tv Fast Money Halftime Report CNBC May 16, 2018 12:00pm-1:00pm EDT
but retail continues to lead macy's on top of the gainer board ahead of walmart today, jcpenney and other names as we get closer to the end of the week >> materials higher too. also industrials up 1% today >> yeah, with all that, let's get to the judge and the half. welcome to "the halftime report." i'm scott wapner our top trade, the great rate and dollar debate, and what happens to stocks and this refueled rally, if both keep rising joe is here along with jon and pete, he's one of barron's and forbes top 100 financial advisers kevin o'leary along with us as well a cnbc contributor, and also with us on set today, cnbc senior economics reporter steve liesman. let's begin with the markets the dow's winning streak ending
as interest rates hit their highest level in seven years kevin o'leary, how much of a threat now are rates and the dollar combined if both keep going up >> on the margin, credit moving up the balance sheet off the equities let's say you have a stock and you love the dividend and you're looking to own it because you think you can get a combination of yield and have appreciation all of a sudden, you can buy the triple-b bond of that company for 24 months and get 3, 6, all the way to 5%. on the margin, what's happening and why the market is stalling here is institutional dollars and investors like me are saying, wait a minute, i don't have to own the equity i think i'll park some dough for 24 months and make 3%, 6%, 5%. >> you're telling me there is nysalternative is over now there's an alternative >> everybody is focused on the balance sheet saying i could be on the interest, in the convert. i could be up the balance sheet
and still play the upside story with effective cash flow yield i like that story. >> not even just that, rob, the impact of both of those scenarios, rising rates, rising dollar on the economy. how much can the economy truly take how much is the stock market willing to accept? >> right, right. it's a good question i think the data tells us that it can take some more, to be honest with you. it is an environment where investors need to digest the change it's not just the move in rates. it's what does it mean for growth >> think it settles all right in the market's stomach or can we just not take the fact rates have going to rise >> i think we have gone everywhere and nowhere this year thus far there may be more of that, but the pain trade now is actually higher if you look at the way investors have been acting i talk to investors every single day. they have been saying, talking only about the pinch points. they haven't been talking about the opportunity set. everybody knows that profits are
great. everybody knows that the economic trajectory is on solid footing. what i think is happening right now is people are saying what are the threats to that, and that's all they can focus on what they have done is hiding in some of the sectors that have worked ifyou talk to institutional investors, they're hiding in tech because that's the only thing that's worked. i think what you'll see is a rotation ultimately to some of these other sectors that work, after we digest all of these negatives that are out there the wall of worry has been rebuilt one pillar at a time you have higher rates, you have high oil price, trade threats, a white house tweets continually, i think all that macro news starts to fade to the background and the fundamentals of this market are still broadly intact, and if we were to wake up tomorrow and see rates at 3.50%, i would be worried because we wouldn't have a chance to digest that >> they moved, they had a nice jump touching base, let's call it 3.10%. we're close enough
the question is, pete, you haven't thought that rates rising would be that big of an issue. >> still don't >> why >> still about velocity. the velocity of the move other than that, i'm not that disagreed. hiding in tech, absolutely not you look at the fundamentals look at the balance sheets in tech look at the balance sheets and the growth you see in the chips. go to some of those names, whether it's an apple, whether it's micron, whether it's intel, you look across, and yes, but it's not for hiding reasons. it's because these guys are growing and they produce every quarter and the cash flows and the balance sheets for the most part are absolutely pristine >> why haven't investors stepped out anywhere else? i agree with you tech is fundamentally sound. >> they have rotated, but the rotations have been light. when they have gone to health care, they go for a period of time and come back but they have not really left tech they have not left chips >> that was my point >> doc, how do you see it? >> well, i don't think it's the
same as the temper tantrum of 2013 i don't think you're seeing the same group of investors that fled the market in droves at that time, steve liesman, when we saw that, when we saw people worried that all of a sudden they were misreading what the fed was saying, i think we're pretty accurately reading what the fed is saying right now, scott. which is - >> i don't know. >> three or four hikes this year we had one >> i got the feeling from you yesterday that this wishful thinking deal that the fed is going to look at this rise in rates and maybe not go down this math that they have set of the three to four hikes. >> i agree that's a possibility. that's a possibility i'm weighing in here, as far as something that could happen. and again, to play off what joe said yesterday, it's transitory as far as the energy prices being at the low end, that is, not up here at $70, because maybe that's not transitory. maybe that's the new normal, is $70 for crude oil and so forth if that's the case, that could
