Seaberg, great to have you with us. Eric, riddle me this. What has changed and why today do we feel so great of a fed rate hike . I have no idea. I think, you know, were going to be in a cheap market here for the foreseeable future just because of all the uncertainty surrounding Interest Rates, Consumer Spending and Political Uncertainty here and in europe and while this frustrating sideways market may be difficult to navigate were still finding opportunities in the hodges small cap fund. Where . Were really looking at some areas such as some of the nonenergy companies that have been beat down over the last six months by oil prices, Something Like a Legacy Texas Bank share which is a bank that we think is very attractively valued here. The perception of Energy Exposure is not as great or the reality isnt as great as the perception in this stock and we think its created an opportunity for investors. Other areas that we like are areas tied to infrastructure spending, like Eagle Materials where youre investing in cement and concrete and we see very nice tailwinds for those businesses, regardless of what happens in the broader economy. David, i want to bring you in here. It does seem like in todays session theres a risk dark on mentality. Eric is part of the worlds small caps outperforming the broader indices and seeing big gains in technology, S P Technology sector up almost 2 . Do you ride on with this riskon mentality today . Absolutely not. I think you know my position on it and this is what it is, its essential lit hedge funds extremely nervous right now, super nervous about underperforming and an up tape so no incremental seller. They have a feeling of being under exposed and volume is light across the board and everybody is negative and were getting a gap up on light volume. I think its a little overdone. Nothing really compelling here for me to step in and buy to chase this rally. What are you selling on this rally then . I mean, i think everything pretty much across the board. You fade this move in general is what youre saying . I would fade this move in general. I think the only segment of the market or sector that looks a little bit from a valuation perspective attractive is the biotech names given the fact that they have been beaten down but still theres still super negative sentiment there and look at ibbs broken up through the 50day for the first time in a few weeks and just from an overall valuation perspective, thats one pocket of the market that you can actually argue. Theres value. Kevin oleary, started off the segment asking a riddle why things are different today. Do you see anything different today . Optimism around europe as well. It wasnt just the domestic Housing Market. 1. 4 in germany when everybody is expecting zero or negative was very surprise and that wave of optimism came into our equity markets in the future so if youre long europe youre up big today, anywhere from 1 to 1. 5 and it buoyed every sector. You are long europe and have been for some time. The negative youve got britain leaving, terrorism. The thing is though the stocks have had the living stuffing kicked out of them, trading at such a massive discount to the same companies ghestically. I cant help myself and im looking at it as a volume investor. When i talk about glaxo and roche and nestle and people on the street say these are great mesh companies. Not American Companies and just have 88 of their sales. Thanks and lets go out to Rick Santelli in the bond market. A bond auction just took play. Well, melissa lee, conventional wisdom a twoyear know. Nobody wants to own it. If the fed tightens yields are going to go up. Boy, were they wrong. This 26 billion of twoyear notes gets an a as in apple. Yield at auction 1. 92. The market was trading around 94. 5 and offered at 94. The low yield on the entire session was 91. This was blowout pricing, so on those 26 billion, lets go through the internals, 3. 00 bid to cover. Oversubscribed to by a factor of three. Best since november of 15, just a few months ago. 49. 8 on indirect, best since february of 16, not that long ago but heres one for the ages. The direct bidders at 32. 5 was the best since october of 2012. Primary dealers take 17. 7 of the auction. I guess the concession built in meaning prices have fallen and years have risen since the minutes was enough to draw in investors. Of course, tomorrow, five years to the tune of 34 billion. Back to you. Rick santelli, thanks. Appreciate it. Now to the blowout home sales number and diana olick live in washington with the pretty big numbers. Diana . Reporter huge numbers and a big jump in newly built homes up 6. 6 for a month to a seasonally adjusted rate to 16,000 units. Talk about a beat. Sales up 24 from a year ago the highest pace since january of 08 but not just that headline turning heads. The median price of a newly built home sort up 9. 7 year over year to the highest reading on record. The last peak was in 2006, and thats a median which means half sold at a higher price and half lower so it may speak more to the shift in buyers, that is, more highend buyers in the market, especially since builders are basically absent from the starter home market. Now you saw that in the big beat by Toll Brothers today raising expectations for 2016 sales and seeing its already luxury median price head north. The average price in q2 for homes delivered 855,000, up from 17,500 according to the company release. Clearly builders are benefiting from the lack of existing homes for sale from near record low Mortgage Rates and from an improving jobs picture. Back to you guys. Thanks. The Home Builders on fire in the back end of the blowout housing number. We were talking before the show, the market may be surprised by this big beat. You were not because youre in touch with these companies. Who out there though among the names, specific Home Building stocks, is really driving these kinds of gains . If youre thinking about stocks