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tv   Fast Money Halftime Report  CNBC  April 13, 2015 12:00pm-1:01pm EDT

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said earlier netflix would have a new high, that would be a new closing high. we're about $1.50 away from a high on netflix of course after two upgrades and two training sessions. that does it here on "squawk alley." let's head over to scott wapner and the half. and thank you very much, welcome to the halftime show, let's meet our star lineup for today, jim laichb that will is the president of laichb that will management. investment partners, josh brown is the ceo of the management and pete is the co-founder of auction monster. he as always is on the floor of the new york stock exchange. looked like this, banken to with jpmorgan and wells kicking off earnings tomorrow. which names you should own right now. motif of the month, how best to capitalize if things actually do
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continue to rise. we begin with the markets and what we're calling a moment of truth. the real star earnings season, 36 s&p companies reporting this week, including the banks, j and j, intel, and so many others. backdrop frankly that's not all that good. investors looking at the worst earnings growth since the recession. jim, the notes are flying around the street saying don't expect much, in fact they are going to be bad, they're going to be negative. what do you do? >> i think you wait it out, scott. definitely though, this is a good time to have 10 or 12% in your florals to pick up the opportunities as they come up. even though the stock market overall is flat on the year, there's a lot of movement on the earnings will continue that. as far as the one quarter though, we knew this was going to be a lousy quarter, basically from january when you have the affect the strong dollar, and that's just yes sen doed throughout the quarter. really have to look past this quarter, in fact past the first half of the year in the back half in 2016 to get
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enthusiastic. >> so joe, doich takes their earnings estimate for the entire year down, they come up with $118 on the s&p, okay, you put 16 times $118, you get 1,888. if you want to be a little more optimistic, put 17 times on that, you've got 2,006. last i checked the s&p is trading at 2,100, do we have a disconnect between market and reality? >> we have disconnect between the market and reality, we have in front of us the month of april and at the beginning of the month, we talked about betting on the consumer. that's where you want to stay into the earnings season. you want to bet on the consumers benefitting from, that's obviously the lower energy cost, that's obviously lower private sector bargain cost. they're spending on health care. that's why the health care sector is hot. consumer discretionary sector is hot as well. i believe we get through earnings season with the s&p carrying towards a new high, april will be a strong month. i'm not changing from that.
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next six months, yes, you could see a correction at some point, but for now, i think the market gets through the earnings. >> i'm glad you went where you went with consumer discretionary, pete. you have the money investing today. why do they fuel fears because the sector is up 18.8% in the past six months versus the s&p up 10. >> right. >> discretionary now the most widely held sector according to bank of america. >> yeah, and it gets interesting. i'm less excited about that area. and i'm still excited about health care, despite the fact that it had a great first quarter. you look at the last week even, health care traded once again -- >> health care, was -- >> one of the best performers. >> now it's discretionary. >> the reason i still lean towards health care, scott, you've got a couple of different things working right now. you have all the big major names we talk about, big pharma names, even talk about biotech. when you look at the big four
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there, the various names out there, you see this area being what's propelling this to the upside. then you have the backdrop of the pharmaceutical names. health care, i continue to like, continue to like it, i've liked it for a long time. ill still think there's a great balance between those and a little bit on the higher priced side in terms of pe, and those are still very, very cheap. >> steve on the floor, if you have sticker shock in some areas of the market against a backdrop of negative earnings, are the major averaging telling the real story? >> well, no, they're not. but we're running into resistance, that 2120 level, scott. if you look at the market as a whole, i think the financials have already priced in whether it's citi, jp, or goldman. they're up. you're going to take the lead from jpmorgan. if trading activity is good, that's a sign you're going to buy the rest of the space. they're all overbought at this point, i would back away as well. >> josh brown, what do you make the comments and what do we do
