welcome back. bob pisani here on the floor of the new york stock exchange. so this is another day where you've got to pay attention. it's not just oh, the stock market looks flat, nothing's happened. in fact a lot happened. we had a huge series of treasury auctions that went off. the first of several that are going this week. by and large they came off pretty well. number two, we did have some tech weakness in the middle of the day. even though we had very good new home sales numbers they sold right into those new home sales numbers. first time we've seen that in a while. stocks dropped in the middle of the day led by tech but then came back. yes we're on the flat line but the dow was down 60 points at one time and we have sector rotation. home builders are showing signs of strength. regional banks are showing signs of strength. some other companies out there,

newspapers showing some signs of strength? some sectors of the energy sector, of the energy group like refiners have been showing signs of strength. the point here is that you get little bits of rotation in the market and that is a sign of resiliency. that's the theme. all day and on friday as well. remember we had a very similar pattern here. stocks starting to the up side, then sold off right after 10:00. and then came back in the middle of the day. that was friday. while it wasn't quite as robust here in the second half of the day, that was the story here. holding up pretty well. now, the next few days we're going to get some very important -- continuing to get treasury numbers, or the auctions of the treasury market. but on friday the important thing is going to be the gdp. we're looking for a 1.5% decline in second quarter gdp here and any move on either side of that is is certainly going to get a lot of comments from the bulls and the bears. remember it's about now the third quarter, the argument is we're going to turn positive by about 1% in the third quarter, and that's what the conversation will be later in the week. tradertalk.cnbc.com. there's the closing bell.

you know who's next. maria bartiromo. and it is 4:00 on wall street. do you know where your money is? hi, everybody. welcome back to "the closing bell." i'm maria bartiromo on the floor of the new york stock exchange. here's what we're following at the close. a complete reversal once again. a wild end of day today. with the market going into positive territory and then some. at the end of the day investors sift through at mixed bag of earnings. home sales better than expected. the yields on ten-year treasuries today rising to the highest level in more than a month as the government begins selling a record amount of debt this week. amgen due out with second quarter results momentarily. we'll have the numbers for you as soon as they hit the wires. tell you how the stock is trading see what that tells us about tomorrow take a look at how we finished the day on wall street with the dow jones industrial average tonight on the up side by 16 3/4 points. nasdaq composite also turning

positive final few minutes of trading with a gain on the session of about two points. and the s&p 500 ditto, up three points. stocks bouncing back from lows to end slightly better on the session. we get all the action right now. bob pisani our eye on the floofrt nyse. >> and i'm sticking with my resiliency theme here. >> absolutely. >> big pressure from the treasury auctions here, down 60 points, the dow and s&p in positive territory. techs under pressure, just fractionally on the down side on the nasdaq. >> ge up 2 1/2%. the major banks. oils on fire today. strong day this was a victory. >> and our parent company ge now decisively over $12. of course it had dropped on its earnings report about a week and a half ago, and had a very good day here today. that is our parent company you know. let's take a look at what happened today. and but i'm staying with my resiliency theme, that's my story and i'm sticking to it. move up nice l. in the early part of the day as new home sales came in better than expected. then they sold off. that caused people to scratch their heads. then we turned around later in the day. tech moved to the down side but

strength in, oil refiners, newspapers, very eck elective group and the treasury auction went off well, rick will give you more details on that. home builders had a great day. 50% off the lows in march. that's the story and you can see nice 5%, 6% moves here. tv and newspapers were up. folks say you've got to be crazy you're out of your mind. there are certainly bears out there but look at the moves here, when was the last time you saw the "times" up double digits? oil refiners pup this is debatable. the spreads between crude oil and gasoline had begun to improve the outslook a little more positive you can see this group outperforming overall energy stocks here today. the regional banks were strong, and this is very interesting. a few strong regional banks reported earnings better than expected, but remember what was going on, generally sell regional banks buy big banks was the trade that worked for a lot of big hedge fund traders for the last several months here. take a look what else is going on here. hmo stocks, we talked about aetna this morning. disappointing commentary, disappointing guidance for the

