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tv   Fast Money Halftime Report  CNBC  April 27, 2016 12:00pm-1:01pm EDT

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today, and we got buried in at lot of news. >> and paypal is going to be interest, because it is the quarter to then monetize that we used for free? >> well, we all use it, right? >> yes. >> and now, ahead to the quarter and scott wapner in "the half." ♪ carl, thank you so much, and welcome to the "halftime report." i'm scott wapner and the trade is the apple aftermath and the stock hammered right now, and are the best of times over for america's most loved companies. stephen weiss, david lebenthal and pete and jon najarian. and now, after the sharp slowdown in china and the stock is tracking for the worst day in 13 year. and the market cap was wiped out right at the top, doc, and are you short the stock now? >> well, i was, but i have covered most of it, judge.
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but i was short because what this is normally going to do is the fan boys, and take the fang stocks, and take the favorite stocks on wall street, and you will see is speculation on the cal side over the puts 2/# 1 on mo most days, and apple who has a more exaggerated call speculation of earnings didn't have it. instead, it was active put speculation, and massive put speculation down to the 95 stripe on the put side. so i put on a simple put spread. i tweeted it out yesterday, and put on the put spread and paid 40 cents for it, judge, and went to $2.20 to dday and took off hf at that level and then i am going to to be seeing if apple holds or whether it goes down and test s ts the february lows >> and david lieb ebenthal, you long and the stock, and are you staying with it, and why? >> well, first of all, kudos to my broer this, jon over here,
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and you must have slept like a baby, but i did not. it was a stinker of a quarter, and the guidance and the puts and nothing to speak positively though. if i am staying in the stock and i am, it is because the iphone 7 cycle is wa you are looking forward to, and the stock has rallied into the numbered upgrades of the iphones which the rally will start a few months before so you would not look for it to rally in the s summer. but for the time being it is dead money and i don't believe it is going to be going lower, and they have upped the buyback and the dividend is increased a and this is the reason to stick around and wait for the iphone 7 to upgrade. >> and now, most are sticking by apple, but some have cut their price, and oppenheimer has downgrade downgraded the shares, and he is with us today, and also, tony nagasaki who is joining us as well. we will know that both of you are on the phone, and glad that both of you are here, and we will do it the best we can. andrew, to you first, what made
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you downgrade the stock today, because you are the only sell sider who did that exactly that today. >> well, okay. thank you, nice to join you g guys, and our view is that the iphone 7 cycle is not good, and it is going to disappoint, and at the end of the day, we thought that we could buy the stock at 95 a year from now. it may rally a little bit, but it is going to be coming down, and lower and disappointing numbers, and basically, this quarter that we had, we feel it is going to be repeated until next june of 2017. so, you know, it makes sense for us to downgrade. >> toni, you are writing a new note this morning and dropped a moment ago, and it says, question, really, a deeper trough or is the end here? which is it? >> i think it is a deeper trough. in the sense that really what we had is an incredibly strong iphone 6 cycle that set up
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extremely tough comparisons for this year. it pulled forward effectively people who would have otherwise upgraded, and switched, so you have very tough comparisons, and now you have fewer people upgrading. and so we looked at the cycle, but the upgrade percentage does not need to improve, but it needs to not get worse which is what has happened over the last year, and path mat cli, you have is yunigrowth, and you put the iphone se on top of it which is a new price point to interest the emerging markets, and we believe you are set up for the unit growth going forward and the stock will work on that. >> and andrew, it seems like you are disagreeing with the toni's asse assessment're? >> yes, the math is correct, and so forth, but what we disagree
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with is that he mentioned that, you know, he doesn't think that it is going to be worse, but we do believe it is going to be wor worse. the iphone 6 was the first unsubsidized phone in the u.s. which means a whole bunch of users over the next year are going to be stopping doing their monthly payments and if you think of the year 6 user, and coming up october, and your carrier bill is going to go down by $35 if you don't upgrade or you upgrade and keep paying the $35, and the view is that most concerns are going to to be looking at the 7 and see one difference of the 6 two generations ago, and that is the iphone jack missing and would ultimately keep the $35 savings so we believe that the replacement cycle is going to lengthen or get worse as toni mentioned well into next year. >> toni, you are the top rated analyst in the space, and when you make a move, it resonates. how close were you to downgrading apple either last
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night or this morning? >> well, i was not close. scott, i was on the show e yesterday and my sense is that the numbers have to come down and i would not be a buyer of the stock before the quarter, but i believe in the upgrade cycle story, and quite frankly my sentiment is no different than yesterday. it is no temptation to upgrade it. we were -- our numbers were well below the consensus going into the quarter, and yes, apple is worse than that, but there is no change in the belief that we had a peak and a trough, and a rebound. >> and andrew, you know, i can't help but wonder looking at the note, wasn't the writing on the wall for this? you could have easily downgraded this stock and said exactly what you are saying today several months back, as all of the concerns can were starting to resonate about the iphone slowdown and the first year over year decline in the iphones for apple ever, and so why today?
