yo. >> s&p 500 tracking for its smallest first half gain since '78. >> i think the strategy for investors is thinking about what to do in the second quarter. japanese yen will strengthen if things get worse. "power lunch" begins now. >> announcer: "halftime" is over. "power lunch" and the second half of the trading day start right now. welcome, everybody, to "power lunch" along with mandy drury, i'm tyler mathisen. nice to be back with you. rough day for the bulls. the dow taking it on the chin down 231 points. s&p down 1% or more, at 2 t,074. nasdaq down 1.4% and the russell down 1.38% at 1,262. europe took a beating as well much more than what we see

here. london stocks fell 3.75%. vix up huge almost 25% today alone. lots to talk about. greece of course capturing a lot of attention and the headlines but a bond crisis much closer to home is causing more immediate waves. this came out of nowhere but it's hardly unexpected. puerto rico saying it just can't pay off its debt. governor padilla saying "the debt is not payable. there is no other option. this is not politics. this is math." alexandra, you told us in february there was some protection to be found in insured bonds. do you feel the same way now? >> well if you have insurance on your bonds, those bonds are going to continue to pay interest and principle on time. so even a restructuring won't affect that. what's actually very interesting is that the spreads -- or those

bonds, even the insured bonds, are actually down and ultimately at some point obviously there has to be some concern about the insurance companies as well if they have to take on massive amounts. but bear in mind that they're not going to be accelerating any payments. >> are we talking about all bonds issued by the commonwealth of puerto rico? in other words, the general obligations, the revenue bonds, the whole kit and caboodle? >> do bear in mind we've talked about this before. there are a number of general obligations, sales tax bonds, puerto rico electric power authority, and some are revenue bonds and obviously general obligation bonds are backed by the full faith and taxing power. the governor is looking at $72 billion in debt which is staggering amount relative to it the commonwealth. the thing tomorrow -- or excuse me, on july 1st is the puerto rico electric power authority interest payment which is due.

at this point -- oops. earring fell -- which there's not enough money right now. >> maybe we can hock the earrings and help them pay a bond. >> they're not worth that much. >> i was actually reading that a lot of the puerto rican bonds are held by individual u.s. investors. in things like mutual funds and various other vehicles. the problem is a lot of people aren't even aware of that. right? >> so this is actually the most important thing as it relates to the rest of the municipal bond market. i have said many times that each issue that's come up whether it's detroit, whether it's chicago right now, is unique unto itself. puerto rico's issue is unique unto itself. however, half of municipal bond funds own puerto rico bonds. so there already have been

declines as this crisis has continued, and today puerto rico bonds are trading even down more and significantly so so this could have the effect around i i -- and i do expect it will cause the effect of affecting the markets. >> could this contaminate the muni bond market by a mechanism that says well if puerto rico is at risk, you mentioned illinois. we know about other municipalities, that there could be some sort of contagion that would ripple through all of the triple tax free or tax free bond fund market? >> having just said that there could be ripples through the market itself this still is a unique situation in that you have a massive amount of debt. and if you look at the per capita debt or debt versus gdp

of puerto rico it's staggering versus the other states. you have unemployment that is twice that of the mainland. you have a structural imbalance in the government, somewhat similar to greece that's gone on for years. so that is different from the other situations and from the other states so i don't see a contagion spreading. i think what you have here -- and this is similar to greece -- is that you can't keep kicking down -- the can down the road. there is a point at which the road ends or there's a brick wall and we're at that point right now with puerto rico. >> thank you very much. it is very interesting. we'll keep on watching what kind ripple effects that may be. i also believe that the puerto rican government is going to address the public at 5:00 p.m. eastern. thank you very much. the financial guarantors that insure puerto rican bonds are also getting slammed right now. bob pisani's been tracking those

from the nyse floor. what kind of slamming are we talking? >> pretty serious. double digit. there's three things to watch on this puerto rican story. one is those bond guarantors. nbia, and take a look at that. down double digits. also assured guarantee, that's ago, down 15%. nbia is about $4.5 bhlillion of gross insured exposure. assured guarantee has about $6 billion. both were downgraded today at btig. the other thing to look at is you are getting great he than expected haircuts on puerto rican debt. there's this sort of risk-on feeling on puerto rico. if you look at banks that have big branches in puerto rico they're down. another peripheral impact is the insurers. not because they have investments in the puerto rico but because there is a flight to

safety around puerto rico as well as around greece. bond yields are moving down notably today. insurers are very sensitive to bond yields. lower yields means less ability for them to pay out on their obligations. we are seeing big insurers like methlife and prudential to the downside. watch high-yield debt. a lot of debt for puerto rico is heavily owned by hedge funds. there's some speculation they may sell some of their distressed holdings. there's the etf for high-yield bonds to the downside. finally, alexandra talked about contagion and the lack thereof. i'm in her camp on this. the mub, this is the etf for municipal bonds, it is the only one that's significant, it is actually trading fractionally to the up side today. at least now contagion in other municipal bonds. to the other debt crisis that the markets are focused on today, and that of course would be greece. here's what we know right now. the greek banks are closed today but officials say they will

reopen on thursday. country imposing capital controls and facing a deadline tomorrow to pay back $1.7 billion. greek prime minister alexis tsipras announced a july 5th referendum. you are looking at a live shot there in athens in front of the parliament building, a "vote no" rally under way. german president angela merkel says they've offered greece a generous offer. let's also check on the euro/dollar trade. it's been an historic day. big swings here. the euro down as much at 1.09 against the dollar or thereabouts at its low today, but now back above 1.12. a major recovery as the euro yo-yos. we'll talk more about that later in the show but in the

meantime ron insana just put up a piece on powerlunch.cnbc.com on four trouble spots he believes will give the bulls pause. part ly due to puerto rico greece, the fed. you could argue that maybe just one of these taken in isolation would not be enough to royal the six-year long bull market we've all been enjoying but maybe all four together could be a problem. >> greece by itself is not 2011. the european banks have much less direct exposure to greek debt than they did in '11. my bigger concern is around china. when you look at the response to the fourth rate cut in the last several months chinese shares closed down 3.3% they were down as much as 7% overnight. then throw on top of that puerto rico, again, in isolation, a big deal for the muni market. if the fed followed through with the rate hike that has ripple

effects around the world. it is not a stable world in which to raise rates. i'd be a little cautious around here. >> i'm not sure ron. i agree with your first three but i'm not sure raising of the rates will have as much impact as everybody thinks. i think the market somewhat priced it in. >> i think it's priced it in the absence of these other factors. once emerging markets get roild royaled by a small fed rate hike. shenzhen got slammed overnight compared to thehang seng. if these continue to. steam roll and get larger then the fed has a legitimate reason to say the u.s. might look fine but it won't necessarily with all these three factors playing at the same time. >> particularly the chinese. more than in puerto rico and greece. >> absolutely.

look, china db again, again even in isolation, they're 70 export they have a bigger problem ultimately than we do. depending how this week plays out, if the market can stabilize it is not the four horsemen of the apocalypse. if we start to go into free fall around the world, i would certainly protect profits at home. >> china is the world's second-largest economy. we'll talk more about china later on in the show. check out ron's story on powerlunch.cnbc.com powerlunch.cnbc.com. to the american housing market we go. a bullish sign today. a key forward looking indicator of home sales rising to its highest level in nine years. diana olick is live in washington with the details. >> hi ty. it was a gain but just barely. realtors are starting to use the "a" word -- afford ability. pending home sales signed contracts, not closings rose just under 1% month to month.

