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tv   Fast Money Halftime Report  CNBC  October 27, 2014 12:00pm-1:01pm EDT

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baggage much more systems are worrying than demons in ai. >> the computer doing that to you on purpose is scary. >> we'll see you back on friday. that's all for "squawk alley." now we'll send it over to the halftime report. thanks very much. welcome to the halftime show. let's meet our starting lineup. joe tare nova. stephanie link is coportfolio manager of jim cramer's charitable trust. mike murphy ceo of rose cliff capital. jim is president of labenthal asset management. we begin with stocks off their best week in years. the s&p amazingly up more than 5% from the lows of 12 days ago. this happens to be the biggest earnings week of the season with more than 140 companies reporting their numbers. including facebook and twitter. the drop in oil remaining a big story today as well, so our question is this, should
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investors expect more gains or pains in the week ahead. joe? can the stock market go up if oil continues to go down? >> um, the next 50 points in the s&p i couldn't tell you where they're going to be, up or down. what i can tell you is that -- >> is that answering the question? >> it is. and -- >> what if oil continues to decline? >> think for a second about what is going to be the catalyst, the fund flows to drive the market higher. it's the speculation. this morning was evidence, scott, that the hedge fund speculation troublesome for the markets in the last couple weeks isn't over and i'll tell you why. oil comes in lower, the hedging done in the oil futures market, believing the low was in. you come in on the ropes on the speculative side once again, then you have the situation in brazil, the emerging markets, speculating again for that scenario, so the market is lifted on the return of buybacks and strong earnings, okay, but you need something to get that
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speculative appetite back into the marketplace once again to drive it higher. i don't know if you are going to see it. that's the honest answer. i can't tell you. >> jim, tell me. simple answer. can the stock market go up if crude oil continues go down? the market only stabilized when oil stabilized 12 days ago. >> that's the modus operandi. to answer your question it can go up if oil prices go down. if goldman sachs is right that oil is going down because of an oversupply position, but really what most people are thinking and i'm one of them, is that this is an ipds case in sentiment there's slower growth ahead and a negative for the stock market as well as for the energy sector. it's hard to combat that. >> oil is probably down because in part at least because of the goldman call. they take wti from 75 to 90, brent. >> these guys missed it on the downside and trying to figure
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out where individual stock names are going to trade or where the s&p is going to trade is hard enough. trying to figure out where oil is going to go, whether it's 75 or 85 next, i think that's kind of a fool's game. it's a flip of a coin to me. so i look at it, right now to answer your question, stock, the s&p, the market is tied to the moves in the oil market right now. but that will at some point decouple. we don't need to go down every time oil goes down or up every time oil goes up. it's the middle of earnings season. let's put oil on the back burner and focus on earnings. if you're going to invest in a name if that company is coming out with solid earnings and growth forecast, and you can buy it like the airlines at a much lower price because oil has gone from 104 down to 79, do it. >> stef, i still feel like i'm trying to find my answer. >> you just got it. >> that was one answer. >> i think you have to figure out why is oil going down. demand or supply. i think it's a little bit of both. the u.s. shale revolution -- >> if it's demand the answer is
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no. stocks might have a problem. >> i think you have to -- first figure out why is it going down. it is a little bit of both supply and demand. on the demand side and i think you to look at europe and i think you have to look at china, the economic data. >> the data has softened recently and that has exacerbated the problems that we're having in the united states where we are actually producing huge quantities at this point. it's this really bad combination. opec not cutting production. cutting price. there were rumors they might cut production. no word of that at all. i think the volatility is here to stay for a while in the market but i think back to mike's point, earnings really took center stage last week and we were able to rally because earnings are really good. they're running about 9.5%. and so i think you want to focus on those companies. when the stocks fall like ahere, for example,s, reported a good number, stock down 2% today. up 6% friday. down 2% today. you look at that, microsoft, google, i think you look at the companies that delivered on the earnings front and that's where
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you put your money into this volatility. >> you think qe ends this week, you guys? >> yeah. >> absolutely. >> and how is the market going to accept ha news? >> already accepted. >> don't you think there are corners of the market that are hopeful? hanging on the words and others. >> they're looking in the wrong direction. >> they're looking in the wrong direction. the fed has made it very clear, there's nothing out there right now that's going to make them do a u turn right now. their eyes are more on when they are going to raise rates on the short end of the curve. >> market going to be up or down on the day this week? >> oh, boy. >> as they say. >> it's kind of impressive it's not down more today, given what's happened in oil. we got green at one point today. >> early this morning the futures up quite a bit very early and then stress tests, results out of europe, that kind of spooked the market out of italy. throw that into market after the major selloff that we had, i think it's impressive that we are we where we are. facebook, twitter, companies like that will be announcing
