of internet. they provide the routers. i love our domestic companies. i love this company. i lot of ceo. >> you have juniper ceo on yesterday. they were optimistic. >> take a trip to it a business in europe. we don't let the wallway routers in here. >> thanks for being here. "power lunch" starts right now. >> you got it. >> if there is a countdown clos clock, it must be cable. market nearing session highs. we closely watch that countdown. 59 minutes until we get to the fed minutes. the news takes on added drama and importance as the odds increase that we'll see potential june rate hike. hello. i'm with brian, melissa and tyler. let's get to the big countdown to the fed. heading us is a member from janiuar janus capital. neil, based on the market action

that we saw yesterday, increasing concerns about whether or not the fed is going to raise rates in june. does the fed threat then rally? >> i don't think. so i'm not going to speculate on when they're going to raise rates. the bottom line is you know they're going to raise rates. it could be june or september, next year. what the real important question is what are you doing in the fixed income market if the fed's raise rates you? know they're going to go up. it's just a matter of time. and i get very, very concerned about the $3.5 trillion that is sitting in fixed income mutual funds as i look forward into a higher rate environment. >> they could be potentially at risk. talk to me about stocks. do you do anything differently with your stock portfolio? >> no, not at all. if you look at the market, i think the market is in great shape here. reminds me of 1982 to 2000 market where it was up each and every year. except for 1990 when down .5%. one thing that you have to look at this market is there's no

euphoria in it. on either side. fear or greed. in corporate profits are at all time highs. cash flows at all time highs. the banks are in the best shape they've ever been n it's poised to go higher. >> nick, speak to that point that neil just made. i was just looking at some mutual fund data. money is coming out. flying out of equity funds. where is it going? it's going into fixed income funds. >> yeah. >> are these people getting their ass handed to them or what? >> there's been a lot of shift in what we do is ch is focus on market volatility and what is happening in the derivatives markets. we've seen an enormous shift towards protection buying. so you started the year with the vix products suite which is where people play pure market volatility with about a billion dollar notional long bias. and that shifted toed 4dz billion notional long. so it's kind of an unprecedented shift. >> what does that mean? notional long bias? >> so because people are investing in vix futures, they

can invest long or short. so you have products that allow you to get short exposure to the market and vix futures, long exposure. if you aggregate whaupt client flow has been and take account of whether it's in the long products or whether it's into leveraged short products, et cetera, and you say where is the money moving? it is towards long volatility positions, short volatility positions? >> which means fear? which means fear? >> it z it drives up the cost of those positions. so what we've been talking to clients about is counterintuitive to what you think with the vix at low levels. we're looking at a 15 on the vix. the cost of those long positions is at near record highs. >> it's very, very expensive if you believe that trade. if you want to put on that trade. it would cost you a lot of money. >> correct. correct. and so what we're really talking to clients about is perhaps it's -- when everyone else is buying, maybe it's a good time to be selling so, neil, as a straight up fund manager, you take the client money and make them money. you are noticing a higher level

of stock fear among your clients? >> absolutely not. i think that's why i say there is no euphoria in the market. when i look at the overall market today, you can get 2.75% yield in the 30 dow jones stocks verse a $1.70 in a ten year fixed u.s. government bond. so it's really a no-brainer. the other thing i see in the marketplace is that historically companies that paid out approximately 50% of their earnings in dividends. today it's about 30 to 35% is being paid out. so there is a lot of room for dividend growth before the companies start to actual lly spend money. >> when you start rotating out of the dividend payers, rates are going to go higher. the thinking is you get out of the utilities of the world, consumer staples. you move into the likes of financials, let's say. which are, by the way, a market leader. you take a look at the financial s&p 500 sector and also the kbe,

the regional bank etf. those are the gainers in today's session on the day where there's a thought that the fed rate hike son the table. >> you have to look at the total market around 30 or 35% which is paid out. there's a lot of room. if rates go up, that doesn't necessarily mean dividend paying stocks are going to go down. it's because of what are they doing with the dividend? have they raised it every year for the last ten years? are they going to continue to do it? so you at least have the opportunity to get more income in dividend paying stocks than you do in a fixed income product. i think that's where you should be going forward let alone profits and cash flow. >> you're ahead of etfs for janus. any way to play the fed at this point or dividends? >> yeah. i think what we see similar to the point being made is that equity market investors have priced this n we've seen certainly at janus a year that we've seen increased market

volatility. this year it's been fairly calm. obviously, we had some of the declines and come back. if you look at the daily realized volatility, it's averaging about 16% on an annualized base this year. >> you're right. i mean, it's calm now. >> can you average it out. we have massive hits, 20% swings. >> what changed the end of february to now? >> this goes to the point that we're making. ultimately, what do you do with equity market volatility? nice to say the fed may feed into that. what do do you about it? and our position ultimately is you have to -- you know, investors don't care about volatility unless it's to the down side. up side volatility is a wonderful thing. what we're talking about is what is the risk of a decline? we're seeing than vestors in equity markets are not expressing that fear. they're not going out in markets. it is manifesting itself in option and derivatives. >> have we ever met bill gross? does he exist? >> i have met him a number of time.

>> did he ever show up in denver? >> he has an office in denver next to the ceo and he spends a lot of time in newport as well. >> good to see you. >> thank you. >> just checking. >> thank you nick and neil. retail target shares trading at the lowest level since november of 2014. this is after they reported lower net profit last quarter compared to the same time last year. they're joining the slew of other retailers hitting multiyear lows. foot locker, lowest level since march 2015. nordstrom, lowest since 2010. macy's and gap, lowest level since 2011. let's bring on a analyst over at morning star for more on this trade. great to have you with us, bridget. >> thank you for having me. >> in terms of the department store, there was a story that gap ceo was saying he would entertain the idea of selling

his merchandise on amazon. is that the new online department store? i mean is it going to disinterimmediate yad the nordstroms of the world? >> i don't think that will be the only player standing. but, yes, certainly the department stores are losing share to the online channel and amazon is the king of that. the trick is how these brands switch over to that platform. their concern is to maintain their brand image and pricing whereas amazon historically was known for the cheaper prices, discounts, and it's not really good at displaying the clothes in a lifestyle manner. so i think you're going to see a slower shift over to that channel than just in the heed everyone gets onboard with amazon. >> is that a good thing for the gap though? they do this in china an t-mall. its not like they've never done this before, sell their merchandise through another channel. >> right. but there is a shift in the

model. you know, you're suddenly not owning and operating your own retail channel. if amazon ever were to become a significant retailer of the clothes that, would mean that you are heavily overstored and that you really do have to tweak your distribution channel to represent the new model. >> so you think that gap should not do this? is that the bottom line? >> no. i mean, all of retailers need to follow the customer to where the customer is. so absolutely they need to do it. i do think that it's going to involve a few bumps and bruises along the way though. >> it's interesting. i was reading through the notes here. it seems like you think the winners, among the winners are the off pricers. we've seen success during this earnings season. and also the manufacturers. these are the guys of the f-corps of the world. they can decide what the channel is. does it play to their advantage? they could decide we're going to go through a department store like a macy's or go straight on amazon and sell our stuff. >> exactly.

