to drop. normally stock traders don't pay a lot of attention to the philly fed, but an hour ago the philly fed numbers came out and i got a lot of e-mails from people who said the numbers were surprisingly good. we had the first positive reading in the philly fed since september of 2008, and the single most important thing is inventories had been rising. this is the first time we have seen positive number, since i think 2007. rarely do we see traders get enthusiastic about the philly fed. >> we knew it would happen at some point, because inventories have gone so low. >> but when was the question. this was a positive surprise. >> financials another biggy. >> talking about markets here, and outliers moving. citigroup got close to $4.30, and boom, moves up. that's the 200-day moving average for citigroup. and yes, the technicals matter, folks. and if you look at aig, people keep asking me about it, it looks like potentially another short squeeze in aig.

up again, a two-month high. the thin i would note here -- >> up highest, 28%. >> they owe $180 billion. to the government. that's all you need to know. but short-term, moving. >> bob, thank you so much. we head to scott wapner at the nasdaq. >> you and bob just talking about how financials are leading the market today. technology is doing its part, as well. nasdaq up three quarters of 1%. look at big caps added to goggle, goldman sachs, they raised the price target from 560 to 510, and expected to reaccelerate over the next year. take a look at other big caps this morning. apple up shy of 1%. research in motion with a 2% gain. microsoft frak nal to the up side, and cisco up by better than 1% today. net app gave no forecast for the current quarter. the stock has been under pressure throughout the morning. it's down just about 5%. take a look at some of the other

retailers and restaurants reporting today and really getting hammered. you guys mentioned sears holdings at the top of the hour, down 12%. their report across the street was looking for a gain. down gain over at credit swiss, to the down side.wñ and mandy, i send it back to you. but jack in the box is up 6.5% on an upgrade over at jpmorgan. so pretty decent morning thus far for technology. >> absolutely. so far, so good. of. foreclosures continue to climb in the second quarter, although thely pace did decline a bit. cnbc's diana olick is in washington with all of the details. diana? >> mandy, for a subprime, it is all about prime now, and we're still setting records. the delinquency rate for all loans in q2 rose to 8.86%, up 2.5 percentage points from a year ago. the percentage of loans in the foreclosure process 3.3%, up from a year ago. so add it all up, and just over 13% of all loans in the u.s. are in some kind of trouble. but the culprit loans are

changing. >> we had 43 states that actually had a drop in foreclosure starts for the subprime arm, completely flip side on the prime side, increase in foreclosures on prime fixed loans. so it's clearly an issue being driven much more by the economy rather than issues with the type of loan. >> and just take a look at the numbers, the percentage of prime fixed rate loans in delinquency rose 5.it ii 3%, sticking in the last quarter. but now take a look at subprime fix. it actually leveled off in the past quarter. same with subprime arms. and some good news is that foreclosure starts were basically flat, thanks to government and banking industry loan modification programs, and also do a big moratorium in illinois. >> i think foreclosure starts numbers will continue to increase for the prime side, and we may see some continuing flattening or further moderation

on the subprime side and may continue to offset each other, but overall, an ongoing increase in the foreclosure starts number, probably through next year. >> and also important to note that the foreclosure crisis is still centered in those four big states. california, florida, arizona and nevada. they make up 44% of all foreclosure starts in the nation. for more, go to the blog, realtycheck.cnbc.com. mandy? >> stay right there. let's talk more about the foreclosure rate and whether it will prevent a rebound in the housing sector and broader economy. joining us is susan was co real estate and finance professor, and dean baker, at the center for economic and policy research. thank you for your time. ladies first. let me start with you, susan. you say foreclosures are standing in the way of a housing recovery. >> absolutely. you know, we've got cut back in construction starts, but this is where this supply of homes are coming from, they're coming through foreclosure supply, and

we see that continuing for quite a while. >> dean, which is more important, foreclosures or house prices? >> well, in terms of the economy, certainly house prices. i mean, the basic story here is that we're talking about several million people that are facing foreclosures, but 720 million people that own a house. and they're seeing house prices fall, and it's leveled off temporarily, but they have seen a big plunge in house prices and my bet is the plunge isn't over. and that's preventing people from going out and spending. >> when you say the plunge isn't over, dean, how much further have we got to go? >> i would say at least 10% and quite likely as much as 15, 16, 17%, if we talk about getting back to long-term trends. by every measure, we still have enormous supply and the only way you clear that up is by having a further drop in prices. >> isn't it a catch-22, though? isn't this a catch-22, because as much as you see the foreclosures are an issue and

