tv Fast Money Halftime Report CNBC September 26, 2012 12:00pm-1:00pm EDT
how should you be trading against the rising short interest and what's been very hot? first, it is back. european unrest dragging on stocks as proceed pests mount in spain and greece. stephanie, are you taking advantage of today's sell off? if so, how? >> in the last couple of days we have. it is not hard to take profits first and foremost because we are up 15% from the june lows. that said, i do think that you look at the economic data that's come out over the last couple of weeks, particularly housing, consumer confidence, and you also have pretty good data out of the banks in terms of delinquencies and charge-offs and that kind of thing so we're looking at opportunities into these sell offs, particularly the cyclicals which have gotten hammered in the last couple of days to be adding, buying, and picking up slowly so we're adding to g.e., bristol-myers, those names and i think there
are definitely opportunities. >> stephanie finds opportunity in the market, do you? >> i would agree with stephanie. we have been holding a large amount of cash for a while and i do think there is a lot of opportunities. there is a lot of strong support at 1420. for those sitting on the sidelines, it is an opportunity to get in and some of the cyclicals and pharma companies we have been picking up recently and good opportunity to get back in the market. >> you're always looking for opportunities in the market and i think one of those tuns came when we saw the volatility index trading as low as it was. we were talking about underneath 14. now today we actually got up and above that 17 level. there has been opportunities. you buy protection. gives you an opportunity to actually buy some of the stocks you might be looking at. we have had as well as the rest of the folks that talked about some of the pharmaceutical industry, they have been on an absolute tear. i think they're going to break up even higher. i think once they got through the 52-week highs there is another couple of dollars left and i am talking about merck and fooizer and lilly and i jumped
more into pfizer yesterday. today i was looking at potash. looking for whatever the opportunities may exist and add to those positions or maybe create new positions. >> stevie, what are you seeing? >> 1442 is an important level on the s&p cash and to simon's point, 1422, those were the old highs. you had guys buy this market at 1442 and ran it up 2%, 3% on the way down they see support here, 1422 probably where they want to stand and if we break that level, we shoot down another 2%. now, the real big level here is 1395, 96. if we break that level, we shoot all the way down to the trend line which is 1361. that gains traders attention if we fade that big going into year end, going into earnings, everything is worried about margins and this is the most unloved rally as every reporter, every stock analyst will tell you. >> absolutely. bob talked about it over and over again.
protests in spain, refreshing new concerns about the future of the eurozone and lease welcome philippe, the chief european economist on what we can expect on friday when spain announces the new budget. good to see you. thanks for joining us. >> yes. i think friday is going to be a very modern day for spain with the budget with tough measures and probably want to take what will not conditional and structural measures and we'll also see some important numbers about the banking sector and the upcoming bank recap program. >> what will that do to their yield? so we have been seeing i believe i am looking at athens here this morning as we see protests happening in athens this morning and we saw protests that turned violent as well in madrid last night and seemed to push spanish yields higher as people start to wonder, wow, are they really going to be able to do these things? are the populations going to be able to take it?
what's going to happen to spanish yields when they announce the program tomorrow and the banking program on friday? >> i think it mostly depends on when they are going to request formally assistance from the eu and the imf. i think the program is largely expected to be pretty tough, but what is important is that the credibility is reinforced with the formal request for a program. i think there is opportunity to request assistance when the situation was more quiet and now they're going to be under pressure. >> you heard roy this morning. he said he is not asking for money until his interest rates rise, right? that's the issue. you're saying that he should have done it while the interest rates were low. why would he do it if interest rates are low and life is easy? >> because it is more i think for the future situation it would have been a lot better because probably they would not have to have to use the funds. i think now the risk is that they will be cut from the market and it will have to request a program. >> what happens to the markets
in that case? that is the nightmare scenario. does anything happen to the u.s. averages? >> i think what could happen is they're cut from the market and they are pushed for program and it will put additional pressure on italy as well. for the europe, the stability of europe, it is quite bad i would say. i think the sooner they ask the program, the better it is. >> philippe, you started on it when you first started to speak. what is the ability for this condition to be accepted? how long do they have before germany loses patience and this is not footage from the middle east. this is european footage. it is hard to take back the freebies once they're given. we have given back a lot of these moves since the esm was announced. do you really see light at the end of the tunnel? >> i think the social unrest will mount not only on spain, there is a sort of fatigue in many european countries about austerity, but i think this is
