tv Fast Money Halftime Report CNBC March 4, 2013 12:00pm-1:00pm EST
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worries about the housing industry, slowing growth within china, pressuring the market today. shanghai saw its worst drop since august of '11, and the company known as the google of china falling today, even as google hits an historic high. baidu's reports the profit margins have been squeezed. apple goes lower. someone asked, can you create a
triple "q"? that sums up today. back to headquarters. wapner and "the halftime." carl, thanks very much. welcome to "the halftime show." four hours till the close. right there on the wall is where we currently stand. a somewhat down day for stocks. still searching a bit for direction. here's what we're calling to "the half." seeing ghosts. what to make of china's real estate market, its empty cities and whether it's a bubble ready to bring down the economy. after a 33% run, is ittime to dump safeway? o first, the headline that stunned wall street. the dire warning of another financial crisis and stock market crash. there it is on the wall. it is courtesy of a well-known chart watcher, the man who made it is here to defend and debate
his prediction with our traders. we're joined for the next hour by anthony, joe, simon baker and john najarian. size up the markets given the weekend, the sequester and everything else factoring into it. >> sure. i don't think much has changed since friday about the marketplace. i don't view the market right now as whether you want to be in the market. all the evidence suggests that you do want to be in the market. it's a matter of where you want to be. you have a u.s. dollar that continues to rise. i want no part of energy and materials. what do i want? utilities. consumer staples. 44 new s&p 500 highs today. ten of them in the consumer staple side. a defensive rally. the arg this morning was we had seven in a row that were down. not so today. tuesdays are better. it's a market you want to be in. it's all about how you want to be in it. and defensively seems to be the right play. >> we mentioned this headline that shocked a lot of people on the street. let's bring in the man who made it.
walter zimmerman is chief technical analyst at united icaps. walter, welcome. when you drop a headline like that, another financial crisis coming, a market crash, you need to be here to debate it and defend it. why do you think that's going to happen? >> well, for one thing, if you step back and look at the bigger picture with the s&p 500, it's been rallying since 2009, yes. but it's formed a big bearish rising wedge. as if to underline the ominous implications of that, you're now getting divergence, sell signals on daily and weekly charts. >> you're basically making a technical argument as to why the stock market is going to have a massive correction? >> yes. >> a lot of that might be lost on some people. you're also talking about sentiment. >> yes. >> momentum. >> yes. >> things that people can more easily identify with. you're saying sentiment's too bullish? momentum's been too fast? >> sentiment is definitely too bullish. in fact, you have to go back to 1997 to find a period of time
where this many people were this bullish for this long. and at least the 1997, you had the market leaping to new highs. here the pace has become glacial. it's crawling higher. >> climbing the wall of worry we say almost every day. >> yes. as far as momentum goes, you wouldn't have bearish momentum without a bearish rising wedge. the two go hand in hand. and so it's no mistake that there's this bearish rising wedge. momentum confirms it. sentiment confirms it. we're reaching historic extremes in all of these things. euphoria is reigning right now. and that is the same type of euphoria we saw in 2007 and back in 2000. now, if you take a step back and look at the even bigger picture from 2000, the pattern that emerges is what's called a broadening top. you had a new high in 2000, big selloff to '02. new high in '07. big selloff to '09.
