Herbal life story started on this show, at this post, january 25, 2013 when bill ackland and carl icahn brawled on live tv. Herbal life, we simply provide to the public full transparency on this investment, 330 slides in detail, not scaring people, but going through the facts about the company. Okay . We exhausted research over a year and a half. Could have fooled me. Well be proven right or proven wrong. And i believe goes out, has 300 people in a room. I wouldnt care if it was anybody else was ackman. Goes in a room, gets 300 people, tells how bad the economy is. Did it in the 90s. Scare the hell out of people. Well, icahn, already herbal lifes shareholder certainly looking good today. Stock up more than 50 since the billionaire brawl. The settlement also gives icahn the ability to increase his stake in the company to nearly 35 . He says, i have always believed in herbal life strong fundamentals, and pleased the board decided to increase my nership limit. While ackman, who famously put a billion dollar short position behind his claims that herbal life was a pyramid scheme doubled down yesterday right here on the halftime show, saying i think it will end up with the government suing herballife for being a pyramid scheme or herballife capitulating and agreeing to changes. Here it is from today, the two sides, though, they settled. Outspoken herballife saying the settlement is a profound victory for the company. Mr. Ramie joins me now. Tim, welcome back. Thanks, scott. Boy, so many conversations about this over the last couple of year pms ws. Why is this a profound victory today . Well, just looking at the terms of it, its roughly in line with what we expected. Herballife looked at doing a preferred customer strategy in the spring of 2013. And i think wisely kept this as a bargaining chip with the fec. Hurdles to get over for sure. This 80 rule, but it applies, as you know, to only the u. S. , and the biggest thing has always been nutrition clubs. How do you document those sales . Its going to look a lot like kind of starbucks loyalty card. Its going to essentially, i dont know whether youll get a free shake after ten or Something Like that, but theyre going to be able to, i think, relatively easily document this. Just as they do in china, by the way. The new program in the u. S. Is going to look a lot like what theyve been operating in china very successfully. You raise some very interesting and important points. You mentioned 80 as a number. As part of this settlement, so people understand what youre talking about, and exactly what the ftc itself is talking about, 80 of sales made by distributors now must go to end customers, to actual retail customer, and those distributors are going to have to provide receipts to the company to, in fact, prove that fact. 80 is a very large number. Ive talked to a number of people today who questioned whether herballife can ever reach that kind of number. What would you say to those folks . I think its relatively easy, actually, for them to do it. In the u. S. , the business is largely a he believe an herbalife business and i am an herbalife distributor and will probably get an letter, an email that says were going to convert you to a preferred Customer Service unless you sign a letter of intent saying youre going to try and be a distributor. And obviously, im not a distributor. Im really just a customer. So, you know, theyve always said, 73 of their distributors are just end users like myself that have no down line. So that parts relatively easy. The sticky part has always been you document that . I think they have a tool and solution in ten months from that. And let me ask you this. Listen to what Edythe Ramirez said, chairman of the ftc and we can react on the other side. Edythe ramirez a short time ago. The dream portrayed by herbalife and reinforced in thesed and other testimonials was an illusion. The vast majority of herbalife distributors found they could make little or no money selling herbalife products. Tim, i have the actual press release from the ftc, i think goes a step further. Im going to quote from a and want your reaction. This settlement says, the ftc, will require herbalife to fundamentally restructure its business so that the participating are rewarded for that are what we sell, not how much they recruit. Herbalife will have to start operating legitimately making only truthful claims how much money its members are likely to make. Some might read that and say, boy, sure sounds like bill ackman was actually right in the end about his thoughts on what herbalife was doing. Its just the ftc didnt think it was going to shut the company down as a result. Well, so ive always felt bill ackman was wrong. As he said yesterday on your air, its not an illegal pyramid scheme. You cant find that language anywhere in the complaint or in sure, nor can you find that its not, to be fair. Nor can you find that its not. Fair enough. But, you