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tv   Fast Money Halftime Report  CNBC  December 20, 2016 12:00pm-1:01pm EST

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a turnaround stock at best. yeah. >> certainly we've been calling it the laggard of the dow for a while, but striekingly so. i don't think it can afford to take your eye off the screen. dow up 65. let's get over to melissa lee and the half. welcome to "the halftime report." i'm in today for scott wapner. of course, closing in on dow 20,000. what the milestone means for your money and for investor sentiment. with us for the hour joe terra nova, jim leventhal, stephanie link, and john najarian. also with us from the nyse senior markets commentator mike santoli. i am tired of people saying dow 20k does not matter. >> it's down 20 thou. not dow 20k. 20 thou because it rhymes with dow. dow 20 thou. >> all right. >> whatever you want to call it. whatever you want to call it. >> okay. >> the retail investor loves
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this sort of thing. >> it's something we all talk about. none of us benchmark to the dow on this desk, but we all watch it. nonetheless, it does bring in a lot of individual and retail speculative paper, which is great for the markets. now, the question is, of course, mel, a close above there staying above there, pushing higher, or is it just you hit it, and come off, which is what we usually do in big numbers like this? it doesn't feel like we've got the momentum, but people have definitely tried to push it today. saw a lot of fas. they tried to drive that. that's a triple levered etf. tried to drive it right away in the morning. didn't get there. it failed and came back. got within 20 points. we'll see if we make another assault this afternoon. >> in terms of the participation on the retail investor, we're really seeing the outperformance in today's session of a lot of the on-line brokers.
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the e-trades and ameritrades, the schwabs, they are doing better than the financials overall, and, of course, with every milestone it's the opportunity to think what has brought us here so far? what do you do with these trades right now? >> the on-line brokers have the most leverage to higher rates, right, and rates are creeping higher. >> they are doing much better than even the other financials that are -- >> well, financials are having a rally today. to your point, i get it. i get that the retail investor is more excited. maybe they have a little more confidence. they feel wealthier if they have been in the market and they're making money. however, as a portfolio manager with a long-term perspective, you've got to look at a couple of other things like valuation, like earnings, like the breadth of the market. i like that. we have a strong breadth in this market. we had the cyclicals that really rally since the summertime, and they've cooled off in the last couple of weeks, right? there's more defensive rotation. i like that, though. that's healthy. we didn't see a major pullback. we saw some rotation. i think that the cyclicals are set up well from here into the end of the year into
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inauguration as we continue to talk about the pro-growth trump rally. i also think that earnings are really going to be dictating this market, especially early on in the first of the year. >> yeah. we have a little bit of respite here because we don't have earnings now from now until the beginning of next year. we're want going to be hearing about the impact of a dollar index sitting at a 14 year high. >> you know what you also don't have is any tax selling this late in the year. particularly with 2017 bringing the possibility of lower capital gains rate. just the possibility. anybody who is sitting on a gain right now is saying, you know, i'm going to ride this into the end of the year. i have seven and a half trading days left. now, what that means is that there could possibly be some sort of day of reckoning in january. i think that january's affect whereby what january does predicts the rest of the year could be a little bit outsized this year. i'm really looking to the first two weeks of january. if there's a wave of selling, and by no means, folks, am i calling for a crash, but if you get something that approaches a correction, you know, that's something that could build on itself and that's what i'm going
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to be looking for in the first two weeks of january. right now it's clear sailing until the end of the year. >> joe. >> i think the conversation is an important one. about 20,000. for a couple of reasons. the most important is we have to think back to 2008. let's face it. main street has not participated in this rally. main street does not trust wall street. the information that's being disbursed over the last couple of years, main street looks and says, oh, there we go. wall street 2008 could happen all over again. i could get busrned once again. they have not participated at all. we talk about every day. we talk about financials going up. we're in agreement. financials are going to go up. there's no reason to sell the marketplace right now. what 20,000 means is does the retail investor finally once again trust the process of investing, being in the marketplace? when the calendar flips into january, do they feel the optimism whether it be for tax cuts, whether it be for health care, whatever the policies might be, do they feel it? do they return again in a trusting capacity to invest?
