>> i think that everybody has been gun shy from the day we bought this thing. first it was venues. venues didn't even want to talk to us. it's television, it's pay per view, it's athletic commissions, it's sponsors, it's taking time. >> after eight long years the ufc has finally been embraced by the fortune 500. their seal of approval is stamped prominently on the octagon floor, where bud light declares itself the official beer of the ufc and harley-davidson rides the league's exploding popularity. >> now, the ufc is privately held and is just about opening -- just started to open up on its finances. last year it had revenues of $275 million.

and erin, that's up 37% from just two years ago. so it's remarkable growth, even at a time when all these other sports are faltering because of the struggling economy. >> i'm curious to watch this piece because as you said, it used to be -- it might make you queasy watching but it has really changed in terms of the characters and -- >> the clip you saw there of like the 500-pound guy against like the 150-pound guy, those are the bad old days of the ufc. it's back in a big way. >> inside the growing fight league tonight, "ultimate fighting: fistful of dollars." 10:00 and 1:00 a.m. eastern. and we will all be looking forward to seeing that, scott. in the meantime, everybody, thanks so much for watching our show. we've got just a couple seconds left until the final and most important hour of trading. that's "the closing bell." stay with melissa francis. >> announcer: this is cnbc.com "news now." a weak five-year note auction weighing on the stock market, which is taking its biggest tumble in three weeks. the so-called blue dog democrats have struck a deal with colleagues that cut the costs of health care reform and puts it on track for a vote in the fall. and bernie madoff's wife, ruth, has been sued for nearly

45 million bucks by the trustee in the case as she seeks to recover more money for the victims. that's cnbc.com "news now." first in business worldwide. i'm mike huckman. a tug of war on wall street. with stocks posting modest losses in the home stretch. decliners outpacing the advancers as we entered the final and most important hour of the trading day right now. welcome to "the closing bell," everybody. i'm bob pisani down on the floor of the new york stock exchange. melissa, is it raining out there? because it is pouring down here. the sky is black. >> yeah, we lost power a little while ago. we're going to get washed away. i'm melissa francis in for maria bartiromo. no matter what happens with the rain here at cnbc global headquarters, in the market right now a choppy session on wall street. we've seen stocks trading in a relatively tight range for much of the day. however, we are seeing weakness falling. the fed's latest beige book report and the $39 billion auction of five-year notes drew

higher yields than expected. as for the major indices, right now take a look at where the dow is trading. it is up -- sorry. pardon me, down 74 points on the session. .8%. the nasdaq right now is trading to the down side as well. down by about 16 points. .8%. almost a full percentage point there. and the s&p 500 is trading to the down side as well by about ten points. bob, what's on your radar down there? >> well, here's a big test for resiliency. i keep using that word. traders getting excited. remember, stocks have been down in the middle of the day for four or five days in a row, but they always keep coming back. we'll see if that happens today because this is going to be a big test. here's what's going on right now. the important thing is that five-year auction that melissa talked about earlier, that was a real disappointment. the yield's back up. we were at 2.70, a little higher than expected. as a result we are seeing interest rates move up across the middle and higher end of the yield curve here, and interest rate-sensitive stocks have been under some pressure today, although not dramatically. so home builders, autos, real estate investment trusts, or reits, as they're called.

take a look at the five-year yield because here's the key thing here. boom, there you goep and you can see it's been coming down a little bit here. that was quite a shock to the market. if you look at some stocks here, home builders, which have had a fabulous run in the last few weeks like d.r. horton reacted pretty quickly to that to the down side here, but only about 3%. still pretty good, given the potential impact. i say potential down the road. real estate investment trusts, things that are sensitive to interest rates, things that need to raise money out there. they're the kinds of stocks that would be under pressure today. so you look at an s.l. green, for example, which is one of the big office real estate investment trusts that are out there, they too -- more thunder, folks. they too to the down side here today. and if that's not enough, we have a big dollar rally the last couple days here. that's put pressure on commodity stocks. there's the dollar index intraday here, and that's of course hurting some other things. we have finally some comments from the big steel companies. mittal steel, arcelor mittal, u.s. steel, and nippon over in

japan all had very cautious comments. arcelor said it's doubtful we'll see a notable recovery back to normal rates in the steel market until 2011. those stocks have been under pressure in addition to the dollar issue. finally, let me just put up that dow real quickly again, that melissa just showed you. folks, if we can get anywhere near the flat line here today, this would be a real victory because this is a day when the markets should be under some kind of pressure with higher interest rates and a higher dollar. flat line, there's a victory for the bulls. it's going to be a very interesting last hour. let's go talk to all my friends standing around in all the different markets. first, rebecca jarvis is over at the nasdaq. >> thank you, bob. it's the place where yahoo shares have been under pressure. 11.8% to the down side. you know the drill here, folks, microsoft and yahoo are going to get into a revenue-sharing deal on search. essentially, yahoo will be providing the sales force and microsoft will be providing a lot of the technology. bing, that search engine, will be part of it. but the way that the analysts are coming out on it, at least as of now-s is that it's more positive for microsoft. their shares are to the up side about .8% right now.

