Transcripts For CNBC Squawk Box 20091009 : vimarsana.com

less than ten months. there are some that are probably surprised this is coming this early in his presidency. and while who would question the deliberations, you don t so far, there have not been ip low mattock triumphs as part of his administration. and that may come as a surprise to people. the u.s. nobel peace prize committee doesn t tell you who they re considering. i just thought maybe this would be a way to honor someone later in their nonetheless, it is a tremendous honor and the mere fact that he won the presidency of this country in an election that brought people together says a heck of a lot about the guy. we have got more coming up from the white house. we ll get a chance to ask him about what the reaction is from the white house later this morning. we got the chance to sit down with carl icahn yesterday in new york. this conversation spanned a number of topics. we talked about his outlook for the economy, for the markets and the best opportunities right now both in terms of what he sees on the long side and on the short side opinion. this is what the administration is doing, in my opinion. on the one hand, they flatted the economy, they i say flattered, all the stimulus. on the one hand, they push money in. on the other hand, they threaten high taxes. they ve got business scared of them. for more of our conversation throughout this morning, we re going to focus on why icahn has been cautious and what he credits for a great performance this year when it comes to what he s seen in the market. it s an interesting fellow. one of the most plain spoken guys you ll ever meet. definitely. he talked about carol barts who we hear from from time to time. and we ll get to all of that this morning. a government watchdog is calling into question the obama administration s attempt to help homeowners. they say the white house may not reach its goal of helping up to 4 million borrowers. the panel argues the program is aimed at this crisis as it existed six months ago, but now the problem has moved beyond subprime borrowers. fed chairman ben bernanke is in no rush to boost interest rates. speaking late yesterday, bernanke echos the pledge. he says he hopes super low rates will entice people in businesses to try and spend more and through that, bolster a budding recovery. meantime, the financial times reports that the fed has begun conducting small scale tests of reverse repos. this would let the central bank train excess liquidity from the financial system once it decides to scale back policy measures. in a reverse repo we need leisman on this the fed sells treasury securities and at the same time agrees to buy them back later at a slightly higher price. interesting. they re testing it now. bernanke says we re not going to do it for a long time, but we have to figure out ow to suck up that that lick tidty at some time down the road. there aren t precedence, and that s one of the things we re going to talk with mr. powell about later. and we re watching the dow closely again today. yesterday, asian central banks intervened in the mblths to try and support the greenback. no such move from the united states. malaysia, taiwan, hong kong is examine and singapore are all said to be buyers of the dollar yesterday. they believe they could be losing ground to china. so china has seen an outside exchange. yesterday, the dollar was at a new low one more day. another day, another record low. yesterday, three out of four days for the dow that we ve seen gains. this morning, futures are just below fair value. you re talking about dow futures down by about seven or eight point is points below fair value. and the nasdaq is down close to 3.25 points below fair value. crude oil down to $71.25 this morning. if you re watching treasuries, reverse repo tests aside, 10-year note is yielding 3.264%. the dollar, again, is going to be the focus because that s been driving a lot of the trade today. right now, you see is yes or no dollar is up against the yen. right now, the yen is at 88.84. euro is trading at 1.4739. and the pound is at 1.5962. gold prices, which have been soaring just about every day we re coming in are now giving back a little bit of that ground. you re talking about gold close to $1,050. . let s get to the overseas markets right now. christine tan is standing by in singapore. we re going to start thing off in london. good morning, steve. they have very much. very interesting weekend. moment, rear seeing a bit of a replacement avenue having rallied three out of four segs. interesting to me financial services and technology are those two. that aside, every major sector is down in negative territory. these are all amid concerns. the german exporter markets were the worst we ve seen in several months. the rest of the major airports in the uk reporting sluggish demand both on the passenger side and indeed on the cargo side. the markets have got themselves back on track this week. interesting story on the front page of the financial times today, saying that the royal bank of scotland and two of the biggest banks are london are not lending enough to their corporate clients. that is the european story. let s speak to christine in singapore. steve, thanks for that. some are hitting fresh 14-month high peps the nikkei 225 rallied 1.9%. the market closing above 10,000 for the first time in a week. after record forecasting of this business here, in south korea, the kospi jumped 1.9%. we had the bank of korea today keeping rates on hold for eight months in a row and comments from the central bank dropping down in november. china came back from a week-long holiday. the shanghai composite rose 4.8%. but the mood in hong kong was cautious after a 5.5% gain in the last four sessions. the hang seng finishing flat. wynn macau made its debut today, a sign that gambling the stocks remain strong. becky, back to you. christine, thank you very much. right now, let s get a jump on today s u.s. trading. joining us now is jim paulson. jim, always good to see you. watching what s happening with the dollar, you ve been somebody who has been so positive for so lock and who has had a very optimistic outlook. when you see what s happening with the dollar right now, does that give you a pause? i could be. but the dollar is basically flat with where it was a year ago. it s still up maybe 5% from where it was 15 months ago. i think what the dollar has done is it went up dramatically during the crisis. now as the crisis is winding down, the safe haven premiums come back out. but really, the dollar has been fairly stable over the last year or couple years, even, and although it s been weak of late, it s been a controlled weakness. there hasn t been a big gap down moves and i don t really think it s a huge issue at the moment. i think there s been more tension applied to it than really what needed to be. this morning, the financial times is focused on it, as well. they point out that the dollar is down almost 12% since the president took office. we start wondering if this administration has a strong dollar policy or if it s in our best interest right now to let the dollar come back to help us out with ex ports in terms of the economy. i think there is something to be said for that. you know, i think that a weak dollar, just like additional money supply or additional fiscal stimulus or lower interest rates is another stimulative policy weapon. certainly the weak dollar is one of the things that s improving our net export position, which is now adding to real gdp growth every quarter as opposed to distracting from it. i think secretly, i don t know if the administration is all that upset about having a little weaker dollar right now to try to pick up the economy again. if it gets, you know, out of control on the down side or if we start having gap down moves, that would be very concerning. but certainly, i don t think i ve seen that yet. jim, i suspect a fair number of people wonder whether the market has gotten ahead of the economic fundamentals or put another way, whether it s too late if you haven t taken advantage of the price rise since march, too late to deploy fresh capital. i think there s more upside here. we re maybe a month or two past the low of the recession. there s not a lot of rallies that end that quickly. i think both the economic recovery has a ways to go as well as the market rally. it won t be a straight line and we certainly are probably due for a correction at some point, whether it s now or later. but i think ultimately, there s quite a bit. i think it s interesting, one of the central adages on wall street since the march lows has been that this market is ahead of its economic fundamentals. and i think it s been exactly the other way around. i think what has happened is that the economic fundamentals have improved to rapidly that they ve been out ahead of wall street s perception of those fundamentals. they can t imagine that the economy could improve this much this fast. really? why do you see that? i mean, what are you seeing specifically that leads you to that conclusion? a lot of people would say, hey, unemployment is not better, profits compared year over year and sales are down. right. well, you just go back to the march quarter. real gdp fell at a minus 6% pace and the quarter now just exiting september, it probably rose 3% or more. so that is a 9% improvement in real gdp growth in a six-month period of time. we were losing 650,000 jobs a month, now we re losing 250,000 jobs a month. the ism reports were at record lows and now they re back above 50% again. i just think even though the levels of things like the unemployment rate are still bad, the pace of change of the economic fundamentals has been really dramatic, faster than people can keep up with. and more than anything, that s why the market has continued to climb. this week alone, ler, we thought last week we had the job numbers that were weak. then we get slammed with better claim numbers, better earnings reports, better top line and suddenly we re back up in the stock market. do you worry, jim, that if the government pulls back, that we could see a double dip? that s something carl icahn says he s concerned about. this is a heavily medicated patient, there s to doubt about that. but i think, you know, if you think about it, that s the case in every recession is we don t spend deficit spending to do it forever. we don t increase the money supply to keep it there forever. we do it because we hope that we put it in place during the void and then the multiplier effect will pick up spending and we can back out the medication. and i think that s what will happen here again, but certainly, there s been such heavy doses of medicine applied to the patient here, that one does wonder what is going to happen as we start to pull out. i think that process is starting. quantitative easing is starting to pull out. some of the talf programs and others are starting to wind down. we have australia raising rates globally. but you re right, it will be an interesting transition. and hopefully the private sector of spending will pick up. thank you for joining us this morning. hope you to see you back here in studio very soon. thank you. comments, questions about anything you see here on squawk, e-mail us squawk@cnbc.com. coming up, more of becky s exclusive conversation with carl icahn. he ranks number 22 on the forbes 100 list of wealthy americans. his latest investment target and much more. welcome back, everybody. right now, it s time for some of our exclusive conversation with legendary investor carl icahn. we caught up with him to hear his views on the markets, the economy and how he s been hedging his betts. we ve certainly been hedged, but cautious. we ve had a great year. one of the reasons is that back about a year ago, we really loaded up on debt. i mean, every once in a while, the market acts irrationally, anyway. it s a myth to say a market is a good indicator of the economy. i think individuals are much more of an indicator. i think that you have to be cautious. i mean, it s a precipice right now and it could go either way. it s a sensitive area right now. and i don t think anybody can see which way it s going to go. when you start looking at particular issues, though, you don t see the same type of opportunities a year ago you saw all these opportunities out there. have they dried up? there are specific i don t want to talk about specific stocks. we have a fund and we don t do that. but yeah, there are special situations, even in the dealt market today that are pretty good. but obviously, the debt market has moved up so much now that credit spreads, the high yield credit spreads have narrowed to a point you d go against them as opposed to for them. so you have to be very cautious there. i think the market is zits phrenic at this point. so you have trillions of dollars, literally, in consumers hands. they don t want to spend it, they re afraid to spend it and they re looking at unemployment and they don t want to spend it. so they re putting it in funds. these funds are now spending money because they have the money. so they will go buy real estate is a perfect example of where there is an opportunity to short it. because i really believe that s a great opportunity. you take these reads today. why would any individual in their right mind i mean, looking at it seriously, with exceptions, of course, why would you buy a read that has underlying values of buildings that are heavily mortgaged that if you went to sell them, you could never, ever liquidate their portfolios, so you re buying these for i think the reads today are giving you 4.5% return. why in your right mind when you go and take a 4.5% return on dividends, by and large with exceptions are, you know, bringing in maybe a yield of 5.5%, 6%. i would say the other side of it, though, if you look at the real estate, i think there s overcapacity in the office market and in shopping centers because