tv Fast Money Halftime Report CNBC December 27, 2017 12:00pm-1:00pm EST
stock. >> that was kim kardashian outlining had a number of christmas gifts from her husband kanye west noep noticeably absent from there, twitter and facebook even though they are both huge social media gurus. >> i would have been happy with the first stocking and gift cards. >> that's it for us on "squawk alley. "halftime report" starts now sully? >> all right thanks, dave, morgan and mike. appreciate it. welcome. i'm brian sullivan in for scott wapner once again. your top trade this hour, the battleground for oil $60 a barrel we are there again crude oil has surged 14% in just 90 days, but is this time really for real, or are we in for another drop your halftime team today jon and pete najarian and jim lebenthal. energy the worst performing sector of the day, the only
sector down, not much, but still down utilities, real estate and healthcare are leading the way let us start with oil. here's the thing, pete we've been here before if you're lock oil, you've had your heartbroken a few times. >> yes, i have, indeed. >> is this time different? >> i feel like it is different and the reason i say that we've seen so much options as of late. by the way, yesterday was the lowest volume day in the options for the entire year of 2017 if you exclude some of the half days that we've had. we've seen paper flows very, very indicative of where the directions are going and seen it in energy time and time again and this time the size and the mass in which they are coming after paper in the xlp, in the xle, in individual names like halliburton and some of the rest, we've even had some in the services index, the oih. >> which is up by the way. >> right, and it encompass eds, you put in schlumberger and halliburton and that's 35% of that index so you know it's fairly narrow, but the energy space seems to have a little bit of something behind it right
now. i've been burned previously in the year, but so far so good in the last month. >> here's the thing, jon i think your brother brings up a good point which is when we look at oil we say energy sector. so many different types of companiesch the oih, that's more services that's more the baker hughes, the halliburtons and schlumbergers, the xli, the big integrated and smaller producers. the if you had to look a little bit deeper into the equity side, is there a group that you think would be better positioned in this market? >> well, the ones that should be participating the best are in the xle, in my opinion, pete. >> that's the biggest, broadest. >> chevron, exxon. >> those two account for almost 40%, and after this recent run they may indeed be over 40%, but it's up from 62 brian, that etf, or that spdr up to 72 now. that's june until now. that's a pretty big move and it continues they continue to buy upside calls when they make money on them they roll them up, and those are the favorite kinds of trades
that we like to follow, and, you know, i -- i think there are a lot of them still that i've been saying away from like rig? that's funny so we look -- when we look at the oih which is up to date, four stocks are about 35% of that. you've got schlumberger, habit op and transocean which is rigged which is what you just referenced and baker hughes, and they have been beaten up until very, very lately. >> yeah, and is that the breakout that i want to bet on they have been heartbreakers all year to pete's point, this is the group that i've stayed away from so i haven't made anything on this move with any of those three that you just named, halliburton, schlumberger or rig, and i've stayed away from them because i've been burned so many times in the space, brian i'm more comfortable with the ones in the xle. >> the bigger. >> jim >> now you've got my wheels turning. >> is that because we were
singing journey before the show? >> if you're a value investor you look at things like price to book and rig and transocean comes right in the middle of the screen and says buy me but i've stayed away for some time, and maybe we need to discuss it a little bit further here's why brian, you and i had a conversation about this year why is it taking so long for the rig count to turn over you postulated because it isn't enough people. workers up there in williston and wherever else to start drilling i don't think that's what it is. i think what's happened, you go back three years ago when oil plummeted, right, a lot of wells were really close to completion and they shut them in. >> called ducs, drilled but incompleted, and there's a lot of regulatory requirements, a lot easier to shut them in than to get them producing. every time we've had the head fakes with oil that we all feel like we've got burned with, all they have been doing is drilling the last 200 feet to get the ducs online and pumping oil. guess what i think we're through that backlog right now.
