Transcripts For CNBC Closing Bell 20140411

Averages as we enter the final hour of trade here and see whether or not they want to be long going into the weekend here, a question we often ask on a friday, but for a different reason. Geopolitical usually. Now youll wonder if they just want to be out because of what could happen on the asian markets over the weekend. As mentioned, heres where we stand on the 4000 level. Yesterday we were watching a 4050 level. How quickly weve gapped down, off 1. 3 . The s p is shedding 16 points right now. The dow off 136 though, 16,034 is the level as we enter the final hour. Lets get to it in our Closing Bell Exchange for this friday. Susan fulton from fbb Capital Partners is with us, ken moraif from money matters, chad morgenlander and rich peterson from s p capital iq, all very pleased that art cashin from ubs is making a rare appearance in the Closing Bell Exchange and Rick Santelli out of chicago so a full house today. Arthur, what is your view of whats going on today . Well, weve got a couple of things going. They tried to rebound that yesterdays selloff. It was successful somewhat in the morning. As the afternoon wore on concerns about geopolitical rumors helped put some weight on them. We now made lower lows, we havent sprung into any cascade selling at all, but the viewers should keep their eye on the yield on the tenyear and stocks. If stocks go down and the yield on the tenyear goes down and particularly if gold starts to pick up, that tells you theres a little bit of a flight to safety. And weve got to go to some breaking news here in a moment, but just before we do, we just went below 4000 on the nasdaq. What does that say to you . It indicates probably further weakness as we go into next week. Okay. Hold those thoughts. We do want to get some breaking news in here on General Motors. Phil lebeau, what do you have for us . Reporter document have been released from General Motors, same documents turned over to the Highway Traffic Safety Administration and 15 minutes ago we saw a headline who mary barra who said from the beginning had no knowledge about the incidents involved in the recall ever 2. 6 million vehicles, she has said that now from the beginning, well, there is a headline saying that there was an email, mary, weve had a chance to look at the email and let me put this into context, from october 2011 and at the time there was an email sent to mary, mary, during the initial cobalt case, the ion data did not justify being included with the larger recall that was being investigated. This situation has been evolving. We will meet and understand the latest data fyi, and that was sent to mary bar rra in relationship to an article about a further investigation by nhtsa about the loss of steering. The only email that mary barra was named, no indication that shes read it or responded. Were looking at documents, going through all of them. Some do indicate that cost was definitely considered when deciding whether or not to initiate any changes in the ignition switch so well continue going through them, guys, and well be back to you with more. Very good. Well be seeing you a little bit later in the program as well. Looking forward to more details on that. You bet. Thank you for joining you go. Back to the story of the day, of the week, the year, the markets, and whats been going on here. Susan fulton, what do you make of whats going on, and what are you doing with your clients money right now . Well, were investing right now. Were actually taking a position about two days ago that we think pays a 3 dividend that we like. I would say in mary barra, in a world that is capitalist cost is always a consideration. What do you mean by that . A capitalist world wants to make a profit so cost always plays a game. At the expense of safety . Well, thats one of the reasons we have regulators. The reason we have regulators is because, yes, in a capitalist world. Do you need a regulator to tell you that you have to do something to make it safe for your cars to be on the road . In my experience, in the real world, yes, you do. Wow. Oh, come on. Susan, would you own General Motors shares here . I i dont own General Motors shares. Would you . Would you buy them here . I would buy them here. I think mary barra is a pretty straightup lady. And you think she will survive this latest disclosure. I would be shocked if she didnt. Rich, what about you . General motors i dont cover. This will be a very difficult hurdle for her to get over, of course, in the public eye with all the scrutiny. So from that perspective i really have no opinion. General motors though is a wellcapitalized company and it has been after the reorganization. Its on firm footing from that perspective. I dont think this generally will be a credit discount or credit downgrade. Ken, thoughts here, just reacting quickly to what we heard from general motor. I think i agree with what the other guests on your show have said. I think General Motors will definitely survive this. I think that the likelihood is that it will be a news flash but it will pass, so, if anything, this may be a buying opportunity. So youre thinking about buying it at this point, okay. Rich peterson, earnings season has just begun. Weve had mixed reports so far. What do you make of what weve heard so far . Expectations for a high going into this earnings season. A couple things. First regarding gm. Let me say, you know, one issue, like any charge that comes about on the recall, where does it come into the First Quarter earnings or Second Quarter earnings, thats to be determined . Regarding the earnings season, you know, we were, you know, poised for a poor quarter. Were looking for the cold, crimea, the chinese numbers, the fact of the matter is now weve slipped negativing negative 1. 2 according to estimates on the s p 500. The fact is financials are very poor. You know, investments will be solid for next week, only a fourday trading week because of the good friday holiday, thank the lord, but the fact of the matter is we have citi corp reporting on monday, fact of the matter for three of the past five quarters they missed consensus numbers so the bar is set very low. The key is on wednesday. Wednesday you get Housing Starts and also you get bank of america reporting. Right. Rinchings ich, im just curi talking to people and trying to gauge how much further this correction goes. The s p is only a couple percentage points, nasdaq fall n7 from its peak and the problem is no way for some of these names that are declining to figure out where they are going to rest on the fundamentals because the fundamentals just arent really there so from that point what can you tell us about valuation in some of these highflying spaces. Thats a good question. S p, up of my colleagues asked me today about ipos and whats the typical valuation of some of the ipos. Many of the ipos are like many earnings, so theres no rational way to gauge these numbers. We should mention that zoes kitchen today, and perhaps it helps that its a food company, up 65 in its debut. Only one of four that made it through. Eight were supposed to. Four were cancelled last night as a result of yesterdays selling. Rick santelli, i would love to hear you and Arthur Cashin have a discussion about the tenyear because art has been talking about that is what the stock markets keying in on right now. What do you think is the motivating move for the tenyear right now, rick . I think the tenyear is going to continue to handicap the gap or the lack of growth reaching potential in the u. S. Economy. We can spend months debating the reasons, but pretty much all the viewers and listeners know where i stand, and i think this dynamic is in place. When i look at such big psychological lows as 4000 in the nasdaq and 16,000 in the dow, i think theres a lot of room. Now is this the big one, im not sure, but ill tell you what. The bullish look of the charts on the long end and the complexion of the curve auger, i wouldnt move away from the notion that this could be a corrective action. Theres a lot of anxiety, the vix and others that monitor option volatility, none are flashing red. I personally think that this is the perfect storm and i think one of the cat lifts nobody thought of, you know, all the weather. So many people avoid being true as to where the market was pricing a couple months ago due to the weather, and i personally, whether its some of the retail sales data of late or some of the jobs reports that are march numbers, i think that was greatly overestimated, and thats going to give it a little more traction, in my opinion, to the downside. Stocks upside in treasuries. What do you think, art . I think rick is right. The flattening of the yield curve and whats going on in the ten years strongly hints that the economy may be losing strength and we get the added bonus that its the litmus test for a geopolitical problems, here it is a friday going into the weekend and rumor mongers will be out, so it will be important how they close here for stocks, but the tenyear has guided us pretty well. Rick talked about the weakness in japan overnight that we might see, chad. We went below 14,000 on the nikkei, that could be one tale. The tact that the 30 crier went below 3. 5 , quick last word, chad . My quick last word, is yes, we have had this really pothole of Economic Data that has come in, but you are starting to see some improvement. The initial claims number on thursday or yesterday was very good. You also saw auto sales that were very good, so thats whats so screwy about it. You can see a 5 to 7 correction or 10 correction, and that was something that we havent seen in 18 months. I dont think though that were going to go into this bear market. I think the economy is going to start to tick higher where gdp will land around 3 and the market in general will be up around 6 to 8 for 2014, so, yes. Before we go. Go ahead, finish your thoughts. Were getting this correction and everyone is starting to get into panic mode here. Yeah. And were only down about 2 on the s p. Now the tenyear syndicating a slowdown, but thats also like art said, its because of the geopolitical unrest. Before we go, mr. Cashin, as we go to the last house, give us some levels that youre watching. What are the key levels youre watching right now . Well, i wouldnt keep an eye on the nasdaq because it has reasserted itself as the leader on the downside. Earlier today it was it was the dow that was otherwise. So i would look for the dow at probably 16,000. If that breaks you could pick up some selling nasdaq. I would make it probably 32992, 39990 in that area, and right now its an eternity until we close and right now the market closings are leaning to the sell side so this could be a very interesting close. Thank you all. Thank you much. Thank you. An eternity to the close. Actually 50 minutes or 48 minutes. But that still perfectly cap turts way tures the way we dow down 120 point as we head towards the close. 