Transcripts For CNBC Closing Bell 20140218

Over again . People are talking about whether a new tech bubble is forming. How many times will we have this discussion . The more, bill, this activity picks up, the more people will question some of the valuations. Is it a legitimate worry . Is there Something Different this time . Well explore this issue. Have you ever played candy crush . No. I havent either. We are no candy crush, no house of cards. Were living in our own little bubble at the new york stock exchange. Also, its the pharmaceutical deal that has carl icahn tweeting again. Actavis is buying forest labs. Paul bisaro will be joining us, a first on cnbc interview, to tell us what was behind that move. A reminder of where we stand in markets, the dow shedding 13 points this hour in an up and down session. The nasdaq looking pretty strong today. Its adding threequarters of 1 . Finally, the s p 500 up just a couple. So barely positive. 1,841 is the level were watching right now. Lets talk about this market as we watch it drift this afternoon in our closing bell ex chain. We have christine short from s p capital iq, joe tanis, greg sarian, hank smith, and our own rick santelli. Everybody, talk about cabin fever, is that what the market is feeling right now, christine . Whats going to motivate the market to move one way or the other right now . Over the past week we finally see Earnings Results making a difference as you saw for the first couple peak weeks, the s p continued to trade down. However, since february 6th, the markets are starting to recognize the respectable Earnings Growth of 7. 8 were expecting at this point. Thats the highest Earnings Growth rate since the Fourth Quarter of 2011. Were seeing the markets react to this positive news for the first time in a while. It was sort of bizarre last week to see markets have their best week yet of the year even as some of the Economic Data kept landing with a thud, whether it was the retail sales report, industrial production. Im sure over the weekend people were looking at this barrons front cover talking about how the u. S. Is going to grow 4 , forget about the weather, look through it. Thats kind of what it seems like markets are doing here. Are they right to do so . Look, i think the backdrop is positive. Its not nearly as positive as barrons says. We are going to have faster growth than we did in 2012 and 13, but its still going to be below average. Data will still come in choppy and inconsistent, but guess what . The fed is behind us for several more years with monetary policy. As the previous guest said, earnings are doing okay in this environment. Valuations are reasonable if not attractive. Youre getting great dividend prices, youre getting share buybacks. It pays to be bullish. It pays to be an equity owner in this environment. But youre making the case based on fed policy and not fundamentals . Is that what youre saying, hank . Oh, i would say both. Okay. Look, top line is 80 of s p 500 companies outperformed on the top line. And the majority outperformed on the bottom line. So i say its fundamentals and the fed. Joe, i know you watch the fed very carefully. Even if they keep tapering, is that still going to be good for this stock market . I think it is going to be good for the stock market. I mean, to echo a lot of the same comments, the underlying fundamentals actually look quite good. You have got a resilient u. S. Economy. Granted, the weather is clearly having an impact but all that does is create some pentup demand for the other end of it. You have corporate profits which look quite good. Remember, the fed is pulling back off the gas pedal. Theyre not necessarily slamming on the brakes. I think you have an environment where risk assets in the equity markets can actually do quite well over the coming months. Joe, what about china . Over the weekend a lot of people are talking about saying whatever the fed does or doesnt do, china is 36 of the global economy, its where the marginal growth is coming from, they might be in the middle of a massive credit boom that they have to figure out how to either stop or clean up afterwards, and we know from Prior Experience here how difficult a position that could potentially be. So do you still want to be long everything even with the supportive fed when that remains such an area of uncertainty . I dont think i want to be long everything. I think i want to be very selective, especially with my exposure to the emerging markets. You mentioned china. We have gotten quite a bit of data over the past week or so. Its been somewhat mixed. Whats going on in china, thats clearly going to have some execution risk. I think were seeing that play out in some of the numbers. But there are other countries in the emerging markets that i think can do well. Greg sarian, are you putting money to work right now . Are you buying anything . You know, bill, when i was with you in january, we talked about expecting more volatility in 2014. Last year was almost a straight shot up, and i think youre going to see this type of volatility throughout 2014, but as was mentioned, the fed has our back here. This Economic Data being murky, some reports good, some reports bad, we see as a positive for the stock market because that means the fed is going to be resilient. When janet yellen spoke a couple weeks back, she assured investors theyre going to continue to taper. Look at the m a activity, with forest labs, comcast buying time warner last week, we think thats going to trickle down to the Smaller Companies because for every Large Company transaction that youre Getting Press about, there are a myriad of Smaller Companies being acquired by Larger Companies in area like biotechnology and pharmaceuticals. We think this is going to be a real additive to the small cap market. We still like europe right now, bill and kelly. We still think that the Economic Data in europe is getting gradually better. We had a positive gdp number in the Fourth Quarter and europe is coming out of the ashes. Well, im just curious, you talked about some of the deal making activity and all the cash the companies have at this point. What is the catalyst, do you think . Is it deal making . Is it more dividends, more share buybacks . How do you see that evolving, greg . I think its a couple things. Number one, these companies are making the same piddly returns that we are in cash. They want to put that money to work. They want to make investments. They want to grow their businesses and they can do so by making smart acquisitions in great Startup Companies with Great Technology where they can save a lot of money on the r d side on the back end. If it was good growth, they would be put to work in areas i remember all the m a buy back talk before the credit crisis. I think 2014 is going to be the roger maris year. Theress a asterisks, whether its the weather, the taper. We think at the end of the day that the treasury market is wrong. Look at the following charts. You know, we were flirting with the lowest yield close in six trading days, it slightly reversed to 2. 71 . The next two charts are respornrespornvery important. If you look at the dow to the dollar yen, theyre not really tracking. Look at it against tenyear note yields. Im not sure how much the weather is going to impact the data, but what i can tell you is if the spread isnt awfully tight, theres a big adjustment for equities that will have to be made in the next several months. How could it not be about the weather . This weather has been relentless, as we know, in many parts of the country and its got to be the kind of weather that is stymieing commerce right now, dont you think . Well, i think that were going to probably seles cars and maybe less houses, but i think the data shows us a bit more than that. And in those two areas in particular, theres nothing thats going to be lost. Any purchases that were going to be made ultimately will be made anyway. All right. Thanks, folks. Appreciate your thoughts on the markets today. You knew there was breaking news because kate kelly was standing here off camera and shes got something for us on the fed right now. Im honored by that introduction, bill. But the fed has just come out with final guidelines with rules for dodd frank that will effect foreign banks with u. S. Subsidiaries in terms of Capital Requirements, some of their structural requirements. Just to run through it quickly, the foreign banks with u. S. Subsidiaries will be required to put together intermediate Holding Companies to improve their structural management. The u. S. Banks as expected will be expected to meet larger capital standards as well. The deadlines for this are rolling depending what youre dealing with but its either 2015 or 2016 depending who is involved. A statement from janet yellen in accordance with this final rule proposal which, of course, is subject to comment, the sudden failure or near failure of large Financial Institutions can have destabilizing effects on the financial system. As the crisis also highlighted, the traditional framework for supervising and regulating major Financial Institutions had issues, and she thinks this framework will deal with some of those vulnerabilities. Hopefully an improvement from their standpoint. The biggest impact here is potentially for a lot of foreign banks operating in the u. S. And figuring out just how much more onerous u. S. Regulators are going to be. What is the net net here . That was a subject of some criticism by foreign supervisors in dealing with the fed. They thought that the rules as originally proposed about two years ago were too strict. So the fed has lowered the asset threshold that will affect folks. In this case generally its 50 billion in assets which, of course, will be all the major for foreigns. The deutsche banks, the hsbcs of the world. Does anyone leave the u. S. Because of this . Hard to say. There probably is a middle ground where it becomes unmanageable to incur the costs of restructural but i would guess the big players will stay. Theyre trying to deal with this too big to fail issue. Did i hear you say theyre raising the Capital Requirements above and beyond what theyve already imposed . No. As a matter of fact they have in a few cases dialed back expectations after conversations with the foreign banking concerns. They said they want to show more fleckability in terms of the imposition of the new rules. For example, the leverage ratios that have been highly controversial, they will be in accordance with basel around 2018. Highly complicated. Were glad youre here to explain it to us. Thanks, kate. Heading towards the close, 50 minutes left in the trading session here. The dow one of those days not telling the whole story. It is slightly lower, but the s p and the nasdaq are trading higher at this hour. You can blame cocacola for a little bit of that. Its Earnings Report had some weakness in the north american volumes. Home builder sentra posting their largest drop. Did the rough Winter Weather put the deep freeze on housing . Could there be been even bigger red flag ahead for the industry . Thats next. Also tesla shares driving to new highs again. Among other things, reports apple may buy the electronic carmaker, but should you buy the stock now on those reports and ahead of their earnings . Teslas earnings are due out tomorrow. We have a fullblown strong brawl coming your way. We want to know about your opinion of a obviously apple to tesla marriage. Youre watching cnbc, first in business worldwide. Ching for trt spark your curiosity tdd 18886282419 can take you in many directions. Tdd 18886282419 you read this. Watch that. Tdd 18886282419 you look for whats next. 