also the only solution to stabilize the situation and i understand why the germans are putting pressure for that. i think the governor will have to find the right balance between austerity measures and also measures aimed at restarting growth in the longer term and probably need to have some growth outlook which is not the case right now because reforms have not been implemented. >> quick question. what do you think the pain threshold is on the yields on the sovereign at the time, 6.5, 1%? >> i think it is difficult to say because we went back to a level which was sustainable for spain. i think there has been lots of good news on the front end of the curve because of the ecb, but i think as soon as we have a reversal of this trend, i mean, it means the pressure is going to mount and the risk is really not about the level but at some point they might lose their market access which would be really bad and this is why the sooner they come with the program the better it is. >> why do you think european stocks sold off so sharply today
across the board? was it the protest? was it the gdp tax revenue numbers that came out of spain? why? >> i think there is a general -- there are some worries about how europeans are going to be able to continue to handle these prices. we have seen a period of a recovery, of confidence over the last weeks which was probably exaggerated. this crisis is not over. it is going to continue for a long period of time. they have to fix the long-term solutions which means building stronger institution for europe and fixing the situation in different countries. i think it was sort of this is the end of a period of more quiet environment but i am afraid the crisis is going to continue for a while. >> yep. i think we all agree. thank you so much for joining us. >> thank you. >> guys, in the past when we have seen european stocks sell off as sharply as they did, the u.s. fell as well. today not so much. disconnect here now, pete? >> solution. i am looking at the financials here in the u.s. as a matter of fact, early on in the trading session when you see
morgan stanley, u.s. bank and wells fargo trading in positive territory in the green despite the fact the s&p is selling off, it tells me you're looking at certain levels of banks, maybe not necessarily the names actually have some exposure to the overseas. when you look at the u.s. centric banks, those are the ones that they have comfort with right now and why i continue to see those as the best opportunities. in particular, if you're getting some kind of yield off these names, you add that and the canadian banks and those are where i would rather be right now. if you want the ultra risk will you look at the european banks. as philippe laid out, this is not going to be short-term. he expects this to be a long-term problem. >> what he just said, you usually see a sell off in the u.s. equity markets. we haven't seen a sell off as of late. no one believes this type of sell off is even going to last. so you get people buying the dips. you buy the tips until the dips really are dramatic, and we haven't seen a dramatic sell off. we're in the middle of the
level. once qe3 was announced, 400 in the s&p. trade to 1474. >> we may not get the dip because we have a better u.s. economy. we have better data points coming out. we have also very low expectations in terms of profits and earnings headed into earnings. remember last quarter the same thing happened and the markets rallied. i am not sure you will get this massive dip especially when the environment is better. >> that's what makes the markets, ladies and gentlemen. >> not cle shea at all, courtney reagan with two tech stocks on the move. >> thank you very much, michelle. much needed good news for research in motion, a name we talk about a lot. they're getting a lift after estimates are raised at goldman sachs citing the unexpected increase in the smartphone subscriber pace. that was announced at the blackberry jam conference yesterday. apple is down 5% since the
release of the iphone 5, a surprise to many, michelle. >> thank you, courtney. still ahead, where should you be investing in earnings season derails the rally and homes over 40%. we will show you great data points we found. stay tuned. sometimes investing opportunities are hard to spot. you have to dig a little. fidelity's etf market tracker shows you the big picture
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i mean, regardless of what's going on in the market you have to love all three. there is more users, more people using it, more advertising space, it is a positive thing and the networks are faster and faster so the whole experience is better and better. as a group regardless of what's going on in the tech sectors, these will do very well. >> all of the three have exactly what we talked about for so long. >> absolutely. >> they grew and everybody knows the brands and they'll be winners regardless. >> absolutely. >> then there is facebook. >> you haven't talked about facebook on this show very much. >> yeah, facebook, he doesn't list that. >> it is not. these are real earnings and real growth and google trading at 30 times next year's earning, these are companies with real revenue and facebook has to go out and prove to the people that they have a sustainable business model and add to the revenues. we talked about before what is the sloo us to mobile? still a question mark over that.
