we look at everything in the business. anything that we can produce a good product and make money and give the public a good price on it. years ago i was back in new york and i did eight interviews in one day. and "sports illustrated," a guy got there late, and he says isn't this kind of a stretch for you to go into the cell phone business? and i says, well, we not only protect your body but we protect your toys. and now we protect your pets. >> this is coming out next year, next spring. one of your licensees developed this for about $150,000.. you've got everything here. on homer you've got the backpack. you've got a life vest here. you've got water bowls. my favorite is under here, the aqua booties.. and when they came to you with it, they said we want to make something for dogs, what was your first reaction? >> well, i like dogs. i like pets.. so i said, well, let's look at it. we looked at it. quick has been a very successful licensee. we had the largest business this year in history. and quick had a huge year, too.

so i said, you know, let's give it a shot, we're going to -- they put a lot of money into this to get it off the ground. >> bob meistrell, thank you. they expect first year revenues of between 1 and 4 million dollars. erin, back to you. >> thank you, miss jane. have a wonderful weekend. all right, everyone. thanks so much for watching the show. final and most important hour of the trading day coming your way in just a couple of moments. we'll see if all three indices can manage to get into the green. in the meantime, have a wonderful weekend. i'm going to be on vacation next week, but i'll see you all back in about a week's time rested and ready to go. it is time in just about eight seconds for "the closing bell" with maria bartiromo. >> announcer: this is cnbc.com "news now." cnbc's david faber reports cit's talks with potential financiers continue with discussions centering on a debtor in possession loan. accepting ious for another week as state lawmakers continue to break a budget impasse. and delta airlines is raising airfares by $10 per round trip.

if matched, it would be the third successful fare hike by u.s. carriers in the past six weeks. that's cnbc.com "news now." i'm julia boorstin. stocks are limping into the weekend here today, folks, but that four-week losing streak is over with. our best weekly advance since the trough in march. hi, folks. welcome to "the closing bell." i'm matt nesto. maria bartiromo is going to be right along any moment now. but as we take a look at this marketplace here today, we're looking at a mixed situation. it's certainly been interesting from the outset. we have some of the biggest members in the dow duking it out at the top and the bottom of that index.x. but the dow right now up 22 points. 32 points of that 22, i remind you, is all coming from one stock. if you can guess it i'll give you the answer in a couple seconds. the s&p is trading lower today, and the nasdaq right now is managing to squeak out a little

bit of a gain here today. but the big story is still going to be that weekly five-day haul that's seeing all three of the benchmark index pushing their best five-day advance that we've seen since the trough in march. if we take a look inside the dow here today, as i mentioned, ibm the single best performer of the day, accounting for more than the full gain of the dow itself. 32 points. because it accounts for 10% of that darn index. if you take a look at the bottom, it's bank of america and ge duking it out for the losers. all three of them reporting earnings. of course ibm overnight i know and bank of america and ge this morning. citigroup also out with results. it's been a head scratcher all day long for analysts and reporters and investors alike trying to figure out exactly what's going on. but the truth of the matter is you forget about the sale of those morgan stanley assets and you have yourself a losing situation. so there's the earnings story here today. two red -- no, one green, two red, and an uncle on the bottom.

see, the market can't even make up its mind on this one here today. but if we take a look inside this situation, we had that huge number bounce, if you will, in the housing starts data. the biggest jump we've seen in four years. to the highest level we've seen of the housing starts this year. you have to keep the context in mind, though. it's helping the builders, shire. and the builders themselves are having their best week in months. but they're also coming off a four-month low. but you have to keep in mind and remember that the housing starts, the 580,000, it's the third lowest we've seen precurrent crisis. so if you go back 35 years or so, 500 and change is not really getting it done in the starts. yes, i understand it is a bounce off the bottom.. if we take a look at some other strength here today, we're seeing energy stocks on the rise, builders doing well as i mentioned. but the weakness right now on some of the industrial stocks, that's being held down by general electric. the utilities are hurting here today. as well as the health care stocks. let's take a look at what's

happening. some of the other exchanges right now. we bring in our market reporters and we start out with mike huckman up at the nasdaq. >> i'm at the green place, and if we can hang on to this, matt, this will be the first eight-day winning streak for the nasdaq in more than four years, and it will be the strongest eight-day gain in almost ten years. a lot of stocks to talk about in my space. biopharma. the fda announced today that teva pharmaceuticals, which is down .7% right now, is voluntarily recalling two lots of an anesthetic called propofol. now, this is the same drug that was reportedly found in michael jackson's home. a company spokesperson tells cnbc that the d.e.a. has contacted teva about one specific lot of the drug. but the same spokesperson says that that one lot is not part of the two lots that it is voluntarily recalling this week. so read into that what you will.

