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the new york stock exchange. here's the post for king pharmaceuticals. nobody in front of it. it was halted for news pending and it's not going to reopen today. it's still halted for news pending. we do not know what the news is going to be. there's been speculation as we've been telling you it may relate to fda approval or not approval for its pain drug embeta. they've had a lot of hopes for that. but again we're not going to know at least for the moment. that stock is not going to resume trading today. elsewhere it's been a tough day for a number of stocks. retailers have sort of mixed commentary. look at the solar stocks like ldk, which is a big chinese solar company. these solar companies in theory should be driving. in reality they're having a terrible time of it. big glut of solar panels out there and can't get financing. ldk also has a very large debt burden. that stock down about 20% today and they've been look for some bright spots, it's just not happening in the solar group. right now we're going toned near the highs of the day. the dow jones industrial average up o'about 40 points a little after 1:00 p.m. eastern time. there's the closing bell. you know who's next. michelle caruso-cabrera.

it's 4:00 p.m. on wall street. do you know where your money is? welcome to "the closing bell." i'm michelle caruso-cabrera in for maria bartiromo, and here's what we're following at the close. investors shaking off the gloomy sentiment that hung over wall street today, sending stocks modestly higher in the final hour of trading, closing at the highs of the session. approaching 9,400 here. the pressure of the day coming from a surprisingly weak retail sales report. that's what kept the lid on stocks for most of the session. that techkt a per krept drop in retail sales offsetting gains in shares of walmart. the world's largest retailer posted better than expected second quarter results. let's show you how the day finished. dow jones industrial average higher by 36, nearly 37 points. 9,398, just two points. less than two points shy at 9,400. nasdaq back above 2,000.

2,009 with a gain of ten points. and the s&p 500 with a gain of 7 points. roberto pisani is our eye on the floor of the new york stock exchange. i wouldn't say a rally into the close but they were buying into the close. >> just shy of the high of the day. before we get to that let me get you some news on king pharmaceuticals. halted aum afternoon, news pending, the stock never reopened but we are getting some news from the fda. apparently they have approved embeda for moderate to severe chronic pain. one of there are important drugs for pain. we'll get you some more information on that. that has literally just crossed the wire. but again, king pharmaceutical not reopening today. let's talk about what happened today. successful 30-year auction. briefly brought stocks to new highs. financials and materials doing well. but the big talk was about retailers. we're going to get nordstrom. in fact, we're going to get nordstrom very soon. look at that stock. 30% move up in one month. it is believed that the july sale, which is always happening

in july sxals planned, was fairly successful. we'll get some news on that fairly quickly. we'll see. there's a lot of issues with the retailers. if you look at the retail index, the rlx, it too as a group retailers are up 30% in the last month. so the general betting amongz people trading retail stocks is the retailers will probably be fairly cautious in their commentary, hopeful but cautious, not wanting to drive up prices too much at this point. you see that big move up there for all of the retailers. let's talk about walmart. yes, they had earnings. it was better than expected. sales a bit on the weak side. but consumers still recovering here. point about walmart that traders keep making who are professionals, walmart has dramatically underperformed the market since the march lows. that's because professional traders park money in walmart in uncertain times and when things start getting better they take it out and put it in higher beta retail stocks doing better. that's why the other retailers have outperformed walmart. there's the big retailer today. we are getting jcpenney and abercrombie tomorrow. we're going to get a whole slew of other ones including home

depot and lowe's next week. michelle, back to you. >> thank you, bob. big economic report today. initial jobless claims. they unexpectedly rose by 4,000 last week to 558,000. but the number of americans continuing to collect unemployment benefits actually fell by 100,000 to 6.2 million. here are some of the other stories that we're following on the "closing bell" take ticker right now. ford motor announcing it is ramping up production of its focus sxes cape models in the third quarter to meet rising demand for those vehicles. under the government's cash for clunkers program ford now plans to build 495,000 vehicles in the quarter. that is an 18% increase over last year's level. ford shares today higher by 2 3/4%. a gain of 21 cents to $7.91 a share. dr. pepper's snapple's group second quarter profit surged 46% to $158 million. that easily beat wall street estimates. the beverage maker also raising its full year earnings above analysts' expectations. taking a look at the stock, had

