improvements in the financial markets but noted that many markets were still strained and they expressed particular concern about the job market and the pace of recovery there. they used this term here, the need for "labor reallocation" could slow recovery. that could mean two things. it could mean both the geographic, where the labor is and the need for it to move, but also what industries they're trained for so there is concern there might slow down the recovery. households they said face considerable headwinds from reduced wealth and high debt. erin, i was very curious about the absence of one thing in the minutes, which is shortly after the meeting, bullard from st. louis and lacker from richmond came out and talked about the need to maybe slow down enough to fill these mbs purchases but minutes don't show there was a debate about that inside the meeting. looks like they took their concerns outside the meeting or the minutes failed to record how much disagreement there is among the fomc members about whether

to pufulfill that. >> let's get instant reaction to this. lots of headlines stand out. disagreement over whether economic slack will keep inflation low. >> i think intellectually that's an important debate but not sort what have traders are looking at down here. this is a much sunnier outlook than recently, erin. at least that's the way everybody's looking at it down here. fed gained confidence, downturn ending. participants see outlook for foreign economies improving. inflation outlook subdued here. many sunnier outlook. we aren't seeing a big move in the markets here. they're still basically flat. the main issue people are debating is the fact we've had better economic outlooks and better news economically for the last week and a half including today the fomc's statement and it is not a really big febt on the market. there is some question whether we'll have to see substantially better news, not just

improvement, to really move stocks forward. >> thank you, bob. rick santelli, what's the reaction in chicago? >> it's interesting. i don't want to make a huge deal out of a couple of basis points but treasuries sold off pushing yields up a couple of base points and stocks knee-jerk reaction, lost ten points pushing them into negative territory. i always like to ask my associates on the floor what headline grabbed them? it's funny because it wasn't any of the ones mentioned so far. headline that grabbed them -- not sure which news service -- but that several members within the commit were concerned about more sizable banking credit losses ahead. i think that's appropriate for the time we're trading in. it seems as though the credit markets have gotten more attention of late and that is showing up with lower yields, weaker equities for just the reason. whether it is credit on loans, credit in commercial mortgage barks, foreclosures, all of those issues are coming home to roost. the biggest deal of that meeting was the asset purchases. the fed punted them into the

future and i didn't see any more clarity in that regard. >> thank you, rick santelli. that headline rick just mentioned, investors are worried about more sizable credit losses ahead for some financial institutions. cio and founder of the pimco fund, he came out today with his investment outlook on the course to a new normal which talked about the investment course and golf course. bill gross, good to see you. we're sort of analyzing this right now trying to get to the bottom of it. steve mentioned and rick mentioned the concern of some members of the fed about more sizable credit losses ahead. what's standing out to you? >> there are so many questions. this is, in our opinion, erin, a new normal. the operative word is "new," which basically means that the u.s. and global economy will

perhaps grow at half the pace of what we've been used to over the past 25 years with profits and asset prices and therefore expected portfolio returns mimicking that trend. that's the key. there are debates here in these minutes in terms of how quick gaps versus quantitative easing and the effect it will have on deflation. there are concerns the actual a growth the economy will experience in the second half and of course in 2010 and there are debates in terms of its impact in terms of bank capital and losses in that regard. lot of unanswered questions. but the main thing to us is to look for a new normal with lower growth and lower expected returns. >> bill, some say that the easiest way out of this -- i guess there is no easy way but one of the easiest ways for the u.s. would be to try to inflate our way out of in particular the huge debt burdens we've now incurred. that's got to be one of your biggest concerns. >> i think that's what they're

trying to do. whether or not they can be successful is the problem because the lowering of interest rates down to zero and quantitative easing of $2 trillion, $3 trillion on the fed's balance sheet is in fact history's largest defacilationa effort. but to this point it hasn't worked. deflation is in the negative in terms of the cpi and expectations going forward for the next 64 months based on those that believe in the output gap, that means unemployment, keeping wages down and those that mean capacity -- excess capacity keeping prices down, those suggest inflation will continue to remain benign. so the ability to reflate is at the moment in question. >> when you say the economy will grow at half the rate it used it, half the rate at the peak? 3% or as low as 1% growth?

