tv Fast Money Halftime Report CNBC August 6, 2015 12:00pm-1:01pm EDT
that will take you back to march 18th. airlines only hope at this point, transports, we'll see? >> that tells you a lot where we've come from. >> thank you so much for -- >> thank you for having me here. >> see you this afternoon. back to headquarters. scott wapner and "the half." thanks so much. welcome to the halftime show. starting line-up for today, joe terranova here with john na gearian. activist play book from bill ackman's new stake in mondelez to dan loeb's in backster what happen will happen next, whether you should buy on their backs? got junction? someone says the problems in one part of the market are the worst since the financial crisis and how you can protect yourself. we do begin with the dow, trying to avoid its first six-day losing streak since october. and the focus at this hour is on several companies who's stocks
are getting slammed after earnings. we'll show you many of the names that are getting hit but i wanted to begin with the major averages, along with the russell 2000 which is below its 200-day movingage. s&p breaking. what art cashin pointed out to be, an important support level of 2087. pete, what -- sorry, john, i'm sorry -- >> it's okay. >>. never happened before. >> easy why i said that. >> i get pete on the phone. john probably has something to say. >> a long and busy day. >> it has. >> i've been busy. your read here? what are we seeing unfold here? >> i think jim cramer nailed it as far the media stocks in particular, disney with the cord cutting going on there. that's not a one-day event. as much as peel want to pull the trigger and buy that stock on that first big $11 sell-off, you've got another $5 in your face today if you did it. i think when you're looking at
viacom and the numbers that we just heard at the end of the last segment, judge, as far as all of the media stocks and the impa impact they're having, that's what's playing out here. ahead of, of course, a pretty interesting employment number tomorrow, given that the bank of england had their most dovish statement of the year today. in other words, they actually had a meeting with the bank of england where they had immediately the question and answer period after, and this was expected to be a 7-2. it went 8-1. that's very dovish for them. i think we're going to be looking at lower for longer on interest rates. >> we've scrambled steve grasso on the floor of the new york stock exchange, the market sell-off reach the low of the day. people talking about technical levels and the dow has the very real possibility of closing at a six-month low. >> yeah, i mean, i heard you mention technicals on the s&p, the s&p, cash, to be clear,
200-day moving average is 2072. we're about 6 or 7 handles off of that now. scott, going back to last year, october, this is going to make about four types that we've tested that level, broken that level. you want to be cognizant if it breaks today. if it does, what you said before, you have the media stocks giving up ground. we have seen apple, what's happened to that last couple of day. disney up 30% year to date rippling through a lot of the rave rits in the face. if you have six stocks carrying the brunt or the market higher, and apple fails, people are going to shoot first, ask questions later. geopolitical worries, a headline about iran. so many other things are going, rippling through the markets now. you've seen the data points people are invested to the hilt here. now who's left to buy these dips? i'm not saying we're falling dramatically or this is going to
be an abyss, but it sure feel like if you're a bear you should be happy today. >> we've taken to some of the name on heel of earnings viewed, either they were disappointing or viewed to be disappointing that are selling off. we'll show you some of the names, whether it's fitbit or tesla or green mountain, media stocks, or if you've noted here are getting pummeled. but, joe, the notion that the dow could have its worst close or its lowest close in six months since early february. >> listen, a lot of the problems that it's had this week relate to apple and the sell-off there and it relates to the sell-off in disney. it is interesting to me, basically, what is weak today is what has been strong throughout the year, consumer technology, health care, very weak today. but yet, energy, which has been the worst sector year-to-date is actually when you look at energy equities higher.
