tv Fast Money Halftime Report CNBC June 28, 2016 12:00pm-1:01pm EDT
than four, but a good time to turn this over now to the "half." that's it for "squawk alley." noontime on the east coast meaning it's the "halftime report" here at post nine. take it away, simon. and here we go. welcome to the "halftime report." i'm simon hobb in for scott wapner. clearly, a market comeback. a panel of experts for the hour, joe tear nova, stephanie link, jon and pete najarian. after that massive sell-off that saw $3 trillion in market cap lost around the world. major indices higher. oil in rally mode. dollar in the treasury selling off a bit. are we looking at a head fake rally or some real stability? >> doesn't feel like real stability. does it, guys? >> we opened up. then sold off. and just sat there. >> didn't feel like people were
committed to it, simon. >> stability is the first thing that you need, after you lose the bullish momentum you have carried in the marketplace since february, markets don't go straight, bullish to bearish in terms of trends. first thing you want is stability. so -- >> hang on. isn't there a short covering element, when you've made so much on the shorts before you get to -- >> oh, i don't know necessarily that this was a market that can be described as short, just three days ago. a market that actually was very long and you're seeing positions being neutralized. so i don't know that that's the case. as i said, i think we're in a little bit of a sideways range here and that might be the best you could hope for until we get to earnings. >> i think sentiment got very, very negative. the problem is, the brexit decision has left so many questions, and now you have this hope trade a second referendum. i think last week once we got the decision one way or the other we would be okay. get this unknown to be known.
now there are so many questions and i think it's going to lead to slower growth in europe no matter what. as a result i've been shifting my portfolio from more international global, more towards the u.s. a little bit more growth versus value, because we are in a slower growth environment, and a little built more yield. so buying things like the iyr, the reit etf, first for me. buying quality companies like lowes, like visa, amazon. so a lot of different things. i think you got opportunity. because you saw the sell-off in high-quality names and taking advantage of upgrading my portfolio. >> what were you guys doing? pete? >> i flipped a lot. did an incredible amount of trading yesterday from the time we closed the show at 1:00 through this morning, because simon, i was trying to take advantage of what we talked about yesterday which was volatility. saw that volatility up and over that 26 level, almost 27. started to pull back. even with the markets down, 250 to 300 points, we saw volatility coming in. why?
because people were taking advantage of that high volatility, expecting these markets to at least calm down a little bit. maybe not get underneath the 200-day moving average, by the way is around 18. keep an eye on those levels. a little above 18. here we are under 20. yesterday all of that volatility, the reason that vix was coming down, people were coming in and absolutely selling and taking advantage of it just like they should have been, because that vix was too high. the volatility who high. gave people the opportunity to sell in to some of that premium, and we did actually see even some upside buying in the spiders later in the day. later in the afternoon. huge paper there as well. you could get that ride into today. >> jon what were you doing? >> a lot of what pete just described, what i was doing. but i think it's important to note, simon that when you look at something like, i'm going to slightly disagree with joe as far as the reaction after the brexit result that was obtained on friday, or early in the morning friday. i'm going to say that there was an awful lot of hedging done
prior to that. and the reason i say that is if you look at the uvxy, that etf for volatility a was trading both in the "halftime" and my own personal account that peaked on june 14th, well ahead of the brexit vote. after a 900-point drop in the dow jones, and, what? 78 to 100-point drop in the s&p, depending where we're measuring from, simon, it didn't get up to that same level it was on june 14th. why? well, i think the answer is pretty clear, just like pete said. a lot of people had that protection in place, and they were just both hands when your hands are out you're selling. they were selling out of their volatility protection. selling out of puts in the s&p. i think joe was right that what they're doing now is, they're getting back into longer-term trades, but all of those short-term trades flipped off on friday and again yesterday. that's why the vix was down
substantially with the market off triple digits for the dow and a good 20-some odd handles for the s&p. >> joe? >> in compliance meetings i prepared to launch new funds, but in the marketplace right now over the last couple of days what's important to look at is the longer term perspective on things. as jon's talking about activity over the last couple of days i don't disagree with jon, but that's a short-term orientation as far as it a trading mechanism. i think for the very first time since february the institutional passive, longer term type of money got challenged. something that it has seen since february, and you're actually seeing a little bit of risk neutralized on that side. so it's not just the short-term trading. it's a little bit more of the institutional money, some of the mutual fund money that's also paring back holdings as well. >> i would totally agree with you on that. a lot of people were caughten 0 the wrong side. we rallied last week into this vote. right? and we rallied on risk. not in defensives. so that you're seeing a little
