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some of the best e-mails we got on that saying that stockses are for speculators, as well as if you bought stocks on march 10th, you were a speculator as well. do we hate those people, too? that's an interesting,000. >> i love speculators, and that's what makes the market. >> well, these speculators are speculating the market is going to come back a little bit. we're up 71 versus that 90 something earlier. that's going to do it for today. thanks for watching, everyone, i'm trish regan. >> i'm melissa francis. >> i'm larry kudlow, sew you tonight on ""the kudlow report" and "power lunch" is up next. >> single family home prices rose in may. this first month-to-month increase in nearly three years, according to the latest s&p

case-shiller price index. spss are soaring about 40%. ibm is buying it for $1.2 billion in cash or $50 a share. san fransisco head janet yellin will talk in a speech scheduled to begin in 30 minutes. i'm julia boorstin. welcome to "power lunch" for a tuesday, i'm bill griffith. stocks are generally lower right now, whether you call it profit-taking or whatever, we did get a consumer confidence report that was a little bit troubling on the economy, despite some surprising positive news on the home front, surprising on where it came from. which we'll talk about in a little while. we're also going to get the results of the treasury's $42 billion -- two-year notes. that could move the markets in the next hour here. >> i'm sue herera. are speculators to blame for the

wild swings in oil prices? oil regulators say yes they are i'm michelle cabrusso-cabrera. wall street may not make anything tangible, just push around paper? they slice and dies and train highly engineered financial products. but should america get back to making more physical products instead, rather than focusing on paper profits. here's what else is on the menu. >> i'm diana olick in washington. the 25 loan servicers were called to task at treasury this morning, ordered to improve loan modifications and increase capacity. but sources tell cnbc those servicers are telling treasury that job losses and responsibility to shareholders are keeping the loan mod numbers low. >> i'm mary thompson. on the menu, ge capital expected lawsuits in its portfolio to be similar to this year and next, while it expects provisions for the losses to speak sometime next year. the finance arm of cnbc's parent

says the current environment remains challenging. i'm jim goldman in the silicon valley bureau. it does work out to a 42% premium for the company's shares. it follows the sun-oracle deal, and amazon, zap owes. >> let's focus on the market right now. the dow losing steam after three straight up sessions. energy leading the declines. investors also getting ready for massive treasury auction in just an hour. we kick it off at the new york stock exchange. what's the problem today, bob? >> the problem is the allrally looking tired and the sector is starting to slowly roll over here. we had good news this morning, case-shiller home price index, some stability there. but when the consumer sentiment came out at 10:00 a.m. eastern, it was leer than expected and we sort of just rolled over here.

one sector that is holding up very well, and i find this interesting is some of the health care names, hmo names. remember aetna? ah, but they're in the in government-assisted programs. they specialize in medicare and medicaid. they had very good numbers and raised their guidance so that was up. coventry was also in government-assisted programs like medicare advantage programs. they also have hmos. they had good guidance, as well. they're on the up side. even aetna which was down yesterday allows the earnings and guidance up rather nicely. look at these nice double digit gains. let's talk about what is weak here. crude is down, but the dollar has been rallying here and that's a problem for stocks and commodities on days when that happens. big energy names are weak. valero, one of the rephoners, has disappointing numbers today, and that stock has been down throughout the day. also a group that's starting to roll over on the big commodity names. so if you look at alcoa, freeport mcmoran, u.s. steel, declines of 4, 5, 6% and those are the classic names that usually begin to move over if you get a strong dollar, or just

start getting a little tired. and that's what we're seeing right now. trader talk on cnbc.com. mike, how are we looking at the nasdaq? >> the nasdaq is 13 for 14 in terms of up days, and it doesn't look at this point, barring an afternoon session turn around, that it's going to be 14 for 15. here is that take-out deal that jim goldman was remembering to, shares of sbss up 40.5% right now on that buyout by ibm. but bob was talking about health care, and i really wanted to call your attention to this really nice one-week chart of teva pharmaceutical hitting another new high today. the world's biggest generic drug company beat the street, reaffirmed guidance for this  year, and raised its guidance for next year. again, those shares are at a new high. let's go to rick santelli back at headquarters. rick. >> thank you very much. it's a double downer today in terms of hey, we saw consumer confidence find a lead in july at 46.6. you add in what equities are doing today, and a picture

emerges and that picture is buy some treasuries and even in the face of short-dated supply, treasury yields are moving down, mostly in the long maturities. we already had $57 billion in one month. but all of the fun will be in 48 to 55 minutes when we get the results of the $42 billion two-year note. suffice it to say the curve is flattening a bit. sharon, what a controversial day to be in the commodity arena. >> that's right. that's all they're talking about is what's going on in washington. oil prices under $67 a parcel and the fact the s&p is getting hammered has something to do with it. but a lot of traders say what is happening in washington also has something to do with the weakness in the energy markets. of the talk there from the commodity future attention trading commission is whether or not to set position limits and who will have the power. the cftc or the ex changes in terms of setting those limits. the cftc's chairman, gary beginsler says he wants the commission to seriously consider

setting strict position limits, and here's why. >> to the extent that financial parties such as money managers, hedge funds, swap dealers, participate in the futures markets, position limits have the potential to increase liquidity, i believe, by reducing the positions of the largest trader. >> so his view is that if you limit the position of one large trader, they will then have to liquidate some of the positions they already have. that will increase liquidity, and therefore, he thinks that will be good for the markets. of course, there are others who say this would be a one-time only event, and putting such position limits on various entities could cause them to go to other markets, foreign markets, unregulated markets and i have a lot of traders will to go talk about that. >> that's right. you're joined by ray car bone, and we have rick santelli. ray, i'll go to you. what do you think about all this? they already -- the cftc already

set hard limits on speculation in the agricultural markets, and there are those who argue that works well. what do you think about their proposal for your market? >> well, i think that's a very good point. we already have limits in the agricultural markets. we go look at 2008, we see the price volatility in the agricultural markets is staggering. it is the biggest volatile year that they have had. so you can make the argument that position limits did not limit volatility. and we had very, very high prices in if early 2008, along with those position limits in the agricultural markets. may not moderate prices at all. >> it's impossible to argue that case. he is referring in probably many ways to the weak market. if you look at minneapolis wheat in that growing season, it traded up on an expiration cycle up to $25, last day of trading had a $5 range, which was higher than the previous three growing seasons of the entire commodity. so he is right. give an analogy. i think that the issue is, commodities are finite, the players are going to give it the

right price, but the road there, whether it's 147 down to 33, that market wanted to be in the 60s. the game has gotten so big, it's going to be a wild ride. >> i saw you shrug your shoulder a little bit when we heard gensler, trying to keep him from corning a market. >> by weird chance last night, i had dinner with the largest private buyer of wheat in the world. in other words, they really need the wheat. they're not speculators. they're doing a thousand contracts a month. they go down and sit with traders who are doing 2 million contracts a month. 1,000 a contracts a month for somebody who really needs it, versus 2 million contracts for people who don't need it. what does that do to the market? that's what we're trying to get at. >> but the 2 million buyers have to find 2 million sellers. so it's going to heat it up like a petri dish and it's going to move around more. but i still think you end up where you want to. >> and the speculators the sellers as well?