we've got biochris pharmaceuticals up 40% on positive flu drug data. lupus drug data expected out on monday. finally in my beat gilead sciences up 2% on a new deal with j&j on a one a-day hiv/aids drug. of course the big story here, though, is google. and that stock is dragging down the whole internet-related sector with the exception of yahoo, which is up more than 4% right now because oppenheimer raised its price target on yahoo, basically based on a read-through from google's results. and finally we also had a price target raise and an earnings estimate boost out of jpmorgan on apple. that stock's up more than 2.5% ahead of its earnings report coming out next week. for more check out my blog pharmasmarket.cnbc.com, and you can follow me on twitter at mhuckman. >> thank you very much, mike.. i'll take it here at the nymex. want to just talk about how commodities across the board had

a strong week, but today with oil there was a bit of a breakdown and a trend. usually, when you have strong dollar, weak s&p 500, that has meant weak oil prices. well, not today. take a look at oil versus the dollar index. the dollar stays firm throughout the whole day. and as you can see, oil gained momentum throughout the entire day. it's one of those things where a trader told me just the other day that oil was most sensitive to the dollar. well, the thesis fell apart today. you want to know why? there's a few possible explanations. one is we really turned today. we were negative when i came in this morning. we turned on that house starts number. that definitely bullish. there's some geopolitics all across the world, whether it's protests in iran, potential union issues when it comes to an oil deal in iraq, and even some supply output concerns in nigeria. and then just about every trader said no one wanted to be short going into the weekend. take a look at the whole day just with oil. it finishes off the highs a little bit, but this is the first up week in four weeks. so it's a very strong finish. look at the whole complex, actually, reformulated heating oil, strong throughout the day.

you take a look.. it lagged toward the end but held up the double digits percentage gains from yesterday, which is really important. i just want to point out with the metals, they sort of trended sluggishly with the rest of the commodities today. but all to the up side for the week. and also, copper up nearly 10%. some people betting on a bit of a rebound here. back to you. >> all right, schak. coco's going crazy too. you know who else is going crazy, the stock market. let's wrap up the week that was. i'm joined on the floor by lee munson chief investment portfolio asset management. and david darst at morgan smith barney. the guy with more business card print than anybody ever. >> thank you. >> we're having the best week for stocks that we've seen since the trough in march.. a lot of people saying thin volume, summer, whatever, that we're going to give it back next week. >> matt, the bullish to bearish ratio is right at the same level it was march the 9th. that's 27% bulls, 54% bears..

this pullback we had, this 7%, 8% sell-off that this week has now reversed is basically the sentiment is still very negative.. valuation is not the key determinant. the key determinant will be earnings. you look at ibm, some of the drug stocks this week, google this week, the earnings have come in nicely, and the guidance is coming in nicely. what management's talking about, they're sanguine, constructive, positive about the future. intel is another one. so we like the market here and can see it run some further. >> so is this a bull and a bear? what do you think? >> if we close positive on the nasdaq today, it's going to be eight days straight.t. that's only happened four times in the last 16 years. i've been very bearish throughout most of the year, but i've changed my stripes. last week i got fully invested, got rid of my hedges. i covered my shorts. and this week usually i sell into the strength. i've been doing that. but i'm looking to buy some quality, some stwokz a little bit of beta and some

diversification. >> sow think there's some follow-through ahead next week?? >> i think so.. we had a head and shoulders formation happen last week, but it violated that technical pattern. so as a bear i have to respect the violation of head and shoulders. it suggests that we're going to go back up. >> dave, we take a look at all the things happening, watching nancy pelosi, speaker pelosi was out again today, talking up president yesterday, health care. it's a giant, expensive beast that even the cbo has said is not going to cut costs. >> matt, 100% correct. i think the fact that it's run into some sweating is another thing that's helping the market lift. that was a cloud hanging over that. i think part -- who's going to pay for this? and it's going to be a lot bigger than people thought it was. so i think the scaling back of expectations, the scaling back of the uncertainty, that's helped the market lift as well. it was the same as earlier this year. you had nationalization, bonus callback, and punitive taxes. and when those moved away, that was as important as green shoots. that was important as the stimulus, stress test, and all that other stuff. and this is basically a

