the important thing here we're not high from the market highs as you heard from maria, that number, 1012 was the august 13th closing high for the s&p 500. we're just five points shy of that. we've essentially regained all of monday's losses, believe it or not, despite what happened on monday the major indices are now in positive territory after being up three straight days. 3-1 advancing to declining stocks. we were up 2-1 earlier, but we had a modest rally late in the day. volume still on the light side here. what moved on the day? we had a slow move on the up side in some sectors that were not very obvious earlier on. for example, some of the industrials like united technologies, you see that move up. a number of the injurdustrials that move. cisco and some of the tech stocks also helped the major indices. i'm talking about the s&p 500 and of course the nasdaq. that stock also moving up a little after 1:00 eastern time. how about some of the real estate investment trusts, some of the financials, and some of the ones that were related to more cyclical names? did very well throughout the day. we had a great day. most of them up 4%, 5%, 6%.

this one of the big office real estate investment trusts. but the real strength was in the financials. and certain what we call outlying financials. aig we talked about all day. bottom line is very simple here. there's only 134 million shares outstanding of aig after that 20 for 1 reverse stock split. how many trade today? over 130 million. the entire float of the company traded in a single day. when you have that happen it's very difficult to maintain short positions and that's what's going on. this may be a second short squeeze here. quick look at citigroup. those who think technicals are nonsense, citigroup hit 4.26, its 200-day moving average a little after 10:00. and you see that blip up in the minute that happened it went up. there are people who are trading technicals in narkt. hasn't been there in over a year. fannie mae if & other what we call financial outliers, look at that, that's not a typo, up 20%.

freddie mac also. you get these momentum guys, the day traders, see the stocks moving in, moving up, they'll pile into it. it's not a fundamental play. it's just a momentum play. >> but it certainly worked for them today, that's for sure. bob pisani. let's take a look at some of the other business headlines we're following tonight. the conference board's index of leading economic indicators up .6% last month. that was slightly lower than expectations but it was still the fourth straight monthly increase. partly due to higher stock prices and better sentiment. the philadelphia federal reserve survey meanwhile showing manufacturing activity in the mid-atlantic region unexpectedly turned positive this month with a reading of 4.2. now, any reading above zero indicates that manufacturing is expanding in the region. the labor department reports initial jobless claims were up by 15,000 last week to a seasonally adjusted 576,000. the number of americans continuing to collect unemployment benefits inched up by 2,000 to 6.24 million. and the mortgage bankers association reporting that the number of u.s. homeowners either delinquent on their mortgage

payment or in some stage of foreclosure was up to a record 13.1% in the second quarter. certainly not the kind of record you want to see. we now have mary thompson with some breaking news. let me get right to headquarters with that story. ma mary? >> that's right, maria. this is on the gap, the company coming in with earnings a penny ahead of expectations at 33 cents a share. you might recall that about two weeks ago the gap reported, or said ha it would earn somewhere between 30 and 32 cents a share. beating on the bottom line at 32 cents a share. revenue at 3.3 and a quarter billion dollars. some other highlights. the company's second quarter same-store sales were down by 8% but that's better than the 10% decline we saw in last year's second quarter and its online sales actually increased in the second quarter by 17%. breaking down the company's different units on a same-store sales basis and keep in mind these are sales that have been open for more than a year. gap north america was down 10% compared to a 6% decline in last year's second quarter.

banana republic continuing to show some weakness, off 15% there compared to a 6% decline. old navy is where the improvement was. sales declined by 4%, but this is far better than the 16% decline seen in last year's second quarter and international showed a decline of 5% compared to the decline of 6% in the prior quarter. also one note of improvement, the company's gross margins improved by 150 basis points, or 1.5% in what the company called a difficult operating environment. no guidance given in the press release that was issued. the company will be holding a conference call at 5:00 eastern today. maria, back to you. >> all right, mary, thanks very much. really a nice indicator of where the retail area is right now and certainly consumer spending and sentiment. by the way, we are going to be talking with the chairman of the gap tomorrow. he'll be my guest here on "closing bell." join us for that special interview as we get more on the quarter as well as what he's seeing in this environment. meanwhile joining me now to break down all the market action and how to invest in this