you have a second with change and the way retailers are behaving as compared to the way consumers are behaving and as a result, i don t know, they just are making it easier to borrow for this real estate. i think maybe you re talking about residential as opposed to so i would say that just as the bond market had been tremendously undervalued or overvalued, however you want to say it, undervalued back a year ago, which it was i consider some of these things to be no drainers where they get completely out of walk with reality that was a gift. i think some of the stuff, i can t understand why some of these things are selling at the prices they do. but there s so much money flowing into these funds, so the funds have nowhere to go but to buy it. just as a year ago, all these funds were being liquidated in a panic. so it had nothing to do with the underlying value of the debt, what the debt represented. it was a gift. that was almost the opposite with some of the real estates. is there are anywhere you see as a good area? i m talking broad sectors or broad areas or are the best opportunities just shorts right now? no. i think there are some. i mean, we re quite involved with the secular charge in the way advertising is going to be done. and obviously, the cell phone business is a growth business. you have secular changes hitting the world, especially in a way we buy. so the internet, i don t have to say, it s obvious is a great new thing and advertising on the internet as opposed to the printed media. so i think there, you can find a certain things. in the internet arena, like yahoo! and yeah, and there are some bankrupts. in bankruptcies, if you know what you re doing and at the risk of being a modest, this is something we really do know. if you know what you re doing and now how to handle that bankruptcy situation and understand the rules, there s a lot of stuff there that might be cleaned up more than they have cleaned them up. there, i think, in the bankrupt area, there are some very good opportunities. but that is not for the amateur, you know? i think the problem really is, we re going to see that the amateur is going to get hit badly again because they re pouring money into these funds. some of these fund managers, i do not think, are experienced enough to handle some of the distressed stuff they re buying and they re going to get burned. then you re going to have that cycle. in other words, if you get a double dip recession and they start coming down, it s going to be a bit of a flood bath in some of these areas i m talking about. obviously, it s and it s not possible to say where it s going, but there s a real risk for that, you think, the double dip? yeah. i think there s a real risk of it. will it happen? i hope it doesn t, frankly. i m not sure. but there is a risk. i just don t see the numbers coming in so great. you see unemployment keeps creeping up. consumers really aren t spending. christmas is going to be bad. but on the other hand, maybe we ll be able to pull ourselves out. we will have more of our exclusive conversation with mr. icahn through the show this morning. he ll talk more about what he thinks the obama administration should be doing, where he gives the admin props and we ll talk to him more about carol bartz and yahoo!. a lot of money to be pointed out in distressed debt. you have to know what you re doing. but i bet you more money will be made relatively in buying distressed debt in over the next three or four years than in equity pes i bet you re right. he says that s been a very fertile area. he does say you have to be very careful. there are a lot of pit pauls that can trip you up. and not only for the average guy to do it. all right. coming up this morning, top stories, plus the picture from the futures pits. don t go away. yes, you re lovely. what do you think? hey, why don t we use our points from chase sapphire and take a break? we can t. sure, we can. the points don t expire. there is nothing for me. there s no travel restrictions. we could leave tomorrow. we can t use them for a vacation. you can use the points for just about anything. i know. the way you look tonight chase what matters. get your new chase sapphire card at chase.com/sapphire. please help me welcome a long-time friend of glencoe baseball. a man who played second base here some 45 years ago. actually, 47. ladies and gentlemen, mr. larry mccarthy. amidst today s financial turmoil, our sophisticated wealth transfer strategies. and philanthropic expertise ensure your legacy. is passed on to family or your favorite pastime. northern trust. wealth management. asset management. asset servicing. we keep on waiting waiting on the world to stay all right, good morning, everybody. welcome back to squawk box here on cnbc. i m becky quick along with tyler mathisen. joe and carl are off today. our top story this morning, president obama winning the nob nobel peace prize. the commander and chief won the word for, in its words, his extraordinary efforts to strengthen diplomacy and cooperation between people. the committee says only very rarely has a person to the same extent as obama captured the worl s attention and given its people hope for a better future. his diplomacy is founded on the concept that those who are to lead the world must do so on the basis of values and studs that are shared by the majority of world s population. fed chairman ben bernanke spoke late in washington yesterday. he echoed the central bank s pledge from its meeting in late september. he hopes super low rates will entice people and businesses to spend more, thereby bolstering is budding economic recovery. it s interesting. the people who are bulis on the stock market look to that exact point as to why they think things will going to be okay. it s hard to argue when you look at the climbing unemployment rate. it s hard to argue when you look at a lot of the negative signs in terms of corporate profit and where consumer spending is going. but the argument on the other side is that we will see this poll for a long time to come and they say that s where the sweet spot is. so to hear bernanke say this probably is giving them a lot of optimism about things, a lot of hope. but as you pointed out earlier, at some point, they have to sop up the liquidity. but if they do that directly, you don t derail the recovery. let s check on the markets now. we are talking about four days in a row for gains for the s&p and the nasdaq. the dow has been up for three of the last four days. right now, the futures are just about in line with fair value. right now, those dow futures are down below fair value. we have international trade numbers coming out at 8:30 today. crude oil prices have been coming down, but only slightly, $71.37. the 10-year note is yielding 3.258%. but the new story has been the dollar. this morning, the dollar is showing at least a little bit of recovery against the yen, right now trading at 88.84. i think 88.84 was the low levels that we saw yesterday. and the pound is at 1.597. gold prices have been coming back. right now you re talking about gold sitting at $1,049.70. now to the futures pits in chicago. ira harris of praxis trading joins us now. ira, good to see you. what s going on? well, tyler, right on target. we ll talk about the dollar and the gold. i think a lot of people had it wrong about why the gold is going up and i think we hear it based on the flip side of bernanke. people think gold is going up because of the tip in inflation. i happen to believe that gold is going up because the fear of deflation taking hold, which actually bill douglas spoke to the other day, not in terms of gold, but he was more worried about inflation. explain that because that s counterintuitive to most folks. let s look at that. if the fed has gotten this wrong, even with all this liquidity and we start to head into deflation at this time, i think that s what the global monetary players are looking at. that would be a horrendous event because then all central banks would begin to panic about what do we do next. and i think that has unnerved all currencies. gold is not just rallied in terms of dollar. ich argued that gold only gets good when it argues over currencies. i know dennis gartman has argued it for a long time, as well. so it s that deflationary fear that keeps driving the gold higher because we do not see inflation. becky was reporting there about chairman bernanke saying once again that there was no really immediate reason to raise interest rates. what does that tell you about the path of bonds over the next few months? well, to me, the bonds are interesting. the dollar is up today because the story in the ft about the reverse repos that the fed has been testing and will that lead to bigger things. well, if they were to do that and put the short-term interest rates up, i don t think that will force bonds higher. i think bonds will hold here and we ll see a flattening of the yield curve. now, will the flattening of the yield curve be good? you know, there s a two-sided argument there, too. i think that if you flatten the curve, if the curve came back down, let s use the 210 as our barometer here. if it came back down to 140 or 150 basis points from the 235, 240 that we see now, it may free up banks who are not lending now to start lending money rather than just borrowing short-term and giving it back to the fed on the long end of the treasury. so that is a tough argument under bonds. i m not sure which way. right now, they re not showing you that they re worried, number one, either about a dollars collapse or about inflation. what s your best trade of the day, ira? you know, i have to say a few other things. you re going to see some liquidation. we re going into a long weekend here. so i think the dollar may do a little more correction here. we talked about tinter vengz we saw yesterday. we know the europeans have been vocal over the last two weeks, anyway, about talking the euro is too strong here. so i think you ll see some people taking some money off the board. but it looks like full steam ahead just from what bernanke talked about. the fed is not going to raise rates. i think they might have moved a little earlier, but last week s unemployment put pay dirt to that for another month because that 9.8% number scared them quite a bit. so really steady as we go. you ll get some corrects. the stock market likes it because, hey, there s nowhere else to go. it s the ultimate recipient of the global carry trait trade right now is the equity markets. and it was interesting to see carl icahn really he talked about it on the fringes because pooed people are going to buy reats at 4.5%. but they re looking at the 4% return and that is the real basis of any type of carry trade. and the only place you ll find it, because global interest rates are so low now, is to find it in the equity markets. thank you very much. harris, when you chase yields, you ll get hurt. that is what got us into trouble a little bit, anyway. anyway, if you have any comments or questions about anything we re been talking about on squawk, go ahead and e-mail us. squawk@cnbc.com. still ahead, we go from banks to bailed out auto companies. many executives have been under fire for taking the corporate jet. our next guest, though, says he has the solution to this. squawk box hits the runway, straight ahead. more than just money moving across markets. it s about exchanging ideas across cultures, opening up to the world- continuing to innovate. you need to have a nimble organization that can innovate rapidly and constantly is willing to learn. speed has become so important. every aspect of business has to be able to demonstrate flexibility and agility. collaboration is the name of the game. we have at least half a dozen relationships giving us new products, new opportunities and wonderful new therapies. a great place to be is at the intersection of content and technology because from the creative side the possibilities are endless and the ways you can reach people are extraordinarily exciting. our partnership has a long history. the new york stock exchange is where people look for companies held in high esteem around the world. nyse euronext powering the exchanging world welcome back to squawk box, everyone. chevron forecasts its third quarter earnings will be higher than in the previous quarter. the energy giant says results will be driven by significant increases. the financial times reports sara lee is separating the role of ceo and chairman. and wynn macau s ipo making a stronger than expected ipo debut in hong kong today. shares there rising as much as 13%. that s a bet you would like. it suggests more to come for a listing of rival sands in the near future. monica know vootny is here with a roundup of the headlines. president barack obama has won the nobel peace prize. he was awarded the price for his, quote, extraordinary efforts to strengthen internationaldy employsy and corporation. in a short while, nasa run returns to the moon to search for water. an unmanned rocket will slam into a crater. soon after, a second satellite will fly through that presume and transmit life images and scientific data back to earth. then it will also crash into the moon. finally, it s friday. if you think ice hockey is tough, imagine trying to play while holding your breath. these pictures are from california. the sport is hockey under water, or octo push, as some call it. they wear fins, masks, snorkels, and not much else, apparently. the hockey sticks are just a foot long. they say it s a great equalizer, that folks of all sizes and genders can play together. i like that. not quite as rough. and i like the uniforms, you know? the uniforms, yeah. probably cheaper than the regular hockey game. yeah. although i can t hold my breath for very long. that might be an issue. yeah. i think the whole game is like 30 minutes, 15 minutes each half. after about five minutes, oh, my gosh. monica, thanks very much. have a great day. thanks. you guys