the new order component rose well above that.t. it's been rising in other countries as well. ism went out of their way to say this would correspondent to a 2.4 increase in real gdp. that's good news. growth numbers. 2.4%, folks. take a look at some of the other sectors. financials had good -- were up, good comments at the european financials. from hsbc as well as barclays. the weak dollar, again, new lows in the dollar index pushed the commodities and commodity stocks. and autos.s. the manufacturers were stronger on those car sales reports. and yes, the clunkers was a factor, but still we had good numbers overall here.e. the other financials, sbc and barclays had very positive comments. they pushed things up. bank of america, $33 million to settle charges that they made false or misleading statements regarding bonuses paid to merrill lynch executives. and mary thompson's going to give you all the details on that in just a moment. on the cyclicals and the weak dollar, most of the major names are the highest levels since september or october of last year. all the big names were up 2%, 3%, 4%, even 6% or 7% here. auto storksz ford's at a new

high. toyota's at the highest level since september.. the big car dealers like sonic automotive were up. again, the companies that have replacement parts are the ones that were down here today. finally, the defensive names looking very good here. excuse me. are the big laggards here as the people out there who are actively in the market want cyclicals, not defensive.e. there's the s&p 500 over 1,000 there for the first time since november. and as i said, 66 was the march 9th low. exactly 50% above that. melissa, back to you. >> yeah, ominous, but we don't mind now. thanks so much, bob pisani. a management shake-up and an s.e.c. settlement for bank of america today. cnbc's mary thompson joins us now with the details. mary, a huge news day for b of a and the order of the announcements not lost on us in the media business. >> no, no, no. you had the settlement first and then quickly those management changes. melissa, the banking giant has laid out a succession plan for ceo ken lewis as well as settling s.e.c. charges that it made false and misleading statements about bonuses paid to merrill lynch employees. first to the changes in the c suite. b of a saying this puts a number of executives in line to replace

lewis when he steps down.n. among them, 44-year-old sallie krawcheck, the former head of citi's global wealth management unit. she's joining b of a to run its global wealth and investment management business. cnbc's charlie gasparino reporting that aloung with krawcheck brian moynihan, now heaved consumer banking, tom montag, head of global markets, and now global corporate and investment banking, barbara desoer who is head of home loans and insurance and ceo joe price are the five horsemen in the race to succeed lewis. now, in a statement b of a didn't name any specific candidates or say when the 62-year-old lewis might step down. the bank says lewis maintains the board's full support. twice named bankerer of the year, shareholders stripped the 40-year-old b of a chairman of his title this spring over bank of america's acquisition of merrill lynch. lewis said woe like to stay on until the charlotte-based bank repays the tarp money it owes the government. separately, without admitting or denying any guilt, b of a is settling charges with the s.e.c., over $3.6 billion in bonuses paid to merrill

employees last year. the s.e.c. charging contrary to public statements the b of a had agreed to pay 5.8 billion in bonuses as part of its agreement to buy merrill lynch. the s.e.c. says the bonus pool and merrill's failing financial health made this material information but b of a failed to disclose it in the proxy when shareholders voted on the deal. >> interesting. yeah, and 33 million doesn't seem like that much. >> 33 million being the fine that it paid. it's pocket change for b of a. >> mary thompson, thanks so much. and coming up we'll hear fray former s.e.c. enforcement official on whether the latest black eye could signal the end of the line for ken lewis. that's coming up. but now taking a look at today's business headline, a group of bernard madoff's victims is objecting to the fees, the trustee overseeing the liquidation of madoff's assets is requesting. trustee irving picard is asking for $15 million for the three months of work he has been on the job. but the victims say they would rather see the bulk of that money go to the casualties of madoff's ponzi scheme. and according to internet data firm stat counter microsoft's

bing search engine increased its market share by 1% in july to nearly 9 1/2%. microsoft and search partner yahoo now control more than 20% of the internet search market. rival google, however, still controls more than 3/4 of that market. and only 6,000 of general motors' blue-collar workers taking the automaker's latest early retirement and buyout offers. that fell about 7,500 short of its goal. gm has said it wants to end the year with just over 40,000 workers, meaning more layoffs at gm factories could be coming soon. in the meantime the government's cash for clunkers giving auto sales a boost last month. cnbc's phil lebeau is outside a dealership in lagrange, illinois with the details. hi, phil. >> hi, melissa. and we just received word from auto data, an auto research firm, that the monthly sales rate for july coming in at 11.2 million. clearly the best month in a long time for the auto industry. here's how the major automakers did, all better than expected.

