the high cost of healthcare continues to climb even as the recession drags on. what it could mean for your insurance costs...as well as profits for hospitals. plus, the market on edge as it eagerly awaits second-quarter bank earnings from some of the world's biggest banks...the impact they could have on the recent rally. and... go for growth or look for value? what could you expect from each investment strategy with risks and rewards? these stories and more all ahead on this edition of first business. off and running a make or break week with second quarter earnings season time to put up or shut up for the nation's big banks. whether or not they've been able to dig out of the whole that they found themselves in over the past year and will finally get those earnings as really this recent rally since march is still a bit of risk. and we're also

expecting more earnings from some technology heavyweights. will pull in and tell and this may actually bring participation in the overall market with the s&p 500 down about 3% since january. and this is the first week in two months that general motors is not in bankruptcy as the week begins late in the week last week general motors was able to exit bankruptcy. several bank earnings for the second quarter could have the markets on edge this week. on tuesday, its goldman sachs thursday jp morgan, and mb financial on friday bank of america and citigroup analysts are expecting a mixed bag of 2nd quarter earnings results with some banks likely to report small profits.. and others continuing to report losses... largely because of writedowns on mortgages. i think overall, the tone will remain negative. mortgages are still underwater, people are still defaulting on them.. and

banks are not up to date with process of foreclosures which will slow the rate a bit. zacks research analyst eric rothmann points to faulty loan modifications that will continue to present problems for banks... he says many modifications are not effective because there is no change in interest rate or principal reduction...and in some cases.. he's seen minimum monthly payments going up for struggling homeowners... in addition he says commercial real estate will also be a drag on bank earnings... as more retailers go out of business. i don't believe the worst is past the banks.. we'll see 1 or 2 more quarters use we've not seen an improvement in unemployment or job creation. it's hard to predict how the markets will react to bank earnings one index of large banks has seen a strong rebound off the march lows but it's still down 11% since january... and appears to have stalled for the past 2 months.

one of the first big tests of the white house's pay czar could be a new round of a-i-g employee bonuses in the new week. since the last time the bailout out insurance giant paid bonuses, the obama white house has put in place a compensation czar who has the power over pay plans for the top 100 executives at companies that have received government bailout money. but these latest payments of less than $9 million dollars by a-i- g may not need government okay because they're part of the employee contracts before the government stepped in. on thursday, former treasury secretary henry paulson will face lawmakers as they continue grilling all the players involved in the bank of america - merrill lynch merger. in his first congressional appearance since leaving office paulson will testify in front of the house committee on oversight and government reform... as part of an ongoing investigation. lawmakers want to know more details about paulson's role in pushing bank of america to buy merrill lynch - just as huge losses were coming to light that could have derailed the

deal... because b of a's ceo wanted to back out. in june, federal reserve chairman ben bernanke testified in front of congress - he denied ever threatening to replace bank of america's management - if they did not go forward with deal to buy merill lynch. bank of america has received 45 billion in goverment aid plus guarantees on more than 100 billion in assets. confirmation hearings for supreme court nominee sonia sotomayor... are set to begin on monday. the senate judiciary committee will call dozens of witnesses to speak to sotomayor's personal character.. as well as her experience with the law. the list of witnesses include new york mayor michael bloomberg, former fbi director louis freeh, and various attorneys and community associations. ahead of this week's confirmation hearings, opinion polls indicate americans are divided on her nomination. and while she has the support of democrats on capital hill.... republicans are critical of some of her past rulings - including one that went against promoting white firefighters in connecticut that ruling was recently overturned by the

supreme court. if confirmed, sonia sotomayor would be the third woman on the nation's highest court. time now for tracker talk less head to the cme group and join larry levine of secrets of traders coming up we have a big week for second quarter earnings results banking and technology stocks bogle in intel how are traders positioning themselves for that? i thing most traders are on the floor is looking for a situation where the bar is gonna be set low. is not one be very hard to overcome the expectations on earnings you really want see the stocks move higher you want to see the market as a whole move higher. pretty much last week in the last couple of weeks we've seen these markets move below so most traders are getting ready for good numbers to maybe see a little bit of a comeback from these markets in general. i want to talk to you about the s&p 500 is scenes as of late as the past few weeks so the sellers have not been that of rest of the down days are happening all less than average volume would you make of that? i would agree with that in fact the one theme that is important

