tv Fast Money Halftime Report CNBC October 18, 2017 12:00pm-1:00pm EDT
they do tend to trade together it's not just jamie dimon and larry fink with comments about it bernanke and other bankers have had thoughts about when regulation hits, countries try to protect their own currencies. >> absolutely. no one has called it for a fraud except for jamie dimon and that's considered very bullish. >> dow up 134. let get to "the half" back at hq and welcome to "the halftime report." i'm scott wapner our top trade this hour, taxes or else. the big market warning from the treasury secretary on what could happen to stocks in the president's agenda comes up empty. with us for the hour today, steve weiss, dave leven,hal, michael farr, founder of farr, miller and washington. let's begin with the markets, the dow surging thanks in mart to ibm's big beats but it's
comments from steve mnuchin about tax reform and stocks that investors are talking about. tax reform or look out below is that what we need to start thinking about >> well, i think, number one, we don't want to pass a tax bill just to support the market markets are up 80% of the time, number two number two, it's an irresponsible comment by mnuchin and number three, the u.s. market is lagging other markets around the world, so there's no -- or very, very little expectation that a tax plan will occur and that it will occur that's going to impact this market. >> here's steve mnuchin with these comments >> there is no question that the rally in the stock market has based into it reasonably high expectations of us getting tax cuts and tax reform done it also has based into it amount mitchell on regulatory relief
which they have begun to see, and there's expectations, so i think to the extent we get the tax deal done, the stock market will go up higher, but there's no question in my mind if we don't get it done you're going to see a reversal of a significant amount of these gains. >> you guys agree or disagree? >> can i sum it up in two words to conclude, that's fake news. >> he's choosing his words carefully. look, will it go down? probably will go down 3%. >> there's no question in my mind if you don't get it done you'll see a reversal of these gains, significant amount. >> not significant take that word out, that's where he's wrong go back to the middle of the summer, right, when people thought -- after health care, there's no way that tax reform is getting down. that was 75 points ago roughly on the s&p 500, 3%, or use the math, all right. most people think that corporate tax cut will earn about $10 per share for the s&p 500 next year. put a 17.5% multiple, 175 points, i mean, that's your bid ask right there is 175 points.
that's like 6%, 7% of the s&p 500, and we've already gotten 3% of that. what i'm saying is there's not a lot of volatility that's going to be driven by this tax cut one way or the other. >> do you buy that >> well, i agree. >> this is the biggest question for investors. >> well, of course. >> people who have money and decisions to make. >> yes, but -- >> how much of tax reform is in the market, in any, at this point, and what happens if they can't get it done? >> here's one point that's very important. all of us are aware if we look at s&p earnings estimates for this year and next year, no one has in those models a tax cut. the numbers are whatever the tax rate was for '16 is pretty much what it is for '17 and the same for '18 and that's true for macro models and that's true for company models it's true for the models that we do on firms that we own at our -- at our shop, and i'm sure it's true for everybody here, so, therefore, the sentiment may believe that there's a good chance there's going to be a tax cut, but those numbers are not
definitely or specifically in the market. >> i guess the expectations are in, aren't they? that's what the treasury secretary says the market has baked into it reasonably highexpectations. >> three percentage points. >> i disagree with the treasury secretary. i don't think it's baked in. i think it's optimistically hoped for by many of us, and i think that tax cuts in france, which macron has already said is a possibility in 2018, likewise in germany, two biggest economies in europe, i think that along with ours would be reason for optimism, judge, but i don't think it's baked in, so i disagree with secretary mnuchin. >> everybody disagrees with the secretary? >> he's talking with his book. >> you've got to disagree with the secretary because there's two things here. you're assuming that the market as a pricing mechanism can price in this expectation but not every other bit of information that's coming out of washington. what's coming out of washington and has been is that they haven't been able to get anything done. i mean, for all the policies that they have been trying to get done whether it's health
