little bit strange. we'll see if that continues. >> pete. >> everyone is talking about cvs because it's the deal of the day. take a look at rite-aid something to look at. the fed hike in june or september or not at all? >> it will hike sometime but not necessarily in june. notwithstanding that infrastructure and water and my last word is water. >> we'll see you soon. >> hold your water. >> mario gabelli. >> "halftime" is over. the second half of your trading day begins now. >> all right, scott, thanks very much. always great to see mario gabelli in the house. along with mandy drury, i'm tyler mathisen. the dow is up 10%. mcdonald's is down 3. >> well, on this day when the company meets shareholders a large protest is taking place. what is wrong under the golden arches and how can it be fixed? also as gasoline prices rise, what is it going to mean for the strength of the american consumer and consumer stocks. in the last month gasoline

futures are up 10%, consumer stap 'ems flattening out. and two of china's richest men lost billions in just a few hours. we'll tell you who they are and how they did it. but we start with a very rough trip for mcdonald's. protesters have hit the street outside of the company's shareholder meeting. they're protesting low wages. kate rodgers has been monitoring that meeting. the protests and the stock, which as we mentioned is trading down by about 0.8 of a percent today. kate. >> well today was ceo steve easterbrook's first shareholder meeting in oakbrook illinois where he acknowledged mcdonald's challenges and touted his turn-arounds. the biggest takeaway was a clear win for shareholders. one of the measures passed was a proxy access by law. those who have held 3% of mcdonald's stock for three years to propose director candidates on proxy materials. this was a shareholder proposal that mcdonald's did not want to pass but it passed with 61% of shares voted.

this is a way to make the board more accountable to shareholders. meanwhile outside of the shareholder meeting, wage advocates for the fast food industry spent their second day protesting. yesterday's crowd drew about 1,000 people and today there are several hundred people in the crowd. the demonstration was organized with the service employees international union. they're pushing for higher wages in the fast food industry and are making a visible plea for the company to invest in its workers. mcdonald's did announce in april it would be raising wages to an average of $10 an hour by 2016 at its corporate-owned locations but the move does not impact its franchise locations, which are the majority of its stores nationwide. easterbrook did defend that move in today's meeting saying mcdonald's raised wages at company controlled stores because that's what they can control. independent owner-operators will make their own decisions about pay. back over to you. >> thank you very much. some upgrades and downgrades to tell you about.

pfizer getting a boost. jeffreys tapping the drug maker as its top global pharmaceutical pick based on a positive outlook for its drug pipeline as well as other factors. pfizer stock up 10% so far this year. jeffreys also beginning coverage on nike it's cutting its business outlook as well as the potential for shareholder -- touting the business outlook as well as the potential for shareholder friendly moves. nike up 8% so far this year. ali baba getting a nice job. there's a high conviction outperform rating saying the street is underestimating the company's growth potential. despite today's big move ali baba talk is down. the dow is up for the fifth time in six days. the s&p 500 is up for the first time in three sessions. both, though on pace for a third straight week of gains for

the very first time since february. bob is on the floor of the nyc, bertha coombs at the nasdaq. bob, you first. >> they're singing the star-spangled banner. 2131, so we're essentially in record high territory once again. we still don't have a lot of volume behind it but listen we're in record high territory and that's all that matters. airlines have settled down after a lot of damage done yesterday. the transport still down more than 6% on the year but most of them are fractionally to the upside. you can see how we're moving today. the important thing is not much volatility in that particular group. did you look at the vics today? this is the new low for the year essentially. not a lot of worries. people aren't trying to buy a lot of protection right now. best buy had very good earnings on the top line but there was a lot of problems if you look underneath the hood a little bit, it's up 5%.

look where the sales were great numbers in appliances and consumer electronics. that's the tvs and the phones were really good overall, but entertainment was down 11% led by gaming and services were down 10% as well. also shopify, they went public at $17 and opened at $28. you can see trading here at $25 and change. mandy, back to you. >> nice 50% pop there. thank you very much, bob. let's head over to the nasdaq a little further uptown. bertha coombs following the big movers there. >> hi, maengdndy. the nasdaq composite about three points shy of a record high. apple a big reason why today. apple at the highest level since back on april 29th and the stock today getting a boost over at morgan stanley. google uses search to look at whether people are looking for flu information to see how flu moves across the world. morgan stanley is looking and

they say there's a lot more search for phones and for watches and so they're raising their estimates there. apple getting a boost on that. also alibaba getting coverage over at bernstein. that is boosting yahoo! a little halo effect and amazon has its price target to $520 over at morgue appearan stanley. you can now have groceries delivered in an hour from amazon in manhattan. finally we're seeing the halo effect from that big deal cvs buying omni care. a lot of the pharmacy stocks are moving up as that pbm value continues to get underscored by these values. >> thanks very much bertha. a convoy of prison vans today bringing eight men to court who are suspects in the easter become jewelry heist in london that netted hundreds of millions of dollars in stolen goods. some of those arrested were senior citizens all charged with conspiracy. when police made the arrests,

they said they found significant amounts of highly valued property they believe was stolen during the burglary. thieves used heavy cutting equipment to empty hundreds of safety deposit boxes from an underground vault. let's go to dominic chu for a market flash. >> it's like ocean's eleven. financial engines, an online advisory service for financial products spiking on a report that wells fargo will plan to offer financial engine services to its retirement platform. the move would make financial engines online service available to 3.8 million wells fargo 401(k) participants. if you're looking for those auto rebalance products in those defined contribution plans, that's what financial engines does. back over to you. >> thank you very much. hewlett-packard selling off assets in china, so it's kind of got us thinking just how difficult is it for u.s. tech companies to break into and/or even stay and succeed in that market right now?

remember, many u.s. tech giants are black balled in china. plus billionaire blues. not a problem i'll have to face but how do you lose billions of dollars just in minutes? robert frank has the full story. well china's richest man lost half of his fortune in under a half hour. a hong kong billionaire lost $11 billion the next day. sudden wealth loss hits china, coming up right after the break. the technology changes the design evolves the engineering advances. but the passion to drive a mercedes-benz is something that is common... to every generation of enthusiast. the 2015 dream machines, from mercedes-benz. today's icons. tomorrow's legends. visit the dream machine event today for up to $3,500 towards purchase. bring us your aching... and sleep deprived.

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shares of halliburton and transocean both higher today. both companies settling claims related to the 2010 gulf oil spill with bp. bp will pay transocean $125 million and transocean will then pay about $212 million to some claims related to the spill. halliburton did not disclose the details of its deal with bp. deutsche telecom ceo said he would consider a partnership to improve the performance of t-mobile u.s. of which it owns 66%. there you see t-mobile shares up about 3% today at 36.25. and shake shack is considering adding chicken to its menu in some way. according to a recent trademark filing shares of shake shack up 8% today alone. it's a hot one, mandy. >> it is a hot one. i love shake shack. okay how do you lose $15 billion in 24 minutes? one wealthy chinese business

tycoon found out the hard way. robert frank is here with the story. hey there, robert. >> this could be the biggest sudden wealth loss in all of history. china's richest man lost $15 billion in wealth in just 30 minutes. li is the chairman and biggest shareholder of hanergy and shares fell by nearly half after li failed to show up for the annual meeting. the company is under investigation by securities regulators in hong kong for stock manipulation. the company shares are up more than five fold since september and that helped li surpass jack mah as china's richest man no longer, of course. in a similar crash in hopping kong, shares of golden financial and golden property fell by nearly half. that shaved $11 billion in wealth from its chairman. pan was the second richest man and he's known for his love of the finer things in life. he hangs out with prince william at polo matches and owns

