but if you're a corporation you're feeling a bit better about economic stability, so you're going to postpone the layoffs. i think you will see as we work towards the end of the year further postponements of layoffs. >> a week and a half ago we heard from microsoft, this year we hear from cisco, not as bullish as everybody would have liked, yet the mark goes up. that tells you the market we're in. people have bought enough protection, i know we've talked about it time and time again, but 2 to 1 puts to call on a market that's going higher. why are they doing that? they're buying that protection. it prevents them from having the need to have to hit the stock. they don't have to sell, because they have the protection. that allows the market to continue to the up side. >> the mutual funds are here in size, they're picking spots and they put a pseudo floor. up 7% versus up 0.9.

this is the largest exporting economy in the world. so the data everywhere is getting better, not just here. >> but you have to look at what's going on here domestically in the u.s., and have to look at the currencies, because those markets are telling you globally what's going on. why is it the dollar today rallied? that has been a different dynamic than what you have seen in the past. good news coming out of the u.s., and the dollar rallied? reason being we are looking at the u.s. in terms of growth being the first to come out of this. so the rest of the currencies are rolling over. all the money is coming here supporting the u.s. dollar. >> does that seen like a smart trade? >> absolutely it's a smart trade. >> that the u.s. is going to be the first one in the world to lead us out of this global recession? >> absolutely. >> we're not. >> right. >> i'd go to asia right now, not the u.s. >> and the bet is being placed on the dollar. which doesn't seem to make sense. >> i don't think -- china has a v-shaped recovery, they've had it already, but we're looking at the g-3.

look at japan, the u.s., like at what the swis franc today. >> i think the dollar is more a result of a very crowded dollar if you think we're all recovering, but i think the dollar is more a result of a very crowded dollar short and people rushing back to get into this. i would start to get short the dollar around 80 on the dixie. we're over 79 here and would stay long the commodities. the fact the commodities. i think that's the big trade. commodities rallied today. when the dollar was rising, that tells you this trade is not broken. the dollar will come back. >> oil sold off significantly at the end -- sorry. >> oil sold most significantly at the end of the day, it was under pressure, because the dollar was rising. pete, you're up. >> you look at the volatility index. why? when it broke through 24 today, suddenly it looked like all bets were off. what's going to happen next? panic came back into the

marketplace. the guys steve talk being all the time, there's panic coming in to buy up side, not only the puts to protect themselves, but buying upside calls, because they missed it. they want to get some participation. the volatility index finished the day near the highs of the day, with the market, 1010 up big. that tells you a lot. >> the day after cisco reported, they couldn't, that fostered this rally again. >> let's move on to the next trade. financials a group we're watching. up 12% on the week, including a 4% surge today alone, certainly nice strength there. bkx was up about by 3.5%. >> one of the things we pointed out, the key to this job number was that in fact if people were not losing jobs, it meant they were staying current on house payments, staying current on credit card payments. this is part of the rally, part of the consumers staying -- that's why financials were

higher. >> it's a balance sheet recession. financials right now, jpmorgan, their balance sheet just got better, also look at the asset managers, they're doing well. the capital markets play, morgan stanley, goldman sachs we're going to talk. citigroup actually rallied. if you look at citigroup, citigroup is about to bust above the 200-day moving average at 466. >> more importantly on citigroup, it's going to the $5 level, and institutions start looking at that. at it goes closer to $5 -- institutions start actually looking at that. as it goes closer to $5, was saw it costs $4 today. >> it's 30% away from $5. >> nobody -- nobody. >> the bigger picture is look at where it's come from. nobody wanted to touch financials a couple months. the government has said the bigger ones will not fail. the bigger ones will not fail. >> people have moved towards, you look to citi, look to bank

of america, look now, the consumer-base money centers. we've talked about a lag in morgan stanley and goldman sachs. look at goldman sachs today. it was in negative territory almost the entire day. be careful. keep an eye on goldman sachs, volatility has dropped the stock down to a 19 versus an 80 just a couple months ago. i'm talking about a stock that's been flatlining. now it looks like it's falling off. if you like goldman sachs buy some protection along the way. it could be a great play, because you better have protection, because goldman sachs looks awfully weak. >> let's move on to another strong sector today, and that was the transforce. you flagged this one. >> surging sector. the railroads, they have managed the expenses at the nominal, pricing power, but this is a nerve torrie story. we've worked off inventories and now we're going to restock as we move forward in the second half. the rails are definitely in play right here. iyc, the transport etf, take a

look at that. you also saw participation from the names like fedex, as well and the truckers came to play. >> just better careful. volumes are down still, the transportation. they're up a little bit week over week. sorry, joe -- >> what a killjoy tonight. >> the transportation index has had a -- i would be very careful. i agree with you. in that space, i like csx, they're the cheapest of the bunch. relative to bni -- >> the northern southern has the highest exposure to the auto industry, but you look across the industry, it makes complete sense wile they're moving and starting to see stabilization. what do they move? chemicals. chemicals have been on fire. coals are back on fire. now you get into the autos. if they start producing once again, who's moving them, it's the rails, but they're pretty expensive. >> and big brown, if oil goes lower. >> he wants to defend you. >> it's the same thing with the retail space.

