fighting a music battle, looking at streaming. you have so many things going on. two years from now, we'll see how smart these moves are, but it will take a while. >> best presentation in your view? >> i missed several. but i love this conference. i've gotten very little sleep. i don't know about you. >> jon, great stuff. thank you very much. let's get back to scott wap they are wapner. >> we look forward to seeing you back here. welcome to the halftime show. here is today's game plan. and the beats goes on with apple finally scoring its deal with dre. what does the company really want for its $3 billion? straight from the fed. richmond president jeffrey lacker first on cnbc on how low yields may go. and central bank's plans. and the man who said the stock market is rigged is back in a cnbc exclusive. with more accusations on how you

are getting screwed. let's meet today's starting lineup. we begin with the markets and continued focus on falling yields. today the rate on the ten year hitting its lowest level in a year. and threatening to go even lower. so what does that mean for stocks which continue to hit new highs? let's take that to the panel. steph, how do you make sense of what is taking place in the market. >> i don't. the biggest surprise to me and where i've been wrong so far has been the bond market. i feel like initial claims are at new cycle lows, isms are over 50. sar is over 16 million. loan growth is starting to improve. i would not say that bond yields should be at 2.4%. so i don't know when it will turn, but i do think it will as we get better data throughout the year. >> josh brown, people pile manage to treasuries, better hope it didn't turn anytime soon. do you short them?

>> i would not short treasuries. longer dated treasuries even if they're only 10% are the only thing that will protect you if there's a tail risk type event in the market. so i would continue to incorporate bonds in to a portfolio. but on the equity side, i told you earlier this week, this is the twilight zone. stocks are in their own world. every sector is back above i20 and 50 day moving average. i don't understand what stocks are so ebb uhe plant about, but it's low volume. i don't know of anyone who is really pushing the needle and getting crazy long here. >> move in rates is stunning. and as gdp forecasts fin to go higher, goldman taking their forecast up to 3.9 from 3 bpt.7 the economic print comes in better than expected, what will

happen to the flood of money in treasuries? >> i think what we're watching right now as in the last two sessions in particular is that we've got folks trading ahead of the draghi announcement next week, june 5th. i don't think draghi did talk rates any further. he has to act. and everybody believes he will. that's why you're seeing our rates here. when that happens and just ahead of that in fact, that is probably the time that if you're a trader, you could short the bonds at that point. don't have to wait all the way until then, but we say buy rumor, sell news. rumor or read ahead is that this will happen next thursday. i think by wednesday next week, most of the bets will be placed and you want to be short as of that date. >> pete, how do you read what is taking place in the market? we're watching yields, you look up every half hour and they're ticking down.

>> and we've heard about this from 3.0 all the way down to where we are right now. i think the fed clearly has a stranglehold on where these levels are, where these rates will be. we look at the economy, we get mixed messages all the time. but it seems as you get into the second half, people think it will get that much better. i believe all of that, but i still say we heard all the concerns about the russell. now nobody is talking about the russell. everybody is talking about the rates and ten year. yet the market is going to new highs. there are lots of different -- >> don't you think something has to give at some point? are you saying ignore all the other noise that is out there? put the party hat on? >> don't ignore it. you take everything in and as you do that, you have to process it. but all those guys that have focused on the ten year and reduce sell, they have missed 30 or 40 points in the s&p already and likely will miss more.sell, or 40 points in the s&p already and likely will miss more.

let bring head of global value, matt mcclellan. what is your take on what we're seeing in the market? >> i'd say there is a great deal of complacency. i think if we look at it from a 30,000 foot perspective, we're seeing credit spreads go to 350 in the high yield universe. we've seen rates repress. pe multiples double. yet what is happening in china? that was the demand pulse in 2009 that helped the economy recover. where is the source of latent demand potential in the u.s. economy? so there are a lot of questions, but there is a great deal of complacency in asset prices. >> if this is tyson versus holyfield, who wins? >> i think what you need to do is have modest expectations about future wins. be it an absence of bargains in the stock market, repressed real

