tv Fast Money Halftime Report CNBC October 27, 2017 12:00pm-1:00pm EDT
some people were worried nobody would want to pie a $1,000 phone but apple telling us that demand is off the charts. which charts, i'm not sure. >> i read be worried that the lead time is only going to take two weeks and now we're up to what, six? >> next week is the phone. tax legislation, the social media companies and earnings, so rest this up weekend let's get to the judge and "the half." and welcome to "the halftime report." i'm scott wapner the top trade. the tech takeoff, some of the biggest names in the space surging on this hour on earnings is there still time to buy, or have you simply missed your chance to get in with us for the hour, weiss, jim lebenthal and kevin o'leary here with us as well. microsoft and intel, shares higher leading the nasdaq to
another record high. kevin, i don't know what your superlative is, but which was most impress sniff. >> they are all impressive, a beautiful thing to see we can say coming into the end of 2017, that this year was the year of f.a.n.g. it was the f.a.n.g.ology it was fantastic you're up 40% on these names or a collection of them will you make 40% in 2018, or is it time to start thinking about what the rotation will be, because f.a.n.g. is a wonderful thing, but i don't think we'll get 40% next year. development is up there, cash flows are beautiful. this is not like a tech bubble it's an earnings orgasm, that's what it is. >> weiss, the street is tripping over itself today to bump amazon's price target up i mean, everybody from webbush, cowan, jeffreys, rbc what do you make of this result? is it too hard to pick because of amazon, microsoft, intel, they were all so darn good >> they are and it's too hard to
pick the growth on the type of revenue base they already have is outstanding i don't think you've ever seen it in the history of the market. >> but amazon, right, so the street is expecting seven cents. they come in with 52 they are like you want profitability, okay? we'll show you profitability. >> that's a good point 30% top line growth. >> they can turn it on and off the 30% top line growth is unbelievable google also great growth look, here's how -- >> 33% goog. >> too early to think about selling these and i'll tell you why. traditionally as you go into the end of the year, a positive market and not only that, you've got amazon with their own products which is helping drive revenues and drive profits, and you'll get into the christmas season so analysts will be tripping over themselves to raiseprice targets, a happy consumer and great economy globally so they will keep going and the change in these companies is really amazing, so you've also got to look at other cloud plays because it's the cloud that's driving this, like with microsoft, et cetera.
>> and amazon. >> exactly >> you said it's too early to sell makes this very difficult to buy that may be a question they are asking themselves today. >> every day in your portfolio, you make a decision, do i buy, it if i'm buying it, do i hold it am i going to sell, it let it go, so that's a little bit of hyperbole but i think you trade to the end of the year. >> i'm in the in that camp and i'm happy owning what i do i bought western digital today the one name out there that was down 5%, so i think that will come back, but i'm more of a buyer on the dips. >> kevin said something very interesting. you alluded to where earnings are, where prices are relative to earnings, and they are a little high if you look at the overall average, but, frankly, there are stocks out there that are darn cheap, even after they have run intel is one names that reported today. yes, it's up about 6%, but it's still at about 14 times the earnings guidance for this year. >> you wouldn't call alphabet
expensive, would you >> i would not call alphabet expensive. now it is 24 times presumption of next year's earnings. you know, for a value guy like me, that's the outside range of what i will buy. i own alphabet and i'm very happy with the price action. it's a little bit hard for me to put a full position to work in new money there, but intel or a cisco systems or qualcomm, other technology names that are frankly darn cheap, they are just not even in the same territory. >> but arguably google or alphabet is no more expensive today than it was yesterday given the pe that's matching the growth if you look at it on a peg ratio. >> intel is better value though because everybody thought it was a commodity and now it's showing that in the server cloud world you can have a lot of value, a lot of value and all of a sudden it's not thought of as a commodity anymore. it's specific to the class. >> i don't know that google or alphabet has been thought of as a commodity for a while given their dominant position, you know, in online advertising with facebook they own the space others comes in only at their
good graces, so i'm not so sure that's been are regarding xhod physical for a while it's been a great call. >> you own intel i don't know what stands out. >> i own google, too, and actually in our tactical model we got fully invested in the qs which can go in and out and have less or more, but back in november, there's a clear as day breakout, and it hasn't even gotten near any -- any of the levels where we would say this is no longer breaking out, so we've been long the whole way up i own apple, and i just feel like this has not been very difficult. these are large well-respected companies that continue to come out quarter after quarter with high expectations and exceed them, and i don't know -- it doesn't have to be any more difficult than that. >> when do we get past the whole amazon value question? >> three consecutive quarters of cash flow quarters, three consecutive profits.