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earnings will have a major impact on whether or not we close up. >> look what's green, consumer, beneficiaries of lower oil. that's 70% of gdp. so if that can continue to work, then i think that's another part to support the market. >> our next guest is a four-star value investor and seeing opportunity in the beaten up energy names, joining us is matt, portfolio manager of first eagle global value funds. good to see you again. >> why don't you take a stab at the question where i asked the group. >> where is the market going? our crystal ball is always foggy at best. what i would say -- >> do you care where energy is going as you try to make stock picks? >> if you look at the history, low energy prices have usually been good for equities and high energy prices have been bad for the valuation of equities. so the movements of the market in the short term here, arguably have been counterintuitive in that regard. putting that to one side the problem we have with markets taking a longer term perspective too much debt in the system. if you have too much debt in the
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system, and that's what's driving interest rates down, policymakers want to oppress interest rates when they have too much debt, should risk assets be cheap or expensive and that's a question mark. >> where are they right now? >> the full side of fair. we think risk asset spreads, credit or equity market valuations are on the higher level of historic norms. i think it's time to be a little cautious and not necessarily call the direction of the market, but to prepare yourself with an all weather portfolio. >> but when the market was going down, you know, ten days ago, or so, were you buying? were you pull something money out of the market because you were nervous? >> at first eagle we tend to be counter cyclical. we were active buyers in the short-term window of distress. we did put capital to work. but i think if you look back at the history of our funds over many, many years, our lowest levels of cash in recent years
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were in the beginning of 2009. if you're a buyer of good businesses and prices you should wait for those moments where you could buy on the good prices. today, the bottom pickings are scarce. >> jim layven thal you said too much debt in the system, that's a theme going on too many years. do i take it from that you think de-leveraging still has a long way to go and buy extension that inflation is something none of us should be worried about? >> in a sense everybody was getting ready for the rising cycle in the united states. witness the decline in the price of gold. witness the decline in the euro vers sus the dollar and all of these kinds of bearables. if you look around the world and look at countries that have had the most debt, sovereign debt to consumer and corporate debt, those countries have typically resorted to sustained financial repression. so we may have to get used to an environment where the authorities try oppress interest rates on a generational basis as opposed to a cyclical basis. >> that's dour, matt. >> if you look at the bis data
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and add up those levels of debt the levels of debt relative to gdp are higher than when we went into the crisis in 2007. the de-leveraging has not happened. i think you have to be a realist. >> geographic? i won't hog all your time. >> please do. >> actually it's not just in europe. it's in the united states as well. and japan. and we've seen big builds in debt in the emerging markets. the softness you reference before in china's growth, the situation in brazil, this softness is coming after a decade of very rapid credit growth and sos there's lots to look around the world. >> would you be a buyer of gold? >> we view gold as a potential hedge. if you think there's too much debt in the system and you want a potential hedge against the policy risk from that, sustained financial repression or longer term inflation, then we think gold is a good potential hedge against that. look at the sweep of history, it's nature's alternative to manmade money. >> you're still placing your
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money with old technology, microsoft, intel. >> sort of entrenched technology. always a new flavor of the month in technology. social media today, you know, go back 15 years ago, it was the b2 b internet ipos and the like, but what matters to us is persistence of cash flow rather than price to concept and big companies like microsoft or racle, two of our biggest tech holdings, they generate oodsles of cash flow, buy back stock and companies like microsoft have dividend yields close to 3%. >> thanks for coming? >> thank you. >> matt mcclennen. >> yeah. i think matt's insights helpful and one of his energy names that i want to ask him about, national oil, it's a company we've done a lot of work on, gotten killed recently a lot of big hedge funds in the name but more from a technology side i think there's a lot of upside there. >> when the oil price goes from 100 to 80 in broad terms it starts to knock out some of the marginal producers and starts to dissuade excess production growth.
