Signs. Im going to go for a ride in this baby behind us. Closing bell is next. Hi, everybody. Good afternoon. Welcome to the closing bell. We enter the final stretch. Im Maria Bartiromo here at the new york stock exchange. The market trying to stay in the green. Second straight session. At the highs of the session as we approach the final stretch, scott. Back at a fiveyear high. Im scott wapner in for bill griffith. On top of the markets plus a whole lot more. Did the upper income crowd start retrefrping before their taxes were raised . Some worrisome evidence that they could already be hiding their wallets . Jim grant from grants Interest Rate observer here with a big warning about the debt ceiling fight, and it may not be what you think hed say. Plus, are women better Hedge Fund Managers than men . Maria says yes. A new study agrees. Well speak with the person behind the data. Let check the markets right now as we approach the final hour with the Dow Jones Industrial average at highs of the day. Take a look at that chart. Real momentum going into the close. Up 70 point on the Dow Jones Industrial average here. Pretty broadbased as well, 13,460, last trade of the blue chip average. Nasdaq composite inching back towards the high of the day. Noted a it though on the nasdaq, but as you can see, gains of about 11 points and the Standard Poors are 500 index, similar chart pattern here, looking into momentum heading into the close, with a gain on the session of nine points. Maria, in todays Closing Bell Exchange steven wood and lee munson and our very own Rick Santelli and gordon charlesoff as well, a cnbc market analyst from rosenblatt securities will join us in just a minute. Steven, what do you make were sitting at fiveyear highs yet again . I think youve got a recovering economy in the United States. Europe has pulled back from the headlines, at least for the last couple of months and china has really begun to show a soft landing so the Global Economy is doing much better than we would have thought six months ago, four years ago, and i think the markets are pricing that in so the fundamentals in the economy are improving gradually, but they are improving and Corporate America looks in very healthy shape. I wonder if its actually a reaction to fundamentals. Lee, we know that theres a ton of money around on the sidelines from corporates as well as the Federal Reserve making this Interest Rate environment so attractive and really few alternatives. Is it really a function of the Global Economy, or is it more a function of this money that needs to find a place to go and u. S. Equities seems to be best looking game in town . Well, you know, i do think its a lill bit of the latter. When you start looking at the velocity of the money, not trying to get too into the financial jargon, but we do have an issue where people are still seeking out safe money. However, if you look at growth of bank lending, commercial bank lending, what we call a credit growth, its above 6 right now, so we do have banking and financial organizations wanting to lend money, and as they do that, thats going to create the capital to give those fundamentals that we sort of have forgotten about, but theres no denying that when the Federal Reserve is printing 85 billion a month it will have an effect. Keep in mind, still looking at 8 , 10 , s p corporate earnings growth. Lets not get into an argument about top line growth. Youre talking about the Fourth Quarter, 8 to 10 in the Fourth Quarter . Estimates for 2013. Forget the Fourth Quarter. Too confusing for me. Ive got the Hurricane Sandy and analysts didnt have their act together. I think this year we see 8 , 10 earnings growth, even with the fiscal drag which i think is blown way out of proportion. Because s p capital is looking for 3 growth in the Fourth Quarter so youre talking about the year. Scott . No, im talking about 2013. Right. I totally agree with those estimates. Were going to get killed Fourth Quarter, but its in the past. Forget it. Lets move forward. Hey, rick, im going ask you a loaded question but i want your expertise on it. Is there a bubble in the bond market . No, no. Prices are lofty, but to me a bubble implies a very close to popping scenario. You talk about bubbles. When you think its about ready to burst. Its frothy, but its photoactualphotfrothy in actually a sean way and take the discussion were having right now. The ecb tries to talk recovery, and things because the daxx and kaks are up, everything rowsy in europe. Look at the unemployment rates. Once again, the same scenario in u. S. If all you use is a barometer against Economic Growth over the Bigger Picture next three to five years, even the next one to three years, our stock prices are really delivering you an accurate message. If you look today the hygtf is making new nour and a half year highs, like the high yield better than the investment grades. See it in the spreads as well, and this is at a time when theres a boat load of issuance this week, as high as 21 to 25 billion. Look at the currency market, too, the euro dollar. The moves there off the ecb what . Rick. Look at the dollar index. Cant hear anybody if everybody is talking on top of everybody else. Talk about the currency market. Thats really telling today, too, off the ecb stuff. Off the ecb, off the Monetary Policy committee of the bank of england. The pound is up dramatically. The euro is up dramatically, and even though were still all rallying against the yen, this is one of the biggest drops net day over day in the dollar index i can remember in a while. Its getting close to a whole cent drop. Thats pretty big. Let me get to gordon. Were seeing a real move up in the final hour. What are you seeing in terms of flow . Where is the money moving, and who is buying . Seeing institutional, again, across all sectors. The important thing is were starting to see it in the