17 consecutive quarters of Earnings Growth. Wells fargo surging on the heels of its latest report. The companys chief Financial Office will give the outlook for a very important sector of the economy, mortgage lending. The Banking Sector in these shaking markets. Coming up. Also the story we were discussing, new documents just out suggest gm chief mary barra knew about problems related to the massive auto recalls, injuries and deaths. Phil lebeau with more on this bombshell just ahead. Plus, who is winning the race among the big three in social media, facebook, linkedin and twitter. The answer may surprise you. Dont go anywhere. Dont go anyw. Geico motorcycle. See how much you could save. Dont go anyw. Maestro of project management. Baron of the buildout. You need a permit. To be this awesome. And you. Rent from national. Because only national lets you choose any car in the aisle. And go. And only national is ranked highest in car rental Customer Satisfaction by j. D. Power. aaron purrrfect. vo meeeow, business pro. Meeeow. Go national. Go like a pro. In todays market, a lot can happen in a second. With fidelitys guaranteed onesecond trade execution, we route your order to up to 75 Market Centers to look for the best possible price, maybe even better than you expected. Its all part of our goal to execute your trade in one second. Im derrick chan of fidelity investments. Our onesecond trade execution is one more innovative reason serious investors are choosing fidelity. Call or click to open your fidelity account today. Welcome back. More breaking news now on General Motors. Some of these documents that are coming out. Phil lebeau, what else are you finding . Reporter a lot of document are emails between engineers who worked on the cobalt when it was launched back in 2004 and then through the years, and were looking at one email that was sent by john hendler, an engineer who handled the cobalt launch, and two sentences in this email are going to resonate with a lot of people. The first one saying as the vsu, one of the Service Engineers on the cobalt launch, i was very aware of an issue with, quote, inadvertent ignition offs, end kwoit quote, due to the lowmounted ignition switch in the steering column and the low efforts required to rotate the ignition. In that same email, he later goes on to discuss the pros and cons of changing the ignition switch, and he said, the con, in other words, one of the negatives to consider of the change is that the piece costs of the ignition switch went up about 90 cents per switch and would require 400,000 in tooling tootoadd the almost 500 in volume. Again, just one document that weve had a chance to take a look at here as the house energy and Commerce Committee releases some of the document that have been turned over by General Motors regarding the recall investigation. Bill, kell, back to you. All right, phil, thank you. Well be seeing you again a little bit later. Markets winding down this wild trading week with some relative well, it says here there was relative calm. There was when you wrote that. The dow is down 118 right now and the nasdaq flirting with that key 4000 level. Did go below t. Holding right there now. Kelly, lets start d. Gm one of those Consumer Discretionary stocks leading the dow lower in the s p. Check out a positive story, this is zoes kitchen surging on its nyse debut, priced 15 a share and trading up 70 so theres some appetite for certain types of ipos and then theres iac interactive. The company has reportedly bought a 10 stake in the tender dating site at around 5 billion so decent shares there. Truly yea trulia, the an line Real Estate Company and jc penney, down 10 and wells fargo posting stronger than expected results with profits coming up 14 over the same time last year, so a different story with jpmorgan, but for wells fargo kelly, a nice move to the upside on a down day. Back over to you. Certainly is, dom, thanks very much. For more on the wells fargo earnings beat were joined by tim sloan. Hes chief executive officer of wells fargo, or at least until may 15 and also a member of cnbcs global cfo council, i guess, at least until may 15. Youll run the wholesale Banking Group for wells fargo, right, tim . Thats correct, bill. Congratulations. Thank you very much. Bill, you mentioned im sorry, go ahead. What were you going to say . Well, you mentioned earlier that it was our 17th consecutive quarter of Earnings Growth, and were very, very proud of our performance. It was also our 12th consecutive quarter of record earnings, and, you know, our earnings at 105 a share were up 14 year over year, and we were able to achieve those results on just the fundamentals of our business. We focused on our customers and we would grow loans, up 4 year over yore. Grew goes deposits up 6 year over year and focused on oh, on expenses and obviously our secar plan was not objected to and we plan to purchase more of our shares. Tim, a lot of people are going to be looking through and comparing your results with jpmorgans, and i wonder if you would describe the improvement in the loan conditions, Lending Conditions that you see as more of a pull or a push. In other words, are you seeing customers, whether they are corporates or, you know, individuals demanding more in terms of resources, or are you pushing your workforce to be more productive and to take share from some of your competitors . Oh, i think its definitely a mix. I mean, if you look at our loan growth which was 4. 1 billion in the First Quarter, that was up compared to last year and last year our growth was a little under 400 million, so clearly conditions are a bit better. The First Quarter tends to be a seasonally lower quarter for the industry, but what was exciting for us is how broadbased the loan growth was. It was in our corporate Banking Group, our assetbacked finance group, government and institutional finance group, growth mortgages within our Wealth Management and retirement group. It was in our credit card business. It was in auto, so year over year it was up across the board and that to us indicates that the economy continues to slowly but surely increase, but it also means were taking shares from our competitors. Yeah, slowly but surely for a lot of impatient people out there is not good enough. Can you give us a breakdown of the residential versus commercial. Anecdotally were hearing that commercial is doing a lot better than Residential Real Estate right now. Are you seeing that as well . Well, commercial real estate values are clearly at high points in some markets, even higher than the high end of the last cycle. Is lending going up as well . Oh, yes, absolutely. And we saw growth in our commercial real estate group, not only in terms of new loans, but also for construction loans, so that was good. On the residential side, the the mortgages that we originated for sale were down around 14 billion from the Fourth Quarter, but we ended the quarter with a stronger pipeline. It was up 2 billion when we started the quarter, and were able to grow the nonBalance Sheet conforming business nicely into the quarter. I want to ask what were seeing in the rate space. 309year is below 3. 5 and the tenyear note, a benchmark for so much activity, as you know, has come down considerably for this year as well. Is it for structurally lower rate, and if so wharks does that mean for your business . Well, its a great question, an, boy, i wish i knew the answer to it. I think one of the things we know at wells fargo is nobody knows where rates are going to go. It seems like the economy is improving, but as bill mentioned, its improving more slowly than we would like in that environment. I think its more likely that rates are going to go up than go down, but they are going to be very volatile on their way up, both at long end and the short end. I mean, i dont mean to be mocking it, but the only direction for rates to go is up, isnt, it especially since the fed is doing the taper right now. They are pulling back on their easy money policies slowly. Oh, dont feel like youre mocking me at all, bill. We think that rates are going to go up, but we thought that when the tenyear was at 280 and 290, too. Exactly. I think well see a fair amount of volatility. Need to be prepared for that, and weve got to be there for our customers because weve got to help them through this kind of period, and our results this quarter demonstrate that were able to do that. Is the refi market dead . No, i dont think its dead. About 40 of the mortgages that we originated are in our pipeline this quarter, so thats 40 of about 36 billion, plus or minus. Really. Our refinancing opportunities, that will continue on, but the complexion has really changed. Its primarily going to be a purchase moneydriven mark. Thats about 60 or maybe even a little bit more than that of our new original nations, and were looking forward to a stronger spring buying season and the summer buying season than what we saw in the win thor. Tim, when is john stones birthday . Sometime in september. I cant recall the exact day, probably will get in trouble for not knowing. Some day in september. I didnt know how closely you were watching the day he turns 65. Oh, i get it. Im sure well have to get him a good gift for certain. Johns got a lot of runway left. Hes a very active ceo. Gives me instructions every morning and gives a lot of us intruckses every morning. Hes a terrific leader, and hes going to be ceo of this Company Subject to the board who think the world of him for the next 4. 