let's take a look at a quick recap of what's going on. we had tech weakness early on, disappointment from microsoft, disappointment from amazon, by all rights given the rally we had we should have been down today given the heavy leadership in the tech area, but we weren't because it was a test the bulls needed to meet and they met both of them. number one is resiliency. can the market come back on disappointing news in market leaders like technology stocks? the answer, yes. number two, can you show any rotation if you've got disappointment in tech one day, can smelgs bounce back? and the answer is yes. we saw it in energy. we saw it in health care. we saw it in some of the utilities, some of the consumer stocks as well here today. that's very important. as a result there's a lot of frustration on the part of bears. con-way was my go-to stocks to show how frustrating it's been. earnings down 40% year over year. normally that's awful. but they had a huge earnings beat and i mean a big one on a much different cost structure, so the bull argument is very simple now, and so far they've proven right. you get small increases in efficiency will lead to small

increases in the top line eventually, and that's going to be a big earnings boost down the road. jpmorgan did upgrade the company as well. here's a key point. they may be taking some market share away from some competitors, that also helped them out. take a look at the big truckers here today. conway did great. some of the others, though, basically slightly on the up side to flat here. healthcare stocks, here's your rotation. and yes, folks, there is clearly some effect from the fact that healthcare reform is having a bit of a problem here. two days in a row on the up side but still pretty good action overall. these stocks have not been left behind. even healthcare has been performing well recently. so don't argue it's just a defensive play here. some of the big energy names, same situation here. energy has been a laggard in the recent market but today some of the big names, some modest gains, 1%, 2%, or 3%. maria, back to you. >> all right, bob, thanks very much. we break down the markets right now with phil orlando, chief equity market strategist. he's with me right here. as well -- he's strategist at federated investors, pardon me. as well as david katz. he is chief investment officer

at matrix asset advisers. gentlemen, always great to see you. welcome back to "the closing bell." nice to see you both. so here we are on a friday afternoon, quiet day inside. but you know, even if you look at the decline in the nasdaq you still have to be bullish about where we've come from. nasdaq up 12 straight sessions and now, you know, the dow industrials above 9,000. is it justified, i guess is the question. >> we think it is justified. you had a horrific bear market last year. after horrific bear markets stocks rebound very significantly. typically in the first six to 18 months of a rebound you get 40% to 80%. we think it's starting to play out. >> given the misses by softy american express and amazon last night today would have been a great excuse and opportunity to take profits. the market held in there. and i think investors are realizing that the second quarter resurgence is for real and it's going to accelerate over the course of the year. >> the only problem is a lot of people come on the program, managers of business, and they say to me, look, things are still pretty bleak, you know, we're not seeing end demand.

one point that i've been make throughout the day today and yesterday is a lot of the better than expected earnings were the result of cost-cutting efforts. so companies are cutting jobs, they're cutting their spending, so we're not really seeing revenue growth. so when does this story turn from a cost-cutting story to a revenue growth story and an end demand story? >> well, from our perspective we've seen about a 5% revenue increase in the second quarter. and given where we are in the cycle that's not bad. but again, we're expecting positive gdp in the third and fourth quarters which we think is going to accelerate. we think the revenue gains to going to come with it. and given the operating gains the companies have manufactured for themselves we think we're going to see some terrific earnings in the fourth quarter. >> give me your recommended portfolio today. and i realize it depends on a lot of things, your age and how much risk you want to take on. but if there were groups, asset classes as well as sectors within equities that you feel they are a must, what are they, david? >> we think this is a very good time to own equities. and within the equity market we like small, large value growth.

we like the international markets too. a lot of people put a lot of money in money markets and treasuries. now is not the time to be holding them because we think stocks are going to be meaningfully higher over the next two, three years. >> you've got an enormous a money on the sidelines. do you think that money on the sidelines is going to come in to which sectors? >> we think it's going to come into the overall equity market. it probably is going to come into the higher beta areas of the market. you're talking about the industrials, technology, the banking group, which was devastated last year. we think is on the mend. that will capture some of that money as well. >> you're talking about the majority of my money, investable money in equities. >> if you're an equity investor. now is not the time if you have all your money in bonds to say okay, i want to buy stocks. but for money you that targeted to stocks over the long term now is the time to own. >> by the way there, has been an enormous amount of money going into the bond market. we know that. i guess yield has been there. what about you, sir? can you give me a recommended portfolio what that might look like? >> if in our balanced portfolio we are overweight stocks about 3%, the areas we like. small cap domestic stocks. junk bonds in the bond side. and emerging markets.