you see chrysler, gm, and toyota all reporting declines, but smaller than expected declines. the real story, ford, an increase, its first monthly increase in nearly two years. that's one reason why shares of ford jumped substantially today. meanwhile, the senate is considering a $2 billion extension on the cash for clunker bill. now, this bill needs to be extended within the next couple of days, or else the program runs out of money. the white house is optimistic that the senate will reach an agreement. >> this program is continuing. it's working. it's obviously working quite well. i think for this program to be extended, for me to be able to give assurances later in the week, we're going to need to see the senate act. and i think that's what the president wants the senate to do.. >> and the senate needs to act quickly. for more on the cash for clunkers program and whether or not it will be extended check out the blog, behindthewheel.cnbc.com. melissa, without an extension,

the $2 billion from the senate, the cash for clunkers program runs out of money tomorrow. melissa, back to you. >> phil lebeau, thanks so much. joining us now to break down today's market action is virginia dawson, president and ceo of claremont investment partners and co-manager of the morningstar four-star-rated industry leader investment fund. we also have jeff davis cio of lee munder, boston-based investment firm that managed $4 billion in assets.. thanks to both of you for joining us. virginia, i'll start with you. what do you think of today's action? >> what we like to say is we see the market going up. it's great. the cash for clunkers, whether you believe that the 2 million's going to be approved or not, it's been a great deal. it's gotten people looking into the market. it's gotten people looking into opening up their pocketbooks. and i think this is just going to keep this bull market going. >> yeah, jeff, do you agree with that? >> yeah.h. i feel pretty good. i mean, 50% rally off the bottom is just about average now for a market rally off the bottom historically. so that's good. it hasn't done it with any

economic strength or in the earnings we've just seen are not revenue driven, they're expense driven. but you know, that said, you know, it's wait and see. the market's going to have to earn it from here on. >> virginia, jeff says it's not happening with any sign of economic strength or any proof of it, i guess, it's in anticipation of that. is it getting ahead of itself p. >> no, i don't think so. i think we're going to have two more quarters of making it on the bottom line. companies are doing the right thing.g. they're cutting costs, cutting expenses. with the inventory numbers the way they were for gdp we can see production's going to have to increase. increased production could mean increased jobs. i think we're just going to keep going up from here. >> i mean, jeff, we make a lot of these round numbers, but it is 50% for the s&p, 58% for the nasdaq. that's a huge rally. does that make you nervous we might see some kind of a pullback, or is it proof there's really some strength in this market? >> keep pushing that out, you go to the emerging markets and you've got 80%-plus rally from the bottom. no, i'm actually not convinced -- look, even in '73, '74 and '33 you had powerful

rallies into lousy economies. so i don't think this is unusual. we haven't even fixed the derivatives crisis yet. i don't mean to sound skeptical because i'm actually fairly bullish here. but you know, a lot remains to be seen before people start loading up the bandwagon and jumping into equities full bore. >> so the important question is of course what are you doing with your money right now. virginia, how are you betting? >> we're betting on financials. the sector's gotten smaller and smaller as companies have gone away. people want to put their money somewhere. they're putting their money in brokerages. we're not going back to the days of putting our money under the mattress. especially in the retail space we love the retail brokers. and on the institutional brokerage side companies have to have somewhere to access the market so they have to go back to those brokers. >> what did you think of b of a on that news today in would you buy them today or no? >> yes, i would. whether or not you like the way the deal was done with ken lewis, at the end of the day b of a got a great retail -- it's basically b of a and morgan

stanley in that space. those are the two big competitors. maybe the deal wasn't done in the best way but -- >> we are where we are.. >> yeah. >> jeff, where are you putting your money right now? >> as much as people seem to be liking producers and cyclicals right now, kind of like any growth that has no relationship to commodities because underlying these nice numbers today is a rally in energy and commodities. and that's kind of ominous.s. you just can't have a sustained economic growth when if you start seeing commodities and energy spiking again. >> we're going to leave it there. thanks to both of you for joining us. we appreciate it. google ceo eric schmidt is resigning from apple's board of directors. cnbc's silicon valley bureau chief jim goldman explains what's behind the move and what it means for both google and apple going forward. jim. >> yeah, melissa, good evening to you.. the surprise isn't that eric schmidt is off apple's board but that it took this long for the main players in this drama to come to this conclusion. schmidt joined apple's board three years ago as both companies tried to come up with a way to crack microsoft's