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here? how are you going to get a huge bulk of earnings coming down this week, then it really gets interesting. >> where to begin, well, first of all, let's put the down earnings into context. if you back out energy, it's not down earnings. number two, resistance, the most important technical thing you need to look at right now. what all the technicians are talking about is the new york stock exchange, stocks only advance decline line, exploding through to new all-time highs. that's the headline. forget everything else, when you have expanding leadership and more stocks breaking out to new highs, you're going to get the index price follow. it happens every time, it's happening right now. the other thing to keep in mind, look at leadership, up 8.74%, year to date. russell 1,000 value is flat. so what's leading us higher, growth stocks? there's no reason why that would be interpreted as a better sign. people are willing to bet on growth. the headline on consumer stocks,
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think about why that's happening. you have huge energy savings, you have an uptick in wages, tighter labor market, you have quick rates hitting highs you have not seen before the great recession, and all of those justify the price action we're seeing, in consumer discretionary stocks. people are feeling better, spending more money, earning estimates are going higher, profits are rising. >> can i add one thing to this? you made a great point about this. the multiples you would put on that. you can find so many stocks that are trading cheap. you may disagree with whether you want to own them or not, but look, ibm, ten times earnings. general motors, citi group, book value, there are a lot of cheap stocks out there. it's a market of stocks, not a stock market. >> i did put the correct multiples and the doich bank is correct with earnings? >> that may be a good point. you would like it see them lower? >> some people think bigger. >> >> well okay, there's that, but the point that i'm drawing,
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you were throwing 16, 17 times multiple. that's fine, that's in the middle of the road. >> that's why i threw. >> wait, the market's got to come down 100 points. that's not necessarily going to effect these good companies that you can buy at great prices. that's my point. >> all right. you have bank earnings up -- antonin, welcome back, good to talk to you as always. >> always a pleasure. >> the thing that jumped out to me most on your notes here is you do not own, correct me if i'm wrong, you do not own goldm goldman, jpmorgan, or stanley. is that correct? >> that's correct. >> what does that say about a guy who focuses exclusively on the financials, not owning the murderer's row of financials? >> well, i do own citi, bank of america, i do own sun trust, we are certainly well-represented, and i own a lot of merger
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candidates among the smaller banks. that's certainly been a great place to hunt, and greatly it's helped our fund outperform. >> why don't you own the stocks i mentioned? >> well, we're expecting some decent quarters out of them, and i think, you know, the trade's to some extent. and i always worry about the crowded trades. i worry when everybody says they are consensus longs, you know, if there's a slight miss, if it's not perfect, they can come under a little pressure. usually you'll find me being an honor. i love to take advantage of sort of other people's weakness. and right now everybody thinks they're going to have good quarters, i don't disagree, i think they'll be fine. trading will be good. i think thick will be particularly be really strong. certainly what we've seen with the dollar's been traesk. >> fixed income, kurn sis, and commodities. >> correct. you think about the move in currencies, plenty of trading in oil as well. so energy's been very active, the bond market's certainly provided some trading opportunities. >> what was the last time you heard anybody talking about
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trading being betted? is that a wild card that folks really need to pay attention to and the reason why some could be ripe to go higher? >> i think that's right. i think that it's been a while since, you know, guys have beaten those results or have real strength there, and i think that the real strong move we've had in the dollar has just really been good for these banks from that perspective. >> hey antonin, it's josh brown. what do you think of the brokers? >> so the brokers have a couple of other interesting issues here, because there's some fiduciary standards that the department of labor is going to issue at the end of the month. there's been fear among people who are doing more retirement kind of work. then the fcc comments shortly also. these are things about morgan stanley, they have a big retail corner and retirement accounts. depending on what they can or can't sell to clients, something i'm watching sitting back. >> sorry, go ahead. >> i was going to say, i think goldman sachs will have a strong corner, it's more of the fiduciary question that's an
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issue. we'll wait for clarification. goldman will have a good quarter. >> i want to ask you again about mogen stanley, i want to throw the chart up one more time. people love the stock. its done well against its peers, is the street missing something there. you certainly don't seem to be enamored with this, we were watching the day start to tick lower, i don't know if it was all related to your comments as a very well-respected investor in this space. >> well, you know, i think depending on the way things flow, i mean it could be, you know, 50 to 30 cent head to their earn physician they can't sell products to people in iras. you know, and that is a real question. department of labor will come out with the results. other stocks under pressure last week, i think we saw lpl under pressure, i think we saw aher ra prize. >> do you think they'll allow that to go through or that could be a four-year fight, right?
