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and the thing is, the other investment firms know it. but they do it anyway. and that's just not fair or straight-forward. td ameritrade. independence is the spirit that drives america's most successful investors. and welcome back to the floor of the new york stock exchange for today's closing countdown. the summer rally continues here off the best levels, no doubt, p of the day, but nonetheless impressive. the dow is up 80 points or so. maria's going to have those disney earnings after the bell. you'll definitely want to pay attention for those numbers. there is the bell. and then maria's got you.

and it is 4:00 on wall street. do you know where your money is? hi, everybody. welcome back to "the closing bell." i'm maria bartiromo on the floor of the new york stock exchange. it's been a rock and roll day here on wall street. here's what we're following at the close tonight. the summer rally returning today. driven by better than expected earnings, a strong treasury auction, and a decline in the number of people continuing to collect unemployment benefits. the markets now at the high for the year. and get this, the dow industrials on track for the best july since 1939. yes, we're tracking it all. the rally sending oil prices higher as well. crude tonight up nearly 6 persian, closing at 66.92 a barrel, gaining back nearly all of the losses from wednesday. walt disney ready to report the third quarter today. we will break down the numbers

the moment the numbers are released. the estimate calls for a profit of 50 cents a share on revenue of $8.83 billion. we're on it when the numbers come out. we'll show you how the stock trades in the extended hours. here's what we're looking at at the close and where the markets settled out. the dow jones industrial average up, yes, but way off the highs of the afternoon. up 81 points. 9152. but look at the sell-off right at the close, actually, despite these strong numbers. nasdaq composite also closing off the best levels of the afternoon-w a gain on the session of 16 1/2. nearly 1% at 1984. and the s&p 500 driven by higher oil stocks up 11 1/2 at 986 despite weakness in exxonmobil. we get all the action from bob pisani, our eye on the floor of the nyse. >> watching to see foote s&p 500 could break into the 1,000. it would be the first time since november of last year it happened. it didn't quite happen but this was st. louis a powerful rally and still a great day. >> but what happened at the close? >> we came off of the highs. i wouldn't worry about that that much. look, given what we've done here and what's been going on and the second quarter gdp tomorrow, a

little bit of an event risk, it's not surprising. don't be worried about that, folks. this was still a powerful move up because -- >> how are you? >> working against the market moving higher here. let's recap what happened today. yes, we had a little bit of a midday sell-off but we didn't end on the highs for the day. i don't think that's any raefea for people to be too concerned. we moved up despite factors working against the market. number one-v you noticed how oversold the market is? stock traders have been trying to short the market for the last five or six days on that reasonable assumption. but guess what, the stock market doesn't go down. it is not cooperating with the shorts. another factor working against the markets is the fact there hasn't been particularly bullish commentary from energy companies or some of the big industrial companies concerning second half of the year activity. again, stock market doesn't really go down. so what's helped today? we had a china rally. we had a weaker dollar. we had a commodity rally. we had jobless claims in line with expectations. all of that helped. then in the middle of the day we this that seven-year auction a little better than anticipated. that created a very powerful stu

that kept stocks going throughout the day. a little bit of weakness at the end. let me show you an exchange traded fund. you want to see what the pros are doing these days? wafrn this one. this is the sso. so it's twice the s&p. so if the s&p goes up 2.3%, and it did today-f you owned thank you made 4.7%, you made twice as much. this is how the pros play the game. these are called leveraged etfs. you notice how it dropped a little there late in the day? you can't see the volume chart on the bottom, but the volume was huge. so what happened was a lot of people had booked a lot of money late in the day and just decided to take some profits and not press their luck too hard. this is what kind of pushes the market around these days. let's take a look asome of the markets here. again, you'll look at the big commodity names under pressure the last several days as the dollar was stronger. dow chemical good example for the bears. did not have particularly great things to say. made money. but they cut their expenses rather dramatically. didn't have great things to say about the rest of the year. stock still goes to the up side. same situation with the big

