away so these things are cheap. >> great to have you on the show. >> thank you. >> that does it for us. more fast at 5:00. power begins right now. scott, thank you very much. three hours to go in the trading day and we are back in rally mode. good news about the economy outweighing worries about greece and bank warnings from moody's. jobless claims down almost at a four-year low. housing starts and philly fed up. inflation relatively tame. so is the american economy better than you think or not? >> welcome back, ty. nasdaq up 12% year-to-date. shares in apple up 30% in three months. are we seeing a rock solid tech boom, or is this a bubble waiting to burst? >> plus pain at the pump. gasoline prices soaring. talk of $5 a gallon gas by memorial day. what is driving prices up so far so fast, sue? >> i am sue herera with tyler mathisen. a great edition of "power lunch"

begins right now. >> i'm jackie deangelis at the realtime exchange. today's trade all about good economic news in the united states. the other worries haven't gone away but on the back burner for the moment. here's where we stand right now. take a look at the markets. the dow up by over 100 points. s&p 500 up by 11 points and change. and the nasdaq composite seeing a nearly 31-point gain there. nice green in terms of our markets here. taking the pulse of the markets, the euro, it was improving from earlier levels. it's slightly higher there at 1.3103. nat gas up on a bigger than expected inventory down. and rbob continuing to tick higher as well. third quarter earnings fell on some charges but reported double-digit sales growth. gm higher as well. record profits but earnings

missed because of losses in europe. philip lebeau will have more on that in a moment. and a 58% jump in earnings on tap and that is pushing the stock higher by nearly 2.5%. on the downside, amazon getting hit after a downgrade from morgan stanley. and smuker in a jam. the stock is taking a beating. blue nile sinking as well. they're predicting down beat first quarter. and the full year as well. and blue nile taking a beating there 12.24% to the downside. tyler. >> jackie, thank you very much. markets taking a leg up in just the past hour and bob pisani's all over it at the new york stock exchange. the rally is moving. should we make something of it or not? >> yes. i was on about an hour and a half ago and i said i'm not impressed with the stock market today. i don't care if the dow's up a few points. i see telecom up, utility up, consumer stocks up. this does not impress me. we're looking for something a

little more market leadership-oriented. as i'm standing there about an hour and a half ago headlines come out from a german newspaper that says the ecb is going to swap its greek bonds that it bought at 30% discount for new greek bonds. that was a little bit of a surprise because they haven't finished all the other negotiations. take a look. material stocks, which had been market leaders, they all started -- look at that. boom. now you're getting my attention. what else moved? technology stocks. boom. to the upside. energy stocks, boom all of a sudden. now i'm paying attention here. and bank stocks, tyler, which had been the only real group that had been doing pretty well among the leadership groups also moved up as well throughout the day. so overall, yes, we're moving once again on some greek headlines. >> the telltale here is it's not just the defensive sectors hanging in there. >> that's right and this guy, mario draghi is so smart. what he's doing here if the

story is right in the german newspaper is he's putting a nice bow tie around the greek deal. he's saying all these parties supposed to meet on monday, okay, you wanted the ecb to do something, i've held off. i said i wouldn't, now i'm tipping my hand to you. now i'm telling you how we're going to play a part in this. the only thing i don't like, it doesn't look like the greek wills get any savings from this. if they swap the bonds for new bonds, the greeks aren't going to give the money to the greeks, they're going to give the money to the national banks. i don't think the greeks are going to get anything out of that. >> no, but the market's embracing it nonetheless. >> absolutely. >> bob, thank you very much. our economy is front and center in today's market surge as well. inflation, housing, manufacturing data all coming in better than expected. and jobless claims hit a four-year low. our senior economics reporter, steve liesman, kicks off our power surge with the latest figures. and they're pretty darn good so far, steve. >> not too shabby, sue. the stream of better data continues. this, by the way, is the 20th straight week of generally upside surprises.