reduction in the size of that cloud outside, which was the size of this health care. >> memphis or national. let me ask you another thing too. a lot of the story at least in earnings season so far has been the top line miss. i mean, that's not good. it's, you know, full respect to the managers who can do what they can do and do what they can control and manage the bottom line, but ultimately you've got to grow those revenues. >> over 60% of the earnings, i mean, they beat the estimates, but sales are down on the majority of what's been reported. i think you're going to see some weakness in retail, but overall i think we're going to rise here. i think we're going to recover next year, and i think people e have to be cautious. they just have to buy quality and start getting rid of the junky companies in their portfolio. >> you mentioned it earlier.r. you're going quality. you and i differ on what quality is. >> when i say quality, i like ebay. i think it's a quality retailer. i like heinz. i think most people would say

that's a quality company. >> okay. >> and i think bank of america, which -- if you own a huntington bank share, keycorp, i think that's the crap you've got to get rid of. and we can argue over a beer about bank of america, but i still think relatively speaking it's a bellwether and i think it's going to last. >> we've got to run. dave darst, always a pleasure. lee munson, appreciate it. and we'll continue our quality discussion. what have we got? about 45 minutes until the close here. can't look at the clock on the wall. but the dow is still clinging to a little bit of a gain. 18 points. the s&p can't turn positive. the nasdaq is too close to call. we will continue to take a look at it. also, you know, next week is going to really get busy on the earnings front. what are those numbers going to say about the health of corporate america? probably an awful lot. we've got the scoop on earnings central. plus, housing starts. as i mentioned, huge, big month there. the second straight monthly gains. are we seeing something sustainable going on here, or is this just sort of a wiggle along

the bottom? and after the bell we've got jobs and health care reform.m. more taxes could be on the way. but what kind of impact is that going to have on the job market here and away from wall street? that story at 4:00 p.m. eastern but first let's take a peek at the most active stocks here at the big board. the most innovatie companies in the world know that connectivity is about reaching further, faster than anyone else. together, we're helping to shape the exchanging world. nyse euronext. powering the exchanging world.

there is a live picture of the podium at the white house. we are waiting on president obama to come out and give us a live press conference on health care. soon as that press conference begins we'll take you back to the white house for that developing story. meanwhile, it has been a busy week for earnings.. welcome back, everybody. to say the least. we had intel, ibm, google, ge, goldman, citi, bank of america, all out with results. what do the numbers really tell us about the health of corporate america right now? let's check in with michelle caruso-cabrera. she is at earnings central at the nerve center. >> and at earnings central, maria, we've got piles of upside surprises from glts gls, jpmorgan, ibm, google, bank of

america, even the toy company mattel. beating the numbers is what helped drive the markets higher this week. but when you drill down into the revenue number, the top line as it's called, things didn't look so good there.e. as peter bookbar at miller tabak point out this is a testament to corporate america's ability to keep a lid on costs and improve margins but it also highlights the economic environment remains tough. mike darda still optimistic. he says this is the second quarter in a row earnings are coming in better than expected. the ratio of upside surprises to down side surprises nearly 4-1. he sees that as more evidence that earnings have bottomed, and he thinks it's possible if history repeats itself profits could rise 50% over the next 12 months. very easy comparison year over year. now, next week is even bigger for earnings. 25% of the s&p 500 telling us whether or not they made money. we're going to hear from a dozen members of the dow. household names such as mcdonald's, caterpillar, merck, microsoft, amazon, apple. they're going to give us even more in-depth insight into what

is the most pivotal earnings s season we have seen in years. and they'll give us some clue as to whether or not, maria, the economy is finally turning. back to you. >> it's an important check.. thanks very much, michelle. let's get another take on today's market action. we turn on that cnbc investor network. fire that up web cam connection. straight today from annapolis, maryland. adrian day is with me, chairman and ceo of adrian day asset management standing by. adrian, have you been investing based on what you've seen out of earnings? >> no. we've done very little investing in the last couple weeks, to be honest, maria. to me stocks are -- u.s. stocks, and global stocks, for that matter, are neither compelling value that i want to see aggressive buying, nor are they particularly overvalued and i want to be selling too much. so we're just sitting on the sidelines. and frankly, it's not very exciting for me as an investment adviser, as an investor. probably not very exciting television. but i think sometimes you just have to wait. you just have to sit out and wait. >> how much cash are you sitting on right now, adrian?? >> we've got about 35% cash now

