hello, and hi, welcome to a monday edition. hope everybody had a great weekend. >> oh, it was fabulous. >> i think we all enjoyed that. so happy fourth of july monday, stocks are lower, though, coming off that weekend. earnings will be in focus as companies gear up to report their latest results and, of course, that all begins about midweek this week with alcoa. >> looking forward to that certainly, a lot of traders are. >> it is hot hands all day at cnbc, we're speaking with some of the best of the best on investing in this second half of the year. so on "power lunch" today, two top gun money managers that run some of the best-performing russia funds and then we're going to speak with a four-star manager whose fund is up 10% this year, and he has some terrific picks for us. >> vice president biden heating up the stimulus debate, saying that the white house misread how bad the economy was. did the stimulus fail? do we need more of it? watch the sparks fly on the power grid today. but first, let's get to the

markets. rebecca jarvis kicks it off at the new york stock exchange, rebecca? >> thank you, michelle, and right now we are seeing the markets tending to the downside. the lows of the session, the focus here, commodities a big culprit behind today's slide. in particular, there's two components to the commodities story. first off, you have the strength in the dollar. near two-week highs, the dollar index. you also have the weakness, the perception that perhaps we have overshot our idea of what the economy will be going forward. and you see that in the commodity names, rio tinto, alcoa, and u.s. steel. all of these companies since their june highs have come off very significantly and one of the reasons for that say traders is perhaps they overshot some of their estimates. perhaps they thought things were getting better or improving faster, on the demand side of the equation on the commodities demand side of the equation than they actually are. of course, alcoa, we'll hear from them on wednesday, it'll be a very important, not only component of the dow, but also an important component of the

commodities complex to watch for their outlook going forward. let's get over to brian for more on the tech trade. >> thank you very much, rebecca. we're underperforming almost double as bad as the s&p 500. down 1.4%. take a look at some of the big names that are underperforming. apple down 2.3%, yahoo 2.4%, having an incredible battle, a lot of states -- want to go after online sales taxes and that could be a trend that could continue. the one positive i want to point out is dell bernstein basically says there could be a foreseeable bounce in pc sales. i want to update you on the battle for data domain. emc, upped its offer for $33.50 for net cash, for $30 cash and stock. of course, data demand up 2.7%. and i want to point out this courtesy of mike huckman, up 2.2%, a new price target of $75. it's at $53.97.

oil is in huge focus today.?ñ so i yield the rest of my time to sharon epperson. >> brian, it's all about risk and the fact that really right now investors don't have much appetite for it. that is causing the slide we've seen, not only in oil prices, but across the board in commodities. keep in mind, though, oil is off of its lows of the session and several factors to talk about, yes, there's a lot of economic uncertainty out there and weak fundamenta fundamentals, that's nothing new, the dollar has strengthened a bit, but the real story is what has happened to money flows, and when you look at the amount of money that's in commodity indices, it has increased by about 56% just in february. we're talking about $125 billion. not all of this is in oil, but a lot of the money is in oil and that has something to do with the price volatility that we've seen. back to you in the studio. >> what a relationship we do have with oil. we wring our hands when it's going higher, and when it's lower, does that mean the economy is cooling off?

we wring our hands about that, as well. everybody chill just a little bit. president obama kicking off his week-long international tour today in russia. he's holding that news conference with president medvedev you saw portions of it live here on cnbc. they're talking about ways to build new relations between our two countries. and our chief washington correspondent john harwood joins us with some of the highlights of that. >> bill, an interesting press conference still in progress in moscow. not a lot of smiles and acknowledgment from both leaders that they were frank and business-like discussions especially on the very prickly issues. and said just as they've pledged to try to provide a fresh start to u.s.-russian relations, in these meetings they've taken steps to do that. >> we resolved to reset u.s.-russian relations so that we can cooperate more effectively in areas of common interests. today, after less than six months of collaboration, we've

done exactly that by taking concrete steps forward on a range of issues. while paving the way for more progress in the future. >> now, that includes an agreement on a framework, not a final agreement, but a framework for reductions of nuclear warheads and launchers, for a continued conversation on the difficult issues of missile defense, even an agreement to let u.s. livestock into russia which is very important to u.s. livestock prusoducers. it's about much more than national security. >> too often the united states and russia only communicate on a narrow range of issues. or let old habits within our bureaucracy stand in the way of progress. and that's why this commission will include working groups on development in the economy, energy, and the environment, nuclear energy and security, arms control, and international security, defense, foreign policy, and counterterrorism, preventing and handling emergencies, civil society, science and technology, space,

health, education, and culture. >> and, of course, the summit continues tomorrow when president obama meets with the prime minister vladimir putin who some consider the real power in russia. president obama got a question about who is really in charge at this news conference and he said in effect, well, looks like they both are. >> i was just going to say, i'm struck by the body language and the tone as you were alluding to in this news conference. contrast that with the times when vladimir putin came to the u.s. and spent time in crawford, texas with the bushes and the back slapping that went on and the jovial mood that was there. what do you think is the true representation of our relationship with russia right now? >> well, i think what happened, bill, president bush got burned by the idea that he was taken with vladimir putin, had a very warm relationship with him initially and then was disappointed over and over again by russian behavior and president obama is making sure not to get out too far on that limb and look like he's too buddy buddy with this leader,

especially at a time when we have not gotten russian cooperation in a full sense on issues like iran and as well as on the issue of the rebelian with respect to georgia. >> indeed. well, we're going to talk more about the developing relationship later this hour, as well here on "power lunch." john harwood, we'll see you later. the city of los angeles preparing for a swarm of michael jackson fans at his memorial tomorrow. reports are that over 1 million are expected to gather. we're also getting more details about who will have power over michael jackson's estate. a courthouse in downtown los angeles with some breaking news on that front. jane? >> hi, yes, the probate hearing is going on as we speak. we have a producer in there, but the "wall street journal" is reporting that michael jackson's parents are not disputing that the 2002 will submitted into court last week is the will, although they are hesitant to turn over control of the estate to the two co-executors named in that will, a long-time jackson attorney and music executive. but as we show you the sort of

video, what's been happening down here this weekend, there are so many important questions left to be answered. what is the estate worth? that $500 million figure, it's really only a pro forma number, a place holder thrown out there. the petitioner ins really don't know the value, but they also do believe most of the value is ill-liquid. did jackson, the other important question have enough insurance or any insurance to pay the 45% death tax for anything over $3.5 million? we're talking conceivably about a couple hundred million in cash due to the irs, nine months from the date of death. so randy says even if they don't have enough money, they could avoid having to sell important assets like that song catalog if they set up a payment plan with the irs based on incoming new revenue. listen. >> the irs would understand that you don't want to sell -- you don't want to kill the golden