5 years. Boy, are you sneaky. And well just see who comes after him. Yes, indeed. Tim, great to see you this afternoon. Well talk to you again sometime. Good luck with the new job. You will. Good seeing you both. Thank you. Tim sloan, currently the cfo of wells fargo, soon to run their wholesale banking business middle of may. Fascinating day in the banking space. Coming back. A little bit. 35 minutes to go, and as bill just said that the dow is just off 84 points. Show us the heat map. This is the nasdaq 100, all 100 components, not all are red today. Weve got almost a full row of green right now. Well go live to the Nasdaq Market site for a check how the battered biotechs and other momentum names are close out this week. Plus, get out your notebooks, two of wall streets top pickers will give us a peek of their Shopping Lists. What are they doing amid this selloff . Well be back in just a movement [ male announcer ] when fixed income experts. Work with equity experts. Who work with regional experts. Who work with Portfolio Management experts, thats when expertise happens. Mfs. Because there is no expertise without collaboration. Without standard leather. You are feeling exhilarated with frontwheel drive. You are feeling powerful with a 4cylinder engine. [ male announcer ] open your eyes. To the 6cylinder, 8speed lexus gs. With more standard horsepower than any of its german competitors. This is a wakeup call. Welcome back. Stocks are seeing losses across the board as we head into the close. Yeah. Were watching the nasdaq very carefully. Seema mode has been tracking the action there all day. Seema . Reporter bill, thats right. The nasdaq here down 1 . The selling pressure intensifying as we close out end of the trading week, down about 1 on the day, but just stepping back for a second. It has been a tough couple of weeks for the nasdaq, now down about 8 from hitting its 14year high back in early march, so getting really close to entering correction territory. Morgan stanley came out with an interesting note this morning, identifying six other time periods where the nasdaq has significantly underperformed the markets over the last 15 years, and they found that largecap names like hp and ibm, not only bucked the downward trend but outperformed during these time periods so the debate whether one should invest in new tech or old tech. When the market sectionceptionly volatile, it brings investors back to the fundamental story. Earnings, evaluation, two factors being watched very closely by markets participant. In fact, i was speaking to one analyst who said if these momentum names mysteried expectations this earnings season in what has already been a fragile training environment, there could be more carnage to come. Back over to you. Seema thank you very much. Plenty of Money Managers who have come through here are saying this selloff is a buying opportunity, so weve called in a couple of them to tell us what stocks they should be buying right now. Its great to see you both. Michael, looking at selloff today, does that make you more eager to get into this market or to just some selective names . Im always a buyer, but im always buying selective names. I mean, i think you really have to do your homework in every market, but this one now has kind of been swinging my way. Ive been calling for folks to buy defensive companies, with strong Balance Sheets and good dividend and good earnings, so this is kind of where i think people should have been for a while and i dont think its too late. A name like johnson johnson, for instance, ten years of 10 compound Earnings Growth. Stocks selling at 16 times earnings. 8 to 10 growth rate Going Forward so if you keep the pe kind of normal and you get 7 , 8 , a aaa Balance Sheet. I mean, thats the kind of company i want to own. Rob what, but . First of all, is this a buying opportunity as were saying here, as weve declined, or would you wait for a bigger decline before you get in . Well, i think youve got to definitely get your Shopping List red, and i think you should start buying right now. I think there are great opportunities, particularly of the leaders, and at areas were focusing on would be clean technology, the alternative energy area, and in that area i like solar city, the Fastest Growing company in the solar area and solar is being driven by something really novel, economics. You can actually get a wonderful rate of return today. If you live in a state like massachusetts, california, those states with investment tax credit, you did get to a rate of 20 return. You wouldnt have gotten that if you bought them in march. Well, hey, its a volatile space, theres no doubt about that, and these are not inexpensi inexpensive. My Companies Grow a little bit faster. The reason why i say that actually, and im curious to hear you mention these names because more people are doing what michael farr just suggested, trying to look for the plays you can talk about more reliable Earnings Growth. Why do you recommend that people look and take a gamble to some extent on a name like solar city beyond, and i understand the story, the longerterm story youre talking about, but even in these markets here. This is the reason that you get the opportunities. I wouldnt have been founding the table two months ago for solar city or gte advanced technologies, but today with them being down 25 and 30 and still growing at 75 you have to look at these opportunities. Michael, youve got qualcomm and abbott labs on your list. Still, would you have been pounding the table on these as much two months ago . I was ive owned them certainly, bill, for that period, and, yes, i probably would have been a buyer. I like to be a more opportunistic buyer, but with the ball sheets of these companies, with the Free Cash Flow and dividends, you know, part of my job as a money manager is to make sure that my clients have a chair when the music stops, and certainly you look for opportunities as my colleagues are suggesting in some of those names perhaps at times, but these are the kind of companies that get you through tough markets. Qualcomm selling at 15 times earnings, growing at around 15 with a 2. 2 dividend. Abbott labs, great company, 16. 5 times earnings, going to grow double digits, i dont think the s p will, and 2. 3 dividend when the tenyear treasury is yielding 2. 67 . Why not only aaa Balance Sheet in johnson johnson. Im a big fan of getting rich slowly in a worked you guy, weve got to go. Are boast of you or either one of you seeing clients sell for tax purposes . Michael . A little bit of cash rage on the edges, but i i think, you know, youve got to keep in mind, too, markets go up and down. No reason to panic. Just not used to markets going down. Rob, does this have anything to do with tax season, some of the weakness here, do you think . I think it clearly does. Lots of our clients have been calling in and asking for money. Were fairly fully invested so you usually need to sell something to raise cash. Thank you. After the 15th we could really have a real here. Appreciate it. Well continue that discussion next hour. Leave it there for now. Heading towards the close, 25 minutes left in the trading session here with the dow heading lower again, down 120 points. The nasdaq holding right at that 4000 level that art cashin has been talking about, though he lowered the bar to 3995 or Something Like that. Coming, such investors be antisocial when it comes to certain media stocks . Facebook, linkedin, twitter, which ones to include in your portfolio. And more on these new documents that are being released right now that suggest gm Ceo Mary Barra may have known about car issues even after telling congress that she didnt. A timetable is being moved back is whats going on with these documents. Well have the latest details on the crisis at gm coming up. T gmo c , but there are no branches . 24 7. Im sorry, im just really reluctant to try new things. Really . Whats wrong with trying new things . Look mommys new vacuum cat screech you feel that in your muscles . I do. Drink water. Its a long story. Well, not having branches lets us give you great rates and service. Id like that. A new way to bank. A better way to save. Ally bank. Your money needs an ally. I and i got the tools ira to do it my way i got a lock on equities thats why im type e thats why im tyyyyype eeeee, i can do it all from my mobile phone thats why im tyyyyype eeeee, if i need some help im not alone were all tyyyyype eeeee, weve got a place that we call home were all type e welcome back, if youre just joining us, where have you been, but, second, the selling continues, but its not as bad as yesterday at this time. We are testing some critical levels, especially on the nasdaq, the hardest hit of these minimum wage or averages. Art cashin first identifying 4000. Below that 3995 and 3990 would be a number you dont want to breach on the close today because it could auger more selling. Right now the dow 140 14, nasdaq down 50 and s p down 13. If you add this to what happened, yesterday we were down 3. 25, so at this moment weve lost 4. 5 of that index in the span of two days. New details emerging in gms recall crisis meantime suggesting Ceo Mary Barra may have known more about car problems than she told Congress Just last week. Phil lebeau has been going through the documents they have been release what. Are you finding and how much double do you think shes in now . Reporter it depends on what she says about this email that we have that we are looking at right now. It was sent in october of 2011, and well give you some context about the email. Basically summarizing that there was a New York Times or the call looking at the issues of steering problems involving about 380,000 saturn ions, a vehicle later included in the recall of 2. 6 million vehicles so there was an email sent summarizing all of this. It was then sent from one of the engineers who was on the list to mary barra and heres what the email says. It says, mary, during the initial cobalt case, the ion data did not justify being included. The situation has been evolving. We will meet and understand the latest data. There is no email back from mary barra. No indication that she read this said great, understand, lets talk about it some more. In other words, theres no indication based on these documents that we know that mary barra, a, read the email and, b, had some point of view about the situation involving the ion and the cobalt, but it is clear that back in 2011 this issue, at least tangentially was brought to her attention, and, again, thats from october of 2011. Thats the one thats going to get a lot of attention, guys, as we look through all of these documents. The other one that really stood out to us is back in 2005 it was pretty clear. They knew almost immediately there was a problem involving the ignition switches. In fact, in an email from one of the engineers to other engineers, two statements stand out, the first one being that as the vse of the cobalt launch, i was very aware of the issue of inadvertent ignition ofz due to the lowmount ignition switch in the steering column and the low efforts required to rotate the ignition. The very next sentence he discusses the pros and cons of changing the ignition switch, and he said the con is it will cost about 90 cents per switch to change, require 400,000 in tooling and add 500,000 in volume. Its very clear in these emails and documents that the cost issue came up early on. Phil, thank you. Thank you, phil, very much. We want to bring in alec gutierrez, Senior Market analyst for kell blue book to talk more about this breaking news. Im curious to some extent, this is a huge deep troubling problem at General Motors, unprecedented almost. Where were the consumer reports, for example, and all of the other, you know, evaluators here for the last decade. Why is this all