>> the s&p is down a point and the nasdaq is down 19 points. we will have to see how the day anything yo figures out. >> that will do it for power lunch. >> have a great afternoon. street signs begins now. >> the douw is holding up. some say bonds are calling for a new recession. who is smarter? we have got a show down. google to $1,000, microsoft break up, apple losing its cool? a triple play of tech stories. and what the spring housing boom in one state may say about the entire nation. and the man who wants to build the starbucks of marijuana. >> as for the markets today, it is june already and it's a little wobbly.

the market has a tendcy to do trading in june. and the third worst for the s&p 500. the worst month of the year. the second worst for the s&p. there is one exception. but, here is the but. >> sure we can. we need improvement in the global economy. if that happens we will get rotation. take a look at the sectors that have done well. a lot of them are domestic oriented.

home building stocks. those are the big leaders. look at the laggards. material s materials. >> so let's bring in a bond guy. rick? look at this chart.

s it is a ten-year over the treasury. may be a little higher. yields have jumped, some say, definitely sort of points stocks don't seem to be saying that. who will be right. >> we are idling on your chart at contract all time highs. 21st of may at 1669. having said that, traditionall., . moving up should mean that. but they can also mean that there is a debate about the fed continuing to buy 40 to 45 billion treasuries or

cumulatively. so it can be one or a combination of those two issues. so to truly answer your question, i would have to understand where the markets would be and what signals they are sending but the fed really masks that. so i guess theestest answer is with stocks idling up here, my guess is they are just handicapping fed programs, nothing more. and the quality sessions. >> let me be more direction. who would win on jeopardy? you or bob? we don't have to answer that. we know the answer is me. >> i was going to say so. >> coming to chicago with a bottle of scotch for you. >> i will bring some vowels. >> i will buy some. all right. so are stock people really smarter than bond people? jack, we had a little bit of fun on that piece.

we're doomed, yields are rising. stock market continues to do pretty well. >> i think historically, bond people are smarter than stock people. i think with the fed now being such a huge part of the bond market, they would done it down i guess. so, overall, i think we get the second half rebound that the stock market is projecting. get back to basics. what do you think the bond market is telling us now? what is the stock market telling us and which is right? >> i have got to say that i think that the bond market is recognizing the fact that yields have to go up. but that raises concern among

bondholders as to prices. but in terms of borrowing costs, they are likely not to go up very high. as for the stocks, stocks are saying higher yields here really means the economy is getting better. i agree with jack on that one. >> as the yields do go higher, to what degree will it prod higher? >> john? >> go ahead, sorry. >> okay. can you repeat that? >> essentially into defensive issues but now it's beginning to move into the.

>> we have diverged away from fundamentals back probably as early as march. and now we're trading, you know, kind of in anticipation of something to come. if we don't see earnings come through. if we don't see the economic growth, there is, you know, now we see the fed pull back, there really is very little to sustain these current levels. >> is that -- i'm glad you brought that up. is that a big deal? no offense to anybody here on this network or whatever. so? we're up. we doubled in three years. >> no, absolutely true. you're right. i think fair value if i were to just take out a pencil and paper

paper. >> fundamentals, technical. just not right and it's too pricey. >> we think you have got to be selective in here. we prefer alpha strategies over beta strategies. overall the market at around 16 times trailing earnings looks fairly attractive. >> beta would be trying to match

the performance. alpha you are trying to beat the index. looking for stocks that have anticipated to do better. >> thank you very much for the explanati explanation. >> thank you very much for joining us. >> google getting a $1,000 price target from an analyst. is that the kiss of death for its magical run? we will debate with that analyst. >> and back in december, winding back down history road we predicted various things for 2013. i predicted there would be changes at microsoft. maybe some big changes. there is a new report suggesting that maybe i was on to something. later on, big pot. we're going to talk to the former tech exec who is setting out to create the first american chain of pot shops. [ male announcer ] with wells fargo advisors envision planning process,

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>> i think he is definitely one to watch. >> okay. >> big hair. with regards to mr. softy, that was my prediction at the end of 2012.

