tv Fast Money Halftime Report CNBC October 9, 2015 12:00pm-1:01pm EDT
weeks in recent memory. up 8%. that's the market for a long time. >> many names, of course. >> we'll talk about that. as we continue on the east coast. let's send it back to headquarters and "the half." ♪ welcome to "the half." chief strategist at trading partners. our game plan today looks like this. electric slide. tesla shares falling this hour, and one analyst pulls the plug on the stock. you'll hear why in our call of the day. the great debate with energy up eight straight days and showing new signs of life. our experts fight it out on that sector's next move.
up nearly 8% alone. all of it happening now as key earnings next week. including the banks. dow up five straight days. we have staying power? >> it depends on earnings. i'm not surprised the price has moved up continuously like this because the issues that were facing the market haven't changed, which is slow economic growth, in particular with china. however, with oil moving up, that sort of gives a signal false or not that things are better and will get inflation. inflation is great. yes, there's staying power, but we're still in no man's land. up by some things, and then -- mlp's have looked great. v-shaped recovery. they're all your way. it's dependent upon earnings. next week will be the heart of it. what's important next week are banks. then we get to the heart of it.
>> your own sentiment. this week it hasn't been able to go -- >> you know, i think from a shorter term perspective, good trading is not being predicted. it's being reactive. recognizing when conditions may be changing, and being open and honest about what the data might be telling you. i think it's really important to point out how powerful the rally this week has been. even if it doesn't last. even if we fail at the s&p highs, which are about 5% above us. when you take a look at what's led the comeback, it's time and energy. that's a really healthy thing to see the contrarians finally see their day in the sun. i want to point out, scott, the top 30 stocks this week, first of all, 12 of them are energy. the top 30 names this week all had an average gain of 16% in five trading days, but they're still down 30% year-to-date.
those are the worst year-to-date. whether or not it continues, we have to see how investors are reacting to the report that we're going to get because we're not going to get a lot of the good ones. >> kwet is, though, as both of these guys -- both is the worst of the worst over for the worst of the sector that is were beaten down? is now the time to really jump on board some of these stocks that can continue to climb if the overall market gets, you know, even more busy here? >> i'm saying no. here's why. fundamentally, i don't know what's changed here. we've had energy from the low 40s back to wti $50 here. i don't see what changed fundamentally. any news that i hearted, whether it was inventory or supply and demand 23450uz about saudis cutting prices for asia coming up. i had an issue with that. fund mentally i don't see the change here. there may be reflectivity. that's fine. they've had these great runs, and they ran, and then, of course, they had the big crash, and i kind of got involved. now it's running back again. getting dragged up.
the energy stocks getting dragged up. i'm not sure all the pain is out of these stocks. i don't trust them. i think some pain has abitted, and that's a lot of what we've seen for the last hundred handles here. >> if we think that earnings are going to be the real tell and that clearly is going to be the case. you've got the big banks coming next week. somewhere p morgan raining on the parade with a note that's not expecting much. they say weak markets. soft loan growth. higher loan loss divisions. capital markets extremely weak in september. they're taking down their own earnings estimates. should we be taking down our expectations as well? >> what's happening in the finance sector, scott, should not be a surprise to anyone. when you see the volatility and all the financial markets that you saw august through september, that directly affects capital markets. the flattening of the yield curve, a fed that seems to be on hold hurts net interest margin. there's no need to expect anything positive from the banks. the bigger question that you are asking is what about the markets overall? not just the financials. for that, look, it's not what the earnings are reported to be in the third quarter. again, nobody is expecting
anything great there. it's what the ceos and cfo's say about expectations going forward. >> it's going to be positive. 6s sales are coming along. i think one key tell will not be the financials, but you'll get a look at intel next week, and that's the first look at a tech value company. a big one. we'll see how it does. >> here's where why i'm going. you have the market now at the highest level it's been in many weeks. you've got bank earnings expectations which are not going to be great. the numbers are just not going to be great. you have big technology stocks that can't get out of their own. . whether it's apple or the so-called fang stocks, google, netflix. what do you do if you have technology on a rolldown and you
have the big banks which are not going to deliver? how is that going to impact where this market has been over the last year? >> i think the hardest thing is not to extrapolate a few days worth of market activity into a bigger story. still on a down trend on a 200 day. that could change. so far it hasn't. you've had this huge oversold bounce. at the end of august only 4% of s&p 500 stocks were above their 50-day. that's an incredible wash-out, and you've had this huge rally. now it's 60%, and we haven't seen a move in something like the russell 2,000 like we've seen this week. you have to go back to the october 2014 bottom. i think that that's a positive. antoinette carnivale. it's not -- it does not mean we've got this massive trend change and we're back into that momentum driven bull market. we just aren't yet. i think it's really, really difficult to keep those two ideas in your head at the same time. >> all right. the fed speak rolls on. got more of it today.
