hewlett-packard plans to combine its printer and processor or computer units. stock is downright now. there you just saw hewlett-packard. that'll do it for "power lunch" this day. >> "street signs" begins. we'll see you tomorrow. welcome to "street signs" where we are going back to school. steve liesman one on one with fed chairman ben bernanke. it is a cnbc exclusive. go big or go small. super caps to the wee ones. we've got six all-star stock picks for you. it is battleground priceline.com. ten years ago this was a $7 stock. now it is nearing $700. two analysts, manatdy, will duk it out. we'll continue in the trend of the past few months. financials are the best performing group in the s&p 500.

nasdaq, meantime, is today's biggest percentage loser. but it still has the best year to date gain by far of the mayor averages. about 17% to the upside compared to 8% for the dow and 11.5% for the s&p. lots of chatter as well online about the new ipad. some users complaining it gets real hot while using it. "consumer reports" has done their tests. in a first on cnbc one of their senior editors will join us with those results in about 30 minutes time from now. straight down to the trading floors. bob pisani at the nyse. rick santelli in chicago. bob, i want to start with you. i know you feel some of the bhp comments were misinterpreted and therefore maybe the concern about china slowing down is overdone. >> i think that's exactly right. this bhp executive, those who didn't hear, made a comment that iron ore imports into china were going to go into single digits in 2012. nobody is surprised. the world seems to be collapsing. look at the effect it's had on

some of the big iron ore companies and materials and industrials around the world all dropped. the guy is probably shocked he had this kind of impact. i called around and asked about steel production. you'd think it was collapsing. it's supposed to increase 5.3% in february. the numbers came out. steel production month over month is increasing in china. maybe flat compared to a year ago. my point here is that demand in china is still very, very healthy here. this looked like a pretty sorry excuse for a selloff. >> i think you're absolutely right when you said i think the guy from bhp is probably a little shocked about the impact he's having on the market. >> can you imagine? he must be shaking his head. >> he's thinking, oh, my g goodness. can i take this back. i want to get to you with regard to the 10-year. a moment ago it hit 2.39. what's that, the the highest since october? >> highest since october if you're looking at closing yields. it underscores not only what steve liesman is doing today covering ben bernanke, but underscores that whether you believe the fed is in control of the interest rate market or can

control the interest rate market, there's no doubt they can certainly try. a lot of the moves that we see in the interest rate complex were spurred by the meeting that we had on the 13th, just a week ago today. so we want to pay very close attention because having ben bernanke go on the road with students is a bit of a media event. why would the fed need a media event? because many question whether the task at hand is solvable. of course, we see the fed's balance sheet is historic. so the beat goes on. >> who doesn't need the meteor bank. the meteor is your friend, rick. the s&p 500 up 11.5% this year. small cap 600, not far behind adding under 11%. as those numbers grow the chorus of those saying you can't find good stocks at good prices is growing louder. the next two guests disagree. they come from opposite sides of the market cap spectrum. mark travis is president of

intrepid capital. james vp at james investment research. we're going to try to find good picks for our viewers not overvalued even with this run. mark travis, first to you, can you give us one or two names you just love in the small cap space, please? >> a name i like in here is bill barret corp. it's an enp company out of colorado. the perception is with natural gas at 2.50 per mcf it's hurting their business. that have their revenue comes from oil and natural gas liquids. propane, butane and the like. we think the shares are a meaningful discount to that valuation which we have in the mid-40s. shares today around $29 last i looked. >> david, just to even this out, what should we be looking at within the big cap world? >> well, there's a lot of good areas you can look at. our research has been saying that we think the dollar's likely to get stronger. so as a result, companies that focus more on domestic sales will look better.

things like big lots, we believe, looks very good. they have good valuation levels. good profitability. to combine that, they've also been rewarding their shareholders by buying back some of their shares. we think that's going to be one of the better plays as far as going to the future. >> on that point when you're searching within a large cap world, to what extent are you looking for companies doing share buybacks instead of dividends considering the changes to dividend taxes? >> that's a great point. we think the dividends that unfortunately the taxes on them are going to go up, and while we still like dividend companies, we find that really by buying back those shares, it really puts it in the shareholders' hands as far as when they're going to note a taxable event. it's a much better situation overall. we've also seen over the last 10 or 11 years that companies that are buying back their shares, they generally hold up much better in the more volatile markets. >> mark, i read today that soda volume continues to drop. not soda stream but actually, you know, soda like coca-cola.

