Transcripts For CNBC Power Lunch 20140312

Painstaking life and death decision. First, to sue at the New York Stock Exchange. Look forward to that interview very much. Meantime, it has been an amazing run for tesla. Up 520 in a year. Now that new jersey has become the third state to side with dealerships in their bid to keep tesla out of the market, what does that mean for the future of this gamechanging company . Phil lebeau is live in chicago with that for us and much more. Phil, over to you. Reporter in the near term it means that sales of tesla from the company directly to consumers in new jersey, that will stop on april 1st. Heres what happened yesterday. New jerseys Motor Vehicles commission, it unanimously approved a change in the rules saying you know what, no direct sales from auto makers to consumers, so the sales for tesla will stop april 1st. This is the third state along with texas and arizona to ban the direct sales of automobiles and direct sales of teslas. There are two tesla stores that are impacted in new jersey. Unclear whether or not tesla will convert those to galleries where you cant ask about pricing, cant ask about buying a vehicle, but the vehicles would be on display. That remains to be seen, whether or not that happens. Heres what one supporter at the hearing yesterday had to say about the potential move from the commission. It is without a shadow of a doubt unamerican. You have stifled progress and innovation in the state of new jersey. Reporter how much will this impact sales . The company has sold about 500 vehicles in the last year in the state of new jersey. By the way, compare that with all of the makes and models sold by auto dealers in new jersey last year, which was almost a half million. Shares of tesla bouncing back today after being hit fairly hard yesterday afternoon. Hard to tell how much of the Stock Movement is due to whats happened in new jersey, but clearly, this is a story thats getting a lot of attention because there are now three states that have banned direct sales of tesla. I know there are more that are considering it. The story will be alive for some time. Let me turn you to another story we are following, phil. Gm. The House Appropriations subcommittee on transportation is dealing with funding for the department of transportation at about 2 00 p. M. Eastern time. This all comes at a time when General Motors is having some very difficult headline risk involving the massive recall, 13 deaths due theo a faulty ignitn system. Lawmakers are requiring more information from the national highway Traffic Safety administration. What are they asking for and what is gm up against . Reporter they want to know how the recall was handled. Thats basically it. That means a lot of questions about who knew what, when. Did they ask enough hard questions, did they notice a pattern of complaints regarding vehicles stalling from 2003 all the way up through 2014 and why did it take so long for the recall to happen . Thats it in a nutshell. Gm is facing multiple investigations about how it handled this recall. There are two congressional hearings that are coming. There is also the d. O. J. Which is investigating gm for possible criminal charges in terms of how it handled this investigation. Take a look at this chart. This is gm shares since mary barra took over at ceo at the beginning of january. Lot of people said boy, you have big shoes to fill there, being the first woman to run a major automaker. Not sure she realized it was going to be this tough, this early on in her tenure. By the way, those recall hearings for General Motors, they are likely to happen in the next month to six weeks. Depends on when they are scheduled on capitol hill. This question is also coming up a lot about what kind of liability General Motors faces for accidents that are involved. Heres the general rule. When they went through bankruptcy, they were given a shield by congress in terms of liability. So accidents that happened before General Motors went into bankruptcy is now being controlled by the Motors Liquidation company, the shell of the old gm. Understand . Any accidents since the bankruptcy, the current General Motors corporation is liable. Thats a shield given to General Motors and chrysler. I know people who had suits against chrysler not for anything major but they were dismissed essentially and they were not happy about it but thats what congress did. We are going to talk to a congressperson in just a moment about that. Thanks for including that, because i think it explains a lot to investors in gm and those who are very concerned about the headlines on gm. Thank you, phil. Breaking news from the bond market. This is an auction week. We had the three year note yesterday, the ten year note goes off the board today. Rick santelli is at the cme. What was demand like . Reporter if Jackie Gleason traded bonds he would go how strong it was that was a strong auction. We gave it an a for apple. If youre in debt and want to sell paper, this is what you want your auction demand to look like. Lets go through it. First, it is really a ten year note because we auctioned what was the true ten year note a month ago. This is a nine year, 11 month we added into an existing issue. The yield at the auction, 2. 729. What was trading in the one issue market, around 2. 74. What was the low yield in the one issue market . Well, it was higher than where we price which means lower yield, higher price, one of the main reasons for such a strong rate. In addition, the dealers took less than 30 of this auction. Why . Because the directs were strong, the strongest since april of 2013. The indirect were right on average and the bid to cover the best since march of 2013 at 2. 