tv Fast Money Halftime Report CNBC December 10, 2013 12:00pm-1:01pm EST
>> so i'm optimistic. >> bill, always good to get your insight. thanks so much. bill george, talking about the story that did dominate the discussion today. >> and incredible 24 hours for the company, just last night, word that the government had sold the rest of its stake, and here we are. >> let's see what the afternoon brings, wapner and the "halftime." >> thanks so much. here's what we're tomming today. nifty fifty as twitter retakes the key level. are shares now poised for a bigger breako out. -- now the man compared to some, compared by some to buffett, tells you where he's investing next. we start today with this question. is the so-called crisis trade officially over? five years after the meltdown, stocks sit at historic highs, europe appears to have stabilized, a budget deal is looming, and according to our own steve liesman, the taper is increasingly likely this month. what does it mean for your
money? it's "halftime." let's play the action. murphy, you first. is the crisis trade over? >> the crisis trade is 100% over, scott. you look at it, right now the fed is getting together, figuring out how they're going to -- or when they're going to start to pull back on qe. you know, we're going to get a taper. whether it's this month, next month, we all know it's coming. clearly, we were at the -- you know, i don't think all of the books are written, we were at the verge of something ugly back in 2008, and now you're seeing a recovery. and you touched on a lot of the points out there right at the top of the show. you are seeing a market that wants to go higher, and i think this market is 100% ready for the fed to start to taper. >> simon? is the crisis over? is the crisis trade officially over? government's out of gm? we named all of the other things that have happened. now, if the fed finally tape tapers -- >> i mean, i think it's a really broad question. i think it's in hibernation. if you look at the stock market, you say, yes it is. but what have we done? yes, successfully delevered
corporations and personal finance, but it's gone over to the sovereign nations. what will they do? the monetary policy, fiscally they could pooch the house, whatever the expression is over there. i don't think it is over yet. and here's the deal. it looks like it's over, but, murph, what happens if all of a sudden we see the growth, the interest rates spike, how will they start to feed the sovereign debt, and we go back into crisis again? >> if we go back into crisis, what happens, you're saying? >> yeah. >> well, then, we would deal with a new crisis. but right now, on the table, do we have a crisis -- >> we're far removed from a crisis, are we not? >> the only people who think we're in a crisis is wearing camouflage and have lots of canned goods in their basement. the crisis of 2009, preferred stocks of banks, debt, they were trading -- basically giving them away. and that was the big move in '09. since then, it's been a bet on rekw recove recovery, not going back to crisis.
now, in my view, we're sort of in the normal innings of the beginning of a major bull market as the economy improves, as earnings get better and as europe is getting better. we saw good economic news coming out of europe. it's patchy, but saw good stuff. italy, better than expected. >> if i could add to that, if you're long this market as i am, you want the taper to come. you want the qe to come. we've been talking for 12 months now, if you get it for the right reasons, it's a positive. well, i think the economic data will tell you that we've gotten some of the right reasons. >> well, a december taper now looks more likely than not. that's the view of our own steve liesman. he's here to tell us exactly what to expect from the fed. steve, you've been, you know, your opinion has changed as to how likely -- >> yeah. >> -- it was going to be, and now you are most in belief -- i guess the most you've ever been -- that it's -- >> yeah, if you take a look, on friday, my sense was it was a close call. when i looked at how markets reacted, and i came on this show last week, and i said the fed is
looking at how short rates react, and short rates have reacted very positively. not only short rates but long rates, as well. the big thing was watching the december -- i'm sorry, the june 2015 fed fund futures. on friday. 27 basis points, and ended at 27 basis points. what does that tell the fed? it fells the fed that the market believes in lower for longer and taper is not tightening. the fed gave us three tests. confidence in the economic outloom. three-month outgroet, 40,000 higher than in september. unemployment rate down by two ticks. fiscal uncertainty, you had it on the big screen, budget deal in d.c. another element, of course, is the idea that interest rates are well behaved. >> you're obviously worked your variety of sources to come to the conclusion that you have. the fed had a chance to taper in the past. it did not. >> right. >> are we to believe now that the fed by virtue of some of the