i think now if you want to start increasing supply, you've got to drill, baby, dribble, and that takes time and that actually may get transocean which has a ton of these rigs in cold storage, not just riggs but drill ships, et cetera, and it may actually bring some of that inventory of theirs back online. >> see, you've got to be very careful because transocean, a lot is super deep and super hard and super expensive. >> this is -- >> they have ships that go down 10,000 feet and if you're paying that kind of money you better be doggone sure that the price of oil will stay at a certain level. >> west africa and off brazil and even deep water mexico there are a lot of areas that certainly would be brought online, brian, if indeed the demanned is there. in other words, if the prices hold at this level and so forth. how much of it is somewhat manipulated by what went on in saudi with the imprisoning of a whole bunch of princes hand things like that. >> sure. >> how much is it the point lines in great britain as well as the relatively small libyan
pipeline >> we'll talk to doug in just a second and before we get to seema. the points we're all trying to make, we're all making the same point which is that if you're going to invest in any oil stock you better be sure what they do because an onshore driller is alot different than mid-stream and integrated >> you don't want to confuse things by saying that. what i'm saying is the quick supply of onshore drilling may be used up which means exactly you've got to go to that longer response deep water drilling to get new supply on. >> and it ties into something we talk about all the time and that's why john and i both wanted to point out what exactly is in the xle. two names that encompass 40%, chevron and exxon. >> go over to the oih and have a similar sort of a setup where you've got 35% so you've got to know the concentration and know what is in the index and know which leg of this you're really interested in. are you in the land driller, deep water those are all things you absolutely need to know. rentals, the options and derivatives market, that's been
the place to be because quite frankly with the low volatility, the opportunities there have been greater in terms of if you're getting moves, you're getting substantial moves in a hurry. >> just quickly, i've got a bunch of screens set up with different areas and the bakken stocks are the number one performers these are a lot of heavily shorted names, cameron, whiting. you've got to be careful. >> permian basin, by the way, record production already. >> doug is coming up in a second, but right now let's continue our journey into the oil conversation because we're not going to stop believing. head over to seema mody at the cnbc energy desk and see if buyers and selllers go their separate way seema? >> reporter: that's exactly right. breaking through $60 a barrel was a pivotal moment for the oil complex, but we failed to stay above that level those supply concerns have quickly eased with news that the pipeline that exploded in libya should berepaired and back online as early as next week despite today's move lower, oi
is still on track for its monthly duane and traders remaining focused on the positive impact of cut in production that's expected to help boost prices in 208 and the worsening power struggle between the saudis and iran could upend oil markets next year. brian? >> all right seema, thank you very much more now about what seema talked about and the energy stock and bring in doug terreson from isi. you put out a deep dive note into oil recently. it's 83 pages, and here's what stuck out to me. i'll read it directly so forgive mee for looking down the problem is that higher oil prices and output growth, while positive for enp ceo pay will likely remain negative for shareholders until emphasis on value creation increases what do you mean by that why isn't good for shareholders? >> well, so -- first of all, brian, thanks. the report was called transcendental change, and we think that we had transcendental
change during 2017, and we think it will continue into 2018 and what we meant by that is that we think that the historical model which assumed that higher oil prices would always lead to higher share prices in energy could be disrupted. the reason why is because in research that we've published this year we clarified that most energy companies in the big oil category were employing strategies and pay incentives that emphasized production growth and because they didn't focus on creating economic values those strategies and pay incentives had very little correlation to shareholder return and without change we think owning the stocks would be hard to justify. using the old model, higher oil prices and output and growth and positive for ceo pay would likely remain negative for shareholders until emphasis on value creation increased we propose a solution and that's to employ strategies and pay
incentives that are tied to intrinsic value in the stock market, earnings per share, free cash flow. fortunately during the past year several companies have pledged which is what we've focused on growth in value rather than growth in production bt, conoco phillips are ahead by 40 percentage point last year and we think outperformance will continue in 2018, but there will be change in the rest of the space, too. >> i like what you've done, doug, because you laid it out to your point and called them the pledgers, the oil companies that have pledged to give capital and give returns back to shareholders you name a couple of pledgers, bp, chevron, royal dutch shell and conoco phillips. ben van burton, interviewed him a couple months ago and interviewed chevron a couple of times. they said they will return capital to shareholders, and you clearly believe what they are saying. >> i do and the reason why because in every case these
