500. that's going to do 2 billion shares by the end of trading. jpmorgan and bank of america as i mentioned also strong. here's one reason why we're seeing financials do well. remember those mortgage insurers? radian had excellent numbers overall but the basic idea is mortgage insurers seem to be returning to some kind of profitability. radian, that's not a typo on the percentage move. that's a 52-week high. that's a big help to banks, to know there's some kind of return to profitability for some of the mortgage insurers out there. also, american express intraday came out and said their credit metrics are showing the first signs of improvement in 18 months. that is an intraday chart of american express. that helped the financials as well. finally, i just want to note the real estate investment trusts also moving up here today and a lot of speculation on that. the most obvious one is that they are notably underowned because of pessimism in commercial real estate and traders are being forced into those stocks as well. melissa, back to you. >> all right, bob. thanks so much.

we're just getting earnings out from newscorp right now. non-gaap earning per share, 19 cents. 19 cents a share on newscorp. that's the number you can see at the bottom of your screen. that's what we're hearing. let's take a closer look at today's market action. joining us to discuss that is scott wren, equity strategy with wells fargo, and mary jane rapp, with fifth third asset management. thanks to both of you for joining us. >> hi, melissa. >> hi, scott. let me start with you. what do you think about the rally today? >> i don't think it's very surprising. we've had a big move in a short period of time. i think what you've seen here over the last couple of weeks is we've broken through some technical levels. you've got a lot of people that really missed most if not all of this move. you've got traders jumping in. you've got professionals jumping in. you've got retail investors jumping in. and i think a pause here, we didn't see much of a downturn at all here. so i think the momentum at least in the very short term is still going to take us a bit higher. >> scott, you think a lot of

people missed almost all of this move? you think there's a lot of money in the sidelines? >> i do. melissa, earlier when we moved up off the early march lows, my feeling was hey, we're not getting any chasers in here, there's not much money coming in off the sidelines, and i think that kind of -- when we got that pullback, which was 9% and it was over and done with pretty quick, we expected a little bit more then. but i think it was because we didn't really have the chasing. but i think once you get -- and these rallies usually pan out the same way. once you get the chasers in there, once you get the people piling in who've missed most of the big move, i would argue that you've probably got some kind of correction or at least consolidation not too far in the future. and i think that's the way it's going to play out this time. >> and jane, what do you think about the pause today? >> think about -- i'm sorry. >> about the pause today in the market. do you think that means something bigger or is it just today? what's behind it? >> no, i wouldn't read too much into it. it looks like some profit taking and some further outburst of

support for the low-quality stocks. i'd start to get concerned here when you see junk running as hard and as fast as it has. the overall market doesn't look terribly overvalued, but when you get a layer or so beneath that the low-quality stuff looks like it's well past its due date. >> scott, i mean, we've seen tremendous strength in financials. do you think that move is overdone-f you're 99 you shnlt get in or do you think there's still more room? >> near-term these numbers are going to be very dicey and i would still argue there's a bunch of these financial companies that are going to need more capital from the government. but melissa, we've been trying to get our clients to position themselves not for the next two or three months but for the next couple of years. and i think, and i think i can say this with a high degree of confidence, that from where we are now two years from now these financials are going to be a lot higher. >> okay, guys, i'm sorry we have

to end this year. we have to get to more breaking earnings news. we have the numbers out from newscorp. we mentioned to you 19 cents earnings per share just a short time ago. cnbc's julia boorstin now joins us with more of the details. julia? >> that's right, melissa. that's 19 cents of non-gaap earnings on $7.67 billion in revenue. that compares to expectations of $7.63 billion in revenue. we're now still sorting out the details of the earnings per share, including all the other items. but looking at some of the divisions, noting which areas are suffering, i want to point out the operating income dropped dramatically in the television division. likely the factor of advertising losses, declining in advertising, also the book publishing division showed an operating loss. magazines up slightly from last year. but if you look at the major segments, cable network programming was the one segment that showed a significant increase. we're going to be listening in for more information on the conference call. looking for trends in