meantime, google basically in the background saying they're going it take a look at the deal and obviously regulators are going to be taking a look at that deal too to see if it's a monopoly type of situation. google shares, meantime, 1.2% to the down side. obviously a lot of pressure coming out of china into today's session. it has continued here. a lot of adrs trade here. they're chinese-related companies baidu among them. the chinese version of google. interesting to note that baidu is one of the top performers year to date at the nasdaq. up more than 160% on the year. that's a huge move in that name. also huge moves in this one, human genome. it's not a big move as far as things stand right now today, .3% to the up side. they did make a new 52-week high earlier in the session, and they also upped their share offering, 22.3 million shares is what they're offering to market at 14 bucks. that's they say because there was a lot of appetite, a lot of demand for that company.

not so much demand at least for today's terms in the oil pits, and that's where we find sharon epperson as far as oil goes. >> rebecca, not much demand at all, and that is why we're seeing oil extending its losses, even extending the losses from the close. we're down about 50 cents from the close. still declining in electronic trading. we did get that report today from the energy department that shows that we had a massive build in crude supplies, up 5 million barrels, and continued declines in gasoline and distillate demand. this has weighed on the market. add to that we're looking at prices that can continue to fall to the $58 mark. that was the low we saw earlier this month and that may be where we're headed. that's the next key technical support level. the dismal demand picture, though, is another factor to consider. we're looking at crude supplies that are up about 18% from where we were a year ago. gasoline demand is down meanwhile nearly 2% to the four-week average compared to a year ago. and distillate demand is down nearly 20%. that's why you'll notice heating oil was down very hasharply tod

as well. the dollar index, bob mentioned the bounce in the dollar across the board in the commodity complex, and it had an effect across the board, in the metals arena as well with a lot of loans liquidating their positions in the gold market in particular. natural gas, another interesting story there, we're going to have that storage report on natural gas supplies tomorrow, but we just got word that the u.s. natural gas fund, the natural gas etf is now reducing its natural gas positions on ice, on the intercontinental exchange. so as those hearings continue in washington with the cftc on position limits, we're hearing right now that the ung, natural gas etf is going to reduce its positions in natural gas futures on ice. back to you. >> sharon epperson, thanks so much. taking a look at today's business headlines, the latest federal reserve beige book report shows signs of stabilization in some regions of the country. four areas, new york, cleveland, kansas city, and san francisco are seeing some stability, while chicago and st. louis are reporting the economic pace of

contraction is moderating. still the central bank says economic activity remains weak and the labor markets are still very soft across the country. the commerce department reports durable goods orders dropped by a much larger than expected 2 1/2% in june. it's also the largest decline in five months because of falling demand for automobiles and commercial planes. and the mortgage bankers association reports mortgage applications fell 6.3% last week. it's the first time in the last four weeks applications have declined. that's because rising rates for 30-year home loans inched up, resulting in an 11% drop in refinancing. bob? >> thanks very much. let's talk about what's going on in the stock market right now. we have a very interesting last hour for you planned here. let's talk to two people who have been around here for a long time. we have mark freeman here on my right, harry raidee also here. raidee asset management. mark is with whd fund. so look, this is a day when the stock market should be under some kind of pressure.

11% move in the s&p in the last 11, 12 trading sessions. we've got higher interest rates. the specter of higher interest rates. higher dollar, two-day rally in the dollar. negative comments here from some of the steelmakers. china down 5% today. and yet the dow is down 70 points here and even looks like it wants to move up a little. what does this tell you? does the market have real resiliency here? >> i think in the short term you have to say yes. in terms of all the things you just mentioned none of those were sufficient enough to shake the market's confidence. and specifically, that confidence in forward earnings. so i think until you get something that calls that into question, then the markets can stay at these levels and it probably will take something more significant than what we saw today. >> but wait a minute, higher interest rates-f that doesn't scare the daylights out of people here, good heavens. >> let's qualify this. i mean, today we had the five-year auction. didn't go great, but i don't know how upset i would get over a 2.7% yielding five-year. is it higher than where it was? so be it.

