tv Fast Money Halftime Report CNBC August 28, 2019 12:00pm-1:00pm EDT
america's asset allocation about where you should be putting your money to work instead of stocks. after the bell, another read on the consumers. pvh, williams-sonoma and five below all reporting earnings see you at 3:00. before that, to the "half. thanks for being with me today let's get to scott wapner. >> i'm scott wapner. the message of the markets recession signals flashing bond yields falling. the trade war raging where is the best place to invest right now it's 12 noon this is the "halftime report." >> is the countdown to a recession under way? and where do stocks go in the months ahead the fear and uncertainty piling more pressure on powell. should the fed cut rates next month and how big should they go >> a big call on jetblue why the stock may be ready to take off the investment committee is ready to go. "the halftime report" starts
right now. welcome. our investment committee today, jim lebenthal, jon and pete najarian, brenda, adam parker is the ceo of triveria capital management lp. much of the focus today on the drop in bond yields. the 30-year hitting a record low. some saying the countdown clock for a recession has started. so, pete, i turn to you and i want you to answer the question i asked at the top where is the best place to invest people want ideas. >> sure. and i still think the gold and silver trade is on what we're seeing today, scott, some of these individual names are still moving to the up side. gld, slv have been a smart place to be. if you go back to the end of may. that's been a great place to be. the slv in the last month up about 10%. it's still playing catch up. those are more on the conservative side. >> you think that's the best we've got? gold and silver and -- >> 10% in a month isn't so bad if you annual ize that out
>> i ask, i don't hear tickers i hear gold and silver >> oh, i'm excited to talk tickers early, bro let's do it. i still think technology is the place to be. i still think there's all kinds of other places you could be energy today is really what sort of flipped when we saw oil start to move to the up side and see this move in energy, how cheap have we gotten in some of these names look at exxon. i own exxon. i'm not happy about it under $70 a share. those are possibility names that have plenty of room to run to the up side if we hold or even increase a little more in the oil space. >> adam parker the former chief strategist, morgan stanley if you are posting a note this morning in your former life, what's the headline. i like u.s. stocks we talk about u.s. stocks. is that -- >> it's a great asset class. this channel probably wouldn't exist if there wasn't a u.s. stock market >> not probably. >> definitely would not.
>> all of us would be elsewhere. the market trades at 16 times consensus forward estimates for next year. the real number is 17 times. estimates are too high like they always are as long as you think earnings are growing next year, a dividend yield, a buyback. not seeing the hubris. typically you have too much cap ex, too much inventory, too much hiring, too many private planes to nowhere i am just not seeing that kind of corporate excess in the results i'm looking at i feel like earnings are probably going to grow and to me, 16 1/2 times the real number for next year, seems good versus, what do you have, 1, 1.5% on a ten-year or corporate bonds and other stuff. i don't see why everyone has to always call 17 in the last year a recession. >> if you are writing that note i asked you, about bet you somewhere high up would be bond yields why are they falling what do you make of that you wouldn't just dismiss that in your note, would you?
>> i've read the outlook notes from some of the major firms recently from last thanksgiving for this year four hikes from one. three hikes from another the inflation numbers, the economy. roughly what people thought and now two or three cuts. it's about people's vrptation of the fed and interest rate environment. equities if you look from here to there, have been fine and you'll look forward and as earnings grow, they'll continue ton a reasonable option. >> brenda, that make sense >> i think we're getting a false signal from the bond market because rates are so low globally negative across much of the developed world outside of the united states, but it's a little bit of a dangerous game. because i think people are forgetting that inflation will materialize at some point. in the united states, we have seen just recently there was some signs inflation is exceeding estimates. we saw some impact from tariffs.
