yesterday got word he reached out to hank greenberg and seems the company stock is extending its rally on that. other stocks we're watching today, precision cap parts up, 8% volume here. also, extremely high today, over 2.6 million shares above its ten-day volume of 1.3 million shares. this comes in the wake of its $850 acquisition of carlton forge works, a deal they say should expand its business, as well as add to earnings. union medics, look at that, up 58% now on the news mid stage trial suggests its antibody for? treating lupus proved effective over a placebo. second quarter profits excluding items dropping to an expected 28 cents a share. the maker of chips, hold from buy at collins stuart. kahn, the appliance retailer down just about 12% after a

second quarter profits fell a more than expected 52%. higher costs and higher customer delinquencies and chargeoffs between the 22 cent a share profit. those earnings, 11% below analysts' estimates. this company also lowered its outlook for the full year. osi systems is the stock to watch, as well, down just about 5% or so, actually 7 % now. profits for the maker of metal detection systems, falling 23%, earnings excluding items at 28 cents a share. its full-year forecast came in below estimates. larry, back to you. >> all right. mandy, i think that's it. we're out of here. >> i think that might be our call to say goodbye. that's it for "the call." >> i'm larry cuddly see you tonight for "the kudlow report." 7:00 p.m. eastern. now, "power lunch" is up next. >> and then there were two. >> i know!

vacation time! >> not for us, obviously. >> in your office -- we welcome to you to "power lunch." the bulls running out of steam so far today. better than expected news about the economy, though, on the overall economy and the jobless claims front. we'll get to that. unable to keep the summer rally going here. but aig, it's surging again. shares right now up roughly 30%. it's almost a $50 a share, a momentum play, a short squeeze? we'll talk to a trader who has an idea and the price targets. >> and i'm sue herrera, jap on heading to the polls to elect a new leader. what does that mean for the world's second biggest economy and for you as an investor. we'll show you the smart way to play japan. >> michelle is off today but we have a special guest host this our, our friend mullencamp is with us, and we'll find where he is putting money to work, and

what he thinks about the summer rally, and among other things, we'll get to. but here's what else is on the menu today. >> i'm hampton pearson in washington. the fdic says its list of problem banks hit a 15-year high in the second quarter, and fdic chair sheila bair says a banking industry balance sheet recovery will lag behind the rest of the economy. >> i'm phil lebeau in chicago. boeing hopes the third time is the charm when it comes to is heing a schedule for the 787 dreamliner. we'll tell when you its first fight is scheduled, first dlif re is scheduled and why investors love this new schedule. >> i'm jim goldman in the silicon valley bureau. apple's journey into the market may finally be coming to an end. the company preparing to unleash in china. the mark opportunities are striking. 687 million market describers. the biggest market iphone is not yet in.

that's about to change. wheat we'll get to that, but now market stocks coming off their lows. the major averages lower for the week. boeing and mcdonald's among the big dow components that are winners today. bob pisani kicks off our coverage from the new york stock exchange. hey, bob. >> a tough time moving forward, even with better economic news. toll brothers, good news, bad fwhus. their deposit activity in august is strong, but can't make any money. that's still an issue here. these stocks modestly to the down side. energy stocks have really struggled ever since oil hit $75 and fell back. oil trading right above 70, so all these stocks have had a very tough time so far this week. bill mentioned ait. here is a two-day chart, moves up toward the close yesterday, and rumors hank greenberg would be brought back in. then mr. benmow say acknowledged

he was talking to mr. greenberg. does this justify going from 44 to 38? you put that together with the fact it's a hard to borrow stock and momentum traders trading recently and the answer is that's what you get, 44 to 38 in two days. and scott still not able to get in positive territory on the nasdaq. >> no, off the lows bob, but big cap text under pressure. apple down. research in motion down more than 2%. that have anything to do with the iphone in china? perhaps. cisco is weak, google is weak, microsoft and dell. and dell out with its earnings in a closely-watched report, both on consumer spending and certainly technology spending from businesses. chip stocks a weak point. the semi conductors down, components also weak. intel a half percent, sandisk weak, as well, and tivo off 6.5%. the news as you may have heard already on cnbc, filed the patent suit against verizon over

the so-called time warping technology. they did have earnings and posted a narrower than expected loss. let's go to the nymex and matt nesto. >> thanks, scott. the big story here today is the commodities falling for the fourth day in a row. crude, the best thing you been say is it reached 70 and firmed back up, got as low as 69.83, we firmed back up to 70.62 as the last trade. natural gas, though, another inventory field of about 54 billion cubic feet in line with estimates, but traders here see nothing but down on that particular trade. 250 is some of the talk there. i'm hearing some people saying they're buying puts in the $2 range, as well. so natural gas already at a seven-year low under a lot of pressure and down under six or seven% today. after seven days of gains, the dow jones industrial taking a little breather following this more than's gdp and initial claims data.

has the market run out of steam? we'll gather our "power lunch" task force to talk about that. joining us is ron mulhencamp, and principle at yathro. ron, first of all, welcome. good top you with us. >> pleasure to be here. >> we have had a very impressive move off the lows for the dow jones industrial average, but where do you think we are overall in this cycle? more room to run, in your opinion? >> we're back to roughly fair values on a whole lot of things. we think march was created by foreselling last year, both deleveraging and redemptions of not only hedge funds but mutual funds and along with mark to market. we think there was forced selling into march. since then, we have bounced back ask everybody's big question is, what's the new normal? we all suspected it won't quite be what it was two or three years ago. so profitability is a little less than it was, maybe this is about where we deserve to be. >> peter, lately it's been tough to get this market excited about

much. the data this week has been pretty good, today another good example. jobless claims down, gdp about what had been anticipated, maybe better, and we're down 20 points. >> well, i think we're a little bit velocityized here. >> we're velocityized? >> i think people are getting a little bit overwhelmed with all of the news, and sitting back, and as sue might have mentioned, taken a little bit of a breather. stocks look really attractive if you compare them to anything else out there. you can't buy two ten-year notes, don't look that attractive, when you compare it to the deals you get on the dow jones industrial. so, you know, we really are faced here with a problem, if you're sitting on a lot of assets, which many in this country are, and you're trying to get a return on those assets, the pension funds, the retirement accounts, people's personal savings accounts. mps right. >> they're having a very, very difficult time finding yield right now. and what we're seeing is, a clear chase around the globe for safe, consistent yields.

