worked at world 2 financial center ordered the novelty grenade to be sent to the building. caused the evacuations. those happenings in manhattan a short time ago. more fast at 5:00. power begins right now. three hours in the trading day and the bulls are adding to yesterday's gains. investors shrugging off mixed economic data from earlier this day. it is the best two-day gain since mid-march. but how do you make money when growth is as slow as it is? a top gun at jpmorgan's going to give you his avid game plan. >> and we're drilling down on the banks after a great run this year, jpmorgan and wells fargo report earnings tomorrow. the other big names weigh in next week. what do you do about the bank stocks now? we'll tell you. >> plus, macy's shares hardly on sale. i do have a buddy who got a deal on two suits last night. what are they doing right?

can they keep it up? we talk exclusively to macy's ceo. >> with brian shactman and kayla tausche, i'm tyler mathisen. put on your rally caps, folks. "power lunch" begins right now. i like mine inside out and backwards. inflation tamed. the bulls battling back from the five-day selloff. it's not too far in the rearview mirror. stocks near the highs of the day. here's where we stand. the dow up 162. the s&p good for 1.25 -- everything's basically 1.25% to the upside. pulse of the markets oil ticking higher maybe on qe-3 home hopes. maybe on rumors of a strong china gdp. a real bid in confidence on signs of better global growth. nat gas we're always keeping an eye on it. it is up but still below the $2 level. hewlett packard biggest gainer in the dow, 6.3%. they basically global shipments of pcs rose in the first

quarter. that's true. and two research firms say hp is the top pc maker by volume. mckesson won a $4 billion contract from the government. good for 4% to the upside. and tyler's favorite place to shop, tractor supply. it's actually mine. sharply higher after raising guidan guidance. in the words of steve liesman's favorite band, every silver lining has a touch of gray. audio video product maker avid down almost 15%. they forecast a q-1 loss on revenue well below estimates. fastenal lower. earnings per share slightly missed expectations. and dynegy nearly $300 a share in september of 2000, look at it now, 37 cents. faces a possible delisting. right now though breaking news. 13 billion worth of 30-year notes up for auction. rick santelli tracking it at the cme. rick. >> all right.

well, we had $13 billion reopened 30s. really they're 29-year 10-month securities. the wi, one issued market was 3.22 offered 3.225 and the yield came in right there at 3.23. very similar to yesterday's 10-year. it priced within the wi window, but at the high part of the yield range low price, but it's just following the underlying markets as all markets are selling off in treasuries. the bid-to-cover was strong at 2.76 versus 10 auction average of 2.65. 30.7 indirects versus a 10 auction average of 31. directs, 13.4 versus a 10 auction average of 17. looks like close to 56% went to dealers. we're going to give this one a b. a little stronger due to the very strong bid-to-cover. back to you. >> rick, not terrible. we've had a lot in the b-range recently. action in equities.

bob pisani joins us on the floor of the nyse. >> hello, kayla. simple about what's happened today. number one, higher gdp talk in the u.s. and number two, higher gdp talk in china. does it get any better than that? remember what side of global growth you're on and that's really what matters. here's the s&p 500. this morning a number of wall street firms have raised their estimates on gdp based on the better than expected trade data. imports were a little weaker and that was the main factor that helped. but that's a factor. jpmorgan, barclays both raised gdp estimates for the first quarter. now we're talking 2.5%, 2.7% versus 2% earlier. that's significant. that's helping propel the s&p 500 up as well. the other major factor what's going on in china. they reported lending in china hit a 14-month high. does that matter? yeah. everybody's been talking about a slowdown in china. here's your main etf for china. nice pop up today. this is heavy volume it's been seeing. it's been kind of neglected for a while. very popular for a long time and kind of fallen off. today nice activity.

