tv Fast Money Halftime Report CNBC June 1, 2017 12:00pm-1:01pm EDT
got a record high on the s&p, ticks above 2418. we will watch that. looking for news out of the president on the paris accord and then more coming up. >> looking forward to having an interview. also watch palo al owe networks and blackberry. let's get to wapner and the half. welcome to "the halftime report." i'm scott wapner. our top trade, bank shock. why one well known marketwatcher says that space too treacherous to invest in. you'll hear from him live in just a moment. with us josh brown, john terranova, erin brown with us as well. let's begin with the banks. the red flags, some executives are raising on that space. words of warning that sent many of those stocks selling off this week. they are higher today.
markets setting new highs. it does raise questions about whether many of the biggest names are simply worth your money or not. doc, you've been talking about the banks being a good place to be. jpmorgan's cfo starting this yesterday whether brian moynihan, morgan stanley sounding the same sort of alarms. why should investors be in these stocks? >> you should wait for a moment like yesterday in goldman sachs and you see a $7 or $8 collapse. that happens. it happens in great stocks, jpmorgan, whether it's the whale. yesterday it was reaction to the venezuelan bonds that goldman sachs purchased for 31 cents on the dollar. people weren't questioning whether they were going to lose money on the bonds, they were questioning ethical questions about should you be supporting that particular dictator and so forth by virtue of basically backing his bonds. >> aren't we talking -- this is a simple story. trading is down.
>> yep. >> trading is bad. yields are too low. banks can't make money. why buy the stocks, erin. >> the sector is off 4.5% for the regional banks and 5.5% year to date so these stocks have been weakened pretty significantly. the sector is trading at 1.15 times book which is cheap on a relative basis versus where it's traded historically. since the election, the bank stocks have traded with 85% to 90% correlation to the ten-year yield. going forward given where yields are, you have to be pretty bearish on the economy to think yields are going significantly lower from here. if you expect that they're going to bounce back which we're starting to see today and i think there's value in the market -- >> one basis point is bouncing back, from 222 to 223? >> the data has been good to date. the data is getting better. isms continue to creep higher. we're seeing this synchronize
recovery. the market is too pessimistic relative to the fed rate expectations. they're only pricing in one rate hike this year, one rate hike next year. there's nothing priced into the ten-year curve or front ends either. rates are going higher and that's going to drive the bank stocks higher. >> if kevin o'leary was here, he'd tell you you'd be crying if you own these stocks. >> i suppose it's possible. i don't think so, but he could be right. >> why invest in them? >> when you're buying a bank that's paying a 2.5% yield that you think gets up into the 3s by the end of the cycle, you're buying it for a below market multiple on pretty much every single metric that you think of. it's not just the ten-year yield it's the twos and tens we should be concerned with. when you look at that yield spread, you're looking at the curve and you say, all right, we're back to where we were in october on the twos and tens, but stock prices have not quite retraced back to those levels. if they did, they'd be much
lower. why aren't they? because there are things happening in the economy that are bigger than just the reason for that initial burst of enthusiasm after the election. so you have a blowout jobs number today, for example, and maybe that puts a floor under rates. there are some things that are not priced into these names that are positive and i think the fact they're not down more on these profit warnings tells you people are willing to see through that and want to be invested in banks for the benefit of the recovery. >> i'm sorry to interrupt you, josh, but these stocks are well off their 52-week highs. goldman 17 off the 52, wells 15, bank is 13, jpmorgan almost 13, morgan stanley almost 12 and citi is almost 4. >> goldman sachs is a specific company problem and that was clearly stated in their earnings so i don't know that many of us have really aggressively suggested that. i've maintained bank of america. you're talking about a stock that was $16 before the election, has now rallied up to $22. you can make the argument when
you look at the xlf that it's in the consolidation phase. regional banks i think are where the volatility has been. kevin o'leary is right, that is the part of the financials where you wanted back in march to rotate out of. there were other places and financials. josh and i talk about this all the time. there is blackstone, kkr, there's visa, there's more to the financials than the big banks. but if you want to talk specifically about the five big banks, bank of america, citi, jpmorgan in consolidation -- they are in a consolidation phase since the beginning of november. morgan stanley has the benefit of the wealth management division. that is why it is outperforming goldman sacks. goldman sachs is incredibly challenged by what's going on. that's stock specific. >> back in april our next guest called this space treacherous. let's bring back in dick bovey.
