you'll be watching the home builders incredibly closely as well to see this move higher in interest rates and possible move with it with interest rates means not only for the stock but sector at large. stephanie link? >> profits in avon. >> weiss? >> tri-city. >> excelon? >> ext. >> "power lunch" starts now. "halftime" is over" and "power lunch" and the second half of the trading day starts right now. >> the past couple of weeks the markets have been just like the nba finals, big swings, wins, losses, wins, losses, you can't really tell who is dominant here, buyers or sellers, and today on "power lunch" is the big drop we've seen over the past couple of days over? is it an opportunity? is it an overreaction? we'll explore all of that with this guy, my friend jim cramer. he'll be here and has an opinion on all of it, and he's here to give us a special set of stock

picks that he thinks is right for today. and it's all about the house. there are some mixed messages in real estate, as there always are. we're going to talk about the economics of housing to see what it means for buyers and sellers right now. first to sue at the nyse. sue? >> thank you, ty. right now you want to look at this chart because it really tells the story. it's a chart of the dow jones industrial average over the last three sessions. we're now down almost 4% since wednesday's fed announce president, and it hasn't been a pretty picture for the bulls. the s&p right now, last trade on the s&p is positive, up two points. the dow is up 30 points, but the nasdaq is still in negative territory, down about 11.5 points. everybody down here is watching interest rates. the yield on the ten-year topping 2.5%. bob pisani joins me now on the floor. interest rates is kind of telling the story? >> we hit it, the market has been stable. much lower volatility. 140-point range. up about 90, down about 50

points. that's much lower volatility than we've seen in a while. can you see we're basically on the flat side today. sectors, all the strength is in the defensive names today. health care and utilities, the staples, a little weakness, mod nest tech and materials, but compared to what we've seen recently, nothing to write home about. i've been asked about the financials, and if you'll notice in the financials, money center banks and regional bakes like wells fargo, pnc, on the upside. traders rotating into the regional names because higher rates help the margins with the regional banks a little bit more. there's also some stories on higher capital requirements for the money center banks that are hurting. i've been asked about why whirlpool is weak, and it is weak today. it's been weak for the last three days, down about 4%. that's because it's tied to the home builders who have been notably weak. doubt me about the relationship. will pool down 11% the last three days and the etf for home builders is down 9%. a rough week for the home

builders. they are a little bit frothy, and a lot of that froth has come out of them this week and all the concerns about higher rates, a little overblown. very unlikely we'll see 6% mortgage rates. >> all right. bob pisani, see you a little bit later. ty, up to you? >> from frothy to frosty for some of the home builders. let's go to the nasdaq where seema modi is tracking, at least for a few more days, the big moves in oracle? >> that's right. oracle is now responsible for the nasdaq 100's entire loss today, and it's not just oracle's lackluster earnings that are disappointing the street. an analyst says oracle's tans fer from the nasdaq to the new york stock exchange could pressure shares between now and july 5th which is the date that oracle makes the switch. oracle has a 4.7% waiting on the index. leading the qqq would result in 15 million shares going up for sale and in terms of which company will take the spot of oracle and the nasdaq 100, alta vista research says it probably won't be a technology firm given the slowing growth that we've

seen in this sector. now, other large-cap tech stocks trading lower today, extending losses from yesterday's selloff. however, a couple of tech names rebounding in today's trade specifically from the semiconductor space and take a look at facebook shares, shares moving higher after getting a thumbs up after its introduction to video instagram. tyler and sue. >> seema modi, thanks very much. we posed the question, is the selloff an opportunity or an overreaction? the chief executive officer of greenwich wealth management joins us and the also with us cnbc contributors kenny polcari and welcome to all of you. you've given us a list of stocks, three stocks to run to and two stocks to run from. let's start on the positive side. what would you be moving into right now? >> quell -- well, one of the stocks i like is xls, eselis.