>> i think the old normal, let's express it in two terms. in terms of nominal growth, that being the real growth, plus inflation, was 5% to 6% for the laugh 25 years. in real growth terms it was about 3%. cut those in half and you have 1.5% real growth and perhaps nominal growth of 3% to, max, 4%. >> in your world which focuses on bonds, what's that mean your expectation is for how bonds would do on an average basis for you? >> well, it means bonds continue to do well as long as inflation stays down and growth is tempered. it means as long as the fed and other central banks keep policy rates low, and as long as inflation doesn't rear its head that intermediate to long-return bonds do well, as well. one further point in this new nomplal ty normal type of economy, there will be broken models associated with delevering, associated with we regulation. some of the easiest ones to

understand would be the employment model in which wall street investment bankers and realtors and so on don't find the same jobs that they had 12 to 18 months ago. for the most part those jobs are gone. another broken model would be the housing model where homeowners, at 69% of total homes, in terms of households, moved down from 69% to 65% or 64%, in other words people rent as opposed to own. there are a lot of different things going on in this new normal that re-enforce slow growth and low inflation. >> two final questions. this is on where to invest right now. one in particular, the fed winding down some of these programs, treasury program as part of quantitative easing, do you expect a change in policy from the fed or is that done? >> at the moment it appears they're not going to change, or at least debating that potential change going forward. really we at pimco think they're going to have to continue these

programs. to the extent that they pull $1.5 trillion worth of purchasing power out of the market, which they provided for the past six to nine months, then interest rates will move up, mortgage rates will move up, and the economy will falter again. so this quantitative easing aspect of policy in addition to the low interest rates, we think, has to be continued. whether it's on the same size as the same sectors is debatable, but i think in the next statement, in the next meeting, you'll see some clarification there. >> interesting. all right, now on that front where are you investing right now? last time i remember we ended this segment with you throwing something out that surprised a lot of people. you said aceh. you said if you had to buy anything it would be aig or short term aig paper or its subsidiaries because it was yielding 10% to 15%. a couple weeks ago on fed day, what's your best idea now? >> well, the aig investments have done well. the stock's doing better and the bonds are doing much better t n

than -- let me move on and suggest that in this new normal world of slow growth and low inflation that there are attractive aspects of the long-term u.s. treasury bonds to the extent that we might have and pimco is beginning to explore this possibility of a double-dip in the economy in 2010, then the long bond at 413, 414, 415 begins to have some attraction. one last point. when you look at u.s. treasury market, you can basically see there is not much room for short rates to move lower. the fed's as low as it's going to go. if we have a slow-growth economy this creates a bull flattener for 10 and 30-year treasuries. >> when you say explore the idea, what are you saying there? are you saying that your view at pimco before in terms of how you were investing was not for a double dip? you didn't expect we'd have that, now has something changed that's made you think that that's more realistic next year? >> i think things are beginning

to change and the biggest aspect in addition to what i've mentioned in terms of the new normal has to do with the absence or retraction of fiscal and monetary policy primarily on the fiscal side. to the extent that we have had a trillion dollars worth of stimulus from the standpoint of deficits and more. the government basically has to continue to do that and to add to that in order to keep the economy chugging along. to the extent that that's limited, to the extent that they pull back on some of those stimulus programs, cash for clunkers and those types of things, then the double-dip moves into the realm of possibility. >> all right, thank you very much, bill. appreciate you taking the time. i know our next panel is here. we listened to what bill said, including mr. steve leisman. dean brown also joins us. good to have all of you with us. steve, just jump in here. bill said a lot of things there. >> but the idea that the long bond could be a bargain at 4.14,

jumps off the page at me. in context of the fed minutes which say -- which the staff forecast saying inflation could slow substantially. i went up and looked up the core pce, the fed's version of inflation. it's 1.48. i don't know what they could mean but maybe a point coming out of this? think about what that would mean for the real rate which is how bill and i'm sure zane and dave think about that. he's saying even in light of all the fiscal spending they're going to do, the idea the long bond could be a bargain is a very interesting call. >> what do you think? >> i think the fed staffers are very well informed. they're held in high regard. for them to come out and suggest that at just over 1% core pce that actually inflation is going to decline significantly from that level, really holds out great hope for additional price improvement in bonds. i wouldn't suggest though that the 30-year offers a great deal

