year that start this is quarter way below street consensus. the theory for stocks, sales trends are supposed to improve, but they are not for brinker. in the second half, they will be easy because they were so bad last year. that's going to be tough. we have a real issue and it's not panning out. the bull argument for brinker and the other restaurant chains if you take a look at downside. we see similar comments with the retailers. the bear argument is simple. we will see this as well. we will see. we have reached the limit of cost cutting. the stocks are having a tough time moving forward. >> you hit a huge issue. you are aware of the story i have been underscoring where you could get big revisions to the job loss. they experience friday january through may, but the bottom of that is the same notion. the bottom of this is false

assumption about income and wages and salaries and the government by overestimating is how many people are working so there is less jobs. it's all about disposable income and the same dynamic. if you can't eat at chili's, the issues are big down the road and current liquidity and programs like cash for clunkers are giving this an income boost whether it's sustainable or not is huge. if you look at markets today, the knee jerk reaction. they are getting hit embarking on the central bank statement this morning. if you waited four hour, it was still a home run trade. interest rates and u.s. in the front of the numbers, sideways a bit lower than they were yesterday. >> brian, before i get to you, i want to follow-up on something this morning. you talked about the financials standing out. i know you have been talking about the volume numbers and financials.

extraordinary percentage of nicy trade suggest what peter is saying. if you take city and bank of america, the 25% of the entire volume for the stock exchange today. this you warned was going to happen. you were watching city. the scale of it is pretty incredible. >> 2.8 billion shares of city traded yesterday. not all that was traded on the new york stock exchange. that's the close of the fact that the fact that city increased its waiting. when you are dealing with a stock that was a $20 stock, you get 10 times the volume to get the normal price volume action. >> fair point. what about you, brian? the nasdaq is lower there too. >> i wanted to bring in highlights of sector. the trade has been when oil has been up and alternative energy has been up and thinking expensive oil is there elsewhere. solar is interesting.

canadian solar is a chinese company. forget about the name and the address. it's up 18% and the rest is mirroring the oil trade. why is it up 18%. it had earnings sequentially and up 131%. they took the margin from minus 10% to plus 15%. this is the key as this sector begins to mature. they came out and said we are learning how to manage inventories. they got it together and that's why we can do this. they are starting to get decoupling in the management of inventories. a brutal day and the sector is up. >> thanks to all three of you. rick and brian? i want to talk about american homeowners. it's a rather shocking number. that means that those homeowners will owe more on the mortgage than the home is worth on the market. here's a frightening part of that. it's not just subprime

borrowers. 40% may find themselves upside down before they hit bottom. this headline caught our attention and you may recall we were talking about it as a trader here. we got the author of the report ochl also here a professor of real estate and finance at the wharton school. you have all of our attention when the headlines came across the wire about 24 hours ago. in terms of mortgages, it's worse than the market is banking on. >> that's true. not a lot of folks have tried to do this analysis. a lot of them are close to ours. somewhere between 37 to 42% down. to put that together with the actual mapping of the loans out there and forecast what that

means is a somewhat different exercise. as you see, it's an important one. it ends up with a shocking statistic. >> what it takes us to in terms of home prices, people go for a home price forecast without looking at the mortgages themselves. if you are starting with mortgages, you are saying we could get a 15% drop? >> down about another 14%. that is close to market consensus, but that next step of saying what does that mean for homeowners and what does it mean to get mortgage obligations is an important step. you try to see what the outlook is and what it will mean for household wealth. >> what's your reaction to this? as karen said, her decline forecast may be not that different from the overall market. if the mortgage situation in terms of mortgages is as grim as she sees it, it could mean that the current efforts out there to modify mortgages are not near

enough. it's a little bit more severe about and makes a big difference. none the less, this is very good careful work and exactly what needs to be done. others will get you something like 30% of something under water. 30% is less, but still a severe problem. >> karen, you are seeing a difference. i believe we have a chart of where we have the worst problems now as opposed to where we will with the half of all mortgage owners. it seems that now it's california-focused. by 2011, florida is finally in the center of the storm. >> it becomes much broader. right now it's heavily in yell and that's for a number of reasons. one is they had the steepest declines. they had some of the most

