thing ends. i'm still worried about what we have to talk about all summer. john? >> pick up that yellow metal, simon. some of the gold. >> and play it. that's going to help you. >> it's been a pleasure, guys. thank you for the trades and analysis. it's a big day here on cnbc in the wake of the brexit vote. now it's time for "power lunc.". >> and we do welcome you. i'm bill griffith live from the new york stock exchange. >> i'm melissa live at cnbc headquarters. stocks are close to session lows following that brexit vote. take a look at the s&p 500. again, 2047. 2045 is the session low. the nasdaq really feeing most pain of the three major indices, down 3.75%. sectors, financials and materials are the worst performing. financials and technology are the biggest weights on the s&p 500 and that is what people are watching in terms of whether or not we can move off of the

session lows. the hunt for yield, the hunt for safety is alive and well. we have utilities seeing a bid today. higher by .6%. of course, the big, big move today happening in the gold markets as well as the bond markets. guy is with us for the next two hours. so what are your thoughts right now? >> unbelievable. this is fascinating. i think this is historic stuff. it's not the time -- this is the time to sit back and evaluate what is going on. we're at the s&p 500 off the all time high. we were here last week. what should you be doing today? you should be gathering questions for the weekend. what are the questions you should ask? why are interest rates in germany negative? why are ten year yields in the united states 1.5%? what does brexit mean for global economies? those are the questions you should be writing, e-mailing them to your adviceor. if he or she cannot answer the question, you have the wrong advis adviser. you don't have to do anything in

terms of market participation, but you need to as the questions that everybody has on their mind but afraid to ask. >> a question in today's session, i'm sure investors have this people watching us, is this the dip you buy? you hear a lot of people get in! buy the large cap stocks and dividend yielding stocks. now is the time you're waiting for. >> job number next week. you have a weekend to digest this thing. you have more countries probably get in line in terms of -- if you're germany and ten year yields are zero and a working class being bludgeoned by what's going on, at what point do they decide, listen, maybe it's time for us to make a move. i don't notice. but those are the conversation that's are going on. if you think is the dip to buy, i would say you know what? take a pause. first wave is usually the wrong wave. >> all right. let's get out to josh brown who is also joining us from the new york stock exchange for the next couple blocks or so of the show. josh, in terms of what to do, are you in agreement with guy that you just step aside and see how this shakes out?

or are new the camp to use this dip as a buying opportunity? >> well, if you're long term investor, you're not stepping aside with your entire portfolio. if you are worried about this event, you probably have already taken risk off. so you're in a position that you can do something. the more pedestrian thing is seed up the rebalance. you have bonds doing their job right now. maybe precious metals. mae you have volatility hedge in place. that stuff is all flying right now. that gives you the opportunity to take some from there and add back to the things that are really getting hammered. >> like what? >> vgk, some of the large cap european etfs. where i agree with guy is that first bounce may not be the only bounce or the final bounce. i think it's really important for people to use buy limits on the more speculative stuff that they want to do. so make a list of your favorite names. maybe amazon, facebook. they are not getting killed right now.

they're not down enough. but if you got buy limit in -- >> i'm sorry. is the euro stock 50, is that not speculative at this point in this environment? >> well, speculative over one or two days, absolutely. but this is the dow jones industrial average of the european continental stocks. there is no uk in there. it focuses on germany, france, spain, italy. you can own this index for a 10 or 15-year hold. if you have an opportunity to bite down 7, 8, 9% that, is much better than buying it at the highs. >> it's down 12%. >> germany is 9.5%. i say step away, i don't want there to be any ambiguity. i'm not saying pull your money out of the market. i'm not suggesting. that i'm saying don't make any ration decision onz a friday. this is the day that you need to write down the questions that you have and ask those questions and make sure they're answered. >> guys, stay right. there we want to get more on the fallout following that historic

brexit vote. michelle is live in london. michelle? >> great points. there is so many questions about the future of europe as a whole after this vote in the uk. historic and water shed vote for the united kingdom. acknowledges such by angela merkel, the most powerful leader in germany. she came out and said that she deeply greted the brexit vote and she acknowledged it was a setback to european integration. handled by media out of germany found a document they say they reported on eight pages labelled the german strategy regarding brexit. what should they do now related to the uk s? the suggestion is they shouldn't get too much market access because they don't want to incentivize movement in italy and spain, things that you guys were just talking about. and those issues raise a lot of questions about european stocks which many of our viewers own because it's been the place to

be because of what the ecb is doing. so what should you do? let's bring in dan morris, senior investment strategist g to you have here. explain one thing to me. this was supposed to be catastrophic for the united kingdom. the uk is down 3% today. italy is down 12%. to me, it's the eu that looks like the losers here. explain that. >> i think the first thing to keep in mind is a lot of the benefits for equity markets in the uk are front loaded. you have the currency depreciation. you think about benefits to rev ne revenues. the vote will be longer on, who knows, maybe two years. that is the first thing to explain why the ft-se is not down as much as you expect. i think what you're seeing on the continent with italy and spain, the nextcontagion. i think that's what people are worried about. we have an election in spain this weekend. you have referendum in italy in october f thing goes further off the rails, that's where it's

going to happen next. >> so i'm not wrong to look at the falls and think that maybe people are worried about a threat to the euro? >> exactly. that's how you think this would be trans transmitted out and becoming a europe problem and then to a global problem. that would be the path. i think at least in our view we don't expect that to be what happens, however. >> so does that mean 12% decline in italy is a buy or at least a trade? a one day move like that can sometimes -- >> does it seem to be -- force. >> it does seem to be an overreaction us to. i think if you imagine what the perspective might be like in spain, if you were trying to determine how you were going to vote this weekend, if you see what is happening in your own stock market, perhaps that gives you pause f anything, it encourages the vote more on the conservative side, more stable government and government that is more pro e.u. >> as i mentioned at the top, we have a lot of viewers in the united states, they're dollar buyers. they live in dollars. they earn money in dollars. but they bought european stocks because there is the

differential between the central banks. it was assumed the u.s. was going to raise. and the ecb was going to ease and ease and ease. they bought european stocks. so they stay in those stocks and should they hedge the occur eni >> i think they should stay and they should be looking to add. at some point, not necessarily today. this is going to take a while to play out. we still think on a relative basis, europe looks more attractive than the u.s. it's not like japan were really all the gains you got in the equity market is because of the currency. you had to hedge that. the opportunity is europe is partial lit currency. the euro weakens, that's fine. the benefit comes you have low marge ninz europe relative to the u.s. you have potential for earnings growth and that's going to drive the market. so it's not the currency you probably don't need to hedge zblichlt so you don't want to -- you don't have to worry about the euro weakening much more? >> no. we don't think it it s. gois goo

to pair parody. we know we're in extraordinary times in terms of monetary policy. you should see it appreciate. they're trying to time when that is going to happen. >> thank you for joining us in london on this historic day. back to you. >> all right. thank you. let's take a closer look back here at the new york stock exchange. the reaction to the surprising brexit vote last night. here in the united states, the major averages are near the lows of the session. but nowhere near the kinds of declines we saw on the continent this morning nor in japan overnight which was down about 9%. the dow is down 3% right now. the nasdaq is down 3.8%. and the s&p 500 is down 3% right now. bob pisani is joining us now along with josh brown. you wonder how we're going to do rest of the afternoon here. we have the russell rebalancing as well and kind of reacting to what happened overnight, obviously. >> it is not happening the way you would thichlt we're stuck at