still the highest level in nine years. but compare that to a 5% jump in closed sales in may, those are contracts signed in march and april. why the disconnect? well, first, home prices continue to rise as inventories are super tight. the median price of a home sold in may was nearly 8% higher than a year ago and realtors say we could see that price surpass the 2000 peak this year. home prices are rising at four times the pace of earnings. combine that with a sharp jump in mortgage rates in may when those folks were out signing contracts, it went from 3.6% to over 4% from mid-april to june. it looks like we may be headed for a speed bump here as there's plenty of demand but still not enough supply. it all keeps prices going higher around out of reach for some potential buyers. >> diana olick reporting. dominic chu for a "market

flash" flash". >> shares of credit card companies are lower. visa and discover among the worst performers today followed by mastercard and american express. credit card issuers, payments companies, a focus for some investors today in this sell-off. >> a lot of red on the screen. if you are looking for a bright spot in today's big sell-off, look at coal mining stocks. they are soaring on the back of a major supreme court ruling. we'll have the fallout on the sector. good fallout. currently looks very good for those stocks. plus auto sales through the roof. why is it getting hot ingting harder around harder to find cars and trucks that are actually made here in america? we'll explain that as well. don't go away.

the market is currently in the red. you've got the dow at session lows down by 250 points right now. i think the last time the dow closed down by 200 points or more was back on april 17th. session lows for the other markets as well. the vix, by the way, a little gauge out there that we know is the -- as the fear gauge, it is up by 25% so that would be i think its biggest one-day jump so far we've seen this year. here are some of the headlines. sysco corp. abandoning its bid for u.s. foods. general electric selling multiple commercial car and truck financing businesses for $6.9 billion.

ge has been on the selling spree in an attempt to get out of the banking business. it is a big down day but guess which sector is rallying. coal stocks. why? supreme court strishgking down regulation by the environmental protection agency. the etf that tracks the coal stocks, it goes by the interesting ticker symbol kol. it is down just a little bit, down 21%, almost 22% so far this year. hampton pearson live outside the supreme court in washington. >> yeah. a big win for the electric utility industry and a setback for the environmental regulation of hazard usous pollutants from coal fired power plants. the supreme court in a 5-4 decision today says the epa must consider the cost of compliance when regulating pollutants. 9.6 billion a year in this case says the industry but the reduced emissions benefits just

$4 billion to $6 billion. the epa released a statement reacting to the ruling reading, in part this rule has issued more than three years ago, investments have been made and most plants are already well on their way to compliance." the case now goes back to a lower court for further action. meanwhile, the court did deal a significant setback to opponents of the death penalty ruling that a drug used by the state of oklahoma in its lethal injection procedure does not violate the constitution's ban on cruel and unusual punishment. and finally, the justices upheld a plan that stripped the arizona legislature of their role in congressional redistricting. pin instead, it's authorized an inpend commission it set those congressional boundaries. six other states including california have used similar plan. that wraps up what -- mandy, what by anybody's assessment, a very historic session of the

supreme court. >> i would agree. thank you very much hampton pearson. gm chrysler ford three great american auto brands. but good luck finding a car or truck actually built in america. what's behind that phil lebeau in chicago? >> mandy, they are built here. not just from the big three but from a number of automakers. the question is what's the total percentage of those vehicles that we can say are american made? the numbers might surprise you. we'll have them when "power lunch" returns. but not every insurance company understands the life behind it. ♪ those who have served our nation have earned the very best service in return. ♪ usaa. we know what it means to serve. get an auto insurance quote and see why 92% of our members plan to stay for life. ♪ i built my business with passion. but i keep it growing by making every

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auto sales are soaring. so why is it tougher and tougher to find cars and trucks that meet the "made in america" standard? phil lebeau in chicago with some answers. hi phil. >> hi tyler. it's because we have a more global industry. if you look at the latest study being done by cars.com what they do every year is they go out and they actually check the stickers on all the vehicles that are made and they said what percentage of these meet the threshold of not only being assembled in the u.s. but having 75% of the content coming from suppliers in the u.s. or canada. just seven models this year meet that requirement. global diversification among suppliers is the big reason why. finally, the question is whether or not consumers really care about this. is there much of a sales impact. even the folks at cars.com say, at the end of the day, people are more concerned about things like pricing, brand loyalty, reliability. those are the types of things that drive it more than whether or not a vehicle meets the

standards. let me show you the toyota camry. it took the top spot on the list this year in terms of the most american made of the seven vehicles. it's biltuilt both in kentucky and in indiana. the camry has been the top selling vehicle since 200337 what was the top selling vehicle or best -- most american made vehicle last year that is not on the list this year? it's the new ford f-series. the reason why, cars.com says the content on the f-series has dropped from 75% down to 70%. as a result, its dltsomestic parts dropping below the threshold to be on the list. shares of gm and ford like the rest of the market are under pressure today. finally, one more piece of information in the auto industry came out today. auto loyalty as measured by ihs, a consulting firm at its highest point in ten years. 52.8% of the buyers in the market right now are sticking with the same brand that's the highest since '05. by the way, 13 different brands

hit ten-year highs. kind of remarkable when you think about what's happened with toyota gm the takata airbag recalls. even after all that people are saying i'm generally happy with this brand, i'll go back and buy another one. >> has anybody asked the manufacturers what their answers are to those dropping numbers? obviously with toyota being number one that's a bit alarming. most people would not even recognize that. is anybody asking the manufacturers like ford why are those percentages dropping? >> we have not gotten a definitive answer from ford. what we know generally speaking we're just seeing a more diversified splarupplier base and increasingly those suppliers -- >> the most american-made car in the united states is a toyota camry? >> but driven by the labor pool. >> what they do is tyler, they take -- you have to be built, final assembly in the u.s. and you have to have 75% of your

content coming from suppliers either in the u.s. or canada. they can't really decipher out whether somebody is from windsor canada or in detroit. they make it u.s. and canada. there's only seven. >> so if only seven cars make that 75% american constituent parts and are assembled here if only seven cars do that today, is our standard for what constitutes an american car too high and rooted at a time when -- >> the standard needs to be about labor though. right? that's ultimately what we're doing. when you bring bmws into south carolina, you bring toyotas into indiana, it's really the labor pool. part of i think what's confusing the issue is a lot of the suppliers out of michigan are now owned by worldwide companies. so we don't know where all those parts are coming from because there's been a lot of consolidation. i'm focused on where is the labor coming from that's putting these cars together. >> in that regard marcus we've never seen the amount of manufacturing -- i shouldn't say "never." but the amount of manufacturing

in this country is at its highest point since the early 2000s especially when you factor in all of the foreign automakers who have now set up plants or built on to their existing plants in the u.s. >> fascinating conversation, folks. thanks very much. marcus phil. let's take a look at what gold prices are doing at their closing right now. benefiting moderately from the turbulence we're see inging in places like greece puerto rico china. up to $1,178. that's up .05% at the close. let's look at silver copper palladium and platinum all down except for platinum which is sitting flat. to the bond market now, where rick santelli is watching what's happening at the cme. >> even though we're down a dozen basis points at 2.35 of the 2.47 settlement in our 10-year, a 2-day chart shows what's fascinatesing we did intersect friday's range when we

traded up to 2.40. why is that significant? because it is far from a lehman moment. matter of fact look at a 2-day chart of bunds. they came within one basis point of a range intersection. very important. everybody wants to make everything going on today about greece. but you could argue as you look at a 24-hour chart of the euro versus the dollar or a march 1st chart of the euro versus dollar. you can't really pick out today as anything unique. maybe it's indeed more puerto rico or maybe, the most it's china. that would explain equity markets. who is one of europe's biggest trading partners. this is important. make sure we all understand. one of the main reasons yields seem to have gotten ladyyzy here is because of the weakness in the equity markets. next the greek ripple effect. will greece take a big bite out of the u.s. economy and the first half of the year almost in the books. just a day left? i guess. basically one more. airlines have really taken a beating. they're down 9% so far this

year. near in correction territory. i thought the planes were full! mine sure have been. there your second half playbook on the transports is ahead.

