tv Fast Money Halftime Report CNBC May 23, 2016 12:00pm-1:01pm EDT
week. interesting move by some of these storage names that had been in a sense left for dead for awhile. >> worth pointing out london club up 10.5% today. reports it hired [ inaudible ] to find buyers. without those they don't have a business model. let's get to headquarters. scott wapner and "the half." welcome to "the halftime report." i'm scott wapner. our top trade this hour, the great rate debate as yet another fed head says a june hike is now likely. with us for the hour today, joe terranova, john and pete najarian and michael santolli. let's kick it off with the markets and those comments from san francisco fed president john williams who said today two to three rate hikes are appropriate this year. raises the question of whether a steep summer sell-off will be
the result if the fed moves. doc, what's the market going to do now that almost everyone is saying two to three this year? >> not almost everyone, first of all. this guy is an outlier and he is going to be wrong, wrong, wrong. he will be wrong about this year, 2016. he will be wrong about 2017. he's basically or is saying seven rate hikes within -- by te the end of 2017. ain't happening. no way, no how. >> this is the perfect point to have the conversation of whether the market is truly ready. is the market ready? >> absolutely not. >> i don't think the market's ready for two or three rate hikes this year. if you look at the most expensive sectors in the s&p, they are basically sectors that have done really well because rates have gone nowhere for seven years. my take is that so our house view is we will see one rate hike this year. i think the market might be positioned for that. but anything more than that would actually roil the markets,
especially in june. i do not think the market is poised for potential rate hike in june. >> lockhart says two to three hikes this year, williams says two to three hikes this year, rosengren says rate increases are absolutely appropriate. dudley says there's a reasonable expectation which many people thought once dudley actually said that, that was sort of the go sign. now you will hear from yellen on friday. are you guys in denial? what's going on? >> i think they will go in june. it depends where the s&p is. they want to make sure global markets don't have volatility. we reduced the volatility in the global markets and when i say volatility, i don't mean as measured by the vix, measured in terms of credit markets which are clearly functioning much better in the emerging market debt cycle, in european credit cycles. i think they do go in june. i think it is more of a one and done than we are going to see, we could say last year was one and done. i think this will be one and
done. i think you want to have a press conference surrounding whatever hike you are possibly going to do. you are not going to get that in july. september is too close to the election. in december, given who wins the election, you might be talking about a possible -- >> they are not even going to be there in january. >> the election's not going to make a difference. are you in denial, doc? >> no. it's a river in egypt. what i think here is that with -- >> bond market might be in denial. >> with egyptair last week as well as austria right now, haven't heard for sure but it was too close to call with a very right wing candidate leading over in austria, i don't think we're in position right now where the fed at its june meeting is going to be able to move. but i mean, could they move and is june more likely than december, yes. i still think it's way under 40%. in other words, saying that we might see two or three hikes this year, i don't see that in
the cards at all. >> this is why i wonder how the market's going to react if and when they go in june. half the table here doesn't think they're going to. >> we have 23 days until it would be made for the june meeting. i think the fed would love to have things line up in the way it would need to be able to go in june. i think the fed's issue is that it was saying, the house view of the fed was two, probably, this year before all this jaw-boning started and the market was saying maybe none. they don't want the market to say maybe none but they also don't expect the market to get fully on board with two or three, one starting in june. i think there's a lot of play in it. the market could be prepared for it but not the way that sectors have been leading and lagging here. we are not set up for it. >> pete? >> everything we continue to hear sounds like these guys are telling us they want to go in june. you listen to the feds speak right now, they are basically telling us hey, look, june's on. june's live. june's this, june's that.
