stocks are up and there are some very specific reasons. first take a look at financials here today. and i'll tell you what turned things around. goldman sachs announced around noon eastern time that they were going to be repaying the tarp money. you might think that's not a huge surprise. but it helped move not only goldman up but the overall financials up. this despite the fact that some big bank names like keycorp and wells fargo had somewhat disappointing comments this morning about their credit continuing to deteriorate and some key metrics, like non-accrual loans, continuing to have problems there. and net chargeoffs. also continuing to have problems. morgan stanley also a disappointment, bit of a loss anticipated. that's their third loss in a row. another big story here today is home builders. now, as a small home builder, that's the seventh or eighth largest builder in the country called ndr. they announced incredibly good earnings, really rather surprisingly good earnings. they beat by a wide margin. but not just the earnings.

all sorts of metrics showed improvements. revenues and mairnlgz. writedowns. remember all these writedowns for land the companies have been having? this showed improvement. the absorption rates, which is the new orders per community, also up. overall orders, here's a shock, were up 2% year over year. when is the last time you saw a home builder reporting orders actually on the up side? as a result we have seen home building stocks outperforming today. in fact, generally home builders have been doing well in the last five or six days, outperforming even in this market. look at nvr, up nicely here. 7%, 8% in names like lennar and kb homes. bear in mind we'll have existing home sales tomorrow. another talking point there. finally i just want to note there are smilstill some very cautious companies out there, caterpillar coming out with comments very cautious on the conference call. whirlpool beat what looks like a good number, but overall they talked about reduced demand in key markets and nthat stock despite the beat that's had a very tough day. >> wells fargo shares meanwhile

under some selling pressure today. the stock, let's take a look at chart of wells fargo, which is certainly one of the most heavily traded issues, and the stock is down 3% on wells. as you can see there. it is at $24.55 a share. the company reported second quarter numbers. and even though wells fargo reported an 81% increase in profits, 81% increase, investors are still concerned about the deterioration in the loan portfolio. joining me now in a cnbc interview, "first on cnbc" interview to break down the numbers and talk about the future is howard atkins, chief financial officer of wells fargo. howard, always nice to have you on the program. we thank you so much for your time today. >> good to be here, maria. >> i was speaking to one of your investors in the company and they said that credit ramped up, they did not beat as much as the whisper number, and it was a sell on the news because of the credit that was ramped up. how would you characterize the quarter? >> well, there may have been a little profit taking on the news. our stock has been pretty strong the last few weeks on the expectation of good results.

we printed record results in the quarter. we're very pleased with that. there were very broad-based increases in revenue across the company. we did have elevated credit costs. again, i think there may be some misinterpretation in the market about some of those statistics. but basically, our net revenue was twice the number -- the volume of credit costs in the quarter. a $5 billion difference between net sxrechb credit cost. that really speaks to the sustainability of the results of this company. even in an environment where credit costs are high. >> the capital raise has been unbelievable. you've been able to raise so much money, certainly in the second quarter, but no doubt you saw the "journal" story today, which looked at the company's earnings expectations, as well as the idea that some people believe you still need to go out to the market and raise capital, need to take your reserve levels much ohioer than they are right now. what do you say to that? do you think you'll need to come back to the market in the near future to raise more capital? >> we have no plans to do that, maria. again, i come back to the statistic i just quoted, the

basic profitability of the company is very strong. our net revenue exceeds our credit cost by a significant margin. that's really how we're covering the elevated credit costs in the company, by generating all this revenue, which comes back to the business model and all the volume and spreads we're getting and the market share we're getting. >> as far as that environment right now and the lending that you're doing, how does the environment feel to you here versus last quarter? >> the environment feels a little bit better. you know, i think there is some sense that we may be at the bottom and maybe turning a little bit. you look at some of the statistics like in california, for example, we've had three successive months now of increases in median home sale prices. there's a lot of activity going on in california. our volumes are very strong. we extend over $200 billion of credit in the quarter. we had another $100 billion-plus mortgage orangeation quarter. deposit checking accounts are up