now this move-up, if it makes a new high, it will complete a massive peaking power. i think there is a case for that. we've been looking at 1480 as critical support. that held. so there's a chance of one more leg up, maybe to 1590, best case. everything leads to a big brick wall overhead at 1590. >> joe? >> you know, and this is where i utilize technical analysis. i think it has a purpose, but this is where i think it gets a little scary for folks sitting at home. in terms of a technical formation, you still have the s&p over its average. let's talk for a second. you cite euphoria and a bunch of people that everyone's in the marketplace right now. what's the statistical evidence to that rather? you just don't see that. when you see actual fund flows right now into mutual funds, when you see fund flows into
taxable fixed income versus equities themselves, investors still are gravitating towards the taxable fixed income. i would argue with you that this is actually really when you say it's a slow grind higher, this is really a short squeeze on pessimism itself. >> but you mentioned a lot of things there. one about the fund managers. you have leveraged length in funds now for the first time since 2007. >> listen, i'll give you the statistical evidence that i'm presenting on the mutual fund side. i'll talk billions of dollars and what the fund flows are. if you look at february, they've slowed significantly from the $81 billion that's actually come into the market in january. what's the statistical evidence? you're talking in generalities. >> no, this is not a generality. i don't have a chart handy, but funds are getting leveraged long now. and i would just ask, why are they just getting in now? this is a rally that's been going on since april of 2009. isn't it a little late to be arriving? you're near new all-time high.
it's a bearish rising wedge. sentiment is euphoric. >> to suggest that funds are just getting now long is completely incorrect. there are funds that have been in this market and riding the rally on the institutional side since 2009. the argument right now presenting itself in the market is the great rotation about to unfold out of fixed income into equities which would signal that a top as you are saying potentially -- >> let me also get in. walter, you also make the statement that the financial markets have become so far ahead of reality. >> yes. >> that the fed has largely juiced this rally, and it's standing on straws. are we discounting the fact that the economy is improving? i mean, earnings weren't as bad as people like you probably were saying that they would have been. the economy's not nearly as bad as people like you probably think it is. et cetera. >> well, it depends how you connect the zdots.
that's what it boils down to. as far as is the economy really improving, the latest quarterly gdp was not that great. >> no, it wasn't great, but it's likely to be revised upward. i think there were certain metrics within that that suggest that it's not as bad as the headline number would say. >> you know, when you look at it adjusted for inflation, earnings, median household earnings, is not really recovering. the latest income numbers were pretty lousy. retail sales are looking pretty lousy. what i mean by a financial crisis is when the stock indices gets so far ahead of reality, then the degree of correction needed to align those things becomes traumatic. >> walter, i don't want to interrupt the question. >> sure you do. >> i had to say that as a segue here so i didn't sound undiplomatic. 2007, you're at your peak.
the earnings have doubled since then. we've retraced back to that peak. >> right. >> so if you're a fundamentalist which a lot of people are at this desk, not a technical person, you'd look at that and say okay, the stock market isn't unattractive. it isn't unreasonably priced. mr. buffett this morning said he's a little less sanguine about stocks but in general most value investors and most fundamentalists are looking at really positive things for stocks. the fact that there's no wage growth means that's good news for inflation. i'm making the argument that there's a decoupling that corporations are doing so well, the american household is doing less well, but that doesn't necessarily mean it's bad for stocks on a fundamental basis. >> two things. as far as -- >> how was that, joe? was that okay? joseph? >> good job. >> farce this being a consumer-based economy, i think that 70% number is still accurate. you've got to think at what point is the s&p so far ahead of being of this lagging consumer
influence? y now, you could say the s&p 500, they're all strong stocks. they all export a lot. >> in 2007, it was the tightening cycle from the federal reserve at that point? exactly what i just said. it was a tightening cycle. right now it is easy monetary policy. it's two different environments of liquidity. you talk about the consumer, but the consumer right now has the tailwind of easy monetary policy at its back. >> in theory -- in theory, that is that really trickled down? it's trickle-down economics. when you look at median household income, adjusted retail sales, it hasn't trickled down yet. how long is it going to take? >> are you suggesting that people need to just go to cash under the mattress at this point because of what's going to happen in the market? >> i'm suggesting that if you're long here, pick an exit point ahead of time. maybe it's that support line for
