all right. time for the "last call" today on bernie madoff. u.s. marshals announce seeking proposals from real estate brokers to sell madoff's new york and palm beach properties. what do we think of that? >> i'm in the market for a new apartment right now. that looks pretty nice. a little out of my budget, but looks nice. i want to know, when mary thompson was doing the interviews with these victims and the woman working on the book at that time, i don't think we knew that. that is pretty interesting, she was sitting there having this conversation, and here she was working on a book saying she had an affair with him. >> you know, trish -- >> i don't know if we all got that undercurrent. >> trish, she is having an

affair with him and later on calls him a beast. but it must have been a beastly affair, and i want to understand about pillow talk. she is running the money for hadassa, he is getting the returns that are phony. do we not think pillow talk -- >> i guess it would depend on how close they were, right? >> well, i don't know. pillows only -- >> more of an emotional affair? >> the pillow is only so big, trish. >> goodbye, everyone. that's it for "the call." >> they're leaving me, running away from me. but i am still larry kudlow, i'll be on at 7:00 p.m. eastern on "the kudlow report." and up next is "power lunch" and pillow talk. >> this is cnbc.com news now. >> stocks have their worst loss in more than a month after an unexpectedly low reading from the university of michigan. wall street journal says bb&t has reached an agreement to buy the deposits and branches of colonial bank corps. and atlantic city's resort

casino will hand over control to its lenders after being unable to make loan payments. the current owners will stay on as managers of the operation. they still need approval from the regulators. that's cnbc.com news now. i'm courtney reagan. oh, larry. larry, larry, larry. >> we love him, don't we? >> we do love larry kudlow. we are proud to follow him. welcome to "power lunch" for a friday, i'm bill griffith. stocks sinking fast today so far as investors try to figure out the mixed messages we have been getting on the economy lately. almost all of the dow stocks trading lower, in fact near the lows of the session right now. so don't go anywhere. we're going to put it all in perspective for you here today on "power lunch." >> i'm michelle cabrusso-cabrera. one of the questions on investors mupds have sdox gone too far, too fast? >> and i'm steve liesman.

consumer sentiment lower than expected as consumers not up beat by the low inflation numbers the government reported today. plus, why a little inflation could be a good thing for stocks. here's what else is on the menu. >> i'm phil lebeau. another problem for boeing's dream liner? the company says it has a fix, but how do we know this fix is going to keep things moving? the company hasn't even told us what the schedule of deliveries will be for the 787. i'll have the story coming up. i'm diana olick in washington. you've heard about it in residential real estate, shingle mail. when troubled brothers mail back the keys to the lenders. now it's happening in commercial real estate, and hotel owners are leading the way. >> and i'm darren rivel. michael gerald vick signs with the eagles and apologize. how much more p.r. does he need to save face? >> let's get the market reaction. the major averages extending losses on the back of the consumer confidence numbers. p and g and walmart among the big winners.

bob pisani kibs it off at the new york stock exchange. >> the numbers coming out and even before cyclical stocks that tend to do better or worse, really drop. and there is your weakness today. materials and industrial stocks and all of the classic names are to the down side. caterpillar leading the dow jones industrial weaker here. also, while you did get some decent news out of the retailers, jcpenney, for example, modestly raised the guidance and analysts have already raised the guidance, stoc stocks up huge. and that's why, for example, you're not seeing any move up in jcpenney or nordstrom. again, jcpenney up 20% and nordstrom up 40%. scott, how are we looking at the nasdaq? >> nasdaq down 2% right now, so the sell-off looking up. look at the weakness across the internet space today. perhaps some has to do with the weakness in consumer sentiment when you look at a internet

retailer, amazon down, ebay down 2.5%. price finds down 1.5% today. biotechnology stocks have been weak throughout the session today. names i'm watching, celgene down 2%, genzyme down more than 1%, bio general, and take a look at some of the bigger cap technology stocks at the nasdaq, as well. no relief there, either. apple shares down, cisco is weak, as is intel. in fact, all across the semiconductor space. >> when you see consumer confidence slip, what is it does that mean for energy demand? it means the path of recovery may not be as fast as some would hope or had hoped. and that has oil prices dipping below $68 a barrel and the recession today just above that mark, right around 6816. keep in mind, we continue to track the stock market as well, and as the s&p 500 has dipped below 1000, that is also putting weakness on oil prices.

we're trading at the lowest level for food we are seeing this month. lowest since july 31st, and broken out of the 70 to $72 range. what the key is to watch going into the close is 6875. that's what folks are looking for, but we are below that mark right now. rick santelli, to you in chicago. >> thank you. trying to keep up with what's moving the fixed income market, is it inflation, is it lack of inflation, is it the nontransparency or the clouds with regard to the economic detail down the road? or is it a mountain of debt? well, look at this chart of two weeks of pricings on yield of -- hey, that does look like a mountain, that chart, doesn't it? you know, we have seen -- we have seen last week, the week prior to this, rates went up 40 basis points. this week, they're down 30 basis points. going nowhere quick, with lots of volatility, based on things like supply and weak data. the next chart, a one week of the dollar index. believe it or not, even with today's bounces earlier in the week, a down week. back to you, bill and steve.

>> all right, rick, thank you very much. we eluded to those big retailers out with earnings today. mixed news from them. matt nesto is on earnings central with details. matt? >> mixed news, bill, a steady reaction. morgan stanley retail index, i like it because it includes walmart, kind of important. 31 to 35 members are down today. almost two to one negative in terms of agivebacks. retailers have been % ez a group. and within the discretionary sector. but today definitely seeing a retreat. as we showed you, jcpenney and nordstrom both down 5% here today. and it's interesting, if you look at nordstrom met their inline and raised their guidance. this is a stock up 40% since july 1st and over 100% on a year to day basis. historically, tends to surprise and pretty cautious there. jcpenney down on old fashioned forecast the third quarter.

and lastly, barnes and noble the worst performer on a downgrade today. abercrombie, smaller than expected loss. gap with a positive -- some positive comments out there. and then tiffany also very, very strong. so it's definitely a mixed bag, steve, but all of these stocks have had a pretty darn good run in the short term. >> hey, matt, mixed earnings just like the economic data. the inflation data looks boring, but investors looking for companies that have pricing power, and those profits will be challenged, because they lack it. take a look at the cpi data. unchanged today. core rate up 0.1% year over year, a 1.5% core number and a minus 2.1% on headline. okay, let's look into the industries that seem to have a little pricing power going on. new cars -- there is the year over year rate right there, you can see the disinflationary trend, not as bad as '03. new cars up just a little bit, gasoline down, going to reverse itself. apparel. but look inside there, because the footwear folks don't have

any pricing power, but hotels, minus 2.1%. there is the manufacturing data, up a half a percentage point. a little bit less than expectations and capacity utilization, the measure of how many cylinders are firing in the economy, also up less than expected, but still going the right way. here's consumer sentiment data, up 63.2 or 263. 2, much less than expected. michelle, one word to describe the consumer sentiment numbers there. >> pretty rotten. >> okay. one word to describe auto sales. >> strong. >> one word to stripe how consumer does in predicting auto sales. >> very little correlation. >> steve, people will not buy -- until you know the price they will not buy at. that's giving us the cpi and inflation and the impact on profits. there may be stuff on the shelves people don't want, you cut the price -- for religious economist, can i say something? pricing power is the second most powerful force in the universe, after god. of after god. >> on that note, can i ask you, when you compare prices year over year, down more than 2%,