92, solid, solid auction. Tomorrow, 13 billion reopened 30s to cap out the supply. Back to you. Rick, thank you very much. Representative Marcia Blackburn of tennessee is the vice chair of the house energy and Commerce Committee which has launched an investigation into what General Motors and the national Highway Transportation Safety Administration knew about gms ignition issue. Congresswoman, welcome back to cnbc. Always great to see you. Thank you. Good to see you. What is it that you want to know about how either the nhtsa or gm handled this recall . You hit it on earlier when you were making your comments, who knew what when. And what is the timeline. Thats what were going to need to do first, is secure the documents, secure information from nhtsa, from gm, be able to establish a time line, go back to the first point where they knew that there was a problem, and review it and determine why this recall has taken so long. Its important work to do. One of the reasons its important is because of the age of vehicles on the road now. People are driving them a bit longer and you know, this is one of those things we need to figure out where they hit a road bump with this. Some of the brands involved including saturn, made in your state, by the way, are no longer made at all. Many of the models are no longer made. I wonder how you feel in retrospect about the wiseness, bad word, about the wiseness of congress basically insulating the current General Motors company from liability having to do with accidents prior to its bankruptcy filing. As phil explained, it kind of insulates the Current Company from what could be very large liability judgments. This is why i didnt vote for bailouts and i dont like bailouts. I think what we do want to do is make certain that the act, which chairman upton had led to passage, that we get back in here and we look at consumers knowing and being aware and being informed when there is a problem and a recall needs to be made. And that to be carried out in a timely manner. I will tell you, it is really quite troublesome that for some reason, this was delayed. You look at one window and then you look at the fact that gm widened the window on this, and the problems that have occurred with those ignition switches, and its going to take us a little while to build the body of evidence that we need, but we have started on it and we are going to stick with it until we get it completed and get some answers. We will all be watching with interest. Let me turn your attention, congresswoman, and again, i appreciate your time, to the question of tesla which has become a very hot topic. Most especially in this state of new jersey, where we are broadcasting from. As you are aware, the situation there is that the state has now decided that tesla cant do business selling cars directly to consumers. They must use a dealership network. Governor christie, a member of your party, has embraced this decision. I wonder if you think this decision and governor christie, by extension, are on the wrong side of Free Enterprise in this case. Well, its going to be interesting to see how that plays out. Especially when you look at the flattening of sales and manufacturing and the direct access because of the internet that people have. Im one of those, i cut my teeth selling doing direct sales, getting through college, so i understand the format. I also appreciate the fact that auto distribution in this country has been built on the dealership model. Whether or not the disallowance of tesla and a manufacturer to consumer model will be continued with other states, i dont know. Its going to be a state issue. We will see this played out on a state by state basis. There are some individuals that prefer to buy their auto from the person that built their auto. You can look at whats happened with kit cars and that industry. Also, which i know you all have looked at in the past. So i dont know what the answer to that is going to be. I do know there are lots of people that appreciate having the ability to work directly with the manufacturer just as there are some who have done business with a particular dealership for the past 30 years. I just got, since you raise it, what did you direct sell in college to put yourself through college . Im curious. I sold books door to door for the southwestern company. Is that right . They are located in nashville, tennessee. The Little Things we learn. The things that you learn. That was my First College job and went on to be a Sales Manager for that company. How do you like that. How do you like it . I love it. I think its fantastic. Thanks for sharing it with us today. Absolutely. Thank you. Congresswoman blackburn, thank you. Dominic chu with a market flash . Check out berkshire hathaway. This stock is moving higher after it agreed to swap most of its long Time Investment in grant holdings, the former publisher of the Washington Post for most of the shares held by graham holdings. It also received a miami tv station and cash and consideration for this trade. Graham holdings is also moving higher to session highs on this deal. Back to you. We will switch to a topic that you have covered for us in the past. A very rough month for copper, down almost 9 , near a four year low. That could be a bad sign regarding china and its economy because Chinese Companies often buy copper to use as collateral and chinas exports as you know, we got that bad number out of china earlier this week. Peter baum joins us now, the coo for essex manufacturing. Hes in hong kong. His firm makes products licensed to retailers like Betsy Johnson and steve madden, just to name a few. Thanks for joining us. I know its very late, your time, so tell us what you think and what you see happening inside of china. We got a bad data point out of china. Does that, do you believe that data point and does it indicate that chinas economy is starting to crack . Well, thanks for having me, sue. I saw the data point. I do believe that that is somewhat influenced by the Lunar New Year holiday that fell during that period of time. That being said, i also since im here now, am seeing a very tight squeeze on middle market type companies, factory owners who export. They have weak demand for an extended period now from both europe and the united states. They have inflation on Raw Materials due to appreciation of the r d over the last three or four years, and believe it or not, because of the one child policy, theres a lack of manual labor for factories so that they have to pay more to get their labor. Then on top of it all, they got to go to shadow banking to get some funding and are paying usurous Interest Rates, 25 , 30 . Is there a sense is your sense the government can manage their way out of this . Or is your sense that its gone too far for them to pull it back . Well, i have seen numbers, for example, a number came out where its estimated, because no one really knows, that the debt level from the shadow banking is 234 of gdp. That also is presuming that the gdp is really 7. 