advertising. also what rupert murdoch plans to do about the cash that's sitting on the balance sheet. melissa, we're going to be getting some more information about newscorp and coming back to you. thanks so much. >> julia boorstin, we look forward to that. let's get instant analysis on this with porter bibb managing partner at metatech capital partners. >> rupert has a record, a track record of not disappointing the analysts, and he came in about where everybody was expecting newscorp to be. but more and more newscorp is beginning to look like an old media company. he's got some serious problems not just in radio and the book publishing. his newspapers are soft. television is not going to recover, despite his protestations that the advertising slump is over. and he's got some really, really serious problems with units like myspace, which is going to lose its google advertising contract at the end of this year. >> porter, i'm sorry, i have to

interrupt you for one minute. we'll come back to you, but i have to go to jim goldman, crazy earnings today, who has the numbers on cisco. those details just coming out. jim goldman, what do you have? >> yeah, melissa, i do have those numbers. sorry about that, porter but i'll be brief. i want to get to you these numbers here. we're seeing them go across the bottom of our screen. the 31 cents that cisco is reporting on the bottom line beats by two pennies and in fact beats by a penny the whisper number that i heard over the past week as these estimates have been creeping up. 30 cents was the whisper, 29 cents the consensus. that 31 cents obviously is going to be well received. that on in-line revenue of $8.54 billion. the street was 8.5 to 8.52 billion. but as much as we talk about the company's fourth fiscal quarter, this is all going to come down to guidance in the company's conference call, which begins in just about 20 minutes. but it's possibly a hint to what john chambers may be saying on that call, let me read you a quick comment from the company's press release. he says, "if we continue to see these positive order trends for the next one to two quarters, we believe there is a good chance we will look back and see that

the tipping point occurred in our business in q4. that sounds an awful lot like cisco might be calling an i.t. spending bottom. but of course we'll get more details on that when that conference call begins. right now the street is looking for flat to up 1% as far as cisco's business guidance is concerned for its fiscal first quarter. but at least at first blush here this would appear like cisco is starting to feel a little more optimistic and john chambers may be anticipating some kind of increase in i.t. spending. and indeed, that would be significantly good news for all of broader tech. >> okay. i'm the traffic director. jim goldman-u get ready for that call. porter bibb, we're going to get back to you in just a second. but we're going to take a closer look at cisco's earnings with eric stuperger, senior research analyst at morgan hill. what do you think of those comments jim just read to us? >> i was encouraged. i think cisco's doing a very good job on the expense management side. the revenues probably were in

line, maybe even a little less than what people had been hoping for in light of some rising expectations. but clearly the company's executing on the expenses. >> and what about that quote where he said if they continued to see the positive order trends they think they may have seen a bottom in q4 or at least will look back and say that was the bottom. was that new information to you? >> so last quarter they had suggested that they were seeing some degree of stabilization, i would say incrementally this is somewhat more optimistic. so yeah, i would say that's a step in the right direction. >> you think their growth, though, is going to lag other networking vendors, right? >> yes. we have some concerns -- >> why? >> we have some concerns in terms of channel conflict with some of their bigger partners like hp and ibm. they've recently introduced some products that really start to compete with those players. and sought landscape's changing a little bit where those other titans are starting to partner

with the competitors of cisco and move some of their product. >> eric, what's your number one question for the call? what are you curious about? >> well, the obvious one is just exactly what does he mean by we could see this as a bottom. but secondly, i'd also be very interested to know what kind of progress they're making with some of these products that are xeeth with the likes of ibm and hp, in particular how they're performing with some of the server products. >> real quick, eric hour, do you feel about this stock? buy, sell, hold? >> you know, we have a hold on it. and we believe that's the right place to be. i think the economy is certainly working, getting a bit of a tailwind. but on a relative basis to the networking sector we do have concerns about their growth lagging some of the others. >> okay, eric, thank you so much for joining us. we really appreciate it. let's go back to porter bibb, who's a very good sport for hanging out through all that other earnings news. porter, let me get back to a comment you were mentioning. you were saying rupert murdoch said last quarter that he thought the end of the advertising drought had been reached.

