter. that's not a good metric for them. that's why the stock is open to the downside. scott, it's about dell today. >> and you knew it would be, bob. we opened lower half a percent, right where i told you, approximately we were going to be. dell though down 8 1/2%. revenue, earnings below expectations. gross margins below expectations. dell expects revenues in the current quarter to improve over the third. so that's something clearly to watch for in the pc business, specifically in dell. google down. microsoft is down. apple under pressure. big cap widely held stock is under pressure. palm is cutting the prices, third prices are cutting the prices on the their smart phones, the palm pixie by 75% is what the "wall street journal" says. palm cut the price of the pixie. amazon selling the palm pre for $75. intuit is down. posted a smaller than expected loss. guidance though was a bit weaker than the industry was looking for. taleo, secondary offering. $20.25 a share. putting out 6 1/2 million shares. let's go down to the nymex. >> traders here watching cftc chairman gary gensler's comments about reimposing the limits in the energy market makes them think even more so that more investors are moving to the sidelines. large hedge funds, investors want to take the profits they have and wait and see what happens with the regulation and they have moved to the sidelines. that has caused some of the volume to come off here in this market and in others. meanwhile, looking at what is happening to the products and the product demand how low that is going. we're just seeing a headline crossing about the energy permanently shutting down the city refinery. they say there is plenty of storage when it comes to "discover distillates. gasoline demand that bp ceo says it's never going to return to 2007 levels when you think about biofuels and the energy efficiency that is going to eat into consumption. rick santelli, to you in chicago. >> thank you, sharon. several days ago we brought up issues going on in bills. these are above and beyond the issue of debt ceiling and issuing less of them. if you look at the charts of three- and six-monday bills, the one month doesn't cut it until we start to get into december. because, really, at the epi center of why investors are doing a re-do of last year's end of the year is because not necessarily crisis safety management, but just piece of mind safety management. whether there's collateral issues or anything going on, they want to be in something safe. we had certain bill rates, of course that mature after december 31st. briefly go negative yesterday. it doesn't happen very often. even the treasuries may be prone to a terrific month of december for a same dynamic as we get to points where if you get more negative bill yields and less issuance of bills, they're going to have to go somewhere. back to you. all right. a quick check on the markets. the dow, as the futures indicated, down just a tad. not down nearly as much as we thought we might be. just, what, 0.1%? yeah. no, 0.2%. those numbers are getting smaller and smaller as i get older. i noticed that. not my eyes. they're making the numbers smaller. we're losing half a percent on the nasdaq, a third on the s&p 500. your cnbc edge now with david pledger, and jeff clinetop, chief market strategist with lpl financial. david, you say 10% from here either way wouldn't surprise, you right? >> it wouldn't. >> 10% down would be a buying opportunity it. >> would be. it gives us a great entry point for those people on the sidelines or a little bit late to the game. if you look at it sort of like fiber in a healthy diet, given how far we've come, the opportunity for people to get in at a reasonable entry point is not bad for the look haul. >> jeff, you're expecting the rally to continue and you still like tech, huh, because a lot of people are saying tech seems to be weakening. >> yeah. i still like tech, mark. i think that as we go through the fourth quarter we will see pretty good sales growth there. there's still a lot of worries about the consume there holiday season. and i think ultimately the consumer will do better than expected. i think the business spending side, particularly exports to the emerging markets are really going to shine through in those tech results when they get reported. i think that will bull the sector higher through the fourth quarter. >> david, in thinking about sectors across the board and in anticipation of a potential 10% correction in the market, which se sectors will fall the hardest, in your view. >> unemployment, or employment, or lack thereof and consumer discretionary. it will be interesting to see if early figures coming in for holiday spending. that could either surprise us on the upside and drive the market or, on the flip side, be a leader that take a step back. >> when you tell your clients that you could expect a 10% swing either way, how do you then follow up and say, this is what we should do to protect your portfolio in anticipation of a 10 -- i mean, a 10% swing either way, a are you supposed to do? >> we're not letting our clients get lulled into a sense of security as much as we love where the market has been. we're taking a more conservative posture but still having our clients invested. one area that we specifically are talking about, talk about gold. there's this great gold rush that's occurring. sure, it's an asset class. roughly 5% growth oriented portfolio in gold. but many people have a very short-term memory. if you bought an ounce of gold in 1980 it took you 26 years to break even, not even accounting for the time value of money. it doesn't mean gold is not a great hedge against inflation when that ultimately does rear its head, whether it's three months or three years. clearly we're not making a major sector bet in that arena. >> it's not even a great hedge against inflation, long term, is it? i mean, the inflation adjusted price of gold back in 1980 is $2,000. >> right. >> more than. yeah. >> and now it's a little more than half that. so, i mean, i seems to me if you look at the history of the gold market it can catch fire and become worried about something -- >> as it has. >> yeah. and you can make money in those periods. >> right. >> but just as we learn in the last few years of buying and holding stocks may not be too cool, buying and holding gold isn't too cool either. >> you're right. that's why when you have this great gold rush and people say, i'm going to hold a tan jilk asset because i've gotten beaten up so bad in the equity markets you don't want to jump out of the pot and into the fire. that's what i think some retail investors are doing. >> jeff, let me ask you about commodities specifically. when you look at gold versus copper or silver, in reality copper has done better than many other commodities so far this year. they may be more leveraged to a recovering global economy. which would you say is a better bet at this point of investor wanted