Follow me on twitter. And power lunch begins right now. Halftime is over. Power lunch and the second half of the trading day starts right now. An unhedged hour of power lunch. An hour filled with breaking news. In 30 minutes time we expect president obama to name jacob lew to replace Timothy Geithner. It the white house really getting serious on gun control . Under way right now, Vice President biden, at the chairs seat. We should have answered very soon. And new rules on mortgages. Being announced today. We will highlight changes and explain how they could affect you. First though, sue at the new york stock exchange. Sue . Ty, as you mentioned, president obama will announce jack lew as his nominee for secretary of treasurer. He staffers believe it will be approved. Analyst say the president s pick is a sign he will move forward with planned Economic Reforms and do so aggressively. Mr. Lew served as coo of nyu and worked at citigroup and served as White House Office of management and budget chief and is currently white house chief of staff. Apparently job one will be to work with congress to raise the Borrowing Limit and prevent default that could come as soon as next month. The announcement is at 1 30 p. M. Eastern time. Stay with power lunch. We will take you inside the white house for all the details. Ty, back to you. Very interesting. Now, of course, another major event at the wlohite house. Taking place right now. Vice president bidens task force making a change in the way americans buy, sell and potentially use firearms. Eamon javers live at the white house. Eamon . There are some that biden himself might not participate in. We just heard from the vice prest as he emerged from his first meeting of the day and he gives us a sense of how fast this process is moving along. There is no conclusion that ive reached and with my colleagues, im putting together a series of recommendations for the president that he will take a look at and a very tight window to do this. I committed to him i would have his recommendations to him by tuesday. A couple of other groups invited to the white house complex. Including retailers. The biggest on that list walmart. But also look at others who will be here, including air cad my sports and outdoors. Bass pro shops, cabelas, dicks sporting goods, and gander mountain. Other sm of the folks there, brandon entertainment llc. Cam cost corporation, a parent of this network. Motion picture association of america and a few others there as well to talk about violence in the culture. So tyler, clearly, a very busy day here and those folks dont have a whole lot of time to get their message through to the administration. Because you as you heard the Vice President say, he will give his recommendations to the president on tuesday, tyler . Eamon javers, two questiones. Where, if at all, does Mental Health figure into the discussions. And secondly, there were some reports that had been circulating in recent days that the president might do something unilaterally that would not necessarily involve legislation involving congress. Right. On Mental Health, we just dont know where the Vice President will come down on that one. But we do know that Vice President said that universal background checks are a key element of all of this. Tyler . Thank you very much, eamon javers, we appreciate it. Sue, down to you. Breaking news in the bond market. We have another bond auction up for grabs. And Rick Santelli is tracking action at cme. This is 30year today, ricky, how did it go . First of all, i love 30 dpsh year options. Furtherest down the curve. This is an a minus best of the bunch. Best of breed this week for 66 billion. Lets go through the metrics. Ultimate yield is 3. 07. Wi mark set 309 bid offer at 308, split the difference, 3. 08 and three quarters. 3. 07 were priced lower yield. Higher price sought after. If you look at the bid, we are above the average at 2. 77. Indirects above average app 37. 8 and directs at 16. 7 doesnt show the intensity of some of the direct bidding and all maturities over the last month but still beats 15 . Ten auction average, solid auction, maybe a bit of the down tick pushing yields up. Whatever it is, every auction should have demand as good as this one. Back to you, sue or ty tyler, it is all yours. Rick, thank you very much. Herbalife stepping up. Last month a few big funds jumped in on the other side of the trade since ackmans presentation. Since then, the stock is actually up by 5 . Interesting course for the stock today. Which im sure we will hear about. Herbalifes Ceo Michael Johnson defending the company in front of analyst today in new york and kelly spoke with him very interestingly on cnbc one hour ago. Kate . Tyler, thanks so much. Very interesting morning here in terms of herbalifes defense in charges against bill ackman. Among other things they are a pyramid scheme. They spent about two hours speaking to investors. As well as take something q and a afterwards. I just want to give you the highlight of the latter part of the presentation, which is bring flg a consult front Northwestern University who defended the pyramid scheme allegations in particular. She talked about a lot of people getting into herbalife sales because they want to get into the product themselves. They want it receive a discount. This self consumption as they call it is perfectly legitimate. She also talked about the notion of inventory loading, which is to say the distributors, who also buy the product themselves, will buy extra product because they intend to sell it to customers in the future. That might distort the sense of sales. They are future sales, not real ones. She said this does not go on. These are two examples of their defense. Moreover, i talked to Michael Johnson about an assertion he made on our air december 19th be, the day the ackman short was first revealed by us. He said that day that 90 of sales occurred outside of herbalifes traditional distribution network. Today he backed off of that calling