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had the street been too bullish for too long? >> well, it is a great question. at lo of the notes are last four months have been kind of getting more and more negative. but we have always kind of taken a longer-term approach, and talked about the services providing the big revenue boosts, and no one, and it didn't seem that, nobody wrote about it, and the services revenue were to a second largest contributor to the quarter for the first time, and so we took a longer term view, and the valuation was a textbook buy, actually, if you are in business school. but our view was kind of, sentiments, and it tends to happening on too long. and people are underestimating really underestimating that replacement cycle lengthening here, and this quarter, i really thought that it showed it more than any other quarter. and android switchers, all-time high, and china not nearly as bad, which means that new se, which means that something has
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to be giving here to miss so poorly, and we believe it is replacement cycle. we very much think that the phone is a utility, and we will see very much lengthening the replacement cycle not just this quarter or the next cycle, but last for multiple quarters. >> i appreciate your multiple points of view here today, and good insights of where the stock could go and classic bull/bear debate. thank you, toni and andrew. >> thank you. >> thank you. and steve, what do you make of this? >> well a few things, because first of all, nothing goes on forever. are the best days behind it? absolute absolutely. do the best days have to be ahead of it for the work? no. it is another market stock, and you have to find the marginal buyer coming in for it to go higher and i don't see the marginal buyer coming in here. looking a china, the sales were down 26%, and blame the economy and the consumer spending was up 11% in 2015 and the inskom up 6% to 8%, and that is not the
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issue, and the issue is cheaper devices with more robust technology made and sold in china, so it has gone from the ubiquitous story, and hitting on all cylinders and they blew the apple watch and not another update for a year, and clearly something is happening with the technology there, and is so i believe it is okay, and cheap and a lot of cash, and yada, yada, yada, but to me, it is other ways to make money in the spa space. >> and it is a classic bull/bear conversation, pete. >> yes. >> and weigh in, whether you think that there are going to be recurring problems and the 7.0 is going to be a disappointment. >> well, it depends which analyst you are listening to. >> yes. >> and katy along with my wife is a reason that i am in the portfolio, because of all of the different things that we have
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seen through the cycle. i disagree, steve, because one of the things pointed out by andrew that is not pointed out enough in the ka call, because we knew that the quarter would be bad, and the guidance a little bit and they will oftentimes give you a little sandbag, but this is a bad one. this guidance was awful. that is really what pushed this stock lower. services, scott. we have been trying to focus on the different parts for a long time, and now shgs s, it is the largest contributor to revenues, and it was up 20%, and that is what seems like to me to be building upon, and it is not a lot of growth, and growth is growth though, and we are finding somewhere where there is grow growth, and the second largest which means something to me, and also, if you get to the 7, and it is successful, then the stock should be trading towards some of the numbers of 125 or 130 and we are talking a year out by the way. >> yes, and that is why it is not going anything for a year. product by product, the watch. and they won't release the unit saeldz. in u new ipads not successful.
