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tv   Fast Money Halftime Report  CNBC  June 17, 2013 12:00pm-1:01pm EDT

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obviously it goes without saying that wednesday is key. >> how many people want to put on big positions before that meeting? we know how much is up in the air. we know we're still unfortunately, even though everyone is trying to get to the sense of us getting beyond a fed-driven market. >> that's it for "squawk on the street." let's send it over to scottie and the halftime. all right, guys, thanks so much. welcome to the halftime show, four hours until the close. let's look at where we stand on this monday on the street from post nine. the dow industrials up 162 points, it's a strong start to what is. a very big week. 1% gains across the board. here's what we're following on the half. the greatest trade ever, the man who made it back for more, the inside story of how hedge fund heavy raet john paulson is winning big on housing again. >> a winner for the stock net
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deal. a sign to sell? a trader debate is just ahead. our top story, the biggest week of the year is off to a ripping start, the dow posting a strong gain, ahead of the all-important fed meeting which starts tomorrow. and what mr. bernanke and company say could very well decide whether this rally lives or whether it dies. we're trading all of it at post nine with mike murphy, joe tear nova, josh brown and stephanie murph. what is the biggest week of the year for the stock market. >> we're off to a strong start, scott. i think you have to look back inside the technicals. you have the s&p got right through the 1640 level today and it's holding above it. i think as long as we stay above that into bernanke's announcement, it's a very positive sign. so whatter going to get from the fed in my opinion is just more of the same. there's not going to be a tapering in this meeting. i think that's pretty much clear. when does it come, whether it's going to be september. whether it's going to be early in q 1 of 2014, that remains to
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be debated. but the market is telling you above 1640, that it wants to go higher. >> is that true, joe? >> i disagree. i don't think you'll get more the same from the fed. i think the understanding is out there now, the investment banks were talking about it over the weekend. the fed is going to acknowledge deflationary pressures, they're going to take the economic projections they have for gdp and lower them. >> they're ahead of consensus. >> way ahead of consensus. >> i'm countering what you said initially. where you said more of the same. >> yes, it is positive today and i think what's good about today, you talked about the technical, where we were friday afternoon was it a dangerous place. the market came in strong, reversed, it looked like the market was real heavy. we're holding the gains today, the financials, the cyclicals, energy, technology, they're rallying, that's good. >> the market has called shenanigans on the tapering a week ago, you sought reits
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bounce this doesn't happen if we think there's an imminent announcement on rates or bond-buying or anything of that nature. i glee with joe, i think we're probably in for more of the same. all the may 22nd stuff is getting walked back and the tape is telling you the market is just fine with this. >> stephanie, these guys are saying buy stocks, that's what i hear in the message of the market today. >> i think you use the volatility to buy stocks, last week when the markets were down a lot, that's when you had to be buying. i don't know if you necessarily need to be chasing today into wednesday. i agree with these guys in terms of what the fed is going to usa it's just going to be better communication in my opinion. but the message is clear, rates are going to stay low for a very long time and when they do taper, that means the economy is getting better and they can handle it. i don't think we're there yet. i think we're at 2% gdp. >> senior economics reporter steve liesman is here with what the fed is likely to do. most importantly, what the fed is likely to say, steven.
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what it all is going to mean to your money and the markets, what are you expecting? >> i don't know if i agree with joe that we're going to get a kind of fresh bullish signal. i think inflation could be acknowledged as a problem. i just don't know that we're going to get more of a kind of, we're going to be continuing on the -- i think the fed is trying to figure out. i think bernanke is going to play it neutral. i did like my wife did she likes to make lists, i made lists on would it taper, would it not taper. let's look at the to taper idea. one idea would be to take some of the steam out of the stocks that the fed is concerned there may be too much leverage in equities. making the exit easier obviously the less it buys. the third one is probably the biggest things out there. the fed would want to reduce its footprint in a treasury market where new issuance is falling and there are the hawks that say the output has been substantial since 2012 when the policy was announced. and then there's the or not to
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taper, stocks are the fed's friends that bernanke shouldn't be messing with it the housing market needs low rates provided by qe. still a long way to go to the normal jobs market. inflation, there's joe's big thing, could be a problem in that it is too low. my list for or not to taper is a little longer. that's my call for june. i don't think we're going to get a taper in june. but i still think september is something that is in the cards if the data go the right way. >> josh brown, that's a stock market's best friend or not to taper. >> well, i mean that would support the majority of this that have worked this year. steve, over the weekend, john hill said pay a little bit less attention to just the press release and the fomc statement. and this time focus on the feds' economic outlook report which sometimes gets swept under the rug. what are we likely to see in the fed's forward-looking projections. what are your thoughts?
