we're flat out of time. thank you for watching. >> where do those lithium batteries come from? that is on "street signs." >> this is cnbc.com news now. >> stocks edging higher despite weaker than expected retail sales data and an unexpected rise for jobless opinions. the olympic committee has recommended adding gulf and rugby to the 2016 games. 35% over the 12 months ending

june 30th, according to the federal agency that oversees eunice corp. we're first in business worldwide. i'm courtney reagan. good morning, everyone and welcome to "the call" 90 minutes into trading, stocks fluctuating, up 20 points on the dow thanks to mixed economic numbers. we have walmart out with strong earnings but the retail sector as a whole is getting hurt based on those weak retail sales numbers. we're going to discuss just exactly where the economy is right now, and cash for clunkers, larry. >> yeah, i have a defective cash for clunkers, although i'm going down with the ship. wal-marts earnings show discounters are doing well, but will american consumer ever go back to buying full-price discretionary items in my lifetime? we'll take a look. and i'm melissa francis. tomorrow is the deadline for bailed out companies to submit their compensation plans to pay czar kenneth feinberg.

should feinberg sign off on guaranteed bonuses? this is the call on cnbc okay. more economic numbers for investors to die just. walmart, leading things off by posting better than expected numbers. but then retail sales came in weaker than expected and weekly jobless claims as well. where does the economy stand right now? steve liesman is here to break it down for us. steve? >> melissa, thanks. despite walmart's better than expected profit numbers, it was a number of miss when is it comes to sales at the nation's largest retailer and the nation's retailers as a whole. bottom line, the consumer is undermining the clear-cut bullish recovery case, at least for now. take a look at walmart's sales. not the prove it's. down 101 billion, down from $102 billion by 1.4% from the prior year. economists had been expecting a gain of almost 1$103 billion. just like walmart, the overall count of national retail sales disappointed in the month of

july. july was down 0.1%, the estimate again for a gain. x autos was the thing that bothered me down 0.6%. we knew we had the cash for clunkers. automobiles, not as much as economists expected. and then i don't have to read the details. all the rest of the stuff was negative when it came to stuff beyond automobiles. a gas station down on lower prices. look at the depth this year compared to other recessions. how much automobiles are down in this do thisdownturn. some economists believe you've got to turn down jobs before you turn down retail claims not helping much, continuing claims that was a little better than expected, 6.2 million. but hold on, a truer picture of claims which adds up continuing claims and all the different programs piled on, much worse scenario. 9.25 americans are now in one of those three programs. down just slightly from the peak you can see there last week of 9.35 million.

the data show we have a long way to go to put the unemployment back to work and get americans spending again. and you've got to be kidding me if you're asking, melissa if people are going to pay full price. i don't think so. >> you don't think people are ever going to pay full price ever again, that's it. maybe that's your chief and larry's cheap. >> i get discounts. i get discounts. can i rephrase one point? >> quick. >> i don't disagree with your basic hypothetical hypothesis that consumer spending is soft. i do want to note, however, on the automobile sales, the survey from the commerce department in 2.4% will be thrown out. the industry is reporting a 15.8% jump in july. >> okay. >> and tgdp will include industy numbers. i don't think that changes your basic high owe let california hypothes hypothesis, but does make the story a little less worse. >> that's why i concentrated on x autos by anticipating your disagreement. >> x autos, you are correct. >> moving on, thanks guys.

>> i cannot argue with that. stocks open higher, move lower once again as investors try to figure out where the economy is headed. we're going to have more on that in just a minute. let's take a look at where the majorin did i sees are trading right now. look at the dow ballotsing back after the bad news up 23 points, a quarter of a percent, not that much. but still sinking on that news and now the market turned around. s&p up half a percentage point and the nasdaq trading to the plus side, as well. we're going to show you that in a second. there it is. trish, take it away. >> basically, the market taking some of this news in stride here, guys. up 25 points right now, but it really comes back to larry -- i don't mean to pick on you, but it's just interesting that the cash for clunkers situation in terms of what everybody was saying might happen actually turned out to be true. basically, consumers said well i can buy a car, so why am i going to buy a new sweater or go out to eat, these kinds of things. so the money was spent on a lot of the car situation and even probably not as much as some had