vineyards around the world including three in france. in 2011 he bought a vineyard in napa valley for $40 million. in both of these cases you have huge run-ups in shares that are very thinly traded and owned by a handful of owners so you have to wonder why these shares and how these shares went so far so fast, and why they came down so fast. >> the speed at which it came up should have been a little bit of a warning sign right? tyler, over to you. great story, thank you. sticking with what's going on in china, shares of hewlett-packard are higher today after the company said it's selling a majority stake in server and storage company singwa. this is part of hp's plan to restructure business there after the chinese government started encouraging the use of products from local tech companies rather than international ones. should investors still invest in big u.s. tech firms specifically if they are getting ousted in china. joining us is the president of

oberweis funds. jim, are these companies being ousted or has the chinese government out of its concern that american infrastructure i.t. infrastructure companies were being used by our government to collect sensitive information, are they being ousted or are they just making it very difficult for them to do business there? >> i think they're certainly making it more difficult. i think it's a combination, by the way, of sensitivity to technology but also in terms of trying to kind of level the competitive playing field for some of the upstart chinese companies. so combination, of course is always being packaged as a security sensitivity, though. >> so a lot of big, big, big u.s. companies in the tech field point to growth from china as one of the key drivers of their businesses. so if this is happening and may well expand for whatever reasons the chinese cite which -- how big a threat is it to these companies and which american

companies are most vulnerable? >> yeah sure. so let's look at kid of the ingredients that we would look for in a u.s. company that's investing in china. first of all i look for nongovernment customers. so anybody who has a really diversified mix of nongovernment customers, i think that's a really good starting point because it's just harder to regulate but that's not enough. you also have to pay attention to the policy trends. in other words, are you in an industry like cisco where it's really sensitive and you know the government is likely to go after kind of the poster child. third, are you a dominant employer in your field? i'd much rather look at small cap companies where they're just kind of around in there and it's not a big deal for the government. those make lousy poster children. so that would be the way i'd look at it. lastly, where does the market expectations lie? if investors are already expecting the government to come in and attack that area it may not be such a big deal. >> on the flip side jim, i know you've identified two u.s. companies that do actually have

a lot of their growth driven by china but which do not face such regulatory scrutiny or problems. >> yeah, that's right. we look at companies like imax and synaptics. imax is growing a little bit in the u.s. but exploding in china where they have about 220 theaters right now. they're building another 220. but they're still only like 1.5% of the box office in china. so it's an insignificant share of the market. but they're certainly benefitting from the overall growth and the end customers are diversified and not government owned. my other pick is synaptics which makes interfaces for computers and cell phones. i like them because they cell both for the local chinese upstarts as well as the majors like samsung and apple. they have a diversified mix and the end customers are likely to buy them no matter which way technology shifts. >> you just have to look company by company, right?

thank you very much. well the buyer of the world's most expensive painting is apparently still a large. a week and a half ago at christie's this sold for for $179 million to an anonymous phone bidder. sources say -- remember there are only a handful of collectors and institutions who can pay such staggering amounts. billionaires leon black or steve wynn come to mind. christie's had no comment on who the real buyer is. let's get to courtney reagan for a quick market flash. >> shoes of lululemon on the move trading lower at about twice the normal 30-day average volume. women's wear daily is reporting the evp of global e-commerce is taking a new job at sock maker stance. earlier this month lululemon did announce the resignation of

13-year company veteran delany swietser. that is effective may 29th. this could be the second departure in just a number of weeks. yum brands ebay val yangtiant pharma some of investors are in. the question is should you get in after the big guys have already disclosed their position? dom chu taking a look. >> you'd think not but there's a new study that says you may be better off investing after these guys have already disclosed. we'll have the results of that coming up next after the break so keep it right here on "power lunch."

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welcome back to "power lunch." police in london are warning people of the health risks are using fake beauty products, including makeup and perfume. tests have shown poisonous chemicals including arsenic, human urine and rat droppings in counterfeit products. they have suspended 5500 websites selling fake luxury goods and seized more than $5 million of fake goods in the past 18 months. tyler. >> here's terror of a different kind. >> i guess you do need makeup so you do need to worry after all. >> this is terror of a different kind. the newest ride at six flags magic mountain. it is a hybrid wood and steel roller coaster called the twisted colossus.

it features two inversions. look at that. man, that looks cool. it is the longest hybrid coaster in the world, folks. four minutes of sheer terror or joy, depending on your stomach. i actually hated, mandy, roller coasters most of my life. now i love them. >> what happened? >> i don't know. i don't know. >> you're supposed to become more fearful as you become older. >> i think the fact that you're harnessed in makes all the difference in the world. >> they were very rickety when we were young. >> let's go to dom neck now. one of the big dilemmas for investors is should you get into a stock after activists have disclosed their position or is it too late, has all the money already been made. you've crunched some numbers. >> the conventional wisdom is why get in because they have already disclosed these positions. they have already gotten in and gotten hypothetically more attractive prices and whatnot. it's interesting because the folks over at s&p capital iq put

out this study of the authors of the study actually looked at whether or not it does outperform the market overall if you invest right after these guys file. so they make their filings and you go alongside them and you know that they bought them. >> those filings come out six weeks with a lag. >> the 13 fs do. 13 bs may be a little more timely. >> ds and fs, i was very familiar with those letters in college. >> high school and college in some cases. here's what they did. they looked at some of these firms and their study. they looked at investing in these firms right after they filed activist disclosures. we are taking a stake in the company and going to become activists. they then looked at the performance up to two years and they found there is outperformance in these stocks that activists have taken a stake in up to two years after investment, both against the overall market and against a certain control group that they're looking at. i'm not going to bore you with the details there. but the returns do start to dwindle after two years,

assuming that the activists have taken their stake and done their thing. here's some of the companies, though. the folks over at symmetric io they track performance and research them and take a look at all of the hedge fund universe and found some of the stocks hedge funds like the most right now, the most involvement, mondelez has two activists. yum brands valeant with four activists. so these are the most popular because multiple ones are in there. still, it's interesting only because whether or not these stocks will outperform over time history as shown that they have. >> how big is the universe of stocks that they looked at did you say? >> again -- >> and how far back? >> they looked over i think the past maybe ten years or so. now, what's interesting about this is in that same study, s&p capital iq said technology stocks and consumer staple stocks appear to be some of the most popular and have been for

years among these activist targets. so it's an interesting story. >> and we can get the full story, boy the way, on the cnbc.com -- cnbcpro.com. head over if you want to learn more about this. okay. to the bond market rick santelli tracking all the action there. rick, how are things going? >> well mandy, if you look at the two-day chart there's a drift lower in yields. she sit right around 218. this would be the lowest trade since may 19th and the lowest close since friday's close at 214. it really underscores some of the big things going on underneath. look at the pound today versus the dollar it's running high. it's doing the same thing against the euro. if you look at the next chart, we were talking about how compressed it is look at this since march. breakout city. we're solidly above 1.20

flirting with trades above 121. this is a trade you want to pay close attention to. >> rick if you're a savvywatcher and i'm sure many of you are, you probably know the dow transports underperform the dow industrials and that's raising red flags for the overall market. is this a real fear or is it a head fake? we'll debate that next. plus -- >> today's powerhouse is home to the nation's largest airport by area. it was host to the dnc two times. and it is the only city to have turned down the olympics. can you name that city?

