higher along with tesoro. and you know what, we talked about all those dow components that were out with their numbers today. five in all. well, at&t today, they beat -- they did well especially on the wireless side, and that is a critical part of the story as we've heard from weakness from the likes of nokia and sony ericsson over the past couple of weeks. but not at&t. they had record low churn and that's the rate of cancellations. that was at a record low. that's critical as well. then if you want to say well, of course they did well because that was due to the iphone from apple. well, it wasn't exclusively to the iphone. and that's part of the interesting story here as well. low-end, mid-range and the high end if you will with the iphone is where the strength for at&t was. the stock up 3 1/4% today. take a look at the transports as well. oil higher today. the transports rupp by better than 100 points today. ups, united pacific, and ryder all either met or beat expectations. said they did see some stabilization. they still gave cautious comments. guidance was still a little weak. and when you talk about companies that really epitomize

what's happening within the economy, you want to look at the transports because you want to see volumes picking up on the rails and from the truckers and things like that. and then 3m is another one. clearly to look at today. easily beat expectations. and that stock was having a nice session as well. you'll see it up almost 7%. one of the top performers on the day. our team is covering the markets. around the horn the nasdaq, the nymex, and the floor of the cme group in chicago. look, the nasdaq's been on a huge run, and that's why we're going to brian shaktman, who's up there. brian, what a run. >> what a run. and we're outperforming the two other major indices today. it would be the 12th consecutive day in a row to the up side. we haven't seen that since january of 1992. where were you in january of 1992? i was studying in the library. yeah, right. amazon.com and microsoft. let's talk about it. amazon, you didn't buy books from them until about 1996, i believe. they are both reporting after the bell. amazon, we're expecting, you know, pretty strong year over year on the top line, but we'll see what happens on the bottom. microsoft actually lower year

over year in both ranges. 32 to 38 a share. so the analysts are really in a tight one there. both to the up side strongly today. what else is working? ebay. deshlgs research in motion, google also to the up side. ebay of course, that strong guidance part of what's buoying that. google up 3.1%. but i'm told that apple up .8%, now supplanting google in terms of market cap. it might not mean a whole lot. but it is kind of psychological. celge celgene. want to talk about celgene and intuitive surgical. both up side. celgene has good earnings but also has to do with a multiple myeloma test. it was so good they stopped it and intuitive surgical just hitting it out of the park. med rex, mike huckman will talk more about this. bristol-myers taking it up by 16 bucks a share. chips definitely weak today. qualcomm, sandisk all getting hit pretty hard. especially relative to everybody else. it's a guidance issue. when it comes to the earnings report. going to talk to their ceo in just a little bit. to the up side. they made money. united airlines will be cutting

9,000 staff for the rest of 2009, but jet blu a strong one on the day. >> it's interesting how much oil traders are talk baernings these days as well. they're watching the earnings because they're following the stock market and the fact that we have the rally today in stocks, part of the reason why, we're looking at oil prices that closed today above $67 a barrel. it is the highest price we've seen since the beginning of july. coming back to those early july figures and up about $12 just since last monday. we're also looking at gasoline as a very important factor leading oil higher today. the gasoline rally really has a lot to do with the fact the refinery runs have come down sharply over the last few weeks. down 2% in the past week. and that perhaps leading to tighter supplies over the long run. and that is listing not only gasoline and the gasoline cracks in particular but also heating oil and heating oil cracks as well. in terms of retail gasoline prices they've been falling for the past month. they've now turned around a little bit and up about a penny.

$2.46 a gallon. natural gas we saw a technical rally over the last couple of days that took that to the 3.90 level. a technical sell-off has natural gas prices sharply lower today. and when you look at the metals, copper at a new high for 2009 today. silver really leading the way. a new silver etf introduced today. some analysts attributing that to part of the gain we got in the silver market. rick santelli, to you in chicago. >> well, thank you, sharon. it's no surprise that we're seeing what is turning out to be a huge day in equities. turned treasuries into a huge day. and catching many big traders flat-footed that are going the wrong way on being long treasuries. now, if you look at a five-year or especially a ten-year on these intraday charts you can see that they've both caught up. the five-year was leading the way. it's up close to 20 basis points. 10-year's up close to 20 basis points. if you look at a multimonth for the ten-year, these are the highest yields. we haven't closed above a 3.70 yield since the 19th of june. but what's interesting is the

