we know we got earnings out after the close that are setting a negative tone for tomorrow morning. but. >> running straight up. i think as larry touched on it before, if the health care agenda is on the back burner, i think we have the ability to start going higher. i think that was one of the cat wlifts of the downside. i think we do have the ability to go higher going into year end. >> here on the floor you're seeing the flow in terms of where the interest is, really seeing commitments, money into the sidelines, not just short covering. >> i saw it today. it was short covering. i didn't see the mutual fund money coming back into play until the last two days. i see that. >> steve, i can't resist myself. on the march to s&p 1200 which is where i think this is going, i would love to see a correction, i would love to see a correction. whatever, to me that would be totally healthy and even give a

chance for some of the cash on the sidelines to get in and catch this bus. >> i'm totally with you. i think you're going to see a slight correction. we won't dip back down to the 900 level, but we might dip down to a 950 level. that was the level we're having such a tough time breaking through to the upside. i'm totally with you as far as the long-term aspect of getting back up to that 1100, 1200 range in the s&p. >> i guess my issue with all of this is we really haven't seen so much of a change in terms of the economic and earnings backdrop. even the companies that have reported better-than-expected earnings, it's been a cost-cutting story and not necessarily a revenue-growth story. >> the unfortunate part is we'll drift higher on not so tangible economic data. jobs data today was a little better. what you're looking for is to drift up because the shorts have gotten out of the way. it's not going to be a spike higher. i think it's people readjusting where they should have their money, the reallocation trade.

>> one little thing, steve, just on that point to maria. jpmorgan has an interesting table out there that says sequential, quarter-on-quarter revenues are actually rising. 90% for health care, 80% for financials and consumer cyclicals and staples, even 70% for industrials and tech. i agree the year on revenues are coming down. that's the economy down. the see questionables off the first quarter are actually rising. that could be an unexpected bullish gem there steve grasso. >> you'll find an unexpected couple of bullish gems. you looked at a couple of comments today, potash and ford ceo's both saying the recession looks like it's coming to an end. if you take in bank of canada statements which are more positive going forward, i think if the president's agenda gets more to the middle ground, this marketplace can move higher. if he doesn't, the market is going to test low again. >> got to leave it there. thanks steve grasso.

now to rebecca jarvis with the full reports from earnings central. heck of a day. >> heck of a day, larry. we got to breeze through the day today to look ahead to tomorrow. we want to get to the after-the-bell earnings reports. these are the ones, if they come up, we will let you see them. but the stories of today, dow's top performers 3m blew past evenings peckations. earnings report was great. margins improving, health care, consumer, office, business. you see the stock was up $4.53 on the day, at&t meantime, also a big performer beating expectations, strong wireless growth there. continued cost-cutting. ford posted $2.3 billion profit. you see the stock was up on the day about 50 cents. mostly that profit was due to debt reduction. mcdonald's, that was the story that came out weaker than anticipation. less upbeat, stronger dollar. year ago stimulus check induced

gains. that wait on profits, this time around sales not as strong as the market hoped. let's get to the stuff that happened after the closing bell. nation's biggest military contractors came out we reports, very different after the bell. raytheon up .66. buying strategies, raytheon says they believe they're well positioned for the new direction. earnings in the previous quarter up 15%. north rupt gruman, they came out more cautious today. they're seeing their stock down after the bell 2.5%. did not provide any guidance. says it's still evaluating the effects of the new pentagon strategy. this is more of a navy ship-building play. that's what they're known for. their profits there down 20% in the previous quarter. the credit card companies also made some big headlines after the bill. american express, capital one both reported they've got some pain. you see the pain in the shares at least in the after market

trade at american express, almost 3% to the downside right now. basically they say over at am ex-people are using their credit cards a little less than last year. that's not entirely a surprise. also delinquencies, loans at am ex-they were 4.4% in terms of the delinquent loans versus 3.3% last year. the same trend at capital one in terms of delinquencies, 4.47% in the previous quarter were delinquent. last year more than 3.85%. net charge up also up there. this is a story we've been hearing. obviously the chief executive, he was on, the chief executive of american express, he was on "street signs" with erin burnett, said it's still too early to point to any sure signs of an economic recovery. but he did come out upbeat at least in terms of what he's seeing going forward. back over to you rebecca, thanks so much. we had a host of other earnings out after the close.