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and the macs and the units are going down. >> yes. >> and they sold 12 million watches in the first year. that is unsuccessful? >> yes, relative to the expectations of a normal takeup is. >> the expectations were too high to begin with, and we talked a it on the desk. >> and the volume. >> and a 12 million volume of anything is not unsuccessful. >> relative to the market. >> but relative to 2/3 of the sales are iphone, and if you are a bull in the stock, you want some better diversity, and retain some hope that the 12 million watches sold this year will beget further gains in the category, but the question is out there, what are they going to be doing next? >> isn't diversity the services as you have a billion users out there, and you can continue to build upon it? >> it is 12% of the rev fews out there, and i don't know how fast it grows, but it has to grow awfully fast to be a meaningful portion of the iphone proportion.
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>> and we heard from the analyst last week that it is bullish. >> i was on the show when we did it, but it is 12% of the sales right now and not enough to move the needle. >> yes. >> and isn't that the exciting part because they had 1% of the pc world and they had to get to 5%, and it is a game changer, and all of the sudden they start to move up. >> i hope you are right, and the watch which is what sold 12 million will double, and it is one of the fastest launches they have had and faster than the iphone originally, and so there is hope there, and the average selling price for the watch is not anywhere near the average selling price of the iphone, and so this is an iphone story and i would like to see them get away from it. >> but you can't get away from 40% margin on the phones when every other phone manufacturer is bare ly making money if any, and it has to come down, because it is just natural. >> spirited conversation. thank you. still ahead on the halftime. >> chipotle is roasted. they report the first quarterly loss ever and a big drop in
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sal sales. find out if anybody on the desk is buying the stock today. and plus, oil gusher. crude hitting $45 a barrel earlier today. we head to michelle caruso-cabrera in iran for a look at ta supply picture. and a period for hedge funds that dan loeb calls catastrophic, and he has a dire prediction for the industry. that is all coming up on the halftime report. my dad gave me those shares,
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you know. he ran that company. i get it. but you know i think you own too much. gotta manage your risk. an honest opinion is how edward jones makes sense of investing.
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we are back with another damaged tech stock. look at the screen, twitter shares down 15% after posting a revenue miss and poor guidance and what are you doing with this? i know that everybody is negative on it, and the s&p global markets have reiterated the buy on the stock, and they say it is attractively valued. the stock is down 15%, and we know it is a train wreck, and at some point -- >> well, there is a lot of noes on the screen right there. >> and yes, there is, and now, what about now given the carnage and the damage that the stock is attractive? >> well, you don't want to be short twitter hoo, but i don't see the compelling reason to be in there, and i love jack, but no turnaround here, and the only way that the stock goes up here in my opinion is that it is a takeout by somebody bigger, and who that somebody is, i'm not saying, because i don't know, but i think that it is the upside from here owning the name, and that is why you don't want to be short of it, but i don't see any reason to be in
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it. >> the only way you buy it is for an event? >> well, it is a poor reason to own a stock waiting for somebody to take it out. this is theer story in four characters, sell. you don't need 140, and you can have the other 137. >> really? >> well, i honestly have no other takers on the other side of this? >> well, judge, it was in my portfolio, and why in the portfolio challenge in this going on, i am crushed because it went down so fast, and unfortunately, it is one of the portfolios that i liked it is because i thought that it was potentially a take out, but they have not been able to make a turn. when jack came n we thought, give him a quarter or two, and now we are pushing it down further. jack has to produce. when you are looking at the monthly active users we are virtually the same, and ta have added some, but it is still 310 mi million and the same numbers that we have seen forever, scott. then they are not having success. >> possible to better monetize the users that i have? >> they have to. >> and too much focus on the
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grow growing the user base? >> well, it is one of the things that, you have to show the growth somewhere and so it has to be growth in the monetization to your point. >> i am reaching far and wide to ask you these questions. >> you the user base which is worth something, but it is the question of who is the partner to come in and capitalize on it, and extend the revenue. >> well, some moves going toward towards the live and trying to get to, they have gotten involved in sports, and doing some things that some day. >> and this guy was in the stock from the beginning, and defending it yesterday. >> probably painful. >> and on the show, and he is thinking long term. >> and he is also an excellent tweeter as are several people on the desk and i feel like an hee then, but i am not an excellent tweeter, and so i try to get engage, but then i lose experience. i think that it is not compelling and i am more in the majority that is growing more everyday. >> they got the nfl deal. >> and does that matter for