environment, doug sandler, bob allard. good to have you on the program, gentlemen, and welcome. >> thank you. >> thank you. >> doug, let me kick this off with you. a market up 50% from the lows, even more than that. do you see value in that market? >> yes, you certainly see values here. i think you to discount the lows of 666 on the market. that was an outlier just like we discounted the nasdaq high of 5,000. drawing any comparison to that point i think is a wasted effort. i think the market's up from probably about the s&p 800, that's kind of where it was before it dropped off a cliff. but largely i think days like today, weeks like this week are a testament that there's a lot of people waiting on the sidelines with a lot of doubt and every pullback is short and shallow, which tends to be a sign that the market's going to churn higher. how much higher i don't know. but it's certainly not expensive at current levels. >> certainly if you have a lot of buying power. here you have a day on monday that everyone's worried all of a sudden once again about china.

sell-off around the world. but here we are back again to bull market territory. >> it certainly does. on monday it looked like we'd have a couple days sell-off. we had a small sell-off on friday. monday looked pretty scary. the futures were down about 175 points as early as 5:00 in the morning. but what was interesting about monday to me was it didn't get any worse than where it was at 5:00 in the morning four hours before the market opened. the market dropped no more. it held that level. and so then when we come back tuesday it's all over and we have a good tuesday, wednesday, thursday and really this appetite for risk that we're seeing, that everyone's talking is there a appetite for risk coming back in the market, i think you have to look at what is the alternative? and real estate is still a little slow. it's not competing with stocks. >> how about corporate bonds? commodities. >> not at all. because corporate bonds really

key off of the treasury and you have the ten-year treasury at still less than 3 1/2%. so there's not much competition for the stock market right now. hence it's had a 50% recovery. >> let's talk about how to invest, then, in this environment. you both feel there is still great value here and things are not overdone even though we have seen this market rally pretty substantially since the low. how do i want to invest, then, in this environment, doug? give me some names or sectors you that feel are ripe for even better performance going forward. >> yeah, i think the litmus test is companies with growth that have been able to grow the last couple quarters. if you can grow in those quarters, you can grow anywhere. and i think what you'll find is most of those companies trade for a very little premium over the s&p. so what i want to do as an investor is be willing to plug my nose a little bit, pay up for a stock, but i think that premium's going to grow significantly higher. that includes tech. it includes software. big names like apple or, you know, software companies like

oracle and microsoft. it includes areas like health care. i think pound for pound health care's the best space out there and it's been beaten down because the health care initiatives on the table, i think a lot of those you'll see more compromised and in the end that's probably a good thing for health care stocks and medical device companies we like across the board. beck and dickinson an example. if you can find growth for a reasonable price or even a slight premium, those are going to be the kind of names that get you over the finish line for 2009. >> all right. we'll leave it there. gentlemen, thank you. we appreciate your ideas and your insights and your time tonight. we will see you soon. meantime, let's take a look at some of the other stories we're following on the "closing bell" ticker tonight. pierce holdings reporting an adjusted second quarter loss of $20 million. there was a loss of 17 cents a share. analysts were expecting a profit of 35 cents a share. revenues down by a larger than expected 10%. company generated $10.6 billion in revenue due to lower home improvement and appliance sales. the stock down today a sharp 12% on sears holdings.

food producer heinz reporting its first quarter profit fell 7%. $213 million. that still beat wall street expectations. sales volume increases were really the story. core brands helping offset the impact of a stronger dollar. heinz up 2% today. and third quarter income also higher, 39% higher. the company made $77 million in the quarter beating wall street estimates because of improved investment income, higher operating profits in its grocery and refrigerated food units, and lower livestock feed expenses. hormel tonight up just a fraction. our next guest manages more than $5 billion for morgan stanley. he's one of my favorite analysts out there. find out how he is allocating assets right now, if you think you should be alongside him. you're going to talk with henry mcveigh coming up. upgrade of google today giving the tech sector a pretty good lift. up next we'll talk about whether technology can keep leading the market higher. is that where the momentum is and is that where it's going to