interest rates in the bond market, there is an absence of opportunity. so perhaps it's a time for patience, a little bit of cash to wait for better opportunities in the future. >> and in sectors in the market, do you want to be more defensive? >> we look for scarcity in the market. security by security, company by company, we're looking for businesses that have advantaged business models that aren't be replicated or ownership of assets is hard to replace. the key is to get them at the right place and it's increasingly hard to find. >> your predecessor one said that he'd rather lose half his investors than lose half of his investors' money and that was his reason for not taking part in the last tech bubble. i know you tend to carry a lot of cash when you're having trouble finding areas for buy. but are there areas to buy right now where you just feel, hey, look, i recognize a lot of complacency, but there's still a

lot of value? >> there are big areas that i could see where we're seeing big buying opportunities. but what i can say is that stock by stock, we see occasional opportunities. >> old tech you like. >> old tech. we weren't in technology a decade ago, but companies like or oracle for example. >> we have to run. it's great having you. let's send it over to dominic chu for what is happening. >> talk about a food fight. this time tyson foods which is the countrie country biggest me processor is offering to buy hi hillshire brands for $6.8 billion or 50 buck as share. hillshire shot up above the deal price. you can see they're currently up $52.23. as for tyson, it's the leading

gainer in the s&p 500. currently you you can see they're up about 7% on the day. the offer comes just would days after pilgrims pride offered to buy hillshire in another all cash deal valued at $6.4 billion or $45 a share. pilgrims pride down about 2% earlier today. earlier this month, hillshire offered to buy pinnacle foods. that was a $4.3 billion deal. typical you see there up about a percent and a half. so a lot of things are happening in the food industry and it looks like there will be more to come on this front. scott, back to you. >> doc, we have ourselves a bidding war. >> yeah. >> and you were playing the options in this. >> it's been a wonderful ride for everybody who has been in this. i am now out. the reason is the stock has just made such a monumental move. they were buying the 35 calls all the way up to the 38 calls. now where it is, i just said

adios. it's been a wonderful right. >> that stock getting a big boost. coming up, who can forget this heated exchange on cnbc last month. >> do we believe it or not? because you said it. >> let me walk you through -- >> it's a yes or no question. do you believe it or not? >> i believe the markets are rigged. >> well, brad is back and this time he says he's found new evidence to prove the market is rigged. an exclusive interview you do not want to miss. and later, it's a bird, it's a plane -- no, it's a hawk. we talk to jeffrey lacker about the fed's next move and rates, as well, and the fed's long term policy plans. with all the opinions about stocks out there, how do you know which ones to follow? the equity summary score consolidates the ratings of up to 10 independent research providers into a single score that's weighted based on how accurate they've been in the past.

i'm howard spielberg of fidelity investments. the equity summary score is one more innovative reason serious investors are choosing fidelity. call or click to open your fidelity account today.

take a look at shares of netflix moving above 400 bucks again this week. and it seems reed hastings is even marveling these days at where the stock is. >> some days i wake up and i think it is too high, other days i think it will go higher. boy, the short term guessing is just hard. >> hard indeed. >> you have to appreciate his honesty. this is a guy who -- >> he's said it before. >> you're right, when it was lower than it is now. so credit to him being surprised himself. i'm surprised that it's actually been able to not just get off of

that 350 or closer to 300. but you look at the stock now, it's exploding to the up side. i've missed this one. we talked about the international growth and germany and some of the others where there is significant growth. i might have to jump on late. >> apples beats is just the latest transaction in a huge year for m&a. so is that a good or bad sign? terry has 20 years of experience and advised on more than $300 billion worth of deals in his career. welcome back. good to see you. apple pays $3 billion for beats. what does it tell you you? >> it tells me that they have a currency with a very high pe and all of the numbers while large and absolute terms are relatively minor to them on a relative basis. >> how about in the bigger