2050. how many times have we been sitting here in the last year? that hasn't changed much. banks are down notably. even defensive names like health care, you thought they may do better. they're doing -- they're off today generally. so the defensive group isn't necessarily helping a lot overall. we do have nice interest rate sensitive groups. i guess the reits are doing better, that is not a surprise. telecom stocks are doing better. but overall, we got a little bit of a problem today, bill. this russell rebalancing is a little bit of a fly in the ointment. this is a once a year rebalancing we get. normal lishgs it's huge volume. the biggest volume day of the year. normally it doesn't move prices. the problem is we don't know how that closed that interaction is going to affect people who are trying to sell at the close and if they're interested in lightening up for the weekend. it's a huge deal overall. there are three things i kip hearing from traders. number one, at the economic slowdown, could reduce capital

investments. that's major issue. the stronger dollar can hurt earnings for energy and materials and industrials. and then lower consumer discretionary spend kog hurt the consumer discretionary group. as for the exposure overseas, the one thing i absolutely can see is the companies that have big exposure outside the u.s. are already reducing their exposure. so look here. the s&p 500 is expected to drop 2.8% for earnings in the second quarter. this is the fifth quarter decline. those that have more of their sales outside the united states already are saying their earnings are going to be hurt more than those who have a majority inside the united states. the concern here is that that might accelerate overall. so we have a number of real x factors sitting around waiting on us. my big concern is that compression in the earnings multiple. i think it's hard to argue expand the earnings multiple when earnings are shrinking. >> yeah. >> and, yet, we found a way to

do it. >> we did that recently. >> take a look at the splv. this is an etf that tracks the low volatility standard & poors 500 index. it's down less than a third of what the major average, about 1.25%. and really interestingly, found support right at this 50-day moving average. this is something that happened over and over and over again. we saw it in the august lows. we saw it in the february lows. they keep coming back to the stocks. and if you think we're talking now recession in the european union and the u.s., you have to be thinking about lower rates for bonds and what does that push investors ultimately to do? not the next day, but eventually. that could be a low volatility name. >> i like that, too. but it has essentially consumer names in it, by and large they're the ones that are least volati volatile. >> the first one to turn green was altria. that will never be the case as long as we got them in these types of moments.

then you saw the telecoms turn and utilities up on the day. they keep coming back to the names. >> the boring utilities that nobody likes to buy. >> that's for sure. all right. stick around, guys. uk votes to leave the eu. we all are asking, who could be next? a look at the countries that may follow britain's lead. and throughout our program, you're going to be hearing from every day britains sounding off on this historic vote like right now. >> this morning we have actually left the eu. we should have an opportunity to vote again because i see so many things differently. things diffe. thank you. ordering chinese food is a very predictable experience. i order b14. i get b14. no surprises. buying business internet, on the other hand, can be a roller coaster white knuckle thrill ride. you're promised one speed. but do you consistently get it? you do with comcast business.

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it's reliable. just like kung pao fish. thank you, ping. reliably fast internet starts at $59.95 a month. comcast business. built for business. the banks getting hit hard following the brexit vote. the bank index is down of 6%. check out the major financials getting crushed. morgan stanley is looking at a 10% loss right now. citigroup down by 8.4%. goldman sachs is feeling the pain. the president of cio mendian capital advisors. they own citi, bank of america and wells fargo. at this point, fed funds futures are not only saying that a rate hike is off the table, but they're also factoring in the possibility of a rate cut. what does that do to the yield curve and the outlook for the

banks to hold? >> it's always tough when they revalue things in a shock situation like today. clearly, we've seen very large moves in the treasuries. and really what's next is what central banks do around the world. are they going to chase the uk lower or let the uk do it by itself? i think central bank action is important. the u.s. economy is doing fine. it's going aalong. we'll see inflation eventually. this clearly takes your eye off the table. but i think this economy is doing fine and will muddle along. i think there still an issue with jobs. i think, you know, not enough qualified people out there. i think there is wage inflation this year. the bank onz a one day move like this i get beating the bank that's have direct exposure. but even that is hard to quantify. so i think it's shoot first, ask questions later. >> a lot of people are asking with this big decline today, should i step in and buy

something? is it cheaper right now? you and i have talked in the past about the regionals. you pounded the table for those. are those the better buy now because they don't have the exposure to the uncertainty that is brexit right now? >> well, they're simpler. you know, we know they don't have the direct exposure and we always talked about buying in areas of the country where there is really good economic growth. i particularly love the southeast. there is a lot of good things still going on that have nothing to do directly with what's going on in the uk. so you know, i like banks in the carolinas. i like banks in florida. there are really good dem grfk things going on. panama canal widening is providing a lot of business. i focus on smaller. i focus on bank that's could get bought or bank that's could do smart deals. that's how you create value. even with bade yield curve, company that's merge and cut costs can create value in this environment. it has nothing to do with interest rates. >> it's josh brown. is it going too far to ask you

to take a look at the texas regional banks being much worse than the overall market on a day where oil is not necessarily much worse than it normally is on a down day and say that should we be thinking about the possibility of a contentious fight in texas over independence? are we taking a leap too far today? the markets seem to want to have that conversation. i think the market is extrapolating a dollar that is a lot stronger and that is bad for texas banks. so i think that's really where it's going. i think everybody kind of got upside down. a lot of people bought texas banks recently. the chart looks fantastic. a lot of people bought the big financials recently thinking i was going to remain. people are upside down. i'm not ready to step into texas banks yet. it's not just energy prices.

there are less people moving there. if you buy a bank in texas, buy one focused on dallas. >> that will be maybe next year. >> thank you. you know, what we have not talked about yet, european banks which are absolutely getting crushed today. take a look at the deutsche. credit suisse, barclay's, rbs. they all rallied hard into the brexit vote and are now giving back the gains. the index is down 14%. >> it's not a small -- it's down 16% today. but in context, here's a stock that's been grinding lower now for quite some time. you have to give kudos to brian kelly. he's been pointing it out. is it a canary in the coal mine, i have no idea. i thought the problem was the exposure to the crude market. guess what? crude doubled in price. so there is clearly something else going on.

there is not a one day move in banks. yes this one day move is lousy. goldman sachs top out last june around $215. morgan stanley at $40. the banks have been going down for a year now. it's not a one day thing at all. they're tl are clearly structural things going on with united states banks as well. >> what did you think about his argument about the regional banks? simpler to understand given that two year yield right now is down to 0.6 and change? >> i think you have to talk about the regional banks the way we fwatalk about pharma and biotech. probably a mistake. they're very much stories of their own region, their own place in the community, their own market share, et cetera. just to echo something that guy said this is not a one day phenomenon in the european banks in general. they topped out in february of 2014. take a look at the eufn. that is the etf that tracks the big european banks. it has british and continental.

>> josh, great to get your input for the time you had. josh brown, the reformed broker joining us here. guy is going to stay. >> he's leaving? where is he zbhog. >> he has to go to the beach. >> i'm going to lunch, guys. i have a real job. >> mix the salad in, baby. >> all right. there is one big way the brexit could affect americans personally. we'll tell you how next. as we head to the break, take a look at the s&p 500 sectors. we're watching financials closely. now down 4.75%. utilities, of course, keeping it in the green, up by .7%. turns rc turns rc why pause to take a pill? or stop to find a bathroom? cialis for daily use is approved to treat both erectile dysfunction and the urinary symptoms of bph, like needing to go frequently, day or night. tell your doctor about all your medical conditions and medicines, and ask if your heart is healthy enough for sex. do not take cialis if you take nitrates for chest pain,

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welcome back to "power lunch." the fallout from brexit is giving u.s. homeowners and buyers a break. mortgage rates are following the ten year treasury yield lower. they come back slightly since early this morning. not by much. the average rate on a 30 year fixed mortgage will likely mark 3.49%. that is 20 basis points higher than the all time low in 2012. rates will likely stay very low for the foreseeable future. you can expect the jump in mortgage refinances serbly for those who regained significant equity on higher home prices.

banks, may start to tighten up lending again. i dependent lend koerz pick up the slack. back to you. >> you would think that would be a good 1, 2, 3 inning. we have three year loan rates now with the mortgage rates. but they've been substituting starter into the season. and now with the stock market falling, not that wealth effect had an impact on housing, but that cannot gb for housing right now. >> it's not good for consumer confidence, that's for sure. the vast majority of home buyers, the first time home buyers and that move up middle buyer is not quite as invested in the stock market as the higher end buyers. still, it's going to take a toll on confidence. it's not always the lowest rate, it's whether or not can you get that mortgage. it's credit availability. that is a much bigger deal than the rate. >> all right. thank you very much. >> let's talk about stocks underperforming even in the decline of the overall market.

brexit buys or bust. >> go. >> priceline. take a look at this decline in shares of priceline. down 10%. >> you look at priceline, $1200 stock. you have to wonder is their business going to be affected what with is going on in europe and the terrorist activities? are people going to pent up, stay at home? i say priceline is a no touch until it gets down to $1100. >> so you say bust? >> yes. >> try. >> bust! >> okay. >> ebay, ebay shares are down by 7.5%. >> no idea why. i guess it's lumped in with the rest of the market. this stock has been doing nothing for a while. i say it's a bust before brexit. and it's a bust after brexit. double bust. >> double bust. ford? this is the last one here. shares of ford are down. >> listen, you've been at a

historic time for auto makers in the last three or four years along with the stock market until recently. that's only gone straight up. ford has done absolutely nothing. it's gone side ways. you have to ask yourself, sell. what is the problem -- i'm telling you. what is the problem? we talk about this all the time. >> all the time. >> what happens? >> quadruple bust. that's a eququadruple bust. >> all right. final gode trade crossing for the day. we have the metals close. e the r unwittingly gave you a global product endorsement. and millions of women everywhere decided, "i love that shoe." and the company's data center handled the spike in traffic without any drama. before all of this. cdw orchestrated a scalable software defined data center solution using vmware nsx technology. scalability by vmware. orchestration by cdw.