in our accounts. which is high for us. it's the highest we've been for several years. >> yeah. i would imagine. it's high for anybody, given that you're getting paid to invest and get returns in this market. how do you do that? >> we hold a lot right now, we hold a lot in gold, we hold a lot in asian stocks. we hold a lot in resource stocks generally. i'm pretty comfortable with where we are right now, but we've been taking profits over the last couple months, frankly, into this rally. and you know, when we look at earnings, i certainly agree, earnings to me are one of the key determinants in the next couple of weeks as to whether this market is going to -- the u.s. market is going to finally be able to shoot past this resistance that it has been bumping up against for the last several weeks. i think it's an open question, frankly. because as we just heard, some of the earnings' top lines are better but the revenues are not necessarily better. and as we just heard the more you drill down -- you look at ibm, for example, not only were revenues down but the only area of the business that was really

strong was government. well, you know, you can't build a strong economy on government revenues. you can build a strong company but not a strong economy. >> that's a very important point, adrian. thank you. very quickly, do you think the market will be higher or lower at the end of the year? >> oh, gosh, you're asking me to predict. i'm a value investor, not a predictor. but i'm guessing lower, frankly. >> all right. adrian, we'll leave it there. have a nice weekend. >> thank you. >> good to have you on the program. we so appreciate it. we are in the final stretch here, 40 minutes before the closing bell sounds on wall street. dow industrials extending what has been a powerful week, matt.. >> unbelievable. >> only 15 points higher today but we've got real momentum in this market. >> maybe we should have taken friday off. president obama isn't, though. he's getting ready to talk to us about health care. three in two days.. press conferences on health care.. we will go to the white house as soon as it gets under way. >> but first here's a look at the bond market today. let's check how interest rates are doing and the price of bonds. back in a moment. ♪ on this endless ocean

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welcome back. we were watching this market trade higher as we approach this final stretch. dow industrials up about 18 points here. we've got the nasdaq composite also showing -- actually, the nasdaq is fractionally lower right here. let's get the opinion right now of warren meyers of walter j. dowd and steve grasso of stuart

frankel, both cnbc market t analysts. gentlemen, good to see you. >> good to be here. >> what's the most compelling thing happening today? >> i will tell you, for the last two weeks my clients have been covering shorts and getting long.. i think your other guests have definitely said the same thing. so i think no one's really shocked. but we're seeing, you know, a lot of the rotation that we're seeing in the financials, we're starting to see spread to other sectors. >> you never know because it could have started as a real short squeeze, but it feeds on itself, doesn't it? >> absolutely. it certainly does. i think the shorts all got scared on a nice rally we had since the middle of march on. we haven't seen too much shorts coming in or even attempting to come in to dampen this little run we've had. and like you said, we started the short covering. i think it's rotating to going along a little bit. >> where do you see conviction on the buy side? are there areas you feel you're seeing consistent buyers day in and day out? >> tech has continued to be strong. but we're also seeing new buyers in big pharma. so you see this watered down new health care plan. i think that's going to add some

bullish tones. >> i certainly see the tech side. you look at a stock like ibm today. obviously, they had nice numbers. but that's really held everything up. without that today i think nasdaq would have been down significantly. >> i guess it's because people are looking to follow growth. where is the growth in the economy? and we know we're still seeing growth in technology. >> we're going to see growth in technology. the balance sheets look good. but until we start to see the jobs numbers start to improve, even though it's lagging, you're not going to see any real growth in this market. >> and are there areas that you see in terms of people avoiding, warren? what are people still staying away from?m? >> that's a tricky one. you've got to look at the home builders. anything i think to do with the consumer on the home side of it or maybe in the upper end retail people are still staying away because they're very concerned the consumers don't have the money to spend. >> and you still don't see e people making new bets in financials. either they're just trading or they're not making new bets. >> any talk on the floor or in your circles about the cit situation? you mentioned retail.

cit is the leading lender to small business. particularly the garment center. so you wonder if you're actually going to see some situations worsen, deteriorate in the retail sector and the garment industry as a result of this. >> that certainly could have a huge impact on where we're standing now, in new york city. i think that's why you're seeing jpmorgan have some interest there and maybe goldman sachs and a few others, to try to come in and step in where the government isn't because they y see the importance of trying to stabilize that area. >> which is all healthy and i think it's a good sign that we're moving toward the private sector handling it versus the government. so i think we're still moving through that mine field of where the government tent is going to open. >> a lot of uncertainty about that.. looking at the market right now, how much more momentum do you think it has? are you looking at certain levels in this market that perhaps could represent barriers? what do you think? >> the big level is 946, with the highest level i think it was around june 12th. >> on s&p 500. and right now it's 938. >> 938. so that obviously was some resistance yesterday, it's probably going to follow through on the resistance next week.

