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in honor of larry kudlow who wants to talk about upside earnings, high-tech itt and medical diagnostic maker beckman colter both reporting better than expected earnings. raising full-year forecast.. both trading higher on the day, trish. >> see, we're looking out for them. >>s that's right. >> we've got president obama talking at 1:15 today, so you definitely want to tune in for that. he's going to have some remarks on the economy. likely some talks about -- >> it will be good. >> yes, of course, the gdp number. he's got to want to talk about that, right, melissa?a? >> no doubt. that's it for "the call."." have a great weekend. >> "power lunch" is coming up next. >> this is cnbc.com news now. >> the house is moving quickly to add another $2 billion to the government's popular cash for clunkers program. there could be speed bumps in had the senate, however. ubs confirms an agreement in had principle with the u.s. government in their tax battle

with details to be worked out next week. no comments further than that, though. and president obama will speak briefly on the economy at 1:15 p.m. eastern time. see them here on cnbc and cnbc.com. that's news now. i'm matt nesto. fear not. we're expecting your clunkers.. not to worry about that. happy friday of. welcome to "power lunch," i'm bill griffith, trying to keep the rally alive. stocks extending their gains slightly, trying to end the last trading day of the month on a high note. the dow on track for its best july in 20 years. its best month since october of 2002. so far, so good. >> so far, so good. fingers crossed. exactly. i'm sue herrera. the president is set to speak about the economy in the next hour, one of his big programs, cash for clunkers is looking to fill up again after running out of money because of huge demand.

so is this the stimulus program the economy has really been waiting for? >> and i'm michelle cabrusso-cabrera, we have $500 billion worth of investment advice for you. david kelly, chief market strategist, we're going to talk markets, the economy, and what millton freedman means to him. here's what is on the menu. >> i'm mary thompson, chevron's second quarter profits fell 71%, but the company raises its full-year production forecast by 5%, thanks to strange performances by a couple new projects. >> i'm julia boorstin, the king of commodities is at the top of the box office with "funny people." i'll tell you why this billion-dollar producer casting in on america's need to laugh. >> let's get to the market action. no problems with millton friedman. caterpillar, the big winner this month, up more than 30%. roberto pisani kicks it off at

the new york stock exchange. >> the market now believes that cyclicals are the way out of the market here. so let's take a look at the dow for the month, and just show you here, 8.8% gain for the month of july. important thing is, we haven't seen these gains for a month since 2002, and you're absolutely right, michelle. if you look at some of the key movers here in the major indices and the sectors, it's the industrials and cyclical type stock. so look at caterpillar, up 33%. in a month, folks! look at that move. that's just single month, leading the dow. that's a stock that, of course, would not do anything if the investors did not believe that there was some kind of recovery somewhere down the road in the global economy. how about american express? yes, you know all about credit concerns, losses, you know all about lower card spending. we know all about that, the stock up 20%. again, this is a play on the future and the belief that somewhere down the road that, card spending is deductible going to start shooting up.

tradertalk.cnbc.com. mike huckman, a heck of a month at the nasdaq, as well. >> yes, we have. and even though we're not busting out above the champagne court-popping level of 2000 yet today, investors can still party like it's 1999, because this will be the best several-month although-long wind streak. speaking of dot com, shares of yahoo not getting a bounce after ceo of microsoft said, hey, people don't get this deal, this is a win-win. shares down 17% this week. microsoft up about 1.5%. on the earnings front, first solar down 10%. dry shifts down 2%, and varian up 7%, because it's going to make money this quarter instead of what analysts were thinking, it was going to lose money. rebecca, what's going on at the nymex with oil? >> mike, things have turned around, started out negative, in positive territory now.w. the first component of the complex to change course was our gasoline. we have heard a lot of commentary from refiners saying the demand still isn't there.

people are thinking about in terms of bull case scenario is that refineries will continue to cut back on capacity. that will draw down inventories and eventually when demand picks up, there will be a supply constraint. let's get over to rick santelli who has more for us in chicago. hi, rick. >> well, you know, today there's two big stories. ask, of course, the first story is mostly that interest rates are down.. but if you look at intraday chart of the 30-day bond, it's been an interesting animal, overperformed a lot this week. and that's true in terms of a week to week. up 20 basis points, down in yield. we saw that in august funding supply side on the 13th of august. but if you look chart of the dollar, it's the huge story. in the last hour and a half, it's almost down a penny. and guess what? in another hour, we're going to make the dollar the feature, because of the month of july's big activity. tune in. we'll talk more about the foreign exchange side.e. back to you. >> all right, rick, thank you very much. see you next hour. when we do make the dollar a feature. in the meantime, mixed bag

of earnings, chevron out with results. the oil giant missed profit estimates. mary thompson is on earnings central for us, listening in on chevron's conference call. what are you hearing? >> here are the headlines from the call. chevron raising its production forecast by 5% or 30,000 barrels a day. 2009 should be 2.66 million barrels per day, based on a $50 price for a barrel of oil. the higher forecast comes as new projects are running on or ahead of schedule. chevron also says the cost-cutting program to eliminate $2.5 billion in costs for the year is running ahead of schedule through the first half of 2009. and the company isn't going to be reinstituting its stock buyback program. instead using any excess cash to fund its capital program and to keep its balance sheet healthy. in the u.s., it's going to be focusing on oil production rather than natural gas production, and says by year-end u won't be any new natural gas production in the u.s. because of the steep decline in price we have seen in natural gas. second quarter profits declining by 71%, earnings of 87 cents a share, we're 8 cents shy of

estimates.s. this reflecting lower prices for gasoline, oil, and natural gas. revenue for chevron fell over 50%, $40 billion, still that number came in ahead of estimates. here's how the company's operations broke out. a big drop in chevron's upstream profits behind the decline in earnings as results improved in both its downstream and chemicals unit for the second d quarter. sue, back to you. >> thank you, very much, mary. and we're all having a big discussion here, because the house is going to take up the cash for clunkers bill in about ten minutes. >> oh, boy. >> that program has met with enormous success, and we're going to give you some of the numbers and talk about whether or not this is really the stimulus plan that the economy is needed all along. >> we're going to get you yet, steve liesman. >> grem lynn -- >> his car --! >> we had a grem lynn when i was little. >> i hated it. >> i bet. >> my first boyfriend had a she

havet. >> really? interesting. >> let's talk about the irony in this number, the bad parts make people think request stuff in the third quarter. economist have taken out their erasers and pencils and writing in higher growth forecast for the third quarter after the second growth number came in better than expected. here are the numbers. advance down 1%, economists looking for 1.5, and they have revised downward the first quarter, now would you believe 6.4%. let's take a look at the contribution to gdp, what contribute today different parts of the economy. there's the gdp. there we go. you see consumption was down, contributed more to the decline this quarter than the last one. investment didn't drag as much. net exports didn't contribute as much, and government adding a lot more. take a look, though, at the inventory number. big story here. what you see here is a massive $141 billion drop in inventories. really off the charts in terms of the inventory drag. it is that number that many

