caterpillars of the world, alcoas and material stocks can push us forward. we just don't know if we're going to get the global growth we're expecting. more on caterpillar tomorrow. take a look at the s&p 500, folks, because this is an important technical level. 944 was the old closing high in june for the year. we are now at the highest levels since going back to november. that's an important breakthrough. and you'll see a lot of technicians writing overnight about what that means. what happened here? remember goldman sachs early in the morning. we talked about this earlier. but they came out with a call saying the s&p should be 13% higher by the close of the year. but they specifically singled out cyclical stocks as something to invest in as opposed to investment names. eaton came out better than expected. were they terribly bullish the rest of the year? they were not. but it was enough. johnson controls similar situation. they too beat some of the big cyclical names. u.s. steel, alcoa. you all know the usual names, all moved nicely to the up side. how about cit? i hope you were hearing our reporting throughout the day. including steve liesman.ñ

cit borg has approved that financing package from bond holders. two parts. what we don't have and we have been waiting for all day is some kind of formal statement from the company. still done see any formal statement. but you see the effect, stock up dramatically. the important thing, is that having any kind ever ripple effect? take a look at airlines. there was clearly some relief that some kind of deal, no matter what you would call it, to help cit is out. that's helping perception of credit quality and that's helping airlines as well moving nicely to the up side. finally your big story here tomorrow is going to be caterpillar. what's going to happen here? remember, two thirds of their sales are outside the united states. so we are waiting for comments on how the china stimulus package is going to help them or hurt them, how brazil is doing, and also how agricultural sales in the united states are helping them out. this is going to be one big argument, maria, on either side for the bulls and the bears. if we can get positive comments from caterpillar at this point on the global economy, we'll definitely move to the up side.

>> nouriel, we'll see you in a few minutes. thank you very much, bob. i was just chatting with nouriel roubini, who just joined us. he's going to be up in a couple of minutes to talk about his expectations for the economy and the markets. so join us for nouriel roubini as he just arrived. new developments, meanwhile, out of -- out today on the cost of the u.s. financial crisis response. the number actually could surprise you. cnbc's hampton pearson is in washington now taking a look at that angle. hampton. >> hi, maria. tomorrow the special inspector general for the tarp program will tell a congressional oversight committee the total federal government potential risk tied up in the tarp program could reach $23.7 trillion. tarp troubleshooter neal borowski says there are about a dozen programs under the tarp umbrella, loans, loan guarantees, the auto industry bailout, and the public-private partnership to buy toxic assets. he's prepared to tell the house oversight committee that $23.7 trillion risk factor represents how tarp has evolved into in his

words a program of unprecedented scope and scale. there are about 35 ongoing civil and criminal investigations involving securities and mortgage fraud, insider trading, and public corruption he says in his report. and borowski says he believes the obama administration has so far come up short on accountability issues related to tarp. of the 700 billion in the tarp program, he says so far 441 billion has actually been spent. that tarp i.g. roar also says 80% of banks receiving tarp funds are using the money in ways that supports lending, including 43% of banks using the money to meet capital and reserve requirements, another 25% invested in mortgage-backed securities. just in the last half hour treasury has responded saying the i.g. figures are inflated and fail to take into account the government has assets to offset some of that risk. but treasury is not putting its own number as far as the total possible risk exposure, what that might be. maria? >> all right, hampton, thanks very much. hampton pearson. we appreciate it. with that angle.

we're going to get those numbers, as hampton just mentioned, tomorrow. meanwhile, fog stocks finishing the day in positive territory today adding to the market's biggest weekly move since march. will the momentum in stocks continue? for that we're now joined by michael vogelzang, president at boston advisers. along with jim bianco, president of bianco research. good to have you on the program. jim, let me kick this off with you. how do you see things here? and what is your assessment of market activity leading into the second quarter earnings in so far things have been right on. very much momentum on the side of better than expected numbers. that's what we're getting. but does it continue? >> seven to ten days ago we were at the lower end of the range and we were about ready to break down and everybody was getting pessimistic. now we're at the higher end of the range. the typical numbers you come out with at earnings season is the good numbers come first, nobody wants to sit on bad news, and then we'll have to see how they start to come in after that. my biggest concern right now is most people are using -- most strategists are using $45 for