those are the three areas we focus on. >> what do you want to avoid? >> losing money. >> don't we call. are there areas that phil orlando's not going to touch? >> the parts of our model that are still not screening well is banks. financials have had a pretty good run here. i don't know that fundamentally they're completely out of the woods yet. so we've taken a little bit of profits here on some of these nice run-ups. we'd like to see some more evidence that they've fundamentally turned the corner. >> and david katz? >> basically we would avoid money markets and treasuries. we think long bonds are not going to be a good place to be over the next few years. >> two pretty strong bulls here. i like it. great to have you on the program, gentlemen. thank you so much. phil orlando, david cass. some of the nation's top financial regulators meanwhile appearing before a house committee today to voice their opinions on president obama's financial regulatory reform proposal. cnbc's hampton pearson right now on capitol hill with the highlights on that story. hampton? >> hi, maria. first of all, treasury secretary tim geithner spent most of the time on the congressional hot

seat today drawing lines in the sand on the administration's regulatory reform proposal before the house financial services committee. geithner says the fed must take the lead as the systemic risk regulator but the central bank, he says, must also surrender some of its consumer protection turf to a new consumer finance protection agency. >> they are not enthusiastic about giving up that authority. and i with great respect to the chairman and the other supervisors who are reluctant to do this, they are doing what they should. it would just not offend the traditional prerogatives of their agencies. >> ben bernanke sidestepped the consumer protection agency controversy for now, but he did weigh in on why he believes expanded authority for the central banks to act as systemic risk regulator is a better approach than using a council of key regulators. >> when it comes to specific regulatory actions or supervisory judgments, collective decision-making can mean that nobody owns the

decision and the lines of responsibility and accountability are blurred. >> the afternoon portion of that hearing ended abruptly, and we did not see a face-off between the fed chairman and fdic chair sheila bair. they have significant differences over how a systemic risk regulatory regime should in fact be crafted. maria? >> all right, hampton. thanks very much. we were waiting for the rain. the rain never came. as hot as ever. and the sun is shining. sun really hot on us here. still to come on "the closing bell," with over $4 trillion sitting on the sidelines, can hedge funds fuel the recent market rally from here? we'll track the money, coming up. and later we're discussing whether high frequency trading is giving an uneven playing field to certain traders. but first listen to the 42nd infantry division band of the new york army national guard performing today on wall street. ♪ (announcer) illness doesn't care where you live...

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as investors celebrate the new high for the year, there is still more than $4 trillion sitting on the sidelines. a lot of money is from institutional investors, with hedge funds, pension funds, and private equity yet to participate in the rally. can hedge funds take this market even higher as that money finds a home from the sidelines into the market? joining me now, marianne bartle, head of technical analysis with bank of america securities merrill lynch. and jack mcdonald, ceo of conifer securities. great to have you on the program. thank you so much for being here. i want to give you a stat that rich peterson from standard & poor's gave me. and he says that according to recent institutional money fund asset stats money fund assets total $2.44 trillion while retail fund assets total 1.21 trillion. we're talking about $3.65 trillion in basically cash just in money funds, excluding uninvestable funds that total another $1.21 trillion. corporations and large cash holdings also not even added to

that number. so do you see that money moving into the market? marian, you are always covering hedge funds. you have a report on hedge funds, and in the previous week hedge funds continued to sell equities. is that right? >> that's correct, maria. they're actually pretty bearish. they have a crowded position in gold. and at the same time they have a short position in the nasdaq, and they've been selling their position in the s&p 500. for us that's a bullish sign for the market as well as all this cash that you brought up. >> so you think that eventually it's a bullish sign because at some point it comes into the market? >> sure. especially with a short position in the nasdaq and the markets moving higher, you would think that that would be a pain trade they'd want to close out. we think the pain trade is still for higher highs in the market. we've been targeting since the end of march that the s&p could hit 1055 to 1065. >> jack, what do you think? conifer is a prime brokerage and hedge services provider. what are your clients telling you? >> there is a lot of money on the sideline. as mary suggested one of the reasons why hedge funds are attracting a lot of capital

