Skip to main content

tv   Fast Money Halftime Report  CNBC  May 16, 2016 12:00pm-1:01pm EDT

12:00 pm
investors are looking to europe as necessarily being impaired in terms of alphabet's business. >> heck of a speeding ticket. >> exactly. >> the report said that could come as soon as early next month. we will keep our eye on that. with a strong market rally on our hands today, let's send it to "halftime" and scott wapner. thanks so much. welcome to the "halftime report." our top trade this hour, is it time to get short stocks? with us for the hour today, joe terranova, josh brown, pete najarian. we kick it off with the markets and the bearish call being heard around wall street despite the green on your screen. bank of america seeing a severe summer slump coming. dropping that note today, the ominous prediction just hours ago. i have the note in front of me, you say put your shorts on, it's
12:01 pm
summertime. you have the lowest end of year target of the big firms on the street. why? >> i do. yeah. we have been pretty bullish for the last several years now since 2012, we have been pretty positive on the market. this is the first year where we are really seeing signs of things to worry about. here's the framework. i feel like every time i look at updated charts there's a lot of signals that are at levels that have only happened prior to big market selloffs. for example, if you look at the distress ratio, a credit indicator we track, it's at levels we haven't seen without significant downside to stocks coming. when you look at percentage of companies forecasting negative earnings, that's at a level again that's never been seen without a bear market accompanying it. so lots of signals make me worry. then on top of that, we are heading into a seasonally weak period, may to october is
12:02 pm
generally the weakest period for equity market returns and then you take that seasonal weakness, add on the potential for lower oil prices, election risk as we move closer to november. if you look at brexit, it's like what don't we want to worry about in the next let's call it few months now. and it's all happening right about now. >> it has been in most regards a hated rally. almost every step along the way. now you have maybe oil threatening to actually move higher. we have buffett's berkshire hathaway jumping into apple. things that are sort of counter intuitive to being negative on the market. >> but you know, i think the bigger theme is what we are seeing is potential for capital to really tighten. i'm not just talking about the fed. let's think about what the fed is doing. the fed has embarked on a tightening cycle, albeit a very slow protracted kind of benign
12:03 pm
tightening cycle but this is against the backdrop of negative earnings growth. so we are seeing a tightening into a profits recession. let me tell you something. we went back over time and looked at all the periods in the past where the fed has tightened into a profits recession. it's happened three times since the '70s. in two out of three of those times, the market has sold off over the next 12 months. here we are, we are sitting at fairly similar levels to where we were when the fed started tightening. i feel like that in and of itself is a reason for some consternation. then on top of that, even if the fed stays on hold for the rest of the year, you have got other markets tightening for the fed. so you have got the capital markets, ipo activity this year is tracking the lightest levels we have ever seen year-to-date. if you look at senior lending standards, senior loan officers survey data shows that lenders to corporates are actually tightening, they have been tightening over the last three quarters, which again, is not a
12:04 pm
real that's not a precursor to great period for equities. historically that's not been a good desisign to buy. >> savita, good to see you. see you soon. what do we think about this? it's hard to argue with any of the sort of laundry list of ideas that are on here, be it politics are an unknown, the capital markets tightening, the fed threatening to tighten into what is a profits recession. you could go so on and so o does it make sense? >> it makes sense but the one thing that works in the bullish argument's favor is the fact that sentiment is still incredibly bearish. there is so much disbelief around what has happened here with the rebound since february and then if you look at the calendar going ahead, everyone is petrified. you think about the federal reserve, brexit and the upcoming election in the united states. i think sentiment works against it. i don't know or i would never really want to advocate that outright short type of
12:05 pm
mentality. i think if you want to take some risk off the table, that makes sense. i still believe it's a side ways market. really, it is going to be a name oriented. find names that work and that's where i want to put my money. >> 2,000 on the s&p, that's the target, does that sound reasonable? does that sound too low? it is the lowest on the street. what do you think? not all at once. >> look, i agree completely, there's so much negativity. everybody, people are -- you would say buy today. i'm not saying buy. i think sideways is correct. you get a bump and a rise and as you get closer to all the things that could potentially happen, the market is looking forward six to nine months. we know at the end of the year comps will get better, oil stabilizes, elections are past, brexit's done, then what? the market could be ahead and people say why is it getting ahead of itself. >> i would just add it's entirely possible all the negatives and by the way, she's my favorite strategist on the street. i'm not opposed to the idea we could have a sharp swift pull-back.
