what's your takeaway? >> the economic stability plan that the president started is working. it's clear that bailout of the banks or stabilization of these banks and t.a.r.p. program worked to stabilize our financial markets and now the banks are getting much more of a control of their difficult assets and they're beginning to solve their legacy programs and i think they'll take the rest of this year to do it and then we'll see them get back into the fundamental business of lending. things are good. it's good news. >> don, your thoughts? >> i think where we are now is the government saved the banks that they have not yet fixed them. the signs of big banks are early signs of the now starting to make loans again. the key thing in this country is you have to make loans on real estate and small business.. private equity can play an important role in this. one of the important things about private equity in banks is you have to combine that with management. what's key here going forward is healthy banks being constructively aggressive in lending for housing and small business. that's where we'll turn this

economy around. i think we're off to a good start with these reports. >> all right. joe, i don't have a clock here. you'll have to take us out of this. >> now you need me. i will do that. thanks, don. ron is already gone out there. we had a lot of big hitters. a lot of guys out sunning themselves in the hamptons. must be nice. i want to thank david faber, the brain show will continue at earnings central straight through 11:00 i think. for me, don, david, thank you. make sure you join us and becky quick. join us -- >> i'm joe kernan. spongebob marathon this week. "squawk on the street" is next.

live from the financial capital of the galaxy. stocks on a four-day winning streak into today's session but results from ge, google and bank of america keeping futures under pressure as caution takes hold. >> happy friday.. i'm rebecca jarvis in for erin burnett. builders are starting to regain some confidence as they emerge from the housing implosion. >> that's what we need. more houses. >> more of them.. >> we don't have a glut. wait, we do. futures not too bad. i'm not sure that number is accurate. i have a different number down here. so we'll double-check that.

i have them down only 130. we'll triple check that. >> on the economic front, construction of new homes in june rising 3.6% to a seasonally adjusted annual rate 582,000 units. the highest level in seven months. it was driven by a rise in single family homes and in another encouraging sign for housing perhaps applications for building permits and indication of future activity that rose 8.7%. >> let's see what else is shaking out in the free market. reporters standing by. we begin with matthew here at the big board. >> a big blue chip tug of war going on between ge and ibm. both are dow members. it's interesting the effect ge will probably get dwarfed in the dow because of its waiting. ibm a 9.6% weight in the dow versus 1% for ge. ge is the 29th smallest

weighting in the dow right now. ge with top line miss. energy infrastructure the only group that gave revenue figure that analysts were looking for. profits up 13%. ge capital profits were down 80%. the company saying that they see solid results in a challenging global environment. after the close ibm came in strong. 12% higher on the quarter. revenues pretty much in line but most importantly they raised their full year to 970 per share above 912 estimate and worth a peek is bank of america. down 2% in premarket. they beat on the bottom line. revenues look to be in line if you will but their loss provision 7.7 billion and nonperforming assets up 220%. citigroup a messy quarter.r. it looks like the per share loss

coming in at about 39 cents per share. there's a huge one-time gain in there from sale of smith barney. we'll watch that. let's get up to mike huckman at the nasdaq for more on what's going on there. >> the nasdaq is rolling the dice today after hitting a lucky seven yesterday. the first seven-day win streak here in about or almost three years. at this point it looks like it will be a crapshoot whether we can make it straight eight. at the nasdaq it's all about google. the lowest year over year revenue growth rate since it ipo'd. watch the read through with internet stocks with yahoo! that reports next week and microsoft we have apple shares up almost 1% ahead of the bell this morning. jpmorgan raising its estimates and price targets on that stock ahead of that earnings report.. and a lot of bullish commentary

on a new partnership on hiv drug and continue to watch human geno science on a release of a lupus drug on monday. >> we were down a percent last week. now we're down only 7 cents. the basic story in light trading is the dollar. look at the dollar index. it's off and something that he focuses on. it's simple. oil with this recent turnaround there are other stories at play and one is where we are right now. 6197. resistance at $62. analysts saying there's profit taking involved and maybe even looki ining at fundamentals. i just want to look at the one

week because the bottom line is that we're still up for the week when it comes to crude oil and just a quick note on that. gas huge double digit run-up yesterday. profit taking in that part of the complex as well. mark, back to you. >> thank you very much, sir. let's check out asia overnight. indonesian stocks suffered because of the news of the bomb blast. at least eight people killed at two luxury hotels in jakarta. benchmark index did fare most of the losses ending down half of 1%. hong kong up 2.4. india's bombay up 3.5. guy johnson, what's happening where you are? >> we're up again.. that's five days in a row we've been up every day this week here in europe. there are a few red patches around but the main markets are trading higher. frankfurt up 90. london market trading up by .7

of 1%. let me show you what the stock 600 has done this week. it's been going up since monday morning. i'll give you numbers on what the main indexes have done this week. germany up 9%. london is up by 6%. impressive games being made over the last five days. european banking stocks up 9% this week.k. today a bit of volatility surrounding overseas with numbers from b of a and ge affecting numbers here. moving above the flat line. the big story i want to focus on at the end of this week is 1.6% up this week for european auto stocks. the story is surrounding bmw talking about getting back into gear. bmw a whole series of upgrades coming on the back of that upgrade today. morgan stanley upgrading bmw and looking more rosy.

have a great weekend. back over to you. >> thanks, guy. you have a great weekend as well. word on the street from the floor, alan valdez, great to see you. a lot of people look at this week as a huge one for earnings. clearly it has been. have we heard what we wanted to hear and heard reasons to be bullish going forward? >> not really. this has been great week. we're over 500 points. it's a strong, strong week. how much of that is shortcomings, we're not sure. >> the people following head and shoulders idea had to cover those shorts. >> no question about it. if you look at everything, the revenue really were good but the cost cutting is what did it. there was so much cost cutting. i think if you're not in the market yet and you didn't get in on monday, i would stay out today. >> the issue when we look ahead to the second half of the year and we think what's going to drive companies forward, the

question is will it be more than cost cutting and top line growth. what companies are best positioned in your mind to generate some top line growth?? >> it's a tough call. if you look at everything. consumers are having problems. you look at jpmorgan credit line consumers having trouble with credit. you look at google. revenues down. revenues down. there are credit problems with the consumer. i would look at companies that consumers need not what they want. that's what i would look at. >> all right. thanks so much.. have a great weekend. mark? up next, the kahuna and brain manning earnings central and we check in on the ge conference call. >> then the nation's small business already feeling left out in the cold now bracing for the impact of cit's bankruptcy. we're live with the head of the national small business association and the analysts

with outlook for google an insight on how to play the stock now. stay with us. we're back in a few. not long ago, this man had limited mobility.