2010 s&p 500 earnings. that's about 20, 21 on the p/e. that's overvalued range for the stock market. so unless we have a massive up side surprise and the numbers aren't really pointing toward, that the stock market's still a bit in overvalued territory, and if it does break out and move higher it's only going to get worse and not get better in terms of valuation. >> do you agree with that, michael, in terms of valuation? yeah, we have some better than expected numbers, but has this marketen got anne head of itself? >> it's clearly gotten ahead of itself. we've had very good numbers. what we've really seen is analysts underestimating earnings power. not so much revenue growth but earnings power. so what we've really seen is corporate management managing their income statements beautifully and being able to surprise wall street on the up side. what we really need to see is some earnings growth. i'm sorry, revenue growth. seems like everyone we're listening to is coming out saying their numbers were fine on the bottom line but the revenues were light. until we get some revenue growth

we can't get real excited about this thing. >> because it's really been a cost-cutting story and not necessarily -- >> exactly right. >> -- an end demand story. >> exactly right. >> and that's really what we need to see. >> yep. that's it. >> where is the growth in the economy right now? jim, can you take that one? do you see growth, whether it be globally or in sectors, that you can tell us -- and do you want to be investing following that growth? >> you know, i'm having a hard time really identifying the growth. we're still kind of in a second derivative type of argument right now. you know, surveys came out today saying that the economy may be very close to bottoming. we're kind of talking about a plateauing somewhere around zero, maybe starting to pick up. we're not quite at the point yet where we're ready to really start to see growth. and as far as the fed's programs go, they are also at the point now where we're still talking about a possible exit strategy or whether or not we're going to get signs of one from bernanke tomorrow. so we're not ready to start to say that here is up side.

we're really positive, if anything, because the down side has been limited. but nothing pointing north yet. >> and jim, very quickly, you're so savvy when it comes to not just the stock market but really the bond market. how have you been investing in particular in this environment? >> very concerned when it comes to the bond market right now because of the inflation worries. beng kooe speaks tomorrow, and i think it's really important that he lays out a better argument for the exit strategy. every time the fed has printed money in its history, back in the '50s, back in the '60s, it's led to inflation. they've got a perfect record on that. they've got to really tell us they're not going to screw this one up and they're going to get it right and not create inflation. the bond market's worried about that, and it's going to take some strong language from him to try to explain those fears. >> no doubt about it. particularly when you've got the inflation trade working so well. copper up 70% year to date. all of the major commodities, raw materials really seeing a bid here. gentlemen, thank you. we'll see you soon. we appreciate it. up next on "the closing bell," is an economic rebound just around the corner or is it already here?

noted economist nouriel roubini is my special guest. we'll get his take on where we are. last week comments when he was at a conference sparked a huge rally in the market. i asked him about that later on. he said, well, the markets took it out of context a bit. we're going to go right to the source and check in with roubini, get his comments. of course he was among the few to predict how tough things would get. later on the credit markets showing signs of life. a look at some long-term indicators. got a lot coming on "closing bell." back in a moment. at 155 miles per hour, andy roddick has the fastest serve

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welcome back. as the markets today respond to hopeful economic signs, my next two guests say the worst is behind us. but remain concerned over a prolonged recovery and the potential for government missteps. nouriel roubini joins me. he's chairman of rgemonitor. also joining us is ariel cohen. senior research fellow at the heritage foundation. gentlemen, nice to have you on the program. welcome. nouriel, i want to kick this off with you because last week you made a speech in new york and your comments were definitely moving the markets.

we know that. you said that the worst is behind. but was this anything new that you said in your speech? >> no, i didn't say anything new. i was always consistent. i've been saying the recession would last 24 months. it started in december of 2007. in my view it's going to be over only the end of this year, december. that's 24 months. last year -- only eight months is now three times as long and six times as deep as the previous two. and the recovery's going to be also weak in my view. >> so you're saying that the downturn would be 24 months but the recovery is really the more important part of the story, that it's going to be a weak recovery. >> yes. the -- recovery going back to potential growth of 3%. in my view because of the financial system, of the housing sector, of the corporate sector, and now the releveraging of the public sector, the recovery's going to be 1% growth for the next couple of years, well below strength. it's going to feel like a recession even though technically we're out of recession. and the unemployment rate i see it peaking at 11% sometime next year. so it's going to be ugly.