12:06 pm
of course we could. could happen at any time. brexit's as good a reason as any other. but here's the problem. my kid's orthodontist could go through five reasons to be negative right now. so when the market, when i say the market, the people in the market are all completely fluent in the biggest risks. they tend not to be the biggest risks. number one. number two, look at a day like today. every single international etf my firm follows is green. you have 206 stocks in the s&p 500 up greater than 100%, less than 15 stocks down more than 1% today. when you think about these rolling corrections we have had, sector bisector, they hit the biotechs, then the banks, then the materials, yet we continue to churn away at these levels and to the point, yes, there are negative things coming up in the near term but everyone's thinking about the easier comps with the dollar in the second
12:07 pm
half of this year versus the second half of last year, and that could be meaningful upside to earnings. >> how about the two variables that have been sort of a question mark to where the market's going to go, that being oil, oil's pushing towards 50, and apple had been in this slide and then lo and behold, berkshire comes n. >> let's not get too crazy about apple. i know we will talk about it more. we are seeing a bounce today in apple. that's great to see. with berkshire, that carries some clout to it. when you look at the markets right now, you were just touching on this, this rotation, it continues to be this rotation. how about the fact the xle, the energy, we talked about this being absolutely battered. now it just cannot break below some of those moving averages. it hits near that 65 level, we popped right back off of that. you look at energy just sglin general -- >> two best stocks in the dow, chevron and exxon. who would have said that? >> especially in february. look at the pipelines, the way
12:08 pm
they are performing as well. across the board, it's been energy. then you start to look at what are the other areas, where are they rotating out of? they are rotating out of retail last week, absolutely got slaughtered. yet today, it seems like they are coming after some of the banks, after some of the international, and obviously you can see energy once again. >> if the biggest stock in the market itself has a berkshire backstop, which some people are saying this is -- >> are we calling it that officially now snnchlg? >> i just made that up. is it a signal for others all clear, go buy this stock? is it the belief that okay, this is now the -- on the value radar of berkshire's two folks over there? >> it's obviously on the value radar. that's for sure. >> should it be on others now? >> it's not -- i think jeff is right. i don't think apple is important anymore. apple is down 10% for the year, yet the s&p is sideways. i don't know where apple goes where the market goes. >> you're right.
12:09 pm
>> it's more about oil than it is about apple. >> if you look at berkshire's purchases, bought ibm, am-ex, there is deep value stuff there. we own am-ex. this is a long trend. if he's buying a billion now, he will buy a billion later. >> david tepper got out of apple, correct? so david tepper is someone everyone on this desk really appreciates as a phenomenal investor. why not pay attention to what he's doing? carl icahn got out of apple. you have famed investors getting out and a famed investor getting in. >> i'm just saying how the market seems to be perceiving the berkshire news because again, this wasn't buffett himself per se, but the two associates who run the portfolio. >> maybe. maybe it is. you know, they have complete autonomy with air quotes, right, because -- >> they don't have any autonomy. >> it's a billion dollars and they run 20% of the portfolio into one stock? i don't know if that's all them.
12:10 pm
>> the market is bidding oil up 3.5% because it deems the berkshire position to be an overall bullish sign for the stock. no? >> note where the rally stopped. 92 with support for apple going back a long time, now it's probably resistance since it's broken below. don't be shocked by that. >> the institutional investors won't look and say it's time to get back in. it's more the retail investor. wow, buffett's in, let's follow him. short term gets a little backstop but i can see this going lower. it's a very liquid stock. >> the reality is it was a value stock at 110, at 130, quite frankly. now in the 90s, it's even a better value stock. it's been cheap. it's been cheap the whole way along. now it comes down to what do you think of this stock in terms of what is your time frame. my time frame is pretty much probably looking out quite a few years. i think that's something we all know mr. buffett, berkshire clearly, that's their format as well.
12:11 pm
that's what they are looking at. they are not trying to say they are picking the bottom. one thing i would say that's a little nervewracking is ibm, is there a backstop there? i don't think so. this stock has been on an absolute free-fall for the most part. apple, is this a backstop? i wouldn't call it that but it's something people want to follow because they understand how good of an investment this -- >> if it gives others cover, so to speak, that point was discussed this morning on "squawk on the street." >> knows who it gives cover to? those who have been buying it and trading around it over the last couple weeks and we are going to be greeted this morning with news that david tepper was out of the name. that puts a little bit of a bid and they can get out of it a week or two from now. if you are focused like pete is, which is probable the right strategy longer term, don't bet against that balance sheet, don't forget the fact tim cook is in china, going to india. those are the two markets that are going to matter most. where is this stock going to be three to five years from now. $93, i think it will be significantly higher than that. the reality is it just helps those that are kind of trading
12:12 pm
around it and were defensive coming into today to begin with. here's what's coming up. >> still ahead, two bullish calls aathletic stock. do specially retailers have a competitive edge amid the retail slump? plus, cleanup in aisle nine. amazon is looking to disrupt your local grocery store with its latest push into food. and we got a gusher. crude getting ever closer to $50 a barrel. and goldman just raised their price forecast. we will tell you how to trade it, coming up. 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.