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>> i think the gdp forecast could come down a little bit. i think unemployment is okay. and we'll be watching the inflation forecast. for the record, josh, we do not sweep them under the -- >> traders do. >> carpet there. >> traders do. >> we make big deal of it. we believe that the feds' policy is directly linked to the economic projections. i think that's always been the case and something to keep in mind. i will say there's some technical issues out there. which is the fed's concern that it might be taking too big a part of new issuance of the treasury issues. he think it will be interesting to hear bernanke talk about that. the deficits coming down, so the issuance by the treasury is lower. the feel about indplags is a big issue and the feds' orientation about that. it doesn't have been to a change in the forecast to get a feel for whether or not that's a driver of policy. >> steve, stock market bulls would want the gdp forecast to come down, wouldn't they? >> that may be the case, scott.
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but i -- i -- i am going to pound the table. good news, is anywhere and always good news. we want higher gdp, more people at work. and the only thing for the market to price in. is the danger of a fed policy mistake in that scenario. that you want gdp to be higher. you want more growth and you expect the fed not to make a mistake, you want more employment and you expect the fed not to make a mistake. let's not do that. scott. >> no, we're -- >> it confuses me. >> i raise that question in the context of the fed's forecast being ahead of consensus of the rest of the street on where they think growth is. if they are looking through rose-colored glasses and thinking that the economy is in fact better off than it actually is and they make a policy decision as a result of the shaded view of what the real picture is, that's a problem. that's why i asked the question, that's all. >> i think the fed is in or
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around the market for the second half of the year. there's expected to be an acceleration. another thing we didn't talk about is the market's view and the fed's view about the impact of sequester. think so far the market has been re-evaluating that and expecting a little bit more growth and i think it's right to think that fed policy was oriented somewhat towards offsetting the sequester effects and to the extent that that's less it would make an argument for less qe in the months eye head when that becomes clear. >> good stuff as always, good to talk to you. >> steve liesman back at headquarters. volatility has ruled the day lately. if our next guest is right, better get used to it. steven whiting is chief investment strategist for city wide bank. where do you weigh in on what happens this week for what happens with the feds. >> i start off with agreeing with steve liesman, good news is good news.
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roughly 30% higher than when the market last peaked in 2007 and the stock market is up 4%, 5% since 2007. valuation has come down in the age of qe. this time around, we do think you know, markets always tend to want to see whatever they want to see or hear what they want to hear from chairman bernanke. but he will probably explain to the market that eventually tapering off the pace of qe is not the same as outright tightening and that might be marginally helpful. >> good luck trying to get the message across. i think that's going to be one of the major issues, ha does that mean for volatility? >> it's a very difficult communications challenge right now. i think people got very used to the extremely low volatility environment during the first five months of the year. implied volatility was exceptionally low. realized volatility, incredibly low. you had some fabulous runs in local currency terms. the japanese market was up 50%,
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the u.s. up 17% in dollars, with just no setbacks. people start to believe that they're owed a positive return every day. stocks are a risky, volume tiff asset class, but that happens to be where the best returns are and where we expect them to be if we look out one or two years. >> the best place in the market to be is where? what are your clients asking and what do you tell them? >> i would tell them, if you expect let's say a 5% global equity market index return over the balance of the year, that the standard deviation of equities markets, one standard deviation is something close to 13% and the last three years, we had positive returns for the full year. and all three cases, even excluding the 2009 rebound. the inter-year corrections were 15% on average in the last three years in the u.s. market. so they should expect more volatility than we saw in the