think will cause -- will cause the economy to do better the in third quarter. the government also revised the past five years of growth, generally showing the recession has been worse, but americans save more. some economists more optimistic that don't show quite as much ahead but remains considerable. jpmorgan up 3% from 2.5, and merrill saying his forecast was 4.7, and may pull that forward to the third quarter. >> wow. let's talk with john, chairman economist of rdq economics, thinks the recession ended in the second quarter, and we're going to see a bigger than expected bounce by year-end. and john, you were surprised by that liquidation number, correct? inventory liquidation. >> absolutely. surprised first in a toke california sense, and the monthly data on inventories show the dedecline at the lower rate. and also this is a record inventory liquidation.n. >> what was that about? >> both in absolute dollars and in terms of in relation to the economy. and yet we saw these signs in

the isn data, for example, that the manufacturing sector is beginning to stabilize. so if you're stabilizing in the face of a record inventory liquidation, that when the inventory picture stabilizes, you're going to get more of a pop to growth in the second half. of. >> steve, inventory liquidation is not so much about the demand as it is about the lack of production? >> one follows the other. and i think what they have been use something a newt ron bomb because it's difficult to empty the shelves the way retailers have.. and i want you to tune in at 12:30, because i'm going to show you the cash for clunkers map and the potential for the month of july, and what that could do to gdp in the third quarter.. >> and also when we look at the success for cash for clurvegers, does it tell us that the stimulus plan should have been more about tax cuts and rebate than spending? >> the entire stimulus plan should have been about tax cuts. >> we're agreed. >> if you look at the second

quarter, interestingly enough, auto production actually added to the second quarter. it was positive contribution of 2/10 of a percent to growth.. in the third quarter, it will add in part for the same artificial reasons that jobless claims have fallen, as much as we have seen in july. the shutdowns were taken early in the year. and the seasonal adjustment data shutdowns take place in july. so we're going to get potentially a really big pop in auto production. and part of that being artificial, and that's going to be added on to the reduced inventory and liquidation, the reduced housing drag. i don't see the great drivers for growth looking into 2010, because of tax increases and health care and a lot of other stuff that's anti growth. but the second half of the year is shaping up potentially to be -- >> even with housing? is housing basically still a drag, not as much of a drag? >> housing is not going to be as much of a drag. but i think if i might move the discussion now, if we are going to get the pops to gdp that some

are talking about, the question becomes whether or not the pessimistic forecast of 10% and greater unemployment. and now everybody is looking for the unemployment numbers to behave the way they did prior to recessions. i would submit that unploemth in this recession did not behave anywhere near the way it did. it was fast and panicked layoffs by employers, and i wonder if there is a possibility for at least capping this thing at 10%? >> that's our forecast, that it gets capped at 10%. >> all right. >> but this report also had a 5 or 6% productivity number built in there. because hours worked fell at about 7.5%. in the second quarter. while gdp was only down 1%. so there's a 6.5 percentage point spread between the decline in hours worked, and the decline in gdp. and that's all productivity and that's why the earnings numbers are coming in better. and that's what the stock market likes. so hopefully, maybe if we don't get too pessimistic, we can get

a boot straps pick up to growth despite what's going on in washington. >> all right, john. good to see you as always. thank you. >> isn't it great that john is stim around, even though his company is down. >> we love john.. if you haven't heard, the house getting ready to vote on the cash for clunkers extension, perhaps adding a new $2 billion into it. and that vote is going to be getting under way any moment here. >> and you see this with senator dodd. >> is this new information? >> yes. it just hit the hot wire. >> senator chris dodd of connecticut is going to hold a news conference at 2:00 eastern time to discuss what is being billed as a personal health issue. >> and that's all there is in the hot file from nbc and on the news wire. >> all right. >> they'll have that on "street signs." still to come, john harwood sitting down with the leaders of the blue dogs, and he'll have the latest development on the health care battle. and also coming up this hour, the cash for clunkers, the story of the day. the president is going to talk about that at 1:15 p.m. eastern

time, and you'll see his remarks live. a good example of how the stimulus money should have been spent? michelle will handicap the power grid debate on that. >> early stages of prostate cancer, according to a connecticut newspaper when it comes to senator dodd. absolutely unfortunate. on "power lunch," get ready for the "fast money" halftime report. "power lunch" is back in two minutes. 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.

debate in the house on

capitol hill under way right now. they are getting ready to vote on whether to add another $2 billion to the cash for clunkers program that's only a week old, and is has already burned through a billion dollars that has been that successful. the exchange of an old car for $4,500 credit on a new car has just lit up trading floors or car dealerships around the country. so the house is voting on extending it by $2 billion.n. the senate will probably pick it up next week. they will still be in session. the house goes out today. >> give money back to people, they will spend it. . all right, also waiting, 2:00, a news conference, connecticut senator christopher dodd will talk about a personal health issue. "hartford current" is reporting that it's early stage prostate cancer, and is "reuters" saying he will be fine. we'll watch for that at 2:00 eastern time. the "hartford current" saying he has been diagnosed with early

stage prostate cancer. >> wall street, modest up side, but stocks got a big jolt in july. the dow is up 8.38%, just for the month. that makes it the best july since 1989. it is also the best july for the s&p since 1997. and for the nasdaq, july marks the fifth consecutive month of gains for that composite, the longest winning streak since 2003. what does august hold for us? let's talk about that with our "power lunch" task force. the president of dawsonwells management, and chief strategist at sink or swim. welcome, nice to have you here. >> good afternoon. >> let's start with you. we have a modest advance in today's trading session. but, you know, does what happened in july necessarily translate to august?? do you really think that this market has significant upsides? >> we do. we think that there's a lot of positive signs out there for the equity markets. we're finding among our many small closely-held business owners that they're beginning to

change their attitudes to cautiously optimistic over the next several months. and i think you're seeing that kind of optimism out there. low inventories, as you were discussing earlier. all those things we think give strength to a continued run in market. >> j & j, you agree with all those? >> i do, but there is one thing down here, and i thought steve liesman brought up something very interesting in the last segment. it's the the worry of the floor. in the gdp report this morning, the one thing we saw is consumers not spending. they are saving, which is great. >> they're buying cars, doing cash for clunkers.. >> and giving their money back. they'll spend t right? >> by the way, michelle, i agree with you 100%. on the tax cut. but that being said, the one thing is, the unemployment number next week now has even more focus than normal. the reason being, if people are also not being employed and they're spending less, over the next quarter, that could be real problem attic i can for the economy. and also for the carpet.

that's something we're on. we're at 985 in the s&p futures. the consensus here is we have to hold this 969 level. we touted it a couple times this week. if we do hold, most believe we're going to -- >> joe, let's add calories to this interview. what are you going to buy, if you like this market? we're a big deliver rather than taking to invest in a broad-based portfolio, we like waiting rather than taking a rifle shot and a bet on any given sector. >> all right, gentlemen. thank you very much. >> have a good weekend. >> you have a great weekend, too. up next, john horowitz interview with key blue dog democrats on the future of the health care bill and their take on cash for clunkers. >> and the dow is holding on to a modest raise. the nasdaq up 4 points and s&p under a point. back in a moment. i drove my first car from my parent's home

