welcome back to "the call" i'm hampton pearson reporting live in washington outside the cftc. it is day two on hearings of changes of possible policy regarding energy markets. specifically today, like cme yesterday, witnesses from goldman sachs and jpmorgan are endorsing the idea of the cftc possibly setting position limits to discourage excessive speculation in energy and other commodities markets. but, they say, the focus of any position limits should be on the end users. the customers, the investors, if you will, not the aggregators. frankly, like the market, goldman sachs and jpmorgan market participants themselves, cftc chairman gary gensler had a

problem with that motion. >> i don't see a goldman sachs swap desk or a jpmorgan swap desk as a passive mechanic and the billions of dollars of transactions that you just do, just to surpass the mechanic or the billions of dollars of profits or the billions of dollars of compensation wouldn't be a pass of mechanics. >> it is absolutely the case that we do play a major facilitating role for hundreds if not thousands of clients around the globe. it is a complex business. we hedge options with futures, we hedge power with natural gas, we hedge jet fuel with wti, et cetera. and so we're going to have to have some language whereby we explain to each other, what do we mean by intermediatation? >> going right to the heart of the matter of if you're going to go forward, how do you set the limits, and who might or might not be exempted. larry? >>s all right. thanks, very much, hampton. i think we're just going to cash out. melissa, trish? you cash out.

i hate limits! i just want to say that. >> dismajoritying this market, consumers will pay for that, because hedge is a valuable thing. that's it for "the call." thanks for watching, everyone, i'm trish regan. >> and i'm larry kudlow, and see "the kudlow report" tonight at 7:00 p.m. eastern. and now "power lunch" is up next. the conversations have already begun. >> we need to clean this place up. martha stewart is coming, everybody. come on. we need -- >> cleaning products out -- >> i'm sure. welcome to "power lunch" everybody, i'm bill griffith. stocks have been generally lower today. >> thank you very much. >> come back here, liesman. the price of oil, though, is collapsing right now. the inventory bill that we heard about a couple hours ago has the price of oil down almost 6% now at $63.27. also, we'll get results of the treasury's $39 billion of five-year notes. which may move the markets in

the next hour, not to mention the beige book from the fed in a couple hours. we have a lot to get to here, sue. >> we do indeed, bill, including miss stewart, martha stewart will join us first on cnbc to talk about her company's latest earnings, the property picture, and she has several new big ventures. >> and i'm michelle cabrusso-cabrera, conoco today, exxon tomorrow. you heard bill talking about oil plunging. is this an opportunity for investors to fill up on oil stocks? and here's what else is on the "power lunch" menu. >> cnbc pharmaceuticals reporter mike huffman, and drug maker beats the street and raises guidance. but a major focus for the company is its ongoing effort to develop an effective vaccine for the h1n1 flu. and we will get an update on that situation straight from the ceo in a first on cnbc live interview from paris with chris bebocker and that is coming up at the bottom of this hour.

>> i'm jane wells in la la land. it's a good time for any ipo, but especially for one based on bad mortgages? wait until you hear who is running the company. >> i'm scott cohn. did bernie madoff really spill his guts to a plaintiff's lawyer in prison after refusing to name names for so many months? we'll tuck to that lawyer live on cnbc in a first on cnbc interview coming up. >> wouldn't surprise me, because in the end, they always want to talk. let's get to market action. the major averages having their biggest three-day drop in as many weeks. oil getting pummeled. bob pi san see kicks it off at the new york stock exchange. roberto. here is the big question. we have been here before, weakness in the early part of the day, but markets have been resilient, keep coming back late in the day. so here is the market test. let's see if we can come back from this minor market set back here. let's look at the steel stocks, and folks, you knew wurp going to get smacked around with commodity names.

mittal, not a full recovery, and u.s. steel and nipan in japan are weak. as are all commodity stocks. chinese stocks are weak, a 5% drop in shanghai today, so all of the big commodity names are weak, as well. finally, oil stocks, you combine collar strength, combine a big build in oil inventories, you've got weakness across the board. the oil service names like nabors and valero and apache to the weak side. rebecca, not a lot of help from techs, as well. >> not a lot of help from techs at all, bob. and that's in light of the fact you've got this big tech deal taking place. the media giants or i should say internet search giants, microsoft and yahoo teaming up on the search side of their business. yahoo shares to the down side now about 11% lower. meantime, you have microsoft really seeing the benefit of that transaction at this point in time.

they're up about a half a percent. the big deal here is that microsoft isn't paying any kind of upfront fees, and on top of that, yahoo says it's not going to knock your socks off in terms of guidance on their operating side of the business. i want to point to one other name, human gene only sciences, they have you said their share offering by a handful of millions of shares. let's get over to sharon epperson for more on oil. big active day in those pits, sharon. >> very active day. looks like oil is going to post its biggest decline in three months. we are down nearly 6%, and the bill that we saw in oil inventories here in the u.s. about 5 million barrels, was a big surprise to many in the market, but it shouldn't have been, because the american petroleum institute data showed an increase last night of 4 million barrels. the other factor pressuring oil prices is the dollar. the dollar index continues to bounce higher here, and is not only weighing on oil, but on gold and commodities across the board. when it comes to the oil picture, though, it is a picture

of dismal demand. we have crude supplies up about 18% from a year ago. gasoline demand down about 2% from where it was a year ago. and distill at demand down more than 20%. and will we see any uptick in the winter season or will it continue to decline? rick santelli to the cnbc headquarters on the bond market. >> sharon, all of the same dynamics. it's the tail wagging the dog. many of my traders in chicago calling me up and saying, listen, we think what's going on with the dollar and commodities is the same story. having a negative effect on equities. whether it's true or not, hard to dismiss the following. two-day chart and ten-year note rates, isn't having a huge effect pushing rates down. granted, they are low on the day. but really, the big story in so many ways, if you want to rise above some of the day-to-day wild activity, this is year-to-date chart of the dollar index. it is bouncing off the right levels, and if you notice, the specifics today, even though the dollar is up against the end,

there is more deterioration on the euro side of that. that is something unusual, actually, an environment of weak equities. what does it all mean? it means we want to see how this five-year $39 billion less than an hour goes for a variety of reasons, to see if safety is an issue, to see if longer maturis s are favorable and maybe the chinese have had their fill. no matter how you slice it, a lost of action in the last several hours. sue, back to you. >> look forward to seeing you when the auction results are released. thank you, rick, very much. when this gentleman speaks, the markets listen. new york fed president bill dudley making headlines today, and steve liesman is here to tell us what he said, and more importantly, perhaps what it means. >> introducing me, sue -- no, you are absolutely correct. the new york fed president bill dudley with stride ensee in his voice saying the market is misplaced when it comes to the fed and it's likely because

investors don't understand new fed tools that has to take away the easy money policy. . >> people keep saying the monetary place is going to replace inflation. that is the old regime. we're now in a new regime and people need to rethink this. >> in the middle of a financial crisis, congress gave the fed the ability to pay on excess reserves by jacking up interest rates on the reserves. the fed says it will keep them at the central bank and put a lid on new credit creation. still, dudley predicting the fed's easy money. and the balance sheet will likely balloon to 2.5 million as new programs take off. as for the economy, dudley sees a return to lackluster growth this year, which he says will keep inflation in check. michelle. >> got it, steve. thank you so much. let's go to what is happening with the markets because pimco mohammed muscle layerian says he doesn't believe this recent rally. >> and you've got a feeling that the equity market is now on a