new york fed president bill dudley sitting down with our own steve liesman. steve joining us now from new york city. steve, i don't know about you. i heard a guy who didn't sound like he was ready for lift swrof any time soon. >> yeah. it's kind of funny, scott. he feels like it's likely, but not with a lot of commitment. we had an exclusive interview with him this morning, as you said, about a rate hike this year. it's still his best guess, but he was pretty clear it's not a commitment he is willing to make. here's what he said when i asked him, scott, if he was in the camp who sees a rate hike as likely this year. >> based on my forecast, yes, i am. it's a forecast. we're fwog get a lot of data between now and december. what -- it's not a commitment. if i say i think it's likely this year, it doesn't mean that i'm committing to demand this year. it's just based on my expectation of how the competent economy is most likely to evolve. you know, there is certainly a risk that is involved in a different way, and obviously it would be totally inappropriate for me to not take that into
consideration in terms of what i think is appropriate for monetary policy. >> scott, he also talked about that labor market. he said it was weaker, but it's important for guys to understand what he said next. what he said was that, look, if it's between 120,000 and 140,000, it's enough to lower the unemployment rate. those kind of numbers from dudley's standpoint, remember, he is a key member of the fomc. he gets to vote every year. those kind of numbers are enough for him. they don't necessarily speak of a weak employment report. just a weaker one. >> scott. >> i guess what i find, you know, most interesting and maybe even in this continual confusion mode that people try to have been in, he says, okay, it's still on track. i see it on track for later this year, but then says himself, are we really going to get much different information in october than we had in september? lots of things change that quickly. also says that he is concerned about what's happening more so in the meerjing markets and the impact it will have on the u.s.
economy than on china. >> not only that, but he also sees weaker growth. i think the idea, scott, to think about is that he sees things perhaps stabilizing over the next couple of months. that the impulse from china, the deflationary impulse, and you see that, by the way, a little bit in the commodity prices. you certainly have seen it in the stock market. if they go in to a meeting and you've got this, say, 150,000 to 200,000 jobs report, a couple under their belt. if china is not a screaming headline and commodity prices are not declining year-over-year, you can see the fed doing a quarter and then halting. >> yeah. great interview, steve. >> thanks. >> certainly plenty to talk about out of your conversation with the new york fed president bill dudley today, exclusively on this network. >> what do we make of these dudley comments and how is he supposed to react? >> you're not supposed to even listen to them. >> okay? >> if you are an equity investor, it's worse for traders because they've got so many more data points they have to be right on a short-term basis, which is vurt we'll impossible. if you are a long-term equity
investor, i would say tune it all out. it doesn't matter. i can't think of anything more dilutive to your process, more dilutive to your potential gains than -- >> people sht heeding your advice. >> how do you not see that they're making it up as they go long? in other words, at this point in time why is that so difficult? they'll cite one data point as a reason to raise rates, and then a month later they'll cite it as a reason not to. >> why was the market up sharply yesterday after the fed minutes? because it was revealed that -- >> more stimulus. >> more dovish than we even anticipated. >> two months ago raising rates was a positive. >> here's what it shows. it shows that nobody really knows what the market psychology is, right? bernanke actually gave the tell when he was on squawk on cnbc. if you listen in, he said inflation is the only thing that matters. that's what matters now. here's what could change in two months. even if the u.s. economy declanz, china comes out with