know, the essence of this is and i guess this is a show about stocks not a show about bill ackman but at the end of the day, this applies to 20 of their business. It is a relatively palatable rule change, one we thought the company would accept and in fact it did, and they put their top distributors in a meeting, had them sign ndas, presented the deal to them and they had tremendous buyin from their top distributors. I dont think this is going to be problematic to them in any meaningful way, but if it is problematic, its problematic on 20 of the business, not 100 . Tim, leave it there. Last word. Youve obviously been right on the money on the stock, and how youve viewed this whole thing as turning out. Appreciate your time today. Thanks, scott. Pivotals tim ramie. Next guest, a longtime supporter of herbalife. Robert chapman, joining us now on the phone. Robert, welcome back. I guess i knew we were always going to get to this day. Just didnt know exactly when it would come. Your reaction to what the ftc and herbalife agreed to . Well, thanks, scott. I have a couple reactions, and i want to be very fair to both the bulls and bears on this. I dont think theres any question that the ftc essentially agreed with persian square and glakman. No punches pulled, and though the pyramid scheme language was not used, i think that was part of a negotiation that the ftc and herbalife probably squabbled over a while whether or not that language should be included and that was left out. It is interesting when you look at the language that they use, where they say herbalife now has to start operating legitimately. What impact is this 80 number going to have on the u. S. Business, and if youre thinking today, we just got the point of view from an analyst whos been bullish throughout. If youre looking at this story, thinking, okay, i was waiting forever for a settlement of some sort, or at least a resolution, what do i do with the stock today . What directionally does todays news mean for investors who may be thinking about this whole deal . Well, first of all, to answer your question, ill tell you why. So i think the stock is fairly priced here. And so i wouldnt come in and buy it and i wouldnt necessarily short it. The only thing i did today was very small, within the low 70s. Actually put them out on the short side, hedging out a long position that i held since the 50s coming into this. So i think its very much so a stock just to be avoided at this price. I wouldnt short it, given all the Short Interest and the fact icahn is threatening to take his position from 25 to 35 . I would not do that and wouldnt go long, because we dont really know two things. Whats going to happen in the u. S. , and the 80 rule is a big one. At the corporate level. At the individual distributor level, a situation basically distributors need to show twothirds of their down line is coming from retail. Also high threshold and on the risk side, secondly, if the International Regulators replicate what the u. S. Has done and, again, the ftc has not come out equivocally, very clear what they think about this business, then you have the rest of the Global Business as well and its not immediate but could come. You look at the long and short of it, i say this more often than not as ive gotten older. Not much to do here. Have you, and lastly, robert have you considered at all, like i have, for the last many months, and, really, since this whole deal started, that its quite possible that at some point herbalife could be taken out . Could be taken private . You already have, because of this deal today, icahn can go up to nearly 35 . And that, that ultimately is the end game here, and that a big hurdle, if you will, the waiting game on Something Like that happening is now over, because herbalife and the ftc were able to come to a settlement . That would have to factor into your thinking if youre a potential investor in the stock as well . Anything can be taken private. I hedged out my long position today and should have been more aggressive, gone short given the stock in the 66s now. Its unlikely. I think theres still serious risk. Bill ackman did an extraordinarily competent job of getting detailed facts in front of the ftc and they came out in their complaint and stipulated order made it clear they think this company is an illegal pyramid scheme, used those words. Seems clear to me thats what came out. If he replicates that internationally, who knows what happens, right . Id be surprised if a private equity firm would want to replicate what Golden Gate Capital did many years when they bought the company for a song, much lower valuation. Very surprised. And i actually would be surprised if icahn increases his position much here in the 60s and 70s. I think he got that capability, the safety net, in case the stock collapsed today. Thats just my opinion. Interesting. An interesting take. Bob, appreciate you calling in. Robert, talk to you