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brain, we've been covering all of the angles. joe, kick it off for us with citi numbers. >> you get the banks reporting on the same day, it's so convoluted even in normal times and given the extraordinary year we've been through, it's harder. it was a 49-cent number. i hate when people say that. don't you? that said, there are so many items in here. >> the key one 6.7 billion gain on the sale of smith barney which wasn't a complete sale. it's a loss. we know that much when you take that number out. what's interesting is citi didn't give us the numbers. >> why would they? with the government being such a big owner, he may never get the number. it may look like a congressional report from here on out. >> some days it pays to wait for the cue. i look forward to reading the actual quarterly filings from all of these companies. a lot of times --

>> only a complete geek would say that. >> revenue did total 22 billion which was a little bit below expectations. just to get that number we had to back out the sale of the gain from smith barney transaction. you had to back that out. that looked way above when that came in at 29 billion. and despite swinging to a profit, the bank saw 7% drop in investment banking operations and credit concerns continue. that would not be a headline.. we don't need to stop the e presses. credit concerns continue.; the state of bad assets in holdings will factor into bottom line for a long time to come. >> don't forget the exchange offer. probably very near when that happens.s. 34% will be owned by the government. 23 billion shares outstanding for citigroup. bank of america also out with earnings this morning. earnings per share did beat estimates 33 cents.

analysts looked for 28. revenues a bit shy. bank of america says it didn't break out an earnings number for merrill. it's a part of the event at this point. trading less. revenues less. stocks come back. they've been trading down initially in the premarket and now as we get closer to the open it's looking flat. let's get more analysis now. let's bring in chris, bank analysis, for his insight on bank of america. chris, let's start on the credit side.. where do you think provisions were versus your estimates of what they would be and do you gate sense they're near the end of the increase ultimately in credit losses? >> i think that's a question of the day. the provision expense came in $3 billion or so higher than we anticipated as the management company over provided by $4.5 billion. the key question here and many

banks right now is do you see provision expenses being that high going forward especially in light of the credit trends we saw in the quarter. if you look at nonperforming assets, that's down 40% increase from last quarter. you saw stabilization of 90 days past due. there's a big buildup in reserves peaking at that level or not? we're seeing signs of stabilization in different portfolios for a ray of hope going forward in the next couple quarters. >> you're not willing to say at this point that it's a sure thing, right? >> no. i don't think so. from a macro perspective, you have two portions of the credit quality debackcldebacle. we're in the late stages of that. could we have a lull between the consumer and what happens on the commercial and commercial real estate side? so far commercial real estate losses and commercial mpas have not been that high.

will we get there in the next couple quarters? we're not as dooms day as others are. we didn't have oversupply in commercial real estate base. it remains iffy over the next couple quarters. our hope is given the fact we like b of a stock and earnings power is that here first quarter and second quarter we're peaking from a provision expense perspective and it may go down or flatten out from here. >> obviously that's going to add to profitability.y. people talk about what we're still in this period here where they will take provisions suffering a great amount of losses. how much longer does that go on until that earnings power you talk about starts to be seen in the underlying numbers?s? >> that's a good question. in our models we think that the loan loss reserve building effort start to slow by the end of this year and early 2010. as you just mentioned, that's a great deal of earnings power whether b of a or other banks in general because you don't -- the only thing you do on provision

expense is tax it. there's no margin against it. every dollar decrease is 65 cents to bottom line. every dollar increase of revenue is only 33 cents to bottom line. so that's the earnings power we're talking about. from our expectations by the end of this year and maybe early 2010 you start to see more sizable decreases. >> last question. net interest margin, disappointing? >> the margin itself in terms of percent margin was not disappointing. down six basis points. about three basis points lower than we anticipated. the disappointment was on net interest dollar amount. the bank delevered their balance sheet. it was short of our expectations. on that line it was disappointing yes. >> thank you, chris.

i apologize for mispronouncing your name. >> they were laughing. >> they laugh at me for other things, too. >> thanks again to chris. >> what do you want? i'm not a regular on "earnings central." >> i know you're not. it's intimidating over here.. >> not kidding. >> we can't wrap before we get to our parent company, general electric. topping expectations but revenue came in below expectations. we have continuing concerns that ge capital where profit plunged. the unit remains on track to be profitable for the full year. if i knew that scott kohn was assigned to something it would make me nervous standing outside of a prison or courtroom but this time he's listening into the coverage call.

any highlights? >> don't go to earnings central. that's scary. i'm here. i'm listening to the coverage call. they're getting into q and a. they clearly are cognizant of the concerns. a lot of questions people are asking. they say they feel good about it. they say liquidity and funding of that important financing division is in great shape. since the financial meltdown took place, they're trying to reduce the balance sheet and increase reserves. they did that in the real estate area by $175 million in the last quarter. they say that they are now 173% reserved for real estate losses but it's a tough environment. they also say that some of the delinquency levels are trending below the forecast. every other word seems to be

tough environment, tough environment but they say that they are persevering in this tough environment and maintaining guidance for the year and continuing to focus on that very important ge capital division. >> thanks, scott. joe when you look at the numbers in terms of each division, the revenue declines can be startling for ge year over year. given where we were a year ago. >> it was 12 but 5 was currency like so many multinationals. that brings you down to 7. the company would sayat the rest is due to shrinking ge capital which they're putting a positive light on. are you there, mark? >> yes. >> so the other day when you tried to talk spongebob it was obvious that you were not a fan. you didn't know one other character. a marathon this weekend. 50 hours if you would like to get up to speed on spongebob, patrick, mr. crabs, mr. crabs'

daughter, pearl. any of those people. 50 hours this weekend, mark. i urge you -- >> do you have 50 hours this weekend for that? >> sounds like time well spent. all right. how about i do know that he lives in a pineapple under the sea. >> you like to eat pineapple. >> i at least know that. up next, we hit the training desk to get the buzz beyond the big board. >> is this a relief rally in a secular bear market or are we in the midst of a turnaround? this is "squawk on the street" on cnbc. we're first in business worldwide. the world'sncer) leading companies thrive on collaboration

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welcome back. take a look at futures. right now they are pointing just slightly lower versus fair value. as far as dow is concerned and the nasdaq is concerned, so yeah we're looking at a nearly flat open. >> not much there. let's get the buzz beyond the big board on the final trading day of the week. joining from us bean town, art hogan. good morning, art. >> hey, mark. >> this market certainly has confounded everyone.e. a week ago we talked about head and shoulders and correct me if i'm wrong, i think that went away, didn't it? >> it went away quickly like someone flipped a switch.