no reason to disagree. but whatever party the economy may be throwing invite maybe fed and wall street economists, they seem reluctant to show up. even the market didn't want to come until events in europe turned them higher today. here's what we're looking at here. if the housing start and unemployment numbers add to the belief the economy is shifting gears. policy looks more and more at odds with a brightening outlook and barclays saying the solid downward trend enforces our view that the labor market is building momentum. and the philly fed saying the evidence continues to build that the u.s. manufacturing recovery is picking up some steam again. ppi up less than expected. those are producer prices. take out food and energy, up more than expected. tobacco and some other factors raising those prices. housing starts, going to have diana olick give you details on that. jobless claims up 348,000, the four-year low. and philly fed, a bit higher

than expectations at 10. look at claims in unemployment. you can see we've had this big drop in claims but not the drop you might expect with the unemployment rate that may be to come. some economists do suggest all of the good data should be taken with a grain of salt. none of it so far has been enough to raise economists' expectations for growth of around 2% to 2.5% in the first quarter of the year. that would actually be a step down from the 2.8% reported last quarter. question, sue, are economists late to the party? >> i think that is the key question. what's it going to take to get those economists to raise that growth outlook for the first quarter and perhaps for the year? >> it's actually a pretty long list. it starts with doing away with the sort of da ma cleez of greece. higher gasoline prices and what that means to the consumer. belief actually in the jobs numbers and in housing. i'm interested in what diana has to say next. and, finally, i think a key issue here is fiscal austerity. how much the government's going

to cut back and what effect that will have on gdp. >> that is a long list. steve, thanks very much. appreciate it. >> and of course steve mentioned housing. and despite all of the good news data that we've been talking about here in the past five minutes, housing does continue to be a bit of a drag on the economy. after a yearlong respite, foreclosures are back on the rise just as our own diana olick had been predicting for a while now. she joins us from washington with the new numbers. diana. >> that's right, tyler. foreclosure filings in january were up 3% from december according to realty track. one in every 624 households receiving a filing. this is a turn as banks post-robo get the system moving again. realty check calls it the thaw after the foreclosure processing freeze. big jumps in bank repossessions. that's the final stage of foreclosure. and big jumps in foreclosure activity in certain states, especially where you need a judge in the process. florida, illinois, indiana and pennsylvania saw foreclosure activity jump annually for the

first time in over a year. now, that is the pipeline of long troubled loans that will continue to be a drag on the market for some time. but overall mortgage delinquencies are actually dropping. 7.58% of all u.s. mortgages were delinquent in q-4 according to the mortgage bankers association. down almost .5% from q-3. loans in the foreclosure process also improved to 4.38% of all loans. but barely. just down 5 basis points from q-3 and still near record highs. again, much of that robo signing related. add it up and 12.63% of all u.s. loans in some kind of trouble in q-4. that's down 10 basis points from the previous quarter. one caution though, brand new delinquencies thar delinquencies, that is 30 days, with the only to post gains. despite these numbers, housing starts rose 1.5% in january. it was all on the back of multifamily. single family actually fell. there's nothing wrong with multifamily. a job's a job.

we're still at very low volumes and unseasonably warm weather cannot be discounted for a bit of this jump, tyler. >> i want to ask a question that's maybe a little off point here, but nevertheless i think germane. do you believe as a matter of opinion, diana, that one of the reasons housing hasn't picked up apart from jobs, despite the fact that mortgage rates are at 4%, is that people view housing as not a good investment anymore? >> well, look, we've been talking about consumer confidence for' ones now. going into the spring market this is going to be based entirely on jobs and on consumer confidence. there are headwinds. there are foreclosures. there are under water borrowers. about 12 million of them who can't sell their homes and move up. but, again, if people start to see the turnaround, if they start to think they're missing that bottom and they can get in on the record low mortgage rates, that's when they're going to jump in. it's all about confidence. and, of course, got to have a job these days to buy a house. >> diana, thank you. >> all right. joining us now on the phone in just a few minutes will be

morgan stanley's steven roach, but before that a turnaround for general motors from bankruptcy to biggest annual profit ever. shares have been soaring. right now the last trade is up 1.74. that's about 7% gain at 26.66. but gm's european business is putting a big dent in the quarterly results. the market doesn't seem to care today though. philip lebeau is at gm headquarters in detroit speaking with the company's cfo. hi, phil. >> hi, sue. when you break down gm's fourth quarter it's a tale of two companies. look at gm's primary profit drivers and in some cases loss drivers around the world, europe, big part of the business, lost $600 million in the fourth quarter. obvious problems too much capacity, sales not doing well, pricing down. but then you look at china and gm's international operations profit of $400 million. we've talked about the strong sales in china for a while. and finally the real profit driver, $1.5 billion in the fourth quarter from north