the brexit thing to john's point is something that has to be something considered but joe and i are together on this. i look at this and i'm looking at what the fed is saying day after day after day. you look at low unemployment, look at the moderate growth that we are seeing right now. there's a lot of reasons why it actually could line up. do we sell off on that, maybe. is it a knee-jerk where we sell off and then start to come rallying back, sure. but i expect maybe june but for sure, if we don't get the june we are going to get a december. >> are you saying that the so-called bond proxy kind of stock you haven't seen a huge rotation out of them because those were the natural places that you would look. >> well, they were. >> utilities and whatever else, if you thought rates were going to go up. >> that's right. there's a couple levels to that calculation. if the market starts to think the fed's going to go and you have the ten year that doesn't move anywhere as has happened so far, then maybe those types of stocks can still do it because they are really competing with
market interest rates and not the fed -- >> patty was speaking to people within the market, saying the bond market is not pricing in the rate hike. forget about the stock market. take a look at the yields curve, what it's telling you. they may hike and the yield curve flattens. to think about brexit for a second, the polls continue to suggest more and more likelihood this is not going to be -- this is going to be a no vote. i think that's going to give the fed a tremendous amount of comfort going into that meeting. >> let's see as we get closer. because again, egyptair sort of disaster as well as that issue i described in austria with the very right wing guy who is very much against immigration and so forth, perhaps it's a coin flip he was either up slightly or trailing slightly last we heard. that is just going to encourage all the no votes out of great britain. >> all the volatility that we are talking about here, is that why you think there's going to be this big summer swoon? in the stock market? >> i do. >> for those who might not know,
you shifted. you have the lowest target for the s&p of the major strategists on wall street. >> that's right. we are looking for 2000 by yearenyear end which isn't that bearish. but what worries me is we are entering into a seasonally soft patch as it is. you generally see the role of sallie mae buy-back in september. seasonal soft patch and on top of that, potential for the fed to hike which i don't think the market is adequately discounting, potential for brexit. granted the odds are a lot less extreme than they were a month ago. and we have softness in oil prices, we have companies, like a profits recession in the s&p 500. lots of bad stuff going on as we are entering a seasonally weak period and the vix does not seem to be reflecting this. >> manufacturing pmis not good. >> not great. >> you have the fed intent on
hiking into what is still an economy that appears to be teetering. right? that's sort of the scenario in which you as an investor, trader, whatever you want to call yourselves, have to maneuver this marketplace. >> i thisnk the fed has been clear in their communication, their desire is to get out, so to speak. and on the global stage, you look at all the economies, our economy has improved by far the best relative to everyone else. we were the first into these policies and we want to be the first out of these policies and hand off to whoever the incoming administration is the need for fiscal policy. that's what this economy needs. fiscal policy. >> you have friday when yellen will be speaking herself which as we learned with the new york economic club a month ago or whenever that was, that it was the one voice that rose louder than everybody else's. it was sort of the talk to the hand moment to all the hawks out there. i wonder if now she's come around a little bit and will be more hawkish herself. >> she very well could be.
right now all we are seeing as mike mentioned, 23 days ahead of the fed decision, is these folks are trying to jawbone it. they are trying to get the people off the zero, off the no, we are not going to see any hikes this year camp and get them at least to thinking one or two is reasonable. again, preparing the market. but that's jaw boning. we will see whether or not they actually have the commitment as we like to say about breakfast, the chicken made her contribution, the pig made a commitment. >> in december a lot of the people who were saying they are not going to go in december, they were looking at a couple things. they said they will never go if the vix is above 20 and never going to go if china's currency doesn't stabilize. both those things are in place. now we come up with four other things -- >> that's the key. if you think about it, last september -- >> barely. >> last september, everyone including myself thought the fed should go. the problem was in the 60 days prior, the market was down 6%. december, the market actually went up 2%.
that gave them the green light. that's why i think when you look at it now the market's gone up, giving them the green light. >> you make the case that the market should be looking at things and investors should be looking at the picture more positively than they are. >> what they should be doing is allowing for the possibility that there is also upside risk in this market. when savita mentioned the big concerns, a lot of people at home are nodding right along. that's why you see six weeks in a row by her firm's calculations, six weeks in a row of heavy outflows from stock mutual funds and etfs. the retail public is saying i don't want to be involved. the pros are involved. the pros are taking what the market gives. it's interesting that in general, people are not really looking -- >> positioning is the reason to be bullish on this market. i agree. we have seen outflows but you know, i have to say i don't think that everybody was all in on equities to begin with. so we have been in the most hated bull market we have ever seen. this whole bull market we have seen outflows from stocks into bonds. i don't know if that's --
>> which maybe just says it's not the big one. >> it might not, i agree. i think we could see another leg up for equities but i think we are entering into what could be -- >> sentiment has been incredibly bearish. pete, myself, you. to me, everyone was incredibly pessimistic. tr was not a high degree of op mic optimism. david costin continues to be right, flat is the new up. you are really not going to get much return in any asset price. that takes you in the direction of the need to be tactical. opportunities will present themselves and remove themselves quickly. that was pointed out to us three weeks ago. >> for more on mike's column, it is up on cnbc.com/pro. head there for the full read, what he has to say about the market. here's what else is coming up. >> still ahead -- did she just say starbucks? while you weren't looking, starbucks is down nearly 10%
this year. why one analyst sees a big rally percolating in the stock. plus, drama at viacom. what the redstone saga means for shareholders. and gearing up for tiffany earnings. the najarians face off in a bull/bear debate. 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. the e-class has 11 intelligent it recognizes pedestrianss. and alerts you.