sugar high. assumptions are being made, assumptions are being made on things like corporate profitability can continue to be driven just by cost occurring. that's not true. you need revenue growth. assumptions are being made that the stimulus is going to have a permanent effect. that's not true. >> so what does all that mean? is now the time to take money off the table? joining us is eric thorn, investment advisor at bryn mawr trust wealth management. good to see you. what do you think of what mr.el-erian has said and do you think now is the time to take money off the table? >> no doubt we're going to see some ups and downs. the markets on the s&p has bounced about 45%, up from the lows earlier this year. but then again, we're only up 7 or 8% year-to-date. so i think the rally has legs, even though we'll see a pullback here and there, the rally has legs. we'll probably see the markets at higher levels at year-end versus where we are right now. and we could easily see another 10% gain before what, you know,

the interview said. >> so if that's the case, are you adding to positions? i know you've been putting money into this market fairly consistently, and if so, what sectors? >> yeah, we're really asset allocators, and the areas we like particularly right now are the small cap stocks, mid cap stocks, emerging markets. we think those are the areas when investors' appetite for risk increases. you're going to see a little bit more performance there. so we still like our big core domestic area, but we think some of more risky areas and economically sensitive areas will do a little bit better over the next six to twelve months. >> how much down side are you willing to accept, though, in the meantime? i can't imagine you see the market going higher from here that it's going to go in a straight line. we'll have bumps along the way, i would think. >> definitely. and that's to be expected. you know, not too long ago on the dow, we saw the dow go from 8800 down to 8300, 8200. and you're hearing people say, you know, we're going back to where we were before. and it didn't happen. we actually rebounded fairly

nicely. and so we're looking mostly at this point when the market takes a breather to look at that as a buying opportunity. and, you know, it's difficult to say exactly how much, because it depends on the circumstances and what's going on with the data flow. you know, corporate earnings have been pretty good. at this point, with about halfway through earnings season, we're probably 18 to 20% ahead of expectations. in terms of where earnings were supposed to be. and that's a good sign. you know, this isn't going to happen overnight. >> eric, good to see you. thank you. >> great to be with you. >> right now, president obama is in raleigh, north carolina trying to pull out all stops to encourage lawmakers to vote on his health care reform plan before congress recesses. but the beginning of his speech there, he said that it is entirely possible that we may be seeing the beginning of the end of the recession. our chief washington correspondent john harwood is joining us with the latest. he's making a comment on the economy which would be good news but he is pulling out all of the stops on health care, too. >> he is. and bill, the white house is

hoping for good news as soon as possible in in terms of recovery growth, especially since unemployment continues to rise, 9.5%, headed to 10. but the president is on the road trying to build public support for health reform, but here in washington, there is action going on. here are the moving parts. first of all, in both chambers of congress, they have lowered their sights from the previous goal of passing legislation by the august recess. now they want legislation out of the energy and commerce committee and the house senate finance in the senate. both of those are going to be moderated bills, and what we're seeing is moderates in both chambers, flexing their muscles, trying to reduce the cost of the program, reduce some of the government role in health care. and what is fueling the strength of those moderates is the dropping poll numbers for president obama makes it more difficult for him to pull the process to the left. although i'm not sure that that's exactly where he would want to go in any case, because he is serious about cost control. and finally, bill, as evidence of how the process is u in fact, being moderated, we have seen

senator max baucus in the finance committee and senate coming out and saying the new bill they have come up with, tent active compromise, which avoids a public plan would come in and score by the ceo at less than 9$900 million which is a positive step forward for those who want to keep a lid on the cost and a lid on the deficit over the long run. >> i think you mean $900 billion. >> $900 billion, yes. sorry. >> i have a question. president obama saying we may be seeing the beginning of the end of the recession. the conspiracy theorist in me says maybe he says this in order to make passing health care a little more palatable, because maybe we're willing to pass it if the economy is getting better. >> there is no question that's true, michelle. and yes, they want to seize and create an environment in which they think the country is going in the right direction, because concerns about the economy fuel concerns about the debt and deficit. the thing is, if he's -- if he's making it up, michelle, that will be exposed rather quickly.

so i think that would be a risky scenario, if he didn't have good reason from his economic advisors to think that that in fact is what is happening. >> okay, john. thanks very much. we'll see you later. straight ahead, tough times for media and consumer companies. martha stewart, both. coming out first on cnbc, we're going to clean up the set because martha is coming out in a moment. >> indeed. oils getting pummeled. is it time for investors to fill up on those stocks a first on cnbc interview, as well with the cfo. >> and the stocks are taking another dip. get ready for the "fast money" halftime report. i am in the chair with the gang while melissa is on assignment. we are back in two minutes here on "power lunch. of"

dow jones industrial average off 38%. the big action in commodities, look at the top of the screen. oil is getting pummeled. even copper is off like 5 cents, which is a big move when it comes to an inter day session for copper. martha stewart living posting a second quarter loss of 2 cents' share, but ma managed to beat analysts' forecasts. revenue dropped 26% on a decline in ad pages and a wind-up of some of its merchandising partnership. in afternoon trading, the last trade on martha steward living an the media, the stock is down

2 1/4%. first on cnbc founder martha stewart along with the founder of merchandise, robert marino. thank you for being here. welcome back, and robin, welcome. nice to have you here, as well. >> nice to be here. of. >> i think that's one of the places to start is merchandising, because you did beat the street in your report today. but one of the things that you've done that other companies have not done is you have really branched out into a number of new areas, many of which the products are right here. >> right. and robin has developed an amazing team at our company, handling all the design and the future -- you know, future-forward aspects of merchandising. we have great stuff in crafting. we actually have some patent-pending, talking about innovation. last time i was here, we talked about that. this little gadget is a -- >> i love these. >> a paper punch, but it goes around the corner. well, here -- you know, here's

what it looks like. never before -- >> oh, you create this. >> yes. >> by this -- sure, go right on the corner. >> and robin, that really goes to the new trend, which is people cocooning a little bit with the economy, and a lot of people feel as though -- that trend will continue, even as the economy recovers. people have changed their habits considerably, and doing more things for themselves and doing more things at home. >> absolutely. we call them recession ease at thats sometimes. cocooning, staying at home and cooking and crafting and that plays to the heart of many things we do. >> i want to talk about martha stewart's cupcakes. >> there it is, best-seller. >> number two on the new york times best-seller list. >> and it's not surprising, because, again, the people who want these books are cooking at home, making more things themselves for the price of one cup cake at one of these fancy

cup cake emporiums, you can make a dozen. >> and you have this online university, as well. how-to videos. >> i do. and many videos are fulfilling the need for, again, the at-home student to learn how to do all kinds of things themselves. when money was free-flowing, it was a lot easier just to go out and buy stuff. but now people are really spending money on books again. i'm very pleased. we've had five best sellers in a row. and more books coming this fall. and next spring. and it's exciting. >> all of that is great news. it doesn't offset, though, what you have seen when it comes to declines in advertising. when is that going to turn around? >> well, i hope that it will turn around in the beginning of 2010. we're already seeing a little bit of brightness towards the end of this year. i certainly hope that we will get more ad pages, and we are working very, very hard. we just hired a new head of our whole advertising department,