>> you read this as well. what do you think? >> when you do the breakdown google makes 100% and the mobile search and all of the rest of that but when i see amazon versus ebay it is tough not to stick with ebay. when you look at the p.e. levels, you're talking about the forward side trading about 100 times. seems very, very price to value and any miss step can cause it to call. they have done a tremendous job and when i look at ebay and the partnerships and pay pal, i see the opportunities at ebay at 16 times earnings makes more sense. >> and you could have said that about amazon for the last 100 points. i think that's the perplexing thing. amazon also has as we saw yesterday talk about the cloud data storage space for now financial exchanges and a whole amount of 100 or who knows, maybe 500 different companies. that's the engine of growth now. >> no doubt about it.
the one thing i would add is look at the graphs. ebay kept pace nicely and along the way you don't have the worry about if there is a miss shep, how far of a drop do you get. >> and you also have margin growth at ebay and very depressed and declining margins at amazon. it is a great story. ebay is definitely cheaper. >> of course. >> you're a value player. >> i am not necessarily a value player. i own ebay. ebay is 16 times forward estimates. >> when dunk it was okay value? >> when they disappoint on earnings and when the margins continue to contract. you get a massive sell off in the shares and that is the opportunity. a steady consistent grower in ebay with pay pal and marketplace consistently growing, taking market share and i think it is a big point they signed a deal with discover financial and that opens the door and that takes more share
versus visa, versus mastercard and others in the industry and at 16 times estimates the expectations are not nearly the same. >> he has been talking about that at least a month now. >> thank you forgetting that in. >> hit the biggest pops and drops in midday trading. pop and family dollar higher by two. >> discount store sales consistently on the rise. family dollar, i don't like the chart technically if i want to buy the space i would probably by dollar general. >> coca-cola. >> the stock has actually lagged the other consumer staples sectors and with commodity costs coming down and the euro going up i think earnings might surprise to the upside. this is one we're looking to get back in. >> a drop in salesforce.com. >> take a little hit and i think it really based upon ibm and the in roads this he have made in the cloud space and amazon and
salesforce are under pressure here and ibm's acquisitions continue to get in the space and in their face. >> a drop of 5%, deutsche bank. >> no surprise there, down 5% when you look at the people just throwing each other and getting in fights. big stress in the system over there. interestingly down 10% in the last three days and still up 40% over the last three months. could be a buying opportunity sgr and a pop for chickens. a hotel in england has unique guests, chickens are checking into the foltie towers, the idea started when people kept asking to take care of the chickens >> that's foul. >> i have to tell you. >> turn the chickens into cash and started the service business and the owner treats the chickens to vegetables, takes them on walks in strollers and one positive she says she never needs to buy eggs any more.
>> that's quackers. >> you know her? >> i don't know her. if i did, i certainly wouldn't tell you. >> small country. am coming up next, oil sliding below $90 for the first time since early august. is this the start of a bigger sell off? the come back trades from chicago. we'll show you the best way to play the move in treasurys and the losers, could they be next year's big winners? more ahead in the halftime report. sometimes investing opportunities are hard to spot. you have to dig a little. fidelity's etf market tracker shows you the big picture on how different asset classes are performing, and it lets you go in for a closer look at areas within a class or sector that may be bucking a larger trend. i'm stephen hett of fidelity investments. the etf market tracker is one more innovative reason serious investors are choosing fidelity. get 200 free trades today and explore your next investing idea.
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here are the top three trades, jabil circuit, offset by weaker margins and higher over head costs. what do you think? >> i think that the guidance is a little disappointing, particularly the lodge term guidance. they're talking secular declines. i think you have to let the dust settle on this one. i am always interested in the stock down 10% on a day but again i think you have to let it settle. >> barnes & noble taking a shot
at amazon and apple. >> i could give them a potential shot. when you take a look at the tablets, they get interesting and everybody talks about the kindle and the fire and everything else and the nook, the two products look fairly interesting and could be competitive. i don't think it is in the ipad space but going after amazon. the oil slick continues, crude trading below $90 a barrel for the first time since august 3rd. what do you think. >> if you look on a retrace basis $88 looks to stand out for crude. i see a lot of guys trying to bottom pick figuring it is over done on sell off. what is beneficial? the refining space. it is caught up in the data trade and i think the input costs are lower with lower crude and gasoline has not moved. >> fear is back in the markets, demand for treasurys on the rise, the yield on the u.s. ten year falling to a two-week low. you have long been saying going
lower and lower. are you still sticking by 1.19. >> don't call it a comeback. i have been checking it for years. when you broke the images yesterday, it was sensational, to see the violence in the streets in spain coupled with greece really put fear and fright in investors and we saw the treasury purchases and today we have supply to keep in mind, a five-year auction, seven year auction tomorrow and the grab for treasurys is back. >> it is back. does it get to the 1.19 yield? year still above that. we have gotten close. what is it going to take? how long is it going to take? >> my deal has been we're tethered to 1.5%. rewind two weeks when mr. bernanke went out qe3. we saw break through and tent down to nearly 118 and now come
back to 125. i think as we see european woes persist and a little supply roll over there, we will see the 1.19. i don't want to see it. i am telling you what i see technically. >> is that the trade that you recommend? >> yeah. i think it is the best way to play this. i think they will approximator cyst and it is a monster and we talked about this in solvency and implementation and growth. right now the insolven say we have seen it shored up and installing the austerity and antiausterity is the word over there and you will see that catch up and maybe tomorrow in italy the next protest. >> we will see. thanks so much. the home builders, one of the year's hottest trades, incredible gains for these guys and some of them triple digits. could the rally be nearing an end? we'll bring in the research director at market research. lots of short interest here.
