tv Fast Money Halftime Report CNBC April 27, 2018 12:00pm-1:00pm EDT
positive for the month of april. >> yes, with one session left on monday we'll be watching that closely dow down 70, of course, and we'll keep our eye on the white house today. that press conference between the president and merkel around 1:50 p.m let's get over to melissa and the half welcome in to "the halftime report." we start off with amazon the stock up big today after last night's earnings report, which was so strong, it took some of the biggest bulls on the street by surprise with us for the hour today, josh brown, stephanie link, jon najarian, and jj we had every single analyst on amazon, steph, surprised by the upside and the magnitude of the beats across the board >> it was huge absolutely huge. and it came from a couple different places it came from the important places like aws ad subscriptions, and we saw
acceleration in growth we saw acceleration in margins in each of the sections. then these are the pieces that have the highest margins so you feel good when they're growing, when they're expanding. i have to tell you, it was pretty flawless. really nothing here that was negative to pick at, even the prime fees going up. that's going to help offset retail costs in the second half of the year. they're kind of protecting the rest of this year. you maybe can say valuation is the issue, the pushback, but i don't think the fundamentals have any place but they're going to continue to work. >> aws margin is 25.7%, and the 20% increase in prime fees, that's $2 billion straight, right, in terms of profit. jj, how are retail investors trading this going in? >> a couple things to keep in mind it's a very expensive stock. this is where a lot of retail investors use options because of the price. there were a couple things impressive to me prime is stickiness, and so with that, they continue to keep their customers there.
and the other end i don't think a lot of people talked about, they spent a lot of money this quarter. they spent on almost every area of their business to upgrade it, yet they still came through with these killer earnings. >> amazon web services like you said, mel, aws, 5.4 billion, i think, year over year, versus 3.5. they talked about having that seven-year headstart over everybody else now, we all know they didn't have a full seven years. the other guys were developing and icrosoft is nipping at their heels, among others, but this is a huge number to steph's credit and her point this is a stock that just delivered every metric, including ads. i mean, we have rarely talked about ads on amazon because -- >> 6% share. >> yeah, but all of a sudden, given -- >> marketing spending. >> exactly, so when you talk about ads into the mix as well, and that becoming a real number now, it's not just an afterthought, it will be double digits very soon, i think. >> josh, can you still buy
amazon here? >> well, you have a gift the market is yawning. so all the traders are talking about the stock gap is up to all-time highs it's still up about 5% on the day, but it's given up almost all of the pop i think that's indicative of something we're seeing more broadly, with all of the great earnings we had in financials, in other technology companies. which is that let's take amazon as an example. stock is up 36% on the year regardless so it's not as though people were saying, ooh, earnings will be bad oh, we're surprised it's great no, we all thought they would be good and they were even better, and that's fantastic, but the stock is consolidating gains that had already been -- look, it's a $750 million market cap what do you want it to do, double i think there's a lot of that going around, not just with amazon this is something that you have seen happen with google, you have seen it with facebook where you get these great results, even better than the great results we expected. and then you get these nasty black candles, and we're seeing
that at intel right now and seeing that just in the qs in general. it's not the end of the world, but it tells you that there was a lot of optimism going in >> earnings season is always kind of hurky jerky, if you will there's really crazy reactions, and this earnings season seems to be really extreme where the companies that are reporting are doing well, but those that actually come in line or god forbid they miss, they're getting hammers. the reactions are so severe. that said, that gives you the opportunity. i do think there's a big difference between google's report and amazon's report google spent a ton of money and they didn't see as much operating leverage to j's point, amazon spent a ton of money and did still see operating leverage >> also on google, 86% of the business is still ads. amazon has such a broader portfolio of businesses that are showing growth >> people say google is the cheapest of the fang and you should buy it and own it it's cheapest for a reason now they had two quarters in a row which quite frankly were a
little disappointing still great growth, still a great story long term, but you want to pick your spots and focus on the fundamentals. amazon had phenomenal fundamentals >> i think the biggest difference is how you have to approach this year's earning season compared to just last year's last year, you approached earning season, it's good. you're going to get rewarded handsomely this year, if it's good, it might be a good stock to buy because of the fundamentals, but you're probably going to have to wait time to be thoroughly rewarded because if they don't hit a home run, you're not going to get it. >> one of the analysts on the street who got jazzed up after amazon's report, benjamin schachter raised his price on the stock to one of the highest on the street. he joins us on the phone you new target is $2,100 a share. what is the part of the amazon story that you think investors may not be appreciating enough everybody is pointing to aws, fantastic. the increase to the prime membership fee, that's