to play sort of a weak dollar trade and wanted to diversify their portfolio, would you go for more industrial metal or something like gold? >> i would favor the base metals over the precious metals. i think we've been sort of in that position all year. i think that will continue. emerging market infrastructure spending, there's so much of that going on. emerging global manufacturing recovery. all that speaks to still a very positive environment for base metals. so that's where i play. but listen, there's so much demand for commodities as this cycle begins to turn around, fears about inflation. declining dollar, really it's hard to miss when it comes to commodities here lately. we continue to focus on them. here's the key, buy the stocks, not the commodities themselves. the stocks tend to out-perform in the short and the long-term the underlying commodities. that's the way to do it. look to global material companies, not buying the futures themselves. >> all right, gentlemen. thank you very much. in two minutes, stocks on the move including a computer maker and an athletic footwear retailer. plus, bond yields back at three crisis levels. is this a sign things are getting worse again or just investors who are made their money settling up before year's end? let's make our way to the commodities corner. a very special soy edition for you this morning. take a check on soybeans, higher by 1%. mark is smirking. soybean oil meantime, down 3/4 of 1%. take a check on soy meal, soy meal is up a whopping 2 1/2%. it's worth the most of the of the soy complex. >> i'm soy impressed. >> we want to brick your attention on stock tons move. brian shactman is back at hy. >> soy-free zone here with my diet. of course, so much talk about dell, 54% profit drop. talk about hewlett-packard, are they winning the war? they report on monday. after that 3com announcement we did learn they're going to beat most estimates by 3%. stock is up since the march low but neutral the last month or so. this foot locker, beat on the top line, pretty big miss on the bottom. ten cents versus 13 cents. ceo citing weakness in the united states. comp store sales down 8%. this stock has underperformed the broader market since the march low. finally, a little more detail on intuit. similar story than foot locker. beat estimate on the top line, missed on the bottom. operating margin, 6% below expectations. lowered next your's guidance but did it for full year. stock is down 4% the last three months. mark, back to you. >> thank you, sir. bond yields back in pre-crisis levels, a sign that things are getting worse again or just investors settling up before year's end. kevin, head of fixed income sales trading and research with morgan keegan. kevin, don't tell me this is a reflection of things getting worse again. >> no, not really. i think there are two forces at work, mark. there's the fear, the fear of the recovery or a lack thereof, the fear of risk assets and fear of liquidity as we approach the end of the year. the other is greed. you've got hedge fund managers, you've got corporations, you've got broker dealers, all of that great years in bonds for this year, and what they're looking to do here is buy some assets, they go right after the first of the year. climb up in the tree and watch the market between now and the end of the year. so really nothing that is going to, you know, really scare you like they did last december or previous year. certainly worth watching, especially after the bond securities between now and the end of the year. >> the credit rockets, let's say, three years ago. let's say that is a 100, on a scale of 100. what grade would you give the credit market in terms of functioning today? >> functioning a lot better today, but again, we're still talking about a lot of government programs at work. you really don't know how the credit markets are going to work until the crutches are taken away. so let's call them 80, 85 right now. but they could go to 60 if you pull stimulus away and the market doesn't feel good about it, especially the banks. so right now they're running maybe 80, 85 on the grade. but you know, it's not without a lot of help. >> all this being said, kevin, where are the opportunities rye now? rates are generally low across the board. where can investors find yield? >> you can find yield away from treasury. still in safe assets like federal agency, securities and high-grade corporates. in the higher yield corporates, that deal has been really, really good for 2009, but those spreads are getting really, really tight again, i'm not sure that's a good play continuing forward. agency spreads if you want to keep safe asset, at or near government credit quality of spreads, 25 to 50 basis points, depending on what you're looking for, still a good value. >> according to my notes here, the treasury market is receiving a lot of interest in people around the world, still wanting to buy the safest debt in the world. >> yeah. >> how does that square with the weak dollar? >> well, again, if it's a matter of entry point. if you're a foreign investor and the dollar is weaker, you've got a good spot in which to buy dollar denominated assets. now, how long you plan to hold them and what the dollar does after that is really part of the gamble here. but right now from an entry point looking at the other available credits of the world, you still have a good buy if treasurie treasuries. >> so the dollar -- i want to make sure i understand. >> yeah. >> so the dollar could continue to weaken, but that's not going to adversely impact the bond market? >> well, i mean, again, it depends on how -- what level we're going to weaken. if we're slowly trickling down, again, i think there will still be a lot of interest in treasuries or dollar denominated securities, because of the alternatives. you can go to gold, which a lot of investors have been. there's still a lot of interest in the credit markets. if we see a plunge, then we have a problem here. but the dollar is stabilizing some, getting a little bit of a boost. that's going to help the assets. >> so it's not the decline, it's how the decline happen, kevin. even if we go down on the dixie another 10%, if it happens gradually over time, that's not an issue? >> yeah. the real scare is going to be in the velocity of the downturn if it happens. >> kevin, thanks for your time. appreciate it. >> you bet. thank you. all right. coming up next, the five-star manager of $24.5 billion under management who thinks strength in the fixed income market is going to continue to drive equities stubbornly higher. where he is putting his money right now. but first, a quick look at some early gainers on the s&p 500. would you think putting iraq and investment in the same sentence is crazy? some hedge funds and mutual funds don't. we traveled with a few on an iraqi road show and you'll get to come along, too. turning our focus to five-star investing, the ivy asset fund, when needed, using