have a great weekend. you, too. citation air plans to relaunch today by launching its operation at craytation air cessna. welcome. good to have you with us. good morning, tyler. why the change in branded? citation shares have been operating independently for some period of time and we had a lot of great independent products that we were offering. we feel now is the time in this economy to really rebrand ourselves as citation air, tie it together with cessna and take all of those independent offerings so our customers can benefit vv a better value than we have had. how rough has this economy hit your business? this economy, starting in september last year, has been devastating to us as a company. the business is down about 48%. but the good news is that we re starting to see the business and the market coming back. we re seeing some of the economies around the world starting to respond favorably and we think the future still remains bright for business aviation. is this product mix that you re beginning to see come back different markedly from what you might have sold two, three years ago? well, certainly with our citation mustang, our entry level jet, it s been a new and exciting product that s revitalized the lower end of the market and we re seeing that recovery much faster than some of the other products we offer. where is the demand coming from? it s really split. historically it s been about 50% dmaftic. now we re seeing lots of new and emerging markets that have untapped potential long-term. what is your answer for going to the expected question to people who are critical of corporations that spend shareholders dollars to purchase private aviation for their executives or board members or whatever. what is your best answer to those who say that is not a smart use of corporate money? well, corporations have an obligation to their shareholders to explain why they made the acquisition of a business jet. whether it s an explanation of brick and mortar facilities or a plane, polices have an obligation to make sure that story is getting told to their shareholders. these are not just play tools. these are tools that typically 80% to 90% of the time, the seats are full. they have mid level managers, salespeople that are out visiting customers, fixing machinery and equipment in places that aren t served today by regional or commercial traffic. jack, the argument certainly makes sense that you can get people faster to more places. have you seen reyukt nant for people willing to be spot the on the site? certainly, we have. this year, there was a lot of rhetoric that came out of washington, d.c. that unfairly was characterizing aviation light other than what it was used to. and we think that those ads are getting to the essence of what business aviation is about. and again, it goes back to when people bought those products, they bought them and were able to justify them with a business return sociologied and they have to get that story out. mr. pelt, thank you very much. thank you, tyler. thank you, becky. good to have you here. coming up, tyler and i are going to jump off the set and good over to the chairs. we have the stories that will have us talking this morning. then a man who is no stranger to boshd rooms. don powell is now spending the morning in the squawk chair. oh, john cannis is there, too. at the end of the day in sitka, alaska, everyone awaits the return of the fishing boats. their safe arrival is highly anticipated, as is something else. a shipment of natural sea salt from cargill, essential for preserving the catch. we deliver the salt on precise schedules. and ship it efficiently all along the alaskan coast; saving the fishermen money, and their catch. this is how cargill works with customers. welcome back, everybody. this the time of the show where we get to take over a little bit ourselves. these chairs are sponsored. sponsored chairs. this is when we talk about what we like to talk about. if you re in mississippi and up this morning, you re in for a treat. i m jealous of you. this morning there s two rockets headed to the moon. if you re west of mississippi you might be able to glimpse this with the naked eye. this is a representation of what they expect to take place. it s headed to the moon. when it hits it s expected to send out bright lights. west of mississippi, you might see this with the naked eye. or if you re naked. if you re naked and you d rather stay inside the house and watch it. we ll try to show it. forty minutes from now it s expected to happen and we re expected to get a live feed from nasa. the first rocket will crash into the crater into the second hemisphere of the moon. the second crater is behind trying to get a shot of it all. trying to see if water is released or vapor. what if the moon cracked. that s what i thought, too. what if it cracked like a clay pot or egg. the end of the earth. the reason they are doing this, they are hoping some time in the future they hope mankind can set up shop on the moon. condos. there s not enough of a housing bubble here. i think you buy some nice land on the moon and it will be fine. i like that. one thing that caught my eye, who do government officials talk to. if you want to know, they put in a request on tim geithner and found and say totally surprisingly since becoming treasury secretary he speaks a lot to guys on wall street. the precise folks he used to oversee when he was at the new york fed. let me tell you who he talks to most. apparently lloyd tops the list. at goldman sachs. 22 times. we should not be shocked like this. people go back to government thing. i thought you said sex. who knows, there s a lot of sex in government. the other guy, dick parsons of citi, 17 times, apparently not bank of america. how involved government was with a merrill lynch. he goes out of his way, mr. geithner, in an interview to the journal to say many of these calls took place around the time of the funding, that he s very careful not to discuss with them regulatory reform. he does not want to discuss or bring into those conversations. he s got to be in the back of his mind all this is recorded and sow knows it will come back. it s off balance. larry of blackrock shows up on his list. ellen degeneres. no, just kidding. and me. wouldn t we like. coming up, top stories, plus much more conversation with investor carl icahn. approaching 7:00 a.m. on the east coast, squawk box will be right back. here comes mr. powell. welcome. see you in a minute. tdd#: 1-800-345-2550 i want everything right where i can find it. tdd#: 1-800-345-2550 anything that makes trading easier. tdd#: 1-800-345-2550 i want to be right in the middle of the action tdd#: 1-800-345-2550 you know i have to see what s going on. tdd#: 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on cnbc. i m here with cnbc s managing editor tyler matheson and david faber. gentlemen, thank you for being back. good to be back. you didn t screw it up, i guess. you guys are perfect. i appreciate your being here. joe and carl are out today. they will be back next week. we have a great show including exclusive interview with legendary activist carl icahn. before that, let s look at top stories. here are some of those headlines. president barack obama about two hours ago found out that he won the nobel peace prize. norwegian nobel committee said his interpretation cooperation was a factor. president obama is the third sitting president to win the award. fed chairman ben bernanke says the will tighten when things improve sufficiently. the mantra, monetary policy will need to remain accommodative for an extended period of time. u.s. labor groups turning to pay czar fineberg to stop retirement payments to outgoing bank of america ceo ken lewis. service employees international union calling lewis, quote, one of the chief architects of the economic crisis and saying he should not receive any retirement or severance packages until the bank stops foreclosures and increases lending. lewis s retirement pay includes $53.2 million mostly from a pension program frozen years ago and $72.8 million in accumulated stock and other compensation. well, the pressure is on for bank of america s board to choose its successor to ceo ken lewis. here to give us an update our guest co-host for the next two hours on how a board member, former chair of fdic. good morning. good morning. we hear a good deal of chatter. i ve done obviously some reporting on this as well. it does appear the bank is focused internally. is that correct? or is there also the possibility of an outside candidate? maybe the board of directors process to secure the next ceo. i don t think it would be proper for me to compromise the integrity of that process in any way. i believe in the process. it s led by our chairman. in time there will be a ceo. you say in time. at the very least can you give us a sense of how much time the board would like to see go by before telling shareholders hot person will be? i think it s in the best interest of all stakeholders that a new ceo be obtained as soon as possible. hope fully by the end of the year. ken lewis is still there. this idea that perhaps somebody would be anointed who would be a short-term successor while you continue to look or perhaps somebody else within the organization is allowed to have a little more experience. yeah. i just think i don t want to can i sit here the rest of the two hours i think you can. i m going to heed solomon s council, guard your lips. a wise man does that. i don t want to compromise the integrity. let me try another way. try another way. what is the kind of person? what are the attributes of the ideal successor? well, i think it s important, obvious obviously that person understand and has been involved in the large business of enterprise. integrity is very, very important. leadership characteristics is very important. large enterprise, integrity, leadership. other characteristics you would want in any organization. do you think you have it? you know, i think there is an individual that the board will focus on that will have most of those attributes. how are you feeling about being on the board of directors? how is that working out? i m proud to serve with some distinguished men and women that serve on the board of directors. they are committed to making sure that the shareholder are represented. it s a fiduciary role. we understand we re a regulated entity. there s a relationship with regulators. these are men and women who are spending an enormous amount of time dedicated to the mission of bank of america. it s too important. and they are all focused. they are all bringing certain expertise. i m honored to serve with them. why don t we talk about regulatory reform when it comes to the finance system. that s moving forward. looks like next week some of those bills will be marked up in barney frank s committee. when you start look at what s happening with barnie frank s committee and tim dodd. is there going to be a new consumer protection agency, all other agencies wrapped together as a super agencies? what do you think will happen? the consumer protection agency and concern about consolidating agencies, ots. becky, i m focused on certain principles. i think regulators should be very independent en. it s important they be independent not only from the political process but budget process. i think that s characteristics that is very important. i think also there should be some type of oversight. independent, can t be oversight. it s important there be some checks of that process. i don t think in the regulatory regime has served us pretty well. i, being a former banker, was supervised by the office of control of currency and i can assure you they are very capable people, very professional. come on, regulatory regime did not serve us well during this last period time. we almost lost the entire banking system. part of the regulatory regime is focused on those that regulate and those that do not. we had a mortgage crisis and that was outside the regulatory environment. there s always some things we could have done different. i think over the years, i ve been regulated and been part of regulators. at the fdic they are dedicated professionals who know what they are doing. otc and federal reserve. could there have been some things different, sure. what could have been done different? obviously there should have been more checks on the mortgage financing and real estate loans. they begin to force some of that to stop. again, you ve got to remember the environment we were in. real estate loans, owner occupied home loans traditionally doesn t make as much. the underwriting on that got all screwed up. it ran amok. we re going to talk a lot of topics but we ll end there for now. thanks. comments, questions about anything you see on squawk, e-mail us at squawk@cnbc.com. i think the government should stay out of this as much as they can. not threaten higher taxes, not threaten to socialize businesses, threaten to take them over. legendary activist carl icahn sits down with becky quick to do an inclusive interview. listening makes me want to do you know he s not up. up next financials state of banking, chairman and ceo of bank united. you re watching squawk box on cnbc first in business worldwide. time now for today s aflac trivia question. what is the only two syllable word in the english language with no true vowels? the answer when cnbc squawk box continues. aflac! is that different from health insurance? well yeah. .aflac pays you cash to help with the bills that health insurance doesn t cover. really? well, if you re hurt and can t work, who s going to help pay for gas? ..the mortgage, all kinds of expenses? aflacc it s the protection you need to stay ahead of the game. exactly! aflac. we ve got you under our wing. aflac, aflac, aflac. aflac, aflac, aflac @@ now the answer to today s aflac trivia question. what is the only two syllable word in the english language with no true vowels? the answer, rhythm. all