america. the reason there is pretty clear. gm is profiting in north america because of greater demand, sales up for all the automakers, better pricing, they haven't had this kind of pricing power in years, and finally lower costs. you put all that together and gm has a pretty good recipe at this point. but earlier today cfo said they still have some work to do. >> we make good progress this year, but we're just beginning to see some of the benefits and impacts of a lot of the actions we're taking. and this is a long-term game. we have a lot of actions that will help us in the near-term. >> one of those actions included derisking the pension plan which we announced yesterday on cnbc. take a look at this stock over the last year. now, it has come back a bit. you know, in the last three months or so. but there are still a lot of people saying you're nowhere close to 33. what happens for the government investment here? well, we broke down these numbers because we heard it from a lot of people on twitter saying when is government going to be made whole? $49 billion essentially was put into the turnaround of general motors.

that means the government has to sell its 500 million shares at roughly $53 a share. if it were to sell today at the price where it's at, they'd lose about $14 billion. they have recovered half of the $49.5 billion that was put in to general motors to restructure the company. so, again, tyler, we always hear from people, what do we need to see in order for the government to be made whole on general motors? it's got to get to 53 and the government has to get to hold and sell then. more likely they would sell once it's over 33. tyler. >> phil, thanks very much. shares of discovery communications trading at an all-time high level dating back to july of '05 but the stock well off its opening highs right now. the media company beating profit estimates but questions do remain about the oprah network. julia boorstin has been going inside the numbers. julia. >> well, tyler, the cable giant behind dirty jobs and deadliest catch reported strong viewership, advertising and distribution growth with a positive 2012 outlook. discovery's net income last

quarter grew 76% on 11% higher revenue of $1.1 billion. so why is this stock trading down today? margins were lower than expected. and the beat came primarily from a lighter tax bill. and there is that question on everyone's mind, the performance of o.w.n. discovery's joint venture with oprah when i know f oprah when i kn opr oprah win free. now focused on growing what it calls a meaningful audience. the key now seems to like with oprah herself. the ceo stressed her greater on air presence this year and said that it's already boosting ratings. meanwhile, he emphasized where the company is growing right now, which is overseas. international now generates about a third of discovery's cash flow. sue. >> julia, thank you very much. one high-profile economic name on wall street is calling it

quits after nearly 30 years at morgan stanley. steven roach is retiring to focus on academics and write a book. since 2010 he's served as non-executive chairman of morgan stanley asia and taught at yale university. congratulations, stephen, good to hear from you again. >> thanks, sue. no eulogies though. >> none whatsoever. i know you're pending a tone on china and u.s. relations. it's interesting this happens this week with china's vice premier in the united states given your extensive knowledge of asia, how do you view relations right now between the u.s. and china? >> they're a political football right now, sue. in the meeting this week with xi jinping is a clear example of that. we have serious economic problems in this country. and the politics on both sides of the aisle want to blame someone else. and that's china. and that shows a real reluctance of our own political leaders to look in the mirror and try to address our own problems on our

terms. >> frequently the currency is what is pointed to. but yet if you look at the appreciation in the yuan, it has been relatively significant to the dollar especially as it's compare today years passed. >> it's up about 25% over the last several years. the currency is not going to fix what is really a multilateral trade imbalance that the united states faces. we have deficits with 88 countries. and the reason for that multilateral imbalance is a lack of saving. and as long as we run these big budget deficits, as long as consumer saving continues to be depressed, then trade deficits are not going to go away with china or anyone else. >> stephen, good luck with the book. can't wait to read it and have you back on cnbc to talk about it. stephen roach. now retiring. >> i was with him on "squawk box" just as he was beginning his teaching at yale. and he was pointing out how much

dog on work it is to teach one of those classes. >> it is. i can just imagine. all right, up next, tech is on a tear. the tech sector now makes up a full 20% of the s&p 500. nasdaq's up 12% year-to-date. shares of apple running wild just the past few months. >> we have seen this movie before. and you know how it ended that time. so, are we looking at a full fledged tech boom or a bubble or something in between? we'll tell you how to play it in two minutes time. ♪ ♪ [ male announcer ] offering four distinct driving modes and lexus dynamic handling, the next generation of lexus will not be contained. the all-new 2013 lexus gs. there's no going back. see your lexus dealer. weight loss programs can be there's no going back. expensive.

