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tv   Fast Money Halftime Report  CNBC  May 3, 2016 12:00pm-1:01pm EDT

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caused by the allergan. >> yes. and product up 17, and the best performing dow on a day that is not working. busy day for you, meg. >> thank you. and that does it for us at "squawk alley" and we go back to head quarters with scott wapner. carl, thank you so much, and welcome to the "halftime report" i'm scott wapner. the trade this hour is the commodity rally over? joe terranova, and stephen we s weiss, and josh brown and pete najarian. and now, with the are reaction of both of the moves, and joe, you made some bug moves, because you do think in fact that the commodity rally is done? >> yes, history is repeating itself, and 2016 is the same as 2015, and you had a trade that began in february, and easy
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money trade as it relates to energy, and the oil bottoming, and the u.s. dollar, and that has ended. i would take the chips that one might have and a materials, energy, lower dow type of trades and move them elsewhere. myself, i bought some puts in the xle, and the xlb in the last couple of days. >> you sold all of the holdings on friday? >> yes, and i told friends that i had in energy names to do the same. and i truly believe it is the dynamic as it relates to the currency, and steve has often talked about what has changed fundamentally as it relates to oil, and not very much. it is a currency story, and the reversal to dday is power nfl t u.s. tlar where it was this morning and where it is right now, and that trade is now past for 2016. >> you sis the other side of it? >> no, i tend to be with joe. and we have been talk about the dollar for how long on the desk, and talking about this, and the energy and how we have been correlated with the market and that has not broken. people have come on the air and say it is breaking and the s and
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the p and oil are not moving today, but they are. the oil is beaten up, and looking at the china numbers and the markets are not down 100, but 200, and look at the volati volatility, too, judge. the volumes yesterday were absolutely atrocious, and we are averaging 18 million a day so far this year, and 17 million, and only charted 13 million in the options world, and volatility indektss creeping up, and it has been low for a long time, and opportunity to get protection, and buy it cheap, and joe is right. >> and people have said that the overall rally, the air is thin, and this is what gunlach had told me a few weeks ago. and now, joe, the bottom, it is a february 11th. wti up 711% in that period, and energy up 26, and the materials better than 20%, and it is incredible run for commodities across the board, and a number of stocks which trade in that space. >> sure. >> and joe could be right. but i think that it might be a little bit premature, and i think that we are overreacting
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to the volatility today, and just in reading everyone's commentar commentary, and when you are actually looking at what is going on this year, so in january and if february, you had 35 days where the s&p was a # 1% move down, and only two since then, and that is remarkable. we have had the incredible lack of volatility. and today could be the third by the way, and it is also the first time ta we are staring at the possibility of two back-to-back down weeks for the s&p since january, and so people are looking at the tidal wave of volatility hitting on one day, and extrapolating out further than they need to, and it is not a good bet this spring, and so i don't know why all of the sudden we want to say it is. >> sorry, i'm not making a call on the s&p and saying to take the money that we have allocated to it, and the trash, and the energy names that have recovered and the material names, and go buy something else. i bought facebook -- >> and you mean the
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chesapeake -- >> and hold on. is it the trash, because exxonmobil and chevron both be. microsoft was not a good report, and neither was apple, and so what is the trash here? the companies in a challenged industry with low expectations. >> no he is talking about the freeports up 200%, and the -- >> no, i will talk about the gas companies and the peabody coals that traded up 20% after a day of saying they were in bankruptcy. so i said that market does not make sense and i cite d them specifically and i am taking off citi because not that it is cheap, but risk. i am out of energy and time for it to reverse, and it was too easy to say weak dollar and weak dollar and the dollar is going to the be continuing to strengthen in my view. what happened today, and i'm not looking at today when i am taking the risk off, but the whole picture, multiple expansion with the declining person, and when does that happen with the low growth? you had the growth analysis
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coming out from europe. >> and the china pmi. >> and it is ultimately why -- >> and so draghi blamed germany. >> and we are to say that even if the commodity rally rolls over, they will find another k sector to go into, and suggesting the overall rally is about to be done? sxwlit is always going to find some place to go and it does not sit in cash for more than three days, and everybody is looking at the same math, and the same problem in the whole world which is a low return environment, and they need to generate a return that is rel realistic, and the dip is aboard quickly, and so we could have a risk off moment, and the is h tri of these things in the recent pasts not always, be new the recent pasts is that the money might go to the cash temporarily and the short term bond, but it won't stay there long, because lit find a home. >> and so, suggest hag the utilities and the telecoms and the yield plays that were hot and then not could be back in