the apparel manufacturers are completely channel. and, you know, they're manufacturing and supply chain is set up to distribute to whatever retailers are necessary globally. so i think for them, their positioned to have the easiest shift over towards somebody like amazon. and i'd also highlight that basic apparel manufacturers like a hanes brand, they do underwear. and the underwear category is wonderful. it's replenishment, right? the underwear is going to run out. you have to replace it. >> hopefully. >> let's hope we don't get so poor we can't afford that. so i do think right now those are some of the best positions. >> all right. bridget, great to speak with you, thank you. tyler? >> so what is the fate of the major dement stores? former chairman and ceo of saks incorporated joins me. what do you think of what bridget said? pick apart her argument. >> i think retail is going

through a major transformation. i call it a disruption. you'll is winners and losers. everybody is going to look at their own self interest in terms wlaf is right for them. and whether you have the vertical intergrated manufacturers like gap thinking that maybe we ought to be selling on amazon or the vfs of the world saying that department stores are not growing the way we need them to grow and get another distribution out. so maybe they'll open up amazon. so that says the department stores have to find -- >> they'll sell on their own website. >> absolutely. >> just the way the shoe companies do or whoever does. spin forward this movie ten years. with specific reference to department stores, who's going to be left? what are they going to excel at? how busy are they going to be? how are they going to be different? >> remember, the department stores, a number of them, macy's, for example, nordstrom, they're major players. they have internet businesses today. that's going to become even bigger. they'll probably have fewer

stores. but they have to fundamentally transform themselves. they've got to provide much better experiences than they do. everyone use that's word, experience. but it is real. they've got to change -- it's not just about selling the physical product. because if all you're doing is selling a pair of jeans, they can get it on amazon or somewhere else. they have to first have much more differentiated product, more private owned brand, brands that nobody else can get. then they've got to provide an experience that is very different. >> i think that's the real key. i just bought a pair of branded jeans on amazon, first time i'd ever done it. i like to try the stuff on. but i knew this brand. and i ordered it that way. i probably do it again. like the shopping experience. i think you nailed it there. i think the experience is critical. when i go into a store that is jammed with stuff, that wasn't the word that came to mind, i get annoyed by it. i can't get -- i can't find what i want. that's number one. number two, i think for the

younger shoppers and others, it has to be a social experience. it can't merely be i'm going to go in there and go through racks of stuff. i think you have to have a party. throw a party at saks and make women come and serve them a nice rose. >> it's about the relationship and experience and providing something they kblt get anywhere else. and macy's, nordstrom, all of them have to go into how are they going to do it? >> brian? >> it's a little side ways of a question, i guess. you know, you ran saks. all this real estate, macy's and sears, all the real estate. what it is going to look like if your prediction is true? is america going to be littered with a bunch of empty ugly buildings and half filled malls? >> i think you'll find winners and losers. the winners will be fine. there will be good malls for the long term. the cnd malls, i call them the a

malls, the short hills. the cnd malls, they're going to become health clubs and reused for other purposes. you don't need amany malls as you have. >> will they be used or empty? an empty building is blight. it is ugly. it's dangerous. it brings down neighborhood housing values. will they find other uses? >> i think it will be both. some will and some won't. some will go away and they'll become housing. >> what about the big buildings in the interior of the cities, i'm thinking of the big macy's landmark on seventh avenue. big macy's in chicago. lord & taylor. >> i think the big stores like the macy's, the saks on fifth avenue, they'll be fine. they'll be fundamental tolt idea providing the experience. but they have to change. they have to bring in the restaurants. they have to bring in -- gosh, ways in a mall in thailand where they have movie theaters where they have movie theaters where they serve why pay for insuranc yo pay even more for using it? if you have liberty mutual deductible fund™,

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welcome back. we're learning new details from the financial disclosures of the presidential candidates. chief washington correspondent john harwood has the new details. john? >> hillary clinton continues to press donald trump to release his tax returns as is customary for presidential candidates to do. he'll release once a federal tax awed it is done, perhaps even before the lection. meantime, both likely presidential nominees have released the legalry required personal financial disclosure statements which show both of them, no surprise, squarely in the top 1% of all taxpayers. as did he last year, trump reported net worth of over $10 billion as well as income of $557 million. not clear whether that is revenue to his businesses or

personal income but here's some building blocks. $131 million from the trump golf course, $49 million from the miss universe pageant. $44 million from trump park avenue condo sales and a screen actors guilt pension of $168,000. clinton's income was smaller but still extremely large. $5 million from book royalties, $1.4 million from paid speeches, and another $5 million from bill clinton's speeches. whatever affects their policies would have on average american families, neither one of these candidates will be feeling them, guys. >> he gets it from the apprentice, i assume is where the pension comes from, the screen actors guild? >> makes sense to me. >> john, i believe i read in an article last night on these financial disclosure that's bill clinton had received a fair amount of money, maybe totaling $20 million over the years from an online education company

based in the middle east. was that part of this disclowe slur? do you know? >> i don't know about that online education company. is that a -- from speech making revenue? >> no. no. he was a consultant to this company as i recollect what i was reading last night. we'll have to check into it. >> all right. >> thank you, john. >> john, thank you. >> you bet. >> all right. there is no other way to put it, it's air travel hell. long lines, angry passengers, people sleeping inside airports. fingers are being pointed squarely at the tsa. senator richard bloomenit wi eel talk to us coming up. the call just came in. she's about to arrive. and with her, a flood of potential patients.

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>> thank you, me list yachlt of course, you pointed out, everybody is going to be tuning in in 37 minutes. serve tuned in now. more exciting with the minutes. let's look at the markets. two year note yields is month to date, yeah, they skyrocketed. but if you look at a three month chart, that is more important. we're about to breakthrough levels we have not seen. but will it? we're up two basis points in the short end. the long send catching up with the curve. look at the three month of tens, you can see what i mean. that right side popped up a lot more in the last day or so. and the dollar index, here's the fly in the ointment. if everything is set and the curve reflects it and the yields reflect it and the hawkish comments reflect there could be a tightening sooner rather than later, i'm shocked at the scholar index. it's off the highs. it isn't looking that aggressive. i think the dollar index is going to move here. i'm talking about what happens at the june meeting. speaking of the june meeting thashgts is off in the distance.

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hi, everybody. here is your cnbc news update. queen elizabeth announcing the upcoming agenda at the lavishly ceremonial state opening of parliament. there she is in the carriage. she wore a diamond studded crown and sat on a guilded throne. she announced a list of bills to be introduced by david cameron's government. >> legislation will be introduced to prevent radicalization, tackle extremism in all its forms and promote community integration. my government will continue to safeguard national security. hot and dry weather and strong winds are expected to push the massive wildfire burning near ft. mcmurray,

alberta, can dashgs eaada today. the fires already destroyed a 665-room lodge for oil sands workers. tim cook began his tour of india with a visit to a temple in mumbai ahead of business meetings. the company announcing they'll set up an app design and development center by early 2017. >> and this is my favorite story of the day. the u.s. returned to italy a letter written by christopher columbus in 1493. announcing his discovery of the new world. the letter was stolen from a florence library and acquired about it library of congress. it's value is estimated at about $1.1 million. i don't know, i think it's worth a lot more than. that. >> yeah. >> it's the new world. >> i love. that. >> isn't that cool? that is my favorite story of the day so far. >> all right. thank you. very new developments in the