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Because when it comes to feeling safe behind the wheel, going the distance and saving at the pump you want it all. Get our multipoint inspection with a a Synthetic Blend Oil change, tire rotation, Brake Inspection and more for 29. 95 or less. Get a complete vehicle checkup. Only at your ford dealer. We have dramatic pictures out of kiev in ukraine at this hour. We were looking momentarily a few moments ago at some fires burning in maiden square where there has been this antigovernment sitin protest by the protesters there. That turned violent a few hours ago when police moved in to try and break up this sitin which has been protesting some trade agreements with the eu that the ukraine has been putting together. They actually favored russia. Theres the picture now as they pan back over. That is maiden square. Those are turning tents right now, kelly, that the protesters had been sitting in as part of the sitin protest, and now its push coming to shove as the police move in to try to break this thing up. Reuters reporting at least nine dead on what is so far the worst day of protests that have been going on for weeks and highlight the position ukraine is between russia and the eu. Its a mess. Not good right now. All right. Back here, the shares of Home Builders have been lower today after that record decline in home Builder Sentiment. Diana olick, how much of that has to do with the rough winter on many parts of the country here . Well, not as much as you would think, bill. Look, we expected a drop, but certainly not this much. And even the Home Builders are saying you cant blame it all on bad weather. Theyre blaming land, labor, material costs, fast rising home prices, and, okay, a little bit about the weather. A record drop in home Builder Sentiment bringing the survey into the negative for the First Time Since may of last year. This tenpoint fall is the largest monthly drop since the survey began in 1985. But look at the components. Current Sales Conditions were down the most. 11 points. Then buyer traffic down 9 points. Future sales expectations were down the least, but thats based on visions of pent up demand and the fact that we are headed into the spring Housing Market. Now, since this past weekend was the unofficial start of the spring housing season, we went to an open house in Northern Virginia where there was light traffic despite all the snow. Buyers there, however, were just kind of kicking the tires. I feel like theres more movement in the market buying and selling, so in terms of time lines, how long it would take to sell your home, how long it would take to get into a new one, it does seem to be moving faster. And regionally speaking on the sentiment survey, the builders like to use a threemonth running average for that one, but if you go month to month, sentiment actually fell the most in the west where weather was not a factor at all. Why . Thats because home prices in the west have shot up the most, and thats where affordability is the weakest. And thats what were going to be watching going into this spring season. The Home Builders have raised prices a lot. Can they keep prices high given existing home prices are high and theres so little supply out there . Thats the one to watch because prices always lag sales and sales are already coming down. It could mean a drop in home prices this spring season. Theres a lot more about this and the weather online at reality check. Cnbc. Com. Com. Comprehensive stuff as always. Should we be worried about the housing recovery based on this report . Joining us is shear ri olafson fred glick. Fred, you got the higher rates with the tapering. You got the weather. Are you hopeful that things will improve as we move into the spring here . What do you think . Let me just say the Housing Market as we knew it from a year ago, thats over. Were in this new era where its just nice and steady. Theres going to be your crazy blips in the los angeles area, san francisco, new york. But it all comes back to the good jobs. Right. Theyre just not there and growing. So why would you buy a house . Plus, the Home Builders have prices that theyre trying to get more and more and more and the existing home stock thats out there thats only a few years old is still good and cheaper, and you can renovate it a lot cheaper than the new Home Builders want to charge you for a new house. I just see it nice and calm. Lets talk about this drop last month because you point out, look, we had bad weather in december. So why is it that all of a sudden people seam to realize this weather affected last month. You think theres Something Else going on here. Absolutely. The weather might impact the buyer traffic component but the market sales condition is completely about the indicators and the numbers. Builders know that for the last two months the sales of new homes have been down. Last year we saw about 430,000 homes sold, which was great. We were expecting to push the half million mark this year, hoping to do that, but in december and november, the numbers were less than what they were last year, which is a big problem no matter what youre trying to sell. So, you know, when theyre looking at building as many as 700,000, a million new homes, theres just not the sales to support it right now. Are we wrongiinging our hand over nothing more than the Business Cycle or is something more afoot . Here is the real issue is were expecting about 2 million new households to be formed this year. More than half of those are going to be renters. So a big problem that america is experiencing right now has to do with wages and income disparity and the lack of affordability in Home Ownership. The issues like difficulty getting a mortgage, for example, with the new dodd frank rules and changes at the gses and rising rates, those will come and go. But things like affordable, jobs and wages, and Home Ownership rates will not. Youre notably skeptical on how many people will buy a new house when there are other options out there on the market. Fine. But we know investors have been snapping up homes across the country, renting them out to sha sharis point. At some point dont higher rents make those homes that much more attractive to people . I think the people who are renting, their rents will go up, theyll continue to rent because were back to the mortgage problem. The whole nightmare that the cfpb has put us through with dodd frank, the Flood Insurance nightmares where people who had 400 premiums how have to pay 30,000 a year, those Little Things are adding up. Shari said theyll go away. I hope theyll go away. It could take years for this stuff to clean up. Most buyers are not comparing renting to buy a new home. Theyre comparing buying an existing home to buying a new home. I agree. Well see a lot more existing homes on the market because millions of people are coming out from negative equity. Theyre now able to sell. Shari, but this is an interesting point. Let me jump in here for a second. If were talking about a group of people buying new homes that are, what, probably have a higher income relative to renters or to people buying existing homes, perhaps a better demographic or something, arent these the very people who are supposed to be doing better in this economy right now . So why is there then a disconnect between these new home purchases and how the other kinds of purchases in the retail or restaurant sector, this group of people is supposedly making . When you look at the average price of new homes in this country, were not talking about that luxury high, high end. Were not talking about the 1 percenters. Were talking about Middle America which is where the biggest percentage of growing disparity really is. Let me finish with a very simple question and it can be a simple answer. Would you buy a home right now . I know everything is local. A lot of variables, but is this still a good time to buy a home . Fred glick . You always have to compare that to where youre coming from. I understand that, but trying the answer is yes. Anytime is a good time. Ill get shot if i dont answer yes. Well, okay. So youre going to give me the pc answer . Is that what youre going to say . Absolutely. On national television, absolutely. I mean, theres a billion factors. We could be on for months about it, but yes and no. How is that . But to your point, bill, you have to buy it right. You make your money in real estate when you buy, so buying at the right price is important. There you go. If only we knew what that price was. Like buy low, sell high. If only investing were that easy. Thank you, folks. Thank you, guys. A little more than 30 minutes to go before the close. The dow is slightly negative, but we are again seeing small gains for the s p 500 and actually pretty dissent gain for the nasdaq today. And a decent gain for tesla driving toward a record close on word that apple, yes, you heard that right, apple could be shifting toward an acquisition of tesla. But should you believe the hype and buy the stock just in case . We have a stock brawl coming up. Teslas ceo elon muck has also made a big bet on space travel. Jane wells gives us a rare look into what is becoming a high flying industry. Well be right back. 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In addition to that, fbr Capital Markets upgraded the stock to a market perform rating from an underperform rating and also raised its price target to 10 bucks a share from 6. 