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tv   Fast Money Halftime Report  CNBC  May 31, 2016 12:00pm-1:01pm EDT

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trading is fierce. >> and i have beige book tomorrow, and 80p, and of course, jobs friday. >> yes, sales. a lot packed into a short week. that is going to do it for us from "squawk alley" and we will see you tomorrow from the code conferen conference. let's go to "wapner and the half." ♪ >> thank you, guys, so much. welcome to the "halftime report" i'm scott wapner, and now, will it be a june jump or june swoon for stocks? with us is joe ter nova, and stephanie and jon najarian, and steve with us. and now, we will be kicking this
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around, as you heard kayla tausche talking about so much on the table this week. so much on the table, and what do you think that the month is going to go, a nd what is the traditionally the worst month? >> well, now that the earnings are over, we are macro focused an data-dependent, so it is more volatile than we have been seeing, but i am encouraged by what we have seen so far, and especially for the consumers. and 75% of the gdp is consumer, and we have good numbers in spending and income, and jobs an wages, and friday's number is very important. >> and comps is not good. >> well, it is spending with on the range, and okay. and volatile series, and the consumer sounds good to many, but what is bothering me is manufacturing. maybe the oil and the gas bounce and maybe the dollar kind of stabilizing-ish, that should l help the manufacturing going forward, because that is the one piece that i am going to be watching particularly close ly. >> and pete, you saw as we come on the air literally on if midst
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of the sell-off of the highs of the day. do we get swoon or jump? >> well, overall, i'm expecting a correction. last week i did buy some volatility and early and expecting to see the volatility jump. maybe a little bit of it this week. and as a matter of fact, when you listen to what you are talking about, steph, look at the manufacturing, there are some good numbers out, there and this is why the fed is positioning the way they r and overall, the numbers are reasonably well, and you can see the market, and you have oil up to 50, and gold on the move and the 10f-year is moving around a little bit off of the lower end numbers, and so there a lot of reasons to be excited about it, but i think that we will see some sort of a push. does that mean i expect june to be down for the month? not necessarily, scott, but i do expect to see some move that is going the push it to the downside and shake these folks out, because we have had rotation. >> and what is going to roll over? biotech up 5% month to date or tech which is up 5%, and the
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banks up 3.5%? >> i don't believe it is bank, because i am in the camp that the fed is going to be making a move. and looking at the fast move, apple and the way that the chip stocks have made a dramatic move in the last two week, it is a significant move. and if you are looking at the last two weeks, they have been on fire with apple, and apple is the impetus of that, and i believe that we will see a pullback, but nothing huge, and the market won't sell off 10%, but i do expect a pullback, and then we will start to bounce again, and the rotation starts all over. >> the other side of that? jump or swoon? >> the pessimism is so prevalent in the marketplace, and this is why we could be high, and so many known headwinds out there, and it feels as though the market wants to technically breakout, and yet, the people are on the sidelines to chase the way in, and dispersion seems to bewinding which is a good thing for the markets continuing to rally, but it seems to defy
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log logic, and sell in may and go away was seeming to work, and so the brexit vote, and we will need to have markets have more of the binary swoon or jump, because you willt need the exogenous event to have it work. >> and josh, this could be the week that sets the table for a while to come. if friday brings a jobs report that is better than expected, who knows what the ecb is going to do thursday, but if the table is set for the june rate hike, then in a couple of weeks, we are talking about the rate hike. and play a big role into the june jump or swoon? >> right. we have the adjustments of the expectations, and then rally. and every event has been the same way, and i can't think of any that didn't. so maybe what we have seen in late may has been this rally into what many people think is