to know is that we went up over last three or four months at that volume was a very be either. it may have been a little bit bigger than what we're seeing right now but it's been pretty light for the most part this year there's a whole lot of investors trading last year and don't have any money left to be involved in the market so i think that's a big part of what you're seeing a lower volume with the been the case you're seeing some moves that's hard for a technician or trader here to trust moves are happening on volume and those are moved we don't wanna see. or move to we really can't put a lot of faith in until the volume picks up is really hard to be a good technician down here. seems like a lot people are waiting on the sidelines let's talk about the kind that in the week ahead of inflation numbers retail sales housing data what you think is one move the market? i think the retail sales will be one of my people are really looking at look into those numbers to really get a lot better wal-mart's in the targets of the world if those things start to pick up i think people will think that the economy is picking up as well. on not a big believer in that but i do think on the short term if we saw some good numbers from the retailers in the retail number in general we could see a pop in the market. thanks as

always mary levin of secrets of traders. still to come why high risks and low returns may be the outcome no matter how you invest in today's uncertain stock market...we'll hear what an expert has to say. but first....the rising cost of healthcare....why the recession doesn't seem to be having much of an impact on those high doctor bills.

in the midst of the biggest healthcare reform debate in 15 years, and the worst job market in a generation, healthcare costs continue their rise. the economy may be shrinking but what patients are paying to feel better isn't. brett hickman is a partner at pricewaterhousecoopers which is out with its annual forecast of medical costs. it's time to bring you back nice to see you. the cost increases continue another 9% expected in 2010 will take a look at the trend here. the good news is that these increases are slowing down a little bit. where coming down off of 2008 and 9 per 0.9% this year will probably end up at 9.2% looking at are forecast at about 9% for 2010

but the race still greatly outpaces inflation as well as growth in wages which continues to play bit pressure on employers and employees. basically what this means is that even if you are getting an increasing array of car is gonna be eaten up by health care premiums. especially as employers look to be in our survey over 40 percent of our employers say that they're born to pass along more costs of health-care insurance premiums and even to the point really trying to influence higher copays and deductibles to try and change behavior's related tuque utilization. and alas park one and five of thing these health care savings accounts. and that's about changing behavior as well getting more proof than a tax treatment as opposed to critical care treatment. absolutely. 75% of employers + actually provide wellness and chronic disease progress but only 15% because of lack of incentives for employees actually utilize those

programs so these eight essays are very key tools that we have to give employees more engaged in their own wellness and spin doctors that's a key point because it attracted some and say that those who tend to go to wit are those that can least afford the big shot at a high deductible plan is gonna deliver. we are seeing a major shift in the survey across even the large employers such as wal- mart and even price waterhouse coopers the level of participation even at the top ranks within those organizations participating in those h. s. as is materially increased. we are looking across the industry in a lot of our employers are not going be able to to have expensive plans anymore and they're gonna start to move towards these high deductible plans with these eight essays as the standard. this evolves from a user's standpoint let's talk about from the delivering of this kind of care what are these trends mean for hospitals that have seen their margin squeeze significantly more and more focus on employers and using

services. they have a competing trends in people who are fearful losing jobs are increasing their utilization people who have lost their jobs and don't have insurance obviously have a bigger population coming in the hospital industry is preparing itself as we move into universal coverage under the new administration of having a much larger pool of patients who were on their short and looking and trying to improve their systems up how they care for much larger pool of under insured vs. the uninsured and full ensured. what does it mean for hospital investors who do need to return a margin for their shareholders? but it means for those hospitals they really have to get aggressive in the areas of chronic disease management. there really have to be focused in on quality and out comes as you start to think some of the major trends that are going on like readmission rates were mortality rates in hospitals the changes that occur in the impact that those can have on costs as hospitals focus on both the hospital industry is really recognizing that they do

have a big influence on costs. beckon help build a sustainable cost. you mentioned the cost of universal care with the obama administration you work with hospitals and other care providers is their anticipation that that's going to be a fact of life within the next 12 or 18 months? i think the leaders in the hospital industry clearly recognize the universal health care in today's environment does it mean a one payer system. it means that there is an active role for the commercial or private industry but the more active role for the public side. in the public side is going to expand to a much bigger pool of on the insured population. the commercial side is going to have to prove that they can work with hospitals to lower costs and utilization to a more appropriate level. we'll leave it there hopefully will see you before the 2011 forecast. thank you sir. online items after the show, head to our website to learn why investing in your company's stock could pose problems when it's time to

retire plus, why both general motors and chrysler bankruptcies may not necessarily set the standard for bankruptcies of the future. and, tips on how to emerge from a mountain of debt...you can find it all on our website, first businessx.com. and straight ahead on the show.... growth vs. value investing...which is the better strategy... why you may be surprised by the answer...that's coming up after the break.