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here's your cnbc news update for this hour. paul ryan rolling out a new gop tax code plan he says will simplify how americans pay taxes. he said the code would be so simple it could be done on a postcard. >> are we, america, going to shape the global economy or it is going to shape us? i think with this plan, once again, america will take the lead. with this plan, everyone in our

country, the interests and the eager, the old america and the new america can unite and build a competent america. donald trump in scotland to reopen a golf resort he owns. as' proechd the podium to speak, a protester stepped forward to offer golf balls offering swastikas. he was vausurrounded by securit and removed. they released images of jap japan's biggest drug bust ever. they received 600 kilograms of amphetamines from a yacht in a port in okinawa. the street value is $400 million. workers are seen trying to save a whale tangled up in fishing rope off the coast of massachusetts. they were able to cut away most of the rope to free the whale. that is your cnbc news update. back to you. all right. thank you very much. let's take a look at the final gold trade there crossing for the day. this is a biggest rise among asset class that's we've seen so

far in today's session. gold is up $1322.80. that up is by 4.75%. these are the highest levels we've seen since march of 2014. take a look at the rest of the metals complex. the dollar index say big driver, should have been a big driver in today's session. it's higher by 1.7 a%. we're seeing a decline in copper and palladium, the two more economically sensitive metals. big gains in silver as well as platinum. we're seeing huge moves in the bond market. rick santelli tracking all that action from the cme. rick? >> can you just understand how important today is by listening to traders. one trader says how weird that independence day two is opening today, another trader called it phoenix friday. it all depends on your point of view. many down here, they didn't expect the outcome but they're certainly not disappointed by it. let's look at one week of tens, shall we? i'm not diminishing the fact we have yields at 1.57 now?

if you're trying to be object bif brexit, we're still only down four basis points on the week and a lot of the rest of those moves are due to fund amount will die nam ibs. anybody desurable goods today? it's isolating that lehman moment that nefrl materialized. look at a one week of 30 aers. they're unchanged on the week. boon yields are down five basis points for the week. well off the minus nine or ten. year to dast the dollar index, all the talk and, yeshgs it's a big day for the dollar. but on the year to date chart, if you didn't know there was a brexit yesterday, the chart really look that weird? i don't think so. bill g, back to you. >> all right, rick. thank you, buddy. enjoy "independence 2." that is hilarious. >> let's get more on this selloff and what it means for your money. that's what everybody is asking today. bringing in now the ceo of principal global advisors and

charles rhinehart at main stay investments. they have half a trillion dollars in assets under management. i imagine the phones are ringing off the hook from clients wondering what to do. i know you're one that says, look, any time the u.s. market goes down in any capacity, it's time to get in there a little more, yes? >> i think that's right. the fundamentals of the u.s. market remain pretty good. and the damage from the brexit economic damage is actually very modest in the u.s. the problem arises in europe. the biggest strain of brexit which will cause lower economic growth in europe as in britain, that lower economic growth will lead to lower interest rates than they were before and it reinforce that's lower for longer theory that we had for a while on interest rates. >> what you are buying?

how do you translate that into strategies for your portfolio? >> in the u.s., buy equities on setbacks, focus on domestic earnings which means small and mid cap. if you're in european or emerging market equities, those are the ones that are hurt worst by trade. so theret ones to let them fall, don't to don't be too committed. >> charlie, you have a lot of ee etfs there. where you would see good value right now? >> well, what we're seeing is good value in international equities on the weakness that we've seen today. and one simple way to do -- gain that exposure is in an etf that covers developed international equities but does so differently in that it has a 50% currency hedge. leading up to the brexit, pound, and euro were up and down 50% of the time in the 30, 60, and 9 o

d -- 90 days leading up to a brexit vote. bigger picture, the more global level, i think that what we've experienced in the last 24 hours should remind us all that we need to construct portfolios that can withstand multiple scenarios. that is relying on companies that have solid cash flow growth and also that pay dividends. >> all right. gentlemen, good to see you both. we appreciate it. up next, what you should be doing with your portfolio on a day like today. we're going to talk about that all day. td ameritrade top money manager joins us when we return. s us wh. i'm here at the td ameritrade trader offices. s us wh. steve, other than making me move stuff, what are you working on?

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welcome back to "power lunch." we're a little off the lows right now. a lot of fear out there. so what does it mean to be average investor as well as the millions of brits living here in the united states? jane wells has been working that side of the story for us. she joins us now. jane? >> hi, bill. yeah. it's brexit for breakfast here at the british pub in santa monica. what does it mean for people here? there's over a trillion dollars in u.s. goods and service that's trade with europe. thompson reuters says that 14% of mutual funds are invested in european companies. and just in l.a., there are over 200,000 british people living here. so for them and locals, here's the reaction.

>> we would havy about who will run the country now and investments in the stock market. so we're not happy. >> we voted. we did a postal vote and the worst decision that we could have made. i think there's a lot of disaffected people that globalization has not worked for. i just don't know how you put that genie back in the bottle. >> well, across the country in new york a little closer to wall street. we went to times square for this reaction. >> i have to believe. i think they're strong outside of the eu. i don't think we should be breaking ties with europe. >> i think it's a bad thing. they might try and leave. but they'll be part of britain. england might just say no. >> as a european and irishman, i hate to see the breakup of something that, you know, could develop in my opinion for people of europe and in so many ways.

>> all right. we're asking in a poll clshgs is the best investment today ranging from stocks, gold, bonds, the pound? those with a strong stomach, u.s. equities are winning the polls right now. you know that the brexit has gone mainstream when on social media they turned the chart of the pound into a crying michael jordan bean. >> yeah. thank you. let's take a look at the names that might be in your portfolio now and how they're reacting on the back of this brexit vote tachlt a look at alphabet. so underwe are forming the broader indices. april sl down. j.p. morgan, of course, getting hit hardest. let's take a look at what your broker is doing on a day like this. j.j.kinahan is a strategist. great to see you. >> what you are notice in terms of trading volume and willingness for investors to step into this market? >> volume has been really g we

saw it starting last night with our clients that trade futures. really wanting to be involved. speculative or hedge the portfol portfolio. what we're seeing today is a continuation of a theme we've seen for a while. you know, since march 19th, we've been between 2030 and 2100 on the s&p 500. and today we're right at the 2050 level as we start talking. so we're just at the low end of the range. i don't sense a panic at all. one thing we saw industry wide was volumes were lower going into the brexit. i think there are quite a few people have the powder dry and are willing to start nibbling at the stocks they like on the selloff. >> j.j. this is not to suggest anybody should do. this i asked this question because i want to as the question. we always hear it's a buying opportunity, buying opportunity. any time you hear opportunity, typically buying is ahead of it s it ever a selling opportunity? >> you know, it is a great question. i do think that overall there are probably some stocks that might have some exposure to

europe that you would be a little bit more careful of. but when we're at the lower end of a recent range, you know, i would see it more as a buying opportunity on many stocks. the one thing i would say that people do have to reconsider is the financial stocks right here. because they're actually being completely repriced based on new information in terms of what may happen ratewise. let's face it, a month ago we were talking about a summer rate increase. now it doesn't even necessarily look like we're going to have a rate increase in 2016. we had this situation in england which was quite a surprise. we have the potential sunday night with the spanish election to see more things disjointed. so with that, i would say, guy, overall bottom of the range i look at it as a buying opportunity overall. i wouldn't to watch the stocks i have. >> you know it's interesting that it seems like financials are really getting repriced

pretty hard. that is a reflection of what the outlook on growth is here in the united states as well as globally. why aren't other sectorsst market being repriced just as hard in this new era of just lower growth here in the united states and abroad? >> i think you'll see a delayed reaction to that. that being said, as we're going to head to the earnings season in a couple weeks, i'm actually excite btd earnings season that all this is a weird thing to say, for the earnings calls. because the ceo's outlooks have to be changing as we speak and what they're going to present to people in terms of what they see noefrme for the next six months and next year. it should be a different message than we got in the last quarter. i think you may see a delayed reaction. another area being affected is tech. many of the companies, it doesn't matter. we all have a need for that.