unwind. the problem now, simon is, you have to wait another two weeks for the non-farm pay roll number, 8th of july. a big, bill number that is going to matter for this market and then earnings. >> why? usually that would only matter as a function of the fed. the fed's out of the game, in it? the rest of the year? >> important to see how much we're growing. what is happening in the labor force? the last report was so controversial, it was such a surprise, such a disappointment in so many different ways. was that an aberration or the beginning of something? >> as a gross driver of earnings more than anything else. >> sure. earnings the week thereafter and guidan guidance. interesting to see how companies are navigating through this. you see a couple companies, whirlpool, reiterated guidance. will people believe the guidance if the brexit situation doesn't get more of a resolution. >> the other thing i would add. talking about trading, joe talking longer term. the problem in the market,
nobody's looking longer term but they're in the immediate, simon. look at our indicators in the options world, everything is a week or two weeks out in duration. people are not pushing out further, because they have zero clarity. they have absolutely nothing of what they've got to have to be able to have the conviction longer term. >> let me ask you a question. >> yes. >> if it appears the process in the uk will elongate, which is may do, and people realize nothing is going to happen right now it could take six or three months before we have a decent idea how they're going to frame it. without enabling those to go after as well? >> i think that would slowly -- i think slowly over the next week or so we'll see people getting more comfortable. obviously the reaction in the market for brexit was immediate. it was sudden, and friday we saw that sell-off. yesterday we had the extension. now i feel we're getting a relief sort of, a rally kind of thing, but it certainly doesn't feel like people are saying, that was the bottom and we're ready to take off again. >> speaking the institutional side. the longer term perspective.
so looking at that, what pete debit phis is an environment that for the very first time and i stephanie you would agree, you do have this lack of visibility. >> yes. >> what you're doing, questioning your holdings and saying, am i in the right place now looking over the next 6 to 12 months? >> nots just brexit. also the employment report and what we were able to generate. >> i don't know if i agree with that to the extent. >> the point steph was making. >> to the extent brexit impacted multiple asset classes i think it's had a much larger significance. i think the one area you have to look at right now is you have to think about commodities, you have to think about chinese derivatives and look at currencies themselves, and regionally look at places outside of europe be in exposure. i mentioned the name yesterday like doman owe's pizza. pete and i agreed, a great place. u.s. centric but has latin-american exposure and exposure in growth potential in asia. dominoes. the type of companies i want to
ally with on a longer term perspective. not the centric focus to europe. >> okay. let's just cross back to london if we may. >> sure. >> joe? >> the fiscal clearly continues. vote of no confidence in the labor opposition leader that came through within the last half hour or so. sara eisen issen 0 the ground with the very latest. sara. >> reporter: yeah, political uncertainty, simon. i am here at a demonstration just getting underway at trafalgar square. central london, central meeting spot organized by folks who wanted to come, show support for remaining in the eu. the vote last week went against them and they are here today to demonstrate. we've seen signs that say "we are european. "accept immigrants. we are pro-europe. it's not over." people are just starting to come after work. it's a little after 5:00 p.m. here and it is raining. we'll see. at first on the facebook page, 50,000 people at least had signed up, and then the event actually got cancelled.
there's talk here that that was because of security concerns, but clearly, people are still coming out in the rain to show their support. there's a heavy police presence all around the perimeter. so they were expecting people. it is supposed to be a peaceful demonstration and right now it is just that. people standing around with signs, gathering together. we've spoken to a number of them, and a lot of them represent some of the european community that lives here in the uk. that is worried about what this vote means for them. worried about backlash and an increase xenophobia that played out as a result of this brexit vote, but it's important to note that this is the divided country, and this is jut a reminder, simon, that large groups of people here voted against the -- voted against leaving the eu and are here to show that today. back to you. >> eisen live from london with the dow up 143 points. what's coming up on the "halftime report." still ahead -- the vice president of the european central bank joins cnbc
exclusively. we'll get his comments on the brexit aftermath. also ahead, today's most interesting analyst calls. including a cautious outlook from microsoft, and a downgrade for fallen angel elle brands. and a european fund manager joins us with what she's buying and selling amid all the uncertainty surrounding a european union without the uk. it's all coming up on the "halftime report." >> announcer: "halftime report" is sponsored by -- there's a lot of places you never want to see "$7.95." [ beep ] but you'll be glad to see it here. fidelity -- where smarter investors will always be. if only the signs were as obvious when you trade. fidelity's active trader pro can help you find smarter entry and exit points and can help protect your potential profits. fidelity -- where smarter investors will always be.