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welcome back "power lunch." rsts are here on the floor of the cme group. today i guess you could call it risk-on. call it whatever you want but the charts look so similar sometimes the correlation aspects of this make me a bit nervous. look at an intraday of our 10-year. look at the intraday of the european 10-year. look at the euro versus the dollar and then look at the stock market. and also remember, yes, we had some good data today, but much of what you see on these charts look so similar started a half hour before the data was out. a lot of this started about 8:00 eastern. one other thing, the inflation data wasn't good. i don't normally cover tips auctions, but about 19 minutes ago we had a really crummy tips auction. $9 billion 30-year tips. the yield at 77 was the historic low. but it was trading 70, 71, meaning it tailed off dramatically. demand wasn't very good. just an ugly auction. and think, we did have a ppi

number that wasn't terrific. maybe there's just a general sense that at those yields maybe it isn't worth the effort. back to you. >> that's exactly right. sabers taking it in the you know what, in the neck there. technology bursting out of the gate in 2012 leading gains and rising 13%. the sector reclaiming 20% of the s&p 500 weighting. wow. are we looking at a boom or a bubble? and how should investors be playing the tech space right now? joining us is larry havrty, associate portfolio manager of multimedia trust and cio of davidson investment advisors. ed is with us in studio. larry, let me turn to you first, do you think this is a bubble or a bubble in the brewing or what? >> i don't think we're anywhere near a bubble, tyler. i think the thing that's kind of unique about this cycle is that the two biggest guys are doing the best. and this is biassing the indices, which are market cap weighted upward. and it's going to continue.

and of course i'm speaking about google and apple. and i think the thing that investors are missing on this particular cycle, and it's very different than past cycles, is that -- and take apple, i think it's the best example, apple's feeding at a lot of troughs. i can remember when apple was simply a pc company. but it's not a pc company anymore. it went into the retail industry. it has a phenomenal retail model. it then went into the music industry. and basically it's captured all the cash flow in the music industry. then with the iphone has migrated into the telecommunications area. and it's creating a monstrous amount of profit there. and just last week i was down at toy fair, i thought i would get a lead on what the hot movies would be and i was astounded when i went to mattel and hasbro meetings and all the hot toys are derivative off the ipads. >> i think apple is a media company that happens to make some devices.

ed, why don't those two companies split their stock? one is $500 a share and the other is $600 a share. >> that doesn't necessarily create value. >> no, but it creates an opportunity for a broader ownership base, doesn't it? >> it does. but i think it's not necessarily value-enhancing. i think from that perspective it really doesn't make a difference. you do mention, as far as getting access, but a lot of individuals can get access through mutual fund or active manager. >> keeps them both out of the dow industrials though. >> perhaps. >> that's a price-weighted index. >> that's right. >> ed, you're finding opportunities, you said, in the tech sector. but you're picking your spots because there is a little bit of a worry on the horizon for you and that has to do with government and local spending. >> that's correct. that's correct. i mean, we are seeing a turn in semiconductors, which is usually a good sign for technology and confirms broader strength. your guest mentioned that it's been consolidated with the

bigger cap weightings, which is true, but we're seeing a turn in semiconductors. microchip, which is a company that we like, it's a leading microcontroller company, tend to see turns earlier. and they've indicated that the december quarter was the bottom. so we expect better things in semiconductors in 2012. but as you pointed out, the government spending, financial services spending, these are big areas that affect overall tech spending together when you bring in europe and u.s., they constitute close to 50% overall tech spending. so this creates a headwind as we're seeing budgets getting scaled back there, some downsizing. that muddies the water a little bit for us. >> larry, let me come back to you and ask you, you talked broadly about the two big ecosystems. the google ecosystem and the apple ecosystem. what about some of those other

technology sweethearts like zynga, like groupon, like linkedin, like pandora? what do you think of those? >> i'm very skeptical about them, tyler. we've been staying away from them. and the reason is they're quite different than apple and google. they're only playing in one pond. and you can more or less size the pond. and as whitney said in the previous hour, the valuations on these stocks relative to the size of the pond is very, very high. there's a couple of other things that are bothering me. if you look at groupon and zynga and linkedin, if you go into their income statements, the depreciation accounts are going wild. this is good for tech because they're buying a lot of tech. and i think that's the kind of thing that offsets that weakness in government that we just discussed. but these businesses aren't as inherently a good business model

