from the treasury market. at least the long end is minus 25%. the overall treasury market has a return of somewhere around zero for the year. and the federal reserve announced today they are not going to be buying treasury bonds after october. so we have a $1.2 trillion deficit. we've just been told that the $300 billion buy of treasuries has left the market, and i'm not sure where you're going to get support. in particular i know the previous guest was talking about foreign demand, but if the dollar's going to continue to head lower foreigners would be insane to fund our deficit at these low interest rates that are not just low on an absolute but a relative basis as well. >> tom, we're glad to hear you with something we bantered about a few minutes ago but we are happy could you make it. ira, thanks so much. and rick santelli,al at always, thank you for being here. with 20 minutes to go the dow not the highs of the session but still about 156 points to the up side. >> and rebecca, our next guest is not sold o

treasury takes the position that means when money comes back to pay down that that gives treasury as they describe it more head room to be able to use that money in other places where it's needed. quite frankly, if that's not what congress wants, then congress has to be more specific in the legislation. >> my guest today, elizabeth warren. thank you so much. >> thank you. >> susie: citigroup is one of the biggest beneficiaries of the government tarp funds. the bank said today the program helped to increase lending during the second quarter $6 billion worth. most of the loans went to state and local governments as well as mortgage lenders making more money available to new home buyers and homeowners looking to refinance their mortgages. >> paul: wall street >> paul: wall street headed broadly lower at the outset with the bank stocks leading the selloff after analyst dick bove' made cautious comments about the sector profit taking also helped to send the dow off 101 points an hour into trading with the nasdaq down 24 points. the losses persisted as buyers were scarce ahead of tomorrow'

>> well, it's funny, i don't think that the treasury, excuse me, the fed buying of treasury securities has really done a lot to keep treasury yields down. but the fed has also been buying mortgage backed securities and agency debt. and there i think we've actually seen some frankible impact, i think that's what's been important. they are winding down the treasury purchases, but they are going to continue to buy mortgage securities, and i think that that will help to keep mortgage rates from rising, even if treasury yields start to move up, i think the ongoing purchase in the mortgage sector will provide underlying important for the housing market. and slowly make a bottom and perhaps start up modestly by the end of the year. >> susie: we have less than a minute left. go ahead, michael. >> michelle, i thought the interesting thing there too was the feds giving us an indication of how they are going to terminate some of these programs, not just a dead stop at the end of september, they're going to taper it off. and that gives us a sense of what they might do with a mortgage back repurcha

worth of treasuries hit the market next week. a look at what that means for interest rates. >> paul: tonight's "street critique" guest says the technicals aren't looking so hot for tech stocks. he's todd harrison founder and c.e.o. of minyanville. >> susie: cisco systems' latest results beat expectations despite a third straight quarter of falling sales. our guest tonight, chairman and ceo john chambers says the tech slump may have reached a tipping point. >> paul: i'm paul kangas. >> susie: and i'm susie gharib. this is "nightly business report" for wednesday, august 5. "nightly business report" is made possible by: this program was made possible by contributions to your pbs station from viewers like you. thank you. 7//& >> susie: good evening, everyone. the big question about the economic recovery is when will american businesses start hiring again? more than 6.5 million people have lost jobs since the recession began. on friday, the labor department reports on unemployment for july. and today payroll processor adp said the nat

. >>> i'm erin beurnett with a change on treasury or mortgage buying, right here on "street signs."hould the fed's move get your money off those sidelines, the biggest bond in stock investors weigh in here. >>> breaking up aig may cost taxpayers, is this fair or something banks might do pro bono, given how their trading with aig caused such a crisis. our show starts now. >> ahead of the fed decision, which as you can see we're awaiting in a couple of moments, the stock rally is on. what a day it has been, we started out with virtually no direction in the market. then a sudden pop and that's the rally that has held through much of the day. it could dramatically change one or the other as in a bigger surge or losing all of it and more depending on what the fed says on a couple of key programs. right now we're up between 1.4 and 1.6% across the board. now, the worst performer in terms of sectors, health care and the worse is still up for the day. and i believe the best stock on the dow jones industrial average in terms of percentage gain is travelers insurance. let's get straight to ou

