fundamentals are not improving. home builders, similar situation. dr horton or putty, their results were not terribly inspiring. stronger pending home sales and smaller incrementally better news has been moving home builders up and they will too have been outperforming the overall market in the last several days. so have broader financials and the big regional banks including zions and hunting bankcorp. in the middle of the day yesterday, cit sweetened their bond buyback offer. it's helping to an allay some bankruptcy fierce. you see cit also to the downside today. caterpillar was very important for the bottom line argument or the difference in the importance of cost cutting. ceo jim owens, big investor analyst meeting here today. they were talking about earnings in four years, six times higher than this year. top line growth only two times

higher and michelle, there is the power of cost cutting as you get small increases in the top line, you get dramatically bigger increases in the bottom line. caterpillar had a great day. >> thank you, bob. speaking of earnings, numbers outs from craft. mastness toe has the latest. >> on the continuing operations basis, kraft the foodmaker 56 cents a share. the revenue is down 6% to $10.2 billion. looks to be a little bit soft. get this, an 8% negative hit from foreign exchange from the currency. we've talked about the effect here. another 7% hit on revenues from divestitures. the stock inching higher in the after market. little change in the regular session. it is positive on the year to date basis and a $40 billion market cap also worth noting here today is their full-year forecast. the company acknowledging what the street already believes. they raised their full-year target to at least $1.93 from $1.8.

guess what consensus is, $1.93. there's the kraft story. the numbers out. they beaten ot bottom line. it looks to be a little bit soft on the top line due to some revenue constraints due to the foreign exchange. michelle? >> thank you. here's a look at some of the other business headlines from today. senator chuck schumer says the sec chair mary schapiro told him a ban of so-called flash trading is imminent. but then later shapiro said no ban is imminent because any proposal eliminating the practice first needs to be approved by the commission and then made open to public comment. so it's clear they've got something working here. they will think flash trading is controversial because it allows some traders to see buy and sell orders milliseconds before that information is made wider more publicly available. as cnbc's david faber first reported, pepsi is buying two of its biggest bottling for a total of $7.8 billion in cash and stock.

pepsi had originally offered a combined $6 billion for both companies back in april but rejected because the bottler said the bid was too low. pepsi says is the deal will result in $300 million in annual savings by 2012. donald trump is buying the bankrupt atlantic city casino for $100 million beating a competing bid from bond holders. he was forced to relinquish control of the resorts when filed for chapter 11. the deal still needs to be approved by a bankruptcy judge. today's mark action, mark i bolt joins from us russell investments and noah black from the dynamic u.s. growth fund. good to see you. not a lot of action today. mark, how do you feel about the fact that still the s&p managing to hold onto the 1,000 level? do you feel good about the markets or is now the time to take money off the table after the big run? >> i think no action today is a good day. the market has had a very strong obviously since march but

quarter to date and just through yesterday. there was enough news out today, whether it was on the earnings front or economic news that had you mentioned at the top of the hour. investors if they wanted to take money off the table they could have. it was relatively flat all day. i think today' a relatively good day. things look positive moving forward, as well. volatile but things are looking better looking forward. i think you're seeing it today where investors are starting to believe it themselves. >> what's going to drives the market higher from here? earnings season seems to be winding down. congress is going to be leaving soon so they won't be able to do much. >> that's terrific news. i think we've gotten through the earnings season and for the most part, over almost three quarters, the companies have had positive earnings surprises. the tsds revenues haven't come in, some have missed, some have come in better than people expected. we're setting up for the operating leverage of the s&p 500 companies as the economy recovers in the fall and winter. so i think you know, we've made

it through this. and i think it's pretty clear globally the recession is over. and now we're starting to come out of it. i think we'll see pretty good operating leverage. the third quarter and fourth quarter, i think we'll see much better earnings than people think. >> it all depends on the economy. when caterpillar says if the economy norm lies we'll make 8 to $10 a share but extended recession, we make something like $2.50. it's all dependent on the global economy. mark, what do you do with that uncertainty whether or not we're truly in a turnaround? >> i think there's a couple things there. look at caterpillar's comments. it wasn't as if they said things don't look good at all and they weren't going to put a timetable on it, but they said things were looking up. the forward discussion is looking up. so what do you do with this as an investor? you were diversified going into the crisis, be diversified going

out and have ex-posh to emerging stocks and a company like caterpillar is in perfect position. >> i see you're a little nervous about the emerging markets. >> if you look at the emerging markets, i believe in the growth of those economies but you have indonesia and malaysia and china and a lot of these it up 60, 80% year to date whereas the u.s. and some of the european markets, the u.s. market is up roughly 9% a year. i think the developed markets in the back half of this year, the uts u.s. and europe could really power forward. i think the u.s. market specifically and some of the european markets for the world economy to come back, these economies are coming back. a lot of the stimulus we talked about from the obama administration is just starting to hit now. we're getting reports now from the field that that money is just making its way into the system. we on wall street have the attention span of a gnat. it's really just starting now.