hedging techniques. ryan caldwell is a portfolio manager of this fund. ryan, welcome to you. you've got 15% in gold. >> yes. >> how are you investing in gold, in the metal itself or in the miners? >> this product has the ability to hold physical bullion. at the current time we do actually hold physical bullion and the products, 15% of it is in 100 ounce and 400 ounce bars. >> oh, really? >> yes. >> you want to play -- >> you ever bought one? >> they won't let me take them out of the vault in scotia or i would take them with me everywhere i go. >> why do you want physical gold? >> our premise in investing the gold is because it's the only currency in the world we're comfortable with, given this product can be denominated in any currency we want it to be. we're not bullish on my currency anywhere in the world except for gold, given what central banks are doing around the world, not just the fed but other central banks. and so we wanted to be as close to the physical asset as we could. and we had some issues with the mining stocks back when we started investing in gold seven, eight, nine years ago where the input costs were rising faster than actually the physical cost of bullion. and so we wanted to be as close to the commodity as we could get. >> how are you hedging yourself, if at all, when it comes to your gold position? >> we can use gold futures in this product to hedge gold. when we see the product, when we see gold getting, you know, either ahead of itself or as a way to reduce just gold exposure from a currency perspective, we can use futures. >> the bars, i take it, are -- involve less of a premium than coins? >> yes. and we do actually do get some leverage through physical storage cost because of the size in which we own gold bullion. for us it's much better and for the shareholders it's a more effective way to actually get a gold, in some instances, even more so than the etf. >> okay. let's move on to the equity fix. we're spending a lot of time. 80% of his portfolio -- >> the gold story, you're right. >> fascinating. >> ryan, where are you finding the best opportunities right now? >> our portfolio at this point is tilted toward global growth. we have this bigger valuation and everything that's cheap across the globe given that the world didn't end, credit spreads didn't collapse. back in march and april have had a tremendous run over the last six, seven months. our portfolio today is largely geared toward companies with stronger top line prospects on a two, three, four-year outlook. and in our framework anyway we're starting to see growth looks cheap relative to value. and so the portfolio has really moved toward equities and toward groet-related equities. >> okay, ryan, it is a pleasure to have you was. >> just for the record, ryan likes -- or owns taiwan semi, mediatek, qualcomm, china life, wynn resorts, stuff like that there. thank you. >> thank you. just around the bend, our market whip, crammed full of stocks on the move. plus, your "squawk on the street" daily jobs report state by state edition. how are things where you live? and forget about putting your money under the mattress, if you put it in the mattress you would be up well over 400% since the old bottom. ceo of temperpedic is our guest next. capital of the world in the heart of lower manhattan, this is it, second hour of "squawk on the street." today i am on wall street, 7:00 a.m. on the west coast. half hour into the trading. and stocks making modest moves. no big deal. alcoa the big drag on the dow. merck, the best performer. dillard's higher on the s&p. and five new companies hitting 52-week highs. melissa? >> thank you, mark. we're joined here by bob pisani at the big board who is just talking about how he couldn't stay up to watch "twilight" last night. >> i almost went to the midnight show. i couldn't do it. going with my nieces. this would be the thing to talk about. >> the markets and the dollar here. >> dieing to hear about this. nieces are dying to hear. 16-year-old is dieing to know about that. >> relationship, it's back on today if this time the move to the dollar index is sharper than what we've seen in recent sessions. >> that's right. it's been very simple story this week, if you take a look at the dollar index, beginning with monday, bernanke gave that speech talking about the strong dollar, unusual for him to do that. now, look at the s&p 500, again for a five-day chart, you will see the rally that we were sitting at. 1100 on the s&p 500 fluttered rather noticeably. you get that exact inverse relationship. it's worked perfectly this week. the trade is way too easy. it's been going on for way too long. it works until it doesn't work anymore. elsewhere, the key stories. ipos are interesting. some have been working and some haven't. >> the one here on the stock exchange today. big one. >> it's a third biggest coal company in the united states. priced at $15. $16 to $18 was the price talk. as you can see, a bit below that right now. it's very important that they got this deal done here because basically the market is closing. ipo is market closing. whole market slows down. see what the volume is. a lot of people don't want to trade because they made money this year. very simple situation. >> a lot of hedge funds out there reached their high watermark and they don't to deploy capital in a period where we have seen in the month of november, average daily volume on the exchanges, below average. >> your point is correct. it's all about employment here. people who do the most kind of trading, hedge fund guys, hedge fund guys in particular back to their high watermark. that means employment, folks. that's what it means. we've got a job next year. why would you want to keep trading if you know things are fine for next year. you want to slow down your trading. basically just wait for the year to end. that's why the volume has been dropping. >> bob pisani, always good to speak with you. let's head down to the nasdaq and check in with scott wapner. yesterday, a sector downgrade in the chips by bank of america today. it is a weak earnings report from dell. >> melissa, i was really going to say it's been two straight tough days for technology. the table is set up each day for it to be a rough day. that's what we're seeing right now, too. nasdaq is down 3/4 of 1%. i'll get to the update on the chips in a second. but dell is the real story here. stock's down 9%. earnings after the bell yesterday. missed on both refrigerator knews and the earnings themselves. gross margins were a real disappointment. dell is losing market share to its competitors. there is -- i guess a bit of a bright spot within that report. dell saying it does expect revenues in the current quarter, the fourth obviously to be better than the third. it's clearly something to watch. there's an issue of servers as well as dell is trying to maintain competition with the competitors on that fronts as well. here's big cap tech this