and as the opportunities have gotten less and less, they're spilling into the equities. >> okay, so ron, we have seen a lot of people move into the financials. i mean, we have seen the move in aig, which we're going to talk about a little bit later. but we've also seen one very successful manager, mr. paulson, moving in to citi, and i think you've had a fair share of b of a. what do you make of what's going on in the big move in the financials? >> first of all, they were driven down to 9 cent levels for good reasons. we think in terms of going farther out on a limb or a natural progression. in march, the safe bet was the jpmorgan. there was no question it would survive. somewhere out on the end of the limb is citigroup. we usually play about halfway out of the limb, so we were playing a bank of america, which turned to be farther out of the limo owe. >> so john, paulson takes 2% of citi, but you think b of a is a better reward. >> well, paulson plays a little different game than we do. i believe he also owns bank of america. but at this point, where the

survival is in much less doubt, you go farther out on the limb. and every investor, ourselves included, you get to choose how far on the limb you want to go, and we think citi is farther out on the limb and we're quite comfortable with b of a. >> what about peter's point that the search for yield is on, and perhaps risk has been repriced as a result of people will to go take the bet in the financials, ron? is that a bullish sign for you, longer-term or no? >> well, we think that's true. that's an entirely different point of view than mr. paulson would have. you know, so everybody gets to take their choice in here. and we do think that there's going to be a move. we think that since september, people are saving about 5% of their income, and so -- and much of it has been placed in the local bank. >> right. >> at some point, you want to move out from that. >> peter, we have to wrap things up, but i wanted to get peter's comment. we had an analyst on this morning who is a little worried about the action in the short end of the curve, specifically the three-month, six-month and one-year. and the indication to him is credit is not flowing as freely

right now as it was a month or so ago. do you agree with that, or no? >> well, right now, we have three-month libor below 3.75. we are talking about extremely low interest rates. and what that indicates is that there is an -- people are keeping their assets safe, their banks are not willing to lend to -- if we make a joke, banks are willing to lend, just not to people. and what we're seeing is the short end of the curve is dramatically compressed. rates are the lowest i've ever seen, and people continue to put their money into that part of the curve. i think part of that is because with the fears of inflation and the fears of other supply coming, the safe money wants to be in the very, very shallowest end of the pool right now. >> all right, guys, thank you. ron, we'll be checking back. more to come from ron this hour. peter, always good to see you. thanks for joining us. when we come back, we get to the stock of the day, aig. think about this. it was around $8 last month.

today it's almost $50. so what's going on? we'll talk to a trader who has some theories on that, and a price target that ought to get your attention. >> also this hour, japan. they head to the polls to elect a new leader this weekend. we'll show you the smart way that you might want to play the world's second-biggest economy on the back of this potentially historic and market-moving event. plus, cash for clunkers got two thumbs' up, so should we expand that plan to other products? >> and the "fast money" halftime report coming up in about 30 minutes. stay tuned. you're watching power lunch on cnbc. first in business worldwide. bbbb

all right. here's a look at some of the most widely clicked stocks on cnbc.com. the financials very much in focus, citigroup, bank of america, fannie mae. some of the leaders in terms of percentage volume on the market. also on the list today, ford, at 759, and sirius xm radio. phil? >> certainly aig has to be one of the most widely clixd as well here on cnbc.com. shares surging to 30%, almost to $50 a share. mary thompson, what is fueling all of this right now? >> you know what, the firm's new ceo is making nice with one of the insurer's former ceos. robert benmoshe has reached out to hank greenberg.

shares trading yesterday, and extending today. aig declined comment but a person close to the firm says that benmoshe respects what greenberg built, and his knowledge of the firm. greenberg who was fired in 2005 remains a shareholder in the company, though he and the company see runs are in a variety of legal tussles with aig. greenberg critical of the government bailout, and the fair sale of assets that followed. benmoshe echoed those comments saying he won't sell until the time is right. he does favor a smaller aig, saying the firm greenberg built is too unwieldy. all in all, a stellar month for aig. its stock up over 80% on the news of its first quarterly profit. and rally truth comments that the problem at the firms stem from regulators, not employees. reports say also the obama administration's pay czar is set to approve benmoshe's $10.5 million compensation package.

calls from not returned. given the firm's owned by the government, itsis said it's reasonable. the company talking with the government after the package. >> the government like that the stock is going up. if it owns 80%. >> when is the last time you saw 50 bucks on aig? certainly not a year ago. >> no, that's for sure. thank you, mary, very much. our next guest has an even higher price target, though. joining us along with ron mullencamp, david vickers, and day monday, i'm reminded, you look at a year to day chart of aig, this is the second time this year that this stock has had this kind of a run. it came off the march lows, and immediately went back to $40 a share. this time an even more dramatic gain. what's going on, do you think? >> you know, i think wall street really likes robert benmoshe. here is a real salt of the earth new york financial guy. that is saying all the right things. . i mean, he is saying things like

we don't want anymore government money. he is also a guy that's taken the time to, you know, to maybe reflect and take some time to get some perspective in running the company. the momentum is very strong. you've got a bit of a good short interest in the stock, so people that are short the stock are getting out of the way. short interest is up 300% over the last three months. we are long, aig. >> and you get them started. >> yeah, i think -- i think people could really be surprised at this one, bill. >> well, how far do you think it could go? >> i think we're looking -- i think we're looking at $100, and we might even see 2 to $300 per share. >> okay. can i argue with you? >> if you feel devilish, sue. >> i do. it's based on something one of our "fast money" money traders said last week, talking about aig when it was starting to make this move in earnest. and he said basically, there are no shares out there to short. therefore, the only play in the

stock is long. and all you need is one momentum player to take some money off the table, especially after a move like this. and everybody is going to try and head to the exits. you buy that strategy or not? >> i don't buy it. we're long the stock. you know, when we shorted general motors last year, and lehman, i mean, people told me i was crazy for shorting lehman in the '70s and then it went bankrupt. i love what i'm seeing in aig. sue, this stock was trading on a split adjusted basis. and i know it's crazy, at $1400 a share. that's where it is on the charts right now. >> that's what has me worried. >> we could see a 300 print on aig, and it would still be 80% off its highs. i love it! >> if citi is far out on that limb that you were talking about before, where is aig? >> it's as far out on another limb. my difficulty is, we try to look at companies as companies, and it's very difficult for us to picture what aig as a company will be worth in a year or two

or three or four. and so we're happy to let this game be played by people who enjoy playing this game. >> how do you view the performance, though, ron? do you view it as a technical -- as a result of technical considerations for the stock as in there are no shares available for shorting, et cetera, or do you view it as, you know, as a lot of people do that it has turned a corner, on the road to recovery, the new ceo, that the fundamentals are in place? >> well, but you haven't given me any fundamentals that i can put numbers on. >> give us some fundamentals, daman. give ron some fundamentals. go ahead, daman. >> i would like to put this out there. we know that aig's biggest exposure, and we shorted aig last year, its biggest exposure is to the swap market. we know in the recent housing reports that the numbers are starting turn up. robert shiller said the other day he thinks real estate is actually rising. that plays to aig's favor. >> okay, ron? >> and how much of these swaps have worked their way off the

books? >> that's a brilliant question, ron. and i don't know. but it seems that the pain has abated, and it's reflecting itself in the shares, not only citi, but aig, and we're long both today. and we're quite happy with the results. >> isn't your point, though, daman, if we were going to see it crateterring in the swaps market, it would have happened already? >> i haven't made that point, but i think you make a good point by saying that. you're right. i think there's a good chance the worst may be behind us. we didn't implode. we didn't. >> all right. daman good to see you. good luck. >> you too. >> see you later. ron, we'll be checking back with you in a moment here. >> we've got to follow this one. a great page-turner, isn't if? >> great story. >> coming up, high stakes investors when the japanese heads to the polls. the world's second biggest economy has been stagnant for 20 years. is it ready to rebound? and if so, how do you play it? >> and top of the hour, speaking of page-turners, $2 billion in seven year notes up for the treasury auction today.