but it's still relatively lower. >> pooh-pooh it. we'll speep i'll bring you back tomorrow on the seven-year. harry, you're a contrarian here. everyone's going long. the cyclical names. everyone's going long consumer discretionary. you're going short those names. why? >> we go when they're coming and come when they're going. we're true contrarians. we're short the sexy technology stocks, if you will. and we're long drug and biotech. some of these stocks are trading at single-digit multiples-v no debt on their balance sheets, strong product portfolios, a great pipeline, and we just see extraordinary opportunity. in addition we think m&a's going to pick up in that space. and we're very bullish. >> i've noinsed that btk, the biotech index, has had some nice -- but this is product announcement as well, it's not just m&a possibility. can you tell me why you think other than the contrarian play,

do you think this whole idea of a global recovery is nonsense and that's why you're not interested in playing the more cyclical side of this? >> in short, yes. i think that this is a bear market rally. and we want to own very defensive names. and the baby boomers are going to continue to get old. people are going to continue to take their medications irrespective of what happens in the economy. and they're cheap. so we want to be long very defensive names. but stocks with up side also. >> well, i'm going to keep taking my medication, i know, because this market, you really need it. mark, where are you investing now, and where are you going to put your -- where are you advising your clients to put -- >> i think it would be great if you could pick out one particular sector and say this is a sector that's going to do well. i don't think that's the type of market going forward. i think ultimately you're going to have to look at individual sectors and fix those companies that are doing well on an operational basis because that's ultimately what it comes down to. at the end of the day it's earnings that's going to take this market higher but those earnings have to come through. >> but look what happened today, and i keep beating on the steel

stocks today. but we had nippon, u.s. steel, and arcelor mittal all basically saying that the recovery here in the second half of the year in terms of steel volume it's pretty darn modest. and i'm trying to be diplomatic about it. it's pretty fitful out there if you're buying on the cyclical side. >> absolutely. and i wouldn't disagree with that. i think to a certain degree there is an area of disconnect in terms of the expectations for earnings versus the actual economic environment that we're in now. look, the balance of risk has shifted dramatically from where we were march 9th to where we are today. you have to acknowledge that, but at the end of the day as least as far as today goes there wasn't enough to shakt mark confidence. >> is there anything that would change your mind to get long yes on the cyclical side? if you saw clearly within the next month better commentary. i know we're in the middle of earnings season here so, maybe there isn't anything. but what would make you change your mind? >> if i saw the government backstop a 4% mortgage program. this started with housing, and it's going to end with housing. there's a year's worth of inventory in most markets.

but another year of phantom inventory on the banks' balance sheet. so net net we've got two years of inventory. and for a housing market to function normally there should be three to four months. so i think the governmentds to get behind the housing market, backstop it for everybody, not just the select few. >> we've got ten seconds. the s&p going to be higher or lower on december 31st than it is today? >> it's impossible for me to predict the future, but i've got my funds positioned for significantly lower. i am very, very bearish. >> so the answer is lower? >> lower. >> you. >> modestly higher if the seven-year auction goes okay tomorrow. >> so we have agreement on that. mark freeman, harry rady, thanks very much. 40 minutes to go before the closing bell. dow jones industrial average was down much as 80, now down 60. modest comeback here, but still got a long ways to go. >> up next the kotick tick by tick. european markets have been soaring over the past two weeks. we'll tell what you that moans for the outlook for stocks in the u.s. in just a moment.

plus, democrats in the house of representatives coming together to reach a deal on health care reform. but coming up, former council of economic advisers chairman martin feldstein tells us why he thinks the plan will hurt 85% of americans who already have health insurance. and then coming up after the bell, the ceo of aetna and the cfo of wellpoint explain how that proposed health care reform legislation could impact their bottom line. that's today at 4:00 p.m. eastern. >> but first the most active stocks at the new york stock exchange, led by, duh, it's a -- citigroup, bank of america.

imagine... one scooter or power chair that could improve your mobility and your life. one medicare benefit that, with private insurance, may entitle you to pay little to nothing to own it. one company that can make it all happen... your power chair will be paid in full. the scooter store. hi i'm dan weston. we're experts at getting you the scooter or power chair you need. in fact, if we pre-qualify you for medicare reimbursement and medicare denies your claim, we'll give you your new power chair or scooter free.