8%. clients under management up. we're seeing very significant volumes pretty much across our business. some of that may be market share we're getting given our position in the marketplace. but volumes are looking very good in the company. >> what about those credit losses? what does that tell us about the consumer today? >> i think, you know, consumer we're actually seeing a few signs of improvement. some of the what we call early stage delinquency numbers on the consumer portfolio actually have slowed down a little bit. so there's a little less coming into the bad portfolio, if you will, than there had been previously. commercial was a little bit weaker. we've seen some softness in commercial real estate. most banks in the industry are seeing that. ma tha may actually continue for a period of time. consumer's feeling a little bit better. and our reserve position takes into account the losses we expect in both of those portfolios over the coming period of time. >> a lot of people were happy about the wachovia acquisition. certainly your shareholders were.

and it proves to be so far obviously short time span. but you're taking market share with the wachovia deal. is that integration -- where is the integration in terms of wachovia and wells at this point? >> well, we closed the deal at the end of the year. we're two quarters into the integration now. it's proceeding on plan, on pace, and as expected. the big surprise on the positive side are all the revenue synergy that's we're getting. we're seeing a lot of sales coming from the wachovia customers, a lot of cost sale opportunities that are being realized. we're taking a lot of skills and business platforms on the wachovia side and applying them to the wells fargo commercial and retail base. so we're getting a lot of what we call two-way synergies now between the two companies that are creating revenue opportunities for us. >> so in terms of the market performance, then, you would think that these numbers would have been a positive for the investment community. i guess despite getting the $25 billion in the federal bailout money those stress tests indicated that the company still

needs to raise capital. where does that money come from? >> well, actually, the stress test doesn't really indicate that. we've already generated now in the second quarter $14.2 billion of capital toward the stress test requirement established by the testified 13.7 -- >> so you've already gotten there. because the stress test indicated there was a $13.7 billion shortfall no? >> we needed to build a $13.7 billion budget. we've done 14.2 of that. and we actually expect more coming through in the third quarter through internal sources, which is why i said before we don't really need to go raise capital to complete the stress test. we're at 14.2 billion already. >> i see. okay. so what kind of second half are you looking for, howard? >> well, we'll see. you know, we're continuing to see good mortgage applications. you know, our unclosed mortgage application pipeline at the end of the second quarter was still $90 billion. very big number. bodes well for volumes coming into the third quarter. business actually, as i said before, is pretty good. depends to a certain extent on

interest rates. mortgage interest rates, if they remain as they have so far for a period of time, that's going to bode well for the mortgage business. deposit growth is good. so we're seeing good momentum in some of our businesses now and pretty broad-based. so if that continues, this is going to be an interesting year for us. and eventually credit costs are going to start declining. i don't want to make a prediction when that will happen. but that is cyclical. and what we're trying to do is grow the top line for sustainability well past the end of the credit cycle. and then when credit costs begin to moderate, we really will see even more profitability come through in the company. >> when do you expect those credit costs to moderate? >> again, we've got to look at the individual portfolios within the overall credit picture. commercial, as i said before, is still looking soft, maybe getting a little bit softer, and consumer losses are still going up.

but some of the early indicators on consumer looking a little bit better. so we'll see how that plays out. there's a little bit of to-ing and fro-ing on that. we are seeing overall somewhat more stability, but a little bit too early to call a turn in the portfolio at this point. >> howard, let me ask you broadly speaking about the industry. we're just looking at an e-mail from standard & poor's, rich peterson. since the tarp was passed last october, less than 10% of the s&p financials are trading higher. wells, for example, down 26% in nearly 9 1/2 months since the tarp has passed. you've got situations like cit group out there teetering. some mall and mid cap business still unable to access real capital that they need. the credit crunch remains very much alive and well for them. what do you think it's going to take to get credit moving again in a substantial way? >> well, i think the banks in genteel are supplying a lot of credit. as i mentioned before, we supplied $200 billion of credit in the second quarter. demand, however, seems to have

moderated a little bit in the last year. both commercial and consumer. and i think the reason for that on the consumer side is that consumers are looking to pay down debt, to sort of deleverage their balance sheets. and that process may be -- you know, hopefully will be coming to an end at some point. a lot of that has already taken place. on the commercial side we've seen also some deleveraging but also, in addition, on commercial as the capital markets opened up this year some commercial customers had the ability to issue debt in the capital markets have paid down their bank facilities. so that process is taking place now a little bit as well. i think that's actually a healthy sign because the markets are open up. consumers and commercial customers are in the process of deleveraging their balance sheets. that's healthy. that will play its way out. and then we should start seeing some more loan development again. >> those capital raises have certainly been effective and real positive. however, it's always a pleasure and a privilege to have you on the program. thank you. >> thank you, maria. >> we'll see you soon. howard atkins is the chief

