today is a good buy and unusual option activity in it as well. >> pete. >> seeing buying in vmw, another one of those cloud names, look at the forward p/e it's extremely cheap. i think there's an opportunity and huge call buying rolling out not just weeklies, going all the way to september. that's a strong buy. >> it has been a pleasure. have a great evening all of you. thank you very much. that does it for "halftime." "power lunch" starts now. and welcome to "power lunch." i'm melissa lee with tyler mathisen and brian sullivan. michelle caruso-cabrera is off today. after a massive selling waver the past few trading days stocks are in fact rebounding today. the dow is up triple digits here, but off its session highs. take a look there 17,298 up by 0.9%. s&p 500 up by 23 handles up 1.1%, nasdaq the best gainer of the three up 1.6%. it is worth noting that facebook, amazon, netflix making big gains in today's session. what may be a point of caution in this bounce, take a check on

the european banks. see them in the green there, but after losing 20, 30%, we've only got a bounce in deutsche bank of less than 1%. royal bank of scotland up by 2%. let's get to wilford in brussels with breaking news. wilfred. >> reporter: melissa, thank you very much. i'm joined in brussels by nigel farage. congratulations, extraordinary victory last week. >> big event. seismic actually not in terms of british or european policy but even global policy. this was the little people. ordinary people. standing up against the multinationals, the goldman sachs and big politics and getting a victory. big news. >> a long way to go of course until the uk actually leaves the european union. when should article 50 be invoked? >> well, i have to say i rarely agree with the president of the european commission, but what he said today we should end the uncertainty and start the process, you voted to leave, so let's do it. i thought to myself, yeah, he's right actually.

the idea that the succession in the conservative party should be the key determinant in this doesn't make sense. i think what needs to happen is the government gets its negotiating team set up in the next few weeks, triggers article 50 and let's start negotiating. >> should you be on that negotiating team? of course the fact that you're not a member of parliament means you're unlikely to be in the next conservative cabinet. do you feel you'll be excluded from these negotiations? >> actually, the negotiating team should have lots of people in it who've never been in politics in their lives. there are people out there like former boss of the cbi, people like john longworth, let's get people in there who know how to do business. >> now, you mentioned you don't often agree with mr. juncker, you told members of the european parliament you didn't think they'd done a proper day's work in their lives. we've got incredibly tough negotiations for the uk to carry out coming up, is it the right

time to be antagonizing european leaders. >> far for me to be antagonistic, they've been abusing and screaming, twice the parliament had to halt proceedings. it was when i said let's just be grown-up about this, be practical, you sell us more than we sell you, it makes no sense, no sense at all for us not to have a tariff free deal. and what i was trying to make that serious point they kept on booing. though i did remind them most of them have never created a job in their lives. >> you do say rightly that there's a big trade deficit, but if you look from a sector basis on the financial services industry it's quite the opposite. massive surplus. bank shares have been slammed in recent days. do you think london is a financial center is now threatened? and the banks share prices falling very sharply, do you feel responsible for that? >> i've felt london is threatened financially for the last ten years. i've seen things like the afim directive lead to other hedge funds disappear from our shores. i've seen insurance regulation coming from this place seen companies leave london, go to

bermuda, singapore and elsewhere. london cannot be a global financial center if it's kept inside the clawing regulations of a european union. free of it we've got the opportunity to be the singapore -- >> why are bank shares falling then? >> because they've got themselves long sterling, long equities and absolutely did their dough when they got a result in referendum they hadn't expected. >> predominantly retail banks small portion of investment earnings so they're being hit fears these banks could collapse, not because they made trades like hedge funds. >> well, they did -- they were on the wrong side. barclays certainly were on the wrong side of the market in quite a bit way. these banks have been badly run anyway for over a decade. they got themselves in a terrible mess in 2008. they barely recovered from it. and there is this false perception that somehow because we've left the european union the city business is going to decline. we've got the opportunity to go global. i was very excited last night to see the prime ministers of

australia and new zealand say we're in a race to see who can be the first country to do a trade deal with the uk. now we're free to do it. >> the big falls in share prices is just one of the scares that people in britain are facing at the moment -- >> please, can we just end this complete rubbish? ftse is up 3% today. >> yeah, but -- >> it's 12% up from february. can we all grow up? stop this absolute scare mongering nonsense. >> so the pensions that people have seen fall in the last couple of days is irrelevant? >> ftse is up 3% today, 12% up since february, stop this media hype nonsense. >> but relative to brexit-related issues it's fallen sharply. february we were facing global scares in terms of central banks collapsing, china collapsing, oil prices collapsing. we've rallied since there for other reasons. >> look, there is a declining global economy. and indeed in britain our growth forecasts are down. not because of brexit, because actually the economy is not

doing as well as we thought, because government borrowing is running way ahead of any expectations. and sterling ends in a declining market, a bear market in july 2014. i actually know about these things. do you know why? because i once had a proper job. >> let's move on a little bit and talk about the fact that the polls were so wrong, which of course they were. there were many more people who were willing to vote for brexit than perhaps the pollsters had realized. do you think there are parallels there with what's happening in the u.s.? do you think there could be more secret trump fans out there? >> i do actually. very interesting, on the morning of the vote one of the most senior figures in the british polling industry said, believe me, if we've got this wrong, the polling industry is finished. do you know what , it's finishe. no one is ever going to believe it again. there's kind of this consensus that has made people feel slightly embarrassed, ashamed to be patriotic, to believe we should control immigration.

and so when pollsters ring them, they tend to shy away a little bit. >> have you spoken to mr. trump since your victory? >> i haven't, no. >> would you meet with him now and give him advice on how you won your election? >> oh, look, it's a different country. it's a different country. some u.s. crossover, but it's a different country, broadly different. it's going to be a fascinating electoral contest in america. i sense he may well win it because he may well get people voting that haven't voted for years. >> final question, mr. farage, who do you back? >> anybody that holds faith with 17.5 million people who said we want our country back, we want our borders back, somebody has got to keep faith with them. >> mr. farage, thank you very much for joining us, leader of the uk independence party. i'll send it back to you in studio. >> thank you very much, wil. we appreciate that interview. there was a trump quality to the rhetoric there, wouldn't you say? >> i think he is fired up.

he is right about the stock moves. we are well higher than we were in february. remember one of the reasons we fell in february was because of fears in february, we're going to talk about how the brexit may actually stoke some of those china fears again. he's right now, but we'll see if that china dragon rears its ugly head. >> he's right. but wilfred was right pushing back on ftse specifically down european banks have gotten slaughtered for this notion he says has nothing to do with brexit that's as british would say is rubbish. >> also talk by farage said let's end the media hype then quoted the ftse up 3% today. you can't criticize us and then quote today's move. you can't do that. it was a farage-ian move. >> nice. all right. meantime protesters are in fact taking to the streets in london right now. let's get to sarah eisen who is there live in london with the

very latest. the crowds really have come out, sarah. >> they have come out and they've come out in the rain, melissa. they are here to express their support to the eu for britain remaining in the eu, they are demanding a second referendum. everything is peaceful, but there is a lot of anger here. angry that the vote was so close 48%, a little more than that voted to stay in the eu. little more than 51% went out. and some people are concerned here that little more than 3% decided the destiny of britain within the eu. it's very young crowd here. remember that younger generation did vote to stay inside the eu. there's a lot -- >> all righty, looks like we've lost temporarily our signal there where the protests are just getting under way. meantime, down on wall street where we expect we do have a signal, stocks are rallying, the dow up about 145 points. bob pisani covering it all for us as he usually does at the

nyse. hi, bob. >> hello, tyler. call it steady as she goes. let's take a look at the markets in the middle of the day. the early gains for the most part are holding. we're just a bit off the highs but good enough for government work. keep a close eye on the dollar and ten-year, those are what move the markets these days. relatively quiet today. the breadth 5-to-1 advancing to declining. you want heavy volume as the market is up. volatility is still dropping, it was down yesterday, still dropping today. a sign traders believe the volatility we've seen the last few days will not last for the next 30 or so. we're going into the end of the quarter. the good news is we're outperforming the rest of the world, but the bad news is that's not a big thing to argue about. so take a look at q-2 so far here. s&p 500 down 2.9%. you see the rest of the world trailing us here. i would anticipate some modest buying going into the end of the close simply because in certain sectors we've had such beaten up names that are out there.