financials which to me is the bellwether of this thing being a real bull move here to the upside, because behind financials you know that housing is going to be behind that, and thats going to be one of the things that weve been waiting for down here for a long time. This is an inexorable move to the upside, and we are seeing more and more guys buying in here. The volatility is still low. The volume is just starting to pick up, but this is money thats sitting on the sidelines saying ive got to get in here. Doesnt really matter which sectors are in in a lot of ways. The fact they go into financials is very important. Well get a whole slew of earnings in the financials next week. Seeing real conviction there, gordon, in terms of these buyers in the financials . You know, maria, i am. Or just a trade . You are seeing conviction. It looks like conviction. The fact that these guys are all buying ahead of earnings indcates these guys are anticipating a move they want to get in front of. I dont think its guys looking to buy and sell. I think these are guys that are seeing that this is the play right now. Youre getting in front of it, and they are going to be right there right through the move. Steven, you guys dont love the financials. We had your chief investment vat gist on halftime today, and financials arent one of the top sectors that you guys are looking for. Youre not looking for a big repeat in what we had in 2012. I think thats true. Its more of a Stock Selection than it is a benchmark relative, so relative to the benchmark were underweight, but there are certain names we do like. They had a very, very good run. You bring up a very, very good point. If withy go back, whats the Federal Reserve trying to accomplish . They are forcing investors up the risk curve so what were seeing is looking at valuations ultimately matter, as in the case of financials but globally diversified Portfolio Risk assets is where a lot of people will have to go, emerging markets, global credit. Even in commodity space, a longer time horizon, unavoidable for people to avoid the investment goals. What do you want to avoid . Obviously treasuries. Sovereign debt doesnt look terribly attractive. I think in fixed income you have to be very, very careful to make sure the spreads have not narrowed too much. Fixed income side, like more global and emerging market, global credit. Do like u. S. Equities, and within equity space in the United States, health care is something that our managers like. Energy, more cyclical Consumer Discretionary leaning a little bit into a cyclical play. Dont overshoot it but just lean too it. At the same time you guys are only looking for 1,500 on the s p. Were at 1470 so between now and the end of the year. 0 point . Looking for 30 more points on the s p. Coming into this year a lot of volatility is wrapped around that. Saw that last year, a rally, pullback, rally, pullback and rally into the end of the year. High single sdajts reasonable expectations for someone having into this market, wrapped with a lot of volatility. Get so much more, so much the better, but it will be a cheap ride in our opinion. Well leave it there. Gentlemen, thanks so much. Great conversation. Appreciate it. This market is gaining momentum as we approach the close. Lets find out whats behind it from bob pisani. Over to you, robert. You know whats important. Put up the s p 500, because were about to close if we close at 1469 or so, fiveyear highs in the s p, near historic highs, of course, with the midcap as well as with the russell 2000. Whats important, banks are leading. Glad you just mentioned that because banks had an ugly day yesterday. Normally they dont sell off going into earnings season. Thats reversed. Wells fargo starts tomorrow at a threemonth high and Morgan Stanley 2041, eight or ninemonth high for that one. Take a look at techs though, anchor around the market all day long. Yahoo a new high on january 2nd. Rolling over. Seagate great numbers yesterday. Its rolling over. Microsoft, 26. Thats probably a new low for microsoft. Apple started up, went down, had a terrible afternoon and finally just got into positive territory. Finally i want to mention china exports, stronger than expected. A lot of interest in the international etfs. Theres the china etf, fxi, the biggest one. Thats had good volume. Japans had pretty good, and emerging markets etfs, also on the upside all near new highs. Maria, back to you. Big news on the app front. Cnbc is launching our new brand spanking new cnbc alarm clock app. Now you can have scott or myself or any of our onair people wake you up in the morning and get your day started. What a great idea, right, maria . On right foot. If you want to get your mind ready for the trading day select to hear maria. Yeah. Listen here. Okay. Im cnbcs Maria Bartiromo. Thank you for waking up with cnbc. No matter what market youre in, make the most of it. Have a fantastic day. Wake up. Wake up. Or you can have scott wake you up. Listen to this. Thanks for waking up with cnbc. Im scott wapner. How are you going to play your day today . No matter what you do, make it a great one. Oh, its not just the joy of having our voices wake you up. The cnbc alarm clock app gives you the most important business headlines of the morning. Market information and, of course, your local weather. You can also set reminders for big interviews you dont want to miss on cnbc. Im going to go out on a limb, maria, and im just going to say. I want you to wake me up. Im sure that youll be one of the most downloaded people on cnbc. I want you to wake me up. My favorite part of the app you is go to the app and also have the headlines so as soon as i wake up, even if i want to press snooze when you wake me up, i could, first say, okay, before i do a snooze, let me put it on snooze and then let me just see what the headlines are so i know what the heck is going on and lets say i want to know what the international markets, are where the markets are internationally and maybe if they are not doing anything ill sleep for 15 more minute. Hit the snooze button. And then ill wake you up again. Wake up, wake up. All right. All good. Its all good. Rocking and rolling here. We are in the final stretch. 