okay. welcome back to the floor of the inform stock exchange. it's time now for the closing count down, the same word we've been using to describe this market. and that is resiliency. figure the dow jones industrial average at one point today was down triple digits. right now down about 15 points or so. even the knack, you know about that big technology run over the last several months. the nasdaq has gone into positive territory. looks like it's going to close to the upside as it is up right now about seven points or so. oil is down today down a buck or so. energy stocks no big surprise there, among the weakest issues today and technology just playing off that nasdaq mention that i made. certainly one of the strokest

performers today carried by microsoft which seems to be bouncing back a bit after just getting pummeled on the back much a really disappointing earnings report. also, it's the biotechs really performing well today. names like amgen, for example, teva pharmaceuticals having a good day. amgen better than sfeked earnings, boosted the outlook after the bell today. certainly on the plus side. put all this into context, today a much weaker than expected consumer confidence number. but that was canceled out really by case shiller. maybe the first time that you can really put housing and bottom in the same sentence as that report showed the first rise in home prices month over month in three years. yes, it is that significant. also, general electric, the parent company of this network giving a boost to the market today saying it did not need an additional capital raise for ge capital. that was big news. the dow industrials down about 12 points as we go to the close. here's the bell and maria is going to pick you up.

>> and it is 4:00 on wall street. do you know where your money is? welcome to the "closing bell." i'm maria bartiromo on the floor of the new york stock exchange. stocks struggling today on wall street although we are very close to flat as we settle out. the dwoij industrial average making a push at the final few minutes of trading to go positive, the dow at 9,096. stocks struggling after mixed earnings reports and a second consecutive monthly decline in consumer confidence. housing a big bright spot after the case shiller index rose for the first time in three years. the two-week rally in oil prices today takes a breather. crude oil falling nearly 2% to finish at $67.22 a barrel.

here's a look at wall street. the dow jones industrial average on the downtownside by 11 points at 9,096. nasdaq come pos went positive with 15 minutes before the close. a mixed performance within the tech sector. at the close, money coming in extending the nasdaq's recent momentum, up 7.66 points. s&p down about 2.5 points. bob pisani on the nyse. you were looking, is it going to go positive. >> a bunch of standing here saying it's going to happen because we were down 100 points on the consumer sentiment number. >> it came all the way back. >> four days in a row they keep trying to drop the market. there's our watch word for the day. tired of that word resiliency? that's the word everybody is using here. what happened, important thing is this. we had a drop in the consumer sentiment numbers but they stays in the up market up trend all throughout the early morning here.

techs and the builders led. the case shiller home price index was important early on. we had 0.5% higher in may than april, the first sequential move up in home prices in several years. yes, we were 17% below that a year ago, but the rate of slowing down is slowing down. here's the bill home builders and what else is important. masco had very positive comments about their earnings in the second of the year helping a lot of home building stocks overall. generally home building stocks have been up for several days in a row. talk about other groups moving here. how about, for example, hmo snz did you see what happened in hmos? a positive company from centene, a government supplier of government programs, like medicare and medicaid. we saw positive comments as well from could ventory that provider broader hmos, raise their guidance as well as centene.

etna which had terrible comments the other day was to the upside. the laboratory providers, don't normally comment on them. laboratory corp, late in the day, there was word out, we haven't confirmed in that the new senate finance committee on health care might contain a copay for laboratories that might save money. you're trying to save money in the health care area but could cost profits for some of the laboratory companies which might include quest diagnostics. all those stocks were down. we have to confirm that little piece. >> bob pisani. thanks so much. business headlines. consumer confidence index fell in july to the lower than expected reading of 46.6. is the second straight monthly decline as americans remain concerned about rising unemployment. ibm reached a deal to acquire software maker spss for $1.2 billion. it is a 42% premium to spss's

closing price on monday. it allows ibm to better compete with oracle. in a separate deal, ibm is acquiring ounce labs for an undisclosed sum. sprint nextel acquiring virgin mobile usa. that's for nearly half a billion . that is a 31% premium to the closing price on monday. the deal allows sprint to focus on the fast growing market for prepaid cell phone service. for a closer look at the markets, let's get more from bob turner, chief investment officer at turner investment partners. gentlemen, welcome back. >> thanks. >> any risk here that we go into a double dip? in other words, we feel like we're out of the woods and feel like we've seen the worst of the market rallies. here are back at 9,096 for the dow jones industrial average. are we missing something? do you think this is for real? >> i think it's for real. the economy is improving and