regime change, the chinese bought a third of their treasury, they increased their holdings of treasury by 38%, the second half of this year. they continued to buy throughout the first quarter before taking a lit before of profit in may. i think a lot of this stuff about china is mostly politically aimed by the chinese, taking its mind off the idea that the chinese and repegged their currency of the dollar. they have a large growing trade share plus. they've got problems at home. this -- let's not talk about that, let's talk about whether they diversify for dollars. bottom line no, diversification. >> just chatter. >> just chatter. >> interesting. very interesting. all right. hang on. >> we're still waiting on that breaking news. but in the -- okay, we're going head over to the breaking news desk. >> just got signals out. mary thompson has some breaking news. i'm sorry to put butt in. >> larry, we have looked over the court filings, basically terms of the bail agreement between frank dipascali, the former owner, a $2.5 million bond will be posted, signed by three people with financial -

i want to ask you, will this new budget bankrupt the american treasury? yes or no.ich deficit. they won't bankrupt us but put us in one hell of a hole. >> robert reich. >> absolutely not. the proportion of gdp was much, much larger at the end of world war ii. we've had bigger deficits. >> you hated the reagan deficits. you used to hyper ventilate about the reagan deficits. these are five times bigger? the question is what are you using the deficit for? building the economy? trying to get back to full employment? >> hang on. a second round real fast. good question, robert reich. does this budget help grow the economy? yes or no, in one word. >> no. higher taxes don't grow the economy. >> i haven't heard anything about higher taxes. steve moore, you don't have an idea how to grow the economy. >> hang on, we'll come right back. we'll tease later in the prachlt our investors including the famed byron weem will tell us what it means for stocks. i can only get it out until next spring or next summer. i am worried about this tax, spend, inflate, my goodness, keep it right

treasuries? >> no, i think for the moment our purchases on treasuries are quite low and it's by nar our largest underweight in our portfolio just now. >> is that because you are concerned about growth picture, inflation picture in the west? >> no, we don't necessarily see the month supply picture as favorable at the moment. that's why. >> and on the equity side, one thing that i noticed, and in norway, you take the time to look through things.. sometimes in a different way than others do. i wanted to highlight on this. looks like about 11% of your equity holdings are your fund overall, which perhaps is a more significant statement, are in water related companies. why is that? >> well, you know, we have been having a big explosion in that area. and corporate efforts, water management is one of our focus area for that work going forward for the next few years. and that's an area we look more closely into. >> is that because you believe we're going to have a shortage of freshwater or we look here in

the treasury is the white house's financial political arm. don't these agencies have their own relationships with the oversight committees in congress? >> it goes to show you that there's a lot of hammers being used and there's a lot of speed being used and i think that this is a great little litmus test for a lot of issues going on between markets and washington. just consider that some of the regulatory -- i read these working sheets. it's kind of complicated. but it's pretty easy at the same time. there are products throughout that cause a lot of the crisis. they need shall kind of management attached to them even if it's just more capital set aside. but they can't agree to it. then they put speed, complexity and politics into this and how going to do something a thousand times bigger when something so obvious gets so muddled up. that's the way traders are talking about it about sgrp a lot of coops in the kitchen. >> exactly. >> when you look at what the treasury secretary did, do you think it was tactically smart, is he going make any hea

now we have this report card from the treasury department. it said that 2.7 million homeowners are eligible for modifications to reduce monthly payments and said banks and mortgage servicers have offered to modify 400,000 of those, 15% in total, but only 235,000 of those have been approved for trial modifications, just 9%. the administration and the companies agree it took time to ramp this program up, and more needs to be done and more will be done, they said. bret: we have getting details of a private meeting with treasury secretary tim geithner last week with bank regulators t seems like the treasury secretary got a little hot under the collar. what happened? >> our colleagues at "the wall street journal" reported on a big meeting friday between geithner and ben bernanke and bank regulators over the administration's proposal for regulatory reform of the financial market. the journal is reporting that secretary geithner used expletives in this meeting. we're not going to put them on a full screen like we did with those numbers. now, remembe

and yet treasury is sort of the ter of where treasury is going is once again toward the very largestinancial institutions. >> you know, there's been this sense, chairman warren, that these small banks, we would see more failures but that would be okay. the fdic could handle the small bank failures. you make this sound as if this is not going to be a few dozen or beyond. this is more of a systematic risk when it comes to the small banking institutions. >> i'm going to say it slightly differently. one thing that's deeply troubling is that there's no good estimate of how much toxic waste is still left on the books of either the large or the small financial institutions. the congressional oversight panel crunched as many numbers as we could find. we went to the other experts. the estimates run somewhere between 600 billion and 1.5 trillion. now, that's a lot of variance. when you put that onto the books of individual banks, that's a lot of banks that are still at risk. >> have you heard anecdotally from small banks who are hoping they could get access to things like the pipp? >> i think