5 which im dubious of. So if you were to think 300 of gdp or some number north of that, and there was some kind of breakdown in trust between counter parties, i dont know that the government has the kind of money to fund all those losses plus support the banking system. The smart money and the big money in china has been buying real estate in london, new york and hong kong. What would happen if they all had to repatriate that money at the same time . Thats very interesting. Thank you so much for joining us. We will be keeping in contact with you so we can continue on this developing story. So what does this mean for stocks in the u. S. . We are down about 40 points here but kenny, we have talked about this before. Is our market Strong Enough to withstand a crack in china, or are we so tied to china that we cant withstand that . You know, its confusing to everybody because look at us. We are still at the highs and this whole china story has been ongoing now for awhile. This is not necessarily new. We have been talking about it. Yet our market continues to move higher. In fact, made new highs only last week, right . So were still here. I think whats going to happen is if china does start to crack, you will see Global Markets and the u. S. Come under some pressure but in the end, i think investors will come back to the safety play which is the u. S. , and thats kind of been the story. I think we will withstand it if china moves off the edge. Im not really believing it will go off the edge. I think they will have some trouble but i think they can manage it. We will see. Bob pisani, come into the conversation. There are people who want to play china both long and short so if you think that china is indeed cracking or the government cant fund all of those issues that peter baum just addressed, how do you play it . Theres a lot of different ways. Thanks to etf, its one of them. Let me show the simplest way. Go short to market. Theres an etf for that. Thank goodness. Yxi, very straightforward. I like this etf a lot. Pro shares, short china. If china drops 2 with this particular etf, you go up 2 . Its very simple. Theres nothing very tricky about it. I like it. If you got a lot of nerve, there is even leveraged etfs. Take a look at one of these. Got to have a strong stomach for that, right . This is the one i dont know if i would do that. Yang. Three times inverse of the market. If the china market goes down 2 , you make 6 . But this is just on a daily basis. We have warned you about leveraging inverse etfs before. So 1,000 gain doesnt mean anything. Doesnt mean its only on a daily basis that you get the inverse of it and that could change over time so it doesnt track the market. If the markets down 2 in a month in china, it doesnt mean youre up 6 . You have to look at it, it depends upon how the market moves. This all has to do with the problems with leverage and inverse etfs. Let me show you a very simple direct way to play this. How about a chinese Property Developer . Heres one of the biggest ones in hong kong. China resources. They develop all over china but you see this play has been around for awhile. This is a one year low. Everybody knows this is the way to short china, this particular stock, but its widely known so i thought i would put it up. Finally, how about playing the currency of a company thats very dependent on china . The aussie dollar is the clear one to play here and you can see the china markets been weak and so has the aussie dollar for awhile but a lot of people have known this is a back door play. Thats one of the reasons the aussie dollar is weak. Dont forget, the china market is off about 42 from the 2009 highs so its almost getting to the point of have we hit the lows and is this going to turn around on everybody. Thats why we are heading this direction. These inverse etfs, you should be very careful. You were talking about tops in the Chinese Market in 2008. So there has been a lot of people playing this china short idea for a long time. Thats right. Got to go. Ty, up to you. Sue, gentlemen, thank you very much. Developing story we have been watching all morning long. A large explosion rocked east harlem on park avenue at 116th street near mt. Sinai hospital. Big fire broke out seconds later. Hundreds of firefighters have been rushed to the scene. Two buildings then collapsed. There were people inside. 18 have been listed as injured. We know now so far of two fatalities. Con edison supplies gas to that area. A spokesperson says there were reports of an odor in the area. Workers were dispatched to the address just before the explosion. Northbound commuters this evening should expect delays on the rails heading towards westchester and connecticut. I have to tell you, on my way down, i go down the west side, and it was really crowded because the east side is being impacted by that. We are in march but forget about it, its going to be freezing cold again tonight and tomorrow in the east. Look at those pictures. Snows on its way. Its already hitting the midwest. You know that they want to put those snow plows away but not quite yet. Plus, the search for Malaysia Airlines flight 370. Its really one of the most bizarre stories we have ever covered. We will have more on it. Its still developing. vo you are a business pro. Seeker of the sublime. You can separate runway ridiculousness. From fashion that flies off the shelves. And you. Rent from national. Because only national lets you choose any car in the aisle. And go. And only national is ranked highest in car rental Customer Satisfaction by j. D. Power. natalie ooooh, i like your style. vo so do we, business pro. So do we. Go national. Go like a pro. [ male announcer ] the allnew 2014 lexus is. This is your move. Welcome back to power lunch. We are going to keep a close eye on shares of herbalife, ticker hlf. The shares have been halted for news pending. Again, shares of herbalife have been halted awaiting some news dissemination. The last trade for the shares around 68. 31 on about three million shares worth of volume. Again, a 4. 5 gain. Shares are halted. We are waiting to see what happens in terms of the news when they open back up for trading. Back over to you. Im down at post nine here and right behind us, is the herbalife post. You can see that some of the traders as they await the news and the release of the stock, we are waiting for an indication on it. We dont have an indication yet. But thats where herbalife is traded right behind us here. What the traders are doing is gathering, trying to figure out where the stock is going to be open. Bob pisani is down there, working the story. I just called out to one of the traders and asked if they had an indication whereof where the sts opening. We do not okay. They are working the book right now. They have not decided right. Do we have an indication . No indication. No indications yet. No indications. All right. Well wait. Herbalife is right behind us so we will hear. The traders always call out to us when they do get an indication. Hopefully that will be in just a few minutes. Meantime, when is it going to stop . Not the market, the weather. Spring is next week, believe it or not, but another major winter storm slamming chicago and northern illinois. As much as seven inches of heavy slushy snow tying up commuters. Dozens of schools closed for the day once again. At ohare airport, 3. 