energy names. they all said the same thing. exxon, british petroleum, royal dutch shell all said things were very, very tough here. and despite that most of them moved to the up side. >> all right, bob, thanks sop. as you were talking, actually, bob, we had the breaking news on disney. 52 cents a share from disney. that compares to an estimate of 50 cents a share. looks like the etfs better than expected but the revenue could be an issue here. 8.6 billion in revenue for the quarter versus an estimate of $8.83 billion. we'll show you the stock in a moment, see what's happening in the extended hours on this third quarter report. again, earnings, 52 cents a share versus an estimate of 50 cents a share, better than expected on the bottom line. but the top line looking a little light. 8.6 billion versus an estimate of 8.83 billion. as you can see, right out of the gate on these numbers the stock is under some selling pressure. we'll continue watching. it's down about 2% in the xer extended hours. let's see what else we get out of this earnings report before we talk about the disney quarter. joining me is russ costrich,

global head of equities at barclays. and daniel frishberg, chief investment strategist with laffer frishberg. gentlemen, great to have you on the program. welcome back to "the closing bell." let me get your thoughts on the disney quarter if you can or really the overall earnings picture. we're getting better than expected numbers, but once again, we're waiting for that revenue growth to really happen. it's been largely a cost-cutting situation, and yet the market's loving it. another 80-point rally today. how do you see it? >> whose turn? mine? >> go for it. >> okay. i think right now the cost cutting is what has brought about the buying so far. but we're looking out three to six months and we think that you're going to start to be reporting on cnbc real growth, real sales growth. >> rush, you agree with that? >> i think things are going to get better. unfortunately, i think a lot of that is already baked in. if i look at the back half of the year i would expect

improvement for no other reason than particularly the manufacturing sector inventories have been depleted. wholesale inventory, biggest drop in history. the problem is if you look at 2010 numbers we already expect a 35% discount in earnings. a lot of the improvement already reflected in the price. >> that's a really good point. scott, i'm coming to you next, but let's swing over to julia boorstin. she's in l.a. right now on the disney report. the numbers, we told you were 52 cents a share on revenue of 8.6 billion. julia, over to you. >> that's right. the 52 cents, that is a penny better than analysts' expectations and that is the earnings from recurring operations. if you look through these various divisions here, you have a sense of what's going on with the company. we see that they are being impacted, as expected, by the downturn in advertising. the revenues at the media networks division was down 2%. but the segment operating the media networks division down 13%, hit clearly by the downturn in advertising. we're also seeing that the parks and resorts were really affected by the pullback in consumer

spending. thanks to some very deep discounting, they did manage to keep the the attendance high. the revenues at the parks and resorts is only down 9%, but the operating income at parks and resorts down 19%. studio entertainment, the movie studios suffering a lot from the decline in dvd sales, which is an issue we're seeing across the media conglomerates. again, entertainment revenues down significantly thanks to that. also, some changes in some of the big hits they had this past quarter won't really impact their bottom line nlg the next quarter. hits like "the proposal." struggling with the economic issues, consumer spending, dvd sales, park attendance, and we are starting to see that the discounting does work, though we'll see how it holds up once they start bringing that pricing. maria, back to you. >> all right, julia, thanks very much. and once again, gentlemen, we are looking at a company that is being impacted pretty straight on from this economic landscape.

you've got the parks division showing that. you've got the advertising spending showing that. scott, when do you believe that we will start seeing a reversal of these moves and actually see some growth regardless of what company you look at, whether it's a disney or really a microsoft, you're seeing, you know, revenue under pressure because of the economic landscape? >> well, good afternoon, maria. i think if you look at it collectively we've got three big elements here that are going to drive earnings over the next several quarters. they're going to get better sequentially each quarter. the first is the large amount of stimulus and policy that's in the system, both here and abroad. second, one of your guests brought up the inventory build. i think that's going to stoke things along. and third you have a lot of skeptics. there are still skeptics on the street. and as long as there are skeptics there's going to be the ability of the market to move higher. so as long as that continues, we're going to have a recipe to test 1050, maybe 1100 as the cyclical recovery unfolds. >> so you really have two camps