care or wherever, they are not getting their agenda done. the market is pricing that in, too, so the market knows that, you know, when you get to, what, april, they can't get policy done in an election year coming into a mid-term election, so they have got a real fire drill on their hands second point, i think what the treasury secretary is doing is saying, look, we've been trying the carrot and promising you the promised land. if that doesn't work we're going to try to scare you with the stick. >> the dow is at 23,000. you guys are telling me the only reason the market has gone up because the economy is pretty good and earnings are pretty good. >> profits are really good. >> this is the first time in our collective lifetimes, not just individual, that we've seen a global economy moving in the same direction plus you've had reforms in europe that make it more profitable, so that's what is driving the markets. i think if anything that there's been a governor on the mark because the concerns here that have kept perhaps, you know, rates where they are, which, by the way, makes equities more
attractive. >> i know. how far can that take you? >> i got you, i got you. >> it will take you, but you can't have it both ways. you can't say the market is going down if we don't pass it and the market is going up if we do pass it and say something is baked in there's no doubt in my mind that if it ever came out and the way trump keeps going, very persistent with health care. if he ever came said, fine, tax cuts are off the table, no doubt the markets would drop because the markets look for reasons to bought. >> those dips get supported. you look at the last six months, and the we were talking about this earlier, it's been basically 18 months since you've seen a 5% drop that's ridiculous, hand what it really indicates is that any little dip cash comes to work. this late in the year, you're definitely going to see cash come to work as people try to play catchup. >> how about this from kyle best, if you see the equity market crack four or five points buckle up, because i think we'll see a pretty interesting air pocket and i don't think investors are ready for that. >> not for the next two months
who is going to want to take losses this time of year if you're a taxable investor, you won't want to. >> you're telling me if the cracks cracks 4% to 5% the retail investor is all of a sudden going to say this is the great paying opportunity, jim, that i've been waiting >> i misspoke slightly what i'm saying is i don't think you're going to get a 4% to 5% drop between now and the end of the year. >> and the retail investor is not a big factor in the market face it. it's institution and large program traders. a lot of powers in the market and they are not the retail investor remember one thing -- >> i disagree with that. retail investors are very big, not in single stocks but they are huge in the indexes and etfs. >> and indexes are 20% of the market. >> 80% of the market is not an index funds also. >> you've seen the flows go out of retail accounts in single stocks out of brokers. >> i understand that, but the market, if you look -- if you look at all of the ownership in the market, still mostly individual stocks. it isn't -- it isn't index funds. >> we saw prices rally based on the trump agenda, i mean,
starting last november when trump was elected, markets started taking off, and i think that prices did indeed get ahead of valuations and based on those expectations, but the fundamentals have been proved over the past 12 months. >> agreed. >> and we've seen earnings gains in the double digits matching the market, pretty much at same price-to-earnings multiple that we were a here ago so we haven't seen a multiple expansion or seen things get that much more expansion and the trend for the fundamentals is improving so i'm nervous with prices this high, but, no, there doesn't seem to be anything with interest rates this low. >> you're a professional money manager, aren't you? always nervous. >> we have to be nervous. >> that's a great point. there's been no multiple. >> the dow gets to these lostier levels 23,1. >> so you selleck pensive stocks and sell the most expensive stocks. >> scott, when you look at, you know, the latest leadership groups, the financials that have really given us the list in the
last several weeks, some of them sold off because they made the run prior to the earnings and even though they had great earnings sold off a little bit hand now they are recovering the real chance is that our rules here with dodd/frank are much tougher than the basel and all the rest that attacks the european bakes and all that, so if we have that lessening of onus on these banks, on these financial institutions, i think that that is the leg that carries us higher still right now. >> all right our editor dat, at-large john harwood doing new reporting today on whether the votes will exist whether tax reform goes before the house and the senate. he's live in washington. john, the president moments ago said i'm sure we'll have unanimous support. now i know he said that somewhat in gest. this is going to be more difficult than maybe people expect. >> reporter: going to be extremely difficult and there are problems in both chambers, scott. first of all, let me say about steve mnuchin's comments today what i know about the market, i learned from you guys, but what i've heard you guys say on your
