tv Fast Money Halftime Report CNBC March 7, 2017 12:00pm-1:01pm EST
as to what's the actual effect on the economy of the strong dollar. >> mr. secretary, it's good to talk to you again. we hope you will come back soon. >> i hope so. i hope we'll have news that's worthwhile to be reported. >> we look forward to it. wilbur ross, commerce secretary. with all that let's bed back to headquarters. scott wapner and "the half." ♪ >> welcome to the "halftime report." i'm scott wapner. top trade this hour, the states of the trump rally. stocks in the red again today. are investors missing the warning signs? with us for the hour, joe terranova, stephanie link, josh brown, jon najarian. stocks, a modest pullback this hour with some calling for a bigger pullback in the weeks ahead. does it mean investors who missed the trump rally will get a new chance coget in. doc, you think we're going have a pullback in the short term as some are now calling for? >> we're sort of feeling it right now, yeah. we cited two things that we
thought could be catalyst for that, judge. of course the march 1st and then m. welcome back to the march 15th. we're coming up on march 15th. "halftime report." just want to tie up the health we're not seeing a lot of fear. care conversation we were having because you guys are buying we've seen minor, you know, these stocks. >> this is one of the sectors whatever, .2%, .4% sell-offs. that's along the lines of what i i've been underweight -- at think we're going to get. least market weight for now. mylan is a new name for me. a softening rather than just an eight times earnings. off to the races continuation of got crushed. we know why. that rally. >> we talk about the warning epipen issues. signs, whether it's the dollar, i think that's behind them. they had a meeting last week. the numbers are redisked. it's a fed meeting looming. i'm wonders, steph, if you think they talked about getting to $6 the fed actually does hike rates in earnings power. >> ceo was was on the network on next week, what happens to the thursday or friday. stock market? >> i think it's kind of a friday i think it was. >> did a good job explaining. ho-hum, especially if the data >> did you buy it before or continues to be strong. after that? >> before the quarter. we've had some very good data and then i bought it afterwards points over the last couple of weeks with p.m. is, isms, both and i've been buying it this morning. >> the strategy that josh talked business and consumer earnings. about which was focusing on equipment, devices, life >> do you think the market is -- science, something i've been talking for six months and >> i do. >> cramer says, everybody says actually bought a bunch of names we're ready, the market is ready and remember at the beginning of until you do it. >> i think they communicated the year, mckes son and in and very well. i think janet yellen did a great out of stryker. per kin, elmer, pki, solid job last week. all the fed officials did a very company.
good job in prepping us for you also have in that group this. of course it's going to be thermofisher, tmo. depending on the language that >> boston signicientific breaki she uses but i think it's going to be slow and gradual. and i think that's really important. out. so if rates continue to inch up, >> looking to he re-enter them but gradually, the dollar but this is where the focus continues to maybe inch up but should be, the striker type gradually. names, pki, boston scientifics. >> what are you doing to your portfolio? the billions of dollars under management you personally have. >> yeah. >> what are you doing? >> you do have a handful, se >> so, trying to find some of celgene above 125 is gone. the laggards, right, because it's not -- there's not a lot of super compelling ideas out there so there are some names where but i'm looking at energy. there's strength, too, in the discovery side. >> all right. i think seasonally this is the focused on energy as well today. time you want to own energy. and health care, today is a the ceo of petro is ahead. perfect example. trade energy stocks. these are two areas that have sort of lagged. first, though, susan li has so i'm still very much with the cyclical trade. still very much in financials "futures now." and industrials. but i want to juice up the portfolio and looking at the laggards but that's where i see >> crude is confined. jim, can crude rally in the face opportunity for sure. >> joe, you've been getting more of a potential rate hike and cautious of late. stronger dollar? you had been short s&ps as of >> i think if you look at the last week. two-month consolidation in crude >> yep. >> do you think we're going to you think that the story's get a pull back of any kind of size in the short term? >> you have to look at the price boring. it's actually a clash of two action and what i see during the fascinating fundamental stories.