here, right, scott? you've got on the one hand the story of the economic slowdown. and companies cutting costs and they're seeing better than expected earnings, not seeing any recovery yet in terms of revenue. but on the other story you've got a story of money on the sidelines, momentum in the markets, and a fear that if you're not in this market you're missing a major move. >> to your second point, i thought that that was going to occur. i thought that the portfolio managers were going to start piling into the market. they haven't quite done that yet. they may as we continue to go higher. you know, on your first point, i think companies that cut to the bone, consumers have cut to the bone. so when we start to get some of this stimulus in the pipeline and start to get traction, hopefully we'll hand the baton off to the rest of the economy, the private sector, and when we get that you're going to see these companies poised for great operating leverage and that's when you're going to see the earnings materialize. >> daniel frishberg, we've got president obama talking right now about the gdp. of course, earlier bob called it so-called an event risk, that

maybe the market sells off at the close today because of the so-called event risk of the gdp tomorrow. president obama says we are going to see contraction in the second quarter. how important is the gdp report tomorrow in terms of dictating where the market goes? >> you know, this is one of the most confusing things to people. the stock market doesn't really key off the absolute level of the economy, economic growth. it keys off the rate of economic growth. so when you go from minus 6 up to maybe minus 1 or even, which is where i think it will be, that is -- if you think of that on a picture, it's a huge move up. and then if we end up at plus 2 in three to six months, that's a very big move up, and that is not discounted in the stock market right now. >> wow. russ costrich, that's a pretty big prediction that daniel just gave us. he's talking about minus 1 in terms of -- relative to minus 6. that would be a real improvement. that would be a positive, wouldn't it? >> it would be a positive. i think, again, the improvement sequentially is looking much better. and that will probably even continue in q3, q4.

i would disagree a little about what's been discounted because if you look at earnings growth for 2010, 35% year over year, that would be highly unusual for an economy that's not likely to grow much better than 2% 2:00 1/2% the most. i think if anything investors are probably a little too optimistic about the operating leverage for 2010 and they're really baking it into the numbers right now. >> all right, gentlemen, great conversation as always. we appreciate you being here. we'll see you very soon. meanwhile, the latest foreclosure data being released today. where are we on that? some surprising cities seeing declines in foreclosures while others are continuing to experience big increases. we'll look at state by state. we'll discuss whether that could be a sign the housing market is finally recovering, or at least beginning that recovery. later, former council of economic advisers chairman glenn hubbard is with me talking about whether president obamas health care reform plan overpromises and underdelivers.ow he'll talk about all the impact the government spending will have on the economy. stay with us.

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welcome back. time to check housing once again. realty track releasing its mid-year review of home foreclosures. some of the data on the state of home foreclosuresize quite surprising. cnbc's diana ole sic in washington with the story.

diana? >> well, maria, the usual suspects still dominate the foreclosure rates. that is california and parts of the midwest. but we're actually seeing some cities there decline while some unexpected cities are bumping up. still, it is all leading to opportunities. >> the question was what's the difference between regular property and a distressed property? >> realtor bob lucido is taking his clients for a ride. in a good way. >> the bus tour enables them to hear a bunch of questions from a lot of different people, see numerous properties at one time, ask other people their opinions and their experiences. it's kind of going to a seminar on wheels. >> reporter: and tours like this are now taking place in locations you might not expect. as the foreclosure map is changing. >> a lot of work. >> a new report from realty track finds foreclosure leaders like stockton, california and fort myers, florida actually posted declines in the first half of this year, while markets you might not expect like portland, oregon, minneapolis

