gold going lower. that's it for us. >> streets signs begins right now with the dow up about 150 points on the trading session. have a great afternoon. . >> welcome to "street signs." are banks too big to fail? jamie dimon and forget the kid gloves, bare knuckles all the way in the house, are we any closer to a real answer? pushing stocks up to triple digits, we debate if it will be a twister day. after just months on the job, a merchandising guru is out. did one controversial ad cost him his job? herb is hearing it could be the vultures?

we will talk about that and many other things. hello. i'm mandy drury. as brian mentioned we have a power rally in the last 11 days since december. bank of america, microsoft and caterpillar leading the dow. 1.3% is the best day in almost two weeks. good year is one of the winners there. nasdaq on its best way in two weeks extending to nearly 13%. a quick check on jpmorgan, stock sharply higher, investors seemed to be liking what they're hearing on capitol hill. let's go live to mary thompson live outside the house hearing room where things have just wrapped up. last week was really softball and the jig jamie dimon did in front of the cnbc cameras really set it off. how is the tone different today and what did we learn from last week? >> the tone wasn't that much

different. broke down on party lines wanting to hear from jamie dimon what he thought about the regulation and the chairman came to his defense several times who kept pressing him on loss, he can't tell you right now. baucus did further and ran defense from him coming out of the hearing room, blocking him from reporters trying to get a shot at him. some of the democrats continue to press him on things like the size of the loss and risk management, including representative carolyn maloney. listen how she pressed him how changes in risk measures s as chief investment officer may have caused these greater loss. >> were the risk limit rules raised while the loss making position was on the books? >> no, they sometimes limit triggers and as you prefer the focus in details, some things you were told about when the

limits were hit, they did that whey were supposed to do. >> did they raise them? >> they do get raised sometimes, yes. >> why? why were they raised again? >> i don't know if they were raised. sometimes they do get raised. >> so you don't know whether they got raised or not? >> they might have been. i don't recall it. >> other than that, pretty much what dimon said the last time. apologized for the loss and to lawmakers for taking up their time. he said their time and his would be better spent focusing on really critical issues at this time included the problems in the euro zone. back to you. >> stick with us. how did dimon do? let us bring in ben white for walt political. give us your grade on the congressional monologue or dimon testimony today? >> he was not shaken at all. the questions were much tougher, very significant issues. and mary hit on one, how much

did jamie dimon know about the increas increase? >> did they draw blood? >> there wasn't a lot of blood on the streets but questions asked of him and why he's opposed to transparency. if they're so transparent, how come he didn't know about the size of the risk taken and shouldn't he support more regulations. >> what did you think about his comments regards to do big to fail. he totally agrees no taxpayer should bail out a big bank. kind of ironic considering t.a.r.p. was forced on them. >> forced on them in a sen sense -- the whole system was bailed out by taxpayers. it's been bailed out. there's still an open question whether too big to fail banks would require a taxpayer bailout under the rules in place now and probably would. jamie's bank probably too big to fail wouldn't be allowed to fail and i don't think he answered that question. >> at the end of today, what do

you think is the future of the volcker rule? do you think things have change with regards to how regulation will move forward? >> i think what most people feel right now, the loss at jpmorgan, given they basically took out the strongest voice the banking industry had against a stricter volcker rule, a number of people say any chance that it might be somewhat less restrictive were wiped away once these loss were revealed. i don't think that's changed since then. we should probably know more by the end of the summer when we hear about the final proposal we put out for public comment. >> tell us about the bottom line, this is a big bank, he's in front of congress. is there any lasting damage done? is there going to be any real change in this series of hearings or just a dog and pony show and we move on and things remain the same? >> i think there is a chance is what mary says, we could get a tougher volcker rule out of

this, are we really regulating these trades the way we should be and is there enough transparency. it takes dimon down a peg, can't make a mistake, could be the next united states secretary of treasu treasur treasury. >> do you think with the volcker rule he would have caught this? >> i don't think so. if you had more transparency and disclosure what risks they're taking, of course, they could have been caught. >> my last question to you, sec chair woman mary schapiro said there could be violations and legal sanctions against the bank. how possible could that be? >> we have to wait and see because the sec is just conducting their investigation. that will focus whether the company properly disclosed any changes to the measure of risk