>> that's right. >> and you don't believe that? >> i don't believe that. it's not evident in any of the other media companies who've been reporting over the last ten days or so. and all you have to do is look at the weekly advertising figures for the networks, for the newspapers, for the magazine business. it's still very, very soft and problematic. but i have some questions. if you want to ask rupert during his conference call, here are some questions for newscorp. what in the heck is he doing with dow jones? he paid $5 billion for the company, and he's sitting on potentially a mother lode with wsj.com and he's not doing anything with it. the "wall street journal" is soft, and he's trying to broaden, dumb it down a little bit and broaden the circulation, but it's not going anywhere. what's he doing with the fox business network? and by the way, what's happening at 20th century fox? they've got a couple of middle

of the road hits in their last quarter but nothing -- "alvin the chipmunks," a squeakwel they're calling for their big christmas movie. news corp. is looking more and more like an old media company despite the fact they brought in jonathan miller and some other digirati. he dished off direct satellite television to john malone and got chase carey back in exchange for $43 million a year. that may make a difference if chase can do anything, but the street is concerned about succession and nepotism and there's no real clear path to what happens when rupert decides to step down. >> and porter, i'll throw one more at you. you might as well ask him what's going to happen with myspace. >> myspace is dead in the water once the google contract ends early next year. it's going nowhere fast, and it's just been way overtaken by facebook -- >> what do you think he should

do with the journal? what would your advice be? >> i think he's got one of the most potentially high traffic portals in the world if he puts wsj out, dotcom out, and makes it multilanguage and free and advertiser turpted. when advertising does come back, he will ray home run. >> porter bibb, thank you very much for staying with us during our whirlwind tour of after the bell earnings. are energy etfs continuing to pri price fluctuations in energy markets? and utility pg&e powering profits with a jump in second quarter earnings coming up. the company's ceo tells us where he thinks he sees energy heading and why an investment in alternative energy could begin to pay dividends. we'll be right back. the algae are very beautiful. they come in blue or red, golden, green. algae could be converted into biofuels...

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cnbc's hampton pearson is in washington with the highlights. hampton, did they solve the problem? >> reporter: not even close. they've agreed that it's very complex. as a matter of fact, the last

day of those hearings ended with two well-known fund managers that invest heavily in energy commodities telling the cftc not to set limits. leading the charge, billionaire hedge fund manager john arnold. >> hedge exemptions on the physical futures contracts is a pandora's box and once you open it up and allow one counterparty to have a hedge exemption then it's hard to stop and not let much of the industry have hedge exemptions. >> reporter: a similar view from john highland, who manages one of the largest natural gas exchange traded funds. he said last summer's big spike in oil prices had nothing to do with trading activities by big tracking funds but representatives for major manufacturers and energy users had a different view. >> we are not dragging prices higher by our buying in the last run-up in natural gas. we're not driving prices lower in this current bout. >> the creation of the futures market was not intended to be a

substitute for a gambling casino by wall street funds, hedge funds, sovereign funds, and index funds. >> meanwhile, cftc chairman gary getsler remains committed to the idea that the commission should possibly do something as far as setting position limits to discourage speculators, but another member, at least one other member of the cftc thinks they need more authority from congress before taking action. melissa? >> i thought for sure they were going to get it all straightened out. for more on this story we're joined by the executive director of the industrial energy consumers of america. and scott burns, director of etf analysis for morningstar. thanks to both of you for joining us. paul, let me get this straight. we were blaming the speculators before. now we've shifted and we think it's the etf's fault? are you buying that? >> well, they're all one and the same. when you've got a fund like the u.s. natural gas fund that currently controls 30% of the

natural gas market with 300 million shares, asking the security exchange commission to increase that to 1 billion shares, how much is too much? 30% of the market? 40% of the market? 50%, 60% of the market? what we have is too much speculation that is not associated with managing the risk of the underlying commodity, and that is the heart of the issue. and we applaud the cftc for pursuing this. >> scott, what do you think? >> well, i think it's really hard to just pinpoint etfs, especially the ung, the u.s. natural gas. this is actually probably a very poorly structured fund. it's not united states natural gas spot price etfs. it's the united states natural gas rolling one-month futures contract etf. you know, in fact, it's hard to say that this fund in particular's been pushing up prices when in fact year to date it's down 40% in its return. and the assets inside etfs are