so i think you should look toward some of the developed markets. i think the u.s. and europe are particularly cheap versus the emerging markets. >> mark, give me two sectors you like and don't like. >> from a sector standpoint, our managers have liked technology. they like financials. so more of the cyclical areas, sectors, underweighting, utilities, a little bit of health caretakering the defensive bet off the table. >> thanks, guys. the senate banking committee holding a hearing on banking supervision with a witness list that includes she la bear. hampton pierson has more of the details. >> hi, michelle. inquiring minds wanted to know just what it was it that treasury secretary be tim geithner said last friday about their on going criticism of the obama financial reform plan. >> regarding the meeting on friday and generally speaking, did it capture the essence of the attitude in the meeting?

>> senator, with candid conversation about institutions, i mean our agency's different views on the different subjects. >> was it generally fair article? >> a lot of it was true. >> now, the reported expletive deleted rant seemed to have in front of the banking committee. the topic, the administration called for a single national bank regulator. >> we think having multiple voices can strengthen regulation and guard against regulatory capture. if you have a single monopoly regulator, there's not going to be another one saying we're going to have a higher standard or be stronger or we're going to question that. i think you lose that with a single regulator. >> at the end of the day, if you put everything all in one place, it would be probably too much. >> and the treasury secretary has said publicly in recent hearings he thinks a lot of the this criticism is related to

turf wars but you cannot do major financial regulatory reform, michelle, without somebody creeding some turf somewhere along the way. >> makes sense. thank you, hampton. so ford making a bullish bed on the all new taurus. ford president of the americas it mark fields tells us why the taurus can threaten toyota's camry and when the automaker could return to profitability. and cvs posting very healthy second quarter profits. the ceo tells us why he thinks it next year will be even better and what does he think about health care reform. has the fastest serve in the history of professional tennis. so i've come to this court to challenge his speed. ...on the internet. i'll be using the 3g at&t laptopconnect card. he won't so i can book travel plans faster, check my account balances faster. all on the go. i'm bill kurtis and i'm faster than andy roddick. (announcer) "switch to the nations fastest 3g network"

"and get the at&t laptopconnect card for free".

back. here are some of the other stories we're following. home builder dr horton narrowing its third quarter loss to $142 million after losing $399 million a year ago. that was a larger loss than what wall street was looking for. revenue came in at a better than expected $914 million. the company also selling more homes compared to the exactly quarter. dr horton's shares higher today by 4.5%. marvel entertainment second quarter profits tumbling to $29 million compared to a $47 million profit a year ago. when it release d the block bus

sper iron man." that will number still beat wall street's estimates because of strong dvd and pay tv sales. the. shares sitting at an all-time high before investors started taking profits, lower by 36 cents. walgreen reports same store else is rose last month driven by a nearly 4% increase in pharmacy sales. total sales jumping to $5.25 billion. shares of walgreens today lower by a little more than 2%. second quarter earnings season going to be remembered for many things but when it comes to growth, the fourth quarter could take your breath away. cnbc's matt nesto explains. >> i got a new thing for gdp. it's growth domestic profits. it's hard to say. it's easy to spell. the reality is we are in for some humdinger of a quarter in the fourth quarter. it is what it is in the second quarter, but take a look where we've come. if you look at the first quarter results, we are now 35%.

we were down 28% so far in this quarter. that's actually better than expected and the reason why we're rallying. but it is the eighth consecutive quarter that's been a loser. and then the third quarter right now is forecast to be down 21%. look at that figure. that is not a typo, folks. 185% rebound. mind you, the fourth quarter a year ago was down 67%. so yes, i understand mathematics and easy comparisons on a year end basis. but the fact is that numbers not only inched up higher this month but steadily for the past 30 days or so. so there is a bullishness in terms of expectations and earnings improvement creeping into the marketplace. so that's oddity number one. remember that, the fourth quarter earnings been up 185%. ness toe told me. look at this disparity. the material sector earnings far and away the worst this quarter. the material sector performance far and away the best. go figure. it's all about expectations even