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anything? >> well if the jack and the crew can use it correctly, judge, and by that i mean, that for instance when you are watching it on twitter if you have on the side just a cur ated list -- currated list, and you can talk about how cam newton is performing, maybe that is it. >> and the reason that i have to buy twitter is football and all of you, because everybody is so negative. >> not so negative, but it is -- >> buy signal. >> and it is not that, and jon is not talking about selling it, but maybe you have, but not so negative, scott, but what is the catalyst right now? they have shown us absolutely no growth. that is what you are looking for, and look for growth in the monetization process, and they have not gotten there either. it is not that we know it is negative and it is a sale, and
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feign the crowd or whatever, but they have to say what this company is doing, and jack has to show us. >> and buy chipotle, and then come back in a few months and tell us how it went. >> well, the chipotle shares are going to be the first quarterly loss, and the stock has fallen a lot, and is it finally attractive, and why is somebody not will ting to take it. this is what cramer said, a year from now the stock is going to be up, and we will forget about all of the stuff surrounding the stock. >> it is a great comment, but within that year, how many times are you going to have to put on the seat belt when you are not seeing the traffic pick up. i mean, the one issue that i have had for a long time since this started with them is traffic. can they start to get the traffic numbers bet ter, and thy have not been able to do it, we even some of of the the promotions out there, they have not gotten the return of the traffic. >> and cramer threw out some number this morning, andly get
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it wrong, but it is a big number of the people who use these coupons or whatever that they passed out to go into the store. >> for free burritos or whatever? >> i guess so. but is it sticking? is that causing the stickiness? >> what is the margin of the coupon? zero. and so when the people are not getting free food, will they come back? >> they come back because they like the food. >> no, it is like groupon, and you go to the if merchant because you have a coupon and they don't go back. and my experience has been valuation, and this is egregious valuation. >> 82 times forward. >> still egregious valuation even with the normalized earnings, and at one point looking at this, if you have a 30 pe earnings, that is too high for a company that is no longer pristine, and increasing competition in what they do. >> the new stores are not growing anywhere as near as the established stores. and if you are even buying it
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on, steve, 30 times, but if you are, and i'm not saying that you are, but on the normalized growth, you assume that the growth is there, and the foot traffic numbers don't support that thesis. >> cramer has more on that on "mad money" along with buffalo wings ceo sally smith, and look forward to those interviews with our man krcramer. and coming up, the chief equity strategist from morgan stanley is going tole tus why he is turning cautious on the stocks. and you know him, adam parker. and we will be on, and our own michelle caruso-cabrera who is going to the join us from iran with a look at crude. >> yes, we will have a behind the scenes look at iran is trying to ramp up the oil production and reengage with the world. that is coming up on the
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all right. welcome back. take a look at the market picture, and here are the
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sectors year to date, a energy up more than 13%. it has been, steve, a surprising leadership sector in so many ways. >> i am completely surprised not that it has rallied, but the sustainability of the rally, and talking to somebody today about private equity, and the bankruptcies are still coming and we are seeing them, and that is a good thing that the bankruptcies are being treated as a positive, because it takes the xcapacity out, and it seems that 50s, pointing to resistance, and the stocks at this point, the number of them, and still involved and i have not sold them are discounting a much major recovery and still ahead of themselves, and not g going to take much of them to retreat somewhat. >> it is surprising to somepeople, and despite the predictions that oil would not top $44 a barrel, and crude is doing that, and hitting $45 earlier in the session, and the move is playing right into the call by goldman's jeff currie who said tuesday that the sentiment is more bullish, but what about the supply concerns? our michelle caruso-cabrera on
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that, and in iran telling us what that market could mean for prices. p michelle? >> well, scott, iran is exporting more than 1 million barrels per day everyday compared to when the sanctions were in place, and they are not done yet. they want to do even more. they seem eager to prove to the world that they can do it. they gave cnbc access to a place called kharg island 25 miles off of the coast of iran in the persian gulf, and it is an island dedicated solely to exporting iran's oil, and it is very rare for the journalists to see this place, and journalists from an american network, the wo workerers could not recall when that happened. they showed us the play, and showed us the tap to see and touch the crude. it is heavy crude that we got the look at, and api of 30 for the oil experts in the audience, and oil produce for expert is sent via pipeline to kharg to storage capacity of 28 million barr barrels and pipe it out to the tankers that are arriving on a