so i think a lot of what's goingen todgoing on today is reallocation of whereas sets are being placed ahead of tomorrow which is lining up to be very important in the wake of some of the economic data in the last couple of days, it looks stronger than we anticipated. september appears to me, this is where john and i disagree, i think september's clearly on the table and we get the one and done. >> josh? >> well, you know, i talked to all of the major technicians and what they'll tell you is that 200 day moving average crossovers are no longer relevant because there's no trend. the 200-day movingage or ten-month is flat, which means you can cross above and below it every single day of the week. it's not telling you anything. >> forget the russell breaking below? >> not relevant. it's crosses over multiple times. >> grasso, not sure? >> let me finish my point. >> hang on. if you say something that's -- that i believe is incorrect, let me respond since you have the
hour. if you cross over 200-day,s that a weakness. we didn't do that for 24 months now we've done it repeatedly. so just because you say it doesn't mean anything, once we cross over that and stay below it longer than six days it relevant. >> grasso, we're saying the same thing. it's crossed above and below multiple times. why? it's flat. it's not declining. it's not ascending. meaning, meaning, it no longer, in the short term, has an important signal. what's more important is bred, that's why everything's focussing advance/decline, high versus low. what's happening with the overall average, s&p 500, has already been happening and we've been documenting it relentlessly beneath the surface. we define a correction as 10% off of a52-week high, the average stock in the s&p 500 is 14. 5% below its 52-week high which means the entire market is
correcting, say for a handful of consumer discretionary and health care names. >> correct, the breadth is important but 200 day of short term, nothing worse than that. >> but there's no signal where it's flat. >> i want to move on. >> i got it. speaking of the correcting -- >> i don't think so. >> what's that? >> here's the big thing, judge. the breadth that josh spoke about, is the most important thing when you see a high flyer like tesla, that's overbought on a monthly and last time that's happened, you need to see that it's down 30 and 37%, once you get those major cracks, as josh said, the breadth, that's why the market's in trouble. >> biotech hit 3% today. jim, you look at the dramatic pullbacks we're seeing in some of the names, i don't -- what's the signal? >> first off, let me give you the small and big signal. small significant, it's a high beta sector. you expect to to come off more in a downtrend.
bigger signal, you've got legitimate fundamental worries the market's facing. fed governor lockhart suggesting that september's on the table for a rate hike. china, frankly, does not look good. >> let me just stop you one second. >> go ahead. >> it's fed president lockhart and fed governor powell who was on the very network and didn't want to go as far as lockhart himself did. >> and that's -- >> the jury's still out. >> of course the jury's out. the jury's out until it actually happens. this may be a fool me once, shame on you, fool me twice, shame on me, but for somebody, they usually dissemble. they don't say what they're going to do. for lockhart to say strongly as he did or imply as strongly as he did that september, barring some major disruption in economic signals when they're going to do it, is real news. that's a real signal. anyway, to my bigger point here, is if you're going to be invested in the mark, which by
the way i am, i'm a believer in the market, what you have to believe is the strength of the u.s. economy is big enough, it's strong enough, to power through china and power through one rate hike, which will probably be a one and done until spring of next year. i don't think that's too high of a hurdle for this economy to get through. >> what are we looking for tomorrow out of the jobs report? trying to figure out where the market's going ahead of a critical economic report, given the context the fed could move within a month? >> look, please, go ahead. >> think about it, also going to get a second look in september, so you can't make an absolute decision on what you get tomorrow but i think -- >> we're going to get another month of doing nothing in the market? >> list. right now the pressure, obviously, is on a lot of asset prices that are correcting to josh's point. there's clearly a correction. think for a second about the emerging markets, we're not talking about right now, but are very important to this
conversation. they're down 7% for the year. you've got currencies at incredibly low levels. that leads to a lot of outflows out of the emerging markets. that leads to money sitting in places that it's not necessarily comfortable and emerging market debt right now will have a conversation as it related to high yield later on, but emerging market debt right now spreads are widening there as well. >> the real problem, if you're a bull, then you understand earnings are going to be flattish this year. barring any kind of, you know, major event that no one's expecting, there's not a lot to be excited about on top and bottom line reports in the s&p in the next two quarters. if you believe there's upside and the chief strategists that come on our show continue to repeat the line, that we deserve more multiple expansion, okay. here's the problem with that. we're taking companies like disney and facebook that beat earnings and dropping them. take companies that gfb a mediocre outlook and ripping 20%
