with dom chu and the steel horse he rides. dom? >> good, bad and the ugly. i feel like watching fistful of dollars and hang them high and also looking at dog in the photo as well but let's talk about the good, the bad and the ugly right now because in today's trade we've seen a little bit of all of that stuff playing out. on the good side of things, we've got transportation stocks. haven't been doing great as of late, but they are moving higher and as of just a few minutes ago 19 out of 20 members of the dow transport index all in the green, perhaps a good sign for those of you looking for positive signs and on the bad side of things, consumer staples, bad on a relative basis because they are still positive on the year, they have been and some. stocks have been making record highs, some of the consumer product names so consumer staples, bad in today's trade. the worst performing sector so far in the s&p 500 and on the ugly side of things we've been talking about it for quite some time, about the consumer spending picture. yes, some signs that retail sales are better than expected and retail stock earnings have opinion disappointing overall and even today with home depot saying that they have done an earnings beat and they have also raised their guidance the stock is still not performing the way that you would like. home depot near its all time highs and retail stocks are going to be a big focus and, of course, as we talk about retail, guys, remember, there are those out there still looking for some of that at least opportunity in some of these beaten down names. go to powerlunch.cnbc.com and some of the platinum portfolio players at cnbc pro, subscribers there can see what, stock pick some of those portfolio managers are looking to make in the down retail environment. back over to you. >> thanks. let's add in one more factor to the good, the bad and ugly and that's great data we got today. david sieberg joins us and jon najarian, good to have you both with us. let's go through the good, booed and ugly trade and dr. j kicking it off with the transports, transports rising in the airline sector, air fares rising after delta announced capacity cuts in the second half of the year. finally, finally, do airlines have the discipline here? >> they have the discipline. however, even with that slump in crude oil at the beginning of the year, these can't get out of their own way, melissa, they had to reiterate buys across the boards, a number of brokers to get them moving to the upside because as you know they are down probably between 12% and 22%. american airlines being the weakest of the majors right here, but united and delta not exactually setting it on fire either, so, yeah, there's some reason to pause as to $47 crude and holding at that level, 47 just shy of 48. how these guys are going to do going forward and then you throw in the tsa lines. >> right. >> and that's another bad things. >> don't like airlines right here and david i go to you. action on the transports is actually encouraging for those dow theorists >> if you look at last couple of weeks, last two weeks they goatth got smoked, melissa and i look on the move higher i would not be a buyer. wouldn't chase this at all. maybe a little more room for the upside, but i think we could actually sell off, and they can come back below 130. i'd be a seller of transports a at these levels. >> the bad and consumer staples. throw in there, dr. j, utilities, because it's the yielding stocks, the high-yielding stocks, safety plays the best performing sectors year to date that are the weakest in today's session. why do you think that is? >> like you said, some. strong economic numbers, although you did see the atlanta fed sort of counter that, melissa, by taking some of their numbers down by as much as 10% for gdp for the second quarter. that was the atlanta fed, that is, but williams is out there, non-voter saying that he thinks, you know, that everything is on the table, every meeting is live. we've got the fed minutes tomorrow, and i think because of those statements about everything is live, i think that's why you're seeing some of those high-healeding plays that you spoke of in the utility space a little weaker today. >> seaberg? >> no, i couldn't agree more. i think the narrative, it's about a shift in the narrative, right? nobody is expecting a rate move in juppe. however, the data is improving, so given it's such a one-sided sort of expectation, melissa, the risk is only for a more hawkish fed so in general you're looking at a tape right now that could be teetering on the brink of a little bit of a pullback or at least a pause for the near term. >> let's go to the ugly trades. that would be retail obviously. home depot had a beat and a raise and yet it's selling off in today's session pand you add to that the gap, nordstrom, limited brands. these are multi-year lows, dr. ja. any worth a flyer here? >> well, you guys already spoke of tom of the hour with dom about record highs for home depot, and it was right up against that record high. i think shop. these transport costs when you look at fedex-ups and old dominion or old dfl, those are showing those stocks are moving up by about 7%. i think many of these retailer were pricing in probably cheaper transportation. goods to their stores and instead -- >> it's all -- hold on. it's transportation costs, it's not because the consumer doesn't want to buy a sweater or a wallet? i thought that's what it was. >> it's both. >> okay. >> yeah, it's both. i think it's both because i think a lot of these folks had probably priced in lower gas prices. that's going to be not only good for consumers but good for us moving all these goods across the country. whether we rely on odfl or wal-mart or our own fleet and now that's vipized. $47 crude verseus, you know, $30 crude in february, that i think has taken a lot of that off the table. >> right. >> and incremently. i think that's part of what's behind it. >> guys, got to leave it there. >> thank you david seaberg and jon najarian. >> mallinckrodt has made great strides into transforming itself into a well diversified special if i pharmaceutical comthat's meeting or exceeding expectations. you may have noticed mr. leff brought with him a check made out to the company for $1 is million. he says he'll give to charity if the company does a test on that drug. he has long questioned the efficacy of the drug which has been approved by the fda for usage for a number of different conditions, but it's really remained the point of contention for mr. leff and certainly the pricing of that drug. they go on to say our growth plan is based on volume. pricing is a consideration only where a product may be undervalued in the market or to maintain sustainability. so as i said, this sort of war of words between these two parties continues today. mr. left just a short time ago and, melissa, you know this issue as well as anybody from when left was on your program at 5:00, "fast money," along with the ceo as they debated one another on some of the issues that mr. left has raised that caused this stock to slide some months ago. >> yeah. >> and really put it into the center along with valeant and others on this drug-pricing issue. >> what's so interesting, scott, about these two stories is the commonality that they have, a lot of hedge funds in vale ant were making the same trades in mallinckrodt and allergen and the base overland quite a bit and interesting to see that andrew left has come out on differing forecasts on where the stocks are headed. >> the headline is he's now long valeant but reiterating it was pretty much a pair situation, long valeant and short mallinckrodt. >> even though they have been so correlated. scott wapner, thank you. happening now, s&p downgrading icahn enterprises to junk status, bb plus. you can see it go from the positive to nefgtive territory when the announcement came out just a short time ago. shares back in positive territory, $52.818 and the ratings agency still sees the outlook as stable and like i said shares of the company have fallen 42% in the last year. tyler? >> michelle, thank you very much. stocks are giving back some of those gains from yesterday. today's losses, the dow, nasdaq, s&p 500 are negative for the merry, merry month of may, so is it time to get more defensive or do exactly the opposite. >> reporter: andrew slimmen is portfolio manager with morgan stanley and jill kuniff is president of edge as the management. welcome to boast you. andrew, you say one of the things that you like about the market right now is that value is closing the gap and lately maybe even outperforming growth. when that happens, what happens? >> markets go up, not down, right. i get all the reasons to be negative. look, not pay lost earnings growth. we're coming up to the summer, bad macro events happen, the fed might be acting and you just heard someone speak about that, and when have you had someone on that's actually been bullish. i don't hear anyone bullish. a very crowded trade right now and yet value is starting to work and typically markets are going up and look at a 02, 2012, '90. when value works markets go up. they don't go down and value sector is now outperforming the growth sector year to date. >> jill, do you see it that way? in other words, why are people as down on the market as they seem to be? a year ago we were roughly at the same levels of the s&p 500, roughly, roughly, and no one was really all that concerned about valuation. now we're at roughly the same levels and everybody is concerned that the market is toppy and overvalued and may fall? >> well, there's this thing call the fed, and the fed has taken await punch bowl so this is a very volatile and different market environment but we still believe there are opportunities in this environment and we lean to the value space as well, but for the reason of dividends, dividend-paying companies tend to be value-oriented companies and we really like the commitment that the company and the quality that these companies bring to the market so in a volatile market like we're nor and expect to be in for the next 12 to 18 months you should look for companies that can grow in a slow growth strirnt and take advantage of the volatility and buy when there are setbacks in order to keep your positions intact. >> the difficult denld play has been i guess in the ter of art a crowded trade. one of your choices, harman, you've got to have some fortitude, let me put it that way, to jump in there. that stock is down 40% in a