financial officer of wells fargo. bob? >> -- he was talking about there. loans delinquent 30 days, for example. there's your first little bucket showing some signs of improvement. think that's a very good point he's making. we've heard that from some other banks, maria. let's take a look at how the commodity and bond markets are faring today. we've got it all covered. the nymex and cme group in chicago. sharon, oil ended to the down side but nat gas is trending up here ahead of the weekly numbers tomorrow. >> that was definitely the breakout story in the energy complex. and you know, after six days -- five days straight of gains, taking a little bit of breather here for the oil market may be expected. we did get that oil inventory report from the energy department, and it showed that crude supplies declined as that may have offered some support as well as the fact overnight we got that data from china showing that implied oil demand was up nearly 2% in june compared to the same period a year ago. those were some positive factors. in terms of gasoline, what supported that, there have been a number of refinery outages

along the gulf coast and we did learn the four-week average for gasoline demand was actually a little bit higher than it was last year. so that was somewhat supportive as well. refinery runs down 2%. means that they know their margins aren't great, they're not making as much gasoline or heating oil, that seems to support that folks think down the road inventory will not be as great even though distillate demand was down 11% for the four-week average compared to a year ago. now, the story that bob was talking about, natural gas, it really was a technical rally that had natural gas up as much as 5% earlier in the session. it finished not quite that high but definitely was the best-performing part of the energy complex today. and we are going to get that report on natural gas supplies tomorrow. the build there expected to be less than last year. again, we continue to monitor the tropical waves in the caribbean as well. so far they have not developed into anything significant. rick santelli, to you in chicago. >> thank you, sharon. if we forget about the notion

that on monday intraday high yields for the ten-year were over 3.70, just looking at the previous two days' settlements i'm rounding, yesterday 3.60 and then a smidge below 3.50. what we've done in the ten-year is hover back as we sit in the mid 3.50s. why did yields reverse some of the drop yesterday? one of the reasons may be at 11:00 eastern tomorrow we're going to learn from the treasury how many 20-year tips, two, five, and seven-year notes we're going to auction next week. don't forget after that we have the august refunding. for that number benchmark expectations around 113. 113 billion. as far as the dollar index this chart is very interesting. lowest close since early june right now. and both of those closes are only the closest above the summer of last year. very significant lower dollar index levels. need to pay attention to. maria, back to you. >> we've got a market under some

selling pressure here and accelerating on the down side. 45 minutes before the closing bell sounds for the day. dow industrials now down 40 points. bob, i'm not sure what you're seeing, but it's very much a mixed performance. in the oils -- actually, exxon was higher, it just turned negative. a number of banks are already turning negative as well. >> and we're sitting right near the lows for the day today. american express weaker. markets have been rallying the past two weeks because of better than expected earnings. but can it last? some answers in a moment. >> after the bell cnbc your home for earnings central will bring you the latest numbers on deck, qualcomm sxechlt bay out right at 4:00 p.m. eastern. >> dak a look at the most actively traded stocks, led by citi, but also notice pfizer's the there.

and you're looking at a shot of president obama about to come out. he's been meeting with the prime minister of iraq. he'll make some comments on that, i'm sure on health care as well. we'll be monitoring all that and more than likely taking you to excerpts from his comments. maria? >> so before we go to washington we're back on wall street here. let's talk about these markets

with the dow industrials down about 45 points or so. joining us is scott jacobson, chief investment strablthist with capstone sales advisers expect pp and greg olsen partner at lennox advisers. good to have you on the program. let's talk about these markets and how you want to be positioned in this environment. an enormous amount of money going into the bond market. that continues today as well. do you want to be getting ahead of that trade? do you think the money's been made there? how are you investing? >> we love municipals right now because we think with all the proposed changes to the health care bill that income tax rates are going to be going up and that's going to mean very good things for municipal bonds. >> you hope income tax rates are going to go up just from the idea that the economy recovers soon and you get that revenue. what do you think? >> the stock market is certainly discounting a recovery right now. we've had a little correction.8 we've rallied back significantly. say, 10% in the last two weeks alo alone. so the market is discounting a v bottom in earnings and a big return to earnings. bond market a littles certain what's going to happen because bernanke is cautious, the fed is cautious, they don't