that bearish rising wedge. tell your broker, look, i don't want to be long in this line breaks. >> where is that line right now? >> it's down -- it's right around the 1420 area. >> that's a long way off. >> it's a long way off, and we may go to 15090 first, but an ounce of prevention -- >> i go here to jon's world where the vix is trading at 14. >> the problem with being scared money over the last year has not made money. zloo that's rig >> that's right. >> it's an easy cowl to get out. it's so difficult for retail investors to get back in. i would make the case, too, it's been one of the most worst-hated rallies. a lot of my cleents haven't participated in the equities market. hitting an all-time is like the indexes are itching to get back in. when we see that pullback, people want to get back in. my question is if you do see a little correction, what's going to change your opinion to get back in? >> a little bit of correction is one thing. 14, 15, that would be a little
bit of a correction. but you break much below that, you're breaking a longer-term uptrend line from an overbought condition with euphoric sentiment, with momentum divergence sell signals. everything that individual investors tend to ignore, they ignored it in 2007. they ignored it in 2000, and now they're back. into the same vulnerable worrisome set of overbought technicals that occurred in '07. >> you're the technical guy, and i'm not. so let me ask you this, sir. if indeed we've got the market back to where it came from, which in my mind is not a bull market, when you recover from a big selloff, that's not a bull market. you're just back to where you started. i mean, so for me, as an investors on my side, more of the fundamentals and so forth, i respect what you're saying about the charts and so forth. but i'm just back to where we were, and i think most people when they're looking at the 401(k)s and all the rest, they
would be wise to take your advice and have some point at which they would exit or at least to joe's point buy protection. but wouldn't you think that most people who are watching the market here are committed, have been committed for most of this ride except those that got flushed out at the bottom and are instead thinking that they could have a lot more upside because of the easy money that we mentioned as well as the growth of earnings? >> walter, i'll give you the last word, then we're going to run. >> well, the thing is, that's the same thinking in 2000 and 2007. if you look back at the bigger picture since 2000, it hasn't been a buy and hold market. it's been a trader's market. >> i agree with that. >> huge swings. >> but we weren't at 0% interest rates in '07. >> yes, we weren't, but then why do we have a bearish rising wedge? why are we having momentum divergence? why haven't we broken out to the up side already? and even if we break out to the upside, it still looks like a big broadening top. >> walter zimmerman, provocative
headline, good discussion. transocean announcing it will restore its dividend after pressure from shareholder carl icahn. he told me too little, too late. he's also planning to put up his own slate for the transocean board. shares of rig getting a little pop there. you'll see up a half percent. so off the best levels. but the point is, when icahn gets some people of his on the board of companies, their performance tends to be pretty good, right? hain up almost 180%. there's biogen, a couple of buyouts there. not to mention the fact that of late the investments that icahn enterprises have done, joe, have done tremendously well, right? except for rig. but that's still a work in progress. netflix, up big. some of the other names, cvi and whatever else, up big as well. >> motorola worked well also. carl is on a hot streak now, but
i think this is more about rig itself and the fundamentals and a name i think you should be in. we've gotten past the worst. i like what's going on with energy, and it's in a perfect spot right now in the low 50s. i think you buy it. >> you like it because icahn's in the game? he's obviously gearing up for a fight. >> it adds to it. i think that's good. but i also pull carl out, i still like the fundamentals of what's going on in the company. >> stock is down 60% over the last five years in rig. coming up on "the half," can u.s. stocks withstand china tightening, sequester fallout and italian election dysfunction? gemma godfrey will tell us how she's playing the market coming up. is apple's pain google's gain? we're heading to the nyse to find out what's the better buy right now. much more "halftime report" is on the way. but we can still help you see your big picture. with the fidelity guided portfolio summary,
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welcome back to "the halftime report." i'm jackie deangelis. take a look at material and industrial stocks, on the move lower today on worries about china. this, of course, coming after china announced new cooling measures for home prices. that on the back of the shanghai composite suffering its biggest drop since august of 2011 and taking its toll here as well. take a look. cat is down more than 2%. rio tinto, u.s. steel. scott. >> you want to trade some of these names?
