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52-week high for dollar thrifty. that's our secret stock. along with all those rental car companies had a pretty good year. up 7% today. thanks for watching. time for "the closing bell." genzyme has bounced off a 52-week low and is now higher by about 4%. the company's discarding about 80% of work from a plant that was shut down after a virus was discovered there earlier this year. southwest airlines has put in a bid for bankrupt frontier

airlines. its bid is several million higher than one from republic airways. priceline.com shares rupp almost 15% today on the strength of better-than-expected earnings. that's cnbc.com news now. i'm julia boorstin. bears making their first move this week. stocks posting losses in the home stretch. we're near the worst levels of the day. we enter the final and most important hour of the trading date day right now. welcome to "the closing bell," everybody. i'm bob pisani down on the floor of the new york stock exchange. hi, pap. >> hey, bob. and i'm melissa francis in for maria bartiromo at cnbc global headquarters. in the markets right now stocks are down on the day. they're having their worst drop in a month. however, still less than 1% dip, which goes to show you just how far the bulls have come in the past four weeks. as for the major indices take a look at the dow right now, down .6%. about 55 points. 9,315 the level there. the nasdaq also trading to the down side, down about .7%, a

little more than 14 points. 1,986 the last trade there. and the s&p 500 also trading lower by .6%. bob, what's going on on the floor? >> well, if this is the worst the bears can do the bulls should be pretty happy. it's very simple, folks.s. everything that was up the most last week is down the most today. that's called profit taking. remember, professional traders have got to figure out what to buy and sell every day, and today they're selling the stuff they made the money on last week. so let's take a look at the highlights here. and that's the story. that's what you need to know here. first of all, cyclicals were the main providers last week of all of the profits. and i'm talking about the home builders, retailers, industrial names. they're all on the weak side today. financials were a big gainer last week as well. they are mixed here, mostly slightly to the down side. but the big volume we saw in some of those names like citi and bank of america have definitely fallen off here today. finally, our third big story is the dollar rally which is continuing now for really the third, perhaps the fourth day. that's putting some pressure on commodities as well.l. take a look at the big names here on the commodity group

here. remember, all of them had gains of 4%, 5%, 6%, 7%, 8%. all the big names including rio tinto under a little pressure from statements made by chinese officials that they may have been spying. again, these are hotly disputed issues, but all the big names in the materials group are to the down side. industrials had a great week last week. all the big names like qatar pil sxr 3m were up. many of the home building and material stocks, building material companies like masco were to the up side. but as you can see here, all of them down 3% or 4%. same situation with the retailers. we did get retail sales last week. a number of them did raise their guidance or had improved commentary like macy's. those stocks were to the up side. all of them, again, to the down side here today. pretty clear pattern going on here. finally, on the financials here, note goldman sachs again a little bit weak today. goldman has underperformed all the big financial names now for four or five days in a row. citigroup and bank of america are up, but the volume is way off. state street had a little bit of a drop in the middle of the day. they hay 10q out and there were

legal services -- legal reserves, excuse me, related to its subprime mortgage portfolio main be sufficient. it's a little complicated but it relates to a potential case against them by the federal government. potential lawsuits regarding some of their -- the people involved with the subprime mortgages. tradertalk.cnbc.com. let's go around the horn. let's go to all my friends. we'll start with scott wapner standing by over at the nasdaq. >> thanks, bob. technology stocks like so many other sectors bob showed you have been weak throughout the day and nasdaq sitting right around the lows of the day, down around 3/4 of 1%. research in motion has led big tech to the down side for much of the day today. was downgraded over at ubs. it's a valuation call. they also lowered the price target there by a couple of bucks, but the stock has been down about 5%. elsewhere in tech, yahoo is fractionally to the up side, but yahoo and microsoft are giving back some today. one of the stories i've really been following today is priceline.com. out with earnings. take a look at the stock.

first of all, the stock's up 14% today. but take a look at the stock chart because the stock has been on an absolute tear year to date. first of all, priceline.com is at a new 52-week high today.y. it's up more than 100% year to date. and all this talk about the down economy, what's happening with the consumer, priceline says they actually saw an unexpected pickup in leisure travel, that it was stronger than expected, they took some market share from orbitz and expedia. all that adds up to, as i say, a 14% gain in shares of priceline today. genzyme was another big story as we headed into the afternoon today. they cut the outlook, also took a charge due to the contamination of one of they are plants. the stock was lowerer, but it's since bounced off that low. it is now up by 4% or so. but that's the story at the nasdaq. let's head down to sharon epperson at the nymex. >> it was a pretty trappy trading session at the nymex. we have oil prices that finished below $71 a barrel but still have remained in that very tight range we've been in for about a week between $70 and $72 a

