tv Fast Money Halftime Report CNBC March 14, 2013 12:00pm-1:00pm EDT
by the time we get to "fast money" tonight, we might have a record high on the s&p. >> we might have a perfect ten on the dow. tonight we'll count down to the samsung launch. we've got brian marshal o from isi about the apple tradeoff for this. and also asking about ibm's monster run. of course in today's session, a new high for shares of ibm helping the dow to power higher.
of course, we'll get the bank stress test results, and traders will give trades on the financials. they like the financials that have been left behind. you'll want to tune in for those names. >> that's "fast money." that's all that we have for "squawk on the street" there their thursday. now it is time for the "halftime report." thank you very much. welcome to the "halftime show." there are four hours to go before the close. on the wall, on the street today, the rally continues. the dow is up 59 points. s&p continues to march toward its all-time high, as well. here's what we're following on the half. mobile melee. with samsung rolling out its new galaxy in new york tonight, what will the fallout be for apple, google, and beyond? we'll have the play. offense or defense? with the s&p closing in on its all-time high, is it still safe to believe in the rally? traders will make the call. first, hour top story, perfect ten. that's what the dow is going for as the rally continues. the index already up 10% this
year, on track for its best first quarter since 1998. david tepper thinks stocks can go even higher. we'll see what our traders think. mike murphy, stephanie link, josh brown, jon najarian. josh, you first. >> yeah. ten days. the last time this happened we were listening to the spice gills. i can't believe the -- spice sgir girls. i can't believe the superlatives stacking up. there was a target of the high 1,-600s for the s&p. he's saying we better get a 4% to 7% correction at some point soon. we've called this a hot stove market before. i'm enjoying it while not adding to any new positions, keeping my favorites and allowing the markets to do the heavy lifting. i have no idea when this ends. >> doc, the market continues to go higher. we're at 50 points plus on the dow, working on ten straight days. the s&p 500 going for its all-time record high.
people keep calling for a correction, doc. where is it? >> well -- >> when is it coming? >> again, if you were seeing 1% moves, 1.5%, 2% moves, this a different market than we're seeing here. i mean, this is just really crawling along very slowly. i'm looking -- today, up 58 points for the dow. big whoop. 58 points is .4%. if you're long, all of you are happy, too. this isn't a super heating market based on that. take a look at the xlf. pete always talks about this, and we talked about the huge buyer of the xlf and puts a few weeks ago. it's up more than $1.50 from there for an 18-point index. the xlf is at the highest levels since larry was over at lehman. who we're about to bring in. i mean, that was october of 2008, folks. i mean, the xlf the last time it was over 1,850. take a look at that. these stocks ton work. >> i get it. stephanie link, look, everybody continues to think there's going
to be a correction sometime, someplace of some magnitude. yet it continues to go in the opposite direction. where is it going to stop? where is the rally going to end? what do you do? >> i think that the economic data continues to be positively to the upside, right? we had retail sales, light this week on economic data. but retail sales, better, initial claims, a little better. as i mentioned yesterday, the four-week moving average in initial claims is at cycle lows. jobs continue to get better. housing continues to get better. and i think those are really positive, powerful themes. what you do in this market, i think you sell some of the defensive stocks. the staples. really expensive. some of the health care names also pretty expensive. utilities are trading at a premium to the s&p while industrials and financials and tech are trading below the s&p. so i think those are the ones that you do. and that's what we've been doing. we've been rotating selling p&g, buying u.p.s., buying hartford. and i think that's how you continue to outperform the market. >> here's what i want to know, you've got one camp that's
afraid to get in. the other camp is afraid to miss out. who is going to win that battle? ultimately that's going to tell you where this market goes next. >> right. i want to touch on a few different points that the guys and ladies spoke about here. you know, doc was saying that it's a slow, steady move higher. that i think is the key. when you see a move, scott, of 1.5%, 2% rally, that could be a blow-off top in this market. that's where i'd get concerned. we were up five points on the dow yesterday, two points thereabouts the day before. these are very slow, incremental moves. right now i think the move is to stick with what's working. we talk about it all the time. financials are working. stay long. you don't have -- there will be -- market will not go up forever. there will be a pullback, whether it's 2%, 3%, 5%. i don't know. but if you want to protect yourself there, you have puts under your positions. we know the vix is trading at historic lows. you don't have to overthink this. if you are waiting to get in, i think you can get in at these levels as long as you're doing it correctly in sectors that haven't run too far too fast. >> despite the record highs, one