to play, first off, to set the table, we got helium in the Housing Market because of the fed, super tight inventories creating demand and massive job growth. A great setup for a slow and steady recovery thats going to benefit stocks like d. R. Horton which caters to the firsttime home builder. Their numbers have been on a rampage. You saw a very expensive print to date from Toll Brothers and really like whats on with lennar and patty struggled a little bit last year and they turned the corner and are moving forward resolving execution issues. Bob, sit tight for one second. Were going to jump in with more breaking news on monsanto. Dom . We just want to call your attention to the fact that monsanto shares have reopened for trading, now up about 2 marginally higher than they were before the trading halt for news that monsanto had formally rejected that buyer takeover bid of 22 a share. Also noting here as well that the takeover price that they proposed for 122 a share, the sandercock has gotten to a high of 109. 13, 109. 13. Not gotten to that level since the reopen and well keep you posted and for now thats the news on monsanto. Have reopened for purchase. Diana talked about Toll Brothers and the average selling price, wow. I mean, a huge jump but that stock over a year has been a dog. Its down Something Like 10 . Why isnt toll performing with those kinds of numbers . Tolls targeting big presence in the california market, strong tristate, new york, new jersey, pennsylvania. A lot of concern that these markets are a little frothy right now and theres slidity to that. Can they sustain the pace of growth . Theres questions that need to be answered. We prefer a company like d. R. Horton and lennar, much more focused on the entry level builder because thats the segment. Used to be high end and now youre saying the entry level is the better trade. Got to go where the puck is going and its going right to the firsttime home buyer. I want the companies that will drive that price and growth sglvp the companies that make the stuff that goes into the homes, the Eagle Materials, the usg, the treks, masonites, they have done far better than the Home Building stocks themself. You would think they would trade the same. Why is there a difference . Big production costs, as you ramp volume you get massive Market Expansion and were seeing this with market leaders lie masako, mohawk, fortune. The big three strong horses selling into home depot. Massive demand and strong consumer mixed shift of higherpriced products and getting the benefits of the tailwinds. Look for this to continue in the back half. Year and looking for other names to invest whirl spool an extremely wellmanaged company and another name which would benefit from similar trends, along with masonite. So theres still a lot of opportunity remaining after the big riots. Bob, appreciate your time. Thank you very much, brother. Tyler . Tudor investments will trim its fees on at least some of the funds in its stable to help keep investors on board and happy. Kate kelly is with us from new york. What is my fellow uva grad Paul Tudor Jones doing, kate . Reporter well, paul tuldor jones has had a tough year so far, tyler. Had some redemptions and went from 13 billion at the end of last year to 11. 6 and also the Flagship Fund is down about 2. 6 through midmay. Not alone and a lot of hedge funds are underperforming and what makes it somewhat unique is the Fee Structure they have is higher relatively speaking than the industry standard, the sort of 2 and 20 that you hear about, 2 of expenses. So, in other words if i invest a dollar two cents goes towards the expenses and then on any upside they take a quarter of that before the investors see the rest. Their funds were historically higher than that. What they have done now is reduced some of those funds but heres the catch. Their fees still remain relatively high. They are still above the 2 and 20 compared to the rest of the industry even though in this case its an inducement to make it a little bit more attractive. My notes, kate, tell me tudor has lowered expense fees on one of its funds to 2. 25 to 3. 75 and the performance fee down to 25 of gains from 27 , but that presumes kevin ollie that there are gains which apparently, as kate points out, there have not been in at least one of those funds, tudor investment down 2. 6 . Youre a value player. Youre a value investor. You see value in hedge funds . Hedge funds have been a problem as an asset class. 07, 08 and 09 when we had collapses in the overall market and when its encapsulated in a hedge fund format you got gated. In other words, they cant give you back your money. They have elephantlike memories and remember that and have a different problem of late. Simply not beating the mark. The way to look at hedge funds i dont care what the fees are, 2 and 20 and its after free performance, the way they advertise themselves. It turns out for many hedge funds, leaving individuals out of the equation or conversation anyway, they werent hedged at all. They were levered. They werent betting against markets. Just using a tremendous amount of debt to turn the turns. When things went bad they got triple or quadruple the downside because they were using leverage. Its been a very ugly 24 months for hedge funds. Theres many of them down 20 , 30 , 40 . Right. And the Institutional Investor looks at this and says why do i need this . A lot of volatility to my portfolio. I think. They will be under performing for quite a while. Thing you. A bit more breaking news, im told. Is the that correct . Well have a little more in a bit but were Getting Started here on about power lunch. Up next the one thing that could be a huge gamechange for apples investors. Plus one country is seeing huge success with a sixhour work day. Should we do the same . Well debate it when power lunch returns. Theres a place for vacationers who seek more than just a little time off. The ones who choose to