it passes by lunch. >> and the euro too. don't discount what is taking place. north of 111, it's a 2% move in a single day. thanks for watching and see you tomorrow. power starts now. >> they keep running right at us right now. >> a bad six months down about 7%. when will that impact? >> a new weapon in the war on cancer. reporting from the major oncologist conference out in chicago. >> absolutely. we do begin with what's happening on stocks. around session highs. the dow is up by about 42 points

and at one stage down by about 115 points earlier in the session. down in washington with breaking news on fifa. >> a massive global story breaking over the past few minutes. the president called a news conference and now announcement ahead of time what the subject was. he stepped to the poed jum and said he was going to call a new election for the president at fifa. he called it an extraordinary conference. he will not be a candidate for the election in that whenever it does happen. they are out after reports over the past 24 and 48 hours. fi firks a's secretary general has been implicated in a $10 million payment that was apparently part of an alleged bribery attempt to win the world

cup. that moved the investigation a lot closer to himself. high profile officials and indictments here in the united states led by the u.s. department of justice. all of this within the past few minutes. the president of fifa stepping down after about 17 years as head of the oefgz. >> out to the american automakers reporting the latest figures, racing to the strongest pace in a decade. ? >> these were great numbers by all accounts. they were western expected. by 2% and 4%. take a look at the auto makers and you may look at this and say they were up 4% and gm up 3%. you need to focus on basically how strong they were relative to

expectations. they were better for every auto maker. for the big three, trucks drove the success they had last month. when you look at general motors they were up about 8%. even with limited supply they are selling for an average price of 43,300 up more than $3,000 year over year. look at the sales rate relative to the annual sales pace. going back to 2009. that's for the month of may for the pace of greater than 17.4 million vehicles. that's what we hear from the automakers. that would be a substantial increase only for the month of may relative to where the industry has been over the last six years. unlike the american automakers over the last six months to a

year, you have seen momentum for the japanese automakers with the exception of honda. we will get the sales pace for the month coming out within the last couple of hours. it's somewhere in the range of 17.5 to 17.7 million. host of cnbc's the profit. you are a car guy. i want to follow-up with a couple of questions. >> the sales numbers are being driven by the suv business. the concern i have now is when i see these payments get stretched out to 84 months and 96 months are people buying more than they can afford? number two, i like to see a cycle turn every 2 to 2 1/2 years. when the folks come back they will have negative equity. that goes to my question. if you are taking your loan out to six years, seven years and

beyond, what it said to me is you are -- you are buying too much car because you couldn't afford the monthly payment. >> a typical loan is 60 months. that's a typical auto loan. past 60, you are stretching too far. >> by paying it off over a long period of time. >> the orange has been increasing steadily and 60 months is what people have focused o. the average right now is 67 months. marcus is right. >> that's almost six years. >> lulths. you are looking at five years and seven months. the biggest between six and seven years. what is interesting here is the growth in leasing. leasing is up substantially. of all of those -- >> there is one reason. >> they are three years. >> there is one reason they're doing better.

the used car market is strong and the values are stronger and allowing that payment to get spread. that was about the max. >> starting to feel like 07 to me again. i want to make sure they take the amnesia pills. the used car market fell apart and the leasing fell apart. >> you will be back with us. market flash. >> tyler, financial shares resumed after being halted for news. they are up by about a percent now. they did announce a share buy back program and raised the operating return targets and outlook to 14.5%. the range is 13 to 14%. the showers you can see they did take higher on that bit of news coming out. new fears about flying they reported tous aircraft were made today, but government sources saying the threats were not

credible. in total they were similar to chemical weapons threats. a us airways flight were searched after a plane landed this morning at philadelphia international airport. new fears about the security of america's airports. shocking lapses at the tsa. under cover testers smuggling weapons through airport security. 95% of the time. it let to the departure of the tsa chief. my eyes just popped when i saw the figures. >> it is scary and as a result acting tsa administrator has been reassigned by homeland security secretary and that news coming late yesterday in the wake of what you described here. these reports that the agents failed 95% of the time to intercept weapons and explosives on a test basis by what are called red teams operated by the department of homeland

securities. these are designed to probe the known weaknesses. it is unfair and none the less they were not able to stop this. according to the reports, at one point, one of the testers set off an alarm. he was patted down but the tsa agents failed to find that he had explosives strapped to his back. agents are saying this is a disaster and the question is what becomes of this troubled agency. airline stocks taking a bit of a hit between the tsa's score and the latest bomb threats. should you, passengers and investors be concerned? i am going to bring in the partner of airline weekly. airlines get threats all the time. are you suggesting that we only really hear about a small

percentage of them? they said they haven't noticed an increase and that runs from something that is not credible to something where yeah, they worked to determine the level of that threat. more probably a combination of the two. you have one of something. we all start paying attention. that's last year like everyone suddenly was concerned about people reclining their seats and you hear about it more. >> the ability to thwart real or credible threats are completely another. >> i want people to pay attention all of the time.

not just once in a while. that's the concern about me. they were missing one after another after another. i don't know if it's a training issue or awareness issue. i'm concerned. >> and marcus a key point that he made a moment ago in announcing this yesterday, they were quoted as saying out of context, the numbers can look a little bit deceiving. what that said is not to make an excuse because the numbers are awful, but they were probing known vulnerabilities. people on the outside try with worse intentions would not know that. it's not 95% of -- a terrorist would get these things through. they are going after the most vulnerable spots. >> it's not a great excuse. >> the fact means you should be addressing that. that concerns me. part of the problem here. >> go ahead.