anticipated or hoped. we want to get to bob pi san who is tracking retail news for us. walmart coming in beating expectations but really not happening from top line growth. the thing we see over and over again. >> good news in walmart and some disappointing news in walmart. it wasn't -- take a look at the key point. q2 earnings beat, sales were weak. here is something important. sales down 1.4% for the quarter? supposed to be on the up side. one of the reasons the com store sales were down is deflation is hurting grocery stores. yes, walmart is continuing to get more market share, but deflation sales there. good news on the inventories, three quarters in a re, trish, we have declined right now. unfortunately comp. store guidance, a little on the disappointing side. walmart trading up throughout the whole morning. kohls, though, did not get very good guidance for the second half of the year, not much of a pickup in sales for them, although they're anticipating, j.c. penny is, to the down side as well. >> is there any overall theme,

other than the lack of top line growth that we can talk about here when it comes to these retailers? >> yes, anything discretionary is continuing to perform badly. if it you look at furniture, home improvement, electronics, all of those fell double digits in july, and that's where there is going to be real pressure. there is definitely weakness in a clear segment of consumer failure. >> bob pisani, thanks. i want to clarify what i said earlier so larry doesn't bite my head off. i had been a fan of cash for clunkers, as well, because it was working, at least. now we head to scott walker at the nasdaq tracking the action for us. >> hey, trish, not weakness at all in technology, pretty decent, up a half a percent picks up after yesterday's strong session. look at big cap text, apple leading the way throughout the morning, up 2%. barclays capital raise to go 208 from 188, they like product pipeline and free cash flow. dell shares getting a lift. jpmorgan raising the price target. microsoft shares up 1% today. the hd version of its zun

available on store shelves in mid september. but watch the chip stocks today, they had a reversal. the semiconductor index up half a percent. intel up 1%. texas instruments got upgraded over at bear today, and that was one of the cat lifts for a decent move today in this chips. kwal come higher, as well. the stock down on a downgrade over at morgan joseph, business reverse, up 4%. the so the tech trade keeps rolling today. >> good stuff. how do you play the stock market right now with the way the economy is performing? let's bring in our bull, scott richter, he is co director of large cap value strategies, port foam manager with asset management. and our bear, really a semi bear, dan fitzpatrick, president of stock market mentor. dan, the fact of the matter is, the cash for clunkers generated 16% sales, according to industry sources, that's the gdp number. but i do agree, dan, and here's

my question to you. the rest of the sales performance was lousy. how does that impact your thinking on the market right now? >> it really basically just confirms what i'm thought, which is the market is acting -- i can't say irrationally, it just does what it's going to do, and i think it doesn't pay to overthink it, but the markets discounting a slight recovery because we're basically manufacturing stuff, like this cash for clunkers. you know, you can't pull these tricks out of your pocket and really assume -- assume that it's ultimately going to fix the economy. and help the retailer. or the consumer. we have still got way too much debt that the average guy on the street is carrying, and they're not going to go out and buy this stuff. >> scott, isn't the bottom line -- the news is mixed today, the economic news. that's kind of the way it's going to be for a while. how do you invest, given that? >> i think you look at the market taken in this data, and it hasn't done much. to dan's point, it's discounting a better time. and you have to think about what is that better time? is it the consumer or the financials?

i would say no. i would say trade those stocks. but if you want to get at the heart of the cyclical recovery, i think you look at tech, you look the at materials, you look at energy and industrials. because that's what the emerging markets need. that's where the stimulus is being delivered. and we've got an inventory correction, a big stim back-end loaded and a lot of skeptics out there that aren't in this yet. so i think you can still make money in this market, fits and starts, but opportunity. >> scott, just as a factoid, we haven't mentioned yet, inventories fell again? july, the inventory sales ratio is really rock bottom. that's a business recovery signal, is it not? >> it's a screaming business recovery signal, larry. it has pore tended just about every recovery we've had. just means everything is very lean. i use the metaphor of a beach ball under water. remember when you're a kid you push the beach ball under? this economic depression has been worse than everybody has thought, so the beach ball is way under water. you let go of it, it's going to spring up. we've got leading economic indicators turning, we've got the stimulus program going.