what we like to see is actually this market's climb the proverbial wall of worry. sentiment is still negative. most investors have missed this move and therefore, any settling back is really met with buying as investors are playing catchup here. >> so you don't think that there is a risk if something false out like commercial asset and this market reverses course? the moment sum for the bulls? >> it is. it's built into the economy. we're going to see improvement over the next few quarters. our concern would come to the later part of next year. we'll have to see if this stimulus is able to sustain economic growth rather than provide a near term boost. >> jack add lynn, how do you see it. >> keep in mind, i look at the market in 12 to 1-month g increments. i will say from here, things arg looking really good valuations g reasonable. you know, notwithstanding

commercial real estate.g we have roughly 1.7 trillion of commercial rale loans coming dug over the next four years.g i do think it's perhaps extended out enough to maybe create a bunch of ripples rather than a big splash. >> you think second half of the year is looking good? >> yeah, huge liquidity on the g sidelines, nearly half the valug of the stock market is sitting on the sidelines in cash earning one half of 1%.g any more moment numb stocks will tend to help fuel further rallies as this money comes back into the market. >> what sectors do you want to be invested in if both of you are right and we are going to see this rally continue throughout 2009? what sectors do i need to be g owning then here? >> sure.g we still one of our favorite g sectors is materials.g we also like technology.g and consumer discretionary.g those are areas that would be -g poised to advance as economic g

conditions improve.g and so far, things are going pretty well.g we put materials in march, maybg a little bit early but i think things.certainly this month has proven really strong for the materials group. >> bob, do you agree with those groups? >> yes, with technology at the top of the list. i would also highlight the home builders you had touched upon prior to the interview here. what's interesting with home builders beyond the fact they're actually improving is the total capitalization of u.s. home builders is only about $20 billion. once investors decide to come back to these, these stocks could do very, very well. there's a limited pool to investment in. >> thank you. we'll see you soon. here's a look at some of the other stories we're following on the ticker tonight. textron which makes cessna planes and bell helicopters slumps with $5 million second quarter loss compared to a year

ago profit of $258 billion. the company actually had better than expected numbers and that was eight cents a year, textron saying it is seeing stabilization in the business yet market. the stock tonight was up 17%. u.s. steel in the red for a second straight quarter. the steel maker lost $392 million in the second quarter because of slowing demand and lower prices. while that was better than expected, the company is warning it will not return to profitability in the third quarter. u.s. steel shares tonight down 2% at 40.40d a share. teva farm suecals made $521 million but excluding costs related to the acquisition of rival generic drugmaker barr pharmaceuticals, the adjusted profit was up to 83 cents a share beating expectations. the company cited strong sales. up 4% today. billionaire investor sam zell is with me telling us where he

thinks the best real estate investments are. later on, are speculators driving the energy market? will regulation fix the problem. stay with us. a lot to come.

welcome back. encouraging news from the

housing sector. s&p case shiller home price index rose one half of 1% in may. the first time in three years prices have increased. >> year over year prices still down more than 17%. it is the fourth straight month the rate has slowed. the data is providing some signs of stability. there is one area of the market that's not showing much improvement. diana olick is in washington with that story. >> that is foreclosures. after a full day of meetings with hud and treasury officials, the 25 loan servicers signed onto the administration's housing rescue program promised to increase the rate at which they provide loan modifications. they're now at a rate about 20,000 per week and looking for a goal of half a million loan modification trial offers by november 1st. this all started with a letter to the servicers from the hud and treasury secretaries summoning them to washington and the letter says we believe there is a general need for servicers to devote substantially more resources to this program.