on one side you have the course of the trading day is it seems as though the rallies that production cuts which are pepper we'd a notion that opec has to used to extend late in the day support prices. at 2:30, 3:00 and press us to a saudi has to support prices new high we experienced that through the aramco deal. refiners are continually coming throughout february. it seems like we've got a shift. back online. to jon's point, i don't know from a technical standpoint i necessarily if it's going to be very dramatic but it seems as think that we usually break out though when we really now it's of these ranges in the direction met with selling pressure. that we came in. kind of reverses it and doesn't so i'm looking for a trade of seem that we can get the lift to 55.25 and then i think we go a new high. higher. which is odd because longer term we haven't seen that in a while. to your point though about the federal reserve, it is not as if i think that they will cheat on this is the first time this is production cuts but in the short and medium term probably higher. going to happen. we've experienced this. >> you mentioned ranges are we have had a ril bit of port. scott, what are the key levels dislocation sell-offs. that we're watching for? in the two to three weeks prior >> that's right. jim is right. to them normalizizing rates but we're in a gentle upward we recover over time. channel. top is 54, 30,. the environment is right for that to happen again p the only thing it disrupted would be a up a little bit still because, print on friday that makes the again, the saudi oil minister market really, really said that production cuts are uncomfortable with the decision. >> josh mentioned yesterday the working but they're unhappy with the resuffer shun of shale correlation between the approval production. rating of the president and what i would say welcome to the free the stock market -- market, guys. >> yeah. >> jim, scott, we'll see you >> -- was actually doing. later on. reminder that today on "futures >> look. let's talk a little bit about now" we're joined by samantha
internals because rather than go azzarello to discuss the markets through every single stock and why she thinks that maybe individually let's just take a high time for investors to look look at the basket that make up the indices. first of out, we're 79 days outside of the u.s. that's at the top of the hour on "futures now." scott, back to you. within 1.5% of the all-time high >> all right, susan li, thank which you have to go back to 1964 to find another streak like you so much. this. it's really historic. ceo of brazilian energy how tight we've been able to hue to that all-time high and not giant at the sara week energy give up a lot. conference in houston. we may be in the process of brian? giving up more right now. >> scott, thanks very much. >> when was the last s&p move one of the first interviews for you had greater than 1% when it comes to the downside? ceo really brought in to clean >> on a one-day basis? up to a. troubled company. >> yeah. i hate to say that, i'm sorry. >> it's been quite a while. >> i know. >> yeah. it's true. they had scandal. that's a function of the mood on the street, which is, oh, my god, i've missed so much of this the stock got crushed. bankruptcy fears are real. they brought you in. rally. i can't afford to let it go up another 10%. 1 to 10 u.s. dollars. >> a hundred sessions. >> internally the picture is still very heavily indebted. why should investors continue to different. we double topped on the percentage of stocks above 200 be optimistic? day moving average in the s&p >> thank you for the invitation to be here and talk to your 500. might have doubled topped around audience. 85%. that is a historically high i mean, i think that we have a reading for that measure. have 85% of the big caps sb very clear sdra tee jik plan we
alove their 200 day. are implementing. that's a lot of enthusiasm. a enough ber of initiatives have maybe some of that has to come already been implemented. we have tried to recover the out. in january we were 65% which is credibility by promising and a little bit more average. delivering. and that's a very important process. so maybe we get some of the enthusiasm out of the market, now that earnings are past. and by these strategic plan we now that we're going the a fed will reduce our debt to half move. this would be seasonally a good time for that to happen. i actually hope that if we're into positive. >> >> you are the most heavily getting this big dip that everyone is talking about i hope indebted oil company in the it happens now. world. >> you're right. >> how do you eliminate half the let it happen and let us -- let's set our sights on -- debt? >> we really need to plan that's >> i saw something from td amr very comprehensive. trade, their investor movement so we have -- actions related to index is something they track. our pricing policy. i we have actions related to our it indicates the highest retail investor sentiment in the data's costs. and we really needed to have a history. it goes back to 2010. not a large -- >> one thing about that is much better -- management of that's skewed toward very active traders. i think it's important. costs. productivity of our investments much more sensitive to market. >> it speaks of competence in and very extensive partnership general. businesses are saying more confidence. in divestments. consumers are seeing more when you brought all of this confidence. they've got better jobs. together, and of course it's -- wages are growing better. home prices are appreciating. it's working on the debt but as there's a lot of good things