>> 11% unemployment. you think that peaks next year. >> yeah. we're already 9 1/2. we'll be at 10% for sure by the fall. closer to 10 1/2% by the end of the year. we'll get to 11%. by the way-f you include partial employed people and discouraged worker, it's already 16.5%. >> but is there any evidence that you can point us to that makes you believe still that we've seen the worst? >> well, we've seen the worst in the sense that there was a freefall of the global economy in q4 and q1 with massive policy action, monetary, fiscal, and backstopping of the financial system. so we're not in freefall. the second derivative is now positive. there's been a slowdown of the rate of contraction. we're closer to the bottom. in my view the bottom's going to be at the end of the year. the financial system, over $12 billion of financial support. we're not going to have a freefall anymore. we're not going to have an l-shaped depression. but between an l-shaped depression and a v-shaped recovery there is in my view a sluggish u-shaped recovery that

might go into a w double tip p f. we don't fix the fiscal problems in the economy. >> that's what i want to talk to you, the fiscal responses and the monetary responses. i want to get to that in a moment. but ariel, let me bring you in here. last time we spoke we talked about the demand for resources when we were both in russia for the st. petersburg international forum. let me ask you about the demand for commodities because this is also a window into what's going on in terms of the global economy. what do you see today in terms of russia, economic growth there and in the emerging markets wit oil above $60 a barrel once  again. >> russia is the ugly stepsister of the bric. brazil, russia, india, and  china. when we're looking at the robus growth rates in china, we are having a decent growth, slow growth in india, and very little decline in brazil. 1.6%. something like that. russia is down 8% of gdp and

over 10% of the industrial  production. so it is an unfortunate confluence of a couple of factors in russia. one, it is very dependent on oi and gas prices. and those plummeted from 147 pe barrel to 35. now it's back to 65 range. and the second issue is that russia is seriously lack whg it comes to the rule of law. therefore, the russian investors are running away like scared rabbits. and foreign investors don't want to come back. >> you know, the imf recently said that the emerging markets, and i don't know if really russia was a part of this, because the picture you paint, ariel, is obviously a dismal one when you're looking just at russia and investing. who wants to invest in a place where there's no rule of law? number one. number two is if we are looking at a country that dependent on oil, all bets are off. in terms of a recovery.

but the imf, ariel -- the imf, nouriel, rather, pardon me, said the emerging markets have actually been better than expected and that's going to help global growth. do you buy into that? >> i buy the first part of it. the performance has been better than expected because they didn't have the same leverage and excesses of the advanced economies. but many of these emerging market economies depend on net external demand, net exports rather than domestic demand. and unless there's going to be a radical and structural shift in demand from exports, domestic, private demand in china-n brazil and other emerging markets, i don't believe the emerging market can fully decouple from the very weak recovery of the g-3 countries. >> ariel, what were you going to say? >> i was going to say that for example you see the growth in domestic consumption in brazil, china, and india and you see a steep decline in russia. as far as other countries are  concerned, it varies from

country to country. it varies on the export structure. there are some commodities that are in relatively high demand. for example, copper is going up. and that benefits a place like brazil. in other commodities it's the  collapse of demand and therefor the delay of the recovery. but i would like to also bring  word of caution here. in terms of the speed of  recovery. our policy in the developed world in the euro zone, in the united states and japan, influences the speed of the  recovery and the quality of the recovery. and this is the wrong time to come up with very high-priced ticket items. for example, the health care reform that the obama  administration is pushing or th carbon tax. these are going to be negative  factors that will delay the recovery and make it so much more difficult. >> but do you agree with that, nouriel? how do you feel about the

responses coming out of the obama administration? >> i think there's a very delicate trade-off right now because the question of exit strategy from the monetary and fiscal easing. if you do too much too soon raising taxes and cutting spending you end up in a recession because the economy's still very weak. if you instead wait and you have large budget deficit and you increase them by having things like universal health care and you don't pay for it then the deficit becomes larger. eventually that's going to push higher interest rates and the realization that the mond monetization of these debts is going to continue. increased inflation. if that were to happen then long rates go up and you crowd the recovery again. a very thin line of when to do the exit for monetary and fiscal policy. too soon you get refregs. too late you get inflation and recession. >> do you think the administration needs to come out with another stimulus package? how has the stimulus part one work? >> in my view there will be another one for the end of the year. they want to give time for this one to work. i think by the time the

