A body mass index or bmi of at least 18. 5. Okay. And with that were going to end this show. Thanks for watching. Hi, everybody. Good afternoon. Were into the final stretch. Welcome to the closing bell. Im Maria Bartiromo at the new york stock exchange. A bit of green on the screen today after two Straight Days in the red, scott. Good to see you again. Im scott wapner in for bill griffith. On top of these markets plus a whole lot more including the imminent nomination of jack lew as treasury secretary may mean to the debt ceiling fight. Well previau Bank Earnings which are about to kick o. Those more than anything else could drive the markets in the coming weeks and aig will not join in former chief Hank Greenbergs lawsuit against the same u. S. Taxpayers that bailed the company out. Aig ceo bob benmoschy will be here. First take a look at the markets. What were seeing is we have the markets higher though its well off the highs. Up 90 points on the dow industrials and were up 34 points on the Dow Jones Industrial average, 13,363 and the last trade on nasdaq has given up some of the oomph of earlier and the Standard Poors 500 has a similar chart pattern with a gain on the session of just 1. 5 point, eking out positive territory. Gentlemen, good to see you. Thanks so much for spending the time. Hi, maria. How are you . Lets talk about this market because you certainly have a fair amount of issues that could seem troubling, and yet we continue to see money finding a home in equities. What do you think is behind that . If you look over the last five months, youve had a huge riskon rally. A lot of Economic Indicators have turned up. The, revisions news has become less bad, and theres a lot of Hope Associated with stimulus in china. Monetary policy in japan, et cetera, and so as a result of this improvement you have seen a lot of optimism and a lot of movements in the stocks. As we look over the next two or three months though, i do expect somewhat of a pullback as i expect earnings season to be somewhat more cautious than investors expect, though the markets should rally beyond the end of the year through that. Bill, youre managing money so where are you putting it . I right now i like stocks that i can see visibility, and which is hard, but i think the earnings season is going to be muted because i think people are concerned about the near term so we look at areas where we can see visibility and airline stocks, an area we like for a while. Continue to like it. Planes are full, fuel costs going down, ancillary charges and raising revenues for those guys so we like that group a lot. Healthy living group, we like a lot, supplements and organic food, and actually were starting to move a little out of software and more into hardware because we do think spend will go pick up in 2013 so the telecom equipment, enterprise stocks, i think they will do pretty well in 2013 as well, but i would agree with vadeem over the next few weeks you will see consolidation. You have to be patient. What do you see out there on the trading desks of the floor today . Are you seeing conviction to the buy side . How do you see things . Perhaps well take a note from a pricely fairly large secondary offering this evening rand a slew of ipos so calendar in syndicate land says these are rich prices arksz good time to raise capital or sell shares and bring our companies public. Thats perhaps a leading indicator to where they see the market going, stabilizing here or peeling back a little bit. A lot of volatility in sickle names. Youve seen all the names that come out of the mccondo settlements, bp and anadarko both on the horizon after the settlement with transocean and herbalife, dan lobe throwing in his support of the company who has an investor day where he basically supports the company and opposes oftentimes a colleague of his on some activist names in mr. Ackman, so that poses a lot of volatility or sets the stage for a lot of volatility in a single name. Jeff, weve seen some money coming out of mutual funds and going into etfs. Investors are getting more involved or trying to. Is that bearish or bull strategic defense initiative. I think its bearish, and its bearish from a contrarian standpoint so to kind of get back on this drum beat of the complacency and kind of the overdone enthusiasm. A couple of the things weve seen, a big rise in margin debt. Thats the highest its been postcrisis. Weve seen hedge funds at their net longs, twoyear high there, and as you say the etf flows showing really strong level of bullishness from investors that i think is getting excessive, going to be a contrarian bearish indicator. For the short term, agree with a lot of what vadeem said. Out on the streets going to some 2013 outlook conferences with media, and the two things that i heard over and over were real estate, wall street making a big bet on real estate. I like it, i think its a good bet, and also the multinationals. Like whats happening as far as the materials stocks go. Look at that for a good entry point as i do think we go into a period of consolidation. Those dividend payers are certainly breathing a sigh of relief given where the law ended up on that fiscal cliff deal. Let me ask you, bill. Small caps versus large caps. Do you need the large caps to go up in order for the small caps that you own to follow suit, or do you think the small caps can do well regardless . I think small caps will do well regardless. I do think, you think about the big themes for 2013 that we expect to do well. Talking about the industrials. Hopefully tech getting better. These are areas where the Big Companies may be hard to get bigger but for the Small Companies they can do extremely well. One other point that was earningsed earlier about ipos. There is supply demand and balance here. As money comes back from bonds and other areas into the equity market, there isnt as much paper out there to buy, so theres going to be demand, and i think that would be positive, and then lastly the m a cycle. Talked very little m a