>> you reck the princess bride. there is a difference between mostly dead and all dead. i sat down exclus ifly with the president of microsoft. one big idea here they are announcing today. it's renting to products the server products that it's selling. >> the r&d and this is the same.

>> about 25% have used microsoft and that is gaining share nicely. it also runs. >> it is battle tested infrastructure. >> microsoft, there is a report that microsoft is restructuring. that would make sense.

>> do you think that breaking up microsoft or having a massive restructuring going into two different groups? >> that is what she predicted. >> yeah, yeah, yeah. >> you said within five years microsoft would cease to exist. >> i'm offering a little wiggle room. >> a little? you go on tour with the wiggles. >> we invented the wiggles. >> nobody wiggles like her. >> you have got the prancercise, i have the wiggle.

>> does it need to get into the business? things, for example, like the bing, xbox, does it need to shed those? >> xbox live runs on top. office 365 growing at a billion dollar run rate. that also runs on top. if they can leverage that correctionally, game share versus amazon, those businesses including online end up not looking quite so bad. >> it does pain me to say this but i think you're right. i think microsoft is going to look like that in five or maybe three years. you're going to be right. you will have the cloud business, entertainment device business and probably maybe

whatever else it might be. >> back a decade ago, baby bill gates? >> i think you will be right. but i will leave myself wiggle room. >> i'm going to dvr that. >> google's race upping its price target today. increasing adoption of enhanced k578 pains. >> that means if you're an advertiser, up until now you have been running multiple cam

tans for multiple devices. this gives you the ability with one campaign. >> absolute. and large to have a mobile strategy. today 84% of ad dollars are a signal to the desktop. yet mobile is better. google is effectively forcing advertisers to think through their mobile strategy and make money.

>> we'll see. the way we look at it is we look at the short-term potential impacts from thing thas as that are doing in the campaign. >>. with management team that is still in tact with a very, very go goodmented 6 ever -- attractive

here. >> abc is danielerness. he is not overly negative. >> it is somewhat irrelevant in 2010, earnings growth was that sounds pretty. it has fundamental. been cut in half. it is fantastic business. it is the best mouse trap.

. . . >> you would be paying on current year earnings about 24 times. so more expensive than google. you are paying 24 times to get 125%. with google you would be paying 25 times to get 17%. the relative trade looks much better. >> google is right there at the

forefront of innovation and making great strides. when you get that big, when you get that successful, the regulators come sniffing. i think they are increasingly sniffing around google. are the regular lay dtors goinga downfall? >> the concern i think was greater a year ago. so far no one has really been able to get him anything. the contracts that they have had with the doj and with the eu comes the commission have been basically nothing. they have really gotten by that. by the end of the day, let the market decide. google was exceptionally innovative. we care about that translating into earnings growth. i don't think that 12% is really all that innovative. >> dan, thank you so much for joining us. >> thank you for having me. >> put that nasty robe on and go downstairs yourself. because a big new york hotel is saying no more room service.

>> and don't steal the robe either. they charge you for that. and nearly doubling a price target. [ male announcer ] frequent heartburn? the choice is yours. chalky... not chalky. temporary... 24 hour. lots of tablets... one pill. you decide. prevent acid with prevacid 24hr.

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>> yankee stadium, moments ago. >> i'm out. no mas. >> that pretty much sums up our favorite video of the day. the bench is freaking out last night during a thunderstorm at yankee stadium. the sox ended up winning 3-0. i got to be honest with you. i did the same thing. >> ripped up the shirts. run out in the rain. >> asking the kids to protect me, boys.

