tv Fast Money Halftime Report CNBC January 17, 2017 12:00pm-1:01pm EST
>> when china itself, yeah. >> yeah. we can't wait for more from you in davos on a busy week. of course, earnings season, davos, the inauguration, we're going to have a lot to chew on on the last several days. let's get back to the headquarters. scott wapner and "the half." >> welcome to the "halftime report." i'm scott wapner. top trade this hour, trump rally and your money. with 72 hours to go until donald trump becomes the 45th president of the united states, what happens to the markets after the inauguration? can stocks keep climbing or is a correction in the cards? with us for the hour today, joe terranova, steve wise, jon nanlgian and here onset is aaron brown, he'd of mckro investments with ubs o'connor and tony dwyer, chief market strategist. doc, what's going to happen come the inauguration? this rally going to keep going or get stopped in its tracks? >> more of the same.
we're going to see fits and starts trying to get through 20,000 when we eventually do we will pull back and try to make another assault and see if that holds, judge. i think the same pattern that we've seen playing out until now is going to continue to play out. and that is, buying dips, any significant dip, even friday's dip. if you buy the dip you get a chance to take profits quickly. the vix is still below 12 but they have been buying a ton of vix calls. upside calls, in february though, at about this what's going to happen on friday, guys, but about -- >> where is the vix today? >>. 1170. >> 1170 we'll call it. let's call it 12. in february as you say, this is trade that we've just sort of gotten our eyes on. investor have purchased 250,000 vix call options with the strike price of 21. >> yep. >> so they're looking at a double on the vix. >> they bout another 150,000 of those on friday last week. >> that it don't need it to double. >> as the vix was coming down.
>> right. but you get the point we're trying to make. >> it's big protection by multiple parties, most probably. there's one person that comes in virtually every month and buys a one-month out vix call that's right around 50 cents. it's a hedge against an existing portfolio. not a bet on the downside. now, this is some of the biggest activity we've seen, judge, so i'm not saying it's just that one party. this could be multiple volatility book guys that are hedging, could be goldman, could be deutsche, could be a whole bunch of folks hedge for what could happen. again, it's not about what happens on friday because they're buying these way out. >> do we think people have been simply too complacent about what lies ahead? tony dwyer, you're looking for a 3 to 7% correction. >> we downgraded in mid december because all the enthusiasm -- when we upgraded before the election it wasn't base and donald trump. i wish i was that smart to know that was going to happen. it was based on fell rating market activity. it has continued to accelerate
globally. when everyone is enthusiastic, when you have 60% bullish, the correlation of the individual stocks in the s&p itself in a cycle low near 2007 levels, history shows you will have a correction. the biggest point i could make, scott, is you never ever ever, everer ever ever ever want to not buy a correction like that even if it gets worse when you're not in a recession or inverted yield curve environment. >> look, you know, buying protection of the vix. equities are the only asset class that is holding up there. if you take a look at -- i should say that we're talking about -- if you take a look at all the other asset classes it's been the safety trade. you take a look at the ten year, the yield has gone down 2.3. right? you look at gold at the rally, silver, we had the rally, copper starting to sell off.
