. time frayed? >> ms. >> ups. >> baw. >> ntap. >> josh won the debate. "power lunch" starts right now. >> thank you, scotty. we begin "power lunch" with a big stock mover. josh lipton is here with the details. josh? >> yes, sue. we're look is at onyx pharmaceutical, the dow jones reporting it's expecting takeover including from amgen and pfizer. that stock now up some 80% so far this year. sue, back to you. >> josh, thank you. more earnings and more beats, so what happened to all of those

scary forecasts that so many people told us to beware of? have the analysts changed their tune, or is the rough stuff still to happen? archrivals, goldman sachs making a pretty bold call picking a favorite between gm and ford and then, of course, there's coke and pepsi. where should you put your money? we're going to talk about that coming up. >> and mcdonald's is getting a brand new address, but wait until you see who is going to be behind the counter. tyler is out today. michelle is at the nyse, and we'll get downtown to her in just a couple of minutes but first the bull run in housing. another big number today. this time it's the home builder sentiment figure. this year kb homes is up 20% year to date. ryland up 10% and d.r. norton up 9%. diana olick live in washington with more details on that. hi, diana. >> reporter: yeah, sue, what about the rising mortgage rates? i guess the home builders don't care so much but skeptics tell me they will. the sentiment numbers first. home builder sentiment in july jumped 6 points to 57.

50 is the line between positive and negative, and we only crossed that line last month. they were at 35 one year ago. builders are feeling the best since they have since january of 2006. looking at the three components of the index, current sales rose five points. sales expectations over the next six months took the biggest leap, up seven point and buyer traffic rose five point. the biggest gains were in the midwest, the smallest out west. in the west you still have the final level of distressed homes so, again, buyers not so worried about rising mortgage rates. they are, however, worried about losing the mortgage interest deduction and worried about reform of fannie and freddie and general housing finance. now, the price of supplies they say are easing, and that is helping the bottom line quite a bit. that was the quote from the national association of home builders, but going forward skeptics are saying that that we will see the effect of rising mortgage rates in the months to come so we'll see if sentiment continues to stand up. a lot more online.

reallycheck.cnbc.com. >> the markets are down today. the dow jones industrial average right now is lower by about 51 point. the nasdaq is lower by 12 and the s&p 500 lower by nearly 9. okay. the nasdaq, however, is near a 13-year high. it's been up 14 straight days. that's the best streak that we've seen since 1990. year to date, it's up 18%. the s&p is up almost 4% over its eight-day up streak. that's the best up streak since november of 2004. joining me on the floor is cnbc's bob pisani and joe greco, managing director with meridian equity partners. guys, good to see you. >> good to see you. >> this feels like the market can't go up every day pullback. >> two things about today. number one, esther george on the federal reserve saying she's in favor of tapering the bonds essentially immediately. that good for a few points on the downside, the big of the

hawk on the fund and number two, comerica the first big regional bank to report, the first regional, and they had very weak loan growth and lowered their loan growth expectations. that's one of the reasons people have been buying the banks so all the regional bakes are weaker. i think it might be tougher for the banks to move forward after a few good earnings reports. >> mr. bernanke nervous ahead of the meeting tomorrow? >> i don't think he's nervous at all because he clarified what he's looking to do and farther reaching in september or at the end of the year with the tapering it's his legacy. tomorrow prepared remarks at 8:30 and we'll hear from him 10:00 live and unscripted what. he's looking to do here is all the hard work he's been put in getting us up to 1673 a day, he doesn't want tonight buyer. he wants to make sure that this market transitions over. >> has the market demonstrate that had it can handle it? it sure seems like it with the

recent run. >> today is just a breather. need a little breather. volume low so we're looking to tomorrow's cat lifts, and we had decent numbers out of the home builder sentiment and cpi came in a little bit better which is obviously a little bit of a bolster, mostly related to the gas price, but i tend to think right now good news is good news. it's good for the economy. >> and it's good for the markets. >> i don't think that -- >> the main goal is to keep the ten-year below 2.6%. the home builder sentiment. they are not worried at mortgage rate at 3.5%. if it goes to 5%, i can assure you that home builder sentiment will change. mr. bernanke knows that. >> gentlemen, thank you. let's get over to the nasdaq and seema mody and the big movers there. >> first half of the year the big question is when will the nasdaq join the party? the nasdaq has now not only joined the party but the life of the party, outperforming the s&p and dow on the year-to-date basis. the recovery in tech has really been the driver behind the nasdaq. the nasdaq 100 which is