we are asking that all servicers expand servicing capacity and improve the execution quality of loin modifications in order to help the sizable number of homeowners at risk of foreclosure and eligible for the program. servicers are aware the plan itself creates roadblocks. >> it's unfortunate still there are different rules, different forms and different processes even between fannie mae and freddie mac which are both covered by this one program. so those servicers are going to be saying let's make it standardized and make sure when our people are trained, we can make this very efficient by getting one set of rules, one set of regulations and one set of forms so we can move quicker and deal with those folks in a more efficient manner. >> now, after today's meeting, the administration put out a statement saying they would publicly report results of the program starting next week and name names of servicers doing more or doing less. they will also work with servicers to streamline the process for measuring the program's performance and will have freddie mac give loans that

didn't qualify for modifications a second look just to make sure. as for mr. koor sen's concerns about all the changes in the programs, they may have been discussed behind closed doors today but public lit administration made no mention of them. go to the blog relate check.cnbc.com. >> tonight a report special focuses on all things housing. watch "realty check," asking whether it's time to buy, hold or wait, tonight 8:00 p.m. on cnbc reports. my next guest is no stranger to the real estate sector making billions in the commercial sector and was a seller. i'm joined by sam zell, founder, chairman of equity group investments and the chief executive at tribune. good to have you on the program. >> thank you. >> can you characterize the market for us right here? what's fact, what's fiction? we're getting all of these mixed reports, certainly when it comes to residential, three straight

months, positive signs in existing home sales. what are you seeing? >> i think i was on your program about six months ago. and i think i at the time said i thought by the end of the summer, we would reach equilibrium. it doesn't mean prices of housing go up, but that basically we're moving toward a position where housing prices have stopped going down. >> and you think that's what's happening? >> yes, and now, that's not going to solve miami or vegas or stockton or some of these places where there's extreme overbuilding and intense subprime foreclosures but in the general market, i think we're going to see a slow improvement this fall take it out? >> don't need it. >> so as far as when you look at the residential -- i'll get to commercial real estate in a moment. >> i'm just talking single family housing and the key to

everything in my opinion is single family housing. >> why? >> that's where consumption comes from. in other words, if people don't have confidence in the value of their biggest asset, they're not going to have confidence to spend money. >> right. >> and so as far as we're concerned, we believe that once housing stabilizes, it will stabilize the rest of the consumer side of the market. >> you know, "newsweek" magazine, the cover story was the recession is over. are you ready for recovery. is there any reason to believe this recovery is going to sort of bump along the bottom and perhaps we're still seeing some areas of the country still seeing prices for homes coming down? >> you're never going to have a uniform up or down. you're going to have various parts of the country, here in new york, they have no problems for a long time while the rest of the country was suffering. >> right. >> now it's new york's turn. and some of the other parts of the country where things were very difficult, they're getting better. >> i see. but you know, i don't know the

definition of the word "recovery." all i'd a is things are stabilizing. >> okay. and i want to get to a lot of things. the last time we spoke, you talked a lot about real estate outside the u.s. i'll get to that in a moment. give me your assessment of commercial real estate. people are talking about loans coming due next six months to a year. this could be another shoe to drop and impact the financial services sector. what do you expect? >> i expect just the opposite. i think that the commercial real estate sector is definitely underwater. if you look at institutional real estate say between 2000 and 2007, some enormous percentage, 50, 60% of all the institutional real estate was sold. and therefore, relever anded. and all of that is underwater. on the other hand, when interests rates where they are, you have people being able to carle the mortgage. so, i don't think you're going to see any significant

foreclosures of institutional assets and until the point at which they can't cover it. i think that's probably two to three years away. >> in terms of them being able to cover, not being able to cover. >> not being able to cover. that's a bet on interest rates but something like that. >> of course, you had one of the all-time great deals sold at the top to the blackstone group. you obviously are a happy man having done that when you did it. what were the signs that led you to do that then for a price you couldn't refuse? >> as i said to you earlier, somebody makes you a godfather answer, you have to respond to it. just like in the rest of our companies every day you don't sell, you buy. as a result, every 90 days, at equity office, we would revalue the portfolio to bring it current. and when we will came up with a valuation, and realized that we had an offer that was measurably above the valuation, wasn't a hard decision to make. >> blackstone said it was going to turn around and resell the

assets. some of the assets they have not been able to. what price would you pay to buy back those assets today. >> ask me that in three years. i don't know the answer to that. >> in terms of sectors, the financial services obviously troubled, has been for a little while. are there sectors you could say are still going strong and well based on what you're seeing in commercial real estate, based on what you're seeing in terms of housing? >> well, i don't think that you know, if you look at reports, these companies are bringing in, business is not anywhere near as terrible as everybody expected. and part of that is that these companies responded very quickly, and cut costs very dramatically. that resulted in an explosion of the unemployment rate. but the companies are to a large extent in pretty good shape and the balance sheets are much better than consumers' balance