people are afraid of defense contractors these days because the united states is pulling out of the wars and there's the pending sequestration or the sequestration that's already in effect. >> right. >> so there's some fear about that. this company specializes in an area called c-4 isr which is an acronym for command, control, computers, communications, intelligence, surveillance and reconnaissance. you have to hold your breath when you say that. >> yes, indeed, you do. but it's an interesting company. their sales come primarily from the united states government and military, but they also provide stuff to foreign governments. >> okay. >> and one of the things they are famous for is night vision goggles. >> next on the list was children's place and armor residential which is a reit. >> right. >> so you would be going into those three stocks. i know you don't short, so this isn't necessarily the next two stocks aren't sells necessarily, but you don't think that they provide value. >> well, children's place i

would long, and -- >> no, no, no, i was -- i was skipping down to microsoft and also lululemon. those are the stocks you think don't provide value, correct? >> those are stocks that i would avoid. microsoft i think is simply because way too big to generate any kind of significant growth, and my analysis indicates that it's an overvalued stock. lululemon, of course, has had a huge selloff, but, again, it's a -- it's a very pricey stock based on a conservative discount to cash flow analysis so that's another stock i would avoid. >> kenny polcari. we saw the selloff yesterday, but everybody has been waiting for this correction. >> that's right. >> do you view this as an opportunity? >> i think it is both an opportunity and an overreaction, right. i mean, certainly the market got well ahead of itself, but i think that on days like this, the long-term investors that have been waiting patiently as the market ran away from them, these are the days where they are -- they are actually feeling good about this because they have the opportunity to put some

money to work at prices that are much more reasonable. >> do the higher interest rates that we've seen the last few days worry you at all? >> eventually if they keep going up, but that's an initial reaction. i don't think they are really going much higher because i don't think the economy is that strong yet. that would be another conversation on the line, but i think the interest rate -- the jump in interest rates is more once again of a knee jerk reaction. >> do you agree with that, because it does feel as though we're kind of at an infliction point in terms of rates, and this has been a really big backup this week in rates even though we're still at historically low levels. >> as much as i love kenny, i disagree with the big guy. an overreaction, no. we aren't seeing an overreaction. big ben. came out with the bernanke belly flop when he inadvertently suggested that they can move the stimulus or even taper on unemployment target. went from 6.9% up to 7%. that was huge, and that's when the ripple effects and the tsunami came into the treasury pits behind me. they began selling it, and right now, sue, severe technical

damage, so the treasury market, obviously 7 and above, 2.40 in the ten-year note is very difficult. equity bounced off this 100-day moving average of 15.75 which coincides with the multi-year high. a lot of people were caught offsides and a lot of folks don't even know they are offside. they haven't even heard the whistle yet. >> what trade are you putting on at this point? >> well, i think you have to own roll tilt. we like volatility and secret sauce. the dollar, seeing huge strength in the dollar so for folks at home if they want to be short that euro currency playing off that dollar strength. you get long the euo. that allows you to be short your currency. >> you know, let me go back to you, and in the last minute that we have, does the move up in interest rates worry you, or do you put that aside in? >> no. >> in your investment scenario. >> of course it does worry me, but in my opinion the jump that

we've seen in interest rates is a real overreaction. i mean, everybody knew that the fed was eventually going to taper, and everybody knows that interest rates have to rise over the long term, but i expect interest rates to actually level off and perhaps go a little bit lower in the near term before they go higher. >> but, sue, no one anticipated rates to move this fast, do you agree? nobody anticipated rates to move this fast. 1.60 a month ago to 2.50 today, this is ridiculous. too fast, too much and bernanke did not want this volatility. >> exactly. >> that's why it's an overreaction. >> rates should not have jumped this fast. >> but they did. they did what the market dictates. >> that's true, it does. maybe they are misinterpreting tapering for tightening. >> correct. >> look at equity markets. some people say it also overreacted to the downside based on what we heard. all of a sudden you see in the headline with all the economists all of a sudden interpreting what the fed is saying, and the headline says the tapering will start in september.

that did not come from the fed, so i think once again we're getting an overreaction also in the equity market. >> see you a little bit later. thank you all, gentlemen, appreciate it. ty, over to you. >> rick santelli has been tracking the action for us at the cme. rick, thoughts? >> well, tyler, before i even get into the charts, pursuant to that conversation, i've gotten so many e-mails, there's anywhere from 300 trillion to 1.2 quardrillion of any derivatives nationally and i would challenge anyone to tell me that every single one of them isn't impacted by rising interest rates. remember, every expert we had on the day of the fed, they all wanted to what the market, buy the market? big offsides going on here. now let's get to the charts. if you look at the intraday of tens, you can see we traded up as high as 2.51. open that chart up to august 1st of 2011. it gives you some history there. there's a lot of talk about what's going on in things like

