tv Fast Money Halftime Report CNBC April 4, 2016 12:00pm-1:01pm EDT
it depends how they perform toward the end of the year and how these price increases they've done in ads gets sustained. >> we'll see if things get heated up earnings wise in a few days. good to be back with you guys. >> good to have you. >> to headquarters, scott wapner and the half. ♪ guys, thanks so much. welcome to "halftime report" i'm scott wapner. the weakening u.s. dollar and why it's the gift that could keep the rally going. with us today, joe terranova, jim lebenthal and rebecca patterson, chief investment officer. the story for stocks lately has been the dollar, dropping versus the euro and other currencies over the past few months. it could be a nice rescue for earnings, which are good about to be reported as well. is this the surprise catalyst to keep stocks climbing? that debate beginnings now, joe. i begin with you. dollar index at five and a half
month low. fell 4.2%. the worst quarter for the dollar index since 2010. we know it's helped. is it still going to do that? >> it has helped and is going to continue to help. i think a lot of commentary on the upcoming earnings, the guidance looking forward is going to talk about the previous challenges, the headwinds appreciatinging presented. now that's dissipating. but in terms of long-term portfolio planning, i don't think we want to get overly excited and think we had the u.s. dollar drift from an uptrend to now a down trend. i don't think that's the case. this is a correction, good nor another weeks. but after that, we need to look at where the dollar is going to be on a longer-term basis. i don't think it's going to be down. >> pete, a quarter of the russell 1,000 generating more than 50% of the revenues overseas. >> yeah. >> so it's going to provide or has already provided a significant benefit that coincides with the rally we have seen. >> no doubt about it. i think if you look at where did we see the biggest rally is in the xlk. technology, we talk about all of the time how much is overseas of
that profits. to joe's point, it's huge. and i do think it's much more temporary. i think we're going to see the dollar go all over the map over the next couple of quarters, at least. and beyond. i think we're going to see it dipping. it's going to be great temporarily and then we start to see it rise again. >> so rebecca patterson, what's your view? >> i think we have had an inflexion point. the dollar appreciation trend since 2011 has moved into a dollar range. so that doesn't mean the dollar keeps falling out of bed month after month. but a range, something boring would be music to the ears of every corporate treasurer in america. because if you have stability, you can plan around it, you don't have earning surprises and i think at the margin, that's good for equity sentiment. >> what keeps it from continuing to go down? fed policy? >> fed policy is a big piece. and on the other side, the european central bank, bank of japan. 114 for euro dollar. we're getting close to the edges where you're starting to get verbal intervention from those central bankers.
and we will price in a fed move over the coming months, i think. so, again, that's the dollar range. but a range is a change, and it's a good one. >> yeah. not soaring out of control. caught a lot of people flat-footed over the last couple years. that's why jim lebenthal, we had some issues in the market we did. and earnings. but now we've got new earnings season about to develop. what do you expect? >> well, i expect the reports for the first quarter to be rather tepid. two out of three months of the arrest quarter, we had a lot of tir mail in the markets. what i'm paying attention to and everybody is paying attention to, what's the guidance, what's the spoken language as far as the second quarter, and as far as the second half of the year goes. and based on what we're talking about with the dollar, there's reason to think there's going to be enthusiasm from the c suites as far as what the second half can bring. >> if you think the dollar is going to remain weak -- >> well, i don't, by the way. >> i'm just saying -- not you specifically. but you more broadly, if you think it's going to be weak, that's a green light to keep buying stocks.