a demand for that. it will be interesting to see how many contracts are lost over next few months becausest pound repricing. >> j.j., good to hear from you. emerging markets taking a big hit. how to play the global fallout straight ahead. straight ahead.

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the eem having the worst day since november 2011. meantime, the major european markets finishing the day deep in the red. the big question is will any other country follow the uk and leave the eu? let's get to seema mody. >> the fear is that britain's decision to leave will spark a domino effect across europe and those contagion fears driving the selloff in global equities. the european stocks closing well off the highs. netherlands, france and the reverend yum highlighting this anti-eu sent. isn't confined to the uk. in fact, it's so strong in countries like czech republic and denmark, they say the brexit strongly increases the chances of these countries following britain out of the eu.

we see anti-establishment parties gaining traction. other countries to keep an eye on, us aindustry yashgs finland, poland, hungary, the list goes on. if there wasn't enough to worry about, europe has another political vent on the horizon. second parliamentary election taking place on sunday for the radical left party. this he could potentially benefit from the outcome of the uk referendum adding to the broader fears of the rise and populism across europe. greece, still keeping an eye on the debt troubles and turkey, keep an eye on this country given that immigration is a big part of the brexit story. we could see an acceleration in the migrant priceies. turkey would be a big loser. there all in all, the fears around greece, the brexit vote and spain election sending the euro lower by 2%, holding ton 111. european stock index closing the biggest loss, the biggest intraday move since 2008.

bill? >> thank you very much. let's get more on the brexit fallout. this time from the heart of the european union. political reporter and cnbc contributor tara palmeri is back us with. we talk so much about the response in the uk and here in the u.s. i can imagine there is a lot of soul searching going on there in brussels today, isn't there? >> that's the perfect word for it, soul searching. i mean, it was so depressing this morning once the news broke that was for leave. i was in the european parliament and the motions that i heard from the political leaders there was everything from the word nightmare and horrifying and shock to good riddance, defiance, we'll move on without the uk. one person said we've been on london time since 1989 when they started giving us a hard time about integration. there is a lot of emotion. people are trying to process it. i see the defiance and the

leader of the biggest political party here, the center right party said it's the uk problem. look at the pound. look what happened today. it's a mess. but the euro is sustainable. so this is a british problem. we'll move on without them. you know this is sort of the feeling. but i see that diffusing any sort of excitement toward more breakup of the eu. >> right. that's the thing. today is the british problem. but it could become a french problem, an italian problem, a greek problem. that's been the big fear. the domino effect this could cause. >> absolutely. the eu is starting to look like a house of cards. it is such a fragile state right now. people are thinking how do we stop this from happening? what can we do? a lot of people are krit cacrit president of the european group. poland is very different than portugal. greece is very different from

ireland. so at the same time, you can't, you know, they're starting to think do we need less europe or more europe to move forward? and these are the kind of talks they're having right now. they're talking about what is the eu actually good at? is it good at just being an economic trading area? is it good at security? so -- if they're gatt something, they need to bolster those things. the things they're not so good at, maybe they need to step away. from we're expecting to hear from the french and german alliance in terms of where they should go in the next few years and still come out soon with a memo, a political initiative and since they are considered the core country of the eu, everyone is holding their breath and seeing which way they're going to go. more europe or less europe. >> all right. tara, thank you very much. tara palmeri there from brussels. lots going on today. that will do it for me at the new york stock exchange. i'll be getting ready for closing bell. we're going to watch very carefully that last hour of

trading to see not only what the russell does but what kind of continued response there is to brexit. melissa lee will pick it up when "power lunch" continues. ower lu. there's a lot of places you never want to see "$7.95." [ beep ] but you'll be glad to see it here. fidelity -- where smarter investors will always be. if only the signs were as obvious when you trade. fidelity's active trader pro can help you find smarter entry and exit points and can help protect your potential profits. fidelity -- where smarter investors will always be. there goes my sensitive bladder. sound familiar? then you'll love this. incredible protection in a pad this thin. i didn't think it would work, but it does. it's called always discreet watch this. this super absorbent core turns liquid to gel, for incredible protection that's surprisingly thin.

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welcome back to "power lunch." you're looking at a live shot of the president making shots at stanford. we're listening for any comments on the brexit vote overnight. as soon as we have that, we'll bring it you to. let's continue with "power lunch." take a look at what happened today in europe. spain's index is down 6%. now is the perfect time to put your money to work in europe. joining us is the co-founder and ceo of evermore global advisors. great to have you with us. we look at the notes prior to segment. you said now is one of the most open tune times to invest in europe and the vote last night doesn't change anything. does that mean that it's completely inconsequential? >> no. the reality is that you get the

best opportunities in the middle of a crisis. so this was a shock to the system. we have no investments in the uk. we haven't had any in a couple years. there are always cheaper opportunities in the other european markets. and so i think it's no different today. we're looking all around and looking at stocks all over the place. there are companies that won't be impacted at all by this. >> what do you make of european banks? this is not a one day event. deutsche banc, these are banking going down now for better part of 18 months. clearly, long before brexit was even a word, these banks started going lower. what is happening? what is the reason behind this? >> the bank have issues. rules are change. capital requirements are changing. so they need to have more capital. >> david, hold on, we're going

to president obama in stanford, california. >> i spoke with david cameron a few moments ago. david is an outstanding friend and partner on the global stage. and based on our conversation, i'm confident that the uk is committed to an orderly transition out of the eu. we agreed that our financial teams will stay in close contact as we ensure financial stabil y stability. i then spoke to chancellor merkel of germany and we agreed the united states and our european allies will work closely together in the weeks and months ahead. but while the uk's relationship with the eu will change, one thing that will not change is the special relation sship that exists between our two nations. that will endure. the eu is one of our partners. our nato alliance will remain a

corner stone of global security and in a few weeks we'll be meeting for the nato summit. and our shared values including our commitment to democracy and pluralism and opportunity for all people in a globalized world, that will unite all of us. and that is the work that brings us here today. the world has sh rufrrunk. it is interconnected. manufacture you are accelerating it. it promises to bring extraordinary benefits. but it also has challenges. and it also evokes concerns and fears. part of why this global entrepreneurship summit has been so close to my heart, something that i've been so committed to is because i believe all of you represent all the up side.