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the fugz, the flows will tell you main street has not participated at all the last couple of years. i think that that's the narrative i do believe that main street begins in 2017 to return to investigating in the marketplace. >> in 2017. >> they haven't been here. they haven't been here the last couple of years. they don't trust it. they haven't participated. there's a wide income disparity in this country because paper assets have performed so well. the assets they own have not performed well. i think that's the real story here. i think 20,000 gets them reengaged. >> let's go to our senior markets comment ate every on. mark, what should we make of this round number here? do the markets get spooked after hitting these round numbers? >> i don't know if it's about being spooked. i don't know if people look at it and say, wow, what a perfect selling opportunity that's never existed before in history because we've never been at this level, but i actually do think that there's something to be said for when the number is coming, right? you have had this pretty furious rally over the last several weeks. you're going to be talking about a 15% gain or thereabouts for
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the broad equity indexes for the dow total return wise, and, therefore, looking at the past three januarys when you had a pretty significant payback, down at least 3%, and last year was the start of a bad corrections, do you actually have that muscle memory kick in? that's the question mark. i'm not saying it's happening. i do think that that's why the round number might have a lot of two-way action around, it but if i also can kind of restate some of the conversation that's happened already about maybe now the retail investor finally comes in, are we talking about whether this is a good time for the retail investor to, in fact, make that move, right? the market is up 235% in almost eight years, and now they're going to come in. if your bull cases, somebody from the public will come in and take me out of this stuff, and we're going to get to crazy valuations, i'm not sure that's really the market that we want to have, and i'm not saying that's what we do have, but that's where that steer line leads you. >> i think it's a great point about the muscle memory in the month of january. anybody who remembers the beginning of last year, that was just hand-wringing time for the market, and here we are. we're going to be entering earnings season where we might
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hear these companies say with the impact of a stronger dollar is, for instance, so it's not just all this -- everything is coming up roses. >> what you were sawing about the retail investor coming in that it could, unfortunately, be a horrible setup. if the retail investor does come in and some of these things like a higher dollar and higher energy prices and maybe some profit taking come home to roost, it really could -- it really could slap the retail investor around and send them possibly running to interest rate products like bonds that have started to go higher. >> the difference is you have trump in office, getting in office, and we are going to listen to his plans and his growth plans in places -- >> that could matter. >> much different setup. i agree. january could be very volatile for all the reasons that everybody is talking about. i totally understand that, but i think the back drop sets up very nicely for 2017 for better growth and also better global growth. look at what japan said. overnight. no one is really even talking about it. look at europe.
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they're pulling a little bit back. >> on commodities on an upswing going into next year, which is different from last year, in terms of a barometer of global growth. a vix sub-12, that should be a go ift to investors right now. >> it is. to your point exactly. that is what it is. a gift. you get an opportunity to a some insurance out against the long holdings at record levels. that's a very smart thing to do. in particular, because of what we talked about with europe. the elections, multiple elections across europe. unfortunately, terror events in switzerland and in berlin and germany yet, those are the sorts of things that can cause people to step back a little bit, but that's probably not enough to take people out of the market
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sflo do you spend it? do you invest? do you save, which is what they've been doing the last couple of years, or you could donate to charity, which hopefully all of us will be doing. i think right now it's, okay, spend it or invest. spend, it it's good for the economy short-term. invest -- >> it doesn't preclude the other. you can leg into a position now and leg into position in january and -- >> but listen, the main street investor, okay, over time might statically go in month by month and have incremental investments in the marketplace, and i happen to agree with you. that's the right strategy. the question becomes and it goes back to 20 thos. do they even bore or take the disposable income that they're getting to them in 2017 and go spend it? i would argue that's just short-term positive for the economy. that's not the right thing that we want to see them doing. we want them investing, believing again in the capital market, something they haven't done. zroo all right. as we come within points of dow 20,000, let's bring in a man who has been calling for this
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milestone for quite some time. professor jeremy seagull. professor of finance at the wharton school of the university of pennsylvania. he joins us live on the phone. great to speak with you. >> good afternoon. >> what is the significance in your view of dow 20,000? you did write a whole book about it, so you must have picked that number for a reason. >> the sum of the 30 industrials divided by a crazy divider that starts with 1.146. you know, it doesn't have any concrete meaning, but i was looking back at dow 10,000. that was 1999. we were talking about public participation. april 1999, that was in the midst of the internet technology mania that brought the public in to a agree. we had never seen it since the 1920s. this is a world of difference. i mean, the public really isn't there. i mean, obviously it goes above 20,000. we will get some headlines.