if you think the trend is going to reverse itself, isn't that a bit of a headwind to make you want to question where we are? how far we've gotten and how fast we've gotten back. to where we are. >> if you think the uptrend in the u.s. dollar resumes itself, you want to look at domestic names. technology overseas. you want to look away from that and go back to the playbook in place at the end of 2015. where you wanted orientation. the one low-hanging fruit i see globally is the japanese yen, appreciated 8% year-to-date. the nikkei down 15%. if you tell me the u.s. dollar is going to walk higher, the bank of japan will come back in again, i would say over the next six months, look at japanese equities. >> if you look at u.s. equities, ba reaney out with a note today saying 10% of stocks are at all-time highs. if the overall market is just 3% or so from its own all-time high, is 10% a lot? or a little? mike santoli posed that question
earlier today. >> i don't think being at an all-time high is possibility. psychologically you get excited or scared, because things have run too far. but i think it depends on the environment you're in. >> i'm just wondering, is that representative of how far we have run, or is that mostly representative of we could still run a lot more? what do you make of a number like that? >> what you've got to make, there are still sectors that are not even close to their highs. so certainly a lot of the industrials, transports still not close to their highs. and i think that's a signal. the number you're giving us, scott, that you really want to look at rotating. and i just want to point out, we've got these march figures looking good. the ism survey better than expected and the regional fed surveys. that's probably going to give some cover to the fed when it wants to embark upon further interest rate hikes that manufacturing is doing well. so you've got to be nimble here. you've got to be in and out of these sectors. >> can we clarify on the green light part of this thing? it's not necessarily a green light. it just opens up the window, scott. because now all of a sudden one
of the many headwinds, and we talked about oil for a long time. then it became the dollar. >> but the biggest headwind, the single biggest headwind over the last two years has been the pace at which the dollar rose. >> right. and the fact we're seeing that come back makes it easier on a lot of companies, but it doesn't mean every single company because of their international exposure, they still have to perform. there are a lot of -- companies out there that are not performing well, those are the ones that aren't hitting 52-week highs. some that are, because of the help they'll get from the dollar, there's plenty of room for stocks. >> i agree and i would add -- just because the dollar is less of a headwind doesn't mean you might not have others. we have the uk vote on membership in june. >> what about here? >> exactly. i was going in chronological order. who knows what happens july here. you don't want to get overly ex union rabbit. >> that's the point. don't look where we're going. the s&p up 1%. it feels like we have rallied dramatically. think of where we were in january. we were talking about possibly
going 20%. >> we have rallied dramatically, though. from mid february. >> no, let's go back from the beginning of the year. and let's see, you know, where we went to start the year. we were down 10%. looking at a down 20 call for the s&p. for most people, for the year. now we're up 1%. i still think david costin has it right. >> the problem, too, a lot of these stocks to what you're speaking to, joe, have rallied in and of thepz. that leads us to an interesting downgrade today. our call of the day. this ge downgrade by bernstein. and it's really with some other industrial stocks, as well. but it place right into the conversation. i know you like industrials. in this environment. stock like ge is up nearly 30% over the past year. tap the brakes. does bernstein today. they said, look, premium multiple companies have limited multiple expansion. so maybe the party -- that's been a great ride, but time to move on. that's what they say. >> we have actually been underindustrials for some time
and energy and materials. we're starting to nibble in those sectors. the point with the downgrade, a few other stocks included, we're talking about getting more into cyclicals. reducing the defensive posture. and if manufacturing is -- i wouldn't say it's good. i think that's overstating it. but to say we're getting out of recession-like territory and stabilizing, that is the new good. right? if manufacturing is stabilizing, commodities are stabilizing, the oils and dollar is in a range, that does open a window for some of these underperforming sectors to catch up further. >> what do you think of the call? multiple at 21 times makes it no margin for error, catalysts already baked in. and you need a lot of other catalysts to take it much higher than it's gone. that being ge specifically. >> i don't have a position in the stock. >> a lot of people watching do. >> i think it can go higher from here. i question a valuation call like this. this may turn out to be right. 21 doesn't strike me as nosebleed territory, particularly when you consider the transformation ge is going
through. so i'm not going to buy the stock here. but i don't think this is a rabid call to sell it. >> no, it was -- look, the analyst was on one of the prior programs. i think "squawk on the street" and it wasn't a negative on the fundamentals of ge. the stock has done a lot, up nearly 30%. the it's perfection right now. >> well, i don't think it's perfection. i think that's too strong a call. the problem is valuations can stay high a lot longer than you expect. and especially if the market is going higher in the short term, as many of us think with the dollar weakness we have been talking about. ge will absolutely participate in any broad market rally. >> pete, you own it. >> i do own it. calls just a week or so ago, i took those off. >> does this make ayou want to question -- the near-term? >> i don't question, but understand why they want to downgrade. we have had such a great run. why not? from a timing perspective, it makes some sense. i think the fact that they have shed the assets -- look at the
forward pe of 17. you look forward, trading at a 17. and you've got to look forward with g e. they have been shedding so many of their assets that were somewhat of the weakness they had for such a long time, the financials and continue to move into other areas they feel the growth is going to be. a lot of us question it for a very long time. but the move has been staggering this year already. they even point out, getting rid -- >> look at the yield. >> yeah. >> already baked in. i'll tell you what someone else who bought ge and has been very bullish on the stock as our own josh brown who joins us on the phone. josh, are you there? >> hi, guys. >> what do you make of the called today, josh? >> lol. let me tell you something. any time you see a company get downgraded, because there's really nothing bad to say, but it's had had a big run, that's one of the all time best times to put a name on your radar. not necessarily pull the trigger, go long. but that is a signal. these guys have nothing new to say. and, in fact, i don't think i've ever seen anything like this. they downgraded, but raised the price target at the same time. they went from 33, 34.