and heaven forbid, the stock market getting better, housing bottoms, and inspire a consumer to actually go out and spend at minimum levels, working for value. so i think there is a thesis there. >> dan, how do you balance that argument? that's like the coiled spring argument, whatever metaphor you want to use with the only reason why companies like walmart are coming in better than expected is their top line is no good, but cutting costs down from -- they're not spending anything. that's always the glass half empty argument. how do you balance those two? >> right. well, you know, i look at it and say maybe the beach ball has a little leak in it, and probably not going to be coming up so fast. you know, i mean, you really nailed it. that they can only cut costs so much before there's nothing else other than strictly essential things that, you know, you've got to keep the lights on to run the business. the real issue is -- here, i'll use an analogy. you've got a car that you can't start and get a bunch of guys behind it and push it, it's going to go and it's going to accelerate as they push.

but what we are anticipating is that that push in the car is ultimately going to start it, and it's just going to go along its merry way and speed faster and faster. >> but dan -- >> the car is out of gas. >> scott, can i just ask you, though, in a serious way, if one is very worried about the consumer, which is a big theme this morning, i agree outside of car sales that retail sales number was ugly. do you sell the rlx and related retail stocks? >> yeah, because it's cut and run. >> that's right. a tremendous run, and it does look to be outstripping any economic fundamentals. key question here. rlx, retail, what do you do with it? >> i think you do sell them, larry. i think you stay nimble, you look at the market getting very far ahead of fundamentals, not that there can't be a recovery, not that these institutions won't, you know, morph themselves into more professorable entities down the road, but you've got to take advantage of a 50, 60, 100%, 200% move. >> right. >> and you take profits, and you

redeploy those into the areas that are weak. you buy the the weakness in this recovery. the skeptics don't understand that, you know, being up 50% is a normal part of a recovery period. we may go the next couple of years with very modest gains, and then when the economy, the handoff, goes from the public sector to the private sector, you're going to see, you know, the tail end of a bull market. and that's what -- that's what we're banking on. >> we've got to go, guys, thanks so much. trish. >> good ideas from those guys. thanks so much. melissa, bailout recipients facing tomorrow's deadline to fit executive compensation plans to pay czar kenneth feinberg. so should guaranteed bonuses be allowed, regardless of a company's performance? today's "call of wild" debate. >> but up next, diana olick with a reality check. no, a realty check. heldly, diana. you did so good with bob toll. >> thanks, larry, and thanks for getting the realty check right. the foreclosure crisis, is it the thorn in the side of a true

housing recovery? maybe. maybe not.

okay. welcome back. home loans failed at a regard pace in july, despite ongoing federal and stay programs to avoid foreclosure. realty track says 1 in 355 households with a loan got a foreclosure filing. diana olick joins us live from washington on what this all means for the housing sector. diana, there had been some hope we were going to see some

recovery in this, and yet today's numbers really showing something different. >> absolutely. so we have to ask the question, can housing really recovery with foreclosures continuing to rise amid so many positive housing numbers? last month, just a dismal report from realty track, the online foreclosure sale site reports that in july, over 360,000 properties received some kind of foreclosure filing, default, auction notice or bank repossession. up 7% from june, and up 32% from a year ago. 1 in every 355 u.s. housing units in some stage of foreclosure, and yes, that is a new record. nearly 2.3 million notices have been sent out in the first seven months of this year. >> you know, i think what we're seeing is an influx of new foreclosure defaults that had been sitting in delinquency for some months, and we're seeing an increase in the level of bank repossessions and that's more likely what is driving the numbers. >> now, the usual suspects, california, nevada, arizona

account for nearly 57% of all of the foreclosures in the nation. but the pain is spreading. we're seeing big jumps in states like kansas where foreclosures are up 94% from a year ago. maryland, massachusetts, oregon, all of them way up. in fact, oregon foreclosures up 84%. >> generally speaking, when you're looking at areas of that haven't been foreclosure hot spots suddenly jumping into the mix, the culprit is unemployment. and you can almost do a county by county analysis and track unemployment levels rising and then several months later a subsequent rise in foreclosure activity. >> so how much, much of a wrench is this in this recovery? well, surprisingly, it may not be. there is so much pent-up demand out there and affordability is so wonderfully off the charts right now that they're actually seeing bidding wars on some of those foreclosed properties, buyers bidding up the prices and at higher end properties starting to into foreclosure, you'll see those median prices