goose by having to force its sale, but rather allow serial extensions up to ten years after the date of death so that money machine can crank out the cash that's needed to actually pay off the irs. >> he likens it to the elvis presley situation to which there was a lot of post death management and exploitation that made the estate more valuable. the hope is, of course, that michael jackson did have enough insurance to pay this 45% tax. and insurance trust, by the way, that is taxed at 45% when you're alive. as you put payments in after the first $1 million, it has a 45% gift tax. hope is in after death there is enough there to cover your death taxes. we will keep you posted on the latest. >> and jane, what's the latest on this drama of how much the memorial service is going to cost? i keep looking for estimates and so far nobody in l.a. figures out how much this is going to cost the city of l.a. and whether or not they should be paying for it. >> well, currently the estimated cost this morning is now $2.5 million, that includes police,

sanitation, perhaps i.t. workers, everything outside the staples center itself, which aeg is paying for. the city, meantime, has $500 million deficit, it is asking for aeg or the jackson family or perhaps private sponsors to come up and pony up some of that bill. so far, no help. >> and just moments ago, jane, the judge said in the courtroom there, somebody needs to be at the helm of this ship. i think we all agree at that. >> agree on that. >> reporter: i think the executors think it should be them. >> thank you, jane. we'll see you later. as we mentioned earlier, earnings season kicks off in less than 48 hours. alcoa the first out of the gate on wednesday after the bell. this is the biggest reporting season in years. will the numbers trump all of the recession talk or just add fuel to that fire? our task force will have some answers on the other side of the break here. in the meantime, the vice president joe biden seemingly setting the table for another stimulus package.

is he playing politics with the economy when he says the white house misread how bad the economy was? and is the stimulus working? "power lunch" debate coming up in a couple of minutes. plus, one of the hot hands making money in russia. plus the fast money halftime report, oil's four-day slide front and center for the traders. what to do next. "power lunch" will be right back. so many arthritispa- i justant fewer pills and relief that lasts all day. take 2xtra strength tylenol ev4 to 6 hours?!? taki 8 pills a day... and if i take it for 10 day-- that'spills. just 2leve can last all day. perfect. oose aleve and you can beaking four times... wepills than extra streth tylenol. just 2 aleve have the strength to reeve arthritis pain all day.

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hi, folks, welcome back to power lunch. a realtime flash. something's happening here, folks. eastman kodak, 7.4% gai that makes it the best single percentage gainer in the s&p 500 today. if you back up like a week or so ago before the stock had a big rally as it left the rustle 1000 and entered the russell 2000, almost 13% versus a 3% current decline. eastman kodak is a short squeeze, it was 15% short interest, and those guys are sweating. >> kodak not in the top 1000 anymore. >> that's amazing. >> i've got stats on where it is. by market cap 780 million, it's actually fifth in the s&p 500. >> not exactly -- >> ha-ha-ha. >> you are good. weighing on the markets

lately as you know, is this overshadowing earnings? those reports to come out later this week. let's gather our task force. chief executive officer of riley management, and senior vice president, and if i read you two carefully enough, i think ned, you're a little more hopeful on these earnings reports than you are, john. why are you hopeful of what we're going to hear over the next few weeks? >> i'm not saying the earnings themselves are going to be great, but i think the results are going to beat the expectations of the street. 67% of the companies actually beat the analysts estimates. i think the analysts are in this conservative mode underestima underestimating and hoping the companies will produce better results. i think the economy is the focal issue right now, and clearly people are waiting for that second step of recovery to take place before we push this market higher. >> john, your palms are sweaty around earnings, i guess. >> i think so, bill, i think with a price earnings ratio around 19.5% to 20% right now, i

think equity valuations are fully priced for a pretty good earnings season, ex-financials, i think quarter over quarter and year-over-year basis, but i think at the end of the day, consumption represents about 70% of economic activity. and last thursday's employment reports suggested that we could be in for some rather soft times in regards to domestic consumption which would eventually feed into earnings of the third and fourth quarter. >> so ned, you know, what do you put new money into if, indeed, you're looking at this v-shaped recovery in the economy. is it one enough to propel the market forward if indeed earnings come in along the lines of what you're looking for. where would you allocate cash? >> first of all, into the tech sector. i still like the qs. technology stocks, biotech stocks, small health care stocks, and clearly the qs are the place where i think we've

had the best performance, actually, they're up 19% year-to-date or 17%. but the key here and the key issue is this recovery, i think, has to get back to what i call the panics -- prepanic zone era. this whole year we've had panic drive the economy in the market down, and now, i think, we've got a slow recovery, but i think it's going to accelerate in the second half. >> john brady, you were saying similar comments there and your concern about the u.s. economy. what does that mean in terms of investing? are you staying away from consumer discretionary, for example? >> well, i think consumer discretionary, michelle, is going to be a little bit tricky as i think that the domestic savings rate is going to keep the marginal consumer most likely on the sidelines. so i think in terms of allocating capital here, i think investors would be wise to perhaps stay a little bit careful. i think the equity markets are certainly going to be a trade, but more specifically to your point, the earnings outlook is for the third and fourth quarter. the real wild card may also be

the rise in energy prices, and as that takes away a little bit more discretionary and consumer income, that like wise has the ability to play havoc with future earnings and future consumption. >> thanks for the ideas, guys. ned, john, good to see you. the vice president saying the administration misread just how bad the economy is. is he setting the table for another big stimulus package. do we even know if the first one is working? we'll deba your tax dollars and the mounting deficit. american express shares, take a look at this, almost, a little bit better than 3.25%, ax $23.10, moving higher on an upgrade. having details on that one. plus the fast money halftime report minutes away. melissa and the gang talking about oil. can the market rally if oil does not join the party? back in a moment. (announcer) we spe.

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the truth is, there was a misreading of just how bad an

economy we inherited. we are now only about 120 days into the recovery package. the uth of the matter was, no one anticipated, no one expected that that recovery package would, in fact,e in a position at this point of having distributed -- >> now, a lotf people -- >> that's vice president joe biden this weekend saying the obama administration underestimated how bad the economy is. does this mean the stimulus package isn't working? joining us now for the power grid debate is democratic strategist rich masters. and jason lewis, radio host of the jason lewis show. you each get 20 seconds and we go at it from there. jason, you get 20 seconds, make your case. is the stimulus package working? >> well, of course it isn't working. the stimulus package has never worked. the bush stimulus package in '08 didn't work, the bailouts don't work. there's a first rule of economics and that is opportunity cost. when the government spends money, the private sector doesn't have that money. and you add the inefficiencies of government spending and the

lack of market discipline, you lose more jobs with the stimulus package than you gain. and the numbers show that. >> 20 seconds to make the case why you think the stimulus package is working. >> well, i think right now it's clear. if you look at what's happening on wall street, there is some indications that the economy's starting to breathe life. obviously the job indicators lag behind what's happening on wall street, and i don't think anyone said we were going to get out of this in the first two quarters. every analyst conservative and liberal agreed it's going to take a while. and it's clear that the government stimulus money is having an impact and will continue to have an impact later on. >> jason, green shoots, we keep talking about them. you don't see any out there? >> this is the same administration that said in february if we don't pass the stimulus package, why unemployment could go over 8.5%, i guess they were right, we've passed the stimulus package and unemployment went over 8.5%, 9.5%, 2 million jobs lost, i don't know what more empirical evidence we need that these pump-timing nonsense programs