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low prices can cure themselves over the medium term. with energy we take a long-term view to investing, buy names that are positioned for the next five, 10, 15 years not just the next five months and national oil, provides the bits and bobs if you will, to rigs they use for deepwater drilling, for unconventional drilling and they're where the capital spending needs to be in the future not just today. recycled risk there. but if you take a long-term view they're in a good place and generating free cash flow. >> coming up daylight savings across the popped. we're watching the european close as soon as the trading day ends there. look ahead to twitter's earnings after the bell. good news is priced into the stock. find out if he's liking facebook over its social media rival? up next, however, citizens financial, the second biggest ipo of the year, we talk to the ceo exclusively after the first earnings report since going public. regional banks are lagging
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anybody sick of these low interest rates you have to be at the top of the list. >> yep. we're waiting for the lower for longer phenomena to finally come to an end, but i guess events over the last months call that into question to some extent. >> what really is your outlook for rates and how is that negatively impacting your business? >> well, i think it puts a little pressure on spread because companies that have loans with us have an opportunity to refinance but it takes a crimp out of our overall margin. in any case, i think the fed ultimately still is making positive sounds about the economy and we could still see i think an increase in the fed funds rate next year which certainly would be good for us given our asset balance sheet.
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>> 63% of your revenues come from the consumer. can you give us a little color about what you're thinking and seeing from the consumer and can you specifically talks to auto loans because that has actually been on the rise and do you think that's still under control. are you starting to see pricing pressure? >> i think the consumer is starting to get their mojo back a little bit, if you will in certain areas. auto loans, the auto manufacturing is at all-time highs and we see good demands for auto loans. we're playing that reasonably cautiously in terms of terms and conditions. there's enough there for us to continue to grow our book. student loans as well. i think we see good demand for education and we came out with a very innovative refinancing product during the quarter and we've had a large spike in applications related to that product. mortgage market we'll have to wait and see. we've seen some sequential quarter improvement in q3 versus
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q2 but i think overall the year has been a bit of a disappointment. >> do you feel lucky to have gone public when you did, given the return of volatility in the last few weeks? >> yeah. i think with the benefit of 2020 hindsight that was probably a good time, although again, i think our stock is not priced for perfection at this point. we are a work in process. we have overall improvement plan to get our roe up. i think our stock has held up in reasonably well, relative to our peers through the choppiness in the month of october. >> good to see you again. thanks for coming on, bruce, exclusively on cnbc. we'll talk to you soon. >> great. my pleasure. >> do you still like the regionals? >> i do. but i'm pretty selected on them right now because of interest rates. what we talked about. i was pleasantly surprised with sun trust they had a good quarter -- >> that's at the top of your list and has been. >> it was impressed on the efficiency ratio and progress they made. in the face of a difficult
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interest rate environment. i'm kind of specific where i like the regionals. until you see rates going higher it's going to be tough. >> a chance to by ctbi. that's pulled back. texas, a strength when you talk regionally and i think you have to do that with a lot of these banks, tech is strong, southeast is strong, places i would look. until you see a turn in the yield curve and begin to see m&a activity in financials absent in a year where m&a is at strong levels i don't think you could be attracted to it. >> i would look at the big banks over the time when rates start to move higher. they will eventually. we know that. stay away from the regionals and look at the big banks. >> developments in the u.s. ebola story. another person in new york city being tested for the virus. this time the child is a -- the patient is a child i should say. meg is at bellevue hospital where the 5-year-old boy was admitted.