no one asked about where the next level of support is in the s&p 500. one of the things that caught us by surprise is we have guidance from earnings report we got so far. it's interesting that we hadn't seen guidance for the last couple quarters. now we're getting guidance. we can put in numbers that are better than expected and have the market react positively to that. the one thing i'll tell you we run up 7% this week so far. we set the bar pretty high for the rest of the earnings season. we only had six dow components and 30 s&p 500 names. next week twice that in the dow components and 130 s&p 500 names. a broader look at corporate america and earnings possibility. i think it's about guidance and more than anything else. >> sounds to me like they're trying to have your cake and eat it, too. are you sounding a note of caution or not? >> not at all. for the first time we're looking at things like we haven't said anything positive about a financial company in a couple of years here for the most part. early this week we started to look at the levels of loan loss

reserves on credit card side. you hear more of that today with bank of america and jpmorgan and citibank. that trend is we're saying you won't late until unemployment peaks to get into credit card companies. that's a big change in quite some time. we say technology is the way to go. we talk about that last week. technology will be a leading force as we move forward with a lot of names we like. we'll point to that in that direction. there will be a lot of activity going into technology and consolidation. >> all right. thank you very much. have a great weekend. >> thanks, mark. undefeated professional boxer floyd "money" mayweather

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earnings stories we got this morning. >> they're not pointing firmly one way or the other. here's what's going on here at the bells. at the big board it's chile day as in the country. the finance minister joined by other executives here to highlight the country's investment opportunities. we'll talk to the finance minister in a couple minutes. and at the nasdaq, rovi. we start with matt nesto here on the floor. >> we're up 17 points on the dow quickly here. that will be due to ibm. let me just remind you that ibm has four times the weighted effect on the dow than ge does and they're 1% over in the s&p

500 because the dow is a price weighted index and not a market cap weight index. we'll talk about that another day. ge with top line miss. analysts are concerned there. the company saw their capital profits falling under pressure today down 4%. ibm after the close revenues fell but they offset it with cost cutting in a big bottom line beat and also a huge full year forecast increase. that's 2% higher today. bank of america turned a premarket loss into a little change in the last check maybe even bidding higher here today. this after the company's loss provisions rose or nonperforming assets are way up and the company said difficult challenges are ahead in global economy and rising unemployment is still continuing to be problems for credit quality. keep an eye on that one. also, citigroup is inching higher here today. the company when you back out to sale of smith barney assets to margian stanley, the company is turning a 4.3 billion prof$4.3

loss. depending on how many shares you calculate the loss looks to be wider than 37 cent loss that was forecast. 37 cents. we'll let analysts vote on this market pushing it higher a few pennies. another stock that's important to look at here today because we've seen so many of these revenue misses but we're seeing great cost control and great management through some situation is mattel. profit way up on 19% increase in sales and that stock is about 5% higher here today. let's get up to mike huckman at the nasdaq for a look at what's happening there. >> thanks, matt. we're trying to make it an eight-day winning streak. the nasdaq trying to build on the first seven-day win streak in almost three years. we're going to be googling all day today because that's what's it's about on the back of that company's earnings report after the closing bell yesterday. let's watch impact of the

competitors and other internet stocks. yahoo! up and ebay and amazon to name a couple of them. apple shares up 1%. that company reports earnings next week. jpmorgan ahead of that report is raising its estimates and price target from 155 to 167.50. the analyst thinks the company sold more iphones and macs than previously thought. hgsi is still up ahead of the expected release of key data on a lupus drug on monday. let's go over to brian at the nimax. >> about an hour ago we were down a percent.t. we've seen a complete reverse. a couple traders telling me it's short covering and some of the

reason behind it is reports out of iraq the government concerned that unions might try to block something like the bp oil deal with chinese company that they are so dependent on for the turnaround in that country. all you have to do is look at the charts. i've been told by several people that $62 a barrel was resistance. we busted through that. you look at overseas and they thought they would see profit taking but an up week. this is part of the complex that gained double digit percentagewise yesterday and volatile vehicle for gas taking a breather today. i want to look at gold.. nothing really moving too much in the metals complex. we'll have more on that at 10:00 a.m. eastern time. mark, back to you? >> thank you. small businesses across the country bracing for a likely bankruptcy by troubled lender cit.

let's talk about that and the possible ripple effect. todd, president and ceo of the national small business association, the oldest small business advocacy organization in the country representing more than 150,000 small businesses. todd, good morning. thanks for being with us. >> good morning. thanks for having me. >> what would a cit failure mean? >> it's going to mean a significant disruption if it happens. they provide credit to something like a million small companies which is a huge cross section of the small business community and they are tattered the as the biggest fda lender but they have their fingers in all sorts of activities. they are huge in the retail industry. they provide the loans that allow suppliers to retailers to float those products out there to them. that's a huge disruption for that marketplace. >> no one around or no group around who can step in and fill the void? >> we were hopeful the secretary

of treasury made comments at the beginning of the week that they felt they might be able to them and were on top of the situation but it doesn't seem that they've been able to reach an agreement. we're fairly disappointed in that because it seems like a strange place to draw a line in the sand. the impact of a failed cit certainly i think when you look at the millions of small businesses that could be affected directly and indirectly, that's looking similar to a failure of gm or large automaker and they certainly found a way to help in that situation. >> setting cit aside for a couple seconds, health care front and center with this administration. front and center with small businesses. what's your reaction to the plan that's on the table? >> it's insufficient cost containment. it imposes more cost on small businesses rather than reducing cost. >> have you been able to quantify that yet? >> not specifically yet because

we're still working on the rest of it. clearly yesterday the head of cbo said that you haven't done much of anything to change the actual cost curve. if anything the costs are going up under this plan which is exactly the wrong direction.n. >> so if that's the wrong direction, what's the right direction for small business and health care? >> the right direction is we have to basically change our delivery system so there are incentives to improve quality of care and not just do more procedures and then we have to have insurance reform that spreads costs evenly across the whole system rather than imposi imposing payroll taxes on small companies. we don't stand behind anybody. our system does not work for small businesses and their employees. this is an opportunity to get reform and we have to get it right. >> who is going to oversee a reform health care?? is that a government role? >> i hope not. when you say oversee we hope we

can structure a marketplace that works for a change in health care. so in some sense we'll all be overseeing. the people who pay the bill have to demand quality of care and not just more procedures, which is what we have right now. we have every incentive in the world for providers to do more things to people whether or not it improves their care or not we have to turn that on its head.. >> isn't it one of the problems here that have to get too deep into medical discussion but, you know when my doctor says you need this and that, i really don't know any better. who does? >> exactly. and so the patient isn't necessarily the right person to make those decisions. but the insurance company paying the doctors should say, look, if this guy gets healthier, you get more money. you get less if he's unhealthy. we won't pay you to do more procedures. that's what we have now. >> in terms of where we are in the cycle for small business,

are things improving and where are we? >> they don't seem to be improving. we've just done a new survey that we'll release in the next few days. things are if anything are more grim than they were earlier this year for small companies. having a harder time getting loans. cit failure will not help with that. and they are pessimistic. the only bright spot is the numbers are still bad that it does feel a little bit like a bottom and maybe there's no way to be but up. >> thank you, todd. we appreciate it. up next, david faber is working the phones. the latest coming up. they're celebrating chile day here at the nyse with the stock index up 35% this year. we're live with the finance minister after a quick break. you're watching "squawk on the street." we'll be back in just a minute.