buying in chinese stocks here. they're loosening credit controls in china. that appears to be working and is supporting the idea of a soft landing in the chinese markets, tyler. remember what side of chinese gdp are you on? 8% plus or 8% minus? consensus for gdp will be out overnight. right now it's 8.3%. we saw the dollar moving down all throughout the day on this. that's helping commodities and commodity stocks. tyler, you can take a look and see all the big material names, the global material names all up 2%, 3% and even in 6% in the case of freeport. >> people who work inside 2 world financial center are back in their office after a suspicious package forced the evacuation. bertha coombs lives in lower manhattan with the latest. >> reporter: hi, tyler. police say that it appears an employee sent himself a novelty grenade that was on a plaque

that said pull pin. someone who worked in the building sent it to himself. but it was discovered through normal screening this morning in the mail. those security personnel when they saw that, it looked suspicious to them. so they alerted police out of a preponderance of caution. and it wasn't until a little while ago that the bomb squad determined that it was a novelty gift toy grenade item. meantime, number of workers were evacuated. workers told us they were in a meeting, some of the folks. and they were told calmly they needed to leave the building. it was all very calm. folks stood outside for about an hour or more and then went in. among the tenants in the building, merrill lynch, commerce bank and deloitte. very relieved it was just a toy. back to you. >> any indications as to whether this individual was just doing this as a test of the security? or was it just the idea that he was buying this novelty grenade, sending it to himself so he could take it home and do whatever he wanted with it?

any idea there? >> reporter: that is what is not clear at the moment right now. authorities aren't saying. they aren't saying who sent it to himself here. certainly it wouldn't be the smartest idea to do that especially when you know that things are x-rayed here. and being right across from the world trade center, security down here is always paramount. >> if you're going to order a novelty grenade, have it sent to your house. not to the office. bertha, thanks. now, let's switch on the "power lunch" power serge and drill down on the stories driving the day. some of the most powerful members of the federal reserve speaking today about where the u.s. economy is heading. the talks come on the back of that weaker than expected jobless claims report with higher than expected jobless claims. steve liesman is here now. let's start with those data, steve, tell us about them. >> tyler, thanks. the street puzzling over whether the rising claims is confirmation of the weak jobs report we got on friday. or maybe it's just a lot of

holiday-related hoo wi. jobless claims popped higher than the street. a technical increase related to the seasonal adjustments around the good friday holiday. they said they would put much more weight on next week's numbers, which is also the week when the government does its survey for the april jobs report. you can see that pop right there. today's data there where other seasonal issues around the february trade data which came in much lower than expected. there you see claims. ppi unchanged. the core was a little bit hotter than expected at 0.3%. but the trade data boost many economist growth estimates for the first quarter some see growth between 2.5% and 3% this morning. within the last 24 hours two powerful fed officials have spoken. fed vice chair yellen and new york president said the fed would do more if the economy worsens. but i didn't hear qe-3 being

imminent. the last hope for the qe-3 bulls is tomorrow. fed chairman ben bernanke speaks at 1:00 p.m. his speech will be about the financial crisis. he will take some q & a. a fed exit strategy in the next six to nine months, tyler. >> steve, is the fact you heard from those two fed governors and they both said basically that the fed stands ready to do more if needed. is that because that reflects the overall view of the fed, or because those two particular fed governors are in the camp that says if we need to do more, we will do more as opposed to others who would be against it? >> well, i think there just aren't any two february members, tyler. one is the vice chair. janet yellen is the vice chair of the federal reserve. and dudley is not only new york fed president, he's the vice chair of the fomc. i would think they're carrying a bit more weight probably speaking for the balance of the committee. and i think that's reflecting where the center of the

committee is and probably very much likely reflecting where the chairman is. >> some members are more equal than others. steve, thanks very much. >> thank you. >> meantime, sony's new ceo wasting no time in laying out his turnaround strategy. the struggling electronics giant holding a conference call earlier announcing job cuts. just fewer than the greek public sector. and the shift towards mobile devices and its medical business. but the big question for investors now is will this plan work. our jon fortt is in silicon valley with the details. jon. >> hey, kayla. the question is also is the plan enough. first let's go over the pieces we heard already. letting 10,000 employees go mostly from the chemical and low end display. he's focusing on turning around the tv business. it's a big money loser right now. he's targeting margins for the business around 5% or 6% in 2014. he plans to leave the entertainment and financial divisions alone for the most part. the troubled electronicis business he'll focus on three

core areas, gaming, imaging and mobile. what struck me about this is that it's not a crisis reorganize. this is nothing like the classic scorched earth approach steve jobs took to save apple nearly 15 years ago when he slashed down to a basic core. this isn't even on the scale of cisco. they laid off twice the percentage of workers that sony is here. the question for investors is this, do you believe sony can hold off silicon valley long enough to save all of today's core businesses? or do you believe that in the next three years silicon valley will do to the tv what they did to the phone? and that smartphones will kill point and shoot cameras? if you do, could be tough. kayla. >> jon, i also want to switch gears to apple because obviously apple is coming under fire over the malware that infected macs, surely there are tons of apple product out there. is this something the company will take heat for?

