tv Fast Money Halftime Report CNBC January 21, 2016 12:00pm-1:01pm EST
premarket got strong. opened with a gain. went into the red. now session highs, up 215. all of this on the heels of oil, which is putting together a pretty nice rally. up $1.50. almost at $30. that's the march contract. whopner has his hands full. let's get to headquarters and the half. >> carl, thanks so much. welcome to the halftime show. let's meet our starting line-up for today. joe here. steve is here. john and pete courtside as well, and steve grasso on the floor of the new york stock exchange. with us as well on the set senior economics reporter steve liesman. our game plan looks like this. fit or bit? with the stock sinking below its ipo price, one wall street firm ups it to outperform. you'll hear from the analyst who made the call of the day. bottom fishing. is crude oil getting closer to finding its floor? we'll ask bank of america's head of global commodity on how low
it can really go? here's how we look at this hour, and you are looking at that picture as we speak. crude is about to hit $30 a barrel. it is getting a gain of nearly 6% today, and that, joe, is helping the overall market. certainly some are asking have we put in a near term tradeable bottom in both stocks and oil? >> my answer to that would absolutely be where he. i think it happened yesterday. it was expiration in oil. a lot of this is off just 25 years in the business watching the oil futures market. watching the market itself. i think there were a lot of shorts yesterday that really after 12:30, 1:00 pushed it on oil futures and the s&p itself.
i think there's stuff short down there. i think the next 500 points for the dow is up. i think oil will rally above 30. there is a tradeable rebound about to occur in the marketplace. by the way, same thing happened late january to energy last year. >> something to believe in, steve? >> no. here's how i look at it. i don't know if it's the bottom or if it's not the bottom. the way i'm taking a look at it is we pretty much discount it as bad news as much as we have to. it can always get a lot worse there. their issues are far from being cured. in terms of the possible impacts on the s&p, i'm looking at the multiple, and that's about 15 times. i'm not going in with both feet, but it's worth picking around and finding vaulgz there. what does it feel like?
>> you know, felt like when draghi was speaking. it felt like the market had spiked. that became a sell the event or sell words type of event. definitely to joey's point, it feels like a lot of these shorts have thrown in the towel just on i daily basis where you see that over reaching the cover there. energy shorts. >> if we close above that, a lot of shorts are going to be forced to cover as well. i don't want to over simplify it, but i do think that the risk is to the up side short-term if we can close above the s&p 1880 level and be up on the week. >> we're at 1887 as we're having this conversation. steve, grasso on the floor mentions ecb and draghi, and maybe there was a delayed reaction. you were beginning to wonder, perhaps, if draghi still had the kind of verbal juice, if you will, that he did many, many
months ago where he says whatever it takes. this wasn't that far off from that. >> what happened was draghi came in and said, you know, we're going to make changes in march, and most of the expectation was if they were going to make changes that it would happen in june. i think draghi has amplified it and really raised questions and got the market thinking about what the fed does next week. draghi stepped forward and said, you know, why am i making changes now from december in because the situation has changed. i just brought along a little chart if you don't mind, scott. how was -- i always do. how have things changed since the fed last met? take a look. the s&p is down 9.4%. when the fed met it was 2%. now it's 1%. you have taken a percentage point off the fourth quarter
growth outlook. all that creates the possibility for changes next week. even though the fed has been stoic, and here's three things i think the fed can do. >> so pete, if steve thinks you may get what sounds to me like he is saying perhaps dovish -- does that enable this if it is, in fact, a short-term tradeable bottom to last longer. >> maybe, scott. one of the things we talked about yesterday, though, was we were talking about how long the duration of when we have seen the spikes in volatility index going back to august. it was about a month and a half in duration. wean this move to the up side, you would expect to see that volatility index coming faster than it has. it's still 26. yesterday we were at 32. we closed around 27 1/2. the reason we seem to be trading better right now, two things, draghi and obviously oil. if oil were down today after the draghi comments, that would be something for us to all be