soon. Have a good weekend. You do the same. Robert chapman, following tim ramie. You know this company in way back . Yeah. I was part of the team, and threw a lot of stock away when they first went public when the company was founded with a ninth grade education. Called in front of the u. S. Senate subcommittee, same issues back then, concerns, and when they said, how can you disagree with all of these weightloss experts when you have a ninth grade education . His response, if theyre such experts on weight loss, how come theyre so fat . This company has a long, turbulent history with the state of california at one point sub stracting the largest from Health Care Products in history. I wouldnt be surprised if carl put out buy orders because the technical effect of that with a high shortage risk they have to call in shares. Those shorts have to cover whether they want to or not but doubt he stay theres for so long and dont think hed model it out at this point for private equity. So chapman says, nothing to do here. Other ways to make and lose money. Id move on. The takeaway, that the government doesnt bankrupt six, seven, eight billion Dollar Companies just because they dont live their business model. The reason everyone knows Arthur Anders andersen, its only memorable instance Something Like that happened. They closed down a whole company for the actions that one office took in aiding and abetting the enron fraud. This is not something regulators do. It probably is akin to a pyramid scheme. The big risk for ackman and all shorts from day one, they would be right and still wrong on the trade and how the trade gets its the big thing, a Short Interest, 20 , you immediately go to the other side of the trade. Everybody did that. The most interesting part of the way this story has turned out. Herbalife can continue to operate. They have to make significant changes. Pay a 200 million fine, at the same point, read the language in this ftc complaint, you look at the statement the ftc put out today and you heard Edythe Ramirez in her news conference, all that language in total is damning. It is damning to the way that herbalife in many ways did its business. To stephen point and others made as well, the copiy will continue to operate. Big enough to pay a 200 million fine. The difference between this and some other mlm boiler room operating out of someones garage. They can be squashed. A big firm, publicly traded, thousands of employees, can do business in the courtroom outside the courtroom, and keep themselves alive nrchlts two or three quarters, when you short the stock. When theyll guide down and guide down and guide down. Not only ackman watching, i doubt he covers here. Probably stays short. Im going to bet that carl icahn actually exits rather than buy more. Hes made great dough in this and youre not going to have Short Interest. Builds back up, thats when you make the money. 23 million shares traded. Average share volume, 1. 3 million. Smub somebodys conquering today. Look at this. Lod, continuing to drift lower. You do not see a wave of buying coming in on the heels of this news. 70, pivot. Closes above, shot to 89, to 100 maybe. Stay below 70, like chapman said, its a short. How interesting. Interesting the brawl happened while sitting on this desk. Get the settlement and here once again. Big part of your life, scott. I feel that way. All of ours. We should hug and make up once more. Been there done that. Still a lot ahead on the Halftime Report. Huge week for the markets. Record breaker after record breakers. Have the bears capitulated . Early hibernation . Plus, auf wiedersehen and hello usa and beyond. Where theyre flowing and how you can still make money in this market. Youre watching the Halftime Report with scott wapner. [announcer] is it a force of nature . Or a sales event . The summer of audi sales event is here. Get up to a 5,000 bonus on select audi models. We are back at post nine. How the markets look. Pretty much flat. Dow down 14 pints or so. S p down 5, significant here, guy, the s p was going to set a new record high for the fifth consecutive day, or is trying to do that. It hasnt done that since, like, 1998, where it set a new high all five days in a given fiveday stretch. Pretty remarkable. Now, a little muted here. Are we set up, though, jon, to keep going higher . Yeah. I think we are. I think that the last time i was on, in the seventh inning stretch, waiting for brexit, for the fed, waiting for a lot of things and right now a twoyear consolidation period. Tested the 1984 low four times, had a capitulation low over the brexit event, end of june, that washed everybody out again. That low was 150 spx points higher than the last. Right now were breaking ouch this range weve been in two years. I think at the moment the bears should be concerned. I dont think everybody is allin or not even partially in yet. So the market has a ways to go higher. Do you, jimmy, get the