sheets, maybe much better than the fed's balance sheets. >> they've done a real big capital raise also. look around the world for us. where do you think the opportunities are in real estate today you? mentioned real estate outside the u.s. the last time we spoke. >> yes. i guess i would say that my number one country in the world for investment is brazil. and we have a very significant real estate presence in brazil. and it's growing. our enthusiasm for brazil is one, it's leftist and we like them. two, it's got 180 million people so it has scale. three, it's energy self-sufficient. four, it's commodity self-sufficient. and they have an educated and trained workforce. >> how about china? also one of the countries. >> we have a couple of countries in china. china has extraordinary growth. it's not as transparent.

it's not as clear. >> that's a good point. >> that makes it a little bit more difficult from an investment point of view. but i'm as enthusiastic about china as i am about brazil. brazil's just a little easier to deal with. >> let me switch gears. you're a man that wears many hats, one of them head of tribune. you probably hate this subject. you said it was a mistake when you did the deal. we know the company filed for chapter 11 in december. where does that stand? what can you tell us? >> i think the company filed in december. i think it's going to turn out that it being the first to file is going to be an enormous advantage for it in the future because it's going to solve its problems without destroying itself in the process. we're obviously in the bankruptcy court, no plan has been put forward yet although everybody is working on one. and i suspect that sometime between now and maybe as early

as the end of the year, it will exit from bankruptcy. >> will you be looking for partnerships at that time? are you still as committed to holding on here? >> i think that that's the kind of a decision that i'm not going to make today, and deal with in the future. >> i understand. you know, people say look, it's the franchise that's most important. it doesn't matter which vehicle, whether it's print, tv, internet. is that something that's leading your decision making here because obviously, a lot of people are watching magazines fold, newspapers fold. is this a dying business without the internet? >> well, i think there's a very serious question as to how big the print business will be in the future. it certainly will not be as big as it has been in the past. at the same time, i think it's naive to think that the print business as we know it will disappear completely. >> that's happening with the chicago cubs, sam? very near and dear to many people in chicago. >> they're in first place.

they're in first place. >> in first place. how about bitters? >> well, the answer is that i suspect that in the very near future, the situation will get resolved. >> you don't have an emotionaltachment to things. that's not the way you operate. >> i have emotionaltachments to my people. >> and your motor psych. >> and my motorcycle. i don't have any emotional attachment to assets. >> broadly speaking, what would you say is the most important issue we need out there in terms of a turn for the economy? what would you like to see done whether it's from a policy standpoint or from a consumer standpoint? what do you look for to turn things around here. >> the most important thing to turn things around is to restore confidence and frankly from, my perspective, perhaps one of the most important things is for the people of this country to see what's going on in washington and see washington as concerned

about the deficit as the general population is. a lot of these wonderful massive programs that they're currently considering are interesting. and maybe at the top of the market we could afford to do them. to do them at this stage of the game i think is very scary. >> particularly the tax increases taking effect at a time when people are thinking the economy should turn. >> tax increases, all of the uncertainty. what does carbon in trade mean? what is it going to do to my business? nobody knows. this is not a great time for them to spend time thinking about it because they're scared to death. >> tom rickets has his term sheet in to major league baseball to buy the cubs. are you going to do the deal with tom rikts? >> maybe. what can i tell you? >> so you're in negotiations and you can't say much? >> well, i think the answer is, it would be safe to stha

mr. rickets is probably the leading player in that particular scenario. >> sam, we love you because you're such a straight shooter. appreciate your time today. >> thank you. >> sam zell joining us here. general electric a parent of this company updating investors on the future of ge capital today. what was said on the call. it is being speculated about a spinoff of the unit. we will tell you the facts from fiction when we come right back. stay with us. a great deal gets even better. let us recycle your older vehicle, and you could qualify for an additional $3500 or $4500 cash back... on top of all other offers.. on a new, more fuel efficient chevy. your chevy dealer has more eligible models to choose from - more than ford, toyota, or honda. so save gas... and money... now during the chevy open house. go to chevy.com for details.