bezos said the game is over and i'm going to start generating cash i now respect people who want to buy my stock for the profitability. metrix generating cash flow. he knows that company now can turn the switch and generate billions is he going to do it that's when it gets the ultimate respect because right now here's a little teaserino and here's what i could do exactly. >> the point is the joke is on whoever doesn't only stock. >> i went back and looked at some articles from 2013 when really the cloud results started to become meaningful, and i was reading the same exact -- it's four years later this month in 2013 people were saying when will they turn the key and when will they start to let it hit the bottom line and when will they slow down on the investing? that was like up $300 a share. >> you've had drawdowns on the way to that. >> if you're a investor in a stock like amazon you're kid considering yourself if you
don't think 30% drawdowns don't come with the territory. we have to decide i can accept that or i can't and a lot of investors can't, and i get that, so they have no business even being near an amazon. >> you know, the question that you're requesting and that you're correctly referring to and the point you're making is for people who don't own the stock, right the valuation is not my discipline guess what, when they start doing that, if they start doing that, i don't think they ever stop investing and so the government comes along there's no politician with any will power to say this is a monopoly nor should be it. those same people, if you see three-quarters of cash flow, you're not tepg in and buying it. >> let me ask you this. >> there's no chance. >> i'm not sure about that if i saw three-quarters of cash flow, it means the discipline at the board level and bezos' decision to say this is a cash machine now and let's measure it that way the stock would continue to go up. >> i disagree. you would see a turnover in the shareholder base >> you mean, it's bad to make
money, are you kidding >> that's not my point. >> with certain stocks, it's absolutely bad to make money. >> are we not in america anymore, what happened >> they make plenty of money. >> jeff bezos has made a ton of dough. >> returning cash flow to shareholders eventually matters to everybody. >> you're a cash flow investors, hold on, so you missed out on the 40% moves. what stocks in your portfolio -- what group of stocks have had the kind of movement >> i made tons of money in apple and microsoft. they pay me back in cash and return capital and they understand the game and have been great beformers bezos is in an efor, he pays no money, when does that end? >> it doesn't have to end. >> wait, wait, wait. scott asked a question, and are you dummy basically if you don't own amazon and your question to him was anything else performed as well as amazon? and the answer is there are a
lot of things that have performed as well this year, general motors, a cisco systems, a couple of names just to think about, and the point that i'm driving at is your point which is you can pay attention to the price you pay for earnings and still get returns in a stock. >> here's my point since amazon came public it's been straight up general motors has had a great year. >> it hasn't been straight up. >> but it's not back to where it was at the peek. >> steve, the most dangerous words -- >> when you're looking apt your performance, sure, there are dips, there's volatility in the market. >> the most dangerous words ever uttered it's different this time. >> you didn't hear me say that. >> you're insinuating this is a new kind of company. >> i'm not insinuating, i'm saying amazon is unique to itself in terms of its model >> it is different this time it's different every single time. >> it will defy gravity forever. >> no one is suggesting that it's always different. you had companies that had completely different business models in prior erars, ths, the survived and what's not
different is investors overall should not every stock has the potential to defy everything like an amazon it is truly a unique company i put apple in that -- in that basket as well throw tesla in there, too, then. >> it doesn't mean we know the outcome. it just means this idea that graham and dodd-style investing applies in a world where everybody is thinking about total addressable market and complete dominance of industries where these companies didn't play, you're welcome to have that discipline. you're not in the same world though that the rest of the world can have it. you can see the competition coming after tesla you can see bmw spend billions and billions and gm spending billions, ford everybody is coming after tesla. >> okay. >> tesla's got finite production. >> gravity will strike tesla before amazon, that's basically what you're saying. >> i'm interpreting what everybody else is saying. >> do you agree with that? >> i think tesla is a 35% correction waiting to happen when somebody says bmw and gm
with just as advanced. >> that's where i disagree with you. 35% won't be where it stops. it's going to go a lot lower. >> you're saying amazon is going to eventually succumb to gravity as well? >> no, i'm saying in order for it to come back to reality, in other words, we're giving this remarkable company, i agree with it, an incredible window now for over a decade where it doesn't have to make money or pay taxes and go out and crush everybody. >> it does pay tax it does make money. >> kevin, if i were to focus on one point that you've made where we differ is that for amazon this is the reality. >> but saying it's different this time. grown men weep saying that. >> first of all, it's different every single time. it's never not different. >> i'll put that statement in the category of now whoever wins the super bowl. >> i can't deny that this has been a fantastic stock to open i have had just as good returns dealing in the real world where companies make cash flow hand return it to their holders