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vogue quicker than we think? >> some heavily shorted telecoms are part of the dash for trash have rallied despite really depleting fundamentals, and you will see the utilities picking up, and the consumer doing okay domestically. >> and what about the big balance sheet technology names that are punished? >> great rotation area, out of some of the trash names that we are talking about, and i don't put chevron and exxon and conknow coe in -- conoco in the trash, but it is the freeport-mcmorans and those who have made 180 or so moves and great trading names and we have talked about them as trading names, and great for the options world, but not stock, because you don't know when the rug is doing to be ul ped out, but the rotation when you look at the names in the tech space crushed recentlya and i'm not saying apple, but microsoft, and apple and the names that i truly believe in, that is an opportunity and the spot for
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rotation and maybe it is tech. >> and talk about financials as well today under pressure, and dom chu has the latest. >> from the s&p, and the financials are down nearly 200 in the trade, and the spdr and the kbe also falling by 2% at this point, and tracking for the worst day since early april. laggards are the big banks like the wells fargos and the jpmorgans and citigroups down 3%, and internationally, usb and the wells fargo hurt the first quarter profits, and the president said that they suffered from even more pronounced client risk aversion than they have seen in the past. but scott, you brought up the dividend play, and the xlf, the big etf that tracks the financials is tracking 2.5% right now which is the same as apple. >> thank you, dom chu. okay. you got out of citi? >> yes, goit out shg, i got ou because of what was not as bad
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as expected quarter, so that is the tone nor, so you want to find the yield plays and safety, and you want to be in cash, because i think that you will get the opportunity to buy stocks, and i will give you one example. we have one manager that is long chesapeake bonds and 36 cents on the dollar and short the stock. now, the stock trades to $4 billion market cap which it did, the bond should be apart, and they did. and the ones paying attention to the balance sheet is the fundamentals to get it right. so you have to be selective, and not completely risk on anymore. i don't believe that oil goes 36, but 45. >> and careful in the european bet. >> and yes, be very careful in the european banks, and when you look at usb and deutsche, judge, they are nothing like the numbers reported in the u.s. the u.s. banks are disappointing, but they exceeded the expectation, and these names not only disappointing, they could not reach the low expectation, and they can't get
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over the low bar, and that is a huge problem. >> the narrative from the most bearish people out there from the depths of the lows in j january is that deutsche bank was the poster child of how the next wave of crisis or whatever you want to call it is going to manifest itself. all sorts of fear in the market, and it subsided a little bit, and are we back to that? >>le with, it is driven by the cds which is insurance against the company, but it is moved up, because there is no liquidity, and somebody sold 50 million and through the roof. but the european banks have not gone through the stress test that we have and they have not cleaned up the balance sheet so they are between a rock and a hard place with nowhere to go >> and the one thing about the ur peep banks that if the we are pointing out that the american banks are a better buy, a lot of of the problems that the european banks are having in america, and credit suisse does not know what it is doing here, and u bs is the management unit
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and even that may be on the blockt at some point, so i am not sure that you can say it is a european bank issue, because looking at the xlf, and here is a chart that is in a very defined down trend virtually all of the businesses these companies play in are under pressure. it is not changing any time soon. and they are rolling them over again. >> and with the up trends, aptd it is up 10%. >> and pull the chart back further, and you will see a pattern of lower highs, and the buyers are not coming in as they approach the prior highs, but selling off before we get there. >> and boring, the canadian banks continue to work. i know it is boring and bland and not something that the viewers are, but you are getting the performance, bmo, and toronto dominion, and that is where the performance is, and that i have good structure and no regulatory rhetoric that surrounds the financial institutions in the u.s. and i would continue to own them. >> and guys, good stuff. here is what is else is coming up on the halftime report. >> still ahead, the $500 billion
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questi question, and at what point is apple the screaming buy? the traders will weigh in on tim cook's exclusive interview on cnbc. plus, a checkup on the biotech, and a fund manager with 50 years in the business is going to join us with his top six stock pick, and hedge funds under fire, and steve cohen is the latest to join the can chorus of billionaires calling out the fund managers overpaid to underperform. it is all coming up on the "halftime report." 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. fidelity's active trader pro can help you find smarter entry and exit points and can help protect your potential profits. fidelity -- where smarter investors will always be.