activity last year. I think it will pick up 2013 which will clearly benefit small cap. The weakest year so far has been the highest first week for m a ever in the global economy. If m a picks up not like m a had a bad year in 2012. It wasnt, you know, stellar, but if m a, vadeem, can pick up a little bit more, that can be one of the positive cat lifts leading into the end to the middle of the year. Its one of the most significant indicators looking for value to the economic side of the economy. Just as a fun fact, the number of attractive lbo candidates in the market today is the highest since 1975 which was the advent of the highyield bonds, so the opportunitys clearly there. If we see capital commitment, thats a Huge Positive for the market. In terms of longer term, weve got this Earnings Period that seems to be a challenge according to many but longer term you say it will continue to find a home in stocks . Well, one of the key controversies of the market, the most base care scenario is that the Profit Margins will decline. We dont believe thats the case outside of a few industries that have been very aggressive capital spenders, so if you stay outside of the industries that have been slow aggressively invested in capital, i think margins can sustain which means stocks are cheap. Yeah. Goldman sachs was a no doubt this morning that kind of reflected a lot of what i think is the First Quarter is going to be rough, and because of things that we talked about before with the debt ceiling negotiations and the sequestration cuts and also a bumping earnings season, alcoa is nothing to brag about, and then we get through that and go through the end of the year and i think gains are backloaded. That was goldmans position. Makes sense. Whats your take on the Third Quarter, typically good because youve got the Holiday Spending but certainly a different kind of quarter with the dysfunction and the fiscal cliff and the uncertainty over the economy . When we saw the Third Quarter be reported, we saw a huge buildup of inventory in almost every region of the world. Everything ranging from commodities, to industrial equipment, to autos so Fourth Quarter, some of that inventory got worked through, but it probably has kept the profits down, maybe the margins are not going to be able to recover as quickly, and i think thats creating a little bit of risk to the current quarter. All right. Gentlemen, thanks very much. Great conversation. Appreciate your time. Lets get to bob pisani who has been following the market all day. Bob, what are you seeing right here . Were up but only half as much as we were in the dow industrial as an hour ago. Want to show you a few industries on the upanddown side. Danaher, a big company, works across many industries. Many companies raised their revenue guidance last night helping a lot of Companies LikeUnited Technologies and rockwell. Remember, alcoa was very bullish on china. That may be helping them as well. The disc drive companies are all to the upside and seagate came out and unexpectedly raised their revenue guidance. Thats helping all the companies. The two sectors on the downside are the bank stocks as well as some of the energy names. Remember, banks usually sell off, maria, after the earnings season starts, not as were going into it. Thats a little bit unusual. Keep an eye on that. Nat gas stocks on the downside, nat gas on a multimonth low. Maria, back to you. Breaking news right now. Lets get to Herb Greenberg on herbalife. Reporter a multitude of new angles on this story on herbalife, this just crossing. Dow jones reporting that the securities and Exchange Commission has opened an inquiry into herbalife. That doesnt mean anything is necessarily going to occur, but its an inquiry in the company. The stock on this news is down. Last i checked its down 4 , still coming down, as are other companies in the group. I want to point one thing out here, and a lot of times we talk about the federal trade commission. People ferg that the s. E. C. Itself can and has in the past probed multilevel marketing companies. Maria, back to you. Herb, thank you. Amazing timing that this happens on the same day that we find out that dan lobe takes a long position against bill ackmans short position, so you have this clash of the titans in the hedge fund world, and now the s. E. C. Staff opens a probe into herbalife. What do you think about this . I mean, youve got these two guys on totally different ends in terms of herbalife . I think i know youve covered it so much. Its just interesting in that they have, i guess look, i dont know that they have worked together in the past or what their relationship personally, is but they have both come out on such on the sit sides of the spectrum and publicly so. The fact that dan lobe released a letter today saying that the nothing of bill ackmans claim that herbalife is a pyramid scheme, has no merit. He used words like preposterous when describing some of the theories that bill ackman had in putting on his short position. Its rare that you have two Hedge Fund Guys as big as these guys are. Right. Go public. Yeah. Against each other with a fight on either side of the issue. Really interesting story. Yeah. Ill take a short break. All right. We do have 15 minutes before the closing bell. Take a look at where the dow currently sits, up plus 35 and the s p and nasdaq are in the green as well, just clinging on to slight gains. Interesting developments in washington. Just as the debt ceiling fight is heateding up, were getting a new treasury secretary. Tomorrow president obama expected to nominate white house chief of staff jack lew to replace tim geithner. Will that a make a deal on the debt easier or tougher . And Constellation Brands raising its estimates. The stock is one of the s ps top performers of the year. Not getting much of a bood boost at all though. Will this push the adult Beverage Company even higher . Dont miss our exclusive with the companys ceo, rob sands. Thats coming up. And aigs board declining to join