reports that's out there -- yours included -- is trying to set the table and will not disappoint the people who are going to come to the dinner table? >> you can't know for sure, because i will tell you from the fed's perspective, doing it this month or next month is irrelevant to them. they're looking at six-month, 12 months, two-year timeframes. they may do it in january. what informs my reporting here, scott, is the public comments from officials that september was a close-call. and when i look at what stopped them in september and i see those things gone, i can make a good case for this happening next week, and not only can i make a good case, but in my opinion, in my reporting, and what the data show, i can make a case it's more likely than not. >> you're only talking about the jobs number. let's talk about gdp. a great number. >> yeah, i'm a little more circumspect on gdp, steve, because it rolls off a little bit. scott asked me not to use the word inventory on this show. so i won't talk about inventories. but i will tell you there was a big bump up on that thing, the
stuff on the shelves, in the third quarter. it's expected to roll off in the fourth quarter. we did get a big bump up in and the stuff on the shelves were inventory, the wholesale data, suggesting the fourth quarter rolloff will not be as extreme. >> steve, thanks. >> my pleasure. >> dr. j, so if steve's reporting ends up forecasting what the fed is actually going to do in a couple of weeks or next week, what does it mean for the market? >> well, i agree with murph. i think that what steven's describing, the possibility that we get a fed move is being priced into equities and has been being priced into equities, whether or not it's december or january matters not to the market right here, judge. so if that is indeed the case, then i think we just go right back to a slow grind higher in interest rates, not a leap. so i'm not looking for anything about this crisis and a big blowup in rates, and that's what i think is being played out with
all manner of investments, including housing right now. >> i wonder if you guys -- i mean, doc says priced into equities, and we'll move on in a second, but wonder if it's more priced into bonds at this point, the 10-year, than it is the stock market? >> no, actually, i think bonds are more vulnerable than stocks. the best thing the fed did was not go in september, because the market thought they would. the market traded off in advance, and they didn't. and it was like a dress rehearsal. now with the economy being better, i don't think stocks are going to be, you know, unfazed. steve points out, friday, the jobs number came out, and rates really did not move. it's very positive for equities. >> the next guest has been compared to warren buffett for the way he picks stocks. jay bowen runs the tampa firefighters and police officers pension fund. he's outperformed most of his competitors over the years, so we welcome back a man some call the oracle of tampa. welcome. >> good to be here. >> what do you think will happen, once tapering does
happen, december, january, otherwise? >> i agree with the panelists in terms of the tapering being bullish. after all, who wants to be a perpetual state of monetary life support? that will get you nowhere, as japan has demonstrated over the last 20 years. so i think the market will applaud and welcome the normalization of interest rates if it's occurring for the right growth-oriented reasons, and by that, i mean higher real rates of interest, in terms of forecasting higher real returns on capital and an increase in economic activity. so in that respect, i think the tapering is bullish. i think the fed is going to have two big -- the yellen fed is going have to have two big objectives in 2014. change expectations, number one, regarding inflation. there's a core group that wants higher inflation. and number two, the longevity of the zero interest rate policy. i think they'll want it firm firmly -- they're going to want to change expectations in terms of how long that's going to be in place. after all, let's remember,
coming out with that employment report on friday was core pce data, and it was off again. that's the preferred pressure, the core pce again fell in october from november -- excuse me, from september to october, to 1.1%. so price stability is the other mandate. and the tapering will commence in 2014, but the zero interest rate policy, i think, will be in place much longer, which means a steeper yield curve, which i think is bullish for stocks. >> what stocks in particular do you like in this environment? again, you know, we made reference that some people call you the oracle of tampa, and the people that you invest for, the firefighters and police officers down there, certainly think you're a lot like buffett based on the stocks you've picked and the performance you've had. where should we be putting our money right now? >> yeah, we're top down in
themattic, and there could be a significant reallocation of capital based on bert global prospects and safe and secure dividends. so we're looking at a couple of areas. we continue to be intrigued with the shale revolution. i though it's not a new theme, but it continues to manifest itself in ways that baffles and confounds the experts. we're producing over 1 million barrels a day from the eagle ford region. i mean, this was unheard of five years ago. we like the railroads in terms of transporting oil -- >> anyone in particular? any railroad you like in particular? >> we really like canadian national. they're unique in a variety of ways. from a financial stand point, we like the operating ratio and the free cash flow, and we very much like their tri-coastal footprint, from nova scotia to british columbia, and north/south down into the gulf of mexico. and we also like -- it's not
