you had a pretty good gain going. plus-90 or so. took a little wind out of the sails. is it important to get back to the close? >> it is just as important if we can close black today, judge. even if it is just ten points instead of 90 that's a positive. >> thanks for watching as well. see you tomorrow. power begins now. halftime's over. the second half of your trading day begins now. >> move out of the way there! move out of the way because we're here! welcome, everybody. it's "power lunch" along with mandy drury, i'm tyler mathisen. making it move here! the dire forecast we've heard on growth. expect new numbers from the man, leisman, in 30 seconds. >> he really is the man. isn't he? housing insiders say when interest rates rise as they have in the last few weeks, that will have an impact on sales. are we starting to see cracks in the home buying market. look at that chart! it's the nyse arca airline looks like an orca going down ladies and gentlemen. down 9%. the great seat debate folks.

empty seats, capacity. today the former ceo of continental weighs in on what's happening. we begin this hour with a rapid update on the u.s. economy. the man, steve leisman, has details. steve? thanks, mandy. there is better economic data string of better economic data we've had over the past two weeks increasing the outlook for gdp in the second quarter, our rapid update compiled by moody's which is a survey of ten economists and their tracking survey, up two ticks with those better retail sales and inventories report. we're back over 3% now. suggesting that this recovery from the contraction in the first quarter is more robust. the tracking 1.9% to 4% is the range here. hfe is the top of our range. goldman sachs at 3.1%. right around average. morgan stanley, pretty close. atlanta fed which did such a good job in the first quarter, they came in expecting a very weak second quarter. now they've almost doubled where they were up to 1.9%. a lot of this gain with the

consumer doing better. the may retail sales report up 1.2%. that core number that feeds into gdp, up 0.7%. combine that with better jobless claims and the second quarter rebound is looking better. we also got a report on first quarter household net worth rising. $1.6 trillion to a new record of $84.9 trillion. real estate values up $400 billion. equity values that's stocks and mutual funds $500 billion. real estate equity -- how much of the homes that we have do we actually own, what part of it. it is up to 5.6%. better than the lows 36% we were during the crash but below where we were during the recession of 60%. slowly they're clawing back more equity in their homes. >> good news steve. thank you, steve leisman. speaking of housing, there is a big debate going on whether rising mortgage rates are having

an impact on the housing market. many people say no. keep in mind rates are still near historic lows but moving up to 4.03% this month. diana olick with some insights. are you starting to see pinches in the housing market? >> reporter: we're definitely hearing about that tyler, anecdotally on the street from real estate agents and lenders saying people are getting very nervous about those rates moving higher. folks on our air have said oh rates haven't moved up that much and it is really not going to affect the home buyer today. take a look. but said just over 4% but that was from freddie mac last week. since march, we've gone from 3.65% on the 30-year fixed to 4.25%. that's for your best borrowers out there. while that's not going from 3% to 6% or anything it does make a difference. say on your $200,000 mortgage. we buy the monthly payment. not the house. right? so your monthly payment on that

difference would go up by about $73. doesn't sound like a lot, i know, but still, when you talk about these borrowers today being squeezed on every end trying to get the down payment, seeing home prices rise as steve leisman just talked about. every little bit does matter. tyler? >> di we're getting a little breaking news. let's go to rick santelli. i'll tell you what when you are looking for a stencil for a solid demand auction, today is your day! 30-year -- actually 29-year 11-month adding to an issue originally auctioned on the 14th of play. yield for that 30-year, 3.138. the offer side of the one issue was 3.145. 2.54 on bid to cover well above the 10-auction average. 52% on indirects, the best since july of '14. above the 10 auction average. direct 14.4 just a smidge below the 16% 10 auction average.

this is a solid "a," the best auction of the week. longest maturity maybe the yields yesterday getting close to 3.25%. they've slipped a bit, might have drawn the demand in. >> that's from a tough grader mr. santelli. an "a." let's get a check on the 10-year note before we go back to diana. it is at 2.41%. that is the yield right now on that 10-year. back to diana olick. i'm so with you with the idea that people buy the monthly payment, that that's what really matters to them. how much is my cash flow going to be able to carry in terms of a monthly payment. one question here with rising rates. are those rising rates beginning to affect who and how many people can qualify for a loan? >> reporter: that's a great question tyler. because it absolutely does. in today's lending environment, which is very tight, lenders are looking very strictly at what they call that debt-to-income ratio, how much money you're

bringing in versus how much debt you have. while your monthly payment might not change so much in these rate moves, that percentage does matter in the calculation. lenders are telling me that some folks will not qualify for the loan even when rates inch up a little bit. >> all right, di thanks very much. from the ground to the skies, boeing is a stock to watch. the world's biggest planemaker boosting its outlook saying near-term airline traffic growth will fill record jet production and more than double the global fleet over the next two decades. boeing cut its long-term forecast for global economic growth in air travel. boeing stock is up 10% this year, the fifth best performer in the dow. today it is up by 1%. 12 analysts have an buy or overweight rating. four have a hold and just one has a sell rating. a new report card is also out on the state of air travel. phil lebeau was at o'hare airport in chicago. phil, how did the airlines do? >> reporter: they did pretty

good in april, mandy. this is the latest data from the department of transportation. overall improving numbers across the board. 81.6 of% of flights were on time in april. 0.9% of them had cancellations. there were fewer mishandled bags. which airlines were most on time? hawaiian leading the way at more than 92% of its flights. followed by alaska and delta. at the bottom of the pack frontier, spirit and envoy. but really what people should focus on when they talk about the airlines is this chart right here. this is the airline index and it is under pressure because of two things tyler. rising jet fuel prices and capacity increasing over the next year for the airlines. that's what's spooking investors when it comes to the airlines right now. >> phil, we're going to get further thoughts on that from our next guest. the stocks taking a beating over the past month. passengers seem concerned. investors, too, about overcapacity, as phil just points out, whether or not airlines would turn to their bad old ways of just adding flights and planes.

goredon bethune, form ter continental chairman. continental it was never better than when you ran it. at least from where i sat. i don't see flights full but a lot of people are worried airlines will do what they used to do add capacity, add multi multiple flights on routes. are they in danger of doing that? >> no the people running airlines are smart boys and girls. these guys are going to manage capacity, they're not going to be discounting and we won't revert back to what you call the bad old ways. i don't see it happening. >> let's talk a little bit about something we talked about the day before yesterday -- or maybe it was monday. can't remember. with bob crandall, your former competitor and colleague used to run american. i asked him about what he thinks about air marshals and he said

air marshals ought to be abandoned. absolutely. numerous studies show it is the least effective way we can possibly spend i think he meant antiterrorist dollars and it is utterly nonsensical. is he right? >> bob is 99% right all the time and i agree with him 100% on this one. it is not an effective use of money and quite frankly needs reevaluation as a well spent dollar. could be a lot better off somewhere else. >> would our dollars be better spent if tsa was not a government-operated entity but rather airport security were handled by private contractors under government supervision? >> ostensibly that was going to be the competing kind of marketplace when they established the tsa. hasn't happened as you noticed. they've gotten a lot bigger. i'm not so sure those are all well spent dollars but i don't want to be overly critical because they provide a very necessary service. i think air marshals are a

different idea all together than tsa. >> gordon great to see you. gordon bethune, former ceo of continental. let's stick with transports. transports are up 1% today just hovering near correction territory. railroad stocks leading the rally with kansas city southern norfolk southern and union pacific each up more than 1% a piece. csx is the biggest winner. that's up 3% right now. analysts say despite weak fundamentals, these stocks are getting a bounce after being oversold. the exception -- genesee and wyoming after cutting second quarter guidance on weakness cold, crude and agriculture volumes. the company won't provide and update for full year guidance until its q2 earnings call in august. pafafter a lackluster first quarter, retailers are gearing up for the second half of the year. that also means the countdown to christmas, believe it or not. second half retail winners and losers coming your way next.