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last five minutes. it's an indication that the economic expansion is going to continue. i think if you look at the readings out of the u.s. for example today, the first reading above 50 in the home builders' index in six years, we're very far from having a complete full excessive expansion in the economy. and that's what's also going to be clear from chairman bernanke's comments. >> steve, great to have you on the show. >> let's discuss this on the desk. the notion of where volatility is going to go. we can put back up the graphic showing the triple-digit moves in the market in the last week have been alone to turn your stomach up and down. >> and volatility going to continue. i don't believe it's buy stocks right here. i think you wait and why i highlighted that what you're going to hear from the fred is different than what we've heard in the past. is i think it adds to the continued confusion. you asked the question, what do you buy? i don't know the answer to that. do you go with cyclicals or
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federals? i don't know where to go yet. think it's confusing and i want to wait -- >> but you use the volatility like last week when we had triple-digit declines to be buying and you do want to take advantage of whatever sectors get hit. utilities and reits and staples were the best performers of the year. they're now the laggards. i don't think you want to be overweight those. you have all the stimulus that's going on here and around the world. so you do want to be having some exposure to the cyclicals. should they pull back and if financials pull back because the back-up of rates starts to give that back. those are the sectors you -- >> i would argue we have yet to see volatility, we'll probably see more as we get to the summer. as stephanie points out, this is exactly what you want. that's how you end end up lagging into great positions at lower prices. >> crude oil hitting the highest level in nine months, we'll tell you what it means for your
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money. plus we know about john paulson's struggles in gold. >> kate kelly joins with us another side of her winning portfolio when we come back. performance, u hd a new ride comes along and changes everything. ♪ the 2013 lexus gs, with a dynamically tuned suspension and adjustable drive modes. because the ultimate expression of power is control. this is the pursuit of perfection. before their gift helped preserve the point... before a credit solution was used to expand their business... before trusts were created for their grandkids' educations... they chose a partner to help manage their wealth... one whose insights,
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don't look now, crude hitting the highest level in nine months today, is up more than 13% in the past two months alone. there's a look at the chart. joe tara nova will give you the trade. >> >> the production numbers,
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supply numbers, the move is not warranted. technically crude wants to go above 100. on friday, there's no correlation between the s&p and energy. the way i would play this is continue to look at a name like halliburton. look at a baker-hughes and hornback offshore. hos, nice company down in texas performing well today. >> we like the ieo etf, it owns all of the u.s.-based producers, everything from apache to anna darko. oil hasn't even moved yet. if and when we get a rally in the commodity, you'll want to own the company, mid-caps and large-caps, subchevron and large companies that have the upside of commodity prices. >> oil prices will serve as a major headwind to the general economy. something to keep an eye on. >> oil and stocks have been positively correlated since the financial crisis until i see that change, i would have to
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argue that higher oil prices within reason are going to be good for the s&p 500. when you get to about $5 a gallon of gasoline, we can revisit the topic. but -- >> josh, gomg from that, since the financial crisis, you're talking about a one-time event. >> it's been five years -- >> until that correlation breaks -- it's over. >> so if you listen to the ceos, what they say, caterpillar gives you great color. they say the sweet spot for them is 90-100. because you don't have a collapse of budgets, 90-100 gives these companies a lot of money to play with, above 100 it starts to get too hot. the way i play it, we like the rig companies and scone. we were buying it this morning, the stock is down a percent on the year and it delivered 31 of the last 32 quarters where they've beaten expectations. >> the yin and the yang of river argument. 100 or over could be hard on the company or consumers, but if you get energy stocks picking up and showing any sort of strength, that's good for the overall
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market. >> let's go activism, you're going to begin to see the activism, paul singer, carl icahn. they'll look at a lot of the shell producers. >> it's happening now. >> ongoing. >> as the price moves higher you're going to see more and more of it it's a viable investment play. take look at e.o.g. investment resources. >> housing stocks surging again today after home builder sentiment rose to a seven-year high, murph, we're going to you on the housing trade. >> you look at the data that came out this morning, it was very interesting, it was so positive. it actually stopped the s&p in its tracks for a couple of minutes. the market started to sell off. i think that was more howard bernanke react to the news, but if you look specifically on housing, you couldn't have asked for a better number, the best number we've seen in six years, you look at some of the names, like toll brothers and leonard. they're trading about 10% off their highs, so there's upside. if you're looking for something
