cce. >> wow, europe. >> yep. and it's making a big move today. >> talk about exposure. pete. >> that sounds great, but i'm not in that one. but i already bet in brazilian and ewz has been great. >> all right. that does it for us. "power lunch" starts right now. melissa, thank you very much. we will see you in an hour. welcome everybody to "power lunch" along with seema mody, welcome, nice to have you here. i'm tyler mathisen. brian is with us. michelle is off. and melissa will join us at 2:00 p.m. eastern time. wall street right now extending the post-brexit rally. the major averages have now made up roughly half of those brexit-related losses of friday and monday. let's take a look at the dow and s&p. once again higher now for 2016. the nasdaq is out of correction territory. the dow up 227 points capitalizing on yesterday's big rally. 1.3% there, the s&p 500 up closer to 1.5%, the nasdaq

composite up even more 1.35%. materials and financials leading the charge as you see right there. and this rally could keep going, that's the question, will it? as we close out this quarter. we're very close. bob pisani on the nyse floor here to explain. hi, bob. >> and the important thing is we've stopped having an influence from brexit and seem to be looking at people picking up bargains right now. let's take a look at the markets midday. we've got an end of the quarter rally going on 8-to-1 advancing declining stocks, that's better than yesterday. it was 6-to-1. volume again on the heavy side. buying interest with heavy volume, stocks up good indicator overall. and volatility, the vix is back to pre-brexit levels, back to levels it was last week prior to that vote here. number of beaten up sectors are rallying. we've had quite a rally in commodities and commodity stocks. look at this south africa, this is an etf, brazil is up, steel stocks are up 3%, oil and gas

exploration and production stocks up 2.25%. overall rally in commodities. other beaten up stocks, airlines, double digit declines this quarter, but for the last two days slowly but surely some of them up 6, 7, 8% in the last two days. here are the big names all doing well today. same with big tech though more modest. we've seen double digit declines this quarter in apple and alphabet, microsoft, juniper even. and you can see the last two days similar to yesterday, mo modest gains here, but considering the losses still pretty deep holes for most of these big tech names. major indices since brexit, well, it's very interesting to see the s&p is only down about 2%. crude oil's actually up since thursday's close. the dollar has stopped increasing. in fact, it's down a little bit. and the vix, well, it's back to pre-brexit levels there. very interesting changes. people should be very careful about talking about europe though because there are a number of different ways to look at the indices over there.

we often cite the ftse 100, the biggest of the big cap stocks like the s&p 100, but the broader index, still down quite significantly as the europe stock 600. keep in mind it depends on which benchmark you're looking at. finally, one quick question, what's going on with twilio, it priced at $15 on thursday. it's $35 today. again, i think there's just a lot of demand out there. this is a very, very hot space, but i wouldn't anticipate being up 120% in three or four days here. we'll keep an eye on that one. guys, back to you. >> you know, bob, if you sold the s&p 500 on monday, let's say you own the spy etf, you lost 4% because we're up 4% since the lows on monday. bob, stick around. we are going to switch now to the global bond market because something incredible continues to happen in germany. yields on their ten-year bond, called the bund, are negative again. and even though you may not give

a snits el about the german bond market, you should listen to it because it's sending a loud message. jack, what is that german bond saying? >> it's saying that capital preservation is the name of the game. it's a giant red flag. look, when we start to talk about negative rates, it's one thing. when we start to talk about steep negative rates, which is really what's taking place there amongst all of this uncertainty, well, it's got some real ancillary effects. one of them of course is what we're seeing in our markets here. remember that relative trade, and rick santelli has been talking about it. now, rick and i have argued for years about how the bonds have been giving the wrong signal to those that are trading stocks, and i argued that for the last six years. well, guess what, now it's a little different. now we're seeing a contraction in earnings. we're seeing reasons why the bond market is giving us the yield that is giving us a side from that relative trade. >> bob, the brexit vote has

galvanized the support of a lot of the euro skeptic parties across europe. if we see other countries follow britain, what does that mean for the bond market? more of the same or widening spreads? >> oh, no, as jack said certainly bad news. what we're seeing here in the united states and one of the reasons i think our bond yields remain low is we're getting money coming in from foreign countries buying into the bond market here in the united states. the question for this brexit thing is very simple. is this one of these big, big seismic events that's going to change things, like for example when china devalued its currency in august. that was seismic. that moved markets for months. remember oil dropping in january and february? that was seismic. moved the markets for months. is this one of those kinds of events, or more of like a one-off event? i'm rather impressed by the reaction in the markets in the last couple of days, but i still think we really haven't quite figured it out yet. >> to call larry kudlow, can i push back against my friend jack

just a bit. i wonder, jack, if the negative yields in germany, without getting too wonky, i wonder if they're saying things are bad versus that the ecb is just buying debt because they need someone out there in the market because the private credit markets, corporate credit, et cetera, haven't done that poorly? >> that's a good point. but just to go back to something that larry kudlow has taught us all is that earnings are the life blood of stocks. what we're looking at right now is a situation where there's a lot of uncertainty out there. going back to what bob was saying, if this rally were taking place next week after the quarter end, i think it would feel a lot better to a lot of us. but the fact is it's got all of the characteristics of a bull trap much like the action we saw at the end of the year before the market came off in january and february. remember, that move that we saw in oil took awhile. it was not a one or two day event. it needed to be digested in the market. and once it did we saw the ramifications. i've got a feeling brexit is

going to be exactly the same way. >> jack, where do you see the u.s. ten-year settling? or is it settling roughly at this 1.46 -- between 1.40 and 1.50. >> it's funny i just got through telling somebody i would not be surprised to see the yield on our ten-year go down to 1%. if the market starts -- >> you're not alone in that. there are others we've talked to said the same thing. >> you know what, there are people out there that think i'm absolutely nuts, but i've got to tell you there's this real call for capital preservation out there. and with everything happening, and then of course couple all this insanity we call the u.s. election process coming up in another couple months, it's not a time to be a hero. it's a time to sit back and wait and maybe be in a little cash and try to buy the market 10% or 20% lower because chances are you'll get that chance. >> all right, gentlemen, thanks very much. bob, jack, we appreciate you're being with us. seema. >> let's get international. we continue to see this pullback in risk as investors face the

next bout of uncertainty around europe, the brexit. stocks, yes, have rebounded. but it's important to note the european stock index still down 6% since the uk decided to leave the european union. now, if we go around the world, you'll see that despite this rise in risk aversion for the quarter russia is up 6%, indian stock market up about 5.5%, brazil as it settles in with this new leadership up 2%. china though still down about 2% to 3%. i would point out that the shenzen composite is officially out of bear market territory. now, the other big talker has been japan battling two decades of deflation and this global flight to safety sending the japanese stock market down. it's down about 9% over the past three months, slightly higher today, but of course the currency has been appreciating. that's a big headwind for its economy, which is export oriented and relying on a cheaper yen. at the same time you have the bank of japan accumulating a third of the outstanding

japanese government debt. so what does this all mean for your money? and which global areas are ripe for your investment in asia? let's talk to a global quantitative strategist at wells fargo investment institute. samir, good to see you. japan of course has been in focus after we got that brexit vote the boj and policymakers suggesting that we could see some type of currency intervention in the coming weeks because of the sharp rise in the japanese yen. what does this all mean for the u.s. investor? does a proactive approach taken by the boj mean it's a good thing for u.s. stocks? >> you know, it still remains to be seen. they've passed a couple times in terms of doing anything. and with the yen in the low 100s, it's really been a surprise they haven't really stepped in post brexit. so one of the clearest losers away from call the uk and europe over the last couple days is japan because with that currency rising and those exports, as you mentioned, really that flows right through to earnings right

away. for u.s. investors what we would tell people is stay allocated in developed markets, but there aren't quite clear winners right now. so we're going to need to let a little time go by to see what happens. on the other side emerging asia could be one of the hidden beneficiaries of all this if global central banks come out with stimulus. >> which emerging asia country are you speaking about? is it china? i mean, that was a big concern for markets earlier this year around capital, outflows, the volatility in their chinese currency, the yuan, but now with the focus more on europe are people now starting to say asia does in fact look better? >> we think so. we would stay away from china for now just because there is so much volatility and so much uncertainty around those reforms, but if you look at the emerging asian economies that tend to be a little more developed, i know that sounds a little funny but more developed emerging nations, think taiwan, think south korea, think india, those are the real winners out of all this because they tend to have a lot of, you know, gearing towards global trade and towards technology. so we think they might be

beneficiaries from the fed staying lower for longer on those rates. >> there is this growing belief that because of this uncertainty around the international backdrop that the fed won't be able to raise rates perhaps until 2017, or even later, but i'm just curious, i mean, if we get a good jobs report next friday, will that reconfirm that the u.s. economy is on track and therefore that gives janet yellen more ammunition to raise rates some time this year? >> we think they've evolved. and this kind of started with jim bullard here in st. louis. i think more and more going forward they will incorporate the global outlook and market volatility into their call it policy measures a little bit more. and we think the jobs report by itself won't be enough to drive that. and so maybe they might try to do something at the very end of this year, but it's really hard to see until and unless there's more clear implications of what the last few days mean. >> all right. sameer, we'll leave it there. thank you so much for joining us on "power lunch." now let's get a market flash. d, what's shaking?