happening but i was just going well in the operational result to say that maybe we don't have of the company. when you work both sides we will this massive sell-off. maybe we continue to see this rotation because that's what be able to do the debt. this year has been all about, >> you're an interesting company really. february was a very defensive because you are state own month where staples, utility, preponderance . if you're a private u.s. company telecom led the way. beginning of march we saw better you can cut your cost. you have a state that is an rotation back into cyclical. active owner and partner of your i'm thinking that maybe you company. are they allowing you to cut the could get that rotation, maybe into the laggards like the costs that you need to? energy, like the health care. >> yes, yes, that was a very and we don't have to have this important part of the -- the massive sell-off. conversation i had to come to >> this is a point of good debate. assume this position. confidence versus complacency. we really need all the conditions to do the job which is needed to do the right way it's genuine, confidence but are people too complacent? if you look the warning signs and all this was accepted. out there. we recognize enough of them, we i have all the autonomy. put them on our wall today, whether it's the dollar as i >> can you do what you need to said, rising yields in the do with oil between 50 and $55 a threat of the fed, inflation, barrel u.s. tump policy actually coming to is that a good price for you to few i guess so now. be able to pay down some ebdebt you've got the republican plan for health care. it's going to be a messy process figuring that whole thing out. but continue to reinvest? >> yes. the current level of the are we too complacent about what really lies ahead? >> i think, to answer your petroleum is completely in line with the numbers we use in our question and let's tie it to your initial question, is this strategic plan. the start of the pullback? we don't use just one scenario.
how do pullbacks historically we use a number of them. happen especially when you're but we use it as well even in gnat significant highs like this. it seems as though we are able to absorb whatever the this stress we manage to fulfill contention might be in the this target. >> jpmorgan just recently united states during the course of the trading day. upgraded your stock. these small trading ranges, they assumed $55 a barrel for right? the correction is not happening the next three years in their while the u.s. market is open. upgrade assumption. would you agree with that? i would imagine and historically that's what the experience has $55? >> we are working for the next been, that wake up one morning, scott, and no one has the year's range between $50 and ability to get out because you $60. that's the range we are work wake up and the market is down pong as i said, we cannot just pick a number and work with this significantly. well, what does that i'm fly? that implies that the concern is something outside the u.s. that we don't see right now that we number. >> pedro parente, the ceo of wake up in the morning and everyone goes, oh, boy, we've petrobras. got a problem. scott? >> brian, thanks so much. now we have to source liquidity brian sullivan in houston. you follow this company closely, and that creates the pullback that you're looking at. josh. stock's up 85% in three months. i don't think you're going to >> yeah, but like -- get it here right now based on >> i know from where it has what's driving the fundamentals. come. >> contexturally it was down 90 >> there was a survey that something. >> i know. >> this is the beauty of two things happening at once. converge x did and they spoke to number one, diminished their client it base, expectations in the case of this institutional investors. company there were people i think it was 40 something talking about bankruptcy. so you don't have bankruptcy. percent say their biggest
concern is tax policy, not being you don't have have a collapse enacted soon enough. in the brazilian economy or the brazilian political situation. and i think the -- for the most so not having those collapses part their respondents think tax was enough. policy by the end of 2017 is james grant like to say that, you know, with cheap stocks good realistic. if that gets rolled into 2018 things have a habit of happening for no reason other than no one then probably -- and we start to get some sense of that now, thinks anything good ever can. that's probably what people are that's how you get a situation most worried about. like this. and then to joe's point, you i wouldn't read more into it than that. it's not a well-run company. know, iranian ships come within it's not the next big thing. 600 feet of a ship in the strait it's just a situation where there were no sellers left. and people waking up too late to of hormuz, things along the border of ukraine. buy it when it was a couple of bucks. >> no-man's-land? >> 600 yards. >> that no stock trader has any kind of a handle on. >> no-man's-land. i'm sure josh is less thanner is that's the other part of it. really if you're trying to reon the number of clients he formulate a portfolio based on has in petrobras. those risks, good luck. >> we talk about -- i want to >> we don't play that. move on and talk about the continued sell-off in snap. >> no woman's-land, steph? a lot of people paying attention >> no. to what that stock is doing in >> so many other choices. the early life as a publicly >> not when you can buy chevron, traded company. down 11%, doc. good analyst meeting today. >> yeah. >> you're completely out. not when you can buy an darko >> completely out. and, you know, echoing what down 12% from the high with a great asset sales story and everybody has said here collectively. on the desk about this company. balance sheet improvement story.