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meg? >> that's right, scott. we know that the child was transported here to bellevue last night, developed a fever this morning, because he had been in one of the affected countries in west africa in the last 21 days. they are testing him for ebola. they expect the preliminary results in a couple hours. we hope to bring you more details. they're checking him for other things because fever could be caused by many illnesses. no suspicion yet he has ebola. of course, dr. craig spencer the only patient in new york to be diagnosed with ebola. we're told he's in serious but stable condition and some updates on casey the nurse who had been quarantined at newark airport and being held there. she is being discharged after testing negative for ebola, symptom free 24 hours, transported privately to maine still under a quarantine order. we're hoping to get more details on dr. spencer and the young patient who is here being tested later today and bring you the updates. >> meg, thanks so much. meg terrell for us in new york
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city. coming up, european markets wrapping up trading in just a few moments and look on track to close in the red. we're going to take a look at the final numbers as soon as the bells across the atlantic ring and also whether we're going to get a pick up in our market once europe closes. and your holiday shopping list including some sporting goods, citi thinks it will and has the companies in position to cash in. but is fitness really your best bet for this holiday season? we'll do bait that. and the energy sector, the real drag on the markets today on the heels of that goldman call on oil. how is the smart money dealing with that pain. kate kelly will join us with how hedge funds are managing the energy plunge. we're back after this. there's a difference when you trade with fidelity. one you won't find anywhere else. one-second trade execution. guaranteed. did you see it? in one second, he made a trade, we looked for the best price,
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welcome back. back to our big story of the day. that's the continued plunge in the energy space. kate kelly tracking the smart money as she usually does and author of the secret club that runs the world focuses on commodity traders. >> professional commodity traders and whether or not they have an influence on actual
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prices which is the important question. goldman sachs as you know cut their price forecast today, both for wti and brent. very interesting. they're looking at prices of 75 or 85 respectively in the first quarter of next year. and this is articulating what i've been hearing a lot from hedge fund traders in this market. most i talk to are bearish on the brent side kind of uncertain. they feel it's a coin flip in many cases and people are looking to the opec meeting which is actually being held on thanksgiving day for some clarity based on what the saudis do and what we hear about producti production. i'm told we could see a $20 move one way or the other which seems huge. the bearishness globally is catching up to these markets right now and folks that i know are really not bullish until a couple years out of the curve, 2017, 2018. >> heard somebody on our network today talking the potential of $65 oil. >> i heard 60 as well. people are very, very bearish and the issue is the production continues to happen rapidly. bottlenecks going on, regional
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inefficiencies. the bakken shale has been a gift and keeper gas prices will be great in some ways for the economy but for the energy producer not so good and clearly shake up the models people had going into this year. >> thanks. >> thank you. >> kate kelly. if crude oil will stay cheap for while what does that mean for gas prices? to jackie deangelis at the nymex. probably means they're going lower. >> hi there, that's right, that's what a lot of people are saying. as we're watching these oil prices fall we also see -- are seeing gas at a four-year low. your take on this in terms of the drop we've seen in gas prices, 18 cents in the last two weeks, do you think that these levels around $3 are sustainable for the next couple of years? >> jackie, we do think they're sustainable and goldman, a lot of smart folks came out with that call, calling for lower oil last thursday but think about it the crude oil prices about a 66% correlation to the gasoline. 66% of that is refinery costs and as we see that price at
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the pumps it will give relief to consumers but there is a deflationary undercurrent and consumers need to realize. >> as for the short-term outlook do you think we could see prices fall by the end of the year even more? >> absolutely. since june, gasoline futures have been down by about a third over the past two weeks, balanced in a 10 krechbts range. that's now how any market bottoms after a drop of one third. i think it's a lock that we're going to see gasoline futures trade below $2 a gallon, the first time we've seen that since 2010. >> all right. certainly good news for consumers, producers, that's another story. for more head to futures.cnbc.com. we've got the live show tomorrow at 1:00 p.m. back to you. >> thanks. you want to say something? >> just overall on the oil conversation, stephanie and i were talking about this before, have you heard anyone come on, we had matt on and i asked did you get out of your energy equities, has anyone come out and said i'm out of the energy equity space.