never ever work. >> well, first of all, that's not true at all. if you look throughout history, all of these pump priming to use your term actually do work. but they don't work instantaneously. it's not like a lawn mower, you can't pump, prime, and hit. and we're off. keep in mind we took years and years of george bush's mismanagement to get in this hole. we've got to be patient, there are good signs and i think this administration is doing all the right things. >> name me one stimulus package that works. you can go back to the ford rebates that didn't work, the bush stimulus package didn't work, this one isn't working. the money has to come from some place, it doesn't grow on trees. >> the 1992 -- listen, the 1992 -- >> to the public sector. >> bill clinton passed the economic stimulus package in 1992 without one republican vote created the longest economic expansion in the history of the united states. >> that is -- bill clinton --

actually when al gore and bill clinton were running on a big spending program and the republicans finally shot that down, that's when the economy started recovering. >> what about a balanced budget and welfare reform? those were all clinton-era policies, as well. >> they were, and they all stoked the economy and created the longest expansion in american history. >> and gave us a stimulus package -- >> there was a lot of things that came into it. we finally got our fiscal house in order. >> what about tax cuts and personal tax cuts, would that have been more effective? >> of course. >> he doesn't know. >> i understand he's obsessed with spending. if spending could get us out of this, we would have been out a long time ago, we have a production crisis, and when you look at the higher taxes down the road, the takeover of health care, the cap and trade, there is no incentive to get into the economy, the investors are waiting it out. >> wrap it up. >> the one thing jason said, the

thing he missed. you asked him a direct question. more tax cuts to corporate folks, would that spur the economy? the answer is, the republicans didn't offer any kind of alternative whatsoever. they unleashed a budget with no numbers in it. >> all right. thank you so much. >> reagan to bush, my friend. >> tough to turn it off. like a lawn mower. all day, we're talking to investors who have had a hot hand so far this year, tough to do. we're talking to the best of the best. with the president in russia right now we've picked a couple of top guns posting big profits in the former soviet union. we'll talk about the secrets to their success right after this break. and we're counting down to the fast money halftime report, of course. melissa, what's on the radar? >> talking about hot hands, talkin to the man who ll for oil toead down to 63.50. where is it now? 64.50. he was on the right track. also we'll head to the charts to see if technology is headed for

a technical breakdown. that and much more on the halftime report today. but first more "por lunch" right afr this. (announcer) it is the t advanc automobile we have ever creed a car that can help awr if he begins to doze... keep him in his la if he starts to wander.. if you want to see thef he be. future of the automobile, just look at the new class... today. this is the 9th generaon e-class. this is rcedes-benz. in tse markets, i'm glad turned to fidelity for an annuity witguaranteed income for life. that's right, guaranteed incomfor life. my annuity fm fidelity means my retirement income is safe. it's guaranteed, no matwhat happens. if guaranteeincome for life sounds good to you, do what i did -- let fidelity byour guide.

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technologies in the spot right now. it had an upgrade today by bank of america to a buy from an underperform. be that as it may, it is down 1.5%. look how it's done so far this year, up 120%. on seagate, technology. president obama is kicking off his international tour, first stop russia, meeting with medvedev, tomorrow with putin. so far, mr. obama's visit has generated $1.5 billion worth of deals. pepsi says it's planning to invest $1 billion in russia to open a new plant, john deere says it's going to build a tractor factory there, shares of pepsi are trading higher, deere part of the selloff today down about 2.25%. >> if those companies are betting on russia, should you? let's meet two of the street's most respected russian investors. once the largest western investor in russia for over a decade. he now has about $50 million

invested in that country. and john conner with third millennium russia fund another long-time russia investor with $50 million in assets under management. thank you, gentlemen for joining us. it strikes me that both of you have obviously had success in russia, but you also both have cautionary tales. john, i'll start with you. you make the point that a lot of time it's hot money that goes into russia. goes in quickly and comes out quickly. is it the place for the individual investor, then? >> well, russia doesn't have much of a pension fund system or a mutual fund system or insurance, life insurance, which is long-term money. so it does tend to be overly impacted by foreigners rushing in and out. but right now looks like it's making itself -- i hate to pour cold water on my hot hands, but i'm very discouraged by them bowing out of the wto negotiations which have been going on for 16 years. but, you know, this is rule-based organization where russia would become drawn into

the worldwide system that we all know and take for granted. and it's a very bad sign that the kremlin, a little averse to the constant change that we all take for granted as a promoting economic growth and prosperity. >> what about that, bill? we're used to the changes as john points out here, but when you have regime changes like you had with vladimir putin installing medvedev in the position of president, do you see a country that you want to invest in right now that you feel you can safely pull profits out of at some point? >> well, you know, my own tale is one of -- one where people should take note. i was the largest foreign investor in russia for ten years at about $4 billion in the country. and then one day, they took my v visa away and told me never to come back. since then they've been taking away our documents, reregistering our companies, coming up with crazy claims in

court. and most amazingly, the police with a group of criminals stole $230 million of taxes that we paid to the russian government in 2006. so i think the place is kind of melting down into one big criminal cesspool. >> why in the world would you still have $50 million in that country? >> well, the only money i would keep in russia is money you can sell on a two-hourly basis. this is the stuff where you can buy and sell something. i've heard people putting $1 billion into long-term plans, i think they're crazy. this is a place where if you have a liquid stock, that's fine, but to make long-term investments in a country that's run by criminal characters and government positions, it doesn't make any sense at all. >> john, what about that? and if indeed people want to take, you know, the leap into russia, how would you do it? would you play the retail sector? we just heard about pepsi going in and they've been a long time player in russia certainly, but how would you do it?