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it will be a little bit more, you know, recognition, but we're in a very different world than when we hit that last big milestone in 1999. i think this market has a way to go. good point about capital gains, which everyone expects to be dropped and that is obviously preventing probably some people from taking some profits right now, but i see -- i see this trend certainly lasting at least a few more months. it could drive us -- we went -- i think to 11,500 from 10,000. i don't think we're going to quite go another 10%, 12%, but i don't think this rally is over. >> so you think that the retail investor is not in -- it's probably not into the degree we saw during the internet bubble, but they haven't largely been participating in this? is that a good thing for the markets or a bad thing for the markets? does it lend more stability to the markets if the retail investor is not a main participant?
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>> well, when the retail investor gets overly involved, it's usually a top. they get over optimistic at the top. they start buying because it's going up, and, you know, you only get the momentum players. now, there are professionals that are a lot of momentum players. we certainly know that, and that's -- the public is what often does drive a top. we don't see the public in there yet. my feeling is -- and, you know, yes, we're at 21 times earnings, but if we get a tax cut next year and it looks like a slam dunk on corporate tax cuts, i mean, that could boost 10% on earnings. s&p has only been up 6% since the election. even on taxes alone, you rknow,i don't think we've moved as far as we could in terms of discounting what a trump victory could mean for corporate earnings and the market. >> professor, it's jim leventhal. i was in your class accident are actually, when another milestone
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was hit when the s&p 500 went through 1,000. that will date us both. >> wow. >> that was in the late 1990s. another time when valuations were questioned, and i do remember one of the things you said this was that there's the potential as emerging market economies expand and mature and middle classes come up that they would be the ones buying stocks from baby boomers looking forward. i'm just curious. it's not something that we talk about very often. do you still see that as a possibility to propel markets higher, that international buyers could be looking at the american stocks? >> well, you know, that's a sprt good question, and it's a good long-term question because everyone says when all the baby boomers are selling here, you know, who is going to be the buyers? i said, well, it's the new rich of the emerging markets, and i said that they had to grow at a certain pace,ing and the slowdown in china and what we have seen is a little troubling
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that way, but i think they're getting back on track, and i still think they will be the young -- those younger -- the new rich will be many of the buyers that we'll see. that's very long-term, but those people look out to 2020 and 2030. you know, that's their concern. >> professor siegel, do you have dow 30k or 40k in the works in terms of a book? have you started writing this? >> no, no, no. i don't have anything that -- dow 30 would be another, what do we say, 50% if we can get 7% a year. that would be about six years. it's going to be volatile up and down, but -- >> so you have a couple of years to get started on your book, in other words. >> i have a few more years on that. >> professor, thanks for phoning in. appreciate it. professor jeremy siegel of wharton. mike santoli, back down to you. the professor makes a good point in terms of the retail professor getting in. could hedge funds, though, in today's market be the retail
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investor ofie yesteryear? >> on paper the environment should be relatively target-rich for hedge funds right now. they're losing capital. obviously, they have big withdrawals. they're not in a good position to be as opportunistic as you might hope them to be, but i do think if you look at this rally, it's not been about every stock of the same percent. it's been biforcation, winners versus losers. i don't think that just having that on paper means it's actually going to be a formula for success. i don't know that that's really going to be the storyline into next year. i really do think that the more this rally is purely about a trump rally, is purely about policy expectations, maybe the weaker the fundamental case for it is to be honest with you. i think you want this to be -- we were pent up over two years and going flat. we need to go higher. it shouldn't have to be about incremental gains for policy. >> great to speak with you. thank for joining us.