companies have come out and basically acknowledged to wall street that the competitive condition has changed. there's too much capital chasing too competitively advantaged opportunities so they are basically promising to keep spending low through 2020, even if the oil price rises what happens if the oil prices rises? then, they will have tons of surplus cash flow and rather than invest it into areas of dubious competitive advantage which the industry did during the past decade, they will return that capital to shareholders, and because investors have transparency to value as to how they are going to get paid, they have bought bp, shell, conoco phillips and the pledgers and will continue to outperform and i'll tell you that the pledger movement is really gaining momentum between the first quarter and the third quarter of 2017 on conference calls. the number of mentions of the word returns tripled so we have an industry that's actually beginning to behave in a more disciplined fashion whether or not it continues for the big spenders remains to be seen, but the pledgers have outperformed and they will continue to outperform and the reason why is because they have very strong
value propositions in our view, and that's going to bode well if the oil price continues to rise as we think. >> doug, it's jim lebenthal, i like your analysis and royal dutch shell has been on my radar screen for a while i'll be honest i'm focused on the dividend and my question is is it sustainable because they certainly had a payout ratio above 100% for quite a little while here. are we above $60 a barrel, and is it sustainable and should i stop worrying about it >> you should for bp and chevron and conoco, too. you're right when the oil price was, you know, 55 this year for brent, very few of the companies were able to cover their dividends. if we were right and it head to 70, 75 one year from now, these guys will have tons of free cash flow and the difference is they will return it to shareholders rather than to go invest it into areas of low return which is part of the reason that the disdain towards my group is so great today, but we have to have the oil price stay at this level and recover.
we think the forward curve is too low by is a% and the oil prices will head to 70, 75 and the difference is these companies will return capital to shareholders and that's what investors are after. not only is the dividend safe but i think we'll see company buybacks, the pledgers, sglas why isn't exxon on your list >> exxon hasn't taken the pledge and the pledge takes three steps. you've got to show that you'll keep your spending through a low level through 2020, and you've got to use measures to judge the performance of the business units that tie intrinsic value to the stock market and tie that to ceo pay they do the latter things and are pretty close to taking the pledge no exceptions. have you to follow all three steps and if you do you get to become a pledger and probably outperform thereafter and so far so good. >> doug and dover, 108 a share, pushing 115 right now. mays about a 2% dividend, and this one looks pretty interesting. $18 billion stock.
i know your targets are close to 130 on it, is it not >> that's correct. >> as far as in this group, a lot of yours are the mega caps this one is one. ones that -- that somebody else could take a nibble on, if you know what i mean. >> well, so you're right we've covered the big oils and we covered some of the stocks as well and we've covered the refiners, and our view on the refiners is that we're not going have what we termed the golden age of refining between 2003 and 2006 where the average refining stock rose by 11x or crazy number but a couple months ago we did become more positive on the refiners, and the call is it's not your father's golden age but we'll take it, and what we mean by that is that we're not going have the substantial increase in margins and earnings that we saw between '03 and '06 and we do think between 2018 and 2020 global demand for approximate is going to be way oversupplied and margins are going to supply and earnings
estimates will surprise and then we've got environmental mandates that will strengthen or going tighten the market further and we think whether it's endeavor, valero, marathon petroleum or phillips 66, all those stocks will do well, and we think that they will uth perform the market as well. can oil stay around $60 a barrel, wti, not brent, doug, if we get a million barrels a day added in same the permian basis or eagleford shale in the next 12 to 24 months? >> we think that wti and brent are going to be well above that level. i mean, we think that the forward curve is 15% too low and let me make a couple of points about that first on the demand side, we have a goldilocks scenario in place, global gdp is in positive territory and the u.s. which is 25% of gdp will have lower taxes next year and our economics team believes that will lead to