>> i think caterpillar is a buy. it's not exposed to residential. it's more commercial and industrial. i'd be buying cater pillar. >> overreaction to a headline, doc? if you put the "60 minutes" thing, plus the news out of china, everybody's getting scared now. >> well, no, that's the problem. they're not getting scared -- >> down almost 4%. >> well, yes because when they say they're going to put their foot on the brake, they really do it. here we talk about it and we talk about strong dollar. >> that's why everybody's getting scared. what happens if china's growth is a real problem? >> they put on the brake for the property market over in china. that's what the foot is on the brake for. it's not for the rest of their economy. so i don't think that this is more than a couple-day move on this one, joe. >> not only do i agree with jon on this, i actually think because of the regime change, they are going to quietly stimulate the economy so that they can gain political favor. those nine new people that just took over the polit bureau, i
think this has been a well-managed decline in their growth, and it will be a well-managed reacceleration in their growth. we all recognize that they have to do something to stem the property bubble. so 18 months from now, you'll see positive numbers that will surprise wall street. >> okay. so buy materials right now, then, joe, right? >> no. don't do it. no exposure to coal or flat spot price of oil. >> anthony's giving you a thesis as to why you should. >> i disagree. >> he's dealing with it on a much shorter-term arrival. >> absolutely not. i'm looking forward throughout 2013. i think materials are set to underperform for the entire year. the pmi was a little soft. the pmi nonmanufacturing a little soft. it doesn't mean the u.s. equities market is going down. it means the dollar is going to be strong. and the market can go up in that environment. it's just no, i don't want to own materials. >> well, in addition to china, sequester cuts and concerns stemming from europe and italian elections all weighing on investors.
will the wall of macro worries continue to shake the markets? let's bring in gemma godfrey who joins us from london. it's monday. gemma's here. nice to see you. >> nice to see you, too. thank you. >> so we add china now back. >> yeah. >> to the wall of worry, right? what does it all mean for the market? >> well, it shows that global concerns are resurfacing, and any retrenchment is healthy. in terms of what's happening with china and trying to call their property bubble, it's positive politically, neutral economically and healthy with respect to markets. so it's positive politically because it highlights how the government is going to remain focused on trying to avoid -- prevent a property bubble. it's neutral economically because it's actually the ninth time they've implemented a control mechanism in ten years. and during this period there has actually been, you know, property prices have rallied. there's a lot of skepticism. it's more likely to avoid a crash as opposed to put the
brakes on anything too harshly. and finally, we're seeing profit taking, and that is healthy at these levels. so it means from our perspective on what we're looking to invest in, it's given us cause for concern over consumer staples because we think they've run potentially too far. but, for example, for some cyclical stocks, this might provide an attractive entry point. >> yeah. i mean, but here we sit, you know, 110 points or whatever we are away from the all-time high on the dow. i mean, it's had a great resilien resilience, obviously, but also the ability to look past a lot of the noise that's been around. >> i mean, the way that the markets are trading, it's quite interesting. it's more -- i guess i'll use the term second derivative. it's less about the data. it's not even about the underlying drivers, but it's actually about how investors are interpreting it. if we look at, for example, the u.s. spending cuts on friday, it wasn't about the amount of the size of the spending cuts that were implemented or the effect
that a lot of people are coming out with the effect on growth. it was more investors turning around saying, you know what? this is going to force the government to remain accommodative, and that's really what's driving the markets as opposed to the underlying data. we are still seeing certain signs of cautiousness. we're seeing yes, people buying into the equity markets but also going to safe havens. and another fact to put into the pot here as well is that short sellers have reached kind of a multiyear low in american equities which again shows that they're being squeezed out of the market as opposed to having strong conviction. so again, this kind of plays into our view that short term we are nervous. and a pullback would be healthy to try and get longer-term investors into the markets. >> gemma, thanks so much. >> thank you. >> gemma godfrey, brooks mcdonald. next, from casino stocks to certs, our top three trades.
and google versus apple. one gets to the high, the other, the low. we're headed to the floor of the big board for some answers when we get back. how do traders using technical analysis streamline their process? at fidelity, we do it by merging two tools into one. combining your customized charts with leading-edge analysis tools from recognia so you can quickly spot key trends and possible entry and exit points. we like this idea so much that we've applied for a patent. i'm colin beck of fidelity investments. our integrated technical analysis is one more innovative reason serious investors are choosing fidelity. now get 200 free trades when you open an account.