if you really want good growth there are now of course you have to stick with perm i questionings about could they be don't know and eog and contra. added to an index. if you want to do services, we don't have any votes. >> we nailed this stock on this weather ford is a game changer. show. we -- i think we nailed -- even this new ceo, game changer. >> when this stock was $3 crude the people in it said i'm counting the minutes before i was like in the 30s. get out. i think we got it right. people were talking about $15 >> and it was going to be a very crude. short window to take that big if you tell me that crude oil pop and take advantage of it. definitively is going to double, which is in fact what happened, then, yeah, i would probably buy do i think the company is over? the worst company on earth that's in the crude business. no. but do i think it's tremendously over valued and people will >> you could actually get some avoid it like the kevin o'learys of the highest quality companies of the world as well as of right now without having to make course jim lebenthal. yeah, they will avoid it because a case that oil needs to get to $60. so i get what you're saying. it's got no vote. >> that's what needed to happen for this thing to come back from may not be part of any etfs the dead. because of it. >> the company will be okay. >> exactly. >> it doesn't happen absent a $3.5 billion in cash sitting on double. >> i would rather take the their balance sheet. chances on chesapeake pan opportunity ahead of them. they is the five big advertising petrobras. there's a lottery ticket. companies that control 90% of all spending and they don't have >> chesapeake is the petrobras a significant lock-up until a of the american southwest. year from now. next up, dick's sporting >> nobody is spending on that site. goods. the faft forecast was below. >> a billion dollars in revenue. >> when i heard people from o i cramer today said not as bads people think.
omnicom, they will still lose it's down 8%. what's your read? money. >> i'm not a bull. >> retail is so hard right now. i'm just saying they are doing revenue. and it was a fine quarter but >> they have some revenue but they made it in gross margin and for 158 million people that are sgna. active on there you would think guidance was lower. cutting vendors. they would be able to generate that's not a good sign. more than that. i think you're going to have to >> at what point though -- be patient. i just think you wanton >> that's up 7 times than what underweight. consumer discretion. >> joe, you figured this was it was and now they're rolling going to happen. over. >> the slap across the face that the activist paul has gotten hunter harrison in as the csx bar rinse had. cut in half. >> i think the bigger question ceo. what do you make of this? is what point do all of these social media companies begin to >> he's a legend. roll over? he turned around canadian you begin to wonder is facebook now reached the level where the pacific. did a fantastic job there. he's coming in to a company that valuation is too lofty? >> no. cheerily is seeing the momentum >> no. >> i'm not there anymore. >> no. >> i think you do have to ask reversed from where they were three years ago. the question, has social media very strong peornc seen over the last couple of clears since march 2013. run its course. down 4% today. >> to that point that joe is making as far as when people citi takes the price target to look at spend on digital and so 66 which the stock is below today from 90 bucks. forth, it is facebook and google >> they should have done that 60 points ago. or alphabet. i mean, those are the two the short sellers have absolutely nailed this story. places. and the street was way late. >> if facebook wasn't a $400 continue to be late. billion company snap would not i'm not an expert on the be worth 25 or $30 billion right entirety of the short case but
i've read enough to tell me not now. >> facebook is trading at a reasonable valuation for the growth that you're getting. to be involved. if that weren't good enough all right? and they've proven themselves. you have to do is look at the and they've got a business model that works and they have almost chart. definition of a falling knife. 