in other words, are the sellers taking both sides of those trades when they're crowding out those who would need the contracts to begin with? >> they absolutely are. i mean, you've got -- you can't talk about speculation just when oil prices are rising and not talking about it when it's falling, as well. and i think the same entities are at work. the issue really is the financial investors in this market that may not have been there before. >> but doesn't physical delivery impose some kind of discipline? if you have to worry about that oil ending up on your driveway, doesn't that drive something? you have to worry about the wheat or the copper showing up at your back door, and you will hear a lot of traders talk about when a contract is going to expire and they haven't been able to make the deal, they don't answer the phone, because they don't want to take delivery. >> and do limits blur the market? if you need the physical commodity itself and there are limits put in on your ability to trade, rick, what does that do to the market? and the original function of the market? >> you know, i don't think the

limits are going to be as impeding, of course, for the farmers or the real hedgers as they are for some of the players that aren't in the business. but i still think the market could work. i have another issue michelle brought up. physical delivery is finding every physical delivery cycle. however, if you look at things like natt gas, i have an issue with settlements of commodities. >> because of physical delivery there? -- there is no -- >> it's really important to talk about speculation as a two-way street. that is something traders are really, really fixated on. >> you know what, before i go, i want to get your response, ray, but we have joining us craig dona hoe. i don't know how much you were able to hear, but we were talking about the limits being proposed on this market, on the energy market itself, the comments of the cftc, and the way that some say those limits have not worked as they have been imposed on some of the agricultural markets. so tell us your take on exactly what should be done to try and

limit quote, unquote, speculation. >> well, first of all, i think that's not accurate. we actually maintained position limits, hard limits, not only in commodity markets, but also during certain periods of trading in our energy products, as well. we also maintain what we call accountability levels, which give us the ability to look at positions and determine whether they're causing a concern in terms of the pricing mechanism in the market. >> well, if those were working well, then, would we even be having this discussion? would we even be talking about the wild swings in some of these markets? >> well, i think that any time you have, you know, the kind of price spikes we saw in the crude oil market last summer, and natural gas or commodity markets, people are going to ask what's causing that. but fundamentally, they're certainly not being caused by the commodity futures markets. those are reflecting, you know, macro economic supply, demand, fundamentals and characterist s characteristics. >> sharon? >> what about the unintended consequences? if position limits are imposed and i know that you've already

said that you are willing to have some position limits, and have already imposed some position limits. but if the cftc then does this, there are many traders here and many traders across the country who i talk to who say they may take their business elsewhere to foreign markets. what impact would that have? >> well, sharon, i think that's exactly right. first of all, as we indicated in our testimony this morning, we going to move toward a hard limit regime for energy markets. but having said that, it's very important that we do it correctly. and that was our message today, because the unintended consequences are, and we have seen it happen many, many times, is the business will move to off-shore markets and unregulated over the counter markets where there is no reportability, there are no position limits, and nobody has any idea what market participants are doing. we're trying to defend against that outcome. >> do you think the cftc will allow the exchanges to just impose stricter limits themselves, or do they want to be in control?

what was your feeling come out of it today? >> well, i think that remains to be seen. i would like to think that the cftc would like to work collaboratively with the exchanges, particularly given that we have indicated that, you know, we're very amenable to a hard position environment for energy product. we want to work with them. we hope they'll work with us. we clearly have authority to move forward and do this. and we intend to do that, and, you know, it remains to be seen how the cftc will come out on this. >> sir, thank you very much. appreciate it. settl share ron, thank you, and thank ray for us, as well. >> the cme or cftc. >> the question is, do you want the to have the government impose it or do it yourself? and traditionally, industry likes to do it itself. >> but guess what? things are different now. >> listen, there's a plot of problems and issues regarding pricing of finite commodities. but the alternative, is the government going to find ways to do it more efficiently, more

fair? i doubt it. >> see you next hour for the big two-year note auction. when we come back, the dow off its lows, but up 10 of the last 11 and the nasdaq up 13 out of the last 14. should be be jumping in and riding this bull right now. is the appetite for risk on the rise? task force time coming up. >> very surprising report on housing. so still ahead, we're going to talk about whether home sales and home prices have hit a bottom or not. and then we're going to talk about the tummy tuck tax. lawmakers now consider taxing certain types of health care surgery, this is a way of fixing health care or another way to get rich. >> and i'm in the chair for the gang today. rickster tonight. me during half-time report. we're back in two minutes. you have questions. who can give you the financial advice you need?

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once again, starting out as a day of rest. dow is other by 76 points, still holding on to the the 9000 level this afternoon. >> also, watching dollar. the index is rebounded after touching its 2009 low earlier, and despite today's losses in the stock market, so far the dow is on track to post its best monthly point gain in over two years. is it too late to get in, and ride this rally? let's talk about that where the dollar goes from here. our task force today includes

larry rosenthal, president of financial plaque r planning services, and mark, you think the market is getting ready to stabilization. >> i think the dollar is stablizing. i think what we're seeing happening is -- even though we are making -- australian dollar, and canadian dollar new prices. but i think we're on the verge of stabilizing. ahead of the gdp report friday, the consensus looking a contraction of 1.1%, setting us up for a q3 expansion. >> larry, you think this ral hay has been sort lived. with our sill water about the consumer. >> i am. i feel right now you take a look at the earnings reports that have just recently come out, a lot of it has been due to cost cutting. a lot of the true meat of the economy is going to come out in the third quarter this year. and we need to see some top line earnings to see if in fact the

consumer does come back. if that happens, i believe we'll have legs and a substantial expansion. >> mark, what object about you? the currency markets, does it tell you anything about whether or not the equity market is tired? >> no, i would say both the equity majorities and currency markets more or less moving with the australian dollar, along with a stock market. if you tell me the stock market is taking a breeger, i say it will get better action later today. >> larry, isn't it too wait to get into the market if you're waiting for top-line growth? >> no, i think what we have been -- and we have in our firm. a lot of our clients are close to and retired. so dollar cost averaging, buying on dips and taking some profits into some strengths like we've had the past couple weeks. >> so you're playing take the profits now, but you're waiting for a more substantial gain once we do get some growth in this

economy. >> no, i think in certain sectors, we need to be doing dollar cross averages come in. but as far as long term goes with the amount of easiness that the fed has -- i mean, the fed has done a wonderful job of greasing the gears of the economy. and we're doing buying hold dollar cost averaging long-term into the commodity space. >> interesting. >> thanks, larry. thanks mark. good to see you. >>. >> we have had a trifecta of good data in housing. new home sales up. case-shiller out this morning. up, first monthly gain in three years. has housing finally bottomed? is there any hope out there? wee going to drill down in the data for you. >> let's check the home builders. we had a run-up the other day, so perhaps it's not surprising we see a property taking a toll in kb homes and renar, but pulte

on the up side at 10.66, back in a minute. businesses more efficiently,

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dow. down about 72 points on the dow jones industrial average. one of the biggest losers in the dow today has been exxonmobil, which is now down batteries than a full percent, almost 2% at this level. 7142 is last trade. >> positive news on the home front yet again. and this is a surprising source. the s&p case-shiller index, which has typically been most bearish of the indicators out there actually showed home prices rising for the first time in three years on a month-to-month basis. year over year, still down 17%, but it comes on the back of the gains we have seen in the sales of new and existing homes. are these signs of a bottom the in the housing market? joining us, our own diana olick who follows the markets for us. michelle myers, u.s. economists and susan whackter, professor of real estate and finance at wharton business school. and i'll start with you professor, because as i understand it, erlg on you've been skeptical of this market, of the housing mark. but this case-shiller number has changed your mind, yes?

