Take a look at the splash, there is positioning that is starting to take place in anticipation of what could be, maybe a fed Interest Rate increase. Hedging their bets tachlt a look at this one. The two year note yield for u. S. Treasuries, already over the korts of the past week, moving higher. It was near 80 basis points about a week ago. Now its up towards 90. Again, look in the grand scheme of the year to date period, eliminatively on a low basis here. One place where that battle, that hedging is starting to take place. That positioning. Also look at this. The dollar a big part of that story as well. Gold also playing into that. Again, 1275 a week ago her ounce. Now were around 1250. A 2 loss over the course of the past year. Gold has been a hot trade. Its still up. Up marketedly. So but some of the bets being paired back in anticipation of what could be a fed Interest Rate increase. Then one more place well look, one manufacture places well look, again, regional banks. Weve seen the Interest Rate expectations move higher. Regional banks benefiting. A huge spike since wednesday. Still below where they were a year to date period. Well talk about the volatility. You heard on the Halftime Report this low volatility environment weve h maybe well see that again. Remember, when i comes to the overall market and the s p 500, since mid march, again, mid march, we only traded in about a 75 point range for the s p 500. The vix, volatility index between 13 and 17 since that period. So were waiting to see whether or not there is any kind of move and whether or not thats going to jigger volatility here. For now, a lot of folks saying lets hold and wait and trim positions and see what its going to lead. To back to you. I think the technical definition for what weve seen, dom, is a big yawn. There we go. All right. Thank you. So the fed may raise rates in tune or may not. But one thing is certain. Unless something crazy happens and Interest Rate increase is coming at some point. The big question is what, if anything, should you be doing with your money because of that . Joining us now, cbs contributor brian kelly and Brian Jacobson and somebody not named brian, john stolfus. John, ill start with you. We all note fed is going to raise rates. If you watch the show, im not big into the fed camp here. What you are advising your clients to do with or without the fed . What were advising them is to keep their goals and objectives in mind. We think that the fed raising rates is indication of an improving economy. The fact that the fed may actually begin raising rates, i dont think in june but may do it in july, more likely in september and most certainly we would think about december. So does the timing matter, john . If they do it in june or july, it is newsworthy. Does it matter for your clients would are investing ten days out. If youre a day trader, it matters. If youre a longer term trader, you just fasten seat belts, enjoy the ride. And if we get any kind of a pullback in here, you start using that Shopping List to buy stocks you may have missed. Brian kelly, there is a certain playbook that investors immediately go to when they hear about fed raising rates. That would be one to snap up the financials. And we have certainly seen that action. Dom mentioned the regional banks. For a year, theyre pretty much flat. Im curious what your thoughts r that weve been seeing of late is the spread between twos and tens has been narrowing. Its the narrowest since november of 2007. Indicating there is no steepening happening here. Right. I would be very careful buying the financials. One, theyre challenge he had regulatory. Theyre now utilities at this point in time. The yield curve is flat. And it will likely flatten, especially if the fed raises rates. Weve seen this happen before. People from around the world say, you know what . A 2 ten year looks pretty good. So im going to buy that. That buying pressure brings yields down, keeps the dollar higher and thats going to flatten the yield curve. It wont be good for financials. The other part of the playbook is to dump dividend yielding stocks like utilities, telecom. Brian jacob son . Yes. Thats what happened last week after the minutes were released. You saw those Interest Rate sensitive partsst market were the ones that did the worst. So what your classic defensive sectors were actually kind of the place not to be in this type of environment. I would concur that thats the way thats probably going to play out as well Going Forward. I agree with john and brian and what they were saying. I would encourage people to think about not whether or not its important that fed raises rates, its a question of why are they raising rates . Its because they think the economy can actually take it. Obviously, people have different views on. That i think the economy can take it. The more important thing to watch, i believe, is actually what the peoples bank of china does with the occur eni response to a rate hike. So far, so good. Theyve allowed the currency to fluctuate a little bit here. If you by this what triggered the previous corrections on auk 11th, depression of the yuan and then the depreciation. Its a lot more flexible. The really key thing to watch is what the pboc does, not so much what does the fed do . All right. Were going to leave it there. Brian, brian, thank you. John, thank you. Thanks, brian. Youre welcome, brian. All right. Shares of monsanto are higher. Germanys buyer is offering to bite company for 62 billion or 122 a share. If the deal goes through, it would create the biggest Agro Chemical business. David . We knew last week that bayer had made a request to buy monsanto. It wasnt made public until bayer close to make it public. 122 a share. 