tv Fast Money Halftime Report CNBC July 19, 2012 12:00pm-1:00pm EDT
low rates. this food scenario is going to be big and there's going to be export issues with countries like china if corn crops are small. these are things we need to pay attention to. >> people don't realize how important the u.s. is on corn and soybeans. unbelievab unbelievable. meantime, back to hq and the "fast money halftime." with four hours to go until the close, welcome to "the halftime report." looking relatively flat on the markets overall, but do bear in mind that over the last two sessions, the dow has gained 181 points. 1.4%. that's where we sit at the moment. disappointing data as far as some are concerned, but we've hung on to those gains. let's have a look at oil and gold. we will talk about oil and a projection that still we could go to $200 a barrel. for the moment we're above $90, as you can see, and gold currently trading at 1587. here's what we're following on the "halftime" show.
earnings central. is tech still the best place to be as an investor? we're trading all the big reports from ebay to ibm. also, oil's big bounce. the summer swoon is over. dennis gartman weighs in on what it means for the economy and indeed your portfolio. and emerging opportunities. we're trading the globe with david riedel. welcome to "the halftime report." i'm simon hobbs. let's start with the financials. a slowdown in trading and investment banking continues to plague all the big names. certainly shares in morgan stanley, selling off today after missing earnings and revenue estimates by arguably a long shot. is the best trade here to avoid the money-centered banks, those big international universal banks? stephanie, avoid them? >> well, i think that there are haves and have-nots. i think there are strong players in terms of jpmorgan, wells fargo, those companies posted pretty good numbers.
underlying fundamentals were strong, good balance sheets, very good capital positions. and then you have the morgan stanleys of the world which really continue to have problems. and we have avoided. so what we've been doing is gravitating towards the high-quality names. we own jpmorgan and the fund because you can get that one at one times tangible book value. i think a lot of bad news is behind the story. >> when you look at morgan stanley, morgan stanley as a long/short guy, a lot of hedge funds have been using morgan stanley as a short. you look at morgan stanley, the numbers were very bad. morgan stanley is definitely a have-not. at this point i think you avoid that. i think there's a lot of people saying i'll take a shot on a wells fargo and hedge it with a short against morgan stanley. >> and some of the regionals arguably. josh, where are you on this? >> i think i agree with everyone in terms of the haves and the have-nots concept. really this is a stock that trades with the european
financial stocks for better or for worse. if you put up that stock 600 index versus m.s. over three years, the correlation is like 1.0. so unless you think there's going to be some kind of resurgence there, morgan stanley is way too tough a trade here. i think you've got to look at areas like wells fargo and actually the way we're playing that is with a long position in berkshire hathaway. wells fargo makes up 21% of berkshire's common stock portfolio. and we're seeing the same thing they're saying which is much better data on certain areas of housing. i think that's what's really driving the haves and have-notthesis among the banks. >> interesting. guy? nice to see you. >> i mean, i'm not that big of a fish so i can't get into a berkshire hathaway and i doubt most of the folks playing at home can. we've talked about u.s. bankcorp forever. it's a stock that's at a four-year high. this is a bank, by the way, that pays you a decent dividend to boot. i think that's the place to be.
that's a pretty big bank. about a $65 billion market cap. and blackstone has been hovering in mid-12s. good quarter this morning, decent dividend, great story. i think blackstone, even with the move you're seeing today, is a buy here. so the two names i go to usb and bx. >> let's bring in doug sipkin. he joins us now on the fast line. doug, if you look at morgan stanley, clearly a lot of what went on had to do with the threat of the moody's downgrade. >> yeah, i think that's a great point. it was a challenging quarter, challenging operating environment, and for morgan stanley, you also had to add the uncertainty created by the potential for moody's downgrade. it probably was, you know, anywhere from $300 million to $500 million collectively impact on the quarter. augmenting already tough environment and a tough quarter for morgan stanley. >> are you prepared to come out against most of our panel and suggest that morgan stanley is a buy? some are saying that today.