unemployment rate is above 10% we're going to need to renew first of all the unemployment compensation for those that don't have jobs and can't find them. state and local government. and we need to do more shovel ready labor intensive infrastructure. i see a package of $200 billion sometime early next year. if it's too small it's not going to make a difference. if it's too large the bond market's going to panic. but we need another one especially if the unemployment rate is going to be above 10%. >> the issue is how do you pay for all of this. ariel's making a point we shouldn't be doing all of these big projects, health care reform, cap and trade, and  relying on higher taxes to pay for it. ariel, how do you get the money then? >> you have to be very careful. if you shovel tens of billions of dollars, for example, to the car industry and there's no fundamental change in terms of the quality of production, in terms of legacy costs, we will not be able to compete with, let's say, korean car industry or even japanese car industry o

the future chinese car industry but we'll already spend this  money. so you have to be very, very  careful. and the other thing is we have all these billions of dollars, hundreds of billions of dollars allocated, but it's all still  stuck. if we're serious about the  recovery, by the time congress and treasury are managing to allocate this money the recovery may be already way along, moving along, and at that point more monetary stimulus is going to stimulate the inflation, and we don't want to go there. >> nouriel, which country in your view exits the recession first? is it the united states? >> well, among the advanced economies probably it's going to be the u.s. because the monetary and fiscal stimulus in the euro zone and japan is going to be and has been less than the united states. but there is already some growth recovery of course in some of the emerging market economies, namely china and india. and i would say that those emerging market economies are the higher potential growth than

advanced economies. however, their sustained return to potential growth is going to lag because the weakness of the g-3 is going to drag on the growth rate. >> how do you think people should be investing in this economy? what's the bottom line for me? here we have an economy that perhaps has seen the worst but will bump along the bottom for a long time is what you're saying. we're not going to have any vibrancy time soon. in fact, we're going to see unemployment exceed 11% or peak at 11% in 2010. what do i want to do from an investment standpoint? >> from my point of view markets, both equity markets, credit spreads, commodities, have gone up too much too soon based on those fundamentals. in my scenario the weaker recovery's going to be pang out, then you'll have down side surprise on the macro side, down side surprise in terms of credit shocks, down side surprise in terms of earnings of the corporate serktd. you'll have also some weakness in commodity prices. therefore, i would stay still away from risky assets. there will be a time to get into those risky assets. i think from now on actually the surprise is going to be on the down side rather than the up side. >> so you think we're going to be able to get into this market

at much better prices, then. >> yes. we're not going to test the lows of march because the lows of march were essentially pricing in a near depression and collapse of the financial system. between the current levels and lows of march there's meaningful correction. if the unemployment rate is going to go toward 11% and budget deficit is going to remain large and keep the monetized pushing eventually higher interest rates based on expected inflation. >> we'll leave it there. nouriel, great to have you on the program. we appreciate it. nouriel roubini. ariel cohen, great to have you as well. we so appreciate your time on this really amazing story, which is obviously global. ariel cohen, nouriel roubini, thank you. we'll see you soon. the fight for health care reform is up next. president obama making another push for overhauling in the face of waning public support. we'll see if there's any real change and how that can take place before the end of next month. today there's a way to save more for retirement,

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welcome back. credit markets showing signs of life. the latest positive is that the troubled lender cit has reached a $3 billion emergency financing with bondholders. is it too early to calling a turning point? joining me to talk about that is daniel alfred managing director of westwood capital jerry webman chief economist with oppenheimer

funds. gentlemen, it is good to have you on the program. so daniel, credit markets are showing some signs of life, obviously. and we had a huge reception a couple months ago with a great capital raise, whether it's on the credit side, the equity side. do you see a turning point? >> well, look, the panic is out of the markets right now. there's certainly phenomenal spreads being made still among people who are trading the markets. we saw those reflected in bank earnings announcements recently. but we still have to deal going forward with the fact that a lot of the loans that remain out there, a lot of what are euphemistically called legacy loans, are collateralized by property and other assets that are well underwater from the values at which they were originally made. >> and jerry, we are seeing some confidence around the cit story getting assistance without tapping the government's coffers. the government's obviously said look, we're not going to bail you out. is that a good sign? >> it is a good sign. we've had so many turning points that our heads are spinning, i think. but the fact that there was

