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tv   Fast Money Halftime Report  CNBC  November 7, 2016 12:00pm-1:01pm EST

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twitter went public three years ago today which got completely lost. if we hadn't been in the midst of an election, we would have talked about that. >> it was a textbook ipo at the time. >> unbelievable. $26 a share right over here. i remember that day. let's get over to the judge and the half. thanks, welcome to the halftime report. our top trade this hour, this market rally. stocks bouncing back today, now on track to break their longest losing streak in 36 years. that surge coming one day before americans hit the polls. we will talk about that this hour. with joe , josh, jim and steve. steve, i start with you. dow is almost back to where it was before the losing streak. s&p has work to do. what do do you before we go to election day? >> i added some exposure. it was light an exposure and better looking than smart
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because i sold vxx on friday. what john said resonated with me. they could turn hard and fast and they did. get near top tick. i think that you have a free pass until wednesday morning. that's when it gets dicey. you are stealing the hillary rally. i didn't think it would be this strong. they said yesterday 50 up if hillary wins, 50 down if trump wins. so i do think it continues through tomorrow. it gets dicier from this level on. then after that, i have the same issue. i will be lightening up on exposure that i add. i actually don't think i'm going to add more. i'm content to play with what i have. you still -- by the way, you are still in that margin of error for the polls where anything can happen. i went back and looked at old polls. you have seen as much as a 6% change in termless of the winners and losers from the polls into the final tally.
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>> all 30 dow components are higher. the eem, we haven't talked about them much. they're up 2.5% today. gold is down. what on the board is exciting to you today? >> the thing that stands out is we have been talking the last couple of weeks about making a rotation into financials, out of energy. that's one of the things that i have been doing. you see the differential today. you are talking about nearly plus 60 basis points favorability toward financials. i hold regent financial, usb came out of earnings. that's a name i like. i don't want to be in energy. looking today with the opec news, even with this risk on type of environment we have, you are not really seeing the follow through in energy right now. i want to continue to avoid that. i think that's the important thing to do. lastly, overall on market, the good things about today is that now you have a point of reference to mark against on the down side between 2080 and 2085. that's the low point from
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friday. i think the market needed that. those getting back in the market can look to that to measure their risk. >> 2153 is where we have to be on the s&p. that's where it was before the losing streak. starting of nine days. we have some work to do. >> one of the things we pointed out is that although it was a quote unquote historic losing streak, there wasn't much damage and there was almost no panic. you had a slight spike but you didn't have big losses. i think what's important to look at -- this is something toyota has been talking about for weeks. the iyt, transports, have been hanging high. meaning, just below resistance and not really phased by the market over the last couple of weeks. today they are breaking out. been in a down trend relative to the s&p. going back 18 months, finally, that trend is now turning up. you have individual standouts in the group. look at banks. jp morgan, almost 52-week high. goldman sachs, finally.
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let me show you health care. this has been the sector with the biggest damage. you have a market decision that hillary will come out on top. a huge rally. three of the top five names are drug related or health care related, take a look at biib. i think it's important, you go back to 1992, hillary, bill, the same routine. we're going to go after the drug companies. the health care sector was down 18% with the s&p up 8% that year. if you were a buyer of these names and not a seller, score. >> and the health care companies actually dumped on themselves. >> that's right. >> universally they came out and bagged quarters hoping they could take the target off their back. there were some going on this time as well. the ibb is up tremendously. >> huge. biggest day since april. i think from an investing standpoint, the idea is are you reacting to headlines or are you thinking about what could potentially take place on a go forward basis?