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hello, everyone. i'm sue herera. here's your cnbc news update for this hour. a new jersey man was arrested at his home this morning for allegedly conspiring to provide material support to isis. a court document is accusing the man from west new york of planning to travel to syria to link up with isis militants and in regular contact with others who had similar plans. more arrests are expected. doctors upgrading the condition of prison escapee david sweat to serious from critical a day after he was shot by a local state trooper after more than three weeks on the run. david sweat is being treated at the albany medical center where the trauma team said he did not need surgery. iraq's shiite fighters moving closer to the center of the refinery city of bahji

taking two villages reportedly on the outskirts of team following a week of fierce fighting with isis militants. a study from san diego university reveals americans are much more accepting these days of working mothers than ever before. the rate of acceptance more than double ing doubling from 1977 to 2012. as a working mom, that's good news. that's the cnbc news update this hour. the s&p 500 and the dow are having their biggest drops since may 26th. that's what the nasdaq since may 5th. >> we have fractional losses. we've seen this play out like six, eight different times it dipped below year to date losses then back to gains, losses, back to gains. >> it's been a fairly narrow range. >> year to date we're down by about .6%. we are just fractionally lower. but in terms of point contribution, this is where it gets interesting. the stocks that have given the most towards the dow have pulled

the most weight if you will have been some of the bigger names that you'd expect especially because of their price tags. united health group has added 141 points to the dow's gains or losses overall. it's been the biggest contributor so far. disney we all know the story, keeps hovering near these record highs adding 134 points. goldman sachs adding 103. if it were just these three stocks and other likes it we'd much positive on the year. walmart has detracted 95 points from the overall total. again we have on-balance net losses. american express also taking away 97 points so far year to date. chevron taking out almost 100. these three stocks have been some of the biggest drags. if you are looking for where the action is this is where most of the action has happened to the downside obviously because now net-net we're down for the year. let's get back to what is one of the major reasons for the sell-off today. the crisis in greece. greek prime minister alexis tsipras announcing a snap

referendum on the terms of a cash for reforms deal scheduled for this sunday. meantime greece has imposed capital controls. the stock market and banks are closed. the latest now from our chief international correspondent who he a been pretty much working 24/7, michelle caruso-cabrera from athens. >> reporter: going on behind me a "vote no" rally. that very referendum that you referenced that was announced. a surprise move late friday night by the prime minister of this country. i'll step out of the shot. this is the largest rally we've seen in a couple of weeks. doesn't reach the heights that we saw in 2010 and 2011 but maybe give it time. very large crowd out here. we've been able to speak with some people in the crowd. some people -- and hearing this very subtly for the first time since i started covering the greek crisis people who are willing to leave the euro. one guy said, you know what? the british, uk they use the pound and they're doing just fine. we've had this for five years and it's been nothing but

suffering. maybe we should try something different. that's a fairly distinct tone. that doesn't mean the overwhelming population believes that but certainly it is something that wasn't prevalent before. a far less raucous event earlier today was the hellenic chamber of commerce hosting an emergency meeting. members who are business leaders in the country are quite terrified of the possibility of a no-vote against the reform package because this is being seen essentially all over the world by the leaders of europe and being seen as -- are you in the euro or out? are you voting for the euro or against the euro in members of the clam ber of commercehamber of commerce want greece to reach a deal with creditors and stay in the euro. they believe it would be terrible, terrible for their businesses. you highlighted at the beginning some of the big events for the day. because of this surprise announcement that led to a bank run over the weekend ecb put

caps on how much banks can produce in withdrawals. ecb reconvenes on wednesday to figure out if they'll keep supporting the banks. by then they will know two key questions. did greece pay the imf that 1.5 billion euros, that looks unlikely. >> thank you for reporting from athens. our senior economics reporter steve leisman is here to show us how the greek crisis could hit here in the u.s. we were just talking offline. you're going to make me ask the question -- should the greeks really just leave the euro? is that the best thing they could do? >> i think so. and for europe. i think that -- i can't think of another way, tyler, for them to solve their problems. the market can solve it by adjusting prices inside greece. politically they cannot have an

outside force, as you see now what you see from that protest. you cannot have an outside force imposing restrictions. what will happen if they have their own currency they will have -- they will bear the cost of their own largess when it comes to things like pensions and they'll decide for themselves. >> i'm here with my hands. front of me like stefan on "saturday night live." if you cannot have an outside force imposing conditions internally -- >> i was in russia for six years. i saw it fall apart. it doesn't work. >> does this say that the euro is doomed because then -- you've got parties in italy, portugal and spain that are rising against the kinds of austerity. >> i don't think so. i don't think so. i think that the differences between greece and italy and spain are greater than what italy and spain and the other potential peripheral countries have in common. i want to show you one effect that's happening right now

though. marcus? >> i just feel like you're taking the lowest common denominator and say something you don't belong anymore. i don't know if they're capable of surviving on their own. >> sure they are. anybody can print their own -- they have to figure it out for themselves. >> get away from our currency -- >> they don't want to live like germans. they don't. i don't think. if they want to have retirement at 56 even if they don't, if changing it from 56 more like in other parts of europe is too politically calamitous or difficult to get to then they can't do it within this framework. >> what happens to the tourist market? does it just fall apart? >> people will come. drachma will be so much weaker and they'll work harder and they'll wish they stayed in the eurozone. >> as if they're not working now? >> you know? i go with my good colleague, michelle. when michelle says that the working conditions there, although i think since the crisis are worse, in general before that people got to retire at earlier ages they got

disability pensions and pensions -- >> just too comfortable. >> it was a little too comfortable and it didn't work. the currency -- it was the cart before the horse. the currency was supposed to force the countries to come together. but that wasn't the way to do it. it's got to be done over time. they've got to do it internally. then they come together. i want to show you one quick chart. the effect on the united states here in the united states. this is the fed funds chart. we are trading at the low of this contract. you want to know the effect on the u.s. already what's happened is not only is -- are two rate hikes being baked out but they're now baking out even the first one, even one entirely. that's one effect. obviously you've seen lower yields. you don't have contagion spilling over just yet obviously a recession in europe would hurt us. right now thinking is that this is not going to be a big deal for us. >> i worry about the people in both greece and puerto rico. >> you should worry. >> out in puerto rico general

obligation bonds, they require that everything is paid in the general obligation fund before anything else is paid. >> we should be providing assistance to greece to make that transition to their own currency. that would be something that would be helpful. >> we should provide that? >> the western world and developed world should provide help to greece to make that transition. >> what about puerto rico? what do you do there? they leave the dollar? >> no they don't leave the dollar. that's another topic. >> you know i'm kidding, right? what do you do then? >> i don't know how you solve that problem. they have to be worked out. it has to be an agreement between creditors -- >> massive restructuring. >> it's just like people take a haircut. >> we think it is weird to restructure companies that way but not countries. >> the difference is there's either cash flow or assets -- >> there's cash flow in a country. there's the ability to tax, right? >> but you can't tax people that don't have the money to pay the bill to begin with. you're just going to keep raising taxes that they don't have the cash to pay for electricity. >> gentlemen, thank you. tyler, macro level to

microlevel. we're watching utilities stocks. standing out as the sole s&p 500 sector that's even in the green today. telecom, consumer staples not far behind but they are still in the red. they're relative gainers but on this down day everybody is losing some ground leer. names like american-electric, also dte energy coned, first energy all up by 1% or so on the day so far. so when interest rates fall and there is a somewhat flight to safety, those utility stocks tend to gain. greece and puerto rico still in the headlines today, but do take a look at china with the main stock index there entering bear market territory down more than 20% since june 12th. it's been a bit of a mixed bag for the u.s.-china etfs. that discussion ahead on "power lunch." k and choose world. choose choose choose.