coming to light now . Yeah. I think its a great question. We know that this stretches back more than a decade and was widespread. A lot of knowledge within gm, certainly with the two engineers that were already suspended and clearly this goose at a much higher level. What it sounds like is that gm wasnt as forthcoming as they should have been in terms of the scope of the problem that they knew about, and the sound may have frozen there. Just making the point, bill, as well. In these documents people are talking about how expensive these fixes would have been, and its only in the tens of millions and for the individual parts its less than 10. Alec, you back with us now. Yes. We loust there. I dont know, weve been having gremlins in the system lately. Do we just blame the the need for profitability to keep costs down, the fix was going to cost too much so they needed to find other ways or just completely ignore it . Is that really what was going on at gm over the last decade . Thats really what it looks lying. It looks like it came down to dollars and cents which to me theres no excuse for. If youre talking about Something Like say your electric power windows, if theres costs related to fixing that, okay, thats a different question, but when you talk about Something Like the vehicle turning off at highway speeds, regardless of the cost, this is something that needs to be addressed right away and brought to the attention of the proper regulators. I guarantee you, if they told every single driver of a cobalt that they had a bad ignition switch and it would cost the driver 1 to fix this thing they would come back and fix the thing. Why wouldnt gm do it that way necessarily . You Better Believe it, and i think what it must have come down to is although you can tell consumers, you have to come in and spend a dollar, 2 to get that fixed that doesnt alleviate them of every liability in case someone were to miss the message, not get the email or letter so if there was still an accident they would still likely be liable and thats where it comes down to being on gms shoulders to make the call and take the expense. A lot of moving pieces and breaking news. The gm share decline not helping broader markets. The seydou off 100 point, the nasdaq is off 43, and weve got about 15 minutes here to go into the close. Well take a quick break and come back. The nasdaq the big loser of the week. As you can see on our heat maps, still lots of red along the components of the nasdaq 100. Back after this. Back after this. And what theyve been through lately. Polar vortexes, road construction, and gaping potholes. 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Some people think the kind of accountability that thrives on so many streets in this country has gone missing in the places where its needed most. But i know youll still find it when you know where to look. Gundyes n group is a go. Not just a start up. An upstart. Gotta get going. Gotta be good. Good . Good. Growth is the goal. How do we do that . I talked to ups. Theyll help us out. New technology. Smart advice. We focus on the business and they take care of the logistics. Ups . Good going. We get good. Thats great. Great. Great. Great. Great. Great. Great. Great. Great. all great i love logistics. Welcome back, some breaking news on herbalife. Shares are down 11 , 12 toward session lows in trading today, this on the heels of a Financial Times report saying this a criminal probe has been launched with regard to herbalife, the story citing close sources familiar with the matter that says the department of justice and the fbi are investigating herbalife. Again, this criminal investigation, according to a report by the Financial Times citing people familiar with the matter. Also important to note that this inquiry may not lead to any charges and herbalife has not yet been accused of any wrongdoing, so this is taking down shares to 12 to the downside for this company. Also look at fellow Multilevel Marketing Companies newskin, nothing with news there, but its moving in sympathy to the downside, down about 4 as well so keep an eye on hlf and hlf as we approach the closing pebble. Add those to the names deeply in the red. Herbalife say they have no knowledge of any Ongoing Investigation by the doj or fbi so well watch it closely. Heading towards the close. 12 minutes left in the trading session with the dow down 120 point, found some stability at that level and nasdaq Still Holding above 4000 right now. But barely. But barely. After the bell, find out how much, and this is an important discussion as well, how much the april 15th tax deadline has to do with this weeks selloff. A contentious issue. Well be right back. Capital to make it happen . Without the thinking that makes it real . Whats a vision without the expertise to execute it. And the financing to make it grow . Whatever your goal, it can change more than your business. It can change the future. Thats why, at barclays, our ambition is to always realize yours. Ameriprise asked people a simple question in retirement, will you outlive your money . Uhhh. No, that cant happen. Thats the thing, you dont know how long it has to last. Everyone has retirement questions. So ameriprise created the exclusive. Confident retirement approach. Now you and your ameripise advisor can get the real answers you need. Well, knowing gives you confidence. Start building your confident retirement today. Salesgets up to 795 highwayal is the passamiles per tank. 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About eight minutes left in the trading session, and we are going to watch, you know, art cashin was saying this is an eternity to the close. Well watch very carefully the last few minutes to see the levels where the markets can finish. The dow at 16,034. Doesnt look like well finish below 16,000, famous last words, but the nasdaq is the one were really watching, down 53 points right now, right at 4000, david darst, Senior Investment consultant joining us. Bill, its been a very interesting week where were flushing out a lot of toxins from the system. Getting rid. We cans. Are we having a recession, no, is the fed tightening . No. They said they would keep Interest Rate low. Is investor euphoria present . The banks and the transportation and the russell 2000 stocks have akuwaited themselves okay, not great, but they are hanging in there, so our feeling, is we said to you week after week, let the markets settle down and come down. This First Quarter is not going to be anything to write home about on the profits. Let the markets sell off and then put some money to work again. Weve seen a mixture in the profit picture. So far 29 companies have reported. Its very early. For example, today, jpmorgan, a decline of 19 in their profitability whereas wells fargo was up 14 so it depends on the company. It depends on the company, right . Very stock specific right now, very idiosyncratic and heterogenous, youll have wheeling that fall short and others will be okay. Art cashin following the levels to keep an eye on. As he said, anything below 3995 on the nasdaq on the close, we could see more selling next week. Do you watch levels like that . I mean, what are you doing here . I think barton biggs. Great man, used to say he was never a technician but secretly did look at the chart. Were all technicians. You broke it down below the 50day moving average so youll see other technician followers put pressure on the market if it does break below that. Again, another reason to be cautious. Take your time and use discretion and be disciplined and exercise caution right here. Thats our message. David and i will come back with the closing count down. Well see if we can close above those levels. Right now that nasdaq is right at the 4000 level, and after the bell a major trend shift in corporate earnings versus Revenue Growth and what that could mean for wall street and your money coming up. Youre watching cnbc, first in business worldwide. Siness world. Aflac, aflac, aflac [ both sigh ] ugh you told me he was good, dude. Yeah he stinks at golf. But he was great at getting my claim paid fast. How fast . Mine got paid in 4 days. Wow. Thats awesome. Is that legal . Big fat no. [ male announcer ] find out how fast aflac can pay you at aflac. Com. 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That could mean a little more selling as we head towards the close here. The dow this is the week for the dow, ant selling has really intensified yesterday as we all know and has continued today. For the week the dow is down 2. 25 , but the nasdaq is the one thats really taking it on the chin, down almost 3 for the week, and today were watching that 4000 level pretty carefully right here. Were at 4004 at the movement wheres the money been going in the treasury market, the yield on the tenyear has collapsed this week. Were down to 2. 61 , and in percentage terms that decline is about 4 . Also, were just talking here during the break, the fear indicator, the vix, has gone up, yes, but not a whole lot. Its up 23 which sounds like a heck of a lot and the level is at 17 and bob pisani joins david darst. When the vix is slow youve got to go slow. You just said it a moment ago, above 20. Rapping on us a bit. There you go. The vix is above 20, dont pay a lot of attention to it. Were heading there. The tax issue, ive been getting inquiries all week of we cant quantify how much the taxes affect things, but heres something from tom mcclellan. A lot of investors last year did not figure their quarterly estimated tax payment, the extra 0. 9 medicare tax or the extra 3. 8 investment return tax, and they will have to write a big check on april 15. You cant quantify it, but i think it is somehow playing into this. Theres got to be something to that. The timing is just too strong, right . This coming week youve got retail sales, industrial producti production, empire set, fed, housing, a lot of indicators and people will ignore them i was just going to say will it matter because the market ignored the better than expected jobless claims number yesterday, decent reports this morning on the economy and were still down. So far well have to wait more for the earnings season to give us a clear indication on what the Second Quarter is going to look like. Well need to get a gdp pickup. We dont get 3 gdp by the Third Quarter, then well have some problems. Do the to see it higher. Happy passover and easter to everybody. There you go. If we dont see you next week. Thank you, everybody. See you later. Going out. See if the nasdaq can hold above 4000, still a couple minutes to keep an eye on that with the dow down 2. 