barrel. the real story on today's trade had a lot to do with the dollar, the fact the dollar has gained for three straight sessions here has had an impact on crude prices. of course as the dollar rises we are looking at crude prices following. the refined fuels, though, that's an important area to look at because that is where the strength was in the petroleum complex today, looking at gasoline and at heating oil. analysts are anticipating in tomorrow's report that we get from the industry groups apis and on wednesday from the energy department that we're going to see a decline in gasoline and in distillate fuels.s. keep in mind we have seen retail gasoline prices jump up about 10 cents in the past week as we've seen a 22% increase in gasoline futures. we're also looking at natural gas prices even though the rally kind of faded, we're still paying attention to what has happened in the atlantic off the cape verdean coast where the national hurricane center says there is a 30% to 50% chance of a tropical cyclone forming there in the next 48 hours. we're also keeping a close eye on gold because as the dollar

has strengthened we have seen gold fall off. it's dropped about $12 just in today's session.n. it's down about four straight sessions. and keep in mind traders are also eyeing the fact that last week the ecb, a number of central banks in europe decided that they were going to limit some of their gold sales over the next five years or so. that's also an important story to keep your eye on. rick santelli, to you in chicago. >> well, thank you, sharon. today the credit market chatter's a little different than we would have expected just thinking back several weeks to the last big sets of auctions, and that is we are rallying a bit into the supply. but keep in mind rallying a bit we started out in the 3.80-ish area. we're in the 3.77 area. we settled at 3.85 in the ten. we're still hovering close to seven, eight-week high yields, which may mean that the drop in price and the rise in yield makes it interesting for investors. the second thing of course is hooking the dollar to the same line of thinking.. there is new talk, new chatter

that maybe the dollar is early and the foreign exchange investors are a savvy lot.t. maybe the purchasing of dollars the last several days and the rally in treasuries is giving us a new glimpse is that maybe we're getting a little long in the tooth in some of the positive moves in the equity market. and the last, out of that 75 billion about 16. -- 60.9 billion is maturing, which means $14.1 billion new money is going to be raised with that, to $75 billion in auctions.. it starts tomorrow with a $37 billion three-year note auction. now let's go back to bob pisani. >> now take it. thanks, rick santelli. taking a look at today's business headlines, bank of america and the securities and exchange commissions heading to court to defend their $33 million settlement over merrill lynch bonuses. a federal judge refused to sign off on the deal because it did not fully clear up the allegations that the bank misled investors or specified the basis for the amount of the settlement. cnbc's mary thompson will

monitor the hearing, which begins at 4:00 p.m. and boeing winning a nearly $1.2 billion contract from the canadian government to provide 15 chinook helicopters. boeing is expected to begin delivering the helicopters in 2013. and barnes & noble agreeing to buy barnes & noble college book sellers for nearly $600 million because both companies are run by chairman leonard rigio. the special committee of independent directors had to evaluate and negotiate the deal. barnes & noble says theable wiz igs will boost full year earnings per share by as much as 35%. >> debate growing, melissa, on wall street about whether this summer rally can last. we had michael steinhart this morning on "squawk box." he said the market may be facing some headwind. >> almost with no exception no one i know is long-term bullish. no one i know is long-term bullish. >> this is a famous contrarian. so take that one with a grain of

salt here. any long-term concerns on the horizon? let's talk with our experts here. marian bartles. you know her. head of technical analysis bank of america merrill lynch. and brian daly, sales trader at conifer securities. marian, let me talk with you first, one thing that struck me about the market that's very interesting is we've had a lot of stocks, technical analysis looking very good.. i think we mentioned before 80% of stocks are above their 200-day moving average. short-term, though, a lot of the market looks very much overbought at this point. is this going to be a problem? so far it hasn't been. we've been overbought for weeks now. >> bob, i think we're going to stay overbought. we've had targets on the market since the end of march of 1055, 1065. i think they're doable. we are, though, looking for an intermediate top. i think maybe september, october could be more of a problem. we still have a lot of cash on the sidelines. all of our indicators in terms of momentum still point to the markets going up, even though the short ones are overbought. >> this is a very important