fantastic. what are people sort of missing? >> i think following some of what your other guests have mentioned, the margins are what the story is going to be going forward. what's interesting about amazon is virtually every business they invest in going forward is going to be a structurally higher margin business than ultra low cost retail. that's what's so exciting. >> you say in your note, we believe without margin expansion, other business can drive significant profit basically, the other businesses are going to bankroll what's going to go obin business. it's going to bankroll the spending they're going to do are you confident they're going to spend in the way you want them to spend? >> you can never say quarter to quarter, year to year with amazon, they're going to spend exactly howia want them to, and margins can fluctuate, but the track record of bezos and his team are remarkable. i don't see anything on the horizon outside of government regulation that will stop it >> ring, they paid $900 million for ring, that they disclosed in
the earnings report. was that a defensive move? was it something they needed to do like i say, so i'm saying a versus b, was it defensive or was it something that's going to be accretive to them >> on that particular acquisition, it's likely there were other bidders and they wanted to keep it away because they have such strong momentum with alexa beyond that, what's so interesting about ring is they're clearly going to move into more of a services business around home security, home automation and do those through the alexa ecosystem, that's a very exciting opportunity that no one is talking about. >> it's josh brown i want to ask you about the government interference, because if you talk to people that are bearish on big tech in general and amazon specifically, that's like number one on the hit list these days and one of the things that we have seen the company start to do or maybe bezos individually, is start to invest in some infrastructure in the washington, d.c. area. there was a notable article
about him buying a party house this week. can amazon successfully do this in washington? and put himself in a position where, you know, he can neutralize the threat, either with political action committee spending or glad handing it there a precedent for that happening with other large giants and you can skirt the big fear that everyone has >> you know, i have covered the stock for almost 20 years and this is at the top of my list for much of that time. the only thing i think can possibly stop them is government coming in. right now, there are no laws on the books here i don't see any laws on the books internationally either that are written that could pose a threat, but as they get bigger and bigger and take a bigger share of so many different markets, can they spook enough folks that they can get new laws written and new pieces coming down that would really come down on them hard i don't see that, but there's really no other threats i can see out there. >> thanks for phoning in we appreciate your analysis.
the conspiracy theorist in me says amazon hits an all-time high at the open, and that stokes the ire of the president of the united states, jon. >> i think he's celebrating. not the amazon pop, but i think he's too busy celebrating other things to focus on the fact that amazon just hit another all-time high as far as the going forward with amazon, the worry is always government on one side and jeff bezos decides to cap-x to the moon he decides to spend a whole bunch of money when he's got a big war chest like he has built several times, he has done that so you know, is it surprising to see some people take some profits? no, but with stephanie link and other longer term investors, i don't think they sell. >> 600,000 employees at this point. the second largest private employer in america, and growing. and hiring, and building and the president kind of needs that to continue
it's actually so he doesn't like "the washington post," fine. amazon doesn't actually own it what the president probably has to like is the fact that this kind of story is taking place in, quote, trump's america, is number one on the bezos side, i'm sure socially he's on the other side of trump on a lot of issues, but the business climate that trump has helped bring about, obviously, the republican congress, too, has been very good for jeff and for amazon and so i think it's probably not quite as mano a mano as maybe editorial writers and political writers see it i think there's a great business case for these two factions not to go at each other right now. >> in terms of how amazon trades today, what do we need to see it do in order to believe that the tech train is still going to roll we're up 5% on amazon. >> i would love to see it hold these levels and rally in the close. >> rally into the close. >> if you see a lot of sellers into the close, that's people taking profits my biggest concern outside of the political thing, they had a 39.8% margin
that's a tough level to keep up. if they go on a spending spree, it's up significantly from last year, that's the hardest thing in my opinion for them to keep >> we mentioned cloud. let's go to tape playback of the president of the united states meeting with german chancellor angela merkel. >> they like you they like you. >> thank you >> thank you very much it's a great honor to have chancellor merkel, and i will say that you can rest assured she was going to win that election, and congratulations on winning. and by the way, a formal congratulations. that was a great victory we're working on a lot of different subjects, including trade, including nato, including military of all types. and we have a really great relationship and we actually have had a great relationship right from the beginning, but some people
didn't understand that but we understand it and that's what's important. but very extraordinary woman and it's an honor to have you at the white house. thank you very much. [ speaking german >> thank you very much for this warm reception and also for the words of congratulations you know, we took some time to build the government, but i thought it was very important on this first visit outside of europe to come to the united states, to come to washington, in order to yet again on the line that we wish to deepen our relationship further and i hope and am looking forward to the good talks i trust we'll have today. >> thank you very much