every year it's been declining. that does not stop you from liking cot corporation which makes generic, like, sam's club cola. aren't you concerned americans' new push toward thinness and absolute health and bodty control is going to impact cot? please note a little bit of sarcasm in that. >> a lot, actually, brian. but i did note it. i think they also produce juices and water which they don't make any money on. i feel like when we get at this valuation a very defensive business that sells generic carbonated soft drinks, juices and water that's a type of business that can suhr vif in any environment. $650 million market cap with, you know, over that -- over $70 million, $80 million in free cash flow, that's a mid-teens free cash flow yield to us. we think the shares are at a discount. today, last i saw, maybe 6.50. we think they're worth in the $8-plus range. i'm happy to sit and wait till

the valuation is achieved. >> david, i would like to stand back for a second and take a look at the bigger picture here. if you measure the market by volume alone it feels like there's a lack of conviction here. you have a lot of money flowing out of treasuries. so where's all that money going? >> that's the question i think everybody is asking. you know, we do have concerns about the market. especially in the short run. as you pointed out, you look at stocks, they've been up in 10 of the last 11 weeks. volume has been about 20% lighter than normal so far this year. shorting interest in the vix which are good gauges of fear have been down. i have a feeling that people are going to want to be selling some more of their equities in the short run. we think that places people should be looking at would be things like agencies. some municipal bonds. perhaps even some of the corporate bonds will give us a chance to be doing some buying there. that's where the money should be going. >> but you're also recommending, david, rent-a-center. isn't that on the complete opposite side of the spectrum?

now you're going for the people, rent-a-center not always, but go to the people who maybe don't have the credit to buy what they want. >> that's actually -- >> let's let david -- i'll give you a chance to respond, mark. david first, please. >> all right. >> okay. i agree. the rent-a-center market is really a very interesting one. there's articles even talking about that some places are finding ways to go out and rent to own tires of all things. basically we see the consumers basically need items, and that's what they're looking to try to do is to get those rent-a-centers, they give you electronics or different furnitures and the like. again, it's a really good company that has all the sales domestically which is something that we like. it's also another one that's buying back those shares as well as having good valuation and profitability. you know, you never can say these things are perfectly for sure, but that's a good combination in our book. >> we've got to wrap it. mark, quick comment on rent-a-center or the spectrum of thinking i was in. >> i tend to agree with david.

that's a company we've owned in the past in intrepid capital. it generates a lot of free cash flow. i would concur with david on that pick. >> mark, you mentioned cott corporation a moment ago. we threw out the chart as well. who knows. it might have been on the back of your comments. it's currently sitting there flat with an upside bias. see the spike on the board. mark and taifd, thank you very much for that. on deck, back to school with ben bernanke. steve liesman just got out of class with the fed chairman himself. it is a cnbc exclusive. also on ice, we've got ourselves a good old fashioned battleground stock brawl. that was the start of the rangers devils came last night. they fought before they hit the puck. priceline is your battleground. under 700 bucks. sit worth it? two analysts that see differently on the name.

we've got some breaking news a few minutes ago on hewlett-packard. let's go to jon fortt in silicon valley with more on hp. jon? >> brian, cnbc has been able to confirm hp is indeed combining the pc and printer businesses. the head of the printer business now will be retiring. todd bradley who heads the bc business will take control of the combined unit. the reason for this will be to simplify hp's overall business. this coming from a source familiar with hp's thinking behind this. meg whitman had mentioned on this on the last quarterly call.