>> i would never take issue, but i do have to point out that he brought more lawsuits than you can count on, you know, your fingers and toes. and i think as a foreigner, and in any country, in any market, you have to be very conscious of the fact you are a foreigner and you have to limit your assaults on the local system and the local leaders. and i think, you know, these large american companies know how to invest in countries all over the world and they usually have local partners and they are very attuned to local culture. i've lived and worked in india and i've been in the government and state visits the china and so forth. i think the russians are a lot more like us than the indian mentality. so still it is a foreign country and it does have its own -- right now they're talking about things we want to talk about, like arms control, that's an obama initiative. so they are being responsive to

our wishes and, you know, it's a matter of how to play the local music. >> all right. thank you, gentlemen very much. and john just brought up the china versus russia debate. next hour, we're going to talk about that very subject. should it be china? should it be russia? which country in the years to come will become a more important player to the u.s.? china with its massive trade or russia with the untapped sea of oil, natural gas, and that growing middle class? we'll talk about that. plus, the best plays in health sciences in the second half of the year. we have a four-star fund manager with that for us. that fund is up 10% this year. by the way, let's get to hampton pearson with breaking news out of washington. >> hi, bill. the "wall street journal" reporting that the department of justice has begun what is being described as an initial anti-trust review of the u.s. telecom industry. department of justice are trying to determine whether large telecom companies like at&t and verizon may have abused market

power in recent years. the journal saying according to people familiar with the matter, the review of potential anti-competitive practice in the early stages, the not a formal investigation of any specific company at this point. and it's not clear when and if the doj will launch a full-scale inquiry. back to you. >> is it me? but mine has only gotten cheaper over time. normally it would be if the prices are going up. >> i have teenagers, no it's not going cheaper. not getting cheaper. >> that's the problem. we're going to follow that story and also this one. believe it or not, a year ago oil was up $140, up above the $140 a barrel mark, went down to $33, back up into the $70, right now it's $64. is it fundamentals or those dreaded speculator the fast moy halftime report is talking blackold minutes from now. plus, che out this

headline. poor ruth madoff, t most hed wife in wall street history, but is she getting bad wrap? we're going to bring you the inside scoop from a new york magazine article which says maybe she is. come fast enough.

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now coming off those lows again. but what a ride for oil in the past year. you know the story, just a year ago, a peak at $147, it bottomed earlier this year at $33, now we're at $64. what is the proper price of oil given supply and demand? and is it even supply and demand dictating the price these days? sharon epperson on the floor of the nymex. >> there are new fundamentals to consider when you're looking at oil prices, as well. and one of those are investment flows, which are considerably greater than they've been in some time. and as i said before, up from $80 billion in february to $125 billion in commodity indices today. so with that said, you've been  on the floor for a very long time, you've watched the trade change, and what do you tnk is driving the prices right now? >> you know, sharon, that's the $64,000 question.

we could talk about so many things that go into the price of energy. i would argue that the old school supply and demand fundamentals are not at play. we've seen this market can escape those fundamentals easily. we saw it last summer when it went to $147 really on nothing. we've a two times price increase since march and i don't know that supply and demand fundamentals are behind it. i think there's a lot more going on. >> mike, mike, mike, didn't we hear that very argument at the peak of the dot com bubble in the late 90s? the fundamentals didn't matter anymore. they have to matter at some point, don't they? >> at some point. maybe there's some new fundamentals to consider. i would argue that the amount of privatenvesting that goes into these things. ten years ago no one knew what an energy future is and now y trade it as an asset ass.. maybwe need to reconsider what a speculator is and what our fundamentals are. >> well, it sounds like when you

talk about the fundamentals, you have more buyers. seems simple to regardless of why they're in there. that's it, right? >> right. well, are we going to call them speculators then. let's talk about that. >> it's a liquidity. >> i guess, huh. >> right, we have to consider that. are they so evil now they're going to drive it up and down. no one's arguing when they brought it down to $33. no one argued with it then, they want to argue when it's $147, but they praise them at $35 a barrel. >> we've got to go to commercial break. thanks, mike, very much. >> fast money halfme report comingnext. 

welcome to the "fast money" halftime report. we're getting into the action as it's happening. oil and material names slide, will investors second guess the economic recovery? where are traders putting their money right now. let's get to the word on the street. john najarian, as well as an options action trader, steve cortez, and katie stockton of mkm partners. great to have you here on the set. >> great to be here. >> let's talk about, we've seen an explosion, but the markets are not moving. does this tell you that traders are looking for protection going into earnings season? >> yeah, it does, a lot of nervousness going into the report with alcoa, which is down

8% today. it's an ugly day for them, for the crude oil and the representative stocks. although they are bouncing a little. exxon mobile, chevron, the question is whether that holds or whether or not people just say i'm out of that trade, i don't want to be anywhere near the energy space right now until it gets down and tests a lower level. that's the big question. >> we are watching very carefully the move in technology, the nasdaq is down by 1.5%. the other options guy in this mix here today. what are you seeing in the volatity the nasdaq? >> i think a lot of people were commenting on the fact that they were up. i'd issue a quick cautionary note about that. if you're going to look at the vix, one of the important thing is the vix futures. it can be a littleit -- it ca exaggerate up side moves early in theeek downsid declines in the vix later in the week. if you look at thefutures, they were only fractionally higher, i don't know there's been a huge change as far as the vix is

concerned. that's the thing i'd keep an eye on. >> mike, where that is exactly right is after a long weekend, in particular, one where a lot of things have happened with the crude oil falling so dramatically. it's not unusual to see a big blip-up in the spot. but again, that's where you go from contango, where the spot is much higher where the futures are and where i'm likely to hold that based on what we're seeing in the market right here. >> i want to delve deeper into the technology discussion here, and this brings us to our chart of the day, the tech sector has been one of the bright spots, i should say so far in 2009. but take a look at this chart and this is raising all sorts of red flags for you, isn't it? >> it is. the quadruple qs, primarily weighted towards technology stocks is down below the 50-day moving average, often is followed by 200-day moving average, which becomes self-fulfilling as the support level, in this case, that's about 9% below current levels

for the quadruple qs. and one comment in regards to the vix, we do see a lot of volatility in day-to-day basis. today's move doesn't really mean anything. but if we saw the vix get above the own 50-day moving average which is right around 31-even, that would be suggestive of a nice bounce in the vix and, of course, a pullback in the broader market. >> okay, and the vix right now just for viewers reference is at about 30 right now. el captain, let's get you in the mix. in the expected rotation that we are likely to see in the next quarter out of the best performing sector for the year, are you a buyer of technology or is this something you stay away from? ibm is trading at 100 and change, a lot of people wanting to get in for a long time. >> i'm not a buyer of technology, melissa. i believe technology has traded to disparately from the

consumer. the consumer is too weak to support technology at these levels. if i can make one final point about the vix or one additional sp point. it's very unlikely to see the levels in volatility last fall. but i think it's also very unlikely we're going to see a return to sustained low vix volatility, the period from 2003 through '07 where the vix was in the teens. if you believe in the new normal, and i do, lower growth, lower employment, more government, that it's going to be high volatility environment. >> who would've thought the vix would be such a hot topic today. it is a hot button topic. let's move on to something else that is a hot button topic in today's market and that is oil once again hitting five-week low as investors feel less optimistic about the global economy and the effects it could have on oil. dr. jay, what do you think? at some point, some point, the levels on oil should be good for the consumer. >> well, they are already. look at the market right now. the market's down 31 points as i look at it and we've got chevron

and exxon and alcoa, those big three pulling down multiple percent. that's a positive sign. if it weren't for the pull we are getting out of the stock price, i think we see the market in positive territory. >> are you you a buyer of services names that tend to see a higher impact in terms of the price of oil. they are eing weakness. would you be a buyer? >> i am a buyer and probably the integrated names with conco phillips and brought it up a couple of times from the past. a quick point with people talking about demandriven and when italls off, ifthey are loing at it, the concern is we are not recovering as quickly as we might have hoped. weaker oil prices are better for consumers. yes, i would be buying names

like conco phillips. >> let's go deeper. addson remember strong joins us on the fast line. a couple weeks back on the halftime report, you called for oil to be at 6350. it's 64.50. >> the next stop is down around $61 as the next attraction level. >> by when? >> probably down towards $60. we got down to $63.40 which is bang on the average. a nice rebound and largely on the bull pack. falling along and the dxy is not that much stronger. the dollar is figuring in on what's going on in oil. >> how do you read the decline we are seeing in oil. is this a demand driven drop in the price of crude or speculation-driven. >> right now what's going on is a demand to the poor figures week in and week out of the u.s.