look at the airlines, the retailers, even the whole tech group as a whole down almost 7%. a lot of double-digit decliners including microsoft and apple in that group. and the banks as well. finally i would note the big banks here, tyler, i think we may see some dividend hikes and maybe some buybacks after wednesday's fed stress announcement comes out. remember, bank of america, citi group pay almost no dividends at all. back to you. >> bob, thank you very much. u.s. markets rallying right now as bob just so ably described. europe also up. so could this be the perfect time to put money to work? joining us is david marcus, co-founder and ceo of evermore global advisors. david, welcome. good to have you with us. >> thank you. >> you say now is one of the most opportune times to be investing in europe in a generation. the vote didn't change that. you feel the same way today as you did last week. why is now such a good time to invest in europe? >> well, look, the markets except for today the markets

have come down precipitously as you were just talking about. the fact is that's when you get buying opportunities, when investors go in to fear mode, when they go into panic mode, they start to sell good investments with bad ones. they don't care, they just want to get out. so we look over the carnage and we start picking up. >> does your call on europe extend to england, to great britain, or not? >> no. so we do not have any investments in the uk, but we haven't had those in years. we've always focused on non-uk europe. >> why? >> because frankly most u.s. investors when they go to europe, they gone to london and they stay there. it's easier, it's the same language, the valuations are generally higher. we want to go to the other markets, germany, italy, sweden, go to the southern -- >> find better bargains there. >> cheaper stocks, more change. >> let's be clear, how are you buying them, david? if you buy in local currency terms, it's not as bad. if you buy them in dollar terms, buy them here, it's worse. how are you buying them? >> so we buy them in the local markets, but we actually hedge

all of our non-u.s. exposure. we're a dollar-based investor. we're a mutual fund. >> because as bad as the ftse looks it's worse in u.s. dollar term. you've got to be clear wherever they are what currency are you buying them in. >> so we're buying in the local market. so if it's in euros, it's euros, if it's swedish, it's krona. but the fact is we go out of our way to hedge away all of our currency exposure. >> what is it that tells you that europe is a good place to put money now besides the fact the stock prices are down? what do you think is fundamentally right about the businesses there? >> look, i've been investing in europe for over 25 years. when i started, sweden was going through a financial crisis. it was the end of the world. it was that end of the world. this is a different one. and the fact is that's when you get bargains. europe's doing something that it had not done previously. it's changed the rules and regulations. companies can restructure, streamline, layoff, close plants. they couldn't do that previously.

so the eu has brought things that are positive. so i don't think the eu goes away. the fact is we want to embrace the volatility and take advantage of it. >> i get that, at the same time if you take a look at the dax it's basically flat over two years. and it's been in a down trend over the past year. so given the increased concerns over brexit and the impact it might have on eu growth period, why is now the time to say, you know what, even though this has been in a down trend for the past year, i'm still going to go in even if there is uncertainty. >> ultimately we're not buying markets, we're buying companies. we're buying companies in those markets. so while the index itself might be flat, even down in some of the markets, individual companies are up. and the ones that are strong balance sheets, good management teams, they're restructuring their business, growth is coming back. and so the fact is -- >> do you own volkswagen? >> no. >> did you? >> no. >> would you buy it now? >> i would not. >> $15 billion fine, stock's beaten up, sounds like you're a deep value guy. is there deep value in

volkswagen? >> not yet. it's just not cheap -- >> got to get deeper. >> exactly right. >> you do like vivendi, a big owner. we're going to have to leave it there. we have a little breaking news from meg tirrell with the market flash. >> that's right. we're checking out a couple pharmaceutical stocks, endo spiking after saying it got a new patent issued to one of its operating companies on a product known as vasostrict. endo soaring up more than 13% on that news. and then over to gilead today getting approval from the fda for new combo pill for hepatitis c. this expands the applicability of this treatment to all six forms of hepatitis c. this new drug is priced about $74,000 for 12 weeks. that's just about in line with what some analysts were expecting see gilead up 4%, tyler. back to you. >> meg, thank you very much. volkswagen, which we just mentioned a moment ago, just ordered to pay up for its

admissions cheating scandal. wait until you hear how much the automaker has to fork over. it's a lot. and is the worst even over for vw? "power lunch" will explore that in two minutes. 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, or adempas for pulmonary hypertension, as it may cause an unsafe drop in blood pressure. do not drink alcohol in excess. side effects may include headache, upset stomach, delayed backache or muscle ache. to avoid long-term injury, get medical help right away for an erection lasting more than four hours. if you have any sudden decrease or loss in hearing or vision, or any symptoms of an allergic reaction, stop taking cialis and get medical help right away. ask your doctor about cialis and a $200 savings card. [so i use quickbooks and run mye entire business from the cloud. i keep an eye on sales and expenses from anywhere.

even down here in the dark i can still see we're having a great month. and celebrate accordingly. i run on quickbooks.that's how i own it. enis really built into theat foundation of the company. whole foods market is engaged with pg&e on many levels, to really reduce energy and reduce our environmental footprint. for a customer like whole foods, saving energy means helping our environment, and we can be a part of that. helping customers save energy is a very important part of what pg&e does. we can pass those savings on to the environment, the business, and the community.

pg&e really is an expert in saving energy, and that partnership is extremely exciting. together, we're building a better california. welcome back to "power lunch." let's get back to volkswagen. shares of volkswagen actually up slightly. maybe the market anticipated

worse. phil lebeau still has the big money details. >> and, brian, i just got a list of what the payouts will be for volkswagen owners. we'll go over numbers in a bit. these are hefty checks that will be cut over the next couple years for vw diesel model owners here in the united states. here's the settlement overall that volkswagen has agreed to with a number of u.s. as well as state regulators $14.7 billion total. up to $10 billion of that will be in buybacks and compensation. we'll explain more about that in just a bit. another $2.7 billion to the epa and another $2 billion to develop zero emission vehicles. now, this is what a lot of people are going to focus on. what's the compensation for the people driving around with these vehicles that are violating emissions standards? the buyback at september 15 value is where they're pegging this to. and an additional $5,000 to $10,000 depending on the vehicle you could also have the option of give me $5100 or $5500, however it much be and i want

the vehicle fixed and i'm going to keep it, payments start in october. people believe this is probably more than many people were expecting. >> i think people are getting as much or more money than they hoped or expected out of this deal. and i think they like the option of seeing what they want to do as opposed to being forced into one pathway. >> keep in mind volkswagen is not out of the woods yet. it is still facing criminal investigations. and in fact this morning we learned that new york is serving subpoenas to vw to look at their leasing records. the idea being did people pay too much in their leases, expecting a certain value for a vehicle that clearly was defective. we have reached out to volkswagen, have not heard back from volkswagen. and finally i want to share what we think is an interesting chart here. it's volkswagen versus general motors versus toyota. you consider these the three big scandals in the last decade, and what these stocks have done in the last year clearly volkswagen is feeling the most pain since it's the most recent scandal. i mention the value of the

buybacks. guy, how much do you think you're going to get if you have a 2010 jetta sports wagon, how much can the owner expect to get with 90,000 miles. >> 2010 with 90,000 miles, probably retail for $35,000 -- >> eight grand. >> yeah, eight to ten. >> they're expecting to get between $14,700 and $16,600. >> sold. sold to you. >> let's pick a more recent one. go with a 2015 jetta sedan, 22,800 to 26,400. >> that's more than resale market. >> yes. a lot more money than people were expecting. >> that's a lot more. that's high, man. >> yeah. >> could i sell a few cars back to volkswagen? they're not volkswagens, but -- >> make me an offer on my car. >> thank you. still ahead, a potential side effect of the brexit that is not really been talked about but may be the riskiest thing of

all for the global economy and your money. stick around.

welcome back to "power lunch." rick santelli live on the floor of the cme group. look at a one-week chart of tens. there hasn't been much bounce in the ounce of yield. much selling pressure with regard to investors, that's important. put a six-year chart, traders are almost holding their breath waiting for a test of the

all-time low close right under 1.40. so of course we'll continue to pay attention. let's look at a month-to-date chart of the euro versus the dollar. look at the same timeframe on the pound versus the dollar. why is this important? well, now let's open them up to ten years. the breadth of the move on the pound is bigger. and it's intensely crucial because unlike all the countries locked into the euro currency, which the brits aren't, they could let their currency move down which will aid and abet the healing process. melissa lee, back to you. >> good point there. rick santelli, thank you. airlines staging quite a comeback today after getting slammed over the past three months or past couple of sessions for that matter. should investors buy into this weakness? that's straight ahead.

