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tv   Fast Money Halftime Report  CNBC  May 13, 2016 12:00pm-1:01pm EDT

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to thread the needle there. >> and the patties made out of the same material, just not frozen. >> still cow. and probably the biggest operational change they would ever make if they take it system-wide, and time will tell. good weekend, everybody. busy week next week, and over to the head quarters with "wapner and the half." ♪ >> welcome, everybody. destruction at the department store. macy's, and nordstroms disappoint i disappointing. and with us stephen weiss, jim lebenthal, and josh brown and courtney reagan who is going to start us off with the carnage. >> few thought that department stores results would be good, but yikes, they have shed $5 billion in market cap in total,
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and in one week's performance, and macy's, and nordstroms and kohl's all down double digits, and coming in short on the topline, and only macy's beating on the bottom line. and jcpenny's, and daillard's ae down on the bottom line. and macy's, and nordstrom put up the worst comparable sales in nine years, and jcpenney is also down, and jcpenney missed the comp sales estimate base wide margin, but it is holding the guidance due to the recent comp trends in the last two weeks in ape are ril. i spoke with ceo marvin ellison on the phone, and he is interested in bringing in less weather-sensitive categories, and rolling out appliance, and growing sephora beauty in more stores. he does not believe that the quarter is a reflection of those moving to the amazon, because he said that the customers feel good about their financial
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situation, but it is more of the lack of confidence in the future of the economy, and specifically the economy under a nonincumbent president. >> and thank you, courtney. the retail wreckage, steve, the stocks have been mugged this wee week, and many have reversed which is interesting into the show today, and what is that about? >> well, number one, it is sign of the times in the roll tivoli of the market, and if you were late, you were losing big time. and also, the sales less than expectation expectations, and as i mentioned earlier in the week, the cons e consumer credit which is far, far in excess of the expectations. so you have a sideway to play it. i am staying away from the department stores, and jcpenney is overvalued while the ceo is overcon overconfident, he is an ops guy, and they need a marketing guy, and they are the weak sister. >> we should have a debate on it
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la later, but now, if you own the stock, and you have a completely different point of view here, jim? >> yes, a completely different view than steve, because courtney said that they beat on the bottom the line, and she d didn't highlight, and the same store sales is not projected, but they are projecting same store sales profit, and nobody else is projecting that, and about management they can't control the top line and the macro economic line is what it is, and they can't control it, but they can control the expenses, and ho that is how they beat the estimates. >> they reported a loss. the loss was more than expected. >> every retailer has a loss, and it is a terrible quarter for the retailers and we know it. >> a string of losses. so the debt, and 2/3 of the death -- >> you have to look at the e bia for this. >> i look at nordstroms and
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macy's who has a better value, and you are a beter value player, and i don't see the value where the brand has been damaged and going down and you are playing in the company to say, they are controlling the costs, and they have no idea of the top line, and you are relying on the same sales growth which are the same management who made these projection s fs the quarter. >> and you pointed out that the retail sales were above expectations in the last month, and maybe that is what they are citing when they are saying that the same-store sales are better, but talking about the damage to the brapd, that is two years ago, and you is have to be forward. i remember what you said to me a year and a half ago, i missed targ target. but this is the time, steve, this is the time not to miss jcpenney the way you did on target. >> and brought it out, and if you are looking, josh, at the destruction, nordstrom down, and sears down with 11 and j krshgs pc penny 4, and are any of the stocks if
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investors thought they were attractive worth buying in the environment where amazon is eating everybody's lunch. >> sure. let me address the last debate. i look at nordstrom, and macy's like at&t and verizon. j krshgs p jcpenney is sprint, and nobody wants the sprint. >> josh, ouch! >> focus on the bigger picture. >> i want to come back. >> it is a perennial turnaround, and a story in about ten years. let's talk about what is going on in this retail sector and not limit ed limited to the week, but a year. ralph lauren, gap. and these stocks are down 40% to 50% over three months, and so it is not all of the sudden, and the macro being challenged, and this morning a retail number that was the fastest growth in 13 months. so, there is consumer activity happening. >> confidence, also. >> yes, and it is just not happening in the basement of an anchor chain store at the