massive real stimulus that cures the emerging markets. it cures the growth part of it. you could have the u.s. jobs number next month still at 140. >> the stimulus could cure things, steve. i think we can all -- >> cure psychology. >> it will make stock prize go higher. it will take time to flow through the economy. especially in the case of china, which everything is a two to four year process for them. >> that doesn't matter. the fed came out with stimulus in 2008 and 2009, and we were in a five-year run. >> the whole problem is that enough to get things going? is that enough to get inflation going? if inflation is all that matters, why aren't they saying this? >> they have said it. >> they have said it. >> it's more explicitly. >>. >> why are we still talking about a rate hike at the end of this year? december 30th, are they still going to be saying that? i don't get it. they need to stop that and get off that box. dudley did a little bit today. lockhart needs to stop saying that. all these other guys, fisher, all he's guys need to stop doing that. enough. >> here's what my concern is with the fed. i'm not going to take sides between you two on this, but 25
basis points. i think we would all agree really that isn't going to matter. what are they waiting for? there was a comment in the minutes yesterday that said something to the affect of the impact of getting this wrong, this 25 basis point rate hike wrong would be very large. i would submit that i don't think that's right. i think what it's really indicating that comment is the fed is very nervous. they've been for six, seven years now taking a lot of shots, political shots, about quantity takive easing's one through five or however many it's been. in so doing they've gotten worried about their own independence. i think all this hand ring and then saying one thing and doing another is real concern about their political independence, which is a crying shame. they need to get this rate hike over. >> let me say one thing. >> make it quick. >> 25 bips, and i'm going to peculiar a point here. 25 bips. that doesn't add it. that's not the conversation. it's the next 25 and the next 25. >> the number itself, we're not -- shouldn't even be talking
about the number itself. it's the message that the normalization of rates is underway, the new reality is here. whether you like it or not. whether you all like it or not. >> coming up, oil could post its biggest weakly gain and energy stocks up eight straight days. what do you do with the rally? do you fade it or ride it? we debate the sector's next move straight ahead. >> plus, it's a bad bet to estimate apple in the past. that's not stopping tesla ceo elan musk from taking a shot at the company. talking electric cars, some fighting words as well. next. so what's your news? i got a job! i'll be programming at ge. oh i got a job too, at zazzies. (friends gasp) the app where you put fruit hats on animals? i love that! guys, i'll be writing code that helps machines communicate.
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taking shots at apple's reported electric car ambitions. when asked about apple poaching important tesla engineers, musk said important engineers? they have hired people we fired. we always jokingly call apple the tesla graveyard. >> what do you think of that? >> why would you say that? why even mention it? by the way, there are a lot more engineers being brought into that group at apple than just tesla reruns. you are seeing people like the head of omg and mercedes benz. you are seeing hundreds of people coming into that group. i think it would be a mistake to look at that as wanna be tesla. >> you don't mess with -- >> tesla shares. one of the worst performers of the max 100, in fact. after getting downgraded to underweight at barclays. brian johnson made the call.
>> why this call today? >> really just taking a look at the likely ramp of the model x. we realize that 4q we are only talking 15 to 100 cars. we've actually been at 19,000 cars next year for a while. what we've seen is now realization on the part of the market that, yeah, that's probably going to be a slower ramp than some . >> it's that long outlook on the
model x. >> you are a pretty good hater on the company by virtue. words that you use in the record, you missed four negative data points. yet, you only cut the price target to 180 from 190. why should i own the stock at all if i believe all of these four things that you list here primarily the one where you said, look, the -- you say no way this company is not the next ford. >> we're making a valuation call. it's not the hate them and sort of, look, they've been successful. they do have a future as a nearby luxury maker. we just question for a while that -- is that worth $200 and more a share. we think just with now the market kind of seeing that cars are, in fact, a difficult business, ironic to hear tesla accusing other people of underestimating the difficulty of the business.