the hope and the opportunity that interconnective world represents. but it's also important in these discussions to find ways in which we are expanding and broadening the benefits of that interconnection to more and more people. and that's what so many of you are doing. and we're gathered here at stanford in the heart of silicon valley, one of the great hubs of innovation and entrepreneurship for america and for the world. this is a place that celebrates our ability as human beings to discover and learn and to build, to question, to reimagine, to create new ways to connect and work with each other. >> and welcome back. we've been listening to the president making comments on the brexit vote. he spoke with david cameron and

angela merkel. he said things are chafrging. one thing remains the same and that is the special relationship that u.s. has with the united kingdom. and also that he is confident that the uk is going to make an orderly transition out of the eu. we'll continue monitoring this and bring you developments as we have them. let's check on the markets in the second hour of "power lunch." and we have market that's are just off of the session lows right now. as for the dow, we're seeing that down by 489 points. as for the broader markets, the nasdaq is feeling the most pain of the major three tlachlt is down by 3.6%. s&p 500 good for a decline of 61 points, 2052 is the level that is very important. 2050 is the bottom end of that range that we've been holding on for so long. russell 2000 down by 3.6%. huge day, of course, for gold and gold mining stocks. people are reaching for that safety trade. and we do have gold trading higher, actually closing at 4.7%

gain. $1321.80 is the level there. take a look at the ten year note. we've seen a huge decline in the yield. 1.584% right now. i'm joined this hour by simon hobbs at the new york stock exchange. >> let's not forget in two hours time, of course, before the close of the market we have the rebalancing here of the russell. so there is a lot of activity on the floor in anticipation of what that might bring. >> absolutely. how bad is the brexit for the markets? listen to what former fed chief alan greenspan told us earlier. >> this is the worst period i recall since i've been in public service. there is nothing like it including the crisis -- remember october 19th, 1987, when the dow went down by a record amount of 23%? that i felt was the bottom of all potential problems.

this has a corrosive effect which is not easy to go away. >> let's bring in our own steve liesman. you heard greenspan. what do you think? >> there is no doubt that this was an event that is going to shape the outlook for growth and the federal reserve here. i have a hard time seeing this as different from -- or worse than 1987 and 2008, both of which i lived through. markets are pricing in now some possibility of a rate cut and certainly a fed on extended hold here. morgan stanley among those cutting their outlook for growth. they shaved .3 off growth next year, .6 in 2018. those are big take aways in a economy that doesn't have much to give away. further hikes are off the table for now. others are moving from september to december. here is the way the brexit can affect the u.s. economy. confident shock. two stronger dollar hurts exports. keeps inflation low as well as hurt the manufacturing sector. financial conditions tighten.

if you want to go into the market to raise money with equity that, is more expensive now. puts the fed on hold. some economists worrying that brexit could tip an already fragile world economy into recession. that ka k. cause the fed to be cautious. there could be a rate cut for september. 10%, not a lot, 90% say they hold. the fed, i think, will wait months now for clarity. some wall street banks now saying december is the earliest possible rate hike. there is concern over elevated recession risk. the fed swap lines are open. the boe can come to the u.s. and borrow dollars if they have a funding crunch. >> how does this affect the other central banks around the world? the boe has a meeting july 14th. what do you think is going to happen here? >> i think they have a problem here. if you think about what happens with a currency that deappreciate yates, what does that do? more inflation. by the way, england is one of the countries that relies more on pricing for foreign goods

than the u.s. z so that is a big inflationaryism pact. on the other hand, the gdp impact. by the way, i think this is only an inflation mandate. he should probably be cutting. but he may have his head -- his hands stayed here. we also heard talk of additional possible quantitative easing. >> how does the fed deal -- why is the u.s. dollar put pressure on commodities, some with inflationary and moves away. >> yes. >> what do you think they're thinking? i mean it's a very difficult position they find themselves n much more so today than a week or so ago. >> i think the fed takes a step back. let's talk about, for example, to day. the durable goods data came n it was .1 down. it caused the gdp to be cut. they're up 2.5%. it will be july before we get first indication of how they affect the u.s. investment. the july meeting is completely off the table.

you're going to get that june jobs report in july. let's say august, september until you get an impact on the jobs market. so i think september is a time when the fed might think about think about what policies are going to be. it's going to take a very -- how many thinking abouts? >> at least three. at least three. they take a step back and they just take a very long look at the case. at the least we're on hold. so the market will be dialing out. now if i can add one more thing. a school of thought that this is a trade agreement. that uk and the u.s. don't have this incredibly significant and robust relationship that u.s. could weather through this if the confidence factor could be restored. >> i just wonder if what we witnessed in the uk is something that is beyond the discussion about economics and whether now what you have to worry about is the shear weight of populism and how that affects the politics. if it affects the politics in spain or italy or in this country as well.

when you see donald trump up there in scotland saying what he is saying and championing what is happening despite the fall in the market, i wonder if this is perhaps a new era or the central bankers are really overtaken. i that i is the nerve of where we are. >> i can be machiavellian about this, the worst it gets for england, the better it gets for places like the eu. you know, the big discussion this morning on "squawk box" about proving the counter factual, the jd this is expected to be economically disadvantageous for england f that ends up being the case, simon, can you imagine that there will be less talk about people leaving the european union. >> yes. i guess, so provided the rational players. and i'm not sure if there are rational players. >> and also this is more of a discussion by the way from the polls of immigration much more than it is economics. >> absolutely. let's just go out to london again. there say huge move in the british pound as we fell back

from 1.50, plummeting on the news today. let's get to michelle who has a special guest. >> thank you so much, simon hobbs. 1.50 to 1.32 in a matter of a couple of hours. the ceo of millennium global joins us. asset manager who specializes in currency management. we interviewed you yesterday. i brought up this possibility. the markets were all on the same side. this is going to be remain. and you said if it went the wrong way, it to could go to 1.30. not bad for government work. a swing like that, give me the historical context of a currency and advanced economy moving like that in a single day. >> it's extremely rare. we've had exchange rates for 45 years. that is going to be the days and the foreign exchange market in terms of the aberration we saw. >> incredible. president obama was just on and

he said that nothing will change about the special relationship between the united states and the united kingdom. is that going to most pound at all? >> it's great to hear what he is saying. it is not news. essentially, we trshueasure tha relationship but it's a given. >> that's interesting. the reports coming out of washington last night from the british reporters over there said there was all this worry that relationship would change. but the markets don't think so. >> not at all, no. >> where do we go from here? >> i think it's now a marathon not a sprint. we had the 12% move on the day. i think the outlook is it's going to take, two three, four, however many years to get this thing worked out. the political uncertainty is enormous as to who the new prime minister is going to be, whether a labor party leader is going to change. i think it will continue to decline. >> from where? >> i think against the dollar, if we're going to get another 5%, 10%, 15% to go. it is quite material over time.

>> parody? >> a long way. certainly down in the 120s. george soros says 1.15, is that possible? it certainly is. >> what about the euro? if you're concerned about the threat against the eu, the euro weakens to day as well. >> yechlt we think the euro is going to rally. but the euro is under threat because it questions the whole euro project. the eu itself and theu euro-zon as well. >> mark, thank you for guiding us through this currency madness that we've seen here the last couple days. >> you're welcome. >> good to you have on. back to you. >> all right. thank you. financials one of the biggest losers today, the sector pacing for the worst day since august of last year. european and u.s. banks down big time. we have a guest that overweight where he is ahead of the u.s. equity strategy. great to you have us with.

how does your view on growth change based on brexit? >> our view year to date has been fairly cautious on equities. and we've been warning clients whether you look at the market the risk-reward is to the down side given simply elevated equity valuation, a relatively challenge on the backdrop. if you look at earnings in some shape or form in an earnings recession. buy back is coming down dramatically. and coupled with that, investor positioning is quite long, especially going into the presidential election. our global macro strategist put out an interesting note just recently saying, you know, expect volatility to increase. in particular this could mean a lot of the systematic strategies that are long equities. they could start to trigger deleveraging. >> and we talked to marco in the past on "fast money." in terms of your call of

remaining in financials, given with what you said, it doesn't sound like an environment in which you want to be in financials at all. >> right. so financials i would sat market is currently pricing in some possibility of a negative rate hike. it's pretty much pricing in no rate hike for two years from now. so i wouldn't at this point be selling financials. if you look at valuations, they're compelling. european banks are trading close to 20,000 and 80,000. so i'd be looking for an opportunity to think about start stepping in. or if you've been out of trade and avoided it, perhaps we'll be longer for them and start considering your position. >> i understand valuation is compelling. i understand capitalization is probably as good as it's been in quite some time. maybe ever. we saw some of the results from the stress test. how do they make money going forward? every historical way they had to make money is seemingly going away. >> i think the big question mark for the banks is what happens with the fed. and do we get more rate hikes?