show over the last few months is that expectations of no action are kind of built into the market, that it's not about tax reform i've heard wall street people say especially after the failure of health care, we're not assuming they can do anything. now, having said that, let's take a look at what the problems r.first of all, in the house, which is is the most trump supportive chamber, you've got a controversy over whether or not you're going to get rid of the state and local tax deduction. that is big in new york, illinois, new jersey, california, all blue states, right? well, there are 35 republican members in just those four states that's more than enough to take down this bill, and that's why you're hearing people talking about walking back a commitment for paying for the bill by eliminating that state and local tax deduction. on the flip side, if you walk back that deduction, then you have bigger deficits and you've got bob corker in the senate who
has said if this adds one penny to the deficit, i'm not going to be for it. the same time you've got rand paul in the senate, remember, 52 republican senators, they can only lose two and pass it under these expedited rules, rand paul says there's not enough of a middle class tax cut in this bill we're cutting taxes for the wealthy, so if you get a bigger middle class tax cut, bigger deficits, and finally the other thing that steve mnuchin said in that interview with ben white of politico is he had previously said on our air that we're not going to have any tax cut for the wealthy. now he says, well, mathematically because the wealthy pay so much in taxes, you can't avoid giving them a tax break. that is a political problem. if you look at the recent nbc/"wall street journal" poll, they say they think taxes on the wealthy should go up rather than down so they have a lot to overcome and that's why we don't know when this is going to come up and whether it will pass when it does. >> i've got michael farr with us, john, who wants to get in on
conversation. >> john, i'm hearing from folks in washington that timing of this is really critical because once they get into that election cycle starting in the spring, it's all bets are off. i mean, they will just shut down and they can't get anything done, so do they have to get this done by march and what's the likelihood, what have they got, 35 more working days for congress for the balance of this year i mean, how does the timing of this work, and is it that important in. >> reporter: there's not much time at all, especially if the congress takes up this issue of obamacare marketplaces again you had that alexander/murray deal yesterday, the president blessed and he's made ambiguous comments since then but you nailed it, michael, with the march comment. what i'm hearing from republicans who think this can happen is it's got to be done in the first quarter of 2018. i'm not hearing optimism about the end of this year, but january, february, march, that's sort of the hot zone for getting this done, and it's going to be a challenge to do it even then. >> secretary saying absolute guarantee the president would
sign a bill by the end of the year and by the end of the interview he was walking that back as well. >> said it would be in august. these are very flexible dates. >> we don't know the details of this bill. so many things, mortgage deductions and state and local tax. >> general was saying, game on officially johnharwood in d.c. >> you bet. >> a lot to make of what john was talking about, doc. >> and i think he's spot on as far as the difficulty it's going to be to hold that 52-person majority, the two-person majority, the 52 out of the 100 senators. >> right. >> i still say that there's a possibility, depending how it's framed, that you could have a crossover from the democratic party because depending on what it is, now they are not likely to cross over with that non-deductibility that steven spoke of as far as state taxes, but when they start bartering
with that -- >> going to be a big food fight over that for sure. >> i think that's where they do horse trading. >> shares of ibm today, on pace for the best day since january of 2009. that's right 2009 on the heels of a strong earnings report. let's trade this one the notes are coming in from all over the place on this stock tony sakanagi, number one hardware analyst on the streets, results better than expected but don't confuse a cyclical pop. >> the additional numbers they were able to get out of watson that was laying there dead and has now come back to life, that's huge for ibm. i think it was a significant contributor to this move, and obviously it caught a lot of us. i'm not in t.caught a lot of us flat-footed. >> the only problem with that though, and i saw that, too, the cognitive systems which include
watson is somewhere around 22% of the overall revenue don't mistake me i both want and think that ibm will recover, but this is a turnaround that is taking years. >> yeah. >> so overall sales are down .4 of 5% which is the lowest drop i've seen and they are slowly turning it around, but you've got to remember, first off, this is just one quarter, you want to see a couple of quarters there were shares sold short so this could be short covering, too. >> hang on one second. do we have the cramer sound from this orning, guy we don't he said the ibm story is back. should it be bought up 10, shouldn't have been as low not a discussion about buffet anymore. warren buffett was in this name. it's a discussion about reignition of the earnings, right? >> well, i don't necessarily agree with that. i think they had a decent quarter, not a great one revenues are still going down, and they are relying on mainframe computers. i mean, they went out in the '60s i thought so i don't see where the catalyst really is the ai business, it's growing.