janet baylist, coming at the end of august, and we are very excited about her presence in the company. and so i think -- i think all of that bodes well. and i do hope that if advertising gets better, retail sales will get better. and it's all kind of like convoluted right now. it's convoluted. without advertising, you're not going to sell as much. >> right. >> and so then people have to be informed. so it keeps going around and around like that. right now, and it's difficult. >> you're going from k-mart to macy's. >> no, we are at macy's already. >> and winding down k-mart. >> winding down k-mart at the end of the year. and we don't have an announcement to make yet, but robin -- >> you can good on -- >> optimistic of robin. >> very optimistic about the future. always. eternally optimistic, and i think you'll see a lot of roughly announcements in the second half of the year. >> isn't macy's a much better fit than k-mart. don't take this the wrong way, but i never understood why you did that. >> well, how about $65 billion a

year? >> i got it -- >> 2007. >> a different level consumer. now, the last time you were on, we asked auto general economic question, because we were in the depths of difficult times for wall street and main street. and you said never count out the consumer. that seems to have been bourne true in your business, certainly. but do you see definite signs that the recession is ending, things are turning, the president just made the comment that we may be at the beginning of the end of the recession. >> well, he -- any word from the president makes people feel better. i -- any word from the consumer makes us feel better. we have not seen really a serious decline in subscribers, for example. searching for information. our online business is -- >> 28% -- >> yeah. and that's very good. and we see people searching, looking, trying to find good bargains. the consumer is very smart. >> what's the deal you're doing

with sandals? >> oh, that's very exciting. now i think our wedding business is really coming full circle. we have the greatest wedding magazine, martha stewart weddings. we have an extraordinary -- >> digital space. >> now a wonderful website, diy. we have sandals, where we're designing weddings. are you getting married? >> no. >> you can design your wedding -- >> that's our question. does that mean i'm going to get the classic martha stewart -- you change wedding bouquets? >> yes. one-stop shopping. >> the experience of a wedding. >> and we have ping online wedding invitations, paper, traditional invitations, and we have -- >> number one at macy's. >> right. >> bridal registration. >> you must be exhausted. >> we don't sleep. >> nice to see you again. >> well, thank you. >> thank you both. >> thanks for being with us today. >> up next, we get into crude prices, because they are getting

crushed today. also a big week for oil earnings. conoco reports today, exxon tomorrow, oil stocks are lag guards. does that mean they're a buy, though? we'll tell you if it's time to fill up. >> here is a check on how the big oil stocks are faring right now. of course, there is exxonmobil and the like, and we're going t take a look mostly on the down side, as you might imagine, given the down draft in oil. there is exxon, conoco, chevron and bp. back in a minute. at 155 miles per hour, andy roddick has the fastest serve in the history of professional tennis.

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welcome back to "power lunch." i'm mary thompson. the treasury department as part of the capital purchase program, the price tag $340 million. keep in mind, american express is the second big financial company to repurchase the warrants, goldman sachs being the first. now, when you include the dividends that american express paid to the government at $74.4 million, essentially that $414 million total paid to the u.s. government suggests that the treasury earned an annualized return of 26% on its investment in american express, which was one of the companies that, of course, received t.a.r.p. funds. that compares to the 23% return the treasury received on its investment in goldman sachs. again, american express,

repurchasing those warrants from the u.s. government for $340 million. back to you. >> they didn't leave home without it. something like that. thank you, mary. big earnings week for oil companies, conoco out with results today. profits at both companies fell sharply from a year ago. tomorrow we'll hear from the big guy, exxon. group prices getting slammed today, but always you know, they have been rebounding lately. and oil stocks during that time lagged. so we're wondering, is it time for investors to fill up on the stocks themselves? deutsche analyst paul sanky is back with us today. good to see you again. >> nice to see you, too. >> i'm thinking if stocks are lagging the price, the stocks are suggesting that the price is not going to go much higher beyond that. what do you think? >> no, that's not the way we see it. we have always thought these oils are discounting more like $75 oil, long-term. so, in fact, they didn't discount 30 when we were right at the bottom. they actually held their value well, if you recall, when the off price fell aggressively. now that we're coming back a

bit, i think they've got some to give back, as well. >> the number-one pick, according to my notes that you have, is objection dental petroleum. why do you like it? >> well, one of the big things, it doesn't have any refining. that's important to us. we look for reserves replacement being strong. they're good in that respect. just had a major discovery in california. they say the biggest in california for 35 years. they've got good growth above 5%, up to 8%, they say, which is in contrast to the other oils. and they have high free cash flow generation. what we're worried about with these results that we're seeing at $60 oil, which is the average in q2 is these companies are still cash flow negative. that is, cash from operations is below their cap ex plus their dividends. that's obviously a concern. it means that if it does fall below 60, they're clearly not sustaining themselves. >> what do you expect from the big fish tomorrow from exxon? >> we're worried about chemicals, that's for sure. conoco had had a bad refining result. saw that from valero yesterday, as well.

so i think there is a lot of concern. having said that, exxon is more levered to oil prices than people think and the lowest cost producers on the upstream side. so we'll be looking for what we have seen from some of the other oils, conoco and hes both today, which is that costs have been good, and therefore that profitability upstream has been better than we expected. so we'll see what happens. >> take a swipe, if you will, at the current topic of debate, which is putting limits on specific energy positions, and the role of speculators in the move in energy prices. what do you think? is. >> well, ultimately, to me, if speculators want to buy the commodity, they should be allowed to. we don't find any long-term evidence they're able to drive the market up. the reality is that this is a very highly efficient, very highly traded market on a daily basis. and if anyone could seriously push it around, i'm sure they would. but we're very skeptical about their ability to do that on a discuss takened basis. we think generally speaking that the more the speculation, the more efficient the market. and that's ultimately in everyone's interests. should there be more

transparency? yes. we agree with that. should you limit speculation? no, we don't believe so. >> what will happen first? 50 or $100 in oil? >> well, this time of year, in august, you should be bearish. i don't think you want to go bullish in august, ever. i'll be writing a note in november saying don't get bearish now that we have fallen. so we'll say a better shot at 50 than 100, definitely. >> already writing his november notes. love that. thank you, paul. see you later. >> yep. >> ssanofi-aventis reporting a big upturn today. first on cnbc, we talk to their ceo. >> also, 12:45 eastern, the "fast money" halftime report. i'm already talking fast, michelle. >> that's good. stocks taking a dip and commodities in the red, as well. factory orders showed the first decline in three months. were investors too optimistic about the global recovery? plus, oil in free-fall? you just heard after the latest round of inventory data. we're going to ask that same

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french drug giant sanofi-aventis out with earnings, profits rose 5% last quarter, beating analysts' estimates, and also raised its outlook for the rest of the year. shares currently down 42 cents, or 1 1/4%. mike huckman joins us with a very special guest. >> thank you. san owe fee has afrownsed they have approved an injectable sculpture. this was only used for cosmetic use in healthy people to get rid of where else and lines on the physician. joining me on a first cnbc live interview is sanofi-aventis's ceo. thank you for joining me. and i'm going to launch straight into my question because of the satellite delay. you put out long-term guidance saying your results in 2013 are going to be at the same level

they were last year. but are you going to do that all on the back of the nearly $3 billion in annual cost cuts that you announced today? >> no. what we wanted to do, when we talked to investors, it became obvious to us that people really were having difficulty thinking about where the company was going to be in 2013, after the so-called -- and what we were able to say is, if you look at the 20% that's going away, you're missing the big picture, which is the 80% that stays. and within that sanofi is a little different. we've got businesses that i think have long-term durable growth process because of capital, brand loyalty or the fact we don't have path protection on those today. so vaccines, growing at 18%. emerging markets growing at 20%. so when you project those out, we see that just organically, we can actually achieve the same level of sales that we had in