watching. >> i was waiting, waiting, waiting. the reason i bought today, john skipper from espn yesterday was talking with the "wall street journal". >> a lot of people are talking about that interview. >> i loved what he said. they lost seven million subs, but you know what they didn't lose? they didn't lose ratings, and they didn't lose ad revenue. the subs they lost doesn't matter, scott, and that tells me how powerful what they have is, and when you look at the money they're able to generate on digital, it's unbelievable. $500 million. this is a company that continues to grow, and they're just growing in the right way. >> doesn't matter. doesn't matter whether it's a skinny bundle or not. disney will have the same
margins that they have now. >> here's james gorman, he was with our crew out in davos from earlier today. let's listen. we react on the other side. >> people keep telling me the chinese economy is growing at 9%. now it's growing at 6%. you know -- >> it's a $10 trillion economy. does anybody know what the third largest company is in the world and what's growing at? third largest is japan. against that i'll take 6% growth on the $10 trillion economy. >> doc, are we over doing it here? >> no. >> why not? >> clearly there was palpable fear in the market. last friday and again yesterday. both times we saw surges in volume that were way above
normal. yesterday we thought when we got topete cited. it was the volatility of oil and those that produce it and so forth. that index got up to 72. highest reading in months. it's down 7% from that level today. >> what did the vix hit yesterday? when we were on the air, the dow was down 560. the vix to, like, 32. what about the notion that people say, well, remember the summer in august the vix spiked to 50. >> 53. >> one of the reasons why they don't think we've hit a real bottom is because there hasn't been enough fear and the vix hasn't gone through the roof enough like it did in august, joe. >> go ahead. >> sorry, john. >> if you can hold them, judge, the crude oil bottom at $26.55, but i cited just a minute ago, if you hold that and crude oil
is no longer the anchor that it has been for all of 2016 and the tail end of 2015 as well, if you do that, then it's got to be some other event or that was the bottom. this is really more about the speculator. understand how the speculators are approaching this. this is going back to the days of being in the pits and seeing how the pits trade in the marketplace. understand the overall sentiment of what's going on right now. this is a hedge fund. this is an institutional type of gain. as the market begins to rally, i think steve mentioned it before, the energy equities that are being sold as a hedge against being long energy debt, that's going to be taken off.
>> i don't think they want to take rate hikes off the table. hept to tell the market -- they're listening on nonautopilot. that's what they want to do. there's a sense. i'm amazed by this discussion if i could just be critical for a minute. you guys don't talk about fumtss anymore. >> talk about pe multiples. there's profits. profit margins have come down from 9.62 and all-time highs. >> we don't have a red on that. >> no, i know. >> whoever talks about -- hey, it's 6% on 10 trillion. that's a pretty good number. it doesn't mean that the u.s. economy is falling into recession. >> that's wrong.
he is under stating the problem. the problem is in china and it's understating. not overstating. they're overstating -- >> what about the affect on the u.s. economy? those are overstating. >> they overstated relative the impact to us, but that's been a debt-fueled binge. their debt has people think that it's as bad or worse -- >> the idea of trying to put some form of logic on it, which has a guy who believes in markets, to see the market go down 570 points yesterday, and then come back on no news at all to be down 250 and call that a
victory and somehow say there's fundamental logic behind the trading of the market and not -- >> it's not about -- >> high frequency trading. >> it not about the fundamental logic. it's about the names, some solid names that, shouldn'ts be getting pushed out are getting pulled down. what really led us yesterday, steve? names like nike. we know what nike is able to do. names like microsoft. solid fundamental companies. along with some of the dash for trash. >> it's a vacuum. the buy backs from corporations are not there. there's no information. there's no earnings yet. volatility is when money is made. >> really last point. >> one pour last point? >> no, he means it. >> i can't predict the movement of a train that's being driven
by oil. you can't make any sense of it. sfroo grasso, i'll see ow the five tonight. thank you very much. coming up, cio of eaton vance. he is responsible for -- he will tell you how he is managing the wild market swings and why he is optimistic on stocks. plus, defining cheap. u.s. stocks are racing nearly $2 trillion in market cap. are they a bargain yet, though? we're going to get some historical perspective from mike santoli. as we take a look at crude oil, bank of america's head of commodity research joins us with his take on the bounce later on in the program. you are watching cnbc, first in business worldwide. ♪ those who define sophistication stand out. those who dare to redefine it stand apart. the all-new lexus rx and rx hybrid.