there's also hope that some of the innovation from ipg, from the printer business, will be able to come over to the pc business also. of course, margins have been under pressure in the pc business. they've also been under pressure in both the printing and pc businesses. so this is an effort to effect that. hp sales force will also undergo some changes. that will be announced soon. there could be layoffs coming also as a result of this combining of the two businesses. that's something analysts did mention seem eed like it was coming at the end of the last call, brian. >> jon, quickly, i guess we can read into this the idea of spinning off the pc business is likely toast? >> this is a 180 from that when you think about it. this was todd bradley's business. he wanted to be ceo of the spunoff business if they were going to do that. what they've done is spun in the printer business into the pc business in a way that's

doubling down on the pc business. trying to bring innovation from hp's core profit center, historically, into the pc business, brian. >> jon fortt, thank you very much. cnbc is not the worldwide business leader in business news -- there we go. that was the worst thing i've ever said. for nothing. i even wrote that myself. i still screwed it up. it's from moments like these, steve liesman exclusively with fed chairman ben bernanke who today many are calling professor. he goes back to school. steve, one of our viewers aptly titling this bernanke panky. which i kind of like. >> already got a name. not even an hour old. i did just get out of class with fed chairman ben bernanke. a really interesting class where he ends up laying the ground work historically for current fed policy. i do want to play you a piece of the interview i had earlier today with fed chairman ben bernanke when i asked him about the current situation in the economy and rising rates. >> you know, i'm here to talk

about history and about the fed's role in the crisis and so on. we're going to continue to analyze, you know, the financial data we get. the committee i's going to lookt everything that's happened. it's an interesting period. we've seen improvement. we've still got a long way to go. we're going to keep looking at it. >> i thought one way i could ask it you might want to answer, will interest rates still be exceptionally low when a junior graduates? >> i don't know. depends on how good their course work is. if they get through in time. >> i thought i could get an answer out of him that way. in the course what he talked about was the gold standard and the stakes by the federal reserve really leading to the severity of the great depression and saying all of this stuff was responsible. it goes into his thinking when the fed did what it did in the most recent financial cry cisis. he did sum it all up by saying when asked by a student, what should we have learned from the great depression, here's what the fed chairman said in the

class. >> when you accept that traditional interpretation, it is that you need to be attentive to where the economy is and not move too quickly to reverse the policies that are helping the recovery. >> brian, that has direct relevance to right now as we think about higher interest rates, an economy that's growing a little bit faster than maybe we thought, better jobs numbers. that's the fed chairman saying, you know what? history says stay the course on easy policy, brian. >> steve, stick with us. let's bring in now our guest. we have btig's dan greenhouse and our very own kelly evans onset. dan, let me get to your first of all. what's your reaction to what bernanke was saying to liesman. >> i think what he said in the class is exactly right. you know, i've been meeting with clients the last couple of days. there's this debate about the rise in treasury yields and how quickly the fed will move to change its language given the improvement in the economy. i think people are underestimating the degree to which 1937 hangs over fed policy now. they are going to go very closely in making sure they

don't make the same mistake again. >> kelly, do you feel we learned anything new today? >> from ben bernanke? i think his comments about the economy sounded pretty upbeat. he tends to try and strike a pretty even keel tone. that jumped out at me. aside from that, not necessarily. the real question comes down to the focus on rising rates and people wondering in context is it time for the fed to react to this? i agree with dan. it's far, far too soon to expect that if anything. i'm curious what dan has to say about this. we've basically come full circle back to the point at which the fed -- where rates were when the fed started operation twist. is that a problem for them at all, dan? >> not at this level. certainly if it continues drifting higher you're probably going to see a couple of the more dovish members of the fed come out and try to jawbone rates lower. but it's important to remember that virtually every fixed income strategist's model, the yield on the 10-year should be anywhere from 2.75 to 3.20 underscoring the importance of fed policy. they want rates lower. at the same time, let's be clear.

we should all be praying to god that we eventually get higher interest rates or else we're jap japan. >> dan and kelly. an earthquake hitting off the coast of acapulco, mexico. it is a 7.9 magnitude quake. a pretty big quake. initially reported 7.6. couple minutes went by. now 7.9. off the coast of acapulco, mexico. awaiting word on any damage reports. a heavy touristed area. concerns about the waves as well. mexico city is more inland. still the city mayor tweeting out we have an earthquake but nothing else. again, folks, we'll get back to our discussion on fed chairman ben bernanke. just to make you aware, magnitude 7.9 earthquake hitting off the coast of acapulco, mexico. we'll keep you aware of developments and headlines as we get them. dan, back to another earthquake, the risk of keeping rates too low for too long. your first comment with mandy's question, basically you said, we believe they don't want to sort of change things up. what's the risk of not changing

