Skip to main content

tv   Fast Money Halftime Report  CNBC  October 16, 2017 12:00pm-1:00pm EDT

12:00 pm
thor they spend more than anybody else but are the low-cost producer on a per sub basis and the direct to consumer model takes all the middle margin. >> we'll see what happens in a few hours. thanks for coming in and helping us out with us watching netflix month. >> let's get over to the judge who has jim in tow over at headquarters oh, indeed we do welcome to "the halftime report." our top trade this hour, 23,000 watch as the dow approach eds jet another major milestone. why is one "halftime" regular seeing rising risks for stocks with us for the hour today, joe terranova, stephanie link, pete najarian and so is jim cramer, the host of "mad money." let's begin with the markets today where all three of the major averages hit new records again. tech a big winner with at least 20 names now within 1% of at least a 52-week high yes. how do you feel about that, joe?
12:01 pm
>> i feel good about it. steph and i talked before the show i've tried to be cute at times, did in the beginning of september, if you remember i thought the market had a lot to overcome from a trading standpoint you have put a small position on, but listen, this is a market that punish eds you. you need to get out quickly to see where we are today i love what's going on with technology the software play is the play that i have. it's the -- the three big names. it's microsoft, it's s.a.p., it's red hot, and i'm not looking to get out of any of them. >> steph, you know, we mentioned mike wilson who is the -- the gentleman we were alluding to at the very top of the show i of morgan stanley. sat right here hat the desk recently saying there's greater risk of a correction than he's seen in a while. points to the balance sheet reduction from the fed uncertainty around the next fed share. negotiations on text legislation. counter trend dollar rallies is he wrong? those are all real risks, no. >> for sure, and i think expectations are clearly high headed into earnings, but i think earnings are going to be very good. i think the economic data has
12:02 pm
been pretty good look at that empire state number the best number since 2009, and it was shipments, employment, new orders underneath the surface the numbers are strong, so if -- the question is valuation and the expectations, again, are elevated, but that's why if you have a little extra cash around earnings, if you see sell the news, i think youwant to buy the strong fundamental stories, particularly the ones joe was just mentionings. >> cramer, october 6th welcome here, good to have you back. >> thank you. >> here's what we said on october 6th. i'm a little less constructive the last part of the rally on the on sense of news when all we were hoping for was a fed rate hike and a tax cut nobody is worried as i am. i'm worried. i'm worried. stocks are higher today than they were then. >> yes, they are, and maybe i'm too worried about some retailers and some of the consumer packaged goods stocks and not really that the coloration of the market has become cleveland
12:03 pm
if it's from cleveland it's good, okay i'll give you a classic example of what i'm seeing ilgo over the charts in the weekend and tend to know a lot of stocks. there's like ten of them saying, well, gee, i've got to really a avatar group, acute names that come around and then i look at illinois to works, one of the great american companies, and if you take a look that stock was at 150 and then it dropped to 136 and then it went back. what i'm saying is as much as i like the work of the morgan stanley wilson, what you have to do is look for individual breakdowns in stocks that shouldn't have broken down lamb research after the last quarter, the stock with endown the. it shouldn't have. i'm looking for situations that make no sense versus the fundamentals. >> so, are you saying that the correction that we're all looking for in the overall market is actually happening in individual stocks? >> exactly. >> we've had this rolling
12:04 pm
correction. >> it's positive. >> yes. >> but that's in sectors. >> but the market keeps going up regardless that have. >> remember when amazon went down, was well off a thousand, amazon have decided it's an investment year. >> it's amazon. >> right. >> and the only things not working are something where you hear amazon and another -- amazon cosmetics, amazon sports power, amazon, i mean, amazon. sorry, costco. >> don't you think it's interesting that energy has actually started to catch up and also kind of the material stocks chemical stocks have done well year-to-date but steel and iron ore and copper and that to me is very encouraging because that suggests the global synchronized growth stories. >> we're out of stocks, steph. how many -- what i was saying when i was saying those word cat florida kept going up because there's not a lot of cat flars when we got in the business there were like 25 companies that liked caterpillar and now there's like united rental which
12:05 pm
doesn't use caterpillar. >> this might have been the day of the microsoft throw in the towel. >> i can't take it anymore. >> i'm waiting, waiting, waiting for a correction hell, we're not getting a correction. >> turned out to be right. that was a good call what was weird about that microsoft call was that he said i think it's going to keep going higher so i've got to get on, and that's what i don't like i don't like the so-called multiple expansion but if stephanie is wright and the earnings are better, you'll be left behind for good. >> apple is a classic example of what he's talking about. >> yes. >> what did we have, a 10% decline in apple right back to 160. >> traded down to 150 and people freaked out. >> the it actually dipped below 140, 150 rather and everyone got excited. 149 and now back toward 160. but i think energy is indicative to what jim was talking about when you mentioned before the show about japan and you have to look at the flow no one has energy right now. no one is long energy. >> because it -- it's been
12:06 pm
painful. >> it's killed you. >> a lot of people -- >> same as japan. >> i've got a lot of people long tax cuts, tax reform. >> taxes. >> should you be tax reform or long - >> yes, short tax reform because what matters is once again when he cuts the subsidies to the states puts health care front and center behut health care right front and center again, he being president trump. i called him trump last week and people were fearious it's president trump. >> came after you on twitter it's lincoln, no, president lincoln. you can't make a move. you can't make a move if you talk -- >> even if you put mister in front of it. you're a bad guy you're a bad guy, but i do think that the apple piece is so right because what they are seeing is listen if you give us a is a multiple it deserves to trade radically higher it was at 150 and nobody liked it again, that's the intra, you get these different declines, and you either buy them or you miss it and they come back.