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i'm in the latter camp. >> the financial name i added was lpla. if you take a look at that, it has huge leverage interest rates. >> they're for sale. >> and it's done nothing except go up, even as the market was going down. during this whole shifting. >> you guys sound somewhat active. >> we're talking about stocks. we're talking about -- that's the right thing to do. >> don't talk about the market. talk about stocks right now. >> you are not willing to do anything yet? >> i have cash on the sidelines. i don't know which way this election is going to go. the polls are leaning towards hillary. i think there's a good degree of uncertainty. there could be a brexit-like surprise here. what the market really does not want is one party to take both the presidency and congress. the only way that would possibly happen is if trump wins. i'm ready. i've got 10% of cash in my equity for the foel portfolio. on the heels of a trump victory, if both houses stay republican, i may well raise more cash. my point being is that
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unfortunately, i think you do have to be reactionary. >> jp morgan says if trump wins markets are likely to fall forward. don't use the brexit template of them bouncing back quickly like they did then. >> i think that's right. particularly on the trump presidency, it's not so much what happens on day one after he is elected. it's what's going to happen over the next four years, particularly in international relationships. we know he's pro-business. we know he is pro-market. but he is volatile on international markets. i'm being generous. that's where things could get very dicey. >> let's go to the wall. john has a look at where we stand. with less than 24 hours now to go before we head to the polls. >> getting close. everybody will be happy when it's over. as you were discussing, is it possible that we could have a surprise on election day? anything is possible. it would take an unprecedented failure across the board of polling. why do i say that? because if you look at the final polls out today, they're all telling the same story.
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our nbc/wall street journal poll, four-point spread for hillary clinton. cbs/"new york times" four. fox, four. that is a powerful indication that the people who model the electoral, who have experience doing this, believe that they are seeing the same thing going into election day. on the state level, you also see some convergence around battleground polls that reflect this national trend. two poll out today. one in florida, 25 electoral votes, donald trump absolutely, positively has to have it. what it shows is a one-point advantage for hillary clinton. that is consistent with some of the early vote totals we have seen with heavy hispanic vote. second is in the state of north carolina. if you look at north carolina, two-point edge for hillary clinton. that's a state that mitt romney carried four years ago. donald trump needs to hold that
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state. that's why donald trump is going to north carolina today. and hillary clinton is having a midnight rally in raleigh. a lot on the line. signs are looking good for hillary clinton. we will see what happens tomorrow. >> trump's plate is full today. he is going all over the map in the final hours. >> yeah. you know, he has more targets that he has to hit than hillary clinton does. she's right now playing defense on states that she can block him with. michigan is a state that she's going to be in today as well as pennsylvania. she's having a rally with president obama and michelle obama this afternoon, getting the vote in philadelphia and the suburbs out. that's the key for hillary clinton in offsetting the western pennsylvania vote for donald trump. >> john with the latest for us there. for more on what the markets may do, let's bring in jonathan and tom. he is on the phone with us today. it's great to have you. tom, i go to you first. you say the market is going up
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no matter who wins. >> well, you know, i think -- i think we're poised for a rally. we're oversold. i don't think -- unless we have a recession, i don't think either candidate causes us to have a huge sell-off. >> you don't think a trump victory would cause stocks to go down like many of your competitors on the street do? >> i know that's a consensus view. we published a piece today. we looked at 116 years, including political power changes, contested elections. presidents who are not popular even initially don't translate into bad markets. >> jonathan, how do things look to you? >> we're probably in a somewhat similar camp. it's important to remember, you can't look at the reaction to what happens on tuesday into wednesday. you have to look at the reaction to the reaction. brech it brexit was a perfectly example.
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if you look we rallied into the action. what happened to the knee jerk down? it got sold more and more. we jump to 2012, we were selling off into the election. knee jerk was down. that got bought in mid november. >> there are some suction -- jp said it won't be a reversal higher. >> let's take away the predictions. nobody knows what the reactions will be. let's look at what's happening now as josh and joe brought up. we have transports breaking out, financials are best performing sector of the last three months. technology, industrials, they're all working. what's not working? utilities, telecom, the safety sector. >> rates have backed up. >> have they? >> can we go back to brexit? if you look at the -- the reason why that worked is because you
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were crushing sterling. so that made the exporters, which comprise most of the ftse, work better. it was a more advantageous scenario for them. if you look at the small cap uk focus companies, those companies got crushed. that's how it should have worked out for the ftse. the smaller cap indexes didn't bounce back. so that worked as they fundamentally should have. you can't just look in isolation at the ftse. >> the s&p is mostly an internationally driven index in terms of revenue and earnings as well. it would be a similar sigh of relief to not elect someone who is openly talking about huge tariffs on our biggest trading partners. >> my point is to rely upon the reversion trade is a mistake. there are fundamentals that drove those moves. >> to your point that it's a reaction to the reaction, this seems to me at least if you look at the s&p 500 to be a listless market.