let me tell you what's really going on. sell side firms employ analysts so they can generate trading on the desk. that's the business, not a public good. they're not doing it for fun. they want people trading ge to trade with them. so here's a comment. i don't particularly think the analyst dislikes the name. >> no, he said he was on the earlier program on this network. i don't know if you saw the interview or not, but anything but a hate fest on ge by any stretch of the imagination. it was, look, it's a premium multiple. the catalysts to take it further are lacking and real issues that need to be dealt with by investors, nothing more, nothing less. >> i missed the interview. no tv monitors at the duncan i was at. here's what i think. the stock has had a big run, no doubt. it is selling at a premium multiple to the market. my argument is it deserves to. i point to something like a home depot or nike as evidence this kind of downgrade is not particularly helpful for investors who have a time horizon greater than six months.
home depot up 40% over the last five years. never been cheaper in the market. and continued to earn the higher than average multiple that the market was rewarding it with with execution. i don't think anyone can look at what ml has been able to accomplish the last couple years in terms of deleveraging, getting out of bad businesses, changing the messaging, et cetera, et cetera. and say this company hasn't continued to earn. so could it pull back 100%. is it to some extent a market stock? of course it is. a $300 billion market cap. you've got a good yield. you've got a company that's in every business you want to be in for the future. whether internet of things, aerospace, health care and a company that continually does what they tell the street they're going to do. so if there is no catalyst for the next six months and that's the worst thing you can say about the name, that's a buy. i have a question. i own the stock as well. i have for many years now. this is my question. health care. is that a risk? do you see that as a risk right
now? what know what a lagger it's been and last week a move on health care in the biotechs, actually final starting to move to t to t to the upside. do you view that as a hang on ge? >> i think it's important to recognize which part of health care ge plays in. they are not developing drugs. they are not pricing pharmaceuticals. on the market. they're not involved in the areas that are being called into question directly. by the politicians. i think when you look at ge's business in health care, whether we're talking about instrumentation or consumables or any of the areas that they've committed to, these are the areas that will do well regardless of a lot of the political decisions that get made about, you know, pills or pricing or generics. so i'm not really worried. and if that gives us a discount to continue to own the stock at these levels, then that's a blessing, not a curse. >> josh, thanks. get another doughnut. see you back on the set soon. >> coffee, scott. not doughnuts.
>> josh brown for us. wealth management on the phone. here's what's coming up on the "halftime report." still ahead, underappreciated. >> i get no respect from my wife or anyone else. >> that's what credit suisse thinks about apple. the firm saying it's time to buy the stock. the analysts behind the call joins us. and barron says one cable stock could rally 25%. >> hello, mama. >> but do our experts agree? and we go digging for the most overbought and oversold stocks in the market. we'll tell you how to trade them. ahead. there's a lot of places you never want to see "$7.95." [ beep ] but you'll be glad to see it here. fidelity -- where smarter investors will always be. if only the signs were as obvious when you trade.