the fed is going to be there in buying treasuries and mortgage bonds. have they put to rest the issue of quote monetizing the federal budget deficit? have they put that to rest, michelle gerard? >> i think they probably have because they're winding down the treasury program. let's face it. as long as the balance sheet remains as large as it is. as long as there's this looming threat of the fed continuing to grow the balance sheet, those fears will not be put to rest, they will not be put to rest until the fed ultimately goes on course and shrinks the balance. >> no mention of the dollar, michelle, no mention of the dollar, none, zero, i'm not surprised, i'm fighting a losing battle here even though i have a peculiar view a stable greenback is good for america. >> no mention of the dollar. in our view, the dollar will continue to weaken. >> you said it. michelle meyer and michelle gerard, you're both terrific. thank you. >>> coming up earthquake off the coast of japan tonight. conflicting reports for tokyo. >>> when we come back, bullish signs from the h

and even the secretary of treasury now, mr. geithner, just a few months ago recognized that during the time he was in the fed, the fed kept the interest rates way too long, too low too long. how can you defend the fed maintaining indendence or secrecy in order to maintain stable rates and to even try to achieve a stable economy, which obviously nobody argues we have a stable enomy. >> so i do not equate independence and secrecy. in order i agree with the underlying recommendation. i think of your question which is indendence and secrecy in a democratic society are antithetical. i thinkt haq become much more transparent under chairman bernanke about what we are doing and why we are doing it. and i think we can retain our independence and your ability to trust what we're doing only by explaning to you what we're doing and why we are doing it. we have not only the statements which you mentioned in your opening stament after every meing explaning what we did and why we did it. we have minutes, you have hearings, there are monetary

didn't the treasury come in and basically buy $6.5 billion worth of treasury short-term ma turts? >> yes, they did. there is some talk they were instrumental in the seven-year auction we had last go round. the dealers took it down. and, you know, quantitative easing. you could buy any maturity. the answer to your question is, yes. that's why the statement on wednesday may be important. are they going to pull a bank of england on us? are they going to say, hey. we run out of money in september and we need more money for treasuries? we're all assuming that won't be in there but that's what they did for the mpc as well. they assumed it wouldn't be in there and it was. >> rick, how important is 40 basis points or 37 to 40 basis points as a ten-year move last week or off the recent lows? isn't that new hampshire to get the marginal treasury invest og back in the game including a stronger dollar?r? so can't we get a place where treasuries and equities are possibly rallying at the same time? >> i think it's possible. you brought up a good point. if you look, there was a point today where

treasury proposal covers all types of rating agencies.that erects a major barrier for firms interfering with the rev new model. requiring registration of all companies issuing ratings is perhaps the most counterproductive initiative of all. investors will not have the inclination to look at all of these firms and will tend to remain with the providers they know best t the big three. further, registration would impose all the increased direct and incorrect costs on firms that choose not to be an nrsro. this will stifle potential innovation and positive competition. so the treasury proposal would require firms to register, put at risk some firms intellectual property and all in all, regulatory protection is anything but a level playing field. can conflicts exist in other business models? sure, theoretically. has it distributed to any disasters? no. this red herring cannot drive new legislation. it's not the potential behavior of the describing agencies, rather the misbehaviors that have already occurred. effective legislation must focus on

the treasury department was going to take a look at this, but today we learned that treasury decided not to stop this paycheck from going through, because this trader's contract got in under the wire before congress passed these new rules. here they are, back in february, but on friday citigroup, a.i.g., g.m., chrysler and three other companies that got the most government assistance have to submit their pay plans to the new pay czar and treasury to have their pay plans reviewed and then he has 60 days to decide if he wants a change, to reject them, accept them, so it's unclear if these $100 million paydays are going to continue for wall street. bret: one guy is happy tonight. >> one guy is having a good day. bret: peter, thank you. well, if you are an average american, you are finally working for yourself now. let me explain. the americans for tax reform foundation and center for fiscal accountability say you have been working all year so far just to pay your share of the total cost of government. the mark falls 26 days later this year because of the increase in government spending.