though the surprise factor hasn't been necessarily the best there. the health care earnings have surprised very, very strongly. they're the only sector that's actually delivering profit growth of the ten sectors this quarter in the health care index has been a bit of a clunker, and the last little anomaly i bring to your attention here, the better than expected surprise factor coming in, better than ever it has. three quarters of the stocks have beaten the streets. a bads indicator for the analysts but they'll accept it because the market is doing well. lower than expected sales of 54%. so lastly, a tribute to the marine corps, the few and the proud. these are the best three performing stocks over the past four weeks since earning season started. all much them have beat and or guided higher. ga net up huge over 100% in that period of time. wynn resorts about 80% higher and masco with a 75% move during that period of time. so there you go, earnings season

through the prism, if you will. >> thank you, ernesto. ford's monthly sales increasing for the first time in two years. coming up next, ford motor president of the americas it mark fields will give us insight when the automaker could drive back into profitability after this. for clunkers program, a great deal gets even better. let us recycle your older vehicle, and you could qualify for an additional $3500 or $4500 cash back... on top of all other offers.. on a new, more fuel efficient chevy. your chevy dealer has more eligible models to choose from - more than ford, toyota, or honda. so save gas... and money... now during the chevy open house. go to chevy.com for details.

every head. every bite. every gallon. every shoe. every book. every cereal. well, maybe not every cereal. but every stem. every stitch. every tune. every toy. pretty much everything you buy can help your savings account grow because keep the change from bank of america rounds up every debit card purchase to the next dollar and transfers the difference from your checking to savings account. it's one of the many ways we make saving money in tough times a whole lot easier.

hi, folks. welcome back do closing bell. the breaking news desk here, going to bring you results from electronic arts, trading 4% higher. the loss on their first quarter of 20.10, two cents per share. the stock was up about 1% in the regular session. you'll see that 5% move includes what it did between 9:00 and 4:00 today. the revenue up 34%. you don't see that these days very often. $816 million. that's also well ahead of the $730 million estimate. they keep their full-year estimate for revenue and earnings intact. and they say that their new game launches did very well as did their cost cutting efforts. >> thanks, matt. ford unveiling its redesigned taurus see dan today as the cash for clunkers program is jumpstarting sales of the u.s. automaker. the company's june sales jumped

9% versus a year earlier. joining us in an interview from chicago to discuss the company's progress is ford's president of the americas mark fields. good to see you, mark. we have talked enlessly about cash for clunkers here on cnbc. tell us what you think the impact is. did people delay buying a car knowing that this program was coming? did it draw sales forward that you would have had otherwise down the road? how real are these sales, or does it matter to you as long as you've got them? >> you know, clearly it had a nice impact on the industry and our business. we were having a good month for the month of july and clearly in the last week it, helped turbocharge it. i do think because of the response it's been a stronger than expect, i do think it really points to the fact that there's penitentiary up demand out there, not necessarily full forward but we'll see how that goes over the next couple of months and see also if the program gets extended. >> what if the senate doesn't extend it? what impact is that going to

have? >> from our standpoint it's not going to have an impact in terms much our execution of working our plan. we've been working our plan for the last couple of years. it's about making sure that we continue to work on our structural costs and bring great products out with world class quality and fuel efficiency and continue to make sure we get improved pricing for successful products. we'll keep our noses to the grindstone on that. >> the most traded in vehicle was the explorer suv. when i looked at all the vehicles, they were all-american and the two-door, four-door exexplorer. the car that was most traded in for was also a ford though. a ford focus. of do you think you're going to see that kind of trend continue? >> well, i think that the program has been very effective and i've got to give kudos to the congress and the president in terms of this is a stimulus that has clearly shown that it works. and in our case, you're exactly right. the most traded in vehicle was

the explorer. and the most sold vehicle that people were trading in for was the focus. and i think it shows we're pleased that customers are coming into our show rooms and recognizing the fuel economy of our vehicle and we're glad to keep those customers in a ford vehicle and keep them satisfied. >> you got a taurus here? you've got a minute to sell me one. what's so great about the new taurus. >> i'll try and sell you a taurus. we're here at the chicago assembly plant celebrating the launch. they're shipping to dealers right now. it is the flab flagship of the ford brand. we're terming this the smartest full size sedan in the segment. a lot of technology, world class quality and part of our strategy in making sure we have a vehicle in every segment and in every segment those vehicles will have world class quality, technology, fuel economy and safety. >> what role, we're showing people the hybrids, ford escape sales up 94% compared to a year