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>> it could be quite a fight. uncertain city an issue for financial service stock farce long time. it's just a new phase of it, obviously the big banks have suffered for a long time under lots of regulatory issues. this is just another phase and heading in a different direction, making different companies. >> antonin, real quick, about the asset managers real quick, because the performance has been incredible. what do you think about that particular sector right now? >> well, like i said, i love it and it worries me that that sector's been incredible. it worries me -- i'm most afraid of fixed income. if we ever get a tightening cycling, i know it keeps getting pushed out, man oh man, it could be really wreak havoc in the bond mark. guys that have had tremendous flows in the fixed income funds. that's a surprise to catch people off guard. everything looks so good. multiples are up, forward earnings are up, but, you know, rates can move and they can move quickly. we certainly that h that a year
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and a half ago, almost two years ago, and i expect we could have the same issue at some point in time. and it could be heavier and harder. when will the fed raise? that's the question. if tongue happens any time this year or particularly in the, you know, june to september time frame, then i worry about the asset managers, i worry about the bond market and worry about big franks, dodd frank will have issues providingly kwid i did to bonds. who's the buyer? that's the question the fed will deal with that one. >> appreciate the conversation, thanks. >> thank you. >> all right. what do you make of what he says? sobering view of certain parts of the financial spectrum. >> definitely sobering, but keying in off the comments from the rest of my partners here. there's definitely, there's cross currents here. it's not a clear cut case. at the end of the day, good financial sector, there's a few things that'll help here. still for a lot of companies they're creating at discounts to the historical multiples of book value. granted you know amusing history, that disclaimer out of
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the way, there is room for them to appreciate to where they are now. i think post this round of fed stress tests, there is more room for capital return to shareholders. finally look, we know where the fed is right now and has been. it's not a question of where it has been and is right now, it's where it's going. and whether it's june, september, or december, most people, and i'm one of them, agree that the fed is going to raise rates and that'll help banks. in general, i'm enthusiastic and in particular on city. >> so pete asks about the asset managers and the question was answered with, well rates are going to rise. we have known that for last six to 12 months. why are asset managers really appreciating like they are? just think for a second, the space has been incredibly absent of any type of em nay, goldman sachs, what morgan stanley has done in the wealth management division. somewhere along the way, one of the asset managers, there will be it and one will get bought. coming up, john is pushing
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qualcomm to split up. shares are down so far this year. find out if the traders think a split could turn things around. then flet flicks flying today, but we have a bull and a bear on that stock coming up. plus nike making a big bet on women, expecting women's business to outpace its mens. we debate the apparel competition, that and much more straight ahead. but what if you could see more of what you wanted to know? with fidelity's new active trader pro investing platform, the information that's important to you is all in one place, so finding more insight is easier. it's your idea powered by active trader pro. another way fidelity gives you a more powerful investing experience. call our specialists today to get up and running.
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welcome back, jonah partners putting pressure on qualcomm asking that company to consider a break up. here's what he had to to say. >> we've had constructive discussions with this company. we've met with them multiple times. we are convinced that the board and the management recognize there are issues. we have advocated a number of steps, not just to split up. and in fact where we think they ought to do, just a transparent review of the growing businesses and determine whether or not it makes sense to do either a partial or a full split. >> all right. that's barry rosenstein, does this make sense? >> yeah, it makes sense to me. something that qualcomm already considered, right? if you go back around 2000, they are a company that talked about hey, maybe we ought to pin this out, decided they didn't want to do that. the one thing you can see that there is some common ground
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though, scott, when you're looking at what they want to get done. they talk about repurchases, they want an acceleration, seems to me like qualcomm's already moving in that direction anyway. they announced that $15 billion buyback, 10 billion of it within a year. i think they are both working together, doesn't sound to me like this is really their butting heads right now, seems like they're trying to work together. >> jim, you owned the stock, if you throw me the chart back up, guys, if you wouldn't mind, please. if you look at the actions and the stocks, the news breaks that jonah is there -- >> 3%. >> not exactly the most adversarial sounding at least activism going on at the current time. and i just wonder if the stock backed off a bit as a result of that, maybe the market doesn't expect that this is actually going to happen. i don't know. >> i think you might be right, scott, the reason for that is without putting jon in a down in any means whatsoever, it's a very simple proposal to put out there, and it's one that i'm sure the ceo, cfo, and board of directors evaluate on at least an annual basis whether to split this up.