6 inches of snow was recorded. That was enough to move this season to the third snowiest on record in that part of the country. Ty, its headed our way. What a winter it has been in the midwest and the east. Winter storm vulcan intensifying as it barrels across the midwest, leaving chicago behind, heading to the northeast today into tomorrow. Buffalo expecting 12 to 18. Weather channels tom niziol has the latest. Winter storm vulcan already producing significant impacts in the western great lakes from chicago to detroit. It now sets its sights on interior new england and upstate new york. Lets take a look where the warnings are out. Blizzard warnings in and around buffalo to syracuse. This area here, the i90, is going to be heavily impacted. You can see the winter storm warnings all the way up into new england. This is the way it will play out. The snow across this portion of upstate new york during the daytime hours today. As we get into tonight, that snow expands into interior new england. The cold air back down into pittsburgh. A rain snow mix in across boston and southeastern new york, then as we get into tomorrow, what is ever left over from the system as it moves off the coast in the form of snow showers. We put it all together, total snowfall, eight to 12 inches from upstate new york, parts of Northern New England could see as much as 18 to 24 inches of snow. The Silver Lining in the cloud, its warmer down here from new york up to boston. Other than an inch of snow thursday in boston, most of this area will miss the worst parts of vulcan. We will keep you updated. Back to you. Thank you so much for that update. We are also getting the first good aerial views of massive flooding in central montana. These pictures were taken north of billings. Much of the land thats partially or entirely underwater is farmland in rather lowlying areas so some crops are entirely submerged in the water and some flooded areas really, as you can tell, kind of look like lakes. That might affect grain prices and corn prices and Soybean Prices if indeed it did hurt some of those crops. Sue, thank you. The search to find that missing malaysian jet carrying more than 230 passengers now in its fifth day, and there are really no answers. Nbc news now reporting that senior u. S. Intelligence Officials Say National Technical means, often codes for satellites, picked up no indication of a midair explosion aboard Malaysia Airlines flight 370. Phil lebeau is back now with more on the expanding search. It sounds like we really dont know much and the malaysians arent saying much. Reporter they dont know much, either. You know, you talked about spy satellites picking up a midair explosion. When twa 800 had the crash back in 2001 after it took off in new york, spy satellites picked that up. They pick up a lot of things that happen in the air. So the suggestion that there was some midair explosion and thats what happened to the plane, that still may be the case. We dont know for sure. But the spy satellites did not record anything that would indicate a midair explosion. Lets show the expanding search area because it has been expanded as they continue to look for malaysia air 370. Thats the last known location as it was heading towards vietnam and over vietnam into china. They have expanded that area and are still looking to the west towards the strait of malacca although its unclear whether or not thats simply because the plane turned and was headed in that direction. At least thats the indication according to malaysian radar. Here is the comments this morning from investigators in malaysia in terms of what they believe was the last location and the last intent for the airplane in terms of where it was turning. Theres a possibility of the aircraft as of now that remains a possibility but must be scrutinized by the experts. So until such time, it is very difficult for us to say that is for sure that is the aircraft. Reporter the key is what he said at the end. There is very little that we can say for sure about what happened with this aircraft. Still, more questions than answers when it comes to malaysia air flight 370. Absolutely. Thank you very much. Hopefully some answers will be forthcoming. Dom, we are tracking herbalife. Its still halted. News pending. They are gathered at the post behind us here. It will be interesting to see, the stocks up 4. 5 on basically right before the halt. Interesting only because many of these Multilevel Marketing Firms, herbalife, nuskin, have been scrutinized in recent weeks and months over their Business Activities in china. Most recently, you had ackman talking about the Business Practices of herbalife in particular. Of course, he has a very big interest, Short Interest in herbalife shares. The question is, herbalife did respond to the comments from bill ackman. They still defend their Business Practices here and in china. So whether or not this news has anything to do on that front remains to be seen. But still, we are still trying to find some indication of where these shares are going to open up. A 4. 5 gain, again, volume is slightly better for this time of day than on average just shy of three million shares have already changed hands. Again, a very close eye. I know you guys will be watching things closely from post nine down there. Yeah, absolutely. Its right behind us here. You mentioned nuskin, they are up 10. 