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welcome back. ge the parent of this network saying its finance arm should be profitable this year and also noted that liquidity is moving and finally improving. mary thompson has more. mary was on call. >> that's right. a two and a half hour conference call. executives at the finance arm made their case. the unit is set up to handle further weakness in the economy in 2011, if capital is needed, the capital company is set to inject into ge capital. here's what the ceo had to say. >> we don't have rose colored glasses on about the environment. it remains challenging but we expect to be profitable in 2009, in fact, we've earned a billion seven in the first half and for the most part, losses better

than the fed based case. >> once a source of 50% of ge's profits ge capital is now a sore spot with the credit crisis raising questions about reserves for losses. ge capital seeing similar losses in its portfolios for this year and next forecasting 12 billion in 2010 in losses. a more dire forecast says losses to 16.9 billion this year, 17.5 next. losses at ge capital with reserves peaking in the middle of next year. u.s. consumers performing much better with uk mortgages, commercial loans and leases doing okay at this stage of the cycle. a sore spot continues to be its $84 billion commercial real estate portfolio, something analysts say may lead to far bigger losses than anticipated. ge capital also touching on regulatory reforms for big finance reforms saying it's hearing of support withinen

congress for not splitting ge capital from its parent something proposed refors might require and investors liked that news today, maria. >> thanks very much. mary thompson. to blame or not to blame? the cftc is changing its position when it comes to wild swings in the oil market. we'll take a look at the shift in sentiment when we continue on closing bell. >> here's a look at some of today's winners and losers. eses

welcome back. the commodities futures trade commission says speculation could be to blame for major moves notice energy markets. cftc chairman gary ginsler said new regulation and oversight is being considered for the energy trading community. critics say market fundamentals are driving prices and warn against heavy regulation. debating the topic in is sean coda from the petroleum marketers of america and walter zimmerman with united i cap.

sean, in your testimony before congress today, you say it is abundantly clear that the large scale institutional investors specs lating in the energy market continue to act as the driving force behind prices. can you explain that position? >> you've got index funds that are with huge amounts of money because they have been told you need to diversify your portfolio into other commodities. they're not really investors or speculator. i guess this new terminology we've got called investculators. that's part of the problem of what we're seeing and part of what the discussion was today with position limits. >> walter? >> i think it's absolutely ludicrous to blame the speculators for this rally in energy prices. if you look at a chart of crude oil against the u.s. dollar, you

see clearly what's going on. the dollar was collapsing. crude oil is priced in dollars. a weaker dollar buys less crude. crude oil automatically becomes less expensive. during this period of time, that everybody is upset about when crude oil went from 60 to 150, the dollar collapsed. so crude oil got more expensive. metals got mou expensive, everything got more expensive. >> what's it based on? we're not exactly seeing the demand picture turn around. >> based on the fact that crude oil is priced in dollars and if they were really serious about reigning in crude oil prices, they would be concerned about maintaining the strength of the dollar. its economics 101. you can't have a weaker dollar and have lower crude oil prices. >> dollar's only part of it. the dollar value has been relatively stable for the last three months since the collapse in the market, this past january, you've seen an increase

in the cost of crude oil about two times. and you've got crude oil inventories and refined product inventories at quarter century highs. there's no demand. demand is off 10%. has nothing to do with supply and demand of the underlying commodity. it's the supply and demand of the contract. too many people chasing too few things with never the intention of taking it as delivery. >> it's just so convenient to blame speculators when what's really going on is dollar weakness. look at today, the dollar was up a little bit. crude oil was down over $1. this happens hour by hour. anybody who looks at the chart, it's unmistakable. this is dollar weakness. i think it would be much more productive to you bear down on the politicians to institute responsible financial policies where they're not constantly throwing the dollar under the bus to try and reflat the economy. >> let me ask you this, walter. do you think last year's oil spike the way up to 147.ood a barrel was because of

fundamental demand? >> it was because of u.s. dollar weakness. it had nothing to do with the supply and demand of oil. it had everything to do with the supply and demand of dollars of which crude oil is priced in dollars. >> that's a good point because it's true. that's why you're seeing all these middle eastern and russian executive boards saying look, we don't want to be tied to the dollar because they are all pegged to the dollar. what about that? why aren't you getting on the currency speculators sean and blaming oil investment community? >> the currency -- the currency market can expand without regard to the fundamentals of like energy does. and walter's right. congress does need to reregulate these marks to provide some oversight like agricultural commodities, you can't overwhelm it. >> what kind of oversight do you want? how much can we have? maybe we're talking about a regulatory strong hand when you really do not need it, given the