2 billion users. >> dish networks, s&p 500, doc? it's a huge company with huge >> replacing it on the 13th of numbers and valuation that's pretty realistic in my opinion march. >> network? even after the run that it's had. would i chase it here? >> that's a big deal. couple of pretty good upgrades. no. i own it, hold it, happy with it. ubs just upgraded them a week or >> everybody is betting on a split. >> that would be nice. two weeks ago. >> right. >> let's move and talking about great timing by those guys. health care. noise time to be long this one. in focus today, the xlv, ibb, up 5%. three times normal volume. >> you've been right on the money, in fact, doc. efts to track the space to on speaking of bang. pace for their worse day since >> bang. >> two recent unusual activity january. president trump tweeting out today, don't worry, getting rid segments. one stock is up in a week, the of state lines which will other is popping as we speak. promote competition. we're going to recap those two i'm work on a new system there will be competition in the drug trades and see what the doctor industry. pricing for the american people has today. will come bway down. plus, an attack on the activists investor by an let's bring in meg tirrell and influential judge. you won't believe what he had to sam, managing partner at a fund say about hedge fund managers with more than $10 billion in assets under management. and activists specifically when it only invests in health care. we come back on the "halftime report." sam, welcome. meg, it's good to see you.
meg, you've been looking at this both the republican health care plan, the impact, and the president's tweet rating to drug prices. where is the impact going to be hey gary, what'd you got here? most felt? >> the tweet remindsing folks this bad boy is a mobile trading desk so that i can take my trading platform wherever i go. plu president trump has not forgotten about this. you know that thinkorswim what a lot of people are seamlessly syncs across all your devices, right? focusing on is where the bidding is, where the negotiations are oh, so my custom studies will go with me? in government pricing. anywhere you want to go! and medicare we look at part d and part b, two different parts of medicare. what i'm really hearing the conversation's focus is on part the market's hot! b. sync your platform on any device with thinkorswim. biologic drug, drugs given in only at td ameritrade the doctor's office versus medicare part d. they gave thus data. looking at big drug makers exposure in medicare to part d vers versus part b. you can see where the biggest exposure is. the blue is part b, orange is part b. really exposed to more pachlt d if they try to give pachlt b the
ability to increase bidding there. >> sam, which stocks should we be focused on today given not only the republican plan but the presidential tweet? >> well, there are two different things that happened the same day, in effect. surely health care is a big deal. something like 20% of the united states economy. we should probably -- number one, be looking worldwide because there's things outside the united states that look good. but number two, probably a little askance at the therapeutics. drugs in biotech are a little unsettled because -- maybe a lot unsettled because we really don't know where it's going. the president's plan, the new health plan does not address drugs very directly. but then he indirectly or maybe more directly through twitter said, gee, something's coming. we don't know what's coming. we will surely be addressed through list brices bid prices of drugs but also towards the
supply xhchain. in recent days or months the two camps have been pointing figures at each other. the supply chain says, oh, it's you guys make the drugs. duexperience our mostand pthrilling models ever., the drug makers say, it's the including the exhilarating is, gs and rc coupe. supply chain that marks them up. we're going to see something emerge here. ♪ we're not quite sure what it is. experience amazing. surely though, innovators, innovators are going to continue to do well. >> right. all right. so then you would want to be a buyer of some of these biotechs that are pulling back today? >> those that are innovative, for sure. we in the united states are the envy of the world for the discovery that goes on here. and the pace of advance is just spectacular at the moment. >> can you talk specific names? >> well, i mean, in particular, we like alumina for the sequencing they do. there's a got going on in gene therapy. and there's a new technology called crisper that we're watching. so there's a lot of specific it is time for unusual
activity. names. actually you mention negatively doc, giving us an update or something new as well? let's go with the new first. >> anheuser busch, back in regeneron is not a bad name. october the stock was 135 bucks a share. take a look at it now. >> sam, i find it fascinating the tree areas you just 107. people are stepping in in big mentioned. numbers. buying the 110 calls and the 115 illimuna, tools for studying things in labs and things like calls out in may. that. i bought the 110s. you mentioned gene therapy and i'll probably sell 115s against crispy, precommercial, gene therapy is getting close. it and create a $5 spread there. we have here a list of kind of i like the action in the stock what donald trump has said since today and i think this one is he was elected on drug pricing certainly set up for a nice going back to december saying springtime into the summer. he's going to bring drug prices >> you told us about sales force down to january calling saying yesterday when cramer was here the industry is getting away with murder but lighten things along with your apple unusual in his speech last week talking activity as well group have an about artificially high drug update in sales force today? >> yeah. prices. what does that mean to you and >> again? >> sales force made a fantastic do you think he's shifted since the election on this topic? >> unofficially high may, in fact, tie back to drugs that pop to nearliy 85 n. in the pos last night. have lost theiridn't have competition. i'm out of stock but still have calls. the companies raised their i've been selling calls against prices. and that could be the artificial the calls that i'm on. i would like them to push to the plat that we're talking about. 