picture just where tech m&a is now relative to 2000. we said the highest level since that period. should we be celebrating the pickup in deals or fearing what it means? >> well, you know, sure, there is a lot of activity. but it feels different than back then. i feel like i'm repetitive talking about are we in a bubble or not because that's the perennial question that keeps getting asked. and it's healthy that it gets asked because it keeps us from being in a bubble. so yet valuations are frothyish. but there are real business models behind what these companies are doing as opposed to 15 years ago which was a lot of froth without any reality to it. and the difference is this time, you hear a lot about disruption, digital disruption and how it's fundamentally changing

industries like taxis or hotels and what have you. but the reality is a lot of what is going on now is more about enablement. in other words, if disruption is about shifting share of an existing spend of a pie, enablement is actually creating new spend where the software and technology solutions are actually providing something that is actually useful enlarging the pie which i think is a positive thing for the economy in general. >> this is josh brown. so when the apple beats deal was first leaked out on may 8, the immediate reaction both in the stock price and the media at large was skeptical, negative. in the meantime, we're less than a month later. apple has added $38 billion in market cap in the last three week since the leak of that deal. are we 00 skeptical overall when a company like apple who has been sitting on cash forever and doing nothing all of a sudden does something? why aren't we cheering, why aren't we applauding companies

willing to take risk? >> yeah, you know, it's a good point. when you have $156 billion on your balance sheets, spending $3 billion is kind of irrelevant. i think facebook's acquisition of whatsapp where the majority was stock is maybe something that should have turned more heads. and my general feeling, and i haven't checked recently, but whenever your price earnings ratio exceeds 100, which is where facebook has been trading recently, you should use that currency. if you think about normalized pes in and around plus/minus 25, it's like everything is a massive tag sale with 75% off. so for companies that are in dynamic spaces where things are changing rapidly, m&a is actually the answer. you can't get speed to market with your own development of

applications and opportunities fast enough, so people are resort to go m&a. and by the way, if you look going back either in the '80s with cisco or in the 2000s with google, there is a stock market premium for companies that know how to do m&a well. >> we reerkt yoappreciate your . we'll have you back soon. apple shares hitting their highest levels since october 2012 following the beats announcement. the question is, can it keep climbing. let's ask one of the best analysts on the street and someone who rarely comes on television, as well. katie hubberity covers apple and joins us live from new york city. welcome back. >> thanks for having me. >> good deal or not for apple? >> so first of all, i want to take a step back because we are huge believers of the stock even though it is hitting recent highs. and i make two really important points.

first, it is the only large cap technology stock that is underowned relative to the benchmark by the biggest holders. and second, we see increasing evidence that our bull case of $860 is going to play out driven by iphone 6, iwatch as well as this acceleration in services growth. and the last bepiece leads to t beats deal which i view as lee risk with potentially high reward. the low risk is that there is an established device business with a revenue stream that justifies the majority of the valuation. the potential high value comes from the music service business and any other services that this new team can dream up. we published yesterday that one point penetration into the apple customer base is equal to almost a billion dollars of incremental

revenue. >> so he had decihe ha eddy cue conference. let's listen. >> we don't try to do too many things. we're not smart enough to do 100 great things. we want to do a few really incredible things and we're focused on that. and that hasn't changed. it's been, you know, keep going down the path we're going and building great, great products. later this year, we've got the best product pipeline that i've seen at apple in my 25 years. >> katy, do you buy that, is he overstate wl statstating what i? >> there are a number of products and services that are in the pine linpeline. first is iphone 6. that will drive 11 points of market share in the u.s. according to a recent survey we

had in the field. and then iwatch, i think investors are looking at that product all wrong. most are looking at the swiss watch market as a proxy just like they looked at netbooks for ipad and blackberry ofor iphone. the right way is to think about the halo fact. what percentage of apple's customer base will buy a new apple device. that's 30 million to 60 million incremental units. >> what about gross margin implications? historically that's been a problem for the stock given the run the stock has had, how do you see it playing out. >> sure. so there has been a lot of he questions about iphone 6 margins. we are not nearly as concerned as others. i just spent a week in asia earlier this month. we don't see apple pressuring the supply chain like they were ahead of iphone 5. i think part of that is because