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welcome back to "the halftime show." it is time for the top three trades. let's go to the wall for our first one. it is yahoo!. the stock is up 2 3/4% on an upgrade from barclays. simon. >> upgraded on the assumption that ali baba is undervalued. they increased the price target on it. >> doc is always watching the casino stocks. that's why he gets las vegas sands. why? >> it was off much harder on rumors that they were going to be charged with some sort of bribery. that hasn't come to pass. you've got jpmorgan defending them. the stock bounced from $2 selloff, judge, to almost
unchanged. now it's down about a percent. but still well off the lows of the day. >> joe, what's up with the ferts? all getting crushed today. >> corn and wheat down today in the futures space. now, the entire ag space itself under pressure. you've got to be stock selective here in knowing what names you want to own. i like santo. you've got to know your in particular name. agrium, that's the name i think you could own. >> you talk about the difference between? >> diversification. diversification. >> why do you say no to some and yes to others? >> diversification and the ability of management to drive shareholder value, return of capital. >> another day, another milestone for google. the current street darling hitting a appreciate high adding to its 15% gain since the start of the year. our very own steve grasso has been bullish on the name all along. he joins us now from the floor of the stock exchange.
grasso. >> what's up, brother? >> did this reverse itself, sort of this apple move one way lower, goingogle good the other way? >> i don't know if it reverses itself. you know, i don't think you're going to see guys dump google to bet back into apple. i think what people are doing now is it's lack of google selling, more google buying and a presence of apple selling aggressively. that's what you're seeing. >> it's funny, you had this big price target put on google. i think it was last week. a lot of people said hey, is that a sell signal? and the stock has continued to work higher. >> because they're trying to use the same mental state that it was for apple. those price targets were sell signals for apple. but apple's out of favor until the next catalyst. maybe it's a product that comes -- they've come out with. google is much more than search now. that's why you see that strength. >> you know, for me, i've been buying google from 700. i've been in and out of the name because we're traders, not investors. i'm staying long the name until
it breaks down below 785. >> look, a lot of us are investors. i know a lot of people watching are obviously investors. what about apple? a long-favored name by you. >> i actually own apple, but what i own of apple is basically 20% of what i own in dollars of google. i'm waiting for that next product catalyst for apple to pop or some type of a dividend change or a buyback. there's a bunch of catalysts that would make it run back to 500. we're waiting on it. thanks, guys. >> what about you guys? >> i would look at ibm. it's returning to the breakdown levels off of earnings. so you had the earnings spike up to 208. then it moderates. it's back to 204. it's great defensive technology play. i think right here it's going to break out above 208. >> anthony, pretty interesting move, right, when you see google going up, the divergence, apple can't get out of its own. and google, i don't know where the stopping point is. >> until you see tim koch show up somewhere with funky glasses
like sergey brin or you see some kind of masterful representation of their innovation story, apple's going to be languishing, and that's the big issue. >> you're talking about potentially -- >> has anyone seen the new google phone? it's ridiculous. >> koch's going to show his new watch, not glasses. >> everybody's got the watch on the phone. simon's making my point. >> are you saying that they need to come out with something completely transformational for the stock? >> no. they need to reinvent their innovations story. they lost the best messenger in the world on innovation, unfortunately. they have a team of great innovators, but they've lost their edge in terms of explaining themselves. look at the image of sergey brin with glasses on that none of us would wear because we would not understand how to operate. but there's a cool factor now to google. it's being represented in its share price. >> and judge, if anybody's going to monetize mobile to compete with google, it will be apple. and that's where they got to go
next, i believe, because they have the eyeballs. they have the various stores. that's what i've been pounding the table on for months. they have not gone there yet. when they focus on that, that's when the stock goes up. >> back to you, anthony, it's interesting how the hedge fund world that you know well has moved almost en masse except for a few big names here and there. >> the value guys are rotating into apple. the momentum growth guys and the story behind apple, that explosion to ride that momentum, a lot of those guys have left. apple is still a great name. they've got a ton of cash. it's great fundamentals. but they have to re-ignite that story. >> listen, i know we have to move on, but real quick, if apple is where it is right now at the end of the year, i think you have to begin to have the conversation about is tim cook the right man to lead apple? just my opinion. >> all right. we shall see. let's hit the biggest pops and drops. let's trade more stocks. target, simon, getting a pop. >> yeah, a little pop. increased their price target. wells fargo increasing the price target last week.