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welcome back to the "halftime report." jeffries cutting earnings estimate from microsoft and lowering pc sales further, estimates. stellny told trimming in microsoft anyway. correct? >> i have. i don't think the call is new. we know pcs have been weak quite some time. that's not the growth story. the growth driver, cloud transition and margin story around the cloud transition. margins need to stabilize. the thing that's been disappointing. i worry about the european exposure, and i actually think the pull back in oracle is more interesting. risk/reward basis, where they are in their transition to cloud. trending some microsoft still own it, and adding to oracle. >> jon, are you bullish microsoft? >> still. still bullish microsoft. in call spread, simon. nerd, gutted a fine amount of risk, along the 48s, short the 52s. basically trading around 50.
a longer term trade for me. just basically willing to be in that trade. nothing with the currency yu cu changed in the vote. nothing changed in britain. and this applies for technology which makes so much money in europe. if the sterling is going down, less in dollar terms, isn't it? >> if they repatriate? >> yes. >> and most of it, in apple's case, stay overseas. i don't think they'll repatriate. sorry. >> and companies, many have 40 percents for 50% of earnings derived in the month of june for the quarter coming up. can you just imagine what happened in the month of june for many of these companies and what guidance is going to be? you have to be selective. why i actually prefer oracle. they just reported. we have a little time.
i think you'll have a lot of companies being very cautious on the technology space. >> did you buy microsoft? >> i did not. deciding yesterday which of the two names i wanted to buy. microsovlt or cisco. i went with cisco. who is there ceo and where they're moving the company. i still like microsoft. the focus on the cloud is who they are. 2016 is their aim. look where they're going, pc, we all understand, it's dying. all understand that aspect of it, but i go to cisco. the reason, almost a 4% dividend yield, see the growth they've got and it's the name i like the most in the tech space because of the transition and where they are now. >> swap to our second trade. sorry, did you want to come in, joe? really sorry. >> point something out from a technical perspective. pull back the chart a couple years on microsoft you've come down to exactly the resistance you had so much trouble getting through at $49.
historical historically, a great level, from a longer term basis to buy against. i suggest using the technicals. nothing about the fundamentals i believe changed significantly. >> dick's sporting goods added to the conviction, the firm tha a $53 price target. you agree? >> pound the table for this call. unusual activity on options, primary driver. somebody who traded based on a fundamental benefit to them of the sports store going out of business and closing all of those stores, because that's not reorganization. that's liquidation. they're leaving the business. so that's great for dick's sporting goods. going forward i think dick's will benefit dramatically. goldman is spot-on. >> joe? >> not sure i want to buy this one right here. i think what has happened over the last couple of weeks is obviously the stock rebounded on a lot of good expectations jon is talking about. i do think there are challenges
inherent to retail overall and when you lose momentum in retail it's something that takes a while to come back. so this is a name i would rather see pull into the upper 30s before i bought it. >> steph? >> yes. a $70 billion market. 10% market share. in itself appealing. good balance sheet, trades 14 times forward estimates. not commanding valuation. the problem, like joe, overall retail. online competition. just i think that's going to put a hold on the multiple expansion. i'm not -- >> the one of the points of the call as well. >> what does that mean? >> insource, ecommerce. funded out and ebay runs its forum. bringing that in-house by 2017. the problem golf galaxy. we now golf has become a real issue for many of these in the sports world or whatever, and if you look at dick's in terms of where they've had their growth, they are in the right place at the right time. they've got under armour, nike,
everybody and haven't executed properly. now the focus i think will be on ecommerce and getting themselves back, refocused where they'll go. goldman is right, by 2018, impressive. trading at a 10 multiple. >> l brands, downgraded. the firm slashes its price target to $57 down from $74. still not a buyer? >> not a seller for sure. not here. stock down 32% year to date. the problem is the fixes they've announced will take a really long time. may not see same-store sales in a year. trading at estimates. wouldn't sell it. down a lot. looking to go the other way but i think we have time. >> pete? >> there's opportunities here, but this is a great name. they really survived off consistency forever. >> yes. >> all of a sudden things started to change. lost a few folks in the management world and things changed how they're putting themselves out there. the catalog, cutting back.