just oil -- the supplies, in and out of the shale reasons, focused on sand. and in fracking, sand is the new gold. canadian international spending 6 million, 8 million to up grade the network to ship more sand out, so that's another kicker. also, their exposure to the ports in western canada. china is now the biggest importer of crude, and that also plays into canadian national in terms of their ability to ship crude to the western ports in canada. >> just a real quick question on canadian national. the stock's had this huge runoff september, from 48 to where it is now, in the mid-50s. trading at 15 times next year. you think they can actually expand that number, you think the top line will grow a lot for 2014? >> you know, we're very long-term oriented trying to look out three to five years, and you're right, on a current basis, it's not particularly cheap. but the stock recently split two for one and they announced the
significant buyback, also. we think they're perfectly capable of earning 5.50, $6 a share, over the next five, six years, which i think is a three, four yards and a cloud of dust, where in five years, you'll look back, and say, wow, this stock has given me a compounded annual return in the low double digits which we think will outperform the market. >> jay, great do have you on the show. >> great, good to see you again. >> happy, healthy new year. facebook, twitter, both hovering around 50 bucks, but which is the better bargain? plus, we'll talk to the first analyst to put a buy rating on twitter. and we'll hear from mike mayo about today's volcker rule decision. why he's calling this big brother banking. [ bagpipes and drums playing over ]
all right. welcome back. four trades on four stocks making big news today. first up, general motors, just after the treasury department sells the last of its interest in gm, the automaker announced that ceo daniel akerson will retire next month and be succeeded by mary barra. big news, perhaps surprising, the stock is down about 1%. >> it's an interesting choice. she's been a lifer at gm, and
has some great wins to her credit. her dad was even in the business. the disappointment, i think, is that some were looking for an outsider to come in to take a fresh perspective on the company. i, however, think she's a pretty good choice, and it would be too hard a task for somebody to really learn the business coming in from the outside. so i think the stock will recover. i still think we trade higher from here. >> maybe the stock is down on the timing, which is certainly unexpected. >> could be. but, you know, some of the holders i spoke to said, hey, we were hoping for an outer to really come in and cut the costs. >> starbucks and green mountain heading in opposite directions. starbucks is falling right off the open on negative comes from itg investment research. green mountain is trading higher, though, after yesterday's beverage conference presentation, murph. a look at what either -- each of the stocks is doing today. >> yeah. looking at star bucks, i don't know if it's trading light just on the one analyst downgrade. it looks like it had been topping quite a bit.
if you want to own a quality name, this pullback is a great entry point. green mountain, positive data yesterday, but a rumor floating around, unsubstantiated, that green mountain and coke are in advanced talks to do a partnership. that's what's got green mountain moving. >> the company also hosting its analyst day today, stock up 1.6%. >> it's been underloved, underperformed, and down 14%. it's cheap here. for me, scott, still very much a show-me, and nice to see the earning estimate increases, but i like to see that before i own it. >> two social stocks are looking good. twitter is breaking through 50 bucks a share. facebook trading under that level. at this price, right, we've been playing the 50/50 game, and twitter gets back there first. who do we like better? >> to me, this is kind of easy. facebook has been up here.
it's the big brother. facebook just cracked above the 50 level. it's a name we've owned for quite sometime. i think twitter has a lot to prove. we haven't gotten the first quarterly conference call. if you remember with facebook, there were a lot of questions on how they handled the first few conference calls. so i think twitter, i'm shocked it had this rally it did off 40, trading up in the low 50s, but i think for the next 12 months, facebook is the name to own. >> twitter has one thing going for it, momentum as a stock. to murph's point, we don't know about the fundamentals, we don't know if there's momentum in the fundamentals. facebook, on the other hand, has momentum in the fundamentals, and now regaining momentum in the stock price. so i prefer facebook. >> plus, i mean, they've already demonstrated they can monetize the mobile. they've already gone over the billion mark from three quarters at zero, and twitter still has to define how they're going to monetize. so facebook going 50 and higher, all day. >> what about some of the other social stocks? that have been moving, groupon today, i had on my list. up 5%.