4 today. Their volume is a lot heavier than normal. As we look at the herbalife tag right there on the post behind us, scott wapner joins us as well. This is probably one of the most fought over companies in terms of who is on the right side of this trade. Including, sue, new salvos this week from carl icahn on our show, the halftime show earlier this week saying that what he thought that bill ackmans activities here were bordering on the insane. Those were carl icahns words this week. That was just a day before bill ackman held that Conference Call or presentation, the webcast on herbalifes china business. So as we speculate as to what this news that is pending, i guess one thing to consider here is something that i reported a couple months back. Taking note that herbalife had some debt coming due on the balance sheet, that Interest Rates are obviously low, that the company, according to my sources, would take advantage of that situation and refinance some of the debt on the balance sheet. I dont know if this is that, but its something to keep an eye on. The other thing that everybody has speculated obviously on is some sort of leveraged buyout or some kind of transaction involving the ceo of post. Hes a big shareholder here in herbalife. Carl icahn is a big shareholder in herbalife. As to whether either one of those gentlemen could do that individually or together, i guess i would throw a little cold water on that as being this news based on the conversations that ive had this week alone, just based on the fact that on the left side of your screen, that number, 68. 30, i think the stock according to those that i have talked to may be a little too high for a transaction to take place here. I think those who are thinking about that sort of thing would love nothing more than for the stock maybe to go down a bit. I was going to say, that would be a pretty rich premium to pay. I think all of that plays into the thinking here. Again, my best guess, and its nothing more than that, and it could end up being wrong and if it is, so be it, is some sort of debt refinance. But thats only based on previous reporting on my understanding of what the company was thinking about according to sources and that was a couple months ago. But in reality, who knows. Yeah. Were waiting once again, there is no indication yet on where the stock is going to open. I also want to note, you mentioned nuskin. Yes. That stock has halted, too. Thats what i wanted to bring up. Shares of nus, another Multilevel Marketing Firm thats had scrutiny over it because of chinese Business Practices on direct selling, those shares like you said are halted. This is not for news pending. This is a volatility trading pause or trading curve, if you will. Its been paused for trading because it dropped a lot. It was up about 10 going into this pause. You can see there, it dropped about 6 in trading in just a relatively short amount of time so it triggered whats known as a Circuit Breaker for traders. Single Circuit Breaker. This is the first time it happened today. Again, not news pending for nuskin, just a volatility trading curve put into effect. We are still weigaiting on the herbalife news. Interesting indeed. Those two companies which have similar Business Models are halted. Albeit for Different Reasons at this hour. We will take a short break. Well be watching nuskin but most especially herbalife right now. Maybe by the time we come back, we will know more. Return on investment wall isnt a street. Isnt the only return im looking forward to. For some, every dollar is earned with sweat, sacrifice, courage. Which is why usaa is honored to help our members with everything from investing for retirement to saving for college. Our commitment to current and former military members and their families is without equal. So our business can be on at ts network for 175 a month . Yup. All 5 of you for 175. Our clients need a lot of attention. Theres unlimited talk and text. Were working deals all day. You get 10 gigabytes of data to share. What about expansion potential . Add a line, anytime, for 15 a month. Low dues, great terms. Lets close new at t mobile share value plans our best value plans ever for business. For tapping into a wealth of experience. For access to one of the top Wealth Management firms in the country. For a team of Financial Professionals who provide customized solutions. For all of your Wealth Management and retirement goals, discover how pnc Wealth Management can help you achieve. Visit pnc. Com wealthsolutions to find out more. All right. Welcome back. Nuskin has just opened for trading. The indication was 74. 30. It opened at 74. 30 and has now moved to the down side. It is also traded right behind me at post nine. It trades on the same post as herbalife which were now waiting for some sort of opening there. Theres no indication on that. The news pending has not been released. We dont have an opening and they are still working the book on herbalife. The book was closed on nu skin a few minutes ago. Dom . Its scott at the breaking news desk. I think were prepared to report at this time that the ft is now reporting that the ftc has opened an investigation into herbalife, a formal investigation into herbalife. Bill ackman obviously has been urging the ftc to do this through his own webcasts, through his Conference Calls, through his various presentations, through letters from him and other organizations to the ftc commissioner urging them to open an investigation into this company and apparently, at least according to the ft, the ftc apparently is doing just that. So you can surely bet that while the stock is halted on your screen right now, at 68. 30, whenever it does reopen, it is going to be far lower than that. Yeah. Let me just call out to peter. Peter costa, do we have any indication yet on herbalife . Not yet . Okay. All right. No indication yet. Dom, why dont you join the conversation. If that ft report is indeed accurate, and we are going to see what the stock opens, but to scotts point, that has been something that mr. Ackman has been calling for for some time, and it most likely would weigh quite heavily on the stock. The interesting part, like scott said, if this is going to happen, its going to have not only a direct effect on whats happening with herbalife shares but also any other companies that trade in the same industry. Were talking about these multilevel marketing direct selling firms, nu skin, we told you before, nu skin had been halted. It has now reopened for trading. We had told you before that it was up about 10 . It dropped 6 very quickly in and around this news surrounding herbalife. It reopened for trading and fell another 4 to just around flat for the day. So up 10 near its highs, then down back to flat on the day. Nu skin, you are seeing real issue. Now for traders, remember, if youre looking to take a view, trying to hedge some risk, sometimes you have to play where the action is. If herbalife is still halted, you may see some traders trying to express their views either positive or negative with nu skin shares because they are a proxy in this moment for shares of herbalife. That may be one reason why you are seeing this kind of reaction. Very good point. I do sense a lot of frustration. I have been calling over to the traders behind me because herbalife is right