>> yes. i think we're beginning to see the bottom. this is just one more piece of information that's consistent with other good news, and to me, this is the most surprising. this is telling us not only that we're up nationally, but the minority of markets down, falls are slowing significantly. >> what do you think, miss meyer? you were positive anyway, right? >> absolutely. that is coming pretty much as we were expecting. the one surprise is that the not seasonally-adjusted case-shiller index on a month-to-month basis. we think probably that's seasonal distortions so be a little careful reading into that month-to-month gain. but i think overall what we're seeing is a slow down in the right rate of decline. and that's an encouraging sign, goes hand-in-hand that we're seeing a leveling off of housing sales. >> there was a note a few minutes ago that said the significance of this should not be underestimated because many people feel as though that index

really saw into the subprime crisis and has a very good gauge on perhaps the worst part of the market. and if that's showing some improve many, that's pretty good news. >> it is good news. and it's the the fourth straight month that we have seen at least not record price declines in homes. but there is one cautionary note on this, and just in the statistics that you want to look at it. and that in the last several months, we have seen the most failed activity in the distressed properties. part of that because of the first time home buyer tax credit and because investors are getting in there and starting to suck up the foreclosed properties and really actually beginning to compete. and that's why prices are going a little bit up on lower end. the question is going forward will this be sustainable. because that first time home buyer tax credit is going to expire at the end of november. and also, we have seen mortgage rates tick up a bit, and we're starting to see some of those investors now who are competing for prices, maybe pull away, because prices are going up. the question is, will it be sustainable? i hope it can be. >> professor whackter, what

about that? okay. so maybe the recession is over now. but now what? i mean, what does the recovery for housing, which as we all know, is so key to the the economy? what does it look like, in your view? >> well, the recession is not over yet. unemployment is likely to rise some. but diana, we know some things are working and do work, and that's really good news. because there is an expectation component of this. part of what drives decisions is the fear that prices are going to fall further. and we have seen a reverse in that. that's going to be important. >> so in other words, people expect prices to go up, they want to buy in, or expect the interest rate to go higher and don't want to miss the bottom in interest rates. >>el can. let's turn it around. interest rates are not falling. that's the key. >> a lot of people are looking at the next quarter very closely to see exactly how if indeed housing is bottoming at this point, or has bottomed, how that's going to impact overall. >> absolutely. i think the next several months, quarters, will be very important in determining if we really are

seeing a turn in the economy. we think that q3 will be the first quarter of positive growth and we think that residential investment will start to be a small positive in that quarter. so the big drag we have seen from the sharp declines in housing construction we think is past -- >> so q2 is the last negative quarter. >> in our review. >> guys, can i throw another note into this? foreclosure issue, we know today the treasury is meeting with servicers about the administration's loan rescue program. and they're only calling those servicers in because they want them to do better. they are feeling that it's not doing enough. and we're expecting a new wave of those alt-a defaults over the summer, will more foreclosures put added pressure on prices and we're going to have to see that in the coming months. >> susan, and michelle thank for joining us. diana, see you later. thank you, as well. don't miss tonight's cnbc reportses special, focusing on all things housing, we'll go region by region, asking whether it is time to buy in this housing market or not. and you'll hear the special case of a refinancing.

>> yeah, michelle, weigh in on this. >> yeah. i want to thank the american public for helping me with my re-fi. you can come on over this way, guys. yeah, i'll be on the special to explain how i got help through president obama's help for homeowners in my re-fi. in the meantime, what's coming up on "fast money"? we're taking a turn to the down side as the latest earnings wave, and a new economic data are all weighing on investors. so where do you protect yourself, where do you go? plus, the big deal in the technology space today. could it mean technology stocks are undervalued? that's coming up in the "fast money" halftime report. stick around.

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welcome back. in the headlines at this hour, coach shares down 5%, profits at the luxury hand bag maker dropping by more than 30% from a year ago. but that stock for the year is up more than 28%. office depot shares plunging, too, about 20% after reporting a bigger than expected loss. troubles in corporate america weighing on sales at that retailer. on the plus side, though, mile lanes getting a boost, the third biggest generic drug maker says the fda has only found minor issues at its key

manufacturing plant in west virginia. reports about quality control this caused concern about the safety of their prescription drugs, michelle. >> all of the women in hollywood and miami, sit down. in your seat. because senate democrats are talking about a tax on tummy tucks and other elective plastic surgeries. a bo-tax, of sorts to pay for health care reform. is this just another way to tax the rich and the vain. let's talk to our strategists. you guys both get 20 seconds to make your case. trebt, start with you. why do you think this is a bad idea? >> luxury taxes are always a bad idea. the most important example is in the ship building industry. ten years ago, levered a huge tax on yauts, and the democrats who pushed it through quickly repealed it. it's a bad idea and desperation attempt why we're not talking about cost cutting in health care. all we're talking about is more ways to raise more money for more spending. this shows the democrats are did

he say trat to find anything to keep this alive. >> chris, why is this a good idea? >> well, it's an interesting idea. i'm not sure it's a good idea or a bad idea yet. i think it's one of those things that has been floated. the reality is, there are basically two kind of revenue-generating proposals. one, a tax on high-income earners, a surtax. and other being a tax on these cadillac health care plans. but going to trent's point, this is about maintaining a key position of president obamas, making sure that this health care reform is deficit-neutral. >> well -- >> i don't know that he really countered you, trent, but go ahead. >> i'll tell you a couple things. first of all, this goes to the point we're just talking about more tax to say favor health care. we're not talking about cost-cutting -- >> that actually is not correct. >> hold on, chris. we're not talking about cost savings. president obama didn't itemize a single one last week in his news conference. >> but, chris, you acknowledge his point, right? chris, you acknowledge his point that being deficit-neutral is one thing, bending the cost curve is something else

entirely? >> well, listen, in terms of the cost-cutting, that's not true. two-thirds of the health care proposal in terms of the various costs we're talking about, are being generated by cost savings. the question now is -- how do you come up -- >> no, chris. >> a third? and that is a key area of debate. thanch is not what the congressional budget office said, that is not what your own blue dog democrats are terrified about. they say this doesn't bend the cost curve, it bepds it upwards. >> again, that's not accurate. >> it is accurate. and why are we talking about more revenue raisers? >> i want to hear him address this. you say when you hear him say the cbo doesn't bend the cost curve, that's inaccurate, chris? >> part of the cbo, and i understand their limitations -- they do not have a way to basically measure cost savings. so they focus on the cost of program. and what we are trying to do here, and i think this is a key platform of this health care reform, is we're going to generate significant cost savings. >> oh, okay.

