index and the xlv which is the health care select sector. biggest winner in the group, arcadia pharma, up 6 boston, almost 300% this year. ty? >> does look like this little rally has some traction, unlike yesterday, moving a little bit higher as we go through the day. that does it for "power lunch." >> "street signs" begins now. ♪ silver and gold, silver and gold ♪ >> you know burl ives had it right, silver and gold are your top stories as the metals melt down like frosty in a heat wave. is there any bottom in sight in the conventional wisdom is that higher mortgage rates will hurt housing. we're going to show you why the conventional wisdom may be all wrong. plus, hear from a musician about what he says pandora's real royalties really amount to, and can an american company really do business in china, mandy? we're going to meet a ceo who recently moved most of his business back to america?

>> okay, brian. let's take a look at those markets. today could be the dow's 14th triple-digit move of the month. however, folks, the major averages are still on track for their first lose month of 2013. let get straight out to josh lipton at the nyse and rick santelli at the cme. yesterday we rallied on good economic news. today it seems like we're kind of rallying on bad economic news. can you explain all of this to me. >> well, you look at a dow right now, up triple digits, talk to strategists and traders. a lot will pin this green on central bankers and policy-makers who have been active. doing a lot of talking from china and europe and out to a lot of calming words and can you see the blue chips up 147. if you look at the s&p 500 and the benchmark gauge, you'll actually see a mix of defensives and cyclicals and you'll see financials gaining, materials and energy pacing and let's look at commodity funds so i know you'll be talking about gold and

for good reason, finishing at a three-year load. gdx miners, down 50%, silver miners, copper and steel. want to end here on the emerging markets. a lot of these markets recently have tanked. showing some pop, philippines, indonesia, thailand and turkey. brian, back to you. >> i'm going to pick it up from there. thanks so much, jellyfish lipton. rick santelli out at the cme. believe we have a pretty soft five-year note auction. what's that telling us? >> soft auction. i'll tell you what it's telling you. the direct bidding, you know, kind of large entities like central banks. we've seen that component in many auctions now getting much weaker. about a year ago it was unbelievably strong. i think that potentially as we get treasury international capital flow data which comes out usually beginning of every month, that it may show a less aggressive foreign buying, maybe by central banks or by china, but that is going to be very

key. we know that the treasury held by the fed is a big block, and there's a big cushion there, but as you can see, by all the charts, as much as stocks are buying into the line and all the fed talk, there's a certain testiness about interest rates that still haven't conformed and, yes, on week data the rates went down this morning, but it seems as though the stock market is at least winning on the talk side of the fed, what do they call it down here, open mouth operations. >> rick, on a different note, i've had a few market watchers, guys that i trust in the market kind of reaching to me saying, hey, man, why are you looking at treasuries so much? you need to be looking at the high yield market. that's more of a proxy. what's your take on that? >> listen, there's been many people. jim cramer said anybody who participated in the run for all of these crazy yields, they are morons. i'm not saying i disagree, but the people that create the the strategy to force the trader

into that position, what would we call them? so we're correct. high yield is really showing the cracks because in the end if money is cheap and you buy anything to get yield there's a comeuppance period. we're even seeing some of that lingering in treasuries. >> rick santelli, thank you very much. appreciate it as always. >> your top stories, metals in full meltdown mode. gold down 26% per. by the way, on track for its worst quarter on report. silver even worse, down a whopping 39% year to date. peter schiff ceo , my take is nt why gold collapsed off its highs but should gold ever have been 19 bucks an ounce in the first place? >> you have speculative longs getting out, speculative shorts getting in, but i think

everybody is operating under a false narrative and so gold is being mispriced. the u.s. economy is not recovering. we're entering back into a recession and might be in recession by the end of this year. >> how can you see it's not recovering? look at all the data prices. >> housing prices won't keep rights. they are about to roll over and make new post-bubble lows. the fed is not about the tightening. they will ease and do more qe and not less. i think when the market figures this out there's going to be a sharp reversal in the price of gold and people who are selling it now will have a big problem trying to buy it back. >> mike, to brian's earlier point, to what extent do you feel that gold has become overowned over the meltdown of 2008 and basically what we're seeing now is an unwind of all of that? >> yeah, that's pretty much straightforward, right? look, investors we know, human behavior drives most investing. we know people buy stuff when it's going up, and so look at the bubble period, enormous