comprised mostly of large-cap tech posted its best winning streak since 1990. this comes right as wall street kicks off tech earnings with yahoo! on deck tonight. however, according to thompson reuters, tech corporations on average are supposed to see a contraction in eps growth. analysts pointing to a stronger dollar, week i.t. spending and a slower than expected recovery in europe as for the reason why. he watches outperformance in tech, being told that the street might be getting ahead of self and trading on hope that we'll see a pickup in corporate i.t. spending. sue, back to you. >> thanks. goldman sachs shares are on the downside but year to date the stock is up some 25%. incidentally, today is earnings day for goldman sachs, and mary thompson has been on the case since the get-go. right, mar? >> reporter: that's right. goldman beat the street and there's questions about the quality of its earnings pushing it lower. 83 cents ahead of estimates held by a $1.6 billion share buyback,

lower tax rate and strong results in its own investment and lending portfolio. here's barclays analyst roger freeman. >> the core businesses were a little bit better, just as some of the other banks were reporting, but that was the real standout, investing and lending. >> reporter: revenue and core training businesses hurt slightly at the quarter end by volatility while investment was helped by strength in debt underwriting. the ceo saying client are information centric these days looking for data to help position their business as they anticipate an end to the low interest rate environment, an environment that schwartz says isn't necessarily bad. >> returning to kind of normal interest rate levels, it feels good in some respects. >> reporter: less forthcoming on how goldman's position to meet a proposed rule on leverage ratios for big banks, questioned repeatedly about goldman's position now and says he's very comfortable meeting the 2018 deadline unwise to give firm

numbers. he also described goldman right now as being cautiously optimistic but still very concerned about expenses. concerned that revenues will pick up any time soon as the clients try to assess how they should position their business in this environment. >> everybody is worrying about the september taper or not september taper. thank you very much. to johnson & johnson hitting a record high, or at least it did earlier today. the company posting better pan than expected quarterly earnings and its revenues coming in better than expected. the stock is up nearly 30% for the year. hca is moving to the upside in today's trading session. the health care provider projecting stronger than expected second-quarter earnings because of an increase in hospital visits. the boosting of other health care providers going along for the ride, all of them with strong leads with tenet leading the way. michelle.

>> pepsi versus coke, gm versus vote. if i could pick only one, which way would you go? >> sense is also delivering alpha. treasury secretary jack lew kicks it off in the 8:00 hour. right now though, there's more "power lunch" after this break. surprise -- your house was built on an ancient burial ground. [ ghosts moaning ] surprise -- your car needs a new transmission. [ coyote howls ] how about no more surprises? now you can get all the online trading tools you need without any surprise fees. ♪ it's not rocket science. it's just common sense. from td ameritrade.

the big mac heads to ho chi minh city. mcdonald's is planning to open

its first restaurant in vietnam early next year. it's the latest u.s. name to open up shops following the likes of pizza hut, kfc, subway and starbucks. and get this. the person that was awarded the franchise just happens to be the son-in-law of vietnam's president. funny how that works, sue. >> isn't it funny the way that works. i'm sure it's just a coincidence, michelle. all right. tesla taking a big hit today down 9%. goldman sachs setting a new price target. set 11% actually. setting a new price target for the electric car-maker. though it's raising its target to 82 from 61, it's still well below monday's close of 127. now, based on forecasts for global market share and operating margins goldman's best case scenario fortes la shares is 113. the worst case 58 so there's a pretty wide margin there. tesla stock has nearly quadrupled since the start of the year. all right. arch rival time. we have big news on all four

stocks. coke versus pepsi in a second and first the automakers, gm and formed. hitting a new 52 week stock and there could be an announced stock dividends by the end of the year. our auto guy is phil lebeau. why did they make this move. >> reporter: ford has been doing extremely well? >> reporter: thing they are saying a case where ford is no longer attractive and gm is. they raised the price target on both of them and that expects both of them to do well but when you look at gm, touched on a couple of points there, one, more near term cat lifts, especially when you take a look at the product launches coming in the second half of the year and the other thing to keep in mind if gm declares a dividend by the end of the year that will give the stock a pop as well. they think this is a stock that goes up near $40 if not past $40 a share. >> what about the cars and trucks that they sell? who has the edge there?