who knows? it looks doubtful. >> i pretty much agree. 946, 950 range is a key on the s&p. we've had a tremendous run-up this week.k. where are we? we're up almost, what, 8% give or take -- >> big move. >> that's a huge move. i would expect a little relaxation. maybe a minor sell-off or a little profit next week. but again, it depends on how these earnings come in. if they come in strong -- >> usually in the earnings season we wind up getting not so great earnings in the beginning part of the earnings season and then we scale up going forward. this time it was totally different. so we want to see if there's any follow-through going into next week. the fear is we're back down to the 900 level. >> great insights. thank you. steve, warren, good to see you.. we really appreciate it. matt, over to you.u. >> all right, maria, thanks very much. the dow still positive today up about 12 points right now. big week, though. that's what we're focusing on. we're also focused on whether the nasdaq and the s&p can finish positive on the session. housing starts, you saw the surprise number today for the month of june. is that a sign of a recovery in

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time now for the "fast money" final call. my next guest says that the rally off the march lows is still intact, and for investors that means opportunity. the bingo, "fast money" contributor bill stra zooulo. at bell curve trading. joins's now to explain. so it's still intact? how long? >> matt, i think the key is as long as we stay above 8400 in the dow, 1750 in the nasdaq, 1400 in the nasdaq 100 and the 900 area in the s&p, you've got to be a better buyer looking for places to get in the market. now, it's not the same across the board. i still think the nasdaq is going to be where the strength is. i think the dow will probably be the weakest in the s&p somewhere in the middle. right now we look to buy the nasdaq 100, which is what we

like the most, 1490 to 1470. and i think you can try to get long the s&p as well in front of 900. >> i mean, this is just a phenomenal week.k. the best week that we've seen since really the trough in the market four months ago. i mean, historically you would expect to see some sort of consolidation, especially when you combine that with over 150 earnings reports out next week. >> yeah, matt, i don't think it's going to be necessarily easy, but the bottom line is the march up trend was challenged last week. it held. i think it held convincingly. and now you've got to look for places to get back involved in the market. because i still think you can get the s&p up to 1,000. so i still think there's more to go on the up side. we have that 950 level to deal with. that's been kind of rock solid resistance. but we think you do get through there. so i'm a better buyer on pullbacks to try to play this next leg to the up side. >> in this mix of buys, you just flashed on the screen, bill, you

like the financials, you like the biotech etf, and you also like the industrials. a little bit for everybody in there. >> well, first with the biotech, the biotech outperformed the broader market since may. and we've had our clients get in anywhere from 89, 90 and wrote this bbh trade up to 97. it would be more profit-taking mode there. i think you get a pullback to the 90, 89 area, then i'd look to buy again. in the financials the xlf is caught in the 11 to 13 range. we glot a client in around the 1 area, 10.70. then the key is can we break to to the up side? i think we'll get a good idea of that next week. >> thanks, bill. we appreciate it. we've got to jump. but folks, just want to remind you, coming up on "fast money," earnings are of course driving the s&p 500 to the best gain that we've seen since this rally began in march, and our all-star traders are going to give you the very best way to continue to ride the bull if you dare. plus the worrell series of

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welcome back. in the first half of this year nearly 2 million homes went into foreclosure process. that is 1 in 84 houses in the country. the obama administration has tried to fight foreclosures with a $75 billion plan. the experts say it's not stemming the tide. we look now at where the effort is falling short and what glimmers of hope are there right now on the market. joining me is mike larsen, housing analyst with weiss research. jack mccabe, ceo of mccabe research and consulting.

also joining us. and gentlemen, it is good to have you on the program. >> hi, maria.. >> nice to be here. >> so the foreclosure numbers obviously not pretty. this is a situation that continues to deteriorate. mike, why is that? with all of the stimulus on the table, what do you think is falling short? >> well, i think we have two main enemies here for the government. you have rising unemployment and you have falling home prices. as long as more people are losing their jobs, this might be great if the lender could be willing to cut their payment from $2,000 to $1800 a month. but if they're unemployed they're up a creek.k. >> jack-s there any evidence that these government programs to save homeowners is actually to save homeowners is actually making an impact beyond just the margins? >> not that we've been able to >> not that we've been able to see or track so far, maria. they're able to refinance some people. and we've seen some very, very limited success so far.