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daily basis, and the employees are hoping for more and more tankers to arrive everyday. if you are looking at the graphic of raub's oil production over to the last six years, you can see the immediate impact of each round of ainsanctions had 2010 to 2012, and you can see that they are hoping to get back to the 4 million barrels by the end of june. no doubt about their intent. the numbers are crucial, because there is a lot of speculation that if they get back to 4 million barrels, they are finally at the opec quota, and are they finally willing to agree to a freeze, because they have been the holdup in any kind of deal. so we have to see if they can hit it, and if that measure means something if they are will t willing to do a deal with the very bitter rivals the saw dis. guys, back to you. >> thank you, michelle carruso ka can brar rashgs and amazing
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access into the iran market. trying to make a comeback. and doc, what do you do with the stocks? >> well, i'm looking at wild cat drillers, ocean drillers and land drillers and everything was screaming early today. a bunch of them looked like they kind of rolled as we got to the $45 level, judge. we will see if whether or not we can hold and build from here. i would be one of the people betting against it. i don't know that we can go a lot higher right now with the increased production coming out of iran, and with some of the shale producers cranking it right back on. >> and pete, you are in the exxon calls? >> and conoco phillips call. >> and exxon reporting later? >> and yes, bull today. >> nervous and thin? >> i u am. i feel like it is a little bit of the thin air. with jon's point about $45, some sort of a pullback, because it is a dramatic move. i think that you have to take some off of the table if not all. i might be out of both by the end of today, because my gut is telling me that it might be that
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time. >> and jimmy? >> well, you have to watch the drilling rig count here in the u.s., because jon mentioned that the shale oil producers are going to be coming back online, and you will see it first in the rit count going up, and a lot of the wells were dug within a few hundred feet of the completion, and left until the prices are up, and now that the prices are up, look for the rigs back up, and if the production in the u.s. goes up, the rally is over. >> and now, what the third point founder derrick low is going to predict as the third quarter returns are continuing to disappoint, and plus, we will have adam parker with his outlook of the stocks and why he is concerned about the rally. look at the dow, 30, and the heat map. the dow is lowerer and you know that apple is down 6%, and boeing up 2, and dow is up 44. back after this. i trade with *, where true traders trade on a trademarked trade platform that has all the... get off the computer traitor! i won't. (cannon sound)
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welcome back to halftime ri port, and now sue herera with the latest headlines. >> thank you, scott. this is what is happening this hour. president barack obama is say tag he is going to travel to flint, michigan, and speak to residents there. word coming from a letter of an 8-year-old girl affected by the the city's water crisis. and she had written to the president to voice her concerns.
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>> the sentiments of the former house speaker dennis hastert is immine imminent. he told the judge that he is story for mistreating the boys when he was a high school wrestling coach, and he is called a serial child molester, and that is mr. hastert coming into the court earlier this morning. and a judge is liable for inapt purchases made by kids. a federal trade commission who filed that suit had settled the issue with apple and google, and they had reached out to amazon for a comment. and yahoo is confirming the agreement, and activist starboard is going to add four more members to the board including the starboard ceo jeffrey smith to help yahoo avoid a proxy fight ahead of the annual meeting. that is the headlines this hour, scott, and back to you. >> is that a good move, doc, to put mr. smith and others on the
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board? >> well, it is a way to make sure that the transaction is going to actually happen instead of talking about it which they have done for a couple of years. what do i do? i continue to own june 27 calls, and use the short term calls the bets that something happens as a sold, and in other words, i am selling them games at the junes, because each week that goes by the premium just gets sucked out of the short term bets which are hope, and you don't want to invest with hope. >> and but, you are optimistic -- >> that a deal gets done. >> and holding for the deal, but when i asked you about being optimistic about twitter? >> yes. >> and about getting in for the prospects of the deal, you said don't do that? >> right. and i am not -- >> what is the difference of the two stories. >> the difference is the short term volatility and the risk premium they put on the options ash and this is money that people are betting, and money people saying, i think that the deal happens, and they thought it would happen three weeks ago, but nothing happened, and two weeks ago, nothing happened and both of those out, worthless,
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vapor, and then last week, we will know by friday and the 22nd, a deal, nothing. so i did it again this week, and hopefully i get to do it all of the way up until the june calls expire. it is like a money machine. >> you don't care about the stock, but you are playing the are premium? >> i am playing the premium. >> and the volatile the ity in front. >> and the greater fool theory, because they believe that somebody is going to pay more than this company is worth. >> and with the takeout, it is an attractive setup for the options. >> right. i wanted the folks to understand the potential difference of the way you viewed both stories? >> yes, sir. >> and now, the rally in stocks can last, and one top strategist thinks that the road is growing shorter. adam parker is going to join us from new york this hour. food to see you. >> you, too, scott. >> why is this road getting shorter and shorter? >> well, you used the words betting and hope in the last segment which translates to this