>> has there been a company in the last 50 years, maybe longer, that's been as disruptive? >> no. >> look at the news today. cvs and -- >> right. >> and aetna. >> $60 billion deal that they don't even want to do. >> you don't think amazon is looking at that? >> jc penny is being flushed down the toilet as we speak. >> if you want companies focused on returning between 5% and 10%, you know, in terms of profits. >> that's not true. >> the only way to get that kind of money. >> you can find 592-week low list look at traditional advertising companies, for example, they are making new lows in this environment. can you buy them they are a good value. they are getting cheaper, and the reason why is because there are companies like google and companies like facebook who have figured how the that those companies have a lunch that's sitting there to be eaten, and now those are managements that are focused on things like roe, today, what next quarter's earnings will look like. >> by the way, you brought up a
good point here. i don't know if you've noticed the subtle change in where cap "x" is going in lphabet. they are taking it away interest all the crazy stuff and giving it back to google where they are getting decent returns doing new phones, new hardware all of a sudden adult supervision at the cfo level must be say stop with the craziencing experiements. >> are we going to be having this same sort of conversation next week after apple and facebook report their numbers? >> facebook is kind of interesting. i believe we will. i mean, my daughter works 20 hours a day, got up at 3:00 a.m. to order the iphone x. >> which apple tells us demand is off the charts. >> i did it the a 6:00. >> the word from apple after the charts. >> as expected i own apple and i own facebook and another one that i own that's sort of lost in the shuffle here that's baba. baba is up nicely today t.sold off from its highs it's got some of the same fundamentals going for it as amazon not as great a company. >> accounting issues.
>> which is why there's a discount well aware of that how many issues come out from a chinese company, come on they can hide them forever. >> let's just say alleged accounting issues. that's what you would say. >> they would come back and say what are you talking about there's no proof of any accounting issues anywhere apple thursday and facebook wednesday. so we're optimistic. >> going to be a great week. these are going to be great numbers. >> up today perhaps partly on the record that apple told lipton about demand. >> so i want to come back to one thing. all of the arguments about, you know, it's different this time with amazon. could you have made them every single year since 1997 and repeatedly it has in fact been different this time. it's always -- there are always different variables. there are different things that investors are looking for out of the companies that they invest in, new business models emerging, old business models dying. it's absolutely the case that every time is different. if there were a single
unilateral law that we could apply across the board then the quants would all be millionaires >> how many people can raise billions of dollars from the investors and tell investors i won't make money for 50 years. >> that's the reality of amazon. it's buy itself. >> it's a different universe. >> and they don't need nun mu more. >> if you give amazon an actual metric to value the company. >> that's crazy. >> the ultimate get out of my face in bezos. you want me to make money. >> wall street analysts do not have power over bezos. if the business falters, that will be on amazon. it won't be because a critic -- he looks at wall street firms like toys. he doesn't need money from them. he doesn't talk to them. he might appear at one or two conferences a year when he wants to talk, he can speak directly to the world. he doesn't require anything. >> he owns his own newspaper. >> how high is the bar
i want to get back to where we're going for next week before we move on to another stock that's in the news today the bar is high for facebook >> yes this is the second part of that. tech had an amazing week this week all -- all the big names that is not what's going on around the entire market the bar has not been raised for other stocks quite the way it has been for these stocks so that brings a lot a new risk factor people in these names do expect this to continue every quarter from here on out and when you actually look at the equal weight s&p down 1% has not been a great week for stocks that are not technology stocks, and i think that's a really important point to bring out. if you're sticking with these trades, and i don't have a problem with you doing that, understand expectations have absolutely been ratcheted up. >> if facebook were to miss the qs would get crushed >> maybe for a few hours. >> exactly, and then you'd see the buying come in. >> that's such a metric of how the digital economy and the
advertising and media and all of it if they miss it, hits all the f.a.n.g.s. >> even given what you just got yesterday. >> i'm not saying they are going to miss. >> i know, but you really think that the qs would get hammered. >> yeah. >> as badly because if facebook missed -- >> when the day comes. >> it will look like a facebook thing and not a tech thing. >> it will crush the pes of all of them. that's what's going to happen. >> i don't think so. >> alphabet is taking share from facebook in ad space. >> i would agree if the selloff in amazon over the summer is and early fall had knocked the qs down meaningfully and it didn't. amazon was down 10% from its high. >> but we've defined that as a different kind of company. >> it's -- it's in the qs though >> he's talking about -- >> when one that makes money misses out of the f.a.n.g.s, an apple, a facebook, an alphabet. >> it's going to happen. it's going to happen. >> maybe if facebook had come before alphabet and amazon and some of these other names.