i didn't pay a penny out of pocket for my power chair. with help from the scooter store, medicare and my insurance covered it all. call the scooter store for free information today. call the number on your screen for free information. welcome back. good to see you. let's take a look at some of today's research calls. here's the latest upgrades and downgrades. goldman sachs upgrading fifth third bancorp to its conviction buy list and raising its price target to $11 from $8.50 to reflect better preprovision earnings and greater capital certainty. citigroup is downgrading aflac to hold from buy because of valuation. weaker sales. and rising investment losses. the supplemental irngs provid a provider's stock had hit citi's $36 price target before the

downgrade. and bank of america merrill lynch cutting its rating on casino operator mgm mirage to neutral from buy because pricing in the already struggling gaming industry will continue to be challenging through the rest of the year. melissa? >> time to look at the market technicals in this week's "tick by tick." my next guest says the summer squeeze is over for stocks markets are ready to move higher. jordan kotick global head of strategy at barclays capital. thanks for joining us. you called a bottom to the stock market in the first quarter and you called a top to the summer correction. you have a good record so far. you think now it's going to break out and go higher. why? >> we're not looking for a -- we're looking for a side move to start to regain some traction in the month of august. and what we're going it look at is starting out in europe to give us signs about what we're seeing in the u.s. starting off the laggards in this move had been the european stock markets. if they start to play catch-up that's a good sign for equities in general. we see the ftse and cac and they've had very aggressive declines to the down side but

you can see since then the markets have tried to base out, the ftse here, the dax here. both of these markets are trying to break out to the top side, on the verge of doing so. it's not surprising the market shave bit of a correction here but if these markets ultimately start to turn higher which we think they will and break out european markets going higher that's lagging, that will be a good side for the u.s. as well. >> ten-year spread versus the dax or versus your next dhart, versus german currency? >> ten-year yields between germany and the u.s. interest rates never lie. we always respect the message of the market. now, clearly the ten-year spread to us is signaling very strongly here that european fixed income is going to outperform u.s. fixed income. if european fixed income is going to outperform u.s. fixed income it probably means the u.s. equity market will outperform the european equity market. so if european equities go haier it means u.s. equities will ultimately go even higher. that seems to be the message we're getting on bonds. aside from being an outright relative value trade. >> how would you invest based on that? >> if you're a fixed income investor it means heavily weighing in the european fixed

income market over the u.s. fixed income market. on the flip side it means higher u.s. equities or u.s. equities outperforming european equities. >> home builders are are telling you something now as well. >> certainly one of the sectors that's been trouble has been home builders and home building in general. but stocks are on the verge of a breakout there as well. what we're starting to see is the hom home builders number one right here trying to break out after a massive bottom, what was a very aggressive decline to the down side and more importantly the market is now outperforming once again. this is the home building stocks. that's a good sign. they're a leading indicator for what we expect to see. we would suggest this is a market that perhaps is one of the most important markets out there right now. >> why do you think after it bumped along flat there that this is going to finally be the time? >> great question. you tend to go from bear markets to bases to bull markets. you rarely go from bear to bull. you go bear, base, and then bull. and that seems to be exactly what we're starting to see with all these rounding bottoms on all these various sectors. >> but what makes you think that that up move is right now? is it that s&p chart or is it just the data that you're getting or --

>> number one, it's outperforming the broad market which is the change in behavior very crucial. number two, when you stop making lower lows and you start to turn to the top side all you have to do is squeeze all the short positions which have been accumulating and all the people who are off side on this position are starting to carry and move their trade to the top side. we think that's what's about to happen on the next leg higher. >> and you see something in option volatility as well. >> generally speaking it's counterintuitive to bull markets. you want the ball to drop and everybody talks about the vix. winds that. but we think foreign exchange volatility is another way to take a look at it. three-month volatility and options is heading to the down side. it does look like it might struggle a bit here but ultimately we think vol goes lower and if foreign exchange vol goes lower remember the dollar and yen they've just been a proxy for risk so if we see volatility falling off think of it like volatility in the vix market, a good sign for the stocks as well. >> tell me what you think for august. august is the time of year when generally we see a lot of people go away on vacation. there's not a lot of volume on the exchanges. but if we know that and it happens every year there's got to be a way to make money on

that. what are your charts telling you about the next month? >> right off the bat remember september is the worst month of the year for the stock markets. september, october is a touchy time. but we think august -- look for a lot of whipsaw, a lot of false breaks. in that environment we expect stocks to go higher. we think selling volatility in foreign exchange and a lot of relative value trades in fix the income just to get to the heart of the matter which is october. >> this year has been so different from other years. why do you think septembering going to be the way it's always been? >> we don't think it's going to be as aggressive -- remember after labor day last year that's when things fell apart. there's a woind of opportunity where people who are looking to sell will start to build their shorts pornlly in the september period. it may not turn the market to the down side but it's likely to cap the up side but that's still five weeks away we've got some room to run first. >> jordan, always an education. thank you so much for joining us. bob. >> about 40 minutes to go before the closing bell. higher treasury yield, stronger dollar weighing on the markets. the dow is off its lows for the

day, maybe 20 points off the lows. nasdaq same situation. >> up next we're digging deeper into today's pullback. does it signal for weakness ahead or are we poised for more up side down the road? first take a look at bond prices today. we're going to show those to you in a second. we'll be right back after this break.