aggressive lending out there. it became under water more quickly, if you will. as time goes on, as the forecast in home prices is correct, it becomes more and more severe for california, florida, nevada and arizona. for us to spread to parts of the northeast as well. population-wise, moving away from simple math, it becomes a very big part of the american consumer landscape. >> i guess that makes the real point here. everyone said you can't recover until housing is fixed. if people are under water on mortgages, half of americans in the year 2011, we may get a couple of quarters of growth now, but we have a problem years out. >> the recovery is bumping along the bottom. by the way, i want to correct. it's not half of americans. it's half of homeowners with mortgages. none the less, that's going to pull down the consumer. >> right.

but my question is, what does that do to the economic -- the white house came out a few moments ago and don't expect any stimulus measures. it would seem from that this that it's possible we may need more. >> absolutely. it's a potential that it all depends on the job loss. if job losses do not peak in the first or second quarter at 10, but continue to get worse, this makes the problem worse and we are back in the adverse loop. we could have a second leg to the recession. >> thanks very much. we appreciate t. karen, thankses again for coming on. the deutsch bank study for those of you who want to get a look. a look at under water homeowners with analysis there. now to more news from capitol hill on democratic infighting and whether it stops reform all together.

not just between democrats and republicans, but within the party, take for example the issue of taxing incomes above $350,000 or $1 million which is how the leadership wants to help pay for health reform. chuck schumer is open to the proposal and ken conrad not so much. take a listen. >> i wouldn't take anything off the table. i think it's important to get a bill done and there better ways and worse ways, but to draw a line in the sand on anything i think is unproductive. >> if we bend the cost curve, the things we need to do need to be in the health care sector. the cbo said you can raise the revenue and it does nothing to bend the cost curve. >> another potential split is

between the white house and democratic senators. news today of a deal between the drug industry and the white house to not seek additional cost savings for them in terms of negotiated drug prices under the program. i talked to conrad and schumer. that doesn't bind us. >> do you consider the congress bound by the deal? >> i do not. >> do you think it's a good idea to tell the government they can negotiate? >> i supported it and always believed it's in the interest of the united states to be able to negotiate lower prices with all providers. there is stuff in the house bill about it. i would tell you that the agreement i head about in this morning's paper causes me heartburn and i want to find out more about it. i think the drug companies have gotten away too easy.

>> you can see there an awful lot of angles to play on the massive enterprise of health care reform. some of them are internal to the democratic party. >> i love watching the back and forth. they are playing out publicly. one thing that senator shumer who i know we just saw on health care said earlier, you made headlines and said he spoke to the chair woman and she said a ban on the flash trading where some people get trading information was imminent. yesterday she said she is moving in that direction, but not sure on timing. did senator schumer give you more color on moves on that or trading issues? >> he did and not only is he considering that commitment that he thinks he has for a victory, he is not necessarily prepared to stop there and he wants to look in other areas for the same purpose. take a look at what he had to say on this. >> what are other steps do you think can be taken?

are you going to prod the se krerks and others to take going forward in advance of financial regulation? >> the vitality of our markets depends on the belief by both the large investor and the small that they are on the level. if certain people because of size or something else have an advantage, it will ruin our markets. i feel very strongly that trading should be abolished. we have to look and see if that will happen in high speed trading. >> there you have it. chuck shumer is out to defend the integrity on the small investor and the big guys. >> thank you. and speaking of where we are going for the economy. john chambers said this morning, but we are at a possible tipping point. two ideas of the talk of tipping up. plus, do we still need newman delivering the mail.