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b-class mall. >> yes, that is the point. if you are looking at the retail winners it is not like people are not going out the spend any money on the apparel, but not doing it at the anchors. >> they don't want a warehouse with fluorescent lights, but they want to take a selfie. >> and burlington is up year to date and at barnes & noble, and up 22%. andt at dick's sporting goods or dollar general is up 15, and cabellas and auto zone. >> you are missing the point of jcpenney and you want to broaden it out or what? >> well, i am tired of jcpenney. >> the point is that it is apparel, and do you want to be in the department store that is focused on the apparel, because the consumer is spending in restaurants and autos and elsewhere. >> vacations. >> so where is this directed consumer spending, and yes, you are saying that a dick's or something else. >> and is it a cyclical or secular change? >> and it is cyclical, and why own any of the names? >> well, it is a good question, and one of of the thesis, and we are kind of re-evaluating that
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nordstroms is the jc -- >> you own both nordstrom's, and macy's? >> yes, the view is that they were cutting the stores and focusing on the brands, but it is taking much longer, and the secular shift is happening. are we catching a falling knife. >> secular -- the department sales are down. >> and in the business the middleman is going to be squeezed. the profitability is never where it was, and that is the case with the retailers. if you want exposure, buy, and if you can't find the unique story, buy in nike, because nike is not doing to be squeezed, and as a matter of fact, they have more channels now for amazon, and so there is a commodtization of thehe retail business. >> and what is happening is that the online sales are less margin than in-store sales and looking down the road, what is the long-term trend of earnings,
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because they are coming down. >> are you going the hold on to nordstrom's and macy's? >> well, we are looking at it hard, and i'm not buying anymore, but i am looking in the next couple of weeks more work on it. >> and you will get the earnings next week as well, and we sort of talked about the amazon proof names, and i gave you a number of stocks that had outperformed some to traditional retailers or the mall -- >> well, they are off really damaged bases of dick's. and barnes & noble off of the low base. so at some point macy's, and nordstroms and jcpenney will bounce back, but do you wait or buy now? >> and what about home depot? people said that i'm sort of the poster child of the anti-amazon tra trade. it is the one thing or one of the few things that can hold up. in this environment. you need a lightbulb, you want it now and you go to home depot. >> the retail sales, and the categories that did not do well were the building materials the
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and garden, outdoor, so maybe you want to wait on that. and home depot is not cheap. i would go with maybe a foot locker, because they sell sneakers. >> so, they report next week. >> if they have a unique value proposition or the unique products, and again, to nike, you have the no pressure, you have to pay the same whether it is in store or online. >> and t.j. maxx, and rossb, dollar tree, and home depot is sticking out tuesday. does home depot do enough to reverse the snide in the retail store? >> well, i think it can, but it is not a lead-through to anything else. and home depot has a good report, it is not going to be helping if you own jwn, because it is own story. >> very different now sh, and y are look at the pieces, and the specific companies, and turn around at jcpenney or can home depot focus on the home improvement. >> well, forget the home dee e
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poe, because we have discussed it already, but of the remaining stocks reporting next week, who are you interested in buying? t.j. maxx? >> target or walmart. >> why? >> i would rather buy in a disappointing quarter than good quarter, and my own mentality. i want the lowest priced name i can get, but the names hold up better against the onslaught of e commerce, but not much better. >> i am not ready to sell it, and i don't own it, but i owned it and bought it and sold it way too soon. and i am looking at target, because they have easy comps in terms of what the prior management did not do. >> and some to avoid next year, the app stores, and you called jcpenney a perennial turnaround story. >> and gap. >> and it is the perennial story that never does actually turn around. and dick's was flying high, but it has lost the luster. and those are two to avoid. >> and now, apparently, amazon cannot count donald trump as a
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fan. this is the presumptive republican nominee unloading on him. >> this is a toy controlled by jeff bezos who owns amazon. they are getting away with murder tax-wise, and he is using the washington post for power so that the politic tigss in washington don't tax them like they should be taxed. he is getting it away. he is worried about me, and i think that he said it to somebody, and in some article where he says that i would go after him for anti-trust, because he has a huge anti-trust problem, because of what he is controlling so much, and what they have done, he bought this paper for practically nothing, and he is using that as a tool for political power against me and other people, and i will tell you what, we can't let him get away with it. >> and i will tell you that we need to bring in our own john harwood in the d.c. with more. and interesting words, john. >> yes, and hours before the washington post published a story saying that donald trump in the 1990s was known among the