depreciation expense will come down, inventory costs will come down. and they also have the flexibility to raise the price like they did with ipad mini retina by $29, $30 no order to digest the higher bond cost. i'd also point out that we believe the bill of materials in the iwatch is $100 and that that product will $299. >> has the stock been running in anticipation of the pipeline and product or because of the financial engineering or at least the way some people describe what apple has been doing with its money? >> i'll tell you this. the buy back, the dividend and share split has come up in virtually zero conversations that i've had with institutional investors over the last month and a half. it's all babout the fundamental and it's iwatch, iphone 6 and the services acceleration that is driving the stock.

>> katy, appreciate it. i know we don't do this on which. so we're thankful for your time. so we're thankful for your time. i don't know that i've heard an analyst that bullish. >> if you follow katy like i have, she helped get me into the stock in 2007 and even before that. so this lady has been on it. i think the real critical things she talked about in her notes to us is the idea of we'll get this new largest screen phone september, we're looking toward the iwatch probably q4. and she also talked about trying to make some of florida money on the mobithat money on the mobil payments. so she's looking forward and saying $860. >> i think there are technical factors. the market is saying it wants larger cap stocks and it's shifting out of the newer hotter

clo cloud names. grooet maki growth managers have to put the money somewhere. >> she said it's underowned. >> fine. whatever the euphemism you want to use, but i think large institutions and big roll funds and tech nufunds are add to go apple and taking from thing has they don't want to be whiexpose to. i don't think anything has changed with the fundamentals. >> coming up, abercrombie surprises the street. we'll find out if anyone on our dechb desk is a boouyer. and another upgrade for twitter.

with all the opinions about stocks out there, how do you know which ones to follow? the equity summary score consolidates the ratings of up to 10 independent research providers into a single score that's weighted based on how accurate they've been in the past. i'm howard spielberg of fidelity investments. the equity summary score is one more innovative reason serious investors are choosing fidelity. call or click to open your fidelity account today. but at xerox we've embraced a new role. working behind the scenes to provide companies with services... like helping hr departments manage benefits and pensions for over 11 million employees. reducing document costs by up to 30%... and processing $421 billion dollars in accounts payables each year. helping thousands of companies simplify how work gets done. how's that for an encore? with xerox, you're ready for real business. how's that for an encore?

in a we believe outshining the competition tomorrow requires challenging your business inside and out today. at cognizant, we help forward-looking companies run better and run different - to give your customers every reason to keep looking for you. so if you're ready to see opportunities and see them through, we say: let's get to work. because the future belongs to those who challenge the present.

four trades on four stocks making news today. first up, costco on the rise despite missing estimates.

>> yeah, because gross margins were a little better than expected. the year over year growth rate was the best in three quarters. we're buying on the weakness this morning. >> dollar tree getting an upgrade. >> and it was the impulse buys that helped them. candy and seasonal goods. that's what drove it. >> abercrombie & fitch popping today. >> better than expected and yet still off. when you look at the revenue, still off. when you look at the comparable sales, better than they were a year ago. down 17%. now they're only down 4%, 5%. but still i think this is moving too high too fast. this is overvalued. i'd be a seller. >> palo alto? >> palo alto networks had a really good earnings report. huge revenue. but most importantly, they settled a patent thing with

juniper and an lais lalysts li for both companies. >> and twitter, another update and shares are on the move today. yousef, welcome back. what has changed that had you upgrading shares today? >> a few things. obviously the valuation is a bit more attractive here with the stock off some 50% from where we downgraded it five months ago. second, we all recall the huge lockup expiration that happened on may 6th. and we feel and we believe that most of these shares that were going to come to market, we feel they are resetting their expectations to look at twitter really for what it is. not as a facebook wannabee, but just a great broadcasting