>> i think -- i like the stock. obviously you're going to need to see a better environment to get people reengaged. the quarter was weak, but i don't think it was completely atrocious. the investment banking looked good. retail brokerage margins went up, and their capital position has never been stronger. but certainly you're going to need to see better revenue and earnings to get people excited. but i think today's probably a little bit of an overreaction. >> hi. it's stephanie. i'm actually curious about what your thoughts are about the smith barney integration on the wealth management side of the business. it's been a couple of years since they made the announcement to buy half of it. now they're going to buy the rest of it. when do we start to see better results from this business, and do you think this is going to be the growth driver at the company for the long term? >> yeah, it's a good question. the integration is complete. at the beginning of september, they will probably buy in another 14% of the jv. and so there will be a little bit of a positive earnings benefit, and they'll add some deposits from that. longer term, i think the key to
success for morgan stanley is retail brokerage investment banking. they actually said today for the first time that they're probably going to be shrinking a little bit more of their fixed-income assets over the next year, two years. retail brokerage and investment banking are the key paths. those need to become the earnings and revenue drivers for the company. it can't be about fixed income. when that happens, the stock can be volatile like we see today. >> doug, mike murphy here. just had a quick question regarding the downgrade on morgan stanley a few weeks back. at that time a lot of people were talking about the potential for an acquisition on morgan stanley, that they would have to put themselves up for sale. can you speak to that at all, the potential for morgan stanley being bought out? >> i don't see that as a real distinct possibility. right now no big bank wants more assets. i don't see that as a possibility. what i think you're going to see, though, for m.s. is a little more aggressive restructuring which sounds like it's going to start to come on the fixed income side.
>> i mean, are we looking at morgan stanley sort of revision assist, looking back for the glory days? because the environment they're facing now is extraordinarily difficult. those fixed revenues, they were a disaster. this is a company that missed by $500 million on the revenue side. so i get the stock might be cheap valuation, but i'm not even sure that that's a reasonable argument right now. >> i mean, it's a fair point. it wasn't a good quarter. look, it's an incredibly volatile business. they destroyed estimates in the first quarter and revenue stocks sold off. this was a challenging quarter. they missed by a decent amount. some of it attributable to the moody's uncertainty. so the stock's probably in the penalty box for a little while. but i think when the dust settles, q3 so far is shaping up a little better. sort of the underlying optics are still fairly sound. >> doug, thanks for the advice. thanks for joining us. >> no problem. >> from susquehanna. let's talk tech, a new trade, trifecta of tech companies
surging after impressing investors with earnings they came through with. qualcomm, ebay and ibm all stars today with ebay clearly leading the group as far as those gains, i think about 8%. yep, there you go, almost 9%. let's start with ebay. mike, you were long going into this, were you not? >> yes. >> were you surprised at what they're managing to achieve, nonetheless? >> not really. you look at the quarter, it's what we expected from ebay. under 40, so it's a relatively new position for us. if you remember, ebay was trading in the low 40s, it pulled all the way back recently down to about $38. the key for ebay from our standpoint is paypal. you look at paypal, the growth, the amount of revenue, it's over 40%. i think paypal is the key driver for ebay, and i don't see that slowing down. >> there are a lot of other people that would like to get on the paypal bandwagon. some big names. is it a dangerous stock from that point of view when they're trying to expand so rapidly? >> i don't think so. i think that's the key. the fact that other people are
looking to come in just gives verification that it's a real business. it's where we're going in the future. and they already have the footprint. i think it's a long-term hold, ebay. >> i think half the reason why ebay is so strong is because the stock has acted poorly over the last couple weeks. >> you were long. >> we still are long and kind of suffered over the last couple weeks because the stock has underperformed. people thought they were going to lower guidance. the fact they just reiterated guidance for the full year was a sigh of relief. if you look through the underlying fundamentals, it was growth. organic growth of this company overall, they're expected to grow 20% which is an acceleration from the current quarter. there's good things happening. we love paypal but marketplace has momentum, too. >> guy? >> we're saying it for a while, simon. the two numbers that stick out to me, the total number of payments were up about 31% year over year, which is a staggering number for the company the size of ebay, one. and their operating margins were up to 27.3%. the street was looking for about 26.3%. the two things together, they're
growing and they're running their business better. so it's not that expensive valuationwise so i don't see any reason why you still can't own ebay at these levels. >> josh, of the three, ibm, ebay and qualcomm, which do you prefer? >> actually, all of them look great. ibm probably the least exciting. it wasn't a great quarter, but they're very good at finding a way to make that earnings number look good even with down revenue. but qualcomm, there's a couple important points here. this was not a great quarter, but the stock is being bid up because this business tends to be very back-end loaded. 30% of smartphone shipments will happen in q4. the other thing is their fortune is tied to the iphone 5. that's the primary applications process in chip that's in most apple products. the other thing i'll mention, they cannot make the snapdragon processor. it's a chipset for tablets and smartphones. they cannot keep up with demand. they're talking about possibly having to expand manufacturing