of value. you may find that some price appreciation occurs in the 30-year but there's got to and lot better value elsewhere in corporate bonds, high-yield bonds, kind of following up on what bill gross had to say, if we do have a slow-growing economy with low inflation, that's an ideal environment to get a great income stream off corporate bonds. they'll continue to do a little bit better because they have a slightly strong are economy. but with low inflation, rates can come down, and prices can move higher. >> that's one thing that's interesting, bill gross is joining -- appears to be considering joining the ranks. a lot of sophisticated investors who are turning really, frankly, bearish and putting that double-dip scenario firmly on the table. do you think they're just nervous because things have come so far so fast or are they really seeing something new? >> i think it is a combination of a lot of things. no doubt right now the market is selling the good news. last week and a half durable good positive, great housing data, consumer confidence, bernanke's reappointment,

everything's been great. but everything's looking forward to what's coming up. the concern is, how much of this demand has been pulled forward, what's going to be left in the next quarter or two. that's where investors are starting to get a little concerned about growth with the absence of stimulus like mr. gross was talking about. you just look at action in wells fargo yesterday, they come out ten minutes before the bell and say no capital raise, we'll pay back t.a.r.p. they take the stock up 90 cents and smack it right back down. that's indicative of a lot of things we're seeing. we're getting more data this week that i think investors are more keyed on, specifically retail same-store sales tomorrow. we read dire things in the paper as far as back to school and christmas season. but they're outperforming right now so we're seeing some demand in there. we get congress coming back next week. the market hates uncertainty. what else will be worse than as soon as headline about cap-and-trade and health care start rolling across again. >> it has no absence of things to worry about.

a really long list. >> zane and steve, what do you think about bill gross' point that he says some of the programs the fed says are coming back could be extended or put in new areas. it was a trial balloon. >> i think what bill says is very interesting. i'd have contradicted him right there though. what has happened since the fed announced that the treasury program would be tapered off and would go away even though it was extended a month is the yields have come down substantially. if i'm not mistaken, we were around 380 when that announcement was made. august 7th or so. i think it was the handle on the ten-year yield. i think it is now 335. so the market has improved. whether or not it is improved because it believes the fed will come back in and reverse course, i think that's suspect. i think the market is fine with the fed stepping out here. >> thanks to all three, zane, dave and steve. more developments. a government report on the madoff investigation. mary thompson has the breaking headlines. >> this is a 450-page report

that's been issued by the inspector general of the s.e.c. first let's look at some of the headlines here in the report. basically the s.e.c. says there was no kind of inappropriate influence by members of the madoff family. you might recall that mr. madoff's niece shana madoff had a romantic involvement with an employee at the s.e.c. at the time who later became her husband but the s.e.c. basically saying the agency wasn't influenced at all by that relationship. they say madoff kept two sets of books and one of them was on his person at all time. one that he also kept on a private computer. lastly, that madoff trades were not verified by a third party. the s.e.c. went in there and all they had to do was go to the depository trust corporation to ask for records as to whether or not mr. madoff was actually doing these trades. instead they asked mr. madoff for the records which he gave. of course which were false. here's some other headlines. there was a complaint to -- made to the s.e.c. that one investor

said there was a co-mingling of funds from an ultra wealthy late investor with mr. madoff and madoff's firm. and that also essentially over five different possible probes the s.e.c. fumbled it in large part because they didn't understand mr. madoff's operation to some ebs tent. again a 450-page report. a lot of headlines to get through there. back to you. >> reading coming on, reading coming on. thank you, mary. if mary has more she'll come back. next though, two days into the mochbt september, the flight to safety is on. gold close is in on the $1,000 mark. is this the best 30 days to bulk up on bullion, one of the best natural resource fund managers here with us with specifics. plus if your bank won't give you a mortgage, should you turn to your credit union? jane wells looking at big winners from the mortgage meltdown.ea you're watching "street signs."i e gotten by without aflac! is that different from health insurance? well yeah...