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where do you want to be?

what is the trade? >> my trade on the ticking point and tech is elx. what john chambers said is it's coming, but what is the catalyst? what is na that is is a technology that allows you to send the same data over the same

cable. they switch to do the neckinology. why now? storage is increasing at 60% a year. if you walk down the hall, you will find the server room with a spaghetti warehouse of cables. no room to put more storage. with the ether net, can send more data over the same cable. standardization. there is new standards on how to connect. that's similar to 1886 where you couldn't travel more south and then with standardization, they moved the other railroad closer and everybody could travel north and south. i'm not the only one. they tried to buy the company and the record rejected it and the stock is trading at 930 roughly that. is 1.70 and 20% valuation that someone else paid. >> a positionate proposal here

what's your tech tipping point? >> china unicom. chu. they have a characteristic that many would envy and scale is the main reason. china has 700 million subscribers and 3 g service has recently started in the country and china unicom will start in china in either september or october. they are close to signing an agreement with apple for a three-year i phone arrangement in heina. the stock underperformed and the shanghai composite index. this is without some richk because growth brings competition and expect and unexpected innovation. google is teaming up with china mobile, the world's largest mobile phone company to offer

the o phone there. it will get a subsidy as well. it will get competition. furthermore, best buy agreed two days ago to california. china unicom products. >> they were able to play. ahead on "street signs," coffee wars. donut wars are on. the newest contender from the great white north. up to canada is tim horton with an interview of the ceo and find out if there is dough to be -- wow. he's ruling. the post office is raising prices and cutting costs. $7 billion this year alone. is it time to rip? at 155 miles per hour, andy roddick

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just update you on the trading story everyone expects. they are moving ahead of that. that's an ideal situation. they are going to ban flash trading. they are going to cancel that and that that follows on the heels of what the nasdaq said. they will be stopping on september 1st. with e-mail, faxes, cell phones and fedex, how many people even use traditional mail anymore? it's becoming a major problem for the united states postal service. the accounting office predict that is the postal service will suffer the biggest drop since the great depression and a net loss of $7 billion. director of issues for the government accountability office. good to have you with us. we appreciate you taking the time.

this is a fascinating report. i hope people read it. it's very readable and not too long. some of what it says is pretty shocking. you cut $6 billion in cost. the postal service has. it's not enough for them to post anywhere remotely resembling a profit. >> that's correct. in fact this year in addition those that you cited earlier, they are posting an additional $3 billion. they are having a tough time. based on the financial conditions and looking at trends and brought trends, we feel it's important for the postal service to develop a plan if you will to get out in front of them and begin to realign and get costs

under control. it will be able to sustain the operations going forward. >> they are changing the post offices in the neighborhood. days a week and they could go to five. would that save a lot of money. >> good question. congress hasn't weighed in yet. congress currently has indicated that it expects and has a cost estimate of $3 billion. it currently goes to about 50%. we have 633,000 career employees and 94,000 noncareer. those are a lot of people's jobs and family's lives.

do you think that's viable? >> one of the things the postal service has is a universal mandate that provides service in the smallest community. the letter is from miami to alaska to 44 cents. they have the obligation to take that distance. that is a bit beyond where we are at. i think there unique features of the mandate that would suggest that that could be difficult. >> thank you very much. we appreciate you taking the time and want to talk more about this. should taxpayers bail out or throwing more money into a black hole? we are joined by a director and vice president of police for third day of senate advocacy group. a good policy.

let's start with you. the postal service is not something in this country. it's in all wealthy countries. do we need a government-operated postal services and is it to say we can have direct competition? >> we need to have that competition and that discussion. you had private delivery across the world. it's no longer a money making monopoly. we need to ask should there be a monopoly and the harm in allowing the private sector to compete for starters and if we o make arguments about rural ço

areas, we should make them explicit and should not do the o run around.ço i think it's worth remembering o about a half of postal businesses are advertisements. this is to make sure i get my junk mail?ço the direct person to person letters have not been a big part of it.ço unlike the auto companies.çoço i don't think the postal servico is going to turn around.ço we will see a long-term continuo to climb with the person to person letters. we need to ask what is sustainable. >> the largest civilian seajss in the country. it is relevant. the size of employment between the postal service and the auto industry. the direct auto industry. does he have a point that we should at least allow competition? we don't need delivering the mail to be a monopoly that loses