results at the top of the hour with rick san selly. >> the trend tracker data board is brought to you by super trend oil fund. >> oil stocks down, but natural got stocks up almost 50%. >> have you thought about managed futures yet?

okay. more of the widely picked stocks we'll get to in a moment. we are coming off the lows of the day, again if you're joining us, jobless claims down 10,000, the gdp for the first reinvestigation, 1% contraction. a little better than expected. so we're not getting much of a response there. vonnage, apple, human genome, las vegas sands and jpmorgan chase among the most clicked stocks that you're most interested today on cnbc.com, and all trading lower. >> japan bracing for an election this weekend that is poised to unseat the liberal democratic party which has ruled that country almost continuously since 1955. but will political chains jumpstart a stagnant economy and bring new opportunities for investors? joining us the portfolio manager of matthews fund, and roth stock, the director at the

you're asia group. nice to have you here. most people expecting a change, dramatic in terms of the change of government, but will it make a dramatic difference in the investment opportunities in japan, in your book? >> right, you know, i guess has been so bad in japan for a long, long time, and japanese investors are really skeptical about what's coming to the next government. and that's why when you look at the stock market today, no expectations are built in. as a matter of fact, i think japan is completely north. so i will say that -- nothing what they were expecting for this election. >> you know, ross, though, the economy there has been recovering any way. so is the stock market. good time for the democrats to be coming into party -- into power at this point. but will they matter, do you think? >> they will indeed matter significantly. this actually represents a very

significant break after 50-plus years of almost uninterrupteded ldp rules. >> what will they do different? they're less market-oriented, more than the traditional vein of the democrats in this country where they try and provide safety nets, especially what rural voters are looking for in japan right now, right? >> that's what rural voters are looking for, but they're really targeting not just rural voters, but parents with kids and a variety of other types of groups within society. and so i wouldn't really characterize them as less market-oriented than the ldp. ed indeed, what we could see is a party -- what we're going to see, actually is a party that is much more focused on protecting individuals as opposed to protecting jobs, as the ldt was focused. and so to that extent, we're going to see party and power that's going to be less focused on directly intervening in markets. and more focused just on protecting individuals. >> if that is the case then, how

would you play it? what are your best plays in japan right now? >> right. so, you know, the way i look at it is, there is no expectations, so there should be more positives on the markets. as a matter of fact, i think if you're global, you know, fund manager, in way of japan -- should be ending the dilemma of my god, i think something is going to happen. because this is a big event anyway. it's not investors, there are borders in japan -- likelihood is doesn't win. >> so you favor new technology, environmental technology. >> right. >> and exposure to china. >> right. so, you know, my point is, yes, this is a big but -- if you play japan, i think japan is one big cyclical stock, if you like. so if you look at global recovery, the japan should be the place to be. and japan has lacked such a long time. >> how would you play it, ron?

>> i largely agree, although i think that given the dtj coming to power would likely mean a party that's much more focused on promoting domestic demand and promoting sort of raising the -- what's in the pocket books of the typical japanese person, and we should be looking for domestic opportunities for consumption. >> ron mullencamp, is this an emerging economy, if you will, that you want to invest in? >> we have a different take on japan, they seem to be trying to do this through government spending, as opposed to giving the incentives to individuals to produce more and spend more on their own. >> so would a new party and party in power change that strategy? >> exactly. that's my question. >> so you want to know that question. ross, is that what's going to happen? >> a new party in power is actually going to significantly change how japan is ruled. this has been a slow change since really electoral reform took place in japan in the mid

'90s, but we should actually see a significant acceleration in how the japanese government really rules japan coming out of this election. it's going to take a few years, and i think that long-term, though, this bodes well for japan, andality nation in it political power bodes well for japan. >> if that happens, ron, are you ready to step up? >> well, for instance, if i saw them make it much easier for the average japanese familiar low to own their own home, which i was told by delegates from japan a decade ago was basically a three-generation project. so, yes, i want to see evidence that they're encouraging individuals to produce more and to consume more. and if i see that, then japan could be great things from here. >> okay. we'll see what happens after the election. thank you both for joining us today. appreciate it very much. >> thanks. >> well, you know, the cash for clunkers program got rave reviews, even though eight of the top tensiling cars as part of the program were selling brands. so should we expand this kind of a program? how about cash for appliances,

for example, which is under way? that's our "power grid" debate in a moment. >> and then 12:45 eastern time, the "fast money" halftime report with rick santelli. what have you got, rick? >> it's a big day, the market stalling out. having sellouts a little earlier now, but the data was pretty good. are there going to be trading opportunities? you'll find out from us, of course. citigroup trading higher. john paul son, should you follow suit? that's the key question. the "fast money" halftime report starts in 900 seconds. 15 minutes. i gotta ask, what's in it for me? i'm not looking for a bailout, 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, who commutes, no more gettin' jerked around on gas prices... and for me, well, it wouldn't be so bad if this breadwinner brought home a little more bread. repower america.

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welcome back, here are heads lines this hour. a couple seconds ago, the dow tushed positive. aig and technology leads the nasdaq 100. profit at american eagle outfitters plunging more than 50%, but the clothing retail certify hopeful about back to school business and the upcoming holiday season. harley-davidson looking to rev up sales outside the united states. the company is rolling out it's high-end bikes in india next year. india is the big second biggest

motorcycle market. so the cash for clunkers program, the tally is in, almost 700,000 vehicles sold in the roughly two-and-a-half months this program was under way. yes, eight out of ten of the top ten vehicles sold were foreign-made. foreign brands. many of them built in the united states, though. but the success of this program, should it be expanded to other areas, cash for appliances, for example? firing off on the power grid, former clinton white house staffer david goodfriend, and gm berkman and associates. you know how it works. 20 seconds to make your case. jack, you probably don't even need 20 seconds to tell us why you don't think it should be expa expanded. >> carl marx said don't worry about america, they will spend themselves out of existence. i think he was right. we're diverting capital where it should not be. you've got an artificial industry with artificial jobs. now the government is