but the problem is not just with restructuring the debt as we talked about before. it's the principal amounts of these notes. that even though if you refinance them with the principal balance being 150% or more of what the note value is or what the market appraised value reit now, these people do not have any hope. so we're going to continue to see this tide of foreclosures. >> well, what about the inventory -- >> absolutely. >> go ahead.d. i'm sorry. >> well, no, jack's absolutely right here. the problem is that the administration's program is all designed at extending terms of loans, you know, giving any kinds of interest rate breaks to lower the payment. but you're not doing anything about the fact that the borrower is upside down. lenders have been extremely reluctant to actually cut the amount people owe. and that's why a lot of folks are just walking away from their homes anyway. >> so what about the inventory? inventory is a key part of this story, isn't it, mike? because you've got a lot of f homes on the market and many of them are new construction and

obviously that's keeping pressure on prices. >> well, the builders have done, to their credit, until the last couple of months, done a good job of cutting back on construction, which has brought the supply down on the new housing market. but on the existing side it's a real different ball game. you have somewhere on the order of 1 million excess homes in this country on the market. and you look at something like the realtytrack figures this week, 340,000 foreclosure filings a month. that's bringing a lot more new supply into the pipeline as well. well. >> jack, do you agree with that? how would you characterize the inventory part of the story? >> no, i agree. we are seeing some sales increases right now according to different indexes like the association of realtors numbers. there has been some drop in how would you characterize the increases right now according to inventory. but i don't think it covers the but i don't think it covers the thousands and thousands that are somewhere in limbo right now, maria, that are either at clerk of courts offices awaiting of courts offices awaiting foreclosure proceedings or sitting with the banks in their reo portfolios that they're pulling off the market and not reo portfolios that they're

selling now trying to stem the tide of foreclosure sales or in their non-performing loan portfolios as well. portfolios as well. i think that's going to continue the flow of the inventory and it's going to be a distressed nature moving forward. >> and jack, you say that the banks right now are rethinking their foreclosure process. what are they doing with the what are they doing with the foreclosures in their possession? >> in many cases right now, maria, they're filing for foreclosure but they're pulling the foreclosure sales on the courthouse steps. and it's for two reasons. one is once they take the one is once they take the property over they're responsible for the maintenance, for the homeowner's association dues, for keeping the electricity on. and it's an incredible cost for these lenders right now with all these bad loans. on top of that once they take the property back they're looking at selling it for considerably less money than what that note is in many cases, and a lot of times they just don't have the reserves to cover the losses on these.

the other thing is they're also waiting to find out what the next stimulus is going to be from the government. are they going to have anything as far as principal reductions on homes for that 37. >> so they're just holding on to -- they can't just hold on to homes and not do anything, homes and not do anything, though. i mean, at some point something's got to give, right? >> you can only put off the grim reaper for so long, maria. but we're seeing a lot of them do it as long as they can. we're looking at somewhere i think in the nature of 200 to 500 banks that are going to go belly up in the next two years. and a lot of that's because of their bulging real estate loan portfolios. whether it's in residential. many others now are going to see it because they have a lot of i mean, at some point but we're seeing a lot of them we're looking at somewhere i 500 banks that are going to go and a lot of that's because of commercial. they've got a lot of office and retail loans that are coming up for refinancing. the money's not there to refinance the projects. >> part of the problem, mike, is people can't get mortgages. it's tougher to get a mortgage, even though prices are down. so mike, are lending standards easing at all? final question here. >> no, not really.

i mean, this is really a fannie, freddie, fha market. fha market share is the highest it's been in a couple of decades now. so if you're trying to find an easier credit standard or low down payment loan, fha's really your only option. it's out there, but all the private guys are pretty much gone. >> we'll leave it there. gentlemen, great to have you on the program.m. we so appreciate your time.. thank you. we've got 20 minutes before the closing bell sounds. this market is up but just by a fraction. nine points. i'd call it a victory after the weekly pad on the up side. we are slipping in a short break and then we'll hear from president obama. he's talking about health care, and we're going to take you to the white house live next.t.