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there's been nine moves down. but very little damage. we have been in this 2100 to 2200 range for many weeks now. doesn't that make it difficult to say a trend will be continued? >> again, we have to see. instead of predicting what's going to happen wednesday, all we know is what's happening now. we know what happened into friday. if you look at the short-term volatility, that was one of highest closing levels in the last four years. the three other highest times were the days before brexit and the august of last year flash crash. there was a lot of protection bought, anticipating regardless of the outcome, people are clearly hedged. we don't know how the market is going to react. all we know is what the trend is. that's still bullish. >> the odds are higher for a huge relief rally than they are for -- given whichever side wins the white house, like a meh reaction? >> you could have a back end
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fill. as we know, markets don't tend to make huge bottoms on fridays, which is another issue. but we look at what's going on under the surface. this is nothing new. this has been since the july 8 breakout, we have been having cyclical outperform, defensive under perform. we are not higher than we were at brexit. >> it's easy to put a note out like this today and feel better about where we are today, because we have a 350-point rally. what were the prior nine sell-offs about? >> the prior nine sell-offs? >> yeah. we have been down nine days in a row. we're feeling good about things today because we're up 333 points. >> yeah. >> who is to say this is the tell versus the nine days that we went down? >> you never know. i kind of agree, you can't predict the future. when you look -- if you look at election outcomes and some of the sell-offs occurred around elections, the prevailing trends
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mattered more. but i do think what's really interesting, we published this piece last friday. when you look at those nine -- streaks of nine-day sell-offs, they often came at critical turning points in the market. so you are talking 74, 78, 82, 96. those marked essentially the crescendo of selling and markets were turning. i would say it's actually bullish if we end up seeing a relief rally and it really engages investors and we see capital put back to work. >> what's your end of year s&p target? >> i still think it's possible to rally 10% from here. i would say unless we have a contested election, i think it's possible to see something with a 23 in front of you. >> i haven't heard you mention -- jonathan the same question to you. oil right now does not appear to be looking like it wants to rally with the rest of the market. are you concerned about oil? are you concerned about the u.s. dollar which looks like it's
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breaking out? we could have a similar condition to what we had coming into 2016. that kind of held back the s&p from rallying. either one of you. >> i would just jump in and say, oil has been weak. but what's not getting a lot of talk about is copper. copper is on an 11-day winning streak, breaking out of a good base. some of that is the weakness in the dollar the last ten days. copper is a metal that bears were harping on it. that's not having the rally. the metals are mining stocks, steel stocks, those are breaking out. oil is not acting great. you are seeing this rotation in the commodity sector. >> tom, appreciate your time. quickly, on squawk this morning, they seemed to sound more bullish than not. said they had gotten a little more long, steve, on the market picture.
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>> dave picks levels. he is very into sentiment and markets getting oversold and markets getting overbought. what he said was basically that the market was near term oversold. and what he didn't say was -- i don't think he expected -- i know he didn't expect the market -- the s&p to be up more than 40 handles today. the picture very likely could have changed. i'm sure it did. right? unless he thinks there's enough momentum to continue to tomorrow. it did get oversold dramatically. it was down an unprecedented nine days in a row. you know, we'll see what it is. it's very tough. there's no play book. as is often said on this very situation, there is no play book. throw it all out and salvage what you can do. day by day. >> we will talk a quick break. come back with more. here is what else is coming up on the halftime report.
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>> biotech stocks have been caught in the election cross hairs and taken a big hit. one name is cheap enough to buy. a 15% rally. we will debate it in our call of the day. plus, our shark, kevin owe leary is taking a bite out of one very beaten down stock. his bet is ahead. tomorrow, don't miss cnbc's special election coverage. starting at 7:00 p.m. eastern. the halftime report is back after this. 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.
