tv Fast Money Halftime Report CNBC December 30, 2015 12:00pm-1:01pm EST
so far this year for 2015, it is nike. up 33%. home depot and mcdonald's as well. we will keep watching the markets. just a couple of trading sessions left. andrew, thanks for having us. andrew ross sorkin. thanks for joining us. for now let's send it over to mandy and the halftime report. >> we're on a road to nowhere. i don't know what that says about the show. i'm mandy drury sitting in for scott today. let's meet today's starlgt line-up. we have steve weiss, jim leventhal along with john and pete. feels like groundhog day. the game plan looks like this. hail mary playbook.
>> nasdaq is clearly a win wrer, up 10%. mostly thanks to netflix and amazon, have more than doubled this year. also, treasuries in the dollar and the green, and, of course, crude, well enough said about that one. it is a complete disaster. down by 31% year-to-date. >> that's in the books. will we see a rally for stocks in 2016? dr. jay, kick it off. will we see a rally next year? will it be a better year for stocks? >> i think it will be a better year for stocks next year. i don't think that american companies are going to have the same head winds that they had this year in terms of fx or foreign exchange, and that
definitely took a bite just as they were starting to make some nice inroads and recoveries of both revenue because the revenue numbers, mandy, have been pretty good, but, unfortunately, when you take into account the fx translation, well, then it erased a lot of the profit that they otherwise would have gleened. i don't knowing we're going to see quite that same head wind this year. 2016, that is. that's why i think it's going to be a better year. >> and i know we're going to see new highs. we're still less than 3% within all-too many highs, which is an important point to remember. we're at multi-levels. >> that level so much. pete pointed out yesterday, 2050 to 2,100 for basically the last month. just bouncing back and forth on a couple days sell-off. you buy it. a couple of day rally. you sell it. i think it's going to be a little more volatile in january, but we've got some good catalyst there's. not just the jobs report, but we've got jp morgan health care conference and several other big things right away in january. >> well, let's hope the direction gets out of limbo mode. what do you think, pete?
>> i tend to be with john. although i'll not quite as bullish, although we don't have such explosive move to the up side. i think it's going to be another grinding year. yes, it will be volatile. very much like it was this year. that volatility, i think, will be contained within a certain range just like i think the s&p will probably remain within that range. we've got to have some sort of a spark. we've got to have obviously globally i everybody. i think china is something all of us would look towards, and obviously looking and feeling out what's going to happen over in europe right now. i mean, those are the issues. i think the u.s. companies and u.s. centric, that's actually been a solid place to be. those -- those exposed to the rest of the world, and john has talked about fx. that's really been the head wind so far. >> wear fwog turn to a theme of the next hike. with each fed meeting, again, and that's a danger to getting preoccupied with that because
then you're missing the action below that. there is carnage below the averages. if you look at not just energy, but also industrials. that sector has been decimated. the bar has been set very low. consensus from what i'm listening to, what i'm hearing is 8% to the up side. i would think we could go higher than that. what it's going take is going to take more growth in the u.s., and i think that's going to be consumer-led. don't forget, most of our economy over 70% is consumer-led, and that's where the action would be. i would be in the mid cap companies. etf have taught us one thing. if are you in the upper echelons of the etf's in terms of your exposure, that the percentage of the higher compoen he wants of the etf, that that is even going to help you or hurt you. i is would have to be in the mid cap companies both here and in europe, and that's where the focus is. >> how you about, jim? >> i agree with much of what
steve just said, and in particular, when you have everybody saying that you are going to have mid percentage, mid single digit percentage on the returns of the s&p 500 for the coming year, you can almost bet with how many people are saying that, that that's not what's going to happen. what's going to happen? it may be down. it may be up big. i don't think it's going to be down, folks. yes, we are going to be worried about whether the fed is raising two times or four times, but as stooefr just said, that's noise. underneath you have a u.s. economy that is strengthening. you have a europe economy that's doing okay. that's good, by the way. and those two factors alone should move earnings and the stock market much higher. >> well, let's just dig a little deeper. get from macroand talk sector. the winners are discretionary, health care, and tech. what's the best sector to buy for 2016? pete and john, you have actually been debate about this. >> what do you think?
