morgan stanley smith barn. here to rethink wealth managemt. here to answer... your questns. morgan stanley smitharney. a new wealthmanagement m with over 130 years experience. >>> massachusetts zoos say that governor deval patrick's threatening the lives of their lovable animals. he cut funding from 6 1/2 million to 2 1/2 million to deal with the state's deficit. the zoo says 20% of the animals may have to be euthanized. the governor says the state's going to work to find the animals homes. the $11 million zoo budget is funded by a combination of state funds as well as private donation. now, a spokesperson for the governor's office released a statement saying, "as a supporter of the zoo and a parent who has visited often the governor's disappointed to learn that zoo new england has responded to this difficult but unavoidable budget cut by spreading inaccurate and incendiary information." that is, about killing the animals. but governor-f there is no money and no other zoos want your capybaras, are you willing to take them in? it's time for "the closing bell." >>> the budget deficit soared to $94.32 billion last month, the highest ever for the month of june. that's nearly three times the deficit registered in june of 2008. those numbers haven't taken the starch out of the best stock rally in almost three weeks. financials are leading the way higher today. >>> as first reported by cnbc earlier this month, former stanford financial cfo james davis has agreed to plead guilty to three felony counts. that's cnbc.com "news now." i'm julia boorstin. >>> stocks rallying today with the s&p 500 rebounding from four straight weekly losses. financials among the leaders today as we enter the final and most important hour of the trading day right now. welcome to "the closing bell," everybody. i'm bob pisani. it's 3:00. maria will be along in just a moment. let's take a look at where we stand right now. dow jones industrial average sitting right near the highs for the day. you can thank the financials. the key thing here, bank of america, jpmorgan, american express, our parent company general electric, which often trades like a financial. what happened here? meredith whitney upgrading goldman sachs. but read carefully between the lines. she's talking about them being a key trader on the government debt market along with trading those derivatives. that's a lot different than in the past when goldman was a big play on the global growth market. it's a different kind of call, and we're going to talk about that in the next hour. also the nasdaq sitting near the highs for the day. s&p 500 having one of the nicest percentage moves it's had in the last three weeks here. let's take a look at our team that's covering the market. all my friends in place. the nyse, the nasdaq, and the nymex. mary thompson is down here today at the nyse. mary? >> well, bob, the dow jones industrial average, the s&p, the nasdaq, the markets in general on track for their best session since june 25th. light volume, though, 678 million shares changing hands here. so there may be not a lot of conviction today. however, there ia lot of enthusiasm, especially for the financials, as bob mentioned. take a look at these stocks. all of them trading higher today. of course goldman sachs has been the one we've been talking about all day today. the company reports second quarter earnings tomorrow, and analysts are expecting the company to -- will report profits of over $2 billion for the second quarter. additionally, of course, meredith whitney raising it to a buy from neutral. jpmorgan will be reporting on thursday, followed by earnings from bank of america and citi on friday. on a different -- on the different end of the financial spectrum, though, we have cit under pressure once again today as the lender to small and medium sized businesses scrambles for ways to improve its short-term liquidity. we did have treasury secretary tim geithner saying treasury has the power to assist cit, which has already received over $2 billion in tarp funds. as you can see, though, the company is a possible contender for bankruptcy filing. its shares down an additional 10% today. the markets also received a little bit of a boost on the technical front today when the s&p 500 earlier in the session bounced off near-term support at 875. it then broke through near-term resistance at 890. and that actually helped to accelerate the market's gain later in the session. take a look at a couple of story stocks we've been following. american dairy is under pressure after the company said that it expected second-quarter revenue to increase by only 10%. sales it sees at $41 million. that is well below analysts' estimates. they were expecting sales of over $80 billion -- million dollars. million, that is. and you can see it is down over $15 on that forecast. phillips electronics overnight, or before the opening bell reporting second quarter profit, which was a surprise. analysts were looking for a rise. so its stock has benefited from that. and we want to close out with csx. the railroad operator will be reporting its second quarter earnings after the market closes today. and analysts are looking for earnings of 62 cents a share. keep in mind when it reported its first quarter results it surprised the street by 11 cents a share. now let's go to the nasdaq and get a tech on check with