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going going to be a rate hike. who knows. but the bigger picture is that for every bullish fact, i can cite a bearish one, and we can play the thenarrative game overd over, and cut to the chase, and the tie-breaker, technicals. if you are back last year challenging the same level about a year ago, you had a really bad setup. you had the s&p making a series of lower prides in terms of the breadth, and the exact opposite right now, and 70% of the s&p names are above the 200 day, and then the small caps are acting better than they did, and year-to-day high, russell, and the microcaps are look good, too, and then finally, looking overseas internationally, and a better tone to the global stocks than those supporting us last time when we failed at the level. so if we flip a coin here, and say, well, where is there a little evidence on the breakout, it does not happen this week, but it is headed in that
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direction. >> and i was going to ask that some people were asking the question of maybe our colleague carl quintanilla on the show prior that some people are talking, what is first, 22150 o the s&p or 2050? >> well, i don't see pessimism, but nothing but optimism, and now suddenly, oil going sup the greatest thing nb the world as we press to $50 and people are grasping, judge, right now on the things that the reasons that they should be and want to be in the marketplace. i look at the volatility index, i don't see the pessimism, and where we are trading, and it seems that people are very happy with where the market is. >> and positioning is very pessimistic. >> and the institutional money flow is showing that money is coming out of the funds. >> and in staples, and utilities and telecom and not the cyclicals. >> and the bond futures have never been -- >> well, let's talk to the
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somebody at a big institution, black rock, and our next guest russ costrich says that you should not expect much from the markets. and he is live in san francisco. welcome back. >> thank you, scott. >> you are a pessimist? >> well, i wouldn't say pessimist, and i don't believe we are running straight up to 2200. and i agree with the comments, because the fundamentals are okay, but it is hard to argue that there is not a lot of complacency in the markets, and the valuations are stretched by most historical measure, and the volatility well below the historical average, and while the economic data is better, we are stuck in the environment where sluggish growth is not giving a tail wind to irnings. so in that market, do i believe that the market is going the rip? i think so, but i doubt it if we see the dollar moving higher. >> and if i said to you, 12050 or 2150 on the s&p you would lean 2050 first? >> i would go to 2015, and
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looking at the volatility in the low teens with everything in the world, and the credit markets fragile, it is going to be hard to offer the gains into the summer and fall to offer a volatility in the fall. >> and where would you be invested in the u.s. market? where is the best place? >> well, you want a barbell. so in looking at the secular growth themes. technology, health care and where the companies can grow their earnings organically, and on the other hand, you want some carry in the portfolio, but the problem is seven and eight years into the extraordinary monetary policy, it is hard to find anything with yield that is cheap. some of the places that are cheaper on the relative basis is u.s. telecotelecom, and the aig. >> and houw about the brexit, ad how does that factor into your
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near term with a negative tone? >> well, i am going to the call a cautious, but i won't quibble with you. >> well, you r but that is neither here nor there. >> and okay. and brexit is a tail risk, and when you are looking at the recent elections of europe that i am thinking about the uk election, and some of the referendums in greece, the polls have not been particular willy accurate, and whether or not it is a real risk, i dont n't know but you have to factor nit. and the fed, it is not the end of the world if they go in june or july, but the bigs issue is what is going to be happening in the corporate earnings in the backhand of 201. >> do you like gold here? because there are sniffs that the trade is tired? >> well, gold has come off of the highs, but it is still up 13 to 14% year to date, and now, gold, it is best in the environment in which the real rates are low and negative, and you have real rates that are
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negative out to five year, and it is inflation that is firming, and also the case in the u.s., and second, if you do believe that there is some risk that the volatility is going to rise in the summer. gold is an effective hedge. we have seen it going back to the environment where gold has had a negative correlation with the stocks and the credit, and you think of the hedges in the port foal e owe, and gold is one that will arguably work in the situation. >> and so, russ, thinking of 2050 or 2150, what you telling the clients with their portfolio in that environment? >> well, the stocks are better than bonds bshg you have to have the modest expectations of what the stocks can do in the cycle. i spoke about the carry a few moments ago and thinking the about parts of the portfolio to get some decent income, and 4% to 5% yields with the modest volatility is not that exciting, and it is not the type of thing that sets people's hearts racing, but if we are in a flat market, and difficult to get the