15 minutes left until the closing bell sound for the day. A market at the highs of the day right here. Money wants to find a home in u. S. Equities. Up 70 points on the industrial average. Apple ceo tim cook is in china. Is he about to strike a deal that could open up a huge new revenue stream for the company . That is next. And then Recreational Marijuana use is now legal in both colorado and washington. Getting pot in those states could soon be just as easy as buying a soda or a snack from a vending machine. Yeah. So were going to talk to the ceo of the Company Behind the marijuana vending machine. Well join us, yes, this actually exists, a vending machine. All right. And from a drug thats supposed to mellow you out to one meant to kill you, a 1 million Lottery Winner poisoned with cyanide, and now his family is fighting for his fortune. An update on this Million Dollar murder mystery is coming up. Wake up, wake up. 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Tell your doctor if youre prone to infections, have cuts or sores, have had hepatitis b, have been treated for heart failure, or if you have symptoms such as persistent fever, bruising, bleeding, or paleness. If youve had enough, ask your dermatologist about enbrel. Impact wool exports from new zealand, textile production in spain, and the use of medical technology in the u. S. . At t. Rowe price, we understand the connections of a complex, Global Economy. Its just one reason over 75 of our mutual funds beat their 10year lipper average. T. Rowe price. Invest with confidence. Request a prospectus or summary prospectus with investment information, risks, fees and expenses to read and consider carefully before investing. Welcome back. Apples ceo tim cook may be cooking up a plan to help further tap into the huge market in china. Jon fortt with the story. Over to you, jon. Thats right, maria. Tim cook is in china, and reuters and others are reporting that hes met with the head of china mobile. Now, of course, that would be a big get for apple, something that investors have been waiting for for quite a while. You take a look at apples sixyear chart. China mobile could be the thing to provide the next catalyst for the stock, something that people have been looking for over the last few months. Take a look at growth moments for the iphone. It launched, of course, back in june 2007. In july 2008 the iphone 3g came out that really excited a lot of peoples imaginations because it actually ran faster on data networks, and then two years ago, almost exactly two years ago, the verizon iphone came out which provided a huge boost. It was like two holiday quarters in a row when apple was able to come out with an iphone on verizon. People expecting that that kind of boost might be what apple would get if china mobile picks up the iphone. China mobile has been holding out. Reports are that the executives there are saying they dont want to do the same kinds of subsidy deals that others have done, and because they are the biggest carrier in china, they have a little bit more sway than others. Well see if we hear anything about that on apples next Earnings Call which is coming up in just a couple of weeks. Maria . All right. Jon, thanks so much. Cant wait for that. Will apple strike a deal with a carrier in china, and the if they do, what does it mean for the tech giants bottom like . Lets talk to david pearl who says apple will because they have to and another says if apple fails it would be a huge win for googles android. Good to see you both. Thanks so much for joining us. David, let me kick this off with you. One of the drawbacks or challenges of doing business in china is the fact that they rarely do you see a Foreign Company get any kind of ownership, right . Its all joint venture. Certainly in Certain Industries such as banking, technology mixed. So are they really going to be able to make this work for them . Well, they have so far with the number two and three carriers, but to really grow they need the dominant carrier which is china mobile, and really china will be their biggest market in a few years, and they need this outlet to get there. The stock is already being punished in essence for having slowing rate of growth and margins peaking, so i think in their position right now getting this deal is very, very important, even if the margins go down a little. The volume goes up a whole lot, and todays customers of even lowend iphones, should they make a cheaper version, will eventually trade up and buy the Premium Products, and they are in the Apple Ecosystem forever, so they are really worried about market share because once you go to google android, you may not come back to apple so this is crucial. Lena . Yeah. The rumor is that china mobile may be looking for some cuts of ad store revenue which is unheard of in any of the deals apple has done with carriers previously. If they do that, its a sign they need this. What the iphone mini is all about, right . Tackling markets like china. You may not have the same type of consumer that you do over here in the United States thats willing to pay several hundred dollars for a phone, especially if you believe what jon fortt is saying where hes saying they may not be willing to pay the kind of subsidies that folks have gotten used to here in the states. China mobile has something to gain for a deal because iphone subscribers are known to be the most valuable for a telecom so, you know, china mobile risks some consumers in china flocking to, you know, the other carriers that carry the iphone. Well, if