12:07 pm
>> alphabet. >> unless you're taking about ge. >> right down to 135 and back above 1,000. >> it was because you didn't want to put your ad next to cryptonazi contempt. at 1,000 suddenly there's no cryp crypt nazi content mark penn, a very noted pollster and he said the amount of money that -- that the russians like threw in versus say like what hillary threw in, he did raise some interesting point i used towork with mark, money management mark had some great ideas, but the idea that you suddenly sold down facebook because of content now people are saying why did i sell it? >> because there's a lot of potential risk around it all of a sudden, no >> well -- >> you know what let's hold the thought president trump holding a cabinet meeting today. >> right now >> well, he's out from it now. >> i would like to basically provide you with an update as to how we're doing for the american
12:08 pm
people, and we're doing a lot of great things the unemployment rate is at an almost 17-year low the stock market is soaring to record levels. we just hit a new high on friday and i think we're hitting another new high today because there's tremendous amount mitchell having to do with business in our country. gdp growth has reached more than 3% last quarter and other than the hurricanes would have done phenomenally this and i think we'll still do very well but something will have to be taken off because of the tremendous problems of the massive hurricanes that we've had to endure, and now i guess you can probably add the wildfires in california, but the economy cannot take off like it really has the potential to do unless we reduce the tax burden on the families, businesses, workers of our country, and we'll be able to do that i think we're getting tremendous receptivity from the people i hope we get the same receptivity from coming, but we are getting
12:09 pm
tremendous accolades for what we're doing having to do with both reform and with the massive tax cuts it will be the largest tax cuts in the history of our country. we're one of the highest taxed nations in the world, right now costing us millions of jobs and trillions and trillions of dollars. it's time to restore americans' competitive edge one point in gdp would be $2.25 trillion, think of that, revenues we go up from 3 to 4, and when i began, we were in the 1s, and now the last quarter we're at 3.2%, and we're going up higher, but if we went as an example from 2 to 3 or from 3 to 4, talking about 2.25 trillion, and we're also talking about many millions of jobs so we want to also reduce excessive government spending, and that's what we're working on at our cabinet meeting today
12:10 pm
as we head no next year's budget season, i've asked director mulvaney to come up and find various savings in all of the departments that are gathered around the table which is everybody. i need my cabinet to work with director mull vein toe fight these spending cuts, fight for them and make sure that they happen, and we want to make the department as lean and as efficient as possible. at the same time we'll be departments with lots of heart, lots of heart. one thing we're going to be looking at very strongly is welfare reform that's becoming a very, very big subject, and people are taking advantage of the system and then other people aren't receiving what they really need to live, and we think it's very unfair to them, but some people are really taking advantage of our system from that standpoint, and we are going to be looking very, very strongly, therefore, at welfare reform it's going to be a very big topic under this administration, and it started already, and we have a lot of -- a lot of
12:11 pm
recommendations that we're going to be making, and you'll be hearing about them very shortly. the other thing we're doing that relates to people's lives is the prescription drug prices are out of control the drug prices have gone through the roof, and if you look at the same exact drug by the same exact company made in the same exact box and sold some place else, sometimes it's a fraction of what we pay in this country meaning as usual the world is taking advantage of the united states. they are setting prices in other countries, and we're not the drug companies frankly are getting away with murder, and we want to bring our prices down to what other countries are paying or at least close and let the other countries paying more. they are setting such low prices and we're subsidiesing other countries. that's not going to happen anymore. that's been going on for years where our people are paying so much more for -- i don't mean they are paying 2% more.
12:12 pm
they are paying double, triple, qua group. they are paying so much more that it's very unfair to the united states, as usual. last week i also sent a letter to congress outlining my administration's top priorities for immigration reform this was a bottom-up effort driven by dedicated law enforcement professionals, and they took a big oath to protect our nations. the justice department is doing a fantastic job on the border and with regard to immigration, more than anyone has ever seen before from a justice department thank you very much, jeff. it's really had an impact and a very positive impact and now we're going to take it to five steps further. our proposal closes dangerous loopholes hand vulnerabilities that enable illegal immigration, asylum fraud and visa overstay tsz. the slicea overstays, you're talking about numbers that
12:13 pm
nobody even knows what they are they are so out of control and we're going to take care of that when you look at what's going on in mexico, mexico is -- is having a tough time right now in terms of crime more than ever we need the wall. we have drugs pouring through on the southern border. they are literally pouring through, and we have to have the wall we're going to have the wall, but if you look at just what's happening on the other side of the border with the tremendous crime and the tremendous problems going on. we have a very good relationship with mexico, but there are a lot of problems, and we don't want the drugs and we don't want the crime but we need the wall we've asked congress to ensure that any proposed immigration reform ends chain migration. one person comes in and then brings everybody and his family with him or her, and we have to end chain migration which is critical for creating a system that puts american workers and the american taxpayer first.
12:14 pm
last thursday i proudly nominated kirsten nelson to serve at department of homeland security and i urged the senate to quickly confirm this tremendously qualified nominee i asked them to confirm the other nominees the democrats have terrible policy, terrible, and they are very good at really obstruction, and one thing they do well their policy is no good and i'm not even sure they are very good politicians because they don't seem to be doing too well. that could be because of their bad policy but they are great at obstruction and we have half the nominees that president obama had at this time which is very unfair they are taking everybody right after the final moment and in many cases confirming them with tremendous majorities, but they are bringing them out purposely, right down to the final.