>> seema, bond insurers, mbia all trading higher as a rescue package for debt stricken puerto rico has survived a test vote in the senate. this of course two days before puerto rico is expected to default on a $2 billion debt payment. these names are now trading between 2% and 5% higher, as you can see. seema. >> thank you so much. u.s. banks have been battered in the wake of brexit. why there could be more trouble ahead for the banks and a cnbc exclusive with microsoft's satya nadella coming your way in the second hour of power. we'll be back in two minutes.

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starts at $59.95 a month. comcast business. built for business. financials are led the way ased market rallies for the second day in a row. more pain may be ahead for the u.s. banks. let's bring in head of north american institutions at fitch ratings. financials probably more than any group overseas but here in the states took it on the chin post brexit. yes, we've had a day and a half of decent stock markets. why do you not think that the u.s. financials are out of the woods? >> hi, brian, thank you for having me. i think from our perspective a lot of the u.s. banks in europe have consolidated their operations in the uk. they've gotten a lot of cost efficiencies out of that. with the brexit we think there will be some restructuring charges ahead of them in terms of having to potentially pivot away from the uk.

so clearly it depends on how the trade agreements are worked out. >> one thing we have talked about is so-called n.i.m., net interest margin, basically in a rough way, what banks make when they lend. as bond yields go down, banks tend to get squeezed even more. is that a part of your concern? >> yeah, i think overall we're looking at the earnings picture for banks which right now you know is challenged because of the low interest rate environment. there hasn't been a huge pickup in activity. i think given brexit it's less likely we're going to see a rate hike out of the fed any time soon, so maybe december at the earliest. and so it is lower for longer, which creates additional challenges for the u.s. banks in terms of that earnings pressure. >> is there anything outside of brexit, something that was there before the vote that had you worried about the u.s. financials? >> so, you know, i think we have said for a while we don't think it's something that's going to

impact our ratings in any way, but there will be some asset quality deterioration across the u.s. banks. our asset quality performance has been stellar. and we think that there has to be a little bit of deterioration over the next couple of years. >> final question. for the trading banks, not just the banks you put money in but for the banks that trade, is there not at least a -- maybe not a balancing but at least some gains from all this volatility? because what volatility means is that people are trading. will some of these firms mitigate some of the damage you talked about with increased trading revenue. >> absolutely. we have stated in the past volatility does help the banks as long as it's not too much volatility that keeps investors on the sidelines. what we are seeing there's been quite a bit of volume. and so that is good for the banks. and there will be especially on the fx side, i think, not surprisingly there's been quite a bit of activity.

and that increased trading volume will certainly help earnings. >> but on the -- just to wrap it up, on negative though it is more negative, brexit, than any positive from this increased trading revenue? >> we think that that could potentially be the case because i think what will happen with investment banking is that because of all of the uncertainty transactions may get sidelined or put off. that may slow some of the investment banking activity. so there is a little bit of a negative bias in terms of the earnings challenges. >> okay. it was a pleasure to have you on the program. thank you. >> thank you so much for having me. >> take care. next up, one area of the market that should not be impacted by the brexit. and in fact it could be the hot summer trade. what is it? you got to stick around to find out. but first, the final gold trades are set to cross for the day. we're going to have your metals close and more when "power lunch" returns. is car? came courtesy of james and patricia thompson. this tv?

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it's also a game of big data and servers. just as pga tour pros need modern analytics to improve their scores, businesses need customized data center solutions implemented by cdw, using hpe proliant gen9 servers with intel xeon processors to improve their bottom line. welcome back to "power lunch." let's get a look at markets. stocks right now in rally mode. we're looking at the dow industrials up 225 points. nasdaq up 74 points. and the s&p back above 2,000, up 28 points on the day. will be interesting to see when valuation kicks into the discussion. we're looking at the s&p trading 19 times earning, nasdaq trading at 20 times earnings. in terms of where we're seeing the gains, all ten s&p sectors currently trading in positive territory. energy one of the big winners

here up more than 2%. in fact, for the year energy is up 14%, quite the dramatic turnaround specifically in the sector. remember, it was the worst performing sector in january. but with the rebound in oil prices, copper as well, we've seen this sector outperform. technology, some of the growth sectors also doing well up 1.4%. we'll have to look forward to what the ceo of microsoft tells cnbc. that's in the second hour of "power lunch." let's get a market flash with diedre. >> upgraded shares of the timberland company to buy from neutral. d.a. davidson called the best in class and most liquid of timber real estate investment trusts. shares are down after today's gain about 3% so far this year. back over to you. >> thank you. let's check on some of the other headlines crossing right now. nike reporting better than expected quarterlies, but sales were flat in north america and the company's growth in future orders came in below consensus.

the stock nonetheless up 1.25% on this up day. toyota will recall nearly 3.4 million vehicles worldwide. the reason possible defects involving airbag inflator cracks and emission control units. the number of toyotas prius hybrid models may contain both defects. and sony boosting sales projections for its games division for the next fiscal year. this on high hopes for its virtual reality headset, seema. investors remain transfixed on the move in gold. we're looking at gold trades crossing for the day at 1326, higher by $9. keep in mind for the year gold now up about 23%. those brexit fears of course helping investors find more safety and gold has been a big winner in this, but it's been a positive session for commodities in general, silver, copper, palladium and platinum all higher on the day. platinum in fact up by 3.5%. now there of course is an

apparent disconnect between the equity market and the bond market. let's get straight out to rick santelli tracking the action at the cme. rick. >> well, seema, that's because there's a disconnect between policy that's been applied and policy that's needed. all these negative rates make our market look awfully like a delicious banana split on a hot day in chicago. speaking of tens, look at a 24-hour chart of tens. you watch any of those hospital shows? that looks like an ekg, doesn't it? we're going nowhere fast. but the important part is open the chart up to a week before the last fed meeting, the fact of the matter is we're hovering near the lowest closing ever from july of 2012, which was just a whisker below 1.40, and if you look at this chart see the low of 1.57, that was fed day, the 15th of june, then we went to 1.75. you think we're at 1.57 on the 15, the 1.45, 1.46 gets put in

proper brexit context. look at a one-week of the pound, this will teach us something. when you have a 14% turn in your currency, houston, we have a scaling problem. go to a two-day chart and all of a sudden you realize there's been a good bounce in the pound versus dollar gone from 1.32 to 1.35. i don't want to make too much of that, but obviously that 1.30 area seems to be holding. and a weak currency may be just the elixir for what ails the uk post brexit. sully, back to you. rick, thank you very much. on deck, maybe the only question that really matters to you at all, where should you be putting your money right now? simple, right? our guests will answer it coming up. with usaa is awesome. homeowners insurance life insurance automobile insurance i spent 20 years active duty they still refer to me as "gunnery sergeant" when i call