>> now, republicans don't want to believe that, that's fine. but that's the reality. this is going to be a deficit-neutral bill. >> chris, trent, good discussion. thank you very much. we'll let you talk during the break to each other. >> how much would a tax on the tunnely tuck be, anyway? >> any taxes unacceptable to those who need it. >> by the way, san francisco president janet yellin is out speaking right now, saying that the fed will -- you know, she has been a real hawk on inflation. she says the federal will have to act decisively to keep inflation in check. but she does see some growth the in the economy right now. >> she sees growth, although she says recovery in employment is likely to be years away, and that the recovery is likely to be painfully slow. one risk that she cites is not only a fresh financial crisis, but also she cites commercial real estate as something to watch. >> we'll take a break and come back. our parent company, general electric, has pulled back the veil on its ge capital unit. did investors like what they saw and heard, how healthy are

investors' books? we'll be back with the answer. >> and minutes away from a $42 billion bond auction? is the government going to be able to borrow that much? "power lunch" is back in two minutes. bad cholesterol but your good cholesterol and triglycerides are still out of line? then you may not be seeing the whole picture. ask your doctor about trilipix. if you're at high risk of heart disease and taking a statin to lower bad cholesterol, along with

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executives with ge capital have been meeting with investors today. the financial arm of our parent company was hard-hit during the credit crisis, pulling down ge's stock price with it. how healthy are the books at ge capital right now? mary thompson has been listening in on that web cast, and joins us with details. >> yeah, it was a two-and-a-half hour call. and on that call, executives at the finance arm pointing out that its u.s. consumer business is improving. mortgage has been a tough spot. commercial lending and leasing, as well as global banks are stable, they say, with the challenge continuing to be ge's real estate portfolio. ge capital is expecting losses in its portfolios to be between $13 billion this year, and $12 billion next year. this based on the federal reserve's base case scenario. a more dire reading on the economy would drive losses to $16.9 billion this year, 17.5 did his billion next year. when asked about provisioning or reserving losses, ge capital says it sees those loan loss

provisions peaking overall in the early parts to the middle of 2010. within the u.s. consumer business, they expect loan loss provisions to peak in early 2010. and commercial lending and leasing in early to mid 2010. now, concerns about ge capital's funding sets the stage for next year. and right now, it says the funding environment is improving, and it still expects ge capital to be profitable this year, 2 to $2.5 billion. it also doesn't see having to raise any new capital from outside sources for its finance arm even in a worst-case scenario. company's cfo keith sharon saying it won't need additional capital until at least 2011 when a new infusion might be necessary, depending on economic conditions. conditions that the company said remainel cha challenging. one challenge that appears to be diminishing, proposed regulations for finance companies that might lead to ge having to split off ge capital.

here is what ge's ceo had to say about it. >> there is a lot of support for our business model and we're working to preserve that. >> while ge reports a systemic regulator, it doesn't obviously want to split up ge capital. >> and it all depends what happens to commercial real estate down the road. thank you, mary thompson. >> still ahead. >> minutes away from the $42 billion treasury auction, hitting the market. results for that and reaction and instant analysis coming up. and viacom's earnings are out, but that's only the tip of the iceberg. we'll have more in a minute. >> michelle has the halftime report first though. of see you in a minute.

welcome to the "fast money" halftime report, getting to the heart of the action as it's happening. the stock market retreating after hitting the highest level since november. is a correction on the horizon? if so, how do you protect and profit? let's get the word on the street. our "fast money" crew today, the pi boss pete najarian, dennis gartman, and steve not related to dick unless he leaves him alo alone, grasso. >> hope he is getting the memo, michelle. >> we'll send him a note. pete najarian, what is problem today. >> well, you know, really not a major problem. i think what you're seeing is profit taking and the profit taking makes a lot of sense.

>> wait, wait, wait, why does it make sense when case-shiller says the housing prices are up. we have the triif he can at that of data. >> well, it's following the predata that's already pushed us this far. we heard from the big financials last week and got great information from the technology space. then we started to get a big push from commodities led by caterpillar last week. i tell you what. we've had this big whoosh to the up side. you've got to expect some kind of a pull back to the down side and i think that's why you're seeing the volatility index up today, michelle. but don't be too concerned about the volatility index. what they are doing is buying puts that will protect themselves. and take a look at a couple of the big financials. citi in positive territory and where are they most active? buying up side calls in both those two names. >> interesting. but patricia, you think that case-shiller doesn't matter. >> it's not that it doesn't matter, but you can't take two points and make a line that goes to the up side. you know, a little bit better on the price is great.

but look at the fact that we've got a whole bunch of mortgages resetting over the next year-and-a-half, two years. we've got a the love hangover where the mortgages are -- the homes aren't being put out there, we have foreclosures still increasing. i can't get excited about it yet. >> all right. so you wouldn't play housing here at all then. >> you have to play housing. if you really feel like you've got to get in there, look at a home depot, look at lowe's, something where they're turn around the business, and the people who buy those foreclosures are going to have to buy paint. >> stevie grasso, it looks like you didn't believe this either. what's going on? >> well, you know, going after pete najarian, you always have to agree with pete najarian. have you seen him in person? he's too big to disagree with. >> that's not true, steve. >> come on, he's a sweet teddy bear. having said that, i think pete hit it on the head, too far, too fast, i think we have to take a back step. but how far back do we go? no one knows, but a better base than we were. >> dennis gartman, what are you doing right here? >> trying to be smaller than i had been. i owned a lot of stuff.

i'm trying to buy puts. pete had it nailed. i've sold calls against things. i'm trying to get as neutral as i can. i'm not sure we came too far too fast. we just came a little bit too far. and corrections are along the way. doesn't really matter much about the economic data. the case-shiller, you have to remember, michelle, is from may. it's a long time ago. really doesn't mean that much. >> michelle, let me jump in, as well. my clients believe we're still going to 1,000 in the s&p, but it might take a couple days to get there. i think the most important data we're looking at is still august 7, the employment situation. i think people are really gauging that. >> next week, we'll have to watch for that. next trade, topping the take today are the phrma names, shares of amgen pharmaceuticals leading the space higher after reporting better than expected results. both names higher by more than 2%. can you still get in? or is this trade over? strong opinions here on phrma. are you seeing in-flows into any of these -- stevie grasso, into the health-related sectors? >> hmo is strong, and aetna

upgraded. you had the senate getting closer to an agreement. that is basically not going to have to a public arm to it, so i think there is a cup he things going on, and still bullish in the sector. >> dennis gartman, is that good news if you didn't have a public option, in other words, less government interaction. >> any time you get less government, it's good for everything, michelle. so the fact that the government wants to get their hands into everything, hospitals, big phrma, that's discouraging. the fact that it's now been put off for a long period of time i think is good. >> patty, what do you think of teva. >> i love tea teva. they're revenue growth was phenomenal. it continues to be phenomenal. we're moving forward more on the generic front. love stock. >> all right. and speaking of phrma names, let's head to some options action. pete najarian, you are seeing activity in mile lan. tell us about it. >> it's another generic name and i think teva is the best out there, and the reason they're

out there is they may have an issue in one of their plants. now today the news is maybe the the issues weren't as bad as they once were. all kinds of options are moving out and particularly to september 15th. these are very, very cheap shots and could build off of what we have heard and they are not just a generic company. a phenomenal job and acquiring and looking out in the space. myelin might be a name that would trig or there. back to a.m. jen. the good thing about their drug sale citizen fact that they mentioned the economic recovery that brought spending back. their drugs -- >> have to go to the next trade weighing on the energy sector after they failed to impress wall street and off more than 2%. you are the oil man.