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welcome back to "squawk on the street" here at faber central. close to earnings center. it's actually lou's joke. we can't show you him right now. he lurks behind the cameras. let's talk cit. yesterday around this time a little later i told you about cit's efforts to raise as much as $3 billion in secured financing from private investors so to speak. private equity. fixed income investors. hedge funds. that continues today. that was going to the hope is of course that you combine that with getting these approvals to move assets from finance company to the cit bank and stabilize the company's liquidity situation and then you embark on debt for equity swaps and put it into a position to survive which

those moves might allow. that was yesterday's news. that continues to be today's news at this point for cit. the stock of which i might add is up sharply percentage wise.e. when you trade up to 59 cents it's not exactly the greatest thing in the world but then again you see it right there up 14 cents. let's call it already coming down. it's a significant move. haven't got a check as yet on the bonds. we'll be following the story all day today. what can i tell you right now? i talked to a couple investors that were approached. any number of banks out there it would seem trying to cobble together a financing plan for cit.t. time is very short here. it doesn't appear that the company had a real backup plan so to speak if the government assistance they were seeking in terms of getting the approval on the fdic or approvals to transfer assets so they're

pursuing plan b as of questioned with the clock ticking. how quickly it's ticking has been a hard thing to determine based on the fact that most people don't want to talk to me about it or won't return my phone call. it does appear as i reported that it is possible that cit could file as soon as today.. it may very well be that they have the weekend. ultimately the company is running out of

it might interrupt this year.. markets are up over the last 12-month period and chose an economy with a lot of resilience and good institutions and plenty of protection for investors. >> how much benefit to your country's bottom line? >> that's a tremendous improvement and we welcome that. at the same time unlike other producers of commodities we have a system where by when prices are high we save the windfall so we have cash in hand for lean times and when copper prices came down late last year, early

this year chile was one of the few countries in the world where the government could keep up social spending, infrastructure spend, stimulate the economy. >> when you talk about copper, one of the world's largest consumer of copper is clearly china, what do you see out of them as far as demand is concerned? >> clearly we look very carefully at china and what chinese do for copper and what happens to copper matters for us. we're seeing chinese growth picking up. demand for copper picking up and that's one of the things that is explaining that while all commodities have rallied recently, copper is leading among them. that's good news for chile. >> one last question. what specifically is out there so a u.s. investor knows i can put my money in chile and it will be safe? >> chile one one of the first countries in the world to set up a special code for foreign

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google shares slumping. the weak economy and ad slump taking a toll on revenue growth and the price of google search ads. joining us to go inside the numbers, internet analyst just

upped the price target for google to 5.20 from 4.80. why would do you that? >> the quarter was very good. i think if you saw some of the key highlights there seeing a stabilization in the revenue, the margins were excellent and they're getting progress in emerging businesses like youtube. >> ben, when it comes to those emerging businesses, which ones do you think are poised for the biggest pop in the future? >> clearly the display in video business are growing more rapidly than other businesses. in near term you see an increase traction at youtube.e. they're starting to look at ad units that work like preroll video and demand for that kind of video. in general you will see advertisers following the audience and the audience is clearly at youtube. >> how do those margins compare to those that google is accustomed to presently? >> the core business is 70% to 80% operating business. you won't see margins in these

emerging businesses. they're growing. it will take time. investors want to see emerging businesses work and having the positive tone the company laid out for youtube last night is positive for the company going forward. >> the slowing ad sales you don't care about?? >> it's not that i don't care about it. you're seeing a deceleration in the rate of how much that's slowing down. if the macro recovers, you'll see that reaccelerate. if you look at the numbers excludeing the hedging issues which i somewhat noise in this name, you see that deceleration is slower than it has been since 2007. that stabilization is not getting worse. those are positive times for me. >> all right. four emerging revenue streams you talk about in the latest research. displ display. what's display? >> it's difficult for a brand to build their message around just text. the banner ads. things you see on yahoo!

homepage. >> okay.. and video is obvious. mobile. i mean, i don't know, i guess i'm an old foge. what's the use of google mobile? >> when you have a mobile device particularly a smart phone, you're always still looking for information. i actually don't think there's much of a distinction going forward between the desk top and smart phone internet experience. you always want more information. google can win when people are using the internet more. their strategy is to have the most share. >> makes sense.. all right. thank you, ben. >> thank you. >> up next, stocks stuck in a rut. today at least. you can't complain about the last week or so. more mixed signals on the economy from today's earnings reports, we'll take you inside the action and have the latest

from bank of america's conference call straight ahead. >> whether a bull or a bear, what's the best way to make money in the market right now? we have some answers coming up in your cnbc edge. you have questions. who can give you the financial advice you need? where will you find the stability and resources to keep you ahead of this rapidly evolving world? these are tough questions. that's why we brought together two of the most powerful names in the industry. introducing morgan stanley smith barney. here to rethink wealth management. here to answer... your questions. morgan stanley smith barney. a new wealth management firm with over 130 years of experience.