90 level or higher by the time otherwise, we need to pay for frame.
discovery. i think it was may trade, judge. does it get there and how discovery will not be done if quickly because of that ibm partnership and other possible prices are not fair or high. things? sure could. but that was a nice pop and as i said, the united states is the envy of the world. yesterday. >> you had another -- speaking ourt the's a of nice pops, winner weather mega trend going on within the sector where managers are buying ford. >> yeah, weatherford, stock has equipment company, companies been up as much as 16% today. like -- that are not involved in we talked about it on this necessarily discovery firsthand program january 17th. but are selling to those said look at that unusual call buying nape get a great companies. so just a couple of quick executive. stocks off to the races. examples. first of all, diagnostics names i like cabot oil in guest, also. look a2345mazing. quest is flawless. ensco. this one is really making a very labcorp. and the other names like baxter, nice performance today. >> good stuff, doc. badr, these stocks continue to come on back. >> thank you. >> we'll go to sue herera with go high per. is that because managers are the latest headlines. just afraid to take the risk of >> here's what's happening this drug pricing but they still wan hour, everyone. iraqi forces battling their way into the heart of western mosul exciting technological advance facing a wave of intense isis as well. we like that area, diagnostics counter attacks. and so on. but surely therapeutics are kind troops stormed a government of the most dramatic. cures in effect for cancer in complex but had to pull back in the face of very heavy artillery some cases and for some serious fire. a wisconsin jewish community center was evacuated this
morning after receiving an genetic diseases. e-mail threat. we would be watchful to get it was reopened about two hours outside the united states and later. more than 100 such threats have some fast growing areas. and we like been made to jewish facilities in 33 states since the start of the year. as americans continue to portfolio is currently outside gain weight fewer are committed the united states. >> sachl, we appreciate the time to losing it according to a new very much today. talk to you soon. study from georgia state >> thank you. university. >> all right. the percentage of overweight sim isely,good voice to add on adults trying to shed pounds dropped from 56% in 1988 to 49% this. >> thank you. here's what else is coming up on the "halftime report." >> energy taking center stage at in 2014. greater acceptance of obesity a market moving meeting deep in may be the reason for the the heart of texas. we're talking oil, natgas and decline. white house tours resuming today in 50 grade schoolers got more. on deck, the ceo of brazilian the surprise of their lives as president trump showed up to energy giant. plus, caterpillar and deere, greet them. he asked the kids to gather about even in the last year. around but only 10-year-old jack but it's no contest in the last cornish pepted the offer. six months. he got a quick moment to chat deere out-pacing cat. which is best for youron battles with the president and it looks like a hug as well. that's the news update this out with stephanie who owns hour. now to brian sullivan with caterpill what's coming up on "power caterpillar. before the break the financials that faired the best lunch." >> sue, thanks very much. one week before a fed decision. it's been a big energy day on cnbc. and this is going to continue gold machine saks is up almost with more big interviews here
3% on average since 1994. from the conference in houston, and jpmorgan up 2%. texas. the financial sector overall up the ceos of conocophillips. 1.3% in the week before a fed decision in a rate hike environment. the "halftime report" with scott we're going to continue the wapner is back in two minutes. fallout from trump's tweets on lowering prices, biotech stocks taking a hit today. and more on the fallout from the gop's plan finally rolling out to repeal and replace obamacare. there is a lot to do. it's all coming up at the top of the hour on "power lunch."