>> that means some of this from this year. we look at ham zon. that's one of the areas. you look at something like sales force. whether they get bought or just continue on their own, they just made an acquisition just the other day. this is a company that just continues to grow their revenues. now, from a pe standpoint, both those two names are very, very toxic. everybody is very, you know, obviously intimidated. when they look at those names, you think, oh, my goodness, how can i buy into those? how about microsoft, azur, and the job that satia nadella has done in transition? for that reason the cloud space has much more to go. i think those three names actually can lift the entire nasdaq. >> we'll give microsoftation more focus under the microscope later on in the show. you're in the consumer discretionary still.
>> 25 million folks and their credit cards and where that money was spent that they saved at the pump. turns out in the midwest and the south, about 80% of the savings were indeed spent, and i think that trend will continue this next year for that reason. i like cracker barrel. both a restaurant and a gift shop. if you have extra in your pocket, it's probably going to be spent in that gift shop. i also like bob evans. another greats play for exactly those consumers. lastly, buffalo wild wings. it's not just about the wild wings and super bowl and all that. although you'll get a lift out of that. it's also about the bar business. the liquor business there is really the crown jewel of
buffalo wild wings. >> that's where all of the margins are made. yes. >> you know jeff foxworthy says how do you know if you are a redneck? how do you know if you are a redneck? you just go to those restaurants. >> this one is yours, pete. >> it's jumped up. it originally was lower. jumped it up by $2. now it's over $1 billion. this actually adds to the icahn exposure into the space. this is something that they think they can actually continue this move to the up side. carl is making a very good point here. he seems to do much better here than he has in the commodity space, so i like this deal. >> we've also got facebook feeling some pressure after a federal judge approved two shareholder class action lawsuits against this tech giant. jim. >> well, really, mandy, it's old news, and, you know, we're talking about 2012 news from the ipo. this is meaningless for the stock going forward. we've talked a lot about the
fang stocks this year. within that spectrum, facebook is actually fairly attractively priced. i think you can own it here very easily. >> fedex getting some optimism at goldman with the bank saying they see a 20% up side for this stock. steve. >> yeah. i think that's true. it goes into what's happening in the cloud and what's happening with amazon. however, here's my caution. remember when they missed some deliveries. it's disappointing they didn't learn from ups's examples in the prior two years. you just got it right this we're, amazon said that's both educationary for amazon because the major expenses are fleeing, and cautionary for these guys. there's positive up side to the stock. you know, i bought you out to come around midyear. $336 million of some of its 2020 notes. john.
they had a deal with dominion about mauer, solar power in particular, of course, which is what sune is all about. stock has made a wonderful move off of $2.50 and is now over $5 again. people may start looking at this, but there are so many others in the space that i'm more interested in. >> i got torg with elan musk. if i would have held it, solar city, stey. if i would have held it, i would have won the contest. i bought it because we had unusual call activity. it popped about $5. i got out of it there, and it continued another $15 higher. >> that's the case of a fish that got away. >> could have, should have, would have. don't look back. >> incredible hope. amazon, microsoft -- they're all on a tear and worth $3 trillion dollars combined. time is running out. the trader of the year. who will wear this glittering
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2016? john. >> well, i like amazon. i talked about it yesterday for unusual activity, mandy. stock certainly gave you a nice read, and, boy, i think it moved $30 this week in just these three days. a little bit of a giveback today. it's down $1.33 for a $600 stock. that's zip. i like it going forward mainly because of amazon web services and the three million people that took on prime accounts. i think an awful lot of those stick with it. i know people were talk about churn, how many would drop off? i think a lot of them will stick with that rather than give it up. >> much has been made of its lose money to make money model. that doesn't concern you about its ability to make money going forward? >> it's probably why it's not going to be in jim levanthal's portfolio, for exactly that reason because this isn't a value play. it's certainly a valuable stock, and i think it will continue to be in 2016.