the rest of the assets have really gone safety trade and they're very skit tish about equity markets. the buyers -- >> which side of the trade is right? >> i going to say that -- that there are some concerns that have been bubbling about there. trump can't possibly execute in a timely fashion on everything he's gone after. in addition, protectionism keeps getting more and more prominent. so you can't pick on merkel, you can't pick on china, you can't pick on, you know, bmw, you can't pick on everybody without it being a concern. that's number one. number two, you can't go after the gop. not that he went after them but talk about the border tax. i wouldn't call it a fragile alliance but the numbers aren't very strong in the center. we point out last week. with rand abstaining 51-48. there's some reason to be concerned and with the ek cutity valuations where they are, that,
you know, maybe just want to pause little bit. you're going to earnings. earnings should be good. >> history hasn't been all that kind to a new administration either within the first month of taking office. rich peterson sends me something here. >> sure. >> it is what it is. ronald reagan, eisenhower. >> george w. bush, 4.7%. >> you can easily do it but it's always a credit -- reagan, the recession came in the first year of ray again. eisenhower, there's been comparisons made to that. the key is you had an inverted yield curve and shutting down a credit in the years before that they took office. that's why you had that recession driven bear market for both in their first year. >> i'm saying, in the first month. bush, obama both lower by more than 4% within the first month. >> i also think a lot of the reason why the market rallied off the bottom, clearly positive economic trends that were reflecting more positively. nigsz to that you aed a lot of optimism about a tax and infrastructure deal getting done. and i think what you saw
yesterday marl particularly fro the "wall street journal" article released is that it's going to be a lot harder to get a tax plan done as quickly as the administration would like. there's a pretty big disagreement among border instability between the house. the house wants any deal to be done, revenue neutral. trump is saying he doesn't -- never loved the idea of border adjustability. so i think that the time frame is probably pushed back to the fall where the market was hoping it was going to be in april or may or at least before the august recess. that probably pushes the timetable for any implementation into next year. and so i think that between infrastructure not even being discussed, taxes being pushed out, i think both of them are probably putting a little bit of a hold on market moving higher from here. and then you're getting negative signs from the rest of the market. >> you've got confirmation hearings that still have to happen with important cabinet members, too. >> we talked at the end of december about the strategy in
december being not to make decisions until the month was over. that was what was important. i said last week i thought the market was going to accelerate above 20,000 until the inauguration. you like to make mistakes earlier in the year and be over and done with it. that's my mistake of the year. steven talks about 230 and a ten-year. what does that mean? money is still sloshing around globally and has a place to go. josh did a great job talking about if you're not in the u.s. i'm going to be in europe, i'm going to be somewhere else. i talked about taxable fixed snk. those are the places that are going to see flows of capital coming because we're still in a little bit of search for yield environment. if you look at flows and i'll tell you on a mutual fund side, i am amazed that we have not seen a stark inflows to mutual funds on the equity side that you normally see in january. it's negative. you've seen a slight outflow. unique situation. >> maybe part of that has to do that we had a great run since the election and people are skittish. >> no. that's -- no, and it's not.
it's the environment of where yields are right now and what the expectation is for the investor and what tear going to get. we're still not in that go-go environment, scott. >> josh? >> yeah, well, so they are reporting -- we have the sentiment data and the newsletters are bullish. they always get bullish after the market runs. that's their function in life the is to chase what happened. they ride it over the weekend. if you had a good close friday they're constructive again. that will change on a dime. look at what people are doing, not what they're saying. the ici data says the week of january 6th was a net out flow of minus $2 billion from u.s. stock funds and u.s. stock etfs. show me the yeuphoria. it doesn't exist. utilities at the highest levels since the election. and now you've got some of that internal strength that we were seeing in the russell 2,000 and in some various areas that have been left behind. starting to fade a bit. i submit though that this is not
necessarily negative. again, you don't want to see a market just go straight up six, seven, eight weeks and then crash. it's much healthier to see money move around, see a little bit of rotation, and, look, we don't know what's going to go on. >> money trying to make up its mind. look, we've talked almost every day about the financials rally that we saw since the election. kbw coming out today saying cut jpmorgan. they downgraded to market perform. catalysts are becoming harder to find. is that more of a reality for what the banks are going to be? facing? >> the analyst has done a solid job at being or keeping jpmorgan in an out perform. i think he was low 70s. he's had it all the way up. congratulations to him. i think he shaves it by maybe $1 here, takes to it market perform. the average price target on jpmorgan is somewhere around $91. that was a great quarter that jpmorgan put. that was a great quarter. i own jpmorgan. >> jim cramer called it arguably the greatest quarter ever put in by a bank, ever.