right? >> on the headline number. >> decline since 1994, 1950, is that deflation in. >> right now, it's disinflation. >> slow down in the pace of inflation. >> slow down on the pace. when we get to sustained negative numbers. will deflation derail the economic recovery. michelle is asking that question. let's bring in stu hoffman from pnc financial services group. stu, you heard the conversation we were having, hopefully. >> i did. >> tell us about the profitability and profits and margin you geeks talk about. >> i think it's clearly the exception, not the rule. and you know, maybe there is still some health care for the moment. and maybe university tuition still seems to be going up. and it's obvious the car companies figure -- if the buyer is going to get a big subsidy from the government, maybe they don't need to deflate the deal, as well. but purchasing power is a rare commodity, and where companies are going to earn income or

profits is not so much out of purchasing power, but controlling costs, and getting productivity, better managed, better educated, and basically better -- >> in this era where top-line growth is challenged, to say the least, stu, what you're looking for are companies who are really efficient, or they're essentially monopolies or agoplies, among other things. and also those where the input prices are falling faster than the output prices they receive. of. >> all good points, and some of the energies were. you talked just a minute ago about deflation. yes, the cpi below 1% a year ago. the reason i agree with you that it's not deflation, you happen to be picking the high point for gasoline, $4.12 since last july. by the end of this year, on a year over year basis, the cpi probably will become positive. won't be a big number. so i still don't think deflation is in the u.s. economy, still very low. inflation. but i don't think a big inflation is a threat either

because businesses don't in general have that purchasing power. >> for investors watching right now, what is the key take-away when you see a disinflationary environment when it comes to their ability to invest or where they should be investing? what are the lessons? >> as i said, i think the lessons are you look for best in class in an industry, look for sometimes new models like in amazon where they obviously are more cost effective, and as steve said, if you can't really grow your top line revenue, you've got to grow the bottom line. >> so stay away -- >> the top and the bottom is a lot of labor costs. >> so stay away from companies that have a lot of debt. i want to get to the sentiment numbers, stu. stu, i've always been very skeptical of how good the sentiment numbers do at predicting consumer sales or consumer actions there. so when you look at this 63 number which is less than expected, is that a reason for pessimism about the consumer? >> steve, i think as the fed pointed out in their statement, they recognized the consumer still under pressure. the drop from one month to the next i agree is not a very good predictor.

car sales are going to be good, because the prices are down. i think what hurt consumers in august and pushed sentiment down was the run-up in gasoline. gasoline prices looked like they peaked around the july 4th weekend, dropped to 25 cents a gallon, and i think opec is picking our pocket again and with gasoline prices back up, i think that's hurting consumer sentiment. and especially as they're looking around to buy back the school supplies for their beloved offspring, then you've got to decide, it would be easier if i didn't have to spend so much money on my beloved clunker. >> but they still bought cars. stuart, thanks very much. of. >> okay. >> a lot of things beloved in this economy right now. when we come back, pimco's mohammed el-erian telling the "squawk box" this market is on a sugar high. and the vix, the measure of volatility is up 4%. is this a friday blip in the rally road or something bigger?

our task force is waiting in the wings. >> you warned people about that vix. >> i did. >> and michael vick back in the nfl, a member of the philadelphia eagles. what will the fallout be for philadelphia, the nfl and the sponsors? an interview you'll see first here on cnbc. and the massachusetts secretary of state rejecting an offer by fairfield grenich advisors to file fraud charges over the madoff scandle. at the bottom of the hour. of. >> and the half money "fast money" halftime report. "power lunch" back in two minutes. tdd#: 1-800-345-2550 tdd#: 1-800-345-2550 i want everything right where i can find it. 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

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mohammed el-erian on the markets and i know he was talking about sugar this morning, as well. and i don't put sugar in my coffee, but if prices go up, i'm really in trouble. reaction. tim bearden, managing partner at stonebridge. good to see you guys, thanks for joining us. tim, what do you think is this summer stock market party over? >> well, i think the way bev been putting it, we are in the eye of the hurricane, we dacame through the front end and it was brutal.

and things calm down, but it can often be a false sense of security as i think we saw from the sentiment numbers this morning. we may not be alone. >> but tim, what do you decide? you're in the position to make the decision about what has to be done. you think there's a storm coming on the other side of the stock? >> yeah, there is a lot of data each way that says the weather could dissipate, but i think you need to be prepared that if it is brutal going out the other side, i need to be prepared. >> so you think the market is going to go down. >> in the short run, we're due for hiccups. i think it's been too quick, too fast, too high. >> okay. what do you think, evan? >> i think we're looking at here, we have always had an amazing rally for march lows. i think that was due more to a fundamental shift in investor sentiment than a shift in fundamentals. so going into the end of the third quarter here, i think people are going to be focusing much more on actually what is taking place on the bottom side. and you can really look at what's taking place with the p/e ratio. march lows, looking at 10.5, and now just over 18. has that been on the price side

or been on the earnings side? i would say on the earnings side. so i think that deductible points to a correction. >> the p is getting better, but the e hasn't bunch budged. >> exactly. >> so if you're worried, are you building up cash positions or areas that haven't performed well. a lot of consumer staple stocks have lagged, while a lot of cyclicals have done well in the last few months. >> well, i think it's -- >> tim? >> i think, yeah, you want to be positioned. we're looking for places for field yield right now. the problem is, we were showing the mountain charts, and equities always go up, which has historically been the case and i think in the long run that's true and in the short run you look for yields to buffer that low. >> in fact, you like high yields right now, the junk bonds? >> yes, if we haven't reached a peak in default, we're near that and the yields are very attractive. another area would be emerging market debt. these countries don't have the overspending and the overleverage that other countries had.

so i think there is a good opportunity there. and some great yields, as well. >> what would you buy, evan? >> i think looking at here obviously, you know, take some of your profits. but i would like to look at areas for companies that have low debt ratios, things that are more on the consumer discretionary side. when you're looking at moving forward, we have seen a huge rally in commodities, so there is a certain aspect you might not want to step into, but dependent on where asia is growing, and some of their growth and metals and copper and things of that nature. >> very good. tim, evan, thanks for joining us both. see you later. when we come back, we'll talk about michael vick who is back in the nfl. he has faced the media in the city of brotherly love where he is going to play. but will the spotlight on the nfl and the tarnished quarterback hurt the bottom line? >> and in our "power grid" debate, health care discussion. what should we do about preexisting conditions? you're watching "power lunch" here on cnbc. we are first in business worldwide. welcome to the now network. population: 49 million.