as a result that tends to be lower margin and higher cap x than people think. >> that's where -- it's not meant to minimize the accomplishments and being one of the first true auto start-ups. >> i get you. it's a good reality check in your mind, though, of how investors should view this thing. so lochk as tesla has the only giga factory in town, do they have anything to worry about at a true scale level any time soon? will these other automakers and tech companies figure out the battery issue just like tesla has and be serious competitors, you know, in large size? >> they're going to come down
the battery scale too. tesla will probably always have a continuing advantage, but it could get to the point, call it 50, 75 per kilowatt hour where they're within a few thousand dollars per car. what they're not in there really the cross subsidyize because they have to meet these very aggressive 20, 25 epa and european co2 targets. visa have i apple, the question is how are they going to redefine what the experience of a car is similar to what they did with the iphone. similar to what they did in the computer industry. you know, if i had that answer, i would be at apple. i'm not. i think they're going to come in ortholical. it's kind of like an audi or jaguar with an electric engen. we think apple is going to be
different in both the production technique, probably going positive in the modulearity approach and then the -- tesla has great infotainment, but apple has to go one step further. >> thanks for coming on. talking about this note that certainly is one of the talks of wall street today. >> thanks. >> all right. >> here's my question for you guys. if this is really a niche player and that's what it's always going to be, how could a niche anything have the valuation that this stock currently have? does that make sense? >> your question makes sense, and i think it's very, very tough. think about some of the sushgtal difficulties in the industry, and take a look at what's been going on with feeat recently in labor negotiations? now, you know, i know that there are a lot of south carolina auto plants that have gotten away from union price pressure, but the fact of the matter is union labor is still prevalent in the auto industry, and niche upstarts like tesla are able to avoid these sorts of pressures for a period of time, but after
a while it does catch up with them, and i think that's the sort of thing that doesn't get factored into a current price level at tesla and needs to. >> i'm not so sure it figures into it, right to work states. they don't have the legacy businesses in other states, and -- >> labor can move. >> well, but to me the issue is that it can't, and the -- >> you should see the youtube video. there are few people helping that process. it's literally machines working with other machines and maybe there's a guy holding a cup of coffee. >> i'm kerntd about execution with this company. assets grow. can they keep growing the wonderful machines quickly enough? could be an issue as it continues to grow. >> well, it was an interesting note. it's got the stock on the move. all of us talking as well. quick programming note. all next week hear on halftime show, we're going to bring you the street's number one ranked analyst in various sectors to
give you their outlooks for the rest of the we're. can't afford to miss that. >> twitter is moving higher today. now up, wow, don't look now, 17% this week. you bought it today? >> i did. i've traded it a few times. today is not the first day. i've been in it since the dorsey news, and i bought it before that because one of the sell side firms is said twilter wasn't going to appear. now here saying they will appear before the news was announced. to me one of the major currencies, one of the major ways, the most important ways to get employees, engineers will work for you, is the currency of your stock more so than the cash. they have to talk it up. they have to get going. the ceo role is behind. look, wronk valuation is there yet. i'm not a fan of the product. i'm not even a fan of the company. i'm a fan on a short-term basis. from the guy who is running it all the way up. >> what? i said wednesday it's a buy right here. technically speaking short-term trade. i would stay long the name.
broke 30. that was resistant. i think it will roll a little higher. >> what about the overhang? there's still an issue of whether dorsey can run both of the companies. >> the only thing that matters is user growth. that's what the stocks trade on. you can say i don't like that because dcf model -- i don't care. that's how these stocks react. sflo i think dorsey can get this going. >> a big miss for gap. a high price at tech miss. all part of our trader blitz, which is coming up next. plus, is the growth trade over? one strategist says yes. where is she putting money to work instead? she'll tell you straight ahead.