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all right. we are back on the "halftime report" apple ceo tim cook speaking out to cnbc's jim cramer say tag the street has it all wrong as the stock is seeing the worst losing streak in almost 18 years. >> i think it is a huge overreaction. and look, we had, actually incredible quarter by absolute standards and $50 billion in revenues and $10 billion in profits, and to put it in perspective, the $10 billion is more than any company make, and so it is a good quarter, and not up to the the street's ek -- expectations clearly. >> and what do you make of tim cook telling mr. jim cramer? is the street getting it wrong? >> no, because they are look g fing for the growth opportunity in the near term and not seeing it. no visibility on it. is the street going to get it
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wrong longer term? yes, they are, and that is why there is a name that you want to own and not trade around it. and can it fall behind 90? yes, absolutely. it is my mantra as well, because i have made the mistake in years to be the idiot of trading around apple and losing a ton of money doing it. and don't forget i called it a generational buy or something like that stupid a few years ago, and i have lost a lot of money trading apple, and it is better to own it, and be cautious of the consis ten soif the earnings because of the balance sheet, and what they give back to the shareholders an ultimately they tend to find their way in terms of growth, and they will do it once again. >> steve? >> well, the stock is a market stock, and doing better than market, and maybe in a declining market, and so it is a fairly safe place to be, but apple is in a show-me story, and what i didn't like what cook did instead of being forceful about the growth, he averaged iphone
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sales over two years, aed when a ceo starts to spin like that, that when i am worried. so we are to see if there is room to upgrade, and the clearly the upgrade cycles are changing, because of the subsidies on the upgrade upgrades. >> and cook must hear this commentary and -- >> frustrated. >> and sit back and laugh and say that you guys don't know what we have up the sleeve, and you think that you do. sg>> i don't believe he is listening at all. >> and gene munster thinks that he is, and xyz investor thinks so. >> and 9,000 article s a ds a d >> and i don't believe he is reading 9,000 articles, but he could be watching right now. >> and he knows the tone. and this is the point. no doubt that tim cook understands the tone here. >> and the tone follows the stock price, and when the stock is up 20%, and apple is back, and drops 20%, apple is dead and over and over and over again.
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>> and how many times -- >> well, he doesn't care about that. >> and that is not his job. >> i am not i sag it is his job. >> and this is true of any ceo if you asked them about the business they believe that the street is undervaluing the thing th things that are not known to the the street, otherwise he would not be talking about it. >> and pay me cash, because i don't want opulence. >> and you are not talking about one of the most quote, unquote seek retive companies out there, because they don't just show their hand, they keep it all to the vest. >> and you buy out one quarter, and you will be penalized by the guidance, and the visionary, and the person who drove it, the o products, he has not been around for a few year, and so we have seen the runoff when all of the pricing is created so it is reasonable to bet on what is going forward and by the way, a lot of the service revenues which is going forward -- >> and the glory of -- >> hold on. the global service revenues is is $1i8 bi8 billion, and what au
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willing to pay for that >> and he talked about china, and -- are we running that sound bite or not? well, he did addressed china, and they were changing it up which carl icahn told me was his main reason for selling out of the the stock. >> we no longer have a position in apple, and you worry a little bit and maybe more than a little about china's attitude. in what you have been een seein >> well, tim cook says it is a strong source of revenue, and let's listen in to him. >> and the revenues in china were larger than any other foreign company, and in greater china, the revenues were $58 billion and we did fairly well in china, and done fairly well, and despite the short term turbulence here, we are doing well now. >> and these are two separate situations. icahn is talking about the relationship of the chinese government and the companies doing business there and the risks involved and i am sure
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that every company doing business there are going to include significant risks including mr. cook if he were here, but mr. cook is talking about the revenues in china and how they had the year over year decline. what do you make of both of the angles and what it should factor into the stock? >> well, as a short term mentality as it is surrounding apple, and josh spoke before about the performance and he is correct in the sense that if you are right now a large cap technology growth money manage, you are thinking of the next quarter and where to see the growth, and you don't see it in applement so is you turn to, where do you get that? in facebook, and get nit facebook, because it is proven it consistently over the last three quarters so it is a short-term mentality, and so i cite that it is a name that you have to own and not trade. >> and tim cook also said to tony sack -- toni sacconaghi's
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comments. >> well, i believe that everybody is going to be owning a smartphone. >> toni, i don't know if you saw the interview last night, but they directly addressed a concern on the program that apple's best days are behind it, and he says that you are completely wrong. how do you repond? >> i did see the show. look, it depends how you define best days. apple had one of the greatest runs of any company in history. between fiscal 2007 and fiscal 2015, revenues went up 10fold, aband earnings up more than 15fold and the stock price up 10fold. if that happens in the next eight years going forward, apple's market cap is going to be $5 trillion, and i don't think that anybody among the panel is going to be making that