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press corps in new york city for phoning reporters and speaking to them in the name of a purported p.r. person john miller or john baron, and trying to get stories in the press, and donald trump on the "today" show denied it is him, but i suspect that he knew that the story was coming when he talked to hannity last night, and donald trump has shown that he wants the go after people who he believes are going after him, a nd he thinks that the washington post among other news organizations are going after him, and hence the attack that we saw on hannity last night. >> and i'm wondering kind of what real concerns in amazon should have about mr. trump if he does become president going after them on the anti-trust angle, although, i don't know what that would be or how he would pursue it. >> well, like you, scott, i don't know enough about the anti-trust potential implications for amazon, you
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know. donald trump if he were selected president would appoint an attorney general and appoint an anti-trust, the head of the anti-trust division in the department of justice, and we will see what he might come up with. he has done that tactic before. the ricketts family who owns the chicago cubs when they were financing a super pac that was going after donald trump, he said they better watch out, because they are vulnerable, and so it is not a unfamiliar tactic for trump to use. >> certainly that. and john harwood, live in d.c. for us. and this is what is coming up on the "halftime report ". >> still ahead, apple making moves in china, and what the company's billion dollar investment in that country could mean for the stock. and plus, cheap stocks, but expensive trades. we will explain what looks like a bargain has been cost iing th investors a fortune. and it is friday 13th, find
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we are back. it is a tough week for apple and the shares are briefly breaking below $90 for the first time in a couple of years. rebounding and apple at $91.29. it is also lost the top market cap spot to alphabet in the process of the slide. and those two companies are in a virtual neck and neck, and you can see that apple has regained
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$501 billion ahead of alphabet, and interesting story though, because apple is also getting into the ride sharing business in china. cnbc's josh lip tton is live in san francisco with those details. hey, josh. >> well, scott, tim cook apparently has a new role, venture capitalist, but why exact exactly is apple's ceo committing the $1 billion to didi chuxing? it could be a smart stand alone investment, because didi is a $1 billion company with the private car hailing share in china. on the call last night, the company's president says it breaks even in 200 of the 400 cities that it operates, and the partnership with didi might help apple to expand some of the services in china like apple pay, and if cook is really interested in developing a car, then this partnership could give him a lot more data about the can xhi -- chinese consumer, and
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this is on worries of the futures growth, and so, down some 30% from the all-time high of $135 last spring. some of the worry is because of the tougher line that china has taken with apple. recently shutting down the company's online books and film services, and, in fact, that is one reason that carl icahn told cnbc that he sold the stake in apple, and so with this investment, cook could be trying to buy some goodwill with the chinese reg yu ulators to keep relationship healthy and strong. back to you. >> thank you, josh lip tton. josh brown, apple pierced $90 and managed to get above it kw quickly. >> yeah, i mean, look, the stock is a buy in the 90s and i can't tell you where the next couple off points are, and maybe support in the realm. the dividend is a good support, and we said yesterday the buyback as well, and as far as making the inves tments in the
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chinese startups, you could look at this two ways. the bearish view is like yahoo the core business has peaked and now throwing a few billion at the asians assets or look at it more constructively and say that this is a company that understands that nobody succeeds in china without a local or regional partner, and nobody goes in by itself, and apple is planting the seeds to learn more about the services side, and the driving business and maybe incorporating more of the technology in some of the next generation of things. so i would look at it constructive constructively. >> and with all of the cash why not use some of it. >> rounding error. >> and tax wise this is a smart decision, and you bring it back and pay tax and bring it back from overseas, but if you go back over history and companies so-called peaking, like qualcomm, and other companies with tons of cash, and you could extrapolate that it is knowing china, and it is a small