also very murky because shorting an etf actually creates asset size growth. so we have -- it's hard to say you've had a fund that's grown $4 billion in assets over the past four months, and yet the price hasn't gone anywhere. that actually means there's probably a lot of people and they're shorting, which is good, it keeptz prices down. and i do think it's very hard for people using -- looking to hedge physical exposure to these commodities to not want speculators. they go hand in hand. you have to have speculation to help with the hedging. there has to be somebody there to offset that risk. >> paul, what about that? because you represent the consumers, and i mean consumers of all types, whether they're companies, whether they're individual consumers, need to hedge somewhere. and if there aren't people out there willing to take the other side of that bet and create liquidity there is no hedge. >> absolutely. we're not saying that speculation doesn't play an important role. it is a critical role. but let's look at this thing with the proper perspective. prior to 2000 the futures market

worked great. but with the passage of the commodity futures monetization act that changed everything. and since then the cftc has consistently provided a large number of exemptions for these organizations that are now what we're calling the excessive speculators. it's the excessive speculator that we're concerned about. and how much is too much? >> yeah, paul, i was just going to ask you, how in the world would you identify what is an excessive speculator? sounds like being a little bit pregnant. >> go back to basics. this is a very special market. this is futures. every transaction should be associated with managing the underlying risk of the commodity. and when you have transactions that are detached from the basics of supply and demand of those commodities and managing risk, then you have transactions that are excessive. >> so paul, do you want everyone to take physical delivery rather

than having a cash settlement? would that make more sense to you? >> no, no, no. of course not. that doesn't make sense. we want a marge that -- where there is significant liquidity. but when you have organizations like the -- and i'm not blaming all of the excessive speculation on this one fund. so don't get me wrong. i'm just using it as an example. but it is a passive, long only fund. the futures market doesn't operate that way. buyers and sellers in the marketplace historically don't buy every month and don't sell every month. and they don't tell everybody in the marketplace when they're going to buy and when they're going to sell. futures don't work that way. they are reactive. if you look at a goldman sachs or a jpmorgan as investors or you look at producers like bp and chesapeake energy or some of my consumers and my manufacturers, i will guarantee you none of them will signal the

marketplace and say i'm going to sell so and so amount of quantities or buy so and so quantities on such and such day. >> scott, real quick, last word. >> and that's one of the bad structural issues with this fund. there are other commodity issues out there that use optimal roll strategies that don't signal as much. the first commodity etfs outside of the gold ones have the structural issue. it's part of their legacy. i have a hard time seeing how these funds survive, actually, another five years or so. i think investors, outside of using these funds to capitalize on these inefficiencies, you know, longer-term investors who want commodity exposure, who want to participate in the democratization of this asset class, are going to look for more efficient funds that do a better job of not getting gamed on the futures curve. >> okay. a point of agreement. we'll leave it there, then, guys. thank you so much. we appreciate it. up next, it survived the subprime crisis and is now successfully modifying mortgages with a lower default rating than

the national average. so why is first federal bank of california now in danger of going out of business? we'll explain in a moment. we'll be right back. so i've come to this ring to see who's faster... on the internet. i'll be using the 3g at&t laptopconnect card. he won't. so i can browse the web faster, email business plans faster. all on the go. i'm bill kurtis and i'm faster than floyd mayweather. (announcer) switch to the nation's fastest 3g network and get the at&t laptopconnect card for free. announcer: some people buy a car based on the deal they get. others buy the car of their dreams. 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 is 250.

demand for new home loans getting a lift last week. the mortgage bankers association reports mortgage applications rose 4.4% as rates on 30-year

fixed loans hit a three-week low of 5.17%. that helped boost refinancing applications by more than 7%. first federal bank of california has been one of the few banks specializing in risky loans to survive the mortgage meltdown. but the clock may now be ticking on this troubled bank itself. cnbc's jane wells is in los angeles with the details. jane? >> hi, melissa. it's a rare look inside the last bank standing, which specialized in option arm loans, and it is still surviving. first fed financial, the parent of first federal bank california, has seen its stock plummet to pennies. a year ago it was on everybody's list to fail. and yet it has still survived. why? well, first of all, it stopped making risky loans at the end of 2005. so it missed a lot of the bad news. it started modifying loans before everyone else did at the end of '07, getting in front of a lot of problems. but regulators won't let it make any new loans until private investors recapitalize the bank. and that won't happen until the bank finishes working through $4 billion worth of troubled