again start to skew up. so trish, what's that thing larry is always talking about, the free market economy doing its -- something like that? >> could that be working? >> i don't know. >> well, stay with us, diana. we want to bring in real estate attorney sherry oel afterson author of "for closure nation" to get more perspective. let me ask you, as diana was saying, affordability suddenly off the charts. we're seeing a little pent-up demand for some of these properties and at the same time, dealing with an unemployment rate that's 9.4%. so how do these two reconcile so that market forces do come into play and we start seeing a recovery, and when will that be? >> right, right. most people are expecting most people are expecting serious recovery in all markets, consistently within the next two or three years. but one of the things we have but one of the things we have seen from these new realty track numbers, which are shocking -- i mean, 1.9 million new filings in two months, especially when you think about the fact that back in 2006, we were predicting 2 million foreclosures all totalled through this whole

totalled through this whole crisis is that this roerve r recovery is happening at different paces in different different paces in different parts of the country. realty track numbers, if you look at the month over month or year over year or quarter over quarter numbers are not anything we weren't expecting. in fact, this is exactly what we have been telling viewers, that we hit somewhat of a bottom, but it's going to be a bumpy bottom, and we certainly can't expect to recover from sodom and go moraish like market. so things will be happening at different levels in different markets. >> all right. sherry is the glass half full or empty? i understand the foreclosure argument. but sales in the hardest hit places, nevada, california, florida, arizona, sales are booming, as diana suggested. markets are clearing at lower prices, sales are running big-time. so why can't we say the glass is half full? >> the glass is definitely half

full, and we are definitely in a recovery mode at this point. but one of the things we have been telling viewers is, the main thing we have learned from this whole crisis is expect the unexpected. we are past the point now where we're going to find hidden fault lines in other areas of our economy, like the derivatives or auction rate securities, but we're not past the point where we're not going to have adverse feedback from this. these new 2 million foreclosure filings are not happening in an isolated sieve, and there will be adverse feedback, not the least of which is negative equity, which by some expert predictions, we should be expecting about 28 million people to fall into negative equity between now and 2011. >> wow. >> and certainly, that will have other repercussions. >> diana, are we ever going to see enough of a recovery that we could be back to the boon times we had, or is this a reality such as we saw with the nasdaq in 2000, where it's going to take years to get back to previous levels? >> it's definitely going to take years. i mean, any expert i talk to says this is not going to be a

v-shaped recovery at all. this will be an l. we will be along the bottom for a long time. and whether we ever see the boon times in housing like we did? i don't think we want to see the kind of boom we saw in 2005, because it was artificial, detrimental and came crashing down. faulty mortgage products. you want to see steady appreciation, you want to see a healthy housing market. that's not going to happen for a couple years. but we don't want to see that kind of spike we saw in the last couple. >> go, diane. fr b. is not in my vocabulary. >> but for years and years, housing was merely a place to live, a safe, steady investment. it usually rose a little better than inflation, never like what we saw in 2005. and, you know, you're right, diana. and you're right, larry. thanks so much, sherry. we appreciate you being with us today. melissa, to you. >> up next on "call of the wild," the clock is ticking for bailout companies, tomorrow is the deadline for them to submit compensation plans to kenneth feinberg. >> should guaranteed bonuses be allowed? big question. we're going to have the big

debate, straight ahead, only on "the call" which is a big show.

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big jest sticking point, bonuses. cnbc's mary thompson is here to explain. mary. >> this is going to be something that will be interesting to watch, because concern, of course, being if the pay czar finds the bonus successive, a force may renegotiate them or limit executives' other pay in the future, something that might limit the seven firm's ability to retract and retain top talent. under t.a.r.p. rules, firms receiving more than 25 hundred million must limit bonuses for executives and the most highly compensated to a third of their annual compensation. feinberg is signing off on pay plans at citi, bank of america, gmac and chrysler financial. he will approve the highest paid employees not subject to bonus restrictions. feinberg has pretty much declined requests for any comments since being appointed the special master of executive compensation, but when we spoke with him back in june, he did