better economic growth which bodes well for oil demap the demand side is not talked about as much because the focus of the debates is on the supply side as you pointed out it's on u.s. shale hand whether or not cooperation between opec and non-opec can continue. so we fully believe that u.s. shale output us going to rise by at least a million barrels per day next year. after having said that, we think that the market is going to need that supply and then maybe some more when you consider that the rest of non-opec and opec are unlikely to increase production by very much at all in 2018, so our bottom line on crude oil is that while oil prices are higher by a full 40% since july, we think that further positive surprises are ahead because the inventories are going to decline further in '18 and we think brent will be 7 to 075 one year from now an in that scenario we think that the pledgers will be the best performers in the peer group but we also think as we talked about a few minutes ago that the refiners will do pretty well, too, and quite frankly the companies that elect to return
capital share shoulders are going to be in greater demand hand they will have better investor sponsorship i think it's really interesting this year that the price of oil decoupled from the stocks as the market came to the conclusion that high oil prices are negative, that's positive for many of these companies. >> it was a pleasure happy new year and thanks for joining us on cnbc. >> thank you, guys. if you missed out on the pledgers, pledging to return to the shareholders well, this year was a good year for most stock groups, including the banks and financials, the xlf etf up 27% year to date and with the prospect of likely higher interest rates on the horizon is the run likely to continue, vore all the gains been made because we know everything already here's wilfred frost with the 2018 financials playbook
>> reporter: big tailwinds for banks in 2018. first, deregulation. investors are excited about deregulation actually arriving now that key positions are filled including jerome powell at fed fair and the vice chair and the occ controller the key things to watch for are changes to bigger capital returns and changes to volcker and overhaul reductions in regulatory expenses. second, rates. expect interest rate hikes to continue to help much of the recent focus has been upon the flattening of the shape of the yield curve which isn't ideal for banks long term but there remains an immediate positive earnings impact for every fed fund rate hike that we see. in terms of risks, keep an eye on deposit beaters ie the rate at which banks compete and pay depositors more as rates go up, and also credit quality. while still low by historical standards, it's shown signs of rising recently, especially in
the sub prime consumer space final thought, tax reform. bank share prize may have already risen sharply in late 2017 on hopes of tax reform given that they pay a high disproportionate rate of tax and expect the benefits to flow through the eps in 2018. >> guys and brian, it's been a good year overall for the banks. kbw is up 27% in 2017 and a lot of performance, bank of america at the top 34% and goldman sachs, the lagard, up 7% this year. >> some that have with goldman and the trading banks, isn't that a question of what they call the fixed business being weak so if commodities and fixed income start to show some life, maybe the results would get better >> reporter: that's definitely true and the trading business has been tough for the banks all year and goldman sachs has underperformed this has been a big, big year for goldman sachs. they set out 5 billion of new
growth revenue opportunities for next year a few months ago people are quite skeptical of whether they can really deliver on that hand this kind of growth in lending that we've started to see them do, that's a low margin business than traditional goldman sachs businesses and that will mean had a lower multiple as well so goldman sachs has a lot of questions to hanes this year and clearly its valuation multiple has slipped a bit so there might be easier ground to make up so a lot of questions. >> i think that's totally fair to say that about goldman, but not only for goldman but all the investment banks, a couple things could go fwhel 2018 first off i'll make this call because it's easy toe make volatility should pick up. >> very bold of you. >> i'm out there on that one. >> stocks will be higher or lower next year. >> volatility will pick up it's not just that, you know, mixed income was misfired. not that many trading opportunities in general, particularly on the equities side the other thing is it does feel that there's a small wave building of m & a activity which
is a prestige operation. you're certainly seeing it in healthcare i do think you'll see more of that in broadcast entertainment as well. what do you think about that, wilfred? >> on m & a, quality a & a this year and clearly we're waiting for the big deals and if that continues, goldman sachs still unquestionably number one in investment banking even though they have slipped down the rank tables of some of the otherias like trading and the other kicker for the banking names is in the deregulation names. they are all going to benefit if we continue to see a relaxation of scar and the volcker you'll have a big area of focus if that's relax had little bit, that really helps the investments banks. >> what is csa sfl. >> the tests every year in terms of the capital levels and clearly we've seen them get through it this year and start to increase their capital returns. >> the stress test by the more official name. >> very correct to point that out, brian that's a really interesting area