things up? of letting this easy monetary policy go on in perpetuity? >> clearly rates are not going to be too low forever. they're probably going to make a mistake one way or another. such is the nature of human error. this idea somehow they should rapidly move to remove accommodation while nice to say, is not grounded in what they think right now. the core of the federal reserve looks at that chart of the dow jones industrial average in 1937, looks at industrial production, looks at the economy and says i don't want to make that same mistake again. certainly there are risks both ways. i think they would tell you all else equal, the risks are that you withdraw policy too soon. >> dan -- >> yes, steve? >> i'm wondering what bernanke meant when he told me this is an interesting period. then follows up by saying things are improving. we have a long way to go. i'm wondering interesting how? interesting in the sense of time for the fed to consider changing policy or interesting in terms of how the fed can maintain this

easy policy amid an improving economy. i think those are the challenges for the fed chairman right now is that he has this idea that he wants to remain low for longer than the markets want him to remain low. i think he has to somehow convince them that maybe what he's doing here, why he's going to be doing -- we have been here before. we have messed this up before. i am not going to mess this up again. >> let me add one thing there that we all know. we've had two false starts already. i don't think the federal reserve is going to look at the improvement in the economy right now and say, oh, we didn't learn from the last two years. let me also add -- >> dan, the pressure from the market's going to be tough. you're going to see a 10-year that came up 2.50, 2.60. you start seeing inflation come along with that, going to be very hard for bernanke to sit in that hot seat and keep rates cool. >> that's exactly why we've heard in the last couple years, to dan's point -- we were talking about exit strategy in 2010. we were talking at this point last year about the same kind of

things. whether it was welcome to the recovery and how is the fed going to react. i'm sure there's a sense at which they look at this and it's a bit of deja vu. might be part of the reason why we're not going to see more of a quick reaction. >> that's an interesting point, kelly. i was just going to say that not only did we have that historical precedent in 1937. we had it in 2010 also. >> steve, kelly and dan, thank you so much. great debate. in the meantime we have been following this story about the 7.9 magnitude earthquake that's being felt and reports that in the pacific coast area off mexico the tremor was felt in mexico city. there were some shaking buildings. there has been no sue ma'ammy warning issued at this point. of course we will continue to follow the story for you. next up, we're going to be talking pizza, burgers and doughnuts. don't pretend you don't know what this chair is. we're going to talk about how it helped send one stock up over 10,000% in just three years. "street signs" is back in two. cannot be contained. [ clang ]

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introducing gold choice. the freedom you can only get from hertz to keep the car you reserved or simply choose another. and it's free. ya know, for whoever you are that day. it's just another way you'll be traveling at the speed of hertz. there's a new king in town. wendy's dethroning burger king as the country's second biggest hamburger chain. wendy's had sales of $8.5 billion in 2011 compared with $8.4 billion for burger king. mcdonald's still the number one, of course, with a total of $34.2

billion in sales. a downgrade for domino's. shares of the pizza chain down about 2% after bank of america merrill lynch downgraded that stock to underperform from neutral. the move comes just a day after domino's announced a special dividend. from deep dish to dunkin donuts. yesterday herb brought you a report about how private equity insiders seemed to be dumping dunkin. hereby is here. he'll follow up. today your question is new store growth. is it as healthy as some people say it is? >> that is indeed the point. yesterday i talked a little bit about that. i just wanted to get the company's comments in here regarding the issue of whether dunkin's new store growth appears to be slowing. this is something i highlighted yesterday based on comments from hedge eyes howard penny. his point was that with a franchise business like dunkin, new store growth is more important than same store sales growth which is actually what has analysts all excited. but a dunkin spokeswoman none too pleased with his comments told me that dunkin has, quote,

a strong multiyear domestic development pipeline. she said they opened 206 units in 2010. another 243 in 2011. they intend to open 260 to 280 in 2012. that's pretty impressive. but penny is looking at the number of stores the company has contracted to open in the future. it announces these every now and then in a press release. by penny's count, that backlog is not keeping up with openings. to keep one step ahead, he believes in any year the backlog should be higher than the number of stores actually opened. i asked the company if they provide a quarterly backlog number. in not so many words they said no. i have more on this question, whether there's a hole in dunkin's story right now on cnbc.com. >> a hole in dunkin's story. wow. >> i'm such a creative guy. >> such a creative guy. well done. just getting reports from the acapulco town hall as well with