hello, everyone i'm sue herera here's your cnbc news update for this hour. the s.e.c. announcing fraud charges against an atlanta-based investment advisory firm and two of its executives for their handling of the city's pension funds. it accuses gray financial group, its founder, lawrence gray and co-ceo robert hubbard of steering public pension fund clients into an investment fund that did not comply with state laws. a british court awarded more than $1.5 million in damages to eight people whose phones were

hacked by mirror group reporters doing stories on celebrities. the highest payout went to the actress sadie frost who won more than $400,000. a falling hazard has prompted the recall of more than 25,000 booster seats made by oko. the stitching on the restraint straps can loosen which allows the straps to separate from the seat. no injuries have been reported. japanese technology company fujitsu has the first iris recognition smartphone. it will be sold by mobile carrier ntt dokimo and allows them to unlock the phone by simply looking at the screen. that's your cnbc news update. back to you guys. let's take a look at gold prices which are closing right now. flip over the board, it's moving to the downside at 1204 down by 0.3 of a percent. let's look at silver copper pauladium and platinum. all moving higher except for

platinum. as for stocks the dow is up for the fifth time in six days. the s&p 500 is up for the first time in three sessions. they're both on pace for a third straight week of gains for the first time since february. the nasdaq coming in as the top performer after gains by apple and amazon. tyler. mandy, thank you. there's a long standing theory that if the dow industrials and the dow transports are both on the upswing, it's one possible indicator of a healthy economy and a healthy market. conversely, if one is close to a new high while the other is near new lows, trouble might be in the cards.nin insana said this could be more of an underperformance. how explain the fact that the industrials are up so high and the transports are so low. >> jim cramer has referenced this many times. as oil prices plunged, the transport soared because that's

the biggest cost they had, whether it's a railroad airline, what have you, so they outperformed madly on the upside. since they have rolled over with oil bouncing up more than 50% from its lows they have started to head south even as the dow has headed north. typically, tyler, there are three parts to the theory. there's a move to new highs together there's a correction together and a move to a new high in one and new low in the other. right now if we look at the transports over the last six months, it kind of looks like that. if you look at it over a longer period of time that's not as pronounced divergence. >> they're moving up pretty much in tandem except for very recently. >> now if the transports were to trade through a new low and the dow industrials surged to a new high you would get a dow theory cell signal in which case people who follow this a long time would call that the beginning of a bear market. >> so the sell signal break it apart for me. it's because it suggests that if

transportation companies truckers rails, shippers and so forth aren't carrying as much stuff while industrials are producing stuff, that sometime that has to -- >> correct. if you go back to charles dow, the co-founder of the do you industrial average and the dow rail average for that very reason. if you're producing too much stuff an oversupply of goods. the industrials could be soaring because they're making stuff. but if the shipper stops shipping because ends user demand is falling off, you get that divergence and supply and demand have to right themselves at some juncture. so whether it was the industrials and the rails or how the industrials and the transports diverge, it could be worrisome. right now i'd say it's yellow not red. >> yesterday the airlines all went down rather dramatically, not because of anything other than that one research firm said that it's possible that delta may add capacity. >> right.

>> which would reduce the revenue -- >> and have a record summer season. >> add capacity which would reduce average revenue per seat mile and all the airlines sold off. >> i would worry less about the cost issue, more about the final demand issue. if we start hearing from transportation companies, including airlines that business is slowing down then you really start to worry. >> ron, thanks very much. mandy, over to you. no matter what the theory the markets are moving slightly higher on the day. what is the best strategy for you and your portfolio. let's bring in lori heinel and mark tipper. lori, we've just been talking about dow theory. does the fact that the transports are not confirming the new highs in the dow industrials, does that bother you? >> it actually doesn't bother us necessarily. we look at a number of indicators to adecember whether we think the markets are likely to move higher from here. one of them that we do look at is something we call the market regime indicator which has recently moved back into normal territory after being at high risk.

what that is signaling is that we want to take on a bit more risk in our portfolios right now. >> what does that mean taking on a bit more risk? >> it means we are still favoring equities and still like credit. in fact we're starting to move selectively to increase our overwaste to things like european stocks, for example, and to reduce the underweight we've had most recently in emerging markets. >> mark, what about you? does the dow theory at all give you concern at all, whether it be yellow or red? >> no it really doesn't give us any concern. we're focused on sector rotation at this point. we think that the highly acalm dafb monetary policy will act as a tail wind for the stock markets for at least another year. with the fed interest rate hikes looming, we do think that there are going to be clear winners and losers and we think that it really justifies some sector rotation moving from consumer discretionary into financials.

>> are there any particular financials that you like some more than others, mark? >> yes, absolutely. so we are very fond of both key bank and jpmorgan. key bank particularly is probably our favorite in the group. they a few years ago really got back to the basics with regards to their business strategy. so they really started to focus again back on loaning out money to local businesses. so being that they have a pretty big presence in northeast ohio i've been able to track them over the last few years and maybe four or five years ago they were doing relatively nothing in the sba market and now they are the leader in this region. so they have done a very good job of executing on that business strategy and they have a ceo who's really looking at taking care of expenses as well. >> we're going to leave it there. thank you both very much for your commentary. for more on mark tepper's favorite picks, go to powerlunch.cnbc.com and find all kinds of goodies on that page. take a look at one month of

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biotech company sage therapeutics -- they raised to $85 on optimism of an upcoming drug trial. shares are up 85% so far this year. the housing market is heating up out west and for once we're not just talking about san francisco. diana joins us to give us the lowdown on the mile high city. diana. >> well, mandy, there is an awful lot driving housing in denver.

apple and google are bringing jobs here. home construction is still pretty weak. millennials love this market and the ceo of redfin wrote on cnbc that people are fleeing the high home prices in silicon valley and moving here. the result is that listings are down 15% year over year. home prices are up over 11%. days on the market are down over 30%. so what does that mean? it means that bidding wars are the new normal. christopher simmons has been shopping for a home for six months. he lost eight houses because they all went in one weekend each and he lost two bidding wars. one of those had 18 bidders. now he's finally under contract. he had to write a letter to the sellers about how he grew up in the neighborhood pleading his case and then he used a risky strategy, but that's how he beat out five other offers. >> i waived an inspection and the appraisal contingencies on all of the offers i made and on this one as well.

>> reporter: now that's something you don't normally wanting to do when you're putting an offer in on a house, but you have to ask where are the home builders. right now land prices are at an all-time high in this area. there's not a lot of land to be had. all of it is out in the airport area, not exactly where folks want to live and the builders are seeing their margins stretch. so going forward you have to wonder what's going to happen with construction. well, take a look right here. these are not condos, they're rentals rentals. we have a severe lack of condos here. we'll tell you why coming up in the next hour on "power lunch." time now to move to our powerhouse. it is the home of chipotle's headquarters. one of the manning's plays there. we're talking about denver. with us once again, the guy whose name just says real estate to me larry hots of the kenwood company. it's always a hots market. welcome back. let's check out some denver market stats. the median sale price in denver about $283,000 with inventory of

about 4,000 homes. market time average of 62 days folks. our first listing, larry, 752 hughes way. $559,000 taxes of a sickeningly low $3200, five bedrooms four baths, 2700 square feet of living space. tell me about this one, larry. >> this one is in the near south suburb of highlands ranch, tyler. it's listed by rob goldhammer of our kentwood office. highlands ranch is the most popular relocation suburb when folks are moving here. it was developed by mission viejo and it looks and feels very much like that southern california community. there's four free indoor tennis sports clubs, lots of open space and trails and excellent schools. the remodeled kitchen and bathroom stand out in this home. so does the formal dining room. it backs to open space and has views of the mountains. >> all right, the second listing is 9721 sunset hill place.