a great session. higher by more than 7%. a gain of 1.70. 25.22. and koz m and koz met sxikz perfume maker estee lauder swinging to an $18 million fourth quarter loss. sales fell by a larger than expected 16% to $1.7 million. $37.80 a share. let's put all of the recent action in perspective here to discuss is chris johnson chief investment strategist with johnson research group and richard sparks senior equities analyst with schaeffers investment research. guys good to see you chris let me start with you. couple days of rest over the last two little bit of a rebound today. what do you make of what has been a very, very strong market? do you believe it? >> you know, i do for right now. and let me evaluate that for right now'ssituation. what we see is a market that's been driven heavily by emotion. it's not fundamentals. when you look at the fundamentals of the marketplace right now, one plus one does not equal two.

it equals about 1 1/2. for that reason we look out six to twelve months and thikz the market is going to see a little bit of a problem getting over some of these hurdles. what we have seen over the near term and what i think is going to be over the next month or two even is the fact there was spoch sideline cash, so many people sitting around that just absolutely hated stocks. >> but so many economists are saying the recession ended in the second quarter or we're at the end of the recession, why is that not a good enough fundamental to have driven what we -- >> there are some fundamentals. don't get me wrong. there are some fundamentals out there. but when you look at the bigger picture, the housing sector right now has taken off just through shoots and fires right now over the last couple weeks but when you look at the other side foreclosures still going up i think there's going to be a build-up in the inventory. i think investors are getting a little ahead of the game, that doesn't mean this rally can stay in place. technicals right now should be an investor's best friend. that old saying the trend is your friend is heavily in play right now, especially -- >> richard, what do you think? >> go ahead. >> well, i agree in some sense. i think the emotion, though, is

not overwhelmingly optimistic yet. we are becoming more optimistic. but if you look at some of the investor sentiment polls, if you look at some of the numbers on options activity, you'll see that although they're becoming more optimistic they're by no means overwhelmingly euphoric at this point. >> let's bring in the novice viewer to explain that. when people are pessimistic about a rally it's actually a good sign, right? >> that's exactly right. you still have individuals and even institution whoz are still sitting on the sidelines somewhat, a little bit cautious, maybe not quite sure that this rally is for real. especially now that we're at that 1,000 level on the s&p 500. that's a round level number that i think a lot of people are betting on to actually hold this rally and then cause a downturn in the market. so there's not really a lot of overwhelming optimism. there is still money on the sidelines that may come into play, and that leads us to believe that although we may pause here at 1,000 over the next several weeks we should be able to surpass that and move

higher. >> how high? >> well, i think that we could see 1,050, that's not very far from here. where we stand now, that's obviously the next kind of little hurdle that we're going to have to cross. i don't think we're going to go back up to new highs anytime soon. there are going to be bumps in the road. but for now the trend really is your friend. >> chris, you also said the trend is your friend. does that mean you're sticking with things like technology which has done very well, material cyclicals, things that are leveraged to an economic recovery? >> we are indeed. we're trying to get in at the front end or the bottom end of that supply chain right noup if you look at some of the material companies out there, you look at steel, steel is very attractive to me right now. i know one of the local steel companies, ak steel, went from laying people off three months ago to now they've brought all those people back and they're working overtime. so we're starting to see the bottom of that chain get active again. and i like that. i like to see that and it's going to build obviously to a stronger future here. we're tending to stay a little bit further away from some of those consumer-driven stocks. the retail stocks obviously we got some mixed news today and in the next few days and in the

next week we'll get a bigger fuller picture of what's going on in the retail sector but i think we've overdone it a little bit there. anyplace where the consumer, the consumer has an active role, and what i mean is by people either going out and buying something, people going out to eat, people -- you know, people actually crossing money across the table, i think we need to be a little bit tentative there. >> now, that's contrary to what richard likes. because richard, you say you do like the retail restaurant sector, right? that's what i see here? >> well, again, it gets back to the issue of sentiment in the market. and of course the consumer has reined in their spending. savings rates are extremely high for the u.s. in comparison to historical patterns. so you do have people who are spending less, and yet when you look at companies like chipotle mexican grill or the cheesecake factory those stocks are doing well. the companies are doing well. and they're being rewarded in the marketplace for that. and they have actually led us off the bottom for march, and we think that that actually can continue because in the sentiment profiles we see for those stocks there's not a lot