2008, before we do any acquisitions. >> and mr. bebocker -- >> and the cost savings will achieve the same level profit. >> and the patent -- as you well know, the health care reform debate is hot and heavy here in the united states right now. can't tell you how many times i've heard from pharmaceutical execs during this earning season boiler plate stuff, like we're happy to have a seat at the table this time, we support health care reform. what, if anything else, can you add to that conversation? >> well, like, i think it is a good thing to have the reform. we have seen a lot of people who aren't able to afford their drugs, and i think if this can lead to greater coverage, then that's got to be a good thing. it's not great when people can't afford your medicines. is there going to be some shorter term pain? yeah. there is going to be some higher rebates, but i think the fundamental -- fundamentals of the american marketplace stay there. it's going to be an important market going forward, as well. so i think it's the right thing,

even for patients, to support that kind of health care reform. and i think probably there's some underestimate of some of the benefits, longer-term that will come out of that. we as a company are a little less concerned, because we only have about a third of our sales in the united states. and it also tells you why it's important to have big sales in other parts of the world, and to be diversifying away a little bit from the traditional black buster model, which we're trying to do. >> as we speak in atlanta, a panel is meeting at the u.s. centers for disease control to talk about who should be in line first for an h1n1 vaccine. can you first of all give us a progress report on where your development stands at the moment regarding an effective h1n1 vaccine, and secondly, is there going to be enough to go around? will developing countries have access, the same access that, rich countries are going to have? >> so we have three factories, two in the united states, one in

france. they're working full tilt to produce h1n1, as we speak. there are some very important questions that you raise there. first, who gets the vaccine is not our decision. that's got to be the decision of public health authorities, it's the w.h.o.'s, the cdcs, and tradeoffs, whether we make seasonal vaccine for the southern hemisphere or keep producing h1n1 for the north. those are the major public health issues. in terms of developing countries, we had the same concern. we said we were going to provide 100 million doses to the w.h.o. for them to be able to provide to countries who couldn't afford to stockpile. and because it's going to be the first doses coming off the line that are the most critical, we also said we would take 10% of all of the doses right from the very first week, and provide those to the w.h.o. there's clearly a higher demand today than there is supply. and that's why i think we have to think carefully and work with health care authorities to make sure that we're allocating the

vaccine in the best way to the people who need it most. >> that is for sure. thanks again, chris bebocker, the sanofi-aventis ceo. for more, check out the blog, farmers market at cnbc.com. tomorrow guys, double header. astroz astrozenca's ceo. >> back with more "power lunch" after this. announcer: some people buy a car based on the deal they get. others buy the car of their dreams. during the lexus golden opportunity sales event, you can do both. it's an opportunity today. it's a lexus forever. special lease offers now available on the 2009 is 250.

all right. lowered by more than 5%, nearly 6% as a result of the inventory data that came out, much of larger bill than kpld, refocussing on weak demand. that's why you see a big sell-off there. >> and because of the strength in the dollar, a sell-off in the gold market, the copper market and soybean market, too. >> and the five-year note auctions coming up, $49 billion up for grabs. we'll have results at the top of the hour. but in the meantime, michelle and the gang have the "fast money" halftime report after this.

and welcome to the "fast money" halftime report, getting to the heart of the action as it's happening. stocks falling after hitting a eight-month high, and energy shares tumbling and investors are worrying about the economy. where can you still profit? let's get the wortd on the street. our "fast money" crew today, the governor, steve grosso, and options action trader and jon najarian of optionmonster.com. steve, what's the problem today? >> it's what everybody has been saying, can't go straight up for too long, and no fundamentals. you can talk about growth coming back, but it's not here yet. and that's what people are starting look, the reality of the issue. >> jon thnajarian, what about 

options, as we keep seeing this weakness day after day, are they buying more protection? >> they are indeed, michelle. they have pushed the volatility up another 4% today, both for the s&p stocks, that's measured by vix and the nasdaq, the vxn. and i think that that's just prudent, given that we're at a critical level in the dow, this 9,000 level, and we're shy of a serious upside resistance in the s&p. i think they're doing what they should do. >> scott nations, what's the talk at the cme when we see this weakness the last couple days, even though we have been able to rally into the close. >> yeah, right. the talk is this is expected. you're right. we had a great run. but that leaves the s&p overbought. the relative strength index, just made a new 52-week high. that doesn't mean the market is going to collapse. it might very well bump along as we get into august. and i think that's what is likely to happen. but it does mean that for long, they're going to face a pretty stiff headwind if they're expecting the market to go higher again. >> michelle, this is where i

always jump in and say, we're still bullish, my clients are still bullish, but this is all natural and we should go sideways before we take a running start back to the,000 level. >> like my dad always said, it can't go up every day. next trade, after months and months of back and forth negotiations, yahoo and microsoft finally announcing a search deal. the agreement announced this morning gives microsoft access to the internet's second largest search engine audience and has a potentially potent weapon in its fight against google. jon najarian, what are we seeing in the reaction of the stocks. yahoo investors are seeming to think they didn't get enough out of deal. >> yeah, they wanted a lot more. and isn't that always the case, investors want more than they've got. i think in this case they were looking for something that just wasn't there, michelle. i mean, yahoo outsearched to  goolgsz, which was their search engine years ago. they have tried to do it on their own, and as carol bartz has said, this company is not about search anymore. they're going to get paid handsomely, i believe. i don't think this is a bad deal

for them. because i think they are more of a media company than a search  company. and i would say that it is likely to trade a little lower  still. as analysts downgrade the stock and that will present a buying  opportunity. and microsoft just did a fabulous job here, but don't dismiss eric schmidt over at google. he will keep the pressure on them with the justice  department, and he's got the cashe with them. >> what are you saying when it comes to the calls of yahoo? >> this is a huge disappointment for yahoo, long -- people along the august calls. we saw a lot of buying interest in the august calls. people were hoping for a pop when this deal got done. that's not going to work out, and they are just -- they're selling those august calls hand over fist. they are really getting crushed on those people who had speculated buying calls are puking. and that's going to be a huge disappointment. >> puking. yes, exactly. all right. next trade, oil futures accelerating their losses today after the latest government

report showed that crude supplies rose more than 5 million barrels last week. that's more than the 1 million expected by analysts by a long shot. so oil is now down 12% in the last month. is the summer oil trade over? let's get answers from addison armstrong, on the fat line. addison, what did you make of this selling today? justified or overdone? >> completely justified. it shows the fundamentals are back in charge of aa month in which oil traders have acted more like equity traders and moved the price up along with the s&p. so i think that when they look out and see that oil inventories are now 9% above the five-year average, and distill at inventories 28%, and they're a reflection of industrial america. so with no demand on the horizon, and a complete huge amount of supply -- >> where is the down side? >> it's really time for the fundamentals to reassert themselves. >> are we going to 50? how low are we going? >> i don't think we're going to get back to 50. we're going to retest the lows

we had back earlier this month in the 50s down to 58, 58.30 i could see that. that will move down to 55 if we get through that. >> you were saying no, it doesn't get to 50. why do you think that? >> i think that the recovery is under way and not only the housing numbers but the durable goods we looked at today, up for the second straight month. i agree and addison called this thing head on. i don't think we get lower than 55 on oversold condition. then you want to be back in buying what the mcclellan os later says. >> morgan stanley going to the down side after being cut to neutral by competitor goldman sachs citing disappointing trading results for the downgrade. are you seeing any effects on