once we get into september, that's going to be more meaningful and gets the yield curve moving the other direction. it won't take much a 30-year bond just with a 50 basis point move higher, a 15% loss in that position. so i think people are forgetting that there is interest rate risk in smo of the longer duration bonds because there aren't other alternatives with a yield. >> yield curve inversion doesn't matter >> look, i think we have to -- >> he basically made the case it doesn't. >> i think we'd need another couple thousand years and several more examples of it for me to be super confident it's a bit of a chicken and toeg see what's causing it. you can look back several times it has happened it's been a problem. the economy is clearly slowing if you look at major metrics that's not really a debate if you look across a host of metrics. will corporate earnings in the u.s. grow next year versus this year if they do, which i think is
still the base case, i think u.s. equities -- >> what if they barely grow? >> if they barely grow, it's still okay if they start declining, then you've got a problem and a reset. we've had, what, 10, 11 times the s&p has been down 10% or more this cycle and what do you guys say on your channel buy that thing every time? >> buy the dip >> it's your channel, too. >> it's your channel, too, man, all right? you're part of us. >> i'm just saying, i don't see a reason to fear earnings are going to collapse outside of a huge economic slowdown that is no long eer -- to me isn't quit in evidence. >> much ado about nothing? >> it's not much ado about nothing. maybe we'll get a recession but i think the more important question, and you asked at the top of the show is what do you do it's not that helpful to say we might get a recession 6 to 9 months out the more important thing is what has the stock market already reacted to what has it overreacted to this has been the most
anticipated recession i've ever seen and there's large sectors of this economy already pricing it in. look at what's going on in financials we don't even have to name names. you can look at the top of the xlf and it's all in a bear market look at health care. cvs these things are 20% off their high i think you mentioned energy and exxonmobil we can go around the horn. royal dutch shell. marathon petroleum some of these are selling below book value what's the point here? st the stock market has anticipated this recession more than anything so let's say we don't get the recession and the bond market is wrong. wouldn't i want to be in these things already sold off 20% in anticipation of an event that's not going to come or if it does, it's predisastered i think of the movie when the plane runs into the house. he says we'll buy it why? because it's been predisastered. >> doc, how do you see it?
>> i think we've been driven down by the rates overseas, skots. and that it is different this time because it's not the u.s. market that's screaming this it's the rest of it pulling us down i think that just as rick reeter said yesterday when he talked about the ten-year being the market and the two-year being the fed he said you've got to hit that two-year and hit it hard they haven't they've jawboned a little here and there. haven't come out with strong forward guidance saying we're going to drive this two-year down to zero or something like that they haven't said that instead they've dribbled out a little 25 basis-point cut july 31st they're probably going to dribble out another in september. it's the wrong move. cash carry said in his op ed, we should be using forward guidance a lot more than we are right now. they're silent after jackson hole they should not be silent. >> talking like every day? >> no, i want them to say in this september meeting there is
a better chance than you guys are pricing in that we'll make a bigger move than you're pricing in right now >> he suggested they would like them to go 50. >> yes >> you think they cut rates in september? >> i think they -- >> you play the scenario in which they don't have to >> they don't have to for economic reasons they want to if you want to flip that yield curve back around >> are we talking about whether they should or what we think they're going to do? i don't think those are the same things and report is been for a long time. >> what are they going to do >> it seems like the experts think 25 basis points. to be honest, the experts thought they were going to raise 100 a year ago that was my point earlier. i don't -- my process at my firm, i don't really care. i'm going to go to the right parts of the market if you get a bull flattener, i'm going to find subcomponents of the market i want to gross or net up. >> you don't want an environment where the market believes the fed, there's already enough criticism of what the fed has said and done that there's a great belief the fed is so far