nice pop today. >> asus popping? >> printing, that's what it's all about. >> however you say it. >> the stock is up 6% or more today. it's just like the cell phone or like the fax machine. each iteration is going to come down in price. and each iteration is something that gets closer to what regular joes and janes can buy. as that happens, this stock will be higher. >> best buy's popping, joe. >> you saw from that bug picking that your brother gave you on friday, or have you worked that off just yet? >> no, not yet, but pete's been right. >> he has been right. he talked about management turnaround, margin turnaround. i think best buy continues to move higher. you talk about sentiment. look at the credit default swaps. they went from 23% all the way nine months ago down to 5%. that tells you best buy is healing. >> and celgene is dropping, simon. >> yeah. what's the name of the drug that came out for the dandruff? i'm not sure. maybe you know which one.
>> why don't you just look at the prescription. don't look at me. >> the guy that doesn't need any. >> suffice to say, dandruff is still happening and the stock doesn't like it. >> and a pop for batman. police in england were shocked last week when a crime fighter in a batman costume delivered a wanted criminal to their stations. the vigilante's physique didn't match up to batman's big-screen appearance, was captured on camera as he brought the crook to justice while batman's true identity remains a mystery, his bat story is quickly flying around the internet. >> the fact that it's the 1968 version of batman, thank god. >> he's got your tighty whiteys on, too. as we head to break, let's take a look at the s&p at session lows. it's being dragged lower by energy stocks. as oil drops below 90, we're tackling those moves after the break. plus, we have new evidence retail investors are all in this market. we're going to name the stocks they're buying. and should you invest like warren buffett's new investment gurus? our traders will make the call
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will exit its trading businesses. this coming on the heels of some pressure from activist elliott management to break the company up. elliott is the third largest shareholder. now, hess also saying that it's going to buy back up to $4 billion of its stock and increase its annual dividend to $1. that would happen in july. back to you, scott. >> thanks so much. let's trade some of these names. joe? valero, good year? >> off course. >> marathon? >> the refiners continue to have the favorable tailwind of t.i. contracting significantly, relative to brent. i thisnk that continues. gasoline as a future product remains strong. i also would say i like what's going on with hess here. i would own hess. i would also look at anadarko and oxy, those that have the presence in the u.s. they are clearly going to see activity both on the m&a side and in return in capital. >> simon, do you agree with that? the spread between brent and wti remain wide enough for the
refiners to keep making what they are? >> i think so. i think he's dead on. i think you play those names, good exposure with shale. >> doc? >> mro, i think that's underperforming clearly versus a stock like western refining wnr. i like both stocks but on the valuation level, i like marathon better. >> all right. is the everyday investor missing the bull market or jumping in? today t.d. ameritrade is tracking the trades of its clients. joining us is steve quirk. good to see you again. >> thank you. >> what can we make right now of sent snimt where is it? what are you seeing? >> well, we're at the highest point we've seen since june of 2011. we've had about seven months of increasing exposure by retail clients. obviously, we're within a whiff of multiyear highs. >> some would say, i mean, question whether it's late, whatnot. we had a guy on the top of the show who dropped a headline today. >> yeah, i saw it.