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investmen investment, and i am more skeptical on the other side. you have the watch it. >> we had a robust discussion yesterday and you talked about walter issacson as being the car of the next big thing, and i like them taking a concrete step in the market for it. i like the idea. >> and the good thing about this is that if they do go with the car, they have a ready buyer of it, right? the biggest buyer of cars in china, and plus, it is to assuage the chinese to get involved. however, when they get into the car business, it is tremendously competitive more so than now, and they are not the market leader of the technology, because others are there, but however, going back to what josh says, it seems to have found its place, because the negativity was at a crescendo pace this week, last week, and maybe 90 is a good place. >> and so that is the support leve level? >> yes, psychological if nothing else. >> all right. coming up the chicken shacks for everyone. we will give you the trade
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update just ahead. and betting on a beaten down drug maker. time to get bullish on allergan? we will have that call coming up. [ male announcer ] eligible for medicare? that's a good thing, but it doesn't cover everything. only about 80% of your part b medical expenses. the rest is up to you. so consider an aarp medicare supplement insurance plan, insured by unitedhealthcare insurance company. like all standardized medicare supplement insurance plans, they could save you in out-of-pocket medical costs.
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shake shack today beating the estimates and raising the foreca forecast. the chicken shack is giving a boost to the sales. and josh, you bought the stock and own it and you bought it at the ipo and holding on? >> well, i am. and here is my takeaway, and this is the sixth quarter for shake shack as a public company, and they continue to execute. they manage to pull off something extraordinary this quarter where they doubled the consensus in shack sales, but it is not just that, but the comp was an 11 percent number, and that is tough to do. they are pointing to chicken as one of the big drivers, and talking about doing a lot more with chicken going forward. so it is a company still ip know vating and they aret to just relying on the success of the bugger, itself. and when you think about, you know, the big picture, the company that basically did $50 million in sales and $15 million store level profit. and they'd earn a lot more if they were investing so much to
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the future. >> and you said that where the stock got to before is out of whac whack. >> yes, it should not have been $90. >> so what is reasonable? if somebody said, josh, what is a reasonable price for shake shack could get to? a target >> i don't know, because i don't do the targets, because the price fundamentals are always fluid and moving. >> and what was the tops? >> high 80s for about five minutes. >> and what is reasonable? >> now. because the stock does not deserve to be higher, and it is not cheap, but it does deserve the premium multiple i believe, because how many retailers and excu excuse me, how many companies in the sector can you find that are growing revenue by 40% to 50% year over year and not many, and that is ist not to suggest that the growth rate is going to persist forever, where they will
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run into the row of large numbers, but a a lot of room between fou and then, and so i think that it is faur to say that the company should get a premium multiple. >> morrisk in the mcdonald's share given the run or in shake shack? >> well, growth investor or the value investor. what is weird about mcdonald's, the shareholder base are value investors and playing 25x, because they are selling breakfast sanders at dinner time, but if you are a growth investor, you would say that shake shack makes sense, because give given the potential of the growth rate, it is fair. fair right now. >> it is not fair right now, and it is ig significantly overvalued, but the momentum is carrying both ways, and it will continue as long as they execute. >> same question for josh, what is reasonable ten? >> well, percentage loss risk, because the valuations, no base, and once the valuation breaks on the momentum stock. >> and that is a fair point, and i would not argue with steve,
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because if mcdonald's stumbles in a quarter, it is going to lose $10 on the share price, but it has a 3% dividend yield to keep the floor under it, and a six-year operating history and people will trust it to turnaround, and if shake shack stumbles, it will be crushed. >> and i want to leave it there. and lots of dheep stocks out there, and are they bargains or the value traps? we separate the winners and the losers with our own michael santelli, and now, gold with the worst week since march. we will go to the futures pits next. they're your customers. and by blending physical with digital, cognizant is helping 8 of the 10 largest u.s. retailers meet their demands with more responsive retail models... ones that transcend channels and locations, anticipate expectations... creating new ways to engage at every imaginable touch-point. it's a new day in retail, and together, we're building the store of the future. digital works for retail.