welcome back. good to see you again. the five-year auction was a disappointment. now, here to discuss the implications of higher interest rates, charles campbell, senior sales trader at miller tabak, an old friend of cnbc's. charles, i dutifully reported interest rate sensitive stocks got under pressure here, your reits, your housing stocks. but does this automatically mean that interest rates are really going to go up here? >> bob, it doesn't necessarily mean that. here's the problem that we're confronted with. the u.s. government we know has to issue about 3 trillion gross of instruments for the fiscal year ending september 30th. a little over 2 trillion net after the maturities that come due. the only question is what's the economic environment in which those issuances will take place and how large are the coupons that are going to have to be had in order to sell those instruments? so what we're seeing is an interesting situation now. with the prospect of this enormous pipeline of supply coming to market, yields on the two-year fannie mae are actually

below where the two-year treasury is. and bond investors normally play historical yield relationships to one another. and i would suspect what we're seeing now is bond investors are saying, you know, we're seeing all this treasury come -- supply that's coming to market, the auctions are not that great, we saw that today. yesterday's wasn't terribly good, but today's is worse. seven-year tomorrow. they're thinking to themselves the treasure ry curve could mouch let's rotate, make a defensive move, protect our defensive value and move into agencies which have a lot less supply. >> i think you're making an important point about fannie mae. for the viewers who don't know, millimeter fannie mae of course are mortgages and normally mortgage yields on fannie mae yields are higher than comparable treasuries because there is more risk associated. now, charles, you're saying that fannie maes are yielding less than comparable treasuries. why on earth is that happening? >> well, it's happening because

of the supply of treasuries that's expected to come to market. investors are getting skittish about it. fannie mae and freddie mac will also be issuing paper but to a much smaller absolute and relative degree. so investors are kind of, if you will, reappraising this and gravitating toward a new, less risky trade. >> normally, mortgage rates trade off of a rough relationship with ten-year treasuries. maybe 150, 160 basis points. so if it's 3.7% yield on the ten-year, typically 30-year mortgage might be 5.3%. is what you're saying about the fannie mae imply that maybe mortgage rates won't go up even if treasury yields go up a little bit? >> it's possible. it's not just the spread relationship between the two instruments but where the absolute levels of rates on the two instruments and particularly the agencies are. every thursday freddie mac puts out a summary. every thursday morning just before 10:00 eastern time on where over 120 banks are pricing 30-year fixed freddie mac paper

with 20% down. and you know, that's a little over 5%, around 5.20. you need rates to remain low as a necessary but not sufficient condition for the housing market to continue to recover. >> i've got ten seconds. 15 seconds here. you're senior trader over at miller tabak. what are you telling all of your clients about where the stock market is going to be in the end of the third and fourth quarter? are we going to be lower than where we are right now or higher? >> we're really at a bifurcation, bob. we're not in a vicious cycle downward as we'd seen much of last year and first quarter this year. nor is economic date o. or corporate earnings, particularly top line, strong enough to say that a virtuous cycle to the up side has taken place. so that's why we're in this bit of a trading range here. >> charles campbell at miller that barks always a pleasure to see you. thanks very much. >> pleasure. >> dow jones industrial average off the lows. we were down 80 points. now down maybe 50 points in the major index. and the nasdaq also coming off

of its lows. melissa? >> will president obama's health care reform proposal actually cost more than expected and deliver fewer benefits than promised in that's what former council of economic advisers chairman martin feldstein says. heheheplaiy when we come back. back. this is "the closing bell." people try to get rid of algae, and we're trying to grow it. 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.

welcome back. 30 minutes to go until the closing bell. here's mow the markets have been shaping up moving sideways the last half hour just off the lows but this is pretty good here, stronger dollar, higher yields on treasuries all putting pressure on the markets but holding up comparatively well. the nasdaq also down a bit here. but again moving sideways. melissa? >> thanks. president obama's pushing his health care agenda on the road today, holding town hall meetings in north carolina even as congress struggles to make progress on the plan. in a "washington post" op-ed marty feldstein, former chairman of the council of economic advisers under president reagan and my harvard harvard professor says the obama plan isn't the answer and he joins me now. thank you so much for joining us. professor feldstein, want to get right to it. in your opening line you say for

the 85% of americans who already have health insurance the obama health plan is bad news. why is that? >> well, what does it do? it raises the taxes on everybody going forward. it -- if you read what the administration is talking about doing, it means cutbacks in health care, substantial cutbacks in the volume of health services, and it doesn't do anything for those who have insurance today but who worry that if they get laid off they're going to lose that insurance or if they choose to retire before they're medicare eligible. they again will not have the kind of insurance they have today. seems to me that's a group that ought to be helped and that will be easy to help. >> why wouldn't they just migrate to the public plan? >> well, they may not be eligible for the subsidies in the public plan. those subsidies are aimed at low-income individuals.