the hylqd. i liking to to the barclays, the actual spread relationship. you can see it's definitely higher, but let's put some perspective here. look at a five-year chart, the left side. yes, the spreads have widened, but they have been much wider, and in terms of the dollar index, this is important, because the dollar/yen relationship has moderated in favor of the dollar, and the jgb haven't had nearly the volatility we've seen in the funding rates in china or some of the sovereigns like the bund or the treasuries. those issues do dictate that this market may calm down. this isn't about trading, strategy or money moving, this is the pain trade. back to you, tyler. >> rick, thank you very much. love rick. you kind of got to get him going. you've really got to edge him on. let's talk about jeff skilling, he's been in court this morning, houston, hoping to have his 24-year prison sentence for his role in the enron scandal, hopes

to have it reduced. if all goes according to plan, he could be free in four more years, part of a deal made with prosecutors that allowed $41 million to go to victims of enron's collapse. sue? >> jim cramer, ty, is getting ready and getty miked up, and we'll ask him the theme question of the day. opportunity or overreaction? there he is. it's cramer time. hey, jimmy. >> i like the regional banks, don't like the international banks. ♪

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they wrote an intro. i don't care about the intro. jim cramer is here. >> thank you for having me. >> i guess a couple days ago it could have been easy to say that everything was an overreaction. we knew bernanke would start tapering at some point, but there are other things that have been going on that are at play here. china being one of them. >> right. >> europe being another. what's going on in brazil, yet a third. how worried should we be? >> at various times i disagree and various times i agree with rick santelli and that represents the kind of commonality of all of us, and we was just saying these things are far more connected. he elooking at the ten-year and i'm looking at the ten-year. if the interest rates were going down the conversation would be like this. this is one more fire drill and we can get back in. they are not going the right way, and what i fear is, sure, we've got a great rally going here and that would be fabulous to go in the close, fabulous because some things you've got to sell because every time i go

home and i look at my machine sunday night, there's another country that i don't like what i hear about. >> yeah. >> a million people rally in brazil. okay. that's the "b." russia, market as low as it hasn't seen. "that's the "r" and "i," india, they are broke and not buying gold and what's going on in china? nobody knows except a small group of people in the communist party but if you take away bric and decide it's okay to own hershey, you've got to have more than that. >> yeah. >> listening to the john wopner show and people talking about the home builders and if i wake up and someone says mortgage rates are going to 2.75, i don't think that tempts me. these are worries that i want to get a leg up. >> the move in bond yields. >> doubled since may 1 stth. >> yeah. would you have expected that? what do we do rk, watch the bon?

>> i have the bonds and the various tnx. i watch those -- the key day was the day that the fed actually gave a statement and interest rate were climbing while they was speaking, spiked during the press conference, and the stock market wasn't doing anything, so the stock market didn't know who to react to initially because you know why? it's been since like 1997 that we looked at the bonds. >> that's right, that's right. >> i'm not kidding, people forget. >> they go down and stay down. >> this is not the -- >> this is a different kind of market. >> all right. let's get to some names and narrow it in here. i mean, if you look at these selloffs as a point at which you can buy. >> okay. what's on jim cramer's buy list today? >> as i'm looking at the bonds, and you don't just like at the ten-year, i look at five-year, the interest rate for that has jumped rather substaungsly. 1.5. you know the cd, you know how much they went up, from .80

to .81. >> the banks are not going to pay you fast, are they? >> the banks are making the most i've seen them make in ages, and who is doing that, the regional banks and the huntington banks, it's first horizon, fhn. these were banks, by the way, used to trade up here, all the way in here, why? because they were making nothing on these particular kinds of products. cds are the greatest. they don't have to do anything. somebody lends and somebody default and they turn the lights on, you buy the cd and they rip you off. >> the money sits there. >> there's no risk, and that's why these bank stocks have been so fabulous. >> all right. >> and i think that this move is in its infans? >> hunting don bank shares, had a very nice day yesterday. >> what does that tell you? >> what you just told me. >> what stock has a very nice day down 350? >> you like some tech, two,