over my shoulder and they are somewhat frustrated at the inability to get an indication. They are having a hard time figuring out where to open up this stock. Its going to be very interesting to see whether or not we get a gap to the down side in herbalife. We are watching both nu skin and herbalife very closely. Herbalife once again halted pending some news. No indication yet. Ty, over to you. To the bond market we go. Rick santelli has been tracking the action for us at the cme. Ten year auction today. You gave it an a. Yeah. Could almost give it an aplus. As you look at the intraday chart, down a handful of basis points but the stencil of moving lower was already firmly in place. If you open the chart up to seven weeks, you can see why. Anybody who was stuck short most likely used the auction to cover some of those shorts. Technically it looks like we will see dropping rates. Dollar index, look at this chart, hovering at the lowest level since halloween. If you open the chart up to a year, we are very close to breaking through a long term trend line that could potentially see the dollar Index Trading much lower. Tyler, sue, back to you. Thank you very much, ricky. Youre up to date on the bond market. Once again, we are following shares of herbalife which are pending news, they have been halted. The ftc according to the Financial Times is going to open an investigation into herbalife and its business. We are still waiting for confirmation of that in terms of the stock performance. No indication yet on where they are going to open it. We will continue to follow that. Scott wapner is working the story for us. Thanks so much. We do apparently have a reaction from herbalife on all of this. Says it has in fact received an investigative demand from the federal trade commission. It does not intend to make additional comments regarding the matter. It says it welcomes the inquiry. Also saying that it will cooperate fully with the ftc. But that is the latest news. Again, the stock has not opened for trading. We should also give some perspective here. There have been many questions raised about herbalifes Business Practices, not only by bill ackman, but others as well. We have reported many times about questions asked about their Distributor Network and how it operates, and most recently, a month or so ago, it was senator markey sending a letter to the s. E. C. And ftc asking both entities to take a look into herbalifes business practice. So the drumbeat has been building steadily for a number of weeks, culminating yesterday with that presentation yet again from bill ackman regarding china and this news then breaking today. We just wait for herbalife to reopen and see what the shares do. You can just be sure they are not going to be sitting here. They are going to be much lower, you can only presume, when the stock reopens for trading. Absolutely. Scott, thank you so much. Great work. Ty . I wanted to ask scott a question, if i could. There have been historic questions about multilevel marketing Business Models and whether they are really on the up and up. Some are, some apparently arent. I dont remember my herbalife history sufficiently well, but my recollection was that the ftc or some government body had looked into them before and that they, herbalife, have said hey, we were exonerated at that time. Am i wrong about that . I dont believe you are, ty. Herbalife has been in business for 30 years. I believe they have been looked at before. Questions have been asked of Multilevel Marketing Companies for a number of years. This is a company that continues to report record profits. Their earnings continue to be good. The stock continues to be backed up and propped up, if you will, by a number of large investors who continue to believe in herbalifes Business Model, saying almost exactly that, that how could a company thats been in business for 30 years thats been looked at many times for its Business Practices, maybe not the formality of the ftc opening an investigation, but certainly the Business Practices have been looked at over the years of not just herbalife but these other mlms as theyre known in the industry, and certainly, herbalife has been found in the past not to have done anything that would rise to the level of an ftc investigation. Weve got an indication on herbalife. The indication is to come at 62. 67. 62. 67 is where they are going to try and open that stock. So a 10 decline off of here and thats merely where its going to open. Its likely going to be volatile and it will be active and my guess is that it will trade lower than that. I think youre probably right. Im just hearing they are making the book behind me and what im hearing is that they might have a lot of pressure on that stock. 62. 67 is where they are trying. 62. 50. Thats a 5 wide spread. The other thing to keep in mind here is because we do not know the exact details of the ftc investigation, exactly what sort of questions they are going to ask of herbalife, what sort of information they want from herbalife, its dangerous to speculate on what it ultimately will mean to the companys Business Model and to its business as a whole going forward. Do they ask a number of questions, does herbalife end up paying because this is a civil investigation, a fine of some sort at the end of the day and continue operating as a business, as it normally does. Who knows. Until we get more details from the ftc, its difficult to speculate on exactly what this really does mean. For scott, again, scott has hit the nail on the head here. The reason why youre seeing, when traders dont know exactly whats going to move a stock, they widen the spread out. They make their bid very low and make their offer very wide because you dont want to transact anywhere 61 to 61. 50. The indication is 61 to 61. 