>> a j bank of america trading higher. housing starts rose to the highest level in seven months. just one more economic stat to come with index of leading economic indicators out any minute now. i'm courtney reagan. welcome to the second hour of "squawk on the street." i'm mark haines. encouraging housing data. i don't think that's encouraging but there are worries about the quality of corporate profits.

citi, bank of america, ge, the most active stocks on the big board in the wake of their results. citi and b of a are higher. ge is down. they boosted the full year r earning forecast. let's get to rebecca jarvis on the floor. >> i'm joined by matt nesto to break down numbers. kind of a tepid response as far as the market is concerned to these earnings report. we're seeing bottom line growth because of cost cutting but top line growth isn't there. >> that's disturbing. it's sort of like serenity now prayer. you can't deliver on the top line. we saw companies with a top line miss or big declines in top line growth, you can cut cost but at some point you have to start growing revenues again. g mem ge, mattel, all with a revenue miss here today.

that's going to be a continued area of concern for this marketplace no doubt about it. >> there's also the area of concern that is to say maybe we have seen too fast a run-up this week. >> come on. we have. we have. come on. if you look at american express up 20% week to date. even ge down 5% today still 10% in the bag for the week. >> this is an expected pullback is what you're saying? >> it's been light volume on the way up. it's summer. i don't need to remind you of that. >> it's a friday. >> but the fact remains if we turn positive we're down three on the s&p. 25 on the dow.w. we haven't had a five-day rally for eight months. this is the best weekly gain at 6.5% that we've seen since the latter part of march. a heck of a run. >> heck of a run for matt nesto. now we head to the nasdaq and mike huckman. >> the nasdaq is trying to have its first eight-day winning streak in more than four years in what would be the strongest

eight-day gain in almost ten years. the problem is that google is the search engine that's driving this truck downhill. look at this. almost all of the internet related stocks are trading lower this morning with the lone exception of yahoo! up more than 3%. we have apple shares up more than 1%. jpmorgan analyst raising estimates and price target on the stock ahead of that company reporting earnings next week and then check out shares of the pharmaceutical company. this is a small cap company but shares up more than 40% right now with the company this morning unveiling positive late stage test results on its iv drug to treat seasonal flu. check out my blog for more. follow me on twitter. and follow me over to brian at the nimax. >> the bulls are back in charge here. the housing data was bullish. we have the hotel explosions

overseas and news out of iraq that unions might try in the middle of an oil deal with a chinese oil company and government trying to unpldownpl it. we were up as much as 2%. we pulled back a bit as you look at the charts.. we've totally turned things around here. the interesting thing is fundamentals aren't in play as usual. look at the dollar index. to have this rally in the face of dollar strength would definitely buck the trend. i also want to point out the rest of the complex.x. don't forget it was a double digit percentage gainer yesterday. quick look at gold, silver and copper. a little bit muted in trading. firming up there as well. let's take it back to rebecca and mark. >> thanks, brian. >> up next, stock strategy in your cnbc edge.. a trip to earnings central with

joe and david. more from the bank of america conference call. >> and what new york and 16 other states are doing to stop from hemorrhaging jobs and a bake analyst tells us why there needs to be a major financial industry restructuring across the board. "squawk on the street" will be right back. companies on the planetl

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the s&p is down in today's session but on the week it's up almost 7%. next week we have another big one as far as earnings are concerned. this week a 7% gain on the s&p 500. will the stock market rally pick up steam? perhaps it stalled.. either way what should you do with your money right now? joining us with the cnbc edge, david kelly, chief market strategist at jpmorgan funds. right? >> yes. and david hefty. >> in toledo, ohio. david always has a sunny outlook. >> two davids here. >> david kelly always has a sunny outlook. and you take the housing numbers as a good sign why? >> i don't always have a sunny outlook. i smile when i talk about the economy.

i do think it's a good sign. if you look at single family housing starts up about 18% in the second quarter relative to the first quarter. there are still at low levels. the delta from a low level have nowhere to go but up. as housing begins to rebound, you will help stem the loss of construction jobs. you will help support prices. it's very important and positive that housing starts are up. >> don't we have a lot of unsold inventory? >> sure.. you have to think about the natural demographic. the population growth would absorb 1.6 million houses per year. we're only building about 600,000. we could actually push up housing starts and still gradually ease away that inventory of unsold homes. >> mr. hefty, you don't buy into this rally.y. you say it's a rally in a secular bear market. >> that's right. right now being bearish today is nothing more than being realistic about what's going on around us. when we look at the relief rally

right now, we still have demand in this country coming down. it's not going up. it hasn't stabilized. >> you say it won't go up until unemployment goes down?? >> that's right. right now where the rally comes from is supply has to come back online over the last six to nine months bewuwe burned through th inventory. supply needs to reach demand. that's lower than where it was a couple years ago. >> it sounds a little bit like you make the same argument as david kelly from an alternative point of view. david kelly says supply is coming online thanks to housing numbers this morning.g. is that shaping your opinion as more positive? >> it is. when we look at the economy and the recession, honestly today i don't even think we're in a recession today. i don't think we're in a recession. by definition we're having growth and we're growing but what's going to happen is we're going to have a gdp not 3% or 5% but a gdp of 1% at best.

there's three big issues facing that fragile growing economy and those three big issues are next february, the mortgage armageddon starts with 9 million households upside down. this is middle and upper middle class problem.m. these people want to spend. they make up that 70% of our consumer driven economy but they're not going to be able to. the other big thing we have coming is california. for crying out loud. that's a $1.8 trillion economy and if it goes bankrupt it will make lehman brothers look like child's play. >> there are lots of risks out here. people say this economy can't begin to grow until unemployment comes down. it's never done that. in every single postwar recession the unemployment rate peaked in the last month of the recession or after the recession was over. we also have to pick ourselves up into the teeth of rising unemployment. i do agree with david that there are risks out there and the reasons to be balanced. we could end up in a w for any number of reasons. right now the number should be betting on the economy gradually

pulling itself together and markets reflecting that. >> david, i agree with what you're saying on unemployment. absolutely agree with everything you just said. the analysis at the end another factor we have to think about unemployment is this. we have to think about the obama factor. if this health care bill and cap and trade pass and penalize anyone in this country that knows how to make money and create jobs, it's going to not only push unemployment into double digits, it's going to keep unemployment in double digits. we haven't seen this type of growth mismanagement on capitol hill since the fdr administration during the great depression. this will create a long sideways market. >> assuming we agree with your world view, what does that mean for investments?s? >> first of all, you should make sure you're not underweight stocks. within the stock market one thing we didn't talk about is the rest of the world particularly asia coming back

much faster than we are. that suggest technology will do well. you can see that in some of the earnings reports. and i would make sure i have enough money in international stocks. be diversified but don't put it all in bonds or cash when you see a recovery in the economy. >> thank you very much for sharing your thoughts.. >> thanks, guys. if you didn't get enough of them in the first hour, they're back for more of the kahuna and the brain. they'll start us off with bank of america. joe, take it away. >> hefty.y. that's a cool name, isn't it? two davids. a third david right here or brain. thanks. let's recap numbers. earnings per share beating estimates coming in at 33 cents. analysts expected 28 cents. revenues a bit shy of consensus. stock trading at this point is not any of the major reports today except for ge are we seeing a lot of action both citi

and bank of america sideways managing to trade higher even though it had a big week. 7% on the s&p. it's huge for the week. as far as bank of america, we do have mary thompson listening in. she joined me on the set of "squawk box" this morning. had to get up early. came on. don was there. >> it was a highlight of your day, wasn't it? >> the highlight of my day. maybe your week.. >> yes. >> you looked very thin. i want to tell you that, joe. i know you have been concerned about that. the conference call for bank of america continues. i just want to give you a couple statements made by the company's cfo who is on the call right now. excuse my back. i'm turning back to notes that i have. they think they are close to a peak in loan losses. they also think they're close to a peak or seeing a leveling off of some of their home building charge offs there.