behind the curve they just missed the whole story >> i'm not big for criticizing the fed. i always thought it was interesting that even with bernanke, and those guys, looking at a lot of information and all these 25-year-old kids on wall street with two years of experience are saying this guy is an idiot. i'm not so sure they've made all these mistakes maybe they're a little behind. the argument that rates are low everywhere -- >> when you focus on the u.s. you have to look at what's going to cause the earnings to collapse earnings are flat year over year >> trade war, more tariffs >> sure could be >> september 1st right around the corner >> it seemed like an apocalypse that day the mark set 5% off its all-time high he tweeted he got some calls and then didn't get the call you know, i just don't know how to handicap that stuff in the short term if you follow what the companies are doorks iting, it's not as gs six months ago if that's my base case, i think
i'm going to get paid in u.s. equities over -- >> what if it's getting worse faster than you think by chaotic nature of everything >> then in that case, the market will go lower. ime not all the way where jim is where it's priced in >> sectors >> maybe in certain parts. but i would say if we're going to get an earnings decline of 10% or more, the stock market is going lower. that's clear to me but i just don't think you want to position yourself for that right now. that's wholly different than what i think some of the other guys are saying. >> interesting move today. you are up almost 200 on the dow at a time where we're talking about the 30-year at a record low. >> and started down 100 and then to flip around the way we do we talk about volatility all the time volatility continues to be volatile look at where the vix is today look at the range already. up well over 21. now we're back into the lower 19s. scott, the movement that we are getting on a daily basis is extraordinary to be honest we're all looking for opportunities out there on some of these sell-offs
earlier today, there were probably some great opportunities when we're down 100 points if you had any kind of a vision that we get this kind of a flip. you have to remember, too, volumes are excruciatingly bad right now. and they have been i brought that up for the last week or so been really, really bad. really low which is understandable. this is the end of august, end of summer. all the rest of that thrown in together folks are actually comforted by the fact that this market is kind of hovering around where it is give or take, call it flat over the last couple of -- >> there's also a reasonable explanation to your question about why with bond yields going down the market is up today. this economy, the u.s. economy is hanging consumer forget cap ex. it's not happening u.s. consumer is directly benefiting from lower interest rates. now mba mortgage applications weren't great this week but so big last week that that's an easy explanation for why they weren't so great this week car loans. mortgage refinancing all of these are coming through and they'll help the consumer consume more which again is the
peg on which this economy rests its hat. >> when you look at the volumes that pete just cited, andgriffe listening. you look at tiffany's today. the stock opened up 3% or 4% as soon as those earnings hit the tape that's up 3% or 4% about $3, $3.40. flips when the ceo comes on and says, yeah, even though things were great in china, hong kong was a real problem we missed at least six full days we're going to miss more and the thing flips from being up 3% or 4% to down 4%, and then they catch a bunch of shorts right there to pete's point about volumes, scott, and where you're going to get it. all those 11% or 12% short interests came scrambling in trying to cover and they drove it up. and you look at where tiffany is right now. it's like an ekg that's because of that lack of volume >> don't chase that. >> four years ago when china devalued and set up a six-month
period in the markets that were terrible i remember tiffany's then had one earnings report. i think right around this time that did well. and then it slid for the rest of the time china is very important to tiffany's. >> you can't underestimate that. >> they were good in china and my point was then they cited the events in hong kong and how much it's affected their sales stores, people unable to get there and all the rest and then when everybody wanted to come back in and say i'm going to buy back some of those nice shorts i've got on, there was nothing offered. >> don't chase the shorts. >> let's get more on the state of the markets jim o'neil is the former chairman of goldman sachs asset management former commercial secretary to the treasury in britain and leads the british think tank chatham house. welcome back great to have your voice on our program today. >> thanks for having me on >> what do you think about the current environment? >> i listened to that discussion you guys were just having.
i guess the strongest thing to be said for the market, not that i follow it as close as i once did, is that there's a lot of things to worry about. that is for sure i've generally been somebody with a more optimistic air but there's a lot of things out the there, especially outside the states, but in my opinion, or inside the states than i often hear people in the u.s. talk about. partly because of this very strange character that you have as your president. >> we'll get to our president in a moment let me ask you about bond yields what is the message in the continued drop in yields we have one of our panelists today suggesting oos sending a false signal just simply because of the fact that yields are negative what do you see?