you're stuck in low treasury rates. >> thanks. >>> next up, guys, lunch. if the white house invites you, you would think maybe you're going to have your meal picked up by the taxpayers. not in the case of the great american corporate executive. if this isn't a hostile policy, i'm not sure what is. i'll tell you a little bit more. and later, blog you! no need to say more than that. announcer: what are you waiting for? all around the world, men with erectile dysfunction have asked their doctors about cialis. ask your doctor if a cialis option is right for you because in addition to 36-hour cialis, there's another dosing option: cialis for daily use, a low-dose tablet you take every day so you can be ready anytime the moment is right. man: tell your doctor about your medical condition and all medications and ask if you're healthy enough for sexual activity. don't take cialis if you take nitrates for chest pain, as this may cause an unsafe drop in blood pressure. don't drink alcohol in excess with cialis. side effects may include headache, upset stomach, delay

the second is referring to the '51 accord where the fed regained its independence from the treasury, which had had lost in world war ii and was committed to pegging interest rates. and he went on to say, remember how difficult it was the f to disentangle itself from the treasury in the post-world war ii period. so these are very serious concerns, my four concerns, and i'd be happy to answer any questions you have about them. thank you. >> dr. meltzer, you're recognized for five minutes. [inaudible] >> thank you forhe opportunity to present my appraisal of the administration's proposal for regulatory changes. i will confine most of my comments to the role of the federal reserve as a systemic regulator. and i'll offer an alternative proposal much closer to the republican proposal. i share the belief that change is needed and long-delayed but appropriate change must protect the public not the bankers. during much of the past 15 years, i have written three volumes entitled a history of the federal reserve. working with two assistants we have read virtually all of the minutes of the board

what else do we need to see from the treasury market now? obviously, there's going to be more very quickly. >> yeah. there's going to be probably a trillion dollars worth of supply about the market. supply concerns, inflation concerns exist, but what you've seen over and over again is the treasury's able to more or less sell their debt, bring their debt to market with little concession on the part of the marketplace, and that is a net positive for stocks and for the economy. >> i would think so. one of the things that's amazing to me, rich, and you watch all these numbers like a hawk, we're what, 50% off the lows from march 9th? >> yeah. 50% up. >> at that level. in five months, though. and it has been remarkable. we've never seen that maybe since the depression going back five months. have we come too far too fast? 50% is an amazing move. >> some may think it's unprecedented. what would be unprecedent sd that droch, over 1,5000 in october '07 to below 670 in march '09. >> what does it mean to you that we've come historically fast in the las

the fed is now in the process of buying 300 billion dollars in treasury securities... in an effort to keep overall market interest rates low... and to help improve the credit markets. that program has been under fire since it was announced... back in march - and yeilds went up anyways.. from 3 to almost 4% today. the fed also kept short term interest rates close to zero as expected and those rates will likely remain low for an extended period. later in the show we'll talk more about the the fed's exit plan...and what that may mean for investors come this fall. ben bernanke has only three more scheduled interest rate meetings left before his current term as fed chairman is due to expire. bob chirinko is a professor at university of illinois at chicago. so how would you grade the chairman does far? very good but not perfect. he has made few mistakes over his three- year tenure but he had a very challenging times. he's done an absolutely up excellent job. was that the top of it in a state list? lehman brothers. budding member of the failed. the second when he was a little

both the fed and the treasury are the tp taxpayer.n is focus, and the fed needs to focus on monetary policy. and in order to be independent in monetary policy, it needs to be out from under the treasury's bum. >> mr. hubbard, do you think ben bernanke is doing a good job? do you think that has navigate ed crisis well, or do you think there is room for improvement? >> well, i think there is no question that the fed under chairman bernanke's leadership has taken very bold steps that have lessened impact of the crisis. >> do you think he'll get another turn? do you think he'll get reappointed next year? >> there is only one person whose opinion counts on that, and that is president obama. i would say that ben certainly deserves reappointment. >> talking of president obama, obviously there is some financial regulation reform on the table right now. and amongst those proposals, there is obviously to give the fed essentially the mission control spot. how much do you think that is also jeopardizing further the independence of the fed? >> i t

it's challenging for the treasury and also for the fed. there's a lot of hostility in congress. a lot of reluctance to give the fed new powers. and very frankly, congress just didn't have seem to understand the situation very well, because the treasury's proposal in fact doesn't give the fed vast regulatory powers since it's already the supervisor of almost all systemically important financial institutions. >> susie: real quickly, we just have a few seconds left, david. i want to ask you about larry summers. the rumor mill was that he was very interested in being the fed chairman. what happens to him? does he stay as the chief economic advisor to president obama or does he move on? >> i think he will stay as the head of the national economic council. the right-hand man for the president in terms of economic policy. i think he might at one point have wanted that fed chairman's job, but i think bernanke did a good enough job in handling the credit crisis and championship to deserve to be -- and -- deserved to be nominated. >> susie: we'll leave it there. thank you so much for comi