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to buy, can you buy those names. it's been called the great end trade ever. john paulson betting big against housing before the market turned ugly. paulson is winning in that space yet again. our kate kelly has the latest. >> it's been a rugged few years for paulson. but his conviction about the u.s. housing markets and certain financial stocks may be turning things around this year. so far, paulson's so-called recovery fund is up 14 %, best performers through the end of the first quarter and his privately held real estate portfolio is doing very well. john paulson is famous for his big short on the u.s. house market. a short that produced seven-fold returns in 2007 as the market tanked. but now he's done a 180 and seems to be making money on the other side. some of paulson's biggest winners this year have been stocks like the mortgage insurer raidian which he bought at $6, to see it shoot up and double that. another genworth financial, an
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insurer with a large mortgage exposure that paulson bought at $7 thinking it was oversold. it's now trading above $11. paulson thinks it's the best time in thistry to buy a home. he said at the 92nd street y, he said mortgage rates and we're still basically in this territory, are still near historic lows and home rental rates in many cases exceed the cost of owning. he's expressed this view in his closely held private equity fund. which he's used to buy residential lots around the country. land trading at distressed levels that is now beginning to turn around. things do remain tough and paulson's gold fund once considered his next big macro thesis. but there's brights spots in the portfolio. it's interesting when you consider where they are and what the history is with that space. >> no doubt. right? i mean a nimble investor, kate knows how to win on either side of the trade. depending what the environment is. >> absolutely, scott. and what's interesting about john paulson is his roots in 1994 when he started paulson and
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company, he was a merger, he has a lot of background in the arbitrage corner of the markets, which involves a lot of technical analysis, looking at different stocks and comparative valuations, being quick on your feet in the markets, knowing when to get in and get out. at the best possible time. looking at different metrics, so he's scoring in terms of macro view on the housing long, which is interesting for the reasons we discussed. but he's also obviously doing a lot of fundamental research on some of the names. and seeing the rewards. radiant to be up 113%, 115 year to date shortly after he got in, that's a pretty good story. >> most are huge gains there. fidelity national is up 5%, everything else at a minimum is up 30%, 50, mgic, 140, radiant up 115. kate, thanks so much. guys? >> i think paulson has had at right idea for a long time on these. >> a lot of these moves are a
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little long in the tooth. other names in hedge funds have been all over. they all feed into the same idea of the real estate reflation. everybody is pretty aware of that's happening. >> one of the names that he owns that we own, but we've owned it lower is hartford. but the reason that's kind of still interesting is because the turn-around story. they've been kind of shedding their variable annuity business, they'll sell that and they could get a better price because the assets are reflating in japan and their property casualty business is getting good pricing so on the fundamentals, some insurance companies have room to go. >> i think you could look at some of the brick-and-morter type names, louisiana, has underperformed all year, a second-half story. v.m.c., vulcan materials concrete, a necessary component of the housing recovery. the biggest pops and drops in midday trading, the first up
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is big lots, stephanie link, getting a big pop. >> this is a new ceo, so if you're going to buy the stock, you have got to believe it's going to change. >> the stop had a huge move at the end of last week, cnbc broke a story about a possible buy-out from charter. this morning analysts are downplaying the likelihood of that. however consolidation is good for the company and. >> boeing has had a massive run and the ceo was object live from the paris air show. announced a big order for 777 dreamliners, so the stock looks like it wants to keep going. >> any time you use the phrase did he pyatt, that means it's a good investment. obama care potentially going to be delayed. he's macked health care names, despite what we're going to get from bottom. the question becomes, you go
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aetna, cigna or unf. coming up, netflix scores the biggest deal ever. and later, why bond yields matter more than the stacks in your portfolio right now. oh, he's a fighter alright.