>> one big chain is dropping gas, room service. simon hobbs, isn't that sacrilege? isn't that why you stay in a hotel? so someone else can bring you food in bed? >> let's be clear. there is one hotel, the new york hilton midtown. actually not on the public market. it's owned by black stone. is this a private equity play? it has 6,000 hotels. mainly franchises. very much for middle america. >> we have room service in some of our brands, not in a big way. no one is happy with the

situation. and i think it's time that we finally looked at it. stopped trying to do interim changes and say what makes sense. and they are certainly not looking forward to the cost that it is. >> by that he means $60 for breakfast. more likely, if room service is to be dropped it will be an evolution. he is touting these new fitness hotels. just signed the second contract in new york. >> there is no front desk. it's an open arrival. i want to use the word organic, but the entire room is available to you. you can look across and see the opportunities from where you can eat for breakfast and dinner.

around or behind the front desk you will see a fitness center which has got more space than what you might otherwise expect. you can get a full workout in. >> does it have room service? >> it doesn't. >> you heard it. it is the areas in the country that are more heavily unionized that will lose room service first. >> you won't catch me in one of those hotels. that's the point of going to a hotel. picking up the phone and lying in bed and having the food come to you. otherwise you might as well stay at home and cook it yourself. >> you know that's not allowable on the cnbc expense account. you're ordering room service? let me call hr. >> let's talk street talk on tech deck. and we're going to talk to the man who will create the starbucks of pot. >> and the beginning of the end

for one big music company?

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>> rapid fire street talk. let's make ate street run. first up we have got best buy, which is moving lower. >> it is down despite it being in as its top pick. the increased confidence under the new ceo. best buy has done a good job matching prices and dedicating more store space. >> this was a 15 dollar stock.

it has gained 80 bucks. >> ready to roll you out. >> they have a drug used for treatment of hyper -- it meets primary end points. this is too much in the blood. this was a nearly $20 stock back in early 2006 so it's well below that level. it was higher earlier. a lot of market volatility. >> final stock of street talk. >> remember, you got the conferences going on. the results of this test look pretty good. the stock getting crushed.

he thinks this will be an effective drug. >> and finally by the last, we got the speed just right. >> it is really jumping today. it's up by nearly 9%. doubled the price target on the stock. it is quite the expert on all things. >> you notice i have not said anything negative for at least three years. it was fixed. they said it was fixed. it was not fixed. >> when you make it right there it's going to be a little more bubbly than if you have it in a can. >> i never had used it before. he could look at it and tell, he

could taste it. here is the reality. he is coming out saying it's not a fad. the kind of thing that galvanizes me. he points out the short interest in the stock. you hear that so much. that's no reason to buy a stock unless you're trading a stock. i will point out that the analyst said something interesting. you use these as the co2 canister. >> i use them, too. >> in my view they are too expensive. the canisters are too expensive to replace. >> if competitors get into the business they will be forced to use the soda stream co 2 canisters. i want to point out one other thing.

the challenge is around the company's ability to increase penetration. >> in the meantime, shares of pandora took a real tumble today. we have been waiting for this. >> they tell me apple is on track to announce i radio for both music and publishing rights. apple will pay twice the revenue share from ads. and the fact that apple is willing to pay up should help

close deals with universals and sony music in the neck week. that's why pandora's shares are tumbling. apple poses a bigger threat because of its massive reach. apple is not just in this for the ad revenue. the system is designed to drive people to purchase more songs from i tunes. and streaming options are increasingly popular and potentially eating into i tune's revenue. from an ownership to access, apple does not want to be left

on the sidelines. >> still ahead, a texas sized housing indicator. but is the lone star state a big christal ball? >> it is texas. >> plus, reefer madness. one man's mission to build the starbucks of pot. let's get to scott with what is coming up. >> thank you so much. apple shares are down more than 16% this year. but we will hear from somebody who says the stock has hit a bottom and it's time to jump in and buy. also wall street buzzing about the hindenburg omen. find out whether that means bad things are ahead. can anything actually be something good? i don't know about that. he sees some very dark clouds on the horizon. all of that. much more ahead on the closing bell. ♪ je t'adore ♪ c'est aujourd'hui ♪ ♪ et toujours