amount of flows into the now easily available way to purchase gold, the etfs that are available. massive amounts of flows going into those and during the middle of the 2000s when equities were going nowhere. people were buying gold because it was going up. why are they telling now? because it's going down. to peter's point. new shorts are coming into this thing every day. it's clearly a favorite of hedge funds to be punishing gold. i'm not quite as negative on the economy and the outlook as he is, but, you know, we do think that gold is getting a little bit of speculative oversold here, but, you know, the problem with this, talking about behavior and people chasing prices, where's the bottom? really hard to say. >> where is the bottom, peter? how much does this have to go on until we get to a real reason to get back in? >> we know at $1,200 the majority of gold mines can't mine it profitably. gold is trading for less than the cost to produce it and in order to produce it you have to own a gold mine which is very

hard to do so the price of gold can't stay down here for a long period of time because the gold mining companies will shut down and there will be no supply so i don't know exactly -- >> i push back a little bit on that, pete. heard that 1,200 bucks thrown around. listen, i get it, but what i don't understand is why did any gold miner produce any gold at all before gold hit 1,200 bucks an ounce, and they did, so the price of gold production has either gone way up which means it can go down again, or that number is not true. >> no, remember. there's been a lot of inflation that the government doesn't want to acknowledge but you can see it in the cost of mining. meanwhile, look at crude oil prices, still at $95 a barrel. i mean, if you look at the gold-oil relationship, gold is extremely cheap relative to oil. the cost of mining has gone way up. i don't even think the price of gold has kept up with it because there's so much more inflation in the pipeline than is generally perceived. but, you know, again, there's an

expression in poker, don't count your chips while you're still sitting at the table. a lot of gold shorts that think they are making a lot of money, let's see how much money they have made when they actually cover because i think when the traders figure out the true predicament that we're in and that the fed is in and how much more money is going to be printed i think gold can rise even faster than it fell. >> heard the inflation argument many, many times, jim rogers has said we'll get a waffle inflation because of all the central bank money printing. we just haven't had it. don't you think the inflation argument for gold is getting old? >> no. we've had inflation. we haven't had hyper inflation. >> mike first and then peter, you can get a word in. >> part of the reason why gold went up, the anticipation of inflation that frankly isn't coming and hasn't come and probably won't come, right? at least not for the foreseeable investable future. the unemployment, the job problem is going to continue to create downward pressure on

prize around the globe. this is a ---ins a 1970s argument that's not valid in today's world. that's why interest rates are at secular lows, even up from the very low levels. this is -- gold does well in a negative interest rate environment. interest rates are clearly turning slightly more positive, another reason why gold is going down. look, the -- the big elephant in the room is the central governments that own gold, and they can jerk this thing around any way they want, so is it beyond reason to think that they are manipulating the price of gold to keep people into the equity markets, won't surprise me a bit? >> really, it wouldn't, because those things are going around, mike. people are talking about it. are central banks manipulating the price and conspiracy blogs throwing this stuff up. how about the fact that it's darn easy to sell gold these days because it's not just a wheelbarrow in a safety deposit box? it's a piece of paper and a computer transaction? >> why would it surprise you that they manipulate the price

of gold when they clearly manipulate the price of the bond market every day, right? it doesn't take a huge leap of lodge take say that. again, i'm not a conspiracy theorists, i'm not a gold bug and don't have any particular dog in this fight here, but the point is that -- that they are the largest owners of gold in the planet collectively, and if they -- if they decide that they want the price of gold to go down because it's gotten too expensive, want to chase people into the equity markets as they have been doing with fixed income, they can. it's not too complicated. >> meanwhile, let me get a point in here about inflation. >> peter? >> inflation is by definition an increase of supply and money and credit. that's what the central banks are doing. they are inflating and creating inflation, and you're not seeing falling consumer prices. people might want to talk about it, but actually speak to people who shop, who actually go to stores. the prices for the things that we buy are going up. now maybe real estate prices -- >> that's just not true. >> no, it is true.