>> i think it i just got -- >> i'm going to call you professor because i think that's what you go by. it's a lot easier. >> the one company that's in my portfolio, it's a company that i don't like very much as a company, but i love as an investment, and i love amazon as a company, but i don't like it as an investment. i mean, at the prices it trades at, i've kind of given up on trying to even explain why it trades at the price that it does. it's one of those companies that i think you have to sit back and look at and wonder and say this is a true trader's stock. i mean, it's a pricing stock, a
and. >> it's one company that's not in my port polio. i bought amazon off and on over the last years. google is a stock i have never bought. it's -- it's, again, a company that redefines disruption. figures out a way to keep pushing the limits of what it does and it's a company i keep learning. as i watch it, i keep learning more about how tech companies can expand the marketplace and keep competition aware. >> you're still not willing to get in at these levels, right? >> it's one of those stocks that i'm afraid that i'll go to my death bed saying i wish i had bought that stock, but it's not the kind of company that fits into my philosophy, and you have to live approximate with what brought to you the dance, and this isn't one of those stocks that i -- that is in my area of investing. >> you certainly are not the only one littered with regret with that one. you also brought along three good value buys and three value traps. what are they? >> the value buys, i mean, are people that might be thrown off by. the first is apple. a stock that i go back to every -- it's a stock that i have bought and sold.
i sold it this summer, and i'm glad i sold it this summer. i swapped it with twitter, and that's not a great swat anyway, but at $108, i think it's back to being a stock that i think is a good value stock. the second is luke oil. i'm not doing this as a commodity play. i think it's beaten up for multiple reasons. it's in the wrong country. it's a commodity company. the currency works against it. for all those reasons, i think i have a lot more potential in the up side than the down side. >> you have -- you mentioned that you bought twitter, and i think that was in august when it was around $26. >> yeah. >> at last check i think it was $22 and change. are you still sticking with it? do you still believe in it? >> i mean, it's -- i don't believe in where the company is being managed, but i believe in the resource the company has. that's the 350 million users. i can't believe how badly they've misused that base, but i think in the hands of somebody else, and i think that's the best wish you can have for this company is that somebody with the capacity to convert that
user base will run the company. >> so, professor, you actually think that user base is something they can expand upon in the case of twitter? at $26, now it's $22.50. you think they can get over that hump and start to see that growth accelerate once again? >> i'm buying it more like an option than a stock. that resource base is an option. like any option, it could end up being unutilized, but i think that resource base is an immense advantage for them if they can find a way to use it. i mean, they've struggled for these last few years, but part of the reason is they haven't had focus. i mean, any company that goes out and hires a diversity head before it starts thinking about -- i'm not saying diversity doesn't matter, but you have to make money for all of the rest of the stuff to matter. it's got its priorities mixed up, and i think it needs to focus on surviving and making money before it starts thinking about the rest of the stuff. >> professor, first of all, just an observation. you can tell how tough this year is because i think you have more gray hair there.