to watch because also going forward as well, bank of america and j.p. morgan, two outperformers this year, premium rated. a big question going forward is can they continue to pay out more than 11 is hundred% of earnings and returning a lot more capital to shareholders, so even if earnings aren't boosting, and could the sector soon be a dividend paying sector and have a decent yield on it because clearly buybacks have been a return method of choice for banks so far and as they rally dividends become increasingly attractive and i think we're looking at a decent one to three years of capital returns hand that could shift. >> let's switch gears a little bit because we're near the end of the year. i'm a big football fan my favorite teams, soccer what, we call it here, my faith rite team is the tottenham hotspurs. >> okay. >> wilfred frost likes arsenal but i noticed watching tottenham that the greatest goal scorer in the history of the premier
league harry kane and wilfred frost, which one is kane and which one is frost so are you harry kane? >> i wish i was harry kane. >> your life is not that awful. >> i don't think you're doing that bad greatest goal scorer of premier league history. >> just broke 56 goals this year for club, team and in competition and national team, breaking all the records. >> breaking all the records for a team i really hate. >> why do you hate -- why can't you just embrace them? >> arsenal and tottenham are north london rivals. we're less than a mile apart. >> i know in a. >> yeah. it's like had a classic rival little. >> real quick, got a quick question for him on this topic of the banks, getting back to it for a second, talking about being the best and you're talking about who you think is the best. >> sadly arsenal is not the best. >> of the financials anybody that stands out to you under the regulatory loosening, let's just call it that, that actually really stands to gain the most in your opinion? >> if you want to play
regulatory easing, goldman sachs is the way to do it because it's an investment banker could benefit more than that, and there's other investment banks and also the lowest valuation now. >> let me ask you the same question in a better way. >> what do you mean? i just gave you the answer, goldman sachs. what are you saying? >> who is the harry kane of banks and who is the arsenal of banks? >> so the arsenal -- >> i've got the arsal. >> would have to be -- would be a previous giant that's fallen from grace so i guess goldman sachs on this year's performance, so we haven't had like a really wild scandal. >> not burning up the charts, harry kane is but the team isn't. >> tottenham is like bank of america because they have come from behind, they are not quite at the top yet and doing very, very well and have an u outperformer. >> let me throw this to you brian and wilf, what about capital one? i thought you said the bowl
games and all the rest. >> capital one up 11% year to date only made it back to about 99 which gives it about a 10% or 11% gain, half of jpmorgan that's why i like this one. >> third of bank of sglerk with the tax treatment as well i think theseguys will benefit. >> they benefit more from tax reform than the bigger banks, and we don't know what the dereg will be but we think it will be focused on trying to help the small banks first and they look in a pretty good position. >> and the goldman sachs conference earlier this month we talked to the smaller bank ceos. i always ask them are they looking at consolidation and accommodation? have a year or two of gains for the first time in years that we can make organically and i thinker in a very strong picture. we always talk about s&p valuations being pretty steep. the banks with a steeper ratio.
>> they are not growing that much. >> well, they are growing more like guys like you talk about tall the time. >> look at consumer and business loan demand on the regional side it's not exactly tearing up the charts. >> true, true. >> that's true and clearly, you know, can you have an economic shock hand that would hurt the banks but if we're talking about a rate hike environment that puts pressure but this is a sector that can handle. >> we can handle rate hikes. had a little fun with it then the najarians will come in and try to be all serious again. >> you were right. >> next season is going to be arsenal's year though. i've said that for 12 years. >> like the sign in every british pub. free beers tomorrow and it's never tomorrow, it's tee. >> and we still go in and still support arsenal. >> that's right. >> i don't even care that much
here's what's coming up on "the halftime report. >> after a wild ride for the bulls, is 2018 going to usher in a big change >> before the break, our data partners at kensho examining retail's run in the xrt is up 11% in a month after a similar move retail keeps gaining but slows down, but still outpaces the s&p for more go to cc.m/nbcokensho "the halftime report" is back in two minute a tiny sword? bread...breadstick? a matchstick! a lamppost! coin slot! no? uhhh... 10 seconds. a stick! a walking stick! eiffel tower, mount kilimanjaro! (ding) time! sorry, it's a tandem bicycle. what? what?! as long as sloths are slow, you can count on geico saving folks money. fifteen minutes could save you fifteen percent or more on car insurance.