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calling activists. >> it's one of the strongest repudiation of hedge funds to date. leo strine, delaware supreme court chief justice ask lz who bleeds when the wolves bite. the wolves of course are hedge funds and the wounded, the average american investors. regarding hedge funds he says, there is less reason to think they are making the economy much more efficient, and more reason to be concerned that they are perhaps purposing steady producers of societal wealth on a riskier course that has no substantial long-term upside. scott? >> you guys want to kick this around? look, buffett has taken on hedge fund managers as it relates to fees and the lack of production relative to what they're charging investors. >> this is separate issue though. this is about our corporate managers doing things that are in the best interest of all stakeholders of a company including workers, including outside minority investors or are they pushing managers to do
things that will boost earnings or dividends or whatever over the next six months so that a windfall can be harvested. >> age old argument about over activism. whether it's good for the economy, company, employees, jobs, retirement, et cetera. >> the only ragszal way to look at these arguments that never go away is to say, it's probably more gray than it is black or white. and you could find egregious examples of activists, demolishing the company and you can find amazing examples of an activist who gets involved, pushes a company to be better, brings in better management and shows the benefits. so you could find ugly examples. it's the same thing when we say are buy backs good or bad? let's figure it out in five minutes. it way more complex. what this guy wrote is extraordinarily one sided and probably is is not backed up with data when push comes to shove. >> it's a good point. one of the reasons i think we're starting to see all of this pile on activity, it's fun to hate hedge funds these days because
the performance has been lagging. fun for pontificators out there. one of the things he said in this report which i found really sbrising was he said that, you know, back when they were doing well it was like shakespeare writing a "mid summer night's dream" when the hedge fund was doing well. he said hedge fund reports in recent years has been, quote, a disgraced politician's mistakes were made speech. so he is looking at this, looking at thor performance and what it means for average investors, saying that average investors may be better served in private equity like instrument where's they're locked up for ten years and more of a correlation to the long-term. >> oh, my goodness. >> and illegal by and large at this point. >> alternative investments, lumber, things like that, are lying. it's ludicrous. activism itself is not prohibited by the s.e.c. it's allowed. hedge fund managers incredible
incredibly well and we continue to paint the broad asset class as being such an underperforming type of strategy when it's not. you -- >> it is. >> well, you could -- >> broad asset classes are. they underperform checking account over the last five years. >> i don't disagree with that. >> okay. >> but i would say that there are plenty of hedge fund managers out there uniquely qualified to navigate the environment we're in right now. >> probably a couple hundred out of 11,000. can you identify them in advance? >> i know a few of them. >> is it worth the cost of trying to find those in advance? >> to the -- >> do you qualify it to get in? >> exactly. >> can you get to the ones that can do it? >> to the investor seeking that type of return, that type of investment model, yes, it is. they're all high net worth investor out there with $500,000, a million dollar, who 13e specifically seek out that style and strategy. >> qualify, do you have
$500,000, you can't even qualify. >> you can seek it out but it is not going to work. >> you're at $3 million. >> $3 million household and you say i'm going to carve out $500,000 and i'm going to find the next david einhorn? >> you just said high net worth. $500,000. that's your words. >> i'm talking about people who have a net asset value of 20, $25 million. >> the data says they can't do this either. nor can fund to fund. the data is very clear. >> carl icahn can't do it. >> carl icahn can do that. you can't call carl icahn and get up and get in to carl icahn. >> he is one of the hundred in the hedge fund industry that can do it and there will be others that come along once the industry consolidates. >> the hedge fund industry was $200 billion like 10 or 15 years ago. it's $3 trillion. anyone who doesn't understand that that makes it harder to
outperform, not easier, has no business allocating other people's money. it's math. >> that's the last word sdm. >> why is that the last word? >> because i said that. >> i just wanted to hear you say that. >> jane wells is live in las vegas at one of the biggest shows in the country. jane, we always have time for you. go ahead. >> scott, this is a $550,000 smart bulldozer. it's a genius. so smart it can train people like me to drive it. so smart they gave eight graduation hat. tassels in vegas, who knew. don't let the color fool you. this is a john deere machine. up next, deere goes after cat in construction in a big way. don't go away.is it go after it the same way?se so y chasing after short term returns. instead if getting caught up with the crowd, the investment managers at pgim take a long term view, teaming specialized active investing with risk-management rigor, to seek out global opportunities. we manage over a trillion dollars this way, attracting many of the world's leading investors.