and find new partners. that's not a negative thing. that's a very bullish thing, obviously. so i think a lot of momentum here for the qualcomm story. and the stock really has done nothing so far this year. >> well, look, josh, in four hours' time, google will come through with its earnings. everybody knows that it's failed to impress investors so far this year. i think the stock's down about 8% when last i looked. there we go. actually higher on the session. let's take our positions ahead of the results with darren chervitz. you own google in your fund, is that right? >> -- around 4% of the fund. >> sorry, just recap. we missed your mike there. you do own google? >> we do own google. it's about a 4% position in the fund. >> why do you own it? >> obviously it has a dominant competitive position. really strong secular tailwinds. one of the most important features of the story is the mobile story. and that is it has its positive
and its negative side, but we think in the long-term side, that's going to end up being a positive for google. that said, we have trimmed the position over the past year. and we are less comfortable with it than we would have been maybe 6 to 12 months ago for various reasons. >> yeah. so what is the chief reason that you're feeling less comfortable? >> well, i would say the chief reason is probably still remains some of the economic uncertainty, especially in europe where they have a fair amount of exposure. we absolutely hated the idea of the stock split. i thought it was an affront to corporate governance and something that that's when they obviously consolidated power among the top executives there. and that is something that we especially didn't like. and then also, the mobile situation in the long term is going to be a positive. but in the short term, they, like a lot of other internet companies, aren't monetizing the mobile traffic as well as they are in the desktop. and also there's the big apple risk. you know, google maps is now not
the default option on the apple products. and i think over time, search may also be at risk in terms of being the default product there. >> josh -- >> it's josh brown. i'm just curious, the knock on google and the chart's really tough here as well -- the knock is that at the end of the day, this is a very cyclical advertising business. they have all these products and divisions, but really, we're talking about ads. can they ever overcome that stigma, and can they ever show real revenue and real profits in some of these other businesses? >> no. i mean, even the newer businesses such as video and mobile, it's going to be an advertising type of business. and as the economy goes, so goes google. that said, you know, we're talking about a multiple on google's earnings that is worse than almost any cyclical name you can think of given especially the growth they're still seeing in their business. you know, we're looking at a little bit less than ten times next year's earnings next to the
cash they have on the balance sheet. and that, again, just seems to us to be on the cheap side here. >> darren, itself stephanie. do you think investors are going to sell the stock, or do you think they realize what you just said, that the stock is cap and there will be eventually positive momentum given the transition to mobile? >> no, i think costs per click has been an issue, and it's not going away. you know, they give a lot of different reasons for it, but i think the primary one is the mobile issue, monetizing that traffic more effectively. and i think that over time improves. and so i don't think that's going to be the real thing investors will be looking at. i think the key thing this quarter is going to be how investors react to the fact that motorola mobility is going to be included in google's numbers the first time. they did the deal -- >> and that's going to -- that's going to complicate figures tonight. darren, we're out of time but i want to ask you, as you were paring back your investments in google, what were you buying? what is hot at the moment? i see apple is a core holding. >> yeah, apple is our top
position. i think there could be a little bit of a pocket with the iphone this quarter, but that's going to be ignored by wall street. we own a lot of yahoo! which we think has potential for catalyst in the near term. and you talked about ebay earlier. it's a big position of the fund as well. >> we've seen what marissa can do at yahoo!. thank you very much for joining us, the view from darren chervitz. guy, trade it for me. >> the ibm quarter, they have had better quarters when the stock has gone down. this quarter wasn't great. what it says to me is people have used ibm, they think the tape is still strong and it's going higher, to get it on the cheap. earnings weren't great. they weren't bad. price is truth. people want to own the stock. right now tech like ibm, qualcomm, i think even microsoft, to be honest, looks like it wants to go up. coming up on "the halftime report," housing stocks have been on a tear coming out of the
fourth quarter of last year. but is today the day the momentum trade effectively ends, or is it an opportunity to buy more? we'll ask one of our traders who's been on the right side of that trade. stay with "the halftime report." with the fidelity stock screener, you can try strategies from independent experts and see what criteria they use. such as a 5% yield on dividend-paying stocks. then you can customize the strategies and narrow down to exactly those stocks you want to follow. i'm mark allen of fidelity investments. the expert strategies feature is one more innovative reason serious investors are choosing fidelity. now get 200 free trades when you open an account.