welcome back it's been an extraordinary year for the overall stock market with outsized returns and record highs hand low jilt, so is next year shaping up to be more of the same bob pisani is at the new york stock exchange with more bob? >> hello, brian. they say 2017's gains can't happen again but i say why not many traders say we can't have 20% returns in the s&p because that's not normal. the average is 8%, since world war ii they say we can't keep hitting new highs. 62 all-time highs and even in years when we hit new highs the average is less than half of that that's true, but they say they can't keep up with a low volatility only eight days when the s&p moved 1% or more the average is 50 days, that's amazing, and they say we can't have the big difference between sector performance and technology the best performing sector outperforming telecom and the
worst performing rp by high dispersion earnings are not peaking out and if anything they are going up thanks to tax cuts and the complaint that the market is expensive, well, that's true but when the global economy is expanding and earnings are at record highs, this is exactly the time you can argue for a higher multiple. absent some kind of big outside shock we've been in a longer term low volatility period that's likely secular caused by low rates and caused by etfs and less trading, whatever you want to call it finally about everyone who wants to dump technology and buy cheaper sectors like energy you were just talking about. if you bleach in the global economic expansion and earnings continuing to expand, that would argue for growth stocks which are still largely technology names. brian, back for you. >> bob, thank you very much. we'll see you in a bit guys, listen it was a great year, but i will say this the dow being held down by ge a
bit, we had better years in 2013, twhooet, 1999 and 1996 do you guys think that this kind of gain can continue next year really the only question that matters for most people. >> this is opinion i think you'll have a gain this year but not as great as this year the simple reason, there's been a lot of good news that's gone into the stock market thus far and if i look forward into 2018 the only good news i can see coming out is from an infrastructure spending bill which frankly when i like to say back end loaded hand that will really stretch out this economic recovery even further, so the problem i have is if you get a whiff of disappointing news you can see a small downturn which could limit your returns over the course of the full year but i think you will be up certainly. >> how about the idea that a lot of tax reform is not really priced in, right >> are you saying it is or it is not? >> was not priced in hand might
not still be more than just a portion of it so that could actually be a tailwind as well. >> chop. >> the strongest thing about this year, and my biggest takeaway because you brought this up in the break, the second you brought that up, you know what i liked about this year, the diversification of growth across different sectors it wasn't like we were just brought by f.a.n.g. or tech, we had tech and financials and industrials. we really had a rotation throughout the year and because of that this was a nice broad move to the upside with the exclusion of energy which actually did lag to some degree. everybody is mildly or not mildly bullish give me the downside risk, because when everybody is on one side of the ship, man, sometimes you want to be on the other. >> downside risks and nokes on the desk brought this up i think jim has just last week and that is that people have delayed their selling until next year, not because of a change in long-term capital gains but because the short term, even though it's only, for instance,
the 39.6 or dropping down to 37. >> getting a lot of deductions removed hand let's not forget the quote, plus states, account for one-third of total usgdp what if the people realize they won't have as much after-tax income to invest or spend? >> that's a risk as well the combination of that selling, that waterfall of selling, again, josh just mentioned it last week, josh brown that perhaps we could see that in the beginning of the year. heim in pete's camp where i don't think it's properly priced in as far as the full impact of the tax cut that was just passed, but i do think we're going to see some a little more volatility before the futures price in at 16 that used to be our average, you know we used to be hovering around that hand now we're right flat at ten right now today, so if you have to push all the way out to september, nine months into next year to get to a 6 is, they are telling you people are
pretty confident right now. >> okay. you know what's kind of amazing, guys, as good as the year has been for the s&p 500, only the seventh best year in the last 20 we had a big year, not taking anything away from it. next up, jon and pete are tracking unusual activity. their two new plays based on bullish options moves in a hotel and beverage stock "halftime" returns after this. ♪ [vo] progress is an unstoppable force. the season of audi sales event is here. audi will cover your first month's lease payment on select models during the season of audi sales event. (daniel jacob) for every hour that you're idling in your car,