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positive, big move in interest rates to the down side today on the long end of the curve. take a look at dupont right now, up about half a percent. the second-best dow performer so far this month, last trade, $30.99. well, as you know, the fiscally conservative democrats known as the blue dogs struck that compromise with their more liberal colleagues in the house on health care earlier this week. but it still looks like there is more work to be done. john harwood has that, and we've got a lot of other things to look ahead to with the cash for clunkers and christopher dodd, as well, john. >> bill, i've just been in touch with several aides to chris dodd, the senate banking chairman, and they tell me, in fact, he has early stage prostate cancer, was caught early, will be treated they feel successfully and will have no influence on his re-election plans. of course, senator dodd is the most vulnerable democrat running in this cycle, so he has a big task ahead of him in any case. and now it's steeper. one of the things he has been working most aggressively on is,

of course, the health care issue. he has been standing in for his fred ted kennedy.y. but there is resistance from conservative democrats, including blue dogs who i talked to today. and one of the fascinating things from our conversation was that at least some of those blue dogs, like jason altmeyer of pennsylvania thinks they don't think any taxes need to be raised. >> this is about preserving the health care delivery system in more rural parts of the country. i think that people who pay into medicare, whose taxpayer dollars may be used to set up a new system of benefits for middle income americans need to be treated fairly. and so i think that that is -- an inappropriate and unfair criticism, that that is in any way pork. >> that was not the sound bite that i thought we were going to be playing, but jason altmeyer said he thought that savings could be taken out of the system in a way that would obviate the

need. the other i discussed was cash for clunkers which is moved very rapidly through the house to renew the program, even though the $1 billion allocated has already run out. stephanie hersseth also told me that the popularity of this program, even though she voted against it, is a cue that members of congress cannot ignore. take a listen. >> it will be deficit-neutral, which is -- meets our criteria, obviously. and you're right, it's been an incredibly successful program. and hopefully there are good signs today as we speak that the market's turning around and so this thing probably headed in the right direction. >> you don't think it's going away.. >> i don't think it's going away. i wish we would have time to find not only a intergovernmental transfer. >> so there you have it, bill. congress, despite all of the talk about spending and deficits, looks like they're going to ante up more money. >> it was said earlier today,

they were hoping for $4 billion. do you think the senate is likely to make this happen when they vote on this next week? >> yes, i do. this is a brush fire around the country, and members of congress may do some things the rest of the country doesn't understand, but when they get a crystal clear signal about the popularity of a program, they usually follow it. >> all right, john, thanks. we'll see you later.. >> up next, the president and congress are trying to get more cash for the wildly-popular cash for clunkers program. if the government has started this self-stimulus back in november, is it possible that two of the big three wouldn't have been forced to file for bankruptcy? we're going to turn the key on our power grid after the break. >> plus, we're just minutes away from the "fast money" halftime report, and we're all excited because we're welcoming back melissa lee. >> and it's great to be back, especially to talk about the summer rally and what is moving today. we are also seeing a rally in gold with the dollar index selling off. also as capitol hill kicks off cash for clunkers, which auto

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right now, taking a look at

some of the most active stocks in a market that sees the dow up 27 points, citigroup on the down side. bank of america is higher ford with this gangbuster cash for clunkers deal on the up side as well by better than 7%. almost 7.5% right now at $7.94.. >> yes, they are debating in the house right now whether to extend the cash for clunkers program, add another $2 billion to the program after they burnt through the first billion in just one week. steve liesman is crunching those numbers for us. >> yeah, and it's quite astonishing what cash for clunkers could mean for auto sales and the economy. let's take a look at what cash for clunkers means. a billion dollars, 223,000 new cars. assuming all these cars were new and weren't going to be bought anyway, okay? what is 223,000 cars? well, 2.7 million at an annual rate, which is how we think about this stuff. what does that mean for the existing base? well, we're only doing 9.7. remember, this thing was as high as say, 17.

it fell as tonnishing to 9.7 million. let's add back in 2.7 and 9.7 million, that's 23%, back to september '08 range.e. let's go and look what this means for the economy. obviously it's going to mean more auto production. so came out with a forecast, 4.37 million in the second quarter. what's the third quarter going to look like? $6.7 million, an astonishing growth rate, 456% quarterly change at an annual rate. that's how we think about these things. what could this mean to gdp? couple of economists saying that could add a full percentage point for fourth quarter. so put that in your numbers and crunch that away, michelle.. >> big impact.. thank you, steve. the program is hauling in customers at auto dealerships this week. so successful, the money is nearly used up. congress debating right now about giving it $2 billion more to keep it going. should this have been the stimulus package instead of the

mega $700 billion plan and if this was done back in november, would gm and chrysler not have ended up in chapter 11. turning the key on the power grid, we have the radio host of the jason lewis show. you each get 20 seconds. jason, let me start with you. 20 seconds. should we have done this in the first place, and would this have preventeded gm and chrysler from going into bankruptcy? >> no, this is a bailout. all we're doing is replacing one bailout with another. probably the third, fourth or fifth bailout for the auto sector. we're doing for the automobile sector what we did for housing. an artificial stimulus shall going to get an artificial boom. you just heard they're going to ramp up production, and guess what happens when the money runs out and it's going to run out quick, you're going to get a recession again. the stimulus packages never worq long-term. >> 20 seconds as to why you ñq think what you think.ñq >> well, i mean, absolutely we need this program.ñq i mean, this program is wild req popular.ñq we're talking about a billion dollars spent in less than a ñq

week. i mean, and we're now talking about possibly looking at another $2 billion to expand this program over the next couple of -- over the next couple of weeks.ñq i mean, you know, you're now talking about putting people back to work. you are now talking about getting the inventory -- >> do you think gm and chrysler would have stayed in business? >> oh, yeah.ñq >> they're still in business, ñq avoided bankruptcy.ñq >> look, you're talking about two different programs. when you're talking about -- you're talking, but know, eliminating the corporate debt.q you are talking about, you knowq getting those big three.ñq you are talking about keeping them going for the duration.ñq now, when you're talking about this cash for clunkers program, you are simply talking about moving this '09 inventory off the lot, making way for the 201q inventory. you're getting people kicking the tires, taking in that new car smell, getting excited about what the future holds for these automobile -- >> what you're doing, i'm afraid, is just looking at one side of the ledger. money doesn't grow on trees. the billion dollars for the automobile industry had to come from some place, some other

industry. this is the old broken window fallacy at large. everybody ought to break their windows and that would do wonders for the window repair industry. what do we do, keep extending subsidies forever? >> we want to hear what mike >> we want to hear what mike jackson had to say this morning. he's there on the front lines. let's listen to him. >> it's a brilliantly conceived stimulus program. >> it's a brilliantly conceived this is how stimulus programs are supposed to work. my compliments to the auto committee. >> jason, i bet you're not surprised an auto guy would say that, right? >> duh! you give me a billion dollars, i'm going to say it's a brilliantly conceived stimulus program, too. we're also destroying a lot of perfectly good used cars that poor families could get into for the first time. >> but jason, isn't a bigger message for your side of the argument, when you look at the overall stimulus bill and the way it was done, there was straight-on government spending, and this aspect was good giving more power back to consumers to make a choice with their money. i've got to think out of the

two, this say much better option, right? >> this is about subsidizing consumers for one industry. now, what are you going to do when the billion dollars run out? we're going to have $4 billion. what are you going to do when that runs out? got to have $8 billion. this is a teachable moment in the vernacular of the day. because what is this going to mean for health care when demand is subsidized, you get unlimited demand, and you get unlimited budgets. >> we're not talking about new money. this money has already been allocated. we are talking about looking at other sources within the stimulus package that has already been allocated, and we are pulling from that. i mean, the other aspect of this is, that this $2 billion i quite possibly could come out of a renewable fund. and so you're basically talking about climate change issues, you're talking about the environment. now you're getting these clun kers off the road, now you're talking about putting more fuel-efficient cars on the road. what's not to love about that? >> got to go -- good discussion. >> the same thing with housing and the bubble burst. >> okay.