want to raise rates too soon. yield curve is steepening, kind of worried about what's going to happen with interest rates in relationship to the stock market. >> a couple companies have been talking about stabilization on the top line. caterpillar said it. etx said it. that means perhaps better visibility in earnings maybe and that's one of the things that's helping the stock market. the problem i have is if that's true, what is the market worth right now? what kind of multiple should we -- first of all, what are the earnings going to be? because we're getting stability on the top line doesn't mean we know what the earnings are. and number two, what multiple do we put on it right now? is it 15 times full earn sngz 12 times -- >> the average multiple for the last 20 years is actually 19 and change. 19 1/2, let's say. that includes stock market bubbles of the 2000s to late '90s and 2000. but i think the high teens is probably where it's going to be with low interest rates. >> what is it right now? >> right now on a trailing basis it's about 24 times, 25 times. so you really need the earnings to come in. we're looking at $55 trailing earnings for the s&p.

maybe 62 forward if we go out a couple of quarters. to the extent that doesn't happen the market has trouble being valued where it is. >> i just wonder, then, if what you're saying means that the market is not ahead of itself. we've got a 7% rally last week. 20% move in the nasdaq year to date. on this expectation that things are rosy again and growth is coming. >> portfolio managers and investors for that matter really can't afford to miss it if they're wrong. so they're allocating to marginal dollars to stocks. once the market started moving positive for the year, people had to get on board and had to chase. you can't afford to miss it. you can't afford to be bearish forever and miss that rally. but it puts more risk in the market and makes the inherent risk -- >> you said $62 for 2010. is that what you're talking about? >> four quarters and then the first quarter of -- >> 15 on, that which is close to the average. you're still at 940, right where we're at? >> you have to have a high multiple. >> and you can justify that if

interest rates are low, inflation is low, and growth is predictable. but let's start to throw in some risk in that and maybe that multiple's too high. >> gregg, how much do you focus on the stock market? i know you're a muni bond guy. >> we're a wealth management firm. so we're look at all different aspects of the market to see which has more value. >> you're saying the value is in the muni bond area. what about stocks? >> we think we're in a trading range right now and we think we might be in the upper range of that range. >> we appreciate you joining us for the hour. we'll see you in a little while. by the way, bob, earlier i spoke with financier michael mill keb. he wrote that op-ed in early march basically saying the market was about to take off because of the capital raises we have seen. that is exactly what happened. and i asked him where are we right now in that process? 70% through? i threw that out there. because he was so right in terms of the capital raises and in terms of the performance of the market. >> and you're doing a health care special, are you not? >> that's next monday. >> we'll be watching for that.

35 minutes to go before the closing bell. we're not far from the lows of the day. >> short break and we'll take you to washington. checking in with president obama. he is giving a news conference. no doubt we'll hear about health care as well. and then we're talking about the drug sector. we will look at health care reform, get president obama's take on that, and see if there are investing plays you ought to know about. next. me? find love on the internet? skeptical! oh, my gosh. (woman) find your perfect place at remax.com. (doorbell rings) you had me at "ding-dong." where do you want to be?

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welcome back. market down better than 50 points today. three major drug companies out with earnings. two of them beat estimates. one mixed. cnbc's pharmaceuticals reporter mike huckman tallies it all up. mike. >> and good afternoon to you, maria. dow component pfizer topped expectations by a penny. eli lilly beat by a whole dime. but british drugmaker glaxosmithkline came up a little short today. and the mixed results are resulting in mixed trading in the pharma sector today. lilly and glaxo are down while pfizer is up. but just barely now. shares of the world's biggest drug company are well off their intraday high. look at that chart. even though the company raised

its revenue and earnings guidance for the full year and it's been a very choppy trading session for eli lilly, even though it too boosted its profit forecast and had that healthy ten-cent beat. but lilly will soon have a new top and bottom line contribution in the u.s. from the blood thinner e thinner eph yent, which the fda finally approved after several delays. lilly said it will lunch it in august as the potential competitor to plavix. but it's only approved for a certain population of patients and it has a stiff safety warning. it's a risk-benefit equation but of course the cost benefit analysis is a big part of the health care debate. and in a "first on cnbc" interview on "squawk box" this morning lilly's ceo said the company supports health care reform but hopes washington will find a happy medium. >> we do believe that we need to improve access to health care in the u.s. while at the same time improving quality and