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today after better than expected earnings. the company reported adjusted earnings of 79 cents a share. better than the 50 cents analysts were expecting. the manufacturing company also boosted its earnings guidance for the year and the stock sees a 10% move today. callaway golf stop down after the company announced it no longer expects second half earnings to be better than last year. it estimates a drop in sales of between 15% and 17%. that is for the year. the stock down 10 1/2%. and first horizon national taking a hit after the company reported a loss of 58 cents a share. worse than the 31-cent loss that analysts were calling for. now, this marks the fifth straight quarterly loss for the tennessee-based bank. and the stock is down 4 2/3%. >> it used to be first tennessee, believe it or not. anyway. for more on the market now i'm joined by steve neimeth, portfolio manager at sun america asset management. so steve, we're talking about earnings season here in the break. obviously, we had three dow members reporting today,

including ibm overnight. two of which were the worst performer and one, ibm, the best performer on the day. really giving us that tug of war feeling that is earnings season. >> yeah. there's a lot of action in the market. it's very confusing. i think i'm going to spend all weekend long looking at those releases. they're very complicated. ge, bank of america, some good data coming out of bank of america. some of the credit metrics were a little bit better. the valuation of the company's pretty decent, but the outlook for revenue and growth is pretty minimal. so pretty confusing. with the ge number, i mean the ge tax rate is just about at zero. so i think there's some concerns whether that's sustainable and what the earnings might be a year out, which is expected to be about a dollar. >> so what do you want to do, then, from an invest standpoint in an environment where you have all of this noise and sort of mixed signals? how are you investing? >> very confusing. so you kind of take a barbell strategy. are we going to see deflation, which has kind of been the bet that we've had on, for a year? >> before inflation. >> before inflation. so what we're doing is very recently we've brought back our

barrick gold. we owned it earlier this year, bought it in the lower 20s, went up to 30. thought it was fairly valued. goal hasn't moved. nor have the stocks.. they've moved together. we saw ppi and cpi moving up a little bit. some of the components dell uses to make computers are going up. we're seeing a little inflation. i think investors need to have some inflation bets in their portfolio, whether tb a little bit of gold or a little oil.. >> so you want to buy the commodities producer on the bet that we will see demand for the likes of oil and gold and copper, iron ore, steel, whatever it is, from economies around the world? >> we don't own copper, and i kind of wish i had bought it a couple weeks ago. but over the last 12 months if you look at the energy sector and the materials sector of the s&p they're roughly same performance year to date. basic materials have done a little better.. we're overweight energy right now. we've had a little gold. we don't know that the construction numbers can continue to hold up in the u.s. and china might voe down.

so we like energy a little better than the materials. >> what do you think about health care? we saw the markets make up in a week what it took them four weeks to do to the down side. i mean, in health care it's been slammed down. arguably people are going to want to go back to that growthy side of health care like the hmos that were so hot beforehand. >> we own united health care, like it on valuation. some of the news coming out of the government on what the plans are for health care, kind of scary, especially for the drug companies. we've recently sold most of our, or all of our biotech companies. we're not too sure how the government's going to reimburse drugs that cost $50,000 a year. hmos may be the solution. we're buying those. the joint companies like zimmer are looking kind of cheap here. we're not ready to buy those. but there is some value in the group. we're underweight right now because we think there's more risk. >> so is there anything in the health care proposal on the table out of the administration that is going to dictate your investing in health care either way? >> i think our bet is within that small sector for us is

playing the hmos. they look cheap. we think ultimately the government will see them as the solution to the problem in implementing their plan on lower health care costs. so united health care. >> you know, another theme, i talked about this earlier with a guest, dave darst, but i talked about the revenue missions. ge, mattel, ibm, all with revenue misses. >> yeah, it doesn't look very good. the valuations at the company are cheap but you think about the outlook. another indicator that you guys have commented on which is what warren buffett looks on, the rail numbers. they're weak. they're weaker every week. luckily that industry is getting pricing, which gets you worried about inflation.. but hopefully when the economy comes out of this either in the fourth quarter or the first part of next year, the leverage of a slightly higher revenues to operating margins could really set the market on fire. we could have a good market. >> it's funny you mention rails too because earlier we were talking about industrials are a total battleground segment. ge is tearing it apart but on the other side you're seeing

rails, maska was a building products company on the rise today. truckers are doing well. it's a mess of a sector. >> we own some union pacific, and it's been absolutely painful owning it. reading the fundamentals. but the stock goes up every day. i think people are looking at valuing these companies on recovery earnings next year. >> what is the issue in terms of those revenue mishaps that we saw, the misses on revenue?e? can you point to the area of the economy or the problems specifically that some companies are still faced with given these revenue misses? >> a company we bought pretty heavily recently is united technologies. we've been in and out of the name for the last few years. we've owned it most of the time, but we're kind of heavily overweight. and businesses like hbac, which they have. or otis elevators. a lot of it's construction spending dependent. a lot of their businesses are down 15% to 20% just because it was inventory in their channel.. and a lot of their end customers