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let's check in on the dow. we haven't had this kind of decline since mid-april, down 243 points on the industrials. nasdaq back below 5,000, folks. off 1.6%. the s&p 500 down about 1.4% at it 2,071. bob pisani is covering it all from the new york stock exchange. >> let's look at the s&p 500. specifically let's look at the spy. that's the etf for the s&p 500. i'm putting that up. we are at the lows for the day. because volume is heavier than normal. almost 100% of normal volume for here. this is the biggest etf in the world. you could expect volume to be a little bit lev onheavy on a day like today. financials are the weak group but also materials and consumer discretionary and tech everything is down about 1.5%.

not everything is down this month. these are the weakest sectors. some the high-beta etf rz,s, the stuff that moves more when market is down. that's not terribly surprising. the vix. remember my rule of thumb on the vix. i generally don't pay too much attention until it is over 20% but today it is moving up in that direction. we haven't seen this in a few months. really since march where we've been in this territory. it gets towards 20 then i'll start squawking. insurers are weak today. we have seen a situation where greece, as welling a puerto rico, has caused a flight to safety in bonds. this has pushed down bond yields. insurers are very sensitive to bonds yields because they have bonds that they use to pay out future obligations. so when yields start moving down notably, insurers are typically under pressure even if they don't own greek debt even if they don't own puerto rican debt. it has to do with that flight to

safety quality. as for the banks, european banks understandably sitting now towards the lows for the day. they closed over in europe not far from the lows. 4%, 5% 6% declines depending on where you are. i want to point out there are some of the greek banks that are still trading and they're down in the double digits even though the greek markets are closed today. for more on today's market drop let's bring in brad freedland, portfolio manager with angel oak capital advisors. patrick kaiser with brandywine global and markets. gentlemen, great to see you. brad you're more of a fivgedxed income side of things. rather than talking about the concerns, where are the opportunities for u.s. investors in the bond market that's been created by this volatility? >> we're thinking about opportunities a day like today is a way to think about that. we are looking at areas of the bond market that are strengthening fundamentally but

may be in a certain way impacted by some of the credit jitters that are out there right now. >> brad, can you be more specific? some specific examples? >> sure. yeah, so you heard this morning pending home sales did particularly well. last week we heard about existing home sales. so i'm talking about real estate. i'm talking about homeowners across the u.s. and those are packaged into mortgage-backed securities, not guaranteed by the government. we like that space. we also like u.s. commercial nbs. that's csnb. those areas may be feeling a little bit of the impacts today and represent buying opportunities. >> why do you think those commercial opportunities representing those opportunities? why do you feel that way on the commercial side? >> that particular area tends to be a little more volatile, it tends to absorb some of the news and headlines that exist every day. we'd expect a little bit of short-term softening, and with that a little bit of a snap-back as investors begin to realize

that the fundamentals continue to look very good from a vacancy standpoint, from a growth standpoint, and from a supply standpoint as well. >> what about you, patrick? what do you think is the biggest problem facing the u.s. out of all the various things that we're talking about today, and how does a u.s. investor turn a that around to their advantage? >> i think a lot of the things we're talking about today in terms of greece china, puerto rico really don't matter that much to the u.s. economy. if pixar were going to make a movie and call it "inside out for wall street," you'd only have two emotions fear and greed. today you have fear dominating. at brandywine we are value investors and tend to be more xrarian. i'd be looking for are opportunities that depend more on u.s. economy growing. we think financials are very interesting. we just heard that the move in rates is hitting those stocks today but they're very cheap. >> brad what do you -- patrick, what do you like about the financials? we're hearing interest rates. why are you grabbing on to that? >> so first of all they're statistically cheap and we look

at price to earnings price to book. here i think mainly about the biggest banks, biggest life insurers, citi and metlife. they're cheap, quality companies. we do expect that the u.s. economy is going to reaction sell rating now and will continue to do pretty well. even though the market is saying today that rates aren't going to rise in the near term we do expect that over the next 12 months that presents the opportunity. you've got a catalyst either loan growth higher rates or just the valuation right there. you've got three pretty good reasons why financials look interesting going forward. >> mind you, of course the expectations of rates might be sort of realigning as we speak. patrick, on the point about the big banks, jpmorgan got a downgrade today by oppenheimer because they were basically saying the valueations just might be outrunning some of the fundamentals. how would you respond to that? >> that may be an interesting short-term call. when we look out we think normalized earnings at jpmorgan to be north of $7. you put a 10 12p on that.

we still see potential for earnings growth there in the coming years. great franchise. most of the major u.s. banks have great franchises so we think that somebody that can have that long-termly can do quite well for the bigger banks. >> thank you all for joining us today. the first half of the year has been a rough one for the airlines, down 9%. will there be more turbulence ahead or investors in the second half? when "power lunch" returns in two minutes.

in the face of its deadline to pay back $1.7 billion by tomorrow, greece is imposing capital controls around the country. secondly, the american housing market showing some bullish signs. pending home sales have risen to the highest level in nine years. the last thing that we learned was the supreme court has decided that the epa must consider the cost of compliance when regulating pollutants. the case is a major win for the electric utility industry and it is a potential setback for the environmental regulation of hazardous pollutants.

call it the greece of new jersey. atlantic city having its own financial problems. casino supply has shrunk by one one-third and the state is in emergency state of restructuring its finances. we'll head out to the boardwalk still ahead on "power lunch." join us. ♪ every auto insurance policy has a number. but not every insurance company understands the life behind it. ♪ those who have served our nation have earned the very best service in return. ♪ usaa. we know what it means to serve. get an auto insurance quote and see why 92% of our members plan to stay for life.

this is a very difficult action-packed day for the markets as greece worries rattle investors. that's not all. the dow down by 247 points at this hour. chief market strategist with oppenheimer oppenheimer, john stolfis. >> i don't think there is any need to panic, tyler. if anything i'd say this is what we would expect. the market has to pay homage to something like this especially coming up on a holiday week. people want to lighten up anyway. this was a good catalyst to stem cell -- sell stocks today.