including some of the semiconductors. >> when tech ruled the world with stegosaurs, the tyrannosaurs, that was an amazing quarter. that was an amalgam of all the japanese producers that failed. they have flash. i'm not calling for the historic $18 to $99 run that micron had from 1999 to the 2000 but i will take 13 to 18. >> micron, amd. >> hewlett-packard. this is one -- i call this the david famer play because i'm listening to an interview that david faber is having with meg whitman and i hear balance sheet fix, starting to innovate again and i think, okay, there's two people going crazy to load up dell with debt, michael dell and carl icahn, so why do i want to -- the one place i want to be

is meg whitman going up against a hobbled, not unlike "misery," james caan and stephen king, when you think about the new dell, and she going to be able to come in and eviscerate them or everybody is going to rip out their dell for hewlett-packard. she has a great balance sheet. >> a stock that's topical and timely today, oracle, like it, hate it, love it, loathe it? >> i like to own certain things i've screwed up. my charitable trust owned this and it blew out y.? because i have no conviction whatsoever that they know what they are doing and i believe others have superior product to them. i think they become the company that couldn't shoot straight in tech. they are this year's hack ard, okay? i think they can go down substantially from here. an announcement, they are teasing us, an announcement that's so supposed to be very positive but unless they have developed a car that can run on it, i want you to sell. if they have a car that runs on water, i'll change my mind and

buy. >> back to your buy list, one of the other ones you mentioned a moment ago to me was schwab, had a very good day, on a down day up. >> they make money on the deposits that you keep there, so that's -- you work -- >> that's a beautiful thing. >> worked in a brokerage house. we ranted your deposits so that we could pay you next to nothing and you gave us your money and we all live happily every after by owning the stock and that's why schwab and e-trade are good and when i say good, yeah, not a lot of people are trading, and what is that all about? >> you give me your deposit and i give you nothing. >> that's amazing how that works. >> next to nothing. >> they are giving you what you make in your checking account and the cds, these net interest margins that everybody has been waiting for, now that you're getting it, don't run from it, buy those stocks. >> buy the stocks because that's the way -- that's the way you'll compensate for making nothing on your savings. >> it's a revenge trade. >> i love in a. >> yes, it's a revenge trade. >> another category that you're

a little bit down on are food and drug stocks, some of the defensives. >> what i like is you're getting a rally in those, okay? and that's a real off the idea that they are ore sold. a terrific upgrade bmo. went from sell to hold kimberly. that's good because he had a sell and stock point down so he changes his mind. that's okay. that's a declaration of victory, but what i don't want to do is get complacent about j&j and get complacent about hershey's. these stocks are hanging by a thread. now, they are great american companies. i was talking with judge wopner and david faber, and traders, listen to me, those stocks have downside. hershey will be a great company long term but if you ask me where the money is going out of the so-called bond equivalents which will lose favor as interest rates go higher, if they go higher as i think, and they will go into regional banks which win, tech which wins and not oracle. and then you can buy some industrials, particularly ones that are levered. i think europe is coming back.

don't be too much china because we don't know what's going on there. >> europe may be coming back. >> bottoming. >> bottoming. >> faber skips over. >> they ought to go buy some prada bags or something, but not stocks. >> going in there and buying property. >> that makes sense. >> going and buying houses in spain, private equity. >> i think that the dollar is going to go nuts to the upside versus the euro. >> i guess we're going to take a quick break here, jim. >> why? >> i don't know why. >> this is game seven. >> it is game -- >> did you watch that game last night? >> oh, man, a good game. >> i'm tim duncan and you're sitting me down. timing is everything. >> more with jim cramer in a more. more violence and protests. talked about brazil, and the protests there continuing as that big country wobbles just a little bit socially. >> yeah. >> developing international story, and the impact, not so great news out of china as well. we'll talk about that. we touched on it just a few moments ago, and we'll dive in a little deeper in a couple of seconds. e a migraine