$81 million heist that apparently came through bangladesh's central bank. we're live if washington with the late environment. hi. >> hi, tyler. this information coming to cnbc from a source familiar with the investigation into just what exactly happened here in this will $81 million heist. we're learning a little bit more about what investigators have found. starting with the fact that there were up to three entities that had access to the bank of bangladesh's servers according to that source familiar with. they say that one of the groups was in the servers in order to steal money. the other two, apparently, just wanted to gather information perhaps and intelligence operation or just waiting and lurking to see what they could discover. the heist group, though, officials say is likely a sophisticated and well funded criminal gang. now the second group that was inside those servers is an interesting one. they're saying that there are some similarities here now between the sony hack back in 2014 and this bank of bangladesh

hack in term of the techniques that were used to get into the servers. this is a group that did not steal the money but one of the groups that was found to be inside those bangladesh servers. officials in 2014 said that the sony hack was sponsored by north korea but investigators looking at the bangladesh situation are not yet ready, tyler, to conclude that north korea itself was inside those bangladeshi servers. a lot of this stuff is done by cutouts and other groups. it may be the case, they're speculating, that another group that did the sony hack was fls bangladesh but not the north koreans. maybe they farmed theirs out to a spraet cutout. a lot of mercuriness but interesting that a central bank was penetrated now up by three different entities and a warning really to bank ands central banks that a lot of penetration activities are around the world. >> the bangladesh central bank was porous. were they searching for information specifically

about -- or within the bank of the central bank of bangladesh or was this a back doorway of somehow getting access or a fishing attack or something on the sned. >> my source doesn't know exactly what they were there for. one source -- one entity was in there to steal money. the other was monitoring. the third organization out of the three, they don't have any information on whatsoever. so it's not clear what they were doing. but you could speculate two possible motives. one is to figure out where bangladeshi money is going inside bangladesh. then the other to figure out more about how the new york fed operates in terms of its accounts that it holds for foreign central banks. remember, the new york fed has about $3 trillion on deposit for foreign central banks. >> thank you. you bet. >> new home building is doing better, not great. maybe just okay. but many argue that it could be doing even better except it's being held back by one thing. we know what that is. she is right here at cnbc hq.

>> there is huge demand for entry level housing and precious little supply. you think woibt a fabulous opportunity for home builders. they cannot profit on starter homes because of the rising cost of new regulation. and that is why it's high end homes all the way for them. the poster child for that is sea summit. it is called the last sea side development in southern california. stunning 200 acre development is finally open and building and selling luxury homes. arizona based taylor morrison purchased the project two years ago after previous development stalled. the plan is for about 300 homes here, decades ago, they could have built twice as many on this land. government regulations say they keep half the land as open public space and they had to build trails, bridges, and plant new vegetation. >> the requirements can be a

lengthy list that things you wouldn't see 10, 20 years ago. but you're also seeing it in fees that cities and counties impose on new home construction. fees can be anywhere from 50 to $100,000 per home to be able to build. >> all of which gets passed on to the home buyer. the purchase price of the average newly built home was a stunning 30% higher. >> most regulation is sold to us like, hey fwheeshgsd to regulate so we can protect the little guy. it looks like these regulations, all they're doing is making sure the little guy doesn't live near the big guy. >> well, i mean, a the love the regulations are helping the environment. don't get me wrong about that. some of them are very good for the environment and very good for the public. open trails. it's beautiful. but the costs involved are staggering, as we said. and they are keeping prices high and keeping those first time starter home buyers out. >> rich people and the desert grouse are welcome protected.

stick us with. let's bring in a man that covers the home builder stocks. do you believe there is a dramatic lack of entry level homes being built? >> you talked about california. it will take from 10 years to go from raw land to getting the house constructed. that's an issue. you know, there are issues around the mortgage process. regulation q-m, the trade move and know before you go the borrower rules. and then there is also the issues developing around labor. there is a department of labor ruling out today that is probably going to, you know, unfortunately raise the cost of construction further. there are proposals out there to increase builder liability as they relate to the subcontractor.

so it's not just land. so there is mortgage lending issues, regulation processes and there is also labor issues escalating as well. >> but if you build high volume that, is a company like dr horton, they have express homes which is a starter entry level home under $200,000 and they build big volume and they're seeing really good demand for the home. none of the other builders will touch it y is it that they're so afraid, even when they see that it can be done at least when you have high volume? >> it is around gross margin. higher gross margin homes, obviously, less of those to sell or can you go lower price or lower gross margin homes and sell a lot more of them. so it's a question of gross margin percentage or dollars. i think where we're at today, i think a lot of the public builders are not shurt demand is fully there at the entry level to support the volume they need. horton is killing it. horton has done a great job. they've -- they were early first mover advantage there. i think they got a year or two head start on the industry and

the sub2 hundr-200,000 homes. we're going to earn more dollars and that's what they're doing. but their several basis points lower than the peers. >> i want to switch gears a little bit and talk about pulte. there was an e-mail this morning, that company, they fired the ceo. there is a very, very public battle going on. is there a reason to buy shares. pulte because of this overhang? does it make the stock look artificially less attractive? or it is a reason to stay away? >> i think the pulte family involvement puts a floor onlt shares. i don't think they're going away. i don't think when a chance to meet with bill pulte recently. i don't think this is a short term strategy for them. but at the heart of the issue is

this gross margin versus gross margin dollars tradeoff. putle has an entry level product. that is major part of the issue. the question i get from investors is what is the outcome here? the ceo has agreed to retire in 2017. so to me, the way the stock reacts depends on how aggressive the family is. do they run a midyear process? do they try to call a special meeting or wait until next year and try to run a slast board seats since they missed the deadline this year? i think you have a floor on the stock. the stock is not expensive. but it hasn't grown to the extent some of the other names have in the space. >> there you go. thank you very much. we should have said forced out rather than fired. you get my point. i appreciate. that good to sigh. >> you, too. >> we like having her here in the studio. it this video just into the newsroom. venezuelan security forces clashing with protesters. this is the third outbreak over

the last week. they're arguing over lack of food and medicine. they have taken to the streets to demand a recall of the venezuelan president. let's bring in the director of political and m rachlt cro research and the founder and ceo of graywalk capital. venezuela owes both of them money because they own venezuelan debt and they're not worried about it. hans, explain this to me. this country can't -- doesn't have enough foreign exchange to buy food or medicine. but you think they're going to prioritize paying you first? why? >> the fact they're having economic troubles is less about the debt load than the economic policies. so they've been running this two tiered, multitiered effect system. >> foreign exchange. >> and at the same time, they are mismanaging the economy completely. so the aggregate debt to gdp is

76%. there is some short date maturities that could come up and be refinanced. there are simple tweaks that they can do to allow them to service the debt. i am not saying there is no chance of default. but it will be a default because you get a collapse in the system, of the political crisis that results. it's not an inability to pavement it's a liquidity issue because of how little access they have to the international markets. >> explain why it is that you would own venezuelan debt here. >> this is exactly what we look for in the investment. when the politics are overwhelmed all the normal economic and financial variables that most investors look for, that's where we try to get n whether we look at these protests, what i see is not necessarily -- what i'm thinking about is not necessarily whether they'll make a new coupon payment or principle payment but what this means for the longer

term political trajectory. and i think we certainly believe that whether i see this, i see one more reason for all the people around the president to abandon him. as they band on him, they'll move to a more centerist, pragmatic approach. and at that point, they'll be able to do some relatively easy economic fix that's i think will have enough broad base political support to work. and that's exactly what bond holders are looking for. what people shouldn't see when they look at these pictures is the beginning of some sort of right-wing movement. what we're not going to have is a cobble of milton friedman accolades who take over the country and control every single level of power and turn the place into switzerland overnight. >> i heard the argument made as well that if they don't pay the debt, despite how bad it looks on the ground, it could get even worse if they don't pay the debt. that's why they would prioritize it?

>> the current government, if he defaults, he's gone. they always paid. through the latin american debt crisis, they always paid. they restructured but they always paid the coupons. so the -- i think the man on the street if, they knew him defaulted, he would be out of. there he would lose any -- >> the yields are like 30%, 40%. those are screamingly high. >> the petroleum company bonds are close to 70%. going down to about 20% on the long end. so if you think they're going to make next few payments, you know, i'm not saying for your viewers, but it's not a bad investment. >> do you think they're going to make the payments? >> i think it's a pretty good chance that they will make next couple payments. i think it's a very, virtually certain that the country will make the next payment in 2018. >> wow. all right. daniel phillips, thank you of

calloway capital. hans hughes, thank you. melissa? >> take a look at what is happening to the banks ahead of the fed minutes. the thinking is that a rate hike is going to be on the table. therefore, the yield curve will be steepening. the financial etf is up by 1.7%. check out the move on the online brokers. this is the group that could benefit most from a steepening yield curve. we see sharp gains across the board. more than 4% gains like charles schwab and td ameritrade. so this is an area of the market, especially as we're seeing yields at train day highs here ahead of the fed minutes. >> all right. waiting on the fed minutes. baited breath. all right. a gold mansion, a luxurious pool house and a $10,000 lunch just another weekend at tyler's house. >> that's right. >> but also the power rundown million dollar addition you won't want to miss it.