we had microsoft after the bell, that stock very active. jim goldman on that angle right now from the west coast. jim? >> maria, good evening to you. on the face microsoft's earnings look and feel ugly, very ugly. the company comes out $1 billion short on the top line and short on the bottom line. to the tune of 5, 6, 8, 10%. it was a blistering after market for these guys. client revenue because of weak pc sales, $200 million below estimates. server and tools, $300 million. the business division home of microsoft office missing by almost $400 mill xwrun. entertainment and devices missed by almost $300 million. microsoft's steep bullback merely erases this week's run. add back the two pennies and someone-time impairment charges and microsoft actually met e

expectations on the bottom line. if you consider all the new products in the pipeline like windows seven, new office suite server software, revenue fell off a cliff not because customers were deferring purchases but because of new products on the way. on the conference call microsoft says the worst is behind it but the remaineder of calendar 2009 will be tough with improvement coming in 2010. still you have to wonder how microsoft can come up this short on the top line and not have communicated this better to the street during the quarter warning analysts as the quarter progressed. >> let's bring in joe terranova. let me see joe on the screen. there you are. so i am told you own microsoft and am ex. let's start with the microsoft story. intel hits the ball out of the park. microsoft gets slammed. what does it mean? >> -- buying microsoft for the story of the quarter. i'm buying microsoft for the story going forward, the back end of '09 and 2010, i think the

story will be phenomenal. windows 7, microsoft, getting aggressive again. they're stimulating innovation and technology. i like that. i like what they're doing with apple and google, basically saying, hey, we're going to war with you here. bing, they're taking xbox, ramping up the xbox. i like the strategy for '09 and 2010. i've been long microsoft. i'm staying long microsoft. >> i don't mean to be argumentati argumentative. you've got to question the management. you've got to question their investment of spare cash. you've got to question the businesses they're in. once again, if it's pc driven in no small part, why does a company like intel come out with gang buster beat and microsoft falls flat? >> you're right, larry. i think the quarter right now, obviously an extreme disappointment. no doubt about it. going forward, why is it different this time around? why are they getting aggressive

now? i think it goes back to how microsoft and the rest of the technology space went into this recession. remember, technology understands the environment deflationary that we are operating under in the back half of '08 into '09. they went back through this in 2001, prepared for defligs their environment. they understand how to work down inventories. if there's any sector that comes out of this clean and comes out of this first, it's technology because of what they went through in 2009. >> joe, the other issue here is it was lighter than expected when you look at just the business part of the business. we're waiting to see corporations put money to work in terms of information technology, i.t. and r&d. so far we're not tenecessarily seeing the business there in microsoft's quarter. >> microsoft has come a long way here in the last month. psych soft has been rallying. microsoft today is trading 25 1/2 on the close. they basically had to hit the

green with their tee shot. the expectations for microsoft heading into the earnings release were extremely high. is microsoft trading 23 1/2, 23.75, wherever it will come in tomorrow. where do you believe the next move is? i tell you i believe maintaining microsoft at this level is the trade. going forward you'll see microsoft within the next six months with a print back above $30. >> i guess that means you would put new money to work right here. >> absolutely. i believe in microsoft, believe in the model. i believe in technology and i believe the entire model of the market is getting better. >> maria, i think he owns the stock ch. i get that sense that he's going to stay with it. >> joe, thank you. great weighing in. we appreciate it. joe terranova. joined by the ce of of stifle nicholas. down 9,000. the big question, what's next. this special edition of cnbc reports comes right back.

joining us today on this great summer rally story, we have stifel nicolaus chairman and ce o and chairman of td ameritrade. thanks for helping us out this evening. joe, you get a lot of retail participation from your firm. i want to know, are they in this summer rally or are they still on the sidelines? >> larry, they're definitely involved in the market and certainly the positive environment that we've seen over the span of the last several weeks has helped them emotionally. i think one of the things that's taken place is you can't go through something as painful as our client base got through over the span of the last year or so without learning a lot. i think they really appreciate the importance of diversification and asset allocation. they're definitely involved and have been for a while. >> rod asked you the same thing, are you getting retail. i don't want to be pollyanna. i don't think we're going to