breaking through its 50-day moving average. yelp, some of the stocks we haven't talked about all that often of late, and look at the performance of social media stocks and if you remove facebook and twitter from the conversation, what's the next stock you would want to own here? >> linkedin seems to be the darling. for valuation purposes, i can't own it, but it's one that's consistently outperformed the expectations, and this is a group trade. it's stage right, stage left, momentum coming back to the market, that's what that shows to me. and that's why they're moving. >> twitter shares have retaken the $50 level. bob peck of suntrust was the first analyst to slap a buy on that company with the $50 price target. bob, good to see you again. >> thanks for having me again, appreciate it. >> did you think it was going to get back to 50 this quickly? >> you know, we did, and we thought it would sit in the 40s, the low 40s. and what's important to realize if you're buying the stock here, what do you need to assume? and assuming most investors need 20% annualized return, you want
to get north of $90, $95, so $2 billion of revenues, growing 70% at that point, then you're thinking about 50% growth to $3 billion, 23% growth to 4 billion, four times multiple on that gets you the required return around $60 billion for the company. >> why do you think it's been able to get from 40 to 350 awfully quickly? >> a couple of things. the news last week about the more targeted ads, and showing much higher conversion rates made people realize we're so in the early innings with this company. you're talking about $600 million of revenues. they basically got that without trying. you know, facebook for comparison, got to about $3 billion without really trying. when you see the increased targeting and what they can do with mo pub, the mobile ad unit, they can get to off-twitter inventory, so a lot of optionality in the stock. >> what about the fact that everybody on my desk continues to be negative for the most part on twitter, choosing facebook
over that company? what's the deal with the perception of where twitter is and monetizing its mobile, its profitability and everything else? >> yeah, much more nascent, even on the ad products, all of that is much more nascent than facebook. and you're seeing that in the growth rate. the twitter ad rates grew 125% last quarter. facebook, as we know, is growing 60% or so. so it's a long way for them to go. i agree with the comment earlier, there's a lot for them to prove. that's why we're waiting for the first analyst call to see how they handle wall street when they report the 4q numbers. >> bob, thank you, we'll have you back again. coming up, mike mayo is sheer with his rule on the volcker rule decision, and why this puts banks' ceos on notice. costco, we're trading. a bull and a bear. that and much more is just ahead.
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welcome back. big news in the banking world. the fed and fdic unanimously approving the volcker rule which will limits certain types of trading. with the reaction is outspoken bank analyst mike mayo from csla. welcome back to the show. >> thanks for having me. >> kate kelly, our reporter, whose opinion i greatly respect, her take was that the banks got off easier than they could have as a result of all of this. do you agree? >> well, look, banks need to be pillars of strength and stability. they need to facilitate the economy. they need to be a port in the storm. but, no, they can't have a casino inside the bank. so, from that standpoint, bank ceos are put on notice. if you have a large bank with the proprietary trading loss over the next few months or couple of years, that ceo's job could be more at risk than ever before. >> but i think kate's take was
that there's many, many loopholes here. some of the rules are quite subjective. would you agree with that? >> anytime a regulation like this becomes as precise as the volcker rule has become, there's always ways for many smart bankers and lawyers to get around it. i much prefer principle-based regulation. i mean, the principals can guide what happened. there will be ways around it. having said that the ceo needs to attest that they're not taking big proprietary bets. so i think if after the fact you have a big loss, banks don't get off so easily here. >> so let's get -- you know, now that this is on the table, we know what we're dealing with, many banks have been, you know, gearing up to deal with what was delivered today. does it make you want to double down on a name like morgan stanley, which has been your top pick? or does it make you want to take a little off the table?