close is always what traders look at. but intraday we were about at this level on monday before everything reversed going into mr. bernanke's two days of testimony. some things i'm hearing on this floor, very unusual. some of my buddies on the floor that trade, some of the traders were looking to make some shorts today. and they said their traditional avenues of finding stocks to short were pretty much dried up. that says volumes as well. and as many of our commentators have pointed out, there is some talk that the notion of maybe less big expenditures without a lot of details in health care is viewed as an equity positive as well. the dollar, it's kind of sideways except for a huge day against the japanese yen. maria, back to you. >> all right, rick, thanks very much. we had that home sales data out today, which certainly was very positive. and now people are expecting that perhaps we're seeing some real stabilization there. better-than-expected existing home sales report. diana olick is following that story right now in washington. she has more on that. diana. >> well, maria, existing home sales rose for the third month

in a row, indicating a stabilization in sales if not prices. but it's somewhat disjointed take a look at np sales up 3.6% although much of that was driven in a surge in multifamily. single family up 2%. prices up 15.4%. but that's actually an improvement from where they were last month, down nearly 17% year over year. inventories are trickier. yes, down a bit, but that doesn't account for so-called shadow inventory. >> i believe there are many banks including fannie and freddie who are also holding on to some properties. they are releasing foreclosed property on a measured way so as to not flood the market, which they perceive perhaps that could lead to even more drastic price cuts. >> and gern, it's very disjointed. the supply of homes on the market listed at under a quarter of amillion is just a six-month supply. historically that's pretty good. and that supply is based on number of homes and sales pace. the supply of homes at over $1 million is at 20 months. mostly because the sales pace at that level is so very, very slow.

still the news today sent beleaguered builder stocks up. news of stabilization in sales on top of a rise last week in housing starts is giving the builders a little bit of juice. the trouble is how long can that juice last as things start to change over the summer. now, i'm hearing from sources that the builders are very worried about that shadow inventory of foreclosures that we're talking about because they compete directly with new properties. they're also going to lose that first-time home buyer tax credit soon. some builders, however, are offering $8,000 up front to major for it. for more on all this, go to the blog, realtycheck.cnbc.com. maria? >> diana, thanks very much. speaking of how much juice is left, what about this market rally? got the dow up 202 points now. let me bring in our guest as this market soars on the heels of those better-than-expected earnings. gene kernan is with us, president at macro risk advisers along with thomas lee, chief u.s. equity strategist with jpmorgan. glad to have you in person, tom. usually, we see you remote when you're on your trading desk at jpmorgan. so let's talk about what is behind this move. some people say look, this is a lot of short covering.

you don't see that. you don't see that on the december snk. >> we haven't seen evidence of short covering. >> yeah, this has been a synthetic short position because people are -- we're seeing that money put to work. today's been a very big volume day. so it's been very good. and if there was short covering, we would see the russell outperform because the russell is more heavily shorted than the s&p and the russell's barely keeping up. so we don't really have evidence of short covering. >> do you agree with that? because if it's not short covering, that means it's actual commitments to put money to work in stocks and perhaps money coming off the sidelines, which we know was sort of waiting there for a place to go. >> a bit of a -- fear of missing out. there's money sitting in things like money market funds that's being chased out. that's ben bernanke's strategy from the get-go. it's very powerful. it's very tough to get in front of. and it becomes self-fulfilling for the short term. the stuff that we're looking at very short term is short dated up side calls on the s&p 500. we're not committed to being long the market for any extend

period of time and with the vix so low right now you can buy a lot of calls for very little bit of premium right now. >> thomas, the number of bullish calls seems to have picked up of late. bill miller was out last night from legg mason saying the conditions are right for another bull market. jack ablin positive, you positive. is that more momentum into this market or should we be worried that it's a little topee? >> well, i think if people were getting bullish and there was no fundamental evaluation support it's going to be very tough to sustain momentum. but there's a lot of micro data that's supporting a recovery. like true blue, for example, talking about manufacturing, staffing, hiring picking up. orders are improving for illinois chill works. there's visibility developing, actually. >> who is the buyer today? is it institutions or individuals, do you think? >> you know, you have positive money flows into money markets and now into equities. so asset managers have to -- you know, have to buy on the dips