regard to the 7.6 magnitude earthquake we've been reporting about in mexico. apparently there is no real damage reported so far. of course, we'll keep on that story. i want to get back to dunkin donuts. i was doing a little digging around myself. it's not just in the u.s., obviously, that we follow these stories. apparently dunkin donuts is about to open up in india. and starbucks is about to open up about a month after that. they're going to really duke it out in what is one of the world's biggest consumer markets. i just wonder how well they're going to do. >> we don't know how well they'll do. what's important about the story, the growth story is internationally for them. growth really if you look at it, 2%, 3% of dunkin donut's store sales are actually international. you could argue -- but the big growth story is in the u.s. you know, west of the mississippi. >> this is where we want the donuts. >> that's where the real growth story is. they'll talk about international. right now it's small incrementally. they have 500 stores or so planned to be open there had. >> right after this the southern california standby winchell's.

>> they're still there. >> i would take you to winchell's if we still both lived there. i think we're supposed to talk about domino's and wendy's. or are we moving on? >> we're going to move on. >> i want to talk about domino's and wendy's. >> maybe another time. if you want to talk about them, talk about them. >> wendy's moved to number two as we were talking about them. i wanted to say a couple months ago we had people on about wendy's talking about new management. the new strategy was going to work. it appears it has. a shout out to our guests on wendy's a couple months ago. they were proving correct. >> you're trying to get some hamburgers on your desk here. delivered fresh. hot and steamy. in the meantime, is apple's new ipad too hot to handle? the company's rather chilly response to complaints the new device is getting way too hot. consumer reports is going to way in on that one. the house that stocks built. from paint to papasan chairs. we'll break down the nuts and bolts housing plays.

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is the new ipad just too hot to handle? apple firing back at claims that its new ipad gets unusually warm. "consumer reports" just finished

testing the new device. cnbc is the first to have the results. let's break those results and bring in paul reynolds, "consumer reports" electronics editor. great to have you with us. what were your findings? >> here's what we found. when we put the -- the new ipad and the ipad 2 head to head in the same test running a game, which is a demanding use of an ipad, we found that the new ipad was, in fact, noticeably hotter. by about 12 degrees or so. it was hotter, and it reached temperatures in our tests, the new ipad, of up to 116 degrees. that's hot enough to be a little -- to be uncomfortable, at least. >> is this the kind of heat that would warrant some kind of recall? >> i don't think so. i mean, you know, we're not at that point yet. what we were really trying to do was to respond to the -- the reports out there on the

internet from a number of users that this device was running hotter, on the hot side, hotter than its predecessor. what our test did is confirm that. the temperatures we're talking about here are -- are not temperatures that are likely to cause any harm. but it does mean that this thing runs a little warmer than its predecessor. >> paul, it's brian. you said 12 -- the new ipad, ipad 3, whatever you want to call it, is 12 degrees hotter on average than the ipad 2? 12 degrees? that seems, that sounds significant. >> yeah. it's a -- we think it's a significant difference. and that's when running a game, which is a demanding use of these devices. >> apple's fired back that saying essentially it runs within their thermal specifications. it's saying this is normal. from what you know is this abnormal? >> you know, we don't really have a lot of experience yet. i mean, the world, consumers,

with what's expected from a warm -- in terms of temperature from a tablet. what we do know in our tests is that this one is running warmer than the last one. we also know that it has a more powerful graphics processor. and that it is a sophisticated device. and we all know that over the years, laptops for some time did run quite warm. >> okay. paul, you sort of jumped into what i was going to ask you about. because sort of what mandy's point, i think all of our points are thinking, at what point does it get warm enough that the average purchaser is going to say, this is worrisome or uncomfortable and, therefore, i will return it and apple may have a problem on its hand? when we look at, say, the average temperature of just a laptop, not a tablet, a lab tpt how would this new temperature