leveling off. the company said as far as their financial advisers they said there's been a stabilization. some financial advisers have left following the acquisition of merrill lynch. there seems to be stabilization there and they are looking to hire additional financial advisers at bank of america and merrill lynch.h. just to repeat what was said earlier by the company's ceo, ken lewis.s. he said that the buildup in late stage delinquencies will contribute to higher charge offs as they approach the end of the year. it may peak at year end. they continue to build reserves on this although the reserve build should level off as we move into 2010 and probably stay at elevated levels because bank of america is still fairly cautious. we want to talk about the second half of the year. mr. lewis said he expects a profitability is going to be tougher in the second half of the year in large part because of the positive gains that the company had in this quarter. they don't see that being

replicated in the second half of the year. conference call still going on. i'll be back with other headlines as they cross.s. back to you. >> all right. thanks. we were going to look at citigroup. not that much to say. plenty to say on citigroup. it's funny. it's such at this point a company is very difficult to follow. you're talking about $3 stock. 34% of it owned by the u.s. government. the trends at citi are as important at any other bank given the world wide franchise. it's a consumer bank. it's got credit cards and the same kind of thing that you see at b of a. they reported 49 cents. what's funny is they don't give you any sense as to what adjusted loss operating loss is because it was an operating loss and back out to the gain from m the so-called sale of smith barney which they merged into morgan stanley retail brokerage

unit. citi keeps saying that the exchange is the key there. that will conclude fairly soon. you'll then see what the adjusted stock price ultimately is when they exchange that preferred for common. >> if they did make 50 cents that would be $2. it would create 1.5 times earnings and $2 a year on $23 billion shares they would have to make $46 billion a year. not likely. >> during their best quarter -- >> never made that much. >> they were making 20 billion a year. 20 plus billion a year. >> maybe some day. let's finish up and take a quick look at general electric, our parent company. stocks taking a hit this morning. shares currently down about 5%. earnings per share top second quarter expectations but revenue miss are continuing concerns at ge capital although the unit was

profitable in this quarter and ges ceo says the unit remains on track to be profitable for the full year. to the problematic financial operation of some of the companies that gave us so much to worry about over the last year. ge capital remained profitable which is -- >> you know what naysayers said back then. at the end of the day if you can ride out your problems and continue to earn money, it is what it is. >> and then if you can -- even if you value ge capital at zero, it is probably valued at $10 billion in the marketplace, you try to put value on the rest of the business. there are problems there. we're in a global recession with energy infrastructure is good and other infrastructure is good. media assets and other stuff not

quite. >> not bad. all right. we're done over here. back to you.u. >> thank you so much, david and joe. we'll get over to scott kohn at the breaking news desk. >> big news about mark cuban. he was charged with insider trading. a federal judge in dallas dismissed the complaint against him for insider trading involved a company called mama.com. the judge attacking the s.e.c.'s theory in this case but given the s.e.c. 30 days to file an amended complaint saying that they have not proven that the miss appropriation theory of liability on this alleged insider trading case which cuban was fighting and fighting hard and the judge in the case, the federal judge siding with cuban but given 30 days to file an amended complaint if they care

to. no comment from mark cuban on his blog or twitter page. we'll keep you updated on what he has to say. probably pretty happy right now. back to you. >> definitely want to follow his blog. all right.t. coming up next, what 17 states are doing to save jobs and cue the dancing banana. all right. on a week that has seen stocks close higher every day so far. the ideas share their ideas for moves you should make today. this is friday trade. it's "squawk on the street" on cnbc. world leader in business news. ♪ look at this man ♪ so blessed with inspiration ♪

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we're back. many employers are cutting costs by cutting jobs. a little known initiative called the shared to work program offers a unique program to large scale layoffs. 17 states participate in the program. new york is one of them. joining us to explain how the

program works, patricia smith is new york's commissioner of labor. madame commissioner, thank you for being here. shared work. how does it work? >> you have an employer with 100 employees. bad economic times. you think you'll lay off 20% of your workers. instead of laying off 20% of your workers instead of what you do is reduce hours of all of your workers by 20%. five days a week to four days a week. you keep your workers. those workers are entitled to unemployment insurance for that one day. you have your workers working four days a week making 90% of their pay. when times are good again, you don't have to hire new people. you don't have to recruit new people. you raise hours again. you keep your trained workforce. your employees keep their jobs.. >> how do you protect the system from corruption? >> in that type of situation you have to go into the labor department. you have to present your plan. you have to -- the labor department makes sure that you will lay the people off. they're not part time already.

the plan has to be approved. >> sounds kind of french. >> it is a very popular program in europe actually.. the germans do a lot of shared work in bad economic times. again, it's for employers who say to me all the time, my business isn't broke. the economy is broke right now. i am going bounce back when times bounce back and it's a way to keep your workforce. >> what's the unemployment situation in new york?? >> unemployment situation in new york is not great. it's 8.7%. national is 9.5. city did go to 9.5 yesterday. new york has been better than the national average. unfortunately we're catching up. >> is there enough money in your opinion to help people through this program and when does the money run out? do we need another stimulus? >> well, we actually haven't seen the effects of the first stimulus very much. we have in the unemployment situation because we've increased the unemployment

benefits from 26 weeks up to 79 weeks now. but i think that when it comes to the jobs, we're only now in new york state seeing those jobs getting started. >> what's the top rate of unemployment compensation? >> in new york state? 405 dollars a week. >> in order to get that you have to have been making a great deal of money. my point is some people criticize unemployment insurance as a disinvecentive to find a f job. >> it's hard in new york to live on $405 a week. i'll tell you that. anyone that's quitting their job to make $405 a week has a low level of lifestyle. let's think about that. what's rent in new york city?? >> forget new york city. >> what's rent in -- >> for 405 a week you live under a bridge. >> you're not getting rich on

unemployment insurance. >> did i see in my notes that there was actually a slight uptick in wall street jobs? >> there was. >> that has to be a little encouraging. >> it is encouraging. one of the things that we see is that when you lose a job on wall street, you lose two other soft jobs. so when you see an uptick in wall street jobs, it's hopeful you'll see it in other jobs coming soon. there's a lag between wall street losses and wall street gains and rest of the economy. >> i was surprised that a lot of people haven't taken advantage of your program.m. what percentage of businesses out there stand to benefit and actually stand to become new members of this program over the next six months?? >> i will tell you that in the last six months we have tripled the number of employers participating in this program. it was a little known program. i've been going across the state promoting it everywhere. we've seen a huge uptake..