be that moderation that the fed doesn't have to fight against then steve >> i would say one of the biggest risks, if the fed is intent, because the hawks have taken over the party okay we know that, right? the doves are basically gone at this point if rates continue to rise, the possibility of a fed error is real >> it is can i just say that i listen to kevin o'leary talk and i saw yoda >> that's happens a lot. >> a man speaking simple truths. simple truths, long forgotten. the discussion - >> is that a backhanded compliment >> i am growing back my hair for you. >> mr. wonderful, yoda >> work with me. when he was talking about this discussion, this debate, this decision that has to be made
between stocks and the dividend yield on a bond or the income of a bond is one that people used to make all the time in a galaxy far, far away. it was a basic - >> haven't made it in ten years. >> it was a basic part of the investment thesis. what i'm hearing when i hear kevin yoda o'leary speak there is welcome back. good-bye to the new normal this is the normal what i see in higher interest rates, what i see in the dollar is a step that is symptomatic toward the regular normal. if you told me growth was going to be 3%, and i told you we were going to have a three handle on the ten-year ten years ago, big deal right? if i told you there was a massive differential between european interest rates and american interest rates, and you told me the dollar strengthened, i would say tell me something new. in all of these regards, at current levels, with the current underlying level of the economy, i do not see a huge deal in terms of being predictive or
ultimately causing economic outcomes but more symptomatic and emblematic of the underlying economy. >> i don't know if we're at a poins where we're making a choice between bonds or stocks paying a dividend yield. companies leading the market higher like amazon don't pay a divide dividend secondly, you're not factoring what is better for the customer, buybacks, which is long term capital gains versus ordinary income i don't necessarily agree if we're at that point right now. >> i think the point is that the more you get a competitive - >> if you can do it doorx it it's cheap it's cheap >> let's lay on some financials. let's put on some financial weighting into the portfolio for the first time in probably five years the traders said to me, citi just put out a credit bbb, it's 104 basis points above the two-year what do you think? that was alternative offer to the equity of buying citi stock.
now, that's interesting. that tells me somewhere out in in the ethos, traders are starting to think maybe this client wants to put on a little balance sheet risk as opposed to equity risk. >> a great observation, but the problem i have with that is we're in an environment where high yield continues to outperform investment grade so far to date. i'm not necessarily sure again, i don't know we're at that point i understand what you're saying but let's say -- >> you can buy the same -- >> we're missing the point he's right okay, it's not a relative valuation trade yet. okay what is the life -- hold on. >> he just told you it is. he's an investor making a relative valuation >> the story of 2018 is buybacks >> can i make this point what is the life blood of the economy? he'll tell you, he runs a lot of business it's credit. credit is still flowing. you can talk all you want about relative valuation credit is still readily available and companies are still able to get access to it that's the life blood of the u.s. economy >> have the theory of the
rational investor gets up today to redeploy cash and has to make a decision, where on the balance sheet does that go economy is good, i get to choose the equity, the lowest on the pecking order. back in the old days at harvard business school, the last thing that is safe is the dividend now they don't even talk about it >> you think they're parking in the ten-year no, they're not. they're packing in crash >> wait a minute, the question is about they. who are they there are multiple different investors with multiple different risk profiles. at the margin now, what scott was saying earlier was absolutely right we can't buy anything else era that is over when you can go and find 3% or 4% dividend for a person or an investor profile who is not looking for a lot of risk, there's a place for that person to go now. that person did not -- that place did not exist previously >> i'm not talking government bonds. the credits of the same companies you were willing to
buy the equities in. move up the balance sheet where it's certainly safe. >> are you that scared sounds like you're scared. >> it's a rational risk decision >> to go everywhere every day. for the first time, i'm looking up the balance sheet >> let's simplify it even more it's the question we ask off the top. if rates continue to rise for whatever reason they're getting there, for good, bad, or indifferent reasons. does the stock market ultimately have a problem we ask in a tease leading up to the show, is the doomsday scenario for stocks if rates and the dollar keep rising together? >> the pace of growth has to equate to the pace of rates. since 2016, nominal gdp is up 225 basis points we raised rates 125 basis points so that gap can close even further. so yes, you could see a continuation of a rise in equities as long as the growth is there and to pete's point, what you might see is you might see a little more, not a removal of long allocation to