>> so i don't know whether it's -- it's sending a very powerful signal, but what is intrig intriguing, and i heard one of your guests saying that. why should that signal be false? i mean, it could be and if we get massive fiscal stimulus in germany and more in china and trump manages to come up with more fiscal stimulus, all of that could mean that bond yields suddenly rise sharply in many places but the fact that you've got such low yields in the u.s you've got an inverted curve you've got amazingly negative yields in so many growing parts of the rest of the world, it's kind of pretty scary in my view because the markets appear to be saying that they don't see an end to the deflationary crashes
and something close to a recession in many parts of the world. you know, of course it could be false, but that's the message. >> do you worry about a recession in the united states maybe sooner than some people think? >> i do. i think if you look at the areas of weakness of the u.s. economy that essentially business spending and exports, they have no chance of improving until trump gets over his very erratic love affair with trade tariffs, which doesn't look like it's happening any time soon. or you guys get over your love affair with trump and the
econo economy's strength depends on consumption which is fine unless financial conditions tighten unexpected lie wh eedly when a f indebted consumers can't keep up the consumption they're doing. >> how do you see the trade war playing out? >> it's what i've said starts to show up more in the u.s. domestic data. and i'm not sure how easy this would be for trump and his colleagues are on this approach but they seem to flip flop a lot on other things. i think given that 2020 is an election year and we all know historically, is the economy stupid, he would have to change his whole strategy, and somehow come to a conclusion that trying to pursue tariffs with currently
china but no doubt the other countries, is it likely to benefit the u.s. and if he did that and there was some confidence that it would going to be a persistent change, i think there would be an enormous relief around the world and there would be a big recovery in global trade and we'd start to see a pick-up in u.s. investments and exports without that, the u.s. economy is increasingly riskily dependent on the consumer. it's like in some ways, it's like 2008. >> therein lies the issue with the fed. is the fed has to game this whole thing out, worried about a more dramatic slowdown in the u.s. against a back drop that seems to be good now if you get any development or movement like you just suggested in trade, the picture can brighten quicker than people
expect if you are jay powell, what do you do in this environment >> make sure i've got some good sleeping tablets, i think. you know, it gets tricky and i've seen reference the last 24 hours to the article that my old colleague bill dudley wrote. i think bill is right on this. to be essentially responding to structural bad policies from the government is in itself making it trickier. but that said, i quickly turn to supporting jay powell because they have a mandate from congress which links to growth and inflation. if the economy is weakening and inflation softening, then the fed has to respond but if i were in his shoes, i would highlight that perhaps
markets should have somehow tried to put in more optionality to what the outlook may be in the next 12 to 24 months because i do think the current pricing of the euro/dollar futures could turn out to be very wrong. but that would have to be dependent on trump abandoning this almost kamikaze strategy that he's embarked on. >> you mentioned the dudley op ed which has gotten a lot of talk over the last 24 hours. it's not exactly the fed's job to decide which policies it likes and which ones it doesn't, and which it should react to and which it shouldn't. >> i agree with that i agree with how you stated it suddenly i published something through project syndicate about a fortnight ago which is
tangential it relates to aspects of financial conditions you know, the trump strategy appears to be hugely dependent on an easing in the interest rate part of monetary conditions, both short rates and bond yields. and that, of course, the fed zould have to do if the economy is slowing, and that's essentially right. but in terms of it really helping the u.s. economy, the theme i increasingly suspect is the u.s. economy is becoming asymmetrically dependent on financial conditions a little bit more easing in the domestic interest rate part of it might give some support to the economy, but whenever financial conditions tighten, whichever form of tightening they are and, god forbid, if it were through higher bond yields and short rate, the u.s. economy would be extremely sensitive to that and i could imagine fed