financial noise financial noise financial noise financial noise

all right, folks. coming up now tomorrow on "squawk box," the showdown over president obama's trade agenda ahead of the big vote the house ways and means committee chairman paul ryan will join joe, becky and andrew at 8:15. dominic chu has replaced morgan

brennan as the "market flash" person. >> not quite as pretty as morgan is but i will try to fill in as best i can. great day for cloud storage providing box. shares rallying after shares and earnings came in better than expected. more on the box story. ceo aaron levie will be on "closing bell" today 4:00 p.m. eastern time. an interview you won't want to miss. tune in to the "closing bell." >> thank you very much. if you are headed to the malls this weekend, you're probably looking for summer gear. right? getting a strappy sandals and your tank tops to head out to the beach. but the retail business is about being a step ahead so for retailers with be it is countdown to christmas. yes, that is right. only 196 days left to get that christmas shopping done. the nice fire crackling behind us. founder and ceo of talmidge advisors, how are retailers planning to bounce back in the

second half of the year after a disappointing first quarter. >> i think it is setting up to be a tale of two halves. the first half weather wasn't cooperating, the port on the west coast made inventory difficult to get. i think there is a story on the back side of the story. >> but talk about wage inflation that is starting to ever so slightly creep into the equation. >> the last couple of months have looked really good in terms of wage inflation. we're hearing these big companies out there raising wages and i think all of that plays very well for the consumer. >> bob pisani was telling us this morning that if you look at the xrt, the retailer it has outperformed the s&p so far this year. despite the fact that if you look at individual stocks it's really very patchy. some of the more luxury end haven't done well at all, shoes and home improvement have done very well. what are you looking at in terms of stocks that will do well in the second half? >> i think you want to stick with the winners. i think those that won in the first half are probably going to

continue to do so in the back half. i know that's not always what you want to hear but i think the thing is it is really about share gains. so companies like l brands are taking care of their gaming share. i think target is another one that's gaining share. i think you want to stay away from teen retailers with maybe the exception of american eagle. that one looks okay but i think in. general the teen retailers and missy retailers look to be losing share and i think that's going to continue. >> i do want to explore the losers a bit more but let's just back up to the winners here. here on your list lululemon. i'm sure you're all over the story the founder chip wilson may be potentially looking to offload the family stake, about $1.3 billion. does that give you any cause for concern at all? >> no this has been something that's been in the works for some time. i think chip has been a little bit of a distraction here in the last year-and-a-half or so. he's been looking to unwind his stake. he's obviously got a family interest in another retailer that's competing and so i think it is just good to sort of cut

the cord and move on. >> cut the cord and move on. let's get back to losers. fossil is on the list down 35% year to date. how much of that is due to the apple watch? >> i think there is a lot of fear related to the apple watch. but if you look at their reported results they haven't been doing as well as analysts expected so i think it is a bit of both. but going forward i think this will be more focus on the apple watch and i think a move away from traditional watches. >> we'll get back to you in just a second. warming ourselves here by the fire. >> it is only 91 here today. aarple retail employees complaining to the ceo, tim cook saying security bag check policies in the stores make them feel like criminals. do they have a point? plus crime and punish. . andrea day on the case. he was raking in the cash on wall street so how did he wind up caught on camera robbing a bank? the trader once nicknamed it loudini and his wild scheme to stay rich coming up right here on "power lunch."

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get your first month's payment plus five years wear and tear coverage. make the most of summer... with volvo. it reads, folks, like a made-for-tv thriller. a trader behind a ponzi scheme pulls one final brazen move. here's andrea day with the crime and punishment. >> reporter: he was charged with $20 million scheme and during his pre-trial release, prosecutors got a stunning call. the wall street superstar had finally hit rock-bottom. take a look. he was a poster boy for wall street. so how did he go from this to this?

>> he walked into a bank carrying a bag, threatening that he had a bomb. >> reporter: the wild story begins right here. he was a trader at the new york stock exchange. sara wolf assistant u.s. attorney, district of new jersey. >> he was so successful on wall street that he earned the nickname loudini. >> reporter: making money appear for hundreds of investors for years. she says until loudini left wall street to open up ljs trading in new jersey. he told investors he used an algorithmic trading strategy to deliver returns of up to 14% and dozens bought in. >> over the course of three years he collected $20 million. >> reporter: but she says he only invested about half of that money. the other $10 million going to fund a luxury apartment in miami, fancy cars and more. >> he also made a $400,000 donation to a private university. >> reporter: she says he sent investors small monthly returns to keep them going. but loudini's so-called magic

show was about to feature a disappearing act because according to prosecutors, his investments failed and he lost almost everything. with clients on his heels -- >> he began resorting to telling lies. >> reporter: even texting this screen shot to one investor showing an account balance of $28 million. >> when in fact it was nowhere close to that. >> reporter: with him sinking deeper, wolf says the lies kept growing. >> he was so in need of additional funds that he fabricated a story about a very wealthy individual who was interested in purchasing his trading company. >> reporter: she says he now promised even higher returns, up to 30%, and raising nearly $2 million from investors. >> there was absolutely no truth to that story. >> reporter: and when no wealthy buyer materialized investors reached out to authorities. spina was busted on federal charges for operating a ponzi scheme. he was out on bail waiting for trial in new jersey when a judge allowed him to move to miami.

months later wolf says she got a call she'll never forget. >> i hadn't anticipated that that's where this case was going. >> reporter: she says the man behind the wall street magic put on a mask walked into a bank in coral gables florida and told tellers he had a live bomb. >> this brought it to a whole new level. >> reporter: s pmpltpina made off with thousands of heist but a teller spotted him driving away in his range rover and he was busted. >> robbing a bank after engaging in a $20 million ponzi scheme is pretty rockbottom. >> reporter: the entire scheme just an illusion that ultimately went up in smoke. >> he turned out not to be loud. ini. six days ago he was sentenced to 6 1/2 years in guilty. when the judge hit him with that sentence he was already serving time for bank robbery. back to you. >> sure is rock bottom. andrea day, thank you very much. let's get another check on the bond market on the back of the 30-year bond auction that

great a grade "a" from professor santelli down at the cme. how we looking now? >> let's look at an intraday 30-year bond. not only was the. 30-year auction a good one, so did 10s. yes, we reversed just a bit but not big in the grand scheme of things. remember settle at 3.11 friday in 30s. last chart is the dollar index. do you see any tligthing there? no that's the point. >> rick santelli. let's get a "market flash." >> so biotech on the move today. fda advisory panel recommended the agency the full one approved amgen's cholesterol lowering drug, only used in patients

though at high risk of cardiovascular disease and also they have to do more studies on long-term benefits and costs. same drug was run by regeneron which is moving lower again today. some investors worried the restrictions could limit the amount of money these companies could make. solitaire surfing the web, how employees really waste time at work. plus apple retail employees not happy with ceo tim cook over his security bag check policy. we'll explain. plus -- >> today's powerhouse is home to qualcomm headquarters. it is ranked the seventh largest city in the u.s. and it is edged with 70 miles of beaches. can you name that city?