technology, but maybe a reduction of leverage and more into health care, more into energy, what you're seeing, and more into financials >> i think it's a step back in overexuberance because i think the slam dunk play is gone i think about it this way. there were -- there's a green slope and there's a blue slope and a black slope. three ways down the mountain the green slope previously was closed they were all closed, you have to go down the blue slope or the black slope. now the green slope is open. i think that creates a challenge. >> a black diamond >> institutional investors >> all the guys at the table are one ski down the moguls. that's where these guys are. >> jon wanted to make a point. go ahead >> first point, if we had kept up like we were in january, guys, we all know the fed would already be making its second move on interest rates if we kept up in the stock market, that is, scott if that was just a straight up acceleration like we were seeing those first let's call it 20 days of january, that stopped. now we're, after plummeting to the lower, we bounced back up
and we're basically gyrating around i think that is one of those other moderators, steve, that is helping the fed. the fed doesn't have to get out in front as fast because that rise - >> that's also right, the possibility of a mistake is there. it has to be factored in but i disagree with you, scott, that the hawks are in charge i don't think that's true. i think that powell is a very moderate person when it comes to rates. >> all right thanks for being here for this conversation >> you think so? >> yeah, good having you >> let's go to the president making comments on north korea >> thank you very much. >> we'll have to see we'll have to see. we haven't seen anything we haven't heard anything. we will see what happens
>> we'll see what happens. we'll see. >> thank you very much, everybody. >> all right, so just to recap that, and forgive us, it may have been difficult for you as it was for us to understand what the president was saying or at least hear it by virtue of some of the yelling in the room perhaps our reporters trying to ask the questions of the president. president trump saying we'll have to see if the north korea summit is still on that's in reference to a threat last evening by the north koreans to perhaps pull out of
that summit or at least to cancel it. so we'll continue to follow that story. eamon javers is at the white house. perhaps you have a little bit better ear on what we were hearing out of the oval there as the president was meeting with the president of uzbekistan, we caught a little bit of him talking about north korea. >> it can be tough to hear sometimes because the press aides are yelling at the press to leave the room at the same time the press are yelling questions at the president, and the president sometimes tries to answer the questions while the aides and press are both yelling. that's the dynamic you have in the oval office these days so what we think we heard there is the president saying we'll see what happens in terms of north korea. then also asked if kim is bluffing, according to reporters who were in the room there he replied, we'll see what happens to that. so the president not willing to show his cards here, and the problem when you talk to white house officials in terms of what's going on in north korea is that the u.s. simply doesn't have all that much information about how the north korean regime is making its decisions right? so typically, when you're
dealing in foreign policy, you have a lot of data points about who the players are, how the decisions are being made, what's important to them, what they're prioritizing, whether or not they're bluffing, whether it's for domestic political consumption or whether it's a real gesture all of that is stuff the united states doesn't really have from north korea. that makes dealing with this much more tricky so it's really unclear right now whether that june summit between president trump and the north korean leader is going to happen or not the president would like for it to happen. he would like a breakthrough, but he's said repeatedly that he's willing to walk away from the table, even in the middle of the meeting, if it doesn't look like it's going well right now, it's not clear whether he's going to be able to get in the room in the first place. we'll see what happens, as the president says >> if nothing else, it says what has been a mostly smooth, i think you could say, walk up over the last couple weeks to that june date may in fact be a bit more bumpy in the absolute
lead-up. >> yeah, that's right. this is, you know, sort of art of deal style negotiation, to coin a phrase. you threaten to walk away from the table. you say you're going to come back to the table but only under certain conditions the white house will have been expecting some of this behavior from the north koreans they will expect that the north koreans will try to extract some demands from their side. from all this, and it's never been clear whether the north koreans were actually moving toward full denuclearization of the korean peninsula, which is what the white house has said their ultimate goal is so the white house has never really known whether the north koreans were in fact serious about denuclearization of the korean peninsula or whether they were simply engaging in talks about it to see whether they could get some other carrots delivered their way. you heard the president say we'll see, and it's a very fluid situation. >> eamon javers, always our eyes and today more importantly than ever, our ears at the white house for us >> macy's is hitting its highest