we see no deal, lets say apple fails to win a deal, what would that mean for competitors . I mean, how important is this given the fact that so Many Technology companies are betting on this enormous population in china and throughout asia . It would be a huge loss for apple. I mean, they are already seeing subscriber share for the iphone in china go down to Companies Like samsung and lenovo so this would be a pretty big loss. They would have to figure Something Else out in the country. Yeah. David. Can you address the issue of the margins . I mean, that seems to be the single most issue, most important issue affecting the way people feel about this company. Margins are compressing. They are not growing nearly what they were before. If apple comes out with an iphone mini, thats only going to hurt margins even more as it tries to establish itself in emerging markets like china. Well, thats right. I mean, apple had the best of both worlds. They could sell a Premium Products at ridiculously high margins and grow faster than anyone else. That is clearly being challenged, but as i say, the stock right now after this decline over the last couple of months reflects a lot of skepticism about margins, so they are better off getting more volume, and, remember, once you even sell a lowend iphone, that customer is going to buy apps, and they are going to be a Loyal Customer probably for the rest of their life, so you really are motivated to keep market share and gain marketsh and as i say the stom stock doesnt really reflect much in the margins right now. Their margins are twice as high as most of the competitors, by the way, so they have plenty of room. The stock is trading at such a lofty level, you know, 705 was the alltime high, and it kept going up because they were able to sustain those really high margins, so any little dropoff sort of spooks investors. Yeah, although oddly at 700 they were trading at about a market multiple, and now they are at a 20 discount to the market. So i think a lot of bad news is in the stock, and china mobile would be good news. Yeah. All right. Well leave it there. Thanks very much to you both. We appreciate it. Speaking of china, that nations largest Search Engine is among the big movers at the nasdaq. Seema modi is here with all the details. Reporter thats right. Baidu among other internet stocks moving higher. Jeffries writing that a shift to the older generation has positive implications for the ecommerce and online ad space. In response seeing those stocks move higher. Lets talk social media, shares of linkedin was given an outperform rating. Groupon, among others, including facebook move higher. The bulls continue to plow into this event ahead of the Mystery Press event and take a look at research in motion, todays topperforming stock on the nasdaq 100. Reuters writing that three of the top u. S. Cell phone carriers signaled this week that they would support the blackberry ten products, verizon, t mobile, once again a lot of rights optimism ahead of that blackberry ten launch on january 30th. Back to you. Seema, thanks so much. 35 minutes before the closing bell sounds for the day. A market is sitting at the highs of the day with a gain on the dow 76 points. Gm and ford both hitting oneyear highs with ford making a major announcement today. Details on that and then a debate on which automakers stock is the best bet to drive even higher . Also ahead could, solving our nations massive debt problem really be simple as jim grant says . Hell be here with some solutions. Back in a moment. [ male announcer ] how do you turn an entrepreneurs dream. Into a scooter that talks to the cloud . Or turn 30million artifacts. Into a hightech masterpiece . Whatever your business challenge, dell has the technology and services to help you solve it. And only hopes to achieve them. So youll be happy to know that when it comes to your investment goals, Northern Trust uses awardwinning expertise to lead you through an interactive investment process. Adding precision to your portfolio construction by directly matching your assets and your risk preferences against your unique life goals. We call it goals driven investing. Your life has a sense of purpose. Shouldnt your investments . Expertise matters. Find it at Northern Trust. Well, higher taxes on the nations wealthy impact the ultra luxury cars market . Rollsroyce is betting it wont. Phil lebeau has details. Phil. Reporter rolls is putting up numbers a lot of people may be surprised with. Take a look at what rolls did in 2012 t. Set a new global sales record selling 3,575 vehicles. That is a new record, surpassing the record they held back in 1978. The u. S. Is replacing china as the number one market for rollsroyce sales. That might surprise a few people, but they noticed a slow dunne at the end of last year in china, a bit of an uptick in the u. S. U. S. Sales fell 18. 8 in 2012. That said, the ceo of rolls says they are not going to diminish what they plan on doing in the future. We are the pinnacle of all Luxury Brands in the world, and for that reason we are not interested in ups and downs and dramatic growth patterns and all that stuff. We are interested in constant growth over the years to come, but Sustainable Growth. And that Sustainable Growth increasingly coming from new markets, particularly south america. Were showing you this chart because the corporate patient of rolls rouse is bmw. Bmw announce it had set a global sales record for all of last year in bart due to rollsroyce. 1. 