there are employers out there that would participate in the program if they understood it and knew about it. >> what steps do you make to make sure that you're not creating zombie businesses? for example, a car dealer might come in and say -- he doesn't have a chance to bounce back. >> that's one thing we look at. we ask you to have your plan approved by us. we're looking to be sure you're not a declining business.. the other thing is you have to reduce your workers hours by 20% but not by more than 60%. this is not a situation where you are basically in effect laying everybody off. >> you won't pay the majority of the salary for these people. >> exactly. this is a situation where you get some downtime but not a lot. >> all right. >> thank you very much. >> thank you. >> appreciate the information patricia smith, commissioner of labor for the state of new york. up next, a check on the market

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welcome back. dow in positive territory again

in headlines at this hour, mattel up 6% on better than expected profits. the toy maker ceo says second half revenue will reflect ongoing pressures from retailer inventory cuts. shares of home builders getting a boost from a rise in housing starts. and ticker mi one of the biggest drags on the s&p. loan quality at the bank continue to worsen during the second quarter. >> let's look at the market and the internals right now. the dow is to the plus side by 8 points. it's not unanimous. the nasdaq is down a quarter of 1%. s&p down a little bit as well. check out the internals. all right. we've got a few more losers than winners. that's to be expected. on the nasdaq it's a little bit worse because the index is a little bit worse.. so not too bad. >> it's not too bad.

we've had a great week. >> a great week. >> the man in the middle of both health care and financial reform, senator dodd is also at this center of this morning's "harwood file." >> an interesting senator and point in this debate. senator dodd is one of the most powerful people in the capitol. he chairs the senate banking committee and stepping in as acting chair of the health care committee while senator kennedy battles cancer. he's in the crosshairs of republican targeting. he wants to get some things done and that includes both financial regulation and the health care bill. on financial regulation he has agreement. we talked about this with the republican counterpart richard shelby in concern about expanding the feds role and compromising the feds independence but he has little patience with business complaints for consumer protection agency.

senator dodd told me yesterday that business just doesn't get it. >> you think business is tone deaf on this issue? >> completely. i find it amazing what planet are they living on that they don't understand what's happened. when you get 10,000 foreclosures a day, 20,000 jobs lost a day in this country, the health care, people being wiped out, retirement incomes, 401(k) disappeared at warp speed and then turn around you have no right to insist on protections. >> senator dodd wants to move financial regulation and is going to although on a slower track than health care. health care is moving very quickly. he moved it out of the health committee on a party line vote this week. he's willing to give more time to the bipartisan negotiation going on in the finance committee but he says bipartisanship is valuable only to a point. >> is it clear that this will be a democratic bill that goes through the reconciliation

process? >> i hope not. >> do you think it will be? >> not necessarily. we're in a room here where a few weeks ago by a one-vote margin i got the credit card bill. when we got the bill to the floor and debated it, it passed 90-5. would i refer bipartisan? i would. that assistance you over a longer period of time. given a choice between a bipartisan bill that's weak and doesn't do much for people at home or a bipartisan bill that gets things done and that's where i'm going.g. >> there you have it. he's going to try to move this.. we may end up with a democratic bill and senator dodd told me even though senator kennedy is ill struggling with brain cancer, he would crawl over broken glass if his vote is needed to get this thing through the senate. we'll see what happens the rest of the summer. >> all right.. john harwood, thank you very much. up next, why the banking sector isn't out of the woods yet.

analyst joins david faber to shine the sector spotlight straight ahead.an dick has the fastest serve in the history of professional tennis. so i've come to this court to challenge his speed. ...on the internet. i'll be using the 3g at&t laptopconnect card. he won't so i can book travel plans faster, check my account balances faster. all on the go. i'm bill kurtis and i'm faster than andy roddick. (announcer) "switch to the nations fastest 3g network" "and get the at&t laptopconnect card for free".

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all right. we're back here is how the market looks right now. the dow swung to the plus side by about a fifth of a percent. the nasdaq is to the minus side by about a sixth of a percent. the s&p is down by -- >> a tenth of a percent. >> that would be an eight. yes. it would be an eight. i'm really sorry i steered myself into that fractional cul-de-sac. >> i was rounding down. >> i'm going to have to go with

whatever is up there. .14. let's get back to hq and the brain. >> two financial titans having a very good week certainly. we started the week off with reports from goldman sachs and then jpmorgan out with earnings that were better than expectations. financials nearly doubled since those march lows. what about the sector? we heard from b of a and citigroup. what do things hold in the future? we have our guest in the studio to answer that question. chris whalen.n. thanks for being here. let's start off with b of a. the conference call may have ended just moments ago. what's your take on that quarter? >> the quarter like most of the large banks is helped by subsidies on the cost side. the cost of funds thanks to fed and treasury and repurchase agreements that give them collateral that they can finance. the question in the future is

losses both on balance sheet and off balance sheet.. they spoke to this. i thought they gave us some good color. all of the large banks are saying two quarters out maybe we see a plus in loss trades generally and therefore provisioning would be sufficient and pressure would come off earnings. >> do you believe that two quarters will be sufficient? >> well, here's the thing. i think you will see the peak in that time frame. as ken lewis said today we may stay there for a while. the question i didn't get to ask because i had to get ready for this show is will the offbalance sheet factor drag the number up higher. as ba takes back securitization and provide money for them to pay the investors when they mature, will they have to take a larger reserve position? >> what areas would those securitizations be? >> real estate primarily. the legacy from acquisitions. >> right. from which country? >> countrywide primarily.y. >> what about off balance sheet?

we got some interesting data this week. it shows certainly stabilization. improvement. hard to say whether it will continue in terms of 30-day delinquen delinquency. >> they are easy to assess. there are analyst that can price them for you if you're a buy side investor. opaque structures are difficult to value. that's the problem we've been dealing with for the last 18 months. the real question comes if we get unemployment over 10% and see loss rates on all kinds of collateral but particularly mortgage collateral go up to levels we haven't seen in a long time -- >> do you think that will happen? >> it's possible. the reason is that i just don't see this economy bouncing back. i don't see that large chunk of unemployed americans finding employment easily in the next

couple of quarters at least. >> right. that cheap money will continue to be out there. bank of america will continue to churn out earnings as will -- >> the problem is you see cash flow on assets falling. this is represented also in the off balance sheet structure. when they have to finance a securitization to go to maturity, they say assets weren't par. >> so many fail. >> they short funded structures during the bubble. the assets wouldn't quite cover it. up until around 2006, 2007, the industry was aggressively substituting collateral and it stopped. these structures have been on their own. >> they spent a lot of time on b of a. let's talk broadly about banking. you have been realistic and negative. are you changing your tune??

