we believe in success. but it does offend our values when executives of big financial firms, firms that are struggling, pay themselves huge bonuses even as they continue to rely on taxpayer assistance to stay afloat. >> hi, everybody. that was president obama speaking moments ago in his administration's plan to curb executive compensation. a big story is taking central stage on wall street today. and we are all over that topic this afternoon, during the next two hours on the "closing bell." welcome to the "closing bell." i'm maria bartiromo, coming to you live from oppenheimer's trading floor. behind me we'll bring you a series from various trading floors. oppenheimer is the location today. it houses the company's equities. right behind me, investment banking trading and taxable fixed-income groups. i'll talk with some of the research analysts from

everything on the outlook from oil and whether you should be betting on financials right now. we have a strong day on wall street right now. triple-digit move for the industrials. bob pisani on the floor of the nyse with all the action. >> hello, maria. a lot to get updated on and talk about here today. breaking news on paczar. slashing compensation at some of the top t.a.r.p. recipients. mary, what's going on? >> i'm outside the treasury department where ken feinberg just briefed the press on his plan. feinberg's plan for compensation for these executives for 2009, it starts in november. he -- the cash salaries for these executives will be reduced by 90% as reported. but this starts in november. any payment made to these top executives, top 25 executives at the seven firms receiving exceptional assistance from the government, payments made before november will not be clawed back

by mr. feinberg. the base salaries for these executives going forward will be paid in cash and salaryized stock. and the companies can appeal mr. feinberg's decision to the pay czar over the next 30 days. during the press briefing, feinberg called the process a difficult one, but said the companies were very, very cooperative. companies include gm, chrysler, their finance arms, bank of america, aig and citigroup. the plan submitted by these companies were not in the public interest. take a look at what the ceos of six of these companies will be paid for 2009. you might see that one name is missing from there, that being bank of america. ceo ken lewis has already said he will return his salary for all of 2009 to the company. here are the plan details. cash salaries will not exceed $500,000 for 90% of the top 25 executives. the exceptions include aig's ceo as well as two others at chrysler financial. they will receive $1 million in cash salary. the rest of it, again, in

salaryized stock. the salaryized stock can be sold in installments, but not until 2011. at that point, one-third of the stock can be sold in 2012. another third, and then 2013, the last third. any incentive or bonus stock given to these executives cannot be sold until the t.a.r.p. money that their companies owe to the government is repaid. some other details, any supplements or retirement executive plans that the companies have will be frozen. tishlly perks above $25,000 need to be approved by the special master of compensation, in other words u the pay czar. feinberg called the whole process very difficult. he also said that he was very sensitive, extremely sensitive, actually, to public outrage over pay. he said these pay packages are designed to get money back to the taxpayers as soon as possible by incentivizing the companies to pay the t.a.r.p. money back as soon as possible. so the executives can be paid what they have been promised. he doesn't know if this is going

to have any impact beyond the top 25 executives that have been affected. bob, back to you. >> meanwhile, the federal reserve proposing new guidelines on executive compensation, under the proposal the fed would not set pay limits on bank executives, but would conduct reviews on compensation to ensure that employee incentives do not encourage excessive risk taking. the question everybody's asking on wall street today is, do these restrictions on executive pay go too far, or not far enough. we debate the question right now with john martini, partner at reed smith and mr. sterner. good to have you on the program, gentlemen. thanks very much for joining us. let me kick it up with you, john. why do you think the restrictions on pay go too far? >> i think what we're getting caught up in here, maria, is the question of fairness. my concern is, we as taxpayers are now investing in these businesses. and what we really should be doing is running them in a

professional way, as a businessman does. and that means paying people what is necessary to get the best people to incentivize them to do the best job so we get our money back and so that we prop up these failing institutions. >> and of course, steve, you completely disagree, right? you think this doesn't go far enough. >> absolutely. we think it's an important first step, but that it should go way beyond just these companies, that there's a crisis in this company where we have an elite group of executives who make billions while people lose thag homes. i love what john said, the problem is, we're trying to be fair. i think that says it all, why people around this country are sick and tired of all the shenanigans on wall street. we do believe in fairness and we think it's wrong that the people who crashed the economy pay themselves literally hundreds of millions while somebody's losing their homes every seven seconds. we hope the government's able to go farther to limit compensation to companies raking it in here. >> john, what stephen is saying