12:15 pm
we have people that are totally qualified, are going to pass and have to wait a long time and it's total obstruction can i say the same thing with our judicial nominees, our judges we have some of the most qualified people "the wall street journal" wrote a story about it the other day that this is some of the most qualified people ever, and they are waiting forever on line, and it shouldn't happen that way it's not right, and it's not fair i want to thank acting secretary elaine dute for her leadership in responding to the catastrophic storms that have struck our nation and our territories. we've also issued a disaster declaration in california in response to the devastating wildfires like we've never seen, and we mourn the terrible loss of life. we have fema and first responders there we have our military helping it's very sad to watch how fast, how rapidly they move and how
12:16 pm
people are caught in their houses it's -- it's an incredible thing, caught in their houses, so we have a lot of people helping government in california and made a lot of progress in the last couple of days, but we're a little subject to winds and what happens with nature, but it's been a very sad thing to watch we also continue to pray for the victims of the mass shooting in las vegas. we cannot erase the pain of those who lost their loved ones but we pledge to never leave their side we're working with them very much so with the fbi and law enforcement, department of justice, and i guess a lot of people think they understand what happened, but he was a demented, sick video, wires crossed extremely badly in his brain and it's a very sad event.
12:17 pm
in each of these tragedies we've witnessed, however, a tremendous strength and heroism of our people each up of these tragedies that we've had, we've witnessed such strength and such heroism. when americans are unified, no destructive force on earth can even come close to breaking us apart. we have a lot of work to do on behalf of our magnificent country and our extraordinary citizens a great trust has been placed upon each member of our cabinet. we have a cabinet that there are those that are saying it's one of the finest group of people ever assembled as a candidate, as a cabinet, and i happen to agree with that. of course, i should agree with that, but i think we have an extraordinary group of people around this table. this is a tremendous amount of talent, and i wouldn't say i was necessarily looking to be politically correct, although i ended up being politically correct because that was right
12:18 pm
thing to do in every sense of the word however, we have -- we have just gotten really, really great people i'm very proud of them, so we're going to work on all of those things i just outlined and many more you know we have the iran deal that right now is being studied, and i think a lot of people agreed with what i did i feel strongly about what i did. i'm tired of being taken advantage of as a nation this nation it is a been taken advantage of for many, many years, many decade frankly, and i'm tired of watching it, but the iran deal was something that i felt had to be done and we'll see what phase two phase two might be positive and it might be very negative. might be a total termination that's a very real possibility some would say that's a greater possibility, but it also could turn out to be very positive we'll see what happens i thought the tone of the iranian leaders was very modified, and i was happy to see that, but i don't know if that
12:19 pm
means anything they are great negotiators they negotiated a phenomenal deal for themselves and a horrible deal for the united states, and we're going to see what happens the health care, as you know, is moving along knocked out csrs that was a subsidy to the insurance companies. that was a gift that was frankly what they gave the insurance companies, take a look at their stocks take a look at where their stock was when obamacare was originally approved and what it is today you'll see numbers that anybody -- if you invested in those stocks, you'd be extremely happy, and they have given them a total gift they have them, you could almost call it a payoff, and it's a disgrace, and that money goes to the insurance companies. we want to take care of poor people we want to take care of people that need help with health care, and that's what i'm here to do, and i'm never going to get
12:20 pm
campaign contributions, i guarantee you that, from the insurance companies, but a lot of other people got them take a look at the democrat. take a look at how much money has been spent by the democrats and by the health companies on politicians generally, but take a look at the coffers of the democrats, so the csr payments has actually brought republicans and democrats together because we got calls, emergency calls from the democrats, and i think probably the republicans were also calling them saying let's come up at least a short-term fix of health care in this country, and the gravy train ended the day i knocked out insurance companies' money which was last week. hundreds of millions of dollars a month handed to the insurance companies for very little reason, believe me i want the money to go to the people i want the money to go to poor people that need it. i want the money to go to people that need proper health care,
12:21 pm
not to insurance companies which is where it's going as of last week i ended that we have a lot of interesting things to do i'm meeting with mitch mcconnell in a little while for lunch. i think we're going to say a few words on the steps after that. i know you won't have any questions, and -- and pretty much that's it enjoy yourselves, nokes, and i'll see you out there with mitch mcconnell. thank you very much. >> mr. president, do you steve sbraccia bannon's war on mitch mick conley -- >> steve is very committed, a friend of mine and is very committed to getting things passed despite what the press writes, i have great relationships with many senators, but in particular with most republican senators, but we're not getting the job done, and i'm not going to blame myself, i'll be honest they are not getting the job done we've had health care approved and then you had a surprise vote by john mccain we've had other things happen,
12:22 pm
and they are not getting the job done, and i can understand where steve bannon is coming from, and i can understand, to be honest with you, john, i can understand where a lot of people are coming from i'm not happy about it, and a lot of people aren't happy about it we need tax cuts we need -- we need health care now we're going to get the health care done in my opinion what's happening is as we meet, republicans are meeting with democrats because of what i did with the csr because i got off the gravy train. if i didn't cut the csrs, they wouldn't be meeting, they would be having lunch and enjoying themselves they are right now having emergency meetings to get a short-term fix of health care where premiums don't have to double and triple every year like they have been doing under obamacare. obamacare is finished. it's dead. it's gone. it's no longer -- you shouldn't even mention it. it's gone. there is no such thing as obamacare anymore. it is -- and i said this years ago. that's a concept that couldn't have work, and in its best days it couldn't have worked, but we're working on some kind of a
12:23 pm
short-term fix prior to the republicans getting together, maybe with some democrats. again, it's obstruction, but maybe with some democrats to fix health chair permanently, so i think we'll have a short-term nicks with republicans and democrats getting together, and after that we're going to have a successful vote, because, as you know, we were one vote short, and i think we -- i think we have the votes right now whether that's through block grant or something else, block granting the money back to the states, which does seem to make sense where the states run it because it's a smaller form of government that can be more individually sensitive, so that will happen fairly shortly, as soon as we have the next reconciliation i feel we'll get the vote. i think we already have the vote for health care. sadly the democrats can't join us on that which will be the long-term fix but i do believe we'll have a short-term fix because i think the democrats will be blamed for the mess.