>> i was going to say part of the problem is that they are playing ultimately defense and on the back heel all the time. the terrorists only have to be right once. the tsa has to be right millions of times a day. it is so vast our economy and tourism depends on the ability of people and goods to move around fairly freely. how do you set up a system to protect that in realtime. it is a magsive challenge. the question is with all these solutions whether you privatize it and have more training and other things is it a doable task? >> what do you think? is it a doable task and what would you recommend? >> the bottom line is knock on wood, it's been now 14 years since 9/11. something has gone right. the reason nothing happened on that scale since then it's not because nobody tried. the question of privatization versus federal, i don't know that that determines airline

security. israel has the best security in the world. they rely on a lot of contractors. >> we wait in lines a long time. we are all frustrated by the process. we are waiting because we have this assurance that it's right. if i'm going to wait it will be right. i will go through as quick as i can. we will make it loud and clear and nobody has a problem waiting. we just want it to be right. excuses about it not being right are not acceptable. i have employees flying. employees are flying. >> it's not acceptable when you have lives. >> it's not acceptable. >> we have to leave it there. really great discussion. thank you very much. over to you. >> on to headlines. apple reportedly set to announce the new music service next week during the developer's conference. kraft foods looking to dismiss two counts in a cft case

alleging that the two companies manipulated prices in the wheat market in 2011. and sears is the target of a shareholder class action lawsuit that claims sales of stores were used to benefit ceo and strip the retailer of its valuable assets. >> the war on cancer. how they're helping to fight the disease and what it means for researchers, doctors and patients. it is the most expensive weapons system of all time and it's about to make the debut. jane wells in l.a., over to you. >> it is a big summer for a big program and taxpayers are about to find out if the f 35 is ready for prime time. we will have that after the break. blap # the life behind it. ♪ those who have served our nation have earned the very best service in return.

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welcome back to power lunch. fbi background check for new gun owners increased 6.5% from the same time a year earlier. that's a record and a sign that perhaps the market is in a bombing process after that boom and bust of 2013 and 2014. keeping an eye on shares and those sorts of companies. back over to you. >> it is the most expensive fighter jet ever made and about to make its debut. jane wells is in l.a.

>> not just the most expensive fighter jet, but the most expensive program ever. it's a big summer for them but despite a rocky path the next generation super jet is making progress. first, the air force version is taking part for the first time in war games being conducted among all branches. this is a live fire exercise, but the f 35 will not drop any weapons. others will. instead it will test that communication software and the ability to send and receive information from other planes and people on the ground. can it play well with others. the first f 35s to be deployed will be the marine corps version making successful take offs and landings on the uss. the marines will get their final f-35 software and set of fire a live weapon and july finally the jet will be deployed.

it will be flying for real. the current software will only drop about two bombs and have limited capability. the final software that will weaponize the f-35 is not coming until 2018. >> we will have to wait. one of the major topics of the biggest cancer conference is how technology is helping to fight the disease. the pharma reporter has that story. hi, meg. >> hey, mandy. understanding the genetic drivers of cancer has been a huge movement, but it raises a lot of questions about what doctors should do with the data. especially because they are rare. that's happening as the tools get more and more sophisticated. we sat down with foundation medicine and in their experience 2/3 of the time, they turn up with a finding that has never been seen before in their institution. >> when a patient is found with a rare finding which is often

the case now that we are getting sophisticated, doctors struggle to figure out where similar patients have been treated and understand how those patients responded or didn't respond to other therapies. >> there is this idea of the curbside console when doctors run into each others in the hall ways or the medical conference. with the air findings we are hearing that the nearest patient with a similar profile can be halfway across the country. >> the foundation medicine has been doing sequencing of tumors and we have sequenced over 43,000 cases. we realized is in our database cases that may be rare at an individual institution or practice, we have seen before. >> foundation said that it can match 91% of those cases to other similar patients in the database. it is rolling out patient match to help doctors communicate about the findings and talk about out come when is they tried a different drug.

they can request information from other doctors who have seen similar cases even if they are halfway across the country and share information about that. this is all anonymous to connect doctors in new ways. something that the organization itself is also working on. back over to you. the internet of things connecting to the web. new research shows the area of tech will nearly triple from $1.7 trillion over the next five years. the top venture capitalist told us where the opportunities are. after this. with your life it gets talked about... ♪ ♪ ♪ so you can live the way you live, and enjoy all the rewards. chase sapphire preferred. so you can.

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. a big week in the works for tech. where opportunities lie with the seattle-based vc firm that has dozens of tech start ups. welcome back to the show. great to have you with us. his wise words of wisdom as well. what are the hot trends you are seeing at the moment? >> the biggest trend is application intelligence. the idea that you can take the data and push it up into applications and make them smarter for the end users like you and i. services like pandora or spotify. like extra hop and app dynamics. that's a big trend and it relates to internet of things. >> when i think about my house, i want to be able to function

really simply. turn the lights on and off and how do i deal with that? >> that's a good question. if you power goes down and you don't have a back up generator, that will be a challenge. what kinds of back ups would you want like datacenters have back ups to make them reliable. >> if i connect my lights and alarm system and my gate and pool to a smart phone or a tablet i feel like my life is in everyone else's hands. you are making a trade with other people having the information that is the more daunting thing. you will still be in control and there is mechanical ways to control all of the things you are talking about, but you are trusting that somebody will be there to use the data to help

you have a better life. if you don't trust them you shouldn't make the trade. ing this a better life. this is a service over a product for something i never knew i needed. if it's something we don't need it will be out. >> are people installing these in their businesses? that does almost level tagging so they can keep track of shoes and apparel as an example. we see all the applications that go on it. all the messy stuff there and if you go across the board, all businesses are much more data aware and intelligent with the

applications they use. either internally or what they expose to you and i. in a downturn they pull the app exoff and fix roofs and parking lots more than anything else. how have you insulated yourself in the companies that you invest in for that scenario? >> it's a very good question. what we focus on is unit economics. it might be an individual customer and a selling team and a geographic market. we have a company called rover.com or red fin. one is real estate and is set 60 services. if the economics are working, they can adjust to factors more easily.

they can ally that to other markets they are going into. it's understanding the core units of economics. >> we have to leave it there. great to speak to you. thank you very much. over to you. >> building on yesterday's gapes and the sector is down about 8%. it time to take a right. flipping homes on a new level. now flipping penthouses. the staggering sums of money the pats are going for fast. all that and more.

