Composite up even more 1. 35 . Materials and financials leading the charge as you see right there. And this rally could keep going, thats the question, will it . As we close out this quarter. Were very close. Bob pisani on the nyse floor here to explain. Hi, bob. And the important thing is weve stopped having an influence from brexit and seem to be looking at people picking up bargains right now. Lets take a look at the markets midday. Weve got an end of the quarter rally going on 8to1 advancing declining stocks, thats better than yesterday. It was 6to1. Volume again on the heavy side. Buying interest with heavy volume, stocks up good indicator overall. And volatility, the vix is back to prebrexit levels, back to levels it was last week prior to that vote here. Number of beaten up sectors are rallying. Weve had quite a rally in commodities and commodity stocks. Look at this south africa, this is an etf, brazil is up, steel stocks are up 3 , oil and Gas Exploration and production stocks up 2. 25 . Overall rally in commodities. Other beaten up stocks, airlines, double digit declines this quarter, but for the last two days slowly but surely some of them up 6, 7, 8 in the last two days. Here are the big names all doing well today. Same with big tech though more modest. Weve seen double digit declines this quarter in apple and alphabet, microsoft, juniper even. And you can see the last two days similar to yesterday, mo modest gains here, but considering the losses still pretty deep holes for most of these big tech names. Major indices since brexit, well, its very interesting to see the s p is only down about 2 . Crude oils actually up since thursdays close. The dollar has stopped increasing. In fact, its down a little bit. And the vix, well, its back to prebrexit levels there. Very interesting changes. People should be very careful about talking about europe though because there are a number of different ways to look at the indices over there. We often cite the ftse 100, the biggest of the big cap stocks like the s p 100, but the broader index, still down quite significantly as the europe stock 600. Keep in mind it depends on which benchmark youre looking at. Finally, one quick question, whats going on with twilio, it priced at 15 on thursday. Its 35 today. Again, i think theres just a lot of demand out there. This is a very, very hot space, but i wouldnt anticipate being up 120 in three or four days here. Well keep an eye on that one. Guys, back to you. You know, bob, if you sold the s p 500 on monday, lets say you own the spy etf, you lost 4 because were up 4 since the lows on monday. Bob, stick around. We are going to switch now to the global bond market because something incredible continues to happen in germany. Yields on their tenyear bond, called the bund, are negative again. And even though you may not give a snits el about the german bond market, you should listen to it because its sending a loud message. Jack, what is that german bond saying . Its saying that capital preservation is the name of the game. Its a giant red flag. Look, when we start to talk about negative rates, its one thing. When we start to talk about steep negative rates, which is really whats taking place there amongst all of this uncertainty, well, its got some real ancillary effects. One of them of course is what were seeing in our markets here. Remember that relative trade, and Rick Santelli has been talking about it. Now, rick and i have argued for years about how the bonds have been giving the wrong signal to those that are trading stocks, and i argued that for the last six years. Well, guess what, now its a little different. Now were seeing a contraction in earnings. Were seeing reasons why the bond market is giving us the yield that is giving us a side from that relative trade. Bob, the brexit vote has galvanized the support of a lot of the euro skeptic parties across europe. If we see other countries follow britain, what does that mean for the bond market . More of the same or widening spreads . Oh, no, as jack said certainly bad news. What were seeing here in the United States and one of the reasons i think our bond yields remain low is were getting money coming in from Foreign Countries buying into the bond market here in the United States. The question for this brexit thing is very simple. Is this one of these big, big seismic events thats going to change things, like for example when china devalued its currency in august. That was seismic. That moved markets for months. Remember oil dropping in january and february . That was seismic. Moved the markets for months. Is this one of those kinds of events, or more of like a oneoff event . Im rather impressed by the reaction in the markets in the last couple of days, but i still think we really havent quite figured it out yet. To call larry kudlow, can i push back against my friend jack just a bit. I wonder, jack, if the negative yields in germany, without getting too wonky, i wonder if theyre saying things are bad versus that the ecb is just buying debt because they need someone out there in the market because the private credit markets, corporate credit, et cetera, havent done that poorly . Thats a good point. But just to go back to something that larry kudlow has taught us all is that earnings are the life blood of stocks. What were looking at right now is a situation where theres a lot of uncertainty out there. Going back to what bob was saying, if this rally were taking place next week after the quarter end, i think it would feel a lot better to a lot of us. But the fact is its got all of the characteristics of a bull trap much like the action we saw at the end of the year before the market came off in january and february. Remember, that move that we saw in oil took awhile. It was not a one or two day event. It needed to be digested in the market. And once it did we saw the ramifications. Ive got a feeling brexit is going to be exactly the same way. Jack, where do you see the u. S. Tenyear settling . Or is it settling roughly at this 1. 46 between 1. 40 and 1. 