tv Fast Money Halftime Report CNBC May 24, 2017 12:00pm-1:01pm EDT
up an okaycolus, but eventually we'll get there. we're looking forward to that. >> walt mossberg from "the verge." >> thank you. that's it for "squawk alley." sara eisen, mike san tolli, it's been great we're going to toss to the half. welcome to "halftime report." famed market watcher robert shiller saying stake in stocks, which he believes could go up another 50% from here. with us for the hour, the brothers jon and pete, po and also with us is jim cramer and more. that jaw-dropping prediction from a man best known for his words of caulks on stock.
nobel winner, jails' robert shi -- yale's robert shiller. >> i didn't mean to cause jaws to drop. >> why this call? >> well, it's not that different. stocks have generally outperformed other investments through history. they're highly priced now, which means i don't expect them to outperform so much, but for a long-term investor, and most people are, i think there should be a place for stocks in the portfolio, and they could go up a lot from where they are now. they could also go down a lot. that's the problem, but the answer isn't to avoids stocks entirely. >> what gets them to go up 50% from here? >> well, the last time that happened -- right now the price/earns ratio i used is
cyclically adjusted -- >> you're very famous for your cape ratio. >> it's about 30 now. think back to the 190s. it went up from 30 to 45 in 2000. that's a 50 percent -- essentially a 50% further increase. i'm just saying that could happen again. to me it's largely psychology, it's not something that has an exact science. we have some kind of inspiration maybe from the white house, a businessman president. if factors go right and there's tax cuts for corporations, it's not that hard to understand that that could happen. >> earnings obviously have been strong, the economy is improving. is that in and of itself enough to take stocks to where they can go?
how much help do you need from washington? >> i don't no in we need -- the markets can do that on their own, you know, but i don't know what you mean by how much help from washington? it's an agenda. >> i'm talking about the agenda. tax cuts and all these other programs that the president would like to get through. >> well, if you cut the corporate profits tax to 15%, if you can do that, get that done, that's going to be a major shift. that gets you good way there, just that, and then, you know, i'm sounding awfully optimistic. >> believe me, that's one of the reasons my jaw dropped. wait a minute. shiller is saying it could go up 50%? i would say it could go down 50%. >> both of those are extreme cases, and both of those are unlikely. so the problem with being an economist, you have to be boring most of the time and those are extreme, extreme outcomes.
both of those are possible, but for a long-term investor, this is such a femme idea, stocks have generally outproismd. so you can try to time the market, but i'm not particularly knowledgeable at this point to predict a -- things could go wrong. >> i understand the necessity to hedge a bit on a call like this, but i clearly hear you saying there's no likelihood in your mind that stocks go you want 50 percent from here rather than down 50%? >> yes, a little bit more. stocks are not the exciting investment that we assume them to be, because they're already high, but even so, yeah, my analysis shows that it is likely that they'll go more likely up
than down over the next ten years. i use a long horizon, and remember i'm talking about stocks versus bonds. bonds are dangerous territory now, they have low yield and the interest rates are -- >> professor, when i first heard 50% in you, i thought sheesh, down 50%, i'll deal with that, and talk about, it turns out to be directionally incorrect. what i think is important from you is i had felt the possibility of you saying we're in a giant bubble was more likely than -- so i want to clarify everything. you do not think we're in a giant bubble or overinflated. you mention it's kind of humdrum or boring, but that's important to me to hearing the professor it's not the same mentality when i wrote the book "are rational exuberance" in 1999, we had this
dot-com excitement. the internet wang was changing the world. people were breathless. it was a gold rush. people thought forget earnings, now is the time to stake your claim, and they were right about that. they were just off on the magnitudes. you do, thoughs, notes that valuations here in the u.s. are high, and that you could easily find better value in almost any other market around the globe. now, i'm, you know, paraphrasing it perhaps a little too liberally, but you get my point. >> yeah, i forgot to say that. you don't have to stay in the united states. there's a whole world out there, other asset classes.