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we've just increased the speeds on two of our most popular plans. >> here's your cnbc news update for this hour. that is amidst a widening scandal for fresh elections to choose the successor. he was elected to the fifth four-year term as president. a college friend of boston marathon bomber has been sentenced to six years in

prison. he has already served two years and will be deported after completing his sentence in 2019. he plead guilt tow obstruction of justice. safety regulators say millions of owners equipped with air bags may have to get air bags done more than once because of uncertainty of whether the parts are already defective. they scheduled a hearing on the matter beginning in about a half hour. a unit of united technologies said they will cut up to 1400 jobs due to a drop in production and lower demand for the helicopters from the oil and gas industry from offshore oil projects. that isnbc news update. >> shares of disney have been on a roll over the last year. they have a new category of toys they hope will change the way kids play. julia boorstin knows how kids

play. hi, julia. >> hello, tyler. disney introducing a new line of toys designed to get kids to run around. the playmation kicks off with a package of connected toys built on marvels avengers. the toys work together leveraging motion sensor along with blue tooth and the toys talk to kids in the voice of iron man's assistant, jarvis delivering instructions for a mission. they can make the glove vibrate. it's all designed to inspire kids to run around as they imagine the characters. while the toys can with an app, they work without any screens or a wi-fi connection. it will cost $120. in november a package built around interactive hans will hit stores with more toys in the works. how much it will be worth? the franchise could generate as

much as a half billion in annual sales from the toys and these toys could hit a billion dollars annually as they expand to other brands according to the toy expert. a frozen system is in the works for 2017. >> you are playing with virtual friends. disney wants kids to run around and have a healthier style, but at the same time how psychologically healthy is it when they are playing with a virtual friend and not real kids? >> this is designed so you can play with multiple kids and yesterday when they were rehearsing and getting ready, we saw them practice together and you can see two kids synch up and make the systems work together. it's really great for kid who is want to play together and more interactive than sitting in front of a tv set. >> very true. >> it's an alternative for kids

to run around or with each other. >> i'm scared to introduce it to my kids because i will never see them again. they will be off playing the virtual world. thanks a lot. let's look at the world of stocks. the dow is down and right now up by 29. doing a lot better than it was earlier. joining us now is the chief market strategist. portfolio manager at usaa investments. what do you sea as the trigger. some something else you see? >> a couple of things worry us. it's a very real chance of a disappointing number in the 150 to 180,000 jobs added below the 225 consensus. that will highlight that the economy is still weak. we are facing an earnings

recession where negative cops see with the earnings and lastly, we are worried that the uncertainty creates more volatility in the market. we are looking for a target of 2,000 by the middle of july. if you see a weak scenario, don't you think that the expectations will be pushed back and that might be supportive of the market? the past worked out that way, but they want to try one rate increase and a slower economy won't do it. they want something more normal than zero. >> still a chance they will not raise rates at all this year? >> that's correct.

i think that you can make a decent case that the unemployment has been met. we are at about 55%. in terms of inflation, they want to see more. prices are pretty much flat at a trop of a tenth of a percent. there is a strong possibility they won't do anything. >> what do stocks do? pruj along with that? >> we will not so stock returns in double-digits, but it's

reasonable to expect low to sit single digits? that's where we are one of the biggest today. would you be a contrarian and buy these on these year to date dips some. >> we would be selective. utilities haven't done very well. we are the second worst performing group. utilities seem to have washed out the news about higher rates. we would look to utilities for a group for the month of june and july as we see the market correct. we would look at staples over discretionary and like the mid-caps. last time we were on we were up about 1% versus the market being flat. like that area of market it's like the broader s&p 500. >> you like pfizer and the fifth

and 30 as your stock picks. to see what bob likes in the pc market, that is power lunch. >> to bonds now and tracking the action at the cme is rick santelli. >> whether it's interest rates or foreign exchange. they are tied at the hip and wild today. if you look at the interday rates zoomed up and here's the important chart on may 1st. on the 13th of may, we had the high yield close of the year. we are still at 2:26. that's a level you want to pay attention to. it's all about foreign exchange and let's look at the euro versus the dollar. the euro flying the dollar and having a good day. we are switching and versus swiss. dollar versus yen. not real hard considering it traded up at about 125. #

that's a big down day. back to you. >> the road to the white house is crowded. how do the home states of candidates fare when they crunch the numbers on the governors and former governors who have now declared for presidency? scott? >> hi tyler. 17 u.s. presidents dating back to thomas jefferson were governors, but not one of them had to with stand the scrutiny of our top states for business study. we will put the current crop the candidates to the test, coming up on power lunch. here at td ameritrade, they're always working. yup, we're constantly making thinkorswim better. like a custom screener on your desktop, that updates to all your devices. and you can share it with one click. wow. how do you find the time to do all this? easy. we combined every birthday and holiday into one celebration. (different holidays being shouted) back to work, guys! i love this times

of year. for all the confidence you need. td ameritrade. you got this. push your enterprise and you can move the world. but to get from the old way to the new you'll need the right it infrastructure. from a partner who knows how to make your enterprise more agile, borderless and secure. hp helps business move on all the possibilities of today. and stay ready for everything that is still to come. over 20 million kids everyday in our country lack access to healthy food. for the first time american kids are slated to live a shorter life span than their parents. it's a problem that we can turn around and change. revolution foods is a company we started to provide access to healthy affordable, kid-inspired chef-crafted food.