>> thank you >> mr. president - >> we were honored a great report no collusion, which i knew anyway no coordination, no nothing. it's a witch hunt. that's all it is there was no collusion with russia, if you can believe this one. there was -- she probably can't believe it who can. but the report was very powerful, very strong. there was no collusion between the trump campaign and the russian people as i have said many times before, i have always said there was no collusion i also said there's been nobody tougher on russia than me. with that all being said, if we can get along with russia, that's a good thing, not a bad thing. but there has been nobody tougher on russia than me. i was very honored by the report it was totally conclusive, strong, powerful many things said that nobody knew about and said in a very strong way. they were very forceful in saying that the clinton campaign actually did contribute to russia so maybe somebody ought to look at that. but what we really should do is
get on with our lives and get on with a lot of things we have a lot of great things happening including potentially with north korea, angela, as you see, a lot of positives happened in the last 24 hours we're in total touch with both north korea and south korea. we'll be setting up a meeting very shortly we have it broken down to probably two sites new, two or three sites, locations and hopefully we're going to have great success we'll see what happens hopefully we'll have great success. president moon and i are speaking, and we're speaking very much with south korea and with north korea the relationships are building and building strongly, and this will be a great thing for the world. this will be a great thing for germany, but this will be a great thing for the world. angela and i have discussed this over the period of the last 15 months quite a bit, north korea. the north korean problem and i think you're seeing that a lot of very positive things are
happening. >> any agreement on iran oday, mr. president? >> i don't know. i think we'll be talking about iran, probably, but i don't expect it one way or the other we'll have a very good discussion on iran, as i did with emanuel, who just left, the president of france. so we'll be having discussions on iran. we'll have discussions on trade. we'll be having various discussions. >> what will you do to insure that they're not - >> i don't think he's playing. no, i don't think he's playing you know, it's never gone like this, never gone this far. i don't think it's ever had this enthusiasm for them wanting to make a deal. i agree, the united states has been played beautifully, like a fiddle, because you had a different kind of a leader we're not going to be played okay we're going to hopefully make a deal if we don't, that's fine the united states in the past was played like a fiddle money going in and nobody knew what was happening the day after an arrangement was made, if you call it a deal, i
doubt it, but an arrangement was made they start with a nuclear weapons again. that's not happening to us we will, i think, come up with a solution if we don't, we leave the room with great respect we leave the room and keep it going. i also will tell you that president xi of china has been very helpful at the border and i want to acknowledge that i think it's very important to acknowledge. but president xi has been extremely helpful to me. we have a very good relationship he's been extremely helpful to me at the border so we'll see where it all goes but no, this isn't like past administrations. we don't play games. thank you very much, everybody thank you. >> you said this week you weren't interested in intervening with the doj but that might change --
>> thank you very much, everybody. thank you. >> and we have been listening to tape playbacks this happened moments ago, of president trump along with germ german chancellor angela merkel. the q&a was the more interesting. far reaching in terms of the topics hit eamon javers has a wrap-up >> the thing that stood out was the president of the united states saying we had a great relationship, that is he and merkel, since the beginning, and a lot of people misunderstood it he's attempting to present a warm welcome to angela merkel and paper over some of their differences. you saw that handshake that's going to be much analyzed you had the hand shake and then the double hand clasp. the president really going out of his way there to signify that he's welcoming angela merkel to the white house. and moving past some of the awkwardness of their initial relationship to say that they have always had a good relationship and they'll have a number of discussions. he didn't go so far as to say
they're going to have agreement on things like the iran deal we'll wait and see if we can get reporting on what happens behind closed doors here. >> thank you eamon javers joining us from the white house. meantime, a news alert on russia michelle caruso-cabrera has the headlines. >> look at shares of alcoa they have moved lower intra session. we believe that's related to a news related tooling deripaska there's a statement from his company saying that mr mr. deripaska has agreed in principle to a request to reduce his shareholding in his company to below 50% in addition, mr. deripaska has also agreed to resign from the board and consnts to the appointment of new directors why would he want to do this because he's been sanctioned by the u.s. government, being close to putin plus, is the holding company for rusal, one of the largest aluminum producers in the world, you'll see from the date of the sanctions to now, the stock is
off by roughly 50% becausoling deripaska is sanctioned by the u.s. government, nearly any company in the world that does dollar based transactions would be prohibited from doing business with rusal so 93, the company, the holding company the one you're watching there, has stated they're waiting to see if ofac, the committee at the u.s. treasury that's in charge of implementish the sanctions, is this good enough, mr. deripaska trying to disengage that the rest of the companies in the world can continue to do business with rusal. that's why we see alcoa moving lower, because if indeed the sanctions come off rusal, you have more supply of aluminum coming on the market >> already, there had been stockpiles built up of aluminum because of what is going on with rusal. theoretically, those stockpiles all of a sudden come to market, flood the market, and alcoa is on the wrong side of that trade.