distinction. a lot of people say the market's overbought, therefore it must drop. but as you point out, it doesn't necessarily have to drop. what would tell you the market is in danger right now besides -- overbought?? what has to happen? >> your indicators have to start rolling over as the market starts going up. that's what we call a negative divergence. one of the things we tell l clients to look at is the percentage of stocks over the 200-day moving average. we're up in the 88 range. i'd like to see that drop down around 70 and have the marx up. that would give us a negative divergence. we also need a little bit less bears. right now we're at 25% in terms of investors' intelligence. if we drop that below 20%, that would be a warning sign that there's too much optimism in the market. >> and brian, one of the other things that's interesting about the market is i don't see any sellers. we tried to drop the market a week and a half ago. we were like this. and it would come back late in the day. we didn't see a lot of volume. there wasn't a lot of power behind the selling pressure. >> that's exactly right, bob. i think you're seeing like today's a good example a little bit of selling here and there, a little profit taking but to the point we're discussing here we're staying overbought because money is still being put to

work. cash levels are above average. overweight cash levels by portfolio managers. and on our trading desk at conifer we're seeing money being put to work day after day. >> we're going to talk about the dollar a little bit. he with know right at the top the dollar's got to rally three or four days in a row. in the past when that happened stocks would come under pressure, bond yields would move to the up side, and certainly commodities would move down. and yet there's an interesting little -- i'm not sure it's a break or not. you tell me. we've seen the dollar strong here, but bond yields have been actually moving down. and the stock market's kind of been holding up as the dollar has been moving up in the last few days. is something new happening here? >> i think it's a good point.. we've seen a little divergence of the trend or the trade that we've seen over the previous month. i just think that's the short position that's were bet on the dollar, short side bets on the dollar, being covered a little here after the better happen expected jobs data last week. >> ten seconds. are we going to be higher on the s&p at the end of the year from where we are now? >> yes. >> yes. >> two yeses.

excellent. we'll have you back as a result. thanks very much. 48 minutes to go before the closing bell. we are just off of our lows for the day here. we've had trouble with industrials and all the cyclicals. tech also not particularly helping here. melissa? >> up next the outlook for energy prices. the chairman and ceo of dynegy tells us where he sees prices heading and why the power provider is selling some of its plants. >> plus the morgan stanley emerging market index up 50% on the year. but are global markets ready for a pullback in some answers coming up. >> and then coming up after the bell, first they took taxpayer money, now some of the nation's largest banks could pull in nearly $39 billion in overdraft fees from those same tax-paying customers. is that adding insult to injury? we're going to discuss it today at 4:00 p.m. eastern. but first, the most active stocks on the new york stock exchange, led by citigroup and freddie mac. we'll be right back. thththththt.

hi, folks.

i'm matt nesto with the "closing bell" realtime flash. i want to show you one of the hottest stocks in the russell 2000 small cap. e.w. scripps. ssp is the ticker. 30% higher here today.y. the company coming out with better than expected operating profit. they made four cents versus an 11-cent loss a year ago. the revenues were still down for this media company, but the media stocks, oh, how hot they've been. whether it's gannett or cbs. there's any number of them, and they're all doing very, very well. this one included. back to you. >> dynegy selling eight power plants and one under development to ls power in a $1.5 billion deal. the power provider is under pressure to shore up its finances after another difficult quarter. dynegy lost $345 million in q2, which includes a charge to write down the value of four plants. joining me now bruce williamson, he's the chairman and ceo of dynegy. mr. williamson, thanks for joining us. what does the deal get dynegy? what does the deal with ls power

get you? >> well, as you said, it does significantly strengthen our finances, our balance sheet and at the same time we're redeeming 30% of our common stock outstanding. it's very unusual that you can do both things at the same time, leverage the ultimate results for the common stockholder and strengthen the balance sheet.t. >> when you say strengthen your balance sheet, you really mean paying down debt. it's going to help you significantly reduce your debt exposure. >> yeah. it brings a billion dollars plus of cash in. that will then enable us to pursue what's called a liability management program, really going after our 2011 and 12012 debt maturities, which are our next debt maturities.s. >> isn't it in a sense, though, you're sort of selling your seed corn by selling your power plants? you're a bet on rising energy demand, rising energy consumption. you need those power plants if demand comes back to really grow but you're selling a chunk of them as a significant part of your jernlting capacity, isn't it? >> well, but interestingly you have to look into the type of plants we're selling. the five of the plants we're selling are called peaking plants so, they run maybe a handful of days during a given

year. so those are not significant earnings contributors. three of the other plants, the other three, are ones that are under a long-term contract. so they don't have that leverage to the up side. we're actually keeping the higher-quality earning plants, but as the economy comes back we'll see the margins grow on those as well as -- we think we're really increasing the economic quality of the portfolio. >> i said before dynegy is a play on an economic recovery and on an increase in electricity demand. but so far we've seen very little evidence of an increase in electricity demand. talk to me about power generation. talk to me about when you think we might see some increase in demand. >> we actually saw increasing demand in terms of megawatts produced in the second quarter.. it's the second quarter in a row now our gas powered plants our combined cycles have had increases of double digits. our midwest plant's right round 10%, the northeast right around 30%. that shows what's happening is people are continuing to consume electricity on the residential side. the gas plants are now running harder, starting to displace some of the higher cost appalachian coal plants. we burn powder river basin coal.