a controversial shareholder lawsuit against the government over the 1 will 2 billion bailout of the company. Ill get the inside story from the ceo of the company, Bob Benmosche joining me here exclusively in the 4 00 hour of the closing bell. Back in a moment. Curb. Make you a target for thieves . Or that dog bites account for a third of all home liability claims . What if you didnt know that one in seven drivers is uninsured . And that grease fires have to be smothered . The more you know, the better you can plan for whats ahead. Get smarter about your insurance. We are farmers bum pa dum, bum bum bum bum [ male announcer ] staples is the numberone Office Superstore ink retailer in america. Now get 6 back in staples rewards for every ink cartridge you recycle when you spend 50 on hp ink. Staples. That was easy. Welcome back. President obama expected to nominate his chief of staff, jack lew, to replace treasury secretary timothy geithner. Thats expected tomorrow. Its a big move at a time when the white house is about to enter a showdown with congress over raising the countrys debt ceiling, so how does tim pact that battle with lew substituting for geithner as the main player . Steve liesman and Rick Santelli tell us what they think it all means. Steve, you first. You recently did, as you know that great interview with tim geithner right here on the closing bell. How well do you know lew . Not as well. He was at omb for a brief time, a couple years in this administration, his second goround there. Look, were learning more about him, and i dont think theres very much mystery here. He would be picked for the job because hes a budget expert, and that also hes a loyalist inside the Obama Administration and in a place that values loyalty like a lot of white houses, and the question becomes does he have other critical qualifications that say wall street or the International Banking and Financial System would require, with the big question being, you know, if we were at a place where there was another financial crisis, how well would jack lew, as did robert ruben, hank paulsen and tim geithner do to instill confidence . Steve, you were right on the money with the jack lew prediction. You and i had this conversation, but i just wonder, you know, theres this antagonistic relationship between the white house and business. Right. There were a handful of business guys in the mix that wanted the job. Larry fink. Would it be sort of better as a perception from the market or perception of business to put a business guy in there to help the relationship, help the togetherness of business in washington so we actually get some job creation going . Whats your take on this choice . I dont disagree with the signal that could have been sent had somebody else been chosen. Exactly. No doubt about that. It could have been an olive branch to the business community. I think thats for sure, and president obama did have several candidates who he could have chosen from in that regard. Right. So i think thats very important, but i think right now president obama says, you know what . Ive got a problem with congress. Ive got a problem with the debt ceiling. Let me pick a guy who almost all sides agree is one of the foremost experts when it comes to the budget. Rick, what do you think . Jump in here. Well, you know, carlton college, harvard, 73 and a to tip oneill, a former lifer bureaucrat here. Instead of someone like a jamie dimon, and i think steve is absolutely right. I dont think theres a human being on the planet who knows the current budget and its issues better than jack lew which is exactly the reason i would say hes absolutely not my first choice for the job or the fifth guy in line to be president should anything happen to the other four because i think hes going to have a parental relationship, so to speak, with the budget and its process in trying to change it, and i think that that paternal instinct is going to be defending it versus, you know, actually trying to make a difference. Looking at the budget even though we technically havent had one. Weve had continuing resolutions. I think we need someone that will look at frankenstein monster called the budget and not stick up for it but pick it apart. Rick, you know, i dont think anybody in their right mind would argue for a second that a guy like jamie dimon wouldnt be the right, the qualified, the good messagesending pick. I dont think jamie dimon would take the job, by the way. James owe dimon would last about three days in that job. But it would be a pick nonetheless i think everybody underneath him would last three days, thats what i think. Possibly, possibly. My point in asking the question is certainly that would be cheered in places like where maria and i are sitting right now here at new york stock exchange, but on the flip side that are those who would say president bush 43, you know, not like paul oneill or john snow were exactly greeted as the greatest treasury secretaries. They werent. In the history of the country. Hank paulsen dealt with some serious issues. I want to underscore that, there is this notion that somehow if you put an executive in a government job it will be much better. Thats my point. I think thats a great point. William daly didnt do terrific there. There are guys who are good at government because they need to be good at government. That does not counter what rick is talking about that we need fresh brains, fresh ideas, fresh personalities. All of that is true. Just to point out that a lot of executives have come into government and not prospered. Thats in no way to disparage either of those gentlemen at all, its just that there are many people on many sides that say that doesnt automatically qualify you to be an acceptable and wellperforming treasury secretary. Seriously, if we look at the litany of treasury secretaries over the last 25 years, really the job is kind of being a cheerleader for the president. Im sorry if that sounds crass or not. Absolutely. And thats not what we need, and i guess