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said the u.s. stands with the people of turkey after the suicide bombing that killed 41 people at istanbul's main airport. >> need to be defeated in syria, they need to be defeated in iraq. they are going to be on the run wherever they hide and we will not rest until we have dismantled these networks of hate. >> north korea convening a meeting of its national parliament to bestow yet another title on leader kim jong-un. he will now be the chairman of the new state affairs commission, what the country says is the top position in the country. the university of connecticut has revoked bill cosby's honorary degree. the board of trustees voting unanimously to rescind the doctor of fine arts it awarded to the comedian at a commencement ceremony back in 1996. and a police chase in houston ended with a police department helicopter crew member tackling the burglary suspect. helicopter camera footage showing the officers pursuing

the suspect after he ran on foot from his vehicle. the suspect darted into an open field, police continued the chase before he was apprehended. that's the news update this hour. i'll send it back to you, ty. >> that's a pretty brave guy. >> no kidding. >> taking on a perp as we call them. >> absolutely. >> sue, thank you. stocks rallying for a second consecutive day with the dow, the s&p and nasdaq up more than 1%. so is the market moving past brexit? let's bring in christina hooper, u.s. investment strategist and jill kunif, welcome to both of you. let me begin, christina, with you. it feels as though despite what went on in europe last week, despite what went on in istanbul last night that the market is looking forward to better days and maybe better profits ahead. certainly in the u.s. is that what you see? >> well, the market seems very resilient right now.

i wouldn't say we've gotten past a brexit, but we've temporarily moved past a brexit and the tragic terrorist attack. however, don't expect us not to have some stumbling blocks in the future because of negotiations. this is going to be a long drawn out process. article 50 hasn't been invoked yet, probably won't be until october when a new prime minister is elected. so there's much more to come in the way of rhetoric and negotiations that could at times send the market downward and at times send it upward. >> in light of the british vote, is the new europe going to look materially different? or is it really going to look more like the current or old europe? >> it remains to be seen. but we can take hope from what was very cool headed, thoughtful language coming out of angela merkel, looking for a solution. so let's hope for the best in terms of the negotiations that the uk undertakes.

>> still saying britain can't cherry pick what they want to go along with and what they don't want to go along with and maintain the same trade relationshi relationships. >> there are huge question marks about this now. i think all we can say is that we can hope for the best. and the good thing is this is not a lehman time of event. our decisions need to be made quickly and move from crisis to crisis, we have a luxury of time. hopefully cooler heads will prevail. >> let me bring jill in. jill, what is your take on this? are we moving past the british vote, or are we moving past it too quickly? >> we're definitely not moving past the vote yet. and i agree with a lot of what kristina said, this is going to be a very long drawn out proc s process. and the u.s. economy is very resilient and has a lot of strength to it, but it's going to come at the cost of a very volatile geopolitical backdrop.

so we're going to continue to see some shocks that impact us so we can move up from here. but it's not going to be a steady climb. we're going to have a lot of ups and downs and continued volatility. >> so i'm thinking, jill, that over the next two weeks we're going to end the quarter here in just a day, basically. we're going to be moving on. we're going to see earnings start to come out in ten days full-time. then we're going to be moving on quickly to the political conventions. there's going to be a lot of noise, a lot of sound and fury there, where should i put my money? are there some stocks that look good to you here? >> well, there's going to be a lot of noise. and for edge we look through those headlines to think about how identifying the companies that can maneuver through these kinds of environments. and so investors going for an active approach versus index strategies and going for a diversified approach. one of the sectors we're finding

opportunities is small to medium size space. looking at even some financials in a different way to play the big money centers that everybody knows is financials but looking for other more unique opportunities in that space. >> and a couple of them are on the screen next to you, pac west, bankcorp and pebble brook trust. let me move back to kristina. you like european dividend stocks. you feeling strong enough for that? takes some fortitude to go back into europe right now. >> well, it's not even specific names so much as companies that are fundamentally solid, and actually they haven't been hit very hard in the last few days interestingly because i think investors recognize the opportunities presented by them. but what i would say is that there are also opportunities domestically. particularly in the tech sector. which really got hit hard.

i mean certainly we've seen something of a recovery in the last two days. but there are opportunities there, and amongst the tech sector there's some solid dividend payers as well. >> yeah, so there's tech and then there's tech. facebook was down, a lot of these companies were really hard hit. is it baby in the bath water scenar scenario? >> that often happens with selloffs. fundamentals disregarded in the heat of the moment and ultimately opportunities created by this downward volatility. >> do you think the u.s. market ends higher for the year higher than it is today? a little? >> we think we're going to see some pretty anemic returns. it could end higher, but it's not going to be dramatically higher from where we are today. keep in mind we have the backdrop of probably a fed that is going to keep rates lower for longer, but we have the headwind of a stronger dollar created by the brexit. >> jill, how about you? do you think the market will end the year positive, flat, negative?

>> we have been calling for mid to high single digit returns for equity markets. so we're basically flat for year-to-date. and, again, not a straight line up, but there is some upside opportunity. but it won't be all boats rising and it will be important to look fundamentals and companies that can pay and grow a dividend and return good value back to shareholders. >> jill, thank you. kr kr kristina cooper, thanks very much. go to powerlunch.cnbc.com to find another small capper jill likes right now. something interesting has happened. during the height of the brexit fears most stocks sold, but some of the food stocks did not. they went up, seen as a safe haven. today give you an idea of the reversal of the rally,tyson, one of the names down today, only about 30 of the s&p 500 that are in the red right now, tyson foods, clorox, some of the

safety things we saw amid brexit fears just 72 hours ago, they are up, they are down today. complete flip-flop in the markets. like most shares airlines are also up today. but that's cold comfort for investors in most of these stocks because this month has been a tough one for many of them. delta airlines for example it is down 17% this month, american airlines, united, continental and southwest also down. let's talk about this why they're down and maybe some opportunities with hunter kay joining us now. he is managing director of wolfe research and joins us by phone. hunter, traffic trends tend to be pretty good, economy hasn't fallen off a cliff, jet lines stable, why did the airlines get racked even before brexit? >> well, it's not about volume, it's about price. airline stocks three and a half years prior to this year rated on a concept of pricing power returning to the industry, not profits, not cash flow, not return on invested capital but

pricing. buying volume, try high low which is effectively helpful. hallmark for what bad industries do. >> let's talk about pricing for a second. probably like yourself, i mean, as our viewers know we travel a lot. i'm always on flights. we book them ourselves here, and i see the prices and i can tell you, tickets, maybe it's where we're going, tyler, they are expensive. >> they are expensive. to go to denver. >> $800 to go to denver or wherever it is. how has pricing trends been? are we looking at the wrong stuff? >> yeah, you're wrong. pricing is not -- >> i love it. >> down 10% from the peak. and traveling either at the peak times most people want to fly, you're flying the wrong hour or something you're not doing enough research. >> or you're flying the wrong route. >> maybe. >> if you're going on a highly competitive route between new york and l.a., there are lots of choices and flights. if you're trying to fly from new

york to norfolk, for example, you get slammed. >> well, you can connect. you can fly on saturday. >> but who wants to do that? it >> it's up to you. i'll tell you the same thing i tell investors, it is not representative of the overall market right now. that's why stocks are down. >> hold on. seema, i want to get you in in a second, but you said you're flying the wrong airline maybe. unfortunately, when you live in this area you pretty much have to fly united continental. you're stuck there. you like united continental. in fact, your target price is about 80% more than the current price for united. so of all the airlines you cover and you like a few of them, this has the greatest gap between the current price and your target, in other words maybe the greatest potential upside. why is united continental which has not exactly killed it in the customer service ratings by the way, why have they done so poorly? and why are you so optimistic about how they will do, hunter? >> well, there's a gradual turnaround story occurring there. united went from having the

worst board to having the best board industry within the last three months. and government takes a long time to trickle down into good management. we've seen already some changes, i believe more are coming. united by many measures has one of the best networks in the world monetized dramatically. better service, you know, there's a lot of potential upside, potentially close the gaps margins and close the gap on cash flow, but it's been a rough road for them. in fact, it's g rated. really over the last four or five years. a lot had to do with the federal government. >> hunter, following the brexit we've seen this precipitous fall in the uk currency, the pound, will that incentivize more u.s. consumers to take that trip to london or somewhere else across here? we are seeing the euro down as well. if so, which airlines are best positioned to capitalize on this trend? >> so i think the fed's not really thinking about it

properly. it will, yes, but unfortunately the stronger u.s. dollar has more of a negative impact than positive one. about half the point of sale from u.s. to eu and uk is here, i say here i'm in london right now, here in europe. if the euro or the pound is going to depreciate 10% against the dollar, the rates run the risk of demand. not enough to offset the headwind so all equal for international exposed airlines is weaker u.s. dollar better than a stronger u.s. dollar. it's really more of a question who's going to be negatively impacted the least. >> hunter keay of wolfe research. it was a pleasure. thank you very much. if you are just joining us, the markets rebounding. also following up on yesterday's gains. if the brexit has you worried about your 401(k), 529 or any

other series of numbers, don't worry, you are not alone. what you should be doing with your money next on "power lunch."