all-time highs or anything like that. when you look at the bond market spreads, we're back to pre lehman brothers. at that moment the stock market, the s&p 500 was 1250 or thereabouts. we closed today about 975, 980. this thing could have a ways to go. i guess that's my question. do you agree with that? do your own investment people agree with that? >> you know, larry, i share -- i want to share your optimism and i two, but the market obviously climbs the wall of worry. this wall is pretty steep. there's a lot of things going on. i think there's some things that people are correlating. goldman sachs earnings do not correlate the problems in the financial system. there's still a lot of owns on dirt, sbefrest on dirt. there's a lot of things that have to sort themselves through, and to sit there and suddenly think that this market is going straight up from here, i think investors need to be cautious. i think our investors are being cautious. there's a lot of cash on the sidelines. but just to say that this market, all of our problems are

behind us does not recognize that this is a debt reduction, that the company has to be rev rajjed, consumer has to be leveraged and it's going to be sluggish. we're improving. there's a lot of optimism that i share and i'm smiling. but wow. >> joe mogley, ron makes a good point, the fundamentals are supposed to be supporting this rally haven't necessarily changed all that much. unemployment is still continuing to rise and you've got a consumer that is hoarding cash and not necessarily going out and spending money. tell me what you think changes this situation if anything. >> i think maria basically what we're seeing is while we've had a more positive environment as of late, i think we all know and frankly our client base knows that we're in the middle of a very difficult cycle. i do think a lot of the country thinks that the worst part of this cycle is behind us. we're in the middle of it. we probably have another year or so to go. unemployment is very painful to

the typical family in this country. there are a lot of positives. stability in the financial sector is much better today than it was nine months ago. housing, while still having a problem is more affordable than what it was a year ago. interest rates, while down the road there might be concern about inflation, right now they're still low. the bottom line is we're going to come out of the recession, we've got to have -- pretty good. >> tell me where the red flags are from your standpoint. >> the consumer is hoarding cash. as you say, i think they're repaying debt. it's not like they're sitting there and they're going to run off to the electronics store and start buying plasma tvs. i don't see us that way. i agree with joe that things are changing. i just want to throw out a little bit of a word of caution that this economy, we've not seen a deleveraging economy like we've seen here. to larry's point, today people

are saying the fact that the health care might be put on the back burner, but what if it's not and what if we're going to not only try to deleverage this economy -- >> that's not my only point. i'm glad that you guys are worry warts. i think that's what makes the great ingredients for the boom markets. the two leading financial ceos are worry warts. that's great stuff. back to you ron. profits are clearly bottoming. the economy is bottoming. important leading indicators in housing and jobless claims, you can see it. the fed is going to be easy and and dayive. does not those things put together a nice little cass role of optimism for stocks. that's what this summer rally has been made of. >> hey, look, i do run a financial services firm. optimism drives our revenue. i'm all for it. but i also have a little bit of caution in this mix. i'll tell you why, larry. what we need to do is, let's not lose sight of what we have to

fix. all the markets go to 1250, we just went through isn't going to happen again. i'm concerned about that. i'm not concerned so much about the market. i want to see real fundamental changes in some of the ways that leverage is put on this economy and the way that we're going to operate going forward. make no mistake about it. you can't have the economy run the way it did without the leverage that we had. the only leverage being put on this economy today is by the u.s. government. that's the concern. >> so joe mogley, a final point as far as what investors are gav stating toward. technology has been the winner, up 23% year to date on the nasdaq. what are people looking at in terms of -- you said asset allocation real important to individuals today. >> right. we've actually seen, maria, first, you're exactly right on. the number one interest they've had is the technology. i think the second has been the financial sector. larry, your point, that's positive because six months ago they hated financials, and the third area, they like energy.

nine, twelve months ago they might have liked energy as well. they also liked bonds. as ron pointed out, they have a reasonable amount of assets in cash. one of the things they've done with that cash is paid down their debit balances. we see margin levels much lower today than where we were in the past. >> great conversation, gentlemen. thank you so much ron and joe, we'll see you soon. up next is the rally for real? we'll talk with one long-time bear who is actually turning bullish when this special edition of cnbc reports. we've got another all-star panel after this break.