home prices are a separate issue, they're very much intertwined, because the more foreclosure's on your block, the more devaluation in your home price. so at some point, these foreclosures have got to let up if we're going to see any kind of real recovery in housing. >> yeah. i mean, this is -- >> can i just add to that, from the mortgage bankers what they were saying this morning is the reason we're seeing such a big jump in the prime fixed rate is because the normal reason for foreclosure, that being divorce and job loss, usually allow people to sell their homes and get out from under a bad mortgage, and all of these people now in prime fixed rates, their home prices have fallen so l low, they cannot sell. >> and that's the key. the key point here is not just continued price decline, but prices are so low now that if you're hit with an unemployment event, you have no choice but to foreclose. >> i mean, susan, when we talk about, you know -- we've been talking about who is wagging who with regard to many in the markets, china, et cetera.

with regards to the housing recovery, what's the most pertinent thing here, to what extent do we need to see a recovery and stabilization process in the jobs market before we can even start to think of a sustainable housing recovery? >> yes. absolutely. the job focus, without -- stopping of its continuing increase of unemployment, housing prices will continue to fall, because the foreclosure supply will increase. >> you know, susan, at one point, though, do we go back, or do we never go back to the sort of heady days of 2005? and maybe i shouldn't even say 2005, 2006, even just 2004. that sort of earlier part of the decade when we saw pretty steady rises in home prices, do we ever get there again, susan or is this just a case where we keep up with inflation? >> the problem is, we've got years before we get there. and that's the key problem. this recovery is not a rebound, not in housing and not in the economy, because it's not in housing. because this supply problem is

continuing, as long as unemployment is high and growing, and even if it's just high. so we have year, two years, before we see -- >> how many years, did you say? >> i don't see recovering housing prices until we see unemployment starting to drop, and that's a year away. and even then, we still have a continuing supply of houses coming on to the market, just because we have he will valt aggravated other sources, not just subprime, the option arms, prime, et cetera. but this is a problem that will be with us. >> plenty of time if you want to buy. >> you don't want to return to the heady days of 2005 and 2006, and those kind of price appreciations which were completely detrimental to the housing market and the overall health. of when you saw prices going up 40, 50, 60% in some markets over a year, that brings in speculators, it turns housing into a trade. >> but diana, what about 10%? what about between 5 and 10%? >> the average historical price appreciation is 4 to 6% on an annual basis in housing. and that is a healthy rate,

allows for a good investment, allows for a healthy market. it's going to change market to market. you're going to see some markets higher. >> if we look at the case-shiller data, the average was the rate of inflation for 100 years, so that was pretty good data in my book. >> right. and we don't want to turn housing. we saw what happened when we turned housing into a constant trait, housing is a place for people to live. obviously, an excellent investment, and for some people, more than an investment property. but overall, you don't want to see 10, 20, 30% depreciation over a year, because that's just going to put us right back where we were. >> whether we like it or not, we're in a new world of volatile house prices, and we're going to see these volatile ups and downs going forward. >> people may be renting in the future. >> good discussion. we wrap it up there. thank you very much to all of you. up next, what have we got on the plate, trish? >> retail earnings, from lowe's and sax disappointing, and now sears following suit. the question is, mandy, what does it mean for a retail recovery, and who is really buying out there? is it the high-end consumer, the low-end consumer?

somewhere in between? >> somewhere in between. and speaking of consumer spending, new credit card rules are in effect today, but some say they actually create more problems than solutions. we'll find out why coming up on "the call." taking its rightful place