of euphoria. there's still sidelined money that we think can come into play and push those higher. >> we keep hearing about that sidelined money. i'm waiting to see it. guys, good to see you. richard. thank you, chris. >> thank you. >> consumer spending is down, savings is way up. will the weak consumer be a roadblock to economic recovery? we're going to have some answers in a moment. and then later, commodities like sugar, copper, nickel, they have all been soaring recently. some investors think, though, we should start bracing for a bubble. we'll discuss if they're right coming up. you know, the beer you choose says a lot about you. you want friendly, but not pretentious... classic, never trendy. you want a real american beauty. are you talking about the budweiser? or... me? yes. ♪

we are focusing on the american consumer. and speaking of which, nordstrom's just out with earnings. matt nesto has the numbers. >> you've got to remember this is a stock that's been on a pretty good tear. it's one of the top five performers in the retail index. coming out with earnings share at 48 cents per share. that's in line with expectations. remember, they preannounced their revenue for the month and the quarter. so there's really no action or surprise there. what else is new is that they have raised their full-year earnings per share to $1.50 to $1.65 from a buck 25 to 1.50. that's both up and above consensus. the good news right now in terms of the full-year picture is being overshadowed by some short-term profit taking on the stock that's been very hot and

also from the stock that historically at least for the past six quarters at least beats by a few pennies if not more on a per share basis. so maybe the absence of a surprise is being short term seen as a disappointment for nordstrom's, which met and raised their full-year forecast. back to you. >> interesting. it's trending like it was all priced in or they wanted even more. >> down about 4% in the after hours. >> thank you, matt. despite what you're hearing from nordstrom's talking about things being better than what a lot of people were thinking the weaker retail sales numbers we got out earlier this moshing provide more evidence that the consumer's still not spending like they used to and that is praes ooisly what some say is needed to bring steady economic recovery. with consumers holding on to more of their dollars, though, is consumer debt the unappreciated speed bump of this recovery? brett beemer, chief of american research group and brian economist with first trust advisors. you divide consumers into three

different categories, right? >> right. >> tell me about them quickly and why. >> well, one, 38% of consumers who are concerned about their jobs. and they're cutting their spending dramatically in case they do lose their jobs. you have 41% of the consumers out there who say they have to go through another income tax refund season before they can get their credit card debts somewhat under control. then 51% of consumers saying they have to work five to seven years longer to regain what they lost in the market. when you look at those three pods of consumers, michelle, 98% of consumers fall in one of those three groups. so we only have 2% of consumers spending -- >> 38, 48, and 51, you don't add them up to get 100. you're saying out of all the consumers that's where those numbers come in? >> that's right. you have some people falling in two pots and a couple people actually fouling in all three. but basically, what you've got going on the day is you only have 2% of the consumers spending at the enuncome berd level and in normal economic times between 36 and 41% of consumers spend at unencumbered

levels. the reason retail's in such a tank in the last few months is consumers just don't have the money to spend. >> brian, you've just heard all those numbers. you're the economist. does that worry you? >> this is a classic case of bottom up analysis, which we just heard, and tiend of top down analysis. and when you look at this from a macro point of view, we have the classic makings of a boom in consumer spending. the federal reserve is extremely easy with its monetary policy. we just had a panic in the economy. in the fourth quarter of last year grocery store sales, of all things, fell almost 10% at an annual race for the first time in like 60 years that they've fallen. it was a panic we had. and so that panic is ending. so you have an easy fed and an end of the panic, and i think that's going to carry the consumer much stronger than conventional wisdom would believe as we move into the second half of this year. >> but what about that 38% who fear losing their jobs? why would they go back to spending? >> sure.