year. >> we do have conviction, and we do -- we are a little bit contrarian so, again, we look for opportunities when something isn't quite right but edge is a long-term investor so we'll take our conviction and invest in companies that we believe can maneuver through these kinds of environments. in the case of harman most people know them as the sound systems. >> right. >> but they have a lot going on in the connected car and inknowtainment space that's growing so dramatically. >> right. >> that's the area we would expect to see them grow for the long term and thofr investors opportunity? >> you know, back to you, joe. the election is coming and in this morning's "times" andrew ross sorkin wrote a column where he pointed out that in the final years of presidential terms when the incumbent is not running again, the history says that the market doesn't do very well. do you expect that the next five months will be times when the market moves higher, or is it going to be backloaded after we get certainty on who is in the white house? >> i think the point is that everyone's positioned for just what he's predicting or the data says minus 2%, so all i'm saying is i think the market -- the underlying currents of the market is saying maybe the economy will aksccelerateaccele why value it will go -- that's why gold is going up. and whoever gets elected will have faster economic growth and the market starts to anticipate that. the data doesn't support it. >> but you're true to your contrarian side, andrew and jill, you as well. we have to leave it there. alas, thank you both very much for your time today. go to powerlunch.cnbc.com to see another small-cap name that jill is betting on for growth. just getting started here on "power lunch." next, is china going to crash silicon valley in our next guest was just there in china and says yes. plus, oil up 8% in the past week and 30% so far this year. we'll talk torque run noted watcher on wall street saying a pullback is coming soon. "power lunch" continues after this. man 1: you're new. man 2: i am. woman: ex-military? man 2: four tours. woman: you worked with computers? man 2: that's classified, ma'am. man 1: but you're job was network security? man 2: that's classified, sir. woman: let's cut to the chase, here... man 1: what's you're assessment of our security? man 2: [ gasps ] porous. woman: porous? man 2: the old solutions aren't working. man 2: the world has changed. man 1: meaning? man 2: it's not just security. it's defense. it's not just security. it's defense. bae systems. things are tough in silicon valley as valuations of the so-called unicorns come under scrutiny and all the supposed disruptive business models just don't seem so disruptive after all. inside remembers starting to admit there's maybe an even bigger threat, china. that's according to our next guest who says silicon valley is too well fed. it's too fat, in other words, too clubby, while chinese startup entrepreneurs are raw and hungry. let's meet tech entrepreneur and angel investor who after selling his startup went off to china for a fact-finding mission and wrote about it in "recode." welcome to "power lunch." >> hello, how are you doing? >> good. tell me. what did you find in china? a lot of people are saying they are building over there and imitations what we've already done here in the united states. >> that's a really well-used argument. in fact, it's outdated. we are going to see a way for innovation come from china in the next decade. already a lot will have ideas on the way in china that are interesting that we don't see yet because innovation takes longer than cloning, and to be fair, yes, they do clone, but what's interesting is they are starting with cloning. that's just the beginning but not the end point, and -- and then they it rate really fast. for example, do you know the company maetuan? >> tell me about them. >> most people don't know them. 6 years old, they started as a groupon clone when groupon's star was rising notice u.s., and they were one of 800 in china that were trying to do exactly that. one year after they started it it was a completely different company. the company was then instead of doing 50% discounts, not sustainable, doing 10%, 20% that brought people back to the stores and drive loyalty. >> what are you telling me, that that metamorphosis is emblematic of what happens there? they adapt more quickly? >> very quickly and they addeded into delivery services and online ticket sales and six years later the company is worth $20 billion. >> are they profitable? >> that's unknown because it's private, but they are $20 billion driving tons of revenue and i met the founder for breakfast and a very impressive guy, and he looked me in the eye and says, you know, i'm really unhappy about my third business, the food delivery because i'm only number two in china with 48 boston market chair so that's the level of aspiration that the startup entrepreneurs, have and i found a lot of hirng and drive. >> right. >> a lot of friendliness and openness, and i was very impressed by t.loved it, and i actually think it's a good thing for silicon valley, not a bad thing. >> syriac, part of this depressed business cycle and hunger is their work ethic. they have a 996 model. explain in a. >> 996 means the average normal work day is from 9:00 a.m. to 9:00 p.m. six days a week and i'm talking about the normal employis. for founders, top executives and startups, it probably is more like 9, 11, 6.5. in other words, there is no work-life balance, and i'm not a proponent of saying long work hours produce more output. actually i think that's wrong because, you know, if you are always tired and don't even know your kids how can you be a good leader? burks on the other hand, what -- what it is showing you is the enormous hunger and drive and i found that to be very impressive. you can see that in all startups. went from late stage to termy stage. >> is that because silicon valley has matured and now they just don't work as hard, right? is it that simple? is this silicon valley 20 years ago? >> maybe, but i think there are obviously exceptions. there's a generalization here in this article, of course, but what i'm trying to point out is when you love something, like i love silicon valley. i love europe. i'm from there. we should look outside of where we live to look at what other people are doing really well, and when we can look at china and we can see this hunger, we should take it as an impulse, as a little bit of the kick in the butt which sometimes might be good for us and say, okay, you know what? awesome offices, all the perks, we're a little bit perked out in the silicon valley sometimes when i look at our offices and all the things that everybody wants here. why don't we just focus on what's true entrepreneurship and that is creating awesome things out of almost nothing. >> i don't doubt a word you've said, really, i don't, but when i think of the breakthrough products that have defined the digital era i can't think of a one that was invented in:. facebook, google, the -- the cell phone, itunes, digital animation. all that have stuff really didn't come out of beijing offer shanghai or guangdong. correct me. well, what about consumer drones? >> consumer drones. >> consumers drones becoming a bigger and bigger market now, right? that's a classic silicon valley play. it's design meeting technology meeting marketing. well, the number one consumer drone-maker, the drones that -- that people fly around in their gardens is made by dji out of sensen in china and they have 70% global market share and my point is not in the past what you're said is totally true. what i'm saying is the next ten years are going to look different, and i think we should be ready for some more xe digs. the harbinger of dji is just an early sign of what's going to happen. we're going see more innovation coming out of china, and that is a good thing because it can't hurt us to have a few other players around the world being really serious about it. when you look at the hub in beijing, in beijing you have very talented entrepreneurs. you have top engineers coming from the university and peking university and you have a lot of venture capital there, and if you combine that it produces a mix that's very interesting, and if you combine that with technology, which arguably china is not as strong, then you have the mix that -- that potent mix that produces a new hub. >> bottom ryan, talking about staying competitive in the united states, how important competition is so good for snowfall toe have vom competition down the road. thanks so much for joining us and giving us your inside. >> thank you. >> read his stuff in "recode." all right, the biggest problem in the housing market right now. what is it, and when is the industry doing to fix it? that's still ahead. "power lunch" is back in two minutes. i take prilosec otc each morning for my frequent heartburn because you can't beat zero heartburn! ahhh the sweet taste of victory! prilosec otc. one pill each morning. 24 hours. zero heartburn. ss. welcome back to "power lunch." i'm melissa lee. a check on gold because the final trades are crossing for the day. not too much movement. slight movement in the equity and gold market. 