and what the sec is focused on. >> still a lot to come out of this one. >> one quick quote. thank you very much. jpmorgan chase, the fourth best performer on the dow, up 2 3/4%. the best performer is bank of america. up 5%. you can see the banks hammered today on the dimon testimony. >> the same thing happened last week. as soon as the testimony wrapped up, jpmorgan was already gaining and got an extra pop at the end. >> in the question what dimon said we disclosed what we knew when we knew it, a key line basically him saying i knew we will be investigated on this. people should focus on that. there are questions what they knew and how they disclosed. >> a lot of questions still need answers. in the meantime why don't we turn back to the markets. rick santelli is in chicago. yesterday, i noticed a lot of

defensive sectors led the markets, utilities, consumer staples, that kind of thing. today, it seems there's more risk taking going on. we have growth oriented sectors like materials. >> exactly. the money is coming out of the bond pits and stock exchange. we're just off our highs for the session of the dow. it's the risk on trade really lifting the rest of the market. actually all major sectors, higher utilities seeing the highest boost since 2008. highest level on record and the financials are the overall winners. speaking of financials, the bkx index we look at all the time, hitting two month highs. some components that have done very well the last two months include bank of america, up 18%. jopmorgan jpmorgan, jamie dimon's

jpmorgan, not too bad for the risk on trade. can't be all green. a lot of red in retail. walgreens announced they have a 45% stake in alliance foods and shares going the opposite direction often happens. jpmorgan shares taking a big hit after announcing the departure of president michael francis. big surprise after less than nine months on the job. >> we'll talk more about jc penney later on. and expectations what the fed may or may not do this week driving a lot of trade. number one, do you expect them to extend operation twist a few month? number two, what will happen to the market if they don't? >> my opinion is, no, they will not do anything. i am so in the minority, that opinion is not representative of many of the traders around me. as for the second question, i think it would definitely

reverse. what i see as a major impact of the notion that more accommodation in some form will be delivered by the fed. that is up 140 in the cdow and down three-quarters of percent in the index. hard to differentiate accommodation from european issues. there's a recalibration going on how low interest rates need to be to match the current angxiet levels in europe. boon deals are at a high and making it complicated because the there's a lot of moving parts. >> thank you so etch. >> don't go away just yet. can i get you to answer a question. sl threw it to ben white. >> sure. >> look at you, getting in your stance, dragon style no match for my tiger style. do you think there's any change in banking and regulation and too big to fail and anything for

congressional testimony? jpm shares higher than they were when the congressional grilling began? >> the best way answer that and i mean no disrespect to anybody in my answer, the last panel you had, what does an expert about politics know about hedging and banking and getting down in the weeds on those issues. >> what would congress know about that? >> bingo. my next comment. the same amount as the people asking the questions. will it make a difference? perception with their stock is yes. at the end of the day, no matter what you feel about jamie dimon, he was the smartest man in that room by a factor of 10. that isn't good for us as citizens as those guys in that room are integral to fix legislation what not they know is wrong. >> you got the feeling they knew it. >> we were looking at the shoes, somebody kicking their feet behind rick. watch rick go. >> thank you.

fix labs, carl icahn owns about 8%. today in an sec filing nominated four people for the board and requesting records based on what the board has done in the past and wants to take a closer look at this company and what he wants to do with it. the stock went from negative to green. still ahead on "street signs," break out your rally cap. we're dean in the green and how you should be playing it. microsoft surfacing with its very own tablet. looks impressive. but too little too late? >> what do you think? would you give the microsoft tablet a shot if priced competitively? tweet us. would you buy a moth surface? and why? why not? [ male announcer ] aggressive styling. a more fuel-efficient turbocharged engine.

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the question is whatcan we expect with qe-3 and others. kathy jones fixed income strategist at charles schwab, always ladies first on "street signs," kathy. what is the fed going to do and will it make much of a difference? >> we think the most likely outcome is push lower for longer and push out the time frame to the end of 2014 where we have zero interest rates at the short

end and a good chance they will do extension of operation twist. the economy domestically softened. the risk out of europe, inflation declining. there are enough indicators that could push them towards an extension. >> do those indicators warrant even more than just an extension of operation twist? >> i think at this stage of the game, no. we could see qe-3 down the road. at this stage of the game, they'd probably rather hold off. >> do you agree with kathy? what's it going to do anyway. isn't the market doing the work of the fed by driving long interest rates down anyway? >> to an enter degree. fed wants to keep then long rates down and spur the housing market and reinvigorate, get spark in this economy and get consumption. what you're seeing in the overall market itself, interest rates, people want to invest in this market if we have the clearing of some of the clouds