but if you look back at history, for example, the fourth quarter of 1982, i'm certain 38% of the people back then felt like they were about to lose their job. the unemployment rate was almost 11%. and yet in the first three quarters of 1983 we had a boom in consumer spending. so almost every recession you look at unemployment is peaking at the end, just when the recovery gets going. >> michelle, i hate to disagree with my colleague over here -- >> go ahead. >> but i'll tell you where he's wrong. let's look at the fact that at christmas time 80% of consumers who shop, for example, on black friday weekend went in and bought the advertised special. only 40% considered buying something else. fast-forward to memorial day. 88% of consumers bought the advertised deal. only 25% looked to shop for anything else. by july 4th it was 90% bought the advertised deal -- 63 1/2% of consumers today are making out shopping lists prior to shopping to control their

spending. >> but i almost feel like you're making brian's point, that the retrenchment has been so strong that you almost get a springback of sorts due to pent-up demand. am i characterizing you right, brian? >> yeah, that's exactly right. i mean, 100% of consumers are human beings. and they go through emotional swings. and we have just been through one of the biggest -- i mean, we haven't had a panic like this in 100 years, and i don't think you have data back to 100 years looking at what 38% of shoppers did prior to going to the mall. we didn't even have malls back then. >> brian brings up a very good point. we haven't had a panic like this in 100 years. the question becomes, and i think you're trying to get at that, have we seen a permanent shift or semi-permanent shift in behavior, which suggests even if we get an economic recovery, say gdp does grow in the second half of the year does that mean americans go back to spending the way they used to or are they permanently chastened by what they saw? >> michelle, when we talked to

consumers less than a month ago, we asked a series of questions, have you, for example, bought any store brands in certain categories. a consumer who bought store brand denim jeans, 60% said they were going to stay with that store brand, only 4% would go back to the name brand. >> but do you believe them? >> i do believe them. if you look at the fact that over the last six months when we've gone back and talked to consumers they have followed what they said they were going to do 91 1/2% of the time. >> that's really the ultimate question, are we at this transitional moment in history where the american consumer is permanently changed? that's really going to decide this. >> i mean, michelle, frugality is here to stay. i think retail sales are going to -- >> frugality is here to stay. >> that's what they say every time. in 1987 -- >> that's a good point. we've got to go. >> in 1987 the stock market crashed. nobody was ever going to buy stocks again. it wasn't true. >> good point. thank you, guys. and to our viewers, that discussion is the very essence of whether or not we're going to have an economic recovery. that question about the

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index science nutrisystem d works. satisfaction guaranteed or your money back! new! nutrisystem d. lose weight. live better. call or click today. cities in the cross-hairs again. the ft reporting that regulators have forced the bank to hire outside consultants to review the company's management. that got us to wondering how the government's doing and as an investor in the banks. it's our money, after all.

cnbc's hampton pearson has been doing a deep dive on the data, has this exclusive analysis. hampton? >> hi, michelle. well, first of all, for taxpayers the only real money in the bank is the interest and dividends being repaid by tarp recipients. and for that matter the billions repaid by at least ten major banks to get out of the tarp program altogether. but as of the end of june we are told that treasury has received more than 6.8 billion in dividend and interest payments according to the tarp inspector general, including 1.1 billion from bank of america, 1.38 billion from citi. citi officials also pointing out the government's investment in common shares has gained 7 billion in value since the market has rebounded. but the jury is still out on those long-term investments in warrants and preferred stock. the citigroup breakdown looks something like this. and they're not alone in this conundrum. 50 billion in tarp funds in three separate fichlts. october 28th preferred stock and warrants worth about 25 billion.

under the capital purchase program. december 31st trust pefrd preferred securities, another 20 billion of the targeted investment program. and in the middle of january another 5 billion under the asset guarantee program. now, the average strike price is about 14.66 per share. today those warrants are worth about 4.8 billion underwater or 72% below the strike price. but remember, we're talking about a ten-year option to buy. citigroup is now less underwater than they were earlier. however, experts say it's perhaps overall in the top five worst tarp investments by the government to date among money doled out to some 280 financial institutions but also another way to look at it, michelle, it's perhaps over time a better return on investment likely than what the government may get back, for instance, for investing in, say, the auto industry. >> that's going to be a long question to answer. all right, hampton. thank you. my next guest has been a texas

banker for more than three decades as head of cullen frost/banker he was the first financial to publicly turn down tarp funds in 2008. kick evans, chairman and ceo of cullen frost banker joins in a cnbc exclusive. he also sits on the federal reserve advisory council. for the novice viewer what does that mean when you sit on the federal reserve advisory council. what do you advise the fed about? >> they want to get realtime experiences of what's happening and some issues that -- opinions of bankers of what's happening. >> and what are you telling them right now about what you're seeing when it comes to the economy in texas, what you're seeing, which you know so well? >> i feel good about the economy in texas. we were the last to get into the recession. i think we may get out first, but certainly we won't be late. >> you turned down tarp money. during the break you said thank goodness. >> that's right. >> why? >> we did the analysis early on and it wasn't 5% money, it was more like 11% cost. so it wasn't in the best interests of our shareholders.

