tv Fast Money Halftime Report CNBC October 9, 2017 12:00pm-1:00pm EDT
re-examination, especially as jane wells says. vegas is such a gun place. there are gun shows there. >> yeah. >> and it's legal. >> yeah. people come for the actual gun shows which jane has pointed out and sometimes bring their firearms with them well -- >> on that sad note. >> very unfortunate. >> we'll watch for more security measures and that does it for us other on "quack alley. have a good rest of the day. "halftime report" starts right now. and welcome to "the halftime report." i'm swappier top trade this hour, a tale of two generals, one flying and one falling and which at the moment is a better bet for your portfolio. with us for the hour today, josh brown and steve-wise and jim lavanthal and jon najarian began electric falling to a two year low, the biggest loser on the dow after a series of management changes, some saying
that ge's challenges are worse than anybody else in the market. they say it's bod and could potentially get worse. >> so the problem with that kind of prognosis for shareholders is, you know, this -- this historically has been a orphan stock. some people said i don't really need high returns. i feel like this company is going to endure and it will be like good enough or a market stock, and that has not been the case for a while the situation has been deteriorating. it's almost become a conglomerate, but in the negative connotation where people are saying why does this thing even exist in its current form, and, you know, maybe new management and some of the changes they are going to make can't happen fast enough. >> i mean, look, widely held name, a name you yourself had far different thoughts about let's say 18 months ago, had owned it you threw in the towel the best i know. >> it was technical. i'm not like looking to get involved with the board. i bought the stock on a false breakout and i sold it for a
break even right now tactically speaking it's uninvestable and it's in a clearly defined downtrend and the buyers do not surface at any level where you would expect them to. the one positive i can give you as a ratio trade, ge priced an spy. it's at a low we haven't seen since 2009 and if you want to say all right, here's a quick opportunity. the whole world is giving up on this thing, maybe i can catch a point or two on a bounce off of that ratio, but that's not for me. >> jim, i mean, the commentary now has gotten so negative this particular analyst at jpmorgan that i referenced also says possible outcomes from events this fall almost none of which are positive it's hard now for almost anybody to see the upside. despite the fact that you have activism in there and ed garden gets on the board, low expectations are an understatement. >> right. >> and industrials are back in favor. >> yeah. >> and ge can't get out of its own way as a stock. >> so, look, ge reduced its portfolio over the last several years and, unfortunately, placed
a large bet on oil and gas which really turns out to be the wrong bet. i don't think we should flagellate them for that it just turned out that oil prices came down and stayed low for a long time. the question that you're putting, scott, what do you do with it from here in the think the pieces are in place from a recovery, but, and here's the really important part. it ain't going to happen until 2018, folks. i mean this thing is at a two, two and a half year -- if. >> you're telling me there's going to be a recovery in 18 why would you buy this stock today then if that's what you think? >> let me answer the question. >> because you're going to get tax law selling like crazy over the next several months. there's no buyers here, only sellers, and that will continue through the end of the year. look, all i'm saying it, and i'm not going to take a position in it, but the pieces are in place. you change management and get an activist in there, heck, if you get any sort of recovery in oil and gas prices, which by the way you don't right now, this thing could recover. they do have one great franchise which is the aviation franchise, but that's not enough right now. >> i see no reason to own
t.haven't seen any reason to own it it's been unanalyzable anybody that thought they could analyze this company even with the shrunken portfolio has been kidding themselves. >> can we stop and think about this and what we're saying about general electric, a blue chip name that i hear words like uninvestable, unanalyzable. >> it always has been analyzable there's no analyst out thereto or portfolio manager who can take a look at all the various parts of the country and come up with any type of forecast, so it's always been on the faith of management that they will underpromise and over deliver and that's been the case with immelt for a long time. >> they were great at it back in the day. >> as everybody was. >> right. >> and this is no different. if you take that two-letter ticker off and put a three-letter ticker on it like ibm, these are the ghosts of the past they were widow and orphan stocks because they owned them because they create widows and
orphans. >> this widow is reiterating his sell on ge. >> i don't want to paint it with the ibm brush. >> do you worry about it >> yes, you do. >> the shareholder base that traditionally would say, oh, look what they did to ge, this is a great opportunity, historically when that's happened and it happens with every stock that's been around for decades, it was always like, all right, at the very worst we have the yield, we have -- we have the buyback. >> listen, all of us are just beating it to smith reasons here let me paint a positive picture. they have streamlined their portfolio. a lot of it is on things that spin, an i'm not being trite i'm talking about power turbines and jet engines, things that spin there's a unified concept there, and frankly over long periods of time if you think the global synchronized economic recovery is going to continue, by the way i do, then there should be more power station production there should be more airplane production which by the way airbus and boeing have seven