75 before largely based on positive momentum. Now, a big one to the downside, kansas city southern, the biggest loser in the s p 500. Jpmorgan cut its rating to neutral on fear that is pending legislation in mexico becomes law and spurs increased competition for ksu. The firm cut its price target to 96 from 118. Then theres tesla, continuing to power forward. This as investors continue to react to news that the electric carmakers ceo elon musk met with apples acquisition chief. The company has a Market Company of, guys, i cant say this enough, 25 billion. This stock has been on a tear. Dom, we wonder who picked up the check on that lunch. Yeah. Elon musk. Is tesla a buy at these lofty levels whether apple buys them or not . Greg johnson says tesla is fundamentally changing the Automobile Industry and will continue its climb. He joins us while John Thompson thinks the stock is only worth 50 and hes here, too. Time for the stock brawl. I got to hear this one. First, 50 bucks, john . Yeah. The stock as you just said has a 25 billion market cap which is half of general motors. Theyre going to sell roughly 30,000 cars this year, maybe 50,000 next year. We just think the stock is wildly overpriced. Youre not betting on elon musk on this, i guess . And what if apple buys them . If its true, wouldnt they wait for the stock to fall back to its normal level . Would they be talking to them at these lofty price levels do you think . I mean, apple obviously has plenty of money to do Something Like that. But i dont see them getting in the car business. Its an entirely different business than what theyre in. You know, the company, you know, the issue is they need to get into mainstream to justify its current valuation, and theres just little probability of that happening in hour opinion. Youre saying forget apple, tesla will change the car industry on its own and its a buy here. I disagree that the stock is worth 50. I mean, tesla is fundamentally changing the industry. Youre seeing whats happening with ford. Youre seeing whats happening with gm. Tesla is coming out with products that people want and they are starting to really deliver. When you go back and you look at the overall Revenue Growth for this company and as an individual who is focused on growth, you were doing about 50 yearoveryear 50 growth over the last three years, and the growth over the last one year has been over 100 . So might have a 25 billion market cap, but it looks like it has a lot more room to go and when you pull up the weekly chart how much more . You just broke out to alltime new highs. I would think at minimum theyre a 240 if not closer to a 300 stock. What kind of multiple does anybody want to try to put on a stock where you have over 100 growth and the stock if they go to 300, if they jump 50 from here, youre talking about 37 billion to gms 50 billion in market cap. Do you think thats realistic . I think you have to take a longterm perspective on this stock. You have to look at how theyre fundamentally disrupting the car industry and how theyre changing the business Going Forward. This is an innovating company. They said these things about apple in the past and other kinds of Companies Like this. Tesla is delivering Something Real and its a gamechanger. John, im going to pull out a script from the 90s and see if this works for you. You know, you got to think outside the box. You got an elon musk. You have an apple which needs a transformational acquisition because they have been pilloried for only doing evolutionary stuff, not revolutionary stuff. Isnt this a perfect opportunity for elon musk to join a company that is badly in need for some innovation here . You know, i just dont see apple getting in the car business. Theyre already in the car business. Im talking about them getting into the elon musk business, not just cars. Thats my point. Thinking outside the parameters of what we see as this company right now. Well, you know, back in the 90s i was running equities and i heard a lot of transformational stuff about aol and Cisco Systems and yahoo and amazon, and in our experience nothing works at 100 times earnings or more, and, you know, the company is trading at 150ish times earnings and we think the probabilities are so low that they can live up to those expectations that its not going to be a good stock. All right. Thanks, guys. Good stuff. Classic water cooler talk right now. Everybody loves talking tesla. Thank you, both. We have the dow losing about seven points here. So pretty much unchanged on the day we have to say. Weighed down a little bit by coke. The other indexes holding up a little better. The nasdaq up 32. Candy crush maker king digital is preparing to go public which could value that company as high as 10 billion. I bet craig doesnt like that one either or john. And spotify is considering an ipo valuing it around 8 billion. Are these sky high valuations reminiscent of the run up to the dotcom bubble of the 90s . Speaking of big values, actavis is buying forest labs for 25 billion. Actavis ceo paul bisaro is breaking down the deal and thats all coming up on the closing bell. Well be right back. Announcer where can an investor be a name and not a number . Scottrade. Ron im never alone with scottrade. I can always call or stop by my local office. Theyre nearby and ready to help. So when i have questions, i can talk to someone who knows exactly how i trade. Because i dont trade like everybody. I trade like me. Thats why im with scottrade. Announcer ranked highest in Investor Satisfaction with selfdirected services by j. D. Power and associates. Like carpools. Polly wants to know if we can pick her up. Yeah, we can make room. Yeah. [ male announcer ]. Office space. Yes, were loving this communal seating. Oh, its great. Yeah. [ male announcer ] the best thing to share . A data plan. New at t mobile share value plans for business. Our best value plans ever. For example, you can get 10 gigs of data to share. And 5 lines would be 175 a month. Plus you can add a line anytime for 15 a month. Sharings never been better for business. Were watching the situation in this is kiev in ukraine. This is i guess they call it Independence Square where those antigovernment protesters have been holding out in tents for days now, and the riot police moved in earlier this evening, and it has become very violent, as you can see. They had set a 6 00 p. M. Local deadline to end street disorder or face quote, unquote, tough measures. Were getting a sense of what those measures are. It is coming to a head in kiev, this protest of trade relationships that has been going on. It comes at a time when russia and europe are so much in the spotlight with the olympics happening. This is an important test. Protests were spurred in large part by a lot of people in that country who feel uncomfortable with the direction its headed to get more funds from russia. And timing of this protest is not coincidental. If you kick back in your spare time listening to spotify while playing candy crush, you may want to pay attention. They are both heading for the ipo market. Julia boorstin joins us with details. Thats right, bill and kelly. Candy crush maker king has filed to raise as much as 500 million in a public offering. Candy crush saga was the most popular free app last year downloaded more than 500 million times since its 2012 launch. Kings s1 filing reveals the Company Generated 1. 9 billion in revenue in 2013 with adjusted ebitda earnings of 825 million. The big concern though is that king is too much of a onetrick pony like zynga whose ipo was fueled by the success of farmville. Zyngas stock has fallen by half since the ipo. Spotify, which has over 24 million active users including over 6 million paying subscribers hasnt yet filed for an ipo but it seems to be moving in that direction. Posting a job opening for a, quote, external reporting specialist to prepare the company for s. E. C. Filing standards, set up all reports necessary to be s. E. C. Compliant. Posting that job opening on its own website and linkedin. Spotify raised 250 million in september at a valuation of 4 billion. It is expected to go public in the next year or so at a valuation much higher than that. Back over to you. Julia, thank you. Luckily, kelly and i have not been sucked into the candy crush vortex, but were hearing a lot about it. If you are one of those who crave candy crush or tuning into spotify, lets take a deeper look into the ipo opportunities. Already some market watchers asking if the valuations for a video game and another Music Service are reminiscent of the dotcom bubble. Joining us with their take, jody godfrey and our own bob pisani. P bob, what jumps out to you . Does it seem excessive . Is it different this time . I think when youre dealing with this company were talking about today, king, youre dealing with a bit of a oneoff. A specialized market. My wife played this game for a year religiously and paid money. She was one of the 5 that paid the 98 cents. She finally had to go cold turkey. I cant help thinking about who is the competitor . Zynga. Remember all the hype that went into zynga. There was all this talk, they went public at 10, and the thing promptly went to 2. 50. Its still recovering, probably 5 right now. You cant help but thinking the street is thinking about that right now. Gemma, for you its about the two ps, profit and platform. Do these meet the criteria for you . See, these two companies are very interesting because both of them have one and not the other. The candy crush company is cash rich. Obviously its the second highest grossing app on apple. But its very concentrated. 75 of its revenues come from this one app. The question comes down to is it going to acquire, is it raising this capital to actually make an acquisition. So theres a lot of uncertainty thats there. On the opposite side you have spotify which has that broader platform but hasnt made profits yet. So, you know, these two companies are very interesting and that strategy to enable them to make an acquisition or to turn their assets into Revenue Generating assets is going to be crucial once the hype has passed because you could make a quick buck out of these ipos because a lot of goodwill is given for growth, but as weve seen in twitter recently, investor patience does wear thin, and its a very crowded trade. The tech the bank of america and Merrill Lynch came out with that survey saying that 48 of managers are overweight. Its the second highest amount in a decade. I think she just made a case for them to merge. Right there. That will work. Absolutely. Right . The ipo business goes in trends. So look whats been hot recently. Biotech. Last week we had six biotech ipos and four of them were not successful. Were a little bit cresting now. Tech is still hot. The talk of spotify is still hot. Drop box is still hot. Those companies are going to do well at least initially for sure right now. One offs like candy crush, i think theyre going to be a little tougher sell because the market has a lot of experience seeing what happened with zynga. It does seem like theres plenty of factors to differentiate this from the kind of throw anything at the market vibe of the 90s where everything was well received, bid up on the first day. We havent seen that kind of market here. Look at biotech. When biotech stocks were hot in the 1990s, they went through the roof. After the market crash of 2000, they did really well. They had no real cash flow behind them. They had single off products. Today most of these companies are very well capitalized. They have big pharma behind them. I think the ipo market is generally healthier than it was 15 years ago. Were expecting big valuations on these, gemma. What does that say about this market right now . Is it overheating . Are we to that point in the ipo market or not . Exactly. And weve got to broaden it out in terms of where investors are in terms of their allocation. They have been heavily allocating to the equities markets which means if there is this trouble, if there is this turmoil, it means that with everybody trying to turn all at once and trying to rush for the exit, thats where you could see these risks playing out. So it means you see all this hype which is good on the short term trends, but actually it means longer term you have to be invested in companies that you have confidence with over the longer term so if you see this turmoil, youre happy to continue to hold it. Like i said, i think she made a great case for those two merging. Gemma, thank you. Thanks for staying late tonight. Thank you. Bob, welcome back. Pleasure. Thank you. Cant wait to see the slides from your vacation. Ill bring them. Set them to music. I am one of those people who uses spotify and pays every month for it. Good for you. I know. Apparently it doesnt make them profitable yet. My investments in itunes has dropped 80 . I think spotify is an amazing company. I cant understand how they pay their artists but its an amazing company. 