everyone thought that move ahead of the better numbers too, but it's moving ahead on the economy play. that's what you've seen in joe's space. >> if you're a dow theorist, and -- time for the obama trade. today's better than expected jobs number gives president obama the lift he needs in the polls of an obama comeback. i think i know what this desk thinks. joining us is john harwood to give us insight on that. john, of course, we care about those poll numbers, if obama is going to take credit for this recovery we have seen so far. we care about the poll numbers on the desk, simply because it could give him more currency to get other parts of his agenda accomplished, namely health care and potential taxes in order to race the money for health care. what do you see in terms of his ability to ride this rally? >> well, i do think, melissa, the white house believes the numbers are improving slightly. they've had some good news, the release of the north korean hostages, the approval of sotomayor, and now these jobs

numbers. i think this is more of a sugar high for obama because you've still got a protracted period in which unemployment is likely to rise further. the white house still expected to hit 10%, not likely to go down in a significant way until next spring. with 9.4% unemployment, that's not the place for the white house to celebrate. i think americans will not look at it in a fundamentally new way at obama because of this. >> they're taking credit for a lot of these good numbers, but in the first 200 days they've lost 300 million jobs. these guys don't really have, i think, any claim over lower interest rates or a banking system that seems to be moving assets through and credit thawing. what do you give them credit for? i don't think they should be taking much here. >> look, i think we have to be humble about cause and effect, linking the two, and what we know and don't know. i remember when he took office, people said, yikes, obama is president, he's for tax

increases, the market is going down, but guess what? he's still president, he's still for tax increases, but the market is getting better and the economy is going up. does he get credit for both? >> but steve grasso, how are you doing? i think when health care got slammed down, when the energy policy was kicked to december, not september, that's when you saw the market start to run. do you get the feel that obama understands that? >> you know what? i don't buy that analysis. i think the administration has always known that the energy plan is going to be a very, very difficult sell. it is not going to happen this year. and on health care, i think what's in the process of happening now is that we're going to see all, these numbers go get beat up in their town meeting, situation will be polarized and democrats will come back and abandon the bipartisan process, that's the likeliest outcome and you'll see a democratic plan that still can pass and i would expect it will pass. if the market is rallies and the belief that health care is dead, i think they're mistaken.

>> all right, john, got to leave it there. joining us from washington, d.c. tonight. what do you think, guys? >> number one, fomc meeting next week. let's talk about ben bernanke. if anyone brought us back from the abyss, it was the actions of ben bernanke and the federal reserve. you would like to see obama endorsing better bernanke. in terms of obama, what does he control? he controls the recovery. what letter? what alphabet letter is it going to be? l, u, v, or a w considering -- >> a little "love" from obama. >> obama controls the her of the recovery. >> wow. i mean -- yeah. >> too much -- >> because there's too much dollars being printed. the long and short of this, after we run through the stimulus, i think we have to pay the piper. >> and people don't like change. wall street hates change. all these ideas have been shot down, and as they've being mob

centralist, that's why the market is starting to move to the up side. people like the way things are, and the market is moving to the up side. >> you've got to wonder, if this is a sugar high, as john harwood eloquently put it, continues and is a lasting high sustained by something other than sugar, then wall street has to be concerned. that gives him more power and standing to pass policy that is wall street doesn't necessarily like. not to be partisan at all, but in general traders don't like taxes. >> that's where the "w" comes into play, a double-dip recession. >> sugar's at a high, melissa. >> nobody on this desk has hired by a poorman. he's got to understand that. gave birth to the -- go reagan! >> let's move on near. >> thaj thanks very much. it's interesting to see how warren buffett does, $3.3

million of net profit earnings in the class a shares for their second quarter. that is a sharp improvement from the 2.8 billion that they did a year ago. if you take a look at their operating earnings, which excludes about $1 billion in investment gains, it gets you to $1,147 per share, the estimates out there and there's not a lot of them for 1,238. i'm not positive if it's comparable if you add in the investment gains it comes up to 2,123 per share. the company also pointing out they have over $24 billion in cash. and they're also talking about the fact that their book value increased to $73,806 per class a share. that's up about 5% from year end and 11% from the end of the first quarter. so they've had a good jump, if you will, in the second quarter. they also point out that the