>> well, i'll agree with your comment from before. you know, this is life threatening to the banks. to some degree, the industry has already adjusted to the prospect of a volcker rule. and nowhere is that more true than at morgan stanley. i've been on your show many times this year, and i've said morgan stanley is my top pick. morgan stanley is still my top pick. the volcker rule is not a game-changer for morgan stanley. so i can't say i've gone through the new volcker rule, all of the details. i'm not sure exactly what's in there. having said that, i'm not the least bit worried about morgan stanley hasn't adjusted. in their fixed income trading business, morgan stanley's risk is one-fourth what it used to be at the time of the crisis. the assets in that area are one-third less, and the revenues as a percent of total are one-half less. so they've already downsized and contained their fixed income trading. they've gotten rid of the proprietary-like activities, so as it relates to morgan stanley, perhaps the rid of the
uncertainty to getting the final volcker rule can still be a positive catalyst. so i still like morgan stanley as much as any time, and if anything, i mean, retail investors are a little more engaged. the stock market is a little higher. and don't forget that this evolution of morgan stanley, one-half of the company is in wealth management, in the brokerage business, and they're still trading at almost tangible book value. that's almost unheard of over any time frame over the last few years. >> has your opinion changed on any of the banks in recent days, whether it's volcker and the expectations there, rising interest rates and the expectations there and the taper? >> well, we actually did lower our estimates on goldman sachs a couple of weeks ago. and that is a reminder that the current environment today still is not great when it comes to trading activity. it's not robust. when it comes to loan growth, it's nothing fantastic. and i think that's a consistent message.
so my recommendations are for the multiyear structural changes at companies such as morgan stanley. but having said that, beware of the short term, things haven't picked up so incredibly, at least not yet. >> the market appears to like your comments on morgan stanley. thanks for sharing them with us. >> thank you for having me. stick around, we'll be speaking with the ceo of suntrust and getting his reaction to the volcker rule later on in the show. there's kayla tausche there, of course, and she'll be speaking exclusively with william rogers, the president and ceo of suntrust in just a bit. let's talk gold, though. it's getting going today. rising more than 20 bucks. let's get the story from jackie deangelis and the "futures now" crew. >> good afternoon, scott. that's exactly right. a 2% pop for gold. taking bullion to a nearly three-week high, so, jeff killberg, you're on the floor of the cme. what's behind today's strength and is the floor in for gold? >> i think the floor may be in
for gold, and we did see right before 7:00 a.m. central time, when most bears were thawing out from the game, we saw a big trade come through the gate, and, boom, $20 subsequent pop. and you're right. so right now, we think it will go back up to 1,305. it was a big technical pivot, and it wants to go back there. >> a cold game, jim, i know you had your fur on last night. how do you think the gold will close at the end of the year? >> the end of the year? it's only two weeks away. i think for the next week or so, gold could trade higher. i don't think we've put a bottom in longer term. i think what's happened is we've had a huge down move over the last eight months, most of the weaker longs have been flushed out. now it's time to bounce. that's what markets do when there's not a lot of longs in there. you can trade up to about 1,300, but then it goes lower. >> by the way, something that's -- something that's interesting, too, four times in the last year, you know, huge orders have come in at a time when the market's very liquid. i'm not saying there's a conspiracy or anything, but those tend to move the market in
another direction, and people thought there was some -- some -- some people to flush out right then. >> all right, jim, we'll have more on the yellow metal on our live show. we'll be joined by two big guests, dennis gartman, and rbc's tech technician, who has a surprising call about where gold is going. you'll want to see that at 1:00 p.m. eastern. >> jackie, we'll be there at the top of the hour. dr. j wants you to be right there on gold and the miners. how will you trade it? >> i think some tax loss selling could carry this one lower for the next week to ten day, so i'm a little bit against jim there, even though i think he's spot son longer term. i like the idea of what killberg is saying, we go back and test 1,305, but, judge, i have to think we test the june lows particularly on tax selling here. >> understood. well, doc, not so fast. we're coming right back at you, because we know you're quick, but you're not always right. >> not always right. >> you made a bullish call on
zillow. let's listen to that. >> okay. i think it could go a little bit lower, but overall i do like the stock after a correction here. i'd give it another day or two before you have to jump in, though. >> all right. since you made the call, the high-flying stock is trading down near 15%. doc, what do you do with this one now? >> well, i'm a believer, judge, that a not a big leap but rather a leak higher for interest rates means that people are going to be shopping for homes, and one of the places they do it, of course, trulia, zillow, both of the sites benefit. i think zillow and trulia will be buys into the next quarter of next year, so i think you buy zillow. >> all right. we'll trade tomorrow's action today. it's baker versus murphy debating costco ahead of tomorrow ae tomorrow's earnings report. and a professional hockey player turned advisor is helping others keep their mega contracts safe from financial turmoil. he is here with one of his