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report" want to show you shares of apple, 1.5% to the upside, just shy of $97. hottest level in a month for a stock that has been on the schneid consistently. >> i said i did not think this would be a buffett bottom. clearly so far in the last week or so it's bounced pretty nicely off this. this is the levels where i got in after the big fall down from apple. look, i'm still looking at this long term. this is very short term paper. this is what's moving this thing around. i know we were talking about this earlier today, why apple is making this nice move. it's more to me, less about apple, more about all of those suppliers into apple. look how they have been trading. look at the smh. >> look at today. guys in the control room, if you can bring up micron, skyworks, western dig, you will see them on the move big time. >> they had a great week last week. they have been moving for awhile now. we started to see a little bit of paper flowing into the options in a lot of these various names. last week late in the week we
saw qualcomm paper as well. there's a lot going on and it's not just an apple story. it's the suppliers getting involved. >> do we think buffett or his guys, however you want to believe -- >> whether buffett or his guys. >> berkshire, to be accurate, forced people to reassess apple straight as a value stock? >> no. >> the merits of apple as a value stock? >> buffett had absolutely nothing to do with it. >> okay. the two guys who did it, forget buffett, you think berkshire's purchase of it forced people to reassess it as a value stock? >> no. >> if the stock reacted positively since then, why not? tell me why it's not the case. >> because why can't i look at what david tepper is doing and carl icahn is doing in exiting the stock? we have three dynamics here. one is getting in, two are getting out. i side with what pete is saying, what jim cramer is saying, own the stock for the longer term fundamentals. in the near term, those who have tried to trade it --
>> why would you look at what icahn's doing? he booked a $2 billion profit. >> so i have looked at icahn on the way in, i'm going to look at him on the way out. i'm not going to ignore thinkang carl icahn is doing in any type of transaction in the capital markets. >> you have to put the profit in perspective when you talk about why -- >> i should have a higher degree of concern and higher degree of focus on what buffett's group is doing? i disagree. >> i'm not saying that. i'm saying given the timing of the fact people were assessing really where apple was, the stock had come down, everybody has said it's a value stock, it's so cheap, cheap, cheap. it's nine times this, 11 times this. >> it was cheap at $130. >> why has the stock gone up consistently since the news of the berkshire buy happened? >> because people are focusing on trading the stock. all we heard about was the possible break below $90 which happened. when it broke 90, was going to
85, 80 in a flash, that never happened. people got turned the wrong way. >> am i on an island here? >> no. i think what happened was your interview with carl, when carl basically said i'm out of everything because of china. i'm shortening it up but that was the crib notes version. and by the way, i made $2 billion, i was on the right side of it and i'm gone. same thing with david tepper, different numbers, but same thing with david tepper. i'm gone. leon couperman, gone. a lot of the folks -- >> in and out for a trade basically. right? >> exactly. now buffett, a guy who is obviously willing to take some pain which he's done in ibm and several others, getting in and saying i'm drawing the line in the sand here. if i'm a little early, that happens from time to time. but i want to be in for the long term. the 72 million, 77 million hand sets, i bought glw just in the last few minutes because of unusual call activity in that stock. that's one of the suppliers that pete's talking about that could potentially benefit here along