was sort of glaringly out had there just last week when we saw goldman and jp morning an come out with strong numbers once again and putting aside tens of billions in bonuses that we learn that 10% of the company is unemployed and wages are at such low levels. what do you respond to what stephen just said? >> sure. you know, i think this is a classic disagreement here. i fully understand this fairness issue. and it isn't fair. what business is fair. business is about making money. and that's what i want to make sure that we do as part owners in these businesses. we are going to put ourselves in a position where we cannot recruit or retain good executives, traders, people in certain circumstances who are bringing in $600 million to their firm. >> i think people around the country are -- >> and others making $100 million. >> people around the country are so tired of this myth, that somehow it's a sacrifice to make

half a million. i challenge wall street right now, that people show a little pa terrorism. they show they care about the country. and say i'm not going to run away for another job if you pay me only half a million, i'm going to try to fix the economy and put people back to work. new york stock exchange week in chicago for the 25th and 27th, thousands will gather because they're sick and tired of the whining from people who make enormous sums of money and then say, i'll quit my job if you don't give me a big bonus. >> one of the issues we're sort of circling around and we haven't really hit on democratically is, the question of whether or not the government should be in the role deciding who makes what. i mean, that's one of the issues. free markets, capitalism, you can come from nothing and work hard, with a little luck, and end up making that half a million. or even more money. but is it the government's role to come in and decide who makes what? and there's one question -- wait -- there's one way to look at the companies that have taken money from the government, the t.a.r.p. recipients, but then you've got senator schumer out

today saying, i'm pushing for legislation that i want to start regulating pay on all public companies. is this appropriate? >> if you look at goldman sachs for a second, they wouldn't be standing if they hadn't gotten the taxpayer guarantees, that these companies, when they need help, they want all sorts of involvement from the government after they screw up. then they turn around and say, oh, the government shouldn't be in our business. wall street had an opportunity to fix itself. it's done the opposite. it's back to the same old thing. that's why a poll showed that 75% of americans blame wall street. they say wall street's greedy. it's back to the same problems. and people are demanding solutions. >> have a structure in place, right? we've got compensation committees. you've got a board of directors. the public markets have a structure in place that are supposed to include policing of certain things. >> and they haven't worked. >> right. but is that the fault of the people who are making this money? or is that the fault also of the regulators who are supposed to be overseeing how the process

works? >> maria, i think it's important to note that we didn't save wall street for the benefit of wall street. we saved wall street for the benefit of all of us. we were concerned that if these financial institutions seized, then our 401(k)s are going to be worth nothing, our checking accounts are going to be worth nothing. we didn't do this out of the goodness of our hearts. now that we've done it, we need to do it right and make sure that these companies that we now own operate in a competitive manner. we're going to put ourselves in a position where we are not competing with the other entities. and they're out there, either in this country or in another country. and we're going to lose the best people with the best relationships. >> these are the people that crashed -- this is what most americans think is so crazy. >> we'll see. >> these guys failed and now we're saying they're holding me hostage. give me a big bonus, give me big money or i'll run somewhere else. people are ready to say, go somewhere else because you did a lousy job in the first place. we have to start thinking about the rest of the country and not just wall street here.

>> great conversation. really worthy of lots more discussion on it. hope you'll come back soon. thank you for joining us. we'll see you soon. bob, over to you on the floor. >> we're near the highs of the day. walmart's helped in the middle of the day. an update on the sales guidance, up 1% to 2% this year. walmart moving up on that. now just off of the highs. in the last hour here, the important thing, once again, dollar weakness has helped the overall market, particularly the material stocks here. we've got earnings above consensus overall. but a lot of cautious guidance here. look at some of the big names here. j. crew, sales improving. sales only selectively improving overall. united parcel service, black & decker. potash in the fertilizer group pricing kind of poor there as well. financial stocks, the important thing, good comments overall.