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let's start with the gold house. >> yes, $159 million house. 60,000 square feet in florida. the staircase issed 2dz million. it has a private imax theater, 30 car garage and a lot, i mean a lot, of gold.

the owner isn't just splurging on jumbo size amenities. he's also pouring huge amounts of cash into the tiniest details. it cost him over $5 million to accent inch after inch of this palace with 22 karat gold leaf. >> the same type of gold in the technique applied from the 18th century in france. >> this man is in charge of the grew painting on the precious metal. they had o the highly skilled artists working on the scaffolding flown in from france. everything is getting the midas touch like the 500,000 front doors imported from germany. the railings on the $2 million staircase, and the moldings on the walls and ceiling. this paint job will take months to complete. >> the process is quite long. there is a lot of gold leaf. we have to apply the gold very specifically just on the molding

and this take a long, long time. >> there is so much gold in this house that there was a lot of gold on the floor wli walked out of the house. my shoes were covered in gold. part of the occupation -- >> did you scrape it off and sell it? >> i could v part of the occupational hazard is gold buildup on your shoes. >> wow. >> so much gold. >> i hate when that happens. >> this is from a man who said once i eat gold for breakfast. that was a direct quote by you. >> and now it's on my shoes. >> soon, i'll be covered in gold. >> a champagne problem. >> exactly. >> let's move on to the ultimate pool house. >> so there is also in florida. it is in bal harbor. it's ult ma modern. the doors open from your iphone and it's got the perfect pool for aquatic voyeurs. take a look. >> he is taking us to his most prized listing on his 1.p $7 million yacht. he's throwing the pricey 55 footer in with the home. one of several incentives he's

offering to buyers in this massive estate with every convenience. >> from right here, open up the doors, turn on the music. turn on the lights. >> from your phone? >> welcome to 252. >> his father designed and built this ultra modern 20,000 square foot indoor/outdoor tropical oasis. >> the jd to create something that is contemporary yet felt intermat. >> some of the touches including a roof top jacuzzi and infinity pool lined with half a million dollars of see through glass. >> we have to give the house a bit of a wow factor. and you're able to see them as if you're looking into an aquarium. it's pretty cool. >> needless to say, i think clothing will be optional for whoever swims in that pool. >> that's what you were thinking. >> all right. largest piece of glass in any pool? >> largest piece -- largest single piece of glass in any

commercial or private pool. 75 feet of glass. >> is it really akin to an aquarium? it is constructed that way? you could put a volume fin in, there for instance? >> if the dolphin liked chlorine, yeah. but it's designed -- i mean it's amazing when you're out there on the water and see people swimming in that. they hired models for that. just amazing. >> $10,000 lunch on to that. >> so here's a woman, she started out as a hairdresser. she became a multimillion dollar product magnet. her products are called she's a ten and get a load of this dock and dine experience. >> this 165 foot mega yacht cruising up the miami river is carrying ten vips to a very exclusive sunday brunch. onboard, the founder of titan ultimate fighting league jeff aaronson, angie martinez, former major league baseball player cliff floyd, and rap artist fat

joe. they're all guests of the owner of the yacht, carolyn aaronson. >> i hope you're all thirsty and hungry. >> she went from being a hairstylist in michigan to ceo of her own hair care empire called it's a 10. her success helped pay for this four story, five bedroom, 12 million dollar ves he will. appropriately named she's a 10. >> do you ever have days when you just pinch yourself and say i can't believe it? >> yeah. it's not just days. it's every day. >> so that lunch that we showed there which you'll see tonight is a $10,000 lunch. >> miami is where it's happening. >> it's where it's happening. yeah. >> why is all this stuff in florida? >> you know what i worked there for seven years. everything happens in florida. i don't know thou explain it. it's weird. >> good place for wealth reporters. >> and crime reporters. and weather reporters. >> yeah. >> the wealth reporter becomes the prime reporter? >> often. >> secret lives of the super rich tonight at 10:00 eastern

time. only right here on cnbc. we'll all be living vicariously with you, rob. >> thank you. >> we're about ten minutes, yes, no, eight minutes, 15, 14 away from market moving news from the fed. the minutes are out at the top of the hour. what clues might they hold? don't go anywhere. there's no one road out there. no one surface... no one speed... no one way of driving on each and every road. but there is one car that can conquer them all. the mercedes-benz c-class. five driving modes let you customize the steering, shift points, and suspension to fit the mood you're in... and the road you're on. the 2016 c-class. lease the c300 for $359 a month at your local mercedes-benz dealer. steve, other than making i'm here atme move stuff,rade trader offices. what are you working on? let me show you. okay. our thinkorswim trading platform aggregates all the options data

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new clues on what policymakers are thinking when it comes to raising rates. we have the minutes just five minutes away. it could be a major market mover. we'll be all over it market reaction. stay tuned to "power lunch." hi...i'm pamela yellen. you may have read my bestselling book "the bank on yourself revolution". over the last 25 years, i've researched more than 450 financial products. i found that one of the best-kept secrets to help you plan for your retirement is the home equity conversion mortgage. it's a line of credit for homeowners age 62 or older. and it's offered by a company you can trust- one reverse mortgage,

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welcome back, folks, to "power lunch." we're two minutes way from the fed minutes. they are going to be looked at very, very closely to see what clues, if any, they might hold as to how the fed is feeling about the possible rise in interest rates as soon as june. how you about, art cashman, director of floor operations at ubs. what do you expect the mood at the fed is these days? >> well, look, the key thing they're going to watch for, the key word is the word most. if they can find anywhere something that says most of the participants were concerned about or looked to or that it shows some sign of consensus. and traders would feel like that will carry through into the june meeting. barring that, they're going to worry sb b. some cherry picking by people looking at that part

is dovish that, part is hawkish. that could lead to some volatility. but the primary thing is can we find some kind of consensus among that group were there something that they were either worried about or hopeful to see. >> why do you think investors are so stock averse these days? >> i think we've been through -- since the l.a. qe ended, we're right where we were then. we haven't moved. we've been range bound. we had some real big flips. they're not entirely sure they understand the fed. and they're not entirely sure that the fed is in actual control. the central banks around the world are looking less and less infective as each day goes by. >> let's talk about the lection. do you that i is a bit of a wet blanket? >> yeah, it will be an uncertainty. it won't play major factor until

you get close to the conventions. and then they start to see what the policy outlook is. >> art, thank you very much. we appreciate your type the we're a few seconds away now, folks from, the release of the fed minutes. and steve liesman is down in washington. he'll bring it to us when they were ready to do so. take a market check. and look at where things stand right now. we go to steve liesman. >> the federal reserve said they're likely to hike interest rates in june if the second quarter data improves as expected. the members at the april meeting judged it appropriate to leave the option open for a june hike. they saw conditions improving or likely to improve to justify that hike including a weaker or stable dollar, rising equity prices and improved economy and diminished global risks. now some were worried that market was not properly paying attention and pricing in the possibility of a june hike.