>> yeah. the number of infected pcs is down to under half of that -- macs is down to under half that. really this is a java flaw. they didn't get the patch out quickly enough. they like to protect how they get the patches out and that slowed down the process. it's causing some people to rethink how apple's getting attacked in these issues because they're gaining market share, they're more of a target. it might also cause apple to think how they respond. they've been open about how they've responded to this than they have to issues in the past, kayla. >> thanks, jon. and a new report card out today on the airlines and shows a surprising improvement in one area that drives customers crazy. our phil lebeau has been studying the report. phil, these numbers will get your attention, won't they? >> they will. we're seeing some record improvements from the airlines when it comes to on time arrival as well as the way they are handling our bags. start with on-time arrivals. 86% of flights arriving on time in february. the most recent data collected

by the d.o.t. the top three airlines according to the d.o.t., virgin america listed as number one atd at 91.7%. and air tran and hawaii. the bottom three according to the d.o.t., frontier, express jet and united airlines. the other big story coming out of this report from the d.o.t., the number of complaints, the rate of complaints about mishandled baggage dropping to an all-time low as long as they've been recording this data back to 1987 they've never seen it this low coming in at 2.64 complaints per 1,000 passengers. tyler and kayla, when you take a look at this data, you now see people saying, okay, i understand about the weather helping the on-time arrival, but what's the deal with the mishandled bags? it's because people aren't checking as many bags. >> right. >> we're carrying them on. >> phil, it's always puzzled me, i want you to explain to me what the d.o.t. counts in on-time performance. for example, if an airplane is

delayed because there are heavy winds at newark airport, does that count against, say, united airlines? or is that something that the airline can't control and therefore it doesn't count? >> it's when they leave the gate. that's when they measure on-time arrival and delays in terms of taking off. so it doesn't count against the airlines. and that's why when you see badwet ner certain months, you'll see the on-time arrivals much lower than compared to this past february report where they were much higher. one thing to keep in mind, tyler, we have not seen any of the three-hour delays. >> it still counts against them? >> yeah. pretty much brings everybody down. tyler, you look at the listings, hawaii is always near the top. how often are flights delayed going to or from hawaii? doesn't happen very often. >> maybe we need to fly to hawaii more. >> i think so. >> as we approach the two-year anniversary of the b.p. gulf oil disaster, new fears surfacing in

the region, this time involving shell. the coast guard checking reports of a 10-mile oil sheen in the gulf near wells operated by shell. shell says the source is unknown and that there's no indication the sheen originated from its wells. about 130 miles southeast of new orleans is where we're talking about. the company is skimming the area as a precaution and says it's cooperating with federal regulators. we're keeping a close eye on this situation and we'll bring you any new headlines as they cross. up next, most of the fed speak this week pointing to slow but steady growth, so what sectors will pay off for investors in that kind of environment? chief strategist for jpmorgan funds helps oversee more than $300 billion, that's a lot, he's going to tell you where he's putting that money to work. kayla. >> here's the action in the commodities space as we see it right now, green across the board. gold hitting 1679. safe haven trade is on even though stocks are up. "power lunch" back in a few.

welcome back to "power lunch." i want to remind people we are near the highs of the session especially in the dow. i want to talk some earnings though. specifically google, which is up. but basically in line with the broader market. a little better. on a year-to-date basis it's underperformed, actually down even with today's gain that a big miss in q-4 of 2011. almost 10% below on consensus on profit and 3% on revenue. but there are signs of strength

for q-1. search market shares have 66.4% up. more than 850,000 androids are activated every day and that 100 million active users on google plus. in terms of expectations, consensus is for just over $8 billion in revenue and eps of 9.65 a share. highest price target 8.25 from ubs just this week. if you remain earnings starved, we will talk upcoming bank earnings in our next half hour. back to you. brian, thanks very much. stocks rallying on a second day on hopes that china is headed for a soft landing. where do you put your dough if there is still global growth albeit a slower pace? bring in david kelly, chief market strategist at jpmorgan funds. mr. kelly, welcome back. good to see you. >> glad to be here. >> do you think that stocks and basically u.s. stocks can continue to trend higher if the fed isn't there helping them do so?