85 million vehicles, scott and maria, so theres certainly plenty of demand for those luxury cars out there. One last note, guys, production in the u. S. For bmw double what it was back in 2010. Thanks, phil. Shifting gears a bit to slightly less expensive cars. Take a look at ford and gm. Both stocks hitting 52week highs. Ford announcing it will double its quarterly dividend. The question now, which is a better stock to buy here . Lets talk numbers on the technical an fundamental side of the story. Richard ross with our back and jeff kilson with kkm financial. Great to see you. Jeff, lets talk fundamentals. Whats your view on these two companies . Well, maria, i think the u. S. Auto recovery is intact, but im looking at ford on the road in 2013. And why they are going to do that because of europe, proactive in europe. Shut down three plant, two in the uk and one in belgium. Gm, tiptoeing here. Mismonked. I dont know if i dont know if its political pressure or what not but not poised for 2014. Ford will obviously move forward and continue domestically but europe are properly in line to domina dominate. Rich, with a about the technicals . How do they look . In the short term you might want to pump the brakes on both of these stocks even though were very bullish for 2013. When we pull up that chart of ford, you see were loaded with options here. The classic signature of a stock that wants to go higher. Beautiful rounded base of support. Bullish trend acceleration out of that welldefined channel and a decisive break to a new 52week high above 15. While it might be counterintuitive we think that breaks down today. We think this is likely to be the capstone of the 53 move off the august low from last year. You want to buy the mystery, sell the history in this market. Thats what you want to do. Take some profits in ford and get out on a pullback. Gm, thats a stock you want to buy right here. Looks a lot like facebook, a failed ipo that starts at 38 and loses half its value. Rich, youre going to get tboned. And a break out to a fresh high. Youre going to get tboned on the gm trade. Dont click the seat belt. Ford is the way. Youre right. When ford is properly aligned for the 2014 growth and gm, hope of thely rich, wont happen due to the fact they have been hemming and howing. Facebook looks pretty good on the charts right now. Gm, same exact chart buying both on the breakout do like the gm. Okay to agree with me, jeff. Not such a bad thing. Tbone, ouch. Still the holiday season, ill give you that, but honestly ford is the way to go, maria. Guys, thanks so much. Well watch the story. Scotty, over to you. 30 minutes to go. Take a look at markets. Pretty nice move going on in stocks right now. The dow is up 75 points. Its not at a fiveyear high. Not at its closing high. 150 points or so, 100 points or thereabouts away from that but the s p certainly is, above the 2012 closing high of 1465. Right now the s p 5001471. Financials having an awfully good day. Wells fargo kicking off earnings season for that sector tomorrow and then a whole slew of reports come out next week. Coming up the government announcing new rules on mortgages. What does all that mean to you . Our diana olick will tell us, and later this is no ordinary vending machine. Recreational pot smokers in some states could soon buy their weed from a machine just like this. Currently used for medical marijuana. The ceo of the smoking hot Company Behind this special vending Machines Joins us later on the bell. Tdd 18003452550 when im trading, im totally focused. Tdd 18003452550 tdd 18003452550 and the streetsmart edge Trading Platform from charles schwab. Tdd 18003452550 gives me tools that help me find opportunities more easily. Tdd 18003452550 i can even access it from the cloud and trade on any computer. Tdd 18003452550 and with schwab mobile, tdd 18003452550 i can focus on trading anyplace, anytime. Tdd 18003452550 until i choose to focus on Something Else. Tdd 18003452550 all this with no trade minimums. Tdd 18003452550 and only 8. 95 a trade. Tdd 18003452550 open an account with a 50,000 deposit, tdd 18003452550 and get 6 months commissionfree trades. Tdd 18003452550 call 18662945412. Welcome back. The new Consumer FinancialProtection Bureau laying out revised rules on mortgages. Diana olick joins us with the details on what it all means. Diana . Thats right. The rules outlined today are designed to get rid of the socalled toxic loan products that brought on the mortgage crash. They are supposed to make sure new loans are well documented and borrowers can afford to bay them. To that end we want to focus on one part of the new rules, specifically the limit of debt youre allowed to have to qualify for this new standard. The requirement says can you not pay more than 43 of your gross income on debt. That debt includes everything related to your mortgage, like property taxes, mortgage insurance, principal, interest. It also includes your other debt like car payments, student loans, credit card debt, even alimony and child support. Okay. So lets say youre buying a 1 million home, lets just say that, and you put 20 down. Youre getting a 800,000 mortgage. At the jumbo rate of 4 with property taxes of around 1. 5 and mortgage insurance, your Monthly Payment is just over 5,000 or 60,000 a year. Now, add to that all your other debt payments, all the ones i just listed, and all together it cannot add up to more than 43 of your gross income. One thing to note, jumbo loans are about 2 of the market, and in 2011 under current underwriting standards 80 of jumbos written would have qualified for the qm standards so what are the rules really doing . Actually just cementing many of the standards that banks are already using. Lenders must ensure that borrowers are able to repay their loans. Back to you guys. Thanks so much. Stick with us, the Mortgage Bankers association is applauding the consumer agencys efforts on the new rules but also saying some of them will make some loans more expensive in the higher cost areas like new york and california. Joining us is the ceo of the mba. Sounds like there would be some potential unintended consequences to all of this, david. Is it really going to help lending consumers . How does that all shake out . Well, look, the cfpb