ago, the ford fusion up 66%. ford focus up 44%. how long can you continue to see those kind of gains year over year? >> well, you know, that's going to depend a lot on the economy. it's going to depend on the health of the u.s. consumer. and it's going to depend a lot on the labor market. but our intent is to make sure we match capacity to demand so if there's demand out there and we're really pleased customers are coming into our dealer show rooms and recognizing product for the qualities they have, we'll continue to supply the product as much as the customer wants them and it's very encouraging to see that we're seeing life in the auto industry and in our sales. you mentioned earlier our sales were up for the first time since actually about november of 2007. so it gives us a lot of the encouragement going forward and hopefully, the consumer will respond. >> 11.2 million cars was the annualized rate in july. what do you think we'll end up

doing for all of 2009? >> well, our call for 2009 is anywhere between 10.5 and 11 million units. first half of the year we were in the high nine range and we do expect an uptick in the second half, partially because of the cash for clunkers program but also because partially we expect to see some gdp growth if the second half of this year and some evidence of that will pentup demand for consumers in the back half of this year. >> mr. fields, thanks for joining us. >> thank you, michelle. >> all right. higher pharmacy benefits management it celts driving cvs/caremark second quarter profits. we'll ask the company's ceo if he's interested in acquiring any other pharmacy benefits businesses when we come back. >> here's a look at some of today's winners and losers. tdd#: 1-800-345-2550 tdd#: 1-800-345-2550 i want everything right where i can find it.

tdd#: 1-800-345-2550 anything that makes trading easier. tdd#: 1-800-345-2550 i want to be right in the middle of the action-- tdd#: 1-800-345-2550 you know-- i have to see what's going on. tdd#: 1-800-345-2550 and when i pull the trigger... tdd#: 1-800-345-2550 ...i've got to get the best price out there. tdd#: 1-800-345-2550 (announcer) try the new schwab.com tdd#: 1-800-345-2550 for yourself. tdd#: 1-800-345-2550 call 1-888-4schwab tdd#: 1-800-345-2550 or visit schwab.com/trader today. tdd#: 1-800-345-2550 'course a trade doesn't always work out my way. tdd#: 1-800-345-2550 but when it does... tdd#: 1-800-345-2550 ...man... do i love that feeling. so now we've turned her toffee into a business.

my goal was to take an idea and make it happen. i'm janet long and i formed my toffee company through legalzoom. i never really thought i would make money doing what i love. robert shapiro: we created legalzoom to help people start their business and launch their dreams. go to legalzoom.com today and make your business dream a reality. at legalzoom.com we put the law on your side.

a healthy second quarter for cvs/caremark. the drugstore chain turned in a 15% increase in profits.

shares of cvs now trading at its highest levels of the year, $34.03 a share. joining us for a first interview is thomas ryan, president and ceo of cvs/caremark. good to see you again, mr. ryan. >> good to see you. >> you've got two different businesses, the retail part and the pharmacy benefits part. start first with the retail. what can you tell us about the state of the consumer, the understanding of the kind of products you sell should be a little less sensitive to the recession. >> right. well, 70% of our business on the retail side is in the pharmacy and in prescription side of the business. so that's holding up as i said, people were splitting prescriptions and stretching it but now actually taking their medication and we're doing a lot of work to make sure they stay adherent. on the front end of our business, you saw our front end comps were up 3%. we're seeing less traffic, but we're seeing higher rings from the people who do come in. and they're really focused on

buying more promotional items and private label items and smaller sizes. they're trying to stretch their dollar. in fact, we're not promoting any more. we have a higher percentage of promotion it will sales because people are seeking out those sales. >> talk about the pharmacy benefits management part of the business. etna's reportedly put their division up for sale. is that something you might be interested in? >> well, we don't comment on it. you know, obviously we've been a inquisitive company on both sides. and we'd look at an appropriate opportunity. but we're happy where we are now strategically. we think we have all the assets we need. you can see from the results we're putting on the board we're pleased. >> do you see improvement finally when it comes to the consumer and their ability to keep buying medicines next year, et cetera? >> i think so. it's anyone's guess when this is going to bottom out. i don't think we're bottomed out

yet. especially with the unemployment and you know, unemployment up and savings rates are up, which is a good news, bad news. but people just are, you know, they're not spending. so we're trying to do some things to bring people in and our extra care card program is one of them. our generic program is another, our private label program, we're trying to stretch the dollar of the consumer and we're also trying to lower costs for our clients and our pairs. >> health care reform, is that a threat at all to your bottom line? what's your opinion of all the different plans that have been floated by congress at this point? >> well, there's a lot of different plans out there. you know, we are in favor of expanded coverage but we think you should have expanded coverage and reform measures. you know, we're spending close to 3 trillion dollars on health care today. >> does that mean a public option though? >> i don't think think a public option is necessary. you talk about a public option that's on a level playing field.