say he needs to consider what a company needs to pay its employees to contend with their rivals. >> competitiveness is just one variable, profitability, avoidance of excessive risk. these are the variables that i should apply as part of the law. >> now, while the 175 individual pay plans are due at feinberg's office tomorrow, he has 60 days to review, approve or not approve them. so it will be some time before we hear what he has to say about the guaranteed bonuses. >> and even the obama administration has said they're not going to make public what everyone is making. i read that in an article earlier today, not going to necessarily disclose it, it will be up to the companies if they want to e but that's another huge point of contention, as well. >> what we will know in the five senior executives, because their pay is always disclosed in s.e.c. filings in the annual report, so we will know that. but again, they're leaving it up to the company. >> all right. mary thompson, thanks so much. so should guaranteed bonuses be allowed? let's bring in attorney and investor advocate andrew soleman

and jim batson, employment attorney and partner. thanks to both of you for joining us. the poster child for this whole argument, of course, is this andrew hall from citi who has a $100 million payday because his urnt within citi made 10% of the net income for citi last year, and he had a contract that said he gets x percent of whatever it was of however much they make. that's his incentive. that's what we're calling a guaranteed bonus. is that right? jim. >> absolutely. if that's what the market calls for, that's what we need. >> a deal is a deal? >> a deal is a deal is right. it's not unlike major league baseball. if i want my company to succeed, i need to bid on the free agents and i've got to have good talent. if i can't afford to bid on these free agents and guaranteed contracts are what it takes, that's what i've got to bid for. we own 36% of citi as shareholders, and i want the company to succeed now that it's been forced upon us.

>> i think the flip side of the question is who pay ifs the trade goes wrong. it's one thing if he gets 10% of the profits, is he going to write a check for 10% of the loss if there is a loss? >> no. and that's the biggest problem with this. >> that is the biggest problem. nobody has a problem with big compensation packages, but first off, when you're playing with taxpayer money, this encourages huge, huge risks that if the trades go against the andrew halls of the world, guess who -- >> we end up paying. >> of course. >> what constitutes successive risk, andrew? how do you measure that? >> it's like pornography, you know it when you see it. >> i am totally againsted guaranteed bonuses, i'll get back to that. but on the question you just raised, what constitutes excessive risk, something you look at right now looks fine and then the market changes, you're in trouble. how do you measure that? >> well, it is hard to measure, but there have to be ways to do it and i don't know the answer to that question. but certainly, the sort i had trades that put aig and citigroup's existence into

question is too excessive. >> but it's the the consequences you can't decide what's going to be excessive or not. >> exactly. >> the time you get to the consequences, it's all over. i mean, consequences is very interesting. but no one has perfect foresight. >> andrew hall is a great example and is making what i consider to be an obscene amount of money, but also huge profits for the company that we as taxpayers now own. we want those profits. if that's what it takes to generate those profits, we have got to pay them now. >> but listen -- i don't mind limiting risk, that's why we have risk departments, and lord knows the rating agencies. but it wasn't compensation that caused these problems. >> my problem is that if the andrew halls and those type of guys are wrong, it doesn't just melt down citigroup, it has the potential to almost melt down the worldwide economy. >> right. and that's not a compensation issue. that's a risk issue. and risk controls are important. and i agree, we need performance measures. look, the question had to do with guaranteed compensation. i would love -- if ken feinberg can regulate the entire securities industry, maybe we

can do away with guaranteed compensation, but he only regulates seven companies and if you handicap them, they're at a competitive disadvantage. >> i didn't mean to interrupt. but andrew, i think guaranteed bonus is an oxymoron. the essence of a bonus is performance. it's incentive. >> but that's not what keeps people moving. the number is a guaranteed percentage. 10% of what you make. they're not saying you get $300 million, 10% of what you make. >> bonus is an oxymoron itself. it's a misnomer, it arose out of wall street when it used to be a partnership. it's no longer a partnership, they should call it what it is, deferred wages. these guys make a lot of money. >> cap compensation. >> it is -- >> here's my question. if you don't deliver, andrew, if you don't make your percentage -- i don't know what the percentages are, but i worked on wall street years ago at bear stearns. if you don't make it, you don't get it. to me a guaranteed performance bonus is an oxymoron, is it not?