and so you know, we see the constant demand there. what we are really looking forward to is a comeback of the industrial demand as the economy comes back, and then you'll see increased run times across the plate. >> i ask you because your stock actually loosely parallels natural gas. we saw natural gas prices come down in the middle -- i know people put up a chart.t. i think we had a comparison. there's a pretty good association between the drop in natural gas and your stock. that's a three-month chart. >> in a lot of the markets gas sets the marginal price of power. as gas comes down, power prices come down, and then in turn our results come down with it. we add a lot of diversity with the coal-fired fleet as well as the gas-powered fleet, and that's a key component of our portfolio. >> there's a lot of talk we'll see some more merger deals in the future.. i know excelon tried to get hold of energy. that deal fell apart. do you think we'll see some m&a activity in this space? >> i think we will and we should. you combine two power companies in the space and you can easily

have 200 million of synergies coming out. what's been difficult is to get that timing to synchronize up. the step we made today with the transaction with ls power i think is very constructive because it will enable to us really strengthen the balance sheet, concentrate that share ownership, eliminate the dual-class equity structure we had where we had a class a and a class b shareholder, and potentially set the stage for some things like that. >> now, there's been a lot of talks in congress about increased environmental regulations here. there's been talk about carbon dioxide reductions and emissions going on. to what extent does that affect you, and to what extent will it be important to you in the future? >> well, we're going to use all fossing fuels in this country for a long, long time. one of the things we did is we were the first electricity ute toilet do what's called a consent decree with the epa and agree to clean up the coal fired plants kroos the fleet rather than fight plant by plant over new source reviews. so that's well under way. then in turn from there we've added the diversity of the combined cycle gas plants that we acquired about three years ago. so we're a big believer in

diversity between coal, between gas, and we're going to be using those fuels really as a bridge to a less carbon-intensive renewable-based future in this country for many decades. >> i just want to claear up the lse shareholders.. 40% of your shares are still controlled by ellis power shareholders. >> ellis controls 40% of the stock today. when this deal closes they'll be down to 15%. in terms of total shares buying in the deal announced today it's about 30% of our common stock. >> and there's a 20-year lockup for those shareholders, isn't there? >> no, that was on the earlier deal.. on this there's a restriction on increasing their share of ownership which will run for paired of time. >> bruce williamson, ceo of dine ju. thanks very much for joining us. >> 40 minutes, 39 minutes before the close. the dow down and nasdaq trading lower as well. >> up next a look at where today's sell-off may be creating buying opportunities. we're coming right back.

taking a look at some of the day's research calls, here are the latest upgrades and downgrades. staffing and consulting firm mjp group upgraded to buy from neutral with a $13 price target by suntrust robinson humphrey. this is because of higher job posts on the company's website and improving industry sentiment.

duke energy downgraded to perform from market perform by oppenheimer. that's because of valuation and lower load usage. shares of the power produce had been up nearly 10% over the past month. and wnt offshore cut to underperform from market perform by bemo capital markets. the call made because of the company's weak portfolio of drilling prospects and lack of internal growth catalysts. bob. >> thanks very much, melissa. join meg now to discuss what the markets are doing alan valdez vice president at hilliard lyons and gordon charlop at rosenblatt securities and cnbc market analyst. gentlemen, the bottom line is this. we've got selling today in the groups that were up last week, in the cyclicals and the financials, but the volume's not very heavy. so once again we face this minute amount of profit taik and the markets basically are moving sideways here. let's not get excited over a 40-point drop in the dow at it point. is there any sign of weakness in the market in this powerful rally we've seen since the beginning of july? >> not really.y. i don't think -- like you say you're seeing a little rotation

going on, small profit-taking but no volume. i don't really see any real weakness out there right now. i still see guys interested in getting in the market. little small profit taking and just some sector rotatinrotatin. >> gordon, where are we going to go in the next -- august and september traditionally weak months for the market. >> you know, bob, one of the things that happens down here is when you expect things to happen they don't and when you're not expecting things to happen they do. i think this week could be very interesting because we've got the fed announcement coming up and this may be the sometime that chairman bernanke starts to step on the brakes a little bit. and if that's the case a lot of funds are going to find that they're overinvested and underprotected on the down side. we may see some pullback that way. additionally the political noise going on on the hill, the health care issues also cause for some possible concern here. so we are setting up here for a pullback at this point in my opinion. >> you think they'll pull away and try to distance themselves even further from the bank of