you know, i talk to people every say. >> when is the last time you bought a mother, pensive television? >> excuse me? >> when was the last time you bought a more expensive television? >> well, i don't buy televisions every day, but i'll tell you, the television sets that people buy, you know, they don't last as long as they used, to but it's not the television sets. that's -- that's technology that's bringing prices down. television sets would be even cheaper if the government wasn't printing all this money. that doesn't mean there's nine flakes. >> fair enough. the cost of living of living is going up, but it's going to skyrocket, but you can't wait until inflation is running out of control until it's 40%, 50%, 100% a year to do something about it. when nixon imposed wage and price controls which i think was wrong, the cpi was going at 4% a year. if we measured inflation today the way it was done when nixon was president, it's more than 4% a year. >> guys, and i don't want to get into some wonky inflation argument. for that we need to bring in steve liesman and nobody wants to do that.

mike, a quick question for you before we wrap it up which is this. >> sure. >> whatever the reason gold is being sold, we know it's being sold. people are pulling in cash, bonds are being sold. people are pulling in cash. where is that money going? >> well, a lot of the money isn't going anywhere. >> go ahead, mike. >> it's just -- part of the money is staying in cash. we're in an unsettled time. people are trying to find places that are going to be -- that are going to be stable. i do think that equity prices are going to continue. equities will continue to see inflows because they have been going up. it's really about that -- that simple. you know, we've seen global equity prices fall substantially, particularly emerging markets, but i do think u.s. equity prices will still get supported as we're seeing yesterday and today so i do think some of the money is leaking into equity markets and also into real estate over the last -- well, we know what prices have done over the last year and real estate in general, both housing and commercial real

estate so part of that is where it's going. i -- i think everybody makes a different decision but we know it's out of gold. >> peter, very quickly, bottom line, as gold has been going down and you've been continuing to say buy, buy, buy, any clients called you up and like blasted you for this and said you've been making -- making this call and losing money? >> look, i've been telling my clients to buy gold since it was under 3 hub. i don't have a crystal ball on the corrections, but i think it's the clients and the brokers who have been telling their clients not to buy gold since it was under 300. they are the stop clocks. get a correction and now they come out and say, see, we were right. this is not the end of the bull market on gold, so when gold makes a new high, i'd like to see you guys bring out all the nay sayers and ask them what they are telling their clients, who they told not to buy gold. >> we certainly l.peter, a good point. if you bought before 2010 you're still in the money. gold wasn't here until two years

ago. a good discussion, guys. thank you both very much. >> all right. on deck, some lenders are really now pushing adjustable rate mortgages again is this a big red flag for housing's comeback, and will higher rates really hurt housing? history says not. >> and later on pandora's royalty battle royale. we'll listen to the artist who says his song was streamed more than 1 million times on pandora and he only got 16 bucks. pandora's biggest critic is coming up on our show. (announcer) at scottrade, our clients trade and invest exactly how they want. with scottrade's online banking,

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well, it has been a very bullish time recently for housing, but here's a potential red flag. adjustable rate mortgages are coming back, and they are coming back in a big way. diana olick, you know what, a lot of people are talking about this, and the old adage of maybe history repeats itself and we never learn from our mistakes. >> reporter: well, that's right, mandy. don't even have to go further than our observe shops. "street signs" producer tells us she has gotten seven calls from quicken loans offering her adjustable rate mortgages. a.r.m.s do have lower rates and can be interest only. the rate on 309-year fixed surged to around 4.5%. lenders said they started seeing more request for more option