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. shares of cisco moving higher ahead of an analyst conference call hosted by deutsche bank tomorrow. analysts are expected to discuss the company's strategy on the call. cisco's top performing stock trading at a three and a half year ohio.
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let's debate with joe terranova, the bull is up first, that would be you, joe. >> that would be me. it will din to go higher and most bears have missed the story, analysts missed the story. the recovery is happening now. let's talk about the technical formation, what you don't want to fight in the stock. the momentum is pointed to the upside. the market since may 22 has had a 3.5% correction. you would think a high-flying name like netflix would come down it has not. april 22nd earnings, phenomenal turn-around story. expectations in terms of earnings, subscriber growth, all beating what the street estimated. karl's not out yet, you don't want to get out. >> if you look at deal that was announced, 7% on this deal, i think they completely, the market has overshot it this time. this dreamworks deal is not that much of a game-changer for netflix. viacom, netflix got rid of
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viacom to make room for the dreamworks deal. who picked up viacom? amazon. net dplix does not have the firepower to go head to head with azom. with the stock up 230, i would be a buyer in the 150, 160 range. with the stock this run, this is a sell the news event, you buy it lower. >> i don't know if we should be arguing today's move. i'm not in a position to do that. i think you have to argue the overall story. think about what the story was last year, everyone was concerned with the international spend and the build-out. they've bought themselves time. we've heard jim cramer talk about the potential for doing the secondary -- [ buzzer ] . >> did you see the financial information on the dreamworks deal? they didn't release it. >> i don't disagree. i'm not arguing today's news as a reason to be in or out of this [ buzzer ] >> i'm arguing the second --
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>> i would weigh in and say they didn't release a ton of information about the disney deal, either. it didn't stop the stock from running up 70 points. you put in a stop loss at 200, the breakout level. you have 12% rink. i think you stay long. >> tell us who you think won. we'll tell you the results and give you the results at the end. show. weyerhauser naming a new ceo, the investors applauding the decision, is there time to get long? we'll give you the trade and a top fidelity portfolio manager makes the case for the worst-performing sector since the market topped. he'll tell you why the recent selloff in utilities is a big buying opportunity when the half comes back. ♪
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welcome back to the half, live today from post nine. let's top our top three trades on the half. first up, the ten-year yield. i want josh brown to tell us where you think it's going to go, it will be closely watched. >> sure, we had jeff dunnlock on the show point out that this is now ground zero of the marketplace. i think we've probably seen the worst in the short-term. given what the fed is likely to say. i will say it's already up 28%
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in the last five weeks. so probably we get a little bit of a calming more so than more volatility. >> murphy, smithfield? >> smithfield had a huge pop on the deal from the chinese manufacturer to buy them out. but this morning, one of the large shareholders, a company that starboard that owns 5.7% stake in the company says they should stay away from the deal, break it up and the company would be worth more. on the news, the stock isn't having too much of a rally. >> stef weyerhauser, new ceo and a deal? >> new ceo, they're buying timberland assets, looking at their real estate division to potentially sell it spin it or make it better. they're going to do debt and equity financing to fund the m & a. so i think if the stock pulled back, that's where you want to be buying it. the stock trades at 11 times ffo. >> what's the yield? >> 3%, but they'ring going to be doing more. the dividend increase is the
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third one since october. so the company and the new ceo totally gets it. >> from first to worst. a story for utilities after leading the market to the may peak. the sector now the worst-performing s&p group. is there a long-term case for owning these stocks? doug simmons manages the $5 million fidelity select portfolio. you may be talk your book, people are running for the exits, why is now the time to get in? >> i think utilities right now are particularly interesting. the group has corrected 10% from its april highs. but if you look just at the month of may, the group underperformed the s&p by 12% in one month. the last time we saw underperformance of that order of magnitude, was over a decade ago, in november of 2001. so the group has been sold very aggressively on rates. and fear of rising rates. but despite the selloff, the group still offers a good return. it has a competitive dividend yield of 4%, as well as earnings