and if you do feel that way, what kind of stocks? >> well, first of all, yes. i don't really think the fed can help much through quantitative easing. i don't think that's been as much help as people think. i think what's going to drive stocks higher is increase in u.s. confidence. and i think confidence is rising. the housing market is looking a bit better. unemployment is beginning to trend down here. and with the stock market gains themselves, that helps confidence. so overall as confidence goes up, i think that's going to push more money into equities and i think stocks in general will rise. and if that's the trend, if you think that stocks in general will rise, the best way to play that is usually buying relatively high beta sectors, things like technology, financials, consumer discretionary. tend to go up more than average when the market's going up. >> david, huge gains in the first quarter. and the stock market keeps running up. but stocks still appear relatively cheap when you look at the bond market. but at what point do you think equities become expensive? what's the number there? >> well, i think you'll need to go up another -- if you ignore

the bond market altogether, if you ignore the amount of money in cash altogether, you'd still need to go up maybe 15% from here to get to some measure of fair value if you look at real core earnings yields, which is what i tend to focus on. but you can't ignore cash. there is $9.9 trillion in investable cash sitting in short-term accounts in america today. that is more money than the entire mortgage debt of the american household sector. american households owe $9.8 trillion on their mortgages. there's $9.9 trillion in cash. that is eventually going to move into financial markets. i think that will happen as stocks push higher. i don't think we want to stop fair value in absolute sense. i think when we have below average inflation and interest rates, i think we will end up eventually at above p/e ratios. >> quick thought on china. what do you expect there? and how will that effect your global view? >> well, our overall global view is that china is cooling and the united states is warming here.

our investment bank looking for 8.2% year over year gain in gdp for the first quarter, which we're going to get this evening. maybe that's right. but if you look at some of the numbers beneath that, vehicle sales are down 4% year over year in china in the first quarter. >> i saw that. >> and exports already up 7% year over year. 7% gain in exports sounds fine. but those are u.s. kind of numbers. not chinese kind of numbers. china is definitely slowing down. we're still more in the soft landing camp, but with the u.s. stronger and china weaker, we think there's a lot of opportunity in the united states stock market and people should take advantage of that. >> 8% in china would be a vertical takeoff here in the u.s. >> they measure things a little differently. >> they sure do. thanks very much, david. >> straight ahead, the macy's parade, actually investors marching to buy macy's stock, shares sitting at 52-week highs. will consumer spending be strong enough to keep driving the stock higher? we have an exclusive with macy's ceo next.

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credit suisse saying the firm is well-aligned up 2.5%. a lot of buying in microsoft. reports that pc sales grew by 2% in the first quarter of 2012. that news of course helping microsoft today. lashly, illumina in focus. a bid of $51 a share is more than adequate especially if illumina is unwilling to enter any negotiations. kayla, that plot continues to thicken. illumina down 4.5%. back to you. >> thanks so much, seema. we're definitely going to be covering that next week as they meet their shareholders. meanwhile, ceos of the nation's biggest retailers gathering in tucson, arizona. our michelle caruso-cabrera is there with the ceo of macy's in a cnbc exclusive at the retailing center. michelle, not coincidentally named for the one and only terry lundgren. >> reporter: exactly.

yes, terry lundgren here. ceo of macy's. thanks for having us as exclusive broadcaster here. >> glad you're here. thank you. >> big question right now in retailing, the extraordinary same store sales numbers we saw in the first part of the year, your company no exception, same store sales up more than 7% in march, more than 6% year-to-date, is that a strong consumer? or is that all pull forward because of good weather? do you expect we're going to see a deceleration in sales? >> we've had close to two and a half years of same store sales growth at significant rates. we're picking up more than $1 billion a year in same store sales growth. so we've got momentum. so in our case i see that just continuing. >> you don't think the weather had anything to do with it? seriously, any deceleration expected or no? >> in our case we feel really good about the strategies. it's not just one thing or another. it's about the overall strategies that we've had in place now for a couple of years. that's what's driving our