policymakers probably think the same and probably very worried about it but you're right at the end of the day, they are what they are, and the democratically mandated by congress if some independence so they have to respond to what's there. >> jon najarian has a question for you. >> great to have you on. thank you, sir quick question regarding the observations you're making they sound fairly pessimistic. are you putting your mouth on where any of those are or are you just publishing? >> well, i -- my investments are all done in a trust which is managed on my behalf so put it like this. if i were in charge completely of it, i'd make sure to have quite a bit of cash. i think, you know, against that, i think for -- i guess what i
really suspect we are coming to the end of is the broad mass simplistic moves of so many markets together, and i would imagine for sector and stock pickers it's probably going to get more interesting but the easy simplistic ride of low vol related trades is kind of over. and in so far as i can give guidance to my trust which i do, that's the kind of guidance i get. >> let me ask you lastly, before i let you run, brexit. how concerned should we be about what may take place in the uk? >> if you could have any confidence about what today's outlook for brexit will be in a week's time, then it would be easier but, you know, parliament is just about to come back in the uk after a summer recess and i think even though we have a new prime minister, i suspect we're going to go through the
whole complex that we did with many months with theresa may and it's not easy to me what is going to happen. clearly we have a prime minister that's very loudly making it clear that he intends to take it out on the 31st with or without the deal but i suspect we're going to see in the next week that parliament is going to make that very difficult for him to do. but in the event of the uk leaving on the 31st of october with no deal, that would definitely be bad for the uk, and i think it would add a further element of weakness to obvious places in europe ireland and germany in particular, on top of a european economy which has weakened sharply in recent weeks, both for domestic reasons in some places but also linked to the big slowdown going on in china >> i'm assuming that you've seen the news about parliament being suspended in september as well
i want to make sure you're seen that >> yes, yeah, of course i have but parliament has a week starting early next week to try and make life very difficult for boris before parliament is suspended. right now, all those that want to take over parliamentary business, which is what we'd all agreed just today will be accelerating their plans to do that next week so there may well be some legal thing they've put to the table next week which would make it very difficult for johnson to do what he wants, even if -- the only thing i would guarantee for you is what appears to be the light path on any one day in the next week won't seem the same the following day >> the only guarantee is there is no guarantee these days who knows, just about anything jim, great to talk to you today. >> thanks for having me on we'll take a quick break
lots to discuss on the other side here's what else is coming up. feeling fly. why deutsche bank says buy jetblue on the back of its double-digit drop in the past month. it's our call of the day plus, the desk is ready to answer your questions. you can reach us on cnbc.com/halftime. or tweet us @halftimereport using #askhalftime the alim"hfte report" with scott wapner and the investment committee is back in two minutes. mmm... good. so i've spent my life developing technology to help the visually impaired. we are so good. we built a guide that uses ibm watson... to help the blind. it is already working in cities like tokyo. my dream is to help millions more people like me.
welcome back there's your market picture at just about 12:30 on the east coast. dow up nearly 200. s&p and nasdaq russell is the outperformer. all this on a day where there's focus on bonds and yields. the 30-year hitting a record low today and nonetheless at this moment, stocks are higher. let's go to kayla tausche with a news alert on the trade war. see if maybe stocks are still higher when kayla is done. >> just days before this new set of tariffs kicks in, business groups from a wide variety of industries are calling on president trump to delay them. in a letter sent today, 161 industry associations ranging from the blue chip u.s./china business council to those exporting like greeting cards, lobster. they say china is still some place they have to do business, leaving there is unrealistic and
there will still be an economic impact even with some of the tariffs delayed until december the coalition notes $112 billion in goods hit with new tariffs includes 92% of all apparel and half of all footwear we should note, though, these business groups pleaded with the administration in may. there were tariffs that did go into effect on june 1st and then a truce after that a u.s. trade representative has already submitted a file with the federal register to make this 15% tariff effective for goods that leave china september 1st. so we'll see whether this letter has any sort of impact on reversing that scott? >> okay. kayla, thank you back to jim o'neil i think projecting what a lot of people are feeling uncertainty. elevated risk. and not really with a lot of conviction on what to do about it if pressed.