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together that's over $3 billion. - enough to open a dunkin' donuts in space. - ( walk( alkie sounds ) from america's most dependable 3g network. bringing you the first and only wireless 4g network. get the palm pre from sprint. only on the now network. deaf, hard of hearing and people with speech disabilities access www.sprintrelay.com. i'm larry kudlow here co-hosting with maria bartiroma. what a pleasure for me. we'll put up a couple quick charts. we'll show today's economic stats. jobless claims coming down nicely, existing home sales reviving. i know we heard two distinguished ceos who were rather bearish. that's what makes markets. me, i love the banks and financials. i say buy a bank you hate and go out and buy it with a zero

interest rate and a steve curve. i don't even think the bank rally is over yet. >> you know what larry? i'm always looking for the bright side and certainly have been real bullish here. fundamental changes have happened in this economy, own shift by government into business. mr. black from the apollo group will tell you, leon black, you don't want to be investing in anything government owned. we have that going on in a handful of banks. in addition from the earnings picture, it's largely a cost-cutting story as opposed to a revenue growth story. i'm waiting for the end demand to see if people are out there spending money again and buying, right now it's been a cost-cutting story, not necessarily an end demand story. i think we need more evidence to catch up with this bull run. >> i think those are fair points. maybe i'm a little more optimistic. i really think you look at some of these opinion polls, washington is going to have to slow down and move back toward the center. every single poll seems to show that your point about government threats to economic growth and

my dear heart is free market capitalism, there's a revolt going on. >> larry, you have the government owning 80% of gm, 80% of aig, 40% of citigroup. let's get to the bond market. an enormous amount going into the bond market right now. rick santelli is with us with the bond report. >> before we get to that, let's look at the lq. you're talking about the lqd, investment grade corporate, close to the highest prices of the year. that is important. we also know that junk bonds today tightened up to some of their best levels. well, probably going back to about september of last year. we remember that dark september. some of those credit default areas that larry has been talking about, the ma car i.t., market indices, i don't know that i'd put too much faith in those. rather precipitous rises and yields. a little over a dozen basis

points on five, a little over on ten. even though it was above 370 for a while, they only close up around a 365, 366. here is a key point. good news in equities that has ternd out to be less than good news for the safe harbor areas. we also have $205 billion in terms of bills in coupons and tips. back to you, rick. >> rick santelli, one real quick one here. is it fair to say these corporate bond spreads have narrowed back to either at lehman in september of '08 or even pre lehman. >> i think it's fair to say, larry. if you're using that as an argument that the equity market should get to the same money, a lot of the bailout money has been a positive for the financials. i'm not sure equities can keep up. people on the floor have an adage. you might see 10,000 in the dow, but you might see 12.5% unemployment. there are issues. i agree with maria and some of your guests. it isn't all that rosie out

there. equity price is a good thing. they can go up despite other issues. >> stay with me. i'm going to hold the bullish. let's bring in joe la vorn yeah of deutsche bank. he's been a long-term economic bear. he's turned very bullish and our great friend mort zuckerman of u.s. news and world report. he wrote an opinion-ed, "the economy is worse than you think." i agree with your piece. but in the last couple weeks there's been a spayed of new data including falling jobless claims and this housing business with much better earnings, kind of making me me on the optimistic side which you know is where i feel comfortable. >> i certainly understand that. but let me just say besides telling you that the difference between an optimist and pessimist is that the optimist thinks this is the best of all possible worlds and a pessimist fears he may be right. i'm in the latter category. i'll tell you why. we're still seeing an increase

in unemployment. unemployment numbers are worse than the basic number of 9.5%. the underemployment number is very bad and the total, it's all getting worse for the moment. i'm not saying it's going to get terribly worse. i think we'll see double digit unemployment numbers and still have the impact of that on cons assumption. another thing that's going to impact consumption. people are saving a lot more money. every dollar in saving comes out of consumption. the fundamentals on the economic side are not as strong as in the corporate world. the corporate world is cutting costs all over the place. that means their margins are widening, their rev news are not going up so much. what is good for each individual corporation which involves, amongst other things, letting people go and not hiring, is not good for the overall economy. that's what i worry about. >> joe lavornia, what's the other side of the coin? you called me this morning. now you're bullish. tell us why. >> the one thing people are

missing is nominal gdp probably fell third quarter in a row for q2. any improvement in demand in housing is going to cause nominal gdp to be positive and with that tremendous operating leverage and nobody is talking about it. >> you know what? there's a little thing called valuation. are the valuation that is we're seeing here, nasdaq up 23% year to date, 8%, 11% in the last nine days or so. are stocks and investments -- investors really getting ahead of themselves in terms of the fundamentals out there. the point mort just made, we've been in a cost-cutting story versus a revenue growth story. >> i don't think an economic troughs valuations really matter much. we have an opportunity to grow in those valuations. what i think was a game changer was bernanke's opini ed piece.