full year and the issue is what are they going to be able to do to rein in medical costs because that was a major issue for them. finally take a look at the vix, the cboe volatility index. spike up here today. this sector has been at its lowest level since september. spiked up 5%. a sign some traders are concerned -- >> here's your pen back, bob. the numbers from al jen came out. the numbers i'm sorry to interrupt you just wa tonight get this out. $3.71 billion in revenue. the estimate calls for revenue of 3.58 billion. earnings per share $1.29. estimate $1.16 bob. >> beat on top and bottom line. >> both on top and bottom line we're going to check the stock thank you very much. bob pisani we'll see you later. check what amgen is doing right now in the extended hours and as you can see it is trading up. second quarter revenue 3.71 billion, much better than the estimated 3.58 billion. and the earnings per share ditto. $1.29 much better than the estimated $1.16. stock sees a bid with a gain of

1 1/3%. we'll look at the numbers on amgen. meanwhile the other business headlines we're following tonight. bws financial amazon.com to a sell. the analyst telling clients the retailer will be hard pressed to reach its target because of spending on technology and its discount shipping program amazon prime. amazon weighing down the rest of the internet stocks meanwhile putting pressure on the nasdaq pretty much throughout the session on that decline. the commerce department reports new home sales, meanwhile, were up 11% in the month of june to a seasonally adjusted annualized rate of 384,000. that is the largest increase in more than eight years. the strongest sales pace since move. and it adds on to the good news we had last week on existing home sales. the median sales price, however, of a home falling nearly 6% from may and 12% year over year to just over $206,000. $206,000. median price of a home in this country. in an interview with "wall street journal" meanwhile philadelphia federal reserve president charles plosser says

that the fed will probably have to begin raising rates in the not-too-distant future, possibly even before unemployment peaks later on this year or early next year. well, the summer rally taking a back seat today with stocks finishing the day mixed despite good news on the housing front. how should investors position their portfolio now? our experts weigh in. sarah keterror, portfolio manager at causeway capital management. tony dwyer, equity market strategist with ftn capital markets is with me. good to have you both on the program. today performance is not necessarily that the bull market took a breather because we ended positive and we are extending this rally that we've seen. tony, is there still a significant makt significant amount of money that could eventually make its way to stocks? >> my buddy has a chart that he sends to me and it points out you could buy 41% of the s&p 500 as of the end of may, which is the last data available, with the money in money market mutual funds. so there's a lot of cash in the sidelines, and what's very

interesting is one of the negative things up until recently was the up volume on the new york stock exchange was very weak. there just wasn't a lot of enthusiasm in terms of buying it. and that was a negative because it meant there wasn't a lot of conviction in the price and you get selling if it turned down. here's the problem. prices broke out and because you didn't have much up volume that means not a lot of participation took place, which could drive stocks -- obviously, there's buyers on weakness, which is what today was all about -- by the way, i totally think you can have a 2% to 3% pullback to the breakout point and our plan is to buy that versus actually trying to be defensive for it. >> let me just put this -- the headlines of the day out there. tony, thank you. i'm going to get to mike huckman. we have more news on amgen. the numbers are better than expected. mike huckman's looking behind the numbers. are they raising guidance, mike? >> yes, they are, maria. that's really the kicker here. that amgen, the world's biggest biotech company-s raising its guidance, now saying that revenue is trending toward the upper end of the 14.4 to $14.8

billion range that it had lowered to in its first quarter earnings release. but then it says that it's going to have earnings per share this year in the range of 4.80 to 4.95 a share. the previous range had been 4.55 to 4.75. and the street's sitting at 4.57. so that is a huge up side surprise out of amgen, and we are seeing the shares react positively, up almost 2% right now. in after hours trading. but there was a huge beat in the second quarter on the bottom line. 1.29 a share versus 1.16 was the consensus on revenues. 3.71 billion versus the $3.57 billion revenue consensus. and finally, maria, they beat on sales pretty handily-w sales of their drugs aranesp epogen and embril just to name a few. >> thanks very much. and as we know the stock is trading higher pretty heavy volume in the extended hours as well. we'll keep watching for any new

developments out of there. up next an exclusive interview with the ceo of alcoa. find out if he thinks the recent rise in aluminum prices can be sustained. we also want to talk about the so-called inflation trade with our guests. sarah keterror, let me ask you what i asked tony earlier, and that is is there still that amount of money on the sidelines that obviously has come to work into the stock market? do you think the rally has legs from here, second half of the year? >> absolutely. but i don't think it will be say strien li a straight line either. there's a tremendous amount of value causeway is finding. we're certain there's plenty of up side. >> we just heard the numbers out of amgen. how would you assess the quarterly earnings period and do you think that's enough of a boost for that money to come into the stock market? >> yes. and it's not necessarily current earnings, especially for the cyclical stocks that have had the big moves this year. their current earnings are terrible. and they may be fairly disappointing early next year.