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volatility to rise, that is not a bad thing. >> and if you favor are the stocks over to the bonds, but you think that the stocks are expensive by the historical valuations, you must think that the bonds are blown out in price? >> and di fine the bonds as the sovereign debt markets and you have a case in the world similar to 30% and 40% of the sovereign debt is now traded with the negative yield. you are paying for the privilege to help governments in germany, e japan and switzerland and yeah, that is expensive. >> fair enough. i won't quibble with that. russ, see you soon, and thank you for coming on. blackrock's russ koesterich. >> he said, where do you find cheap and yield, and that is financials and tech. and we have seen it moving to the upside and i know that i am arguing my side that it is is
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going to be pulling back, but those are the two areas of the money flows starting to flip back in this rotation. >> and those are two incredibly important and big parts of the market, tex and finanphfinancia the if the rotation continues in the sectors, it is positive? >> well, it is not just tech and financials, because every single sector in the s&p 500 other than the consumer staples now above the 20 and 50-day moving average, and the participant, and forget about the polls, they are telling you with the money, they are not concerned about the brexit, and okay with the 50-50 sh shot. >> and health care and tech are the main sectors that are doing very well, and still very cheap. i argue that with the financials, we will have ccar and learning more about the capital allocation, and so you could say that the yields are going higher in the financials. >> and you have interesting midday in the market, and we are going to continue the follow
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that. and plus your minute-by-minute trade. here is what else is coming up. >> carl icahn's billionaire bet, and his stake in allergan, and what it could mean for the stock and the company ahead. and one of the most popular etf's may expose more of your money no the chinese markets. we will debate the risk as and rewards. and now, lebron james and steph curry, and the real battle is off of the court between under armour, and phi k and nike, and debate which is better for your money. that and more on the halftime report. there's a lot of places you never want to see "$7.95." [ beep ] but you'll be glad to see it here. fidelity -- where smarter investors will always be. if only the signs were as obvious when you trade. fidelity's active trader pro can help you find
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smarter entry and exit points and can help protect your potential profits. fidelity -- where smarter investors will always be.
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we are back, and carl icahn has a new stock position, and our billionaire investor tweeting that he is taking a large stake in allergan, and he is a supporter of the ceo brent saund ers and he says that he has no reason to believe that the investment is made for the purposes of influencing the management or control of the company. and dave wells of fargo covers allergan, and it is good to talk to you again. and what is your reaction of this one? >> well, it is great news, and carl icahn is one of the greatest investors of all time, and it is a clear endorsement of the ceo brent saunders and the strategy, and health care, carl icahn has a great track record. >> and is that sort of just what
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the doctor ordered for the stock that had been under pressure since the pfizer fall apart. >> well, he has timed it correctly. there is no change to what allergan does, but i think that carl icahn with the great timing has come in to place it once this teal is about to close in the next month, and the company with a big influx of cash, and detinue tral, and buying back stock. >> and what does that mean for allergan, and what they will do next from the strategic standpoint, with carl in there? >> well, you know, in is a call that not everybody wants the get, because even though carl icahn is not call ing fing for activist position to be calling for the change of the board, but he is focusing on the shareholder returns, and the smart buybacks, and smart deas.s >> what rating on the stock currently? >> buy rating or the outperform rating on the company. >> and you had that before you found out about this? >> correct. >> and so you anticipate another