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bulls are on the run this morning. right now dow futures are higher. the huge driver of the dow of course, the price of oil. getting absolutely crushed today.

september is the worst month for stocks. but it is a great month for gold. the ceo of u.s. global investors, frank, this is pretty amazing, you're saying gold prices have gone up in september compared to august 16 of the past 20 septembers? >> absolutely. it's an incredible event that takes place on the planet when several factors sort of the stars align for different holiday seasons. right now it's ramadan and we're going to have the post monsoon rain so in india they go back to start buying gold for the wedding season. then we have the festival of dwali, the season of light in india, a very significant gold buying and gift-giving season. then you have christmas and restock something taking place for christmas shopping. then you have the chinese new year. >> what's amazing, looking at your analysis, is that the world's two biggest buyers of gold are india and china in that order. you note india's demand for

jewelry has plunged more than 30% but deposits have increased. so there's fire power that could be used for gold purchases. right? >> absolutely. there is news out today one of the largest jewelry store chains in india is seeing gold demand picking up. gold jewelry. because the fear of a recession is going away. so people are spending money and they've noticed that gold in rupi terms has gone up. you can buy beautiful 24 carat gold jewelry with only a 10% mark-up. that's a very key factor. what's also very important to look at is this inverse relationship to the dollar. today the dollar is down 44 basis points and gold is up 22 dollar. there is for 70% of the time over the past 20 years when the dollar is weak, gold is up. today is a classic example. in the mochbt september is historically one of the weakest months for the dollar along with

december. >> you think that -- obviously that means you think gold will go up this year but i like how you say this, from good to great. while september is a good month for gold, it is a great month for gold stocks. which ones and how much do you think they'll go up? >> what research has shown is the leverage is in unhedged gold stocks. you get a bigger mop. historically a 1% move in the price of bullion translates into a 3% move into unhedged gold stocks. that's what we focus on and we like those companies that protect the shareholders' value on a per share basis. what we've seen is that those companies that have the highest production per share of growth reserve per share of growth, end up having the best performance. >> what are they? what names? can you give us a name? >> our biggest holding is rangold. rangold is not in south africa.

even though the south african gold stocks are on a tear today, i'm amazed by it by the rand is up 18% and is basically hurting those profits. but the randgold just made a major acquisition in the congo. they're very conscientious of protecting per-share values. then we have jaguar and jack war is a company that's producing gold today in brazil with a very strong healthy production growth profile. the third one is royal gold. royal gold lagged because they are waiting for a big significant event to take place on the acquisition of gold royalties from tech and waiting from permitting from tech. they have lots of cash in the bank. they have close to $9 a share cash. and there's all ready to acquire that. when that takes place a re-evaluation of royal gold. >> randgold, jaguar and royal will probably be new to a lot of

people. jaguar mining gold in brazil. there you go, frank. thank you. another september play coming up. a hint -- it is one of -- rocks, paper or scissors. play the game, take your bet. up next, washington has a new way to curb high-frequency trading. how about trading overall? how about a new tax? a big tax. we'll explain what it is, who's proposing it and why it might happen. the toyota prius is not gas guzzler but it is a guzzler of rare earth metals. more than 90% of those metals come from china, now china is hording them, cutting off exports. will that kill all those green jobs america is counting on? we'll be right back. 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.

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the nation's biggest union wants to tax investment banks and traders. they propose taxing every single stock transaction. .1% levy on every trade could add up to big money, they say. really big money.

the goldman sachses of the world could pay up to $100 billion a year just in this tax. the co-director of the center for economic policy research and from the cato institute, larry summers made -- >> it is the best way to raise an awful lot of money in a relatively painless way. as you said, you could raise $100 billion, that's $1 trillion over a decade. imagine just knocking off $1 trillion off those deficit projections. the great thing about it is for most people it would be virtually invisible. people do invest in stock but say someone goes out and buys $10,000 worth of stock. even if you had a tax of .025%, that's $100.

>> mark, the one proposed now is .1%. listening to dean and thinking about it, it does sound sort of small. is it? >> it does sound sort of small. i think that's one of the points of it. the afl-cio told us this will reduce speculation but i have a hard time believing if somebody thinks they'll double their money on an investment they'll be deterred from that speculation because of .1% of a stock purchase. i'd say look at the housing market. we have a variety of transfer indeed taxes in the housing market. didn't we just have a house bubble? the argument -- i'm not saying dean is making this but the aflcoi is making this argument that it would reduce speculation. don't see that happening at all. the afl-cio says they're not proposing this deficit recession, they propose to use it for additional government spending. be honest about this, this is a way to raise lots of money to spend on new government programs, not to reduce the