bear is not backing down. joining us larry mcdonald of new edge. welcome to the set. good to have you. why are you not backing down? the market continues to vote you and others off the island, right? >> yep. if you think about it, the last couple of years, credit spread con dangeron of this time -- contagion of this time of year hurt equity. a year ago in march, equities were up 10%. then we had widening credit spreads in europe, rising systemic risk hurting stocks. if you got -- if you stayed in cash all of last year, got into stocks in november, you're up 15% now. so systemic risk of europe has been a problem the last three years. and i'm seeing warning signs of that now. not as bad as last year, but rising warning signs. >> market completely seems to be oblivious to what's happening for the most part. out of europe, out of china, almost everywhere else because we've had this slow drip higher which has pocked up in pockets here and there. what are we to make of that? >> the equity market has consistently ignored credit risk
the last three years. so we've seen this over and over again. all i would say is the biggest financial institutions in europe are massively underperforming the biggest financial institutions in the united states on a credit basis. it would be like investment grade credit, subordinating credit, that tells me that they're very concerned about what's happening in italy, what's happening in spain. if you look at the top ten banks in italy and spain, their refinancing needs over the next 12 to maybe 24 months and the sovereign needs, it's -- you have to have deep credit markets in those countries to keep this going. >> guys, what do you make -- >> that's why u.s. stocks are working. everything that larry is saying is the bull case for u.s. stocks. nobody wants to buy european stocks. there's been a massive divergence since january. emerging markets peaked the first week of january. we don't even talk about it anymore. the reason why people want to l allocate toward u.s. stocks is because we don't have the credit issues that larry mentioned that the sovereigns and banks over there, number one.
number two, sentiment here is very different than sentiment abroad. >> larry's saying it's eventually going to catch up to us, right? you're making the argument -- >> we know that -- >> is there a human being on the planet right now, any human being, that doesn't understand that europe is in quasi-recessionary -- i mean, is any of this not discounted into the market? we've been talking about europe for three years. >> that's why you may want to take a look at europe. people do know how bad it is. and that's -- >> you point out that it's the same thing that happened last year and the same thing that happened two years ago. but that was coming out of a major financial crisis. you know, what -- i think what the market's recognizing and discounting now is what if it is different. what if you're not going to get the black swan out of europe? i think that's why you're getting a push up in our markets. people are starting to think maybe it is resolved or they're working toward a resolution. >> i agree 100%. the bulls have been right, bottom line. >> stephanie had wonderful calls last month. at the end of the day, we have had elevator shaft drops the
last two years because of european credit spread contagion. my point is, if i don't see european credit spreads on the big bank improve, i'm not that comfortable owning equities at this point. i'd rather potentially buy some equities now but save most of my powder for that elevator shaft drop. >> that's a fair argument. that's the best case scenario. that's actually what you would want to see. if this market drops 7% because of an italian bank blowing up, that would be phenomenal for u.s. investors to have an opportunity. if they're not fully invested at these levels. i think you're making a nuanced point. it's a good one. this is certainly something that we need to watch. >> should somebody dictate everything -- >> is there something you would be buying on the equity side? any place at all? >> well, on -- >> the u.s. -- >> i would argue, you know, japan is -- >> emerging supermarkets. if you look at the -- markets. if you look at the emerging markets, they're underperforming, the s&p by i think 12% over this year. maybe it's 10% or so.