feeling, though, as if you may be at that great rotation point . You look at some of the equity inflow data, maybe that makes you more optimistic . If youre bullish the bears are capitulating altogether . What makes me optimistic. Talked about it yesterday. Fundamental support. Larry finks comments. We basically agreed. Confirmed when the earnings particularly in the second half show so. But today youve got a ream of data out, Economic Data, both here and abroad that is quite positive. Industrial production, better than expected. Retail sales, better than expected, and chinas gdp. Havent talked about china in forever. Better than expected as well. That would give the impetus for earnings to go higher. Well always say allegedly. Based against the alleged benchmark of 6. 5 , came in at 6. 7 . All would give impetus for earnings to move higher. Tell you this, i love the debate. Youve got the head of the largest asset manager in the world saying that stocks dont deserve to be at this level, and we have others who are sitting here and believe me, others ive heard from since larry fink said that who said hes wrong. Somebodys going to win out. The problem, on the top side, we dont know what the valuation can go to at a negative rate environment and dont know what the multiple will be or where the markets going to go, because weve never been in this position before. So the fact that, you know, negative yields around the world are so negative, anything with a yield including utilities, right, treasuries down. Tot below 40 yet utilities hold in because. Yield. The new carry is, u. S. Stocks, high yield and good cash flows. Thats where the moneys gravitating. Because the money is coming out there, outflows from eu equities. Where the heck is it going to go . If you want to be invested wheres it going to go . Good old us of a. Major inflows in distracy. One place. Sometimes operates as equity proxies. Larry is, he said yesterday, got the market trading at High Historical levels. Weve had five months of declining earnings. So were in that profit recession, which would only take you have to believe thats ending, though. You do, right. There was a trough, now rebuild that. So not only today the data. Its been a week of great data, even some European Data is looking better and saw a massive stimulus. However, weve also had the ten year back up to where it was a month ago. 1. 35. Now at 1. 57. Who know where is that goes. Look, i think there is no other place to put money and i also think Public Markets both credit and equity are lowreturn markets, but you can wait it out. Selling at 16. 7 times earnings. Lets not act like its 1999. Exactly. Thats in the context of global yields offering nothing, and essentially the stock market thats done nothing in 2. 5 years. And the s p yields bhor than the tenyear treasury . Heres my like 80 points. The number, couldnt remember the number. The s p 57 00 is only half of the Global Equity opportunity set. Selling at 2. 5 times book. I have a portfolio of Global International small cap value, just as one example. Selling at 0. 8 with a 3. 3 yield. I know japan, europe, all the problems. Everyone knows that. If things even just stop getting worse, these stocks are at incred beforably cheap valuations on an absolute historic basis. There are other things beside chasing hershey to 25 times earnings. People need to be aware of that. Well get to you. Get to you. Coming up, Morgan Stanley on the sidelines on chipotle slashing its price target by almost 100. Why its our call of the day, and its coming up next. Welcome back to the Halftime Report. A lot going on outside the world of finance. Courtney reagan with the news headlines. Scott, whats happening at this pour. A tribute to the 84 victims of the nice truck attack is growing. Many placed candles and flowers near the site of the attack and flags flown at halfstaff. French president hollande went to visits injured at a nice hospital. More than 50 still in critical condition. The president said france is facing a struggle that will be long. Meanwhile, the attacker is identified at a 31yearold tunisian living in france, reports he was married with three children but estranged from his wife. She is reportedly being questioned by police. And here at home, president ial nominee donald trump made it official picking mike pence as his running mate. The announcement tomorrow. Thats your update. Back to you. Thanks. Citi beat on the top and bottom line. Spiking at the open, the stock turned negative. Wells fargo in the red missing on revenues. Financials, the worst performing sector today. This comes look, yesterday all banks were up. We got yesterdays got todays gains yesterday. I dont know. Jpmorgan hit it pretty much out of the park. At least as a market was concerned. All of the stocks went up as a result. I think you hit it right on the head. Citi up big yesterday. What happened yesterday, not a surprise in terms of