platform. and a base that could still double over the next, you know, three or five years. not get to facebook's 1.2 billion or 1.4 billion, but still a huge opportunity that could still make the stock highly attractive. >> we had a big tech investor on the show yesterday which made the point he thinks you need to choose from facebook and twitter. why is that the not the case? >> that's not the case. from an advertiser perspective, one could make the case that it is supplement taker. meaning could you buy one and not the other. but social advertising is 5% overall, so there is huge up side. but i personally use both and my usage of facebook is very, very different from my usage on twitter. i use twitter when i want to broadcast something to the world. when i want to broadcast

something to my followers, i use facebook when i want to share with friends and family. >> thanks for coming on. twitter is on the move. who wants it? >> i think the biggest issue is engagement. obviously yousef has been all over the story. but how do they get that year engagement. i do think you could own twitter and facebook if the stars line along right. but we haven't seen that yet because the engagement factor and the ability to be able to have that price point and attack, they just don't have facebook what facebook has right now. >> his target was 40 and he didn't change it. it could hit 40 in a day the way this stock moves. so i didn't find it that bullish in terms of his upgrade. >> sounded bullish in the enter sttrue interview. >> he did it. >> i like it a lot. do i own twitter. and i think it goes higher.

we get a pair upgrades, carries to nearly $35. i think his target is conservative. still ahead, are bonds in a bubble? we'll ask jeffrey lacker. he'll join us in a first on cnbc interview, so timely with rates going what they are today. and battle of the exchanges. iex founder went toe to toe with bill o'brien during a cnbc interview last month. >> what do you use to price trades in your matching? >> we use the frequedirect fees. you had a 300 page commercial, so let me talk. >> well, he's back and we'll hear from him next in a cnbc exclusive about what he says is new evidence about the market being rigged.

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traders. and he's back. eamon javers joins us with more. >> thank you very much for being here. we appreciate it. last time you were on cnbc, you caused a little bit of a stir. but i'm wondering what the impact has been from all the hoopla since then. how is your business doing, how is the company? >> business is going great. we doubled market share. we continue to have requests for meetings. we've had thousands of e-mails, calls. we're sitting on i think over 1,000 resumes. so it's been a really positive response. part of it now, if this is a marathon, we're probably in the second or third mile. it's a long road. but we're very encouraged by where we are. >> i've been talking to some of your critics, and you do have some. a lot of whomee viament views. one critic raised a question that iex has something called

broker privilege in which brokers are allowed to jump the queue as they're executing on trades. and he says it's something that is a problem in his view because people are getting ahead of everybody else in line. explain that because that is one of the big criticisms. >> sure. the process is called broker priority. and what it means, if a broker that is third in line on the bid, if that same broker catch as seller about to sell stock on the bid, the buyer who is third in line will jump to the to which the queue and trade with the seller. the goal is to have brokers who have earned both sides of the trade to internalize and it happens on iex. >> is that fair to the other folks who are getting jumped ahead of in line? >> if we were the only market out there, if we had 100% of the volume, i could see the case against it. but if you don't give the broker the chance, they will create their own private market to do it.

and withhold orders from the open market. so the perfect example is the trauma stock exchange has broker priority. no big canadian bank has a dark pool because they realize they can internalize on the exchange. the criticism is really right now it's 2% to 3% of our total volume. >> critics say this is something that is not done anywhere else inside the united states. you mentioned canada. do you think the s.e.c. will approve it if you become an exchange? >> i think there is a very strong case for to stay. i think when there are 57 places to trade, you're giving people choice. they have allowed other exchanges to kind of, you know, adjust their priority rules. so i think there is a strong case given how fragmentationed the market is to give brokers the opportunity to internalize on the venue. and when that trade happens

broker to broker, it's tree. the free. there is no economic incentive to enkurcourage this. it's trying to reduce fragmentation tags. >> let's go back to scott. >> it's interesting listening to the way you're describing what you are because what i hear is that there are certain people who have an advantage. an advantage is different than the system itself being rigged. and i'm just wondering in the last couple of months with all of the firestorm after claiming that the markets are rigged, whether you regret use aing that word and you would describe it differently or you would change the way you spoke about it knowing now how this whole thing has developed. >> i think the issue with the word rigged is that i gave critics and gave people that were part of the problem a very easy out. all they had to say was the