with skyworks, qualcomm and those guys. >> got to run. looking to brew up returns? baird is reiterating starbucks is a buy, saying that stock has become increasingly attractive and the big rally could be ahead. it's our call of the day. joined by the analyst who made it. david tarantino. welcome. good to have you on. you say you are quote, reframing the valuation argument. how so? >> yeah. we took a look at starbucks relative to some of the large cap names in the consumer staples universe largely because starbucks does have a lot of staples like properties both from a qualitative perspective. but also from a financial metrics perspective, it looks a lot more like a staples company than it does a retailer. we think when you look at the stock relative to those companies and those stocks are trading at very big valuations, starbucks valuation premium is
now close to a five-year low even though we think the fundamentals of that story remain very strong. >> yeah. it's not a stretch to call a company selling $4 to $5 cups of coffee a staple. that seems like a stretch to me. >> i would say it's a bit of a stretch. there are components that make the product, more staples like in the sense that it is a daily occasion for a lot of consumers. it helps that the product's somewhat addictive being caffeinated, and i also think that not only on the qualitative aspects, the quantitative aspect of the story where starbucks posted a 20% ebita margin makes it act like a staples company when you look at the top line and margin structure. while qualitatively it might look like a little bit of a stretch there are elements of the story that look a lot like a
staples company. >> what about the competition out there? has that gotten more difficult for them right now given the fact they are $4 and $5 versus all the competitors that are coming along including the fast food names? >> yeah. i don't think competition's a big part of the story. if you look at the metrics for starbucks it's really hard to argue that others are having a big impact. the most recent quarter they had 7% same store sales in the u.s. and that's a very strong number, among the strongest of the overall retail environment. it would be a tough argument to make that competition is really having a big impact. >> good to have you on the show. thanks for coming on. >> thank you. >> you own the stock? >> i was in the calls recently. i just got out of them last week. >> is this a stretch? >> you just wonder, we talked about this for awhile now, is it stretch when the stock is trading even higher than it is right now and you look at the p/e values of this thing. when you look longer term, one of the things all of us take
into account, they still have plenty of growth geographically. they have talked about their plans for china. is it stretched? i don't know. maybe a little bit. >> is it -- he's making the case -- >> it's a staple. an addictive staple. >> it's a staple to the high income consumer and that trend, i see as weakening because you have home price appreciation slowing, stock market gains slowing. the high end consumer might become a little bit more frugal. >> but is it just high end? the fact that it's 7% u.s. sales, same store sales that just last quarter reported, i'm not so sure it is just a high end. i think other people are willing to go out there and go -- >> it's definitely not low end. i think -- >> that's why fast food was not eating their lunch. >> you see strength in the low end consumer but not really seeing it in the mid and high end consumer. that's where i worry about. >> you guys will debate another stock that fits into this
paradigm a little later. coming up, family drama, boardroom power plays, billions hanging in the balance. we get the latest on the balance over viacom next. plus jon and pete, we said they will go head-to-head on tiffany and they are. is that stock a buy ahead of earnings this week? we want to hear from you. take our poll on tiffany. i am benedict arnold, the infamous traitor. and i know a thing or two about trading. so i trade with e*trade, where true traders trade on a trademarked trade platform that has all the... get off the computer traitor!