up. we think new housing has a long way to go. >> these guys, the lennars, the pultys, they're going into strong markets and going in and selling at a price point where they know they're going to get the orders so i think you can own them. >> there you see proof positive that time and time again mike murphy has been banging the drum, bullish on home builders for some time. i guess we're pulling back a bit today after the week of existing home sales figures that we have. boy, what a run they have had. mike, what do you do now? >> we actually added to our position in toll, lennar and pulte. and the reason is simple. you saw the number regarding existing home sales. it was a very weak number. and that's indisputable, although if you peel back the banana, you'll see that you actually have a lack of inventory which contributed to the slowdown. that said, we want to draw a major distinction between existing home sales and the sale of new homes. the tolls, the lennars. we're buying home builders that make up 15% of the market.
and these guys are focusing on the hot markets and as i said in earlier clips, the story really hasn't changed. they're in the hot markets. they're getting pricing. they're raising pricing. there's big demand. mortgages are at the lowest levels that we've ever seen historically. so i think there's a huge upside in the builders. >> josh, your way to play this is the home improvement plays. >> that's correct. and actually, i think they've been working in tandem, even though they are slightly different. so the home build versus been really working because they're building these multifamilies. and now they're getting a little bit of an uptick in single. but the foreclosures that have to be processed and rebuilt and then they have to find tenants and you have to rent them out, every single one of these requires some work. and i think the way we've played that has been with home depot and some of the derivatives. this is not for widows and orphans, but usg is basically the sheetrock for all of this kind of remodeling work.
and i think it ties into both new homes and remodeling. and i think that might be a place where you could get an explosive move if these trends continue. >> josh, let me just draw everybody's attention to the fact that we're now up almost 60 points on the dow. we have, since we came on air, had a headline pass from berlin that the german parliament has approved the spanish bank bailout, 100 billion euros, of course. and tomorrow on a conference call, that will then be rubber stamped by the other finance ministers. it's not everything, but it's something for the market. and you can see that we have been able to add to our gains partly as a result of that coming through. the euro, not a huge amount of movement overall. 122.66 is where we are at the moment. oil certainly has had a big day today, jumping more than 2% to the highest price since the end of may. as tensions in the middle east appear to escalate yet again. crude bow taylor of taylor capital spoke, of course, yesterday to kate kelly at the delivering alpha conference
about what could cause crude prices to double from here. take a listen. >> i threw out this $200 figure. is it right to say that you guys believe in that, and what is the time frame? >> to the extent that you had something that looked like an escalation and you didn't have a particular end game, you know, commodities have a strange ability to go much higher than you might suspect that they would. >> let's bring in the commodities king, then, dennis gartman of the gartman letter. he joins us on the fast line. $200 a barrel. what do you think, dennis? >> i think it's laughable. i think it's nonsense. i think it is so improbable as to be something we should just discount entirely and move on. is crude oil heading higher? likely. are there problems in the middle east that are difficult? of course. might the iranians do something silly in an attempt to block the
straits of hormuz? yes, they will. will it last for very long? not more than 48 hours or so. and oh, you might get a spike, but $200, come, now. that's just wrong. >> surely, dennis, you could spike to $130, $150 if the straits of hormuz are blocked. >> you could take -- you could take brent, which is now at $107, and you could get present to $112 or $115 or so on that sort of news. there is so much crude oil abundantly being found. so many new methodologies for finding it. so many new prospects for natural gas coming at us. the probabilities of that occurring, simon, i'm sorry. i think they are illogical and ill-founded and wrong. >> i think i know the answer, but is the move recently in oil geopolitical in nature or is it economically driven in nature because the slowdown in china, what's going on here, europe would say to me the slowdown and
the selloff should continue. so is this sort of a move to fade, do you think? >> i think this would tend to be a move to fade. let's be honest, i have been a buyer of heating oil predicated upon the fact that there were so many closures and refineries that i thought there would be a bounce in perhaps gasoline. at this price i'm going to tell you i'm going to start moving to the sidelines. it's been a huge bounce, i think, in crude oil, this is nothing more than a correction of the very massive break that we've seen. i think it is absolutely a political -- geopolitical circumstance rather than a fundamentally warranted circumstance. and i suspect after another $2 or $3, barring some unforeseen massive geopolitical circumstance, i suspect energy prices are likely to go lower, not higher from here. >> josh? josh? >> i hope he's right because that would be very bullish for areas like consumer discretionary which have been under pressure and really could use a positive catalyst.