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nasdaq getting hit hard today, lower by 36 points, a decline of 1.8%, back below 2000, 1973. very good year.c let's show the big movers.

garmin and joy global. garmin has apparently lost its way.d get it? ha-ha-ha. a buy from conviction over at goldman sachs. i'm told they're going to show us any second. >> had a pun there, no joy in joy global, or very sad at joy global? you missed an opportunity for a pun. i can't remember the last time. mike he vick telling the media i've done terrible things. not me, michael vick. he is back in the nfl and a member of the philadelphia eagles. darren rivel here to tell us. what did he have to say? >> he did a pretty good job. michael vick doing what he had to do, the quarterback answering questions about his past for the first time since getting out of jail. >> i was wrong for what i did. everything that happened. at that point in time in my life was wrong. and it was unnecessary. and, you know, for the life of me to this day i can't understand why i was involved in such pointless activity. and why did i risk so much at

the pinnacle of my career? and i was naive to a lot of things. but i figure if i can, you know, help more animals than i hurt, then, you know, i'm contributing. i'm doing my part. our country is a country of second chances, and, you know, i paid my debt to society. i spent two years in prison, i away from my fiance, my mom, my dad, my family. away from my two kids. and that was a humbling experience. >> i actually thought vick did pretty well, considering the fact that he is not a good public speaker. but for what it's worth, we just spoke with someone at the people for the treatment of ethical animals, and they said they have no protests planned at this time. key word might be at this time. let's get more on the fallout or maybe lack thereof of one of the leading crisis management experts year-round. and the president of to a

company that provides counseling to ceos and clients. what do you think about this with michael vick? >> i think he did an okay job, not an excellent job, and the reason is i don't think he's getting enough counseling in the area of crisis management. he has someone on his team, but i'm not sure she has enough experience dealing with pro athletes. >> what about the words, though? take me to the words, not necessarily his counsel. what did he do wrong, if anything? >> well, the two questions that he asked, i don't know why i did this in the first place, and why i put my career in limbo like this. those are two critical questions that he needs to be working on. so one of the messages that i would be working on with him, for example, if i were his counselor is to say, before you start talking to kids in the inner city, that means that you're not truly on point with your reputation yet. work on yourself before you start talking to people. two years in jail, quite frankly, unfortunately, is not enough. you need to prove to people that you have rehabilitated yourself

in the court of public opinion, which means getting to know self. not about football, this is about making sure the people who you've hurt who are dog owners truly understand that you understand why you did it. >> mike, i don't want to be too cynical, but isn't it ultimately going to be about his performance on the field? >> absolutely not. >> and not everybody is going to forget if he is throwing touchdowns? >> the crisis that is still a potential is in the area where he had had trouble in the first place. >> but are they going to have lower ticket sales because he is on board? >> no. >> no? okay. so what's the point? >> i didn't say no. >> i said no. >> you think no, mike? mike, you think no? >> look, i think this is -- you're asking questions from a business perspective, this is a business program, i think it's important. i'm an expert in reputation management. >> let's talk about the eagles' reputation. are they risking tarnishing the team by taking vick on at this point? >> good yes. yes, for example, we talk about sponsorship. one of the things that is at

risk is not only vick's sponsors that he had in the past, are they going to stick with him, are the new sponsors going to be attached to him. the team has sponsors. the stadium has sponsors. they're having meetings right now saying gosh, if this guy is wearing our logo and doesn't have a deal with us, we have a deal with the team and with the stadium and with the league, we've got some concerns. >> mike, what do you make of the idea that darren called peta and they don't have any protests planned at this time. >> they have the greatest protests around. >> this is not going to be the hot potato issue that maybe some had feared? >> ironically, i'm dealing with a client who has a protest tomorrow. it doesn't deal with dog fighting. no one tells you when they're going to do a protest. that puts a smile on their face. they're not going to tell you when they're going to do it, guys. >> mike, thanks so much for joining us. >> i know so little about football, but one of the few people i have bir interviewed to me is tony dungy.

>> and the league set him up as his mentor. you can't touch that. >> what's the bottom line? does this hurt the eagles? >> the eagles' owner came out and you got the sense what a hard decision this was. i don't think anyone returns their tickets. i think until be some protests. it depends how michael vick handles it. he should work with peta and everyone and i think they could move on here. >> all right. got to pay his debt to society. makes a good point there. >> he did pay ace debt. secretary of massachusetts of state rejecting an offer to settle fraud charges. we're going to speak with william galvin. >> and the "fast money" halftime report. melissa, what are you watching? >> everyone might be wondering is the summer rally over. we'll tell what you the options traders are pricing in. two words -- we'll also be looking at heat parked out with earnings and we take our position on that tech.

today on the ha time report. but first more "power lunch" right after this.

how you could start saving. welcome back. in the headlines this hour, a

triple digit decline. boeing is the loser. phil lebeau with details in a minute. coca-cola one member of the industrials trading higher today. on the s&p, the financials and retailers leading that index lower. jen worth financial down more than 8%. nordstrom around 5. and on the nasdaq, shares of wind rolling crafts today, wynn resorts falling more than 5%. fairfield's grenich advisors offering to settle fraud charges they didn't protect clients against madoff by offering to reimburse those clients. but the massachusetts secretary of state, william galvin, says no way. and he joins us here for a first on cnbc interview. sir, good to see you. >> good to see you. i must say at the outset, though, this was not a simple offer to settle. what you have here was an effort by them and its counsel to preempt a hearing by acknowledging they would not contest the allegations.

our focus is on at this point making sure that all of our massachusetts investors are first identified and then fully reimbursed. >> you aren't certain that you have identified all of the investors. >> that's correct. >> but once you have, they have offered to make them whole, isn't that enough? >> well, i'm not sure that's case. again, i suggest that what they did in their preemptive filing was simply aimed, i think, at preempting the hearing and removing the issue of negotiations away from our securities division. >> i'm confused. you don't believe they would pay the victims back? >> at this moment, i don't have that full confidence. to that end, i must tell you, i do have some information additionally for you, though, that has developed earlier today. we have been able to reach an agreement with them that we are going to begin a joint process of notification of all broker dealers who do business in massachusetts, as well as investment advisors, both federal and state, asking them to provide us with information about massachusetts investors. see, many people came to

fairfield grin itch through secondary means, so we have some progress on the identification process. at this point, however, the hearing is certainly going to go forward on the 9th of september. >> you want to go beyond what the -- what irving picard is doing, not trying to make whole those investors who found themselves directly invested with bernie madoff through a secondary broker/dealer. you want to go beyond that. >> we want to protect all massachusetts investors. many of these folks didn't know they were going to end up with mr. madoff, and they relied on the -- or the entities relied on fairfield grenich. we think we have a very strong case. >> talk about that case. i'm really interested to know, what is your state of knowledge of fairfield's knowledge of what madoff was doing, and whether or not they were complicit in this ponzi scheme. >> well, i think if you look at this complaint that we brought, and the details that it provides, for instance, one of things that many people are focused on is the recorded conversation between mr. madoff

himself and agents of fairfield grenich, where he was coaching them how to avoid defectitectio the securities and exchange commission. >> and we have a full screen of this, let's bring this up. madoff is saying -- obviously, first of all, this conversation never took place, mark, okay? >> yes, of course. and then they go through a whole series of questions. >> he says there are a couple of things that, you know, could come. i don't know if they'll come up or not, and let me just tell you how we -- >> and this is in conversations with the s.e.c. >> what i'm trying to get at, is there a criminal situation here where fairfield knew and was complicit in this? it goes beyond this issue of reimbursement? >> a decision for others to make. my jurisdiction is civil and focus is on providing relief to the massachusetts investors and obviously disciplining on the civil side within the industry. we have laid out our case very thoroughly and clearly to everyone who was interested. it's up to others, perhaps, on the criminal side.