affordability. the thing we're also equally interested in is ensuring that we're able to sustain and encourage medical innovation, that allows us to bring improved patient outcomes for those with unmet medical needs. >> tomorrow earnings from roche, bristol-myers squibb and the company wyeth. for more check out the blog pharmasmarket.cn pharmasmarket.cnbc.com. you can follow me on twitter at mhuckman. and i know you'll be talking more about health care form with mr. rice's boss on your special monday night. >> monday night the future of health care. thanks so much, we'll see you later, mike huckman. meeting of the minds health care next monday night. >> and you've got a lot of big names there, not just the fellow mike just mentioned but a lot of big names pup don't want to miss that one. 30 minutes to go before the closing bell. we've lost, oh, 30 points in the dow since the top of the hour. nasdaq also sitting near its low end. we'll see if we can now put together 11 straight days for the nasdaq. right now we're in positive territory. >> do you know what the dow

chart looks like over the past six weeks? >> almost straight pup. >> we're going to look at the charts coming up, go tick by tick with jordan kotick. we'll see how the russian ruble has been doing and why that could hold some clues as to where oil prices head next. stay with us.

welcome back. take a look at this chart. it's the ruble. it has been on a run this week, posting record gains versus the dollar. on a spike in the price of oil. jordan kotick is barclays haetd head of technical strategy. he is oversaed, but that's not stopping him from giving us today's tick by tick. he's breaking down the move in the currency from moscow, telling us what it means to russia's market. jordan? >> we saw in the s&p and the stock markets around the world in the last couple of weeks. here in russia what's getting the attention on the back of this is of course the currency market. the ruble, which is always an important market for this part of the world. and here in russia one of the things you can notice is if you look at the first chart, what we've done is we've put

ruble-dollar on top, the s&p on the down side. when the first chart goes higher, that's a stronger ruble. one of the things you can see from 2000 right through 2007 the strength in the ruble is being mirrored with the strength in the stock market. that's not a surprise. it's a proxy for growth. that's been a tight correlation until the year 2007, when the credit crisis began. things started to change. as you can see on the second chart, again, ruble on the top and now we have crude oil on the bottom. ever since then the correlation has come from the ruble and crude oil market because energy is the key market in this part of the world. of course it's almost like you trade the ruble and you put crude oil up beside it not only day to day but the intraday correlations are very important. so it's not just about stocks, it's about the ruble and particularly the crude oil market. not to say the stock market doesn't matter. of course volatility in global markets throughout the u.s. and the world matter. but one of the things of course here in moscow is the misek. a very important market here in russia. the market has bottomed, as you can see on chart 3, it bottomed

similar to where it did in 2003 and 2004. it had a strong run higher just like it did in 2005. and now we're correcting to the down side. ultimately like global markets, u.s., asia, we think it's still choppy, it's still corrective but we do think the up side trajectory is consistent and it has more to go. in this part it's about the ruble, it's about crude, it's about the micex, and the unfolding correlation that continues between all of these markets. >> all right. thanks very much, jordan kotick. it's interesting to note the ruble is so closely tied to crude oil despite the fact that all of the securities in russia are based on the dollar. >> of course, that's because the country's entirely tied to the commodity business at this point. >> absolutely. oil and natural gas. >> yeah. >> we are in the final stretch here. 25 minutes before the closing bell sounds. and the market remains low. down about 42 points on the dow. and the nasdaq also -- actually, the nasdaq is higher by a fraction. i think that's a huge victory, bob, given the fact the nads is

up 20% year to date. >> you would expect tech to sell off a little bit more here and take some profits, but it's not. it's holding up at least right now for the 11th straight day on the nasdaq. up next we'll discuss which sectors could lead the markets higher from here and whether you're better off in stocks or bonds right now. >> certainly a lot of money moving into the bond market. after the bell another "first on cnbc" interview with senate banking committee ranking member richard shelby. find out why he's so convinced and concerned the federal reserve getting more power is destructive. how he thinks the fed can be audited without interfering in monetary policy.