now. >> we see a pretty mixed bag of economic and financial data. i think the earnings surprises have been generally positive. bottom line, not as positive top line. so the question becomes end demand. where's the final demand? we always go back to the u.s. consumer. we're looking at concern about the pace of job losses and the extent to which people are underwater on their mortgages. we host aid dinner at macro risk advisers for our clients this tuesday, and especially most of the focus was on the continuation of this theme of how do we unwind the debt that sits on the balance sheets of corporate individuals and increasingly unfortunately the treasury and federal reserve. i think that's the big question. and that may be a long ways out. it doesn't make you necessarily short the market now, but we're positioning for a decline in the market in the months ahead. >> thomas, where do you see opportunity right now in this market? is it small caps, for example, which haven't exactly come along for the ride yet? >> well, we think this is a smokestack recovery. so very heavy e.m., heavy industrial. which means you want to be

cyclicals over defensive. but you definitely want small cap over large. and i think the next couple months the big trade's going to be buying the russell over the s&p 500. >> that will catch up to the s&p? >> that's right. in the first year of a major bottom the russell generally outperforms by 2,500 basis points. it's only been 1,100 basis points now. so we're talking about maybe a 25% move into year end. >> i guess the question as far as sectors, which sectors do you want to be in to really participate in this? but before i go there, real quickly, you think this market's going to be higher at the end of the year? >> correct. >> you agree with that? >> i think it's kind of a tossup. i think it's going to be higher in the next two or three weeks. i think the market could easily run into trouble in 2010 and 2011. >> b >> but sectors in addition to the small cap -- >> we're focusing on industrial commoditi commodities, stocks that have a linkage, beta to industrial commodities. it's really a china slash kind of anti-dollar play. china is stockpiling reserves

outside the u.s. dollar. china is the basis for a lot of what's going on right now. i think it's important to watch china. >> thank you. great to see you. we appreciate it. thomas lee, dean kerner. >> we've got about 45 minutes to go here before the closing bell on wall street, maria, and the dow jones industrial average is good for 208 points. it's the highs of the day. crossing that 9,000 level. the s&p crossing 970, which is another technical level people were looking at. what can you say about the nasdaq and that run that technology has been on? >> make it 12 today. how about oil? back above $67 a barrel. what's that do to the airlines? we're going to check in with one of the executives in the space. the ceo of jetblue airways joining us. the new ceo dave barger, coming up. >> and after the bell cnbc is your home for earnings central. we're going to break down the latest results from amsz amazon, american express, and microsoft today at 4:00 p.m. eastern with maria. >> but first, here are the most heavily traded stocks on the nyse today, led by ford. back in a moment.

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welcome back. a profit surprise from jetblue airways. the carrier pushing second quarter net income of $20 million. that compared to an expectation of a loss. compared to a loss a year ago, rather. $9 million loss a year ago. near 60% decline in jet fuel prices helps cushion weak demand in this environment. jetblue shares tonight up 2 1/2%. joining me now in another "first on cnbc" interview is dave barger, he's president and ceo of jetblue airways. good to have you on the program. >> maria, thanks for inviting me. >> thank you for coming really. can you characterize the quarter for us? what were the main highlights you saw this quarter? >> i think a good quarter. i think what was most important is we're focused on a cost structure but also driving revenues. with our young fleet that really worked for us. we learned a lot. with oil running and also a softening revenue environment, and slowing the growth helped us a great deal. >> what do you mean it helps you a great deal to slow down? >> i think today to take new airplanes and to really open up a bunch of new markets it wasn't too long ago we were taking an

airplane every ten days. we're taking nine airplanes this year as opposed to an airplane every ten days pup don't have that -- the maturing market effect that tends to take a great period of time. >> ah, that's an interesting point. what about fuel? obviously one of the biggest factors for your earnings this quarter were lower fuel costs. how are you hedged for the third quarter and beyond, and how impactful is it to see these moves in oil? you know, when we were talking about $32 a barrel, $35 a barrel oil, it was all positive for the airlines. but here we are back up kissing up against $70 a barrel again. >> we're becoming more and more hedged. more of volatility insurance. so we're off the program that we had the previous several years at jetblue. we learned a lot as oil ratcheted from 147 down to 32. i think that as oil continues to run, again-w our fleet and our business model this is an airline that can be profitable as oil goes north. and i certainly believe it will. >> and i guess you have no way of knowing what's going to happen with the market. so you have to hedge yourself. how hedged are you? >> yeah, we're closing -- we're adding layering in.