i do not have criminal jurisdiction. others on the criminal side might want to do that. >> but you're going to make a tradeoff here, right? you're going to give up this offer to pay back everybody. >> there is no offer. at this point, i have to correct you. i'm sorry. but there is no actual offer. there's been suggestions, but the reality is, our goal is to get everyone, and at this point, we have not satisfied ourselves that everyone has been identified. and that's why i told you earlier, i think we made progress today with fairfield grenich -- >> after all this time, you don't know how many people there are? >> rpg no, we don't, because many people came in through secondary sources. they did not know they were with made off, because they may have invested with anent thee invested with fairfield grenich. we have had other deals like this in the past, where people later are identifying themselves as part of a settlement we made and not having the necessary resources or not clearly having the necessary resources. we don't want that to replicate. >> a point on your contention

here, you fear their reluctance shows maybe they don't have the wherewithal to make whole all of the investors that you probably will find when all is said and done. >> i don't know. i'm not going to speak for them. obviously, whatever they did here might be seen as a template for settlements other places, i don't know. but at this point, our focus is exclusively on satisfying the massachusetts investors. and providing the information that we have been able to develop to assist others to are trying to sort out this huge mess. >> mr. galvin, thank you very much. >> my pleasure. >> up next, boeing's streamliner continues to be one big nightmare. another delay on the road to the runway? our phil lebeau with the latest troubles for the 787 and boeing stock prices. nightmare. >> boeing not the only industrial feeling the pain today, a triple digit decline. perfect time to stick armed for the "power lunch" "trade or triple trade" on this friday.

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money in tough times a whole lot easier. boeing's dream liner jet during into a nightmare. production of the jet being halted at one of boeing's plants. cnbc's phil lebeau joins us with more from chicago on the overall

health of the plane-making industry, and boeing's woes specifically. >> if you want to see boeing's woes, look at the stock chart over the last year. this is a company feeling a lot of pressure because of delays and the overall health of the economy. the stock down 31%, down almost 5% today. and here's the reason why. more problems with the 78 7 dreamliner. this t has to do with the carbon fiber composite fuselage. they stream carbon fiber around the fuselage barrel, and that's how they make it. they stopped fabricating those. no impact on the schedule across of the 787, but the problem is, they found microscopic wrinkles in the skin of the fuselage. boeing says it has a patch for the fuselage barrels already made, and is goes over the outer skin so shouldn't be a problem. and boeing is changing the manufacturing process. and while it says there is no impact on the costs or schedules

for delivery of the 787, keep in mind, we don't even know what the delivery schedule is. that's not coming out until next month. so when you look at what's going on with edef, the parent company of airbus, a little better in the last few months, but the stock is down 25%. today eads in europe received some tax guarantees from the british government. as they are looking for some subsidies, some assistance in making their carbon fiber composite aircraft, the a-350 wxb. so tough times in the aircraft industry, and they still haven't set a schedule for first flight and deliver wry on the 787. >> is this the first composite fiber fuselage out there or is this old technology they're having problems with? >> the first one for a commercial aircraft. yes, there are smaller aircraft, there are business aircraft that are carbon fiber composite. that's a totally different story, though, building that

versus building 787. >> if you look at the economy of boeing, how much is the economy and how much is the dream liners themselves? is. >> i think a big chunk is the economy and airliners around the world not following through on taking orders. there has been order cancellation going on and that's the biggest concern. >> phil, lebeau. thanks very much. chicago. >> coming up, we talk about ceo pay. you won't believe how some of these chief executives are being paid and the question is, does that matter? plus, the obamatini, as they head to the vineyard for vacation, a cottage industry has come up. >> "fast money" after this. 345-0 tdd#: 1-800-345-2550 if i'm breathing, i'm thinking about trading. tdd#: 1-800-345-2550 i always have my eye out for a stock on the move. tdd#: 1-800-345-2550 doesn't matter if a company sells computer chips tdd#: 1-800-345-2550 or, i don't know, fish and chips. tdd#: 1-800-345-2550 i'll look at all kinds of stocks before i settle on one. tdd#: 1-800-345-2550 if i think i'm onto something i'll check it out,

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welcome to the "fast money" halftime report, getting to the heart of the angction as it is happening. the s&p 500 giving up the 1,000 level. is the rally over? lets get to our fast crew. and an options action contributor. we have a mini options action going on in the halftime report. steve, the drum beat is getting more negative. the notes i've got in my in box seem to be outlining the reasons why we are, in fact, due for a pullback. is that sentiment the sentiment you're seeing on the floor? >> definitely. everyone thinks we're due for a pullback. the project is the hedge funds

have made the bet 100 points ago. so day after day, the bears are getting killed here, and the bulls just keep loading up on their positions, buying the dips. >> so what is happening today, in your view? >> they're still buying the dips. i do not see people laying out shorts any longer. i see people buying dips, that's the theme i'm going with. let's called today an anomaly. even if we trade down to 965, what are they calling for as far as correction? >> right. phil, what are you seeing in the charts for the s&p 500 right now at 996? >> you know, melissa, our game plan hasn't changed, bullish months. the right way to be. there is still a chance you see another leg to the up side, another 1100 in the s&p. and that's it. we don't look at this as a multiyear bull phase. we think the march rally tops out somewhere around there. and then we settle into a range, 1100, 1150 in the top side in the s&p, 900 fair value in the low end of the range, somewhere around 750. >> and scott, how are the

traders positions themselves given the pessimism that seems to be creeping into the markets now? >> yeah, we see some people trying to hedge themselves by buying calls to participate some of the long -- say 1,000 calls in the s&p, been rolled out to october. the 1075, 1080 area. so that's a pretty short-armed way to play this rally. people don't really want to just run in and buy equities. there's actually less protective activity today, you might see. there was one synthetic put buyer, but for the most part people doing stock replacement by buying index calls. >> scott, is that what you are seeing. >> yeah, i agree. the vix trading around the 25 level, actually doan over the last few months is really relatively high compared to actual market movements, only seeing the market around 1% today. today a harder selloff on come assumer sentiment. that caught me by surprise. i still think you get below 1,000 on the s&p, you can get

long again and play to the up side. >> one sector that is weak, the financials. we had news that hedge fund titan john feld was buying bank of america shares, and region financial and that created a rally. what do you make of today's pullback, not seeing the buyers rushing in on the pullback. >> melissa, we talked about this a couple times in the xlf, that 11 to 13 range and talked about how it was going to break to the up side. that's exactly what happened. unless you see the xlf back below 13, i think it's the path of least resistance is still higher. i think we go to 15, and last week -- i don't think we question we go back to 17, 18. >> governor nater, still seeing the flows in the financials this week? >> definitely. people want to start putting pen to paper and see when they're going to get back to normalized earnings, when does that happen? talk about 2011 and 2012, a lot

of green in between. >> phil, are you seeing any effective put buying and any particular names or do any names pop out on your screens today? >> last week i was talking and mentioning wells fargo, definitely a lot of protection being in place. talking about september, october, put buying going on in wells fargo. some of that kind of systematically gone over to some of the other names like that. a lot of protection being put, afraid this rally may peter out, at least the shorts. i think that helps protect the down side, and when it goes down, you can go in and buy at that level. >> right. and scott, you're watching citi. >> that's right. for the first time -- well, over the last couple weeks, for the first time in a long time, we see that citigroup calls are actually more expensive than puts. it's usually the other way around. and in citigroup, even when the stock was below $3, the puts were more expensive than the call. it tells us that people are reaching and want to buy calls to participate in some of the second-tier names. they don't want to just run in and buy the stock, but that's how they want to participate to

the up side, buying calls. >> let's move to the next trade and talk about the weakness to the consumer, consumer, we hav points that indicate that the consumer won't be back any time soon. coming in below expectations and jcpenney raising below expectations. are you seeing retailers coming up short with back to school season? >> they have been running on technicals. if you wait for them to run off, that won't happen any time soon. this is based on recovery and not on fundamentals. i am seeing a lot of buying even though the market is weak today. >> what are you seeing in terms it of abercrombie that is absolutely on fire after it beat expectations. >> the retail space, i don't think that is to the upside. you can push that to 87 and maybe even to the low to mid 90s. 92, 94, in there.