that's it. thank you so much, guys. >> thanks for having me. what we're showing you is a live picture of capitol hill where they're set to vote any time now on extending yet another $2 billion for the cash for clunkers program, because it ran out of money in six days. that's how many people went out and bought cars. >> when we come back, coming up next, we drill down on what sectors are really performing well in the summer rally, and is it too late for you to in? >> we look at american express which has been the third-best performer in the dow this month. the dow itself up 17 points. back after this.

well, today mcdonald's might not be participating in the summer rally, but it has really been an amazing july, and all day on cnbc, we're focusing on sectors that have been riding that wave, and matt nesto joins us with a look at the housing stocks in particular. >> i always call these guys the home boys, and any time you see the boys here, you get excited. and you wonder, what's going on? is it time, is this the big turn, because people say this is the linchpin for the economy. well, michael jackson would say that autos are, but he'll also concede that housing will be key. if we take a look at the house on fire story here and look back to when this recent literally within a rally began on july

13th, check it out, baby. 37% higher. >> holy, moly. >> and today it's also working as well. 12 of 13 members of the home builders index are pushing higher here today. so what's up? with the home boys? why now, why buy these builders? this morning we heard from -- i figure this was this morning or overnight. but in today's cycle, it's reported their first growth in orders in four years. >> all right. >> and their inventory and cancellation rates both going way down. their inventory of unsold homes actually fell 70%. and their cancellation rate was cut in half. their average selling price fell only, quote, unquote, 6% to 279,000. we also have data momentum on sales, and this all coming in the past three weeks, pointing out the case-shiller number coming in very strong. we also had housing starts and prices in it positive data

there. so there we go, there's some of the guys on the go-go. mdc strong, and wry land, and toll brothers. pick your builder, and it's going higher. >> lennar is not higher. >> you would be guessing -- that would be incorrect. >> okay. >> i don't know exactly which one it is. i have to take a look. >> but as michelle so appreciately said the other day, it has to get less bad before it gets better.. >> right. and some of these things, you've got to watch out. inventory, or unsold inventory. the price change -- the price increase, rather. it was up 1.9%, and 977 from 950. so they all along have been selling about 900 homes or so. >> people are going to look at that and whether or not they should get in at this point. >> rates go lower.. by the way, we should have mentioned when we show you the mcdonald's -- there was an audible gas in the studio when we heard that mcdonald's is the

worst performer among the dow 30 this month. down 4% in this time with the market -- >> so is the trade down trade over? is the trade down trade over? >> well, who, morgan who downgraded them yesterday? somebody caught them yesterday, forgot who it was, but that's what they're saying.g. >> still have great coffee.. >> still ahead, a half million for jpmorgan.. david kelly will tell us whether we think the summer rally has legs and what you should do to make money right now. >> up next, the "fast money" halftime report. melissa lee is back in the chair. we're back after this.

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welcome to the "fast money" halftime report, we're getting to the heart of the action it is it is happening. the best month in a decade as the latest round of economic data keeps stocks in the green. can this momentum carry us through august? let's get the word on the street. our "fast money" crew today, the governor naturer, steve grasso, and tim yuri of tjm institutional services, and, of course, an options action trader. before we get to the markets, we want to talk about what is going on in the session right now, and that is decline in the dollar index, blowing through levels here. it looks like we could close kpor a new low on the dollar index, 409. these are levels we have not seen since december of '08. at the same time, we're seeing strength in the so everyone be be the concern. >> bill, when you take a look at thcharts for the dollar index,

for instance, if you take a look at the dollar specifically, you know, it was flirting against highs for the yen, highs for the pound, et cetera, the list goes on and on. what does the chart look like? are we making a new level here to get concern about? >> yeah. i think, melissa, the next stop here is back to the 2008 lows, and, you know, i think -- you know, there is more weakness to come here. >> 2008 lows. for the dollar index. so you do see more weakness ahead. at the same time, prices up on oil, we aren't seeing the same strength in the oil trade as the gold trade. jim, what do you make of that disparity, the strength in gold but not the same commiserate strength in the oil trade? >> remember, because gold is a pure panic play, and this move in the dollar is different than the moves before. we love dollar weakness for the last four or five months with the whole reinflationnary trade. that's when people were floating out of the dollar intoyen. today the dollar is weak again, everything, including the yen,

came from comments from the ims talking about more stimulus. people just hate the dollar today. so it's a little bit of a panic. remember, we like a little bit of dollar weakness, but not a lot. if it gets too dramatic, you want to be in things like gold. oil -- there's other things involved in oil, like demand, which we're not seeing a huge pick in that, as well. so gold and silver, the more pure place. >> jim mentions panic, seeing that in the options pits. >> well, you're definitely seeing that in the vix in the september, october, november months. i talked about it yesterday. those futures are continuing to trade higher than the actual vix, meaning that some traders are betting on some volatility coming back into the market come this fall. however, i also say that's -- on a contrarian view, a good sign that maybe people are overpaying a lit bit for some protection to the down side in the market, and whenever you get a pullback, people can feel comfortable and get back and buy more, because they have the protection going forward. >> bill, quickly run through the charts in terms of where we are seeing this rally go next. the big question on this last

trading day of july is what is in store for august? >> well, melissa, as far back as may, i talked about the s&p going to 1,000, and is we got within a couple points. so i'm a better profit taker here. but the much more important point is, the march rally is still intact.. we think there is another leg to the up side, 1100, 1150, another 10 or 15% to go. i want to try to buy a pullback to 950 in the s&p, and look to stay long. because this rally is not over. >> all right. let's move on to the next trade, and this is a story taking place right now, the possible renewal of that cash for clunkers stimulus plan, so to speak. you see there pictures, live pictures of house speaker nancy pelosi, they have just started debating this, how much they're going to expand it. the thinking is right now it will perhaps be a doubling of the original amount. we are seeing reaction right now in some of the auto stocks. ford a big winner, auto zone on the flip side, seeing some weakness here. steve grasso, is there a play here for investors out there, or is it already -- we're seeing a