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i'm courtney reagan. here is your cnbc news update

for this hour. three crew members of the international space station return to earth today landing in kazakastan. u.s. astronaut terry burts. the longest time a female has spent in space -- 199 days. whole foods announcing the name of its new streamlined value focus brand called 365 by whole foods market and open in 2016. stores will be smaller and more price conscience to compete with trader joe's and other neighborhood market stores. police footage showing a jeweler fighting off a masked robber in his store. the jeweler used a baseball bat to foil the crime. shots were fired but they were believed to be blanks. the suspect is still at large. an acura is recalling 48,000 vehicles worldwide due to a glitch in their automatic braking system.

the recall involves two models from 20147 and 2015. that's your cnbc news update for this hour. back to you. stocks rallying for a second day in a row mark the biggest two-day gain for the dow and s&p 500 since early may. bob pisani covering action at the new york stock exchange. hi, bob. >> hey tyler. generally up day. good advance/decline line. retail sales the big number in line with expectations. that was a high of relief. look at some of the big retailers right now. very nice moves up in appliance sales in may, consumer electronics also strong. home furnishings did very well. computer electronics, all strong. mixed group. jcpenney just turned negative recently. also up today, interest rate sensitive stocks second day in a row. yields lower today. that normally is good news for interest rate sensitive stocks. utilities, telecom and reits all to the up side. and what looks like potentially the biggest biotech ipo ever

i'm still getting numbers, but look at this -- axovant. their product is a dementia drug, a biotech company. the company wasmarket cap of this company close to $3 billion. quite an amazing story and we'll have more on "closing bell" at 3:00 p.m. eastern time. >> i'll jump in here. let's talk more about what's happening in the markets. stocks now rallying for the second day. is the market getting the all-clear for another move higher? joining us now, chief market strategist of boston private wealth and kenny, give us a post check. two days of rally under our belt do we see any more legs in this rally? >> yes, i do see legs but i don't think you'll get that until next week.

a little bit of an issue with greece, europe now the market that is to sit and be patient for janet yellen after we've gotten this rash of good data. and now speculation that she's looking to change her language to allow her to start to raise rates beginning in september. i think the market is not going to wait patiently and that's i think when you'll see the next move up. >> looking a little bit further out than just the next week or so, bob, what do you see in your crystal ball for the next few months over summer? a sideways trade or something bigger? >> i think the market is going to hold up for the next few months but there is a possibility a correction develops. if you're asking me if it is going to happen? i have no idea. nobody has any idea. these issues like kenny's saying about greece and the ecb and imf and the federal reserve and oil and interest rates, and even valuations these are all short-term worries that a long-term investors should just push completely out of their mind. valuations really aren't extended. if you look at where the market is trading on a this-year basis with be it looks expensive.

but now we're in the middle of june so you have to start turning your attention to 2016. markets trading at about 15 times the earnings estimate for 2016. earnings are expected to increase by about 12% in '16 so there might be some volatility. but i would use this any kind of sell-off in the german market to position myself for going forward to what you really want to be doing is positioning yourself for growth. but especially because the fed's going to move on interest rates in september, you want to look at financials. >> to bob's point, kenny, do you think we're more short-term than normal? are we lurching from headline to headline on a daily basis more than normal? >> i think we are because i think the headlines are so impactful. this whole greece thing, because it's new be with it's never happened in the eurozone, are they going to default, what's it going to mean for greece for the eurozone so these headlines are really historic. so therefore i think we are jumping from headline to headline. once it happens, then we see

what the fallout is then i think we start to focus on the broader picture again. >> there is an interesting aspect to that question you just asked kenny. the reason why the market is so focused on the short-term is because much of the volume that happens day to day is day traders, hedge funds and high-frequent say traders. they're the ones generally moving the market but the long-term investor still staying in there over the long course. so if you follow their lead you'll do just fine. >> good point. thank you very much bob and kenny. go to powerlunch.cnbc.com to see why bob thinks they will hike interest rates in september. closing retailer j. crew laying off 175 employees at its new york headquarters this morning. j. crew's ceo mickey drexler has made comments in the past laying the brand's struggles at the feet of its women's fashion division. listen to what he had to say on a recent call to analysts. >> if we were merchandising well you'd not only see the perfect crew neck again but you'd see the new colors.

that's the fundamentals of what we got sloppy on. >> so can j. crew re-invent and recover? let's talk to stacy whitlites, a cnbc retail analyst, and liz dunn is in the house, ceo and founder of talmidge advisors. stacy, it would see mickey drexler is the mickey mantel of merchants. if anybody can bring a store or brand back it is he. >> i would totally agree with you on that tyler. but here's the problem. so drexler's talking about traffic and promotions from the competition. they had some self-inflicted pain in the last couple of fashion cycles. sizing was wrong. shapes were wrong in the women. so they'll get it back on track but i would also point out that in the era of czar growing in the united states there are other brands that are doing things, not quite the quality but close to it a lot cheaper. so that's really the problem out there.

>> so that's a very interesting point, liz, that stacy makes, is that the brand is still strong but the price has gotten beyond what some people are willing to pay, particularly in a land where zara can come in and say the same cashmere top at one-half to two-thirds the price. >> right. i think prices have gone up and quality has gone down and the fashion has missed the mark. a trifecta of issues. >> that's what my wife said. she likes j. crew. i asked her, my one-person focus group. she said she loves going there but sometimes the stuff falls apart. have you heard that? >> yeah it is really mishgsed. lyly mixed. but the important thing is the fit. a lot of sweaters last season were too short. a 30 40-year-old woman doesn't want her midriff hanging out.

some of it was too boxy. drexler said they're going to solve that problem. but it's been really mixed. so the question is does the consumer get turned off? is it hard to draw them back into the star particularly considering that competition out there. >> final quick thought, liz. what do they need to do? >> i think they need to listen to the customer. the good thing is that the customer is engaged in saying hey, we don't like what we're seeing so they need to listen to the customer. i think stacy's right, the fit needs to be reinstated and flattering. prices into ed to come down. quality needs come up and they need to stick to their classic knitting. >> well done there. nice. liz, stacy, thanks very much. mandy? the russell small cap index outperform being the large cap s&p 500 this year. will large caps catch up in the second half? that's still ahead on "power lunch." plus -- >> the city in today's powerhouse is home of the muse seem of man, wd-40 was invented here and golfer phil mickelson was born here.

can you name that city?

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is this a great city or what? who emto 70 miles of sandy beaches and herb greenberg! we're talking about san diego. with us is jeffrey shearing of san diego real estate pros. let's go through some san diego stats as we have the median sales price, $515,000. inventory, 5,000 houses. properties listed on the market for an average roughly 44 days. let's go to our first listing. 8547, old stonefield chase. listed for $579,000. taxes, about $9,000. three beds 2 1/2 baths. 1,600 square feet of living space. that looks like a nice one, jeffrey. >> it is. we're featuring the community of del sur in san diego. it is a newer community in san diego that has gained all kinds ever accolades.

they were named the community of the year in 2011 by the builder and developer magazine. the reason is they just have a real ecofriendly and well designed community that appeals to high-powered professionals in the area. it's a gorgeous community. this two-bedroom -- actually three been head room town home was sold in 11 days. this is the entry level of the market in del sur. >> it looked very nice and pretty much brand-new. our second listing is 15881 monte alto terrace. listed for $925,000. taxes of nearly $16,000. this one four beds three baths, almost 3,200 square feet of living space. tell me about this one. >> well again, our listings are selling really quickly in san diego right now. this home had offers after one day on the market and went into escrow. this is the pocket of the price

range in del sur. the median price of homes there is right around $910,000. so this is a beautiful home. it has that is called a del sur room, which is an outdoor living room which provides indoor yo/outdoor living space to enjoy the beautiful san diego weather. >> love it. >> let's move on to our powerhouse of the week. >> listed with ann schreiber. let's go to the powerhouse of the week 8459 mapleton, 1. million is the ask. nearly 5,000 feet of living space. that one looks nice. >> now we're getting into the upscale homes in del sur. there's an optional membership of the crosby which is a beautiful country club/golf course. the golf membership is $50,000 at the crosby.