rebecca jarvis. rebecca? >> thank you, mary. and tech is firm as we head here into the closing hour. 2 1/2% to the up side. that's novellus shares. they report after the closing bell. they sell the machines that make computer chips. so an important earnings story to come later this afternoon for a company that will give us a window into the likes of intel, into the likes of dell, the pc makers. and speaking of intel, their shares are 2 1/2% to the up side right now. they report tomorrow. sandisk, meantime, getting an upgrade over at thomas weisel. up almost 5% right now. essentially upgraded to a buy. google, meantime, a lot of estimates raised there today. the stock is up 2.2%. they report later this week. but that whole operating system battle with microsoft is heating up. microsoft said to be putting some stuff out on the internet later this week as far as the o.s. is concerned. 3.3% to the up side is microsoft. and there's also that battle brewing between microsoft and yahoo as far as, well, internet search goes. bing obviously out there. it's the newbie. and then you have yahoo, which is the old school search engine. been out there for a while now. well, you have a couple of analysts coming out saying they're looking at the market, bing has beaten yahoo on a couple of days. they don't say it makes a trend, but at least for a couple of days more people searched via bing than they did via yahoo. still, those shares are strong. where we do see a little weakness, in the likes of dryships, the dry bulk shipping company, 1 1/2% to the down side. and you know, you can look at the commodities space and get a couple answers there. still a little weakness there in spite of the overall stock market strength. let's get more on that from sharon epperson at the nymex. >> more weakness in oil despite the strength in equities and the lower dollar. we are looking at oil prices that have finished below $60 a barrel for the second straight session. again, it seems that we're consolidating here in this range between $56 and $60 a barrel. but the big question is are we going to break to the down side, the lower end of that range? we will probably get some more indication when we get the inventory reports coming out tomorrow afternoon from the industry association, api's, and from the energy department on wednesday. but the expectation is we're going to see another build in gasoline and heating oil supplies to the tune of more than 2 million barrels, and that's according to analysts. we're already seeing plenty of supply of refined fuels, particularly of distillate fuels, which are at the highest levels that we've seen in 24 years. and that is why you notice that heat oil led this market lower today. keep in mind we're also looking at natural gas price that's are reflecting the weakness in the industrial demand picture that is also seen in the distillate side of things and the petroleum complex.d# baker hughes talking about rig counts being about 56% below where they were a year ago. add to that with the lack of real weather events and an increase in storage expected again this week in terms of natural gas, that is pressuring natural gas prices as well. so what are we going to look for in the next day's trade? we're going to be watching that trading range between $56 and $60 a barrel. we'll be watching ppi numbers coming out tomorrow, retail sales numbers, and some key earnings reports from consumer companies like johnson & johnson that give's a gauge on demand. before that, though, we'll get a gauge on demand picture from opec. they're going to issue their monthly oil market report tomorrow morning. so again, we'll see if they are as bearish as the reports that we got from the energy department and from the international energy agency last week. back to you. >> thanks very much. let's talk to our two old friends here. rick bensignor. chief market strategist at executive llc. eric roth, director of u.s. equity strategy over at cannacord adams. all right, fellows, it's earnings season. you look at the numbers -- i love watching strategists' numbers. normally they should go up a little as the quarter progresses. go back to april. the numbers are actually a little stronger back in april compared to now. except for a few discretionary, consumer discretionary stocks, a few financial stocks, generallight earnings estimates have not gone up. for this quarter and i think the market sense that's, understands that and that's part of the problem. where are we right now in the earning psych snl. >> well, i think from a cycle perspective you're talking about that you're closer to a bottom. analysts have probably overshot in one direction. they've corrected themselves. they don't want to be too fanatical in either direction. so i suspect you'll see a tapering off and just kind of have some mellow estimates, closer to long-term benchmark numbers. >> is there anything that's going to surprise to the up side here? >> i think this earnings season is going to be to the up side. we'll have financials that will probably outperform. technologies probably outperform but the problem is is that going to beat the whisper numbers out there? though we'll probably see very good earnings, can that really drive stocks very much higher? >> and then you have surprises like what's happened to oil in the last few weeks. $72 and suddenly you're at $60. the energy stocks have reflected that disappointment. in the last two three weeks as oil has moved down toward $60 energy stocks and the s&p 500 have dramatically underperformed even the s&p. and there's your chart there. and that bottom white line that you're looking at is energy stocks for the last month. and the top yellow line is the s&p 500. >> crude oil peaked june 11th, same day the s&p peaked. they've very much moved in tandem on the way down. but in the bigger picture we actually think we're getting closer to a point that -- i would say in the next three to five weeks you want to build into energy names relative to the s&p. we're getting close to the 200-week moving average of relative performance of the xle diveded by the xpy. energy versus -- i think we're close to a bottom, and it will be time to come back in -- >> since the bottom in march technology stocks have outperformed. last week or so it's looked a little more iffy at this point. is there any more up side -- >> there's a little -- >> what kind of positive catalysts are going to get out of technology stocks in terms of fundamentals? i don't want to hear from the tej technical point of view. >> certainly they can get earnings estimates right now, and they have reduced earnings numbers. surprise can come to the up side but you've got to beat the whisper numbers to really make the difference. some of the things we are looking at technically are showing whips, some signs of up side exhaustion in technology versus the s&p. we actually told clients this morning to start working your way back over the next several weeks and over the summer into -- out of technoly and back into the s&p or basically stopping the outperformance in technology. >> let's talk about financials a little bit. i read meredith whitney's note this morning. and folks, we've been talking about it all day. goldman, some of the other financials. as a very specific kind of upgrade she made it clear it's not because goldman's going to participate in the global growth market. they're going to be a big winner because the size of government bet, size of government treasuries, they're going to be big participatesants in the trade, big participants in the dpr diftives market. it was a call on goldman's strengths rather than fundamental on the economy. and yet we're seeing -- >> it's a re strategic time to do this upgrade because we're going into an earnings season when we've had some of the best months the investment banking world has seen in probably five years. and also you have the tarp and other monies out there that are allowing commercial banks to le for a very low cost. so it looks to me like the financials will see a pretty good earnings season. i would bet all of them throw as much as they can into the earnings season to show the world they can do it. if me can't do it, they'll be in a lot of trouble. the earpings season is going to be very good for them. you hold a gun to my head i say you buy them, but there's a lot of risk out there you i just want to put that out there. >> here's the problem i see with financials. everyone and their mother is long bank of america. i don't care what anybody tells you, they're all long. if anybody i get in a corner and i take them out and i say where are you, they're long. on all these financials. >> goldman sachs. who's not long goldman who wants to be long? if you wanted to be long, you're long already. so unless you have a number that blows await whis number, i don't see how this thing doesn't pull back because nobody's in who doesn't want to be in. >> we've seen the pullback in citigroup. we've all seen that one. but there hasn't been a giant pullback in most other financials. they're below their highs, but we haven't seen any massive kind of sell-off like we saw in the early -- >> not the same. different story. >> we also have to look at the fundamentals in the banking sector are going to be looked at as raw positives for the s&p. i think this is going to be a positive catlist for the s&p but maybe not necessarily for financials. i'm still worried about technology as well for exactly the same reason. you get very high expectations. >> we've got the last question. i just want to hit you on the emerging market index. here's the play we have seen. china, shanghai is near a 52-week high right now. wait a minute. break this thing down. look at bombay. the indian market has been rolling over the last couple of weeks. some of the other big emerging markets have been rolling over. japan not an emerging market, has been rolling over. >> russia. >> russia's been rolling over. so you've got china at a new high, and everything else is kind of looking like a -- how do you justify this sort of split -- the markets are splitting here a little. >> it's hard to. for instance, last week turkey was the only market that wasn't down for the week or the month. everything else was down worldwide on a 30-day basis. i can't explain that, unfortunately, but that's just the way it is. i would rather be involved in brazil than any other market right now because of strength in commodities, has its own resources and a very strong economy and young population. >> rick bensignor, eric roth, thanks for coming by. we've got about 45 minutes to go before the closing bell here. dow jones industrial average just off its high. we were up about 190 