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the bigger issue facing the stock, and you're right, we have nibbled that, and i keep holding back, i really want to get big in it, haven't done it it yet, is whether or not there is a fundamental flaw in the business. whether people are really designing new products around their patten portfolio is where the profits are. this thing with the samsung galaxy 6, really is something to keep an eye on, i don't think they're done in samsung, but that's really the more important thing to keep an eye on as opposed to splitting up the company in my humble opinion. >> quick, quick. >> just real quick, think about the stock a year ago was $81. terrible 2014. so a lot of folks used the news this morning as an opportunity to get out of bad inventory. i would argue that the lows that we saw in january at 61 now with jana entering into the picture here, you know what your downside is, you can be in the name, if it's going to get back to 881, it won't do it quickly, it'll take a long time. let's do the trader blitz,
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making news today. first up, ubs upgrading netflix to a buy. pete. >> it's an interesting time to move from that hold to the buy, when you look at the stocks, it's incredible and their growth strategy going forward, original content that they've got, then go back and look at what those usage numbers were, $10 billion hours watched. there's a lot of reasons to get excited about the stocks though. significant move in terms of price target, however. i actually would look at the way morgan stanly is analyzing this company right now. i think it does go higher, this is not an evaluation stock, you've got to look at the stock and understand what you're getting, very expensive. >> they suggest that the stock performance of late doesn't necessarily match the performance of the revenue which is surged, relatively to what the stock has done. >> that's one of the things. the other thing you also have to look at this company, we've talked about latin america, last year it was germany, now you've got to look over the next couple of years, that's where the growth goes. >> there's a big battle of
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course over general electric and what to do now that they have announced those big plans late last week. barrons saying over the week it's time to sell. time to sell. losing big portions of earnings. i've heard other people, no, no, this is the key to unlocking wig time stuff at the stock. >> it's funny, you think back five or six years ago, this is what the street wanted them to do. what's wrong with being a pure industrials play? i think that it can and in the near term, there will be challenges, yes, longer term is going above 30. jimmy lebenthal, let's talk about a joint deal with simon. >> biggest thing, it's a 50/50 venture. i like that, if it's a bad deal, they have 50% that they're holding on to, if it's a good deal, then they've gotten 50% off their books. clearly with the news from ge, there is a move afoot from non-real estate operators to get out of their real estate portfolios, but you can do it the wrong way. you know them along jc penney.
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i think they securetized their real estate way too cheaply. devil will be in the details, keet here is, it's a 50/50 deal, i like that. >> josh, united health care to a buy. >> yeah, now? i mean, now you like it. this is a very late call, the stock is up 100%. it's up 50% in the last year. it's up 14% year to date. this is like the guy in your office that wants to talk about breaking bad. dude, we already did that, two years ago. really not much left to discuss at this point. i don't dislike the stock, just think the call is a little like okay now you want to talk about justifying a higher multiple after it's already raced to that higher multiple for the better part of 24 months. coming up, playing the field. the debate on nike, underarmor,lily lemon, which is the best buy? plus apple watch pre-orders said to reach nearly one million on day one.
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is that true? can the momentum continue? and flying the not-so-friendly skies, airline quality ratings are out, big shock, the feedback's not good. and we discuss, next. opinions. there's no shortage in this world. who do you trust? whose analysis is accurate? how do you make sense of it all? a simple, unbiased stock score consolidated from the opinions of independent analysts... is that too much to ask? nope. equity summary score, powered by starmine, will help you execute your ideas with speed and conviction. and it's only on open an account and find more of the expertise you need to be a better investor. when the moment's spontaneous, why pause to take a pill? or stop to find a bathroom? cialis for daily use is approved to treat both erectile dysfunction and the urinary symptoms of bph, like needing to go frequently, day or night. tell your doctor about all your medical conditions
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help brazil reduce its overall reliance on foreign imports with the launch of the country's largest petrochemical operations. when emerson takes up the challenge, it's never been done before simply becomes consider it solved. emerson.