>> down 2% today. if you want to scare yourself out of the position, fine. there's other things you can do around it. jpmorgan looking forward into 2017. that's the least of your problems potentially. >> it's almost like they make a bigger picture call with, too, with this. i'm quoting from the note, should tax reform or broad scale deregulation become more like it. >> bigger issue there as well. don't forget one of the proposals in the tax plan is the inability to deduct interest. so if you canned deduct interest and you're a bank there's less borrowers. we need to see how it fleshes out. in terms of the bank, this is a sell on the news. morgan stanley came without with a very good quarter and look at this stock. that stock is down dramatically. if you're a long-term holder of the banks i don't think this is where you want to sell them. >> you want to buy them? >> i think you will get a better opportunity as well as ten year staying at 2.3% at w. the about that it goes lower. this is not the point of entry. just be patient. you will get a better point of
entry. >> i agree with the point on interest deductibility. with interest deductibility they're have a carve out for the banks. it will hurt with issuance for maybe new lending. it might hurt their stream of business but it's actually got to hurt the banks. >> so if you're a borrower, right, and if you're a private equity we know how that works out. bridge loans, and others. >> 100%. i think just really quickly, though, with the ten year, i meerning right now positioning is at record shorts with the ten year. it's going to be hard for the ten year to sell off significantly further from here. >> agree. >> i think because of that if you continue to see the bonds continue to rally a little bit further from here, you are going to see the banks come under pressure. >> scott, the financials kind of highlight our current opinion. corrections are only natural, normal, and healthy until you get them. and then all of a sudden if you're already very offensively positioned and levered long and it starts to go down 3% or 4% i get the calls. people start to get nervous and they start to sell.
they do the opposite of what history suggests you do in a positive fundamental economic backdrop. you want to buy weakness. unless you're in a credit driven recession or bear market you want to buy weakness, not sell it. you have to be neutrally better. >> i do you one better. if you want to follow that advice as tony would tell you it's much harder to dothan to say. but if you set your perimeters in sned a vank ed advance and m. the next time the market wants to vomit them up because of the french election or whatever the boogeyman is, maybe it's, for me, it's google, which i'm in. i wish i were bigger. it's jpmorgan, which i'm not in yet. thank you today for whoever was -- was it kbw? >> yeah. >> appreciate it, brother. you make this list. and then you put in buy stop limits and you put them in at levels where you say, all right, maybe this is unrealistic but i don't care. i'm saying yes to the dress right now. >> now, absolutely dovetail that. how do i get held accountable as
a talking head on tv when i make a statement to the public. >> you're above the law. >> never. i have to make the statement before it happens. because i promise you i will from scared when the markets down 5% on a perceived fundamental change. if you are not convinced that it's going to happen before it's happened and position yourself that way -- >> these are behavioral nudges that can limit the pain. >> just like mike tyson said. everybody has a plan until they get hit in the face. and when you get smacked in the face -- >> you have to. >> it's great. >> i gave you the plan. >> it is a great plan. but it works until you get smacked in the face. when we see a 2% sell-off, judge, then we'll see who's got the stones to step up and buy. i know i will. and i know many of them around the table will. but it's a question that needs to be answered because everybody just assumes that it will happen. >> wait a minute. if you're making a plan in the heat of the moment you will fail. i agree with you. >> 100% right. >> look, we did it live on the air. we bought -- in january and
february we bought facebook, we bought apple. netflix. we said this is a joke. >> i did it again in november with facebook when they took it down to 114. >> down in the market, yeah. >> i'm just saying -- >> before the election, nine days in a row. >> mention about talking heads on tv and accountability and so forth and i'm just saying not that tony is one, i'm saying that we all have plans. and it's a question of can you stick to that plan when the crap hits the fan. that's what separates us. >> put the orders in there and forget it when you get hit. >> dwyer, you're looking for this correction. and you say you should buy any dip. and yet you're only looking for 3% upside in stocks for 2017. >> i'm very conservative which i've said publicly. >> can i -- >> in other words, our target, 130 on earnings, which is a little bit below the street. multiple is 18 times. i think it's trending higher than that. you know, i'm not going to go up to a new move. i've said publicly i'm