dominance. developing cool new software and hardware to do the trick. they shared two common directors in schmidt and former genentech ceo arthur levinson, and al gore, who serves on apple's board. he's a special adviser to schmidt.t. in fact, at macworld two years ago schmidt joked about so much overlap.p. >> you know, i've had the privilege of joining the board, and there's a lot of relationships between the board, and i thought, you know, if we just sort of merged the companies we could call it appleoo. >> funny then, not so funny today. venture capitalists fund lots of start-ups and sit on multiple boards simultaneously. the issue for google and apple is the ftc opened an inquiry into the relationship between the two companies. that's an investigation the ftc says late today it will continue even with the schmidt departure since arthur levinson still sits on both boards. schmidt has always dismissed

these competitive concerns, doing so as late as saturday, even as apple faces big-time competitive threats from google's mobile phone, google's mobile operating system android, and the upcoming chrome o.s. more and more google is encroaching on apple's territory and there simply was no way schmidt could keep recusing himself from so many conflicts as an apple board member. apple's decision to ban the google voice software from its popular app store last week, well, that spawned an fcc inquiry late friday evening. that surely didn't help matters either with apple and google far more competitors than collaborators today. melissa, back to you.. >> jim goldman, thanks so much. still to come on "the closing bell" beside the fact of s&p closing above 1,000 for the first time since november a former s.e.c. enforcement official tells us whether the regulator was correct in charging bank of america for misleading statements and if ceo ken lewis's job is in jeopardy after the latest mess. and then later we'll discuss what role fed chairman ben bernanke and the central bank had in fixing the financial crisis and what ripple effect those actions could have on the

economy going forward. we'll be right back.

okay. take a look at the s&p. over 1,000. this is the first time since november. remember, this is a 50% rally off that march low.

we're not just talking round numbers, not just talking about being over 1,000. 1 1/2% on the day. not giving up those gains at the close. pretty impressive. the securities and exchange commission has charged bank of america with lying to investors. at the heart of the matter, billions of dollars in bonuses paid to merrill lynch employees. will this latest debacle seal ken lewis's fate? joining me now to discuss, robert hime, senior partner at meyers & hime.. also a former s.e.c. enforcement official. let me get right to the deal with the s.e.c. what do you read into that?? $30 million on 5.8 billion in bonuses doesn't seem like a lot to us. how severe does it seem to you? >> well, it's not when you compare it to the amount of bonuses, but certainly a $33 million fine by the s.e.c. on any company is really meant to send a message to that company that the s.e.c. won't tolerate investors being misled. and i think here you had a pretty egregious example based on the s.e.c.'s complaint of investors being misled to approve this merger.

>> i mean, what does it really mean from there, though? because they didn't have to admit wrongdoing, which i understand is standard. but it just -- it seems like kind of a rounding error on their balance sheet. should it have been more? >> well, i think you can always make arguments for having a stiffer fine, but this is really going to get the attention of the company. the s.e.c. is also very mindful of the fact this economy is not very strong right now and that bank of america, they don't want to do anything to really jeopardize the company and impose a fine that would likely be material. it's a part in sending a message, and i think a management shake-up is in the works as a result of this. >> you do. you think that ken lewis could be on the way out? >> i think so. i think the writing is on the wall between the bungled merrill lynch acquisition as well as all the other issues that have been leading up to today with the $33 million fine. shareholders by and large have not been very happy with his performance. i zmi this fine will just be more writing on the wall for mr. lewis. >> i hear what you're saying, ,