government. last week demand was running at only nine million barrels a day. obviously very consumer sensitive and with the lack of credit creation happening here, the consumers are not getting a break in the high oil prices and helping the demand side of that equation. >> if you are a believer, this decline in oil is because of a lack of demand. >> i'm not skeptical but i agree he was spot on about the direction. where i think we go is test down to 60 and i'm an aggressive buyer and i don't think the story is over and i think that

we just got overbought and oversold. we are just right at the level right now. we will go bast it like we did to the upside. >> i would like to say i think oil is the reason he is in the pinch he is in. higher input in terms of food and energy and a tenuous employment picture. i am somewhat the opposite. i disagree with my chicago. the consumer is in a horrible place and one of the reasons is high sustained energy prices. >> and let's end this here for now, but coming up on "power lunch," a four-star fund manager, first more fast money on halftime report. >> will continued job losses and a sputtering economy spell danger ahead for upcoming corporate earnings? with the obama stimulus stumbling out of the gate, are other countries on the fast track to recovery and the real

after hours trade profiti. on america's posmarket show tonight. l advice you need? the stility and resources l advice you need? to keep you ahead ofs these artough questions. thatpowerful namest togeinhe industry.e most trucing morgan stanley smh barney. here to rethink wealth managent. here to answer... your queions. morgan stanley s barney. a new weal management firm with over 130 year of eerience.

time for the "power lunch" trade to go. >> the shares are for real estate and we have seen strong put activity in the contract today. that's betting that this one goes back down. it was at 22 back in march on the lows. it has exploded up to 35 recently and now 31. that's right at the level they are buying at. they bought a bunch today. >> what are would the trade be specifically. >> i would be a buyer or sell upside of this. >> short of the iyr. >> probably for the next 15

days. they are not just buying july options, but august options over the next two to weeks. >> do you buy o sell going to 4:00 p.m. eastern ti mike, ki it off. >> when are i see situations like today's pull back, we are not going back to 35 dollars a barrel. i like looking at the integrated names and i am not looking at the consumer names. >> in stocks, a seller of rallies and a buyer of the dollar also. >> i would be a seller today and throughout the week. we had a downturn in my favorite indicator that happened last week. and a significant loss in the short-term: >> i like dell computer because microsoft will be a strong leader into the fall. you can be patient, but it is

stronger than the rest of the market. >> that are does it for us. cnbc confirming that goldman sacks's high speeding recipe. the latest on that story and what else you are working on. >> coming up as well, a new york magazine reporter takes us inside the world of bruce madoff. is ruth getting a bad rap? also ahead, who should foot the bill for michael jackson's memorial? taxpayers or the king of pop's family. a fund manager is posting gains by investing in health care. what names necessary his hot hand? >> the u.s. in russia signs a preliminary agreement with nuclear proliferation to improve u.s.-russian realizations. 3 m will cut the jobs. the company is helping the

devices at a fast bridge. stealing secret computer codes from goldman sacks. they are a key to the trading platform in the profit. that's cnbc news now. welcome back. i'm bill griffith. stocks off the lows in the session right now. better than expected. what are the options? a lot of people are talking about the vicks hitting 30. >> i'm sue herrera. her husband is sentenced to 150 years, but ruth madoff is feeling the wrath. is she getting a bad wrap or is it justified? the reporter who wrote about bernie's better half. >> president obama meeting in

moscow with russia's president. shouldn't it focus more on china instead? are they more vital to the interest? we will debate that question. >> we are joined by the power player today and welcome back to the journalist. it is a jittery market. what do you think it's about? >> it's like the people are waiting for earnings and starting to see the earnings and worried about the second and third quarter. the recovery is looking strong and i think we are getting into the reality phase of the summer. the liquidity of the low and it will be weird. >> we are at risk. we have so much expectation when it comes to earnings that they disappoint. >> it plays into unemployment and hits the housing market too. it will be a long, hot summer. >> that's what the market is looking like today. we are slightly on the downside. brian is at the nasdaq and we will start out with rebecca

jarvis at the new york stock exchange. >> have we overshot optimism? it's the question traders are asking here on the floor and the question that will be important going into earnings not only in the backwards sense, but the forward looking sense. we are at an important level with the s&p 500 below 893. that's an important level because it was the june 22 low ú and if we cross, it puts us back where we were in the month of may. what are investors doing? taking shelter in th consumer staples namesike the conag ra and the kelloggs and the colgates of the world. they are not only places to hide up, but places to benefit because the input cost also go lower. let's go over to brian with the tech trade. >> here at the nasdaq, we are like the curio child.

when things are up, they are up higher and low is down lower. working the other two major indeces. i will start with chips because they are underperforming. down 4 plus percent. take a look at the big names. research in motion, 2 1/2 percent. apple 2 1/2%. dell is up 2.2%. if there is a bounce in investment, even better position than hewlett packard to yield results. that's why they are up. talk about oil, how about solar f. oil is not so high, you won't invest so much. two examples down weird on the day. both up today when the retail is down and the whole play for data domain. offered to 33.53.

came off with a press release to tell us they are update us soon. nothing concrete from them and we will see if we can match that offer. they will to have the net. >> we am look forward to that update soon. >> for those of you who are watching the treasury options going off, they had an option of tips. inflation securities and a lot of people had been worried about whether inflation is coming back and as a result they are looking at inflation treasury securities and the 10-year tip is trading and the cover ratio is okay in line with expectations at 2.51%. >> the 10-year note. >> off the 1.87. >> 1.87%. 23% at the high however and the bid to cover was 2.51%. if only he were here. >> he is celebrating the sale of the cubs. >> too big.

welcome back. >> i'm delighted and he picked it up. we have the better owner in the trip. >> sorry that why he is going to 30? >> no. just because we price in time over the weekend. the last trading day we had. saturday and sunday. now we have crude oil moving dramatically to see a pop in the front in the spot. but we have not see the futures budge to the upside. >> we can bring it back and put it in perspective. does it mean anything? >> the peak we saw. >> i also think what people are missing, you can back me up.