it's not growing really as fast as expected. the cloud business was not as good as the bulls on ibm had thought it would be, and if you're going to sell facebook, google, apple for ibm, i think you really have to wait a very long time. >> michael, this is not a how great is ibm conversation. this is is the worst over for ibm conversation. >> this is really the sort of it wasn't awful, and everybody is excited because that's the best news we've got they didn't die a painful death and they are still alive gross and operating margins were lower, the top line. i mean, it -- it's not great, and i think the other thing that i look at is their balance sheet. 63%, you know, debt to cap i mean, this is a highly leveraged balance sheet. they don't have a lot will have flexibility. until we see a little more evidence, i would say this is probably a decent income stock, but it's not a growth story yet. >> michael, that's a very important poip the debt is why this stock trades at a low multiple and will continue to do so
i don't think the stock is going lower. >> missed every quarter for the last three years that's why the stock is where it is. >> you're talking about the price. i'm talking about the multiple. >> blue chips have flexibility on that balance sheet to make acquisitions or to pursue sort of higher revenue-producing lines of business. these are guys are tight because they have been doing buybacks. >> do the buybacks. >> you sold this thing maybe too early. >> i don't feel it you take a look at the two-year term two years ago that i sold it, scott. i don't feel like i was too early. >> also depends on where you put the money that you raise. >> i keep an eye on it this is a stock that's going to turn around. >> do you have the question for josh completely. >> all right that's the best line of the day. >> all right >> it needs to be a little smaller than it is today before i get back into it, but this is definitely -- >> they were so negative on this up they beat on sales by half a billion dollars.
that's significant, so, in other words, as bad as it had had been, people thoumt it was still going to be even worse and they surprised. >> by the way, ibm's ceo martin schroeter will be on will gym tonight on "mad money. what about the other dow lag yards, ibm left for dead, the stock gets a nice bump of 10% today. year to date, and we've talked ge and beyond, that stock is down 26% verizon is down almost 10% and exxon and disney. >> they are all different stories, and i don't think they will be contagion because of just one quarter and a large move on ibm adding a lot of market cap i look at every one differently. this is still a momentum market, like it or not, and the momentum stocks will keep performing where the fundamentals are actually supporting the momentum and that in time will pick the bottom people would pick the turn and miss the upside than catch a falling knife. >> what stock out of the group i just mentioned to you has the
greatest upside potential of ge, verizon, exxon on disney >> disney. >> i agree >> why so? >> i think in particular right now the numbers eroding as they have for the nfl and for espn, you know, their crown jewel over at disney, i think that they may be troughing in other words, it might be as bad as it gets i don't know that they get a lot worse as far as that goes, and that's one of the reasons for optimism versus those other five, judge, because there were five stocks on your list i like disney the best of the five. >> michael. >> i think these are all good blue chip companies, in different industries almost a good diversified portfolio at the right price, but we've been in a market where the risk trade is what's been paying these are old blue chip stodgy stocks so if you're going to invest in one of them, have you to look at the balance sheet and look at like ibm they have a lot of leverage and are not that flexible and make sure these people are very
flexible and i think you're seeing, almost, cramer has been talking about the death cross and the cyclical stocks because people have been moving money into the tech stocks and into, you know, the stocks that have been moving more hand higher risk so i don't think you buy them just because they are conservative, and if you do buy them, better look at the balance sheets. >> i think exxon might be the one i pick. >> i agree. >> it doesn't need much except oil prices to go up a little bit higher. >> why wouldn't you just buy oil? >> he gave us a list, and scott asked which one i would pick. >> she followed directions >> i'll try my best to follow them, too. i like home depot. just kidding >> not on the list. >> here's what else is coming up on "the halftime report. ". >> a battleground restaurant stock gets hit with a key downgrade. the stock is feeling the pressure today that's next. also ahead, the one sector that fares poorly when the dow hits record territory. see what kensho sees when "the
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that fares the worst when the dow soars is energy. when bought the day of a new high and sold a month later, the dow is up almost 1%. energy down 2.6% for more, go to cnbc.com/kensho. >> all right we're back on "the halftime report." chipotle shares cutting, bank of america cutting the stock to underperform coming for more than 10% downside. the call of the day. a call that you like, weiss? >> i like the call i'm not sure why i'm not short this still was short and did make some money fortunately and then i covered and i meant to short it again, and i'm still going to. look, the valuation on this stock is really egregious. when you think about for a company -- >> still >> absolutely. >> yeah. >> continues to disappoint he's taking a hatchet to his 2019 eps from 13.50 to 11.50. >> gill worried about the guidance >> still a $300 plus stock