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so far a bit of a no go. go-go disappointing traders, stocks down 6% at $16.01. the company raised $187 million after being priced at $17 a share. that was at the high end of its expected range. we should note that it priced in last night's trading session, and that was a tough session indeed. gogo provides in flight wi-fi

services. >> here's the latest video out of brazil. look at that. following the big demonstrations since they began earlier this week. 80 brazil i don't know cities are seeing the preface in the middle of the confederations cup soccer tournament which is ahead of the world cup there next year. protesters voicing displeasure against high taxes and inflation and then there's china and a bit of a credit crunch. eased up just a bit today as banks and financial institutions start lending again. it is unclear whether the government jumped and that n. that's still some of the brazilian video we were looking at. that's knows china. don't want people out there. michelle caruso-cabrera has been following the international

stories. these are areas that worry you, jim. >> very much. >> china is definitely, their central bank is absolutely trying to engineer a credit crunch. however, we do know in the last 24 hours they did step in and add some liquidity to the banking system because though they want higher interest rates they didn't want them to go as high, as nosebleed high as we saw in the overnight rate. they definitely want to clamp down on what they consider. >> excess borrowing. >> sharky, snarky, lending. lots of bad arbitrage going on there because they think it's gotten too bubbly. >> sue, i know you followed china relatively closely, been an observer for a long time. i do. >> what would you like to ask jim or michelle? >> i'd like to know whether or not you think the united states is strong enough to stand up to the problems that china obviously is facing. michelle's done a fantastic job in detailing them, but are we somewhat immune from them or not? >> the real economy is. i think that china is turning out to not be as important as we

thought how the real economy does, but the real economy is not controlling the stock market. the real economy is a sideshow. what matters are bonds and futures traders who come in on every new piece of bad chinese news and blow out our market because they haven't figured out yet that we're not hostage to china, and i think it's the perception, it hasn't been able to get to the point where we realize in -- traders realized that china is not the be all and end all that it was. >> and i think also, too, there's just different cultural context when it comes to banking between the u.s. and china. if we saw our overnight rates shoot to 25%. it would be apocalyptic, right? >> absolutely. >> but they have a more infantile banking system there and it doesn't feet here like it does in the united states. >> one of the things that does worry me. brazil, a million people on the street. not protesting they wished they had a more capitalist regime. one of the things i've seen time and again in south america is when you get the protests, other

than when iendi was shot in the back, we all know pinochet, they go left. michelle, they can go left. >> and they have a really leftist president right now who is confounded but that because she used to carry gun and was a leftist herself and cannot believe that this is actually happening. you can't blame this on unemployment record low unemployment and can't blame it on slow growth. not europe, had slowing growth, but they have had growth. >> what about inflation? >> inflakes, the bigger issue beyond inflation which is problematic when you have a lot of poor people, the worst infrastructure, sub par hospitals and schools and roads, only 12% of their roads are pave. that's why people were complaining about the busing system. >> really? >> that says a lot.

>> underinvestment. >> their rail system is down 30% since 1930. it's gotten smaller even as the population and the economy has gotten bigger. >> think about the olympics and world cup. >> spending $25 billion on stadiums. >> that's great. how about the people. >> you have to be able to get to those places. >> just worries me, i'm sorry. >> jim, yesterday, there were numbers of a chinese pmi that apparently played into the 300-point decline somewhere somehow. a month and a half ago, a bad number out of china on the pmi, the market would have blown past it. >> you get a bad number like that, and it's like get me out of here. >> michelle is talking about how they injected some capital in order to make it to the banks. that's entirely what the rally is today. people were saying, you know what? maybe china, maybe we come in on monday and china does something good. we've got one of those sunday night things again.

our interest rates are not going the right way again. this rally looks substantial, why? >> people say the chinese, they will be back and do something monday night. >> they injected a little bit of liquidity, but there has been an absolute turn in the way they think about using monetary polipol policy and fiscal stimulus luce. they want a better economy, not one that runs for growth's sake. >> when do we realize that that for good? >> here's the bigger worry, right? unintended consequences to this. you can say ultimately this is a good path and what happens in the meantime as they shake these things out. there's a lot of lending and a lot of small and medium enterprises in china that were getting this money via the questionable system and they won't have it anymore. >> i don't want to live in a world where i have to worry about sunday night. got enough on my mind. i don't want to think will we get bailed on by china? >> got interrupted there, folks? >> michelle, jim, good to see

you. >> we'll go quickly for a market flash. let's see who it is. i think it's courtney today. >> good afternoon, tyler. take a look at shares of osi systems. this is a company that has a couple divisions. one of the divisions makes securities systems. we're just getting news that the company and its rapid scan system have reach and agreement with the department of homestand security over some kind of disagreement that they had in the past with the imaging technologies. shares were halted and now they have resumed trading. take a look at the spike up. almost 18%. a pretty big move there after being halted for about 25 minutes on this press release. sue? >> thanks very much. we'll watch that one closely. also watching gold prices very closely. after yesterday's session, a bit of a sigh of relief for the bulls. not much though, right, bertha? >> still seeing gold here closing below $1,300 an ounce. tried to rally it up there.