the fact that it comes after blowouts from all of these names, probably protects this space. >> actually a media stock emerging and not under the gravitational force of court cuttings happen, people think facebook is winning. maybe that's the new media story. >> facebook up 4% ahead of earnings next wednesday. let's talk about jc penney hitting a new record low today it is a revises its guidance jim, you're the guy on the stock, and you've been sitting there holding on and holding on and telling us why you've been holding on i don't think what you're thinking today. >> i'll tell you i was wrong. i'm telling it today the results just haven't been. there doesn't matter what i think my research has told me. the results haven't been there, and basically gross margins are deteriorating again because they have to clear out inventory and
i might have been willing to give a parks but i've been on the show and i think it was with the same lineup. i think it was you, kevin, who said what would get you, jimmy, to change your mind, and the answer was if the bond prices deteriorated the three-year bond on jc penney have deteriorated 300 points that's all i need. >> three stocks like this one, mattel, jc penney and ge >> is this the time to go look at the debt now on vc pen? in other words, you're talking about a really interesting story here of assets and the way to get at it, assuming the stock is worthless and go on the bonds. is that a play >> yes, it is, because it now trades at about 75% of book value. >> now i'm getting interested. >> and the book value, look, you can see some of the inventory. i happen to think it's to the going to go bankrupt if it did and you had to liquidate the inventory it would be at a discount, you should still have enough residual value to pay off the bonds, but i think there's a bigger point to be made here i'm going to steer away from the bond question. there are 5,000 stocks out
there, okay? i've got a portfolio of 20 of them the other 19 are doing terrifically i've got this eyesore. this stock could double from here, and it's not worth the risk to me there is a price to be paid for return it's in risk i don't need this risk anymore. >> i've got you. >> and i'm moving on. >> i think the conversation that we've tried to have on this program about this particular name in your presence in it is the writing was on the wall. the writing has been on the wall. >> yes. >> i don't need to look as where a bond is trading in jc penny to know that the writing is on the wall the fact that the stock has been in a steady decline, the trend is what it is, it's really not that much more complicated than that, is it? >> i love that they took it behind the barn and shot it today. glad i was here for that. >> i can't retort to that other than to repeat what i said and i'll say it again so that i'm clear on this i was wrong. not everybody gets every stock call right. >> is it enough that the bonds are a terrible indicator i mean, we've argued over that
>> i would like to think that that's part of the point i'm making. >> yeah. you merely need to look in one place and one place only and that's the stock >> are you a technician now? >> i love it, i love it. >> following this action is a very good way to make money, i agree. >> easy to be an armchair quarterback sitting here with no money on the line in the name. >> it's also, look, you've got to -- you've got to look yourself in the face when the results are what they are. you're correct that following the price action is a very good way to make money. now, we've spoken with many value investors on this show, including last week on ge. people who like me say i'm looking for intrinsic value. i'm comparing that to the share price, and if i see a dollar's worth of intrinsic value selling at 75 cents, 50 cents, i'm going to buy it. the issue here is not the methodology, the issue is that this was the wrong call. i make many calls in the year and this was a wrong call. >> the difference between let's say a ge and this, ge's issues
seem to be related to general electric itself. it's not like the industrials are the worst investments and the worst place to be and question just happens -- >> are you blaming management, scott? do i hear that >> how can you not in the. >> jc penney's issues -- >> you have to. >> are emblematic of what's happening in retail. may be more accentuated in jc penney than others because they are in a more precarious position singularly than some of the other names. >> you know what the difference -- you know what the difference is, it doesn't matter it doesn't matter how good management is, how much financial engineering you're doing. none of that stuff matters if the consumer doesn't care about your brand and doesn't want top shop there you can play games with receiveables you can sell off real estate you can do sale leaseback, whatever you want to do. if people are not walking into the stores at the same level that they were years ago, you're in trouble, especially with fashion and retail it's so hard to begin with.
>> let me ask a question first of all, this is a textbook case because they alienated all their customers and couldn't bring new customers in so go back to our boy from apple who came over here i've had worse mistakes than this here. >> we all have. >> and we all have that's not my question the question is you talked about retail as a thesis on a lower store count. >> right. >> is that still intact, or are you questioning that as well >> no, that's still insglakt why? >> because -- because i basically think that the idea that nobody is going to shop in brig and mortar retail sales again is wrong >> the value is in the bonds. >> the poll may be in the bonds, and that's a difficult message for a lot of viewers of our show because you don't know what factor claims there are in the inventory. you don't know -- >> for you, it's fine. >> at the end of life, the bonds are where you want to be you're getting paid in a way. >> not in it's a liquid.