why should it sell at that multiple particularly with an industry that's not doing very well that's overstored. >> to your point analyst expectations for 2018 are a 40% increase in earns per share. where on earth is that going to come from? this is not a company that you go to and you see this as growth for people going into the stores quite to the contrary. i think you would be lucky if you got 10% growth and a 30 times multiple on next year's earnings doesn't correlate to 10% growth which is kind of a reach anyway. >> and the queso doesn't deserve a premium yet. >> and it hasn't worked. >> yeah. don't have our food expert on the panel today. >> josh. >> josh is trying the queso. we'll get a report. >> the price target cut 25%, that is huge they also cite what had we started off the show with with john harwood and so forth and that was if tax reform does not get done if it does get done the analysts address that had and said this stock could pop significantly because it's one of the most
exposed to the upside of a tax reduction. >> one of the most positively impacted restaurant companies, says the analyst. >> because they are here they are in this country they don't have cross border pricing and all the rest of it all of the revenue virtually is here i think that the stock at around that, you know, roughly the 300 number gets interesting to me again. >> i think one of the big problems with the restaurant industry right now is that malls are becoming just food courts, and so the amount of competition has increased for them while they had a dominant position for a while, for a few years in the sort of latin food sector, they are now many competitors, and they are competitors just attacking them from all fronts, and there are more and more restaurants. i mean, the numbers have gone up because that's what's going on with mall space. >> and the college kids that were flocking in there because it was a healthier alternative
to taco bell and all that and when it became not healthy they lost their patrons and that reputational thing is very hard to turn around and the other thing that will happen with this stock when it's not happening is the emotional momentum will really start going after it where you're considered a moron if you step in front of the train on the downside. >> another tough call today. jon and pete with two stocks which way the options traders think it heads one stock up 10% here's where the dow and 30 components stand on another record-breaking day. ibm leading the way followed by goldman sachs. "halftime report" is back in two minutes. zar: one of our investors was in his late 50s right in the heart of the financial crisis,
and saw his portfolio drop by double digits. it really scared him out of the markets. his advisor ran the numbers and showed that he wouldn't be able to retire until he was 68. the client realized, "i need to get back into the markets- i need to get back on track with my plan." the financial advisor was able to work with this client. he's now on track to retire when he's 65. having someone coach you through it is really the value of a financial advisor. throughout my career, i've been fortunate enough to travel to many interesting places. i've always wanted to create those experiences for others. with my advisor's help along the way, it's finally my turn to be the host. when you have the right financial advisor, life can be brilliant. ameriprise
all right. we're back jon najarian at the telestrator with a pair of unusual options trades for us today. peter is with us as well from minneapolis. >> pete is opening up. >> yeah. >> well, thank you, doc. there you go. >> did that well, doc. >> oh, thank you pete, take it away >> scott, you know what's really interesting is we just talked about what's leading the dow right now and it's ibm the well, the interesting part about that is a lot of people are wondering is this a one-day pop and the option markets are saying no. as a matter of fact, katie huberity from apple has been powerful and strong talking about a 112 price target and the transformational part of ibm towards the cloud in that, that's also going to get the margins a little bit better for ibm as well. in either case, the november 160 call, 13,000 of those were bought today earlier in the day they paid
from 1.25 all the way up to 2.40 for the calls. very aggressive buying there, scott, so it says something about where ibm has come from and where it might be going to this is a stock i open i'm not in the calls right now i'm considering it, but i've already owned the stock so i'm willing to wait, but this does give me confirmation that it's been worthwhile to hold on to it, even when warren buffett decided to take some off the table. >> so how long have you only it? >> i've owned the stock now for multiple months. i think i'm probably up a little bit, not a lot, but i still like what i've got. i sell calls against my stock position every single month so i'm trying to gain that way on top of the dividend yield. i like the stock, and i think the transformational part of it is what keeps me involved in it. do i think they blew me out, absolutely they did not. revenues declined again but maybe we're seeing and sniffing a little bit of what's been coming forward in the future if that margin business can expand for ibm. >> okay. so you are a believer in the