a lot of the over the counter and serving the team purpose. a guy in chicago told me you don't want to miss the upside, but you don't want to look like a shmuck either. you sell it and you make a little income. it's not showing up in the prices. >> what do you think, john? >> what today's move shows you is the fear out there and that's a good thing. things people take advantage of when they own stocks as dan detailed. they take advantage by selling the pumped up volatility. i think they will continue and it will be hard for us to get the vicks up over 31. we are probably back down in the 28 level. >> viewers at home would say does that mean the market would go up or down? >> yes. >> a lot more of a guess. >> exactly.

that vicks when you look at a five-year or two-year, 30 is relative based on a hooif five-year look. when w peaked up over 90 briefly for a red second. >> you are pricing in 8% moves and 9% moves. it's pricing in a lot less. less than 2%. >> exactly right. with alcoa. they are down huge and down over 8 1/2 and now over 7% as a lead in. that's not a positive one. they are find together and the positive side is they have done a lot about what you talked about and hedged themselves and so there is not that powerful demand and you don't have insurance. >> this earnings season is that don't have to watch so careful. we talk about recovery and the vice president made comments

that they inherited a worse economy, but this is a high stakes earnings season for investors. they want to see the turn. >> i would like to see it too. in certain stocks we will. you will hear hewlett packard and dell and say this microsoft os 10 say game changer. it is. everybody at microsoft said this will cause people to get off the sidelines and upgrade and that cycle will kick in. it's also great for the hardware. >> any of the big names reporting besides what investors are pging when it comes to making it or breaking it? >> i don't have a big tell on that. the first week is more or less just when everybody said there is the first stock in the s&p 500. it's always alcoa, but nobody cares. other than a small amount of

demand. >> you don't think it's indicative of the commodity play? >> it's more of how dull it is for the frames that are provided. >> anybody that thinks that is going gangbusters, it's not. i think it's going to be a lead in to the rest of the earnings season. a week or 10 days from now, far more important. >> thanks, big guy for stopping by. see you later on. >> when we come back, she has to be the most hat wife of a wall reet scoundrel in history. there a stinctn. as ruth madoff i getting a bad wrap. the inside story that we will tell you all about. >> alcoa is the stock we are learning about. the biggest percentage drag and set to report earnings wednesday after the bell. back in two minutes.

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wanted to draw your attention to energy. if you take a look at june 11th, the high water mark in the energy, but since then, it's

pretty much nothing but down. the s&p 500 and 3-1 underperformance. you have to start taking a look at things. if you look at the market, it's let lower by the energy index. i look at the super composite, small cap, mid-cap and large cap stocks. it's all busted. you can see these are the top five performers and the best of the worst, if you will. you look at basic energy, it's a tiny company and a gas example down 37%. it seems like if you get back around 30 to 35%. people say no mas. enough. they start to back off. that's going to indicate a time where maybe an entry level is worth a peek again. these are the life of the performing best amidst the cart.

>> we have breaking news out of los angeles on the michael jackson probate hearing. jane? >> reporter: bill, the hearing just ended and we expect the attorneys shortly. the judge assigned the two coexecutors named in the will as special administrators through august 3rd. they are not permanent that. means they are basically in charge until that time. the two men asked for several specific powers during this time to try and say what they consider to be the minimization of losses to the estate. the diminution of value. the crux of the matter is they want power now to enter into contracts with aig over this tour, over merchandise, over pay per view. the judge is go going to allow them to enter into talks and wants katherine jackson consultd. she doesn't have to approve the plans, but wants her consult and

they have to come to the judge for approval over new contracts they will enter into. all parties are supposed to be back in court august 3rd and the judge hopes he can appoint a permanent administrator and the jackson parents realize they no longer have authority over michael jackson's estate. it moves the two men named in the will,u it's not the permanent will yet. >> thank you very much. michelle? >> the city of los angeles is expected to dip into a special fund to pay for the security costs associated with tomorrow's memorial service for michael jackson. given california is so deep in the red and in crisis, is it fair to stick it to the taxpayer? dan is here with greg kidnap. it makes me crazy that they have to foot the bill, but is there a choice? >> why should the people of california have to pay for this

when they are working on ious. what about the people in the music industry who are multimillionaires. why don't they take the wallet and say we are going pay for this. how about janet jack? it's up to the people? i love michael jackson's music, but this guy might be a child molester and you are spending taxpayer dollars? >> let aig pay for it. they are the company that is going to mint money for the michael jackson trust. everybody made money off this guy whether it's doctors or lawyers and now it's their turn. they will make money off of this. they are the last in line. >> neither of you would say l.a. shouldn't put up the police? >> they should, but they should be reimbursed. >> cancel it if you don't have people paying for it. why should the people pay for it. there will be networks on and

you have to have a huge thing at the staple centers. >> that's people's choice to go or not. >> not that they have to pay for it. >> is this really how people live? >> all we are talking about is the expenses incurred. what about the revenue for the city and the number of people who will be showing up? that is like -- look at the influx of tourist who is will be coming to downtown los angeles. that could be good for businesses in the area. >> it could be. if everybody who goes down puts a dollar in the hat to pay for it as it goes around and buys stuff to drink and eat, i'm good. >> in reality it's probably only a drop in the bucket. >> absolutely, but that's not the point. >> it goes to the culture of hollywood and stardom. >> the people who run the staples arena had to know this

could be a profitable venture. it's about the money. they will not do this out of good will. >> they will make the money. it will come around the city. >> they will benefit from this as well. let's face it. >> are you also the that believes every time there is a super bowl and the city makes money and never loses with all the stuff they put into it. there a lot of studies that say the teams did not make money for the city. all you do is take your income and move it from part of the city and move it to another part. >> i equate this for the olympics. to use that, i was there in 84 and live there when the olympics came and it was a huge generator there. it's the same here. los angeles has become a pilgrimage for people who want to pay homage to michael jackson. he will beburied in hollywood. you bet people will want to flock to that area and that will be a revenue generator.