out of the market cap overnight. please explain to me where you're going to get multiple expansion. i think if you're a bull, this is what your real concern is. companies reporting the best earnings they can report -- >> fitbit a perfect example. the quarter was good, there's like a bit of an issue with the margin. like people are say, it's nitpicky and the stock gets hammered. it's had a nice run-up but it's getting taken out back. >> the signal, purely sentiment, none of this has to do with company fundamentals, purely based on how we're reacting these days. but what that's telling you people are saying, give plea an another reason to keep paying 20 times for these companies and these companies are not giving you another reason. and that's a little bit of a problem right now. >> i think that's exactly right. when you've got these companies that have what i consider to be nose bleed multiples, plus 20, plus 30 multiples, if they disappoint or there's a whiff of disappointment in projects it's
easy for the stocks to come off 20% and have a low 20s multiple. let me finisher. >> then wrap it up. >> a lot of companies in the dow, we'll talk about this later that have 10x multiples, it's harder to go from 10 to 9 than it is for a 30 multiple to go to a 20. >> coming up, big action from activist investors, bill ackman ba taking abig stake in mondelez. should you follow the lead? one strategist says big area of the market showing the worst problems since the financial crisis. we'll find out where, whether your own investments are at risk as a result. but what if you could see more of what you wanted to know? with fidelity's new active trader pro investing platform,
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so we can keep the lights on for everybody. because i live here i have a deeper connection to the community. and i want to see the community grow and thrive. every year we work with cities and schools to plant trees in our communities. the environment is there for my kids and future generations. together, we're building a better california. report." i'm kate kelly with new developments on the monster take bill ackman's hedge fund has taken in mondelez. the filing that ackman made a short bit ago at 13d filing reserves right to go active on the name, talks in some detail where he got into the stake and how. interesting developments there. he says, among other things, pershing square says, planning to work with management, the board, talk to stockholders about plans, reserve the right
to talk about anything related to the company's operations, its assets, financial condition, as well as its management or board makeup. they also give us a sense of the economics here. bought, i know from my own reporting, began amassing stake at the end of march, most recently. but in the filing it details a flurry of purchases of various securities and options, starting in june, going through july, and up until recent days. they bought the stock in the low 40s. bought it within the last few days in mid-40s. bought a range of both put and call options with various prices but many cases buying puts in the low 40s. it's a variety of ways they bill the position. one thing to note, ackman's fund is up 10.1% year-to-date through july. if you look at a mondelez chart, you have to think that's that was a contributor to his performance, especially give than it appears 7% of that upside, so a 7% rise in july, came during that month. he was up 3%, now up 10, in 30
day. >> on the back of a good year last year. >> absolutely. >> he has a good run going. the irony, kate, in all of this, is that you know, nelson peltz is on the board of mondelez, bill ackman sat next to nelson peltz with jim cramer. >> our own delivering alpha. >> and was building this position at the very moments that he was sitting at delivering alpha. you have to believe that those gentlemen are going to have a conversation at some point, if it hasn't already happened. >> right. >> about what that the future is going to hole for mondelez. >> you certainly wonder what melson knew at that time i don't know what he said with you, but i understand that pershing square has had a relationship with irene rosenfeld date back to mid-2000s with kraft. they're respectful of her, help to work with her and her team. there have been some conversations with management, i
don't know if that's extended to the board. >> it's going to get a lot more interesting. we'll talk about it some more, i'm sure. thanks so much. our trader blitz, four trades on four stocks making news today. first, mobile i, beating earnings, raising guidance, yet off 5%. >> yeah. here's a classic example of what we are talking about just now. here's a company, great results but up 70% over the last 12 months. so people are looking at overall market, this report. and saying, you know what? i'm not a buyer up here. it's almost irrelevant what fundamentals are now, it's sentiment. >> are you making a case that's how it's going to be for the overall market? >> no, i'm not. the hell with you, throwing your stock in the toilet? >> keep in mind, mobile eye on a weekly basis has volatility of 3%, up or down. s&p, as a reference point, like .75. this stock is four times more
volatile in the market in any givenen week. on a day like today, expect it to get whacked. >> you want to jump? >> it's all about momentum for the very first time being broken. attack a name like palo alto network, why is it down as much as it is today? momentum names for the first time are crack. >> okay. jimmy, you've got l brands, raised their guidance as well. a look at what the stock is doing. it, too, is down nearly 5%. >> yeah. you certainly do have a theme here. by the way, the stock's in a downtrend here. despite good results, results over the past few months have been spotty, choppy. >> comps were better. >> on this report. but in june numbers were not all that good. so the market is not convinced, the multiple on this is not particularly expensive but not forgiving either. it's around 20 times earnings. that's no man's land, purgatory, and in a market like today, nothing to make you scintillate about l brands.