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we are back and it's time now for the trader blitz. four trades on four stocks making news today. first up, alaska air announcing a deal to buy virgin america, outbidding jetblue. >> the stock is down on the news. i think this is a great deal for -- >> america isn't. >> i think this is a great deal for alaska airlines. a lock in the northwest corridor. but now this is going to move them east-west with the virgin atlantic route. >> deutsche, joe, thinks facebook's results could come in light. >> okay. potentially, they can come in light. i still think the stock is going to 120, and i don't want to play that game. i almost want to begin to play the facebook game, the way many on this desk, like pete and others and josh brown have played apple. longer-term investing. don't trade around facebook, not
becoming a trading environment. facebook, live, all the other things happening right now. even if it pulls back, you're a buyer on a pull back. >> time warner could rally 25% over the next year, according to weekend's bar ron's. pete, do you agree? >> i do. look at where the stock was, in the 80s i a year ago. reason, a lot of failures. superheroes huge for them. the pipeline going forward in this particular industry for time warner. you've got aquaman, superwoman, all these various different franchises out there i think will suit them very well. i think 80 is not that far into the future. >> joe, 276,000, model 3 orders over the weekend for tesla. stock up another 5% today. this seems to have sort of blown away everybody's expectations, including elon musk. four times the expectations, right? $35,000 pricing point. specs look good. everything about it looks good. >> phil lebeau points out this morning that maybe a thing that doesn't look so good, if you
want to frame it that way, and he didn't. but i will. >> is you have to wait forever to get this car. you might have to wait until 2018. i don't know, 2019. can they make all these cars? >> i think they can make all the cars and i don't know if 2018 is forever. and look, the bottom line, the stocks is appreciating. i was wrong last week when we discussed it. i wanted to pause, didn't want to step in too buy it. a five-year high. i'm wrong and i think many others are. if if you look at straight pricing on the value of the franchise, it's selling you 300 bucks. >> ij not going to -- i don't know that anybody would suggest you're wrong. the thing that i see is not right or wrong. it's just a hesitancy to get into this name. >> because you're worried about production. >> everybody only talks about the valuation. >> right. i think the other part of the element here is that we look at this thing and can they produce, scott. like you were talking about. 2018. i do view that as a far way out. you've got to put money down and
all the people who lined up, put down some money. not a lot of money. but into the future and when are they going to get that car. something that has to be considered. >> yahoo! talks, takeover talks heating up, according to reuters. time considering a bit on the internet assets and soft bank. also reportedly interested. pete, back to you. >> makes sense because of the digital presence they want to get. a little bit bigger and exactly the direction they're going. we have all known for a long time these assets are going to be spun off eventually. and here you've got time that would make sense if they actually did indeed, along with the private equity group. >> okay. pulte group boardroom drama, the ceo will retire early next year. there's a look at the stock, down almost 7%. an interesting story today. this succession plan initiated by the founder the grandson, bill pulte, on this program a number of times. and also jimmy grossbeck who has been on this program as well.
and who, by the way, in a filing we noticed was kicked off the. >> yeah. clearly, there's a lot going on inside the boardroom here. mr. duhgas pushed out. this may be unfair, given what happened in '07 to '09. in the last ten years, the stock down almost 50%, the s&p 500 up 60%. if you think that's unfair, definitely over the last three-and-a-half years, the stock stuck between 15 and 20 with a spike above once or twice. what's going on here, the stock has been stuck and the board has said we need to do something. they talk about a new direction. but they're a home building company and i'm not sure how much a change in the ceo slot is going to change the overall macro dime mix of home building now. you're in the sweet spot as far as the cycle goes. homes should be picking up. i think new ceo comes in. the i question whether there is a fair move. >> a boardroom shuffle for sure. depending on what metric you
look at. you point, okay, well, because of the great recession, you would expect things to have not been that great. but then you also point out more broadly over a longer period of time, the stock underperformed. >> what i'm saying is, the you could definitely justify the board's decision here. but at the same time, you could also justify that this is not one man's position to really move this stock. it's really going to move with what the fed's doing, what the overall economy is doing. that's where i question the fairness. >> also moving today perhaps on zelman downgrading it. that did happen earlier. as she's reminding me right now they downgraded it today, as well. so down like 7%. we like it or no? >> i don't know. i want to see what happens. i still think when you look at the space, the space is going to be okay throughout the remainder of 2016. we have talked about toll, orton, names you could look at on a day where this name is down significantly. >> okay. coming up, the missing link, the