stimulating artificial purchases within that artificial industry. we're reaching levels of absurdity. >> david, make the case. >> hey, buddy, wake up and smell the recovery. there has actually been a successful program implemented whose goal was to create jobs and reduce our dependence on foreign oil. the program has worked in achieving those goals. if it should be expanded, uncle sam should spend his money wisely. this is one that works. >> jack jack, you have to add mid, $700,000 vehicles that otherwise may not have sold. we don't know that, but this is a tangible result of the stimulus package. >> but the wrong kind of of tangible result. most of the auto industry should have left north america, basic product cycle theory dictates that combustion engine products should be made in kenya, and tanzania, and we're still making them in the most sophisticated economy in the world. the problem with everything that's going on in the last six months is we have denied ourselves the future, the same way with the bailout of wall street. capital wants to go in new

directions, and we're not allowing it. >> what about that, david? and did we cannibalize future sales with this program, necessarily? >> well, i like to buy my friend here a one-way ticket to tanzania. for the rest of us who like to stay here in the united states. of the fact of the matter is, when you have you have industry and large levels of employment, you to ask yourself, how best do we get industry to produce what we need? now, in this case, it's evident -- >> why -- >> hang on, one at a time. >> i'm going to keep talking until you let me finish my sentence. it's evident we don't want to put money in the pockets of the yahoos in texas. we need to reduce our dependence on oil, and we need to reduce our fleet of automobiles. this is a program that worked on that front and all the big three reported inventories were used up, and got more guys. of it worked. >> who is the federal government to determine what the people need and what the country need and what kind of purchases should be made? you're talking about some kind of system where somebody sits at the top of america like joseph

stalin, directs production, directs employment, and now directs consumption with federal money. of this is -- i don't think we realize, i think people have lost sight of the fact of how far left the country has gone. we have reached the point with this cash for clunkers program, and now talking about things as crazy as appliances. where the europeans are laughing at us. of the french and the germans can't believe what they're seeing, and they're actually starting to laugh at the united states. >> well, if you look at that -- >> very quickly. >> if you look at that ticker going across the bottom of the screen right now, what you notice is these so-called leftist programs that my friend just referred to are helping the economy recover. i'll stick to the facts. the fact is this is working, and if you want to move to tanzania and taking your combustion engines with you, go right ahead of the. >> talking past each other today, but sometimes that happens. >> up next, a look at september's markets. what will the big investment names that month and the top

picks for the widely held stocks. >> you're watching cnbc, first in business worldwide. the dow is up 300 points. ccc

stocks are seeing higher than normal volume today, sometimes signalling a real conviction in the move. aig, we've already talked about. precision cast parts, boeing announcing a more ambitious timetable for the unveiling a dreamliner seeing big volume today, as well. also on that list, goodrich, mbia and king pharmaceuticals. >> let's find out where the

smart money is going to put its money, especially as we go into september, which can be the cruellest month. legendary investor ron mullencarp is our special fweft this hour. >> you are a legend, ron! >> i'm not even dead just yet. >> well, you have an awful lot of money under management, and your fund is up well over 25% year-to-date. of you know, if you look back a year ago in september, we were in a world of hurt at this time last year, ron. as we go into that month, we're all going to be looking back and remembering those times. but what do you see ahead. how are you playing this upcoming month. >> we'll probably end up concluding that the recession ended right about now. the lock-up in the financial system is pretty much over, which is some of the stuff you're talking about. we're all trying to determine what the new norm is. in the meantime, what i learned over 40 years, if you buy good companies when they're cheaply priced, you tend to do okay. and today i sort of made a career of buying pontiacs and is buicks when they go on sale.

today a number of the cadillacs are on sale. firms like pfizer and cisco, bank of america ain't quite a cadillac, but they -- they are in contact with about 50% of the homes in america. so they have a great chance to participate in this savings that we talked about earlier, that the american public's new-found fondness of having some savings and putting money to work. >> we have already had such a rally in the last several months here. are you putting new money to work now, even? >> we have taken -- some of the things we have bought in march we have lightened up on a little bit, and we're shifting toward these other kinds of things to some extent. we think that rally -- everybody argues that the fundamentals didn't support that rally. we think that was a rebound rally from things that had driven it down. okay? so if you assume that march was normal, no, we haven't improved that much. if you assume that maybe last september, pre-lehman was a little more normal and today is a little more normal, we think the anomaly was driving it down and since bounced back up. so we're kind of resetting deck.

we're trying not to make bets on how fast this economy comes back. >> we've got to run, ron. >> okay. >> good to see you, ron. >> thanks for joining us, mr. ledge end. >> it's been a pleasure. >> all right, "fast money" halftime report coming up in just a minute and the 1:00 auction, as well. >> $28 billion, seven year notes. see you at the top of the hour. (announcer) we understand.

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welcome to the "fast money" halftime report. always getting to the heart of

the action as it it's happening. rick santelli in for melissa lee. once again, broken record, rally stalling again. where are traders, are they taking profits, what are they looking for? here is our crew today. what is the word on the street? joe? >> hey, rick, how are you doing today? i'll tell you what. early on, a lot of selling pressure. you talk about numbers that came out, looking forward to next week. i think what's important is ism, unemployment, look at the recovery today, though, rick. i like what we're seeing right now, and actually enter day seeing the dollar roll over giving support to the commodity resource trade. >> john, what do you think? >> i think we are seeing exactly what joe says, that it's a pretty nice rebound so far today. and a number of stocks that you would think would be taken out to the wood shed and beaten are not being beaten nearly as hard. and yet we've got pretty significant lift from a number of sectors, and i think that's why we're pushing back towards

unchange. >> jared, you have a really neat chart. we would love to show. why don't you explain it to the viewers? >> well, a little bit of a doubt here, and i almost feel like susan powder needs to come in and stop the insanity. look at this s&p chart, earnings versus price. back on june 1 when those lines intersected, that's when the s&p was at 950. earnings continue to drop off, and yet the price of the s&p still going up and up and up. and what you can see is this morning we are responding less positively to this positive data. what i mean is, if we had this gdp data i month ago, we would have seen the markets really rally. i urge people, be cautious, the fundamentals are not there totally across the broad market. in some areas, they are. >> gurka, my buddy from the cme. what do you think? a bit of dropping in claims. are you buying into this story, mike? >> well, you knee what? there is every reason to really get excited about this, but i can't. and i think it's also because i'm seeing these numbers on bank failures, and how they're at 15-year highs. that doesn't equate well into a

housing sector. and for the same reasons just mentioned, rick, i have a big trend line at 7885 on the dollar on the index. it's a whole new dynamic. but until that happens, bear value in treasuries, and short s&ps. >> next trade, oil falling below $71. this is joe's backyard, the liquidator. >> rick, listen, the dollar is going to decline. of that is going to support commodity prices. that's going to support energy names. it's all a matter when we talk about the dollar about how quickly the decline occurs. you talked about oil going below 70. let's talk about -- 71, rather. let's talk about it going below 70 today. which it did. it was unable to sustain below 70. buyers have come in. you want to own the energy names. i continue to be 100% convicted behind this, rick. that's the trade. >> gurka, i love these stories when they intertwine. >> well, one of the questions is, how can the dollar be so bearish in such a long cycle, but yet we see where crude

prices are? i watched the euro very closely and of course sterling against the dollar. one of the things that happened when we traded up to 170, we saw a dynamic where oil started to really catch a bid. and for the same regard we're seeing oil come up at the 75 level, i look at sterling here at 161, 162, and i think that the euro in the same regard is about to see a breach in support. i think there is actually more risk in being short the dollar than there is being long. options prices show that. and for the same reasons, you're getting a lot of cheap put positions right now in crude oil with the 60 or even a 50 handle that are well below a dollar. again, this is one of the reasons why you want to see these things pick up into the marketplace. only caveat here is how do the s&ps coming into month-end without profit taking in front of the two ugliest months on record not start to come off. >> i remember '87 well. citigroup, hedge fund manager john paul son has been buying shares.