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>> welcome back to the halftime report. i'm jackie deabbing less reports from the nymex. crude oil popping over $30 a barrel. that's the march contract for wti. now just under that level, but still more than 5% move higher today. lots of reasons for crude to still go down from here. data points still pointing to the bear side, but not surprising to see a little pop today. a little selling fatigue out there. especially after such a violent session yesterday.
>> welcome back. >> give us your view here and what we've seen this week and over the last it 2 4 hours certainly. >> i think there's a bull market in pessimism. sentiment is horrible. when sentiment is horrible, as warren buffett once said, you want to be greedy when others are fearful and fearful when others are greedy. be a little greedy. don't go crazy, but start putting money to work in the market. >> unless there's not enough blood in the street yet. >> you can drive yourself crazy trying to call the absolute bottom. >> investment banks, and the more cyclical part of the reet
sector have interest in stocks that we are looking at very closely. >> like which ones? >> i like the hotel stocks within the reets. we're starting to nibble there. they've really beaten up like the -- i like the investment banks. i like within the asset management companies. i like investco, which is a global asset management firm. they're buying back their own stock. they're well balanced between type of and passive. it's business that we know well. pretushl plc, they have businesses in asia that are attractive, and, of course, they're being hit with the selloff there.
>> my eyebrows went up because you said they're worried about the banks because you don't think they've come clean on their energy ebbs posure. elaborate. >> the banks are the first companies to report. we've gotten through the large banks in the last few days. >> at eaton vance, they have very large bank loan business. we invest in bank loans. we have a very good read on where these types of loans are trading. they're not trading at the carrying values that the banks are holding them at. that's the nature of the talkin
traded yesterday and now there's a big lift today, you better be putting on your seat belts if you want to be in amazon right now. >> oil prices are rise, but is it too early to call a bottom. we're going to ask francisco, bank of america's head of global commodity tech rsh plus, we'll turn to the energy traders for how they are playing the bounce. we are seeing that on that screen right there. as we head for break, another screen. a look at the s&p. sectors leading the way today. s&p is having a pretty good session. up 1.5%. led by telecom, energy, and discretionary. back after this.