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. athletic apparel, stocks amping up their advertising to target female consumers. nike launching a new campaign saying it expects its women's business to outpace its mens. so, which apparel stock best outfitted now to wear down the competition? let's debate it. we can debate it on the desk, pete, make your case. nike saying 2 billion in additional sales. >> makes sen. >> underarmor, lulu's off the canvas as well. >> i think the turn around lulu, you can't not pay attention to what's happened here. i think it's happened so fast that they finally got themselves back into the position where they are competition, but when you look at valuations across all three, i think you lean towards nike. i still think that the best ploy of the three however is underarmor because of the global growth story they've got right now. >> and for the female play too. >> and for the female play
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because they are going for the female, they're going for different sports they never used to have penetration, they have that now as well. and there's plenty of room to expand. >> who's on the other side? >> oh man, i like all three, right. so technically, they're all breaking out. quite frankly, this is a massive trend that it's big enough for all three to do very well. but underarmor, i mean, i have a son who's six, my daughter's nine, everything, everywhere i go is underarmor. spent the weekend at an amusement park, every kid under the age of 15 is like head to toe from sneakers to hat -- to your point, a lot spent the weekend watching the masters. they had a billboard -- >> there's the billboard. >> they had a billboard all week with jordan spieth. >> without a doubt. it's so poetic, my friend was tweeting to see rory and tiger in nike, and then the winner just blow by them wearing underarmor. and when you think about that from a demographic standpoint,
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it's just so perfect for that to have been the outcome. i think underarmor, look, it's expensive, everyone knows it's great. still think it's $100 name masquerading as $50 name. >> bought a lot of gear. >> yeah. >> just think about it for one second, okay. >> josh talked before about growth. if you're a portfolio manager, where are you finding growth? underarmor is growing topline 25%. >> and entering new categories. >> i mean, you look at what they're doing right now with underarmor, there's no reason to believe the stock cannot push towards 90, 80, to $100. the question is back to nike. can nike get above 100 and go towards 115? i see no reason why they can't. >> nike has underperformed, ua and lulu both up 23. >> it's like five times the size. >> i think we make a mistake in putting nike and underarmor head to head against each other.
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they're both from a fundamental point of view exceeding expectations year in and year out. clearly they can co-exist. i think the loser is somebody like adidas who occasionally has a good headline. really there is a duopoly and everybody sells standing still. >> that's the point. you shouldn't expect it to move. >> i actually have a confession to make on lulu. i wasn't going to do this. >> are you sure? >> listen, i'm going to go ahead and say it. i actually own my first piece of lulu lemon clothing, my wife ordered for me, i didn't go to the store. they just get me. like there's no label inside of it. it's like versatile, you can leave the gym and go do something else. >> now that you've opened the door. are we talking pants -- >> undergarments. >> it's a sweatshirt, but the material is such you don't need a shirt under it, and it almost caresses your skin. i never thought that i would be wearing liu liu lemen, i might
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go back and buy something pels. >> we didn't either. >> this is not women's clothes, it is men's clothing. >> scott, can i say real quick, in term was underarmor, you have to be careful, i'm a dir rivets guy, i talk about this all the time. you talk about the percentage moves made. that's when i take money off the table and try to stay in with the options because i can limit by downside and still be a part of it if there's upside. i think it's really important because this stock, win, and it'll happen, disappoints, i'm not saying any time soon, but when they do, that'll be a pretty fast fall if you have valuations. >> you have a magnified amount of downside in what the option's going to do. >> whatever you paid for those, that's exactly what you could lose. >> less capital at risk. >> right. >> underarmor, they get me. >> they get me. >> they get me. >> that was lulu. >> lulu, i'm sorry. i feel like they understand me. >> that was josh. >> i'm an ageing millennial that
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needs workout clothing that's both form and function, and i think they just understand me. >> okay. >> why are you laughing at me? >> it's phenomenal. >> he wears everlast to the gym. >> looking at you as well. sue has our news headlines. here's your news update for this hour everyone. police are searching for a man who shot and killed a person on the campus library at wayne community college in north carolina. he is still at large, he is described as a white male, 5'11", with a goatee and a tattoo over his eye. the college was put in lockdown mode. florida senator marco rubio has told his largest donors he's running for president in 2016. rubio, a first-term republican says he is quote uniquely qualified for the job. except the official announcement a bit later today. a new study from the university of california of san diego suggests that many kids in military families may be missing out on vaccines.