turnaround. >> yes. >> you don't think that this is a tease? >> no, i don't think it's a tease, and if i did, you know what, i do want to follow along with warren buffett. we talk about when a great investor he is he's made very few mistakes. this is one of the ones where he has made a mistake maybe he made a mistake again by selling off that portion of his stock earlier. let's remember, he didn't sell it all he sold off a portion of his stock in ibm and still conditions to own it as well another up for it as well. want another one. >> sure, go ahead. >> let's move over to the xlf, scott. >> you mean, we booked a satellite stock for one stock? >> so xlf is really interesting and here's why when you look at the month of october, we have seen nothing but call buying. the november 27 strike has been attacked two different occasions. 66,000 were bought on one occasion, and then 110,000 calls were bought on another yesterday there was a put spread bought in the xln as well. i think that was protective. something we talk about on this
network all the time protecting positions well, they are protecting positions right now in the xlf because they have had a move up and through this 26 level. today we see very aggressive buying, november 3rd, the 26.5 calls. over 15,000 of those were bought so, again, when you look at goldman sachs, bank of america, citi, i'll even throw in an unusual from a week or two ago, northern trust you look at these numbers. the financials continue to show us that facts and fundamentals are right and the right side of that is saying the xlf is going even higher, i already own the xlf and have multiple months and multiple strikes i believe in this to go a little bit further. i actually don't think that 30 is that far away, and it's probably not going to happen by the end of the year, but i think the xlf hits 30 probably the early part of this year, of next year. >> sounds good pete, thank you. >> cool, yeah. >> doc, pete took all your time. >> go ahead. what's your first one? >> take a look at the first up,
procter & gamble, judge. proctor obviously battleground stock. nelson peltz and so forth. look at the stock. it's down 50 cents today and instead of getting out, people are getting in what are they buying take a look at the calls aggressively bought over and over again today the 93.50 calls. that's what the stock, whatever, 92ish earlier today. big volume and 7,000 of those traded very quickly. they like it i'm in there as well i'll probably be in this one into the middle of next week second stock, because i'm going to give you a two-for just like pete >> go ahead. >> abbvie, look at the stock running $2.50 higher they came scrambling in here again today and look what they were buying. in abbvie they are calling big block purchases, blocks of calls, just out of the money from where the stock is now, and they are basically saying about 3,000 of those traded.
i bought those as well just a quick highlight, judge, granger yesterday. we said really unusual call activity they started buying when the stock what is 188. by the time we came on the air it was 196 granger, take a look at that today. 209. it's traded up to 212 i believe today. >> that's good. >> so somebody has a pretty good first lock at what might be a great run out of this stock yesterday. >> you got anymore is that it >> i'll have one more for you final trade. >> come on back. for real this time. >> all right. >> sue herera with the latest headlines. >> here's what's happening at this hour. president trump renewing his focus on insurance companies this morning during a meeting with members of the senate finance committee last hour, the president criticizing a bipartisan senate plan to stabilize health insurance premiums which would resume the federal payments to health insurers that trump halted >> lamar alexander's working on it very hard from our side, and
if something can happen that's fine, but i won't do anything to enrich the insurance companies because right now the insurance companies are being enrich they have been enriched by obamacare like nothing anybody has ever seen before i am not going to do anything to enrich the insurance companies >> three people were killed and two wounded in a maryland office park shooting. police say they are continuing to search for the suspect who opened fire at the business park in edgewood, maryland. he's considered armed and dangerous. the death toll from california's deadliest and most destructive wildfire is rising to 42 today. about 60 people remain unaccounted for in snoem, hand napa counties, and targetled searches for victims is very slow going that is the news update this hour now over to michelle with what's coming up on "power lunch. hi, michelle. >> starts in 23 minutes, saw top of the hour. treasury secretary steve mnuchin, you heard, said the
stock market would see a big drop if tax reform doesn't pass, and is he right? nba season under way the former commissioner david stern will be on, anthem protests and team valuations and much more, plus an exclusive interview with wells fargo ceo tim sloan. one year since he took over the bank is the worst over when it comes to their fake account scandal? scott, back to you. >> look forward to all of that the trade is on, abbott labs, cbs, allergen, anthem, all in the blitz and all just minutes away on "halftime.