12:13 pm
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.
12:14 pm
12:15 pm
welcome back to "the halftime report." some breaking news on 13-f filings of money managers. couple of interesting things to draw your attention to. julian robertson, the very famous hedge fund manager of tiger management, also joining our investors whose news is rolling out today and friday, appearing to eliminate a 409,000 share stake in apple. it would appear he's net bearish on apple. no comment on whether that's changed since the end of the quarter. another thing he's doing, according to this 13-f from the first quarter that parallels what other hedge fund managers have been doing, is pairing a google class c position slightly
12:16 pm
from about 69,000 shares to about 36,000 shares. finally, an interesting note on the san francisco based hedge funds. it appears again according to these filings on the first quarter, they are taking a net bearish position on the overall market. what they did is sold a whole bunch of spidr calls and upped the puts from about 10.6 million to round about 12.9 million. interesting moves a couple of fronts people are watching. >> forgive me if you don't have the answer to this question readily available. do you know how long tiger, julian robertson have been in apple? >> i do not. i can look into that and get right back to you. >> just wonder if it's sort of the long-standing positions you start to lose faith in and that's why you trim the steak or just a bit of context. i don't know. >> i think we have seen both. leon cooperman did what somebody referred to me as simply a trade in apple during the first
12:17 pm
quarter, purchasing shares and essentially selling out of them after the end of the quarter. it's a relevant question. >> i appreciate it very much. sorry to put you on the spot. >> can i point something out? you are seeing for the first time in seven years on a quarterly basis net redemptions. just not something we have seen in this industry going back to basically the financial crisis. we don't know to what extent the sales of apple or anything else are related to just outright sales because money is being raised by investors. that's an important dimension. >> add to that these hedge funds have leverage. it's not just the online position is 100,000 shares. they borrowed against those as well. >> kate, were you listening to that? >> i was. i think they are on the an important theme. we have seen overall hedge fund assets on the decline, redemption levels for the first quarter at its lowest point since 2009. there is definitely a trend of
12:18 pm
dissatisfaction with hedge funds. more anecdotally we have heard of major insurors bailing out of hedge fund portfolios. the new york city pension fund bailing out of $1.5 billion of hedge fund investment. there is a level of dissatisfaction that appears to be rising. it's very possible you are seeing people sell out of some of these more liquid positions even if they still like them in order to raise some cash to meet redemptions. >> glad you were still with us for that. oil prices hitting their highest level in more than six months today. joe, going to you first on this. wti's up 3%, pushing closer towards $50. now goldman has raised its short-term outlook. it goes to the second quarter wti to 45 from 35, second half to 50. >> i think goldman is playing catch-up to where the market is. they were beneath the market in what their oil price target was. forecasting the price of wti is a very very difficult thing to
12:19 pm
do. many including myself have failed miserably in that endeavor. >> did you jump the gun last week in saying that crude and some of these stocks have topped, it was time to get out? >> no. i think i rang the register which was the right thing to do in a lot of high beta names. could have hung around a little longer for sure and made some extra money. i'm comfortable with it. i still stand behind what i did and what i want to do right now looking forward. i don't want the high beta energy exposure. i would rather have a big integrated name proven global reserves, big balance sheet, more of a defensive energy slant. >> he's talking about bigger names. that's what we were talking about when i brought up xle earlier. it's holding on to the 50 day and 200 day moving average. that's hanging in there well. talking about some of the biggest names in energy when we talk about that. that doesn't mean there's not a huge amount of trade still to be had in the free ports and craziness of the world. if you want to look at what's been solid, moving and producing, josh was talking about this earlier, look at
12:20 pm
chevron and exxon. >> you like the refiners? >> i do. i still think the volume of the refiners is why i like them. but i think oil stays in this 45 to 55 range. if you get that, then you get more comfort from the rest of the market, too, because when oil went to 25, the market really sold off. it's just like our foreign currency. you need the dollar and you need oil to stabilize. >> josh? you are still in xle? >> yeah, i am. it still looks great above 65 as pete mentioned earlier in the show. seems to really have momentum on its side. chevron looks phenomenal. it can hold above 99, 100, which it's been able to do, the stock should be bought for a short term perspective. longer term, it's going to take a lot for it to see its old highs but it's paying a really nice yield. i think on the smaller producers, to joe's point, you got to be really stock-specific here. there's an article today that their own hedging activity is up almost 3% year over year. a lot of them are actually
12:21 pm