as google or apple. >> right. >> and they're selling it at preposterous multiples. that of google and apple. i think what happens there, tyler, is that the business is segregated and there are too many managers that are just small cap or mid cap and more or less have to buy these things or they're going to lose their jobs. so they buy them. and then eventually it's like the road runner movie where the coyote figures out that he's at the edge of the cliff and all of a sudden the valuation collapses. but a lot of these -- >> quickly -- >> linkedin is a good business, it's just too expensive. >> sorry to interrupt you, but you said those were preposterous multiples. is that yes or no for facebook preposterous? >> the low end of the discussion range $75 billion, no. if it trades at $1.25 on the first trade, yes. >> i think -- well, so much

hinges on the growth. and we're seeing some of the growth already decelerating. that said, it's a real business. but i tend to be skeptical on growth. >> a very rich multiple of sales. >> it is. you're counting on a lot of durability to that business model. >> gentlemen, have to leave it there. larry, ed, appreciate it. up next, if you drive, you know all about the sticker shock. why did i buy a big crossover suv? >> i was just going to ask you that. it's the tyler mathisen effect. >> gasoline prices are soaring, some are predicting $5 a gallon by summer. we're going to tell you what's driving prices up and how high they might go. i love my prius. >> as we head to break let's check the commodities complex. gold, silver and copper all on the minus side today. but the gasoline and energy complex solidly in the green with nat gas up almost 5.5%. dave, i've downloaded a virus. yeah. ♪ dave, where are we on the new laptop?

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3.5% despite he was one shorting the stock, there was an interesting note from citi's mark ma han any. he says we view linkedin as arguably one of the strongest assets of 2011-2012 internet ipo cycle. however, a lot of people hinge on the valuation. it's trading at something like 160 times forward earnings. your last guest talked about it. whitney talked about it as really being the thesis, the core of his thesis, as to why he's shorting this stock. however, you can see on this chart today it's up 3.5%. just wanted to highlight that. and a number of the other social media stocks, sue, that are moving to the upside today. >> indeed. thanks, scott, very much. well, if you drive, this is not news to you. the price of gas is going way up again. according to the u.s. energy department, the national average for a gallon of regular gasoline is $3.52. that is 38 cents more than it cost consumers a year ago. but the price at the pump could cost even more come memorial day weekend. gas buddy.com is projecting that come may the price for a gallon of gasoline in los angeles could

run between $4.45 to $4.70 per gallon. in chicago, $4.60 to $4.95. and in new york between $4.30 and $4.55. what's really fueling prices? let's go to the nymex where john woods, president of jj woods and associates joins us. i guess there are several reasons, john, we could be seeing the runup. prioritize them for me. the middle east certainly has a problem and we have some refinery closures. which do you think is driving prices? >> you have to look at the middle east. all eyes are on iran. there's your starting point. then you have some factories come by, shut down, it's like a double whammy right now. it's not looking too good short-term, but projections of $4.25 to $4.50 around here are probably pretty accurate. i don't see it going much higher than that. >> you don't. last week on our triple trader anthony said he saw $5 a gallon at the gas tank. what do you think? >> i mean, $5, it's a lot. when you say $5 a gallon, you're

looking at trickle down. >> right. >> you're going to have an economy basically shut down. no road trips. i mean, just transportation costs. >> but that's the worry, isn't it? >> i'm sorry? >> that's the worry. >> yeah. and that's it right there. you got to look at the economy. our economy really isn't that strong right now. we can't sustain these high gas prices. people are going to be like we're not going anywhere. you'll see it come back. we're going to see production come back online. you'll see inventory numbers start to build a little bit. and then you're going to have lower gas prices. so my thought is really right on the $4.35 level being the top right now. >> we hope you're right. thanks, john, appreciate it. >> sure. >> and up next, half a trillion dollars worth of market advice, that's how much t.rowe price holds. they also hold a bundle of facebook shares. brian rodgers is their cio. he'll talk about it in two minutes.