welcome back. the president finished his press conference. he did speak about american-iraq relations but didn't say anything about health care. we thought he might say something. >> saving that for tonight because we've got a primetime press conference coming up at 8:00 p.m. eastern time. we're back with our guests for the hour. gentlemen, good to have you back with us. let's talk about what we heard out of the president, what we

didn't hear out of the president. do you think that the reform happening on the table, what the reform is on the table right now is going to dictate investing? >> well, it ruined the health care industry. we had -- some things came out, health care stocks started to sort out winners and losers. but i think the opposition that's in congress right now and kind of growing to the extent it pushes out health care reform to later in the year is going to increase uncertainty in health care cuts, maybe reshuffle the deck in terms of winners and losers in health care. >> yeah. especially in that sector it's a big deal. also from a tax policy perspective how our taxes are going to change this year, next year. in terms of who pays for this. >> do you look at the policies coming out of washington as a director in terms of investing? >> well, certainly. a new york city resident earning over $1 million is going to look at a 60% tax rate on their last dollar of income. that is certainly going to

dictate investment decisions. >> you think as we get closer to this becoming a reality and if these kinds of tax increases actually occur it will put pressure on -- >> definitely. >> because right now let's face it the markets are moving up. there's still a high likelihood that this will not pass in its current form and that may not happen. but if we get close to these kinds of tax increases you think it's going to affect the number? >> we do. >> it's a huge number. 60%. >> there's less to invest of your paycheck certainly. and there's other tax increases that are most likely going to happen over time. we were talking about social security, taking the cap off the social security tax. and you know, those are the types of things that means less money in everybody's paycheck. >> as we put sxhor more dollars into the federal government and they're managing the money, i think we've got less gdp. that's less good for overall corporate and profit growth and less good for the stock market in general. that's one of the things they're really struggling with is how much money is the government

managing versus private sector. >> this whole credit crunch has focused on the bond market and focused on maturities. tell me how the muni bond market has been holding up in the face of all these worries over credit. >> the muni bond market has improved tremendously in the last six months, as you know. you know, the last quarter wasn't as good for muni bonds as it was for corporate bonds. but we still see a lot of value there. the longer end of the curve is representing the most value probably at this point. but you know, if interest rates increase, that's a risk. the shorter end is your best bet if you want flexibility. and that's why we're recommending more in the intermediate term. >> we only have a few seconds. but why aren't muni prices under more pressure given what's going on in california? given even the remote potential increase in default risk, why aren't we seeing more pressure? >> the most cited municipal was with orange county back in 1994. every single debt was paid. so people know that they're going to be bailed out if they hold that debt.

>> because they're first in line. the creditor is -- >> correct. >> do you think this is becoming a show me market? here we are quiet in terms of equities, down, you know, 40-plus points or so. but also we're in the middle of earnings season for the second quarter. the market is up pretty substantially year to date. certainly nasdaq and over the last couple weeks even the larger cap companies within the dow. are we still waiting for evidence of a turn, or what? what are people taking to the sidelines about? >> it's going to be more show me coming up now. now you're priced for a perfect earnings season. as we go on, everything got really ebullient after goldman and apple reported and it's all good. but i think we've got another quarter to look forward to that's going to be show me. you've got to show me. earnings have to advance to support these valuation levels. >> and yet for every company that's making the case about

stabilization on the top line their company's being very cautious. whirlpool talked about reduced demand in key markets. that stock was down 10% even though they beat on the top line. >> i really thought that microsoft would pick up more now during this earnings season due to that management caution. but again, investors have decided they need toer on the side of being wrong and not being cautious. they're afraid managements are being overcautious for a v-bottom recovery so they need to own the stock. >> you want to be looking international as well? >> we like emerging markets right now. bric countries, especially china at this point. we think there's a lot of opportunity there. because we're looking at 2010 growth in china of 10%. that's something certainly we want to think about. >> does that mean you're buying on the shanghai stock exchange direct or you're looking at companies that have exposure to that? >> we're looking at money managers who have expertise and they're purchasing the stocks. >> locally. >> where do you think we're

going with homes? existing home sales tomorrow. i know that it's still very iffy, but you look at a company today, we hay small company i told you about, nvr, their numbers were right up across the board, much better than expected. all the metrics. top line, margins, the percentage of homes they're selling in the communities with up. any hope here? >> in housing? maybe. maybe in residential housing. but again, i think the problem is switching to commercial real estate. you've seen a number of banks, smaller banks come out with problems in commercial real estate right now. those loans are just now hitting 90 days delinquent and have yet to roll -- >> but if we get a bottom in home prices, that's a major pin for the bulls. that's a major call, if we can get some kind of bottom in the home -- >> it could be. but i haven't seen it yet. it's not there. the rate of decline may be slowing, but you need to see a big increase. that is not going to happen overnight. anecdotally i see prices still falling in areas --