in fact, if you take a look after hours last night, overnight, we hit a low of 1368.70, so when you hook at where we're closing today, that's quite a rebound off of the highs of the session. gold closing down its worst week since april. silver similarly. the worst weeks since april. off 9.5% for the week on silver. came very close here at the end of the session and tried to rally it back up to $20 but closing below there. a lot of traders saying what we're seeing here is some short covering. the bias continues to be to the down side. copper down for six straight weeks. back to you. >> thank you so much, bertha. opportunity or overreaction? one of jpmorgan's biggest money men weighs in coming up next and big changes in the way certain economic data is released, but will this make things a little more free and fair. we sure hope so. that story is coming up next. my mantra?

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well, the dow is higher by about 33 points. other areas of the market, however, are still lower, so it's kind of a mixed day after yesterday's big selloff. the dow is down about 4% over

the last month. so as an investor is this part of the long-awaited correction that may continue, or is this a buying opportunity? we have john duffy joining us, ceo of jpmorgan's u.s. private bank which oversees better than $900 billion in client assets. jim kramer is still with us as well, so we have a lot to talk about. ty is with us, too. great to have you here. you view this as an opportunity, correct, if you're looking longer term? >> absolutely, sue. if i had one of jim's bells, i'd be ringing it right now to wake people up. this is what we've been waiting for, an opportunity to take a step back from a trade or theme and see what my portfolios should look like. this is right risking your portfolio. >> explain what right risking is. people want to add to their portfolio, but they are not going a return. >> this is all derivative of post financial crisis investing.

clients have been comfortable in cash, high transparency. they extend it to yield and they like that, too. those are all smart things to do, you know. last year high yield produced 15%. this year it will produce 5%, so equity market data that you thought you had by owning high yield, you no longer have now. thinking about the long term, you need to think about building that back in in a smart way into your portfolio, back to strategic asset allocations. >> that's something that you've been talking about a lot, jim, correct? >> i love john's work and love the work of michael, one of my chief guys i go to and we all know how fabulous he is, and i agree that if you're a longer term investor and you've been waiting, you've got to use it, the tension that i have here is that i also know that we need a level of gran layerity for our viewers which is why i say listen, the market can go up and this time it's a different market. it's not verizon this time. it may be hewlett-packard, john, just curious to know whether there's a subtle shift that has

been crushed over time which we know is technology and financial and drill and out of ones that i think you've been saying are pretty overvalued like some of the traditional consumer package good companies. >> gyp, you know, in terms of themes, we like cyclicals in here. we like playing the housing recovery. we like energy renaissance. that's going to play. services companies, transportation companies. we like the banks that are levered to the housing market because, you know, 5.5 million annual units of existing home sales. the affordability index for housing has never been better. >> what about higher interest rates though? >> so, you're right, but think about this. you know, in april at like a 350 on the 30 year, we're talking about 12.5% of your personal income dedicated to a mortgage payment. >> always find it ironic to talk about higher interest rates when my first mortgage was at 15 so to me these are record low interest rates so i guess it's

all in your perspective. >> 20% of your income should go to home mortgage. if mortgage rates go to 6%, another 200 basis points from here. >> right. >> that's only 17% of your perm i can so that will continue to push the market? >> you were talking about some of the industrials, which jim was talking about, the cyclicals. >> it's been impossible to buy aerospace. the only thing that takes that component down is a broad market selloff. you know, when you talk to mcnierny, when you talk to cody from honeywell, you're seeing -- we're talking about a ten-year cycle, so periodically the market gives you the gift of getting into those stocks and that's what i really like. now, is it a gift to get into hershey's, kellogg? i don't think -- those are just not going to work for a while. suddenly sprint comes in and they will have billions to build out a third network. i don't want to be in verizon

right now. it's fine, but i'd rather be in something that goes up and i don't have to depend on the yield because it's no longer going to be a yield market. that's my thing. >> really. >> a lot of people had been saying that the last couple of years. >> yes, i think that last part was the part that's the most important and you can still find companies that are beating the s&p yield of 2% and a 3% dividend yield with the eps growth expectations. they are still intact. >> where do you put money to work outside of the united states? >> okay, we continue to like -- i heard the debate about china and brazil. >> and brazil. so we favor an economy like the emerging markets that have tremendous secular power behind them, right? >> so today you've got gdp growth, global gdp growth and over 50% is coming from developing economies and now 80%