getting short crude to a larger extent so you don't know how much leverage they will have if crude continues to recover. >> coming up, pete is picking up bargains in the retail space. it was a rough week last week. he unveils his latest options. two analysts are out with calls on lu lu lemon today. one analyst says it's time to sell. we debate coming up. tomorrow starts today. all across the state, the economy is growing, with creative new business incentives, and the lowest taxes in decades, attracting the talent and companies of tomorrow. like in buffalo, where the largest solar gigafactory in the western hemisphere will soon energize the world. and in syracuse, where imagination is in production. let us help grow your company's tomorrow - today - at
12:22 pm
12:23 pm
from icy ocean your wild-ckitchen counter. mon. when you cook with incredible make incredible meals. get your first two meals free at
12:24 pm
we are back. pete is making his way to the telestrator. he went shopping for a bullish deal, buying a stock that is down 30% year to date. we said it was a retailer. which one? >> it's in the food retail world. it's a very competitive, we know how competitive that world is. whole foods is struggling. they all now have an organic section. you look at valuations, this particular name, you can see how it's traded this year. super valu. revenues continue to be a struggle. they beat on earnings last quarter, missed on revenues and everything seems to be on the decline. today it got interesting. somebody bought the october 6 calls in a big way, i think 5,000 of these things for 25
12:25 pm
cents. it gives them time. when the stock's sitting near the low end of where it's been trading for a long period of time, gives people time on a stock that's trading at a five multiple, you can understand why there's interest. are they covering a short? maybe. i'm willing to wait. i bought some of these calls and will be in for a couple of months. >> this is a longer -- >> these are way out in october. we are sitting now in may. i have time to see if this will actually work. this is one of those names that comes up once in awhile when people are looking around. they have had management changes so there's lots of things going on in this stock. >> okay. pete najarian, what do you think about this play? looking for beaten-down stuff in retail. >> that's a name that clearly was beaten down in april. i think it was down close to 15%. obviously one of the problems for it is price deflation as it relates to food. need to see some of that coming back once again. the fact pete's in this until october gives him a fair amount
12:26 pm
of time for that. >> coming up, amazon taking a page from brick and mortar retailers with its latest endeavor. will it cause more pain than promise? details straight ahead. plus lululemon sits out the rally today. bank of america says it's time to sell. two other analysts saying it's a buy. who's right? we debate later in the hour. take a look at how the s&p sectors are stacking up today. mostly green on the board. pretty good day shaping up on wall street. s&p up 17. es make healthcare more personal with patient-centric, digital innovations; from self-monitoring devices that can interpret personal data and enable targeted care, to cloud platforms that invite providers to collaborate with the patients they serve. that's why over 90% of the top 25 global pharmaceutical companies are turning to cognizant. our domain experts, technologists, digital and data specialists, clinicians and scientists are transforming the way clinical research sites collaborate
12:27 pm
with pharmaceutical companies, and enhancing patient engagement with innovative platforms and solutions. our population's growing healthcare needs present growing opportunities for our clients: to advance the future of medicine with digital, and improve the quality of lives. ♪
12:28 pm
man 1:man 2: i am. woman: ex-military? man 2: four tours. woman: you worked with computers? man 2: that's classified, ma'am. man 1: but you're job was network security? man 2: that's classified, sir. woman: let's cut to the chase, here... man 1: what's you're assessment of our security? man 2: [ gasps ] porous. woman: porous? man 2: the old solutions aren't working. man 2: the world has changed.
12:29 pm
man 1: meaning? man 2: it's not just security. it's defense. it's not just security. it's defense. bae systems. all right. there's your market picture. dow up 144. welcome back to "the halftime report." sharon epperson has the latest headlines. here's what's happening this hour. president obama honoring 13 law enforcement officers who risked their lives to protect others. he presented the medal of valor at a ceremony in the east room of the white house. including three santa monica officers who are being honored for their response to a 2013 rampage on a community college campus that left five people dead. secretary of state john kerry in vienna to host talks aimed at easing the crisis in libya, saying it makes sense to provide the new libyan government with weapons to fight
12:30 pm
isis. but it needs to be carefully sculpted. he ruled out military intervention in the country. brazilians came out in droves on sunday to march in support of dilma rousseff as she awaits her impeachment trial. demonstrators carried banners and chanted slogans in support. disney's newly constructed theme park opening in shanghai for its trial operation period. the park officially opens on june 16th. visitors called donald duck practicing his tai chi moves. that's the cnbc update at this hour. back to you. seems wall street can't make up its mind today on where lululemon shares will head from here. one firm saying it's a buy, two others calling it a sell. which is why we will debate it. it's our call of the day. who's right? bank of america says sell, guggenheim and telsey say buy. >> i'm with them on the buy side. this name was talked about before.