but whenever i argue that people say he has held on this long, though. i mean, it has been mounting against him for so long, and he hasn't gone anywhere yet. is there any chance you think he survives? >> well, there's always a chance that he could survive. but i think this might be the straw that breaks the camel's back. he's certainly shown a lot of resiliency and mr. lewis has stuck it out overt time that he's been with bank of america. but when you compare this fine and really the misleading nature of the acquisition of merrill lynch, particularly with bonuses, which were such a hot topic issue, with respect to the bailouts and the financial assistance, this could really be the event that makes mr. lewis have to go. >> also, as a former s.e.c. official we have been making a lot of fun today over the way the announcements were made. 12:30 the s.e.c. says that they are charging b of a and then lo and behold at 1:07 a settlement is announced and then at 1:17 they talk about the new people coming on board to turn around the country. are we right or wrong to be suspicious of all this timing? >> i think the timing is

suspicious. this was obviously a well-orchestrated plan. settlements with the s.e.c. don't get done in an hour. so certainly the company was aware that there was going to be a settlement. by and large, it's good news for investors. it puts the s.e.c. investigation behind bank of america. they can now move on and focus on its core business. and with the new managers coming in there's a real indication of a management shake-up and potentially grooming a successor to mr. lewis. >> robert-s there anyone else who should be shaking in their boots in the walk of this charge, maybe aig? >> potentially. but i think the s.e.c. was very careful to limit the nature of the charges to something that was very specific with the bank of america transaction and the specific proxy statements that were filed with the s.e.c.. so this is not a case that's s going to carry a lot of precedent with other companies. >> robert hime, thank you so much for joining us today. we appreciate your insights. >> thank you. >> up next on "the closing bell" cnbc's matt nesto explains why the industries leading the

recent market rally could continue to outperform from here on out. we're coming right back.

i've been talking about this great day for the s&p. i don't want the nasdaq to feel left out. after all, it closed the day at 2,008. the last time the nasdaq closed above 2,000 was october 1st, 2008. this is about a 58% move off

those march lows. and take a look at that. 1 1/2%. pretty good. as stocks continue to rally, many investors are worried they've either missed the boat or they can't figure out where the best place to get on board is. cnbc's matt nesto has a look at that situation. matt? >> yeah, you know, if i was french, melissa, i would call this assignment impossiblebecause today it is the trillion-dollar question right now, is this rally going to keep going? and if it is, where the heck do you get on board? where do you catch the train? if you take a look at just history-f you just go back, and i'm only going to take this thing back a month. i know we can go back to the bottom in march. but we had that dull period, remember. this thing really caught fire in mid-july. but just in the past month sectorwise materials and financials are clearly outperforming on the sector level versus an s&p that's gained about 11%, 11 1/2%. same for the dow and the nasdaq. during that period of time. but if you take a look at where this market might run and you

take a look at getting involved and who's going to chase the momentum here today, the reality is history tells us that momentum favors winners. any financial professional worth his or her weight in salt will tell you that stocks -- new highs -- stocks hitting new highs tend to go further than those who just hit new lows. it's an indelicate way to put it. huge liquidity plus many red faces equals irrationality, which means again, you're going to hear a lot of strategists saying you know, what we'll see a lot of investors continuing to chase this market, they look bad, they need a way to get in, there's tons of cash on the sideline, moving into all kinds of different investments and environmentalists need to catch up. so they will push this thing even further along. and then lastly, there's very few industries that are delivering what i have dubbed super performance rngs and that is 1 1/2 times the performance of the benchmark index. so that takes you up to north of 17 1/2%.

on a sector basis there's only one that gets it. on an industry level there's only five of 24 groups that can claim to be super performers. and there they are. autos, materials, which is also a sector, consumer, durable, and apparel, as well as insurers. and the fifth would be semi and semi equipment stocks. it's a pretty slim group, but that's where the fishing would look to be best. melissa? >> matt nesto, thanks so much. ben bernanke and the recent financial crisis. coming up, we look at the fed chief's role in preventing a major catastrophe and the ongoing ripple effect of the fed's actions to this day. we're going to be back in a moment on this banner day for the bulls. >> here's a look at some of today's winners and losers. at 155 miles per hour, andy roddick has the fastest serve in the history of professional tennis. so i've come to this court to challenge his speed.