what did you find? >> sellers took their time the last six months and remain very short this tech sore, on average 10% short and triple what it would be the 3,000 average. massive short in the sector and after the great rally the last six months short sellers running for the hills and just started to put them back on and having been sort of covering frantically for the last few weeks >> did you use the word trouble? that's simon that uses the word trouble. >> trouble, naughty, one of those two. >> which stock has the most short? what do we know about the level of short interest versus whether or not you should be joining the shorts or seeing it as a contemporary an play? >> there is a tiny smack of short squeeze in recent months. it is reasonably expensive to shut because the demand is quite close to the spl i and the long only funds selling them and the short sellers rorsed to cover
and the price is ramping up and like 27% of the shares short which is massive. interestingly, the short sellers are going back in for more and could this spell your favorite word, trouble again or right this time and this recent spike could be about to run out of steam? >> what's your favorite idea, though, and these particular home builders got acatalyst and mate see a short squeeze on the other side you mentioned? >> it probably happened already. you look at the others and they're not really technical short squeeze territory. you can get short covering due to short covering but not a real proper squeeze. you look at the ones with certainly more than 20% of the shares short to get near that and very few like in the high 18s now except for kb home. >> a proper squeeze, absolutely. steve. >> i hear your premise to the other ones that short interest,
just off the board. what about a quote, unquote, safety bet in the home builders? what about a toll brothers with only 7% short interest? would you see money coming back into those once you see everyone out of the other names that seem a little bit unsafe? >> you think they might cover shorts and go into one less crowded? depends to the extent to which they will use the crowding information and all of the company fundamentals. not everybody is pouring over the short interest data every day like we are. we wish they would. that would be a sensible thing to do. >> will, good to see you. thank you for joining us. what do you think, you going to short the babies? >> i don't know that i will short them. as far as the option markets what they're indicating is after the huge run in the upside people are definitely scrambling and maybe because the folks like will are talking about it and maybe the fact it could have a steep fall. when you look at it kbh, the one that you mentioned has by far the most puts versus calls ratio
today which tells me that a lot of folks are either scrambling to protect themselves if they were long and still want to hold these names in case they get the squeeze to the upside or there is fear out there and the folks are actually going and trying to pounce on this expecting these to see these builders fall even further. >> stephanie, how would you trade this? >> we're not in the home builders. what we have done is tried to look at the derivative call of the housing sector and that's the banks. the ones that we played are keycorp. we like suntrust although we're taking money off the table and wells fargo, those are the way that is we have been plugging in addition to wire houser which has 70% of revenues. >> simon, 221. >> i think nice pair trade. we still like the derivative plays and more so the suppliers.
i think we can go short and long home depot and lowe's and those types of names and i think it will be a nice trade. >> ahead on the halftime report a top fund manager revealing the one thing that could kill the rally and stock picks to soften the blow. germany trying to slam the brakes on high speed trading. will it work and should it happen here? stay tuned. bob... oh, hey alex. just picking up some, brochures, posters copies of my acceptance speech. great! it's always good to have a backup plan, in case i get hit by a meteor. wow, your hair looks great. didn't realize they did photoshop here. hey, good call on those mugs. can't let 'em see what you're drinking. you know, i'm glad we're both running a nice, clean race. no need to get nasty. here's your "honk if you had an affair with taylor" yard sign. looks good. [ male announcer ] fedex office. now save 50% on banners.