loan products. home prices are rising along with rates, and this has potential buyers watching every basis point >> for us over the last probably week or two we've seen our a.r.m. production double because folks are actually looking at it and saying to themselves i have a 30-year fixed rate that's gone up maybe to a 4.5% range and i can look at a seven-year or a ten-year adjustable that would have a half to three-quarters of a percent lower interest rate. >> now, california home buyer alicia deadericks has been working to buy a home quickly. a job move forced her and her family into a temporary rental just as rates and home prices began to spike. every penny counts and that means a riskier mortgage. >> ideally we would do a 30-year fixed but, you know, it's all going to be dependant on the end mortgage payment of what we can afford so we would have to look at an a.r.m. potentially if

rates continue to rise. >> reporter: record low fixed rates over the past several years pushed a.r.m.s back out of favor during the housing book. in 2006 they accounted for 36% of original nations, today, just 4.5%, and some home buyers are actually being forced into a.r.m.s right now because they signed contracts on homes before the rates started to spike, and now that they are getting to closing, they didn't have a lock, they need to get that lower rate. plenty more on this online. back to you, guys. >> diana, stick around here. how often, folks, do you hear if rates go up, housing is in trouble? you probably hear that a lot but is it true? maybe not. look at this. this is a chart of the 30-year fixed rate mortgage coming from the fed. the trend has been down for generations now but there's been times of rising rates, '93 to '95 and 5098 to 2000 and if you look at the median home price,

118 in '93 and guess what, prices magically went up even as rates did, too. joining us, ken rosen, chairman of rosen consulting group and what we're trying to prove with that graphic, and diana with us as well, not that rights rates don't dent us here or there, but to think that rising rates will automatically slow down house price gains is not only hyperbolistiy but according to the fed's own data and consensus data is wrong. >> people are switching now to adjustable rate mortgages, but i would advise very carefully against that. your rate is still very low by historic comparison. 4.5% is a low rate. we have a million people in the process of buying a home and if they can lock that 4.5%, that's pretty decent. the jump is because of the

ten-year chairman jump and mr. bernanke was badly miss represented at last week's news conference so i would be a little cautious about jumping into an adjustable rate because it adds more risk and you're stretching really far. >> the average retail investor might get a call from the bank or go into the bank looking for a loan and it's in the bank's best interest to sell them an adjustable rate mortgage, an a.r.m., from cnbc and following what rates are doing, hang on, not something i want to be do, but how many people will be sold by the bank to lower your monthly payment and this is a good thing for you? how many people will get screwed. >> the problem is the refinance ing ability five years down the road. they will get a short-term gain and taking big risk. my guess is that most people will continue to do the fixed

rate and a portion of them will do the a.r.m. and a portion will back out of market. they know they captain afford it so the initial response is to jump in and do it and september and october, these rates, these levels are rising, you're going to see a slowdown in sales and definitely a slowdown in price increases for sure. >> diana, let's go back. >> i think you're leaving something out of the equation. >> guys, let's take it back to the focus of the segment which is will higher rates necessarily hurt hougtsing and the fed's ow data says not? >> i'm misinterpreting a line going up rather than down. >> rates are still low, but housing is definitely by september, october and november, if we have the higher rates, we're going to see some slowdown. the price increase that we've, the 12% year over year, partly due to the mix effect. my guess is the rate of increase will slow down to a more sustainable 4%, 5%, 6% as we go through the fall. >> reporter: if i could jump in. what we're not putting into the

equation, one-third of home buyers right now are all cash so it doesn't matter what the rates do. that's what this market is doing. still have a lot of investors and still have a lot of regular home buyers who are using cash. on the other side when we look at the a.r.m.s, adjustable rate mortgages and say it's a danger zone because of what happened back in 2006, let's remember that underwriting today is nothing like it was in 2006, and for adjustable rate mortgages, banks are now extrapolating out seven, ten years, however long the a.r.m. to see the buyers. >> it's also the velocity which rates have been rising and obviously if there was a gradual rate rise. nonetheless, nonetheless, is there a tipping point considering that we have been now attuned to these historically low rates, even though it was like 18% back in