i was just saying i was referring to stocks versus bonds. bonds are not that exciting. is it that controversial to say you're not going 100% bonds? a portfolio would likely be diversion fitted have less than half in stocks, but having something there, because it's still a positive investment. >> why are bond yields so low? what does that say? does the bond market know something that the stock market doesn't? are we going to be surprised? >> that at the same time that the bond market knows something is humanizing. i would tend to talk about the narratives, and they're generally not that knowledgeable. i think we are still emerging from the financial crisis. we have a secular stagnation narrative, we have fears about
automation, robotics, same fear that was taking hold in the great depression. we don't know where our jobs are. so we bit up asset prices out of fear more than excitement. that's the kind of moot we are in at the moment. it's kind of hard to find a historical precedent for it. maybe it's something like the 1932 to '37 stock market boom during the great depression, but other than the it's different. we're bakkal full employment. >> people are debating where in the bull market cycle we are, by you suggesting we could go up another 50% from here seems to suggest we're in the fifth, sixth inning, that we're nowhere near the ninth inning of this bull market? >> well, that was a -- okay. that's a possibility, yes. 50% increase from here would be putting us into extraordinary territory. i'm not predicting -- i'm
thinking more like 10% or 20% is more reasonable. why do we keep going back to the extreme? >> you said 50, i didn't. is that over the ten-year period? >> yeah. >> if you look at 50% over ten years, you're actually looking for underperformance in the equity market relative to the historic performance in the past, because the market historically goes up way more than 5% per year. >> i was talking about the s&p, not a total return index. >> i understand. there's another factor, that companies are buying back shares, which tends to push prices up, but that's kind of illusory. it's just a share repurchase
tactic. >> just so summarize, what you're saying is when you add back dividends, which are right now we are two and change, i guess the in the s&p yield, you're talking trend line over the next ten years versus very overpriced bonds? so it's a relative call more from that standpoint? >> yeah, i think that sounds right, yay. >> professor shiller. >> jon najarian. i've heard you speak about this and about the reflation trade and in particular about some of the springing up. in particular ply question is how much of the agenda that president trump has is priced both into your projections and where you think we're going to be, whether it's in the one year or ten years. are we at a 50/50? a 40% chances?
what do you think is priced in? >> well, i don't think markets are very effective in pricing in the future. it's -- investors tend to look at what they think other investors are going to do. so, you know, on the night when trump was elected, i thought the swings in the market should have been even bigger if they were really pricing in what he's going to do. so i don't -- yeah, i don't think too much in those terms, is it priced in? it's a factor. it's a narrative. >> that's an interesting point of view. professor, thank you for your time. >> okay. my pleasure. professor robert shiller at the yale school of business management. obviously wanted to walk it back. can't deny that. i think everyone here recognizes, it could be down -- what he's saying is i wish you
guys hadn't focused on the 250, but what i think is really important, any time i've ever had him on is bubble bubble bubble, toil and trouble. he's clearly not saying that. i know a professor is not going to say dow 36,000, but i think it's important that he compared it to 1999 favorably. and a lot of our viewers may think it's big bubble, federal reserve. i've heard people say, listen it's all the federal reserve, when the reserve takes the air out of ball it's going to crash. that's not what he's saying. >> a he's saying fundamental reasons for the increase over time. >> the pent-up potential power of the trump agenda is enormous, according to the professor, as being a real propeller -- >> and he hits that at the end. he expected even bigger swings,
and is this really priced in. we've it on the network time and time again. everybody loves this expression everything is all priced in, judge, and here we are at 2400 on the s&p. so the reality is if it was priced in, where is it now? that i think is what he's talking about. that low volatility, i'm going to hit this one more time. you protect a portfolio and you get the tuned to ride professor shiller to the up side if that exists, especially if it's faster than ten years. >> i don't think he was walking back. i think he was putting a time frame on what he was saying. 50% over ten years, as i said, that's way below the average of what the market has done. the commentary, the cautious note, more than the bubble is stay away from bonds.