deficit or extend speculation. >> dean raises this tantalizing idea. forget the afl-cio. what if we did this little brnt 1% tax, $100 billion a year and allocate it only for deficit reduction. >> that's a different discussion. i still wouldn't be in favor of it. i think once you put it on there, what it will be used for is hard to say once congress gets its hands on it. i'm not convinced they'd use it for deficit reduction. i don't see goldman sachs as paying this. investors would pay this. not necessarily this would just get passed on to the trades. i also think this could have the bad sentiments for the financial system. our financial crisis we recently had was not a problem of equity, it was a problem of too much debt. if you tax equity and don't tax dead correspondingly, you encourage people to take more debt which rids more leverage which actually makes the financial system more fragile. >> dean, do you agree and do you think we should tax neither or tax debt, too? >> you want to tax all trading.

have a comprehensive tax, a scale tax. very modest taxes. we talk about ten basis points, 25 basis points on stock. when you talk about something like taxing options, futures, maybe one basis point. again, someone who's going to buy looking to buy a future to hedge their corn crop or jet fuel, again .001%, that's not going to keep you from doing that. to mark's point about speculation, we don't want it to draw speculation. for example if someone was shorting the housing stocks, that's great. speculate against housing. you would have been giving information to the market. the point is if you will are looking to buy at 1:00, sell at 1:30 that will be deterred because you're hoping to make a profit on a very small margin. in that situation this tax would slow down have type of trading a good deal. >> dean mark, thank you. we'll keep talking about this issue. if you have any thoughts, e-mail us. what do you think of a tax on trade of .1%.

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china currently accounts for about 93% of the production of what's called rare earth elements. things like -- pardon my mispronunciation if there is one, disprosium or terbium. without them your cell phone, your car or flat screen tv just might die. now china is hoarding the minerals. executives at toyota telling "the new york times" they're very worried about a shortage of the minerals for, of all things, batteries of the prius. the founder of the rare metal blog and a senior fellow at the institute for analysis for these

rare metals join us. jack, you talk about what some of these minerals are and what they're used for? >> the rare earths are actually 1 in 6 of all the chemical elements known. but they are not so rare as they're very difficult to separate from one another. so they're hard to obtain in the pure state and nature has provided that they're only in very certain geographic locations. one of them is china, inner mongolia. it is producing not 93%, but probably 97% of today's supply of rare earths. >> tracy, is it -- i mean i know he says there are certain places geographically but it would look like if you look at it on a latitude basis we'd maybe have some similar locations like that other places in the world, even in the u.s. we just don't? >> no. we actually have a couple of advance-stage exploration

projects in the united states and in canada. particularly wyoming and the northwest territories. we have avalon rare metals and we also have rare element resources. of course, until california, you have molycor also producing from stom piles. >> there's one in california, i believe, which incidentally, according to the "new york times" report was almost bought by a chinese company, is now own bid chevron? >> that's actually molycor, mountain pass is their property. they're producing from their stockpile. it would be strategic to open their mines to produce again. >> jack, when we were in congkc where there is the largest producer of cobalt, just as crucial for a lot of these battery components, for example, i was amazed we don't have the ability in the united states to refine it. whenever we buy this we have to import it because we don't have

refineries. why is that? >> that's a very good question. in fact we do not have a single refinery in north america capable of refining the rare earth metals to metals and making their alloys. this is one of the ironies of trying to promote the development of rare earth mining outside of china. we need to also promote the development of rare earth refining and metal production and end-product production. we also don't make any rare earth mel magnets. not a single one. >> is it fair to say china's hoarding the stuff. >> no. i don't like the word. china is using its own resources for its own ends. to say "hoarding" means you accept the fact that there's a global free market and everybody's entitled to anything he can pay for. this is not the chinese position. their position is that those metals belong to the chinese people and that they're best used as the chinese economy

exfane expands to produce many, many modern communications and green technologies. >> would you mind if i interject for just a second and say that, actually, with regard to the processing, we do have a time line where we can with some investment dollars create the infrastructure for processing in north america that will meet our supply and demand in the next four to five years. >> could we though, bottom line, become energy independent in this country? and that means instead of -- obviously we rely on oil now. right? but not be reliant on any of these metals? is there a way? >> well, your metaphor to the rare metals -- or rare earths that are utilized for green energy and clean technology and comparing it to our dependence on oil is an excellent point. we can absolutely be independent if we proceed to not only take these advances exploration properties to the producing stages, build infrastructure for processing and simultaneously by processing them here in north