consumer stock stephanie is buying. she's going to tell us after the break. and apple on the move today as credit suisse says the market is missing a key growth driver. as we head to break, take a look at the s&p. s&p flat. there's a look at your market picture. back after this. want to hear more? head to cnbc.com/halftime for exclusive commentary and behind the scenes access. is all about seizing opportunity. so i'm going to take this opportunity to go off script. so if i wanna go to jersey and check out shotsy tuccerelli's portfolio, what's it to you? or i'm a scottish mason whose assets are made of stone like me heart. papa! you're no son of mine! or perhaps it's time to seize the day. don't just see opportunity, seize it! (applause)
welcome back to "halftime report. yoegs another set of records highways for the consumer staple stocks. cooking, cleaning, whatever. beverage giants coca-cola and pepsico lower and package food makers like campbell's soup and general mills. personal care companies like kimberly-clark, tobacco companies, phillip morris international, all setting record intraday highs at one point today as the hunt for dividend yield continues. moving away from the consumer staples, more to the discreationnary side, gap also focus today on the heels of an upgrade to overweight by analysts at key bank, $36 target
price. citing among other things, back seat overall apparel demand and currency environment. so consumers certainly a focus for traders today. >> dc, thanks to you. rebecca, you like the consumer plays? >> i think we're an environment where the consumer has growing tail winds. you've got more and more jobs. we saw that with the jobs report friday. wages rising slowly and from low levels. going up. home values going up. and i think steve liesman and his poll today showing us home values matter as much as jobs. so i think that that keeps the support under discretionary and staples. >> pete, consumer stocks trading at all-time high, home depot, mcdonald, he is at a lauer, coca-cola. >> yeah. for a of reasons. when you look at pepsi, you also look at coca-cola and spread themselves away from cola products, and into milk and everything else. people are looking at these names and feel very, very comfortable with where they're trading right now. they don't feel they're too
stretched. probably a bit stretched. >> i was going to ask if you think -- which would you -- >> say are daggone stretched? >> pull the register. >> as much as i like -- minnesota, wonderful company, general mills, feels like it's stretching to me right now. but i think some of these other names, can continue on. just based upon not just the yield, but they still have growth in certain parts of the economy. and outside the u.s. as well. >> jimmy, buys or sells? >> for our clients, we hear them calling in and asking for yield. this is where we go. having said it, that's really the only reason we go there. we don't see the growth, notwithstanding, rebecca, what you said. a coca-cola -- >> energy drinks, though. >> a tiny fraction. >> milk and some other things? >> are you joking? >> no. >> i thought you were being sarcastic. >> they have gone into a lot of other product lines to get themselves away from coke. >> yeah, but none move the needle. >> what about mcdonald's?
>> i think you have to make the distinction between the creationnary and staples and year-to-date. staples are trading at a very rich valuation based on historicals and a lot is because the ten-year treasury has imploded year-to-date and you've got the affect that i dollar. consumer staples to me, are names right now you want to look at as being sellers. i would take the money and i would put it into discretionary. >> segue here. do you use that same logic on the utilities and the tele coms? >> i'm never one that gets excited over utilities to begin with. >> if people are chasing them for some of the same reasons that you're laying out, for staples -- >> again, you're talking -- >> yield, et cetera. >> defensive. >> i've never been a proponent of owning utilities. not something i believe in. in a chase, i think there's other places you can go. and behind it, the fundamentals of the business, a lot is aligned of what's going on, whether natural gas or coal, or
energy industry. so, again, you're talking to someone who has a predetermined bias being negative all of the time as it relates to utilities. >> consumer staples versus utilities, would you rather have staples. >> you know what, it's interesting. where staples are right now, i don't know i would make that. i think the staples are incredibly rich right now. incredibly rich. >> last point. >> props to josh brown, brought up church and white last week. 52 week high again today. not so bad with baking soda. >> i do remember that. i remember that. let's stick with the consumer for a segment we cow the missing link. tiaa global asset management portfolio manager, stephanie link. is going bargain hunting in that sector today. steph, nice to see you as always. hope you had a good weekend. what did you go shopping for? >> well, good to see you too, scott. i actually sold out of tjx. to your point of some of the stocks that look stretched to me, that is trading at a high valuation. and i took the proceeds and i put it into walgreens. alliance boots. not necessarily for the quarter,
scott. i think the quarter will be fine tomorrow. they'll probably issue some conservative guidance. and i would look to be buying if you see a dip. but i really like it because over the next 6 to 12 months, i see specific catalysts at the company that should drive the stock higher. and just a couple of things. they -- i think they're going to see substantial synergies from the alliance boots acquisition. they're doing a lot of cost cutting. they're actually announcing a lot of new products, and it should drive better margins in their front end of the store. and i don't think that's priced in. i also like they're announcing several different contracts with a variety of different pbms to narrow their network. to drive traffic. so that's really -- those are really two important things. and then, of course, you get the rite aid deal that should close in the summer or later and that could drive the $6 in earnings power by 2018. i like this one. not at an all-time high. that's the one i'm buying. >> steph, see you back here soon. tia a's.