12:24 pm
this is an obamacare mess. when the premiums go up, that has nothing to do with anything other than the fact that we had poor health care, delivered poorly, written poorly, approved by the democrats it was called obamacare, but i think we'll have a short-term fix and then we'll have a long-term fix and that will take place probably in march or april. we'll have a very solid vote it will be 100% republican, no democrats, but most people know that that's going to be a very good form of health insurance, so that will be it okay any other questions. no thank you. i'll see you in a little while >> [ inaudible question ]. >> i know how he feels depends on who you're talking about. there are some frankly republicans who should be ashamed of themselves but most of them, i'll tell you what, i know the republican senators most of them are really, really great people that want to work hard and they want to do great thing for the american public but you had a few people that
12:25 pm
really disappointed us they really, really disappointed us so i can understand fully how steve bannon feels okay thank you very much. thank you. >> all right that is president trump meeting with his cabinet today at the white house saying there is tremendous optimism in the country. he cited the stock market, record run doing a lot of great things, he said, but then, of course, you did notice that the markets did come off of those record levels when he took dead aim at the drug companies drug prices are out of control they are really going through the roof, said the president the drug companies are getting away with murder, he shade eamon javers at the white house, john harwood as well the market reaction was swift, and it was severe. >> saw the president talking about drug companies last winter, even before he was sworn in as president. united states, so this is a return to some of that rhetoric that we've seen. he's going after really two sectors in these comments today, the drug companies and also the insurance companies. he cut off the so-called csr
12:26 pm
payments last week that would go to insurance companies to subsidize health care for lower income people. the president saying that was nothing more than a political payout to some of those insurance companies who benefited greatly from it, but in return for almost nothing, the president said, so the president here has two sectors in the crosshairs, drug companies and insurance companies, and we'll see whether the action to follow backs up some of the rhetoric he was talking about today. >> so john, the president wants to do tax reform, but he seems to be taking great pride in what he's done to what "the washington post" has described as throwing a bomb into the health care system. >> well, that's right, and it was very interesting on a couple of levels. first of all, he said we're first going to do a short-term fix. that seemed to be blessing the effort by lamar alexander, the republican, patty murray the democrat, to provide some short-term relief for those same insurance companies that are not going to get those cost-sharing
12:27 pm
reduction payments that, of course, is going to take time and attention away from the health care effort. the other problem was he seemed to be in a back-handed way embracing steve bannon's war on republicans in office right now, including in the senate. going to make that 12:30 lunch he's got with mitch mcconnell pretty awkward because he talked about how -- i understand why steve bannon wants to go after republican senators. he said i'm not going to take the blame on myself on what happens. it's the congress that's nailing and some of the republicans are not, you know, pursuing my agenda, so steve bannon is talking about funding primary challenges to many of the people that donald trump needs right now to pass his tax bill this is not an auspicious political sign for the prospects to get tax reform done. >> eamon, lastly to you. you've got 41 people now dead in california businesses that have been burned to the ground and no mention at
12:28 pm
all by this administration, the president, about what's taking operation there. what do you make of that >> reporter: we did hear the president talk about it. the president said he felt it was a very tragic thing. people were caught in their houses, the fires burned so quickly that they weren't able to escape. he said that there are people out there helping the government, so the president focused on that tragedy and sort of to my eye seemed a little bit in awe of the power of nature here and what it does to the united states presidency because you saw the president has been dealing with the hurricanes and natural disasters, and now these fires in california, so this is a president who is realizing the scope of the damage that can happen in just a short period of time, and he did sound a sympathetic note there, and we'll wait for more details on what the federal response is in california from the white house later on today. >> thanks so much. >> scott, the other thing that he said was that the wildfires, along with the hurricanes that we've been having, are going to depress the gdp numbers that
12:29 pm
he's looking for in the next quarter. that was an attempt to use those to shield any disappointment of course, second quarter was positive but over 3% and he was touting that and saying we may not do as well in the next quarter. >> if he did in fact say that, then i in fact missed that my apologies then for mishearing what the president was saying there about what's taking place in california. guys, thank you very much. >> you bet. >> jim, you want to comment on what's taking operation in the market. >> well, look, i think that this is that rhetoric we haven't heard in a long time we kind of got a really nice period where the president didn't do anything to hurt his nielsens, being the stock market he kind of just said, listen, take profits in the drug stocks, take -- put that money in the industrials. i mean, he kind of gave you a game plan, right y had's telling you where he -- >> rotate. >> he wants you to row thought. >> he's calling for a rotation just like the fellow from morgan stanley. >> pretty strong words though, jim, about insurance companies and the drug companies. >> i mean, look, the insurance
12:30 pm