costco is set to report earnings tomorrow. closing in on an all-time high. should you be a buyer or seller ahead of the numbers? let's debate it. simon is the bull, murphy is the bear. simon, you're up. make your case. >> up 22% year to date and going higher. costco is the largest warehouse in the world, 400 warehouses. it's all about cheap discounting, and people have massive loyalty to this company. the average margins are 10%, compared to 20%, 25% at amazon, walmart, et cetera. renewal rate at 90%. massive opportunity international. right now, they're the only one out of walmart, amazon actually profitable overseas, and looking to expand that, and over 2% of the sales is ecommerce, which is
pathetic. what a massive opportunity for the company going forward. they doubled the 20% last quarter, sorry not last quarter, but the previous one. looking at ecommerce, and people looking for deep, deep value, costco is -- >> he's almost laughing as he's making his case. >> so looking at costco, up 26% year to date, averaged between 15% and 25% per year over the course of the last three years, this is a perfect example, simon, of a great company that's too richly valued. and when you look at a value stock, this is a company trading at 22 times next year's earnings, when the five-year average eps growth is 11 times. so you look at it, and to jump into a costco here, that when a lot of retailer has a tough november, i would not jump into it in -- >> this is exactly why -- why its valuation is rich. the company has good same-store sales going forward, and membership went up to 4 million last year. >> so we know the same-store sales, they released that number
already. >> this is a good stock going forward because people want to own it, because it's a good growth story. >> it's a good growth, but at 22 times earnings, it's not growth at a reasonable price. that's unreasonable price. i wouldn't be a buyer in the mid-120s. >> to tell you the truth, i couldn't concentrate on simon's argument, because of his outfit. it just threw my concentration off. >> it's not from costco. >> i think murph did. the reason is, it's very overvalued. i prefer target going 13 times, rather than twice the multiple, with canada's troubles behind them. so it's a great stock. it's a great company. but it's overvalued. >> tell us who you think won the debate. tweet us @cnbcfastmoney, use #bull or #bear, and we'll give you the results as we always do at the end of the show. last week's robinson cano's
contract has jaws dropping, and while we hear about the big deal, we don't hear about the players who end up bankrupt. two-time stanley cup winner, jay, david, good to have you here. >> good to be here. >> david, how did you get into this business, after the '92 olympic team? >> my second passion in life has been about finance, and i was very much trusted by my colleagues and teammates while i was playing, and i had a mission, and to do everything that was never done for me as an athlete. >> you trusted people to manage your money, and it didn't go like you liked? >> there's some truth to that. the problem with the athletes is you trust but you don't verify. it's important for athletes to not just assume you can trust somebody. you need to verify and you need to be empowered and take ownership of your wealth. >> jay, you just retired. you have a couple of stanley cups.
probably more than a couple million dollars at your disposal in the bank, or wherever it is. how are you putting it to work these days, and making sure that it's there for when you really need it? >> that was the most important thing for me is, you know, making sure i would be set up for when the day came that my career was over, but i wasn't going to have to look over my shoulder the next day and, like, what am i going to do? when's the next paycheck? and i have some time to figure out what i'm going to do, and david afforded me that. it was really nice to have that help. >> how easy or difficult is it to trust another person running your money, given, you know, your age. you have a lot of years ahead of you in so-called retirement. >> yeah. at a young age, you know, you don't really know what to expect. i had a guy before who i actually didn't trust, and i got rid of, thank god, because he ended up getting into some trouble. and now, to find a guy you trust, it makes you feel more comfortable and gives you the confidence. >> how many clients do you have now, david? >> we work with about 35-plus
professional athletes. >> most of them, if not exclusively, are all athletes? >> well, no, total in clients is about 95 families, but about a third of them are professional athletes. >> how do you feel about the market? we've had this great year. everybody wants great returns to go along with it. what do you think? >> our view is we're very cautiously optimistic, i would say. you know, it's been -- it's been a great run here in the market, and i think everybody knows the reasons why. but again, we're a bit cautiously optimistic on what's on the horizon here. >> why cautiously? >> because i think -- i think the issue with the market right now again is that, there's been a lot of -- as we know, a lot of manipulation from the fed and the printing that's going on, and we don't know how it will end, and i'm not sure anybody has the correct answer to that. >> yeah. do you think much about the stock market? you entrust somebody to run your money, or are you into investing, as well? are you watching twitter? are you watching facebook? are you watching apple? you calling david, do we own twitter? >> i don't too much. i trust what he has told me.