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let's reset the markets and see what's going on. we continue to climb higher. dow industrials closer to 120 points higher. s&p gaining by nearly 14. the vix just under 20. seeing modest gains in crude and

gold as well. weakness in the dollar. look at 109-year note, just under 2% right now. look at some winners and losers today. not too many surprises here. not a great thishd quarter but double digit sales there. and jm smuckers down on its earnings as well. >> jackie, i'll take it over here at the nymex on the headlines that the greek swap deal may be imminent. we saw the euro turnaround. and a big reversal in gold. held support this morning and wound up higher to close up for a second day in a row. part of it moving up along with oil, which is above $102. concerns about inflation. and while gold here wasn't the best performer, take a look at gold in yen terms today. dennis gartman telling me he is long gold and yen. while we're all worried about greece, he's also worried about the monetary situation in japan. let's head over to seema for three in 30 at the nasdaq. >> biggest gainer on the nasdaq

100. good earnings, the street was happy. jpmorgan expects to benefit from favorable trends. on the flip side, take a look at clearwire. hurt by higher interest and higher tax expenses. the stock getting hit. also worthwhile looking at invid ya. a bullish outlook for 2013 that it offered last fall. tyler, back to you. >> seema, thank you very much. our power player today is one busy guy. he's brian rogers. not only does he manage the four-star rated t. rowe price equity income fund but he's chief investment officer of t. rowe price. he joins us today from t. rowe's headquarters in baltimore. brian, good to have you back. i'm having a little hard time hearing brian. i'm going to forge right ahead and assume that the viewers can hear you.

i want to talk first about a subject that may be a little stray for a guy who manages an equity fund but is certainly top of mind for an awful lot of investors and that is the proposed changes that the s.e.c. may well mandate in money market mutual funds, a kind of fund that virtually all investors have one way or another. what do you think of those proposed changes number one? and do you think they are necessary? and will they make those funds safer? [ technical difficulties ] >> i guess we don't have brian's mic right now. let's see what we can do -- >> let's tell them what's coming up tomorrow. we have our power player tomorrow and hopefully we'll be able to solve the technical issues. our power player is kate nixon. she's an extremely powerful woman. she manages over $160 billion. it will be very interesting to see where she's putting her money now.

>> let's take a break and see if we can get those audio problems resolved. baltimore's a long way away down there. >> we're up 126 points on the dow. we'll update the markets and regroup with our power player in a moment. no, no it's her dad. the general's your soul mate? dude what? no, no, no. he's, he's on my back about providing for his little girl. hey don't worry. e-trade's got a totally new investing dashboard. everything is on one page, your investments, quotes, research... it's like the buffet last night. whatever helps you understand man. i'm watching you. oh yeah? well i'm watching you, watching him. [ male announcer ] try the new 360 investing dashboard at e-trade.

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that's thousands of kids learning to love science. ♪ isn't that cool? and that's pretty cool. ♪ coming up top of the hour on "street signs," are investors getting their mojo back? why there may be signs of hope from housing to the market. plus, another black eye for blackberry. surprising new survey shows buyers are hanging up in a big way. and snickers not so fun sized. plans for sweet downsized. that's next on "street signs." back to sue and tyler on "power lunch.." >> mandy, thank you very much. let's try again with brian rogers, the chairman of t. rowe price. you can hear me now. my question for you the first time around as a leader in the fund industry, what do you think of the proposed s.e.c. regulations governing money

market mutual funds, a fund all of us own in one way or another. will it make them safer? will it hurt the business? >> tyler, my view is money funds are really safe just the way they are. two years ago the s.e.c. put forth new rules ensuring greater liquidity, higher credit quality, shorter duration. these were the january 2010 new rules adopted by all money market funds. and in my view the commission is fighting the last war in some respects. i think the changes made in 2010 were very sufficient to ensuring that money funds are very safe. >> all right. fantastic. how about the proposals regarding increased transparency? i realize i'm being a little wonky here with respect to what fund companies or advisors charge for the management of 401ks. >> tyler, we're all about transparency with respect to 401k plans. we disclose all of the terms and costs and expenses and dollar