>> hello. i'm sue herrera. here is your cnbc news update this hour. russian president vladimir putin hosting a science and education council in moscow. no reaction from him on the findings of a british judge claiming putin probably approved a plan in 2006 to poison a former agent turned kremlin critic. the obama administration's nominee to be the army's top civilian official is worried about the plans to reduce the army's size. aaron fanning says that improving the army's state of ready city council challenging because of the threat posed by
isis. its shipping capacity away from its houston hub. the move is in response to weaker sales from energy industry clients. and another record for star wars. according to retail research group ndp star wars toys generated more than $700 million in sales last year. that made it the number one toy property in 2015. more than jurassic park, minions, and adventure toys combined. that's the news update this hour. i contributed to that. >> yeah. i had a feeling you were going to say that. i did as well. >> i knew you did. >> leggos count towards that. >> absolutely. >> crude oil surging and breaking above $30. jackie deangeles has more. >> after yesterday's session a near 6% pop today in wti. also, seven straight weeks of production we are pricing in the
scenario where there are barges circling the world with no place to put their oil. it's hard for us to imagine pricing in more of a bearish supply story. anything that comes in conflict with that is part of the bottoming proosz. however, i'm not getting in until it sellingses above $32 a bare are. to me it seems like this is one factor of it, but not enough for me to call a bottom. >> your thought on the levels here. do you think we can close over 30 today? >> i think we can, jackie. jimmy highlights a wonderful and technical level here at 32. look at the year-to-date chart. we have seen a pummelling. it's been a whipsaw to the down side. now we're seeing it pop back. if you look at january 4th, we were trading near $40. i look at $32 and leadership. we get above $32. $36 should come quickly. it's emotional volatile trade should persist as we see
uncertainty globally about central bankers now possibly stepping in. more on the live show at 1:00 eastern time and we're also talking to legendary technician ralph. he will tell you what everybody is missing about the stock market. scott, 1:00 p.m. futures now.cnbc.com. >> looking forward to hearing from ralph and the gang. >> is today's move a tipping point for crude oil, or is there more pain had theed? let's go to francisco glaunk, the head of the commodities remp at bank of america, merrill lynch. welcome back, francisco. is this a bottom? >> well, it's a pretty hard question to answer, but i do think we're in the process of finding a bottom for oil. i don't think we're going to be in the 20s for very long. what i'm really looking for is the change in the leadership and really for the gasoline market to start picking up steam as we get out of the winter. i don't see prices staying this low for a long time. i think if you look at obviously
wti has been trading 26 points lower per barrel in the last couple of sessions. western canada select, which is a key benchmark for it's really hard for prices to get a lot lower given the fact that the light sweet crude oil will be in scarce supply heading into the summer even though the declines we're seeing in the shale industry. that's really bound by the lower end of the scale, whatever single digits, and that's where we are. i don't see a lot more down side. >> francisco, it's john. i can't imagine an opec in november of 2014 was looking for the price that they're getting today when they got into this market share war.
>> there's a price war going on between the cartel and opec producers. more recently between saudi arabia and raurn as the two refuse to cooperate to balance production even within the cartel, so to me that's really the issue. opec cannot find common agreement. from the flip side western there are oil producers pumping oil today. it is going to be -- i think it's going to be a hard price to go lower and the reason why i think the market is taking the recent more possibly is because they're coming along with a big.
>> the more comfortable we'll get that the market is bottoming out. >> so let's look at it this way. right now you are starting to finally see, as you mentioned, production being shut in. however, you have sitting on the side lines $65 billion of unspent private equity capital that is locked up for seven to ten years before that shows results. what are your concerns in terms of that -- those -- that reduction that gets shut in coming back on stream as the price of gas and crude move higher. >> look, i'm not saying that $65 billion is not a lot of money.
it surely is. this is the annual expense. when you strip out the ten year, $6 billion, $7 billion, $ billion a year,ates decent amount of money, but it's not big enough to tilt the market. i think the saudis have really managed to scare risk capital off the oil industry by allowing prices to fluctuate wildly in the last 18 months.
anything can happen, but in the absence of a major demand event, i don't think prices have a lot more to go on the down side. >> okay. francisco, thanks so much. crude oil going above $30 a barrel. this used to be maybe a developing conversation, and one that perhaps needs to be had more, and it's sort of what gary cohen was talking to our folks in davos about. yes, there is a ton of supply on the market, but the stock market reaction and the way it seems reacting to a demand story reflective of an overall weakening u.s. economy, weakening global economy isn't necessarily the case. says i don't believe the selloff in oil is reflective of an economic slowdown. if you look at the fourth quarter year-over-year demand, it was actually up 1.1%. is the right story being told when it comes to supply and demand in oil? >> i think the right story is being told. i don't think oil -- i don't think oil is forecasting any
form of an economic contraction here in the u.s. that would lead us to a recession. i just don't see that. the stock market seems to be reacting the opposite. the stock market is reacting in a capacity again of highly volatile nature given the time of the calendar, and i can't emphasize that enough. >> if you had corporations in there -- if this was february and corporations were able to buy back their stock, i don't think you would be the significant volatility that you are seeing in the marketplace right now. >> coming up, are stocks cheap yet? mike has gone through the numbers, and he has bad news to share. he will explain. next, the trades on am eggs, starbucks, ge, ahead of those numbers. you are watching cnbc, first in business worldwide.