earnings and the problem, looking forward and at a low Interest Rate environment. Yesterday everybody priced in, the better Net Interest Margin that jpmorgan produced. To get anything further from that, you see the feds raise rates. Noble is calling for anytime soon. They bought back a lot of shares. The wave of the future that the stock, one reason i own it. When they buy back stock a great ing in. Was yesterday, steve, a one day holiday to feel good about the banks and now are back to reality . Or do we have any kind of reboot, reset, place to feel good about banks . Same old, same old. Not just about jpmorgan but the Economic Data, particularly about the ppi number, which was much stronger than was expected. That leads you to believe that rate hikes are coming sooner. Look, lets not mistake these reports for showing theres growth. Top lines were flat. Revenues still flat. Thats the issue, and wont go up until we see a steeper yield curve. This is about unbelievable credit quality control. So you dont think there will be a massive writeoff like were seeing in europe, particularly italy. So there are cheap stocks, the yields arent fat, but if you want to hold them in weight, such a discount to books, specifically st. And b of a, you own it. John, playing citi and bank of america through options . . E. Upside calls. I think 2018 actually bp going forward, again, with the buybacks coming, the fact wells fargo came out today saying even a low nim environment, making money. Positive. Part of the reason why the bank stocks are down now is because the sterling came off a lot, yen came off a lot and theres a little profit taking ahead of the weekend, long weekend options and well as the fact a terrorist attack. Playing the same game today. Yeah. And the rate. One of the positive things is that jpmorgan said and also citi said theyre treasury trading was up, right . They made money in bonds. The masters of the universe are back. Jamie dimon said after brexit doing 1,000 currency trades a second. So expecting that type of revenue to come back in the next quarter. Quick on one thing. Talking a lot about the fed not moving at all this year. I think december rate hike chances around 13 . At some point the winds will change on that. Particularly if you keep getting good Economic Data here and abroad. The chances of a december rate hike go up. Thats the further impulse for banking stocks to move higher. Gold on track for its first weekly loss since may. Jackie deangelis, a stones throw away from the futures trade. Thats right. Just across the highway at the nymex, 1322 session low for gold prices giving back some of those postbrexit gains we saw. Jim, whats dragging gold down today . Seems like theres less panic in this world. Yields have screened from 1. 395 to 1. 6. A joke. 1. 6 a very low. Several good economic pieces of data in a row. Good Economic Data from china as well, too. As it sits now, gold doesnt look particularly as attractive. Juxtaposed against the yield, high perp this is probably short lived. Two weeks of good data. Probably want to see more than this before i give up the gold trade. Right now momentum takes it down to 1310ish and probably a buy there. Okay. Brian sutland, is gold going low jer flirting at 1330 level, key technically . Yes, it is, jackie. Jims point, that 1310 level is key. That catalyst of brexit and global low Interest Rates took us over 1300. Still in a massive down trending goal. 1400, top end. I see a raiding range 1300 to 1400 the rest of the year, really. The longer we stay in a low global Interest Rate environment the more likely were able to finally resolve the down trending goal and actually pop above 1400. Certainly 1310, below 1312 a buyer on gold. For more head to the website. Futurenow. Cnbc. Com. Back with the show tuesday. Looking forward to that. Wrap up this gold thing. A tough call. Plays into how we discussed the market early perp prospects of a great rotation, money flooding into stocks and gold trade comes out. Have you ever seen hard pressed to think of another day where you had a massive terrorist attack, people didnt go into gold from safe haven, actually came down. What happened here is that, because of etfs, crowded trades get crowded a lot sooner, because its so easy to buy gold, for example. And also seeing oil correct this week down 5 . And storage, i mean, its over the brim. Over the top. But the sould saudis, had enough. Let oil work its way through the system. Sets up buying oil starting in the fall. Maybe sooner. Gold, to me still has no Intrinsic Value to analyze. Who else has a thought on oil . I think just just to the gold point. Inbound etf flows, gld and price of gold itself are shocking to anyone that thinks that this is a dog thats wagging its own tail. You are mistaken. I think gold has ban great trade this year. It may continue to be. Well have the stuff later this summer or oct, rather. Noises coming from other european