>> you know, pending doom, basically. >> yeah. the only positive news i would say around that is number one, they're participating in the rally. number two, and jon will be able to talk about this a little more, since 2008, i would argue retail traders have become very nimble. 40% of our derivatives or our trades are derivatives. they know how to use options to protect themselves. so even if they're sitting in for what we -- some might think are the last legs of the rally, they know how to protect themselves. >> so when people like to throw out terms like the retail investors, the late money being the dumb money. >> yes. >> in fact, retail investors are becoming smarter in how to play the markets. >> if you look what they're doing within their portfolios, they're actually doing some reallocation within their portfolio. if you look at what they're selling, they're selling the names that have had noticeable appreciation. you know, they've been selling names like jpmorgan or netflix that are multiyear highs and
purchasing things which are seeing weakness like apple or facebook. >> intel, conoco. that's interesting. doc? >> "q," i want to ask you, because steven was a former floor trader on the chicago board, so i know him as "q." "q," the reason i like your pull over at t.d. amerie tad is "a," these are real people that have money, skin in the game, rather than just a poll of conference board or anything else, judge. so when you see the people who have skin in the game are still willing to stay in the game and as steven has said, are smarter and are protecting themselves, availing themselves of these derivatives, i think that's why they're staying in the game longer. >> that's right. because now they have the ability to stay in the game. even if we do see that move, which hey, look, we just saw a 30-point down move the other day, and two days later we're right back at that level. i also think there's a bit of a bid that's underlying some individual names and jupd lying the broader market. >> with the etfs growing as much
as the last four years, would you account the etfs have grown and getting in and out of exposure that way? >> yeah, liquidity is insane on those broad-based etfs. when you look at what education is available out there, a lot of it is on etfs because the diversification is so great. yeah. i mean, it's great. they're great for retail clients. >> steve, good to talk to you. >> thanks for having me. >> t.d. ameritrade. coming up on "the half," is there still time to get in on one of this year's best performing stocks? two traders debate whether safeway's rally has more room to run. "the half" is back in two. >> "fast money" means trading. everybody has to bring their best information each night. the entire trading day is the preparation for the show that night. >> it's idea generation. it's all about giving you a framework for how to look at the market. as the world has changed, our show has evolved. i am guy adami. i am "fast money." >> i am pete najarian. i am "fast money."
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morning, no worries. we have the best of buffett. we'll get his take on why he thinks stocks are still cheap, selectively so. what he has his eye on and what he thinks about the events in washington. then we'll analyze his stock strategy with traders. it is a special "power buffet" edition with warren buffett beginning at the top of the hour. back to you. >> thanks so much. see you in 15 to 20. one of the year's best performers, shares of safeway up 33%, but has the stock gone too far, too fast? simon baker's our bull. dr. j is the bear. 1:30 is on the clock. simon. >> the reason it's going up, it's going to continue to go up. ten times earnings is cheap, 3% dividend, very nice when you're holding on to the stock. catalyst why it's going to go higher, i think there's a possibility they're going to unlock shareholder value. the loyalty program is doing very well. you look at the competition. they struggle a little bit. safeway and costco recently reported disappointing earnings.
safeway is a nice way to go and be safe and get the stock higher. >> well, i agree with that to a point. but unfortunately, they've got walmart. so that's my number one point against this particular trade, simon. walmart, because the expansion in grocery and in organic grocery. so i'd say walmart and whole foods are going to start hurting these guys even more. the payroll tax credit -- or the tax cut that went away, i think that's a headwind for them as well as $4 gasoline. and finally, we'll know if i'm right or if simon's right. wednesday this week, because they're going to be giving guidance wednesday. and i think it's going to be bad. >> walmart's been increasing their prices, too, at increased margins. i think it's pushing people out there into safeway. there's a 30% squeeze on safeway. it's going to be a nice little squeeze with people like you out of it losing money on wednesday. >> we'll see, wednesday, march 6th. >> year to date, no contest, safeway up 33%, walmart is up. >> because that hadn't hit, by the way. because that payroll tax
increase back to what it was hadn't hit yet. >> we'll see. >> tell us who you think won the debate. joe, who made the more compelling argument? >> doc mentions the march 6th analysts day. i think that's going to be important. i think it could rally into that, the just-for-you program. they'll talk about that. i think longer term you measure out three to six months, this is a stock that should be trading between $15 and $20. >> tweet us @cnbcfastmoney. use either #bull or #bear. we'll have the results at the end of the show. it was one of the most sought-after jobs on the street. buffett's investment manager and the two guys that won the job couldn't be doing a better job. according to the oracle this morning. >> now i'm giving some money to the two other managers. in fact, i'm going to -- i'll make news for you today. last week i told them i was going to give them another billion. they're just under $5 billion right now and they'll be around $6 billion on march 31st when i give them the next billion.