1980, a world away, but nonetheless, is there a tipping point at what point we'll really start to buy? >> fixed rate mortgages get over 5%, that will definitely have a fairly big impact, and i think up to 20% of the people in the market now will probably have to drop out. they can't really afford it and shouldn't encourage them to stretch too far. i've been an advocate of home purchase but never stretch too far. it's not worth it. >> i'm not trying to beat the dead horse, ken, but from 1998 to 2000, 30-year mortgage rates went high, but according to the census department, the median price of a home, looking at it right now, in 1998 was 152,000 and by the end of 1000 it was $169,000. prices went up even as rates went up. >> because underwriting went under because anybody could get a loan with putting nothing

down. that's 2000 and 04. >> end of that, 2003, 2004, when they started the products, no money done, the teaser rates, negative a.m.ization, a very different world which allowed you to buy more expensive homes. >> the economy for 1997 was very strong, had a boom economy and depends where we are on the job creation side. not all about interest rates, you're absolutely right. job growth is very important to the whole housing sector. >> lots of things in the discussion. thanks. >> a big warning for anybody using instagram. >> and later on, six days into hostage drama in china. we'll speak to another american boss who says this is the essential and not the norm. we're around the session highs.

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kids on instagram, pay attention closely to this sign of the times. a skweedish court has convicted two teenage girls of defamation for posting sexual insults about other young people on instagram. the court says the girl used an anonymous instagram account to post derogatory comments next to the pictures of 38 teenagers. the comments that were posted in december caused violent protests in the girls' hometown and sweden's second largest sitting, goth enburg. one was sentenced to juvenile detention and the other to community service. it goes somewhere anonymity doesn't count. >> that's a really good thing, account ability, finally. the public has three words for congress when it comes to the deficit. just deal with it t.steve liesman is here with some strong words in the all america survey. steve? >> our survey of 800 americans

all across the country, all income groups and regions find the appetite of dealing with the deficit on the rise. let's compare it to the last time we asked this question back in 2010 compared to 2010, 51% said do it now and 45% said wait until the economy improves and now you can see here, the improvement since june 2013. 60%, a nine-point gain and those who are saying wait until the economy improves declining from 45% to 31%. moving on, let's see who has that kind of support for the government. democrats, just around 45%. 80% of reason cans saying deal with it now. independents, a little more towards gop side on this than the democratic side. of a mann can americans, latinos, more towards the democratic side. how about the wealthy and low-income group and wealth saying deal with it now. less than 30,000, 40,000 saying deal with it now. something that might look

contradictory. on the debt ceiling, what is more concerning, back in june 2011 the big issue is not raising and defaulting, 49% said raising it but the deficit going up, so let's see what happened now and what you see here is that in june 2000, the idea of not raising and defulling it more concern. a plurality saying they are still concerned you'll raise the debt ceiling and not cut the deficit burr those numbers are getting a lot closer. a lot saying they don't know new. compared to the other chart and might say these things contradict each other but i think there is something you can make some sense of this. first thing people are saying deal with the deficit now, but i think what's happened over here is support-for-using the dent ceiling as a trigger for solving the deficit problem, that's what's going down. i don't know, guys, if we have that other chart. if not, i'll tell you what it says. if we do have. it asked what the real problem is with government, spending too much, 12%.

spending on the wrong things, 49% and about a third of the public saying it's both. you spend too much and you spend it on the wrong things. brian, can you read all about this survey online, cnbc.com. got a couple of stories on this, and you can look at the results yourself. overall people are a little more optimistic, and they are using that time to say you know what, deal with the deficit now, brian. >> you know when i said earlier we need to bring you in, but that's not what we wanted to do, i redact that. >> knew you didn't mean it. >> had a good time on "squawk box." >> i went like this and rick went like that. >> thank you. we're going to feel the love, not physically, but we'll have street talk coming up, and if you were a singer how much do you think you would get paid by pandora if your song that you wrote was played a million times, think about it? >> and paula deen on damage control, but is her brand already toast in the big money still is on the line. "street signs" is back in just a moment. clients are always learning more