so it's getting hammered. >> let me see costco because, comps were flat. >> yeah. >> they beat, stocks down. >> a name that's been coming back, had a significant slide off of 155, pulling back. listen, whether it is costco, whether it's target or in the worst-case scenario, walmart, the hyper market trade has not worked. of the three, believe it or not, walmart, which looks awful on the charts, that's one name i would take a look at if you are going to buy any of the three, which i would not do yet. >> okay. doc, generac, record low level of power outages. >> yep. >> and the stock gets hit as a result because they sell generators. >> when sandy was in the headlines everybody's talking about generac. on a straight downward all this
year. missed by 20%. missed by sale estimates, 15%. residential sales of the generators, basically down 26% year-over-year. stock's down 12% to a new 52-week low. i would look for it to go lower still. >> coming up, one of our experts gone from leading the pack for four months to flat in our portfolio challenge. so what is his next move going to be? plus, eight stocks in the dow now in correction territory. which one is the best value right now? experts give you their picks. take a look at s&p energy, by the way, there it is. it's in the green. despite oil falling 2%. talk about that, too, coming up. there's a difference when you trade with fidelity. one you won't find anywhere else. one-second trade execution. guaranteed. did you see it?
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all right. we're back. and i between show you our leaderboard and our laugh time portfolio competition. mostly in the green. pete's in the red. but jimmy, you were in first place. >> yeah. >> and then you were in second place. and nen third. and then fourth. up double digits. what's going on. >> started testing for
performance enhancing drugs. >> seriously. >> listen, i thought about this -- >> up more than 11%? >> you want to keep going? this feels good, please. >> i was shocked. shocked. >> he got apple. he got appled. >> it's a five-stock portfolio. by definition, that's going to be a volatile portfolio. in the last five, six weeks basically everything that you see on that board right there has stunk. now, frankly, most of it has stunk because of the things that we're talking about. apple sobviously something we talk about a lot. i've never seen a stock this cheap with earnings estimates going up after earnings and stock goes down 14% or whatever it is. i'm not trying over spilt milk, you've got to live with that. don't invest in the rear view mirror. you look forward and say are these the right five stock sntz fundamentals of the business, leave assize the numbers,ful of the businesses are very, very strong. and i'm sticking with them. >> it's play money, anyway.