money and taxpayers have to finance? >> let's be clear between 1991 and 2006, the u.s. postal service made money every year. they are losing money. they didn't mention that you put a letter in your letter box outside your home in kalamazoo, michigan with a 44-cent stamp and gets delivered to somebody in caribou, maine, that is an incredible bargain. that's a success story in this country. that is a tremendous bargain. let's not forget about that. raise the price a little bit for advertisers. mailing a letter in this country is very inexpensive. >> it's fair to say we had price increases recently with much

greater frequency than in the past. >> we're did. there 200 billion letters delivered every year. that is a lot of mail. there have been price increases and 44 cents for a letter? think about it as you are going home and collecting the mail that day. >> the losses are getting bigger which is not always a good sign. do they have the flexibility to get the workforce they need? this is mostly a union workforce and do they have the latitude io they needed to?ço >> i don't think they do.ço this is one of the important keo elements that is there ways theo can reform and ultimately i don't think congress would let them.ço the 44 cents sounds like a bargain because we are not ço looking at true costs.ço

it's more than 44 cents.ço if it will be profitable up to o 2006, why should any well-run organization have to fear ço competition? if they are that well run, theyo can beat the competition and bring the competition on and prove they can do it better. i'm not concerned about that part of it. the post office has been one of the most successful institutions in the history of this country. it works well and had a couple of bad years. there should be reforms and it's still a bargain and still works. don't throw the baby out with the bath water. >> thank you very much. let us know what you think, everybody. costs have been cut and profits or losses are getting bigger and prices are going up. is that a problem? should we allow competition for the postal service or not? next on the show, the trades to tyke gold for the purple cows. then china is pulling ahead and

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it's certainly going to drive the gold price and i would say that gold has at least $900 an ounce and can go a lot higher than that. >> mr. cramer, that was the gold field ceo. he had a flight so he couldn't be on with us. thinks it can go a lot higher. what do you think? >> i totally agree. my friend shawn voided and he was unhedged. this was the way to play it when people think about what their percentage of the port foal show should be insured. maybe 20% and deal with goldfields that i feel is so right. >> goldfields you like. >> otherwise the gld, but i did pish he was on with us. he is one of my gaves.

>> here couldn't make it, but i wanted to make sure we got him in here. you still like gold and the two names. on call this morning and saying by the end of the year, 1052 and 1100 is where we might see the s&p, is she too pessimistic or optimistic? >> she is okay. she is not -- i don't think that she has the clout she used to be and the work is okay. i can't say her work is enough to -- it's wow, she said it, it's going to happen. not like that anymore. >> let's get to all the names. huh a few. can we start with the owner? >> the gap stores did a great number, but the analyst. barkleys came out earlier this week and recommended the gap stores saying the number would be good. i said oh, god, this guy is out

there. you want to reward great analyst who is nail it like this. he nailed it entirely. >> already. so you really would buy it here some. >> i think that was the trade, but i feel like i'm so tough on these guys and that was a good call. i think he can go to 1920. not that much. jc men pen he a good month. >> we are seeing more and more of them in the new york area. >> they were ahead of plans. goldman is doing a good job and i thought they were strained from the past and last year was bad and this year is good. this year turned out to be a great year and they will have a great back to school season. >> let's talk about aig. an outliar of the day. >> i was in touch with the people who tabulate the new york stock exchange trading on this. more than 50% of the shares sold

since june 2nd, sold short. 72% was short. 59%. this was -- june 26th, you had 68%. this thing was really an incredibly overshorted stock. you may think it will go to 0 and they didn't count on him coming in. he is a great leader and i think they will be right. this was too heavily shorted for any good news. >> i'm looking right now at the four best colleges in the country. unlike the report that are ranked against each other, you are torn on this one. >> no, i'm not. i heard on morning joe, williams is number four.