>> it was a relative call. in terms of reference, yes, the fundamentals are better. he's not looking for it to get to 45 times, to match the progression and the buybacks. >> what about the other suggestion he makes, and he makes it in his commentary that got us started in the first pla place. that is the u.s. has a high cape ratio, and you can go anywhere else in the world and find it lower, the suggestion being better values exist outside the united states than in. >> we talked about that. you see can find value anywhere. finally stock pickers will come back into favor. so it's what names do you actually see value? are you picking up on pullbacks or buying at the highs? where are you buying globally. we are in a global market.
it's up to you to decide if you're looking at the full sandbox or play in a small corner. >> we're not talking about u.s.-based stocks. we're talking about shunning the u.s. for markets overseas that have better perceived value. >> i think the europo is incriminal le undervalued. we actually put money in europe, okay? why? it was an investment. i think the euro is ridiculous, and i think that they're about to have a major turn. i wanted some exposure that did real estate. it's just crazy. it's too good over there. i don't get what they're trying to do with kwan at a timive ease, but i think the valuations are nuns. >> herein lies the.
i think that movement has to happen over the next few months. >> shiller is saying own u.s. stock exchange, and over the long period of time that many of our viewers have as their horizon, you are going to see great returns. >> but he also apropos of what joe kernen just said, it was like he was on "squawk box" playing joe's music. he's not talking about trump getting impeached, but getting it done, and if he gets it done -- we have kind of stopped hearing that. >> you've said this before, yeah, you, you've said this before. this market right now is doing well because i think we are seeing some fundamental improvements in the economy. >> individual stocks. >> as long as we think that there is an opportunity for trump to get something done, this market will be fine. >> yes.
yes. i'm glad it's held off to 2018. >> so i go to your famous line of your show -- there's always a bull market somewhere. the question is with all these sectors that have raced ahead, where are the best places to investment in the u.s. market given what shiller told us and what you guys think are the places to courtney you run a portfolio in chicago. >> i'm running my own portfolio, but we trade on behalf of a lot of institutions. and it's diversifiediversified. >> what are you doing? i want to know what -- >> i bought oil field services today. >> you did? >> that's important, because i'm struggling. i want to believe. i want to bluff that the saudis come in with something that's breathtaking -- >> i don't know if -- it's
company-specific. >> diagnose go halliburton? >> i did. >> you know halliburton is at that key level. it's at that level, and i got in. >> i'm not going to fight that. we were kicking around a segment where the fangs get all of the play, and we came up with one called trash, which is -- those are the lowest-performing stocks relative to the fangs. and a number of though whether it's the h of hall burting or a of -- >> what is the "s"? >> hey, it's like -- it gets two fists. >> exactly. but herein lies the point. kourtney saw opportunity. >> i bought akami.
i had on my list to buy steel. >> did you? >> and i -- that's for a trade, because it's oversold. i had a bit in below the market today, and i got hit, so i own a little steel now. >> and transocean, by the way, was the t. energies occupies a piece of the underperformance. >> professor shiller came on and said i think it's time to get into nvidia? that would be something. that is something that's coming. this is a juggernaut. that's the one that does remind me of the 08d days. i do love it, but it's one that i think i struggle with fang. >> let me ask you a fundamentally simple question, jim. how do you feel about the market? do you feel okay? >> i feel okay. i really do. i just feel like that -- look, if i liked europe, there's a lot of companies levered to europe.