so somebody who is a middle-class person who loses a job and loses health insurance in the process is going to be out there on their own. we have a program called cobra in which individuals are allowed to continue to buy into their previous employer's plan, assuming the employer hasn't gone bankrupt. but they have to pay the full cost. so somebody who's been getting a substantial subsidy from their employer may be paying a couple of thousand dollars a year for insurance might face a price tag of $12,000 for the same policy at a time when they no longer have that income. so that's a big problem for a vulnerable group that is not the low-income means-tested group eligible for subsidies. >> i just want to drill down on the idea of 85% uninsured and none of them being better off. what about the group at the bottom that a lot of them think would migrate to the public plan

because it would be cheaper plan? obviously since it's a public plan versus what they're doing right now. if they're migrating, it must be better. >> yes. i take that point. they would migrate. and it doesn't have to be a public plan. it could be that they'll get a subsidy. so in that sense their health care won't be any better. and i don't know how much they will end up paying in additional taxes. but yeah, some people whose income is low enough will be able to get a subsidy by going out of their current plan and into another plan. good point. >> so who do you think would be better off under this plan? is it just the 15% who are uninsured and the little group that we just identified? >> i think that's the group that the president is aiming to help. and the other point i made in that article in the "washington post" is that a major focus of the administration's plan is to slow the growth of health services 15% over the next

decade, 30% over the next two decades. real reductions in services. not reductions in the prices paid, not reductions in spending so much as reductions in the actual volume of services because they believe and want to find ways of making those reductions happen. they believe it's possible to reduce health care spending by an enormous amount, by nearly a third over the next 20 years relative to what it would otherwise be without hurting people's real health care and without hurting their health outcomes. i just don't buy that. >> in some ways it's a sound economic argument if i understand you because they're talking about maybe at the end of your life it doesn't make sense to have hip replacement, to have various things done if you're already in your 90s, but this isn't something that necessarily everyone would want to face in their own life.

isn't that part of the argument, that we consume a lot at the end of our lives when maybe it doesn't make a lot of economic sense although you may want to make it emotional sense? >> but it's not just at the end of life. these are proposed reductions all throughout individuals' lives. ways in which presumably technical decisions would be made about what's really worth the money and isn't worth the money. and at the end of life it's not just about hip replacements for 90-year-olds. they say, i guess correctly, that a very large fraction of our health care spending goes for people in the last year of life, people who are critically ill and doctors are currently giving them expensive medical care. but the question then is do the doctors know how to say, well, mr. jones, well, even if we give them the expensive care that's just not going to do any good for him while mr. smith is going to benefit. i don't think they know that

because if they did i don't think they would be giving that very expensive care to the first person. >> one flash point has been that the president keeps saying if you like the plan you have you can keep it. and there are those who vehemently say that that is not the case. what do you think? >> well, i think over time if his plan passes, especially if they have a public option, we will see the government undercutting the existing plans so that individuals are all migrating to a single public plan. i think it's hard to imagine why the administration is pushing for a public plan when we have a lot of private plans where we can have even more competition if we remove the barriers to interstate trading, interstate selling health insurance. so to me the goal of many people is to move toward a single plan. >> why do you think it's going to cost a lot more than a trillion dollars? >> well, it's been the history

of all of these kinds of programs. medicare and medicaid, when they were first -- when they first introduced, there were estimates of how much it would cost, and it ended up costing very much more than that. but you know, a trillion dollars is a lot of money to start with. adding a trillion dollars over the next ten years to our national debt would be increasing the debt that we have today by about 15%. so a very substantial increase and one that we really shouldn't be doing at a time when we're facing very large fiscal increases, debt increases for other reasons. >> all right, professor feldstein, always a pleasure. thanks so much for joining us today. appreciate it. >> good being with you. >> and speaking of health care, the "wall street journal" reports government officials hope to have 120 million doses of the h1n1 swine flu vaccine by october. more than 20 million of the 195 million doses already procured are currently ready for mass vaccination campaigns. bob? >> and here we go.

we were down 70 points ten minutes ago. now we're down 30. so we're getting a little bit of a rally here late in the day. dow jones industrial average well off its lows. same situation with the nasdaq, melissa. >> up next, the "fast money" final call. yahoo investors not liking the company's search engine deal with microsoft. but is the sell-off a good opportunity to buy into this stock? we have some answers in a moment. >> and after the bell an exclusive interview with the ceo of texas instruments. find out if he's seeing increasing demand for his chips and why the company is shifting focus toyotas analog chip unit. welcome to the now network. population: 49 million.