blue buffalo pet products nearing session highs. the pet products maker priced a secondary offering at 15 million shares at $22 per share. the stock trading well above that now up nearly 3% on the session. seema. >> thank you. pending home sales dropping more than expected in may down 3.7%, but there are some cities in the u.s. where real estate is surging and it has to do with tech. diana olick is live in washington with that story. hey, diana. >> hey. and surging in prices that's for sure. the common denominator in all of these cities is an inflow of tech workers and tech companies. take a look at home prices in seattle. portland, oregon, denver, boston, all seeing gains more

than twice the national average and seeing new record high home values. we're also seeing big gains in new tech centers like austin. now, seattle leads the gains, but portland isn't far behind. these cities are seeing droves of workers heading north because they were priced out of san francisco. san francisco meanwhile is showing price gains, but its market is starting to see some cracks. annual values up about 6% from a year ago, a new record for the second month in a row, but home sales were actually down 5% year over year, and that's the third month of annual sales drops in the past year. all that according to to core logic. now, the record $700,000 median home price tag in san francisco has many workers there moving out. one in four people in san fran now searching for homes on redfin are looking outside the area. no change from a year ago, but compare that to one in seven five years ago. what has changed in the past year is destinations. seattle is now less popular, but searches for homes like right here in washington, d.c.,

austin, denver and boston are way up. i got to say i love that for my personal home value. back to you guys. >> diana, thank you. the pacific northwest so hot, brian, seattle, as well as portland, my home city and seattle where i went to school, those prices continue to rise and diana points out has to do with tech companies setting up shop increasing operations there. >> that small online book seller has done fairly well. >> they've expanded. they've gone into beyond books. >> the company that makes the outlooks and windows kp excels, they've done pretty well. >> they're ceo is coming up. >> yes, that's right, but to your point portland has been really hot. >> it is. coming off a low base, but it is a trend many people are watching. >> how many people are able to bike from seattle to portland in skinny jeans and flannel shirt? >> isn't that amazing? >> shocking. we are two weeks from annual top states for business rankings where we rank all 50 states for business competitiveness and as

we get to set to unveil this year's highly competitive study, scott is in kansas city, missouri. >> hi, tyler. one of the things we look at in top states is business incentives. we give points to states based on the incentives they offer. i'm in kansas city, missouri. that's it behind me. there is kansas city, kansas. two states, one metro area, but those states offer subsidies for job creation, create a job, you get a tax break. what do businesses do? a missouri business will move employees over to kansas city, kansas, and claim a tax break. move them back, claim another tax break. even some local business leaders are now admitting it's all kind of stupid. >> nobody's saying we should dismantel these programs, but i think there's a growing need that we should try to agree to a strategy, a regional strategy that would use these tools to attract businesses to this

region to be more effective. >> by the numbers, according to the hall family foundation, which is the charitable arm of hallmark cards, $262 million in tax breaks spent by the two states. kansas at this point as of april was the net winner at 1700 jobs at a cost of $93,000 a piece. now, 17 companies including hallmark have written to the leaders of both states, to the governors and said we need to come up with a better strategy. the states are now starting to look at that more actively. some experts say finally the tide may be turning, change may be in the wind. >> i think we're seeing a shift now. people are beginning to understand that tax breaks aren't what matter for economic development. it's about workforce quality, it's about infrastructure, it's about quality of life. those are the more meaningful competitive edges. and you can't get those things if you gut your tax system with stupid giveaways.

>> those things are things that we also consider in our america's top states for business rankings. the countdown begins two weeks -- well, less than two weeks, about a week and a half from now with the big list revealed on the 12th, that's a week from yesterday -- or two weeks from yesterday? yeah, tuesday the 12th. and we'll be somewhere. we've got more about all this topstates.cnbc.com. and we always want to hear from you #topstates. >> scott cohn, thank you very much. folks, egg mcmuffin has a birthday today. the question, should you mcbuy it now. that is next.

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a dramatic turnaround for the market, a number of stocks hitting new highs in today's big rally. altria trading back to highs back to the philip morris spin-off in 2008. jnj, ete and waste management also hitting new highs. all right, that will do it for me. don't go anywhere. more "power lunch" ahead with tyler, brian and melissa lee straight ahead.

donald trump coming out strongly against free trade agreements such as nafta and the transpacific partnership on the campaign trail this week just yesterday listen to his statement on nafta and the world

trade organization in pennsylvania. >> 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. >> after the u.s. chamber of commerce published a series of posts on twitter with the goal of fact checking trump's speech, the republican presumptive nominee lashed out at them tweeting, quote, the u.s. chamber must fight harder for the american worker, china and many others are taking advantage of u.s. with our terrible trade pacts. why would the u.s. chamber be upset by the fact that i want to negotiate better and stronger trade deals or that i want penalties for cheaters? unquote. we're joined now by daniel, director of the center for trade policy studies at the kato institute. how do you react to what mr. trump says?

and obviously the buzz today is this runs counter to longstanding republican orthodoxy, for example, nafta largely negotiated though signed by president clinton largely negotiated by presidents reagan and bush. >> yeah. taking a pro-trade stand has been the policies of both parties' presidents ever since the 1930s, the middle of the 1930s presidents have come out in support of trade liberalization. it's not just republican. you know, donald trump is -- has tapped in to this sense of nationalism that has always lurked beneath the surface. during election years we look to blame people for our woes and he's blaming foreigners and he's tapped into that sentiment and getting away with it. if the policies were put into place he's suggesting we would be poorer as a result. >> pete, you can understand, can't you, how the guy in western pennsylvania or in buffalo or in clooefd land hears what mr. trump says and says,

boy, these trade deals haven't helped me, haven't helped me at all. >> sure. that resonates, but i got to say trade-related job loss, outsourcing, imports, accounts for a very, very small percentage of job loss in the united states. many, many more jobs have been lost to technology, to corporate malfeasance, changing consumer demands and to adopt a policy around taking care of some of the people who lose jobs it doesn't make a whole lot of sense to me. >> daniel, you're using facts and logic to make a good point. darn you. >> sorry. >> one of the reasons we're having this discussion is that this morning i was filling in for joe on "squawk box" and i talked about this and i didn't slam and tony and i got into a very polite by the way twitter debate ability this i wasn't slamming free trade. what i was say sg to tyler's point, there's a difference between being a politician who's trying to get elected and an elected politician trying to make change. and i tell you what, daniel, you

know this as well as i do, if you go to the horseshoe bar in warren, ohio, or somewhere? steubenville or wherever trump was and go to a steel mill and try to explain the benefits of free trade, you're probably going to come out of there with a black eye if not worse. the point is it resonates, right? >> right. >> the stuff i used to make is now being made somewhere else cheaper, now i lost my pay, doesn't mean free trade is bad but that message isn't an easy one to send. >> that's true. but, look, free trade expands the size of the pie. that's its role. it's the role of domestic policy to reduce the frictions in the labor market. people who've lost jobs, it's terrible to lose a job, no doubt. but it's the response -- it's their responsibility as well as their elected officials to create an environment to attract investment. why is investment going to places like south carolina and tennessee instead of michigan and wisconsin? you know, you have to look at

the business environments. you have to look at the labor environments. there are policies that attract investment. and workers looking for jobs should put the pressure on policymakers to do a better job of making them more portable as workers, and just to eliminate some of these frictions. >> you made an interesting point earlier again, damn you, based on fact, you said more jobs have been lost to modernization and technology than to these trade agreements. okay. that is good as far as it goes, but that's scant comfort to the guy who has lost his job because of it. it would be more compelling if you could make the argument that the total job growth has been greater because of those trade agreements. can you make that argument, or is that not factually true? >> i don't know that it's factually true. i mean, those who advocate for freer trade don't really make jobs claims. they say in the united states the quality of jobs on average is going to increase. and we've seen that. so if you look at your iphone,