50. Its funny i just got through telling somebody i would not be surprised to see the yield on our tenyear go down to 1 . If the market starts youre not alone in that. There are others weve talked to said the same thing. You know what, there are people out there that think im absolutely nuts, but ive got to tell you theres this real call for capital preservation out there. And with everything happening, and then of course couple all this insanity we call the u. S. Election process coming up in another couple months, its not a time to be a hero. Its a time to sit back and wait and maybe be in a little cash and try to buy the market 10 or 20 lower because chances are youll get that chance. All right, gentlemen, thanks very much. Bob, jack, we appreciate youre being with us. Seema. Lets get international. We continue to see this pullback in risk as investors face the next bout of uncertainty around europe, the brexit. Stocks, yes, have rebounded. But its important to note the european stock index still down 6 since the uk decided to leave the European Union. Now, if we go around the world, youll see that despite this rise in risk aversion for the quarter russia is up 6 , indian stock market up about 5. 5 , brazil as it settles in with this new leadership up 2 . China though still down about 2 to 3 . I would point out that the shenzen composite is officially out of bear market territory. Now, the other big talker has been japan battling two decades of deflation and this global flight to safety sending the japanese stock market down. Its down about 9 over the past three months, slightly higher today, but of course the currency has been appreciating. Thats a big headwind for its economy, which is export oriented and relying on a cheaper yen. At the same time you have the bank of japan accumulating a third of the outstanding japanese government debt. So what does this all mean for your money . And which global areas are ripe for your investment in asia . Lets talk to a Global Quantitative strategist at wells fargo investment institute. Samir, good to see you. Japan of course has been in focus after we got that brexit vote the boj and policymakers suggesting that we could see some type of currency intervention in the coming weeks because of the sharp rise in the japanese yen. What does this all mean for the u. S. Investor . Does a proactive approach taken by the boj mean its a good thing for u. S. Stocks . You know, it still remains to be seen. Theyve passed a couple times in terms of doing anything. And with the yen in the low 100s, its really been a surprise they havent really stepped in post brexit. So one of the clearest losers away from call the uk and europe over the last couple days is japan because with that currency rising and those exports, as you mentioned, really that flows right through to earnings right away. For u. S. Investors what we would tell people is stay allocated in developed markets, but there arent quite clear winners right now. So were going to need to let a little time go by to see what happens. On the other side emerging asia could be one of the hidden beneficiaries of all this if global Central Banks come out with stimulus. Which emerging asia country are you speaking about . Is it china . I mean, that was a big concern for markets earlier this year around capital, outflows, the volatility in their chinese currency, the yuan, but now with the focus more on europe are people now starting to say asia does in fact look better . We think so. We would stay away from china for now just because there is so much volatility and so much uncertainty around those reforms, but if you look at the emerging asian economies that tend to be a little more developed, i know that sounds a little funny but more developed emerging nations, think taiwan, think south korea, think india, those are the real winners out of all this because they tend to have a lot of, you know, gearing towards global trade and towards technology. So we think they might be beneficiaries from the fed staying lower for longer on those rates. There is this growing belief that because of this uncertainty around the International Backdrop that the fed wont be able to raise rates perhaps until 2017, or even later, but im just curious, i mean, if we get a good jobs report next friday, will that reconfirm that the u. S. Economy is on track and therefore that gives janet yellen more ammunition to raise rates some time this year . We think theyve evolved. And this kind of started with jim bullard here in st. Louis. I think more and more Going Forward they will incorporate the Global Outlook and market volatility into their call it policy measures a little bit more. And we think the jobs report by itself wont be enough to drive that. And so maybe they might try to do something at the very end of this year, but its really hard to see until and unless theres more clear implications of what the last few days mean. All right. Sameer, well leave it there. Thank you so much for joining us on power lunch. Now lets get a market flash. D, whats shaking . Seema, bond insurers, mbia all trading higher as a rescue package for debt stricken puerto rico has survived a test vote in the senate. This of course two days before puerto rico is expected to default on a 2 billion debt payment. These names are now trading between 2 and 5 higher, as you can see. Seema. Thank you so much. U. S. Banks have been battered in the wake of brexit. Why there could be more trouble ahead for the banks and a cnbc exclusive with Microsofts Satya Nadella coming your way in the second hour of power. Well be back in two minutes. Will your business be ready when growth presents itself . Our new cocktail bitters were doing well, but after one tradeshow, we took off. All i could think about was our deadlines racing towards us. A loan would take too long. We needed money, now. My amex card helped me buy the ingredients to fill the orders. Opportunities dont wait around, so you have to be ready for them. Find out how American Express cards and services can help prepare you for growth at open. Com. Find out how American Express cards and services our partnership with habitat for humanity at pg e, we believe solar should be accessible to everyone. Allows us to provide the benefits of solar power to the types of customers who need it most. Pg e provided all of the homes here with solar panels. The solar savings can mean a lot, especially for lowincome families. With the savings that i am getting from the solar panels, its going to help me to have a Better Future for my children. To learn how you can save energy and money with solar, go to pge. Com solar. Together, were building a better california. Thank you. Ordering chinese food is a very predictable experience. I order b14. I get b14. No surprises. Buying business internet, on the other hand, can be a roller coaster White Knuckle thrill ride. Youre promised one speed. But do you consistently get it . You do with comcast business. Its reliable. Just like kung pao fish. Thank you, ping. Reliably fast internet starts at 59. 