england. remember last week they increased their quantitative easing program, buying back more treasury just as a little bit of an insurance policy here. will the fed try to make some kind of distinction between them and the -- >> well, i think the fed at this point is more likely to decide to do something to combat the potential for inflation. at this point we've had a good move. it would be an opportune moment for chairman bernanke to do that kind of -- >> even implying that rates might be higher or they are clearly ending any program they have of buying treasuries, would that be helpful to the market if the market's strong enough to greet that as positive news, alan? >> well, it could be positive news, but i don't think it's going to do anything. i think it's going to stay pat. i don't see much happening in august. i don't see them doing that at all, to be honest with you. i think the threat of inflation's still pretty far down the road right now. so i don't see that actually happening. >> what do you think of what's actually going on in china? we saw what happened to rio tinto today.

the chinese on the agency website, who knows if that's authoritative or not, one assumes it is, accuses rio tinto of spying essentially. >> obviously, specifically tinto's had an adverse effect on its own stock. but i think, and i brought this up last week, chinese loan policy, a lot of that money has gone into the market. so that, again, you have a little bit of a bubble setting up over there. a lot of this, you know, credit money being used to extend market gain. so they're a little bit vulnerable there. again, they may also have moved up a little bit too quickly.. i think we do have -- we're starting to see a couple of warning signs here. >> you have to admit the chinese authorities one day saying we're going to keep monetary policy loors, the next day saying we're looking into the moves up in the stock market.. every day there's a different announcement over there. >> it's a communist country. you don'trail know what's going on back there. so yeah, every day is something new. >> alan valdes and gordon charlop, always a pleasure to talk to you.u.

thanks very much. of course they'll be on the floor and talking to us in the next couple days as well. 30 minutes to go before the closing bell. nasdaq and the dow they're just off their lows here. the weakness is in cyclicals as well as financials. melissa? >> the market hs a big run-up since early march. up next do stocks still have room to run or are the bulls running out of steam? we're going to discuss it when we come back. these days, when you have to spend, shopping online can help save. doing it with bank of america can help save a lot more. up to 20% cash back from over 300 online retailers with our add it up program. just sign up and use your bank of america debit or credit card when you shop online. it's one of the many ways we make saving money in tough times a whole lot easier.

first to welcome back avis budget group to the $1 billion market cap club. the stock is up a staggering 2,600% since the trough in the market on huge volume today, double the normal, 6.5 million shares. short squeeze, do you think? you'd be wrong. there's only 2 1/2% short in this bad boy right now. the stock's at a 14-month high. and as i said, above ten bucks a share for the first time since june of 2008.

avis, budget, car and truck rental. back to you. >> and the important thing is all those travel stocks doing well. >> that is important. >> along with some of the other ones that are out there like orbitz and priceline as well here. thanks, matt. with about 30 minutes left to go until the closing bell the market's shaping up here, we're off the lows here, down about 70 on the dow, the weakness, as i mentioned, in some of the cyclicals as well as the financials. nasdaq also coming off of its lows. s&p 500 also in the same situation. similar chart patterns here today. melissa? >> all right. thanks so much, bob. since march 9th the market is on a tear, up 40% and creating a buzz that the recession may have bottomed out. but is it just the calm before the eye of the storm with strong headwinds soon to smack investors right in the face? we're going to get the thoughts of chief investment strategist with raymond james. also peter bookbar, equity strategist with miller tabak. thanks to both of you for joining us. jeff, what do you think? you think we're due for a pullback here? >> yeah. as you know, we were on the show march 2nd saying every indicator

that my dad and i have says the market bottoms that week. since then we have been steadfastly bullish often commenting we think it's a mistake to get too bullish. that said it looks to me like things are pretty stretched in the near term. but i don't think it will be a serious pullback and i think you'll get a rally too before the end of the year. >> so you think we're going to pull back here within the next week, two weeks, something like that? give me some timing. >> within the next two weeks. 96% of the financial stocks are above their 50-day moving average. that's typically pretty overbought. >> okay. but then you think we're going to rebound. so sounds like that might be a buying opportunity for your favorite stock. >> that's what i think. i think the upcoming third and fourth quarter earnings comparisons are going to look pretty good. >> peter, what do you think? >> i'm bullish on the reflation trade. i think march 18th when the fed announced they were going to start buying u.s. treasuries and ramped up their quantitative easing policy when you want to inflate your way out asset prices usually follow and that's what we've seen.. i'm more cautious on the u.s. i think the excitement on the

