Both sides. The securities and Exchange Commission has a new warning to Bond Fund Managers that has to do with structural issues that have crept into the market. We will tell you about the implications. We want to start with breaking news on new skin. Sterns, ise, olivia there with everything you need to know on this story. Shares in new skin are down and the stock has been halted in trading twice. Comingllows allegations from a chinese newspaper saying new skin has been suspected of an illegal pyramid game. This is a company that makes nutritional and skin ruddocks and the government says they are investigating these allegations. Tearkin has been on a recently, the stock quadrupled last year. New skin denies these allegations, but this calls to mind another herbal Nutritional Supplement company that has been accused of operating a pyramid game herbalife. Herbalife shares are down 10 . It a pyramidalling scheme. Its interesting to see what analysts reaction has been. One has cut the recommendation to a hold, saying the Chinese Market is large enough that this could significantly impact their sales. Theirin gets about 20 of sales of china. Bank and wedbush are taking another town, maintaining a bite on the stop and bank of america says Network Marketers like new skin have always been questioned. There does not seem to be tangible evidence to validate these negative claims. They say the selloff is basically unwarranted and face similar allegations. What happens at the government level . When does the Commerce Department get involved . Its hard to say. Hink its too hard to say there are reports saying they suspect new skin of a pyramid scheme. Thank you as always. Joining us from the breaking news you saw the 33 intraday drop. We are going to get you down to the ec where ben bernanke made what may be his final appearance as fed chair. Spoke about his eightyear tenure and defended his controversial decision to expand the feds balance sheet. We hope as the economy improves and tell our story and as more information comes out about why we did what we did appreciate andl understand what we did was necessary and in the interest of the broader public. Are chief washington correspondent was at the event today and he had an exclusive interview with one of the chairmans top lieutenants. Time to thek in financial crisis. Thats right. He was then the vice chairman for one of bernankes closest confidant as they steered through policy. He was one of the people president obama considered to replace ben bernanke and i sat down with him after the event to get his take on how history will treat an bernanke. Goi think ben bernanke will down as one of the great Federal Reserve chairman in history. Was presented with a terrible situation. By the time he became chairman and 2006, the cycle is close to peaking. House rises were starting to go down and in the middle of the year, the israeli could have done about it. He was presented with a very serious situation and he brought knowledge off his the depression, his experience thinking about this kind of experiencehis through a full year of being the governor for the Federal Reserve. Talking about centralbank powers and authority and responsibility, i think he engaged in what was a very bad situation and it could have been much worse. He brought all of that imagination to bear and deserves credit for keeping it from becoming much worse than it could have been. You know the debate, this happening here in washington about the feds policies and the expansion of the balance sheet. There are those who the judgment is out on ben bernanke. Did he expose the fed to greater risk by those actions . What is your response . The greater risk would have been not doing it. The greater risk would have been allowing be economy to be even weaker, allowing the Unemployment Rate to run higher thelonger and allowing potential economy to be hurt by the high unemployment. The main risk the economy has faced over the last six or eight years since the crisis began was the risk of weakness and he fought against that. His commentsed in that there could be adverse effects on some parts of the financial system. The fed is monitoring that closely. They have new tools to deal with have deployed the powers theyve gotten under dodd frank to strengthen the Banking System and they are doing that. It would be foolish to say there are no risks or potential downsides out there, but looking at the choices that had to be made and the risk on the economy and financial side that the fed has done what it needed to do to come to the best possible outcome in a very bad situation. You know ben bernanke and janet yellen well. There has been a lot of talk about sharing similar views in regard to whats happening with the bond buying program. Do you agree with that . Is there much daylight between ben bernanke and janet yellen . I think they are fundamentally in agreement and they have both stressed the cost of high unemployment. The necessity for dealing with that to make sure it does not have permanently adverse effect on the economy is also a point that was talked about. They have both stressed using regulatory tools to deal with the Financial Risks as us as possible and they both admitted that at some point, if the regulatory supervisory tools are not sufficient, you may have to move your monetary policy. I think they are in broad agreement on the important policy issues of the Federal Reserve. Says the tape or continue when janet yellen takes over . Are the Economic Conditions such that they can continue that . The feds expectation is that the economy will pick up and be stronger in 2014 that it has been in the past few years and if their forecasts are right, and i dont see any evidence janet yellen