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what's going on back to the top of the show when i talk about speculation. the hedge fund community is using the oil futures as a proxy. one of the things that happened is they didn't want to sell their energy equities, tax inefficiencies of doing that a couple weeks ago. they went in and shorted oil. oil ran up to 83. they got stopped out. they were left empty. now they're back in selling again. i think that's the most important thing to understand. this is going to continue until the opec meeting until the end of the month. they don't want to get out of equity energies at all. >> i think you're right. mind if i ask you real quick. the long-term holders of this have been in oil stocks since the beginning of the year. isn't that the bigger picture? since the beginning of the year we've had long-term holders. >> they don't want to pay the 58.5%. trade the futures that's volatile, a problem, stays for the whole month. >> i don't think anybody has a real good handle on where oil is going to go. >> i think you're 100% correct. >> it comes back to why exactly is it down? demand or supply? if it is demand that's a problem.
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supply there's an opportunity. i think it's a combination of both and that's why you want to look at valuations, special restructuring stories and plenty of them out there that are actually getting much more at >> a lot of big funds that we're quoting here, kind of got caught off guard in the last few weeks in my opinion and led to a lot of volatility to the downside that we saw in the market. so be careful who it is you're following and why you're following them. >> anybody would buy a refiner here with -- >> with both hands. because. >> why? >> the rub is two fold. one the collapse in the west texas -- >> you hear about mostly the spread. wti and brent. >> that's one. the other the potential we're going to export oil. these guys make money hand over fist if any of those things. they make money hand over fist if the spread goes away, make money hand over fist if you export oil. the american refiner complex has cut its costs dramatically. upgraded all of their plants and really minting money right now. >> do you agree with that? >> i don't. i would not put money in a
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refiner right now and i think i shared with you last week the energy lift we had i sold into that because i believed that people are stuck long energy equities right now. i put the money into health care and happy i did it. >> i'll tell you, we get the look all the refiners are reporting with the exception of valero and examine back next week. >> okay. >> all right. >> i thought we were going to have a little fight. >> look, i mean the score is about to come up this week. >> i can only instigate so much. >> and if you want to instigate something else over the weekend i thought about this and reading the goldman sachs note, why would you buy as tesla with the price of oil where it is? look at tesla. i have not traded that stock but to me, it looks to me like it's going to implode if oil stays where it is right now. why buy it? >> our trader blitz. four trades on four stocks. merck moving lower after missing revenue expectations and narrowing full year forecast. >> it has been a big winner. you're seeing some profit taking. i think the quarter was fine.
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i thought their update about products not so good, their help c. looked like they are going to be pushed out a little bit at a losser are sus its competition. not one i would chase. >> goldman sachs upgrading garr mon from buy to neutral saying it is positioned for sustained growth. >> i like this one. first off the emphasis on personal navigation devices is going away. they're into autos in the oem sector and where they want to be is in the internet of things. start with your autos. move over to other products as well. i like garr min here. >> up to therapeutics getting hit hard after a delay in the release of its muscular dystrophy treatment. >> the temptation is it looks as though it's going to be mid-2015. a volatile stock. very typical biotech with a lot of volatility. i wouldn't buy it. want to play biotechs by the xbi. >> european markets have finished their first trading day since the results of the bank stress tests were released. let's send it over to michele caruso-cabrera for a check on
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how europe is finishing up and reacting to brazil as much as anybody. >> yeah. certainly. the european markets actually opened higher across the board in the wake of the stress tests you mentioned but take a look at what's happened. the major averages have turned lower after another piece of weak economic data out of germany which showed german business confidence declined for the sixth month in a row and germany europe's largest economy. the weakest greece lower by 3%, italy lower by 2% and spain 1.5%. we're going to get to that because of the ecb and the bank stress tests. before that german data a positive reaction to the stress tests which showed none of the systemically important banks in europe failed. the banks that did fail were mostly in the weaker economies. ie italy and greece. the weakest today. they dominated the list. italy nine failures, in fact, 13 banks need to raise about $12 billion in capital. the oldest bank in the world is one of the most troubled. italy had the largest capital
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shortfall $2.7 billion. the milan also needs to raise capital as does the national bank of grease. see what's happened to them there. that's according to the ecb. once they complete a restructuring plan the national bank of greece says they should have a surplus. what isn't clear yet, are these tests credible? remember during the previous stress test in 2011, at least one bank failed within months of passing the stress test. we're going to watch and see how the markets react and whether or not these banks can hold on. >> you want to talk to us at all about brazil and what you think the days and weeks ahead are going to be now that the election is in the books? >> well, huge, huge market day in brazil. it had been off at one point by more than 9%. i mean we talk about that over a couple of weeks in the united states. but can you imagine in one day. it's now off only 3 or 4%, down steadily on the fears delma ru -- dilma would win the election. take a look at the etfs.