conservative. i'm not going to upgrade it right before i think you're going to correct. >> are you conservative or concerned? >> i'm conservative on the intermediate term i'm concerned near term. no question about it. here's the answer of what i would do instead of just talking into the camera. if i was a hedge fund or aggressive trader i would lower my exposure. i would just be not -- i would lower my net, lower my gross. if i were a long only mutual fund which we also service i would neutralize significant offensive overweights. as i said in my note back in december i would lower my financial exposure, lower my steep cyclical exposure, i would go neutral. it is a time to not get hurt by a pullback. you cannot get offensive if you're already offensive. >> if you're 3% upside and 4% downside you should be in cabo nursing a margarita. >> i just got back from the bahamas which is why i'm relaxed. >> what we talked about is buying names like adoeb dobe, names like smucker,
fundamentally their strong but in 2017 they got caught up in a moment of we don't want to own defensives and we want to go back to cyclical names. we're also 15 minutes in the show and not talking about the thing that everyone was so worried about, rising u.s. dollar. we got confidence over the weekend from president-elect trump, his feeling that the u.s. dollar. we've got people in his administration talking about the dollar. and you know what, year to date the dollar is down 1.7%. if the dollar falls further, does that gain your concern for a correction? >> that is the most nonconsensus call i've had for the last two months, three months, is that the dollar is going to weaken and s&p operating profit -- >> people are making that call a little more in the last few days. you made that -- didn't you have that call? >> i think the dollar is going to weaken but you think it really matters whether it's going to weaken again. if you're talking about the g-10, probably going to weaken. em, probably not going to weaken. the reason why is i think em has its own problem structurally that have been a little bit abated by some of the strength
in china but i think that that's starting to rollover. >> omura said the money moon is over. >> against the g-10 you allow the s&p to play catchup versus the russell, the russell weakens because that was a big trade there. >> i want to throw a couple things out there because tony has put forth a point of view that some of you clearly have issue with. sector by sector. financials. tony says he may be reduce exposure financials. i don't hear anybody saying that on the desk. >> no, i 100% think that because of the yield curve i think is flattening and because i think rates are rallying from where we are and a lot has been priced in i think you should be underweights in financials. >> i want to buy them, to be clear. i'll buy them when they weaken. >> i hear you. but i don't hear anybody else thinking that -- >> categorize them. >> lighten your exposure. >> tony and i talked about that before, i don't categorize financial, okay, it's binary.
either i like josh or i don't. i bone bb&t -- >> he likes parts of me. >> bb&t and -- >> do you not want to be in visa and mastercard if there's trillions in tax cuts? of course you want to be in those names. are they financials? yes. binks that rely on a yield curve? no. i agree with joe. it's very difficult to keep these. >> these stocks are up. they've out performed the market significantly since the election. up significantly. a lot has been priced in already. >> many of them did nothing though for years and years prior. >> yes. 100%. >> we think we can take a three-month time frame and extrapolate it or say, all right, over 36 months have banks out performed? have they done anything? probably not. >> offshore account not paying taxes, i would have sold my financials. okay? if i have to pay taxes, i'm selling them.
they over bought but they've run the course right now with the yield curve flattening. because they traded up on a steepening yield curve. because that's how they make money at the spread. anticipated. >> and what they anticipate they were going to make. like we said last week, judge. in the jpmorgan aerpings bought the weeklies, stock rally. went through 892349 premarket on friday. i think opened just over 88 in the regular market and was quickly sold. you've got to pay attention to that because people were saying, your hands were open like this towards you, sold at 88 bucks a share, at 87, 86, now it's 84. i think it probably glets to 82 on this move. maybe it gets to 80. i don't know. i have long-term call spreads. i'm out of all of my trades from last week and jpmorgan but i'm still in long term calls. >> josh mentions visa. you need to know the corporate tax rates for the financial institutions. visa, 38%. that's not going up.