>> if you look at a three or four-month chart, you'll see, first the rocket higher when the news of particular tariffs go into place, then the sanctions, and then as they have gotten softer and softer, alcoa has come off >> thanks for the update >> meantime,iga getting back to tech it's still the top sector. some investors say it's not over let's bring in paul. you have been buying the dips in technology why do you think so far that the tech names in general haven't really gotten the full respect that they may seem to deserve based on the strong earnings reports that they're posting >> well, we know that the earnings game on the street is not what you do. it's what you do relative to expectations and everybody knows that this is probably the most superior sector as far as revenue growth, operating income growth, cash flow growth relative to the other ten sectors in the s&p
500. as you said in your intro, they have had quite a run the way i look at it is fundamentals are strong. probably the strongest i have seen on a relative basis going back to almost when i started my career in the late '80s. but you think about it, you have to buy these stocks, like any company, you have to buy the stocks on a down day and even companies like amazon that trade close to all-time highs, you will have that opportunity again. >> which of the stocks have you added in recent weeks, do you think as being most underappreciated by the market >> sure, so in recent weeks, so not after they have announced their results, but i did buy in the midst of the controversy some facebook and some google. those are the only two among the fangs. and i have been partial to a number of what i think are relatively ignored semi-conductor and semi-conductor capital equipment stocks like micron, like nxpi, like applied materials, and like lam research >> how are you doing
it's jj. one of the things you talked about buying facebook, we talked about it in the last segment do you foresee any issue with the government, with amazon, with facebook? or is that just a lot of noise and a lot of articles? do you see that being a hindrance to their businesses at all? >> i do think it's going to be a hindrance, but what i think the market is misperceiving is i continue to believe that digital advertising is a very important fast growing market. i continue to believe it's going to be dominated by facebook and google now, what will happen is not a problem on the revenue line. but there will be some incremental compliance costs, and even mark zuckerberg at facebook has talked about that so maybe they are less profitable per dollar sales, but i think their top line growth will continue and really be much better than the rest - >> hi, paul. you continue to believe that they will be dominant in advertising? do you think there's anyone on earth who doesn't already believe that >> i think the problem is, yes, i actually do.
>> so who, for example >> i think that people do think that over time twitter might take some share. even amazon might take some share. and snap might take some share the only one, frankly, that i'm worried about among these three is amazon because it's such a high-quality and aggressive player >> is there a risk to google that people begin their product searches directly on amazon and don't even bother with a google search and that gets amplified by the fact they start doing those with voice, and nobody has the google speaker. everybody has the alexa. is that the biggest risk to google >> i think that is a risk. but again, when you have all of the digital advertising pie, you have all the slices, you know, there's really only a chance for these guys to lose and i think they probably will lose some share on the margin, again, i'm most worried about amazon, but there's still a pretty good space to be in their compliance costs will be higher, they'll be less profitable, but there will be a
multitude of profit higher i like them. do you buy them today? no, you buy them when they're down like a week or two ago. you don't buy facebook after it raises 9% or 10% on its earnings >> thanks for your time. >> with nearly 80% of companies reporting earnings above expectations so far, can the market make a move higher on the good news this time? let's bring in mike santoli from the floor of the nyse. that seems to be the gripe going into earnings, we both talked to so many people who said earnings season will be it. the markets will take off. what have we seen? not much >> not much yet. certainly, that could change i often find as earnings season goes on, you see a slightly different tone develop in the back half, but i do think one of the key issues coming in, an interesting setup to earnings season because normally forecasts get marked down ahead of reporting season. and then it becomes much easier to hurdle. this time, it doesn't come down, which i think paradoxically, even though we have beaten the numbers, it was very little
doubt in investors' minds that numbers will be okay if you had the list of exactly what investors and traders were most worried about, earnings coming through wouldn't make the list it was all about macros, all about rates. and here you had the dollar rally as well. that seems to be much more about this ongoing correction process that we have been in that's also taking into account as you have been mentioning the fact that the nasdaq 100 was up 40-plus percent from the beginning of 2017 through january these numbers are what you paid for last year. it doesn't mean it's over. it means it has to consolidate in here, i think >> steph, how do you examine what we have seen in earnings season versus the performance we have gotten? how do you in your head justify continuing to buy on these earnings reports even though the market doesn't seem to appreciate them? >> even though numbers went up into earnings, stocks fell coming into earnings we were down probably 8% in