pnc bank said net chargeoffs were declining. that was a big move. look at the move up for pnc today. fifth third bancorp, two stocks with positive comments in the potential for credit losses. tradertalk.cnbc.com if you want more on the bond market. and rick santelli standing by in chicago. >> thank you very much, bob. let's start out with the treasury complex. we had action today. but for the most part, ten years are unchanged. one-month chart will reveal we're right around the 330 and 350. those are the extremes to pay attention to. we're much closer to the 350 mark. we're going into, with five-year tips next week, $123 billion in supply. twos, fives, sevens and five-year tips. the dollar yen was a biggie

today, because the dollar jumped to one of the best levels against that currency in about a month. the dollar index actually had one of the rare up days in the last couple every weeks. it's only a quarter of a cent. but it is something, but we need to continue to pay attention, of course, to how supply next week may start to make a dent in the psyche of these low interest rates and a low dollar environment. maria, back to you. >> rick, thanks very much. once again, we're coming to you broadcasting live this afternoon from the oppenheimer company trading floor. it is just at 300 madison avenue in new york. trading and taxable fixed income groups are housed here. behind me is the convertible bond desk. we'll be speaking to some of the key analysts later in the program. we'll look at oil and commodities and what's going on today. just to give you a sense of what goes on on the equities trading floor, most heavily traded sectors, technology, health care

and consumer. the equity research team currently includes 45 research analysts covering over 800 companies across six sectors. the growing importance of the chinese economy is part of the action here. oppenheimer has a team dedicated to covering china. its research group covering roughly 50 chinese companies. we'll talk about that as well. we'll also get some sense of what people on wall street are saying, as far as these new rules in terms of compensation coming out of washington. also, we want to talk later on about commodities, because that certainly has been one of the areas that people have been talking about recently. and money has been moving into commodities quite a bit. today we've got once again the financials leading things. the major banks trading higher. once again we continue to see the triple-digit move in the industrials. the money is coming into this market, i do not want to get in front of that train, as many traders continue to say once again, bob, the most heavily traded issues are the financials.

but look at all the groups, and we're looking at a broad based group today. >> 3-1 advanced declining stocks. we're certainly doing fine here. joining me on the floor right now, alec young at standard & poor's. and joseph. alec, even when you get disaappointments like black & decker, potash, pricing continue of poor, these stocks don't really drop. >> and i think, bob, is the reason for that, you're still directionally getting what wall street wants. a gradual improvement. i think people were just looking for that to continue in q 3. no one's really expecting corporate america to knock the cover off the ball on the top line. maybe just a little improvement. the earnings are still cost driven. i think it's just moving the ball down the field. we're still moving in the right direction. i think that's all the market needs. >> moving the ball down the field. now the bulls are saying top line growth is a 2010 story. eight months ago they were

saying it was a second half story. moving the ball down the field. >> i would say, on the other hand, you have any number of companies, big cap companies, i would mention alcoa, intel, goldman sachs, that report numbers that not only beat estimates, but in some cases beat the whisper number, expectations higher than estimates. those stocks so far over the several days have not only not sustained a move, but have sold off. it's a very different response in my view than we got on q2 earnings. >> and up so much higher. >> expectations so much higher. and at the moment discounted. but some of the issues in our view were present at least back on the table for the moment. sustainability. alcoa benefits from incentivize ed around the world. and inventory restocking, question how much of that was really final demand. goldman sachs, jpmorgan, fixed-income trade. probably not sustainable at that

volume of those margins. >> are we basically going to be investing in multi-global national stocks? you see the fund flows for u.s. mutual funds. nothing this year. a little bit of inflows into global funds. but other than that, people are putting their money into bond funds. >> i would definitely, given some of the, you know, well put risks that clark mentioned, i think you definitely want to go with the global angle within the s&p 500. we've been recommending materials, energy for a while. those are the leading sectors in this rally. the weak dollar keeps going lower. the commodity trade, the faster growth and a lot of emerging markets, i think you want to keep playing that theme. >> how long does this weak dollar, short the dollar go long materials and energy stocks? >> it's oversold, just like the market's overbought. it may correct. but our view based on technical as well as fundamental considerations is that over time it does go lower. hopefully in a very even, orderly way.