after the massive market drop of the past 21 months investors are

both looking to make up as of that lost ground as possible but also to protect what they still have left. but when trying to decide whether to invest in faster growing companies or more established stocks, odds are each will come with more risk and lower returns. david ikenberry is a professor of finance at the university of illinois college of business. always nice to see you dave. when we take a look regrowth courses about you this is certainly a classic investment decision for investors to decide how we define the to? in the profession growth and value are usually sorted on a some key metrics like price-earnings ratios and other kinds of multiples for example price to book versus the price to share these are the main metrics that organization like frank wallace would use when the sort their value and growth. and that's the key indices you look at the russell 1000 which you take the universal stock and a thousand biggest based on total market

value and total market cap is really the price per share multiplied by the number of shares outstanding for example of a company does a share and would shrink the count to make it smaller. in the the normally seen as bigger and more established companies at the rest to thousand are smaller companies and more growth oriented. sometimes yes and sometimes no. we can have a mid cap co. the falls on hard times at the stars to masquerade role as a small company. we've had met the caps masquerade as small caps lately. a loss of medicare to turn into small caps. what have you found when you take a look at the past decade we've been through which is the daughter, bubble burst in 1911 the credit buildup in the latest credit destruction would have you found in performance differences? you're right we can look at the last 10 years so we can even go back over the last century a lot of these results tend to hold but for example let's focus on market

cap for a second. smaller forms obverses larger farms if you look at how the annual returns are and you also contrast that with the risk or the volatility the and there are no free lunch while small affronts tend to outperform larger firms by 425 or 6 percentage points per year the small farms have a little bit more volatility and that makes more sense because small forms don't have the same footing or capital structure and as you were suggesting the larger companies tend to be in a more mature phase and earning potential. so there we see that small firms tend to outperform larger but it comes out at the expense of a little bit added volatility or risks. if to the cause of those rewards come at a significant risk. here we to that were to look at a picture of mr. return if you think about that picture as a map of the u.s. we want to be up near

the state of washington we want to be high or return as a low- risk and that's not the case will look at these graphics here. when you look at large and small you see it you can eat chris your return on small caps with a little bit more volatility when we the next chart we don't see the same picture. if we take those same indices the russell 1000 which again is the large guys in the russell 2000 which is the next 2000 smallest taking each of those two benchmarks and subdivide them again on the basis of price to earnings and price to book metric looking for growth versus value so the value guys would be a little bit cheaper in the growth the guys because we pay for growth in advance appeared to be more expensive. interestingly here there's no free lunch argument because the value guys to generate high returns on the scale of an additional 300 basis points or 83% per year

but interestingly it tends to be as low work volatility relative to the growth guys. this is a part and behind the ivory tower and the academy that we haven't quite figured this out in fact we don't talk about much because we are scratching our heads on this. value stocks historically generate their higher returns and we can talk about why that might be but they generate these high returns historical the air supply and lower volatility levels which is significant in these type of environment because is exactly what many investors are looking for. we have to leave it there put thanks for sharing. you bet tom. lifting the ivory cup curtain. professor of finance at the university of illinois. coming up is a big week for financial stocks as the nation's major banks you're ready to go report second quarter earning results. and coming up in chart talk another look at the financial index. that's after this in the know message.

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is going to be a big test for the overall stock market with some big bank earnings do we mentioned a goldman sacks and j.p. morgan bank of america in city group all this week. we mentioned at the top of the show put up or shut take time for these banks remain for the past several weeks remember this march rally to make is really sparked by bank of america in city group announcing debris in february that we are profiting and we haven't heard much about the second quarter and now it's time to see whether or not these banks have been able to dig himself out of this deep hole. it's actually pretty surprising when the bank ceos are very forthcoming when what they thought would happen earlier in the early part of the year but now is in actually silence. let's take a look at

the tape be the best is one of the exchange traded funds that tracks some of these big banks you can see after the march rally of about 70% off of the los since march it has pretty much stalled for the past two months is kind of flat line since may. stalled but making some more highs and lows since may and has been a big los some it wasn't able to hold 80 which happens to support build of much of may and the month of june dipping below and know the the next up some resistance whether some support could come in and around $16 a share. those were bills alone for about a " so people mind also breaking down some of these performance bank of america down 15% wells fargo down 22% since january and perhaps one of the best performers is j.p. morgan up 2 percent since january. watching the banks in the financial send us any know about what's on your watch list comments at first business x. c o m. see you online or back here next time thanks for

watching everybody.

walmart.