as promised, a couple of your e-mails to the show this hour. on the $100 million man at citi, mr. hall has a contract, do we want to give the government the power to break contracts? and charles wrote "if andrew hall was as talented as you say he wouldn't be working for anyone but himself. why do we insist on putting these people on pedestals because someone was stupid enough to approve an employment contract with excessive compensation?" that's all for us. time for "the closing bell." >> announcer: this is cnbc.com "news now." philadelphia fed president charles plos sechlt r says the central bank will probably have to start raising interest rates in the not-too-distant future. house financial services chirm barney frank says congress

can complete financial regulation overall haul by year's end. and the treasury will be a passive investor in chrysler and gm and not try to influence management decisions. that's according to ron blum, senior white house adviser to the auto task force. that's cnbc.com "news now." and i'm mike huckman. and there's a live picture of the floor of the new york stock exchange. we enter the final stretch on a monday afternoon on wall street. stocks bouncing from the lows off to a mixed start for the week as investors set their sights on some after the bell earnings tonight. hi, everybody, welcome to "the closing bell." i'm maria bartiromo here on the floor of the nyse. we've got a market that is quiet but certainly that seems like a victory given the huge run-up that we saw last week and very important earnings after the bell tonight. we're waiting on amgen after the bell. in the biotech sector. we will get you those numbers. meantime, the market fractionally moving today, up just about a quarter of a point on the dow jones industrial average. oil solidly above $68 a barrel

once again and the dow is holding above that 9,094 level as you can see there, fractional moves here. nasdaq weaker, extending some losses of last week. the nasdaq down about a point, although it remains the winner in 2009, big run-up, 23% actually in 2009 at 1964 on the nasdaq. check the s&p 500 with the leadership there, "new york times," zions, gannett, regions financial, and e trade. s&p 500 up 1 2/3 points, fractional move at 980. bob pisani with me. anything jump out at you today? >> yeah, once again stocks are showing some kind of resiliency. remember, we started with good news on the new home sales number. they sold right into it. haven't seen that in a while. and now stocks are coming back. we even had the dow in positive territory. was down 50 points a little earlier. that's what i call resiliency. and you're right about the newspapers. it's not just them but other sectors that are showing some real strength here. here's what's important, resiliency, and that's the key word i'm using all day here.

stocks pulled off early but a rally modestly in midday. some tech weakness. but regional sxwankz oil refiners and newspapers and tv. huge treasury auctions which rick will tell you has gone off very well. home builders here. some of these are up double digits here, a few of them today, due to the better-than-expected new home sales numbers. how about tv and newspaper stocks? when was the last time you saw "the new york times" up double digits in a single day? organnet even? mcclatchy's up high single digits here. there are some hopes for improved ad revenues. have they really materialized? not yet. but the noise is getting a little better here. oil refiners are up. well, this is a tough call. the spread between crude oil and gasoline has improved recently. the outlook is a little more positive. all those stocks are outperforming the energy names here today. regional banks are strong. now, here's something very interesting. you know what the game has been

the last two months amongst the big traders? go long some of the big cap bank stocks and short the regional banks because they'll have even bigger credit problems than the big banks here. that's reversing a little bit here. as they notably outperform. even though we continue to have credit issues with companies like regions financial. here's one issue being discusse with traders today. the cboe volatility index. you know we talk about that many times. that's the vix. it's a measure of volatility, a measure of fear here too. for the first time in a long time that index is up rather notably, 6% here today. some people are saying this is your indication traders have been a little nervous about the recent market advance. let's go around the horn, talk to all of my friends. we'll start with scott wapner standing by over at the nasdaq. >> and bob, tech's been weak throughout the day but it's improving just a bit. it's the reason the nasdaq now finds itself basically flat, down 1/10 of a percent a lot of a couple of points. amazon the story got downgraded by bws financial they put a sell rating on the stock they're concerned about the long-range targets for operating margins.