doesnt agree i think they will continue with the taper. Continue with the taper the decision will come at a january 29 meeting. Ben bernanke stepped down officially on january 31st. When you were at brookings, did anything stand out . He looked the most relaxed i have ever seen her . Two things stood out to me. Every thing on tv that has been out there. Isse who have suggested it have been wrong. Easily one credible risk out there is a notion of financial insecurity. They say they are all watching it like hawks and they acknowledged its a credible risk. He was asked about the sleepless nights and it brought a lot of us back to that moment. Was on his mind and he equated it to a car crash when you wake up later and think oh, my god. Peter cook joining me from d. C. With his exclusive conversation. Thomas angelback investor and consultant will be joining me as my cohost for the hour. We will ask if he thinks the presence of so much investment money tack is leading to a bubble. Also if activists in tact are changing the way he invests. The president of social computing will joining me. He will tell us how they are changing the way business gets set. We focus now on private equity and investment carlyle is making in the diagnostics business. They are buying Johnson Johnsons ortho clinical for more than 4 billion will stop our private equity reporter is with me now for more on this story. Lets the bat carlyle is making . Be a veryt going to easy that. Its a business that has been struggling and makes medical right gnostic equipment and tests for things like hepatitis or cholesterol of everything like that. Carlyle plans to invest heavily in research and development and theyre looking for new products the business can bring to market. They are looking to take these Products International two countries and regions where Health Care Equipment is coming up to speed. Makes this diagnostic that wouldve meant, everything from cholesterol to fertility can be tested. Why is Johnson Johnson willing to sell if it is such a gross unit . If you think about Johnson Johnson, you think most of their businesses are first or second in the market. Bloodusiness of diagnostics comes in fifth and fails among competitors. The Johnson Johnson ceo identified it as a business thats going to slow for Johnson Johnsons ambitions and higher jpmorgan to shop the company. Justs a business that was not keeping up with the rest of Johnson Johnson. Lex i know carlyle was not alone in wanting to put them in this unit . When big corporations are publicly shopping a unit, carlyle was not the only one interested. Fromw joint bids blackstone and from a European Private Equity firm, and Leonard Green and partners. Thank you as always for the latest on carlyle, picking up about 4 billion. From private equity to the larger investment landscape, the sec is warning fixed income managers about structural risks in the bond market. And the is with me founder of nt advisors is with us. When we think about bond risks, its usually about rising rates have not structural challenges. It is quite interesting. Warning about a all of this. You see the cover and you think theyre just saying watch out for rising rates, but they are talking about an interesting structural issue. This will illustrate the point really well for old. This concerns how much bond mutual funds have grown since the 80s. If you look at the chart, it is in orbis growth. That is billions. It is a large number. Hugelyve is streaking up over the last you years as everyone has run away from stocks will stop rex is the point then that there are major outflows and that is a disturbance . Rex as part of the point. The second article same point is illustrated by the next graph which shows how much primary dealers have reduced their ability to facilitate liquidity in the market. Primary dealers have left the marketplace, so there are not the same number of Market Makers in the bond world as there used to be. But the Retail Holdings of bonds have exploded. Went the net outflows you are talking about surtout evidence themselves, theres not a marketmaking capacity to absorb it. Is concerned about extreme volatility arising from those two factors. There has also been a big runup in stocks. That turns around and says if you are a normal investor, Financial Education 101 is you have to rebalance that. Torybody says i have rebalance. What do i rebalance into . The sec is saying because the woman out the bond market, so how do i go about rebalancing . Fortunately, your show about alternative investment helps to answer that question. The we have the graph on screen and you see several options that give you income without exposure to Interest Rate risks. Longshore a lot of people are going credit long short and dont forget about tips. Choices, fewse dont want to be in stocks or bonds, there are some choices. How do these themes and alternative choices factor in two decisions you make in technology . Rex i think from a technology standpoint, it doesnt make a big difference. Most Tech Companies have raised money during the recent time in the bond markets and generate a lot of cash. They are not typically looking to raise money on a frequent basis, but one thing i would like to add to the discussion as i remember during the 2008 there wererisis, times when there was extreme illiquidity in money market funds. Investors were looking to get out and it created severe rapid changes in prices. A lot of people think i own a bond fund, if its a big place, its liquid. It is not like a stock that trades record only and fluidly in the markets on a per instance asus. The quiddity became a magic term. It did. Hold that the. We are back in just a few minutes and we will talk about activists being extremely