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it's painful. it's always easy to know in retrospect when you sold at the bottom. take a look at those rallies.s. the s&p closing above 1,000. this is a 50% rally off that

march low. the dow of course we don't want to leave it out, up 114 points but the nasdaq up above 2,000 on the day closing 1.5% higher. that's about a 58% rally off the march low. i hope he you didn't sell there. economists are becoming more optimistic about growth in the second half. in a new cnbc survey eight leading economists are increasing their third quarter gdp forecasts to 2.65% from 1.74%. in the fourth quarter they are predicting gdp will grow at a 2 1/2% annual rate, a quarter point increase over previous predictions. government spending and an increase in home building, those are two of the key factors cited as groelth drivers. for the second half economists see growth on average of 2.6% compared to a nearly 4% average decline in the first half of the year. and that, they say, could lead to a quicker turnaround in the job market. in the meantime, we set our sights now on the role of the fed and ben bernanke's part in limiting the fallout of the recent financial crisis. what was bernanke's role, and what kind of ripple effect of

his actions are we still seeing? joining us now to discuss that, david wessel, author of "in fed we trust." and economics editor at the "wall street journal." along with mike darda, chief economist at mkm partners. david, let me start with you. if you had to give him an overall grade, how do you think ben bernanke has handled this crisis so far? >> i think you'd have to give him a b-plus or a-minus. we had a crisis of something that was totally unimaginable. we had a guy who was a student of the great depression. and we never thought we'd see anything like this again. he was there. he did whatever it takes to make it possible for us to be enjoying the forecasts that you just described.d. some flaws, but overall i think you have to give him a pretty y damn good grade. >> i kind of agree with that. but mike, what do you think? are we wrong?? >> no, i agree 100%. we were staring at credit markets last fall that looked like nothing we'd seen since really the early 1930s. if the fed had not intervened the way it did, there's no doubt in my mind that we'd be facing

potentially depressionary conditions right now. this big turn, not just in the stock market, which is well publicized, but in the credit markets, it's been incredible.. the fed really deserves the credit for that.t. >> david, we all love being monday morning quarterbacks. it's so easy to judge everyone in the rearview mirror. what would you say are his mistakes? >> that's the great thing about being a journalist. you get to do all the judging pup don't have to make the decisions. >> and we don't really make as much money.y. but whatever. >> well, i don't know. i don't know about you. you don't make a lot of money as being a federal reserve official. >> that's true. >> ben bernanke was at the fed when alan greenspan pursued policies that some people think contributed to the credit bubble. >> right. >> he was at the fed when the fed was not using its regulatory muscle. he was chairman of the fed when this began, and i think he was slow off the mark. but once he got the message, he really moved quite swiftly. i think he confused some people along the way about what exactly the rules they were following.

some people judge him harshly and say he made the problem worse. i think it's more an inevitable consequence of human beings trying to deal with something that really defied their imagination and doing the best they could in a crisis.. >> mike, the tv campaign has been successful. do you think -- do you agree with that?? and do you think he keeps the job? >> i do think that he keeps the job. i think it would be a bigger risk for president obama to go ahead and nominate someone else, especially since it looks like we are going to have a real recovery emerge and ben bernanke's obviously going to get a lot of credit for that. in terms of the media blitz, you know, it's certainly different, but these are different times. the fed has done a lot of extraordinary things, and ben bernanke's taken it upon himself to try to explain that in a clear fashion. the fed's also under assault to some degree by the congress and ben bernanke's not going to go down without a fight in terms of wanting to preserve the fed's independence. so it makes sense in that respect. >> david, do you agree with

that? and is there anyone out there that seems like he's even close for the job? for a while everybody was talking about larry summers but since then it seems like ben bernanke has charged out in front. >> well, i think bernanke is out there because he thinks the fed needs some explaining if it's going to preserve its powers and independence to fight inflation in the future. and a side bechbnefit of that it makes it a little easier for the president to reappoint him. he'll never admit that's part of his strategy, but it certainly has that effect. there are alternatives. i agree with mike about the odds. but larry summers is still an alternative. there's also janet yellin, the president of the san francisco fed. i'm sure the president wouldn't mind being the first president to appoint a woman to the job. she's quite competent. roger ferguson, a former fed vice chairman under alan greenspan now with tiaa-cref. alan blinder, another princeton professor, a former fed vice chairman. there are alternatives out there, and i think mike has it exactly right, that if the president had to make a decision right now the upset to the markets of replacing bernanke would exceed any benefits. >> mike, i was reading this