i think it was much more black when we -- >> absolutely. >> at the beginning of the year. that aside, i'm a big fan of your work, and i go on your website, and the last time we had a year where both bonds -- the ten-year, that is -- and the s&p were down was 1969, i believe. this including -- according to what i have seen on your site. that may happen this year. we're right on the cusp of the ten-year -- what does that pour tend for next year, in your mind? >> i have given up trying to forecast markets because i've learned especially in the last six years that every time you try to focus, all you end up with is more gray hair. i think -- i think this year actually rather than say they were down, i think we're both flat, and i think it's an amazing non -- it's a year when nothing happened, if you look at the start and the end of the year, but lots of stuff happened in the middle. and i have a feeling that next year is going to look a lot like last year or the year that's ending. in terms of you are going to
have a crisis somewhere in the world. it's almost a given. you're going to have ups and downs. i don't see a break-out in either direction that would be significant. at least sitting where i am today. i think it was a very interesting year in terms of what happened in the middle of the year, but not in terms of the start and the end of the year. >> professor, getting back to your value traps. >> i think i'm going to get a lot of heat on this one. i look at an ibm, and it's a stock that looks cheap, that's looked cheap for a while, and it keeps looking cheap. and unlike the other tech name, for instance, apple, i look at ibm, and i can't see anything happening in the business that's exciting. if it makes it back, it will be purely as a dividend play. to me it looks -- it's a stock that will continue to look cheap. i think the other two value traps are more generic value traps. i think one of the value traps that i see is all these codes, which is almost a corporate scam. i really don't see the value creation in splitting off these
u codes other than you're attracting investors that are so in search of high dividends and high yields they'll buy anything. the last value trap is these emerging markets that look cheap, especially brazil and indonesia. there's a reason they look cheap, and i think jumping into these markets just because they've dropped is asking for trouble. >> professor, it's been great to talk to you. thank you very much for joining us today. have a happy new year. as a fellow value guy, jim, what do you think about those value traps? >> i agree -- well, i agree with ibm. i'm out of the name. i know steve is probably chomping at the bit to remind me how he told me to get out of the name. thank you, steve. but, look, i do think at some point when a legacy business has declined enough that what's going to be uncovered is a agreeing business. pete, you were mentioning the cloud wrerl. i was curious if you were going to mention ibm. it would be too early, but ibm does have a growing cloud business, and their artificial intelligence business is great. it's a value trap now, but you got to pay attention to this
stock. there comes a point in time where it transitions back to growth. >> getting back to the amazon microsoft and alphabet discussion. which is your top pick? let's go around the horn here and just quickly get an idea on where we're sitting with this? >> mine would go right back to the professor. it would be microsoft. i look at that name, and i see all the diversity of growth that they've got going on right now, and it's obviously the cloud is the focus, but they're still making money on some of the legacy as well. i think for that reason i still like it. >> microsoft for me, but i also think google behind it. i think it's easier for a guy like me to look at amazon and say pretty much what the professor said. great company. hate the stock price. i believe going to stay away from it. >> if i had to pick one, i like them all because i think frankly amazon should have a 399 forward multiple instead of 375. it's a lot more appropriate. in terms of specifically picking one, i would go with google because they basically got t
the -- >> well said, could raising yesterday's rally reminds us that the world is just drowning in oil. let's have a listen to this. >> john is throwing a hail mary to catch township josh in the halftime portfolio competition. the leaderboard and the trade up next. don't go away. >> we'll give it a try. you're late for work.