private funding available, even though it was private funding under some duress. i mean, it was take this risk or know you're going to lose some money. i think it's a real positive. it means there's some private credit flowing. and gives the opportunity for other transactions to get done. so it's a positive. >> and would you be -- how are you investing? that environment, then? do you want to be putting money to work here? do you think that it's sustainable? >> well, the credit spreads still in the investment grade area and actually to some extent in the high yield area are still pricing in defaults and poor recoveries at four to five times the historical averages. and that says if people are cautious, take some time, deal with the fluctuations in the market, it's not a bad time to be investing in good income producing securities. particularly high-grade bobds. >> daniel, you think the government called it right with cit group. >> absolutely. i think especially chairman bair of the fdic she came right in

and said there's more for private capital to do here before the government has to step in and quite frankly there, really wasn't very much justification for the government stepping into this particular credit. you have to remember that what happened today or what theoretically happened today because it hantz formally been announced is that the bondholders who had an already vested interest in this company stepped up to effectively grab the assets of the company through a collateralized loan. that will put them in good stead as the company moves forward with what will hopefully be an out of court restructuring. but in the event they end up in bankruptcy next year, these creditors will be advantaged over the rest. >> you can't still rule out a bankruptcy, right? >> absolutely not. i mean, we're at a point right now where as i said the collateral underlying the loans that cit has made is going to be very, very difficult to collect upon. consequently, there's been great disintegration in the quality of their credit. it's going to be very difficult to roll over their own

obligations, and one thing will lead to another. it's about a 50-50 this ends up in bankruptcy. >> so jerry, do you think that there are banks out there that handle the slack if we were to see cit continue to struggle? >> i think there are good loans to be made. loans will be made. one of the things we find very encouraging is we're starting to see some of the toxic assets dissected into its more and less toxic parts and put back together again. i say that in this context because that means that banks are on their own bit by bit, increasing their own capital transparency, which means they can begin to make more loans and maybe the small business types at cit was making. so this is all just little bits of moving forward. it's not a sudden thing. but there are opportunities now in cit falling away and capital improving will be part of that.

>> meanwhile, we've got the earnings season continuing. texas instruments just coming out with the second quarter, 20 cents a share. the estimate was for profit of 18 cents a share, revenue estimate $2.41 billion. overall, daniel, tell me how you're investing in what has been a pretty good earnings period on the heels of i guess lowered expectations is one way to characterize it. >> and of course those lowered expectations will get easier to beat going forward. i mean, we're going to be comparing ourselves to fourth quarter of last year before long. look, we're still looking at the credit markets. i think jerry's comment was absolutely right. there are some good opportunities in the credit markets, and i think even amongst distressed assets there will be some excellent opportunities. the only question. the $64,000, or $64 trillion question, depending on how you like to look at it, is whether or not there's sufficient cap in the capital markets and in the banking system to absorb the

losses that still have not been fully taken. that's what the stress tests were all about. that's what we're looking down the road to try to determine. it's a hard call. >> so jerry, are you reading into the earnings season in any particular way? how do you think? even t.i., revenues at 2.46 billion for the quarter, that was better than the estimate of 2.41 billion. how do you read the latest earnings news? >> well, part of it is reading that everybody wanted to be conservative. nobody wanted to be surprised by being too high. and as dan said, we're facing some easier and easier comparables. but these earnings that we're seeing are consistent with a gradual rebuilding of some economic momentum. some strength in selective parts of the financial world. the big players are okay. there's financing available. and people are going to be able to make some money. they just won't make it with the kind of leveraged balance sheets they've had in the past. >> it's a whole new focus on the balance sheet. that's for sure. gentlemen, thank you.