i come back to that. >> absolutely. it's a great point. and it's funny, because when companies aren't doing well, it becomes a guaranteed bonus and then when they're doing well, it becomes pay for performance. so they kind of get their cake and eat it too. >> look at what is happening with goldman sachs. look at how goldman sachs takes back their money as fast as possible because they want to remain competitive. >> yes. >> but we're not talking market rate tax. >> when the market rate calls for a guaranteed contract, i don't think a-rod should make $25 million a year, but that's the market rank and if the yankees don't give him that guarantee, he's going to show up at another team. >> we appreciate it. >> theian ease -- >> he's going to go down. >> the yankees. -- >> the whole issue is a guaranteed bonus is really on wall street. a guaranteed salary. people depend on those bonuses, and if they're locked in ahead of time, they're anticipating that they're going to get those. anyway, wonderful discussion, guys. coming up next, an in-depth look at retail and the state of the

american consumer. walmart with better than expected earnings, but the retail discount giant now has lots of company when it comes to slashing prices. so here is the question. are consumers ever going to pay full price again? have they learned a new behavior? we're going to have a live report. plus analyst reaction for you. >> all right. and from the food network to hgtv's script network interactive is a media success story. the stock up almost 55% year-to-date. julia boorstin talks live with the ceo, only here on "the call."

welcome back, everyone. as walmart beats wall street's forecasts the for the second quarter earnings, the entire retail sector is jumping on the price-cutting bandwagon. what's the state of count retail? and are lower prices here to stay? jane wells joins us with more on walma walmart, discounters and the pulse of the consumer. hey, jane. >> hi, trish. i'm outside of walmart in san fernando valley. it did have a drop in same-store sales, but overall, outperforming peers, but not the stock. take a look at the year to day chart, down compared to target which has been up 22% and the s&p retail index up even more. it is clear, though, that walmart is picking up new customers. sara lugo appears macy's, but started checking out walmart recently. drove 45 minutes to get to this store. >> i kind of shopped when i went

in there, all of the clothes are cheap and fashionable. all my kitchen stuff, all of my bathroom stuff, everything here is more -- i can buy a box of cereal for $2.50 instead of $5.50, i'm like yes. >> when she came out of the store her cart stuffed with more than she planned to buy. she calls walmart more than just a safe port in the economic storm believing it will continue to gain market share in an environment where the recent consumer migration to value retail chains is sticky. morgan stanley has a stock on what it needs to own. retailers have cut deep, and it is unlikely that cost cuts will be replicable in 2010. i have to tell you, the cars in this lot are a little nicer. and one viewer tells me, guys, that the female shoppers here recently have gotten hotter. will they stay when the economy

returns? >> wow, isn't that an indicator tore you? the level of hotness of the female walmart shopper! my goodness. stay with us. will the consumer go back to paying full price, that's our question, or are we going to remain here a discount nation? we want to bring in stacy witlet's retail analyst. stacy, good to see you. basically, we're seeing this real fundamental shift in consumer behavior. i'm kind of of the belief that americans are very optimistic, and as soon as things start to change, their consumer behavior will start to change with it. what's your take, though? do you think these are new sales tactics that people are going to come to expect in the future? >> i would disagree. i think frugal is here to stay. i think the one interesting thing about this environment is that it's sort of forced the consumer to go out and say, hey, i've been overpaying. and if i actually open up my eyes and look around, i can get great value. whether that's my food, my clothes or my handbag.

and i think that's -- >> and something that will really last. even if five years from now we're in a very, very different economic environment, consumers have learned a new behavior? >> i think so, far the foreseeable future. certainly if the economy picks up in a major way, people get a little lazier, they may feel, you know, go and just get something that's just convenient. but i really think they have discovered new value, whether it's in the discount or at the dollar stores or the factory outlets when it comes to luxury, that is here to stay. >> stacy, why isn't this the greatest thing? this is gales of creative capitalist destruction. price discounts, price adjustments, these are consumer tax cuts, aren't they? >> yes. in essence, it's, again, you know, certainly the consumer got lazy and now they're out there. and you had had certainly all of the retailers fighting for market share dollars, and, you know, we just did a mall tour recently, and i think the retailers out there first with the promotions are going to win. the ones that are waiting are going to lose market share, and

they have trained us. why would i go buy my fall clothes -- >> and isn't this spencerian -- you know, the fittest will survive and the consumer demands it, and this is the path to recovery, and this is the path to a healthy capitalist economy. i think this is fabulous. fabulous. >> i would agree with that. >> you would agree with that. >> who isn't a discounter? who isn't discounting? >> right. cut 'em more until they clear the shelves. >> the point is -- >> if you go to costco -- >> jane, go ahead. >> well, i also wonder if people might say, depending on the quality of the shopping experience, i mean, i reasonable discovered overstock.com, and it's a wonderful shopping experience. why not stay there, but at the same time, back to my point, who is not a discounter now? sure you can go to costco and get filet mignon for $10 a pound, oh my goodness, but it means navigating costco, when