good to have you today. >> thank you. >> hard to find too many people negative on the banks. i don't think you've changed your tune on this space. are they still treacherous? >> i think so. i think actually based on what i've just heard, they're even more treacherous than you think. first off, you have to realize that a bank is no different than any other company, it has a product. and that product is a loan. if it sells a lot of that product, the company makes a lot of money and the stock price goes up. if it can't sell that product, then the company doesn't make a lot of money and the stock doesn't do well. banks are dealing with the issue that over the last six months the ability to cell loans has evaporated. basically commercial industrial loans, which were roaring at 7%, 8% year over year gains are struggling to grow at 1%. if you take a look at the consumer sector, you're seeing major difficulties arising in selling, if you will, credit card loans. you're seeing difficulties in the automobile space.
you're seeing difficulty in the student loan space. the one thing you can be sure of with the banks over the next few months is that losses are going to grow pretty substantially, and that's because the underwriting characterizatio characterizations -- the underwriting standards of these companies have weakened. they have gone back to trying to get the subprime buyer. that's particularly true in the auto loan sector. the net effect is if you can't sell loans, if the loans you're selling are coming back to you because of high loan losses, then you don't want to buy bank stocks. all this stuff about interest rates is useless. i think you just said that you can't make money in banks if interest rates are low. we just came through six years of the lowest interest rates in the history of the united states, and in that period, bank earnings went up every year. not only did they go up every year but in 2013, '15 and '16 they had all-time record earnings, which means that anyone who thinks that because interest rates are low or high
you should sell or buy banks is not looking at the right place. that's what makes them treacherous. the other thing that makes them treacherous is all this yield curve stuff. basically from 1966 to -- '66 to 1982, which is a 16-year period, the yield curve was inverted 47% of the time. any theorist will tell eubanks can't make money when that happens. they made money every one of the 16 years and earnings went up every one of the 16 years. so for people looking at interest rates and getting loans, it's not the right way to look at these companies. >> if you take it into context of what could be perhaps termed a perfect storm of low loan growth, trading revenues, which are not good, combined with low interest rates, stubbornly low interest rates, you add it all into a cocktail, it doesn't taste very good. >> no, it doesn't taste good at
all. but let me tell you one thing. if interest rates go down, the value of bank assets go up. the capital in the banks go up. and the net result is you have a better investment to make. the other thing you have to realize is that banks have no vision. there is no vision as to where this company is going to be three, five years from now or this industry is going to be three, five years from now. in addition to which the main thing that bank management seemed to be selling is i'm going to pay you 100% to 125% of earnings in terms of payout. well, if you're doing that and you're doing that in a rising interest rate environment, the present value of the business is going down. so they're telling you we're going to make the present value of the business go down, but we think that's terrific for the stock, go buy it. it doesn't make any sense. >> what's the biggest problem with loan growth, is it regulation? too much regulation? or is it the economy being too weak? >> it's the economy. i mean basically, you know, i've
never said anything about bank regulation in my life. but the fact of the matter is, if you take a look at what's happened from 2010 when dodd-frank was passed to the present, you don't see regulation really killing bank earnings nor is there any sector of the u.s. economy that you can argue was starved for funding because of regulation. so what is causing the problem is, you know, underwriting standards have weakened, the competition for business has heightened so that pricing is not good and the economy is not providing enough good loans for these companies to make. you don't buy banks if you can't get good loans. >> dick, you mentioned regulation. what about the tremendous amount of capital that regulation has forced these banks to keep on their balance sheets if in fact we do get from the trump administration the regulation initiatives that we're looking for, that capital gets released. not positive? >> of course it's positive. but it's not as positive as i once thought. in other words, i thought when