1,2776.70 is where it's trading. the most notable move here is on the part of palladium, actually down by more than 1% right now. let's get a check on the bond market and to rick santelli at the cme. rick? >> well, melissa lee, i think we can thank dell today and the combination of data for enlightening us on the market. what do i mean? let's look at the yield curve? intraday two, up two basis points and intraday five up one basis point. tens, down one basis point and 30s down three basis points. that's the numbers on a flattening yield curve. on a day where we saw some. hottest inflation we've seen in years, that doesn't hold water. you know, when mario draghi announced he would be buying corporates. well, what happened? corporates around the world are going to be mispriced. it will start out in europe ant arbitrage will take us around the globe. dell, being fortified five times over and everybody is looking at watch eds and might price any minute is creating this dynamic. the yield curve is flattening. does it mean recession? i don't know. you know what it means to me if you have corp race. you can't keep them in the showroom. melissa lee, back for you. >> roads, bridges, airports, america is literally falling apart. infrastructure running at 1.4 trillion deficit over the next nine years. today we're focusing on the problem, the solutions and how can you profit. our special report is straight ahead. it was a simple idea. for every pair of shoes we sold, we'd give a pair to a child in need. at&t has been with me since day one, keeping me connected to my team, to my business, and to the reason we put giving first. toms started small, but now we've given shoes to more than 50 million children in need. i'm blake and this is my network. the network of at&t. anything worth pursuing hard work and a plan. at baird, we approach your wealth management strategy the same way to create a financial plan built to last from generation to generation. we'll listen. we'll talk. we'll plan. baird. hi. i'm sharon epperson and here's your cnbc news update for this hour. secretary of state john kerry says the situation in syria is deeply disturbing. he made the comment in vienna where world and regional powers have been meeting to find a solution to the country's five-year civil war. >> none of us, no one, can be remotely satisfied with the situation in syria. it's deeply disturbing, and we are all concerned about the levels of violence that broke out in recent days challenging the cessation. >> the senate passing a bill to allow the victims of 9/11 to sue saudi arabia for its possible involvement in the terror attacks. the white house is opposed to the bill. currently there are no plans in the house to take up the measure. truckers blocking highways around france this morning to protest longer working hours required in a new labor bit. despite growing unrest in the country. french president hollande says he won't abandon the contested measure, and want a tiny house in new york city? task rabbit, the sharing economy company that offers on demand help for its daily chores, is building a tiny house in midtown manhattan in just three days. it will then be auctioned off for charity. that's a cnbc news update at this hour. back to you, brian. >> sharon, thank you very much. >> sure. >> breaking news on amazon.com and let's get to josh lipton live at amazon's annual meeting. josh? >> brian, amazon shareholder meeting just wrapping up here in seattle. that vote went according to plan. you saw ten directors elected. ernst & young ratified as the auditor. three shareholder proposals were shot down. again, just as amazon predicted there, so just as we expected in the meeting. what happened is ceo jeff bezos came up and fielded some questions from shareholders and talked for one about prime and how important that is to the business. and why is that important? bezos will always give you an exact figure of how many prime members there are. the team at cantor estimates there's as many as 60 million prime members. that's their loyal group, an asset nobody else has, and they also estimate to spend a lot more, as much as five times more than non-prime members and if you're not a prime member at this point, in his words, you're just being irresponsible given how fast, efficient and effective that is. shareholders are also asked do you think you'll have the same success overseas with prime that you've had here in the u.s., and bezos says it will be different how they think about prime in india, for example, will be different than it is here, different regulations, different transportation, different payment systems. he also talked about aws, brian, the company's cloud business on the $10 billion run rate meaning it's growing faster even than amazon as a company did and was asked by shareholders how sticky you think the business is and pointed out a couple of things. they are not sitting buy or sitting idle. aws added more than 700 new features in 2015 and a growth there of 40% which they have to. can't be just offloading, compute capacity and data storage to customers when you're competing with goingled and microsoft, have you to keep inventing, and he said he would do that. he also said though when you look alternate cloud computing market it's a big market and there may be long-term in his words not one winner but multiple winner. the leadership position, he said, is going to real be decided by who offers customers the best service. you only retain your customers bezos says so long as you offer the best service that nobody else and that's a fight they will have every day. guys, back to you. >> josh, thank you very much. we appreciate that report and they will be following for us throughout the day. take a look at this video of a bridge slaps last week near harrisburg, pennsylvania. that's what happened. nobody was hurt, but it is evidence of the country's crumbling infrastructure. if you drive, fly, take a train, a subway, a boat, even walk on the sidewalks like my town, chances are you run into problems. according to the bipartisan policy center this company's infrastructure has a $1.4 trillion deficit. that's what it would take over the next nine years to bring it up to snuff. today we focus on the big picture. the problems, the solutions and how you as an investor would profit, and there's no better place to start than in the nation's capital, washington, d.c. the subway that was promised to be the crown jewel of transportation in our nation's capital is a mess. lines running through d.c., maryland, virginia will be shut, sometimes for a couple of weeks at a time and sometimes for days, for mavis overdue repairs. let's start with half. on pearson live on the red line in tacoma park, maryland. half. on? >> reporter: yeah, that's right. under pressure from federal safety officials. a massive year long safety and maintenance upgrade plan will begin next month, two and a half weeks from now, for the washington metro system, the subway system here. with more than 700,000 riders per day, the washington metro subway systems with six lines and about 120 miles of track is the second busiest in the country. but in the last 16 months there's been a fatal fire last january where more than 80 passengers were injured, a 24-hour shutdown of the entire system in march that forced hundreds of thousands of commuters back into their cars and just last week this dramatic video, a fireball arcs on the track moments after a train pulls away. these and many more incidents contributing to a crisis of confidence for metro riders. >> it's an antiquated system that's been around for years. infrastructure hasn't been keeping up with the progress and the usage on the system. >> for me as a commuter using the metro every day i worry about getting to work on time and also worry about safety and bring my kids on the metro. >> me flow if that's all you have you have to grin and bear it. >> it shows some 216 smoke and fire incidents last year and double the year before. ridership is down. 214 million last year and down from 225 million in 2009 despite a population increase and expanded service in northern virginia. now the new chairman of the 16 -- member board that runs metro says the need for at least $1 billion in additional spending to catch up with some of the safety and maintenance problems, but there's no designated source of funding, ie corporation and by the way, guys, in the interest of full disclosure i did take metro to get to this live shot location. >> all right, hampton and got there safely. glad to say. let's talk a little bit more about it with the man who has to solve the problems, the ceo and general manager of the d.c. metro. welcome. good to have you with us. i should point out that you are the lucky guy who got this job about six months ago. this is new to you. how did we get here? >> it's taken decades, to be frank, of deferred maintenance pand investments just not being made, and we -- we can no longer -- we cannot wait any longer and we have to deal with these issues. just announced a program that was just mentioned. we're combining or basically making three years of work into one year so we can get this system more reliable and obviously safer. >> is it that congress hasn't appropriated the money to do the upkeep and repairs and the management, prior management, i don't want to ask you to point fingers particularly, but is it that the money wasn't well spent or wasn't spent? what went wrong? >> unlike most transit properties around the country we don't have a dedicated funding source so every year in effect we have to go to virginia, maryland and the district of columbia and seek the dollars for the improvements and, as you know, that gets down to local politics and local budget decision-making that makes it very difficult. most of the systems, major systems in the country. they are regional in nature and they are funded regionally and managed regionally, and -- and we don't have that here in the district are. >> is the system dangerous? >> no. it is not. i use it daily. my family uses it and as you've seen i've shut it down when i think it is an issue. i've done that twice now. did it with the blizzard that came in and also with a smoking incident that we've had and i'll continue to do that. if i see anything unsafe. >> you've done -- you have taken some bold strokes, and as hampton pointed out, 216 issues of fire or smoke or incidents of fire or smoke over the last year. how costly is it going to be to do what you know you need to do to get the d.c. me troerks and i'm a native washingtonian and i love it, man. i ride it when i come there. how much is it going to cost and how long is it going to take? >> well, just to get it back to a state of basically good repair, you know, level state, that's what we'll be doing the neck year so we're actually moving up dollars from outyears into that and looking for some federal dollars, so we'll be rolling out those numbers shortly, but the bigger picture, is you know, this is a multi, multi-billion investment that has not been maintained overi'm and it will take multi multi billions of dollars to repair it in the future. >> you're going to take down parts of different lines. sometimes you'll single track and sometimes there will be interruptions in service, i assume. if i want to go from friendship hutz to dupont circle and that's under maintenance. the train stops at friendship heights and are you going to shuttle people to dupont circle or what? >> we have 15 areas that -- what we're calling surge areas that we need to basically do extensive work on so five of those will be shutting down a station or two so we'll be doing bus bridges around that so we continue your trip. you know, almost a quarter of our passengers make less than $30,000 a year, their households