you can go to vonn's for two bucks more, and it's closer convenient and still a great price. >> stacy, what does this mean as an investor. as i approach the retail safe, should i be thinking that the consumer has fundamentally changed its behavior and that's going to affect how i invest in these stocks? >> yes. i would agree with that. i think that, again, the customer is trained. if you take, for example, the department stores, they have trained to us wait. why am i going to buy my fall clothes full price when i know a month from now they're going to be 50% off? so certainly we're not going to see the discounts we saw last year, because the inventories are more in line. but they have trained the consumer. so now we're certainly going to be waiting, and i think we need to think about investing, you have to think about the retailer that is can manage that. >> all right. >> surrender viflg vival of the. and i think price discounts on tax cuts, jane wells. >> all right. and there's hotter women shopping at walmart. i learned something new today. my goodness. >> jane, thanks so much.

stacy, thanks so much. a -- larry, you have to get yourself over there one of these days. a programming note. be sure to tune in on september 23rd for the cnbc special presentati presentation, "the new age of walmart" with david faber. >> up next, a game-changing success story. >> julia boorstin has a cnbc exclusive interview. hello, julia. >> hello, the company between rafer ray and merlin, hgtv design star is thriving. i'll talk successful to the ceo, coming up only on "the call." r. with my new netbook from at&t. with its built-in 3g network, it's fast and small, so it goes places other laptops can't. i'm bill kurtis, and wherever i go, i've got plenty of room for the internet. and the nation's fastest 3g network. gun it, mick. (announcer) sign up today and get a netbook for $199.99 after mail-in rebate.

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ler. a quick mention on bank of america, the s.e.c. filing saying that a new head of global wealth management, is buying 63,000 shares of the stock, paid an average of $15.97 for each of the shares, a total just over $1 million. the stock trading, last up at 77%, almost 5% almost.

cscripps is on top of the heap with the food network, the company's focus allowing investors to avoid problems plaguing media conglomerates, its stock up 55% year-to-date, so clearly they're doing something right. so can scripps keep up the growth? julia boorstin joins us with the interactive dr ceo ken lowe. >> hi, larry. a week ago, they reported earnings of 49 cents per share, up from 2 cents a year ago ago. this is a quarter when most media con glom rats struggled. here to talk about this is its ceo, ken lowe. thank you tore joining us. >> great to be with you. >> so your growth is being driven, and expanding distribution, can you keep up the growth of both these revenue

streams. >> i think we can, julia. you know, it's always important to have quality brands, and we're very fortunate to have two in hgtv and the food network, and these are networks that are resonating with viewers right now like they never have in the past. all-time high ratings, for records for food network. viewers truly, truly value and we have an engaged audience that also enjoys our commercials. they find them to have relevant content. so you add that together with the ratings success we're enjoying with these networks and if you pardon the pun, it's a recipe for success, and our networks are on a role. >> the food networks has sparked a phenomenon, a website, magazine, and a cookbook. but are you capitalizing on that success, and what can you do to continue to keep that up? >> well, you're right. food is definitely on a roll. as a matter of fact, just august the 2nd, sunday night, the

concluding episode of "next food network star" hit an all-time record, the number one watched show in network cable. and that has spread. the magazine we're in partnership with, is due to do a million copies the first of the year, a success story, probably the biggest since the "oprah" magazine. we are moving into significant areas with kohls department store being just one example. so we feel we can continue to exploit the food brand on multiple platforms. >> now, you say that your viewers enjoy watching your ads, but your ad revenue did drop nearly 4% in this past quarter. as the period wraps up, what is your outlook for the ad market? do you think it's hit a bottom? >> well, we do. we are right in the final phase, if you will, of negotiations in the upfront markets, so i'm not going to speculate on where we might end up, but we're very