morning. google lower. microsoft lower. apple is giving some back. word that this morning that palm is already drastically cutting the price of some of their smart phones. don't know if that's such a great thing for that business there. intuit is under some pressure this morning. here's the chip stocks. melissa mentioned the story that dragged tech down yesterday, and that was that bank of america/merrill downgrade of a number of chip stocks. semiconductor is down. intel was a drag on the nasdaq and dow yesterday. it's down another 3/4 of 1% today as technology is a clear laggard in this market today. >> thank you very much, scott wapner at the nasdaq. now, let's get a check on the energy markets right now. the stronger dollar we've got a downward move in the price of crude down by more than $1. sharon epperson has the latest. >> we're looking at a downward move in december and january contracts. january is going to be the front month at the end of today's trading session. around $77 a barrel. the losses are somewhat limited in gasoline perhaps that has something to do with the news that hit this morning that valero shut down the refinally in delaware, city delaware. this is another in a string of closings or shutdowns of partial operations for many refineries. doing maintenance. refiners just cutting down on the run rates substantially because margins are so poor. this time of year we should looking at 88% run rates. they're under 80% right now. so a lot of refiners are not making the product because it doesn't make economic sense for them to do so. we are also paying close attention to what this is doing to both the gasoline crack and the heating crack. both have been severely pressured by what has been going on with the refiners. rick santelli, to you in chicago. >> thank you very much, sharon. listen, i'm going to over simplify for a second. everything, of course, was starting to pay attention to the t-bill movements early in the week. now it's everywhere we had brief bouts with negative yields, negative return on these bills. we're talking specifically the ones that mature after the end of the year. we all know that the end of last year was unique. and there was a flight to quality based on huge crisis-type anxieties. well, you know the way to depression changed people and how they invested for generations? many think that just what happened last year is going to have a residual effect to a flight to safety but not necessarily for the same type of dire reasons. here's where it gets interesting. we see what's happening with bills. 2s, 5s, 7s next week. some traders say december is going to be a bonanza for the short maturities as the safe harbor of treasures get more intense as we get closer to the end of the year. but they also think it's going to be good for the dollar, which means you have something to think about for the end of the year, if you're long equities. mark, back to you. >> thank you, rick santelli. coming up next, a bonus battle brewing between goldman sachs shareholders and employees. find out why investors are revolting. i mean, they're revolt iing. >> yes. >> at 85 broad street. >> is that where they are? >> down the block. then we're taking a cross-country road trip to see where the unemployment picture is improving and still reeling. exclusive cnbc state by state jobs report from sea shining sea. and the biggest gainers on the s&p 500 this morning. topped off by dillard's with a $1 move. if you're taking 8 extra-strength tylenol... a day on the days that you have arthritis pain, you could end up taking 4 times the number... of pills compared to aleve. choose aleve and you could start taking fewer pills. just 2 aleve have the strength... oh, that was acne down there, that trader. he runs the shoe police on the floor. goes around checking shoes. a bonus -- i'm not -- i am not kidding. a bonus backlash at goldman. the "wall street journal" reports that some of the largest stakeholders in goldman sachs are urging the firm to credit bonus pool and pass the cash along to shareholders. where have you been? the bank is on track to make the biggest employee payout in the institution 140-year history. $17 billion. according to this report, shareholders say that this would deliver an upward jolt of per share earnings and the share price. ya think? all right. i want to bring your attention to stock tos on the move and th is brian shactman at hq. >> we have interesting stories today, mark. thank you very much. let's start with exelon, u.s. power plants. in baron's weekday trader talks about how the stock is down 17% for the year and dividend yield now 4 1/2%. and baron's says little downside here. if climate policy changes, so could the prospect of the stock price. want to talk about uaua, ual. the chicago tribune today talks about how the company might make its first new plane order in a decade. actually a little bit scary. both airbus and boeing furiously duking it out for the deal which could be worth about $5 billion wot worth of planes. tech on a drag today. some names bucking the trend, take a look at scansource, it's a tech product distributor. upgraded to out perform. that reverses their call from the spring. price target here now $30 a share. this just in the last few minutes. big pop for leap wireless in the last little bit. there's been a lot of talk and denial about leap and metro pcs getting together. they pali with a note that they recommend a pair trade here, long leap, short pcs. that stock is moving on that call. back to you. >> brian shactman, thank you. we are taking "squawk on the street's" daily jobs report on a road trip this morning since all economies are local, cnbc is taking a day long cross-country look. the state of the states, in california, jane wells on how record unemployment is hamstringing state coffers. out in utah, school cohn on what a better than average economy looks like right now. we do start it off with bertha coombs here on the east coast where the government is just out with the latest state employment numbers. per tha bertha? >> wall street profits may have roared back but the jobs have now president in new york city, unemployment topped 10% for the second straight month. in october, 29 states recorded unemployment increases and not surprisingly, the numbers that drove the national level to 10.2% were worse out west. in california, we saw a new record high of 12.5% unemployment. and over in florida, we also saw 11.2% unemployment. that is also a new all-time post-war record. generally the remains below the national average. in wall street's hometown, new york, unemployment rose 0.2% to nearly 9% in october with another 15,000 jobs lost. new york city, the economy shrank about 1 1/2% in the third quarter. and after a rebound in securities jobs in september, finance jobs fell again last month to start off the fourth quarter, down over 35,000 year over year. in new jersey, across the river, the unemployment rate ticked down a tenth