fact that we already have an amazing it amount of financial reform coming. >> all markets require visibility and a lot of the tradinging in these markets is not visible. the over the counter market is not regulated, possibly the majority of the market. that's part of what the reregulation of these markets needs to be. you can't have a single buyer that's going to buy the majority of the market like happened with amaranth and natural gas. >> first of all, the fact that the government is faenlt looking at this issue tells me probably the dollar is about to ral rally and energy prices with to sell off. the government is such an immense lagging indicator. this is probably not even an issue anymore. secondly, if you really want to maintain the purchasing power of the dollar, you don't blame speculators in the oil market. >> right. >> it's misinformation and misdirection and obfuscation and it's escape from the real issue. >> this is an important debate

to have. and you know it, we're always looking for someone blame for a market that trades on for the most part fundamentals, but we'll see about that, and we thank you both for your important input on this. we appreciate it. thank you very much. up next, the earnings scorecard from today's reports. we're back in a moment.

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welcome back. a handful of companies rrting their latest results. rebecca jarvis is at earnings central right now with the details. >> we're following the kesy corporation. also, railroad corporation north rub southern and also the coal company, massey energy. massey up in the after hours trade and beat spentations. managed to outperform in a tough environment, still shipping coal to electricity companies. now on to mckesson, able to beat by 20 cents on the profit line, eps of $1706, sales of $28.66 billion, raising guidance 4.15 a share through 430 a share. you see the stock getting a bit up in the after market. we're still waiting on north folk southern information.

railroads remained somewhat resilient against most of the recession effects. they've cut costs and raised prices. what we most want to hear from norfolk southern which is hard for me to say is that the recession is over. earlier this month, even though things were looking weak at csx, the rival of ncs, we did see that things are not as bad as expected. we have a handful of companies coming out tomorrow morning before the bell. integrated energy provider conoco phillips will be out before the bell. san know fia venttis will be out an auto trio, we'll hear from honda, daimler and nissan. ars lore mittal will be out. today's results from u.s. steel not looking great. they're slowing demand, lower prices the story there. lastly, general dynamics, the military combat provider, it's going to be interesting to get their outlook given the fact

that this administration has taken a somewhat new approach to defense, and that's going to be a curiosity when they tell us what they see as far as what revenues are in their pipeline. >> thanks so much. meanwhile, the other big story this beck, the u.s. and china finishing up the second day of the strategic and economic dialogue 0. up next, city securities international partner donald tang is with me live from beijing on what the talks mean for u.s./china relations. he's coming up.

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welcome back. secretary of state hillary clinton and treasury secretary timothy geithner minutes away from a press conference in washington following day two of the u.s./china strategic and economic dialogue, a chance for officials on both sides to talk about top issues affecting their nations with today's discussions focusing on how to prevent a future financial crisis. i'm joined by donald tang, ceo. he joins us right now live in pay jing. we appreciate you getting up early to come to us live from beijing. let me get your take off the bat what you think is the point of the strategic economic dialogue. what do you see as the most

important thing these two nations are going to achieve in. >> >> seems that donald tang cannot hear me. we're going to go to the market action right now and let him fix his audio issue. we apologize for that. the dow industrials down 11 points at 9,096, very much a mixed situation. i should tell you a number of companies including coach today and others have been talking about the importance of the chinese market. donald is back with us again, donald ceo of citi financial partners. my question to you as we gan the segment after thanking you for getting up so early for us, it's ten to 5:00 in the morning there. what do you think is going to come out of this strategy economic dialogue and these two nations are trying to achieve together? >> well, i think what we're seeing now is both countries

recognize that china will be a very powerful consumer group. so we can have hope in the future that united states can sell many of our products, our brand and also create jobs for our own citizens here and also china is transforming itself from the greenfield to green economy as they transform its economy from export oriented the economy to a consumption economy. >> donald, i want to ask you a lot about the deal making and what you see as far as na transformation happening. a lot of people have come on the show recently and said to me china is buzzing again, up to 9% growth again. it seems to be shaking off the global economic slump more swiftly than the u.s. what in your view has beijing done that washington hasn't? >> well, you know, in beijing, i was here two months ago in ritz carlton and tried to get into a