companies i think -- it is very funny to listen to a president who really attune because those stocks have just been incredible and it's because they got a big gift he doesn't say anything that -- we say this stuff on the desk. it's very fun toy listen to the president. >> most of the hmos have gone out of the exchanges. >> correct. >> and there's molina and santee and a few still in there. >> cigna got out of it unit health care got out of it when they sell these stocks down this is exactly what we're talking about at at top of the show you buy some of the names especially when the fundamentals are strong and will remain strong. >> if unh gets hit, obviously, when unh reports tomorrow, the president is like a quarter behind in the rhetoric, right? i mean, these guys have already pulled out and not making is as much money except for santin at
12:31 pm
the and moved big in new york. the president says these things and obviously j&j goes down and i is that right thinking, okay, so jamie rubin is going to be on thesell of the j&j the president has to back his words up with tweets, i mean what does he back his stuff up with these days? >> tweets. >> he's obviously getting the information from his economic team the stuff that we're talking about on the desk, gary cohn and all of them. they know it. >> pete najarian is joining the fun. >> great to see you, brother. >> you know how hard it was. i mean, we've been following him for literally from the airport. >> tracking me for the last week. >> the fact that you are here is fantastic. >> pete tracker. >> you are nan taftic. >> washington isn't the only risk investors have to keep their eyes on these days jeffrey sherman is ceo at doubleline capital live with us on the set good to see you. >> thanks for having us. >> how do you generally feel about where you are, new record highs every day?
12:32 pm
you mentioned the top of the program, strategist on wall street starting to say the risks are bigger than he's seen in a while. what say you >> we've had a great run it's been a voracious rise in risk assets across the board, equity market, credit markets on the bond side and what you have is actually a growing global economy. i heard earlier at the top of the hour, coordinated global growth seeing commodity prices. there is an exuberance are, i don't want to use it in the negative context about markets, but it's because you're getting this coordinated growth. when you talk about the risk side of the equation, ultimately a lot of the balance hangs in the central bank behavior globally as we face a new phase of actual global tightening and so it's likely warranted in some capacity given the rise we've seen in the economies globally and while you have a control level of inflation, so it is this kind of very tepid type of growth environment and done on the backdrop of not having inflation out of control.
12:33 pm
>> we can take rates globally rising incrementally always, can we not >> yes. >> at the same time that global growth as you cite is improving. >> and profits are improving. >> correct. >> hand they came off very low levels. >> we leveled this profit recession where we have five consecutive quarters of profit decline, and we've turned that around i think the fundamental case for raising rates is there it's just the idea of this balance sheet unwind and the quantitative tightening, things we don't have a lot of historic data points on the ecb still having a negative 40 basis point rate across the board, overnight lending rate, excuse and the negative interest rate has not went away the last time we calculated it, it's $8 trillion still sitting in bonds with a negative yield on them. to lose money by investing securities unless the yields go down even further, and so to
12:34 pm
have this environment that we need some form of -- this tightening i should say where we don't really need stimulus in the eurozone for instance, when you look at gdp across the eurozone, it's very comparable to usgdp and look at german bunds, sub 40 basis point on the ten-year whereas we have a 2.29 ten-year so what you find is there is a disconnect in policies, but we are moving in the direction of this global coordinated tightening carney was talking about leaning towards tightening next month. >> i think it's hard i think that's hard because you've got an austrian election that's too reminiscent of people that of another election that occurred a long time ago, but it's like yesterday for them, so, i mean, on the one hand, i think europe is incredibly strong i think the europe euro is still a great buy. get an austrian election where the right wins and people suddenly say listen, i don't care what you think about the growth we have to put more money to work because we have an immigration problem. >> right. >> now that's not -- it's not in
12:35 pm
the textbooks that there'sin aim gracious problem but that's what they have. >> and negative yields aren't in the textbooks. >> but at the same time what happens is i've been saying that they have to raise rates in europe, got to raise rates in europe and they look at the election this weekend and say we really don't care about this stuff. what we care about is the social fabric and it could be going the wrong way and saw it happen in the 30s, and they don't think about negative rates they think about -- they think about the end. >> negative rates are bad for the consumer at some point you get the frustration of keeping money in the bank and they are losing their money. >> they think war is bad from the consumer that's where they are from they think totalitarianism is bad for consumer, that fascism is bad for the consumer, but this -- look, in an economic world you're right these people believe that fascism lurks in hungary, that fascism is lurking in poland, that there's the possibility of
12:36 pm