interesting story in the "f.t.," and it was talking about the fed and its role buying skurkts particularly mortgage-backed securities and how they don't drive that much of a competitive bargain, how much profits wall street has made off of trading with the fed this quarter. we certainly saw that in the earnings. does anyone care about this, or is anyone who would be offended by this understand it? >> well, think people do care. and we are in a situation with the fed doing and taking these extreme actions, you know, that it could lead to mischief down the road. so the next real challenge for the fed and for fed chairman bernanke will be the exit strategy. that's a challenge they want. they want us to be in a recovery, and they want to take that challenge on. whether they can surmount it and the appropriate way is another question. >> yeah, david, how are they going to do on the exit strategy? >> well, right now they're trying to assure everybody they have an exit strategy, which is the first part of the program. they say they can pull back some of this credit they've extended. i think it's really going to be

a question of wlikt will. they're going to have to tighten credit before it's clear to a lot of workers that the recovery has arrived at their employer. you know, even if we have a slightly better recovery than we had been anticipating just a few weeks ago, we're still likely to have high unemployment for another year or so. so it's really a question of whether the fed has the spine to tighten when it believes it's necessary despite the political pressure to hold off. >> okay. thanks, guys, for joining us today. we appreciate it. >> you're welcome. >> thanks a lot. >> coming up, maria's one-on-one interview with the president of the philippines. find out what's been helping her nation maintain steady growth while other asian nations lagged in the area. we're going to have that when "closing bell" returns.

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the bulls are in charge. all right. philippine president gloria arroyo met with president obama last week. the first southeast asian leader to do so. fresh off her meeting maria bartiromo caught up with her in new york in a wide-ranging interview president arroyo shared her perspective on the global economy, the importance of trade, and how she kept the philippine economy on a path to growth. here's more from maria's exclusive interview with president arroyo. >> thank you so much for joining us today.. it's good to see you again.

i want to first offer my condolences to you and your country over the passing of president aquino. you began your service to government under the akequino administration. >> yes, as undersecretary of trade and industry. she was a great woman, and she presided over the most important historical event in our country in the last 100 years, and that is the people power peaceful l revolution. >> you met with president obama this week. >> yes. >> can you give us a sense of what went on at your meeting with president obama? >> well, it was a fruitful meeting, i would say. and the fact that he thought of the philippines for the first southeast asian leader to meet with him in the white house is a testament to the strong ties between our two nations. very high on our agenda was peace and security, including cooperation in counterterrorism, especially in light of the recent gentlemjakarta bombings,

also nuclear non-proliferation with respect to the whole world and also with respect specifically to the korean peninsula. >> you've got world leaders looking inward and looking to protect their own land because of the weakness in terms of the global economy. so how do you get in front of protectionism to ensure these kinds of measures are taken to create open and free borders? >> it's really very tempting to raise up walls at a time like this, but we just have to go back to the previous -- the great depression when that was the knee-jerk reaction and beggar thy neighbor, beggarself became the truism. >> do you believe you got a good reception from leading lawmakers on this top snik. >> on this particular topic yes,

i think i did. and the good thing about this, i understand, is that u.s. labor and u.s. industry also think it's going to be good for them. so this is a win-win solution.. we have to find more win-win solutions like this and examples to show that more trade will help bring about world recovery rather than slow it down. >> and this is a time when people are very much in a protectionist mode. >> yes, yes. well, speaking for the filipinos here in the united states, i -- the ones that are already living here and who are able to claim their relatives are doing quite well. in fact, they send a lot of remittances back home in spite of the fact that the u.s. is in recession. >> how important are those remittances to the philippine economy? >> in 2008 they made up 10% of our gdp. and this year, in 2009, the prognosis was that they would suffer a decline, but they have not. they continue to grow.