hi everybody. i'm sue herera. and here is your cnbc news update for this hour. ahead on collision involving two bns freight trains caused several boxcars to detrail and erupt into flames in texas injuring an unknown amount of

people. residents who live nearby were forced to evacuate. that accident occurred this morning near the town of panhandle, which is about 25 miles northeast of amarillo. senate democrats blocking a republican proposal to provide $1.1 billion to fight the zika virus. faulting the gop for packing the measure with restrictions on planned parenthood money. the 52 to 48 vote left the senate short of the 60 votes needed to advance the measure. more than 1,000 immigrants and refugees were rescued from the mediterranean sea, that's according to naval forces patrolling that area. they were found aboard several rubb rubb rubber -- and on a sad note buddy ryan the architect of one of the greatest nfl defenses of all times, the 1985 chicago bears, has died. he is survived by his twin sons, rex and rob ryan, who both coach in the nfl. he was 82 years old.

that's the cnbc news update this hour. brian, i'm going to send it back out to you. sue, thank you very much. oil rebounding a bit today. in fact, the price of oil is up a little more than 2% which actually could be giving a little bit of floor to the stock market. who knows. either way oil at 42 to 47 area. will the brexit have an impact on global oil demand and thus price? well, guess what, we caught up with nigeria's oil minister who was in china and he said he's not really that worried. >> i'm not too sure why it should have an effect on oil. the european isn't a huge consumer, you know, really of oil as it were. once the dust settles, oil will climb back to where it should be. there really isn't any logical reason on a demand and supply basis why this should have a dramatic effect on oil. >> well, from oil to gold, here while the norwegian threat of a

norwegian strike is lifting oil prices, gold prices aren't seeing that same sort of impact here. 1318 is where we're closing on gold here on the session down by just about a half a percent. and keep in mind that we had a massive two-day rally here in the profit taking on gold really limited when you consider how much damage has been done to the market. taking a check on the rest of the metals complex, copper as well as palladium, the two more industrial metals, are seeing the biggest gains right now, brian. stocks are rebounding overall after two big days of losses. you've got travelers, visa, home depot leading the dow higher. dow up 122 points, not on our highs of the day. we've come back, but we're still up more than 100. also important to note as we just did oil may be giving a bit of a bottom there because we are seeing a bunch of the energy names up as well. so pay that close mind. and of course we will continue to remind you as well about oil. now, you cannot keep track of the big moves in the market. you've probably got a day job. but this is our day job. dominic chu looking at the stocks that have taken the biggest hits in the brexit

aftermath. dom. >> brian, you're not wrong there. we watch a lot of these stocks on a daily basibasis. we wanted to look in the large cap s&p 500 we've seen real downtrodden times in the wake of brexit. no surprise financials the worst performing sector in the s&p 500. a lot of those stocks were some of the worst performers since that brexit vote on the close of business thursday last week. financials certainly in focus. in fact, out of the 20 worst performers in the s&p since that time around 14 of them are financial, insurance, that type of related stock. that's something to watch for sure. the financial sector spider certainly a focus for a lot of people out there. also industrials with sales exposure to places like europe, uk, owens illinois one of those companies, make a lot of glass products, that company down by 13% just since that timeframe. and then auto parts, also an interesting focus there, two large publicly traded auto parts manufacturers are part of this brexit slide. check out these two guys, delphi

and board one both down big about 12% to 15%, tyler. so a few interesting names here besides financials that have led the way down since brexit. back to you. >> dominic, thank you very much. stocks as we mentioned rallying selling off the last two sessions. is this what's known as a dead cat bounce? or is the worst potentially over? joining us are dan skelly, head of equity model portfolio solutions at morgan stanley wealth management and michael cagino, president of permanent portfolio funds. gentlemen, welcome. good to have you both here. dan, i'm going to begin with a hypothesis, there's a heck of a lot more we doen't know about te economic effects of brexit. we're all in a bit of a guessing game here. with that being the case, my suspicion is that within two weeks the focus is going to pivot towards the health of the u.s. economy and the health of u.s. corporate profits. with that in mind, do you buy that thesis? and if so, what do you expect the earnings season to show? >> now, i think that's a great point. and i think there's some

validity to that. i think in really just a couple weeks time to your point we're going to start paying attention to corporate earnings. when you look at first quarter earnings, we think that we actually saw the trough in this cycle recently. really we'd been in a period for three or four quarters there where we had contracting earnings. so i think, yes, there's a lot of uncertainty right now particularly as it relates to brexit's impact on the uk economy. will obviously have the most severe impact. and potentially on the broader impact towards europe. but i think in the near-term people are going to come back to the realization that earnings from a broader market perspective are looking okay. and when you look at other drivers of the u.s. domestic economy, namely housing, i think they'll be some really strong solid trends that won't be as affected by this update with brexit. >> michael, do you buy the argument there that there's so much unknown about brexit, we don't know how it's going to effect britain, we don't know how it's going to effect europe, but what we do know or will know

in two weeks plus time is how american companies, how profitable they are. >> yeah, i totally buy the thesis, tyler. in fact, we don't even know whether it's going to be a negative or positive for europe, britain or the u.s. going forward. and i think the markets may trade on that news in those negotiations for a long time to come. having said that, i do also agree that we're going to be pivoting very quickly to second quarter earnings, outlooks for the second half of the year, how they're impacted by policy initiatives and the election. the lack of growth or growth in the u.s. economy, i feel like a broken record at times, but which economy is going to show up in the second half of the year? i mean, q-1 awful, q-2 appears to be maybe better but i can't tell how much. we're in this sort of low growth, you know, 1.5 to 2.5% annualized gdp. which is good. it's not recessionary, but it's not robust and dynamic. when you look at corporate earnings, yeah, i think we may be starting to bottom out. the effects of the strong dollar you've now got comparisons for over a year.

so that is less weighted now to corporate earnings. but you still don't have very good revenue growth overall, certain industries that's not the case. there are good growth stories out there but net net the overall market the growth is not there. i think that's the next significant leg up for the stock market. we need the top line growth. >> busy news day, let me point out, michael, you like among financials first republic, key and state street. and, dan, picks are allergan, down so far this year, and alphabet, that's the goog google folks, down 11%. thanks, guys. go to punch.cnbc.com right now to see a growth stock dan likes in the consumer sector. thanks, tyler. getting slammed over the past three sessions and past month for that matter, should traders be cautious or is this now the time to buy in? jim, great to have you with us. >> thanks, melissa. >> even prior to the brexit selloff, jim, this is a group

that's been under tremendous pressure. take for instance american airlines basically sitting at 52-week lows. this is a stock down 36% over the past 12 months. why would you step in here? especially given the unknown of the exposure and the impact of the brexit. >> well, it's not just american. most of the group is sitting near 52-week lows. if you look at it on a valuation basis these stocks are trading at levels we haven't seen in about a decade when the industry was fundamentally different, much more risky. so seems like some stocks get priced to perfection, these stocks are priced for disaster and it's disaster we don't think is fundamentally sound. certainly there will be an impact from brexit. we've seen american at risk for 6% of revenues, united about 5%, delta about 3%. this is a very small part of their overall business. of course if there's a global domino effect, that's certainly going to be something we'll have to look at at that point. but the stocks are priced for a much worse outcome. >> you rightly point out exposure directly to the uk is very limited, but in terms of exposure to europe as a whole.

let's say there is a global slowdown in europe. i mean, how do we factor that in to these stocks? >> i mean, international total including asia and atlantic is 10% of revenues for the airline industry. it's a little bit more profitable because these are more profitable markets. we're not currently expecting it to be a domino effect. we don't think there's going to be a global slowdown that will impact the industry. but certainly a risk people need to consider but that's more than discounted into the stocks looking at these valuations we're seeing right now. >> you've had a lot of strong buys in your coverage universe. in terms of more insulated ones some might make the argument that domestic carriers here in the united states service more point a to point b within our borders might be the safe way to go. where do you stand on that? >> look at a company like jetblue we have a strong buy on, no international exposure whatsoever except maybe a little in the caribbean. they're not going to be impacted by brexit or a slowdown in europe and doing very well right now. they're benefitting from the oil tailwind all the airlines are

getting, they're solidly profitable and we think the stock has been overly punished for factors that are not in actual fundamentals. >> jim, thanks a lot for your thoughts. appreciate it. >> thank you, melissa. well, the first week showdown over brexit taking place today in brussels. there were fireworks and some awkward moments too. we'll have the very latest coming up.