march alone. so valuations have come in quite a bit. we went from 19 times forward to almost 16 times forward. i do think there's this looming concern about rates, about the fed, not knowing if powell is going to be hawkish, not knowing where growth is going to be in the second and third and fourth quarters because fiscal policy hasn't really gotten into the economy just yet and i'm of the mindset the economy is going to do better because of fiscal policy kicking in that will be better for earnings as well. it's a stock picker's market this year. not just a basket of stocks and etfs you have to pick where the fundamentals are strong. that's why i'm really standing to this. fundamentals are good, eventually when the market stabilizes, people will go back to the strongest companies >> it boils down to whether or not you think markets at this point, steph mentioned how far pes have gone down, 16 plus in currento sore, whether that
accurately reflects the risks out there. earnings was never a risk in the mix. >> that's right. and by the way, that 16 or so times forward earnings that we're now at on the s&p 500, how did we get to that number? well, the estimates for the forward earnings are 18 or so perce percent. you say 16 times earning and growing 18%. that's saying the same thing only 16 times and not 20 times which is the trailing multiple because earnings are going to get there, we think. i think you're not really -- you can't really use both of those things as a bull case. you can observe that at 16, down from 18 plus the market is figuring out what the right value is for this point in the cycle and i think that process is ongoing. >> mike, thank you mike santoli from the floor of the new york stock exchange. quickly, in terms of what we have seen in reaction to earnings reports, which stock do you think has been underappreciated in stock price appreciation based on -- >> post earnings >> post earnings >> twitter yesterday, it took back a lot of
ground twitter got slammed from $34 in the premarket, mel, two days ago as you were reporting early in the morning. it got slammed all the way down to $29, $28 and change came back through $30 and $31 yesterday. i would say that would be the one that was least appreciated of these >> yeah. jj, same question? >> i would say goldman sachs because the trading environment is still going to be a good one, and they have had a very tough time since their earnings and they hit on most of their cylinders. i don't see them having a tough time going forward >> i think it's a market-wide story. xlf, what a terrible, terrible -- look at the qs i just -- look, two weeks ago on the show, we were talking about, oh, a great earnings season. 17%. and i'm sitting here saying, okay, but everyone knows that. and you don't get paid on what everyone already knows i'm sorry that it played out that way because i'm bullish and long, but it's a simple fact you had this mega rally going into these numbers
everyone believed they would be good they were good we were all right, but that's information everyone had and that's why there's no follow-through in almost anything it's very hard to find a stock, good report or bad, that gave you a nice follow-through to the upside the hope fell thing to say is, okay, they're consolidating recent gains no big deal. the more bearish case would be to say we have already seen everyone that wants into these stocks they're already in and buckle up for a tough summer we'll see. >> you have to think, are we at peak earnings if you think we're at peak earnings, you sell off the market sells off i don't believe we're in paerk earnings and earnings are beating expectations people thought we would grow 18%. we're running 23% growth we're also doing better on the revenue line as well so it's not just finagling there's real demand. business investment is up 6% that's a good number i feel like we're not at peak. we had a nice run. you used the pullbacks
i would say caterpillar is the name that is the most underappreciated given they raised numbers by $2 and people took out of context the comment about the high water mark. >> historic moment at the demilitarized zone on the north korean and south korean border kim jong-un walking across the border to shake hands with south korean president kim jong-un they're pledging to cease all hostile acts eunice is live in seoul, south korea, for us. >> thanks so much. the two leaders made a lot of pledges on this very dramatic day on the korean peninsula. after the summit, south korea's moon jae-in and kim jong-un issued a joint declaration where they vowed to end the korean war. they also said that they would want to move to a peace regime, set up a liaison office, and move to complete denuclearization on the korean