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sort of the deal of size to make up for the fact that pfizer is not? >> well, no, i think that they will continue to do both deals, and they recently announced a big stock buyback, $5 billion stock buyback, and they might do another five or six billion, and they will see where the buyback goes, and the stock is at the end of, that and then decide. >> and how about more broadly in the space itself? have we seen a turnaround to actually believe in? >> so far in the space, we are starting to see some suns of the improvement, and you know, the last two years is really has been a, or maybe the last year has been all about valeant, and inversions, and the problems with the sector, and recently though, we are seeing the companies step up, to put their toe in the water to do system deal, and jazz pharmaceuticals is announcing a deal. and the sector of the sentiment is starting the turnaround, but the the real turnaround has to
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wait for after the election. >> and back to us for a second, because you touched on it, do you expect to see more yields in the space going for war and you talked about people dipping the toe into it, and do you expect that to accelerate from hoar? >> yes, from the last month or two, and there is a derth of them, and people will be much more careful on how they build their business model. you will see the strategic bolt ideas, and the promotion of deal after deal after deal, and that business is over. >> and david, josh brown. this is a historically pharmaceutical drugs, more defensive sector than not, and i think that the performance from 2012 through 2015 brought a lot of new investors into the group which is great, but then a name like allergan which drops from 330 down to $200 in the space of six month, and given that we could see it with the large cap names, what does it say for this group in the asset class, and are these trades now, and not necessarily investments at least
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for the more consecutive investor who had been historically looking for the defensive qualities. >> and when you see a stock going from $50 to $300 in a few years, you have to wonder, you know, what is built into that, and likewise, when you see a stock going from $300 to $200 in a year, you will get a lot of value investors who then come back to it as an investment, and not the story. that is what we are seeing in this part of the market right now, and in this part of the sector is a separation between what we are really interesting and fun stories before to what has a pipeline and what has cash flow, and what is investable, and in allergan, it fits that category. >> and david, thank you for jumping on the phone with the insight. again, david maris on this one from fargo. >> and he has a long history of understanding the space, and -- >> well, to your point, he understands saunders as well and
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saunders at theest. >> yes, but there is a similarity of the investment in apple, and the investment in allergan, but he is not coming in as an activist, but he is seeing the amount of capital from teva on the sale, and the tremendous cash, and the ability to allocate it back to the shareholders. >> i think that you can buy it, and i was buying it and i was buying it on the crack, because it is trading 15 times forward and they have 17 drugs in the pipeline, but to be realized if you will, and great balance sheet, and a great ceo, and i don't believe they need to do a deal. they could do it, but the pipeline is enough to carry them for the next couple of years. >> as someone holding the big position, you are happy with the news that you got? >> absolutely, but i don't believe it is too late to buy it. >> and you own it? >> no sh, i got out of it. they were buying the may and the
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june options which is the trigger point for me, and i love the pipeline, but there are other big names after allergan has made off of the lows. >> yes, the group is underperforming, and lot of values, and this is one of thema and shrewd move by icahn and he can come in and say that he is not an activist, and if he goes right, fine, but if he goes wrong, he can change the posture, and if you are watching, that is the optionality to play out. it is a good situation, and i'm not upset to be in the same name as steph, of course, so i agree with everybody on the desk. >> and coming up, we go inside of steve cohen's trading school exclusively to see how he is building the next generation of great stock pickers, and also, time to buy ahead of michael ko kors, and what does the desk think? and also, we have heated in the market, the dow is down, and the s&p is down, and looking at the lows of the day, and it is
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defensive zone of health care and utilities and telecoms leading the way. 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.