a totalitarian right wing shift, so we've got to just figure out ways to put more money in people's hands they are not thinking about weimar, but does qe put money in people's hand and i think the consumer doesn't feel that way. >> they are more worried about guns in people's hands than they are money in people's hands. >> that's fair. >> jeffrey, are you can't be too sort concerned about or too worried about where we are given the fact that you like discretionary, tech, industrials and health care. >> yeah. ultimately our strategy is systematic it does essentially look at the back earnings data and uses the cape ratio so we're looking at long term histories relative to the long-term averages, so it's not out there that we're making the full discretionary call, too, but from the same standpoint, i mean, with the level of valuation across some of these the market those are the cheapest sectors of the market, and so that's the key thing. i heard you that you canning
12:37 pm
about energy as well we had this momentum filter that kicks out the thing with the worse breath in it and energy has been out of there. does seem like energy should be catching up as we've had a stability in the oil price from around the $50 level, too. remember, it's a systematic non-discretionary type of strategy. >> thanks for being here. >> jeffrey sherman, doubleline capital cio. appreciate him being here today. >> big call on financial citi cutting the price target to $65 a share, 10% lower and where the stock is now it's our call of the day steph, you added to your position today this keeps like a very peculiar call to me it's so against the grain, the crowd, this desk explain. >> yeah, and i do worry that this is kind of a crowded long for sure the stock is up 2 1%, absolutely the best name in the space to
12:38 pm
date but i don't think the story changed after the quarter. nim was disappointing, and at the same time jpmorgan, their nim was much better than expect the but the expense story and the capital return story, which is why i like the position, that has not changed at all in fact, in the quarter they did better on expenses you got operating leverage, so you just have some other puts and takes, and i think that's why the stock trade at a discount they can't continue to execute flawlessly like jpmorgan can and that's why jpmorgan gets the premium, right so this one they have their work cut out but i don't think the story has changed so i've beenic pentagoning at it. >> i'm with you. the capital return story. >> yeah. >> if you look at the piece, the downgrade, he's using a $645 target price now you know $68 tangible book, mike will sit there and buy every single share he's not going to let this thing go down because it's too good for earnings to buy back stock. >> we wanted to speak with the a
12:39 pm
lift on the air today, and we weren't able to do that. this analyst has been on the wrong side, offside on this one for a while. >> yeah. >> the stock is up 52% since this analyst downgraded the stock to a sell in september of 2016. >> so don't we always -- >> and moved it back up to a hold. >> right. >> and then cuts it to sell again. >> to sell again. >> and did get a little bit of a run, but a run on a hold for at stock. i'm not so sure i even give him credit for that. the reality is every one of us know sittinging on the desk there are analysts you listen to on each and individual names mike mayo is my guy on citi and mike mayo and i have talked about this being a $100 stock in the not too distant future jim has even ached around the 19 number though. >> yes, yes. >> but i think it's not that far away from being a $100 stock look at the revenue growth what they are doing in consumer banking. we all knew that trading was going to be bad, bond trading, that was an absolute
12:40 pm
stock his $76 for a reap yes, it's pulled back a little bit because of the run it made steph is doing the right thing i've not add it had yet but i've been considering it because after being at 76, here in the 71s i think that's an opportunity. >> they have done all the right things, and i think this is about trading. i think pete hits t.fixed income trading is very important to citi, and it was a disappointing quarter, but tell me something i don't already know we knew -- >> i think nim was disappointing given -- given where interest rates and what they have done. >> it goes to 68, that's a buy -- he's talking 6:45 it's a buy it all day at 65. wnc, everyone, again, knows that's the best one now. it's now the best one, right, and this multiple is half of pnc's multiple it's crazy. >> you have to bring in the credit card concerns, too. like, again, like on the margin there were things to pick at, and when stock is up 21% year-to-date and it's fairly crowded you can see why it pulls back but i don't think the story
12:41 pm
has changed. >> pnc is getting all the credit for having a strong mortgage business and i think the mortgage business is accelerating are you telling me that citi's mortgage business is not going to benefit as well. >> we're just forgetting that? >> and i think suntrust will actually do quite well on the market. >> regionals >> yeah. >> regionals will do better. >> on the mortgage side. >> one thing that is certain is that the group has a bit of a tough lon going for it than it used to have jpmorgan, when the number comes out, pretty good i went over the wells fargo thing again this weekend they are literally just starting to look at and coming out of view -- >> come on. >> bear with me. you're looking at a home equity loan hand mortgage loans and how much people pay and they are starting to look lock in, and i'm saying this is such a negative story is, and this is all that goes down >> right. >> holy cow. >> that tells you a lot. >> that's the story, and the stock has gone from 50 to 55 and only down this much, into the mid-53 range that. tells you alo about what's going
12:42 pm
on. >> not like people pulled a lot of money out people just said okay, i got cross-sold. >> let's not get out of conversation without pointing out jorg answer, 97, well on its way. >> that's right, triple digits. >> hand how about bank of america today. >> bank of america, best quarter. >> i would have -- >> stock and calls, keep on loading them. >> i just want to be sure. >> from the call of the day, to the worst call of the day. this may be the worst call of all time i have no idea jim, what do you think happens in the patriots/jets game they played great. >> two things that it could have been down with the one or could have been a touchdown how did it become a fumble and then the ball -- i mean, this is was biggest steal -- this game, it should be redone. we should get a replay. >> they did give up a 14-point lead, come on. >> i'm a jets fan.