how are you play something. >> i'm trying to get short today. suggest larger name oil companies to get hedged up and stuff i'm long, i'm selling against it because i'm selling crude oil up to $70 is sporty high. >> what do you make about the big auction coming up and should we be nervous about the government trying to borrow so much money? >> i am and you should be too. i can't imagine it will be good for the treasury market. >> we'll see. >> could that be a market mover? >> of course, but the problem is we have been fighting market movers and going higher for the last couple of weeks. the risk is to the upside. i don't want to say close your eyes and buy them, but we will get a lot of e-mail, but it has that. >> the next trade, the sec tenthor as they agree to buy spff for $40 a share.

could this signal that tech stocks are undervalued? let's bring in the negotiator? guy? >> how are you doing, michelle? you are fired up. >> i'm trying. >> the first quarter that reported back on april 20th was better than this report a week or so ago. they told you back in april of 2o 10 that the earnings would be 10 and 11 a share. it's 10 multiple and the stock went to basically 120 at the end of the day. this acquisition ask is a great deal and it's small potatoes for ibm. money off the stable in a big way and looking for a pull back. >> you mentioned it's small potatoes. are a lot of these big companies limited to small deals because we see so much government intervention coming out of the white house when they talked about the d oj? you try to get too big and gather scrutiny?

>> no question it's a concern. you see them gobble up the smaller firms. the sun micromight have been the last big one you see for a while. they are nice deals as sort of an adon, but not a huge deal for ibm. if you are buying the stock, you are making a mistake. >> time for the fast and the furious where we answer the burning questions into the close today. let's talk about high frequency trading. is that fair? >> i think it isn't fair because people don't understand what they're talking about. it's drvet, but high frequency trading, you have got to like it. >> you have to distinguish between flash. >> liquidity is needed everywhere. i'm not opposed to either one. any time you get people buying or selling, you make it easier. >> on fast money, don't miss the first on the ceo moments after the company's earnings release

coming up next on "power lunch". a big debate. is america's economy? danger of putting profits ahead of real products? first after this, more fast money halftime report after the break. >> traders to plame for massive swings in oil? why speculator is becoming a dirty word again. and the ceo of the world's largest rental car company breaks down a make or break quarter and we trade it live. the super charged trade for example the geeks on wall street taking you for a ride? on america's post market show tonight. this is the aarp...

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yep... this is one great card! welcome back to time for the "power lunch" trade to go. what are you watching the second half of the trading day? >> pharmaceuticals have been on fire. the drug distributor got an upgrade and only missed once in

16 quarters. >> around the horn. buy or sell? patty? >> i hate to be the rainy day person here, but i don't like it here. i'm selling. >> dennis? >> i'm getting short. >> that would be a sell. >> steve? >> we are moderately higher, but not green on the day so i would be buying. >> buying or selling, pete? >> there is a problem when you try to pick a bottom. i wouldn't want to pick a bottom. the market goes lower and i think we have to keep our eye on the volatility because it has been a great directive for us over the past couple of weeks. remember who picks bottoms. proctologists, right? that's the problem with bottom picking. >> he will never put you in there with that kind of talk. rick santelli is the guest host from chicago. you think i talk fast. he will talk stocks, bonds and

commodities. breaking news from the bond pit with the two-year net auction could be a big market mover. stay tuned for that and what else are you working on? >> you will be with us and we will talk about ibm jumping on the bandwagon. you mentioned it with the acquisition. more deals to come and we'll talk about that. also ahead with stocks. are they poised for a late session rebound. we will make the rounds and private equity firms making the case for the emerging markets and talk about that when we come back. we are down 73 points. $100,000 fine for short-term sales of the fund. approving the nomination of sonia soto mar oi to the supreme

court next week. fed janet yellens said the economy is recovering, but will likely be painful and slow. it's like christmas every day this week. waiting for this note auction result. welcome to the second hour of "power lunch". we had rather disappointing reports on consumer confidence on the market. that seems to be weighing on stocks right now. now wall street is turning attention to this huge $42 billion two-year note auction the results of which will be out in moments here. >> viacom's profits fall more than 30% in the second quarter, but believe it or not, that's not the only problem. we will fill you in. >> wall street feeling the heat from washington and main street due to huge pay packages. should companies focus more on

real tangible products rather than financial products? >> we will talk about that and other things with the power player. jeff is with us and chief market strategist. how have you been? >> great to be here. >> the stock market and the rally we had in a couple of weeks. too far, too fast? >> the ease is what we have been here. earnings results are better than expected given this extra fuel we needed to get closer. >> seems that risk appetite is back in a way we evaporate seen in months past. >> i travel around the us and i talk to a lot of folks and they're asking me what to buy and not how to protect. >> are we that far along? >> with consumer spending, we spend more when we are depressed based on the consumer polls. >> we consider it our patriotic

duty. someone has to support the economy. >> what you tell them to buy when they ask. >> take on a little bit more risk in the bond market with high yield bonds. the emerging markets and commodities can be great as we look forward. >> let's go to rick santelli with the auction. >> i will have to give it a c plus. a 108 yield is not bad, but it was trading around 106 in the higher yield, lower price. you didn't have the pricing demand pressure. 275 is normally b, b plus territory. that was one of the best ever last month when it was 3.19. they slipped to 33%. in some, c plus, but listen. >> it's a two-year note that. could have gone better.n >> i thought it would and the guys are a bit cynical and the windy city said the chinese are in d.c. and they love the

two-year notes and they didn't hit it hard. let's be macroabout it. 42 billion out the door. it wasn't great. >> does this make you more nervous about the 7-year, the bigger hurdle of the week? >> hard to say that makes sense and the more we should be concerned and also remember, there has been so many bills and even though the two-year notes are in, the extra yield will be more interesting in the longer maturities. >> the question michelle posed is really the key because we are going to continually have this paper to auction off and hopefully the government will be able to raise the money, but the two-year was expected to go well. does this worry you? >> the deficit is the number one issue for responding to the polls after the economy. to head into health care and the other issues. if the market chokes on all of this coming to market, it doesn't bode well for what will happen. >> interest rates are higher and

so important. wouldn't tb ironic if the cost tips us back to recession. >> you think tim geithner is getting sweaty palms here? >> not at all. rick is grading the curve on a curve. >> he agrees with that. >> it's terrific. >> it was 2.twen 27. the other was in the 3 area. i mean we are two basis points where it was at market. i'm not concerned about that. an enormous amount of debt and so far seems as if the market is swallowing it. on an objective basis, i give this a b plus or an a. >> bottom line, it is easy for the government to borrow money at low rates. >> yes and i will lean with you on this.