>> reporter: well, i would say the first half of this year it was clearly ford having the edge. >> right. >> reporter: benefit is you had truck sales accelerating because of the housing markets and these why the f-series is doing well will general motors was flat. gm showroom, a slew of new models will be coming in, you combine that with the expectation that they will likely pick up market share, i think this is the tale that both will do well and gm likely to do better in the second half of the year. >> what about the global footpri footprint? which cop do you think is better positioned, ford or gm? >> gm a little better positioned globally because of where it is in china, but when you look at china, keep in mind that ford is growing very quickly there. year to date, sales are up 47%. both adding a number of plants, and think expect to pick up sales rapidly over the next couple of years, sue, but an edge right now to gm because it is number one in that market. >> phil, thanks so much.

appreciate it. michelle, over to you. >> sue, two more archrivals now, coke versus pepsi. coke's second-quarter profit falling. they blame the weather this. while pepsi bubbles up to all-time highs, so which drink-maker is a better investment right now? a senior analyst with jpmorgan joins us now. good to see you. >> good to see you as well. >> investors with a choice between the two. which would you tell them to buy? >> we'd stick with pepsi here. recommending it for a while. outperformed coke year to date as well as over the past couple of years. we still think there's a lack of appreciation for the improvement that pepsi has put in over the past couple of years, more marketing, spending and greater growth at pepsi than we are for coke or pepsi's global beverage business. >> i'm glad you pointed out that because we always say beverage-makers combe coke versus pepsi but they are very different companies. pepsi also has snakd. in the past they were criticized, that it should be

split off but you think it's a benefit, it sounds like. >> if you look at these businesses, what matters is not whether it's a food or beverage but whether they grow, and for a number of years pepsi simply wasn't investing for growth behind the core beverage or snack food business. they have accelerated top line and ramped up productivity and now look at the snack business and say this is what it should be doing. growing volume, growing profits very nicely, it's a more attractive business right now than what we're seeing on the beverage side. >> what do you think about coke blaming the weather. is that to be believed? >> weather has an impact on beverage sales, whether it's beer, soft drinks, what have you, so there's no question that the weather impacted them. i think what we're seeing on top of that is global macro economic problems whether it's brazil, mexico, china, europe, what have you, combined with a little bit of a pushback on carbonated soft drinks. you hear more and more about obesity. becoming a bigger issue around the globe and that will continue to weigh on volumes going

forward, but weather is definitely an issue, particularly in north america and europe this quarter. >> yeah, but, that's what diet coke is for, i always say. all right, john. thanks so much. good to see you. >> thanks for having me. >> to josh lipton with a quick market flash. josh? >> watching merck here near the lows of the session saying that the fda will require more time to review its application to sell a drug which is intended to reverse the impact of muscle relaxants used in surgery. merck down just about 1% now. sue, back to you. >> josh, thank you. the nation's biggest home builders, well, they are going on a big buying binge gobbling up their smallest rivals what. that means for the housing sector and the buyers and sellers out there coming up next. and bringing down the pourhouse. see what happened when the dynamite went off and the smokestack started to fall. that's in two minutes. smart. so you're worried out house fires? stop smoking. manage your wires. watch out for space heaters. clean the chimney. get one of these. cool the romance.

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. the new cnbc.com, take a look at your screen. come up with a new clean look that we hope makes cnbc.com easier for you to use. we're also rolling out live streaming tv. yes, we are part of the tv everywhere movement now. check out new cnbc.com. sue? >> michelle, the housing market may be coming back, but there are signs of the smaller home builders that are still struggling out there. take a look at this "wall street journal" headline. "big builders gobble up rivals starved for cash." what's the impact on home