12:43 pm
i was there. >> that's why ratings are down. >> one more reason on top of many others. >> i wish i knew what mike thought. >> hand not to mention more potential pr problems. former 49ers problem colin kaepernick filing a grievance against the nfl alleging the teams colluded in not signing him following his decision to kneel during the national anthem in 2016. we're joined by mike francesa on the phone. mike, you there? >> i am. >> i do want to talk about the business fallout to the league because of the kaepernick thing but i gather your radio showers, i hope you have extra time devoted to what we're calling the worst call of the day in the jets/patriots game. >> it was a very up popular one. i can't tell if it was a good call because if the ball is not in possession when it hit the pilon it is a touchback. they called it a touchdown and to review it when we can't see
12:44 pm
that it's possession the problem with getting into instant replay the slow mo cameras are changing so many calls, you're seeing it in baseball. seeing it it they are saying they see the ball move. we can't see the ball move so it's going to be a hard thing to legislate from that standpoint and instant replay, they will have to come to more definable terms because the level of slow m ho they can use. they see things we don't even see on television. >> like i said, i know that's going to take day lost your time today, but i guess more serious issues the nfl was hoping to sort of move on from this -- this whole anthem deal, and now they have a grievance by kaepernick to deal with how do you think this plays out, and how difficult do you think it's going to be for kaepernick and his folks to prove this? >> i think that's going to be very difficult to prove, but i think the timing is no coincidence. number up, the nfl is meeting this week, and the owners have moved to a position now that
12:45 pm
they feel the anthem protests are killing their business, so they want to make a change, and they are going to try to get the players that can see that the get off the anthem tell us what you want tell us how we can help in moving the conversation forward, but get away from the anthem because it's killing our business, and it's killing their ratings. it's killing them in the stadiums the backlash has been so enormous that the owners are going to meet and the first order of business is to get away from this national an hem protest at any price, so what the price will be, i don't know. now here comes kaepernick knowing that that is going to happen this week he's back in the news now, and there's also a lot of ramifications here he files a grievance inside the collective bargaining agreement. if he ever wins, he can strike down the entire collective bargaining agreement by that judgment, so the ramifications of this could be enormous. they don't want to even deal with that. he hires mark geragos to
12:46 pm
represent him. it's going to be very hard to win. he waited for a team where it was a team that played with a style that he was very much part of so he could fill in for mariota because they are the same style of quarterback. he went and signed a bad guy, a real bad player in weeden which helps his case it's about the best scenario that he can have, but i still think it's almost impossible to prove that he was in any way -- that there was in any collusion, so from that point i don't think he'll win but i think he could get a settlement the other part of this is he'll never play in the league again because now that he went after of the league this way, i can't see an owner giving him a job under any circumstances. they might pay him to go away, but he's not going to get another job. >> jim cramer is here with us. he has something for you. >> a great honor that you called on the show. >> jim, i know you want to talk about the eagles but don't bore me with the eagles
12:47 pm
>> i'm not going to do that. i wanted to get your feel about why constellation brands, pepsico, domino's, on last week, they still feel that the best bang for their advertising buck is the nfl will that ever change? >> no, it won't. remember this. the nfl is still hundreds of percentage points ahead of every other league and every other property the nfl is the number one television property in the world by such a wide margin because it is, first of all, it's live action, and it's unscripted live action, and that is the number one form of content over any other kind of content, so it's the rarest form of content, so sports as a content is never going to be cheap. it's always going to be expensive, and it's always going to be exclusive, but the nfl is so used to being so far ahead of everybody and basically just deciding to hit numbers that are so outrageous that when they see any fallback in their business and they are finally seeing a
12:48 pm
fallback in their ratings, and they are getting complaints by the thousands at every stadium and letters from their fan base, they know they have to move on this as it has become a very unpopular stance, and there's no win on either side they have to convince the players that they are not winning with their stance. the owners know they are not winning with their stance. they want this protest to go away, but don't ever forget the fact that the nfl is still light years ahead of everybody else in terms of how important they are as a property. they are still worth a fortune. >> yeah. indeed mike, thanks for calling in. we appreciate it >> my pleasure. >> we'll see you soon sitting here with us look forward to that. >> i'm looking forward to it thanks very much. >> mike francesa, wfan calling in let's move nelson peltz's battle for a board seat at p & g is still too close to call. it's now in what's known as the snake pit stage where each contested proxy vote is being investigated the fight itself bring on what
12:49 pm
yale school of management's jeffrey sonnenfeld calls a sea change in activism he's live with us in new haven jeffrey, welcome back. >> thanks for having me. >> what's a sea ching in this peltz/procter & gamble fight >> i think what we're seeing it's inspiring such a number of boards such as at adp, athena health, to have sock backbone and to stand up against the assault of activists when it's not justified. there are times where, of course, they make an awful lot of sense, but what's happened now is we've seen a huge jump in the number ofthese activist campaigns, and -- and it's hard to see what's justified in the oh, so troubling years, you know, the mid-2010s that suddenly we're seeing this jump. we've seen a 40% increase in activist campaigns, and roughly 50% of them get settled before we actually have the proxy vote.