it's coming down. charl charlie schalb, upper 30s. you have to know the tax rates because relative they are harder than the other sectors. >> i think stock picking makes sense in this financial sector but if you do aggression looking at the xlf versus the yield curve or yields since the election it's very highly correlate with one another. >> totally agree. >> if you have a view that yields are the curve is flatten or yields will rally further tr here when you have to be underwaunde underweight financials. >> when you look at the correlations to the market, you know, we've talked this entire cycle about how high, historically high individual stock and as set class correlations have been. it is now the lowest level since early 2007. that led to a correction and then a real ramp which is what our call is. but correlations are very, very -- stock picking is already taken over. arou that means that there's not
enough macro risk being thought about or priced in which opens the door from an out of nowhere comment and that out of nowhere perceived event is what causes a correction. >> what were you going to say? >> we haven out of nowhere comments two to three times a day and it doesn't seem to be impacting the market. look at the market and say we have not accelerated above 20,000. look at the other side of it and say, hey, we're still very close to 20,000. it seems as though anybody is able to be the catalyst for this correction everyone keeps talking about. >> by out of nowhere, it's not a tweet. it's going to be something that's a real perceived fundamental change. >> what was it last year? >> china. >> china. >> brexit. >> the weather. literally the weather. >> valuation and the china currency on the first trading day of the year that totally caused that. >> and then they did it again in the summer. >> that's right. and that's what created your loss. >> what has kept the market at these levels has been the fact that china is on the other way. a head fake. but i think one of the reasons
why china has done that is because they wanted to play nice into the inauguration. they haven't wanted to sort of, you know, rattle anything. and get donald trump to be more angry at china. but if you think that china is not going to deval over the next year and continue -- >> or capital controls or some combination of the two. >> right. >> either would be good. >> their devaluation will be like one fell swoop. >> i don't think they're going to do that. >> they shouldn't do it. >> but they won't. they will do a gradual approach to devaluation. once you start seeing it start fixing higher that's going to start getting the market nervous and that could be the catalyst to get the market to have that 4% correction. >> we talked about the sector financials which sort of top of everybody's mind but what about technology? just the nasdaq has done -- >> lower dollar. if you're going of get a lower dollar that's going to bode well for technology. >> apple hit 120 today. look at the canndle on that thing. facebook has had a bad day, 2%. these stocks have been in the hunt all year so far.
>> we'll talk about some of the calls that we got today. netflix, there was a call there. morgan stanley had an interesting call on the estimates for apple as well. the bank stocks seem to have had some what of a rebirth in the last, you know, couple of few months as well. >> smoked going into the year though. fang was getting crushed in the software names ramping. everything was ramping. now it's just a me verse. most stokes are under pressure in tech and -- >> it's stock picking. it's going back to stock picking in the market and particularly in tech. if you want to get invested, what's the best way to get invested? resurgence led by amazons where fundamentals have been solid. going is still a relatively cheap stock now and face book there's been no real information on it. just negative information. kept the lid on it. apple i'm just not a fan of. it's okay. >> what makes me a little bit nervous is the breadth is narrowing in the tech sector.
>> here we go again. right? >> right. but i think that that has always been sort of the canary in the coal mine for techs rolling over so i'm keeping a close watch on that because i think that could be something that could potentially lead to underperformance. >> thanks for coming out here. >> great to be here. >> tony, in some small way, subliminal or out right inspiration for your beard? >> i try to do everything that you recommend. come on. >> all right. tony dwyer with us. a lot more ahead on the "halftime report." a big day of upgrades, downgrades. on the list, disney, netflix, nordstrom, and twitter. also coming up, block full of stocks in the blitz. could traders watch american express? tiffany, jcpenney and united health. should you? and two stocks with unusual activity. jon's getting bullish on one and bearish on the other. we're naming names and making trades. this is the "halftime report" with scott wapner.earnest, whic