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making news today. first up, gap reports of 1% drop in september comps. not as bad as analysts were expecting, though. jim, the stock is down 51/3%. the street is not hanging on much. >> i agree. i think the whole story in retail is you've got to be very company-specific. it's been have's and have-not's all we're. you had l brands. now gap misses. same with department stores. you have jc penney reporting well. you got to be stock-specific and gap stores hasn't been an outperformer for many, many years. i really would stay away from it. >> you see the airlines today? >> i do. very happy. is that what this is about? is there traffic in september? it's very, very positive. also a turning pass. >> look, the airlines are different companies. they manage costs and expenses, and they manage productivity.
until the world comes out and recognizes that they're a different industry, i'm going to stay there. >> what is this price hike for netflix going to mean? dollar a month increase for new subscribers? you own the stock? >> yeah. not a good week for hook-up culture. it's going to get more expensive. i think that the customers will pay. i think they have a ton of elasticity here. look at where this name is. it's 35% off those august 24th lows. that's around where i bought it. it's been 11% from the record high. this thing looks incredible. i think the price increase probably is warranted given how much time people spend on the servers. >> block, biotech. >> yeah. >> i mentioned you the numbers. dow, s&p up better than 3% on the week. winning streaks. ibb still down 1.5%. this space cannot get out of its own way. >> yeah. it's true. there's a lot of pain coming out. when it comes time to buy stocks, i'm down with ibb. there's still a premium to be paid. yeah, you know me. there's a people wrum to be paid
for scarce growth, and i'm not afraid of hillary here. i think when stocks come out, we get a pullback, and i'm diagnose zoosh. >> you need to see more of a pullback than you've already gotten? what are you going -- when is it going to look good enough for you? >> stars have to align. i need people to come out in other sectors, and when it's a rotation back i think people will say, yeah, we need growth. i'm still in the growth camp. have my own -- >> naughty by nature may be looking for a royalty. despite a small drop, the energy sector 8% this week. is it time to jump on the rally, or is it short-lived. that's coming up. you're watching cnbc, first in business worldwide. (trader vo) i search. i research. i dig. and dig some more. because, for me, the challenge of the search... is almost as exciting as the thrill of the find. (announcer) at scottrade, we share your passion for trading. that's why we rebuilt scottrade elite from the ground up - including a proprietary momentum indicator
on a huge selection of tempur-pedic models. or choose to save $300 on beautyrest and posturepedic mattress sets. you can even choose $300 in free gifts with sleep train's most popular stearns & foster mattresses. the triple choice sale ends soon at sleep train. ♪ sleep train ♪ your ticket to a better night's sleep ♪ >> hello. i'm sue her air wra. here auto is your cnbc news update this hour. president obama on his way to oregon to meet privately with families of those shot and killed on a community college campus last week. afterwards he came out strongly for new gun restrictions. some gun rights supporters, though, plan to protest during his visit. representative daniel webster says he plans to continue his campaign to replace house speaker john boehner. when asked if he would step aside if paul ryan jumped into the race, he said i'm
challenging the process, not him. alaska airlines is retro fitting its overhead bins to accommodate more carry-on luggage. the new bins are 5 r50% larger accounting for six bags instead of four. the company is trying to placate passengers whose top complaint these days is not enough room in overhead bins. and lift is making it easier for people who have cars but want to drive for the ride sharing company. it's partnering with hertz to let drivers rent cars at a discount. the program also helps people who have cars that don't meet vehicle requirements but also want to drive for the company. part of the sharing economy. that is the cnbc news update this hour. scottie, have a great weekend. back to you. >> you do the same. thank you so much. see you next week. >> oil prices up 9%. could see its best week in 20 years. do you ride the rally or stay away? jimmy, you first. he still thinks oil is going back down.
this is nothing more than both short covering and long only commodity money coming into this space. >> i'm just going to go to the fundamentals here, and i'm not getting on board with the $20 oil call, but i do think that oil is coming back down simply because of the speed with which supply can come back on. i know people out in north dakota who say that they have a ton of wells drilled within 200 feet of completion. there's a lot of cost reasons where they've left them uncompleted. now with oil above $50, they take another week or so to drill up to completion. the oil comes up, and you have over supply again. it's not just north dakota. it's iran coming on board. it's iraq producing at 4.3 million barrels a day. there's no sign yet. no sign of saudi arabia cutting production. even if they did, it's overwhelmed by the over supply elsewhere. >> what are you doing with the refiners? you own mlp's. >> that's a place where you can make some money, and it's nondependent on the price of oil. refiners take oil in, and they put gasoline out. it's the refining margins that matter. that's an operational capacity.