if it's a public option on a level playing field, then it's a private plan. we don't need a private plan. we there there are some reform notice insurance industry like pre-existing conditions and the ability not to drop people. so i think there's some reforms on the health care side but then on the insurance industry side, but then i think there's some reforms that we can make that can lower costs before we totally expands coverage. >> like what? because congress could really use the advice. >> well, we can -- i know. best practice is we can share best practices. you know what, n angioplasties are different costs in different areas of the country. why? because they're different procedures. we can encourage the use of generic drugs. there's biogeneric legislation in the congress now on finding a pathway to generics. we have to make sure that companies can reap their -- >> oh, we had some problems with the satellite feed there

obviously. he has disappeared. that was unfortunate because i'm sure members of congress were listening to find out how they could bend the cost curve because so far they haven't been able to. that was thomas ryan, ceo of cvs. doesn't look like it's coming back. our sincere apologies. is the sec facing conflicts of interests when it comes to eg regulating banks? some answers when we come back.

i get the question "does it work?" all the time,

and you know what, it works. nutrisystem for men: flexible new programs personalized to meet your goals. what's great about nutrisystem is you eat the foods you love and you lose weight. i'm dan marino. i lost 22 pounds on nutrisystem and i've kept it off for three years. for a limited time, get an extra three weeks of meals free! that's right, you can get an extra 21 breakfasts, lunches, dinners, desserts, and snacks. that's 105 meals free! i had awesome results. i mean, i lost 22 pounds, my goal was 20, it came off fast, and the food was great. it's what every guy's been waiting for: it's healthy weight loss and it's flexible. with prices as low as $12 a day, you'll save hundreds over other weight-loss programs. order now and get an extra three weeks of fantastic meals. that's right, 105 meals absolutely free. call or click now. guys, you can do this. just pick up the phone and call. you will lose weight.

as government regulators keep financial firms operating by the rules of the laurks the government's stake in some of those firms creates a quandary. how does one arm of government enforce laws that could impact the investment by the other arm? we discussed this with a former sec enforcement attorney and codirector of research at kbw. ron, is this really a concern? have we seen any evidence of this thus far? >> i don't think we've seen any evidence of this thus far. is it a concern? yeah, the reality is conspiracy theory sells papers. it puts votes into politicians' pockets. is it a concern of mine? it sure is. however, i don't necessarily see the sec who's hanging on by a

thread and fighting for their life not prioritizing their obligations and goals to the population. and seeking every enforcement opportunity they can get their hands on. >> fred, how serious a situation do you think this is? i look at, for example, the bank of america situation. the sec comes out yesterday and says there was an issue with your proxy. you should have released this, that and the other information. $33 million fine. in theory, you could say maybe the fine should have been bigger except to we want to hurt an institution in which the taxpayer las so much investment in. >> i don't think the conflict really has to do with the taxpayers' investment. let's face it, the $33 million you know, is coming out of one pocket and if b of a makes money on that, that goes out of -- the taxpayer comes out even. i don't think that's the conflict. the real conflict may be right now that these too big to fail banks, the top 19 the government really needs to help those guys get through this any way they can. that may be what in my mind may

create some pressure rather than the return that they're going to get on investment. >> if you're the sfcc, a bank violated the law, do you give them some forbearance till they pay back the t.a.r.p. money. >> i don't think you do. there's two variables. you have an action, do you bring the action and two, what kind of fine or penalty do you look to impose. those are separate thoughts. the reality is the sec has always looked at the health of the organization versus the weight of the fine they're going to impose. it's going to happen before t.a.r.p. and post t.a.r.p. this even came up during the hearings with regard to ken lewis what the fsec's role was. and guess what, it's on the sec's plate. it's their charge. and until the broader government at larnlth relieve their objection, i think tlag going to follow through on that.