>> and i don't know what kind of pin -- first we need the housing market to stabilize but then it was we need the toxic assets off the bank balance sheets. then it was we need the consumer to gain sxochbs come back into the market. all three things are important and now it seems like some of these things are on the sideline. how about toxic assets coming off the balance sheet? that's completely fallen off the radar. >> where there's a lot of assets including toxic assets is on the fed balance sheet, or perceived to be toxic assets. the fed has purchased long dated long duration fixed income products which now is a highly levered hedge fund in and of itself. a lot still out there subject to interest rate risk even if the credit is good. >> you're right, maria, deteriorating credit is a major issue but so are the home prices. if we can get some kind of signs of bottoms in awful these areas, the bulls are going to crow like crazy. they still can't make that claim right now. >> would you buy the toxic

assets? >> would i buy the toxic assets? no. we're more conservative. >> some people say they're not really that toix, they're going to be -- >> the question is what price are you going to buy them at? >> it's the same thing when we're recommending munis, we're looking something more about aaa general obligation bonds as opposed to something -- >> you're a aaa guy. >> at least an a guy. >> all right. do you think the market's going to be higher or lower by year end? what do you think? stock market. >> i think it's going to be about the same. >> about the same. >> i think it will be higher. >> why? >> i'm going to bet with what the market is telling me right now, and that is that earnings will kind of be better. anniversary investors want to own this market. it's up substantially on the year. i think it goes a little higher. not a lot. >> goldman raised price targets, credit suisse, barclays -- >> you're the only one -- i've done this anecdotal survey the last two weeks where do you think the market's going to be the rest of the year? urt only one who says about the same. everyone says higher.

>> it could be lower before we go higher. >> that's helpful. >> thank you so much. appreciate it. great to talk with you tonight. >> and we've got, what, ten minutes to go before the closing bell. we're right in the middle of the range from where we've been in the last hour. let's talk about the "fast money" final call. we're going to discuss where the markets are heading. up next, where the smart plays are right now. 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.

time for the "fast money" final call. earning season in full swing. mixed earnings, where do we go from here? this guy always has an opinion on everything. you know steve grasso, director of institutional sales at stuart frankel. you know the basic bull story at this point. a little bit more safe -- let's call it moderation or top line visibility, which is sort of helping maybe bottom line visibility, which is making people a little more confident. are you buying into this game? >> i think the wordiness of your question -- >> yeah. >> -- is the point that everyone's watching here, is that if you have the earnings right now -- no one knows what

to look at. all they like is the fact that earnings have been better than expected. people thought they were going to get hit with bad earnings right off the bat. they haven't. goldman sachs turned this market on its heels. and that's what people are waiting for. i've said it before. when we're at 870 everyone thought 850 was coming up and they didn't get it. >> let's talk about goldman because the financials were having a great day. wells fargo wasn't particularly great. keycorp wasn't particularly great. credit concerns over there. then 12:00 eastern time goldman sachs comes out and says we're going to repay the tarp money. now, is this shocking news? but it turned financials. >> exactly. and the rate of return for the government was a 23% annualized rate of return. people were worried about taxpayer money. they got paid back. and i think that was the big news there. >> the important thing is -- this was in less than a year. and i think the numbers -- i think it was 1.4. 1.4 billion, i believe. this is what the government made in profit. and state street, they also paid back, i forget what it was, i

don't have my notes here, but 400 million or 500 million, something like that, was paid back by them. i don't remember the number. >> i think the important thing besides that was before -- as you said, that turned the market and the financials. the important thing besides that was the losers were being judged separately. they weren't being judged as a sector any longer. >> 166 million is what state street paid back, i beg your pardon. but isn't it amazing that everyone was carping about the fact whether we should have anything to do with helping the banks out and now the federal government is making a tidy profit as these banks repay significant, significant interest here. now, i'm looking for state street's number -- they paid 11% annualized return. >> you won't hear that from the government. the government is going to continually talk about compensation about how goldman sachs is making money or how much goldman sachs is paying their employees. these are the best and the brightest. i'll say it again. but you won't hear how much -- >> but the point is the fad, not only are they making money for the country, they say the banking system.