sxwer seeing some inflows at conifer right now is hedge funds have the ability to go long and short. right now year to dailt performance for hedge funds is almost double what the market is. and i think the institutional investors see that outperformance and they're going to see a lot more money coming into the hedge fund industry. >> how much of this most recent rally do you think has been short covering? >> my sense is a lot of people were long maybe not long in retrospect so i don't think it's all been short covering. it's a little tough to gauge by think it's been a fairly balanced portfolio. >> what about you, mar yea? do you think some of this has been short covering or is this actually end desires, end market demand on the part of investors? >> well, based on the data, we get new data after the close today but they've been still extremely short the financials and consumer discretionary. what's important about the financials is they reversed their down trend that they've been in since october of '07. so i think there is a combination of short covering and money grudgingly coming into the market. when we look at individual investors and our firm alone, they're sitting with 20% cash. you look at the amg flow data,

we don't have excessive flows in our market. you're seeing them go into the emerging market but not our market. so we're also finding individuals still more on the bearish side than the bullish side. that's when you look at the aaii survey. so everything stacks up that's the money and the sentiment can still drive markets higher. >> isn't that interesting that they're going into emedging markets? is that what you're seeing? >> we're seeing emerging markets, long-short equity managers and some global macro and credit strategies as well. and i think if the money's going to continue to follow performance and go to some existing managers that may have been redeemed for liquidity purposes in the end of last year. >> i guess because they feel that's where the growth is, the emerging markets. >> that's right. >> what about the holdings of commodities? mary ann, hedge funds still holding steady, their long positions in crude oil. is that right? >> they are. they have generally been selling the energy complex, but they're still long. as i said, the real big long position showing that they're still pretty bearish is having this really crowded trade in gold. some of the other trades that they have on, they saw a very steep yield curve by being long

the two-year treasury, short the ten-year. soug so the energy complex from a contrarian standpoint based on hedge fund positioning can still go higher. we had crude up around 70. i think we can get back up there, maybe even 80. >> you're seeing a number of startup hedge funds trying to cash in on the inflow of money in the quarter. tell us how you characterize that. >> two things. one, the managers need day one capital, they need an institutional track record and pedigree and they need infrastructure to be successful and i think what they're seeing is there is a lot of money as we spoke about on the sidelines performance is good so there's investor appetite coming back. and third of all and this is a little tough to gauge but there's a lot of high water marks that aren't being met and i think people are realizing that for many people this is still going to be a tough year to get paid in the hedge fund industry. and so now could be a good time to break out on your own. >> so based on what you're seeing, what do you think it's going to take to get those hedge fund dollars into the market? mary ann's saying you're talking about 20% in cash. at some point what's going to be the catalyst to actually get them moving?

it could just be this momentum continuing -- >> i think that's right. and i think that's starting to happen. as i said, we've seen inflows in the last couple of months at conifer into our managers and you're starting to see the industry track that data. and i think my sense is that there's a lot of cios with a big pension endowment who are looking to pull the trigger on some investments. and i think you're going to see it in the second half of the year as long as the relative outperformance continues. >> do you agree with that, mary ann? >> yes. we have models that estimate inflows or outflows into hedge funds. we are expecting second quarter to have an outflow, but it's ebbing. but we're expecting going into third quarter we could have positive inflows anywhere between 10 to 40 billion dollars. >> wow. and that's going to put this market much higher, i guess. >> i think so. but the question is if we get to 1055, 1065, what happens after that? and what we've been trying to brace clients for is you can enter a correction because if we hit our targets you're going to be 60% off the low. so we can have a pullback. but i think that we've put in a good bottoming process in this market. >> all right. we'll leave it there.

mary ann bart lz. jack mcdonald. great to have you on the program. >> thank you. >> we so appreciate you spending the time. thanks very much. have a nice weekend. up next on "the closing bell" we will hear from california governor arnold schwarzenegger about the big progress the golden state is making in resolving the massive budget deficit. stay with us. we check in on california next. announcer: some people buy a car based on the deal they get. others buy the car of their dreams. during the lexus golden opportunity sales event, you can do both. it's an opportunity today. it's a lexus forever. special lease offers now available on the 2009 is 250.