>> okay. s&p 500, the end of the year, higher or lower than now? >> higher. >> higher. >> thanks very much. always a pleasure to see you. about 43 minutes to go before the closing bell. we're sitting off the highs for the day. financials and materials leading the way. >> for sure. bob, of course, you know what else has been leading the way all year, and that is commodities. oil prices up more than, get this, 80% this year alone, year-to-date 80% on oil on the upside. we'll take a look at what is the best way to invest in oil. we're going to get some answers from two top oppenheimer analysts coming up. >> after the bell, our expert earnings central team brings us instant analysis of earnings from american express and amazon.com. the most heavily traded stocks at the new york stock exchange. coming to you today live from the oppenheimer trading floor. amazon.com at the bell. you're watching cnbc, we're first in business worldwide.

the "wall street journal"

reports federal investigators say a pilot briefly fell asleep at the controls last night. the jet went 100 miles past the minneapolis airport before turning around and landing safely. maria? >> bob, thanks very much. you know, it has been a big year for oil. year-to-date, oil prices are up 82%. it's risen a whopping 140% from the 52-week low on oil. for investors deciding what the opportunity is in the sector, my next guest says you just need to look. finest on the oil sector. the managing director of oil and gas research and scott of wealth services and ocean shipping. good to have you on the program, gentlemen. thank you for having us on your trading floor. >> good to be here. >> oil up 82% this year. one of your 40% from the lows. does this market still have momentum? would you put new money to work in oil at these levels? >> absolutely. what you really have to take the

whole volatility. i do believe that oil prices will remain inflated for the next few months. supply and demand fundamentals do not support an 82% hike in oil prices. in the last six or eight months, more demand is not that much. it goes from $30 to $80. a year ago it was $150, went to $30 and now it's back to $80. >> where's the demand coming from? give me your sense of what's behind this move? >> well, in my view, it's pure speculation. >> just speculation? >> absolutely speculation. i still believe it does not support $60 oil or $80 oil. but they're not doing anything about it. the u.s. government isn't doing anything about it. six months ago they were happy with $50 oil, now they're happy with $80 oil.

a couple of months ago, you were happy with $60 oil. now he wants $80 oil. we're going to get the $80 oil. we already have the $80 oil. >> let's not forget that part of the story here is the dollar, right? clearly the dollar has played a big role here. should investors be looking to acquisitions in the sector if they believe the dollar continues to weaken? >> if you think the dollar will weaken, you can expect oil prices to continue to go up. that will be positive for the energy stocks in general. specifically for the stocks i cover, the offshore drillers, there's a correlation about 93% between oil prices and the stocks. the stocks will move with the oil prices and the dollar continues to weaken, the stocks continue to move up. >> which stocks do you recommend right now? and are the companies that you're following in step with the prices of the commodity? >> yeah. certainly, the two stocks that i cover that have the highest prices are atwood and pride,

pde. if the dollar's going to continue to weaken and oil prices continue to go up, those two give you the best exposure. even if you think it's speculation, it doesn't mean the speculation's going to turn around anytime soon. >> absolutely. >> so you think it does. how do i make money in the oil markets right now? >> you make money with stocks that have the momentum. and the stocks that have the momentum are those stocks that will have catalysts in them, even if production grows, and like apache or these companies we believe have significant upside. i like devon. it has led the world by a while. and i think they will come around. the one stock that outperformed the s&p 500 is bp. investors are looking for a catalyst. investors are looking for a reason to buy the stock. >> so now where we are in terms

of the calendar, we're going into a seasonally poor time of the year. is energy demand on the rise because we're going into the heating month? >> natural gas prices have been depressed for a very long time. they are likely to rebound. the question is not when -- it's not if, it's when. so we're still bullish on natural gas stocks. we've seen that oil will be an investment for the long term. oil is not going to go out of fashion anytime soon. but the investor has to be careful when the stock gets overvalued, they have to pull back a little bit. >> gentlemen, appreciate it. scott, thank you. always good to have you both on the program. we've got 35 minutes before the closing bell sounds for the day. a rally under way. dow industrials up in the triple digits, the nasdaq also holding on to a double-digit move. matt nesto fills out the scorecard from today's big profit reports.