12:31 pm
when you really look at what they have done over the last couple years since some of the management changes and all the issues they were facing for awhile, it's a pretty amazing turn they have been able to make. you look at this last quarter's numbers, the revenue was great but the direct to customer is where they are seeing the growth. i think that's the most important part. what have we seen? we talked about macy's and all the struggles but amazon has been crushing it. these guys are doing extremely well. they have done a great job. that seems to be where they are making the money right now. i think they are doing the right thing. they are going after growth. >> so telsey say it's so uncertain out there, let's stick with strong brands. lulu being one of them. then you have guggenheim on the buy side which you get the same sort of picture in this world of retail that's been just under t turned on its head. they say the ability to off differentiated and compelling merchandise is the key.
12:32 pm
>> here's what's crazy about this game we play. they could be right and still get the stock wrong. they are making the case that a lot of retailers have to fear amazon, especially department stores, because you can get that stuff anywhere and it will be a battle over price whereas lulu, you have to go to them to buy it and they have a relationship with their customer and in the communities they serve, they are big. guggenheim says only 300 something stores so still a lot of room for expansion. all of that may be well and true but the market is saying they are wrong. $70 was resistance. every time the stock gets to that level it gets slammed back down. it's not cheap enough to say that 3% to 5% comps which i think is the bull case, will take this valuation higher. i am not sold that what they do is so differentiated. when you have nike as aggressive as they are, and new at leisure brands coming along. >> that's sort of the crux of the bank of america side of the argument. basically all these things are great that lululemon has until you factor in that under armour
12:33 pm
and puma, adidas and whoever else, is in the space selling product. maybe it doesn't have the same -- some of the other brands don't have the same cachet with women, i don't know. that's the crux of the argument. >> the stock has recovered since december. a lot of the recovery has been on operating margins improving, inventory being worked up. the next question becomes what's the catalyst going forward. this note we are talking about sets a $50 price target on it. stock is now $60. gich right now what the environment is for retail, wouldn't lulu have already dropped down to that level if it was going to be part of this negativity surrounding retail itself? i don't think so. as it relates to competition itself, the penetration from nike and under armour has been an argument that bears have made for many years. i think the stock is fairly priced at $60. probably the down side is limited and if you are going to look at it and say where is it going to be on the next six
12:34 pm
months, i would argue more with the bullish argument that this stock has seen the most negativity -- >> here's how you get this thing going. if dough's smart they give 2% of the company to kris jenner and let the kardashian girls wear the clothes and at that point you have something approaching cachet with the next generation buyer. if you rely on the past generation buyers, there are too many options and the brand is not as meaningful. >> you want to follow that? >> i think it's a hold. i think a lot of it is built in. you have to have a stanable grow sustainable growth rate model. >> let's stick with retail. amazon announcing a new brand. let's go to the market flash desk for more details. >> big news. amazon shares coming off their worst levels today but still down on the day so far. the online retail giant is reportedly going to launch its new line of private label brands sometime in the next few weeks. its brands will include names
12:35 pm
like happy belly, mama bear, according to the "wall street journal" report. items will include food, house hold items like diaper, laundry detergent, that sort of thing. amazon shares, remember, nearly 65% higher over the course of the past year, up by 4% year to date but interesting to see how this ripple affects the rest of the retail industry. >> dom, thanks. i was trying to hold it together. >> i was diagnosed with happy belly by my physician. >> talk to your mama bear. >> let's keep it rolling. >> what do you think about amazon? >> look, i have been wrong on amazon for, what, the last two years? i still think it's a great company. do i think it was a great stock to own from here, no. you b but they are getting into everybody's space. >> why is it not a good stock to own? >> the market expansion from the businesses they are going into will be really high. at some point when the market looks and say we will value it
12:36 pm
as somewhat a retail stock, the value will come down. >> i disagree. i think this defines a new economy. convenience and time. that's what the consumer wants. amazon stands out as being able to deliver that. they have done it when they want to make money, they can show they can make money. they have significant investments in the past. >> you are making a fundamentally bearish case on amazon. >> make the valuation case. >> let's separate amazon. you have aws, the cloud computing side, great. they are doing really well. anyone in that space is doing good. when you look at the retail space, they are taking share, but share doesn't mean margin expansion. when you say pull the levers you still have infrastructure cost. this is what they are doing. they are building money to do that. everybody who does that over time, your margins will come down. if you look at it two to three years from now, is it going to be $700? it might be $500 stock. >> didn't we learn that last week, what the real game is where you had online sales, if i recall, over the last year were up i think ten? >> but -- >> straight retail was down 1.7 or whatever?