st. paul, and boys yeerks idaho posted big gains. why? job losses. but a loss for one is a gain for another. >> buying a foreclosed home seems like a good deal, and we don't want to pass up an opportunity for a good deal. >> that's why donna and bob larson boarded the bus. they're eager to settle into a market that for them was once financially out of reach. >> you're going to buy many times 10%, 20%, 30% below market, maybe even more. >> others are looking for an income property. >> some of them are in bad shape, but some of them are in better shape, which is what we would be looking for for an investment. >> reporter: now, banks are actually ramping up the foreclosure process as many moratoria expire. you can expect to see more properties on the market and ready for investors. go to the blog, realtycheck.cnbc.com. >> let's get more on the state of housing right now. i'm joined by rob insana cnbc contributor and portfolio manager of the street.com's market movers along with mike larson research analyst with

weiss research. gentlemen, good to have you on the program. welcome. can you assess the housing market once again? where are we right now in this down psy down sequel? mike. >> sure. i think we're at the point where we're finally seeing some stabilization. sales rates have started to pick up in some of the hardest high hit areas. int ventries are starting to come down in those same areas. i think we'll probably start to seek some weakness in pricing. but after being raging bears for years on housing we're a lot more sanguine about the state of the market today. >> ron, do you agree with that? >> yeah, i'm absolutely in the same camp. i would like foreclosure in a certain way to short covering in the stock market. the housing market has been oversold, there is some pent-up demand and housing prices have now fallen to the level that stimulates buying. it's at the level of a foreclosure purchase as opposed to people paying up for housing, but you need this kind of activity to take place, find a market-clearing price before we can put a real bottom into housing. >> but you still see house

prices coming down, and depending on where you are in the country it's a lot more sever than other places. >> sure. and they were wildly overvalued. some areas like new york lagged the rest of the country because there were bonuses being paid out on wall street longer than the employment picture was brightening in other parts of the nation. so you know, it's not going to be an even rebound. the hardest-hit places appear to be rebounding faster than those are tha are lagging behind. >> yeah, and it wasn't an even boom either. mike, would you be putting money o'work in the housing area right now in terms of investing? from an investing standpoint what do i need to know? >> from an investing standpoint i think it's important to note this is going to be a gradual recovery. i don't think we're going to get back to the booming days in housing anytime soon. but if you want to pick your spots, there are survivors out there that have made it through this down cycle and you can play it through etfs. you can play it through a few individual construction stocks. something like the etf that trades under the ticker symbol itb. it's a home construction index fund. those are things that might be

worth a look these days. >> all right, gentlemen, great conversation. thank you very much. we appreciate it, mike, ron, we'll see you soon. >> thanks. >> president obama making some comments on the economy today. find out what he's saying when we come right back. it will be about the gdp, which is out tomorrow. stay with us. undefeated professional boxer floyd "money" mayweather has the fastest hands boxing has ever seen. so i've come to this ring to see who's faster... on the internet. i'll be using the 3g at&t laptopconnect card. he won't. so i can browse the web faster, email business plans faster. all on the go. i'm bill kurtis and i'm faster than floyd mayweather. (announcer) switch to the nation's fastest 3g network and get the at&t laptopconnect card for free.

welcome back. president obama speaks about the state of the economy just a few moments ago and previews tomorrow's gdp report. let's listen in. >> on gdp i don't have a crystal ball and i haven't received the figures yet, but i think if you look at the consensus of economists right now it confirms that we have seen a significant slowing down of the contraction over the last several months. there are a lot of indicators out there that tell us that job losses, although still way too high, are not at the pace that we were seeing in january or february. housing prices went up for the first time in three years.

the credit system, the banking system, the financial markets generally have settled down. you're not seeing the huge volatility or panic that you were seeing. and so all of that is a sign that we have stepped away from the precipice. as ben bernanke and others across the ideological spectrum have indicated, we were in a position where we could have gone into a great depression. i think those fears have abated. but i suspect that the gdp numbers will show that the economy contracted in the second quarter, that job loss is still a huge problem, and you don't have to read gdp numbers to see that, all you've got to do is talk to the american people, who