state side you can't help but market taking. >>stocks today. state side you can't help but market taking. >> real debt problems in greece puerto rico and a bear market in shanghai. >> i'd say there's always trouble but there's a lot things that are getting better at the same time. we just have to consider home prices in the united states existing home sales, new home sales. job situation is improving. on a scale of 1 to 10 we're probably doing an 8 1/2 right here. >> what do you think is next as we move through the summer here? there's a lot of unresolved issues. do you think this is a sideways market between now and say school time? or what? >> i think we have a good opportunity for some sideways motion and i think we've been

experiencing that for a spell before this selling that we're seeing today. would also have to consider the next main event really is going to be earning season state side. hard to believe but that's coming up next week on july 8th when alcoa reports earnings. >> so if you had two sectors to lean in to and two to lean away from over the next three to six months, what would they be? >> i'd probably continue to overweight consumer discretionary and health care. both of those are right now in a trend which is benefiting from demographics in terms of health care developments in m&a in terms of health care. in terms of consumer discretionary, the consumer is really beginning to spend some money again. >> ones to lean away from? >> i would say utilities as interest rates are poised to

normalize. i would also be underweight energy, as well as telecommunications here. telecommunications just too narrow a sector. there's just a couple of players really to own there, we would say. but in energy we can't help but think there is a lot of oil floating around the world at these prices even at $58. i'm getting a little nervous. >> john thank you very much. we appreciate you being with us today. let me hand it over to mandy who will kick off the second hour of "power." thank you, tyler. it is indeed 2:00 on quality, 9:00 p.m. in athens greece. you are watching the second hour of "power lunch." i'm mandy drury along with tyler mathisen mathisen. right now stocks are holding deep in the red. things you do need to know at this hour the dow is currently off session lows but not far from. the dow is now red for the year so far. the nasdaq is down two points

below 5,000. 10-year note yield is currently 2.34%. overnight we touched a low of 1.09 for the euro. it's gaining against the dollar. you cut off the weakest link in the eurozone the thinking is maybe the rest of it will be stronger. gold up by nearly .5%. over the course of one week gold is down by .5%. not fully capitalizing on the financial turbulence around the world. as for wti crude, 58.46, down by about 2%. that is a one-month low. concerns about the economic impact of all these financial problems. we've got much more on greece puerto rico, klein, and the u.s. markets in a moment. but i do want to begin with that big sell-off in china

because the main stock market index there entering bear market territory. the shanghai composite down more than 20% since june 12th. let's bring in head of global strategy for investnet, zach what's your reading on what's happening in china. more importantly what does it mean for a global investor? >> you just pointed to the chart. it's in a bear market only if you use the most technical -- it's down 20% but it's up 98% for the past year so it is hard to look at that as a bear market. second thing, we really do need to keep making it only retail domestic chinese citizens can purchase shanghai and shenzhen stocks and there is a few billion here and there of foreign quota money that can be institutional money. so in a lot of ways these are hermetically sealed markets.

>> mind you, it is having aen knock-on effect to the h-shares. >> but they aren't tracking by any means one to one. while they've sold off today, the h-shares wonky stock is probably what's related to what's going on in global markets a la greece than what's going on in shanghai. this neither has a lot of implications for the domestic chinese economy because again it is retail investors probably speculating. they're not gambling in macao but they are gambling in shanghai and shenzhen stock markets and because you don't have a lot of foreign money in and internal money going out. >> nonetheless, you say it isn't indicative of what's happening in the chinese economy but a crash in the stock market would have an impact on the chinese economy. this is the world's second-largest economy. what worries me is that even further easing even further action by the central bank is not helping the stock market at this point anymore. >> mandy, i come at it from a

very different point of view than zach does. i see this market action basically as the technicals now reflecting the underlying fundamentals in china economically which are horrible. you have a heavily export-dependent economy in china now seeing both its biggest customers, europe and the u.s. having significant issues. >> what are the issues peter? >> hang on zac. let me finish. i didn't interrupt you. >> they ran growth rates of 10% and now they've plummeted down to like 7%. they're probably on their way to 6% or 5%. the basic problem with klein is that it's export dependent. that's the underlying fundamental. lay on top of that a stock market bubble, lay on top of that a housing bubble and then lay on top of that rising wages, and then lay on top of that

severe pollution problems my view is that the china story is basically over. this bear market is a bear market. it's going to continue to go down and china's going to be in a slow growth mode and that's going to continue until europe and the united states recover. >> peter i wants to take you back to your export dependence. this is marcus. you said that there are two largest customers on export side of the united states and europe and those are dramatically slowing. what indicators are you seeing -- because i'm not seeing those in the united states -- why do you feel like they're slowing? >> well, let's take the united states. united states is the strongest economy in the world right now -- >> but you just told me it was slow. >> yes, but -- here's the "but." if you look at our historical growth rates, we used to pull off 3.5% gdp growth rates year in year out for 5 1/2 decades after the post-war period. what's happened now is we've secularly dropped down into the 1.5% to 2% maybe 2.5% gdp

growth rate at best. so even though we're doing better than everybody else we're still not doing as well as we used to and we're not doing well enough to sustain china. europe, of course, is a total basket case. if you look across the continent there, the only strong economy there is really the german economy and ironically the german economy is strong because it's parasitically feeding off the rested of the eurozone so that's not sustainable. >> obviously peter and i disagree about there and that's fair. there are different points of view on this. there is a lot of china bears out there. first of all of, i do not think that you can use the chinese equity markets as any proxy for domestic chinese activity because they did really badly while china's economy was booming and they've been doing really well for the past year absent the past two weeks while china's economy is admittedly slowing. other thing, klein growing 5% or 6%, by whatever number at the current rate of its gdp, the size of its economy is adding

more to its own domestic output than china growing 12% or 13% last year and it is making a massive shift. doesn't mean there aren't bubbles. >> bottom line if you're a u.s. investor an international investor, do you use this as a buying opportunity in a china tefr etf? >> i think there are a lot of great companies to buy like alibaba. a lot of those are not in china etfs. i think china investing is a little more complicated and this buying say an sfi. but i think china represents a domestic market of really still incredible potential. >> thank you very much zach and peter. we'll keep on watching what happens with the shanghai and h-share market. what a first half it has been. went by in a flash. first half of the year almost in the books. got sort of a day and some change left to trade. today's drop putting the dow back in negative territory for the year. one sector that's really taken a beating this year airlines. that sector down nearly 10%. 10% as you see right there in

the first half. will there be more bumps ahead for investors in the second half? phil lebeau taking a closer look. >> tyler, you've got to separate the airline business in terms of profitability, how packed the planes are, separate that from the sentiment of airline stocks because they're going in completely different paths right now. talk first about the second half of this year for the airline business. it's fantastic. the profitability will remain strong bookings demand they're at high levels. there's even the possibility that we could see the fares rise a little bit. having said that as you pointed out, when you take a look at the airline index, a lot of investors are saying i got a lot last year i'm not expecting as much this year. the story to watch in the second half of this year when it comes to the airline industry involves the big three airlines in the u.s. versus the middle east carriers. emirates, qatar, when you look at the open skies battle we'll hear more about this in fact

tomorrow. the president of emirates is in washington presenting their side of the case in terms of charges. they've been charged with having subsidies helping their business making it tougher for the u.s. to compete in the middle east. the u.s. carriers will continue to press their case. quickly take a look at big three. talking about delta, american and united. it is the same story. these guys are under pressure right now, in part because a lot of people are looking at what they're doing and saying i don't think the profitability per available seat mile will be as strong as we thought it was going to be a year ago. and typically we look at gulf coast jet fuel and we say, hey, if jet fuel goes up these guys are going to be under pressure. jet fuel comes down they're going to be hurting a little bit. there you see how much it's done this year. but really that's not the story when you look at the airlines right now. >> its pea basically flat that jet fuel number so far this year. phil so how should you play the airlines heading into the second half? joseph denardi covers the

airlines for stiffle. are there some airlines that you think are great opportunities here or are you kind of in a holding pattern? >> you know we're still very bullish on the space longer term. i think the next couple of months, phil alluded to some sft factors that are kind of pressuring sentiment right now. the think the gulf carrier issue is more of a longer term factor. i think nearer term it will be a function of supply and demand. this is a commodity business. right now supply is outpacing demand. i think a common theme on second quarter earnings calls is going to be reducing capacity beginning in fourth quarter. i think that will be a positive catalyst for the space. but really to turn around sentiment, investors need to be comfortable with that unit revenue trends have bottomed and are going to start to pick up towards the end of the year. we still like southwest, united, alee a allgiant.