country. Gold should work in that environment but for traders, not investors. Still a lot more ahead on the Halftime Report today. Announcer straight ahead the call of the day. Its a stock thats been beaten down 37 in a year. Now, one analyst says watch out below. Plus, apples really legged the major indices this year. Is there reason to believe were in for a change . And, well get you ahead of next week with key quarterly reports on the way. More halftime in two minutes. Im here at the Td Ameritrade trader offices. Steve, other than making me move stuff, what are you working on . Let me show you. Okay. Our thinkorswim Trading Platform aggregates all the options data you need in one place and lets you visualize that information for any options series. Okay, cool. Hang on a second. You can even see the anticipated range of a stock expecting earnings. Impressive. Whats up, tim. Td ameritrade. On deck on power lunch, a world that is increasingly difficult to make money from investments. New and interesting ideas just for you. Plus, with alltime highs here and trouble in europe, has china suddenly become a surprise safe haven . And has the demise of the american shopper were exaggerated . Signs the consumer may be back. First, back to scott. See you in a little bit. Chipotle shares feeling sickly in the six months since the reported food safety incident. Today Morgan Stanley downgraded that stock to equal weight, cut their price target to 405 dollars from 500 on expectations of an even longer recovery. Thats why weve made it our call of the day. What do we do with this today . Cut the price target by almost 100 . A stock that hasnt gotten a lot of play lately. Do it today. Whats the trade here . Go ahead. Well, it trades at 90 times this years earnings. 35 times next years earnings. Thats saying next unique the consumer will come back to cha to potle. If it doesnt, theres a problem. The heart at this comment, he thinks customer, taking much longer to come back. I dont know that thats true but i think you have to wait and see how retail excuse me. How samestore sales go with chipotle before putting money in the stock. I can verify thats true. A certain amount of people saying to the survey, they found other places they like better or just as much. When the spell is broken, its tough to get it back. Quickly mention price action. Thats actually more important than what the consumers are saying, and when you think about the way this stock has found major overhead resistance at the 50 day, which is declining 50 day, really going back to last october, that has been a trend thats been undeniable. People dont understand how to read charts are not longest in losing money. Until that paradigm shifts, that stock can go lower without a problem. Competition in fast casual is so fierce, gave an excuse to shop, look around. Window shop at other places. Taste other foods. And maybe some of those found somewhere else to go and its hard. These guys have said, to come back. Yeah. My kids love going to mos all the time in respect two, three time as week. Not really chipotle. Again, like josh said, the ubs call was for 500 to 405. 400 is a big level where the stock sits now. If it holds for 100, a shot. Selling rice and beans a little meat. Margins are good. The margins are really good, just that problem is they have to spend too much on marketing, killing some of the margin. It can be done, though. Mcdonalds did it. They said, what do customers like the best about this place when in their darkest times and built marketing around it and did come back. They got people back into the store. It can be done. The question is, do you want to take the chance and also the sweet spot the key look, no yield as well. The concept, no casual, no fast food has ever kept on borrowed time for a couple of years already. The first question you want to ask the analysts is, where have you been . Coming down to lthis level make no sense. Could easy go to mcdonalds multiple. Take a while. Egregiously overvalued. Coming up, as the bulls keep running apple stock continues to struggle this year. Will it finally start to play catchup . What is going on with the apple trade . Well get some answers, next. Announcer Halftime Report with scott wapner is the place for marketmoving interviews. You dont call a company a sewer because the company made a mistake. Announcer real money we are short both tesla and solar city. Announcer real debates. People think that globalization has hurt businesses. Its not. It is technology thats hurt businesses. Competition is a good thing. I dont want to go back to a single marketplace. Announcer the most profitable hour of the trading day. I love this show all i do is get to tweet about this show im on the show. This is the greatest moment of my life announcer the Halftime Report. Weekdays at noon eastern. Then your rates go through the roof. Perfect. For drivers with accident forgiveness, Liberty Mutual