right now 1.2 million people are on sprint mobile broadband. 31 are streaming a sales conference from the road. eight are wearing bathrobes. two... less. - 154 people are tracking shipments on a train. - ( train whistles ) 33 are im'ing on a ferry. and 1300 are secretly checking email... - on a vacation. - hmm? ( groans ) that's happening now. america's most dependable 3g network. bringing you the first and only wireless 4g network. sprint. the now network. deaf, hard of hearing and people with speech disabilities access www.sprintrelay.com. with annuities from fidelity. turn your savings into income -- guaranteed, and get a retirement "paycheck" for life -- guaranteed. call... to get started, and learn how to secure retirement income that won't go down -- guaranteed. call fidelity at... for details about guaranteed income for life, and change the way you think about your retirement savings.

taking a look at some of today's under the radar stocks. commercial and government vehicle fleet payment processor wright express reported a better-than-expected second quarter profit of $93 million. and that's prompting the company to raise its full-year guidance. hotel operator wyndham worldwide reporting a 28% drop in its second quarter profit to $71 million. but excluding charges wyndham's bottom line beat wall street's

estimates because its nearly 14% drop in revenue per available room was much better than what the rest of the industry was experiencing. that stock up about 3%. and tracks, which makes decking and fengs products, reporting a better-than-expected 14% rise in second quarter earnings to $7 million. the company is warning third quarter sales will come in below analysts' expectations because of the tough economy and that stock is suffering as a result. bob. >> the deal between microsoft and yahoo changing the face of the internet search engine business. but what does it mean for the two tech giants and their rival google? here to break it all down and tell what you naenz for the stock and options markets, scott nations. explain something to me here. there's a lot of ifs. traders understand this very simply. do they think the bing platform for microsoft is going to be a real deal changer for yahoo, and do they think that that's going to be enough to bring back all the customers that yahoo has slowly lost over the last few

years? >> if you look at the deal on the face of it for yahoo it seems like a good deal. they get great revenue, a much better split than is normal in this space. something in the 60s is normal, and they're getting nearly 90. and they have shifted a bunch of the expenses to microsoft. so for yahoo you would think that they would do really well. but boy, if you're an investor you are just getting crushed today and that is because there's no up front payment and there was quite a bit of speculation that this might lead to some sort of hybrid deal where there would be a revenue split, a big up-front payment, maybe even again talk of microsoft buying a stake, all of -- i can hear there's more thunder. >> yep, it's certainly thundering here. >> but that microsoft might end up taking a stake in yahoo. and they are completely disappointed in that, and they are just crushing the stock. >> well, i don't know if it's the up-front fees that are the big disappointment. the only thing up-front fees will give you is a little bit of a pop in your income statement for one quarter. i don't know if that matters so

much. the question is i'm not sure traders are committed to this being a big deal changer for yahoo. how many august 16 calls? the stock was $17 yesterday. there must have been a lot of people in the august 17 calls that just puked them right out. the stock's trading at $15. >> yeah, you are absolutely right. there was a lot of speculation, a lot of speculative longs in the august 16th calls. international securities exchange is the exchange where most yahoo options trade. the average daily volume in yahoo options for all options is about 85,000 so far this month, and they're going to be nearly 100,000 of the august 16th calls that trade today. obviously, speculative longs in the stock and in those calls are puking. they're just going to get out of the way because what they thought might happen is not going to play out. we're not going to have a pop because there's going to be good news. this is like taking your -- this is like eating your spinach. it's good for you in the long run, but it's probably not going to be a lot of fun for yahoo over the next quarter. >> the bottom line, it was a

necessary deal for yahoo to do. it was their natural partner. never mind they were offered $33 last year and the stock's at 15 today. it was a necessary thing to do. how about from microsoft's point of view? remember, microsoft was -- i don't know, what was it, $15 a few months ago? and now it's 26 or $24, i'm sorry. it's $24 right now. so microsoft's had a great little run here in the last few months. >> that's right. and microsoft paid up in a lot of ways to get this deal done with yahoo. obviously, they are willing to pay yahoo plenty as far as a revenue split in order to be a real player in search. and they see this as a great way to generate essentially free traffic for microsoft's new bing site. obviously, given the tepid response as far as microsoft is concerned, i don't think this is considered a big market mover for microsoft. but they have bought a lot of traffic right out of the box. >> but when was the last time, scott, you saw microsoft sort of outperform the overall market? the overall tech market. it's been a long time. but since the march bottom