points, strength in the financials. bank of america, american express, and general electric, our parent company. nasdaq also sitting near the highs for the day. up next we'll take the pulse of the economy. with the white house council of economic advisers chair christina romer. we'll get her take on the prospects for recovery this year. plus are emerging markets getting too pricey for investors on "fast money" final call. and after the bell taxing the rich to pay for health care reform. we'll debate whether the plan makes sense. first a look at the most active stocks on the new york stock exchange led by bank of america and citigroup. access tfavorite courses) pommrites peaps a night at the theater wi extra special seats additional hotel ght, o treat yorld in perfect harmon pceless look for world on your mastercard to g rewards and offers thatatter to you. >>> welcome back. good to see you. let's take a look at today's business headlines. swiss drugmaker roche saying its carciva cancer drug improved the survival of patients with advanced lung cancer when used right after initial chemotherapy. roche says it will use the findings to support its filing of the drug as a firstline maintenance treatment for lung cancer in the u.s. and europe. meanwhile, a federal judge agreeing to delay the start of a trial in which u.s. prosecutors are trying to force ubs to turn over the names of americans suspected of tax evasion. the postponement was part of a joint motion from the justice department and the swiss bank. the new trial date is set for august 3rd. >>> and ford becomes the latest automaker to object to the $80 million bonus package proposed in visteon's bankruptcy fielgsz. ford says the plan that would pay more than $30 million to the top 100 employees at the parts supplier is "too rich for the economic environment." maria? >> bob, the interview we have been waiting for since this recession began, 6.5 million jobs have been lost. the $787 billion stimulus is geared to create more jobs, although some question whether that's actually taking place. today the president's council of economic advisers released its report on where the jobs of tomorrow will be. we're thrilled once again to bring you inside these numbers with christina romer. she's chair of the president's council of economic advisers. miss romer, nice to have you on the program. welcome back. >> it's great to be here. >> let's talk about where the jobs are. obviously, this is near and dear to so many of our viewers' hearts. according to the report, jobs in the health care and environmental-related industries will have the biggest job growth from now to 2016. is that projection based on the stimulus spending and health care reform or something else? >> it's actually based on a mixture. so you're absolutely right. what the report is trying to do is think about as we come into the next five to ten years where the jobs are likely to be. and in doing our work we both used some data from the bureau of labor statistics that didn't take into account the stimulus and some other private sector forecasting data that did try to take into account the fact that we were doing a lot of investments in the recovery act on things like green energy, or renewable energy, weatherization, those kinds of things. and absolutely, some of those numbers take that into account. >> so what kind of skill set do you need to actually participate in some of this job creation in those areas? >> well, one of the things that we absutely think is true is that we are going to see increasing skill needs. that's a trend that's been with us for several decades, and what our reports suggest is that it is going to continue and that if you -- to position our workers to get those good jobs of the future we are going to need to make some improvements in their skills and training. >> okay. so are there opportunities to do that? i mean, is this going to require different schooling? tell me how you get there. >> well, so we certainly -- what our report talks about is some of the problems or the weaknesses in the current system and some suggestions for how one would improve it. one of the things that we talk a lot about is in any kind of a training program, kind of encouraging completion. we think that that's been a weakness of some of our current system, that people aren't staying with things to get the degree, to get the certificate, and that that could be something that can help to improve. we also think aligning the training with the jobs, so more feedback from employers about what they need, what they're looking for in workers, we think will actually help to make this a more efficient system and make sure that workers when they finish these training programs then get the jobs, which is of course what everybody wants. >> where will the job losses continue to be, miss romer? we've got an unemployment rate now above 9% and most expectations looking for unemployment to exceed 10% at some point. do you expect we will continue to see job cuts in financial services, in manufacturing, in some of the areas that have been hardest hit? >> our projections do suggest that finanal serces is one of the sectors that is probably going to shrink some over time and that's something, again, you probably wouldn't have guessed two or three years ago but does come out of most of the numbers. in terms of manufacturing, again, that's