welcome back to "power lunch" everybody. the first european union summit since the uk voted to leave the organization takes place today. and there have been some heated exchanges already. wilfred frost is live in brussels. high, wilfred. >> hey, tyler, thanks very much. i just caught up with the leader of the uk independence party, nigel farage. i was asking him whether he felt responsible for the fall in asset prices, particularly share prices of banks, and he got pretty heated. let's take a listen. >> please, can we just end this complete rubbish ftse is up 3%

today. >> well, but it fell before that. >> it's 12% up from february. can we all grow up? stop this absolute scare mongering nonsense. >> so the pensions that people have seen fall in the last couple of days is irrelevant? >> ftse is up 3% today, 12% up since february, stop this media hype nonsense. >> but relative to brexit-related issues it's fallen sharply. february we were facing global scares in terms of central banks collapsing, china collapsing, oil prices collapsing. we've rallied since there for other reasons. >> look, there is a declining global economy. and indeed in britain. and our growth forecasts are down, not because of brexit, because actually the economy is not doing as well as we thought because government borrowing is running way ahead of any expectations. and sterling ends in a declining market, a bear market in july 2014. you know, i actually know about these things. do you know why? because i once had a proper job.

>> now, of course we know that he was mistaken. share prices have certainly fallen in relation to brexit. couple key points, one, thinks article 50 should be invoked sooner than later and i asked him about trump and said it's going to be a fascinating race in america. i sense he may well win it. i don't know if hillary clinton's taking note of that. guys, back to you. >> all right. wilfred frost with a fiery exchange there. thank you very much. as bad as the last couple of days had been for stocks, it is important to remember as you heard nigel farage point out that we are still well above the lows that we hit this year back in february. now, that drop largely based on concerns over china's economy. but could those china concerns actually come back because of brexit? consider this. if the u.s. dollar continues to rise against many other major world currencies, china may be forced to further devalue their currency to remain competitive. if that happens, is there a risk of a deflationary trade war that

reopens some of february's wounds? let's bring in conrad soldana, conrad, i noticed as of last filing a number of your top holdings are china companies. are you selling them on brexit concerns? >> no, i'm not, brian. in fact, i think the brexit phenomena has less of an impact on china when you consider that maybe a couple of percent of their exports are geared towards china. so i think that's a nonissue for me. i think that what china has is its own reform process and it's trying to migrate more from the export led sectors that we know about historically but more towards the consumer and towards services. and i think that's in its own hands the reform agenda's going to drive it. still find good attractive businesses in china. and we've got to face the fact that the chinese economy as large as it is right now the second largest in the world at

$10 trillion plus is going to slow down mathematically. so within that we find good opportunities in china and we continue to seek those which have high returns and more focused towards either the consumer, towards internet companies where the cash generation is very high. >> so you have no concern about any kind of a currency led trade war then, conrad? >> that's a global issue. so, brian, when we talk about global growth being anemic, the currency debasements that we're seeing is in fact across the world. so for instance last year as much as a lot of the currencies devalued or debased, china moved just a little bit. we're talking about single digits. and that's significantly less than what in fact the depreciation we had seen in major currencies in developed markets leave alone the commodity currencies such as australia and canada, but even the euro. so i think we're exaggerating the move here, but i think it is an environment where global growth is going to be anemic. and i don't think there is much

positive for people trying to debase their currency because the growth is subpar and is going to remain so. >> it is not the united states, it is not china, it is the collective eurozone. china sells a lot of stuff into europe's more than $14.5 trillion economy. if we see even a one percent -- a half a percent haircut, conrad, in eurozone gdp, wouldn't that have a negative impact on chinese exports to europe? >> it would. >> that's the share price of the companies you own. >> sure. so firstly, yes, that while that is correct the eurozone, if you take the entire eu itself is about 16% of chinese exports, and the uk is just two percentage points off that. so while it is significant, i don't mean to minimalize that, but the fact is i think the u.s. is bigger, number one. so there is an impact to chinese

exports, but net exports not as significant as we're talking going back three or five years. now, what we invest in is not really the export side. we're looking much more towards the domestic businesses in china and across emerging markets to me that's where the opportunity is to buy the domestically focused businesses that are growing faster. >> we showed a number of those names. making a strong case for china, conrad, we'll see you soon. thank you. >> thanks, brian. if you checked my facebook page over the weekend you might have seen a rather unfortunate high speed spin, i hit oil, that's my story, i'm sticking with it. not to be outdone jay leno was actually in a flipping car while filming his show. he's okay. we'll show you the full video straight ahead.

take a look at this video. jay leno hop in a ride for a stunt with 80-year-old driver bob riggle. it didn't go well.

>> i'm okay, yeah. >> what's your name? >> bob riggle. >> how old are you, bob? >> what track are you at? >> urbandale. >> anything hurt on you right now? >> my name is bob riggle and i'm 80 -- [ laughter ] >> the two are fine, leno shaken, probably stirred, but quickly recovered. >> i don't care. that is three advil right there. >> at least. >> sort of a legendary guy for doing wheellies and that's what he does -- >> did he intend to do that? >> first off he should know that car is not meant to go left or right, it's meant to go straight. >> that wasn't on purpose? >> well, no, i hope not. and those fat tires he gripped it -- anyway, jay leno's garage airing wednesdays 10:00 p.m. eastern time. my spin was not as dramatic. >> thank goodness. >> there's jay leno's garage. no helmet. >> good video on facebook page. >> thank you. airing on cnbc tonight, a brand new episode of "west texas

investors club" at 10:00 p.m. eastern time and pacific. stocks are rebounding today. a number of names hitting new 52-week highs, dollar general, take a look at that all-time high levels dating back to its ipo in november of 2009. dollar tree trading at all-time highs back to its ipo in march of '95. and james smuckers, american water works also among the names hitting highs. consumer confidence rebounding but will brexit rebound a turnaround? we've got that story ahead.

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street talk at the time how we roll like leno. first stock, microsoft, jefferies remains negative on the stock. they kus estimates for this year and next year well below consensus of wall street. shares remain underperform rated as a $40 target. microsoft is at $49. they're concerned about the pc cycle, so jefferies may be the most negative. i mean, this is -- they sell microsoft. >> 20% downside to the stock

basically from where it is right now. >> we bash analysts for not having sell ratings. >> for an outperforming stock, that's true. >> jefferies going short and strong on microsoft. >> all right. second stock we're watching solarcity getting upgrade to market perform from market -- outperforming from market perform. analysts claiming shares being upgraded in anticipation of successful resolution to the tesla bid. shares also added to the conviction list at avondale. of course news here is they formed a special committee to take a look at that tesla offer specifically, more than half of the board has recused itself from voting on the deal because of ties to either elon musk and/or tesla. >> they're very interconnected. solarcity having a good day. the stock up about 6% over the past month -- >> couple of days. >> yeah, couple days. tough year for -- >> all the solar stocks. >> yeah, last couple of days may have done okay. third stock, dick's sporting goods. goldman sachs reiterating their buy, but now also adding it to

its conviction buy list. got a $53 target, so they see about 20% upside. they see dick's the best position to benefit for the closure of sports authority. that's its biggest competitor. get this, in the analysts note they note that 63% of sports authority stores were within ten miles of a dick's. so they were basically hurting each other. now sports authority is going away and thus goldman sees sharp acceleration in dick's sporting goods earnings growth. >> and a similar analysis out today, survey of 1,200 consumers recently bought sporting goods and they found that the people who used to shop at sports authority and this place called sports shall lay which also is going under, 53% of those consumers said they were going to go shop at dick's. >> went under because all they sold were rabbit parkas. that's not true. >> are you serious? i've never heard of it. >> no, made me think of swiss people and skiing. >> fourth stock, penske automotive, clobbered on brexit because it is the biggest auto dealer in the u.s. but generates