mortgages. >> we're hoping to raise capital by september. if it can't get done by september, it needs to get done by year end. so if we're here at year endish it's passed. >> want to talk about the modification offer we sent you last week. >> we can get through this last group of mods, which we're doing very aggressively in the next couple months. an investor will be able to look at us and say we understand how much money we're putting in and what's the risk. >> one homeowner who has seen his loan modified is tom dowd, who had an adjustable rate mortgage with the bank for 480 grand. >> initially, i was declined because i was going to be self-employed without any steady income. i then in july got a call from the president, jim geraldin, and he actually contacted me directly, and at first of course i thought it was a joke. the president calling me. >> it wasn't a joke. and the loan was converted from adjustable to fixed at a lower interest rate.

more on cnbc.com. analysts report tonight at 8:00 p.m. including what the bank is saying to the fdic to let it keep going for a while. back to you. >> all right, jane wells. thanks so much. up next we're talking alternative energy with the ceo of pg&e. find out if he thinks solar or wind power can be the fuel of the future and we are thinks energy prices are heading during the rest of the year. we'll be right back. i've been growing algae for 35 years. most people try to get rid of algae, and we're trying to grow it. the algae are very beautiful. they come in blue or red, golden, green. algae could be converted into biofuels... that we could someday run our cars on. in using algae to form biofuels, we're not competing with the food supply. and they absorb co2, so they help solve the greenhouse problem, as well. we're making a big commitment to finding out... just how much algae can help to meet...

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utility companies posted profits for the second quarter. and as it deals with the challenging economic environment particularly knits home state of california the company's making inroads on the alternative energy front. the stock trading down about 1% on the day right now. 40.14. joining us in a "first on cnbc" interview is peter darbee, ceo and president of pg&e. thank you so much for joining us. let me ask you about your earnings, first of all. profit rose 32%. this is in spite of the fact that revenue was down 11%. pretty good. how did that happen?

>> well, the reality is, melissa, i have to tell you that the biggest contributors to that increase were extraordinary items. we had a deal with respect to the irs on taxes. we had an item related to hydrodivestiture some years ago. so we did increase very substantially on a reported basis, but on an operating basis we increased our earnings from 80 cents a quarter last year to 83 cents. so it was much more modest. >> peter, what kind of pressure are you seeing from customers who are having a hard time paying their bills? i mean, you okay operate in california. largely, that's a state that's having a lot of troubles right now. what is it like? >> well, what we're finding is many of our customers are struggling paying us. fortunately, what we have in california are a number of programs to reach out and to help our customers who can't pay. and that's part of a set of programs that the california public utilities commission and the california utilities set up to deal with times like this. so people are under pressure. >> does it seem like it's

getting worse for people, or do you think you have a unique look kind of at the consumer, do you think it's hit bottom or it's continuing to get worse? >> well, our allowance for bad debts this quarter actually were a little bit better. but i think in the main we're continuing still to get a little bit worse. although the rate of decline has diminished. i think there is the prospect of a brighter future, but we haven't quite made that turn here in california. >> natural gas prices have been all over the map, down about 50% in the past o'year. i think they're up about 12% in the last few months. what's your forecast? where do you think the price of natural gas is headed? >> well, the reality is we don't feel we're any brighter than the market, so we really look to the forward curve as the best indicator of where natural gas prices are. spot prices, you know, have been relatively low, haven't moved up a lot. but the forward market's starting to move up. as we've seen oil prices move up

more recently. >> so are you hedging more aggressively? do you think that it's going to move up, you know, significantly from the four-buck mark? >> we've developed the philosophy of smoothing out energy costs for our customers, but part of that philosophy that we've agreed upon with the california public utilities commission is we don't speculate on the fries. what we try and do is average into the market and smooth out the increases and decreases over time. by standards of the last year gas prices today are low. but looking at historical standards where there might have been $2 or $3 gas the current prices are still on the higher side. >> you've heard this debate about speculators in the market. you said the word yourself. what do you think about the moves that are being made right now to limit speculation? does it make sense? or is it a necessary market? >> well, i think having a forward market, something away