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to growth of 5% for a total return of 9% to 10%. historically speaking, a 10% return is a competitive return in any rate environment and especially over time. >> doug, let me ask you a question. would you agree with me, though, that this is still an asset class that's very much playing off of where bond yields are, number one and number two, is trading historically at a pretty substantial preet yum to the earnings, to the earnings price-to-earnings ratio and things of that nature? isn't that still an issue at these levels? >> i think you need to keep in mind the starting point. keep in mind the starting point. the groups already extremely cheap compared to bonds. so over time, dividend yield on the sector has been 1% below that of the ten-year bond. right now, the dividend yield on the sector is double, it's twice the ten-year bond. now if you look back in history and you look pre-lehman and you look prethe quantitative easing that's come about since lehman,
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in the 50 years leading up to the lehman bankruptcy, were there were only three times that the dividend sector yielded more than the ten-year bond. each time was a tremendous opportunity to buy the sector. i think what the market is telling you that the groups already pricing in some degree of rising rates. and it's viewing this 2% ten-year bond yield as largely an abberation. so i think actually, the sector can with stand some higher rates given that we've seen a massive correction and you marry that with the fact that it's already pricing in some degree of higher rates. >> doug, one of your favorite names is center point, how does it trade as 18 times forward estimates is probably one of the most expensive utilities, i get this they're doing the mlp, and everyone is excited. do you think there's value at 18 times forward at this one? >> if you look at my top holdings, they try to marry two themes, above-average dividend growth and they're also names which can catapult, take advantage of the natural gas
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shale revolution in the united states. you look at a name like center-point, who is as you alluded to, mlping their pipeline and their midstream assets and other names that are building lng export facilities, so investors are saying they're willing to pay up for the sustainable long-term trending growth and trending dividend growth. >> center-point, pg & e, searc searcher. thank you. >> i think if you see the growth there i think utilities have place in the portfolio. although they've had a nice run, focusing on the natural gas area is a very good point. >> did the pull-back give you a good entry? was it overdone so much? >> the stocks were up so much. so they pulled back sharply. >> if you really want to be there. >> you might not really want to be there. >> it's not the entire sector. you don't allocate towards the entire sector. you've got to go individual
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names in the utilities. look at the williams companies. >> throw the chart back up. you get a good look at what the sector did. >> let's come up with the reasons to own them. who's got the infrastructure in the pipelines, who is restructuring what has appeared to be a negative story in the first half of the year. that would be williams, that's why i suggest that. >> the group is still trading at 15.5 times estimates. they've pulled back. think they could pull back more and i think he's right on cnp, i think it's a great story with the mlp cal lift. i think they can get it at 20. >> are investors taking too much risk in the search without realizing it. an alarming new trend is forming. we'll reveal it next. they're not afraid to question the path they're on. because the one question they never want to ask is "how did i end up here?" i started schwab for those people.
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we help you shine every day of the week. those people all props, coming up on "power lunch," identity theft, human smuggling, all courtesy a 7-eleven, andrea day is on the beat and has the story. national security versus privacy concerns. who will blink first? washington or silicon valley? we'll discuss that. and a huge recall by one automaker because of a fire risk. and it could happen even if your car is parked in the garage. all of that and the latest market news beginning at the top of the hour. on "power lunch," back to you. >> let's send it back to hq for
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a market flash with seema mody. >> sewed stream, the company introducing a jointly developed home carbonation system to the kitchen-aid portfolio it's kpbed to be available in the fourth quarter of 2013. terms of the deal not disclosed. shares jumped on the news nushlly bnushl ly initial by but faded. >> the stock up 15%, three months year to date 63%, one year, 79%. >> this is a cult stock and as always, the shorts are learning a lesson, you can't just short things on valuation because you think the thing is a fad, because right now the shorts are forced to buy in on every dip. even on bad news it barely budges. the upside, you can stay long the stock, trailing it with a stop loss at the 50-day moving average. if you a are a momentum player,
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it's one of the best stocks in the market. there's no reason it couldn't din to trade on good news. >> you saw the news this morning with whirlpool, kitchen-aid, i wouldn't be a buyer of the stock, i would want it see it get below the 50-day and retest the lower moving average. >> this is a stock that can make 8%, 9% swings interday. i wouldn't go on everything on a short-term price basis but if you're long this name, the dynamics have not changed. they continue to announce deals, partnerships and you have a third of the float that are forced buyers that come in on dips. >> i think it's exactly the opposite. it ral idea today and i think the shorts are winning the hand right now, the shorts are pressing this and through the 50-day as josh mentioned, the stock will pick up momentum to the down side. >> the 50-day is at 60. >> down six off the high today. >> as scott wopner@cnbc.