they want to hit a long term of 5%. the firm's not so sure that they can do that. internet stocks, well, they've been mostly weaker throughout the day today. except for ebay. and i'm going to get to that in a second. but yahoo is down in tandem just about 3%. google's been weak throughout the day, down 1%. there's the ebay news, up 2 1/2%. they've made some changes to the listing business to try to help larger companies and companies that do sell with a lot of volume. there's also been a hangover, if you will, today in microsoft shares, which have been weak throughout the session, down 2%. you know they came out with that weak earnings report, mid, late in the week last week, and it certainly started to weigh on the major indices towards the end of the week. and certainly did the nasdaq. you know, i've been focused all day today as well on video game stocks because the npd group came out with a report saying that sales of video games plunged 29% last month. that was a record slide there. so maybe you see some pullback. electronic arts is down 1 1/2%. take two is holding up pretty well, up 1%. but activision blizzard is

giving some back as well. ericsson is down more than 3% today. they're buying nortel's wireless business for $1.13 billion. they did beat out nokia siemens in that auction process. maria was talking about the biotech earnings coming out after the bell, amgen, and the shares are down about 3/4 of 1% ahead of that report as we go to the wall one more time and show you while we are still marginally weak the tech story has improved just a little bit. let's go to the nymex and rebecca jarvis. >> oil ending the session fractionally higher. what we did see today, some traders equate to consolidation. there's been a lot of movement, a lot of momentum over the last couple of weeks in the energy markets, and today a lot of traders took advantage of the end of the month and the fact that they have made a lot or potentially lost a lot in these last couple of weeks to consolidate those positions, consolidate some of the profits. following oil's climb, obviously, three-week highs, which is where we stand right now, one thing that's important to note about this climb, a lot

of investment dollars looking for a home, gaining a little risk appetite. where they have found that home in the last couple weeks is in the commodity space in places like oil. but some are beginning to question whether or not that makes sense from an investment standpoint, given that oil and commodities have essentially traded in tandem with equities, meaning that essentially you're not getting a lot of diversity of opinion and a lot of diversity of correlation by putting your money there. it's arnting point to make. there's still strength today in gasoline. ten straight days to the up side. that is the longest run as far as gasoline is concerned in the contract of up side momentum. a major winning streak there. and obviously the refined products an important place traders are following because that's where we've really seen a lot of the strength. and they've managed to pull up the underlying crude contract as well. lastly, natural gas, it did end the session slightly weaker. we've seen some bouts of colder weather throughout the country. not so much here in the northeast but throughout the country. and that certainly has weighed

on natural gas prices. let's get over to rick santelli for more in global hq. >> gloebl global hq. thank you very much, rebecca. hey, before we get to the charts, philly fed president charles plosser had some interesting headlines. he said the fed may have to raise rates in the not-too-distant future, even before unemployment rates come down. that is interesting. can they thread the needle on this? it's also particularly interesting on a day where we move 6 billion in treasury inflation protected securities. 20-year tips, good demand in an auction. what does it mean when you have good demand for an auction? that's predicated on paying you more if inflation goes up. think about it. now to the charts. if you look at the sten-year, yes, intraday you can see the rates came down from what was six-week high levels above 3.75. but they were still a higher closing yield on the day and indeed we had 69 million in tips today. tomorrow 99 million in the form of one-month bills, and of course we have two-year notes.

but maybe more interesting was the dollar index. as you look at these charts, remember the early part of the day it was about ready to make new lows for the year, it bounced a bit, closed down on the day, but it's still holding above that very important 78 and a third cents. >> here to talk more about investing in this environment, craig hodges. robert pavlik is chief market strategist. gentlemen, good to have you on the program were you surprised the home sales numbers didn't give these numbers more of a jolt? last week the existing home numbers were very strong and they sent the market higher. no such luck with today's numbers. >> not much follow-through. the market as bob has been saying has been very resilient. however, you have some traders out there some money moved off the sidelines they just recently bought into this market they're trying to make sure they're in the right position. so i don't think they want to necessarily be selling right yet. there may be some pullback coming toward the short term.

i still like the market long-term. i think you have to continue to see what will lift us higher. 725 companies report this week. a lot of oil companies. i don't know if they're going to take us higher from here. the economic news we're going to have to turn to that and this week is light on the economic news. big treasury auctions coming this week. that might be putting a little cap on the market short term. i think on any kind of weakness you buy into the market. especially if we hit resistance or support at 750. you get down to support you start buying and playing forward. >> got the gdp report out on friday. that could be something. you mentioned oil companies. i want to get back to that in a second. but craig, do you agree there's still a lot of money on the sidelines? >> there is. >> and do you think it still comes back into the market? does this rally have legs from here? >> we believe it does. if you look, the market has rallied about 40% off the low but we're still below where we were ten years ago. that gives us a lot of confidence. plus you said 9 trillion on the sidelines. the retail investor still hasn't gotten back in.