buyers? let's speak with the co-author of today's story in "the journal" and our real estate correspondent diana olick is back with us as well. robbie, let me start with you. this is more about the lack of access to capital, correct in. >> yeah. what we're seeing right now in the home building industry is kind of a disparity that's sort of grown as the downturn progressed and even extended into kind of the beginnings of the recovery we're seeing and that's if you don't have access to capital markets, particularly the bond markets, it's very hard to get a project finance, so forth little guys, we're talking about the mom and possible builders in a lot of different towns across the u.s. and a pickup truck and a subdivision they are working on. in some cases it's very difficult to get financing to build those projects >> you note the big builders issued $8.1 billion worth of bonds last year, but the smaller builders don't typically tap into the bond market. they go to the regional banks. yet we've heard that credit was

getting a little bit easier. doesn't sound like that's the case. >> there are a few larger regional builders that are privately owned, not on the public market, not traded, that are able to issue public debt, but they are kind of the exceptions. they are sort of big. sort of the 1,000-pound gorillas in the room when it comes to private builders. most have gone to the regional banks in the past, and that well is still fairly dry. i mean, we're seeing some signs of it. saw in the last year and a half saw wells fargo open up a small builder lending unit. >> right. >> but it's really more of a trickle than a rush. >> diana, what's the impact of those who are looking to buy new construction? how does this affect the market? >> well, it's not just an access to capital really. it's an access to land, and that's where the home buyer comes in. there's so much more demand now than the builders ever expected. a lot of the large public builders dumped their land position during the housing crash and they see demand coming in the door and they can't fill it because they simply don't have enough finished lots to provide these buyers with to

build homes on so they are buying up the smaller builders to get access to the land that the smaller builders already v.for buyers, having more of the supply among the large public builders, you know, it takes competition out of marketplace. the big public builders have been raising prices dramatically in order to offset the higher costs for, again, land, for labor which is in short supply and for building materials, many of which have been very expensive lately because there simply hasn't been enough supply in the pipeline. it's interesting. i spoke to a small home builder up in northern maryland, and they are telling me that the builders, the private builders up there, they are not 100% sure that the housing recovery is real, at least for them, because they are not getting the kind of buyers that the big public guys are. >> robbie, have you heard that as well or no? >> well, i mean, there's skepticism. i know if you go further up the supply chain and if you look at some of the things that go into new housing, talking about insulation and lumber and dry wall that's manufactured in the u.s., there have been some signs that i've heard, you know, people i talked to tell me that

the producers of that kind of material are sort of slow to get on board with the whole bull case of the housing recovery, and so it's difficult for them to open up a new line and a factory or to hire 15 new employees if they are not sure that, you know, what we're seeing is the real deal kind of recovery. diane makes a good point that down the line builders getting more land and more well located land by buying up smaller builders will probably indeed, you know, result in the moderation of pricing a little bit. a lot of guys, it's true. big builders have been holding supply off the market on purpose so they can increase prices, so if they have more supply to put on the market, then that will maybe help sort of curb the rapid rise in prices. >> and change the dynamic there. >> thank you both. appreciate it very much. >> to josh lipton now with a quick market flash for us. josh? >> sue, check out x-1, 3-d printers, and it's in the red for a second day, the drop following comments from bb&t analysts that said the stock had

moved higher on takeout speculation. at least those analysts not convinced that it's going to happen in the near term. the stock down hard today, though still up about 112% so far this year. michelle, back to you. >> josh, three, two, one. good video. here it comes. florida power and light company imploded four 350-foot tall smokes and four 75-ton boilers, there it is t goes, at its port everglades power plant in ft. lauderdale this morning. take a look at this. the impose took 450 pounds of dynamite, and it's the largest power plant demolition in florida history. a new power plant powered by natural gas will be built in its place. the plan, to have it ready by 2016. sue? >> wow. well, you know, much of the east coast is gripped in a heat wave, and that's put a lot of utilities under pressure.

temperatures soaring over the 90s but is there any relief ahead? >> reporter: the heat is certainly on in the northeast, and that's why we have heat advisories in place all the way from just south of boston right on down to new york city. also heat advisories in washington, d.c. and down in baltimore, now in philadelphia, it's an excessive heat warning in place, and this is going to last for the next few days, unfortunately, so today's highs that we're looking at. we'll see 90s in philly and d.c. and new york city as well, even up in albany, new york, as we get into what it will feel like with a factor of the humidity thrown in there. boy oh, boy. 97 in philly. that's what it's going to feel like for you. 92 for you up in new york city and 99 degrees is what it's going to feel like for you down in washington, d.c. high pressure in control, and that is going to stay. the heat going nowhere soon so tomorrow expect more of it. the break this weekend. >> yikes. all right. check out some of the utility stocks. i mentioned that they are under pressure. diminjob resources, duke energy, cms, american electric and dte