in europe. frankly, i think what we see happening now people are coming to the realization there is no silver bullet fix for europe. this is protracted, not a clear pathway and parting of the red sea. you have to hunker down in this situation and put a portfolio together that will be productive in a trade wind environment. >> you're saying all the bad news is priced in at this point? >> i think a lot of it is priced in. looking at the pes where they are now. we still have small but moderate growth earnings are 1.9 and for qe-2 probably in line. a little vague. i think you can find it in value in stocks with productive different den dividends in all the sectors. it's a good time to make bets. >> i'm willing to bet most of our viewers don't buy ug.s.

treasury bonds directly but do buy homes. we have a chart of the 10 year bond yield in a downtrend the last 10 years. >> 30. >> is it going lower? should people hold off on anything like a mortgage that has to do with that number? >> i think if you can afford a mortgage and need to get a mortgage and refinance, do it. will rates go l lower? i think they will go lower. we are in a soft patch in the economic economy. although be may have priced in a lot of things in europe nothing is solved. >> do lower rates really drive consumption? >> yes and no. they make it's easier for people to refinance debt and service current debt. right now people don't have the credit rating to get a mortgage. it's helping a small fraction of

the people. >> getting back to the stocks you have here in your picking basket, what have you got for us today? >> from a contrarian viewpoint, one of the stocks we like right now is total. hit on all sides, oil prices. they had a leak in the north sea. the leak is capped and trading 6 pe with 3% production growth. the key is you're getting a 7% dividend while you wait. if you can get 7%, most people will take it. >> that's a good payday. >> you look at metlife. same situation trading at 5.5 pe, good growth, should be able to significantly increase their dividend as they remove banking operations. that generates a lot of cash flow while you wait and upside potential, a real value. >> all about the lust for

yields, dividends, dividends. >> that's the key to investing in real estate, dividends. if you know where to get them, can you let me know? before we go, mexican bonds? >> they have a good yield. >> we found a yield for you south of the border. i don't mean perth. >> and they have a strait where they call mexicans as well. >> we will continue microsoft taking on tablets. can they succeed? thank you to all those who have already tweeted. here's the good news. americans and american homes aren't big enough. mcmansions are on the way back. >> with fries on the side. >> homes are getting bigger again. more good news after the break. . now that's like sunblock before or sun burn cream later.

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market taking seriously what's going on in the tablet landscape and dell and hp losers. >> microsoft getting a nice bump today. upgrading the stock to a strong buy. strong buy, not just buy following last night's announcement of the new surface tab mets. we have been asking you throughout the show if you would give the new tablet a shot. >> mad trader tweets, no need, i am perfectly happy with my ipad. >> stone fox capital, heck no, still using windows software shows a lack of innovation by microsoft. >> tweeting if priced well, yes, i'd still buy a ipad before a moth tablet but i'd go microsoft rather than kindle or nook. >> what does silicon valley

think? what are they saying, john? >> i can't get over one of those comments, still using windows shows a lack of innovation by microsoft. it's an all new windows, like saying still using the mack shows a lack of innovation by apple. give them a break. a lot of press were frustrated about the last minute nature of yesterday's event. the bar was high. the hardware looks good is what a lot of people including our own julia boreston is saying. there are some issues. there are comments about the structure of the device, about as thick as the new ipad. the reason the ipad is as thick as it is because it has a huge battery and retina display. the battery on the windows rt version of the surface is actually smaller. microsoft didn't release details about the screen. didn't release details about pricing, isn't surprising because it won't show up until october. if the competitors take price

action before then, microsoft doesn't want to be stuck. the day after people are stepping back and asking a lot of questions. i have to point out the business model issue. as i was saying, hp, dell seem to be focusing on enterprise tablets. this seems to be microsoft attacking the consumer with the first tablets coming out, rt tablet really could have the opposite effect what microsoft seems to want. they seem to want to put out this thing and encourage others to offer their own tablets. players like hp and dell kind of once bitten twice shy on the tablet market. came in with a streak with the touchpad and lost big against apple. they don't want to do it again. this could cause them to step back further, all right, microsoft, go for it. >> thank you very much. barnes & noble stock is under pressure today. the company left out of the surface tablet announcement by its jv partner, microsoft.