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entirely how does that happen model chrissy teigen was on board and vented her frustration in a series of attention-getting tweets israel's transportation minister plans on naming a new train station in western jerusalem after president trump. earlier this month trump reversed years of u.s. policy by recognizing the city as israel's capital and, of course, that move angered palestinians. parts of the colorado rockies are under an avalanche warning following a major snowfall officials are urging even the most experienced skiers to stay away from certain areas at least for a few days here, and starting next year, playing too many video games will be recognized as a mental health disorder the world health organization is adding gaming disorder to its official list of diseases. the symptoms including being unable to control how often and how much you play. also, brian, sore thumbs. >> sore thumbs. >> yeah. back to you. >> i can see it. i understand it, and i'm glad they didn't have the xbox when i
was 12 contessa brewer, thanks very much all right. jon and peter najarian, who are real, not video games, check out the options market for unusual activity jon, you're spotting some action in the travel hand leisure sector. >> marriott, brian remember, idle hands and devil's workshop take a look at this up, 80 bucks beginning of the year. hitting 136 virtually today so what did they do they took some big profits today on some 135s and they bought some 140s so take a look at this the stock is up $2.51 here april 140 calls. they sold several thousand of a call at a strike below 135 i love following people when they are right and put people back to work i'll probably be in the calls about a month, brian. >> okay. i what is going to ask what your holding period is. pete najarian, what are you seeing >> i've got constellation brands, this is a big one because jon and i myself
probably consume a little bit of these hover the holidays look at this, 225 is where the stock was trading earlier. pretty aggressive buying this is a very expensive trade 4,200 of the february 230 calls so they are $5 out of the money. the 230 calls, selling the 250s against it and 4200 were bought. 5.70, and you look at that chart, that's a nice big move to the upside somebody thinks there's still a little something else in there i decided to buy the stock and will sell some calls against it. i like it new. the actual fundamentals of the company really fit into a scheme that i like to do when i buy stock. this one is one of those i bought the stock and will sell those against those. >> to the stars. welcome. >> tesla, ge, celgene and callaway all on the trader blitz and coming up on "power lunch," the most talked about call on
the street today, the analyst who cut his tesla 3 delivery model by 73% will join us. d.c.'s dramatic year coming off a big legislative win with a tax reform bill. what can we expect in 2018 and reality check. with the potential for rising rates and big changes to the tax code what, can the consumer expect next year a lot of answers on "power lunch," but halftime report right after this your joints... or your digestion... so why wouldn't you take something for the most important part of you... your brain. with an ingredient originally found in jellyfish, prevagen is now the number one selling brain health supplement in drug stores nationwide. prevagen. the name to remember.
key bank capital markets from the model 3 from the 15,000 down to 5,000. jon, your thoughts >> yeah, and some of the government incentives have been going away, brian, around the world. not just here, so that's a big negative for them as well. stocks down. i think you getter better price in 2018 to boy it. >> that analyst is on "power lunch." >> the beaten-up ge. company you go its ownership streak in arcam. will ge turn around? >> it will take a long time and that's the biggest problem when you're buying from elliott management and they decide to get out of it, that's not a good sign i'd stay away. >> celgene downgraded from outperform at bernstein. jim? >> i agree with the call
they had a disappointing result last week and that's one of several. frankly, it's still too expensive to be takeover bait which i think this is where this ends in a couple of years. >> callaway downgraded from neutral to sell from compass point after the stock saw a 37% jump this year jon? >> huge jump this year, brian. who would have thought that somebody -- well, golf club-maker in particular with the rates and everything else for golf not doing so well, but here's one that's outperformed and i think that's taken some money off the table. >> well, you know, listen, golf is hurting but it's not dead. >> stock number 5, mattel, stock down more than 40% this year any hope for mattel? looks like ge, literally cut in half and this stock is just -- they suspended the dividend. when you look at what they are doing cost structure-wise, i don't think you want to jump in this name. the only hope would be if you're actually thinking somebody might buy them i'm not in that camp not involved.