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michael kors is caught in the retail wreck, and shares are down 20% in the last month. our next guest is sticking with
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that name, saying that the now is the time to buy it, and the concerns are likely ooverblown. aaron murphy is the analyst at piper jaffray and joining ounce the phone, and it is the call of the day, and erin, it is a big one. >> thank you for having me on the show. >> and you know, you will hear a apparel retailer get upgraded and you say, how is this stock going to be performled in an environment where so many others are hammered? well, it is a fair question, and when you take a step back, and you look to your point, it is a tough environment. coming back to look at the brand, itself, and michael kors is a global brand and there is a lot more stability in the brand and not what we are seeing here in the united states, because there is a much bigger growth story in europe and asia, and there is a number of new categories across the lifestyle offering this fall. so we think that despite the challenges that we have seen, and particularly domestically, we think that there is a bigger growth story ahead h for it, and we like the balance sheet, and
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the stock valuation is very attractive here, and we would be buying the stock here on a much more stable landing than most of the investors assume. >> and stocks are higher, and you can see a 50% upside to where we are now? >> yes, and we are looking to where the stock is historically trading, and it appears that a company like coach who went through a brand transformation, and kors is trading below coach's top multiple, but below a multi year average, so we are comfortable to apply a 15 times multiple tock, and we like this stock against the growing concerns that you are alluded to with the retail tape in the last two to three weeks. >> yes, erinn, how comfortable are you with the growth margins with the price matching? >> yes, more on the fourth quarter, a because we expect that to be in line in itself, and we think that there is a
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little bit of the erosion on the growth market for the q4 models than the q1 and bigger issue is that it is a company that is pull iing back at the wholesale and so one thing to look at is that they is have been pulling back on the wholesale to try to get the inventory as in check and not as significant as others are assuming. >> erinn, it is josh brown, and why should we think that they are g are going to be trading back at the multiple given that the cachet of the brand is at least gone for now, just like what coach went through, and number two, the fashion bloggers and the people who are more focused on the clothes than the company say that the stores are not what they were, and there a little bit of the chaos in terms of the mix, and so why should this get the old multiple back. >> and well, it is not the old multiple, but it is an average apparel group multiple right now
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which is about 15 times, but assuming it gets back to the level, the rational is that it has growth ahead of it in other parts of the world. you have 20% of the business in europe that can accelerate from here, and you have got other international catalysts whether it is china or what they are doing in korea and japan, and it is not just about a u.s. kind of the u.s. brand at this point, and it is much more global, and not getting the credit that we believe that the brand can grow single digits both top, and bottom line. >> thank you, erinn murphy from piper jaffray. you guys buying this or not? i have a feeling that josh is not. >> and no sh, it rolled over, a so, no. >> and two-month period from january to march, and the problem is the wholesale accounts, macy's, is 50% of the business model, and they are telling you that the inventory is building, a dhand not sell
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the product, and the traffic is not, there and the ceo of pvh talked about the challenges of accessories, so i understand what erinn is saying in her call to move frit neutral to overweight, but it is not like she has been overweight all along, but the environment is so cyclically challenging, and a significant part of the business that you cannot dismiss. >> we are not declaring every apparel retailer dead? >> no. >> no. >> but it is not dead, but there is a rotation going on there. a rotation here in the sectors. >> sorry to interrupt you but sinmon andtone is like if you are operating a brick and mortar apparel company and you are not named nike and under armour, you are finished. >> but to joe's part, it is not just macy's, by nordstroms and the big folks out there trying to sell the handbag, and si d-- it is difficult, and it is
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inventory, and extreme discounts. international growth is everything she is hitting on, more and moshgs and we all know the story, and that is going to be plague out, but if they are weakening here, scott, that is a really prob for course. >> and a chance to pop in this, because if you are looking at this stock down 19%, and 9 times the forward estimates and everybody knows the bad news, and comparisons, because the store sales comparisons is down, and the headline is good, and you might get a pop, and fade t it, because the competitive environment with this space, and coach being a stronger competitor makes it a big challenge to own it. >> and a couple of the weeks ago when all of the retailers were plastered, some of them did pop off of the bottom. >> and this is a franchise highly levered an sensitive to the model of those wholesale stores. 50% of the revenue to pete's point, they need to diversify and understand the growth opportunity is global, and less domestic. >> i would say that i would
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rather own a department store than this one, i'd rather own nordstrom. >> and coming up, your money could have expose sure no the chinese market, but is that a good thing? we will talk about that when we come back from china with that story. seema? >> well, researching conmy, and the investment opportunity, and what does that inclusion mean for your inv investments coming up.