level in more than a year today. dom chu at the news desk with that >> shares of macy's are far and away the best performers in the s&p 500 today. that's after the retailer posted better than expected profits and sales. they also said sales growth had established location store locations, that came in above analyst consensus estimates as well those results were helped along by better results in all three of its main operating divisions. we're talking macy's, bloomingdale's, and the blue mercury spa side of things better international tourism also helped the cause as well and that helps macy's boost its full year profit forecast. those shares, again, over a 52-week high at this point, but still less than half of what they were at their peak back in july of 2015 when it was a $73 stock. you can see right now, just shy of $33 today back over to you >> a big day there liz dunn is a retail analyst and the founder of proforma. she's here with us on set today at our hq. good to see you. is this an individual story or
is this something more broad that we should be focusing on and celebrating? >> i think it's both so macy's numbers look great, but if you back up and look at all of the department stores, we're expecting positive comps out of all of the department stores, which is quite a turn of events over the last several years. i think macy's specifically has done a lot to clean up its store base, add better product, and they're working on experience. they're working on veenls, and i think it's showing in the numbers today. >> you think it's a true turn or have we lowered our expectations so much that we're willing to accept anything that looks somewhat rosy? >> i think this is good number positive comps, better gross margins than expected, better sgna than expected and a raising dpiedance. a good esult, but i think expectations are low people have kind of left this company for dead i was at a conference last week where somebody said macy's is not going to turn it around. they're going to be on the wrong side of history, and i think a lot of people think that these results would suggest
otherwise. >> there was an analyst last week with a sell on them >> kimberly, a great analyst, very thorough report the reality is it's difficult to look at macy's and, i mean, even walking into the stores, it's difficult to get excited about the store, but if you think about the tenants of retail, value, convenience, assortment, and experience macy's is working on all of those with their various efforts, the acquisitions they're making, adding backstage and their omni channel efforts they're doing a lot and it's starting to show >> who else do you think is doing it right >> kohl's is doing a lot right into the quarter, it's tricky because they're more of a weather play than others if reports can be believed about the results that they're seeing out of the amazonreturns, it looks like an eight-plus point bump in traffic. it's really about driving traffic to stores, and these department stores are looking to do anything they can incrementally to drive traffic in the right kind of qualified traffic, the right sort of traffic. >> you think the next, say, seven trading days change, fully
change the narrative around retail stocks? >> no, absolutely not. but i think if you look at the broader consumer, the consumer is doing fine. unemployment is low, wages are on the rise. they're feeling okay about the economy, and they're trading experiences for things, maybe, but the consumer is in good shape. they want to buy things. do they want to buy things from these retailers? >> when you say the consumer is in good shape, are you having any concerns about rising oil prices, rising interest rates, and the impact that could have on spending? >> yeah, i listened to your segment earlier, and obviously, rising rates are not a positive backdrop typically for retail stocks i think that in general, it's following some real economic activity that is a very strong positive for the consumer. the number one thing driving consumer spending is employment and wages, and i think those are moving in the right direction. >> let me ask you about macy's as an investor, am i supposed to get excited about a 1.7% store comp if i was excited about that, why
would i buy macy's why wouldn't i go back to depot who gave me a 4% comp and still got slaughtered? isn't comp the mother's milk of all retail >> yeah, i mean -- >> 1.7% just tells me they're not going to zero tomorrow they'll go to zero ater. that's a lousy growth metric >> i think that if we look at the rest of the year for macy's, they raised guidance modestly, but they're still looking for -- it's a decent setup. they're not calling for this type of growth for the balance of the year, but their initiatives, you know, backstage is adding a real lift to stores. they've got the story acquisition, which should help them get a little more of that experienceal thing right, they're adding product with blew mercury and other licensed departments. they're kind of working on all of the levers. i know it's not exciting i personally don't enjoy shopping at macy's, but if they can drive one incremental trip from someone like me, someone like you, or i think it's a
positive i agree that home depot is a much better stock. and you know, the 4.4 yesterday was disappointing. but i think for macy's, for people who have called this all but dead, this is a really positive result. >> you used the word experiential a moment ago, and that's been so critical for retail people, spending on experienc experiences. is that still the way we're going? we're not in the midst of getting back to tried and true retailing, apparel, things like that >> experiential is kind of expanding. people are cataloging everything they do, via social media. and so if macy's can kind of create some of the magic that something like story had, where people begin to instagram it, begin to capture it as part of their daily experience that they want to communicate to the rest of the world, that's magic right there. >> liz, what about urban outfitters stock $17 august last year it's up $23, $24 from there.