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one trading day remains and the halftime portfolio challenge. who is going to be named top trader and wear this glittering belt of champions? it's the kind of belt if i wore, i think i would fall to the floor. it looks heavy. >> it looks like it lights up. >> it may do just like christmas lights. josh is in the lead with a 12% gain. pete, you're down with just over a 10% loss. there you are, dr. j, you're in the middle. 3.3% gain. jim, you are ever so slightly in
the red. who knows? dr. jay, you have made a hail mary trade today. tell us what you bought. >> basically at last night's close, more or less, although it was executed today. we did the double short on the s&p. it's worked out so far. it's made us a little ground back, and i'll probably hold it in to tomorrow. it's not that i'm looking for this to put me over josh into first place. it was just a trade to try to get a little further into the middle of the pack. i was looking for maybe 2% or 3%, which would mean a 1.5% drop in the s&p. >> i remember, of course, our viewers and our listeners can follow that action on cnbc.com/pro to see who will wear that belt. >> oil also seeing a big reversal today. it is falling 3%. talk about volatility this week so far. let's get more with jackie deangeles and the futures now. >> hey, mandy. that's exactly right. voluntarily silt is the word of day. inventories continue to climb. jeff kilberg, how is supply and
demand story going to play into next year? right now it seems like oil prices could go lower. >> jackie, the supply side is all about 2015, and, yes, again, it's going to continue in 2016. we had a little fun here at cnbc futures. we had a twitter survey, and the overall response was that oil, crude oil, got crushed in 2015, but it will continue to flush in 2016. therefore, the -- we have to find a bottom. opec has no doubt about it. it's in the lower 30s. it will rebound back to 50. >> that will continue to either tread water or go higher from here. do you agree with that? >> i think it's value play in. 34. production has already been for over a year. will you start to see the high
cost producers and the americas. really paying it above $40. on top of that, i do think that the dollar will be very interesting next year. the fed will likely raise rates at a slower pace than expected. on top of that, the ecb, have you to look back to last january when the market rallied. the crude oil rallied very strong in early fe-- i do think ecb delivered more still lurks it could be a catalyst for oil in the first part of this year. >> we're going to do a deeper dive on the show tomorrow. 1:00 p.m. futures.cnbc.com. >> thank you very much. jackie deangeles. jim, let's trade energy. this is one of the seblgtors you said you will it dip intoing in 2016. crude is down about, what, 32% already this year. >> there's an important qualification to what i said, which is that i want to be in energy companies that are aing nostic to the price of oil. honestly, i don't think oil is going to rally much from here. there may be some technical bounces along the way, but there's a lot of oil coming on to the market, and as soon as
oil goes up, have you those shale drillers just ready to drill and put more supply on the market. i want to be in companies like the pipeline companies, like the refiners that may take oil in on one side, but on the other side they put out oil or refine products, and they can be agnostic to the price of oil. >> you need to be impervious to it, don't you? >> yeah. >> the cord cutter wrshz skinny bundles and on-line streaming hitting the media stocks hard this year. how our experts are playing that space. plus, just call it the oprah affect. weight watchers soaring today after they launch a new campaign with the company. steve weiss, by the way, was not hot on this stock a month ago. has he changed his tune? has he seen the ad and cried? the trade update is next. opportunities aren't always obvious. sometimes they just drop in. cme group can help you navigate risks and capture opportunities.
even tempur-pedic mattress sets getat low clearance prices!c, save even more on floor samples, demonstrators, and closeout inventory! the year end clearance sale is on now at sleep train! ♪ your ticket to a better night's sleep ♪ >> hello, everyone. here's your cnbc news update this hour. a few scary moments for passengers aboard a united airlines flight arriving in chicago this morning. the plane skidding off the snow-covered runway after landing. luckily, none of of the 164 people on board were hurt. bill cosby face up to ten
years in prison if found guilty of aggravated indecent assault charges filed today in a case from 12 years ago. cosby will be arraigned in a pennsylvania courtroom later today. zooirchlgts deadly flooding continues in hard-hit missouri and illinois. officials there are closely monitoring the mississippi river which has risen to heights not seen since 1993. at least 18 million americans are being impacted by that flooding. meanwhile, bad weather in the u.k. as well. this 18th century bridge in yorkshire, wow, look at that, is no match for those rising floodwaters. the bridge came crashing down into the river below. weeks of rain in the northern part of england has caused widespread flooding and thousands of evacuations, and that's the news update this hour. mandy, there is more bad weather coming their way. it's not a good situation around york. >> not a good situation at all. incredible footage. thank you very much for that, sue herrera. media stocks heading for their first annual decline since 2008 on fears of a growing