emerging markets i think -- you look at all the articles about carlos slims losses -- when you see that, it's a seen that the e.m. space -- it's a sign that the e.m. space is a different story. >> stick around for the next story, a developing story. jcpenney shares under pressure again today. but a look inside the credit market may be the most revealing as to how much stress the company is currently under. jcpenney's credit default swaps, essentially insurance policies against the company's debt show an extraordinary amount of stress. even more than some of the big banks did during the heart of the financial crisis. for example, today penney's five-year cds is indicated at 1,008 basis points. that means it would cost you at least $1 million or 10% to hedge $10 million worth of the company's bonds. last year, five-year cds was at 300. you can see the difference. during the crisis, citi's cds got as pricey as the mid 600
basis points in early 2009. and a look at penney's direct competitors shows just how much more at risk the market thinks the company may be. macy's is at 105 basis points. kohl's, 183. both considered normal levels. it's very important to consider several things here. cds are speculative. especially in jcpenney's case, they're thinly traded vehicles. there's more. a look at jcpenney's most actively traded bond is priced at 8 cents on the -- 80 cents on the dollar, showing more worries. earlier this week, it was reported that hedge fund manager james diamond of york capital is shorting penney's debt, taking the other side of pershing square's bill action man and his bullish view of the company. we did reach out for comment on all of this. so far, jcpenney has not returned our call. larry, you're an expert on this sort of thing. when we bring you these kind of numbers, when i tell you the level that the cds is being quoted at, worried?
>> well, substantial worry in the sense that the strongest part of the high yield universe has been the cccs. only 20% of cccs yield more than 10% now. the ccc part of the high-yield index, the junk of the junk, only 22% of those bonds yield more than 10%. the point is junks on -- has been going well the last 30 days. the fact that jcpenney is underperforming is a warning sign. also, if when you see cds underperformance, blowing out, it's a great warning sign for the equity. >> we bring you this story because we look at the stock price on an everyday basis and can tell you shares up, shares are down. the credit markets can be an especially good place to look for, you know, if you really want to see what's going on inside a company and how the -- have a market view of how a company is, only go back to the
financial crisis for that. >> look at three our four weeks ago, morgan stanley's cds started to really underperform the rest of the financials and the rest of the investment grade and high-yield space. massive underperformance in cds. sure enough, like a week later, the stock lost 10% in literally five days. so when you see cds underperformance, it's a warning sign for the equity. outperformance, a phenomenal buying side of the equity. look at the mortgage insurers, the mortgage insurers' cds the last month has been spectacular. look at the equities. >> guys, i'd love to get you involved. i mean, the -- what you make of what we're seeing in the credit markets regarding jcpenney, how significant do you think it is really seems to be telling more of the story than the comments -- >> i wanted to ask you, just to follow up before mike goes, how much do you think the presence of a $15 billion hedge fund plus supposedly morgan stanley's high yield debt betting against the company, how much is that affecting and moving the price
of cds? these are not liquid markets. typically it's a counter party market. could you speak to what the influence of a short sale is themselves this year? >> one thing i talked about, they complained it doesn't take two or three hedge found move lehman's cds. not create a pan. you're right. you have to look at how much is trading in the cds versus bonds. one interesting thing is the last month to two months, the volume on the cds is actually more than the cash bonds, okay. so -- which is sign of risk coming back in the market. in other words, 2009 and 2010, there were more cash bond trading than the cds. >> those aren't real position takers. these are speculators essentially -- >> you're right. look careful at the bottom on the cds. there's moral liquidity in the cds than there was, say, a year ago. >> and you could have someone with a long position hedging themselves against armegeddon in the company by going long with cds. >> absolutely. >> if you look at the cds on jcpenney, it's been up at these
levels before. we all know jcpenney now has major issues going on. you know, i just think back to about 60 days ago. we were having the same conversation on best buy. you know be best buy was going out of business. it was at $11. all of a sudden it's doubled. everybody wants to upgrade the stock. i think the jury's out. >> we'll leave it there. thank you very much for talking about the market and jcpenney. let's show what the market's doing now. close to the highs of the day. the s&p 500 inching ever closer now it its all-time high, 1,565. would be an all-time high. a new record for the s&p 500. we're about four points away now. the rally goes on. and when we come back, citi's head of global strategy, jeremy hale, will tell us where he's seeing the biggest upside. a provocative note. the talk of the street. his bet might surprise you.