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petro brass lower by more than 14%. a lot of state intervention into that company and expected to continue because of dillma rousseff. the mining company, the big bank lower by 6% and then the ewz, ishares brazil. negative reaction to the election of dilma. >> thanks so much. it's funny we're talking about the stocks today and the reaction to the election. if you recalls last week at robinhood jim chainnos one of the best short sellers called petrobras a scheme not a stock. >> that was kind of harsh out of mr. chainnos. right now he's been proven right. i look at the setup? petrobras this was $21 a share, it's gotten taken to the cleaners. there was a lot of volatility in the name up to friday with people betting on which way the election was going to go. you get down into 10 or possibly
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even $9 a share if it breaks under that, i think there's value there. i don't see it as a scheme. i see it as one of the largest oil companies in the world and possible upsisds from these sfleefls what about valet. >> we bought some today. it's given back all that it gained on friday. friday was up huge on the speculation as mike said. people thought knee vass was going to win. i think the same thing like pettrobrass, trading at such a discounted value vers sus its peers. they put out a production report better than expected. reiterating the dividend. doing things to focus on profitability. nobody cares about fund mentals but at some point they will. >> i didn't expect we would see a change in leadership so i never bought into the premise you would see a repeat of what modi did in india in terms of the emerging markets flows. taiwan, mexico, india. they're the beneficiaries right now. i wouldn't be putting money into brazil on the belief that a lower currency will stimulate exports. and again, it's just one more thing that potentially could be a catalyst for global markets
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that is now removed. >> all right. coming up, mike murphy is just dieing to take a victory lap on a chip stock he's sticking with. never guess which stock it is. >> sneakers and spandex on your holiday shopping list? citi is betting on it and making a call on two retailers it thinks will be this season's top retail plays.
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welcome back. a look at micron the bests performing stock in the s&p 500 right now. trading higher after announcing a $1 billion buyback. mike murphy is feeling good about that. as you know he liked the stock for a long time. he put it in his playbook. and now they tell me you want a victory lap on top of all that? >> no. i didn't -- maybe i did. this is something we talked about last week, scott. micron has been skren rating a ton of free cash flow and we thought a catalyst for the
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company -- got killed, 34 to 27, kind of got a hard time from the desk here a little bit and now -- >> about time. >> little bit. bag of chips. and now you see micron using some of that free cash flow to buyback stock and i think there's still a lot of upside. >> i'm ready to like set you -- maybe you and david high horn want an ice cream and talk about micron. >> you set it up and i'm in in for the ice cream. >> dominic chu what's moving? >> we're watching shares of the at home soda machine maker soda stream giving back a lot of the gains they had on friday in today's raid. they're down around we'll call it 10% in trading. you may recall friday shares they went higher by about 15% after pepsico and the company both confirmed there were limited tests, small-scale tests, going on between pepsico products in possible soda stream machines. both cautioned nothing more should be read into the agreement. so perhaps some traders taking their profits today. the stock is down about 10%
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after gaining 15 on friday. back to you. >> what a veeers ha vereversal. >> soda stream i traded in the high 30s and low 40s and the reason being involved with the name someone is going to buy them. now it's down at 21s if someone does buy it i don't know if they pay up 25, 30% for it. this is not a business you want to be investing in right now. you don't want to be investing for the hope of a buyout. if someone comes along and buys them and you get pop into the high 20s great, don't like the business model at all. >> coming up, sneakers may not be the classic holiday gift but citi says foot locker's stock will get pumped up as the weather gets colder. not everyone on the desk is buying. we're going to debate it next. later with halloween only a few days away now, time for halftime to get a little bit haunted so a member of our team is getting a face lift. zombie style. our intern kelly is in the process of becoming undead. we're going to have the reveal later in the hour and get zombie trades from the desk as well when we come back.