>>. southwest, just fewer domestic play. at this point i think it the risk from a pricing standpoint. it is still going to be international over the next quarter or two. united is a really good turnaround story. margins are well below delta. i think over the next couple years they can close that gap. allgiant is the best performer in the industry. >> joseph denardi, thank you. sue herera now were a news alert. nbc is servering its ties with donald trump. nbc has put up this statement. at nbc, respect and dignity for all people are cornerstones of our values. due to the recent derogatory statements by donald trump regarding immigrants, nbc universal is ending its business relationship with mr. trump. to that end, the annual miss usa and miss universe pageants which are a part of a joint venture between nbc and trump will no longer air on nbc. those comments made by mr. trump when he announced he intended to seek the presidency and as a

result of that nbc has severed their sighsties with mr. trump. >> thank you, sue herera. we just talked airlines a second ago. one airline that's really been struggling to take flight this year is hawaiian air. the stock down more than 8% over the past six months. hawaiian air's ceo will be on "fast money" tonight at 5:00. beyond airlines transports in general have been in rough shape this year. transports going deeper into correction territory right now. for the year the transports are down more than 10% as a group. the biggest transport losers year to date avis down 31%. kansas city southern off 25% and conway down 22%. here is some good news if you are one of the nearly 35 million people planning to hit the road this fourth of july weekend. pump prices are down nearly 2

cents over the last week accord being to the lundberg survey. that two-penny slide doesn't sound like much but it marks the first decline in more than two months. lundberg puts the national average for a gallon of regular gas at $2.85. we're just getting started here on "power lunch." here's what's on your menu for the rest of the hour. coming up next the best bond bets to make in the second half of the year. two top bond fund managers are going to be showing us their playbooks ahead. and the latest on the greek todayrocking global markets. one casino is doubling down the future of atlantic city. the golden nugget's ceo joins us. and we are all over this market slide. less that two hours to go in the trading session so stay with us here on "power lunch." i'll leave you there where the dow is down by 1.4% at 17,693.

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welcome back to "power lunch." wall street getting ready to close out the books on the first half of the year and it's been quite a ride so far, especially in the bond market. the yield on the benchmark 10-year note today hits 2.335%. the markets gearing up for the fed rate hike possibly in the second half but who knows? mary thompson is here with more of what investors can expect in the month ahead. it's only a guessing game. >> but you stole the lead mandy. because a lot of what happens in the second half does turn on the federal reserve. most bond investors betting on

the september or december rate hike. some expect no hike at all this year. when the fed moves, strategists see some volatility, though not at the levels seen in 2013 when hawkish comments from former fed head ben bernanke sent yields soaring in what's known as a taper tantrum. instead most see short-term rates rising a bits then flattening the yield curve. after the fed moves -- the focus turns to the pace and amount of future increases and the performance of the economy. fed signaled it plans to move at a measured base but if the u.s. economy grows more quickly some strategists see the yield curve steepening as long rates rise on fears the fed wornt be aggressiveaggress ive i strong demand for yield seeking foreign investors and a strengthening economy could help underlying companies and limit damage in that market. in the investment grade space, look for a pick-up in issuance this summer as companies move to get out in front of the federal

reserve. strategists say this may create a supply glut in this area so could put pressure on prices. also watch for some liquidity linked volatility. banks now hold fewer corporate and asset backed inventories and that could create a yield spike. if some of the sellers go out when the rates rise and they don't find inany buyers for their bonds. while bond yields were way up in the first half of 2015 they are down a bit today. take a look at the one-week of the 10-year treasury note there you see yo-yoing just a bit at 2.33 -- really 2.34%. concerns about greece causing investors to look for safe assets, that's pushing prices up. and yields down. look at the live shot as darkness descends over athens tonight. demonstrations continuing there. michelle crew co-aruso-cabrera is there

overlooking parliament square. james camp managing director of fixed income at eagle asset management and jeff rosenberg, chief investment stat grist forrategist for fixed income at blackrock. jim, if i'm holding international bonds right now what should i do with them? >> i suspect that the issues with the greek yields has already come and went. we're 14% on the 10-year greek note. we've been uninvolved in international space especially that area for quite some time. you do have some consequential moves out of the key eurozone players -- germany, france and the like that have come off that almost scary seven basis point yield the german bund's traded at. yields are biased higher generally across the eurozone though i think what we are seeing today at least in the u.s. is the massive flight to quality bid that will come back to the dollar denominated markets. we're seeing that in a rally in 10-year. international for us especially the eurozone right now, too unsettled to even touch. >> james, talk to me about that

same point if i am ex posed to international bonds, european bonds, what do i do? and secondly what should domestic fixed income investors be prepared for in a time when interest rates are likely to go up? what kind of losses might they see in their bond fund portfolios? >> well, tyler, i'll answer the former question -- or the latter question first. i don't believe the federal reserve is going to move this year. i think financial stability is paramount to what they've been doing over the last handful of years. remember that we had a domestic economy, gdp and inflation, exactly these levels when the fed decided money printing was key. the point about retail investors and high-network clients and individuals is you need to own real securities you need to own your own assets you need to be mindful, as mentioned by your prior columnist, when liquidity is very strechld in thetched into a debt

market. we're seven years into a stretch cycle. liquidity in bond funds and etfs as we are seeing daily is having major concerns raised. individual asset, individual credit, individual securities make sense at this point. >> jeff what is your view on the risk that bond fund investors -- bond fund investors may face from rising interest rates in the u.s. apart from anything that may happen with respect to greece? >> i think it is important to note greece today is the story but it's unlikely to be the entire story for the second half of the year because greece is a far cry in terms of its systemic risk potential from what it once was. certainly over the next couple of days even over the course of july as we work out whether they're in or out it is going to dominate headlines. but the outlook for fixed income investing for the second half of the year i think hinges much more on the performance of the u.s. economy. mary thompson in an earlier

piece and we talked with her last friday on this i think it is really setting up to be not the story of the taper tantrum but really the story of the fed willing to get behind the curve. what's been lacking is their ability to get behind the curve. in the second half if the issues that we're seeing in greece don't spill over and we don't think they will then you might add to the story the ability of the fed getting behind the curve. it is not so much interest rates rising because of what the fed is doing but rather the bond market taking it into its own hands and raising interest rates because the fed is willing and now able to get behind the curve. >> okay. stocks are really selling off. we're hitting the big movers next. currently session lows for the dow off by 274 points. every single stock in the dow is now firmly in the red. do stay with us.