market is not rigged. that is no defense. really what we said is there are systemic disadvantages in the market. people are systemically disadvantaged. so no one had to answer that critique. they just had to say the market is not rigged. so i think what it did is it s distracted the conversation when really what we were trying to say is that there are built-in systemic disadvantages and those are the problems. as to the fact it shifted the conversation away from the core problem, it's our job to shift it back. it's almost a cop out to say our critique is that the market is not rigged. you've avoided answering the real question. >> you're still making tough criticisms of the exchanges themselves, right? >> when we look and we've learned a lot from building iex and launching it, i think when you look at the role of the exchange or the dark pool in the market, that role is of the

referee. right? your goal is to match buyers and sellers. buyers and sellers will come toward that trade with different levels of information, of technology. you're they evnever going to eq the access different players have. it will be one where that is just capitalism, that is just market forces. but the exchange or the dark pool, their role is to be the neutral referee. and what has happened, as technology has evolved, markets didn't sit back and say how do i use technology to create neutrality and create fairness. what they did is they started selling the technology. and when you're selling technology, really whether you admit it or not or whether it was sbefrngs intentional or not become economically vested in one person winning over somebody else. so i think -- >> brad, we heard from tom joyce since the book came out. he was on cnbc a couple days ago. i'd like to get your creation to

what he said about michael lewis and the book and your reaction. here is tom joyce.rcreation to what he said about michael lewis and the book and your reaction. here is tom joyce. >> he's dead wrong. let me ask you a question. who is rigging the market? is the s.e.c. rigging it? i doubt it. is duncan? i doubt it. duncan has more integrity than your family unit. >> so do you want to answer to what tom joyce said? and again, the conversation went on and he brought the example of everybody has an advantage over somebody else and whatever line of work or whatever you're doing throughout your life. you have documented with ammon a specific advantage that certain brokers have other others in the way they trade on ie sxch echli. so answer tom joyce e's charge, please. >> again, it's whether

intentional or not, what has happened is that the markets themselves have in a way provided certain advantages. back to the point i was making is that the exchange really, the dark pool, the markets, their whole goal should be to be neutral, to be fair. and technology has evolved. again, selling technology automatically changes your perspective. so i think you can't criticize someone who says here is an evolution of technology, i'll use this to trade smarter and faster and cheaper. again, it's free market forces. there is nothing wrong with doing that. where things got carried away again when the referee became vested in certain outcomes. i think that is probably one of the largest problems. >> another thing you hear when you talk to your critics is, well, iex is not necessarily as a customer going to get the best price if you go there and you might see some fees. talk to us about pricing and fees and whether or not you can be competitive for average mom

and pop traders out there and who want to make money on the trade. >> we don't pay rebates, so there is a fee associated with it. of course the people collecting those rebates aren't happy in paying a fee. but also there are fees that are three times the size of ours. so we're in the middle of the spectrum. again, depending on the order you send us, we had a lot of retail interest and what we did is we educated and said you have to send us routable orders. if you have 600 shares to buy, send us the routable order. if iex does not have the other side of the trade, we'll route it out on your behalf. so i think it's one where at the detail, you know, we spiskly built a router to ensure that if we don't have the best price, we're adding to the market that does. we don't trade, we never get on

the other side. we're not a prince trader. but for us it's about saying if there is a price out there that iex doesn't have, we'll get it for you. >> it's a fascinating experiment. we'll follow it as it unfolds. thanks for being here. scott, back to you. up next on the half, another big interview. he's one of the fed's most outspoken hawks. what does jeffrey lacker think of the confusing drop in interest rates? we'll ask him next.