12:37 pm
i will look back. i think those were the numbers. you get the point. >> i get the point. when apple went to 130, people were like this is going to 200 because margins will expand. you do hit a wall. you have large numbers. i'm not saying i want to short the stock. i'm just saying i'm not going to -- >> private label business, though -- >> would you buy the stock right now snnchlg now? >> i'm not long but i would buy it. i like to buy amazon on pull-backs when they disappoint. here's what i'm going to tell you. the whole purpose of going private label is because that's where there actually are margins. amazon reselling food from other companies, you're right, there are no margins. what they are doing is about margin expansion which is not something you see out of amazon. if they are selling their own diapers and groceries they will make somewhat more money than they are making from carrying kellogg's and huggies. >> last thing i would say is name me a category he doesn't dominate. when he doesn't, if he has anything that's a failure, he immediately cuts it and moves on to the next. that's a sign of a winner.
12:38 pm
>> i think the spending is important. most of the spending was 24 to 36 months ago. they got away from the hardware spending, went to the services side and that's working right now. now you are seeing an actual deceleration in spending. that's allowing for the margins to lift and the runway seems to be a lot longer than we originally thought. >> blows my mind when you see a delivery van on a sunday in front of somebody's house which i did yesterday. >> they are building their own shipping -- they are taking real estate, building docking bays for 18 wheelers and they are going to be in a position that no other e-commerce company in the country is in where they will be able to self-deliver and not have shipping fees even be a factor. is there anyone else that's even one inch closer to that goal, whereas amazon could be a third of the way there? >> that's part of the dominance. he's dominating in every category he goes to. look at the cloud. all of a sudden he will have the logistics portion of it. >> i got to jump back to kate real quick at the breaking news desk. she did more digging into this apple and tiger global history.
12:39 pm
>> that's right. just want to give you a quick update for your question earlier. looks as though robertson held this position on paper for about two years now. he started building it late in 2013 and it peaked in size sometime around the summer of 2014 at about 17.5 million shares. so that was quite a large position at that time. i'm sorry. i'm misreading it. 17.5 thousand shares. heened nded up holding 409,000 thereabouts before appearing to totally sell out at the end of this last quarter. we have a call out for an update to see if that's changed at all since march 31st. as far as we know, he's completely out of the position and it is one that had a two-year duration. to your question, it may show a buy and hold and now lack of faith in that stock. >> yeah. i appreciate the update. thanks so much. what do you guys think? best days behind it point of view? is it atm point of view? i think the market's going to go
12:40 pm
down or simply i'm putting my m money somewhere else? >> we talked bit, longer term, don't bet against the balance sheet. it will stimulate the conversation that seems to be popular in the last couple months surrounding activity versus passive management. obviously these gentlemen are being very active in management. stock goes to 80, active management's back once again. if the stock holds here, everyone will say stay with passive management which appears to be the trend right now. these gentlemen are just being active -- >> it's more significant -- >> they are putting money elsewhere, i'm sure. >> when icahn, carl icahn sells after having the position for a few years, julian robertson after having the position for a few years, it's a more meaningful sale on a name like that than just a run of the mill hey, we had it for this quarter, we blew it out a couple quarters later. >> it's a more meaningful sale if they are making the sale under two conditions. number one, duress and if they have a loss in the stock. these are stocks where both
12:41 pm
gentlemen have significant gains. it's a much easier argument to make to take the profit there and reallocate maybe to a facebook. >> call me when they get short apple. >> exactly. >> my ears will perk up when i see that. >> okay. coming up, it's been one of -- been one year since stocks hit all-time highs. can the market recover from such a long break? stocks were working back towards there. mike will join us to break the down. plus the one stock barron says could jump more than 30% over the next year. but are traders buying it? the details are coming up. touch.
12:42 pm
amazing is moving like one. real is making new friends. amazing is getting this close. real is an animal rescue. amazing is over twenty-seven thousand of them. there is only one place where real and amazing live. seaworld. real. amazing
12:43 pm
12:44 pm
coming up in 15 minutes on "power lunch" oil rallying right now. goldman sachs saying the supply glut is over. where do prices go from here? how do you play the big cap oil stocks? berkshire hathaway, you may have heard, buying a new stake in apple.