gauge stack up against that? some laptops can get pretty hot. >> yes. i actually don't have the average temperature currently of laptops. what i can say is we -- we have said before that when the bottom of a laptop gets up to 120 defwrd degre degrees, which is warmer than this ipad is, when the bottom of a laptop gets up to 120 degrees over an extended period that could be a problem. so we're not at that point yet if you compare it to what we have certainly said in the past about the temperature on the bottom of a laptop that would be a concern. >> so consumers that are used to a laptop that runs warm may not be, for lack of a better term, freaked out by the temperature of the new ipad. it may be more the new users who don't have a laptop or one that runs warm. >> yeah. if you're someone, too, you may find this one to be warmer. that's what our test found, when

it's running a game. a demanding application. one other thing we should point out, it actually ran warmer to that 116 degree temperature when it was plugged in. when it was plugged into the charger. when it wasn't plugged into the charger, it was about 113 degrees. so a little bit cooler when it's run off the charger which is more normally, perhaps, the way that people might use it. >> okay. just we want to just say what apple's statement in response to this was. the new ipad delivers a stunning retina display, a5x chip, support for 4g lte plus ten hours of battery life all while operating well within our thermal specifications. if customers have any concerns they should contact apple care. in response. >> i want to tell you something, mandy. herb, tell us if you agree with this. stay with this for a second, guys. 12 degrees is a fairly

significant difference. to paul's point it may not be as hot as some of the hottest laptops which can get uncomfortable or dangerous. the question is going to be are people going to sit at home and say this worries me, take it back and demand a refund? >> i don't know if we'll do that unless we start seeing real issues where this has caused some damage. >> "consumer reports" is a very respected organization. 12 degrees is not insignificant. >> right. there's some semblance of similarity. i also want to point out, i think the one story we're going to be watching going forward will always be on batteries. and who makes the batteries, how we can get to that ultimate battery that will not heat up so much and yet give us tremendous, you know, longevity during use. >> nonetheless, i suspect applecare's phone will be running off the hook. paul reynolds, thank you very much for breaking those findings to us here on cnbc. >> thank you. it is that time again. it is herb's disaster du jour. what are you servie ining up? >> community health. all of the hospital stocks are getting hit today. this one's down a little more than others.

i want to point it out. sharon skoalnick camt with a report today raising some increased and ongoing concerns she's raised about the company's balance sheet. she went ahead and chided stock investors for not paying attention to the credit side of the ledger because that, of course, is where many people see things coming before they occur. >> do check out lionsgate. an independent film maker. it's releasing the first installment of the wildly popular "hunger games" franchise. it is expected to be the biggest release in the studio's history. three day sales of $150 million. lions gate picked up the twilight movies when they bought summit entertainment. the going to join the gang on "fast money" tonight at 5:00 p.m. we've also got an update on the earthquake in mexico. >> sorry. i want to completely bring up out of the random blue, can we bring up a chart of zag? a lot of viewers on twitter bringing up a good point.

>> i know zag. i have red flagged this. >> this is the maker of the cases for ipads and iphones. a lot of the people -- listen, here's the way it works, folks. if you say anything negative about apple you get killed. people come out of the woodwork on twitter and say you're an idiot. >> zagg is going up. >> there you go. >> pulled out of negative territory. >> here's the thought. if the ipad 3, maybe you didn't want a case, is a little hot, what are you going to do? you're going to run out and get a case because you don't want to burn your little -- >> knees. >> knees. what i was thinking. >> it may be because also there was concerns the regular -- the ipad case sold by apple does not necessarily fit on the thing. look, there's plenty of options to buy cases. this is one company that makes it. that has been the hype of that story. >> look at the stock, though. it's popping on the fact that people are now saying -- >> how do you know that's what people are saying? >> we just did the segment two minutes ago. look at that! >> how do you know the stock is popping -- >> pierre eiffel went into the graphics department and built a

tower. i sounded very sophisticated. >> sometimes you do. it's amazing. okay. coming up next, today's out of this world stock up over 10,000% in the past three years. will it come back to earth or just keep on soaring? profiting from the birth of -- rebirth of construction. we're going to show you what we're calling our housing halo, right? many of the names associated with building a home, show you their stock price returns. maybe show you some new names. right, mandy? >> why not. bring out some new names. better than the old names or recycled names. a new name. >> don't burn your knees in the break, folks. how they'll live tomorrow. for more than 116 years, ameriprise financial has worked for their clients' futures. helping millions of americans retire on their terms. when they want. where they want. doing what they want. ameriprise. the strength of a leader in retirement planning. the heart of 10,000 advisors working with you one-to-one. together for your future.

