Facebook, yet another important Earnings Report. That stock is still about 40 below the 38 ipo price, incredibly. Wow. And the numbers are being watched closely, obviously, especially the mobility aspect. Julia boorstin will have the results with the best instant analysis, as well. She will speak with the cfo as well. On the heels of the detroit bankruptcy, Meredith Whitney is out with us, out with a dire call on municipalities. She said detroit is another of yet many big dominos to fall. Thats been a long time coming, that whole story coming. It could be the Death Penalty for allegedly ledge fund report, potential criminal charges coming imminently against the firm. This is separate now from those civil charges brought by the s. E. C. And despite the 616 million settlement for Insider Trading charges that the firm paid months ago. Former s. E. C. Head harvey pitt will be here. And past firms facing criminal charges have not done well. We want to get into the impact on s. A. C. And if theres an impact on the market. Lets check where we stand. Right now, the dow is down about 43 points. Thats a. 25 lower. Nasdaq looks like this. Actually, nasdaq is looking at gains. Technology is one of the leaders on the upside. Up about a point, just barely. Still bouncing off of the lows at 3,580 on nasdaq. Standard poors down a fraction, 1,685, bill. It doesnt look like well set any new records today, bob pisani. What are you hearing . The real problem with the stock market has been the bond market. Interest rates, yields have been moving up. Look at the 10year yield here. We had positive economic data, bill, with the housing numbers this morning. And then we had a crummy fiveyear auction, so yields moved up on that. And thats put pressure on the stock market. Particularly interestrate sensitive groups so utility stocks, reits, all of the areas sensitive to housing, too, for example, all on the downside. Then we had the chinese pmi data. 11month low. These are the manufacturing numbers. A lousy number, frankly. Theres been pressure on all of the materials names like coal and steel throughout the day. But even those caterpillar disappointed, thank heaven for the bulls that the tech came through here. Not just apple. Juniper good numbers. Vmware had good numbers. Remember, nasdaq 100 has underperformed in the last few days since google and microsoft had crummy numbers. So not bad overall for tech. Not bad also is aerospace. Boeing might be down, but they boosted the outlook for the year. Northrup grumman, dynamics, boosting the numbers. Heres the scorecard. Financials, terrific numbers overall. Industrials and technology stocks, frankly, have been on the mixed side. Were still earnings so far up 4. 2 for the s p 500. Im sticking by my idea we could get 5 to 6 Earnings Growth in the Second Quarter. Guys, back to you. Yeah. Even though the estimates, you stuck your neck out on that one, bob. I did. Even though estimates were 3. 5 . Right. We want to bring in the panel of experts. Joining us on the Closing Bell Exchange is sarah and david and bob kaiser from s p capital iq and our own rick santelli. Good to see everybody. Bob, lets talk earnings. Bob is saying we could get 5 , 6 Earnings Growth. What is priced into the market at this point in terms of Earnings Growth, what are you expecting at s p capital . Thats a great question. The market is digesting a number of dynamics. We started out with expectations of 3 . Third of the s p 500 has reported. Were up to 4 . Were thinking 5 , 6 is right, possibly 7 if everything goes well. At the same time, we started out earnings season with expectations for Revenue Growth of negative. 3 and its gotten worse. Its negative 6. Its the Second Quarter where were seeing the revenues soft even though the bottom line is above expectations. We recently outlined that. It goes back a full two years. What it tells us is corporations have been dealing with the subpar gross domestic product, the growth environment, and squeezing additional profits, watching costs intensely, and it almost feels like were at the end of the road. The good news on Revenue Growth, its expected to rebound 4 , 5 over the second half of the year, but youll need economic improvement for that to happen. Rick, bob highlighted the high of the rise in the yield, and a lot of traders here focusing on the 10year yield. At its peak today, it was up almost 13 whopping basis points. Whats your view of what happened there . Yeah, no, we reached 2. 62 yield in the 10s. We reached a 1. 41 yield in the 5s. And if you notice lets look at why the market moved. We had 10 00 eastern data. Arguably, it was pretty good. But the rates started rising long before that. Right. Whether you agree with it or not, it is definitely the pmi news out of europe. Listen, europe is an aggregate, as 12. 2 unemployment. On the last day of july, well get a new read on the unemployment picture. At this point, whether you agree with the markets pricing or not, theyre making a big todo about the fact that the pmis have moved above 50, at least, you know, not necessarily in france, but it has in germany and it has on an aggregate basis. Thats a big deal. You know, right now, if the 10 years were to close around 2. 59, it would be a twoweekhigh yield, and you could argue those are the fundamentals. If you move into the technical regions, as weve been talking about almost on a daily basis, i know the big bond funds are saying you have to buy em now, this is your last chance, but the charts really dont look all that bullish in price. They look a little bit more bullish in yield. Yeah, david, what about that . At a 2. 