>> fred, what do you make of this expletive driven and timothy good nighter says he wants to do a, sheila bair says we've got to do b, he's got arab, right. >> i think that's right. ron's last point is one that's critical. the conspiracy theories don't really hold up as if they're all speaking on one pain. each of those agencies have their own agenda. they're trying to enforce it. the sec is trying to establish themselves as being a tough regulator at this point in time. i really think a lot of it back to the expletive ridden meeting yesterday is interagencies are really grappling with each other pointing fingers and trying to get the upper hand in this situation. >> but i would actually argue instead of that being a negative, it's a positive. it's our country's based on this check and balance system and i'd rather see a different agencies keeping one another on their toes and having to play their a

game. otherwise they're going to be call the out on it. that's what makes our country a well functioning society. >> the other huge issue out here is the too big to fail. why is that, fred? is that because we didn't have the ability to shut down these institutions? we didn't have the laws to shut down these institutions? have things changed now that we can clear all this counter party stuff that we could shut down an institution? what's at issue here? >> the issue is one that comes down to moral hazard. when we get to the situation we have now where you have these banks that have been designed as too big to fail, it gets into the issues we just talked about. >> but have conditions changed enough now that we could let one fail? that's my question. >> i don't think we're there yet by any stretch of the imagination. the interconnectedness between the companies means at least the top 19, i think the government's still behind them. one thing we have seen with cit, once you drop below that, it's

pretty open.failure is an option. >> ron, could we let something fail right now because we have a lot of the cds able to clear on the exchanges because a lot of the countser party risk has been eliminated? >> the reality of what's too big to fail, i have major concerns what was going on with cit in the middle marketplace. i think as a society, people are fearful what's going on. unemployment at an recent all-time high. i think as a country, we've got to be sensitized to. >> don't let it fail, period. >> don't let them fail at any cost. the reality is, some people have to step up. whether there's conspiracy within the government that somebody calls up jpmorgan and says lis, you've got to find a way to finance cit, you're making money presumed to be at the exexpense of taxpayers, i don't know if that's gone on although that promotes conspiracy theory. >> where's oliver stone when you need him. good discussion, thanks so much. >> thank you. there's been a string of

encouraging news out of the housing market recently. has housing finally found a bottom or is there reason to still be skeptical about a turnaround. answers when we come back. announcer: some people buy a car based on the deal they get. - others buy the car of their dreams. - ( beeps ) during the lexus golden opportunity sales event, you can do both. it's an opportunity today. it's a lexus forever.

special lease offers now available on the 2009 es 350. yet a lot of natural gas has impurities like co2 in it. controlled freeze zone is a new technology... being developed by exxonmobil... to remove the co2 from the natural gas... so we can safely store it... where it won't get into the atmosphere. exxonmobil is spending more than 100 million dollars... to build a plant that will demonstrate this process. i'm very optimistic about it... because this technology could be used... to reduce greenhouse gas emissions significantly. ♪

the federal housing administration suspending taylor bean and whitaker, one of the largest lenders from making loans insured by the agency. the fha tas taylor bean failed to submit a required annual financial report and disclose certain irregular transactions that raised concerns of fraud a day after federal agents raided offices of taylor bean and colonial bank group following a failed financial deal between the two firms. speaking of housing today, the national association of realtors tacked on another positive data point. pending home sales rose for a fifth consecutive month higher by 3.6% in june. is it enough to fuel a long running rebound in real estate and the greater economy or will it remain a roadblock for the recovery? thoughts from christopher mayor, professor of real estate at the columbia business school and fred click, president of u.s.

loans mortgage and a licensed real estate broker. christopher, so we have the pending home sales. we also had existing home sales, new home sales, case shiller, all data points have been coming in positive. has housing bottomed? >> no. but we've certainly the rate as lots of people pointed to other things, rate of decline has sharply slowed. certainly the case shiller data showed a slight uptick. we should also remember these data come primarily from the spring when mortgage rates were about .75 of a point lower than today and when unemployment unfortunately was lower than it is today. so i don't think we've seen the bottom of housing. >> how much further does it go down if it hasn't bottomed? what are you talking about, sales or price or both? >> i think sales are likely to kind of hang where they are at the moment. i think price is going to

continue to sort of slip down in the second half of the year. >> wow. okay. fred glick, would you agree with that assessment? >> i think we are at what's called a peak in the market which is p-e-e-k because people are just kind of looking and saying i get that $8,000 tax credit, the rates aren't bad. i think i'm going to have my job for a while so why don't i take advantage of it a little bit. the people who are still under the 417 loan amount who get the fannie mae programs, the fha, the va 100%, they're still there and kind of okay. well, 11:30 of 2009, the tax credit goes away. you're going to see this little rush in september and october to force people to say you'd better get in right now before the tax credit ends. next winter, i think people are going to be sitting around twiddling their thumbs a little bit in the real estate market. it depends on the area, of course. but it's going to like dry up.