pete, give me a comment here, out of tjx, a stock you have liked for a long time. >> understand -- she's moving things around, moving around the chip. i don't know necessarily that i think it's over, though, scott. the growth they have been able to show over time and the e-commerce world on top of its still all about home goods. that's what tjx is the driver. so i understand why she's making the move. i still think tjx has more upside. >> we search for the most oversold and overbought stocks in the market. the names that made the list and how to trade them. that's just ahead. plus, under the radar. the one area rebecca patterson says could be the next fla flashpoint of instability for the markets. you both have a
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i'm a customer relationship my namanager with pg&e.er, i've helped customers like plantronics meet their energy efficiency goals. so you save energy and you can save money. energy efficiency and the environment go hand in hand. and i love how pg&e's commitment to the environment helps a community like santa cruz be a better place to live. and being able to pass that along to my family is really important to me. just being together and appreciating what we have right here in santa cruz. see how you can save energy at pge.com. together, we're building a better california. hi, everybody. i'm sue herrera. here is your cnbc news update for this hour. brussels airport increasing the number of departing flights on the second day of its partial reopening following last month's
terrorist attack. over 20 flights expected to leave today, including one plane bound for new york. yesterday, the airport handled just three departing flights. u.s. and philippine troops beginning their joint military drills. about 8,000 soldiers expected to join the two-week exercise. defense secretary carter will arrive next week to watch part of that training. princeton university announcing woodrow wilson's name will remain on the public policiel school, despite calls to remove it because the former president was a segregationist. the school has borne wilson's name for more than 80 years. and a report says that airlines are losing fewer bags, and more of their flights are arriving on time. but passenger complaints still jumped 34% last year to the highest level in 16 years. virgin america topping the 2015 airline quality ratings, followed by jetblue and delta. and that is the news update. scott, back to you. i know a lot of the people on the desk there fly constantly. >> they do. they do.
sue, thanks so much. sue herrera. apple on the move after credit suisse adds the stock it its u.s. focus list. the firm saying there is an underappreciated driver for the stock the market may be missing. the analyst behind the call joins us. welcome back. >> hi, how are you? >> are this catalyst is -- service is business. which you think can double by 2020. which has some people asking today, is that too big of a bet to make? >> well, that's correct. we did a deep dive into apple services and our conclusion is the market and all the underappreciates how big this business is from a profit contribution perspective. also its growth potential. so we see the gross profit contribution doubling to 30%. and what gives us confidence about this growth, remember apple's user base, $1 billion devices around the world, 6 money million unique individual users, use apple products. they are highly after fluent,
attract very young. and as apple rolls out new services and continues to grow things at the app store and icloud and ramps up the music service as well as tv service, we see strong growth for the segment. >> i wonder -- i'm going to twist it and frame it another way. is this in any way a representation that while you have such high hopes for the services part of what apple does, that it's an indictment in some ways of where you think the iphone can continue to grow, so thus you've had to look for another area that can provide the growth that now the phone business cannot? >> well, we have been on record as saying for the last two or three years, the iphone business is definitely the latter stages of its growth. they are selling 220 million units a year. it's $150 billion business. frankly, they bring more towards -- there is some growth there. but frankly, fairly moderate. and so we have always had that view. what's different about this morning, if you have a services business, it's recurring.
so the way we see it, imagine you have a scenario for apple and this is very good for both margins and free cash flow. two or three years from now, where services is 30% of profits and on top of that, some of these installment plans and growth in the hardway business. half its business is recurring. that's a very positive scenario for this company. and it actually -- actually mitigate some of the risk and diversifies a risk. not everything becomes about the iphone coming out every september and how many do they sell in december quarter. it becomes a much more diversified business. from a stop perspective and evaluation perspective. very positive. but you have to be clear on record, we have always said the iphone business and most hardware business is reasonably mature now. >> jim has a question for you. >> notwithstanding what you said, the services, apple pay, icloud, doesn't that drive more to the iphone? isn't that the beauty of the ecosystem in general? they get tookd and stay with apple products? >> absolutely. i agree.
apple has various services to some of these service business, actually see a genuine and direct commercial benefit when they see revenues. in other like i message, promotes higher usage. the end result of both things is the huge in apple products remains disproportionately high compared to the platform. therefore we use them a lot and replace them predictably. and also use them so intensely, we actually have very high retention rates. in the end, it helped their hardware business, as well. what specifically is interesting about this morning's note, the specific gwth we can see in services, outside of the hardware business, as well. >> appreciate it very much. we'll talk to you soon. >> thank you. >> the analyst over at credit suisse making the move on apple today. so apple is above its 200-day right now for the first time since november 5th. the stock has had a breakout. does it keep going? >> absolutely. it's been on a tear. does it continue? you've got to look at this in a longer term cycle. since may of last year, it's very similar to the cycle we went through with the stock from
late september of 2012 through the middle of 2013. it needed a form of base and new shareholders. that's what it's done. the se already coming out. that's pro pelling it further. and this is going to crescendo into the iphone 7 for sure. >> i think a lot of what has happened -- so the event they had a couple weeks, it really wasn't anything very exciting. that got people to come in and buy the stock. but i think what has happened, the fact that it did not go down. keep in mind, the passive money, the mutual fund money as it relates to apple, went to a historical underweight. we have seen that happen in the last couple years. now as the price is moving higher, they chase their way back in again. it's kind of what carl icahn has spoken about in the past, where it's almost like naturally being short on the passive side when you get out of apple. >> right. >> i think that's largely what's going on right now. that's the dynamics. i don't think much has changed fundamentally. >> what about the substance, pete, of this note making such a huge bet on the services side of the business? >> yeah. >> too big? too big of a bet? >> seems like it's a big bet.