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well, crude might be on a bit of of a roll, but let's look at what natural gas is up to, dipping below $3 in a trade, sitting at $2.96 following weekly inventory figures showing supplies rising by 53 billion

feet. we'll have a full report on this on "power lunch". >> thanks, mandy. a tough quarter for sears, postings a loss of $94 million. of wall street taking notice. sears holdings trading off almost 12%, a loss of $8.66 a share. mary thompson joins us with more on sears' problems. mary. >> hey, trish, the loss took the market by surprise. they were expecting their third quarterly profit in a row. but appliances and patio furniture at sears, and sluggish apparel sales were the results. this measure of profitability unchanged from last year at 26.5%. after showing marked improvements in the first quarter, even as the retailer was cutting prices to clear inventories. analyst gary bahlter has an under perform rating on the stocks, and he calls sees the most under valued stock he

covers. and points out what he considers its primary weakness. sears isn't as efficient as its competitors. >> the number-one reason why sears' strategy doesn't work is its productivity. it's about one quarter in the kmart division versus walmart, and on the sears side, when you put aside appliances, it's well below all its competitors. it's very, very hard to get operating margin in an environment like that. >> lampert creating the retail giant back in 2004, combining the two former icons of american retailing a promise of returning them to their glory days. it's off its all-time highs with real estate holding declined. and bahlter says another problem is pricing. kmart pricing is competitive, and rivals walmart where it's 20% above both stores. and sears, even with well-known brand names like craftsman tools and kenmore appliances, private label brands at lowe's have

improved, meaning there is less reason to make a shopping trip to sears. sears lost 17 cents a share last quarter, the loss below 35 cents a share. revenue dropping as well to a slightly less than expected $10.55 billion. as total same-store sales for combined sears and kmart dropped 8.6%. trish, back to you. >> okay, thank you so much. mary thompson. for more about this week's ups and downs out of the retail sector, home depot, target, tjx, all beating estimates that sears, sax and lowe's all falling short, we want to go to our guests to ask this question here. what does it all mean for the retail recovery, and high-he said versus low end? we asked jan nicen, retail analyst. great to see you, jan. thanks for coming on the program. >> thanks to you. >> so make sense of this. why are we seeing some positive results from some of these guys, and yet such dismal results from others? >> well, the low end certainly

is the place to be in this current environment, and probably will be for a while. we used to say nobody ever made money at the upper end and nobody ever will. for five years that, wasn't true. but that was probably the aberration. the 40 years before that where the upper end was tough was probably more normal. >> do you consider sears then more normal middle of the road, and that's just a problem area? or -- becausis not like your high, high-end consumer is out shopping at sears. >> no, it's been a market share to walmart, and jcpenney'jcpenn because their stores don't look as good, product is not as well displayed. and when they don't have their appliances working, it's really a problem. >> i wonder how much once high in retailers are being forced to become almost low-end retailers by heavily discounting or are we seeing a push back, saying no, i'm not going to tarnish my brand, i'm not going to clear things off the floor because of the recession. >> i think that is what we're

seeing. you see people like ann ene en b abercrombie trying to hold on to their image. and you saw sax last year do deep discounting, because they had to clear merchandise, but they would like to come back to not being a highly discounted retailer now. >> is it harder now for the higher retailer that discounted heavily for them to put their prices back up again, because people got complaints and they kind of liked those discounts. >> it's really, really tough to go back. once you become a promotional retailer, it's tough to convince the consumer again they should pay your prices for your great products. so, yes, it's difficult. >> i've heard so many people come on this program, and they have talked about the consumer really having changed their behavior for the long haul. that americans are now much more conscious and saving their money, they don't want to go through a situation where they don't have enough. so they said this is a fundamental change. and there are people that are shopping at walmart that never

shopped there before, that will continue to shop at walmart. do you buy that, or do you think that once things start to change, consumers will. >> i buy that, but for a different reason. walmart looks better than its ever looked. their new stores and remodeled stores look as good as a target store. it's a great-looking store to shop in, and it's still really cheap. so i do think they'll keep the customers. do i think that upper end is permanently dead? no. but it can be a pretty slow recovery for aspirational consumers to ever shop up again. >> jan, we thank you for all your insight. we appreciate you coming on the program. >> thank you. >> coming up after the break, chinese stocks bounce back overnight, staging a 4.5% rally, and we're going to discuss what it means to the u.s. market and your investments. >> and also new rules are in effect that will impact the 80% of americans using credit cards. but some say, you know what, buyer beware here. find out why in our american consumer segment. coming up next, only on "the