you started forcing these banks to build up such massive amounts of capital, you were causing a problem not just for the banks but for the economy overall. if you go back to the late -- the early and late 19th century, you can see the banks were overcapitalized and that killed the economy. but the fact of the matter is, i can't find a lot of evidence of the economy being harmed because no one could get the money they wanted for whatever the purpose they wanted. you know, this guy bill demchek, the ceo of pnc financial. he said yesterday that a good portion of the excess funding of companies in general has been used to buy back stock instead of capital expenditures. so, in other words, in order to get the rois us and epss up, companies are not putting money into the long-term growth of the business. his view was that that slows the economy and that creates a problem. and i think there's a lot of
merit in what he's saying. >> hey, dick, it's josh brown. so we've seen a sea change in the stock market and i think you would agree with me that corporate executives do react to changes in share prices or to the types of things that if not activists, at least asset managers tell them they want to see. the only stocks that are going up right now and half the s&p is down on the year, the only stocks are growth stocks and are companies that are spending money on cap ex or at least doing m & a. so is that not the type of thing that -- i'm not saying it replaces traditional c & i lending but could that be a different avenue of growth and maybe the types of banks that have a capital markets business would be favorable versus just companies doing traditional lending and maybe that's a different prism to look at the big bank stocks through? >> no, i think that's correct. there's no question about the fact that if banks can lock into a variety of lending
opportunities or capital market opportunities, investment banking opportunities, trading opportunities, which are tied to growth sectors of the economy, then basically they're going to make -- they're going to sell more of their product and make more money and the stocks will be fine. so i agree 100% with what you said. the problem is they're not locking into areas which are showing rapid growth. they have no vision. there is no vision as to what the bank of 2025 should look like, what the growth rate is going to be between now and then, why these companies have some particular edge over the rest of the financial, if you will, industry. there's got to be some reason to get the multiples on these stocks up other than, hey, i'm going to pay out 125% of earnings as dividends -- >> so would you look at a silicon valley bank shares and say, okay, here is an exception to what i've just said. here is a bank that's got vision. they are locking into specific growth initiatives, and maybe
they do have a shot to transcend the malaise that the rest of banks will see? >> i don't follow that one, but i do follow first republic, which is also a silicon valley bank. what is the difference between first republic and the rest of the banks? first republic keeps issuing stock every year, they they're buy back stock. the multiple on first republic is double the multiple on the average regional bank in the united states because it does have an ability to lock into a concept, which is really working. >> dick, i appreciate the time very much today. thanks so much. >> thank you. >> all right, bank analyst dick bove joining us. we do have some breaking news. let's head down to washington at the white house. it seems we have a date for james comey' testimony now. >> reporter: boy, scott, is this going to be some highly anticipated testimony. the date that they're giving us just crossing the wire here over the past couple of minutes, former fbi director comey to testify to senate intelligence committee on june 8th. that's according to a statement
from the senate intelligence committee. obviously the former fbi director will be in a position to talk about what he knows about whether or not donald trump tried to get him to stop the investigation into russian interference in the 2016 presidential election. the question here is going to be, though, scott, how free will comey be to talk? we've been told that former fbi director mueller, who's the special counsel in this case now, has given him the sort of green light to go ahead and testify publicly, but has he put any guardrails on that testimony. is there anything that comey will not be able to say based on the continuing ongoing special counsel investigation. that will be one. then the other question is how will the white house respond to this. you remember just yesterday the white house said they are simply no longer going to answer any questions at all about russia or comey. they said all of those questions will be directed to the white house private attorney, donald trump's private attorney, and the white house press office is hands off on all of that.