the people in the 700, million dollar range are not out there. there's not a lot of buyers. >> they still can't get credit. is that the big issue? >> exactly. >> banks lending at that level because fan i and fred i won't buy jumbo loans. >> not only will fan i and freddie not buy jumbo loans but still looking for 20% down or you're going to face significant costs and other fees. if you look at most mortgage loans originated they still involve very high down payments. i think there's something in between where weigh are now and zero zoun and until credit loosens further, i agree, i think we're seeing a bit of a sort of a blip. but you know, unless we see real growth out of the economy and housing credit markets opening up, it's hard to see, you know, much of a v. it's still going to be kind of bouncing around and maybe trending down. >> fred, what's your assessment when it comes to credit?

are you seeing are you seeing anybody able to get it here? >> well, here's a little story i have. i've been working with a buyer who tried to get a 95% loan. great credit, great income, and the lender number one that i sent it to came up with this thing, they have to have 12 months of reserves. it's like, where did that come up from? i have no idea. moved to lender number two, had little problem getting the appraisal transferred from lender number one to lender number two because of the hbcc craziness. that's another layer of this. but it is silly. these people should have been a slam dunk, 15% of underwriting. hello. so, it's been nuts. so, the mi companies are getting real, real, real cautious. it's not just the lenders. >> the mortgage insurance companies. >> yeah, the mortgage insurance companies, they've been really tough. and until they can loosen up -- i think they want to, they just can't -- there's nowhere to go. >> christopher, what does this mean overall for the economy? how much of a factor -- if

housing hasn't bottomed, like you say, does it prevent a recovery in the u.s. economy? >> well, i still think we're going to have do deal with the other sort of elephant in the room which we haven't so far, which is the continued delinquency rate on mortgages. one in five borrowers in florida is late on their mortgage. one in seven in california, one in six in nevada, and certainly, pretty high rates in the northeast. so, i think the economy is going to continue to be an issue for the banking system. until they're really sure that they've gotten a handle on the losses, on the foreclosures, on the other problems, for them to be willing to open up to do lending. and so, i think -- i don't think lenders yet have the confidence that, you know, we're really out on the other side of this, and you know, our mortgage lending problems are done and we haven't talked about commercial real estate, either. >> oh, right. that's the other big shoe to drop, supposedly. but frank, before --

>> right. >> are you seeing banks finally allow short sales? are they getting any better at that infrastructure to prevent these things from going into foreclosure, or is that -- >> it's still about the same rate. you've got to remember, the lenders get paid to serve as the loan, whether it's in default or not. so, they're not really motivated to get loans off their books that they've already sold to fannie and freddie. so, i really don't like to concentrate on short sales. i'd rather go to a house that's foreclosed, bing, bang, boom, they want to get it off their books after that. i know the title's clear. it's just a pain. the short sales are just, just -- >> the look on your face. >> yeah. >> chris, what about all these programs from the obama administration, making home affordable? full disclosure -- me, i got a refi. you can read about it on cnbc.com, for making home affordable. i can't imagine that was the intention of the program, that tv anchors would get -- all i got was a fee, not a better rate

or financial incentive, but no income verification and no appraisal, either, christopher. >> well, i think for -- look, if fannie or freddie has your mortgage, they already have your risk. if they can refinance your mortgage, they can and should do it. so, i've been a big fan of expedited refinancings for people who the government already guarantees their mortgages. >> that's me, yep. mine was owned by fannie and freddie. >> absolutely. and i think they should do that, and that's sensible policy. i've been calling for that for six months, and it's still -- i still think there's too much paperwork involved, not too little, in that process. >> okay. >> but i still think that, you know, from a foreclosure prevention perspective, you know, you're looking at about 400,000 mortgage modifications. the federal government, you know, their report today suggests that they think there are several million more to go. i'm very skeptical that we're going to get anything like that.

>> okay. >> i think short sales themselves are problematic. >> we've got to go. thank you. >> so it's hard. >> thank you, maria. >> thank you. >> take care. >> now to the nasdaq market site where melissa lee has a preview of "fast money." >> s&p 500 holding on to 1,000. a good sign, right? what is next? we'll hit the charts and find out in a little bit of chartology action on "fast." also in this latest run-up, we had a lot of stocks that sort of overshot. green overshoots. we'll name names, tell you which stocks are perhaps overbought and we'll also take our position for cisco earnings, due out in about 24 hours time. that and more at the top of the hour. real estate is all about location, location, location. so, how much was hugh hefner able to sell his private residence for? and did i mention it's right next to the playboy mansion? next to? r i thought he lived in it! we're coming right back. - enough! you get half. and you get half. ( chirp ) team three, boathouse? ( chirp ) oh yeah. his and hers.