it a misstatement. Here is what he told us, that he doesnt know very much about the statistics on this. Lets take a listen. We know who we sell to. We do not know who they sell to. And theres nothing wrong with the way we do our business. There is absolutely nothing wrong with it. Obviously tyler, he denies there are pyramid scheme. I asked him further about what is at the heart of your company. He said product. I pushed him further. Is it sales, royalties, but that is the central tenant after pyramid scheme that the distribution element is more important than the sales. And he said, tyler, sales. Sales are the only way you get paid at herbalife. The only way can you make earnings as a distributor. Interesting conversation. Can you see it on cnbc. Thank you very much. You can also check out on cnbc. Com, cnbc investigations inc. , selling of the american dream. Herb greenburgs full report on multilevel marketing an herbalife, including the full documentary and complete mix of stories. Find it online at selling the dream. Cnbc. Com. Sue . Ty, they arent selling today on markets. Lets look at how things are shaping up. Dow jones is up about 40 points or so. And the nasdaq has been in positive territory as well. Right now we have the dow up about 40. Nasdaq is up one point. So skimming the unchanged line and saip s p 5 lun is up about 5 2 3. We are heading closer to the heart of the earnings season. And only about 5 spers reported but that is not stopping us from making observations. I just got off the phone of the head of research. He is a long time earnings watcher. He is encouraged so far. It is only about 25 of the 500 at the s p. Oracle for example, put them up there for me. All of them have reported their numbers and they were pretty encouraging so far. Here is what i like, sue, the good news. Number one, put that screen up there. Record profits and likely the Third Quarter will be the trough for earnings. Here is the bad news. No top line growth. Still, how long have we been waiting for this. I think the fiscal cliff did have the and i want this answered. Are ceos showing signs they will spend more. They are sitting on a mountain of cash. Do they increase Capital Expenditures now that some part of the fiscal cliff is still involved . The other issue is that some companies have guided lower and lowered expectations. So my question is whether or not you can actually call these a win if indeed well, thats what you are hearing back here, you know. Sue and i have been doing this for 20 years. This has been going on since the dawn of time. You lowered the numbers going into it and an analysts are complicit with you doing that. Then you beat by a few percentage points. For example, gains in s p 500 in the beginning of october for the fourth quarter. Now down to 3 . And likely beat by about three points. Usually three more percentage points. We know this is a very old game at this point. We just want to put it out there so Everybody Knows what is going on. Thanks. See you later. Ty, back to you. Sue, thank you. Average rates on fixed mortgages rising last week to 3. 4 . Still, though, near record lows. This has major new rules coming into the picture regarding mortgages under the usa. Diana is live with details in washington. Diana . Reporter thats right, tyler. Lenders are now required to insure that a borrower can pay off their loan. And the rules announced today are really just a roadmap to that end. They go into effect next year. Take a look. Lenders must now check everything. No more low doc or no doc loans. There is no excess upfront points and feees. That is capped at 3 of the loan. That includes those to compensate Loan Officers and brokers. No toxic loan features such as terms over 30 years. Interest only loans. Negative amor toization payment where the interest goes up. There a cap on how much a borrowers gross income can go to debt. 43 . Thats the limit. Mortgage and related charges like insurance and taxes. Plus your debt payments like credit cards, car loans and student loans. There is a temporary exception to that last one for certain borrows that pass fanny, freddy or hfhahfha underwriting. Now to jane for more. Tyler, it may be a miracle. Governor brown is releasing his budget for the upcoming year. He is saying for the First Time Since the recession, california faces no budget deficit. His new spending plan calls for small increases in education to fund a budget of 97. 7 billion. Even though he expects it to cost the state in the coming year. He has suggestions in how they can do that. Im not quite sure how he says it face knows budget deficit. Because according to the latest numbers, ty, from the controllers office, which came out last week, california, as of december 31st, had a cash deficit totaling 24. 2 billion, which was cover bed borrowing. So the controller said the debt is 24. 2 billion. The governor says no deficit for the First Time Since the recession. Is this his budget for fiscal year . Excuse me, jane. Is this his budget for fiscal year 2013 . And when does that start . Does it start july 1 . Starts july 1st, yes. He is now presenting his budget starting july 1. Jane, i tell you, im stunned. Yeah. It doesnt make any sense given the numbers youve been following so closely for the past few years. Im anxious to see how they did it. Are you as surprised as i am . I am anxious too. And thrilled if its true. You know, the votes of california did pass an income tax hike for the higher end, which at the very high end goes up to 13. 3 . Also sales tax hike which is retroactive to january 1st of a this year. But we will have to see if thats enough to erase what the controller says is 24 billion deficit. Maybe i know youre going to reach out to controllers, so it is interesting to see what he says and whether those numbers gel. Listen, lets hope its the case. It is a huge economic stake for the country. If they can erase that budget deficit, good for them. We will find out. Keep following the story here on power lunch. Welcome news for ford shareholders. The auto maker is doubling its Quarterly Dividend to 10 cents a share. Highest in seven years. Reflecting strong sales and healthy balance sheet. First quarter payout will cost the company about 370 million. Shares of ford are up on the day by almost 2. 