if the fed does not fight an insip yebt recovery, that's tremendously bullish. >> joe, why does that make any difference here. nobody with any belief in history believes the fed is going to pull the liquidity at any time soon. i am surrounded by high frequency equity traders. anybody see numbers on how much goldman day trades in stocks every day. all of that activity is helping to boost the price of stock. >> we had tightening price in the market a few months ago. if we take that out and that curve continues to be steep, the fed isn't going to accommodate -- >> i don't see inflation for a couple years. all i'm saying is, i'll go back to mort zuckerman. mort, the index of leading indicators which includes liquidity measures and housing starts and stock prices and jobless claims and manufacturing and consumer goods orders, that thing has risen three straight months. it's a powerful search.

historically that's a signal not only of a better economy, but to get the kind of corporate revenues that maria is looking for, mort zuckerman. are we looking backwards or forwards right now? >> i'm not saying the economy isn't getting better. i'm saying, look, if you read michael boxman's column, $320 billion of increased consumer capability of which only $1 billion was spent -- the consumer remains nervous because he's worried about his job, net worth is down. that's going to be something that will contain the economy for a while. >> mort is right. here is the thing. this is what puts that into context. when you come out of a recession, you tend to grow about 7%. >> those are recessions of the past. this is a government-negotiated recovery. >> the consumer will be a drag, there's no question. but there will still be a recovery. >> i still think there's free

market -- >> i have to get joe's answer. when are you expecting 7% growth? >> i think for a long time. >> are you saying the economy grows 7% -- >> the equity market -- if know if the economy grows half of what it normally does, we'll go back to pre lehman equity levels. >> that would be sweet. >> i would be thrilled with 2% to 3%. >> me, too. >> terrific stuff. rick santelli, mort zuckerman, please stay with us. stock, stock, stock, down 9,000, summer rally. what's next. ? is there going to be a correction? a special edition of cnbc reports. maria bartiroma and i will be right back.

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welcome back. welcome back to our special report tonight, "cnbc reports," down 9,000, the summer rally. dow industrials up at 11% in the last nine trading sessions.

>> one of the things that i really like, by the way, positive action in commodities, i call it doctor copper. that's usually a signal of global economic recovery. i guess my pal rick santelli doesn't agree with me. i think these narrowing spreads, both money market, lie boring, back to lehman levels in september of 2008, almost a year ago. corporate bond spreads are narrowing, stock market is on line to track with this. i don't think this is chopped liver, rick santelli. i don't know why you've turned so pessimistic on me. there's still free market capitalism. certain parties are getting their ears pinned back in washington. this ain't all bad. >> first of all, larry, let me tell you something. the current administration isn't going to give up so easily in terms of some of these programs. so there's going to be a fluid landscape in terms of expenditures and potential deficits. i think spreads tightening is a good thing. credit default swaps, whether you believe them or not coming

down is a good thing. the systemic issues of august and september aren't with us. two-thirds of the economy is consumption, and i'm sorry, but you can call unemployment a lagging indicator by some measures it's already at 16%. by government measures it's at 9.5%. this recession, if you compare it to other recessions, i just don't think it's a good comparison. people out there were frightened last summer, and they're not just going to forget about it and go out and start spending because financial stocks -- >> i'm not looking for a miracle. i'm looking for a bottom. and i'm looking for a modest economic rebound. that's my case. i'm also thinking stock market corrections, maria, that's great in the middle of a rally. >> absolutely. >> i don't want this to go up like a straight line. >> you've got to have booms and busts. that opens the door for people to get into any market. but you know, i have to agree with rick, just because the people like business executives, managers out there continue to say, look, it's very, very

little visibility, and that's the issue here. when you've got unemployment where it is, probably going to go higher, that's going to scare people and keep them hoarding their cash. mort, i want to get back to another issue that larry brought up and that's the commodities trade. when you look at copper up better than 70% year to date, copper, iron ore, commodities are rallying. i say you've got to be owning these even if the global economy doesn't come back any time soon, these are finite resources and rich countries are seeing a bid. >> i think that's a pair point. i think there will be buys in this market. there will be investments to be made and people will do well with them, particularly a lot of the commodities and frankly certain kinds of assets. having said that, as i say, i'm a little cautious about where the consumption is going in this economy given all the fundamental factors.