you're seeing a live picture there as night falls over athens, greece. a lot of people are there in parliament square. we'll caruso-cabrera with a live report on the ground. greece one of the mains reasons we are selling off today in the u.s. stock market. at the beginning of the day we saw sell-offs that are not comparable to the really big drops that we saw in places like europe but we are getting there as we accelerate selling going to afternoon trade. why don't i show you what's going on with the ten sectors in the s&p behind me. financials are the biggest losers here. utilities, the only sector on the s&p that's currently in the green. why? not only are utilities considered defensive -- there we go. utilities have just moved into the red. but you get my point, they're not doing as badly as the other sectors today. they are considered defensive. also with all these problems around the world you have shanghai falling like a stone.

greece. puerto rico unable to pay its debts. a lot of problems going on. people are startsing to place bets as to whether or not the fed will be able to go ahead and hike interest rates in september as many in the markets had expected. utilities would benefit from a pushback in rates. financials which have been doing very well on expectation of higher rates are now in the red by 2%. tyler, back to you. it does concern greece. s&p out with a statement right now saying, "in our view, the probability of greece exiting the eurozone is now about 50%. also we believe that absent unanticipated favorable changes in greece's circumstances, a commercial default is inevitable within the next six months. as a result of that s&p has lowered greece's long-term rating to ccc with the outlook negative. it's going to be very interesting to see how this all develops. i know you mentioned you're going to be going to michelle

caruso-cabrera shortly. >> a day of real drama in greece. also puerto rico. and right here for your money in the markets in the united states, as we close in on perhaps a 2% decline for nasdaq. potentially a 300-point loss for the dow. oil also moving lower today. it's been a big day in the energy pits. the final trades closing for the session. it is a day of red but jackie deangelis is in sunny yellow live at the nymex. >> hi tyler. trying to bring some levity to the market today. greece having an impact on the energy space. traders are also watching the iranian nuclear talks this week. a lot of action in energy. we'll break down for you what you need to know when "power lunch" comes back.

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hello, everyone. i'm sue herera. here's your cnbc news update at this hour. the obama administration is disappointed in a supreme court decision that invalidated a key environmental regulation aimed at limiting emissions of hazardous pollutants. white house spokesman josh earnest saying however, the decision should not impact the president's clean power plan.

new york governor andrew cuomo says prison skwaepescapees were to kill mitchell's husband and drive south. when mitchell backed out they instead headed on foot towards canada. north carolina authorities captured an inmate that escaped from a correctional facility saturday. christopher mcneal was found walking along a highway in davidson shortly before 11:00 p.m. last night. he with a is serving a sentence for second degree murder. discovery communications has secured the european tv broadcast rights for four olympics through the year 2024. a price tag of $1.45 billion. the agreement begins with the 2018 winter games in south korea. that is the cnbc news update for this hour. back to you, ty. it's not just stocks that are falling today. oil also down. more than 2%. by a greater margin than the u.s. stock markets.

jackie deangelis covering all the action at nymex. >> that's right. a loss today of more than $1. looking at the closing price of $58.33. we have an intraday low of 58 $58.04 during the session. we bounced up a bit but we've been stuck in this trading range and it is the very low end of the range. the main issue in the market today is greece and the concern is that any kind of a default could cause problems in the eurozone. that creates problems in the minds of oil traders about demand coming from overseas. also on the bright side we are seeing gas prices a little down before fourth of july holiday weekend. that could be a positive sign for the consumer. take a look at the scoreboard here. the dow is down by 293 points in the red. we're watching to see whether we even crack the 300 mark but now we have he a wiped out all of 2015's gains. you are also looking at live pictures from athens greece where it is currently nightfall. large crowds gathering there, various different groups as well.

just to recap the news that broke moments ago, s&p lower og greece's credit rating to ccc-minus saying the possibility of greek exit beinging from the eurozone is at 50%. michelle caruso-cabrera joins us live from athens. what's the mood on the ground? >> i'm not surprised they would say that because when you talk to people in the big crowd behind me, a lot of them say they are absolutely willing to leave the euro. this is the first time i've heard this in the years of covering greece here for cnbc. what's going on behind me is a "vote no" rally. you'll hear them chance "no, no, no." the referendum that's coming this sunday announced late friday night but the country's prime minister went on national television. he said i don't like this final offer that was offered to us by our creditors. i think it is a bad deal blackmail. we'll have a referendum. i think you should vote no. tonight is the vote no rally.

tomorrow however there will be a "vote yes" rally. we'll see how the crowds compete and just who will win a week from today -- or excuse me on sunday. even though they are voting on the referendum -- on the question about the bailout proposal, this is very much being seen all around the world as a vote on whether or not greece wants to stay in the euro, that if you vote no, that means greece wrantsants to leave the euro and if they support the program that means they want to stay in the euro. speaking with the crowd, the "vote no" crowd on the ground a lot of them have told us over the last week people who support the government say, you know, it's not as important to us as it used to be staying in the euro. are you going to vote yes or no? >> no. >> what if that means you have to leave the euro? >> the euro the coin -- that's okay. >> really? >> yes. yes, really. >> why?

>> as far as i can understand it's not about the currency that we have. it is about the worth country owns. so the british have their pounds. they are okay. >> the british have the pound, he says. of course the united kingdom's also talking about negotiating some kind of change with their relationship with the european union as well. some parallels to that situation. guys we'll watch this crowd tonight and also the crowd tomorrow and keep you up to date on any events that unfold over the next 24 hours. tiny little asterisk -- it's possible they still come to a resolution of this in the next couple of days but it looks farther and farther apart and less likely. exactly what standard & poor's said. it seems to get worse by the day. back to you. we have just hit the 300-point mark on the dow. though it has come back now as you see right there at 299.38.

back below the 300-point level. nasdaq composite notably has now dropped 2% on the day. the s&p 500 sort of in between the two in percentage terms with a 1.8% drop at this hour. it is going to be a very busy next hour and 24 minutes. what does the greek drama mean for the rest of europe? simon hobbs following that angle of this story. how is the rest of euro taking this drama that's playing out? >> i think it's fair to say that for many across the eurozone there is anger and despair of what is now happening there. the greek prime minister's snap referendum for sunday effectively broke off negotiations but it also did do without those creditors being able to add last minute sweeteners to better sell those pension cuts and spending cuts to the greek voters. in brussels certainly the head of the commission complaining, alexis tsipras never warned him about a unilateral move arguing the greek's own proposals were delayed and deliberately

altered. yes, he says the door is still open to talks, but he says he feels betrayed by what he calls theegotism you see of the greeks. they want all the advantages of the eurozone says sarkozy. he's effectively suspending green from the eurozone and it should not give the impression of yielding in case its credibility is swept away tonight. two greek bailouts leave two eurozone tack pares heavily exposed. you have to add the liability stemming to these figures from both the ecb and imf. maturities on greek loans have already been extended to 30 years and interest rates slashed to 50 basis points above national borrowing costs. but still, tonight athens wants more. for angela merkel today celebrating 70 years of her own party, the question is whether she is now willing to be

remembered as the chancellor that allowed greece to fundamentally crack the institutions of the european project which has allowed, berlin, guys to rise again on the international stage during now those 70 decades since germany's nazi past. back to you. >> simon, i want to bring in marcus lemonis who had a question. >> simon with be is this the greatest poker match we've ever seen from the greek government or do you think this is really going to happen? feels like there's just a lot of posturing going on. >> i have no idea. i don't think anybody has any idea. as you look at those pictures now, marcus is the greek prime minister a rational player? i mean the risk of an accident as these sides jostled, was always going to be the case. to now put the referendum on the table, what is he expecting? is the rest of europe to come back so quickly? my question would be do you remember what side of the political spectrum he comes from? do you think he really cares if the shareholders in the greek banks are eliminated? i'm not sure.