35% of revenue in the uk specifically. keybanc cutting 2017 estimates 10% because of potential slowdown in uk vehicle sales and fx impacts. forward p/e 7.5 versus five-year average of 11.6. but keybanc expects that discount to persist because of the uncertain outlook in the uk. >> listen, first off penske a company founded by one of the greatest business and racing minds out there, hard to bet against them. we should get sarah and wilfred to go talk to people. are you going to not buy a car or buy jeans or a cell phone because of the brexit? >> they might not. i mean, if you have forecasts of recession in 2017, or six months into 2016, you might not. >> if they just drove on the other side of the road, everything would be fine. finally, today's under the radar name, ultragenex pharmaceuticals, ticker rare. this under the radar's name has been sellers radar because the stock is down 25% this quarter

and nearly 60% this year. bank of america merrill lynch out defending the stock, a buy and $72 target. about 50% more upside from here. the company did recently announced or yesterday, last night, i guess, that it got a broke through therapy designation from the fda for a drug right now called krn-23. until it gets a real name, which is treatment for hypophospha hypophosphatenea, one of the big causes of rickets. some hope there. >> tough sledding for biotechs in general it really is. >> i practiced it this morning and i still botched it. >> folks, thank you very much. it is coming up in about 30 seconds on 2:00 p.m. on wall street on the east coast. markets bouncing back at this hour. the dow as you see right there up 142 points at 17,282, but remember it did lose 870 points

in the prior two sessions. let's check the broader markets, the nasdaq, the s&p 500 and the russell 2000 all in the green today by significant margins. the nasdaq, which has been one of the big laggards up one and almost a half percent. the s&p 500 up at 1% on the button basically and the russell 2000 also hit hard in recent days perhaps somewhat counterintuitively given some of those small companies don't do much business in england or overseas generally up 1.25%. bob pisani is following the action from the nyse. bob. >> hello, tyler. let's take a look at some of the sectors. let's call it steady as she goes. we're holding on to the gains of the day. you can see here banks are leading the markets along with restaurants, airlines and semiconductors. a lot of beaten up sectors rallying today, including airlines. keep an eye on buyback announcements. we're entering earnings season and with prices of many companies down significantly i

anticipate to hear additional buyback announcements. watch banks in particular, after stress tests are announced wednesday, big banks like citi group and bank of america, they likely announce dividend hikes as well as buybacks. also bear in mind remember that jamie dimon turn the markets around february 11th when he announced he was personally buying back 25 million in j.p. morgan stock. there was that giant jamie dimon bottom there. might hear more of those in the next few weeks. by the way there's a long held belief companies cannot buy back their stock during their earnings season. that's not true. they are allowed to buy back stock during their earnings season provided it's part of a regular preannounced buyback program. just one of the many facts you learn here at cnbc, brian. >> all right. bob, we try to be just fact based all day long. a handful of hedge funds ended up big winners on that brexit decision. among them names you know, george soros and stan druckenmiller are some.

scored on volatility plays by buying credit default swaps. so where else are some of these big hedge fund managers finding gains or shorts? and what strategies are they avoiding? let's ask paul graham with $20 billion under management, let's be clear, paul, our viewers, most of them are not hedge funds. they're not going to go out and put some weird swap, short, whatever it is, inverse thing position on some german bank's debt. >> long short is the obvious answer to that question. we take fundamental, olympic know, views on stock specifics. we try to ignore the macro although clearly in this backdrop it's quite difficult. but what we do and what most hedge funds actually do is pretty straightforward. you know, they don't use complex derivative instruments or

strategies. it's just good old stock picking. i think clearly over the next three years good old fashioned stock picking in a market that will see huge, you know, stock dispersi dispersion, weak correlations between sectors and markets oscillating around, i think those are the types of managers that your viewers should be considering. >> so do you think these things -- you know, soros all e allegedly putting huge position, do you think those are just one-offs, sounds like, paul. they just put a bet on this one event and that's it and now we just need to go back to either buying stocks or selling them short? >> yeah, i mean, that's real if you don't mind the term sex, rock and roll and violence, it's very opportunistic around a specific dislocation in the market. we tend to look at things longer term. you get great returns if things go right in those types of trades, but clearly you get

massive volatility and potential downside in negative returns. so i'm not sure that for the most and certainly for retail investors, you know, those types of strategies are appropriate. >> paul, i'm just curious what you're hearing out there in the hedge fund universe in terms of whether or not this event has made or broken hedge funds, will this be the seminole event in 2016 we look back upon and say that's why x, y and z hedge funds went under, or that's why they made a great year? >> well, i think, you know, hedge funds have had a pretty, you know, hard run of late, the last couple of years have not been vintage years. a vast amount of money has gone into index trackers and etfs because markets have been trending upwards. and so hedge funds, you know, have come under a lot of criticism for the fees that they charge and the lackluster performance. what i would say is as i've just alluded to is the next three years should be more positive for hedge fund strategies. you know, the markets should be

more conducive to running a hedge fund strategy because there should be clear winners and clear losers as a result of this market dislocation. it's just whether investors can stay along for the ride because, you know, clearly you've seen the news recently there's a lot of criticism around the hedge fund industry. and jumpi ining ship right now d be the worst possible time. >> we're going to leave it there. thank you very much, paul graham. last week's brexit vote wreaked havoc on the markets the past few days and our next guest believes tech could be the next to see effects from the brexit referendum. scott, good to have you with us. >> thanks, melissa. >> you did analysis in terms of direct exposure to the uk and some interesting companies on that list in terms of 10% revenue exposure. >> yeah, so obviously there was a lot of interest and remains a

considerable amount of interest in this kind of exposure specific to the uk. so what we decided to do is look at all 67 companies within the technology sector of the s&p 500. and as you referenced, we came up with four companies that have 10% or more revenue exposure to the uk directly. so those companies are cognizant technology solutions and hewlett-packard enterprises, both at about 10%. then we have paypal at 13%. and e-bay is the leader, if you will, at 16%. >> right. why should we ignore this? i mean, there are calls now for the uk to go into recession in 2017. there are calls that the eu growth overall will be depressed. i mean, these companies surely have more exposure than just 10% or more to the uk when you take a look at european, continental europe exposure. is that a wild card right now in your models? >> absolutely it's a wild card. and this is just the beginning,

we think. so when you look at a company like e-bay, they're already experiencing growth related challenges, especially when you consider that they just less than a year ago spun off paypal. so they're really trying in terms of revenue increases, now you have brexit, other european exposure, we think that's got to be a risk that investors should know about as they make their investment decisions. >> you know, a lot of multinational companies have sophisticated currency hedging desks, you point that out in terms of what google has -- or alphabet, i should say. old habits die hard. could that actually be a drag? could we actually see companies say, you know what, we got it wrong, because everybody else out there got that wrong also. >> yeah, i mean, it's possible, right. i mean, think about what we're considering in the context of let's say thursday before the market close when folks were really excited about the brexit vote. and obviously we all came in in the u.s. on friday and it was

bedlam, right? so there's no question that folks could have gotten it wrong, but i think alphabet has shown time and time again since they implemented this very extensive and sophisticated hedging strategy that they actually do a pretty good job of this. i would rather as an investor be aligned with a company like that than one that doesn't pay as much attention to currency related risk and actions accordingly. >> wrou point out google, uk is an important part of the business but at the same time it's been less reliant on the uk specifically. what do you do with the other companies? do you avoid them at this point just because there is that uncertainty? i mean, you can't even put it in the model, why should i buy those stocks? >> yeah, so the four companies highlighted earlier, we have hold opinions on three of them. and we actually have a buy on hewlett-packard enterprise largely because of valuation and upcoming transaction where they're selling their big services business to computer sciences. we see that as a positive kas list for the company in the

stock going forward. i agree with what you're saying and that's the reason we put this piece out is just to give people some information and context about the types of choices they should be making given the brexit vote for leave and what could happen next. >> all right. scott, appreciate the analysis. thank you. scott kessler at s&p global. the uk vote to leave is just the first step in the path to exit the eu. so will it actually happen? our next guest isn't so sure. plus, protests in london today. sarah eisen is live, we'll go to her next. this just got interesting. 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." i'm sarah eisen live in the heart of london, trafalgar square, where crowds now by the thousands have taken over. they're here to demonstrate peacefully their support for the eu to protest the brexit vote. they want britain's future to remain in the eu. they're angry. they're chanting eu, we love you. we've been out and about all afternoon talking with some of the folks here. here's what they said about why it's so important to be here today. >> people voted on the basis of misinformation and misunderstanding. so, i think, you know, for it to be left at that in a parliamentary democracy is completely unacceptable.