apt minutes make sense -- make mention of the market not being prepared for a june hike. and they're confident that the economy will improve to support that hike. they're confident in the second quarter rebound and they believe in the strong data, those who support this over the strong jobs data over the weak gdp d data. a few wanted to do it at the april meeting. they judged the outlook as balanced even in the april meeting. now they want to convey in the statement a sense of diminished global risks. now there was another sign to this story. there was some on the fed who didn't want to convey this and aren't confident in june. they were concerned that data wouldn't justify the june hike. they saw some risks that there is a more persistent slowdown brewing at the time. they remain worried about weak inflation, data, and down side risks abroad. also several participants noted that the global financial markets could be sensitive to

the british referendum. there is a sense that federal reserve is considering a june rate hike if the second quarter data improves as expected. back to you. >> all right. steve liesman, wow, breaking news there, folks. a juven june rate hike is likely. the dow jones industrial average has come off 50 points since that crossed. it is up 24 points. let's bring in our panel of fed experts to see what this might mean, if anything, for you and your money. we'll get to rick santelli right now in the bond pits of chicago. we're seeing the ten year yield move up a little bit. >> and the dollar is screaming. >> oh, yeah. you call i had. the dollar, first chart we want to show, the dollar definitely moved from up about six to up about a third or more. so it ripped a bit. and two year note yields coming in were trading up 85, they're up three. the tens are at 1.83.

they're up one basis point. now granted, all yields are moving up to areas we haven't seen, the short end much longer time frame. but my first comment is woo-hoo! finally. this is only my opinion. this is the first logical thing i've heard in so long! janet yellen and company, my hat's off you to. the second thing is now they almost have to go. because if they don't go after these comments without some real outliars on the bell curve with data, they'll never have credibility again. this is a wonderful thing. we need to get much more normalized. certainly after all these years, 25 to 50 isn't enough. a plus for the fed. and the markets movement, i think dig tadz that investors actually by putting on their flat eners are happy. >> here the thing. if the markets and the stock markets start moving lower and start acting like they're having trouble and we have another

tantrum, they're going to pull back, right? this say big test for them. let's see if ultimately how it plays out. >> i don't think, so michelle. i don't think. so i don't think so. listen, there is no way to normalize without a stronger dollar and a negative reaction to stocks. just no way. it is absolutely impossible. >> misch snell. >> either do it or you don't. >> you're right, michelle, to worry about the market reaction here. this raises a really interesting question f there was all this talk in the april meeting about june, why does the april statement not convey any of that? i'm not -- i'm thinking the -- a little bit of the other side of rick here. rick, i'm going to think on the other side. i don't think they get an a plus on. this if they were thinking june, they should have been talking june. they really punted on that a little bit. i don't know. brian, if you do your word counting, june is mentioned in here. it's got to be five or six times. >> you know, gosh, you read my

mind. here's the thing. i won't do the april statement. i'll do the march minutes just because the lengthst document is about the same. they use the word inflation 117 times in march. only 63 times this time. increase most and strong the words that would indicate that kind of movement, all declined in april, steve, from march. it seems like the fed pulled back on their expectations but then said by the way, we're going to raise rates. >> dow is negative by the way, steve. >> it would be interesting to see how many times -- now what happened is, and the thing that i've been trying to pound the table about is how is it possible that market was ignoring eric rosengrand? the self-proclaimed dovish boss to be fed president who all did he for a month is saying you're not listening us to. so it was to the -- >> i have an answer you to, steve. >> go ahead. >> janet yellen, her speech in new york. everybody said they went to sleep after that. >> that's an excellent point.

i'm saying that when eric rosenberg comes out and says you're not listening to us, we're thinking june. we want flexibility. >> built she's the boss. >> fair enough. fair enough. you have williams. you had rose engram. you have a bunch of other folks out there arguing that the market was really not that june is a definite -- is going to definitely happen, but that market was misjudging the possibility or the probability of a june hike. >> all right. steve, hold on. we want to get more on the market reaction. the s&p 500 just joined the dow in turning negative. we're seeing the higher dividend yielding sectors of the s&p 500. that is where the s&p 500 is feeling most pain. we're talking about utilities as well as telecom. >> as you said, we did see that instant reaction to the fed minutes with yields popping and the markets pulling back. the dow now at the worst levels of the day. i should say, in the afternoon. the s&p 500 bounced off a key support level of 2039, now moving towards those levels at

2042. of course, the nasdaq which earlier today was set to move into correction territory but the rally we saw helped to prevent it. remains higher. off best level the day, up six points. let's look at a couple of sectors which were, of course, in the news or certainly leading the markets higher earlier, specifically, we want to look at the financials. remember financials, of course, benefit from the increase that's we're seeing or the banks i should say, the big banks moving almost in tandem with how the yield on the ten year goes. and they continue to rally. technology and health care as well to the plus side. what we're watching right now is oil. oil is giving up almost all of the gains in the wake of the fed minutes. now trading down four cents at 4827. >> thank you. thank you very much. mary said the dow off 100 points since that. we're seeing a dollar move ten years, two years, oil moving down. let's bring in jim paulsen.

steve still with us as well. jim, i don't have a smart question for you other than does this change your investing strategy and how you make money for your clients. >> you know, i'm with rick. yahoo is my response to that. i think my criticism of the last couple years to the fed has been that every time the fed moves from easing to tightening and every recovery, the market strug wells that. it happened in 1984. it napd 1994. it napd 2004. every time i went from easing to tightening. but this fed has suspended wall street at the first tightening move. and has perpetuated the fear which is now last at least two years. they wait to raise waits and then they pause. it's like stretching out or

keeping us in this pattern of fear. if they get away from that and start a regular rise in rates, i think wall street will calm down like it has in the past and the market will start trading more fundamentals and do far better. so i'm very cheery today, if you will about, the prospects for equities. >> i know nothing about how the fed thinks. they were going to weight six months to get a read on data between interest rate hikes and i think if they go in june, they'll wait another six months until december to do it again. >> first and foremost, the fed is going to raise rates when they deem it appropriate for the u.s. economy. but there are a number of fed officials that are really desperate to adhere to that gradual commitment. it will be six months come june and many would argue that six months in between rate increases is as gradual as can you get. certainly a very hawkish tilt to

the april fomc meeting minutes. but more importantly that, hawkish tilt has been affirmed by the most recent comments from a number of fed officials reiterating their confidence in the continued improvement in the underlying data. so not only arguing for a near term rate increase, but we're hearing about multiple rate increases this year. we've heard two maybe three potential hikes still within the bounds of seven months left this year. >> you're a fixed income investors, there is a lot of lo reporting on it. this is the moment where people who thought they were safe in fixed incomes get their hat handed to them. are you worrying about that moment being near? >> there is a very big concern. the fed is going it continue to raise rates again the baction drop of an kple that is still very froth i'll. even if we do see the short end std curve, follow along with the fed rate increases, the long end is restrained about it fact that we're getting out 2% gdp.