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>> coming up next, our call of the day. why one analyst thinks that 44% jump is in the cards for a lagging tech stock. >> many of them up more than 25%. will that trend continue into 2017? halftime report continues right after this. guys, what's happening here? hey nicole, this is my new alert system for whenever anything happens in the market. kid's a natural. but thinkorswim already lets you create custom alerts for all the things that are important to you. shhh. alerts on anything at all? not only that, you can act on that opportunity with just one tap right from the alert. wow, i guess we don't need the kid anymore. custom alerts on thinkorswim. only at td ameritrade. because when you really, really want to be there... but you can't. (cheering)
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>> our next guest sees sunny skies ahead initiating coverage on the stock today with a buy rating at $100 price target. a 44% upside from here. brian, great to have you with us. >> hi, melissa. >> you say it's a zblen master the cloud. is that necessarily a good thing or a bad thing? you could read it as bad thing when you are talking about a space where there's a lot of competition and a lot of bigger players that can afford to drive costs lower. >> i think sales force is at a phenomenal position. number one, they're the number one player in the sas market, and being a teenager reminds me of oracle and microsoft as they were starting for emerge in the late 1990s. i think they're positioned better than ever. the scale is there. at the end of the day if you listen to what mark herd at oracle said, he said, look, 80% of enterprise apps will be in the cloud in a decade, and two companies are going to control 80% of the market.
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who better to do that than sales force? they're the number one player right now. >> brian, it's stephanie link. question about m&a. benn bennihoff has beenco confusing, and we're scratching our head with the linkedn stairtory. a -- territory. are they looking at m&a because their base business is growing? >> it was the concern of 2016? there was media reports they were after linkedin and then twitter. i would just say valuations came down in 2016. there was a lot of good opportunities. they took advantage of that. the second thing is they're trying to broaden their reach. there's nothing wrong with that. i don't view it as a negative. it's like not, oh, my god, they're doing acquisitions, and that's because they can't find growth. that is absolutely not true. what is true is there is some phenomenal assets that are for sale, whether they're public or
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private. some just can't be replicated. sales force has the vision to see that. >> brian, it's joe. this is a stock that i bought above 08 in august. it's a volatile stock. how do they smooth out the volatility in this stock, and be able to just focus on what they are perceived to be? not just yourself. everyone on wall street loves the stock. it's goldman sachs conviction buy list, $96 price lits. it'scategorized it -- it's highly volatile. how do they get past that? >> it's interesting the volatility that we have seen because the company does have visibility, and 95% of their revenue in the quarter, as they enter the quarter, and 80% for a year. this is a subscription model. it should be less volatile. that's number one. number two, i think in 2016, again, this underperformance is driven by concerns around acquisitions. it's absolutely misplaced.
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that's where we think catch-up will start in 2017. if they perform in line with the market, $100 would be fairly easy to do in 2017, and that's what we think. >> all right. brian, we're going to leave it there. thank you for joining us. brian white with drexel, who just initiated crm. to the point that you are making about volatility, his point was interesting. it's a highly visible business, and, in fact, they have a total revenue target out to 2018 already. >> listen, he gave the perfect answer. i think the world tour is going on right now. they're talking about einstein, artificial intelligence. they're talking about the business. that's the important thing. there are concerns surrounding m&a, and i think the investor has to have comfort that they're not going to go out and spend in an unwise capacity. that's the concern. i don't have the confidence in it right now. i got burned on the stock. >> you saw what happened when the linkedin rumors -- twitter rumors came about, says and everybody thought, oh, that was a stupid -- a stupid
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possibility, and, yet, they thought it was a possibility. >> in terms of the volatility, service now also is a competitor of theirs, and it's a volatile stock as well. much smaller company. i get that. look, i own it. i'm frustrated by it too. it's been a terrible stock for me as well. tech is at an all-time high. it's been frustrating, no doubt, but they have a good franchise. they have a good brand management. they have a great management team, and the balance sheet is pristine. they can do m&a, and i was encouraged to hear that brian didn't think that the m&a was because they needed to find more growth. they want to expand, yes, that's been very consistent with what bennehof has said, and if they can find pieces along the way to help in that regard, that's fine. i kind of like 17 as a setup because it has lagged so much. i'm looking for the laggards this year to be the winners of next year. >> don't you think it's a valuation question? this is to your volatility. i know you're a value investor at heart. i'm sure you buy some high priced stocks. this is 54 times next year's