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to learn more about gas safety in your home, visit together, we're building a better california. we're back on the halftime report. want to show you shares of biogen. while there may be more trouble ahead, evaluation seems like a reasonable entry. the firm goes to overweight. what do we think? they're taking a shot here. they are saying, we hope we don't regret it. >> part of the thesis appears to be alzheimer's research, which is notoriously tricky. a lot of companies have failed to make any progress. they may be wrong in that regard. where they are right is that the valuation is very cheap. that gives them a margin of safety. >> alzheimer's has a chance, maybe. the company dropped the ball but
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maybe they can pick it up. as i characterized it, you are talking about a big day for biotech, best since april. where does this stock fit in? >> if you are a trader, you are not on this thing. basically, the stock was able to run right back into its declining 50 day. that's where the advance was halted. that's not an accident. price has memory. you have got this big gap overhead. that's going to be tough to get through. however, if you are an investor, you are looking at one of the top ten biotechs in the country by market cap. maybe one of the cheapest on forward earnings. definitely one of the few very, very big companies that still itself a takeover target. i think if you are an investor, you could find a lot to like here and tolerate. the potential for a continuation of the down trend and a chance to add more. if you want to get long and you are a trader, you are probably still on sidelines. >> for an investor, if you are going to be in biotech, you will look at a name like amgen.
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>> i like amgen better. >> it's a stock that's down nearly 25% from the highs. >> fast. >> fast. >> like two weeks. >> some of the problem that i have with biotech is from an investor standpoint, there's a high degree of volatility. you need to be in the large market cap type names. for a trader, could you go and play in a lot of these other biotech names. the volatility is so intense. that's why overall for -- >> higher risk, higher reward. >> but that's -- now we're having an argument about someone who is a professional at what he is doing who can sit there and who can watch it. most people don't have the luxury of being involved like steven was before the profits that he had. the luxury to sit there and monitor it. most people don't have that. >> the principles apply to this. >> biotech is -- >> i don't know about that. if you bet, you might only -- you might only be correct the one time. most people aren't going to know
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which of the ten. >> to me, biotech -- >> this is commercial biotech. it's more mature biotech. you just don't own one of these things. you have to own -- >> so the etf strategy is the best strategy and still very volatile. >> towards biogen and amgen. >> half the market cap is in the top ten names. it's very volatile. >> this is a high quality name, as is the others. it's got more than one shot on goal. so there's really nothing wrong. you do have some risk. but it should come back with the other products. >> the sector is ripe to rebound after the election. if you are a long-term biotech follower, you know it goes through wild periods of out performance and under performance. this is longer than usual. that's due to the election. once that is over, you are more likely to see this rally continue. sglt s >> it was down almost 7% last month. >> there are parts that have continued to work throughout what has been a difficult year
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with less volatility. i point to a stryker. they are solid earnings, doing well. not a lot of volatility. and you get what you want. >> below market multiple on four quarter earnings. 15 times historically 17. the overall market is 19. this is where the cheaper stocks are. you have to be able to weather headline risk and volatility. smart investors know how to do that. >> with less than 24 hours to go before the election, how are hedge funds positioning themselves? ahead of the results, kate kelly will break it down for us next. twinkies are back. it returns four years after filing for bankruptcy. has it been that long? >> believe it or not, it's been a long four years. >> no joy in joshville. now there is. >> now there is. >> is it a buy? we will find out in the blitz next.
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what are you doing? getting your quarter back. fountains don't earn interest, david. you know i work at ally. i was being romantic. you know what i find romantic? a robust annual percentage yield that's what i find romantic. this is literally throwing your money away. i think it's over there. that way? yeah, a little further up. what year was that quarter? what year is that one? '98 that's the one. you got it! nothing stops us from doing right by our customers. ally. do it right. let's get out of that water.