right. welcome back to squawk box. take a look at futures this morning. remember, four g&a days of games at s&p and nasdaq. earlier this morning futures were below fair value. right now dow futures 13 points above fair value. s&p sitting above as nasdaq remains five points below fair value. fed begun small scale test, drain excess liquidity from the financial system. in a reverse repo, fed sells assets like treasury securities and agrees to buy them back later at a slightly higher price. private equity firm bought bank united in may in hopes of eventually turning a profit. here to talk about what he is seeing in the financial industry is bank ceo. he sold his bank to capital one in 2006 right before the financial system started unraveling. john, when you look around today, where does the financial industry stand? are there still opportunities or now that it s up and running are things starting to stabilize. as an investor there s opportunities. the industry is widely segmented i frankly am bewildered. i m watching stock market and equities march up every day. in the world i m living in, i m not seeing that robust a return to profit able in the market. i think one needs to be quite careful. investing in banks today is not a game for the faint of heart. it s best level to the professionals. i heard what carl had to say earlier and i think that s true. what you re saying is you don t see robustness in the stock market, loans at a community level, is that what you see there? it s hard to make loans for most smaller banks. we have an excess amount of liquidity trying to find a home. frankly most banks today are having a hard time generating in this environment. given the fact the consumer continues to weaken and is frankly leveraged to a greater extent that he was last year to the affect mortgages are down 2% and the value of the homes that our consumers are living in are down $6or $7 trillion, it s a good reason to remain concerned. john, you re because low demand, given lots of applications, choosing not to make those. in florida, a niche of need. all the markets are different. florida has been decimated particularly with regard to real estate values. we re trying very hard and are being somewhat successful. we launched a program two months ago to try to gin up some demand in small business lending, take 7 or 800 applications during that time. unfortunately the balance sheet of small business owners and consumers is significantly weakened compared to where it was last year. so the credibility of these borrowers is in question. it s very difficult. doesn t want to be stretching in this environment. it s difficult to get loans. how do we get this thing going? the answer is time, i suppose, and the answer is that when our customers let the consumer begins to heal, we ll back up into the financial industry. there s very little evidence of that. you say you re bewildered of the picture of the stock market. you just mentioned time, gave an indication you think it will be quite some time. can you tell me a bit more why you think it will be time? the world we lived in a few years ago is dominated by we talked about earlier the shadow banking system that all but disappeared. the new shadow banking system is the federal government today. they are providing liquidity that was once provided by wall stre street. institutions around the world. absolutely. one would hope as time goes by they would be part of this healing process unfolds that we will begin to see alternative sources of liquidity other than just the federal government. but frankly right now it s pretty cloudy. what about the consumer. what is it that gives such pause in thinking perhaps we ll see a return to normal. well, obviously the answer is in jobs. while everybody likes to run around saying that unemployment is a lagging indicator, i m not sure. jobs are created in a small infrastructure in this country. it s beginning to look more and more as we dig down to the hourly workweek, 33 hours. i hope it s not true but it s beginning to look more and more like the unemployment figure might be a leading indicator and that gives us great pause. the balance sheet of the banks going forward, are they going to look different than they did this last five years, especially the capital section? i think so, don. we talked about thisany times. we were in business in banks when capital was capital, it wasn t debt. exactly right. owed to the pressures of wall street over time, we had to ratchet down quality of capital over the years. i think it s quite clear that we re heading toward a time when bank returns are going to be less robust than we ve been used to seeing in the last ten years, more like what it was when you and i got into business. me frankly i got in the business in the late 60s, if a bank showed 8 or 9% return on equity you made the front page of the local newspaper. first question, how many more banks will fail before we get out? i said i thought there would be at least 1,000. we checked off 100 already this year, or 98. by this weekend it will be 100. i m not that pessimistic, i think it will exceed 500. another 400 to go, another 900 to go under your suggest. turn on equity the type that would seem to be enormous for investors to digest over time. i think it s inevitable as there s more and more pressure under this industry. we ll tall under a a great deal more regulation. capital standards aren t going to be cranked up as well as they should. that s good. that s a good thing. i think it s going to be a little less exciting over time. john, thank you very much for joining us. nice to see you all. ceo of bank united. coming up a check on futures and stories making headlines, then our exclusive interview once again with carl icahn. we ll sit down with the bill air and corporate raider. we ll talk markets. rockets to the moon. a booster. there s david bowie. it will really hit the moon in search of water. we will bring you that when it happens. you re watching squawk box on cnbc, first in business on earth. we re going to shoot the moon here in a little bit. you re watching squawk box on cnbc, first in business worldwide. we roll out the blue carpet for drivers of these great gm brands. we can do the small things, the big things, just about everything. right inside your gm dealership. find out more at goodwrench.com. french fries and america s passion for them are legendary. but times change and people want better foods. so cargill helped a restaurant chain create a zero trans-fat cooking oil for their fries, that preserved their famous taste. this is how cargill works with customers. gm drivers.. it s goodwrench & go time. three great services: all in one place. all at one time. all for one price for most gm vehicles. but it s only for a limited time. at participating gm dealers. all right. the futures have been picking up some ground on this friday morning. we re actually now watching the dow figures above fair value even though they started out below a couple hours ago. if you have comments or questions, go ahead and e-mail us, squawk@cnbc.com. when we come back, corporate raider and billionaire call icahn in an exclusive interview. there s no question that we went crazy, you know, back a year, year and a half, two years ago. it s sort of interesting that, hey, the regulation would have helped the madoff situation, right? more thoughts on what the obama administration has done wrong and what they have done right. as we head to the break, here is a look at the widely held stocks. squawk box on cnbc returns after this. we are first in business worldwide. this is my small-business specialist, tara. i know landscaping, but i didn t know how wireless could help my business. i just don t know how wireless can help my business. tara showed me how i could keep track of my employees in the field and get more jobs done faster. i was blown away. i m blown away. only verizon wireless has small-business specialists in every store to help you do business better. we should get you a hat. now buy any blackberry, like the new tour, at our lowest prices ever, and get one free. welcome back, everybody. now we have more of our exclusive interview with activist investor carl icahn. he shares some words of advice for the obama administration to try and get the economy back on track. there s a show, camelot, i remember when i was a kid, goes back a while, in the show king arthur asks merlin, the wise man, he says, what should i be doing king arthur says what should i be doing with my new wife? how do you treat a woman? merlin says the wise man says, you don t control her. don t threaten her. don t flatter her. love her. and that would be my advice to obama. he should heed that kind of advice today. the administration should heed that advice concerning the economy. instead of threatening and controlling and this is what the administration is doing in my opinion. on the one hand they flatter the economy when i say flatter, all the stimulus. on the one hand it s sort of a schizophrenic thing. they push money in on one hand. on the other hand they threaten high taxes. they have businesses scared. if you re an investor, a businessman, you ve got a small to medium-sized business, you re afraid to invest, because you re afraid of what the add manage is going to do. i think the government stay out of this as much as they can. not threaten higher taxes. not threaten to socialize these businesses, not threaten to take them over. do you worry about additional regulation. obviously there should be make regulation in some of this. there s no question that we went crazy a year, year and a half, two years ago. but it s sort of interesting that, hey, the regulation wouldn t have helped the madoff situation, right? the s.e.c. just didn t do it. there s an area you d like to see the administration get more involved, what the s.e.c. has put off next year the idea of allowing shareholders more say in the director. absolutely. they are we should be. ironically there s too much government, corporate governance, state governments have too much to say. they allow these what i consider to be unconscionable things, sort of these poison pills. these things that protect management s. if you have your own private business and somebody is doing as poorly as some of these managers, you throw them out. there s no question. was there one point, go back again to take over the car companies or president obama going to las vegas and saying you shouldn t be traveling to las vegas as a business, was there one point where you thought this was too far? i know what in fairness to obama. nobody is going to accuse me of being a great fan of obama. but some of the things, are i sort of agree, hate to say, but corporations were out there having boondoggles, companies weren t doing good. in fairness to him, i think that s what he was trying to portray. everybody took it, poor vegas. vegas was overbuilt, too much capacity. gambling is a great business. usa know, i own casinos, and we sold them because it was overcapacitized. i really don t fault obama on that. i think he possibly misspoke, came on a little too strong about it. but i think right now and i do think they sincerely want to do stuff. they should be coming out and showing how they are going to help business to build as opposed to doing it themselves. i think that s basically the feeling you get overall. that s what they are trying they don t portray that. i think that s very scary. what would be one thing, an olive branch, that would make you feel better about what they are doing? i would go to businesses and actually literally cut taxes. cut taxes, stimulate business to invest. stimulate business to invest. actually tell the consumer, stimulate purchasing. actually cut the taxes as opposed to try to take the money and do it yourself. the government is there stimulating. probably not going to happen with this administration. i think they built a problem for themselves. you ve got this huge deficit coming. i don t know what you do. the deficit is coming. frankly i really think that with this economy, i don t think this economy is really turning so quickly. i hope i m wrong. when it s not turning this quickly, i don t think interest rates are going up for a while. i think they still have a holiday, the government, where they can put out money. they can give taxes without seeing interest rates go through the wall and without rampant inflation. more of our exclusive interview with kaurl icahn later. his relationship with carol, what he thinks about yahoo! shares. in the meantime, there is something pretty significant about to happen. that s right. you are going to look here in just a second at a live shot there it is. of the moon. nasa tv, a satellite with a rocket booster is about to crash into a crater looking for water on the moon. expected the plume of lunar dirt will be two miles. hoping to find water and ice to make a permanent lunar base. nasa is really going to bomb the moon in hopes of finding water. so that men can eventually mankind can build condos. build condos. why not. want to lease part of that. water on the moon. this flash could last 30 seconds. infrared. by way, if you re west of the mississippi you might be able to see this with your naked eye. again, we ll be looking at these shots. confirm command, over. i don t see it. any second it will happen. if we re quiet we can hear nasa. we should be looking for some signs of the impact on the left most part stand by for infrared changes. the left shade owe below the larger crater rim. make the changes. mir 2, 0.1 hertz, over. mir 1 to 1 hertz sending mir 1 at 1 hertz. directing flight team to just be sampling rate of some of the instruments. stay within the 1 megahertz. .2, .1. flight 0.1 hertz. mir 20.1 hertz sending command. flight confirm receipt of command. over. copy that payload. all stations flight one minute transition to dv mode. transition to dv mode, delta v mode is a control mode for the spacecraft, laos us much more quickly, to