12:45 pm
it was a move by the portfolio managers. is this signaling a changing of the guard? now there's new rules for crowd funding. easier for you to invest in startups and for new businesses to raise cash. the risks and rewards. now back to scott. >> see you in a bit. time for our trader blitz. four trades on four stocks making news today. first up, bank of america downgraded to market perform at kbw. joey? >> the fundamental thesis around this rallying has been in place for many many years now. but the stock cannot rally. i wouldn't go short it. think the frustration on the part of those at merrill lynch. they have to take that crown jewel and monetize it. >> regeneron shares up 5%. >> i really like this call. i really like the trade setup. $360 a share has been support for this stock going back to february. three times that's where the buyers have come in. it's clear as a bell when you look at the chart.
12:46 pm
meantime, this is a company that could have 40%, 50% earnings growth next year launching new drugs. they are spending in support of that which crimps earnings near term but if you are an investor, this is probably a pretty good entry with a very well-defined point at which you would sell and say i'm wrong. >> okay. jc penney upgraded, outperform at baird. the stock's down almost 1.5% today. jim leventhal owns it in real life, now has added it back to the portfolio. he's got super conviction on this name. >> never heard of sears, huh? >> i don't know. >> everybody who attacked him last week which was kind of an attack, i don't remember who it was, josh and somebody else. >> yes. it was one. >> he isn't here. throw him under the bus. >> what do we think? >> i think, look, i have been wrong on the retarilretailers.
12:47 pm
you get a retailer like jc penney with debt on it, talking about sears, it will be really hard for them to grow. maybe get a bounce but i wouldn't chase it. >> attractive risk/reward. that's part of the call here. greater than 30% pull-back from march highs. >> the floor is zero. i would stay away. >> i would look at this stock almost like an nlp with a reserve -- kind of like with a steady amount of traffic but way too much debt. and really, no plan to grow. they just have to keep the distribution of cash flow somewhat alive but it could be a zombie stock forever. there are other maces to places. >> i don't disagree but you look at macy's, has real estate so you get real support there. and they have been killed, too. i would rather prefer macy's which has been hammered and i own it. i just wonder when the debt guys come in, what do you do?
12:48 pm
>> let's talk pfizer. which you own. >> yep. $5.2 billion. what i like about this deal and the fact they actually got this executed was they were already in the process of an absolute monster deal. that basically had come apart. government wasn't going to allow it. then you look at this company, they are always looking for ways to fill in their pipeline and this is one of the ways they will be doing this. maybe these $5 billion deals rather than the $100 billion deals is the direction they want to go. interesting to see. that's why i own the stock. it's been one year since the market hit all-time highs. what will it take for us to break out yet again? we have the details after the break. as we go to break, here's a check on the "halftime" portfolio competition which we were just talking about. jcp thrown back into the mix. back after this.
12:49 pm
12:50 pm
12:51 pm
thnchts. this week marks the anniversary of all time highs for stocks. we have a look at the past 12 months. mike, maybe where it tells us we can go from here. >> we can only hope. unfortunately, very little net progress, as you know, scott. may 21st of last year the s&p 500 hit the all time closing high of 2130. the anniversary will be this coming saturday. since then, the market has actually staid unusually close to that level with the exception of those two little downward wiggles in august and february that you might remember. actually, using the dow going back to 1900, only six prior
12:52 pm
years have you had a time when we averaged closer to the old high without being in a bear market. so what does this mean? it could be a mid cycle? well through see some of the rotation that's going on below the surface. the dow utilities up 13% plus. dow transports down the same percentage. we had everybody kind of crowding into the defensive income producing areas y is that? one year ago, ten year treasury yield, 2.2%. right now below 1.8%. so clearly we've had this move toward income, safety, things that are allowing the market to bide its time, perhaps, until growth comes back. but look, the market did not get much cheaper if at all really. forward pe of 17 times last year at this time. 16.6 right now. you see the yield relative yield situation. makes stocks look better than what many would consider to be expensive bonds. here's the take away which is that at 16.6 times forward earnings right now, we know last
12:53 pm
year that the estimates for earnings for the subsequent year were well high. they were 7% too high. so with the estimates now are plausible, then valuation itself is not terribly challenging if you get a little bit of that growth tail wind. but it's really hard to see what unlock this is market from being in this side ways slog. scott? >> josh? >> i'll give you my big take away from what you said. and i would love to hear what you think about it. isn't it nice to know that given all of the conversation we have in this business about the fed and the ecb and the boj and all of the cross currents with terrorism and elections, tend of the day, the market got it right on earnings. the market stopped short a year before s&p 500 earnings flat ened out. what are your thoughts? is the market still working as a mechanism to discount earnings growth? >> without a document look, if you look to may 21st laugh h. last year tlashgs is as the reporting season ended for
12:54 pm
basically the last quarter of earnings growth. and so what was the market's reaction to that stall in earnings? to force so much money into that the handful of stocks growing relatively fast. there is your fanning year. so, yes sh the market is totally acting that way. i guess my big question is are people kind of buying too much perceived safety in a lot of these income plays to the point where, you know, they kind of are taking a little more valuation risk than they believe they are? but maybe that's not going to be something that is -- that we have to worry b also reminds me, josh, of 2012 when basically you had this kind of sloppy election year type thing. you had a 9% dprrawdown in apri and may of that year. it is also because you were kind of, i guess, getting used to the idea that we were in this new valuation. the market is less cheap than it was back then. and so you might have a tough summer like did you then. i don't think you have that kind of lift. as you suggest, there's nothing that tells us we're going to actually reload on earnings
12:55 pm
growth any time soon. >> michael, great insight as always. still ahead, a big week for earnings on deck. key retailers, more of them. tjx, home depot, walmart. we'll tell you the names that traders are watching.