active in tact. More on this increased focus and pressure. We are back in just a few minutes with more. Activist investors are taking positions in numerous fields, technology included. Earlier this week, elliott judgment revealed a stake in Juniper Networks and is seeking talks with its management and board. S are back. You are an Angel Investor and you have your Consulting Firm and spend many years on wall street as an analyst. What do you think about Analysts Investors being so present in last 12 months and technology . You could sum it up to three things. Activist funds have outperformed hedge funds in general. Last year, they had a 17 return. That is emboldening them to raise more money and as you do that, you have to invest in activist situations. If you look at tech, tech underperforms the s p for the last four years in a row. The reason is a lot of legacy Tech Companies are not growing but generate a lot of cash. Quacks like apple has this amazing balance sheet. Thats a lot of money for a company thats not even a hedge fund. You have the ingredients of underperforming stocks, a lot of cash, and Strategic Issues. In the case of juniper, one third of the market cap was in cash will stop thats a lot. Stocks underperformed and generated a lot of cash. Their businesses are subscale and have not been doing well. It doesnt take a lot of Rocket Science to figure it out. There has to be some sort of carryon effect. Once one activist investor dares to take on one tech company, others in the field im thinking of einhorn or anybody else, i can do the same thing. Of the things activist have to think about is what my Campaign Fails . Im going to be stuck with the stock. Bill ackman has had some very public failures retail and otherwise. Right. I think we are going to see more of this as long as tech underperforms. Microsoft last year, and activist came in and spearheaded the change. Underperforming sectors with strong cash flow and Strategic Issues there is a fundamental issue one reason you have not seen is, until recently microsoft aside, they are sitting on too much money. Thats easy to fix. Mostly, activist investors are arguing a company should be broken up or change its product x. Can you imagine an coming in and saying i think you should change your mix. They dont know enough to be valueadded Board Members in Technology Companies in the same way they can go in and make observations about retail. Activismoo , we saw that got the ceo in there. Guys tog to ask you hold this part of the conversation while we take a quick check on the markets. Bloomberg on the markets. You will see a mixed picture there. Citys fourthquarter earnings disappointing at best buy holiday sales as well. This is money moves where we focus on innovative alternative investment. Goldman sachs reporting the highest annual earnings in three years. Underwriting revenue surging. A Big Bank Earnings day as citigroup reports profits that ms. Even the lowest wall street estimates. Bond trading slumped as did forex. Best buy down as well as much as 31 . Sales lower dreamy allimportant holiday season. Last year, shares more than tripled. In the latest collision of private equity and retail, chuck e cheese, home of pizza and ski ball agreed to a eye out by apollo grow by apollo gold. You have signature and restaurants posted 600. We bring in our chickie cheese kelly,t expert, jason highest ski ball scorer out there. Hes also the author of the new tycoons. At first glance, this seems like a classic pe deal. It is struggling and it becomes the white knight. I has spent more time than i care to admit in chickie cheese. Its quite an experience. This is a classic private equity deal. Chucky cheese has fallen on hard times and these companies tend to be very tracked to Consumer Sentiments will stop they host a lot of birthday parties and those are the things that get cut when a family may be feeling a squeeze during a down economy. These are the type of things apollo likes. ,hey like the stress type deals even a little distressed to go in and buy at the trough and fix it and sell at a couple of years later. What is apollo going to be able to do with chucky cheese . Itsthese are just not as if apollo owning that franchise is going to change anything. We will see exactly what they do. As much as we talk about these billionaire owners of hybrid equity firms, we dont associate them with pizza. But he to has been a fairly profitable business historically for ivan equity. Week, ppg bought a number of papa johns franchises. While the entertainment piece may need a little goosing in the economy, this is clearly something that as the economy rebounds, apollo may be able to invest. We heard from chucky cheese today that they are planning an expansion with 15 new stores throughout the country this year alone. Already. More than 500 you cant pass a strip mall without seeing that familiar road and, as it were. Thank you very much. Tune into street smart today. The founder of chucky cheese will be on. That conversation comes your way at 4 00. Were going to move from private equity to hedge funds. A global Consulting Firm has contact with more than 2000 Institutional Investors with more on what he sees ahead. Great to see you. I know you continue to see these inflows to the industry from Institutional Investors. Which strategies are getting the most new capital . The strategy that got the is longital in 2013 short equity. Long short equity has three things going for it. In 2013 for the first time, fundamentals mattered. Thing they have going for them is a number of other strategies that have done well benefiting from falling Interest Rates, tightening spreads, are still an important part of peoples work folio. They are beginning to put money