welcome back. california's state senate approved a budget package to close the state's more than $26 billion deficit. now the state is just waiting on the approval by the aassembly. and cnbc's chief washington correspondent john harwood just spoke with governor schwarzenegger about the progress the state is making. he joins me now with the highlights. john? >> reporter: hey, maria. governor schwarzenegger isn't taking any victory laps because the cuts in this budget deal are so deep. but he is hoping for some benefits in terms of the state's credit rating. he hopes that even though some people have accused cal calf kicking the can down the road, using accounting gimmicks in some of these deals, that wall street will look at this package and give california credit. >> we have made major cuts. more than $30 billion in cuts. we've increased revenues. and that's the responsible thing to do in this kind of an atmosphere. i think wall street is going to

look at that and say no, they made a commitment, they came together, democrats and republicans, even though they needed 2/3 to pass the budget, but they did it. >> reporter: now, one of the questions is whether california's going to be right back in the soup a few months from now depending on what happens to state revenues. but governor schwarzenegger told me it's not time for more stimulus for the national economy or the california economy. instead he says it's time for patience. >> i think we just have to wade through it and everyone has to hold tight and everyone has to be willing to make certain sacrifices and dial back because the reality is 1/3 of the wealth in the world is gone. >> reporter: and finally, i talked to the governor about the effort in washington to overhaul healthcare reform. it mirrors an attempt that he made in the state of california a couple of years ago. that ended up collapsing over concerns about the state budget deficit. but governor schwarzenegger says for president obama the answer is to keep charging ahead, not give up at all.

>> i learned one thing. never give up. we tried six times with the redistricting. and the six time we won. five times we lost beforehand. so you never give up. the same is with healthcare. >> reporter: so maria, the budget crisis appears to have been terminated here in california, but as we've seen over the years, there's never far from another one because of the difficulty of governing this state. >> great interview there, john. thanks so much. john harwood with the latest from sacramento. meanwhile, the senate may be putting off a debate on healthcare reform until after the august recess, but the debate was heating up among some of the nation's top healthcare leaders in the latest meeting of the minds special on cnbc. >> 70-plus percent of all medicines today in this country are generic. so you can get the generic version of prozac for pennies a day. but if we kill the innovation that led to the discovery of prozac there will never be a

generic version. >> i hope you'll join me and don't miss the premiere of "meeting of the minds:spt future of healthcare." that is monday night on cnbc, 9:00 p.m. eastern, 10:00 p.m. pacific. join us for this special program. and we want to know what you think are the biggest challenges to president obama's healthcare reform. is it concerns about the cost of the program, concerns about reduced quality of care? is it partisan politics? lobbying by the insurance industry? or do you think the effort will eventually succeed despite all of the challenges? log on to www.linkedin.com right now. cast your vote. we'll have the results monday on "street signs." do join us for that. up next we're going inside the health of the hospitality business. we're going to check on some travel for the summertime. the president of intercontinental hotels americas division tells us business and leisure travel is starting to pick up again. but first, more music from the 42nd infantry division band of the new york army national guard. ♪

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welcome back. ihg, or intercontinental hotels group, celebrating the relaunch of the company's 1,000th holiday inn hotel today. the company marked the occasion today by ringing the closing bell. we are pleased to be joined in a cnbc exclusive by jim abrahamson, ihg americas president. mr. abrahamson, good to have you on the program. >> good afternoon, maria. >> so why the relaunch today? >> well, we're celebrating the 1,000th holiday inn and holiday inn express to relaunch globally. we have this tremendous brand repositioning that we're doing

with holiday inn. it's an exciting time. we're here closing the bell -- with the closing bell today. so it's a lot of fun to be here and then celebrating this wonderful hallmark event for us. >> it is a hallmark event. but i guess my question is why do a relaunch now in the middle of such a weak moment for the economy? i mean, i recognize these plans were in place for a long time. but is there anything specific about making sure you that continue that relaunch today even though we are seeing people under pressure and holiday spending and traffic lower? >> well, this is the time to be relaunching. in fact, we couldn't think of a better time right now. because customers today are looking for value, consistency, and great service. so we're delivering that with holiday inn and holiday inn express by repositioning everything that we do within our hotels. whole new arrival experience. a great sleep experience. and wonderful new bath experience. that's what customers are looking for. it's not about price. it's about value. customers are smart today, and they're making good decisions.