are still losing jobs, losing homes, and worried about their ability to keep their health care and finance their child's college educations. so we're not going to rest until we have seen not just a technical improvement in gdp but until the american people's job prospects, their incomes have rebounded, and that's going to take some time. >> and we get reaction right now from cnbc chief washington correspondent john harwood. and john, the president made some really important comments there about the economy. i guess we are away from that precipice. but people still worrying about unemployment. >> maria, that's the communications challenge for this white house, is how do you describe progress in a situation where things still feel very bad to your constituents? unemployment 9.5% and rising. and so you say yeah, it's really bad, but we're not going to fall into the precipice. it's a problem for the health care debate because as long as

people feel anxious and uncertain about the economy, concerned about spending and the d deficit, they don't know whether the country can afford this health care plan the president's talking about. they obviously haven't been persuaded by the cost controls that have been talked about so far. so the president is trying to get out ahead of the numbers tomorrow, condition the response of the american people once they see the headlines that say hey, we shrank in the second quarter too. >> wellish it's true. and of course there was some thought that maybe there was some fear going into the close today and that's why this market ended off the best levels because of that gdp out at 8-30 a.m. tomorrow. john, thanks. and of course we'll have that gdp number tomorrow on "squawk box" at 8:30 a.m. coming up former council of economic advisers chairman glenn hubbard is with me giving his reaction to the president's statements on the economy. but first the ceo of expedia explains how the company plans to keep growing even as it experiences a decline in bookings. we are coming right back with that.

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today as the numbers did beat street estimates, up 12%. for more on the earnings and outlook at expedia i'm joined in a "first on cnbc" interview by dara khosrowshahi. good to have you on the program, sir. thanks for joining us. >> thanks for having me. >> can you tell me what drove the quarter and where you're seeing strength versus weakness? >> sure. i think what drove the quarter is the acceleration of our transactional trends in the business. the number of travelers that we sent on the way increased 18% in a year on year basis. and the number of room nights, hotel room nights we sold increased 26% in a year on year basis. so we are seeing acceleration in the business. we drove higher profitability from a cash flow basis.

and we think the street reacted to that. but you're still seeing that being driechb by lower prices. there has been an impetus for people, right? lower priced tickets and hotel rooms spurring demand? >> absolutely. the consumer's looking for a deal in this environment and they're finding deals. if you go on expedia.com or hotels.com, we're actually running a summer sale right now with 5,000 hotels participating, which is three times the number of hotels that participated last year. so there's no better time to go out and find a deal on our website. and that's why consumers are reacting as far as the amount of volume we're pushing. >> that's interesting because actually you could become sort of a bellwether indicator for value. people want a deal. i'm looking at this research on the travel industry, and basically, it says that the travel business has declined 15% to 20% this year but when you look at online bookings in the second quarter they only dropped 4%. so again, it's that value proposition driving people. they just want a good deal.

they're going to do their travel. but they'll do it online. >> and they're going to do their research. the great thing about online travel is you can go out there, you can look for deals, you can shop around, and i think right now the values are compelling. i mean, the deals that we have on hotels.com in las vegas, for example, are pretty amazing. the package deals are better than they ever have been. and consumers are booking. in this economy if you give consumers value we are seeing reaction as a result. >> so where is the best value? if i want to take a trip and i'm looking for the best, cheapest price as far as my hotel room and my airline ticket, what's the time of the year to get that? >> i think right now summer travel is really heating up right now. and when you look at prices on a year on year basis, prices in las vegas are down 25%. so you can get great deals there. new york city is down 25%. if you looked at new york city last year, the year previously, it was pretty unaffordable as a tourist destination.

it's become very affordable. the other area that we're seeing a lot of strength is actually u.s. consumers going to europe. airfare into europe is down 25%. so we're seeing great deals going to london and paris. and especially if you buy a package on expedia.com, combining airfare and hotels, you can get an even better deal. >> that's a really good point. thank you for that. that's interesting. when do you expect the economy to get out of this slump and you go back to growth and not necessarily being driven by the value ticket? i mean, have the mentalities of consumers changed so significantly that we're not going to get away from the value proposition anytime soon? there's been a real change in how they approach spending, how they approach the market, and what they do with their money. >> well, i think you've got to get people out there. so i think it's pretty encouraging to see the volume on the leisure side increase. once the volumes increase and the hotels are able to get people, get heads and beds, and also the airlines are able to fill up seats, i think they can get some pricing power back.