so we really value the contributions of our filipinos. but at home we are working for the day when we can create enough jobs so that for us hard-working filipinos going abroad will be a career choice but not the only choice. >> of course. tell me about the economy right now in the philippines. where is the growth? can you characterize where you are right now? >> well, we are fortunate that we are one of a few countries after the first quarter of 2009 that have not contracted. and we attribute this to the fact that we made very painful economic reforms years ago and now these reforms are paying off. they create a firewall that eases the pressures of the global economic crisis. and also, they position as well to be a good -- to have a good environment for more investments

and business in the philippines. but of course having said that of course there are challenges. while our growth has still been positive, it's been slower. and we're working very hard to prevent the global economic wave from washing over the philippines. >> what can you tell us about the entire region right now? a lot of people come on the program, and they talk particularly about china, given the population, obviously, and that growth is back up to 9% and things are buzzing. what kind of impact have you seen from that, and can you characterize what the asian economy, broadly speaking, looks like? >> well, we are happy about china's success with fiscal stimulus because china is a big market for the rest of us in the region. in fact, we have a big surplus in our balance of trade with china. so this augurs well for us. because one of the reasons why our growth slowed down was our exports slowed down. now our exports will go up again with china as the major buyer.

if you talk about the sources of growth of asia, i would say that there are three related ones. one is our ingenuity in the world market, like i mentioned, bbo in the philippines. second, it's because some of the major drivers and economic powers of the 21st century are in our region, china specifically. and then -- and which means that there's a lot of intra-asia trade. in the past asia produced for america, for europe. now asia is producing for asia. because we have this very big market of china.a. we have india as well. and japan is still a very big economy, even if it's in recession. >> the world is watching to see how china will make this transition from an export-led economy to a consumer-led economy. you think that transition is

well on its way? >> we are seeing it. we are feeling it in the philippines. china buys of course a lot of electronics and minerals from us, which fuels their industries, which are also export oriented. but at the same time china is buying a lot of fruits from the philippines, and that is for the consumer economy. >> i want to get your take with regard to what's happening in regard to rice. a couple of years ago we saw rice prices soar. how do you avoid a situation like that happening again? >> well, we've learned a lesson. the economics of rice has changed. because you know, like the philippines, we are -- rice is our staple. we really eat rice all the time and in big quantities.s. but our country is an ark pell ago with lots of mountains and we don't have great plains like the american plain. so we produce about 90% of our consumption. the last 10% in the past, it is

economical to import the last 10% than to spend money on marginal land to produce it. but when the prices went sky-high, then economics changed and it became worthwhile to investment now in even the marginal lands, in irrigation, farm to market roads. >> how will you encourage foreign capital to come into the country? >> well, we have a very good regulatory regime for investment. i suppose that's one very important measure that we can convey. and then the success stories of those who have been in the -- who are investing in the philippines. like as i mentioned, the bto industry has grown from 6,000 to 600,000 workers. that's a 100-fold increase. and then we have major electronics corporations like texas instruments, who just recently put up a $1.5 billion plant in our country. >> are there any other policy

changes you think need to be put in place to address the global economic slowdown? >> we are fortunate that we made these very important reforms years ago. our banking system, we have had very prudent -- we have had banking reforms to make our system more prudent, and it complements the innate conservatism of our own banks. so that when the lehman brothers event happened, because there are good disclosure rules and reserve requirements and capital requirements, everybody knew just how much our banks were ex-pose, and that's less than 1%. and the less than 1% was fully covered by reserves and the banks were capitalized. no run. so these are just things that help us weather the crisis. the important thing is we must not be complacent. we must continue our reforms. we must invest in human and physical infrastructure.

we must continue to provide for a regulatory environment that will be -- that is prudent and conservative rather than permissible or financial adventurism. and we believe that by doing all of this we can position ourselves very well to be very competitive once the world economy rebounds. >> president arroyo, let me ask you what's next for you as you look toward next year, the end of your term, you will be capping ten years in office. how are you feeling about this? >> well, there's a lot of things that we still have to do. and we want -- we need to invest -- we need to continue our investment in what i call the three es, our priorities. education, economy, environment. and we still have the global economic crisis, so we still have to address that. but we have weathered it so far. we must not be complacent. for acomplacent.

so a lot of work still has to be done within the next year. >> all right. president arroyo also says while the country has taken great strides to advance its economic system it's time to fix fundamental reforms in the political system. that perhaps could be a change in the constitution allowing her to serve as prime minister when her term as president expires in 2010. aig naming a new ceo. we will tell you who will be the latest executive to try and turn that company around when we come back.