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man 1: i came as fast as i man 2: this isn't public yet. man 1: what isn't? man 2: we've been attacked. man 1: the network? man 2: shhhh. man 1: when did this happen? man 2: over the last six months. man 1: how did we miss it? man 2: we caught it, just not in time.
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man 1: who? how? man 2: not sure, probably off-shore, foreign, pros. man 1: what did they get? man 2: what didn't they get. man 1: i need to call mike... man 2: don't use your phone. it's not just security, it's defense. bae systems. welcome back to the halftime report and over the sue herera with the latest headlines. sue? >> this is what is happening at the hour, president obama and the first lady are welcoming in norway and finland and iceland and denmark into the white house. later he said that he agreed with the nordic nations that the sanctions against russia should continue. a state dinner tonight wraps up the day's events. >> a federal judge in new jersey has delayed the release of unindicted co-conspirators in the george washington bridge lane closing case. the judge moved the deadline
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today to someone else who is someone on the list who wants it private. the obama administration is announcing the microbuy yoem -- microbiome initiative. and mitsubishi head quarters is being raided as part of the inflated fuel economy data for some of the models. the company admitted that it carried out false tests, and gave inflated figures on some of the mini cars. that is the headline right now. back to you, scott. investors may be looking for cheap stocks and pullback, but are they getting a bargain? >> the senior commentator michael santelli is looking at them, and what have you found? >> yeah, scott. i looked at looking at the cluster of the stocks called cheap coming into the year, and by the way, it is not saving
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them. they have underperform and some of them crushed, so this is an assortment, and apple for two years and more that apple is cheap, and it obviously has not kept the stock from going down a lot. and talking about retail, macy's, and nordstroms, and those have been down, and the big banks have been not terrible, but not outperformed. and the airline, and talking about autos that have not gotten any lip from the strong car sales and all of the groups are trading 9 to 5 times earnings and so what is this telling us? at peak sick willy cal earnings, and when it comes to the department stores, there is a place that the market does not know how the price in. and the value index have done okay, and better than some of the growth indexes at least in the last few months and that is about energy and industrials
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that have picked up. so the question is now, bargains to me? well, it is a macro trade, and if the sicyclical indicators pi up in terms of the u.s. and the world growth, then the second half earnings are going to be look good. when it comes to the old chain retailers, it is a tougher call, and you have to get down the rock bottom levels and real estate values and that. >> and thoughts, mike, that you are willing to absolutely willing to chime in on this, but the cheap stocks can stay cheap for a long time, and obviously, you are looking for the catalyst, and in the absence of the catalyst, i look for the stocks with good dividend yields and augmented by the share buyback so that the cash is returned to the shareholders and a couple of the stocks that do have not just good yields, but growing them. gm at 5%, and growing its dividend. apple at 2.4%, and continually growing the dividend and those are the sort of things that i look for, because you can't say,
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well, i am buying a cheap stock today, and that means that the racehorse is out of the gate and it will run up from here, because you have to have the cash flow return on the way. >> yes. and not just the catalyst, but some kind of assurance that the whole business model is not falling apart. and the ones that you mentioned, there that is certainly the case. >> michael, thank you a lot, and interesting conversation for us to jump off on. and how do you see this valuation trade or value trap? >> well, you have to look at whether it is the airlines or the autos, they are supported by the cash e flow, and they are highly debted companies -- >> i think that the microphone fell off, so fix that. >> and yes, look, i agree, and i think that you always have to be careful of the value traps. and i also believe that, just because the stock is down, and the price is not any cheaper, you are -- >> not the interrupt you, but citi is staring me in the face as you are talking, and you are ultimately decided i think that, and correct me if i am wrong
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that it is a value trap. >> yes. >> cheap, cheap, cheap, and cheap for a reason and not going to change for any time soon. >> yes, because the opportunity set in front of them has changed dramatically in ow we are used to valuing citi, and because of the regulation and how they have had to restructure the balance sheets, it is not the same ea earnings ability that it has. >> and michael is dead on. >> yes. >> and also pointing out that citi does not have a dividend yield to the point that i was making. and by the way, i own citi, but it is the only financial that i own and i'm woefully underweight in the financials, and part of that is because of the lack of dividend yield. >> and dividend supports like not the thing that it used to be anymore, because when the stock could be down 13% on the 2% yield, okay. so i will hang on to it for a year if it is flat, and only be down 11, and the support is not there anymore for it. >> i wish that kevin o'leary