do, so we have to maintain the core service for those people that have no other option. >> good luck. >> thank you. >> continued good luck to you, general manager. d.c. metro system. brian? >>the d.c. metro one snapshot of the sad state of american infrastructure. lock around at the old airports, rusty bridges, all while you feel the rumble of potholes underneath your car wheels. we agree something needs to be done but no one seems to agree on who is going to pay for all the repairs. >> let's discuss with a fellow and former president of the american society of civil engineers. the group grades the state of our infrastructure as a d-plus and with us also is chris edwards, director of tax policies at the kato institute and he's testified before congress on funding highways and bridges. >> all right, greg, your group estimates we need to invest $3.6 trillion in infrastructure within six years but we're allocating a tenth of that in the 2017 budget for our so-called 21st century transportation system. how short of funds are we? >> well, thank you, you're absolutely right. since 1998 asce has been doing a report card on the condition of america's infrastructure and we cover 16 broad categories, and our latest report card in 2013 gave our infrastructure in this country overall a grade of d-plus. like the report card you might have gotten at school though i hope it didn't look anything like our infrastructure report card. the fact is you are right. we need to spend about $3.6 trillion between now and 2025 if we're going to bring our infrastructure to a condition of "b" which is a good grade. >> a lot of money. >> but the fact is that's a lot of money and the fact is we're not prepared to do that. we don't have enough revenue to make that kind of an expenditure so in our latest report, which just came out tuesday, the failure to spend, to invest in our infrastructure, we now show over the ten largest categories, roads, bridges, water, wastewater, airports, we now show that we are underfunding our infrastructure to the tune of 1.4 trillion. >> this is a big campaign issue, and, of course, i want to get your response to this. we'll play you both donald trump and hillary clinton, what they have been saying about infrastructure and get you to respond. >> our airports are crumb blirngs our roads are welcomebling. you look at our transportation. we have trains that go 60 miles an hour and you go to china and japan and they have trains that go 250 miles an hour. we have obsolete airports. we have hospitals that need help. we spend money on everybody but ourselves. >> building a strong economy tomorrow starts by building strong infrastructure today. i have a five-year plan, $275 billion to start, to invest in infrastructure and create good-paying jobs, make our economy more competitive, build that future that our country and you deserve. but we're going to go further with a new strategic infrastructure bank that will support up to $250 billion in additional investment. >> another government institution. chris. both of these presidential candidates seem to think the infrastructure problem is their problem, a federal problem. is it? >> no, i don't think it is. american infrastructure is almost all owned by state and local governments. even the interstate highway system. the interstates through texas or new york state are owned by those state governments so state governments have the primary responsibility to fix the potholes on the interstate and solve the congestion problem. it's true that other countries have better airports and seaports and highways than we do these days, but that's often because they have privatized their infrastructure. the united states actually lags countries like canada and britain which have private airports and britain has mainly private seaports that are highly efficient. other countries are doing more of what is called public/private partnerships, bringing the private sector in to highway projects and bridge projects so i think that's the future. governments tend to underspend on maintenance and you see that with the d.c. metro. there's transit systems across the country owned by governments, have underpent on maintenance because politicians like to open new lines and new systems without spending on maintenance so the advantage of privatization is that private owners take care of their property and will spend on maintenance show privatization is the way to go here. >> greg, i don't think is saying the federal government has to pay for all of this. is there enough private money out there? >> well, two things happened. one, we have a responsibility at all levels government to improve our infrastructure. that's the federal. that's the state. that's the local government, and additionally there is a private/public partnership that can help pay for it. remember, at the end of the day infrastructure is a user-based system, and so whether the public or the private pays for it, it has to be paid back, and it's paid for by the people that use the system. now, there are many cases where the federal government has a role in infrastructure, and we support that, but there are also equal cases where the state and the local governments must support infrastructure, as the -- as chris said. >> greg, i wish it was a user-based system. i pay every time i fly there's a big fat tax there that's supposed to go to the airports but guess what, it doesn't go to jfk which probably needs it. it goes to congress and then all these congress people divide it up amongst all their pet infrastructure projects and so i'm paying for airports that i never get. isn't it not just the amount of money, greg, but who is going to divide it up and how it's going to get spent? we can do a lot more than we're already spending, couldn't we? >> clear lit amount of money that we talk about in our report is the investment gap that needs to be filled if we're going to bring our infrastructure to a grald of "b" and we can talk about how it gets divvied up and apportionled but the fact is everybody is going to pay for that system to be used, whether it's a water system in your town, whether it's the interstate highway system or the ports. the levees which got a "d," near failing and moved 51 million truck trips a day on the inland waterways, all require an investment. if we're going to continue our economic prosperity in this country and our quality of life. >> greg and chris, a big discussion. we'll have you back on. certainly not going away. do appreciate your time today. thank you. >> thank you. okay. next, making money from the infrastructure mess, and before the break, california's $64 billion high-speed rail project promises to take you from l.a. to san francisco in less than three hours. phase one is set to be finished in 2029. california voters approved the project in 2008. they were told it would cost less than 36 billion to bit. you won't be surprised to hear that the bill has ballooned to 64 billion. we'll discuss. "power lunch" is back in two minutes. ♪jake reese, "day to feel alive"♪ ♪jake reese, "day to feel alive"♪ [phone buzzing] [engine revving] [engine revving] [phone buzzing] ♪ some things are simply impossible to ignore. the strikingly designed lexus nx turbo and hybrid. the suv that dares to go beyond utility. this is the pursuit of perfection. there's money to be made in infrastructure funds and he likes bab pro shares and bbn, blackrock's build american bond trust yielding between 6% and 8%. job diest is manager of the global infrastructure fund and, guys, great to have you with us. bob, you invest in muni bonds and you invest in stocks. slightly different and same sort of thesis, but yours is steadier, maybe the returns are steadier and yours are more volatile when in fact the returns could be greater. let's just break it down. went through all of the problems across the country and whenever there's a pothole to be filled or a bridge to be rebuilt they have got to raise the money, bob, by issuing bonds, so where's the greatest opportunities now and what sorts of markets and what sorts of projects? >> if you think about infrastructure in theites, we are behind the rest of the world in terms of how we fwns it? a it's all state and municipal governments. infrastructure is all financed through the united states, through municipal finance. through state and local governments so if you look at it it's a great way to build a diversified portfolio and very attractive returns for clients >> you're looking at, for instance, highways being built in texas and laguardia airport here in new york. don't get me started on lag did airport. that needs help. >> that's a great example. it's a $2.5 billion project that's a deal that's getting financed today. massive demand for it, citigroup is financing it. long overdue and anybody who has gone through it like yourself and we're behind the curve in regards to spending money on our from a fwra. >> you're smiling about laguardia airport. in other words, you love cement, like cement companies and basically the guys are supplying some of the building construction projects. that's the side you like. >> i love both. in december this past year we passed the f.a.s.t., first american transportation bill to be built over the next five years, spending them on highways and increasing them in the first quarter and companies like vulcan and martin marietta will benefit. one company has 60% of their ebitda coming into the united states and trades as opposed to 19 and 25 times. on the other side we public in ppes, public/private partnerships and love to own companies that own the infrastructure globally so a company that owns the floods texas and built the roads on the lbj expressway and now they are benefiting from the increased traffic on those roads. >> and you're saying the election cycle will be good for infrastructure. >> we do. that's the one thing, maybe only thing both parties can agree on. both clinton and trump as in the last segment shows they are talking about infrastructure, increasing spending on infrastructure and we believe that private companies will be involved in the infrastructure spend coming up. >> guys, great to have you with us. a big battle brewing over labor on the left and a few names hitting new 52-week highs when today's "power lunch" returns. random? no. it's all about understanding patterns. like the mail guy at 3:12pm every day or jerry getting dumped every third tuesday. jerry: every third tuesday. we have pattern recognition technology on any chart plus over 300 customizable studies