trading up 3.5% today. seemingly doing just about everything right >> yeah. >> this is one that obviously draws from the younger crowd but still has just zoomed to the upside is this one you would ever consider or not even on the consideration? >> the specialty retailers are a little bit more dicy in my mind. it's really very heavily focused on whether or not they can execute on fashion i'm not sure i'm fully bought in to some of their bigger picture strategies, these larger stores and, i mean, they're beautiful i love to shop them, but i'm not sure that it's going to result in kind of outpaced returns on equity so that's my concern there but you're right they have done a lot right and if you look at their penetration of e-commerce, it is -- it's better than most of the other specialty retailers but that comes with a tradeoff of operating margin. >> what should we expect next week from target restock and shipped and all of
the things they have been doing to tweak things, and absolutely, the money they're spending to do to the stores, 300-plus stores this year, what should we expect this quarter >> that's a bit of the problem with target, is they're just in this heavy, heavy investment cycle. and is it paying off yet i think we're still at the point where we're going to see a little bit of margin contraction ahead of us, and that makes it difficult to step in but i think for particularly with where the stock is, i think for a lot of these companies, though, we have seen these investments pay off a lot quicker than the companies anticipate and so, like, you know, for walmart, it began to turn. for macy's, it's beginning to turn so i think the point where you start to see the investments pay off for them is maybe the point to step in, but there's a lot of heavy lifting ahead of them. >> let's finish on walmart i'm glad you mentioned it. you have a scenario in which investors were selling other retail stocks and buying walmart. now they seem to be selling walmart and taking some of that money and putting it into more
value oriented retail plays. does the walmart trade come back what's up with that? >> i think walmart is unfortunately really about one metric this quarter, which is can they drive the online business back up over 30% growth i think the street is looking for 30% growth, 40% for the year they disappointed last quarter >> the stock is down 13% year to date >> yeah, so i think there's going to be an intense focus on the metric, and i'm not sure they have completely figured it out. i don't have a particularly strong read on the quarter, specifically, but i think it's difficult to invest when it's really just all about that one metric, which the company is kind of trying to balance growth and profitability. >> good to see you thanks for being here. liz dunn, the founder of proforma here's what else is coming up. >> next today, the big call on chipotle mexican grill no bull about it this call is now the most aggressive on the street see how high the analyst things the stock can go >> before the break, our data partners at kensho on what happens after the u.s.
government puts new sanctions on iran, as it did yesterday. a week later, oil is up more than 1.5%. for more, go to cnbc.com/kensho. "the halftime report" with scott wapner and the traders is back t mutes let's begin. yes or no? do you want the same tools and seamless experience across web and tablet? do you want $4.95 commissions for stocks, $0.50 options contracts? $1.50 futures contracts? what about a dedicated service team of trading specialists? did you say yes? good, then it's time for power e*trade. the platform, price and service that gives you the edge you need. looks like we have a couple seconds left. let's do some card twirling twirling cards e*trade. the original place to invest online.
welcome back to halftime i'm leslie picker. we heard back from gamestop in response to the letter at management sent the company yesterday. the hedgefund is urging the company to explore strategic options. a representative from gamestop just wrote back to say, quote, i can confirm that gamestop did receive the letter from tiger management, llc, gamestop has a long track record of welcoming communication from all of its shareholders and values constructive input that may help increase shareholder value now, gamestop surged as much as 15% on this news premarket, but so far, it's trading about flat today. scott. >> thank you leslie picker. >> all right, chipotle has run up more than 50% thus far this year but argus research doesn't see the rally end soon itpgraded the stock to a buy
price target $540. we have made it our call of the day. what do you think of this? >> stock is $200 off its low is there more room to go >> there's probably more room, but when you look at the p.e. aflt 38, even if you look on the forward, that seems lie. when we talk about a lot of the names, their competitors, but i think a lot of that is people who are excited about the new ceo. got in there in march, came from taco bell. changes the menu, changing the efficiencies of how the store is run. probably going to change all other aspects of this company in terms of if you order online, you can actually just show up, pick it up, a different window all together the efficiencies to get people in and out, that's where they have been so inefficient how many times do we stand around hire and the line is out 4 door and you don't have time they were losing that client that's a big problem i think he's fixing things very, very rapidly, but at a 38 multiple, it makes it tougher. i'm naumeot in this name. >> what he has done in terms of
developing that relationship is go to door dash and offer it in 1500 stores. you're seeing now weekly orders are up 667%. now, listen, the door dash business is probably low margin for chipotle, but i think what it does is it reintroduces the customer back into the store once again, who maybe felton comfortable over the last couple years. in terms of the stock price, one heck of a move i have missed the move, and i agree with pete. i don't know if you want to chase it, but i'm not going to bet against further gains. >> i'm struggling with the metrics, the cash flow metrics of calling this stock up 100%. the narrative was, if you went there, you died when you ate that's changed with the new ceo? >> it wasn't quite like that >> not quite >> remember what was going on there, the problem was consistent now we have a new ceo, executional skills obviousio what in this world would double the cash flow of this company so that even if the p.e. stayed the same, you would see this kind of appreciation of stock?