we had strong capital, and it wasn't needed. so we were aggressive going to our regulators and saying here's the analysis we've done and we're not going to take it. >> but still, why the thank goodness? >> well, since then we've seen a lot of things we've learned about with the tarp money. and from the public standpoint we've gotten standing ovations in the markets in which we operate. we're so glad we didn't take it. >> so it's been good for business, basically. >> it has. >> a selling point, so to speak. >> that's right. >> tell us about how much you're doing in loans. how much you're seeing in real estate. are we seeing a turn when it comes to those kind of issues? >> the loans are flat. the deposits are growing tremendously. >> because people are saving? >> they're saving. and we're a safe haven. we're at a 25% annualized growth rate, which is unrealistic. but it's a place where people can put their money and wait till they get confidence in the future. >> when economists say they

think -- many of them believe that the recession ended in the second quarter, or is ending right now, do you agree with that? >> i don't agree with it. >> why not? >> i think it's getting better. but we're still -- we're going to see more layoffs. not as much as we saw in the first six months. but we're going to still see them. i think we're close to it turning. and certainly i think we're on the bottom. and it's improving. but i don't think it's over. >> where do you come down on this crucial question about whether or not americans have permanently changed in their spending habits is is frugality here to stay? we just had a guy on who said absolutely that is the case, and other people say no, there's so much pent-up wanted spending on the part of the american consumer that when it comes it's going to be almost like a snapback. >> i think americans like to spend money. i think we've seen that. but look at some of the bases. i think the last five or ten years we probably have seen the greatest growth time in the history of this country because we've overleveraged. now we're deleveraging and we're

looking for a new level in which to operate. and the consumer's doing the same thing, and so are business people. >> how much are you worried about government intervention in the economy right now? >> i worry about it. >> why? >> i'm a free market guy. >> so am i. >> i believe in less government. and i believe the markets will take care of themselves. i believe the government did the right thing when we were at a crisis point, end of the third quarter, and needed to do something. so i think there are times when government should protect the free markets. but then they should get out. >> do you have any opinion on the huge health care debate that is raging right now that has clearly brought up so much angst among the elderly, for example, when you see the videos from these town hall meetings? >> i'm not an expert in health care, but certainly i believe in less government. >> we've been asking every ceo. regardless of what industry they're in. about health care because it's such a huge part of the economy because so many of them are employers who actually provide

health care and struggle with this issue of rising costs and trying to control it at this point. do you face those issues at all or is it that much of a burden for your company? >> health care always a burden. and one of the things we've got that's wonderful in this country, we have a wonderful health care. and certainly as technology has advanced it gets more expensive. so we're looking for those right answers. but again, i'm not an expert. >> fasb's talking about changing mark to market once again, making it so that nearly everything it looks like you carry on your books would have to be mark to market as opposed to saying i'm holding this loan till it matures for the next 30 years. is that a good or bad thing? >> i would hope what they will do is move beyond the theory and look at the practicality of it. it is very hard to mark to market a lone portfolio. look at the problems we had in the securities portfolio of mark to market. and when the market disappeared.

there is not a market for loans in general. so how are we going to mark them to market? so it's very challenging, and i hope they spend time on the practicalities versus the theory. >> what's the biggest challenge you face as a banker right now? >> we really work hard to grow our business. we survived the 1980s, which was more like a depression in texas. >> because of the decline in oil prices? >> that's right. >> so you must be thrilled about the rise we've seen lately. >> right. i wasn't thrilled about $140 oil. that's too high. i would like for us to get to a good balance. which is -- again, you've got to get to a practical point of that. and so it's a point where we've just got to -- i'm optimistic about where we're going. one of the things we didn't do in the '80s is be aggressive about going after new business. and we've done it today. >> good for you. >> this is a good opportunity. >> go get them.