years of back log so there are some things to get positive about. >> you look at the energy. >> we talk about the energy in place. if energy is going to work, why not go to a pure energy play instead of having all the other options? >> i'm not getting in ge i'm just saying here's the other side of the coin. >> done. >> and buffet threw in the towel on this one. he threw in half of it on ibm. he's thrown in the towel on this one. as josh said on what looked like a breakout earlier in the year, i'll raise my hand guilty. i thought it was going to break out there, too what was, it april or whatever, josh, and looked for all the world like the pieces were in place and it was making that breakout it didn't. it didn't hold 26 or 2650 on the way down here, judge, so the question is does the talk, like just we're hearing ourselves right around the desk, does it get negative enough over the next several months to where you can't wait all the way until the end of the year. they don't need to wait until the end of the year for the tax loss harvesting, so at some point, are they going to get out
just so they have that 30-day window to get back in. >> you know what i'm saying? because we all know that game is played. >> my answer is that answer will not be a fundamental answer. it's going to be a price action answer it will be something like a momentum divergence where rsi stops going down as price continues down, and you can see the momentum of the selling dry up that will be your signal that, okay, sentiment got over-the-top negative and now all of a sudden you're seeing the sellers run out of ammunition to -- to dump more shares. maybe that would be the kind of thing that you would look at here because the signal is not going to be a speech by the new ceo or an analyst upgrade or downgrade. it's going to be something to do with sentiment in the buying and selling. >> all right that stock at the lows of the day is general electric down a little more than 3%. now to the other general, general motors, those shares hitting a new high today with citi seeing that momentum continuing jim lavanthal, the owner of this
name, one who has withstood ridicule from left and right figuratively and literally. >> stuck with it. >> just another day on the show, scott. citi says a path to their 134, the narrative shift can unlock much more. the market's willingness, they say, to suddenly reconsider gm's position supports the notion that gm's problem was one of perception not foumtales. >> it definitely was a problem of perception. we've been on this show probably this same lineup can i recall about two quarters ago they had a blowout earnings call josh, you and i spoke about it and you said, jimmy, look, the stock is deteriorating after it popped higher. it was absolutely perception and sentiment, but, you know what. that's where the opportunity is. the stock was trading at six times earnings a few months ago. to me that's an asymmetric risk to the upside. people were seeing peak autos and what's it's going to earn in a recession. >> i'm as guilty as anybody. >> look, it's a market they were sellers and buyers.
>> throwing more shade than love towards a name that's clearly done well. >> here's why i like a stock at six times earning and 4ment 5% dividend yield which is what it was then i seat risk asymmetrically to the upside yes. we could have a recession at any point in time and the citi analyst thinks he sees a path to peak earnings at $9 a share. god bless him. i think that's a little bit of a bold call but to get this to a thing of nine times multiple this year is a $54 stock with a 3.5% dividend yield. we can question, and i can see you chomping at the bit. >> well, i was going to ask if the mea culpa is in order here. >> it is an important point. >> you guys tore him up. >> with all due respect. >> with all due respect. this is the difference between investing and trading. >> jim is talking about the fundamentals of gm being not appreciated by the street and us saying, okay, that may well be the case this stock is in a trading range trapped below a certain price
level from 2013 until a few months ago from the a trading perspective, there's no reason to be in this name while it ping pongs up and down from the high and low end of that range. it took that level out 37, 38 it was the most critical clear obvious technical breakout so if you're saying, okay, i appreciate jim's fundamental arguments. now i have a reason to feel like something is finally changed and the street is coming around to where jim is that's what you buy. by the way, did i this trade with intel last week, didn't like it, didn't like it. >> same story. >> great fundamental company no reason to be in it, and then have you a breakout where big volume comes in above a resistance level this a stock has been trapped beneath for years. it the tells you that there's been a sentiment shift, so you can love a company fundamentally, but wait for some sort of a reason to want to own it beyond just, hey, it's gm, it's good management. >> it's been a sneaky move i mean, it's up 30%. >> i'm going to let you talk a little bit longer because he didn't have so much time in the