this is a gorgeous home priced just below what the current owners purchased the property for. it is a gorgeous property. it's been on the market a little longer which is not uncommon with the upper priced homes in san diego. >> look at that outdoor living space. two quick questions. one is where is del sur relative to downtown san diego in and second, has the drought affected the briskness of the market there in any measurable way? >> del sur community is located off of highway 56 which is east of del mar. it's in north county san diego. part of one of the top school districts in san diego. the del sur elementary school was named one of the national blue ribbon schools of the year which is a very uncommon award to receive. it is also one of the california distinguished schools. so it's gorgeous -- it's a

suburb that's only 20 25 minutes away from downtown. >> sounds wonderful. how about the drought? having any impact on your business quickly? >> not on the business per se. everyone is aware of the drought situation and we're doing our best to conserve water. the highway signs all say drought, let's save water, and i think people are doing their best to comply with that. there is a lot of artificial turf going in. this del sur community and the community next door were both built in an environment with very drought tolerant plants. we're doing our best to landscape in a way that doesn't require much water and also many of these homes have solar panels. for instance, the larger home that we just reviewed has an electrical bill of about $30 a month. >> woo! hey, man, count me in jeff. thank you very much for being with us tonight -- this afternoon. >> count me in too. now, to today's celebrity powerhouse. after losing what was billed as

the fight of the century, manny pacqaoi is going to try his hand in real estate and relist his l.a. villa for $27.7 million. the five-bedroom six-bathroom home offer 2z2-foot ceilings and a pool with both a fire and waterfall features. avis budget down 23%. hertz down 16%. not a good start to the year and the competition is growing, including one company only renting silver audi a4s. are they about to disrupt the industry? that's still ahead on "power lunch." you probably know xerox as the company that's all about printing. but did you know we also support hospitals using electronic health records for more than 30 million patients? or that our software helps over 20

million smartphone users remotely configure e-mail every month? or how about processing nearly $5 billion in electronic toll payments a year? in fact, today's xerox is working in surprising ways to help companies simplify the way work gets done and life gets lived. with xerox, you're ready for real business.

welcome back. let's put up the board and show you what's happening with the markets. the dow and s&p moving up .4% building on yesterday's gains. the nasdaq up by .2%. the russell 2,000 are positive but only marginally. cnbc's david faber reporting rupert murdoch is going to step down and hand the reins over to his son, james. david faber will have more in the 2:00 p.m. eastern hour of "power lunch." stay tuned for that. meantime "vanity fair's"

sara ellison also knows the move on the dynasty inside and out. what do you make of this pick particular move? >> it's one we've all sort of been watching for some time. last spring rupert murdoch made the announcement that his sons were both going to take on bigger roles in the company. this is one of these things people have been looking for for a while but the question is how is this going to play out. you have two brothers who have a very long history. each of them have had -- they've worked within the company. they've been sort of elevated by their father before only two have failed in their respective positions. so in the sort term you still have rupert at the company but longer term you sort of have to wonder how these two are going to work their power structure out. >> what do you think the answer to that is sara? what's the word on the street? >> i think at this point james obviously has the ceo role. lock loughlin -- the big question is what was loughlin promised to come back into the company after

so many years being away from it and being in australia. he was really undermined by his father the last time he was playing a central role. and so as -- even as the co-executive chairman -- now he's the koeco-non-executive chairman, you wonder what has he been promised what kind of power will he have over his brother who has really the operational day to day decision making responsibilities. >> what do you think it means in terms of any potential material changes at the company? like is it potentially signaling a new direction or change of strategy? >> no. i think that essentially for investors right now, what this is is rupert murdoch, as long as he is still at the company in some form or fashion, will be the person who is really in charge of strategy and big, big decisions. now james has been active but i think that while he's there, there isn't that much that's going to change about the place. there have been slow changes

that have been going on for years, but this was his effort to really make sure that his children succeeded him. so he wanted to get this in place before he was any older. now his mother lived until she was over 100 years old so there's been a lot of discussion about how long rupert will be around but he wants to be -- he wants to leave the company while he's sharp but while he's still around, he is really the person who's running the company, and it is important to note that roger ales and fox news is still going to report directly to rupert. those are the sort of details that come out. what does it actually mean? in the short term, not that much. in the long term it's very, very interesting. >> sara ellison, thank you so much for this. we'll talk more about this with david faber in about 30 minutes mae's time with his commentary as well. than sounds very complicated, what she just described. so what do you do at work when you aren't working? a look at how employees waste time. plus apple store employees

tell the ceo tim cook that they are being treated like criminals. we'll explain next on "power lunch."

hi everybody. i'm brian sullivan. coming up at the top of the hour facebook shareholders are

about to kick off their annual meeting. we'll give you the three key things to watch coming up. also we're breaking out the stock picker's handbook with new investment ideas for you. the ceo of one very well known french company is channeled victor hugo in a big way. we'll explain. but first, back to mandy and tyler. time for the power rundown. michelle caruso-cabrera is here for the fun today. a nobel prize winning scientist in london not just making girls cry. he's making everyone cry and he's out now. tim hunt basically saying women should be separated from men in lab work because you fall in love with them they fall in love with you, and then when you criticize them they cry. this man is now been torched by a bunson burner. >> he's 72 years old and he's out of a job. my first thought was didn't your grandparents say things at the thanksgiving day table that made you wince? he's older. it is a different generation. >> he's not necessarily wrong.

it is just that as we say it is not really pc to say that anymore. also saying that we should have gender separation in the labs not so cool. >> i went to a women's college. wellesley. the idea behind a women's college is that men and women are different. we learn differently. that it's good for women to be separated from men for a period of time. right? so it feels almost hypocritical for me to just totally dump on the idea. but it's certainly not, as she says, pc. >> certainly not. >> a couple of employees have e-mailed tim cook about what they claim is demeaning and embarrassing conduct, subjected to mandatory bag searches. cook apparently was unaware of the policy and asked hr if it was true. this all comes to light as part of a lawsuit filed by one of the workers. apparently they didn't like the idea that their belongings would be searched either on entry or egress from the store, i guess to make sure that they weren't shoplifting. >> they also wanted to be compensated for the extra time

that it took to get their bags searched. i don't know numerous studies have shown that employee theft is a far greater problem than just random customer shoplifting. this is something that does happen in stores. so if the store has had a problem with it in the past and wants to search the bags i say go for it. >> i find it confusing because they argue it is demeaning, yet the lawsuit was about getting paid for the time it took. mishgsed mixed message. >> for the extra 30 seconds for somebody to go through your bag? that seems a little bit of overkill. a new survey rooting out the biggest productivity killers at work including browsing online reading e-mails and spending too much time around the water cooler. shocking here! how do you waste time at work? you're very productive. you both are very productive. >> you first. >> i don't -- i feel like all day long i'm typing and writing and calling. >> for me it's basically just

information overload. too many e-mails. make the world a better place, do not press reply to all. just deleting e-mails. delete, delete delete delete. i spend like an hour every day just deleting. >> because google will give me all the e-mail i want but my employer cuts me off after a certain amount of time. >> no you. >> probably running down web links that somebody sent me in an e-mail that are kind of useless. >> and gossiping to the person that sits next to you. >> gossiping to you. i would say, frankly, in our business, i get a lot of pr pitches from people who have no idea what we do on this network. that's a waste of my time. i'm sorry, folks, if you're in the pr business you do need to watch cnbc before you pitch. we don't do a lot of cooking segments. >> i got to jump in on this e-mail conversation, mandy. you know my view on e-mail. it's pollution, it is a productivity destroyer. and you have seen me do it --

i'm actually a pretty nice guy usually. but the jerkiest thing i do is when there is a huge reply all going on and you just write back to everybody, unsubscribe. >> i've been on the receiving end of that by the way. >> i'm going to send you such stuff. >> chain mail. headed your way, brian. >> everybody out there. right? all of our viewers and listeners know exactly what they're talking about. you got to use the "reply all" button with great caution. >> "reply all" is a killer. absolutely. that does it for the first hour. thank you, michelle. >> nice to have you in the house. on that node we'll hand it over to you, brian. >> i would never unsubscribe from tyler, mandy or michelle. it is just about 2:00 on wall street, 11:00 a.m. on portland oregon and sloe gin fizz, if that ain't love, then tell me what is. oil down 6to $60.68 a barrel.