7% rise on ford. >> i think it's already in. ford is up 17% since last friday. 500% since the november lows. i think it's already -- and we heard the ceo make bullish comments. i would be a seller of ford. can it go higher? yes. >> we also can't ignore autonati autonation, second quarter drop in profits, 29%, but the results did beat expectations. interesting commentary from brian setland, expecting a boost from cash for clunkers, but seeing consumers trade in their domestic vehicles and buying imported vehicles at this point. are we going a little bit too full in on ford here, given that commentary we were seeing from the owner of thousands of dealerships across the country? >> i don't necessarily think that way. i'm still a little bit of a believer in ford. it's going to be a tough rebound for some of theseford. it will abe tough rebound, people have to recycle the cars

that they own and it will be money back in the system and that will be a correct correlation and can they rebound going forward? i think they can make the adjustment and the cash for clunkers will gear them to making higher mileage cars and people will want to own it going forward. >> i will see the reaction. he is shaking his head on that. go ahead. >> you fell forward. we are exuberant about ford. according to cars.com, the cars with the best resale values are hondas. after being out with a 10% savings rate, they will throw away brand loyalty and look at their pocket books. honda has been a lager compared to ford. honda doesn't have to deal with the huge union contracts and keep them from making moan in the future. >> let's move on to the next trade.

we are digesting the report showing consumer spending decelerated in the spring and seen weakness in the shares, but with the weakness in the dollar, i'm curious what you think. we see a lot of these multinational companies that have big presence here in the united states, but also abroad. they are weak, but at the same time with dollar weakness in store according to you. is that a boost for them? >> i think ultimately it is. a lost these companies are getting an increasing percentage from over seas and makes the goods more competitive and in the long run will be a plus. >> what are the plays that you are watching in the consumer space?e? we are seeing mcdonald's for instance seeing weakness down to 1% or so. >> i love mcdonald's personally and for an investment. he loves the mccafe and it's a great play. the bargain retailers and the wal-marts and targets, the longer we get with the economy

doesn't rebound as quickly as we think, they are playing for the money. >> i will call you big mac. taking the position, trading higher ahead of the earnings release. will the heavy weight derail or keep the tech rally alive. let's bring in the negotiator. he is on the fast line. >> how are you doing, baby? >> i'm good, baby. how you doing? . >> check out juniper for july 23rd. they reported a great second quarter. goldman upgraded to 29. the problem with cisco is look at the run. $13.50 in march. this broke down for them in the fall. you have to ask themselves, they are going to 11.50, but you have to take money off the table.

jc is the wild card. you have to take the last position. >> quite a run given the earnings ahead and you sell on the news obviously. at what level would cisco start looking attractive to you? >> we talk about retracements and you get to 19, 19.5 and if you don't think that's a move for you and you can stomach a couple of bucks, cisco is fine and if you are trading and can't afford to lose, you have to take profits. >> see you tonight.t. >> see you, baby. >> my wingman on the right. tonight's fast money. ceo of mca fee discusses the "power lunch" with the trip of trader. the stock bond and equity trader heading into next week. more fast money halftime report after this quick break. >> the summer rally going strong with stocks on track for the best july in 20 years. our top traders put on the sun

tan lotion. and find a place that will stay hot in august. and the war games trade. the ceo of mca fee trades the growing super security threat. botox, still a buy? what is giving the company a lift. on america's post market show tonight. what's on the minds of independent investors? let's ask. when i trade, i want a straightforward price. they lure you in with a $5.99 trade, then charge you 15 bucks. you get a low price, but only if you make a ton of trades. at td ameritrade, every online stock trade is just $9.99. period. no matter how often you trade. no matter how much money you have in the account.

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we want to head for the chart of the day. the energy space you are pointing to the lih. >> i like this. it's a way for the people watching the show to play the energy area. i think this is the best way to go right now. they outperformed since the beginning of the year and the range is transitioning higher.

we have been 60 to 95 and now it looks like we are ni to 125. they all pointed at 125, 135. good upside here and good outperformance as well. >> time to call the close. let's go around the horn. do you buy or sell? bill, what do you say? >> 1,000 was a big target and i talk about that in may. we were a profit taker at about 1,000. get back in the market and we are going higher. >> jimbo? >> i think we sell. the fact that the dollar is weakening and the stock market doesn't care makes me think it's off kilter. >> by the close, fun money goes to 1050 and 1100. >> i would still be a small buyer, but the market will be unscathed. a good day to take the rest of the day off. >> you can still watch cnbc.

what is next for this health care.. heavy weight. up next, "power lunch" with $500 billion worth of advice from one of the top strategists. >> we're have david kelly joining us and we bring you live coverage of president obama's remarks on the economy and he is expected to discuss the cash for clunkers program. also a coalition of businesses telling congress the health care legislation is the wrong prescription for america. we talk gdp and the jobs picture for america's cities . we get his reaction to the president's comments on the economy straight ahead. >> and we celebrate a birthday. >> yes. with cake. the house is close to a vote on extending the cash for clunkers program with $2 billion in additional funding. there doubts in the senate.

president obama scheduled to comment on the economy in the clunkers program about 15 minutes from now. senate banking committee will have surgery for early stage prostate cancer and expects a quick recovery. now first in business worldwide. i'm mary thompson. weekend to "power lunch" in about 15 minutes, president obama will be discussing the state of the economy after we got a little better than expected report on the first look at the second quarter growth prospects. the gtp showed 1% and 1.5%. those are expected to get under way at about 1:15. we will get to that. he has been having lunch with the ceo of verizon? >> and starbucks trying to get into the economy. >> they will get along very well. he and howard shuttle i'm sure will get along well.

very charming and got a really big vision with health care for employees. >> i hope they brought their credit cards with them. >> that's a great story. >> the president is expected to talk about the cash for clunkers program. lawmakers on capitol hill are voting on whether to pass legislation to extend and add more money to the program. they were voting on it right now and they'll have the results in a couple of seconds. >> 19 on the democratic side and seven republicans said yes so far. >> the bill is two pages long. >> that's it? >> no. >> never happens. they are working so fast. >> i'm surprised it's that long. we need $2 billion more please. >> i'm michelle caruso cabrera. the dow is poised to finish their best july in 20 years. bank of america, 3 m, travelers

among the winners. joining us for this half hour is david kelly, chief market strategist and nearly $500 billion in assets.. is the recession over? >> well, yes, i think it is, but the recession hit a trough. the economists measure from the best month to the worst month. are we past the worst? yes. in july we will see increases in production and increases in retail sales and that tells me they will say yes. june was the worst month. >> what will the recovery look like? >> they will start reasonably fast because they are down so low. >> what are about the car sales? >> the cash for clunkers thing, what does that say? >> more than anything else, it says as bad as this program is to get people to buy vehicles, why not have a simple plan? i love that it's two pages. why not make it simple? they are adding money and make a

simple program. >> doesn't it show to you, david, that consumers have a price. they are willing to buy if the price is right. >> you have to give people a reason to do it now. it was underfunded the if you didn't do it now, you wouldn't be able to take advantage of it. >> you argued for more aggressive incentives and a time limit for housing. >> absolutely. it's the same deal. what you need to do and if anybody wants to buy a house, give them 7,000. have it stay out and give people a reason to do it now. >> can it have a positive effect to have people come in.