>> i totally agree and to your point and we're talking about it on the desk i brought up gold and silver because you said, well, what is something you can be in. what is working. that has been working. continues to work on up and down days that's the surprising part i think the most surprising thing we heard from jim o'neill and we were all talking about this is just the idea that the comparison to 2008 seems like a very, very big stretch and that was the most concerning thing. we all understand there's uncertainty out there and the trade war is going to be something that's going to be extremely difficult if we ever are able to -- >> let's be clear. he was not making an apples to apples comparison but even using that as a kind of comparison i just don't see that right now in the cards for where we are in terms of our economy >> adam parker >> yeah, i agree with that i think comparisons to '08 are reckless i think also if you kind of take a step back, i can remember at least eight or nine times in the last ten years where it felt at
least this negative about something in the global economy whether it was -- >> summer of '15 >> february 16, the oil scare. >> we didn't have those -- some of those other instances let's say the summer of 15 that was all about china big worries about a china slowdown >> right >> decurrency. here we have the trade war and what some perceive to be self-inflicted wounds on the u.s. economy which is and has been pretty darn good. and the risk associated with policy that could have, as some say, asymmetric or negative backdrop to it there's a difference, don't you think? >> there is. and the trade war is real and can continue to escalate and get worse. each time you go through what's happened in the past, every single one of those things had a slew of people who were articulating very negative stories of what could happen to the u.s. economy and the
earnings profile every time if you go back, the italy bond scare. we can go through a whole list of them and every time with some six, nine-month perspective. the big tech companies health care industry they all collectively were able to grow their earnings and make the stock market in the u.s. superior investment to basically everything else over a longer time frame i don't think it's different this time. clearly if we continue to make things worse and worse with china, it could be the case. i just don't think i should position for it now on the chance that -- >> you have a feeling we're making it better and better? >> i don't think anybody would argue that the kneconomy is worse across multiple metrics do i buy and hold a 1.5% yielding instrument or guarantee myself a loss on $16 trillion elsewhere or do i take a shot at companies that can grow their earnings that trade at 16, 17 times earnings and don't have massive exposure and there's plenty of those securities out there. >> brenda, you're on the hunt
for them >> this time around is different because there is more uncertainty. we have two countries. china and the united states where everybody has thought for the last year or so that, you know, an agreement would be -- would come to pass because it's in the interest -- it's in everybody's best interest and here we are. it's dragging on and the question is, is there a point when it drags on long enough that it really starts to hurt and so we're at the cusp of that with tariffs being escalated the consumer has been really healthy. that's where i disagree with some of jim o'neill's comments about the state of the consumer. i don't think it's anything like 2008 the consumer's balance sheet is very healthy >> he described it as overlevered. >> if you look at the leverage on the consumer side it's minimal versus what it was in 2008 consumers refinancing. having more money in their pockets every month as a result. the consumer is healthy but in my view it's a question of, is there spillover where companies start to pull back maybe they don't hire that person maybe they put on a hiring
freeze and that starts to trickle down and impablth tct te overall consumer >> the stock on the move, jetblue. a catalyst call to buy it at deutsche bank. here's a 2% mover today. that's jetblue the stock over the last three months is down 3%. hasn't done all that much. what about now you invest in these a lot. >> it makes a lot of sense you'd be interested in a stock like this i haven't looked tat eed at it awhile i own united and southwest i'm not in jetblue there is something to be said for it less international exposure and the possibility as the 737 max at some point in time does come back, that will be something very positive for them as well but i think you can wait i don't know that jetblue is really ready, pardon, to take off just yet i think there are other names performing better at this point in time. jetblue is a name that should be on --
>> there are barely any names performing in the space, period. over the last six months, delta is up 13.5%. every other name is negative and jetblue is flat. >> that's what happens to airlines that's what happens to airlines when you have recession talk none of this should be surprising to anyone when you go into recession talk, people start talking about -- >> companies like this not making it through the storm, okay i don't think that's the case at all. okay i'm in alaska airlines i like that. i like jet blue. i like southwest which you just mentioned because if you want to be in this space, the u.s. economy is doing so much better than the rest of the world why do you want to take the chance of being in something that's got international exposure if you want to be in this space the transports in general haven't been doing so great. so add that to the list of sectors of the stock market that are anticipating the most anticipated recession ever >> are you buying -- going to buy a fresh transport today given the concerns that are out there? >> i have my position in alaska airlines it's a full position so i'm in.