i'm seeing this rotation where suddenly the restaurants come alive. you see the steels come alive. i had the consumer product stocks come alive. if we get a good note from the fed and you see jpmorgan start going up, holy cow. >> yesterday it was goldman sachs and the kre both. last week it was citi. i think these underperforming, they have paused. the financials have paused. i think the next step is not down, but up. >> that's the crucial call right now. >> you better hope the fed plays ball? that's part of what you're saying? >> i think the fed plays ball. >> and rates start to creep up? >> look, i think europe's rates are going to go up and it's going to draw some money. new at noon, dan lopes, third point stepping up. with a new presentation sent to the board of directors --
>> of what? it's a great stock. he goes after honeywell and dupant? is he going to go after nvidia? >> i'm going to get your stake on that. [ laughter ] >> as part of their planned merger, they are currently in the middle of splitting it into three main units. the third point is questions whether too many assets are being pushed into the planned materials uchbt, which would be controlled by the executive chairman, who is set to leave the company next year. in its presentation on the heels of a joint press release, promising to consider the portfolio after the deal is completed third point asks if the plan is even the best or whether the company should consider creating additional businesses or divestitures to better enhance that value. the third point says optimizing that structure could create -- shareholder value. you may recall in to 14, as part of the settlement, the firm
recommended two independent directors that ended a contentious fight between the two parties, third point not commenting today. it is my understanding, though, from sources that the firm has yet to speak with anybody from dow our dupant for sending that presentation. >> you're going against ed green, maybe one of the greatest value creators. >> 114,000 people in the stadium -- >> but i do think that -- pick on breen, pick on cody's form of honey did president well? i don't know. i think that loeb is going after fruit that's -- >> i'll take the other side. >> you think it's a bad trade? >> no, i'm going with dan loeb, one of the history's best hedge fund managers, his analysis i have found to be impeccable.
you get everything right, but he certainly gottia hoo right, made a lot of money there. his track record is phenomenal, so i think the fact that he sees there's more to be done there, so he's not satisfied with great. he wants greater. s as with the new c oeismt of honeywell. >> this deal is yet to get the full blessing. >> i love what breen did. i also think that andrew livers is a good man. there was a very nasty campaign again dow that i thought was unfair by dan. i guess the feel this is more about the future rather than looking back. the contentious battle and it's
trying to take december make it even greatest. breen is fabulous. >> i think the general motors plan put forth makes no sense. >> i agree with you. >> jimmy, i want your tame. dom chu has something. >> so jeffrey immelt is making comments at the electrical products group conference in florida right now along with a number of other industrial companies. you can see by the chart of a lot of the moved happened how some of the conference remarks. a couple lieheights. general electric says earnings per share, the forecast of two bucks a share is at the high end of expectations where markets are today, hitting goals will require additional cost
contingencies. they also talk about this idea that capital allocation impacts are -- they also say that their goals of 3% to 5% organic growth and 100 basis points are expected in to 18 as well, and we do say strong emerging markets are an improving situation, and also resource remain tough impacting the oil, gas, power and transportation sectors. >> dom, thank you. the two words i hear you say more recently start with a c and an f. >> that's i interviewed most of the cos of the top industrial companies. how did this happen? this is a real bad sign. >> you buy the stock here, guys?
>> i would rather buy s&p futures. >> i keep think that something is going to happen big, like maybe -- this is -- >> you're saying the risk then is to the up side? >> i think it's a short term. yeah. guys in the control room, can i read a statement from dow? i just got something e-mailed to me. >> it says and i quote. they have agreed to country as announced on thursday, may 11th. additional -- regarding the review. on the two companies are fully
aligned regard the objective of that review, and we continually solicit that from our shareholders. >> he'll do it. man, he's good. he's good. that's the latest from dow dupant. >> thank you for being here, man. jim cramer, what do you have tonight? >> i like it. >> say it again loud. eastport is the most important secular shake shack from here. >> he got a home run. don't forget "mad money." we're just getting started. up next, lowe's tiffany, sign signet, chico, all getting slammed. where is it safe to put some money to worked? plus a big upgrade for the
stocks of steel. one analyst bold call that has a lot of market watchers paying attention. "halftime report" is back in two minutes. but there's no business track record. well, have you seen her work? no. is it good? good? at cognizant, we're helping today's leading banks make better lending decisions with new sources of data- so, multiply that by her followers, speaking engagements, work experience... credit history. that more accurately assess a business' chances of success. this is a good investment. she's a good investment. get ready, because we're helping leading companies lead with digital. ♪ ♪
coach and burberry go up about 4% apiece, for more go to cnbc.com/pro. all right. let's talk retail. in case you needed more evident that it is hurting and big time, there it is. chico's tiffany, advance automarx lowe's and more, kourtney do you find anyply. >> ultimately it's one of the best names in the entire sector. however, let's look at the whole thing. if you're -- and down 5%, 3%, these number the problem with lowe's is their management as well as they don't attract the professional contractors the same way.