so if the oil breakdown turns out to be here to stay, that would benefit a lot of areas where people are concerned. oh, here we go again. headed back toward 4 bucks at the pump. so i hope dennis is right, but i'll defer to him on the short-term direction. >> dennis, one of the things that you haven't mentioned which i'm curious as to why you haven't is the absence of qe and the fact that the fed seems to be moving away from that as an idea. surely that's one of the overriding dynamics of the oil market, whether or not you're printing ever larger amounts of cash. >> well, i'd hesitate to call it the overwriting. i would say it is one aspect of a bounce. i think the probabilities of the fed affecting another round of qe are relatively minimal unless we see unemployment rates get back above 9%, then perhaps we shall. but what you need to realize is that when everybody's telling us that the fed has been erring upon the side of easing of monetary policies, look at the monetary base over the course of
the last year. it's actually negative. it is not positive despite what everybody would have you believe. yes, i understand m1 and m2 are higher, but the real precursor, the real creator of money, the adjusted monetary basis has actually gone negative. >> i got it. >> that's important. >> before we lose you, importantly, of course, i think we had fresh record highs s o wheat and corn today. >> yes. >> do you think they continue to go higher? >> i think corn. you could get small breaks, 25 cent breaks in corn, but the corn crop has gone from $14.7 billion to probably something close to $12.2 billion. it may even get lower than that. the problem that -- and it is corn that is having impact upon the oil market, to be honest, because we're going to have to throw ethanol out the door eventually. and the removal of ethanol is a supply concern that might be of some help to the energy market at this point. but the corn crop is gone for all intents, even any good rain will likely do very little. this is a very severe problem.
the media is paying attention. but it could still go higher. >> dennis, always a pleasure to have you on. dennis gartman joining us from the gartman letter. just on the question of oil, stephanie, how would you play that? >> we've been adding to some of the positions because it's political tensions but i think also, you know, if china continues to ease, i think that's going to be positive or at least at a floor at the very least on commodity prices. so some of these stocks have traded off significantly. chevron still very cheap. we like slumberge. >> when you say you're adding, you're adding to majors, not actually playing crude itself. >> right, exactly. >> thank you, stephanie. coming up on "the halftime report," three all-american household stocks making big moves halfway through the trading day. plus, find out if anyone on this desk agrees with bill ackman that you could make 15 times your investment in his jc penney. we'll be right back.