we looked at what are the aspects of food that will help set up kids for success? making sure foods are made with high quality ingredients and prepared fresh everyday. our collaboration with citi has helped us really accelerate the expansion of our business in terms of how many communities we can serve. working with citi has also helped to fuel our innovation process and the speed at which we can bring new products into the grocery stores. we are employing 1,000 people across 27 urban areas and today, serve over 1 million meals a week. until every kid has built those life-long eating habits, we'll keep working. >> officer mark rodriguez was driving when a bolt of lightning went in front of his cruiser and

after the strike the only sign of damage was a drunk of concrete missing from the bridge. a time lapse camera in the more than part of the state. violent storms have been pounding the south and midwest and the flood warning has been posted in south dakota just this morning. >> the crowd at 2016 presidential field had lots of governors and each had scrutiny of the top rankings. this year's list and the rankings here now with a look at how the governors did. scott? how did they do?

jeb bush left off in 200072007 if any governor could foint pride, it was rick pery in texas. three first place finishes and never lower than second place. conservative darling scott walker improved the ranking to 17th and it was 29th before he took office. the state improved in six of the ten degree categories of competitive and slipped in cost of doing business.

that's since they began and on the democratic head martin o'malley as governor coincide and averaged 32 ath place and mare hand strength technology, and innovation. a lot more on the governor who is declared or are about to deplayer on the top states and this year's rankings we want to hear from you. thanks very much. >> to dominic choo for a market

flash. >> shares are down on iron mountain. the worst levels of the day. the document and data management was down over jeffreys to an under perform rating from a hire hold. they cut to $29 from a prior 33. they cited among other things, secular declines due to more use of cheaper database solutions. those shares one of the worst performers on the day. back over to you. >> one of the most famous voices in men's fashion is back. he has a new company that aims to help you look a lot better with just a little help from the smart phone app. >> z tailors. you will like the way your clothes fit. i've got your back. >> and uber for tailors. will it work? we will debate that. power lunch is back in two. bla upon it's part adrenaline and part adventure.

it's part geek and part chic. it's part relaxation and part exhilaration. it's part sports car and part suv. and the best part? the 2015 gla. it's 100% mercedes-benz.

. >> remember this voice? he founded the clothing retailer men's warehouse and served as chairman and ceo for nearly 40

years and now he is back with z tailors, a web and smart phone app he hopes to bring personal tailors to your home with the touch of a button. >> z tailor is an on demand nationwide tailor network much like uber. you go to your computer and go to ztailors.com and you are asked to pick a day when you would like a tailor to come to your home or office. there is no surcharge for having them come to your house. we hope it will be everyone from the millennials to their parents. the pricing mechanism is much like you would expect at any store or dry cleaners throughout america. >> let's bring back marcus. do you think this is a good plan? >> i don't. i don't want team coming into my

house and my closet and touching the pants and shirts. if i go to men's warehouse, they should alter them for free. >> what would i say? >> yeah someone comes into your house and is awfully close to your inseam. you want the background checks made. would that be an issue? they say they do excellent background checks. >> in uber i can get out of the car even if it's moving. if i'm putting them on it will be a problem. nobody is coming into the house. >> they maintain they do a fullback ground check and they know how to sew and so on. >> you will take it to your dry cleaner s. this is the on demand economy.

i feel like it's the way they have to go. >> guys we will see. we are here at a pinterest event in san francisco where is start up is announcing viable pins. here's how this is going to work. later this month in the u.s. on your iphone or ipad, if you are on pinterest, you will see these blue tags. what the start up is saying is that will give you a simple and secure way to buy products. you tap on that tag and it tells you the product and the price. you have the product. you will buy it with your credit cart and they are working with the stripe in addition to the others.

you have smix million active users and that is a 40% jump. they raised over $300 billion. pinterest is laying out how they plan to make money from all of the users that really is now a new e mercy platform. back to you. may sales rates are at more than $17 million. the director stepped down after investigators from the department of homeland security get banned items through security 67 out of 70 tests conducted. disney unveiled them and if you missed the stories, them.

>> makingmany on luxury apartments by flipping them. how fast are they going? that is straight ahead. flipping the penthouse. blap financial noise financial noise

>> up next are stocks about to sink. who and why ahead. does the magic kingdom have new magic up their sleeve? meet a man who started a numbers his garage and now one of the top this his industry. all of it made in america. not bad. back to you. a new prend in luxury apartments. flipingly them. some sold for up to 50% more. it broke the record for the most expensive apartment when it sold for $51 million. it's around 6,000 square feet with five bedrooms and five baths and great views. it's back on the market for $70 million. a jump of $19 million in a year. the broker told me there has

been absolutely no work or improvements done to the apartment during that time. this pent house in soho told for $10 million. 23 foot ceilings. it's back on the market for $19.8 million, double the price of a couple of years ago. rupert murdoch joined the game. he bought the top four floors of 1 madison for $57 million. he put three back on the market. the price tag is $72 million. he has done a ton of work on the apartment and your neighbors are tom brady and giselle. that's $50 million for a smaller apartment. that works out to $9,600 per square foot. back to you. >> thank you very much what do you think? how many penthouses have you flipped? >> none. it's interesting what happens. in new york and even the other markets. two years ago or years ago, we

were 2500, 2800 square foot and now close to $5,000. >> peaking? >>. >> would you buy in this market? no. i would sell. >> you can live near tom brady and giselle. the price will be inflated. >> let's leave tom brady home and pay more. just giselle. >> i have never -- i have to say i spent most of the my life under water on real estate. i'm surprised i don't have gills. i always have been able when matheson buys the market will peak within six months. >> the matheson indicator. >> put the graphic together. >> i'm staying put. >> you have to wonder what parts they have room in. >> what do you think? >> you look at the california market, definitely not. the florida market still doesn't look like it recovered to the prerecession numbers. miami definitely. down to two or three month