number of analysts. you have a lot of these names, right? you are long a lot of these names. >> disney being the most interesting one to me. it was waiting for that pullback. we're always talking about waiting -- looking for these pullbacks in certain stocks. that stock went from 120 to basically 95 in a short period of time because of the skinny bundle. theme were concerned about espn and obviously that's always been the crown jewel for disney. everybody always discusses that, including myself. i think it was overplayed, and i think that ended up playing out that that was correct. although we're seeing disney start to pull back once again. even with this launch of such great success with some of these movies. is there pressure on all of these names? i think there is in the media business right now. i think some of the reactions have been overraek reactions and those create opportunities. >> you're going to sort out winners out from the losers. >> you have a name you do like within the sector? >> i like viacom. right now you have sumner redstone, and, of course, all the publicity about what's going on with the trial there and who is going to run the company. the way i think it plays out is that if he does give up control of the company, it's been said
who is going to run it afterwards? you have this huge asset there, which is paramount, and he could sell paramount. about $5 billion is what some are saying. then are you left with the cheapest media stock there is at about six times ebida. very cheap. i'm just not a huge fan, and i think it's very difficult to navigate. i think there is going to be winners and losers. i would rather play it through like a google, for example, and try and figure out does cord cutting really move on, which i sense it will. i'm not there. >> all these tech companies are now entertainment bohemaths as well and amazon is getting -- >> it's right up in the generation it's coming up now, and even, you know, our generation, i find myself watching netflix and amazon, which is an even better viewing experience than netflix. >> yups soaring today. double digits after releasing its first advertisement
featuring oprah winfrey. steve weiss has been a skeptic on the weight loss company all year. let's have a listen to what he said. >> on-line right now is killing companies. it's the great company killer, and that's no different with weight watchers. there are fundamentals in the stock that were horrendous. it was heavily shorted for good reasons until oprah came in. it's discounting an awful lot of good -- >> okay. >> okay. steve was right back then. the stock was down more than 15%. since that call. until oprah's new ad hit, and now it's up since then, and i saw just over the past three months, of course, oprah announced a 10% stake in the middle of october. over the past few months, the stock is up whoppingly. you just saw the ad. i challenge the you. did it not make you cry? it didn't. i felt it resonated. every woman -- every person out there who has tried to struggle with their weight. >> i'm not her core demographic. it's actually women over the age
a lot of people took to twilter and talked about how inspirational it was and how emotional -- >> it caught my attention. it's not the sort of thing i would normally pay attention to. it caught my attention. you know, like steve i had my tear ducts removed as a young man, so i don't cry anymore. >> i'm a sensitive guy. >> they keep on telling us that. what's the ad again? >> coming up, it is the second worst sector of the year. material stocks are down more than 9%. your game plan for copper, steel, and chemicals. that's ahead. plus, where in the world is the best place to invest right now? we're going around the globe, and we're going to be picking our favorite investing destination for the new year. you're watching cnbc, first in business worldwide.
we'll tell you what it is. while most of it focussing on amazon this holiday season. there is another on-line retailer on fire and outperforming at zon, it's up 30% this month alone. it's up almost 150% this year. mandy, we'll let you guys guess on what it is, but we will reveal the name on power lunch. >> i love your guessing games. thank you very much. materials feeling the burn at the second worst performing sector of the year. cnbc's morgan brennan has the story behind what is driving those prices lower and were there any end in sight? morgan. >> that's right. mandy, it's no wonder the sector has been hit hard. manufacture the factor that is are pressuring energy, which is the worst performing sector this year are also factor that is are impacting miners, metal producers, and that's within the sector, including slowing growth in china. since china is the top consumer of many commodities and chemicals, our data partner kencho crunched flbz to see how materials perform when there are signs of weakness in the world's second largest economy.
how it trades one week following the people's bank of china cut to interest rate or reserve ratio requirement, which the pvoc has done 13 times since 2010. take a look. while the broader s&p is basically flat one week later, the sector is down nearly 1%. names that fair the worst, eastman chemical company. that traded lower. 85% of the time. it has averaged a 2.5% drop. mining giant freeport mcmoran, that also fell about 2.5% on average. that has traded lower about half the time. also, metals producers alcoa, that has tumbled 1.5% on average. it has traded lower 3% of the time. as we head into 2016, many analysts expect headwinds from china to continue to pressure the sector. morning star is getting a roar, for example. chinese fixed as elt management said to be weak again, having po pro found implications for most mining commodities. particularly iron or and copper.