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bet. so my perspective is from the financial impact and i picked that period because that is when the iphone was introduced in fiscal 7. so from the financial impact, apple's best days are certainly behind it. can the company still develop a powerful and potentially, you know, game-changing technologies going forward, absolute ly. but the kind of growth rate that apple had over the last eight years will not be replicated. >> it is hard to say that the street so to speak is going to be getting it wrong, and it depends who on the street you are talking about, and you folks who are looking at the longer term trajectory of the stock and you have outperform on it, and you are buying into the story that tim cook is saying that by virtue of the fact that you are outperforming, and the people are urging you to buy the stock, and you believe it is a great perfo
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performer over the long term, an investors and traders or whoever are selling the stock, and on a shorter term basis, i suppose, they don't believe in that story as fiercely as those who think that the longer term trend is as intact as tim cook believes you have to be, and who is right in that dynamic. >> and different investors have different time frames and i do agree that apple is a show-me stock in the near term, and there is a risk that near term numbers may be too high. unfortunately, a lot of of the wall street is about expectation setting, and so if the numbers do come in below the consensus over the next couple of quarters, you could see the stock retreat. our belief is the iphone business is still relatively healthy and it had a fantastic year last year, and it created very tough comparisons that effectively pulled forward demand, and it is having a tough year, but there is still growth in the smartphone market, and
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apple is still attracting the switchers, and our belief is that you will have lightened upgraders going forward so we don't believe that the iphone story is over, and if you can look past the near term at this entry point where the stock is discounting 4% to 6% declines in perpetuity in free cash flow, it is really attractive, but could it break 90 and go lower if there is a disappointment over the next quarter or two? yes, it could happen. >> and toni, what a great way to end the conversation and seemed right to have you on considering that you were a topic of conversation with tim and jim. all right. to toni sacconaghi. and he says that it could break l lower, and what is the point that you want to buy the stock? >> well, i bought some last week and unfortunately $3 higher, and can it get to $92, sure, it is long term. and to joe's point, this is the longest hold is apple, and why? because i look at it from the long term, and if you are looking at india and china and the technology and the advances
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and the acceleration of the 3g and the 4g and the lte and you can see interesting growth potential from that alone and the customer satisfaction 95% who want that type of experience, and all of that can drive this this and move it the services needle are from the billion users to a much larger number, and that is why, maybe the best is in the past in terms of the best they could ever do, but there is still plenty of runway in front of them. >> you want to see the year-to-date performances, and steve mentioned the market, and how does it relate to the market. and it is down about 13%, and the s&p is flat on the year, and so when does the appearance begin when the gap is going to begin to see the mean reversion, and apple is going to begin on the daily and weekly and consistent basis on the s&p. and whether it is going to go up or down, and you have the confidence on the longer term
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basis that the trend is developing throughout the performan performance. >> and steve schwartzman is going to join us from the millken conference. and does the valley have further to run? we will go to the pits next. ♪ ♪ (charge music) you wouldn't hire an organist without hearing them first. charge! so why would you invest without checking brokercheck? check your broker with brokercheck. (p...that, you haveit, wait! yoto rinse it first like... baked-on? it's never gonna work.alfredo. dish issues? cascade platinum... powers... through... your toughest stuck-on food.
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welcome back to the halftime report. i'm jackie deangelis with the futures crew and we are keeping a close eye on the gold price under 1,300 and giving back some of the gains yesterday, and this is as the dollar is rebounding a little bit, jim, and so was gold a one-hit-wonder? >> no, it is a turnaround tuesd tuesday, and profit taken a little bit and as long as the gold market stays above 11275 1 am comfortable with the long story, and it is the hawkish fed and the dovish fed. and the boj is not as hawkish so it will do okay. >> and scott, what is your take on the gold price?
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will it continue to outperform the stocks? >> well, all that is mattering is that lockhart is saying that lower for long ser less likely, and that is why the gold turn around today, and we almost have a e key reversal which is bad for gold, but jim is right on the level, 1275 is the top of the range since february. if it stays above there, then gold is fine, but if it falls back into the range, it is a tough time, but jackie, you know me, i would always take stocks over gold. >> i do know you. for more on gold, tune into the online show at 1:00 p.m. "futures now" and we will talk to jpmorgan's stephen parker who will tell us why many of the investors are wrong on the fed. meantime, more "halftime" after the break. let me show you. okay. our thinkorswim trading platform aggregates all the options data you need in one place and lets you visualize that
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they found out who's been who? cking into our network. guess. i don't know, some kids in a basement? you watch too many movies. who? a small business in china. a business? they work nine to five. they take lunch hours. like a job? like a job. we tracked them. how did we do that? we have some new guys defending our network. new guys? well, they're not that new. they've been defending things for a long time. [ digital typewriting ] it's not just security. it's defense. bae systems.