treasury. the exit strategy >> exit strategy is partially the new structure we have been talking about here today. you can't do that in my mind. you can't bring them out in conservatorship until the market is stabilized. there may be apportionment as in receivership that gets left behind in what you might call a bad bank, if you will, that is protected by the senior preferred. and there is a bridge to a new organization. >> thank you. i'm out of time >> the gentle lady from illinois. >> thank you, mr. chairman. i have several questions. so i'll just run through them rather quickly. number one is many consumers in my district are thinking long and hard about purchasing a condo based on all of the new gse requirements which are causing strain for home b uilders. you know, so many people start and say i'm not going to go through the process. can you comment on that? >> well, the gse's have historically had standard scene for a new condo. 70% has to be presold. during that time when they lowered cr

contacting treasury and talking about this bank.ously, they will get the message no matter what is sedar is not said that they are trying to help out a certain constituent. -- no matter what is said. greta: have logs been kept as 2 s at conversations with treasury? >> no, the initial plan was to keep these logs and make them public on the website -- how long have they logs been kept as to the conversations with treasury? how do you go about not limiting people, with free speech to talk to these officials, while at the same time limiting their influence on these programs? greta: you can wade your free speech if you want the cash. if you want the bailout. the other thing is they can also redacted without telling us the names are so it -- -- they can also redact it. >> coming off of the momentum that we have got a new administration, this is change, we are going to do things differently. this is one where we are going to do things differently. greta: and you are being very polite. i would say we have been had. good reporting. but we ha

. >>> treasury secretary tim geithner reportedly lost his cool at a meeting atop u.s. regulators friday. reports say in a profan advertise laced tirade geithner told his counterparts, enough is enough. the meeting including ben bernanke, mary shah peer roy and fdic chief sheila bair. the plan would greatly expand the fed's power. geithner told them even though regulators are seen as independent of the white house, the administration and congress set policy. and the senate could vote as soon as today to approve new funds for the government's cash for clunkers program. last week, two top senators said they would vote no unless higher mileage incentives put were in place. ford brings back a familiar model today, meantime, the 2010 ford taurus starts rolling off the assembly line in chicago three years after it was discontinued. if you want to check os out what's going on in the auto sector, be sure to check out phil lebeau's blog, cnbc.com. >> that ask the, of course, after you've watched the rest of "worldwide exchange." hsbc could raise $3..billion in shanghai in its li

treasuries arise. >> that is a good yes que there. folks on a full-blown revolution. they were ticked off because government services have been cut whef everywhere and now they are talking about bringing in the national guard. blame it on the stimulus plan. getwó i'm gregg jarrett, right now, back to forbes on fox. >>> this proves the stimulus package isn't working. >> jefferson county may have problems that no stimulus may solve. the stimulus is built on the thesis that you can create wealth by taking $787 billion out of people's pocketbooks and gifh it back to them but only to spend on politician causes. does that work? do you think that creates wealth? maybe not. look for example the cash for clunkers extension. this is a scheme to create wealth by smashing things. [ laughter ] >> does it work? let's gets a few facts up here. jefferson county spent money off the taxes that were illegal. the bond issues was downgraded and in a cash crisis. now, the republican governor and the blue dog democrats are scrambling to raise taxes for to pay for it. nothing has to do with

you measure a dividend by its yield versus what treasuries are selling for ten-year federal treasuriesay? and you look for stocks that can grow their dividends. they can protect you from the downside. grow the dividends meaning increasing every year, because as the stocks go lower the dividend yield goes higher and that attracts new investors, particularly ones comparing it to bonds. you need to know is it fairly safe? can the dividend be covered? english for, let's bust that one, english means can it be paid, do they have to borrow money. does the company have cash on hand and the cash flow to pay out the dividends it's promising? in the first half of 2008, the bank stocks had yields of 9%, 10%, 11%, they were serial slashers of dividends. >> they know nothing! >> especially wachovia and washington mutual. why? they didn't have the money to cover the dividend and it was obviously the dividends were too big. but telco companies and utilities like con ed had no problem maintaining their dividends because they weren't hemorrhaging money. you need to protect yourself from the dividends th