it was announced only in april of this year. now, customers are returning the nook simple touch ereader which didn't sell as well as expected during the holiday season and reported a wider than expected loss. kind of sad. coming up next, a perfect pair of sunshine stocks. not socks but stocks. doesn't get much better than that. >> the disaster do year, do month, do her? jc penney ditching its new president after only nine months? is it a sign jc penney's problems run deeper than we think? could bankruptcy be the next stop for this stock? sharks have been circling. stick around. we'll find out more. ♪

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it is stock t time. pandora really sinking today has a lot to do with spottifing. >> it was down a little earlier and down 2%. not a stock that can afford more drops. spotty fi is really for your own stuff and discovering new music. pandora has radio stations. it is announcing its own radio station puts it in direct competition with pandora. and recently 9,000 shares was sold through options. >> and another stock that has a hard name to say. >> they should change their name. >> note to them, change their name. bank bank of america merrill lynch closing this company another company they see further upside. the two mid-sized companies will

make a better company and bump up in cash flow and that stock getting a bump up. look at year-to-date, though. >> talk about good news, retailer zumiez. uf 5%. it was. >> . >> it's live tv. blue tomato. austrians riding in and telling me exactly what they see. >> come see us, austria, we'll take you on. and raised their guidance today. >> bonton, finally an easy one to say. up 11%. it is. it's been a tough year. they agreed to sell their portfolio to ally ants -

ants -- alliance data. and bon ton stock down 40%. target is the last retailer to own its own portfolio. >> and then i will turn to our good friend waiting in the ri s rings, herb. this is really your stock to cover. >> yes. >> navistar. we've been talking about it a number of times. we've gone to sharks circling to whether bankruptcy is a possibility. i have a piece on cnbc.com that says bankruptcy cannot be ruled out even as carl icahn and former employee, margaret chess ski. analyst vicki bryan goes so far as to say flat out she believes bankruptcy is a credible option. there are lots of moving parts at navistar right now. including inapability to get

certification on big rig truck engines. in a recent court hearing, the epa estimated navistar could lose $3 billion of revenue if its engines do not get certified. if that happened, that would be the end of the line. navistar does not have the cash or borrowing capacity to absorb such a catastrophe. they will not address this issue but a spokesman did say it is important to the future of the company things get resolved in a timely manner. >> what's timely? >> hold your horsepower. i hear your story, great piece on cnbc.com. the stock is down 44%, not 94%. still a $21 stock. there are still people seeing value in the equity. >> that's right. >> the stork is not a dime, not a dollar. >> sometimes people see value in equity. there are people like people who give me credit and look at the

balance street. >> if mr. market saw this company wouldn't the stock be down 90% because equity is the first to go because it's worthless. >> you look at a situation like this with someone like ryan raising red flags over american airlines, who could file bankruptcy or a number of years ago, carl icahn piling in the wic communities and she was warning they could file for bankruptcy. these things do happen. >> pointing out the alternative scenario. >> you will stay with us, aren't you? >> i am. >> i know what's coming. >> time for our disaster de jure. jc penney. >> you are seriously excited. >> am not. the problems keep mounting. >> you want to bet? >> i don't care about the stupid bet. it's a company with employees and jobs and people that matter. a big company and people rely on

the success. we talk about -- i want to see jc penney to succeed base i want every company to succeed. that's what you want. this is a company that has a lot of problems right now. we're joined by jay rogers, an outspoken critic of jc penney. to clear it out, nobody is anti-jc penney. they have flaws and doesn't seem like the management right now doesn't understand who their customer is. >> i've been rooting for jc penney to win. i think revolutionizing retailing would be great. i thought they had pretty interesting innovative ideas. my concern is executing as fast as they wanted would be hard to do. lose a lot of customers in the process and a hard strategy to exercise. it's showing up. had horrible first sales and gross margins and had to cancel the dividends. lots of bad things happened to

them. i said i wouldn't get serious about them until they got to 19 bucks. i never thought they would get to 19 bucks this fast. >> and the president has left. what really happened? >> i don't know what happened. i think michael francis is a first class executive and first class guy as far as merchandising goes. i think somebody took the fall for the second quarter that's not doing better than the first quarter. when you're responsible for sales in that part of the world, it seems somebody has to lose and michael francis lost. i think it was a strategy, not approach to customer and marketing thing. >> it was a short amount of time. he was there eight months or so. >> couldn't have really changed anything. >> you cankancan't too anything that span of time. >> they have a new strategy, a huge strategy change. he was told, okay, go out and market this to the customer.