coming up at the top of the hour, it is one of the hottest areas of drug development but what exactly is it. we'll explain. it's really super cool. plus, the drug stocks leading the way in that field. and food fight is on. tyson foods making a takeover offer for hillshire farms. what this means for investors and minuanyone who eats. and we're about two weeks away up the world cup. will brazil be ready. there are increasing doubts. we speak to one person who is neck deep in it and he says no way. now back to scott on "fast money". >> thanks so much. another big move in bond yields today. the continue yeten year falling lowest level in a year. what do federal reserve

policymakers think. we have skrefry lahave jeffrey today. steve, great day to have mr. lacker. >> yes, thanks very much. i'm here at the central banking conference and there are a lot of important policymakers here and i have one right next to me. jeff, thanks for joining us. >> great to see you. >> let's talk about the news this morning. minus 1% gdp first quarter. how concerned are you about that? >> not unexpected given the data flow we've seen. not too concern baud there are a lot of transitory factors at play. they will reverse and unwind in the second quarter. >> is this all weather, and if it's all weather, why couldn't we forecast it? >> by no means is it all weather. i've seen estimates and that's not it. you had inventories, net exports a little bit weak, defense spending falling off. you had a bunch of things that contributed to it. >> so what kind of bounce back are you looking for?

>> people are talking three to four. i think that is reasonable. i think the broader question is what is the longest trend in the economy. a year or two ago, i came around the ppgs thosition that the 2% is the growth we'll get. maybe $2.25%. i know for four years now we've been thinking growth would pick up to 3% or 4% and now we won't know until the fourth quarter because the second quarter data will be polluted by the bounce back from the weak first quarter. so we won't know until very late in the year whether we've gotten a sustainable acceleration. >> you wouldn't be surprised to haveback and then go back down to trend. >> no, it wouldn't surprise me. >> you think long term growth is up to a percentage point lower? >> it is. you have a sagging labor force participation rate that seems structural. i think the cyclical effects

have born oworn off. you have headwinds that are making firms reluctant to make any commitments on hiring or spending before they see the need for it rather than in anticipation of the need for it as would have been typical in a previous expansion. so, yeah, i think growth is just lower now as of trend. >> that leads directly into a discussion about bond yields and where they are right now. i think two discussions here. one is what's going on right now, and one what is the longerm trend? >> that's a good question. i don't think anyone knows for sure, but i think the leading hypotheses that the fall and beginning of the year reflects the appreciation of maybe the surge last year isn't going to be sustained over the next couple of years. i think there's some spillover from what people are anticipating policymakers in europe to do. and, you know, there could be a bit of flight to safety, but i'd put that a distant third on my list. >> does it tell you that there's

a belief that inflation is going to be lower in the year ahead? >> the interesting thing is a decline in yields has been all on the real side. inflation expectations seem pretty well anchored. on inflation, luckily, we've bottomed out. the decline we were seeing in 2012 seems to have bottomed out last year. and we're seeing the first signs of pickup, of firming, and i'm hopeful that we'll see a gradual move back towards 2% over the course of this year. >> so what's your outlook for interest rate liftoff? >> good question. i know we sound like a broken record when we say it's data dependent -- >> you sound like a broken record asking it. >> but it deserves special emphasis. when you see pictures, when you see somebody say second quarter next year, that's the middle of a range of possibilities that are plausible. it's going to depend on how the economy shakes out. >> where does jeff lacquer put himself? >> the second quarter of next year. that would be the central tendency of where i think a

plausible range of dates of where we lift off is. >> i have to ask you about a topic you're going to speak on tomorrow. you're going to make a strong point, i believe, that the fed should not be in the business of lending during crises. >> people think of crisis lending as something that's about 2007 and 2008, but we got into this back in the early 1970s. and over the subsequent decades set a number of precedents for rescuing creditors, of firms in financial distress. those precedents taught markets to expect the if ed to rescue creditors if inc. thises got squirrely. i think that, more than a lot of other things, led to the fragile and vulnerable state of financial -- large financial institutions going into the crisis and the financial markets more broadly. and so i don't think you can evaluate our crisis lending outside of the context of the broader history of us having taken actions that had the effect of encouraging the kind of fragility that we had to react to in 2008. >> jeff, we'll cover a report on your presentation tomorrow. thanks for joining us today.