welcome back. there's a chart of the dow. the highs of the day. holding above the 10,000 mark. big group of earnings coming out. five dow components reporting earnings. matt nesto filling out the earnings scorecard on the latest. matt? >> amex coming out after the close. more on that in a minute. let's look at the scorecard, maria. i'm pleased to announce we're one-third of the way through on earnings season. the results are coming in much better than expected. in fact, 78% of stocks in the s&p 500 have beaten estimates. this surprise factor is still strong. it's not as strong as it was, but we're beating it by an average margin of 18%. the blended earnings rate is now at only negative 19%. if we went into the quarter, at a minus 25%. we're definitely seeing momentum there. the heat map in terms of who is actually beating the estimates, there's still only two stocks that have missed on the bottom

line. the bs, the bad boys, boeing and bank of america. but if you look at a revenue basis, it's a much more elite club. we have two additions to be able to beat. travelers from a year ago, where are you -- merck, there you go. there are two, companies that have actually grown revenues on a year-on-year basis. and if you take a look at american express, it is coming up after the close today. one thing i want to show you here is you can see that the estimates have been rising here for the past three quarters. you have a little up trend going. but we had a big disappointment, of course, the actual in the second quarter. so look for amex in terms of the stock to possibly give investors something to chew on. because it is the hottest stock year-to-date in the dow. but what's also interesting is you take a look at the stock had a really good run-up in july,

really good run-up in august. but since september it's been kind of flat money. amex has most of the work behind it. it's up about 50% during that period of time. those numbers coming out after the close here today. so that's what we're waiting for here. one-third of the way through, maria. it's been a good ride already. >> sorry, maria. just a half an hour to go before the closing bell. if we closed here, this would be a new closing high for the dow jones industrial average. we're just shy of it, may ri a. >> up next, the chief economist for vice president biden will be with us. why the white house is ordering pay cuts to top executives at bailed-out companies. and if the government is taking too much control over private businesses. one person said, start with wall street. what about other industries? what about sports? what about other retails? what about other areas in

business? we'll get into it with jared bernstein coming up. 

welcome back. we're coming to you today from the oppenheimer trading floor in new york city. we're talking about compensation and markets. pay czar, ken feinberg, limiting pay for the top executives at this hour. the white house's reaction to that. jared bernstein, thanks so much for joining us once again. give us your reaction to feinberg's plan. >> i think feinberg's plan is consistent with the comments the president himself made this morning, which is that we here at the white house on the economic team, at the treasury, simply do not begrudge anyone's success. but when it comes to this small

group of seven firms who have absorbed over $200 billion of t.a.r.p. funds, and thereby are under a set of conditions and plans that feinberg articulated today, this makes a lot of sense. >> i guess the question is, earlier i was reading the wires, and feinberg said, what's happening at the t.a.r.p. recipient companies should be a model for all companies to follow. that was his quote. earlier, also, senator schumer saying, look, he's pushing for legislation to regulate pay all publicly traded companies. is that appropriate? >> i think it's really important, and we were talking about this, you and i, just yesterday, i think it's really important not to extrapolate beyond the facts of this case. okay? this is not -- the feinberg plan is not a plan that affects the millions of american firms. it's not a plan that affects the thousands of firms in financial markets. it's a plan that affects seven

firms, seven financial firms that have been the biggest t.a.r.p. recipients. now, to speak to the kind of heart of your question, should pay at any organization in america, but especially some of these large financial organizations, be aligned with performance? should pay discourage excessive speculative risk taking, exactly the kind of stuff that got us into the problem that we're looking at today? of course it should. that's a view that the president has. that's a view that we've heard from the federal reserve. senator schumer has that view as well and i think it's common sense. >> let me give you an analogy. should we be looking and scrutinizing, let's take athletes, how about tager woods, $100 million, or a-rod, $200 million. this desire and passion to win cause some of the athletes to take steroids, this can take you in so many different directions.

how do we know this goes down a road and doesn't stop? >> that's a great point. no one is interested in scrutinizing the 150 million or so americans in the labor market. and by the way, the vast majority of those folks are paid for their efforts at best, if they're lucky, frankly, a lot of them are probably underpaid for their efforts. what we're talking about here, in the case of the feinberg announcement today, is, again, a small group of firms, seven firms -- and by the way, it's only the top executives at those firms, 25 top executives at each of those firms -- that have received over $200 billion of t.a.r.p. funds. >> i know that. but the point is, they're calling this a model for other companies. you've got schumer pushing for regulation of pay on all public companies. that's what i'm getting at. is this the tip of the iceberg? >> no, i don't think so. i don't want to comment on schumer's legislation, because i don't want to characterize it before we at the white house