the high yield bond market feeling the pain from the plunging oil prize. even with the rally that we see today. we have a bond fund manager taking a contrarian view of high yield, hoe. he will explain and tell us where he is seeing opportunities. plus, midcap marvels. the four star fund managers out performing in that space. his fund is up in the past year. three stocks he likes right now. back to you, scott. >> all right. see you soon. u.s. stocks 1.6 trillion in market cap this year. the s&p down 8%. does that mean stocks have gotten cheap yet? cnbc senior market commentator mike santoli crunching all of those numbers, has the answer for us. trum roll, please. >> you would say not cheap on an outright basis. at least not yet. people comparing this selloff to what happened in 2011. global markets in a bear market. u.s. market down 15%, 20%. we got down to 15% loss at yesterday's lows. pretty close in those terms. you got down below 11 times earnings at the end of that selloff in 2011. right now we've just gotten down
to about 15 times forecast earnings for this year based on consensus numbers. most of the up side has happened below 5. we got above 17 from the highs in may. it got to be a richly valued market. i think you would have to say we have more down side before you can declare the market to be outright cheap on an absolute basis, but that doesn't mean the market doesn't always accommodate that. >> also doesn't mean that there aren't stocks within the market that have already met your program meter if you take a look at the european economies, there was -- there was a lot of risk
there. you don't have those risks now. you really have the major qe then. i think what the risk in the market is now where people are worried about, there's no fed put any longer. now you have to be committed. there's lots of cheap stuff, and if you take energy out, which is inflating the multiple, you actually come down i think close to that historic buy point. >> you don't necessarily always get that. >> that's why we use terms like nearer-term bottom rather than bottom because i don't know a lot of people certainly these guys don't sound it or ones that i have talked to on telephone or through e-mail who think that we've actually hilt a bottom. that doesn't mean that you can't have some significant bounces before more potential pain.
>> and, again, i keep bringing it back to the credit markets. if you have high yield spreads calming down, coming in a little bit, that helps the equity multiple. i mean, that's been kind of your red, yellow, or green light for the last couple of years. how is credit behaving? >> you can take a look as well at buy backs and when you could see some sort of meaningful resumption of what had helped support stocks for a long time. >> i think goldman sachs had great numbers on this. not just that buybacks have been a principle source of demapped for stocks, but january, historically, in the last several years is by far the slowest month for buybacks in general. not just because you have earnings reports. just schedule-wise, companies don't get -- 3% of annual buybacks that have happened in january. that actually gets freed up as companies report earnings. you are going to have a majority of s&p 500 companies basically about the the end of next week will be free again to buy back stocks. we'll see if they're as aggressive as they have been. >> you have been looking at that
very same thing. we are getting into the heart of reporting season. the next ten business days, half of the s&p 500 will actually report. you'll get some technology heavyweights. john mentioned before, i think, apple is reporting early next week. you are going to get some real significant technology type earnings and by february, let's call it, 4th or 5th, three-quarters of the s&p will be able to go back and buy back stocks. michael, thanks. >> mike santelli. one firm says it's now the time to buy. the analyst joins us next to defend his call of the day and a note to all of you. steve is going back to trade school teaching an on-line course on the capital market at the university of north carolina's business school. enrollment is open now. courses start february 8th.