you know, next year, year after? so i think this is a way to see how things play out and how a lot of the economic numbers come out. >> it sounds like a long road to be in the trade, i mean the opportunity cost is great to be in this trade for a year, two years to see what the fed does. >> right. but look, keep in mind, there are a lot of intravolatility within a quarter eastern six-month period. the bottom line is the market is pricing in a very negative outlook for banks and financials generally. so, you know, at this point if you're in the trade, woinlt look to sell. if you're out of the trade, i'd be looking to add some position in. there. >> okay. the other overweight sector is energy and materials. >> yeah. >> thank you for joining us, appreciate it. all right. huge loss as cross the board for stocks right now. let's take a look at how the dow is faring as we're entering the final couple of hours. we're down by almost 500 points g for a loss of 2.8%. we're all oifrt markets and all the moves here on the back of the brexit vote. as we head to break, take a look

at how the widely held stocks are trading right now. these are stocks that might be in your portfolio right now. alphabetic, google down. we're seeing that same loss from microsoft, j.p. morgan chase and that is being hit hard today, down by 6%. more "power lunch" in two. power. only at&t has the network, people, and partners to help companies be... local & global. open & secure. because no one knows & like at&t. because you can't beat zero heartburn! i take prilosec otc each morning for my frequent heartburn ahhh the sweet taste of victory! prilosec otc. one pill each morning. 24 hours. zero heartburn. [phone buzzing] some things are simply impossible to ignore.

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they get 40% of the sales from the uk. penske automative and ppl gets 32% of its sales from the uk. these names clearly facing a risk of a possible recession, which of course, the bank of england said would happen as a result of a decision to leave the european union. and, of course, the weakening pound against the dollar which means that those local profits will be worth less once they're brought home. taking a look at those shares right now, nordic america and penske automotive down. none as heavily as the uk issues themselves. >> sim yorngs we're waton watch

technology. obviously, there amajor concern about a lower global growth outlook for technology. >> you have to take night consideration. you start looking at ibm. we talk about cisco before, oracle, microsoft, those names are down anywhere 4% to 5%. you saw a currency move, almost 9% overnight. the sterling, that is not a rinky dink currency. they take place over years. this took flas aboplace in abou hours. that is a historic move. is tech a buy on valuation? can you make that argument. you have to wait and see how this shakes out. ibm is very interesting to me on a move to the down side. guess what? all the pro problems they had just got magnified tenfold is what happened last night. >> there is a plflip side to th, a stronger u.s. dollar. the conference call season is going to be really key. it is really key to see what companies, particularly u.s. based exporters are going to say about the impact or the stronger

u.s. dollar on sales going forward. >> not going to help. they have to address it without question. you have to address what happened in your call. if you don't, look at the stock and sell it f they don't address it, i'll say this again. you know, we talk about wanting a stronger dollar just makes sense. you want a strong dollar. nobody behind closed doors wants a stronger collar. it's in their best interest for the dollar to go down. again, what happened in the last 24 hours made their job infinitely more difficult and all these companies that have dollar exposure, they have to address it. they have to talk about it. they have to make decisions based on what just happened. >> take a look at the xal, the amex airline index. travel stocks are hurt by the eu vote. also take a look at priceline. we mentioned this earlier. priceline is down by 11% right now. and also, by the way, if you're in front of a computer, check out the cruise operators, they're down sharply. the results are in the vote over. but leaving the eu won't than

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history was made here today. the people of the united kingdom voted to leave the european union. the decision was a surprise. the market impact has been tremendous. the dow jones industrial average right now at session lows, lower by 545 points. equity markets around the world have been hit most risk assets have been hit. how do you navigate from here? the global chief invest dtsment strategist from blackrock joins us. u.s. equities and european equities. it is justified? >> yeah. i think the reaction is entirely rational. what you've seen as a result of this vote, the increase in political risk premium, particularly here in europe which is going to last for a long time, is going to take a month, year potentially to resolve some of the political uncertainties. and that just creates a risk

premium on all assets. in addition to that, you create greater uncertainty about the economic outlook, particularly in the uk and europe. you downgrade the growth forecast f like at the market reaction, it is entirely rational. it's worth having the decline. liquidity in the market is good. there is no evidence of panic selling. there is a rational move to a shock event. >> a the love americans piled into the european equities because of the differential that was going to has been between the federal reserve and ecb. remember they're dollar based investors, what do you think she should do? she you this move to other parts of the world sfwh. >> the thing to remember is the european stock markets are global stock markets. over 50% of the revenues of european companies come from outside of europe. over 70% of the earnings of the uk companies come from outside the uk. we had very material falls in

the exchange rates. so i think you have to separate what this means for the economy versus what it means for the stock market. but certainly this election poses significant challenges to many domestic assets here in the uk and across europe. so areas like real estate in the uk i think can have significantly challenged. the banking sector under significant threat for some time with the extraordinarily low levels of yields here is under even more pressure after this move. and those pressures aren't going to go away. >> the federal reserve, everybody assumes now they're on hold. in fact, steve liesman is reporting that fed funds futures are pricing in the possibility now, slight, the possible of a rate cut. what implications does that have when it comes to asset allocation? >> yeah. well certainly the july hikes now are off the table. i think it's too early to determine what happens later this year. that was a critical mistake we get coming out of the u.s. economy over the next few

months. i do think that event here in the uk have the main economic impact on uk and european assets. we're snernl a period now where u.s. rates will remain low for much longer than previously anticipated. we look at monetary policy in europe. uk rate cut is highly probable when the bank of england meets. and the ecb is continuing to ease policy and there is potential for furnther qe. so in a loose monetary environment, i think increasingly, the onus is not on central banks to support the economy anymore much it's on to the politicians, the fiscal policy and structural policy to support growth. i think we're focusing too much on the central banks and shift that focus on to the politicians. >> wow. that does not make me very hopeful. but we'll see. maybe now it's finally the time. thank you so much for joining us. back to you. >> thank you so much.

we're tracking a huge selloff right now. the dow just hitting session lows. yields on the ten year note hitting four year lows right now. 1.575% is where we stand right now. let's get more perspective on the brexit fallout. joining us is the ceo and chief investment officer at double line capital. great to you have with us. >> hi, melissa. >> you thought remain was best case scenario for a long, long time. you bought european equities about a week ago. you sold into brexit. what made you sell? what is your next move? >> i did think it was going to be very close and i did agree with the market consensus that developed in recent days that remain was going to win. but maybe the rain, you know, maybe it was determined by a rain storm. who knows? i did buy european stocks a week ago wednesday and sold them yesterday simply because they were up so much. when you have a burning hand factor, nearly 10% profit and you have a massive uncertain

event, it's good risk management to take that profit. i'm sure glad i did wli got the news last night. so right now we're in a world that is characterized clearly by lack of cooperation. that is the definition of what happened with the vote. and sometimes people say bull markets are defined by 20% up and bear markets by 20% down. i reject that kind of simplistic metric. my waive thinking about things is bull markets are about cooperation. i mean that's what makes things, societies thrive and that's what creates economic growth is people cooperating. if people don't want to cooperate, then there is much slower growth and makes me want to be hib hyperbolic about it. i think we're in anti-cooperation world right now. and so i've been in a capital preservation mode stylistically all year. >> so you think that we're effectively in a bear snashgt. >> well, let's take a look at numbers. germany is down 23% from the

high. france is down 22. spain is down 2 3 4. italy is down 35. japan is down 28. china is down 45 and the morgan stan lyn dechl is down 14%. i've been saying for weeks and months really that i hear people say this is the bull market that people love to hate, i say what bull market? are they talking about the s&p 500? it's a dead money for 18 months. and now it's right back to the bottom of the three month range in one day. it went from the top to the bottom. so i think this is capital preservation market. and i've been talking about a global growth scare coming there summer and a dollar pricing in assets. i do think that this vote he could corroborates the establishment. this is good for donald trump's wind in the sails. i think this is a capital preservation market. i do observe that even bonds

haven't realiallied very much t week. there is a lot of volatility about remain or leave. but not a big rally in bonds either. it's interesting how bonds have been over the past two years or so having huge moves kind of overnight that take you down 20, 30 basis points and then they don't hold those lows. so the ten year treasury at 1.58 is low. but we were down to 1.57 last week. i really think that it's a good thing that the fed didn't -- is no longer talking about raising interest rates. i think that negative interest rates are really the problem. we go through the stock markets i showed you were down so much. these are all kind of the manipulated markets. negative interest rates are not good. >> before we leave the brexit vote alone, you know, you stood out for a long time in saying

that you actually thought that britain would vote to remain because it was a logical -- i'm paraphrasing what you said, the logical thing to do whether people got into the ballot box or going to the booth effectively they would make the correct decision in their own self economic interest. clearly they haven't done. that i want to pick up with the ramifications of that. people may not vote in what would classically be the economic interest. actually the emotions are running away with that. in the case of the uk arguably putting immigration and the feelings about immigration above all else as may have been the case here according to the uk. where does that take us moving forward? >> well, i think that you're on a good point. there i'm quite certain that immigration thing is what is at the root of all of this.