sun so let him take advantage of it. >> same thing with intel, josh point is well made the difference between trading and investing. you're saying waiting for the breakout my point is with either of the names with the valuation plus the dividend yield and here's the key point, plus the dividend deeshlgsd you get paid to wait yes, i was early there's no question about it, but that move from 31 where i pout it to 37 where we're looking for the breakout, i liked that i liked being in early for that 20%. >> better to be early than never. >> so what we're talking about here is i've not looked gm for a while. most money i ever made on it was being shorted since '08 and hasn't been involved since we're talking about basically a two-month period of performance here aided and abetted bid a hurricane that wiped out so many cars it remains to be seen. citi analysts, looking for a 15 multiple on that that will not happen. >> you think that 28% gain in the last two months is all hurricane-related? >> no, north i think part of it is that they are talking about autos, electric autos
they are talking about chip. that's all good, but you have to know when to get off the bus i'm not saying it's now because it's a momentum trade but on a fundamental basis i guarantee we'll be talking about this in six months saying it's a highly competitive industry while the global economy is moving forward and china, they will come out of china eventually because they still steal all your ip, there are other ways to play it. >> you take -- maybe you take the gift that you got. >> so this speaks exactly -- >> and get out of the passenger seat. >> yeah. i thought about that, scott. frankly, obviously, i see more gains ahead, a little bit below eight times earnings first off just to the point, that you know, this thing is hurricane-related. i'll grant you there's a large part of the game recently that is hurricane-related, but to be in that at six times earnings gives you that opportunity to benefit from something that i didn't analyze i didn't say the hurricane harvey was going to wipe out houston by i'm not happy about for you houston viewers, but, look, to the point of what comes
next and the citi analyst is pointing that out. they are get nothing autonomous vehicles. >> show is everybody so is everybody. >> they have an edge in it. >> what's their edge what's their edge? >> the fact that they build 10 million cars a year. >> let me ask you this. >> their edge against who, not against bmw, mercedes, the chinese car companies sell for a lot less. >> is any part of this stock's move emblematic of the overhaul market that people look at and say is overbought, that stocks have risen really out of context for not much news ever, and maybe this one was along for the ride. >> i feel like i'm stepping on jon's toes here. i'll say yes is the stock at 45 >> and then we're going to move on. >> is maybe a little bit ahead of itself, yeah? should be it in the low whos i'll make that argument all day long 7.5%. >> i'll say one thing. >> the last thing i'll say is you get paid to wait is so
ridiculous you're getting so much more to wait on macy's that gives you a 5% to 6% yield than year and you've owned jc penney with other yield stocks. >> he's bringing up the jc penney thing, already, fine. all i'm going to say is josh -- >> i know you worked for the naval academy and you've been spending a long time under water and the with stocks it's generally not a good strategy. >> did you write in a? >> you didn't go to the naval academy. >> he's a princeton guy. >> i did spent a lot of time under water which made me an investor instead of a trader. >> i'm an investor over. >> under matter for two months, i can't worry about who is having a good quarter or who is not. >> you dropped the mike after that one. >> let's move on and talk about stocks investors seem to be gauging what the now public feud between president trump and senator corker could mean for the path of tax reform. it's a modern day duel over twit their began over the weekend our eamon javers is in d.c. with the very latest. eamon? >> yes, that's right
i've been talking to officials here at the white house about this feud between the president and senator corker this morning they are pushing back on the idea that this is going to cause any problems for tax reform they are telling me very much that they feel like senator corker was going to vote however he was going to vote on tax reform no matter what happened here and i also asked a senior official here at the white house today why does the president appear to be attacking and criticizing republicans on twitter publicly more often than he does democrats, that it's very much the president takes criticism from the republicans personally it gets a lot of news coverage and brust else at it and wants to push back that's the president's instinct, and that's what we saw over the weekend. you saw the tweets back and forth. the president putting out i would fully expect corker to be a negative voice and stand in the way of our great agenda. didn't have the guts to run, that's what the president tweeted over the weekend and corker speaking to the "new york times" saying he's tweeting the presidency like a were reality
tv show and saying that the cryptic threats towards other nations could set the united states on the path it towards world war iii. take a look at all the different feuds the president has had during the course of the year with prominent republicans up on capitol hill, including the leader mitch mcconnell, and you go through those one by one by one, and you can see that the president has said that mitch mcconnell has failed and called lindsey graham a disgrace and john mccain was a face in the republican party and leece is a murkowski let republicans and the country down and jeff flake he called weak on and on and six or seven republicans have attracted the president's ire so far this year and that the white house says because the president didn't like criticism from his own party. he really bristles at it the question is whether they can repair the relationships in time to get something done this year. one indication that maybe bridge-building is under way we're told that lindsey graham is golfing with the president in virginia even as we speak right now so maybe they are working on that relationship today over at