a dividend that you're getting that sells for twice the treasury, what the treasury's yield is, sellividends that reach that level have almost always led me to believe that there's something wrong with the stock and that it will soon slash its dividend. we like high dividends on "mad money," but a dividend that's too high, that's a warning signal. there are a couple of general exceptions to this rule. tanker stocks. the big frontline kind of things, they pay dividends depending on the current rate of business and also they have to adjust them each quarter, so it may look high and then be low. master limited partnerships, trusts that do the same thing for oil and gas, it's okay. they can violate the rule. if you just use this rule of thumb, sell any stock with a dividend yield that's twice the yield of u.s. treasuries or greater, you would have flagged many of the bank stocks before they crushed you. you would have flagged the autos in late 2007 and 2008 before they decline. good rule, right? 14th tip for trying to avoid stocks that will lose you money. if a company has a new ceo in h

the gorilla in the room buying treasuries.so that's also going to hurt the stock market. >> before we go, if we're replenishing inventories to rebuild this economy, what are you buying here? >> well, we've been pushing technology, especially the core -- the semi conductors and a lot of the manufacturing. in the last quarter, we rotate to the consumer sensitive to retail and the manufacturing going into the fourth quarter, technology still on top. >> thanks, mark, brian. see you later. >>> more breaking news on the bernie madoff situation. let's go back to mary thompson in lower manhattan. mary? >> phil, we want to clarify something that i brought to our viewers' attention earlier. first of all, what we have been reading from is a summary of the charges that the government is expected to file against frank dee pascaly later today. this is not a formal charging document and we don't know what charges mr. dipascali will plead guilty to. on friday, the u.s. attorney said he is expected to plead guilty, but didn't detail what charg

there are still concerns that he is everything ok if it is why isn't the fed and the treasury taking back some of this there not. but you will hear more in the coming days. taught colvin enough global over at the cme group. thank you tom. still to come the popularity of the cash for clunkers program has ignited lots of internet scams... what you should do to keep from falling prey to them. but first, why one author believes the price of oil will only go up from here and why it may not be such a bad thing. though oil prices have pulled back since reaching record highs over 140 dollars a barrel, some oil analysts believe there is only one direction for black gold to head in the long term: straight up. christopher steiner agrees and writes about a world of rising energy prices in the new book, $20 per gallon: how the inevitable rise in the price of gasoline will change our lives for the better." we trailed him around chicago to get his insights on a world when a gallon of gasoline costs more than 10 bucks a gallon. steiner's book is built on the premise that the rising middle class in p

they could act on mortgages but maybe not so much on treasuries. >> mortgages but not treasuries. that's what we will be watch for as we read this statement. in terms of stock-specific plays, john, what are you looking at today? it's interesting, we had a diverse group of earnings from e-house in china, stocks are going to surge. mining company bucyrus, it's going to be higher. is there any name you're watching? >> i believe the run in technology and the run in materials have been legitimate. we've seen a lot of public spending that's going to fall on projects, so the materials have gone for a big run. there's an opportunity for industrials to continue to move. they haven't moved so much yet. quite frankly, i'm concerned with a run that consumer cyclicals have been on year to date. i really question rising unemployment rate and falling home price. largest asset is deflating. i question the sustainability of the deleveraging consumer really powering the economy forward in this next recover. >> john lynch, thank you very much. >> thanks, erin. >>> and now let's hand it down to you,

treasuries remain in the face of a risk-grab going on the market. >> can i field that one? >> yes, you're in charge. >> who remembers what last year-over-year cpi was, minus 2.1? where did the ten-year note close today? >> 345. >> add 210 basis points, what do you get? probably a more realistic look. i'm not saying i believe the cpi data, but that does address it so some extent. as long as these auctions keep going like a hot knife through butter, you know how quick that readjustment can be and there's a lot of auctions ahead. >> we could have another leg down in this whole thing. some interesting comments out of him. again, i think people are getting a little too complacent here and xub rant. i think we're really ahead of ourselves. >> mr. china said the same thing today. >> i think it translates into a wealth effect for the consumer. they see housing prices, which have now bottomed. that wealth effect carries through to the consumer shares. take a look at bed, bath and beyond, best buy, target, sears was strong as well. pedro and john got into it last night a little. but