it's still an economy in which roughly 70% of it is consumption. if you begin to lose a lot of steam in that part of it, if savings go up to double digit numbers which i think it very well might, i'll repeat again. if you had $320 billion in personal income added in the second quarter and only $1 billion was spent on consumption, you know the consumer is going to be very cautious. >> larry -- mort i wonder what you think about this. i think for so long the u.s. consumer has been the most important consumer around the world, increasingly u you're hearing about fish where the fish are, go fishing where the fish are, and that's in china and india. will the chinese and the indian consumers be more important than the american consumer. >> china is an export driven economy, spending a lot of money on their own infrastructure. their approval process is something that can be accelerated. but i will also point out to you, they had over 25 million

unemployed there. >> dr. copper says this is a global recovery. i think asia, china, i think that's in some sense, the economic tail wagging the doll here in america. look, just on the way out of this thing, you've got these better profit surprises, let's face it, better profit surprises, from the all the corners of the economy. some risk-taking is business healing, really the antidote to the consumer worries. intel, capital, starbucks, ebay, union pacific, ford. i know microsoft tanked. what else is new? when you see the wide variety of positive earnings surprises, tells me business is getting bigger. >> there's no revenue growth. but the profit gains have come from cutting expenses, not from revenue growth and end market demand. that's what we need to see. >> i understand. it's an important first step.

>> absolutely. >> i'm crawling before i walk. that's all i'm saying. i'm calling before i walk. >> i can't wait to see you walk, larry. >> mort, stay with me, rick, stay with us. down 9,000. our market experts will help your portfolio continue to rise this rally. this is a special edition of "cnbc reports." this is our summer rally. unbelievable stuff. dow over 9,000. maria bartiroma and i will be right back. undefeated professional boxer floyd "money" mayweather

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welcome back to "cnbc reports." we bring you the forbes publisher, rich carl guard, dennis neal, mort zuckerman and rick santelli still with us. tell me how you see the markets and what you're expecting the second half of the year. >> the good news is, we've seen a lot of volume increase, the nasdaq take over leadership, some of the medical names that aren't involved with any inane

health care plane are moving, like medical products and devices. that's what i've been looking for the whole time. i really think this is a trojan bull, a market that cannot be sustained because it's based on expect taketion that credit is going to start increases for businesses and the consumers are getting healthier. that's simply not the case. don't forget, getting two-thirds of the economy is consumers, another 15% of the economy is state and local governments. they're cutting employees like crazy. so we have all this pressure. >> good, good. >> and tax revenues is the rockefeller -- >> we're not seeing top line expansion and not going to see it because we had -- coming out of 2002 we had the same thing as we're seeing now. we saw all these businesses cut costs to the core, incremental increase in the revenue. what we had in the wake of 2002 was credit expansion. now we have a fewer number of banks where each bank is using

less leave vag. there's not going to be the leave vag pumped into the system like it was in the wake of 2002. >> let me get rich on here. i'm feeling very lonely. i'm glad to see you and glad to see dennis. i'm so lonely here. profits are bottoming. business is cutting costs and their productivity is soaring. maybe there is competitiveness. we're seeing better profits, better economy on jobless claims and housing. finally, rich carlguard it may be capitalism is alive and well. certain partiers in washington are getting their ears clipped. why can't we get to the pre lehman stock market, 12550 on the s&p 500, about a 25% run. corrections come and go. i love corrections. i'm not saying we go back there. but why can't we follow the credit market. go ahead, rich. i'm lonely. >> we might indeed. it's not a coincidence that the market has gone up over the last

month as every one of obama's signature issues, cap and trade, union car check and now health care is in trouble. people are telling obama that we want to go back to the center at least. >> it's not going to happen. >> toward capitalism, not away from capitalism. that said, i still think we're in 1975. 1975 stocks went up 38% off of the 73-74 tanking and went up again 26% in 1976. then it stalled out because of bad government policy. i think we'll get to 1250 and probably stall out. >> i want to be clear here because you're abilitying like you're the only bull in town. i'm extremely bullish and incredibly an optimist. it's just right now it feels like the fundamentals of the economy do not support this incredible run in the market. >> but here is the thing guys, i

just want to respond to my friend maria. you may be dead right about toppiness. i would probably breathe a little easier if we saw correction coming off this louzly microsoft number, amazon and also the american express credit card. i love corrections. i love them. >> larry, i'm surprised that you think capitalism is alive and well. as far as i'm concerned, it remains under attack. i don't know why you say that. >> you bring up a great point. until we get in the thick of the off-year elections next november, really the issue is what our tax rates are going to be down the road. >> i got to go to break. dennis, i want you to tell me what's going to happen at atm. i'm going to respond as to why the polls are suggesting capitalism is alive and well. you're on at 8:00. what you got? >> we'll look at why the rally is real, what kind of correction it talks about, where you should