lowe's is almost always -- that's a generalization -- haz underperform it's always going to be at a discounts. >> they totally believe it out -- >> that's what we're asking -- sorry to interrupt, doc. >> that's okay. >> did they tell you you can't win and think that the amazon, or whatever fell is going to hit that vitt more so? >> so they still have growth. the problem is home depot -- the
they want that little teal box. that would hole the future of this company. they've had some management changes, executives moving around. that's not necessarily a bad thing. the question is, how do they remain relevant? right now, again if you're comparing in the sector, there's probably other luxury brands you may want to hold. >> do you hold any retail? >> no. the one i owned was louie louis vitten. but farce pvh, who will be -- the ceo will with jim tonight. last week we called that, because they don't have bricks. this is just brands. it's calvin line, everybody else.
for a pair of unlawful options trades in the -- >> well, i got a stock. that gets kind of interesting. cord any talked about it, but you talked about energy. now it's interesting, judge, they're out there -- it might encompass the credit suisse conference june 6th through 7th, i think own in london, i believe. there are rumors about what might trabz spired. look at this. >>. hng is the symbol there.
about this level. you can already see the movement to this stock. if you went back to 2014, this is $it's been moving very nice in the i'll ployable have these all the way up and through the spiritation. they're cutting on cap ex. this stock is going higher. >> indeed i did. here's what's happening at this hour. the fourth stop on his international itinerary, the president and the first lady were welcomed by belgium's prime minister, whisked off to their first event in brussels, a meeting with the nation's king
and queen. bill cosby arrives at the courthouse in pittsburgh for the third day of jury selection. attorneys have seated 11 members, one more and six alternates will fill out the jury. good news for "top gun" fans there will be a quote to the movie. the announcement made by none other than cruise himself on australian morning television. >> rumors of a "top gun 2" please say it's true. >> it's true. >> really? >> yes, it's true. >> really? >> it's true. >> when? are you allowed to say when? >> i'm going to start filming it probably in the next year. >> the movie is expected to be released in 2020 or 2021. what's coming up on -- >> what, are they gob to be in biplanes?
talk to me, goose. on deck, home prices are up, home sales are up, but there's one thing that has the market scared. we'll tell you what it is. uber you said fire underpaying its driver. plus a call on -- and. it's been nearly a month since our stocks draft. who's in the lead? we'll tell you who's in the lead and who is lacking. stick around. liberty mutual stood with us
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credit sweet is hot on steel. our traders debate it next in our call of the day. and commissions back if we're not happy. so can you offer me what schwab is offering? what's with all the questions? ask your broker if they're offering $4.95 online equity trades and a satisfaction guarantee. if you don't like their answer, ask again at schwab.
we're back on the "halftime report." new core u.s. steel, all on the move, upgraded to outperform, that calling for a bottom in steel prices. that's our "call of the day." wyche, you bought some? >> i had it below the market. i wanted to buy it earlier in the week, and credit sweet comes out. i bought it for a trade, though, because i thought it was overso oversold. >> letter x you're talking about? >> letter x specifically. it doesn't matter what we do here if the chinese continues to add capacity, that means the steel prices are going down globally, and they'll be owned down here as well. so 10% and i'm gone. >> they say that when they downgraded it in january, that the thesis has now played out,
which is why they upgraded those stocks in the sector today. >> well, as the analysts said, judge, it's down 23% since february, the sector that is, versus the s&p that's up, about last six days unusual activity in letter "x," stld similarly getting some love and today at the 21 strike they're aggressively buying again. >> newcorp is up 16.5% since the election. steel dynamics up 28. letter x up three. cramer point iing out nucor is e low cost producer. maybe nucor the better place to be. >> as trades and that's why i'm curious why over nucor. >> because i know how a trade is better, looking to express the view they're oversold. that's how i chose to express it. >> do you have a take on steel? >> no. no take on steel.