the golf course. >> we'll see eamon thanks so much the big question is whether the rift could derail the agenda john harwood also in d.c. for us this hour. john, what's the story there >> reporter: well, scott, it's not that the rift itself would derail the agenda, it's what the rift shows us, and what the rift shows us is that president trump isn't all that good at this. in fact, bob corker is a lot better at being a senator than the president is the being president. the president tweeted something out about coaching which was obviously untrue he said he had begged bob corker to run or that bob corker had begged him for an endorsement. he wouldn't provide it that's ridiculous. everybody knows that republicans wanted bob corker to run it would have been a safe seat and what resulted from that is that bob corker started to say out loud what a lot of republicans say privately which is the president is unpredictable, that he is unstable, immature, he talked about an adult day care center
at the white house and when you have a president who is trying to get 52 members of the republican party to hold together, if he's not very good at doing that, as this shows, that is a bad sign for tax reform in addition, on corker specifically, bob corker has had big objections to the nature of this tax bill already. he doesn't want to expand the deficit. this tax bill as it's currently constituted would substantially expand the deficit and if you're in an open war with the senator of your party who already has doubts on your program how is that going to influence the marginal call he's going make do i push this forward at the behest of the president or not it's obvious what the answer is, that you're not likely going to be given the benefit of the doubt and that's why the tax plan at this point is in significant trouble. >> interesting thanks very much john harwood on the hill for us. >> this is three-dimensional chess. all of these legislative victories will take place in 2018. >> they can't afford, the
republicans can't, any losses within the party when it comes to voting. >> that would be assuming that they don't get at single democratic vote, judge i don't make that assumption i think there's a real possibility that they will get some support for exactly why senator corker does not support this and that is that it does expand the deficit there's a lot of spending, not just the tax cuts that are going to be part of this package, and so could you win over one or two of those >> maybe that's why the president was said to be reaching out once again to schumer. >> look, here's i look at this the single biggest risk in the market i see it is trump in my view he's done nothing to bring the will market up, that he's gone along for the ride he's not gotten anything done. there's nothing in the market for tax reform and if it happens, great morgan stanley said there's a lot in the market for tax reform there's nothing there. >> i think there's greater than zero at this point in the market. >> i'll agree with you, but it's relatively immaterial to the
additional $10 to $15 in earnings that could occur. >> if tax reform really can't happen, what does that truly say about where the runway is for the rall >> it says that we've never had a -- >> doesn't it shorten it up? >> we've never had a synchronized global economic expansion while any of us have been alive. >> how much -- i know, but how much of the good economy is in the market maybe that's what we should be trying to figure out. >> listen, this is like -- we raised taxes in the 1980s and it was accompanied by a great economy, tons of hiring, wages rights, a rock 'n' roll stock market the tax cut is not necessary to justify where we are and it's certainly not -- -- nobody thinks anything is going to happen. >> i don't agree with you. it's not necessary no justify where we are, but isn't it somewhat necessary to justify where we could go? >> people are saying and the calendar turns over and we've gone the whole year without a victory on tax reform, a lot of
that is being priced in. i've rejected that argument since january. so far i've been right. >> in the '80s -- >> fiscal policy -- >> in the '80s you didn't have market moving on >> don't talk over each other. >> i'm sorry look, your point is well made. i'm not sure i agree with the cause and effect you had had the peace from the end of the cold war in the 1990s and we're eight, nine, ten years into this expansion depending on when you measure it. you've had accommodative fed and central banks all over the world. fiscal policy to pick up the baton, i find that unassailable. >> we're just getting started here on "halftime. here what else is coming up on the show. >> next up the call on banks that could have investors scrambling to load up on one big name and drop another. plus, big reports from five other big financials this week
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our data partners at kensho has shown this trade has worked 100% of the time since 2004. the financials are up 10% when bought two months before a december fedhifnlgt the decision is set for december 15th for more go to cnbc.com/kensho >> welcome back to halftime. a mixed monday for stocks. morgan stanley is down today despite being upgraded by credit suisse to outperform morgan stanley's best in class and equities coupled with its increasingly profitable wealth management business should drive reasonably attractive earnings growth with less volatility.