peninsula. that's on the formal side of things what really got people's attention was some of the more softer, personal aspects of the summit maybe the most fascinating was when kim jong-un actually walked up to a podium and addressed the press live on television and these kind of moments were happening all day, from the very early morning, when the two first met. they were holding hands. they were sharing jokes with each other and that ambience is all well and good, but since 2000, we have seen two summits here and they have both ended in peace declarations, and then nothing has happened i think that's what president trump was getting at, at his pres conference just a moment ago when he said that previous administrations had been played like a fiddle. because in the past, what we have seen under various policies of under the clinton administration as well as here in south korea, of the sunshine
policy, that they offered up more aid and development or economic perks first so this is what trump administration officials have already indicated that they don't plan to do they want denuclearization to be the priority president moon has also made it clear he wants denuclearization, and he's been much more cautious than his predecessors about offering up economic benefits. these will be the very difficult conversations that will be had when and if president trump at the end of the day actually meets with north korean leader kim jong-un. >> thank you eunice yun for us in seoul, south korea. let's take a check on the markets. we're showing a fade the nasdaq is struggling to remain in the green, turned red moments ago. s&p 500 up by 2 .33 points we're seeing the post earnings fade amazon is still holding on to a gain of about 4.6% or so, but we
have intel shares trading lower by .75% and microsoft is well off its highs we saw in the after-hour session the stock is up 1.25%. first up, mattel is on the move, losing early gains josh >> this stock is down 60% over five years if you're long on the stock, you don't have kids. the only way -- i don't understand seriously, all kidding aside, no disrespect intended. what do you need to see to understand what's going on with the amount of time children are spending with physical toys versus interfacing with digital? like, do you have to come to like -- do you have to come to where someoneis baby sitting a bunch of kids and watch them for seven weeks to understand this i don't understand the longs here, what the bull case is. it's just not working. has not worked, will not work. >> charter communications, the worst performer on the s&p 500 today after the company reported a loss in video subscribers. >> traditional media is really
difficult. you had at&t earlier this week losing on the video side you even had comcast lose on the video side at least comcast has broad band growth to offset it, but they're still selling off that stock and that's the best in the business. i think this space is really challenged i don't think it's changing anytime soon >> under armour popping today, up about 10% week to date. the company is set to report earnings next week jj, you own this one >> how do you like the setup going into earnings? >> it's great. what makes me nervous is the same thing we just got done talking about. that is high expectations going into earnings in a good way, and a potential selloff. if they get over 16 to 16 1/2, they got trouble getting through it my technical friends will remind me of that they're expecting about a 13% move out of earnings so if you go in to play, you're playing volatility >> when you're in the gym, you strike me as an adidas guy are you? >> under armour, you take a shower and it dries overnight.
fwl maybe a little tmi >> media seeing its best reports in two years >> and a 15 million varrepurchase. about 11% of the outstanding shares that's pretty big for expedia. also take a look room bookings up 15% year over year i believe the gross -- sorry, the gross sales were up as well about 15%. fantastic report out of expedia. >> next up, jon is following bullish options moves in an airlines stock you want to stay tuned for that. first, a check on the s&p sectors here definitely a defensive bend here "halftime report" returns in two minutes. or sell? with fidelity's real-time analytics, you'll get clear, actionable alerts about potential investment opportunities in real time. fidelity.
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welcome back to "the halftime report. jon is over at the telestrator with bullish unusual activity in an airlines stock down 8% this week >> take a look at this earlier in the week, we had jetblue, and i bought the called today on a pop today, 81 cents, i'm buying american airlines calls. upside calls not just because i fly them. they bought a ton of calls out in august, mel 45 strike calls, so take a look here one of the lowest levels of the year where the stock is trading. and they buy about 4500 of these calls, august 45s, with the stock at roughly that 42-ish level. i bought these i'm going to turn it into a call spread, meaning i'll sell a call above it in the next few weeks i like it.
i'll probably be in this thing in the neighborhood of a month or more. >> thanks for that, jon. >> thanks. >> intel shares soaring in the past year and getting an upgrade today. stacey rascon saying his firm has been wrong about the stock he'll be with us next to explain, and our call of the day. >> but first, here's what's coming up on "power lunch. president trump set to hold a news conference with angela merkel trade will be big on the agenda. >> plus, north and south korean leaders meeting in an historic summit aimed at achieving peace. what this means to trump's upcoming talks with kim jong-un, and it could be the biggest auction ever, possibly reaching $1 billion we're live at christie's rockefeller auction. "halftime report" back right after this you know what's awesome? gig-speed internet.