>> biotech company scheir. >> that's interesting news m & a activity possibly picking up healthcare and pharma in particular is where that's centered and this is in the crosshairs apparent life a lot of big pharma companies out there. this is a good company to hold. >> okay. >> copper prize on pace for their best run in 12 months and seven years. futures now is next. [music playing]
welcome back to "the halftime report. i'm seema mody we're watching copper on track for its 5th straight day of gains, the metal trading near its highest level since februar. bob is there more room to run here for copper snp. >> i think so, seema copper has a history of supply production and the economic expansion that we're seeing, what is more likely to happen is like we saw with the production facility in china we're going to deal with supply disruptions >> anthony, to you, we know china has played a role in boosting copper. how is it looking from a technical perspective? >> it looks pretty good, seema
we've hit the level on futures and right now the rsi, relative strength indicator, shows that the market is top heavy. bob talks about a pullback i think he's right we see it to 317 in that area but definitely should be bought. electrical vehicles will take a lot more copper and the prognosis in 2018 looks very positive. >> gentlemen, thank you. futures is back tomorrow at 1:00 p.m. eastern that's exclusively on futures now. "the halftime report" returns in two minutes. this is where i trade andrs. manage my portfolio. since i added futures, i have access to the oil markets and gold markets. okay. i'm plugged into equities- trade confirmed- and i have global access 24/7. meaning i can do what i need to do, then i can focus on what i want to do.
visit learnfuturestoday.com to see what adding futures can do for you. what's critical thinking like? 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
christmas may be over but the holiday shopping season is not. shoppers will spend annest maded 1.6 billion on gift this is year >> that number is slightly higher than last year. the national retail federation says consumers are feeling better this year, maybe allocating their gift dollars towards other items this holiday cease sob. but retailers really want you to spend that cash because they can't spend those dollars as earned until you come in the store and redeem deem the gift cards purchased for you. shoppers were set to buy on
average about four gift cards worth about $45 each per the n dpchnfr. it's followed up by department stores and visa and mastercard and discover gift cards came in fourth place and gift cards for places like coffee shops we also know that the holiday season was stronger than projected. sales rose about 5% from november 1st through christmas eve. we chatted with shoppers all day yesterday in the mall and we've heard from them again today. many say they are feeling better about the economy and they are hoping for maybe a bit more cash on hand next year. thanks to tax reform under president trump. and just because christmas is over, that doesn't mean people will stop spending people will stop spending $69 billion this week between christmas and new year's that's 10% of the overall projected sales figures this holiday season per the national federation that big number of $862 billion is on the high end back to you. >> we'll have to come up for a
catchy name, something like prenew year's. we'll leave it in your hands, kate rogers. thank you. >> thanks. top retail stocks to watch next year, jim >> well, clearly a bomb went off in the space and dick's sporting goods, people will want to check out their individuals sports firsthand. i like the valuation pete >> i'm going towards target. they have made improvements. as a matter of fact, they have bought shipped instead of same day deliveries they've got to grow in that e-commerce space it was trading around 12 or 13 p.e. and now it's a 14 p.e >> like walgreens, pharmacy-based, health and wellness >> what the heck is going on here >> these guys have 3% same-store
sales surge this year and when amazon kbets in the space, falra when you buy it >>in tde for the desk, next they came out of nowhere, sir! how many of 'em? we don't know. dozens. all right! let's teach these freaks some manners! good luck out there, captain! thanks! but i don't need luck, i have skills... i don't have my keys. (on intercom) all hands. we are looking for the captain's keys again. they are on a silver carabiner. oh, this is bad. as long as people misplace their keys, you can count on geico saving folks money. fifteen minutes could save you fifteen percent or more on car insurance.
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that's buy >> royal dutch shell we've got to get an auto parts so we can do baba o'reilly >> hey, appreciate you doing this thank you very much. that does it for "halftime." "power lunch" begins now. welcome to "power lunch. i'm melissa lee. a return to normal for the markets. are investors in a reality check for 2018 and tesla takedown, cutting the delivery estimates by nearly 70%. the analyst behind the market moving call will join us and real estate reality. what the potential for rising interest rates and the new tax plan could mean for the housing market in 2018 "power lunch" starts right now ♪