6 yield on the 10year, in a profit picture where revenue is actually declining as bob just told us, do you want to put money to work in stocks here . I think you do want to put money to work. You know, as we look at the earnings for this quarter, i agree with bob kaiser and bob pisani, you know, were expecting 5 , 6 Earnings Growth, thats compared to 3 Earnings Growth estimates coming in this season. And people are talking about a revenue recession. And were actually seeing revenue coming in stronger than expected, and we expect earnings and revenue to improve through the second half of the year, third and fourth quarter. We look around the world rick pointed to whats happening in europe. We may finally be seeing some positive news in a turnaround there. And go that is whats making rates in the United States come up a little bit higher, rates going up for the right reason, that the u. S. Economy and the Global Economy is getting better, thats a good reason to be investing in stocks. Sarah, i mean, you feel that the u. S. Markets gone about as far as it can with these record highs weve been setting. So youre looking at the unloved emerging markets right now, arent you . Thats correct. We fundamentally work from the bottom up, so we just look for cheap stocks globally, and in our global fund, were far overweight than nonu. S. Markets versus the u. S. So the u. S. Market to us seems fairly priced. Many of the stocks where were taking profit are located in the u. S. , and were reinvesting, at least globally, in the emerging markets. Where . Well, all of the markets are interesting. Look at the group. Theyve lagged demonstrably versus the world, seven Percentage Points year to date. Thats a dramatic lag. So some of the most interesting markets, such as indonesia and other Southeast Asian markets, have very strong consumer economies, and our emerging markets fund is taking advantage of that. So its one of the areas we have thats overweight. Big emphasis on the consumer and on domestic consumption. That way we can avoid some of the slowdown in china, which we think will be temporary anyway. Whats the reason for the sharp decline, sarah . When you look at the outflows of emerging markets, its been painful. Im sure painful for you, as well, with the emerging markets fund. You know, how do we know it wont happen again . And maybe it should be at this level, because of the Growth Numbers that were seeing. Well, maria, you never know. The valuation is always the firm ground you walk on. And to the degree, the valuation now is bow ginning to really benefit the emerging market case. Emerging markets and aggregate have higher dividend yields, lower p e ratios, lower pricetocash flow than the developed world. And the bigger the gap gets, the more likely risk is on your side in the emerging world, not to mention the fact that growth is far better there between owning selected banks, and then the Energy Stocks that are fantastic, as well, again, the consumer stocks like the autos. Wonderful investments for the long term. All right. Thank you, folks. Appreciate your thoughts on todays market action. See you later. Heading toward the close. About 10 minutes left. It doesnt look like well be getting records, but you never know. Its still early. We have a lot of time. Down 56 points on the dow. The s p is down a little bit as well. We have 50 minutes before the closing bell sounds. Down about 60 points. The president obama delivering a speech on the economy today, seen here earlier on cnbc. After the break, allen krueger, the president s chair on economic advisers, will join us on what the president wants to i accomplish. And keep an eye on the three stocks. They report after the bell. Well have the numbers and instant analysis here on closing bell, plus a facebook shareholder who says the company should try and buy netflix. Which gets more expensive every day. That and much more coming up on the most important hour of the trading day. With fidelitys options platform, weve completely integrated every step of the process, making it easier to try filters and strategies. To get a list of equity options. Evaluate them with our p l calculator. And execute faster with our more intuitive trade ticket. Im greg stevens, and i helped create fidelitys options platform. Its one more innovative reason serious investors are choosing fidelity. Now get 200 free trades when you open an account. Thats me. I made you something. I made you something, too. See you next summer. [ male announcer ] get exceptional values on the highest quality cars at the summer of audi sales event. Plays a key role throughout our lives. One a day mens 50 is a complete multivitamin designed for mens Health Concerns as we age. It has 7 antioxidants to support cell health. One a day mens 50 . President obama kicks off a road trip to gain public support for his economic policies. Chief washington correspondent john harwood at cnbc Global Headquarters with the story. Reporter hey, maria. The president spoke for well over an hour, quite a long speech. It reflected some frustration with the drift of the debate in washington recently, took some shots at congressional republicans. But mostly in that very long speech, he laid out a case for why we need more well, were listening to john, but we were having audio problems with john. I could hear him fine. Because hes going through what the president is trying to accomplish with this new tour. John, are you still with us . Reporter can you hear me, maria . Yes. All right, were going to get back to you, john, because joining us to talk more about it, bill, is one of the president s key men. Allen krueger, of course, chair of the economic advisers. We hope you we can hear you, sir. You with us . Im with you. All right. Heres a piece of what the president well get you to talk more about the reason and the focus of this particular speech. Heres what the president had to say about an hour ago here on cnbc. This growing inequality, not just of result inequality of opportunity, this growing inequality, its not morally wrong. Its bad economics. Because when middleclass families have less to spend, guess what . Businesses have fewer consumers. When wealth concentrates at the very top, it can inflate unstable bubbles that threaten the economy. All right. The president , as he said, has about 1, 200 days left in his