15 minutes left in the trading session he said moving on. The dow is down 12 points but the nasdaq, the rally continues there. Up next, space may be the final prfrontier, but it could launching from the old frontier, the wild, wild west. And herbalife out with earnings after the bell. One of the most hotly contested stocks in the world right now. We will have full coverage with Herb Greenberg and other herbalife followers in just a little bit. Stay tuned. Where you think youre gonna go when your times all gone . [ male announcer ] live a full life. The new lexus ct hybrid with an epa estimated 42 mpg. The further you go, the more interesting it gets. Lease the 2014 ct 200h for 299 a month for 27 months. See your lexus dealer. Cozy or cool meow or woof . Exactly the way you want it. Until boom your mattress a battleground of thwarted desire. Enter the sleep number bed. An innovative design that lets couples sleep together in individualized comfort. Hes the softy his sleep number setting is 35. Youre the rock, at 60. As your needs change, you can adjust your sleep number bed, so you can sleep better together. Visit one of our 425 stores for the the largest closeout event of the year with 50 savings on Innovation Limited edition beds. Know better sleep with sleep number. When most people think of space ports, they probably think star wars. Right here on planet earth a home for space ships is a reality. Jane wells is live from the final frontier as she joins us now with more. Jane . Im here at mow jave air and space port. They have 17 Rocket Companies and for the first time revenues from space will for the first time mean more than half of the total revenues here. But once you get into space, where are you supposed to live . Robert bigelow is spending hundreds of millions of dollars of his own fortune preparing to launch inflatable habitats once someone can provide tropical storm. Transportation. Were just as ambitious as anyone who wants to chase asteroids our go to mars. Our approach is just being a little more methodical and calculated. Bigelow launched two test habitats into space from russia. Hes roprovided reports say a company could rent out one third of one habitat for 25 million after paying 26. 5 million to get a ride there. He thinks thats going to come together in three years. For more on how this will play out and how thats supposed to be a good deal, a good price, go now to cnbc. Com. Back to you. Thats an expensive i hope they give you more than peanuts and drinks when you get on board. 17 Rocket Companies. Thank you, jane. Incredible. Heading towards the close. 11 minutes left in the trading session. The dow is slightly lower, down 15 points. The nasdaq is the one charging higher today though. Earlier we told you about a reported meeting with tesla founder elon musk and apples top dealmaker. People are talking about this one all day. Could an icar be in the offing . And is it a good idea . Tweet us ayour thoughts on the idea of apple buying tessa and well feature them at the end of the program. Youll experience reliable uptime for the network and services you depend on. Multilayered Security Solutions keep your information safe, and secure. And responsive dedicated support meets your needs, and eases your mind. Centurylink. Your link to whats next. Where you think youre gonna go when your times all gone . [ male announcer ] live a full life. The new lexus ct hybrid with an epa estimated 42 mpg. The further you go, the more interesting it gets. This is the pursuit of perfection. Welcome back. About eight minutes left in the trading session with the dow down seven points, but its the nasdaq thats really stellar today, up 31 points right now. A lot of the Technology Stocks doing pretty well. Joining me, david nelson from bell point Asset Management and Randy Fredrick from charles schwab. You are both constructive on this market for different reasons. Randy, you have looked at washington. I think theyve cleared the decks for a while and it will be positive for the markets. They really have. We had the debt ceiling, the government sequester and those have been pushed aside. Those were some of the major catalysts that are not there any longer. We have to sort of be concerned about some of the emerging markets and china, but right now the domestic issues are primarily off the table. You think the weather gives us a free pass. For now it does. We have a weather put. Maybe that expires sometime in the second quarter. But right now, you know, you go on the Conference Calls, theyre all talking about the weather. I think the market is going to look past that. We already have. Weve kind of tiptoed up over the last seven or eight gives us a floor to work under. And it doesnt even matter whether its true or not. It only matters we believe it. How could it not . I keep saying, people skeptically say the weather. How could it not be affecting the economy . I dont think its the whole equation. What would you buy right now . We have a couple new names. Trinity industries. They actually report this week. Weve seen all the oil tankers, the problems that they have. I think those are going to get replaced. Well see a lot of legislation in the coming months to replace that whole fleet. Randy, whats your best idea . I cant give you an individual name. If you want individual recommendations, schwab equity ratings is the best place to go but were positive on technology. Consumer discretionary we have an outperform rating. If the economy continues to improve as we think it will and the market gets back to where, you know, to record highs which i think we will see very soon, we would still see some potential upside. Youre going with the growth play really. Absolutely, sure. Stronger growth of the economy. And i see that, too. To avoid are some of the large cap names, particularly china and brazil. I dont think thats over yet. Were all still waiting for the emerging markets. It will be a great buying Opportunity One of these days but were not there yet i guess. Thank you both. Were coming back with the closing countdown as we head to the close this tuesday. After the bell, the Obama Administration now allowing banks to do business with companies that legally sell marijuana. Will that send pot stocks flying high . The ceo of medical marijuana vending Machine Company medbox will be joining us to weigh in later on the closing bell. 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Who found a magic seashell. It told him what was happening on the Trading Floor in real time. The shell brought him great fame. But then, one day, he noticed that everybody could have a magic seashell. [ indistinct talking ] [ male announcer ] right there in their Trading Platform. [ indistinct talking continues ] [ male announcer ] so the magic shell went back to being a. Shell. Get live squawks right in your Trading Platform with think or swim from td ameritrade. Coming up on the twominute warning for the markets. The dow is not telling the story today. The nasdaq is maybe a better indicator of the kind of day were having. The s p is higher, nasdaq is up 28 points right now while the dow is just down a fraction today. Cocacolas earnings did not help that one. But the nasdaq up 28 points at 4272. Two controversial stocks that kelly will be dealing with next hour, herbalife reports earnings after the bell. That should be coming out any moment now. That stock is up 4 today. Medbox, this is the company that sells marijuana through vending machines. Thats getting clobbered today, down 11 , and the ceo of that company will be on with kelly next hour. Very controversial topic, so stay tuned for that. Terry dolan, what do you do with this market right now . Its kind of marking time right here. I think it is. And i think that as we mentioned last week, i think youre going to need to do a little work with the industrials and the s p 500. The moving averages are kind of broken down a little bit in my view and i think weve had a nice, healthy rally. It would be great to see them come in a little bit, build a little horizontal movement, and get on firmer ground to go forward but i think the markets are looking positive. I think the chart that looks the best is the nasdaq chart. The technology. Do we think this is a march to 5,000 . I dont want to get ahead of myself. We still have 700 or 800 points to go. I think you will see it take a pause to see some of the other indexes catch up. I think thats the most positive chart pattern right now. So youd be buying here to accumulate positions . You know what . We kind of bought the dips. Thats kind i remember you saying that last time. Here i would look at how much cash reserve i have. I would do some selective buying and i might even pare down a little bit. I was going to say, this is a trader, thats a nice way of saying im not buying all that much right now but youre being nice about it. Thank you. Heading toward the close. The nasdaq had a pretty good gain. Stay tuned now, ceo of medbox will be joining kelly, and you have herbalife, very controversial with their earnings coming up in a moment on the second hour of the closing bell with kelly he was and company. Ill see you tomorrow, kelly. Thank you, bill. And welcome to the closing bell on this tuesday. A shout out to washington illinois university, my alma mater. Here is how were finishing the close. The dow at the bell shedding about 25 points. So moving lower as we got into the close. The s p 500 adding two points to 1,840. Well talk about the significance of that level and the nasdaq adding 28 points so doing all right. About twothirds of 1 . Lets bring in todays panel. With me our own kat kele kelly, Steve Liesman and tim seymour. Kenny, lets