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welcome back. lots of breaking news here in just the last few minutes. the transportation secretary, ray lahood announcing cash for clunkers will end on monday. remember, this is the rebate system that was part of the stimulus package to try to get more individuals to go out and buy cars, hand in old cars that did not get great gas mileage and get cars with improved gas mileage and get a rebate to the dealer from the government, $4,500 if they could get it done. but now they're saying $1.9 billion in rebates have been done, they've gotten 457,000 dealer transactions. so they're going to end it on monday. remember, it's still a controversial program because a lot of the dealers complain that they've done a lot of deals but they haven't actually gotten approval and they're worried they're not necessarily going to get the money back from the government. next breaking, the department of justice has just announced that they are going to approve oracle acquisition of sun microsystems. remember this was announced back in april.

9.50 a share in cash. $7.4 billion takeover. but the doj approving oracle's acquisition of sun. whew. back to you. >> michelle, thanks very much for all that breaking news. and that was certainly debated by oracle's competitors. a lot of people were watching that decision by the department of justice. meanwhile, back on wall street as investors look for direction in this market, my next guest looks at the big picture. he says he's constructive on equities and sees big opportunities in emerging markets. henry mcveigh is with us. he's head of global macro and asset allocation at morgan stanley investment management. henry-g to see you, welcome back, my friend. you say constructive. what does that mean? >> i think by year end we're probably going to be at 1,100 and before the market peaks next year we'll probably be at 1200. with you one thing we've within focus on is corporate profitability. what you're seeing on the s&p and across the globe is corporate margins are troughing at 67 higher levels.

some of that's because tech and health care are a bigger part earnings mix, but also just overall the corporates weren't the ones that were the big offenders this time, it was really the consumer. so we think earnings this year will be a little better than expected, i think next year $70 is not out of reach for the s&p. the other big thing you see in profitability, we're getting rid of all the bad companies. if you take out the gms, the merrills, the aigs, you're adding about seven bucks to the s&p this year and nobody's talking about that. that's helping out book value. it helps out valuation. and our base view is that when you get into earnings season you're seeing a totally different scenario play out than what played out in the bear market. during the bear market the s&p and the markets around the world were selling off 5%, 6% during earnings season. and what you're seeing now is they're actually rallying strongly once earnings are released. that's what our view is at morgan stanley. >> what you're talking about is really a positive backdrop to

the stock market, which of course would be very good because we're actually going to see fundamentals improve and not just sort of expectations of fundamentals. but where are you on revenue growth? a lot of people say okay, sure, earn vgsz been better than expected but we haven't really seen demand. >> i got it. but go back and look at the '03 recovery. there was no he revenue growth in the beginning. ultimately you get operating leverage, a little revenue growth, that's the next cattis that drives us up. also, remember the s&p gets about 30%, 35% of its earnings from outside the u.s. right now and we're fairly constructive on global growth. i wouldn't expect to see revenue growth until fourth quarter of this year, early next year. that's not where i'm focused. i will tell you that there are a couple things to keep our eye on, which is the consensus for next year has about 50% of the incremental revenue -- earnings growth, excuse me, coming from two sectors -- financials and energies. if you're going to spend your time, those are the two areas you have to focus. financial earnings look a little

high to us but not crazy. energy earnings i think are going to actually beat. the other thing just for global investors, particularly because we do top down-f you look at the consensus gdp forecast, about 70% of growth is supposed to come from four countries. those are the bric countries. so if you ask me where i'm spending my time, spending a time getting a read on financials, getting a read on commodities and trying to figure out what's happening in the emerging markets and is that gdp growth doable and if it is doable any up side we get, if japan's not a disaster, the u.s. is not a disaster, europe's not a disaster, actually have a fairly constructive backdrop. >> so what do i need to look at in terms of those emerging markets? put together a portfolio for me you that believe is going to be a winner when you look all around the world. you're talking about the bric countries, brazil, india, russiaa, china. russia is still one of the ones you want to be invested? i recognize as oil goes higher it's positive but russia was

sort of the outlier there for a little while. >> i'd say we're most focused, you know, at morgan stanley investment management we have an investment emerging markets portfolio manager rushi sharma. i agree with him. we very much like the india story. i'm probably a little more positive on brazil. but we want to stay in the big liquid countries. and we also have a positive bias toward some of the smaller countries where we're seeing catch-up, things like turkey. but there's a lot of interesting things going on in the u.s. versus global. take china versus the u.s. right now. china's financials are trading at almost three times book. the u.s. financials are trading at one times book. and in the near term i think the chinese banks will continue to do well, but ultimately they're going to participate price the way u.s. banks did from excessive lending along the way. there's going to be opportunity we do long, we do long short, and there will be opportunities definitely on the long side but also on the short side as we get into getting to next year as well. >> so you think china's overdone, henry? >> not quite yet, but we're going to get there.