same with mlp's. you can make money there because it's volume metric flows through the pipeline that is matter spshgs as long as gdp is growing in the u.s., which it is, you should have volume growth, and these tool takers can take money. >> what do you like on the screen right there we're looking at? marathon? his? >> i think valero is the big daddy in the space. phillips, obviously, we know warren buffett has a position there. you know, mlp's, i think you have to look at enbridge, and even though it's no loernk an mlp, kinder morgan is cream of the pop as far as pipelines. >> what do we make of this unbelievable move really that we've seen in energy? both crude itself and the stocks within the sector. >> so just in time. what they were looking for is at least an expectation of opec and meeting in december will cut production. what's involved them recently, who knows if that happens. i personally doubt that it will. it's enough to get them going.
also they point to shell pulling out of alaska. you are starting to see production be cut in the u.s. $7 billion project. can't go for another five years. putin and syria. i don't think that's about protecting syria's regime, about the i think that's about the best way for them to get russian oil prices up is to control what's happened in the middle east. he knows he wants to build an empire. i think that's long-term. however, near-term, i don't see the supply demand characteristics enough to drive it much past 60, so i think it's going to be that trek in very narrow trading range for oil, given it peaked at 100, 100 plus, 140 way back. the bottom line is if you own it. you could take a little off they wouldn't be able to borrow to buy new projects to support the dif depped because they need that growth. >> believers or no? >> i'm just a guy
white-knuckling buying stocks when there's blood in the streets. i have already sold those. i'm not short yet. i'm watch and waiting. i'm not a believer here for the fundamental reasons. you mentioned marathon. that's a hell of a move there. caught that great -- ioe, you. >> i said while you were at jury duty cracking the case -- this trade had been made. the average energy stock is up 10.5% this week. that ieo spiked 10% off its low. from where we highlighted the possibility of that double bottom. it hewlett-packard to have worked out. maybe we got lucky, but i'm not sure that you want to continue to hold these names into earnings season. you are going to see about a 14% to 15% decline in energy earnings this quarter, and god
knows what they have to say about next quarters. i don't want to be in the names right now. >> you are ahead of next week's big earnings. mattel, csx, along with the banks the board is busy next week. we're going to take a look at many of those companies. plus, gold on the verge of reaching critical resistance. one of our traders says that could set the stage for a huge move higher. we head to the floor of the cme. you're watching cnbc first in business worldwide. (vo) what does the world run on?
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at the time that the bankruptcy filing was done, the public lighting authority had a hard time of finding a bank. citi did not run away from the table like some other bankers did. citi had the strength to help us go to the credit markets and raise the money. it's a brighter day in detroit. people can see better when they're out doing their tasks, young people are moving back in town, the kids are feeling safer while they walk to school. and folks are making investments and the community is moving forward. 40% of the lights were out, but they're not out for long.they're coming back. >> the top of the hour. power lunch. the dow on pace for its best weekly gains since back in february. s&p 500 on track for its biggest weekly gain of the we're. we'll talk about the stocks leading this rally. plus, california brought coal.
the nation's two biggest pension funds there forced digest their coal assets. what that means for the entire sector. speaking of commodities, check out gold and oil. the past month, gold up 5%. oil up 12%. raises the question, is the commodities crush finally coming to an end? we'll tackle that as well. back to you, scott. >> we were just talking about that. sarah, thank you so much. on the export import bank, what's going on? we're seeing a small group of republicans joining with democrats to push for what's called a discharge petition. that's a measure that allows a piece of legislation to go outside the entire committee process and go right to the floor of the house of representatives. they're going to need 218 votes. a majority on the floor to get this discharge petition to force the reauthorization of the export import bank done. it may be that they have enough votes to do that. we're going to have to watch this carefully and see.