25 for the week. Thats the first hour of closing bell. Stay tuned. Well get you set for the next week on the second hour of the bell with kelly evans and company. Welcome to the closing bell on this friday as we kick out a volatile week and ending on a tough note. Heres how were finishing the up the session on wall street. A deep decline across the major markets. Take a look at the major index hess here, were finishing off bradley, bradley. All right. Can anybody read these charts for me. Off 140 points for me on the Dow Jones Industrial average. The nasdaq looks like its closing below 4,000. The s p 500 is giving up 17 points to 1815. Lets bring in our panel, phil orlando, sharon epperson, jeff cox is here, Kayla Tausche and with us for more on todays markets is fast money trader tim seymour. Fill orlando your first time here. Why dont you start us off with a sense of what in the world is going on in these markets. Markets are scared to death. Youve got a number of fundamental concerns in terms of weather, whether or not the weather issue in terms of firstquarter earnings and gdp growth, i think investors are willing to look through the First Quarter, but i think theres concern about what will happen in the Second Quarter. Do we bounce back. Geopolitical concerns, and all of that is catching up with these highgrowth stocks in technology and internet technology. Kayla, is this all jpmorgans fault . I dont think we can blame jpmorgan because actually jpmorgan was the biggest laggard on the dow yesterday even before it issued its earnings, but what you do see in the banks with wells being up today, you see the backdrop of a relatively weak economy, everyone expected loans to be bert and corporates doing more this quarter and they werent. Also, wells fargo got a benefit of releasing 500 million from its reserves so that added a lift that many analysts didnt expect but a surprise to the upside. Jpmorgan did have a couple of specific lines but this is just a weak economy. Tim seymour, 3. 5 misin the 30year, whats that telling us . It tells you that bonds were overreacting to the fed comments of two weeks ago, and i dont think the economy is in a bad place at all. Look at the jobless claims yesterday, may 2007 levels and look at Consumer Confidence and the workweek and look at the consumer who is really in as good of a place as a long time. Ultimately this is very good for banks and the weakness youre seeing in jpmorgan is something i think is partially just expectations coming into this quarter which were very low. Expectations have been managed, and this isnt the case with jpmorgan. Its the case with a lot of the rest of the markets, certainly the nasdaq. Rotation from growth into value. Thats all this is, and i think people need to rell lies markets dont crash when you have such low leverage by hedge funds. Had this conversation yesterday. I dont disagree that the banks have played their bet a little too early. Theres no demand for consumer loans. Consumers arent putting more money on their credit cards, only slightly. Auto sales at 16. 4 million annualized. Looking at where we are in terms of the banks on valuations, again in, a cyclical upswing which i think were in you want to buy banks and want to buy banks because of all the big sectors to own, 1. 2 times price to tangible book to sector is not expandible. On a historical thats certainly quite inexpensive. You were going to say . Look at the broader picture here, taking financials asite. Look at where the market, is yes, over the last couple of days, not great days, but lock at where we are over 12 months. Double digit returns so for those investors sticking here for the long haul and know well see a lot of volatility, we wont likely see the gains weve seen in the past year, but well continue to see some growth and theres positive signs out there. Were at the end of the tax season with tax refunds up 9 , 18 billion. Look at the deficit yesterday. Going back to the taxpayer, so maybe some of that money once folks pay down their debt and save a little bit will come back into the market. Lets give people a sense of whats just happened in the market with our hat tipped to the data team. Looking at the worst week for the nasdaq and s p since june of 2012, the longest weekly losing streak for the ibb which jokingly we were calling the new vix until the vix started popping, off seven straight weeks and seven consecutive weeks of losses for the First Time Since its inception in 2001. Health care, we talked about whats happening with regard to theins ifs. Consumer discretionary also taking it on the chin and industrials of a 3 . Only industrials in the green. We can have all the highminded discussions that we want about data points and some of the other things. What i like to do is just watch the tape, and the tape is telling you something. The tape is telling you that this market has been priming itself for a pullback for quite some time now, and i think when you get to that point, it doesnt take a lot. It takes a little push here and there. Now absent a recession or anything like that, i dont think that this becomes something that gets really out of hand, but you can really get were talking about momentum, right . Those are the momentum stocks. They catch a fever. The rest of the market catches the flu and we end up in a place where mentioned utility, tim, but suddenly emerging markets, suddenly people are piling back in. Look at emerging markets 22 straight weeks of outflows. This to me is the ultimate value trade and its a momentum trade that at least in other words had been so negative on the downside. Are you seeing a rebound in emerging. Look at the eem in the proxy, could you probably trade this thing back to 4475. I dont think you do it overnight, but trade to watch is, really, again, a reverse in the mean trade is the eem against the spi is something that for 3. 5 years kept getting sold and sold and sold, and this is a spread that started to move. Wont happen overnight, but i think you have to watch that. Want to go back to this tax questioned. We had a guest saying he thinks this is tax related and that well get a real come april 15th or 16th or what have you. Do you buy that . Are you seeing that firsthand, and if thats the case wouldnt be the market be discounting it now . It seems as though the selling action seems to be unrelated to that known entity thats out there. You cant you cant discount the fact that stocks have done very well here so youve got individuals with a lot of profits. Some of the banks and pretty decent bonuses. The tax rates went up, the deductions came down, there are tax bills due, the tax bills have to be paid so some of this liquidity over the last five weeks from selling may be related to taxes. We have tax day every april, right . Yeah. And if april is the best month for the market, isnt it . What makes this april so much different . What is made so much different because the rates have gone up, theres a new tax on Investment Income that a lot of folks making 200,000 werent anticipating that they would have to pay more and would not be able to get the same kind of deductions that they have had in previous years so that shocked them. Look at the broader picture, as i mentioned. Overall tax refunds have gone up significantly, so when you look at the broad scope of americans, they are getting money back, more money back than ever before and if they are able to pay down their debt, maybe they can save a little bit and put money back into the markets. One. Reasons why the deficits are narrowing substantially, something nobody is talking about. It could perhaps support the u. S. Dollar or Interest Rates here but it goes back to some of the wackiness in the markets, completely uncorrelated moves, and if you told me that the week in which jobless claims fell to 300,000 for the first time, a sevenyear low, that that would be the week that the 30year bond fell below 3. 5 , id frankly be stunned. Thoughts here . Well, kell, from my perspective, let me jump in here, looking at whats going on in the labor market, thats telling us that this decline that weve seen in gdp in the first and Fourth Quarter is probably not sustainable. Probably seen a significant pickup in growth starting in the Second Quarter now that weve got normalized weather and this will probably be short lived. If you look at the ism, probably 3 to 4 growth year over year. The economy to me is midcycle at this point, and if you look at other parts of trades that are, would go right now include energy. If youre long energy and short tech have i youre laughing. This is a trade that continues to work and look at Industrial Metals prices, nickel at oneyear highs. Some of these trades continue to work and tells you the economy is better, and theres real demand. Thats whats so quirk beit though. Were quirky. Yeah, i know, the point though being that, look, its not as if weve seen these periods in the past, right . When the fed would try to end qe and what would happen . Correlations would go to one . Wed see the flight to safety move . Its not behaving the same way this time, and it comes back to this issue of whether, you know, who to Pay Attention to in this market, do you Pay Attention to whats happening with the tenyear and 30 year and bond marks. You better. Or whats happening in japan. Or do you Pay Attention to the credit market and pig toggle bonds that are price will all at the same time, jeff . I always follow the credit markets. I think the bond guys get it right more often than the equity guys, no offense to any guys around here, but i do think the economic question is the big question and how does the fed react to that . Does this become part of the fed discussion . Is it too soon . I think before this year ends the fed at least pauses in question and says, hey, wait, maybe weve moved a little bit too fast and got too enthusiastic. You think they are going to pause. That kills their credibility . What credibility do they have . I mean, they just stepped away from their 6. 5 Unemployment Rate projection, already told us that Forward Guidance because unemployment is set benchmarks that are not relevant. Who would even listen to the fed. You better listen to the fed. I think you want to watch what the fed does, but i dont think you want to listen to what they say. The reason the fed stepped away from 6. 