encouraged by the response we're getting from advertisers, we're encouraged by the trends we're seeing in the scatter market and third quarter. so, yeah, i think we have bottomed out in the advertising area. >> now, i have to ask you a question that is on the minds of all of the ceos we talked to. what do you think of the health care reform, and are you concerned as a ceo it will cost your company more money? >> well, it's something that obviously we like all companies are taking a look at. i think it's a little early to speculate. we're already looking at health care costs in 2010, and it's an area that we have been able to control, but it's of concern. and but i think it's just a little too early to speculate at this point. >> great. well, it for joining us, and we look forward to seeing what you have next in the pipeline. melissa, back to you. >> all right. julia boorstin thanks. "power lunch" is next, and bill griffith is standing by with what's in store. >> retail sales we're thinking b the mind of the consumer, a couple guests say there has been a fundamental shift in that mind

of the consumer, and how they shop. and we'll itemize who the new winners and losers might be as a result of all of that. here is a debate raging on wall street right now. should citi be broken up? we have both sides of that story. and we look at the pros and cons of college savings plans, primarily these 529s that various states offer. good idea or not when saving for college? we'll get to that at the top of the hour on "power lunch." >> straight ahead, a look at the stocks you need to be watching the rest of today's trading day. >> matt nesto, what can you report? >> lar reerks i look at a fight -- we all like to look at a good fight, i'm looking at a fair fight, and also going to be bringing you something uplifting. be right back. >> good. >> love that. tdd#: 1-800-345-2550

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welcome back, everyone. check out shares of estee lauder, down 37.12. the luxury cosmetic maker posting a quarterly loss of 9 cents a share due to restructuring charges. sales fell 16%, slightly short of expectations. right now, the stock is, as i said, trading off about 1.25% or some. melissa, over to you. >> time for our call to action, the stocks you need to watch for the rest of trading day. matt nesto is looking at the materials sector this morning and he says he is underwemd. >> yes. i don't know if you want to short them, it's definitely a play on the economy, a lot of talk about sugar, not going to

be a real mover in the material sector, as we know in the s&p 500. but if we look now, financials have pulled ahead, they're the best-performing sector, but it's close. if you take a look at -- i mentioned into the break that we want to see a fair fight. if you take a look at the material sector by waiting, they're the ninth largest or second smallest in the s&p 500. only telecom is smaller, in, what, 27 of 28 members are trading -- higher here today. but even with that big 1.5% move, it's only about a 5% hit on the market. it's just not a fair fight. only 1/5, 1/ 6 the size of technology and financials. and those are the guys you need to see go higher if you need to see this market move strong or if you're looking for this market to give back, then you have to be looking for some shorting action there, as well. also, what was the hottest group yesterday? we're going just absolutely nut bird over and that was going to be the home builders, we are seeing d.h. horton going lower,

they think they're going to jam in some last-minute write downs before they hit the bottom in coming quarters. and is then i said something uplifting. i like to keep my promises. i've got not one, not two, but three stocks hitting, beating on the trailing quarter, and also promising better days ahead. harris, the hottest stock last time i checked in the s&p 500 today, very strong. dr. pepper, snap he will, also strong. and lastly, w.w. watson worldwide for the big move of its own. >> matt, are we not watching retailers? >> we're watching retailers, no question. and that's an interesting group, the haves and the have nots, the group is going to be walmart, home depot with the upgrade. and also carmax and oppose enho, but the majority of the group is struggling. >> it's a bigger story so to melissa's point, if the rlx has had a phenomenal run, which it has had, over 60%, as i recall from the march lows, and you're

getting this continued softness in consumer spending and i acknowledge that consumer spending is soft, what do you do about that, matt? this is an case of an economic stock disconnect. >> we have seen that for a lock long time. it's been a head-scratcher and why the discretionary stocks have performed so well in the face of overwhelming negative evidence. and you have to go back and say it's been a trade, an easy trade. >> yeah. >> and the fundamentals are going to catch up with the actual market performance. >> okay. matt nesto, thanks so much. we keep wondering if you bail on it now at this point, because of that -- >> well, it has been a heck of a trade. and you guys are absolutely right. way, way up. >> it worries me. >> sent me a list yesterday of where all these stocks have traded, and some of them -- home depot or office depot, i think, is a good one as an example. it's been just way up since march 6th. anyway, we're going to be right back with the last call. >> you're watching cnbc. we are first in business worldwide. when this shoe store added aflac

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