to 9.7%, despite a net loss of 1800 jobs in the garden state. the lion's share coming from the shrink of the private industry. notable gains came in construction jobs. up 1600. they were offset by an equal number of job losses. securities jobs have held steady in the garden state. in connecticut, home of the hedge fund and insurance industries, despite a bump up in jobs last month. unemployment jumped nearly half a point to 8%. and that, after september's numbers, were revised higher. as i mentioned, the home state of hedge funds and insurers of financial service jobs declined for a seventh straight month. we've got much more coverage on this state numbers on cnbc.com. but right now, let's move to the cross roads of the west. that's where scott cohn is. that's where the economy has been fairing better. but, scott, better is a relative term. >> absolutely, bertha. the view from here is spectacular in salt lake city. the economy, not so much. this is a state that does very, very well economically. when we do our study every year of america's top states for business, utah is a perrenial topper former. as you head around downtown salt lake city, there are people at work. there's construction going on down town, active residential and commercial construction. and the health care sector, which is very important to this state, remains very strong. it's one of the few bright spots in an economy that did manage to add some jobs last month, but the unemployment rate just as it is nationally, has increased. so bright is relative in terms of bright spots in the country. the unemployment rate for october just out. 6 1/2%. nearly 41,000 jobs lost in utah in the last year. construction jobs, despite those construction projects downtown, statewide down almost 16% as residential real estate tumbles. manufacturing jobs down 9.2%. and as you can see, foreclosures up more than 32%. and that is a big problem as job losses continue and foreclosures continue, and so budget shortfalls are a big problem in all levels of government. even though government employment is increasing, partly as a result of the stimulus, the city here is facing a $4 million budget shortfall. looking at all departments across the board for cuts. the state faces an $800 million budget shortfall. but for all of the problems here, it is still a great lace to live, according to the mayor. >> we're finding ways to deal with the downturn without it undercutting people's ability to have basic employment, you know, with the exception of those people we're trying to provide help for, who have lost their jobs. and there's a feeling that, hey, you know what, we've got a bright future here. this is a great place to live. so we'll weather this. >> it is a great place to live. they say that things are stabilizing here. and these days, stable is not a bad thing, especially when you consider what's going on a little further west in california. and that's where we find jane wells. jane? >> scott, you know, 6 1/2% unemployment in utah, get ready because californians are going to move there. it's jumped to 12.5 nrs october. many think it's still going to go higher. small business is the backbone of the economy. of course, california not particularly known for making it easy to start or run a business. we were at this particular small business last august where the owner has seen sales fall at that point 30% and had laid off half her staff. okay. three months later -- business is picking up. but she is still not hiring. instead, to save on money, on workers comp and other costs, she's contracting out. >> back in august i think i told you i was hoping by the end of the year we would see a little light at the end of the tunnel. we definitely see it. if we made it through this last year, it's going to take a great deal to get us to not make it through another year. and i see improvement. >> now, she speaks with optimism of an entrepreneur but many economists here aren't so upbeat. bill watt kings, former fed economists now with cal lieu then, thinking it will be capped at that point because at that point californians without jobs will start moving. they already have. he says california used to do things big but can't anymore. one of the greatest problems may be the across the board cuts at the state's university system and this week's fee hike which put a year at a state school, at us, with room and board, $25,000. >> california's higher education system has been the big secret. it's been the real strength behind the dotcom boom and the fact that people can go back at any time and improve their education and improve their human capital, this is almost the only place in the world you can do that. and we're about to price it out. >> he says california won't turn a corner until it starts grabbing more job share. creeps back up above 11% of the nation's jobs with only a little bit more than 8% of the population. we'll be back in an hour with what a buyer of california's bonds thinks about the state of this state. melissa and mark? >> thank you, jane wells. just ahead, instead of putting your money under a mattress, you might want to put it in a mattress company. we're live in kentucky this morning with the ceo of tempur-pedic. talk about being able to sleep well at night, that is coming up next. later, they're not ski mogul but they want to make sure you look good skiing over moguls. a business owner ringing up sales despite the economic do downturn. we are taking a live look at the senate, the u.s. senate debating the health care bill. of course, we'll keep you posted on any sort of developments here. but again, this is the senate. we will periodically check in on this. in the meantime, despite the tough economy and strapped consumer mattress and pillow manufacturer, temper peed tick tempur-pedic is on a roll. what is behind the big run-up and is there more upside from here. the president and ceo of te tempur-pedic is joining us from world headquarters in lexington, kentucky. great to have you here. >> thank you. >> give us perspective on your product. what is the average cost of that mattress and have you been discounting at all throughout this downturn? >> products range in price from $1500 and up. average price is $2,000 to $3,000. our products are warrantied for 20 years. so over a period of 20 years they cost about 25 to 35 cents a day. consumers tell us it's probably the best investment in health they've made. >> during this same time, consumers have to make a choice. $2,000 or $3,000 over the course of 25 years may seem like a lot of money when you're pay for that up front. have you ever come that when people are having making their house payments? >> what's happened is obviously during the last 12 to 18 months people have been putting off buying expensive things. but we're beginning to see a gradual return. people are starting to come back. and what we know is that we have a relatively small share right now. we have something like 3% market