they may feel a need to respond to whatever it is comey says. we'll see if they break their own newly installed policy about not commenting on this whenever comey says whatever he has to say on june 8th. so something really fascinating to watch in terms of political dynamics next week. >> the thought was that former director comey wouldn't be able to comment at all on the state of the investigation at the time of his departure but would be able to elaborate on his dealings, conversations, meetings, et cetera, with the president. >> reporter: right. but presumably some of those meetings and conversations that he's had with the president will be the subject of the investigation themselves. that is, did the president have any attempt -- make any attempt to have undue influence over the investigation into the russia matter. did he try to push the fbi to quash this. those are open questions as of right now. will comey be able to give everything he knows in public about this or will some of that be requested by the special counsel to be kept private while they continue to investigate it. that's something we'll have to
watch and see. but comey is always a blockbuster witness when he testifies on capitol hill, now even more so. the white house will clearly want to have its say. but as i say they're now hamstrung by this decision they made just yesterday to not comment anymore ever on russia. >> the market not flinching on this news one bit. thank you so much. the dow is up 50, new high for the s&p yet again. here's what else is coming up on "the halftime report." ahead, betting on the casinos. another retailer sinks following earnings. and investors are buying into cyber security. those trades and more in the blitz. plus, intel's ceo on the record. his take on the administration, the future of tech, and why his stock has lagged the market. "the halftime report" with scott wapner and the traders is back in two minutes. it's all yrs. wow! record time.
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welcome back to "the halftime report." mcdonald's shares hitting a new all-time high after a 23% run already this year. there is still another 10% upside. a firm raises its price target to $165. josh, it's our call of the day. what do you do with this stock? this is one of those in a fairly concentrated group of names that seemly continues to just go up. >> listen, it's a great company. the stock price is completely
berserk. it's not -- i like it. i wouldn't say like go short mcdonald's, because they could take this up another $50 if they want to. there are no rules any more. so that's number one. number two, if you want to play this to the long side, it's so easy because all you have to do is using a moving average as your stop. if you look at this trend, it's almost like it was drawn with a ruler. like if you have to be in this stock, i'm not personally, i own some other ones that look similar to this. but if you have to be in it, very simply trail it, maybe use a ten-day or an exponential ten-day if you're a little more risk averse and want to get out on the first down day. but this stock is as perfect a diagonal line higher as i've seen in a long time. people decided they want to own more and the accumulation is happening almost robotically. >> it was the way they put the note. it could be technicals and fundamentals together.
you're saying it's sicmply a technical -- >> no. everyone is aware of that. i wouldn't say that's not part of it. what i'm talking about is the methodical way with which this stock is taken up a buck and a quarter to $2 pretty much every single week. that's been going on for a long time and it's pretty apparent it's not a human being accumulating higher and higher prices. this is one of the biggest momentum trades in the market. >> they think estimates could be conservative, joe. >> i agree with everything that he said and i have been very skeptical as the rises continue. i do think there's a little bit of a fundamental turn. you don't know what uber eats is going to mean for this company. i also think you cannot dismiss the recovery you're seeing in europe and the emerging markets and the positive impact that it has on mcdonald's. lastly, let's not forget where yields are. this is a little bit of a yield play. >> real quick here, this is important. the fundamentals are what they are, and i agree that there's a
lot of good things happening with the company and so earnings can probably go up. but that's not what determines where the share price is. that's what the multiple, what are people willing to pay. i submit to you that the buyers don't really care what they pay. they want to be involved in a very large cap stock that's in all of the indices that's going up every single day. >> you know who else doesn't care what they pay, josh, consumers when they go into the store w these new electronic boards, instead of just looking up and seeing the dollar menu and buying something for $2.25 for two burgers or something, try to find that on their board, it's almost impossible. everything is upsold into higher priced stuff. i'm just saying their boards when you go into a mcdonald's have all these prices and it's hard to find the former dollar menu. now it's a value menu and it's got much higher prices than what many people were looking at weeks or months ago. >> of the names in the space,
let's say mcdonald's, wendy's, shack, jack, yum, which one do you like more? mcdonald's is 24 pe, it has a 24 -- i'm sorry, that's 24%. 24 times. shack 75, jack 26, yum 26. >> i like jack. i like jack and sonic. >> i like jack as well but you're talking about a trading stock when you're looking at an investing stock and you're looking at a portfolio manager who josh talked about before, this is a growth market. now you're looking at a stock, is this growth, is this value. this is more towards value. this is a big name that i could put in a value fund and it could perform really well. that will lead me to get more and more as it goes higher. >> yum has a great chart that looks just like mcdonald's now. wendy's has a chart pt i'm in di dunkin' donuts, might be the best because of how asset light this business is.