continue pointing at the suspected impact point, even though the spacecraft will be impacting a couple of kilometers away. this the last minute for once again, if you re wondering what the heck we re doing. we re looking at the moon here where a nasa probe is expected within seconds really to impact the moon. it could create we re still waiting to see if anything happens. we re watching the remaining few seconds. the last few seconds. we re crashing into the moon right now with this there were two crafts. one was a rocket ship. the second was one. there we go. hit the surface of the moon, the impact there. the expectation was we would see a huge flash in the sky. nir 2 to opr 10. over. don, what do you think? i wish my sixth grade science teacher could be here. she would not believe this. it s fascinating. it s great to watch pictures of the moon. the interesting part here, they have been searching for water on the surface of the moon, below the surface of the moon so eventually they could do something that could sustain people living on the surface of the moon. the expectation is you would see a huge flash that went six miles into the air, maybe lasted 30 seconds. it s hard to say exactly what happened, if they got the expected results. maybe not the expected pictures. a little while before the condos get built there. welcome back. let s check on the markets at this very moment. shall we look at them? there s the futures, the dow futures are a little bit above fair value, s&p 500 roughly equal to and nasdaq also above fair value. that might suggest a higher opening today. all right. in the news headlines, fed chairman ben bernanke saying it will be taken away but not yet. he told washington, d.c. the fed will withdraw it s accommodative policy quickly when we are on solid footing. he says for now interest rates are likely to remain low for an extended period. president obama is the winner of the nobel peace prize. the nobel committee said mr. obama won the award for giving the world hope for a better future. the white house says the president is humbled by the award. coming up, hedge fund specialist and former chief strategist martin biggs will be our special guest. find out how he is putting his money to work now. as we head to break, a look at yesterday s winners on wall street. you re watching squawk box on cnbc, first in business worldwide. yes, you re lovely. what do you think? hey, why don t we use our points from chase sapphire and take a break? we can t. sure, we can. the points don t expire. there is nothing for me. there s no travel restrictions. we could leave tomorrow. we can t use them for a vacation. you can use the points for just about anything. i know. the way you look tonight chase what matters. get your new chase sapphire card at chase.com/sapphire. here is one for the books. global accounting rules may take affect as the industry battles chris sichl for how it balanced the books leading up to the financial crisis. two of the largest accounting firms are with us. jim turley, chairman and ceo, bob is the u.s. chairman, senior partner of pricewaterhousecoopers. welcome to you both. glad to have you here. let me start with you. do you think that the industry has been fairly or unfairly chided for its performance in looking at the books, most especially a financial services company? i think it s been an extraordinary time, as we all know. what we ve tried to do is stay very close with our clients and help them make the very complex judgments they needed to make around evaluations, impairments, all things that came with this financial crisis. i think when we look back, there s no question at this time we live through has been an economic crisis, not an accounting crisis. what we have tried to do is stay close to our client and reflect the evaluations that existed to give transparency to investors. what could your profession have done better? what did your profession where did your profession fall down? when you look at what our profession has been asked to do. we re asked to provide confidence in the financial information to the investment community. i m particularly proud of what my firm pricewaterhousecoopers has done as well as the profession. between fold with my questions, one, do investors have information necessarily to make the right decision. i think the profession as a whole did a great job in actually working with our client base to make sure those disclosures were appropriate particularly in uncertain times. when it comes to the financial institutions, comment specifically any one of them but particularly proud of what we ve done as a firm interacting with those in providing information and when necessary calling out concerns about control in the financial reporting cycle that those companies have. accounting standards and principles, some have said they have gone amok. primarily talk about when an institution can recognize a gain when their debt is going down and some other issues. you know, the investing public, what s the principle? capital account of some go through the p&l. investors are confused. is that an accounting responsibility? you know, don, i think there s a lot of complexity in the financial world today as you well know, and it s caused a lot of complexity to result in financial statements themselves. i think it s something all accounts, profession, standard setters and everyone are trying to deal with because we ve got to make sure that as bob said investors get the information they need to make the right decisions. but trying to make a complex environment more simple is a big challenge. i m curious about that. i ve read financial statements of merrill lynch, for example, and done a lot of reporting on that for the period 2006 and 2007. nobody is charging there was any accounting fraud there. the disclosure was there to the extent it needed to be on the accounting side. there was no discussion of no real way to understand the risk that institution was taking on as a result of securitized mortgage product. anything accounting can do in the future to make risks more cure to investors? let me jump in again. when lou at accounting rules, auditing requirements, we have to step back and ask the question are the investors getting the questions they need around the financial decision, around financial and risks and uncertainties. the thing we have to think about, how do we engage investment community more so in the debate about what the accounting standards look like so they get the information they need. what s concerning to all of us is the amount of complexity in the financial statements, complexity that s in the rules today as well as whether or not the users and preparers can pull together information necessary to make the decision. do you think that is the case today or not? i think there s room for improvement. when you look at the goals that have been set at a very high level, moving towards a common set of accounting standards or otherwise, we have a trend line moving in the right direction. the concern is whether or not again the investment community is expressing its voice. the concern is whether or not consistency is brought in every country with its accounting rules. the concern is over one period of time will we, in fact, change in moving towards a global consistent common set of standards. i think that s essentially a key issue. bob and i and our other colleagues of the other organizations work very closely together on public policy issues. we come together in this country through the center for equality and i m honored to be the chair of that. we ve actually had dialogue tours bringing investors in, bringing regulators, standard setters together to get into these exact issues. how can we get investor more information? how can their voice become stronger. you audit a lot of industries, cross-sections of industries. what are your companies telling you about the current state. let me jump in. we re in front of a lot of clients. i m out there in my role with partners interacting with clients. all are concerned about where is the top line revenue growth going to come from. what is interesting, dichotomy between two groups of organizations, one that try to manage through the cycle as opposed of those managing to the cycle. what s interesting is actually those have companies, managing through it, are, in fact, thinking about acquisitions overseas, taking advantage of opportunities in front of them and market share. if we heard one mention of ifrs, international financial standards. are we going to sit this out? i think it s important we have a single set of accounting standards everyone can use. g-20 consistently said that i ve been on record for a couple of years saying i would like to see the u.s. adopt ifrs. chairman shapiro at fdic said they are going to pick this up and reconsider and state a position on the blueprint. personally, i cannot see a long-term future where we have strong capital markets in this country if we re not all playing globally on the same standard. i think it s a positive thing that needs to get done. thank you for being with us. we ll have to leave it there. still to come on squawk, staff director and chief economist of the president s economic recovery advisory board joining us from the lawn of the white house. we ll get a chance to ask him about what s happening with the dollar if the administration is really pushing that strong dollar policy and what the white house reaction is to obama s win this morning of the nobel peace prize being awarded to president obama. this the third time a sitting president has been awarded that prize. we ll have more on that when we return. when we come right back we ve got stocks to watch. plus why it s okay to be a pig in the current rally. martin biggs joins us next. you are watching squawk box. stick around. we roll out the blue carpet for drivers of these great gm brands. we can do the small things, the big things, just about everything. right inside your gm dealership. find out more at goodwrench.com. gm drivers.. it s goodwrench & go time. three great services: all in one place. all at one time. all for one price for most gm vehicles. but it s only for a limited time. at participating gm dealers. yes, the penguins. never get tired of the penguins. yesterday i heard a goldman analyst upgraded something from a conviction sale to a sale. conviction sale to a sale. not just we don t like it we hate it. i thought those ridiculous ratings had been done away with but apparently not. how about we go for conviction. stocks to watch. a few stocks to watch today. in fact, one of those upgrades we can talk about now. mario buy to underperform at merrill lynch talking about price targets $31. bid ask under pressure. yesterday we heard from marriott, talked about earnings better than expected. i do believe the stock closed down by the end of the day. closing price 26.80. this morning bid ask, 26.15 to 27.14. again, an upgrade from bank of america they are now talking about objective being $31. marriott downgraded by the soleil securities, they say stock has run from this point. downgraded from hold to buy at soleil securities. they say they are looking for a price target of $35, which that doesn t make a whole lot of sense. why downgrade below $35. at any rate, the stock will be a little lower this morning, 32.50 to 32.80. approaching a price target. while a bull bear battle continues on wall street, there s an argument to be made for being a pig. joining us now, former chief global strategist at morgan stanley. good morning. morning. you recently wrote that it s not the percentage change from the lows that matters, it s the amount of the loss altitude recovered. what do you mean? my analogy was it s like dropping a tennis ball. you re going to get roughly you re going to get a 50% bounce from where you dropped it from. if you drop it from 50 feet it s going to bounce 25 feet. if you drop it from 30 feet, it s going to bounce 15 feet. so we ve had a tremendous an unbelievable decline in both the economy and the stock market. i just think we re going to have we re going to have a bigger than normal bounce. tell me the evidence you would cite to support that view. well, we went back and looked at a whole series of not cyclical but secular bear markets. in other words, declines in various in both gold, european stocks, japanese stocks, u.s. stocks, of more than 40%. the average decline was 57%. this time when we were actually down 58% from the high. and the average rally from the low when the market bottomed out was a rally of 72%. this time the dow is up about 45%, s&p up like 52, 53. so we haven t even had a normal recovery yet. in some cases actually like 19 different instances. in some of those instances, the rallies were even bigger than that. rallies were 80 or 90%. again, this is off the low. so i just think we ve got further to go. so do the people who are afraid naturally is long in its tooth, you say we have further to go, where should they go if they want to participate in whatever margin is left in whatever rally you see ahead? well, you know, that s changing all the time in the u.s. i would argue that an area where we have a significant dissipation is big cap technology. so i would argue that the cubes are very attractive. i would argue pharma and oil service are two areas that have been very depressed are pharmas value, oil service has really in a powerful recovery in terms of their businesses are attractive areas. i think that to get a little more complex, the emerging markets, particularly the asian emerging markets stopped outperforming in really in the middle of june of this year. in the third quarter, the real performance, if you were looking as a global investor, came from europe. to some extent the u.s. but particularly from europe. that was the big thing. the emerging markets led by china, and as you know shanghai markets are changing in a big way. that s changing. we re going back to where we see a strong move in the