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more than a quarter were either missing vaccines or documentation to show they had them. compared to about a fifth of children aged one to three in the general population. and the foreign ministers of germany, spain, and france laid a wreath outside barcelona's airport in memory of germanwings crash that killed 150 people. the flight oe ridge natoed in barcelona. after the wreath-laying, the officials held a moment of silence. and that's your cnbc news update at this the hour, back to you. >> serious news all the way around. sorry for the awkward segue, you're a professional as they say. coming up, watching apple, one of the biggest apple bulls on the street, not impressed with the newest sales. he'll tell us why next when we come back. legalzoom has helped start over 1 million businesses. if you have a business idea, we have a personalized legal solution that's right for you. with easy step-by-step guidance, we're here to help you turn your dream into a reality. start your business today with legalzoom.
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apple watch presales beginning this weekend. some estimates say, one million units were sold, but one of wall street's biggest bulls is not impressed. alex is an analyst at jnp securities joining us live from san francisco. welcome, you have a buy rating, and $150 price target. are you saying a million units in day one's not good enough for you? >> well, let's just say scott it's off to a less than
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momentous start here. it's not an embarrassment for apple, but i'm sure they would have rather been issuing a press release this morning talking about the millions, not almost a million units that are on back order and they're rushing to fulfill global demand. it's an interesting first step on what we consider to be a journey for apple in the new product category. >> okay. so the watch underwhelms, you've got a couple of downgrades in the last week, worries about iphone comps, are you waivering on where you ever on the stock? >> not in the least, scott. what we're talking about here is a story that's driven by the iphone. which is on the cusp of achieving 20% global market share. and what j & p securities believes as apple hits the 20% level, as we've seen in the past with brands like nokia and samsung, there's a real opportunity for the iphone to surge towards 40% share. so for us, it's really about iphone and the iwatch, i'm sorry, the apple watch is a side
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story that goes along with it. >> alex, is there other parts of the ecosystem right now that you're excited about? obviously it sounds like the watch is something you've talked about and a lot have talked about, its come down from the excitement levels, other than the phone, is there anything else within apple right now you find exciting? >> thanks for asking about that, pete, yes, you can look beyond the apple watch here and see what is happening in a bigger sense. connectivity, the 4 glte updates, strong drivers for skyworks that was recently added to the s&p 500, and if we think about what's new and really interesting about the apple watch, it's new display, and that's a driver for a company called universal display. we expect that technology to find its way into subsequent generation of apple devices, apple phones, and that again is in our view, the driver of the story. >> alex, good to talk as always. see you soon. >> thank you. >> okay joe. this was in your play book, you
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got out i think around 128-ish, right? >> yeah. >> went down i don't know where it got down to, 122, 123, now back 127. you've had a month or so to think about the story, how does it read today? >> waiting for earnings. i think that's what matters. what were the iphone sales in the quarter. what are we looking for going forward? what's going the next analyst for the stock. i said then, don't get out, that's crazy, own the stock, don't trade the stock. jim kramer has told you to do that for years now. i am an example of you should not trade the stock because i haven't done it successfully. i had a good run for it. i felt there was opportunity and energy space -- >> from a competition standpoint. >> absolutely. i think pete owns it. >> reporter: pete added it to his portfolio a couple weeks ago. >> well, the end of the quarter. >> made a trade, do you believe that? >> one in 18 months. coming up, the motif of the month, how investors are playing
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rising rates. first, a look at the major averages fairing right now. it's going to get hot and heavy on earnings this week. wait and see approach for tomorrow. jpmorgan, wells, j and j, intel, all straight ahead. here's the market picks, we're back after this.