but it's the earnings estimates and the rise in those estimates that's getting the market excited. >> so would you, tony, be putting new money to work right here even after this huge run-up we've seen? >> i would, maria, because when you go back -- and doug kass phrased it perfectly, you made a generational low. i think the action kind of confirms that, it pulls us in. again, you could have a pullback but i certainly believe you should buy it because i don't think it will be that meaningful. there's a lot of money that has to come in. and you're in this fundamental pivot point where you're going to get better numbers. remember, the cost cutting was the reason that so many people got laid off. the high unemployment numbers. most of that is behind us. so you're going to sequentially get some better numbers, which is going to kraet create the perception of better fundamentals. that's what the market will trade up on over the course of this year. we again would at end of the year fade it because we don't think that the consumer is going to be back and the global economy is going to be back to justify it, but we could see another 15% to 20% up side by the end of the year at some point. >> sarah, if we were to see that and you also believe that this rally has legs, what groups do i

need to be invested in? tell me how you're allocating money these days. >> we're certainly very keen on the cyclical stocks, those companies that are sensitive to the global economic recovery. and some of the more interesting ones are based in europe. even though they may have over half their outside of europe, they've been tainted with this idea that europe's very slow-recovering economy, and they would include the german industrial gases company linde, one of the market leaders in industrial gases. they're number one in over 46 countries. they're a fantastic company, extremely strong in terms of balance sheet and cash flow. they've got the money to pay their dividends. and they're very typical of the types of high-quality cyclicals you can buy today. >> all right. we will leave it there, sarah. tony, great to have you on the program. we so appreciate your insights today. >> thanks, maria. >> thank you. we'll see you soon. up next, klaus kleinfeld, an exclusive with the ceo of alcoa.

see if he thinks the recent rise in aluminum prices can be sustained. when does he think aluminum prices move up? later we'll hear from the ceo of one company who says the key to getting health care costs under control is by focusing on prevention. find out how much that's saving his business. safeway thinks outside the box, and we'll talk with the ceo.

and there is more. i'm cnbc pharmaceuticals reporter mike huckman at the breaking news desk. with news out of a follow-on press release from amgen and, surprise surprise, glaxosmithkline. these two companies announcing this afternoon that they're going to share commercialization of the experimental twice a year injectable osteoporosis drug known as dmab that is currently awaiting fda approval. they're going to share commercialization in certain parts of the world, not everywhere, but in certain parts of the world. and amgen is going to get initial payments and near-term commercial milestone payments totaling $120 million. but maria, this is a big surprise for a potential blockbuster drug. amgen's giving a part of it away to drug giant glaxosmithkline.

back to you. >> all right, mike. thanks very much. mike huckman with the latest there. this is obviously a very important report. after the close. and the stock is moving on this news. meanwhile, aluminum prices moving higher on the comments out of china that china will continue its commitment to sustained economic growth and that its stimulus package is working. the country is the largest consumer of industrial metals. and the announcement is good news for alcoa certainly. the stock is up 2 1/2% today. and the aluminum giant has been on a roll since it beat second quarter earnings expectations earlier this month. the stock up 20%. just since then. earlier today i sat down exclusively with klaus kleinfeld, the company's president and ceo, and i asked him what he knows about demand around the world for aluminum and other commodities. >> we in our industry had a freefall, 60% price decline in five months. the industry has never seen that before. we see that china has come back, china's actually starting to