supply. five years in 2010. i don't know. maybe the markets like nashville, savannah charlston, charlotte. >> when you look at the numbers, $10 million plus for an apartment. they are going up all over the place. i feel like there will be so much supply. there is that much supply to keep it going. >> i don't have the demand. >> it takes so much money to get in. in new york, bedrooms are over a million. >> that's crazy. >> you are right. when i buy everyone should sell. # does that come with the picture? that is so perfect. >> i wonder what background the

oerps might have been. just the idea 50 to 70 million $. that will do it for the first hour. great to be with you. >> stick around for the next two markets. go over there and be with brian. awesome. thanks a lot. >> it's a short walk. it is now 2:00 on wall street. 1:00 in the big easy. the dow is easing up down about 38 points. you are watching the second hour of power lunch. welcome, friends. i have marcus coming with us and melissa at the nasdaq. we have more with melissa in one moment. it's happening now. lawmakers holding a hearing on that massive automobile air bag recall, nearly 34 million impacted vehicles and the air bags have been linked to six deaths and 100 injuries.

nil joined us now. >> we need better clarity from the executives identifying how close they are getting a handle on what's wrong with the 34 millionaire bags. part of the reason we say better handle on it they are still searching for the root cause behind the defective air bags. it has something to do with the humidity. they are being redesigned. part of what we thought would work, we are coming up with a new redesign. the replacement air bags they will have to be taken out and new ones will go in. we will hear about the status to get the recall going.

they come on board to expand and you take a look at the shares down 44%. is we are going to get a better sense of where they are with the defective air bags and the replacement. >> if we get news making headlines, you will bring them to us. your take on this massive recall? >> i think the average person probably doesn't know it. >> i don't think they knew that a company called te cata put air bags in their car. it has done in because of the

tragedies. most assume if they are buying a gm or a ford or a honda, the air bags are if not made by those company accident they are verified and perhaps guaranteed by the companies. >> whose ultimate liability is the air bag? >> that's where i was going. >> financial and legal. >> both. this company is flawed and how are we going to get around? >> uber. >> the s&p reached the end of the road. now more on this bold call. >> this guy made bold calls in the past. what he is saying let's take a look at the chart. this nice run we had towards the

record highs is due for a correction. we have seen a little bit of choppiness. he said we believe the s&p is being supported by a low 10-year note field. now as for when this is going to happen, the correction perhaps happens here in may through october of this year. he also said that the dollar will fall and oil prices will rise and we see this event happening towards the latter part of this year. to be fair what he said before last year, he said that the s&p 500 rallies to around the 2300 level. he did get the direction right. maybe not so much the level of where it was supposed to be. barry bannister did call this a bit of a turn for him.

he had been very, very bullish. he gotti bit of that correct, but not all of that move captured in what he thought was going to be there. interesting note, a guy saying we could fall by 10% in may through october. >> very interesting. you can read more about the call on our website. powerlunch.cnbc.com. >> speaking of stocks and roads. the dow transports looked like a leading indicator for the market. the transports are down nearly 8%. jim is with tjm institutional services and managing director with oppenheimer. transports with a big warning signal or is it just the railroads of the airline suffering from the issues and will not lead the overall market down.

we did a study on this and they hold up well in periods of under performance. we are talking about auto tales and most surprising in terms of the economy are getting stronger. the rail i can understand. oil investment is down and they made a lot of money. as oil comes down the airline should go up and most of them are down. your take? it has been in the bombing process and i think crude is

heading higher. they will have a difficult time doing better if they are going higher. there is good in the discussion tooment the hotel numbers are down too and there has been a removal. we talked about how the transports benefit the broader economy. we will see if people and things are moving. that is indicating the price. the price is more indicated in crews trying to find equilibrium than it is in how many people are getting out of planes. are you saying it's a contra indicator or there is no relationship? what are we to make of the theory and are we to throw it in the garbage?

>> wald who produced the study here for us he found the periods when they were lagging, the s&p had twice the percentage gained on a 13 and a 52-week forward basis. there is definitely something to the theory and a lot of theory out there right now. to confirm that they come down with the january low at this point. they have to come down a long way. the theory is good on a quarter to nearly basis and big moves, but in short-term it takes a lot to get that confirmation. >> in the short-term we hope it leads because all of the airline stocks are up about 6% and 7%. jim and andrew thank you very much. let's go to market flash. >> what's happening right now. shares of juneau therapeutics are up sharply and given back a

lot of gains. you can see on the charts they were helped earlier by a bloomberg story that quoted the ceo saying he might consider buying juneau. the story was later corrected to remove the specific reference to juneau itself. they would consider partnering with or acquiring technologies that enhance their pipeline and it was not referring to juneau specifically. astra zen eakzeneca and juneau are collaborating. >> high tech toys to get kids to move around. tying apple for the best outperformer this year. will they be a game changer for the company? joining us is the managing director at rbc capital market. great to have you with us. the toy story with disney really helped the stock move higher whether it's "star wars."