i think there is more upside to go here. >> i want to move on and talk about the oil trade. losing momentum and lower by more than 2% or so. the commodities are high for the month. joe joins us on the fast line. >> know exactly. exactly, joe. what's going on with the oil trade? >> you know the fundamental story. fundamentally we are in steep and tried to move the containingo out of the market. we can't. it is a technical picture and in oil, we have 6838 high and last week the market tried to friday to rally and got up to 7284. this week we tried again. 7221. the dollar this morning rises and the market rolls over to match the fundamentals which are bearish. >> looking out, joe, we see the session lows and the oil service

index. are there tunes in your view to take advantage of the weakness today? >> you are seeing a pull back from the actual strength. the names like transocean and weatherford very strong yesterday. today the risk is being taken off and selling is correcting the names down. >> great to have you with us tonight. let's move on to fast and furious and we have the answer to your burning questions. targets report on tuesday. you get in ahead of the results. >> we will see a little bit of activity. not a lot. bullishness to the upside at least. probably behaves in line with wal-mart and similar picture. september is going to be the key here if it moves forward. >> a 52-week high earlier this week and lows reporting ahead of the bell on monday. do you buy some. >> i don't. much better company than home depot, but it came a long way. 75% from the low. it's okay to not have an

opinion. >> maybe the teens and the tweens are still spending. >> like i said before, these names are based on a recovery scenario and until that is off the table, you have to buy. >> what are about oil. bill, what do you say? >> in the short-term, there is a little weakness, but the biggest picture is bullish. we transition from a range of 30 to 60 and now i think we are 55 to 60 on the lower end and 80 to 85 on the upper end. we talked about that and the bigger picture is still bullish. >> that are is the fast and furious. the "power lunch" debate made plans to go off of paychecks and wall street getting paid too much once again. the fast money as the markets retreat from nine-month highs and we will give you the outlook for the week ahead. more fast money halftime report after this. >> dog days of august? starting to feel that way. it braces you for a possible

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>> welcome back to the fast money halftime report for your "power lunch" trade to go. you are watching the biggest retailer in the world today. >> i have loved wal-mart for a long time. i mentioned on the fast money as you know. >> prior to the flat performance of the year? >> thanks for that. appreciate that. i would take flat performance as opposed to down 30 to 40% like most people. i think it's a safe haven bet. if you are looking at the recovery which is not as robust as everyone thinks, wal-mart

will trade higher. if it is, you will be maybe lateral for a little bit and keep your money in there and it's a great hedge for the portfolio and everyone can use a hedge. >> any retail names that you are pairing this along with? >> no, i'm actually using this as a pair with a lot of my other bets. i'm long from financials and long on the energy space. i'm using that as a hedge. different sectors. >> time to call the close. do you buy or sell? we kick it off with you. >> if we see a break below 990, we may get short-term weakness, but the march rally is intact. we have to look for places to buy. >> i am buying. options traders are hoping it's a big down move and when you get it, the good time to start to buy it. we trade 1,000 on the s&p. >> we started to drip, drip,

drip of bad news. you can't miss on the top line and beat on the bottom line forever. i'm a seller. >> governor, close it out. >> not based on fundamentals, we are pace based on recovery. it's done nothing but move higher on data points. you have to be buying the market. >> that are does it for us here at the halftime report. we have the vacation and going inside the booming obama cottage industry. on tonight's fast money, from working to gm, the ceo of devry talks about the economic climate. scott and myself on "options action" tonight 8:30 p.m. eastern time. i know you will be watching. >> absolutely. coming up on "power lunch," bernie madoff spilling the beans about an affair. a woman who had an affair with bernie madoff. who is she? we will set you up to trade with the trader triple play. "power lunch" is back in 30 seconds.

>> an unexpectedly large drop in consumer confidence spurs stocks to the biggest in months, putting them on track for the first weekly losses in five weeks. the marshal service is looking for real estate brokers owned by bernard and ruth madoff. the forecasters raised outlook for economic growth, but the outlook has worsened. i'm courtney reagan. i know what you are thinking. it's friday and things will wind down. wrong! we are beginning the second hour of "power lunch" and we welcome you for that. the dow has been struggling with a decline so far today. boeing is the biggest loser and coca-cola the only dow component that is higher. the s&p back above 1,000.

triple play, the traders will tell you what to look for next week. >> i'm michelle caruso-cabrera. merrill lynch dishing out big bonuses to bring in new talent on executive pay limits for t.a.r.p. banks. are bank ceos and executives paid too much? >> have you heard about the obama tea to cash in on the obama vacation. we will tell you about this on obama beach. here's what else is on the menu. >> here's what's on the menu. a madoff victim dishes and tell us how he met him and he ruined her and her family's life. >> i'm julia boorsten in los angeles. they are teaming up to take measurements to the next level and pull off a partnership that measures how and where viewers are watching and turn that into profit. >> in washington, commercial mail is sweeping the hotel

industry. property owners can't pay debts s. there a play for investors? >> a new survey ranking the top-paid executives in the u.s. the evaporate by ypt groups at corporate library. at the top of the list, black stone's group came from 700 million for the vesting of equity grants when the company went public in 2007. a regulatory filing said he had a base salary of 350,000 last year. the company disputes the survey's numbers said the stock could not and should not be considered compensation. oriel's larry elston down to number two on the list. he brought home $557 million including 543 million from exercising stock options. oil and natural gas are paying big bucks and represented 7-10 ceos.

the heads of chesapeake energy took in $100 million. >> he is over to the pay czar with at least one of the banks, city coming under heavy fire for the $100 million contract with star energy trader andrew hall. is our bank still shelling out too much for talent or is it just baked into wall street's culture too difficult to stop at this point? we have cofounter of guzav inc. with employee agreements and you think we are asking the wrong question. whether or not the ceos are being paid too much is a moot point? >> yes. i feel that the issue is totally irrelevant as to whether it's too much or too little. this is not a moral dilemma. it's about enforcing the four

corner of a contract that was negotiated that must be enforce and it will open up the floodgates of litigation. >> what do we do for the future? >> they are subject to the t.a.r.p. provision and will be part of the negotiation. if you want the brightest and the best, the banks will have to pay up. this is going to be an interesting time from a contractural perspective because you will see executives walking because they cannot get the deals that they have been entitled to and have gotten for many years. >> i see it more of a moral dilemma with the companies receiving taxpayer support and you are getting huge contracts. i understand what you are saying. there is one order that said it's illegal. put yourself in the shoes of the regulator and timothy geithner said there is a contract that

we're giving tens of billions of dollars to. they have to receive the bonuses. >> the truth of the matter is, if out of the goodness of their heards they feel they want to negotiate, that is certainly their prerogative. however the bottom line is the contract has to be enforced or they are going to be consequences. there is no basis to breech the contract. >> the question that we are posing, what do these guys sdenchlt they are mostly guys. >> the guys and hopefully gals deserve to get what they are being paid to do. they now have to dig these companies out of very large holes. in effect maybe now they are entitled to more. the bottom line is -- >> maybe more. holy molly. >> i explained the whole thing to my 9-year-old son this

morning. it was on the front page of the "new york times". he said you have to pay them or we will lose more money, won't we? >> he has an excellent point. >> he often does. >> we need the brightest and the best to get us out of the situation. >> an extraordinary time. t.a.r.p. won't last forever, knock on wood. right now while the government is holding as much of a stake in the banks as they do, isn't this the time when they should be rolling back the pay for executives until the time that the government is not a shareholder in the companies. then you go back to the way they were paying before. >> the bottom line is, if the executives can command the compensation, they continue to command it. >> everybody said that, but the boys say you know what, i know you think you are worth 100 million, but 80 million would do just fine. >> this is not for us to judge as to what's right and wrong.