>> you don't root against companies was this many employees, with this storied of a brand. hopefully they find a way to reinvent them vefls, but this idea of growing through shrinking. can you pick out examples where that's hats. >> there's people out thereto that have a lot of capital, that have -- that will wring everybody out of the trade except themselves, and their names are tepper, elliott, lazri. >> how about summarizing it this way. >> there are other ponds to fish in i'm done fishing in this one. >> we love you you're a stand-up guy. you knew you were going to catch some heat on it. >> i deserve it. >> hold hon. let's think about the fact that jim is crushed in gm, in intel all year on the show. >> thanks. >> and everyone watching this show and everyone that's ever appeared on it has had a stock that's gone against them
let's not -- let's not act like this is everyone's 10 for 10. >> all right good stuff here's what else is coming up on "the halftime report." . >> announcer: twitter showdown bullish josh brown gets set to take on an analyst who just slapped a strong sell on the stock. that's next. before the break, the tech stocks that fare the best after the start of q3 earnings reports according to our data partners at kensho and nvidia and auto desk up 10%, kla, mastercard around texas instruments also big winners. for more go to cnbc.com/kensho "the halftime report" with scott wapner and the traders is back in two minutes
twitter shares posting a strong third quarter and cfa is not buying it al all, the firm doubling down on its sell call downgrading twitter to a strong sell with a $15 price target scott kesler, ant lift on the call, joins us live on the phone. welcome back. >> good to be with you. >> is this more than anything than a stock that's up 22% in two days >> there's a lot to did that the stock is up 30% year-to-date, and to be honest we don't know if what they reported is sustainable at all still looking for a revenue
decline in the fourth quarter and 5% revenue growth next year, and the stock is trading at a 40 to 50 times multiple so to us this is just overvalued. >> but when you admit just now, we don't know if it's sustainable or not why would you downgrade it to a strong sell right in the middle of that? >> right i think it's fair to say that, look, this is a company in the prior segment that you were talking about expectations, and i think the expectations for this company have been tremendously low suddenly now they have been ratcheted up, and we don't really see the company continuing to deliver the way that they were perceived to do in conjunction with quarterly results upcoming, so our perception here is pretty clear which is, sure, they did pretty well, and they reported their q3 results, but we just don't think what they delivered is sustainable. >> hey, scott, it's josh you're wrong >> all right >> sorry
no, you're not wrong, you're late. >> by disclosure you're long the stock. >> you've been at a sell rating, so you've been right for a long time in being negative on the company, right >> we've been right on a sell recommendation, shower. >> yes. >> so it's over. listen, let's just talk technicals you've got 50 million shares short which is a pretty decent side of the float. it's probably the most hated amongst all of the social media stocks, hated more even in snap and that doesn't have a leg to stand on and now you have an island reversal in the stock which means there's been a significant change in sentiment here i don't think they reported a great quarter yesterday. however, i think what they did is more important than that. they signalled to the street that we are not dying anymore. we're not dead meat. >> that was the narrative. i don't agree with that. >> they are growing users again. they weren't growing users and now they are. >> one thing they have miscalculated users for three years. >> they have no growth in revenue. >> we all agree. >> and have no revenue growth
next year. >> usage is all that matters the revenue growth will follow if they figure out. >> another stock where cash doesn't matter. >> you can't grow cash if the user base slinks. >> scott kesler, anything you want to say? >> no question that perhaps they are not dying but they are not necessarily getting much better. it's the time of hall reason i think in some ways they are not all that much different than a zombie so they are maybe un-dead, full. the fact is that the valuation and, josh, i understand what you're talking about in terms of the technicals >> what do you mean zombie daily average user growth up 14% yore over year 14% quarter over quarter versus 7%. >> revenue zombie. no growth. walking around losing revenue. >> but i'm not speaking that way. >> i'm sorry, what i would say