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segment. look, we are assuming about 4% earnings growth this year and next year, and if you are going out a year from now, and you are paying 16 times the earnings months 13 through 24, that is just to give you a rough number is 2050 on the s&p and you are trading 2% or 3% above, and 16 times maybe optimistic earnings of 13-24 months from now sh, ano we have come a long way from the rally here, and the view was obviously when the market was lower in january, and february and it is risk/reward more balanced. and two point s s to focus on mo wise. one, will the chinese economy continue to look like it is recovering or slow in the second half, and morgan stanley says it is going to slow. and two, will the dollar weaken or continue to be on the longer term strengthening path in the second year, and morgan stanley's hans swedeker says it
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will weaken. >> and now, the street is divided over the direction of the dollar, and people believe it is going to get into the weakening period, and they think that the fundamentals are actually improving where as you topt really buy that story. >> look, i think that the current sentiment, scott, it is trailing two-week price momentum, and everybody was apocalyptic on the 10th, and bullish mid-april, so it is human behavior and all affected by the psychology, but the house call is what you have seen in terms of the stimulus in china and rippling through for the next couple of months, and also that the old e kconomy areas li steel and cement and they have tremendous structural capacity working down over the next few year, and that does not mean that you don't have cyclical turns on the downslope, but on the currency front, it is tricky
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to forecast, but reddeker our strategist says that to summarize that draghi is more dovish than yellin, and the european e kconomy is less pote than the u.s. one over time. so if you take the two factors, and i believe that it is not uncorrelated that the market rally, and the risk taking seem to be coincident with the dollar beginning to weaken, and china looking better. >> look, it is hard to forecast, and i don't envy those trying to do it, but there are variables in play, and lastly the fed. what role does the fed play in the forecast in the way that you view the market? >> ultimate i l everything is coming down the growth and rate, scott. and the fed is going to impact the view in the perception about rates. i think it is really hard to understand, you know, in isolation why they have remained so low. you know, but ultimately our house call, and allen zedberg,
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our can chihief economy mists s is like 2014 where the downgrade is where the fed is tightening and lateer in europe that may impact the currency call as well. >> and all of the name dropping, adam, and these folks owe you dinner one of these days. >> oh, you know, it is all, one team, one dream. and what we don't all agree on everything all of the time, which is naturalt the big firm, but these are really smart people, and we are trying to collaborate as much as possible to come out with a clab raty view, and if we are correct, china slows august on, and the dollar is little bit back on the strengthening path, and then people in september or october are going to be saying that the those things are a big factor out there, and so it is out there, and another thing that people are talking about is brexit a little by, and people are complacent about europe, and could it create some volatility
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in june. the market is rallying but not a lot, and not to power us to a 5% or 10% higher, but we are trying to do the thing where is buy low and sell high. you heard it here. >> first. a.p., good to see you, adam parker, morgan stanley, and good to see you. >> as always. >> and now, in the catastrophic period, that is what dan loeb wrote in the quarterly letter saying that there is no doubt that we are in the first quarter of a washout in hedge funds and certain strategies. >> well, that is what i see. this is not every hunl fund of course, but in any industry where you have such severe excess capacity as we do with
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the hedge funds and the fundamental research means little to nothing, and all driven by the etfs it is difficult for the fundamental investors the make money, and long-only funds similarly have difficult time making money. what is driving it? the bigger debate of the active investo investor, and there is going to be a comeuppance there, and one example, a fund that came over my desk is averaging 2% over the last three years around and the management fees alone are 2%, and then 20% of that, and less than 2%, and they are making a big e return than the investors and fees have to come down, and lobe loeb is one, and i didn't say it, but i was with another al locator and he has 20 funds of the portfolio, and two he was
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happ happy with, and we were invested together, but one of them was loeb, and guys like him will continue to thrive, but the rest of the industry is a shake-up. >> yes, the countdown is on. and now, the treasury yields are moving higher in view of the treasury yields, and we will go to bond pit for more. and now, the stock is lower into it, and with le take the positions ahead of the results. alsoers we want to hear from go to the twitter page on halftime report to vote. is it time to buy facebook? let us know. >> the halftime report with scott wapner is the place for market-moving interviews. >> one reason i like facebook is because zuckerberg will take a risk. >> and we end the year modestly higher than we began. >> the most profitable hour of the trading day. >> don't be surprised to see a 5% or 10% move the other way, because that is what we have been having for a while.