economy and for the second half of this year is really more of a reversion to the mean in the economy from four awful quarters. an enormous amount of government spending. but that is not something that is sustainable as final demand, aka the consumer, still remains under pressure. so i would be avoiding anything u.s.-centric and still focusing more on anything overseas that benefits from a rise in inflation. >> but peter, a lot of -- i've heard a lot of people make kind of this mistake today saying that everyone thinks the economy's going to get so much better in the second half of the year. i'm not sure that's what people really think. they just think we've put in a bottom and we're going to slowly get a little bit better from here even though it's not going to be outstanding. is that kind of what you're saying or you don't even agree with that? >> well no, relatively speaking 2% to 3% gdp growth in q3 and q4 refls to the minus 5 and 6 we saw in q4 and q1 is an extraordinary change, but is what we're seeing that it's driving this improvement something that puts the u.s. economy on a firm healthy foundation or is it just government bubble blowing and a reversion in the mean with respect to inventories?

i'm of the latter, and therefore i'm expecting another hangover in 2010, unfortunately, rather than seeing a still difficult '09 where we could have worked off more of the excess that got us into this mess. >> you guys are talking about two totally different things, though. jeff is talking about the market here in the near term and peter, you're talking about the long-term economic outlook. peter, do you agree with jeff's outlook on the market, that maybe we see a near-term pullback here in the next week or two or month and then ultimately rally to the end of the year? >> i agree in the short term the market's extraordinarily overbought. we've had an amazing run. we've priced in an unbelievable amount of good news. the only thing that i'm comfortable in is this reflation trade. the year-end rally, yes, maybe, but if come november, december companies don't have q1 2010 visibility there may be some nervousness but i think most of this rally that discounted second half recovery is in with the question being degree of sustain bimt of a recovery which then translates to where the market goes.

>> so jeff, how do you trade what you're looking for? >> we made our year in the past few months. >> good for you. >> the trick right now is to keep those profits. and there's a lot of hedging techniques that you can do to protect to the down side. so we've been advising clients to take that path. >> wait, but you say you believe in a rally after this next pullback. but it sounds like you're going to hedge indefinitely. >> well, if you bought a convertible preferred like the fed ex -- not the fed ex, the fcx, the freeport copper and gold, down around 32, 33 with a 15% yield and it's run up into the 80s, the idea of hedging 50% of that position to the down side makes all the sense in the world, melissa. >> okay.. you don't want to get hoggish. i hear that. peter, how would you trade your outlook? i know you like the reflation trade. is there anywhere else? >> i would be selling into the rally in retailers, banks, reits. anything that is u.s.-centric because i think the u.s. economy, while being out of a technical recession in the second half of the year i still

think has a ways to go to delever this economy to put us on more firmer footing so there will be more chances of earnings misses in the u.s. centric companies like retail, like reits, like banks, than would be seen overseas.. >> peter, what would you like to hear from the fed tomorrow? >> well, i would love to hear them say we're done in buying u.s. treasuries after the program runs out in september. they're not going to talk about raising rates, but what got us into this mess was greenspan cutting rates and leave it there for an extended period of time. >> true. >> we are the biggest economy in the world. it is very unbecoming to us to have interest at zero as gdp's expected to go positive. so bernanke should not make the mistake of being too easy for too long. >> i don't know.w. >> oh, he will. he will make that mistake. i promise everybody.y. >> okay, jeff, what do you think? are you listening for anything special out of the fed tomorrow? >> i agree with peter. i think it's going to be a non-event. i think they're not going to change the bias. i think they're not going to do anything with interest rates. i think the fed will not do anything with interest rates

until they're absolutely positive the economy doesn't slip back into a deflationary spiral. >> gentlemen, always a pleasure. thanks to both of you. bob. >> okay, melissa, 20 minutes to go before the closing bell. material stocks have been weak, retailers have been weak all throughout the day. >> up next can the red hot emerging markets keep soaring or there even bigger opportunities in more established markets? we'll have the answer when we come back. >> and aig now on its fourth ceo in just the past 14 months. we'll discuss whether the impact of a ceo is overrated or if finding the right person to run a company is truly crucial for growths. if you're taking 8 extra-strength tylenol...