i wonder if this is a positive in your view. >> overall what i would say is we see a validation of people often say what makes disney different as a media company versus others we cover? we call it the disney difference in that other companies may be able to monitize a piece of content in the way you release a movie or a television show. what disney does is they take a piece of property and be able to exploit it across not just the movie studio but create an event at the parks or create something for consumer products in toys. or have a global phenomenon. it's all part of a validation of the thesis that you see in "star wars" and in the pixar toys. >> will this be burden for disney to have the motion toys as opposed to an action figure? >> i think that you have seen

the consumer certainly has been much more sophisticated and children are -- how many times have you heard the story of a child that walks up to a magazine. you are going to have to see consumer products evolve in a way that is consistent with the rest of the children's economy. >> disney has been gangbusters this year. will this push it higher and are there winds in the near term. >> the reason the stock has worked so incredibly well. when you look over the next couple of years, you see them starting -- we kickoff with "star wars" before the end of 2015 in the calendar year. the next captain america and finding dory. the year after that another "star wars" and guardians of the

galaxy. >> is all of this enough for you to say to somebody buy the stock now and even close to all time highs? >> absolutely. i would say that there has been the rare hiccup. the george clooney tomorrow land vehicle probably performed a little bit less well. significantly less well than expected and could create head winds for the corridor. # >> over to you. >> thanks very much. ahead on power lunch, we are on the hunt for the next big take for target. one thinks they found it. a name that you know. trust me. plus we are finding you big opportunities for small tap stocks and later on we are going all in on made in america. a very cool industry and the guy that started it in his garage is

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>> bud riser versusweiser versus miller. it may do battle. the analysts are boosting the rating on budweiser's parent and said sab miller is an agent.

the managing director at rw baird, i know you are not a single stock guy and xy buying z or whatever it is this would be a deal if ab buys us and whatever it may be is there a limit to a deal size right now? >> not really. that speculation that you are hearing is a reflection of the overall market. so far year to date the volume has been up 65%. the deals are up 90% year over year an incredible statistic. hearing the big transactions should keep you going forward. >> $2.3 trillion done so far in the last 12 months. it is a staggering figure but

why? is it that they have no other home or get money or returns in the environment or is it simply there is so much cash we have to do something with it? >> all the factors driving the recovery with the past four or five years are still strong. when you take a look at beverages out there, when you look at the changing taste of the consumer it is something that big foot has experienced in sometime. the economy seems to be on firmer footing and we did see the consumer spending less but when they are, they are paying

up. they have better health benefits. when you are a pass producer of passengers or food. when the portfolio is slowing, the only option you have is identifying new brands of portfolio that can accelerate your top line growth. you can keep them on the trajectory. you are seeing them particularly in these big cap companies. >> they are open for business and the stock market valuations are near historic levels and less than a percent away or so. what can you tell us about the level of m&as. >> we are seeing for the larger cap deals, stock is a currency that you need to use. there is so much debt available

for the large tap transactions and that's why you see for the $10 bill kron plus deals, stock used more than you will see all cash finance deals which we see in the little market. given the size and the capital available, liquidity across the market. having had the stock or cheap debt as a currency. that's why we are seeing such a robust increase in the big cap deals that we are seeing. capital is widely available to them. >> it's a pleasure to get your view. thank you very much. appreciate it. >> thank you for having me. >> we are on the big returns for small cap stocks. plus, we are keeping a close eye as we do. stick around. power lunch will be right back. blap

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bet right now? coportfolio manager and the executive vp. thank you very much. it's not going to be like small, but big cap thing. you love them and you have a couple of picks. do you see the sector as being overvalued? >> we think small copies are the place you want to be. they have the opportunity to grow. they don't have a lot of runway. >> you have a couple of those names. the financials let's talk about one if we can. fngn. what about this is so attractive? >> this was founded by bill sharp of the sharp ratio. this sits between investors and the 401 k. they help you figure out how to invest it. the nice thing about these guys is they are in nine of the top

10. they added ib m&a t and t. we think this has a long way. >> the notes here check out the notes. on a price to sales basis. the russell 2000,000 is way overvalued. >> three things. i hate to reign in the small caps, but small caps are trading at nearly 40% above the median levels on a price to sales basis. add to that relative to large, they did break down back in the second quarter of 2014. technicals between large and small have been good predictors of forward outperformance. we are well overweight in large caps and under weight in small. the fundamental backdrop. the fed will at some point start

to raise rates. what they will do this time is snell of telegraphing the rate path as previous chair men did, they will try to create some uncertainty around that path. i think that's where they are relative to them getting hit. >> particularly on large caps what has been on the floor is the fact that companies have been able to go out and borrow money and buy back stock and that really helped support prices in the large cap. when rates rise will that floor be yanked out from the large caps? >> it's a possibility. no question that this may potentially impact all equity classes. i will say there is only one metric and i should say that

large caps are expensive too, but there is only one metric that you can peer through to make stocks look cheap and that's bonds. >> we will give you a chance to respond. >> possible we don't love every small cap. we only buy the top 2o to 25 names. we wouldn't suggest buying small caps but they will always be expensive if you look at price to sales. the small caps will be growing faster. at least the stocks we buy are growing faster. we think there really interesting opportunities here but you have to be careful because as a whole, as jack said the overall market has gotten expensive. it's critical to get the right pack. >> price to sales of small caps

are lower than large. the reason is because the profit margins are substantially lower. the and the price to sales ratio is higher than that. relative to history, small cap has never been at this level. thank you very much, guys. appreciate it. >> take care. #

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fifa president announcing he will resign amid scandal and had fresh elections to choose his successor. he was elected to the fifth-year term last friday. the swiss attorney general said

he is not under investigation by swiss authorities. president obama is working to curb the use of antibiotics in meat and starting with the federal government. they announced that later this year several cafeterias will serve meat and poultry with fewer antibiotics. services to honor the life of vice president biten's son beau be this week on thursday. the president will make the eulogy during a mass in wilmington on saturday. jpmorgan is gating creative in cutting expenses and eliminate voice mail for 136,000 employees. at $10 a month per user that is $16 million in annual savings. back to you, brian. >> where will we get that replacement voice every day? >> i don't know. >> would you like to delete the e-mail? >> oil trading higher.