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so if you get a trade idea about, say, organic food stocks, schwab can help. with a trading specialist just a tap away. what's on your mind, lisa? i'd like to talk about a trade idea. let's hear it. [ male announcer ] see how schwab can help light a way forward. so you can make your move, wherever you are. and start working on your next big idea. ♪ and start working on your next big idea. can you start tomorrow?
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yes sir. alright. let's share the news tomorrow. today we failrly busy. tomorrow we're booked solid. we close on the house tomorrow. i want one of these opened up. because tomorow we go live... it's a day full of promise. and often, that day arrives by train. big day today? even bigger one tomorrow. when csx trains move forward, so does the rest of the economy. csx. how tomorrow moves. good afternoon. coming up at the top of the hour on power, oil plunging, prices below $80 a barrel, goldman sachs slashing its 2015 price
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forecast, so is oil's big drop a good thing on balance or maybe not so good? and how should you trade the beaten down energy stocks? someone trying to copper -- grab the corner of the copper market? a single buyer snapped up more than half the metal held in the london exchange warehouses giving whoever it is control over a crucial source of supply and raising concerns about potential higher prices. we'll shed light on who that person or persons may be. toyota in texas. the automaker breaking ground on its national headquarters in plano. governor rick perry and the north american chief will join us first on cnbc. back to scott on "fast money halftime report." >> citi thinks you'll be focused on sport this holiday season. the firm names foot locker and dick's sports goods as top retail plays. let's debate it now. we want to hear from you.
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logon to cnbc.com/vote to decide are foot locker and dick's sporting goods your best holiday bets? guys? >> no. >> what is? >> i'd rather play that space in under armour or nike. you know, when you go to the retail stores, i think there's so much noise around the holiday season, that sometimes you can get although they have great selling seasons, the stock prices don't follow suit. i would rather go to the horse's mouth. i would rather own under armour which i do and like to own nike. >> if you like nike you have to like foot locker. 68% of their revenue come from nike. not only that but they are remodeling focusing on e-commerce, beginning in europe. >> not necessarily because foot locker and nike don't move hand in hand. you can like nike as i do and not want the exposure to foot locker. >> i like them both. >> i think you have to like it because they sell their product. if you don't think nike is doing well you don't want the expo he sure on foot locker to the degree you would. i think there are company
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specific things happening at foot locker that are exciting and the stock is way cheaper than nike. i like nike but i think that foot locker is -- >> cheaper way to play the same story. >> it's a restructuring remodeling story. >> there's a reason why they don't move hand in hand. you can own -- you don't -- i disagree with the point you have to like one if you like the other. i like nike, don't like foot locker. >> under armour i like the strategy and a lot to me is an executive strategy that through 2014 is clearly the right strategy. but overall, i think ups, fedex, they are telling you those are the places you want to be. where is apple to uds? another all-time high. the holiday season is about technology. >> maybe the holiday season gets amazon back on track. i don't know. >> i like the sciti call for th macro reason jobs picking up but don't have wage growth. people are not going to be buying say, you know, jewelry at tif fan my's but they are going to buy theiric ki kids at foot r
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or may buy a new golf driver at dick's. i like the stores for the value they create. >> all right. the vote is closed and the vote is -- there it is, almost 70% say no. foot locker and dick's sporting goods not your best bets. coming up in the spirit of hol lae ween, zombie trades or stocks better left for dead. twitter and facebook earnings out this week. which social media giant is best in breed. citi's analyst thinks he has the answer in less than 140 characters too. we'll be right back.