$800,000. again, a truly astonishing $6,000 in property taxes. three beds three baths, 3200 square feet of living space. >> and this home is right next door to highlands ranch in lone tree colorado. it's listed by mary jane ogle of remax alliance. it's conveniently located just off the i-25 corridor as you go south from denver. >> look at that. that looks nice. i love that. >> it's in a debated community of heritage hills. you can walk to the nearby elementary school and the light rail station if you want to go downtown for dinner. >> boy that's a nice one. keep talking, larry, i'm sorry. >> well it's distinctive turret enters the home and it has a main floor master bedroom so the kids rooms are upstairs. >> that's fantastic. let's go to our powerhouse of the week. 9497 vista hill lane cue the music, ladies and gentlemen. just over a million here taxes of 10 grand. five beds five baths, 4700 square feet of living space.

look at that one, wow. that looks like it could be up at beaver creek, larry. >> well, you know it's in heritage hills also. and it's in the more custom section. this tuscan beauty was built just a couple of years ago. it has an extremely open floor plan. even the dining room is open to the kitchen, the sun room area. there's a full finished basement for the kids. mountain views from the oversized yard and covered patio. it's located just across the street from the community pool and tennis courts. it has five bedrooms five baths and a three-car side load garage tyler. >> that sounds really nice. let's talk a little bit about diana's segment and what's going on in the denver area these days from where you sit. >> yes. well, we have -- this year has gotten progressively more competitive for buyers and i'm sorry to say the story that was told is fairly common especially for homes priced

below $300,000. that's why we don't have any on this segment because the homes below $300,000 don't even get photos in the mls before they sell. >> they sell that quickly and multiple offers i assume? >> multiple offers one weekend and they're gone. >> wow. larry, great as always to see you. >> good to see you, tyler. >> larry hots in denver. mandy. >> as to the celebrity powerhouse for the day this is sean penn's malibu beach house listed for sale at $6.5 million. it's got three bedrooms three bathrooms and located on 1.4 acres of private property with access to riviera beach. it includes a courtyard, a pool a detached guest house. as you would expect with mr. penn, maid quarters as well. it looks very nice. >> it looks lovely. a man was tasered at los angeles international airport yesterday after broacheaching security and resisting arrest. we'll bring you that footage and you warranton't believe who shot it.

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an unsettling incident at los angeles international airport on wednesday morning when a man broke through a security checkpoint. when security tried to stop the man, he resisted arrest and then continued to push forward into the departure area.

>> stop! stop! get on the ground! >> get over here now. >> get on the ground, sir. >> taser, taser. taser, taser. stop, sir. stop, sir. you need to stop now! >> and he was tased finally. that's when he was stopped. they subdued him in that manner. you can hear the officer saying taser, taser, i'm going to tase you. you may remember the man who actually shot this footage. the actor as mini me from the austin powers movie. he saw security following the man and caught the whole thing on his smartphone, mandy. >> amazing, interesting. okay here are this hour's pourpt powerpoints. we learned denver's housing market is red, red hot. the supply is down and prices are up.

bidding wars are the new normal. we also learned that piggybacking on activists can pay off. they outperformed the market by 8.16% over 24 months. and jeffreys tapping pfizer as its top pharmaceutical pick and giving nike a giant buy, giving alibaba a high conviction outperform. and if you missed any of the big stories in the past hour go visit the site of powerlunch.cnbc.com, we make sure you miss nothing. >> nothing absolutely nothing. yahoo! finance question of the day. while u.s. markets have surged the economy is creating more low skill, low wage jobs. have the markets gotten ahead of the economy? 58% of you say yes, 20% say no 22% say we won't know until the fed raises interest rates. meanwhile, best buy surging after beating revenue and earnings forecasts, but can it

maintain the momentum? best buy or best short, we'll debate that coming up. plus the latest on the oil spill in santa barbara, california. governor jerry brown declares a state of emergency. we'll tell you about the scope of the damage. all that and more when "power lunch" returns. the design evolves the engineering advances. but the passion to drive a mercedes-benz is something that is common... to every generation of enthusiast. the 2015 dream machines, from mercedes-benz. today's icons. tomorrow's legends. visit the dream machine event today for up to $3,500 towards purchase. ♪ every auto insurance policy has a number. but not every insurance company understands the life behind it. ♪ those who have served our nation have earned the very best service in return. ♪

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welcome back. our very own steve liesman, the birthday boy has been looking into issues with how the government calculates gdp data especially in the first quarter which can be a little bit iffy. you join us with more. >> i wish i could calculate my age the way the government does the gdp. it's really not a laughing matter, folks. the government agency is acknowledging problems with its numbers and saying that it will bow a series of fixes over the next several months. in a statement to cnbc yesterday, the bureau of economic analysis saying it's quote, aware of issues in its gross domestic product data and developing methods to address what it has found. the statement comes after cnbc in a detailed report in april shows first quarter gdp data has been meaningful weaker than the other three quarters for the past three decades. several economists and many wall street economists have since confirmed cnbc's findings.

barclay's estimating first quarter growth could really be as high as 1.8% if you seasonally adjust it correctly. nicole chief of the bea's national income and wealth division put together the gdp report. she said in the statement the agency has identified several sources of trouble in the data including federal defense service spending and other areas as well. they're going to come out with a first round of changes for the july 30th benchmark revisions and continue to study it over time. initially they're going back only three years to 2012. >> why does this matter to anybody but wonks? >> well that's a good question. >> i say it flippantly. >> let's say you're the federal reserve and wondering whether or not to raise rates and the government reports a negative number but in fact the economy is more positive or the reverse, let's say you're a policy maker and you think everything is okay and you don't notice that the economy is actually weaker than you

thought, it shouldn't matter a lot to investors if they take a step back and look at the big picture and don't make decisions based on a single piece of data. but the way people are today, tyler, as you know these high frequency traders, the way everybody jumps on everything and changes their mind about something, they need to -- the data needs to be more correct and it can be. >> stick around birthday boy, we'll keep the conversation going. is the u.s. economy on better footing than we think? with us now is cnbc contributor joe lavornia and jeffrey cleveland, chief economists with paden and reigel. joe, let me turn to you. do you think the economy is better than the data portray it to be? >> yes, tyler. steve, knows this already but the economy to me is better. keep in mind while growth will certainly slow year on year this quarter, we're still running 3% year over year in q1 from the

previous four quarters. that's one of the best growth rates we've had in ten years. >> joe, i want to give people an idea of the math. when you do the year-over-year comparison you get rid of the problem we're talking about. >> that's correct. >> i just wanted to underscore that joe. >> yes. thank you, steve, that's right. so when you compare apples to apples you effectively are seasonally adjusting away any first quarter problems so the year-over hef year-over-year number looks pretty good. i do believe things are getting better. >> what do you think, jeffrey, and what does it have in terms of implications for monetary policy. >> first of all, i want to say happy birthday to steve. happy birthday. i actually wanting to go a little further than joe. i think the economy is fine. i think it's on really solid footing. what we've been telling investors is to deal with the gdp volatility and the noise is to ignore it. look at payroll growth. payroll growth on a year on year basis is over 2% it's been

there quite some time. it's telling us that the economy is fine. for my money if the payroll situation holds up then the economy is great. we don't need to look at the gdp volatility. as i look at -- >> i just want to point out that justin wolfers did a study of payroll numbers an found seasonality does not exist there. so if you're looking for a coincidental indicator as to what's going on the jobs market may not be the worst place to look. >> look at the claims numbers. i'm sure you guys would agree, the claims numbers match effectively a 42-year low. if you look at the last four weeks. so that clearly is telling you that the job market can't be that bad. it's got to be pretty good. >> but i don't want nebraska -- my personal view is i wouldn't give the u.s. economy a clean bill of health. i see more problems out there than maybe jeff or joe. i'm concerned about the effect of the dollar on u.s. earnings as well as exports.

how the lower oil prices filter through the economy is very interesting to me. there seems to be an initial front-end pain that comes with firings or lack of investment in the oil field. i think those are questions that still need to be worked through. i think what the research shows is that it's probably not as bad as we've been showing. >> let me just -- let me just fire a final question here to both of you and really make it as yes or no as you can. do you, joe, trust the gdp numbers now? do you trust them less than you did? >> i never really trusted them. that's why i look at tax receipts. tax receipts are running at a 5.5% year on year rate. that's pretty darn straight. >> how about you, jeff? >> don't trust the gdp, look at the jobs. close to 250,000. less than 25% of the time since the turn of the century, since 2000 2000, have we seen monthly job numbers growth like that.

it's very important to be complacent. >> let's not forget the fed is as well. >> it sounds like we've just learned you're sort of lays potato chip. if i can have just one it would be the tax receipts number or the payroll number. >> they're smart guys tyler, it's going to change for them depending on what they're trying to figure out at the time. >> jeff and joe, thank you very much. and that is the first hour. >> and that is -- >> unbelievable hour. now we get to go eat lunch. >> yes. and brian sullivan still has one hour to go before he eats lunch because he's got a whole hour coming right up. >> we do. thank you very much. all right, 2:00 on wall street noon in bozeman, montana. the bough down a-- melissa lee is at the nasdaq. welcome. we begin with oil or more specifically gasoline prices. because the economy never really saw the expected boom from lower gas prices. but now gas costs are back up.