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welcome back. taking a look at some of today's under the radar stocks, shares of trucker yrc worldwide soaring today after union workers approved a 5% pay cut. workers also agreeing to give up company pension contributions for 18 months.. the move expected to save the company around $1.2 billion. look at that. up 17% there. and auto parts maker trw automotive announcing plans to sell 14 million shares in a public offering.

trw not yet set the price for that offering but analysts believe it could raise around $300 million, which would likely be used to pay down debt. down 7% today. and cariso oil and gas cutting its second quarter loss by more than half to $6 million. but excluding it came in at $13 million. melissa? >> thanks, bob. take a look at the chart. two industries, both of them tracking global markets but they do tell two different stories.s. the morgan stanley emerging markets index is up about 50% year to date.. so does that show a recovery that might be running out of steam?m? meanwhile, morgan stanley eafe index is up less than the nasdaq on the year, and some believe that's telling anniversainvesto non-western markets may have more room to run. here to discuss that, zach karabell, "fast money" contributor and president of river twice research. also michael gerka, global strategist with empower global funds. gentlemen, thanks to both of you for joining us.

zach, what do you think? are emerging markets overdone right now? >> it kind of depends on the market. and some of that eafe index does include the far east. it includes australasia. places like australia which are going to boom insofar as china booms because they provide raw materials to china, places like brazil same story, places like chile, same story. i think the china story sun equivocally real and likely to be more robust than people predict, and i think countries that are in some way tethered to that are going to benefit. >> mike, the australia story is interesting because of the china aspect and also because they've avoided a lot of the financing disaster that we have as well, right? >> well, very similar to canada as far as not having the banking problems. but for the same reason where australia's positioned on the globe just for that geographical position you've got to look at the hang seng up 45% on the year, and if you're looking at a two-year chart on a weekly i've

got a major resistance level at 21,315, which is only about 400 away, and then i'm starting to look for another tapered reason why we start looking for either money coming out or sellers coming out of the marketplace. there's going to be more bearish news i feel in the far east first just because the acceleration on the year-to-date returns. if you look at the darks which has been a great indicator for us, only up 14% on the year, but at the same time on a one-year daily a huge level at 54.60. and again, that's right up against where we've been trading these levels right now. i think that's another reason you're going to start to see the market hold in and maybe some more profit-taking. again, differences between traders and investors at this level. and i think the investors are e going to do well in this positioning but they're also going to be wondering what happened if they get involved right now. i think the traders never missed the move with just saw in the last month and for the same reason thaur taking profits and waiting for the next pullback like a lot of people have just mentioned. >> zach, that's a pretty convincing argument. >> i actually think that distinction between traders and

investors is absolutely vital. and this conversation we could have been having two years ago, we could have been having four years ago, and what's odd about the financial crisis passing we're kind of picking up the thread of where's the growth and how much volatility can you stomach. absolutely, something goes up 45% in seven weeks you'd be an idiot ton not to expect a pullback. if you're a trader you trade that. if you're an investor and unusual in at these levels, you shouldn't pour your money in today because woke up and heard people talk about it and thought wow, there's growth in the emerging world and china's doing wel well. but do you trickle into these things. but you've got to expect as you have for the past years levels of volatility around the amount of interest at any given time and the amount of actual companies, i.e. market caps that are -- you've got a lot of price disconnect. >> but you have to look at it and say at what point do i take my money off the table at least for a little while. you have people like mark mobius saying they think global markets are going to pull back 30% in the near term. does that mean you should be taking money off the table?

mike, what do you think? >> well, i'm going to use a lot of technicals here just bays think for fundamental reasons where the market is the difference between the market and the economy i would need as much money as rick santelli takes in a day to explain it. but for technical reasons let's look back to 1995, which is a tremendous beginning of growth for the dow, which is up 6% on the year. on a 14-year chart you've got a huge fibonacci level that comes in at 9731. the reason i mention that is there's an up side target there on the marketplace where we could trade to if i'm wrong on a bearish scenario and then i think you start to see technical reason to sell the market. if you want to go back 20 years, when you talk about the crash of '87, that same level comes in around 9391. look where we're trading at the bottom of the screen. that's very relevant. but just on a one-year level we're talking about 9130. and now you start seeing the underpinning and where the market is selling so much and where a first target is if you're short the market where you could trade to. regardless you're starting to see support in the marketplace go higher and higher, which is

bullish in its measure, but i think you'll start seeing more counterproductive trades. >> mike sounding a lot like rick santelli. >> first of all, i do hope fibonacci's errored have some sort of trademark because of the amount of time we talk about it. the emerging market story is one of a lot of cash in a lot of the world and people are going to want to deploy it more in their markets and they're going to want to deploy it in the united states. if you're a u.s. investor, tng a theme i've been very interested in for years, look at u.s. companies and multinationals that are leveraged to exactly the same groelth. you're not likely to have a level of volatility given what's happened in the last eight or nine months. in that sense you get from intel what you probably get from the hang seng in the sense of you are exposed to that global growth. >> a theme like that i always find a little bit annoying because then you look at a stock ibm which has basically tracked the s&p for the past ten years or however, you might as well buy the s&p. >> i think there it depends. ibm's not the best case.