we appreciate it. >> you're very welcome. >> we'll see you soon. we have the t.i. earnings out. let's get to jim goldman. he's in san jose with more on the texas instruments quarter. jim? >> yeah, maria, let's go through this because this is a very good report for this company. no question about it. you went through the headline numbers. the 20 cents against the 18-cent expectation. so t.i. did beat by two cents a share. now, keep in mind that expectations were fairly high going into this report. lots of optimism around these shares. and it appears right now that texas instruments is in fact able to deliver. 2.46 billion against the 2.4 billion that wall street was anticipating. and most of the analysts that i spoke to earlier today said that this company indeed had to beat on the top line to indicate strength in sales. and texas instruments was in fact able to do that. more importantly, as you dig down deeper into this release, $2.4 billion in orders on the quarter. 2.5 to 2.7 billion was the range on the street. so t.i. apparently able to show a very strong and robust

pipeline as well. $2.56 billion in cash against the $2.43 billion. and that in spite of the fact that t.i. was still able to spend a large amount of money. $251 million on the quarter to repurchase about 13 million shares. going ahead out toward the third quarter, the company looking at 2.5 to $2.8 billion and 27 cents? what did we have the range there on the -- oh, i'm sorry. a revenue -- or an eps range of 29 to 39 cents. so the company dramatically, rather, raising the expectations as far as wall street is concerned with that eps range of 29 to 39 cents a share. so if there was any indication or any doubt that t.i. was indeed starting to feel the positive effects of some kind of chip bottom and chip industry turnaround, we are seeing those optimistic effects today. looking at that chart today, investors seem to really enjoy what they are hearing tonight. mar

maria, back to you. >> real action in the extended hours. t.i. stock is up. jim goldman with the latest there. up next we take a look at some of the hurdles we face in health care reform. will a bill really pass the congress before the august recess? we'll have more on that. stay with us. >> here's a look at some of today's winners and losers. closeout is here; hurry to get the pontiac you want before they're gone. the price on the tag is the price you pay. get a 2009 pontiac vibe for $13,708 after all offers. or get 0% apr for 60 months on most 2009 pontiac models! all are backed with the best coverage in america, including a 5 year/100,000 mile powertrain warranty. get some excitement while you still can, during the pontiac summer closeout. visit pontiacdealer.com

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it is a debate at the moment. president obama made another push for health care reform today, the move coming as public support for his role in handling health care is slipping. cnbc's john harwood is in washington right now with that angle. john? >> reporter: maria, the health care reform pushed by the administration is running into some turbulence. partly those slipping poll numbers. partly also rising concerns about cost controls. president obama went before the cameras today to reiterate that he favors a plan that would bend the cost curve down in the long run, and he said he means it. >> the bill i sign must reflect my commitment and the commitment of congress to slow the growth of health care costs over the long run. that's how we can ensure that health care reform strengthens our national -- our nation's

fiscal health at the same time. >> reporter: now, here's why this is a moving target. lots of things in motion. in the house leaders are talking about scaling back that millionaire surtax that drew some controversy last week. you've got moderate democrats who are pushing against the bill as something that's going to exacerbate the health care inflation and the deficit in the long term. and finally, negotiations remain alive within the senate finance committee between democrats and republicans trying to find a more moderate alternative. looks, maria, as if it's going to be difficult for the senate to reach the president's goal of having a bill passed on the floor by august. but the irony is the final product might be more to his liking in a policy sense if some of these changes get made, maria. >> all right. we will see about that. i like what he said last week. buck up. >> reporter: exactly. >> he wants it now and that's it. and he means it. john, thank you. john harwood. up next, the road ahead for toyota. we have the inside scoop on how the company is looking to rebound from the ill effects of a slowing economy. its take on the future business climate. stay with us. bull market or bear, traders are always hungry for ideas.

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welcome back. we all know it's been a tough year for the automakers. even industry leaders like toyota feeling the effects of a consumer pullback. cnbc's phil lebeau spoke to the new head of toyota's north american division about the road ahead. phil. >> maria, these are the first comments from yoshi inaba the

new man in charge of toyota north america since he came out of retirement to take the top job. i met with him this afternoon here in washington, d.c. with a few other select reporters to get his take on where toyota is at. a couple of important things came out of this meeting. first of all, he says that there are some encouraging signs that the auto market is coming back. he is hopeful personally that u.s. sales could hit a rate of 12 to 13 million, an annual sales rate of 12 to 13 million, perhaps within the first year, or the next year, i should say. toyota, in the meantime is replanning the use of its north american plant. it's assessing how the u.s. market will rebound before deciding which plants it's going to keep and potentially some plants it might have to shut down. there's been some discussion about the future of the numi plant that was part of a joint vent yue between toyota and general motors. no decision has been made regarding that plant. mr. inaba is hoping toyota will be profitable in the next fiscal year and he sees positive signs that although things are improving not enough for profitability here in north america. take a look at shares of toyota.