>> one of the hall marks of economic recovery. all the way to the production lines and all the car dealers running ads on tv. all of things add to output. if you can get vehicles back to normal and housing back to normal in terms of start and sales, the recession would be over. >> 52 yeahs and 10 nays. i wonder who is voting against this? >> doesn't make sense. can we draw a bigger lesson. they will roll their eyes. when we were having a debate about the stimulus, it should be lots of spending or tax cuts or subsidies.s. doesn't this answer the question should have been more tax cuts? >> i think it does. it tells you what you need to do is give the private sector a reason to do stuff rather than spend government money. as much as -- it's well-intentioned and the stimulus we have seen in terms of spending, that is not receiving into the economy properly and this $1 billion has

done more to stimulate the economy than the other $700 billion so far. >> to finance the auto sales, rates have been going down and rick san teley is back in chicago. what's going on? >> i can tell you that interest rates are going down, but it's about the end of the month. it's not a staggering amount. let's say they are up five or six basis points and that's coming off. the huge story of the day is the dollar. around 9:30, 10:00 eastern, it started to give it up. technicians say a friday close is the most important of the week. this is a friday end of the month close. the significance is ramped up. as you look at the charts, we are not at the lows of the day, but we are sitting on what looks like a new low close for the dollar index going all the way back to september of last year. after the big news last week or so that it held that level to

breakthrough today, you have to pay attention. sure, to balance the argument, maybe it's end of the month pressures and many times, technical significance is more important in the trend direction on the big end of the month or quarter closes than anything else. you want to pay close attention. back to you. >> the credit markets are paying a lot of attention to what's going on in the dollar and whether or not that means dramatic moves along parts of the curves in the last week. what about the overall health of the credit markets as it pertains to deals and the ability to finance and get credit and all of that. >> it absolutely improved. here we are two years since the credit crisis began. we can measure the anniversary, but let's say two years to the day. certainly things worsened from 2007 to 2008 into the early part of 2009.

it's no surprise to our viewer who is pay attention that things improved since then. that doesn't mean that we are back to levels we saw in 2007 or before that, but none the less, look at this chart. this is high yield to the point. investment grade, we have seen an incredible amount of issuance.. take a look at where high yield is trading. the highs are 18% above treasuries. nobody had seen a spread like that in history. we are back to levels that had previously been the highs. 1990 and 91 around 1 thousand then basis points. >> this is normal. >> normal extreems. go back to the chart and we move past there, 600 basis points is the average over the last 20 years for spreads. that gives you a sense as to where we are and where we have been. perhaps where we are going. yes, things continue to improve and the next chart you have a peek at was worth looking at.

these are loans. corporate and industrial loans and certainly a part of this is leverage loans. back again to around 8%. that's also a significant improvement. are you going to be able to? >> no, but you can buy a car. bring in the clunker. >> there is a hope among a number of firms that you get financed, and credit is flowing again. >> when you came on the set, i said how is business and you said good. >> individual investors are searching for yields and pouring money into high yield funds and that flow of capital is pushing down the spreads, making it easier for companies who are having to refinance at 18%. now they can refinance at lower rates. this flow of investor cash going

into the markets is actually helping. it's helping. >> people are become less risk averse which is crucial, right? >> no doubt. the markets have not opened up and that is an important source of funds for many areas. that we have to wait and see. >> thank you, david. see you later. >> and david kelly as well. >> we are waiting and about eight minutes to go on the vote for cash for clunkers extension. the president will be talking in about five or six minutes and carrying that live out of the white house as well. >> he finished lunch with the ceo of starbucks and verizon and wal-mart. i wonder how much he charged. here are the stocks trading today. starbucks and you in kor are lower. we will talk about the price of lunch at the white house. announcer: some people buy a car based on the deal they get.

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the president is set to talk about the economy. with the cash for clunkers going on, i want to see the time frame. i think they have about five or six minutes to go. he may wait for that to finish. it's an overwhelming majority

and i would like to know beyond ron paul who would vote against it. the senate has to vote on it and the president will be speaking beyond that. a couple of things we are awaiting. let's bring in bob dasani. >> the important thing and rick had it right. the dollar weakness is helping to prop up key segments and take a look at the dollar chart. we are at a 10-month low on the dollar. there days where we get the dollar moving on the upside.. this is not one of them. the trend is down here and what's happening is because the dollar is weaker here, all the commodity names, there is a one-year part. all the names are moving to the upside and gold is up and copper and platinum. when the dollar started falling apart, similar charts and the

result is your usual trend in commodity stocks happened one example is the mining.. all start moving to the upside. let's look at the month. the key story is simple. traders began to really believe the cyclical story. there is the dow industrials. we are up 8.5%. the caterpillars and the financial stocks are all moving. look at the full screen for the month of july. the leaders were cyclical.l. there is the companies. the big industrials and commodity names. housing and semi conductors and the oil stocks. you know the story there. back to you. >> thank you very much. bob dasani. we continue the focus and we look at the travel and leisure sector. jane, hopefully we won't interrupt you for the president. >> i won't mind. the stocks have been doing well even if the industry is not.

it's up over 10%. the hotel industry is having a rough time and news from royal caribbean that a ship pulled d into a french port and 60 people diagnosed with the h 1 n 1 virus they are not denying it, but 60 people are sick with cold and flu-like symptoms. they have been the opposite of other stocks. you can see how it dropped. they have said on the positive side, discounting is slow and bookings are up and things are looking better. citigroup initiated with a buy. for hotels and gaming on the las vegas strip, good news and bad news. the latest numbers are for may. showing a 5% drop from april. a 28% drop in relieve and a 33% drop in attendance and a 6% drop in revenue for gaming. no good news there. wynn in las vegas is not pretty, but wynn did manage to surprise with the profit guides thanks

mostly to cost cutting. back to you. >> thank you very much, jane wells. the action on capitol hill is what we are watching. the cash for clunkers being voted ochl. >> we are waiting for the president as well to speak in a few moments. david kelly, as he does come out and talk about the state of the economy, i will put the question to you. as it does come, a lot of people wonder whether there have been fundamental changes in the way people behave and how that influence bhas the recovery looks like and what it can do to push it along. >> it is such a deep recession it is a rate of rebound.d. that may be influenced. a lot of older americans are

really hurt by what happened. older americans will be slow to spend. the rest of the american economy will be more normal. i am buying the idea like the expansion of the 80s or 90s. getting back to full employment. it takes us five years to get there. >> take a quick break before the president comes up and makes his comments. we are back in a couple of seconds with more on "power lunch." welcome to the now network. population: 49 million.

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we told you yesterday we would celebrate a birthday today. milton friedman would be 97 today and won the nobel prize and the greatest spokesperson for the free market. >> i thought you were. >> anyhow, we will cut the cake and you five things you didn't know about milton friedman. >> we ponder what he would think about the reform package. >> hard to talk about that. >> they are making their voice heard on health care reform. companies sending a letter to congress saying a house plan would hurt the ability to cover employees. the benefits and the group involved and a company for xerox. thank you for joining us. give me the executive summary. what's your problem with the health care reform bill as it

exists right now. as it pertains to the compromise in the house. >> the problem with the house bill is we believe that health care reform should start with a fundamental strategy to control cost. premiums have doubled. >> you don't think the house bill does that? >> it moves in the opposite direction. it's not business as they are saying this. we want to be part of a reform, but the budget office said that this raises the cost curve. it's moving in the wrong direction and has significant provisions to thurt the ability to provide insurance for employees. >> one of the sentences in the letter you sent to the president and i quote, the house health care reform bill includes costly and unaccessible changes to the employee retirement security act to undermine the ability to sponsor health care for employees and families and raise cost for employers and employees

without improving quality or efficiency. the members of congress are likely to listen to this? >> we had over 100 meetings on the subject with members of congress and congressional staff.f. we talk about the senate and the senate finance committee and we have been encouraged by their understanding of the experience and provisions to the abilities of the employers to provide insurance. >> forgive me for interrupting. a moment of history, the extension to the cash for clunkers bill has in fact passed the house. the vote right now as it stand r stands, 311 yeahs, 105 nays. this has to make it through the senate. they go out after today and the senate is in more week and they will take it up at that time. we will hear from the president in a moment. he is coming up to speak on the economy in a moment. >> yes.