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earnings. something like seven times enterprise value to sales. it is a fabulous company. i'll say that. the stock is so darn expensive. >> 17 times that's exactly how you have to look at this company, and this is trading at substantial discount to any of their peers at this point. in terms of the high growth stocks. >> you wouldn't possibly look -- >> i'm saying it's a value brsh i'm saying it's a value within the cloud space. if approximate you look at all of the other -- >> if you look at the cloud, that's a value for you. >> to me it is. certainly. it's not as cheap as ibm. i'm not going to try and attempt that one. >> let's go from a loser to a winner, nvidia getting added to -- mizzoho raising the price target hikes in the past month on the street. now, nvidia is up 220% this year. so at this point do you join the investment banks out there, the wisdom of the banker says and say, you know, it's a buy for me too? >> no. i don't. we were talking in the break,
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mel, about advanced microdevi s microdevices, for instance, where you have seen week after week a new 52-week high set over at amd, and it did it again today. new 52-week high. i'm goefocused in on that, and t one also has unusual activity. haven't had it in nvidia in a while. unfortunately, i haven't been on this train since 0 a80 all you way up to 25. missed the ride. wish i was on it. i'm not really tempted here at 105. >> it's interesting you mention amd. within the goldman note, they're talking specifically about gaming and the gaming population growing, and amd has repositioned themselves over the past few years as more of a gaming chip stock. also, there are the other areas. virtual reality, ai. i mean, these are the hot sort of tickets. >> when you are talking about the potential for semis right now and thinking about the universe and the possibilities, it's endless. i think that's what attracts all of us continually to the
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technology sector overall. specifically, though, for me texas instruments has been my way. it's kind of a forgotten name. big balance sheet name. yet, it is working right now incredibly well. nvidia has been a fantastic story, and you have to bring up josh brown who has talked about this all the way up and never once said let's get out of the stock. he has talked about the changing dynamics, the fundamental story, the tail winds for the business. if approximate he is here, he would say that remains in place. for me i want the big balance sheet type of semi, and that's why i'm staying with a name like texas instruments. >> values within a sector that's up 40% this year. >> there are. and intel and qualcomm come to mind. now, i'm going to channel my inner josh brown since you brought him up. intel had that misstep in the last quarter, and they guided a little below expectations. the chart is actually looking like it's forming a cup and handle, and that bodes extremely well going into 2017. are you proud of me? you like that? >> if you are not chaing your inner -- you have to say something like i'm going to tell
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you something really important, the most important thing i'm going to tell you today. right? he says stuff like that all the time. >> this is really important. listen. >> within semis broad com, so avago. i still think. it's trading at a 20% discount to its peers. they just beat and raised and did an acquisition to diversify away from apple because everyone freaks out about apple. apple exposure is 10%. if everyone is excited about apple with the eight coming, you're going to want to have some apple exposure for sure, but these guys are doing much more than that, and i think you do get exposure to a lot of the various different end marks that have done well and will continue to do well. >> up next, the food trade. a miss for general mills. mcdonald's getting a nod of confidence from credit suisse. the trades ahead in the blitz.
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>> i'm sue herrera. here's what's happening at this hour. the truck that plowed into a crowded christmas market in berlin was removed from the scene earlier today. vefrs, however, remain at the site following the attack that killed security was stepped up
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at a christmas market in birmingham england following the berlin attack. concrete bear yerz were if put in place, and this is a heavier than usual police presence and security was increased in france as well. safety regulators have launched an investigation into about one million fee at chrysler pickup trucks and suvs after receiving complaints of the vehicles rolling away after being parked. the probe covers 2014 to 2016 model year durago suvs and 2013 to 2016 ram 1500 pickup trucks. and the upcoming sports illustrate cover features michael phelps. look at that. wearing all 23 of his olympic medals at once. it's the first time he has been photographed with all of those plelgdss. the issue hits the newsstands on thursday. that's the cnbc news update. that's a collector's item, melissa. back to you. >> looks heavy to me.
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>> probably is. you're right. >> look what's moving here today. remember the financials fell back a little bit in the last few days. well, now they're on the upside today. you get goldman travellers. the industrials are starting to have. this is why the dow is moving. you get big movers. why aren't we getting dow 20,000? it would help if the consumer names moved along. thank you very much. how about you, protector & gamble, johnson & johnson. procter, coke, merck. that's what's holding the dow back right now. we're getting this rotation. there's been no stock for sale. instead of selling often, the market just retats and goes sideways. that's why this is so powerful. my vote, number one, stocks since the dow jones industrial average, goldman sachs.