to help you anticipate potential price movement. there's no way to predict that. td ameritrade. handful of names are hitting new 52-week names including prologic and thermofish everyone and on the flip side a bunch of retail names hitting new 52-week lows. again, getting repetitive, gap, nordstroms, l brands and macy's. but have no fear there is one bright spot in retail. what this company is doing with question marks there so we can't tell you what it is. what retailers are doing well and what others aren't? that's next. welcome back to "power lunch." i'm melissa lee. take a look there. stocks right now are at session lows. the s&p a 500 down by three-quarters of a percent and the dow down by almost 150 points at this hour here. let's talk about retail, tjx really knocking the cover off will ball and take a look where the stock is. intraday basis higher in the session but it's since turned lower right now. the stock is up 7% this year buck the overall retail wrecks so are the discount names specifically a bright spot for investors? joining us is randy conic of jeffrey's who has a hold rating and price target of $80 and roxanne meyers has a price target of $83. welcome to "power lunch." >> thank you. >> riddle me this, randy. >> yeah. >> consumers are spending. t.j. maxx gets a lot of its inventory from department stores and department stores seem to be slashing prices, for sale signs all over the place so why are consumers choosing to spend their dollars at a t.j. maxx instead of the likes of a nordstr nordstrom's or macy's? >> ever since the great recession we've had the idea of value that's become pervasive in the american mindset so instead of buying the bmw or ferrari, people have come to the reality it's cool to save money and they want value so everything from clothes to home goods, you know, the off-price concepts out there have been share gainers ever since the great recession. i think it's that simple. >> things improve, roxanne, is this going to burn. >> consumers have gravitated? >> this is a pernent change, a change in the way consumers are shopping. >> that means it's terrible news for the likes of a macy's and a nordstrom's. >> sure is. sure it s. and you can see what's going on with macy's nordstroms, going after their own off-price arms and this is a trend is that's certainly structural and sustainable. >> taat the same time, do you wt to pay 29 teams pe that pays to its peers as well as the markets? >> we think the stock is fairly to fully valued. what we're trying to do instead of are choosing channels of distribution and this year we've been very big on buying hand black players, coach and kors and being very selective in buying the apparel retailers like lululemon which can benefit from a secular trend. >> got really hit after the macy's earnings. >> coach has 5% of the sales to the u.s. wholesale and korv is about 38% of sales so there is some potential earnings per share risk in the kors story but the stock trades about ten times earnings versus tjx and we think it's more fair with kors or coach. >> if the department store chains are having troubles, what does that means in terms of inventory acquisition for tjx down the line? >> what's really showing up is the numbers. tjx posted a 7% comp. who else in retail is doing that right now, so we see retail being increasingly a tale of the haves and have knots and valuation is simply a matter of supply and demand. there are fewer companies that are really posting these solid fundamentals and investors are going to have to chase them. we think it deserves a premium and it's gaining market share and when the metric for traffic, that's a sticky metric. looking for them to post solid comps throughout the year. inventory, department stores are bleeding inventory. the environment is still pretty bad so that msnbc there's pretty nice tailwinds here as it relates to the off-price channel and particularly tj as the number one player to gain that inventory and drive of the comps. >> last quick question, randy. do you agree with rocks answer that the consumer has changed the way they spend because that who in my mind mean that macy's nordstrom's department stores are not a good boy, even at multi-year lows? >> look, i think the consumer has changed. however, you know, the -- the idea of value and what you get for your value for your stock purchases matters here, so like i said, what we're trying to do is get away from choosing different channels of distribution and more cautious on the department store and they are cheaper and could get cheaper still. instead, we look at some of the categories to get behind like handbags, like athletic apparel which you can buy at cheaper levels versus the off-price retailers today to get value in your stock purchases. >> got it. guys, thanks so much. randy and roxanne, thank you. >> all right, melissa, thank you. what's the biggest problem in the american house right now? ceos of the nation's top home builders are meeting to discuss that and more and diana olick is in new york city with the ceo of lennar in a "power lunch" exclusive. hi, di. >> hi, ty and we're going to you from the jpmorgan annual home builder conference. we did get housing starts out showing improvements in single-family starts but nowhere near the production levels normal historical demand. let's talk about that with the ceo of miami-based lennar stuart miller. thanks for being here. the question everybody is asking. why are you not building more homes? >> this is a tough market condition? we've seen the market recover since the downturn but the recovery has been slow, steady and in a pretty tight band. the reality is that demand was constrained coming out of the downturn but mortgage availability. it was very hard for people to come up with down payments. more restrictive lending requirements. really limited the number of people that could purchase a home and in particular the first-time buyer was really constrained in their ability to participate. >> but that's what i want to get at is that first-time buyer. that's where demand is highest and every ceo i've heard from at the conference today is steering away from that entry level home. are you all missing a huge opportunity here? >> the first thing you say is that demand is the highest. might be high demand but not enabled demand. we're still mortgage constrained. still hard for first time buyers to get the downpoint and qualifying and on the other side of the equation with a more mature recovery land costs are fairly high and entitlement costs have been a very constraining factor along with layered costs that municipalities are putting on top of the land costs, so when you start with a high land base, it's very hard to end up with a purchase price that's lower enough for the first-time buyer to find acceptable. >> so you simply can't afford to is what you're saying, and so you've gotten into the rental market then. you've hedged your housing bets. you're involvementing in multi-family apartments and single-family rental developments in california. how is that first one going? >> so the first one -- first of all, we have invested heavily in rental apartments. we have a $6 billion pipeline of rental communities that are all doing very well and coming online in succession. but we've also experimented with for-rent single-family communities. we've done a couple of those, and throws going extremely well. >> you're seeing high demand. >> high demand and we'll wait and see how they actually work out. >> stuart miller from lennar. back to you, brian? >> thank you very much. well, with the overall market we're seeing the dow take a bit of a leg lower, off just about 1 who points. home depot and coca-cola are your worst performers. four stocks, caterpillar, dupont, jpmorgan and goldman sachs are higher. meantime, the wild fire canada taking a turn for the worse. more live from vancouver with developing news. >> reporter: hey, guys. well this is being called a u-turn in the situation just as production was resuming, and officials were gaining some control over alberta's massive wildfires. the winds have changed and the fire is moving north of fort mcmurray towards oil sands production facilities. here's the late and what we know at the moment. all new developments happening in the last 24 hours. sun corp, canada's largest oil producer has shut its main base plant. a total of 4,000 oil sands workers from various companies in the region have been evacuated from their oil sands camp. the fire has been less than had a mile away from embridge's crude tank firm and officials say it is under control. fifth verse had some cooperation from the winds and a power plant in the region has also been shut down due to the fires. now, before these latest setbacks, lost oil production was thought to average 1.2 million barrels per day for 14 days and with the latest setbacks and the fire moving closer towards oil production facilities, that number could be revised upwards. keep in mind as well that the production is never going to come back on quickly in the first place because fort mcmurray, canada's gateway to the oil sands, which at love of oil sands workers and their families live. that has been evacuated and remains evacuated. we'll monitor the situation. back over to you, guys. >> a situation we need to watch, thanks. another situation we're watching is stocks are hitting session lows, industrials taking another leg down, lower by 138 points and the breadth of the selling in the industrials is pretty wide on home depot, travelers, boeing, 3m, the worst per formers when you look at changes in the actual price level. nasdaq lower by 45%, a decline of nearly 1% and s&p lower by 17 points, 2049. we'll keep you up to date on what's going on in the markets as we move through the day here on "power lunch." don't move. o, president of the north face, we are working on the prototype to match customers to gear. watson, let's give it a try. say it's mid-june and i'm backpacking in yosemite. of our 353 jackets, i can recommend nine. watson, what if it rains? there is just a 3% chance of rain, so i recommend the breathable stretch fleece fuse form dolomiti jacket. a perfect choice watson. no wonder our customer loyalty numbers keep climbing. i believe we can do even better. i like the way you think. i believe we can do even better. 