50 right now. Indications are narrowing considerably. Should be opening fairly soon at this point. Probably in the next couple minutes. You know, to herbalifes statement, they basically say they welcome the inquiry given the quote, tremendous amount of misinformation in the marketplace, and they will cooperate fully with the ftc. Thats according to their news release. You wonder whether the market doesnt seem really convinced about that at this point. A head line of an ftc investigation on a stock that is as controversial as herbalife has been is certainly going to cause investors to run first and ask questions later. I would guess that thats whats going to happen in this instance here, once the stock actually does reopen. You will see 60 on your screen for a mere blip and then the situations going to look far different. They are going to try to open it at 1 46 p. M. Eastern time is the indication. Thats in a matter of 15 seconds or so. They are trying. I dont know whether they will be able to get it open. They are giving it a try. The bid has come down, guys. It is 58. The spread is still 5. Herbalife throughout the whole process here, as it has absorbed all of these attacks from ackman, has maintained that its Business Model is lawful, is legal. They are making the rounds. Looks around 60. We are talking about close to a 10 drop from the 68. Have we heard from mr. Ackman yet on this . I have been unable to reach him at this point. If hes listening, we would welcome him calling in and letting us know his opinion. Hes not the only one who is going to have a big opinion on this. Absolutely. I will say this, just for color, not on herbalife but nu skin, because we are seeing action there. I just want to note that it is trading about three times or triple its average daily Trading Volume. Remember it got halted so you might be able to expect that same kind of volume pickup in herbalife shares as well. Nu skin trading very, very actively after it was reopened for a volatility trading period. Herbalife may experience that same kind of volume trading spike as well. The crowd thats down here is one of the biggest crowds i have seen since a very popular ipo. There is a lot of pressure here. Theres a lot of discussion down here as to whether they will be able to open up this stock. The book is still open. They are taking orders. They will eventually get it open, sue. You are going to see intraday movement on our screen from the kind of charts that we bring you here on cnbc that is fast and furious and as active as ever. Its likely not going to be a pretty picture for herbalife shareholders as they digest this news along with the company itself. And see what this all means going forward. When that thing opens, thats going to look like bill ackmans ekg, i venture a guess. That thing is going to move up and down very dramatically and as you point out, mostly down. Certainly its going to gap lower as it opens. By all indication, right now, the bid was sitting at about 58 a share. This is no doubt a significant development. In a week in which, you know, certain news articles have questioned bill ackmans strategy in all of this, whether he crossed the line in the way that he has attacked this company publicly, former s. E. C. Chairman harvey pitt on cnbc yesterday openly questioned as to whether mr. Ackman has gone too far, was really attacking the fundamentals of this company, or merely trying to push the stock price down. Whatever mr. Ackmans motives are and have been, he is at least on this day going to have succeeded by some measure because the ftc announcing this formal investigation is going to push those shares lower. Ackman yesterday, i believe, on the webcast he was having on chinas business, maybe, i dont know if ragged is the right word to use, but said they could make 2 billion from this. Let me just go down to bob pisani. They are trying to close the book on this now because hes asking is everybody in, is everybody in. The procedure here is pretty simple. They are just about ready to open. The indications are pretty right, 55 to 60, those are the official indications. Peter is trying to open the stock right now. Remember, they couldnt give any indication until the company officially acknowledged what the news was and at that time, the company then notified the New York Stock Exchange and the Stock Exchange notified the floor that they could open it and get indication. Thats the procedure. You cant get any indication until you actually have the news. The company has to come out and acknowledge what kind of news is out there and inform everybody. So they are trying to narrow havent they done that with their statement . They released a statement. Thats why weve got indication. The procedure is, the company says we are halting the stock for news. Then the Company Comes out and says what the news is. Then the floor is notified by the New York Stock Exchange that they can go ahead and get some kind of indications. Again, they are trying to get the book open. They have just frozen the book. Stay with me. We will get an opening price in about five seconds. What they mean by the book is frozen, meaning no orders are being taken. Normally it should be open in about ten seconds. There it is. The stock just opened. Down 13 . Trading at 56. 54 now. Down 13 . Dom, the volume on this i think is going to be very interesting. Yes, youre right, because this was already a stock that was on pace to trade heavier than it normally does. With this news and with nu skins reaction and reaction to possibly whats happening with herbalife, you can expect a lot of volatility, like scott says. Whats interesting about the way its opened up right now is this chart could again be very volatile in just the opening minutes around this retrade. Again, this is just because limit orders and everything have been they have made one price to try to clear all the orders that were in the book as they tried to reopen the trade. Now its about everybody else coming into the market to decide whether or not this is a dip they should buy or if not, some we will go to scott wapner with further developments. As we watch the stock here, tyler, trade down by about 12 , i can tell you that bill ackman is going to have a statement to make about these developments today. I just hung up the phone with him. There will be some sort of statement forthcoming. I would assume in the very near future, as he soaks in this news as the rest of us do as well. If we get that, we will certainly bring that to you. I guess this is about where i thought maybe the stock would trade, although i still think that theres going to be some pressure on this thing for the remainder of the day, down 15 on this kind of news to me is interesting. Look, the day that bill ackman first gave his presentation, i believe at the conference, the stock got absolutely hammered. On a presentation. So one can only, you know, speculate as to the ultimate toll that this things going to take. Yeah, absolutely. I would be interested in mr. Ica icahns opinion of what the stock is going to do. He is the largest shareholder. Exactly. So he is going to have an opinion. I dont think its going to be a very favorable one. I dont know. Well see. Go ahead. I just want to point out that nu skin which was halted on a volatility halt, is now down 2 . This is interesting because it highlighted the Circuit Breakers we have down here. Nu skin which reacted to the news about what was going on or the fact there was a news pending around the prior stock, actually dropped rather dramatically. There is a volatility halt down here. When a stock drops 10 in five minutes, you pause, you actually stop trading for roughly five minutes so that you can get a new series of buy and sell orders. This is specifically designed to create a break on the stock. These were all created in the wake of the flash crash in 2010. They were all perfected and refined at that time. The stock did drop and now has reopened but on heavy volume here, down 1. 