>> britain is not nigel farage's country. we are not a racist country. we are not an intolerant country. we're not an intolerant society. we are colorful, diverse, hugely accepting and welcoming country. and nigel farage and ukip have placed in fact this referendum have put a mark on this country. and we have to wash that off. >> we should say that we are in london. and london was a stronghold for the remain voters. it was one of the few places in this country that actually voted overwhelmingly to stay in the eu. we should note also it's a very young crowd. that demographic also voted to stay in the eu. but it gives you a sense of just how divided this country has become. there's a lot of chants against boris johnson, the former london mayor who is now one of the front-runners to take over as prime minister. people here going against him because of course he was the

lead campaigner for the brexit vote. it also gives you a sense of how difficult the job is going to be for whoever, guys, takes over as prime minister in september from what they have to deal with. there are very much cries here to have a second vote, a do-over. that it's not a done deal. that britain's future still remains inside of europe. back to you. >> all right, sarah, thank you very much. yesterday on "power lunch" we asked the atlantic council president ceo fred kemp about the possibility given the complexity involved in the breakup an exit by britain may not happen after all. listen to this. >> i think you're absolutely right to raise the issue of whether it's going to happen and when is it going to happen, because nothing starts in the eu until you trigger article 50. and article 50 isn't triggered until the prime minister signs a note to the eu saying, look, we're ready to start our exit. that may not happen until october, and we don't know with which prime pminister.

so you're going to have a long time of uncertainty which is what's shaking up the markets, the uncertainty. >> we're joined again today by fred kempe. yesterday you seemed a little hesitant or uncertain that the brexit was a sure thing. has your thinking e involved a little bit? will they find a way to stay, maybe? >> it has evolved. if i had to wager and that would be buying the ftse index right now, i would say that brexit will not happen. and i base that on three arguments. first of all, it isn't triggered. the prime minister, david cameron, could have triggered it on the day of referendum. and it could well be if he didn't do it on the day of the referendum, nobody ever will. most of the political leadership doesn't want it. even boris johnson on the day he wrote his editorial in the daily telegraph saying he was on the leave side, had written an alternative editorial. so he's a little bit mixed. the second reason is the eu has a history of rolling over referendum. you had the danes in 1992, they voted against.

you had the irish twice in 2001 and 2008 on the roman lisbon treaties. they re-ran their elections, they rolled over the referendum, the eu made some compromises and then things went through. then you see the mood of british people. 4 million people have signed onto a petition against the outcome of the referendum. and you have scotland and northern ireland potentially putting constitutional vetoes in the way. i don't know whether they can legally do that, but they're going to do everything they can to slow down the rush to the exit gates. and then the british have to say, well, do we really want to give up our three-century-old united kingdom? and then finally you have german chancellor angela merkel, she does not want britain out of the eu. she sees her legacy as being saving europe. and so i think she'll try to make some sort of deal with britain that will allow a second referendum. but what gravitates against this is of course you've had a vote,

and it's a very clear vote. and you also have a lot of people in europe that would like to throw the anglo saxons out. we have a lot of drama, but i'm betting at the moment brexit will not happen. >> let me bring in larry kudlow to react to that. it's very difficult to go against the will of the people. and this vote as close as everybody thought it was going to be, wasn't all that close. >> wasn't that close. look, with respect to mr. kempe and his organization, at best these are fanciful scenarios. at worst it's just downright misleading. the elites have done this now throughout the entire brexit campaign. britain is a democracy. the eu i might add is not a democracy. that's what this is all about. i call it magna carta 2.0. i think it's about freedom. i think ultimately it's about economic growth. and i think it's a terrific thing. it's going to take awhile to sort through. regarding these issues about the timing and so forth, look, i would like to see the toris move

faster on this. i really would. they're saying party conference in september elect a new leader. i think thaw ought to get that done sooner. i wish they would. i think as soon as that trigger that the portugal treaty will be triggered. >> as soon as they get a new leader in place. >> it appears that's what's going to happen. mr. cameron doesn't want to move unless -- so i think they could move faster on that. i hope they do. and i think the united states should be moving faster to develop trade relations, new trade relations with the uk. this thing is really about trade. maybe we'll talk about that in a few moments. regarding the angela merkel point very clear. >> that's what i want to come back to. >> ms. merkel is part of the problem in the first case. okay. it was her agreements to bail out these other countries. it was her agreements on free and open immigration that caused the problem in the first place. she has been a weak leader. and she is not liked even in her home country of germany. she isn't going to pull off any miracles here. the best thing she can do is get the eu ministers, the unelected,

unaccountable socialist eu bureaucrats to negotiate a treaty on trade which will benefit both sides. okay. >> to negotiate a treaty with great britain. >> with great britain and get the roles done for the eu. if you want to contemplate -- >> let them go work a trade deal. >> the only thing make the worst case scenario come true is what i call mutual assured destruction. like the nuclear strategy, if you want to have a instruction, no trade, protectionist barriers between britain and the eu, then i would regard all hell's going to break loose. that is not likely. >> mr. kempe, your turn. >> let me respond to that. first of all, the eu is still -- britain is still in the eu. nothing has changed constitutionally. nothing has changed legally. and it won't change until this is triggered. and the eu can't compel british leaders to trigger it. and i don't see a leader around who's going to do that in the near future, probably not before october. so there's a lot of time to go.

and the question of chancellor merkel there is a deal to be had. and the deal to be had is over immigration. what the british wanted in their negotiations with the eu, which they didn't get, is an immigration deal where if they reached a certain threshold of immigration they could shut it off with the eu. now, there are a lot of other countries now in the eu that would like that. and so by making that kind of a deal with the brits, you might be able to headoff some problems with other countries. so i think there's a deal to be had here. i agree with larry completely. this would be politically messy, britain's a very strong democracy, this referendum rolling back is not going to be easy. i think you see a lot of buyers remorse in britain right now, certainly see a strong 40% to 60% that won't change their mind. but there's buyers remorse in the swing vote that could change over time. >> fred, this is a democracy. they just voted. you know, that's the way it works. and britain, by the way, this whole movement is about much more than immigration. though i acknowledge immigration is part of this. but it's much more about

immigration. the people in the cabinet, i mean, responsible torres who oppose david cameron. they've said all along the eu, bureaucracy and so-called leadership is unlengted and unaccountable to anybody is driving that whole continent to the left. they are encroaching on britain's fundamental liberties, their regulatory stayed in europe, the judicial stayed in europe. next you're going to see raising taxes and so-called harmonization. this was never part of the original eu free trade idea. they've so far britain has revolted it is the greatest democracy in the world, and we the british cousins took it from them. >> that's why i use the magna carta. it is not so fanciful to cite the magna carta and its 800-year dissent. >> is there an argument to be made, fred and then larry, that this shot across the bow of the eu might ultimately result in an eu that is more responsive to

the democratic -- >> yes, yes, yes. >> -- things you're talking about, fred? >> one would hope that's going to be the case. let me say one thing on the economic front. what the brits are learning is there's more of an economic downside than an upside from leaving the eu, and the leave campaigners, the leave leaders, know that they're going to inherit a britain, a great britain that's probably going to head into a recession, have to renegotiate dozens of trade deals. and i think they don't very much want to take that on. so i really wonder whether the levers themselves want to take on -- >> the leave-ers. >> with respect i think that's just entirely incorrect. let me pakmake a couple points. britain will have a much better opportunity to discuss bilateral free trade deals with the united states, which eu has stopped, with canada, which the eu has stopped, with australia which the eu has stopped. that's point number one. point number two, the eu is no longer a free trade zone. they are blocking any and all expansions to trade. and britain, which is the

financial center of europe, one of the great financial centers of the world, will forever remain so. eu needs britain, its finances and its markets more than britain needs the eu. and that's why this has to be resolved. britain has a chance to reform taxes and regulations and spending in a pro-growth way. and hopefully the united states under a new administration will help them. >> then we can stop calling it britain and call it england if scotland decides to hold another referendum and passes. northern ireland does the same. england gets most of its oil from scotland. >> we can call it anything the voters decide to call it. i'm okay with it. it will be england, it will be big england, it will be britain, it will be great britain. they have been around for a long time. >> i don't disagree with larry's criticisms of the european union. the question is a voter and a country is where is your greater downside risk. and i would still argue the downside risk of out is so much greater economically than in. and the markets are showing us

that. >> liberate. liberate. >> markets are calming people are saying maybe this -- >> we have to leave it there. we didn't even get to trump's speech on trade, which is eminent. we'll maybe cover that in a later moment. fred, thank you very much for coming back two days in a row. larry, always great to see you. >> thank you. let's check the markets right now. you see there the dow up 133 points at 17271. much more market coverage and more coming up on "power lunch."

hello prashant bhuyan. co-founder of the fintech services start-up. hello watson. your analysis of social media and conversations on various trading floors, helps us uncover insights. insights that help investors predict market closes, well before markets close. you know, your analysis has helped us improve our predictive accuracy by over 500%. 550.2, to be precise, but we can always do better. i like your attitude watson.