it's for our competition. so you've had to make moves recently to try and get back in the game, so to speak, marathon. >> you know -- >> was poorly timed, right? >> yeah. >> a day or two before. >> i've lost 3% on marathon. listen you can't beat around the bush. they had a horrible quarter. i'm scratching my head about that, crack spreads, refining margins terrific. still continue to be terrific. you see new lows on crude oil. you don't see new lows on gasoline at the pump. these guys are making money hand over fist. they're in the penalty box now because of what happened last quarter. but again, you don't invest in the rear view mirror. look forward, reevening marriage -- refining margins are high. i like the stock. >> you go where the puck's going, not where it's been? >> maybe buy fitness. plan net fitness. >> it's like a gretzky thing. >> you know how many times i
hear that. >> cnbc.com/pro. crude oil hitting five-month low. >> we're seeing another 2% decline, after another decline yesterday. and according to a new note from goldman sachs, the risks remain substantially skewed to the downside. jim, do you agree? >> of course i agree but smacks of piling on at this point. case for selling oil is very clear and has been for quite some time. that begins to worry me. i do think we're going to head down towards $40. but there's no reason out there to buy oil. that makes me think that we're going to find one soon and things could reverse. the reason could be, if tomorrow's a less than good number and it takes out tightenings, perhaps the dollar comes lower and we buy crude tomorrow, but as of now, i agree with it. >> so, jim is going where the puck is going, not to steal a phrase from scott.
scott nations, this the bottom in the 40s? >> for the short term, absolutely. why? because we're below in the september futures, now below the 2008 crash low and we're -- we see 50-day moving average, it is -- the futures are below that 50-day moving average as much as they've been this year. look at relative strength index for the september futures, it's below 25, which is screaming oversold. in the short term, i absolutely agree with jim. i don't see a lot more to the downside? the short term. but look at longer term chart, it is look out below, no support anywhere below here. >> check out the live show 1:00 p.m. we're talking to david stockman, the former omb director, he's going to give us a dire warning from the fed. don't want to miss it. >> hang on. jim, did you say -- you want to go where the puck is going? >> me? i did not say that. i'm learning this hockey thing since the blackhawks have been
good. if the cool guys are saying it, i'm saying. i'm going where the puck is going. >> they tell me that es what you said. >> i sotole it from you. i should not be using that reference. >> thanks. coming up to two heavy hitting activists making big moves. some investors making bets ago. who knew what, when, why? our options insider, our own options monster, you're watching cnbc first in business worldwide. opportunities aren't always obvious. sometimes they just drop in. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group: how the world advances.
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hello, i'm sue herera. heres your cnbc up in date. pennsylvania's attorney general kathleen cain charged with violating grand jury secrecy laws and lying about actions underoath. she's the second state attorney general to face criminal charges this week. monday, texas a.g. ken paxton charged with securities fraud. egypt celebrating the opening of an extension of the suez canal. the president sailing down the cal na in a flotilla of warships
with helicopters overed head. the extension will be a boon to the country's economy. for the first time in nine years bill cosby ordered to answer questions under oath. a judge ruling he must give the deposition in october in a civil lawsuit by judy huth when she was just 15 years old. adrian peterson had his probation terminated 15 months early a judge signing that order saying that the running back has fulfilled all of the terms of that probation. and you're up to date. that is the cnbc news update at this hour. back to you. >> thanks so much. plan net fitness making its debut at new york stock exchange. dom chu joins us with a look. >> so, the ipo price was $16 a share. that was the high end of the $14 to $16 expected range. you can see here, it's at $15.75. below where it priced but that
doesn't tell the whole story. the chart, it started off much worse during the day. saw a peak at one point. interesting what fitness ipos coming in plan net fitness, a value gym chain. last week sole cycle, upscale spinning class company, saying they were going ipo. fitness stocks hot now. >> dom, thanks so much. doc, i'm not going to say what you called this ipo in the break. >> right. >> nor do i want you to say it. >> i won't. >> on the air for future of your television career. >> right. >> however, what do you think about the ipo? >> might tweet it. go ahead. >> it was a terrible ipo. the only reason it's back up here, the syndicate is lifting shares back to the level, judge, because it opened -- it was $16 ipo, first trade is $14.50, nobody wants to hold this.