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coming up, and scott, back to you. >> always about the language. back to you, mel, in a little bit. the 10-year yield note is falling ahead of the fed today. and bertha coombs is down at the nynex. >> yes, we are seeing the yield down below 190, and scott nations, and jeff guildberg is joining me, what are you looking for in terms of the statement? >> well, i expect them to be hawkish and the market is telling us while it is turning around a little bit today, we are in the middle of the seven-day losing streak, and the longest in about two years, and that is is because the market expects to be a little bit more hawkish, and i wonder if the fed is going to have a sneak peek at tomorrow's first look at the first quarter gdp, because that is going to inform whether we have two or three rate hikes throughout the year. >> and jeff, what levels are you look agent? the last fed meeting we moved up to the two-handle on the yield
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in the 10-year, and closed down at 1.91, and what are you looking at today? >> bertha, we are focused on the 2% level again, and to scott's point, he is saying hawkish and i am saying more of the same, u but either way, i'm indifferent. if you see hawkish, rotation out of the stocks and bonds to bring that the yield down, and if she is not, then we will see it move the other way, and it is going to cap the yield. >> you love the hawks and the doves, and that is is a nice way to be. of course, back with a live show tomorrow at futures at cnbc.com. thank you, scott. >> and thank you, bertha. and michael pearson and big ackman and the board member, too, they are testifying on the hill this afternoon. meg terrell is in d.c. with more coming up. here at td ameritrade,
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they work hard. wow, that was random. random? no. it's all about understanding patterns. like the mail guy at 3:12pm every day or jerry getting dumped every third tuesday. jerry: every third tuesday. we have pattern recognition technology on any chart plus over 300 customizable studies to help you anticipate potential price movement. there's no way to predict that. td ameritrade. you can fly across welcome town in minutes16, or across the globe in under an hour. whole communities are living on mars and solar satellites provide earth with unlimited clean power. in less than a century, boeing took the world from seaplanes to space planes, across the universe and beyond. and if you thought that was amazing, you just wait. ♪
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welcome back to the "halftime report." val yent's ceo is testifying to day. >> the hearing scheduled to start at 3:30 today. it's the third if a series of the senate aging committee's hearings on drug prices. this one specific sli focused on
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v valeant. on the docket, a few familiar faces. mike pierson, valeant director howard schiller and the valeant director bill ackerman. in the written testimony that came out today, mike pierson acknowledges he'll be leaving the company in a few weeks as joe papa from parago takes over. he said it will be in the next few weeks. he acknowledges mistakes made. the company was too aggressive and i as its leader was too aggressive in pursuing price increases on certain drugs. let me state plainly, it was a mistake to pursue and in hindsight, i recredit pursuing transactions where this was an increase in merchandising medic. he is referring to two heart medicines focused on here. he was questioned for nine hours
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last week. so very closely watched. >> everybody will be paying close attention to what bl pearson has to say along with bil ackman. thank you so much. see you later. for more on valeant, let's bring in the senior analyst at wells fargo. he initiated the stock with a sell rating in february. david, welcome. >> i mean you obviously been right. this has been a disaster. why should we think that it's not ready for a turn around with a new ceo, mr. pearson lefrg, mr. papa coming in? >> well, a new captain might sound great but it's the ship that matters and we see the business remains weak and the pricing -- with pricing strategy that they tried to use for the last few years that, gain is up. >> steve weiss? >> you mentioned they are still raising prices even recently. why would they possibly do that? >> it's amazing, isn't it? you know you're speaking before a senate committee. you know the senate is looking