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welcome back to "power lunch." i'm seema mody with a news alert on airbnb. reportedly said to be funding valuing company at $30 billion according to "new york times" citing sources the home rental site reportedly last valued at $25.5 billion in late 2015. this new valuation of $30 billion would make airbnb the second highest value start-up in the united states behind uber, which is valued at around $66 billion, tyler. >> see ma, thank you very much. seema mody. donald trump is speaking right now in pennsylvania. trade is the topic. let's listen in. >> -- economic independence once

again. that means -- [ applause ] that means voting for donald trump. i'll do it. no doubt about it. not even a little doubt. it also means reversing two of the worst legacies of the clinton years. america has lost nearly one-third of its manufacturing jobs since 1997. even as the country has increased its population, think of this by 50 million people. at the center of this catastrophe are two trade deals pushed by bill and hillary clinton. first, the north american free trade agreement, or the disaster called nafta. second, china's entry into the world trade organization. nafta was the worst trade deal

in the history -- it's like the history of this country. and china's entrance into the world trade organization has enabled the greatest job theft in the history of our country. it was bill clinton who signed nafta. people don't remember. in 1993. and hillary clinton, who supported it. and the havoc that it wreaked after he left office was unbelievable. it was also bill clinton who lobbied for china's disastrous entry into the world trade organization, and hillary clinton who backed that terrible, terrible agreement. then, as secretary of state, hillary clinton stood by idly while china cheated on its currency, added another trillion dollars to our trade deficits and stole hundreds of billions

of dollars -- >> donald trump speaking in pennsylvania about trade and assailing what he calls two of the most disastrous trade arrangements in history, nafta in 1993, china's entry into the world trade organization. elsewhere in draft released to the press he assails hillary clinton for her support of the transpacific partnership, a pending trade deal, which she initially called the, quote, gold standard of trade deals, until she decided she would switch and be against it aligning with, oh, by the way, mr. trump and bernie sanders. larry kudlow is with us now. i've read much of this speech. rhetorically it is very strong, rather detailed for mr. trump. >> yeah. >> it's not his usual extemporaneous jazz. it's more composed music. >> that is correct, i think. i believe this was a tell prompter speech. >> looks like it.

>> i think he does quite well when he really focuses and has discipline. a very serious speech. outlines seven steps to improve our program. what he's saying is this, trade is good. trade deals can be good. but the other parties -- >> can't cheat. >> have broken the rules. and we've got to stop them from cheating. this is not a new thought by the way. ronald reagan had to punish japanese, clinton, w, obama too, and also labels china a currency manipula manipulator. i think it's a fair point, but basically saying along with lower regulations and lower taxes, i'm going to have tougher trade policies that benefit the american worker as best we can. and we're going to enforce the rules. and i think he's right about it. i'm a free trader, but you've got to play by the rules. >> he says he would go in and if he can't -- his first tack would be to -- on nafta, renegotiate with the parties to that deal

most notably canada and mexico, as i recall. i don't remember my history terribly well but those are the main ones. if they don't want to go along with the renegotiation, he would move under one of the positions and ab ra gait it. >> it's tricky business ab ri gags. there are laws on the books in the u.s. and the congress just passed a new law called congress enforcement act. basically says yies has the power if there are trade violations and not remedied after discussions, we are permitted to impose temporary targeted tariffs. we are. and it's been used before in the past. as i said reagan used them. i don't like tariffs, tariffs are taxes, but i feel there has to be some way to sanction these deals. >> yeah. >> and i'm particularly critical of china. intellectual property rights, they counterfeit our goods, cyber hacking into our -- awful story. china's an awful story. something needs to be done there. regarding nafta, i'm not as clear about what actions would

have to be taken. but to me free trade is fair trade. the public is really -- >> if you're not going to play fair, you need to have a big stick. >> somehow. you've just got to do this. we have the authority. look, all these years -- think about this. how many times did china come to the united states amidst great fanfare with state dinners and new leaders and we're going to talk about currencies and trade and all the rest of it, and nothing changes? >> why would it? china is us decades ago. i don't mean that insultingly, they still have some pretty horrific work conditions in certain parts of that country, they are a country that is on the way up, but they've got a long way to go. in our early manufacturing history, when we were coming up, we didn't exactly play by the rules either. >> no. we didn't. >> we stole jobs from england. >> we played -- look, early presidents in the -- the republican party was the protectionist party. now, mind you there was no income tax, so trade tariffs were the major source of revenue.

little different than it is today. regarding china, sully, i think china had a nice run in terms of market reforms. i really do. i think the last couple years they've gone backwards both politically and economically. and i think that's important for the future and i think trump is right to step in and deal with this. >> we're going to go to john, my point is we can't expect them to be on a same level because they're in a very different part in their evolution as a nation than we are. >> it's not their evolution, it's the rules. you sit down and you make a treaty and you abide by the treaty. and as i said before, american presidents, both republicans and democrats, have had these chinese here, state dinners and nothing changes. >> somebody has a stick and somebody has a knife at a duel, there's going to be different rules. >> no, you can't have different rules. you make a deal, the deal should stick. otherwise you don't make the deal. look, trump himself has said -- this is why i like reagan

gorbachev, trump wants a tougher negotiating stance. i don't blame him. i think -- >> i don't know how you negotiate with a country whose goals are very different. let's go to john harwood in washington, d.c. with more on wrapping up because we did i guess get an early advance copy of trump's speech. john. >> brian, this was a bernie sanders, u.s. labor union speech. it's remarkable that donald trump is trying to go way left of hillary clinton on trade. it is true, as larry just indicated, everybody is in favor of free trade that is fair trade. but at some point you've got to decide if you're going to make deals or not make deals. ronald reagan initiated nafta, george h.w. bush moved it along, bill clinton got it passed with republican support in congress. the same thing with china's succession to the wto. donald trump came out today and said powerful corporations, wall street elites, had rigged the system to their own benefit. this is a speech that john

edwards, bernie sanders, elizabeth warren, any number of left democrats could give. and this is the way that donald trump is trying to prosecute his economic argument as he goes to rust belt states like pennsylvania to try to win them. it is very unconventional. it cannot help his fund raising at a time when he's now trying to raise the small amount of money that he's got in his bank account and raise that from traditional republican donors. now, maybe he can get a blue collar voters who backed him in the primaries to kick in money for his campaign. but that's not going to be easy. it's very interesting strategy that trump -- >> it is interesting because he really couches so much of this from what i've read as a question of the elites favoring the status quo, they'll never change it versus the little guy who i'm championing. >> i think he's got a point. i mean, i really think he's got a point. >> the rhetoric is really resonant.