treasury undersecretary michael barr says the industry needs to do more. >> we're disappointed in the performance of some of the servicers, we think they could have ramped up better, faster, more consistently. >> reporter: the industry says the home affordable modification program is just one way to modify loans. another way, the industry's hope now program, which has modified an additional 300,000 loans since june. paul leonard of the housing policy council says some of the banks on the treasury's list haven't been enrolled in the program long enough to make a difference. >> what's not reflected in the treasury's initial announcement is when the company actually signed up for the program, so i think in the fall we'll have a better sense for the companies that have really kicked it into gear. >> reporter: the administration wants the industry to modify half a million loans under the program by november. but even that goal is met, analysts expect a record number of foreclosures this year. stephanie dhue, "nightly business report", washington. >> paul: the fate of health care reform may

in terms of treasury yields, can see them inching sghtly higher, bu no real pressur to skyrocket. and again, corpate bond yields coming down. it a favorable situation. >> paul: what are red ags in your mind for thisarket? >>it would take som unpredictable shock-pe event. of crse those are posble, as we saw in 2008,ut i think they're bend us. if things would stay normal, it's higher om here. >> paul:his is a true bull market in your eimation? >> y, it has the cssic trts. even the learship, led by materials, iustrials, consumer scretionary cyclicals. that's as it should be. >> paul: dyou have a mark for the dow to reachn a certn period of time? >> based on val, we'd see the mark at least 10% hier over the next year, but i think value can move even higher make that target more loftier. >> paul: okay. oil prices at $75 a brel today before pulling back a bit. do you see the runup continuing? >> wl,hort-term it's ry difficult to predict t randomness of the oil mart, but overhe long-term with an onomic expansion it wld be proper for moderatel not the ike a few years ago, but morately hig

i don't think they're going to ramp up treasury purchases. but at the same time, they're not going to do anything in the statement to signal that a near term tightening is imminent. that is is the last thing they want to do. what i would say is that the august meeting of the fed is going to be one of those meetings where the internal discussion might even think that we don't hear about are going to be far more interesting than the statement. they'll be talking about things like sterilization, exit strategy, all sorts of things that had market would find juicy. unfortunately we're not going to get too much more clarity. >> we'll have just have to wait a couple of weeks, then, for the fed minutes. but one of the things that might cloud the picture is we've got this record quarterly refunding auction this week today with 37 billion and tomorrow, the ten-year just one hour ahead of the fed announcement, how is that likely to impact currencies? >> i'm not so sure about a currency impact. clearly, the market is still looking for what the demand pic

and the future and rates stay low who's going to keep showing up at these treasury auctions?we have $2 trillion of additional debt due to this stimulus and unemployment, et cetera. that's a heck of a lot money. used to be a few hundred billion dollarses with a lot of money, now we're throwing the t word around. >> absolutely. quechb, what's your take in terms of what you doit rue ghoichb this market scenario and what the fed told us today this idea of leveling out maybe it's stabilization or maybe it means a little growth? >> i agree with what i just heard, that you're losing an incredible buyer in the treasury market that's just going to be going away now. 300 billion, even though it's not matching 2 trillion, it's still a supporting factor. that and inflation expectations that's my concern. not the whites of the eyes of inflation but expectation. so i'd be in the front end of the market the two to five-year area. >> so you're looking at some of these momentum trades on inflation expectations. would you look at oil in would you look at china? would you look at the brick? >>

americans are starting to take down treasuries in a serious way. >> the next trade is interesting. >>> obama doubling down on bernanke today. take a listen. >> as an expert on the causes of the great depression, i'm sure ben never imagined he would be part of the team responsible for preventing another, but because of the his background, temp rabl, courage and creativity, that's exactly what he has helped to achieve. that is why i'm reappointing him to another term as chairman of the federal research. >> our next guest, he worked with ben bernanke in the white house, he was chairman of the council of economic advisers. i interviewed him a couple years ago. joining us from stanford university, where he is now professor of economics, what a surprise there. welcome, ed. >> good to be back with you, rick. >> give me your take. were you surprised at all today? >> i was probably a bit surprised on the timing, but i think it's a good move for two reasons, one, ben is a capable economist, certainly has studied the area and knows it as well as anybody in the world, but more important he's been

one good thing that did happen yesterday is we had a successful treasury auction. we had a $37 billion offering of three-year notes and those went very well with a decent bit to cover and the thing that people were watching was foreign demand. there's new sort of rules about how they count the foreign demand, but it came in at well over 62%, which would mark a record. 3.44% for the 10-year bund yield this morning. today we will have a auction one hour before the fed decision. the ten-year yield has come in, 3.65%. taking a look at gold this morning, it is trading at this hour -- there we go -- off almost about 3 points at $942. christine. >> hey, bertha. joining us now for market strategy ahead of the fed decision is franz winsel and ajune know mahindra, managing director at hsbc. gentlemen, thank you very much for being with us. ajuneau, let me start with you. what could the fed do that could possible out of investor confidence? >> at this point, not very much. if they give any hint that rates could raise, that could rattle markets because nobody is convinced abou