energy are all on the minus side today. for the year so far though, stocks though are up between 10% to 15%. michelle? >> sue, we'll get the trading action here from the floor of the nyse with bob pisani. >> esther george made comments about the fed which lowered the markets, and i this there's concern about the bank stocks. had a great little run. they are pulling back as well. take a look at the major sectors. right now the important thing is a slightly more downside. hospital stocks are up, admissions up in the second quarter and expect second-quarter earnings and sales up bringing the whole sector up. health care not the market leader. semiconductors are the market leader. at a five-year high on the stocks, and it's very simple, folks. might see the pc business decline but, of course, world wide sales of smartphones and tablets are soaring, and companies that are involved in

doing that are doing really well right now. elsewhere, if you take a look at the banks, cma was the first regional bank that really reported today. not a big one, the regional banks are reporting and comerica reported rather disappointing loan growth and lowered their loan growth expectations. remember, michelle, one of the reasons we're buying banks, one is the hope that interest rates are going up and secondly loan growth and comerica basically said loan growth isn't going to be as strong as last year. >> the balloons they do will make more money because the yield curve is steeper and they can charge more money for those loans. >> in theory. most of the banks their loans are tied to libor. libor is tied to the fed funds rate, and that's the short-term end of the curve, so it's really a fallacy to say just because interest rates are going up. >> the ten-year. >> if the short-term rates go up, that's when they will make money. >> all right. thank you, bob. the nasdaq, can you get this, a 13-year high. seema mody following the big movers there. >> since then we've seen the

nasdaq move into negative territory. tesla shares weighing on the index after goldman put out a bearish note revising its six-month price target. however, bright spots to take a look at. take a look at china's largest search engine, badu, citi upgraded baidu to neutral writing this acquisition was a positive. one year ago today that marisa mayer was named yahoo! ceo. since then shares of the company have moved up by 70%. also keep in mind yahoo! reports earnings tonight. as we see the stabilization in gold prices, grand gold resources, hit by the selloff in the yellow metal and now leading the nasdaq 100, today's top stock on that indecks. sue, back to you. >> gold prices are closing right now. bertha coombs is tracking the action for us today down at the nymex.

hi, bertha. >> a pretty good day for the metals if you're long the metals with the dollar easing back with mr. bernanke testifying on capitol hill tomorrow. that's giving a little bit of a tailwind. gold edging higher for seven of the last eight sessions. george gereaux, a veteran analyst says when you look at the gold curve in euro terms, it's in backwardation. the front month so strong at this point and he thinks perhaps we may see central bank buying with the pullback that we've seen. that's what's underlying some of that physical demand. back to you, michelle? >> all right. that brings us to the bond market then, bertha. rick santelli tracking the action over at the cme. so we seem to have gotten used to the ten-year at 2.50 here. >> yeah, and i think we'll get used to it at 2.735, too, as time will tell. michelle referring to, if you

look at a 24-hour chart of tens, one thing jumps out at you, consolidation. hovering above 2.50 and really consolidating in an unchanged fashion. if you open the chart up to one of the biggest selloffs i can remember to may 1st, one thing should jump out at you. basically the first leg that have selloff pushing yields up from 1.62 to basically 2.60, the first retracement or the last two days of june and the first two days of july when we hovered at 29 hadn't 47 level. that's the pivotal area right below the market traders will protect tomorrow when ben bernanke talks. now, if you open the chart up to a $1 index instead of fixed income, 24-hour chart shows weakness. look at month to date it shows a good deal of weakness. remember, just on a simplified level, less qe so less tightening is going to be perceived as a dollar buster, and at least that's the signal

many are getting from the weakness in the dollar index of late. michelle, back to you. >> all right. thank you very much. rick? shares of mosaic down and bally technologies hitting a 52-week high because the slot machine-maker is bifg rival shuffle ent time for $1.3 billion in cash. that's to help boost its gaming business. sue? >> taper talk, mr. bernanke is on the hill tomorrow. new fears about europe, but stocks at record highs, so where are hedge funds putting their money to work in this market? we'll talk about that, and gordon gekko is back, as if he ever left. >> the point, is ladies and gentlemen, that greed for lack of a better word is good.