>> okay. let me ask you about sectors because i mean, look, for a long time your specialty was financials. got to ask you about financials and what you think here. you've said you don't necessarily think this is going to be the leadership group going forward. why and what do you like and don't like there? >> well, i think financials are a lot like what happened to tech in 2003, they bounced hard right after the crash, and then they started to fall out of bed and just really did nothing. and if you look, the beta of financials right now is around 1.6. my prediction is that beta will be 1 or below by 2011. i think you've really got to focus on market share stories and companies that have kind of scale technology cost advantages and companies that are going global. so we're selective in financials. i think there are names, there are some asset managers, a couple brokers, and some of the processing banks, but in general credit's going to lag. once we get through this kind of -- this bounce and euphoria that the world didn't end you're really going to have to be much more selective on financials,

but there is a little more to run, but we're probably in the seventh, eighth inning in the financial rally. >> so you want to look at the asset managers, then? >> specifically i'd look for big companies that can take market share, and i think their names whether it's in the brokerage land something like a goldman sachs or in the processing something like a bank of new york, in the asset management asset accumulation something like charles schwab, those are all interesting names domestically. >> henry, always very nice to have you on the program. we so appreciate your time tonight. we'll see you soon. henry mchave a, morgan stanley investment management. treasury secretary tim geithner upgad grading the size of the federal budget deficit. details on that. details on that. 3w4r i always have my eye out for a stock on the move.tdd0 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, tdd#: 1-800-345-2550 you know, see what other traders are up to. tdd#: 1-800-345-2550 when everything feels right though,

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welcome back. the current fiscal year federal budget deficit is expected to break all previous records. but the white house says the budget picture is actually looking somewhat better than expected. cnbc's hampton pearson in d.c. with the details. hampton? >> hi, maria. it looks like this. the forecast for federal red ink will be revised downward by about $260 billion when the obama administration released its mid-year budget review next week. the new omn estimate expected to be $1.58 trillion. treasury secretary tim geithner saying the biggest reason for

that change, basically the financial system is recovering much faster than had been expected so, there's less money needed to be set aside to aid troubled banks. >> the estimates of the deficit, near-term deficit are going to be somewhat lower than we expected, somewhat lower than we feared, in part because we've seen more stability sooner in the financial system and therefore we think the expected cost of fixing this financial mess is going to be lower than we originally anticipated. >> geithner was on the road today touting the benefits of the recovery act in ohio. a state hit hard by the recession. losing 100,000 jobs per month at its height. now down to job losses of around 30,000. 6 billion in economic stimulus money has gone to the buckeye state, including more than 224 million in interest-free construction bonds to help build new schools. geithner, however, was asked several times when will the recession end and a real recovery be under way?

>> critical priority and the basic responsibility we have is to do what is necessary to get this economy back to where it is growing again, led by private investment. not public investment but led by private investment. that is a very challenging task given the crisis we inherited. but again, our responsibility is to make sure we are doing what is necessary over as long as it takes to make sure we bring that about. >> in that vein the treasury secretary saying there's a long road ahead to sustain the economic growth but we have taken those first few steps toward recovery. maria? >> all right, hampton, thanks very much. hampton pearson in washington. investors still uncertain about the shape of the economic recovery. up next we're talking about whether there will be a subdued return to growth or if a strong recovery could be on the horizon in 2010. stay with us. >> announcer: here's a look at some of today's winners and losers. welcome to the now network. population: 49 million.