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. the selloff is accelerating at this hour. take a look at the lowses and where we stand. dow jones industrial average down by 165 points. that's good for a loss of .9%. home depot and coca-cola the biggest drag. freeport-mcmoran and western dij leading the s&p 500 and the sectors we're watching very closely on the s&p 500, consumer staples as well as utilities, had been the market leaders. they are falling harder and are at recession lows and health care taking a leg lower in the past 15 minutes or so so those are the areas of weakness here within that index. let's head to dominic chu for a market flash. dom? >> talked about the negative side of things and let's talk about the positive or green movers. airline stocks among the best performers in the s&p 500. as an industry group one of the ones in the green. among gainers, delta, american, united, southwest, all moving to the upside and there's broader market weakness and many names are posting double digit losses for the year but they are catching a bid. airlines part of the overall dow transportation rise today as well but they remember have halved gains over the past hour and strength in transports, michelle, starting to fade here in mid-afternoon trading. back over to you. >> thanks so much. fight over climate change may split two key factions of the democratic party just in time for the november elections. leaders of the nation's largest construction and building trade union sounding off to afl-cio president richard trumpka over a recently announced partnership he made with billionaire environmentalist tom stir. president of the labors international union of north america wright we object to the political agenda of the afl-cio being sold to, quote, a job-killing hedge fund manager with a bag of cash. joining us now is not a man with a bag of cash. >> well put. >> but jared bernstein, a cnbc contributor and senior fellow at the center of budget and policy. >> a few bucks in my wallet and that's it. >> get him some coffee. >> former chief economic policy adviser to vice president biden. jared, i wonder why it took so long. one arm. democratic party that's really trying to kill coal, right, trying to kill different parts of the energy sector. they don't like fracking, et cetera. i mean, some days hillary likes fracking but others she doesn't apparently but that's where a lot of union jobs are so there's obviously going to be some kind of bat. seeing this play out here. how does this end? >> first of all, this is not new. go back to keystone to see the same fight. it's been going on for a while and the problem is this. this is a real serious issue. there are most people on the progressive side of the aisle recognize the importance of collective bargaining and strong uniion, especially in an economy with stagnating earnings and high levels of income inequality, and they also, or i should say we also recognize the importance of a progressive environmental agenda. within those two sentiments, those two issues, you do have this conflict. the thing is that it's not pass large in the numbers as i think maybe the introduction suggests. >> >> isn't it problematic now when donald trump has great appeal to those workers? >> yes. this is exact little right. donald trump is making a play for exactly this type of split, and, again, while i think at the national level the numbers really don't hurt the democrats as much as you might think in states like pennsylvania, michigan and ohio you might see some -- you might really see some problems, sure. >> this is where these industrial unions are stronger. what unions are the most important to the democrats? are they these old-line building trades industrial unions, or are they the public service, the teachers unions, the service unions? >> right. look, the fastest growing union last i checked was the service workers international. the public sector unions, the teachers unions, still 30% plus of those sectors are unionized versus 7% in the private sector, so there's no question, just like the rest of the economy, that the service side is growing faster than the other side. >> how exploit sabol this schism by mr. trump, not that he hasn't already appealed to them not necessarily by trying to exploit the schism but simply by the power and the tenor of his message? >> that's exactly the right question, and my personal view, this is unknown yet, and you can't really tell from the primaries. my personal view is that a lot of what this campaign is about to be about is hillary clinton trying to convince a lot of blue collar workers that might lean towards trump that in fact her agenda is the right one and just because this opening salvo has been so harsh and what you played there -- what you said, the quote was truly harsh. >> hold on. >> he says -- he goes on to say it's clear that stir and his anti-energy, anti-job, anti-growth cronies will be dictating how funds flowing from union coffers are spent. >> that could be written by the rnc. >> by the way, do you think he's wrong, about being anti-growth and anti-jobs? >> yeah, i do think that's wrong, definitely wrong in terms of anti-energy. steyer is very much about renewable, anti-fossil fuel energy. look, i've actually interacted with these guys. terry o'sullivan i know. the opening salvo tends to be pretty harsh. these guys are not -- you know, they are not playing softball here. this is a negotiation. what you've heard here is the opening salvo for negotiation and at the end of the day what the dems will do if they can figure out a way to smooth this out, not clear if they can, but certainly have to see if they can. >> thanks so much for coming on. appreciate it. an under-the-radar name spiking higher and the stock just got a huge upside call that. and four other big analyst calls with "street talk" on deck and all over this late afternoon market slide, the dow, nasdaq, s&p, small caps, all at session lows. we'll discuss why later on, and then one bright spot though, transports, they are holding on, but look at that intraday charm. you can see that they have lifted the market higher and they are rolling over along with the overall averages. "power lunch" will be right back. a. afternoon selloff on our hands as the s&p 500 is at a session low. ten s&p sectors with only one in the green and that would be energy on wti's six-month highs and utilities and staples, leading sectors for the year, really selling off here and healthcare taking a leg lower in the past hour. what's interesting about today's selloff is we're not seeing what you would expect in terms. flights to safety. we're not seeing a big bid to bonds. we're not seeing a big bid to gold. simply a selloff in equities that we're seeing right now. >> that's what happens when compute remembers in charge. >> could be. >> happens at this time every day. >> you're welcome, america. time for our daily dive and the key analyst calls of the day, called street talk trying to find opportunities for you. let's go. the first stock is not one call at all. it's secureworks. a lot of comments coming out, a new ipo and you have a quiet period before analyst can come out. citigroup of them all the most sanguine on the name. $14 price target and neutral rating. neh. more bullish calls out there. steeple nicholson and jpmorgan chase, both with overweight and buy ratings and $18 targets. sun trust calls it a best in class company with a $17 target. by the way, the stock is at 13.19 a share. >> second stock, a big paper. freeport-mcmoran, the second bullish call in as many days and even with the selloff it's still higher today by 4%. jeffries upgrading the stock to a buy from a hold and $15 price target. the analyst says the company is making accretive asset sales entering lower costs. it's not time to -- it is time, i should say, after a 21% pullback in the past few weeks and cowan yesterday raised its price target also to 15 bucks a share. >> what a crazy stock, down 20% over a couple of weeks and up 10% this week and 60% over the past 90 days. >> yeah. >> supposed to be like a slow around steady copper company. >> i know. >> third stock, halliburton, fbr, upgraded and bumped the market share to 49 and now that the deal with baker hughes is scuttled halliburton can stay focused on cost efficiencies and leveraged fleets. they say it's the most cost-efficient pumper of the group and analysts say they should not fight with baker hughes that much in the international markets and will narrow their gap with schlumberger. that target is about a 20% upside to today's price. >> the f5 networks downgraded. 25% price from february lows. the analyst says a shift in subscription offering should improve visibility longer term and shorter term muted second half recovery and he had winds with uncertainty to the growth flag net later this year. >> up over the last 90 days, not as good as freeport and press gainey, and it -- >> very under the radar. >> it is super -- unless you've had healthcare recently. a massachusetts-based companies. >> ever gotten up of their surveys? >> to to the hospital and in the mail you'll get a survey, digitized record keeping. a lot of people know that anyway. let's talk about the call if we can move it up. there's some bullish calls i did not bring -- >> here we go. that's it. >> key banking. >> thank you, melissa. $38 target on the stock and analyst don heroic said the company can maintain a high digital growth rate and there should mob advanced analytics which would add 10% more revenue per target meaning the 38% target has a 10% upside. tyler. >> thanks very much. a look at the dow now down, watch and weep, down 200 points, 208 to be exact at 17,501, a better than 1% decline. plus, the oil market getting ready to close. the final trades there and the wildfires in canada's oil heartland taking a sudden turn for the worse. a top oil watcher on wall street will tell us how bad it could get for the oil patch. i'm sharon epperson and here's our cnbc news update at this hour. a wave of bombings striking outdoor markets in shiite-dominated neighborhoods in baghdad killed at least 69 people. one of the blasts occurred in the city's sadr city locale. the white house says it strongly condemns the attacks by the islamic state. the obama administration said it strongly opposes a house bill to fight the zika virus claiming its funding is woefully inadequate. it urged congress to pass legislation that calls for $1.9 billion in funding. nasa has successfully launched a super pressure balloon from new zealand to conduct near space scientific investigations. it was the fifth attempt to get the massive balloon airborne with previous bids thwarted by bad weather. its goal it to remain