jared, buying the story, a., and b., is that a reason to get involved? >> citigroup, i've been taking attention to aig today, and i'll tell you, i was completely wrong on this one. this stock, in my opinion, i was looking to go short at 30. obviously, the stock is hard to borrow, you can't really do that. but what we're seeing today is out of control. a couple things to mention with aig, they have a ton of assets, and if there is a pickup in asset valuation, you could see a big boost in the bottom line. but because the stock is hard to borrow, the stock is a little overdone. but options traders hopping all over it, buying the up side calls, selling the down side puts, and continuing to do so, and doing this morning before the rally took off. >> rick, i would say that our systems >> i would say our system shows the exact opposite. i am seeing unusual put buying on this run at aig because they can't short the stock. i also see the calls in september being sold very

aggressively. i don't see the same picture you are is seeing. >> we say unusual, we are talking big powerful numbers. >> 60 to 65% of the calls sold on the bid and the same thing put on the offer. people are definitely betting on the downside for aig after the run today. >> we valentine options for indicators. >> let's go back to what we were talking about with citigroup and why are a lot of people stepping in right now into the consumer banking names. it's because of the improvement in housing. think about the wealth effect and the consumer balance sheet getting better. those consumer banks hold the loans and those loans will be serviced better. that's why you want to own the citigroups and the bank of america and it is usb and consumer banking sector. >> i'm not sure i buy t but it takes two. 1:00 eastern, we will get the results of the government's $28 billion, 7-year note option.

we haven't had the-year around for a while and it's an odd man on the curve. especially with the talk about equities and giving you more house power on yield, maybe this one will not go badly. let's start out with jarrod. >> this is something i top the learn a lot more about. this is not something i spent more time on. they are giving a direction of where the dollar is headed and that's the way i will use it. the strength or weakness in there. >> how about sprinkling flavor on this from a pure yield curve perspective. >> why wouldn't you buy the seven-year and sell against it. that in itself has got a lot of room. i would not be surprised if the demand is heavy. like citigroup, share prices are cheap and that's why we want it. i think the same on this trade. >> you will go for the differential. >> absolutely. i'm not even doing it against

two. i will do it against five. that's a window of 24 months. >> absolutely. i agree. >> this is the type of maturity that the chinese and the japanese have. they want the-year. shorter term maturities. they don't want the 30-years anymore. >> you don't want to be the last guy on the teeter totter when the bigger guy gets off. dennis is now on our fast line. dennis, welcome. >> good to be here. >> tell me about the dollar and what you are seeing and if there is safety going on in the currency. >> i think people are moving into the dollar. the world is short the dollar. everyone you talk to is short of the buck. it's the easy trade to do for a long period of time. that boat is getting very crowd skpid wouldn't be surprised if you get a substantive as the

shorts have to run to cover. is there anything fundamentally that will justify being long in the buck? no. >> there a lot of issues in the japanese papers about how they enacted their program equivalent to ours where they allow their domestic corporation to repatriate overseas yen at a better tax rate. the japanese papers are making this a big positive for the yen. what do you think? would you be a seller of the dollar versus the yen developing into a bigger story. >> for it becomes the big story, the answer is yes. we won't have to say i'm surprised they will do anything right at all. they never get anything right. they haven't done anything correct in 20 years fchl they were to do that, it would be very positive for the economy. it's hard for me to be bullish in the japanese economy because a demographic black hole, the population is declining and they have problems i'm afraid are not

going to be done away with for a long time. if i that are changing tax laws, you have to give them -- >> i agree and we all have problems. don't go anywhere. the fast time halftime report continues after this break. here's what we have coming up on the big show tonight. >> charlie gasparino rocking his beat and tag teams to find the juiciest dish on the street and we trade it. and i phone entering china. john tells you who is winning there and it's quite a run, but was it all a dream? why this might be a fake on america's post market show tonight.

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satisfaction guaranteed or your money back! new! nutrisystem d. lose weight. live better. call or click today. >> welcome back to the fast money halftime report. now time to call the close. let's go around the horn. joe? buying or selling? >> i'm buying, rick.

>> that sounds convincing and that's the end of it. >> i am also a buyer. i like the way the market is reacting to negative news and i'm not so upset by the way we took in the gdp either. >> it wasn't that big of a deal. they were looking for more inventory bias to the number. the red side or blue side of the card? >> as long as we hold the s&p, i'm a buyer. >> what do you call it? >> i'm short. i have two levels for you. on a-month chart, i have 1036 in the s&p to get along and on the two-year, i need 1013. that support we take out and i would be short. >> guess what. i like the technicals, but that's it for the halftime report. don't miss tonight's fast money as the traders will break down all the action on dell. please tune in. what's the team doing some. >> they and we will. coming up, we have wall street

bracing for the results of the-year note option. we have the numbers and market reaction and which company is worried about google invading their turf. j view kroou and the michelle obama factor. do names really sell clothes? we are watching the dow for you. back in a moment. >> increased production that make the escape and the f150 truck series. pleading guilt to three felony counts with the firm's alleged ponzi scheme. lifetime entertainment for an undisclosed amount. disme in and nbc universal operate lifetime and they make nbc an owner of time. cnbc.com news now. i'm courtney reagan.

all right. we welcome you to the second hour of "power lunch." the dow struggles to keep the winning streak going. we are moment away from a potential market mover and the results of a heavy year note option. we have $28 billion up for grabs and we will bring in the numbers. >> i'm sue herrera. apple wants more than a taste of the market. steve jobs's company is poised to get the switch with the i phone. we will take a look at what that means. weather apple's new snow leopard system really makes the grade. >> we are joined by our friend, the senior writer at business week magazine. michelle as you can tell is not here. how are you? >> i'm the dealer. >> the last hour he thinks the recession ended right about now. >> it was always interesting talking to him and he had a several year funk.