i think the other factor you've got to look at is business travel. and business travel we've seen is weaker than leisure travel. so some of the hotel players out there, airlines are trying to make up for business weakness by giving -- trying to get more leisure travelers out there. and that seems to be working. but i think you that need to see business travel firm up a little bit before you see stronger pricing for the travel industry. >> so what do you need to do at expedia to offset, you know, not just people looking for a deal but they want the best deal? you've got competitors on your heels trying to be the value proposition for people. and the consumer is stretched. business travel, as you mentioned, still an issue on the decline. what do you do at expedia to stand out from the pricelines r or orbitz and others, travelocities of the world. >> we're the biggest online player out there. and as a result we can have more market managers on the street negotiating with hotels, securing great deals.

so for example, if you go to hotwire, where you don't know exactly where you're staying at, you can get incredible prices out there. so we think as a result of being the leading player out there we're able to secure deals that the other guys can't. this is where size matters. and we think in this market we can gain share pretty aggressively. and i think you're starting to see that in the numbers. >> all right. we will leave it there. sir, good to have you on the program. we so appreciate it. >> thanks very much. >> thank you very much. we will talk with you soon, and we hope for an update on the business out there today. meanwhile, president obama proposes to greatly expand the federal reserve's role in the financial system. but former council of economic advisers chairman glenn hubbard says the fed should be given even more power than the presidential is proposing. he'll explain why when he joins me coming up.

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nice shot of the skyline in new york city. well, as president obama turns up the heat on health care reform, his opinion numbers continue to slide. in the latest nbc/"wall street journal" poll, 53% approve of the president's performance versus 61% back in april. among the top concerns, increased spending and the overall health of the economy. for a look at where we stand on

the economic front i'm joined right now by columbia business school dean glenn hubbard. also former chairman of the council of economic advisers and the current co-chair of the committee on capital markets regulation, an independent research organization. glenn hubbard, nice to have you on the program. welcome back to cnbc. >> thanks a. always my pleasure. >> always good to see you. can you give us a sense of where you think we are in this economy? the president's out earlier talking about the expectation that we will continue to see contraction in that economy when we get the gdp report out tomorrow. what's your sense? where are we? >> well, i think we will see contraction in that report, but i think the recession is probably almost over. the big question is really the shape of the recovery. i think it's likely to be relatively slow. and i think the president's own policies contribute to that. >> sure. and let's talk about some of those policies. i want to get to the regulatory agencies and the financial reform on the table. but let me kick this off with health care. the dems striking a deal with the conservative wing, the blue dogs, keeping health care reform

alive. where do you stand on the reform issue? there are concerns about this $1 trillion that's been thrown around over ten years in terms of paying for health care reform. >> the big issue in u.s. health care is the lack of value in the system, which means we've got to get costs right. i think the president was right to talk about that. what his proposal was was really an expansion of access in the existing system that's very costly, and i think it's worried a lot of americans that it's simply too costly. it will have to be paid for by higher taxes or cuts elsewhere in health care. >> so what does that do to an economic recovery if we were to see that heavy tax get implemented? >> wellish it's clearly bad news. the proposal for a surtax on high-income individuals will be a significant tax on enentrepreneurs. it would be very unwise anytime but particularly at the present time. and a bigger concern is simply the huge explosion of health care spending under the president's plan. >> you know, it's interesting

because there's such a debate about how not only to implement this but also how to pay for it. what are your thoughts? do you have a thought on the public option versus the private option in terms of the plan being implemented? some people think the public option won't work with private companies because it will basically put some insurance companies out of business. >> the problem with the public option is if it winds up being heavily subsidized it does drain the lifeblood out of the private sector, which tens of millions of americans currently enjoy their health insurance in. to me the better thing is how do we lower the costs of the private options? and there it's about cost reform. it's about incentives and insurance. and yes, some tax reform. >> i see. what kind of tax reform do you think this economy needs? >> well, for health care, you know, currently we subsidize employer-provided health insurance. we have an income tax exclusion. it would be better to reduce those subsidies. i think most economists believe that. in terms of tax reform for the