5 . Last trade is 13. 80. While ford shares are jumping, one highend retailer is taking it on the chin on the back of its latest sales figures. Well talk about that, plus why investors are dialling into a beaten down telecom stock. It is up double digits right now. Having its best day under more than a decade. We will tell you when it is when tyler and i return on power lunch. At 1 45, the aflac duck was brought in with multiple lacerations to the wing and a fractured beak. Surgery was successful, but he will be in a cast until it is fully healed, possibly several months. So, if the duck isnt able to work, how will he pay for his Living Expenses . Aflac. Like his rent and car payments . Aflac. What about gas and groceries . Aflac. Cell phone . Aflac, but i doubt hell be using his phone for quite a while cause like i said, he has a fractured beak. [ male announcer ] send the aflac duck a getwell card at getwellduck. Com. I am probably going to the gas station about once a month. Last time i was at a gas station was about. I would say. Two months ago. I very rarely put gas in my chevy volt. I go to the gas station such a small amount that i forget how to put gas in my car. [ male announcer ] and its not just these owners giving the volt high praise. Volt received the j. D. Power and associates appeal award two years in a row. President obama getting ready to name his choice for treasury secretary. We will hit it live in about 15 minutes. And see why some are so concerned about the choice and it has nothing to do with his squigly signature, sue. Indeed, it does not, ty. It has been a tough day for shareholders right now down at 60. 50. After holiday sales came in at the low end of expectations. It was 992 plilon worldwide. U. S. Same store sales were the weakest dropping 2 p european sales were flat. Asia was a bright spot with comparable sales increasing 7 . Tiffany now saying its annual earnings will come in at the low end of its previous guidance and the street is punishing it for that today, ty. Thank pup teen retailers, reporting holiday sales figures and here is how they are tried trading right now. Here is a look. Courtney reagan is on the retail beat. Court . As with teens, the stocks can be a little fickle. Three releasing holiday results today. Each tell a different story. The teen retailer lowering its quarterly guidance. Competitor American Eagle reports sales improving by 5 , including Online Business but excludeing ecommerce. The retailer reiterating its Quarterly Earnings forecast all the same. As silver lining, Robert Hanssen notes business accelerated post christmas and seeing good response to sprint merchandise. Shares of Urban Outfitters trading at alltime highs as sales including online increased 9 for the holidays. So brick and mortar comp sales decrease 1 . It does remain a favorite. Court flee, thank you very much. Appreciate it. Sue, down to you. Thank you very much, ty. It is a pretty exciting day here at cnbc. Tune in to us at 1 00 p. M. Tyler and myself of course, but we can be in your bedroom much se sooner apparently. Take a loosen. Im sue when herrera. Thanks for letting c fl nbc be wake up call. Hi, this is cnbcs tyler mathisen. How will you play your day today . No matter what you do, make it a great one. An alarm clock app we think you should get it. Download it. I can see people saying all around the country, honey, nothing against you, i just want it wake up with sue herera. Well, well, well. There you go, ladies and gentlemen. We have about ten versions of that. There are a lot of Different Things can you download. Oh, yes, lots of versions you will never hear. Thats true. There are. Get the cnbc app, everybody. All in good fun. You will enjoy it. Is fun, actually. We add good time doing it. I think im plushing. Anyway, winner is, oscar nominationes. There were two clear winners. We will have it for you when we return. 2012 nominees for best performance by an actress. What . Nothing. Are you stealing our Daughters School supplies and taking them to work . No, i was just looking for my stapler and my. This thing. I save money by using fedex ground and buy my own supplies. Thats a great idea. Im going to go. We got clients in today. [ male announcer ] save on ground shipping at fedex office. [ male announcer ] save on ground shipping we replaced people with a machine. R, what . Customers didnt like it. So why do banks do it . Hello . Hello . if your bank doesnt let you talk to a real person 24 7, you need an ally. Hello . Ally bank. Money needs an ally. Big movies and big business. Steve ep spielburgs lincoln leads the oscar race. Foxs life of pi, right behind. It got 11 nods. 329 million at the box office. Silver linings play book and les miserable from universal studios, part of the comcast family. Ticket sales of 147 million respectively. Rounding out the top five, argo, Warner Brothers film, directed by ben affleck. Who i dont believe got a nomination. A Box Office Haul of 176 million. Here is how studios are training. News corps up a little bit. Comcast basically flat and time warner the same up well, it is unchanged right now, sue . Ty, thank you. Lets recap other headlines driving todays session. Nokia on strong surge sales. The company did warn that competitive environment though remains challenging. Molly corp plummeting after 2013 revenue and case flows would be weaker than expected due to falling rare earth prices. And super value, which has been in the news lately, says it plans to sell five Retail Grocery clans to an investor group. The price tag, 3. 3 billion. As we continue on power lunch we are waiting for president obama to set to name the white house chief of staff jack lew as new treasury chief. But there are