company's net earnings or their average equivalent shares outstanding appear to have gone up just a little bit there and then if you break it down the key operating businesses and insurance underwriting down sharply at $83 million versus $360 million a year ago, investment income, a big jump there, almost a 50% increase from a year ago. noninsurance business is down about 50% to $574 million and other we won't talk about it because it's so minuscule. but the big picture there is that operating income, the operating earnings there as 1,780, which is a strong figure. >> okay, matt. so once again, investment income was up 50%. that's what is in their portfolio essentially. matt nesto, thanks so much. what does that tell us about the holdings. >> wells fargo, american express, these are core holdings for them. >> general electric. >> also the drivety bets he has placed went his way with the markets going higher.

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welcome back to "fast money," here's what we've got coming up. blackstone up around 30% apiece, yes, apiece, and joe, you know fortress had particularly good earnings, even that fund where they had to temporarily, posted a positive return for the second quarter. a real turn around here. >> ford had excellent return and blackstone, they posted $180 million q-2 profits, the first profit of the year. you look at this private equity space, what do you see? improving market, you also see some increased m & a activity and if you look specifically at blackstone, they're figuring out what it is they want to do in terms of modelling their business. they're getting actively involved in the advisory role and that lines up well for the entire space going forward.

>> the whole space looks forward, hedge funds are up 12% this year, assets are coming back in, these guys have a lot of cash to deploy to deals well overdone. but i will say, these guys bought a lot of deals and still saddled with billions of dollars. not just blackstone, all of these guys also in the news today for tremendous both deal flow, kkr and silver lake, a great sale, you know, of the semiconductor designer, but it's still a place i'd be careful even though they have turned the corner. >> there he goes the kill-joy again. >> blackstone has been signalling this, this started back in february, the stock went higher. >> and the big man down there was all over that trade, buddy. >> it started back in february because we talked about -- this was a guy why would you bet against him? they had to drive powder, they've got $29 billion going into the market looking at the stressed assets. >> and they're looking at financials. >> looking at financials and they'll be allowed to buy more than they have.

he also said that 2/3 of the companies they own have revenues going up and that's versus 1/3 in the s&p. a lot of companies beat but didn't grow in the same way that blackstone and some of these other guys probably did a better job. >> the key will be whether or not the fdic gets its way. right now the proposal is double the tier 1 capital ratios from a start-up. that could be restrictive, in fact the cfo today of blackstone saying that would kill it for private equity. that's something to keep watch on. let's get to the stock making street news this week. for american express, it was up 15% on the week. joe? >> warren buffett rejoiced. american express up 16% this year. you must own it, stay with it, great trade. >> the gap was up 14%. >> the stocks were overwhelmingly shorted. that's the real reason you saw the first early pop, i think

it's going to continue as the economy does better. and we saw the jobs number today, i think it's going to continue to do well. >> a pop here for alcoa. you want 11% on the week. >> commodities up 30% over the last couple of weeks, i own alcoa and i'll still own it. >> it was up 14% on the week, pete. >> they've acquired 150,000 acres of more shale and they're also talking about the overseas markets like the shale, they might be buyers, looks like they're trying to get in front of the big hurdle. >> and a big pop here my alma mater, apparently the returns on the portfolio weren't very good. here they are. the ivy league is lending its name to a line of clothing. developed by new york's werewolf group. the brand will be designed to reflect the school's quality, heritage and excellence. >> are we going with the nerd fashion there? >> retail,. $160 per shirt and $200 for pants.

>> i could see pete in that. >> not a plaid guy. not a plaid guy. >> drop for proctor and gamble. >> 60% of their revenue derived outside of the u.s., dollar goes higher, proctor and gamble's profits go on the sideline. >> we've got a drop. how could it be a drop? a norwalk, connecticut woman dubbed nurse of the year by the nursing association is now being charged with pretending to be a nurse. turns out not only is betty not a nurse, but the connecticut nursing association does not exist. and she spent $2,000 of her own money staging the fraudulent awards ceremony. >> but think of all of the fun she had playing nurse. not being a nurse. >> your final trade is coming up next. he ran off with his secretary! she's 23 years old!

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let's do it, the final trade, tim. >> moved higher on cyclicals,

higher on fundamentals. >> let's give mcdonald's a try. >> thanks for trying. coming up next, "options actions." next, we've got your earnings play book. our traders shop the smart money moves to put the odds in your favor. "options action," cnbc next. hour, andy roddick 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".