people want change. people were never in the euro anyway. they were always sort of half way there. and so it's -- when you think about it now, it is logical that they're the first ones to give it up. but i think that people are -- what i think is happening is there is a bear market. i've been saying this now for a number of months. there's a bear market in confidence in market manipulateors, policymakers, central bankers, politicians broadly. and i think that there is a bear market in confidence and in planning. that's why i've been long gold and gold miners all year is my largest long position in my funneled. i think that gold is a play. bear market in confidence and so, you know, obviously it surged a lot now. it's back above 1300. i wouldn't be surprised to see another upleg in gold. i think there is a bear market in confidence in politicians and the establishment. >> in terms of capital preservation, you mentioned

you're large in gold and gold miners. where else in this market, especially as we are watching the s&p 500 right now hit new session lows, where else in this market can one preserve capital? >> well, there is always cash. there saulz really boring, you know, short term high quality bonds. people have been asking me for a f few weeks. if the exit does happen, what should do you with your portfolio? i said, look, i'm managing high quality bond portfolio largely. my portfolios are up substantially today. i don't need hedges. i just need to not have positions in these dangerous markets that are subject to these massive volatility moves. it seems sensible to be plaib playing in your own currency in your bonds. bonds are outperforming stocks by a significant amount for the last couple of years. >> on the point, they continue. certainly in europe the central

banks, can you buy the ten year german bond and you know that central bank is coming in of its own planning to buy behind you. you may think that deficit in confidence and the central bank but let's see if they continue to be as they are at the moment and the only reaction to slowing economy is more qe and the buying of more assets like treasuries and bonds. there are negative ten basis point. if i'm supposed to be looking at a backstop of the central bank taking the rates even more negative, i just think that that's something that investors are welcome to do. but i'm not going to join them. i have no interest in investing in something that over the fullness of time is a guaranteed loss. so i know that those bonds are doing well this year. the best foreman bs bonds for a dollar basin vestor this year

japanese bonds that started out with the lowest yields in the world. but that is a greater fool theory on steroids. i have no interest in playing that kind of thing. i'm not going to expose my investors' money to that sort of a scheme. >> as for bonds, jeff, earlier this year in january i believe you made a prediction that the yield on the ten year would break record lows and at that time is 138 or so on the ten year yield. where do you think we go from here? i mean we're pretty close to that overnight. >> i don't think i said that. i think frankly i was looking for a range bound market and really i still believe we're in gradually rising interest rates over a multiyear period in the united states. and because of the action that we've seen over the past really two years of these massive flight to quality trades that happen seemingly overnight, run in october of '14 14 was

unbelievable. it was trig it got close to the all time close of july 2012. and once gagain resoundingly rejected it. i really don't think interest rates are going to go, thankfully, into the world of germany, japan, and these other countries with all the experimentation. so i think the united states are clearly range bound. they're anchored in part by the fact that central banks and europe and japan have really taken to the negative interest rates. let's face it, what exactly is the reason for u.s. rates to rise at this point? you know, the global economy is being downgraded. the federal reserve is clearly not raising in rates any time soon. the work function on bloomberg terminal is zero all the way through november. zero chance of a fed rate hike. >> do you think we get a cut? >> no. i don't think we get a cut. i don't see why the fed who has been itching to normalize which is jargon for raise interest rates yshgs they would cut just

because of the multiyear separation of process that appears to be under way in the uk. there is really no reason for the fed to cut. actually, i think a cut would be counter productive at this point. what we've seen is the lower interest rates go, neg testiati interest rate world, the stork markets don't goup, they go down. the european stock markets peaked when europe went negative. that was the peak. they didn't rally after twhenlt negative. they've been falling ever since. negative interest rates are the definition of deflation. you cannot fight deflation with deflation. one of these days the central bankers will go one step further to negative interest rates and it will have the same infeeffec weaker stock markets, weaker economies and then they're going to realize like the guest i was waiting to come on the show, they're going to go to fiscal stimulus. absolutely certain, i think, that we're headed to fiscal stimulus and that will have an impact in the short term it will

appear to work. it will increase short term economic growth at an incredible detriment to the ratios. but that the last thing left to try. >> i'll try to ask you a pragmatic question. s&p 500 earnings are supposed to be about $120 give or take. the numbers have to come down. >> i'll take the under. >> what is the right multiple in the environment you just described, what is the right multiple for that s&p 500? >> on trailing earnings? the right multiple is probably around 12. >> 12 trailing which gives you 15 or so forward s that fair? >> forward would probably be i think 15 is a little full. yeah, it's in the realm. >> so folks at home can do the math on the back of that. that's swlau to look at when you look at this environment. >> right. earnings are dropping. what is really amazing is every year for the last five or six years going into the new year, there is a prediction of 10% to

12% earnings growth. it came out at 5, 5, 5 and now negative for two years in a row. and now the dream is that we're going to have this huge earnings bounce off of a lower base admittedly. but i mean, i'm from missouri on that one. i want this thing to prove itself. we have nominal gdp growing at 3.3% in the united states. but we've got, you know, things like rent, things that people must pay are rising at -- faster than. that we have wage measures that are being legislated higher like minimum wages. if nominal gdp is growing slower than rent, how can you possibly get the significant increase in earnings? and so i think we need to have a significant, you know, more average sort of a trailing pe. now interest rates are very, very low. of course, that supports higher valuations on all assets. but if earnings are dropping, you're facing a very significant hit. >> jeff, what about people that just switched on today and may

not watch us very often. and they hear what you're saying which sounds scarey. they're hearing allen greenspan earlier in the day. he was really scary. he was really down beat. >> that's right. >> what do you think? >> but there say fantastic newsletter writer who wrote a newsletter for something like 60 years named richard russell. he wrote a fantastic essay called rich man/poor man. the point is that if you have savings, if you have accumulated wealth, you don't always have to make the market work for you. you have to wait for bargains. you want to walt for the time periods when by old school you actually have a single digit pe which hasn't been seen since march of '09 when i did turn bullish on stocks. >> is that what people should wait for? is that what you see three or four years down the line when fiscal qe fails? >> i'm not sure fiscal qe will fail exactly. it will work for a while and

then ultimately will lead to inflationary situation where equities is a good way to protect yourself if inflation ultimately from lower levels. but i think you're supposed to wait for bargains. you make 80% of your monday 20% of the time. what is important in investing is patience. not always trying to make every single day a profitable day. sometimes it's okay just to make a few percent in safe investments. these days if you make 2%, 3%, you're doing much better than what people are experiencing by trying to time the incredible, volatile dead market money markets. has had two draw downs along the way that probably frightens people out at the low. so most people lost money on stocks for the past 18 months and some of them significant money. it's okay to wait for bargains. in fact, it's prunlt. it's risk management. >> okay, so jeff we covered a lot of territory in this interview. i want to get a bottom line with

you. that is you see the values in the market being in gold, gold miners, high quality bonds and perhaps cash? >> that's pretty much it. i've been on this concept of very safe financials. >> it sounds like a bunker fund, jeff. >> no. it's just making money slowly, gradually and sleeping at night. it's fine. you don't have to be out there making speculative bets on tesla all the time. it's okay to make money slowly. you know, the markets, they take the stairs up and the elevator down. it's important not to be in the elevator. >> all right. i got to ask you about your etf, jeff. the total return tacticals etf is about a year and a half in the making now. what you are seeing in terms of flows into it and you have noticed that your going to reach a pretty important milestone soon and that is perhaps adding more assets under management than the pimco etf. >> i guess that is true.