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welcome back, everyone. the fda just out with a statement that the benefits of merck's gardisil continues to outweigh risks. shares are actually down 1% there. down 33 cents a share. 3115 the latest trade. mandy. >> okay, trish. the first phase of credit card reform becomes lower today. the morgan's card holders gives 45 days to reject rate increases and they'll have the option of paying off their existing balances at the current rate over a five-year period. but some are arguing that consumers with good credit may be hurt by the legislation. are they right? let's bring in jordan goodman personal finance expert and president of money answers.com, and adam levin chairman and founder of credit.com. gentlemen, thank you very much

for your time. my basic read of this is that a new legislation is potentially going to give consumers a little more information, a little bit more transparency, maybe a little bit more time to pay their credit card debt back. but it doesn't actually give them too much relief from those higher interest rates and higher fees. is that the right way of reading this? adam, why don't you go first? >> i think it doesn't necessarily give them that much relieve from it, but it does give greater transparency, adds fairness to the system. it gives people an opportunity to have a little bit more time to develop strategies and a little more time to pay. but it's not the silver bullet, but it is a good first step. >> what do you think, jordan? >> transparency doesn't help when your rates are going up dramatically. and i'm hearing, people who pay on time, was 5%, now it's 17%. i was on a philadelphia show today, their rate went to 29%, and they always paid on time. >> it does seem to be happening.

i've done reporting on this for nbc news, gonna cross the country, talked to a lot of individuals that have seen their credit card rates either sky rocket or their cards cancelled all together, did he say the pit the fact they have always paid their bills on time and they don't have an issue. but basically, these credit card companies are looking at them and saying, you know what, you live in a certain zip code or we're fearful, because we have a $20,000 line on that card with you, and you're only using maybe $500 of it. so why should we have that exposure? adam, how much of this is happening, do you think, ahead of the fact that the entire credit card bill of of rights will soon go into effect in another year, and credit card companies are scrambling to basically not have this exposure to these kinds of risks? >> well, the reality is, they have been scrambling to not have this kind of exposure for the past two years, while this wasn't even an embryonic glitter in anyone's eye. so is it possible that it sped some of this up?

maybe. is it also possible that a lot of the problems that american consumers had relative to credit cards may have been a self-fulfilling prophecy, because rates and minimum payments were raised over the past two years, lines were cut, and accounts were closed, as well? >> so in other words, it's a combination, you're saying, of the economy, plus the rule changes, adam? >> i think that the rule changes may well be an excuse, and to some extent, a little bit of an accelerator, but i certainly believe that the companies have been scrambling to put their balance sheets back together again, as a result of what we have all lived through in the past two years of irresponsible lending, irresponsible borrowing, and irresponsible spending. >> jordan, i'm also wondering whether some of the things being put forward, they sound good, they sound really good on paper, like you have the right to reject a proposed interest rate increase on your credit card. but then what? you reject it and then what? they cancel the card? >> exactly. >> this is actually something that is good or not? >> a huge amount of consolidation of credit card business. mbna and bank one used to be separate companies and now are

part of the big five that own 80% of the market. so people don't have many places to go. and seeing their credit lines come down dramatically. used to be 10,000, now 1,000. >> what would be legislation or reform in this area that would really make a big difference to consumers? >> i think getting the credit crunch less restrictionive. the banks are going to take out over $2 trillion worth of credit lines this year. >> and by the way, that's about half of all available credit. >> right. >> in the system for consumers. >> but they were going to do that anyway. they've made that announcement -- meredith whitney whikted that and talked about that way over a year ago. >> i disagree, actually, because i think the bank law is accelerating much more dramatically had we not had the law. the banks say we'll lose about $20 billion because of this law, and they say all right, where else can you -- >> i was a consumer regulator for many years, and i've got to tell you, any time we ever proposed any kind of regulation on anyone, they would always

come up with a host of reasons why the economic system, as we now knew it, would end, because of any regulatory change whatsoever. we have seen the results of deregulation for years. and it hasn't really worked. of. >> jordan, what do people really need to know? is it that we're living in a new reality where you can't count on your credit card line for real money? that could be gone tomorrow? >> your rates are going to be higher, minimum payments higher, medicaid gone from 2% to 5%, the interest rates much higher than they have been in the past, and generally your credit lines will be restricted. this is a bad situation. everyone is talking about consumer spending. how are we going to get consuminger spending going? >> excellent point. i can't see any message to the consume they're you've got to rely less on your credit cards. there has got to be, surely, some kind of incentive for people to not be relying so much on credit cards, which brought us into the problem in the first place. >> we're seeing the fact that consumers are to some extent relying less on credit cards.