swimwear, the different aspects where they were starting to move themselves and suddenly started moving the line to other areas. that's been the problem. i look at the multiple 16 or 18. give or take where it's traded the last few years or whatever. so from that perspective, i like it. but they've got to have a trigger for this stock to go higher and right now they've not gotten it. >> down, a third of its value? >> from a management standpoint, back in friendly hands. the founder is now the ceo. i'm comfortable with that. the capital allocation strategy hasn't changed much. again, it's about what can they do in the, the mechanism of rebranding their strategy to ignite growth once again? i think there's visibility on that. i think the stock is certainly cheap enough and come down enough, but is that reason alone to buy it? not necessarily. what you want to do, wait for a quality earnings report to come out and you'll see the one change. step in and buy trngts may apply to a lot of retail. >> agreed. coming up on the program, nike set to report earnings
after the bell with the stock down nearly 5% in the last three months. a value buy ahead of those results. plus, crude making on the back of the rally and a looming strike at a norwegian oil field. but is it just a short-term bounce? we'll head to the pits for that trade. and as we look at the break, here's a look at the names hitting all-time highs today. this man creates software, used by this bank, to protect this customer, who lives here and flies to hong kong, to visit this company that makes smart phones, used by this vice president, this little kid, oops, and this obstetrician, who works across the street from this man,
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welcome back to the "halftime report." oil seeing a rebound today but off session highs. bertha coombs joins us at the nynex. >> thanks very much, simon. right. bouncing after having fallen more than 7.5% or so. following the brexit vote. anthony grizanti, do you think this is stabilization, have we bottomed here? what's next? >> i think it's a short-term stabilization. we're heading into a july 4th weekend and now get peak demand for gasoline and diesel and jet fuel. that will support oil and refinery problems.
that will support it also. this week i am a buyer of oil. next week, not so sure. >> all right. jeff, what about you? what kind of levels are you watching? do you think we're going to see 40 before we see 50? or vice versa? >> maybe vice versa, bertha and we're seeing $50. the level prior to the brexit break. didn't see a precipitous drop but now a move higher. why is that? by and large due to the function of the dollar. we see currency wars heat up, the range buyers. $40, to $50, settle there. naive to think volatility in equity, crude and currencies will abate as brexit is just getting into its own. >> right. certainly a lot to talk about today on the show. live at 1:00, at "futures now," on the website and our guest former congressman ron paul giving his reaction to brexit and his outlook for gold. always very bullish on gold. i can imagine he's there now.
simon? >> it's certainly going to be lively. bertha, thank you, bertha coombs there with "futures now." coming up on the program, exclusive interview with the vice president of the ecb. his take on the brexit vote and what happens now in europe. and speaking of brexit, joined by four-star european fund manager katrina dudley telling us how she's navigating the turmoil. is she buying the dips? was "as we go to the break, at the dax. the "halftime report" is back after this short break. 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.
welcome back to the "halftime report" with the dow up 132 points. let's get a news update with sue. >> hi, simon. here's what's happening at this hour, everyone. heavy fighting continuing in rural north aleppo between syria government forces and opposition rebels. the government releasing this video showing heavy mortar, rocket launchers, air strikes and tank fires against opposition targets in that particular area. israeli prime minister benjamin netanyahu holding a joint news conference with u.n. secretary-general ban ki-moon in
jerusalem. he criticized the u.n. for not treating israel fairly regarding the middle east conflict. county fire and health officials say the area scorched by the erskine wildfire, the majority kept away. that fire burned 45,000 acres and destroyed 200 structures. and vol, weigh sn agrees to settle consumer lawsuits and government allegations it cheated on emissions test. the price tag, $14.7 billion. pay out about $10 billion and pay owners an additional $5,000 to $10,000. that story is not over yet. that's the cnbc news update at this hour. back to you. with the european market selling off over the past few days is now the type to buy in the dip. certainly you've seen prices rise. and katrina dudley is with us.