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there's market picture today and it is not pretty on wall street. dow jones industrial averages down 71 points and nearly a loss of 1 1%, and s&p 500 down, and e nasdaq continues to be hurt. sue herera with the headlines. sue? >> hey, scottie.
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ash carter is announcing that an american serviceman has been killed near irbil in iraq, and he was later identified as a navy s.e.a.l. he made the announcement in stuttgart, germany, where he is consulting with allies this week. >> and viewers are heading to the polls in the hoosier state as ta hold the primary. 83 delegates for grabs on the democratic side, and 73 for the republicans. this primary is open, which means that the independent voters can vote either democratic or republican. burn and shock hazards have prompted walmart to recall more than 1 million water kettles, because the heating element can fail and rupture. wa walmart has 80 reports of incidents and the products were sold march 2011 to october of 2015. it is getting closer, the brazilian torch is arriving in brazil kicking off a three-month relay ahead of the olympics. there is president dilma rousseff lighting the torch before passing it to the volleyball player for the first
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leg of the relay which is going to end at the olympics opening sar pony on august 5th. that is the news update, and exciting getting closer and closer. scott? >> thank you, sue. look forward to that as always. i want to go back to the apple conversation and jim cramer jumping on the set after that exclusive and great interview with tom cook, and you wanted to qualify something? >> yes, they did not miss guidance, but lost consensus, an consensus becomes census because they have always beaten the guidance and they have lowered expectations going forward and 10% below revenue consensus there, and that combination, but they did not miss the guidance. >> and the biggest takeaway from the conversation with tim who just doesn't do this all of that often, and the stock is in the midst of the losing streak, and the longest since 18 years? >> well, look, you had a guest on last week who is so closely affiliated that it is amazing interview that you did with carl
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icahn where he basically laid out the bear case in a simple way that china matters and he is concerned about china, and made sents, and a lot of the analysts talked about china in the interim and so it is a rational, and he did not want to turn the gain into a loss, and that is the take away, but the take away is if the services matter, you are a believer, and if services are a back doorway and trying to cover up the slowdown, sell. way too many analysts who believe the latter, and because of that, they are ready to jump off, but in the instant, but waiting for the up day. i am not part of them. i think that you should own apple and it is not going to go to the 7 times earnings which is what you trough with the gilead year, and that is a $100 billion company, and i believe in the service revenue, and that i said they want to do the m&a to do what they are clearly excited
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about, and they are excited about service, and lot of things to slot n and 13 million people, and i had the music program, and only 13 million people have it so far, and that is a service, and the cloud backup for the pictures, if i lose my pictures, that is kind of like, you know, there are certain things that you cannot afford the lose, and pi chi my pictures are big, and the health care issue with the watch. but i am part of the cult, and that is okay, because i like the cult. >> and you have long advocated owning the name and not trading it which is what joe pointed out. traders and investors have two different perspectives. >> yes. since 5. >> yes. and so, one of the ideas that came up last night is whether apple's quote, unquote best day s are behind it. okay. toni saggonachi who is the top
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owner of the space, and he rejects that notion. here is toni reacting to your interview. >> well, it depends upon how you define best days. apple had one of the greatest runs of any company in history. between fiscal 2007 and fiscal 2015, revenues went up 10-fold, and revenues up 15-fold and the stock went up 10-fold, and if that happens in the next eight years going forward, apple's market cap is $5 2ri8 yon, and nobody is going to be among the panel to make that bet. >> i want your comments? >> well, you know, $500 billion, and trillion, and i mean, don't you like think that 130 where it peaked when carl icahn sent the second letter at 128. look, i mentioned toni, because first of all, tim cook cares passionately about what the street thinks, and maybe he
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shouldn't, and maybe this is one of the things that the mom told you not to care, and he does care. >> and you care what he says. >> and toni is very good. and when you on the conference call, and toni takes a negative thing, it is like, hey, the critic didn't like it. he has so much authority, and i love toni, but the fact is that i think that best days behind it versus where the stock can go are very different, and i do think that if you are, and the new it ration, the new it ration phone does a little bit better and a lot of people think it is too big. the millennials think it is too big. they want the power, but many of the chinese want it. but, there is always the possibility that the guidance that you talked about may be low, but far more important is the notion to add to the service stream, because you have a billion, 1.5 billion device, and so if that is the devices