share. yet we know if people say they want to buy a mattress, they said this recently, are going to look at tempur-pedic. >> what are your projections for 2010 and how dependent are your projections on what unemployment looks like? right now we're about 10.2% and we could go higher. >> well, i mean, for 2010 there is potential for growth but it's very hard to predict the future right now. the environment is difficult. we said it's hard to predict. but what we think is the fundamental drivers to business, sequential uptick in the third quarter. we did significantly better than the second quarter. we think that's going to continue through this quarter. and then we think 2010 will be, you know, it's hard to say what's going to happen to the economy. but if we see the trends we have right now, we see good opportunity in 2010. >> do you have an international footprint? >> we do, we do. we're in about 75 countries, a bit more than 35% of your business is done overseas. as much growth as we see we have potential for in the united states, we see that much growth in over seas. >> are you seeing more growth during this downturn overseas as opposed to the united states? >> the downturn in the overseas came a little later it did than in the united states and it was a little less pronounced. but it may be lasting a little longer. i would say that it's -- we saw the downturn. it was not as pronounced in aggregate as it was in the united states. we're seeing some recovery in both geographies right now. >> mark sarvary, thank you for joining us. ceo of tempur-pedic. certainly we have seen a drop in volume since november, in terms of shares traded on the stock exchanges. how do you play it heading into the weekend? your friday trade is just minutes away. and as we head to break, take a check on the dollar. in the past week, you can see steady climb of the u.s. dollar. welcome back to "squawk on the street" on cnbc. 10:30 here on the east coast. 7:30 on the west coast. if you're just waking up, good morning. take a look at the headlines we're following for you on this friday. dillard's, biggest mover on the s&p 500 after it was raised to a buy from hold at deutsche bank. general motor rest leased a full restructuring plan for opel operations in mid dst. it did not give any specifics on capapa or on job cuts. and despite the market is mod dstly lower this morning, five s&p stocks are hitting new highs. including jm smucker and sara lee. mark? >> let's take a look at the markets and their internalses. right now as you can see, we have modest drops here. no big deal. the dow is down about 0.1%. the nasdaq taking the biggest hit, about two-thirds of 1%. s&p is down 0.4%. internally as you might expect, ability 2-1 decliners over the big board. and on the nasdaq, the ratio is not bad at all. 1429. >> let's get a check on stocks on the move. for that we head back to brian shactman at headquarters. brian? >> hey, thanks, me liz islissa. energy, the weakest right along the tech. almost 90% of the names in the s&p index are down today. drilling an example, small cap name. worst performer, down 8%. industrials also weak. take a look at bucyrus, up 175% year to date. it's down 2 1/2% for the day. and another company, mentioned s&p 500 names, merck is one of them. defensive names playing according to script today. merck, the best of the big cap names, up 2.25%. merck got positive news about a drug out of the eu. back to you, mark. >> thank you, sir. time to get your money ready for the weekend. it's the friday trade. on the floor with us is terry dol dolan, brokerage, ceo. in beantown, peter anderson, portfolio manager with congress asset management. dow you want to be paid to hold took stocks, snuff. >> i think so. i think in this market area you have to be selective and you have to try to look at some of the dividend yields and also take a look at the call option premium out there to see if you can write against it as well. you know, stocks like edison are flat lined on volatility are attractive to me, for the dividend yield, as well as even stocks like phil morris, field 7%, riskier but they have decent yields. proctor gamble and in the fact that tractor and proctor gam nbl particular, those two stocks, yield 2.8%. but you can turn around and buy write them nicely in january even though these are less volatile, the employed volume stocks make it worthwhile to actually make it sell that call? >> well, in the first group that i mentioned i took a look at the calls and they real didn't look as sexy to sell those the that's why the better play was proctor gamble and cat. but in general, you know what,this market is going to see swings up, swings down, and for me, the trade has always been to kind of strangle the market in the s&p. i like the spider 110 call over the 109 put as well to day trade that and take advantage, spiks up, scalp them. spikes down, scalp them. >> peeder andersen, you've got two that you haven't mentioned before. el paso? >> yeah, yes. you know, mark, i like to get paid, too, for holding stock based on dividend yield. but el paso is a little bit of a contraryian play. you notice recently that it actually cut its dividend. it lowered the dividend. it's a little bit paradoxical to my recommendation. it's a $10 stock. i think the price can easily go up to $15 by the end of this year. it has a monopoly on gas pipeline in the united states. it looks very good going forward. the reason it cuts its dividend is to sure up money to support the emp expiration efforts. as natural gas recovers, so, too, will el paso. >> peteren would you put fresh capital to work on that stock at these current levels? >> i would. diagio does pay a solid dividend. what i like about diageo is the dividend is greater, 100 basis points greater than its bond yield. earlier this month, it just issued a five-year piece of paper. it's only paying 3.25% yield on the coupon. whereas the stock yield is 1% greater. so in that case, you're getting paid to wait and see this recovery. and it's a very good seasonal play, too, because, as you know, we're going into this season of high alcohol consumption in this season. >> yeah. stock goes down, your alcoholic con sump shup goes up, too. >> peter andersen, thank you very much. have a great weekend. we want to move on to a bold call made just this morning. credit suisse on container board stocks raising 2010 estimates four names to the stree high levels. here to tell us why is credit suisse paper and product analyst, what is the major reason behind this call? >> good morning. major reason behind this call is that we see u.s. prices for material that we make brown boxes out of going up in the first quarter. about 10%. and yet when you look at street numbers, the consensus estimates, they do not reflect price increases p and so given that overseas prices have already risen and given that we have inventories at near record low levels, we think that prices will go up in early 2010 