we have seen debit card usage move ahead of credit card usage and consumer debt fall a little bit, possibly because some wanted it to, and possibly because some were forced into it. one thing is for sure. we are entering a new era where financial literacy is very, very important. >> you're absolutely right. >> we're seeing results of financial illiteracy, so hopefully now we will see financial literacy. >> people are really hurting very badly. there is help, by the way. they should go to a national nonprofit credit counseling place, my favorite is cambridgecredit.org, and they can get your rates down to levels you can afford and actually not be paying 19%, because you've always paid on time. there is help out there. >> thanks, very much, guys. what's up next, trish? >> we talk about chinese equities. this is your wield house here. they saw a big rally overnight, so does the asia bounceback mean it's time to buy? how are they linked?

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welcome back to "the call." $109 billion of klined two-year, five-year, seven-year supply next week, yes, basically every

other week.@ not really in somewhat hard to tell. let's look at the biggest up yields today on the curve. it's the five-year note. look at the intraday chart, up 3.5 basis points in yield. if you look the at what the best performer is in terms of its yield is lower, and prices higher, you have to go to the far end of the curve, two basis points lower. is it supply? not so much. what it really seems to be, well, it's a behavior of the equity markets. building on two days of gains, you see it show up equally as much in the next chart, the dollar index. there's two days. and even though the dollar indeed is a little bit higher, it is having a very difficult time getting back towards any of the levels we saw early yesterday morning. remember, what equities do better, you're less inclined to be owning treasuries and dollars. back to you. >> mr. santelli, thank you so much. across the globe, the shanghai composite 4.5% to pull away from bear market territory. so who is leading this global market recovery and does the china bounceback mean it's time

to buy now? we bring in dan genter and president of genter capital management. and scott ledler, chief strategist officer. how much on a regular basis are you watching the asian markets to allow that to predict what you're going to do here? and the reason i ask is because typically, historically, people have always sort of looked at the u.s. and said, okay, the u.s. will lead asia. are we starting to see a shift? >> well, within the last year, the relationship has changed. in 2007, when the market broke, the asian markets broke to the down side first. and at that point, it started to lead the rest of the world. and then if you recall in march, they led the first part of the rally. they rallied about two weeks before we even started our move. so when they start to have extreme moves, you need to use that as an indicator on your trading strategies. >> what does it tell you now? >> what it tells us now is we had a 20% pull off the highs, and it shows that type of move

can happen, so you need to be prudent with your entries and exits, and you can't chase the excitement, need to have the right entry so you can sit through as we continue to rally and move forward. >> but dave gentry, you say it's all about earnings. you are not looking at a technical basis of what asia is doing so much, and you're looking at the fundamentals in earnings? is. >> i think that's the key, trish. the market has reacted off the bottom based upon earnings moment momentum. and even though the year over year numbers will continue to be negative, the most important thing is the most sequential numbers are continuing to get better. we're going to be about 14 this quarter for the s&p 500 with about 95% of the companies reporting. about 14.5 when we look at the third quarter, and probably 16 in the fourth quarter. and more importantly, probably looking at about 68 for the s&p 500, looking at 2010, which even if we bring the current 17 p/e multiple back to 16, that still gives us about 11.5% in earnings potential when you include

dividends over the next 12 months. >> dan, what about the earnings of global companies? really household names like caterpillar and dm, which during the last earning season, basically saying, okay, things are still really slushish at home in the u.s., but seeing good demand out of china, and that's what is going to help drive earnings in future quarters. is there any concern on your part with regards to what is going on in china right now that maybe that demand will waiver? >> well, i think, again, we have to separate what's is happening in the overall economy in china and potential demand for capital good items and what we're seeing in the chinese stock market, which is a very captive, nationalistic-driven market. so i'm certainly concerned we're going to see lower demand in those areas and it's going to be slow. but i think the key is we have probably plateaued off the bottom and the movement is upwards, and we're going to starts to see recovery in earnings in those stocks and that's what people were trying to buy in as we go through the typical late summer type of slumber that we normally see in august. >> scott, what are you doing right now? what is your investment portfolio looking like?