in response to that is they have been showing the daily active iris growth and it hasn't translated to revenue so i'm not sure what the lag time is there. in addition to that, what about providing us the actual numbers underlying the dau i think the numbers are pretty small and so the growth is really not as material as a lot of people think. the mau growth was only 4% and look at facebook they are growing maus at three, four, five times that amount, so i think that, you know, right now, this is a name that people are probably reversing on. they are looking at the technicals, but we'll see if what i think is an overbought condition is actually going to reverse itself, and i think people getting involved in this stock right now are going to get very hurt, you know, if they maintain or add to those positions. >> scott, appreciate you calling in scott kesler, now we can resume. >> he might end up being right i think it's premature because finally the one metric that the world has been telling these guys, they need to figure out. they did a lot on things like
harassment and getting rid of the nazis and the -- >> who cares about that. >> let me finish my sentence it translation into a cessation of the shrinking user situation. if they really continue to get bert and users grow, they have a better chance at fixing the problem. >> the hint of why the stock moved so much is 50 million shares short it's a short cover no good news, if you can't monetize or grow revenue at some point that ghost is coming out. >> you don't know that they can't grow revenue >> they haven't done it this year. >> how do you know they are going to do it in next year? >> we all agree. the stock reflected that went from the high 20s down to 14 we all understand this, but that's previous. >> i agree with him. i think -- >> wait, wait, wait. one question for you, josh, because you're the ex on that stock. >> i don't have that much of it. >> you know the stock and know the product better than anyone i
know. >> i think i know the problem. >> here's a question i would like to know as an outsider looking in what growth rate in users would you like to see going here >> any. >> any is his answer. >> what price would you like to pay for this company >> 3% user growth is better than 3% contraction, and that's all that's happened so far. >> and you have to pay a 50 multiple for that, 5-0, twice the market. >> well, look, look, at the end of the day, scott will be right. scott will be right and you will be right if the next time they report a quarter they are not showing a continuation of the positive reversal in usage trends that they were able to show this quarter. all i'm saying is i don't think you're taking that big of a risk in that not working out at this price. >> i don't own this stock. i'm not short the stock. >> you'll get very bullish at 30 when they put out their first probable quarter. >> i admit to look at not giving a crap about twitter but here's
my question. i remember the old days where you would come out and say you misstated a key metric for the last three years and the stock would trade down. >> right. >> right. >> so is there revenue growth or user growth a function of their resetting the bar lower for the misstatement >> no, no, it's a million users classified incorrectly it's not -- it's not we have fake numbers they had a third party app called digits that was enabling them to double count users when they shouldn't have. this stock didn't care, nobody cared. >> all right. >> very small relative to the base. >> i understand. >> rounding error. >> let's move and jump over to sue herera who has the latest headlines for us hi, sue. >> hello, scott. hello, everyone. here's what's happening. the state department backing the spanish government's measures to keep spain united calling catalonia an integral part of spain spain's senate approving proposals today to take control of catalonia shortly after that region voted for independence. seen as a reminder to north korea of u.s. nuclear
capabilities, vice president mike pence heading to north dakota's minot air force base this hour marking the second time in six weeks that a top trump official has visited the nuclear weapons base. and president trump's top economist doubling down on corporate tax cuts a new report from the chairman of the white house council of economic advisers kevin hassett says slashing the corporate tax rate to 20% could increase the size of the u.s. economy by $700 billion to $1.2 trillion over a decade and the world series heading back to houston tonight. the houston astros and l.a. dodgers both tied at one game apiece the astros run defeated at home in the postseason. that's the news update this hour scotty, back to you. >> okay. sue, thank you very much. pete najarian is seeing unusual activity in one of the tech giants that is booming today so see which way options traders think it's going to go next first though, let's see where "power lunch" is going to go at
the top. hour brian? >> on deck, alphabet, amazon, microsoft fueling the nasdaq to record highs you know, that folks, but which one of those names still has the most upside left we're going to dig n.cvs eyeing aetna. if a deal happens, what does it mean for other big players and your health care >> and this is one hot stock it's rallying today. it's up 45% in the past two months the ceo joins us for the mystery charm. that's coming up on "power lunch. "the halftime report" returns right after this. >> a clarification from snap yesterday in a graphic we quoted a number on monthly users from a data service snap, however, uses dailies, not monthlies. snap says its daily average iris number is 173 lln.miio "the halftime report" is back in two minutes.