grow nicely again, pulling asia with them. and we see even the u.s. clearly bottomed out and we even see some signs of uptick here. >> what are the signs of uptick? let's go through where specifically you are seeing signs of progress. >> well, number one, we have inventory levels pretty much all across the industries that are so low that we've never seen before. everybody has tried to save cash and brought the inventories down. so we are seeing there's quite a nervousness in the market because everybody knows there will be a recovery but they know that they also will not be able with the low levels of inventory to be there once it recovers. automotive industry. automotives industry in the u.s., we see ford and chrysler -- ford and toyota both have announced that they will revamp production for their most popular models in the second half of this year. cash for clunkers is a program coming in that's been super successful. in europe, 12 countries in europe have established this. coming to the u.s. now. pretty much everybody assumes

it's going to give another 250,000 cars for the u.s. and obviously back end loaded more to the end of this year. we saw even on the truck side class, eight trucks, june production demand levels have gone up 10%. so that's really good. >> a lot of people feel that the auto sector remains very much in the doldrums. what are you seeing in terms of end market demand? >> it really depends on where you look. i think it will take a while for some companies to recover. at the same time they have all played the game of selling off the inventories, and they've sold them down to a level which is not maintainable. and that's the reason i believe we're seeing this uptick here in the u.s., for instance. >> what other industries away from the car industry is most important for you, for aluminum, here and where do you see the inventory levels as low?

>> the good thing is, maria, that aluminum goes pretty much into all industries and we're in that regard a real bellwether of industries. we're very strong when it comes to automotive. we're very strong when it comes to building infrastructure. and we're very strong when it comes to packaging. so the consumer side. we're also strong when it comes to all kinds of other material groups. and what do we see in packaging? packaging is holding up very nicely. summer season in the northern hemisphere. as long as that's warm and hot, we will continue to see that going up. and other than that it's been a very, very stable amount that we saw there. >> i know you were traveling recently with president obama. what can you tell us about the impact of the administration's policies on business? what would you like to see different -- done differently? what would you like to see succeed? >> i think the u.s. has been a role model for showing how well a company -- country can prosper

if companies and government work together. that's always how i've seen it. and i think that spirit has to maintain to be there, particularly in the crisis that we're currently going through. yes, there is probably a need for some additional legislation, but at the same time you can only do it when you have a cooperative spirit. and i think that the administration is trying to do that more so now than they probably started out with. the russia initiative is a great example. i think president obama has set a real wonderful new tone with the russians. you saw how much that was welcomed from the president as well as the prime minister of russia. and also from the business community, from both sides, there's a lot of opportunities in the russian as well as u.s. business dialogue. and the same thing holds true for china. commerce can help. and i think is a strong foundation for wealth creation. without it it won't happen. >> what has been the impact of the trading of the dollar, the weak dollar?

>> that's substantial. for companies like us that are bound to where the ore is and bound to where we can have access to cheap and clean energy, obviously we have a strong presence in australia. we have a strong presence in brazil. we have a strong presence in iceland, strong presence in norway. and some presence in europe. the weakening of the dollar is really hitting us substantially because our material is traded in dollar where our costs are very often in those local currencies. >> where are you in terms of the worries about inflation? people wonder whether or not the policies coming out of the federal reserve will eventually lead to inflation. do you think that's the possibility? >> yeah, i think that's -- i mean, on a mid term it's unavoidable. but at this point in time we still have quite a bit of capacity overhang, which is putting pressure on pricing. you will actually see deflation first. and the big question is when the deflationary scenario, which we

still have today, when is it going to flip over to an inflationary scenario? that's the big question. but eventually inflation will be part of the solution of what's currently going on. >> there's a cover story in "newsweek" this week that says the recession is over. but hopefully, you're ready and prepared for the recovery. is this going to be a jobless recovery? what kind of a recovery would you expect? maybe we won't even feel very differently in a recovery versus a recession. >> hard to tell. really hard to tell. i mean, i don't know how you feel. i think we already today compare to where the emotions were in december, at least in our industry. and from july pretty much this time of year last year where we had our metal price at 3,400, until the end of the year when it was down to 1,400, you know, it was like a freefall. emotionally, i mean, our company feels very different today than it felt end of last year. and i think it feels even stronger today than it felt at