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into it. but meanwhile in, january, they raise price on 16 different drugs. it's one thing to do an apology tour when leaving. but the real thing is what are you doing? what are the actions? are you rolling back price? no, you're not rolling back price. you are giving that back to the consumer that paid too much? they're not doing any of that. >> so you're saying that they should never be allowed to raise prices on any of their drugs again? >> well, it's slapery slope, right? if you control price for one company, you control it for all of them. and that really hurts innovation. there has to be a mechanism between raising price 5% and raising price 500%. there is a big difference. i mean you need to make shurt most egregious violators of that, of the public trust, they're not allowed to do. that it's a difficult thing to balance. everyone agrees that 500%, 1,000% increase on a drug price isn't acceptable. >> where was the stock when you initiated it with a sell? it's been such a disaster. >> it was a few months ago and
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it was $95. >> so at $95 -- excellent call. down to $35. but at $35, you didn't think it was going to go that far that fast. some people are going to say this is a great value at $35. >> yeah, so a lot of people will say well they're going to file a 10-k soon. that will make the stock goup. we should buy it for. that look at the business. you can try to flip coins and say well what is the next uptick or down tick? that might sound great as a way to invest. that's not how we invest and recommend stocks to investors. we look at the next couple years and by 2020, they owe $12 billion to creditors. i don't know how they're going to pay that back without restructuring. i don't know how they pay it back without selling things. if they sell things, they have to bring down the earnings numbers. they bring down the earnings numbers, that's bad for equity holders. i don't see a good clear path forward to recommend a stock that owes so much money and who's business model deteriorated in six months.
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>> we'll make that last word. thank you so much. david maris, the analyst over at wells fargo. coming up, so far tech earnings have been a disappointment to sat least. in that company right there, facebook turned things around. we're going to take our positions ahead of the numbers next.
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facebook set to report earnings after the bell today. i want to know what the trade is going into the number over last two years. twitter is down 64%.
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facebook is up 85%. >> it's because of who is winning in the war, right? talk about social media and my opinion it's facebook they've been dominating. the strategy that zuckerberg put in front of this company is in the ten year plan. that's why they're moving in the right direction, scott. they've done it in video and with their acquisitions. >> you say buy. you're the only one on the decembdesk that says buy. >> i'm rolling with pete now though. beginning of the day i was no. now i'm rolling the other way, judge, because of some of the activity in the calls. normal is 60/40, it's going 2-1 calls to putses right now. so despite the appleness, they're piling in on the bullish side. >> 53% of those that responded say don't buy it. >> okay. >> the stock had a great run. what's the trick? >> here's how i look at it. i wouldn't buy it for the quarter. i don't believe in doing that. if you like the name longer term, and i do, there is nothing wrong with taking a little bit
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of position before the quarter. >> what about taking a little bit off? >> i think you're supposed to take off here. they have all the earnings growth in the tech sector or they're going to be tarnished along with the rest of the tech sector. i'm betting on the latter. >> all right. we'll see how it shakes out. five seconds to go. that's all for us. thanks for watching. "power lunch" begins now. ♪ any way you look at it >> well, the reference there is to joe dimaggio. it could have been the hottest run since '41 whether he went on that 56-game hit streak. but after 51 straight quarters of sales gains, apple whiffs. they miss. sales down. you can see shares are getting punished right now. the chart indicates by about 6% plus. so has apple fallen far from the tree? welcome, everybody. i'm tyler mathisen along with melissa lee and brian sullivan. we'll have a series of special reports from iran. and the countdown is on to t

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