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no, this is not a flackback. look at your screens. tens of thousands of greek workers are on strike again today rallying in front of their parliament. they are protesting the government's plan to fire public sector employees in order to help secure more financial aid from the european union and the imf. remember, they haven't really laid off anybody despite years of requests from their european lenders. over 30,000 demonstrators, including police and teachers, are targeted in the layoffs. protesters are likely to be out in force again on thursday. that's when germany's finance minister visits. remember, many greeks blame germany's demand for austerity for their economic crisis rather than their incredible amounts of spending over the last decade. sue? >> so, michelle, how will concerns about greece and europe in particular impact investing in the second half, pegs legsly whether it comes to the wealthy investor? we welcome back the global head

of citi's private bank which oversees more than $270 billion in assets. good to see you again, david. >> good to see you, sue. >> how do your wealthy investors view the situation in europe? are they still concerned about it, or do they view it as an opportunity? >> well, i think that they are less concerned about it today than they were about six months ago. certainly since the statements by draghi and by the coordinated activities of the central banks around the globe, people are feeling there's more an underpinning of stability. that said, huge tail risks in europe still and you saw some of them in greece, you know, but you're not really seeing activities that would leave us fear balance for the european markets to be a contagious. >> we've heard that they are looking forward to desed assets sales in particular and that provide them a little bit of a year into your portfolio. are you seeing that or not? >> seeing exactly the same trend and specifically the fact that the u.s. is coming out of its economic recovery faster and u.s. banks are healthier than

their european counterparts it's putting a lot of pressure on european banks to capitalize an get rid of their troubled assets. >> how are they preparing at this point for what looks to be a rising rate environment? you know, we've seen the ten-year move up a little bit, and a lot of people think that it's headed higher from here. some are targeting the 3% level. now, how are they playing the rising rate environment? >> in several important ways. first of all in, their fixed income portfolio they are reducing them in terms of the duration, reducing the absolute amount. underweight in our portfolio and overweight equities by 6% and have a 16% allocation in hedge funds so people should be taking money off the table in fixed income and reducing their duration and seeking alternative

investments. sue, specifically, if they are going to own fixed income investments, private clients are really looking to own individual bonds, closed-end funds and the types of mutual funds that hold variable rate debt like bank loans and others so you have to be very specific and very particular about what you own in the fixed income sector and rising rate environment. >> what are they looking at in terms of alternative investments you? mentioned that, but the gold trade has been such a dangerous trade of late. what other alternative investments are being favored right now by the ultra wealthy? >> so, there really are three different kinds. in the hedge fund space we're seeing a decoupling of correlations between equity, fixed income and the hedge funds. think that's very good. we like event-driven strategies and macro and cta and long short equities. in terms of real estate, we like central new york and other major cities around the globe where we think there's a fundamental demographic, and in terms of private equity, like the non-performing loans in europe and distressed opportunities in

corporations in europe and in the united states. we think that there should be a trade by investors, especially the wealthy ones going from less liquid to more liquid markets. >> hang with me for one second. we'll go to josh lipton for a market flash. >> watching goldman sachs here. mike mayo of clsa has lowered his rating on goldman to buy from outperform saying even if his estimates and target price aren't enough to justify the upside needed for a boy rating, down about 1.7%. sue, back to you. >> david, would you get against goldman sachs at this point? >> i wouldn't. >> i think they like the financial sector in the united states and don't see the valuations of banks being particularly expensive, and we think they will have the opportunity to raise dividends and do increased buybacks over time. >> david, things a million. good to see you again.

see you again next month. >> you bet. >> michelle, down to you. >> almost five years on from the financial crisis, be a the culture of greed on wall street still persists. i'm ed shock. alarming new data you need to see. plus, mexican police capturing an alleged major drug lord. what it means for america's war on drugs? former u.s. drug czar barry mccaffrey joins us next. at a dry cleaner, we replaced people with a machine.