the financials? >> i think what's happening now, my clients are not making second and third best financials, staying with the longs but not re-upping. >> we've got to get to the breaking news desk. for everybody that thought that ruth madoff may be out of the woods, not so fast. the bankruptcy trustee has just filed this suit against mrs. madeoff seeking claw backs in an agreement with the government before bernie madoff's sentencing she was allowed to hang on to $2.5 million to get on with her life. she is not out of the woods yet. the bankruptcy trustee saying that she was involved in the fraud for so many years is seeking a major clawback in this case trying to recover money from her. later on "power lunch" the attorney that says he met with bernie for four hours in prison. it time to cash out of this

rally? if so, where can you still profit? up next, a first on cnbc, the lawyer that one on one with bernie madoff. and then the pit boss joining us as well after this. stocks stuck at eight-month highs, fast money knows best. they couldn't quit each other, is this carl bart's first big blunder? tyson holy field, jon and kate and now santelli versus leezman. the post market show tonight. when this hotel added aflac

to compliment their benefits package aflac! it made a big splash with the employees yeaaaahhhh! find out more at aflac!... ...forbusiness.com (laughter)

welcome back. time for your power lunch trade to go and we have a special

guest. pete, what's the trade to go when it comes to chemicals? >> you have to focus on the specialty chemicals. folks in that area have explosive projections and earnings. you look at eastman chemical and dupont, as you look ahead, we're looking at dow. and dow aesz numbers could be impressive as well. no matter what they say, i'm not sure it can be explosive to the upside. on any pullback dow has made a good turn and you have a great opportunity -- >> what's the trade then. >> wait for the earnings and think the earnings will be exceptional. on the pullback, that's when you get your opportunity, specialty chemical, rowman hos, that's going to be huge. >> next trade, time to go outside of stocks under five minutes. got to take tuned to this. the government's auction of $39

billion worth of five-year notes. today's auction notes the largest ever because the government needs to borrow so much money. scott nations, what do you think will happen with this auction? >> boy, are they -- they are really bellying up to the bar now to borrow money. we had a pretty good idea of how this one was going to play out. i would expect to use rick santelli's curve, i would expect a b to b plus today. >> mr. na jer yan. >> that bodes well, that's positive moving further. >> if the chinese aren't buying as much and people are getting nefbous, if they want higher yields is that bad for stocks? >> terrible bad for stocks, let's keep our fingers crossed

there. >> let's go around the horn. are you going to buy or sell th close. steve? >> i'd be selling today. >> john, buy or sell to close? >> michelle, i believe i'll be selling to close as well today. >> i'm a seller because the s&p is still overbought. >> we have sell, sell, sell. >> pete? >> well, let me tell you, i think the fact that we had such an explosive move to the upside i don't know what catalyst exists right now to pull us higher. we have to test the resistance levels. we break those, then we've got a long way to go. >> everybody selling to close? >> she's buying. >> when everybody says something, everybody is wrong. you know that, guys. you got to stick around for that auction moments away. that does it for us. don't miss "fast money" tonight.

a face to face showdown. coming up next, breaking news from the bond pits, the latest results of the five-year auction. "power lunch" will have the analysis and reaction. >> we may have a deal on a health care plan that's breaking news that we'll talk about at the top of hour. then on first on cnbc we speek with a regional bank ceo, driving profits and the stock. money manager who oversees $11 billion says there are dividends plays worth of your portfolio. >> crude oil prices sliding 6% after the energy deposit reported a bigger than expected increase in weekly inventories. yahoo! shares are down about 10% following the announcement of its new search deal with microsoft. and sprint nextel shares also

falling about 10% after that company reported a larger than expected quarterly loss. i'm mike huckman. we have news busting out all over. we have word that perhaps the blue dog democrats have come around to some sort of an agreement with their more liberal members of the democr democratdemocra democratic party in the house. the senate is still working on its own version. we're working on this story trying to confirm it and see what we can find out. we're waiting for a potential market mover, the result of the $49 billion -- isn't it five-year notes? >> i think it's 39. >> the results should be out in just a moment. we'll bring you those numbers when we get them. >> it is 39. yahoo! and microsoft also in the

news. are there antitrust issues that may derail the deal? we'll talk about that. >> a complete look inside bernie madoff's scam of the century, the attorney who got to speak one on one with him yesterday. >> we'll see about that. >> joining us for next half hour, ron insan a, how are you? >> good. last year was 25 years for the three of us. >> he would remember the time and hour and all. >> if we have an agreement on health care, what does it mean for stocks? >> it depends. i think it's equally important they have come out and said they are scoring the cost of the bill under ten years, whether or not that's a reliable forecast -- >> better than a trillion. >> less than a trillion and reduces the near-term

consideration. >> do you have they have factored in a worst case scenario. >> i think we've rallied away from the brink of disaster in march, we've rallied away from over punitive health care system as far as wall street is concerned. today, i think other forces are at work here. >> he's fixing his jacket. rick santelli has the five-year note auction results. >> i know i've used this line again, put a tail on it and call it lascy, this is a bou wow. we were looking in the neighborhood of 263ish. just shy of 2.689. the worst since i believe about september. that isn't that long ago but long enough of the indirect bidding in the high teens, about 14%. this is -- i don't know, i'm going to have to say a c minus minus, maybe a d auction. this isn't good. wasn't the pricing demand they laid out in the weeds for it to

bid the cover for indirect fitting. i don't very any color lipstick that will pretty this boy up. >> you gave the other one a c minus. >> we'll have to call it a d. >> that's not good. >> i agree yesterday was tepid, more in the bs this is definitely a c or d, under 2 on the bid to cover. you wanted above that. >> d for dog. >> we'll get ron to bark here rather than myself. but -- we're at 2.58. there's two things here to be careful about. one is the one explanation is a lack of interest in our bonds because we're issuing so much of it. the other is a pull away from the risk free trade, which is as many my greats it's a riskier assets and both of those could be true. >> is it almost bad news for

treasuries that we got all of the good news on the economy right before the swell of supply. wouldn't it be better if the good news about housing tb a few weeks down the road? >> this plays into our argument that the steep yield curve has roadblocks that aren't necessarily good for people looking to borrow benchmarks about a rate in the long end, even though it might be a driving force. good news in the economy or maybe avoidance of positives in terms of risk so let's credit appetite in treasury. >> steve told you if you look out below for stocks if we get a bad auction here, we can show you, it's holding steady right now. i looked. we were down 55 when the results were just coming out, now down 58. >> look at the two-year they just flipped around. that's the dow. >> it's coming of o the lows. >> here's a couple of things, i'm not sure the five or seven-year maturities are clear.

for wall street institutions that engage in the primary purchase of the bonds. >> viewers should look at the screen and see the two-year dpsh -- okay, never mind. >> what does this mean for tomorrow? >> my opinion is will make the seven-year that much difficult. longer maturities may have bigger implications for the august refunding, this isn't good. >> we have more big news. john, what have you been able to hear and learn. we hear there may be a compromise? >> the blue dog democrats were in marathon negotiations through the night with rahm emanuel, with henry waxman, and it appears now they've got a deal for at least four of the seven democrats who have been holding out on energy and commerce.