again, it is not about the moral issue of whether this is a lot of money or not. >> how the moral issue can end up hurting taxpayers. in the rtc days, we were smart enough to know the s and l executives could get us out of this and they hired a lot of these guys because now the treasury, for example, has been reluctant to hire investment bankers. i think the moralness is getting in our way. >> i agree that the moral issues are getting in our way. we need the best to get us out of the situation that we're in. you have to pay up for talent. that's exactly what needs to be done here. going forward, the negotiations will be stricter and to take contracts and to basically breech them for because the economy has changed is not appropriate. >> thank you very much for your time and thoughts on this. >> my pleasure.

>> interesting conversation. a crook and phi landerer as well. a woman claims she had an affair with madoff for years. mary thompson joins us with more about the mastermind and his mistress. >> you know her. >> the mastermind and his mistress. >> she saw the ponzi master up close. details in her book. madoff other secrets. money and me. pending the book's release on august 25th. we did speak with her back in march after madoff pled guilty. madoff spoke of the emotional toll the scams have taken on her. >> we are in our own jails because of his actions. he is in jail on one hand is yes, he belongs there, but we need to try to help ourselves get out of our jail now. >> married for 37 years, she

said she met madoff when she was cfo of the group which under her watch reported millions with madoff. with the sentencing back in june, she spoke in court saying i view that day as the unluckiest day of my and describing him as a beast that has stolen for his own needs and livelihood. he spoke of the whole family, including her son eric who worked with her one summer. she told cnbc in the interview we had with the other victims, her husband questioned why they had their money with madoff because her returns were 11% when they could get more elsewhere. >> was she working on the book when you did the introduce? >> i don't know. this was the first i heard. i know when i called her before he was sentenced in june, she said i'm not speaking to anyone. would you speak to us. we wanted the reaction to the sentencing. >> when you see her sitting there complaining and now she

will make money on book, it makes me feel -- she scheming. >> it is a free market. to that point, if you don't have any money and have means of making money -- >> i understand that, but to act -- i don't know. >> to call it skeefy, it's hard to judge. it makes your -- >> do we know if she knew anything about it? that has to be 20 years on whatever it is. >> we don't know. i don't know. i haven't seen the book and i don't know if she is being investigated. we asked her. i asked her during this time, there was talk that these charities received higher rates of return and she said she never at any point received a more favorable return personally or through them. >> boom, here it is and all of them are getting advanced play. >> when i spoke to her in june, she and her husband just had to sell their house and move

somewhere else because they could no longer afford it. >> yikes. see you later. straight ahead, the last few trading hour of a big market week will round up the all-stars and take the market for you. >> the market is weak. it will be the first losing week in five. we will have to watch and see what happens. look at a.m. jen to a hold with citigroup. they are lower to $60.12 a share. .

the nasdaq is back below x 2,000 and the s&p below 1,000. if we close here, the major averages are down for the week and would be the first time in four weeks we had a down week in the stock market. >> the 5th week. >> after four straight up weeks, right. this would be the first to the downside. >> let's get to the market action. bob dasani, what is the problem. we have come too far too fast or the economic data? >> professional traders bet this on a cyclical rally and folks, consumer sentiment was into question. did they like the consumer sentiment because it doesn't track spend something they can't afford to make that gamble. look at the names in the last month. look at the housing stocks. the basketball and the housing stocks. up 37%. that's a one-month chart.

are you kidding me? the bank index, up 32%. in 20 days. look at the numbers. how about commodity stocks. they are up 22, 23% in the last month. there names here today. what trouble? 34% in the index. these are names about where it will be going. you have to take profits. you are a fool if you don't. you can't risk saying the sentiment numbers don't mean anything. that's going on here. trader talk and what are we down, 1% on the nasdaq? the first in a few weeks? >> bob, even steepner terms of what's happening today. we are down 1 and 3/4% and you are seeing weakness in relation to the consumer sentiment on internet stocks and amazon. the travel sites like expedia

and priceline is down. even give back among the biotechs. the fda panel voting with the down great and stocks down 1%. biogen down as well and along the big caps, you are not finding much space there. apple to the downside and cisco is weak. chips weak all day today. that's one of the reason yes the nasdaq has a steep drop in terms of that. chips are especially weak. let's go to sharon at the nymex. >> traders may have been optimistic about demand over the last couple of weeks, but consumerser worried and the fact that they are worried shows indiscretion about what will happen. that is why we are seeing crude oil lower, but lower prices across the board. natural gas is lower despite the fact that we continue to watch this tropical depression off the african coast and could enter the gulf by next monday, august 24th. we are looking at where crude

prices are over the past month. we are at lows for august and $62 is the key level to watch. that is the most recent low we had on july 15th. the sell off has been across th@ complex. to you in chicago. >> thanks, sharon. at the end of the week, i like to look at what had the most movement. there is a lot of choices this week. if we look at the yield curve, the winner of the most travel on the week, a drop of 33 basis points in yields. look at the five-year note. interesting how the previous week we saw yields move up in all maturities and more aggressively. that's price volatility. the loser was the winner in terms of distance the week before. that's the 30-year bond down only 20 basis points. as far as foreign exchange, it's interesting. the dollar is pretty much the currency of everything when you look at the commodity regime.

what's fascinating is it's not only down on the week, but one of the main reasons is it was at 97 and change last week. rather precipitous drop. a friend of mine that was a big trader in new york, capital markets e-mail me. he sees a lot of people being hired or intrude in new york. that indeed is surprising news. i know, but i wanted to throw it out there. back to ground control. >> we went all the way up to 385 and started around 350. now back to 350. so far. up next, a major move in the media industry. it could shake-up the ratings landscape. down day on wall street. we will look at that with the trader triple play on "power lunch" after this. not looking f, just a good paying job. that's why i like this clean energy idea. now that works for our whole family. for the kids, a better environment. for my wife,