62 billion, all cash for monsanlt yoe shareholders. Earlier today, the ceo of bayer was a guest. He explained the decision bind or explained why they made the decision to come public. Our position to make this public follows at announcement of monsanto last week that they received a private offer to us. It was out in the open and, of course, we want to respond and explain to the public and shareholders what the content of the offer is and why it is so attractive to monsanlt yoe shareholders. They also want to explain to their own shareholders where the deal makes sense. Bayer shares were down sharply since we got word that a bid was made about it company. Theyre talking about synergies as much as 1. 5 billion to be realized by year three of the deal. Theyre talking about it being a product to eps. Theyll be financing it through debt and equity. Theyre not that common over here. Offerings in europe are common over. There and bay er is issuing he can twhat is 25 st perfect price. So lets figure around 15 billion in rights offering. All that to back that 122 a share all cash offer. But as for the offer itself, speaking of monsanto shareholders, over the last week, week and a half since the speculation and news we got from m monsanto that a bid is made mshgs were anticipating getting a price faf above 122. Perhaps theyve been talking to the anlist that agrees with them and this morning says they think its a low ball 122 a share offer. Now for its part, deutsche banc also decides to waive the m a tax. They havent put the best foot forward and maybe therefore seeing the high ground in the takeover battle of the monsanto. They believe a buyer acquisition is still a possibility, they call it a less than serious initial bid. What i will tell you is monsantos board is considering that bid and likely to reject it. What is important to see how they reject it. Do they go down a road that we o would call scorched earth and bring up the possibility of antitrust regulation being a real impedestrian iment to the deal or do they say its just not enough . That will be a key here for its part bay eastern the new ceo fwhob a position where they have to move forward and potentially win. Very rare, guys, to see a ceo step out so early in the tenure with such a bold move. Back to you. David, thank you very much. Throughout the school year, thousands of High School Students across the country have been competing in the National Economics challenge. Think of it as a quiz bowl for future economists. After months of competition, only four teams remain and they are right now in new york city with Steve Liesman. Steve . Yeah, tyler, here at the 2016 National Economics challenge, 10,000 students competed to be here. In the first contest, we have lechlington high school and massachusetts against west Windsor High School north from new jersey. Now the kids, they worked so hard to get here from all over the country. We went out and visited one school that unfortunately didnt get here. This will give you an idea of just how smart these kids are. I did get a perfect score on my a. P. Macro economic ar. S score. I didnt really know anything about economics. It was a foreign concept to mechlt the more i studied it, i realized it is on decision making. The index to measure inflation is force sfors. Consumer price index. We know these are the best teams in the country. Market theory, product costs. We have a long time second place and were hoping maybe this year we can finally break that record and hopefully get first place. I just like doing supply and demand a lot whether it be like normal fly and demand or aggregate. Gist shifting the grass. Its fun. Everyone seems to be expecting a june rate hike. A quarter point increase in federal funds rate is not going to by any means destroy the economy. All right. Lets meet some of the folks here. We have kenzy martin. Tell us wloshgs is your favorite economist . Probably adam smith just because he was so original in his ideas and he wanted people to come up with their ideas. Now was it you, jeff that, said you got the ap economics book and you read ahead in class . Yeah. What was your favorite part of the book . Percentage costs. I like to weigh between two different options and, like, learning about that through economics. Its interesting. Lets talk to your competitors over here. Jessica, what is your favorite part of economics here . Talking to the mike if you dont mind. Personally, i like macro more than micro and International Just because i think its easier to undstand for me personally. Is the fed going to hike rates in june . Theyre going to stay data dependent and look at how the markets are doing to see whether to raise the rates. What is your best bet . I would agree with. That. Thats pretty smart. Speaking of smart speaking of smart, i want to tell you i want to introduce three judges. You might recognize them from my left to right. We have mark zandy from moodys, and michelle meyer, theyre frequent cnbc guests. Theyre on all the time giving us their smarts about the market. Theyre here to judge the contest today. We have two divisions. Well go to the first question. Tyler, back to you and then come back and well give you the first question. Were going to dip in and watch a little bitst competition as it unfolds, steve. Looks like fun. Good luck to everybody there. Brians got a rooting interest. There. West wind sore plainsboro which is where i live. Go knights xlast. The west windsor knights. You are smarter than a 12th grader . Were going to test the economics knowledge, theirs and yours, when power lunch returns. Sup jj, working hard . Working 24 7 on mobile trader, rated 1 trading app on the app store. It lets you trade stocks, options, futures. Even advanced orders. And it offers more charts than a lot of other competitors do on desktop. You work so late. I guess you dont see your family very much . I see them all the time. Did you finish your derivatives pricing model, honey . Td ameritrade. Race car made history mercwhen it sold forprix a record price of just under 30 million. And now, another mercedesbenz makes history selling at just over 30,000. And to think this one actually has a surroundsound stereo. The 2016 cla. Lease the cla250 for 299 a month at your local mercedesbenz dealer. Mercedesbenz. The best or nothing. Welcome back to the National Economics challenge live from new york city. 10,000 