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we're back with the blitz. abbott labs at an all-time high after beating its estimates in the quarter. jimmy? >> you know, it should be higher they both on revenue and beat on earnings and guided the full year earnings per share and the mid-point is 10% higher than before look, all of the large-cap pharma has had a pretty good one to two-year run but abbott is clearly pulling away from the pack the question i think is do you
see the third quarter gains that abbott is now showing. do you see that show up in pfizer, merck right-hand a everybody else owes earnings who will come up either way, abbott is going higher from here. >> electronic arts let's take a look at that one. i know you like act vision better, weiss, but they are moving away from a studio popular for a game called dead space. >> and they are extending the time frame for release of their "star wars" game which will be a serial game and that's what has it down. i don't think that's reason to sell the stock it's actually attractive it's actually cheaper than act vision and i happen to be in act vision because it's so hated out there. if you'll recall we've had a bunch of downgrades. >> cvs-hour after anthem announced it would launch its own pharmacy benefits manager with cvs there's the stock, michael, right. >> i think there's the amazon threat and here's a stock down so% on the year. it's trading at 11.times next year's estimate so it's a 35%
discount to the s&p. it's paying a 2.5% dividend. this is a well-run company and amazon is not going to take over the world. it's harder to buy a stock when it's down. i like this one. i own it, and i'll buy more. >> kari, alering enhas a patent bat. were you in this stuck. >> i was. >> you threw in the towel? >> that's a nice way to say it we owned allergan for quite a while. one is they seem to have lost their patent bat for rustasis, trying to sell their rights to a native tribe that they could buy back and botox franchise, 80% of the market, and they have slowly and steadily increased the price of botox to the point where i believe that physicians are going to begin to use other alternatives and there are
tuesday that have filed for the fta, recently approved which could really put pressure on the stock. >> anthem announcings plans to create a new pharmacy benefits unit, doc? >> and just as michael says, this is going to be kicking off in 2020 so you're kind of looking out rather far if you're -- no pun intend is, if you're counting those chickens before they have had, but i will point out that the stock is up 250% in the last five years. it's outperformed google over the same period so you've got to give it to anthem, at least they are growing this company in a great way. >> okay. the u.s. two-year yield hitting its highest level since '0 will. we'll go to the futures pit next to find out where it's going to continue to go first, the s&p sector check. financials are leading the way "halftime" is back right after this with advanced safety.
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all with support from a highly-educated workforce and vocational job training. across new york state, we're building the new new york. to grow your business with us in new york state, visit esd.ny.gov. welcome back to "the halftime report. i'm jackie deangelis will. the two-year treasury yield jumping to it highest level
since november of 2008 meanwhile, the spread between the two-year and the ten-year treasury yield falling to its lowest in over a year. jeff kilberg, is this a reaction to expectations for the rate hike >> certainly a component, but i think it signals more to the future growth than inflation and that was reiterated by the fed's kaplan the dow fred kaplan saying that's a worrying signal it's been a great prognosticator, the ten-year, and if you look at today, the five 30-year spread, the lowest level since 2007 so the flattening yield curve is a signal to you will a the traders here in chicago around and the world that we'll have some type of credit event on the horizon. >> scott, do you agree with that take are you yields tell us something bigger about the market story? >> jackie, i agree with you. i think that's almost exclusively about the fed. listen, what's the first thing that the fed did they cut the discount rate, fed short-term rates and what's the last thing they did? they cut long-term rates through qe
it ought to be last in, first out. they ought to be rolling out the balance sheet, and that is the longer-term bonds that they own first to raise those rates first. >> okay. >> but they are not, they are not. that's the problem. >> thanks, guys. mean time, make sure you tune into the live show at is being fm eastern tomorrow exclusively on futuresnow.cnbc.com back to you. >> jackie, thanks very much. several earnings due after the bell the desk will take on their opinions on ebay, united and alcoa. we'll do that when we come back. this is where i trade andrs. manage my portfolio. since i added futures, i have access to the oil markets and gold markets. okay. i'm plugged into equities- trade confirmed- and i have global access 24/7. meaning i can do what i need to do, then i can focus on what i want to do.