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more evidence it's not a stokt market, but a market of stocks. back below 1,000 and tenet health care is bucking the trend, down almost 10% in today's ratings. tv ratings a big challenge for the media business and advertisers. they are joining forces to take on the player in the ratings business. julia boorsten has more. julia? >> that's right. nielsen's raters spend more time watching on line and cell phones for the integrated measure of viewers. a major consortium is in the works easure all formats. it is not finalized until disney and nbc universal and the media giants that most committed to

participating. all media companies like procter & gamble and ad agencies are involved in the talks. currently nielsen ratings measures viewing and those numbers are not integrated into the main ratings. >> for you can integrate the viewership and people watching on the television and out watching the content on the web, the aggregate number is big they're gives them more bargaining power. >> this company's sales are down across the board, pushing them to come up with a better way to monitize the new online viewers. advertising is expected to pick up this fall, but the features seem to be online, given the rivals reasons to better understand and monitize the new market. back to you. >> the consortium is not to replace nielsen, but augment or add to the ratings that nielsen comes up when it measures

broadcast and cable ratings. >> exactly. it is looking to go beyond what nielsen focuses on. if you are on internet at the same time and two minutes later you check it out on your cell phone, they want to have a sense of how you are using the media. this is in the works and everyone is talking, but nothing is finalized. we don't know which media giants or advertising companies and which of the actual advertisers themselves will be involved. >> we are having a conversation here as well. >> i don't understand, don't we have the technology, libertarians would worry about this. with dvrs and cable boxes, we can know what everybody is watching at any moment. >> this is the microsoft of the ratings business. nielsen has been a monopoly for 20 or 30 years and every challenge i watched since 1987 has utterly fail and work themselves in for two times.

agb in the late 80s. they offer service almost as good. >> that's the thing. they are not challenging nielsen per se. >> if you are nielsen and your biggest sponsors and clients are better measurements and measures more than ratings, you are threatened by that and you try to add in the services. i guarantee they are working on it. >> neal 10 would say they have a way of measuring what you are doing. they are not doing it fast enough and integrated enough for the media giants. if you are disney or wpp's m group, you want the results now. we are seeing the traditional advertising on the decline. there is a lot of pressure to come up with new ways to figure out where viewers are watching. nielsen is too slow. even though they say, it is seems like this would be

something that they have done. >> a lot of times it turns out to be nielsen is speeding up and waking up. they are used to being a monopoly. they tried to challenge and stuck to the ratings. >> can i be clear on what it is these guys want to measure. you are walking through the actual habit that they are trying to figure out that people do. they are online and they are watching regular television and they switch over to online. that is not measured. >> this is -- they want to measure everything. if someone is watching, they want to measure how every individual was in different ways. they can be watching video online and mtv.com and mtv on the television. this is not finalized yet. >> hold on. wait. if you are going to measure the media part as in watching cable, why is that not a direct challenge to nielsen? >> that's a good question.

>> what are would be "the challenge"? >> i have spoken to companies that are involved and said to me repeatedly, we are not trying to do what nielsen is doing and this will be added. you have a good point that the television portion of what they would be measuring would be in direct conflict. >> the parallel is when google started up. we are not a competitor of microsoft, but a search engineer. look at them now. this effort will fail. i predict that nielsen will find a way to crush this. >> let's not forget, be careful what you wish for. they assume they will find bigger audiences with the program. >> good point. >> what if they don't? cable is trying to measure your purchases which is another layer of controversy. >> remember doing the tivo thing with janet jackson during the super bowl and they said we know the average person replayed that times and all the privacy freaks said you know that? my gosh. that's terrible.

>> with that information, there things inside of cable that know stuff about the negotiations for the cable subscription fees w. advertisers and what shows. >> people can suggest programs you might like to watch. >> i didn't know and 18,000 homes for $10 million. today we measure all the $110 million. you know i'm getting more at 10:00 at night. >> tivo passes on that information. family guy was on at 2:00 in the morning for about six months before they brought it back because so many people were watch together on tivo at the middle of the night. >> they have a lot of information about the things everybody watches. i want to know how that gets out. >> tivo is actually right now working on measuring the way that people are watching. they have all that information. i disagree with you and i think they have a good chance of working. it's actually the buyers are

advertising and you get procter & gamble involved, they have a vested interest. >> she does agree that the ratings for the atm report are higher. >> it's a national scam. >> they get the ratings bump. >> thank you all very much. up next, time for the trader triple play, seth you up to trade next week's marks. >> have you heard about the obama tea to cash in on the big obama vacation. the cottage industry that is spreading.

here's the stories we are following at this hour. still only one dow component in the black. coca-cola as you expect on a day like this. on the s&p, one of the few winners below 1,000. on the nasdaq, rim just a shade

higher. >> as we said earlier, it's a down week. first one in five weeks. we had four consecutive up weeks for the averages, but with the trading we are seeing today, it will be a town week overall. what's in store for next week. time for the trader triple play with steve grasso and stewart frankel on bonds. peter and from the nymex in new york, tom reilly. welcome back. steve with a down week. the first five weeks. >> i don't think it will continue next week. we have to think we have to give some back at some point. people have gotten so beat up and now they have to see the proves. it's time to take it off the table and we are backing up for a running start. >>or bonds we don't have a big auction like this week. next week yields are starting to move down. what happened some. >> we will have the rest of the

inflation picture shown to us at the prk pi on tuesday. what we are seeing here is a clear indication. manifesting themselves and probably an indication and the country and the world even with all of this aggressive easing by the fed and accommodation, i love the inflationary pressure is building. >> we're continue to see yields fall next week? >> there is a lot of money looking for yields right now and it's very difficult to find places to put money. bonds start to lose their luster quickly at the low yields. >> they have been hovering at the level for a while. >> they will follow the equities and the dollar. if the dollar is weak and equity is up, we will rally from here. my guess is we are not following fundamentals anymore. we would be about $8 to $10

lower. >> those danger speculators. what they are doing. what data are you looking to next week. >> i will say housing starts and the jobs numbers and leading indicators. as the other gentlemen said, we are not trading on fundamentals either. we are trading on recovery or the concept of recovery. >> the fundamentals? he is getting -- >> otherwise we were trading on what's in the rear view mirror. >> i apologize. i didn't hear you. >> giving that a fundamental and trading on the prospect of recovery or is that ridiculous? >> ridiculous all together. who is calling recoveries in six months or months or a year. >> we had for example the philadelphia survey on the forecasters.

they raised by 2 percentage points. that's one group of people. >> they are great at calling a recession as long as it's over. part the point is only that for the second half of the year. >> it is a fundamental and you can't break it down to individual stocks. i'm in agreement with you, but the concept is if you put pen to paper, you will not see the nuts and bolts. >> if you don't get a rise in gdp, the e will not go up? >> to break it down a different way, my wor set financials. even though i see money coming in, it looks at normalized earnings and when is that? >> so your fundamentals are the same as everyone else's? this is what you are looking for for the future? do you agree with that? it's never going to return? >> we found a new level of economic activity in the country

based on a more reasonable amount of credit. credit was so ridiculous and the homes were so excessive, we had an inflated concept where prices should be. stocks two years ago were almost 14,000. people were talking about the massive rally and stocks and looking at a few trees. if you look at the forest, since august of 07, the economy has been sliding and we have been losing jobs and lost housing prices and we are definitely still seeing more pain in the economy, but stocks have come off the lows by quite a bit if you look back two years, they were at 13,000 plus and at 9,000. they are off almost 50% from two years ago. i don't know why people are getting so enthusiastic here. >> the point is we can rally. i don't know how sustainable said. >> we were 12,000 from the

lehman blow up. it's two negative quarters or so. it strikes me that you can get back -- say you got back to 10,000. you are 20% below or less than you were before the lehman blow up. judge y does that value seem more unreasonable? what made the march low the right 1 and this the wrong one? >> because you are looking at mentality. how is that changed? how is the trading aspect changed? does the money come back in from the sideline? just to slap a number on it and say can we get to that level, i'm not sure if that's the right question to ask. >> woo ve to go, peter. sorry. >> have a good weekend. see you later. when we come back, a big topic in the health care debate and what to do about preexisting conditions. this is the hot button issue. should we have a government solution or let the free market

reign? >> have you heard about the baracko taco. we will tell but it later on "power lunch."