in fact gasoline is up nearly 40% this year. so will that hurt the economy as prices climb? let's bring in jab ack ablin. things are like things are going to boom because of low gas prices. we did not see that but as gas prices have gone back up, is that going to be necessarily a net negative or could it actually be a net positive in some ways. >> yeah i would say maybe not as big a positive but certainly not a negative. i think the fact that this gasoline dividend did not find its way to american cash registers means that there's really nothing to give up necessarily. now, we are starting to see confidence pull back a little bit. i do think that's in response to some of the higher pump prices. but like i said we didn't see the boost from the lower gas prices, so we shouldn't necessarily see a pullback if

they do retrace. >> and you've got a really interesting take, jack, which is why we love having you on the show that compares oil to interest rates. please explain. >> sure. you know remarkably over the last year oil and interest rates have been really closely aligned, largely because of the fact that oil price is probably a good barometer of global growth and so as we've seen oil prices come down over the previous nine months or so that has brought interest rates with it. now that oil is rebounding a little bit, interest rates are rising. so my bottom line is you can't be bearish on interest rates if you're bearish on oil. so i think there -- you know it's something you really have to at least take into account as you're considering one or the other. >> you know, kyle we always talk about oil prices on this show. i guess shame on us because most of our viewers are not buying barrels of crude oil.

they're going to the gas station and filling up their vehicle. wholesale gas futures up 40% year to date. are you surprised by the magnitude and the turn higher in the price of gasoline? >> certainly, yeah to a certain extent. keep in mind also from a relative basis in which your other guest is talking about in terms of dollars, we bought them just above $2 in late january. at that time it was about $1.25 lower than last year. we have risen almost 40% at the pump as well and are now about $2.75. but that's still 92 cents lower than last year. gasoline prices normally rise into the summer season. so while it's certainly short-term memory type thing and people were just thinking oh we were just paying just above $2 and now paying $2.75, they're still paying a lot less than last year so i think that's an overall net benefit. they still have more money in their pockets at this time of the year than they did last year vis-a-vis just gasoline prices. >> at the same time jack is it possible is it possible that the consumer has actually learned and learned to like

saving and paying down debt and so therefore, when we see this rise in gas prices even though it may be for right now and for the summer travel season, they will actually cut back on retail purchases because they have gotten used to putting some of that money away? >> yeah i think that's a great point. in fact one of the things that's really undermining this fed policy that began in the mid-1980s is the fact that despite all of this federal reserve arm flapping consumers aren't taking on debt. and in fact they have reversed course. if you look at the total amount of mortgage balances outstanding, we're down about $1.1 trillion from the financial crisis. credit card debt around more than $600 billion lower. so i think that consumers either because of the uncertainty, you know we saw an article in "the wall street journal" yesterday about the variability of income perhaps creating some uncertainties in american households. they're really just trying to ratchet down perhaps some of their spending and maybe push

down their debt loads. but if they are accustomed to the saving rate you know there is a line of reasoning that could suggest that maybe higher pump prices could come from retail. i suspect it probably comes from both. >> kyle, i know you're not a stock analyst so i'm not going to put you on the spot from a stock perspective, but as gas prices fell the big refinery stocks valero to others they soared. gas prices are back up. is that necessarily then a negative situation for the refiners? >> no -- >> to kyle i'm sorry. >> obviously the pump price minus their input costs. actually gasoline margins are still pretty healthy, so you know, the refiner is in a unique situation. they spent billions of dollars years ago to upgrade their units and have a number of specialized units that can do a great job of putting that gasoline in the stuff they really sell. at the same time because of the low natural gas prices and

resulting low electricity prices they have a very distinct advantage over the rest of the globe. we're actually now exporting over 400 million barrels a day of gasoline so as long as it's a global market and there's not a restriction on refined products like there is on crude, you know, the u.s. refiner is in pretty good shape because they have lower costs and great equipment. >> great conversation. thanks so much jack and kyle. keeping with oil here plains all american pipeline lower right now. the company under pressure after one of its pipelines in southern california ruptured leaking tens of thousands of gallons of oil into the ocean. scott is at the scene and joins us with more. scott. >> reporter: hi, melissa. you can see from the activity on the beach behind me why this is such a slow tedious and big job to clean up this oil. we just heard from plains all american pipeline that they have recovered about a container full of that beach material and a few more containers of contaminated soil inland from where the

pipeline broke earlier this week. and about 7700 gallons of what they say is oil and water mixture. so that's only a portion of that obviously is oil that leaked which means they have only gotten to a fraction of the at least 21,000 gallons that have leaked into the ocean. they do say that the recovery will accelerate dramatically today and they also point out that contrary to earlier reports, that pipeline was not running at full capacity when the rupture occurred sometime on tuesday. nonetheless, it is a big mess here. poorly timed for sure because it's the memorial day weekend and a couple of very popular state beempzaches and campgrounds are closed so it hits the tourism industry and a cleanup that's going to take a while, but the company is saying they're here to stay and committed to making this the way it was before. we'll see how that goes. >> more bad pr for the pipeline business, scott, but let's switch gears for a second.

i want to highlight a different story you've been working on for months. lumber liquidators, the ceo unexpectedly quitting. that stock is down nearly 14% right now. what more do we know about this story, scott? >> we don't know a whole lot about why robert lynch unexpectedly, and that's the company's term unexpectedly resigned, but we do know what has been going on events accelerating around this company and none of them good if you're a lumber liquidators stockholder for certain. the criminal investigation by the justice department that the company disclosed in april saying that criminal charges are expected, we're getting indications that is moving forward. we don't know if that's directly tied to robert lynch's resignation. we also know that state investigations and other federal investigations are continuing about this whole issue of formaldehyde in the chinese laminate flooring that the company has discontinued selling. the company has its own board

committee looking at all of this. as we reported a couple of weeks ago, the company's insurers say they will not pay for the cost of defending more than 100 lawsuits and the company is fighting that in a state court in wisconsin. so tom sullivan the chairman of lumber liquidators, now takes over as acting ceo as they undertake what they say is a national search. meantime whitney tillson, who brought a lot of the original concerns to "60 minutes" saying today that while he is now not increasing his short position in the stock, he is not covering it either. he still believes that this company has some downside to it. and the events now are starting to suggest that may be the case. >> it was a $69 stock when that "60 minutes" report came out. it is now sub $22. it has been an absolute collapse for lumber liquidators. scott, thank you very much. this weekend traditionally a big one at the car lot, many

dealers offering memorial day incentives. phil lebeau joinings us now. the weekend aside, let's talk about may. you've got documents to suggest this could be a monster month for car sales. >> it looks like it's already in the process of becoming one of the largest months we've seen in some time. within the last hour jd power released its forecasts who what it may sales to be. they expect the sales rate for the month to come in at 17.3 million vehicles. that would be the highest monthly sales rate since last august when it was 17.44. and here's what's interesting. jd power says retail sales every day, 50,000 vehicles. that is the estimate from jd power. the best daily sales rate for the month of may since 2004. as you look at shares of the big three, keep in mind we still have a very big memorial day weekend, which is huge for the auto industry, and then we continue into june. so we have the potential here brian, to see the largest may in a long time potentially since

2005, 2004 and it's clear people are spending because the transaction price, over $30,000 right now. >> we've got to go to melissa. phil, this is a point we have made many times in this program. we've had weaker retail sales data walmart, macy's and everybody is point here we go the economy is rolling over. when this many people are buying cars at this kind of price tag and maybe putting down 5% or even less they're eating cash right? this is a big part of the consumer economy. that's why they're not going to macy's. >> absolutely. and it's not slowing down. that's the key here it's not slowing down. >> phil thank you. cvs going after the senior care medicine market. the drugstore chain striking a $12.7 billion deal with omni care. it boosts access to the growing number of senior citizens living in assisted living and long-term care facilities. it is subject to regulatory approval and expected to close near the edged of this year.

cvs stock is trading higher by 2.6% on this news. bri. here is your power menu for the remainder of this fine hour. one apple supplier has been rocking it over the past year and we have the exclusive interview with the ceo ahead. plus how is california's water crisis giving new meaning to the term "sour grapes." jane wells never missing an opportunity to go to napa. she'll join us. and from one wine to another. this one scott wine the ceo of polar polaris. he is here with big toys to play with. we'll talk about that motorcycles, a crazy sling shot. it's a big interview coming up. stick around.