students competed around the country to be here. Were down to four teams now. We have lexington, massachusetts, against wwp from new jersey. Its a big east faceoff here. And were going to get right to the first question. What is the name for what occurs if government borrowing causes Interest Rates to rise and private investment spending counting out all private investment. Okay. That is correct. Just so you know, wait until youre told to answer the question. Ive got a job i like to do here. Ive got a job over here. Let me do my job. Otherwise, well do it by computer next year. The time keepers job vaely cool. Are we good . Were going to move on to the next question. The 1976 mow bell prize winner and fierce defender of Economic Freedom . You have five seconds to answer the question. Milton friedman. That is correct. Can we give her extra points for behavior . And take some away from them . Do we have a thing like that . Kidding. Lets go on. Third question. What is the official name of the currency of china introduce bid the ryan, you have five seconds . The chinese reminby. That is correct. Lexington, two. That was a trick question, sfligt i would have hit wrong. You probably would have had it wrong at home, too. Feel free to use pencil and paper for this one. Ryan . You have five seconds to answer the question. It was an accident. Okay. When a firm produces 20 units of output, the average total costs are 4 and the average variable costs are 3. What are the firms total fixed costs . 20. You have five seconds to answer the question. 20. That is correct. Okay. So what is the score now . I think i went 0 for 3 there. Actually, i got milton friedman. The last one i couldnt have done that quickly. That is the National Economics competition pitting school from west plains west windsors plainsboro north and there is a south. Thank god you know. The only one i got right. And lexington. Which is the only one you got . Knowing the schools. Well dip back in there and see chf the four teams comes out on top during the rest of the hour. Right now, i believe it was lexington 3, west windsor 1. Theyll come back. Who matters more to your money, janet yellen or donald trump is it well talk about that next on power lunch. Welcome back. Im melissa lee. We have a Little Movement on the dollar front. Gold is down by. 2 . Taking a check on the rest of the metals complex, the biggest movest day within the complex, palladium. Its down 1. 5 . Otherwise, the rest is quiet. Lets get a check on what is happening in the bond market. Im no rick santelli, what i thought was interesting is the spike in the two year yield here. The two year yield hitting in the session,. 91 . 19 , the highest since march 15th and the spread between twos and tens, the narrowest since november 2007. The yield curve is sort of even state steady there. Today in case you did not know is world turtle day. So to celebrate, we want to know which slow and steady stocks could be Good Investments for you your money . Take a look. This is live in studio by the way. He is going to make his way on the stage. Well have all the stocks coming up on power lunch. With usaa is awesome. Homeowners insurance Life Insurance automobile insurance i spent 20 years active duty they still refer to me as Gunnery Sergeant when i call being a usaa member because of my service in the military to pass that on to my kids something that makes me happy my name is roger zapata and im a usaa member for life. Usaa. We know what it means to serve. Get an insurance quote and see why 92 of our members plan to stay for life. Theres no one no one surface. E. No one speed. No one way of driving on each and every road. But there is one car that can conquer them all. The mercedesbenz cclass. Five driving modes let you customize the steering, shift points, and suspension to fit the mood youre in. And the road youre on. The 2016 cclass. Lease the c300 for 359 a month at your local mercedesbenz dealer. Hi, everybody. Here is your cnbc news update for this hour. President obama and his vietnamese counterpart signing a trade deal between the two countries. That deal includes the plans to sell 135 advance jet engines and boeings plans to sell 100 aircraft to the vietnamese. The white house says the total deal is worth some 16 billion. A blockade in frances main southern oil depot is preventing trucks from accessing that complex, causing fuel shortages. Its another consequence of frances disputed labor reforms which have prompt aid series of strikes and protests across the country in recent weeks. A federal Appeals Court has reversed a jurys finding that bank of america was libel for fraud for the actions before the economy collapsed in 2008. It also negated a more than 1. 2 billion penalty imposed after trial. They said there wassive sufficient evidence that mail and wire fraud was committed by the banks countrywide financial unit. And adelle is set to sign a 1 o 230 Million Contract with sony music. The biggest ever handed to a british musician. The 28yearold sky fall singer was the bestselling artist in the world in 2015. And this deal will double her wealth. All right. Thats the cnbc news update this hour. Ill send it back you to. Thank you. Lets get to julia borsten with breaking news. This is just the latest in the battle over who will control viacom and cbs. Sumner redstones attorney filing a petition asking a Los Angeles County superior court for an order confirming the validity of his removal of both the ceo of viacom as well as another viacom board member George Abrams from his trust. Now he basically Sumner Redstone said he didnt want them as part of his trust, on the board of his trust which will control his 80 voting stake just this morning they filed suit challenging redstones ability to remove them and also raising questions about redstones mental state now redstone himself filed suit has filed again saying he wants to defend those decisions to take them off of his trust. Redstones attorney saying it is telling them that theyre raising the question of meantal capacity foifrt time after