welcome. >> thanks for having me. >> before we talk about where to invest, are you seeing redemption? what's happening at the fund level at the moment? >> seeing u.s. investors taking money out of europe on a general level, that reflects the fear in the market. no one knowsing what going to happen in europe. >> what's the smart thing to do now? >> we are looking at buying companies with good, strong, free cash flow yields and div gend yields and companies that domiciled in the uk but really have revenues outside of that region. give you examples. royal dutch shell, great example. a company focusing on generating free fasch chlcash flow and ret holders. the company focus on generating lower and returning that capital through dividend. i like that type of story. >> love that. like i say, i loved your notes, and i think there's an awful lot of opportunity there right now,
and -- i just was very taken. >> are we going to see management do your asset sales? do a good job calling their portfolio and streamlining to focus on growth areas in the world. so do you think you're going to continue to see that? >> yes. i think you have the capital markets recently. exactly what they said. going to continue to trim that portfolio and that makes a lot of sense. by 2020 this company is going to be a free cash flow machine. i like those type of stories, because that cash flow, in europe, the companies like giving money back at dividends. as a shareholder we see the free cash flow back into our pockets. >> and oil prices have bottomed? >> i think so. basically at the level you break even in terms of lifting that oil and that's a natural level that it needs to fall to. you could have short-term spikes in terms of, there is a lot of volatility in this market at the moment, and i think that that's what generates the movement in the oil prices. >> are you using the volatility? for instance, looking at certain
equities out there, are you using the higher implied volatilities to sell against longer positions? buy rights, for instance? >> no. a plain vanilla mutual fund. we like to buy good businesses with really good business models, solid, free cash flow. we focus on that. obviously you've had a huge sell-off in the financial sector and those stock prices are down 30% since the brexit vote. look at barclays stock. they were cheap going into this and cheaper now, obviously the trajectory's changed. >> you're not a lover of barclays? >> we are not. >> royal bank of xof scotland. >> not a lover there, also, substantially impaired. >> stay with us, katrina. the ecb, european central bank, holding its central forum in portugal today with discussions focused on the fallout clearly from thursday's brexit vote.
cnbc's julia chatterly joins us from portugal with an exclusive interview with one of the vice-presidents. julia, take it away. >> reporter: thanks, simon. pay apologize for the wind, if you can hear me and i might not blow away. two key points from the vice president of the ecb, first, markets overshot as a result of 9 brexit vote. second, and perhaps more importantly here, unlike the comments alan greenspan made to us, he said this is not comparable in any way to a lehman style event. listen in. >> many people in the market, the rust of tesult of the refer came as a prize. as a result, certainly overshooting and we saw today there was a rebound in the markets already. judging by these reactions and fundamentals around the problem, hopefully markets will start to stabilize.