integrity. you know, there are people you meet who you have a pretty good inkling right of the bat are straight shooters and were raised to be fundamentally honest and to treat people with respect. and there are times where that first impression turns out to be wrong and you're a little disappointed and you see behind the curtain that there's spin and some hype, you know, posturing going on. but then there's others who the longer you know them, the better you know them, the more time you spend with them, the more you're
tested under tough situations, the more that initial impression is confirmed. i have now known this guy for ten years almost. and i've watched him grow and i've watched him advance and i've watched him marry and i've watched him be a father and i've watched him manage younger people coming up behind him, and he's never disappointed. he has always been the guy you wanted him to be. and i think that, you know, if you're the president of the united states and you find out that this is the guy who has been voted the most popular press secretary ever by the white house press corps, that may make you a little nervous, thinking that guy's being too
solisitis towards the press. but the fact is that he is worthy of that admiration. he was tough and always give you guys everything you wanted but he was always prepared, he was always courteous, he always tried to make sure that he could share with you as much of our thinking and our policy and our vision as possible. and tried to be as responsive as possible and that's how he trained the rest of his team to be. so, you know, of the folks that i have had the great joy and pleasure of working with over the last ten years on this incredible journey, you know, this guy ranks as high as just about anybody i've worked with. he is not only a great press secretary but, more importantly, he is a really, really good man
and i'm really, really proud of him. so, josh, congratulations. >> thank you, sir. >> natalie and walker, thanks for putting up with all of us because they've made sacrifices, too. >> thank you, sir. >> before you go, response to vladimir putin. >> where were you going on friday? >> that was the president of course appearing at the final press briefing of press secretary josh annest, crashing it, if you will. he doesn't want to front run himself, mr. obama will give his own press conference tomorrow, the final of his presidency which we will carry live here on cnbc. back to business, we do have the latest investor letter from david einhorn. trade or investments he has made. in light of the new president,
donald j. trump coming in and some of the policies that may take effect from mr. trump, more jobs, corporate tax cuts. he says he is long -- this is david einhorn saying he is long a variety of low multiple tax paying u.s. value stocks. goes on to say that corporate tax cuts provide the most benefit to companies that have profits on which to pay taxes. americo, cc, a long running position for mr. einhorn, dillard's and dsw are all generally full federal tax payers with healthy profits, he says. he says he is long apple, that apple stands to benefit from the repatriation of foreign cash and tax reform, that h we is long general motors, in fact, he has and i'm quoting here, with have dramatically increased our gm position, more jobs, higher wages should drive demand for consumer durables and there is no better consumer durable than an automobile. he also says he is short what he calls bubble basket.
bubble basket stocks mostly don't have profits which makes them unlikely to. we fit from corporate tax cuts. he says that netflix merits a spot in the basket because its domestic market has matured, risks an unfavorable change in net neutrality rules and has not demonstrated huge investment in original content has a positive return. guys, just comments on these and then i'll read you more in a second. >> look, i think it's a good trade to own the highest taxpayers because even if it doesn't pass, it will be that it will, we've already seen part of that trade. in terms of netflix on the short side i known netflix. it's been tough for me. i've owned it for a month or so, maybe two months. i don't think it's matured in the u.s. market. i think you're continuing to see cord cutting as cable remains expensive. i think it's going to be positive for netflix and other services. i don't see them getting bouths as stock is more expensive. >> so you -- >> and i agree with the
caterpillar short as well. >> i was going to say as i recall, i mean, you have really taken on jim over the general motors long. >> cycle. i think it's very late in the cycle. >> as far as i can tell it's not a new long either for einhorn. in fact, i think he did that at the conference if i recall, as well. it's not like a new trade but he's added significantly to his position. >> yeah. at one point i think he may have been as largest position, if you go way back to 2010 or so or even before. and, look, it's a value investor's dream, value investor's portfolio. on the other short side, it's a value invested portfolio. >> the only people making at gm is selling it at 32 and selling it in the high 30s. for one day it will break out for real out of that range, ford, too, but it's about six years these stocks don't do anything. >> 27% over one year. that's doing nothing? >> no, no, no. in this range.