the height because sometimes when you go through the fire together and manage, that brings the whole team together. i have the impression that in spite of all the restructuring that we've done there is an enormous power inside of the company and once the economy comes back we're going to really come out of it very, very nicely. >> and while the price of aluminum has recovered some in the past month, it is still down from the highs of a year ago. mr. kleinfeld also told me he's not sure whether or not we will see those prices fully recover, although he says low inventories are helping create regional spikes in both the demand as well as premium paid for aluminum. up next here on "the closing bell," find out why shares of radio shack took a hit today despite an 18% increase in second quarter profit. we'll be right 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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welcome back. now a look at the other stories we're following on the "closing bell" ticker tonight. barclays downgrades boeing today to an equal weight from an overweight. the analyst cuts its price target on boeing to 46 down from 60. he's telling clients that boeing's cost overruns on its 787 dreamliner jet are happening because of delays and technical problems, and that could force

the aerospace giant to take a charge against earnings for much of the plane's backlog. boeing shares tonight down a fraction. verizon's sekt second quarter profits fell 21%. the company made $1.50 million due to a drop in spending. when you strip out charges that was better than xapd due to strength in the company's wireless business. it says it plans to cut another 8,000 jobs in the second half of the year to continue cutting expenses. verizon shares tonight down 2 1/4%. and radio shack, second quarter profit was up better than expected 18%. the company made $49 million because of lowered expenses. sales, though, were down 3% to $966 million. missing wall street estimates. and as a result radio shack tonight down 6 1/2%. up next right here "closing bell," the government's health care reform plan concentrates on treating sick patients. but should we turning it on its head and focusing on preventing the sickness in the first place? we'll check it out. can we do that? back in a moment.

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welcome back. tonight a special report on cnbc. "meeting of the minds: the future of health care." it premieres tonight 9:00 p.m. on cnbc. the top players in politics, business, and the health care industry join me to explain what they think is wrong with the system currently and how we as a nation can fix it. >> if we eliminated cancer as a cause of death economically, it's priceless any way else, but economically it's the world's greatest economic stimulus. $50 trillion. >> but you speak as if we don't want to find a cure for cancer. aren't we working -- >> if it's worth 50 trillion, maybe we should spend more than 5 billion a year on a $50 trillion outcome. >> but is the secret to containing cost all about preventive care and how do we do what mike milken was just saying? we discuss that right now with dr. toby cosgrove, ceo and president of the cleveland clinic. and stephen byrd, chairman and ceo of safeway.

gentlemen, it is nice to have you on the program. welcome back. >> thank you. >> good to see you both. you both have done an extraordinary amount of work in terms of containing costs and really getting this issue under control. so we so appreciate your precious time tonight because this is really an important issue and you've actually been quite successful in terms of doing so. so toby, let me kick this off with you here. i'm reading something about the cleveland clinic right now. and basically saying that the clinic has really been a standout in terms of offering the highest quality and the lowest -- or among -- keeping costs in check. how have you done it? what has been the key to that success? >> i think we've done a couple things. first of all, we think that you've got to control cost by having doctors incented in such a way that they don't order more tests or fewer tests than you need. secondly, i think you need to have a very efficient health care system, and that's built

around the electronic medical record and measuring quality, being transparent about it, and getting all that information in such a way that you continually improve. and finally-f we're going to take down the cost of health care, we have to decrease the disease burden in the united states. and you know, when i was getting this job, i began to think about what i did for 30 years, and that was simply look after people who were sick. and it didn't really seem like health care. and i said, my gosh, maybe what we ought to do is start thinking about health instead of just being a sickness organization. and so we took a very affirmative action on trying to reduce the disease burden, particularly in our employees. we thought charity begins at home. so that's where we started. >> which is exactly what you've done as well, stephen byrd. i read your op-ed in the "journal" recently. market-based solutions can reduce the national health care bill by 40%.

