worked. they haven't been able to figure out what happened. it appears to be an isolated inside and they will continue investigating to resolve the problem. >> thank for watching "street signs," everybody. welcome to "closing bell," i'm in for maria bartiromo. another day on wall street waiting for jackson hoel. >> it is all about what bernanke has to say and whether or not he will offer any clues about more monetary stimulus next month. until then, it's a wait and see attitude by wall street, and we're wondering whether or not the time is to take profits in light of the pretty good rally in the last seek weeks or so. >> it may be calm on wall street, but there is a storm

brewi brewing. we're going to look at the potential financial impact later on this hour. first, here is a look at how things stand right now. we're waiting for friday for ben bernanke -- this is one of the biggest interday moves of the session, it's been literally zero at some points in the day. the nasdaq has been hoovering around the flat line as well. it's higher, and for the s&p 500, it's higher by more than a little more than one point. >> so u.s. consumers have spoken already. consumer confidence at it's lowest level in ten months as job concerns became more pronounced in this period of time. >> plus, the euro zone crisis is heating up, so much so that ecb president mario draghi says he is skipping the meeting to hash

out solutions. so are all of these good reasons for investors to take profits right now. >> rod smith joins us and lincoln ellis, craig hodges, i'll start with you. what's the big feature you're watching today. this is on a very quiet week. a lot of people on have indication. right now, what's the thing you're focussing on? >> well, we have been very impressed with show resilient the market has been. we're a wash in negative news, but yet here we are on pace for kind of a 20% type of return. we have had negative news with europe, and everyone is looking for this very slow growth environment, but here, we're finding growth opportunities left and right. so, you know, the market can correct, and i expect it will at

some point, but we would sure be buyers. >> lincoln, do you agree with that assessment? >> i don't think it's anything amazing about equities moving higher when yields are at 1050 or 1060. i mean, clear market signal from the bond market that things are not okay. that it has become one big relative value trade, and our concern is that it could come off quite violently at any time. bonds are very much suggesting caution. >> what chatter about mario draghi dropping out. he has a heavy work load. we already knew about that, but the feeling is maybe they're up to something and that something of substance will come out of their meetings in september, what do you think? >> i think that's the right interpretation, bill. i think what's happening with mario draghi and his

negotiations is frankly far more important than what ben bernanke may or may not say in jackson hole. i think the critical thing to watch is very short-term interest rates in spain and italy. what has kept this summer, and allowed this summer to be good, is that the spanish and italians have been able to come to the market at short-term interest rates that make funding affordable, and if there is a deal brewing between the bank and draghi to try to cap short term rates in italy and spain, that will be a catalyst for markets to move higher. if it doesn't turn out to be the case, then we have wrongly anticipated, and the markets will have that traditional september correction. >> is that a reason, perhaps, to be cautious right now. you had a nice run all summer as we just highlighted in this

segment, and all of these unknowns, what do you do right now in the face of that? >> if you're a short-term player, you want to take something off of the table. i think there are some things that boosted the markets. we have the ecb president draghi saying we're going to do whatever they need to do to preserve the euro. those are the two things that took the markets up, it's priced in now, as you spoke about there are many things in september. i would say the key is the meeting around september 14th. that's where a deal for spain is likely to get done. in terms of asset purchases. i think they cut rates some more, i think the big thing is is there going to be a deal for spain? i think the answer will be yes, and that will cause markets to move up more. ahead of that, i think it will be tough.

>> lincoln ellis, if rick santelli was here he would be pulling his hair out on talk of capping rates. what do you guys talk about. >> i would love to comment on that if you'd let me, bill. >> i absolutely agree with rick and i will do my best interpretation of rick here, the idea that any other stimulus would move this market for a sustained period of time is ridiculous. we have seen the effects of qe 1 and 2, and operation twist. >> i'll take the other side of that when you're ready, bill. >> let him finish. >> it's not going to happen. >> rod, you think it's a good idea? >> i think it's been a wonderful idea in the u.s., and i think that the people who do this fail to recognize that time that has been bought has allowed for some important structural changes to take place in the corporate

sector, and the household sector, and the financial sector. i think what europe desperately needs is the time to get out of this spiral and tackle their issues out of a crisis moment. >> it's a structural argument about the economy, not about buying equities. >> i'm not looking at buying equities. >> make sure you make the difference. >> can i finish my point? spain and italy need a point that is close to their economic growth rate otherwise they disappear into a black hole. what is being price fd in is that they disappear into a black hole. if draghi can find a mechanism, then they will come out of the hole. >> i'll give you 15 more seconds, lincoln to answer that. >> it's not clear to me that equity prices in europe are pricing in spain or any of the countries. >> we're 1% from the highs in