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stacey joins us on the phone for his analysis thanks a lot for phoning in. >> you bet >> you do a fair amount of self-flajeration unterms of getting the call wrong you say it's hard to call the short case it compels us to admit when we're wrong. we congratulate you for that not too many analysts can come out and say that outright. part of what you missed is underappreciated the growth of data growth. it doesn't sound like you think the strength that yousy in the last quarter for the second quarter in terms of trends continuing from the first quarter, that they're not really sustainable. >> well, so that's open for debate and let me be clear. we have been making a structural call on this stock for a while i'm not saying that the structural issues are gone at all. in fact, i believe that they are even more apparent, particularly given the ten nan ameter issues that the company disclosed on the call yesterday
that's being said, the data center strength we saw in q-4, sustaining was surprising. and if you parse the company's guidance, it's pretty clear at least that they believe that they believe that they still see that business probably growing still in the double digits year over year. in the second half so i guess what we're saying in the note is if we're in front of potentially still double-digit growth at least for this year, it's hard to recommend to my clients that they run out and press the short in front of that i do think given the structural issues there, there may be an opportunity to revisit this call at some point. once we're through this, especially if that data center upside that we're seeing through this year may not be sustainable as we get intothex year, and the structural issues we have been outlining become more apparent as we move into 2019 this is more a call on not the right time now, the right time may emerge at some point >> it's josh brown i'm a shareholder of intel and
nvid nvidia i want to ask you a longer term strategic question for people watching that who own chip stocks so the a.i. thing, eventually these two companies will go head to head in a more meaningful way than they do now clearly, nvidia has a lead can intel seriously compete with nvidia in these important areas? you know, a year out to five years out, without also having the software standard that nvidia seems to have for things like a.i.? how should we think about intel's longer term position as shareholders >> you bet i think you have hit the nail on the head as it comes to a.i. ecosystem is incredibly important. the code is being written today, it's gnaw something that developers want to rewrite for different architectures. and nvidia, obviously, they have been building out the eco system for six or seven years intel is coming, number one, they had to acquire their way in, they bought nirvana systems.
they missed the opportunity to develop this internally. this comes with a different ecosystem. convincing people to make the switch given the amount of time and investment that's been placed by the developers on code using nvidia systems is a fairl sizable moat it's the same kind of concept that gave intel their momentum that's working for nvidia in a.i. >> does it worry you all the big cap-x jump from $11.5 billion to now $14 billion or $15 billion is this a big deal to you that we should worry about or is it all just data centering and something they have to spend on? >> it's 10 nan meters of memory is what it is. you have to think about cap-x in this way cap-x by itself fuels revenue growth going forward they're putting that cap-x in place because they believe it will drive revenue if it doesn't drive the revenue, there will be a problem. sometimes there's a bull thesis that they'll run out and slash
cap-x and that's good. you have to remember, if they were to hypothetically go out and cut cap-x a lot, that has implications with how they would view the forward revenue trajectory cap-x as long as it's coming with revenue is good will it drive the growth they're putting in place >> that's an important point to make in terms of them spending on memory. we had good data points in the concurrent quarters from micron as well as samsung on the memory side is intel spending this too late? will they get the return you're hoping for on investment >> they're seeing the memory will be profitable for the full year, which of course, great but at the same time, their competitors are not just profitable they're massively profitable because industry price points on memory are at lifetime highs, record highs so that is a question. intel kind of is ramping this business hard into what may be a lot closer to the peak in the memory cycle we'll see what happens to prices over time. for now, it looks like those price points can be reasonably benign, but you know, as they're
wrapping that capacity and that revenue going forward, that's going to become a question even right now, even if they are profitable, they're not making anywhere near the kind of money their competitors are. >> thanks. a session, anybody a buyer on this dip >> i actually -- sorry, the dip looks more severe than it is technically, the stock is still in an up trend and the breakout is still intact. if it weathers whatever is going on today with the mass sell-off in tech, that would give me more confidence, not less i don't see it really breaking down here. >> 1% is not a dip, but when you take a look at how it traded in the after-hour session that's a massive reversal. 7% >> you're seeing that in tech today, across the board. >> does it make the trading action okay? >> i'm not saying that, but i get the 10 nanometer concerns, so that is a risk down the road, but data center, we have been waiting forever for this company
to deliver consistent double-digit data center growth. we finally have it they're making money margins were better. this was a good report >> the energy etf xle up 10% in april. two energy stocks are tront an center at cnbc's stock draft yesterday. >> i'm going to go after the leadership sector of energy and a really good balance sheet in chevron. >> i'm going the elect exon. >> a ball here for the energy companies. >> steph here is on team mr. wonderful, and jj is on team eric dickerson interesting disparity in trading today and in results. >> exxon today not doing as well as chevron it's getting beaten. the reason i like it longer term, on their earnings, one thing you have to keep in mind, the way some of their foreign contracts are, they had less
production the reason they had less production is because some of the foreign entity's contracts say it's about price with the price of oil going up, they didn't have to produce as much to hit that it's not approximate volume. that's one thing to keep in mine the other thing, i believe their business is more diversified overall with natural gas with their plastics division than chevron. with crude oil approaching the $70 mark perhaps that's something that makes me nervous. can they break through i feel like exon is more diversified in case it fails. >> chevron up 1% from exxon down 7% year to date. last year it was very much the same the reason chevron growing better and doing better and executing better than exxon is because they have exposure to prk ermeon exxon. doesn't. they have to do something about it and i wouldn't be surprised to see them making an
acquisition. chevron has the free cash flow there is a lot of moving parts for these companies. they are so huge but chevron outperformed on a lot of empty ricks but at the same time hasn't done that much year to date >> we have energy reportings reporting earnings next week which ones are we looking at the calendar is on the wall. doc? >> i like ana darko on that list i have owned it very recently. apache i would say ana darko and apache. >> trb >> i think if the commodity goes higher, he they all go up. >> which one is the most levered. >> the smallest with the best quality and the most conservative with the best different and best energy prices goes up the least. fending what kind of energy trader you are, maybe not pick the actual stock but that's where to start your search.