>> double digits last year by investing in companies like da vitae. visa, mastercard and directv. we want to find out what our traders think about some of the names. daddy's handing out a little more allowance. >> only a billion more. >> only an increase of 20 some odd percent. look at the names like davitae. those are names that are high beta and, of course, correspondingly high risk, look awhatted intuitive last week. but it did come right back. i think these guys are investing in innovative companies as well as steady-line companies. >> visa, mastercard, directv. >> i love visa, longtime lover of visa, but i think what this really speaks to is are they using leverage or not using leverage? it's very hard to beat the s&p 500 by 10 or 20 points a year. mr. buffett was saying earlier today that you should be using a low expensed index fund. and yet he seems to think that there's a few gurus out there
that can beat the s&p. it's very contradictory to me. i'll continue reading mr. buffett to try to figure out the answers here. >> yeah. and joe, i know you like visa and mastercard both. >> i do. i also like directv. these are good investments. these two gentlemen obviously had a good year and hopefully for mr. buffett when he comes back and talks about it again next year, they did so again. we shall see. coming up, not so fast, anthony, it's your turn to show us how to manage a losing trade. and you tweet it, we trade it. four plays on four stocks you asked for on twitter when we come back.
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not so fast. our traders are quick. they are not always right. let's take a listen to what anthony said about facebook back in january. >> this stock is going to explode on the up side. this is a $50 stock. you guys know, i don't like high multiple stocks, but this is in the right space at the right time. >> all right, stocks down 15% since then. you still like it? you must still like it. >> listen, i still like it. but this is a couple of things wrong with this trade personally, something to mention to viewers. i got outside of my personal zone as it related to fundamentals a and valuation. i looked at the stock on the trading pattern and i'm thinking about the explosive growth i think the stock can have long-term. as a result of which, all of the things, all of the discipline i would bring to something here, i
didn't bring necessarily to this trade. can you see how disinterested guy was when he was trading against me on it. message to viewers, you can get yourself hung up if you get out of your comfort zone or what mr. buffet calls his circle of confidence and clearly i was there. it does happen to people. try not to let it happen to you. >> doc, you have supporters on the facebook panels. you like it. >> yeah. one of the reasons my brother pete likes it, is he writes anthony on it. and there were april 28 calls against the stock trading 2772. i think that's the sort of position you want to be? . >> baker? >> i like how anthony did the trade for viewers sake. that is a lesson you were giving. you didn't think it was going to 50. >> it was after i used my dandruff shampoo. >> i like facebook. >> you changed the subject
really quick. >> that's okay. >> thank you. thank you for the take down graphic. can we throw another one of those and brush off the -- >> that's why i don't wear black. >> when viewers ask, we deliver with three trades on stocks. delta, chipotle. delta air lines yb simon, what do you do? >> stock is up. year to date. warren buffett says the airplanes and buzz model is horrible. buy linkedin. >> we should bring zimmerman back. stock has now gotten above 200. i think technicians are looking that favorably. i think valuation is rich and i would move to the sideline. >> anthony freeport. >> quickly, i would sell here. it is linked to china. >> that's why i think stock is down along with the basket of stocks with exposure there. stocks down 2%. final trades when we come back.
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