again, it tends to be more of a volatility insurance. right now as we close the year it will be about 15% hedge going into 2010. but we're actively layering in hedges. just to flatten out that volatility. >> what does the order book look like you to for the third quarter and fourth quarter of this year? what kind of a second half would you expect? >> well, earlier today with our earnings call we talked about that we expect a profit in the third quarter and fourth quarter. all four quarters this year in a profitable year. we're still looking at a softening revenue environment. but this is a business model. people are booking closer. but they're looking for value. and i think that once somebody flies jetblue for the first time it's like, hey, this is really good value. >> for sure. >> it's a new airplane, it's nice staff, it's in-flight entertainment. customers are watching us right now at altitude. >> exactly. so when you look at the overall that your colleagues like delta, ual airways filing for bankruptcy court protection in the last downturn, similar

situation with the autos, what can you tell us about the broad industry today? how does it feel to you? >> it's interesting. growing up in detroit, so the auto industry and of course maturing industry like steel and airlines -- >> yeah, you've seen that. >> seen a lot of it. and my sense -- it was five years ago where the domestic airline industry, over 50% of the seats were being operated by airlines in bankruptcy protection. my sense is we still have too much capacity. i think from a washington point of view it's let the free market determine who the winners and the losers are. that would drive a much healthier industry overall here in the airline space. >> so you think we'll see even further consolidation? because we've already seen mortgagers. but some people say look, it's not about mergers, it's about getting capacity out of the air, and that's bankruptcies, companies closing shops, too many planes in the air. >> i really do. the industry is about 10% smaller based on capacity this year based on 2008. but i think it's going to be a combination of whether it's bankruptcies, mergers, old fleets being sat on the ground,

i do sense we're going to see a smaller, more robust airline industry in the years ago. >> i'm sure. what's your sense of when this economy turns around?c >> i think -- >> i know it's the million-dollar question, you know, it's hard to say. but -- >> i guess i'm heartened, though, by what i'm seeing. we saw closer in bookings and people who were traveling. again, who were shopping for value. we're still planning negative gdp as we close 2009. but some of the data points that i'm seeing opening new markets. lax was our newest market. we had one of the just best months that we've ever had in a new market by opening up los angeles to our home in new york. i'm heartened by what i'm seeing. >> the only place you go to in mexico is cancun. the impact of h1n1, is that right? >> we had an ym pact. $5 million just in cancun alone in the second quarter. 20 million across the network. but i'm seeing more and more people heading to mexico as well, and i'm really encouraged by that too. >> a little less fear there. mr. barger, good to have you on the program. >> maria, thanks for the

invitation. >> we very much appreciate it. dave barger, ceo of jetblue airlines here with us at the nyse. we have a market rally under way. dow industrials back above 9,000. first time that's happened since january. up next another take on whether this rally is for real, where you should be investing right now. should you commit new money today? today? back in a moment. u have questio. 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.

welcome back to the floor of the new york stock exchange. joining us now is art cash-in, director of floor operations at ubs financial services. and of course peter costa, president of empire execution. he is the executioner, ladies and gentlemen, and a cnbc markeq analyst. guys, it's good to see you down here on the floor. and of course sue herera's here too. sorry, sue. 200 points to the up side. is it all earn sngz stt health care thing? what? >> well, it started with earnings. you had on your network meredith whitney came out and said she likes goldman sachs and several other banks. that began a turn that has lasted pretty much right through here. it's the feeling that the review of the health care thing maybe means nobody's got an absolute rubber stamp down in washington, and i think the market likes that.

>> peter, what about you? do you think this is short covering or do you think this is real money on the sidelines, coming off the sidelines and going in? >> i think shorts are definitely covering stock here. i don't think this is all short covering. you know, you're looking at earnings, like arthur said. it's a combination of a lot of different things. and the short covering is part of it. i think last week there was some short covering early on. and now that the market rallied again, they kicked in in certain points and that's what we saw. but we're also seeing a lot of positive feelings from the earnings. >> you're seeing real commitment? >> you were starting to see some real commitment, yes. >> let's bring our own sue herera into the conversation. sue, it appears the number of bulls out there is growing. bill miller from legg mason saying that the conditions are right now for a bull market rally. jack ablynn is out positive now and we've heard from our other  guests today who are also q joining the bullish course.q what do you make of it? >> i think the question is whether or not they're willing to take on risk for a longer period of time. the people i was talking to q today said that what we saw was