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welcome back. new twists today in the boardroom drama surrounding viacom and sumner redstone. hi, julia. >> that's right. it's a high stakes battle for who will control viacom and cbs and now viacom's ceo philippe douman is filing suit and challenging unexpected removal from redstone's trust. also challenging the removal as directors of theater and holding company national amusements. he is also calling into question redstone's mental capacity. he issued a statement saying quote, shari redstone is attempting to illegally hijack her father's well-established estate plan by removing professional managers, going on to say her actions amount to an
unlawful corporate takeover and if effectuated could have far-reaching consequences for thousands of shareholders and employees of viacom. this suit coming in response to a redstone statement late sunday denying allegations that shari redstone has isolated him, saying that he does not support a plan doumann is pursuing to sell a stake in paramount and saying he has diverted resources from quote, the continuing challenges facing the company. viacom shares are down around 40% over the past 12 months. this rift is unexpected, considering doumann was redstone's health care proxy until just last month. and he has done a real 180 from saying that redstone was alert and engaged in november. now they are describing his cognition as impaired. if he wins, he will be reinstated as a trustee and redstone would be deemed incapacitated. if doumann loses, shari redstone
could fire him as ceo of viacom. back to you. >> those words months ago coming back to haunt him a little bit or at least being at the very least used against him today with miss redstone. >> exactly. exactly. just this drama continues, there were statements flying back and forth between doumann, viacom, shari redstone, then sumner redstone and the lawsuit today. this saga will be going on for awhile. >> no kidding. julia, thanks. by the way, as part of this conversation, just before we came on air today, i spoke with mario govelli, the number two holder of the voting class shares in viacom. he called the drama between shari redstone and philippe doumann quote, creative tension that he hopes will ultimately be positive for shareholders, saying the events would continue to accelerate the focus on the fundamentals of the company. he also reiterated that viacom should bring in a minority investor in paramount which he long advocated. he said that in the past. he told me he has not spoken to
the company, nor has he spoken to or made any attempts to speak to sumner redstone himself. as for mr. doumann's future, mr. gabelli says the viacom ceo should not leave the company now. he stood by his earlier comments that he's given him another six months now to try and turn things around there. you have the sense from the conversation he's being loyal as mr. gabelli is. we will see how long that lasts. he says he will gave doumann six months to try to turn this story around. as julia said, the shares are down 40%. you own the stock? >> i do. >> for what reason? >> there was something, steve weiss and i were talking about all these various media companies and all the struggles they were in. it seemed like viacom was starting to move in the right direction. they certainly have not. all we have seen is noise after noise after noise. obviously, all of this is just causing, look at the way the
stock's moving today. i almost would have expected to see the stock getting hit a little bit. instead here we are up and it's actually off of the highs but was nearly $41 a share earlier today. i think it's an interesting reaction. mr. gabelli needs to get a little more aggressive -- >> he's been involved for so long in this story. i didn't get the sense from our conversation that he was ready to go there yet. >> it's not his style. >> i'm not the one saying he appears to be loyal. he said i'm a loyal guy. i have been there a long time. i gave the guy at the beginning of the year, a year to turn things around. that being dauman to try to turn things around. i'm going to stand by my word. it's almost june. he's got another six months or so to do something but he better get something going soon. you are already halfway through the year. he hasn't done what i told them to do with paramount. maybe something amc-wise.
>> taps that's the thing. it's not static. stasis is bad for these guys. they have been hemorrhaging talent with paramount and other properties under the viacom label. he has to make some sort of changes here. otherwise people like mario will give up. >> the reason for concern is because of the conversation is about management right now, not about the business model which has been in clearly decline over the last two to three years. april 28th, they report. look at the media network's advertising globally down i think 4%, dmoeomestically down . the real problem is the business model. that's the concern. that needs to be fixed. is that being done while all the attention is being shined elsewhere? >> the suggestions are being looked at to try to fix the miss in digital and sup thank. the latest poll showing donald trump closing the gap with hillary clinton in a general election.
plus a split decision on gold. the street can't agree where that is heading. (announcer) need to hire fast? go to ziprecruiter.com and post your job to over 100 of the web's leading job boards with a single click, then simply select the best candidates from one easy-to-review list. and now you can use ziprecruiter for free. go to ziprecruiter.com/offer2
lepe's foods is a locally owned here in santa rosa. as a small business, we're always looking to save money, and pg&e was able to help us. i help the small businesses save money and energy. it feels great. we looked at their lighting, their refrigeration system, and with just those two small measures, they were able to save a good amount of money. i was shocked. i couldn't believe that i could save $1,500 a month. with the savings that we get from pg&e, we're able to pass it on to our customers. it's pretty awesome. learn how your business can save at pge.com/businessenergycheckup. together, we're building a better california. over to sue herera, who has the latest headlines.