i follow it a little bit, but i don't get too caught up in it, because i think at a young age, exactly, you think about, well, how are my returns, my portfolio, but you learn as you get older it's not the most important thing, you're in it for the future. >> thanks for coming in. we appreciate seeing you. how's the -- we're proud of the olympics at nbc, cnbc, comcast, how will the hockey team looking? >> looking great. we have tremendous young talent with the u.s., and i expect us to do very well this year. >> don't miss suntrust ceo live after the break. we'll get his thoughts on volcker and find out what bank stocks are trading. find out the winter storm hitting the east coast.
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and my local scottrade office guides my learning every step of the way. because they know i don't trade like everybody. i trade like me. i'm with scottrade. (announcer) ranked highest in investor satisfaction with self-directed services by j.d. power and associates. coming up on "power lunch," two words -- crisis over. the fed set to begin tapering next week, a budget deal on the horizon, wall street regulation in place, how do you play it all? a rare and exclusive interview with carl isle group. and now, back to scott and the "halftime" team. >> melissa, thanks so much. shares of suntrust, the biggest bank of the southeast, more than tripled since the financial crisis as the overall economy regains strength. but with increased head winds hitting the banking industry, what will it take to keep the momentum going? kayla tausche is live at the
goldman sachs financial services conference, and she's joined by suntrust chairman and ceo bill rogers in a "cnbc exclusive." kayla, take it away. >> thank you so much, scott. we're here with bill rogers, the ceo of suntrust. you're focused on one of the hardest hit areas during the financial crisis, the credit has come back. growth has improved. what is the customer feeling like? >> i think they're feeling they're on better ground, feeling a little more confident. it helps that in our markets that employment has recovered faster than the rest of the economy, sort of back to your comment, and housing prices recovered, and those are all things that make the consumer feel more confident. and we're seeing that. >> when we look at housing prices, they were slower to recover -- raleigh, atlanta -- and talk about right-sizing the mortgage business. >> we had to right-size based on the refinance volume. so clearly, the up tick in
rates, that changes the dynamic of mortgage. so the right-sizing was predicated on getting a level that's sort of in line with where we'll be in the purchase market. >> and when does that stabilize? when do you see some of the purchasing come back, do you expect? >> it's kind of -- this is the toughest time to talk about mortgages, because you're in a seasonal low. the know, the fourth quarter is the seasonal low, and you'll see it come back, the end of first quarter, spring, buying season. and i think we're in a seasonal low. i don't think we're in a cyclical low. i think that's a positive. the numbers sort of show this has got some legs to it in terms of recovery. >> a lot of people know the suntrust brand, forget you have $172 billion in assets. you have a big retail exposure, but you also have a fairly sizable investment bank and wholesale bank -- >> right. >> -- the volcker rule is out today. how will that affect you? >> from a regional bank perspective, it's out today, a lot of documents, but based on what i know right now, from a regional bank perspective, we don't do proprietary trade.