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all right. want to welcome you back want to show you once again shares of amazon up birks as you know, on the back of a really strong earnings report and above $11 a share for the very first time ever. a stock that's up 132 right now. >> what's on the trailing 2012 month pe ratio. >> josh shining in the sun with that. >> we just listed the economic advisers talk about how the tax cut will drive $700 billion in revenue, right that's amazon, you know what i mean let them just be great by that. >> transfer the money and send it to washington. >> buy shares in amazon, bang. >> i'm optimistic about what is going to come next year on tax reform, really am. i think mid-cap is going to soar >> i got more optimistic on
that you're very negative and now you have to feel better about what's cooking. >> i feel better about tax reform. >> do you? >> they might be giving you a double-edge sword tax reform and we'll choke off the 401(k). >> you really think they are going to do that >> i hope they don't do that some of these people feel dumb enough >> when i was over in switz laid was talking to a bunch of nationals there, and they said if it's through that they are going to eliminate the state tax, billions of dollars will come into the u.s. along with nationals that want to live here and become americans that never did before we're talking about people worth hundreds of billions. >> how does that work? >> because they won't come here because of the estate tax. say you're worth $200 million and living in switzerland. >> don't the wealthy people come here and don't bring all of their assets >> they will change their minds if they eliminate the estate tax. >> that's just what the trump base wants more, more money from switzerland. >> exactly what the base is fired up. >> you'll see a huge flow of
capital. >> pete najarian joining us from minneapolis with two unusual options trade in the tech sector today. pete, just before you even do that, i know people love your unusual activity as well >> amazon above 1,100, first time ever. >> absolutely incredible. >> when you looked at those numbers last night, one of the factors that we talked about, the one most northern to me, scott, was aws were they going to be able to continue to show that they have some growth because it looked like maybe it was starting to slow a little bit. they actually produced the numbers that everybody was hoping for and maybe a little bit more than that i think that that's really part of what's really triggering this we know about the story of amazon, all the acquisitions, all of what they are doing and disrupting everywhere else, but it's the aws where they find their margins, and i think the fact that that's holding in there is very, very impressive, and i think that's what's lifting the stock as much as it is. >> the other home run, of course, of one of them anyway was alphabet which is your unusual activity today. >> yeah. it's pretty incredible when you
look at those numbers and youtube was one of the highlights, but they absolutely killed it, scott you look alternate earnings, and where we're seeing some paper today which is really unusual, following an earnings release like this and seeing the stock moving to the upside the way it is, but the march so 35 calls extremely aggressively bought today. scott, what makes this very interesting is it's over 5,000 of these i think 5,300 were bought today. those are a $60 option so a $60 option bought 5,000 times, you can do the math very aggressive buying out there. it's part of a spread and part of a roll from january but this is the focal point that have trade. a lot of money that somebody is putting down expecting to seat stock over the next several months starting to move to the upside i'm in those calls but it was just too interesting not to be a part of this trade so i put that on as well in terms of a spread. >> in if i had a dollar for every time you said sergeant
adelo. >> i am thanking him today and he's done good since taking over oh, wow, maybe malaliy ought to be the ce. he's with ford they hired the right person from within within the cloud and that's where they are making all the gains that they are making the numbers were absolutely outstanding last night, the growth everything seems to be intact in terms of the direction and focus of microsoft. >> do you have any activity there? >> i do have activity in there yes, the january 87.5 calls today, somebody suddenly as i'm sitting here, 23,000 of those were bought around $1.15, right in that range. iljumped on those just before we went on the air. too much activity. got to be involved as well. >> pete, good stuff. see you back here. have a great weekend. >> you, too. >> a transformative deal taking place in the healthcare space, cvs in talks to buy aetna for $66 billion, $200 a share.
jpmorgan's lisa gill is the number one ranked distribution analyst on wall street joins us live from new york welcome back thanks for seeing you again. >> has this deal happened, do you think? >> i think that's a great question you know, at this point nothing has been announced i think it's been rumored for well over a year that potentially these two companies come together. i think there's a lot of talk that this is a defensive move against amazon i really think that this move has more to do with united healthcare and optum and all they are doing in the marketplace, and where you're trying to see new entrants come together to try to compete against that offering more than anything else. >> funny, because that's exactly where i was going to go next, whether you really believe whether this is offense or defense. surely some of it, even if it's a smaller portion than maybe some would realize. >> yeah. >> has to be playing defense against amazon, no >> yeah. i mean, i think the question still remains if amazon is getting into this business last night hon their earnings call, our analyst doug ammeth
asked the question directly to management saying we don't respond to any rumors in the marketplace. last night would have been the perfect opportunity to say we're looking at this, an area we're interested in. >> lei somewhat, it's josh brown. 75% of households with over 112,000 in annual income are amazon prime members what's a worst case scenario for -- for retail drug distribution that half of those people switch their prescriptions over, a third? i mean, how -- how apocalyptic could this get at the retail level? >> yeah, i think that's a really important question so there's been mail order around for years and years so if people decide, hey, you know what, i want to use amazon, the first thing amazon will have to do is go out and sign with the pbms they can become, you know, an option just like other retailers in the marketplace and then people will say i want to get it via amazon, and what's really the difference of what they can bring to the market, i agree with you with those households there's incredible opportunities for amazon to work with health
plans and with pbms and payers where it would really make a lot of sense for me to say, hey, alexa, order my drug trade, or alexa, can i pick up my drug at cvs and have that relationship they have a lot of reseller relationships for amazon where they make 15%. when they got paid at pmpm to say that or how about the other way around i'm standing in my kitchen and they say, hey, lei sla, did you remember to order your lexipro that's an opportunity where they can work together. the supply change is complex size and scale is incredibly important, and at the end of the day people may want that hamson option, but i think that, you know, there's ways for them to partner with different players in the marketplace i don't necessarily think that it makes the retail model as we know it today completely go away. >> let's just make the leap here and say that this deal happens. >> okay. >> what's the first domino to fall, if it does >> well, i mean, i think if this deal happens, you know, like i
said, with any deal there's pros and cons to this there's probably longer term pros to this that you'll have a full suite of offering, that you have an opportunity to bring people to a lower cost setting, but initially is you could see some disruption of the marketplace. any time you see big companies come together there's levels of disruption and caremark, which is with cvs, over 50% of their business is with health plans so will the other health plans feel comfortable doing business with a company that is their competitor >> yeah. >> lisa, thanks. appreciate it as always. the number one ranked analyst in in space for jpmorgan. all right. we're going to take a quick break and do mattel, align techlo, nogyexpedia in the blitz when we come back in two minutes. ♪ can i kick it?