put out their first major rulemaking since they have informed. The qm rule is a major impact rule to Housing Finance, but it basically locks in the credit standards that we have today, and please keep in mind to dianas point, the 43 dti, the ratio really only applies to jumbo loans because conventional conforming loans will be able to use the Credit Underwriting engines of freddie mac, fannie mae and the fha. A little curtailment in the jumbo space and a little more processing costs for lower down payment borrowers, but were really not going to see great changes over the current underwriting we see today as a result of this rule but well also not see credit loosen as a result of this rule. I mean do, these rules, diana, contradict with the efforts to keep rates so low . Well, they dont really contradict it, but there may be increase in Mortgage Rates because of this and specifically because of the limits on fees that are allowed to be charged to borrowers, putting 3 cap. Not sure how thats all going to wash out when you get that to the real Mortgage Market, but its interesting that the government is trying artificially to keep Mortgage Rates so low and you have federal regulators doing something that may actually push rates up a little bit. Right. So david, what do you think about where where rates are going, right . Theres so much talk about the fed pulling back on its quantitative easing, whether Interest Rates are going to go up. Whats the deal going to really be with Mortgage Rates . Well, look, gang. Seeing rates in the 3 range. Jumbo rates at 4 . I mean, several years ago no one would have ever dreamed that rates were this low but without question they cant stay here indefinitely. We expect rates to rise, some around half a point through the end of the year. But would that really impact the purchase market . These are historic low Interest Rates for housing that were seeing in this country right now . I mean, do you think that were going to see even tighter sort of activities on the part of the banks . I mean, do you worry that, you know, banks have already tightened the lending standards and that this will just lead to further . Yeah. This is the key point. Qm is just one rulemaking. We have basl and qrm and excessive repurchases hitting the lenders across the country from the gses. Weve got an unknown future state for freddie mac and fannie mae. Fha that still needs to be resolved because of their capital reserve problems. We have excessive uncertainty in the Housing Finance system, and qm just settles one small portion of this. I think the cfpb did a pretty good job on this rule, but we have a lot, many more shoes to drop here before we get the markets settled and really understand what credit is going to look like. Diana, i mean, i think maria hits the nail on the head, right . Its a question about whether you get to the point of whats restrictive for the banks. Banks are already not lending to the level that some people would like them to do. You just rattled off or we just heard rattled off an entire list of the headwinds that the banks are facing. Yes. And yet heres another one. But they are already doing a lot of this, and thats the point. What the problem has been is that theres been so much uncertainty in the Mortgage Market because of regulation thats been coming, and weve been talking to a lot of investors over the past couple of days looking to get back into the Mortgage Market. Thats private label so we can get away from fannie and freddie in the fha and they are liking this certainty coming in. They want all the rules to come in, find out what they are so that they can start getting their ducks in order to get back to the Mortgage Markets, so i dont think that these are really restricting a market that is already pretty restricted now, but its giving more certainty and could bring that private label back in. Im just wondering, the market has certainly improved, but are we rushing and putting these, you know, a little more onerous rules on top of an already fragile market and we have to be careful not to make this recovery stop in its traction, you know, stop on its tracks. Yeah, maria. You make the key point there which is were in the most conservative credit lending environment that this nation has seen in several decades at a time when we need home purchase activity to increase at a far greater rate. Those two are clearly juxtaposed in opposition to each other. This qm rule is not bad t. Basically boxes in todays credit standards, but its by no means going to broaden Credit Access to homeowners across the market and we still really need to resolve, not just this qm rule and see how it gets implemented, but again basl, qrm, repurchase stab guards and gses. For capital to come back, investors need confidence that when they lend, they can do so safely and soundly in a way that doesnt catch them later on. Right. This is step one, and there are many steps to come. David, thank you. Diana, thank you. Well keep watching this. Appreciate your time tonight and will see you soon. 20 minutes before the closing bell sound. Were at the hues of the day. A gain of 77 points on the industrial average. Disappointing home sales, canary in the coal mine for how upper income americans will retrench now that their taxes have been hiked . And will new limits on Tax Deductions for higher earners end up hurting charitable donations . Already real concern there. Check it out. Stay with us. I have low testosterone. There, i said it. How did i know . Well, i didnt really. See, i figured low testosterone would decrease my sex drive. But when i started losing energy and became moody. Thats when i had an honest conversation with my doctor. We discussed all the symptoms. Then he gave me some blood tests. Showed it was low t. Thats it. It was a number not just me. [ male announcer ] today, men with low t have androgel 1. 