>> this is america. >> that's a great way to end this. dick, thanks so much for coming in. >> thank you. >> some saying the recession is over. others are saying we need a second stimulus. the question is are we spending the first stimulus wisely? and what are the economic ramifications? some possible answers next. these days every penny counts with everything you buy. every head. every bite. every gallon. every shoe. every book. every cereal. well, maybe not every cereal. but every stem. every stitch. every tune. every toy. pretty much everything you buy can help your savings account grow because keep the change from bank of america rounds up every debit card purchase to the next dollar and transfers the difference from your checking to savings account. it's one of the many ways we make saving money in tough times a whole lot easier.

the president has recently touted the early signs of economic improvement as a result of the early spending of stimulus funds. but one big city mayor isn't buying it. in an op-ed in today's "wall street journal" charlotte, north carolina mayor pat mccrory says the money will offer little lasting benefit and hamper budgets without addressing real budgets. mayor mccrory joins us now from charlotte. and also with us keith boykin editor of "the daily voice" and cnbc contributor. mayor mccrory, let me start with you. you're critical of the stimulus plan. you say it doesn't offer permanent help. what do you mean? what's the problem with it? >> two things. first of all, it was sold as spending a lot of money on infrastructure. and in fact less than 15% of the money is being spent on infrastructure and most of the infrastructure that the mayors

and governors have to spend it on is what they call shovel-ready. and that means it's going to be short-term projects. many of them are like repaving roads, which the new politically correct term is renourishing roads to make it sounds like we're doing more -- >> but by shovel ready meant it was immediate, right? we wanted people working immediately. >> yeah, but what we need are jobs that have long-term ramifications, where you hire engineers, where you hire architects, where you hire planners. instead we're really putting it toward projects which were already budgeted with very expensive money and were widening roads and filling potholes as opposed to what we did during the roosevelt and eisenhower administration, building dams and power plants and major highways. the projects that we're building now i don't think will have long-term ramifications for the next generation. yet the next generation's going to be paying for it. >> keith, what do you say to that? wrong kind of spending, says the mayor. >> i think the mayor misunderstands the purpose of the spending and the purpose of the infrastructure and the purpose of the stimulus itself.

remember where we were about 11 months ago, michelle, in september when hank paulson came to the u.s., to congress, and said we need $800 billion immediately or the entire financial system's going to collapse. what has happened since that time is that the stimulus was a second round of government infusion designed to stop what could have been a great depression. the stimulus was not designed to have a permanent impact forever and ever. but it was designed specifically over the course of the two-year period where we were most concerned about going into a depression to provide some relief. that's why there's a $111 billion of infrastructure spending in that. but it's not entirely just infrastructure. >> mayor mccrory, let's play a sound bite from a fellow mayor, michael bloomberg, who was on "meet the press." here's what he had to say about the stimulus. >> all right. >> the main thing that the stimulus program has done so far, however, is given the country hope that there will be more economic activity down the road. because remember, most of the stimulus money hasn't been spent yet. >> mayor mccrory, is hope the

strategy? >> that's very expensive hope with very expensive deficit dollars. what most governors and most mayors are doing, including me, is we're spending some of the money on already currently budgeted money, and we're spending it upon -- on short-term operating projects with mainly new government jobs or existing government jobs which really don't add to the private sector, which is going to rebuild the economy. >> why did you take it? >> because if i don't take it it's our money, someone else is going to take it. and my taxpayers are paying this debt and paying for this money. so i'm going to go take it, and i'm going to hire 50 new police officers, which will be good. but the next mayor, my replacement, is going to have to figure out how to pay for those police officers -- >> you're taking on liabilities, long-term liabilities, right? i mean-s that a smart thing to do? >> no. it's exactly what got us into this financial mess. >> but you're doing it. >> because it's our money and if i don't spend it it's going to be spent and i might as well spend it because i'm going to be paying the debt. >> that doesn't make a lot of

splerngs mayor. the state of north carolina got $5.8 billion from the stimulus package. about $4.2 billion has already come to the state. about another 1 to 2 billion dollars left to come. but that money was meant for a lot of different purposes. state and local government, relief to help to continue to maintain the teachers, the firefighters, and the police officers who were already there, not just to hire new ones. that's important. when you're about to go into an economic collapse the last thing you want to do is have a breakdown in your social structure. let's not forget where we were back in january when the administration began. today we're at a different point. gdp numbers are starting to final finally rebound. unemployment is starting to go down. the stock market -- >> wouldn't this have been a great time for most of the country, just like california has had to do, really take a hard look at what they spend money on and make some hard decisions and realize that they've overpromised, they've underdelivered, and they just cannot fund these liabilities forever? >> it's delaying the difficult decisions. and those difficult decisions are going to have to be made by governors and mayors two years from now.