and, therefore, for stocks like packaging corporate of america, temple inland, international paper, you have a good chance to see, you know, 30% plus appreciation in these names. >> in you're universe, have these stocks been sort of leading indicators on the u.s. economy? >> well, they have been. and they were quite strong coming out of the box in march. but they've taken a breathe there of sorts since, say, mid summer. and i think they've rested for a while and now they're poised to make another move on the upside, especially given what we see as pricing momentum for their major products as we enter 2010. >> i'm not -- i'm not sure i get this, pete. if the consumer remains, you know, not in the game, how much demand is there going to be for their product no matter what the price? >> that's a great question, mark. i think what you've got to look at is that container sboe board global industry. with the dollar going down and growth overseas apparent, prices are up 25% since july in europe. that's going to give us the ability to export more board and tighten the market up here, which should lead us to be able to raise prices, even if demand here stays flat. >> chip, just quickly. your favorite name in the space today? >> is pkg, packaging corporation of america. >> chip dillon, thank you for your time. appreciate it. coming up, dell's big disappointment point to clear winners and losers in that sector? the big tech trade is next. and treasury secretary tim geithner is under attack, but are the calls for his resignation fair or just politics as usual? you're watching "squawk on the street." we've got breaking news here. take a look at the live shot of the port in ft. lauderdale. royal caribbean's "oasis of the sea" is there to pick up passengers up. it is the biggest cruiser ever to sail the seas. 16 decks. it holds 6300 passengers. the cost of this, $1.4 billion. would you go on a cruise, mark? >> it's like a city on the sea. >> it's enormous. the biggest ever. biggest ever. >> wow. yeah, i would do a cruise. >> you would? >> i have never done one but i would do them. >> i do not believe that. >> rick says i wouldn't do it. okay. i'll take his word for it. i'm lucky, i'm surrounded with people who tell me exactly why would and wouldn't do. the white house has go to treasury secretary tim geithner's defense. this comes after, you know, you wonder how i made it this far in life without you guys telling me what to do. >> i think you may do the cruise because of the buffet. >> this comes after the republican congressman called for him to resign. if you missed the fireworks yesterday, here's part of it. >> the public has lost all confidence in your ability to do the job, reflecting on your president. >> congressman, if you look at -- >> they agree, liberal democrats agree it's time for a fresh start. i would urge you to consider that. >> if you look at any measure of confidence in the financial system, it is substantially stronger today than when the president of the united states took office. >> you have to -- >> five minutes. >> -- take responsibility for your responsibility. >> i would be happy to but i can't take responsibility is, is for the legacy of crises -- >> this is your budget, this your bailout, this your stimulus. >> i take full responsibility with those with great honor. >> yeah, go get him, tim. all right. is the attack fair or just politics as usual? cropped up in an unusual place. you don't usually see that in one of these hearings. let's bring in steve liesman who has watched more of these hearings than probably anybody in the western hemisphere. and rick santelli, rick, would you agree, steve and i were talking about this, this kind of attack is quite unusual in a hearing. you see it in the papers. but in a hearing, seemed a little overboard. >> you know, it doesn't often happen in a hearing, but to be quite frank, i think the stakes this time around are so high, i would like to see more of it. i think that what is going on is so historic and will so potentially decide the course of our future, i have no problem with it. steve and i have gotten much dicier than that. >> yes, then again, neither you nor steve is the treasury secretary of the united states. although, steve thinks he is. anyway, steve, you have what? >> i've called for rick's resignation several times. >> oh, yeah. >> yeah. no, but look, i agree that we should have a debate and discussion and maybe an argument about how all this was caused. but i think the idea of laying where we are right now at the feet of the treasury secretary is probably over stating the case. even if you acknowledge that the stimulus bill passed by the white house, even if you go that far and say it wasn't the best stimulus bill, you can't say that the bulk of the 10.2% unemployment rate we have right now is the fault of the treasury secretary. that's just going way too far. >> steve, i kind of agree with you. there's also another issue i can't believe nobody has brought it up. if i wanted to be a regulator for banks, okay, i would like to have the job of the president of the federal reserve bank of new york. and by the way, mr. geithner took that job in october of '03 before most could spell subprime. >> rick, i'm with you on that. let me explain where i am with you. i think the federal reserve needs to step forward and explain two things. one is, if it's monetary policy was indeed wrong dug the period of time, why was it wrong in that '03, '04, '05 period. second thing is, how and why did it miss the concentration of derivatives and risk on the books of the banks. i acknowledge that the investment banks were not responsibility, but i think the federal reserve, which by the way, has promised us an accounting hasn't stepped forward with an accounting. that's one of the reasons why getting pillary. the tremendous power it has is rooted in one thing, getting it right. and if it's perceived to get it wrong, whether or not it's right it loses that power. that's why we're at the position with the ron paul amend. >> we're going to talk about that next hour. at the end of the day, i think that these discussions should be more prominent. i think there should be more cameras. and every facet of get tos, committees and legislative processes in the government, we have a right to see and our leaders have a right to yell at each other so we could see the truth under dur rest. >> one more thing needs to be said, i know we have to go, melissa, but the question of mark going on a cruise ship, your need to ask the question of whether or not he actually floats. i don't think that's been answered. >> i float. >> do you? >> oh, yeah. >> okay. just want to be clear. >> all right. that was a good question, steve. rick and steve, thank you very much for your time. he floats. there would be unlimited meat on that cruise ship, unlimited meat. >> unlimited peat maet? >> salad, peanut butter, all the things that mark loves. moving on, business to do here. dell