in my view ibm should be better than it is as a stock. but there are others that, you know, the material stocks have certainly not tracked the s&p. they've led a lot of the smaller cap tech names have absolutely led those developments. so you can find that global growth with kind of a higher beta or a better stock action than just by buying the s&p 500. >> mike, give me your one trade, your best trade right now. >> i'm still very long taiwan. i feel as though they get the backdraft of china with a lot of technology. so look for that to continue to produce very well. but i will stick up for fibonacci levels because when the market was coming off the beginning of the year around 9,000 that same 20-year chart gave me 6422 to the down side. the low of this move was 6440. that's worth hanging a hat on. and i'm going to stick up for that. >> all right. i love it. guys, thanks so much for joining us. >> thanks, melissa. and mr. pibb naturali too. >> yes, absolutely. coming up on "fast money," the gang looks at stocks that have come back from the dead in the last few months. are they still worth investing

in or are they on life support? plus "fast money" heads to the pits with rick santelli and he breaks down the one thing that may really hurt stocks this week. the other melissa and the traders are live at 5:00. bob? >> and melissa, ten minutes to go before the closing bell. dow has pared avenue of ihalf o losses. trying to make a comeback. >> the markets having their worst drop in a month. we'll put it all in perspective when we come back as the market fights its way back.can tdd#: 1-800-345-2550 tdd#: 1-800-345-2550 anything that makes trading easier. tdd#: 1-800-345-2550 i want to be right in the middle of the action-- tdd#: 1-800-345-2550 you know-- i have to see what's going on. tdd#: 1-800-345-2550 and when i pull the trigger... tdd#: 1-800-345-2550 ...i've got to get the best price out there. tdd#: 1-800-345-2550 (announcer) try the new schwab.com tdd#: 1-800-345-2550 for yourself. tdd#: 1-800-345-2550 call 1-888-4schwab tdd#: 1-800-345-2550 or visit schwab.com/trader today. tdd#: 1-800-345-2550 'course a trade doesn't always work out my way. tdd#: 1-800-345-2550 but when it does... tdd#: 1-800-345-2550 ...man... do i love that feeling.

all right. stocks down a bit for the third time in four days as the temptation to take some short-term profits is proving too great to resist. cnbc's matt nesto puts the day's small retreat into perspective.. >> had i only known, melissa, we could have had sponsorship from alka seltzer because i'm watching this hit kind of dissolve before my eyes here as we see these losses sort of pared as we go toward the closing bell. it's going to be close, but it looks like we'll see the worst decline that we've seen for the dow perhaps in a month, we'll finish it up at the bell and figure it out.

but i want to show you something. a mathematical anomaly. look at the cyclicals today versus the s&p 500. about a 3 to 1 underperformance. the inverse of that from the trough is exactly the inverse. isn't that funny? 3-1 outperformers, 32-11. so clearly the market has gone in retreat almost statistically how much it was in the outperformance column. so in the say it ain't so department, will it be or won't it be? the biggest one-day drop in a month. we'll know in six minutes. it is, however, only the fourth down day, down session of 23 for the cyclical index. and the one-month winners are actually the one-month -- or the one-day losers. today the best indexes or the best sectors and the best industries, rather, that have been running up are the ones giving back the most. health care is gaining.g. we did see an upgrade with merck. we saw some strength there. but there's been no flight into

the other defensive. so it's a sell to cash rally if it's even a sell rally, or it was, we're seeing there. one other thing that catches my eye, i'm calling it irrational immunity. the top three percentage gainers over the past four weeks in the s&p 500 are not giving up a nickel today. in fact, they're all still substantially percentagewise higher here today. gannett's up 144%. aig with a 100% gain.. and cbs with an 85% gain.. the gold, the silver, and the bronze, melissa, as you would know. all up still. >> all right. matt nesto, thanks so much.. up next, we're coming right back with the closing countdown. >> and after the bell, will bank of america's rejected settlement with the s.e.c. have a major impact on the future of both the bank and ceo ken lewis? some answers ahead at 4:00 p.m. every sunday, lasagna at mom's was a family tradition. when she started forgetting things, i was hoping it was nothing. grandma! what a nice surprise! mom, it's sunday. that's when i knew i couldn't wait.

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