business. >> let's highlight that. you mentioned the numbers. let's bring up a full screen so people can follow along. 2010 sales at 4.6%, 2011, 5.3% and already gang busters in 2012. but you know what wall street says, can you keep it going? >> yeah. well, the answer i think they have confidence now that we've made fundamental changes to our model that are allowing us to capture market share. >> such as? >> such as we are driving business from a local level. so we have this very large company with over 800 macy's stores, but we're capturing the information from local consumers living here in tucson, arizona, and driving that information back centrally. the only thing we can do this because of an entirely different organization structure that we put in place two years ago. >> the way i understand that is what you send to your stores in miami is going to be very different than what you send to your stores, say, in oklahoma. >> absolutely. you know, that sounds like generally we could all figure this out, but we have people living in oklahoma and in miami

and in phoenix, arizona, who are driving those decisions. that's the big difference. former buyers, former planning executives. it's a more expensive structure, but it's driving comp store sales growth and earnings growth. we love the idea that it's hard to copy because it's expensive. >> ron johnson made news today at jc penney. let me ask you this, this guy was the guy behind the retailing strategy at apple, which has been incredibly successful. the day they announced him as the new ceo, what did you think? did you think, wow, one of my weakest competitors just got a lot stronger? or did you think, ron, you're a smart guy, but good luck with that? >> i think he is a smart guy and i wish him good luck. but i think he's got an entirely different challenge. he's got, you know, apple's the most wanted product on earth. that drives a lot of people into your building. it ultimately begins and ends with the product and having the right product in each one of the right stores, individual stores. as you said, what sells in oklahoma is different than what sells in miami beach. so figuring that out is the

secret sauce in this business, which makes it our work. that's the challenge that he's going to face here in the next months and years ahead. >> terry, thanks so much for joining us. >> thanks, michelle. >> back to you. >> what a beautiful spot that is. let check in now with scott wapner and see which stock is on his radar. >> you heard seema mody mention qualcomm just a short time ago and with good reason. the stock's up today. got an upgrade from credit suisse from $80 to $70. i thought i would give you a few more tidbits from the note today. he says the company is strengthening its lead in the smartphone and tablet area. thinks they're among all the key players. also says they have the highest quality business model in the telecom equipment sector and best visibility. he continues to like a stock that many on wall street have liked. if you look at that chart, this is an intraday, the stock getting a nice boost. but over the longer term year-to-date a good story as

well. >> definitely a run away year for qualcomm. up next we have brian shactman updating all the market action. and bank earnings start to come in tomorrow. jpmorgan and wells fargo will weigh-in before the bell. what should you expect? and which banks to keep and which to chuck? two top analysts make the call next. a route map shows you where we go. but not how we get there. because in this business, there are no straight lines. only the twists and turns of an unpredictable industry. so the eighty-thousand employees at delta... must anticipate the unexpected. and never let the rules overrule common sense. this is how we tame the unwieldiness of air travel, until it's not just lines you see... it's the world.

welcome back to "power lunch." two and a half hours left in trading. reset the market for you. 8.5% to the downside in the vix. weaker dollar. 10-year not firmly above 2%, but it is above it. nat gas still below $2 and major indices basically near their highs of the session. look at the dow 30 heat map. mcdonald's down at the bottom down 1%. it's now down more than 2.5% for the year. the broader dow up 6%. interesting mcdonald's the darling in 2011 is struggling a little bit. few stock stories i'm following, linkedin keeping up that positive momentum. initiate to buy at suntrust. and who says money doesn't follow private equity? small cap china cord blood

getting a $65 million infusion from kkr. that stock up 5%. progressive down after a downgrade. and a follow-up, we often ignore these stocks travelzoo bit of profit taking reports it was up for sale and a huge pop. so a tad bit of profit taking there. not a lot of profit taking in the metals space which is just closing. open outcry at the nymex, take a look at gold, silver and copper. i don't know if we have it. do we have gold, silver and copper? i guess not. basically copper is the strongest of the three. silver's had a nice bid. copper getting the proxy for global growth and that is where we stand at this hour. tyler, back to you. >> there are a couple showing up behind you. >> there you go. 2% on copper. >> we'll keep them in mind for charts of the day. how about that? thanks, brian. banks earnings kicking off tomorrow. starts a very busy run of earnings. jpmorgan, wells fargo report before the bell. will they raise the bar too high for other banks?