are you getting in, getting out? >> in this last move up, we put out a strategy of selling into the move above 1,000, now that 1,015 area, because we were extended and at this point, you need to be a little more flexible. because like dan said, earnings are the key moving forward, but earnings are not what led us out of this march move. it was the not hitting the great depression, no more civil unrest. but now for us to move higher, and to actually have some growth, you need to see earnings growth, and then -- >> when is that going to happen? everybody is talking about a recovery in the second half of this year, but the reality is, we're not going to get back to -- to new levels of growth, or i shouldn't say back to -- we're not going to see new levels of growth people are predicting until at least a year-out. so what is it that propels this market, scott? >> that's why you need technical analysis. because when you're not sure when earnings are going to ramp up, you need the market to tell you where it's going to go next. that's why we were watching asia. asia had an unbelievable move,

because that's where the growth is perceived to be. we're perceived a little bit more as a -- you know, as a -- just -- we would say we're more of a mature economy, and the growth is in here. >> how are you approaching the ssi or etx that tracks the china 25 index? >> we put out a note yesterday that after the 20% move in the shanghai, if you were looking to get involved overseas, here's where you start to get in. you don't buy it when it's six months higher and the headlines are going crazy. you buy it on the pull-in. so if you wanted to get involved, you bought a third yesterday with the plan to buy two more teaiers if they were traced further. that's your proper entry, not chasing it when the shanghai hit 3200 or 3300, you wanted to buy at 28 or 2900, instead of chasing the move and getting into trouble, trying to buy the excitement. >> sure. never makes sense to buy at the top. >> all right, guys, we have to leave it there. thank you so much, dan genter, scott, great to see you. thanks for coming down to the nyse. >> up next, central bankers have

no shortage of issues to address this week in jackson hole, wyoming. >> and fed chief ben bernanke is a hero to some. but he is being heavily criticized by others. so did mr. bernanke save the world? that's straight ahead in today's "call of the wild." y... ♪ what do you think? hey, why don't we use our points from chase sapphire and take a break? we can't. sure, we can. the points don't expire... ♪ there is nothing for me... ♪ there's no travel restrictions... we could leave tomorrow. we can't use them for a vacation. you can use the points for just about anything. i know... ♪ the way you look tonight ♪ chase what matters. get your new chase sapphire card at chase.com/sapphire.

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okay. welcome back, everyone. take a look here at hormel foods. guess what? people are eating more spam in these trying economic times, and hormel has the benefit, boosted by strong sales in the canned luncheon meat. right now, trading up high, up 22 cents. mandy, have you ever tried spam? is. >> i have indeed. it's surprisingly tasty, considering what's going into it. >> you have! i didn't know they had that in your neck of the woods. >> spam has definitely reached down under. of. with the office of budget and administration will announce that the federal deficit for 2009 will total $1.58 trillion. it's actually about $262 billion lower than its may forecast. this is all, of course, as policy makers from around the world are gathering in jackson hole, wyoming to discuss how to prevent last year's global financial crisis from happening again. in our "call of the wild" again

today, we ask did the feds save the world from economic ruin. let's bring in former president of the dallas fed and also dean baker. gentlemen, thank you. bob, let me start with you. what kind of scores would you give big ben? >> at least a 9. 9 1/2, maybe. >> that's a pretty big score. of why? >> well, he got started a month late on the crisis, but since then, he has done just about everything right. and more importantly, he didn't have a rule book to follow. he didn't have a recipe. of he had to create a lot of these programs on the fly. >> but hang on -- >> very innovative in doing it. >> he was a student of the depression. how could he not have foreseen what was going to happen? >> well, i'm not sure -- >> he did, in a way, right? he kind of did at some point, bob? i mean, putting all of these programs into place. of if you think back to those