there are a lot of names in this group that look like mcdonald's. mcdonald's is just the biggest one and perhaps emblematic that these companies are on a huge streak doing better and better and finding ways to replace one of their higher cost items, which isn't food, it's people. car stocks are higher on may u.s. sales. phil lebeau tracking the numbers. phil, what's the scoop? >> it's all about the incentives and they seem to have moderated in the month of may. let's take a look at the sales numbers because you'll look at these and say those are lackluster. yeah, they're not terribly impressive. you had ford and fiat chrysler doing a little better than the edmunds estimate while toyota and general motors did a little poorer than expected. the sales rate for the month of may, and we'll get that a little later on today, is expected to come in around 16.6, 16.8 or 16.9 million. i want to show you the rolling three-month average for auto
sales. the reason we're showing you this is because we're looking at the slowest pace of three-month sales, the first three months below 17 million since july of 2014. and yet as you mentioned, scott, the auto stocks are moving higher today and it's, again, because incentives in the month of may appear to have moderated. they were relatively flat with april, yes, up year over year, but it looks like perhaps we're seeing some discipline within the auto space and that's why investors are showing these stocks a little bit of love. we haven't seen much of that over the last couple of months for sure. >> phil, thanks. phil lebeau with the latest on the numbers. doc. >> when you see bad news like that lawsuit last week against general motors for the duramax diesels an so forth, stock is up $1.50 from there. so that tells you all you need to know as far as when there's bad news and people don't react negatively to it and instead it moves to the upside, maybe all the people who wanted to short
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the s&p gained 7.9% in the first 100 trading days of the year. since 1990, there have been seven other occasions that the market has gained at least 7.5% in that time period. according to our partners, when this happens, the s&p finishes the year up another 13.2% and trades positive 100% of the time. health care, telecom and financials are the top performing sectors. for more go to cnbc.com/kensho. we are back on "the halftime report." heavyweights in the world of technology gathering out at the code conference in ranchos palos verde, california, where we find our very own john ford with a very special guest. exclusive interview with brian krzanich of intel. take it away. >> brian, thanks for being with us. you just got off the stage and you're talking about intel in a different way. no longer has just a chip
company, as a data company. that makes me a little nervous because cisco has been talking about things like that for a while, about the importance of video, but hasn't necessarily driven growth for them in the way investors want. why is this different and how will we be able to gauge the growth trajectory for intel? >> sure. it's just how we look at the world and how we look at the areas we're going to go to and where do we see growth? we see growth around data. then we take our technologies that we're already good at, our cpus, our ssds, and memory and apply it to those applications. you already see it in the data center. you see it in our memory applications, which is another one of our growth areas. iot double digit growth. how do you measure whether we are doing a good job? take a look at it. if you take a look at the growth areas of the company, the non-pc areas, right, they're growing double digits right now.
they make up over 60% of the profit of the company already. so that's how you measure it. if we continue to grow in double digits in aggregate and you see us continue to grow that percentage, i think we're doing a great job. >> that's clean cut. all right, the mobile acquisition big for you guys, driverless cars an area that's really pushing. you've got a study that you're just starting to talk about around productivity gains we can expect around driverless. explain. >> well, there's already studies out that says you put even just 25% of the cars on the road, driverless, the amount of traffic congestion will drop because the number of people stopping way too early for the car in front of them and causing the next car to stop early, just that kind of chain reaction process drops. so you'll get to work faster. you know, you're going to have -- you're not going searching for parking as much because the cars will tell you where the parking is or you'll
eventually not have to park the car, just tell it to go drive home and it will just go home. so all kinds of productivity improvements are going to occur. there's also a lot of social good things that are going to occur. i always say that the cars are going to be out there looking, so the next time an amber alert comes up and they're looking for a license plate, the cars should be able to find that license plate quite rapidly. >> that's potentially controversial, if everybody's car turns into a public access camera. i mean security concerns aside, there are privacy concerns, even the government having unfetterred access to who's on the street doing what. >> sure, so we'll have to put limitations on it. we'll have to encrypt that data and make sure i can't tell that it's john necessarily. and, you know, we'll have to make sure it's data that is okay, that people have bought into, right, that things like, hey, we all agree that in order to reduce amber alerts, this is