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can you tell me who you think won the little brouhaha over soda stream. bond yields remain at historic lows and the next guest thinks the environment is concerning trend among income-seeking investors. joel dixon heads up etf research at vanguard, nice to see you. >> thanks for having me, scott. >> what are you worried about? >> well we've been seeing lots of change in investors fixed income portfolios and it's a trend that has been building over the last year or two. but has hit a height in our conversations with clients and financial investors, the move towards shortening duration and credit risks, we're seeing a lot of discussions about floating rate bonds and high-yield corporate and emerging market bonds and even dividend-paying equities as substitutes for traditional fixed-income mandates and portfolios. i wonder if what we're worrying
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about if investors are forgetting the role of fixed income in the search simply for yield to the exclusion of all else. >> i guess my question would be the following. if you're a wealth manager and you're allocating assets across a portfolio, traditionally you would use fixed income as ballast in a portfolio. now they've ripped that safe haven away from traditional portfolio management. what would you tell people to do, if you have 20, 30 years you clearly can't be in treasuries yielding 2%. now you're saying don't go out there, emerging market, et cetera, what's the right answer to the puzzle? >> i disagree with that premise. in fact one of the best diverse fires in a portfolio context has been high quality government and even corporate debt in periods where you know the stock market has trouble. so from a diversification standpoint, fixed income really has retained its status through
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what we've seen in the global financial crisis and beyond. so having that ballast in terms of protecting your portfolio, what we used to talk about a year ago called table risk. high-quality government debt can be one of the most effective approaches for managing -- >> and if tail rates went to 3.5% in the short-term, would you say the same thing? >> actually i would. because as long as your long-term investor, reinvesting income. you're now reinvesting at the higher rates and you're building up the initial capital loss from the increased rates over time you'll be just fine. >> you liked developed markets outside the united states. maybe not emerging market debt, but other areas? >> the issue with some of the fixed income sectors that i mentioned before that we're seeing a lot of focus on, is that you're really substituting credit risk and increasing the diversification with say an equity portfolio by taking on
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additional equity-like risk, like emerging market high-yield type debt. so a broadly diversified investment-grade high quality international and even domestic, but global bond portfolio, well diversified across sector, and countries, to us is a really great way of maintaining the role of fixed income of diversification in the portfolio. >> joel, nice to see you. >> thanks for having me. >> thanks for coming on, joel dixon with vanguard. coming up, did mr. zuckerberg say face? unveiling a new product on june 20th. will it be enough to get the share price moving higher again? we're going to give you the trade. and you tweeted, we traded. oufr pros will give you the plays on the stocks you asked for so you can make your next smart move, when we come back. [ male announcer ] we've been conditioned
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welcome back. the dow is up 165 point, and a good reason can go towards old technology stocks. so-called old tech looking pretty good today. cisco sleegd the dow. microsoft getting a bit of a pot. you take a look at cisco right there. that's a gain of better than 3%. highs of the day, we have microsoft as well. in fact, there it is, up 2% as well, so a good day for technology. not so fast, mike murphy, okay? >> okay, all right. >> traders are quick but not
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always right. let's take a listen to what mike said about facebook a few weeks back. >> we're long facebook. look at the chart in facebook right now, look at 2,900-day moving average. comes in right around the $24, $25 range and the stock hasn't gone below that yet in the next three months. i think it's setting up a nice space and could go higher. >> the hair may have changed, but is the view on facebook the same, because it's down about 8% the same? >> i think facebook right here at the $24 range, scott, is a name you can buy. i think the next investor meeting they are having, the announcement they will have, is going to be a mover. >> this week. >> coming up soon. >> facebook, you own it here. i would be a buyer of it up to the $27, $28 level. i think it will get above 30. >> why is this stock doing anything? >> i agree with mike. i agree there's no sellers left at 23. i think they exhaust themselves there. >> that's great, but if no one is coming to your store to buy anything, you've got a problem. >> scott, here's the situation, where it won't take a lot of good news for this thing all of
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a sudden to make a big move. there's not been any great news yet. if they have a productive meeting with the street, it will pop. >> facebook, mobile ad platform is working. they are getting people in there. it is going to be a game-changer for them in my opinion when the street wakes up to that. >> $1.7 billion this year from zero last year in mobile advertising so that's pretty impressive. >> when you ask we deliver with trades that have lit up my twitter feed. first up capital one. stephanie link, what's the trade? >> like it. just a little rich at 1.3 times to book value. cheaper financials but i do like the strategy the financials have done, become more of a diversified consumer and corporate lender, and i think they will benefit as yields continue to right. >> murph, micron. >> this is one you don't want to fight.