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is this in itself perhaps a reason to buy? when you get these sorts of levels coming through, 1379, guy adami, should i buy the market purely on that? >> i think we've done a good job identifying levels. 1344 was a pivot point. we talked about that. then 1366. so i'm not saying this is easy, but make it as relatively simple as you can. and i think you can be long this market using 1366 as your pivot point. and you blow out entirely if it closes below 1344. don't make this more difficult than it is. i think the world gets scarier by the day. but that doesn't mean the market can't go higher. and that's what you need to wrap your arms around. price is truth and the market seems to want to go higher here. >> mike, is he right? >> i think guy is spot on on that call. i don't know if it's getting scarier because it's leading up to his big race or not, but 1376 on the s&p was a level our own steve grasso, he pointed that level out, we're above that level. i think we go from 1400 to these
levels and it is a reason to buy. >> you are the ironman, guy. >> no, don't even say that. not even close. if i finish it, you can pat me on the back and say "well done." >> i told david faber this when he went into "jeopardy!" you've got to visualize it to win it. >> here it is, simon. oh, you didn't see me. i was going to visualize for you. >> we're pressing on. we're halfway through the trading day. top three trades, all consumer related this thursday. walgreens and express scripts, both surging after reaching a new pharmacy network agreement. stephanie, this has been a long time coming. >> yeah. well, they had been at an impasse for seven months, so it was somewhat of a surprise. but if you look through -- we don't have the numbers or the details. i think that walgreens and the deterioration of their comps and of their business and of their market share, they really were at the mercy of the situation. and i suspect that express scripts got the better end of the deal. cvs trading down 5%, a stocky
like and that we own in the fund and we've been buying this morning because we do not think they're going to lose substantial volumes that they just got from this impasse. and plus we like the valuation and the balance sheet and what they're doing in their pbm business. i think that express scripts is the winner. i like cvs on the weakness and i would sell walgreens. >> whirlpool is getting a boost after electrolux in sweden reported big earnings. why the interest in electrolux? they have been able to raise prices here in the united states on home appliances. >> exactly. they were able to raise prices here, and the prices are sticking. that's the key point, simon. also, if you look at what electrolux had to say, they saw big gains in the asian markets. if asia is strong and north america is strong, whirlpool is announcing earnings next week. be careful because it's having a big run from 60 almost pushing 70 now. what electrolux announced today is very positive for whirlpool. >> if you look more broadly on
china, yum brands isn't so good. marriott was warning about overcapacity. i mean, where are you on that, stephanie? >> yum brands wasn't horrible. you had -- in china, they grew sales 10%. sure, it was down from 20%, but we all know that china is slowing. this was their margins deteriorating and it was because of labor and food costs. i'm not sure you can kind of extrapolate. we know that it's slowing there, but i think there are company-specific things going on. >> safeway shares certainly hitting a 52-week low after it posted a weak earnings report. joshua, do you buy at 15.28? >> this is a supermarket stock, kind of middle of the road. i'll give you the grocery list of what's gone wrong. negative cash flow from operations, margin pressure, intense competition, declining same-store comps. there's almost nothing good about what they had to say today, and they're paying for it. if you really want to play the space, probably a lot more fun to be involved with something like a whole foods. and you could even look outside
traditional grocers maybe to a target which i'm long. >> josh, thank you. coming up on "the halftime report," a stock that you could have made more than 20% on in six weeks if you had listened to one of our traders here on "the halftime report." plus, jeff degraaf, a top-ranked technical analyst for the past seven years, will tell us which sector he is now betting on. more "halftime" after the break. what makes the sleep number store different? you walk into a conventional mattress store, it's really not about you. they say, "well, if you wanted a firm bed you can
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auto nation topping analysts' estimates today. take a listen to what guy adami has had to say about the country's largest dealership last month. >> new vehicle sales were up 45% year over year. why is that interesting? well, because it's 20% short interest in its name, and i think it sold off enough where you might catch a bounce in this up to 38.50, 39. so i think your risk reward, maybe 34, looking for a 39 handle. >> shares of auto nation since then have gained just over 17%, as you can see. guy, are you doing a little lap before telling us? >> there are no honor laps here. look at today's price section, simon. interesting. we traded at a new 52-week high.