>> my pleasure. >> jeff lacquklacker. back to you guys. >> steve, president lacker, thanks to both of you. what do you think? steph? >> surprised that he thinks 2% is the structural growth rate of the economy. that's a little disappointing. i hope he's wrong. but that was a big surprise to me. >> yeah. >> i don't know. i mean, he's not -- he's not really saying much different than he's always said. and lacker's kind of been a little bit of a contrary indicator in the past. he's pretty worried about inflation in 2006 and 2007, for example. and that was, obviously, not the right course. >> and still not sure exactly why -- and unable to answer the question, as on all of our minds, why are bond yields falling so precipitously to where they are? >> they have no idea. >> if it's 2%, if we really are underlying growing at 2%, that's why it's at 2.4%. coming up, "final trades," and we'll be right back. mine was earned in korea in 1953.

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you may know our own josh brown is out with a new book. it's called "clash of the financial pundits." it's about the history of big-market calls and how to make sense of all of the different opinions that are out there. pundit extraordinaire herb greenberg was interviewed for the book. he's here with his thoughts as well. josh, you point out that a lot of conventional wisdom about investing is contradictory, such as buy when there's blood in the streets. never catch a falling knife. and take your losses quickly, but don't get scared out of a good position. congratulations on the book. >> thanks very much. >> here is the message you are trying to convey is what? >> i think i'm in a unique position to help people who are investors, and they're coming into contact with financial news and more importantly opinion on a day-to-day basis. i think the book will make you a savvier investor, by the time you finish it, you're going to have a much better sense of where all these opinions come from, what the biases are and how to make use of them or ignore them as necessary. >> never one to be shy with his opinions, herb?

what do you think of this whole thing? >> i think it's very interesting. although, you know, the one interesting part is that, you know, the smartest people who think they've just got it right, that's when they get blasted. but i want to point out this thing over my shoulder, the right-hand shoulder. >> the react-o-meter? >> that's the hostile react-o-meter. i have used that perhaps the best contraindicator for much of my career. when i'm getting all the hate mail, the venom because i've talked about some company, that usually means i'm closer to right than not. >> herb, you've obviously been in the game for a long time. and you've interviewed probably most of the smart investors, and you've seen a lot come and go. what do you think the best financial commentators, myself included, have in common? what are the -- i say that humility is the most important trait. but what would you say like when you're watching somebody give an opinion about the economy or the markets, what do you look for

that tells you, hey, this is a guy or gal that i should pay attention to versus not? >> self-deprecating, they realize that hubris can be humbling. >> one more question. >> try and do it before the show ends. >> less than a minute. >> we'll take it offline, herb. i love you. >> i love you guys, too. >> congratulations on the book. "clash of the financial pundits." joshua brown. final trades. around the horn. stephanie lang. >> triumph group. it's a laggard in the aerospace industry. >> okay. doc? >> pbf. this is a refiner, judge. i'm buying it. and i own it right now. >> okay. pete? what are you watching today? >> gt advanced tech, scott, because of the sapphire and what's going on with apple, i think the stock's going higher. >> josh? >> "clash of the financial pundits," this is the number one book in investing out right thousand. buy it immediately. >> what's your real trade? >> applied materials, mentioned it earlier this week. i think it's in breakout mode. >> we're going to continue to

follow this move that we've seen in interest rates. the ten-year note yield is certainly in focus. lowest levels now in just about a year. got to go back to last june or july as that note -- there it is -- the top of your screen, hit 241 earlier today. that does it for us. "power lunch," i'm certain, is going to talk about that. we'll see you tomorrow. "power" begins now. >> "halftime" is over. the second half of your trading day begins now. >> all right, we certainly will be talking about that this hour. scott, bond yields down. what is going on here? the dow transports hitting a new record high today. look at the ten-year, approaching the 2.40 level. there you see it. 2.424. let's see what that means for the big stock picture. also today, a special report ahead of the big american society of clinical oncology meeting this weekend. the main cancer fighters. the through ones. this is a meeting that moves stocks. we're getting you ahead of the game on names big and