the total is a good low risk, short term investment. much lower risk than the bond funds. diversified among sectors, spinning off a decent income stream. the flows are very strong. this environment, we're making money slowly and sleeping at night should be and is attractive to a significant subset of investors and i'm one of them. >> is this a feather in your cap to exceed on the front versus pimco? >> not really. i'm not interested in being the largest fund or the largest investor. all i want is to fight the fight for my investors and to help them survive through this type of environment. i'm pleased to be able to do. that that's the reason for doubleline success. >> jeff, thanks so much for joeng phoning in. >> happy to do it. thanks a lot. >> jeff gunldlach. >> okay, can we put the markets up again. in case you're noticing, we're going further into negative

territory. we're down 572 on the dow. the s&p 500 is down 3.3%. we opened down 3.5%. right at the open. if you like a very quick price and then we recovered. now an hour and a half to go, you're clearly seeing more waves of selling coming in and we have a rustle rebalancing to contend with before the end of the session as well. a lot of people will have held off preparing for that. we may get some quite dramatic moves. in the meantime, howard lutnick joins us. he is chairman and ceo. welcome to the show. >> nice to see you. >> you really -- you got to summit up for a lot of people. you on "closing bell" yesterday said, you know, they're going to vote to stay in and stocks will rise tomorrow. what was your reaction when you finally saw they voted to sflef. >> well, what i said and everybody knows is that winston churchill said itd. the uk is part of europe but it

isn't europe. they're with europe but they're not of europe. they kement the pound and they have the ability to exit if they wanted. many of the other countries just don't. so the idea for the uk was they have that possibility. certainly the markets were speaking as if they were going to remain. you remember that's the people with money. and the people who are waiting in line for the doctors, they spoke and it was immigration issue and they spoke. 52% said they want out. >> right. >> howard, i mean, they're taking over here with the dow down 588 points. what is your point to people. unless you feel the world is about to end not it sell. i don't want to put words in your mouth. could it scare a lot of foam day? >> look, the united states of america this is just not bad for the united states of america. it is stressful for the world. i'm not saying it's not. but it's just not bad for us. you know this is the same. like when we were talking together early in the year when

oil got crushed and the stock market was down 500 points and people were saying, oh, my god. i was like, why is cheap oil bad for america? let me ask you a question. why is the united kingdom being part of or not being part of europe -- >> let me ask you a question. we're running out of time. the stock market has not been stellar performer. what is the tron buy it now? what is the reason to buy? >> dead low interest rates are great for stocks. they don't run up, they creep up. and so i would say that at 1750 you will see this today and tomorrow and any other day that it goes lower as a bargain over the course of the next six months and the next year. there is nothing bad about the u.s. economy right now. there is nothing bad about the u.s. stock market. sure, it's a shock to the system. ultimately, you're going to find that the u.s. economy and our interest rates being so low,

it's better to be american than being european. it's better to have presidents on your money instead of pictures of other people's bridge that's no one knows what they are. you know, it's a good place to be to be in america. i think u.s. stock market is perfectly fine. my public company loves volatility so there is a great time for us and our business. basically speaking, stay the course. keeping equities very low interest rates is good for stocks. >> howard, real quick. i know we have to go. i love wlau said. i'll say this, japanese interest rates are negative. wlook is going on in their stock markets. german is negative as well. look what is going on in the dax. i hear what you're saying about interest rates being good for the markets. it hasn't worked for them though. >> look, zero interest rates really takes money from financial service companies and insurance companies and it gives it to corporations like toyota borrowed money at one basis point. how fantastic is that for toyota? you have all --

corporations borrowing at zero. the central bank trying to do something they have no business doing. i'm simply saying in a growing u.s. economy of 2%, we are growing at 2%, right? we actually have interest rates, granted it's only .25%. at least we have interest rates. i like our stock market. liked it when the oil market crushed it. i liked it better whether it bounces back. i think today, i like it today. it makes no sense. we didn't pull out of anything. our country is not falling apart. we don't have our west coast pulling out. we're one country. we're one great market. you got to love the american stock market especially when the rest of the world is ridiculous. >> okay. howard, good to see you. thank you for the advice. howard lutnick joining us. the dow is down 579 points. "power lunch" is back in two. in. welcome to opportunity's knocking,

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0.1%. financials of note, we're down a full 5% on that sector. >> really the last thing you want in the midst of all this is a russell rebalancing, but that's what's going to happen. it will traditionally mark the highest trading volume of the year. that's without the uk having voted the leave the europeanion. b bob pisani is with us this afternoon. recap what we can expect. >> every year they rebalance it. all the new indices come in, the adds go out and they graduate into the russell 1,000. you also see as companies kind of change their profile, you see

companies move from val yaw and growth or variations of value and growth. so it's a big day. >> is it for smaller companies or big cat ones as well? >> the ross ussell 3,000 covers large cap. the 2,000 on the small cap. >> trade big volume at the close but don't impact stock price sthoos that's exactly right. >> the problem is we've got the brexit going on, and there is a combination here that's going on at the close that we really can't predict very well. can you tell us anything? we know normally things don't move. is there a chance that things can get a little bit hair y at the close? >> no. our exchange partners have gotten this down well. they've done an excellent job on it, bringing all the buys and sells together. the thing you'll notice today because of the brexit news coming out this morning, you see

a lot of volatility. most are tracked in real time. if you want to know what's happening in the u.s. market, you can track that. >> argument that art cashin was giving us from ubs is saying in normal circumstances, people were trying to square up in advance. >> yes. >> first of all, the stocks were rising. we have these primary results, do i wait, do i wait, do i wait, and then it shot down. >> yes. >> it could be more toward the end. >> but they have the opportunity throughout the day to square up. so all the buys and sells for the russell 3,000 can come in today and at the end of the day cross in that last second, half second of trading. >> we have to leave it there. thank you so much. the ceo of russell north america. thank you, bob. major averages down 3%. although we just had a sudden recovery. we shot up about 50 points on the dow, currently down 533. more after this break. (man) oh, looks like we missed

most of the show. (woman) and there's no way to restart it.

(jon bon jovi) with directv there is. ♪ you see, we've got the power to turn back time ♪ ♪ so let's restart the show that started at nine ♪ ♪ and while we're at it, let's give you back your 'do ♪ ♪ and give her back the guy she liked before you ♪ ♪ hey, that's the power to turn back time. ♪ (vo) get the ultimate all-included bundle. call 1-800-directv. welcome back to cnbc's brexit selloff. down by 545 points right now or 3%. we're well off the session lows right now. the nasdaq composite is down by 3.8%. the s&p 500 just about six points off of the lows down by 3.1%. taking a look at the dow heat map, it just switched. we're all in the negative across

the board. verizon is struggling to make it into the green. but, of course, we're seeing a theme here. the financials doing the worst. caterpillar, technology, ibm taking it on the chin. verizon, walmart hurting the least. >> take a look at at&t and verizon over the last couple of months. here are two companies who have gone sideways. they've both broken out to the upside. has their business fundamentally challenge? no. what's going on. it's a change for the yield. with that said, love being with you. it's been a lot of fun. >> one last question. >> go, go, go. i love questions. >> they said treasuries were going to be range bound. >> he's been spot on. 10.25%. i'm talk with you when i get there, sister. >> absolutely.

our thanks to bill griffeth who joined us the first hour and simon hobbs. we'll see you at "fast money." we wrap it up on "power lunch." thanks for watching. "closing bell" picks it up right now. hi, everybody, and welcome to the "closing bell." i'm kelly ervans at the new yor stock exchange. >> and i'm bill griffeth. after that historic night where great brittain voted to leave the european union. it will be a very interesting last thundershower say the least. >> we have an all-star lineup of guests including bond guru bob miner, dallas president richard fisher, michael duffy and michael beal who predicted a selloff like this two days ago on the "closing bell."