here's what's happening at this hour. president obama attending a state luncheon in vietnam. the vietnamese president thanking mr. obama for traveling so far to help improve relations between the two countries. earlier, president obama lifted the 50-year-old u.s. arms embargo against vietnam. a pair of suicide bombings carried out by isis militants killed at least 45 people in yemen. the bombings targeted young men seeking to join the army. scores of others were also wounded. after days of torrential rains in sri lanka, residents returned home to begin the cleanup process as flood waters started to recedement more than 240,000 people were evacuated. the death toll rising to 92 with 10 n 109 still missing. the latest nbc news/"wall street journal" poll shows hillary clinton's lead over donald trump in the presidential election narrowing to just three points. she's ahead 46% to 43% but back in april she held an 11 point
advantage and had led him consistently by double digits since december. getting closer and closer. that's the news update this hour. back to you. >> within the margin of error. thanks so much. sue herera with the latest headlines. where does the election factor into the projections for the market? >> that's another one. when we were thinking about what we are heading into this summer, the election's a big deal. here's what we know about the election. we publish this recently, in the five months heading up to november of an election year, the vix seems to consistently rise. by volatility -- >> just in general. >> just heading into election, political uncertainty increases and the vix increases. stocks could again see a soft patch, especially this time around where you have a lot of policy uncertainty. i think what that could do is crimp corporate spending, crimp consumer spending, as we wait and see kind of how this evolves
closer to november. >> good thought. vix at 15. >> seems on the lower end. >> volatility creeping up as you get a little closer. >> start looking towards the second half of the year. you mentioned policy uncertainty. quite honestly, not trying to make a political decision one way or the other right now but do we even know all the various positions right now from mr. trump? i think we know some of them for mrs. clinton but do we know all of them for either of them, really? are they going to start moving more towards the center? because it feels like now that it's just donald running in the race, he has started to pull more towards the center. will hillary eventually once she's able to shake bernie? >> the conversation was whether the republican establishment was in some level of denial that donald trump was going to actually be the nominee. i ask you guys the same question about the market itself, whether the market has been in denial that this could actually happen,
that there's a decent chance that it happens, and what that means for the market. >> there's got to be a lot of folks shaking their heads and a lot of folks surprised. wall street's given a lot of money to ms. clinton. obviously i believe it's 55% of the money from wall street has gone to ms. clinton. obviously, mr. trump has not taken any big donors yet. so what that means -- >> he's going to next week. >> he's going to start. then that will be interesting to see how that balances out, and whether or not those same folks on wall street start sliding over towards mr. trump as you heard more and more of the republican leadership slide over. >> i think when i was a kid i hated to swim. my parents used to get me swimming lessons. i stood next to the pool i never wanted to go in because it's cold. i would stand there. i think that's what this election will be like. once you jump in the pool, i don't think the water will be as cold as people think no matter who wins. the important thing is what's the congress going to be, what's the senate going to be.
once we get past november, whatever concerns we have prior to that, they will dissipate. >> let's do our trader blitz, four trades on four stocks making news today. first up, bayer making a $62 billion bid for monsanto. >> yeah. the secretary of ag, vilsack, was talking to the ceo of monsanto and the ceo said i'm surprised they're going public with this, bayer, that is, in their bid for monsanto. it's a 37% premium from where they started bidding and they won't engage. monsanto won't engage. i'm not surprised that they went public with this. i think shareholders are probably frustrated and willing to take the money. >> freeport canceling ipo plans for its oil and goods business. >> they stepped into the oil patch and got themselves deep into it in 2013 when they made that decision and oil was extremely high back then. you look where they are now and you look at the fact they are in such debt, $20 billion worth of debt right now. that's still a problem. that's where the leverage lies
with this particular company and this april, they announced cutting 25% of that work force. that's a concern as well. sooner or later, i think they spin off pieces of the oil and gas but maybe not the entire thing. >> something quick on square, initiated at outperform at clsa, $14 target. >> i get to balance my negative twitter view with a positive view on square. jack dorsey has not sold a single share. short interest is very high at 27%. this was a good note. this is a stock you can buy. >> let's do some gold now. got a disagreement on wall street. black rock saying gold could continue to shine. citi, though, says it may dip below $1,000. bank of america says what? >> well, we are looking for gold to hit $1325 by the end of 2017. we are looking for a little bit of down side and i think the argument is gold does well in the early stages of a fed rate hike cycle. as rates normalize, gold could do nicely as global demand picks up, gold could do nicely. but this year, what's a little
worrisome is that we have seen this inflation trade on steroids and that might be more in the commodity than we like to see. >> being the gold trade? >> gold, commodities, it's been -- we have gone from deflation and end of world in the first quarter to reflation and buy any commodity you can find. that might have put a little bit of into some of these commodities. we are looking for down side through year end. >> what do you guys think? >> it just seems to me when we heard from all the various hedge fund managers, everybody seems to be getting more and more bullish on gold, i know these sometimes come a little bit late. i don't know, it just feels to me like right now seems to be the time where people are parking, looking for places to go that are a little less volatile. gold's the spot to be. >> gold can be less volatile but the risk is we are at a 30-year low in global capacity utilization. it's hard to imagine a real
inflation pickup from here. >> coming up, it is brother versus brother on tiffany. the bull and bear case on the stock just ahead of its earnings this week. we want to hear from you on twitter. is that stock a buy? before the break, a look at the halftime portfolio leader board. some recent trades as well. joe with a slight gain. back after this. can a toothpaste do everything well?