that's very important, because it proves, by the way, that the markets worked smoothly. there were many concerns about market liquidity. enough buyers and sellers so that the prices can be formed and the markets could work. they d. alan greenspan compared this to the lehman's crisis, saying actually it's worse because it's more corrosive. is that wrong? >> well, in terms of market developments, i think indeed the comparison does not apply, because the reaction to lehman, as you may recall, was that several markets froze. ceased to work. no price formation. no buyers and sellers. and the bic impact all over the world. that was not the case this time. >> reporter: so that was the vice president of the ecb victor
constanceio. i pointed out, look, since friday morning, deutsche off 15%. the stock of unicredit opens down 22%. similar story for suite. a weak point, markets and investors, pricing in recession here but he pointed to the lack of liquidity thisz crisis, haven't seen markets freeze and banks are functioning. this is the point, broader and more going forward, we still don't know how the uk government will react here and it's still a waiting game, but hi poie point the bounce in shares and said look, forke is on it stabilization at least for now. >> joining us from the ecb and you'll get together in portugal. still with us, of course, katrina dudley joining us from the templeton european fund. katrina, it's his job to say we're stable. that's what he does. the point greenspan was making
was that if the european project looked like it was going to falter we had a bigger problem. that was the lehman-style event he was raising the flags for. >> look, i don't think this is a lehman-style event. there is so much uncertainty were she here. we don't know what the terms of exit will be. we don't know if they'll get a norwegian-type solution, keeping them in the market. >> systemic the point he's making? >> no, it isn't systemic. i think germany will be focused on doing whatever it can to keep the eu 27 cohesive. not going to make concessions. you do not get a do-over. everyone is talking about a revery dote and everythir re-vote. no. there will not be a do-over and further concessions. we may not agree. policy, an advisory vote and it's the will of the people. not invoking article 50, it's very tough. also because of the changes
we've had in britain in terms of now the fixed five-year in parliament, it's not as easy to consult a general election and give the new pm that general mandate he really wants and so we don't know who is going to lead the conservative party. you have so much turmoil. i actually think it is a much different situation than lehman. lehman we knew the playbook, just needed price transparency. here we don't know what britain will look like. >> a new leader of the conservative party taking a middle ground. throw open to a general election because i want a mandate and a halfway house with the rest of europe. what you're saying is correct merkel holds the line, you can cherry pick what you want, in a sense the uk comes crawling back with its tail between its legs, nigel farage withstanding. is it possible? >> tough to do. you have to have the house vote no confidence in themselves, or you have to have two-thirds of the majority -- >> they could do that if they
thought it was in the interests -- they're all pro-europeans? >> they have to go back to their own electorates and they were sent a clear message. we wanted to exit the european union, and i think that, you know, they won't get reelected. >> 17 million votes. katrina, nice sow sto see you. katrina dudley joining us there. coming up, solar city shares going higher. and first carnival beating the streets on earnings. the trades are ahead in "the blitz." before the break, a look at the s&p. the "halftime report," back after this. >> announcer: the "halftime report" with scott wapner is "the" place for market-moving interviews. >> you don't call a company a sewer because a company made a mistake. >> announcer: real money. >> we are short tesla and solar city. >> announcer: real debates. >> people think globalization hurt businesses. it's not. it is technology that's hurt
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past few days. airlines and technology shares among the sectors that have really been hit hardest. we'll look at some names that look like bargains right now. plus, will the british exit from the eu cause china to trigger a global trade war? we'll till you what you need to know about that and -- about the health of the american consumer. what does that confidence in the consumer mean for some key retail stocks? that and more on "power lunch," top of the hour. simon, back to you. >> thank you very much. let's head now to the trader blitz. trades on stocks making news today. carnival, on the top and bottom lines, getting weak guidance. joe? >> fairly valued. guidance reflection of higher costs as it relates to fuel. once the conference call began, that's when the stock began to go down as they talked about the british pound exposure. >> visa upgraded to overweighted. atlantic equity, steph you own this? >> i do and actually bought a little, added to it yesterday. stock down 10%.
i like the visa europe transaction. closed. better pricing power for the company and i think that volumes here especially in the u.s. will hold up nicely. >> solar city forming a committee to review the take jove herb offer on the table from tesla. both companies, of course, controlled by elong musk, jon? >> from a regulatory standpoint, simon, they had to do this. so by putting this special committee together, it's certainly on a day when the market are up, helping the stock. basically back to where it was when tesla made their bid, because when tesla made that bid it popped to almost 24, where it is right thousannow. turnover, 26 million. traded 6 million i believe so far today. >> dish, downbraided to -- downgraded? >> based on u.s. spectrum. what is it worth? what are the balance sheets outside saying this is worth? what is that worth? that's the issue.
they they lower and they put the price down to 40. downgrade to a sell around 49. they see room to the down side because they don't think the balance sheets are good enough to put that number where they think it is. >> coming up on the show, some of the market's biggest buyers about to disappear. bob pisani join us us next to explain the buy back blackout. plus the things experts are watching that could be missing. that's all ahead on the "halftime report." >> announcer: wanted to hear more from our experts, head to krn nbc.com/halftime for es collusive commentary and behind-the-scenes access.
thank you. ordering chinese food is a very predictable experience. i order b14. i get b14. no surprises. buying business internet, on the other hand, can be a roller coaster white knuckle thrill ride. you're promised one speed. but do you consistently get it? you do with comcast business. it's reliable. just like kung pao fish. thank you, ping.