5 is because of the quality of the unemployment, the participation rate. That i think was just a realization of whats going on in the labor market. In other words, how would you describe the feds credibility with markets here . I think the feds got a lot of credibility, and one thing well see, yellen is coming to new york to speak to us next week. I think thats going to be an important meeting because she will be able to potentially clarify some of the uncertainties that we see right now in the marketplace visavis what fed policy looks like. If you were to take the two most recent things, Janet Yellens defense of cyclical unemployment, if you will, the most dovish speech she heard, was one of how our guests put it and then the minutes that showed no one was talking about really any kind of sixmonth language. Those two pieces of information should have given a bid, if anything Labor Participation has been on the decline for several years. Do janet yellen and the rest of the fed realize now were having a problem with Labor Force Participation . Did they just realize that structural unemployment is not going away . I dont buy that. I think they have been behind the curve ever since the crisis started, and they continue to not understand some of the dynamics that are underscoring the economy. Well leave it there for now. Tim, thank you. Thanks, everybody. Catch tim seymour coming up with the rest of the fast money crew here at 5 00 p. M. Now, stocks selling off again today. Jeff cox spotted a major red flag this earnings season that could spell even more trouble ahead. Well talk about that right after a short break. Also, herbalife shares are plunging on reports that the Justice Department has opened a criminal investigation into the economy. Has activist investor bill ackman been right all along . Herb greenberg joins us. Hear what he has to say. Youre watching cnbc, first in business worldwide. Siness world. We route your order to up to 75 Market Centers to look for the best possible price, maybe even better than you expected. Its all part of our goal to execute your trade in one second. Im derrick chan of fidelity investments. Our onesecond trade execution is one more innovative reason serious investors are choosing fidelity. Call or click to open your fidelity account today. I just ah woke up today and i said i need something sportier. Annnd done. Ok maxwell, just need to ah contact your Insurance Company with the vin number. Oh, i just did it. With my geico app. Vin is up to the loaded. Ok well then jerry here will take you through all of the features then. Why dont weeeeeeeeeeee go out to the car. Ok, ill just be outside. Ok, yeah. His dad is my boss. Yeah. Vin scanning to add a car. Just a tap away on the geico app. Put it on my capital one i earn unlimited double miles. Hey, youre not the Charles Barkley . Yes i am. Nah Charles Barkley is way taller. Theres my picture on the wall. Yeah that could be anyone. What about my jersey over there . Oh yeah, thats your jersey. Theres my bobble head right behind you. Alright well let me see you bobble. Yeah, im just not buying it man. Earn unlimited double miles with no blackout dates from the capital one venture card. My brother john, he works here. John, you know this guy . Whats in your wallet . Welcome back. Talk about april showers for this mark. The dow and s p 500 down around 2 , the nasdaq down more than 4 this week. Dominic chu is breaking down the stocks already in bear market territory and which ones are weathering the storm, dom . Youre abslooly right. A tale of two different stock markets which makes some people feel better because picking stocks, the right ones, does matter. No sense of real panic. Check out a couple of names on the bear side of things, big ferocious grizzly bear, a company like staples has dropped 31 from its high back on august 13ofthe2013, so a very bearish move to the downside for this Office Supply retailer. Now take a look at another name. Not quite related by still one of those consumerish types name, dreamworks animation, animated features are their thing and down 25 from recent highs and that was just back in december. Bear market moves for these stocks. You take a look at other names. Not all stocks traded equal. Bigger largecap names have actually held up quite well in this perhaps rollish tight market. Caterpillar, heavy Industrial Equipment making, up 1. 4 some of the recent highs here so they have held up remarkably well in this market. One more for good measure. Not quite bullish but big lots. As much as weve been talking about downed retailers, big lots on the dollar side of thing is actually up 2 from near its recent highs, again, a lot of stocks really come down to whether or not theres a fundamental story in this kind of economy for them to do well, and thats one of the main reasons why they still say, kelly, do your homework, stock picking matters. Jim kaimer would always say do your homework, right, kelly in. Always a bull market somewhere. Thanks, dom. Earnings season will be in full swing at next week. Cnbcs. Com jeff cox seeing a red flag with regard to the fundamentals, whats that, jeff . Under normal circumstances, what weve been looking for for earnings over the past two years now, is to see top line Revenue Growth that shows that demand is returning and actually companies are no longer having to cut costs to reach their profit goals. Now the First Quarter is actually indicating that profits are actually supposed to grow at a farther pace than you mean revenues are going to grow faster. Yeah, revenues will grow faster than bottom line profit. The numbers are about exfinancials revenues to grow 3 earnings per share, actually supposed to fall a little bi. The big problem that you have here with this is that its making a bet on consumer, companies will be able to make that handoff to the consumer for demand, and im just not sure if that demand is there now. Its the expectations game. If we take these numbers at face value, it tells you a better sign, revenues will increase even though earnings are under pressure. What youre saying is the expectations are so high that well see this top line growth. Yeah. Phil, do you see areas of vulnerability in any of the sectors in particular. Consumer discretionary, 12 increase. That looks pretty hefty. The revenue gains are supposed to be a little bit better than the earnings gains and rather than break it into secretary ork the bigger question is the implied reduction in Profit Margins that this is pouring through for the first time. We saw this sort of being qued up, Third Quarter into Fourth Quarter of last year. Productivity data started to slow. Unit labor cost started to go up and the reason for that is the labor market is starting to improve. Bringing new workers in. Youll lose some of your pro tivity and costs will go up. That will hurt profitability, and at least based upon the expectations, that trend is supposed to continue into the First Quarter. Let me ask you this. Sharon, wouldnt it be a good thing, if you wanted to see, for example, pressure on Profit Margins, if you saw earnings because companies were paying higher wages or because they were doing more capx, is this the right kind of pressure or the wrong kind . Back to me. Oh, sure. We, i think youre better to answer this, but i dont think its because of higher earnings or higher wages, necessarily, thatty we are seeing this pressure. When you look at particularly what struck me is the numbers in the Energy Sector and the fact that were seeing lower earnings and lower revenues and Earnings Growth continues to be ratcheted down, chevron saying they expected earnings to be lower than they anticipated, all a factor, those are things that we need to look at some of the sectors phil said to look tat it more broadly because some of the sectors like energy may be skewing the picture. Weve been saying for the last year Profit Margins had peaked and nowhere to go but down as companies started deploying for cap d. A. X, buying deals and we havent seen that. Every quarter has seemed to be a new peak for Profit Margins. People have been waiting around for that to start correcting. As much as they are waiting around for waits to go up. Calling into question some of the mean reversion things weve not keen seen. Jeff quick, last word . It kind of squares the circle. Which direction are we headed in . Will we see more organic growth and that Margin Expansion sickle. A lot of people are starting to question that and i think thats why you see more volatility coming into the record. More with some of the details on this big mover. We do have a response from the f. T. Article, the company saying we have no knowledge of any Ongoing Investigation by the doj or fbi. Weve not received any formal request from either agency. The company says they take their Public Disclosure object gags very seriously and dont intend to have additional comments. The company is saying no knowledge of any Ongoing Investigation by the doj or fbi. Herbalife shares are rebounding 2 in the after hour. Remember, it fell 14 after that article was released. Sheila which is a little bit crazy because the ft story included that same line that herbalife had no knowledge. Clearly investors are trying to make sense of that. Heard a lot about stock prices being fosty. My next guest says the boom in bond prices this year has been nuts. Why the hunt for yield is spelling trouble ahead for credit markets, and senator Richard Blumenthal reacting to news that Ceo Mary Barra may have known about the companys car problems even after she told congress she was unaware of them. Thats coming up as well. Well be right back. Tdd 18886282419 searching for trade ideas that spark your curiosity tdd 18886282419 n take you in many directions. D 18886282419 you read this. Watch that. Tdd 18886282419 you look for whats next. Tdd 18886282419 at schwab, we can help turn inspiration into action tdd 18886282419 boost your trading iq with the help of tdd 18886282419 our live online workshops tdd 18886282419 like identifying market trends. 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Is that because weve seen the fiveyear coming down. Hasnt mattered whether rates have gone up or down in the last five years. Our nations pensions need to make 5. 7 . Need to bring in more money from the cities and towns that fund them. Perhaps no coincidence that back stan can go to market and get 7 to 8 rates. Think about in the last month, greece and preaka raised over 5 billion in the credit markets. So i sense thats a tremendous amount of froth. In corporate funds were hearing 2. 