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for the extra activities that, for most kids, are a normal part of growing up. not everyone can be a foster parent... but anyone can help a foster child. natural resources shaking off the news it will be replaced by kraft foods group. the swap will be made off kraft completes its split into two separate companies after the close on october 1st. you can see we crossed over that positive line at this point. we're decidedly negative early in the session. year-to-date and are down 66%, the worst performing stock in the s&p. michelle. >> thank you so much. grasso, what do you think of the trade? >> the headwinds are not out of the way for alpha. it was caught up in the beta trade. when you saw the chairman announce qe3, everyone scrambled to capture bait a they ran this up, and then you see where it just topped out and started, definitely on the declining basis right now, and i still
wouldn't be a player here. it is a $6 number. it is extremely volatile. i wouldn't be a buyer just yet. >> what do you think? >> i like some of the names still. i am sticking with walter energy, not alpha natural right now. when you look at what's going on in the infrastructure plans announced in china, gave a lot of different names and a nice boost to the upside and enjoyed that boost and seeing pullbacks, that's understandable after the nice run they had and i agree, steve, they're volatile plays and not for the feint of heart. they do come have an incredible amount of beta. >> they're white knucklers. >> they are. >> the bulls enjoying the rally over the past few months and there is one thing that could kill the run. ron sloan, chief investment officer at invesco joins us. do you think earnings could kill this rally, right? explain. >> this has been a rally that's gone up. i think in some ways it is almost a testament to symbolism over substance. we have had earnings revisions
down all year and the market moving up sharply and i think what we have done is put all of our earnings per share growth eggs in the fourth quarter basket creating a hockey stick kind of phenomena or effect and sometimes those don't work out so well if you recall what happened in the dot comboom. >> if you believe that you're buying or selling what? >> i think we run a conservative portfolio. we're old-fashioned fundamental investors, so what we're doing is looking for companies that have not been in the leadership of this market move, companies taking their earnings and reinvesting them back in the business and companies that are actually under achieving in terms of profitability, why, because again they're making investments in new businesses. we're making investments back into their business to provide for margin opportunities next year, year after, where as most of corporate america is actually operating at pretty peak margin
levels and i like businesses that are short-term under achieving. >> ron, are you concerned in general in terms of earnings? sounds like you're more concerned about the margin story or the revenue demand story and is there a chance that over the last couple of weeks we have seen estimates come down tore the third quarter. there a chance maybe we over do it and we beat those lower expectations? >> well, i mean, if we do, it is going to be such a deminimum mus number it probably doesn't make much difference. in question where is the shortfall occurring? yes, it is occurring at the top line. what's happening is no margins probably aren't going to disappoint because companies are already taking the margin bull by the horns. they're already employing the '09/'10, uber margin management model they really didn't practice much last year and companies that come into our office and we talk to them about their business prospects going forward, what they're doing, almost everyone is saying, look,
i don't know, qe, quantitative eases is not a term we discuss but we're micromanaging working capital accounts, and that's where the margin maintenance is going to come from is in managing those working capital accounts. >> i was going to say with stephanie that i think expectations have come down so much already. if you look at the company that is preannounced, caterpillar, intel, a number of them, i think there is going to be a buying opportunity and pullback going back in and i think a lot of those companies can do quite well in there. >> i think you're right. the question is what's the degree of correction that would allow that to occur? i mean, i don't know, but i think fair value is probably somewhere down 5 to 10%, and so in that kind of low 1300 area, there is probably an opportunity to start looking at things a little more broadly. right now i think you have to shoot with a rifle and not with a shotgun. >> another metaphor.