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very quickly before we get to street talk. the dow currently up by 146 points, neither highs of the day and we've been having allotted of triple-digit moves, in fact, 14 so far this mon is kind of interesting. i think though on a monthly basis, all three averages still could potentially be on a losing streak. back to street talk and back to business. hitting five stock stories with a great big smile. southwest airlines with a downgrade. >> morgan stanley cutting to an underweight. shares up 30% so far this year. morgan stanley thinks other airline stocks will outperform. a bullish cycle for the industry and they note southwest 15% rejectioned return on investment capital targets, probably not attainable this week, a big hurdle next year. southwest, 10% off its 52 week

high. >> google with a buy. >> believes google well positioned and capitalized on what they call a strong ecosystem. android, google play and video, all that stuff on your phone and advertising revenue growth, very positive. going-up up 20% year to date but be a little careful. stock does trade at 25 times earnings. something to note. >> adobe systems getting an upgrade. >> upgraded to a buy from a hold. is it falling analysis what have their creative cloud model has been, they are shifting adobe's software from box to cloud. everything ask on the cloud, there is no cloud, what computing is today. my thesis. watch out adobe, trace at 41 times earnings a historically large valuation. >> and trying to find an under the radar movement for you. >> not too under the radar. >> back on the radar. >> so it's a touch screen maker for samsung, blackberry, htc,

seeing higher demand and raised the revenue outlook, yeah, better than expected sales, why revenues go up. sell more stuff so the under the radar move president, up 39%, off its recent high, mandy, but a nice pop today. >> meantime, pandora, the single qp" has been in the news a lot this week. today the company's stock was upgraded to an outperform by cowan and company and that stock is higher by just under 7%. joining us now is the analyst who made the call, john blackledge. also have with us david lowery, a singer, songwriter and i go tarrist who has been an outspoken critic of pandora's royalties policy. he'll join news a second. john what, prompted the upgrade? not going to bash your call, neutral for a while and stocks had a big run. why upgrade it now? >> really two key factors for the upgrade. firstly, rising audio advertising revenue. it's a bigger impact sooner than we expected.

the anal sift which did stemmed from comments that were made at a conference last month where it was said audio ad revenue greater than digital ad revenue in fiscal 2014, a pivot point in the model for pandora. they have been investing the last two years in building the infrastructure to take share from terrestrial radio. it's here now and it drove our numbers, we're expecting audio ad revenue of 240 million going to 1.8 billion by fiscal '19. three key drivers, rival listing hours and, number two, rights advertising spots, pandora's only doing two now per hour. that's going to seven over time which is still well below terrestrial radio and then also rising. >> got a question for you, john to. what degree is the launch of itunes radio going to eat

pandora's lunch? >> we did a lot of work on it and we're assuming a successful launch for itunes radio and we're expecting an 8% shift in fiscal '15 for pandora. itunes radio launching this fall so the 8% shift really doesn't have much of an impact on top line and actually it helps them with lower content costs with slightly lower hours than we had previously expected. >> john, thank you very much for joining us on "street signs." appreciate it. we'll see you soon. >> thank you. >> david lowry is joining us from richmond, virginia, might know him from cracker and camper van beethoven, songs played millions of times on pandora and the problem is what he's getting out of it is ridiculously low. big fan of both of your bands. how did you come up with the $16 number for the million-plus plays? >> that's just directly off my bmi royalty statement.

it lists very clearly that as a 40% songwriter, one of three songwriters on that song, as a 40% songwriter on that song i got $16.89 for, let me look at this. 1,159,000 plays. that's as a songwriter, okay. there are two different royalties. to be fair there's two different royalties, royalty for the per former and a royalty for the songwriter, but the songwriter is -- this is where the music business starts. you start with songs, and that works out to about .0000147 per stream for me as a songwriter, so that's -- we're talk iing thousands of a penny per stream. >> just to not look like we're

bashing pandora here. pandora did, by the way, i believe respond to you. being said that the calculations grossly understatement payments to songwriters. so what would you say back to pandora? >> well, i say that in my article. i note that i'm a 40% songwriter so actually pandora paid two and a half times more than that to all three songwriters, so that would be .000364 that was paid to songwriters so you're still talking three, a little more than 3/1,000 of a penny. you've got some pretty good -- >> an unsustainable amount.