and it's the same kind of game that got us both in the private and public sector in this mess to begin with. and i encourage the person from new york to see what's happening out in the -- we're repaving roads with very expensive money. and if we were going to spend this expensive money, we should have spent it on long-term projects which the next generation should be paying for. >> you made that point. keith, we've got to go. but you know, you're a contributor. you'll be back. >> okay. >> mr. mayor, thank you very much. and best of luck to you in charlotte. sugar is on the tip of everyone's tongue these days. but even though the crop is trading at levels not seen in nearly three decades, we're still subsidizing it, which is wrong. but it's not the only commodity reaching lofty levels. so is it time to start thinking about the b word, bubble? what investors need to know next when it comes to sugar and other commodities. foreclosures are starting to spread even more. but there is a silver lining that we're going to tell you about. the economic impact of that a little later on "the closing bell."

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bob pisani down on the floor of the new york stock exchange.

let's take a quick look at nordstrom. bottom line is this -- earnings were in line with expectations. more importantly, they raised guidance for the full year. they're now talking 1.50 to $1.65 for the full year. prior guidance was $1.25 to $1.50. here's what got the traders talking a little bit. they raised same-store sales guidance. i said sales. i didn't say earnings. just a little bit. not a lot. 9% to 12% decrease is what they're talking about. decrease. but they were talking about 10% to 15% just a little while ago. so the implication here is that sales trends might be slightly more positive in the third quarter and the fourth quarter. that of course implies higher profitability. they also mentioned gross profits are also showing improving trends. so nordstrom's trading kind of flat here. expect sell on the news. that's fairly obvious. but we'll see what happens in the middle of the day tomorrow. back to you. >> we will, bob. it was a banner day tort materials sector. cnbc's matt nesto here to tell us why we should care. matt. >> i've got to tell you this is one of those situations, michelle, we're going to call it

mind over matter. materials. and the truth of the matter is this, folks. this ways big day for materials. they were up we'll call it 3-1 versus the s&p 500. 2.1% gain on the day. the best of the ten sectors by a pretty good margin. and if you take a look at the breadth in the group, 26 of 28 members were higher. and even if you back it back to the trough of the market in march, they're the second best performers with a 68% gain second only to the financials, up more than 100% during that period of time. the problem is they just can't move the markets. but that only matters on the big picture, but it does matter. materials as a leadership group is a loser of a proposition because they just can't move the market. they account for 3 1/2% of the s&p 500. their weighting in terms of a sector ranks them ninth out of ten. alcoa, for example, in the dow, the second best performer today only 1%, has the smallest market cap and the lowest share price. there you have it. there's the commod squad.

other stuff we can tell you about on a day when -- >> you are so good at all those. i love that. the commod squad. >> i'm on commission. >> commodity prices taking another run at record levels. speaking of the commod squad. sugar is trading near a 28-year peak. copper's at a ten-month high, nickel touched its highest level in almost a year. take a look at your screen you'll see it all there. should we be bracing for a new commodity bubble? joining us now to discuss is addison armstrong director of market research at tradition energy. and along with morgan downey, director and commodity strategy. sugar 28-year high. what do you guys think? is that viable? why is it being driven that way? addison. >> you know, sugar's an interesting commodity right now. a lot of it has come in from -- a lot of the buying has come in fueled by some weather situations in brazil. so there is some fundamental basis to what's going on.

>> but is it a bubble? >> i'd put that over to morgan. i think he's a bit more of a sugar specialist than i am. >> mark, what do you think? >> i think we first of all need to dine what a bubble is. a massive bubble is where you have a rally in prices with also an increase in inventories. if you look at sugar inventories, sugar inventories are half what they were last year. copper inventories are half what they were compared to february of this year, january of this year. oil inventories are similarly not growing. so this is a 100% fundamentally supply and demand-driven rally. >> so why do we still subsidize sugar in this country? i know i'm asking you a political question, morgan. >> it comes down to we subsidize a lot of agricultural products in this country, corn, soybeans. the farming group, or lobby group-s a very powerful political entity. so i think -- >> what is it per pound? what's the number right now? >> currently just above 22 cents a pound. >> 22 cents. that's ridiculous, isn't it? 22 cents a pound? >> well, we're still not seeing