joining us managing director at stifel nicolaus and paul miller of fbr management. what are you looking for in the two blue chip banks, chris? and can they satisfy wall street? >> i think that's a great question. i think what we're looking for from both of nothose banks is tt we're leveraged. traded rebounded and usually does in the first quarter. rebounded from a weak fourth quarter level. that's good for jpmorgan. we think mortgage good for the refinancing market and wells fargo generating one of every three mortgages refinanced in the country, we think they'll have a very good quarter. we think they'll probably be the high bar or high water mark for the quarter. and other banks will have a tough time matching. >> hold them if you got them, buy them if you don't? >> yes. both of those names. we have buys on wells fargo and jpmorgan. we think that relatively speaking they're pretty inexpensive. they're trading at two, three

multiple points higher and not generating the same kind of profitability. >> paul, i want to talk credit. credit uptick in q-4, jpmorgan, wells fargo, sort of the best in breed, but are we seeing an overall uptick in credit that's continuing? what's the story? >> that's something we're all going to watch. i don't think investors really care about credit right now. i think it's going to be more of a story in the second half of the year than the first half of the year. we did see some deterioration in credit in the fourth quarter. a lot of people blame that on seasonality. the fourth quarter tends to be the weakest for seasonality for credit. the credit has been so elevated, the deterioration of credit, we haven't seen that seasonality. something we're going to be looking at. i don't think investors are going to be that interested in credit this quarter. and i continue to think if it does uptick, it's not going to be that much. >> all right. chris, back to you. give me a couple other banks that you like right now. and a couple that you are a little bit taking more of a wait and see or you don't like. >> well, on what we like, we

like pnc and fifth third. we think both are being undervalued given the profitability. similar with wells fargo and jpmorgan. roas are higher than most in the group and p/e multiples are two to three lower in the group. the one sell we have is comerica. we think it's pricing in higher interest rates sooner than later. we think the fed is on hold either from loosening or tightening perspective for the foreseeable future. >> is there a new normal in fixed income? i know this has been the hole in bank earnings. obviously one thing we will continue to watch as these banks start to announce their earnings. paul, talk a little bit about the fixed income story and whether that's ever going to make money again. >> well, on the fixed income trading, i guess is what you're talking about, i think it will make money again. i think you're going to see -- the thing about mortgage banking when mortgage banking's strong, fixed income tends to be strong right along with it. i think that's what's driving some of the strong capital

markets with goldman sachs and morgan stanley also. fixed income will go up and down relative to the market. but with a strong mortgage banking earnings cycle coming with these refis coming, that's going to do well for capital markets and fixed income also. >> paul and chris, could you disagree on something? you have exactly the same stocks. you like them all. pnc and the other jpmorgan and wells. thanks a lot, guys. >> my pleasure. >> all righty, up next, this is some serious bedtime reading. the sector of the book market that is on fire right now. >> our own courtney reagan is live at the largest romantic book conference in the country. courtney, is love in the air? >> reporter: love is in the air, kayla. it's the 29th annual romantic times book lovers convention. the economics of erotica are redefining the e in e-reader. the story coming up on "power lunch." tdd# 1-800-345-2550 the 5-day moving average just crossed above the 20.

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i will admit that coming up on "street signs" i have nothing to compete with courtney reagan's live shot, but we'll try our best anyway. car sales have been revving up. one analyst says get ready for a possible slowdown. a new list of the best and worst jobs in america. is your job on the list? ours is, but on the wrong side. and it's the hot dog pizza indicator, guys, what it says about america's appetite. i'm going to send it back to kayla and tyler and the whole erotica team on "power lunch." >> we're going to make you wait for it. we're not going to get to that just yet. we're talking e-books first. anti-trust lawsuit against five major publishers and apple accusing them of conspireing to

fix the prices of e-books. three publishers have settled. amazon is bucking the trend announcing plans to go ahead and lower the cost of e-books. will they come out the big winner? joining us for a special edition of today's hot file, we have our man on the street, john carney, and our man on the beat, jon fortt, cnbc's tech correspondent. i want to start with you, carney. usually have a contrarian view on this sort of stuff. is this revolutionary? wasn't this always in the hopper we would have to see prices come down at some point? >> oh, yeah. this is going to bring prices down. publishers are in a lot of trouble, frankly. their business model for years is now going to be broken. i think we're going to see a lot of major publishers, you know, have to change the way they operate. they're just not going to be able to charge what they used to, which means they have to cut costs going all the way back. and quite a few of them will likely just go out of business entirely. >> so, jon fortt, what's wrong with the agency model? that's what steve jobs was