i love it. >> i get the under performer. i get the idea you want to pick out the under performers. looks like have you a lot of performing stocks there, kellogg, proctor, and still hundred dollaring for the dividend and the safety bets and those are the places for me retail finds a home in even when you see the market shoot straight up or straight down, seem not to be shaken out of those positions. are you still hunting for dibs? >> i think in some of these cases they're already pretty good dividend payers. what we see the companies doing, what did kellogg do? they bought pringles at a decent price from proctor and gamble, this widely known franchise under managed at proctor for a long time and i think it will be kellogg's will have a unique opportunity through their different channels of distribution and their different packaging with their cookies and cracker businesses to really add margins to that pringles business. >> for those listening to the
radio, we want to hammer home what the risk of stocks are that you like, adobe, kellogg's, p & g, and thyme on, do you have an idea question. >> if you take a look at one stock in yur retirement account, what would you favor. >> a little pistol. >> a pistol, what would it with? >> that's a tough one. one of the companies die like and we haven't talked about, i like it a lot is the leading position in my portfolio is adobe. what they have done is taken a short-term hit to revenue growth to rechange the whole model. they are moving from a subscription model, i mean, to a subscription model from a license model, and that's going to create a much more consistent, much stickier business going forward and i think that is good for a long period of time and not just a couple of year hit. >> i love that color right, the southwest clay, they make beautiful pots, really adobe is just great. good to see you. thanks so much for joining us. >> thank you, michelle.
>> coming up next, halftime enters the accountability zone. should the u.s. follow germany's lead and slow down high speed trading? plus, is the rage against austerity in spain creating a unique trading opportunity? stay tuned to see what we uncover. at optionsxpress we create easy-to-use, powerful trading tools for all. like our all-in-one trade ticket. we put strategies, chains and positions all on one screen. start trading today with optionsxpress by charles schwab.
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and go. you can even take a full-size or above, and still pay the mid-size price. i'm going b-i-g. [ male announcer ] good choice business pro. good choice. go national. go like a pro. coming up on power lunch, 1 p.m. eastern, a series of live events, the markets will be watching closely. strikes and protests called for in madrid at the top of the hour. after weeks of calm, why is europe boiling over right now? why is the u.s. market somewhat immune to it? 20 minutes away from two candidates, two events, one big swing state of ohio. who has the presidential edge in this important battleground state right now? find out at the top of the hour and now back to michelle and more fast half. >> thank you so much. in germany you can drive as fast as you want on the highway on the audubon, a company with no
speed limits. they are looking to slow down high speed training, the government approving a draft bill that would impose controls on such trading and critics worry it is excessive. you see the impact of high speed trading. what do you think? should will be rules in germany? should will be rules here? >> there should be rules both places. no doubt about it. a lot is not intended to be jamming the systems but it is and there has to be a payment system and i like the payment system they came up with in germany. >> it is not an issue -- it is an issue of speed, the speed that bothers you, the volume? >> the speed does not bother me. it is the fact potentially they can set up scenario that is unfortunately do cause markets to move in those flash crash type of events and those are awful. we all know that. that's an easy answer. the tough thing is how do you control that speed? i think by controlling that speed you make the folks that are actually trying to run at those speed limits at least have certain qualifications. that's what the german plan is. >> tell me more about the german plan. >> essentially there will be a payment process and they have
some ownership to what they are doing as high frequency traders rather than just flooding the system and yanking it out and flooding the system and yanking it out, now there is ownership to having yourself into that system and that i think does change the model. >> doesn't this just drive high frequency trading out of germany? >> i don't think it drives it out. i think they're still going to be there. i think this could definitely temper it. >> i also think the key is to learn how to trade with high frequency trading because we can't just wait for the regulation to come down the pike and the regulation might be not as accurate as we need it. >> might not, huh? >> you need to be able to trade through these limits, and make the high frequency guys stand up to their bids and it is tough to do but you have to trade with limits. i think a lot of people are stuck in theal goe rhythmic program orders and trade everything straight up and straight down. you needs to pick a spot you want to own them, make the hft guys stand up to their bids and their offers. >> i was going to say i talk to
a lot of retail clients and i think the game is rigged. i think any time regulation is coming into place it gives them a sense it is more a more level playing field. i think it is a positive for the market overall. >> what happens if that gives people a false sense of security and to steve's point, they pass the regulation that actually stinks, people think they're safe, and then they're not which we have seen over and over with the s.e.c.? >> it is really about expectations, right? until you have the flash crash, what i am saying is if it allows people to get back in the equity market and feel more comfortable about putting it in and they will do that. i have a lot of those calls for clients calling me after and they have bigger, faster machines and you were saying bigger and faster machines and why get involved in the first place? >> they always love more regulation, yeah. i am giving awe a hard time. scenes and violent protests on the streets in athens and madrid and putting a quick call to the late summer euro rally.
was it really the images, andy, or is it the data that's come out of spain? is it the data that's come out of greece? what is driving the euro trade? >> i think it started yesterday with the comments and then we had just a snowballing effect with all of the negative things that happened out in spain over night. we had the protests obviously and we also had the announcement of the increase in the q3 spanish deficit to 4.77% of gdp and spending is out of control and they are going to have a budget released on friday and that's really all kind of spinning together. overlay that with the potential that moody's could down grade the country to junk sometime this week and that's what i was looking for. >> does anybody care what moody's thinks any more? >> i think it adds fuel to the fire. >> when the u.s. got downgraded our interest rates went down, right? i am not sure that that has a big effect anymore, at least, what's your trade and what are your levels?