this will allow the committee to move the bill. it's an interesting commentary on how expectations change. everybody is thinking the white house suffered a set back because the full house won't vote before the reset. now you have the news flash and that is a boost to the white house as president obama is on the road trying to sell his plan. now the question will be can the senate finance committee which has a similar process under way moderating the bill reducing costs about an hour ago, below the $1 trillion mark, can they also produce action? if so, the white house will go into the august recess feeling good about where they are. >> trying to play this question here, but max walk us have said they are working diligently right now on this bill. what does your gut say, if the house can come up with a bill, does this give new viger to the senate move? >> i do think so.

and there's a relationship between the two. the existence of an agreement with the conservatives on the house side probably tells you something about the progress being made in the senate because the house conservative democrats didn't want to move until they knew what the set is going to now. now they have an idea what the senate is going to do. we still have to see the baucus and grassley, as you remember, as sure as i'm sitting here, we'll lay something down in four days or so. it's been four weeks and we haven't seen it. it does appear that progress is taking place. >> thanks, john. >> pretty amazing. >> senate finance committee stripped out the provisions wall street fears most of the house bill, so this may be, whether it's a victory or not for the white house, a watered down version of what was originally

envisioned. >> new alliance bank shares trading higher a day after beating the street. despite recession and regional banks saw gains in residential mortgages and stock is up $12.24. here's peyton anderson. good to see you and welcome back. >> good afternoon. >> the role that residential mortgages play in your business, the huge role, how you see the market right now? >> we've been invested in the resdown shal mortgage business throughout our his tri. we originated over 800 million in residential mortgage loans since the end of last year. as you know, credit quality remain incredibly healthy at new alliance we're focused on the

fundamentals, revenues are up year over year and quarter to quarter. we want to take advantage of this market and serve the consumers and businesses in the markets that we're in. >> how is the residential market right now? >> well actually, business is booming -- we are seeing -- and i think really taking advantage of what's going on as you saw with the information now -- >> characterize booming, up how much? >> we're up about 20% year on year. we've seen a shift in consumers going from variable right to fixed rate mortgages, which is a good thing for customers. we're really capitalizing on that as a lot of players have exited the market. >> what about the commercial side of your business and to what extent are you worried about those who say that basically the commercial real estate market is the next to

drop, has already started to drop? >> in some markets you're seeing that. in our case we predicted the housing crisis a couple of years ago and stopped getting into businesses in the commercial area that might come back to bite us. we are our delinquencies and nonpore feno nonperformers under control and we're encouraged with the third quarter pipe line. >> given the quality that your bank has with respect to credit and other issues, you might appear to be a potentially inexpensive way for a larger bank to bolster its own fortunes. are you in the cross hairs of someone who may want to buy out? >> we're focused on what we're going to do to be an acquirer and consolidating in marketplace with the level of capital that we have and in delivering shareholder value. that's our focus, but obviously,

we've got to perform for the market and focusing on the fundamentals is where we are at this point. >> thanks for joining us today. the ceo of new alliance bank shares, whose residents shal mortgage portfolio is booming. >> a lot of things, foreclosure sales that are causing those to pick up quickly than they thought. not too many people are paying attention to that. >> al a lot going to fixed rate. >> there are still still going after a.r.m.s believe it or not. >> we'll round up the cnbc all-stars and take the real time poll in a minute. >> a lawyer that went one on one with bernie madoff in a north carolina prison. what does the con man tell him

about how he got away with his me mega ponzi scheme? stick around. thththththththththh

health care has become the top story with word that the fiscally conservative democrats known as the blue dogs have come around to an agreement with their liberals. the president in raleigh is wrapping up his town hall

meeting there on health care reform. he no doubt has been told about this at this point and i can imagine he's pretty happy. we're expecting to hear from henry waxman who maybe can shed some light on the nature of the compromise that has been reached and we'll go there in washington as soon as we get that. let's get back to scott at the news desk. more on this suit against ruth madoff maybe? >> that's right. the suit by the bankruptcy trut ee seeking $44.8 million from ruth madoff saying that she lived a life of splendor receiving money from her husband's fraud. her attorney is weighing in. and notes that the trustee does not allege that mrs. madoff knew about the fraud and also says she's turned over much of the money under the agreement with the government in a aroullowed to keep $2.5 million. calls it wrong as a matter of law and fairness.

>> thank you, we'll talk to you in just a minute with the attorney who spoke to bernie madoff for 4.5 hours. >> more than bernie ever spoke to anyone. >> let's get to the market reporters and talk about this market which is holding up pretty darn well. bob, steve grass so said if it was a dog of an auction, look out for the stock market but it is holding up well. >> stocks did drop down 75 on the dow and has come back a little bit. also talk about health care reform isn't necessarily positive for the stock market overall. so there was a little bit of pressure around 1:00. this resiliency idea, if we can come back with these types of headlines and go back to

positive territory, this would be another sign the market doesn't want to go down, overall great news. when you get the auction coming out, the possibility of a backup in yield and rates hurts certain stocks like retailers. a lot of the retailers are sitting near lows for the day. home depot and others have been moving down. bank stocks also to the extent there are a few that pay any kind of dividends, they are been a little weaker here. they came off of the highs. the whole commodity group has been under pressure because of china and cautious comments from reliance steel. we saw tech stocks come off the midday high as well. >> absolutely, bob. a lot of the focus has been on the search deal between microsoft and yahoo!. no upfront fees from microsoft to yahoo! yahoo! is down 11%.

on the flip side, their shares are basically flat on the session. had been a lot higher earlier in the day. google, the big rival here, 1.2 pl of the downside. this deal is not going to go without a fight, at least that's what it looks like will happen. interesting to note here, rich peterson tells me of all of the stocks here at the nasdaq, this one is in the top ten in terms of performance year to date. you see the china story playing out here. >> we're looking at the dollar also because it continues to power higher and that is weighing on oil and on commodities across the board. all to that the big surge up about 5 million barrels and you have nearly 6% plunge in crude oil prices today. how low could we go?

when we broke around 6330 or so already today. the next is about $58 a barrel where we were around july 10th or soxt keep your eye on that level. we're looking at demand as the main culprit here and pressuring of energy prices and down about 28% from the five-year average. we'll be watching that as well as natural gas. natural gas storage levels will be reported tomorrow. >> ultimate fighting championship once considered too brutal or bloody for television, now the top brand in one of the fastest growing sports, mixed martial arts. scott joins us now. >> sports exploding popularity made one famous, tap out. i met the executives with brands with names you don't typically see on business cards. >> tap out is a different kind of company to say the least.

the apar rel brand was started by three friends. more tattoos than college diplomas. we found three strange characters with names to match. >> you are? >> punk -- >> sky scrape. >> mask. >> tap out's strategy was simple, pay fighters to wear the logo, an approach that paid off. when chuck and dan henderson, two of the most visible stars made it big. >> people who were seeing our clothes were seeing them on the ufc as the ufc grew, it was more and more people in the world were seeing our stuff, that's how we grew. >> in 2008, tap out sales reached $100 million, they've partnered with sketchers shoe and put out nutritional supplements and opened a chain of gyms.

the triangle choke hold. i would love to go out there. >> you're about to come out here for a very short period of time. >> are you talking trash? >> good lord. >> that would be the shortest -- >> we only have -- no octagons. fistful of dollars premieres at 10:00 p.m. eastern time. we're waiting for mr. waxman to come out on capitol hill. straight ahead we'll talk about the fact there's a deal that's been done. the empire strikes back and microsoft and yahoo! team up in search and advertising. what does that mean for google and any antitrust problems? >> also, still to come, so many of the stocks in the search

smackdown. microsoft is higher and yahoo! down 11% right now. google, by the way, down $5 or 1.2%. we're back after this. announcer: some people buy a car based on the deal they get. others buy the car of their dreams. during the lexus golden opportunity sales event, you can do both. it's an opportunity today. it's a lexus forever. special lease offers now available on the 2009 is 250. i just want fewer pills and relief that lasts all day. take 2 extra strength tylenol every 4 to 6 hours?!? taking 8 pills a day...