from just the spot market, is helpful. and so i think that's a good idea. but i think we at pg&e just as regulators get concerned when we see these wild variations in the price of either oil or natural gas, i'm not sure that that's the public interest. >> what do you think is to blame for those fluctuations? >> well, i think there's a fair amount of speculation where people are making bets regarding the future, and that is driving higher volatility than the volatility just from supply and demand. >> switching gears a little bit, what do you think about the push for cap and trade? do you think that's a good idea? how do you think it's going to impact your business if it happens? >> we have been a big supporter of cap and trade for a number of years and we've worked with the edison electric institute, which is the utility trade association. we've also been working with key members of congress for quite some time. we think it's important that the united states have a cap and trade program, and we've been

constructively supporting the work in the senate to try to get us to a bill and also working with members of the administration in that regard. >> do you think it's going to add to the cost of energy for consumers in the united states, though? >> well, i think the question is do you believe in climate change or not? and i think -- >> do you? >> -- the debate is over. absolutely. climate change is an issue. then we have to ask ourselves what is the least cost solution to dealing with climate change? and i have two thoughts in that regard. one, get started early in dealing with it because the sooner you work on a problem the less expensive it is. the second is the cap and trade program is supposed to provide for the least cost solution to climate change. >> and you think it will? >> i do. >> okay. let me ask you about some of your green energy solutions. i know you struck a deal with sempra to buy a solar plant. on a percentage basis what do you think that adds to the energy you provide or what do you think it could add over time? >> well, it's a small

percentage. where we stand right now is we're getting 14% of our energy from renewable sources and by 2010 we're supposed to be getting 20% of our power from renewable sources. we have contracted to get 20% of our power from renewable sources over the next several years. the big question is whether these new people like sempra and nrg and the people that are still supposed to deliver to us, whether they're able to deliver. i think they're facing permitting delays, economic challenges, and so i think there's the chance that we could be delayed before we get to 20%. of that amount the deal with sempra i think will be less than 1%. so it's small relative to the total we're dealing with. >> what's the cost comparison like for you of that energy versus the energy you get from other sources? still a lot more expensive? >> it is significantly more expensive. if we look at nuclear power that we get today from our existing

plants, it's about 3 or 4 cents a kilowatt hour. hydro's about the same. new natural gas is maybe 7 or 8 cents a kilowatt hour. and we're seeing renewables in the 10 to 15 krents cents or mo range. renewable power is expensive. >> look how cheap nukes are. thank you so much. i really enjoyed our conversation. i appreciate it. the securities and exchange commission charging two operations traders and their brokers, hazan capital management and tjm pro frye pry tri trading, with violating naked short selling rules. combined the two firms will pay a total of $1.25 million in fines to settle the charges. meanwhile, in another cnbc first earlier, mary schapiro discussed the concern that so-called flash trading and frequency trading are creating a two-tiered market where some traders have more access to information than others. >> with respect to flash orders, we're looking at whether they

should continue to be permitted, and we'll go through a process as we have to at the s.e.c. to deal with that. on high-frequency trading, dark pools, some of the other issues that are related, we're going to take a very thoughtful approach, try to surface all of the issues, particularly the ones that go to fairness to investors on some of these strategies, and decide what kind of rulemaking or other action might be appropriate for us to take. >> schapiro adding that the regulator is still hearing from investors on restoring the uptick rule and would like to resolve short selling issues by the end of the year. up next, the health care head fake. the sector as a whole may be underperforming the broader market, but there are some red hot industries within the group. details when we come back. mr. evans? this is janice from onstar. i have received an automatic signal you've been in a front-end crash. do you need help? yeah. i'll contact emergency services and stay with you.