>> what are you seeing in terms of customer traffic and in terms of the shift in behavior? are they looking to go to -- of course you say value. but a lower price hotel experience than they have in the past? i suspect yes, given this tight economic moment. >> well, customers are more intelligent than they've ever been because there's so much information available today. through the internet, through social shopping, and other avenues today. so customers are very astute in making good decisions. so it's not just about trading down or trading on price. it's about trading for quality. and we see customers trading in the mid-scale segment. it's the largest and most dynamic segment. so today what we're seeing is a very resilient leisure customer. we're seeing that most recessions, as you know, are consumer -- the recoveries are consumer led. and so this resilience of the leisure customer is good to see. so summer travel.

our occupancy levels have been holding their own. while rates have been under pressure. so there are some values out there, both with the airlines and hotels today. customers recognize that value, and they're trading -- i wouldn't say they're trading down. they're trading smart today. >> yeah, and they're also demanding change. they want to know that they're getting the best value. they're saying look, i want the best room, i want a lower price. are you feeling that? and how are the bookings looking going forward for the fall? does it seem at all that this economic slowdown is reversing in your view? >> right. >> in what you're seeing for the fall. >> quality sells today. and we're seeing that the leisure customer is continuing to travel. you know, travel is really important. it's aen titlement for people. and we've seen that in previous recessions as well, with the leisure customer coming back first. we're seeing some positive trajectory in that area. but mainly in leisure markets such as right here in new york. now, as we look to the fall, we're seeing that our expectations are that the leisure trends will continue to hold, that we'll see a stronger environment there, and we're

very interested to see if business travel recovers in the fall. our booking windows are getting shorter. people are waiting for the last minute. >> mr. abrahamson, good to have you on the program. we so appreciate it. 1,000th holiday inn. we'll see you soon. and congratulations on that. jim abrahamson with us. think fast and make investors very rich. we'll take a look at that story. high frequency trading is however, giving traders an unfair advantage some say. should it be regulated? then we'll take you to washington. nancy pelosi getting ready to speak. stay with us. today there's a way to save more for retirement,

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welcome back. it is called high-frequency trading. a computer-driven method that allows traders to execute millions of orders in a split second. critics argue it's unfair to retail investors, especially when combined with an exchange policy that allows high frequency traders to preview trades made by institutional investors. we dig into the issue right now with al berkley, chairman of pipeline trading and former chairman and vice chairman of the nasdaq. and bob gasser ceo of investment technology group. gentlemen, it is nice to have you on the program. >> glad to be here. >> so high frequency trading, is it an unfair advantage for some people? >> well, it's an advantage.

if your ax is getting gored, it becomes unfair to you. but these are policy issues that the regulatory apparatus is trying to sort out now. it is a change in power. >> the retail investor doesn't have that kind of access, right? >> well, a lot of times retail investors invest through mutual funds or pension plans, who are very sophisticated in their trading. >> so they actually can have access to it then? >> they can have access to it. but not the individual trader putting in orders one by one. >> what's your take? >> our take is, you know, maria, we're the leading electronic agency firm in the globe representing institutions only. and our take is that high-frequency traders actually provide quite a bit of liquidity to the market and it's really not a very simple topic. it's about the economics, the rewards that they reap from providing liquidity. if they're outside that's a problem. but if they're reasonable from the perspective of make bids and offers and providing liquidity not only to retail investors but institutional investors we think that's a positive force in the market. >> yeah, because you want the

liquidity. you make a really good point. but you say the market is off kilter because of high-frequency trading. >> well, you have to look at how various systems are optimized. if you're a very large firm, a very large market like the new york or the nasdaq, you have to make your money off the people who are bringing the trades to you. there's a recent report, larry tab's group put out that said 73% of trades now are high-frequency trading originated. of course you're going to optimize your market for that customer base. not everybody does that. ipg doesn't do it. pipeline doesn't do it. >> and let me ask you about the talks you've been having with the securities and exchange commission. we are going to go to washington. the house democrats are speaking right now on health care. let's go to washington. excuse me, gentlemen. we'll be back to this. as we listen in to the house democrats. >> -- commemorating the loss of two of our brave members of the capitol police in the line of duty, whom we lost on july 24th,