a good thing, right. so i think there will be rules and new areas we'll have to explore, but the amount of social good that can come from that far outweighs those concerns. we just have to deal with them. >> i want to ask you about the paris climate agreement. the president is expected this afternoon to make an announcement on whether he is going to back the u.s. out of that agreement. he's been very splashy about having ceos into the oval office. you were one of them, talking about job gains that he attributes to his economic policies. if the u.s. leaves the paris agreement, is that going to have an economic impact? is that going to cause you to rethink some of the jobs and growth things that you rolled out? >> it's not a jobs, it's -- you know, i already tweeted out last week saying, hey, we are proponents of the paris climate accord and believe we should continue. maybe there are things that need to be modified. programs like that constantly
need modified and reimprovement but we shouldn't exit. we've been big advocates of that. i don't know any more than you do what will be announced today. but if it got announced that as a country we're leaving, it wouldn't make a decision about our investments here, but we will go and become proponents of, okay, how do we get back in? what do we do to modify it? how do we re-engage? we don't just exit because climate change is a real issue. we can't avoid this and need to make the right improvements. >> elon musk says if trump backs out, it's going to change his willingness to engage with the administration. will it change yours? >> so here's my belief. just like exiting the paris accord and just walking away is not a good thing, walking away from the administration, it is the administration of our country. we need to engage. what i'll do is i'll spend time in there talking about what are we going to do, how do we get back in. >> brian krzanich, ceo of intel, thanks for joining us. >> my pleasure, john. >> we'll see what he does.
>> john, thank you so much. up next, jon najarian has a trade update, plus new unusual activity. ahead in the blitz, the trades on express. palo alto, dollar general, we'll talk casino stocks as well when we come back on "the halftime report." >> miss the blitz, the call of the day or unusual activity with the najarian brothers? no problem. just go to cnbc.com/halftime to see the moves, the trades, who's winning and who's losing. plus breaking news and analsds of all the top stories. cnbc.com/halftimereport. this il and packages. and it's also a story about people. people who rely on us every day to deliver their dreams they're handinus more than mail they're handing us their business and while we makakmore e-commerce deliveries to homes than anyone else in the country, we never forget... that your business is our business the united states postal service. prrity: yo
♪ where's jack? he's on holiday. what do you need? i need the temperature for pipe five. ask the new guy. the new guy? jack trained him. jack's guidance would be to maintain the temperature at negative 160 degrees celsius. that doesn't sound like jack. tually, jack would say, hey mate, just cool it to minus 160 and we're set. good on ya. oh yeah. that's jack.
cigarette butts are toxic. they release chemicals that poison our water... and harm wildlife. and millions... are polluting our environment. [ sniffing ] [ seagulls squawking ] nine members of the cnbc iq100 hitting all-time highs today. for more on the index go to cnbc.com/iq100. now back to "the halftime report." jon najarian making his way to the telestrator as usual for unusual options activity. you have an update for us and then a new name. >> exactly, judge. nabore industries is a stock we talked about a few weeks ago but
it was a little over $10.50 then. they were buying the $11 calls. we scrambled in with them. unfortunately as you can see the stock bled off and because of that these calls have gone from about the 50-cent level right there, come all the way down to basically 10 cents here. so i'm still in these. i will note for you today, judge, that somebody, whoever it was, that was in these 11s just rolled down to the 9 calls. means they sold out of the 11s that they were in. they rolled down to the 9s, so they're sticking with the trade. they still think something is going to happen. as you heard the other day, lee cooperman is in this too so he's feeling my pain. >> big stretch. >> big stretch. take a look at this one because here's another energy play, owe cas -- oasis petroleum. after this slide that you've seen year to date of about 30 some odd percent, they are scrambling in here aggressively buying the june 10 calls. so how many of those traded?
well, take a look at this, average trade over the last five days is basically about a couple hundred to maybe a thousand. today they have traded over 10,000 of these calls, so it's a very big bet very quickly that the stock will move over the next three weeks. i ba i bought them. i'll probably be in there the next two weeks or so, judge. >> now let's go to sue herera who has the latest headlines for us. >> hi, scott. here's what's happening at this hour, everyone. the u.s. has fallen 11 places in the latest global peace index report. the institute for economics and peace, the thinktank that produces that report, ranked the united states 114th in the world for peacefulness. >> look at the global peace index and the results for 2017. we found the world has actually become slightly more peaceful with an improvement -- average improvement per country of 2.8%.