economy as a whole we need to do things that would lower marginal tax rates, particularly on investment. and this is what worries me. the administration's heading in exactly the opposite direction. >> it really is exactly the opposite direction, actually, glenn, and a lot of people worry that, you know, taxing the highest earners is actually just going to make them not spend money. and small business as well. you know, business investment, would you agree, is critical to an economic recovery, but where are the incentives for business to actually spend money, hire people, and create some jobs here? >> well, that's true. and an obvious tax reform there would be to try to, say, lower the corporate tax. the administration has said it's interested in tax reform. and you know, i look forward to hearing what they have to say. >> let's talk about what we're seeing in terms of the regulatory reform on the table. the administration decided not to upend the current sifrnlgs propo system, proposing four federal entities. do you think we should see

consolidation in some of the agencies? some people have come on this program and said the cftc and ftc should merge, we should see more in the insurance industry. where do you stand on financial reform? >> i think we definitely need consolidation, maria. the administration's form proposals as you said are for new agencies. so it's not consolidation. it's going the other way. what we need is an umbrella financial regulator that could stand side by side with the federal reserve and let the fed focus on monetary policy and systemic risk. that would be a much simpler system. >> so the fed getting more power. you think that the federal reserve does not have the power that it should have going forward? tell me what you would like to see the fed look like coming out of this reform. >> i think we're expecting too much and too little of the fed. i think that we haven't given the fed enough power to overall control systemic risk in the economy. but on the other hand, we're

asking too much of the fed when we ask it to constantly add to its bank regulatory and supervision powers. so i think we really need to decide what it is we want the central bank to do and what do we want other regulators to do. to me the big issue is if we load too much regulation on the fed we run the risk of compromising the independence of monetary policy. clearly a bad idea. >> yeah. and certainly that's been the buzz word recently, that the fed's, you know, independence is being undermined here with all of this debate about what the fed should be doing. >> i couldn't agree more. and i think it's an unwelcome problem for the fed. i think the congressional bill to audit the federal reserve is just an example of the kind of mischief that lies in the weeds. >> glenn, where are you on this consumer agency? a lot of people have come on this show, and they're really unnerved by this. they say it's going to act as more bureaucracy, more layers. or maybe, you know, with the fees that people have been paying in terms of credit cards, maybe there is room and a need for a consumer advocate or

consumer agency. what do you make of this? >> well, first of all, consumer protection is important. and the greatest bulwark for that lies in information disclosure, transparency, and simplicity of contracts. i think a consumer agency, if we're going to have one, should be part of this umbrella regulator that sits by the fed, not a separate stand-alone that i agree, could wind up raising costs to consumers. >> and do we need a systemic regulator? i mean, part of this makes me go back to what was in place. we had a structure in place, right, glenn? i mean, we had the people overseeing the proper things that they were needing to oversee. but they just missed it. >> well, i think that's right. and it's easy after the fact to know which institutions are systemically important. it's a lot harder before the fact. i think we need to get our capital regulations working well, increased transparency, and make sure we give the fed the tools to do its job. that's a far simpler approach. >> you wear a lot of hats, again. i want you to put on the hat as

dean of columbia university's graduate school of business. what are you hearing from students here? is there a lot of fear as far as graduation and what they're going to do in terms of getting a job here? are they shifting their thoughts in terms of where they want to go? for a long time everybody wanted to go to the mckinseys of the world or the ges and procter & gambles of the world. and then it was private equity. are they forgoing financial services given that we're looking at this industry getting smaller? >> well, students are very smart. they're always looking to where the opportunities are. there are still a lot of great opportunities in finance. but yes, many more are interested in industry and commerce. i think going forward they're incredibly optimistic because it is still the case that this economy and the world economy offers a lot of opportunities as long as policy doesn't screw it up. >> yeah. so where do you see much of the talent going to these days? you know, a lot of talented people used to go to financial services, but they're spreading their wings a bit. do you see talent going to any specific places, or where are