been a sector in decline for decades, and we do think that that will perhaps continue, that as a share of employment manufacturing will probably shrink but we think that the rate of decline will probably slow quite substantially and that there will be areas within manufacturing like aeronautics, like pharmaceuticals, where we'll actually be adding jobs. >> does your report show any wage trends? what can you tell us in terms of compensation for average workers today? >> the crucial thing we document in the report is just how important skills are for wes, that we have seen again over the past several decades that a high return to education and skills. and that's one of the reason that's we think this is so important. the president has made education a big pilar of sort of his program going forward. because we do know that workers with more skills earn higher wages, and that's great for standards of living. >> all right. so when the skill set is there, you say then wages will go higher is what you're saying? >> absolutely. returns to education. >> let me ask you about construction jobs. be obviously the projection for construction jobs very strong as we continue to see expectations of the infrastructure plans get under way here. an expected 2 million jobs to be added by 20167 vr . what is going to propel this growth, particularly in an environment where we know real estate continues to be pressured and the construction market has gotten hammered so much? is this largely due to infrastructure projects that will be getting started? >> well, that's certainly a big piece of it. i think the other thing we have to realize, and this is a place where our numbers very much do take into account the situation. we've seen construction just get absolutely hammered in this recession. and so we're at a very low point. so part of that recovery of construction is just getting out of the recession and coming back somewhat to normal. but yes, we are absolutely. we know a big part of the stimulus package was aimed at infrastructure, at construction more generally. and that is going to be an important source of growth in that sector at least in the next couple of years. >> we talk about entrepreneurialism as being so important to economic recovery and of course small business being important. what kind of incentives are on the table to get business spending moving again and smaller businesses moving again? a lot of small and mid cap companies come on this program and me say we still can't get any access to credit. so where is the incentive for those businesses so we can see business spending improve which of course as i know you would agree is critical to a recovery? >> absolutely. i mean, this is something that secretary geithner and the treasury have been thinking so much about, is how can we -- we've made a lot of progress in our financial markets, but especially on the loans to small businesses and helping small banks. he with think that's going to be important. the other thing is i can't emphasize enough the best thing we can do for small businesssize get this economy going again. so even things like the tax cuts for ordinary americans are actually a crucial part of stimulating all businesses in the economy. the real thing is if we can get consumers buying again then our firms are going to say, well, gee, maybe it makes sense to invest. and then of course also particular incentives. we have had things the research and experimentation tax credit we have been trying to take specific tax incentives to encourage certain types of investments. >> when the stimulus was first announced, the president said that he expected that in the coming years the administration, based on the policies, on economic revival could save or create 3.5 million jobs. at this point does the administration know how many jobs have been created or saved? >> it's very hard to say exactly because you don't know what the baseline is. right? because you don't know what the economy would have done without it. what we are confident is we are getting the money out the door. we've seen the tax cuts hit people's paychecks. there's a lot of sort of leading indicators that orders are up for durable goods, building permits are up. and so we think that's encouraging but we're not going to be happy until we actually see jobs being added and that's what we're going to be watching. >> so is there any way, then, to measure that statement, save or create 3.5 million jobs? if you can't measure it, when will it be measurable? >> well, i think what we'll be doing -- i'm going to have to -- as c.e.a. chair i'm going to have to have a report to congress saying what are we managing to do in terms of employment and the state of the economy? we'll be doing lots of things. looking, for example, at spending at a very local level. we're going to have data on spending by county. do we see those counties seeming to have higher employment than counties that didn't get the spending? that will be a good test of this. one of the things that i'll be looking at and i would guess you all would be looking at is talking to private forecasters, what they thought was going to happen, and comparing that to what actually happened. that's in some way going to be a way of saying what was the baseline and how are we doing relative to that? i will tell you a lot of private forecasters