>> i don't think it's about fund raising. i disagree with john on that. >> not saying it's about fund raising. i'm saying it may be detrimental to his fund raising. >> it might, john, i don't know. let that play out as it goes. there's a lot of people, a lot of business people who have come to trump meetings who are very much in favor of a tougher trade stance because their own industries have been badly hurt. so we'll let that play out. again, i think the fundamental point here, the republican party has been drifting in trump's direction for many years. all he's basically saying along with tax reform and regulatory reform, we need to have trade reform and get people to play by the rules. and he's saying i am going to change this attitude. and i will take actions to enforce if need be. hard to argue with that. hard to argue with that. >> larry, thanks very much. john harwood, thank you as well. let's take a check on the markets because right now we're just about a point off of the session highs. this is very important to watch especially as we are seeing this bounce after two days of really horrendous selling here in the united states and around the

world. we're going to see how these markets close, but again, a point off of the session highs in the s&p 500, 2025 is our level right now. it is worth noting too financials are surging higher to its session highs close to into the close and oil as well pretty much at session highs right now. consumer confidence is rebounding, but will the uk's exit from the european union derail the turnaround? we've got that story and much more ahead on "power lunch." pro, but they demand the best shopping experiences. they're your customers. and by blending physical with digital, cognizant is helping 8 of the 10 largest u.s. retailers meet their demands with more responsive retail models... ones that transcend channels and locations, anticipate expectations... creating new ways to engage at every imaginable touch-point. it's a new day in retail, and together, we're building the store of the future. digital works for retail. let's talk about how digital works for your business. i've got a nice long life ahead. big plans. so when i found out medicare doesn't pay all my medical expenses,

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consumer confidence rebounding this month after falling in may. will the brexit vote be a consumer confidence killer going forward? president and ceo of kimco realty operates 550 shopping centers in north america. len schlesinger, currently a professor at harvard business school, welcome to both of you. len, let me start with you. is the vote of britain to leave the european union something it's going to show up in any measurable way in american consumer confidence over the next six months? >> well, there's no question the data that came out last week relative to consumer confidence was invalidated by the vote. but what the vote really means at this point is a source of enormous uncertainty. clearly it was a surprise.

clearly it represented some terrible political judgments. but under conditions of uncertainty we find the american population and the consumer particularly either stepping down to a complete mode of paralysis and uncertainty generating no action whatsoever, or in fact prefacing doom and gloom and just completely acting as if the world is coming off the rafters. and neither of those things are true at this point. >> yeah. >> what we do know relative to the american consumer is the vast majority of benefits and issues they face will largely be in outgrowth of currency fluctuations which will allow discounters in the united states to continue to flourish and will raise serious questions about the continuing pressures that exist on luxury goods. we know that the american consumer who elects to go to europe and most specifically to the uk this summer is going to be treated to a whole portfolio of bargains. we know that it's quite likely

that the pricrime rate will not up and consumer credit will be reasonably stable. beyond that i think everything is a guess and we need more time for the stuff to unfold. >> i want to come back to you on a couple of companys that are european based and in the fashion area you are so familiar with from your history at elle. but, connor, your reaction to what he just said and do you see any rub-off or knock-on effects here in your tenants, in your clients, costco, tjx, many other of the big retailers. >> no, it's true. our sweet spot of retail is really on the discounters, the off price. if you look at what's working in retail today, it's still the off price concepts, the grocery stores, the home improvement categories. the consumer is resilient. the supply and demand is very much in balance in the u.s. 38-year low on new supply, so virtually no new development in

our sector. that's a bright spot for us. >> does the stronger dollar, vis a vis -- >> it does especially if they're sourcing from overseas and tjx and others will probably catch that upswing. but, again, you know, the strong dollar will probably impact the tourism trade. and our retailers really focus on everyday goods and services. so i think our defensive portfolio lends itself to holding up through currency swings. >> how much of a nick to revenue or profits, len, with specific companies in mind would a slowdown mean -- a slowdown in europe and great britain mean to some u.s. companies like a tjx that has some stores over there, like a costco that does some business over there? >> i think tjx is very much in a sweet spot. their presence in the united states and uk is more than do --

>> let me go to two european companies. one is zara, the other is h & m, we could throw in a third, which would be ikea. are those companies going to see their fortunes impacted here? >> so there's no question in my mind that companies that are based in europe, that are operating largely in european currencies have some risk attached to them. it is driven largely by their presence in the uk for each of them, h & m has the most significant presence in the uk of those three. but there's no doubt that all three of those firms will be impacted, h & m probably the most. >> all right. so, connor, how's the business overall? the consumer's doing all right? you do see some stores with vacancies. we had a guest on yesterday who said the good malls are doing great. >> there is a bifurcation right now going on between the highest quality real estate and call it

the mid market real estate. and there's significant demand for top quality retail space. we see that as continued to go with -- when you look at the new concepts, the demand sources that are out there, you've got lowe's with a new concept orchard supply, whole foods with their new 365 concept, tjx with a new concept, so the demand is very strong for top quality real estate. and there's virtually no new development. that means limited supply is getting bit up and we can push rents. >> connor, thanks very much. good to have you back. appreciate it. and len schlesinger, vice chairman and former coo of elle brands. what are the risks lurking in the markets? that's next on "power lunch." used a 60/40 stock and bond model, with little in alternatives. yet alternatives can tap opportunities that traditional assets can't. and even though they're called alternatives, they're actually designed to help meet very traditional goals. that's why invesco believes people should

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little over one hour left to trade. look at session highs on the s&p 500 and the nasdaq. worth noting that financials are also hitting fresh session highs. in today's session. that's certainly helping propel us higher here. the nasdaq up 1.9%. s&p up. >> quickly individual stock story of the day is comscore.

that stock is down 20%. not a misprint. they had not filed the filing, their quarterly filings, in february. and then they had a deadline for may. this was their new self-imposed deadline for filing the quarterlies. they missed, that, as well. they've blown three separate times. >> sounds like me in sophomore year. >> calculus 101 or 201. >> i was never in calculus. >> this is what happens when you don't file your papers. >> update on accounting, too. >> you want the know -- a, file it. >> worst filing to miss. >> what's in it? showing up late for the wrong test. i studied biology. this is geology, man. all right. it is time now for trading nation because traders do trade better together. after the big british vote to leave the eu, are there other major risks underestimated by the market? good question. chad morganlander, ari wald.

chad, it is a great question. we're brexit focused but this is the time when other things happen when you're so looking over here maybe something over here happens. what do you think might be out there we're not talking about? >> well, the general thematic is global growth. global growth we believe will continue to decelerate to roughly about 2% over the next 12 to 18 months. that increases the political risk, ie, the brexit issue. as well as global trade. it has a major impact on global trade which bleeds in to global earnings, especially here for the s&p 500 companies. so we would be concerned about that. especially when valuations at forward looking pe multiples of 17 times. we believe we're a bit stretched. so focus your attention on credit growth, in particular within the emerging markets. if you start to see a rapid deterioration there, that's a

bearish sign for the overall global economy and markets. >> i thought we could get through without brexit but we did not. ari, the charts are cold blooded and cold hearted. they don't care what's going on because all known information is supposed to be built in. we're seeing more acceleration and the daily s&p today. is the market chart anticipating some, i don't know, gray swan. we can't anticipate something unanticipated. >> i guess to continue on chad's theme, what is going to cause the global deceleration and our answer and where we see the risk is we think it's still in europe. you know, along with the deflationary signals as the charts speak for themselves as you mentioned, brian. looking at the europe stock 600 index, the big picture view here, once again, seeing the equity market topping out at the same level as 2000 and 2007. still in secular decline.

now breaking a seven-year uptrend, as well. listen. the weak get weaker when markets turn lower. this is the main drag on markets right now. and with this broken trend we think this is an area of the markets to continue to sell. >> okay. sell the european stock market. ari wald, there you go. chad morganlander, thank you very much. we do two additional segments every day on the interweb. trading nations is your destination. power lunch is back in two. and now, the latest from trading nation.cnbc.com and a word from our sponsor. when it comes to medicare,

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welcome back. the markets attempting to lift into the close here. the s&p 500 just one point off of session highs. what seems to be litting us higher is move in financials and close to session highs right now. gain of more than 2% at this hour and take a look at the biggest financial gainers. today we're getting the ccar results. some saying the cap will increase across the industry by

19%. seeing citi, comerica and citizens. >> don't give it all away now because more of us. >> can never have too much. >> we have one other thing in common because virginians. we both hate beets. >> i love them. >> no worse food than a beet. >> thank you for watching. >> "closing bell" starts now. good afternoon, everybody. welcome to "the closing bell." i'm becky quick at the new york stock exchange. >> welcome aboard. >> thank you, bill. >> yes. don't adjust your sets. she is here when the sun is up today. >> been way too long. >> i'm bill griffeth. following that dismal two days for the market, following the brexit vote, is this rally for real or what they call a dead cat bounce that investors