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money the way we would in the u.s. one of the best things about priority boarding is you can just get on the plane and relax. i put everything on the explorer card. i really want my united miles. coming up at the top of the hour on power lunch, three big stocks in the cross hairs of activist investors. david is at a major gathering with those names. earnings officially kicking off this week with dj morgan, bank of america, goldman sachs and reporting numbers, can you bank on the banks this earnings season? and the scary new target for hackers. no, it is not your computer. it's not your credit card, it is your car. you're going hear from a man who watched as his prius was hacked. lots of things coming up, make sure you joan us, back to you. >> thank you so much. with rising interest rates
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seemingly on the horizon, what's your playbook? next guest has options. he's the co-founder and ceo of motif investing. i say tongue and cheek, seemingly on the way up, we thought they'd obviously may have risen higher than now, 195 on the ten year note yield today. this is rising books. >> right, this is a companies that have large balances of cash on their books and tied to the feds fund. interest rate rises, these stock hits the online brokers, e trade, iowa merry trade, bank of new york, northern trust, and they do well in rising interest rate investment. last time feds raised rates, 2002, 2004, to 2.25, the online brokers alone as a segment, there are revenues from that interest rose 38%. >> how many stocks are in this basket? >> seven. >> you said some of the names, bank of new york, melon, state street, charles schaub, e trade,
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how does this mesh? >> sure. >> makes sense. >> makes sense if the rates are going to rise over a sustained period, if it's a one and done, you're going to get a lift over 30 to 60 day period, then it's probably the momentum's going to die out. >> how deep, 1934 to 1953 rates stayed essentially below 4% the entire time. and most of that time were under 3%. that's a really long period with no rise in rates. which i'm not saying is going to be the case this time, but in other words, what if it were? do you essentially end up with the xlf as a portfolio given that those are the holdings and is that great? >> well the advantage versus a generic xlf, it teases out rates. it's not a generic financial site, people don't realize, e trade generates more than 65% of its revenues from net interest spread. they make more money from holding your cash than trading commissions. most don't know, the average revenue from rising interest
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rates in this portfolio is about 30%. so you can play the general xlf, i happen to think of, even if there's sentiment, it will be head wind. just makes a lot of sense because it is, and there are no bips and the good news is you can trade the individual securities as well as change the wait. this is weighted specifically for exposure to the assets and revenues -- >> not just a play on banks, it's a play on the companies that will get the most bang for their buck, if in fact -- >> yeah, schaub just issued for 1% in the fed fund rate, it increases their revenue from net interest 14%, specifically. and, and interests as a percentage of total revenue, 40% right now. of total revenues. >> why not go and include other non-financial companies in here? so, you know, two weeks ago, we were discussing the goldman sachs report of stocks doing well in a rising environment, it was basically stocks that had a strong balance sheet, a lot of cash on it, ochbl this brings to mind apple as well as others.
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why not include those for the same reason? >> we have a motif called balance sheets directly talented that. so i can make decisions. that's one reason. the other one that's relevant is share buybacks. a trillion dollars of cash waiting to, they have nowhere to go. you're going to go through dividends or buybacks. that's another motif. >> you don't have a financial engineering motif? >> we have a share buyback motif. that's doing well. >> performance can't argue with this one. three years, one month return, 3.5%, three month beating the s&p. good to talk to you. >> thanks for having me. coming up, airline quality ratings are out, and the results, not shockingly, are not good. well the airline industry is booming. businesses anyway can this continue? plus under the radar for the moves you may be missing in some retailers today. when we come back.
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oh, i don't know why we're smiling because the airline quality ratings are out, and as you may be could guess, flying hasn't gotten anymore fun. phil is in chicago with the details, phil, i guess, it's one or the other, i guess. you can't have it both ways. you can't have the airlines be
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great businesses and consumers have a great experience. >> no. certainly you can't. and what i love about this ratings, scott, this is a statistical analysis, this isn't done by going up to somebody and saying hey, did you up to somebody and saying did you like your airline? this is mishandled bags, on time arrival, delayed departures and complaints to the dot. here's the top four airlines according to the airline quality ratings by wichita state university. number one for the 30 year is virgin america followed by hawaiian, delta is up to number three and delta is the most improved in the study this year. jet blue round out the top four. take a look at the bottom of the list. of the 12 rated, you see the bottom three are regional carriers. envoy, sky west, express jet and the lowest rated full line airline is united airlines which is not good news for the people who are here at o'hare waiting to fly out on united like i am
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later today. do investors care? no, they don't. take a look at shares of united over six months and compare united with virgin america. no comparison. united up almost 50%. people may not be happy they are being squeezed into planes and being nickelled and dimed, but the airlines are profitable and that's what investors like. even though the kwality rating is showing people are unhappy with the flying experience, it's not going to change any time soon. >> we can never get to a point where the businesses can do well and consumers can enjoy the experience. why does it have to be one or the other. >> expectations are way too high. you think you will have a seat that is empty next to you, that's not how it is run. every seat will be full.