we're still seeing consumer spending very minimal, negative business investment. that is going to create a much more difficult market. >> twint get your market reaction. you take a look at the markets at this moment in time. it looks like they're reacting. yesterday we saw a selloff because of the notion that a june hike was on the table. so over the two days, paul, what do you think? >> melissa, your point is exactly what i was going to sachlt yesterday we sold off on more hawkish fed opportunity. today is the selloff about minutes from a meeting six weeks ago and in that span we've seen a lot of economic data and fed commentary coming out. i think it's a bit of an overreaction on the part of the market. the knee jerk selloff that we saw in stocks. the fed has shown that they're going to be -- they're not going to put the cart before the horse. so if they hike rates, june, i think, you know, even in the minutes it said it's on the table. i think when they hike rates,

they're going to be damn well sure it's time to hike rates and not one of the situations where they think they should do it preemptively. i think initial selloff is a little bit too much. but going forward, the fed is going to take a slow gradual approach. like they said yesterday, two hikes maybe this year. that would be, you know, one every six months. june and then at the end of the year. >> that's my guess here. steve, you know, rick made the point and i gather you were sort of along with him on it. the fed now seems like they have tiptoed right up to the line for june. right there on the line. >> yeah. >> and i was going to make that point about what lindsey was saying. people should realize there are two sides to the ledger here. you're right. michel michelle is correct that fixed income investors could get hurt in this environment. but remember, on the other side of the ledger should be somewhat better growth. they've had decent auto sales f we get that second quarter rebound that we've had of gdp between 2% and 2.5% that, will be a whole lot better environment than you've seen for

corporate earnings than the .5% growth that we saw in the first quarter. they're going to take away a little bit here. the amount they're taking away, i don't think should be overstated in the sense that we're talking about perhaps 50 basis points this year, i think, at the outside. i don't think the three hikes is on the table. but probably could be two out. there and just to your point, yeah, i think that in and out bar is going to be pretty high for them to not hike at this point. >> yes. >> you to have rick used the term a lot of outliars or clunkers in the data. you have to give up the ghost of a 2% rebound in the second quarter. >> lind sishsey, waunt to respo? >> even if we see a rebound at 2%, averaging that out over the first six months of the year that, gives us about 1.5% growth. the weakest start to the year than we've seen in the past several years. i don't see the justification for the fed to continue to raise rates other than the fact that they've really backed themselves

yet again into a corner by committing to a gradual increase in rates. now i know there is a desperation among fed officials to get going, continuing to remove accommodation. but the economic data, the economic data does not support that. >> what i think the right response the fed would give you here is that, hey, the economic data does not support zero or emergency interest rates. and that -- the fed should have long ago probably been off the zero lower bound and the point here is to get to something that is more in line with where the kple is now. 5% economy. and frank lishgs you call it 1.75% growth being very weak. and you're right about. that but it's probably the potential of the economy right now as you know. if you look at productivity and labor force growth, that's probably about where we should be growing. and under those circumstances, if you're doing potential, you shouldn't be doing so under the emergency rates. >> that's not what the fed is forecasting itself. >> guys, i have a comment and then a question to jim.

so here's the comment. there's a lot of talk that maybe we wouldn't get a rate hike in june because of this british referendum on lefaving the eu. they do mention this on page 7. here's a quote. some participants noted the market could be sensitive to the british referendum on membership in the eu. that's all they say. we're aware of it. maybe it won't stop us. jim, you to. when i look at the markets right now, the top five stocks in the s&p 500, e-trade, citigroup, charles schwab, key corps and citizens financial, bank of america up there as well. are you a buyer or have you been of bank and financial stocks on the anticipation of this? >> yeah. i think it's been more about the value that was created in the decline in the financial stocks or the relative underperformance that's drawn my attention. and with the anticipation that i think eventually this year we're going to start to get rate hikes. and you've already got, you

know, 6% loan growth going on. if you now start to raise department rates to some extent, i think the fundamental, the earnings for r story for them improved remarkably wlachlt you're seeing is risk on tight equity trades or wing and defensive intersensitive, you know, defensive utilities and consumer staples are losing in this trade. i don't think anybody in the economy is going to be hurt by a 25 base point hike from darn near zero. but what of the inability to raise rates, i think is hurting. it's hurting confidence. i think the fed would, if they want to juice the growth rate of the economy, they want the stock market to do better, they should

raise rates. start a normal process of that and allow wall street and main street to become the story rather than the fed. >> all right. thanks so much, guys. and lady. good to have you. >> she's taller than all of them. >> i bet she is. >> she's 6'2." >> nice. the financials are rallying as brian mentioned. one what do the fed minutes mean for the banks? we'll debate it next. the e-class has 11 intelligent driver-assist systems. it recognizes pedestrians and alerts you. warns you about incoming cross-traffic. cameras and radar detect dangers you don't. and it can even stop by itself. so in this crash test, one thing's missing: a crash. the 2016 e-class. lease the e350 for $499 a month at your local mercedes-benz dealer.

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the s&p 500, nasdaq and dow are sliding after the fed minutes. they said, hey, a june rate hike is a possibility. however, because of that, the financials, the banks, they're doing well. they want higher rates. let's talk about all this with the trading nation team. one almost we haven't talked about yet, i got this question from a very trusted source, melissa lee. the dollar is going to move. your dollar guy is the dollar going to -- >> it's moving now. it's at session highs. >> is the dollar going to slam a hoech a stock market recovery on this so-called normalization? >> look, it did definitely rally off this news. this wasn't a real surprise. i also don't think this is really huge news. i think this is a pawn sacrifice. the fed absolutely had to do something. otherwise, it was going to lose complete credibility. take a look at what bank of

japan was doing and they saw how bad lit bank of gentleman lan pau japan lost. this is the time to do one and done rate hike in june, before the general election starts and before you have a lot of turmoil in the markets. i think what is going to happen is you have this rate hike in june and then a pause for six months. that will create a much bigger calm than people think. so yes, will it help financial stocks right now? absolutely. is it going steepen the curve a little bit? absolutely. i don't think this is a long term secular move by any means. this is a one and done move to satisfy the markets. >> all right. gina, there is that call. you heard boris' position. your view on financial stocks. they're moving today. is this kind of a we'll trade it to day, sell it tomorrow or is this a long standing investme in. t idea? >> it depends on what you're outlook for the actual result of the economy is. if you think that economy is getting better, then you might get that steepening that boris is talking about. that is really what banks need. remember, they lend at the long end and they pay depositors at

the short end. the bigger the difference between the two, the better you're going to get in terms of bank profitability. how far if, the actual data comes in weak if, we see, for example, we're expecting about sub-2% growth for the total year that, could actually keep the curve somewhat flat. that may the nobody as good for banks. and i'm not sure that the fed is even going to be able to do that june rate hike if in fact we're underestimating the volatility that british referendum is going to bring into the picture. i think that is completely not discounted by the markets. i think there is more potential for volatility there. >> they did mention it, jean yachlt thank you very much. we got to go. boris, thank you as well. we have breaking news. >> yeah, donald trump just released a list of 11 potential supreme court picks that he would select as president of the united states. this is an unusual move for a presidential candidate. we don't see this level of specificity. let me run throughout list of the 11 people that his campaign is suggesting, steven colloton,

allison eid, raymond grounder, thomas hardiman, raymond kethledge, joan larsen, david strass, dianne sykes of wisconsin and done willet of texas. they're zinld about it trump campaign to really appeal to the concerns of conservatives who felt they might not be able to vote for donald trump. he's saying if i'm lekted as president, you're going to get what you most desire out of a conservative president. a conservative supreme court nominee to replace antonin scalia on the supreme court. some of the other people may be considered down the line for additional vacancy that's would happen as well on the supreme court during a donald trump presidential term. so an interesting strategic maneuver. >> i think it's a pretty smart move. when you talk to a lot of conservatives who do not like

donald trump but you push them, you say, hillary or donald trump, they say you know what i don't want her in charge of picking the supreme court. and so this is, i think, plays right into that waive thinking. >> yeah. absolutely. the one name that is not on this list is merrick garland that, is the person that president obama president obama said he would like to see replace an ton toni scalia on the supreme court. he's not on donald trump's list. this is trump sending a signal to those people you're talking about. >> got i. thank you so much. you bet. >> "power lunch" is back in two minutes. # i asked my dentist if an electric toothbrush was

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businesses need the agility to do one thing & another. only at&t has the network, people, and partners to help companies be... local & global. open & secure. because no one knows & like at&t. . welcome back to "power lunch." let's get to new york for an exclusive interview with time warner chairman and ceo jeff bukis. david? >> thank you very much. that's right. we're here at 30 rock, actually, with the chairman and ceo of time warner. nice to come in.