tell me how you've done it, what you have implemented for your employees to incentivize them to exercise, eat right, and stay healthy to obviously prevent disease later in life because we all know that 70% of the money that we spend in health care goes to disease that is based on behaviors, lifestyle, and are preventible. >> sure. you know, unfortunately for us we don't have the cleveland clinic to rely on in any of our markets. so what we did is we redesigned our own health care plan as a self-insured employer. we're free to design that just the way we would like. and we're basically doing what toby cosgrove said. if we can make our workforce healthier, we'll lower the need for health care, and therefore lower the cost. and we picked up on the notion that 70% of health care costs are driven by behaviors. so we created a series of incentives for our employees to engage in healthier lifestyles. so an employee that has a

completely healthy lifestyle as we would describe our healthy measures program, family coverage would be about $1,600 lower than someone who doesn't operate with the same healthy lifestyle. >> well, you know, it's an interest issue that you bring up. and mike milken in our special tonight brings up the same issue, basically saying you have to incentivize people and if you're a driver and you have a car you get into a lot of accidents then, just like what you wrote in your op-ed, your insurance goes up. is that what you're talking about, that it's more cost effective for the individual if they prove that they are staying healthy? >> that's exactly right. if you look at most health insurance today, there's a uniform premium regardless of personal behavior. and in the automobile insurance industry, it's just the opposite of that. your behavior determines your premium. and that's what we've done here at safeway. while simultaneously encouraging everybody to have an active and

healthy lifestyle. so a smoker, for example, would cost you about $1,400 more per year into sure. i think toby can get a number as high as 3,000. and it's really not fair for them to burden the rest of the employees with that particular habit. so we created a differential. unfortunately, under the current legislation we can't provide a differential quite that large, but we're seebing legislative changes that will create more of a premium difference so people will be encouraged to have healthy behaviors. >> dr. cosgrove, toby, are we crossing any lines by doing this? some people say who is going to be the one to tell someone, you know, don't smoke, don't eat poorly, make sure you exercise every day. do you think that could attract criticism because you cross a line? >> well, i think what we are is we are a health care organization and as a health care organization we need to model for society what a healthy workplace is and what healthy behavior is.

and therefore we went about discouraging people from smoking. and in fact we carried it not just to our employees, we carried out a big program across cuyahoga county and took the smoking in cuyahoga county from 28% to 18% in four years. a tremendous amount of improvement in the health of these individuals across the entire county. but i think that you have to understand that it's perfectly legal, for example, not to hire smokers. and we don't hire smokers. we need to encourage people to have proper health. and we started out by giving everybody free weight watchers and free curves across all of our employees. 5,000 people signed up. and so far they've lost 90,000 pounds. we think that's terrific. >> that is terrific. mike milken made another point in terms of what were the biggest killers in 1900 in this country and what they are today. so in 1900 i guess it was

infectious disease. it was polio. it was diarrhea. today it's heart disease and it's cancer. so if we're spending $5 billion on research for cancer and the outcome is so much more, as he said, it was $50 trillion, why aren't we spending more money in terms of finding a cure? >> well, i think you have to look at, you know, a cure for cancer would be a great thing to find. it's going to be very complicated and it's going to be a long time. i would say we've got something closer to home that is even more important, and that's behavior. if you look at the 70% of people who die of chronic diseases, you know, those are caused by three things. they're caused by smoking, obesity, and lack of activity. and those are all behavioral things, all of which we can change with very little cost at all except education. >> yeah, it's a really good point. so steven burd, let me ask you about something that dr. bill frist said in our special tonight. and the question was will we see

quality decline if in fact we have a public health care system alongside a private system? what do you think? >> i don't think there's any question you'd see quality decline. the problem with the public option is that it would compete unfairly. they would start with the medicare rates, which recover only about 75% to 80% of full cost. and so i agree with dri. frist that what would happen in this case is they would crowd out the private sector because they would offer premiums that were so much lower. and that would ultimately lead to poorer quality and you wouldn't have innovation that you have in the current system. >> so the number one item here that we're talking about is prevention and making sure people are healthy so that they avoid disease later in life since 3/4 of the money goes to elderly and diseases that are preventible. let me get your take as we wrap up here. the number one -- or most important item on the agenda you

think needs to be done to solve the two problems we're trying to solve, number one, get costs in the health care industry down, and number two, insure those 42 million americans. toby. >> yeah, i would say there are three things. i think we have to have the proper incentives both for patients and for doctors. and the second thing is that we've got to have an efficient health care system that's integrated. and finally, we've got to put a big emphasis on prevention and wellness. >> steven. >> i think i would add to that, and i think toby would agree, that we need to have some transparency so that people can get information on cost and quality so that they can make informed choices. toby and i are saying the same thing. you have to marry incentives for good behavior with personal accountability. if you do those three things, there's lots of other things you should do with the electronic medical records, you know, but we've been able to flatline our costs over four years.