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welcome back to "the halftime report." our jane wells is in las vegas for us today. hi, jane. >> reporter: hi, scott. this show happens every three years. every three years, deere lets us come in and crawl all over everything. the equipment manufacturing industry is pretty lame right now. that could change maybe with a trump infrastructure bill. maybe farm prices have bottomed. for deere, here is the new deal. big push into big construction equipment. in other words the deere is chasing the cat. >> we definitely respect cat. we think they have the same type of value proposition that we do
in this same and there's room in this market for one or two more players. >> caterpillar, by the way, they don't talk to us, let us crawl around their machines. i've been coming to this show for a decade. maybe it's me. they is third own issues, under federal investigation for accounting issues. still, this is caterpillar's show. it takes up over a football field yet most of their sales are outside north america. tariff and trade war could be bad for cat. >> if a trade war does take place, 35% of our business depends on foreign trade. that would just be catastrophic for thi vsus cat. steph, you own caterpillar. >> uh-huh. >> josh, you've talked about deere on this program for a long time. >> i've been long. >> why is cat the pick versus deere? >> i'm not going to say cat versus deere because i don't dislike deere but the end markets cat is in is troughing
and have been down harder than deere's market. kamatsu and cat have 50% marketshare. this business has been destroyed. we see what's happening to global commodity prices. they're actually rising. that's good, especially given that used equipment has really kind of been spent, if you will. last week they saw their first new bookings orders up for the first time in a quarter. things are starting to level out there. you have construction, oil and gas. all of these are ugly, ugly end markets. >> you didn't even mention the investigation. >> i don't think it's that big of a deal. one-off event. and what's more important is getting the end markets right and the timing of the end markets. you get about a 3.5% end dividend yield while you wait. it's not cheap. >> gave jane a talk to the hand. does that factor in at all?
>> if you do think end markets are going to recover they're going to grow into those earnings. >> so, i don't disagree with what stephanie said on cat. maybe it's not so much a debate as i just prefer deere and it has different growth drivers. story on deere, falling since 2014, horrendous to operate in. their team has done an incredible job navigating through this. no good news for a long time. now, all of a sudden we get the first company sales increase coming this year. they're looking for 4% sales growth versus the earlier consensus of 1%. the outlook is getting better faster than people are talking b inventories are under control. short-term leasing problems and if you get agricultural prices up for the first time in a long time and increases in farm incomes which have been
depressed for longer than we've seen in the '70s, this is one of the premiere ways to play it. >> we'll take a quick break and come right back. final trades. a basketball costs $14. what's team spirit worth? (cheers) what's it worth to talk to your mom? what's the value of a walk in the woods? the value of capital is to create, not just wealth, but things that matter. morgan stanley
final trade time, joe. >> salesforce. >> deere. >> cog. >> "power lunch" starts right now. i'm melissa lee. bio stocks into the red. plus gop's plan to dismantle obamacare. and new allegations that the cia is hacking smart tvs to potentially spy on people. and pop quiz time, what do dan marino and marie osmond have in common? can you name this stock?