crazy days when all hell was breaking lose, when lehman brothers went under and you say you know, we would be here where we are right now, where we're debating growth in the second half of the year, bob, that's a pretty big turn-around? >> yep. what his knowledge of the depression did for him, i think, is give him an understanding that you had to go in hard and soon, and not be timid, and spin fast and create money, and avoid the deflation. >> dean? >> and he did all those things. >> dean, what is your take on this? >> yeah, i have to say, i'm a bit more critical here, because basically, i would say, you know, here you have a person who was a member of the governors, went over the head of the council of economic advisors and then came back as fed chair in january of '06. there was -- other than allen greenspan, there is probably no one more responsible for this crash than ben bernanke. it was incredibly reckless policies, ignored an $800

trillion housing bubble. you could say we could have done worse in terms of how we dealt with the downturn, but this wasn't a hurricane that came out of the sky. this was a result of unbelievable economic mismanagement by the fed that bernanke should have very large responsibility for. >> dean, bob was just saying he was a month late to the party in terms of the really -- being proactive. what is your sense? how late was he? could this all have been prevented through better fed policy? >> absolutely. i mean -- >> by bernanke or greenspan? >> we're talking about the bubble -- well, he was a member of the governors. he should have been jumping up and down, yelling and screaming at the top of his lungs, because frankly, there was absolutely nothing more important that he could have been doing in '02, '203, '04, '0 5 and '06 than warning about the housing bubble, because there was inevitable it would burst and end very badly. >> jump in. >> this was not just a matter of a housing double that burst. of this was primarily caused by

subprime loans, and their being securitized and sold all over the world. that's something somewhat separate from the bubble itself. and that was sort of between the cracks. that was not something that anybody was fully aware of. >> bob, how confident are you that bernanke and coal are going to get a 9 out of ten in the exit strategy, because obviously this is just as an important process of fixing the global financial crisis, as, you know -- as obviously all of the earlier bailouts and financial -- financial, you know, fixing that he had to do. of i mean, we're obviously going to go through a system where we've got to bring rates back to a normal level. how confident are you that he will be able to orchestrate that correctly? >> he may not get a nine, but i think he'll get a high score. the fed balance sheet has already changed a good bit, and it's a very fluid thing. he understands what needs to be done. and i have all of the faith in the world that he will be able to pull it off. >> dean?

>> yeah, dean, who would you put in that slot? >> well, you know, unfortunately, most of the people who were obvious candidates probably would have made the same errors. one person i would like to see is sheila bair. we need someone who actually can stand up to the banks, and it's not just the conduct getting us into this mess, but i think he handled himself very poorly in trying to deal with it. >> >> you don't think he stood up to the banks? >> no, i don't think he stood up to the banks. i don't know why -- >> would you let more go under? >> seeing america outright -- he should have let them go under and goldman sachs, even though it's a bank holding company, continues to act as though it's an investment bank. basically, at the government's guarantee. i mean, this is a joke. these people are getting rich on our tax dollars. >> okay. we have to leave it there. on a programming note, tonight at 8:00 p.m. eastern, we will have a special from jackson hole, the fed crisis and recovery. now, you do not want to miss it.

>> definitely not. "power lunch" coming up. bill, what have you got? >> following on your discussion, trish, we spend time over the next couple hours pondering the question that a lot of people are wondering. should ben bernanke be reappointed as the chairman of the federal reserve? e-mail us your thoughts? pow berer lunch cnbc.com. >> eddy lamp period of time, we talk to experts about that, and social media coming under attack right now. technology way ahead of the rest of us now when it comes to twitter and facebook and all of the video technology that's out there right now. and some companies and sports leagues are starting fight back. we'll talk about that when we see you at the top of the hour on "power lunch." >> certainly ahead of me. that's for sure. i'm still technologically back in the dark ages. looking forward to it, bill. up next, matt nesto on stocks to watch. >> hi, mandy. just when you thought it was safe to go back in the water,

earnings season behind us, no, some of the biggest are movers are earnings-related, pro and con and you heard about eddy lampert what he's going to do with sears. i'll take a look at that, as well as key research calls, and then a little quirk in the biggest of the big cap names. some of the wildly held stocks, who is working and who is not. of all coming your way, right after a quick break. .