do very well buying at the bottom of the range and take ags profit at the top. one day it will break out. i don't know when that will be. i don't think anyone does. i think if you're a trader you got a really great opportunity at the low end. so just say to yourself like the i missed this last run i might get a crack at it. as far as caterpillar, look, this is a stock with a bull trend approaching what's potentially a triple top, probably gets through it. and a triple digit handle. but if you're wrong, you can trail this thing with a stop just below the gap which is about 88, 89 bucks a share from a risk/reward standpoint that's a pretty good risk/reward. stay long as it continues to trend higher. if it breaks below that gap get out of it. you're not green lighting most likely. you could be a little bit more nimble if you're trading it. and you don't have to buy it over the course of weeks and months. you can make those determinations based on price. >> so here's what he says about the cat short. look at the return in cat over a
year. 56, almost 57%. >> monster. >> undeserved. >> even u.s. investment inf infrastructure boom cat is over priced. we own gold. our sense is that mr. trump doesn't hold any core policy benefits. this will lead to a more political and economic uncertainty with less stability. there's been a knee-jerk decline in gold, he says, since the election as investors presume that higher short-term rates are good for the dollar. >> i think there's going to be chaos this year as the elections get under way in europe and trump decides to weigh in, continues to question the viability of nato publicly like for fun. i absolutely think he could be right on that goal and gold could be a trader's paradise this year because what other way is there to express your fear about some of these tweets and interviews these giving. that's probably the primary way that traders will use. >> short the oil frackers as well, joe. >> comments, first of all, would be good for hedge funds if that's the case where we see
chaos throughout the year. that's good for active management. that's good for hedge funds. >> if they get it right. >> as far as being short the oil frackers, that's not a trade this you can viewer can sit in for as longs a david einhorn has been able to. that's a trade going on the better part of 18 months and it's up significantly when he suggested names like eog and pxd. they've rallied sharply. you the viewer cannot stay long in that trade. i do think a strategy that he suggests, scott, that we talked about at the beginning of the show, you believe there's going to be a correction in the marketplace. identify three or four names in each sector but right now have a very high tax rate and on a valuation basis or relatively fairly valued on a pull back you want to buy those names because you will get some form of a lower corporate tax rate at some point. and it will benefit. >> you look at clayton, cwei, the stock that got taken out today. >> noble. >> you better be careful if you're following david einhorn and that advice in these
fracking names because there's a world of hurt waiting for you out there if you're picking some of these, again, like clayton today because that stock is up 41%. there are plenty of others in the space that are going to get taken out as well. the strong will survive as in any industry, but you don't want to be on the short. >> let me bring up one more idea he has because i know erin will have thoughts on this. he said we made a mid size investment in european financial company. he's not going the reveal the company or discuss the thesis yet. but you suggested some of this as well. >> yeah. i think that that's really smart investment. i think that european financials are underpriced. they've gotten way down by a lot of macro headline risks. if you look at reflationary trends in europe, europe is reflating. the data is getting better. credit data is getting better as well. and then you have german real yields, european real yields which broadly haven't moved at all off the bottom despite a cyclical resurgence. >> what about the italian bank, would you still feel --
>> i think a lot of risk is already been priced into the italian banks. it's not where i would invest but i think that broadly speaking european banks right now are a primary place to be invested. i think you're going to see real yield converges between the u.s. and europe and i think that as a result of that you're going to see real yields move higher in europe and you're going to see the banks out perform. >> so they're out of coors, 20% there, doubled in take two which they're also out of. that's a look at the better. that's david einhorn's latest that's david einhorn's latest letter.eam for walking me through my first options trade. we only do it for everyone gary. well, i feel pretty smart. well, we're all about educating people on options strategies. well, don't worry, i won't let this accomplishment go to my head. i'm still the same old gary. wait, you forgot your french dictionary. oh, mucho gracias. get help on options trading with thinkorswim, only at td ameritrade.
coming up on "power lunch" days away from the inauguration. lately you've bsouthern glimpse of donald trump's early style. he has spoken to us many times. so we're going to show you some of the key things that trump has told us over the years. two big issues for the new administration, corporate taxes and growing jobs. conagra ceo joining us with what he wants to see coming out of d.c. and power players meeting in davos, switzerland. the very latest from the world economic forum all ahead on "power" but "halftime" returns after this break.
that is created here by the unbelievable catalog. these movies that they've got coming out, how many blockbusters are they going to have? whether or not he's right about espn losing or slowing in its loss of subscribers we'll see in the next quarter. >> i like the stock. don't you feel like we already knew the movie slate already? every kid sitting in the comic book shop know the films coming out. it's a weird rationale to go uber bullish. >> the slate might be the best ever. espn head whippeds may abate, okay? major new park attraction on the horizon and of course the tax reform thing as well. by the way, they're not the first, second, or third person to come out and upgrade the stock and say the tax reform arguably benefits disney maybe more than anybody. >> $90 stock the other day. >> part of that program no analyst left behind. let me get onboard and recommend disney, too.