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as the s&p aims for a record high, citigroup is making a bullish bet on the u.s. of a. jeremy hale, firm's head of macro strategy, joins us to break down his big picture trades. welcome. a lot of people are talking about this note you put out. very bullish on america. >> good to know. >> yeah. i mean, we're watching the market march toward these record highs. you think it's going to
continue? >> yeah, but basically we're bullish on the u.s., on sort of economic outperformance story. so we expect u.s. equities to continue to move higher, at least through the summer. we think treasury yields will go higher. and we think the dollar will move higher. >> so are you thinking that you're going to get that so-called great rotation right out of treasury, going to push yields higher, the stock market's going to go higher in turn? >> i'm a bit of a heretic on the great rotation idea. the fact is that the flows never predict anything. markets will just reprice. but i do think that treasury yields will go up now. what we're seeing is correlation between good data, higher equity prices, and higher bond yields coming back. yields are going to go up. >> yeah. >> as far as credit goes, you know, for credit to perform as well as it did last year, spreads are going to have to narrow. that's going to be tougher. i think equities are the asset of choice now. >> what's led you to this view on the united states? is it the improving economic picture? a best house in a bad
neighborhood sort of theory that others have talked about? we're coming off of a much better unanimous expected retail sales report this week here in the united states. that has some calling it a game changer for the economy here. >> look, i think it you look at the under-- if you look at the underlying data, it's been pretty good for a while. the u.s. had a shallower recession, better recovery so far. and we forecast continuing widening of sort of gdp trends relative to the europe, u.k., or japan. the other industrialized countries. you know, income growth is good. wealth gains are there. capex is coming back. and actually even the current account's beginning to improve. i think the economy's going to continue to do pretty well. we think that it could be on an underlying path of 3% in the second half of this year. maybe 2014 as a whole. that should support u.s. asset markets. >> what about the dollar? i mean, the dollar seems to be on the strengthening trend. can the stock market and the u.s. dollar go up at the same time?
>> yeah. this is the real change in a way. we've got very used to the 2008 sort of 2011 experience. when the risk is on, the dollar is weak. u.s. investors pouring money into yen. and when the markets are weak, the dollar does well because foreign investors can't get financing for their dollar assets. that seems to be easing as an issue now. going back to how things used to be in the good old days when good data for the u.s. led to somewhat higher bond yields. and this tended to increase the value of the dollar. so we reckon the dollar will do well, especially against other industrialized currencies like sterling, the yen, swiss e, maybe even some of the popular but not doing very well smallers like norwegian. >> it's me, josh brown. one of the things i've noticed of late and strategist notice the risks have shifted from china hard landing and european disillusion. now the risk is bernanke's going
to pull out too early or rates will go up whether he likes it or not. what impact do you think that has on some of the areas you've spoken positively about? >> yeah. i mean, i think we are -- essentially we're saying that growth could be -- could be sort of a strong trend in the second half of the year. probably depends on fiscal policy. if all the sequester sticks, i -- we might have to shave it back a little bit. if the economy is growing as firmly as we think in the second half of the year, i think it's going to be hard for the fed to keep going at $85 billion a month. if they start to pull back or lower their asset purchase, market will start to discount and going away altogether. eventually they'll discount the beginning of the fed tightening cycle. i think that means higher bond yields which is dollar supportive. and at that point, equities might have a tougher time. so one of the trades we like is sort of buying calls for about six months out on the equity market. but selling them for about a year out. we reckon that might do quite
well. however much we think the economy is on a firmer footing now, earnings is good, corporate sales are improving, the fact is that investors have got very used to the idea that when the monetary accommodation is taken away, they're supposed to take risk off the table. it's unlikely that we won't go through a period of volatility when the fed's ready to withdraw accommodation. >> right. jeremy, it's great to have you. thank you very much for coming on to talk about your note today. >> thank you very much. >> all right. citi's jeremy hale. there's a prevailing thought among almost everybody who comes on. that's the u.s. is the best place to be. the best u.s. place now. top of mind, somebody says the best stocks to buy right now to take advantage of the u.s. being the best compared to the rest, what? >> u.s. bank accounts. it's been the story -- u.s. has been outperforming the world for two years now. so if you're just getting into stocks, you probably don't start with small caps. you probably want to start where the best values are. they still think it's u.s. caps. if you're more aggressive, you
could look at the more cyclical names. >> sector specific, you have the financials which have been leading. if you look at the last jobs report, we had 48,000 new construction jobs. you start looking at some of the rebuild america themes, some of the construction names, housing names. >> anybody else with a name or two? >> i love technology still. and stephanie and i talked about emc, pete talked about it with her, as well. emc from just a day ago, some of these options have doubled. seagate, as well, stx, i like tech, those two of the hot names in take. >> housing, weyerhaeuser, hgci. best buy. plenty of names here. >> kmr coming up -- >> tmz. >> okay. coming up, technology, retail, consumer staples. the plays on all the stocks making noise in the top three plays. and s&p 500 on record watch. there you see the closing level on the board.