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the momentum is in their favor, ride this one. >> joe, linkedin. >> 202 was the high. everyone getting concerned on the recent pullback. glad we're talking about this in the wake of a facebook conversation because linkedin is everything facebook wants to be. the business environment goes there. they go there because they have to be there, not because they want to be there like with facebook. it is your resume, linkedin. that's what it's become. it's a buy, buy, buy. >> josh, merck? >> this is the single best pipeline in large cap pharma, six drugs in phase three trials, three of which could be blockbusters. meantime, 3.6% dividend yield, paying about 12 times forward earnings. i see no reason not to have merck part of your portfolio. >> let's revisit tech, cisco ask leading the dow and microsoft getting a pop. jon margian we i najarian was h he's a big supporter of
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microsoft stock. >> you can walk into best buy and look at microsoft's products, touch them, feel them. that's a lot bigger than people are giving them credit for. >> a look atpel back in the control room if you can pull it up while we're having this conversation on microsoft. you want microsoft? >> i want to go google, the most important technology name. do i like microsoft, yes, talked about it last week, but i think dwoogle will give you the real indication of technology over the second half of the year. down below 900 right here. price targets above 1,000. i think they are warranted and potentially it does go there and use that as your leading indicator. >> google reminds me of apple like two years ago. it's kind of in that phase where people's imaginations. >> what about it? >> and what they can do are running wild, and i really like that trade as well. >> how about apple? first time all show that we've mentioned that stock. where do we think it's going from here as we take a look at stock? >> look. old tech is doing well today, whether it's cisco or microsoft and apple is the underperformer.
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>> show meet phone and 5s, and i'll get excited about it. meantime seems lackadaisical price action-wise and fundamentally don't see anything in the next week or two that will compel me to dive in at this level. >> the stock price has changed from the fundamentals of my company, in my opinion. don't want to jump in at 430 here, no-man's-land. >> buy on the dips. >> all right. final trades up next. we'll tell you who won our debate a little earlier on on netflix when we come back. ♪
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welcome back. want to share with you a big announcement about what's become real one of cnbc's signature events, that being delivering alpha. it's coming up again this year july 17th. there you go. carl icahn, the chairman of icahn enterprises will be a keynote speaker there. carl and i will have a good conversation, so for more information please go to delivering
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deliveringalpha,.com. very, very excited about him joining a great lineup including the treasury secretary of the united states, jack lew. we at allied the results and you said murphy won the debate on netflix. >> adt. >> josh? >> citi. >> stephanie. >> boise cascade. >> joe. >> expedia. >> that does it for us. "ha "power lunch" starts now. on the rise today, the markets, the bulls back in control right now. and on the rise now, the great american housing market. home builders sentiment jumping in june to levels not seen before the start of the housing crisis. happy home builders, ladies and gentlemen. also on the rise, oil. wti, west texas intermediate, crossing the $100 barrel a mark today. this as the u.s. says it will send weapons into syria. iran reportedly says it's sending

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