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welcome back to the halftime report. election day one day away. how is the hedge fund
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positioning? >> big market boost today in the wake of new disclosures that clinton is off the hook on the fbi e-mail investigation. a move that some are referring to as the relaxation trade. in other words, the market is breathing a sigh of relief that clinton is likely to win. with that, they're getting the more predictable, more mainstream candidate. risk is off and the markets are up. until recently, however, it has been hard to pick out the best pre-election trades for the hedge funds because a trump presidency according to many would be hard to handicap in terms of its impact on the market and economy. the consensus clinton trade is bullish stocks. neutral or maybe short goal. the trump trade is short the market short-term or perhaps just flat through tomorrow. but expecting a dip on wednesday and after and maybe a buying opportunity along with it as
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well as bullish drug stocks and long gold. it has been a tough call. as david tepper noted earlier. >> i think people are going to have a tough time market-wise doing some of this stuff this time. because of what i'm talking about. you can't go to traditional measures. >> there's definitely a new found confidence in the market today. one manager i hung up with said given how under invested, a clinton win to mean we take out the summer highs before the end of the year. that means we go north of 2190 at some point in the next six weeks. >> kate, got steve to join the conversation. what are you seeing? >> looking at -- the prime broker is goldman, morgan, all of them, jp morgan, they have -- they put reports of what the exposures are of the hedge funds. right now, looking at one report from one of the larger ones, they are showing record short levels. leveraged short levels.
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the net exposure from the hedge funds is very, very low. so they have clearly hedged out a lot of the risk. not only that, their performances work nicely. last month, they were down 40 base points versus the russell down 4% and the s&p that was down 2.4%. hedge funds are being rewarded for having low exposureurexposu. every hedge fund manager i have spoken to, whether in credit, equity, are very, very cautious going into this. that may have changed today. i don't think it changed all that much. a lot of caution, a lot of cash on the sidelines. i think you will see a very big rally going forward. but i don't think it changes all that much after the first few days. >> kate, you want to wrap that up? >> yeah. steve, i don't disagree. i do think people have been hedged on the short side and a lot of people are taking cash and putting it on the sidelines or running market news roll. the most bullish scenario i assume you would agree is a
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clinton win but republicans keep the senate and house. >> correct. >> that's the best up side pressure. then i talked to another fellow who said, think of the hillary rally in a couple of legs. there's the anticipation today. if she wins, there's another leg to that rally. at some point it's going to fade. at some point people are concerned she's not so constructive for the market. the house and senate are an x factor. after that, this guy says, it will rip. >> i think you -- what you also want to see is how big a part of her administration is inclusive of elizabeth warren, bernie sanders' policies. those are big negatives for the market. they want to see if she comes back to a more center view. if she doesn't, then you are going to want to fade the rally. >> i agree. it's interesting that someone like hillary clinton -- i said this in my hit -- is the mainstream candidate for wall street. that just tells you how polarizing donald trump has been. if you look at campaign finance records, you see the blackstones, goldman sachs, all
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the firms that do business on wall street, so many are supporting clinton. i think it's because trump is sort of polarizing and he is just so hard to predict. as you know, the markets hate uncertainty. >> they have done business with donald trump. >> not going to comment on that. but i hear you. >> thanks. kate kelly in new york city. here is what's happening this hour. jury selection in the case of dillon roof has been halted. he is charged with the shooting of nine black parishioners at a church. the judge halting it after receiving a motion from defense lawyers. jury selection is expected to roof on wednesday. representatives from nearly 180 countries gathering in india to discuss how to continue the fight against smoking rates worldwide. while smoking-related deaths are on the rise globally, officials say worldwide sales are declining.
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hundreds of migrants were taken to an italian port after being rescued by italian and spanish ships. officials say they were rescued off the libyan coast over the past few days. more than 159,000 migrants have reached italy by sea this year. toys r us will open at 5:00 p.m. on thanksgiving day and will stay open for 30 straight hours. it's the fourth year in a row the toy company has opened this early. it will boost the number of employees working on black friday. the holidays are coming. that's the news update. back to you. >> thanks so much. buying when others are running away. kevin o'leary makes the case for one underperforming stock he thinks is ready for a breakout. before we go to break, on this weekend's last week tonight john oliver took a shot at multi-level marketing companies with one focus on herbalife. >> if its early days, it was accused of overstating their health benefits claiming in the '80s that one product helped to
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relieve everything. back then, the founder was asked by a senate subcommittee to answer experts who called his diet products into question. this was his response. >> i think if they are so exp t expert, why were they so fat? it seems to me -- i'm not trying to make jokes. i think they ought to use our product. >> first, he seems great. it might not be easy to sell that, because it's a little pricey. b, we actually tried it. it tastes like the wood shavings inside a gerbil case. those are grouped into a batch which qualify for one unencumbered cucumber. it makes as much sense as everything that came before it. >> we're back in two minutes.