the s&p. >> try the last two years. look at spanish banks over the last two years, you'll see a dire picture priced in. >> well, we found something to disagree on, how about that. thank you, appreciate your conversation. >> consumer staples and other stocks -- >> that's despite the weaker than expected consumer confidence number. we're moving on fundamentals for a number of the individual names in those groups. equities are gaining a little strength, but consumers are up the most -- and we're switching, digressionary also in the top level of performers. a couple of food maybers are serving up headlines, tyson foods are making sure their operations continue in the wake of hurricane isaac. william johnson surprising the

market telling shareholders the ketchup maker expecting to move higher. and carnival is noting higher cruise trends. there is improved demand for nike products for the back to school time of year. michelle? >> thank you, courtney, after being delayed by tropical storm isaac, the national republican convention is back on track today. >> they're getting ready to nominate mitt romney as their party's presidential candidate. right now you speeches under way before the role call. a lot of the procedural agenda is under way right now. >> we'll continue to monitor the developments, and don't miss the

cnbc special report. i'll be hosting that, tonight, at 10:00 eastern time right here on cnbc. >> we'll take a break and come back. ♪ >> housing horror, could mitt romney's tax reform proposal include eliminating mortgage interest deductions. and are the rich being taxed enough? a majority of mens, including those in the upper class don't believe they are. we're sitting on a bunch of shale gas.

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>> it has been a major corner stone of the economy and the housing market as it continues it's comeback.

housing prices posting the first year over year increase. >> bill, in 2010, it was the home buyer tax credit that juiced home prices. now the latest numbers appear to be up on their own. this is a three month running average. all three composites were up from a year ago. national up, top ten city composite up.1%. 18 of the twenty markets posted better annual returns in june compared to may. david blitzer says there's not much seasonality. ann lists weighs in are pretty positive be mu are warning about raising interest rates. also, investors have been muddying these numbers, swarming the low end of the markets and bidding up prices.

a 14% price drop. but now many claim investors are dropping out due to higher prices. we have more on the realtycheck.com blog. >> what would happen to home ownership and pricing and the economy if the tax reduction on mortgage interest were eliminated. mitt romney won't say if mortgage rates are among those he would cut, but it is a very controversial topic. >> with a lot of people, but can it happen, would it happen? what if it did happen? john considers the mortgage interest tax deduction what he calls an anti-growth distortion, and sherry says this is no time to be discouraging homeowners.

john, make the case against the mortgage deduction right now, why kill it? >> one of the reasons, i think it fuelled the housing double that you had. that this was the only time of consumer interest deductible for interest from your car loan and interest from credit cards. people rolling all of this interest into refinance and home equity loans. one of the things that will fuel the bubble and cause the crash. >> but we presume that home ownership is good in america and we want to encourage that activity. >> that's -- because there are many american dreams, we distorted investment into the home building market away from biotech. i would be in favor of eliminating this so we can preserve more tax cuts that are progrowth. >> sherry, make the case for the

mortgage deduction. >> it's easy, there's no question that two of our biggest challenges are growing the economy and shrinking the deficit. trust me, you've seen it. all we need is to give people another reason to walk away or home buyers ago reason to sit on the fence. >> why can't the economy recover without housing? one of the spirits of john's argument is housing was too big a part of the economy, and if we go back to that, you have the same kind of economy that we would necessarily want or that is good for us. we can recover in other ways, can't we? >> yes, let's drill down to what that's made up of which is individuals. and factually, 75% of middle america's wealth has been in housing. homeowners have been worth eight times the renters.

that's the savings, retirement account, and it makes people feel comfortable. the last thing we need to do for the 75 million homeowners relying on the mortgage interest deduction. who lost up to 50% of their home value, 25% of whom is under water gives them one more reason to walk away. >> it has been around a lot longer before the housing bubble occurred a few years ago. to blame the housing bubble on the mortgage deduction is that little distorted itself, don't you think? >> not really, it's only in the past couple decades with other tax reform that mortgage interest has been the only time of interest that was deductible. >> but you can't write off your credit card debt any more. >> that's the problem, people were putting their credit card debts into home equity loans and

adding more debt and fuelling the mortgage bubble because of the fact that mortgage interest was the only thing deductible. if you have more progrowth tax cuts and you phase out, i think you strengthen the economy. and housing goes lower and you might get more buyers on the fence to look at some of the slightly lower prices. >> guys, unfortunately right now it's not that scientific. there's mountains of academic research on both sides of this. average americans out there are looking at things like this and not being encouraged to borrow more, but being encouraged to stay put. it's part of the foundation of what our economy is based on. >> have we made too much of home ownership being a hall mark of success? >> there's a difference between