12:50 pm
when the boards battle it out to the proxy vote, scott, the management tends to prevail. last year 2016, of the 37 campaigns that went to a vote, management won 27 of them, but they tend to exit capitulate too soon i thought dupont was a big mistake. two bad quarters and the place is dismembered and i know today's issue is about proctor and gamble where they did need to make this some changes and i think there are some majors changes afoot there 37. >> you say you on hope this will be a harbinger of mores losses and of mr. pelts oig, he's not going away because he has the patience of hum belt still skin. he is given to tantrums over losing and he won't be happy about this these are strong words, jeff he has i recall didn't have a
12:51 pm
tantrum as you would describe it about dupont he didn't have a tantrum about pepsi. in fact has pretty good relationship given all that happened there so this sounds especially personal >> well, when he's challenged, he got quite personal challenged on rational grounds looking at the performance. and asking issues about their own performance. they have dramatically underperformed the s&p you take a look at research that fortune did for the prior eight years is that only in two years did they beat the -- did these activist funds beat the s&p. in fact the target firms generally outperform the performance of these activists themselves but we usually put all of our attention on the activists -- on the target firms and not on you
12:52 pm
how the activists are performing >> i'm glad we went there. and pardon me for for entinterrg but first of all the average holding time since you take on this whole notion of short termism, and this is according to 13 d monitor, not according to nelson peltz or anybody involved 44 months is the average holding time for the funds returns from the actual time that they -- their costs since buying the stock at their cost, their average return 61% you could go down the list whether it's cisco, pent air, i think ger sole and, their -- >> well, since you -- if you want -- >> 85, 82, 74, 28, 132 >> if you want to go down that list, andrew ross sorkin had a
12:53 pm
piece in the "times" taking a look at two years of performance. through this whole period of time, they were underperforming by the end of that two year period of their own holdings and you remember at the time we looked alwat dupont, nobody was taking a look at the continues of their underperformance. people make a big deal about heinz when they never got the margins that they said they would get. and kemchura, throw they loadedp with so much debt, they dove it drove it into bankruptcy if this was any other director, they voonts hahaven't supportedn of a track record. i'm on the board of the national council on aging i saw bob dylan in concert and i
12:54 pm
saw paul mccarts any ccartney it i don't know what their age limits are,but why should it b lifted uniquely for this man why should he be able to go above the new york stock exchange limits on numbers of boards in which you can sit? and in fact if he wants a seat, why didn't he buy enough stake if he wants to be one of is 1 1 people, then he has to have -- >> but these are huge companies. why -- >> he has 1% how does 1% give you -- >> why should the amount of stock one owns has anything do with whether they have a good idea or not? >> if you have a goodidea, publish it, we can hear him. you don't have to sit on the board like a dripping faucet for the idea to be heard i think his idea has been broadcast pretty loudly. he can continue to put them out there. there is no secret to his ideas. is there some reason he can only whisper to a fellow director
12:55 pm
let him continue to say it in the media. but you don't have to have a disproportionate representation if you have only 1% or 1.5% ownership, how do you pretends it's 9%? and he's not the only activist who does that. sometimes they have 2 3% or 3%. >> he wanted a seat. what is so bad about putting nelson -- he's not asking for 50 people on the board. what is so bad about having one man with the name of nelson peltz on the board >> earn is through the vote which he apparently is not getting. or at least buy enough shares. he didn't have the representation to claim that some somehow he is justified more and what does that one seat do what it does, you have a dripping faucet. the management, time, attention, distraction of someone who is on there keeps hammering away, it can become quite dysfunctional look at his past performance tell me where is that argument
12:56 pm
any one is reason enough for i would think an investor to ask a question where is the good idea coming from here? i don't know i don't see it i think it's a shame what happened to so many of these >> we have to go >> okay. >> my apologies, but we have to go >> appreciate it >> just a little that nasty. made a lot of money on wendy's, heinz. there was a weighting that well exceeded all the other weightings to try to make it look bad which was not accurate i think. but geez, i've known jeff since he was five. we were five and at a certain point you have to say hey, i got to be nicer. and this is from me. i'm saying he has to be nicer. >> why is the conversation about nelson peltz's track record?
12:57 pm
>> yeah, unilever would have told it was -- >> i have the numbers from 13 d that i got today in anticipation of doing this segment. and as i said, the return in cisco corporation which is not an exit is 31% i thi in-ger sole and is 65% family dollar, lake mason, dr. pepper, wendy's, twice, tiffany, heinz. not saying these are barn burners. tiffany's down heinz is flat. but i gave you eight other ones. >> i think that long term that income hasn't been great at proctor. they could have picked any of those three men that i
12:58 pm
mentioned. instead they picked mcdonald he leaves, they should could have -- i don't know to me -- >> it adds confidence when you know that nelson peltz has stepped in there >> i wish he had gotten on the board of ge. if garden had been on the board -- they needed to accelerate whaefrt heck they were doing at ge >> is this a sea change, do you agree? >> no, not at all. i think ackman is asking for too much, but this is one of the largest countries in the world how is it sea change >> 44 months average holding time >> there were a lot of things about nelson that i didn't think were accurate as they could have been do you disagree? >> i just don't know -- >> we both like proctor. >> and i think dave taylor has done a really good job at restructuring the company. i just don't know how much more
12:59 pm
juice there is in this particular stock in terms of lowering the costs, streamlining it even more i think that they need to work on distribution. i think they need to fix china ic they nei think they need a lf other places to fix and that's not exactly what peltz was talking about. >> the idea of getting the smauld brasmal brands and building them up -- i don't know i just think that the judgier stuff about how the -- i think there is mischaracterizations of nelson that you correctly nailed that is not a short holding period, 44 months. >> no. >> and those are very good stocks >> 44 months is the average holding time for all of his 13 depositions. some people have different definitions of --
1:00 pm
>> the definition of long term has shrunk down from what it was. >> we have 15 seconds. >> to what, to leave >> paydirt >> raytheon, it's going higher >> jpmorgan is still cheaper than bank of america >> emerson >> great stuff thanks for being here. "power lunch" starts now welcome to "power lunch. here is what is on the menu. president trump lunching right now with the veep and the senate majority leader mitch mcconnell with whom he has had some collisions let us put it mildly. the president sounding off today on soaring drug prices, the iran deal and more. a live report from d.c. is minutes away major averages breaking records again. 23,000 in the crosshairs for the dow, this on a day when apple gets another big bullish call. where to put your money to work in this seemingl


info Stream Only

Uploaded by TV Archive on