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welcome back. there are hints. hints of optimism on the economy in a new reuters poll the majority of economists say that the recovery is stronger than expected. but 're cautioning that the situation is still fragile. economists also predicted 25% chance of a double dip recession. but is that view overly cautious? we debate the topic right now with john herrmann, president of herrmann forecasting. sal guateri, senior economist at bml capital markets. and cnbc senior economics reporter steve liesman at jackson hole. gorgeous shot behind you. tell me what you're hearing there with all those economists. >> maria, the basic story here is people see stability in the financial system, certainly compared with last year. people are not arriving here with a sense of panic that prevailed at the jackson hole conference last year. there's a sense the next couple quarters could be positive but what happens next, the big concern we keep hearing is the

growing deficit, how the fed is supposed to operate and how it conducts monetary policy when the treasury and fiscal authority is going to be issuing trillions of dollars of debt. >> sal, how worried are you about that deficit? >> it's certainly a concern, and it's unlikely the government will act concertedly to reduce the deficit while the economy is trying to dig its way out of the recession and until the recovery is much more durable. so yes, it is a concern. right now investors, though, seem quite willing to finance the government deficit. interest rates are still low. u.s. dollar relatively steady. it's weakened a little bit. it certainly hasn't crashed. it's a minor concern at the moment. it would become a bigger concern if the government doesn't act more concertedly to reduce it once we're out of the economic recession. >> having said that, sal, you're expecting a subdued economic recovery? >> yeah, fairly subdued. we're coming off the worst economic crisis now in seven decades. and normally, after a downturn

driven by a financial crisis, a credit crisis, the recovery isn't that strong. and on top of that consumers won't be in great shape for the next year or spend to any large degree.% rebuilding their savings, paying down the debt that's been built up in the last decade or so. so i don't think there's much push on that side. on the business side they have to contend with plenty of slack, which will likely keep business investment quite weak for some time. the housing market, yes, it's stabilizing, but i doubt it will recover very strongly given we still have a record high foreclosure rate, it's dumping a lot of homes on the market. i don't think home builders will be in the mood to crank up production anytime soon. >> john, where are you on that? give us your expectation, john-n terms of what the recovery looks like. >> you want to hear some subdued numbers? how about new orders ism in ten days at 59, early october ism new orders at 63, and ism new

orders by early november at 70. so oh, yeah, that sounds unbelievably subdued to me. >> are you being sarcastic? >> i'm being highly sarcastic. these numbers are screaming. these numbers are very decent, very solid. we are in the early stages of a v-shaped turnaround. and i can understand a little bit of caution, saying gee, how much gas is in the gas tank of the consumer and that kind of thing. but we all look at the risks. we look at the leverage ratios. we know they're still high. we know they're working it off. consumers have basically repaired their savings rates. they've taken a 25-year down draft in the savings rate, and they've repaired half of it in less than two years. that's just remarkable. it's part panic, but that is unbelievably remarkable. so going forward, we think consumer actually is going to get a lift from some of the signs that we've been seeing this summer. we look for energy. we look for electricity and heating costs this winter to plunge. so consumers are going to get a little lift there. food prices still stay low. so month on month, we think the

consumer just gradually gets the message and says look, get back in the game, start spending, start carrying your own weight, the world is not ending, you still have your job, the unemployment rate is leveled out now for four months. so i think we're good to go. and again, on the -- >> 10% of the country unemployed, right? >> you have to start from somewhere. and this is where we're starting from. >> steve liesman, what's the word there in terms of the most important issues to look at with regard to that recovery? >> there is two pieces of this. one is the idea that the fed really can't stop until the unemployment rate is decidedly turning. i think john makes a good point, about four months are relatively level but high unemployment, and it needs to start coming down and it's going to be a while. let me stress along the lines of what sal said the concerns over the inflation with the need to have an exit strategy is not an immediate concern.

the idea here is the fed here at the jackson hole meeting needs to start preparing for the peace, a time when the economy does turn around. there's a lot of debate over that. there's talk about maybe the fed turning around next spring. the market's probably ahead on that, that it's probably well into 2010 before there's a major course reversal by the federal reserve. >> sal, real quick, are you going to take all this sitting down or what? everybody's putting your numbers up for debate. >> well, we're kind of in the middle. >> we're looking for a recovery. there's no doubt about that. we think it began in the current quarter. but it's going to be more hockey stick shaped or long u shaped. not v-shaped. just too many head winds facing particularly the u.s. consumer, which represents two thirds of the u.s. economy. and i don't think banks as well will be in much frame of mind to open the credit spigots anytime soon. they have long memories. they have to deleverage as well.