12:56 pm
everybody knows that business today is built on data. the thing is, most businesses aren't getting the most out of it. the ibm cloud is uniquely designed for all kinds of data. like data from the weather company for 2.2 billion locations. or billions of health-related data points. even social sentiment in real time from hundreds of millions of people. it's all in the ibm cloud. if you combine that with the data your business already has- then things get interesting. so right now we're working with a retailer to blend social and inventory data to help predict demand. we can help a hotel chain match weather and local event data so they can adjust room prices from minute to minute. and another company we work with can apply analytics to sensor data to save millions in energy cost. today, every business runs on data. that's exactly why we built the ibm cloud. today, every business runs on data.
12:57 pm
steve, other than making i'm here atme move stuff,rade trader offices. what are you working on? let me show you. okay. our thinkorswim trading platform aggregates all the options data you need in one place and lets you visualize that information for any options series. okay, cool. hang on a second. you can even see the anticipated range of a stock expecting earnings. impressive... what's up, tim. td ameritrade. we're back on the halftime report. big week for earnings. and it's retail. before the bell tomorrow, home depot, everybody says it's the
12:58 pm
one thing or one of the few things that amazon can't kill. >> yes. >> does home depot get us feeling about where people are spending money? >> i think home depot is going to give you a good view into the consumer spending money on do it yourself, what is home building going to be like? what is housing going to be like. home depot is an expensive stock. >> you like home depot or lowe's better? >> it doesn't matter. >> the problem for the market though, a great home depot report is not indicative of anything for anyone else. maybe a little bit low. a bad home depot report will absolutely rip down the -- >> that's a good point. there is a place where people are spending. >> they're spending there. and it's spring. >> it's their time of year. if they don't execute now, they're in big trouble. i think tjx is more interesting, frankly. we're talking about off brand. >> sure. >> apparel and things like. that and we're talking about all competition out there in the mall space or whenever. you take a look at what this company is doing. they got beat up last week.
12:59 pm
look at it today. the nice bounce going back into earnings. they have a great on line presence as well. i think they're going to pupt a strong number. time will tell. but i love this name. i like ross. i think both those two do well in this environment. >> we have a minute left. walmart, thursday, before the bell. what does walmart tell us? >> i think walmart's run the course for the year. i don't think it tells but overall market itself. i much rather have a costco or a target. >> target. >> yeah. >> i agree. i think walmart is going to have -- i think walmart is going to have issues too. consumer spending is getting pulled away. >> the stock nab a funk for a while. >> dick's sporting goods and foot locker? >> foot locker trades so inexpensively, right? we talk about it all the time on the show. you always expect, god, nike is doing so well here and under armour and for whatever reason, they just haven't react as much as the stock. irlot of name. i think it's too inexpensive. i think they're in the right spot. but is the stock going to react even with great numbers? it hasn't recently. >> okay. josh, we know you own deere and
1:00 pm
you love deere. friday before the bell, cisco is wednesday after the bell. >> no position in cisco. too hard for me. >> we own cisco. 4% yield. >> i like cisco. >> own it. >> like oracle snl. >> cisco is going to be good. >> thanks for being here. "power lunch" starts now. thank you, scott. welcome to "power lunch." today is all about the big turn. stocks, biotech, retail and oil all making turn arounds to kick off this week. welcome, everybody. i'm melissa lee. tyler mathisen is off today. brian and michelle are bigging in on oil's big come back. hi, guys. >> thank you very much. yeah. crude oil, your top storey. it is jumping after ultra bear goldman sachs did a u-turn and raised the short term price outlook on oil. there is bullish commentary from bank of america and barclay's. ic


info Stream Only

Uploaded by TV Archive on