>> mispriced. >> in a bag way. >> i think it's more than that. the overall fit's trend and wall street, they just don't blend together. you think -- i got burned. >> fitbit's like amazing ipo. >> amazing -- >> 150%. >> stock's up 150%, it's falling back, losing momentum and it will go further south. a mirror and blood test can do the same you can do with fitbit. all of the gyms, open a gym, most gyms business model is met with failure, not success. it's a very difficult business. think, i felt trap to it with vitamin shop. >> at a fitness expert, let me talk to the brief and horrendous history of public traded health clubs, bali total fitness, town sports, life time fitness, what ends up happening they end up bankrupt or falling in the arms of a private equity rescue because the business model is
pretty terrible, they have to spend a ton of money on marketing to drive the membership and members don't renew, ones that do don't show up. >> it's good. >> but what ends up happening they do a martin luther king sale, president's sale, back-to-school sale, and a certain point they can't pay the rent. most end up failing. best run and most successful one is equinox, it's owned by blackstone. that's a pretty good way for a health care -- health club chain to be run, a public company -- >> i want to jump back to the other big news of the day. of course, bill ackman and his 5.5 billion stake in mondelez. we talked about this, doc, on "squawk box" this morning. and i promised that i was going to ask you if there was any unusual activity around this name in the last many days. >> yep, there was back in april, judge. and there was, as recently as
last thursday, the average turnover of calls in mondelez is about 6,000 contracts. last thursday, it traded 47,000 call contracts. so in other words, people were betting big time. and that's not a hunch. now, some of that -- >> earnings were around there, right? >> there were. but would you see this kind of turnover around earnings in a stock that is somewhat sleepy, 6,000 contracts, it's not exactly apple or any of the big active traders. so in other words, the people, this wasn't bill ackman. this was the people that supplied him that liquidity. whether credit suisse, goldman sachs, i don't know who it was, but whoever it was, this is likely them hedging their exposure for providing him exactly what kate kelly described, forward contracts, as well as over the counter call contracts on this stock. >> nonetheless, unusual in the volume of activity we saw on that given day or time period we're talking about? >> yes, sir.
vol tim a volatility and volume both. >> netflix today is the benefit of so much of the media stock pain. the dramatic sell-offs that we've seen in time warner, in fox, in disney. >> viacom. >> viacom. is filtering in somewhat to netflix. the to stock up today. >> talking about it, josh made a great point on it i'll let him go into netflix on it, think about the model for viacom, the numbers from viacom were really, really putrid. look at viewership of mtv, mtv down 22%. what is mtv anymore? it's not what most people who gravitated towards it years ago found it to be in the current environment. it needs to be completely remade, redone, comedy central down 17%. clearly, there's a problem. netflix, as we talked about, is winning right now in that environment. >> i think if you are investing -- we had a fund
manager on yesterday and i think he's probably typical of allot of guys that have a value bent in media companies. i can't buy netflix. maybe seeing capitulation there as they sell out some of the other names and say, all right, maybe i have to own netflix. that realization might be dawning and i'm sure they're stick to their stomach, but that happens all the time. >> you're looking at a six-month low for the dow. i want to point that out before break. at the lows of the day, down 175. it hasn't closed as low as this since very early february. so it would be a six-month low, dow's off 1%. look at the nasdaq, though. a lot of media names within the nasdaq. that's obviously a drag today. down 2%. 100 points. 100 points on the nasdaq. we've got more on this sell-off coming up on the other side of the break as well. bank of america, merrill lynch analyst raising an area of the
coming up on power lunch at the top of the hour, a sell-off here on wall street. the dow down triple digits, easily the number of stocks in dow in correction terror. are they a buying opportunity? the best big cap stocks to buy, that's ahead. another biotech ipo today, soaring more than 50%. could this company interest the answer for those who suffer from peanut allergies? the ceo will join us on a first on cnbc interview. high home prices and fewer foreclosures making it harder to flip homes today. for those who do, the profit is growing. the most profitable zip codes, home flippers, ahead on "power lunch." >> thank you. as one part of the market in danger of a 20008-style blowup?