the last time we did this closing on the nasdaq was october 1st, 2008. a 58% roughly climb from that march low. microsoft helping along the way, ibm, dell and cisco within the techs and the strength continuing in after hours trading. 2,008 on the day. in today's business headlines the semiconductor industry says second quarter chip sales globally jumped 17% from the first quarter to $52 billion thanks to closely managed inventories but year over year sales did fall 20%. aig naming former metlife chairman and ceo robert benmosche its new ceo and he

will replace edward liddy who took the job last year after the government bailed out the troubled insurer. the sec is seeking more than $22 million from the former k-mart ceo for allegedly misleading investors about the retailer's finances before it filed for bankruptcy in 2002. a hearing on that is set for september 16th. now over to the nasdaq market site where erin burnett is standing by with a preview of "fast money." you and me today. >> exactly. we're doing triple time. coming up on "fast money" we have a couple interviews.s. first the beer summit continues with the company's strong second quarter profit results and then is it really time to bet on vegas? again, we have sent two intrepid trade toers investigate and the ceo gives his take on the industry and the company's prospects. live at 5:00, melissa will get to end her very long day. have a good one. >> yours is even longer. what are the boys and karen of

course saying about the rally today? >> you know, they're in a big debate over whether to believe it will last or not. right now we're having an argument about early 2010. >> all right. i can't wait to see how that turns out. erin burnett. the latest results on home sales will be released tomorrow. ! i hope he has that insurance. aflac! you really need it these days. how come? well if you're hurt and can't work it pays you cash... yeah to help with everyday bills like gas, the mortgage... ...and groceries. it's like insurance for daily living. so...what's it called? uhhhhh aflaaac!!!! oh yeah! that's it! aflac. we've got you under our wing. a-a-a-aflaaac! shopping online can help save. doing it with bank of america can help save a lot more.

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a busy day on the earnings front on tuesday. we have numbers coming out from a bunch of utilities including con ed and duke energy, also cbs, archer daniels and d.r. horton. >> tomorrow we're watching for the personal income and spending numbers for june. economists expect a rise of 0.3% for spending the same as last month. >> at the ime x with natural gas prices on a tear above $4 rising 9% in the session we'll look at the hurricane forecast in the day ahead. i can't let you go without showing you those pretty round numbers that ended the day on wall street the s&p 500 closing above 1,000 for the first time

since november, 1,002 to be precise the nasdaq closing above 2 thz for t 2,000 since november. crude oil at a five-week high. one of the reasons the dollar index is at the lowest level since september 29th, 2008. "fast money" is up next picking up the debate on where the market goes from here. thanks for watching. i will see you tomorrow morning at 11:00 a.m. eastern on "the call." have a great night. july auto sales hit a seasonally adjusted annual rate of about 11.2 million vehicles the highest rate since last september. the average retail price of gasoline increased more than five cents a gallon last week to $2.56 more than a one-month high. the sec says eric schmid's resignation from apple's board won't stop the investigation of google's relationship with apple. "fast money" with erin burnett

starts right now. the s&p 500 surging above the widely watched 1,000 level. the question, can it keep going? welcome to "fast money" live from the nasdaq market site. i'm erin burnett in for melissa lee. she's on assignment tonight and will be back tomorrow. these are your experts. wow, do we have a big show for you today. guy adami and the boss. i wondered if we'd get a picture. >> maybe they're still out partying. >> they are in las vegas. live from the strip. no word at the end of that. later, we have an economic forecast and moments from now key announcement from the senate on cash for clunkers. it could be a breakthrough. we'll have it live. first talk about the rally and the word on the street. the big question, can this be it? >> the rally. this thing just keeps going. it surprises everyone i think heading into this week most people including myself, if you

told me on monday we were going to surge in the s&p above a thousand with unemployment staring us in the face on friday, very surprised about that, and it puts the pressure, erin, on portfolio managers because you've got to be in the market. now it becomes about asset allocation and now you have to actually allocate those assets before unemployment. >> i think it has to be on friday and i was the only guy who stood here and said why not go through a thousand, psychological barrier, who cares? the market has to be allocated.. so much money is going to work. i think we can talk about where we see that plus we're getting the data. the china pmi, vehicle sales.. people are going to upgrade gdp and guys are scared to death to be on the sideline. >> how is it that everybody wasn't in, steve, that's going to get in? >> you know what i didn't see today that i saw all last week and the week before? shorts. every time we rally in this market shorts piled on. tried to make the market's back. they couldn't do it and