wont raise your rates due to your first accident. And if you do have an accident, our claims centers are available to assist you twentyfour seven. Call for a free quote today. Liberty stands with you™. Liberty mutual insurance. Great time for a shiny floor wax, no . Not if you just put the finishing touches on your latest masterpiece. Timings important. Comcast business knows that. Thats why you can schedule an installation at a time that works for you. Even late at night, or on the weekend, if thats what you need. Because you have enough to worry about. I did not see that coming. Dont deal with disruptions. Get Better Internet installed on your schedule. Comcast business. Built for business. Back and the dow hit new highs. Not all stocks faring as well. Down five double digits since the index high last year. Apple, believe it or not, biggest drag, down 24 . This is amazing to me. Would you have thought a year ago if i said to you the major averages were going to hit new highs, within a year. The s p would have a week where it was going for a new high every day, and apple would be the laggard . I think that would you have thought that . Well, i i wouldnt have guessed the worst one. Yeah. Not the one if you said heres every stock in the dow, goldman, though, i would have guessed. American express. Said, okay. Rates will remain low. Of course im going to think that a bank is not going to do as well, but apple . Who was betting that . And when does it turn around . If the market continues to go up, does apple get its mojo back . I think so. One of the problems, earnings on, you know, at the end of july. July 26th. The 100 level is interesting in terms of the fact that icahn came out and said he was out of his position. China was a problem. Blah, blah, blah. That negative news is kind of in the stock. Right . Then buffett came out, said were taking a business, 92. 5, around there. Now theres a play where, okay, 100 a big pivot. Earnings coming out, i foiphonea lot of people leave apple to go into other areas that were, like materials, energy, right . Yeah. That had higher yielding stocks, and now we have the iphone 7 coming out. Right . We have talk about them building huge data centers out in oregon. Nows the time to buy it . Take i think now is the time you take a shot. Hundred calls, guys are buying 100, 105 call spreads for the last month. There are going to be some media and tv announcements coming soon. They have that eq out there giving interviews which doesnt happen all the time. They want to talk about tv. They seem more willing to talk about tv than they were last year. Thats not a good thing, because theyre tvs been disappointing. To me its a negative theyre talking tv. Oh, i dont think. If they buy netflix, then i think the stock is very interesting. Dont forget theres also talk here doing something with the battery. If they do something with the battery, the stock will be 106. Wait a minute, you hope they dont buy netflix . Exactly right. I mean, i forget what the multiple is but what is it its cheap, its like 100 times no, seriously, when you look at management of any company that youre invested in, you want to see how they allocate capital. That would be a terrible Capital Allocation decision. Do you think 4 billion im sorry, what . 4 billion for beats is a great allocation . No. Its a tiny one compared to netflix. Tiny compared to netflix. I want to go on what could be barclays cut apples price target to 115 from 121. Oh, wow. Throw that out there. Were a realtime show here. The last three or four months have had a ream of negative data from china for apple. Whether its sales going down, whether its the beijing removal of certain iphone models, that can actually turn around and get positive. Its hard to see it getting much more negative than that. I hate to throw hostage to fortune by saying that but i see more asymmetric risk if apple gone from Technology Leader from innovation to innovation, to energy follower. Its not priced like that. Its priced like it should be, fairly like a hardware company. A Consumer Product hardware company. Its a luxury Goods Company too though. You dont know what the iphone 7s going to be. Dont forget 5g. Thats why its a buy right now. Samsung is Apple Technology and its not a bad one. Its not a luxury item. Well, you spill your champagne on it, its good, right . Youve had phone buying patterns change dramatically. I was incentive. They should hire the engineers from samsung. I dont know if i would put it past them to be able to do that though. I think they could. I think your next 10 in the stock is much more easily to the upside than the downside. Thank you. Thank you. Thanks to party martel by the way for throwing me the thing on barclays on apple. Earnings season getting underway next week. Were trading those names next. [announcer] is it a force of nature . Or a sales event . The summer of audi sales event is here. Get up to a 5,000 