or am i exaggerating? i think they help save the bank system. do they not? ? did they save the -- it looks like they did at this point. but a lot of these companies, bob, as you know, didn't want the money. they were crammed down with the money. so i think there's a difference between the companies that need the money and the companies that didn't. >> the point is it's been a great investment so far for the american public. >> unlike the health care reforms that are coming down the pike. that's not a great investment. >> we'll be arguing about that one here. so where do we go from here? do we have enough -- we were just talking with the guests earlier. how do you sign a multiple on this? even though you say we're get something kind of moderation, whatever you want to call it, in the top line, we have some stability here, how do you know what the market's worth? >> why don't we look at it as an overall? 953 right now. for '09 the highest intraday was today, right? 959 in the s&p. before that it was 956. people are still looking at it as you can't be short in this market. that's the key. we're still trading off of technicals. >> now, when did that market turn?

when did that change like that? you see little bits of good news the market jumps. bad news it doesn't do anything. >> right. around that 870 level. when we bounced from that 870 level everybody was thinking much lower in the s&p. when they didn't get it it made the shorts fear for their lives. not all are covered yet and that's why they think the s&p can get to 1,000. >> you can see this guy at 5:00. he's one of the regulars here. "fast money," the money gang, all the action, including live action from ebay's conference call. plus mr. softy's earnings for tomorrow. from one of the top analysts on the street. melissa and the traders, live at 5:00. maria? >> bob, thanks so much. quick break and then the closing countdown right after this. then after the bell ebay and qualcomm on deck minutes away from reporting the latest quarterly results. we'll break down the numbers, have the instant reaction for you. 4:00 p.m. eastern.

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called the telephone. i can call td ameritrade anytime and talk trades, strategies. anything. that's where the action is. td ameritrade. built by traders for traders. announcer: trade commission free for 30 days plus get $100 cash, when you open an account. on the face of it we look at the actual comment frit companies. there wasn't a lot of reason for the markets to go up today. you look at wells fargo you had some credit issues there. keycorp they had some credit issues. you see all these cautious comments from the ceo of delta talking about the fact what a lousy year it's been, 2009 is not going to be a good year.

you look at whirlpool, they were making cautious comments. and yet look, the market is basically sideways here. it's the resiliency of the market. it's the fact if you get some pieces of good news the market pops. but if you get generally bad news or kind of disappointing commentary the comment doesn't do much. this is not lost on anybody in the trading community. the risk is on the up side for the market and not on the down side. if you listened today to our guests, maria's guests and my guests, you'll hear them keep saying right now we're more interested in trying to find ways to get more invested in selected areas than to get out or to say that the market is topping out and we want out. that doesn't mean that the bear position isn't over. there are plenty of bears who think the market will move down, notably in september and october, as everybody realizes that we're not going to get that kind of top line stability that some companies have been talking about. and there, thank you, is the closing bell. you know who's next, maria bartiromo.

and it is 4:00 on wall street. do you know where your money is? i'll tell what you that was all about in a minute. there's some screaming going on down here. hi, everybody, i'm maria bartiromo. do you know where your money is? it's 4:00 on wall street. welcome back to "the closing bell." here's what we're following at the close tonight. it's been a rock and roll day, really back and forth all day. struggled to find direction really possible is the best way to say it. the dow, 54 cents a share is qualcomm, and we're just getting it right now. we're going to get right back to that in a moment. the earnings just came out moments ago. qualcomm. the estimate calls for a property of 52 cents a share. 54 cents a share is the number. we will look behind the headlines coming up. the dow, seven-day winning streak meanwhile coming to a close tonight. weakness in the energy sector, some profit taking from the recent rally driving stoc low yes. home builders one of the bright spots on wall street after a

better than expected increase in home prices for the month of may. and the earnings keep on coming. ebay is out momentarily. qualcomm just came out. the earnings look like it's 2 cents better than expectations although we are waiting on the revenue number and more details in terms of the third quarter and what the company is focused on here in terms of growth. 54 cents a share is the eps line for qualcomm. and that is two cents better than the 52 cents a share analysts were looking for. let's take a look at how we finished the day on wall street, meanwhile. as we get more information from qualcomm and we anticipate ebay numbers. revenue at qualcomm, by the way, $2.75 billion. the estimate calls for revenue of $2.73 billion. so we have revenue at 2.75 billion and earnings at 54 cents a share for qualcomm. the dow jones industrial average meanwhile ended under pressure today. the market was lower at the close. and we had basically a quiet, pretty stable day, although there was a real struggle for direction. just over a billion shares traded at the nyse. nasdaq held on. in fact, ww