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welcome back to "the half." let's do our top three trade, focus on the big analyst calls. amazon, cut to neutral from overweight at jpmorgan. dr. j., stocks down 3%. >> it was down a little over three. the worst drop since january. and i still look the stock, but i think things like cutting the price of the kindle fire h.d. and so forth, that's a great thing in terms of moving units. but it's of course going to hit them as far as that margin on that particular device and how much they're willing to lose in some cases to expand into europe and japan and all the rest with these devices. it's still a winning strategy. i believe. but again, this is very high valuation on this stock. jpmorgan's just recognizing that, and the stock's going to ease perhaps down to 2.55.
>> coca-cola up, credit ag to outperform. stephanie, the stock is up more than 1% today, what do you do? >> i like this call because the stock has lagged its peers. last year and year to date, it's only up 6.9%. pepsi up 12.5%. it is not cheap. the company is positioned well globally. international sales represents about 75% of total. you get the global exposure. they've got a great brand name. they're refranchising bottlers, as well, here. and around the world. so i like this call. particularly since it's a laggard. one of the few laggards in the staples sector. >> brian, how about murphy? ebay, upped over at ever core, you look at what's happening. the stock up a little more than 3%. >> ebay's been massively underperforming the market year to date. backup 3%. we actually stepped in and bought this name this morning about 52.20. one of the many reasons was the last few days we've seen huge volatility on volume in ebay. so we think that a lot of the sellers are out of the name now.
it's gone from 57 all the way down to almost $50 in the last couple of weeks. we think it's a great entry point and the stocks should hit new highs in the near term. >> do you agree? >> i like -- i like ebay. i'm not sure why it's underperformed. i don't think there's any major reason. >> yeah, actually -- >> i think mike's right. >> the channel advisers retail data came out. it showed they were seeing soft not in sales. that's why the stock pulled back. it was a great performer last year. i think you're seeing giveback. i think it could underperform. >> wasn't ebay on one of most recent covers of, i think, "fortune" magazine, asking if it was the cover jinx. >> "sports illustrated." >> the cover jinx. what do you think about ebay? >> i like it. along with murph, he cites activity in the options. there is some of that. and the fact that over at -- what is it? the -- paypal is doing so well. >> right. >> and -- >> certainly carrying the load. that is the story. the overall business is turning
around. isn't it? that's been the scoop on what john donovan's been doing over there, right? >> yep. >> that's why it outperformed last year. what's your catalyst going forward? if sales are slowing, it's vulnerable. at least in the near term. >> i have a chunk of money. i want to buy amazon here in the face of this downgrade, tremendously high valuation. what some -- what people say, the valuation is what it is, right? ebay, amazon. anybody -- where do you go? do you have to make a choice between the two, what did you do? >> eastbound at 19 -- eerks bay at 19 times earnings with the recent pullback i think is easy. >> i don't care what the auctions business -- this is about the continuing secular growth story of online payment, and ebay is going to be a major player there. they should change the name of the company to paypal. i don't want to hear about what channel checks are in the auctions business. it's irrelevant. it's moving the stock, what's moving the stock is future growth in the payments business period. >> all right. european markets closing now, 12:30 on the east coast.