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it appears it's an agent of good. ♪ [ agent smith ] ge software connects patients to nurses to the right machines while dramatically reducing waiting time. [ telephone ringing ] now a waiting room is just a room. [ static warbles ] >> u.s. automakers posting pretty healthy sales numbers. does this put the industry back on pace for full year sales over $15 million? >> they are definitely going to come in over $15 million this year. most believe it will be about

$15.5 million. we split these up between the foreign automakers. most of them are coming in about 1 to 2% greater than the industry estimate. so what was driving the strengths particularly for the domestics? pick up trucks. in the month of may, the share of the market that went to pick up sales, up 1% compared to the same time last year coming in about 11.5%. ford, gm and chrysler, they all reported gains of greater than 1%. that's raleally what is driving sales. the age of the vehicles continues to go up in this country.

we want to show you shares of ford. the reason we're showing you this is because ford is recalling 465,0002013 models for fuel tank related problems. the fuel tank could leak. they have received complaints so far. no injuries and no deaths related to this. but any time you have a fuel tank and a potential leak and fire that gets a lot of attention. we are seeing the recalls getting larger and larger because of commonality of parts. >> i noticed -- you just tweeted out mercedes car sales are out 8 plus% in the month of may? >> that's huge. >> oh yeah. they have been at that part between 8 and 10%. cadillac for the first five

months of this year, best sales since 1976. >> all right. thank you very much. appreciate that. all right. auto sales not the only thing that is booming. one of your next guest says as goes texas, so goes the market. but does the man agree? what were you saying about your trip to texas? >> you really walked away with three very focused take aways from your visit. we're also seeing very heavy traffic which attest to the strength of buyer demand in the

current environment. and the final take away is as optimistic as we are, we expect that second quarter numbers will meet or beat expectations. and if the yield on the ten-year approaches 2.5 to 3%, that's going to increase the cost of debt service for buying a house. >> again, we have become a little bit greedy, haven't we? even if we go up higher, to what degree will it ease into housing demand? what do you think would be the tipping point? >> i think actually interest rates moving up is not a bad thing.

>> if you look at austin. look at austin x texas. >> the highest tax state in the land to a no income state tax. so that dynamic is similar to where we do a lot of business condos are up 30% plus year-over-year. that's supply and demand there is no inventory and huge amounts of demand to the point that now pre-sales are taking place -- >> maybe you can argue that there is a rise in mortgage

rates. it will get all of those people sitting on the fence and bring a big burst. i will do it now. don't you think it will create a spurt? >> i think you have an increm t incremental sense of urgency. rice is continuing to rise in such a short period of time. that's going to put a damper on the party. that's a concern about the stocks. >> do people buy real estate based on the price or do they buy based on what they can afford every month? those are very different things sometimes. >> buyers buy differently. the hi end buyer is buying based on desire and need. and so, but then, interest rates do play a roll in it. i was having friends over for

dinner in the hampdens who are renting and now they are going to buy and i said why? because interest rates are so low. i think the average american and the buyer buying in the million dollar area is looking at what it costs per month. >> my point is if interest rates do rise, if prices come down a little bit. it won't destroy the housing market. the market can't sustain 20% yooe year-over-year increases in houses or no one can afford a house. something has to control this rapid increase in price. movement in interest rates will control pricing a bit. that's not a bad thing. when i bought my first home in 1987, i was thrilled, there was a libor based loan offered at 9% floating and i was feeling good

about it. >> wow. i am going to ask both of you in the break where you would invest right now. >> they both have a million. >> probably several times over but we will tweet it out. we have got breaking news. >> josh, you have us? >> yeah, brian. these are headlines just dropping on zynga. according to all things d zynga is laying off about 18% of its work force, about 520 employees. the move today is going to cut about 80 million in staff. also include the closing of offices in new york, l.a. and dallas. stock has been halted. we did reach out to zynga which did not have comment to cnbc. stock had been down 3%. stock halted now with news pending. back to you. >> we'll continue to follow that story on zynga zblmpk. coming up next. looking at one man's mission to build a starbucks of pot when "street signs" returns. keep working, but for himself.