now on a decent take. the stock is down 3%. you potentially have a down side. if you've ridden this pun completely intended, today's absolutely the day to be taking profits because today is your catalyst day. if you're piling in today, i think you're late. love the story. today is not the day to be getting in. today is the day to be getting out, simon. >> getting out completely or just harvesting? >> it's fluid, man. trading is fluid. it's all about feel. you know what i'm saying? >> okay. >> at least half you should be pulling the ripcord. but if you want to take the whole thing off and have a good weekend, be my guest, brother. >> stocks trading near all-time highs certainly today. can the momentum continue? let's check the charts with jeff degraaf. he is number the number one ranked technical analyst by institutional investor, and it's been that way for seven years. congratulations. do you still buy health care? >> you're dating me. i don't appreciate that, but thank you. >> seven years isn't a long time. you're doing okay. >> i do. i think the bases in health care
are massive. they're beautiful whether it's biotech, whether it's big pharma. the thing that i like most about them is i get very few incoming phone calls about health care. and i think they're really in this neglect stage. people can't figure out why they're going up. they think it's just -- they'll get overbought and then they'll fail. they look more sustainable to us. big, big bases. you know, whether it's the xlv or some of the individual stocks as i mentioned. >> why is amgen within your favorite pick? >> well, it's one of the favorites, but it stands out to us as this massive base formation. the stock's gone sideways for the last ten years. it's now starting to see some momentum. there's consolidation in the industry. and it just looks to me like one of those names that you want to buy out of these big bases. you know, is likely to be a double over the next three to five years. it's that strong of a base formation. and it's not just -- it's not just amgen. we are talking about very similar base formations in all of the major big pharmaceutical
names as well. >> well, that's interesting. let me bring in josh. josh, you would herd people towards pfizer as opposed to amgen. >> yeah. i guess pfizer is probably moving with the rest of the group, x you probably saw the same breakout we did. we pulled the trigger on a long. where do you stand on pfizer versus something a little bit more exciting like a biotech? or do you think it's just a general trend for most of them to work their way higher? >> i think it's a general trend. you know, when we do -- when we go back and look at attribution and the work of what drives stocks, such a big proportion of the attribution of a stock's moves is the group and the sector to which it's related. and so, you know, it's as much as anything to me a sector in group call as it is an individual stock call. look, pfizer looks just the same to us as bristol, as amgen and the rest of them. they are very good long-term charts. >> while we've got you here, can i turn you over to the currency markets and the view? i think euro/dollar is one that you hold quite a strong opinion on at the moment? >> yeah. it looks to us like the dollar
is going to be stronger. from a longer-term perspective, the dollar has made a double bottom in our view. and we think we're going to look at dollar strength going forward. you know, not just for the remainder of the summer but really for probably the next several quarters, if not a couple years. part of that is as well, you know, this differential in treasury yields. even though we can sit here and look at our two-year yields at 20 basis points, compared to german bonds or french or almost anywhere else in the world, jgbs, we are still attracting capital to the u.s. and that's going to result in a strong eer dollar. >> jeff degraaf, thanks very much for the analysis. more on the currency markets. willie williams joins us. he is our money emotion currency trading segment this thursday. where would you lead us within currencies? where do you think there's a decent trade now? >> i think with regards to euro/dollar, we're in the middle of the range right now. i think you should be selling
euro/dollar at higher levels, maybe around 124. at the moment, the market is concerned. we've seen central banks around the world surprise us by cutting -- by initiating monetary stimulus. the bank of korea, bank of taiwan, bank of south africa. economies that are exporters are concerned about growth. the market is now waiting to see, is the federal reserve going to step in and do some form of more aggressive quantitative easing? in the interim i like to sell euro/dollar to 124, stop loss at 126 with the target of 120. >> in an environment where emerging markets are having quite a tough time, where a lot of central banks are having to do some extraordinary things there, why would you pick euro/dollar as the main trade? thurly, in an absence of qe from the fed here, you're going to get dollar strength and perhaps a greater divergence with some of those emerging markets, are you not? >> i think for the moment, the world is seeking out yields. so if you can find higher
yields, in the majors we're seeing the australian dollar has continued to outperform, canada is outperforming. so across the majors, i'd agree. but if i had to pick a choice as your previous guest mentioned between the dollar and the euro, i think the dollar is going to attract capital. and i think that the euro, over the course of the next month or two, is still in danger. but in the interim, we should be focusing on some of the monetary policy events that are happening around the world and go with the higher yielders for the moment. >> hey, willie, have a nice afternoon. thank you for joining us. willie williams. for more currency trades, watch "money in motion" tomorrow at 5:30 here on cnbc. that's 5:30 eastern. next on "the halftime report," how china may make or break your next investing decision. plus, the trader take on bill ackman's big jc penney call repeated again yesterday. we're taking positions next on cnbc.