we're back with our call of the day now. fitbit getting an upgrade to buy after hitting an all-time low yesterday. tavis mccourt of raymond james made the call. joins us on the phone. tavis, why not and what's been the problem with this stock? >> well, why now is obviously look at the charts. it's gotten a lot cheaper which means the risk/reward profile
over the next 12, 18 months has gotten a lot better. you know, i'd say the problem with the stock over the last six months has been nothing unique to high-profile ipos. it had a great ipo and then generally you get a sell-off after that. the numbers have been quite good. all of our sell through indicators for the holiday season were very strong for fitbit, so that should provide them some momentum coming into this year. >> do you think that fitbit in some respects is paying for the train wreck that gopro's stock has been? >> there is no doubt about that. yeah, and i think the one big differentiation is, you know, gopro made kind of the cardinal sin of a consumer electronics company, they didn't refresh their product line in 2015, so i think gopro will have a better 2016. fitbit already announced the
fitbit blaze which will start shipping in the spring and then likely one or two other devices beyond that. >> i couldn't help but notice though in your note today that you call this company, even though you upgraded it to outperform at the very least a good trade. that says to me that, you know, maybe in the short term it gets a pop, but i don't know if i'm a believer in the long-term story here. convince me otherwise. >> i think -- i mean, they are basically helping invent an entire new industry, so i wouldn't view that as being negative on the long term. just honest about it being very hard to know where the wearables market is going to be in a few years. so right now the market is growing very quickly. all of the survey work that we do suggests it's -- there's a lot more growth to come, and fitbit is going to be a very, very high share of that market, at least through this year. three to five years from now,
you know, this isn't like the smartphone industry where you kind of know where the market shares are. you know, this is a very early stage business. >> uh-huh. >> and so you have to take it year to year. >> tavis, thanks so much. appreciate the time. >> all righty. >> tavis mccourt, the upgrade for fitbit. stock on the move. up next, your game plan for the second half. i've been called a control freak... i like to think of myself as more of a control... enthusiast. mmm, a perfect 177-degrees.
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this time yesterday stocks were about to stage a big reversal. little did we know it though. remember, guys? dow down 560 when they were on the air. you have a nice market gain. doc, are you doing some buying in your portfolio? >> bought several today. late yesterday and into today, but today i added smith & wesson, swhc, and budweiser. both of them for unusual call activity. i bought them for real and i also added them to the "halftime" portfolio, judge. >> what are you watching today? >> today i'm watching starbucks. >> earnings. >> starbucks reporting earnings
and it's just a juggernaut. >> stock up 43% over the last year. >> i think it's a great stock to own in this environment. it always looks expensive but you have to sort of say, hey, i'm going to buy it. >> u.s. dollar. let's hear if we hear something from the federal reserve that initiates a little bit of a correction in the u.s. dollar. i think it was tony dwyer was talking about the u.s. dollar correcting. let's see if that happens. >> the other idea is when we're discussing whether this is a near-term bottom, why not sell into it? why not sell into any bump? >> cramer seems to be on that bandwagon as well. i think it all depends on what -- why did you buy? if you bought yesterday on some of the dips or even this morning before this big run, why did you buy? is it for the long term or short term? that's really the determination right now. but oil is what you're watching for sure because we have not broken out of that. oil goes higher, market goes higher, right? >> it's the hardest thing to gauge, doc s whether you buy into what we're watching today or you sell into it. sell into the bounce, take the
opportunity. >> to pete's point, if you bought, you sell into it. if you didn't buy into it, you don't buy into it up 200 and some odd points. >> you buy into it and you use a stop. nothing wrong with using a stop. >> oil is up nearly 6% today. stock market is having a good one as well. "power lunch," that and more, next. and welcome to "power lunch," everybody. i am brian with michelle and tyler. two days before a huge storm is supposed to hit the area, there is finally some calm in the stock market. a slight rebound in oil. a massive cash injection from china, and the possibility of more money from europe helping to push the dow up more than 200 points. >> today we are focusing on stock picking. what stocks and sectors are ripe and ready after this terrible start to 2016? and if you are still gun shy on stocks, and who could blame you? we have one of the biggest names in bonds this hour. see why loomis sales says now is the time to buy