the recession may well have ended, but consumers are slow to come back. unemployment is in overhang. we survived it and have a 10% unemployment rate. what will eat into that. >> that's the last indicator to show improvement of the rates. you can have growth and still lose jobs. >> what will give us that second warning. >> skprt housing market and improvement in credit and quality. >> you need a 180 degree type improvement and i don't see that. >> what is the rally about? >> who knows? the stock market is never really gotten it right. >> hold that thought because we have the results of the auction. rick? >> 3 time 10 is where they were trading this. came in at 3.092.

guess what. lower yield, higher price is going for a high great. if you look at the bid to cover, that's excellent. once again, indirect bidding in the teams. i am giving this an a minus. does it mean that it's really great? some think the fed is going to come around in a couple of weeks on the back side and buy this. that's okay. the grade is a minus and the market should like the auction, the last of the three. >> the government is able to borrow money at reasonable rates. another encouraging sign or is it for you? >> it's not encouraging for me and people are still willing to the 3% and a-year clip. the irp inplagz is a concern and the reckoning and paying for all the printing recklessly and the fed doubling the balance. >> what would make you more positive.

what would make you feel better about the environment? >> an aft roit-type development. that's a secular thing that you can't readdict. a secular driver, something to hang our hats on. absent that, i don't know that there many energies that can eat into that unemployment rate. >> the options are out of the way overall. what do you think? >> if i was an investor, i agree. we had the halftime report and he said i would buy the seven-year and sell the five-year. there will be a lot of these curve gains and the central banks are going to shorten the duration and be more active in things under 10 year. i wouldn't worry about options, but play closer to closer attention. >> trading strategies are more sophisticated as we get more and more paper coming to market.

>> that's wise. i think it's foolish for government to think that big trading partners and other banks investing are going to carte blanc. the same patterns that they had in the past, the world is more complicate and learned that there issues that can come to haunt you. >> thank you, rick. we appreciate it. see you throughout the day. the number of banks on the problem list has grown. sheila bear is staying about the state of the banking system right now. >> first other highlights from the second quarter bank profile from the fdic. basically by the end of june. the list of problem banks had reached a 15-year high with

combined assets of 300 billion. they had 3.7 billion and aggregate net loss. two out of three lower and quarterly earnings and 28.3 percent per were unprofitable. 48.9 billion and 26.4 billion a year ago. the loan rate at a record level, 41.4 billion, up 14%. sheila saying job growth, a banking balance sheet recovery will trail the rest of the economy. >> today's quarterly profile said performance is as always a lagging indicator. the banking industry too can look forward to better times ahead. for now the difficult and necessary process of recognizing losses and cleaning up balance sheets continues to be reflected as an industry in the bottom

line and the health of the fdic's deposit fund decreased by 2.6 billion and the reserve ratio declined five basis points and the reserves standing at the end of the second quarter at $42 billion. bill? >> thank you very much. that's one soft spot that you can point to is the depletion of the fund, but you have to admit where it's in the environment with the government more willing to spend the money to shore up the banking system. >> that's true, but how much money can government spend? there is a penaltiy in that. there is an externality that you will see and see bonds being auctioned. i am worried about commercial paper as well and the banks that were involved. this all reconnects back to the consumer in the end that is

frozen out of the credit markets. what can you do? you back stop them as the government and they take additional measures. you bend the curve as a federal reserve to generously recapitalize the banks and still not feeling the spirits in a way to lend to people. >> let's take a look at an interesting story that is just breaking and california's treasurer is saying they have been negotiating can various entities and banks to get loans to pay the state ious. they have come to an agreement. no fees and pay 3% interest in order to repay the state ious. it brings it back from the brink once again. significant, is it not, given the pool of that economy? >> it's significant as you know. california is its own nation, but i think there is a path through taking for granted that it won't be like gerald ford.

>> the federal government told california to drop dead. >> there is more signalling. >> having to negotiate with the private ebtities is because the government signalled you won't get the money from us. i think it's instructive that a nongovernment entity like jpmorgan chase is rate to take the risk and loan the money. the state controller said this loan was coming and i think he said that was going to allow him to stop issuing ious. he said at the time around september 4th. he has been issuing ious. he said he thought it was jpmorgan chase. the treasurer didn't want to confirm that and now we know it. the terms with no fees, 3% is pretty advantageous for this date. >> for seems like very favorable terms and he is also saying that they expect to be able to repay

that or at least pay off the sizable amount after the sales a month early after short-term debt is auctioned off. it seem to be a great improvement from when he was out there with you. they have come back from the break considerably. >> for this week, sue. looks pretty good this week. >> my prediction is that before too long, california is going to have to go upgrading the stock

saying we have clarity now. let's hope there is clarity. this is the third schedule on the dream liner. >> hope we don't get another revision and we had many. thank you very much. see you later. >> the dow jones now positive and this makes it days in a row. this would make it of course. we will take the realtime pulse of the markets. >> here's what else is on the menu. a west coast affair. >> yes indeed. california cuisine in the silicon valley bureau. the release of the late operating system. snow leopard might be an incremental improvement and still generate $125 million in revenue this quarter alone. >> julia boorsten in los angeles speaking through media giants and all about technology. time-warner cable testing television everywhere to offer cable and broadcast online.

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look at that stock. it was approaching $50 earlier this morning. precision capping on the list. you know the story with boeing. phil is joining us to show us the unusual leaders. >> have you heard this story? ben bernanke was one of hundreds of victims of an identity fraud ring that stole nearly $2 billion. this is out of oliver twist. the bank sheet was entangled after a thief stole his wife's purse right out of her hand in august last year and they began cashing the checks on the family's bank account. didn't they read the name? how many bernankes can there be? he is out with a statement saying identity theft is a serious crime that affects millions of americans each year.

our family was but one of 500 separate incidences traced to this crime ring. he said i am grateful for the law enforcement officer who is worked to solve and prevent these financial crimes. it can happen to the chairman of the federal reserve board, it can happen to anybody. >> it is amazing. they were so stupid, they didn't have a different name. >> they caught the bad guys and the ring is put to bed now. >> he won't have as much trouble untangling as many do. >> he has firsthand knowledge. >> let's get to the market reporters and talk about this market today. the unusual movers and especially beginning with bob dasani. >> we were down 80 points and because of financials. let's call them out lying financials and high volume stocks and low prices and

citigroup will do a billion shares. the last several days, particularly monday and tuesday. they were about 25% of the volume. it's probably going to do a billion shares and moving up and we saw this in the last two hours and the big moves in the insurance companies as well. off the lows they started flat and moved up throughout the day. they have gone positive and aig was mentioned at about 105 million shares and changing hands. that's a lot more than normal. the story is not moved on the idea that perhaps they would seen it come back and he has been talking to hank greenburg and no real word on whether it's coming back. oil hit $75 and it's nowhere but down. tradertalk.cnbc.com. how are we looking at the nasdaq? >> weak all day and the nasdaq is trailing the other averages. we are down just about 1% or so.