be putting your money. let me tell you, a lot of your guests are making a mistake of too much knowledge. there's every bit to worry about too much inflation. what we're forgetting is one thing. there is a fear fatigue on the part of investors. we are tired of being depressed and scared. we're starting to feel better. sometimes how you feel will lead to a path of fundamentals. >> please stick around. we have so much more to do. we have a couple of disagreements in this distinguished panel. we are, however, "cnbc reports" special edition, down 9,000, the summer rally. i still believe capitalism is alive and well and maybe on the comeback trail. we'll be right back.

welcome back to this special edition, down 9,000, the summer rally. looking ahea give me one special idea, carl for the second half of the year, where do i need to be invested? >> technology, but you have to really separate the companies that are riding the new wave of net books and cloud computing and not the ones from the old wave like, you know, some of the companies that missed their numbers today. >> jim, what do i need to avoid? >> tech and renation are the positives. you need to avoid renal nah nall banks. commercial real estate loans are killing them. capacity utilization, larry, is terrible.

not coming back any time soon. >> tell me something i don't know. that's yesterday's moves from 15 months ago. >> recessions don't bottom. >> my friend jim la camp, i'm going to mort zuckerman. i have had this theory. even a banker can make money with a zero interest rate and a steep upward yield curve. i want to counter mr. lacamp and say find a bank you hate and buy it. i think the stock is going up and they'll earn their way out. >> i certainly agree that as an investment some of the financ l financials it's a very good place to be. i really do think the well managed ones, given the cost of funds, given the availability of funds to them, i think a lot of those firms are going to do very well. i think they're going to be very guy buys. >> can i jump in for a good question since you're mr. real estate in the group. what are you expecting out of commercial real estate? are you worried like a lot of

other people? >> i think the commercial real estate market, it all depends on the city and the quality of the real estate. by and large, what you are seeing is lower rents for sure and, in fact, lower valuations of buildings. but demand is there. there's a lot of companies still moving around and moving -- as i say, moving up in terms of expansion of space. it's much better than it looks on the surface. >> mort, i'm sorry to stop you, i want to hear your whole story. coming up, folks, more of our special edition of "cnbc reports," maria bartiroma and i will be right back. but did you know you also get hotel price assurance? it's a one-two punch of savings -- pow! pow! lower hotel booking fees mean you get a lower total price. plus, if another orbitz customer

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first up, it's been so totally fabulous working with you this evening, maria bart roam ma, i wish i could do it more often. >> me, too. my privilege. love being with you tonight. >> on this summer rally business, corrections, whatever, i'm still saying a bottom in the economy, bottom in profit, the fed is loose. i still believe the opinion polls, all the surveys tell me that free market capitalism has another day left. >> i don't think people are going to allow it to go away, that's for sure. we'll see about that. certainly there hoping it goes the other way in washington.

but we will man the fort for everybody. i'll see you on "closing bell" and tomorrow on "the call." >> michelle, capitalism, is it alive and well? please tell me i'm okay. >> i sure hope so. looks like washington is moving our way, larry, slowing down health care. what do you think, dennis? >> i think it's about time stocks woke up and ream liesed that american economy is worth a lot more than investors are giving credit for, even if there's a big selloff tomorrow. >> have a great show. >> thank you. our special coverage of dow at 9,000 rolls on right now on "cnbc reports." to night, fireworks on wall street. what a day. markets cross milestones across the board. the dow surpasses 9,000. when the bell rang, we're back in november levels for the dow. s&p now up 8% today.

the nasdaq up 25% year to date. tonight another full hour of market coverage as the markets surprise investors from east to west, north to south, from wall street to main street. this is a special edition of cnbc reports. dow 9,000. good evening, i'm dennis neal. >> i'm michelle ka ruse sa  cabrera. a big day for the bulls. the bears may be getting ready for a counterattack. we're hear to get you ready for tomorrow's trading. here is a first look at the futures. right now they're indicating a negative open. s&p would open lower by 8,  nasdaq open lower as well in th wake of earnings after the bell. >> while they should, the nasdaq has been up 12 day ins a row. dow up by 700, 800 points. the big question tonight, is it time to take some profits? we've got a