that's really hard to do. i didn't really think it could be successful. i think he was trying to be too cool too fast too much like target when we used to love them. >> i assume you are referring to the father's day ad when there were two dads and obviously everyone has their views but do you think this was going too socially forward too quickly? >> it's pretty easy to sell in new york city and tough to sell in st. louis, missouri, dealing with a mom who's 45 years old household income is 45 to $65,000, she's not looking for that kind of ad to attract her to the store. when they're doing things like that, they're pushing away more customers than they're bringing in. >> you admire whatting there doing, trying to be socially progress, good for them. to your point do you think they do not understand who their customer was and that ad was sort of the last stand for michael francis? >> i think it's worst than that. i think they don't like their

customer. they don't like the person who shops with coupons. they don't like the low end customer. they want to be nordstroms, want to be cool with cooler product. they have 1100 stores to do this in and have a customer that's been with them for 100 years. they can't make the change that fast. in 1100 locations, half are in bad malls, they can never be nordstroms. >> if that is the case, talking about them not necessarily respecting tor liking their customers, feels ungrateful considering who the customer is. do you expect further attrition here and what's the end game in terms of the company and stock? >> i have told my clients, it's nine quarters of attrition. this is quarter two. you start making changes difficult for them to relate to and you lose customers. they only see this customer four times a year. a lot of their customers haven't been in the store yet this year. they normally see this customer

twice in the holiday selling period. they will alienate a lot more customers if they stay with the same strategy. >> what happens after quarter nine? >> it bottoms out and you bring in new customers to replace the old ones if your strategy resonates with the group of people you're trying to reach. i don't think the macy's customer or nordstrom's customer is ever trading back to penny's. and once you're through the nine quarters, i don't know that it tracks back. >> it is time now after all that for a decadent, double dose of sunshine. a new high and stock not seen since 1968, when they knew a thing or two about having a bit of -- >> three martini lunch? >> 3:00 in this afternoon. maybe even earlier. why not have chocolate with all

that booze. trading at its highest level since 1947. >> coming up, a battered down biotech bounces back. we'll speak to the ceo and what it it's doing to drive the turnaround. ♪ ♪ [ male announcer ] not everything powerful has to guzzle fuel. the 2012 e-class bluetec from mercedes-benz. see your authorized mercedes-benz dealer for exceptional offers through mercedes-benz financial services. what ? customers didn't like it. so why do banks do it ? hello ?

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welcome welcome back to "street signs." we talked so much on cnbc about domestic companies. maybe you should stay here for investing because nergal has unknowns. in coordination europe, what's going on with the fed and getting a boost with foreign stocks, almost all. rios tinto and petpetrobras up almost 7%. >> do you realize tooks are at five week highs and the fed decides whether to extend operation twist. we'll see if this rally is sustainable if they don't get what the fed wants them to have tomorrow. alan simpson says the u.s. is facing fiscal chaos after the

election. governor rick perry joins us, a huge critic of the fed and does he believe they're causing chaos right now? >> thank you very much. let's focus on biotech. many leaders are gathering in boston today. one is a heavy hitter when it comes to drug delivery systems. the stock this year on a bit of a roller coaster, down 5% year-to-date but higher. joining us the chairman of alkermes, richard. we've seen a lot of biotechs get bought. you guys have been more on a steady path this year, not soaring higher. what have you got to do to move the needle. >> biotechs are really easy. if you have important drugs, it goes up. at this meeting of 15,000

people, each year it reminds you how exciting biotech is because it's about breakthroughs and cures. >> you have five key commercial products and many have long lives as well. there are a lot of big pharmaceutical companies out there facing cliffs. how much do those companies look to smaller biotech companies to find new and in novative drug products. >> a great question. >> in my opinion, the biotech industry is the wellspring of innovation for the big pharmaceutical companies. the big pharmaceutical companies are characterized by patent cliffs and loss of big-time revenues. they look to smaller innovative companies to replenish their coffers. it's a very good time to creating new medicines if you have access to capital. >> what else do you have in the pipeline, richard? >> we're very excited about the five commercial products we have already through the fda and