talk about the internals of this market. People have been calling this a low quality rally. It is. Theres no real volume, no commitment that goes with it to make it feel like people are really committed to running right back up to 1,850. It senses were hitting our head at the highs. The market is churning. Lots of macrodata which will cause the market and investor to pause as they assess where were going. Today we got more mixed to negative data. Housing starts and Building Permits this week. Going to be a big number to focus on. Tomorrow you have the fomc minutes . What is anybody expecting to hear . Is there more in those minutes we can ask. We can ask Steve Liesman. My take, and i want to run this by you, is that theres a better bid right now on the economy. People are saying, you know what . I think this economy is more or less growing and that the weakness im seeing is probably as a result of weather. Ubs came out with a big study over the weekend that looked at the effect of housing and payrolls and retail especially over a percent if you average out the effect of nine snowstorms since 1993. If i can hold this up as well, this is effectively the barrons argument. Over the weekend talking about 4 growth. You can either use this as a contrarian indicator or what i think right now is nobody wants to buy the market until its more clear, but what theyll do is theyre not going to sell it right here. I think youre right. Saying nobody wants to buy it, they have taken us back to the highs, thats more trader type buying. Long term what i was interested in the story that was in usa today about how there are so many fewer stocks and fewfew er participation in terms of more money going into the market but chasing fewer stocks. Thats why we saw this dramatic rise in 2013 more so than what the fundamentals of the market are. Its true, if you look at the outperformers, if you were to take an index of one of the etfs of the buyback heavy names, it does better than the overall market. Thats undee nighabniably been. A lot of people have been saying when is the rest of the world going to join in with corporates in buying this stock market. Thats an interesting point. Based on what they have seen so far this year, a lot of traders are expecting a lot of volatility in 2014. In fact, some of them say that was the strange thing about 2013, the lack of volatility. This year they think right now we might be in a better spot than we were about a week or two ago but we might test the lows from january yet again and the not too distant future, maybe for example in april, and that that is going to go on in that vein for a while. I see you nodding. And i agree. I think the move up was too fast and too dramatic. It didnt give the market a chance to create a base, right . There are a lot of different data points here, right, kelly . The news out of japan was kind of interesting. Theyre going to do everything they can to stimulate the economy over the concerns and objections of many others. The fed obviously going the opposite direction. Yes and no because the fed is taking money away but yet pledging to keep rates low for as far as you can see. Australia did the same thing today. The question is will it work . Before we get back into some of that macro stuff, i want to bring up whats happening across emerging markets a little bit. Now, ukraine is an unfortunate example, tim, of some of the protests and the vie leolence ts happening. Its not necessarily something we can paint with a broad brush. What is happening in that country is so specific to ukraine and the geopolitical struggle they find themselves in. Are there any broader takeaways for investors here . I think that ilailand, ukrai certainly turkey, they have political fights going on. Turkey has political strife for the first time really arguably at least in terms of lack of consensus, for the first time in a decade. In the ukraines case, the orange revolution was a while back. People thought these wounds had healed. The ukraine has really suffered in this tug of war between the rest and russia. You cannot read that into the entire asset class. The biggest person that suers from the ukraines problems is the youukraine here, also proba russia. Look at thee m c em currenciecu. We talked about this a few time, where people were shorting em into what they thought was the bottom, and i dont think that was the right thing to do. Tim, we also have this Development Today where oil prices are popping. We have to talk about the weak dollar but also lets do if you want to make a case for selling some of the emerging markets, a lot of it has to do with oil going lower, not higher, so you have that to grapple with, too. Look at the crb. This is a world where were seeing increased industrial demand. Youre up 11 of 12 days on the xhcommodity index. This is not a world where were struggling from weather factors. We have eu pmis coming out on thursday. These will be in the mid50s. Watch for the china pmi on thursday night. Thats something that tim, thats key, right . How much china is going to be buying is going to be extremely crucial for the commodity market. I dont know its we can say its going to rally. We want to keep an eye on china and with the new data out about its consumption of glold in particular. Looking at whats happening with oil, were at a fourmonth high. Why, sharon . Whats going on there . Its not just the weather. Its some of the geopolitical events. Also the fact were looking at fewer supplies out of libya, looking at south sudan, unrest there. Also looking at just the fact that the dollar is weaker. Thats contributing to it, too. All of these factors are in the oil market, that means theyre in the gasoline market. At this time when people think theyre not going to be driving as much because of the cold weather, were paying considerably more than we were a month ago. It goes back to what we were saying off the top, which is, is that why you want to be more concerned about the nature of the recent rally in the market, which is to say we have a weak dollar effect here, the dollar index is hovering above that 80 level along with some of the other factors that make you feel like wouldnt it be better if we had the equity market rallying, yields rising, and the dollar rising as well like we had for that brief period of last year when it seemed like, you know, america was back. You know, i was just looking at some market data we got, and i dont know, blame it on the threeday weekend or a lot of kids in new york being out of school this week, but volume today pretty light and also the dow trading in a very narrow range. The narrowest since 2013. So that might tell you something about People Holding back. Because i think to steves point, right, weve rallied right up to this level again and people are confused. Theres not enough information to push it higher, but yet nobody really wants to sell it because theyre afraid of it running higher. Were kind of in this purgatory. Tim, what are your topics . Ill go back to the commodity space and the place where at least theres relative value. Take a look at the miners, look at the numbers that bhp put out last night. This to me is the miner you follow. They are at least the most diversified. Not only are they being smarter about their balance sheet, but iron ore production was at record highs. It may not be good for spot iron ore because i think theres a supply response that will weigh on markets heavy at the end of the year but i think you have a lot of miners, a lot of materials, and industrial exposed companies that have not rallied up to their highs. I think they have valuations that look interesting. Bhp is one of them. I would stay in that trade. Well leave it there for the time being. Olympic curling is week two but its coming up at 5 00 p. M. On cnbc. You can get your Second Screen ready, too. Tim and the fast money freestyle will be streaming live. Fastmoney. Cnbc. Com. Herbalife, out with earnings anytime. Find out if herbalife delivers. Herb gr Herb Greenberg will be here. Weight watchers shedding value on the heels of disappointing earnings. We have a Portfolio Manager saying the Conference Call was a disaster led by clueless management. Essional. Would you trust me as your Financial Advisor . I would. I would indeed. Well, lets be clear here. Im actually a dj. [ dance music plays ] [laughs] no way i have no Financial Experience at all. That really is you . If theyre not a cfp pro, you just dont know. Find a certified Financial Planner professional whos thoroughly vetted at letsmakeaplan. Org. Cfp work with the highest standard. Could save you fifteen percent or more on car insurance. Mmmhmmm. Everybody knows that. Well, did you know that old macdonald was a really bad speller . Your word is. Cow. Cow. Cow. C. O. W. E. I. E. I. O. [buzzer] dangnabbit. Geico. Fifteen minutes could save you. Well, you know. Welcome back. So weve got earnings due out any moment from herbalife, a battleground stock in a sector thats one of the most competitive and Fastest Growing industries in america, thats weight loss. A wave of new personal technologies helping people to manage weight including fitness bands, we have google glass. All of this, by the way, what was once Weight Watchers sole domain. Lost week Weight Watchers stock plunging. For where the dieting kingpin may be heading next, i want to bring in keith rosen bloom. Its great to have you with us. Weve got a lot of companies in this space to talk about. Wanted to ask you first about Weight Watchers and what you think both is going to be the future for this company and competitors who perhaps can capitalize on their stumbles. Sure. You know, i just want to clarify one thing, i think theyre dealing with a lot of challenging at Weight Watchers. I think what came off on the call was that management was really confused. That the direction that they want to take the company is not being clearly articulated to investors, and that so i think its difficult. I think its challenging for them. The big picture is weight loss is such an important issue in this country. You know, youve got twothirds of america is overweight. You have 9 according to the cdc that has type 2 diabetes. Its a serious issue, and Weight Watchers is really the worlds dominant brand in weight loss advice. And so they find themselves at a fortuitous moment, except that one theyre not executing on. Is that your point . I think its difficult for them. The challenges that they say theyre faced with dont seem to be presented with others in the weight loss ecosystem, other companies trying to help people lose weight. So the free apps are really an attack on the advicegiving business, and they say that there are all these weight loss free apps and things you may want to wear on your wrist like the fit bit bracelet and things like this, but at the end of the day, this is a proven methodology to help you lose weight. This advice and everything else. So we actually