>> why do you think exxon hasn't gone up with the price of oil? too gassy. >> one thing i've seen in chevron and exxon is shale drilling the shale drillers have done very, very well over the last six months to a year i think that's something to stephanie's point earlier about acquisition, i think they are going to have to look this for the coming near that makes me nervous about both of them inpeople are looking at exxon because as stacey said chevron has outperformed they will -- >> staty or stephanie. >> i called you stacey twice, didn't i i'm sorry stephanie. they have done better over the last year. people are saying i wouldary go in there and take my risk there. overall, exxon has a great upside if oil stays in the 60 or
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the stock has been a behemot, so has all of defense year to date. you have this chain in the landscape where people sold machinery stocks this the first quarter and bought defense then they reported and they were fine but they are expensive. so you have seen a selloff, boeing would be the one i would look at if it falls to under 310. i own text tron. that's the one i would buy they have a little bit of defense. but i would be selective of what i'm doing in this sways. >> the question, if at&t is buy after hitting a 52-week low yesterday? >> i don't know. their legacy systems -- this is why at&t needs this deal, why they need deals. if they don't get a deal i think it keeps going down. >> put up a chart of at&t versus the inverse of the ten-year interest rate, and you know,
depending on what your view is there, that will -- >> you are saying it is a devin selloff? >> but the fundamental were terrible at at&t. >> of course there are idiosyncrasies about at&t of course. >> that's not helping. >> sectorwise, big picture there are sectors that are -- >> domestic, global, all those things are down. >> springfield does that change things? >> i don't think -- >> it consolidates price competition. >> maybe less price competition but i think i agree with josh. people see it as a blue chip and good different yield >> selling in different etfs which i'm sure you track that data, a lot of people are looking at those as a source of cash and they can particular less risk for a yield that's almost similar. they don't need the equity risk to earn something. you know, so you are seeing the bond proxies acting the way they have been abilitying all year. >> that's true especially on
staples. in terms of fundamentals they lost 188,000 video subs. this whole space, charter, it's difficult. people are not going to what they offer >> what is a good entry point for starbucks. dr. jay i go to you. >> wow i'm going to pass. i no interest in starbucks. >> it would seem you would want it to go to 55. >> i want guidance they are not doing 3 to 5% koch. >> lower guidance. >> final trade, josh. >> staying long intel here. >> beth. >> i like zimmer a new ceo. he lowered the bar the stock opened down 2% on the news and rallied up 6% i loo ib that story. >> dr. jay. >> as j.j. said some of thinks drillers and frackers are doing
well u.s. silica mill bought it during the show. >> square, billing in a big portion of what they were missing in terms of sales, et cetera that's a stock i am going to be watching, come out tuesday. >> our thanks to you >> thanks for having me. >> amazon holding at 4.6%. we will see how it close that does it for the halftime report "power lunch" starts now. >> here's what's on the menu touchdown. amazing amazon soaring sales, rising prices, growth in new markets. the stock soaring to all-time highs and a ton of upgrades today. is it an unstoppable juggernaut that you can't afford to live without. >> history in the making, north and south korea planning to end their of 5-year-old war and work toward complete denuclearization of the region. what this means for u.s. policy. >> and president trump set to hold a news conference this hour with germany's angela merckal. trade front and center we will carry it live. "power lunch" starts