championing, set the price and that's how it's going to be. what's wrong with that? >> i don't think there's anything wrong with that. i don't think the d.o.j. was arguing there was anything wrong with the agency model itself. i think they were saying all the publishers getting together and deciding to go to it in the way they did could be wrong. in this case it doesn't matter if it's wrong or not. now that three of the publishers has effected the agency model is dead, i think who gets hurt the most are the publishers, main line authors and bookstores get hurt. apple, apple's fine. they don't need books anymore to sell ipads. that's really what this was about for them. >> i want to say i don't think it's really going to hurt autho authors. i think it could help them. being able to sell more directly to customers, the e-book revolution is just beginning. people aren't going to need that large filter system of the publishing houses anymore. they're going to sell directly to customers. it could be more profits. >> yeah. yeah. i'm sorry to jump in. i'm not supposed to, but i'm

going to slap my own wrist. who needs the publishers, guys? >> people still need publishers. you look at what's happened with music artists, the most popular artists don't need the labels. just like the most popular authors don't need the publishers. and kind of the people just starting out who really don't have anything going on who are writing e-book novels and might go viral, they don't need them either. it's the people in the middle who need that marketing exposure who might not have the savvy or the dollars to put behind it. they need some kind of vehicle. and if the publishers are struggling, it's going to be harder for some authors to find that. >> no doubt the book seller will get hurt. we have one in mind, barnes & noble, what happens to barnes & noble? carney, start with you. >> i think barnes & noble has a lot of trouble trying to come up with a way to make people come into the stores. the differential between an e-book pricing and a physical book is going to get even bigger. and that's going to put even

more of a challenge into their business. >> many thanks, john carney. jon fortt. >> barnes & noble gets hurt a lot. if i were them, i'd be looking to do a deal with somebody like google. they need to partner up with somebody who can help them with some funding, with some fire power to go up against amazon because they don't have the money. >> all right. guys, thank you. we have to leave it there. we have a little more to talk about books. taking the publishing world by storm, no, it's not "the hunger games." it's "50 shades of gray" sparking a bidding war in hollywood. the adult book category has always been hot, but is on fire right now. courtney reagan is live at the romantic times book lovers convention. she's got what's behind us and looks like you met a lot of my sources over there. what are you doing? >> exactly. i think i know what your next book is going to be, kayla. these are hot sellers. "50 shades of gray" might have re-ignited this x-rated genre.

but tromance has been the numbe one selling and sub category erotica. sales there are steamier than ever. while many credit the initially self-published" 50 shades of gray" for bringing mommy porn to the masses, the category's publishers credit e-books for saving erotica. with tablets both the act of buying and reading e-books is much more discreet keeping those nearby from knowing exactly what's going on between the pages. >> with the different types of tablets out today, you can get away with a lot more risque type of literature to read instead of sitting on a plane when you're there and you have some fabio-looking cover model on the front. you just have a basic apple symbol. >> a lot of e-book sales are hard core. the first and foremost publisher of erotica sold 40 books per month in 2001. now monthly sales average 190,000. and numbers aren't unique to

ellora's cave. but a trend throughout erotica. at one point 30% of sales came from borders. and its bankruptcy was devastating until the sales report revealed that all of the money that was lost in borders was made in e-book sales, christmas, for the e-book sales. amazon still dominates the e-book market. the shares fallen from 90% in 2009 to around 60% followed by barnes & noble and apple. and editor and chief of publishing perspectives tells me that publishers are starting to accept the quick and dirty writing style that's often associated with erotic fiction. and they should, after all, more readers are flipping through those pages. tyler. >> so the bodess ripper, it's gone. that's a shame, courtney. >> i know. many of these gentlemen -- i know. many of these gentlemen have other jobs because this can't be their only support and go to the

tablet and see just this on the cover, not as exciting. >> i think i know what's on your kindle, tyler. >> steve jobs' biography's on my kindle. >> that's what they all say. >> actually, my wife did download "50 shades of gray" on the kindle. >> she's not alone. thank you so much. hate to be cliche, but let's look at tobacco stocks, brian. >> how do you follow-up the tattooed fabios? let's talk about domestic names, consensus good for yield, many less bullish on stock appreciation right now. so let's go with companies with overseas exposure, different story. i want to talk about two names that u.s. investors can access here. philip morris and british american tobacco. bts expected upside and add 4% yield and you have defensive acting like a monster. philip morris international $150 billion company, huge global footprint. the yield milder at 3.5%.