simon hobbs -- [ bell ] >> the european markets are closing now. [ bell ] >> as you see, scott, it is green across the screen. the fact that we've made gains on wall street has drugged the markets higher. only greece is in negative territory. you'll see the periphery, spain and italy, have rallied greater than others. good auction in spain at the long end. small auction, they came through. that the swiss national bank saying it would still defend one euro, 20 on its currency after more than doubling reserves to do that. we were led higher by the financials on the session. generale, the big italian insurer, came out with results. telecoms did well. morgan stanley coming out with comments on france telecom. led the pack with a gain of almost 6%. with today's gains in europe, the broad market, the stock 600 has come back to where we were in the summer of 2008. not yet, of course, at record highs in europe, scott. as you'll be aware. europe is still underperforming these american markets. back to you. >> certainly is. simon hobbs, thank you, as always. the s&p less than 20 points
away now from its all-time interday high. than far from its closing high. so for more on what's going on, let's go to jackie deangelis, the host of "huchs now." >> that's right -- "futures now." >> that's right. the real question we have to ask is, is the s&p next stop 1,600? how should you play it? we have anthony grizame at the nymex. is it too far too fast for you, or are you comfortable with the pace? >> i thought it was too far too fast 100 points ago. i'm going to stop fighting it. we've had positive numbers in retails sales, jobs numbers. and the economy is growing overall. plus you have q.e. i'm not going fight this. i think we get to 1,600 in the next couple of weeks. i would rather look for a correction to buy than look for a top is sell. >> jim, you've been buying on the way up. for those who missed the rally, should they be holding their noses and buying, or are theren tree points they should be watching to get into the market.
>> i think if you're time horizon's short, you can hold your nose and buy it. i think we'll challenge the highs, the interday highs. we may want to challenge the 1,-600. i think there's going to be one more flush of sideline money coming in and a dramatic uptick. at it point in time, we've -- at that point in time, we've come far. the risks are to the down side at some point. i am a bull. but the higher it goes the more nervous i get. >> that's their take. how about yours? is s&p 1,600 around the corner? log on and vote. we'll i go you the results on our -- we'll give you the results on our show today. and doug cass will reveal his new call on apple, a move higher, and apple could help the s&p. that's coming up at 1:00 p.m. eastern. >> see you on line in 25 minutes. coming up, with smartphone wars heating up, porter bibb and his 40 years of experience will join us to make the call on who's best to come out on top. never one to bite his tongue, either.
you'll want to hear what porter bibb has to say about all of the players in this battle. and g.e., general lelection electric, spiked roughly 20% over the last year. two traders square off in one heated debate. we're halfway through the trading day. next, citigroup, sales force, sodastream. aren't we covering? google, gold, green mountain? we want to hear from you. [ male announcer ] i've seen incredible things.