mutual fund flows have been good for the bond funds but for the domestic equity funds almost non-existent. >> $9 trillion. we should use that for health care. >> despite this resiliency in the market, august is tough for the market. september historically is a very tough month. you know what the bears are saying. the bears are saying september is when reality hits the wall, when everyone realizes we're not going to get top line growth we need. where do you stand on that? >> you look at 1982 as a great example. same type of a scenario. crazy inflation, crazy unemployment. investor sentiment was terrible. the market started moving up in mid '82. no one believed it, everyone sold into every single rally, yet it was the start of the great bull market and about six or eight months later the economy showed the signs of why the stocks were moving up. >> five seconds. no quick down? >> i think we'll get down to 750 on the s&p 500, 950 on the np. i think we rally off of that. september might present a bit of a problem but i think longer term you really want to be

invested in the early cyclicals. >> do you believe in the inflation trade, oil, aluminum, iron ore, steel, et cetera? ? longer term yes. obviously there's going to be demand, especially from china. >> yeah. that's where it's going to be. the next step will be there. >> i don't disagree. gentlemen, thank you so much. we really appreciate it. great conversation. >> robert pavlik, craig hodges. and we've got about 50 minutes to go before the closing bell. dow jones industrial average sitting essentially on the flat line, but folks, we were down 60 points earlier in the day. >> i don't understand why we didn't get a bigger boost on the home sales numbers, bob. >> you know, this is the first day where we sold into some good news. but it came back. okay? that's why i'm sticking with my resiliency theme. that's my story. >> i read that on your blog, actually, on cnbc.com. "newsweek" declared it. it is the end of the recession. however, they're saying be careful. and we hope you're ready for the recovery. so what will that recovery look like? we're going to check it out. coming up. and later we'll discuss whether the weak dollar will heep fuel economic recovery and strong earnings in the second half of the year. and after the bell an

exclusive interview with the ceo of alcoa. i'll be signature down with klaus kleinfeld. he has some real thoughts on china. >> and here are the most active stocks on the day led by of course all the financials. ddd

taking august off. >> "newsweek" said behind the straight months the stock market rallying 48% since march and the majority of leading indicators pointing upward, bob. >> but questions remain amongst us as well on the shape of the recovery. in a town hall meeting last night fed chief ben bernanke discussed the economy and jobs. >> our projections suggest that the unemployment rate will probably keep rising probably a bit above 10%. it will peak early in 2010 and then begin gradually to come down. we could be wrong. it could be a stronger recovery than that. but you're absolutely right that even after the economy starts to grow again, and we're hoping to see that in the next third and

fourth quarters, it will be a while before the labor market, the job market is back to where we want it to be. >> joining us now, nigel golf, chief u.s. economist with ihf global insight. chief economist at bank of new york and mellon and a long-time contributor here. gentlemen, thank you for helping us out. is the recession over, richard? >> yeah, the recession is over. it's been my expectation we'd see that recession end mid 2009. the evidence is now clear-cut. three or four months ago it was just a forecast. and to believe that we were going to find that recession trough by the middle of 2009 you had to make the judgment that the government and the fed had done enough to stabilize the core of the financial system. that's what they accomplished. and because they succeeded in doing that, we are playing out a classic recession bottom. so really the critical point was

three or four months ago when some people argued we were going to slide into deflationary depression, others argued the financial system would stabilize enough so we'd make a recession bottom at the middle of 2009. it's now no longer a forecast, it's a reality. it has already taken place. we are seeing the recession trough. we're now about to begin the economic recovery. >> nigel, are you in this camp, the recession is over, and if it's over what kind of recovery are we looking at?ú >> well, i think we'll be dating the end of the recession at sometime in the current quarterú it's quite clear that gdp is likely to rise in the second half of the year. there's a number of monthly indicators that have to start moving up like industrial production before we can be so convincingly what the date of the end of the recession was but i think they will start moving up in the coming months. we've been thinking about the shape of the recovery.