>> you can't compare that to the olympics. obviously this is going to cost money or the city wouldn't be worried about it. that is not going to go into the city. it may make money for the businesses, but not enough taxes to cover all that. >> the city has the event whether they wants it or not and they have to provide security and sanitation whether it's their choice or not. the people have already started to show up. >> why did they have to approve before they got private money? >> when the lakers had the parade. >> i was against that. >> the bottom line is -- >> i'm watching out for the people's money. >> got it. good to see you. california state treasurer will be a guest on closing bell at 4:00 p.m. eastern time. find out what he thinks. he is busy and glad he has time to spend here. a real life wall street spy story. you can't believe this. this is a guy busted for

allegedly stealing secret sauce and the computer trading that makes him so much money behind bars. he was in court on saturday. >> meantime, we are trying to turn positive here and just have. this is the most meaningful we had all day. declared the bull market. back after this. (announcer) we speak car. and we can say00 miles on a single ta and epa timated 41 mpg city and all the words stic because they're true. we speak the most fuel-efficient midsize sedan in america. we speak the allew 2010 ford fusion hybri

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coming up in 20 minutes, we have the author of a big article and a big bust that happened over the weekend. confirming that a russian nationalized citizen was bust and in court on saturday accused of trying to steal the secret computer trading platform at goldman sacks. this is linked in. sergei with the black box trading. that's how they make their money. the big profits. it's very, very secret. he was told he had to sign an agreement and getting paid $400,000 a year and he quit and would take a job somewhere else and would do the same programming. they were going to pay him more than $1 million. nod anymore.

part of a team. they got the guy on. his wife is one of the most revined figes in history. they suspect s was involved in the ponzi scheme despite the fact she is yet to be indicted. the latest issue takes a look at ruth herself and said there is a possibility she will not be charged. the author of the article from new york. we have no direct evidence, but you point out that these two people had been together since she was a freshman. they had been married 50 years and they were thick as thieves.

that wasne of the mt intrigue questions in the case. you can argue either way. they had a traditional mriage anrn deno share with her what he was doing at the office. she didn't ask and she wasn't interested. he was like a lot of husbands in the generation and he left his business at the office when he came home in the evening. on the other hand, she did work there with him for many, many years. she was the closest confidant. she was from an early teen years completely in his orbit. >> you make the point that she worked on the 18th floor and not the 17th or 19th and in charge of paying invoices. do you think that distances her enough from the questionable part of the business? >> she was doing an

administrative job and nothing to the investing function of the company, but it's to say if she didn't know she should have. >> her demeanor on the day he was arrested, you talked to the person she had lunch with and she showed no sign- see seemed to be pretty cefree. >> the iend said she was ry, very relaxed andhis friend is convced she had no idea. you can argue if this was the secret she w carrying for a ng time, she was practiced at this. there is a gooargument that on th day, this news was coming out and bernie was telling their two sons and rh it knn, she would have known and would she go out to a casual lunch with a friend? >> the story was great. i think the bottom line is we have 62 million reasons to hate this woman. she got to it live a that most of us can imagine. sheville to go back and start a

new orbit. it's almost like she's a widow. she has to start a new life and find somng in west palm beach. >> she has been kicdut of e apartment she lived in since 1984 and she will have to rent an artment. she has $2.5 million which is a lot of money for most people. >> a lot of people get really -- i mean furious about that. how muchid she inhit? there was any jusfication to keep that money. >> it s a complex forla and i don't understandit, butt's based on anargument that her legal team made tha some of the money usedto pay for the t earliestomes they bought was untainted. it was money earned beforehe fraud started. some percentage of that belonged to ruth as the spouse. >> bottom line question. is she getti a bad wrap? >> sgetting tat harshly if you comre the way their

sons have been treated. the jury is ou dishe know? i think it's a very, very tough question. we won't know for a while. >> great article. >> for she was from that generation where women didn't ask and weren't involved, why did she have an office right there? >> also a clerical thing. for better or worse. she stuck with him. i give her credit for that. >> there may be more to come. it's hot pen day here. we are talking to the best of the best. how is the health care fund racking up profits. we'll get answers here in a moment. >> ken lewis's biggest threat. shareholder or an angry union. we have the ceo in a minute. 

the stock market average and nasdaq d the s&p are lagging, but the industrial average is up about eight points. >> for more on today's market moves, more on the stock exchange. what are they trading on? i guess that's the way to put it.

or not trading on. 886 is the moving average. people keyed in on the level. it will be good for 50 points. here we are right now. if the obama administration keyed in on 8% unemployment and we are approaching that 10%, people are not doing anything until the jobs are lagging. people are still a little fixated on that. >> jittery about the earnings. >> we thought that was going to be a distraction from the key economic data, but such an aggressive -- i don't care what side of the fence you are on politically. you don't care what side of the fence i'm on. no matter what side of the fence you are on, health care changes and cap and trade. noens else can do it best.

health care. cap and tack. didn't you say it was about oil about a year ago? didn't i say it was about financials? that's right. >> thank you shay! >> off with his head. he's a coward. >> the family is under one roof. >> see you tomorrow. >>er more on the health sciences fund. one of the best performers in the first half of the year is up about 10% since the beginning of the year. will health care do well in the second half. who are the potential winners. we have a lot of work to get back to work today. chris jenner is portfolio energy of the fund. four stars rated by morning star. congress gets back to work and they have the-week period to wrestle health care reform and try to put it in some sort of shape. what are your expectations?

>> we are at the point where the concepts are behind us and we are at crunch time. we have to figure out how to pay for this. there is a lot of anxiety in the market place. this is a major initiative. it's a good form of therapy and not controversial we need to know how to manage this information. there is tool companies that the vast majorities will take a haircut. >> a lot of people will be talking about the pharmaceuticals. >> is what happens with health care reform in the stock prices?

>> to a large extent, yes. we have one to two more years and what i would emphasize to audiences, health care will do well where the companies meet expectations. despite the huge overhang and the white house. gilliad, med coand script. those speak to the areas that will do well. management of information. i don't eect that to stop. the pbm companies, they help insurance companies and help insure companies and manage pharmaceutical cost and in doing that, they actuallyake money

by helping clients save money. it's all legitimate. >> when you are so striking and you show the charts over and over again, health care should be doing phenomenally well, but it has been a tremendous underperformer because of the worries about washington, right? >> you make a good point. this is the period where they should be doing better. it's about a less bad economic scenario. that goes against health care. as people question the economy. the three companies we talked about, perform is not a big over hang.

>> thank you. >> next hour by the way in "street signs," posting 20% gains so far this year. find out where he is putting his money. >> ken lewis is under fire from the board and shareholders, he steps down and he may have another group on his case. the union or a union. more concessions in the works. the on air editor and charlie gasparino. >> remember the song look towards the union label. >> when you go up to the teller. >> look for the union label. whenou buy a coat or whatever. the thing about this story, the regulators are really disappoint, but they wereot solattering to ken lewis. shareholdeare annoyed and you have this powerful union.

the international union. they have been calling for his head. you might want to brush this off as not a big story, people inside bank of america said these guys are legitimate threats. they have major plugs in the obama administration and not the economics wing, but the political wing where they spent $60 million to get him elect and people into the bureaucracy and people at bank of america fear this. as the seiu is ramping up pressure, calling for his head, they have recently written the secretary and holdingrotests and that unionizedbout 100,000 bank tellers as the quid pro quo. that's one of the major things that senior people in bank of america are worried about.