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microsoft and yahoo! teaming up in a much awaited search pact. it is expected to face antitrust issues. what might some issues be and what will be mean for the stocks

involved. joining us now, antitrust practice and also issues on advice during the campaign. are we going to see antitrust issues? >> i think that that's the question, right? >> obviously, yes. >> there's no question that the department of justice will take a close look at this transaction. they've been very concerned about microsoft in the past and very concerned about google in the past. >> if you were advising barack obama, what would you tell him? >> my answer would be that they should talk to consumers. ultimately antitrust is about protecting consumer welfare. at the end of the you'll go from three search engines to two. the relevant question is whether short of doing this transaction, either google -- either yahoo! or microsoft would have enough

strength to challenge. >> wouldn't everybody tell them to use google? >> google is the dominant provider, with 70% market share in the u.s. that's not the issue. the issue around the legal pieces are will advertisers have more choice in terms of where they can actually spend their dollars. >> what took so long? is this because carol barts has come on board and there were hints that maybe they were talking and finally we get the search deal? >> tried to take over -- tried to take over yahoo! for that $47 billion. one thing that's interesting to note. in terms of advertising, i spoke to the ceo of wpp and he says he's delighted about the deal and thinks it will be great for ad buyers. until now neither were competitors to google and google got the prices.

he thinks this will help bring prices down and will be great for advertisers in terms of choice. >> do you think so, ben? >> i think that is true. standing alone they were not competitive threat to google. now together it's still going to be an uphill battle, but they have a fighting chance. >> am i being naive, after all they went through in this country and europe and still feeling the affects of the antitrust suits in europe there, you would thing they would have done the due diligence on this one and before they would ever think about doing a deal with yahoo! here? >> there's no question they have pretty strong arguments to try to get the transaction through. >> what are they? >> in order for them to be an effective alternative to google, they need to combine. that's their core argument and the question is going to be whether advertisers who are

choosing between either google on one side or alternatives to google now see there's a better second choice. if those advertisers are fine with the transaction, you wouldn't imagine there were going to be problems with the deal. >> gaining more traction on yahoo! than it was on google. combining the two will not be the type of anti-competitive threat that some might suggest. >> there are a lot of interesting issues around the deal. some of the broader issues are around privacy and what will this mean in terms of microsoft and yahoo! having access to data. what will it mean for -- >> compared to google taking shots of my house at the street level and showing my address. >> google map. >> they did that to you? >> yes. >> there are a lot different issues here. the privacy issue is one of government will focus on. >> thank you, good to see you. >> nothing like good dividends to help plump up your portfolio

it says here. i'm just reading that one. a fund manager with $11 billion under management and she'll tell you her favorite stocks right now. >> tell us how you feel about this one. it's a free country, free market. but the former number two guy at countrywide mortgage, ground zero in the subprime mess started a company to buy up troubled mortgages and it's going public this week. is there something wrong with that picture, ron says no. we'll talk about it after this.

welcome back to power lunch. we're down about 76 points on the dow and the market holding up pretty well considering what happened in the note auction. steve mentioning that he thought we would really see a big sell-off. we are down 75 points but better than people thought it would be given the dog of an auction as rick santelli said. let's go to the capitol hill. >> we've got steny hoyer with a presumably details on this bill

they've reach a compromise on health care. >> going ahead i'm hopeful that that markup will end successfully sometime this week and that we will nen proceed accordingly. it's obvious that we're not going to have any bill on the floor this week and the probability is we won't have a bill on the floor until next month. excuse me. september. so that -- we're still talking about that. but progress is being made, been very positive progress. and obviously senate is marking up as well, we think that health care reform is taking another step and there will be a lot of time to review where we are and make sure that we're getting this bill in a position that will be beneficial to the american people and to our country, bring costs down and

make sure every american has health care. >> will these accommodations go with the more liberal wing of your party? >> as i said, we're having discussions on that and i'm hopeful that this will move the bill forward. that's our intent to move the bill forward and to provide for a context in which we can get health care reform done when we come back after the august break. >> all right, let's give you details we know right now about this new proposal that we were talking about amongst ourselves here that sounds interesting, reduces the cost of the bill to below a trillion dollars, but one of the most important things is for small businesses removes 86% of the businesses from the employer mandate. affects mostly medium and small size businesses which will be a key component one will think in terms of continuing discussing.

>> this is from mike ross, representative from arkansas. we should realize that he is the one saying it removes 8 % of the businesses. raises the payroll -- to $500,000. they are adding that many more businesses -- >> fuf a payroll 500,000 or above, you must provide or get some penalty imposed on you. >> they probably won't get a bill on the floor until september. there was a feeling they are rushing this too many and take some time to ponder. they can't get the senate moving until september so what's the rush at that point. two bills have to be reconciled between the houses any way, not like it was going to come to a head within the next several days. >> let's talk about dividend yielding stocks, joining us is

lea lisa myers, oversees $11.5 million including the templeton fund. good to have you here. >> good to be here. >> buying any health care stocks? >> seriously, are you? >> really tempton as a whole has been over -- health care, the stuff you have been talking about for a long time, generic competition, all of that has been priced in. >> obama care putting extra pressure on them. there's still of the highest flow flow yielding in the market. long term value investors based on what they can produce longer term. we're an aging demographic around the world.

these countries have the highest structures, we heard able to cut costs. >> you get a lot of microsoft as well. what do you think of the deal with yahoo!? >> again, we like microsoft as a broader part of liking technology for the same reasons we like health care, high free cash flow yield. $31 billion on the balance sheet, global company able to invest -- >> buying technology for dividends. >> not all technology, but certainly there's a broad spectrum that we are able to participate in. microsoft offers 2.2 dividevide yield. certainly it's possible they could pay another special dividends. some of the taiwan ease stocks, electronics in taiwan, tsmc, higher than 5% dividend yield. >> we were talking in the fall

about picking a company for the dividends but be careful because so many were choosing to cut the dividen dividends, are we past that point where that's one of last resort for companies. many of it was in the financials but it it go across a broad spectrum. >> i think we are probably past the worst of it. does that mean we won't see any more? i'm not sure. that goes back to where temple ton has been focused. a good indication that they'll be able to continue to pay the dividends. >> thank you for joining us. >> lisa myers. one of key players who brought you the subprime mess is hoping to cash in on the mortgage meltdown. jane wells is in los angeles with the details. >> >> reporter: our investors ready for a stock based on bad

mortgages? here comes penny mac, top management came from countrywide. they raised private money from investors like black rock and purchased $8 million worth of trouble the mortgage and modify them one by one. many properties are vacant already. management not talking during this quiet period. in january in an exclusive interview, number two told me he's paying anywhere from 30 cents up to 80 cents on a dollar to buy the loans. our ability to buy the loans at a discount is what gives us the ability to work aggressively with borrower in terms of reducing their payment. >> they are expected to price at $20 a share for 20 million shares, start trading under the ticker pmt. the business model could