1998. officer j.j. chestnut and detective john gibson. we remember them with great fondness. and they were examples of the courage that is shown every day by the members of our capitol police as they protect democracy's citadel and as they protect the millions of tourists who visit our capitol. i'm here with the leadership. the speaker had to leave, or she would be here as well. to say that we are making significant and positive progress on the consideration of what all americans want us to do, and that is adopt a health reform bill that will provide them with access to affordable quality health care. we are committed to that end. as i have said many, many times, every member of the democratic caucus has expressed to me and to all of our leaders, and of r.

clyburn, our wip, counts them. sew hears from them most directly. all of them want to vote for health care reform. we believe we are going to pass a very good health care reform bill. last night we made very significant progress. mr. javier becerra, the vice chairman of our democratic caucus and a member of the ways and means committee, moderated and at times refereed, at times cajoled, but at all times elicited the opinions of members on the very critical issue of medicare reimbursement rates. there are regional differences. members have been very concerned, very animated about that. and there have been real differences, as you would expect in an issue of this magnitude. and i'm very pleased to report to you that last night they reached consensus. this morning they met with the

leadership. we went over the language. and mr. becerra indicates that we have full agreement on that issue. and i want to congratulate mr. becerra on that very, very significant step forward on the process of reaching consensus. we are continuing to work toward consensus. we believe that the energy and commerce will continue its work in the regular order. we are looking forward to marking up the bill and energy in commerce. that will proceed next week. we are absolutely committed to passing a health care reform bill. and we are energized by the progress we made last night and the progress we are making today. the leadership is committed to that end. i believe our members are committed to that end. and we have every intention of passing a health care reform bill and sending it to president

obama for his signature by the fall. >> on the floor an hour or so ago you expressed some doubt as to whether this can happen next week. >> okay. we will get back to washington as news develops there. but you just heard house democrat leaders speaking on health care reform. when we gete developments, we certainly will take you back there. and once again, we are joined by al berkeley, chairman pipeline trading, former president and vice chairman of the nasdaq stock market, along with bob gasser, ceo investment technology group. gentlemen, you both have been in washington recently meeting with leaders in terms of financial reform. tell me what you're getting from the securities and exchange commission. a lot of people believe we're going to see a stronger regulatory hand on high frequency trading. >> well, what i'm seeing and i'm sure what bob is seeing is a very serious effort on the part of the staff to see all sides of this issue. i think they're actually digging in and doing a really thorough

job. >> and i would concur with al. it's intuitive they're looking at all the mutations and evolutions of market structure. i know we're both very interested in making sure a lot of the very productive components of market structure are not adversely affected by this review. >> so you do support some type of regulation? >> yes. but i want regulation that pekts t protects the ability of firms like ours to innovate. because the right answer is finding business models where the dogs will eat dog food, where the market will come to those trading venues because they're performing the right services. and that is not necessarily a one size fits all solution. >> our primary interests are aligned with institutions. ici, the investment company institute, which is the main trade group of the asset management community, estimates there's upwards of 90 million mutual fund shareholders out there. and that's a very important constituency as well. so institutions have to be protected as part of this

overhaul as well. >> see, every business has a choice of how it optimizes its offering. most offerings today are optimized for high-frequency traders because they create so much revenue. our little strategy is to serve the ironically underserved mutual fund industry by giving them the same sort of tools that high frequency traders have but not to -- not to attack but to defend. >> what are those tools? tell me how it works. >> well, we have very sophisticated predictive algorithms that predict when you're about to be discovered in the market and allow you to move and jump out of the way when somebody's about to take advantage of you. we take the fragmentation of the market and turn it into an advantage instead of it being a disadvantage. it gives you 1,000 places to hide. >> i see. you explained that very well and simple for those who don't really understand it. great to have you on the program, gentlemen. thank you very much. >> thanks, maria. >> good to see you. bob, al, we will see you soon.

thank you. the housing market showing new signs of stabilization, meanwhile. we'll take a short break. but more banks are holding on to foreclosed homes instead of selling them. why is that? find out how that may impact the housing market, next. announcer: some people buy a car based on the deal they get. - others buy the car of their dreams. - ( beeps ) during the lexus golden opportunity sales event, you can do both. it's an opportunity today. it's a lexus forever. special lease offers now available on the 2009 es 350.