does two and a half times count as more. >> the rates they pay were set by the organizations that represent songwriters and pub rischers. >> we're all walking into the middle of a conversation basically here. the reason i posted my songwriter royalties was because pandora's actually suing to lower those rates. they are suing azcap, maybe they are suing us to raise their rates. i haven't seen what they are suing us for, but they are suing to lower the rates. >> so where was -- where was music royalty before pandora came along? we know that concert ticket prices, at least to me as a guy who goes to a couple a year, have gone way up? >> for the top 1%. >> where was it before? i have no idea?

>> well, just to give you an exam. you know, i don't get played on the radio a whole lot anymore but i got $1,500, about $1,500 in royalties last quarter for the play of "low" on fairly small market stations and alternative -- not top 40 radio, on, you know, stations that don't have a huge market share. i got $1,500 from terrestrial radio last quarter for that. >> by the way, david, we have to go. i want to bring you back on soon because i think the conversation is going to progress because this is something that is not only impacting you, but also on the video side, streaming is changing everything, but i do want to say that "low" is probably one of my top ten running songs. fantastic song, don'tly serious >> thank you very much. >> now i'll stream it on pandora instead of putting it on my iphone every time i run, promise. >> david lowery, thanks for

joining us from richmond, virginia. still ahead owns signs, is this cook cooked? paula deen's deep fried damage control coming up. >> and later on, the real cost of doing business in china. we're going to hear more from that american businessman being held hostage by his workers over there. lots of things coming up on that story, but in the meantime, what's on top? bill griffith on the "closing bell." >> besides you, mandy. >> you don't know what's coming up on the show? >> i'll tell you. stocks rallying for a second straight day, so is the correction over, he asked, as quickly as it began? somebody here toys it is, and investors have no other alternative than stocks right now. also, what's with gold and the plunge there? proof that the economy is getting better, or has gold officially lost its safe haven appeal? look at both sides of those issues as you guys did and former enron exec andy fastow is back in the news. we'll hear from him and get

reaction from a pair of enron victims. mannedy is joining me. look forward to seeing you at the top of the hour on "closing bell." meantime, more "street signs" coming your way right after this. i'm thinking about china, brazil, india. the world's a big place. i want to be a part of it. ishares international etfs. emerging markets and single countries. find out why nine out of ten large professional investors choose ishares for their etfs. ishares by blackrock. call 1-800-ishares for a prospectus, which includes investment objectives, risks, charges and expenses. read and consider it carefully before investing. risk includes possible loss of principal. vo: i've always thought the best part about this country is that we get to create our future. you get to take ownership of the choices you make. the person you become. i've been around long enough to recognize the people who are out there owning it. the ones getting involved and staying engaged.

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southern cook paula deen after court documents revealed and deen publicly admitted to using a racial slur in her past. it has been tough for her corporate partners to ball isso at the moment and some indeed are choosing to sever their ties. well, courtney reagan is here to explain everything and also to give us an update on where we stand with this. >> yeah, you know that old staying, if you can't stand the heat, get out of kitchen, easier said than done for a woman who has built an empire out of hers. paula dean has had a week that no man of comfort food could fix. after cancelling an appearance on the "today" show last week, deen sat down with matt lauer me. >> would i have fired me? >> would i have fired me, knowing me, no. i'm very lucky in this aspect, matt. i'm so fortunate that so many of my partners that know who i am have decided to stand by me. qvc has not dropped me. >> they say they are weighing their options. >> well, there's only two that