you are watching "power lunch." really interesting stock picks coming up in a few minutes. but right now facebook's annual shareholder meeting is kicking off. that stock is up about 5% this year and doubled from its ipo three years ago. jon fortt, what should investors expect out of this facebook shareholder meeting? >> there won't be a lot of fireworks out of this one because remember mark zuckerberg basically controls the company and there's some shareholder proposals that are on the docket. basically he's against all of them at this point. so probably none of those going to go through. one of them is for one share, one vote basically diluting his control. i think we know how that's going to go. also having to do with human rights and environmental provisions. facebook saying in their rebuttal to these, we are already interested in those things, we have things on the books to protect the company against those sorts of issues, lawsuits having to do with human rights and also a lot of the other things that shareholders are concerned about in these

proposals. >> those are important macro issues. nobody would deny that. but if those are the things that we're talking about from a corporation's shareholder meeting, if those are the big concerns, it seems to say that this is a corporation that is pretty much firing on all cylinders from a core business perspective. fair to say? >> well expect that argument to be made today at this meeting. keep in mind facebook is still growing in a huge way in its core product despite all the worries about young people fleeing out of there. and they've got instagram and what's app covering them with young people and with the global audience as well. they have an announcement today talking about partnership with microsoft in gaming and that product coming at the beginning of 2016. they've got a strong growth argue. you can expect them to make but expect them to use a lot of the same language that they did in the last quarterly call. >> jon fortt, thank you. with over 1 billion users there is no doubt that facebook is the king of all social media. in fact in some ways you could

argue it is actually becoming the internet. but do not confuse a great company with a great stock. they are very different things. so let's debate facebook as an invest. . aaron kessler, senior vice president of raymond james. he has an outperform rating with the price target at $90. this guy is not as enthused with facebook. jon, you're not a bear. you're just not a bull. would you sell it? >> i think zuck has done everything right as far as building the moat around here bigger. i bet we'll hear from that the bull on this case too. however, i think trading at 90 times, give or take net income i think is a little pricey and i think some of the issues that they face are the same that apple's facing right now as far as regulatory issues. apple's of course with itunes and what they might have done with some of the music and the things they sell through itunes and elsewhere. i think regulatory issues about

privacy, the rest of the world seems to care a lot more about that than we do brian. and the regulators in europe are dempbtly putting cross hairs on zuckerberg and facebook about that. >> you think the u.s. government could come sniffing around soon? >> well they could. i'm more worried about what the other folks in the rest of the world where facebook's growing so fast are doing. lastly, hedge funds. this is one of their favorite stocks. if they have any miss then it is like screaming fire in a crowded theater. everybody goes for the door at once. >> okay aaron kessler, $90 price target or not name outperform rating. you can talk about what some of the things jon brought up. what are the bull cases for you though around facebook? >> the key is they're still putting up pretty strong growth. we expect 35% ad growth this year looking for roughly 30% next year. we think it is trading below 30 times none gps gap in 2016. ad dollars are shifting from other sources. social continues to gain massive

dollars and that's primarily going to facebook at this point. facebook's really nailed the direct response side. we heard from twitter last quarter. they hadn't really figured out direct response yet. facebook has. we think dollars are increasingly flowing to facebook. stock has been up a lot over the last year but we still like it going to $90. >> we wonder what your thoughts are on twitter versus facebook in that twitter stock has stumbled and facebook has done pretty well up almost 5% to date. is it benefiting for twitter not posting as robust metrics as investors were hoping? >> it is a couple things on twitter. one, it is still viewed as more of a niche product. user growth has been a problem. from an ad monetization perspective, they're still one to two years behind facebook in an advertising format. think that will improve over time. i think the bigger problem is user growth. >> one thing i'd like to see, i'd like to see a plan for monetizing both instagram and

the ads that they have there with 350 users dsh 350 million users, along with what's app. both of those are things that you can't overload users with or they'll just ditch it. but both of them are exciting and growth for instagram in particular is massive. >> but aaron, think about if they can monetize those things. if they can figure out a way to do it without alienating all their users who then go off to the next free thing. how big of a revenue opportunity really is that going to be for facebook? >> yeah, that's one of our bull cases recently. then facebook moved from the single platform on facebook to its multi-platform, whether it's instagram, what's app, messaging. all these platforms have from 300 million users to 500-million plus. we think they could have a 20-billion plus market cap on a stand-alone basis. >> aaron kessler, about 10% on

his up side. meantime, box shares are up right now. solid results and a solid outlook. reason, the online file storage company raising revenue guidance due to an increase in corporate customers. the ceo, aaron levie, will join kelly evans in a first on cnbc interview today coming up at the 4:00 eastern time hour of "closing bell." small caps giving investors some nice returns lately. the s&p, small cap 600, is up 4.5% this year. but will the big boys catch up in the second half of the year or are small caps still the place to be? let's bring in craig hodges, co-portfolio manager of the five-star rated morning star small cap hodges fund. craig, our viewers may not realize how well many of the small cap names have done. consider this. all right? of 600 names in the small cap 600 index, just 263 of them are down this year.

70 of them are up more than 25% since january 1st. and 13 are up more than 50% this year. make the argument of why most small cap stocks are still not over valued. >> i think small caps are benefiting from the fact that they don't have some of the dollar issues that a lot of international companies have. that's been one thing that's helped. but in a slow growing economy, and even a slow growing stock market, stock picking is kind of the key. and what we do at hodges capital is we're looking through about 900 different companies, made about 3,000 company touches last year and we're just able to find the companies that are showing strength that are having abnormal growth and the ones we feel like have good upside potential relative to their downside risk. so it's a good environment to be in small caps. large caps i think are a good spot to be as well.

i think when rates go up i think you'll see multiple expansion in large caps. but our forte is in the small and mid cap space where our research we feel like can help us in our stock picking. >> don't you tend to favor or at least talk about more of the big cap names. the financials have been on a lot of people's radar rekrerntly with the prospect of higher interest rates going up. many people say the financials will benefit. you agree. you don't give individual names but you say that the kbw bank index and any etf like it could be good buys. correct? >> yeah. we like large caps more than small. in particular in the bank sector because the big banks have cleaned up the most and they're the ones that are likely to benefit the most from regular attorney ish --regulatory issues going by way of the rear-view mirror. they trade at a significantly lower multiple because the fact they've been in the headlines every day for the past five years. i think that's going to lead to some valuation convergence between the kind of mid and

small cap banks and large cap banks. i think craig also pointed out a good point, when rates rise it's likely large cap valuation multiples expand. that's seen over history. so it does sort of underscore the point when you are looking at small caps stock picking becomes increasingly important as you get deeper into the economic cycle which is where we are now. so we're not bearish on small caps, but i'd say bearish in just buying small caps in general over large caps we wouldn't do. and it is probably good time to be picking a good stock picker like craig. >> at the same time, doug i'm curious because the multi-nationals that you like -- you say the stronger u.s. dollar won't really hurt the u.s. multi-nationals because they're going to get that leverage from growth in europe as well as china, yet the large caps that you point to are tech knowledge gi so their growth rates are compensating for that. are you essentially saying that we will see stroong growth out of europe as well as china? because the bet leer looks like

at least raise wise is that we're going to see the strength in the united states. >> yeah. so let's make a difference in terms. strong versus stronger. i don't think europe or japan stronger than the u.s. necessarily, but i think they'll be stronger than what people expect. typically what happens on wall street is people discount the bad news first and then they think about the good news later. what happened is we've had currency weakness in both the euro and the yen, and people -- analysts typically go out there and slash numbers because they know that the profits that come overseas are going to be worth less and maybe u.s. goods will be less competitive. the other side of the story though is the reason the euro and yen are going down is they're restimulating their economy and they're coming from recessionary levels to expansionary levels. i think that will more than offset the hits companies take on profits and what they take on being a little less competitive. that's not in the numbers so i think that's it the up side surprise that we'll get later.