so i just don't see the credit growth and the spending that would fuel a very strong recovery outside of one or two quarters. but over the next year i think it will be a fairly long slog. >> all right. well, obviously, we are watching it, and we will have you back to talk about it. gentlemen, thank you. great conversation. we appreciate it. and tonight don't miss steve's live one-hour special from jackson hole. "the fed crisis and recovery." it all starts at 8:00 p.m. eastern right here on cnbc. the first phase of credit card reform goes into effect today. but will the new rules help or hurt consumers? what will be the impact on the financial sector? we've got some answers next.

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others by the car of their dreams. during the lexus golden opportunity sales event, you can do both. special lease offers now available on the 2009 es 350. all right. kicking off today two pieces of the newly passed credit card act of 2009 are in effect. banks must give at least 45 days' notice before making a big interest rate change. and bills must be mailed at least 21 days before they're due. no longer 14 days. bigger choiz are coming down the pike in 2010. we look at how consumers in the banking industry will be impacted with jacqueline reeves, managing director of bell rock capital, and tim spees, partner

in charge of the personal wealth advisers group at eisner llp. good to have you both on the program. thank you. >> thank you. >> it sounds like these are big deals. certainly no more fine print, that you don't know when the interest rate will skyrocket and you have more time to pay the bill. what do you think? how would you characterize these changes, tim? >> they're definitely pro consumer. and we've only seen the beginning. today as you point out, maria, it's the 21-day rule on the billings and then 45 days for terms and other conditions. but the rest of the changes will be happening in february of '10 include additional disclosure around the internet as far as rates in terms and conditions. also due diligence being done on card applicants, making sure they have the financial wherewithal with respect to the application and the card itself. additionally, those persons under age 21, they're going to need a financial guardian and/or a parent to actually sign with them. and those are some of the highlights of the changes. but i would definitely say that for consumers they still think

it would be prudent with respect to how to use credit. credit right now in terms of credit cards is 917 with a close to 7% default rate. you certainly see a mismatch between those who have access to credit and the credit card companies that have given that access. >> jackie, would you agree with that? tell me how you see these changes impacting consumers as well as the industry, actually. >> sure. sure. i do agree with a lot of that. there is required additional disclosure, and like you mentioned, maria, clearly there is going to be more verbiage that is clear to the consumer with respect to exactly what they will be paying and also the duration, should they choose to take the minimum payment come in the beginning of 2010. how long that will actually take to pay back that line of credit. and then on the bank side the impact for them clearly is the more disclosure and also more regulatory oversight to make sure that those rules and regulations are being followed. and further, i think i would

articulate that, you know, in the grand scheme of the industry and of the credit card model that these banks have been increasing their rates and increasing also the fees on the credit card -- for the credit card consumer, primarily because of the environment that we're in. so i think that's also important to note in the grand context of this. >> so do you think this is going to impact margins, this is going to impact the industry at all? if they just raised fees and raised rates just a little while ago, sort of anticipating, this maybe it actually doesn't have much of an impact. >> i do think it's going to impact the overall business model because the reason that they're actually increasing those rates and increasing the fees of the primary driver behind that has been the economic environment, which obviously is not terrific, and the increase in delinquencies, the increase in net chargeoffs. so the overall cost of capital behind this business is rising.