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welcome back to the "halftime report." i'm mar began brennan. shares of axalta coating systems are trading higher, up more than 20%. this on reports thats of approached about a potential merger again, shares up 21% for the maker of paints and coatings primarily for the transportation industry and axo fended off its own
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casual fridays at buckingham palace? alright, off you go. surprising. what's not surprising? how much money nathan saved by switching to geico. fifteen minutes could save you fifteen percent or more. we're back, the blitz. jimmy, mattel lowest since april '09. >> obviously retail is taking it hard across the board and they are right in the middle of it. the price action on this one you
have to follow the price action. stay away. >> and align shares after taking a hike >> it's very cyclical. the wealth effect does play a big role so you had this morning growth of 5.2%, this is exactly the kind of company that sees an uptick in sales. >> what is up with expedia >> they missed top line and bottom line. so that is why the stocks down they blame the hurricane in large part, but it is also hitting the airlines which is kind of ridiculous because the airlines all just reported so probably a good trade here. >> exxon >> beautiful quarter i've been adding to it because i'm thinking that a sector that was out on of favor in 2017 will be big time in favor and i want to pick best balance sheet, best cash flow. what a thing of beauty if you thought it was going to
stay at 50, 60 bucks, i think -- >> i think you think it's closer to 60? >> no, 52, 55, but look at the operating model at 52. this company really, really he levers a $52 oil barrel. >> let's do some final trades on this friday. >> western digital i alluded to it before i actually bought some calls this morning when the stock was down by four bucks i bought more stock while we were on air during a break look, this is trading down because of issues with toshiba they beat the top line, bottom line i think it the attractive stock. >> and i'll keep it simple apple. you mentioned it earlier, that they said demand is off the chart. there is a battleground about what demand actually is, rumors that maybe the production is lower on iphone x and an he will says it's great. if that is the case, this stock is going higher.pple say
it's great if that is the case, this stock is going higher. good news, it goes up. negative news is having less and less of an effect and releasing the stock to go higher >> trb >> yeah, invidia, so this week their head of ai applied ai did a podcast episode 13 of voices of ai. want to recommend everyone take 40 minutes and listen to that. i think it's a very good roadmap for the way our world will transform over the next year or two. invidia wrote the cuda software which is effectively the operating system globally. i think it's important aspect of the story and people should understand how it works. >> mr. wonderful, a final trade for me >> anything small cap. i'm a believer in tax reform, the major beneficialers are the companies. 100% of their revenues in america, it will increase their cash flow. i'm looking for a 15% increase in russell 2000. i don't use the russell 2000 because return of assets on the
index is low i know i'm talking my own book i like osm, 339 stocks in it i designed that index. i'll take the credit for it. but for me, i want small cap >> we have about a minute left let's throw up shares of macy's. it's at a new low. >> i hate to say this because i think very highly of mace sid's and bloomingdale's and i would not be surprised if a year from now -- i don't think it will be a $3 stock like jcpenney, but we will have to have this existential conversation and i think unfortunately for macy's, because they have done all the right things, investing in tech, trying to build the mobile experience, they have not been t will be enough >> the yields is telling you 7.6% yields telling you that -- >> they have shouldn't pay it. >> they radio not haveshould no dividends in the stock
if they did away with it, you would see a trade down >> stop the buy backs, stop the differ de dividends. >> we'll continue to watch that stock along with amazon crossing 1100 for the first time ever in the last few moments that does it for us. power starts now i'm melissa lee. the 3% economy, america growing at a solid pace despite the hurricanes what is fueling it plus developing news on the race to be the next fed chief amazon hit g 1100 foot first time ever, alphabet also at all-time highs and a big day for the iphone x which one will give you the best bang for your buck and a healthy marriage cvs and aetna, about a $66 billion deal what it would mean for the other big players and your health care "power lunch" starts right now