most of the democrats, if not all of them, will vote for it. they'll need a big chunk of republicans, though, to vote for it. they're moving that now on the house floor. we've seen that nancy pelosi, the democratic leader in the house, has called a press conference for 1:30. it may be she'll have an announcement about how many votes they have there at that press conference. we're going to keep an eye on this, but despite over the export-import bank has been long running. it has been temporarily shut down. we're going watch here this afternoon to see if they can reopen it in this effort on a discharge petition, scott. >> long running. maybe what forced the hand of lawmakers to some respect is news that companies like ge and others saying they're going move a number of jobs out of this country as a result of this very issue. >> yeah, absolutely. you got to look at the political implications of this as well. right? the export-import bank is viewed by the guys in the house freedom caucus. that conservative group that is causing trouble for house leadership right now. they view the export-import bank as krony capital uchl.
this is just a sock to big companies like boeing and ge. they want to get rid of it. this move to reopen the export-import bank with a discharge petition will be hugely controversial over those guys who brought down speaker of the house, john boehner and now majority leader kevin mccarthy blocking him from becoming speaker of the house. eamon, thank you so much. live for us in our d.c. gold is seeing a big move. hitting its highest levels since mid-august. the futures now. hey, jackie at the nymex. >> gold prices dropping over that 1150 level. trailinged around 1158 right now. give me your read on the charts? >> if you are a technical purist, you would say that the downsloping trend line is already broken and it's above the highs that we put it in late september. it would mean it's violated. however, i'm more conservative. i want to see asubtle above
11.on 60 just to make sure, but this could be the precursor of $100 move to the precurse o area. >> the minutes coming out from the fed. gold traders reading them as dovish. do you agree? >> i do agree, jackie, but the biggest undercurrent and the movement attributed to the house speaker situation, or should i say the house speaker spectacle. if we have a shut down, i think people are insin waiting we will have a government shutdown. i'll let eamon and the rest of the folks weigh in on that. there's trouble in washington coming. >> we'll be back with a live show scott next tuesday 1:00 p.m. eastern. see you then. >> great weekend to all you guys. coming up, is the value trade back? one strategist says yes, and it's time to ditch the momentum names. it's going make her case in front of our traders next. i'm here at the td ameritrade trader offices. ahh... steve, other than making me move stuff, what are you working on? let me show you. okay. our thinkorswim trading platform aggregates all the options data
welcome back. big changes could be around the corner for the stock exchange. that's what our next guest says. laura calvacini, good to see you again. what do you make of this recent comeback in the stock market? do you think it's for real? >> i think we're going to continue to see additional chop in markets for the next few months. we never got to a compelling valuation point in my mind. >> will we reach is place where
valuation will come into favor over growth? >> i think investors are finally ready to take the plunge into the value side. there's been a real crisis of confidence among value investors. >> rightfully so, right? value stocks have been so far out of favor. you can't even remember when they were in favor. >> it was actually -- we clal calculated, it was july 2006 when the outperformance cycle started. it's the longest growth cycle we have seen in 35 years. >> why is it going to change now? >> i think the fed has a lot to do with it. we found basically when this latest growth outperformance cycle took off it coincided with falling and then low interest rates. >> lori, the fed hike has a lot to do with it. what if there is no fed hike or the fed hike is pushed back substantially? what if it doesn't happen next year? how does that affect the rotation there? >> i think investors still expect it's going to happen at some point. there's a lot of debate on timing of when it actually happens, but what you may be seeing is people are trying to
move in advance. and i also think that investors have been fed up all year with expensive valuations in the stock market, so there could be some old-fashioned profit taking on growth stocks right now. >> best places to be you think are semis? >> semis are really interesting. this is a key kind of value side of the tech tried right now. it's cheap. it's one of two areas out of 24 that we can actually find good earnings revision trends right now. >> and i think that's a great place for my question because you're right, it's been like being in the desert for what feels like you said 2006, and i have been living it. so the last month we've had this nice little outperformance of at least the russell 1,000 value versus russ sell 1,000 growth. to confirm that you need to have positive stock action in response to earnings which will start next week with intel in the space. do you agree? >> i absolutely think earning season will be the big test for this value resurgence because one thing we've seen the last
few reporting seasons is that growth companies have been more resilient on any metric you can find. >> you think about google, amazon and the blowout reports. >> where are the value stocks though? they're in really the sectors with the worst earnings growth and the worst outlook. value stocks are like coal stocks, right? >> energy, capital goods. these are areas that are cheap, they're bigger components in the value index than they used to be. one thing on cap goods, it's cheap but the earnings revisions haven't quite bottomed out. >> so in other words say, okay, we acknowledge these groups of stocks are cheap but they have been cheap for a while and the "e" part of pe keeps getting slashed. when the earnings revisions stop being negative, at least stabilize, maybe that's the signal even if you're paying up 5% or 10%. >> we're still underweight the cap good space and we want to see the earnings revision bottom out before we get more enthused.