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it's responsible for 24% of the s&p -- of the dow's rise since the election. >> still got the old dow 10,000 hats floating around, and we still have the dow 20,000. we're prepared for anything. back to you. >> thank you. >> let's bring in -- >> i'm slow money compared to
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fast money or "the halftime report." i have a 15, 16, 17 percent turnover annually in my portfolio, so i'm always looking to trim things as they're expensive. i'm trying to add things as they're inexpensive. . >> this is captainism succeeding. >> it's joe. you talked about being slow money, and there's nothing wrong with that. over the last few years financial ownership has not been a place where slow money has wanted to be. are you giving consideration to changing that now? it seems as though the institutional investor is navigating the battleship change and moving more into financials to an overweight status. do you agree with that? >> yes, i agree that the individual investor has certainly been following the momentum. i have never had a blank in the financials. i've always had some representation. i was underweighted up until
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probably last spring, and i still may have been a hair underweighted. >> they love stocks when they're expensive and hate them when they're cheap. these stocks are not cheap. nobody at cocktail parties this holiday season is going to be out there saying, oh, did you hear it was dow 19,950? no. they're going to say it was dow 20,000. it's easy to say. it's going to be celebrate other. i think things go higher once we hit it. >> michael, good to speak with you. michael far from washington. >> happy holidays.
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>> happy holidays to you as well. which sectors look expensive? michael was saying trim the things that look expensive right now. what looks expense i? >> energy. >> energy. >> staples. >> staples. >> basic materials. don't punch me, steph. >> i'm with joe on energy. >> the 11 sectors of the s&p look expensive right now? >> us judge because i don't know how much further we get going on the energy side. in the short-term, though. we may have some more supply coming on from libya. >> it's hard, though, on energy and in basic materials and in industrials and in cyclicals in genbecause you usually buy them when they're expensive because you're at trough earnings. when you say they're expensive, they sure are, but if you think it all depends on what your belief is in the upcoming 12 to 18 months for the underlying commodity and underlying growth. when i say staples, they are absolutely expensive to where they have been historically, to the market, to any which way you want to look at it, and i don't think you want to be putting your money there very long. >> alcoa shares higher as
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mccrory upgrades the stock. now it's the time to buy, that's ahead in the blitz. at the marine mammal center, the environment is everything.
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>> olive garden is gaining market share. that kind of offsets it. it's been a very strong comeback for the stock, and if you believe that there will be a tax benefit in 2017, i think that bodes well for the casual dining space. focus on the olive garden strength. >> exin up, general mills. missing the mark. >> you know, this is kind of a poster child for the consumer staples seconder of the market, which did so well in the first half of the year. it has sputtered since. i think what you are seeing is there's limited opportunities for growth. still has a nice dividend yield. it doesn't necessarily go down from here. >> these guys cited competitive issues as well as deterioration
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of the model, if you will. it will be exactly in the right space. there were rumors about a takeover, which was why i put on a call spread in there. maybe ten days ago. now it's making me question that. >> alcoa to an outperform. what do you say? >>. >> we've talked a lot about mcdonald's on the show this year. had a great 2015. it's sputtered as well in 2016. the question is what happens in 2017. folks, i'm sorry. it's just too expensive for the growth ahead of it. they've done fabulous things with the menu with pricing. it's just too expensive.
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it flat livlines in 2017. >> up next, he is number seven on barrons top 100 advisors. richard of hightower treasury partners joins us for his take on the march to dow 20,000. first,ing take a look at that dow 30 heat map right now. merck, cisco, j & j, holding the dow down right now. stay tuned. come on, wake up!!! come on, why ya sleepin'? come on! what time is it? it's go time. come on. let's go, let's go, let's go. woooo hoooo!! yeah!! i feel like i went to bed an hour ago. i'll make the cocoa. get a great offer on the car of your grown-up dreams at the mercedes-benz winter event. it's the look on their faces that make it all worthwhile. thank you santa!!! now lease the 2017 c300 for $389 a month at your local mercedes-benz dealer. what's critical thinking like? a basketball costs $14. what's team spirit worth?