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the memorial day sale ends monday. ♪ mattress discounters ♪ if you're the owner of this yacht, surely you can think of a better place to anchor than just outside of youngstown ohio. the trailer hitch became unhitched. the yacht found a spot right there on i-680 in ohio. whoever owns the boat good luck. jimmy buffet sang about one particular harbor and i don't think that's what he meant. >> probably not. good luck to the owner there. now let's get to a sector that's had a strong year and outperformed the s&p 500. the semi conductor is up over 20%. nxp up 70%. they have chips in things we use every day. with me now is the ceo of nxp

semi. always nice to see you. >> nice to see you. >> every analyst on the street says you're an apple supplier. that's not something you specifically talk about. but today it's morgan stanley raising estimates for apple iphones, apple watches. should we get more excited about the nxp story? >> from an nxp viewpoint we're focused on the wallet. we have multiple design forms in multiple platforms. but the mobile wallet is where we bring a unique proposition. kind of based on the technology that we have with the bank cards that provides the fundamental key security associated with that, so we want to be able to supply that across the world with all of the leading smartphone companies to really make life easier and more secure. >> so whenever a customer does sell more phones or smart watches with the ability to pay, that's good for you? >> absolutely. and same thing with the credit cards. we're also you know in china,

they have implemented dual interface which is tap and go to be able to speed up commerce. the chinese are very focused on how they make commerce faster and we've given them the technology that's just like apple pay on a bank card where you can just tap and go. >> and you have a lock on that market in terms of the which i need card issuers? >> we have a very leading market share. we won't keep that forever. our worldwide market share is 60% or 70% so we expect it to come down to that level at some point in the future. >> let's talk about china because that's a huge engine of growth for you guys. i know you have many lines of business, but in the smartphone business, people think of apple and samsung as the major players but the major area of growth is the chinese manufacturers. should that be surprising? and where will that be in your pie in say, five years? >> that's a significant part of our growth. what we are focusing on is being sure that we can provide the same fundamental capability for a mobile wallet for them that exists today. and interestingly enough we

have an audio product that's really widely accepted with the china inc. smartphone guys where our found quality actually is enhanced. they used to call it the beats solution with htc. they went away but we still had the same sound quality and we provide that to all of the high-end smartphone guys. >> you've developed a partnership with qualcomm to include nfc, your field communication radios within the snap dragon chip. how important is that partnership? today in the news there is news about hewlett-packard reorganizing their china business because of the scrutiny u.s. tech companies have had. there is a black list of companies, which include some of your customers like apple as well as qualcomm. does that impact you? how does that impact you and does that impact the way you do business in china? >> i think you have to be flexible and figure out how to do things differently. we have a couple of joint ventures we have done. we're in the process of finalizing another joint

venture. we want to be sure that we're very open to doing things differently in china so long as we maintain the same cash flow, we're not so concerned on what happens to the revenue associated with it. really our focus is how to provide the technology and capability for the chinese market. it's not going to just be shipping semi conductors in like it has been in the past. we're going to have to figure out different ways to do it with joint ventures and license income and other ways to maintain the cash flow growth that we see in china. >> specifically joint ventures with chinese companies. does that benefit you to partner up with domestic chinese companies and is it a benefit that you're a dutch company and not a u.s. technology company? >> it's a true benefit because of the relationship between the u.s. government and chinese government. being a dutch company we're perceived as european. one of our heads of one of our businesses is actually on merkel's asia council so he's very involved in the political situation. from a european basis, a german basis with china, so that gives

us an advantage being a european company and not being a u.s. company. but really it's about having the core technology. our leadership position while it really is in security has positioned us well in china. >> rick, always great to speak with you. we'll get to you another time. brian, over to you. up next good old-fashioned stock brawl. the company, best buy. the contestants, urio and kill brook. they're going head to head next. plus -- >> i'm jane kennedy and i get paid for this. what it takes to be a zoo keeper coming up on "power lunch." ght here . with a control pad that can read your handwriting, a wide-screen multimedia center, and a head-up display for enhanced driver focus. all inside a redesigned cabin of unrivaled style and comfort. the 2015 c-class.

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we're helping organizations transform the way they work so they can transform the lives of the people they serve. best buy shares are on the rise right now. in the last year in fact the stock is up a whopping 40%. earnings and revenue did top estimates. there was big demand for things like big screen tvs, smartphones and appliances. but jim says you've got to short this stock. jeff kilberg disagrees. jim, i'm going to let you start, the stock has been hot so if you've been short, you've been wrong. but you're saying stock's good, short it. tell us why. >> i didn't say everybody should short stock. it wasn't as aggressive as you put it.

i don't like the earnings. i think that they are watered down earnings they are a low ball. at the end of the day they sell the same stuff that everybody else sells so where's -- there's no margin expansion anywhere in the future. the problem is they made a ton of money, a disproportionate amount of money on extended warranties. as technology gets cheaper and the lifetime of that particular technology goes down people will buy less of those warranties. at the end of the day they want to increase their online footprint but are still paying catchup to everybody else. the fact that it was after that 6.5% rally means people aren't ready to put this in their portfolio. i think it's short with a target of 33.5. >> worst buy there from jimmy. jeff, why is your good friend wrong? >> well, he is wrong. i want to put him in a full nelson but i can't do that on tv. i'm going to push back. 2012 it was a volatile stock.

we saw a 50% drop. richard schultz tried to buy it back but let's remember jimmy, just two months ago we were trading $42 so it did see a big drop $10 drop off recent store closures. right now technically it's about to regain its average. people are buying big screen tvs. >> at the same time the overall stock market was grinding higher. it's gone against the tape for two months three months. >> people are not buying new cars. they're not taking big vacations, but they're buying big screen tvs. i'm guilty. >> phil lebeau just reported 17.4 million annualized pace for new car sales, the highest pace since 2004. >> no doubt. they have to buy them directly from the dealer. with electronics, you go to best buy to shop around and then it online. >> we just did this i was just there. i matched the price on amazon. best buy hit the price, i bautought it at best buy. >> we've got to go j.j. that's

your permanent name now from here on out. it's j & j, like m & m without the vocal skills. >> as long as i'm the first j. >> do it killberg. they're both on twitter, as am i, let us know. time for our weekly series where we feature people with cool jobs. do you think your office can be kind of a zoo? meet a woman whose office literally is. >> i'm jane kennedy and i get paid to be a zoo keeper. my office is the most beautiful office in the world. i have 359 animals that i'm responsible for every day, so i have to find every single one of them every single day. every morning we come in and we load our feed trucks up. the first thing we do is we make a cursory check through the whole exhibit to see if there's anybody that's been born or maybe somebody that's hurt. a triumph story is the success of rhinoceros breeding. the safari park that i work at

is the most successful breeding program in the world for captive rhinoceros. we've had 176 rhinos born there. i've been able to see 12 rhinos born all different kinds over my career and that's something i'm really proud of. one of the things we would do for rhinos because they're susceptible for sun burn is rub lanolin and mud on their skin so when they go out in the sun they would be protected. when i ending my day, i can look at all the animals i took care of that day and i know i've made a difference. >> all right. another thing kennedy enjoys is feeding baby giraffes. who doesn't enjoy that? she uses a giraffe print towel to get the calf to come over. she steps on a ladder and bottle feeds it. she has to sit on a higher ladder as the giraffe outgrows the bottle. that's cute. to find out more about kennedy's cool job, go to powerlunch.cnbc.com. we are counting you down to the oil close. we're going live to the nimex when power lunch rurnltseturns.

by the way, we've got really cool motorcycles coming up. don't you go anywhere, america, and the world.