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here are some of the other stories we're following on the "closing bell" ticker right now. polo ralph lauren reporting its first quarter profit tumbled 19% to $77 million. that easily beat wall street's estimates as the retailer was able to cut costs and turn in better than expected sales. polo there trading up on the day by almost 7%. dean foods, the nation's largest dairy producer, reporting a 31% jump in its second quarter profit to $64 million.

excluding charges that met analysts' expectations, but sales fell by a larger than expected 14% to $2.7 billion. that news, though, weighing on the stock, down almost 10%. and navigational device maker garmin seeing its second quarter profit plunge 37% to $162 million. but excluding charges that blew away wall street's estimates because of lower expenses and much better than expected sales. the company also says the worst of its sales declines may be over. garmin shares trading up significantly on the day. boy, you'd like it if you owned that stock. 23%. since the low in the market in march the health care sector has been a conspicuous underperformer, and yet beneath the surface opportunity abounds. matt nesto looks at the haves and the have notes in health care. i can't wait to see where the opportunity abounds. >> yeah. and you know, the thing is it's well known, melissa. the health care sector has clearly been an underperformer alongside of the utilities and the telecoms and the staples,

these defensive stocks. but if you take a look at that underperformance from the bottom, it's pretty stark, man. 20 points underperformance. it's going to take a lot of catching up to catch up. but go beneath the sector level, my friends, into the industry level, or the sum industry level, and you'll see things like biotech. check out this performance. they're not up just 27% from the bottom. in fact, in the past month alone a 32% move for the amex biotech. look at the rally just in the past couple days or so. very, very strong. so that's just one area. as we say, you go to health in a handbasket. let's take a look at some of the subindustries, industries that are actually doing very, very well. biotech. facilities. suppliers and equipment. all doing better than not only the health care but also the broader markets. the dogs, the services. the pharmaceuticals. and the hmos. the managed health care stocks. they're all clearly lagging. what's interesting and contradictory and confusing all

balled up into one big ace bandage, 3% earnings growth. the only sector actually growing profit this quarter in the second quarter results, but underperformance compared with that. interesting also, 80% of the results that have come in in health care have come in better than expected. so these are my icy hot picks on my board. one from each of the outperforming sectors. affymetrix, intuitive, tenet, and dentsply. >> thanks so much. i want to go quickly to jim goldman, who has been on that cisco conference call and has more details. jim, what do you have? >> you know, generally a very positive tone from ceo john chambers here. let's get right to the guidance here because this is what everybody pays attention to. with all the necessary caveats that john chambers was typically famous for on these calls as well as his colorful language, the company is now anticipating a decline of 15% to 17% for its fiscal first quarter of 2010

revenue. 15% to 17% decline. and indeed, as i'm looking over my notes here and in talking to analysts, that's a little better, actually, than many of the analysts that i was talking to were anticipating. somewhere expecting flat to up 1% versus what we saw in the current quarter. so essentially down 17%, maybe 18%. but cisco may be anticipating something a little better. the company also saying gross margins in its fourth quarter dropped to 65%. that's better than what some on the street were anticipating. john chambers said the book the bill was comfortably above 1. expenses better than what the street were looking for. chambers says this is the toughest economic environment we have seen in our lifetimes. he says that positive sequential product order growth in the quarter is the first that this company has seen in more than four quarters but before he can truly call a bottom to i.t. spending not just domestically

but globally he needs to see several quarters of this kind of improvement before he can feel comfortable in doing so. but right now he says it is too early to call a bottom but he is optimistic that the trends are indicating that the worst may finally be behind cisco, indeed the broader i.t. industry. >> jim, i'm going to put you on the spot. if you had to guess, while we're talking there, we watched the stock go down, 1%, now down 2%. what do you think investors aren't liking from that? >> i think the bottom line is this -- there have been indications for the last quarter or two that things were starting to improve, and i think that people parse john chambers' comments the same way they parse the comments we used to listen to alan greenspan. i think people were looking for something a little more solid. the bottom is behind us. something declarative. something that they could hang their hats on and say the worst is done, not we think the worst may be done. and i think that's why we're seeing a little bit of softness in the company stock. >> jim goldman, always insightful. thank you so much. we appreciate it. up next on "the closing bell,"

we'll tell you how one majorit. up next on the "closing bell," how one company is trying to cash in.

call or click today.