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(cheers) what's it worth to talk to your mom? what's the value of a walk in the woods? the value of capital is to create, not just wealth, but things that matter. morgan stanley
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welcome back. we are closely watching the dow
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approach 20,000. formore let's bring in richard, the cio of hightower treasury partners. number seven on barrons top 100 advisors for 2016. richard, great to have you with us. are you getting more phone calls these days with a big round number approaching? >> well, not so much results of a round number, but more so as to what the impact of trumponomics will have. we believe that dow 0,000 is the emblem attic of the post-election climate where the fed will be on the periphery of the narrative as it transitions to normalizing monetary policy. the markets are basically pricing a successful handoff from the fed to trumponomics and will be focused on the etf benefits that could accrue from the policy changes. >> how quickly will the markets
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shift to focus on the 2018 etf. >> if you are saying that the markets are expensive right now, i mean, for instance, are you advising clients if they wanted to trim a position to not trim it until next year knowing that the tax environment will be more beneficial? >> well, we're net buyers of stocks right here. our outlook is two to five years, and we're pushing to full equity positions. likely, we'll have an air pocket potentially in the first half of 2017 as a result of uncertainty on the timing, magnitude, and impact of trumponomics. we see inflation possibly rising in q1. we've got the drawbacks from a stronger dollar and potentially higher interest rates. >> hey, rich. it's jim leventhal. good to talk to you. >> likewise. >> quick question for you. i know you do asset allocation for your clients, and this has been a year in which u.s. stocks obviously have torn the cover off the ball, but international stocks in dollar terms -- in
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dollar terms have been a laggard. how are you advising your clients who may be saying enough with international stocks. just put it all into the u.s. >> our position has been underweight international since the crisis given that we believe the fed and central are single monetary and fiscal policy regime will lead to global growth in the world. we had zero exposure to em right now. we think that's going to be a big problem with the stronger dollar and their need to repay the dollar denominated debt that they took over the last seven years, and we have the lowest exposure in years to non-u.s. developed market stocks below 5% across our portfolios. >> richard, you mentioned that you're a fwo plus year holder. two to four years or so. when you take a look at the financial sector, do you regard it as a sector that you hold on for as long as four years from
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now? >> well, we were overweight the financials going into election, and we trimmed recently to just below a market weight. our bet is that at some point there will be disappointment on the benefits of trumponomics, and that will have an entry point once again. we're currently underweight, but we like the sector for the long haul. >> got it. richard, thanks for phoning in. appreciate your time. richard of hightower treasury partners. who agrees with him on financials? are you long and strong, and that's that? >> as you have heard him say many times, my brother pete sold out of his position. >> regretted it. >> regretted it 24 hours later. basically got right back in. maybe it was 48 hours. he wasn't gone long. jumped right back in to a host of names, and i think you just want to hold them. you want to be strong here. >> i was going to make this for my final trade, but jeffreys reported today, and they were
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very confident about investment banking capital markets, and about a kwchl weeks ago there was a conference where they all talked about capital markets and equities. that leads me to believe that earnings estimates actually have to move higher. >> brexit was a big boost in the third. right? >> for years we have been lowering numbers on financials. now we're actually starting to raise them, and it's not just interest rate related. that's why i want to stay on reasonable doubt bo. >> all right. coming up next, nike and fedex to report earnings after the close. our positions on both next up on "the halftime report." i think that she's a very nice girl. you never got the brakes looked at?
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hi, everybody. welcome. i'm sue herera filling in for jackie deangelis. the gold market sliding today against the stronger u.s. dollar, breaking below the $1130 an ounce mark. scott, where do you see gold going from here? >> i think it is going to continue to go lower. might go side i was forways for. why has it gotten killed? you point it out. it is all about the dollar. dollar index making 14 year high in the futures. strong dollar is bad for gold. and also the fact that the dollar is strong because of rising interest rates here with the ten-year yield at its highest point in two years.
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that's also horrible for gold. >> jeff, what levels are you watching? >> sue, we're focusing on the 1125 level, and to scott's point, yes, we have seen gold fall for six weeks, post the election of president-elect trump winning. with the dollar suddenly being above 103, we have not seen a new year to date low in gold. i think right now there is support here at 1125. you can get in, as we're all waiting, to put on that dow 20,000 ball cap, i think you have the opportunity to get into gold and watch it go back up. >> on that note, for more futures now, we head to our website at futuresnow.cnbc.com. and today at 1:00 p.m. eastern, we're joined by stephen suttmeier. he'll tell us why the market looks like the market of the 1950s. "halftime report" is back after a quick break.