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next janet yellen or bernanke. we meet the best and brightest in the economics world and they are still in high school. scott, back to you. >> see you in just a few. it's a bull versus bear debate between the brothers najarian. tiffany is set to report its quarterly earnings later in the week. but after a 15% pull-back this year, could the luxury retailer stock be set for a come kocomeb? doc, you are the bear. >> the reason i'm a bear, judge, is the chinese spending in the americas was down in q4. i don't know that it's picked up yet. i think that's one of the big negatives. another, e-commerce is about 6% of what tiffany's does. >> not big enough. >> it's not big enough. here's why. the real real and ebay. when you have sites that are putting up tiffany goods on their sites, really tough for tiffany to sell it at full price when these sites are selling at a discounted price. margins, that's another
consideration. given that their ceo even says margins could be compressed for the whole year i think if tiffany's pops it's a sale here. >> i think the arguments i would make back to that right now is tiffany's is not really somebody that i don't think that's an e-commerce type world. >> i agree. >> they should be bigger than that but that's not what they are. but they are going out, the ceo has actually made it his mandate to make sure the company stores, they actually have had a strategic mandate to get out, clean up the stores, get themselves in better position than they have been in the past and the strong dollar has weakened some and in terms of china, over in mainland china, the good news for tiffany's right now is the fact that as that continues to grow out the middle class continues to grow up, stabilization in europe, there's a lot of reasons right now after a 15% pull-back, on that pull-back, a lot of this is starting to get priced in. >> be feels like you are stretching to find the bull case beyond the pull-back. >> well, i think that that's part of the bull case, though, is the fact that this has been priced in. so you look at some of the numbers, you look at what they
are looking for in terms of earnings and revenue, i think those numbers have gotten depressed so far, all they have got to do is beat those numbers and i think the stock goes higher. >> if they lowered that bar far enough, then he's right. if they haven't lowered the bar far enough, in other words, if the ceo has been too optimistic, then the stock could see another whoosh lower. >> what do you think of the absence of a true ceo, when i say true ceo, i mean they have an interim ceo, are either of you concerned or are you confident that when the new ceo comes in, he will fix the problems or we are spending too much time with the malaise they are experiencing now? >> i think it depends on whether or not like for instance apple when they brought in the lady from burberry, if they make a pick like that, that would be very positive for the stock and i would have to dump out of my bear case. >> by the way, the cfo stepped down, right. talking about that a little bit. look at the performance over the last couple years. if that's the performance, if the concerns are about the stock, then maybe it's a good thing they have gotten rid of
the cfo because the stock's down over 30% over the last couple years with this cfo in place. maybe that's an area where they could get themselves better as well. >> not that our poll is scientific or a great large sampling, obviously, but 84% of the people who voted say don't buy the shares. it seems as though sentiment needs an awful lot to turn things around in this story. >> there's no doubt about it. we know how bad the sentiment is. you look at the luxury brands across the board, all of them have been taken to the woodshed. this is one that has already been taken to the woodshed. that's why i say if they can get above some of the numbers, then jon and i both agree on the fact if they can beat the numbers, we will see the stock possibly actually start moving back up to the upside. coming up, health insurers versus obamacare. how that fight over what they charge could impact what you pay and the stocks in the months ahead. plus two traders are going global. the under the radar plays you might be missing today just ahead.