airborne for more than 100 days. >> lending club responding to the justice department's subpoena investigating its financial practices. it said it was not surprised by the subpoena and is fully cooperating with the investigation. the company forced out its founder last week after an internal review found irregularities with the way loans were sold. that's the cnbc news update at this hour. back to you. >> all right. thanks a lot. sharon epperson. >> afternoon selloff is accelerating here and let's get to mary thompson on the floor of the new york stock exchange. mary? >> reporter: talking to some traders and watching the wire with some of the headlines coming out of the speeches made by the federal reserve ear non-voting members, speaking the markets a little bit basically raising expectations that we could see a rate hike in june and a couple more rate hikes this year. the federal reserve's williams saying we could see rate hikes two or three more this year and then also the federal reserve's kaplan saying recently the fed wants to normalize rates so those comments, of course, putting pressure on the markets. the dow jones industrial average now up 209 points and certainly giving up all the gains that we saw on yesterday's session that was driven in large part by the strength we saw in apple and oil. oil continues to climb today now at 4830. energy is the only sector that's performing well right now. the broad-based decline led by consumer staples in today's session. there you see wti. a june rate hike could be on the takeout table and that's putting pressure on the markets. melissa, back for you. >> thanks so much, mary thompson. dom chu is here on set and what's interesting is we're not watching really a very strong bid to bonds so we're not seeing the yield move too much except in the shorter end of the curve and that's having a knock-on effect on some of the sectors seeing the steepest selloffs. >> interesting, because people have talked about the idea that the yield curve has been flattening and at the flattest levels we've seen in seven years and that's one of the things that got traders concerned. what does it say about the economy? you heard mary make an illusion about the fed board governors talking about we have not priced in as much a rate hike. >> when you look at what's selling off, utilities, consumer staples, things with big yields. >> sure. worried about the fed raising rate and the commentary that mary highlighted would suggest you've got to worry more about that. it would be natural for those dividend plays to sell off. >> correct. would you just like to see some kind of a more follow-through confirmation from the long end of the yield can you ever. haven't seen a huge amount of movement and still stuck around the 1.75% mark and has been for quite some time. what's interesting in the move in consumer staples, take a look at the dow and some of the names in there, the consumer staple stocks, yes, are underperforming. as an industry food products specifically within the s&p 500 is the worst performing single industry group. that's not clorox. that's not procter & gamble. that's campbell's super. that's hormel and pepsico. that's coca-cola. that's a lot of these large consumer staples. >> dinty moore? you're going to say it. >> too bad for me. >> hormel is the worst performing stock and they make dinty moore. when we sat down i said dinty less. >> let's make some beef stew. >> there's coke, the 26th best performer of the day. >> what's interesting about this though, just an anecdotal casual observation about the consumer staple stocks. we heard an activist investor tryan funds are gotten out of an activist target they were in which was pepsico. now, this is a victory situation. made a lot of money on pepsico and pepsico has made adjustments to their business and what not in line with what tryan would like to see and everybody takes a victory lap and some traders said that this maybe is a sign that there are better opportunities elsewhere in the market besides consumer staples, so you take a look at some of the big food names like a campbell's soup. on this particular day it's selling offer more precipitously than horse in the mark. take a look at other consumer names, doing the same kind of thing and a lot of them have happened just around may 13th which is when the pepsico names came out. >> kraft, heinz, monda le se. >> they carry a hefty amount of weight in the index overall. >> thanks, dom. >> you're welcome. energy still in the green. in fact, the only sector in the green. the oil market is closing for the day. crude oil finishing up the day 1.2%. so the tale of two oil outlooks. goldman, told you all about it yesterday. they see further upside and barclays however coming out opposite saying they think the price is in the low 40s. michael cohen joins us head of energy commodities research at barclays and made that bearish call and joins us now. what's behind your viewpoint on the bearish call? >> i think what we're seeing as we end the summer driving season we're going to ender more of a seasonal lull for demand. i think the other thing that's going on is some of these outages that we're seeing affecting the market right now are due to be temporary. some of them should come back and that will pressure the market coming into q3 but we see prices back up into the low 50s by q4 and at 60 next year. >> on that note you're actually more bullish than goldman the next year. >> yes, we are. >> the talk now all of a sudden, just come up today when you look at the cpi data. heard from mary thompson just a few moments ago, non-voting members of the fed talking about the possibility now. june seemed to be off the table and now maybe june is on the table and when the fed moves or talk of med moves an impacts the dollars and that impacts commodities. is that impactful? is that meaningful? >> it's always meaningful and seen over the course of the last three or four months every time issue of whether the fed is going to hike rates two or three times or one time or not at all all of that is affecting the market sentiment and affecting the riskon and risk off sentiment and positioning in the market and right now we're heading into the peak driving season, but, of course, if there are other fundamental variables and other market sentiment variables that bring us back down, we could see an adjustment that's far in excess of what is justified by -- by the fundamentals? >> all right. thanks so much for joining us. he said goldman is more bullish than gold -- >> he is. >> yeah. sold as a bearish call. okay. >> well, the oil bounced today, nonetheless, saving the energy stocks from today's market stocks. let's bring in our guests. kim, i'm going to begin with you because you're based right near the first oil well in all. united states where apparently it snowed a few days ago actually. >> yeah. >> are you or have you been a buyer of oil or energy stocks? >> no, we have not. we're a value manager, and because oil and any energy in fact is really set by the price of the commodity of whatever pile of rocks you own, you know, if you're an energy company. we generally tend to stay away from that but that doesn't mean we don't look at it. i mean, i look tat constantly. as you point out pennsylvania is a huge energy producer mostly in natural gas and gas liquids right now but it does informing my view on oil in general. >> okay. you're avoiding it and don't see value in any of them. >> craig, technically, you look at the charts. would you buy energy stocks now? >> the answer, brian, is absolutely yes. this is the first time for our work that we have actually upgraded the energy sector from an u.n. weight to neutral since 2011 and on the price of oil we've reversed the trend off of the 201 highs which is a constructive sign and 50-day moving average is coming back above the 200-day which suggests there's a trend in change happening and when we see that with the krubd oil price that's a good chart. look halt the price. xle, clearly expectations are quite low at this point in time. the charts are starting to tell us something and, again, we think we should be owning these at a market weight at this point in time. >> kip says i'm value and there's no value. that's why with do it that way. thank you both very much. tradingnation.cnbc.com. watching a huge slide in today's market, down over 200 points. back after this. >> market technicians look at market breadth which compares the number of stocks moving up to moving down and while the trend may be your friend, if the market has bad breadth it may mean that the trend is about to end. welcome back to "power lunch." i'm michelle caruso-cabrera. the afternoon selloff steepening. dow jones industrial average lower by more than 200 points right now. off by a loss of more than 1%. the s&p and nasdaq also negative territory. when you look at the sectors within the s&p 500, 10 of them. energy is the only one in positive territory bolstered by oil. the rest of the sectors are lower and the worst performers are consumer staples and utilities and generally speaking, you could see, the secretariesors that are most likely to pay a dividend seem to be selling off the most and hardest at this hour. melissa, back to you. >> all right, michelle. he once called it the pharmaceutical enron and andrew left changing his tune on valeant pharmaceutical and he explained his decision to go long the stock. >> i saw the news flows coming out of valeant were increasingly negative and installed popeye and it didn't seem like it was someone getting the company ready for prints and ready the stock can actually stabilize right here it seems liking it could have been a decent proposition for stabilization and i don't believe valeant is going back to 660 a share and the trade was good. not to mention seeing all the negativity coming out on the stock. >> meg terrell joins us now and even with the market selloff shares are higher and so are shares of mallinckrodt and he's now long valeant and still short mallinckrodt. >> calls it a pair trade saying these two should trade in the same direction, thought valeant was bad on the drug pricing front then mallinckrodt is worse. he's been telling that same story for a long time. not the same traction in mallinckrodt than valeant saying all the news flow has been negative recently. he was part of that news flow. >> exactly. >> that was pretty interesting to see him kind of reversing course but not -- scott really pressed him on "halftime" saying he didn't think valeant was