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we are back. big earnings this week bha what do you think about american express >> american express is a great story, different from visa and master card. they actually put up credit. they are more technology that being said, two years ago, american express hit the skids when they lost the costco account. they have gained all of that back their one good report, they are just a few points away from the $96 all-time high. >> i think american express is a great idea it has been a good stock i also think visa and master card have been great they are different types of companies. >> united continental. >> i own and bought it on the
dip and add it to my delta all these companies have preannounced the last few weeks. you have to bet that they are really going to be gain if they don't come out with at least in line i still believe the stocks are cheap than cheap. i like the stock quite a bit >> they have been buying this stock since that dip that steven talked about and when they dragged that doctor off the plane from chicago to louisville warren buffett didn't sell based on that we said, if he is not selling, you don't know what to sell you use this as a buying opportunity. they have been buying it since those low 50s all the way up here to 68 they have been buying low 70s last week. >> still a loser here for date >> not for me. i don't care about anybody else. >> figures >> i think p & g's earnings, there has been such noise from
nelson peltz and the proxy battle it is a core holding i have owned it for a long time. it is what you want to own when the market starts heading south. they are paying you 3% as a dividend to hang in there with a great blue chip company that does have flexibility on its balance sheet. >> and big up side calling >> look at a small cap named winnebago reports. if you look at what's gone on with gm, you are talking buying cars and rvs, they kind of go together their competitor, author, hthor earnings reports that were very good >> we will take a quick break and on the other side, we will do final trades. i was playing golf days ago...
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focused on what you love, not how your money will last through retirement. we make it easier to plan for retirement with day one target date funds from prudential. look forward to your 401k plan. we're back senators speaking in washington following their meeting with the president. these senators from the senate finance committee. eamon javers has been following this >> reporter: that's right. senator toomey speaking and we have heard from senator comey and thune. they are looking for a path forward with democrats on tax
reform we will wait and see what else they have to say we are not seeing any democrats coming out to talk to reporters in the wake of that meeting. there were about six democrats in the room for the meeting. it was a bipartisan meeting but not all of the democrats from this particular committee were invited today. we are waiting to see whether they did, in fact, break any new ground on where we are going from here. >> we will follow that. let's go around the horn and do some final trades steve weiss. >> we have been talking that they did $1 billion, micron. i bought it on the dip and today and a couple of days ago as well >> we talked about abbott. it is hard not to think of their spinoff advi they are going to report next week every expectation is that they will do well i think it continues
>> sherwin-williams is the stock i talked to about before they announced their analyst day, they are getting more synergy out of the bounce barack qui significan we see continued growth and we like that stock here >> dr. jay >> always like what an operator steve wynn is. was fortunate enough to be out there after the tragedy. i think the numbers in mccow are what you focus on with this stock. folks going there are up 32% year over year they have an upgrade today or two days ago from deutsche bank. i like it. big up side call buy ng thing i name today >> i am going to go back with exxon. they haven't done well this year down 8.5% year on year it is hard to buy when they are down it has a 3.75% dividend. you are getting paid to wait
this is a fabulous company and i own it and i am going to keep owning it. >> dow is up 143 points. 23,140 give a lot of thanks to that for ibm. better than expected earnings reports. the stock having their best day in eight offer nine years. "power lunch" will continue to follow the market story. they will do that right now. scott, thank you very much great to see the man from the far side over there, michael farr welcome. i'll tyler mathisen. this is power lunch. the record-breaking rally marches on the major averages new highs treasury secretary, steve manuchin will see a big drop if taxes don't go down. there is a much bigger crisis holding housing back right now it could drive prices higher this is