are investment krad critics and we continue to like asia x japan and probably with what's taking place in japan, a developed market and europe. we'll probably add a little more to efa but we continue to like asia x japan. love to play china in particular for our high net worth clients through private market investing. >> okay. >> and there you can get the western accounting standards. you're looking for the governance. you're looking for an access to the consumer, consumer themes. >> without as much risk in the open market. >> hang seng you get 10% access to the computer, and got to own everything else that jim was talking about that he doesn't like. >> thank you so much, john. thanks, jim. >> what's coming up tonight, jim? >> a very specific list of companies that i think have bottomed, that you can buy on monday if the market comes down. i'll also tell you which candidates i think will be bought by large institutions because next week is the last week and they want to show how brilliant they are. two separate lists, actionable

and buy them on monday. >> fantastic. 6:00 p.m. >> glad to be on the show. >> they call it "mad money," but he is the happy warrior of money. it's been the key driver of the economy this year, but will higher interest rates kill the goose that's laid so many of those golden eggs? a spirited discussion when we come back. stick around. i'm on expert on softball. and tea parties. i'll have more awkward conversations than i'm equipped for, because i'm raising two girls on my own. i'll worry about the economy more than a few times before they're grown. but it's for them, so i've found a way. who matters most to you says the most about you. at massmutual we're owned by our policyowners, and they matter most to us. ready to plan for your future?

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all right. the whole gang is down here on the floor of the new york stock exchange. mannedy is coming up on "street signs." what you got, mandy? >> lots and lots of things, and as can you probably see we're down here at the stock exchange as well. it seems like everybody has been evacuated out of the mother ship in inglewood cliffs. anyway, what's coming up for you is something on emerging markets with two very different views. one guest is saying it's a great buying opportunity, that market meltdown. we're seeing it in the ems and the other one is saying, hell no, what's to like? also an interesting segment on municipal bonds that have been really whacked lately, along

with treasuries, and a guest who can perhaps show you how to take advantage of those losses and because it's friday and we're down here for fun, larry ellison, got an airline and an island and wants another airline. what on earth has he got planned? all those things and more coming up. brian is right up here behind me, photo bombing me. we'll see you at 2:00. >> see you then. >> all righty. we'll be watching at 2:00. housing now, one of the key economic drivers this year and over the past year or so basically as interest rates have been very low, but with the fed signaling an end to the stimulus and rates creeping higher, has the sector seen its best days home builders, index down 15% over the past month or so, so can it overcome these higher interest rates and keep the economy moving forward. diana olick is in the house and steve liesman joins the party as well. diana, what do you say here and what do housing sources tell you about that sector's ability to

withstand these higher interest rates? >> well, look, it will hit on the bottom line first for first time home buyers. they will be hardest hit because they are relying on a market. one-third of this market is all cash buyers, and when you factor that in and you factor in the fact that they are competing against investors, those first time buyers. the rest of the market, i'm not so sure that interest rates are worse than rising home prices. we have seen a spike in home prices because of low inventories and that's a far bigger deal than rising mortgage rates. >> going up a lot. >> the medium price. anywhere from the stress or not. >> people are use the word bubble and i'm hearing that word, unsustainable. >> they were using that word in 2006 but nobody seems to believe it back then. everybody thought they would keep going back up.

>> what's your take on housing? >> there's housing affordability index that looks at home prices relative to incomes, and housing has not been more affordable in the last 40 years, gotten a little less affordable and still way off the charts if you look at housing afford ability. >> but incomes aren't going anywhere near 15%. >> no, no, no, that's fine, but think about the changes that could happen. incomes could grow with the economy growing. bernanke said we're not going to make the change that everybody is so spooked about unless we get better economic growth. that comes with better income growth and better income growth, a huge thing, and diana i think will agree with me, you have k have interest rates change or lending standards change. >> and that's a big one going forward. >> that could wipe out and actually overwhelm any negative effect that would happen from higher interest rates. >> and what's so interesting is we're hearing from banks and the banking sectors because you've