>> thank you very much for that. laying it all out for us at the end. is there any turnaround in sight for the materials? what do we think, guys? >> no, we don't. i'll tell you why. >> one-word answer. >> iron ore, they can't cut production. you would think when there's a rate cut that the material wooz move hire, but they can fight the supply, and what china is doing is don't forget, it's not exactly a free and open economy or, you know, so when they're cutting, they're cutting to stimulate the consumer. >> okay. >> they're not building out the infrastructure, which they've done. the banks are under water. it's just a bad situation there, and a lot of the commodity was also used as letters of credit to get financing. that's done the way it was also. to me there's just a flood of supply coming on. the old saying is you give a miner a dollar, and it goes into the ground. you t just digs more, and that's what's happened. >> there are a number of other metals like copper and nickel where supply is being cut. i mean, at what point, and which particular metals, which
particular commodities. >> is there a brand out there -- >> we'll see more evening lib yum. >> the concern is there enough demand out there? even if they're cutting back, is there enough demand out there globally, economically to be able to propel these names any higher than they are right now. sn. >> is it more of a supply problem than a demand problem? >> probably a little bit of -- maybe a little bit of both. >> you need to see bankruptcies in the mining companies. i hate saying that, but that's the sign that you have reached a bottom. you're not going to see any of the mines get -- >> are there any particular mining companies. no? >> mandy, where jim is spot on
about this is you take a look at gold. down 10%. silver, down about 12.5%. the gdx, not the junior miners, the regular, the big ones, the ones that should have better balance sheets, down 25%. the reason for that is exactly what jim is talking about, and that is there's a lot -- there's a considerable worry that some of these players are going to have to go out just like there is in the other commodity space, the energy. >> and inevitable. correct data team this morning put out a wonderful note. the tallies of commodities so far this year, and really the softs that are the only ones that are moving higher. co he co, cotton, sugar, and o.j. are high year-to-date. pretty much everything else in the commodity space down. >> yep. >> coming up, just call her sima san diego. she's taking us globe trotting to the emerging markets and beyond as we search for the best place in the world to put your money right now. it's hard to find time to keep up on my shows.
and take them anywhere. ready or not, here i come! (whispers) now hide-and-seek time can also be catch-up-on-my-shows time. here i come! can't find you anywhere! don't settle for u-verse. x1 from xfinity will change the way you experience tv. the emerging markets have been a troubled trade this year, so what should investors be expecting from the ems in 2016? seema mody is joining us with the emerging markets playbook for next year. >> mandy, another challenging year for emerging market. hurt by a couple big headwinds. first fed rate hike fierce, china's economic slowdown, the strengthening dollar and weaker oil prices. the rout is one of the reason
stocks in brazil sold off, down 13%, while india down 5%. two outperforms is china up 10% so far this year while russia has rebounded by 22%. interesting enough for 2016, strategists at b of a are bullish on russia projecting economic growth to improve in 2016 after contracting by 3.7% this year. analysts say if there are no major political surprises and if commodities stabilize, investment should continue to recover supported by growth in corporate profits. now, another emerging market investors are warming up to is turkey. strategists say economic growth may recover amid long delayed reforms, but, of course, mandy, as you know, geopolitics will be a big part of the story. >> if we can clarify, am i right in thinking with russia you have to be careful about which collar index you're talking about because there's the two indexes, one which is ruble denominated,