administration to finish the work on the economy. What is that work, and what to be done now and why the speech at this time . The president laid out a vision today for how to grow the economy from the middle out. How to improve on the elements of the middle class life, quality jobs, affordable education, secure housing, healthcare thats there when you need it, and enabling people to save for their retirement. He laid out a vision. Hes going to work towards that vision. These problems that the middle class have have been facing took years to build up. I dont think we should expect the problems to be solved overnight. The president s committed to in. You heard him say these are the Biggest Challenges we face and hell view them all that come across the desk through the prism of how it helps the middle class. Thats the overlying the underlying theme, then, allen. Lets talk about what that means in terms of practicality. In terms of policy, what does that mean . Does that mean a difference in terms of taxes, in terms of growth and regulation . Tell me how that plays out in a practical ways. Well, i think it means a number of things, and the president will lay out more details in the weeks to come. But hes going to use every leaver at his disposal. Hell work with congress to invest in infrastructure, to provide preschool education, and do the kinds of things that can build a foundation for Economic Growth and more competitiveness, and expansion of the middle class. Hes going to use his executive authority. He mentioned an action hes already initiated to connect all of our schools to highspeed internet over the next five years. Thats something he could do with existing authority. And hes also very importantly going to use the convening power of his office. He said hell pick up the phone, call up College President s, call up ceos, call up Union Leaders to try to provide more opportunities for people, to keep College Costs affordable, and to make sure that employers look closely at workers who have been struggling with the economy through no fault of their own and provide them with opportunities. One wild card in all of this will be the feds policy. I mean, it seems as though they are anxious to begin the tapering process maybe as early as this fall. Have you factored that into your strategy, and do you think its appropriate to begin tapering before the end of this year . As you know, we dont comment on Federal Reserve policy. Theyre an independent agency. Were focused on building the cornerstones for sustainable, durable, middleclass livelihood to provide more opportunities for people to make it to the middle class. Is that doable if Interest Rates continue to rise appreciably, which is anticipated if the fed begins tapering . You know, we can certainly take advantage of the opportunities that are out there, use globalization, technological change more to our advantage. The president laid out a vision of how to do that. And were beginning to see the economy heal from the great recession, from the deep recession back in 2008. Now its important that we address those structural problems that have been out there for decades and have been battering the middle class. So are there any areas, alan, you would say are sort of musthaves to really move the needle . You know, when i speak to gene sperling, your colleague, pretty often, he seems frustrated. Well have him on again soon. He seems frustrated that were only looking at a 2 grower. So how would you characterize what these policies have done so far, and how do we really move the needle out of this 2 range in terms of actual Economic Growth . Well, one of the reasons the economy is not growing stronger is because of policies like the sequester, misguided, automatic, acrosstheboard cuts, cutting into the vulnerable and not dealing with the case wasnt this the case before the sequester . Its certainly the case that sequester slowed growth even further and the Congressional Budget Office calculates it reduces growth by. 5 ,. 6 this year. In spite of the sequester, weve been adding 200,000 jobs a month so far this year. We want to build on that progress, take the kinds of actions that will support the recovery in the near term, as well as, as the president laid out today, pursue the kinds of actions that will build a Stronger Foundation so we can grow the economy from the middle out going forward. I spoke to a Breakfast Group yesterday, and i was asked this question, but you far and away are the better person to ask, so im going to ask you. When the president leaves office in january of 17, whats the economy going to look like . What will you consider to be success job completed in terms of gdp, job growth, unemployment rate, and so forth . I think its most important that we continue this recovery. The recession ended four years ago. Growth hasnt been as strong as wed like. We had a very deep hole to dig out of. Theres a lot more work to be done. But the longer this recovery goes, i think the better shape the economy will be in. Recovery dont tend to die of old age. They tend to die because of external shocks or perhaps selfinflicted wounds. I think its particularly important that congress doesnt play games again with the debt ceiling. We saw the kinds of problems it caused in 2011. And the president s not satisfied just bringing the economy back to where it was before the crisis. It wasnt good enough then. And he laid out that vision today for how we could put in place those cornerstones for a durable middleclass livelihood and for rising middle class and more opportunities for people to get into the middle class. And certainly some of the areas that we have seen improvement, like housing, like autos, speaks right to that middle class in terms of improving peoples lives. Let me ask you, bill, im glad you brought up the fed. Of course, alan, im not asking you to comment on fed policy. Janet yellen, obviously, has been the assumed favorite among talkers out there in terms of taking over