up a little over 1% today. but year to date sales down 37 1/2% for toyota and it's gone from number three in the u.s. to number two. stong comments from mr. inaba and we'll hear more from him in the days and weeks to come. >> up next we take a look behind the history books, behind the fall of lehman brothers. we'll take you back to that weekend that changed wall street with noted author larry mcdonald. he's looking at the collapse of the financial giant and the ripple effects still being felt today. then later we look back at the historic lunar landing and the sobering realities of nasa 40 years later. we'll be right back. has the fastest hands boxing has ever seen. so i've come to this ring to see who's faster... on the internet. i'll be using the 3g at&t laptopconnect card. he won't. so i can browse the web faster, email business plans faster. all on the go. i'm bill kurtis and i'm faster than floyd mayweather. (announcer) switch to the nation's fastest 3g network and get the at&t laptopconnect card for free.

tdd#: 1-800-345-2550 including who i trust to look after my money." tdd#: 1-800-345-2550 tdd#: 1-800-345-2550 "the dust might be settling... tdd#: 1-800-345-2550 that's great, but i'm not." tdd#: 1-800-345-2550 tdd#: 1-800-345-2550 "i guess i'm just done with doing nothing, you know?" tdd#: 1-800-345-2550 tdd#: 1-800-345-2550 "oh, i'm not thinking about moving my money. tdd#: 1-800-345-2550 i am moving it."

well, from umbrellas, ties, duffel bags, lehman brothers are trying to sell almost anything and everything that it originally produced for clients and employees on ebay. proceeds from the sale will go to paying off the $250 billion plus it still owes creditors. lehman filed for bankruptcy protection on september 15th last year, but not many know the inside story on how and why this legendary firm collapsed. lawrence mcdonald is with me. he's the former vice president

at lehman. he's detailing this now in his new book called "a colossal failure of common sense." it hits the bookstores tomorrow. larry joins me now with more in his first interview. great to have you on the program. >> thanks. great to be here. >> you traded distressed debt at lehman brothers, and you worked at lehman from '04 to '08. what do you think is the most compelling part of this story about how lehman brothers went down? >> well, i think, you know, most compelling was the disconnect between, you know, the men in the ivory tower and the wonderful people that worked at the firm. lehman brothers to me was never rotten at the core. that's where all the beauty was. she was really rotten at the head. i mean, i think in this -- so many people have been hurt by this crisis, this financial crisis. i think lehman brothers obliterated the world economy. something like 6.5 million jobs have been lost. and i think out of those 6.5 million jobs that have been lost in this recession i think 2 million of those jobs are the direct result of the failure of lehman brothers and it really should have never happened. >> it was the weekend that

changed wall street, frankly, and changed business, lehman going bankrupt. okay. so you're there on the trading desk trading distressed debt. did you have any sense that the firm had taken on all of this leverage and things were too risky, packaging these securities and selling them to customers? what did you know about what was going on in terms of the leverage and at the top of the firm? >> well, if you take something important away from this interview, you know, there's no i in team. i was part of a wonderful group of people that really tried hard to hedge the firm. and we made a lot of money on the short side. we made, you know, $2 billion in 2007 on the short side, our group. but that's the real tragedy here, is that there was so much talent in the middle of the firm that tried to stop the madness and there were people that one by one tried to stop -- the ones who spoke up were really silent. at lehman you kept your head down, you did your job, or you lost both. >> so do you think the people,

the managers running the company did not necessarily know what was going on downstairs on the trading desk or in terms of taking on the debt? what went wrong? >> the 31st floor at lehman brothers, that's one of the most mysterious places on earth, really. some people claim that it resembles in some ways sotheby's art collection facility, a cross between that and a human resources pompom bonfire festival. i mean, you had a group of people up there that were disconnected from the real -- the trading floor where all the cannon balls fly, so to speak. and they were very concerned about their new membership in the billionaires club. they were very concerned about their $200 billion art collection that's existed. and they really were just in complete denial the whole way. and there were so many wonderful people at lehman that i worked with that tried to stop this. >> dick fuld, the ceo at the time, did not want to file for bankruptcy, we're told.

how did he get there? can you take us behind the scenes and tell us exactly how it went down? did paulson call fuld and say you need to file? >> not many people realize this, but there's a great scene in the book, our book "a colossal failure of common sense" where i don't think they realize the tensions really started many years before. dick fuld's a lifetime commercial paper trader.