reliably fast internet starts at $59.95 a month. comcast business. built for business. earnings season, investors complaining the market may go down because being barred from buying their own stock back. bob pisani explains that may not be such an issue. why? >> simon, a big part of trader mythology. some think the blackout period might be a problem for the markets but not all companies are prohibited from buying back stock during the earnings period. many have plans to buy back their stock using pre-established buyback companies. the a company could start a plan buying back x amount of shares if it hits a certain price or buying x amount as long as it's lower than x price or buy 50,000 shares every day of prevailing market price throughout the day. all different. as long as these are part of a
regular buyback program, the company may be able to keep buying, even through any blackout period. that's the key point. and companies can also make a buy barq announcement that's not part of any regulatory program. jamie dimon bottom. wouldn't have made that nearing an earnings report. back in january. don't expect a dramatic announcement like that in the next couple of weeks, but with stock prices down more buybacks may be coming. some banks down 10% or more in the last week. look for potential additional buyback announcements after the stress tests are announced wednesday and perhaps during earnings season. jpmorgan announces earnings july 14th. keep an eye out for those. simon? >> thank you very much. let's trade. joe, on wednesday night when they had the second part of the stress test will they announce they're able to buy back or
increase -- is it an eminent bounce we could get here? >> for financials, i think that is part of the narrative but you have to look more broad based for the impact of buybacks on the s&p itself. historically a seasonality to tito y to it. february strong month for buybacks, around 7% s&p companies will buy back stock in february. that aligned with what jamie dimon did. i don't think you can have strong expectations for august to be a very strong buyback period for s&p 500 companies, why? because you've got in the rearview mirror what's gone on with brexit. and looking forward you've got the u.s. political election. what you can expect is in november to see significant buybacks once you get past the u.s. election. so i think there's -- >> hang on. you're suggesting that treasuries will not buy back their own stock because of the presidential election? >> well, the lack of visibility surrounding the impact on the markets, which there is for the election and has been the entire year and we probably should be
talking about it a lot more, but there's going to be a handoff here in the headlines from brexit to the u.s. election. that's going to happen, especially as the conventions come forward. >> some people think there was an element to what we saw over the last few days. coming up on the program, nike reports its earnings after the close. its stock is in correction this year down more than 10%. our experts are trading it ahead of the results. that's next on "the halftime report." what are you doing? getting faster. huh? detecting threats faster, responding faster, recovering faster. when your security's built in not just bolted on, and you protect the data and not just the perimeter, you get faster. wow, speed kills.
nike set to report earnings after the close today. let's get the trades ahead of that report. does anybody think it's a buy? >> i do. i've seen some unusual activity at the 52.50 stripe, simon. this is clearly a bet on upside potential for nike. they were buying the at the money call because it was $52 and 38 or 40 cents. they were bought several large blocks early on, and it looks like it's continuing now. i'd say somebody thinks they're going to have a positive report. >> the expectations are very low down 16% year-to-date. i just think they're going to have some struggles with maybe guidance because of currency, because of competition, because of getting through the olympics. it's certainly a name on my radar screen. not 24 times forward estimates a little rich, i want to see if it pulls back under 50 and then i would buy it. >> interesting. joe. >> i spent quite a bit of time looking at this and unfortunately i can't give this a direction either way. i don't know where the heck nike is going. i would love to say i want to
buy it, but i just don't have any confidence. sometimes you just don't know. >> i'm interested why the balance of risk would be to the downside given a lot of things you just mentioned there, steph. could the olympics not be ramping up? fine. >> typically the stock does not do well during the olympics. you typically buy the stock after the olympics, right? so if there's any kind of snafus or issues or overhang in inventory, whatever the issues could be. i'm not going to say it will be that way this time, i'm just saying you might get a better chance to buy it. in terms of investment i think i have time. >> pete. >> they've got revenue growth, the future orders, that continues to be a growth area for them as well. you look at this company and look where it came from from the highs, this stock was pushing towards $70 a share. here it is trading much lower than that in the 52s, so i think from a valuation perspective it's more in line. it was extremely stretched, they had to be perfection and they missed and because of that that's why the stock sold off here. if they can put up a decent number, and i think they can, i think north america will be