has dropped me, and i am so very thankful for the partners that i have that believe in me. >> now the food net borque and smithfield froods two interview caesars entertainment says they won't renew their relationship with her four restaurants at four properties. many consumers support deen and they say they will boycott smithfield. a sales drop-off could put it in jeopardy. another number of licensing deals are evaluating what to do, including retailers like qvc, target, walmart, and macy's. she's offered numerous books and cookbooks, a bimonthly magazine. while the parties involved won't reveal the financial details of the deals, mpd estimates deen takes in $6.5 million annually for her retail and contract revenue. "forbes" estimates her net worth

to be $17 million, but that was before the controversy hit a boiling point. >> very interesting. we'll have to keep on watching how it develops. >> the cookbooks are number one on amazon right now. >> i know. a little controversy helping the sales. >> used the cloud computer. ooh, there it goes. up next, the real cost of doing business in china. [ male announcer ] with wells fargo advisors envision planning process, it's easy to follow the progress you're making

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it has been nearly a week since factory workers in china reportedly took chip starnes hostage. the reason? they think the factory's going to close, and they want generous severance packages. so is doing business in china really like the wild wild west? let us bring in professor lynn knight who taught in china for eight years. lynn, thank you very much for joining us on cnbc. what was your experience -- >> my pleasure. >> -- in china? is this a hard scenario for you to envision happening? >> well, actually, not. and i think one of the things that we do when we venture into china, we become very diplomatic because of the strain of doing the business with the communist government. and in doing so, we tend to

overlook some of the hardships that a lot of companies experience going in to china. and this situation in china currently does not surprise me at all. while i was there, on a daily basis, you will see not to the extreme, but you'll see situations like this occurring on a daily basis in china. and my prediction is that will probably increase over time. >> why do you say that? >> one, because of the -- >> aren't they supposed to be advanced, become more diplomatic, resorting less to tactics like this? >> well, i think that's the image that most media and also businesses would like the american public to believe. but in honesty, it goes the other direction. i'm a behaviorist, so one of the things i do is that i track patterns of behaviors. and the pattern of behavior, as long as i've been in china, has been going in this direction.

and then, you consider the influences that are driving those behaviors, and then you can get a different picture of what china really is like when it comes to actually doing business in china. >> we're going to also bring in harry, the ceo of excel outdoors. they make tents, sleeping bags, other gear. harry, we don't have a lot of time. we had breaking news earlier. you did business in china, brought some back to america. did you see this stuff? were you ever taken hostage? >> yeah, we were never taken hostage, but we saw it coming, that things are going to be much more difficult to do business in china. as a company, we decided over five years ago we wanted to move our production back to the u.s., and we've been able to produce 90% of our sleeping bags, used to be produced in china. now 90% are produced in the united states. we see the cost of doing business in china continuing to go up, labor is going to keep rising, and inflation rates in china and freight rates -- >> is it easy to be ethical in china?

>> well, with most american companies, i think there's a barrier where we don't really get approached. as a company, we have a hard line. we will never engage in anything that's unethical. and that's the way we operate as excel outdoors, and we can't control what other people do in china themselves. >> harry and lynn knight, guys, a bit short. we'll get you back on soon. we appreciate the insight. great stuff. man on the ground type material. we'll see you guys soon. thank you very much for joining us. >> thank you. >> take care. we have a couple of seconds left in the program. i'm going to eat it all. i don't want to send it to "closing bell" too early, do i, mandy? why should i give "closing bell" more time? just going to milk the show for everything i can. eight, seven, six -- dow up 163 points. at session highs. remember monday when the world was ending? suddenly, what's the street sign's motto? everything's fine. mandy and bill up next. ♪

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more mobile than ever. get to a better state. welcome in to "closing bell," everybody. i'm bill griffeth at the new york stock exchange where we have a pretty good rally underway. stocks trying to follow through on yesterday's 100-point gain for the dow, mandy. >> indeed. hello, everybody, once again, at cnbc's world headquarters. on today's show, is bad news good again? we'll start with the bad news on the economy. why? because some traders are hoping this will give the fed anden