go big or stay home. Come with me now. Where every amazing, despicable, wizarding adventure reveals moments that are truly epic. This place is made for those who do more than just vacation. Whoa go with me now its made for those who vacation like they mean it. Universal orlando resort. Man 1 man 2 i am. Woman exmilitary . Man 2 four tours. Woman you worked with computers . Man 2 thats classified, maam. Man 1 but youre job was Network Security . Man 2 thats classified, sir. Woman lets cut to the chase, here. Man 1 whats youre assessment of our security . Man 2 [ gasps ] porous. Woman porous . Man 2 the Old Solutions arent working. Man 2 the world has changed. Man 1 meaning . Man 2 its not just security. Its defense. Its not just security. Its defense. Bae systems. Welcome back to power lunch. Ale shares are climbing after a photo was leaked of what claims to be the case of an actual iphone 7 and photos emerging from a site called nowhere else. Not too many major design changes on the iphone. That phone is expected to be released this fall along with a new macbook pro. With apple shares down 26 in a year could the new products turn the stock around . Lets bring in tim long who has an outperform rating on bmo Capital Markets. Tim, great to have you with us. Thanks for having me. Does it matter . Do the pictures change your view of how successful the uptake will be for the 7 . Well, you know, a few things. First of all, obviously the product is going to be very important. What are the features and whats differentiated . We hear a lot of things, more cameras, more speakers, obviously a stronger processor. We dont really know until we get really close to the to the phone launch, until we see that, but, you know, the other thing that we think is very important is to look at installed base and how much its grown and the age of the phones which we think are very old so we think the setup into the iphone 7 is much better than it was for any previous model. The last time there was a positive setup there was the 6. Of course, a new form factor for them so it was a much easier advantage for them to really upside those numbers. And we do think its positive with 120 million phones in peoples hands that are multiple years old so we do think its a positive setup and think theres good upgrades even thought the phone is not a home run on some of the features. I feel like were talking about another dow component, boeing. Apple is starting to feel like were talking about airplanes. Have the 737 700 and 737 800. And the planes are getting older so they have to change the planes. Like whatever. And they tout these small incremental improvements, is really a 7 or 8 really going to make a difference to a consumer who is probably happy with their five or six that works just fine . The microsoft policy . Yeah, this is very broadbased market. Were selling 1. 5 billion esfoerns. Some 50 and some are 800 so theres a very wide spectrum and a spectrum of users so there is going to be a component of the user base that wants that killer feature to upgrade. There are others that are happy waiting so generally weve seen that replacement rate extend a little bit, but, you know, at a certain point. The apps doesnt work as well and a battery goes a little bit. Buttons break so, you know, over time were going to see upgrades, but, yeah, our thesis is the 5 when they added 4g and the 6 when they added the large screen, were not going to replicate those type of changes to shipments or to growth or to increases in specs ever again. We think it will start to modulate a little bit more around incremental features, but i think that thats enough because the key is with the install base up 80 over the last two years, theres just more people to upgrade from there. Yeah. My concern about this dialogue, particularly in the last 24 months about apple and ill ask you about this, tim, we used to talk about apple and all the other products and high margin opportunities, all the other buses, and now the dialogue is about the feature set and Processor Speed of one phone. That smells like motorola or nokia did to me a decade or two decades ago. What happened to the story of the ecosphere and the giant platform and the opportunities and the high margins and the Global Growth on Everything Else besides the phone because if this is the story, it should have stayed left. Margins can krunchltd all the features you just described are already embedded in the samsung 7 edge. It already has all that. Camera, higher processing speed and all those features so what . Wheres the rest of apple . What happened to apple . Send it home. What happened to it . Yeah, well, look, one of the important things that we express and the Subscriber Base which is over 600 million iphone subscribers and a good chunk of those are now used phones where you take your phone and you give it to your son or daughter or father and they they, you know, start an itunes account. That service line is growing 20 this year. Its going to be over 20 billion. Its a higher margin product. Its recurring revenues and think of app store itunes and apple care and music and things like that so i think thats a very important component of the story. As far as the rest of the hardware. Know tablets are in decline, pcs, markets in decline and gaining share and dont do much. The watch was not an initial success but if we get a refresh there with a better battery life and better ampcations that can be good. Its a very Large Company now so i think thats one of the issues with the stock is you have the legacy of huge growth and big momentum and upside. Its just gotten so big and harder to replicate that. See that in the valuation. Thanks so much. Monsanto shares reopening higher after rejecting a takeover bid from bayer. More from david faber on this breaking story. Thanks very much. The important part is the rejection itself. As ive been saying for a number of days, it was expected monsanto would reject it