i'm not rushing out to buy jetblue but i'm not getting out of the space >> a look at places like the transports -- >> if you're not in transports, this is probably a good time to start building exposure. you don't have to load the boat right now, no pun intended, but it's probably appropriate to dip a toe in >> okay. okay coming up -- okay. >> forget it just buy amazon. that should be everybody's investment choice. we don't need the show just amazon. i mean, i'll tell you where the value is >> that's your point of view that's fine. options bulls are making bets on the transports hey. maybe it's him maybe it's lebenthal >> i'm exposed in there with you, jimmy i hear what he's saying, man >> book end sale a lot of energy. i'm feeding off of him >> i'm not saying it's a bad call, but you need to be making another call with that and that, excuse me, the fears about the recession in the economy that we've bottomed >> i'm implying that when i say most anticipated recession ever. we don't have to have a
recession. it's stupid to have a recession. you said it's a self-inflicted wound. it is. so let's stop inflicting it on ourselves. get the china situation better by the way, brexit is a self-inflicted wound but these don't have to happen if the president wants to be re-elected, he has to get this solved in the next three months. unusual activity coming up we'll let you know whether you should buy peloton in its ipo. that's a very interesting story. leslie picker is following that money. and the alimrertis ba after this.
fedex shares slipping to their lowest level in more than three years today. options traders are stick with it jon and pete najarian tell us that in unusual activity >> when the stock was trading $2 lower than it is right now, trading around 150.80 at the time that's when we saw some of the buyers walk in and start to make a position that they wanted to do to see some sort of a bounce. going for the 162.50 calls about 3,000 of these were bought about $1.50 is what they paid for it, but also selling the 170s against this. it's a call spread i'm in this. i'll be in these for about a month. one more for you that's much, much bigger. the xrt. we don't talk about this a lot
here we are with the retail etf. very, very well balanced we've got some buyers down in here stock a little lower on this one as well. traded about 38.80 at the time they bought these. 22,000 of these calls. cost about 25 cents. these go to september 6th. that's when they expire. these aren't a full month. this only gives you a little over a week. i'll be in these very short term but these are the 40 strike calls. keep an eye on this. >> quick one for you, scott. proctor & gamble pg it's had a great year so far look at the performance. and now they're coming in and buying november calls. with the stock at 120, they basically are buying the 125s. they just took profits on the september 120s now they rolled those profits up and into the 125s. obviously, $5 higher i'm in these probably be in these until the second or third week of october. another one real quick about the consumer look at mastercard today ma mastercard is pretty flat. it's basically 276 but this one
has outperformed all year. continues to be one of the stocks the people focus on for how is the consumer doing. we see them buying calls in september. i think these 280s that they're buying are a play on back-to-school so i bought them with them. i think they'll be in them two to three weeks >> come back this way. the investment committee is answering your questions straight ahead and you still have time to reach us. cnbc.com/halfcom or tets. 'rba iju about two minutes. pharmacist-recommended memory support brand. you can find it in the vitamin aisle in stores everywhere. prevagen. healthier brain. better life.
hi, everybody. i'm kelly evans. coming up on "the exchange." bonds have gotten way out of whack. is it a temporary cyclical aberration or global bond market structurally and maybe permanently broken discuss all of that. plus, a tariff hangover for whiskey. we'll talk to a distiller whose business has come to a complete halt and. terrell davis says cbd could have extended his career he's launched his own cbd line and will join us to talk about that >> good stuff, kell. see you in just a bit. let's answer some of your questions. annie in portland has a question on j&j
brenda, you own the stock. what's the advice? >> i think you continue to hold it here. this is a good company with great fundamentals if you can look past the headlines into baby powder and opioids, the underlying business is still growing nicely. likely to have above industry growth trends. the stock is still attractively valued we like it here. >> jon, mike in columbus, ohio papa john's. >> obviously, now that they have gotten out of the trouble that they were in with the former founder and ceo, people have just poured back into this name. you take a look at it just in the last couple days the amount of upgrades a $60 target mkm took them to a $55 target today. i like the activity. and i think a lot of people have loved this one for a long time if it weren't for -- >> don't miss board member, investor, nba legend, the big aristotle. >> shaq! >> nobody better than shaq fu.