>> all right. >> netflix, einhorn says it's in the bubble basket. shining like the crown is what they say. >> when you're in an environment like we've been in the last six to eight weeks what you try and do is you get confidence in momentum in finding momentum and finding trends. i think that's what's important. we've seen that in the financials. netflix falls into the category. technically very strong momentum. very stolid. has the fundamental picture improved so dramatically? i don't think necessarily they've had two consecutive quarters of what i would categorize as okay earnings. the suspicion that you see a significant slowdown, maybe we could remove that a little bit but i think it's more technical, scott, than anything. >> nordstrom downgraded to hold, maybe a little late. they see the price target goes from 40 to 62. >> tough for the retailers. their costs are so out of whack with online, from inventory, personnel, rent, all of that. it's just very, very difficult.
i don't know why you have to own retailers except when they're absolutely bottomed out. >> squeeze one in. twitter cut to neutral over at ubs. >> they're stem in a world of hurt, judge. it's a question when the takeover happens. >> i knew the reaction. >> is it a take under from where it is right here? >> right. >> without any significant moves made, and i haven't seen any significant moves made, it's a take under. >> maybe the government should just buy it, trump should say i want the whole thing. >> he's up to 47 million followers now. and he's going to hold on to his twitter account which is good for twitter but it -- >> becoming trump like one out of every three tweets is either i hate him, i love him. >> i got to split. quick break. currency on the move. dollar has fallen to a six-week low. how the futures -- have the future traders are playing it?
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welcome back to the half time report. big moves in currencies today as the u.s. dollar sinks against a rallying pound. the dollar index hitting its lowest level since early december. scott nation not necessarily a dollar story here. more of a pound story. right? >> that's absolutely right. and it's up big today. what a lot of people are missing is that the pound, that's a decades low. new low for decades. if we see a big -- close at a
bunch higher, mother of all key reversals, very bullish, technically. the others acting as you would expec expect. >> is this just temporary pause here for the greenback? >> as far as the pound goes, versus it, we've got clarity today. theresa may providing clarity for investors. 120 level, that's a very important level right now. i don't think the days of the wild swings are over t looks like it has settled for now, which i should stabilize the u.s. dollar. >> for more future nous, head to the website. futures now.cnbc.com, 1:00 pm. we are joined by heli am.
acroft of rbc capital markets. half time report back after this. [pony neighing] what? hey gary. oh. what's with the dog-sized horse? i'm crazy stressed trying to figure out this complex trade so i brought in my comfort pony, warren, to help me deal. isn't that right warren? well, you could get support from thinkorswim's in-app chat. it lets you chat and share your screen directly with a live person right from the app, so you don't need a comfort pony. oh, so what about my motivational meerkat? in-app chat on thinkorswim. only at td ameritrade.
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every. welcome back, everyone. i'm sue herrera with this news alert. ten firms are being charged with the violating the pay for play rule. among those listed is pershing square management, one of the firms out of ten charged by the s.e.c. they are being fined but it is a very small fine of $75,000. but once again, the s.e.c. has charged ten firms of violating the pay to play rules, one is
pershing square. >> sue, thank you. sue herrera. some unusual activity. doc, what do you see? >> weatherford, in november it was under 4. in december, under 5. now they're buying at the 6 strike out there in march. probably be in call spreads about a month. so that's pretty bullish activity. also have a bearish one for you. >> let's go. let's do it. >> all right. splunk, splk. they're betting that the stock falls perhaps all the way back down to 50 at this one. >> he eats homecooking. >> that's what he calls it. >> splunk is my middle name. markets are closed in about three hours. go around the horn quickly do
some final trades. >> currency better, commodity better. >> disney. >> vol. buy futures for those who can. >> buy more weatherford. that's it. >> well prepared here. >> and i like the retailers. i think that affordability is not going to be around. big benefit. >> we'll see you soon. thanks for watching. "power" starts now. >> i'm brian sullivan. here is your power menu today. four years, cnbc has been taken you insight mind of one donald trump. ahead of his inauguration, we dug through our archives to bring you the president-elect in his own words. also ahead, the real view from switzerland and the makers of swiss miss, among a ton of other products, conagra ceo is here. giant cover-up in d.c. going on ahead of the inauguration but, trust us, it is not what you think. we'll explain as "power lunch"