and you look at all the apps on your iphone, those used to be jobs, manufacturing jobs for cameras and film and telephone operators. everything that's a product on there. but those jobs don't exist now. >> right. >> but -- >> and yet people say but they make our lives better. they might make our lives better, i can take a selfie, but guess what, i'm out of work in rochester because -- kodak is a special situation, but you get my point. >> but other industries arise as a result of that. we never had uber before and all these other applications. jobs in those industries. so people just need to recognize that jobs aren't guaranteed. >> we got to go. i was only talking about the political messaging, that's the point. i wasn't slamming free trade. i'm saying in ohio or pennsylvania, states need to win the presidency. and you say i'm going to put the steel workers back to work and coal workers back to work, that resonates. >> right. it's an easy deceptive message to make and trump is doing a pretty good job of it. >> melissa's microphone off the table with the pounding of the

table. >> apparently melissa too because she's not there. >> all right, daniel, thank you very much -- melissa is going to join us -- where is melissa? >> i'm over here. we begin with second hour of "power lunch" with a check on the markets because we are seeing a rally for the second straight day here. look at the dow jones industrial average. right now we are higher by 1.4%, 236 points, recovered more than half the post brexit losses friday and monday. as for nasdaq seeing that higher by 1.75%, 4773 is the level. we're just a couple points off session highs europe at 1.5%. the russell 2000 higher by almost 2%. let's get to bob pisani on the floor of the new york stock exchange. bob. >> hello, melissa. what is it right now? geez, 8 to 1 advancing to declining stocks, 50-point movement in the s&p the last couple days, we are just off the highs. important thing is volume on the heavy side, volatility down to

the pre-brexit levels. and almost the whole market is up about 1%. take a look here energies leading the way, retail stocks leading the way, health care and banks are also doing a bit better. even industrials are right across the board here. this is a fairly broad rally as you can see. new highs are expanding nearly 300 at the new york stock exchange, including some big cap names. you know about johnson & johnson and general mills, a lot of the consumer names but now chevron and exxon at 52-week highs. oil continues to move toward $50. and talk about the hunt for yield, interest rate sensitive stocks are doing really well. so verizon and at&t are at new highs. and the reits are at new highs and most of those old boring, yes, you know, eutilities like southern and duke also at 52-week highs as well. that hunt for yield extends into etfs, exchange traded funds. so high yield muni etfs new high. vanguard short-term corporate bonds at a new high.

vanguard intermediate term corporate bond new high. and even vanguard long-term corporate bond new high. don't be concerned by the fact that they're down on an intraday basis at a new high. melissa, you sense a trend here. corporate bonds doing very well right now. back to you. >> absolutely. bob pisani, our thanks to you. the fed is releasing a new set of results today from stress tests that measure the resiliency of banks during a potential crisis. the results may prove to be good news especially after a week of turbulence following britain's vote to leave the eu. look at the exxon financials etf trying to bounce back from losses post brexit still down more than 2% in a week. let's bring in jason goldberg over at barclays. he's optimistic about u.s. banks. and market strategist at miller more cautious about banks. matt, i'll kick it off with you. you have more of a technical take on it. what are you seeing at this point? >> well, we're seeing -- first of all, you know, we have to see people -- investors in the banking area, you know, they've been burned a little bit this year. they loaded up back in december in expectations it would be a

great year for the group with higher interest rates and then they got burned. to a lesser degree we've seen it again in may when they got back into thinking rates were going to go up again. but since then of course come down if we take a look at that xl effort or even the bank etf it was already starting to roll over a little bit, broke down below 200-day moving average, tried to rally back up, got stuck right at the 200-day mo moving average making a lower high. and of course after the brexit vote it rolled back over hard and made a lower low. and it's broken below that kind of trend channel upward sloping trend channel it's been in since february. so that's a concern. and then of course we also have on a technical side in europe, you know, we know that the european banks are -- i'm sorry, the u.s. banks are much better capitalized than the european banks. so we're not looking at a repeat of 2008. >> right. >> however, they do have derivatives positions there and the european banks, you know, have not only made a lower low, they've broken below february

low. so that's a big problem there. if you look at the european etf that's a concern as well. when you combine that with the flattening yield curve, you've got some reasons to hold off a bit at these levels. >> i want to get the fundamental take from jason. jason, i'm going to pause at this question to you, and that is prior to brexit banks were not doing well, even anticipation of the ccar results tonight, and one could argue that post brexit the unknowns are even larger out there when it comes to global growth expectations as well as what's going on with the yield curve. i mean, the spread between 2s and 10s right now at a nine-year low. so why would you be positive here? >> yeah, clearly interest rate environment is challenging. i've been covering the banking industry on the sell side for 21 years. margins gone down in 19 of those. we think it's not necessarily new, on the positive front look at valuations now at 40% discount on price-to-book ratios, 20% discount on p/es,

running above historical averages, credit qualities fairly benign moderate stresses in the energy industry though you've seen oil bounce back from the lows earlier this year. and to your point earlier with the stress test results tonight we expect vast majority of banks to increase dividends and buy back a fair amount of stock over the next 12 months. we think industry can return excess of $80 billion back to shareholders chrks is quite substantial and provide some support to stocks. >> it does provide cushion if banks could increase dividend yields. even if yield goes up to a j.p. morgan or wells fargo level, about 3%, that doesn't protect you in the terms of the loss of stock if that's down double digit percentages, right, jason? you're saying you're above consensus terms capital payout expectation for a name like bank of america, so let's just take that for example. you're saying a buy bank of america, just hold your nose, buy and hold it for a very long time? >> yeah, i mean, valuations are it's a challenging rate backdrop

for a while now, and we think to the extent that the other areas continue to grow, loan growth should grow, credit quality should stay benign and we think you'll get a fairly sizable buyback as well as dividend decrease to provide some support. >> going to leave it there. ccar out of course tonight. tyler. melissa, while the markets are rebounding if the british vote has you worried about your 401(k), you are not alone, not at all. our next guest says don't worry, don't panic, chill. the founder of the financial advice blog ask the money coach. so let's ask the money coach, linnet, what should i do, we're coming to the end of the quarter. >> right. >> my guess is people in their 401(k)s despite the vote in england are going to be up on the quarter. >> i think they will be. obviously we've been seeing a rally the last two days, but think about what the natural inclination is for somebody who's got money invested,

putting away for retirement, who knows could be five, ten, 20 years plus away, but when you see these major several hundred point declines, a lot of people do want to panic or sell. >> get me out of here. >> that's precisely the wrong thing to do. you really do want to stay put. i mean, the data is clear. we've seen this time and time again that when we have these major down swings and these downturns in the market, and we're going to continue to see volatility in the market, those who bail out trying to sort of time the market, they think they're lacking in profits they're really selling into a downturn. they always do much worse than people who stay invested. >> sell into the downturn, and they may get it right. >> that's rare. >> it's rare, but then they probably won't get the other side of the trade, right, getting back in. >> that's right. >> the beauty of the 401(k) from where i sit apart from the company match, which is a wonderful sort of subsidy there is the idea that it forces you to dollar-cost average. >> it does. >> so when the markets go down, as they did over these past couple of days, you're actually

buying more shares. >> you're buying shares at a lower price point. not to mention the tax benefits for people who are sacking away money for their golden years. so it's more than just, okay, i'm dollar cost averaging, i'm buying shares at a lower price point, you're also getting the tax advantage of that. and as you mention the potential for a company match. and some companies might do, you know, sort of a dollar for dollar match. >> sounds like you agree with jack who says in times like this don't just do something stupid, stand there, right? >> exactly. just stay put. it's really hard to do i mean because human nature being what it is, fear, panic grips you and the inclination is to do something. but that's where it also pays to have an advisor who can look it over. >> your clients, do you find equity averse? do they have too much or -- obviously depends on age and risk tolerance. >> you know i'm a money expert for aarp, so when you look at different demographic sets, of course the older folks, the