strong once again, and then their second largest is china, that's the one that's the question mark right here. but from a valuation perspective i think there's upside. >> this graphic is interesting on the expense with under armor at the top, actually under armour is having -- three times earnings. under armour is actually having a good day today. thank you. >> if you look at a chart of under armour which pete highlights, under armour and nike basically the same chart. again, i couldn't tell you which one to buy. >> if you told me you could have one of any of those fitness stocks up there, i would take lulu all day long. >> why? >> because they have growth and figured it out and turned around. this was a story absolutely beaten down. they had every mistake in the world and now they've finally gotten their groove back and gotten themselves positioned once again. and they've got growth towards men. and they've got growth towards children, areas they didn't concentrate on at all. i think that's the driver going forward. >> you're very quiet, steph. >> well, i've owned lulu for a very long time. i don't at the current time because i took profits. but i do think the inventories
are getting better. of course margins also have room to move higher. i think that's the problem with under armour and to a lesser extent nike. i think the margin story there's just not that much operating leverage. >> so of the three, if somebody held a gun to your head, which would you go for. >> don't do that to her. >> that's hard. i'm partial to lulu because i know the story really well. i think it's expensive. and i think a lot of good news is priced into it. >> under armour? >> no. i would rather go to nike and i would wait until after the olympics on nike because i do think that it's lagged. and i think it's kind of off the radar screen at this point for a lot of investors. and i just think it's a quality franchise with a great global market share. so that would be the one i would lean towards, but i don't want to do it right this minute. >> i told you i don't know. i defer to these gentlemen. i just don't know. >> lulu, come on, joe, get in there. >> i don't know. no confidence. no clarity. >> jon. >> well, i told you of that unusual activity in nike would lead me to believe, and i would take a limited risk trade.
>> lulu, under armour and everyone else. >> i love what pete says about lulu but i would buy nike. okay. experts head to the ground for trades you may be missing. steph, what are you watching? >> i'm watching cigna. anthem proposed a merger to buy cigna a year ago for $170 a share. but if you look at the arb spread between the two, let's say trading low 120, so clearly it's not pricing in any kind of deal. anyway, the point of that i think that's interesting is that i think the risk/reward -- sorry, someone's yelling in my ear. so the point of it is that cigna i think is from a risk/reward point of view is an interesting one because it's not expecting an m&a, it's not expecting to be taken out. so that if it does, i think you have upside. and if it doesn't, they still have a great balance sheet, great management team, very good franchise. and i think they're going to buy someone and also buyback their stock. i like the risk reward in the low 120s at cigna. >> okay. with the market closing in about three hours -- you can always take the earpiece out.
it really irritates them. >> i should have. that was hard. >> let's get to a second half trades, let's go around the horn. joe. >> so listening to katrina who's comments were fantastic on europe, one of the investing strategies that comes to mind is how appealing german equities look. if you think in europe where do you want to be geographically allocated, uk or germany, potential recession in the uk, germany's underperforming down 7% year-to-date, i say you take allocations in uk, move them to germany, i think that's where the opportunity lies. >> interesting. steph. >> i'm just looking at growth versus value. and i look at the fang stocks as a proxy. i'm watching them very carefully because i think that people might gravitate in the next couple of months into growth just given the slower growth environment in the macro world. it will be interesting to see if these stocks kind of gain some speed and some traction, because they certainly have been lagging so far this year. >> all right, jon. >> gdxj, junior miners, like it. i already like gold and i think this one on a 70 cent selloff
today is a good buy and unusual option activity in it as well. >> pete. >> seeing buying in vmw, another one of those cloud names, look at the forward p/e it's extremely cheap. i think there's an opportunity and huge call buying rolling out not just weeklies, going all the way to september. that's a strong buy. >> it has been a pleasure. have a great evening all of you. thank you very much. that does it for "halftime." "power lunch" starts now. and welcome to "power lunch." i'm melissa lee with tyler mathisen and brian sullivan. michelle caruso-cabrera is off today. after a massive selling waver the past few trading days stocks are in fact rebounding today. the dow is up triple digits here, but off its session highs. take a look there 17,298 up by 0.9%. s&p 500 up by 23 handles up 1.1%, nasdaq the best gainer of the three up 1.6%. it is worth noting that facebook, amazon, netflix making big gains in today's session. what may be a point of caution in this