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were here right now. you are back? >> yes, i am set there. and one of the things that you have to look at going forward is that the market is not dwiing the companies any value for earnings. so even if they keep the earnings and grow it a little bit, the multiples are so low. looking at stock of mcdonald's at 25 times the earnings, and that would be 15 or 16 times, and so you can see it coming back, and any type of cyclical ti in the market, it will come back. >> and apple is staring everybody in the face. >> and one thing that is is important to point out is that allocating on any one single factor even value, you will have ups and downs and seven plump years and seven lean years ins in terms of the returns and the market. and what poom are seeing in the real world is taking the value and adding the factor, and maybe quality to get rid of some of the stocks that killed you over the last year, and adding value to the small, the size premium
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to take advantage of the stocks that are lagging larger in the last three year, and actual ly working this year believe it or not even though it is popular, and so just saying that it is cheap really does not tell you enough of the story, as serat and jim will attest to, but a starting point as the screen, but it is not the end of the discussion, because things are cheap and should be. >> and identify the catalyst like mcdonald's, and a new ceo and you had a catalyst otherwise sitting with a cheap stock forever as i was with citi. >> and now, the blitz, four trades on four stocks making news. and first up iis nuvidia, and serat, you own the stock? >> yes, and and it is a good stock, because earnings are accelerating. >> and j and j? >> well, one of them is the lack
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of the m&a activity in the medical device sector, and the strong run that j and j have had, and putting those two things aside, it is a great dividend payor, and growth dividend payor, and if you are into that thing, and as a value investor, which i am, you should own. >> and dij, from the buy to the sell? >> yes, it is a shame that they didn't say that 70% ago, because it is a stock that is looking death on toast. if you are long for a long time, i have to ask you, what is your risk management system, because it is in the down trend for year, and now back to where you could have bought it to 2013, and i think it is going to like $15. it is terrible unless something really changes here in the trend, i just don't get why you would wade in here and thak take this pain. >> do you go into another like seagate for example? >> no, it is a commodity business -- >> and when rich was here, and i think it is him, that he liked
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seagate over the western dij, and i don't have the chart. >> well, these stocks are like coa coal, but it is manufactured in taiwan. i have no idea the appeal. i understand the value, and oh, it is so negative that it has to be a buy. have fun with that. >> and the drug maker sanofi seeking to take over the medical boar board, and what do you see there? >> well, i was going to be a suter for the company, because it seems that the company is goi going to be bought, but it is high $60s or $70 a shashgs a -- i think that are there is a lot of activity here. and now, as we head into the break, we will look at the gold trades, and more "halftime report" coming up.
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up at the top of the hour, bargain bin, and stocks headed for the worst of 2011 and are some of them set for a rebound? and what happens to the pass down of the 3m ceo? and also, the three trades that you should fear on friday the 13th. >> okay. we are watching out for michelle. sorry, melissa. "power lunch" about 15 away. and we go to bertha coombs with the futures now. >> yeah, scott. gold is holding in either side of the unchanged much of the morn morning with the big move of the dollar, but for the week gold is down and set to have the first down week in three. and anthony pisani, are we taking a little bit of the
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profit taking here? >> yes, that is it. it is not unlucky at this point, but it is definitely taking a pause, and significant thing this morning that we held it to the 21-day moving average at 1126 11264, and the hedge funds are long 250,000 contracts and 129,000 short, so they feel that the market is going higher, and i do, also. >> and the trend lines are looking good, jimmy. but nonetheless, we are stalled out at $1,300 an ounce in the torrid run in the last kocouplef weeks. will we make another run at it? >> i do. i do. and like you said, we did stall out there, and everything is looking intact, and there is a couple of key levels to watch, and one of them is not in gold, but the dollar, and if it can go above 950 and settle, i wouldn't be scared, but if it is on the sort term, i am bullish, but broke, that i think that we would see below 1225 then i
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would think that the recent bull run is over. >> have you said gold shark? i kind of like it. well, we will leave it at that, guys. thanks so much, and have a great weekend and if you want more, always more to be had on, and back to the sharks at ec. scott. >> ber that, thank you so much. coming up, coming up, the bull call for allergan, and they say it is time to buy the stock. a t that is the call of the day. and here is a check on the s&p sectors of the day.