50-plus, 60-plus crowd generally less exposure to stocks. >> as they should be. >> rightfully so. exactly. in general know most of the people i'm coaching and helping with finances, they are okay being in the stock market. they like being in the stock market and they want that growth factor. and i'm telling people as long as you have a well diversified portfolio, you don't need to panic. >> did you get more calls from your clients over the past week? >> actually, yes, i got people on social media asking me, people e-mailing me, clients i've coached to say essentially what should i do, should we sell. and my advice was absolutely not. >> all right. >> that's the short answer. it's actually a good thing too for people who are in the mortgage market, or thinking about it because -- >> rates have come down. >> that's right. and people who are thinking about purchasing or even doing a refi like i'm about to do on my own home and even buying my daughter a condo, it's a great time because the rates have come down. and we're going to continue with this volatility, people are going to flock to treasuries. that's safety there. and those prices being pushed higher means yields are going to drop.

lower mortgage rates. >> good as always to see you. >> thank you. same here. free trade and immigration, they are hot topics in the u.s. and around the globe. we're going to talk to the founder of a huge mexican conglomerate and get his take on those issues. plus, a "power lunch" exclusive with microsoft ceo satya nadella. that and more ahead on "power lunch."

trade, politics and the relationship between the united states and mexico, they're all very big topics. and they're all big topics being addressed at this year's aspen ideas festival. so we forced kelly evans to go to the aspen ideas festival and joins us now with one of mexi mexico's richest and important businessmen ricardo salinas. >> it's a tough assignment, but someone has to do it. ricardo, thank you for joining me out here. >> thank you. >> many don't know right after britain voted to exit the euro -- what do you think the long-term effects of this decision are going to be? >> well, it was a big hit for mexico, but mexico has a very sound fiscal and monetary policy. so just a case of trying to cover your losses somewhere by shorting the peso, it will be short. >> what about -- >> i think mexico has a competitive position in trade balance so we're not so worried

about that. >> do you think the bigger risk is donald trump presidency here? >> well, you know, protectionism is on the rise. and it's really unfortunate because leaders ought to know that protectionism is an idea that's been discredited for ages. i mean, free trade is about freedom, about choice. and protectionism just is good for special interests who are very loud and vocal. we should not be carried away by that. >> what do you think in terms of mexico is at stake? i mean, in campaigning trump and not just trump, there have been other people who feel disillusioned about where nafta, for example, what results those have delivered for the u.s. economy over the last 20 years. if there's enough people who feel like they've lost, quote/unquote, is there a risk that even a key agreement like that could be reopened, rewritten or thrown out? >> well, the thing about nafta is the numbers are there, but people just won't listen. you know, trade is something that's beneficial for both parties. say in mexico we have great avocados and happens to be americans like guacamole, what's

wrong with buying avocados? then come over here and buy some software from u.s. software industry. that's what trade is about. it's about choice. now, when barriers to trade come in, that's barriers to choice. and people are less well off. that's the message because one industry gets hit, let's say the steel industry, everybody complains and talk about lost jobs but nobody is looking at all the benefits of the low prices of steel for the rest of the economy, hotel construction, lower rents, whatever. >> what about britain joining nafta? it's been thrown out there. >> well, you know, mexico has had free trade agreements with many countries. i think we're the country that has the most trade agreements. and, you know, somebody was mentioning about this u.s. company that took its plant to mexico. and that was put as an example of how bad this is for the u.s. the reason they moved to mexico is because they wanted to export their stuff to the uk, which we have a trade agreement.

>> huh. so what about mexican political risk for the next presidency? what's on your mind as you start to look towards that event? >> well, the one thing that unfortunately my country's not doing well is the justice system. so it's been completely overwhelmed by this war on drugs, which is a failed war and we should end it immediately. we should just legalize the whole thing and get on with it. >> the whole thing? cocaine, heroin? >> the whole thing. we should treat this as a health problem, not as a criminal problem. i mean, if anybody at home had an addict, would you put him in jail for that? no, send them to treatment. so, anyway, the war on drugs has overwhelmed our justice system. and now as mexicans we don't have a justice system. for normal crimes, you know. and that is a big issue for our country and for our president and for whoever wins in 2018. >> this morning on the panel we spoke with larry fink of black rock who when i asked the group for their kind of best investment idea, he actually

brought up mexican real estate. he invoked the fact that the peso is about 19 to the dollar, that it was weakening considerably. you know, in light of some of the political risks we've discussed, what do you think would happen to people who kind of make that long-term bet on real estate or other assets in mexico? >> well, obviously it's a good bet. and we have a division that does that for ourselves. i would say this, i mean, compared to new york it's dirt cheap. right? and certainly there's many ways to invest in that. but i would also open other avenues. for example, there's lots of miners in mexico, gold and silver miners, that are traded on exchanges. and these miners are going to have very low costs of production. so their margins are going to improve. they sell in dollars. and the precious metal's going up and costs are in pesos, so it's a good place to be. >> ricardo salinas of course took that world golf championships to mexico city. >> yeah. >> from trump's doral resort, thank you for joining us here. >> see you in mexico. >> coming up, we'll also be

talking with the ceo of microsoft's satya nadella along with walter isaacson who's pretty much running the show out here. stay tuned, much more straight ahead. >> you were born november 4, 1974 -- another strong rally right now, dow up about 250 points. and we will be right back.

mcdonald's egg mcmuffin turns 45 this year, in honor we're talking about the stock. the stock is up more than 20% over the past year which seems to be due in part to the company's introduction of all-day breakfast. but is the strength of mcmuffin enough desirable to buy. guys, good to have you with us. peter, i'm going to kick it off with you because it has been in terms a roaring success in terms of buying it any time of the day, come october when they first introduced this special or this permanent menu change, they're going to face tough comparisons. >> correct. i mean, any time you have success, you're going to face that the next year, we expect that. but, look, the brexit --

breakfast program was limited number of items, wasn't the entire lineup. i think they can add more to it, they can change some things out, they can bring in some limited time offers to this. i think they can create more buzz around breakfast all day and help them lap that come that tough compare in the fourth quarter. so, yes, it's going to be a tough compare, but just because it's a tough compare i don't think that's a reason to sell the stock. >> rj, you know some of the bulls say exactly what peter said. but also say that there are digital efforts that could be the next sort of leg of this turnaround story, that people are discounting. i mean, for instance, if you take a look what happened with dominos pizza when they introduced technology, they got huge margin gains, huge efficiencies from that. are you discounting that aspect of the story too much? >> no, i think we're baking that into our estimates. and clearly the company is in a better place than it was a year ago. the product introductions that peter mentioned, the digital aspects that were mentioned there, i just think it's going to be tough comparisons are

going to be too much for the market to overlook. i mean, i just don't think there's anything the company can bring out to kind of replace the success of all-day breakfast even if you look at that digital initiative. that's going to take time to roll out. i don't think there's anything on the product side either. i think that will be difficult for the market to swallow especially when you get the yum spin-off taking place at the same time, i think the market will flock to that end instead. >> peter, should we be concerned about the world post-brexit at mcdonald's? credit suisse estimates europe is 37% of global revenues. what are you modeling at this point? >> yeah, it's definitely not a good sign that we're getting this brexit. there's a lot of uncertainty. currency, you know, the dollar strengthen a little bit so that could be a little bit of a drag. nobody really knows how this is going to play out for the overall sales and demand. my guess is this could be a slight negative if anything at all, but my biggest concern really would be on the supply chain. we don't know what's going to happen with trade across

borders, happening commodities in and out, does this affect their supply chain at all? we don't know, i don't think the company knows quite yet. i think it's way too early. >> rj, what's the biggest unknown for you when you take a look at mcdonald's post brexit? >> yeah, i think you hit the nail on the head. i think it's more on the demand side what happens if we do go into a recession in the uk and perhaps broader europe and what that might do to demand. i think that is the biggest question. to your point our estimates are about the same 20 to 30% coming from europe at this point, obviously that creates a potential headwind with difficult comps and everything going on and potential slowing demand in the u.s., i think factors would be on the sideline. >> great to have you with us, thank you, peter and rj. up next, oil is rising today, our brexit fears over. the markets are once again paying attention to supply and demand. and another commodity that might be a hot trade this summer, that will be wheat. we'll discuss that coming up on "power lunch." ♪