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company, you sell it. ecosystem finally running through the different fees, okay, then we will see the ios going down, but the other up. >> and isn't it true to admit that we don't know what business apple is going to be in 5 to 10 years from now? >> and they don't want you to the know. >> and so we don't talk futures. >> or virtual reality, and hey, base oball likes it. >> that is the last point. >> why? what a -- this is my show when i am on, and what are you doing? i got rushed over here. >> and it is questionable. >> i have a question -- >> i love the show, and all i do is to get the tweet about the show and i'm on the show, and this is the greatest moment of my life. >> and be an optimist for a moment. >> you don't have to go for a moment. >> and be an optimist, the phillies are 15-11 -- >> well, they lost last night, and i hate them because when i went to bed, they were up. i hate them. >> and what are you going to do
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with the cash, and what if you repatriate it? >> well, i don't want to downgrade it and let the volatility come in, and it is great value, and he an optimist, too, and that is the thing that came through, he is a plain optimist about the company and i'm a realistic, only one guy downgraded the stocks and i nknw they want off, because they have $150 price tags and in the research meeting and the guy says, hey, clown, mr. clown, are you really keying up the price at 150, and the stock is at $95 and tomorrow, you take it off. okay. tomorrow, you take it off, and that is what you are dealing with is the long term pessimism and the long term optimism. >> and so you never hear from tim cook and when you do -- >> and yes, the interview was valiant, and the stock went up when ackerman comes on, and so the pied piper takes it up. and you could not take apple
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down. >> we will see you again tonight on "mad money ". >> and great draft by the way, that wide receiver. >> thank you very much. >> wow. >> and anything else that you want to talk about? >> we do. >> and you could have more sound tonight. >> and to the night, it is just real and tim koch-- tim cook opening up. >> we have to run our commercials on your show though. >> okay. >> and out to l.a. now sh, and t is where david faber has a first on cnbc interview with the millken can institute's global conferen conference. david. you know how it is? >> yes, i do. i work with that man fairly frequent frequently. and thank you, scott. i am joined by steven schwartzman the chairman and ceo of the blackman group. >> good to see you, david. >> and we have known each other for years, and way back when we used to talk about the private equity, because that is what people think about when they are
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lbos, but as an asset manager, you have moved way beyond, that and in part, it feels and may not be, but exits are much more prevalent than the entrance when it comes to the private ek wu ti business and not talk about the real estate, but is that the case or are you starting to ramp up to do the deals the way we saw you and your competitors do? >> well, on the exit side it is a function of what the marks will give you, and right now money is cheap. it is quite abundant strategic. buyerers like to buy thing, and so when they like to buy, the companies have been performing well for a long time. then you sell them. also the structure of how we raise money, we are expecting to give the money back. and in terms of the new deals, the low interest rates also create higher prices, and the higher prices are the enemy of wonderful returns. so it makes it a little more
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difficult to set the deals up, so you have to be careful. you have to do something clever. you have to be really adding enormous amounts of value to be able to make the kinds of return s that historically investors are used to. >> right. to those of us who say, are we ever going to be seeing the days in '06, '07 in the e nnormous deals of hilton using a lot of leverage and doing a deal with the partner with other privacy firms because the equity check was so large. is that day gone forever? >> well, these kinds of things are cyclical, and now, you don't partner with other equity firms, but partner directly with large limited partners and investors, and they have very large amounts off money, and so that the size of equity, you could do, there is going to be a significant debt money, and it is a little constrained at the moment.
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some from the regulatory perspective, and some from pricing, but these things wax and wane. you will be seeing the larger things, certainly possible. and it also depends how long this cycle is going to last. >> and all right. how long is the cycle going to last? >> longer than you think. >> rates are very low all over the world. world is slowing a bit. >> you think so? >> well, sure. if you are looking at all of the imf and the world bank projections. >> and china is, but europe is stagnant. >> yes, europe is stable, and probably 1% growth. u.s., if you forget the first quarter, because it is wrong tragically the last several years, you have the u.s. around 2%. that is not exciting. but it is good enough, and it is the emerging markets pulling down the growth rates pretty
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significantly, and some of that is the commodity souper cycle, and some of it has to do with the less investment going in, because the currencies have gotten so weak that you lose money before you start. but, but, you know, some of that will recover. >> but you expect it to go on for some time, and i guess that for the low rates to continue, and i don't know about the n negative rates, but you expect a low-rate environment? >> well, the next two years maybe three and hard to know on these things. >> your real estate business and the cap rates are low, and you guys are buyers and sellers and the largest out there when it comes to the real estate, and 11 -- and 100 billion in assets, and what are you seeing in this market? >> well, in real estate, the enemies are cranes. supply is what hurtous in real estate. so you just keep away from