we like this time, doc >> i like it a lot. >> i said it last week i like this one a lot. it's not, of course, a bank. it gets that by virtue of what happened in 2008 when a bunch of guys slid in as banks, and they do have a great franchise, and i think that they will be able to exploit that franchise i think it's undervalued versies its peers so i see upside. >> snoks on an uptrend and trades at 1.3 times book value for the left of the large financial centers and still in that space that's still an attractive price. >> what do you mean safe >> well, we all -- >> the stock is up 12.5% in a month. it's up 53% in a year. >> yeah. so here's what i mean by that. friday we talked about we think the market is going higher a lot of us on the desk have talked about financials being part of leadership of that next move higher. within that space this is a very attractively priced particularly on book value which is what you
should value it on also, we'll go to this in a second they have been eating their competitors' lunch, notably goldman sachs. goldman has underperformed in the last two quarters and morgan has outperformed. >> this same firm credit suisse takes goldman down to neutral so it's a replacement frayed. >> you asked the question and i want to make sure i answered it. what do i mean by safe of this call is safe in terms of that's the trend until you see a reversal which gold-in outperforms morgan stanley, that's a safe call. >> is any upgrade of a financial stock right today, quote, unquote safe only in the context of the run that they have had? that's only where i'm going. >> yes. >> because you're still in front of a major tightening cycle that's going to take longer than anybody would have thought three years ago and as long as rates go up, they are highly researched on a steepening yield curve even though it's not a bank so it will work. >> i'm surprised you didn't have a buy on it before. >> i guess that's partly what
i'm alluded to i mean, morgan stanley or goldman sachs. if you had to choose between the two, would you make the same choice that credit suisse makes. >> morgan ten times out of ten and the reason is because of the retail exposure they have got and the wealth managers they have got and the margin loans because you don't have to -- other than just filling that paperwork out once, scott, you can be out there borrowing millions of dollars like that on margin and that's where you get that boost whereas, you know, a stock of papers like this to fill out real loans at the banks and so forth. >> this is as big week. >> here's the issue with the wealth managers. it's not the panacea that it was. all the stocks that run this businesses that are involved, it's a lending book. they have been getting crushed on their asset, not just morgan stanley but all of them that go into active management because of etfs and indexing has brought those margins way down.
>> let's broaden is out to the earnings that are coming down the pike this week because it is a big week, and if you've been an investor in these stocks you've enjoyed the recent gains. can it continue. blackrock on wednesday and citi on thursday and friday b of a and wells. which are the ones we need to look out this week especially? everything. >> jpmorgan set the tone and blackrock is more of an asset management business. nice to have them participate and highest quarters and one of the highest qualities out there. the market, i believe, has looked to jpmorgan and citi because they come first. >> what about wells given all the noise and narrative aren't that name. >> i hear the term unvestable. i'm not going to use that term but you're way too early if you're trying to pick a bottom in that stock. still early in the cycle and still news coming out. you want to let a year pass so that whatever earnings hit comes from all -- the fines haven't been announced
you know they haven't been announced. you still have a long time to play out and frankly it ain't that cheap. >> let's do our blitz now. barron's has a positive article about walmart saying the retailer's book will benefit from e-commerce. that's profound. >> actually -- they look at a 15% upside. >> e-commerce unit at walmart while not substantial in relation to, you know, the 500 billion in overall company revenue is growing extraordinarily rapidly and the company is supporting that growth with acquisitions and smart hiring and poem should not forget that this was always a logistics story even back in the day when they were taking on catalogs and general stores. walmart's success has always been about killing it at the last mile at distribution, at trucking and so seeing them take this next leap into doing that in the digital realm, very encouraging. this is the stock on the ernlg of a breakout and it's the best stock in the dow right now, and
i would be a buyer here, especially if it gets above 80, 82 that range is gone. >> the other dow stock, disney jimmy, rbc says it's a tough pick. >> they had a tough name for have investors like me a lot of us look back five years ago, that was the start of almost a tripling in stock price until two years ago when the espn woes came out i like the bold call here. i think they are early though. i think you need to see evidence that there's some stability, not just at espn, but rest of the broadcast network. otherwise you're really being speculative here and i choose not to do that with this name. >> kohl's is upgraded. the stock is down no matter what today. >> well, i like the call i think citi made almost an identical call, maybe a week or two weeks ago and took it from 43 to 51 she's from 13 to 50. like it. i like the experiment that they have got going on with amazon and chicago and l.a. where you