well, let's check out jetblue and see what it's doing right now, up 2.4%, the discount

airliner which began offering unlimited travel for a month or $599 last weekended the promotion early due to its overwhelming popularity. the stock is currently trading at $5.19. >> a lot for 599. time for our call to action, the stocks you need to be watching for the rest of the trading day. and none other than mr. nesto, cnbc's matt nesto is here with a look. >> yeah, trish, appreciate it. of obviously, the big call of the day is the google call from goldman. it's interesting. i'll bring you this, but three others so we have a total of four sectors represented here, not all upgrades. >> google on the conviction buy list. they think et cetera en route to 56 bucks a share within -- 560 bucks a share. and friedman billings and ramsey, they think this stock has another 30% up side in it. it's had a pretty good run, up about 4% on the upgrade today. and that's industry number two, of course, in the financials.

if you take a look at health care today, there is really not a lot of demand in this bull market we're seeing again today for some of the health care names. as extrazenca being downgraded from hold to buy at citigroup, off 1% today. and then in industrials, both bucyrus and joy global being downgraded from hold to buy. those stocks are down. joy global down particularly, 3% on the particular downgrade. if we want to segue into earnings, they said earnings season seems over, but it's not. of course, the big earnings disaster is the sears revenue miss. also, disturbing -- well, the lack of their inventory drawdown, inventory levels still north of $9 billion. and this from a company that does $10 billion in revenue in a quarter, so they haven't come down as much as analysts would like and you want to see the lean inventory level. that stock off 12%. also seeing weakness -- ten retailers have reported earnings today, and the weak ones are

sears, limited, pet smart, game stop and children's place. dick's sporting good, on the other hand, very strong today. the stock is up 10%. they beat and guided both the third quarter and the full year look to be less worse than expected. for example, they say their full year comparable sales will be down 4 to 5%, they were looking for them to be down 6 to 9%. so that's a pretty good improvement in terms of just how less worse maybe things are going to be getting. and then lastly, we have got some more retailers reporting after the close on this retail thursday. gap, and foot locker, all out. so that's what we're tracking today. just mentioned big caps a, quick nugget. only five of the biggest twenty five stocks are trading lower today. so definitely an appetite for big stocks. walmart, intel, pfizer and heat packed, just to name a few. >> thanks so much. more on the asian market bounceback and how you can profit from it. p we'll be right back. of their dreams. the car

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it is time for "the last call." we have the close of the europe unanimous markets, 55100 in the

uk, and the same for france and also germany. let's take a look at the picture in asia, as well. certainly a big pop from the shanghai composite index, rumbling coming out of the government there that maybe, just maybe, they might stand ready to support the market if there are further folds the nikkei also higher. mass enough up day, massive down day to the tune of 4% or more goes to show how volatile liquidity in this market is. and hard to see a trend in the u.s. in terms of our investors as to whether we should be following it, don't you think? >> yes, because the philly fed had something to do with today's small rally, as well. but, again, china being a big thing for some folks. unfortunately, we're out of time. that has to do it for us today. thanks for watching, everyone, i'm trish regan. >> and i'm mandy drury. thanks for joining us. this is cnbc.com news now.

the fda says the benefits of merck's cervical cancer vaccine gardisli to continue to outweigh risks. jd powers will cross the unit mark for august. that would be a 2% rise from a year ago, and first increase since june of 2007. freddie mac says the fixed rate mortgage fell to 5.21% this week, down from 5.29% last week. that's cnbc.com news now. i'm courtney reagan. this is the time of year when i really am jealous of steve liesman when he goes out to jackson hole. absolutely one of the most beautiful spots on earth. and we'll be hearing from steve shortly. welcome to "power lunch," i'm bill griffith. stocks have edged a bit higher on the back of some mixed economic data, which we will tell you about. s&p 500 is back above 1000 at this hour. the financials once again among

the best performers. of. >> i'm sue herrer. eddy lampert's investment in the retail giant not what he hoped for. >> and i'm michelle cabrusso-cabre cabrusso-cabrera. the most powerful college football conference cracking down on fans who post their own game video on websites. is this the first shot in a war on social media? >> i'm steve liesman. live at the kansas city fed conference in jackson hole, where central bankers from around the world are gathered here to visit the ghosts of monetary decisions past, present and future. what's worked, what hasn't worked. we've talked to some of the players, and we'll give you some of the trail talk coming up. >> i'm jim goldman, live in the silicon valley bureau. google has been on a steady climb, and despite losty levels, the internet store is at it today. the firm saying google has finally come up with a way to enjoy some returns on its $1.6 bin