i think it's likely to be a rather modest recovery. i'm not looking for a strong growth rate.ú the biggest concern i would have would be on the strength of theú consumer, the ability of consumer spending to rise, giveú all the ways we have of holding down the consumer, tight creditú a loss of wealth, the fact thatú employment is going to continue declining for some time, even ú after the recession is over.ú so it's hard to see the consumer being the driving force for recoveries in the same way as it maybe has been in the past. >> so white it be? dick hoyy, welcome back to cnbc. >> i've been working at bank of new york mellon. we've got about a trillion dollars in management and maybe 21 trillion in custody. keeping pretty busy. >> you've bain little busy. we're glad to have you back. let me ask you about that recovery. nigel's talking about the consumer possibly being absent. then what is going to drive the recovery? is it fair to say we're not going to feel much different in a recovery versus recession

because of unemployment, because of consumers who are still really hoarding their cash, and when might we see business start spending again? >> i don't think it's quite that bad. when i expect a subpar economic expansion, i think 2010 we'll get a growth rate of 3% to 3.5%. i'm not a believer in this 1% growth. and a couple of things are driving it. one is the exhaustion of auto weakness and the exhaustion of housing weakness. chrysler shut down every plant in america. you're not going to have further declines in industrial production out of chrysler once you go to zero. you're now beginning to rise back up again. so both autos and housing got so weak that they're actually going to contribute economic expansion over the course of the next 18 months. and we are going to have a massive inventory liquidation in the second quarter. 130, 140 billion-dollar annual rate. we are going to exhaust that

inventory liquidation. and finally, while most consumers are in trouble, there's probably a quarter of consumers, maybe 20%, that have reasonable net worth, reasonable income, and as soon as they begin to get confidence that they themselves won't lose their job there will be a little bit of pickup on consumer spending. so consumer spend will be weak, but it won't be disastrous. it will rise. it won't rise dramatically. but it will in fact have a gradual upward path. but it's kind of led by those people who aren't in trouble financially. a lot of people in this country are really in trouble financially. they're not going to be leading the spending recovery. >> nigel, any thoughts on the bottom line from an investment standpoint? what do i want to do during the next six months from an ú investment standpoint? >> well, i think you've got to keep a close eye on where the main cyclicals are moving.ú i mean, if i'm right and the ú

consumer's extremely sluggish, then you've got to be a bit careful about how heavily you ú get into the normal cyclicals that you expect to lead a ú recovery.ú if it's a rather stronger ú expansion, as richard expects, then you won't want to pile more heavily into those cyclicals. >> nigel, what's wrong with richard's somewhat rosy scenario? we've lost 6 1/2 million jobs in the last eight months. i know it's a lagging indicator. but we could probably go to 8 million very easily here, and many are predicting that a lot of those jobs are not going to come back anytime soon. is this not going to be a serious drag on at least getting the gdp back to 2 1/2%, where wú would like it to be?ú >> i think it will.ú i don't see gdp getting above 2 1/2% until 2011, the year after next. when i do see substantial growth rates in housing activity and in the autos area for next year. but of course those are coming off very, very low points.

so their share of the economy, their ability to contribute to growth, is much less than it would have been in the past starting from such a low bottomú i also think on the inventory argument absolutely massive, massive liquidation in the ú second quarter.ú inventories are indeed going to be a bit plus going forward, buú quite a lot of that is going to be absorbed in imports. on the way down a lot of the inventory cuts were reflected iú import reductions.ú on the way up inventories getting rebuilt.ú imports get boosted.ú so not all the bad inventory swing flows into the u.s. gdp. >> dick, no dip in the september, october period when everyone realizes top line growth is not going to materialize the way it -- that's the. >> i don't see it. i think we're in a stock bull market that was a reference earlier to 1982. in 1982 we'd had 16 years of dreadful returns in the stock market, and we ended up with a market like this that just rose persistently with a lot of

professional skeptical. ed hyman did a survey. 80% of hedge fund managers believe we haven't made a recession bottom, but 80% of long only managers believe that we've made the recession bottom and we're moving into recovery here. i think that we had such a dreadful period of negative returns in the stock market that we have begun a substantial bull market in the stock market. treasury bonds have completed a 28-year bull market. they hit 2% ten-year treasuries. i'm not going to see that again in my lifetime, and neither are you. so basically, this is a stock market story in a sustainable economic expansion we're not going to have a double dip. the double dip we had in the '80s was because volcker intentionally drove interest rates way back up to a 17% t bill, 21% prime rate. ben bernanke's not about to give us a 21% prime rate and recreate

a double dip. >> and he said, bob, that he has an exit strategy. gentlemen, thank you so much. we appreciate it. >> richard hoey, nigel gault, we appreciate it. 35 minutes to go before the closing bell. we're flat but the do you dow was down 60 points and has come back rather nicely. >> up next a new study unveils the staggering cost of o'boast and the impact on the health care system. details when we come back. today there's a way to save more for retirement, with annuities from fidelity. turn your savings into income -- guaranteed, and get a retirement "paycheck" for life -- guaranteed.