big cap techs with a weak spot and they are all week. research in motion is down about 3% and has something to do with the apple about rate to go. maybe fallout there. dell has earnings closely watched not only for consumer spending and business to business. given a little bit back ahead of that. the semiconductor index is off by more than 1% and the components are weak as intel and san disk are lower. you heard julia mention this and julia will have more on the case that tivo has against at&t and verizon. bill, back to you. >> let's complete the loop and go back with this week's 101. >> that's our weekly guide to investing and a lot of different ways you can separate out an index. you can splice and dice indexes and show you about the s&p 500. four different ways you can buy into that.

you need to know that the important thing is that there 500 stocks and different waiting methodologies that can be use and how they are weight kd affect the composition of the index and also affect how it returns. look at four different ways to slice and dice. first the one that you know. that's the s&p 500 way to buy market caps. that's the waiting and market cap thaw know is simply price times the share outstanding. then the eql. the equal weighting to all nine sector spiders in the s&p 500. and rwl which is the large cap weighted by revenue and it is equal weight index. the same 500 stocks, look at the different results. equal weight now performed. the reason that's happen suggest smaller stocks in the s&p have been doing well because we are having a broad rally.

different ways to look at the index. back to you. >> eqls and ious and eieios. grandma would just buy at&t and put it away. i digress. zeroing in on just about everything apple did. steve jobs back in charge. how sdd is this new operating system snow leopard. you will get the verdict from the new york times in a moment. >> we will talk more about getting ready to launch the i phone in china. the dow is down six points and shares of apple in the trading session. the last trade there 45 cents and about a quarter percent. $186.96. back in a moment. what's on the minds of independent investors? let's ask. when i trade, i want a straightforward price. they lure you in with a $5.99 trade,

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>> are unusual volume leaders to the downside. off 8.5% to 5.04. mbia and citigroup big movers to the upside. it's almost 8% and citigroup is up over 8%. >> today in your digital life, apple is out with the latest operating system code named snow leopard. the "new york times" columnist told us whether it's worth the upgrade. >> software usually begins small. small and nice. the problem s how do you get people to buy the 2.0 version? you add to it. you pile on new features much

the problem is that while you can't add more features forever, you make the same complicated thing and nobody wants to use it. this week apple did something and snow leopard are no big features at all. apple considered the previous system to have a perfectly adequate number of features. no viruses and snow leopard is the same thing. just smaller, and more polished. >> you save seven gigs on the hard drive. everything is faster. programs open and run faster and especially the apple programs that have been written as 64 bit aps in that sort of thing. not to say there no new features at all.

the laptops adjust their own clock when is you cross time zones. the menu hot spots shows signal strength for each. they make the icons really big when you put the folder icon on the dot, you can see what's inside and now even stroke through it. the web page plug ins no longer go. they open up into the frameless window and the trim handles and to you tube commands. if you work at a company that uses microsoft exchange and the address book and e-mail and calendar show up in their own e-mail and calendar programs right alongside their own personal information. that's irony for them. they have exchange compatibility built in, but windows itself does not. they are not perfect. they have a bunch of programs that don't work quite right. with luck, they will get fixes

soon and also snow leopard requires macs sold in 2006. there two radical things. they went for smaller and faster instead of bigger and more. second, if you have the 2007 version, snow leopard will cost you only $30. not $130. and that may be the best feature of all. >> my daughter is a mac devote and told me i have to get off the windows thing. you will never go back again. >> a lot of people say that. >> this is different from windows. when they do a broadway production and much of the fact that they will up great. this is a quiet one compare and david makes the point. >> yeah. it's a decidedly low key event

that will be that $30 price tag for the upgrade and looking at the improvements we were talking about in that piece, this is an incremental improvement, but saving seven to nine gigs on the hard drive is a big deal. memory is so important it so many people as you turn your mac into a multimedia entertainment device. that's a big deal as far as how this will sell. analysts and most of this worked into apple stock and $125 million in revenue for the september quarter. 40 million mac users and about 40% are there. >> you can't downplay the price target. it's compelling. >> huge. terrific. that makes this all the more important because again once again you have apple really addressing the needs of the market place and these improvements. they are compelling to people who use the mac and the price tag you can't beat it. >> what are might be a bigger

deal is the move into china. yes? >> yes. you have been following apple and the i phone evolution, it's the last untapped market and people pirate it in a huge way. this will be a big deal if can crack the chinese market and it will be imminent. you have 687 million smart phone and cell phone subscribers in china. even if apple gets one or 2% of the chinese market. they are talking about the additional revenue. you can't under estimate how important or overestimate how important the market s. >> the risk here is also a potential boom to the i phone enthusiasts. could you see hundreds of millions of iphone head back to the united states that people are frustrated that they can only get on at&t?

>> it's an ongoing problem. >> the jail break has been an issue since apple announced the deal with at&t. at&t is coming along slowly and others are saying it's a matter of time before i phone heads off to verizon and offers an additional handset there. i don't think this is going to mean a big increase in jail break. i think the chinese market will be huge. >> thank you, jim. see you later. >> coming up on the half hour and head down to the floor of the big board and talk to steve. either side is unchanged. >> time-warner has a big idea and lined up major companies in a project that puts shows on the web for paying subscribers whochlt is on board and whether it will pay off. you are watching "power lunch," first in business worldwide.

here are the stories we are following. economic data seemed a bottom to the recession. gdp fell by 1% in the second quarter after a huge plunge in the first quarter. weekly jobless claims fell by 1,000. toll brothers posted a big loss at $472 million.

the company said it sees sign that is the housing market is stabilizing. game on. microsoft cuts after sony cuts the price of playstation 3. >> either side of unchanged right now. talk to steve grasso and it is a little bit indecisive and we have more to go. >> bill touched on it. that's how people equate their feeling of wealth. both the retirement money and the housing. they lost a considerable amount of both. if the housing market is recovering, they will spend again. >> broader averages are not doing a lot, but getting the stocks like the aigs, you get the price targets and $100 maybe

on the stock. does that make your palms sweat? >> it does a little bit. you have to realize that the stocks that were beaten down the most would be the ones that were short squeezed. you will have people that are bottom fishing and the short squeeze. the stocks are reacting the way you do. >> still doesn't make sense. we are almost a year removed from the horrors of september 2008. private equity is an unlimited thing. the companies that can't get banks may not have any other options. why it's small or risky outperformed by so much. we never learned our lesson. >> what are you are saying is if we haven't learned our lesson, what you are watching is the chase of performance right now. a lot of guys when the s&p was at 870, didn't know the stocks to buy and they bought the indexes and they're doing the homework. >> thank you very much. appreciate it.