the national coalition of benefits, what do you think in terms of whether or not individuals should be buying their own health care. wouldn't it be great to have consumer demand? >> there needs to be reform in the insurance market. no doubt about it. we live in a system where over 170 million americans get insurance to employers. >> do you think that's a problem that we are not the actual customers. regardless of whether it's the employer or the government that will provide the health care. >> whether it's a problem or not, we believe employees like getting benefits from employers and it is a system that has been in place. >> of course. it's cheaper. >> for will be a huge mistake to try to unwind the system. 170 million americans depend on getting insurance that way and that would be a massive change with a lot of unintended consequenc consequences. health care reform should

strengthen the system because too many rely on the coverage. >> let's go to the white house to the president talking about the economy. >> we received this morning. the gross domestic product or gdp is the measure of our overall economic growth as a nation. this morning the gdp revealed that the recession we faced when i took office was even deeper than anyone thought at the time. it told us how close we were to the edge. but the gdp also revealed in the last few months, the economy has done measurably better than we had thought. better than expected. as many economists will tell you, that part of the progress is attributable to the recovery act. this and other difficult, but

important steps we have taken over the last six months helped us put the brakes on the recession. we took unprecedented action to stem the spread by helping responsible homeowners sti in their homes. rerevived the credit markets and opened up loans for families and small businesses and enacted a recovery act that put tax cuts in the pockets of middle class families and small businesses and extended unemployment insurance for those who lost jobs and provided relief to struggling states to prevent lay offs and made investments that are putting people back to work, building bridges and roads and schools and hospitals. now, i realize that none of this is much comfort to those americans who are out of work and struggling to make ends meet. when we receive our monthly jobs report, it is likely to show we are still continuing to lose far too many jobs. as far as i'm concerned, we

won't have a recovery as long as we keep losing jobs. i will not rest until every american who wants a job can find one. history does show you need to have economic growth before you have job growth. today's gdp is an important sign that the economy is headed in the right direction. business investments which had been plummeting in the last several months is showing signs of stabilizing. this means that eventually businesses will grow be growing and hiring again and it will feel like a recovery to the american people. this won't happen overnight. as i said it took us many more months to fully dig ourselves out of a recession that we now know was even deeper than anyone thought. i will continue to work every single day and take every step necessary to make sure that happens. i also intend to make sure that

we don't return to an economy where we have profits and maxed out credit cards. that doesn't create a lot of job. we need robust growth and health care costs that are not dragging down businesses and families and clean energy jobs and industries. that's where the future is and where the jobs are. now, one of the steps we have taken to boost the economy is known as cash for clunkers. basically this allows folks to trade in their older, less fuel-efficient cars for credits that go towards buying fewer, more fuel-efficient cars. this gives consumers a break and replaces carbon pollution and our dependence on foreign oil and strengthens the american auto industry. not more than a few weeks ago, skeptics who weren't sure that this cash for clunkers program would work. i'm happy to report that it succeeded well beyond our expectations and all

expectations and we are already seeing a dramatic increase in show room traffic at local car dealers. it's working so well, that there concern that is the funds in this program might soon be exhausted. we are working with congress on a bipartisan solution to ensure the program can continue for anyone looking to make a trade. i'm encouraged that republicans and democrats in the house are working to pass legislation today that would use some recovery act funding to keep this program going. funding that we would work to replace down the road. thanks to quick bipartisan responses, we are doing everything possible to continue the program and helping consumers and the auto industry contribute to recovery. i'm pleased with the progress made in the house today on the cash for clunkers program. i am guardedly optimistic about the direction that our economy is going. we have a lot more work to do

and i want to make sure all the americans out there who are struggling because they are out of work or not having enough work know that this administration will not rest until the movement we are seeing on the business side starts translating into jobs for those people and their families. thank you very much, everybody. >> the president talking about the economy and there is a question for which there is no answer, but i will ask anyway. what do you think the gdp would have been without the stimulus package passed earlier this year. >> you can take the 5.6 increase in government spending and probably shave that in half, i want to say to take 2 1/2 off. deficit spending in general is

stillilative. >> there would have been a bigger decline in consumer spending. we saw a number of some tax cuts and social security checks that boosted disposable income and were falling more. >> what would milton have thought of the stimulus package? >> i don't think he would have liked it. >> really? parks. >> he would have gone with tax cuts. >> here would have let the banks go under? >> milton friedman woochb 97 and won the nobel prize for the study and he was the world's foremost advocate. the five things i bet you didn't know. they called him crazy when they said currency should float. we yell at the chinese that the currency should float. he was against the draft because it hit the true cost of war and he thought government could go to war. he believed in the legalization of drugs and believed in the school voucher system. he said social security would be

privatized because it would recognize the depths we are putting on the young. >> 1987. i was seeing a large investment conference and milton friedman was the key note speaker. i introduced him just the day before i was walking around the city of san francisco and went in a used bookstore and i found a remainder copy of free shoes. i bought it at a 90% discount. i mentioned this in my introduction to dr. friedman. what a great country and a capitalist society when i can buy a classic text at a 90% discount. got a great laugh in the audience. one person didn't laugh. milton friedman was not pleased and he refused to sign it. he signed to my wife. a little protest. >> that's a great story. milton friedman signed the book. >> we have a cake for him. >> happy birthday, milton.

>> david kelly is the most important economist? >> maybe the second most, but very influential because he spoke eloquently and we miss his voice. >> who was number one? >> canes i think. >> no! we are going to break. i want a break. michelle is feeling faint. see you on the other side. today there's a way to save more for retirement,

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on air editor charlie joins us now with more. >> how come you get the assignments. >> i intrude him. >> several times, yeah. >> that was an amazing segment and if there is anybody who stands for free market capitalism -- >> michelle caruso cabrera.