if every entity in this country and the u.s. government adopted our health care plan design four years ago, the health care bill of the nation would be about $550 billion less than it is today. >> amazing. well, you know, we can't say that the current system in place is all that bad given the fact that the innovative drugs and the best drugs and procedures in the world are coming from america. isn't that right? >> absolutely. and i think we have to remember that we can't throw out the baby with the bathwater. we can't lose that innovative spirit in the united states. it's very important as an export. >> gentlemen, great to have you on the program. we so appreciate your time today. thank you. >> pleasure. >> one question we gave to the panel tonight, how much say life worth. join myself, michael milken drrks bill frist, jennifer granholm from hitmichigan and m others in "meeting of the minds" tonight at 9:00 p.m. on cnbc. the obama administration kicks off two days of high-level talks with china. a breakdown of how the discussions are going, how they may impact economic relations

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has the fastest hands boxing has ever seen. so i've come to this ring to see who's faster... on the internet. i'll be using the 3g at&t laptopconnect card. he won't. so i can browse the web faster, email business plans faster. all on the go. i'm bill kurtis and i'm faster than floyd mayweather. (announcer) switch to the nation's fastest 3g network and get the at&t laptopconnect card for free. welcome back. the first joint meeting of the strategic and economic dialogue between the united states and china taking place in washington today. cnbc's hampton pearson stands by

right now at the white house with the details. hi, hampton. >> hi, maria. on this first day of two days of bilateral talks president obama joined his treasury secretary tim geithner and secretary of state hillary clinton in welcoming top chinese officials. the president said the u.s.-china relationship will define the 21st century. he also said, he and the treasury secretary, they called for fundamental change in the u.s.-china economic relationship and american recovery will feature slow growth and debt-weary consumers reluctant to spend money purchasing chinese imports. >> as americans save more and chinese are able to spend more, we can put growth on a more sustainable foundation because just as china has benefited from substantial investment and profitable exports china can also be an enormous market for american goods. >> china's success in shifting the structure of the economy toward domestic demand-led growth, including a greater role for spending by consumers, will

be a huge contribution to our global challenge in bringing about a more rapid but more balanced and more sustainable global recovery. >> treasury secretary geithner did not mention continuing concerns about china undervaluing its currency. top chinese officials said nothing about trillion-dollar u.s. budget deficits and the possible impact on the dollar. china is the top u.s. creditor. with more than $800 billion in u.s. treasuries. meanwhile, china's second quarter gdp is up nearly 8%, and it's being closely watched worldwide as the first major economy to show signs of improvement. >> translator: a more open and more dynamic chinese economy will bring opportunities to all countries in the world, including the united states. >> and the president said he hopes these two days of talks will help overcome mistrust on both sides, whether it's the economy, climate change, or

relations with north korea. maria? >> all right, hampton. thanks very much. we take a closer look at the u.s.-china dialogue right now with joe muse, and don straszheim. nice to have you on the program. good to see you again, don. it's been a while. joe, you've been in china recently. give me your sense of what they're trying to accomplish with this meeting. >> well, maria, i think this is primarily a listen politely and go your own way sort of a dialogue. you heard already in hampton's introduction, we didn't really focus on the currency, they didn't focus on our deficits. but this is the most important meeting that can possibly happen in terms of economic growth and potential. and i'm just glad to see both sides getting together. >> joe, what do you think? >> well, i was in china two weeks ago, and i'm telling you they're already past the issue of a global recession there. i mean, that economy is humming.