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places where there is really large amounts of increase and supply. at the moment, some areas have gone up. we haven't participated in those, thank goodness, and some of the luxury apartments and that you will see in different places in the world, but i think that real estate will keep go g going. >> and you have been selling to china and not buying in china? >> well, we did some buying in china and china has been successful for us in the real estate business, and we are in the shopping center business. and to give you an idea of how depressed china is, we are only experiencing same store growth of 10% a year. now, that is is down from 15, but the same-store sales growth of 10% would be pretty phenomenal anyplace else in the world. >> and your hedge fund business has grown as well, and good
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performance last year, but this year is more difficult, and on the conference call recently for the last come pleaed quarter, you were speaki ining positivel about it, and are you concerned about the performance numbers so far this year? >> well, what happened in the hedge fund industry generally, and i mean, very few exceptions is that the first quarter was really tough. and the long term has not been tough, b tough, but the first quarter is tough. it is important not to get lost in one quarter. what was happening there is ta most hedge funds take long and short fund position, and this is why they are hedge, and there was a concentration of the short positions, and when the markets rallied everything went up. some of the shorts had a technical factor where so many people were short a specific name. for example. that when they tried to cover, they drove up the amount of the stock price, because it was so
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little stock to buy, and they were competing to just buy the stock of a not so good company which then looked like it was outperforming the market by 2, 3, 4 times. so that should normalize. >> yes, and finally, stephen, politics, of course, tonight, the indiana primary, and donald trump does appear to be poised there to win and become the perspective nominee, will you support him and to specifically something that we have talked about in the past, the treatment of carried interest and you obviously want that to continue, but are you concerned that either candidate mr. trump or hillary clinton do not support the extension of carried interest. >> well, i think that on the carried interest point, that's part of the overall brew of tax reform or at least it should be. and things will come out hows they come out. we can't control things like
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that. there are a lot simpler ways than picking off one thing or another thing, and i'm a great believer that we should have a flat tax. you don't have to have one tax for everyone. but whether you have one or two, and get rid of all of the deductions. >> really? the revenue from a flat tax would be enough to actually fund the u.s. government effectively, and wouldn't it be regressive conceivably? it is going to be enough. it tends to work all over the world, and so, one should look empirically, and we have a tax code that has so many pages nobody can figure it out. and what happens when you get sim isple numbers, whether it is 10% on the bottom, or 20% on the top, you get rid of the all deductions and just make life simpler. it has a sense of working. >> right. >> and you is a safety net on the bottom, so that nobody gets
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hurt. >> that is part of some of the plans of the republican candidate candidates. will you support mr. trump, and if he wants you the become the are treasury secretary, would you take treasury secretary. i think i've got a wonderful life now. i love blackstone. i love doing my schwar z-man scholar stuff in china and i've got a lot of other interests so we can put you up for treasury secretary, david. >> i think i'm long down that list. >> one never knows. >> one never knows. thank you for stopping by. appreciate it. >> my pleasure. >> the chairman and ceo of blackstone. guys, back to you. >> david, thanks so much. mr. schwar z-man, back to you. back after this quick break on "the halftime report." "halftime report" with scott wapner is the place for market-moving interviews. >> one of the reasons i love facebook is zuckerberg takes real risk. >> real money? >> it's not a growth stock. >> real debates. >> we end the year higher than
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where we began. >> the most profitable hour of the trading day. >> don't be surprised if you see a 5% or 10% move the other way because that's what we're having now. >> "the halftime report," weekdays at noon eastern. taking control of your health isn't easy. but cigna is there for you. literally. just download our free
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e championship game ball? that was sebastian diaz. good guy. and all i had to do was ask for their money and pretend i was investing it. their life savings is now my lifestyle. female announcer: don't let someone else live the life you're saving for. find out if you're dealing with a registered investment professional at it's a great first step toward protecting your money. before you invest, coming up in seven minutes on "power lunch," we have a selloff on wall street, but apple is actually holding up. the stock coming off its worst losing streak in 18 years. should you get in at these levels?
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teenage wasteland, aeropostel the latest retailer expected to file for bankruptcy. the retail stock you need to watch right now and brian sullivan at the conference in california with a lot of big interviews, including former uk prime minister tony blair. scott, back to you. >> michelle, thank you so much. one of the top ranked health care fund managers and he is a raging bull in biotech. let's bring in sam eisley, founder of the world's largest independent investor and sam manages $15 billion. good to see you again. >> thank you very much. >> where do we think this space is going to go? as people sort of evaluating whether some of the damage is done and that these stocks can start a recovery. >> i would like to focus on biotech for you, but keep in mind we are worldwide investors in all subsectors of health care, so there's more to it than biotech, but it's surely an exciting place to be, and it's the volatile place to be. we think there is a good future. >> you say that the selloff in the space was unwarranted.