i don't know the answer to those questions but he's not a similar politician to the ones that are normally involved in these style of negotiations and the hard left you can see it. the hard left is out again tonight on the streets of athens arguably holding the rest of the eurozone to ransom. >> simon, thank you. marcus, thank you. mandy, over to you. >> just moments ago the dow was down by 300 points. of course greece is just one factor in all of this. there is also fears that puerto rico will default on its debt. that's weighing on particularly bond insurers today. assured and mbia are down 15% and 21% respectively on the day.cdonough our bond expert, larry, how big of a threat is puerto rico to the bond insurers and the banks? >> it's a substantial threat. i wrote a piece last year in "forbes" warning about this default risk and i was attacked

by politicians from puerto rico on twitter. so i think since lehman the problem that we're seeing around the world is that there are political officials borrowing money from the capital markets and have not been completely forthwomaning ing forthcoming about their financials. that makes a big risk going forward to the rest of the -- rest of the municipalities in the united states that want to be raise capital. >> what about mbia itself todd? you've been looking at that chart. >> that's a very very ugly chart. the troubles even started before this even back in the 2008 credit crisis. this was a $70 stock. the best this stock could manage to do was it bounced back up to $12, 13. we have we've broken anything that resembles support. if we get to the $6 region you'll look for a retest of those post-2008 credit crisis lows around $3. >> this is an ugly and broken that is right chart.

for more "trading nation," head to the website tradingnation.cnbc.com. shall we take a look at the stocks there? all 30 dow stocks currently in the red. moment ago briefly falling by 300 points. we're all over the market sell-off when "power lunch" returns.

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coming um on the "closing bell" -- the ceo of dupont ellen kullman. that's a big multi-national corporation if you didn't know already. how is dupont dealing with this greek mess? and all of the other cross currents swirling around the world. that's coming up at 4:00 p.m. eastern time. meantime as we look at the dow heat map, all 30 shares in the dow are in the red. the dow off 253. and the worst of the worst today is miss kullman's dupont at

$63.98, it is down about 2.5%. that makes her appearance on the "closing bell" in little more than an hour's time a particularly interesting one. mandy? thank you. as you might have expected, ty it's been a roller coaster ride for the euro currency today. right now sitting at 112.50. sara eisen, am i to believe this is the biggest reversal intraday for the euro/dollar pair? >> it could be if we close higher today. the currency market is sending a clear message -- we're not clear of a grexit. the euro dropped overnight, a 1% move up in asia. now the euro is up almost 1% against the dollar. why? european policymakers have tried to down play the situation with german chancellor angela merkel

saying we need to compromise. if there is no compromise european bankers seem to have fully safeguarded any other problems like spain and italy. a grexit the thinking goes would hurt greece more than euro. european investors also seem to have confidence in the european central bank and its head mario draghi to do whatever it takes to save the euro as he promised. can you be a buyer of euros right now? well, if it may still be risky ahead of sunday's vote. that's according to top wall street strategists. just the uncertainty about what happens in or out. and it could still be risky after the vote even if the greeks vote to stay inside the euro, there is still no deal or even a road map to resolve these issues. all of these questions could keep the volatility up on any headline, not to mention a stronger jobs report here in the u.s. on thursday could actually strengthen the dollar and put some pressure on the euro on the flip side. but today, guys the signal is clear -- no fear from the currency market. >> no fear from the currency markets but the vix itself what we know as the fear gauge, is

having its biggest one-day gain so far this year. thank you for that sara eisen. the dow earlier falling 300 points as greece worries hit the u.s. markets. it has since rebounded just a little bit. down by 261. let's bring in a gentleman who's seen ups, who's seen downs. he's seen a lot of things out there on the floor of the exchange art cashin director of floor operations for ubs and a cnbc contributor. art, what say you? >> well i think we have a couple of things going on here. primarily about greece as we wore down. we've broken a couple of support places. 2,078 was the 150-day moving average in the s&p. then the next support level became 2,068.72. we broke down below that. as the afternoon wore on we're beginning to hear more about china and worries about what may happen overnight. people are also beginning to realize as far as puerto rico is

concerned, u.s. investments there are just under $80 billion as opposed to under $10 billion in greece. we have kind of a full package going here. what really broke the last support was when the s&p came out and lowered greece to a ccc-minus and said that there was probably at least a 50% chance that they would be removed from the euro. >> right. it is kind of like a perfect storm forming here. but, okay. let's just lay it out there. so 50% chance according to s&p. what if greece does leave the eurozone? what kind of reaction would you see either knee-jerk or lingering here in the u.s. markets? what would we see? a liamenesque moment or not so bad? >> tell me one thing. tell me what happens to the banks in italy, portugal and spain. if you begin to see runs on those banks, you begin to see people taking out euros for fear that they will go through something similar to what greece went through, then that will be a major move.

if in fact however, greece were to leave quietly and there was no spillover into the other club med parties, then things probably would be certainly not a thank you for joining us. >> all 30 stocks in the dow are in the red right now. much more market coverage ahead. this is a very busy and significantly down day. the industrials are off their 300-point lows.

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jerry castellini. is this the start of something bad? >> it could be the start of something worse than we've seen this year. it could take us down near 7% to 10%. the other reason is it's not just greece. we have china and puerto rico. we also have stretch valuations. the stock market's up 100% since the last european crisis in 2012. valuations are quite stretched and earnings aren't all that good. we might pull back. having said that, i do not think it's a lehman moment by any means. i don't think people should initially panic, but maybe take a few chips off the table. i must admit, i feel a little better about the market. it was only down 100 points at 10:00, that was too complacent. this is a bit better. oddly as it sounds.

>> jerry, do you agree or disagree? >> i take his last comments and think it's more bullish. the fact that at this time of the year when money managers are worried about their quarter end positioning to see the market only down 1.5% on something of this consequence, at least from a media standpoint is incredibly bullish. we know people now went into in whole situation with enough cash and conservatism in their portfolios, they were hoping to put that to work. there are all sorts of places in the market investors are about to go back into. they would have had knee-jerked in that was the positive this week. now they have this time and better prices to do it. russell 2000 down 2% to 3%. none of those companies have any real connection to any type of european thing. >> seems like people are just using this as an excuse to take something off the table more

than anything else. >> they are. the fact that it's just such a small amount meant they were defensive going into this. this is my point. stocks are not that expensive relative to interest rates. the world economy is doing great, including europe. yes, china's got issues. they just fired off one of the biggest liquidity rounds in years there. what we are masking is this breakout in the global economy. we are about to launch a big economic recovery worldwide. this is the opportunity. >> we have to leave it there. we temporarily lost your satellite. we appreciate you being with us. jerry, great as always to be with you. marcus fantastic to be with you. come back any time.

"closing bell" picks up continuing cover of the market sell-off right now. hi everybody. welcome to the "closing bell." i'm kelly evans. a nearly 300 point sell-off at the new york stock exchange. >> i'm bill griffeth. this is the last hour of trading. we will all look carefully to see whether stocks can come back from what has been an ugly sell-off today. greece moving closer to default. shaking the global markets. the dow now negative for the year.