and cent form. we're fine with the rules for disclosure and transparency with respect to 401k plans. we wish we had more time, but we're all about it, transparency. we're pretty much already there, frankly. >> let's get off of the trade dee issues and talk about the bread and butter of the markets. how do you assess the u.s. market at these levels? >> well, i think the u.s. market is in pretty good shape. i mean, we can't forget we've had a fairly sharp rebound over the course of the last three or four months. but the economic underpinnings appear fairly strong. earnings have been good. dividend activity's been good. there's a lot of liquidity. and valuations aren't extreme. why we may be a bit ahead of ourselves in terms of the sharpness of the advance in the last three or four months, i think the u.s. market's in pretty good shape. >> i was with some fund executives earlier this week, brian, and one of them said that the next black swan risk might not be a negative risk, it might

be a positive risk. do you buy that possibility with respect to u.s. stocks? >> well, tyler, i think anything's possible. a black swan risk to the upside would be the proverbial meltup if you will. >> yep. >> in terms of so much money trying to get into the market because people all of a sudden feel better. i would not count on that although i would certainly enjoy that. i think the black swan risk out there involve potential risks from high frequency trading. so what i would call extreme etf investing. those are two of the things i worry a bit about. if a meltup occurs, so be it and we'll have fun for a short period of time. >> that's interesting because one of the guests on the panel made that exact point. he was worried about a technological, ie, a sort of high frequency trading mess up in the markets. let's talk a little about facebook. your company owns a lot of facebook shares across lots of funds. how do you handicap that ipo? will you be an aggressive buyer? you've made a lot of money in it so far. are you sticking with it? >> yeah.

well, we made an investment in facebook roughly a year ago. it is a very exciting company. you know, to the investor, it's a relatively small exposure in our individual funds. so it's not a huge position in any one fund. i think the ipo will be very successful. i can't really handicap it because, you know, who knows what will take place over the course of the next couple months. but i have to believe just based on the amount of attention focused on the company every day that this will be a very successful offering. >> so it's a small percentage across most of those 19 funds i believe that own it. but in some of them i assume it will be a bigger percentage, maybe a medium technology fund. >> a little bigger in some of our sector funds, tyler, but still not a huge exposure in any one fund. >> brian, great to see you again. >> likewise. >> the chairman of t. rowe price and the manager of t. rowe's equity income fund. well, ty, as you know, some upbeat economic data on jobs and housing giving stocks a lift

today. investors getting further evidence that the u.s. economy may finally be shifting gears. are things really getting better or not? jared bernstein joins us as does kevin at the american enterprise institute. welcome back, gentlemen. good to see you again. >> thank you. >> jared, you think things are getting better but not ready to declare complete victory yet, correct? >> no. keep that champagne on ice by a long shot. i mean, in every one of these reports we see that the trend is your friend, moving in the right direction. but the idea that the economy is into a solid self-sustained recovery, i'm not there yet. in fact, if you look at the upside surprise on housing, you see that it's actually -- that's all multifamily. still having some single family bumping along the bottom. if you look at inflation, yeah, the ppi came in under expectation, but you've been talking about gas. so we know where that's going. the unemployment claims look good to me, but at the same time there's 5.5 million people stuck

in long-term unemployment. so we're moving in the right direction, there is a bit of a hint of some self-sustaining aspects to the recovery. but not there yet. >> kevin, i think you agree at least on that part. i know you disagree on other aspects of this discussion. but you think in your words the economy has great bone structure but not exactly what you want to look at. >> that's right. yeah. and in fact, you know, i think we have to also remember that jared's not really going to be happy until the unemployment rate gets down until he said where it would be when we passed the obama stimulus. you have to look at the last three months of data there are clear signs we've turned the corner. if you look at the people that supply the auto industry, they're ramping up employment. if you look at the people who make machine tools, they are ramping up employment. construction workers were getting back to work. and so there are a lot of signs that the things -- the intrasensitive things that normally lead to recovery are

finally taking off. of course, if iran and israel turn into a skirmish or something, it could turn back right away. the fact is the bone structure's the best i've seen since the recovery began. >> jared, you think still we need a boost from fiscal policy. i'm sure kevin would not agree with that, but you think we need another boost, correct? >> right. i think we need a continued boost. one thing to keep in mind is that when you do something like extend the payroll tax holiday and unemployment insurance -- and i'm pretty happy to see that it looks like we've got some bipartisan cooperation there, you're actually not giving yourself any more fiscal boost. you're keeping your foot where it was on the accelerator. and i don't think this is an economy that's ready to pass the baton fully over to the private sector yet. i think there still needs to be some fiscal push there. actually, it complements the monetary policy. one of the reasons i think you're seeing a little movement in housing is because as the economy moves people are able to take advantage of the low mortgage rates, which by the way are at historic lows.