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according to a new study from research triangle institute and the centers for disease control and prevention the medical cost of obesity is as high as $147 billion a year. more than 9% of all u.s. health costs were found to be related to obesity as of 2006. that's up from 6 1/2% in 1998. in tonight's premiere of "meeting of the minds:spt future of health care" michael milken says fixing the nation's obesity epidemic could have a big impact on keeping costs under control. >> if everyone in america lost weight and returned to the same weight levels of 1991, we would save $1 trillion. we would cover all the

uninsured. and we would be able to quadruple the money for medical research. in the united states we have plenty of capacity to pay for medical. >> meanwhile, milken also worries about the possible impact government-run health care system could have on innovation. >> in 1993 we had a new health care plan proposed. the value of pharmaceutical stocks went down 50% in 12 to 14 months. there was a perception that the outcome was the regulation of the rate of return on pharmaceutical, biotech research. it never was in my opinion part of the clinton plan, but that was the perception. and when that happened, medical research in america was cut. 40%, 50%. glaxo cancelled half a billion dollars. every single human being on this planet has been negatively affected by the fact that medical research -- and it was cheaper to buy another pharmaceutical company than

build -- >> so what are you saying? >> i think -- >> if we had a public plan, what does that do to innovation, investment? >> exactly. >> if we become a major public plan, what happens to innovation? >> that was dr. bill frist there along with the other panelists. hope you'll join us tonight for the premiere of "meeting of the minds: the future of health care." that's tonight at 9:00 p.m. eastern, 10:00 pacific on cnbc. and bob, one of the issues with obesity, i just want to make sure we're clear here, is the fact that an obese person can cost a company four times more than a smoker. why? because that person will typically develop diabetes and heart disease. >> that's a shocking figure, the one that milken used. $1 trillion if we just go back to the early levels, the levels of 1990 in terms of weight for the average american. shocking number. >> it really is. up next got the "fast money" final call. the treasury department selling a record amount of government debt this week, but will that draw money away from the stock market and into bonds? we'll check on that.d of a trying to grow it. the algae are very beautiful. they come in blue or red, golden, green.

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welcome back. we're in the final stretch here on wall street until the closing bell sounds. the dow industrials down ten points. and it is largely the result of some weakness in a handful of banks. citigroup for example down about 2 1/4%. the drugmakers under pressure. merck down 1%. for the most part, though, you do have strength in the banks and the oil companies.

the oils are certainly a highlight on the up side. dow industrials having said that down 11 points, fractional move there at 9,082. after a big run-up last week. nasdaq composite down 7 points. 1/3 of 1%. it is off of the worst levels of the day for sure. 1958 on nasdaq. and the s&p 500 currently down just a fraction, bob. >> it's time for the "fast money" final call. bonds are in focus this week as the government plans to sell a record amount of government debt involving $235 billion in asofted bills and notes. this is the most in a week in decades. my next guest says the huge slate of supply will no doubt draw money away from the stock market. you know jon najarian, "fast money" contributor, co-founder of optionmonster.com. this was a hot top thicke morning when i came in with the traders. the fear was this was going to take away from the rally. and yet it went off, part of the auctions went off very well, we've got more to come. demand was strong. we haven't seen a dramatic drop-off in the stock market, though. is this thesis a little shaky?