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welcome back to the "halftime report" and now over to sue herera with the headlines. >> this is what is happening, scotty. the state department is warning american americans of possible terrorist attacks in europe this summer, and saying that they could include restaurants, commercial sites and transportation. and t he alert expires august 311st. >> an american man charged with murder over the killing of four of his relatives has gone on trial in the czech republic. prosecutors say that 23-year-oldken dahlgren fatally stabbed his wife and son. publicvice employees
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took to the streets to contest the retirement age in belgium. >> and chipotle cut their fund after the e. coli outbreak. it has come off of the lows burk it has had a tough down almost 39% or close to that. >> yes. >> and back to you. >> and that is a huge deal. the kcontra fund is a huge deal and a many of our investor r and dan abramoff who runs it, and any time they back off of a major contract is a big deal. >> i was not surprised to see it off of the stock, and moving down, but it is surprising how low. >> thank you, sue. what do you make of it? >> well, the reputation, and the brand chipotle is going to take
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longer than expected. and what e shdoihe is doing is the shares down from the high down, and you see that they are needing to liquid the stock, but it is not liquid. so you don't buy the stock, because it is telegraphed they want to exit more than enter, and it is when the market can give them the shares, so i think that it is remaining under pressure. >> and wolfe to most popular mutual funds to etfs about to become more risky? cmi who operates the largest fund is now looking to the trade in the china index. and seema mow di is here, and good to have you back. >> yes, scott. cle clearly, a couple of risks to
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this, and from the conversations to the people on the ground, there is a lack of a defined market strauk chur in how china handles the trading halts, and the ipo process which of course is a big concern. i also got the feeling that the government is playing a passive role in monitoring the public and the private markets, and it is this type of the government oversight that sunls that the chinese leadership is still not ready to let go, and let the external market forces the dictate the price action. so it is the lack of the market liberalization that is a concern, and geopolitic as, ande south china sea dispute is seen the number one risk that could derail the china and the u.s. relations, and the vice minister of china saying they are ready to be retaliating if they are provoked by the u.s. and now, despite, that one opportunity is in health care. 96.6 billion people in china have diabetes, and one of the highest in the world, and that is due to the unhealthy lifestyle choice, and the sugary
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drinks. and chinese young are getting obese, and this is providing an opportunity for those who are specializing in diabetes care. and another thing that i witnessed on the ground is the air quality and the groundwater getting worse. in beijing, you can only see 50 meters ahead, and it is hazy. so some pharmaceutical giants are working on the medicine to fight this health care crisis. but the other spart tech. and i was told that the most valuable company in five years is not apple, but alibaba, or others, because it is compelling, and anecdotally are, everybody is on wechat which is seen as a powerful communication tool from government officials to tech entrepreneur, and they
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own that, so it is a name to keep an eye on. >> and the situation of the eem is where i want to focus, because so many people who watch our network or play that inv investment -- good bor b-- good thing or bad thing that mainland china could be included for the first time? >> well, the question is if they could, because there were five mandates to be given by the mdci and they have accomplished two of them. is ate good thing? we -- is it a good thing? well, with quality companies coming in -- >> quality in quotes? well, that is the question, are the potential rewards worth the risks? >> it is a resounding yes. we don't go to war with companies that have well developed e kconomies linked to
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other economies around and the stock markets open, and having the funds back and forth, and the banks and broke rajs cooperating, it is a clear positive and not a necessaryt e necessarytive, and number two, it does not matter how you feel about it, because from the market capperspective, if the investor is going to be buying the eem or other products to track the world, the chinese stock capitalization is enormous, and if it were accurately reflected in the indices, we would vul a more. >> and just a fundamental base is that it is absurd that you would be buying into the largest global index, and it wouldn't have any -- >> but it is happening a at the rights pace, because there are governance issues and reasons why we could not open up the floodgate floodgates and do it overnight, so that the pace is correct, and to seema's point about the chinese tech company being the large nest the world, i agree. the way to play that if you
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agree with seema and it is to look at a thing like kay webb, because it is very hard for a u.s.-based investor to find out which chinese internet company yahoo! and which is facebook, but kay webb will give you all of the names in contention for that, and that is a common sense way to approach the concept of internet penetration, and all of the things going on in china. >> interesting stuff. seema, thank you so much. seema mody. and steph and lebron are head to head in the nba finals, but is a battle are brewing off of the court with their endorsements? you know there is and plus, we are watching a yield of the 10-year note with the highest level, and when go to the pits for more on that.