9 . I want to come back and say theres still a crowd out here in front of herbalife right now. 57. 16. Not far from its reopen. We are down about 11. I guess it was 68. Its interesting, though, usually when they get the stocks open, the crowd dissipates very quickly. They are still here. What that means is that these people here have orders to buy and sell. These are not retail orders. These are very large orders, thousands of shares. We dont know how much. But they are standing around with various orders to buy and sell at different prices and just watching the progress of the stock. I think its a story thats going to continue to develop throughout the trading session, and i think that is one of the reasons why the gentlemen and ladies are at the post behind us, because with each development in this story, they will be buying and selling their shares depending on the news. If we get comments from mr. Icahn or mr. Ackman, it could really influence the performance of the stock. Sue, i just want to say one thing here to highlight the volume discussion again that we have been having. The average Trading Volume over the last three months in herbalife shares business 3. 5 million. We are right now upon the reopen trading up to about 3. 9 million shares right now. So we are already ahead or on pace now for breaking the average trading day volume for the last three months. One thing thats really fascinating to watch here, as we watch the very definition of volatility in action in realtime, as you watch that little red dot mark the price, now 58, back down to 56, as low as in the 55s, it really tells you how the market moves instantly in reaction to news. As scott wapner has left us. He has been most plugged in of probably any reporter in the country on this story with mr. Ackman and mr. Icahn. He is working the phones now and he will be back, im sure, with additional information. I would say he bets mr. Icahn will have an opinion. You bet he will. Watch your twitters, folks. The other part of the story we havent had a chance to touch on is what the Options Market is telling us about herbalife and nu skin. Herbalife, more perhaps prominently featured in terms of the option flow. The option flow is somewhat negative towards herbalife, perhaps not surprisingly, but a lot of people were hopeful on the other side of the trade that perhaps herbalife was in the clear to a certain extent. Thats not indicated obviously in parts of the Options Market. Again, the Options Market is interesting because thats going to be one of the drivers of the volatility here. Remember, any time anybody, say a Retail Investor or institution, buys or sells an option, somebody has to buy or sell it to them or from them. So when you have markets being made in stocks and in options, oftentimes the hedges that have to go behind an options trade, if somebody buys a call option or buys a put option, you have to either short stock or buy stock on the heels of that. That may be one of the reasons why the volatility is as high as it is. Thank you very much, dominic, sue, scott, bob, everybody, for following this story. We will have much more on it at the top of the hour, including herb greenberg, who has of course been on this case for many months now. We will say goodbye. Street signs to follow after this. This. Power consumption in china, impact wool exports from new zealand, textile production in spain, and the use of medical technology in the u. S. . At t. Rowe price, we understand the connections of a complex, global economy. Its just one reason over 75 of our mutual funds beat their 10year lipper average. T. Rowe price. Invest with confidence. Request a prospectus or summary prospectus with investment information, risks, fees and expenses to read and consider carefully before investing. With investment information, risks, fees and expenses if yand youre talking toevere rheuyour rheumatologistike me, about a biologic. This is humira. This is humira helping to relieve my pain. This is humira helping me lay the groundwork. This is humira helping to protect my joints from further damage. Doctors have been prescribing humira for ten years. Humira works by targeting and helping to block a specific source of inflammation that contributes to ra symptoms. Humira is proven to help relieve pain and stop further joint damage in many adults. Humira can lower your ability to fight infections, including tuberculosis. Serious, sometimes fatal events, such as infections, lymphoma, or other types of cancer, have happened. Blood, liver and nervous system problems, serious allergic reactions, and new or worsening Heart Failure have occurred. Before starting humira, your doctor should test you for tb. Ask your doctor if you live in or have been to a region where certain fungal infections are common. Tell your doctor if you have had tb, hepatitis b, are prone to infections, or have symptoms such as fever, fatigue, cough, or sores. You should not start humira if you have any kind of infection. Take the next step. Talk to your doctor. This is humira at work. [ girl ] my mom, she makes underwater fans that are powered by the moon. She can print amazing things, right from her computer. [ whirring ] [ train whistle blows ] she makes trains that are friends with trees. My mom works at ge. Welcome to street signs, everybody. We are jampacked today with bigtime stock stories and a hot debate on how real adhd really is. But we begin with that big story. Breaking moments ago, the federal trade Commission Opening a probe into herbalife. It is whacking the stock. It is down nearly 10 , off 6. 50. Let us bring in herb greenberg, who has been following this herbalife story for a long time. What do you make of this ftc investigation . Herbalife coming out and politically correctly saying we quote, welcome the investigation. Who welcomes an investigation . Well, you welcome it if you really believe you can prove that you hav