america then our manufacturers will be able to access them here and meet the growing needs for these green energy gadgets, as you so-called put it earlier. >> tracy and jack, thank you very much. we'll continue to talk about this wrone. this is exactly on the lithium issue and we have to import that, too, but can't make a battery without it. the mortgage boom started in california. so though did the mortgage bust. jane wells now has a new mortgage trend from southern california. yin or the yang? jane? >> you know what? we could sure use some good news out here. up next in a cnbc exclusive, mortgage lending up big at least in one sector. where? find out when "street signs" ough! you get half and you get half. ( chirp ) team three, boathouse? ( chirp ) oh yeah-- his and hers. - ( crowd gasping ) - ( chirp ) van gogh? ( chirp ) even steven. - ( chirp ) mansion. - ( chirp ) good to go. ( grunts ) timber!

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southern california was the epicenter of the first subprime lending boom and bust. now southern california's come up with a new idea for mortgages which could be an incredibly terrifying thing or perhaps the next great thing. jane wells, take it away. >> reporter: well, it can't be

bad forever, erin. a first on cnbc. for those experts who believe california led the nation into recession because of the housing market and will therefore be the one to lead the nation out here -- are some hopeful signs. california credit unions originated more than 12,500 mortgages, primary mortgages, in the second quarter. that is the highest level in five years and up 20% from the first quarter. they made $7.3 billion in loans second quarter, nearly 10% of all the credit union loans in the country. and california credit unions modified nearly $1 billion worth of mortgages in q2, that's one-third of all credit union mods. >> net worth at credit unions improved in the second quarter. with all that's going on in the economy i think that's quite an achievement. >> there is even a slight increase in small business loans coming out of this state. so many people are now coming to credit unions that new deposits pushed their cap pal base up

over 9%. we don't know how much of the lending at west coast credit unions is because traditional banks have tightened their lending and people are going to credit unions and how as much a general sign of overall improvement and how nationally credit unions are loaning more across the board. the fact there's been such an uptick in hard-hit california is being seen, erin, as a real positive. let's hope so. back to you. >> we all hope so. thank you, jane. next, another september stock play for you as we promised. rock, paper or scissors. we'll be back.

oil prices unchanged here. $68.05. s&p 500 ignoring some of the data on supply. plunged by far more than most expected. the gasoline market is supported, but hasn't translated to oil. gold, though, is really the story that has been taking front and center here at the nimex today. going above the $9.80 mark intraday. a lot of folks say there's a lot of fund buying going on in the gold market today on the

technical levels. that is why we're seeing such a rally in the gold market. >> thank you very much. and frank thought gold would go up even more. rock, paper scissors. paper wins, against rock, that is. our guest says paper could be a good way to go, thanks to rising price forecasts. boosting expectation on a couple of companies. chip dillon is with us now. great to see you again, chip. it's been a long time. >> it has been. good to see you, too. thank you. >> i know that your view here is there's a few names in particular. and you're saying, look, a lot of people missed this surge since it marked the bottom. but september could be a good month? >> i think so. when you look at container board, for example, prices have held up better this recession than any recession we've seen in the last 30 years. yet it has been a terpible recessi recession. we think prices are poised to go higher in the u.s. at least by next year, because prices have

gone up already in places like china and europe. that would be good for names like packaging corp of america and international paper. >> and why is that? a lot of people say, prices for what? is it prices for the paper that's getting sold through as opposed to prices for timber which actually might hurt these guys? >> exactly. it's actually the end product is the brown boxes you see in a ups truck, or being ub loaded in the grocery store in the middle of the night. those boxes have held their prices better this recession. with a global economy coming back, since everything basically moves in a box, the supply and demand balance has actually improved a lot more than we would have expected. that's why we took our numbers up today. when you look at these stocks, you're right, they've had a big move. i.p., for example, going from 4 to 20. if you told me two years ago that i.p. would be a $20 stock again, i would say, that's nuts, it will never go that low. if you look at it in the historical context, it has been

as high as $6 oh. we think that, for example, they can earn $3 or so by 2011. the stocks should trade into the 30s, say, two years from now based on that. >> chip dillon, thank you very much. you know, ge stock, take notice. it can be done. all right. thanks. this morning the chatter on the street was all about taking things slow and steady. which is what the market appears to be doing for now. good to have both of you with us. okay. i want to start off with each of you with this. we had a segment earlier in this hour. it was on a potential tax on trades. one-tenth of 1% could raise up to $100 billion a year, used for deficit reduction. would it be a good idea. our viewers e-mailed in, they are very, very upset. they do not like this idea. mark said this. a lot of traders, middle class guys like me, this little tax as you call it, would put me out of business.