home ownership and sustainable home ownership. that's what this country was about until the last decade or so which is a whole other discussion. because it goes to the ability of being able to make ends meet. but the foundation of owning your home and striving to eventually pay it off and own it free and clear using that nest egg -- >> but once you pay it off, you don't get it any more, right? the deduction goes away. >> yes, most people get that deduction when nay need it the most. younger homeowners and those that just don't have the catch. >> one of the issues, and why there is bipartisan agreement, is that it's more of a deduction. >> all right, folks, an interesting discussion, we'll see what comes of this down the

road. >> we have about 39 minutes before the closing bell. the nasdaq is higher by a little more than five. >> the gulf coast bracing for the on sought of hurricane isaac. we're tracking the storm's latest movement and we'll have that for you. >> we'll look at the potential impact on property and casual ti insurance stock. costs. dallas. detroit. different rates. well with us, it's the same flat rate. same flat rate. boston. boise? same flat rate. alabama. alaska? with priority mail flat rate boxes from the postal service. if it fits, it ships anywhere in the country for a low flat rate. dude's good. dude's real good. dudes. priority mail flat rate boxes. starting at just $5.15. only from the postal service.

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the impact of hurricane isaac. >> a lot of gyrations on the prices. they are only a few cents higher than they were at the close. traders are really trying to wait and see and assess what happens when it makes land fall. it will be the flooding and the power outages. what we're hearing now on the ground is the cash markets for gasoline is where it was on friday. a number of the refineries announced their shutting down refineries. the other half they're waiting to see what happens. the fact remains though that we do have plenty of natural gas in storage, and that's why when those storage levels are higher than any time we have seen this year, the gas prices are not falling. >> meanwhile, isaac continues to strengthen as it goes towards

lass. todd gross is tracking the latest developments. >> the storm is definitely a problem, but it is not a katrina, and it doesn't have time to become a katrina. let's take a look at why. the satellite picture is showing that we basically have a storm coming together at the last minute, which is interesting, because when it does do that, it means then it's only a few hours away from land, and then it's trying to make a last ditch effort at strengthen ining. it could become a strong category one. since it's picking up forward motion it will aggravate it. the winds are already kicking up, you see that right now, take a look. it's gusting now in the new orleans region, 41 miles per hour. 41 gusts near the storm center

itself, sustained winds up to 70 miles per hour. land fall coming up, but it wouldn't affect new orleans until it's in full tonight. >> as hurricane isaac does slowly approach the gulf close there, investors take a wait and see attitude. inevitably we look to insurance stocks. right now, the s&p insurance sector has little change, just waiting to see what impact will be. how does the sector fair in the face of a big hurricane. on the technical side we have ennis tanner. myer, how much of an effect do you think isaac will have? it doesn't have time to grow that strong, but it's about the flooding, and that can have a big impact on insurance coverage there, doesn't it?

>> it can, generally flood losses are excluded from personal property policies. so it could impact the the pers insurers. >> so we look at the insurance themselves, and we have a couple companies to look at here. >> first of all, the sector as a whole has been anything but disaster prone. this is a three-year chart, and it broke out to three year highs in august on a very strong move. what's interesting though is this is a 200 day moving average, and allstate is above that average. the previous three times that has happened we have seen the stock consolidate. >> it's a little rich for your blood? >> absolutely, travelers is a similar suggestion that broke out to all-time highs, but this is a much more technical break

out. it has not been able to push with enthusiasm over that $65 level. i think it will pull back lower, in the grelower $60s, i think i a great buy. >> i would pick all state. they have more reinsurance protection than travelers. if this is a painful hurricane, particularly on the oil refinery side, gas prices go up, people drive less, and people will make more money on the automobile side. >> the dow is lower, bill, by about 10 points, the nasdaq higher by four, and we have 30 minutes. cashing in on the cloud. amazon, is it transforming from a retailer to a cloud computing

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welcome back to "closing bell." disney's espn unit striking an eight year record deal with major league baseball valued at $5.6 billion. it gaves them one game post season, a wild card, and more content. baseball is very, very good to espn. >> it has been very, very good, that's right, an vice versa by the way. the nasdaq has pushed for it's first three session winning streak in a week for those of you keeping score. we have details on that. >> good average. we're watching the nasdaq, and it's modestly higher and the best performer on the day. one of the stand outs is

lexmark. it's going to cost about 1700 jobs but save about $95 million a year. and also kla. and apple, slightly lower on the day. also keeping an eye on shares of google. there is some dispute. the result of it came out yesterday and could have an impact. we're watching shared of google today higher by 1%. back over to you. so there is a battle brewing in the clouds. >> i love to story. amazon has become the leader in cloud computing. that unit contributes a reported $1 billion in revenue. and it's far head.