also don't forget about the financial side of the trade. those stocks are still pretty cheap right now. >> i was going to bring it up, particularly citi and b of a. >> i'm sorry, in the context of those earnings coming out next week and expectations pretty low. >> couldn't be lower. but the issue i have is even though energy has collapsed like it has, it's not even cheaper because the earnings have come down dramatically as well. the commodities have been cut in half. cap goods, i bought ingersoll rand last week but that stock is more expensive now having declined by 40% than it was trading at its peak because the earnings are so much lower. there's no runway to seeing the earnings grow. >> you have to look at valuations relative to the market. we're in an environment in which stocks are generally quite expensive, and so we don't find energy stocks look cheap in absolute terms but when you look at them relative to the broader
market indices they look undervalued. >> lori, we'll talk to you soon. >> thanks for having me on. >> up next, your game plan for the rest of today and next week. big earnings kicking into high gear and we'll talk about many of your favorite names coming up. surprise!!!!! we heard you got a job as a developer! its official, i work for ge!! what? wow... yeah! okay... guys, i'll be writing a new language for machines so planes, trains, even hospitals can work better. oh! sorry, i was trying to put it away... got it on the cake. so you're going to work on a train? not on a train...on "trains"! you're not gonna develop stuff anymore? no i am...
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at ally bank no branches equals great rates. it's a fact. kind of like ordering wine equals pretending to know wine. pinot noir, which means peanut of the night. all right. lots of earnings on deck for next week. there you go. how about that? netflix, financial names, what do you have your eyes on here? >> financials. >> jpmorgan is a big one because it's, you know, it's not just about the third quarter. it's really what they have to so going forward. >> what about blackrock? remember a couple weeks ago there was the news that the saudis had pulled some money out of asset managers like blackrock. i doubt they were the only ones
to do that. i wonder if you get any interesting comments about where we were globally from a company like that because of that news? probably has a pretty good idea about how the rest of the world looks, right? >> that was saudi and relates to reserves so they don't have to sell as many treasuries because they're in deficit -- daily deficit that's ridiculous. i think it's interesting. to me i have united health care next week also. i don't own it, but i want to hear what they're saying, what their take is going to be on drug pricing. are they going to pile on and ratchet it down further? i want to see what they're saying about hospital admissions. those stocks are in the tank. >> csx a good one. transports, give you maybe a little read into the economy, where the strength is, where maybe some of the weakness is. ge next friday. >> we already talked about the banks which is the big focus for me, but ge is interesting as well. we'll see what they have to say. nelson peltz is involved in the stock. i'm interested to see what they
have to say about growth through acquisition, growing industrial and health care businesses, growing the oil services businesses, some big divestitures coming from the baker hughes deal. let's see if they talk anything about that. >> have a great wieekend. >> you, too, judge. >> "power lunch" begins right now. scott, gentlemen, thank you very much. and welcome to "power lunch," everybody. along with sara eisen, i'm tyler mathisen. mandy has the day off. we're all at the nyse today. >> how lucky is this? >> i don't think we've ever stood this close together ever. >> it's been a huge week for equities, the dow on pace for its best weekly gain since february. the s&p on track for its biggest gain of 2015, so will the rally keep on trucking? >> and we've got a great mystery chart for you. check this one out. it's a sector, and it's up more than 7% this year despite the recent