health insurers fighting over what they can charge under obama care. it could have big implications on how the stocks perform in the months ahead. we have the latest. bertha? >> scott, you know, consumers are going to get tlir first chance this week to look at obama care rate requests for next year. they should brace for sticker shock. blaming from rate filings, a lot
of requests for double digit percentage increases. washington state and oregon and 30% from the major insurers, 17% in new york. and more than 23% in virginia. part of the reason the government reinsurance program which has helped offset some losses on exchange plans goes away next year. so insurers are trying to mitigate the risk as much as they k one example, they're eliminating the lowest tier bronze plans which the company says will be a 70% increase for insure it's they use them next year. they make are popular but big money losers because of consumers use them to gain the system. >> they end up paying as little as one month's premium on the cheapest plan that they can buy on exchange and then get a host of procedures and services
delivered before they disenroll. >> that's bnt big problem. that kind of turn on the plans. now regulators are going to cut back on a number of these requests. we won't know until later this summer. but they think the higher prices will keep the exchanges from growing, continuing to drive away young healthy enrollees. >> thank you so much. live at the nasdaq. you have the stocks. naet is up 2% year to date. united health. others have done well. this could have implications as to how the stocks perform within the next 12 months for sure. this is an under the radar thing that a lot of people haven't talked about until she brought us this today. >> right. a lot of the names have been on for a trade on my radar, scott. they haven't been on for a long term investment at all. >> because? >> big trades over the last three years. >> in anticipation of obama care and sort of the -- and the orientation of it early on. >> and now the realization that just as bertha said, an lot of folks that are sick are on these
plans and a lot of the other folks are not wanting to be part of the exchanges and so forth. that is something they have to get as she said, a lot more healthy folks into the mix otherwise these plans are going to go down zblment you love health care. >> i do. >> you say stel staples. sell starbucks. >> sell staples and starbucks. no, sell consumer staples, buy h health care. that's the call. we have a chart. i don't know if you can throw it up here. >> we can do anything. >> we don't have it. >> trust me when i tell that you consumer staples is trading at the highest multiple to health care we've seen in history of our dat yachlt these are two defensive sectors. you want to buy drug stocks and food stocks when the world sending y are they so differently priced? i think it's politics. and it's the risk of regulatory overhangs. if you look at health care, it's got the great secular bear case.
we're getting older and having fewer babies. we're going to need more drugs and buy less stuff. we have a case where valuations are at all time extremes. and then on top of that, if you look at headquartlth care stocky delivered. they have the highest percentage of health care prices. they've been beaten down for political risks that is overly discounted in the sector. >> coming up, a look ahead to the week's big earnings reports. we'll go. >> narrator: ra-- under the rad when we come back. r brain, which controls your thumbs, which control this joystick. no, i'm actually over at the ge booth. we're creating the operating system for industry. it's called predix. it's gonna change the way the world works. ok, i'm telling my brain to tell the drone to get you a copy of my resume. umm, maybe keep your hands on the controller. look out!! ohhhhhhhhhh... you know what, i'm just gonna email it to you. yeah that's probably safer. ok, cool.
welcome back to "the halftime report." "power lunch" getting set up. going to join
you in a minute. let's go. >> narrator: -- let's go under the radar. joe? >> the g7 had an extensive conversation discussing the japanese yen. hawkish fed. chinese currency the last couple of days. it's gone the wrong way. devaluation conversation once again emerging market currencies. i'd ring the register booth to the sidelines. >> okay. doc? >> brexit, i'm focused on it. >> you are? >> absolutely. it will spike -- >> pounding the table. >> as we get closer and closer if, it goes to more -- i'm 82% in cash right now. if it goes to more likely than not, then the volatility will be well north of 20. >> you're 82% in cash? >> right now in the halftime portfolio, yes, sir. >> i thought you were talking
about the real world, doc. >> number. >> what you are going to be watching in the weeks ahead. >> like i mentioned, i think we're heading into a soft patch. i would own defenses. i think health care wins over other sectors. >> great having you as always. >> thanks. >> thanks for watching. "power lunch" begins now. ♪ are you ready for the summer ♪ you are ready for the good times ♪ >> are you ready for the summer? wall street as the odds of a june rate hike come increasingly into play. the question becomes, will the fed make a plash in tsplash in pool? glad you could join us. tyler mathisen. michelle has the week off. man, she earned it. we begin this monday with the countdown to the fed just 16 full trading days to go before that june meeting. so how is the market preparing? >> let's take a look at tom chu. >> if we're