that's never been a part of our business. the expansion allowed to do client, you know, market-making activity for clients, i presume it will give us the leeway we need. >> a lot of banks of a certain size are saying we can't be in these businesses, we're not strong enough, we're not top-tier enough, we need to sell these and exit. are you doing that strategic review, and what have you found? >> corporate investment banking business, we think we are absolutely at the right scale, and we like what we're doing, we like the investment of the business. we've had about a 15% sort of compound average growth rate, clients have been real receptive to having a strong alternative from a regional bank, so that's been strong. we'll look at all of the other businesses to sort of see what's relevant, what's accretive to the ratio story, what's accretive to the roa going forward. >> scott, you have a question for our guest. he don't have an ifp, so if you lea let me know, i'll ask him. >> while his bank may not be
involved with volcker as much as some of the others, how he would characterize whether volcker is too strong, is too strict, whether the banks in general got off easy? >> the question from our anchor is whether the banks in general got off too busy on volcker? i know you haven't had a chance to go through all 900 pages. but based on what you know, do you think it should have been stricter than it came out? >> again, our focus, since we didn't have the proprietary trading business, it wasn't an issue whether it was hard or soft on us. it just didn't impact us. and the fact that we're allowed to continue to do sort of the core business for our clients, i think that's what's important. if you're client driven versus sort of bank-and-hedge proprietary driven, i think we should have been allowed to be in the client business. >> the last question, under the predecessor, suntrust was a longtime acquisition target. is your phone still ringing about that, and do you think a deal would ever get done? >> i don't think this is an environment for large-scale bank m&a. and our focus is on increasing
the shareholder value for our company. so my phone's not ringing, and i'm not making any calls. >> we will end it there, as good a place as any. thank you so much, bill rogers, chairman, president, ceo of suntrust. scott and the "halftime" team,y >> thanks. good place to end it. interesting one about the prospects for more m and e. want to trade the regionals. >> suntrust is a good play here. as not the cheapest, about 1.3 times but nonetheless it's quality company in the right markets. >> regional financial i think is the strongest. stephanie has been big on it. also the upturn in the midwest industry. >> we look at this space more for dividends. people's united gets you 4.5% dividend, new york, community bank 6% dividend. >> doc, what do you think of suntrust or others here? >> i love suntrust, my number two pick. regions simon's pick my number
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it's not a lot of good things. basically oil and commodities have come in since then. the stock down 10% since earnings. down 13% stock. this is a $2.6 billion stock. a commodity play and basically small cap space. and crude oil commodities have come in and this has been a factor of that. that's the reason. >> all right. steven, thanks for your tweet, asking should he sell apple before january 1st. murph? >> yep. steven, that's a question i've been hearing and to put on my wealth management hat for a minute. it depends. doing it for tax reason you should. planning accordingly. if you do, but you still want to capture the upside in apple, you can sell the stock if you're down in the position, take a loss, realize that loss for taxes, but also purchase an xlk to give you 15% exposure. >> steve blake writing in @steve blake 93 thank you for your tweet. steve bought 20,000 january 40
energy calls this morning. what does this mean? also, he's long january 38 calls. doc, tell us what it means. >> well, somebody's been pounding out a lot of calls in this stock in shinerelng. doesn't look like the speculative shots we see when somebody thinks they know something and buy a call at the money or above the market. these are deep in the money calls and they're just pounding them out, they're down as much as the stock so i wouldn't try to read something into this in a bullish way, judge. >> want to get a trade update from you while we're with you, buying toll brothers on bullish call options activity you spotted toll popped on the better than expected earnings. still in the trade? >> we got out of it, judge, again i'm going to keep the hyper boil down, but what we did was we took the profit because it popped in the premarket about 4.5, 5%, just sold it out and went on, stuck with the dar horton however. >> at basically working back to the flat line. doc, thanks on that.
murph your opinion on toll. >> so toll came out with a strong quarter, but -- and you got a big pop. the last four or five times any name in this space has popped premarket the move was to fade it quickly. they had an issue, sales were only up -- orders only up about 6% and there is some pricing concerns there. so this still is a sector or a name that i wouldn't jump into just yet. >> we'll take a quick break and come back, do final trades on the other side of that and we'll also found out who you think won our debate on costco in two minutes. (vo) you are a business pro.
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♪ [ tires screech ] chewley's finds itself in a sticky situation today after recalling its new gum. [ male announcer ] stick it to the market before you get stuck. get the most extensive charting wherever you are with the mobile trader app from td ameritrade. all right. you've spoken, we've counted your results and you said simon the bull won the debate on costco. congratulations there. so you're up. give us a final trade. >> hds supplies. >> all right. steve weiss. >> ual, delta has a meeting, i think there will be good news. taxes on past tickets don't
matter. ual. >> mike murphy. >> petro pbr, run from 14 to 19 and pulled back here recently around the 14 level again. >> dr. j what do you see? >> facebook, unusual activity. they rolled up from the 45s to the 50s in january, watch this one, judge. >> watching that and you're watching "power" right now. >> "halftime" is over. "power lunch" and the second half of the trading day starts right now. >> gentlemen, thank you very much. crisis over, our call. steve liesman reporting the fed is likely to begin tapering next week. d.c. close to a budget deal, new regulations in place for wall street, and new dawn for the big banks. the government out of gm and europe is stabilizing. we're going to have playbook on how you should play it. what do these gentlemen think about it? a rare and exclusive interview with the co-ceo of the private equity giant carlyle group and exclusive with time