so therefore, they need to go out and charge more, raise the rates. in general. i mean, clearly there have been abused, which is the reason behind this act coming fathorth begin with. >> go ahead, tim. >> i would like to add, the historic rate of defaults on credit cards since 1987 in this country has been 4%. and now it's closer to 7%. and in my view what's occurred is the credit card companies, they had been aggressive with respect to providing credit. and again, the numbers that we saw earlier. also, the number of u.s. households now that have cards, it's nearly 78% of total u.s. households. nearly 91 million households using credit cards with an average balance of $11,000. there needs to be a retrenchment. the financial institutions will see also a profit adjustment. whether they put up additional reserves which will hit their eps on earnings or whether they take actual reductions in top line revenue on fees is going to come back to the same place. i think you're going to see smaller volumes of credit

outstanding for some of the reasons. >> you think this is a positive? here's a time the government and the banks are actually trying to loosen the credit markets. does this legislation and the timing of it have the potential to get in the way of that in any way? >> i believe that, yes. i think unfortunately there will be unintended consequences. again, average credit card balance in households is close to $11,000. if we assume median income average of 35 or 40, that's nearly one third of the househo household's income on a credit card. there needs to be a retrenchment. and it is going to have unintended consequences because some persons unfortunately have become too reliant upon credit cards for liquidity and purchases. >> all right. we will leave it there. >> i -- >> go ahead, jackie, make the last point. >> sure. i agree. we're seeing this across all the lines on the consumer side, maria. we saw it in the housing, the retrenchment there, the additional disclosure required on the mortgage side. we're seeing on the credit side. and we're going to continue to see it.

and that is still a further retrenchment of the consumer balance sheet until we can right size their balance sheet as well. >> we'll leave it there. great conversation. we appreciate your insights. we'll talk with you soon. thank you. technology stocks, meanwhile, on quite a roll this year, but can tech keep up the momentum? the big m-o. we'll talk about that. every head. every bite. every gallon. every shoe. every book. every cereal. well, maybe not every cereal. but every stem. every stitch. every tune. every toy. pretty much everything you buy can help your savings account grow because keep the change from bank of america rounds up every debit card purchase to the next dollar and transfers the difference from your checking to savings account. it's one of the many ways we make saving money in tough times a whole lot easier.

welcome back. the stock is up 400%. today, goldman sachs added the stock to its conviction buy list. it was public at 85. the firm also raised its six-month price target from 510 to $560 a share. is google a buy at these levels? with techs on a role this year, are more opportunities to invest ahead? joining me now, kevin landis and seth jason. nice to have you on the program, gentlemen. welcome. >> nice to be here. >> let's talk about this. is google a hidden gem? >> google is much too large to be a hidden gem. i was taking a look at the

valuation in preparation for talking to you today. i think google actually does look like a decent buy. if you believe the story that it's going to grow cash flows over the next decade or so and that it's going to maintain that leadership in search and advertising. i think it's okay. we're interested in smaller technology names. we can talk about those later. >> hold on to that thought. i want to get to the hidden gems. kevin, let's talk about google. getting an upgrade by goldman. is this a stock you like? >> in general, this. the thing to remember about this recession and what's different about this recession than the last one, technology came into this recession already lean and mean. whereas the 2001 recession, they came in overextended. what that means is that these companies are in pretty good shape to benefit from the rebound. and we know that tech tends to do pretty well coming out of a recession because companies would rather into vest in productivity than expanded their head count right away. >> so you'd want to buy it here at this level?

>> yes, i think so. >> uh-huh. do you see hidden gems within technology? i mean, here we have a market that is up sharply, obviously, from the lows and technology has been one of the leadership groups, if not the leadership group, on the way back from that march 9th low. where else are the opportunities in technology, kevin? >> well, you know, i think that if you're looking at tech, you've got to decide, do you want to go buy the blue chips, the ciscoes and the intels and perhaps the gabboogles? or do you want to buy the unloved and misunderstood or the undiscovered? there are always hidden gems in tech. there's a constant changing of the guard. there's no secret. i've been saying the next big wave in thek is alternative energy and there are alternative energy companies that are emerging and they'll be the next-generation blue chips a few years from now. >> you're also seeing a lot of vc money going into alternative energy and technology, really the underpinning of that sector.