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welcome back. huge week . >> welcome back, huge week of earnings, pfizer, es son, a few of the dow xoevenlts we will be hearing tonight twitter is kicking off social media stocks. we are joined with what he will be watching for in that report. welcome back. >> thanks for having me. >> if you want to sort of size up twitter from facebook, from a stock standpoint it's no contest. you can make the argument the biggest surprise is likely to come from twitter, not facebook, correct? >> i think both earnings reports, as you mentioned, twitter this evening, facebook tomorrow, are going to be some positive life here for the internet group, which has not
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really had a great earnings season to date. facebook, we're actually looking to have the bicker surprise this quarter, given the role the video is beginning to play on the video networks. so really look for facebook to lead the charge tomorrow i think. >> you are not bashing facebook and not so hot on 26th. what are you specifically going to be looking for with twitter. what would cause you to change your mind? >> sure. i think a lot of the focus for twitter has been and should continue to be the growth if their user base or naus. we're really looking for at least 285 million naus in a quarter. if they do better than that, that builds the point that we would look either better or worse, really, a change in the thesis that we have. >> you think a big acquisition is coming as relates to twitter. they got some cash. you think you will put it to work? >> so far, facebook has been the more aggressive social media
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company on the nna front. they closed the deal with instagram and oculus. i think twitter has a lot of challenges internally. we had a recent changeover in the management team at twitter. i think they're very internally focused at this point. mna for them is probably not going to be a part of the offensive strategy at this stage. >> on 26th, an a sequential basis, few users are expected to fall because last quarter was helped be i the world cup. how much of a decline do you expect to see? do you think they can actually post upside as well? >> actually the street expectation is for over 14 million net sequentially t. street is expecting helping growth sequentially, despite the world cup, cup as you mentioned. so, you know, that's the expectation, if they do better than that, the stock is probably going higher. it may be worse tan 14, 15 million net ads. the stock is probably going lower. >> we tend to forget sometimes on some of the things and
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corporate activity we do in a quarter. 1.8 billion twitter was able to tap the market with. >> that's what i'm saying. that's exactly my question. they tapped the debt and get all this money. why won they do an acquisition? mark, it almost sounds like you are making the case for e. saying that facebook is the one that's done all the buying. why wouldn't we see twitter put that.to work? >> sure. twitter, if you look at cash as a percent annual of a market cap, with the 1.8 billion convert is way under index from its competitors, like facebook, like goggle. like others. i think what they're trying to do is be competitive and have a balance sheet to be opportunistic. i don't think it's the focus of the management team right now. i think that's to tap, to convert the market right now and really make them more competitive from a brens sheet perspective, to be opportunistic. i wouldn't look for the company to really prioritize mna at this
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stage, given all the internal focus that the company attempted to change the user experience. i think they need to improve the product in certain ways in order to close that gap with facebook. >> mark, thanks is there thanks for having me. coming up, we're taking off our haunted halftime serrys with "walking dead" trades, watch out, there is a zombie among us in the studio. plus, final trades.
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. >> welcome back. we are launching a series haunted halftime. today's theme, zombie stocks.
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so we decided to zombiefy one of our own, our intern arrived looking like a healthy normal human being. with a little handiwork, there it is. this is what she looks like now. hi, kelly. the transformation is courtesy of anthony coczar. he's on the sci-fi show, it's a special effects competition. congratulations on winning, by the way. >> how long does that take? >> probably about an hour-and-a-half, two hours. >> i may have some candidates on your desk for the next project. i can see zombies coming in. how do you feel? >> i can't talk. >> you can't even talk. you can see the season finale of face off tomorrow night. let's talk about zombie stocks. stocks that are better off dead than alive.
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steph. what is left for dead? >> that is so dramatic. i think sprint, the stock the down, they're a knob three player in the environment. they have to spend time to upgrade their networks. the new ceo, there is a chance he can cut the chord and lower the numbers. eight times ebitda is expensive for what you are getting. >> the oil drillers, the contracts they signed for many years, now they will be signing contracts that are much lower than what they are used to. it will be a long time before this get hot again. >> looking at cliffs natural, clf. we talked a lot about this name. there were activists in the high teens, low 20s. it's been low 20s to what it is today, $8, $9, stay away. >> store closing, it doesn't matter, it's $40 bucks.
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>> you can put that on the list for however many years. >> it went back up to 20. short it again. >> let's do final trades. >> long marathon refineries. >> long street timber. >> long tether. >> have a great rest of the day. good afternoon, everybody. welcome to "power lunch." we will begin with a developing story, news about the ebola outbreak. now a five-year-old boy under observation in new york city after he returned home from guinea over the weekend is prompting ebola concerns. meanwhile, a furs held in quarantine in new jersey hospital, in a new jersey hospital, will be allowed to go home. sue is at the new york stock exchange. we will get to her in a moment. first, outside beliveau hospital in new york city is meg. >> reporter: hey,

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