>> it's a friendly -- we're colleagues. >> we're colleagues. and for everybody right now, it's the up front season. you came from some visits there. and a lot of executives seem to be indicating they think it's going to be a very strong year. a lot of media executives i should have said. >> yeah. i think that advertisers know that it's a deal to get the reach of television. so i think that's true across the industry. for our company at turner, i was blown away by the you front. we have terrific new original shows at tbs, tntf you just go over to the news business, you note only have all the world events and the election events at cnn, tremendous interest and great coverage there. but we've got a whole stable of breakthrough original programs like anthony boredane and five or six others ones that just taking off. >> and do you think you'll sell more in the up front this is year than you did last year? >> we do. we think that there will be more

demand because you probably want to get in early this year. >> because what? things are even stronger? >> yeah, i think. so and demand is going up. >> why do they even exist? i mean, it's like walking back into 1968. >> you mean the timing of buying the -- >> the up fronts themselves. what do you need do this for, have the show and tells and the 20 somethings come around. you have drinks with them. what is the point of all of this? >> maybe -- good question. i think maybe the reason it's continuing to have some relevance is there is new programming, how is everybody going to keep track of it? i hope we talk about it for video on demand. there is an explosion of tv programming. people love it whether they're watching it on, you know, an ipad or on their tv. and increasingly, there is so much of it. and so much of it is g the question is how i do find it? how do i decide what i want to watch? how i do get it on demand right now? >> right.

that's interesting you bring that up. >> why don't we discuss that. >> we should talk about. that. >> okay. let's talk about it. some people look at time warner and talk about all of the different opportunities and content that you're producing. but still as the question, well what is your over the top strategy given this new world that we are in? >> basically, most of our audience watches on tv. and everybody likes a big screen. you like to be able to watch your favorite show, your favorite networks. but the issue is, you're not in most cases able to watch your tv network on demand. you can't get through it. you can't figure out what's on now. you can't find out do i go back two weeks episode or what do i do? what you're seeing now is the entire tv environment is finally getting on demand and good navigation. so i think you're seeing it across the traditional television ecosystem. we all know that what is a new kind of a helper for this is broadband delivery. so whether it's the subscription

bulk services like netflix, amazon and hulu that provide a great access to hip programming but most of that is a year or two old, at least. more and more, you want -- >> netflix they have 30 something new shows a year. >> yeah. they have new shows. those are good. but a lot of what the viewing is for everybody's network is your favorite show. most of the shows that are gaining the audience are on the current season, new season of the show on tnt. >> but you're working towards talking about the new over the top bundles of programming, i would assume. >> right. >> that are now starting to be out there. whether it's sling tv, the slim, or potentially what hulu is going to be offering. >> dl is a little bit more maybe. >> and you're going to tell me you don't worry because you're going to be on all of them. >> yes. >> why? >> because we have strong networks. we have a really concentrated group of networks. if you think of tbs, tnt,

cartoon network, cnn, hbo, you could live without any of those networks? no. you couldn't live without them. >> what i think we've got and i think the numbers are bearing it out is we've got the biggest broad appeal tbs, tnt, hbo, the word news leader at cnn. we have a terrific kids network and cartoon. if you have those kind of networks with that much reach and power and we don't have a lot of marginal networks when people are constructing the new bundles and they're trying to make -- they have the big bundle. they got smaller bunld wills, or whether it's hulu or sling or whoever is inventing a smaller bunld will. >> so you'd be a part of all of

them? >> so far. >> you're not now in this hulu thing that is developing. >> well, we'll wait and see. >> okay. >> why won't you tell us how many subscribers you have to hbo now? >> we did. >> no, you didn't. >> we have the biggest year last year that we've had in 30 years and the year before that the same. >> what do you mean? i'm talking hbo now. not hbo. i'm not saying now on hbo. >> we didn't release how many. i think we said 800,000 or more. we keep gaining on those. here's our point. we're not trying to have the now subscriber group be different than the main hbo subscriber group. so we've got cable systems that have 40, 50% of their customers taking hbo. we have others with 20%. wherever you have low penetration, you fill in with the over the top or the broadband delivered service. we're trying to help all of our long term distributeors have as high penetration as they can have. we're doing whatever we can to

help them. but to the extent that people can't be reached or you have those that people that is about 12 million homes in america that don't have a video package, they've got to get it through broadband. so we're attacking all of those. there tends to be too much focus or segregation of interest on to the subs that come through any particular distribution. >> that's not what the future s they want to understand. the biggest piece of the future, if you just take hbo, there are 70 million homes in america that are hooked up to a cable subscription that don't have hbo. all they've got to do is add it to that cable package. they don't need another distribution meth aed to do it they want to get it through broadband, they k they don't have to. that is the biggest source of growth. >> before we let you go, since

it's been a while since we spoke, a few months ago i was reporting or a number of activists looking at time warner. there was a broad sense that if anybody came, and nobody did, they would argue this company is better off split apart. hbo and the movie studio and then the cable network separated in, some way. >> yeah. >> you disagree. why? >> well, not only did i disagree, all our shareholders disagree as well. they know the company. basically, if you look at the -- look at what we just said. we have a group of networks, tnt, tbs, cnn, cartoon, and hbo, they gain a lot of strength and ability to help each other when they go together in distribute. not just in the united states. but think of our program offering in latin america. think of europe. think of all the other places we have those. so that's true for getting into good distribution positions and all the existing or the traditional ways. if you think of the new distribution packages, think of a sling package or these new

ones that are coming on over the top or new packages in overseas territories. if you're using a broadband delivered service, having an adequate group of networks with kids, news, general entertainment and hbo and tnt, very helpful to do that. if you go to the programming side, the biggest source of programming for hbo and turner is warner. >> right. >> the biggest outlet. but not the only outlet for warner is hbo and turner. so there are tremendous advantages. if you think about -- of having these together and if you think about the new world inventing new things and having at built to distribute increasingingly all over the world in more direct way than con sunlers, goods to have a certain kind of core and since we don't think we have extra, less powerful networks or companies, we separate those, we think we've

got the core we need. and our investors agree. >> well, we'll leave it there. >> thank you, david. >> thank you. the chairman and ceo of time warner. back to you. >> all right. thank you so much, david. want to take a check on the markets. we're still digesting the minutes of the last fomc meeting. we will three indexes in the red moments ago. now the dow and s&p 500 in red. nasdaq is struggling to make a gain for the day. a couple notable movers, tesla up by 2.6% on the back of a goldman sachs upgrade and april sl higher. train day, we're seeing big moves as expected in the bond market. we're seeing yields across yield curve pretty much at intraday highs. no surprise. we've got the commensurate move in the dollar index just off of intraday highs right now. >> we want to focus on what is happening in the yen, not because of what happened with the fomc but in the last few minutes, the u.s. treasury secretary jack lu talking smack in terms of what they do, being

very critical of japan before he heads to gentleman pavenlt he said they're relying too much on monetary policy and result of rising currency battles with japan. are we in a battle to try to weaken the currencies? jack lu said japan is relying too heavily on monetary poll sichlt just last week the finance minister of japan said he was ready to just straight out intervene to try to weaken that yen. we'll discuss more about the impact and the overall market when "power lunch" comes back. we'll be back in two minutes. ♪ the first stock index was created over 100 years ago as a benchmark for average. yet many people still build portfolios with strategies that just track the benchmarks. but investing isn't about achieving average. it's about achieving goals. and invesco believes doing that today requires the art and expertise of high-conviction investing.