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coming up on "street signs" at the top of this hour, as j&j is hitting a record high. we've got cramer and herb. they are dropping by the set today, and they will debate whether or not it's a good idea to buy what you know, the products that you use and that you love every single day. also, is there just too many blaming on the weather and gas prices this earnings season a website for finding your love match or just for hooking up. we have the co-founder and ceo of tinder on our show. all that and much, muff more coming up on "street signs." now back to "power lunch." >> thanks, mandy. miguel morales was leader, feared leader of the zeta's drug cartel. he had a $5 million bounty on his head and is considered one of the most dangerous criminals in the world. what will the effect be?

answers from former drug czar and general barry mccaffrey. >> thanks, michelle. >> tell me about this individual. you became familiar with him while were you drug czar, correct? >> he was a pretty low level teenage thug when he began his criminal career. as you know, he's eventually ended up as the head of the zeta, once of the most gruesome organizations on the face of the earth and accused of murdering hundreds of people. a $5 million reward on our side of the border on the head. operating in guatemala and the united states with murder squads, laundering money, smuggling drugs. he is a major threat to both mexico and the united states. >> do you thinks his arrest changes anything, or does somebody just step in and take his place? >> i think in the short run it will probably be a tremendous vote of confidence surely for the mexican marine corps which picked him up and for the neato government who has been

extremely uncooperative with the u.s. government over these law enforcement operations, so i think it's good news. probably in the short run the cineloa cartel will try to jump in and grab market space from the zetas. you mentioned the new president who just took it over last summer and he's made it clear that he's not nearly as interested in prosecuting the drug war who really made it part of his campaign and presidential platform. he seems far more interested in changing the economy there rather than prosecuting the drug war. would that explain why there's a lot less cooperation? >> when they got into office they were horrified between the u.s. and mexican authorities. they wanted to go back to absolutely controlling it and having one point contact. cooperation has been almost nonexistent, except at the lowest levels.

it's worrisome. they have stopped talking about the war, but there's still massive amounts of homicide around drug cartel activity in mexico so it's a very troubling situation. >> yeah, but i can tell you from firsthand experience being in mexico, a lot of very senior mexicans think that the drug problem is our problem and that the violence comes because we haven't legalized drugs. they think the answer is that we should legalize drugs and then a lot of this activity goes away. >> well, of course, that's errant nonsense. the real struggle in mexico isn't over drugs or no drugs but the rule of law. how do you form institutions, national police forces that are capable of integrity and competence and enforcing the law? and up until now only the mexican army and marine corps have been responsive to democratic authorities, so mexico has been terrorize the, as you know, as well as anybody, so probably some 70,000

murdered, but it won't go away simply by not talking about it, and i think pena neato has said we're only going to talk about the economy, and the obama administration has really come to an agreement that they won't mention it either. >> so what do you think should happen instead? >> well, i think our future is wrapped up with that of mexico. they are vitally important to our culture and to our economy. we have to have intimaeimate cooperation with them and that means resources. we're spending $10 million a month in afghanistan. in mexico the entire program to support them was $1.3 billion in three years, so there's been ined a quart attention and energy on the part of the united states to stay close to mexico. >> general mccaffrey, thank you so much for joining us. we really appreciate it. >> good to be with you, michelle. >> sue? >> well, michelle, almost five years after the financial crisis the culture of greed on wall

street apparently is still thriving. some shocking details of a new study. that straight ahead. plus, remember him? disgraced former imf chief dominique strauss-kahn? he's found a new job in, russia. it's all in the power rundown coming up next. y women's 50+ is a complete multivitamin designed for women's health concerns as we age. it has 7 antioxidants to support cell health. one a day 50+. see, i knew testosterone could affect sex drive, but not energy or even my mood. that's when i talked with my doctor. he gave me some blood tests... showed it was low t. that's it. it was a number. [ male announcer ] today, men with low t have androgel 1.62% testosterone gel. the #1 prescribed topical testosterone replacement therapy increases testosterone when used daily. women and children should avoid contact with application sites. discontinue androgel and call your doctor if you see unexpected signs of early puberty in a child, or signs in a woman,