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i've never liked marijuana. but i'm voting yes on prop 64 to legalize marijuana for adults 21 and over. it has important safeguards for families, like strict product labeling and child-proof packaging of all marijuana products. and banning edibles that would appeal to a child. raising a teenager, that regulated system
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makes a lot more sense than what we have now. plus, 64 taxes marijuana to fund priorities like after-school programs. personally, marijuana's not for me. but my mind's made up. i'm voting yes on 64. here is the s&p sector map let by health care and financials. the best day for stocks since march 1.
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been a while. almost the highs of the day. 336 for the dow. >> listen, on wednesday we will go back to talking about earnings, the price of oil and opec. >> speak for yourself. >> we will talk about december. >> the reason why he is putting out notes with the tone is once wetalking about the fundamentals, that things look better. >> i think the concern -- it might be a good concern for companies right now on the bottom line is rising wages and the potential for inflation. that's something you need to keep your eye on. i don't view it right now as being an impediment to earnings growth. >> don't forget about the fed. we will talk about the fed in december. they are raising. >> after the election is settles. >> it's baked in. it's in the market. one other thing, we're at a 12-year high for m an& a active. we have this thing called the election that's putting -- >> lock at u.s. gdp.
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2.9% for the third quarter. that might get revised upwards. this quarter is looking like it's above 2.5%. we're still early in it. why does that matter? before that, you had three quarters where it was 1%. we were worried about stall speed in the economy. the economy has legs. to your comment about inflation, i'm hearing people worry about it. i think we're so far off from having to worry about inflation. >> if you are a company, you have to be concerned about what has been so beneficial to you is the absence of wage pressure the last couple years. even a modest uptick is going to weigh on margins. >> you know what offsets it? if you actually get some inflation and interest rates can go a little higher, not a lot, a little higher. you will see savers with a little bit more interest income. they can consume that. >> that is not impacting s&p earnings. i'm talking about equity, s&p
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500 companies. the bottom line. that's what's going to matter. >> you think the rate hike is priced into the dollar move? sg . >> i think it is. it's not cheap, the market. there are certain things that aren't cheap. >> no. that's why don't talk about the market. i'm not saying you are. if you just talk about the market, okay, fully, fairly valued is a friendly cooperman has said, if you look at the market, it becomes problematic. you have to look at specific companies and find opportunities. >> right. it's rifle shot. as lobe -- >> unless it's energy. >> energy to me right now -- >> you could broadly look at things like dining, entertainment, retail and say that skyrocketing health care costs are not a net positive. i think you can make certain generations that you wouldn't be surprised to see consumer discretionary not finish the
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year well. >> finish your thought. you saw in lobe's letter? >> stock picking is back. i think that's true. that's why hedge funds -- >> at a time when some say it's dead. >> that's exactly right. everybody said it was dead. everybody is -- the crowds are wrong. go back to what used to work. except for when everybody went central bank thesis. >> just ahead, we will debate o'leary's new contrary trade. first, a look at what's coming up on power lunch. >> thank you very much. coming up top of the hour, join us for power lunch. almost there. just hours away until americans head to the polls. those who haven't already voted. who is better for stocks, republicans or democrats? we will take a look at some of the history there. wall street's bonus blues. the street headed for another bad year. but how bad? big news if you own a tesla. it will cost you. halftime report returns after this.