whole china complex, which includes the shares of hong kong and china itself. barton, we have to leave it there. thanks for being with us. coming up the next hour of squawk box, staff director, chief economist of the president s economic advisory board will join us from the lawn of the white house. financials health care, regulation and dollar senator kay bailey hutchison will be our guest. stay tuned. much more squawk box ahead. you re watching squawk box on cnbc, first in business worldwide. for a smarter way to trade online. only fidelity lets you back-test your strategies against an entire portfolio of stocks. plus you ll get advanced, customizable trading platforms. and you get the kind of execution you d expect from fidelity. .with a dedicated specialist to talk about even your most complex trades. they ll even help expedite the account transfer process. trade like a pro. trade with fidelity. good morning. a squawk box exclusive. it s a myth to say a market is a good indicator of an economy. i think individuals are a better indicator. activist investor carl icahn speaks out. president barack obama wins the nobel peace prize. not so fast. fed chairman ben bernanke shows no sign of raising interest rates. he had the year of the president, white house council of economic advisors member austan goolsbee is our special guest. financial state of the union. final hour of squawk box begins right now. welcome back to squawk box here on cnbc, everyone. good morning again. i m becky quick along with tyler matheson and david faber. joe and carl are out today. they will be back at some point next week. our guest host is don powell, bank of america board member, also a former chair of the fdic. don, it s great having you here. thank you. we re going to dig in a little bit on corporate boards and what you think in a little bit. meantime keeping our eye on equity futures. right now looks like the futures are slightly above fair value, at least when you re looking at the dow it does. things turn around, in line with fair value bouncing around a little bit this morning. we do get international trade numbers half an hour from now. meantime some headlines we re following. president obama winning the nobel peace prize for his efforts to, as the board says, strengthen international diplomacy and cooperation between people. administration official says the president is humbled by this award. we ll hear more on this in a few moments. fed chairman ben bernanke in no rush to boost interest rates. super low rates should entice people and businesses to spend more. that, in turn, should bolster a budding recovery. the obama administration s program to fight the home foreclosure crisis look increasingly inadequate. the panel wants it reworked. investor carl icahn speaking out exclusive to squawk box. we talked about the economy, the market, and, of course, his connection with yahoo! it was almost a no-brainer. that s what i m saying sometimes when you see these overpriced reits or underpriced bonds, it was like a no-brainer. just get a deal done here. the conversation where he s talking about the deal between microsoft and yahoo!. carl barts the ceo at yahoo! also somebody who is pretty outspoken. more on his thoughts and relationship coming up. thank goodness my three yearly is listening to blues clues. that did not go well for him yahoo! at all. selling some of his stakes. saw that as a real opportunity. but it didn t go his way. he said he still sees opportunities when it comes to the internet and changes making especially in terms of the advertising market, he ll talk more about carol barts. he sits on the board, right? yeah. go to washington, house speaker nancy pelosi says she will send three versions, count three, of the health care reform bill to the congressional budget office. joining us, republican of louisiana, a member of that ways and means committee and he delivered the gop response to president obama s speech. welcome, congressman, good to have you here. good to be here. what do you think especially how the cbo scored not any of the three bills speaker pelosi sent over there but to the one that came out or is coming out of senate finance the baucus bill. i think we still have a moving target. clearly we did get some numbers from cbo on the baucus bill in senate. what really concerns me about this is this bill raises tacks significantly on businesses. it s going to raise taxes on families. i don t think that s the way to go. what we need is meaningful health care reform that actually brings down the cost of health care over time and is a sustainable drop in cost. raising taxes is not the answer at this time, especially when it s not coupled by real reform from the health care system. let me ask you, congressman, if you don t mind, a rather more theoretically question about health care reform. i ve got to say i don t see in any of the proposals here whether they involve a so-called public option or not, anything i would describe as truly fundamental reform of how americans buy and pay for health care. and the reason is they all rely on a third party payer. and i believe firmly that unless you cause the consumer, the person who is out there actually shopping for health care, unless you cause them to somehow pay for their own health care, that the real pressure, the real marketplace doesn t go to work. as well as a third party is paying one way or another, it doesn t feel like real reform to me. comment on that, if you wouldn t mind. i think you re absolutely right about that. you don t get the market signals that are necessary. that s a problem both in health care itself and how health care is delivered, services, the treatments and all. and also in the insurance side as well. both of those areas lack transparency and there s really not that direct connection between the consumer or the service and the cost. and so again, none of the health care bills really meet the definition of real health care reform that is sustainable. both of the bills, the house bill, three different house bills and the senate bill basically raise taxes to meet the cost to some degree. and i have a real concern that the cost is going to continue to escalate beyond that it s a recipe for much higher taxes for families and businesses in the long run. congressman, good morning. good morning. go saints. choice. all these plans, does an individual still have a choice, is it not true if i m uninsured, i can go to any hospital and they must offer medical services there? if you go to a hospital, you ll get services, especially emergency services. you may end up with a bill that you can t pay. that s one issue. but nobody is going to be denied care currently in the system. now, you re right about choice. what s missing is real choice, real competition in the insurance marketplace in transparency. republicans have ideas about this. we believe let s open this up across state lines and let families and small businesses shop anywhere they want, where they can find the best deal. couple that with transparency, allow people and small businesses to pool together to get better purchasing power. as long as we re going to have an employer-based system, those are the ways you actually can drive the cost down of insurance premiums and you ve got to couple that with meaningful health care reform in how health care is actually delivered. make it much more efficient because there s a lot of waste in the system. what s the obstacle to allowing insurance companies to compete across state boundaries? in some states there are really very few private providers of health care coverage of is it states that oppose it, insurance companies? who is blocking that one? i believe to some degree it may be the states, because you have individual mandates for certain types of treatments state by state. this is just too patchwork. it s far too much of a patchwork kind of system. again, it s siloed state by state. you have opportunistic state by state. if we opened this up and had a real wide open competition, there s a lot more transparency that comes from that. i think we could also put some provisions in law that would push for more transparency. i think then you have a real functioning health care insurance market system which we don t have today. you mean more federal regulations that would reserve state regulations to cover this prof not necessarily. create standardization so individuals and families have a way to compare cost in a way that s meaningful and also to understand what these policies actually provide. and again, what republicans would do is provide mechanisms for a pathfinder to do this actual meaningful shopping. it s not quite an exchange that directs people into certainly not a national exchange. we don t believe that s the approach. but provide people with information, real information, that they can make meaningful choices. from the government or private enterprise. no, private enterprise. would there be a government sort of there would have to be some sort of push from government to make this happen on a national level? i think you could talk about, you know, setting things up on a regional basis or even in given states. this is not rocket science with the internet and so forth. folks could find the information. it just needs to be put in a presentable form so small business owners and families can actually shop. the bottom line is we ve got to get the cost of health insurance down particularly small business owners and families and this is going to require transparency and it s going to require competition and choice. congressman, thank you very much for joining us this morning. appreciate it. thank you. pleased to be with you. coming up, we still have breaking economic news on the way. just about 20 minutes away, we ll get international trade data. numbers, instant analysis. also president obama set to deliver a speech on the economy and on regulatory reform today. we re going to be getting a preview from one of his right-hand men, austan goolsbee. that s coming up when squawk box comes back. fithe same tools the pros use, so you can be a disciplined trader. by selecting from eight advanced triggers, your order gets executed, even when you re busy. and with trailing stops to help you lock in profits and minimize risk, you can be confident in your strategy, no matter which way the market moves. find out why more and more active traders are turning to fidelity for a smarter way to trade online. trade like a pro. trade with fidelity. 13 minutes past the hour. welcome back. making headlines, international energy agency said world demand will recover at a fast epace than previously expected. the monthly report cites the economic climate is improving. air passengers in europe will be allowed to take drinks and other liquids through security checkpoints in the year 2012. why? have you to wait until 2012 to bring it through. transportation ministers meeting today, the existing ban expires in april. technology is not yet ready to let passengers carry whatever liquid they want. let the games begin. golf and rugby are being added to the olympic schedule. that will start in 2016. how about that? tiger woods can win a gold medal now? i think he said he d be very interested in competing. he s won enough. our guest host is don powell on the bank of board of america, former chairman of the fdic. don, one of the things we ve been talking about at commercial breaks is what it s like to sit on a board today, whether bords of directors have been rigorous enough in the past and what some flaws are. it s a sobering responsibility. i think most directors i know bank of america takes it very, very seriously. i think it s important a director has a freedom to ask lots of questions. a director needs to understand the industry, the company he sits on the board of directors for. they need to understand responsibility of all the stakeholders. we re a regulated industry, we need to understand that. we need to assess management and look at the entire enterprise especially in relation to risk. you ve got to be bold, ask lots of questions. do people ask lots of questions or are they, you know, sort of shy when it comes to these things. my guy or my gal. depends upon the individual. some are opinionated. i ask questions. you know, i lost my fear of being accused of being dumb. you ve got to ask the questions. i think also you ve got to have the energy and the time commitment. time commitment is very important. you ve got to read the material, you ve got to read the entire you need to read everything. you need to understand the business. don, i ve seen some of the board presentations. i come back to merrill lynch earlier, i asked our guest about. on the exposure of particularly merrill lynch now of course owned by bank of america. there s no way, in my opinion, that a board, even a sophisticated board would appreciate the risk being taken on. i don t quite understand how the board could be in a position to understand it based at least on what i ve seen in terms of these you ve got to dig. you ve got to ask lots of questions. looking back now those risks there are. just nothing what is our concentration in what s the downside? what can happen to cause us to have a loss. are you share. question assumptions. it s being engaged. seems relatively simple. people might not understand, certainly i would not the complexities of those things. they would understand 40 to 1 leverage. i m the tier count, if you can t show me that, i ve got to understand the entire risk. you ve got to read, be engaged. don is with us for the rest of the program. we ll talk to him more on the show. there s a lot of news out of washington. senate finance committee scheduling a health care vote, also president obama and his advisors mulling a new strategy for afghanistan. joining us right now is david gregory, moderator of nbc s meet the press. david, probably the most significant headlines out of washington this week all surrounding afghanistan because this