95 a month. Comcast business. Built for business. Financials are led the way ased market rallies for the second day in a row. More pain may be ahead for the u. S. Banks. Lets bring in head of north american institutions at fitch ratings. Financials probably more than any Group Overseas but here in the states took it on the chin post brexit. Yes, weve had a day and a half of decent stock markets. Why do you not think that the u. S. Financials are out of the woods . Hi, brian, thank you for having me. I think from our perspective a lot of the u. S. Banks in europe have consolidated their operations in the uk. Theyve gotten a lot of cost efficiencies out of that. With the brexit we think there will be some restructuring charges ahead of them in terms of having to potentially pivot away from the uk. So clearly it depends on how the trade agreements are worked out. One thing we have talked about is socalled n. I. M. , net interest margin, basically in a rough way, what banks make when they lend. As bond yields go down, banks tend to get squeezed even more. Is that a part of your concern . Yeah, i think overall were looking at the earnings picture for banks which right now you know is challenged because of the low Interest Rate environment. There hasnt been a huge pickup in activity. I think given brexit its less likely were going to see a rate hike out of the fed any time soon, so maybe december at the earliest. And so it is lower for longer, which creates additional challenges for the u. S. Banks in terms of that earnings pressure. Is there anything outside of brexit, something that was there before the vote that had you worried about the u. S. Financials . So, you know, i think we have said for a while we dont think its something thats going to impact our ratings in any way, but there will be some asset quality deterioration across the u. S. Banks. Our asset Quality Performance has been stellar. And we think that there has to be a little bit of deterioration over the next couple of years. Final question. For the trading banks, not just the banks you put money in but for the banks that trade, is there not at least a maybe not a balancing but at least some gains from all this volatility . Because what volatility means is that people are trading. Will some of these firms mitigate some of the damage you talked about with increased trading revenue. Absolutely. We have stated in the past volatility does help the banks as long as its not too much volatility that keeps investors on the sidelines. What we are seeing theres been quite a bit of volume. And so that is good for the banks. And there will be especially on the fx side, i think, not surprisingly theres been quite a bit of activity. And that increased Trading Volume will certainly help earnings. But on the just to wrap it up, on negative though it is more negative, brexit, than any positive from this increased trading revenue . We think that that could potentially be the case because i think what will happen with Investment Banking is that because of all of the uncertainty transactions may get sidelined or put off. That may slow some of the Investment Banking activity. So there is a little bit of a negative bias in terms of the earnings challenges. Okay. It was a pleasure to have you on the program. Thank you. Thank you so much for having me. Take care. Next up, one area of the market that should not be impacted by the brexit. And in fact it could be the hot summer trade. What is it . You got to stick around to find out. But first, the final gold trades are set to cross for the day. Were going to have your metals close and more when power lunch returns. Is car . Came courtesy of james and patricia thompson. This tv . Margaret and tom lee. The championship game ball . That was sebastian diaz. Good guy. And all i had to do was ask for their money and pretend i was investing it. Their life savings is now my lifestyle. Female announcer dont let someone else live the life youre saving for. Find out if youre dealing with a registered investment professional at investor. Gov. Its a great first step toward protecting your money. Before you invest, investor. Gov. This is a game of yafairways and greens, drivers and irons. Its also a game of big data and servers. Just as pga tour pros need modern analytics to improve their scores, businesses need customized Data Center Solutions implemented by cdw, using hpe proliant gen9 servers with intel xeon processors to improve their bottom line. Welcome back to power lunch. Lets get a look at markets. Stocks right now in rally mode. Were looking at the dow industrials up 225 points. Nasdaq up 74 points. And the s p back above 2,000, up 28 points on the day. Will be interesting to see when valuation kicks into the discussion. Were looking at the s p trading 19 times earning, nasdaq trading at 20 times earnings. In terms of where were seeing the gains, all ten s p sectors currently trading in positive territory. Energy one of the big winners here up more than 2 . In fact, for the year energy is up 14 , quite the dramatic turnaround specifically in the sector. Remember, it was the worst performing sector in january. But with the rebound in oil prices, copper as well, weve seen this sector outperform. Technology, some of the growth sectors also doing well up 1. 4 . Well have to look forward to what the ceo of microsoft tells cnbc. Thats in the second hour of