next guest says it could be, likens what happens happening in high yield to the financial crisis. the head of u.s. high yield credit strategy at bank of america merrill lynch. he's with us now. good to see you. not an original thought, right? we've heard real big investors talk about their worries about high yield. but why are the worries so acute now? >> sure, as i think about high yield, and the picture i'm going paint isn't the rosiest but is not 2008 scenario either. think about the macro picture, what's benefited from the zero interest rate policy, what's been fitted from easy monetary policy and infinite liquidity in the market, it's credit. the high yield market doubled in size in the last seven years. took 25 years for high grade corporate credit to double in size and has done so in the last eight years. as i sit back and think about what has developed, you've seen
a tremendous amount of crowded trades develop, high yield is one of the crowded trades some crowded trades are not going to do well when liquidity is pulled back. but i would argue that it's less of 2008 scenario and more 1998 scenario, right, when 1998, you had this huge buildup of the telecom sector, right? you had innovation around the dotcom bubble, the oil prices that fell, geopolitical risk heightened. you had all of these sort of macro, as well as high yield unique facters that contributed to mid single digit default rate that led to the dotcom bust and that's where we are today. >> when does this liquidity get pulled back, in your words? when does it become a real problem? that's a point of contention among even those who waving red flags right now? >> sure. so as we think about liquidity, one of the big measures that we
look at is the ownership of the market. 25, 26% of u.s. high yield is owned by retail. 10% of that is owned by etfs. that's similar to the late 1990s when 30% of the market was held by retail. >> you're making a similar argument that carl icahn made at delivering alpha. >> liquidity is an issue on the street. you saw this last fall. people sell what they can, not necessarily what they want to. right? so if you want to sell your energy paper, you may need to do so down ten points, 15 points you go do what your big, large cap liquid structures are and sell that down three, four points think about the high yield market where we are today as being a consequence of the energy sector leading to a contagion to the rest of -- >> what's the transmission mechanism in your 199 8 analogy where mid single digit default
rate and junk bonds led to dotcom meltdown? what's the transition mechanism today where most high yield is energy and materials, the problem areas, and then all of the funding for innovation and the other side of the economy is not even coming from the stock market, it's coming from venture, so how do the two meet? where does the rubber hit the road? >> a couple of things to think been rarely does the high yield market lead to a turn in the business cycle. so i would argue that we're in the beginning of the end of the credit cycle. >> okay. >> but not the beginning of the end of the business cycle. still a couple of more years. that's when you see the big spikes, 12%, 15% default rates when you enter into a recession te period. it's no not because of high yield. but the transition mechanism is risk aversion. you look at triple c issuance gone down. why am i going to buy a seven times levered energy company,
right, at 15% yield but buy a 5% -- five times or six times levered company at 6%? i'm not. risk aversion goes up and that's when you start to see -- >> it's not allocation thing. people have an amount of dollars and direct it elsewhere. >> absolutely right. >> throws dollars found its way to high yield over the last seven years because of a surge of yield. that's what global banks have done. that's why you've had a doubling in the size of the market. now what year going to have to have is other opportunities, particularly as the fed begins to raise rates you don't need to own credit risk to get some yield. >> good to see you. >> likewise. >> thank you. the dow 30 heat map. the dow is at the low of the day, or just off, but till, down about 170 or thereabouts. looking at lowest close in six months. you can see, chevron and exxon still in the green with ibm, proctor & gamble, and cat. but disney, which was the big
loser yesterday, it's down 5.5%. microsoft is there along with some other very widely-held names down 2%. but disney giving back another 5.5. all day on cnbc, taking a look at eight dow stocks that are in correction territory and asking you which one would you buy and why? we'll ask our panel of experts as welling next.