the question that is going to be put to the presidency as to which direction he s going to take and whether to head right or head left in terms of where the party goes. it s a huge decision. you re right. poth politics are tremendous. the party, president s party did not want him to get mired in afghanistan. did not want a true collision doesn t want the mission creep some people associate with this war and the way it was associateed with vietnam. it was a very difficult choice and very difficult path for the president who committed in march to a policy of enormous nation building in afghanistan with civilian resources along with military resources to take on al qaeda. appears the president is moving toward middle ground, narrow focus on taking out al qaeda, what that means for the actual policy. we ll find out in the next couple weeks how many troops actually get committed over there. this the kind of decision that defined the presidency. we ve been talking health care this week as well as every week. we talked to a congressman that would like to see changes from a republican perspective, changes that have not been presented at this point. at this point, the train has left the station, is there anything republicans can do to really slow down. i don t know republicans can do a whole lot more to slow it down. i think the action is within the democrat party, centrist democrats who have concerns about cause, taxes, and republicans share those concerns. again, this is a 60 vote strategy in the senate, the baucus bill, president plan, whether olympia snowe remains to sign on is the big question. the president s advisors working on this see a more deliberate path to get this done. it s moving now with a little more momentum. david, it s great to see you. what do you have coming up on the show. a lot more on what s ahead in afghanistan. we have a unique discussion, former chairman of joint chiefs and senate armed services talk about this incredibly difficult decision the president will make. david, we ll watch this again. make sure you tune in as well. meet the press this sunday, check your local listings for those times. president obama stepping up the campaign for consumer financial protection agency. joined by treasury secretary time geithner for an event at the white house as they seek to try to increase support in congress. joining us to talk more about that is austan ghouls bimember of president s economic recovery advisory board. good morning. great to see you again becky. great to see you, too. we ve been talking about how health care has taken the focus away from everything else on capitol hill. this is a way to try and push those regulatory reforms back on the front burner. what s going to be happening today. i think that s exactly right. if you ask over the next five or ten years what are the most important issues in the country, certainly solving the health care crisis is one. getting the financial system back into a stable, secure place with rules of the road so we don t have the kind of melt down we re living through, that s got to be high on the list. the president is going to put forward his idea of how you reestablish fairness, transparency and accountability in the regulatory system. a lot of that starts with every day people and how you protect. barney frank financial services committee in the house marking up some of their legislation later next week. told us earlier this week he expects something out of the house by the end of this year. do you expect the senate will do the same. look, i certainly hope so. i m not a legislative strategy expert so i don t know what the timing is. i know that the centerpiece of the consumer protection effort that got to be right now you ve got seven different government agencies each with some little piece. we saw over the last ten years there were certain financial operators able to wiggle their way in between the cracks. they were able to engage in deceptive practices or do things that wouldn t be allowed under one regulator but are under another. they all have to be consolidated into one set of rules. so i think there can be general consensus on that pretty quickly. it seems to me moving where the regulators sit may be one part of the problem but really addressing the problem requires maybe strengthening, toughening the regulations themselves or choosing the right kind of regulators, in other words the right people to do it. does the president s plan anticipate doing that? yes. i think there s an insight you ve got both strategies. one is you ve got to have the right rules of the road that gives people so there will be transparency and you hold people accountable. i think have you seen the president do that. take the credit card portion of the consumer protection agency, the credit card bill the president pushed for, prohibited a lot of the deceptive practices some credit card issuers have been engaged in, for bid them from offering teaser rates, once you got them they pulled them after a week, a budge of things that changed the form of the regulation. second you have to do this about consolidating agencies because there s going to be accountability of government not just of the financial institutions. when this thing spread out over seven, eight different agencies, there s nobody to hold accountable when the thing goes wrong. if it s on mortgages, credit cards, what have you. the president gave a speech in federal hall a few weeks ago in north to financial executives, notable by absence of a clause. i m curious as to whether or not clearly you re not going to have a lot of supporters in the financial industry but what about the opposition there, given how much money, how much lobbying power there is. how do you sustain momentum behind this, getting going again. i think it s important to sustain momentum. i think the image that you convey of him speaking to a quiet room on wall street, i don t think that disturbs the president that much when we re designing how to rebuild the system, i don t think you want to necessarily get the resounding applause of the people that created the system that melted down. the president s focus has been on how do you protect the american people and restore transparency and accountability to the system. it does mean you have to keep the public eye and public interest in the foremost. if you don t, this thing becomes a bill stuck in the bowels of some committee somewhere in congress and then the special interests come back and write the rules for themselves. that s what happened the last time. the president is not going to let that happen. the lead story in the wall street journal is about the u.s. standing by as the dollar falls. we saw asian central bank intervening to try and prop up the dollar. u.s. central bank on the other hand has done nothing. we may say we have a strong dollar policy but what are we saying with our actions. i m not going to get myself in trouble. the treasury is the place they can discuss dollar policy of the u.s. government. i m going to refer to you tim geithner. we tried. austan, one other question as to the consumer protection panel. getting the non-regulated businesses under this panel is part of your focal point i m sure. yeah, i think that s right. if you take, say, i think it s yes, that is true. and i think it s important to do that say the payday lenders, brokers type. right now they compete unfairly against community banks, for example, so we ve got to level the playing field. mr. goolsbee, thanks for being with us this morning. we appreciate it. joining us from outside the white house. coming up breaking economic news, international trade. squawk box back after this. 33 mpg highway? they never heard that. which is better than a comparable toyota camry or honda accord? they are stunned. they can t believe it. they need a minute. i had a feeling they would. introducing the 60-day satisfaction guarantee. buy a new chevy and if you don t love it, we ll take it back. there has never been more reasons to look at chevy. more than just money moving across markets. it s about exchanging ideas across cultures, opening up to the world- continuing to innovate. you need to have a nimble organization that can innovate rapidly and constantly is willing to 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policy but should we listen to what the government is saying or what the government is doing? well, i ve been worried for two months now on air about the dollar an its influence on the markets. today it s on the front page of the financial times, it s on the front page of the wall street journal. the dollar is getting a little strength from what our friend kevin ferry has been warning about a week now, giving the dollar strength and weakness in the futures. kevin, i guess that s the same situation. reverse repos are what the fed is doing. but when you listen to ben bernanke still going to be an accommodative policy. again, what do you believe? i believe them both. they are trying to get a message out and people aren t necessarily getting it. it s kind of a technical thing. i wouldn t read much into the operation. but i have to get ready for something and get the market on page with them for something they are going to have to do later. i think that s what he was trying to outline in his speech last night. they have a plan. conversely, as saying treasury when it comes a dollar has no plan. i think that s where the markets have weighed in. so far the negative consequences have been minimal so they go with it. so markets were pride last night. i think you get this trade data, see how it shapes up on abbreviated session. i think it could be a lively one. we have seen quite a bit of up and down with the futures at this point, futures pulled back below fair value. this is coming at the end of some major gains for the markets, though. again, for the week, both the s&p and nasdaq have been higher for four days in a row. the dow has been up three days in a row all together. makes the best day for the markets, best week for the markets since july 24th. again, international trade numbers right now. kevin, why don t you tell us what those numbers are. a deficit of 30.7 billion becky. we are looking for minus 33 against 32. i think the real key to take away, i can t see what the breakdown is, there isn t enough strength. i think the dollar plays into that, whether it weakens, they are weakening on us. more trade is better right now and we re just not seeing it in the numbers. art, as we head into the weekend, you re somebody that gets news from the market, what s the sense of coming off this strong week s market. the market has been choppy since the reversal after fomc, eternal equinox, backing and filling. we have not regained highs. that s going to be a challenge. there as lot of resistance in the s&p between 1065 and 1075. so that will be an area to us all. next week will be a semiholiday a lot of fed speak. i think we ll be doing what kevin was just talking about trying to get a full interpretation of fed policy and maybe treasury policy for the dollar. kevin, art, thank you very much. have a great, great weekend. coming up, an hour until the opening bell and still a heck of a lot more to come right here on squawk box including more with activist investor carl icahn, republican senator kay bailey hutchison. stay with us. okay.um.eighteen pounds and a smidge. a smidge? y know, there s really no need to weigh packages under 70 pounds. with priority mail flat rate boxes from the postal service, if it fits, it ships anywhere in the country for a low flat rate. cool. you know this scale is off by a good 7, 8 pounds. maybe five. priority mail flat rate boxes only from the postal service. a simpler way to ship. and there you see the dow jones futures as you look at them down right now 28 at this hour. more futures. we ll show more of that. that s what we re going to show right now. coming up, senator kay bailey hutchison, the texas governor s take on the economy, banking and more. by selecting from eight advanced triggers, your order gets executed, even when you re busy. and with trailing stops to help you lock in profits and minimize risk, you can be confident in your strategy, no matter which way the market moves. find out why more and more active traders are turning to fidelity for a smarter way to trade online. trade like a pro. trade with fidelity. she is the greatest thing ever. woman: one little smile, one little laugh. - honey bunny. - ( coos ) we would do anything for her. my name is kim bryant and my husband and i made a will on legalzoom. man: it was really easy to do. - ( blows raspberries ) - ( laughing ) robert shapiro: we created legalzoom to help you take care of the ones you love. go to legalzoom.com today and complete your will in minutes. at legalzoom.com we put the law on your side. embattled u.s. dollar watched closely by currency traders and on capitol hill. joining us with her concerns as well as her thoughts on economy, health care and federal spending senator kay bailey hutchison, texas s ranking republican on the senate commerce committee. also running for governor of the lone star state. senator, welcome. always great to see you. thank you, tyler. great to be with you. why don t we talk about the dollar and talk about concerns, speak to people elsewhere and speak to them about why the value of the dollar actually matters. it does matter. i m glad we re now focusing on it. the shrinking of the value of the dollar hurts american consumers. it certainly is going to hurt our capability to attract investment into our country. we re at zero interest rates. it s just putting pressure on all points. of course what i hope we will look at is starting to put our house in order to give the global market more confidence that we are going to start going toward a balanced budget rather than the continuing big spending projects that we re doing. let s talk a little bit about health care. where do you think it s going to be a week from