have had an opportunity to evaluate that. what i will say, and i said it a second ago, but let me reiterate it, i think that the principle that's driving feinberg, the principle that's driving some of these conversations, the principle that drives the president's view of say on pay for shareholders, of independence of compensation boards, is a critically important principle, one that is i think founded in the common sense that you should be paid for performance. >> i could not agree more, jared. pay for performance, i completely agree. one question is, a lot of people are talking about it this morning, and wondering, do you worry that some of the executives at american companies are going to go to other firms, international firms? i was talking to a guy the other day who says to me, i'm moving to bermuda. i think the policies coming out of washington into 2010, i want to pick up and get out of here. are you worried that this is causing that kind of severe upset? >> i'm not worried about that at all. i'll tell you one thing, let's

talk about some of the rules that fine berpg announced today in his plan. if you go to aig, okay, $180 billion of t.a.r.p. funds, aig, if you look at the executives in the financial products division, feinberg is capping their cash salary at $200,000. by the way, that puts them in about the top 1% or 2% of the american income distribution. so, no, i'm not worried. >> we should point out, though, that means lower tax revenues as well. that's another part of this that i think people haven't really focused on as well. >> look, i think you have to realize that resources at these firms, that's not being wasted and squandered on bad, and i think ill-conceived compensation payments is going to be used for other, hopefully, productive investments in these firms. >> that's a great point. jared, we so appreciate your

time today. thank you for joining us. >> you're welcome. >> jared bernstein at the white house. this market is on fire here. >> 19 minutes before the closing bell. we are just off of the highs for the day. we were at new closing highs for the dow. essentially we're at new highs, or near them for the s&p 500 as well as the nasdaq. the former treasury undersecretary, peter fisher, tells us more about the financial crisis. and what happens when the stimulus goes away. >> the ceos of federated investors, kimberly-clark, xerox and zappos.

welcome back to the "closing bell." breaking news in the auto sector. general motors announcing that it will go along with the executive pay changes that are coming out of washington. just a few moments ago, general motors say it will adopt the

changes to the executive compensation as outlined by the special master. gm is more heavily weighted total compensation to non-cash compensation that is directly tied to the company's performance, consistent with gm's long-standing compensation philosophy. maria, bob, general motors going along with the changes coming out of washington. the boston fed holding the economic conference where we find cnbc senior economics reporters steve leaseman. the beautiful spot in the world reporter now. santa barbara one day, cape cod the next. tough life there. >> reporter: if you're going to talk about monetary policy and banking reform, you might as well do it in a beautiful spot. the subject itself is not all that interesting sometimes. you need to convey the drama. that's why i brought peter fisher along. let's talk about exit strategies and the fed getting out, which is the topic going on inside. is the fed ready to do it and is the fed able to do it? >> yes. the fed certainly is ready.

a lot of its programs are self-liquidating. some of the programs have expanded, contracted, but others of them are not. so the asset purchase programs, it's not obvious how the fed gets out of those. i think the bigger problem isn't technical. it's not to pull the plug out of the bottom of the bathtub and see if the water runs out, i think they can do that. the challenge the fed's going to have is to set up its relationship with the banking system. how is its balance sheet going to work with in the future. we've sort of thrown all the rules to the wind and now we've got all these programs up and running. i don't think the fed can go home again the way it was. >> one of the things you pointed out in your presentation earlier, the shadow banking system had no relationship to the fed in a crisis. was it a silly state of affairs to be in right now. what happens on the back side of this? does anybody and everybody have access to the fed's discounted emergency window? >> i think congress and the fed have got to work that through. i think the fed has to think

hard about which actively managed balance sheets should get access to the fed. goldman sachs and morgan stanley have come in. and they get access. but there are lots of others who are very active in managing liquid balance sheets that haven't had access to emergency fed liquidity. i think a smarter financial system would include them. you have to change how they're regulated, true, but i don't think we'll go back to the assumption we'll have the narrow group of primary dealers who are the only ones. >> what do you have to do, put on a suit and tie and get access to the window? what kind of criteria where you have to say, yeah, i can bo borrow from the fed? >> i think the rules of who gets regulated, what will it mean to be a financial services holding company, there are all kinds of places congress and the fed can try to draw these lines. but wherever they draw the line, the fed also has got to create a new presumption about when they'll cross the line. with section 13-3, they cross the lines for all kinds of

institutions there. >> mr. fisher, let's move away from fed policy and talk about what investors are doing. investors so far this year are shunning the u.s. stock market and putting zero money into stock mutual funds on a net basis, and they are continuing to pile into bond mutual funds, even as the stock market hits new highs. what would you tell investors who are continuing to put money into bond funds who do not think they're ever going to go down? >> some day bond funds will go down. let's be clear about that. i think there's an asset allocation going on and investors are thinking hard about what's the right mix of equity and bonds. over the last years people have been very overweight equities, many baby boomers like myself would have had a very big allocation to equities. the crisis means you'll be rebalancing into bonds. >> picking up on bob's question, peter, the fed's going to be exiting some of this stuff.