demand destruction in sugar. i think that people can tolerate a lot higher sugar prices than 22 cents even. i think that sugar is one of those things that it's a very quick market for the supply side to turn around. i think that's why this time next year we might have seen 30 cents but be back down to 15 cents. >> i divert into politics. my apologies. addison, what about the overall commodities picture? there's lots of talk when we see sugar at these levels, copper at a ten-month high, that maybe there's an overall bubble going on in commodities. do you agree with morgan that there's fundamental supply and demand here? >> i think certainly when it comes to the metals and some of the softs. i, however work argue that oil is not being driven by fundamentals at the moment. it's being driven by a weak dollar and robust equities market, not just here in the u.s. but globally. the correlation between a weak dollar on the one hand and strong equities on the other hand with the price of oil has been very, very strong over the past three months. it's gotten to the point actually where it's a little bit

boring to trade oil because all you have to do is watch what's going on in the s&ps. so i would think -- a bubble is really difficult to call, either before you're in it or while you're in it. it's really only in hindsight that we can see a bubble. there's no doubt that in the oil market there has been a lot of up side momentum driven by factors that are sort of exogenous to what's actually going on in the oil market. >> morgan, when it comes to copper, for example, there's all this talk about china stockpiling, that they're almost building like an ftr for copper. is that part of what's driving this price, or is it just global economic recovery? >> well, i think it's a xwngs of both. we're seeing a recovery in the auto sector. we're seeing stabilization of the housing market. but for sure the chinese government diverting some of their dollar holdings into physical copper inventories has been a genuine factor in the recovery of copper prices. but having said that, that doesn't take away from the fact that the commercial inventories of copper are still much lower

than they were six months or eight months ago. also i would respectfully disagree with addison on the oil side. opec has removed 3 million barrels per day of oil from the supply side of the market. dramatically down by two. so there's a 1 million barrel per day or close to 1 million barrel per day deficit in -- >> addison, i know you want to respond, but we've got to go. just say no to subsidies, guys. thank you. see you later. foreclosures hitting record levels for the third time in the last five months. but are they really the thorn in the recovery's side? we're going to tell you when we come back. bad cholesterol but your good cholesterol and triglycerides are still out of line? then you may not be seeing the whole picture. ask your doctor about trilipix.

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foreclosures hitting an a new record and they are spreading. but is this the dark cloud you might expect? diana olec has more from washington. >> the foreclosure numbers out today were worst than expected, especially amid all of the positive housing data we saw in june. it begs the question, do foreclosures really curtail housing recovery? an interesting view is a

contradiction. >> we're seeing increased levels of foreclosure activity and we're seeing price stabilization at the same time. so it could just be that there's so much buying interest because the affordability levels have become record levels of affordability. and that there's this inventory sitting out there waiting for the buyers that the market might be recovering at what amounts to the new normal level of foreclosure activity. at least for the time being. >> now, the usual suspects still prevailed in the numbers. that is california, nevada, arizona and florida, accounting for 57% of all foreclosures. but the pain is stred ipreading. we're seeing big adjustments in kansas, maryland, massachusetts. oregon up 84%. we should still expect the unexpected. >> these new foreclosure filings are not happening in an isolated sieve. there will be adverse feedback, not the least of which is

negative equity, which we should be expecting about 28 million people to fall into negative equity between now and 2011. and certainly that will have other repercussions. >> and also given the changing face of foreclosure, that is spreading to different areas in the u.s., you have to ask is the same buying that is speculator or investor demand going to be in those other states where it is currently in california, florida, arizona, and nevada? and the answer may be no. if it is no, you're not going to have the absorbtion that you're seeing of the foreclosed properties in those four states. go to realtytech.cnbc.com. melissa lee is standing by with a review of what's coming up on "fast money." melissa? hey there, michelle. we eked out gains today. we've seen nice gains over the past month, but are they sustainable? we will explain. also, is john paulson -- has he lost his touch? and woodstock.

we'll revisit that trade 40 years to the day when all of those people were flying around. one of our traders, our guests, was there. michelle? >> thank you, melissa. [ engine revving ]

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