i grade tough because we come off the spectacular auction, but the real notion is as long as we avoid anything but low a c, d, or f, we are in good shape. >> usually the stock market doesn't like a bad auction. when you step back and ask the question, how much of current profits come from deficit spending right now. you have better than expected profits and what's the source of those? how much of it comes from government and if you were to draw that stimulus, what would it be like? i'm not sure that the market itself should have this adverse relationship at the moment. >> how much of the profitability comes from cost cutting? >> they cut not just to the bone, but limbs off. that's why we are seeing better results. a lot has to do with the stimulus. you look at the stimulus and you spend 60 or 70 billion of that. >> but that is not exclusive of

the total spending of the government. that is through the roof right now. there is a piece by david levy. >> the yield curve is steeper and we have seen the stock market rising and the yield curve steepening. both tell us the economy is getting better and both send the same message at the same time. should we read that the economy is getting better? >> this is when we are off sight a little bit. there is a tremendous artificial signal that comes from the interventions. >> that's what we said about the inverted curve with the chinese. >> if you withdrew the fed programs, the short end would be a lot higher than it is right now and may bid up a bid. there is depression that goes on from the fed and i think the signal coming from the yield curve is one of an improving economy. not as approving and indicative by the way of a year or more past the end of a recession.

i don't think we are a year or more past. >> so far the dow is only down 8 points. >> you grade all of this on how the market is responding, we are down 80 points from where we have been for a while. see you later as well. last week amazon.com bought zappos, sprint picks up virgin mobile usa and jumps on the acquisition trail. more on big blue's deal with the pig picture for tech m&a. >> it does, bill. ibm's play is by no means the biggest deal, but the latest in the string of activity. gripping so many companies in the cash-rich sector. ibm will pay 42% premium, a move that expands in business an lytic software. it follows high profile deals

and yesterday they announced plans. you mentioned the amazon and zappos deal. they closed for wind river systems at $840 million there. oracle bought sun microsystems and earlier there was cisco and pure digital. there has been lots of talk that netflix is a take over candidate by microsoft or amazon with several analyst reports fueling that rumor mill. it stands to reason shares have enjoyed a renaissance. they're depress friday a year ago and with many companies sitting on enormous cash positions and apple over $30 billion and microsoft, google is $19 billion and means plenty of money and affordable companies. that means this kind of thing might be just beginning. >> you stay there and with nearly 88 cents of every dollar

going to tech or digital media, the hot button question is do mergingers happen where the government is not involved. bringing in frank a quilla from m&a group where he advised on am jen, boeing, anheuser bush, general mills. let me start with the second question. are we seeing deals that don't involve government stimulus money? >> not really. i think the stimulus moan may be helping the economy to a certain extent. a lot of it hasn't been spent yet and that drives deals. i don't think the deals are being done in sectors away from government regulation. i think they're being done in sectors where there is a lot of cash like pharma and health care generally and energy. i think we are going to that continuing. >> there is also talks that

perhaps the deal that is getting done are relatively small compared to what we used to see because either the cash is there or they want to avoid the scrutiny of government regulators. what do you think? >> the cash is definitely there and certainly that's where the opportunities are. we are likely to see more deals. the one i grapple with is the premium. a 40% premium. you think cash would make them pay less. this is a 40% premium. they have done so well, how much more of a premium can be priced in? >> why don't you answer that question? >> this is one that everybody asks about premium and whatever. >> everybody wants more money. >> sometimes stocks are trading at their full value and you see a small premium and other times they are not. you see a huge premium. i'm more focused on the fact that we're seeing deals done. the tech deals have a lot of cash and we are seeing a lot of

activity, but in the pharma deals, there was quite a bit of borrowing being done to get those deals done. i think that there is the ability to finance significant transactions if there is a rational for it. >> does it speak to a sector being undervalued? >> i think the market is probably undervaluing a sector if you see deal after deal after deal with a high premium. again, you have to look at each company and each deal on its own, but in reality when you see the trend, the trend tells you something. >> financing is as cheep as it will get right now, huh? >> i think when you look at financing, you look at the cash positions that the companies are sitting on. i don't think you can paint the strokes that all of tech is devalued. one times the company's current

revenue. i don't see a huge premium with ibm or oracle. they tried it with sun and backed out. not a huge premium there either. you look at where they trade today and where they traded a year ago and the negotiations begin with what an unusual year we had as far as devaluation is concerned. let's meet in the middle and figure out what the premium will be. >> the public valuation is always looked at based on the last 12 months. the reality is when you are in there and the next two years. that's what's driving a lot of these deals and not what happened in the last year. that's been crappy. it is what will happen in two or three years and what growth that brings. >> good to see you. >> we will get back to you later as well. >> the dow hit the highest close

since november and nasdaq at the best since january. we will round up the all-stars and take the pulse of the markets in a moment. >> as we head out to the break, 15% plus, the biggest maker of corporate jets. looking for a loss. at 155 miles per hour, andy roddick has the fastest serve in the history of professional tennis. so i've come to this court to challenge his speed.

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>> mixed bag of earnings and a positive report on home prices around the country. all factors for the markets to think about today in that two-year note auction which rick santelli gave a c plus. a huge $42 billion. the dow down 56 points. >> not bad at all. people thought we would get more of a dip. let's get more of a perspective. hi, bob. >> it was consumer confidence and you can argue that people say one thing and do another. we had a move up into may and the last two months, june and july have been disappointing. here's a good example of how top lines are a major issue. i don't know if you know what happened, but it has been down. same store sales were down 18%.

the bottom line is simple. they had cost cuts and couldn't outweigh what they had. they have had talk about mergers and the fact is that staples is the market leader and prices higher than everybody else and they appeared to take market share from the other two out there. take a look at the others in energy stocks because the strong dollar has hurt in the commodities. all but moving to the downside like alcoa and all the others. trader talk.cnbc.com. how are we looking at the nasdaq. >> still taking a breather right now. it's lunchtime so let's talk earnings and buffalo wild wings. up 5% after the company beat the street by a buffalo nickel. beating and raising and am jen, the biotech giant up. one more report.

paccar that makes trucks, the stock is down 10%. profits fell 90% and sees sales weakness in europe stretching out into next year. sharon? >> with the power play going on in washington, a lot of the traders are wondering where they will fit in to this mix of what will happen. we are looking at oil prices down nearly 2%, but off of their lows of the session. the lower prices have contributed to that as well as the dollar index being higher. look at goldman sacks and jpmorgan chase and the impact of the position limits. they are very big in the commodity space. they want these limits and the cme group say they are better positioned to actually impose

these limits. it's a real power play and will be interesting to see what wins. >> yes, indeed. thank you very much. mike huckman is too dwroung know what a buffalo nickel is. >> very clever. >> a lot of outrage with wall street paying and it reveals an even bigger debate going on right now. should america be focusing more on making stuff and not just making profits? is that the key to our recovery? back to manufacturing. we will debate that in a moment. >> the companies that do make stuff. you have to love a good otis elevator. caterpillar and p and g as well. let's go brush our teeth. s s