we found that 93 countries increased in peace, while another 68 deteriorated. >> health officials say seven babies have been born in florida with the zika virus. it's unclear whether the mothers were infected in florida or perhaps another country. nationwide, 64 babies have been born with that virus. sears says some customers who shopped at k-mart stores may be victims of a data breach. it isn't saying how many credit cards were affected, but it does say no personal information such as social security numbers were stolen. and that's the news update this hour. now over to michelle with what's coming up on "power lunch." >> starts in a little more than 15 minutes, sue. coming up at the top of the hour, some ceos are pressuring president trump to stay in the global climate deal. are they right? the president is set to announce his decision at the white house today. and although auto sales are driving higher, demand may actually be peaking. plus, the burger boom. a burger stock that is up more
stocks. >> knock on wood, it's helping lift mgm, wynn. >> sands. >> the hotel bookings were up substantially from -- just over a week ago from 82% to 86% and that was a leading indicator here. people were scrambling in buying calls. they're being richly rewarded today for that. >> josh, what do you see on express. >> it's on an express to s sub five bucks it looks like. if you own the stock, what do you expect it to happen. it's been going down pretty much every week for a year. it's an ugly chart in a sector known for ugly charts. so now you have a blowup, an earnings warning, et cetera. this is what happens, bad news follows in the direction of bad stock price because the market is smarter than wall street analysts. never forget that. >> palo alto, joey, best day since the ipo in 2012. >> put it on the radar. you're thinking about possibly getting back in this name once again. it's a name i've owned in the
past. haven't been in it for a while. >> why do you keep buying and selling out of it? >> highly volatile stock. you have to be nimble in this stock. there's been some really bad earnings report, in particular the last earnings report. now, the guidance is a little concerning. the guidance wasn't that strong. >> the stock is up 16%. >> the new product is really good. the new products came in really strong. understand it's a big short squeeze, which is going on right now. i want to see how this over the next couple of days plays out. begin to build a little position. i am in the space via fortnet. >> erin, let's talk industrials, sli. >> i like the industrials. first quarter gdp data the one sector that contributed was capital investment. we're start to see capital investment improve here in the u.s. as well as in europe. also if you look at the soft data surveys, that's also showing cap ex starting to expand. that makes me bullish the industrials and i like buying sli. >> dollar general beat. doc, you own it.
>> they beat, yep, had some good activity in this one. >> stock is up 5%. >> they beat guided inline or higher for the year. that was really strong and it's holding on to those gains. didn't just pop and give it all back. it's basically at the highs of the day just that far off them. >> all right. big question, do our traders have any love for lululemon? shares down more than 20% this year. the desk will take their positions on that stock ahead of its earnings when we come back. miss the blitz, call of the day or unusual activity with the najarian brothers? no problem, just go to cnbc.com/halftime to see the moves, the trades, who's winning and who's losing. plus breaking news and analysis of all the top stories. cnbc.com/halftimereport. [ birds chirping ]
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understands the fact that u.s. shell production is growing at about 440,000 barrels a day in 2017 and even more so in 2018. the forecast is about 650,000 barrels. opec knows what they're up against, but this isn't a short-term battle. this is a longer term war. opec needs it to be closer to 55, $60 a barrel. therefore i do think there's support at $48 in crude oil. >> jim n terms of levels, we broke 49 today. do you agree with jeff that we could break over 50? >> over 50 is fine. i'm still -- we talked last week and i still think 42 is my objective on the downside and i will stay barren until it's settled back above 52. i don't think it will do that. i'm okay with it. my dow move is break of 48.20 and 48 even. it's about opec losing its grip and what jeff said about production here. that's the whole story, in my opinion. >> okay. you're sticking with it and digging your heels in.
meantime, we'll talk more about oil on the online show. we'll give you that trid idea. plus, we're also joined by europa sisks peter shif all at the top of the hours exclusively. "halftime" is back after this. >> announcer: "the halftime report," with scott wapner is this place for market moving interviews. >> this is the fed that's going to lead markets rather than follow them. >> real money. >> everybody is looking for 3% on the ten-year. i believe that will happen this year, but first a rally. >> real debates -- >> the market is not any longer climbing a wall of worry, it's skipping along a little slope of great optimism. >> the most profitable hour of the trading day. >> business is passionate. business can never be emotional. >> "the halftime report" weekdays at noon eastern. i'm here at the td ameritrade trader offices. steve, other than making me move stuff, what are you working on? let me show you.