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makes it easy for anne to manage her finances when she's on the go. even when she's not going anywhere. citibank for ipad. easier banking. standard at citibank. as we continue to see the s&p 500 move closer to its all-time highs, let's go to the market flash desk now for what's moving. josh, what are you watching? >> scott, apple is a buy. that's according to an analyst at btig. his argument, one, there are many revenue opportunities that are available to apple such as
his expectation of a low priced iphone this year. also, apple will benefit, he says, from a reversal of the impacts of the tighter phone upgrade policies in the u.s. and it's likely to come to a decision on its cash by the end of the month. btig's price target, $540. scott, back to you. >> all right. we're watching that today. apple gets an upgrade on the same day that samsung is unveiling its new galaxy phone in new york city. porter bibb joins us with more on what the latest salvo in the smartphone wars means. he's live in new york city. porter, you're laughing. it is the smartphone wars, we know that, right? >> it sure is. and you guys missed the -- your stock picks a few minutes ago -- you couldn't buy the best stock in the market right now which is samsung. and i don't know why samsung doesn't put an adr on the market here in the u.s. because they're just going like a house of fire in korea. >> yeah, they certainly are. and maybe it's something to
think about for sure. look, ultimately, this matters most to what it means for apple, to a lesser extent what it means to blackberry. and, you know, to google. but apple's got the most to potentially lose, doesn't it? >> apple's already lost. samsung has taken over the global market share in terms of -- of smartphones and tablets. and apple still has a marginal lead here in the u.s. but during the second quarter this year, samsung will become the market leader here, as well. and tonight, they're launching their new galaxy s4. the hot new phone that's going to pressure apple which is months behind. and probably won't launch their next iphone until june or july. >> too soon to buy apple here? >> i like what doug kass will tell cnbc later today and what the other analysts are pointing to. apple has more cash on hand than
the entire market value of samsung. over $140 billion. and i'm almost positive that tim cook in the next quarter when they come with their earnings report, they're going to have a plan to dividend out a lot of that cash. >> what -- how does that translate then to someone who's picking whether it's -- whether it's too early to get in, if i need to wait until the stock goes down further? >> it makes me think that apple is a stock to rent, not own. you want to move in and out according to the rumors. and the news that apple puts out. it was really interesting. tim cook came out yesterday with a big press announcement knocking the samsung galaxy phone. that's -- that's a sign of real weakness in the marketplace because apple has never deigned to look down its nose at a competitor. >> phil schiller, not tim cook, but phil schiller. >> that's right. marketing director of apple. you're right. >> but i mean, i guess it shows more than anything how quickly
things have changed and how apple finds itself on such a defensive platform now. >> they also are suffering a little bit which cook did in his last public pronouncement admit. they're suffering from cannibalization with the ipad mini which is eating into the ipad market share. and i think there you're going to see something really remarkable. samsung's got the lead fhablet. the combination phone and mini tablet. and that market is going to explode in 2013. and samsung is going to dominate it. there is no phone on the ipad mini, and there is on the phablet that samsung markets. >> stephanie link? >> what about the ecosystem at apple? when the stock was at 700, everyone talked about what a defensive kind of business it had because of this ecosystem. and now we don't hear anything about it whatsoever. samsung doesn't have it. so can you go through what your thoughts are in that. >> well, it's -- it is interesting because samsung is -- is with google on the android
system. and that's really a loose-knit confederation of partners. and apple owns everything that comes through their i operating system. and what's really important is that they take a revenue share which -- the android market partners don't get. they all -- all google is benefitting from which is not slight news is that -- an advertising mobile platform which is worth about $5 billion a year to them. up significantly, more than 100% from last year. >> doc? >> porter, are you at all concerned as far as the -- i know you're a big samsung fan. but there was also -- apple came out talking about how few people have actually upgraded to the newest android operating system. a lot of that i think is because the android system is different on each platform. yes, samsung is winning, but the lgs and htcs and the rest of the folks that are producing
platforms that run the january droid have a different experience on that device, and that's, i think, part and parcel why they're not upgrading across the board. they're running one or 1.5-year-old software on their, not the freshest stuff, not like apple. >> let me interrupt. before you answer, porter, forgive me. you know, if we're talking about android or whatever, i don't hear anybody on this panel talking google. right? i mean, why isn't google the best play that you can make right now in the smartphone world? >> google. is you hit the nail on the head. google is in the catbird seat right now. and they have their own phones, and -- their own tablets. they're basically anonymous. and what -- what google has done is built an operating system. you know, you're right about the differentials and different tiers of android. but that's really irrelevant to the users. i don't think there's any documentation that mr. schiller or apple can back up about the
dissatisfaction the people have with android. the real key here is -- is multiple performance, functionality, and most importantly, price. and apple's going to reside in the premium tier, and android is going to own the rest of the market. and it's -- it will just completely blow away the low end of apple products. >> wow. all right. porter, good stuff as usual. always enjoy having you on the show. big night for samsung. we'll be watching the fallout. porter bibb. next on "the half," the euro slumps to a three-month low over the dollar. see if there's room to get in on the short side. g.e. next. military families face, we understand. our financial advice is geared specifically to current and former military members and their families. life brings obstacles. usaa brings retirement advice.