ubs only sees returns around 8% for 2012. and that's with the dividend. so not quite as bullish as bti. here are caveats. profits overseas are bigger and lower taxes are a factor in that. that could change. and competition could weaken pricing power. there's big pricing power here in the u.s. and the ubiquitous threat of regulation. none of those are slowing down. thank you very much. up next, giving your kids the right advice and tools so they won't blow your hard-earned money. >> we've got sound financial lessons to help young heirs next. in here, heavy rental equipment in the middle of nowhere, is always headed somewhere. to give it a sense of direction, at&t created a mobile asset solution to protect and track everything. so every piece of equipment knows where it is, how it's doing or where it goes next. ♪ this is the bell on the cat. [ male announcer ] it's a network of possibilities -- helping you do what you do... even better.

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welcome back to "power lunch." energy having a very good day. only about 0.25% in the red for the year. shale exposure showing strength. goodrich petroleum half a billion in market cap initiated by deutsche bank price target $23. it's at $15 and change. oasis up less than 5%. namely bakken in north dakota upgrading to a buy with a $36 target. not a huge move to the upside. about $6 left in that. back to you. brian, thank you very much.

new data shows millionaire housing rising for the third straight year. hour are those affluent families teaching the next generation about money? when they find out, have them tell me, will you? sharon epperson got together a round table of financial experts for their take on critical money lessons the wealthy can teach their heirs. >> teach your children the value of saving early, showing them how it grows over time. i think that would be a starting point. and also doing some education with your children about what it means to invest and how we defer gratification today for things that we really want down the line. >> i really agree. i mean, i think you do too, frank, the greatest legacy is financial education is actually getting them up to speed on what they need to know about perhaps your money as well as their money. >> i think today's boomers looking at this rags to rags. first generation made it, second generation can keep it, third generation will probably lose it. so in the years ahead, i think for the boomer, they're going to make a decision whether or not

their children can act as fiduciaries. if they can't, who can? i think the decision is as simple as that. >> so they're looking for an advisor, stacey, are they saying help me plan not only for myself but my child i'm not sure they can handle it? >> that's it, sharon. what our answer is using trusts, using 529 plans, using vehicles that allow us to customize how money would be distributed to the child. and there's unbelievable different options that you have. you can pin it to an age or even an achievement the child makes. the biggest thing we can do is invest in our children, invest in our society to give financial education because it's an education that no one will ever be able to take away from you. money can be taken away from you. >> and according to the spectrum survey, the wealthiest group of millionaire households said investing was the key to their wealth. while those with net worths

between $100,000 and $1 million attributed their wealth to frugality. two very different but very important money lessons. kayla. >> coming up, just over two hours left in the trading day. we've got our charts of the day when power is back in two. in america, we believe in a future that is better than today. since 1894, ameriprise financial has been working hard for their clients' futures. never taking a bailout. helping generations achieve dreams. buy homes. put their kids through college. retire how they want to. ameriprise. the strength of america's largest financial planning company. the heart of 10,000 advisors working with you, one-to-one. together, for your future. ♪ omnipotent of opportunity. you know how to mix business...

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a more fuel-efficient turbocharged engine. and a completely redesigned interior. ♪ the 2012 c-class with over 2,000 refinements. it's amazing...inside and out. ♪ the c-class starts at just $34,800. has been because of the teachers and the education that i had. they're just part of who i am. she convinced me that there was no limit to what we could learn. i don't think i'd be here today had i not had a wonderful science teacher. a teacher can make a huge difference in a child's life. he would never give up on any of us. thank you dr. newfield. you had a big impact on me.

coming back just a touch in the dow. we started up about 160, 165. basically where we started. still 35 points or so short of 13,000. >> very nice day for the market. a stock we haven't been following for much of this day and that would be best buy. of course the company ceo resigning under a cloud on tuesday. you see the stock immediately spiking higher on tuesday, but it has been lower for the rest of the week. one week so far down 1.75% at $22 and change. >> i'm looking at nat gas heavy name down 42% this year but up today because too many people have sold it. >> hewlett packard top, in the