stocks now in correction territory, including apple, ibm, exxon. all day we're letting you pick the names you think are the best buying opportunities right here. dom chu joins us for a look at who's leading the pack. >> we want to do this with the traders here because this is what the viewers have told us in terms of our eight stocks that are in correction territory and which stocks they think represent the best buying opportunities. between apple and intel, viewers right now have chosen apple to win that battle. caterpillar and exxon, exxon is the winner there. if if you look over here, ib m a and amex. in "power lunch" we'll figure out which two stocks they boil down to but we want to know what you as viewers think. tweet us with the hashtag buy the dip. tell us which stocks you think should move on or go to cnbc.com and vote there as well. i'm interested to hear what the desk thinks about where the best value is among these eight stocks because look at some of
the tweets that have come in already. there are some interesting comments. one viewer thinks that apple is definitely one of the best ones out there. if you look at apple #buythedip, apple by far says that guy. when you look at fundamental metrics. then this -- i would definitely choose procter & gamble over american express. p&g is a safer bet. i want to know what some of the guys on the desk think. >> i'm not shocked at any of the initial results by any stretch. from here forward, though, apple or exxon and why? >> i don't like the seeding. the left side of the bracket. apple and exxon should be the one and two seed. why are they playing each other in the second round? they should be playing in the championship. i think they should be one and two. i think apple will obviously win out over exxon-mobil. the right side of the bracket is weak. i'm going to talk about two other names and i'm not sure about the seeding thing either. but viewers know my spiel.
throw those up. i'm looking for strength usually. i'm not usually playing this game like which correction should i buy. but i guess you could be a little bit constructive on walmart. stock is putting in a higher high. it also happens to be right at a previous support level. you'll know if you're wrong in this trade immediately. your stock goes beneath $71. if it's going to bounce here, great. if it is not, you'll be on to greener pastures. p&g looks promising. putting in a major hammer at pretty substantial previous support level. here's another one. you'll know if you're wrong pretty quickly. you don't have is to take a lot of risk here to play what could be a healthy bounce. $75-ish looks like a decent level to be into this name. we'll get you set up for the second half of this trading day after this quick break.
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been a pretty ugly day thus far on wall street. you've got the dow looking at its lowest close in six months. the russell had broken a key technical level. the s&p had breached what has been a key support level. what should we be thinking about here ahead of again this jobs report tomorrow that could be a big decider in where we go next week? it is going to give the people a real good feel on what the fed is going to do. >> most passive investors won't wake up at 4:00 in the morning like we do and look at the overseas markets but i think they're important tonight. i think the emerging market and chinese market are things we need to be looking at. they're all now clearly challenged, in correction mode. you take the weakness x exhibited in the u.s., add that on top of it, it could make for a very ugly opening tomorrow ahead of the report. >> there were instances -- i think it was apple got 10% below its 1 00-day moving average
seven times in recent memory and each time it bounced nicely off of those levels. maybe it's in the process of doing that again. if apple finds stability in its own right that can't be viewed as anything but positive for the overall market. is that correct? >> i agree. we didn't really go too deep into this. you know i am a value investor. everybody knows this. right? apple at 11 times non-cash adjusted earnings or any of those tech names like ibm or intel. the cyclicals, the retail names. there's a lot of value out there that in a sketchy market like this, you can feel comfortable owning at ten times earnings. >> doc, you seeing some value in any of these media names getting bludgeoned? >> yeah. fox a. obviously we have the debates tonight but that's not what's behind this. after this big sell-off in the media flames, a lots of big buying and out of the money calls in fox a. >> josh brown. >> disney i'm probably buying before the weekend especially if this continues for much longer. >> this was a stock that was in
your portfolio. you got out of it. a lot of these names are just getting blasted today in the media, the likes of which you just don't see. the week of four media stocks since the depths of the financial crisis. zbli >> it's a good opportunity to buy. "power lunch" begins now. scott, gentlemen, thank you very much. this is "power lunch" on a very active day. 1% declines roughly for the dow. the s&p 1%. 2% for the nasdaq. i'm tyler mathisen. simon hobbs, stocks under a lot of pressure. >> major averages down here at the new york stock exchange, the dow is sit being at a six-month low. it is down 2.5% for the year. the nasdaq is on pace for its worst day since june 29th. the s&p breaking its 2,087 support level. if it has another day like this