they hate the tax. steve, could this tax work? >> this tax is a horrible idea. terrible. i mean, i don't know who thinks up this stuff, but this is ridiculous. it is the last thing we need after 2008 in these capital markets to have a tax on transactions. put it in the fireplace, let's move on. >> terry, what do you say? would it hurt the market? would it cut volume and hurt liquidity or not? >> absolutely. i think that anytime you talk about taxing not only the market, but other goods and services, it's always a constraining factor. it's not something that's going to lead to expansion and/or more volume. >> viewers, two more men who agree with a lot of our viewers who really de tested that fact. steve, what are you looking at? >> kind of a boring day. i mean, i haven't really seen a whole lot going on. it looks like the chinese stocks

are leveling off a little bit. i think that's adding support to the market. i think we're getting dangerously close to everyone waiting for the employment report on friday. probably a little quiet until then. i think we're pausing and resting here. we had a couple indicators that looked a little better than expected. surprised the markets that rallied a little harder on that. i think we're in the midst of a correction. i would hold off here. but a little bit lower. i'd start buying them. >> what do you say, terry? final hour of trade, anything in particular? >> i think it's going to be a sluggish session as well with the holiday coming up. i still believe it's to the down side. i expected short-term support right in these levels. because the markets seem to have expected a bigger down this morning. whatever the market seems to expect lately isn't happening. i'm looking forward to the sell-off continuing into next week. >> thanks very much to both of you. steve and terry. by the way, one interesting idea from a viewer on that tax, they

said, let's do the one-tenth of a 1% on all trades and use that to pay for the universal health care. you can tie everything together in one pretty, or ugly box, depending on your point of view. guess how many stocks in the s&p 1600? i'm racing cross country in this small sidecar, but i've still got room for the internet. with my new netbook from at&t. with its built-in 3g network, it's fast and small, so it goes places other laptops can't. i'm bill kurtis,

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# here's a chart of cisco

systems. emc is also higher today. and we have headlines crossing on these. "wall street journal" reporting cisco and emc are in talks to launch a joint venture, a report that it will specialize in installing systems from both cisco and emc. both stocks are trading higher. we told you last week only 55 stocks in the s&p 500 are actually up since lehman went down over the last year. but what about the broader indices? our friends at bespoke found that 267 stocks were up. while the index fell about 20%. let's take a look at the best wonder. technology, 30% of the stocks are higher there. consumer discretionary, interesting giving the fall off the cliff we went through, 28% higher. consumer stap pls, up 23%. health care, 20% of the stocks

are actually trading higher. just interesting when you look at this whole analysis that continues to show it's been the smaller names that have rallied of the big, heavy market cap weighted ones which have lagged. the closing bell starts now. interest rates stay low for a long time, with a slow economy and low inflation. that from the minutes of the most recent fmoc meeting. the inspector general said the agency fumbled at least five probes of madoff. amazon.com is asking a court to throw out google's copyright settlement with authors and publishers over digital books. that's "cbs news now. a live picture of the boards of the new york stock exchange. welcome to the "closing bell."

we've got a quiet day today looks like on the heels of yesterday's big sell-off of the dow jones industrial average. people are cautious as we approach the very important employment number report on friday. >> we've seen stabilization in some of the financial names, really, though, those that krot crushed yesterday. early upbeat comments from the fed. >> the fed minutes out a little while ago saying the u.s. economy on the mend. policymakers felt comfortable enough, slowing the pace of one of the economic revival programs, not changing any others. this is according to the minutes. talking about the fact that ben bernanke and colleagues are striking a much more hopeful note about the economy. no surprise, a lot of people feel like the recession is over at this point. it's interesting to see in the minutes, now topic one at the federal reserve is, what is that exit strategy. >> some of the