>> i think the traders were right. i'm certainly with them, bob, and probably with you, thinking that anything that saps money away from the buying power in stocks in particular after we've had a run such as we've had is something that's to be a little nervous about. and you've seen it reflected slightly in the 7% pop in the vix today. the vix made a very nice move back to the up side. still shy of 25, though, bob. so it has made a move to the up side. but it was off of a very low number last week. i think the important things to watch this week are that we've got the chinese officials that they're meeting in washington with senior obama personnel. i anticipate that will go well. we've seen the tyx, which is of course how we track the 30-year bond, if you type it in, folks, just hit tyx. you'll see the actual yield on the 30-year. and it's back up to the highest levels we've seen since mid-j e mid-june. i think that's a tell as well. >> let's start to answer the question, though.

the big issue is all of this supply, this 235 billion, is this competition for the stock market? is this going to hurt the stock market because so much money is going in potentially to the bond market? >> i think it is, bob, because anything, any extra peripheral buying is enough to help out in terms of the buying power needed to hold the levels that we're at. i think on the other hand, though, that the people that are natural buyers of these bonds aren't natural buyers of stock. that would be the chinese and so forth. >> good point. >> that are going into these bonds regardless. they're not really looking at the next hot stock, like whether it's amgen or acadia or whatever the hot ipo or drug stock might be. they're looking for fixed income. >> how do you decide what really happens? suppose the market moves sideways and the bond auctions -- the treasury auctions in general go off well as they have today. if stocks move sideways, would you consider that a victory? would you consider that a good sign given how much supply in treasuries there were? i mean this week. >> i would. again, i think that would be a

very positive sign. for instance, when the banks issued all their paper and the $130 billion that was sapped away from the market, that was a different buyer because that's not just china and a fixed income buyer. those are folks that wanted the up side, quite frankly, on some of those companies. those were good bets. this is a different buyer this time around. but like you said, the sales went off well, the bond yield is back up to 4.6%. i would think that's very attractive given the run in the market. so i think we do trade sideways. >> so sideways would be a victory for the bulls in the stock market. i wonder if you could put up the vix. this is the volatility index. because you referenced this, jon. here's an interesting question here. it's up almost 7% today. this is one of the biggest rises in the vix we've seen since the march lows. and folks, this is sometimes considered a fear indicator. we're at the low yft 4reest lev we had in september. it's up 6%. some traders are saying this is

a sign -- some are getting concerned about the big rise in stocks we've seen and are starting to buy some protectionn does it mean anything? >> well, it always means something. and it's usually in hindsight that we know for sure. but what i'll say here, bob-s for the last two weeks we've seen a steady diet of selling of puts and buying of calls in the s&p 500. and that's of a done that with these risk reversals or anything else that they do where they come in in a combination to sell puts and buy calls, that makes the crowd short. the crowd then comes in and covers and lifts the market higher. that pushed it to unusually low levels last week. i think it was a little oversold in terms of the vix. 25 seems to be a median area. i think we set until there and we don't go a lot higher. >> and those of you who don't follow all this technical jargon, selling puts and buying calls is very bullish. the marketmakers, jon, are essentially protecting themselves a bit by staying short the market. >> exactly. and i think that's a prudent move given where we're at. but like i say, with the

4.6% 30-year bond, i think that's enough to keep these auctions going well on the 30, on the long end of the kufrks bob. shorter end obviously went well today. >> i love it when you do baby talk, jon. very good. tonight's "fast money," as the dotcom darlings continue to be in the dumps, is the internet trade over? the top analyst in the sector tells you the best ways to plate space ahead of key earnings this week. plus m.i.t. professor and mutual fund manager andrew lowe makes his case for hedge funds for all. michelle caruso-cabrera joins the "fast money" four tonight at 5:00 p.m. >> but before all that, 20 minutes before the closing bell sounds for the day. dow industrials down about 14 points. nasdaq weaker by just a fraction. >> and up next we're going to discuss what the falling dollar means for stocks. good sign, bad sign? what it means for hopes of an economic recovery as well. >> and then after the bell, would your tax dollars be better spent focusing health care reform on preventive care rather than treating individuals who are already sick? we're going to check, is this doable? 4:00 p.m. eastern.uc new chevy equinox. l