in terms of kevin's point, i'm not going to be happy until the unemployment rate is at 5:5:0%. not 8%. we have a ways to go. the main thing to get things moving in a right direction where in a solid way month after month you have the virtuous cycle more income feeding back on itself. >> kevin, you get the final word. >> i think we're in the fourth year of the obama cycle saying let's jack ourselves up for one more year and then do it again next year. that's why we're headed for bankruptcy. time to get the house in order. >> gentlemen, thank you, good to see you both again. appreciate it. >> thank you. >> up next on "power lunch," apple making a big move to bring its top features on the iphone and ipad to the mac. we'll take you inside apple's new operating system. >> plus, cappuccino, mo ka chee

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a week to remember for apple investors. the stock hitting $500 a share. but shares back below that level -- well, not really.

at $503.57. the tech giant is bringing out popular features of the iphone and ipad and going to transport them on to the mac. jon fortt is in silicon valley with the details. apps for my mac, hey, jon? >> that's right, tyler. here's the way investors should understand today's apple announcement. apple sold more than 60 million iphones, ipads and ipod touches. now apple is looking to convert those legions of ios users into mac users in part making them work more like ipads which started in earnest with the last release, lion. now up marginally with the broader market. mountain lion icloud. access and store files on the internet. twitter built into the os as the default social network making ilt easier to share. a mac version replaces that and

somewhat ominously named gate keeper lets you determine ahead of time what apps get to run on the system. built as a security features and the bias toward getting people to download from the mac app store. support for chinese language input and chinese services. this is the biggest market. and also interesting here the ipad, there's kind of conflicting reports on how much it's been halted sales in china because of all of these trademark concerns that we've been talking about this week. back to you. >> jon, can i turn you to amazon now? the shares are sinking -- morgan stanley cut its rating on the stock today. what are their concerns specifically? although we should note that the stock has had a little trouble recently before this downgrade even. >> yes. i would say that the core issue is concern over whether these investments that amazon's made in infrastructure, whether it's logistics on the physical side or kindle fire and the kindle on the digital side are really going to pay off because you've seen for instance in apple's results that the ipad sales were not really hurt by the kindle

fire. so amazon spending more but not getting the returns on the other side. >> jon, stick around here because i want you to ponder this one, some food for thought or maybe some liquid for thought for you and your young one. you've heard of cappuccino, but what about a baby ccino. entice their coffee-loving parents to linger longer at caves and coffee shops. here's one of our very own team members baby girl. no use crying over spilled milk or extra cash spent because this trend is catching on. my little guy loves his coffee. >> mine have not tasted coffee. they are hyper enough as it is. i wouldn't give them caffeine anyway. what do you think, jon? do you think it's going to stick? >> sounds like a dangerous gateway drink. you know, they want to move up to the hard stuff. when you first said baby ccino,

i was worried you were talking about cut off pants. >> touche, nicely done, jon. coming up, just over two hours left in the trading day that has the dow jones industrial average up triple digits. charts of the day -- i know you missed this. >> i've been thinking of it all week long. >> back in two minutes. [ male announcer ] technology accelerates at a relentless pace. anything not moving forward... is moving backward. [ tires screech ] [ engine turns over, tires squeal ] introducing the 2013 gs, with the lexus enform app suite -- the most connected information and communication technology available in an automobile. [ engine revs ] the all-new 2013 lexus gs. there's no going back. see your lexus dealer.

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it's a very positive day on the street today and it spread across all of the indices. the dow jones industrial average up almost a full percent at 12,899.20. nasdaq up .3%. and the s&p 500, 1357. we got above it just a bit. >> top of the charts on this day where the nasdaq is up 12% for the year. one reason why is the move in microsoft, another 4% higher today. that is a four-year high for mr. softy. >> who would have thought. the stock nobody loved for so long. i picked diamond foods. you can see nasdaq composite. i picked diamond foods because maybe kelloggs is interested in them.