, people were selling treasuries.ields went from 2.5% to 4%. now we pulled back. we tried to test at 350 today. we're holding in that area. the stocks come off and the yields will come off a little bit, they'll buy some treasuries. my spin is that we hold 3% going forward. i don't think we break below 3% for years to come. kind of a bold move because we're only 57 basis points above it, but i think we hold 3% going forward. >> greg, years to come. that's a long time. >> bold call. >> it is a bold call. greg, great to have you with us. have a great weekend. >> thank you. >>> coming up next, we take out the trash. as the markets stall, which stocks should be taking profits? >> and we have the interview with the ceo of devry. >>> here's what else is coming up on the show -- is the market going up because obama's poll numbers are going down? joe terranova breaks down the obama trade. >>> and americans are going back to school. but will that be this school at the head of the class? the ceo at devry opens up "the teacher's

because corporate bonds really key off of the treasury and you have the ten-year treasury at still less than 3 1/2%. so there's not much competition for the stock market right now. hence it's had a 50% recovery. >> let's talk about how to invest, then, in this environment. you both feel there is still great value here and things are not overdone even though we have seen this market rally pretty substantially since the low. how do i want to invest, then, in this environment, doug? give me some names or sectors you that feel are ripe for even better performance going forward. >> yeah, i think the litmus test is companies with growth that have been able to grow the last couple quarters. if you can grow in those quarters, you can grow anywhere. and i think what you'll find is most of those companies trade for a very little premium over the s&p. so what i want to do as an investor is be willing to plug my nose a little bit, pay up for a stock, but i think that premium's going to grow significantly higher. that includes tech. it includes software. big names like apple or, you know, software c

treasuries have had a great run this year, but should you continue to bet on them? with some answers joining us right now is greg tricoli, director of technical research at opalesque. good to see you. >> how are you, michelle? >> what's the good call on treasuries? we're talking about the ten-year specifically? >> talking about the ten-year. thank you for clarifying that. little bit of history here. from december to may the market consolidated between a 2% and 3% range. from may on we've been between 3% and 4%. came very close to 4%. we backed off to about 3.30. >> we're showing that to our viewers right now. >> up around 3.25 right now. this is an area where i'll tell you going forward, 3% is the low. going forward, forget trying to violate 3% of the down side. we move higher from here. when we broach, you know, 4%, do we get above it? do we stay above it? a lot of that depends upon the near-term price action in the equity market. there's an inverse relationship going on. if stocks back off here, back and fill on the s&p to about 9.50, 9.45, not a big payne move to

all we hold is short-term treasuries and cash. and the treasuries and cash are moved between the up and down securities based on changes in the case shiller top ten index. it is a pure play on home prices. >> eric, you published a report a couple months ago at morningstar talking about the case shiller price indexes, noting that you believe we should be seeing sequential improvement in prices later in the year. is that actually happening right now? >> yeah. it actually happened for the first time in almost three years last month, and there's probably some pretty good odds it's going to happen for the next two as well. the thing about predictions, it's easy to predict the past, a little more difficult about the future.. and with case shiller we're already talking about old news. it's got a two-month publishing lag and it's a three-month moving average. the data that's published every month has data that's old as five months in it. so it's pretty old use. >> how do you do that? you're sort of gaming it a little bit. how do you forec

we have breaking news from treasury.y're taking the unusual step of naming names of those banks and mortgage servicers that are and are not doing a good job keeping homeowners out of foreclosure. they're saying servicers covering more than 85% of loans are modifying the loans, and more than 400,000 modification offers have been extended. 230 trial modifications. let's get to the names here. jpmorgan, according to the treasury here, has started mortgage modifications of 20% of those eligible. those are 60-plus days delinquent. bank of america, 4%. citi mortgage, 16%. when i looked at the average in the table provided by the treasury, it is just 9% overall of those mortgages that are eligible. treasury trying to modify some 3 to 4 million mortgages over a three to four-year period. they've done 230,000, and trying to ramp that up to 50,000 by november. part of the way they're trying to get this done is by publicly announcing who's doing an aggressive job by modifying these mortgages and who is not. once again, jpmorgan the