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designate tunisia as a major nonnato ally of the united states after meeting with tunisia's president at the white house. he said the u.s. will provide short-term aid to the country so it can complete economic reforms. the national president of the boy scouts robert gates, says the organization's long-term ban on gay adults is no longer sustainable and is urging change in order to avert costly legal battles. he made those remarks at the scouts national meeting in atlanta. the navy releasing video of one of its surveillance planes flying over disputed islands in the south china sea. during the flight it was purportedly warned by a chinese radio operator to leave. china is trying to enforce a military exclusion zone around those islands. the spacex cargo craft departing the international space station with 3,000 pounds of experiments and equipment. it arrived at the space station last month and is expected to splash down off the southern california coast tomorrow. that's your cnbc news update at this hour. back to you, brian.

>> thank you very much. oil bouncing back a bit today. it is back above $60 a barrel. let's get to jackie deangelis at the nimex. >> yeah $60. a key level, we've broken through that and a slightly weaker dollar is supportive but the market is digesting those inventory numbers yesterday but traders are saying $65 is probably the upper limit for crude oil this summer. i do want to mention if you're hitting the road early tonight, as some people are, $2.73 is the national average for a gallon of regular, according to aaa. the good news that's still 91 cents less than it was last year. maybe people will take that money and spend it elsewhere. back to you. >> all right jackie thank you very much. it is time now for trading nation. we're going to flip the order of trading nation and street talk because we're talking oil and energy stocks, so it sayingegues nice.

pavel, you cover a bunch of these companies. we've seen a comeback in oil and in some of these companies. you have told us many times on this program that the equities will lead the commodities. based on that what are you seeing? >> yeah. that indeed is what's happening. if you look at the average oil stock today, it's discounting 70, maybe $75 oil long term. today's price is obviously a lot less, it's in the 60s, as you mentioned. but the futures curve for oil, you go out to 2017 '18 and beyond is in the 70s so the equities are pretty fairly discounting where the futures curve is heading the next three to five years. >> boris, i'll say this good goldman sachs. they have been out there with that lower oil call. they're at $45. they wasn't waivered. if anything they may have doubled down. they seem to be hanging out there by themselves on these much lower oil prices by the end of the year. are they going to be right or

spectacularly wrong? >> right now they're looking spectacularly wrong. >> it's only may. they said the year. >> it's possible but it looks like it's coming to be a supply problem rather than a demand issue. it's clear that the geopolitical tensions in the middle east some of the supply taken off the market and the fact that we were so extreme to the other side we're just having a natural readjustment in the oil market right now. so it seems like this 50 60 is much more of an equilibrium trade right now. i don't see it going down to 45 again because it was a ridiculously sentiment driven market. in fact i remember when we were at 45 joe from "squawk box" was basically saying i'm willing to sell anybody puts on this trade and nobody was willing to take it because they were so fearful it was going down further. >> pavel, are the companies you cover still good bets even though many of them have recovered off their lows? >> the stocks that have not bounced as much are generally

the more defensive oil stocks so some good names that are really not off their highs as much as you might think would be large caps chevron, oxy, hes, apache anadarko. they have not rallied from the junk rally in microcaps and small caps. and valuations, boy and large, while not cheap obviously, certainly not at today's prices we think there is value in some of those larger more liquid names. >> pavel, boris, thank you very much. a reminder when you're in front of a computer check out tradingnation.cnbc.com. we do two extra segments every day. it is now time for street talk. every day we're digging out analysts' recommendations. melissa, are you ready? >> always ready. >> first stock, nike. jeffries begins coverage with a buy. they view this as a solid

long-term play for investors seeking large cap growth. they note melissa, and this is interesting, that despite under armour and adidas coming up nike is still dominant. 47% say their favorite athletic brand is still nike. they have $120 target on the price. that implies about 14% upside. >> this is one area brian, that consumers seem to be spending on, home as well as athletic wear. take a look at foot locker fl. that's hitting a 52-week high. second stock here there was an underrate rating on the stock lowering the price to $32. profits were down 24%. gross margin the lowest in three years. on top of that the analyst says competitive threats will increase this summer. >> that's a 43% decline in cash flow. maybe that's why the stock is down 25% year to date. everybody out there note the

analysts price target is now $5 above the current price. stock number three, mastec. it's down 30% this year about 50% over the past 12 months. stevens resuming coverage and they're optimistic. they have a $23 target. 25% upside from here. i understand that won't get you back to where you were a year ago. you fall 25 you've got to grow 50 to get back there but they're saying maybe the stock has bottomed out. >> option monster on its blog is point out there's bullish activity today and also bullish activity yesterday in terms of the calls. yesterday's overall option activity nine times the average daily volume of calls on number of puts bullish boy a 35-1 ratio yesterday. so something is going on here. williams-sonoma, raised the price target to 80 from 75 but we should note that's about where the stock is trading right now. the analyst is point out the results were strong. there are good signs from q2 but

they did lower its outlook back in march. the analyst is optimistic about the second half of the year. >> who doesn't need a $500 vitamix blender. you can make smoothies. janey calls this a good company but an expensive stock. today's under the radar name, sage therapeutics. the ticker, sage. it's a biotech based in cambridge, mass. boosting their target to 85 from 58. the stock had gone through 58 so they had to do something. there's a higher probability for success for sage 547. it's a treatment for seizures. >> yes. and this company specializes in rare diseases that affect the central nervous system so it's a specialized biotech. >> based up at your old stomping grounds at harvard. on deck what shake shack did that may just have that stock soaring today or it could

be something totally different. and from burgers to bikes. the ceo of polaris is here and he brought some hardware. some very cool motorcycles. there you see them live. we'll talk about that a wicked slingshot, his business and why painting is a problem. stick around. and now your trading nation stats of the day and a word from our sponsor. >> net net a strong dollar is good for the economy but that doesn't mean all companies will benefit equally. companies that do a lot of business abroad and companies in manufacturing versus services tend to be most vulnerable to a strong dollar. if you believe that the dollar's trending is going to continue higher, you may want to check your exposure to companies in these segments of the market. go. tdd# 1-800-345-2550 open a schwab account, and you could earn tdd# 1-800-345-2550 300 commission-free online trades. tdd# 1-800-345-2550 so if you get a trade idea schwab can help you take it on. tdd# 1-800-345-2550 we're getting a lot of questions tdd# 1-800-345-2550 about organic food stocks. tdd# 1-800-345-2550 [ male announcer ] sharpen your instincts tdd# 1-800-345-2550 with in-depth analysis by schwab experts. tdd# 1-800-345-2550 and

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incredible video from new zealand when paddle border luke riley got an unexpected visit from an orca. the orca checking him out and even nibbling on the board. thankfully that's all the orca nibbled on. brian. >> unbelievable video there. paddleboarding is nice but cruising the streets and the trails is a thrill of a different kind. polaris has motorcycles,

snowmobiles, enclosed atvs and a sick new slingshot. the ceo came all the way from minnesota. scott, thank you for joining us. you've got a paint problem but it's a good problem to have because sales of motorcycles have been so good that you're actually struggling to meet production. explain what's going on. >> what we did, brian, we recognized that demand was going to be high so we built a new paint system that had better capacity, quality and lower cost. it's taken us a little longer to ramp that up. so we have got a phenomenal team working on it. we're outsourcing some of the bikes now but we're several thousand bikes in backlog. >> is it a problem that's going to impact investors or literally just a slow delay lag on getting new bikes out? >> no it's not a big problem for investors because the demand is going to be there but we really want to satisfy the customer demand, which is just extremely high for all of our motorcycle brands right now. >> why are you so bullish on motorcycles? you've been right but what are you seeing that leads you to believe that this bike here, that this is going to sell?