breakfast meeting and i walked into the room. the breakfast room and there was nobody there. and yesterday morning, i didn't have a reservation and walked in, and you know, there's no room for me to have breakfast. so the economy, there's signs of the economy picking up quite significantly here in beijing. >> what is the significance. we talked on the telephone yesterday and you mentioned to me this new issue that the chinese government is transferring some of the state-owned stock that it's owned into the state social security fund. can you walk us through that? what is the significance of that transfer? >> well, i think it represents the beginning of a wealth transfer from the government of china to its people. as we know, china's savings rate has been very, very high, it doesn't come home. partially because china's social security safety net is not as robust as many of other

countries such as u.s. and europe, europe, and this is designed to boost the confidence of urban residents about their future. so therefore, they can start to spend and reducing the savings rate as a result to stimulate its domestic consumption. >> what do you -- >> and this is also a deliverance -- >> go ahead, i'm sorry. >> this is also a deliberate attempt to transform its population from the factory floor to the middle class floor. >> yeah, it's a very important point as the company moves to an export-led economy to a consumer economy. what do you foresee are the major trends that will drive the future development of china? >> well, there are two trends, i think while we are fighting green shoots in our economy, they are conducting a significant experiment to go from green field to green economy.

they're planting a new whole green economy. and this is very significant to the rest of the world because this is going to be the biggest of such experiment in the world to go from green to green. and that is something that vast implications to all of us. if they succeed, we will succeed. if they fail, we have problems. >> what about the m & a action right now, it's picked up china across border m & a activity. and i know you're looking at a number of deals while you're on the ground there in beijing and throughout asia. can you tell us what you're seeing? >> well, the recent -- chinese companies have been given a historical opportunity to go abroad. as we know, before the financial crisis, china has been

criticized to have too much foreign reserve, too high of a savings rate, and too robust of economic growth. and all of which now becomes advantage of china and also chinese multinational companies. and look at what they need to buy, to sustain their developments in the future. they need natural resources because china is not a self-sufficient natural resource country. they need more advanced technology to transform its economy. they need more brands to help them satisfy the emergence of middle class demand. so all of those things, you know, it's just the going from high place to low place. the chinese companies have seen a significant opportunity to parlay their liquidity and ample liquidity to buy the companies and brands and technology that they would like to acquire. >> so tell me about the stimulus package. i mean clearly it's working there, how does the u.s. get

affected by this transformation throughout china? and how would you characterize the stimulus? was china smarter about the stimulus than the u.s.? >> you're talking about chinese package or u.s.? >> yes, chinese. >> hello? maria? >> yes, we're talking about the chinese stimulus package, donald, was china smarter about its stimulus as opposed to the united states? and what's the impact of all of this to the u.s. and the rest of the world. >> well, the policy initiative that chinese policy makers put in place is to really take advantage of the crisis to transform the economy from the coastal region exports economy to a domestic -- to put the emphasis on domestic consumption. at the same time, to restructuring its economy to go

towards more environmental friendly. so all of these things, you know, for example, they're giving vouchers to the citizens to buy electronic goods. they are doing different types of tax reductions to basically give money to put money in the pockets of the consumers. and this latest move in august to transfer about $10 billion from the ministry of finance to stage social security -- it's all designed to achieve those initial policy initiatives. >> so increasingly, you're seeing the chinese customer becoming increasingly important and certainly the chinese business becoming increasingly important. do you expect major new chinese money coming into the u.s.? do you expect any change in terms of what they're holding on to? the u.s. debt and u.s. securities, donald? >> you're talking about the chinese companies coming to u.s. to buy assets?

>> yeah. >> yes. i think the chinese companies have all the reasons to go abroad to buy assets, not necessarily in the united states, but to pursue the natural resources area, the brands, and the technology to help them to transform their green fields to green economy. >> right. >> and i think this trend is ongoing, it's different than the past, it's going to go on for a while. >> and, of course, we're seeing an insatiable demand when it comes to raw materials and all of those products as you mention. we so appreciate you joining us, donald, thank you so much for spending the time live in beijing tonight and for getting up so early for us to come on the program live. donald tang, ceo of international partners, he is live tonight in beijing. a short break and we've got th earnings and economic reports that could move the markets tomorrow. back in a moment. natural gas is a cleaner burning fuel,

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