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up 13.5% after being raised to outperform. they make faucets and cabinets and building products. they managed to avoid a third loss and raise sales outlook as well. ge recently made a speech in which they call manufacturing a national imperative. he went on to say "we would do better to observe the example of china. they have been growing because they invest in technology and they make things. a lot of people suggest that

main street is angry about making money because they make profits from financial products and not tangible products. the university of pennsylvania school and steven learner from the service employee's interesting union and jeff kline is still with us. professor, let me start with you. what do you make of the premises that they have to do more and imitate the chinese some. >> i don't think that's in the cards for the u.s. -suggest for a low wage country. he wouldn't like us to have workers that are earning the wages of the manufacturing in china. as countries develop and progress they move away into the service and finance area also. it becomes very important and the u.s. is an exporter of financial services. >> what are do you think of that and do you agree that some

portion of main street is angry because of what they see the wall streeters do which they don't see as legitimate. >> what was an economic melt down for wall street has been a catastrophe for main street. wages are not just stagnant. they are declining and people are losing homes in what people see every day. >> i agree. they should be angry except do you think they are angry about the fact that they are making financial products? >> what people are angry about is these ma jigs on wall street crash and say they need bigger and bigger bonuses. >> we should imitate china then? >> you said that, not me. >> the answer is no. >> we need good paying jobs and manufacturing jobs and good paying service jobs and for most what we are find suggest things are getting worse and worse while wall street is rewarding itself. >> let me read you the next paragraph that jeff said in his

speech. he addresses what you said. jeff said in detroit i had people explain that darwinian nature and they have seen a thrl revolution from farming to services. this happened in other mature economies and said there is nothing predestined or inevitable if we as a people are prepared to reverse it. a key to growth in this current economy and the nature of the recession we are in is to reemphasize manufacturing. that's a mandate of the obama administration. are they ill thought out? >> i don't think that is the way the world is going. you go to countries in europe, japan, they are losing manufacturing and setting up plants in china and elsewhere. there is a lot of specialized manufacturing and germany has one country able to retain high wages and very specialized area

and again has not been a net contributor to employment. >> what is so great -- as i commit career suicide here, what is so great about a manufacturing job where you stand on the line and do the same movement all day long in a factory? is that a great job we want people to aspire to? when we talk about manufacturing, don't we want more manufacturing of what we need our brain to do when it comes to biotechnology? there is other ways to make things that don't include banging a hammer. >> that simplifies what manufacturing is all about, but your point is well taken. >> as we have created service jobs and financial jobs, these jobs pay terrible wages and they don't have pension plans. we have the worst of both worlds. we eliminated and created low paying jobs which is why this

argument has an air of abstraction about it. what we need to do is create an economy where workers join together and form unions and raise wages and make all jobs decent paying instead of having a two-teared economy with millionaires and workers living in poverty. >> basically business investment needs to be done and we need to export more. the consumer will not lead out of this recession in any way. do you agree with that point and if so, weigh in on the manufacturing and making something tangible versus making a profit. >> financing innovation should be the new catch frayed and it's all about genetics and computation and communication. alternative energy is the new manufacturing aspect of the future and we need to move to that. >> i talked to main street small business people all week and what i hear is not so much anger towards wall street about financing things, but that's

necessary to the success of their business, but traders trying to out smart each other and at worst can bring down the financial system. that's where they need to focus less on trading and trying to beat each other. >> products are more legitimate. car experience is very legitimate. >> it's all influenced by the models we have in our mind from history of what the base became. it became this capital-laden anchor because of the legacy costs. where is it written we need mentions included in the cost of manufacturing. >> what is your solution to create manufacturing jobs. >> that's true either way. true either way. >> on main street in this country, woo f we don't talk

about the economy that works for the majority, this is silly. people on wall street are saying if you don't give me a bonus, i will abandon the company you bailed out and won't work as hard. what people are sick of is call 911. this is a hostage situation. if i don't get enormous bonuses, i won't do my job. >> what do we hear unions say to the manufacture. if i don't get a guarantee of a pension and health care, i won't work for you either. >> that's why unions are working into a national health insurance to take the burden off of individual employers and employer-free choice acts and level of playing field to not punish, but reward good employers. >> come up with a scenario to go back to manufacturing. game it out with your students. >> i would love to, but the

truth of the matter is, we are net exporters in the service. >> what could we become? aren't we assuming it's an evolution that there is nothing we do about? >> since 1975, we lost i believe 55% of the manufacturing jobs. >> we accepted that as if it was inevitable. >> at the same time we gained about $50 million and other jobs. they are not all bad-paying. >> i will give you a specific example. >> one of the reasons why the wamgs have not gone up is because of the health care costs that are skyrocketing. >> demanded by the union. >> we're can make a national commitment to fund and raise green jobs and create highways, manufacturing jobs and create the product. >> so much more expensive than

any other jobs. you want to spend millions to create green jobs when we can have them elsewhere? >> one of the problems we have is people don't make enough money to buy things and the idea of getting people in greater and greater debt doesn't work. the core idea is when you manufacture and make things that have valley that ripples through the economy in a different way. it's not making things we don't need when you create green jobs, but fixing the country and putting people back to work which is what we need to do. >> thank you all for joining us. always good to see you. thanks for your time. thanks, my pleasure. >> i think your point was a good one. have the students come up with a new model. we need to think differently and throw out the old ideas and have them come up with a new model. it's a great one.

instead of having a stock market challenge. >> like the netflix contest. >> something like that. >> up next, stocks are slipping a little bit today after a very hot two-week streak, although better than many thought. what's driving the market to the downside on the other side of the break. >> michael vick is out of jail, done with dogfighting and reinstated in the nfl. will any team or sponsors go near him? working that story. "power lunch" will be back after the short time out. >> as we head to the time out, another company that makes stuff, under armor reporting a surprise second quarter profit. the shares up 3%. esesesesesesess

down almost 20% after reporting a big r bigger than expected quarterly loss. shares of coach down and dropped more than 30%, but did match estimates. san francisco fed president janet yellen said the economic

picture in her view is turning brighter and credit, housing and consumer spending has become positive signs for the stock market. >> speaking of which the market is down about 57 points. let's talk about that and head back down to the floor. steve with stewart frankel. >> just trying to help my good friend bob dasani out. >> good thing you did. we are down 57 points and we were worried. it seems to be faring rather well. >> everything we thought they would sell off on surprised us to the upside. i don't think we will see anything that has the capability of knocking us back to that level. >> in the s&p. i think it's health to take a pull back or move lateral, but by and large, people think we are going to. >> you are trying to pick a bottom here? >> you heard about that?