welcome back to "the closing bell." i'm diana olick in washington. some hope in housing. a new census report shows the number of vacant homes in the u.s. is actually falling. investors are getting in and gobbling up inventories. but there may be a hitch. i'll get to that in just just a moment. take a look first at the homeowner vacancy rate which fell to 2.5% of all housing units. that's the lowest it's been since 1996. we've seen buying in investment distressed properties but some of that vacant stock namely foreclosures may not show up in the census data. the report breaks down data by for rent, for sale and others which can be homes held off the

market. the number of properties for rent rose 6%. the number for sales fell 9%. and the other basket fell 2%. >> those are houses that are clearing, that are coming out of the vacant for sale, but they're going right into the vacant for rent. so that's becoming competition for the home builders. that's the category the home builders have to watch now. >> puryear estimates the banks are holding on to about 700,000 r.e.o. properties. if they put them on the market that's fine but if they flood the market that could push prices down and that is the concern. it remains to be seen how fast these houses will come on the market and what the banks decide to do with them. for more go to the blog, realtycheck.cn realtycheck.cnbc.com. maria? >> all right, diana, thanks very much. i'm outside the new york stock exchange with this beauty, chevy volt. we're going to check it out. it's not even on showroom floors yet. we're going to take a little spin. do you guys want to see a spin?

what do you think? what do you think? you we'll be right back on "closing bell." thanks, everybody. new vehicle is easy.ting because the price on the tag is the price you pay on remaining '08 and '09 models. you'll find low, straightforward pricing. it's simple. now get an '09 malibu 1lt with an epa estimated 33 mpg highway. get it now for around 21 thousand after all offers. go to chevy.com/openhouse for more details.

right now, all over the country, discover card customers are getting 5% cashback bonus at the pump. now more than ever, it pays to discover. welcome back, everybody. from outside the new york stock exchange on wall street. from concept car to reality,

general motors looking to close the gap right now on fuel-efficient vehicles with the new chevy volt. now, the chevy volt can drive up to 40 miles a day on electricity alone. it is set to hit showrooms on 2010. but you do not have to wait until 2010, because we've got one right here. will the volt recharge gm sales is the question everyone's asking right now, particularly at a time when the automaker, of course, is looking to hold on to market share. we take a look at the volt right now with chevy's tony potts. thank you for being on the program. >> thank you for having me. i'm excited about the future. >> before we get a look aft the chevy volt, i want to ask the crowd here, how many of you would drive an electric car? all right, electric car it is. tell me, how does this work? this is not a gas tank. >> no, it is not. and we know people don't like going to their gas station, so just like with their devices, the chevy volt is powered just by plugging it in. just like a regular home outlet.

do you know what that plug-in costs you, 50 cents to a dollar to go electrical, no gas, no emissions. >> do i need a change in my voltage at home? what am i plugging into? >> a standard 110, 120 outlet works. we can offer a plug-in like the dryer and it charges in three hou hours, but in a 110, it charges while you're sleeping. >> amazing. 40 miles and let's say i drive the 40 miles and i need gasoline, there's also a gas tank. >> there are people that have range anxiety when they run out of battery power. the volt solves that problem because we create electricity on board with an electric generator. you can drive hundreds of miles more, driving just like a regular car and refueling by plugging in or going to the gas station. >> that's amazing. i remember a couple years ago, i believe it was one of the other automakers out there wanted to try electric cars and people didn't buy them. we have a group here that said they would drive an electric car, but how are you going to

make the sell to consumers who didn't do it the last time? >> this car is more than a two-seater and it does everything your normal car does. it is beautifully styled. it is engaging on the interior. provides you feedback on your driving experience. and, oh, by the way, our federal government is going to give you $7,500 rebate to buy this car and spur the movement on. >> $7,500? >> yep. >> what else is special about the car, tony? take me inside, show me what's really -- i need to know about it. i see there are screens in here. >> well, the auto business is looking at the consumer electronics business as well. right now we have two screens in there. why don't we take a walk inside the car, have a look. and i'll tell you more about what the inside of the volt can do for you. >> we're going to walk around. this is really amazing that you just plug it in right here and you've got -- okay, we'll take a little spin. you're sure i should do this, you guys? >> do it.

let er rip. >> we have two beautiful high-tech screens and these screens provide you feedback on your driving. >> okay. >> the cluster is reconfigurable, how much am i driving, how green am i. the screen here provides you energy-flow diagrams and information. >> and it's telling me when my battery may run out. >> maria, you got it. you got it. and it also provides you information to make you a better driver. and it's exciting, electric-drive vehicles provide you instantaneous torque, so the car is a fun car to drive. it drives fast. it is nice. it is clean. it provides you feedback. more exciting. >> what kind of feedback do i want that's telling me i'm a good driver or a bad driver? what kinegd of feedback might i get? >> well, are your tires fully inflated. are you heavy on the gas? >> i'm a lead foot. >> do i want to go to a charging station around the corner? we tell you where the precharging is coming and we tell you that.