95% of the country is humming at at least 9% gdp growth. >> wow. that's a lot better than anyone thought. >> they're back to where it was three years ago. while we're still stuck in a recession, right? and they don't need -- the piece before talking about the u.s. consumer isn't buying the exports so much. it doesn't matter to the chinese. they've already figured out how to build their economy where it's not relying upon exports. so in my mind what we're trying to get out of is to sell more securities to the chinese and not help them. that's my view. >> so you think one of the main things on the agenda here is the u.s. government saying please don't sell the assets you hold of u.s. securities? >> that's right. we're a safe investment. and we don't have any leverage. they're the bank. right? we have no leverage with them. and we're stuck in a recession. they're at 9%. i think the chinese frankly are amazed that we're still stuck where we are. >> they're holding the cards. >> that's right. they're holding all the cards

and will continue to do so. there's this hope in this country that china's still stuck in some kind of third world mentality. and they're not. they are a superpower. >> right. absolutely. don, do you agree with all of that? >> well, to a certain extent, maria. it's true that china has an awful lot of leverage oifrs right now. but we've got some leverage over china as well. >> what is it? >> as long -- as long as china continues to be such an important seller of product to us and us being an important buyer of product from them, they need the jobs, they need the employment to keep their economy going. as joe just mentioned, their economy is growing very rapidly. i would caution that part of this growth that china is enjoying right now seems a little artificial to me because it's an enormous push lu the state-owned banks for lending to

the state-owned enterprises and an enormous push through the state-owned enterprises to invest in capacity that i don't think either china or the world needs. >> well, the banking system in china was much more advanced than ours when this recession started. they had really tight lending controls. we didn't. so i think they have the flexibility to increase lending and not have it cause major issues. at the end of the day they're growing at 9%. when the u.s. consumer is at its worst and not buying chinese products, right? >> how effective have they been, do you think -- i mean, i know this is only day one. but do you think that china could stop buying u.s. debt? the imf now is issuing bonds. >> i think they're going to be continuing to buy u.s. debt for some time. but you see a lot of diversification. like any investor, right? they're investing in africa. they're investing in south america. i mean, they're locking up a lot of natural resources around the world that nobody seems to be talking about. >> the u.s. is not the only game in town. >> that's right. >> so don, as far as an

investment standpoint here, because of what is going on in china right now, that the economy joss it's humming, he just got back. do you think investors should be looking at investment opportunities in china? >> i think they absolutely should be, maria. i would rather own, for example, china national offshore oil corp. and petro china the big three state-owned oil companies rather than say exxon mobil, conocophillips and chevron because the chinese oil companies are working in the fastest-growing economy in the world. and china treats capital better than americans treats capital. pains me to say that. >> the risk threshold is just comfortable enough for the investor to get in, but investing in china has not become mainstream. a lot of u.s. companies that are u.s. listed chinese companies and really quickly in the oil

and natural gas area, there's a company called china northeast petroleum. making money at $15 a barrel. >> wow. >> i can't imagine exxon is. >> and imagine $68 a barrel. >> right. >> great conversation, really intriguing and i hope you'll come back soon to continue this conversation. don, joe, thank you very much. up next on the "closing bell," find out where he's headed next. you have questions. who can give you the financial advice you need? where will you find the stability and resources to keep you ahead of this rapidly evolving world? these are tough questions. that's why we brought together two of the most powerful names in the industry. introducing morgan stanley smith barney. here to rethink wealth management. here to answer... your questions. morgan stanley smith barney. a new wealth management firm with over 130 years of experience.

welcome back. let's take a quick look at the other business headlines we're covering tonight. testing equipment maker acquiring variant. a 33% premium to the closing price friday. it will result in about $75 million in annual cost savings. investors very bullish on municipal bonds mutual funds. muni flow funds hit $904 million last week, and posted a record

flow of $1.5 billion a week over the past month. that's because investors are worried about higher tax rates and increasingly attracted to the tax exemption. lloyd's banking group is appointing bishoff when the current chairman retires. he was replaced in february and replaced by dick parsons as a result of citi's financial issues. now we head over to the nasdaq market site, michelle is standing by with a preview of what's coming up at the top of the hour "fast money." >> coming up is the internet trade over? the top analyst tells you the best way to trade earnings, expedia this week. plus hedge funds for all, a top fund manager and m.i.t. professor tells you how to trade like a hedge fund. the traders and are live at 5:00. see you then. >> michelle, we'll see you in about five minutes. thanks so much. tuesday brings a big reading on home prices. what else could move the market. that's next right after this break.

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