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well, the stock market's been rising. the dollar's been headed in the other direction. have you noticed that? dollar weakness in the market. over the last three months dollar's down about 8% versus a basket of foreign currencies. is that a good sign for the economy here? weighing in, jordan kimmel, market strategist with national securities and my old friend ron insana thestreet.com's market movers portfolio manager and of course a cnbc contributor. ron, let me start with you. the dollar index is sitting near the lowest levels since october. is the weaker dollar actually a sign of strength for the u.s. economy? >> it certainly is a sign that fed policy's working, bob. the dollars that have been created by these numerous programs from the federal reserve, you know, are starting to circulate. and that's important. we've seen the money supply measured by m-2 grow about 8%. the broadest measure of money is up even more. but what hasn't happened yet, and the reason maybe the ballooning of the money supply hasn't gotten a lot of traction yet is the velocity or the turnover of money hasn't been all that fast. i think as the dollar weakens it will actually accelerate the economy's growth. remember what happened in japan

in the 1990s. the yen went up dramatically. and that was like a tightening of policy. and that kept deflation in place. this is just the opposite. >> and jordan, the decline of the u.s. dollar, there's a lot of hand wringing asovieted with it, but ron pointed out a few of the obvious benefits. is the decline of the dollar greatly exaggerated at this point? >> well, it is. and so is the decline of america itself. for so long people want to jum. and look for every fear opportunity to say collapse and the sky's falling. we've seen that enough. look back in february, march, where all the fear really hit the global markets. what did they want the most? they all rushed into the dollar. this was a countermove against that. this is not a collapse of the dollar. it's actually good for our exporters, as we know. but look for any breakout of any real issue people want to not only want the u.s. dollar, they really want to be in america too. >> ron, let's do a brief 101 for the viewers here. should the average viewer, the average investor, the average american be happy when the dollar is stronger or the dollar

is weaker? how should they feel about this? >> bob, this goes back to -- since you're bringing up 101, it goes back to econ 101 and the principle of all other things being equal. all other things being equal, a stronger dollar is beneficiary because it restrains inflation, it maintains the purchasing power of one's investments and of the nation's currency. but under these conditions where deflation is the most pressing economic problem, a weaker dollar is actually reflationary and allows the economy to grow, and as we heard from jordan that it also boosts exports. i think right now unless the dollar were to fall precipitously, were to crash and cause an interest rate spike, there's not a lot of reason for concern at the moment. >> and also of course a somewhat weaker dollar helps u.s. multinational corporations that have profits abroad when they repatriate those profits. and as ron noted stronger dollar makes imports cheaper as well. so there are some obvious advantages even though philosophically we might be in favor of a stronger dollar. >> the big fear now is america

has lost its place in the world, america is this or that. the reality is only 5% of the world lives in america. it's okay to have strong partners. it's okay for other countries to share in the strength of a global economy and not only have the u.s. pulling the wagon all the time. i think what we have here is a clear indication that the markets are functioning, the exports are happening. there's a lot of global demand out there. people want to consume. people want to live like americans. and remember, if they allow people to come into this country and get a green card, get a social security number, and have our benefits, what would the line look like to get into snerk don't forget that. >> ron, go ahead. >> i was just going to say one thing about the dollar, and i think this is one of the most overdiscussed, overhyped, and overplayed notions on the pla t planet, is the dollar is somehow going to be supplanted as the reserve currency of the world. the world survives on dollar liquidity. there is no other alternative. at margin there might be.

but you know, the talks with china starting today and they're talking about the value of the u.s. dollar. chinese have nowhere else to go. they have a $2 trillion reserve of foreign exchange holdings at home. they have huge current account surplus that's need to be recycled and there is effectively nowhere else to recycle them but here. even a currency basket is going to be heavily dollar weighted. so this notion that the dollar's going away is crazy. >> and of course we saw that when the chinese and the brazilians got together to talk about setting up something else, some other kind of exchange, there was a lot of brouhaha as ron noted and nothing really happened. ron, you've worn many hats in your career including -- >> that's to cover the bald spot, bob. >> -- including investment adviser. where does owning currencies of any kind fit into an average investor's portfolio? would you advise an average investor to hold some kind of currency? >> not really. i mean, i don't see what the inherent benefit is. there are ways to develop proxies for currency plays. you know, as we heard, ex-port-oriented companies benefit from a weaker dollar.

that's one way to play the weaker dollar. and there are inverse trades if the dollar is strong. i wouldn't necessarily advise individuals to speculate in foreign exchange markets. that's a professional's game. certainly there are exchange traded funds and other vehicles that can be used. but you know, for individuals to go out and play around on margin and very small margins at that, it can be fatal or certainly injurious. >> people can lose a lot of money playing the currency business. >> it's not a game for everybody. i agree with ron about that. but the real point, again, is that the risk factor that pulled everyone into the dollar suddenly, the risk is starting to fade a little bit or the fear of all the risk, which means the place to be is equities. you have to be selective. but equities is the place to be. >> and you've seen dollar weakness, equities stronger, dollar strength generally equities are weaker. ron, how long before that trade just plays itself out, or is it a natural trade to play? >> you can slice and dice history a lot of different ways.