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we're back on the halftime report. lululemon reporting earnings after the bell tonight. john, you own the calls. >> i own the calls and i'm deciding if i'm going to sell this one, judge. it's at the 52-week lows. they're pricing in a $5 straddle right now, which means about a 10%, 10.3% move is predicted. >> uh-huh. >> there was a lot of chatter when the stock ran up to if 54s, which is why i'm still in calls about some sort of private equity deal or something like that. >> hitching your wagon to -- >> that faded pretty fast.
but luckily, you know, call spreads you have a defined amount of risk. i'm probably going to ride it all the way into earnings. like i say, i'm tempted to sell puts here. >> down 26% the year to date. >> yes, it is. >> let's do some final trades. let's also bring up the point -- >> the look on your face talking about down 26%. you disapprove of this stock. >> i don't have any opinion on it. >> all right. >> i have an opinion on john being in it, that's neither here nor there. >> transports and the russell. >> yeah. >> doing well today. you said during the break when was the last time you heard that. it's been a while. your point is well taken. >> s&p new high the old new technicians say we're all going to ignore those transports. now you don't have to. you have leadership coming out of these names. they liked some of the economic news i could only guess. had a nice bounce off the 200 day and are now leading on a lot of up days. that's not a bad thing to see. >> the russell, you like the
russell, small caps? >> i like the russell. i think the small caps have been underperformed, they're unloved and underowned by the market and they're the engine of the economy. you think the economy is picking up particularly into the back half of the year like i do, you want to own the small caps. >> i'm sensing from the things that you said on this show today from the start until full circle now, you're pretty optimistic on not only the economy but the market. you like the banks even though some don't. you think the rates will go up even though others think they won't and you like the russell, too. >> yeah. i think that people got too bearish in the first quarter. they were worried about the first quarter gdp data. we're now starting to see this turn in the economy. and i think that based on this, you want to own the more cyclicly oriented stocks that are exposed to a pickup in the u.s. economy. >> to erin's point, if somebody said, josh, you can only have one ticker symbol in front of you, just to give you a general sense of what's going on, i would say it's efa.
it's the efa index. it's the global stock market rally that's so important to your earlier point on industrials, so much is feeding in through that. i think that's really key. >> so let's do final trades. you have one, josh? >> i like schwab. you can own mastercard. it's a financial, it's not a bank. you can own schwab. they're doing so well. has nothing to do with impressiinterest rates. >> joey? >> add it to perkinelmer. i believe it's the second largest s&p waited sector taking out financials. >> doc? >> chicago bridge and iron, infrastructure play. it was near the 52-week low just at the beginning of this week. it's still right off of that low right now. they're buying upside calls. i bought this one, judge, during the show. >> erin? >> i like japan right now. if you want to be exposed to reflation, pick up in global growth, japan is where you want
to own. it's very undervalued and i think that you're going to continue to see inflows. it has had a sneaky rally year to date. >> nikkei get above 20,000? >> i think lit get above 20,000. you know why -- they have monetary and fiscal support behind them. >> good having you here. >> thanks. does it for us. "power lunch" starts now. >> it sure does. here is what's on the menu. the clash over climate change. more and more ceos urging president trump to stay in the global climate deal. his decision is coming up. we'll debate straight ahead of it. is it all about heavy discounting and incentives above auto sales? plus the multitrillion dollar deal opportunity that's opening up in the auto sector. plus, is it peek burger? consumers and investors are loving it right now. but for how long? we'll speak to the ceo of one burger chain whose stock is up 35% in three months.