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we are watching the shares of allergan today and up better than 6%, and they are adding it to the cop vick shun buy list by goldman sachs, and it is the best of the pipeline, and so we like the call of the day. jimmy? >> it is a possible swap for pfizer and attractively priced after the merger broke down. two things that i have to get my arms around and we all do, there are a number of intangibles on the balance sheet, and any downturn in the market sheet, those are not written down. another thing i would like to is see a better dividend yield, but they are doing a $10 billion buyback, and that is going to
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outweigh it. >> and $40 billion from the cash -- >> you own it? >> yes. i owned it and sold it, and made some money, and pete and i bought it again, and i will buy it again, and i don't know why i don't own it today. >> honest answer. serat? >> well, we are doing work on it, too, and too many moving parts. >> and what else do you like in the health care space otherwise now? >> well, i like therma fisher, and cerna. >> why? >> because whoever is producing the drugs, you have to have the companies who are going to be producing the products they use whether it is spectrometers or whatever else. >> and now, we go to dominic chu who is manning the desk over there. >> and yes, honda is down sharply 3% after posting a surprise fourth quarter loss. and the carmaker is citing costs of recall s s to the takata airbags. honda lost 680 million for the
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quarter, and the stock is down 16% in the year-to-date basis, but certainly, the car makers are in the focus when retail spending numbers are a key part of the narrative. back over to you. >> and mentioned, dom, thank you. auto zone some of the parts names have done well. suppliers. people have liked even though as automakers themselves and we beet this li beat this like a dead horse, have not performed to the level people thought. >> they have a sthook is a multiple compression. they're off 50% from the peaks. they think we hit peak order plateau's auto sales. >> they made the case for general motors in part because wlaf is taking place in china. >> and if you look at this and there are so many negatives, you know, people talk about uberization of cars. i still think you'll have cars plateaued, even if they don't peak at these levels, but you're going to need auto parts even more and more. these companies, again, producing gash, dividends, buying back shares. it's going to be a wait and see.
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there is no short term catalyst. >> incentives are driving sales. once you see rates move up meaningfully and you see the subprime auto bubble start to fray a little more, you'll see sales come down. >> you're wrong on this. average selling prices have been going up. and that is net of incentives. >> incentives are increasing. >> average selling price is going up. that is net of incentives. zblaen you own the stock? >> yeah. >> expand on the thought. >> well, there is no -- force. >> you own general motors, right? >> that's right. a lot of things going for it. the negative isn't incentives. people think that peak auto sales are here. that has yet to be proven out. you mentioned china. the other thing that is not priced in here is the nakt europe finally become positive for them and is growing. >> okay. >> stocks fwhn a range for six years. i really don't even know why we talk about it. it does not move. >> you know sh it's a typical value track. >> getting beaten up on both sides, j.c. penny and general moto
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motors. >> they have a new manage. team in. there you're going to make money on this stock. >> she's been there for a while. >> she's not taking it over zbhchlt but she's been in senior management person for a long time. >> they restructured all the products and how they focus the business. they're making a ton of money chlt. >> and you have a 5% dividend yield in a flat market. take it all day long. >> buyer beware, friday the 13th. what spookz our traders? we'll find out. if you're going to make a statement... make sure it's an intelligent one. ♪ the all-new audi a4, with available virtual cockpit. ♪ 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.