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we're back on the halftime report. disney has been a battleground stock with many investors concerned about the slowdown at espn. it's down 11% this year. kevin o'leary is with us. you are on phone. >> i am here. >> you like disney. why? >> because everybody hates it. i like to look at contrarian positions that i can go into next year with. this is a 2017 decision at this point. the debate obviously of espn has
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killed the price earnings ratio of this stock, almost down 20% to the market. baked in already into these numbers -- i've been picking up this position over the last couple of months. it's been trading at $92. but i look at it from the point of view of i'd like to own a position that's going to be less volatile than the market. everybody has been talking about volatility regardless who wins the election. that seems to be coming to the fore. how can trump or hillary hurt this company more than analysts have done with what they have done to the espn estimate? what's not baked in at all is the discussion that we started to have around what's going on in china with theme parks. my guys tell me over there the place is packed. we stopped talking about it. i'm assuming good numbers will be coming out of there in 2017. also i have seen the roster of what they have done in the box office looking very strong there. back to espn, you know, what we don't give them any credit
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for -- i'm giving this -- nobody listening to espn anymore. they assume they are chord cutting. think about you are a fan of lacrosse or something. one day they will serve that up for 25 cents, the game you want to see from your old college over your internet connection or on your cell phone. whatever. those are the opportunities they have with the right segment they hold. i'm bullish they can make -- even if they meet the six bucks next year, that's 605, whatever, what we will get is more confidence in the management team to milk all the opportunities they have in earnings. we will get a slight increase in the pe next year's confidence in a stock i think will be 20% less voluatile than the market. it pays 1.5, 1.4, 1.6 in dividend yield.
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i'm a mhappy camper. that's my investment thesis. i'm sticking with it. >> i know you are a big dividend investor. i own disney. i'm with you. 1.5% seems low for you. also, tell me what you think about m & a active in the space and what you think disney may or may not do in that regard. >> you know, one of the negatives on that, which is less than the sec yield of 1.9, is that people are saying they don't know the cash flows on espn. maybe they don't have to at this point. because the exactly -- keeping a cash forward, start picking up m & a activity. i think the company is conservative in its nature. i think he wants the legacy to be that of executional skill aa. they don't have to hit it out of the park. they were -- everybody talked about twitter, disney should buy twitter. what the hell is that fit at all? i'm glad that didn't happen.
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i trust him for not buying stuff that won't be a -- that's baked into my assumption. there won't be any crazy deal that knocks away the cash flow. particularly when people question cash flow for espn. while he manages the transition from the skinny bundle, i think we will get rewarded. a shareholder will see the stock up north of 100 bucks next year. and maybe, maybe a dividend increase. >> thanks for calling in. we will talk to you soon. >> take care. >> kevin o'leary. you own it? >> i done o't own disney. >> you like it? >> i do. i have traded it long. i hope they come out with a quarter that's somewhat disappointing. you get a reaction in the stock. that's where i would pull the trigger and get long again. i have said before, they have the content. there are questions about the distribution. disney has been solving distribution questions since the 1930s. they will get this moment right. i don't know if it's this
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quarter or next quarter. >> up next, the mixing link. buying names that took a hit following earnings. she will join us with the list. there he had she is. we will talk to her next. is happening before our eyes. shift in human history sixty to seventy million people are moving to cities every year. at pgim we help investors see the implications of long term megatrends like the prime time of urban expansion, pinpointing opportunities to capture alpha in real estate, infrastructure and emerging markets. partner with pgim the global investment management businesses of prudential.