>> if you look at numbers like bank of hawaii -- these are companies that take hard nose position on credit. they want to get paid back. it shows. they are efficient. well below 50% efficiency. profits fall down to bottom line. they are still expensive. in some cases they trade 1.5, two times buck. southwest exposure to m&i. they slowed down their reserve build. everyone says is it time to buy? are they done with the reserve build like we talked about with bank of america or do we have to wait and see if they need to add reserves they end of the year. we have to wait if they have a lot of exposure in problematic areas or southwest or even metro

areas. it will work its way through. >> if i just wait to get the answer on this, i ultimately miss the opportunity. >> precisely. here's the thing i keep telling my clients. we have to stop thinking about banks as though they were tech stocks. that's are meant to be dividend placed. they're not meant to be capital appreciation place. realistically if you look forward three to five years in this industry, what's your run rate a week, half of what it was the past five years. put that into your model. it's not normal to churn that out. >> that's what i'm saying. >> if the average in the industry next year in a good year couple years out is high single digits for return on equity, they shouldn't trade at three times book. >> do you think it will be high single digits? >> for the average bank, yes. they'll go back to being utilities. that's what they historically were. >> they won't go back to taking enormous risk? >> some will. goldman sachs is not a bank. don't think of them as a bank.

>> right now they are. >> they're trading debt with a private equity fund and they are paranoid and nimble. i have a positive outlook because i think they'll make money. easy to shift the business model. very difficult for the commercial universal banks. >> i need a two-word answer on this. future of citigroup. >> restructuring resolution rebirth. three words. >> i like the three rs. chris whalen, thank you. appreciate it. senior vp manager director institutional risk.. >> a quick check on what's making news on outside of the business world. monica joins us from msnbc. at least eight people dead in indonesia after terrorist attacks at two american hotels. investigators say suicide bombers disguised as guests set off the bombs.

more than 50 people were wounded in this blast. no claim of responsibility. pope benedict xvi undergoing surgery after breaking his right wrist in a fall. he slipped in the bath while vacationing. he celebrated mass and had breakfast before going to the hospital. president obama urged african-americans to seize control of their own destinies but he also acknowledged that racial prejudice persist today. the president's speech served as platform to push the administration's agenda including health care reform. a georgia police officer called a hero after rescuing a woman from a roaring blaze. look at that. sparks from a blown tire ignited that van and an entire family of four was still inside. three family members escaped on their own but their disabled mother was trapped inside.. the officer pulled her out to safety. the mother and her daughter suffered burns but they are expected to be okay.

amazing stuff. back to you. >> you know what's amazing, we so often get guys after the fact and do a quick interview with them on the air. they say the same thing. i was just doing my job. >> good people. thank god we have people who are out there doing that job. >> you take care. >> you, too. >> should bank of america be on your buy list today? first, melissa francis. what's coming up on "the call"?? >> i love the way you say my name, mark. coming up on "the call," we're all over the big three earnings that came out this morning from ge, citi and bank of america. mary thompson is on citi's conference call. and as cit races to avoid bankruptcy got us thinking why didn't the government bail them out? some are asking are big banks more important than small businesses in reviving the economy. all that and latest market news and reaction only on "the call" at the top of the hour. first "squawk on the street"

back after this break.

. time now for the friday y

trade. this weekend, bob pablick, b bannian partners, and i bet it's a partying group. start with the party man, b b mcginn. what's on for weekend, bernie?? >> i've got three of them, but i think you can start with bank america. they've had a little by of a run-up in the last couple of days, but i think that long-term, you know, the action in the banks the last couple of months really has been about stabilizing the system, and now we have moved on to a new phase, which is basically clean up the balance sheet.. and i think this will allow bank of america to concentrate on their core businesses, which are banking, private welling management, brokerage, mortgage origination. and those type of things. >> bob, what's your short-term take here now? >> i also like bank of america, but i think what we're going to see is this market, we have rallied up on some better earnings reports. but i think we're going to see a

bit of a pull-back, and i think we're going to see active in the pull-back, because we haven't seen the tremendous volume increase is you see a move up in the s&p 500. a resistance level, if we can get through the resistance level on convincing volume, that would be a very positive signal for overall market. short term, i like bank of america, as well. the stock has formed its cup and handle pattern, and it's been in this consolidation phase. cup and handle is a technical pattern, a very positive technical pattern. >> we just had a head and shoulders -- >> everybody was saying head and shoulders, but you have to look at volume with technical analysis. the head and shoulders pattern really didn't sort of get confirmed on the volume.e. you're supposed to see declining volume. and if you looked at the right shoulder of that head and shoulders pattern, it really didn't confirm that head and shoulders pattern.n. but anyway -- >> this is a cup and handle.. >> this is a cup and handle, and actually a very positive pattern. also with the consolidation for june. another short-term idea, i like

microsoft. at bannian partners, we talked about a lot of technology and microsoft is another name to bring to the party. they're coming out with this windows 7, which is a very -- getting a lot of interest from the overall market. bing is getting a lot of interest. and i think for microsoft, they're going to come out in line and stay with positive things with window 7, with bing with the office suite. >> they're pushing to get on the internet, where google is pushing to get on the computer. >> people are tired of searching on google. google still has the majority of the search engine searches, but i think a lot of people are ready to sort of move on. and i think bing is going to capture more market attention from that. microsoft reports next week. look for an inline report and very positive signal. they're trading above 24, which is a june high. and so i'm encouraged by microsoft. they have a short-term target around 27 in microsoft with a longer-term target of 33.

>> let's give bernie a chance to make a case for hewlett-packard. >> it's selling pretty cheap. the ack which wigs of eds has allowed them to cut $3 billion off the cost structure. and, you know, as the economy improves, as businesses get more confident, as the bank system becomes, you know, better and more reliable, you know, the sales will pick up. i think you'll see p/e expansion and i think you'll see earnings expansion, as well.. >> all right.. bob and bernie, thanks so much to both of you. >> you're welcome. thanks for having me. >> have a great weekend.d. a check on the markets coming up right after this. companies on the planet mol

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