risk is being repriced once again. and they're willing to take on ri risk, and they're unwinding treasury position that's they  may have had for an extended q period of time. the moves we saw in the ten-yeaq note today was pretty darn dramatic. it was down better than a point at one point in the trading q session. and that money was moving into the bond market. we also saw the dollar all over the place against the euro and the japanese yen. so i made some calls. and most of the people i talked to said yeah, we're willing to take on a little bit more risk. whether they do that long-term or not is another question. it would be interesting to hear peter and art's perspective on that. but today the risk trade was back today. >> well, it's true. for a long time there was so much money moving into the bond market. i guess it was $160 billion this year pup still have a very substantial position there but is this going to take money out of bond markets -- >> as sue said you're seeing a little asset allocation flop and if they leave the treasuries and even put a small amount in, remember, it's summertime, these are very thin and illiquid

markets so a little money has a disproportionate impact and it's moving the market a great deal. >> what are the catalysts now? what do you guys look at in terms of taking this market to the next leg if in fact it goes higher from here at 9,000? >> i'm sold at 9,000, but i'm not sold to the 11,000 or 1,000 level. i do think we're going to see a pullback at some point, probably in the next couple of days. we've hay great move. i mean, every indication tells you that we could possibly go higher. that's when i want to be a little bit lighter on my position. >> because the economic fundamentals are not there? >> yeah, i don't think they're fully there. i mean, the market also prices itself a little bit ahead of the economy. and you know what, i'd take some money off the table at this level. i'm not afraid. >> look at caterpillar the other day. caterpillar was a dog the other day, saying things didn't look quite as good at some of the emerging markets as they thought. today it was a big percentage mover. and that's the kind of weird kind of market action that i think peter as lewding to, that one day things like caterpillar

don't work and today it's a 6 1/3% gainer on the day. >> it's interesting about this move we've seen it's been such a broad-based rally. if you look at the sectors that have risen here, it's so different than the pull off the march lows we had which was basically led by financials. this is across the board. materials up 18%. tij 15%. so it's really been broad-based. >> it tells you that part of the driver is the train is leaving the taij station, hurry up and get on. that's why they're going into etfs, baskets and everything else, and that makes it very broad. >> great to talk with you as always. thank you so much. we appreciate it. "fast money" final call is up next. we're going to check in on biotech stocks, see what's happening there and whether or not that's an opportunity for you.

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welcome back. very broad-based rally today. about 25 minutes left before the closing bell sounds. and let me just give you a little read from my screen here. strength across the board in the banking sector. bank of america, jpmorgan each up about 4% apiece. general electric, parent of this company, up better than 3%.

the investment banks also doing well. goldman sachs up 3 1/2%. and you've also got the oils very strong today. chevron and exxonmobil each up about 3% and 2% as well as technology. microsoft reports earnings after the bell tonight. the nasdaq is doing well as well as the dow industrials. nasdaq up 2 1/3%. and microsoft is certainly part of that with a gain of 2 1/2%. google up 2 1/2%. amazon on the heels of that deal yesterday up 2 1/2%. s&p 500 strong. i guess the question is what is not strong. walmart is down as are a number of the defense names. northrop grumman, lockheed both weaker today, aig, cit each weaker. but for the most part pretty much money moving into this market. >> and broad-based. it is time for the "fast money" final call. the markets are sharply higher today on better-than-expected earnings and a housing report, a possible delay in president obama's health care plan may also be playing a role as we've been saying. brian stutland is president and trader at stutland equities and a "fast money" contributor.

brian, it's good to sigh this afternoon. >> great to have me. thanks. >> i know we're going to talk about biotech. but we're in the midst of this 200-point move on the dow. what's your opinion on this move today? >> certainly this has been a rally where option traders were actually predicting this. all week long last week and earlier this week we saw call buyers of the 980 strike up to the 1,000 strike in august in the s&p 500 options. they were buying those options predicting this breakout, once we got through 942 on the s&p, that we would continue to rally and push toward 1,000 on the s&p. i think those premiums now are a little dppsi little expensive. maybe the rally runs out of steam a little bit on this rally but certainly we're on pace to break 1,000 on the s&p. >> you've got the likes of bill miller from legg mason coming out saying that low valuations are one of the factors into why he thinks conditions are ripe for a new bull market. >> right. a lot of companies have been doing great jobs of cost cutting, streamlining their business, and improving their bottom line, improving their earnings picture. that's getting people excited about the market and that's