>> we never listen to voice mail. it's all about voice mails. you will more than $1 on the day. we get the final trade thanks to the fact that we saw the euro strengthening and the dollar weakening a bit. also opec meeting on friday and the rhetoric is that they will stand firm and the feeling is that we will have a fairly supplied market at least for now. we will get inventory numbers and expectations from the futures is a decline from two to three million barrels. >> thank you very much. it is time now for street take. the analyst that you need to know about. stock number is bo jangles. starting coverage of the buy rating and saying it believes consistent unit sales will be

the key driver to earnings. hay have a cult-like following. now with the initiation period have been neutral. your paul was one of a handful that was bullish because of the valuation right now. the second stock here they are bullish with the chinese online travel site. beating earnings for q1 deciding an acceleration in the current quarter. they revealed that it received and declined an acquisition offer, raising the price to 57 and also raising estimates. >> again, i hear the call and i'm concerned about my cattle.

you talked a lot about it. >> this is like expedia. >> is travel slowing down at all or is it more of a dam gelling issue? maybe that will work itself out. their target is $91, about 12% up. analysts are defending the stock down about 10% over the past month and the receipt weakness is an interview point and they have significant opportunities to grow at a very high rate according to him. >> take a look at the right of the screen. the earnings were good and the second quarter guidance is decent. this is what happens with a lot of these high flying card games. when they said unearned revenue was not as strong that is what happened to the stock. that huge decline. big lots and barclays getting bullish. to an overweight focus on food and annual items should help

profits. $53 that would mean in a 52-week high for the stock. >> the target is renally good here. the average target price on big lots, i will give it to you. i am not real click here. it's still bullish, although less of the target of the 17 analysts that cover big lots. finally today's under the radar name is atara therapeutics. citigroup transferred coverage of that stock. that new analyst is far more bullish than the previous. the rating is bye and the target is 35. the target is up because they are adding a new t cell program to the valuation. that program is in partnership with the mow morial hospital. >> this is one of the drugmakers. there have been a paid of acquisitions somewhere in the spring or so. that's when you saw the high being made for them. that is a one to watch.

>> that wrapped it up if are a street talk. time now for other daily segments. trading nation. we are talking airlines because until the last couple of days it has been rough. we have done well. we got a shout out for the coworker on the program. he is a technician with the oppenheimer. so we have been weak this year. last couple of days we turned around and how do the charts look for the airlines. this will support this. you look back at a couple of years ago, there was an airline etf that stopped in march of 2013.

a new etf started trading concurrent with the top. that has become a little bit popular with froth in the industry. there has been break down in price. i see another 10% downside here. i am staying away for now. >> staying away and 10% downside. how are the options traders playing the stocks? >> what we have seen in a lot of airline stocks names like southwest or american airlines we have seen an increase in call buyers and i would label them as bullish and not longer term redeplayment of assets bullish. an luv. we have season buyers that are expiring this week and next week. the concentration is the 38.5 and the 40. this is not a strategy you do if you are looking for a longer term bullish grind higher. this is a strategy that you

would do, particularly a name like are luv with the biggest declines in the last five years. while i wouldn't say that the flow was pound the table and longer table, with the higher probability than last week. >> a little bit of a different view. maybe an upside move and that's why we do both guys. for more trading nation. coming up, a serious story about stress in the workplace. we will have more on power lunch. stick around. blap

>> according to a new study. they are 1.5 times more ikely to commit suicide than the national average.

andrew wrote about the piece titled reflections on stress, long days on wall street. we appreciate it. andrew the meat of your story there, obviously there is a problem and you highlighted the tragic case of a 24-year-old at goldman sachs. your takeaways? >> a couple of things. first it was really the story of somebody who was a young man like so many people on wall street had a class of analysts and interns coming into wall street this summer. some just yesterday. while invariably it is a high intense, and stressful place, some people literally and figuratively fall through the cracks. it was a column meant to be a little bit of a wake up sign or a red flag to say what are we doing about this.

it's a story about a particular individual and trying to raise awareness. >> i give you a lot of credit about writing a piece. with the tension of the stress with the young folks, it's the financial market or what's happening in other industries. the kids feel pressure with the company they are working for. they feel a lot of pressure. it's a tough thing. >> the hardest part about the stories in general, when you think about this medical history or some kind of other

depression from before. i should point out it's difficult to connect the dots and because they were not doing this, this happened. we go through hundreds if not thousands of people turning through the system. they have all sorts of problems with the particular individual who quit his skrob and came back and put on reduced hours. they did see the assistance counsellors. they have taken lots of steps and how do you personalize it and make sure they have the attention they need. >> when i was a youngin' on wall street, i came out and i went to work for a securities firm.

they were going on a big deal and they had to in a lot of hours. what i would say also is this. for a lot of the young folks out there thinking about jobs on wall street often times i went in and was told that you would be working long hours and in a competitive environment. they would do everything they could to help me succeed and in the end it was going to be hard work. especially in investment banking, these are two to three year tours of duty. you go through them and the expectation was back in my day you went back to business school or maybe you stayed on for another year and you did something else so that way they can go back.

>> wart of the work is not just financial services. it's not just doctors and dentists and police officers. they have higher suicide rates than wall street. you run a variety of businesses and how do we keep employees. >> i don't know that we can keep them from that. they are doing psych evaluation tests. i don't know if they are playing ping pong in the afternoon. >> we laugh about that but there was a story about how silicon valley guys are buying the protein shakes because they don't take the time to eat. they are working so much that they just sit at the desks and drink protein.

>> so does a waiter in a busy restaurant. >> this is also about maybe how things work out in terms of work environments and how the capital system works out. if you are working in an industry that is going to beat you up that bad and pay you whatever they are going to pay you -- your bones and the money. >> you are talking about a situation where if things get bad, they no longer want to work for them. they will go somewhere else. you can keep the talent you want. >> the great irony of this death is he was a star analyst. the reason why he was able to do the work and staying up late is because he became the go to guy. he was so proficient that if you

were the managing director and it's a very complicated issue. i'm glad you took it on today. >> power lunch will be right back. blap ♪ ♪ hp instant ink can save you up to 50% on ink delivered to your door so print all you want and never run out. plans start at $2.99 a month. right now,

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>> i'll push back against it and just say, whatever. >> marcus. seems to be that the blame that you want to put it all on me. >> all i do is try to make sure that it's not costing everybody more money. because if we're going to talk honest. my partners will just spend it it don't matter.