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i'm bill griffin. coming up at the top of the hour on closing bell, corporate bonds making a big comeback in 2012. we'll show you where you can still find value in that asset class. plus, oracle has been underperforming the hot tech sector lately. in talking numbers, we'll break down the charts to explain why oracle shares may be cheap right now. speaking of oracle, the company will be out with earnings after the bell tonight. we'll have the market response and instant analysis when we see you. maria and i will see you at the new york stock exchange at the top of the hour. permits for home building

nearing 3 1/2 year highs. this even as new ground breakings of homesites slowed a bit last month. this all comes against the backdrop of rising bond yields. that, of course, tends to push up mortgage rates down the line. does it spell trouble for your housing hope here? let's ask real estate reporter diana olick. what have you found, diana. >> reporter: mandy, you'd think it would. i've spoken to an awful lot of analysts today. none of them seem to think mortgage rates are going to go that much higher. mortgage rates track the 10-year treasury. the spreads have been very wide. wider than the historical averages. that gives rates a pretty big cushion. bankers say they're seeing improved demand so good volumes there. because of that paul miller over at fbr says he does not expect to see a big move up in mortgage rates. over at capital economics, paul digle says there are two reasons why a rise in mortgage rates will not threaten the housing recovery. first, mortgage rates can rise only so far when tighter monetary policy is still years away. second, he says, even if rates were to rise towards more normal levels, mortgages are still very

affordable. peter bukvar at miller tayvak. assuming a $200,000 mortgage going from 4.4.5% in mortgage rate adds about $60 a month to one's payments. while $700 a year matters, not sure if that's a dell breaker. something else to remember. this market is not as dependent on mortgage rates as it once was. 31% of all sales were cash. which means even noninvestors are turning to cash. don't forget 35% of the market is distressed sales. that is foreclosures or short sales which are on the very low end of the market. again, a majority bought with cash. the question is going forward, what will the impact be? well, you know, there are a lot of other things weighing on mortgage rates. that is a lot of the government implications and qualified

residential mortgage standards that are coming up later. they will weigh on the rates. but some actually believe a little rise in rates gets some potential home buyers off the fence because they're worried they might miss out on those low rates, might want to buy now. little hopium, maybe. a little more on the blog. >> there is always a silver lying, diana. we know home building stocks like d.r. horton and le nar and others have had a big year and really a big 52 weeks. if you want to invest in the whole housing turn, assuming you believe we are going to get one, you've got to look at what makes up a house. we did a little bit of work for you because that's kind of like what we do. here's our housing halo, right? not a complete list. but just some of the bigger names and companies in the space. you buy a home, you're going to put some furniture in it, right. ethan allen up 13% year to date. lay z boy has done better. don't like the lime green walls with the shag rug and mirror on the ceiling, baby, you want to

repaint it. ch sherwin williams. gf the biggest roofing materials maker. owens corning also up there. up 25% so far year to date. if you're going to build a new home, you see tyvek, right, all over the place. that's made by dupont. usg number one maker of sheet rock. better known as wall board. you want some new carpet. old pooch did his business on the previous owner's carpet. mohawk. they're up year to date as well, mandy. >> can't possibly imagine why you'd want to get rid of a mirrored ceiling with shag carpet. house b playing for today's out of this world stock. pier 1 imports. nearly went broke during the recession. it stayed the course, changed management and fought its way back. does pier 1 have even more room to run? let's ask anthony takumba, specialty hotline's retail analyst at bb & t capital markets.