can bring in returns to amazon to kohl's because, again, could be a little more transaxes because of it, and who better to partner up with than amazon if it extends, so i like the call. >> the citi says sell viacom. >> this to me is a definitive loser in the media space. >> down 5%. >> hand now to sue herera who has the latest headlines. >> scott, indeed i do. here's what's happening at this hour epa chief scott pruitt says the trump administration will abandon the obama-era clean power plan aimed at reducing global warming he'll sign a proposed rule tomorrow the clean power plant aimed to restrict greenhouse gas emissions from coal-fired power plants at least two hospitals have been evacuated and some schools closed due to two wildfires in northern california. smoke from the wind-driven fires has drifted across pretty much all parts of the bay area. evacuation centers have been opened on the napa county
fairgrounds. 84-year-old senator dine feinstein, a veteran california democrat, says she's running for another term she took to twitter to declare somewhat she's all in. she joined the senate in 1992 after winning a special election and mcdonald's is promising more szechuan sauce after its first batch sold out the company offered up condiment on saturday, but promotion left many customers empty-hand and upset. some packets of the sauce even ended up on ebay selling for sky high prices. that's the news update this hour over to brian sullivan with what's ahead on "power lunch." hi, brian. >> hey, sue. thanks very much yeah, listen here's a good question how do you make money, protect your wealth and in a rising interest rate environment when stocks are at record highs there's continued drama and dysfunction in d.c. and state like new jersey where you are in california where we are could be seeing a big tax hit if the tax plan is passed those are a lot of questions we'll get answers.
legendry investor bill gross will join us and we'll talk about how he's shifting in the fed environment and the ceo of janus henderson will join us as well and flexion therapeutics, a non-opioid knee pain drug getting approach the ceo will join us on that scott, of course, opioids a huge serious topic out here big day. it's a terrible job. somebody's got to do it, scott wapner i'll see you at the top of the hour on "power lunch." >> well, a big step today in california where brian is involving drug-makers. is it about to go nationwide plus, jon tracks unusual activity in an energy stock and how the options market is 'llping him play it. wel find out what it is when "the halftime report" comes back in two minutes feed the world. and energy to fuel its growth. real estate such as e-commerce warehouses.
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ameriprise well, it'sonce again.eason >>yeah. lot of tech companies are reporting today. and, how's it looking? >>i don't know. there's so many opinions out there, it's hard to make sense of it all. well, victor, do you have something for him? >>check this out. td ameritrade aggregates thousands of earnings estimates into a single data point. that way you can keep your eyes on the big picture. >>huh. feel better? >>much better. yeah, me too. wow, you really did a number on this thing. >>sorry about that. that's alright. i got a box of 'em. thousands of opinions. one estimate. the earnings tool from td ameritrade. you know win control? be this guy. check it out! self-appendectomy! oh, that's really attached.
that's why i rent from national. where i get the control to choose any car in the aisle i want, not some car they choose for me. which makes me one smooth operator. ah! still a little tender. (vo) go national. go like a pro. well bock. at this hour california governor jerry brown expected to sign a bill forcing drug-makers to sign a bill before they hike prize l.it go nationwide and will it bush rising prices meg tirrell is here with more on that story
this is like regulating drug companies like utilities here in california. >> reporter: yeah. they are saying if their rate hike is beyond a certain threshold they have to give notice in advance. it's 60 days for drug price increases of 16% or more over a two-year period. it would also right company to provide documentation of what went into the price increase, including any increases in clinical efficacy, if anything, the bill say, and it's not just the drug companies that are reported here. they are also required health insurers to provide big information on their biggest spending on drug costs this is not regulating drug prices we need to know how much these things cost and when they are increasing but this would affect the fast majority of big drugs in the industry. pharma, the city lobbying group is against this legislation. they say, quote, no evidence that drug cost will be lowered because it doesn't shed light on rebates and insurance companies and other benefits that are
being passed on to prices. this is the list price, not the net price and no information on discounts that are being paid on these drugs and people are watching this very closely because a lot of the reason the ivb is doing very well is because some of the drug prices have abated a little bit haven't seen anything come from the president on this, and there are several more hearings coming up in congress focusing on drug pricing so this issue is swirling and it's not going away. >> we'll keep our eye on that. >> next up, consumer advocate ralph nader taking on a key ybkser of rising stock prices y he's against it. what our traders have to say about it they are ready to fight back "halftime report" coming back right after this this is a finann secure from hacks and threats others can't see. finann this is a skyscraper whose elevators use iot data and ai to help thousands get to work safely and efficiently. this is not the cloud you know. this is the ibm cloud. the ibm cloud is the cloud for business.