other regulatory processes. drugs for schizophrenia, addiction and multiple sclerosis and the like. we have two important medicines in the pipeline for our own account, one, a medicine for schizophrenia, we think is a new break through and treatment tor depression in phase two studies. these will take a few more years to come through their development if successful. these will be important because instead of putting them with other pharmaceutical companies, these are our first major blockbuster drugs. >> it's hard to gauge the value because you don't know if things will be improved. i know cowen and company is known for injecting for ski schizophren schizophrenia. can you put a number how big the markets might be? >> as i said, you only understand the value of these products when you're through with the development phase and understand the characteristics. that said, we're going into

major indications like schizophrenia, millions of patients affected. the market is several billion dollars. because there's a big unmet medical need, there's a big commercial opportunity as well. it begins with the patient. if we can develop a medication that helps the patient a different way, issues about reimbursement and market size seem to take care of themselves? thank you for joining us. >> my pleasure. coming up. made-to-order- >> i will talk about mcmansions. we have breaking news. it's breaking. maybe jc penney watching "street signs," the ceo saying second quarter sales show a modest improvement from the first quarter, trying to soothe the market a little bit. jc penney did say that father's d day -- we talked about that controversial ad. father's day was a little bit of disappointment but out there

trying to talk to the market. >> we will watch the stock and see if there is reaction. >> if you buy an mcmansion, apparently a lot of people are, go to jc penney and pick up towels for your bathroom. who doesn't need two bathrooms for every resident of the house? >> with mcmansions, is it a good thing or is it really a troubling case of history about to repeat itself? that coming up right after this. ...the united states would be on that list. in 25th place. let's raise academic standards across the nation. let's get back to the head of the class. let's solve this.

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new new 52-week highs today for home depot and snap on tools. they're both up about 25% this year. >> okay, and mcmansions, mandy, look like their making a come back. the real estate site says consumers are, once again, building bigger homes. is this a sign of more optimism for the market or a recipe for disaster. let's find out. i guess it's a good thing, but when i hear people are building bigger and bigger homes again, it makes we nervous. >> we're seeing in our survey

that people are twice as interested as they were a year ago on the largest homes on the market. and builders are building more of the larger sized homes. >> what makes me nervous is the fact they're building these mcmansions again, when only 37% of the way back to a normal housing market. >> that's right, we're still closer to where we were at the worst of the bubble than back to normal. >> feels like we have not come very far at all. >> for construction, we're even less back to normal. >> when will it be? >> not probably until early 2016. >> what is normal? i don't know what it means after the last ten years. >> given what happened with the bubble, normal feels like a long time ago.

>> is the bubble days considered the normal? >> there's no one day or year or moment we can say the housing market was normal, but i look at the period just before the bubble, before all of that, to get a sense of what the housing market looked like before we had that boom and bust. >> is there any danger at this point of going through a backslide? >> there is a risk with europe and the euro, is there is a chance. >> there is a lagging effect there, isn't there? >> there is some. the housing market does react as quickly as the stock market does. some states have a big foreclosure overhang. that will pull prices back there and in a few other states as well. >> so are you right here on live national television, for an

audience of our grand size, are you calling the nationwide housing slump officially over? are we done going down? have we hit bottom. >> we probably hit bottom a couple years ago in terms of construction and sales. >> you're saying it's over? >> prices could fall back, if a global recession kills housing demand, and of course these foreclosures come on to the market, we'll see price declines in places like florida and elsewhere. but we are beyond the worst for the housing market. >> right now affordability is great compared to renting. now there are 6% year on year. we're going to see rental units come on to the market that will slow down supply. right now buying is more

affordable than renting. lots of people can't qualify for the mortgage and don't have enough for a down payment. >> quickly to wrap it up, as a economist by trade, you're an student of the austrian school -- >> economist come in many shapes and sizes. >> he will be running for office before you know it after this. jed coco, thank you very much. >> i'm trying to bail myself out. >> coming up next, airbus answering the call from overweight passengers. [ male announcer ] we imagined a vehicle

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