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lunch" at the top of the hour. now back to "the fast half." >> certainly will. thank you very much. is china the end all, be all in global investing? and how should you trade it? joining us now, david riedle, president of riedle research, with his china trade. you would be adding two positions, it says, in the note here, david. >> that's right. we think we've seen a huge upswing in the m&i china consumer sentiment which we think is the best gauge of consumer sentiment on the ground in china. that combined with improving sentiment around the world, we think, is building towards emerging market outperformance in the coming months. and we would be building positions, getting ready for a more risk-on environment starting in october and november. >> so do you want to own china-specific names? >> the multinationals are typically more defensive. i want to be more aggressive. i want to find names that are a little higher flying, perhaps some of the tech stocks, maybe u.s.-listed names like sina,
s-i-n-a or in hong kong, ten cent holdings. i want to get that exposure for the more aggressive higher flying names as this risk on starts to develop. >> you see hugh hendry who is always an interesting person to listen to from the fund in london suggested this week now is the time to short the undervaunted and overowned brit quartet of brazil, russia, india and china. why do you think you should move in aggressively now? why do you think that everything's going to start spinning in october? what happens in october? >> what we've done is we've looked back at long history of consumer sentiment indices. we've combined 25 different consumer sentiment indices from around the world. and we've looked at what happens after sentiment gets a shock. 9/11, the lehman brothers shock, late last year, the euro shock, and how many months it takes for sentiment to rebuild after that shock. we are starting to enter a rebuilding phase now. and we think august and september are going to continue that phase. and by the time we get to october, people will have much more appetite for risk.
i think it's very dangerous to think about shorting the economies that are the healthiest in the world, that have the biggest reserves in the world. >> but david -- >> valuations have fallen and we think there's a lot of upside. >> but david, if you mention 9/11 or lehmans, these were one-off shots to the system. china, the question of how china is whether it can make the huge transitional moves over the next few years to a more demand-led economy. you know, china is about whether that society holds together. it is not the same as developing economies suffering one-off shots. >> they have $3 trillion of reserve. they have a lot of political will. they have a structured political system that allows them to implement policies to drive consumer demand and drive the kind of -- the economy the direction they need it to go. i think that you're betting -- if you bet against china, betting against a successful political system that delivered
a lot of value over the years. >> david riedle there on china. josh, how do i trade this? >> if you're smart, you are not looking for individual chinese names because they have difficulty with the accounting. to play the emerging markets, we have a small amount. our favorite etf is dem. it weights companies based on dividends and it's a fact. it is hard to fake dividends. you tend to get a higher quality type of company. it is interesting to note not just a china-india fund. you get taiwan, eastern europe, south africa. so that would be our preferred way to play it. not single stock risk. >> josh brown, thank you. for more global trades, watch a new edition of trading the globe with both tim seymour and amanda drury here. we're learning from one of the big trading mistakes that rarely
united representals is another name. sold that stock close to 36 last week. moved up to 38. the exposure here in the u.s. so we think you will see a tradeable move. >> united rentals. the stock's down over 5%. i think it's a buy here. >> ah, traders are quick but not always right. mike murphy, united rentals
plunged 10% first that first call. >> yes. united rentals with the earnings. the stock hit on what as i read through it seemed like a decent call. not a call to drop the stock 15% overall and down about 6% yesterday, we got long the name and we talked about it on "fast money halftime" yesterday. since this time, dropped another 10%. we bought more of the stock today. first thing this morning, i went through the transcript again trying to see what i missed on this name. i don't think i did. >> why do you catch a falling knife then? >> well, not so much catching a falling knife. it's a name we know well and believe in the fundamentals. they come out with an earnings announcement just like up 15% and we thought the call wasn't good, selling the name. it is down and we look through the call. >> got it. okay. jcpenney acting as the statement at the delivering alpha conference yesterday.
>> only thing in the portfolio i own today to make 15, 20 times the money over 5, 6, 7 years. >> you can make 15 times the money? >> absolutely. look. it's trading for nothing. a huge discount to the value of the real estate assets and inventory. people think they're marking it for dead. >> josh brown, do you believe that people can make 15 times their money? >> talking about a $200 stock. i'm not sure how that works. you're talking about one of the greatest hedge fund managers possibly ever and an activist who's had his share of success so, you know, if there's more to this comment maybe but truthfully tot a game that most individual investors should play. retail turnarounds are few and far between and take forever and better places to be. >> buy or sell, stephanie? >> buy. >> mike? >> i wouldn't be in the stock here at this these levels. i'll short it when it rallies. >> final trades next. ♪ i want to go
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