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i'm michelle carruso
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cabrera, and here is what is coming up on power lunch. the world's biggest banks with the details ahead. and the number one thing to watch on the oil markets ahead of the opec meeting. and also, later a sign of of the times, and the world's biggest hedge fund gets a giant check from the taxpayers of connecticut. all of that and more from the top of the hour, and all of that and more coming up, but first, back to scott. and the 10-year yield is hitting a high today, and jackie deangelis is tracking that, a jounld jobs report, and so much to consider, jackie. >> well, so much, scott, and you are right, and we saw a little action with the yield as well, so we are looking at the volatility with the key events, and the fed meeting is e key to them. and jeff, what are you seeing? >> well, the yields are going higher and i have talked to people who say that the yield s
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are higher, and it is probably because the fed is going to tighten, and, the reality of it is that they can go high er because the fed is going to be tightening, and the stock market seems okay with that, and that is the biggest part of the equation, and if ever a time for the stock market to cascade lower to get used to the new world, and is it is going to be forcing money into the treasury, and the stocks will do fine, and i think that the rates can go higher on the long end. >> and scott, nation, what are you seeing on the ten-year? >> well, i agree, and the levels are important, because the 10-year treasury futures is going to work from the top the bottom, and before you look inside of the wedge, you will see the higher highs and the lower lows, and that is the price basis to where we have seen the higher highs and the lower lows for the yield, but i'm with jim think agatha the rates will head higher over the next month. >> and that is going to be live what we are talking about at
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1:00 p.m., and we will talk about how high, as we will find out about the preview of the opec meeting on thursday. >> thank you, jackie. and just ahead, steven cohens is taking on what he calls a lack of talent in the industry, and so we have a exclusive look at what he is doing to turn it around. and now, look at the race at the leaderboard with joe terranova still at the top. i'm here at the td ameritrade trader offices. steve, other than making me move stuff, 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.
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built for business. hedge funds are having a rough go of it lately and one legendary money manager is blaming it on a dwindling talent pool. hedge fund titan steven cohen saying this at the milken conference earlier this month. >> frankly, i mean, i'm blown away by the -- you know, the lack of talent. it's not easy to find great people. >> well, cohen's .72 is trying toe find the next generation of great stock pickers and gave our kate kelly a new look inside the trade school. tell us about it. >> scott, i recently spent a morning at cohen's firm making the pitch for this newly established school called the academy. >> beyond financial accounting and beyond economics, also we teach them how to fail.
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we teach them about developing as people and teach them aboutry silliensy. that's not something you get in investment banking training. >> reporter: the right candidates for the hedge funds like point72, now private family office, can be hard to find. in the academy's first class three people dropped out. one due to lack of interest, two because of personal issues and the nine that stayed though all got job offers, and it can be hard for the students, too. we talked to one mba candidate on his third career track hedge funds after a career in math teaching fell through and the banking business proved hard to penetrate. applied at bridgewater for two spots and to point72 for the big data analytics group but hasn't found a match yet. >> you go to school, you're supposedly doing the right thing and you hear about how good the economy is. you hear about the low unemployment rate and then when you see it, it's not all that it's cracked up to be so that -- that does give me some concern. >> he says that point72's roots as a hedge fund eventually indicted on insider trading are also a concern, but at the same time, scott, the job market is
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such that he for one feels like he can't be terribly picky. >> were you surprise that had you were allowed to have the kind of access that they gave you? >> you know, a little bit, just because they are historically very private closed firm. >> that's why i asked. >> part of this they are trying to turn over a new leaf. had this new mission. they want to operate above every single ethical standard they can, and there's this talent issue. they go trying to train people up so i think they are very much trying to train the image. inviting us in was part of that. i'm sure they see it as a helpful recruiting tool as well, but i would say other hedge funds talked openly about this issue, too. >> the lack of talent. >> is it a lack of talent or is there too much talent? i think that's the real issue. you know how many mbas there are that are brilliant compared with 30 years ago. if you had this many when all the hedge funds amassed their track record they never would have had that much alpha. so many brilliant people now. >> there's a twofold problem, the lack of talent that cohen spoke about, the experienced