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all right. welcome back a new battle over stock buybacks is breaking out today led by consumer advocate ralph nader. he's with us on the "newsline. mr. nader, welcome to "halftime. good to have you on today. >> thanks, scott. >> you say buybacks are the monsters of economic waste, not to benefit shareholders, that the real motivation was to increa increase ceo pay where does that position come from >> well, there have been $7 trillion that these corporations have spent which belongs to the shareholders, just buying back their stocks, and in order to
meet certain contrived pay performance for their executive suite. so it's basically for their own pay increase because stock buybacks doesn't create anyanything tangible temporarily increase the earnings per share but the studies, including one recently show that companies heavy with some buybacks like general electric and ibm, hundreds of billions over the year, their stock is languishing or going down in a bull market where other companies that didn't do that, their stocks are doing much bert, so the key question, pension holders and mutual fund people who listen to your program have to ask is why aren't -- all this capital being spent for the plant and equipment or shoring up shaking pension plans or going into research and development which walmart should have done to head off the on-rushing amazon challenge. no it's a sign that stock buybacks, when they buy the stock back,
when it's near its high, is a sign of unimaginative or incompetent issues. >> i want to read you a quote from the harvard business review which says such a nefarious use of corporate funds makes for great headlines and these are backed up by large-scale evidence and often driven by a misunderstanding of how buybacks actually work. that studies suggest that they are using excess capital and when growth ops are not there, and they actually create value, and for examples of ibm and ge that you use, i'm not going to argue and it's hard to argue with you given the most recent stock performance, but i could cite and so could the share shoulders is apple, one of the biggest buyback companies around any metric on the last decade and not shorter is tremendous. johnson & johnson's five-year performance, one of the largest buybacks of stock, 95% the stock is up 5 points, home depot at
573% and exxon mobile not great. what about the companies that do buy back a lot of stock and do have great shareholder return? >> well, they have other reasons for having their stock go up apple being a perfect example with its phones that overshadow. apple actually didn't want to spend that much money and cook didn't want to spend that much money and there's been a few giant shareholders like carl icahn pushed him to do it, but it's not the best use of investment it doesn't create anything tangible compared to productive equipment and capital investment and shoring up your pension plans and creating more consumer demand by better dividends more r & d these companies are real suffering, and in an earlier study that was ground breaking in the harvard business review showed just the opposite they called it a form of disinvesting anyway, it's important to have a debate on this because it's been sort of like the hidden mogul in
the corner you're talking about trillions of dollars here. walmart has bought back over $55 billion of its stock in the last few years and what does it have to show for it it can't shore up the defense of walmart against amazon it's not doing the kind of research and development that it should do, and it's having a high turnover among workers because they show them how to go on welfare to get food stamps and medicare it's not good investment r.can you put a lot of people on your show to say show me a big company that puts huge amount of its capital, which belongs to the shareholders, into stock buybacks, and i'll show you an unimaginative, incompetent management. >> you're not the first critic by any stretch on this very issue. do i happen to have some investors on the program today who would like to get in on conversation though. steve wyse first
>> i think the generalization you're making is not appropriate. you talk about hedge funds, a great tool for hedge funds they are not just targeting hedge fund owner stock to buy back, they are buying back everyone's stock, number one by going along with this, what you're advocating is go out and spend money in r & d even if it's a waste of money. you'll wind up with an hp that goes out an buys autonomy and blows $10 billion so it's very case and stock and company specific that you do it. furthermore, when you buy back stock, you're putting money into the economy because you're buying back consumer stock and it's going in there. same thing as when you pay a dividend, and when you pay a dividend, by the way, you're incurring taxes for the shareholders. >> double taxes, tax a double taxation so you're eroding the spending power of that, so i just don't see how this makes sense as a generalization on any level whatsoever if there's no place to spend the money, as with apple then you're
best off using it as a stock buyback, and it's a question of where i would agree with you, even though you don't take it to this level, some companies are unimaginative and some are very conscious of what they are doing buying back stock because it does raise earnings. the last point i would make is very, very knew ceos, i think hard pressed, any get paid in their stock price as opposed to other matters in there which are return on equity and book value and other factors, not on a per-stock basis but an overall basis as the measure. >> there's a lot there. >> i think you ought to read "the ceo machine," ceo of king broadcasting and on a lot of board of directors and compensation committees and he'll rebut you in terms of one important criteria is this the most important investment drug companies are saying they need more tax breaks so they can do r & d for drugs yet they have invested since 2005 hundreds of billions of dollars in stock