there is nothing this is a very competitive space. there's lots of other guys selling product to compete with this i don't get this call. if he's thinking the p.e. doubles, that's crazy. if he thinks the cash flow doubles, that's crazy. make the call is crazy >> i think the repeat customer is what he's talking about the fact that's growing so fast. nobody likes going to these places and waiting in the long lines. pete talked about it years ago when these guys were on that upward trajectory, that people were getting phone calls from their family members and so forth to, hey, order this, order that, because, you know, they would send one person in there now they have door dash doing this it might increase the number of turns you do per month because you don't have to wait in the lines, judge, so that's one of the things, kevin, i'm not against kevin. i'm not into the doubling part but i am into the repeat customers, because of the lack of a wait. instead, you're just at home it's 34 minutes between door dash order and when it's delivered. >> okay paying a 70 p.e. on this
stock? >> no. i rest my case, your honor >> it's not 70 >> if everything stays the same and it grows with the market, okay, why is the stock going to double give me that again >> i mean, if the narrative around this company has changed, and comps can continue to increase, you know, they open fewer stores than maybe they were going to in the past, you don't think that their business can come back in any sort of significant way to where it was or even close? >> i only look at it this way. i respect the call i'm just saying one of two things has to happen the p.e. doubles or the free cash doubles pick one >> is there another stock you would like in the space better >> i mean, domino's clearly has been the winner. that's rather obvious. again, i would stay with domino's if i was in that position mcdonald's i think where it is valued right now and the introduction of technology on their part, that's a name also you could own. >> coming up, jon and pete are
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welcome back, everybody. i'm sue herera here's your cnbc news update at this hour. michigan state university says it has reached a $500 million settlement with 332 women and girls assaulted by sports doctor larry nassar nassar pleaded guilty to assa t assaulting the victims under the guise of treatment he's currently serving decades in prison. >> guatemala's president opening its new embassy in jerusalem, becoming the second country to doso after the united states israeli prime minister netanyahu noting guatemala also followed the u.s. to become the second
country to recognize israel 70 years ago. >> it's not a coincidence that guatemala is opening its embassy in jerusalem right among the first. >> a hamas official acknowledging that 50 of the 62 palestinians reported killed during the gaza riots on monday and tuesday were members of the terrorist group. the official saying in a tv interview, quote, if 62 people were martyred, 50 of them were hamas, end quote >> you are up to date. that's the news update this hour back to you. >> all right, sue, thank you very much. >> let's jump over to kayla tausche with a news alert from washington, d.c. kayla. >> asked by reporters about zte, the chinese telecom giant the president has taken to tweeting about ahead of talks with china and a big delegation in washington this week led by
secretary mnuchin. here's what he said when asked about it earlier today >> enforcement issue and make sure congress is comfortable with whatever they decide. >> so thereseems to be a very clear line from the cabinet that the zte issue, which commerce just about a month ago banned u.s. companies from supplying with components, that that is an enforcement issue, not a trade issue, despite what the president has sought to link we have now heard that treasury secretary, the secretary of commerce, and the nec director larry kudlow all repeat that line we'll see what happens this week >> going to be interesting there. kayla, thank you very much >> well, the brothers najarian are at the telestrator now with unusual activity in energy and mining doc, you're up first >> cleveland cliffs, clf, a lot of times when we're looking at mining stocks, it will be freeport, but this time, cleveland cliffs gets a lot. iron ore and so forth.