>> the diesel. >> best investor out of sports ever how about that >> superman. >> he is superman. >> the big cactus. he has like -- >> you're going on and on. >> he has a million. >> the sheriff >> shaquille o'neal. he's going to be up next we're looking forward to that on "power lunch." peloton disclosing its s1 as it prepares to go public leslie picker is following the money with those details i joked earlier, i called it a fitness company, but, boy, peloton is calling itself a whole lot more >> yeah, media, technology, fitness, exercise. you name it. they are describing themselves as that type of a company. media, software, product experience, design, retail, apparel, logistics so many areas that they are involved in. and what's interesting when you look at the prospectus, the high level financials look solid. they are doubling revenue. pop line growth doubling year over year in the year through
june losses quadrupling but still about 2 $00 million relative to that billion-dollar top line which is an improvement compared to some of the other ipos we've seen recently. but it's harder to get a sense when you really drill down into the subbusinesses how much they're making on the various components how much are they making for tread, for example the treadmills that they're selling versus the stationary bikes that they're known for they say that they have a significant majority of the revenue coming from those bikes, but they don't actually break down exactly the differentials there. so it'll be interesting for investors and analysts to dig in and find an appropriate valuation that makes sense for this ipo >> because you've got lower multiple if you focus just on the pikes. higher multiple if you focus on the subs and the recurring revs. but that's only 20% of the revs right now. so investors really have a decision to make >> and one could say if you buy
the hardware, then you ultimately get roped into this subscription model so there is almost a lagging indicator, so to speak because right now they've only been selling the treadmill since 2018 and they've only been selling the bike since 2014. so theoretically the more people that purchase these, the more subscriptions you will sell over time now how investors model that out remains to be seem and the gross margins for both of those in 2019 were almost equivalent, 43%. i think a lot of that has to do with their hardware is visitically integrated visitically. so they are able to capture higher margins at this stage they say they should be able to provide more and more over time. >> do you want a piece of this >> yes but i would flip it quick. >> as you normally do. >> it's very fast, very fast
how worried should investors be activity with stocks seeming to ignore this move in the bond market >> well, seema, i think the world is confused about an inverted yield curve it's not a switch that causes some sort of recession it's a predictor it's not a very good predictor, but with the 30-year yield at 1.93%, there's only two reasons to be buying bonds either you expect to flip them higher good luck with that. or you're not scared, you're terrified. >> if the 30 year-year-old cannot find its way back to 2%, what will that mean for equity investors? >> scott mentions basically the cup half empty, which is the inverted yield curve, people want to say recessions banks are going to have trouble with earnings going forward. but below 2% on 30 years out i think there will be major share buy-backs going on they can do it out to 30 yields and get dividend yield that after tax is better than the
interest rate that you're getting at the 30-year yield there might be some vol kilt ahead. >> brian and scott, we are back with our digital shows tomorrow. "half ti" ll bmewie back after this short commercial break. this is my headquarters. this is where i trade and 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. visit learnfuturestoday.com to see what adding futures can do for you.
>> i think the risk was actually positive on china news i think if it keeps getting bad, the market can go lower. if we get positive, it will trade 20 times its earnings. >> do you have a target in your mind best case >> it's going to be way better if it continues to be worse, it'll be a little bit worse. it's asimmetrically positive >> pete? >> i'm going to give you as a final trade today amd. i am seeing some paper in there and they're buying a little bit more time than we have been seeing generally overall so we're seeing some of that to the upright. >> urban outfitters. i think it's back to school play they are buying september 6th expiration calls >> brenda? >> cvs becoming more of an integrated health care company that should shift. >> farmer jim. >> here's an investment that people should mathink about makg
in the back half of the afternoon. >> go get them, jim. >> marathon petroleum. take your tow-hold in. seven times earnings what do you think we're going to run out of diesel fuel not me >> we might run out of time though, if you don't stop. [ laughter ] "the exchange" begins right now. thank you, scott hi, everybody. here's a look at what's ahead. another crazy yield sign the s&p 500 is now yielding more than the 30-year u.s. treasury bond that's only happened once before what's it telling us we will debate and a tariff hangover. we're going to talk to one distiller who's seen his europon profits sink to zero as trade wars continue. what he plans to do to fight that and who may be affected next plus, former denver broncos running back tyrrell davis is here who he's betting on this football season. we'll get into a