>> craig, let's wrap it up with a couple of stock picks. i know you like american airlines. that's a big name. but there is a new name that may be unfamiliar to our viewers which kind of sounds like a character from a transformers movie. primorus. dallas based company involved in engineering. >> its pea a stock's a stock hit hard by the misperception it was an energy stock. the stock was in the mid 30s last year. when energy dropped it tropddropped trading at around $19. they've had a couple of contracts coming up that have been delayed. here we think the stock would earn 1 hadn't 8$1.80. i really do believe long term this stock could be earning $2 $2.50 a share a couple years out and the stock would be bake into the $30s. well run management team just

kind of an unknown name like we feel the market is treating it a little bit unfairly. >> thank you both, craig and doug. one of the hottest stocks out there, ambarella. but jim cramer says be cautious. >> it is about to become a cult classic. doesn't mean you should sell it but you do need to know that at these elevated levels it is all about momentum and not fundamental valuation. if you're comfortable with that then amberella queen of the stock galaxies for you. >> joining us now, brad erickson who covers amberella. i want to get your response to what jim cramer said about being sort of the queen of the galaxy when it comes to momentum stocks. in your research note you point out that basically on every single metric amberella is priced more expensively than its

peers. >> it is. it is. but to jim's point i think where i disagree a little bit, there is fundamental basis here. this company's shown a consistent track record of outperforming both top and bottom line. and so this stock certainly pricing in up side at this point that we think could continue to materialize. >> i want to home in on a research note that was put out by one of your competitors yesterday but really seems to be impacting ambarella stock. a note by citi. they said we did this survey and we're finding consumers over the next 12 months have less intent to purchase an action camera and that's really hurting gopro stock and therefore ambarella. are you seeing signs that demand may be softening in this action camera market? >> yeah. we've run similar surveys at time. the biggest forward indicator we've looked at is really selling and demand in the united states.

we're seeing demand retain really healthy levels frankly. inventory was in fact down leading into ambarella's last report that kind of led us to be more strongly convicted around that name taking our price target up prior to earnings. so i think at this point we still see very very strong demand for gopro here in the united states and given the kind of half of their business little bit less than half is coming from the u.s. we continue to take that as a good proxy for forward indicators. >> we think of -- "we" meaning mainstream media and investors in general think of ambarella as the action camera stock, the gopro play. at the same time you point out drones are going to be a huge driver in the quarter and ambar ambarella will shift systems on ships that will go into 400 drones, even before ambarella comes out with its own drones. is this a growth area for ambarella? >> it is a huge one.

substantially created from an average selling price perspective as well as gross margin so it is really attractive growth business. they're basically the leader in the segment. like you mentioned, yeah they're going to do we think, about 400,000 in this next quarter. compare that to probably doing something around a half a million total globally last year. so really really meteoric growth. you are starting to see these things show up in specialty camera stores and even some of the big box channels in the united states. we think as that distribution rolls out in front of the holiday we think there is a terrific amount of momentum behind that that ambarella can certainly benefit from. >> brad thanks for your time. >> thanks for having me. cramer will get you ahead of the game tonight on axovant sciences is and isis. the ceos of both of those companies on "mad money" tonight at 6:00 p.m. let us set the table for the rest of the hour. coming up more on that big story you heard first right here on cnbc. rupert murdoch preparing to step down as ceo of 21st century fox.

we will dig in on the investor impact ahead. also how zombies are taking over the housing market and why one ceobizarre story when "power lunch" returns. leave early go roam sleep in sleep out star gaze dream big wander more care less beat sunrise chase sunset do it all. on us. get your first month's payment plus five years wear and tear coverage.

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shares of 21st century fox are trading lower following news that broke right here on cnbc.

ceo rupert murdoch preparing to step down as ceo of the company and hand over the reins to his son, james. our very own david faber first broke that story and joins us now with more details. david. >> thanks, brian. that's right as we did first report, of course murdoch will be handing over that ceo title -- doesn't mean of course that he's handing over much else, all decisions when they come to the very end will certainly be -- he will be a part of making them. nonetheless, it does mark a significant transformation for this company. not only because james murdoch will be taking over as ceo, but also because loughlin murdoch, who is currently non -- co-nonexecutive chairman will take over as a co-executive chairman. i know the distinction may not seem like much but it is very important. loughlin murdoch is going to have sort of a partnership is the way many sources close to this describe it to me with his brother james in terms of running fox. of course the running of fox has also included professionals from

the outside for years. first it was peter chernin for many years. in 2009 he was replaced by chase kerry. kerry is going to be stepping down as coo of the company. he will remain in an advisory capacity, at least for some time is the expectation. they'll know exactly what his role -- it seems to be hard for them to define at this point. nonetheless, we'll see carey decides eventually but lachlan and james will run this company as rupert murdoch remaining executive chairman of forks. he's also the executive chairman of news corp., manage. of which remains unchanged. so a big day in terms of the changes that will take place. they're going to have the board meeting next week to approve all of this. then i would expect we'll get an announcement very soon after all of which will then take place, unclear whether it takes place immediately or whether it's sort of phased in toward the end of and beginning of next year. >> david faber doing what david faber does that's breaking big

stories. david, we appreciate it. thanks buddy. coming up the latest on the search for the two killers who escaped from an upstate new york prison and the surprising stats on just how often prison breaks really happen. you will be surprised. "power lunch" rolls on. can it make a dentist appointment when my teeth are ready? ♪ ♪ can it tell the doctor how long you have to wear this thing? ♪ ♪ can it tell the flight attendant to please not wake me this time? ♪ ♪ the answer is yes, it can. so, the question your customers are really asking is

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welcome back to "power lunch." i'm josh lipton. so there's no hotter tech trend than virtual reality. today we got some very big news in that market. today we got our first look at the consumer version of the oculus rift.