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how so? >> you know, defending, warranted and unwarranted is difficult when the companies don't have any profit, but for the smaller companies, recommended -- recognized by etf called ixb or xbi, excuse me, they fell something like 50% from the top, so that's a big fall, so they are less expensive than they were. i think it's a good place to be. >> when you have a -- i get your point on sort of debating the warranted/unwarranted thing, but when you do have a more prohibitive environment potentially and you do have many of these stocks being, you know, hung up on the campaign trail as sort of the poster childs of all that's wrong with what's going on in the health care industry, you have a bit of a problem considering the elections not for many months off and this could continue to be the narrative. >> there's another six months to
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go. i think that drug prices, especially, are going to continue to be a political item. they have been for decades, and they are high. but what's happened in the press overstates the price increases on the drugs because the evolving system of delivery, it shows a lot of discounts from list price and the actual prices paid are growing much less quickly than the sticker prices. something like 3%, 4%, maybe 5%. >> sam, let me just ask you about a company that's been very much in the news lately. bill ackman was on our show yesterday defending valeant and said the valuation is attractive at this point. have you ever owned it? did you look at it in this selloff of some 86% or whatever it's been from the high and say, you know what? this stock has actually gotten to the point where i think it's attractive enough to take whatever risk exists in that story. >> first, we do make public filings, and you'll see that we have owned it, and i'm not commenting now on whether we own
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it or don't own it. it's a tough stock to get right. you're not quite sure what earnings or in their case ebitda, call it, because they have a lot of debt to service, and i think they have -- i think they have some god brands. there's still a lot of uncertainty. i'll tell you. when bill ackman and charlie munger and warren buffett start duking it out in the ring, i don't want to be in the ring. i'll let them hit each other and i don't want to be collateral damage. >> we were happy to be in the ring. another story for another time. joe? >> my question related to that, but going back for one second on donald trump, and that seems to be the unknown here as it relates to the election, do you think there would be negative impact on biotech and pharma and stuff itself? >> donald trump is unnope. really doesn't have may lot of policy positions on many issues at all, and we surely don't know what he'll do about drugs, biotech and health care and so on, so you may know that legislation under medicare says
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that the united states government must not negotiate prices. donald trump said he would negotiate prices. well, that's -- that's probably bad for the companies. we'll see what develops, but we don't know a lot about trump. surely he looks like he's going to be in the race, so that will be fleshed out in the next months. >> sam, in the time we have left, if i could get a stock pick or two from you. one of the names that you do think can outperform? >> we like the anti-cancer participation through bristol miers and partner in japan called ono and like their selection of companies in the medical devices. there owes one with surgical robots, intuitive surgical so we like that very much. >> sam, appreciate your time today. appreciate your patience with some news we had to deal with. >> sam isaly again, the founder of orbamed. >> intuitive surgical, very interesting company, because i know the company very well and
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one of the things that's attractive about them is the potential growth overseas. we always point to things like that, but this is one of those companies where you look at the exposure now and where it could be and seeing the growth here in the u.s., and also he put on there one of the newer things he's put on recently is eli lilly. what an interesting company because of the fact they do have something in the pipeline that everybody is looking at and that's alzheimer's. i'm with him on that. i have the january calls and he's in the stock and looking forward that's one of the names that that's why people are excited. >> josh, haven't you made the point that you think this as a group is poised for a run, a comeback? >> yeah, but from where? anybody can say that and he made the obvious point. the stocks went down so now they are cheaper. yeah, okay. we get that. the real issue is when are you going to see momentum come back to these names because that's what's what typically drives them. we all know they have gotten cheaper and i don't think you've seen them that. >> you've seen flashes of the rally happening. >> you bought some of these names? >> yeah. i mean, i own surepta, as has
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john but it's been a great story for us but you've got to buy them quickly? >> joe. >> no interest in biotech. wouldn't touch it. >> good to have all of you with us today as well. let's send it over to "power lunch" which starts right now. >> scott, gentlemen, thank you very much. it's 1:00 on wall street. it's been a rough day out there. if you are of the bullish persuasion. welcome, everybody, to "power lunch." i'm tyler mathisen. and michelle caruso-cabrera is here with us, melissa lee is off today and brian sullivan, a very big lineup out from the milken conference out in beverly hills. >> the tuesday tumble as we're calling it on wall street. stocks getting hit hard and as we head deeper into the afternoon, all ten s&p sectors, all negative. the least bad, least selloff, consumer staples almost flat and energy and materials lower by about 1.8% and 1.5% respectively when it comes to energy in


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