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p.m. level. if you can generate avshlgs you're well ensconced in some firm, well paid and not interested in going anywhere so those people are very hard to poach and then there's the issue of training up the new generation which is what point72 wants to do the with school and there are many approaches to that but it's very hard to get through to the very best candidates and hedge funds may not be people's first thoughts coming out of school. not that they are not attractive actually. i think people think they need experience, maybe at an investment bank in order to have the skill set but banks don't do prop trading anymore and a lot of young people want to go work in silicon valley. finding the right people and giving them a skill set that's difficult. i spoke to the head of recruiting at kit dell who had an interesting thought who said we basically try to find the right candidates and we mold a job for them which is pretty remarkable. i mean, you're talking about one of the best paid industries out there. >> spoke of a greater issue of how attractive finance is these days with increasing regulation on the hedge fund side. it's harder to make money. there's more scrutiny than ever
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over the industry itself so it's something, you know, to keep investigating. >> sure, i asked jamie goodfriend running the academy, is this a game-changer, do the people you're attracting feel like they can change the world because that's something you hear about the millennial work force and she says if you make a lot of money, you get successful and become a philanthropist. >> good stuff. >> kate kelly. coming up, as steph curry gets ready to take on lebron in the finals we're looking at the off-court competition between nike and under armour when we come back. approaching medicare eligibility? don't put off checking out your medicare options until 65. now is a good time to get the ball rolling. medicare only covers about eighty percent of part b medical costs. the rest is up to you.
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all right. final touches of "power lunch." liesman throwing on his mike and getting ready. got a few minutes here. what am i supposed to say. the finals are getting set. that being the nba final. steph, lebron going at it, under armor and nike going head to head. there's last night and ketch durant making a bucket, but it was the warriors who really pulled away in the third quarter. steph curry certainly leading the way with a couple of big shots towards the end of the game. there you go. they come back from 3-1 down. how about this battle in the finals. under armour and nike, and that's really what this is. >> great for both of them. they get all the exposure in the world, lebron on one side and steph on the other side and when you look at this it's really a story of do you want heavy growth and a huge value -- you know, you're talking about a pe that's just extraordinary. even if you look at the forward pe, talking about under armour, but you do have that growth. you look at the size of shoes right now in the under armour
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portfolio, it's still around 10%. there's plenty of room for them to grow there internationally as well as here in the u.s., scott, so if you have a little bit more of that youthful spirit to you that you're looking for the growth. >> look. steph accounts for a much greater percentage of the growth in under armour's shoe business than lebron does for nike. now, okay, that's obvious. one is much more mature than the other as a segment of the overall brand. >> so you cared before about the contra fund getting out of cmg. would you care if they got into under armour in the last month and bought 9 million shares, 375 million. >> that's the kind of thing that's a vote of confidence. >> that i agree with and that's why i go with under armour. >> the thing about them you need to think where gross margins are. nike given their supply chain initiatives they are poised to actually see gross margin expansion so you have operating leverage. in my mind, under 55, low 50s
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maybe, i get interested in that. >> on price alone for a trade it's under armour. stock found support in 36 which was historic support and level of resistance as well and nike's got a series of lower highs. does not look good. >> see you soon. thanks for watching, "power lunch," liesman with his mike on now. >> thanks, scott. beware. series of big warnings today from one of the world's biggest banks. welcome to "power lunch." melissa is out today. i'm michelle caruso-cabrera along with brian and tyler. stock gen society general listing a note called black swans that could possibly derail this market. we are going to focus on four of them, china, the french banks saying there's still a 30% chance of an economic hard landing there, britain in fears of it leaving the eu and then the fed hiking perhaps faster than expected and

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