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speed always wins. especially in my business. with slow internet from the phone company, you can't keep up. you're stuck, watching spinning wheels and progress bars until someone else scoops your story. switch to comcast business. with high-speed internet up to 10 gigabits per second. you wouldn't pick a slow race car. then why settle for slow internet? comcast business. built for speed. built for business. this earnings season has seen a number of stocks going to the wood shed after the quarterly results. tiaa stephanie link and our
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friend has been buying some of these extreme earnings dips. stephanie joins us live in new york city with some of these buying of the beatdowns. steph, you've been active with some of the names. want to start with estee lauder? >> sure, how are you doing, scott? yeah, estee lauder is down 20% from its high in the spring. and it is down 7% just last week alone after the company reported what was definitely a mixed quarter. where they beat earnings, but organic growth at 2%. that said, the company guided to 6% to 8% organic growth for the full year and confidence in that because they have the great brands, the distribution, and the pricing power. and if there is one area in discretionary i feel confident in, in secular tailwinds, it is in the cosmetics makeup and skin care area. i think the valuation has come down to a really attractive level. i've been adding to that position. >> let's go union pacific next. >> yeah, i sound like a broken record on union pacific, i really do have a lot of
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confidence that the stock is going to be higher in the next 12 months. the stock is down 9% since they reported earnings on concerns about pricing. i think it is totally overdone. volumes comparisons get easier. we'll start to see improvement. we get weekly car load data each week and improving since the company reported. it trades in line with csx on evaluation. i think this is best in breed and it shouldn't, it should trade at a premium. >> that stock is on the move today too. air products down 10% from the highs. you liked it and bought it. >> i like it a lot. i don't know why it was down 10% to be honest with you. this quarter was very good. guiding double digit earnings. interesting thing about this company is they have spun out noncore items and selling in other divisions and $2.6 billion to do m&a, buybacks, more capital allocation plans. and i think that that will get the stock going. trades at a discount to prax air which i don't think is justified. >> you were one of if not the only person on the desk to
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actually buy amazon. stock went down after earnings, got hit good, you bought more. >> i did. i just don't think the story has changed. i think 25% growth in north america is extremely strong on the retail side. i think 55% growth in their cloud business with margin expanding is really wonderful showing from the company. and i -- while i like some of the beaten down traditional retailers, i think that their results, amazon's, will look stellar compared to some of the department stores which are really struggling. i think you have to be patient with amazon and buy these dips, but i think that stock is higher in 12 to 18 months. >> it is joe. so back in the summer, you made a great call on ebay, you caught the earnings move. you do have a pullback here in earnings. and in the stock performance, are you adding to the position here, do you think that's something you should be looking at? >> i like ebay a lot. i just think that if i get a
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chance, whenever i get a chance to own the number one player like amazon, that's down from its highs, that is a little bit more controversial than it has been, but yet the fundamentals are strong, i'm going to go with that one. if amazon was at an all time high and ebay had pulled back, well, sure there is an opportunity there, i can get best in breed now down a bit and that's where i'm going to go. >> see you back on the desk soon. you bought pandora after. >> i did. >> i believe in the story there, i believe in the turn. and ultimately i do think this is a -- >> you believe in the sale. >> i believe in the sale, yes. >> cut to the chase. >> yeah. >> three hours to go. final trades are next. ♪
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or is a 423 enough? good question. you ask a lot of good questions... i think we should move you into our new fund. ok. sure. but are you asking enough about how your wealth is managed? wealth management, at charles schwab. all right, want to talk about hostess. trading debut. back from bankruptcy. it says josh in the teleprompter. i didn't make that up. but the stock is up 5%. trades at the nasdaq today. >> yes. >> twinkie. >> well, scott, i would say -- listen, i would say to avoid both the product and the stock hostess has a 90 year history of alternating success and bankruptcies and financial shenanigans. this is not a real ipo.
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it is what you call a spack, special purpose acquisition corp. a company with a blank check went public and announced the deal to bring hostess back from bankruptcy, several private equity firms that helped rescue the company are involved with it, but typically these don't go well. people that buy these spacks and then it gets converted to hostess or we have seen it with jamba juice. it almost never works. i would avoid it. i think the company is on the wrong side of the way people are feeding their children. we don't send our kids to school with twinkies in their knapsacks. and that's very different from my generation where i went to school with like a bakers dozen. >> wow. >> what if they make a -- >> they extended the shelf life on the twinkie from 26 days to 60 and that's the big innovation. doesn't change the fact that gen x, gen y and parents aren't going to feed their kids this stuff. not going to happen.
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>> impressive. i don't know what to say. how many calories in a burger? >> i could do another ten minutes if you want. >> i like the stock, but not like the twinkies? >> i don't hate the company. i understand indulging in a treat once in a while. i just don't think -- >> how do you feel about ring dings? >> thank you. see you tomorrow. >> 50/50. >> "power" starts now. all right, just forget about the menu. today is a smorgasbord of markets, your money and your vote. we are entering the homestretch. and we have every side of the story covered in a way that only cnbc can. so loosen up that belt buckle, america. politics packed "power lunch" starts right now. welcome to "power lunch." i'm michelle caruso-cabrera. stocks are soaring on the eve of the election. right now the dow jones industrial average up a strong 353 points. a gain of nearly 2%. the s&p,


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