>> benjamin shactner joins us, and so does herb greenberg. very guy yetly, they belt this in the cloud, haven't they? >> yes, and it's a fascinating project because it is built based on the fact that they have this built for their own sight. what else could they do for the year. and it's turned into a massive business that can grow for a long, long time to run. >> this is servers where i put all of my stuff on their servers, and it seems like it's a big commodity business. prices will do nothing but go down, is this really such a good

business? >> it's good for that excess capacity and every dollar counts. so many people that have the amazon service is that prices are coming down which gets to the low margin business, it seems they're accepting the increased competition. one of the big competitors out there is rack space. but there are many. even ipn, people with excess server capacity wants in. >> and that name, because they have racks and racks of servers. >> what about that, what happens to margins when they get in in a big way. and on and on, what happens?

>> amazon prides itself, and they're taking that model and bringing it over to the computed side of the world. we're talking about a company today with virtually close to 0 margins on their retail business. if you can get to the high single digits and low double digits, that's a mar gun expansion -- >> so to that point, would they stay away from this business, or should they precisely because of that? >> they talk about getting into the business, so they're coming after it, but it will certainly be a much lower margin of business. >> you wonder if the others are so far behind, amazon is way ahead of them, it tames time to build out the kind of infrastructure to get this business up and running to achieve the kind of economies that amazon has.

they're willing to go then for the lowest cost provider. i will tell you over the last two or three years, i talked to so many businesses that use it. they sit there and they rave about the servers, and the software provided internally. >> there was a time it failed, there was a technical glitch and the stock suffered i believed. >> yes, you have outages with any of these services, that's par for the course. i'm intrigued that margins are going up. you're assuming this business will become that large. and i know you said only if it would, high single digits or something like that. >> think about it this way, jeff

beszos says it's around a billion. it's a long term play for these guys, but they think it could be incredibly large overtime. . >> you have given herb something to think about. he is going back to his desk to assume the thinker position. >> he always does that. >> down 12 points, losing altitude. >> it's been a summer surge for stocks, are the markets heading for a sell off? it has been the worst month always for the s&p 500. >> after the bell, most americans don't think the rich pay enough in taxes, and the major of upper income people agree with them. the shocking details coming up. but first, before we go to break, the dividend.

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just before the break as part of the dividend, we asked which company stock has climbed the most this year. delta airlines, toyota motor, or union pacific? now the payoff, toyota that has risen about 22% year to date. >> we're looked ahead now. it could be historic for the year. so we have guests with us to discuss it, erin, should we follow history and say september is, for the most part, always

bad? >> we have a lot of uncertainties hanging over us. >> pretty good gains we have had this summer. >> because of the gains, i look for a pull back. we're looking at a lot of volatility, and i think we could see more in september. >> you're bearish too, aren't you? >> yes, but you have had four things up and one thing down. four things up, retail sales, lead indicators, house prices, industrial production, okay? you had those things rising and you had the energy prices easing off a little bit even though they were up 10% for the month. we agree with erin, we see the fourth quarter up only 1.2%. and the next quarter is .9%. now we're looking for the number to come in at 1.5 to 1.7. >> wasn't there a moment we were

talking about a recession all over again, you sound optimistic. >> the fiscal cliff, it will go back up to 9%, and the fiscal cliff right now still looks in front of us, and that's how we are not that worried about stock prices, but they will get crazy. >> you never know. >> the volatility goes up. bob pisani, your expectations have been raised today with mario draghi dropping out of the jackson hole meeting, they think he has something up he has sleeve, right? >> i think he will be very restrained. do you know how many traders i talk to that think there will be a 10% direction? like 90% of the trade eres i

talk to. . a lot of these guys will be out of a job at the end of the year. there's two things working out there. china may have serious problems out there. there is a draghi bernanke put out there. you have to fee a way to factor it. >> let me ask erin about that, the expectations have gone up would you place many bets on what ecb request come up with? >> not so far, we have seen a lot of the cbs spreads go down because of positive comments. >> not what they've done? >> exactly. i think they keep the markets so far. and we're still looking for the

very risk adversity -- >> one of your fears is higher smod ti prices. in europe and asia now, can you still expect that with commodity prices going down? >> yes, the u.s. drought, looking at the corn prices -- >> and it's a supply problem, not a demand problem. >> exactly, those prices can go up as long as we're pulling back. we'll see that push on stocks from both ends. >> how did you interpret draghi not coming? >> it sounds like a problem, the elections are that day, and bailout fatigue. the last 16 septembers have opened strong, 12 of them in