in the ear but it was a trade. >> interesting that he views this as a pairs trade because they have been trading in lock step since all the valeant stuff started coming out last fall and they have been trading very closely and for him to come out and boost valeant, that's why we're seeing mallinckrodt shares up that i had. >> yeah, mostly because nothing new is coming out here. came out with the enron comparison and with valeant and that was the beginning. huge snowball effect and with mallinckrodt you actually look at the analyst support for this name. it's very different from valeant. talking to david mayorist the biggest bear and biggest supporter of mallinckrodt and even though the price of the drug was raised a lot before they acquired it, going up 5% a year since they acquired it. >> very different than the other increases. meg, thank you. let's get to the dom chu for a market flash. >> keep a look at amazon.com because the online retail giant is still a few moves from hitting the record level. the stock has now broken down at one point, did break down and hovering just around the $7p hundred per share market. market first claimed earlier this month. underperforming the overall market today and one of the biggest drags on both the s&p 500 and nasdaq composite overall so keep an eye on the amazon shares. "power lunch" will be back in two minutes. keep it right here. more after the break. welcome back to "power lunch." small stocks underperforming the broader market. the s&p 500 down by about that 1%. some of the big names dragging down the small-cap index are treehouse foods, also burlington stores, post holdings as well. over the past year, the russell 2000 is down almost 12%, and we should also note, tyler, one of the big etfs that tracks this, the iwm, the ticker, also trading above average volume in today's trade as well. back over to you, ty. >> dominic, thanks very much. national urban league releasing its 40th anniversary report on the state of black america and the findings show we still face persistent, social and economic disparities between blacks and whites in this country. joining us is the president and ceo of the national urban league and former mayor of new orleans. good to see you. >> thanks, tyler. >> i'm truly struck in this report by how seemingly small the progress has been in naehringoing lots of different measures of gaps between whites and non-whites in america. do you agree? >> it's stunning that these gaps seem to be frozen in to the american ecosystem, but let's give credit to some progress when it comes to educational attainment, when it comes to health outcomes, but in that area of economics it seems that we've been unable to really move the needle on an overall basis, and the recession really had a tram dick effect, particularly on the wealth of blacks and latinos in america. >> why is that? >> i think the sub prime cries and the resulting economic downturn meant that african-americans and latinos who own homes were really in a marginal category, meaning they couldn't withstand two to three months of not having income before they became serious delinquent on their home loans and i also think the effort to rebuild homeownership has not been quick, has not been fast, needs a great deal more emphasis and energy. so importantly, ty, in this report we also have outlined what we call are necessary to try to help us to deal with these persistent gaps. >> one of the things that's interesting to me is the overall rate among black households is roughly double that among other groups. it has only declined from 29.4% to 27%. so more than a quarter of black households live in poverty. there have been and your blueprint here of the main street marshall plan relies a lot on playbook stuff, mayor. it's tax credits, training programs, expansion of a social safety net. we've done that for a long time and it doesn't seem to narrow the gaps or reduce poverty the way we expect it would. >> let me add this. if you look 1963 to 1976, the poverty rate, in fact, declined significantly in america when we had the full board johnson war on poverty. when that retrenched in the '70s and '80s, we kept the program but at a much smaller scale, the impact was that the poverty rate not only for african-americans which is at about a quarter but also whites which is at 10% became sus spented in space. so when we had that, those numbers really declined. from '7 f to '80 when we had entrenchments and cutbacks, we kept many of them but scaled them back. it's important to recognize that now when we're in this post-recession reality and jobs have returned, there's still communities. >> let me get a quick reaction from you from "the new york times" about the schism within the democratic party, industrial working-class unions having real problem. how troublesome is that to the party? >> well, look. the party -- the democratic party like the republican party operates on a broad coalition, and within any coalition there are going to be tensions, elbowing, pushing and shoving. but at the end of the day, the outcome of the election is going to be determined by which side f you will, can put the buggest and strongest and most cohesive coalition together. these are growing pains on the side, if you will, of the growing coalition because monolithics is not the growing party. >> marc morial, good to see you. >> thank you. the afternoon market continues to slide. the dow pushing back slightly. it was down at 209, 210. as the dow drops, the big pops. right now the fear index is up more than 7%. "power lunch" will wrap it up after this. real is touching a ray. amazing is moving like one. real is making new friends. amazing is getting this close. real is an animal rescue. amazing is over twenty-seven thousand of them. there is only one place where real and amazing live. seaworld. real. amazing i have an orc-o-gram we for an "owen."e. that's me. ♪ you should hire stacy drew. ♪ ♪ she wants to change the world with you. ♪ ♪ she can program jet engines to talk and such. ♪ ♪ her biggest weakness is she cares too much. ♪ thank you. my friend really wants a job at ge. mine too. ♪ i'm a wise elf from a far off shire. ♪ and sanjay patel is who you should hire. ♪ thank you. seriously though, stacy went to a great school and she's really loyal. you should give her a shot. sanjay's a team player and uh... it begins from the the second we're born.er. because, healthier doesn't happen all by itself. it needs to be earned every day. using wellness to keep away illness. and believing a single life can be made better by millions of others. as a health services and innovation company optum powers modern healthcare by connecting every part of it. so while the world keeps searching for healthier we're here to make healthier happen. let's get over to eamon with the news. >> you have him emerging from the white house in a raining washington, d.c., a little while ago. it was shot by the "washington post." it's not clear what jack ma was doing at the white house. josh earnest was asked about this a little while ago from the podium. he did not reveal any details. presumably jack mamet with president obama at the white house today. he has done that in the past, earnest said, including at the g-20, talking about malaysian issues, climate change. we're trying to find out what he was doing at the white house today, though. brian, when we have those details, we'll bring those to you. >> thank you very much, eamon javers. fourth day out down day in the last five. remember they hit that intraday high back on may 11. it's a bigger drag on the market overall. remember, facebook stock has been the leader in the stockmarket so far. it makes it worth around $336 billion, up 46% over the last year, guys. back over you do. >> thanks, dom. stocks continue to hit their session lotions. let's bring in the chief investment officer. steve, there's talk out there with the cpi number out there this morning and some of the commentary from the fed, perhaps a summer rate hike is back on the table is. that why we're seeing a selloff or is it something else? >>? >> i think that's it. if you look at the two-year, it's declined. that's when the market really started to go down. the two-year has been trading down for the last four or five days. so i think there's a sense building out there. i know most of the markets still call for, you know, 20% shot in june and barely 50% in december, but i think some of the latest data and especially trading in the two years has people concerned we'll see something sooner. >> yeah, yeah. pictures are worth a thousand words there. they want us to believe a fed rate hike is on the table for june. consumer staples, utilities, what else. >> mortgage raeits. especially those mortgage reits that concentrate their positions with pure agencies. they would be in trouble. you like look at some of the bdcs that have fixed rate loans out but short-term funding. basically anybody invested in a fixed rate environment and financing that with short-term money, that's a problem. >> financials are not getting too much of a big. is there a belief that it could steepen? it's outperforming on a relative basis. >> you would think that big banks would benefit from higher rates and i think most of your money setter banks and larger regionals would like to see the rates higher. so investment banks, especially wire houses would like to see higher rates. i think those people would benefit from an early move. >> one thing that i don't understand. i would think thinks like oil would sell off. you think the dollar is going to be stronger. but we don't necessarily see that happening today. >> i agree. oil is not selling off. your thinking there is spot on. so i would be concerned about oil on a short-term basis. i think it's overdone on the upside, quite frankly. thank you so much for watching "power lunch." >> "closing bell" starts right now. well, hold onto your hats and welcome to the "closing bell," everybody. i'm kelly evans here at the new york stock exchange. >> where they're celebrating 224 years. >> that's right. >> happy anniversary to the exchange. i'm bill griffeth. it's happened again. stocks giving back a good chunk of gains after new data shows inflationary pressures are increasing, and for some that's leading to more expectations that the fed could continue to tighten monetary policies sooner than later. we'll talk about all that. >> but take a look at home depot. it's the biggest drag on the dow today. that's after posting better than expected earnings. strong