pushing the market higher and people are starting to look forward even to a couple months down the line that maybe we're coming out of the recession and unemployment will start to ease and we'll get better times ahead and that's why you're seeing this market rally. >> you think it's short covering at all or is it completely real so to speak? >> certainly some of the calling buying we're seeing could be people that are short, now trying to get in and recover and get some of that leverage to the up side. that certainly is playing a part in this big move today. i think some of that will start to subside now that we've gotten the move and now we can get a good consolidation is push a little bit higher. >> tell me what areas you like and we certainly can work biotech into the conversation as we look forward to the president's health care plan, which at least seems at this point to be on a bit of a delay. >> last night, you know, president obama, when he was talking about the health care plan, really stressing and emphasizing health care information technology. and that really is going to be the key. you know, medicare, medicaid has been a huge cost burden on the american people. and i actually like them seeing that they're going to push this bill out to september because to me congress and capitol hill need to sit down and get all these pieces correct here

because really the key in this whole piece is streamlining the business. when patient care -- when he walks into the hospital and leaves the hospital, the efficiency is quite an archaic system right now. and information technology within the hospital is going to be the key to cutting a lot of costs and a lot of problems out there. >> how much of these stocks that you like within that sector already moved on the expectation of a plan going through? and have you missed the boat? >> well, not exactly. actually, there's a couple of stocks i like out there that are playing in this space right now. you talk about mckesen, mck. also med assets. both these companies have a huge stakehold. if the bill passes and keys on information technology improving that they're going to be in a nice position to play there. they've moved off their bottom. they look like they're consolidating right now and moving higher. there's been some option activity indicating they will continue to move higher. now, the key thing is there's a lot of private companies out there. there's going to be a land grab when a bill passes on this area. private companies like epic systems, which is huge, apollo

data technologies. they're going to try to take some space away from these names, but these games are going to be key players moving forward and making this efficiency in the hospital. >> technology overall. is there still room to get in on this trade? you look at the sox, the semiconductor index is up something like 80% over the past six months. the nasdaq is on this 12-day run. >> i've been a believer in technology for a while, some time now. all of them are very cash heavy right now.c you might see some consolidation. there's a new product cycle going on right now, cloud computing, palm, handheld computers. that's why people are getting excited about technology right now. there still is room for a leg up. i'd like to see how microsoft earnings come out tonight. i think they should be kind of positive. that's what i believe in right now. and that will be the key to continue to push this market higher. >> all right, man, we'll catch you on the desk. thanks, brian. coming up on "fast money" a "first on cnbc" interview with ebay ceo john done ojo. plus all the after-hours action from microsoft and ebay's conference calls. we'll break down the trade post

earnings. melissa and the traders are live at 5:00. >> we've got some of the best numbers under way here on wall street since january. dow industrials up 200. >> and up next former council of economic chair under president h.w. bush michael bosskin says why he thinks obama needs to move to the middle specifically on taxes in order to ensure an economic recovery. >> twitter has millions of users but has yet to turn a profit. the company anybody in tech is talking about recently. the company's co-founder is with us explaining what's being done to change that business plan. stay with us for biz stone.

the automaker lost 21 cents per share, although that was significantly less than wall street was expecting. earlier on cnbc phil lebeau asked ford ceo alan mulally if the company is ahead of schedule

to return to profitability. >> with everything that's going on in the market and coming back slowly that we reaffirmed our guidance that we would be profitable in 2011 with positive free cash flow also. >> therefore, you're not going to move up the guidance? >> no. with everything we know right now it looks like it's going to be a slow recovery and so i think our guidance is appropriate at this time. >> and the labor department reports initial jobless claims rose by 30,000 last week to a seasonally adjusted 554,000. but the number of americans continuing to collect unemployment benefits fell to 6.22 million, which was smaller than many economists had been expecting, maria. >> you know, scott, last night president obama took his case for reforming the health care system right to the american people in a primetime press conference. but in an op-ed in today's "wall street journal" former council of economic advisers chairman under the first president bush criticizes president obama for not governing from the middle and classified his policies as exploiting the economic crisis to promote big government.