>> today marks the 40-year anniversary of the historic lunar landing by apollo 11. as we reflect on the milestone, many are looking ahead at nasa's future and if the space agency has the means to take another big step into space. we'll check it out next. [ engine revving ]

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one giant leap for mankind. >> 40 years ago today we heard those iconic words from neil armstrong when he first set foot on the moon. but as we mark the anniversary of that landmark event, many are wondering whether nasa can make another historic push into space. as the space agency struggles with a massive budget shortfall. cnbc's jane wells on the story. >> hi, maria, it saint cheain't.

nothing ever is. the president has ordered a review of the $187 billion program to get americans back on the moon in nine years. that includes a new orion spacecraft by lockheed with heat shield by boeing and aries rocket by alliant tech. adjusted for inflation that 25 billion is more like 150. >> the eagle has landed. >> a new gallup poll says 58% of americans believe the space program's benefits have justified the cost, and those benefits are, well, a light year long. gps, cordless tools, minute churization. new fabric, new medical technology. currently nasa has an orbiter going around the moon which just last week sent back photos of apollo landing sites. you're looking at them here. but as nasa debates how and where to go back the private sector hopes to do it unmanned faster and cheaper. >> affirmative. contact light is on. we are on the surface. >> all right. that's the animation for google,

which is promising $30 million to private teams working to meet the google lunar x prize goal of rocketing a rover to the moon and getting it to work there by the end of 2012, 3 1/2 years. 19 teams are competing. silicon which could be used in making large solar power. and of course many people believe the moon would be a greet place to launch for mars. back to you. >> all right, jane, thanks so much. jane wells with the latest. before we say good night let's take a look at the day on wall street. it was a pretty good day as the market built on last week's big moves. the dow industrials up today another 1%, making it 8% in the last five days. in terms of a rally. 8,848 last trade on the blue chip average. you did have financials, technology names, as well as the oil stocks certainly participating today. nasdaq up 22 points. up 1 1/4%. although a handful were actually under pressure like google among others. 1909 last trade on the nasdaq. and the s&p 500 up 10 3/4 points. that's better than 1%.

texas instruments trading higher on the heels of better than expected earning. tomorrow we've got caterpillar, morgan stanley, amazon.com, microsoft rest of the week. we'll see you tomorrow. good night. stocks hitting a new high for 2009. this comeback from the march lows is officially back on. i'm melissa lee, this is "fast money." fresh off the trading floor these are the "fast money" traders telling you the best way to ride this run. and be sure to stay tuned because later we've got the setup for apple's big report tomorrow. and the ceo of one of the biggest earnings winners in the market today. but first let's get to the word on the street right now. certainly you can't beat this rally here. we've got 40% of the dow to report. >> i like that. you seem far more optimistic than you have in recent days. there you go. you're joining the party. you know what, though, melissa, right now here's what's interesting. it's a good thing we've got steve on the desk this evening because he can talk about the money flows, talk about what's going on right now. interesting note over the weekend. the savings rate right now sits at 8%. that's about at 9%. this is $900 billion of

disposable income is that is going to get frustrated earning 1%. how do you look at that you? look at this as one massive buy order that eventually is coming in. it could come in now or later in the year. but it's coming in at some point. >> how do we know that's ever -- that full 8% is ever going to come back into the market. really, to look at this rally today, we had an upgrade of caterpillar and cisco. >> yeah, i think joe is making a good point. i've been mentioning it, too. these earnings were getting upgrades. goldman sachs, we'll talk about them. they upgraded. the earnings are coming through. people are beating on the top line. that's what people need to see. you add that, the leading indicators, up three months in a row for first time since 2004. a lot of guys are seeing the end of the recession. can you start to see earnings growth in the third quarter. that's very impressive. coming into this earnings season, people were probably net short on the expectation these are going to be worse. >> right. but if you think about it, what's different about this earnings season than any other earnings season? we cameou