>> all righty then. copper is on the move after moody's downgraded china. we'll hit the future pits next. ♪ predictable. the comfort in knowing where things are headed. because as we live longer... and markets continue to rise and fall... predictable is one thing you need in retirement to help protect what you've earned and ensure it lasts. introducing brighthouse financial. a new company established by metlife to specialize in annuities & life insurance. talk to your advisor about a brighter financial future.
consumer of copper. did you short copper on the down grade? >> i did not. that was a mixed down grade. think of how moody's hedged themselves. that was actually an upgrade. the modern day silk road from 2,000 years ago in china, that silk road we're calling one belt one road will touch 50% of global gdp, and that infrastructure should buoy copper and the one-two punch, jackie, if trump can get any type of robust infrastructure project. you can see copper move significantly higher off this demand on copper due to the infrastructure. >> do you agree with that view and do you think the charts are telling us copper will go higher from here? >> well, the charts when you look at them, jackie, hit a 50-day moving average, resistance when the down grade happened and we failed there. there's been bad numbers coming out of china for the last few
mont months. i'm not surprised by the down grade. the other factor is the dollar. if the dollar starts to rally, then the prognosis is more pain for dr. copper. >> for more futures now head to the website. you can catch our live show tomorrow at 1:00 p.m. eastern time. "the halftime report" is back after this. i'm here at the td ameritrade trader offices. steve, other than making me move stuff, what are you working on? let me show you. okay. our thinkorswim trading platform aggregates all the options data you need in one place and lets you visualize that information for any options series. okay, cool. hang on a second. you can even see the anticipated range of a stock expecting earnings. impressive... what's up, tim. see options data like never before. with thinkorswim only at td ameritrade.
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into new development in the battle. the influential proxy advisory firm iss is recommending that sha shareholders vote for the four detectivors at the annual meeting on june 2nd of this year in just a few weeks. that is a big deal, a big vote of confidence by iss. clearly investors like the news up 6%, bwld. markets close in three hours. final trades. >> i'm going with the steel stalks. >> bond etf, going into the fed minutes they're selling down side puts so rates aren't going higher in the short term. >> impressed to watch western digital today, a big announcement. at odds with toshiba. now there is a bid in for memory.
$17.8 billion on top of their sandisk. they are building an empire. you look at the p/e level at 52-week highs is still an inexpensive stock. i own it. >> do you have a final trade? >> i do. halliburton. you heard me talk about it earlier today. our analyst has a $67 price target that's 40% higher than here. i put my money on it. based on the comments from the coo we think they will continue to perform in second half in 2018 earnings will be sharply higher. >> let me get a couple of quick stocks that are hitting 52-week highs or even more further out. int intuit highest level since the ipo, 93. >> they beat on top and bottom line. they guided higher, judge. unusual activity yesterday. huge upside. the stock has exploded. >> what the ceo said about how many people are doing their own
tax returns on mobile. this platform keeps growing and growing. all-time high in '84. anybody have a quick comment on that? >> it's semiconductor equipment. >> thanks. "power lunch." >> thanks, scott. i'm melissa lee. home prices are rising. home sales are rising overall but will there is one thing completely freaking out the housing market right now. we'll tell you what it is straight ahead. and uber under fire. the ride hailing company underpaying drivers. a shocking and bold claim but one big investment fund. raising questions who has been paid back, many have, but thousands haven't seen a dime almost a decade later despite billions of dollars just sitting there. power lunch right now. >> welcome to