0. The imf warned about that. The standards giving to investors are even worse than 2011 levels. What what does that say to you about the Financial Markets more broadly. Take us back to the stock market which is selling off. Why. Class classic housing stocks bottomed and topped. Topped in 2005. They corrected about 20 and the biotechs today made i think a nearterm bottom on the ibb, etf, and i just see massive capitulation, we have a capitulation model that measures that, and i think theres capitulation in a lot of these names. Specific to that area youre saying. Market, and now weve seen a move back. Brian, what would you say here about where the stocks goes next and why is it that were seeing this volatility, even as you said the credit market demand is so strong. The spread between optimism among Credit Investors and pessimism amongst stock investors has never been bigger. Short selling as a percentage of shares outstanding, never been higher during a bull market, other than 2011 when the u. S. Got downgraded so that tells us that there can be more near term, very near term downside to stocks, but we know that once the selling has passed, and this has happened time and again the last five year, the credit flows intensify so as crazy as this credit market has been in letting greece back in, its going to become more intense. That puts cash on to the hands of ceos. They use it to buy their stock back and stocks go ripping to new highs. Seen that over and over again and thats probably whats going to happen in the next month or so. One thing the two of you agree on as well is that we havent actually seen the froth, the extent to which these markets to i hate to use the word bubble, but do you think thats where were headed in the next couple of years . Credit booms lead to bubbles elsewhere and we had a commodity bubble and this credit boom is going to be so long and so intense that we have a real estate bubble coming in commercial realies tate and those activities lead to higher stock prices while the credit boom is going on. Larry. And ill just say take the vix volatility versus the nasdaq volatility. We saw a two standard deviation spread this week for the First Time Since lehman. That tells you theres defrothing going on there and theres potentially a nearterm snap back rally and so much future volatility. Quick last worth, brian, what youre talking about with commercial real estate plays out, do you think it will be different, that the fed will do anything to keep this from playing out in anything but a classic boom bust fashion . Nothing that the fed can do about it. All the credit booms are driven by our pensions needs for above market returns and the fed can fight that. Nothing they can do to stop it. All comes back to retirees. Were all complicit. Great to see you both down here. Have a good weekend. Will new emails mean big trouble for Ceo Mary Barra. Senator Richard Blumenthal has been all over the crisis and will join us next. Herbalife getting pummeled on a possible pyramid scheme probe. Thats coming up on the closing bell. Well be right back. Well be ri. Who work with regional experts. Who work with Portfolio Management experts, thats when expertise happens. Mfs. Because there is no expertise without collaboration. Mfs. Gundyes n group is a go. Not just a start up. An upstart. Gotta get going. Gotta be good. Good . Good. Growth is the goal. How do we do that . I talked to ups. Theyll help us out. New technology. Smart advice. We focus on the business and they take care of the logistics. Ups . Good going. We get good. Thats great. Great. Great. Great. Great. Great. Great. Great. Great. all great i love logistics. Welcome back. Gm Ceo Mary Barra could be in pretty big trouble. New details emerging in fwms recall crisis suggesting she may have known more about car problems than she told congress about it last week. Joining me to react in an exclusive interview is senator Richard Blumenthal. Senator, good to see you again. Good to see you, kelly. Thank you. So your reaction, first of all, just to the news here to these disclosures, and what further steps youd like to take . Gms problems are mounting, and and really the best way for gm to go right now, and i mean right now, is to do the right thing, which is to establish a Compensation Fund, take these defective vehicles off the road. Warn people that they should be grounded until they are repaired, and finally make sure that justice is done by establishing not only a Compensation Fund by doing the right thing and coming clean with all the facts. Well, to take those three points that you just made, youve called for a Compensation Fund in the past, but i wonder at this point, this isnt just about pr, this isnt just about, you know, gm regretting the way it handled the situation, its much, much bigger than that. What do you think a compensation at this point would really achieve is. A Compensation Fund would provide for money, and money wont bring back lives. It wont erase the pain and it may ease it somewhat, but at least justice for the people who suffered damage, death, injury, as well as economic damage, and thats very significant, could be, in 2 billion, 3 billion, were not sure. Gm is relying on the legal shield from responsibility that it was granted in 2009 only because it concealed these defects, and thats a fraud on the court, if its true, and it is also a fraud on the United States government that supported that legal shield, so these problems are mounting. Credibility is in short supply. Trust and confidence on the part of customers is going to be diminished if not eviscerated. Thats why gm has to do the right thing now you make the point, too, that the government, do they become xlis knit all of this. Both the regulators and the treasury or whomever was overseeing the bailout at the time for looking through gms books and flagging these problems as this whole process unfolded . Thats why im urging the United States attorney general in a letter that we sent today, myself and a number of my colleagues with me, urging that the attorney general pursue this criminal investigation, so we know who knew what when, including the ceo and if people in government knew it, they may be complicit also, but let me just insist that theres no evidence yet that poem in government were aware of this defect prior to 2009. There is evidence that gm knew about it. Theres evidence that nhtsa was aware it but it didnt rise to the level that they neemd it systemic enough to do something about it. Thats absolutely right, kelly. Nhtsa, the national Highway Traffic Safety Administration, as well as potentially others, knew about this defect and failed to put together, connect the dots, but whether that amounts to actual knowledge is a question that is open, and thats why the criminal investigation has to pursue promptly, vigorously and aggressively. All im saying is that the extent to which theres a lot of blame to go around in this case, but its quite clear that nhtsa as well could have done something and, again, did not. Absolutely right, and thats why i have legislation that i proposed with my colleague, senator markey, that would require better reporting by Car Companies to nhtsa, but also nhtsa disclosing through an accessible database what it knows about car defects more quickly and more fully. Thats a very good point. Well, the transparency here, im sure there are a lot of car owners at this point who Bill Griffith made this point last hour. If i was driving one of these vehicles and knew it would only cost me 1 or 10 to fix or upgrade a switch, maybe id throw that in the next time i go and get the car inspected. Why not empower the consumer to some extent to make these choices by giving them the full information. That is the case for Consumer Choice and informed consumer. Ive been fighting this battle on various fronts for more than 20 years, but heres a classic example of it, and ill tell you another point that ought to be raised right now. For the cars that are defective, whether its cobalt, saturns or any of the other models, are the new ignition switches reaching the dealers so they can replace the defective ones in these cars right now . Yeah. Thats an open question. Dealers right now who are saying they are a critical part of the way we buy and sell cars in this country with regard to tesla seem to also have been asleep at switch, the extent to which they were aware of the situation is up for debate, but its now clear from the documents that mary barra are more awareness about the situation than she indicated to Congress Just last week. What happens now to mary barra . Should she keep her job . Thats a question that will depend on the facts that were learning as you and i speak, and i think there will be a lot of dwhaes have to be answered by mary barr a. I asked her when she testified about exactly these kinds of questions, whether she regarded these vehicles as safe or not. The entire credibility of the her testimony will be thrown into if, and its still an if, she was not totally forthcoming. Senator blumenthal, thank you for your time this afternoon. Thank you. On that troubling story. More breaking news on herbalife. Dominic chu joins us with the latest. Kelly, cnbc has learned that the fbi is investigating herbalife but that there is no evidence of criminal activity at this time, this all according to a source familiar with the situation. Remember also cnbc has learned that primetime news magazine 20 20 is preparing an indepth piece on herbalife. Its not yet clear if the 20 20 story will address the investigation into herbalife. Also worth noting, of course, that cnbc has also done its own indepth story on herbalife, the company, so, again, the fbi is investigating herbalife. Cnbc has learned, thats according to a source familiar with the situation. Kelly. Thats right, following it closely all along. For now well have much more on the herbalife investigation straight ahead. Well also hear from somebody who says extreme weather patterns patterns mine was earned in korea in 1953. Afghanistan, in 2009. Orbiting the moon in 1971. 