now. well, tyler, speaking of big spending binges, this government takeover of health care is another big spending issue. we re already around $10 trillion in debt. $20 trillion if we go all the way out to ten years. this is very alarming. it s alarming because of the high cost, $800 billion. alarming because it s going to be tax increases on all of the companies that are pharmaceutical companies, companies that get health insurance, equipment companies. it s going to be a big tax bill on american people because premiums are going to go up. i think that more spending, more taxes is not what we need right now. so your question, of course, is where is it going to be next week. it s going to come out of committee. there s no doubt about that. we are insisting there be 72 hours for this bill to be on the internet because we haven t even seen the actual bill yet. it will come out of committee probably not even as a bill. senator, good morning. switching topics. hi, don. good morning. financial reform. what are the key elements that list financial reforms. on the regulatory side. i am very worried we re going to put another layer of regulatory enforcement in the areas that are already regulated. don, you re a small banker, not small but successful small banker, but we have regulations in the banking industry. where we need regulatory reform is to get control of the other side of the financial markets. the derivatives, the places where we don t have transparency an we don t have any really regulatory operation. so i m very concerned that we are going to put another layer on banks that already have basically good regulations. that s not where we need the help. do we need the help, senator, on the mortgage arena forex. obviously unregulated banks and non-banks that gave out mortgages to people that couldn t afford them throughout the country because there s no state regulations whatsoever on that activity. well, yes. we do need to protect the mortgage buyer. that was a government policy pushing home ownership. that s what was being done out of hud and out of the government initiative. people were being even banks were being forced almost to make loans into areas where the person getting the loan was not creditworthy. so we had bad loans, government backed fannie mae freddie mack and it got overwhelming. then with the derivatives and packaging all these loans from all over, in taking the regulatory we should point out a lot of the mortgages that caused a lot of the problems were not from banks but non-regulated companies. many of them are gone at this point, though many of them may come back. they were not regulated. just to make that point. we could see that come back again, do you not favor any sort of regulation. i do. that s what i was trying to say, we should be putting regulations where we don t have regulatory reform in place. we have regulatory systems in place for banks but not for these loan companies that really didn t have regulation that caused a big part of the problem and then the packaging up of these loans, spending them somewhere where there was no skin in the game for the person who made the loan, who looked at the collateral value. so i do think we need to have reform in the areas that don t have regulation that is adequate and transparent. i just hate to see some of the things that have come out of the secretary of treasury and some of the other recommendations just seem to be piling on where it isn t needed as much as the areas where we have nothing. senator, what do we have to do to create some jobs? how do we stop this unemployment spike? i do think, don, that is where we ought to be focusing our efforts. that means we shouldn t be taxing business more, we should be taking taxes off the backs of business so they will be able to hire more people. that s why this health care reform bill and cap and trade to follow that that are going through congress right now, serious tax increases on the businesses that create jobs. cap and trade will export more jobs from america at exactly the wrong time. i think we need to cut taxes. we need to try to spur the stimulus money that hasn t been spent yet to be going into infrastructure, buildings, things that require jobs, not the social programs that are not going to create jobs except for government jobs. what we need are private sector jobs that will continue to spur the economy. senator hutchison, thank you for joining us this morning. appreciate it. thank you. coming up, much more exclusive conversation with activist investor carl icahn. we ll get thoughts on the day s top stories from our guest host don powell. stay here. squawk will be right back. carl icahn the activist investor sitting down with us to talk about all sorts of thing, everything from the economy to where he sees the opportunities in the market. we also talked about the yahoo! microsoft deal and his relationship with yahoo! ceo. you are known as one of the arm twisting activist investors, ceos i would imagine don t like getting phone calls from you. but carol barts spoke recently. she actually had some nice things to say about you. she said her friends said when she told them she was going to take the yahoo! jobs. are you frigging crazy. but then she said you are a very smart man with a dominant view, if you really really listen, you can have a relationship. for a shareholder to be that interest there s inherent truth to why they are there. the man can call 12 times a day. he s totally capable. what s your relationship with carol barts. i think she s perceptive. i always liked jerry, i think he s a great guy. obviously i said this publicly. he wasn t the right guy, in my opinion, to run a business. i think he s a brilliant technology guy. i think carol barts is a real operator. she s getting things done and she doesn t take prisoners. i ve seen her operate. i don t really call her 12 times a day or even 12 times a month i would say. probably i m sure she wouldn t take my phone calls even if i did. we did call because i was a great supporter of the microsoft deal. i was an influence, i believe on that. i like the board. i do like them now. obviously they made errors in the past but they acted extremely responsibly in backing carol and getting that microsoft deal done. i was obviously perhaps calling not 12 times a day but calling certainly more than i call now about trying to get that deal done. i think that was a great deal. i think wall street hasn t really appreciated how great that deal is because yahoo! you know, i m on the board. you ve got me going on it. yahoo! unquestionably is in a great area, going to even talk t whether it s high or low because it s not supposed to do that and i m not going to do it. but it s in a great area as far as the content company. it cannot compete with the giant like google and a giant like microsoft. and you can let ego get in the way and say we re yahoo! and we can compete. and as time goes on here, i think google and microsoft are going to be two huge dinosaurs ynot dinosaurs but they re going to war with each other and both of them can afford to do it. we can t afford microsoft can t afford to throw into something like bing and certainly google can afford what they want. it was almost a no brainer. that s what i was saying. sometimes you see the over priced reits or underpriced bonds, it was like a no brainer. that s what i told the board, no brainer. get a deal done here. i think harold bots saw that very clearly. i will say that without her on that board as, you know, which i respect her, without her, i will say this, that while i think the board acts very responsibly, wanted to do something that would have been much more debate and question and answer back and forth and she was very strong pushing it to the extent that i could help and i m not taking credit for it, certainly, but to the extent i could help. i spoke to a couple of guys on the board telling them how i felt as a businessman, to get that deal done. i m proud of her for getting it done. i think she s a very, very capable very capable operator. time will tell how great the company does. i m not micromanaging it. you had sold out some of your stake. is that because you think after the deal there s less incentive? well, we have fund and, you know, we don t like to go the stock is up a fair amount, but not to say that i don t think the stock can go up higher. i m not going to comment whether i think it goes higher or lower. i do think they re in a great position. the microsoft deal saves them, i think, close to a billion dollars a year. just saves them. as steve said, he said, hey, he s laughing at i don t see why they re criticizing this deal. we re screaming all the money and they re getting all the profits. so how the hell can you criticize it? we re saving close to a billion dollar on that deal. you know, people say, well, they need us so we should get more. take that attitude, you would never do business with anybody. somebody is buying it for a reason. but the point is, we obviously had a very big position in it, and i think there s some fiduciary obligations in this to, you know, to lighten it up a bit. so i m not going to comment more than that. but i will tell you that i think that time will tell, i hope, that that is great it was a deal that had to be done. again, that s carl icahn talking about one of the opportunities he sees, where the internet is disrupting advertising. he says there are many opportunities to be found there. another opportunity he sees on the short side. he told us earlier that he thinks real estate investment trusts, the reits are a great place to be shorting. he thinks there is still quite a bit of trouble to come when you look at what s happening across the board, across america. interesting on the reits, of course, for many of them exceeding their asset value. three reasons you need to watch squawk on the street this morning. first off, the president will speak after winning the nobel peace prize. we re going to have that live. we re also live with one of the arab world s biggest investors in american companies that includes our parent company general electric. at least for now. and as always, we have the opening bell. it all starts at the top of the hour. i ll be there. hope you are, too. but first, taking it to the bank, a bit of final advice from our guest host don powell. final thoughts from our guest host don powell. we talked about a lot of things. i wanted to come back to one iss issue, compensation. investment banks, a lot of commercial banks, compensate people extraordinarily well. sometimes paying people as much as 50% revenue in compensation. does that sit well with the board of directors or is that something that over time do you believe should change? i think there s two force there s. first of all, it s performance. there is nothing like performance. so compensation ought to be based upon performance and making sure that performance has an ending. and the clawback in case you need that particular clawback. the other issue is marketplace in the competition. you know, there are lots of people that want good people and compensation is a factor. but it s an important factor that we understand i don t think there s any question that there has been abuses in the past as relates to compensation. but it should be very based upon performance, performance. do you feel like you re in a position to do that? right now you have kenneth feinberg advising bank of america how to pay some of its top employees. well, our folks have had great conversations with him and he understands what our plans are, what our strategies are. i don t see any problems there. do you feel like whatever that the pay czar decides ultimately will allow bank of america to retain top talent? i think it s been a very open dialogue between the pay czar and officials at bank of america. they understand each of other. if the fdic have enough money to pay tough banks that fail and not, where do they get it, and ultimately, where does that money come from? i don t believe so. tyler, i think obviously it comes from the treasury. but you have to remember that we have to have it funded by banks and i don t think a lot of the american people are going to understand that. end up having to pay much, much more. yes. to bail out the fdic. yes. what s that going to the do to the banks? well, it s an expense, so it s a tax. it s an expense. it reduces the capital. and ultimately, don t have enough money to loan out. so it s not good. but again, everybody knows that when they join up with the fdic. guys, quickly, want to mention that occidental is buying fibro from citi group. they have had some of the highest pay packages around on these issues. i believe in some cases paying as much guarantee of $100 million employee that s been a real problem for citi. since it s been taking this money from the company. again, occidental making the bargain with that. we ll have more of that on squawk on the street coming up if but ban, don powell, thank you for joining us. david and tyler, gentlemen, thank you for the last couple of days. it s been wonderful. that does it for us today. have a wonderful weekend. join us on monday. david faber will have more on that deal coming up in just a few moments on squawk on the street. live from the financial capital of the world, no matter what anyone says, this is squawk on the street. i m mark haines at the new york stock exchange. and i m erin burnett live in london again this morning. i know some may say, mark, some aggressively over the past couple of days there is another financial capital. new york and london are the two financial capitals. i just returned from abu dhabi. we re going to continue our focus and talk about a place that didn t fall off the cliff. we ve got that special interview coming your way. all right. if you missed it this morning, the u.s. bombed the moon. it was part of an experiment to see if there is water up there. i hope we didn t tick anybody off. despite the bombing of the