they targeting? >> sure. consulting, health care, a lot more in terms of activity outside the united states, even from american students. but by and large financial services still remains a very important employer. >> i'm glad you mentioned global because it really is a global story what you see here. what are you seeing in terms of the emerging markets or the economies outside the united states in terms of the global recovery? some people feel that it is going to be china that really lifts the world out of the recession. someone came on the air this week, actually, and said china's back to 9% growth. >> well, china is doing well with its stimulus package. there's strong underlying growth in china. but having china lift the world is a bit of a stretch. we shouldn't confuse a fast rate of growth with a high base of growth. so i think the u.s. recovery is still going to be very important for the world. >> i see. as far as the suh consumer right now, do you think there's been a real mentality shift in terms of how they spend their money?

some people say look, after a lost decade like the decade we've seen the mentality changes and people will hoard cash for a long time, one reason we've got a savings right back up to, what, 6.9% or so. >> right. i think it's too soon to tell. i think consumers will be cautious for a while. how quickly they snap back is anyone's guess. >> i see. okay. in terms of the recovery, you mentioned earlier it's really going to be one to watch because it's not necessarily important that the recession may be nearing an end but what kind of recovery we're looking at. >> exactly. >> what do you think it looks like? >> i think it's going to be relatively slow. consumers have to rebuild their balance sheets. so do financial institutions. we'll see some inventory restocking from time to time, but think it's going to be slow. >> all right. we will leave it there. glenn hubbard, great to have you on the program. we so appreciate it. thanks for spending the time with us. glenn hubbard is dean of columbia university's graduate school of business. goodyear lost $221 million in the second quarter. up next, we'll tell you why investors drove up the stock anyway. we're back in a moment. meet jack.

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welcome back. look at the stories we're following on the closing bell ticket tonight. motora's second necessity income soared. the company made $26 million.

because of cost cutting and strong cell phone demand from pre-pay discount carriers, the stock was up 9.5%. consumer products make colgate, palmolive up 14%. sales were down by 6%. colgate down 5.5%. good year had a $2.25 million loss because of a 17% decline in sales. the wall streclosures were half wall street was looking for. shares tonight up 15%. stocks racing for the finish line today. s&p up for the fifth time. looking at the big moovrz as well as some historic

milestones. matt? >> as so often is the case, they trip over that hurdle in the final 30 minutes. it ends up being a stinker giving back 36 points there. some people say we talk about this ge story saying they might have to go put more capital into ge capital, but even that, the loan is, one, outdated, and not in lane with what people were saying. but there you go. the big picture is going to be the month to date story. the dow was still up 1.4% for the month of july. that would be the fifth consecutive month of gain. so barring an out right disaster, the likes of which we haven't seen in a long, long time, we will put another positive mark in the book. five in a row. not for the dow. four for five on the dow. but the s&p and the nasdaq will. the materials and industrials were back in a big way.

the reflation trade, if you will. financials also very strong. you're talking about the insurers doing very well here today. big names include better than expected results from owens illinois and hartford financial. they both reported, after the close yesterday, very strong on those results. and also general electric, we had the upgrade from to buy at goldman sachs based on the commentary from marty frank in congress. and then also an industrial that came out better than expected. it's better in july than we've seen in seven years. more than four times the average month of july, which is typically pretty good for the dow. it's the best five months gain cumulatively that we've seen since 1986. the best stock in the dow, maria, is cat of 31%, and the

loan loser, mcdonald's, down 3%. let's head over to the market site, erin burnett. >> what appeared to be the reignited rally, and i know, maria, you felt a little bit of that peter out, but we're going to tackle it. we have a couple of the biggest ceos on the show, and a man who many thought disgrasd going way in on a crucial topic he knows a lot about. back to you and we'll be live at 5:00. >> big one. we'll see you in five minutes, erin. thanks so much. friday brings the latest rating on ggp. we'll come right back to you after this short break.