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it's power rundown time. the gang is all here, michelle and bob. all right, guys, first up, this new study. would you engage in insider trading? say you could make a cool 10 million and get away with it? the new survey is asking wall streeters that very question. 24% of respondents are saying yes, they would. i guess we shouldn't be shocked, michelle. >> i think probably the other 76% are lying, sue. >> right. >> look, i'm not that cynical actually, but, you know, i think insider trading is an overpondered thought. i've long thought it should be legal. milton freedman believed the same thing and if it were legal the profits would be diminished dramatically, not really the problem people think it is. >> i'm shocked it's only 24%, agree with mish shell. first off, i'm not sure that this is worse than it would have been 30 years ago had a survey been taken. i'm not sure if it's any worse or better than other industries.

like accountants, would they have done something similar to that and not sure it's worse than the student population? 60% of college students cheat at least once on an exam every year and i saw a survey, one in four admitted to cheating on questionnaires about cheating. they lied on the questionnaires about the cheating, one in four, so we know it's underreported. >> no one wants to admit they are a cheater. >> put that out on yahoo! and the yahoo!finance.com question today is wall street too greed? 28% saying yes. more regulation is needed. >> oh, please. >> 4% say no, wall street is a better place now. >> oh, please. >> and 68% say wall street has always been long on greed and short on ethics. >> again, i want to compare that to other industries, and, listen, maybe the whole country is long on greed and short on ethics. >> we will see. >> you by want to see the rest of them. >> coca-cola's fco blaming something rather unusual for its

falling profits. >> it was the weather. >> really? >> i thought that was the retailers, the retailers always claim weather but the soft drink guys. what do you think? >> listen, volumes were flat in brazil. was there a monsoon in brazil? china was flat. >> always hot in brazil as well. >> i don't think so. look, maybe a little bit of weather, but consumer demand was slipping worldwide, and i'll tell you something interesting. health issues, too. the sparkling coles wruch 6% on the non-sparkling beverage side. there may be health issues. >> but the gentleman that you interviewed earlier says that weather does affect soda sales and soft drink sales. >> he did say that, but at the same time he thought it was probably more a bigger issue about people being worried about obesity and that's what diet coke and cookie zero is for. >> that's what you said.

i think you're right. let's most on to dominique strauss-kahn. remember this guy? he was the former imf chief, career riddled with sex scandals. well, he has a rather new gig. this time it's in russia. he's now sitting on the board. russian regional development bank. what do you think, michelle? >> he and snowden should get together. i don't know if they are hanging out in russia together. >> russia is a popular place. >> at the airport the lounge. >> you're sought after and warranted. i guess it makes sense. look, a lot of people when it came to financial issues had a lot of respect for dominique strauss-kahn even though he's a socialist so it makes sense for him to end up in russia. i think he and putin are the same height. >> decided to juxtapose a couple of things, written on the statute liberty, give me your tired, your poor, your huddled masses. this one we gave you up, give me your wealthy, corrupt and

wayward masses. that's what we're dealing with. i don't think what the guy did was honorable in other sense of the world. he's lobsly got a high level of expertise in this and other issues and i think the guy is entitled to make a living. >> all righty. we'll leave it at that. to josh lipton now for a market flash. >> hit a new five and a half year high and profit up 36% this year. sue, back to you. >> lucky 13 for the nasdaq hitting multi-year highs. michelle will have the biggest winners when we come back on "power." that's next. my mantra?

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they're fruity delicious! just two gummies have 4 grams of fiber! to help support regularity! i want some... [ woman ] hop on over! [ marge ] fiber the fun way, from phillips'. . this is must-see tv. tune in tomorrow morning at 8:25 a.m. eastern time. treasury secretary jack lew kicks off our delivering alpha conference. look for details for his road map for the financial regulatory framework, plus he sits down with steve liesman for an exclusive one-on-one interview. that's live on "squawk box" at 8:25 a.m. eastern time. going to be a great day, michelle. >> absolutely is. let's show you what's going on with the markets. the dow is lower by 45 and the

s&p 500 lower by 8. the nasdaq is lower by nearly 11. remember, ben bernanke testifies tomorrow. >> that does it for us on mother ri -- on "power lunch." and now "street signs." >> big banks and health care are helping us out while coke leaves us flat. jim cramer and herb greenberg are here to help you make sense of it all. coke, a big part of the blame game these days k.it really be too hot or too cold to drink soda? we're going to find out ifnist usual suspects weather, gas, interest rates are valid as excuses. plus, harsh justice in china as they execute their own version of bernie madoff, a live report from beijing, and do you want the lust maybe but the the .