>> and milton friedman number three. i'm way down on the list. >> what's going on with ubs? >> listen, ozzy is the guy that runs it. i don't know what's part of this settlement. isn't it sealed? we don't know the details of the settlement. for all i know they have to sell the department. i doubt that's the case. this is what he wants to do. he wants to run it for three years. the brokerage division. lots of reports that people want to buy. we wanted first. we brought a team of investors that wanted to buy it. from what i understand, bob can went to ubs from kkr to for a deal and the legendary joe went to ozzy grubale went to try to smell them out and he said no.

there a couple of names.s. put their names on the short list. ironically it's one of the games that tried to buy it. possibly joining to run the private client.. one of the more respected guys on the street. he ran merrill lynch's department in the stan o'neal years. just for surviving, this guy should be getting a medal of honor. he is a gentlemen that runs wachovia. that's the flan he wants to do. with sources close to him, he is telling me he wants to run this thing and sell it.

by the way, guys. who are you going to sell it to? the only players you are going to sell it is kkr. they are not going to bid up for it. he has a legacy issue. there was i believe the insurance company that he could have sold it and he waited a while and sold it. i think it was winter. i know you have to go, but please. >> you just did. >> you can come here. >> as you know, it's a hot july and the dow is on track for the best july in 20 years. what's in store for next week to kickoff a new trading month. david kelly joins us along with matt at the big board and live from the cme and over at the nymex, nice to have you here. does this rally we have seen

continue into august? >> no reason to think it wouldn't right now. we are guardedly optimistic and we had a pull back and good rallies to close each day. the risk tolerance increase and not there completely. we are at one side of the market and the sellers are not here right now. >> michael, we saw the yield curve get flat this week. are we going to see more of that? >> the smart mondenot lose the move in equities. they did very well and some of that being shifted into the treasury market. there is probably going to be a smart money move. what we are expecting is asian markets and equities to lead in excess of over 50%. that in itself will start to stabilize the markets and the bonds can be a recipient.

right now at least confidence is dwindling. that's what's going to happen with health care and government doesn't have this figured out yet. one of the reasons bonds have been a recipient. the yields stayed that way and the 10-years where you looked right now -- >> what we saw this week when it comes to the. >> higher or lower on oil? >> we seem to be stuck in a range here like $62 up to $72. two days ago when it looked like we would go from the high 50s and turned around and shot back up another $4 for wednesday. another $2 between yesterday and today. we are back up to the higher end of the trading range, although who knows. we will see 72 again. >> gentlemen, thank you. david kelly, final comment. what will lead this recovery? the united states or as matt mentioned and others have

mentioned, it will be china and the emerging markets? >> in the economic terms, the emerging markets, yes. i think the u.s. is now turning the corner. asia turned first, but we are turning and that is hopeful. i think we are on the right track here. >> all right. thanks. appreciate it very much. >> take a piece of cake on the way out. >> president obama dined with the ceos of verizon, new kor and starbucks, but even for the most powerful business leaders in america, no free lunch at the white house. joining us to complain they have to pay for lunch at the white house now. >> that's right. literally speaking. the ceos of the white house staff is collecting kredsit card numbers and billing them for the value of their lunch at the white house. the white house said this is

done to prevent conflict of interest between the ceo and the president. i am told that they did in fact bill the ce, os who went there today as well. they did not bill professor gates and the police sergeant for beers yesterday. >> thank goodness. >> those beers were on the house. >> they want to be bullet-proof on appearance of conflict. the president is conferring with as many ceos as he d. george bush didn't confer to avoid all of that. the ceo of verizon must be undoing influence on the president right now. >> that shows you how sensitive this issue is with the relationship between obama and the private sector. we are told that george bush did not have lunches with the ceos because he was wary of being too close and obama is dealing with the biggest collapse since the great depression. he has to reach out to the ceos

and talk about how to fix the private sector and the problems that are going on. they are handle together gingerly and accepting them bills for the price of their lunch. typically the ethical concern goes the other way and concerned about businesses buying lunch for government officials. not government officials for businesses. >> thanks. good story. we enjoyed it very much. >> a personal credit card or the corporate credit card. >> we will be back and talk with members of congress and how they vote on the cash for clunkers. the executive compensation bill after this. 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

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and medicare guide. ♪ we are off to the races at the house of representatives.

they have begun debate on the issue of executive compensation and i guess they will vote on it now. the so-called save for pay with a non-binding vote on executive compensation. the debate is under way and the vote is under way in the house. joining us is representative scott ger on from new jersey. i guess you will vote no on that, but i will ask you on the cash for clunkers. you voted no on that as well? >> sure. >> aren't there car dealerships in maine and elsewhere that you represent who would be upset to know their congressman voted no on a plan that brought people into the show rooms right now. >> here's a plan where the administration doesn't have a plan. we are getting calls from the dealers and saying people came in and they were going to go through the deal and we find out there is not enough money. the money is stuck in the pipeline and literally when i

was on the floor, dealing and managing the pay to play bill, they were still trying to figure out how to get the bill. >> you don't have a problem with the theory and how it's executed. >> i have a problem as to where the theory is. quibbling about the execution. >> no, no, no. i have a problem as to where the money is coming from and we will offset this from spend it on the program. >> they will take it from the provision of the stimulus package, i understand. >> money that we don't have as well. the stimulus package that congress didn't have, we had to borrow that. what they should have had is come out with the more thought out program and how it would work and the environmentalists said it was good. >> isn't it possible they would have a stillilative impact on the automotive business? >> any time you take tens of billions of dollars from the public and brings us to washington and send it someplace

else.. you can have a short-term effect. was it being administered back and did they need to back sail here and go on with the new program. they were as typical trying to rush it through before the end of the year. never addressed. >> representative, you voted no or planned to vote no. >> i was managing and voted downward. the bureaucrats are coming here for every financial institution across the country and both as we define them, this bill will pass in the next 15 or 20 minutes. >> do you think there is no issue when it comes to executive compensation?? is it excessive or just that you don't think the government should be involved. if you think there is a problem, how do you get it solved?

>> the pay is going out, but going out to companies that received tax dollars, t.a.r.p. funds in other words. i have a question where tax dollars are going out and the government should have some insight and also consideration, but to say for every single corporation across this country and every financial institution from the ceo to receptionist that they somehow know better not only than the board of directors, but the stockholders too. i disagree with that. >> if we are looking at the vote on executive compensation running behind right now. >> 164 nay. >> are they voting on that? >> if they are, they are voting on a republican alternative to it right now. >> they are voting on the amendment from among other things make it every three years and not every year. >> that was part of my amendment and they have that. >> what we may be see suggest another amendment going down before they get to the bill themselves.

>> the economy taking center stage at the national urban league conference in chicago. mark joins us with reaction to president obama's remarks on the economy and much more.

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as the economy struggles, unemployment stands at 9.5%. among minorities it is as high as 15%. sharon epier son is in chicago with the conference of the national urban league joined by the president and ceo. hi, sharon. >> 5500 people are gathered here for the national urban league conference. as we get the numbers here about the economy, still contracting down 1%. vice president biden in his remarks a few moments ago he said we will be out of a recession bite last quarter, but what do you think is really happening in our communities? >> even if the economy begins to grow again, it will be slow and unemployment will continue to rise, but i was pleased that the vice president cleared up

confusion about the stimulus and placed a greater focus on the things that the stimulus has done already by increasing unemployment benefits and increasing food stamps that puts money in people's hands that they spend. >> let's listen about what the vice president had to say because he spoke about unemployment to the conference. >> i asked the cabinet with permission of the president to make sure we meet our commitment. minority-owned businesses and minorities, but to women and to veterans. they are among the highest unemployed rates in the country. >> he told you specifically in the next 90 days, he is going to be doing things that will help not only the national urban league and the country, but what? >> he talked about small business and putting more pressure on states to make sure they spent the money and spent it quickly. spent it in areas of high unemployment.

i think you will hear more facts about what in fact the money is being spent on. thank you very much for joining us. back to you. >> thank you very much. when we come back, we will cut cake and talk markets and wrap up this edition of "power lunch."