it is $1,500. the ceo was on stage and talking about what the rift was going to mean specifically to the world of gaming. >> with the oculus rift we're able to cross that threshold, we're able to finally deliver on the dream of virtual reality. vr ebb ablsnables us to experience anything, anywhere. it is that powerful. >> oculus is announcing a big partnership -- microsoft. every oculus rift is going to come bundled with an xbox controller. no surprise that microsoft's ceo wants a piece of this market. remember gramaming is a $100 billion a year industry, according to gartner. it is not just gaming. the reason so many tech giants want a piece of this market whether sony samsung, gopro, the affect virtual reality could

have on a variety of industries. the oculus goes on sale in the first quarter of next year. >> the leading virtual reality product just to confirm is an actual product. >> it is an actual product, brian. i'm excited for you to try that in the first quarter of 2016. see what you think. >> it is actual virtual reality. my mind is burning. josh, thank you very much buddy. great stuff. meantime on a more serious note a massive manhunt now entering its sixth day for two killers who escaped from a maximum security prison in upstate new york. eric you've been looking at prison breaks by numbers because this is a big one. these guys are dangerous and it's made big headlines. but what's terrifying is that prison breaks, while down are still extremely xlon. >> common. >> they're in the thousands! >> per year. >> per year in america. if you look at the data it is 2,000 prison escapes per year just in state prisons. federal prisons actually do a

good job. they only lose zero maybe one person per year. >> but those tend to be also more heavily secured, more maximum security prison. >> the hospital's on site so they're not moving around as much. but state prisons, about 15,000 we saw 20 years ago. that's how many people were lost every single year. that number is down to 2,000, 3,000 a year. some of these states nearby actually are some of the worst states. you think about new york they're ranked 13th on the list in terms of how many people they lost. they lose about 20 a year. alabama loses almost 700 every year. they have a very bad ratio of prison workers to prisoners. they lose a lot of people because there's not as much security there. some of the other data people don't even have write. new york state we haven't lost somebody in eight years and turned out it had been six years so they're not even getting numbers right. the number is really scary and the fact is people don't really have a good handle on it. >> the good news from your graphic is there is a big drop

from 1993. >> because of newer prisons, you don't have as many contractors coming in and out giving tools to the prisoners. >> interesting stuff. thank you. we are keeping an eye on oil. final trade set to cross for the day. we're going to go live to the nymex when "power lunch" returns.

more and more, data is visual. in fact, the number of mris has increased by ten percent a year. and a radiologist might view a thousand images to find one tiny abnormality in shape, contrast or movement. because it's so challenging a research project is teaching ibm watson to see. in the future, it could help clinicians spot key patterns quickly and precisely. ibm watson is working to make healthcare smarter every day.

i'm courtney reagan and here's your cnbc news update at this hour. the white house says it would soon have details on policy changes for how the u.s. government handles efforts to secure the return of american hostages. the administration has been under intense criticism for its policies so far. the body of an american man killed while fighting isis in syria was returned to his family. he was killed while fighting with kurdish units on june 3rd. his body was handed over to his family at a turkish border crossing. the eu adopting a resolution calling on the fifa boss to immediately step down from his post and also calling for urgent reforms of soccer's governing body. fifa saying today the election to replace blatter will take

place between december and february. the actor known as count dracula in a slew of horrors in 1950 and '60. he dies at age 93. up one day, down the next. we could be talking about the new york mets season but we're not. we're talking about oil. >> another manic day. the story of my life! up yesterday, profit taking today. probably the dollar index adding some pressure as well but crude oil did close today at $60.77. it's interesting because we're still stuck in that range and traders are expecting that we will continue to be in that range. we at the eaea saying they thought the 2015 demand would be stronger, conflishthcting what with opec said about demand yesterday which shows nobody really knows what's going on with this trade.

back to you. >> thank you very much. it is time now for "street talk." analysts recommendations of the stocks that you need to know about. first up today, fedex. citigroup adding it back to its focus list. it had been on and removed. they think next year will "transformative." big part of that is the number of airline retirements they think will give it more operating leverage. they've got a $205 target on fedex. >> fedex is sitting at a new all-time high today. there is a lot of bullishness for this particular stock. second stock, toll brothers. credit suisse upgrading to outperform raising the price target to $42, up by $2. the analyst says the street underappreciates the potential in 2016. the upside of the citi living deliveries. those are the developments in actual metropolitan cities like new york. while traditional home building margins from flat in 2016 city

living will drive overall margins. >> it is also the best performing of the big cap home building stocks this year. but as it's also run up just note it is now just under the average price target of the 18 analysts who cover it which is $38.69 per share. stock number three, dlr, digital realty trust. cowen boosted the target to $73. that's 10% to 12% up side. this is a headline driven call because there were reports out there that digital realty may be interested in buying telex for $2 million. the cowen analyst thinks if this happens this could lead to faster growth and would help accelerate revenues. >> with all these reits the concern right now is the rising interest rate environment. if you look at the stock since the beginning of the year in march it declined by 9% on fears about rising rates. this might be swept up within

this whole concern about the reit sector overall. american eagle outfitters janney's bullish. it's got the bet right on trends and looks for the friend. in case you weren't aware, brian, boho inspiration, innovative denim, graphic tees that are all in. there's potential for upside e eps. finally today's under the radar name -- axiall corporation. $2.5 billion market cap. atlanta based chemical company involved in things like moding and deck fittings for homes. paints acrylics, whatever. the stock's been crushed down 19% in the past month. but sun trust upgrading it to a buy. $44 on the stock. bullish call not about earnings. instead it is all about franklin

resources taking a 6% stake in the company and they think that fund manager could actually force a sale or other type of investment in the name. >> it's not just franklin resources. if you look at the shareholder base 25% of the shares outstanding are held by these sort of could be categorized as potential activist investors. they said they want everything considered. everything's on the table according to franklin. we'll see. >> that's your under the radar name. axll. with that "street talk" over for whatever day today may be. it is time now for trading nation because traders trade better together thus it is a nation. today we are looking at real estate names. the industry group is down 7% just this quarter. risch larry is the drop in real estate related companies literally 100% related to a potential higher interest rate

scenario or is that just a part of it. >> i think it is a much smaller part of it because i think european rates at the end of the day, european rates are clearly driving the bus. look at today. we have decent retail sales number. a lot of rate strategy gists were talking about this number all week. lo and beloeld, bonds rallied because european bonds rallied. european bonds are having a big impact. if you're bearish on the european economy you should be bullish on reits here because reits have come down dramatically. >> let's take a look at one chart. that is the iyr etf. rich ross a, why did you pick it and b, how does it look? >> when we are talking about the iyr, we are talking about reits. if we're talking reits we're talking rates. you get one right, have you a pretty good shot at the second. first we look at the daily chart. you can't dress it up here. it is not pretty brian. you can see a 13% decline from the january highs as the 10-year

yield. backs up from 1.80 to 2 hadn'tpnts2.340. now if we zoom out this is where it becomes more useful. focus on the 150-week moving average, brian. that's where we found support back in 2013 during the taper tantrum when yields soared to 3%. the iyr fell 19%. i'm actually a buyer but a buyer down below at that 150-week. it is another 4% 5% downside. that probably coincides with upside and 10-year yields to 2.65, 2.75 before we are done on this move. i'm a buyer, just not here. you have another 4% 5% downside. >> then you're interested. larry, thank you. as a reminder we do two other segments every single day but at

tradingnation dot c tradingnation.com. there may be zombies in your neighborhood. zombie foreclosures. details on what that is ahead. i'm lisa schroeder and i get paid for this. what it takes to be a chocolate taster coming up on "power lunch."