is there one in the family. you might be protecting. >> you are not going to let it go. >> okay, okay. what will propel this market higher? put it that way. >> here's the problem. we have seen the government make their forecast on the unemployment level. if there is a hint inemployment is getting better, we think that it's supposed to. you will see the market move incredibly higher. >> all about jobs obviously. housing is starting to show signs of light and earnings for the most part have been good this time around. if jobs can be the third component, it gets better. >> we know it's lagging, but if jobs continue to deteriorate and you can't afford a house until the job data gets better. we don't know what's happening

with taxation and corporations and everything else, we have a couple of things to get ahead of ourselves on. >> see you tomorrow. >> ben bernanke made the fed stronger and less personality-driven. >> less personality-driven? >> interesting. >> she must be referring to alan greenspan. >> speaking of personality, reinstating michael vick and he will be able to be signed by a team and play in two preseen games. he will rule by the 6th week onr what the suspension will be. what the teams have to think about if they take him and are sponsors scared? >> maybe not himself, but what about the sponsors for the leagues and maybe the team that takes him. now that he is eligible to play, nfl teams have to think whether it's worth it due to his connection with dogfighting. it it f they believe vick has it

after not playing, the financial equation is good. he made $875,000 a game and now they can get away with paying him the minimum of $620,000 for the season. they have to consider the backlash from activists of him getting another chance. we asked 11 sponsors what they thought of vick's reinstatement and not one has given us a comment. 38% of people said they thought at least one nfl or team sponsor would leave if vick were reinstate and signed with a team. there have been 11 teams that publicly said they will not sign michael vick and teams that have been brought up most often as good candidates are jacksonville, buffalo and cincinnati. if no one signs him, the new football league will gladly take him at $60,000 for a six-week

season. >> he's toast. >> we will see if someone will take him. if he's not, the ufl will take him and maybe the nfl wants that because they are insulated from the first year of backlash. she still a talented player we assume. we don't know how good he is going to be because he is just coming out of prison. >> for he is contrite in theory. >> stlar to set up everything in terms of peta and the humane society. he has to do as many public relations appearances as has ever been done. >> when we come back, viacom's second quarter profit down more than 30% on weakness in advertising and television and movies. that's only the tip of the problems. we have the complete story behind the story in a moment. >> as for how viacom shares are performing, they are down a half

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the bill too reign in pay incentives to lead executives to take excessive risks. barney frank on street signs on r at 2:00 p.m. eastern.

>> viacom's earnings reveal how much it is suffering for example the economic downturn, but what's driving down the results? julia joins us live with details on what they are struggling with. julia? >> hi, sue. lower video game sales and weaker advertising took their toll on viacom. that reported second quarter profits that excluded items up 23% and a decline in revenue to $3.3 billion. viacom stocks traded up slightee on improvement at the cable networks. u.s. advertising dropped from a year earlier. decline was stronger than expectations and better than the first quarter at 9% decline. revenue dropped 8% from the year ago quarter and the movie studio released two of the top three of the year. transformers 2 and star trek, they suffered a 22% decline dragged down by lower dvd sales.

he is auctions off looking to raise enough money to cover a debt at the same time in june. he said there is substantial interest from a number of bidders, but shareholders are watching to see if he can generate enough cash to avoid selling off the controls. >> i'm sure they are. let's bring in dennis neal and bureau chief ron grover. i will start with you. what would be the single most important move you can make to try to benefit the bottom line and stem the bleed something. >> pray for recovery. that advertising was back into one of the best portfolios on the planet. the only thing that is advertising is the last thing to rebound. >> you don't think he can pull this off. the debt load is crushing him.

>> viacom has much more exposure to the game than we realized. a rock band has been holding up the company and we are seeing video games tanging in a way it wasn't earlier. it was late to the recession party and they are hurting. >> the second half is more promising. they had the beatles release of rock band on 9-9-09. it will play on guitar hero as well as rock band. we have been saying 8:00 at night, the recession is over. >> they have company on that. >> absolutely. >> i would also take a look at the studio. they are actually going to do better than they had been. a lot of them they released they paid all the money out and they produced it and distributed t. the money comes in now. dvd sales come in around christmastime.

they help in about a quarter or two. >> there is a lot of optimism on the call about the studioturing things around, but there have been a lot of changes and at the end of the day, some of them are hoping that he confined a buyer at a good enough price for the movie theaters. today they are up for auction and we hear about the uk theaters and the media's near term, they hope to sell at a high enough price. >> you think he will be able to do that? the environment although it is improving is not a great time to auction things off. >> the good news is the box office is up about 8%. it's a good time to sell. the bad news is no matter what the time, real estate is down and general business is down. he used to get 10 times and now we are looking at six times.

he will get 501 million. >> what's the status on sherry's daughter. sherry, the theater chain is hers. >> i think she has got her own. she will put her own bid in. if that doesn't work, you will try to stay with the family. she wants to buy the family theaters for herself. >> they get their own investment bankers, that's a happy occasion. >> thanks for joining us. see you later and thanks. >> private equity firms put their money to work and spark growth. the new study said they should invest in america's emerging markets.@b the key executive joins us next. >> the stock market is lower and the dow still down about 50

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ick today. while the dow has held steady and improved, the 30-year

long bond is a different story in terms of yield. the 10-year you can see a dramatic move at the height hand part of that chart. 3.711%. once again, the trashy market is where a lot of the action has been. we ain't done yet. a lot more paper has to come to market throughout the rest of the trading week. they didn't like it at all. >> the emerging domestic market. >> the palladium equity markets with the investment companies. th they. pure coincidence we both ended

up here. >> thank you for having me. >> what is the emerging domestic market? >> it's all the businesses in the u.s. which are owned by minorities and target minority segments of the population with products and services. basically businesses that are acting in inner cities and other areas that benefit from the growth of the minority population. >> the point is to say what? private equities should invest more? >> we wanted after 40 years of an association, we are a group of about 40 minority-owned adventure capital firms across the u.s. after 40 years as an association, we wanted to really look back not only at the history of investment, but economic impact our investments had. we looked at investments over

the past 16 years or so. >> the job growth when private equity came in and invested in the company was significantly better than if they not, correct? >> you can demonstrate that when they come into the markets that we define as the emerging markets and find it tends to lead to job creation and tends to lead to better jobs, jobs that provide health care and lead to faster growth in the revenues of the company and tends to lead to economic activity in general in the emerging domestic market. >> don't take this the wrong way, but i would ask anybody who is socially responsible. the due diligence, any firms going to do anyway is going to look for the best opportunity to make money. what is the ethnic heritage have to do with the investment as much as we are looking for weapons and a way to make money.

>> absolutely. we are not ashamed of that. as a group of investors, we manage pension plan money and fiduciary. the number one job is to generate superior return for investors. we think we have an edge when it comes to identifying entrepreneurs for backgrounds. you trust people who look like you and when you look at the fabric of our society, we are over 50% growth represented by minorities. you see a new generation of entrepreneurs and business men and women coming through the ranks. they are creating great businesses and we are positioned to provide that. >> good to see you and thank you for joining us. see you later at the next board meeting. >> in september. if the company will be worth investing. >> are they being ignored otherwise? >> they are very, very small. that's most of the issue. >> that's the thing.

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