>> that was a clip from "the profit." marcus trying to help out the owners of a burger place, burgers are hot, what were they doing wrong? >> what weren't they doing wrong? >> there you go. right, short list. >> relationship's broken then the business fell apart from there. you have four guys that started a business years ago. four buddies, you, me and college buddies, and we have regular jobs. they weren't focussed, but they are today. and it is amazing. >> you're not going to give us -- >> you can't have one for free. you will pay for it. brian pays for burgers. >> do i look like i get anything for free? >> well -- >> you do you do brian, sorry. i had to chime in. couldn't let that go. >> thank you melissa. >> it does look like freebies. >> i'm like 2% body -- >> 2% brian. >> 2% body lean. >> not body fat. >> i was seeing if anybody caught that.

>> marcus marcus did you invest in this company? i'm curious, there's a thousand burger chains here in new york city. >> there's #,000, but the reason i invested is i feel like i found a niche that will sits below mommy burger and chicago shack. it's not a new york city brand. it feels like a middle market brand. milwaukee, cleveland, where you're not going to find one today. it's like kind of created a price point that fits inside there. >> chicago's, if you're going to chicago's, go to hot doug's -- >> hot doug's -- >> don't get a burger in chicago. >> it's closed. bortello's in chicago. >> i'm trying to lay off the hot dog, otherwise melissa will chime in. >> 2% of body lean. >> that's what he says. >> all new episode airing tonight on the cnbc 10:00 eastern time. all right. coming up american entrepreneur and a small business owner.

see how this guy, there he goes makes skate boards right here in the usa, now he competes against global competitors, that's coming up next. ♪ ♪ i am never getting married. never. psssssh. guaranteed. you picked a beautiful ring. thank you. we're never having kids. mmm-mmm. breathe. i love it here. we are never moving to the suburbs. we are never getting one of those (minivan). we are never having another kid. i'm pregnant. i am never letting go. for all the nevers in life state farm is there.

40% of the streetlights in detroit, at one point, did not work. you had some blocks and you had major thoroughfares and corridors that were just totally pitch black. those things had to change. we wanted to restore our lighting system in the city. you can have the greatest dreams in the world,

but unless you can finance those dreams, it doesn't happen. at the time that the bankruptcy filing was done, the public lighting authority had a hard time of finding a bank. citi did not run away from the table like some other bankers did. citi had the strength to help us go to the credit markets and raise the money. it's a brighter day in detroit. people can see better when they're out doing their tasks, young people are moving back in town the kids are feeling safer while they walk to school. and folks are making investments and the community is moving forward. 40% of the lights were out, but they're not out for long.they're coming back. this could be a total disaster. there we go it comes back been a long time. >> nobody likes a show-off. >> i did grow up in california. this is a law by the way. now for a good old fashioned made in america story, chapman

skate boards is the east coast name for skaters. started in '91 in just a two-car career in long island and now produces decks. called for many brands chapman skate boards marcus is here as well. the one thing i love about your story -- >> breathing heavy by the way. >> 2% -- been a long time. you were at one point, when you started to get big, hey, make them in china, put more money in your pocket. and you said no. it's my literally my name on the board, why did you turn down the more money and keep the production in america? >> i was really proud of what we built. when you build a relationship with the people that got you there, it's all of us. i couldn't bring myself to, you know, cut that off. i had to support what we worked for, proud of it. >> you're the kind of guy i typically invest in understands the people process, and pruktd model. and you do understand the

product. the question i have for you -- >> okay. >> you have the elon musk's of the world asking for big subsidies, corporate subsidies, how do you feel about that as a small business? >> it's a big question for me because i don't know a lot about the relief they're getting, i'd love to figure that out one day as we get bigger. >> do you find you get help as a business owner? you're out on your own? >> i feel we're out there, but now with the information age, all these young adults that have a lot more access in their fingertips, the deeper they dig, and the more they find out about companies, the more they're going to really get behind us. i think that's kind of a setting us up. >> we're going to leave it there with a product placement shot. we have breaking news with phil. >> ryan they have finally calculated the pace of sales for the month of may, ready for this according to autodata sales rate last month was 17.79 million vehicles. most estimates were for 17.3 to

17.5 million, but again, auto data says the pace of sales, 17.79 million. put this into some perspective, guys, may of last year came in at 16.77 million as the pace of sales, and these are the strongest monthly sales since late 2005 early 2006. guys back to you. >> wow. and we learned, couple days ago, the average price now for a car payment is about $500, your take. >> what i really want to know. 17.9 volume how that's broken down. growth in suv, dwrout in imports, growth in luxury. that's going to tell me more than just giving me the number. >> pickups are a huge part of that. that would, some would argue, is great for construction great sign for the economy. >> what we could see a lot of companies investing in capx pickup trucks, farmers. >> ford has issues -- they can't make the f-150ss.

>> pickups and suvs. >> yeah. and subsidized payments 84-month terms. >> what's fast money tonight, 5:00? >> these auto sales, they're on fire today. that's tonight at 5:00. >> second derivative "closing bell" starts right now. welcome to the "closing bell" everybody at the new york stock exchange. >> busy day for this tuesday in the transportation sector airline scares bomb threats, flights grounded, tsa failures and the stocks have been struggling today. you see across the board there, minus signs right now. we'll bring you details on what all the flight trouble means for the airlines coming up. >> and wall street former chair, sheila bear has a message for america's youth in