>> what's your alma mater? >> it's number five. >> my daughter is going to a better school than i did. i'm proud of her. >> do you think jim would be upset by the survey? i said no, jim will be proud. >> she will be done working in 45 minutes and will be very excited. >> of course this is the forbes list. californians to technology number three. i thought that was interesting n. air force academy. >> at west point, that's a great education and friend just graduate and will right to afghanistan. anyone who serves there and served well by that great school. >> thank you. >> much more with jim at 6:00 and 11:00. next to the frontlines, find out if the sneak attack by sam horton has duncan donuts on the run. from the donut wars to the green war. america versus china. can david beat goliath.

we are david. find out on the other side of the break. this is "street signs." 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.

>> take a look at the players. pwr is a ticker. yge. america's super contucketor and that is smse. america is down a green war and china is our adversary. america is losing. the senate is hoping small business can close the gap with $30 billion in loans from washington. the o polo alliance said that can generate for clean energy businesses and create up to 680,000 direct manufacturing jobs. they said a lot more than that. chairman of apollo alliance.

thanks to both of us for being with us. that would give $30 billion in loans to small businesses for green energy. the first question most people would have is we tossed stimulus money and we don't have this money anywhere else? this is a green race versus a space race against other countries. 70% of the component parts of the clean energy industry are made overseas. we at apollo combat global warming and want to see a bill passed and want to make sure when the green revolution comes, it creates job here in the u.s. we want to provide assistance to make the parts of the new clean

industry. it's an important investment in competitiveness and our energy independence. >> it's amazing that 70% and why china is ranking number one. >> we invented many. what happened is shared brown in the senate to provide $30 billion to expand a lot of our existing capacities. for example, suppliers and old industries in the country that with a little retooling can be the suppliers of new clean energy industry and the house including these provisions in the climate energy bill. we have a chance, but america is behind and we are going to lose the chance to get american jobs out of the green revolution unless we move quickly and now. >> you are a founder of a solar

company and were a roofer and an enterprise. why are you a supporter of extra money? >> it would encourage more people like myself to step for the. when i was creating my fan in my garage, i went to my bank and the department of commerce and the sb d.c. and everyone turned away from me. i had to borrow against my house because my wife and i lived below our means and we had equity to borrow from. i did it out of sheer will and determination and my fans are sold all over the world and we didn't have incentives to help us. i'm not saying i need it now, but it encourages a lot of other people to step up and we are behind. >> all around the world you said? >> some of our big customers are

in the cayman islands and the french west indies and greece and israel and sold a little bit and the hawaiian island have been into solar since the 70s and they are a big customer of ours. we are all over the united states and definitely a minority as far as leadership goes and renewables. >> if we get this fund for people to start businesses, how can we make it work? to go to the agencies or go to that 1 and not being able to get the money? >> we need two things. we need to reduce carbon emissions and drive demand for renewable energy. we have demand in the market place and we need to position our manufacturers and businesses to take advantage of it. if you look at senator brown's bill and the house bill, it provides for the financing to be done through the states at loca.

and what's interesting is you know, some of the big corporate interests have been opposing the climate bill like the chamber of commerce and the national association of manufacturers. but 150 american manufacturers employing american workers have signed on to this saying we want a climate bill but we also want the assistance so we can be the leaders in the next space race, you know. apollo takes its name from kennedy's commitment to go to the moon. we're in a similar race today, and we can win this. >> phil and bill, thank you very much. we appreciate it. let us know what you think of what they had to say, whether it will make us number one. and next, when times are tough, the tough want their donuts and their coffee. it's good news for canadian donut titan tim horton, who'll earn a trip to the great white north when "street signs" comes back. so many arthritis pain relievers --

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canadian coffee and donut giant tim horton shares. look at them. up 6%, nearly. it's pulled back a little bit. but right now about 5.4. it's an earnings-related jump. expansion in the united states and combining the brand with cold stone creamery, ice cream, fueling the surge. ice cream and donuts is a pretty heavenly combo for many people. where is haines?