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you probably know xerox as the company that's all about printing. but did you know we also support hospitals using electronic health records for more than 30 million patients? or that our software helps over 20 million smartphone users remotely configure e-mail every month? or how about processing nearly $5 billion in electronic toll payments a year? in fact, today's xerox is working in surprising ways to help companies simplify the way work gets done

and life gets lived. with xerox, you're ready for real business. cicadas attack a local news reporter in kansas. luckily after a while the cicadas gave up and she was able to finish. what a trooper she is. worst nightmare, brian. >> my worst nightmare is being eaten alive by red ants. >> i don't know if we can classify that as a cicada attack. cicadas actually just fly around and kind of land on stuff.

stla an attack? are they literally coordinating? is this like a thing? >> oh brian, you're splitting layers. >> listen cicadas can also be very delicious. high in protein. >> they are. seems like a good time to recap a few of the day's big business pedheadlines that you might have missed. lululemon founder chip wilson finally selling his family's entire stake in the company. that stock up nearly 48% since last year. healthsouth buying reliant hospital partner for 37$730 million in cash. healthsouth is up 9% on the day. . shares of software company citrix systems rising more than 7%. hedge fund elliott management unveiled a 7% stake in that company. they are pushing citrix to sell off at least one of its businesses and boost its buyback. many investors are thinking more and more about how to invest as rates rise. scott nations is a cnbc

contributor. you are also investing in jnk and synk. those are the etfs that follow the high-end bond market. that seems like a no-brainer. you're leeshging for something that's yielding more than 2.5%. >> i'm not sure i warrant to get married to any of those positions. if you're tired of holding your breath when it comes time who hear earnings releases because you are worried about some foreign currency translation losses, then we see investors starting to look towards small caps. that makes a lot of sense. s&p stocks get there 40% of their revenues from overseas. small cap stocks particularly ones in the russell 2,000, much less than that. >> in terms of thinking on the high-yield trade some would say in this period of low interest rates, that helped all assets especially riskier assets like high yield go higher so the impact won't be as great in

terms of being insulated. >> well if you're looking for yield, it's really tough to feel very good about investing in short-term treasuries. you're not going to get very much even though say the 10-year yield is up a fair amount recently. if you're looking for yield, you have to reach a little bit particularly if you're going to hold in there for a little bit longer. now i'm trading these names. i'm trading some of these junk etf names because i'm looking for a pop and they're working out today. but if you're really counting on income from some of these income etfs, then it's really you have to to feel very good about a short-term treasury etf. >> right. but in terms of high-yield, scott, when you say you're trading them what's triggering you to get in or get out of them? >> well, recently it was the fact that bonds in general had just gotten pummelled. they've been pummeled for many reasons. they've really gotten beaten up. they'd come down too far too fast. pass a trader you love it buy something when it's too cheap. when will i get out?

well i'll actually watch the broader market and i will try to unload both jnk and sjnk by again i'm long both of when we see the entire bond market start to well head lower again. >> head lower again. so you want to see yields overall rise correct? have you seen that? >> if the 10-year yield were to head back to say 2.5% then that would really be something that would get my attention. i would be tending to get out of all bond products in that situation. >> got it scott nations. thank you. for more of scott's picks, head to "power lunch"pow er powerlunch.cnbc.com. zombies are homes in if the foreclosure process but the bank has not repossessed yet, the homeowner is gone and the house is sitting empty. are these zombies something that we should fear or could it actually be a good sign for

housing? diana olick, when you hear the word zombie i don't think of good things. is this a good thing? >> no i don't think of good things either but i do think they're getting less and less scary, less scary in my book than cicadas, by the way. here's why. these empty homes in some states the foreclosure process have just been sitting. banks were struggling with paperwork, navigating new rules and frankly these homes were worth very little and it cost the banks a lot to foreclosure. so there they sat. that is all changing now and banks are pushing the foreclosures through the system faster. which are there more zombies now? well, folks who may have been staying in their house, hearing nothing from the bank, are getting those final option notices. now they see the writing on the wall so boom there goes another zombie because they leave. while the overall foreclosure crisis has improved dramatically, the number of zombies is increasing in higher priced markets, new york, l.a., chicago, fichl andphiladelphia and

boston. because as home prices rise banks see an opportunity and they speed up the foreclosure process. we looked at some of these zombies right here in d.c. and also in new jersey. home after home with estimated current values really quite high some at over half a million dollars. once these homes clear the foreclosure process they could present great deals for first-time buyers as welling a investors and flippers. no wonder we've seen bank repo sessions rise for the first time in two months. we're now at a 17-month high in repos though. good-bye all those zombies, hello home sales. more online realty check dot ccheck dot c realtycheck.cnbc.com. our weekly series featuring people with really cool jobs. meet a woman today who's made a very sweet career for herself. >> i'm lisa schroeder and i get paid to be a chocolate taster. ♪

>> i have the job that almost everybody wishes they had. we have our panel room where our panel of taste testers sit. they sit at work stations and they evaluate chocolate. as they are evaluating the chocolate, they're putting their evaluation results into computers. so there is actually a technical side to it. some of the things that we look for when we are tasting chocolate are the flavors of chocolate essence, caramelized sugar, we'll think about the texture, how it feels in the mouth, how it tastes. when we taste we expectorate, which is a fancy way of saying that we spit things out. so, all the things that we're tasting every day we're not consuming all day. the quality process for great tasting chocolate starts at the very beginning with the cocoa bean which gets made into chocolate liquor. we get our cocoa butter. we taste the chocolate liquor and cocoa butter to make sure there's no off flavors. what gets me most excited about going to work i get up in the

morning and i get paid to go eat chocolate. i can't imagine doing anything else. >> to find out what it becomes or takes to become a chocolate taster, you wealth in's quality a huge issue in america. something very interesting is coming out of france and a warning from someone you might not expect. robert frank is on that story. >> it's coming from the billionaire head of a luxury company. a company that makes $300,000 watches and sells them to the ultrawealthy. he is sounding an alarm.

if you needed proof that not all companies and stocks are the same here is exhibit a. michael kors, down more than 25% in the past three months. it disappointed greatly on earnings and the stock paid the price. exhibit b, tiffany had a big gain after its most recent earnings report. stock up almost 10% in the past three months. a down stock is one thick, but something much more perilous may be on the horizon for other luxury companies. the warning is coming from the

head office of cartier. wealth editor robert frank joining us. >> the man who sells $300,000 watches and million dollar necklaces says inequality is unfair and creating quote, envy and hatred of the rich. johan rupert spoke at the luxury conference in monaco and said the biggest threat isn't e-commerce or smart watches, but inequality. massive structural unemployment caused by artificial intelligence and robots will accelerate the wealth gap and tear apart economies and societies. >> we cannot have 0.1% of 0.1% taking all the spoils. it's unfair and it is not sustainable. >> unless there is a new social pact he said there will be envy hatred and social warfare against the rich. he said we are destroying the

middle class and it will affect us. it is unusual for a luxury ceo to warn of class warfare. he says they will have to adapt to a customer base that doesn't want to show their wealth. product should be finely crafted, special and lasting. he said the apple watch doesn't pose much of a threat since gadgets of disposable and cartier watches last for generations. owe said if your daughter is turning 18 or 21 what are you going to give her an apple watch or cartier watch? one is very special. no threat now. this is something the luxury industries are not focused on. they are focused on e-commerce. this is the big worry. >> but it should be noted wealth inequality is narrowing globally. it's getting worse here. it's narrowing as manufacturing and capital disperse around the

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you use a mobile app and a concierge picks up at the curb. there are ten locations nationwide for silver car, mainly in the south and wisconsin. the ceo says they only run audi a-4s to elimination confusion and frustration for customers. >> the customers like it. like i said before this one huge problem that has been around for years is never knowing what car you are going to get. there is always consistency. you are only going to get one car. it's a great car every time. >> is silver car a threat to the hertz and avis of the world? they have strong ties with business travelers because of corporate accounts and wider networks practically every airport around the country and world. they are close to airport locations. you don't have to go off airport many times. the stocks have been struggling.

keep an ifreye on silver car. >> thank you. tonight on "fast money" at 5:00 dan niles, the three tech stocks you should be buying right now. >> thank you. thank you for watching everybody. "closing bell" starts right now. welcome to "the closing bell," i'm kelly evans at the new york stock exchange. >> it's scott walker in for bill griffith. here what's happening. oil is down. transports fighting back. new developments in the greek bailout drama. we'll break down what it could all mean for the broader market. >> and taking on mark zuckerberg. we have a facebook shareholder not happy with the ceo, even though the stock has been an outperformer. >> competition for gopro. citigroup out with a new note saying gopro may not catch on with the mainstr