think Weight Watchers could be in a really good position to take advantage of that, but right now its difficult given sort of guide fre ance from management. Im curious because you see better prospects for a company like nutrisystem. Why . To be clear, we are involved in nutrisystem. We have no position in Weight Watchers. You know, we think a company like nutrisystem, which offers weight loss advice in addition to a weight loss program, food, has an opportunity to take advantage of what could be a real lets say legislative tsunami coming out of the cms to allow for weight loss counseling to be reimbursed or some element of that to be reimbursed by the states or federal government. Thats going to take time to play out like everything, as you know, with our government. Things get complicated, but, you know, the Affordable Care act i think is trying to recognize what really plagues our country and obesity is one of those things that really plagues our country. And, keith, where does that leave an herbalife . Herbalife . Yeah. Well, you know, herbalife is a different Business Model. It has different things. Everyone is sort of lined up differently on their positions in herbalife. You know, i think theyre just one of the Many Companies in the ecosystem. We dont have a view right now on herbalife. One way or the other. Got it. Because, again, this goes back to, as you said, the government to some extent identifying this problem and thinking about perhaps subsidizing ways for people to deal with it. If you look at the simple facts, right, in 1990 no state in the union had more than 15 of its population considered overweight. In 1990, wow. In 1990. Today in 2010, every state in the union, every single state has more than 20 of its population considered overweight. Wow. 37 states have more than 25 of their population overweight. 12 states have more than 30 overweight. So its a real issue and its an issue that i think if you look at the costs on the Health Care System and those estimates range, but the most conservative estimate says obesity accounts for about 20 of our annual Health Care Costs. Huge. And as you guys have covered, Health Care Costs and Health Care Expenditures are a big part of the economy and a big part of our annual spending. So we think theres a big tailwind in the sector. Picking teams that have identified the right path to take to help people lose weight is the key. And lastly, if you wanted to make a broader trade on this, would you go i dont mean this literally, but is it a reason why you would want to shy away from some of the big soft drink companies. Weve seen cocacola lagging today. We see them doing this deal with soda stream. There seem to be a lot of knock on trades you could make and winners and losers you could see for the next decade or so as this all shakes out. I think its difficult to bet against some of the Larger Consumer products company. If you look at the soda stream deal, that was a 1. 5 billion investment which ostensibly is a big number but as a percentage of their working capital, it was minuscule. I think the Large Companies are seeing real opportunities to penetrate the market whether its in organic food or whether its in just like we talked about earlier with Weight Watchers, whether its advice. There are lots of interesting opportunities but i wouldnt bet against some of the Larger Companies. The Balance Sheets are too strong and given this Capital Markets environment, they have a lot more flexibility. Thank you so much for your perspective. Great to see you. Really appreciate it. Thank you. Lets talk about herbalife. Coming up next, actavis ceo here. And ill get a take on carl icahns who Holdings Jumped today. And next a controversial new study showing a minimum wage hike to 10 an hour could kill 1 million jobs. The hot debate on that one is coming right up. And at the center of it all is a surprisingly low price just 7. 95. In fact, fidelity gives you lower trade commissions than schwab, td ameritrade, and etrade. 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Get our multipoint inspection with a a Synthetic Blend Oil change, tire rotation, Brake Inspection and more for 29. 95 or less. Get a complete vehicle checkup. Only at your ford dealer. Welcome back. As you can see kind of a mixed start to the week for stocks. We want to zero in on one name in particular that has everybody talking on wall street and that is actavis. The Company Making a 25 billion deal for forest labs and the ceo paul bisaro joins me now on a first on cnbc. First of all, its great to see you. Thanks for being here. Thank you for having me. So lets talk about this deal. You guys have been so acquisitive and now forest labs. How significant is this for the company . This is really a spectacular day for our shareholders and our employees. Really moves us to a new level of company and weve created a new kind of company with this transaction. Weve become a specialtyplus Company Really with a really strong branded franchise in north america coupled with one of the strongest generic franchises in north america and around the world. So were extremely excited about today. And people have made the point from being more of a Generic Company to buying a branded pharmaceutical, it seems as though there are bigger ambitions here. What is this Company Going to look like and stand for in a couple years time . I think what were doing is stay with our four pillars for growth. We continue to work on our commercial footprint, we continue to invest heavily in organic growth, r d, and making sure we have deliver high quality products. The outcome of that is generally enough cash to be able to go out and do acquisitions to help support your business. This is another example of us being able to execute very well in the first three things and using our cash to drive growth. Thats a point that the lex column makes analyzing the deal today saying you have spent 7. 5 billion in cash and acquisitions since 2009. Thats three times the free cash generated in this period. Is that sustainable . Well, we believe it is because the Free Cash Flow thats being jen agenerated ove next three years is extraordinary. We believe well be generated 3 billion to 4 billion of Free Cash Flow in 2015, and that will allow us to doself things. One, pay down the debt we have awired from this transaction. It wasnt very high to begin with and we will be able to maintain our Investment Grade ratings and then continue to invest in our business both organically and inorganically. This also will put the impetus on Companies Across the space to the extent they dont feel the pressure already to minimize tax. You are based in dublin. That gives you a huge tax advantage. Not enough of an advantage as some of your rivals who are able to get a tax rate of single digit percentages, and you guys are more in the range of the midteens. How significant is the tax rate for these decisions and are you concerned that in the u. S. That regulators might try to crack down . Well, first of all, this is not a tax generated transaction. Forest was well positioned from a tax perspective. Were only expecting about 10 of the total synergy number to come from tax. So what our irish status allows us to do is be a bit more flexible as we look at additional transactions as well as dealing with issues like trap cash. Whether the u. S. Decides to make any changes, i would urge very strongly that regulators look for ways to improve the business environment, not to make it more difficult. If they worked on improvement, i think more companies would be willing to stay in the u. S. Just like we would have liked to have done. Well, and also as the obamacare rules i was going to say are enacted but they are changing as often as they are getting enacted, how is that changing the Health Care Industry . How is that changing the way that youre building these businesses and stacking these bricks together . If you think about it, this is part of how this transaction came together. As our environment changes, the pharmaceutical space changes, one of the things we know we have to do is provide a broad range of Product Offerings to our customers, including Branded Products and high quality generic products. Thats going to be key, Cost Containment is key. Hospitals are looking for Cost Containment. Physicians are looking for Cost Containment and so is the government. I think were well positioned now to be the leader in that space. All right. Paul bisaro joining us on the details of this mega deal. Thank you for your time. Really appreciate it. Thank you for having me. We have an waiting for herbally. Dominic chu, did the Nutrition Company live up to its latest guidance . It did. Thats why the stock is up 3 , 3. 5 in the after hour trade. First of all, earning per share coming at 1. 28. Thats better than the 1. 25 that average analysts expectations were calling for. Sales at 1. 72 billion, bet better than the 1. 52 billion. With a guidance, here ill give you the bad news first in essence if you want to call it that. First quarter earnings per share guidance comes in at 1. 25 to 1. 1. 29. Just a little shy of the 1. 35 but on the full year earnings guidance, they say theyre going to earn between 5. 85 and 6. 05. That beats the expectations for 5. 87 in terms of the overall 2014 earnings season. Thats the news that perhaps is driving the gains, if you will. So again, kelly, the last check here about 3. 