says tech spending is on the rise despite a 15% revenue drop in the third quarter. execs at the computer maker say demand has picked up since windows 7 came out after reporting last night here is the stock this morning. it is trading lower by a full 9%. we're talking tech plays with brian marshal, senior analyst with broad point. brian, i know you don't coverdell, but it was around the board a disappointing quarter, miss on the eps, miss on the revenue, miss on the gross margins. in your view does this cause concern when you look at the other tech companies in this space or more of a dell specific problem? >> good question, melissa. it's a dell-specific problem. we think if you look at the broader large enterprise names, trends are positive. they start to pick up about six months ago. we expect very solid trends. actually to continue over the next couple of years. we see a massive tech upgrade cyc cycle. i would steer you towards enterprise storage names, brocade, actually, as opposed to dell. >> connect the dots for us then. if it is a dell-specific problem and dell stands to lose share. who is poised to gain the most with this dell stumble? >> well, i think that dell specifically, they're competing against ibm, hp and others and servers and pcs and storage. and so i think you've got to look at who is poised to gain the most share have the most operating leverage in their model, i.e. driving the most earnings growth next year. i think it's the smaller guys like emcs, netap, brocade, they focus on enterprise storage, we think that's one of the most interesting secular growth opportunities over the next coming quarters and years. >> you say this is a dell-specific problem. what specifically is the problem of dell? >> well, i think they've had some trouble over the past several years guiding their company from a strategic perspective. they're obviously going through a large acquisition adding 25, 26,000 new employees. specifically, you know, people were waiting to buy pcs that were loaded with windows 7. there was a lag factor if you will. we expect dell to, you know, come back here in the near term, but you know, that's the issues with dell currently. >> brian, just to get back to a brocade quickly. it's reporting next week. would you recommend investors buy ahead of earnings? >> yes, melissa. this is a great opportunity in the near term. street high. expect positive results. price target is $11. 30% upside from current levels. we do like brocade a lot here. >> mibrian marshall. still ahead, the ski industry, expected to have a better season this winter than last. one small business is making sure you look good coming down that black diamond and making cash in the process. >> you've got to look good. it's better to look good than to ski good. but first, oh, trish. >> do you ski, mark? i'm just curious. >> i haven't skied in years. >> okay. but i bet you would look good if you did. okay. >> i look fantastic. >> all right. we've got house speaker nancy pelosi. she's adding a new twist to this whole issue on the wall street tech. she said in order for this system to really work, there needs to be an international tax on stock transactions. we're going to discuss whether something like that is really feasible and whether, in fact, that would have a negative or positive impact. plus, another cnbc exclusive for you. julia boorstin, she sits down with paramount chief brad grey. we have all the latest market reaction right here at the top of the hour. but first, "squawk on the street" is back right after this break. all right. we're back. the ski industry going downhill a bit in this recession. lift ticket revenue has been dropping. bails five mountain reports are hit hard. i'm sorry. the prompter is a little hard to read with this on. despite the steep drop -- >> business is still booming from one boulder, colorado company that sells ski goggles, which mark is so aptly modeling. >> here for our small wonders series, michael and -- >> wink. >> wink. jackson. cofounder of -- >> neil optics. >> that's great. excellent. >> so, this is -- what's the big deal? this is $200. >> this is $200. >> okay, why would i spend $200? >> you are getting a lens and goggle that you'll never have to change the lens on. >> well, i'd have to change it if i skied into a tree, right? >> well, yeah, you'd probably break your face, too. >> and how's business? >> it's good. it's been a really good year for us. >> really? recession or no? >> well, you always have that looming presence especially on the retail aspect of it. >> now, do you get lifted? and do you suffer a long with the resort business if the winter doesn't have a lot of snow and things like that? >> the accessory business is a little unique. a lot of customers who are not going to buy a pair of skis this year will probably buy a pair of goggles. >> are you seeing more growth overseas? do you have growth overseas? >> we do. the interest level is really, really strong. >> do you have lower price points? and where are you seeing the most interest? >> we're seeing actually the most interest and growth in our high technology level, which is 150 to $200. >> when you see the unemployment rate rising, does that concern you at all or is that not your customer base whatsoever so therefore, you're insulated? >> i don't think anybody's ever really insulated, but now need to offer products that are different and for people who are still wanting to enjoy is outside are going to enjoy that little little. >> when did you start? >> we were live ng japan and decided to come back to the u.s. and this was going to be our project. >> you were working for bicycles. >> right. >> well, ski googles, performance eye wear. >> there's more stuff here. >> are you going to put that on? >> i'd break them. >> this one, you wouldn't. >> these are cool. >> we use recycled materials, too, to make most of our glasses. >> are we out of time? so i want to mention their website. zealoptics.com. when you see some of the spelling we get in communications, zeal optics. thank you very much. what we're watching the rest of the trading day on the other side of the break. >> 90 minutes into the session so far. we've got much more show in two minutes. time for "six in 60." six stocks in 60 seconds. i will start today. the nation's number two homebuilder reporting much larger than expected loss this morning even though orders increased. down by 11%. j.m. smucker. up higher by 5%. and dillard's upgraded from the buy to a hold, 8%. >> the hess corp., from 75 to 65. dell down 54%. lower than expected sales of lost market share. not a good report. foot locker, a third quarter loss of 6 million from a profit of year ago. the ceo citing week sales in the united states. and we are out of time. >> we are. it was a pleasure, mark haines. hope you had a good vacation next week. >> i am off next week. i'll be watching. >> i'll see you guys later on

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