62 testosterone gel . The 1 prescribed topical testosterone replacement therapy, increases testosterone when used daily. Women and children should avoid contact with application sites. 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Change your number. Turn it up. Androgel 1. 62 . Shares of luxury retailer tiffany losing their sparkle today. Courtney reagan explains exactly why. Courtney . Thats right, scott. Looks like not as many blue boxes were stuffed into stockings this year. Holiday comparable sales were flat. The ceo notes Economic Uncertainty as the reason the jeweller now forecasts its annual profit to come at low end of its guidance. Tiffany shares losing their shine in reaction but off the session lows. Geography brought different Macro Economic pressures telling different separate stories. Samestore sales fell 2 in november and december. The fifth avenue Comp Store Sales fell slightly more than 2 hurting from superstorm sandy. Asiapacific Comp Store Sales improved by 7 and european samestore sales fell by about a percent. Maria . Thanks so much. Are tiffanys results that highend consumers are scaling back . That could hurt the economy and the market. Right now the s p could be closing once again at a fiveyear high, so how do you put together the markets and whats going on in highend retail . Joining us now larry cantor of barclays and also danny huse of Divine Capital markets. Larry, what do you read from the tiffany news today, if anything . Im not sure i make much of it because they have been underperforming for a while now, and the tax hikes havent taken place. We usually dont see consumers reduce spending in anticipation, but we do expect the consumer to get hit, and the high end is going to get hit from capital gains, the dividend and high end income tax and on the low end Social Security taxes going up so consumers will get hit. Partly a tiffanys story but also partly, look, people know whats coming. Their lives are about to get more expensive so why not scale back. Yeah. Whats your read . I think its an asian story actually. Saw the growth out of asia. Thats been consistent with what tiffany has seen, although last year not really. Got really soft in 2012. 2011 was a huge year for them. 40 , 50 up in asia in particular, and they are really expecting Enormous Growth there. They told me they have 22 stores in china right now. They are looking to add another eight or nine stores over the next few years, so thats where they are betting. Thats where they are thinking they will see growth, and chinese investors, asian investors in particular, really spend on luxury. We dont see that ending any time soon. How does him pact the Broader Market . Larry, youve been right on this market. Money continues to come in. It doesnt matter what the fundamentals say. Just feels like this market wants to go up. How do you think thats scaling back of the high end impacts the Broader Market . You know, i think markets are expecting to see Consumer Spending weakening, and we look like were on the in the beginning of manufacturing picking up, having gotten hit sort of summer and fall last year. And housing is finally picking up, so i do think the economy slows on the tax hikes. I think investors look through it, and the big story continues to be the Central Banks that are just continuing to pile money in there. The fed, now the bank of japan is accelerating. We havent seen really the ecb yet, but i think thats the story. This money has to go somewhere and its accelerating, and thats pushing up the financial pressures. Anything that you see that you see on the horizon that puts an end to that. Where does that end . Do fundamentals not matter with all the money swashing around and the fed making such an easy environment . I mean, i cant say im comfortable with stock prices going up because the money supply is going up. Thats not the firmest foundation you would want to see that kind of thing, but its too early. Valuations arent stretched enough, and theres more coming so i do think i think the one thing, maria, that could knock things, if you think that they will let the debt ceiling go and not get through this, of course i think the markets have seen this, done this and will put another bandaid and kick the can. I dont think they will allow the dire consequences to occur from either that or the spending sequestration, but that would be the thing that could really knock things. Danny, i hike what maria has been saying the last couple of days, that the market really feels like it wants to go up. Looking at the Dow Jones Industrial average, right, as we sit here at the highs of the day up 85 points. The s p 500 is likely going to close at a fiveyear high. Thats right. So we keep moving higher despite all of the concerns and uncertainty that is still out there. Thats right, and management has continued to, you know, dial it back everywhere. Tiffany, four quarters in a row, but we still continue to see this market look very, very resilient, and i think well continue to see that. I think in 2013 we may even see people come back into the stock market because theres a large swath of investors that have not actually come back into the market yet and that still could happen any time when we see this market continue to stabilize and do well as it has been. If we see disappointments in earnings Fourth Quarter, would you think they would buy on the debt . Thats what i would be doing . And you recommend it . Yeah, i do. I still think weve got some room to keep going here. All right. Well leave it there. Great to see you. Thanks so much. See you soon. 12 minutes before we close it up, as i said, the dow is up 86 points. 