a nice bottom around there, about the $6.50 level. it made that positive move to nearly $9 today. today we come scrambling in with a lot of call buying for instance, almost 14,000 like rapid fire like this so they came in buying the june 7s i think this is a surrogate for the stock, because as you see, it's nearly $9 instead of buying the $9 stock that's up from $6.50, instead they're buying the calls in by about $1.88. i bought these calls i will likely write the 9s or higher strikes against them if the rally continues. >> good stuff. you have an update as well >> teva. we last week, pete and i were both remote on monday, i think, and i called in with a teva call turns out that warren buffett doubled up his stake on teva as did highland capital. i don't know if they doubled it, but they certainly added to it that hasn't hurt at all. the calls that were basically
last week right around this level, 70 cents or so, traded up to $1.80 today very nice one. rung the register, got out of this one >> i'm going back to energy and exxon. not too many weeks ago, we talked about this. it hit seven different occasions in april, and again, we're seeing buyers come back in going out to august and buying the august 90 calls. they bought 10,000 of these calls. they're paying about 50 cents right now. expecting this move to continue up and watch this contraction between where energy prices have been and where some of the equities have been i like this a lot. i own the stock. i actually bought these calls on top of the stock that i own. i gotone more. it's sort of an update, but this is more of a new trade it's in the ewz, brazil. we had this a few weeks ago. we talked about some of the paper we were seeing there those performed pretty nicely for us trimmed out of mest of that, still own some, but then today, the june calls, very aggressive. the june 42 calls. 23,000 of these were bought. now, they sold upside call as
well they sold the upside call, capturing money there. selling the downside put, capturing money there, but trade itself that we're going to focus on is it's the june 42 calls and how aggressively the 23,000 of those that were bought today i like what i'm seeing out there, so i added these. i'm not only in the july calls now i added the june calls as well >> you better watch where rates go >> this has a lot to do with that let's also remember, when you're talking brazil, a lot of what we're looking at in the ewz, a lot of energy, a lot of oil. >> let's talk about the russell. russell record-breaker, that is. russell 2000 hitting a new all-time intraday high you have been on this trade. it's the first high for the russell since january 24th >> yeah. >> you told us to focus on this area >> my thesis is two-fold number one is there's no risk of trade wars around the revenues of these companies, 100% domestic i like that. but the one that i think is underestimated by themarket
completely is the free cash flow increase as a result of tax reform many of the companies i talk to in this space have not even got the tax code from the irs yet. they don't know how to enhance their tax flows yet based on the code we're going to see big surprises in the next 24 months on these companies. one thing to be careful with with the russell 2000. a lot of reits in there. reits don't perform well in rising interest rate environments i developed an index that xs out the reits. >> i like that, that's how i play it. >> first, sara eisen with a look at what's coming up on "power lunch. >> hey, scott. coming up on the show, how big of a threat is the rising dollar to the global growth story what companies here could get hit the most >> plus, new york city comcomptroller scott stringer weighing in on the battle to legalize pot and whether they're jumping in on the sports betting
game pld tepper buys a team and sells ape. that and much more ahead "halftime report" back after this arkets, the rhythm of the world. arkets, but to us, it's the pace of tomorrow. with ingenuity, technologies, and markets expertise we create the possible. and when you do that, you don't chase the pace of tomorrow. you set it. nasdaq. rewrite tomorrow. with dell small businessout your technology advisors you get the one-on-one partnership you need to grow your business. the dell vostro 15 laptop. contact a dell advisor today.
this is where i trade and 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.
all right, welcome back to "the halftime report." you saw we're in the green across the board the big story, though, is the with the russell 2000 today, hitting a new time intra day high for the first time since january 24th kevin o'leary, you were speaking about it, but let's open it up to the rest of the table >> first, kevin, you did a fantastic job talking about the opportunity in the russell in the last six months. >> what do you got >> i also believe that the lifting of regulation has been such a tremendous benefit for these small cap companies, and i think more visibility than on the large cap side, i think it was unexpected, very difficult to see i think that continues i think, to kevin's point, it's an obstacle that's not in place over the next six months, that lifting of regulation is going to be a tailwind for multiple years. >> massive outperformance quarter to date.