it is record that oil supplies rose by 1.7 million barrels last week despite that increase, oil prices inched up 55 cents to just under $72 a barrel at the close. snxt it is the very first meeting. general motors is ordering the manage tomt step up the rollout of some vehicles. it is not clear which vehicles will be brought to market more quickly but the chairman says the board is emphasizing fuel efficiency. it is also a clear sign gm's new board will play a more active role than the old one. and they are agreeing to a major sponsorship deal with proctor and gamble. the consumer product maker will have four of its brands, including old spice deoderant and gillette razors, become official locker room pros oofl pros will be able to carry the nfl logo. material of the deal were not disclosed. if this college weren't already expensive enough, the soaring prices of textbook is

putting the squeeze on students. but amazon.com sees that as an opportunity to cash in. jim goldman is back to explain. >> reporter: forget about those heavy backpacks and crowded college book stores and say hello to the on campus kindle revolution. joining the ranks of the apple, mack and ipod as the tool of choice. with 60% of all college textbooks available this back to school season at substantial savings. >> students will end up saving between a third and 50, or 33%. 50% of the total cost. >> reporter: professor ted humphrey is part of a new pilot program where colleges and universities are giving kindles away to students for free. >> they can access any book on access. >> in semesters past, the humphrey soldiers students have spend nearly $500 on the 30 books he requires. >> you use the same cursor for highlighting.

>> downloading them instead cuts the bill in half. >> for academic texts, that means footnotes, the whole thing. >> a 3 g wireless access. there are $300 kindle has struck quite the nerve telling 1.5 million units so far with anticipating explosive growth thanks in part to the big on campus kindle giveaway. >> given the price, it it is a fantastic idea. >> probably because of the sheer weight part. >> reporter: uva, case western, and the university of washington are also part of this new kindle trial which could close the books for good on traditional textbooks. jim goldman, cnbc, business news. >> amazing. what a change. lets head over to the nasdaq market site where melissa lee has more on what's ahead on "fast money." >> we'll be all over the action. we'll keep you up to date on those comments from the company conference call.

we'll talk about the auk away ceo will tell us what he sees for the housing market. and we'll get the futures. a retired four star general and also the interim ceo of bae system to tell us about the future of that defense trade. it may be cybersecurity which may be your best way to play. thank you. >> thanks so much. we'll look forward to it. tomorrow brings the initial jobless claim reports. tdd#: 1-800-345-2550 if i'm breathing, i'm thinking about trading.

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a slew of media earnings out thursday. in the morning we'll hear from comcast, sirius and xm radio. after the bell reports from cbs and concert promoter are expected to reveal the impact of economic downturn. >> the most important back to school season in years, we get a fresh read on the retailers with tomorrow's chain stores sales report.

>> we'll see you on the call tomorrow. "fast money" is up next. thanks for watching. >> stop now. a four-day winning streak. welcome to "fast money." we're live in new york city. these are your faft money traders. we have a big show for you tonight. rick santelli moments away. we'll have a four star general who will give us the future of the defense trade and you won't want to miss the hot waitress. >> what? >> you heard me. we have to get to cisco. jim goldman in silicon valley who has been on that conference call. what are the highlights? >> so far some pretty optimistic words from john chambers. we're seeing shares pull back a little and that follows the company's guidance for the first fiscal quarter. one for 2010. john chambers and cisco anticipating revenue to the client. 15 to 17% for the period. while that sounds bad, that is

actually much better than many on the street were anticipating. because chambers, and to borrow a phrase is a little squishy about his overall outlook about the outlook and whether the order trends they have seen through the fourth quarter will continue for the next several quarters, without something truly solid as far as we have seen the bottom, the bottom is now behind us, i think that's why we're seeing a little softness in the company shares. all in all as we look through the company reports, very positive news. the company exceeded $1.5 billion in expense reductions. that's good. the 65% gross margin beat the street 64%. anticipation soefl that's also good. chambers says this is the toughest economic environment we have seen in our life times, and while the company is seeing the positive consequential product order growth, the first quarter, this is the company has seen this kind of behavior in more than four quarters. he knees to see several more quarters of these kinds of trenz before he feels competent. right now,