>> google is trying to do that, you're giving me information where the fill-up station is. >> exactly. these are the involvements we are seeing. the volt will be ready. it's exciting. the technology is right. we at general motors is going to do the battery. we're doing the battery as well. >> let's say i charge it for 40 miles and i need another fill-up, can i plug it in anywhere? >> you can plug it in anywhere. and maybe it's free of charge as we talk. >> i see. i see. this is just your -- what is this about, climate? what is this configure ration? >> this is a uniquely designed screen and you can control the car just by touch. >> i see. >> so, you get your climate information. turn your ac on and get feedback with the green leaf on how you're performing. >> you're saving more energy and obviously it needs more energy if i'm using more things on the car. >> absolutely. and that's the feedback you'll get. again, we think this is the opportunity for many customers maybe to go gas free for a long, long time. >> that is amazing. what does this retail for?

what is the price going to be? >> well, general motors has probably invested probably a billion dollars. it's very important to us. this baby is a specially built car for close to 3 million, but in showrooms it's very nicely priced. it's a chevy. we can't announce the price today. but we talked about the $7,500 our federal government will give back. we believe others will want to support the cause so we can drive gas free. >> sure, sure. it will be in showrooms, 2010, is that earlier in the year, later in the year? when should we expect it? >> towards the later in the year. >> and then you'll announce the price sometime in 2010. >> speaking of going and going gas free, are you ready? >> should we try? >> let er rip! >> let's give them something. >> thank you for joining us on the "closing bell," everybody. have a great weekend. >> and away we go. >> see you next week. >> floor it! let's hear it! let me get the feedback. it's great.

this is "cnbc.com news now." >> house democratic leader steny hoyer is confident congress will send a health care bill to president obama for his signature by the fall. american airlines will raise its checked baggage charge by five bucks a bag. and the new york federal reserve creates a 13-member investor advisory group on financial markets. it's expected to meet three or four times a year. that's "cnbc.com news now." i'm rebecca jarvis. "fast money" with melissa lee starts right now. the dow capping its strongest two weeks since 2000. i'm melissa lee. these are the "fast money" traders, fresh off the trading floor, despite a plunge in microsoft and amazon today. the rally hanging on. let's get the word on the street. we are sitting on this desk 24 hours ago and today we thought we would see a sharp selloff and

basically on the day, the ind e indices sold off. >> the market rally, you sound great. you are happy the market rallied. i like that. we told you two things to watch for. the first thing was the vix. pete will talk about that. the second thing was the dollar. was the dollar the safe haven trade overnight? it was not. how about the vix? when they opened up, they tried initially a little bit of a rally. it softened up. it rolled right back over. everyone felt comfortable again and the market was off to the races. >> what was the feel opening the trading floor? was there anticipation in this should we read too much in the fact that we bounced back from lows here? >> i don't think we should read too much into it. we started this desk with the exception of tim because tim never thought we were going to sell off, right, tim? >> never. i never think selloff. >> tim wasn't here. but we all thought we were going to sell off. the floor was waiting for something to fall off the table. they tried to crack them, but when couldn't break them, they rallied straight up. who was going short into the weekend after the week we had?

>> guys came in short and looked at futures and almost jumped out of a window and they couldn't have broken the nasdaq coming into this thing. all week it reminded people what happened this week, 76% have beat earnings. we've seen great data actually, if you look at the housing numbers and jobless claims. europe had a strong pmi, industrial data. the german is the largest exporter economy in the world. they are up. you have good news, people. >> it's true. but it seems like a market that it wants to read what it wants to read out of the data. housing pricing still down 15% year-over-year. >> but less and less. >> beating the expectations, but lowered, and we're still not seeing the revenue growth a that we've seen in past years. pete, what do you make of the market? >> people are chasing. steve and i were in agreement on the "halftime report," 12:45 every day, except today was 1:15. absolutely incredible the fact that people right now just don't want to miss this market. they use e