here to talk about that we welcome back to the program michael boskin, who is now a professor of economics at stanford university. so nice to have you on the program, sir. thanks so much for spending the time. >> great to see you again, maria. >> and good to see you. so in your time as chairman of the president's council of economic advisers under the first president bush, you said the challenges facing the administration were similar to what the current administration is faced with. can you draw the parallels and tell us where you think the current policy makers are moving too far to the left? >> sure, maria. when president bush was president starting in 1989 we had the money center banks were insolvent from their latin american debt after the mexicans repudiated their debt. the savings and loans were in crisis, and we had to shut down 1,000 of them to prevent the unhealthy savings and loans from infecting the rest of -- and raising the cost of capital for the rest of the financial institutions in the economy. we had an oil shock when saddam hussein invaded kuwait. we had a recession that was a

much briefer, milder recession than we have now. but qualitatively and conceptually we had many of the same challenges that we face now. this is bigger and more severe certainly. i think that the major problem we have now is the attempt, conscious or in some cases unconscious in others perhaps, to conflate a variety of long-term issues with the shorm severe recession. we had an unfortunate stimulus bill spending almost $800 billion. very little of it has been spent yet. it has no impact yet. that may improve a bit as we get some of the infrastructure spending. but a lot of it's due to be spent after the recession ends. there was a much better way to do this. they would have suspended the payroll tax for a sxwraer firms would have suspend feuder workers, people would have a lot more cash in their pockets already -- >> let's talk about that. some of the ideas you have that the president should be considering in terms of tax policy, in terms of other

policies, what do you think is the most important issue right now in terms of policy that needs to be done? >> i think the president has to -- and the congress have to step back and say we cannot have a massive increase in spending, a big increase in taxes, and an explosion of debt that's very bad for the long run, it will be unfair to our children and grandchildren, it will harm our growth and reproduce partially what has happened to the european welfare states, which have stagnated for a quarter century, but also it's harming recovery now as people are expecting higher taxes, as they're uncertain about what it is. it's one of, it's far from the only, but it's one of the factors that is causing people today not to spend. >> now -- >> and businesses to be worried about investing because they're worried about those future taxes. >> that's an important point because many people in the current administration, whether it's larry summers or aufton goolsbee have told me that getting businesses to spend

money and invest is critical to an economic recovery, we need to get business spending getting going again. how do you do that? >> well, they are right about that, as are you. there's no doubt that business capital spending especially has been very weak and we need to get businesses confident again that both demand will pick up and we'll have a recovering economy. but the economy they will recover into will be more predictable and will be a much stronger market economy, sure, with some of the rough edges of what occurred before, rounded off, some of the problems filled in, probably a bit higher government than i would like in the economy, but certainly not the immense increase which has been on the table even before we get to the explosion in medicare and social security, which will swamp us later on. >> so how do you do that, then? are you talking about incekrents for business? >> the first thing the president has to do is get a lot of the massive increases in spending oft table so business won't

expect giant tax increases to fund them in the future. the second thing, it would be a good thing for him to take a new look at corporate tax. we have the second highest corporate tax in the world. there are other complexities. he's proposing increasing taxes on corporations for some activities. he should be taking a look at reforming the corporate tax with an eye toward lowering the corporate rate, for example. he should be looking at on his -- the things he thinks are really important, he should be looking at pilot programs that he could test, and if they work on the spending side he'll get broad support throughout the political spectrum because he demonstrated they work, to go ahead and expand them. but just to try to go and rush through these immense programs, to micromanage energy, to remake the health care system on kind of a hunch that it will work or the suggestion that it might do some things he like and ignore not just him, but congress, others. it's not just the president by any means. that they think will not cost very much or they hope won't or they're ignoring a lot of costs.

for example, in the health legislation, hundreds of billions of dollars are shifted onto the states for medicaid. that doesn't score in deficits for the federal government, but the same taxpayers in new york and virginia and illinois and california that pay federal taxes are going to pay the state taxes to pay for those. >> and i think it's not including the 5 1/2% tax to the highest earners to pay for the -- >> even above and beyond. and california will be at 57%, which would be among the highest marginal tax rates in the world for our most successful small businesses and individuals and families. and if president obama followed through on his campaign pledge to partially uncap social security for social security purposes it would be above 60%. that's just going to crush the economy eventually. >> where does the money come from, then? >> where the money comes from is -- >> if not higher taxes. >> well, first of all, you get the spending commitments down substantially. sow need less revenue.

on the energy side instead of this highly complex, politically motivated and bureaucratic social engineering policy, should have a modest carbon tax that's broad-based. we should engage in some energy efficiency initiatives. we do need funding for the long-term research that will help scale one, two, three, several alternatives. eventually -- unfortunately, it's going to take decades. in the future to be commercially relevant on the scale of the vast energy industry. and in the meantime we're going to need to increase our domestic oil and gas exploration because we badly need more oil and gas. >> well, you make a lot of great points, michael, and we so appreciate you joining us today and spending your precious time. i hope you'll come back soon. >> it's always good to see you, maria. >> thank you very much. and to you. michael boskin, former council of economic advisers chairman under the first president bush and now professor at stanford university. economics. >> and maria, we're going to wrap it up in about ten minutes on wall street. the dow right now is up 184.