- ( crowd gasps ) - ( chirp ) van gogh? ( chirp ) even steven. - ( chirp ) mansion? - ( chirp ) good to go. ( grunts ) timber! ( chirp ) boss? what do we do with the shih-tzu? - ( chirp ) joint custody. - dog: phew... announcer: get work done now. communicate in less than a second with nextel direct connect. only on the now network. announcer: get work done now. communicate in less deaf, hard, hearing and peopith speech disabilitiesit .

here's what to watch for tomorrow. >> rick santelli on the floor of the cme group. tune in tomorrow for june factory orders. factory orders need to be positive, but they're looking for a negative number. tune in, 10:00 eastern. i'm steve liesman at cnbc global headquarters, where tomorrow we're watching for the

adp unemployment report. economists look for a decline of 350,000, a marked improvement from the decline of 470,000 in the prior month, and the hope is that this continues into friday's overall payroll number. i'm matt nesto. be watching for a busy day in earnings central. tomorrow, proctor and gamble, devon energy, transocean and baker huge. a wild card to watch will be orbit th orbit. then after the close, cisco, prudential and news corp. >> we're going to end the show with some empty calories here. the playmates at the playboy mansion are getting a new neighbor. founder hugh hefner has sold his private residence next door to the iconic playboy mansion for $18 million. of course, in this tough housing market that was $10 million below the original asking price. according to reports, the lucky buyer, anonymous. a wealthy man in his 20s. he'll probably enjoy meeting his new neighbors. i think they are kendra, bridget and holly. that's what the producer in the control room tells me, because

he watches it all the time, "the girls next door." before we go, here's the day on wall street. we ended in positive territory, the dow jones industrial average higher by 33 points, 9,320, so above the 9,300 level. nasdaq still holding on to 2,000, a gain of 2.7 points. and the s&p 500, another day above 1,000, gain of 3 points. "fast money" is coming up next. thanks for watching. you have a have a very good night. second-quarter profits rise 11% at kraft foods and the company raises its forecast for full-year earnings. shares of whole foods soared 12% after hours as profits easily beat the consensus forecast. and an s.e.c. official says general electric bent the counting rules beyond the breaking point. cnbc's parent will pay $50 million to settle charges it used improper accounting in 2002 and 2003 to avoid missing wall street's earnings expectations. that's cnbc news now, first in

business worldwide. i'm mike huckman, and "fast money" with melissa lee and the traders starts right now. it is a market that won't go down. welcome to "fast money," live at the nasdaq market site. i'm melissa lee and these are your "fast money" traders. the s&p 500 holds the 1,000 level, inching higher today. these guys will give you the best way to play. and later, rick santelli, aka, the big sur, reveals what may ruin this rally, plus, behind the high-frequency trade. first, the "word to the street." let's talk about that 1,000 level. it is a good sign, i would imagine that we held onto that level. >> huge level. you have to look at this in a couple different ways. the hedge funds tried to push and break this market's back and couldn't do it. mutual funds forced a buyout on the that level. i saw. it this morning i came in, hung funds kept telling me, i think the market's going to crack today. i didn't think so, mutuals didn't think so. it didn't. >> we were talking about this on the halftime report, pete, that you're seeing this, and this is a good sign that we've been able to hold onto this.

seeing good participation in this rally. >> absolutely. the options market, 14 1/2 million contracts sold. the volume is there. everyone talks about the volume being low. no one wanted to believe the rally. take a look at the options. i think you're seeing more and more folks using the options as their vehicle to try to participate in this market rally. i'll tell you what, the other thing that really strike me is people all were looking. yesterday, what really drove the market, a lot of commodity stocks really pushing us to the up side. today, really light pullback. we didn't get that dramatic pullback that everybody was waiting for, and i think that's why we saw the market not only stop, but then move positively. >> and i think it's important to understand, if you're an asset allocator right now, figure out which way you need to be positioned. you're waiting for an impending correction. here comes unemployment on friday. what if unemployment lines up just like all the other economic reports have in the last four to six weeks, where they surprise to the up side, and you're waiting for this correction? i'll tell you what, if you get a surprise in unemployment on friday, this market is going to shoot higher and you missed the trade. >> at the same time, j