13,476. S p is good for almost 12 points, and that is sitting 1472. That would be a new fiveyear closing high for the s p 500. Up next, the ceo of herbalife strikes back right here on cnbc against accusations that his company is not legitimate. We know who we sell to. We do not know who they sell to, and and theres nothing wrong with the way we do our business. Now, some on wall streets biggest hedge funds are taking that side. Weve got the details on the story. Still developing. Thats a juicy story. From one controversial topic to another. Recreational marijuana use is legal in colorado and washington state. Well hear from the ceo of one company that may light up sales by launching pot vending machines in those states. [ male announcer ] staples is the numberone Office Superstore ink retailer in america. Now get 6 back in staples rewards for every ink cartridge you recycle when you spend 50 on hp ink. Staples. That was easy. I dont have to leave my desk and get up and go to the post office anymore. [ male announcer ] with stamps. Com you can print real u. S. Postage for all your letters and packages. I have exactly the amount of postage i need, the instant i need it. Can you print only stamps . No. First class. Priority mail. Certified. International. And the mail man picks it up. I dont leave the shop anymore. [ male announcer ] get a 4 week trial plus 100 in extras including postage and a digital scale. Go to stamps. Com tv and never go to the post office again. [ male announcer ] how do you make 70,000 trades a second. Reach one customer at a time . Or help doctors turn billions of bytes of shared information. Into a fifth anniversary of remission . Whatever your business challenge, dell has the technology and services to help you solve it. The herbalife soap opera continues today. The company ratcheting up its Public Defense against claims that its not a legitimate company. Brian schactman following all of the drama. Brian, more drama today. I mean, its unbelievable. You cant even script this stuff in terms of drama. Bill ackman says its a pyramid scheme and herbalife disagrees, right. The stock trading four times its daily average, the stock dipped during an afterhour. Our own kate kelly interviewed Ceo Michael Johnson. At the Investor Presentation he counter the bill ackman major short position as we know in the stock which is now currently off its lows. One thing he said, the ceo, that may have led to the selloff was that a huge portion of his distributors are actually consumers as well. Its always a misstatement. 90 of our distributors, okay, who are buying our product, and let me just try to clarify this. Buy it for one reason, and they pie it for selfconsumption. That a misstatement on that day. I was kind of hyped up that day, wasnt i . I guess so. Before a presentation in the statement, ackman reiterated that its believed that 90 of herbalife distributors have zero earnings in terms of addressing his firms questions in the presentation. Ackman stated, quote, the company distorted, mischaracterized be a outright ignored large portions of our presentation. Whether you believe the ceo, ackman or daniel lobe and a few others who are taking a long side to hlf, this story, as you guys know, is far from over. Back to you. Yeah. No doubt about that, and throw up the intraday chart again because, maria, theres no doubt that when the Ceo Michael Johnson was being interviewed live on cnbc, right almost at 12 00 you can see the stock drop into negative territory. It was when he said that he had made a misstatement on the day he came out swinging when it became clear that bill ackman had put on this short position and went public with it. Right. So the market was clearly questioning this gentlemans credibility at the very moment he was speaking to cnbcs kate kelly. Very amazing. Kate did a great job in that interview and just to point out Robert Chapman of Chapman Capital also going long so to see the hedge fund community, the stock that herbs been doing a great job on this story. Normally this is not front of mind, right, but its dramatic, characters in the financial business that we follow so closely are going at it. Yeah, real clash of the titans on this one. Back with the closing countdown well take a short break and after the break girl power. Why are there so female Fund Managers . Well check it out. And new twists in the mysterious death of a Million DollarLottery Winner. The dead mans wife has lawyered up and now the family is fighting over the cash. Our robert frank is on top of that story, and hes going to have the very latest. What are you doing . Nothing. Are you stealing our Daughters School supplies and taking them to work . No, i was just looking for my stapler and my. This thing. I save money by using fedex ground and buy my own supplies. 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They dont know it yet, but theyre gonna fall in love, get married, have a couple of kids, [ children laughing ] move to the country, and live a long, happy life together where they almost never fight about money. [ dog barks ] because right after they get married, theyll find some retirement people who are paid on salary, not commission. Theyll get straightforward guidance and be able to focus on other things, like each other, which isnt rocket science. Its just common sense. From td ameritrade. All right. Welcome back to the floor of the new york stock exchange. Time now for the closing countdown as we approach the close. Pretty good day on wall street. Schactman and i were just talking about this herbalife story. Stock down 2 . Ceo speaking on cnbc exclusively right there and thats where the stock fell. An interesting story we continue to follow. Tiffany really set the tone early on for that stock. Holiday sales at the low end of expectations. Outlook disappointing as well raising questions about what the highend retailers are doing. A number to watch. Stock down nearly 5 has. Apple, tim cook meeting with china mobile. Is he going to do that deal in the market would certainly love it if he did and amazon named deutsche banks favorite largecap ecommerce name