week four, and the last 16 have closed in a down mark. >> because they getting ready for october. it's the worst of the last 12 months since 1950. down one-half percent on average. so a little less bad. >> two things matter in september. number one is what draghi says, and number two is what happenle does, it's up 70% this year. it's the number one or two holding of anybody that i talk to at this point. tell me what happens with those two. >> very good, and watch those interest rates. the thing that went down is the spanish and italian bond yields, if they start rising, watch out. >> thank you, all. good to see you, thank you for joining us, david i'll see you later on the countdown. >> is it 12 minutes?

>> yes, 12 and a half. >> it's lowered by more than 5 points. >> we have not forgotten about hurricane isaac and the impact it could have on your commute to work. >> new york city cracking down on soda, so why is the state now taking aim at energy drinks, stick around to find out. with scottrader streaming quotes, any way you want. fully customize it for your trading process -- from thought to trade, on every screen. and all in real time. which makes it just like having your own trading floor, right at your fingertips. [ rodger ] at scottrade, seven dollar trades are just the start. try our easy-to-use scottrader streaming quotes. it's another reason more investors are saying... [ all ] i'm with scottrade.

okay, they're holding their breath on the gulf coast there in florida as they await hurricane isaac. it did become a hurricane a couple hours ago with winds about 75 miles per hour, but it's a slow moving storm. >> very slow, when i left last night, we were talking about whether or not it would have come ashore by this morning. as we leave today, we're asking today if it will have come along. when it comes to business stories, it's about refining.

we have a lot of oil. >> the markets are saying this may not be that big of a deal, least for the energy industry. the same thing for oils as they were yesterday, we're waiting to see what impact it will have. they spent 14.5 billion in the last seven years after katrina to sure up the levee and flooding system there. we'll see what impact isaac has on that and if the storm surge takes out some of those levees there. >> the first big test for this city physically, psych logically as well, preparedness. >> we certainly hope it works out for them. >> don't forget, we have a special to the, 10:00 p.m.

eastern time, we'll cover the con vens and this at the same time. bill, i know you will be watching? >>ly be watching it later, yes. >> we're coming back after the break for the closing countdown. >> we have a guest that says romney's proposals would make things even worse, so both sides of that issue coming up. we're sitting on a bunch of shale gas. there's natural gas under my town. it's a game changer. ♪ it means cleaner, cheaper american-made energy. but we've got to be careful how we get it. design the wells to be safe. thousands of jobs. use the most advanced technology to protect our water. billions in the economy. at chevron, if we can't do it right, we won't do it at all. we've got to think long term. we've got to think long term. ♪ as much advanced technology as the world around it.

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okay, about nour minutes left in today's trading session. if you have one indicator to look at to see what's going on today, the vix is up, there was a spike there, peter costas will tell us why it did that in just a moment, but for the most part, a pretty sedate market again today. it's that time of year, but not

too much worry about what's going on. look at the price of oil, up a little, but not tremendously. here it is at $96 and 23 cents. mario draghi drops out of the conference, what does the euro do? not a whole lot. so we're at $125.67. the dow, as you know, it's like a rounding error with the gains and losses we have had today. instead of just looking at today's trading. here we are down a fraction today, up 16% this year. a pretty good year. ten year yield, i'm going to get over there in a moment, the ten year yield down a fraction but down sharply this year at 163.5

and change. gold seems to have stalled a bit here down $85. the sectors we want to see if we're defensive or putting risk on today. the s&p 500 sectors, the top five performers for this day so far -- apparently we don't have that. >> gold was up 6% of the month. as that looks like it's going to be delayed, then they base it off of today as you just points out. >> so you were expecting volatility? >> i think it can be to the up side. that led to that pop -- >> that got the markets attention briefly this morning. >> yes, it was right after i finished my bagle, right after i got done, the market moved.

>> sometimes on a week like this, you forget some of the more significant things. >> a lot of skepticism comes out of jackson hole, are you hanging your hat on the ecb and what they're do something. >> i'm not. i said this before, i'm getting tired of this noise coming out of europe. the market is coming up 125. it's -- i'm getting -- it's old. you could argue it's getting hold for the markets as well. the volatility has come down, and we're taking a lot of this in stride. >> absolutely. >> i think that's part of it, i think people are getting tired of it. >> you are buying european securities? >> yes, they're at a ten year low relative to the u.s. the dividend is double that in the u.s. so we added a