bonus on select audi models. All right. Were back at post nine, new york stock exchange. Want to show you once again shares of herbalife, since the settlement reached between that company and ftc, i have a statement here from bill ackman responding. While it appears negotiated away from the words pyramid screen, the ftc findings are clear. As part of the settlement herbalife can only compensate for profitable retail sales, a genuine sale made above average total cost of the product. In light of the fact ftc found that herbalife distributors make little or no profit or lose money from retailing, there are no longer any meaningful incentives to become or remain an herbalife distributor. He goes on and says, in closing, we congratulate the ftc for enforcing the law that will lead to protections for consumers in the United States and the rest of the world. He says that once herbalifes business restructuring is fully implemented, the structural changes but he says pyramid to collapse as top distributors and others take down lines elsewhere or otherwise quit the business. So were hearing for the very first time from bill ackman today. We had a statement earlier from carl icahn. I also want to clarify something i said earlier and some of these changes, i said 80 of whats sold by these distributors has to be sold at retail. 80 is in part that and also a distributors own personal consumption as well. I want to make sure im 100 clear, and all of you are as well, just to clarify that point. So were hearing from ackman whos putting an interesting spin on how what he believes this reads as today. Are these people going to buy their own product . Are they going to consume the product theyre buying, or are they going to continue to hunt for more people to sell it . Sounds like they cant do the latter. So to ackmans point well see what the actual fundamentals of the products demand are, perhaps, once this is implemented. I just dont know how much opportunity cost you could expend in a stock like this. This is going to be going on for so long, to continue to say yeah, has to be personal. Yeah, you have to eventually say were going to part down a position, were going to do something. But to continue this effort even after today seems, i dont know. I just want to also reiterate, its so interesting to me that depending on what side youre on today, you could claim some form of victory. The problem is youll look at ackman going in 1 billion sh t short, and it had to be a binary deal. Its up 12 today. The stock is voting, the market has been voting that they thought this was going to be the outcome really since before and certainly since herbalife did that filing with their most recent earnings. That said, look, this seems to be a likely outcome. Were preparing for a 200 million settlement. Thats in fact what exactly they got despite the fact as i held up to you earlier the ftc was prepared with that complaint to sue herbalife if they could not reach an agreement. And by the way, use some pretty what i think most people would agree was some damning language within their not only the settlement release but the complaint itself. But the headline at least for this very moment is that bill ackman is responding today to what happened between herbalife and the government. That seems to be the way the government is operating these days. Look, we think youre guilty but were not going to press charges. And to me, if thats how the government feels, they just didnt do their job once again. They should have gone at them. I dont understand what leverage herbalife has over the government, that the government did not go ahead and say, okay, youre done. Theres a lot of multilevel marketing schemes that you could say. This just doesnt affect herbalife, this would affect the whole sector, right . Not necessarily. Everyones looked at different. Pull them up and look at them quickly if we can. New skin, some of these other publicly traded multilevel marketers. If not now, perhaps i think Herb Greenberg will be on in the next hour on power lunch to talk about this story and maybe what it means. Hes been an expert on it. Its been great to be here today at the new york stock exchange. Thanks, scott. All of you have a great weekend, power lunch starts now. Yes, it does. Welcome to power lunch. We are following three big stories at this hour, first, the investigation widens into yesterdays deadly attack in nice, france. Well be live on the ground in moments. Also, big news from the campaign trail. Its official, donald trump tapping indiana governor mike pence to join his ticket as vice president. And were all over this market. Stocks down after hitting new highs earlier, but we are still within a stones throw of a record week. Hi everyone, im Michelle Carusocabrera along with tyler mathisen, melissa lee and brian sullivan. Were going to get the latest on nice in a moment. But first to news on the campaign trail with eamon javers