you've got this stock at a buy despite the fact it's had an incredible run over the past three years. why? >> despite the improvement we've seen over the last few years, sales per square foot is still well below historical peak levels. they'll do $185 in sales per square foot this year. all-time peak is 235. quite frankly even 235 is not particularly high for a home furnishings retail. we also think the company has a very compelling internet opportunity. >> an opportunity, but it's not really taking advantage of it at the moment? >> well, you know, i mean, when the company was going through the restructuring, they actually shut down their e-commerce website. they had much bigger problems to fix. last summer they actually reintroduced some e-commerce website where you can pick up the items that you select online in the store. that's been very successful so far. this summer they're going to roll out a site to store website where you can, you know, order products online and have them shipped to your home. we think that's a great opportunity for pier 1 imports. >> this is a company virtually debt free as well, right, anthony?

from here how do you think it should grow? do you think it's got room, for example, to make acquisitions or should it stick to the organic growth path? >> you know, that's a good question. on the one hand, you know, there isn't much of an organic square footage growth opportunity for the company. they've got about 1,054 store. i think they can grow that to about 1,100. we do think e-commerce is a good opportunity for them. neither of those opportunities is really going to take a lot of capital. we think the company will continue to aggressively buy back stock which should be acretive to earnings per share. >> thank you so much for joining us. anthony there on pier 1. priceline stock almost in the 700 club. they're sending captain kirk over a cliff. adds more heat. for your portfolio, priceline street fight when we return. with scottrader streaming quotes, any way you want. fully customize it for your trading process -- from thought to trade, on every screen. and all in real time.

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we're showing you a board here of yahoo! up 1.5%. the talks between alibaba and yahoo! are about to start again. name your own price? how about nearly 700 bucks a share? priceline has been one of the

hottest stocks in the last couple of years. this was an $80 stock. the stock getting another vote of confidence. up to 750 bucks. such a remarkable run, is the run finally done? j. fuller joining us and s&p scott kessler. jake, i know the revenues have gone up by over 200% in four year's time. name your own price is part of their business. big in europe. how are they going to get $750 a share? >> i give you three keys. first, the stock has had a great run, no doubt about t but i would argue that it's inexpensive relative to other travel spots. second, on the growth side of the equation, priceline is growing. as travel grows, they gain travel share. the last big plank, you have a lot of cash.

billions of dollars that can be put to work for shareholders over the next couple of years. >> scott, you have a target of 785. my question here is, obviously it's going up against companies like expedia. is there anything that they can doing differently that can move them forward? >> there's no question that jake makes a number of good points and actually we agree that priceline is a good company and it's well positioned. one, is their exposure to europe where there is a big question mark in particular with the euro, if it would to decline against the dollar, that would affect priceline dramatically. when their reported q4 results last month, they talked about investing and investment. that to us means more narrow margins going forward. >> do you want to defend those arguments that scott has made? >> certainly euro is a big risk. every 5 cent is not in material,

absolutely a risk. on the margin side of the equation, i would argue where i think the street has this wrong is there's still a lot of margin upside on the gross margin line. some of the company's businesses where they report costs of goods are flat. that gives you a big margin tail wind and helps offset the margin spending. >> scott, would it take for you to be bullish on priceline? would you like to see them go after an expedia, consolidate and be the big dog? >> first, just to clarify, it's not that i expect the margins to go down. i think the pace of increases could moderate. to answer your question, brian, look, we have a strong sell opinion on expedia. we don't see a combination with priceline. we agree with the notion that priceline very well is best in class. the question that we have right now is, is it the right time for this particular company, especially given the substantial

competition that they are facing. look, they are a very good operator, very well positioned. but we see less potential upside and more risk than we have in the past. we've recommended the stock, frankly, just as recently as last month but we think that the gains are going to moderate coming from here. >> jake and scott, thank you so much for joining us on "street signs". >> thanks a lot. up next, why soda sales is losing some pop. ♪ why do you whisper, green grass? ♪ ♪ why tell the trees what ain't so? ♪ [ all ] shh! ♪ whispering grass ♪ the trees don't have to know ♪ no, no [ all ] shh! ♪ why tell them all your secrets ♪ ♪ who kissed there long ago? [ all ] shh!

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total volume of sales fell 9% which is the level it was back in 1996. if you cut out energy drinks, soda would be down 1.5%. not having a stock impact just yet, coca-cola and pepsi is up over the last year. brian? >> it's a special day for mandy. because the outback steakhouse giving away the national fruit of australia, the blooming onion. this you go, it's nice to get some australian -- all right. thank you for watching "street