not buying treasuries at the end of this month and mortgage-backed securities next year. are you shying away from those areas that the fed is going to be exiting? >> our portfolio managers at black rock underweight mortgages, agency mortgages. we think there are other things more attractive and we're a little nervous how that exit unfolds. how will the fed behave in the future, will it be actively managing its mortgage portfolios or simply stop cold turkey or keep buying mortgages. there's a lot of uncertainty around that. treasuries, that's a tougher question in a sense, because that's a lot of uncertainty about the path of real rates, and where is inflation going. if inflation's going to be zero, 3.5% real rate on some of your portfolio may be attractive. >> peter, in 15 seconds, can you sum up your way to save the world in terms of getting counterpart risks not being the top of the capital structure? so that there's actually risk on the line? real quickly. >> i think a lot of what's going on is we've had too much

trading, relative to credit creation. we've got to figure out a way to separate the trading book from the banking book. trading ek po shurs need to be treated separately and have to be margined for everybody. the way to do it is make the net trading exposures subordinated. >> bob, that's a really important idea that i think we'll be coming back to when we figure out exactly how we're going to be restructuring this banking system. >> that's a very good observation, mr. fisher. about ten minutes to go before the closing bell. we're just off highs for the year for the dow, nasdaq, and of course the s&p 500. a lot of winners and a couple of losers to toll you about as well. "under the radar" stocks, we'll find out what's going on with the market. up in triple digits. we're also taking a look at j. crew. up 15%.

welcome back. we're coming to you from the

oppenheimer trading floor in new york city. money moving into stocks in a big way today. look at the widely-held shares today. this doesn't even say what all of the story going on. some retailers under pressure, like walmart. that's a dow component. having said that, the dow jones industrial average is being led higher by financials, which are higher across the board, among others. you have a handful of better than expected earnings, which really led things today. as a result, this market is up 135. off of the best levels, but still pretty strong, bob. over to you at the nyse. >> let's look at some of today's "under the radar" stocks. j. crew outlook well above the previous estimates because of better than expected sales and profit margins. that's a new high here for that stock. us airways narrowed to $80 million. excludeing charges, that would be wall street's estimates. the carrier cut fares. ceo doug parker said the

economic environment is soft but improving. us airways stuck between $2 and $5 since bottoming way back in march. itt educational services reporting a 50% increase to $75 million. that was better than expected. the revenues came in at $335 million, about $80 million short of estimates. up next, we're coming right back with the closing countdown. >> also, bob, we have the interview of the day coming up in the next hour on "closing bell." mary thompson sat down with ken feinberg. we're going to get into the compensation changes coming to wall street when mary sits down with ken feinberg, the compensation czar.

welcome back. bob pisani down on the floor of the new york stock exchange. just shy of new highs on the dow. 1,092 was the old closing number. just dropped down in the last hour or so. the important thing about today? news really matters. walmart in the middle of the day, talking about sales trends. a little built better than in 2010. that moved walmart up. bill dudley, new york fed, made comments in the middle of the day that maybe the government wouldn't have huge losses on some of the programs like

t.a.r.p. that are out there. that helped some of the financial stocks. we had the weak dollar, yes, the endless weak dollar. short dollar, long commodities, big industrials, long commodity stocks, the best trade of the year. it helps move the market up. overall, we had very cautious comments this morning. yes, we had great numbers from companies like 3m, or j. crew, for example. but for everyone that was there, there were three or four other companies that were fairly cautious in their commentary. we'll go over a couple of them right at the close. here's the "closing bell" here down at the new york stock exchange. just shy of the new highs for the dow industrials. there's maria coming up. it is 4:00 on wall street. do you know where your money is? hi, everybody. welcome back to the