as we mentioned, the stocks have been soaring in receipt days and many have been involved by the government. joins with us the latest. what do you make of this? >> historic short squeeze. we are making history. citigroup goes to 5,000 shares. my sources sele me there is a long case to be made for the stocks and i don't necessarily agree with it. what we have is the short squeeze as well getting killed. what does that mean? it's a term of art, so to speak. it means you can't borrow the stock and you can borrow city, but it's hard to borrow aig. the traditional short squeeze in those stocks. it's hard to borrow, that which can be and the float is low. you see this massive movement in the stocks. it's clearly that the shorts in the stocks and there plenty,

some hedge funds and day traders are getting crushed. part of this movement right now is a movement to cover that short position and the short position is a position that you can make money by borrowing and selling immediately and buy it back to cover the shorts. that's what you are seeing. it's interesting for average investors to understand the dynamic here that some of this is not just the long case for the companies. citigroup, aig, fannie and freddie. they may do well in the future. the average is that some of this is a technical factor that the shorts are getting crushed. don't get too excited. this is a technical move of moves covering and buying the stock to cover the short position which they are losing on. that's a different scenario than maybing a bet that citigroup will rebound. after the short covering, more

news can come out and the stocks can fold again. >> thank you very much. appreciate t. >> j crew is reporting earnings after the bell and the stock has been on a hot streak this year without a short squeeze. do you think they have the obama family to thank? they are big fans of the company's clothes. >> check out the chart of j crew. an impressive performance to say the least. up 160% this year. you are watching "power lunch" on cnbc first in business worldwide. >> toyota, the company behind the hugely popular camry is driving health care reform. >> there is a highly standardized way in which they place the front left tire on a camry. >> at the university of pennsylvania's department of

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even as the nasdaq is down 12 points today. >> j crew is due to report after the bell and the retailer has been a success story thanks to america's first family. we have more on j crew and the michelle obama factor. >> you know this is just a sweater like billions of other sweaters until somebody famous wears it. michelle obama wore not this exact sweater, but the same style that is j crew. everybody goes crazy for the store and the obama crew has been good for the store. it makes people who never

shopped there aware of the company. the stocks tripled since the march lows. the profits are expected to show a sharp drop. analysts remain bullish on the company. >> we think j crew took business from a host of retailers and department stores. by getting it right, their ability to capture a wider audience has occurred and whether it's banana republic or a department store, they put the share in. >> now we are talking several months later. do the fashion choices remain with the buyer. not a lot of action. the mall was mostly filled with the forever 21 valley girl crowd that don't take fashion cues from the first family. >> my mom shop there is. i don't. >> i don't necessarily follow what people do. >> totally. >> as for back to school, chelsea said it's not a back to school story. it's more of a back to work

story. >> i'm seeing my fut nur those girls. >> stay with us. we will talk more about celebrity endorse ams that help sell fashion. more thoughts now. laura, the celebrity endorsement factor is interesting to talk about, but how much different is it when it's the first lady of the united states who is endorsing your clothes versus a hollywood celebrity. >> it's a huge difference. is the credibility factor and they are not getting paid for the endorsement and it's a believable, credible connection to the brand and j crew is here benefiting from the obama bump in terms of their choosing the brand to style their daughters and michelle herself in. >> let me ask you the question. do celebrity endorsements sell fashion?

>> they can help sell fashion. if there is a credible connection between the celebrity and the brand and the celebrity that is popular. j-lo at once had $175 million in her fashion line, but is no longer as famous as she was in 2003 and today she shut that fashion line in the united states. you have angelina jolie who was once with the brand. angelina wearing st. john's? never in a million years. huh madonna and gap. i don't think she would be shopping at gap. it didn't help at all. it has to be the credible connection. once you find it, it's popular. the sean p. diddy combs was a good connection. he wears the brand. >> you went through your madonna phase, but are we talking about the generational thing? are the younger people more impressionable and likely to buy based on what the celebrities

are wearing that, young lady not with standing. >> i'm not sure every generation is impressed u but the key that has been brought up is whether or not they are paid for. j-lo happened to wear a coat when she was pregnant. that coat sold out. they have not paid her to wear that coat. the same with a dress michelle obama wore. a few years ago with the oscars where she showed up in a gap blouse and may resonate more than the tiger woods being paid to sell bewkuicewkeuick s. >> they are fashions not just for tweeners, but the high end. you are very familiar with that. >> absolutely. you know me. look, again i don't understand. are the olson twins there to inspire taking your kid out for

back to school shopping? does it look like they are authentic or paid to do this stuff? >> they designed it. >> but they don't -- i think this is interesting. they made a transition and what is interesting is they don't have their name on it. there is very little connection and what's selling that, celebrity is not an excuse. you need an idea. you can't have an idea for the olson brand, it's about basic clothing and pieces. that's what is selling that brand. they are able to get pr and listen, they are backing that with million was dollars. it doesn't matter if it's a success or not. they can keep throwing money at that. >> may money is on hannah montana and dora. dor get t. >> thank you.

>> a california story that is still developing.  shares of the company in the dvd showdown. tivo and verizon communications all lower. this in case you were wondering is "power lunch" first in business worldwide? some people buy a car based on the deal they get. 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. special lease offers now available ♪ 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...

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>> contebt and delivery properties push to protect their property. >> time-warner cable announcing they are launching a test of tv everywhere, partnering with cable and broadcast companies to bring their contest to cable subscribers on line. this is the latest to preserve the revenue as viewers shift online. they offer protected content against tbs, tnt and hbo as well as cbs, sci-fi and discovery

communications at no additional cost to subscribers. shows will be available through the websites as well as programmer-owned websites like humoru. it is similar to comcast launched in july called on demand, july. the videorecorder is trading down on the news that last night they filed suit against verizon ask at&t. they are reporting a 2.9 million quarterly loss and tivo is hoping verizon and at&t will opt for the software. they lost and appealed several decisions. they are ruling out partners like comcast and it announced a best buy for the company to determine to get at&t, verizon and dish on board. >> how is it going to work with

the web tv thing? how is that different from just a humoru or other programming? >> here's the difference. humoru is almost exclusively available for free through regular broadcast hours. . the difference is tv everywhere and online are designed to protect the cable content. they want to make sure you keep on doing the cable bill. some of the viacom's properties are putting shows like john stuart on humoro and all that was is behind a fire wall to get any content that you need to pay a subscription. >> do you know what drives me nuts. i had a demand 10 years ago. nine years into the nightmare, the time-warner deal, they waited this long to put them up. i always wanted to pay and

download episodes of the sopranos and they never gave it to me. the technology was there and the dvr and they waited this long. >> your dreams have been realized. >> shame on you, time-warner. it turned me into a pirate. i ended up -- >> don't confess that on national television. i have one last thing. there is a reason you didn't want to download just the sopranos. they wanted you to pay for the whole package. >> they had him willing right here. see you later. up next, stimulus checks for convict getting friended bee the ivs. >> empty calories galore when we come back. carol, when you replaced casual friday with nordic tuesday, was it really for fun, or to save money on heat? why? don't you think nordic tuesday is fun? oh no, it's fun... you know, if you are trying to cut costs, fedex can help. we've got express options, fast ground and freight service--

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