so, seth, let's hear your hidden gems. >> well, you know, i think mr. landis made a good point. tech came out strong. and actually maybe it was that crushing unpopularity in high school i'm getting over. i'm always squeamish. i like to look in a sector that people hate for stocks and companies that i like. that said, we own in our portfolio right now a small maker of networking chips that are finding their way into an increasing number of -- of things you use every day, routers at home, small pda and phone devices. and we own that. we also like form factor, which is a company that makes test equipment for the wafer manufacturers. those folks have not been adding capacity. that business has been decimated for a few months. it was really bad a few months ago. we got in a few weeks back. now that people are more sanguine, the stock has come back, there is more opportunity there with the folks selling the picks and the shovels to the

miners. >> what about the idea the we'll have more hidden gems coming to market? how does the ipo pipeline look? will we see new ideas within technology? what are the broad marbliket themes? >> when things are popular, the ipos start coming out, and we just say -- those are the kinds of things we usual estay away from. we're looking for the companies that aren't popular or companies that have a minor popularity, but loonly if they're not currently priced into the stock. people don't launch ipos when they're unpopular. they do it when everybody is hot and bothered to get at it. so those are the stories we stay away from. we let them prove themselves first. >> real quick, kevin, what is it going to take you to get you to sell tech? this is overdone, i've got to step away, take some money off the table? >> i think when tech has a hot streak of four or five years in

a row and everyone is telling me i'm a genius again, that will be the time to sell. >> gentlemen, thank you. we appreciate your insights. melissa lee with what's ahead, top of the hour, "fast money." >> we've got an interview with the ceo of dick's sporting goods on what he sees for the u.s. consumer. and we'll talk with the top-ranked analysts on the street on the best places to invest in clean technology. and john madden will join us live to talk football as well as the latest electronic arts release. that's all at the top of the hour. >> will do. see you then, melissa. thank you. coming up, what could move the markets tomorrow. ♪ yes, you're lovely... ♪ 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.

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♪ that's where i shoulda gone! coulda got my knowledge on! ♪ ♪ vo: free credit score and report with enrollment in triple advantage. existing home sales have been in the positive for the last few months. will the trend continue? we get existing home sales tomorrow at 10:00 a.m. in wyoming, tomorrow on the opening speech by ben bernanke, it's supposed to be a retrospective on the financial crisis and we'll be looking for his opinion of what worked and what didn't for where fed policy goes next.

all right. let's show you where we begin the markets tomorrow at the opening bell. show you how things played out today. the dow finished near the highs of the day. 9,350. 1 billion shares traded here at the nyse. we had a gone on the dow due to financials as well as technology. citigroup is up 8% today. nasdaq up 20 points. that was just over 1%. 1,989 on the nasdaq. and the s&p 500 up about 11 points at 1,007. have a fantastic evening. i'll see you tomorrow on "closing bell." "fast money" is up next. thanks for being with us. the obama administration says its cash for clunkers program will wrap up monday night. transportation department analysts project there will be enough money for submissions through monday's 8:00 p.m. eastern deadline. and regulators in the u.s. clear a deal to buy sun micro. it still needs europe's approval. and net profit falls on

sales for gap, but profit margins and online sales improve. that's cnbc.com news now. "fast money" with melissa lee starts right now. stocks rising for a third day. is the bull run back on? these traders have your answers and the winning ways to play. i'm melissa lee. this is "fast money." stay tuned until later on in the show. pete najarian will talk to john madden. they'll talk football and then the video game trade. but first, let's get to the "word on the straight." not to pick on you, but i will. >> born and bred in the bay area. i grew up as a raider fan, and loved john madden back then. what people love right now is the volatility index and selling it. they're taking the preme yp down. everybody was in that big panic earlier in the week. there wasn't so much panic in the volatility index, but it does seem to get to a level

28 -- that's where people say, okay, that's enough. we start pounding that volatility and they bring it back down. it gives you an idea of the appetite. we found a range. 23 to 28. we're at 25. so the markets seem to be accepting where things are right now. if it drifts back towards 23, gives you an idea. you want to buy that premium. >> drift is the operative word in this market. when we saw the market move in the first couple of hours, after that it was -- >> drifting quietly. >> yeah. >> the volume is very light here. you're getting pretty decent data. again, the leading indicator, it's up for the fourth straight month. the jobless claims, less important, but they have moved this market. today, they're more or less in line. s&p breadth was very positive. 4 to 1, 5 to 1. this entire market was casting a light bid, despite the fact that, you know, commodities were actually off, if you look at the commodity index, and that should have taken the stocks down, but it did not. >> the volatility will come back with a