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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. 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. hi everyone. i'm sue herera. and here is your cnbc news update this hour. president obama and hillary clinton have now rescheduled their first joint campaign

appearance of the 2016 presidential campaign. the pair will hold an event on july 5th in charlotte, north carolina. an earlier event in green bay was postponed following the nightclub attack in orlando. the italian navy says it has recovered the migrant ship that sank off the coast of sicily last year with an estimated 800 people onboard. it said it raised the boat to the surface from a depth of about 1,200 feet. only 28 people survived. the miss teen usa pageant is dropping the swimsuit portion of the competition. the miss universe organization says it will be replaced by an athletic wear competition. the 2016 pageant will be held in las vegas on july 30th. mark your calendars. and new research -- this is the story of the day, says butter is not likely to harm your heart. a university study found eating one to three tablespoons of butter a day did not significantly increase the risk of heart disease. butter eaters even had a slightly decreased risk of

developing diabetes. go figure. next it will be bacon is good for you. that's the cnbc news update this hour. melissa, back to you. >> that seems like a lot of butter for one day. >> yes, it does. >> sue, thank you. >> you're welcome. oil closing for the day. jackie deangelis has the final trade at the nymex. >> good afternoon. melissa. i thought bacon is good for you. you're right, i do have the final trades. we saw about a $2 pop in oil prices today closing just under $50 a barrel once again. what's interesting here was the inventory number definitely added some support today. we did get a drawdown of more than 4 million barrels, but also concerns of supply disruptions back in the picture again. worried about venezuela, worried about a potential strike in norway as well. add to that that we're heading into what's expected to be the most traveled fourth of july on record, that's because gas prices are 48 cents cheaper than they were last year, and you get that demand boost that we typically see in the summer. finally, post brexit as everything seems to be calming

down a little bit you've got traders that are saying certainly with these other factors in play they want to buy the dip and get in on the oil trade. it may not be a long term trade, but they want to be in it. finally, today the dollar backing off a little bit as well. so all of these elements sending us back up to that magical number. back to you. jackie, thank you very much. aside from jackie and oil you know we mostly focus on stocks here at cnbc. but there are a lot of ways to make money. and one way is to make some dough may be with wheat. it has been a terrible investment the past few years. the price has dropped by half since 2012. let's bring in scott of tgm investments and senior meteorologist dan leonard at the weather company. wheat only has been good since 2002 on the short side. do you believe it is finally bottomed and a buy, buy, buy, as jim might say. >> well, i think we'll need a little help from the dollar and we didn't get that as of late with what happened overseas obviously. so as an older trader would tell you with wheat you know how much

you can lose, it can only go to zero, we're not that high. we're seeing six or seven-year lows and it's about time for commodities as a whole to turn around, like i said we'll need help from the dollar, demand from help overseas which doesn't look like it's coming any time soon. >> i'm not good will hunting anything, scott, you're right, the price is not that high. i know if i bought today and goes to zero, it's 100% loss. >> well, everything is 100% loss if it goes to zero. we're at lows that i think we can slowly but surely see a turnaround here because i think all commodities are going to turn around. however, we have a crop report tomorrow that will give us acreage and you could see some generally around there with what we've got, soybeans, wheat and corn. they kind of don't all trade together, but there's a spread that trades off of them that could be a big factor as well. dollar, weather and then what we get tomorrow from the government. >> last question for those of us who are not randolph duke, how do you play wheat? those who like what you say and do their own research and agree,

how do they do it? >> i think they got to do it in the options market. i know that's probably not where mom and pop want to go, but you can get leverage at the cme group. at the end of the day buy safer and buy options. until we see that turnaround it could be an expensive like you said could still see dollar in action but not going to go as badly as future. call options, call spreads, medium data two or three months out the way to play it. >> all right. see beaks on the train to barrington, thanks very much. dan leonard, let's talk about the weather. what weather is best for wheat? and are we going to get that weather? >> yeah, well, as scott mentioned we're at near record lows for this contract. and part of the reason is because we've had such great weather across the growing region, especially western kansas, eastern colorado, not only there but around the world it's been really wet winter and that's really what they needed in those areas. and it's been actually a pretty good harvesting season so far. they need dry weather to start harvesting this crop. and they've had it. starting to get record yields out of those areas in western

kansas, which is not a good thing if you're looking for high wheat prices. but what we do have to look forward to over the next few days is there are indications there will be a big thunderstorm complex somewhere in that area, eastern colorado, kansas, that might buoy up wheat prices at least temporarily because it will delay the harvest, but i think long-term once ridging builds in there, once we get warm dry weather return later next week, you'll start to see those prices come back down. >> dan leonard of the weather company saying the weather has been good but maybe too good for wheat because we might have too much of the stuff. dan, thank you very much. appreciate that. all right, coming up, one stock based in america's farm country appropriate that an analyst says you got to buy. plus, this is a biggie, an exclusive with the ceo of microsoft satya nadella, is he feeling the fallout from europe? and tomorrow another "power lunch" exclusive, this time with black swan author nassim taleb. see what he's got to say about

brexit and everything else. back in two minutes.

time for street talk, analyst recommendations of the stocks you need to know about. number one, health care information company, morgan stanley upgrading it to

overweight from equal weight. target bump from 86 to 84. they met with management over in asia. that gave them increased confidence in the stability of key platform and the company's long-term pipeline raising the forecast the next two years they'll see some cost synergies. $86 target on cnc is about 25% upside. >> wow, nice pop today. second stock, netflix, pac crest says buy in concerns of u.s. subscriber are overdone. those are analyst words, relative to the company's global growth potential. shares pricing in a miss on domestic subscribers and creates attractive opportunity to buy business in the early stages of unprecedented expansion. also words of the analyst. netflix down it was close to february lows just yesterday. >> amazon prime, youtube, a lot of competition out there. stock number three, suntrust, target goes from 20 to 18, three reasons for the upgrade, one, higher projected earnings

estimates -- three, the valuation discount to its peers $20 target about 25% upside. up about 10% this quarter. >> fourth stock, tjx companies, we actually spoke to the analyst on halftime report bmo saying brexit may be a buying opportunity in the stock. the analyst just met with the cfo came away comfortable with his above consensus estimates outperform rating. there is very little immediate impact from brexit outside of currency volatility and tjx's uk businesses of note about 8% to 10% of sales, but brexit came late in the quarter decline in the pound that's an incremental half a percent sales impact. and you know what, if there's a uk downturn, people want to go downstream. they want bargains, they want values. >> only thing that be a bargain is the stock, the stock made millionaires. it was a $9 stock in 2009, now $76 despite the fact tjx owns home goods which is the store tyler mathisen hates more than any other store. >> not true. not true. >> he hates -- what do you hate

more, home goods or beats? >> beats. >> me too. >> beet the vegetable, not beats by dre. finally -- different spelling. today's under the radar name, casey's, iowa-based convenience store chain, goldman sachs upgrading it from a buy to neutral and adding to conviction buy. say casey's is a purely domestic and stable compounder poised to benefit from higher prices and lower food costs also notes it is favorably positioned, he said, as a consolidator in a fragmented store industry. i guess that's the gas station based retail store. target goes to 1.45 from 1.43, 17% upside seen by goldman sachs and little old casey's general stores. >> you know what you do when you have gas savings? you go by cigarettes, a slim jim and cup of coffee. >> biggest competitor is the kum & go in iowa. interesting. dow recovering more than half of the post brexit losses, can that bounceback continue? plus an exclusive with the

microsoft ceo satya nadella, is he feeling the fallout from the turmoil in europe? that's coming up.