so as his financial advisor, i took a look at everything he has. the 401(k). insurance policies. even money he's invested elsewhere. we're building a retirement plan to help him launch a second career. dave's flight school. go dave. when people talk, great things can happen. so start a conversation with an advisor who's fully invested in you. wells fargo advisors. together we'll go far. we went out and asked people a simple question: how old is the oldest person you've known?

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i'll take a grande. bong hit. that's kind of the idea behind your next guest company. he wants to nail the first national marijuana store brand kind of like the starbucks of

pot. founder and ceo of diego st. pierre. you're a microsoft executive. you're not some guy coming from -- you're not woody harrelson. kidding. you're not coming from some hemp factory. you're a businessman. what opportunities do you really see in the marijuana business. >> brian and mandy, great to be with you guys today. thank you for having me on your show. and thank you as well for pronouncing my name correctly as well as the name of my great grandfather. >> muchos gracias, amigo. not a problem. >> the opportunities in the cannabis industry are absolutely gargantuan. as a current black market, gray market sector, most of it's in the black and gray market. very little of it is completely thoroughly legal. given the fact that it's still illegal according to the federal government. even under those dire circumstances of being such a

black market and gray market economy, it's a $100 billion industry in the united states alone. now, once full legalization is happening, give it a few years for that, you'll be looking at closer to a $200 billion market just in the united states. worldwide somewhere north of half a trillion. it is a gargantuan market in search of a brand. >> you want separate brands. you want recreational use brands and medical use brands. but you need the money to make this all happen. where are you getting the money from and how much do you need? >> so we're getting the money from private -- well, first i started with my own funds. but now fortunately i don't have to break out my own checkbook anymore because private investors, mostly from the state of washington, but some around the country, even some international, are pounding on the door to try to get in. and we're fortunately in the position where we can be selective. >> any particular big name

investors you can tell us? >> not that i can tell you. but i'm sure there will be some soon. because this is not just something that people like to invest in. this is something people like to take credit for. and be on the right side of history. and right now what we need are heroes and pioneers to move this industry forward. and to systemically and safely dismantle this old, obsolete, berlin wall of prohibition of cannabis which is absolutely absurd. >> jamen, hold on tight. josh lipton. more breaking news from zynga. >> we told you about these headlines before, zynga to cut 520 jobs, 18% of the global work force. coming out also with guidance, reaffirming second quarter outlook for revenue, eps, eeb ta and eps. seeing a second quarter loss of $28.5 million to a loss of $39 million. we'll give you more headlines as they come. >> josh, thank you very much. we had to say good-bye to jamen

shively. if you're out there in tv land, thank you for coming on. there you are. good luck to your business. we'll get you back soon. take care, buddy, appreciate it. >> okay. bacon, doughnuts. a marriage made in munchie heaven, next. it's monday. a brand new start. your chance to rise and shine. with centurylink as your trusted technology partner, you can do just that. with our visionary cloud infrastructure, global broadband network and custom communications solutions, your business is more reliable - secure - agile.

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dunkin brands up almost 20% year to date sitting at 39.77. >> way to end the show on a strong note, drury. she has not been hanging out with jamen shively, by the way. thanks for watching "street signs," everybody. >> "closing bell" is next. welcome to the "closing bell." i'm scott walker at the new york stock exchange where the market remains on edge after friday's violent selloff which, oh, by the way, started in this hour of trading. >> i'm kelly evans in for maria bartiromo. bill griffith as well. for now, buckle up. as scott said the next 60 minutes here could be pretty interesting. keeping an eye on things. dow is up 84 points. it wasn't until 3:00 p.m. on friday the bottom really dropped out of the market. >> absolutely. it's been