5 , 4 in a plusside move for herbalife after hours. Back over to you. Dom, thanks very much. Lets get more on herbalifes hae earnings with Herb Greenberg. Herb, i know im going to keep saying herb and herb, herb, what does this Earnings Report, what does everything that keeps happening with this company, what does that mean for the people who have been calling this a pyramid scheme . As i have said to anyone who will listen for the past year or so, the earnings and whatever the Company Reports are really irrelevant in the scheme of things because, you know, if you dont believe there are issues with the companys underlying Business Model, then you look at it like you would any other company. If you believe there are issue was the underlying Business Model, then you have to look at this and say, hey, all of the other things may matter, and these numbers may be built on something that may be unsustainable at some point in the future. Is that your view, herb . Pardon . Is that your view on this company . My view that its fundamentally broken . Mi view on the company and the industry in general is the Business Models have to be reset and reeled in by regulators. When we did our documentary selling the american dream, thats the bottom line of what we have. There are issues. Brian, you own the shares. What is the herb missing and what do you think about the quarter . What herb is missing is numbers always matter. The concept behind herbalife is that there is a Business Model that, you know, while people think is a bad thing, theres a lot of mlms out there, multilevel marketing Business Models that are very well accepted. The avon Business Model is accepted. Theres a bunch of others that are out there. If you take a look at it in terms of, you know, the key l m linchpin is is this a Pyramid Company . What if they put it in the Grocery Stores go ahead, herb. Then i could say how about if regulators come in or a senator was asking some questions and find something through their inquiry that raises questions. We can go either way, what if, what if. The question right now is, is there are some concerns in the Business Model. Thats why i look at the numbers and say, come on guys. We know what the numbers are. You either take it at face value or you dont. It look like investors are taking it here at face value. Theyre up 4 . They like what they saw in the quarter. Joos of course. You know what whats interesting, theyre below where they were when the company came out and did the convert recently. Take a look at some of the big investors who have invested in this thing whether its george soros or heyman capital, they bought and they sold. If this is such a great model, why arent they sticking with it at these levels . Brian. You cant fault someone for making a quick buck, especially when theres a lot of confusion in the marketplace. We had the news in january about china looking into the Business Model at newskin and that hurt shares of herbalife. When you look at herbalife, you have to take it as a one off example. Only 10 of the sales come from china and right now if youre looking at the company over a long term perspective, it fought these battles again and again about the Business Model and has come out on top. And a well publicized battle as the shares adding 4 after hours. Thank you for your perspective. An important story. Coming up next, raising the minimum wage could kill as many as a million jobs. Thats the key finding of a new Congressional Budget Office study. Well get details from washington when we come back. 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. Through sunday, save up to 500 on beautyrest and posturepedic. E savings go on at sleep train. Get a sealy queen set for just 399. Even get 3 years interestfree financing on tempurpedic. Plus, free delivery, setup, and removal of your old set. Keep more president s in your wallet. Sleep trains president s day sale ends sunday. Superior service, best selection, lowest price, guaranteed. Sleep train your ticket to a better nights sleep welcome back. Earlier this month the cbo said obamacare could cost jobs and now they say the president us a push to hike the minimum wage could also cost jobs. Eamon javers has the details. We have a little bit of an economic standoff in washington, d. C. , between the Congressional Budget Office which is nonpartisan and straight down the middle historically in washington and the white house which is disputing these new cbo findings. First, the findings themselves, what the cbo said in its analysis of a proposal to raise the minimum wage to 10. 10, that could cost as many as 500,000 jobs as a result of companies switching to technology, machines, and the like and getting rid of some of those employees who will now cost them more money. That raised the support of republicans up on capitol hill. Speaker of the house john boehner issued a very supportive statement saying this report confirms what weve long known, while helping some, mandating higher wages has real costs, including fewer people working. But the white house is not going along with that analysis. The white house effectively disputing the cbo here. The white house saying the overall consensus view of economists is that raising the minimum wage has little or no negative effect on employment. So basically this is sort of a geek off here. Both sides have their studies and their economic history that theyre citing here and both sides just basically flatly disagree. The white house saying also that their are a whole host of other knock on positive effects of raising the minimum wage, including raising peoples motivation at work, reducing absenteeism, reducing the stress of poverty. Theyre saying the minimum wage hike is a good idea. Stay with us because its not a geek off unless liesman is involved. Speaking of. Exactly. Steve, what spurred the cbo study . Was it because there might be legislation so they have to score it . Somebody asked them to do it. I want to correct your intro which is that these are very different. The Health Care Job issue and this issue. The Health Care Job issue is not strictly speaking lost jobs, its lost supply of labor. This is more serious in the sense its a charge of loss of demand. The idea i wont want to work because im getting the subsidy versus the idea there wont be a job for me because of this law. And i will point out that the tolerance on this is zero to a million with the cbo picking with the half a million. I think whats interesting is the white house has a point. Theres quite a bit of research on both sides of this issue, and the question in my mind is why the cbo decides so definitively on one side here. It seems to me what the report should have said is theres controversy over this and it could be nothing or it could be quite a bit. If its quite a bit, here is our estimate of that. Some of it makes sense, the idea you charge more and youre essentially going to have a reduction in the amount of demand for that labor and also the technological development. To your point, eamon, a job is a job at the end of the day. So if you were to simply just look which it sounds like theyre trying to do, weighing all of these factors, considering all possible angles, coming out and saying this is the most likely outcome. If you move forward with this legislation, this is going to be the economic effect. Thats what theyre saying the analysis is. Theyre saying about 16 Million People will benefit as a result of an increased minimum wage. All of those people will see their earnings increase. A lot of families will see significant earnings increase if you move it to 10. 10 an hour as the president is proposing. What theyre saying is you have to weigh those people against about a half Million People or so who will lose their job. Steve is exactly right. The margin for error is between zero and a million. Could just as easily say zero jobs. That was the white houses point. Why didnt they pick zero. We pick zero. What does the cbo report say about the impact on some of the subsidies that are out there which is why many are saying theres a need to raise the minimum wage so you wont have as many subsidies. What does it say about the deficit . I havent read far enough into the report yet which is 40some pages long to see what they say or if theyre silent on that issue. There are all these interesting ramifications for a minimum wage increase into how employers der side to hire and who they decide to hire. One of the things they are saying here is that youre going to see a raise for managers. People who are is up advising minimum wage employees thats exactly it. More of the benefits will go to the higher income people. Some people will benefit who are at just above minute waimum. I want to say i think steve raises a great point which is like the interpretation of the numbers is such an important part of this discussion, and the more the less recent report of the cbo on what would happen to jobs under obama care really had a devastating effect in the first 24 to 3 hours when people read that as jobs will be eliminated by employers because of the aca and were still repeating that. Instead that people will feel comfortable stepping out of the workforce but interestingly, its still increasing the deficit and lowering potential growth over time. Theres still a negative net economic effect you could argue. And, kate, to kates point, politically thats a tough thing for the Obama Administration because theyre trying to say its a good thing ultimately if people leave the workforce because. Obamacare because they have more freedom and flexibility to not stick with a job they hate just to get those insurance benefits. Thats a tough thing to spin politically because a lot of people read it as thats a job killing estimate there. We got to hop. Im going to zip the lip. Eamon, thank you. Its a complicated report. Well still dig through it and look for more detail as its interpreted. We have some more after hours movers to report. Dominic chu gives us a round up. We have a lot going on here. Were going to start off with lazboy reporting weaker than expected Third Quarter earnings and sales. You can see there, you can see down about 9 , 10 in the afterhours session. Panera losing ground after slashing guidance. You can see those shares down as well. Potbelly is off of its lows. It reported better than expected Fourth Quarter earnings on slightly lower sales. It also said full Year Comparable Store Sales would grow in the low single digits. And then theres Analog Devices off of its highs. It posted better than expected First Quarter profits and also increased its dividend by 9 and increased the stock buyback to 1 billion. It also gave q nps2 guidance that was slightly better. Thanks very much. Now, today medbox shares were tumbling down more than 11 despite the governments recent green light to bank on doing business with Legal Marijuana sellers. Medboxs ceo will explain why his stock had such a downer day. And later, your thoughts on apple potentially buying tesla. Tweet us cnbcclosingbell. Your thoughts on air in just a bit. [ children laughing ] move to the country, and live a long, happy life together where they almost never fight about money. [ dog barks ] because right after they get married, theyll find some financial folks who will talk to them about preparing early for retirement and be able to focus on other things, like each other, which isnt rocket science. Its just common sense. From td ameritrade. Youd do that for me . Really . Yeah, id like that. Who are you talking to . Uh, its jake from state farm. Sounds like a really good deal. Jake from state farm at three in the morning. Who is this . Its jake from state farm. What are you wearing, jake from state farm . [ jake ] uh. Khakis. She sounds hideous. Well shes a guy, so. [ male announcer ] another reason more people stay with state farm. Get to a better state. Get to a better state. In a we believe outshining the competition tomorrow quires challenging your Business Inside and out today. At cognizant, we help forwardlooking Companies Run better and run different to give your customers every reason to keep looking for you. So if youre ready to see opportunities and see them through, we say lets get to work. Because the future belongs to those who challenge the present. Where you think youre gonna go when your times all gone . [ male announcer ] live a full life. The new lexus ct hybrid with an epa estimated 42 mpg. The further you go, the more interesting it gets. Lease the 2014 ct 200h for 299 a month for 27 months. See your lexus dealer. For 299 a month for 27 months. Theyre the days to take care of business. When possibilities become reality. With centurylink as your trusted partner, our visionary Cloud Infrastructure and Global Broadband network free you to focus on what matters. With Custom Communications solutions and responsive, dedicated support, we constantly evolve to meet your needs. Every day of the week. Centurylink® your link to whats next. Welcome back. Take a look at medbox. As we mentioned earlier. The stock down sharply. More than 11 on the heels of a report out by citron research. They accuse the company of committing fraud on its financial statements. This despite good news from the government allowing banks and legal pot sellers to work together. We want to get reaction from medbox ceo bruce bedrick. Whats your reaction to the charges . Thanks for having me back. And honestly, we believe that theres absolutely no basis in fact for any of the charges. We are so excited that we are one of the only companies that has filed our form ten. We let all the facts speak for themselves. All of our accounting has been essentially audited and submitted to the s. E. C. , and we will let it stand for what it is. A couple of the specifics that they pick out here include in revenue last year you had represented as almost 2 million in one quarter only to restate it down to 1. 