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the big-time "power lunch" exclusive. kelly. >> all right, brian, thank you. i'm here out in aspen joined by walter isasaaisaacson of the as institute and satya nadella, the ceo of microsoft. satya, you've been a little busy lately. couple projects you're working on, we understand. and that didn't prevent you from weighing in on artificial intelligence just yesterday too. walk us through a little bit of what that's all about. >> you know, as someone working at microsoft and creating a.i. and being at the forefront of machine intelligence, the thing that i've been thinking a lot about is what is that design principles and sensibility that should guide us as we build machine intelligence? and taking a stance on it. as much for ourselves, quite frankly, so that we are principled in our approach to creating a.i. and that's what is the mo motivation behind that piece.

i definitely fall in the camp of thinking of a.i. as augmenting human capability and capacity. and then distilling a set of principles. algorithmically how can a.i. be programmed to care for humans, not bias built in. how can it be trustworthy, how can it be transparent? those are the principles of a.i. design that are pretty core or at least how i want us to approach as designers of a.i. >> why do you think it's so important, walter? >> well, you know, it reminded me the rule of robots you've done some of those rules throughout the ideas festival this weekend, even some of the health things we did, it was a notion a.i. would replace doctors, that artificial intelligence machine learning would destroy all of our jobs. and i'm reading satya's piece and i think you did it, and i believe like you do, no, it augments. it is symbiotic.

it helps take human creativity to the next level. but i'd ask you what is it humans bring to the party most of all? empathy, creativity? >> in fact, as i wrote those principles that we as designers of a.i. need to infuse into the. a.i. we create, i went onto write how do we amplify the human values and human powers of empathy, creativity, curiosity? these are the things that are going to be in scarce supply. i think machines are going to get more intelligent, but before we talk about artificial general intelligence, which let's -- i don't want to even get into the speculation of which decade or which century it will be, the reality is computer intelligence or artificial intelligence will be intelligent in narrow ways, and humans have a lot to contribute in conjunction with these machines because of the curiosity, empathy -- >> what are the coolest things y'all are doing at microsoft now in the machine realm? >> it starts for me with

cortana. every day i wake up where cortana is more intelligent. one of the things i talk about is with all the abundance we have of computers and computing, what is scarce is human attention and time. and so having a personal digital assistant that really helps me regain my time, empowers me to get every moment out of my life is perhaps the best a.i. capability i want today. >> so can i ask you, the british vote to leave the european union last thursday, you wake up, what do you do? what have you done since? what will you as microsoft do next? >> look, i think the we are global company 55% of our revenues are global, so what happens in britain and what happens in the globe and the world matters a lot to us in our core business. it's not the one incident here. i think britain is a huge market

for -- united kingdom is huge market for us, 78% of our revenue, the real thing is how do we bring back certainty that global companies and global economies can drive in a connected world. >> so it doesn't mean necessarily you're going to be moving people out of the uk. is it going to change, you know, investment decisions about whether it's going to be the uk or europe or here in the u.s., those kinds of things? >> when it comes to the uk we've been there for 30 years and we're going to continue to invest because it's a huge market in a place which is pretty core to us. but at the same time, i think, what i am seeking at least from all of us collectively as a global community is to make a better case for why a connected globe, a globe that trades with each other, creates more prosperity locally because i think that's super important not just for business but it's important for us as a society. >> that's been a huge theme, wa walter, out here, how do you make that case? can you still make that case?

>> whether it's a shipyard worker or the maytag former plant worker in newton, iowa, feels that, well, trade may benefit a certain elite in this world. and certainly immigration. maybe something that some people really like. but my job but my job is gone and maybe my, you know, flat screen computer, you know, the new windows is a little bit cheaper. but -- and i can buy it on sunday, but on monday i can't get on the bus and go to work and secure a job. i don't think that's a natural or an inevitable outgrowth of either immigration or trade or technology, it's an outgrowth of policies, just like when we're talking about artificial intelligence, we're in charge of deciding how it's going to work. well, we're in charge of the policies. and the policies have left a lot of people behind. >> i want to ask you, too, before we have to let you go, about the linkedin deal. there's data, there's interconnectivity in those kind of things. is there going to be more to come in your pipeline of deals,

in the linkedin vein? are there going to be more deals in a different kind of vein? or you focused on developing internally now? >> our core is always going to be our organic innovation that we create. everything comes back to our sense of purpose and mission. our mission is to achieve more through digital platforms and tools and in that context, linkedin was an amazing deal for us to do, because of their mission. their mission to connect the world's professionals, to make them more successful and productive. you couldn't have found two more compatible missions, because every day when you think about microsoft, it's about the tools that professionals use to create, to make, and now having the professional network with them, as they create and make, i think, can be game changing. and that's really what led us to linkedin and we will stay very, very focused on things we uniquely can contribute to this world. >> well, thank you for joining us here out in aspen to talk about it.

walter isaacson of aspen institute. i have to let you guys and talk much more about these topics. >> fun co-hosting with you. >> thank you guys very much. back over to you guys. >> all right, kelly walter, appreciate that. just a quick note here. microsoft stock up $1.13, or just over 2%. well, as the market rises for a second straight session, how much more spring may be left in the market's post-brexit step? i didn't even practice that. let's ask the trading nation, max wolffe, erin gibbs with s&p global. erin, i'll begin with you. it's hard to say the market, unless you buy the s&p 500, because the market is a lot of different companies with a lot of different headwinds and tailwinds and issues, but if you look at the macro picture, how does it look? >> so, for the long-term, i say, absolutely, look, u.s. equities are still the best house on a bad street in this world of global deflation, low interest rates, it's still going to be one of the better places to put your money. in the short-term, i think there's still a little more room to go.

this s&p 500 is trading about 2%, just below its high, its peak it made back in june. and when you look at valuations, the s&p 500 has been trading in this really tight range for the past 18 months. so just below 18 times forward earnings, to just above 15 times. and right now, we could have another 6%, just on pure valuation expansion, in the s&p 500, if we see more of a risk taker, that risk on environment. so short-term, there's a little room to grow. longer term, still one of the safer places for your money. >> okay, not the biggest endorsement, but a decent one. >> decent. >> max wolff, would you agree or disagree. >> i think the u.s. equity markets is the best place to be, because it's the cleanest shirt in an outright grotesque camper. no one else knows where to go or what this stuff means.

here's what we do know. it's going to be harder to make a profit, upward pressure on wages, some upward pressure on regulation, and we're going to be in a less high-growth environment for the developing world, and we're going to have more political uncertainty. all of that is not so great, not so great, and not so great. and so, given we've had a long run to the upside here, people should be real careful. that being said, getting negative interest rates, being on the bottom market with all the headwinds there or running back to the developing world doesn't look like a good idea. so money's stuck here, because it doesn't know where else to go. we don't love the dynamic, but we don't see the bottom dropping out in u.s. equities right away. >> that was the least ringing endorsement i've ever heard. >> and the best use of laundry metaphors ever. >> grotesque hamper. max wolff, yee of the hamper pun, thank you. erin gibbs, not quite as in the hamper as max was, thank you as well. for more trading nation, folks, you can head to our website, tradingnation.cnbc.com.

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stocks are near session highs. the dow, as you see there, up about 1.5%. the nasdaq also higher by 1.8%. and the is s&p splitting the difference. is the market giving us an all-clear on market's vote? >> i think the reaction on friday and monday tends to be now, when you look back at it, an overreaction, almost a flash in the pan. i think the market's much more calm about that, especially since a lot of the central bankers have come out. the ecb, the bank of england, the fed have all come out and said not to panic, everybody's here. everybody's going to help make it all -- everybody play nice in the sandbox. i think the market is now taking it all in stride. we've got the last two days of the quarter. we've got a lot of window dressings coming on. stocks are really dislocated. therefore they're take advantage of that. i think the next hurdle will be

in two weeks when we start with the earnings season. >> i couldn't agree with you more on that. i think that very quickly the british vote is going to recede. obviously, there are going to be negotiations. there are going to be some bumps along the way. there's going to be a lot of -- >> and we've got earnings and then the political conventions and that's where the focus is going to pivot. >> earnings are expected to be weak. if they're weaker as a result of how people are going to interpret brexit and the stronger dollar. what's that going to mean for earnings going forward. if that gets any weaker, look for the market to come under some pressure again. but i don't think that the market is going to completely fall out of bed. but i wouldn't be surprised to see it kind of back off and churn a little bit. listen, this move back up from the move down has been just as swift up as it was down. and so expect a little bit more of this over the next couple of days, and then prepare yourself for earnings and be prepared for just a little bit more volatility as we move through that season. >> kenny, thanks very much. always great to see you. >> you as well.

>> all right. fantastic. >> and we should note, the s&p 500 about a point off of the session highs. as we enter this final hour of trading, it looks like there's some lift, particularly from the financials. >> only 30 stocks at a 500 or down. my path tells me that's not a lot. >> all right. thanks for watching "power lunch". >> "closing bell" starts right now. hi, everybody. welcome to the "closing bell." this is not the new york stock exchange. these are the trees of aspen behind me. i'm at the aspen ideas festival. >> i'm bill griffeth. that is the new york stock exchange behind me. we're just about to hear from president obama. we'll take you live to ottawa. they'll begin a news conference from the north american leaders' summit, canadian prime minister trudeau, mexican president pena nieto will be speaking there as well. we'lke