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that's what they should be doing. it's not running so you can have an empty seat next to you. it is running to maximize profitability. selling services that they used to get for free. i don't think that will change any time soon. if they are courteous on the way and if they are on time, they have done pretty well. >> if you are an airline investor, who is to argue? you are relationship. you love it. >> cash flow is great and they have baggage fees and all the things that are great for the stocks and the companies and not great for all of us. i think on this pull back, we talked about a week or so ago on the pull back in the airline, i like the names. delta, we saw unusual buying. i think they have upside. >> we made good money and we sold united continental as it was known, but here's the thing that bugged me about this. if you want to be an investor and owner in these companies, do you want to own in a company
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where everybody hates you? your customers and employees hate you. >> they don't have a choice but to use you even if they hate you. >> you are missing the missing ingredient. we hate every airline other than virgin. we are only making decision based on price. it's basically an oligopoly. you have four choices and you go on kayak or priceline and you rate the prices. delta is $50 cheaper than american, i hope they both die, but i will take the that is cheaper. >> that's absolutely accurate and i like to own great businesses. that's classic value. these are not great businesses. every one of your partners in the business hates you. that's me. >> time to go under the radar with something jim is watching and you probably are not focused on. jim? >> who else do you hate?
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let's turn that around. >> we are not paying too much attention to it and there is good momentum here. if you look at -- i talked about jcpenney in the past. it's gone from 7 to 9. tiffa tiffany's had a disappointing quarter and is up 10% since then. if you want a beautiful chart, but target, the days of the data breech are so far in the past and this seems to only go in one direction. i think we are supposed to be focused on this rally in the retailers. >> all right. unusual activity. >> they turned down silent properties and now all of a sudden you look at the stock. it's under 80 and up to 95. trading around 82 today. the 831985 calls. huge volume. 9500 calls.
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i jumped into this as well. just three hours to go in the first trading day of the week. your game plan for the second half ahead of big earnings up next.
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three hours to go as we look ahead between now and the end of this day and ahead tomorrow is more important. bank earnings. jpmorgan and wells and intel and j and j. >> i would say wells is important because positive momentum has been there. so many question their ability to continue to deliver. >> i think they are all important and the one i am waiting for is at the end of the week. amazon had a bunch of disappointing quarters and came out nicely in the fourth quarter. i think that was a head fake. i'm not expecting much from them in the first quarter and can't
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wait to see it. >> you think i was going to ask the most personality earnings report of the week. you say it could be amazon. >> because it's the that has the most surprise potential to it. intel announced they could give guidance and that will be interesting. the banks we have been talking about ad nauseam are important, but the that has the most potential is amazon. >> i don't know if it's a market mover, but the one i am most interested to hear after the actual numbers, wells fargo. it's the most of the banks and the most personality financial player and that will be a key read through how is the spring shaping up for both mortgages and new homes, etc. for me, that's what i will be listening for. >> goldman sachs of the names out there. intel, but i think -- >> dollar, dollar, dollar,
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dollar. >> the billion dollars off of what they expected. this goldman sacks is impressive because of the way the stock is trading. >> you like h ban. >> i like the regionals and huntington bank. it will deliver well-diversified. >> good stuff. thanks for joining us. power begins now. >> halftime is over. the second half of your trading day begins now. >> scott, thank you very much. welcome to power lunch. mandy is here and i'm tyler matheson. the biggest retailers, some of them are under the gun over their employee work schedules. the out come could have major ramifications for retail. >> searching for alpha. the big cap starts in the activist investors. our david faber has the story and joins us live from a major meeting in new york. >> earnings officially kickoff this week and a big bank day


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