the nasdaq is going to do 12 in a row today as technology is really performing. >> we've got a big deal in the pharmaceutical sector to tell you about. find out which kilometers are involved in the deal, why investors think there could be more ma&a in the industry. stay with us.

welcome back. two more drug companies today, wyeth and bristol-myers squibb, beating street expectations with their earnings and raising guidance. one of them also stepped up to the plate with a $2 billion deal. investors think there's more to come from the sector in terms of m&a. cnbc's pharmaceuticals reporter mike huckman now with a look at who could be next. mike? >> that's for sure, maria. good afternoon. on the bristol conference call today executives said they've got the cash and the cash flow to remain on the prowl for more deals like the $2.4 billion one it's doing with metarex or maybe even bigger than that. bristol's paying 60 cents a share for medx nearly double yesterday's stock price to get its hands on among other things a late stage experimental drug for an advanced aggressive form of skin cancer. that deal along with some earnings and drug data news have

the nasdaq drug index zooming up almost 5%. here's what's driving the partnership and acquisition trend here. set aside the threat of health care rechl for a moment. big pharma's facing intense competition from cheaper generic drugs. most of the major drug companies don't have enough new stuff in their development pipelines to replace their huge-selling brand name pills when they go off patent. but one thing they do have is cash. and some of them have lots of it. meantime, smaller biopharma companies have got the goods in the form of promising, albeit still risky but promising breakthrough medical treatments. here are a couple of boards that include just a handful of names that analysts are mentioning today, or often mentioned in the past as buyout or partnership candidates. and you can see that nearly across the board investors are speculating pretty big today on who could be next. bristol, by the way, said today that it could file for fda approval of that med arex skin cancer drug next year if late

stage test results expected in early 2010 are good. back to you, guys. >> all right, mike, thank you so much. the closing countdown coming up next right after this short break. >> and after the bell of course is it was i big day for earnings before the bell. after the bell as well. amazon, microsoft, american express all ready to report their numbers. that's minutes away at 4:00 p.m. eastern time.

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and welcome back to the floor of the new york stock exchange. it's time now for the closing countdown. they're about to put the finishing touches here on what has been just a great day on wall street. the dow jones industrial average is back over 9,000. the s&p 500 over 975. and another great day for tech as the nasdaq is going to be up for 12 days in a row. better-than-expected earnings this morning. some better-than-expected housing data. perhaps even a delay in the president's health care plan, lending a hand to this rally we've seen across the board on wall street. and really the key term, across the board, because it has been a broad-based rally. materials, commodities, telecoms strong as well. and as i mentioned, a big rally in tech. the bell's going to ring. and then it's maria at 4:00.

and it is 4:00 on wall street. do you know where your money is? hi, everybody. welcome back to "the closing bell." i'm maria bartiromo on the floor of the new york stock exchange. a rip-roaring rally on wall street today, pushing the major averages strongly higher. dow industrials back above 9,000 for the first time since january. we've got strong earnings and housing data leading the way. the housing data after this morning setting the tone. the nasdaq extending a winning streak now to 12 straight sessions. oil also higher, surging on a weak dollar today, and hopes for better-than-expected sales data leading to higher energy demand has investors looking at oil and the oil producers. oil today up nearly 3%. closing above $67 a barrel. all of the major oil producers on the up side. a trio of big earnings moments away that we will have for you. we've got analysis and instant reaction to earnings results am

express, and microsoft. here's a look at the dow jones industrial average. 2% higher at 9,068. nasdaq strong, due to strength not only in microsoft but google and amazon ahead of amazon's earnings also. 47 points higher on nasdaq. 2 1/2% at 1973. and the s&p 500 up 22 points. one weak spot within the s&p. walmart in the red today. all the action right now from scott wapner, our eye on the floor of the nyse. >> great day to be here and witness this powerful rally firsthand. let's take a look inside this rally. the dow jones industrial average at 9,068. we'll take a look at the markets at the end of the day here. as i mentioned before, it was really built on stronger than expected earnings. some housing data that was better than expected on the existing home sales side. also inventories fell slightly. and even a delay in that healthcare legislation