microsoft has generally been an outperformer here. and i haven't seen that in a long, long time. you've got to give them credit for something here. >> well, obviously the initial reaction to bing is great, but let's face, it microsoft's had a pretty tough time getting out of their way. nobody that i know is proud of owning microsoft or using a microsoft product. those kinds of people are paying attention to apple and they own macs and they own ipods and iphones. so you know, using microsoft products or being long microsoft is a little bit like, you know, using energy or, you know, having -- being a customer of consolidated edison. it's tough to get excited about it. but for a lot of people you just have to do. >> scott nations, thanks so much. always good to see you. coming up on "fast money," stocks continuing to slide from their eight-month highs. how can you make sure you protect and profit in this volatile tape? plus a face-to-face street fight between the economists and the trader. two of my best friends. steve liesman and rick santelli are going to square off on what

the fed's exit strategy are going to be p. rick santelli hosts tonight's "fast money" live at 5:00 p.m. eastern time. what a rock staer was yesterday on that show. melissa. >> yeah we've got about 11 minutes here to go before the close. and right now markets are coming back. still in negative territory but making it back to the flat line. the dow right now is down only .2%. the s&p right now is down about .3%. bob. >> if we end flat you will hear some cheering and not just because there's thunder down here. one of the key men that brout the subprime mess is now hoping to cash in on the mortgage meltdown. details when we come back. you have questions. who can give you the financial advice you need? where will you find the stability and resources to keep you ahead of this rapidly evolving world? these are tough questions. that's why we brought together two of the most powerful names in the industry. introducing morgan stanley smith barney. here to rethink wealth management. here to answer... your questions. morgan stanley smith barney. a new wealth management firm

with over 130 years of experience. a day on the days that you have arthritis pain, you could end up taking 4 times the number... of pills compared to aleve. choose aleve and you could start taking fewer pills. just 2 aleve have the strength...

welcome back. let's take a look at the big board here. and you'll see what's going on. the dow industrials down 80 points. a little earlier in the day a little after 5:00 as those five-year auction results came out. market's been under a little pressure but once again some resiliency here we almost went even on the dow just about 10 minutes ago come back down a little bit but we've seen strength in some of the big industrial names, united technologies, for example, doing well. even some of the other names like verizon and different stations doing well. retailers were under pressure because of concerns that maybe higher interest rates would impact the consumer. that was after 1:00.

but even stocks like home depot that got hit have been coming back in the middle of the day. same situation with techs. even some techs that are green like microsoft as well as hewlett-packard. melissa? >> one of the architects of the subprime mortgage boom is hoping to make a big profit by cleaning up the mess left by its disgrace. like countrywide his former employer. cnbc's jane wells is in los angeles. >> posted to go public tomorrow. it's going to continue to use that ipo money to buy bad mortgages at steep discounts from institutions like the fdic dealing with bad banks. those discounts let them modify mortgages that let people keep their homes while environmentalists make a profit. what kind of discounts are we talking about? executives are not talking during this quiet period but here's ceo sanford kerlin in january about one deal he just got into worth $500 million in loans.

all right. well, at that time he was getting that deal a discount of 30 to 50 cents on the dollar for that particular case. he used to be angelo mozilo's number two at countrywide. he left in 2006. and as for criticisms that penny mac is profiting from a mess countrywide helped create, kurland says he left the mortgage giant before the most serious problems arose. pennymac plans to issue 20 million shares at about 20 bucks apiece to raise 400 million. it could issue more if there's enough interest. 5% of the shares will go to executives, and original investors blackrock and high fields capital. and the company's getting licensed in all 50 states to eventually originate mortgages after they're done working through all the troubled loans. kurland gave this outlook for housing in january. >> by the time we get to the end of this year i think we will have most likely seen the bottom of home prices. >> melissa and bob, we've got a

whole lot more from him including large chunks of that january interview on the website, cnbc.com. again, it's supposed to price today and start trading storm under the ticker pmc. >> i'm going right to the website. thanks so much. up next we're coming back with the closing countdown. >> and after the bell a breakthrough on health care reform as democrats reach a deal in the house. but how will it impact health insurance? ceo of aetna and cfo of wellpoint give us their take. that's minutes away at 4:00 p.m. eastern time.

bull market or bear, traders are always hungry for ideas.

they find them at td ameritrade. trading's all about strategy. and strategy's... all about information. so: i start my trading day... with td ameritrade's morning perspective. that's interesting... or, look at this... i can mine their weekly webcast for ideas. this is what i need. of course, ideas are just the start. so now i can drill down. heat mapping... heat mapping shows me where the money's moving. 2,500 stocks... one quick glance. cold... cold. hot! right there. look at this: pattern matcher... pattern matcher spots technical patterns, automatically. wow, look at that. look at that head and shoulders right there. it's like pattern radar. pattern x-ray vision. plus: this amazing gadget... called the telephone. i can call td ameritrade anytime and talk trades, strategies. anything. that's where the action is. td ameritrade. built by traders for traders. announcer: trade commission free for 30 days plus get $100 cash, when you open an account.