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for current and former military members and their families. get advice from the people who share your values. for our free usaa retirement guide, call 877-242-usaa. all right. shares of general electric, g.e., rising slightly. the stock's up 13% this year leading to concerns about the company's valuation. is it doing just that? so is it the time to get out of g.e.? we debate it now. stephanie link is our bull. josh brown's our bear. mike the bull case with 90 -- minute and a half on the clock. 90 seconds. >> i like the g.e. story because it's a restructuring story. the company is selling off noncore assets like nbc universal. they're shrinking g.e. capital.
they're selling out their real estate assets which are actually getting a better price for given the elevation in real estate. and they're focusing more on industrial. their industrial business, 20% is energy which is starting to see secular tailwinds. and infrastructure is what they do best. and i think that is a multiple enhancing event. in addition, margins are stabilized and poised to go higher. >> i don't hate it, let me start there. here's the problem -- you can only own so many stocks. there's no reason to think at all that, a, this rally should continue or, b, it should outperform the. you're almost better off with a basket from g.e. all the things stephanie says are true. however, this is already discounting a lot of that. it's an 18 multiple. the dow is selling for under 16. i have no idea why it's getting premium. 20% of the business is europe which is contracting. there's no revenue growth for the company overall. the bottom line, i'll finish here, there's a momentum divergence negative beneath the surface. meaning the buyers are not quite
as aggressive as 23 as they were at 21. >> if you're worry good the market, this is the tar heel you want. you get 3.2% dividend yield. it's trading more -- >> trailing. >> okay. i'm looking at forward. i think numbers will get better because they're only focusing on the industrial piece and shrinking g.e. capital. that has been the noose around the company. as they do that, their balance sheet gets better, earnings get better. the stock is not nearly as expensive. [ buzzer ] >> we've seen the benefit already. i'm not sure what drives the next leg up. >> mike murphy, who made the more compelling on argument? >> i agree with stef. the fact that they're shedding noncore assets is happening. >> send us a tweet, @nbc is-- @cnbchalftimemoney. and what's next for the euro? there it is. about 1.30, almost even. our cnbc contributor will give
the answer as to where the euro's bit lower. what's happening is this morning, germany announced results that the european summit that it's going to balance its budget earlier. that's not anything new to the market. it's new information. really hurting on the austerity front. those countries want to see economic stimulus plans rather than germany pushing austerity, austerity, austerity. the market is pushing more taylored solutions and we have not seen that yet. >> give us the levels. >> trading a little higher now. i would like $129.70. i'm making the target at 128.
$130.50. just watch out tomorrow. because the italian parliament has re conveconvened and they d have the coalition government yet. >> thank you as always. all right. next on the half, you asked for it on twitter. we will deliver with more trades on stocks so you can make your next move. we will be right back.
>> welcome back. we want to bring you an update. jc penney's credit default drops are showing signs of extreme stress. so an official right now from jc penney. >> when you the viewers ask, we deliver. >> it's not a name i own. >> you have got warn buffet in here. and loan pine. those are smart investors.
it's an ag play. while i do like the story, it's not an exciting story. >> what do you do withp with pitney bowes. >> they have an analyst meeting coming up in may. if you're in this for the yield, don't be. i think they will still offer some dividend, just not the one they are offering now. >> and palo alto networks? >> it's a shame. this should be a much better stock than it is. basically it's gone nowhere. their biggest customers are face book and apple.
the more time we spend in social networks, the more you will need this kind of thing in place. maybe they find a way to drop more of that revenue to the bottom line. >> all right. when we come back we will do final trades and we will reveal who you think won our big debate on general electric. [ male announcer ] you are a business pro. omnipotent of opportunity. you know how to mix business... with business. and you...rent from national. because only national lets you choose any car in the aisle. and go. you can even take a full-size or above. and still pay the mid-size price. i could get used to this. [ male announcer ] yes, you could business pro. yes, you could.
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