and there are periods when a stronger dollar's been beneficial for the stock market and there's a period when a weaker dollar's been beneficial to the stock market. i don't think i can make a very secure correlation between the two except to say that, you know, a crisis is negative. and we don't see that on the horizon. there's no reason to anticipate that foreign central banks won't be buying some of the $210 billion of government debt this weak. there's no reason to currently expect a crisis in the dollar. so absent that, this gentle downward sloping currency is actually in my view anyway a net positive. >> final word. >> as to ron's point, again, there's no collapse in the dollar taking place. should there be a collapse in the dollar, it's a different story. i think it's just working off the trade that everyone rushed into. and again, ron's other point that's important, the u.s. dollar's not going away. and when it comes to our exports, too people say, well, we don't export anything ever, we don't make anything.

remember, we export more than twice as much as the next biggest exporter in the world. don't sell u.s. short for too long. >> the u.s. consumer is still certainly the engine of growth worldwide. as a lot of emerging markets are discovering right now. ron insan arks jordan kimmel. up next on "the closing bell" retailers person experiencing a pullback. we'll tell you which names are moving the rest of the industry when we come back. tools are uncomplicated? nothing complicated about a pair of 10 inch hose clamp pliers. you know what's complicated?

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welcome back. good to see you. take a look at some of today's under the radar stocks. office supply products maker ecco brands reporting its second quarter loss widened to $120 million but excluding current charge the company earned a better than expected $6 million from continuing operations. and egg producer calman foods report aid 27% drop in its fourth quarter profits, $10 million, badly missing estimates because of lower prices and higher feed costs. capital markets raising price target on glass maker owens-illinois to $40 from 33 because strong results in north america are expected to offset weakness in europe. maria? >> meanwhile, bob, retailers under pressure today following a strong run in the last month. mary thompson joins me now with more on the sector to watch

today. you know, mary, i've got to say i've been expecting some weakness in this sector largely because of the developments surrounding cit group. you know, cit their biggest customer the garment sector and the retail sector. i don't know if this has anything to do with what you're seeing today but there has been some speculation that this was coming. >> some people were saying that, maria. today it appears to be a couple analyst calls that are affecting the group. the group has been on a roll for the last month. retailers, as i mentioned, under pressure today, though, some analyst calls hurting a couple members of the group. take a look at this. the retail sector has actually outperformed the broader markets over the last month, 7 1/2% to the s&p being just over 6 1/2%. keep in mind last month's retail sales were up for the second straight month. most of that came from auto, gasoline, and electronic sales. clothing sales in june were flat. now, today the index under pressure. recent run-up in retailers have some analysts changing their views on a couple of stocks. among them lowe's. goldman sachs removing it from its conviction buy list.

as the home improvement retailer's stock is getting close to goldman's 12-month price target of $23 a share. goldman is keeping its buy rating on lowe's as they believe the residential investment in real estate is near a 50-year trough and near an intermediate term drivers including housing rates and mortgage turnovers are stable and improving. coach is lower as well. the accessories retailer was lowered to hold from buy. lazard saying the stock appears to reflect good news. fundamentals don't appear to have troughed or stabilized for the company. keep in mind we are in the midst of earnings season we're not going to hear from major retailers for two more weeks foeshlg forecast for consumer staples earnings call for a 5% decline from last year's second quarter for consumer discretionary profits forecasts fall 25%. most of that from the auto sector. the question for retailers of course continues to be what are they seeing from consumers. were they saved by summer's markdowns on the sales fronts but how does that impact their profits in the second quarter. also, how are they set for back

to school and christmas? are their inventories lean enough going into those key seasons? those are a couple things we'll be listening for in the next couple weeks when these companies start to report their results. but again, maria, you bring up a good point of of course cit a financer for a number of these retailers, hasn't had evidently a big impact -- yeah. back to you. >> thanks, mary. mary thompson. we take a short break and then we've got the closing countdown right after that. >> and after the bell cnbc is your home for earnings central. we'll have instant analysis of amgen second quarter numbers, minutes away at 4:00 p.m. eastern time.

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