he usually is sitting here. joining us now is tim horton ceo don schroeder. good to have you with us. my partner in the morning mark haines no doubt is a huge fan of all of your products. but plett just ask you, when you look at your growth profile, how much of it was just driven by people buying more stuff at a higher price as opposed to just adding new stores? >> well, in the quarter we had very little residual pricing from any price increases last year. so we hadn't taken any pricing during that in the quarter. so we just had some good solid same-store sales growth across all 11 states that we're operating in in the u.s. and then coupled with the co-branding opportunity that we have with cold stone creamery, which has helped the same-store sales growth in the quarter. >> during the recession have you seen a slowdown in people buying things because they're trying to save money or make coffee at home, or have you seen an

increase as people sort of go for a relatively inexpensive comfort food like doan snuts. >> well, there's a combination of two things. like our core customers come to us, 40% of them visit us more than four times a week. so during the economic slowdown there was some pressure on them and a limited number of discretionary dollars. so we can see this trend starting late last year in terms of it being impacted by traffic from our regular customers. but we also get the other side trading down from more expensive brands to ourselves. so we targeted this year, and it certainly panned out during the first and second quarter of this year that our marketing programs were designed to drive traffic. so we've seen positive transaction growth during the second quarter. we're very pleased. >> have you seen those people, the 40% who come four times a week or more you that saw some weakness in, have you seen them coming back? >> for sure they never left.

it's just that instead of coming four times they might have only come three times. and if you go back this time last year with the price of gasoline and so on, it really impacted the amount of discretionary dollars that they had. that has lightened up at this time this year. >> what if there is a tax passed on fattening food as has been discussed in the u.s. congress, whether it's soda or donuts? is that something that you are specifically putting a potential scenario for in your financial planning? >> well, again, we have a full product offering. we're much more than just a donut and coffee shop. we have a full line of soups, sandwiches, a lot of very healthy food options available to our customers. so that there's a combination. the donut and things like that, muffins and cookies certainly are a treat. but at the same time the customer has the option to get very healthy product within our stores. and we've been very conscious in terms of making sure that we're addressing all those issues with all the products that we have

available. >> thank you very much. we appreciate your taking the time. >> okay. thank you. it's my pleasure. >> one now in manhattan, too, for fans of tim horton. >> that's great. >> people shopping for more than just donuts. we'll explain. we'll be right back.

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once since being put on the market. chili's parent brinkler international is down 15% following its disappointing earnings forecast. that's cnbc.com news now. i'm julia boorstin. red arrows on wall street. stocks are lower. s&p 500 falling below that important 1,000 mark. we enter the final and most important hour of the trading day right now. welcome to "the closing bell," everybody. i'm bob pisani down on the floor of the new york stock exchange. hello, michelle. >> hello, roberto. i'm michelle caruso-cabrera in for maria bartiromo at cnbc global headquarters. in the markets we are seeing some selling pressure on wall street. stocks are lower in what has been a pretty broad-based pullback. the s&p 500 as bob mentioned dipping below the 1,000 mark today and as for the other major indices i'll show you what's going on. the dow jones industrial average lower by nearly 52 points, a decline of half a percent. 9,228. below the 9,300 level again. the nasdaq below the 2,000 level

at 1,971. and the s&p 500 declining by .8% or 8 points. 994.52. yes, below the 1,000 level. bob, later on in the show we're going to talk with a technician about what the s&p's going to do. what have you got on your radar? >> here's the important thing. there are some positive today but also some clear negatives. let's dot bull-bear, put up the screen here because i'm getting a lot of flak from both sides, and that's a good sign. the bulls are arguing right now get used to some gdp growth. in the second half of 2009 the gdp is going to grow at better than 2 1/2%, some people think 3%. that's growth. that's job growth as well. they're also arguing lower prices if it drops in september and october is going to be a chance to buy the dips, not sell the market. this is a completely different mentality than it was six months ago. but the bears are also very insistent as the markets have climbed. they're saying look at the data. there is little or no sales growth in the second half of the ye