are not buying. the channel is kind of working its way down in inventory. so i think a lot of this, and people have commented about every sector and every industry, is an inventory destocking. you're seeing it in industrials a little bit more. we're probably seeing it in the ge lot. in addition, ge is cit. is there credit to buy all these products, whether it's health care or turbines or ge? health care products or turbines. >> if you're talking about financials, i'd kind of like to go back to it. jamie dimon on the call yesterday said we don't really have the commercial real estate exposure but the regional banks are going to get slams. what are your thoughts on financials? bank of america's out today with their numbers. citigroup's out with a report that 15 hours later people are still trying to make heads or tail sense out of it. what's your takeaway? >> we own it because of the valuation. we trimmed a little before the quarter. bank of america.a. and we like it a lot. one thing we're concerned about and we talked about in the break, do you really believe these credit numbers? you talk to your friends at fourth of july puck knicks,

everyone's having problems. i don't think we've seen the increase in defaults that people think have stabilized. i think you're going to see more credit card defaults. i think the alt a mortgage problem is a big problem and that wave hits next year. and prime mortgages too we're starting to see defaults. this might be a seasonal head fake on credit defaults or consumer loans. we're seeing it in possibly commercial loans with cit. so i think there's going to be a revenue problem later in the year. on the other hand, bank of america, jpmorgan, and some of the larger banks, not the regional banks, have reserved enough for a little bit of an increase there. >> it sounds like you're really going for value. but at the same time you are expecting another shoe to drop in this economy later on in the year. you're looking for revenue to be under pressure. we could have a commercial real estate blowup. >> a lot of that is probably reflected in valuations. the jpmorgans. but i don't know that i'd want to buy cap one financial. i don't know that i want to buy discover or american express. they've done well in the last few weeks on this kind of sentiment rally.

but i think they're anticipating a recovery in credit issues.. >> you know, as business goes, i'll tell you that unemployment is a lagging indicator. in that, you know, it always recovers after. and that makes sense because companies understandably are slow to rehire. but this time it's different because it's so high. we haven't seen anything like that in decades. and people are -- it seems more omnipresent in terms of the number of people that have lost their jobs. some people are saying that that's going to really hinder the recovery and make it a subpar recovery. >> you're right. based on my business school books, i should be buying all the credit card companies now because they should have anticipated the unemployment situation. i don't know if i agree with those unemployment numbers. there's some concerns about the calculation with birth-death calculations in the actual number. you when you hear companies laying people off, it's 15% to 20%. and it's s&p 500 companies. it's dow 30 companies. i don't know that the unemployment rate is particularly capturing that. and with cit's problems and the lack of credit in the mid-tier

market, where much of the employment is, maybe there is another little bit of a shoe to drop in unemployment in the mid-size companies. so you know, maybe some people are looking for an 111% unemployment rate. i'm thinking 12% or 13%, which really hits credit card and credit card sen tiff industries. >> headline today unemployment tops 10% in 15 states. so while the unemployment rate is staying just above 9% when you look state by state you're looking at a much more troubling situation. and there are people not even included in that number who've stopped looking for a job. >> that's a good point. you think about california, the fifth largest economy in the world.d. they're going to have to lay public employees off. i don't know that they've done all that much yet. just to meet their budget balance. so i think maybe state employees will be laid off. so there's an issue there. i don't want to get everyone too upset. the valuations in the markets are 11 times next year's earnings. much of this is baked in. >> were you moved at all by the housing starts number?

do you believe in that? >> you know, it's hard to calculate. in our analysis, i wassing wag watching this morning, i saw ron barron out in the hamptons. he made a comment regarding building a subbasement in the house. i've got to believe based on that calculation many of the houses built in the last five years are way overpriced. so there might be some more deflation coming in the housing market, which might be good for the inflation figures but it's not good for people who own homes. >> for sure. steve, great insights. we so appreciate it. steve neimeth here, portfolio manager sun america asset management. the closing countdown just after this short break. next? >> after the bell of course extraordinary tax rates could be under way for high income individuals. it's part of a plan to fund health care. but could the ripple effect lead to serious consequences on jobs on and off wall street? we'll have that story today at 4:00 p.m. eastern. closeout is here;

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