but is it too g, i'm not really so sure, scott. he's also talking -- this is something that i think -- look at the reaction of the stock today. he's not talking about today. he's talking about years in the future. >> 2020. a couple years. >> right. so i mean, you have to -- i think you have to understand what his perspective is versus how the stock is reacting today. i will say this. on this reaction today, scott, the 111 calls over 20 plus thousand trading today. buyers coming in early in the session, almost right out of the gate. 112 calls as well. very, very aggressive. but it's very short term. so people aren't going out and time right now. they are going to the short term on this kind of a pop and then he's talking about much further out into the future. >> rebecca? >> it's interesting. you can look at the company specifics, what they're trying to do. i think you can extrapolate macro from micro. apple is such a big weighting in the market if apple can move, whether it's short term or long term, it has an influence on the entire stock market. so for medium or longer term investors, even if you don't own apple, you've got to understand
hazard happening here. it will affect everything else you own. coming up, the u.s. ten-year hitting its lowest level, that being the yield, in more than a month we go to the futures or what's behind the move and how to play it now. "halftime report" back after this. some say "free the whales." for them, nothing else is acceptable. but nothing could be worse for the whales. most of the orcas at seaworld were born here. sending them into the wild wouldn't be noble. it could be fatal. when they freed keiko, the killer whale of
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i'm melissa lee. coming up on "power lunch" panama papers rocking the world of the rich and powerful. and juicy new details on what went down behind closed doors during the 2008 financial crisis. should executives be headeded to jail? and the big money in allergy season. top of the hour on "power lunch." >> melissa, we'll be there in 15. the u.s. ten-year yield hitting its lowest level since march 1st today. jackie deangelis with the futures now crew. >> good afternoon, scott. that's right, the yield you're talking about, that low today, 1.75%. janet yellen probably having something to do with that. brian setland, what does it tell us about the stock market right
now? >> well, certainly the way you're seeing the treasury market move, people are a little weary where the stock market is heading. and we have seen the treasuries totally reverse course. they were so aloft at the beginning of march, that's changed. we found a bid, talked about janet yellin. unemployment rate ticked up friday, concern for the stock market. people would rather own bonds. and when you look at the trend, to smooth out the returns. people look at bonds. too many flat rates in the world, japan, germany. people want to come in and buy a ten-year. any rise in rates, i want a buyer of treasuries. . when it comes to the yields, what are the levels you're watching on the ten-year note and do you agree with brian's view here? >> jackie, when you look at the stock market, and the ten-year, we both saw these -- both rally since qe 1 started. the yield go lower, the stock market rally. so you know, having that happen at the same time isn't out of the norm. right now, 1.63 was set as a low on february 8th. and not wanting to mimic ryan,
negative rates around the world, i imagine in the next eight weeks until the next fed watch which would start june 1st with that meeting june 15th, that will take a shot for those lows. >> all right. we'll be watching closely. head to the website, futuresnow.cnbc.com. live show tomorrow, scott. >> we'll be there, thanks. so interesting move in yields today. not -- i'm sort of surprised they didn't get a move higher with rosengreen, boston, a voting dove, sounding a little hawkish. >> i agree. and usually when you get a voter who goes against his or her normal grain, that does move the market. >> surprised. >> i think you have to take into context what's going on overseas, as during the last interview. if you have the european and jap lease threatening more negative yields, the flood of capital. we might have some division within the fed. but the global force is pretty big out there too. >> his view is certainly different than your view. he is almost speaking to people
like you. saying, look, market expectations of zero to one hike are in his words, too pessimistic. >> i think we'll get at least one this year. i think the fed wants to. and as long as the data continues to improve, the dollar normalizes, oil normalizes, we'll get 1 at least. i think the fed wants things priced in before it happens. so it's not disruptive to the market. so they've got some work to do to get yields up and that june move priced in. so you're going to have to see somewhat more hawkish rhetoric between now and then. i'm curious to see -- >> as long as it's not from the fed chair herself, who was very dovish last week at the new york economic club. and that seems to be drowning out some of the noise, so to speak, from the flanks of the fed. >> you do want to watch yellen the most, and fisher and dudley. two and three. but rosengreen matters. he does have a vote at the table. >> all right. coming up, dom chu breaks down a
list of the most overbought and oversold. and jim lebenthal up 15%, in first. we're back right after this. opportunities aren't always obvious. sometimes they just drop in. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group: how the world advances. you should have quit while you were ahead. 32 years at this place and i've got 9 days left before retirement. look jim, we've been planning for this for a long time.