when you look at what typically happened late cycle, this is emdemic of why i don't think it's the end of the cycle. large caps typically outperform. now we're seeing small caps outperform for some of the reasons kevin said, for some of the reasons joe said i think the tailwinds get stronger and that's why identical rr continyou'll continue to see this space do well >> you say the small caps could lead on the way up they could lead on the way down, whether now you see the small caps lead the broader markets to new highs as well. >> the challenge with small caps, there's no analysts covering the names anymore you get the traction covering the big fang, the big movers, that's where you make your career you pick some company, you know, transition from small to mid-cap, nobody cares. but quietly, these companies are o outperformer you get all 11 sectors you can get full, you know, disclosure to every sector in the russell 2000 but nobody does it
>> the active versus passive debate comes into this, and that's the point as you see a migration to fundamentals and beyond what we talk about every day, i think you're going to start to see momentum pick up in the small cap space. space fundamentals mattering in the small cap. >> how many can manage 2,000 income statements per quarter? they can't >> i agree with you. >> i have asked this question to you and others, do you think we are going to hit these new highs? one of the confirmations of thinking that we might could be this run in the small caps which sort of sets everything else up. >> you bet. >> the dow and the s&p haven't hit an all-time intraday high seines january 26th. right around the period that the russel had its last intraday high. >> since then it bounced 8%. it's bounced, up on the year to date so far.
turtle beach, i talked about it on my blog it was a 1.80 at the beginning of the year, now it's 18 bucks >> i have to believe it is a small market cap >> 250 million that's why we don't talk about it on the show much. >> generally at all. until now. >> those kind of names that pop up based on great quarters or great cash flow or great outcomes from tax reform are going to be the story for 2019 that's why i like the russell 2000 i let's talk about gold its hitting a new low for 2018 we are trading it next on the halftime report.
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welcome back to the halftime report i'm jackie deangelis this is futures now. we are watching gold today, hitting a new 2018 below, trying to snap a three-day losing streak this as the dollar index is surging. scott nations you said investors hate gold the most tell us why you said this? >> right now they hate it for a couple of reasons. essentially a double whammy that has to do with high interest ratsd. the opportunity cost from investing in gold is higher now. but also, the stronger dollar
means that -- or the higher interest rates means that the dollar is stronger and that's another reason that gold is having a really tough time as long as interest rates remain strong and head higher, gold is going to have a tough time. >> you are breaking down key levels we are trading under $11,300 here what do you want to do >> what the look for 12 of the 1 is where it's trading. once it broke the moving average yesterday 1305 the liquidation started. hedge funds liquidated half their long positions a and doubd their short pensiositions they think it's going lower. i think it gets to 1276. >> back with a live show at 1 p.m. eastern team exclusively on futures now.cnbc.com
halftime report is back in two this is my headquarters. this is where i trade and 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. one second. barely enough time for this man to take a bite of turkey. but for cyber criminals it's plenty of time to launch thousands of attacks. luckily security analysts and watson are on his side. spotting threats faster and protecting his data with the most securely encrypted main frame in the world. it's a smart way to eat lunch in peace. sweet, oblivious peace.
>> i can >> can you fine looking suit, though. >> somehow, i knew that was coming >> fine looking suit you even knew it was elvis. >> do you want to borrow it. >> no. you are too maul. >> oh! >> you look spectacular, darling. >> trade update, twirlio 5415 it hasn't pulled back at all since earnings staying in the name. believe it's going to 70. >> reporter: for thoisz of you who bought itb last time on my recommendation, don't worry. i'd get in it again. sentiment continues to be great. new home sales, and i plays into the millennial household formation theme. >> russel 200 0 ex reits best is yet to come. cash flow for the next two years. >> sun core energy big energy player. upside call buying i bought it today, during the
show >> who do you think can throw up more, me or joe? >> i tell you what, i have seen what you have done in the. >> i think he may have you, joe be careful -- >> i have seen the way he drives a golf ball. >> nrg it might explode to new highs. >> thank for watching. power starts now >> i'm michelle caruso-cabrera here's what's on the menu. macy's rallying. the stock is up 30% this year a. slew of other names rebounding in a big way from their lows we will go inside the numbers. high hopes that's a bad pun a new report says new york would hit the jackpot if the state legalizes pot. hundreds of millions of dollars could be at stick. the city comptroller is going to join us to make his case help wanted. more people are flying more planes are in the air do you know what there is not more of?