are talking that certainly their forecasts about where the economy is going, they're thinking that we're going to get some real input from the stimulus pack sxj that is going to be an important source of job savings and creation but we're going to have to see. >> miss romer, good to have you on the program. thanks so much. christina romer. up next we'll get the latest on management cnges at ubs along wi a preview of goldman sachs with charlie gasparino. bob and i return on "closing bell" way market that's up 144 in one minute. the world'snnncer) ading companies thrive on collaboration with the wld's leading companies. together, we're helpintohape the exchanging world. nyse euronext. powering the exchanging world. in the markets, i'm glad i turnedo fidelity for an annuity with guaraned income for life. that's right guaranteed income for li. my annuity frofidelity means my retirement inme is safe. it's granteed, no matter what hpens. if guaranteed incomeor life sounds good to, do what i di-- let fidelity be your gde. call fidelity at... for details about guaranteed income for life. >>> hi, folks, i'm matt nesto at the breaking news desk. a source close to the case tell cnbc that bernard madoff will serve his 150-year sentence at the federal corrections camp in buttner, north carolina. it's essentially on the outskirts of raleigh, north carolina. the research triangle area. now, the bureau of prisons per their policy won't confirm the location of any inmate until that inmate arrives. but a source close to this says it's butner, north carolina. the bureau of pripzs has a big facility there. their website indicates about 3,000 innamates in three facilities on this particular campus. there's a low, a medium security as well as a medical in butner, north carolina. >> thanks very much, matt. two big stories in the financial sector this week. we've got management moves at ubs along with earnings tomorrow from goldman sachs. our charlie gasparino offers his insight on both stories and both of those stocks moving all the financials today charlie on meredith whitney's comments. >> about goldman, right >> that's right. >> mainly about goldman. bfr i into that that was an amazing interview marijust did with romer. and i'll tl why. the fkt she g her to sayhey really can measure the employment gai, is is after spending $0 billion and saying that would stop unemployment at 8.5%? obviously it didn't work. it seems like a complete about-face. >> charlie, i didn't know what else to say. how do you measure? and then she said we can't measure it. >> then how could they measure -- she did the report with jared bernstein that said if you spend $800 billion you will sp unemployment at8.5%. and obviously, how did they measure it then and how do they measure it now? congratulations to you as being one of the few journalists that put the feet to the fire of the obama administration -- >> well -- they say save and create. i think that statement alone, save and create, it creates confusion, like it's not measurable. if you say an absolute here's what we're going to create, that's different, but save and create -- >> it' unbelievable. but maria, here's what islso unbelievab. how's this for i atransition intooldman sachs? goldman sachs is going to make something like $ bilon this quarter, and what's interestin about this,guys,here doing it as a bank. they are taking risk as a bank. and i'll tell you, i st g a nasty e-ml from lucas v praagh, the flak over there at goldman chs, saying my rant at "power lunch" about ho goldman sachs increasing risk as a bank -- remember, as a ban it s access to the discount window. it's basically takg risk somewhat on the dime of the xpayer. he said th was a complete rant and nfair and evething else under the sun. but i will say i again. goldman sachs is making a lot of money. it's making a lot of money as a bank. if you're a bank, you have special privileges. you have these privileges, namely, the discount window and other privileges. remember, they got $10 billion, they did fay it back, but they got $10 billion from the federal government, they got the aig bailout, and i will say this. i think it's about time that goldman sachs is going to resume trading activity, which they are. their var, the value at risk is up. their leverage is much higher than morgan stanley's. 15-1 leverage compared to morgan stanley's 11-1. that's first quarter. we've got to see what it is in the second quarter. it's higher than that. if you're going to do at, it's time no longer to be a bank. become a wall street fund. become a hedge fund. but don't do it as a bank. >> the key point that everyone was talking about and meredith whitney brought this out, and they're going make big money because they're a key player in the government bond market. the government's been issuing >> of course. >> and the derivatives that they are part of, the trading they are part sf going to be a re healthy -- >> bob, that's what we're saying here. >> but that's different than saying things have changed -- that's different than endorsing goldman sachs as part of the global growth model. all those things meredith pointed out i think she's right. >> there taking risk as a wall street firm, but there aank with that access. and i will s one other ing. two of t major bond mket coetitors o
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