this is the price of a car. >> well what we've been able to do for a long -- for the 61 years of the company is drive performance and innovation. and what we figured out in motorcycles, if you drive performance and innovation with a phenomenal brand and great styling, it's a formula that works. >> i'm going to give you credit scott, you've come out with cool stuff. the slingshot, three-wheel thing. i would like to do that. talk about that. you've also got an atv, really an atv with a roll cage you call it the ace. it's kind of a different experience. are you worried about bastardizing your own business in a way? >> if we don't cannabalize ourselves, somebody else will do it. we talk about an armata of off-road vehicles. and the ace, the single seat vehicle you talked about, the mixture of an atv and side-by-side it's for that customer that wants a little more comfort and safety with a

steering wheel but yet still have the individual experience. >> the slingshot got a lot of attention. car magazines are talking about it and test driving it as well. it's classified as a motorcycle in some states in other states an auto cycle or a car. it's gotten the buzz but does anybody buy it? >> it is one of the most desired products from the launch we've ever had. >> desired is one thing. >> we're talking about people that placed deposits and make orders. >> so they're buying it they're not just looking at it. they're getting it. >> literally thousands of orders on backlog. in fact the dealer -- the rolling fast guys that brought these bikes over today whispered in my ear, can you hurry up and get us our slingshots. what's nice about it is the broad demographic. we've got 65-year-old men who don't want to hurt their back on their old bikes anymore. young people women, it is just a fantastic success. >> and before we go i've got to say something that's kind of cool. you are also from the shenandoah valley of virginia.

>> i am. i'm going back to speak at my high school graduation. >> what high school was it? >> turner ashby. >> did you ever play james wood in football? >> we never made it that far. james wood was a good football team. >> he was a graduate of the naval academy. you're a midshipman. congratulations. thank you for serving the country. go, navy. >> thanks brian. >> thank you very much. well an influx of tech jobs has made denver one of the hottest housing markets in america. the only problem, it's getting hard to find a house to buy. maybe the only market hotter than denver right now is san francisco. after the break, we're going to bring you our latest installment of the series we're calling are we getting stupid again in real estate? i came up with that name. we're back after this. the cnbc realtime exchange market snapshot is sponsored by interactive brokers.

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company filed a trademark for chicken shack, meaning it could be adding chicken to the menu. but is that enough to second the stock higher by 7%? this is a new high, by the way, on the stock. it isway, on the stock. it has more than quadrupled. a lot of the other recent restaurant ipos are doing quite well. habit, loco. >> there is a restaurant called the chicken shack in astoria queens, new york. it's called chicken shack. just note to shake shack's attorneys. here on "power lunch", we have created something that we call the power city index that's exclusive to this fine program. we took 30 groups of stocks from the 30 biggest metro areas in america, got stocks in each index. it's a great way to see what areas of america are doing well in the stock market so to speak. and though san diego still leads all the indexes this year with an average stock return of 17%, most of those gains are coming from just a couple of red hot

biotechs, but hot on san diego's heels lately denver. its 12 biggest stocks have an average return of nearly 11% this year. those hot stocks include new mont mining western union, cimarex energy. only two of the 12 biggest stocks in the denver area are down this year. those two are dish network and chipotle. so, speaking of denver, it has also become a hot housing market. maybe those two things are related. as more tech companies like google and apple are also bringing jobs to colorado. the problem is very simple. there simply aren't enough homes to buy. diana olick live in denver for us. >> reporter: it's particularly acute here in denver. listings are down 15% from a year ago and that's pushing prices up by the double digits. of course, there is plenty of construction going on but it's all rental. not condos to buy. in fact, just 2% of multi-family

construction in the city right now is condos. now, some say it's just weak demand left over from the recession, but the bigger issue may be a colorado law passed in 2010 that gives homeowners associations greater leeway in suing developers for even the tiniest defect in the product. that is keeping developers like chris wagget from building condos. instead, he's all in rentals where demands are soaring and so are rents, but that all comes with a catch. >> for investors, it's a fantastic market. but i don't think incomes have been rising at that pace. i think we all know what happened in 2008-2009 where we got an imbalance between incomes and value of property. in this case rent. so, those are serious issues. >> now, the only developers who are doing condos are doing it on the very high end, in the multi-million-dollar range. that's because that's the only way that they can afford to get litigation insurance and also to do over-the-top testing on these buildings. in order to ensure that these

lawsuits won't go all the way through. if you want to see some of the over-the-top things they're doing, post it online realtycheck.cnbc.com. >> all right diana, thank you much. this is either the world's worst real estate pricing job, or a big scary sign of the times. the san francisco house you're looking at just sold for more than double the asking price. it looks all right from the outside, but the inside, it's pretty much dilapidated. >> you don't like green carpet, brian? >> well actually, that carpet -- >> it looks like astroturf. >> there are rooms that have holes in the floor. it went on the market in the mission district last month at a price tag of $1 million. now the price told for $2.3 million. so melissa, is this 2005 again? are we getting stupid again? where it was just the worst real estate pricing job of all time? >> as you know the mission district is an up and coming place. i wouldn't be surprised if somebody's just buying this

thing for the land, tear that thing down and put up something that could be two stories, two separate units, that could be sold each for $2 million. >> but a realtor should take that into consideration and put that into his or her pricing on said property right? >> so you're saying that it's not priced high enough? if it sells at 2.3, who cares what it was listed at? >> all i know is this. the average home in san jose california, is now selling for 11 times the average income. >> wow. >> kind of been there before. >> quite a market. we'll have to watch this. >> dear congress, pay attention now. >> some businesses in california speaking of california, are taking extreme measures to cope with the drought. jane wells is live at one winery takeing an unusual step jane. are you sober? >> we got a lovely rosay, a sparkling wine. they're turning wastewater into wine, and not just any wine. napa wine. we're going to check it out after the break.

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affluent. yes, i could go on and on. he's really been on the cutting edge of using water efficiently. >> we're going to come back to a point in the next five to ten years where i'm sure all the recycled water will be efficiently used instead of just dumped into the river to dilute into the bay. >> how come more farmers aren't using recycled water? >> there's still a negative perception about it. >> this is the chlorine contact basin. >> reporter: the water comes from the facility which uses a filtration system to vacuum out and clean the water. it's spending $3 million to upgrade. including buying a recycled holding tank to hold more recycled water as demand increases, because fresh water supplies are being cut. >> we have customers that make concrete products landscape

areas, garbage facilities that use potable water. all of these could be recycled water. >> we don't have our own reservoir, so when the state says you're going to cut, we're going to cut. >> oh hey there. well, it tastes fine to me. and the grapes that went into this sparkling wine came from this vineyard or part of them did. back to you. >> the real apples to apples comparison, though jane would be if you had a bottle of that that was fueled by or fed by recycled water versus nonrecycled water. >> they have. they've done it. >> side by side? >> in napa valley you do not mess around with the cash cow. if it had a different taste, they wouldn't buy the grapes. >> i just want to say, jane, you upped the ante with the pee-no noir. i don't know what my number two is. >> it's from daniel in the assignment desk. these young people they're so

clever. >> melissa lee. what's on "fast money" tonight? thank you, jane. >> the ceo of shazam. we have got him tonight. >> that's cool. i'll know what he's saying. thank you very much. "closing bell" starts right now. hi and welcome to "the closing bell", everybody. i'm kelly evans. >> and i'm bill griffeth. stocks modestly higher but only modestly. the s&p is on track to close at a new all-time high. that would break a two-day losing streak. as for the dow, it's higher for the fifth time in six trading sessions, although we're still a few points away from a record close for that one. the nasdaq is finally in the water, trying to end at a new high as well. that's something we haven't seen from that index in nearly a month. coming up over this next hour at least, much mor