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names that could be setting up for both short-term success and failure. dom? >> scottie, some traders use history, statistics to try to identify the shorter term potential pops and drops for stocks. our colleagues over at cnbc pro have tapped our data partners at ken show for some of that analysis and what they're looking at, stocks that have traded to a larger degree above or below where they traded on average for the past 50 days. they could be due for a short-term reversal of trend, a mean reversion, some call it. among stocks that could be due for a pop are ones that some consider as having fallen too far, too fast and that includes shares of pharma company allergen. they tend to post positive returns a week later around 70% of the time. so it is an interesting look there at allergan. shares of mastercard rallied to levels well above the average trading price for the past 50 days and could be due for a fall, which has happened 85% of the time, about a week out.
that's, of course, just part of the story, a couple of names. for more cnbc pro subscribers, get the full story on cnbc.com/pro. back over to you. >> dom chu, thanks so much. joe, trans ocean listed as one of the most oversold. the chances it goes higher this week according to the data dom looked at, 66%. >> no interest in that. >> no interest? >> no interest whatsoever. >> pete, your backyard company here, in minneapolis. >> i like these guys. i put them in mastercard both in the same -- >> both on this list. >> right. and i don't know -- >> 85% chance according to this data they'll go down this week. >> that data is something interesting you want to keep in mind. but still like mastercard. i still like general mills but i can understand why there is a little fear about being overbought. the desk goes under the radar, the things they're watching you might be missing this hour. "halftime report" back after this.
i'm hampton pearson in washington where the justice department is announcing that it is suing value act for violating premerger notification require s. the justice department claiming that value act invested over $2.5 billion in halliburton and baker hughes at time of their announced merger. the justice department saying that was wrong because it violated the prenotification requirements of antitrust laws, the justice department also saying that penalties, civil penalties in the neighborhood of $19 million would be appropriate. cnbc has reached out to value act for a comment. so far no comment from value act. back to you. >> hampton, thanks. interesting news regarding value act. under the radar now, things experts are watching and might be missing today. pete, unusual activity. >> bed, bath & beyond, interesting one because they have earnings on wednesday after the close so it is something to keep an eye on. they're going out and buying here in april the 15 1/2 and 51
calls, way above open interest. there is very small open interest out there. but something to keep an eye on. >> tiffany's. stock is up 20% off the february lows. those lows were at least in part on china news. the fact that this has gone up as estimates have come down would indicate china and japan are not doing as bad as people feared. >> rebecca, europe? >> europe and japan, if they're not going to play the currency game, what do they do? there is increasing talk that japan could buy more equities just outright as part of their qe program. and i think in europe's case you have to be nervous the other way, political fallout from refugees that affects policy. >> joe, to you. slumberje. $82 price target. >> april 1st, largely positive. oversold, we did allergan,
oversold. >> on slb, like it? like the call? >> i like some of the names but i think it is premature quite frankly. i look at the names and that particular name has been beaten up, i know, but i think it will be a little while. >> good stuff. rebecca, great to have you. >> good to be here. >> see you soon. rebecca patterson. "power lunch" starts now. welcome to "power lunch." i'm michelle caruso-cabrera with melissa lee, brian sullivan, tyler mathisen is on assignment. we begin this hour with a bombshell of a story still developing. a massive leak of financial documents revealing how the wealthy and the world's most powerful leaders are hiding their money. eamon javers joins us with more on what is being called the panama papers. robert? >> that's right. it is being called the panama papers, also being compared to the edward snowden leaks and the wikileaks situation back in 2010, a dramatic exposure of global information. here's what is a