>> right. so i was looking for a pullback in europe. we got it to the 128.50 level. that's why i wanted to buy. this is a medium term trade. i am giving it room on the downside and the 150 stop-loss and tray profit were the highs were 1.3150. on the upside is blew through it hard and should be support on the way back down. >> do you think the rally was just short covering? >> a lot of it had to do with short covering and it is basically a situation where you are eliminating the tail risks for europe with the euro currency breakup of the union and that's what the ecb did with the pledge to keep the euro alive and the pledge to intervene through the omt mechanism. >> got it, andy. thank you so much. >> you bet. >> you can watch more currency strategies on "money in motion" every friday at 5:30 p.m. cnbc and see andy on that show.
your call on intel this month has some viewers scratching their heads. take a listen. >> i would take intel right now because of the fact that where are they going to get growth? in mobile. they have made a huge push. they brought along a guy mike bell that was at palm. he helped get ty phone into the marketplace. this guy is leading the mobile division. that's where they get the growth. >> ouch, ouch. since your call september 7 intel is down almost 10%. are you still in the name? do you own any other ties? >> i have the same shirt and tie. i just show up here, throw them on. i continue to hold intel. they were late to mobile. we knew it. this is a name where i have held it for a long time. i will sell calls against it, collect the dividend yield. i like it.
>> stephanie? >> we don't own it. you got two downgrades today and the stock is green. i think the yield gets interesting in the low 20s. clearly they missed the boat to get into the smartphone or mobile early, but they have a strategy in place. i think the risk-reward in the low 20s. >> steve? >> they have two things going against them. they are tied to the pc market and the dividend play became out of favor. people were selling dividend plays and buying risk. they are still so attached to the pc market you have to wait for those dividend plays to come back in favor. i like the dividend close to 4%. >> do you see how nice your colleagues are? none of them made fun of you. >> grasso laughed about the shirt and tie. >> what's to laugh about? the guy is a gentleman. >> i love you, brother. >> you have questions, the traders have answers.
seema has been tracking tweets and joins us now. >> let's talk about iphone carriers. mac tweets, do you hold or sells shares of verizon in the wake of the iphone 5 hype? oppenheimer noting carriers are entering a seasonally strong period. grasso? >> 4.5% yield on this one. this is a performer. if you look, they blow out the doors of at&t. obviously sprint is a way distant third in 4g-lte. you don't do yourself wrong in this space with verizon. >> today the stock getting a pop. salvador writes, i would like to know how to trade cliff natural. jpmorgan writing it doesn't think steel fundamentals are supporting a recent short covering. pete? >> points out the short covering. this is a large short interest in the name.
a lot of pea were chasing after the china infrastructure story. i like the name still. i realize the short-term risk as long as you understand how tied they are presently to the steel trade. china, brazil, all the rest. i think as long as you understand it, i like it. the name can go higher. >> grasso? >> the steel names, you want to play. their marketplace is last week of november, first week of december. you get a bunch of ceos pounding the table at a conference. that's when you want to buy all the collateral plays in the space. >> it's interesting it's up today and fell 3% earlier today. all of the iron ore, steel, copper names are rallying. >> thank you for the tweets. final trade is next. [ male announcer ] let's say you need to take care of legal matters.
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final trade. steve? spvmt. >> m.o. >> got it. >> long, starbucks. still think there is upside here. it's had a nice rally. >> i wasn't married to tammy faye baker. >> thankfully. abbott labs. >> potash. >> "power lunch "starts now. >> announcer: halftime is over. the second half of the trading day begins now. >> indeed. we are keeping an eye on a series of live events the markets will be watching closely. right now in madrid, a call for a second day of strikes after yesterday's violent protes against austerity measures. greece erupted this morning. why now and where do the markets and countries go from here? both canada dadidates for presi are duelling in ohio. both set to start four minute