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this is the official card... of the world's largest airline. >>. >> trading higher we heard earlier from the fdic they were going after shares of colonial bank group. bb and t will be the buyer of the assets of colonial and they are up 6 and 1/3%. >> curious why they did it in the morning rather than friday night. >> i wonder if that forced them. it's a good franchise regionally, but the problem is

on the books. we heard stories in line with that. we are under water homeowners stop paying mortgages, closing the door behind them and leaving the keys in the mail box. we are hearing the same story in commercial real estate. what's the impact on the publicly traded companies and cnbc's diana is taking stocks and naming names. >> we learned today that the first u.s. hotel and casino built outside of las vegas, the owners are actually turning the keys of the casino over to the lender, credit suisse. it's a growing trend that is sweeping the hotel industry. the first was in june giving the san diego w back to the lender. hotel owners are unable to cover services, returning the property can be a good thing for the balance sheet. >> the ramifications for the owner are not as severe and it doesn't affect credit because

most of the lenders understand ha that hotel is where the problem was and they are happy to make new loans to them. >> if we learned about the resort's atlantic city hotel, others are following suit. funding the $29 million hyatt regen regency, give together back to the lender. they didn't repay the maturity from the embassy suites and wilmington double tree and they intend to return at least one asset. since all that eases assets, are the companies now a buy? >> when you see revenue per available room, you start seeing same store revenue gains rather than losses. that's the time to look to invest in hotel stocks. we think the turn probably doesn't come until late income year. >> he said he does like hospitality properties trust that leases hotels. you are asking what about the banks? he said that the losses will be in the hundreds of billions and

will be born by the equity holders, but mostly by the investors. >> thank you, diana. >> they were talking about investing and inflation report. year over year change in hotel prices minus 9%. >> you wonder why the guys are going under. it gave you the trend. the stocks went along with it. the debt is fixed and you can't change that. the pricing goes down and the hotels go under. >> lightning rod in the health care is coverage for preexisting conditions. with the university of chicago said a competitive health insurance market would solve the problem. is the solution government or a free market firing off in a power grid. our contributor and ben ferguson, syndicated talk radio host with the icon network. you know how it works. 20 seconds each. we start with you and why do you think a free market system would be better? >> you can fix it right away by

having competition in the market and not just getting coverage from one state, but across state lines. name something you can't buy in state and can in another. that would fix it right now. >> what do you think about that? >> we have a free market system right now. >> no, we don't. >> we're do. >> i explained why we didn't. >> i thought i had 20 seconds. the fact that it's a free market system within one state doesn't mean it's not a free market. we are expecting according to john to let the insurers decide to cover those who we can't cover. >> in an average state, home people can you go to? i have two or three options. that's not competitive. next door they have and three of the four are not in my state. the other problem here is why the actual free market can fix this. the president ran on giving people insurance. there is only as his numbers say, 40 million americans that

are uninsured. why are you trying to fix a program for 300 plus americans, the entire population when only 40 don't have insurance. >> the reason why is everyone is pay paying for the 46 million people and paying for higher costs. we paid more for health insurance than any other country in the world. we are paying more for premiums that doubled over the past deck eads. >> let's be clear here. we don't have a market system. i get my health insurance through my employer. it's subsidized so it's cheaper and by the way, the taxation system in the country drives us to that solution. as a result we have no strong private competitors for me to have a different choice. >> we're are all arguing for the need to reform. the problem is the system doesn't work. it's ineffective. it's too expensive. how do you get to that reform?

>> if they plan what's out there, the house bill that's out there and all the others will not save us a dime. any company knows if you have a portion of your product or business that is not working, you don't change the entire product line. this president is trying to change something saying will not save us a dime. that is horrible business. any other ceo would be fired. >> free market system for health care does not work. >> yes, it does. hold on. >> the insurance companies will not bring in people with ailments or drop those with ailments if they were allowed to. the reason why you get a tax break from a corporation gets it from the government is because you gree take everybody on in your company. you don't discriminate. the government intrudes and that's why the one -- michelle starts off with a free market system. that's why it works. >> free market will work here if you do two things. you give me a tax break if i go

for individual insurance and the second thing, if you open up across state lines so everyone can have it. you can't say it won't work. >> how can you say it's a free market when you are asking the government to intervene? >> you said you wanted to reform. >> have to end it there. >> there limits. it's a free market. right up to the point. >> you make bad assumption that we all got together and brought our individual health care that still the droppage rates would be the same. they would not. they would be forced to retain more people overtime because insurance companies dump people just like they do with car insurance and auto insurance. people run from them and they go to the better insurers. we would make the choice rather than people at hr who are lovely, i'm sure. >> i'm told i don't have time to respond. i'm reserving time on monday. >> would you rather talk about a baracko taco. ale to the chief.

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t minus nine days until president obama begins his vacation on martha's viniard. they are pushing themed drinks and food in anticipation of the first family's stay there. martha's vineyard, one of the great vacation spots. >> gorgeous. >> we go over some of the -- it's a whole industry. i remember when the clintons vacationed there. something similar happened issue but this takes it to a new level. >> one thing said it's baracking in anticipation. you can barely walk down the street without having an opportunity to buy 15 t-shirts. here's a few. the obama one. a warhol silk screen. >> pro obama is the family dog. >> 'is there a map of new jersey. >> good question.

this is a rift on the martha's vineyard black dog t-shirt. >> ale to the chief. >> that's a new beer. they are not going to pour it until august 23rd when the obamas arrive. this is the bo bar that is being marketed for you and your dog. it keeps the whole family clean while you are there. >> before that or after that, you can have the president obama muffin. >> what's in it. >> macadamia nut. >> it's low fast with coconut and banana. like hawaii. that comes back up in the obama rita that has his favorite frud, mandarin oenchls and pineapple juice. >> you didn't greek the obama tini. it is friday and afternoon. >> we have the summer one. this is the 1 to have. the one side. here's the back and here's the

front. a to do list for the president. >> this is funny. >> bailout again. did that. martha's vineyard. >> shoot hoops, shop. cute. very cute. >> relax and others say i vacationed with the obamas 2009. they are having fun with it which is great. a baracko taco at sharky's restaurant. >> the locals are loving this. it will help the economy i would think. we have breaking news and more on the michael vick situation. >> thanks, bill. michael vick signing a two-year deal with the philadelphia eagles. this statement coming in from nfl commissioner. i said several times they want michael to be one of the nfl success storiesa as an individual and football player. i believe he can accomplish both goals with the eagles organization which has done an outstanding job with the community and on the field. the last 15 years under the

direction of the owner. i know the eagles provide strong support and ultimately michael's success is up to him and the decision he makes, he is allowed to practice with the team and play in the team's last two games and the commissioner said he will rule on what michael vick when he can play at least by week six of the nfl regular season. back to you. >> all right. i feel closure on that story now. >> was that a blessing on it a little bit? i'm not ready. >> as you know, it's the 40th anniversary of woodstock. we will look back on those days and hear from one of our staff members who was there 40 years ago. >> where the dow jones average was as well. >> exactly. stick around. these days every penny counts with everything you buy.

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we got the hendrix thing going there. >> the greatest coverage of all time. >> you often leave when you want. >> years ago. some of you may