that's the one up 22% this year because obviously when the ruble falls, it benefits, and then there's the other one, the rts -- >> which is dollar denominated which is down this year. absolutely. there's two different russian indexes to look at it. the currency will be a big part of the discussion. >> ruble down about 20% this year. thank you so much for that, seema. so where in the world is the best bet for your money? according to the ifm's christine lagarde global growth will be disappointed and uneven in 2016. thank you very much, christine. that's kind of laying it out there. let's go around the desk. what do you think, pete? >> i tend to agree. right now as i'm looking around there, might be some nuggets. i think europe, where i think you can find something. i still look at the u.s. i think we're the best shape right now when i'm looking around because we have less -- although china obviously is going to be a headache for all of us, that's going to be the reaction but i think in the u.s. markets themselves, domestically
there are many companies that are here that can do very well. >> so the chinese economy will probably be a headache for us and the chinese/u.n. issues there and devaluation could be a headache for us. but in terms of putting your money in china, in the shanghai market, it's up 9% this year. >> i'd rather be in the u.s. >> still in the u.s.? >> i think i'm going to have more success in the u.s. >> still captain america. anyone else prefer to stay at home? >> i'd rather stay here for sure. >> yeah? >> i have said it for many reasons, the biggest one is liquidity. the liquidity offered here dwarfs -- we trade more in 15 minutes here than they trade all day in most of the other markets, however, i like russia. we heard patriot fesser from nyu talk about his pick, luke oil i believe it was, and i agree with him. i think there's plenty of opportunities over there. you just have to be comfortable with the risk that seema spoke to a moment ago. >> i'm a long u.s. equity manager, so i stick to the u.s. having said that, we have an international equity team in our
firm that's very quantitatively joriente oriented. they're very good at what they do. they actually like japan quite a bit right now. they like europe, and in particular they like eastern europe emerging markets like poland just as an example. >> and steve? >> well, the way i look at it is emerging markets, it's purely a flow of funds issue. you get in front of the flow of funds, you make money. you don't, then you can lose money while you're sleeping. last place i'm investing in is russia or china. i just finished reading a book on -- it's called -- i forget what it is. i'm going to look for it right now, actually, mandy, because it's important. >> we only have five minutes left in the show but take your time. >> "red notice," and it's about -- i think it's heritage, the hedge fund that was there. if you want to invest in russia read this before you do because it's going to open your eyes and that's modern-day stuff. where i like to be is i like to
be in the u.s. and europe. europe i don't want to be in the big names. we're invested in two european hedge funds. the euro stock 50 is down 6% this month. these two hedge funds only invest in the little market and they're up over 1%. so you have to be careful where you are, but the u.s. two-thirds, europe one-third. >> and germany is still almost 13% from its highs, a bit more runway. >> and a dollar basis it's not there. >> good to talk to you all. ahead, flying high. pete is seeing some unusual activity in one airline. he will tell us what that is and we'll go under the radar with jim with the auto name he says it's time to buy.
out there in the february 50 strike. i think they're losing a little patience that the stock will be able to recover quite that quickly. we're seeing a large rollout to may. they're buying the may 50s, getting out of the february 50s. 10,000 of may 50s were purchased. looking for some upside. >> what's your holding period? >> i am expecting this to be multiple months. i'm willing to be patient for this name but i'm in other airlines as well. >> what are you seeing? >> a biopharmacy play, achillion. it's a longer term play. like the stock. i bought it today. >> rounding out with jim, what's your auto trade? >> theo ems, ford and gms. they've underperformed the market and that's despite three months of torrid sales. we expect another december sales number on great. that comes out on monday.
i think you have today and tomorrow to get into the stocks. we haven't borrowed from neck ye next year. single digit multiples. >> wonderful, guys. that does it for us. you can go to "power lunch" with breaking news and kate kelly has details. hi there. it's kate kelly from headquarters starting out "power lunch" with breaking news on puerto rico. the governor just about to make remarks about on a crucial set of bond payments due monday they are likely to default on a relatively small portion. let me walk you through it briefly. the first missed payment is expected to be about $36 million due on some public financing bonds otherwise known as the rum tax bonds. there's also a small payment, a little over $1 million due from the public financing corporation whicre