this union losing their cloud with the obama adminiration. let's face it. the government controls part of bank of america, right? >> they should be worried. what do we know about unions? they drive up the cost of labor and they're proud of that. aren't you tlald you have taxpayer money invest and now we are going to drive up the cost? >> let me make this point. my dad was -- i have been through my share of strikes. i come fr union background and my dad almost lost his li twice on theob. we are not talking abo coal ners and people who do hea construction. we are talking about the biggest occupational hazard like a paper cut. i amot denigrating wt tellers and back office people do, but it's not a type of job -- >> they are not out of the jungle. >> we are talking about sweat shops here.

it seem to be all downside. that's for ken lewis and shareholders. >> really literate. thank you, charlie. good report. the president is in russia, but should china be his big focus. russia's energy and china's trade. who will come out on top? >> more on this story of the young man charged with trying to steal computer trading secrets. we will show you his picture as well. >> amazon.com. businesses more ficiently,

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>> i knew that. he wrote the jungle and wrote oil. which today by the way is lower by $2.67, a decline of 4%. almost year ago that oil hit a high of 147 dollars per barrel. where should his focus really be. here now is the eurasia group and the author of the coming china wars. nice to have you both here. i'm going to start with you. you can look at both of them at super powers, just in different ways. you can look at russia as the

super power. does the president have to make a choice? >> in the short run, the big problem with with russia. georgia is the obvious topic that comes to mind. if russia wants to go into the republic, there is little obama can do and that will create tremendous uncertainty. i think the long-term threat obama needs to focus on is china and the economy. the reagan economy defeated the soviet union and what's going on is china is gutting the economic and manufacturing base and taking over a financial system by acquiring so many reserves and overtime, the clear danger there is china. >> do you agree with that assessment from where obama's focus should be? >> i don't think it's either or. most gas deposits in the world is a big deal. it's not chine amp china makes

stuff and russia really doesn't. good business relationships with both are very important. i think russia matters for iran and a lost other global issues and the president is well-advise and did a good thing by going to russia in the administration. >> how worried are you and our apologies because we lost his feed. we got a good comment in before that happens. how worried are you that russia backed out of the wto after such a long period of negotiations. does that worry you at all? >> i know what they did. what they did was join with belarus and that federation may not be possible. if it does, it will take decades. >> does that have them shooting themselves in the foot. they are lost. >> they are shooting themselves in the foot. if they don't get in.

punin could be laying down a marker. see how like that. i don't know what they are doing. nobody does. >> what about china? would it not be beneficial to the president, especially given economic cloud to get closer to china. i know the treasury secretary has been over there, but what strategy should the president take right now in not necessarily wooing china, but becoming closer to them.c >> china is a major rising power and shows growth this year despite how bad things are. china is really where the action is and i think constructively business-like relations with neither of which are wild about u.s.-dominated systems. they are both to a lesser or

greater revision, but constructively relations should be the goal. >> sorry to interrupt. there is 140 dead now in the western part of china because of the weeker protest. >> it's more limited. >> thank you very much and our thanks to peter navarro as well. bill, over to you. >> let's look at what you find. it is the most widely-followed story and the editor is here to itemize for us. >> i have a weird assortment. we start with the bread and butter and the first one people were diving into alcoa. everybody thinks they will post the loss. what does it sneen we have an interesting analysis and others are saying no, it's just a taste

of aluminum prices. the second one is a bit of this ha ha thing going on. uk spy chief, they are getting a new spy chief. the wife put the whole photo album up on the internet. >> i think it said it's like having leon's beach photos put up there. who wants to see that. he does have nice legs i understand. >> people are getting a pick out of that one. the last story is the golden trading scandal. apparently a trader uploaded a lot of secrets and algo rhythms and computer codes. goldman has note said anything about that. >> we will follow it more in a little bit as well. >> when we come back, a significant story. soak's secret formula and did they steal the trading codes. the secrets behind it after this. atirst i was afraid. i was peified.

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a former goldman sacks has been arrested for trying to

steal computer codes related to the trading platform. it's the secret sauce that helped to generate for goldman millions in profits each year. goldman shares are higher along with the rest of the market of about 57 cents at $144. joining us with details of the arre arrest. how is this possible at all? this should be under lock and key and nobody should know where it is. >> thanks for having me. basically if you go and read the criminal complaint, it appears that early on goldman suspected this guy was doing this downloading to a website and to to his computer. they were able to track it and he wasn't good at hiding himself and he tried to encrypt stuff and lost a lot of tell tale trails. in sense they got him, but the

other sense you want to wonder about it seems like they didn't put on a gardening lead and a non-exceed agreement. >> why not? isn't there confidentiality agreement? >> they knew he was going to a competitor. a lot of people who do this can have the source codes and a lot of face they will not do this. they come down on him hard. they raved him over a holiday weekend and it's hard to raise bail if you have a lot of money. they knew he was going to sit in jail and one could see a message being sent like this is going to happen to you. >> he wasn't trying to hide himself. >> no, he is always over the place. if you go on you tube, you can find he and his wife are ballroom dancers and contests all over the country and several videos of them up there. he was sort of out there.

>> too bizarre. the people at goldman are talking at all. i will get back to the first question. how was this possible? >> i don't think they wanted to talk about it. i think at this point it's probably clear it's not a big monetary trading hit to them and they have to go back to trade, but it's a weakness and a blemish and shows that as much as pride as it is profitable the systems are, they are reliant human beings and human beings are fallible. >> it's about controlling risk. the same discussion over and over again whether it's how much leverage you have got versus how secret your stuff is. >> absolutely. warning signs for the rest of the street. you are obviously making $4 had been hundred,000 a year. maybe for the millions, it may

not bring in. >> what's the average trader making? much bigger than 400. >> they make that money and thank you, matt, good stuff. we will be back with more "power lunch" getting ready for "street signs". stay with us. eversunday, lasagna at mom's was a family tradition. when s started forgetting thing i was hoping it w nothing. grandm what a nice surpse! mom, it's sunday. that's when i knew i uldn't wait. mom's doctor said these were signs of alzhmer's, and that prescriptn aricept could help. he said it's the only eatment proven effective.. for l stages of alzheimer's. studies showed arice slows the progression... of aheimer's symptoms. d ows the decline ofverall function. aricept is well tolerate t not for everyone. people at risk for s. or who take certain other medicines... should tell eidoctors...

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>> the gold is down $7 and the oil market down almost $3. >> we hope that means lower gasoline prices. 64 dplz a barrel and it has been down $10 in the last week.

think about that >> are you see together at the pump. that's the key question. >> not yet. we are coming off the fourth of july holiday, but almost 4% on oil and there is gasoline at 1.74. >> if you look at the sell off, it's across the key commodities com apartments. the dollar is moving against the euro especially. >> a crazy day. thanks for joining us. see you tomorrow. >> "street signs" begins in about 30 seconds. have a great afternoon. a source of goldman sacks confirms an employee was accused of stealing from the firm. there will be no impact on the business. the treasuries option went off at a yield of 1.92%. and the oecd predi