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this is where i trade andrs. manage my portfolio. since i added futures, i have access to the oil markets and gold markets. okay. i'm plugged into equities- trade confirmed- and i have global access 24/7. meaning i can do what i need to do, then i can focus on what i want to do. visit learnfuturestoday.com to see what adding futures can do for you. ♪ well, if you want to sing out, sing out ♪ ♪ and if you want to be free, be free ♪ ♪ 'cause there's a million things to be ♪ ♪ you know that there are ♪ and if you want to be me, be me ♪ ♪ and if you want to be you, be you ♪ ♪ 'cause there's a million things to do ♪ ♪ you know that there are ♪
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but i keep it growing by making every dollar count. that's why i have the spark cash card from capital one. with it, i earn unlimited 2% cash back on all of my purchasing. and that unlimited 2% cash back from spark means thousands of dollars each year going back into my business... which adds fuel to my bottom line. what's in your wallet? nike reporting earnings after the bell. jim owns it. what are you expecting? >> i have very low expectations. i'm not expecting a blowout quarter. certainly the momentum has been with adidas for most of this year. however, that being said, i only own half a position. if the stock breaks down on earnings, i would definitely fill out the other half. i would love to get this at 50.
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if it goes down to 48, i would be in heaven. >> this has been on your radar, right, steph? >> yeah, my gosh. it is a great company, great balance. >> have you hit the bid? >> not yet. i was concerned about athleisure in general, but i think the evaluation and the expectations have come down. this is a quality company, great products and they have margin expansion for 2017, which they didn't have really that much this year. so on any weakness, i'm looking to actually buy it. >> strong buying in the 52-50 calls, huge unusual activity at that strike. so i bought that today, mel. sold the 5350s against it that expired at the end of this week. i think that's a great setup for this trade. >> fedex is also reporting today after the bell. the stock trading near an all time high. so what is the move ahead? the results, this is one outperforming u.p.s. by 10% year to date. >> fedex is fantastic. before the show, talking to the producers, i said if it goes higher, buy it, if it goes lower, buy it.
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it has all the tailwinds behind it. this company can raise prices, pass it through to the consumer. that's an important question in 2017. these packages are being delivered. it has been an active season, we're not doing it by horse and buggy. it is getting done by fedex. they're going to continue to benefit. >> i hear somebody on this desk owns u.p.s. >> yeah, but i've been trimming it. always been a really good stock and it is trading at a premium to fedex. i always get to january and get a little worried about the execution because you're at peak season. these companies want to deliver the packages. on time, right? they will take additional costs as a result and sometimes that comes back to bite them. so i've been trimming u.p.s. still like it very much, but i'm looking for maybe a better buy point in january. >> this week into christmas, your stomach is in a knot thinking one of these guys will say we had a major snafu. >> in january, like the last two januarys, you know, some serious issues. i worry a little bit.
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had a nice run. >> weather. don't worry about it. >> to the final trades here. dr. j. >> clf, unusual activity, huge buying in cliff and free port. watch this one. bought this one. i'll probably hold it for two weeks. >> stephanie. >> i was going to talk about jeffries, but i don't like every financial. aig i would take some profit. nice run. i think it is time to just let that stock sit. >> jim, what do you say? >> time warner, entertainment company, one being bought out by at&t, you know, every day it goes higher a little bit and still 12% below the buyout price. >> okay, so -- >> it continues, trickles higher every day. >> joe? >> we had mr. jim cramer on with us yesterday. talked about the department stores and last evening i look through them, dillards is a name -- >> went to the department stores? >> no. >> yes, he did. >> you're in charge. >> i don't travel very far.
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but looked at dillard's, it is a name i owned, a name i like, i like the geographic exposure it has, a little bit resistant to some of the weather concerns. i think it performs well in an environment of 2017 with more money in people's pockets. >> that was fun. that does it for us on "the halftime report." "power lunch" starts now. >> we'll see you in a bit. welcome to "power lunch." i'm brian sullivan. here are your three big headlines right now. first, with with two hours to go in trading, will the dow hit the 20,000 mark today? we were as close as 13 points away earlier. let's see if the market provides any kind of a late day push. second, we're counting or continuing to follow the developing story overseas following terror attacks in germany and turkey. we're live in berlin ahead. >> and third, we're keeping a very close eye on fedex. why? the company reporting earnings after the bell. we bring you the three things to watch when they report. "power lunch" begins right now.

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