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Well, its a new development in the whole story of herbalife since bill ackman issued his reports almost two years ago, and its the first indication of potential criminal wrongdoing, although to be clear no charges have been filed, and its an investigation to determine whether any charges would be filed. Herb, is that 14 selloff warranted . Well, you could argue was the wise warranted given the uncertainty around the stock and thats been per mentioning to me. We did our documentary selling the american dream, well over a year ago, raising guess on our we had an eightmonth investigation too this thing or however many month it is. Weve watched this thing bounce back and forth knowing full well theres issues that need to be addressed and perhaps now they will be addressed and its to see if the fbi and federal go further whether they are looking at things like mail and wire fraud, things like that. Of course, we dont know what they are actually looking at. Based on all the reporting that youve done, herb, i was surprised how many investors are still interested in this stock but many investors dont realize they own it because its in their 401 k . I just did a little bit of research, one of the top holdings in the did i felt Growth Company fund. That fund is the Top Mutual Fund in microsofts 401 k , one of the top funds in gms 401 k , deere and company, maybe ours, i dont know. A lot saying i dont want to part with this stock right now. They may own it and not realize it. Looking back you would say this is a Fabulous Business but the thing that perplexed me as we watched the battles with carl icahn on one side and ackman on the other, wait a minute, we all know that this is a company that does have issues, so where does the uncertainty lie, and where is the fiduciary for the invest snors what i would like to know for the mutual funds, what kind of research have they done . Have they really gone out and done the deep dive that you would expect them to do in light. Situation here . Isnt the problem that they almost have to do to the work to justify taking a name out of an index that they are tracking . If the maime is in the index, there almost has to be a rationale for taking it out . Thats where they need to Start Building work, should they not . The minute we came out with our piece and ackman came out with his, you have to do the work of more than one people. Holdings as of the end of february. Theres been so much reporting around this issue. The stock hit 82 in between, february, might still wanted to have been in there. Ive been amazed at these releases. Kara, heres what i wonder as well. Sources now telling us, you know, they are not aware of evidence of criminal activity here, and herbalife is saying the same thing so how unusual is it for the fbi and doj to open an investigation that doesnt perhaps come to fruition with criminal charges . Well, it does happen. I mean, its not its not a given that every investigation is going to uncomfort criminal wrongdoing but the fints you have made questions being raised about this company. Not surprising that the fbi would get involved and j would got involved. I think thats the point of the veegs is to get to the bottom of that and determine what if these reports are true and what my not be substantiates. Herbal life said were not aware of any on going investigations. I think if we look at some of the Insider Trading investigations, it was sometimes the company or the founders that were the last ones to know that they were under investigation. I think to do an investigation youre going to have to talk to the people that might have been buying the product, what were they told about the products . In order to see if theres any legitimacy to any of these fraud claims. So i dont think it is surprising that the company doesnt know. If the next seems to get legs the Company Might be asked for information, might be asked to provide their side of the story but if there doesnt seem like theres anything there it might end right here. On a nim like herbalife, feb, if funds hold and will some sell. We were long hermive in a number of our fund. Our analyst tom banks loved it and the stock did very well, and it was when the whole thing first broke, ackman, icahn, we realized this information was no longer analyzable and we took it out. It was a relatively easy decision. Not as easy a decision with the stock down 14 in one day. Herb, well give you the last word here. Just remember one thing. This is all about whether distributors are making more money recruiting other distributors or selling the product, and thats where this gets very cloudy, and that sort of gets lost in all the shots and the mudslinging that gettorsed around here. Thats what you watch in the end. And that is what the federal trade commission if they do an economic analysis. This winter was not about just the snow, more extreme weather is becoming more common throughout the year and how thats creating both risks and opportunities for wall street and for your investments. Well be right back. Well be ri. Make it happen with fidelity active trader pro. Its one more innovative reason serious investors are choosing fidelity. Call or click to open your fidelity account today. Welcome back. Climate change is one of those issues that can impact virtually any company across any industry, and its also a hot topic in this months edition of a hot t this months institutional investor. We have the editor joining me on the floor. Good to see you. Nice to see you. There in is some forced selling that could start to happen as Climate Change becomes more of a policy issue that investors need to know about. Theres a lot of reasons why investors need to know about Climate Change. Clearly its a big risk, but its an opportunity for companies. If a cap and trade policy gets enacted, thats certainly going to have an impact on companies immediately. How much so . Lets assume first of all that these things happen, how big an impact could it be and how exposed can people figure out that they are . The carbon producers, the Energy Companies, theyre directly impacted, utility companies, and if there is some sort of tax, its estimated that about 80 of the reserves are never going to be able to tap. I mean, if you were to actually pull that 80 out of the ground wed go way over the carbon limits. So basically companies are sitting with all this on their Balance Sheet that theyre never going to be able to use. So for the Energy Companies its a big deal. But it also affects all companies. Climate change is an issue, really, that impacts every company in every industry. Whats interesting about this is that, and i know people who personally were going to work on specifically cap and trade or carbon tax that lost their jobs with when it went no where are under the obama administration. There ins a lot of momentum, if you go back to mccain and obama during the primaries, they were both talking about Climate Change and things like cap and trade or carbon tax. The financial crisis basically put an end to that, because it was such an immediate concern. The thing about Climate Change, its longer term. It plays out over decades. It doesnt play out over quarters or weeks or days the way most investors are focused. You mentioned there are a couple of ways that investors can tell how exposed they might be to these policy moves. The carbon disclosure asset, helps them figures out what are the emissions levels of their own portfolios. There are people who hate to talk about this political issue. But it sounds like there needs to be more awareness about it than what most investors currently have. The good news is theres more awareness on the part of the companies. If you go out and look at the Largest Global companies theyre publishing sustainability reports, theyre providing information for folks like the Carbon Disclosure Project which have Detailed Analysis of what their Carbon Footprint is, what their expenses r theres a group out of San Francisco that is actually putting in place metrics that companies will hopefully follow that will enable them to have, investors to have uniform information about companies climate exposure. And theres so much information in the latest edition. More breaking news now. Phil la bow joins us. Can you clarify the extent to which things currently stand. We know mary barra knew more than what she reflected to Congress Last week. We have a response from General Motors regarding that specific issue, remember, all of this stems from the fact that mary barra has said from the beginning of this entire thing back in january, i had no knowledge about what was going on with the cobalt, the ignition switch until it was brought to our attention by the committee. Documents came out where an email was sent to her regarding a saturn power steering issue. General motors has just release add statement saying the email to mary barra references a saturn ion steering issue which is completely separate from the gm recall. We have no idea whether she has sent any follow up emails. Theres no documents that she since a follow up email. Thats gms response that they are maintaining she did not have any knowledge of this prior to january of this year. Right. And phil, thats going to be an extremely Important Development to watch. Thank you very much. The hits keep on coming in the meantime. We have breaking news on amazon. Whats going on . How about smartphone chatter again. Sources are saying amazon is preparing to release a smartphone in the second half of this year. They will announce this phone by the end of june and begin shipping by the end of september. Also this amazon phone is going to have some kind of 3dlike display screen without the use of special glasses. All of this from sources. But, again, more chatter about amazon launching its own version of a smartphone. Back over to you. And a 3d one at that. Oh, my goodness. Thank you, dom. Up next sha, the panel willl us what they are watching for, in 3d maybe. In 3d maybe. Polar vortexes, road construction, and gaping potholes. So with all that behind you, you might want to make sure youre safe and in control. Ford technicians are ready to find the right tires for your vehicle. Get up to 120 in mailin rebates on four select tires when you use the Ford Service Credit card at the big tire event. See what the ford experts think about your tires. 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Because there is no expertise without collaboration. Welcome back. What a week its been, what a day its been. Were already gearing up for a big week ahead. We want to get thoughts from the panel on what they are watching. There are 11 ipos. We had a few false starts today youll see a backup in the ipo market depending on what happens next week. Slow down in the economy and the earnings, is it all about the weather or not . We get the retail sales report on monday. Im going to see what mutual Funds Companies own and if its in my 401 k . What were those . Fidelity group fund. This is not just a battle of the billionaires. Well be interested in some clarification on Monetary Policy thoughts. Did you survive the show today . It was we had a little bit of news there. Whiplash. Exactly. Thank you all very much. Have a great weekend. And of course well keep an eye after weve seen a pretty sharp two day the melissa lee, what is on top . A very rough week. We had some big pull backs for the week. Were going to take a look at the biggest stocks facing the biggest pull backs and whether theyre buy, sell or hold. That is the question. If they can answer it, that would help us all out. Its going to be a long weekend. A lot of homework to do. It will be. Fast money starts right now. The nasdaq getting hurt the highest. Is this a buying opportunity . Or will the selloff get worse. Our traders tonight are tim seymour but first breaking news on General Motors on what mary barra knew about the recall. A lot of documents coming out this afternoon from the house energy and commerce commit eye. 2,000 documents in all handed over from General Motors and the National Transportation safety committee. Whats getting a lot of attention this afternoon is one particular email sent to mary barra back in 2011