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all right. get is set for "power lunch." i have a few minutes to go. "power lunch" does set up for the top of the hour. today, friday the 13th. perfect day to face our biggest fears in the market right now. steve, what dankers are lurking? >> the uk is going to sustain. every day you hear somebody of significance coming out and saying massive recessions. so that will keep people worried and keep the markets going. also obviously still concerned about china. that got worse. and then the election. so i don't really see the positive catalyst. i know everybody is so negative. get in. i don't buy it. >> okay, jimmy? >> you have really low growth around the globe. i don't think can you get much accommodation from central banks and you have 1% growth in the
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u.s. and europe and no growth in japan. china slowing. the only things that going to change this in my mind is if you get fiscal stimulus. and the problem there is nobody's going to do that in front of the election. that's at best an early 2017 activity. we really need that to get growth going. >> josh? >> my comment on what am i afraid of, everything and nothing. i'm really not scared. volatility is the only way my clients, the accounts i manage are going to be able to buy equities at better prices. you're going to need that to happen from time to time. we run strategies that are managing for 20 and 30 year outcomes. i need pullbacks. i need corrections in order to be able to buy. i'm not looking forward to buying the tops all the time. if any of these things happen this is the mother's milk of the
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return. >> when you go back to when greece was going to exit and russia and the ukraine, there is always negative. then you add to what is going to happen in the elections. there are so many people so afraid now, this is such a hated bull market. we've been saying this for seven years. i think the opportunities are there. i think if you're a long term investor, you'll do well. >> one thing last. >> you can't time the market. >> i hope so. >> you cannot time the market with valuation. there is no way to do it. however, can you look at forward future returns based ton day's valuation. and the problem with that right now is, history suggests buying stocks at this multiple, it's not a great forward looking picture over 5, 10, 15 years. so again, that's you want to root for a down turn in the market. gives you a better opportunity. the reason why the corrections are so short and sharp is because everyone has the same math. in terms of the returns they need. so it's like almost a contest who can rush in and buy that dip quickly. >> to that point, market is
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fully valued at these levels. you have sij digit returns, maybe 5% or so. i don't think it's adjusting for the risk. i want to keep my powder dry and get wlit you get the soft because you will. >> two plinz to go in the show. let's run down the other stocks that will report next week. they're ones that people follow closely. cisco. who owns cisco? >> i do. this is a value stock now. it trades at 10 times earnings with a 4% dividend yield. there is a focus on can they grow? i think longer term it's good. >> one other quick thing on cisco, we've had preannouncements from juniper. there is question in the space. that's why the stock is down low, at least partly. there is a good chance that cisco is eating juniper's lunch and the other competitors. i think there is a chance for them to outshine here. >> it's a market stock. >> if you're worried about
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enterprise spending, capital investment, things like that, this is a stock that should be on your radar. >> juniper either disappointed or warned, i don't remember which one it was. there was a thought that, you know, oh, what does that say about the state of the economy? and the flip side of that is maybe it's just cisco eating juniper's lunch. >> it's always been that way. they're so much bigger, they can force to take that product to put pressure on them. >> it used to be, remember, cisco was like weight a second, that's no longer the indicate. they give us commentary. nobody looks to cisco to see where the world -- >> i have 30 seconds to go. deere. >> i'm long the stock. even when they reported weak quarters recently, the stock has actually been flat to up or recovered within a day or. two i genuinely think
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agriculture is at a traffic the way that metals and mining is not. like this better than cat. sells for a cheaper multiple and buff set buying dips here. this is a good stock to own. >> all right. i'll point your taengs to the dow. it's down 76 points. what a week it's been for retail v a great weekend. see you on the other side. power starts now. >> thank you. welcome to "power lunch." happy friday, everybody. i'm melissa lee and tyler mathisen. brian sullivan has the day off. we kick off the hour with a crack in the retail wall. shares of jcpenney recovering after a big drop this morning. the stock down 30% in just two months. that as the retailer reported a drop in sales in a $68 million net loss moving on to nordstrom. it is down after posting weak numbers last night. this stock also dropping 30% in two months. lots of questions on retail including this one. will the stocks recover? bob pisani is reporting on that. we start off with


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