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hi, everyone. i'm sue herrera. here is your update this hour. two powerful earthquakes jolted ecuador today. a magnitude 6.7 in the early morning followed by a 6.8 quake around midday. the extent of damage from the second quake is not immediately clear although the first caused relatively little ruin. the second quake was centered near the city of rosa zarate. training got under way in the former soviet republic of georgia. 1300 soldiers from the u.s., united kingdom taking part in the exercises. it is a provication aimed at destabilizing that region. israel tested the iron dome

rocket defense system aboard naval ships for the first time. the system shot down a volley of rockets during a recent drill. the rockets were fired from land. they were detected by the radar system and intercepted by the weapons system. and the second leg of horse racing's triple crown, the praekness stakes will be run on saturday. nyquist is a huge favorite. the roodds are 5-7. his trainer says he is ready to race. >> i feel really good about our chances in the preakness. and like any other race and any other horse, you know, it's, you know, just you have to say that nyquist continues to just give off vibes that he's doing super. we will see. that's the cnbc news update this hour. "power lunch" is back in just a moment.

welcome back to "power lunch." i'm phil lebeau live in chicago's airplane where the security lines are shorter. looking fairly normal for what you would expect on a wednesday afternoon. this in a day whether we've seen long lines here earlier this morning at o'hare and we also have been told to expect even bigger lines this summer.

the airlines for america, they're out with the forecast for summer travel. we're looking at a record sumner term of people flying. 231 million passengers according to airlines for america. that's an increase of 4%. if they see the lines that we saw here at o'hare this morning, a lot of the people are going to be saying, why am i flying? long lines again this morning at both chicago airports, o'hare and midway. and o'hare is now warning travelers to arrive three hours early. it was easy to see frustrated people this morning. >> i think tsa, they should divide the lines better. there is just one long line. >> it's unbelievable. it's disgusting and it's uncalled for. whoever is at the head should be fired. >> i'm very upset about this. it's got to be a better way than this. >> so what is the tsa doing to fix this situation? they are adding staff. they're having more other workers work overtime by the middle of august there will be another 258 tsa workers added

here at chicago o'hare as well as midway. they're also shifting the staffing to the morning hours. but guys, one last thing. this question has come up a couple times today to me. people are saying well, what if nobody brings carry on bags anymore? if the airlines don't charge for checked bags, then people will check more bags and carry on fewer bags and make it through security quicker. that is not going to be a solution. that almost anybody familiar with the tsa thinks will work. because you still have people with purses, with briefcases, those are going to take a while to be checked as well. and look at southwest airlines. those airports where they have a big presence, guys, you still see long delays there. remember, southwest doesn't charge you to chekt first couple of bags. so although that in theory sounds like a good idea, most believe it really would have a very limited impact. >> we have senator richard bloomenthal coming up. the tsa is add more people, increase the budget. you point out it's not a shortage of people, it is? it's just the way things are designed doesn't work.

>> well, the design is a huge issue. can you add more staffing. and it's when the people are staffed. early this morning, there were people here who were saying, look, i've been in line for an hour. did the tsa get here at 4:00 in the morning? 3. 306789 in the morning so they were completely staffed and trod go when the crowds start coming at 5:00? i'm not sure about. that we have a call in to the tsa to find out m who study this say you have to shift how you're working the airports. it's not just simply throw more people at it. >> i've been to airports where there are more sta agents than people on the flight. but those are the kind of airports i fly into. >> and, brian, you and i both fly in airports where there is nobody at the tsa lines and a tlong of people. goes both ways. >> senator richard bloomenthal joining us. your proposal which is to eliminate fees on checked bags, get more people to check them. tsa itself says won't work. how do you respond to that? >> well, it will work. but it's not the sole solution. it will work to reduce not

eliminate those lines. and there is a need for a multifaceted approach. tsa needs to restore the screeners that were cut. there was a 15% cut in the number of screeners. almost 6,000. it's proposing to add about 700. so person power is important. so is the amount of money that congress is appropriating for the design of the system and the equipment. and so are the number of carry ones versus checked bags. here's a statistic that i think should carry a lot of weight. tsa reports that at the check points where there are charges for the checked bags, the number of carry ones is 27% higher. now it's not 100% higher. but when you get those lines three hours long that result from in effect people carrying on two or three bags instead of

maybe one briefcase, that's going to have an infect. and here's one more phenomenon. you probably seen it. you've been flying a fair amount. people carry on those bags and what do they find whether they get on the airport? there isn't enough room for them. there are 15 to 20 bags on most of the recent flights i've been on that have to be then taken that have to be then taken off the airplane. >> but that is not problem with the security check points. that is a problem once you are on the aircraft. not the -- >> well it has to go through -- sorry, but it has to go through the security check points and then it defeats the purpose of carrying on the bags because they are then checked, which often delays the flight. >> i flew southwest this week. and i can tell you, they have no fees for check bags. the lines were just as long at newark airport. they were just as long at mid way airport. i take your point. maybe you knock some of the volume out. but i don't think it is a measurable difference.

how about mismanagement? we had an air -- aviation air expert on last week who talked extensively about mismanagement at the top? is that a key problem here? >> it is a problem and i've just said there is no single panacea that management will make a difference. there is a relatively new tsa head and maybe better management can make a difference. but when you charge for those p bags you are going to find more people carry them on. you folks deal with financial incentives. it is only natural. and the more bags you have the longer it is going to take. and we can have anecdotal information about how long it is going take but the tsa says 27% more carry on bags when you have those kind of fees to check the bags. >> senator blumenthal, thank you for coming on.

i wonder how much this is tsa or the fact that the country doesn't have the will or the money to build any new airports any where so the capacity is -- >> here is the problem. you are not going to have new airports built by this summer travel season. you can take action right away. better management of tsa. more screeners. >> or drive. >> good luck on driving. >> senator blumenthal, thank you very much. power lunch is back in two. qual, and that in a new house, you probably don't share the same tastes as therevious owner. ♪ [ dolphin chatters ] so when you need a little house painting or a comple remodel, we'll help you get the job done right, guaranteed. get started today at angie's list, because your home is where our heart is.

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treasury yields are soaring. rick reader. welcome to power lunch. were you surprised by what we heard from the fed minutes? and how do you interpret the market reaction? over reaction? roept? >> i think the repereaction was appropriate. hawkish is probably a fair representation i think. i don't think the market is going to be completely surprised by it. there's been a steady stream of speakers from the fed. lockheart, williams, rosengren, dudley. have suggested that the market should be more prepared for moving whether that is june or july. and market expectation for june were pretty much zero percent. and i think the fed whether they were trying to adjust the market expectations or and give them a bit more flexibility. >> and you called that a low probability a june move. do you still feel that way? >> yeah i is still think they

are setting up in -- you know in front of brexit i think is a low probability. is july on the table? sure. i think you have to take the fed at its word, if the data supports it especially. the data is critical. so, you know, we think -- we still think it is hard for the fed to move more than one or two times this year. >> the fed funds and futures said like a 4%% chance. now they say 24% chance. so it is not baked in they think a hundred% chance in by the end of the year in terms of a raise. >> i would say a couple of things. one thing we're a core believer in diversify the fixed income. the u.s. is going to be the first to have rates rise. and, you know, with today's announcement, today's minutes, you clearly are moving that up a bit. and potentially moving that up a

bit. owning rate risk in places like europe which is going to be slow. japan clearly is going to be slow. places like australia, korea that are going to be more deliberate about rate moves we think is the right thing. diversify fixed income. all on spread assets that are going to be much more zlt in this environment. >> closing bell starts right now.resilient in this environment. >> closing bell starts right now. hi everybody. welcome to the "closing bell." >> stocks turning to the downside. financials getting a pop in the last hour after the fed revealed a june rate hike is still very much on the table. we are we're going dig deeper into those comments. an all-star panel coming up. >> google announcing its new

mobile virtual reality platform. >> what we've built won't be available until