generate up to 25% in annual returns before fees. says they will transition to originating mortgages after it's done with the business of reworking them. we have a lot more. the story is highlighted on cnbc, including a link to the january interview where he answers criticism that's he and the company are benefitting from a mess that countrywide helped to make. you want to link on that to find it. >> speaking of linking, time to look at the widely followed stories on cnbc, alan is joining us with what's clicking. my story is one of hottest on the web. >> she's one of hot ones today. right now the that marvelous piece about the qualifying for the more affordable home. >> president obama helped me with my refi. >> i'm employ i had, current on my mortgage, loan to value was

very, very low. and i was owned by fannie. >> by qualifying what did you get? >> speed, no appraisal, no income documentation and done in three weeks. >> do you think they were aiming at you -- >> no the program was mept meant to help people in dire need. >> i don't think they had you in mind. it's a great story, people are diving into it. >> bill. >> thank you, congratulations. >> ron, thanks for joining us. >> thank you for having me. >> i always enjoy being here. >> when we come back, the lawyer that went one on one with bernie madoff, did we learn anything new about the scam of the century. welcome to the now network. population: 49 million.

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an extraordinary twist in a story, the attorney representing victims in the bernie madoff scandal, met with him for 4.5 hours in the prison where bernie is serving 150 years in north carolina. joseph is in california and joins us now along with scott cohen who has been following the

story. >> good morning. as you know bernie madoff has refused to i am my indicate anybody, refused to name names, basically has said in court appearances he acted alone and lied to his brother and sons. why in the world would he talk to you? >> we've been negotiating this for a couple of months now and wanted to wait until he was sentenced. we've been in discussions with his lawyer and wife's lawyer and other lawyers. he agreed to give me a full candid open interview, 4.5 hours, answered every single question i posed to him. there was never a hesitation. his lawyers sat there -- >> you sued mrs. madoff, you sued the brother and sons and a number of others. basically he was trying to protect them, correct. >> let me put it this way to you. he had an agenda i'm sure.

this is a streetwise guy from brooklyn. >> he didn't tell you anything new? >> oh, yes he did. >> did he tell you things he did not tell the feds? >> i have no idea what the told the feds but i do know they didn't spend a lot of time with him. if he told me correctly, he spent about two hours giving a proper and i asked him specifically, did you go into depth as to what you pulled off here? and he said, well, i answered their questions, it was clear to me that the feds did not get the full story. >> but he went into detail with you about how he did it. >> let me put this this way. i asked him for 4.5 hours questions and he answered every one. >> tell us something thaw learned. >> something i learned generically is this. >> tell us something specific. >> i'll tell you something

generically, because everything i put specific is going to be in a complaint but you'll get the gist of where i'm going. it was clear from the year 2000 on, that he knew that at some point the time was up. >> that's what he's already said. >> this -- >> let me finish. >> meet hg a lot of publicity, your publicist sent out a press release, we received it. you spent several hours talking with mr. madoff, you grilled him in a four-hour interview, learned key facts. let's look at the date there. it was sent out 9:26 yesterday morning. i'm assuming you didn't walk in the prison at 5:00 a.m. how did you know you were going to get key facts. >> let me put it this way to you, we knew he was going to be open and truthful and honest with us, which he was. we didn't put out a press release, somebody put that out. >> it was put out on your

behalf. did you authorize it? >> somebody talked to me about going to the press. the answer is i never saw it before it went out, but put that aside, the bottom line is this, we weren't sure until we got to the prison that we were going to be able to see him. we weren't sure whether or not the doj or sec would put a restraint on us of some sort because as an ongoing investigation. >> did he act alone? >> i don't think so, no. >> did he tell -- did he name names to you? >> he named a lot of names as to who he acted with. his position is that they didn't know or he acted alone or this or that but gave a lot of facts we'll put in a complaint within the next 30 days. >> did ruth and the sons know? >> i kind of think that ruth at some point right near the end am to know what was going on. >> your intention is to file an

amended complaint and you held a press conference outside the prison. i want to play something for that. that gets to what this is all about. let's listen. >> what do you think people are thinking right now -- >> those people -- who? >> who you believe were in on this -- >> they may be buying pampers. >> so the intent is to make these people think you've got new information, maybe they'll settle up with you? >> i don't think anybody will settle up before we name them. >> clearly people -- >> there will be new people named in a complaint we will file within 30 days. >> thanks for joining us. >> thank you. >> stay in touch. >> oh, my goodness. oh, please. that was incredible. he's obviously trying to get the people to turn over. has the last line.

30 days. >> in all of these frauds and all of these ponzi schemes or whatever, there is a search for pockets and the madoff case is particularly difficult this way. he has a long history of winning big verdict, made his name in the s and l scandal, represented valerie plame. so you know, clearly there was publicity attended to this. whether that's part of an overall strategy, you be the judge. >> what do you think the feds are think sng. >> i think it's probably expected. they have $170 billion forfeiture order. they've already attached anyone could conceivably think is part of the fraud. >> what i mean is, what do you think they are thinking about walking in and talking to bernie the prison? >> don't know. anybody can do it if they get a meeting and clearly madoff had the incentive to protect his wife and brother and sons who have been sued here --

>> i'm sure they're thrilled to be insulted about the questioning ability of him. >> crazy. >> thank you. great stuff. see you later. >> up next, people using blackberr blackberrys, trying to stay involved. multitasking, a and productive or rude? the algae are very beautiful. they come in blue or red, golden, green. algae could be converted into biofuels... that we could someday run our cars on. in using algae to form biofuels, we're not competing with the food supply. and they absorb co2, so they help solve the greenhouse problem, as well. we're making a big commitment to finding out... just how much algae can help to meet... the fuel demands of the world.

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k today.otect your family, launch your dreams. maybe you think you're being productive, typing away on your blackberry while the meeting goes on. a study in the financial times says the brain cannot concentrate on two things at once. should e-mail devices be banned at meetings? dennis is here with us. >> we've been waiting months. i'm on 8:00 at night. >> bureau chief of wire.com. how to behave in the wired world. welcome, gentlemen.

>> are you going to tell me i can't have a blackberry? >> no, i think you ought to have one. >> no, it's rude, don't use it. >> it's not rude. part of the business process. i go to meetings and there are often things that come up that i don't know the answer to and have to speak to peers and subordinates and fact check. >> i've been at meetings where people don't pay attention to what's being said because they have their head buried in the blackberry and that's rude. >> it says more about the quality of the meeting than it does about the quality of the texting. if the meeting is compelling, there's a lot of stuff going owñ and decisions being made, you're going to pay attention.ñ when you're bored, you'll text a little bit. should be banned from having blackberries in meetings, finally the explanation for the wall street meltdown because they were texting, right? >> the only rules in a board

room, a lot of things that go on are classified. you don't want people leaking what's going on. >> that happens all the time. >> but has nothing to do with wlorpt you're doing it in real time. do you mind if i tweet while i'm doing this? >> people in opposite sides of the meeting are e-mailing each other making fun of other people. >> of course, it is acceptable. it's part of the -- >> it's more rude though, texting on a meeting or texting on a date? >> it is part of alliance -- >> i bet martha stewart would have said it's rude. >> we've got a commercial. >> thanks, john. >> 8:00 tonight. >> put that thing down. >> see you tomorrow.