seen refinancing go up, they are look for the purchase applications so maybe they drop the underwriting standards. >> it will hurt to have higher interest rates, not as easy or affordable, but there's reasons why the fed is usually open and accommodative right now and that's because of tight credit standards. >> when interest rates are really low, the banks don't have to go anywhere. customers have to come to them and they can be strict on whom they will approve. when rates go up, they may have to lighten up a bit, but to make the loans, loans are the lifeblood of the bank. >> you 'v the rise in the yield curve, steepening of the yield curve so the amount a bank would make on the spread, a little more incentive there because there's a little more profit. >> that's what jim was talking about, banks like huntington and first verizon. >> home builders have been raising prize very aggressively to deal with their higher cost of land, labor and materials. watch the builders because

trai interest rates will hit them. >> steve, diana, great to see you here at ec. sue, down to you. >> coming up, a victory for free and fair markets. cnbc called out the conference board for releasing market-moving economic data early. we'll tell you how they responded when we come back in two minutes on "power lunch." customizable charts, powerful screening tools, and guaranteed 1-second trades. and at the center of it all is a surprisingly low price -- just $7.95. in fact, fidelity gives you lower trade commissions than schwab, td ameritrade, and etrade. i'm monica santiago of fidelity investments, and low fees and commissions are another reason serious investors are choosing fidelity. now get 200 free trades when you open an account. with the innovating and the transforming and the revolutionizing. it's enough to make you forget that you're flying five hundred miles an hour on a chair that just became a bed.

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welcome back to plunchlt i'm eamon javers in washington. back on may 28th we first told you about unusual trading ahead of the release of the consumer conference board index. yesterday they announced they would change their way of releasing their information ahead of time to media relations, they will stop the half-hour embargo for fear that the information is leaking out ahead of time. here's the statement from the conference board. they said with the growing influence of private sector data as market movers, the blurring of lines between news outlets and data providers and the ongoing trades measured mille

seconds, these are impossible to monitor with any legal or technological clarity. one says he feels his organization has a responsibility to restore trust in the market and they won't profit off their economic data. take a listen. >> we could make money at it, but that we felt that the asset has become almost a public asset, and we felt the need to protect that and to protect the trust by the man on the street that the markets aren't a rigged game. >> so tyler and sue, they are saying that they want to make sure that folks who are average investors have a sense that the markets are not rigged and that there's something that they can do to put that to a rest and they say that's why they are changing their embargo procedure here, guys. >> eamon javers, thank you very much. >> the top state for economic growth. after the break. today, the chairman spoke, the markets react and interest rates are rising, so what you can do now to protect your portfolio. put the odds in your favor. "options action" 5:30 eastern,

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♪ ♪ ♪ [ male announcer ] if you can't stand the heat, get off the test track. get the mercedes-benz you've been burning for at the summer event, going on now at your authorized mercedes-benz dealer. hurry, before this opportunity cools off. you know, 49 states had real gdp gloat 2012. here's scott cohn as we count you down for the cnbc extravaganza, "top states for business." our 2013 top states rankings

come amidst a shift in the competitive landscape as economic growth really starts to take off. the author of the new book "fate of the states." >> you look as texas, louisiana, north dakota, all the way up and down the central corridor, high single digits and double-digit growth inside of the united states. >> and it's widespread. 49 states improved their economies last year. the rate of growth, up 56%. far and away the fastest growing state is north dakota where gdp jumped more than 13% last year. >> even bigger than china's growth rate of 8%. >> you know, it has been oil and gas there. >> the lone state that shrank, connecticut. governor milloy blames the debt crisis in europe, an economic trade partner but economic growth is one of only 50 metrics in the study. we look at costs, workforce and quality of life. only states that put it all together can be america's top

states for business. scott cohn, cnbc business news. find more of topstates.cnbc.com. all right, sue. we'll see you when he get back here later today. >> you got it. >> what a week it's been. that does it for this edition of "power lunch." >> "street signs," they are down here as well. begins right now. have a great afternoon. happy friday and welcome to the show, everybody. i think we'll call today's show "squawk on the street signs." we have your road map for roping in this rally. we'll find out one thing you must keep your eye on. if there's one country outside of america you need to invest in and what the heck is larry illesson doing, buying an island, airlines? we'll have to figure something out. >> let's see what the market are up to. actually opened up higher, things looking good after we