buyback. the same is true for banks. >> banks spend much more on r & d. >> they almost give you no interest on your savings, yet in one day last unithe big banks bought back $92 billion of their stock. it's just not the best way to do it it's not their money it's the shareholders' money, but the shareholders have been rendered powerless because the business judgment who gives the power to the bosses whose salaries they pay. >> raffle, you don't have to own stock in those companies go somewhere else. >> wait a minute. >> ralph, why are dividends better for the shareholders given the fact that the corporation is taxed on that income and then the shareholder is taxed on that income? a buyback used either in conjunction with a dividend or in lieu of a dividend is a tax-preferenced situation where if the shareholder needs let say an additional $19,000 in income for that year, they can sell down that amount of stock rather
than take it in the form of yields which then gets taxed i don't understand why one would be better than the ploer. >> it's very simple. when i pressured as a share holder in cisco a few years ago. cisco was paying no dividends, 4$45 billion in capital piles up here and no dividend they had a bored of directors meeting and say, we should give some of this money back. so they declared a 2.9% dividend pension plans, mutual plans who invest in cisco got money, individual shareholders. presumably, they spent that and that increased consumer demand the key question is, who decides? why is it a few guys at the top who don't have the stake the shareholders have? who decides to do that with the share holders money? >> william laznika is the nation's expert in stock
buybacks >> apple is paying a very healthy dividend for a growth company doing about $47 billion worth of buybacks since 2016 when i say doing, there is a difference between announced buybacks and actually executed they do about $47 billion in buybacks since the beginning of 2016 and does $17 billion in new r and d spending if you look at their cumulative annual growth rate going back to '09, it is something like 40% growth in r & d. this is a model for what other companies should be doing. >> scott, you know ha appthat ai in a world by itself, a class by itself, a historic company with a huge innovation. maybe they should have spent some of that money paying some of that surf labor in china so
they don't jump into nets and commit suicide we are talking trillions of dollars and it gets far less attention than wen venture capital trying to rate some company on cable tv. this is extremely important to do what you are doing and get more views on this >> mr. nad der, er, we appreciar time today ralph nader is the author of "breakthrough power" it is easier than you think. john trackunuas usl options and activity in an energy stock. we will do that next
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we send dr. jay over to the te telestrator. what do you see? >> today, we see energy transfer equity, a sunoco partner, doing what you would expect that company to do, deliver energy from point "a" to point "b." take a look. year to date graph $19, bled as low as almost $15 it has made its way back to $18. here what is they were buying, two different strikes, both the 20 calls in april as well as the 20 calls out in june
that's something worth paying attention to stock pays a nice dividend this is something that i think people really get behind thinking that i'll give it some time in this particular case here we are first two weeks in october and they are buying aprils, obviously 4 months into 2018 as well as 6 months into 2018 with the junes. i'm in these i'll probably be in them one to two months sfwhch two months >> come back here. we'll do final trades after this quick break. at cognizant, we're turning the industry known for processing claims into one focused on prevention with predictive analytics, helping them proactively protect the things that matter most. get ready, because we're helping leading companies see it- and see it through-with digital.
> welcome back markets close in about three hours. zu >> intel is in a definitive breakout it is the hottest sector in the market it has a lot of ground to make up they are rapidly working toward figuring out the future of technology i pulled the trigger last week i think you should do. >> weiss >> active vision i think for a long-term position >> jimmy >> if you want to be an investor and get into a stock before it breaks out, i think cisco systems will be the one to get in be early good dividend yield. >> dr. jay
>> mac, tells me it is going a lot higher over the next several months how about netflix, another new high >> love it boy, were they all over it last week again just ahead of the price increase >> we will see you torey i am melissa lee president trump and senator corker going at it neither of them pulling any punches. will this derail tax return? walmart says they are going to make it easier to return the ugly christmas sweater it will only take 30 seconds harvey weinstein is being fired from the company he helped create the name is being changed too. can the company survive? lights, camera, action power lunch starts right now welcome to power