3 million at the end of the year. Saying how can you say youre being transparent if youre being transparent but then youre changing the numbers as you go along . Thats a very simple answer. Actually as a young company, we had outsourced our accounting practices. Since that time, we have brought accounting in house and you will also notice the addition the recent addition of our cfo to be a truly transparent company. Once we did that, we noticed the discrepancies and reported it on the form ten. Another one of the concerns was the way you represent the company generally. So talking about being a leader in the Pharma Business despite not really having any business there and talking about licenses you helped clients win in arizona that were awarded by blind lottery. What do you say to those charges . I think once again the people who did this report didnt really do their diligence. We do have essentially Amazing Technology that is going to come out for the Pharma Industry and i have spoken to even on your show about this. It is in a prototype. Its in a prototype stage and i have represented those facts. It is a Game Changing technology . It absolutely is. It has the ability to change the way every man, woman, and child obtains their prescriptions in traditional pharma. The same thing in the marijuana industry. Not only do we have Great Technology to store inventory, control, and dispense the medicine, but were also one of the best and the most successful industry consultants. And so really everybody is trying to take a pot shot at us. The reality is that pun intended. Right, exactly. Unintended pun. When youre the leader of an emerging growth industry with billions of dollars of potential and knowing that ultimately when this grows up into its childhood and ultimately adolescence, theres only going to be a few yahoo s and googles that will make it and medbox is poised to do that. There are people that will want to knock us down and tag our stock and it has no basis in fact. Aside from some of the yellow flags that were raised in the report that weve discussed, going back to the core Business Model, here is a line from this report as well. He says, look, anyone who thinks you will buy marijuana out of a machine without smelling it because these machines youre selling are behind the counter, has never bought marijuana. I have never bought it so i have to take his word for it. Perfect example. A perfect example of somebody who doesnt know who we are and doesnt know the industry. Our technology is a compliance tool. This is not about going into the store and shopping and smelling and tasting and touching the medicine and evaluating it. This is about storing inventory, control, and dispensing medicines that are highly regulated. Our technology sits behind the counter and is operated by technical or store or dispensary staff. I want so hes completely off. Hes completely off of where hes coming from. Once again, it has no relevance or basis in fact. I want to bring in the panel here, keith, who is with me and has been looking through a lot of this as well, has a couple of questions. Sharon, were you going to ask i was going to say i think bruce brings up a very good point and that is that investors need to do their due diligence. There is a link on the website about marijuanarelated stock scams and what people need to be wary of and going to the s. E. C. Filings and looking for yourself to see what the companys numbers really add up to be and what youre getting is something that people should do, but also investigating those at the helm, those that are in the leadership positions in these companies, also very important. And i think bruce, you would agree with that. Absolutely. Im echoing and saying amen to that. In fact, i was also on your show last month when i echoed the same thing. We completely support finra. The cornerstone of medbox has been about safety, security, transparen transparency, and compliance. We are probably the only or one of the few that are actually becoming a fully reporting company. We filed last month and by definition i think we will be a fully reporting company next month. Like i said, you have to should you be a billion Dollar Company . Should you be a billion Dollar Company . We hope to be a multibillion we should be a multibillion company. Based on what . Based on where this industry is going. You have to understand, again, that especially on the heels of the release by the Justice Department and the treasury now saying, which is the big thing that came out on friday, is that, hey, look, we believe this Industry Needs to be integrated into working society in america. There are billions and billions and there are billions and billions and billions of dollars of potential in this and the overwhelming statement that that makes is not about the fact that people can walk in and use their debit card and the dispensaries will be able to have banking relationships but the recognition by those in power that need to protect the industry, integrate the industry and what those opportunities will bring for many can, every day investors, entrepreneurs, people who want to get involved. For medbox, again, the opportunities are limitless not only nationally but internationally. Thank you for being here on a tough day for the company. Im sure weve seen your response to citron. I have a feeling this is not the last of the back and forth so investors should pay attention. Bruce bedrick from bed med box. Thank you so much. Mr. Allen wosler is coming up right after a short break. Really appreciate our powerf. And let it do its thing. Wow, more fan mail. My uncle wanted to say thanks for idea hub. He loves how he can click on it and get specific actionable trade ideas with their probabilities throughout the day. [ male announcer ] open an account and get a 150 amazon. Com gift card. Call 18883303136 now. Optionsxpress by charles schwab. We know were not the center of your life, but well do our best to help you connect to what is. We still run into problems. Thats why Liberty Mutual insurance offers accident forgiveness if you qualify, and new car replacement, standard with our auto policies. So call Liberty Mutual at. Today. And if you switch, you could save up to 423. Liberty mutual insurance. Responsibility. Whats your policy . Back from the long holiday weekend, much needed may i add. Allen wastler, whats percolating to the top of the hot list . Kiev, libya, venezuela, egypt. In the background you have iran and syria. Our finance editor jeff cox did a wrap through all these hot spots and looked at where investors should be sensitive for a tipping point. People, 100 readers a minute are diving in. We have a pickup from the New York Times about rock salt. Theres 40,000 tons in maine and cant get here because of an old shipping law, the jones act. The jones act rears its head again. It has to be u. S. Flagged and crude and theyre having trouble getting the rock salt down. People are upset about that. Finally we have a marvelous feature that looks at three olympians, christie i am gujy and a curler who works between construction jobs. All on the website. People are loving it. Im loving it. Allen, thank you. Great to see you this afternoon. Appreciate it. We asked, you tweeted, we wanted to know what you think about the idea of apple possibly buying tesla. Get those tweets to us at cnbc closing bell your thoughts right when we come back. [ male announcer ] these days, a Small Business can save by sharing. Like carpools. Polly wants to know if we can pick her up. Yeah, we can make room. Yeah. [ male announcer ]. Office space. Yes, were loving this communal seating. Oh, its great. Yeah. [ male announcer ] the best thing to share . A data plan. New at t mobile share value plans for business. Our best value plans ever. For example, you can get 10 gigs of data to share. And 5 lines would be 175 a month. Plus you can add a line anytime for 15 a month. Sharings never been better for business. Double the screen time, double the fun. Catch the latest olympic curling action from sochi right here on cnbc next. Be sure to live stream freestyle on fast money. Melissa lee joins us now. Youre going to be talking to the citron analyst, right . The dialogue will continue on freestyle. We heard the ceo say the case was baseless essentially and that they got the story wrong. Were go back to the executive editor about his short story and see what happens. Its going to be explosive. Exactly. Thats coming up in just a couple minutes. We will absolutely stay tuned. Thank you, melissa. See you then. We want to know what your opinion is about apple buying tesla. Glen tweets it will create the best company ever. An apple car will be a great idea. James tweets im most worried that the icar would use apples maps for navigation and keep parking my car in the ocean. Lots of snark about this one. Can i get that first guy to tweet on my behalf . I thought he had a way with the 140 characters. That was really a smart one. We have time for a couple of quick final thoughts. We have a lot happening tomorrow, the fed minutes and everything. Whats most significant . The most significant for the markets Going Forward is looking at what allen was talking about an cnbc. Com and this story on hot spots and watching what happens in the middle east not only as it pertains to oil but the financial markets. While the ukraine may seem like a ukraine only problem we need to watch it. Its like when you had the emerging markets system reared its ugly t. J. Oshie score team usa wins