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tv   Fast Money Halftime Report  CNBC  May 29, 2018 12:00pm-1:00pm EDT

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hold to in any environment for now. >> we'll watch that. people say wait until they add another buck in prices they could clamp down on password sharing and no one would blink. that's the bull case on netflix for sure down 385 we'll watch the afternoon sessions salesforce earnings tonight. let's get to the judge and the half >> welcome to "the halftime report." i'm scott wapner our top trade this hour, the sudden selloff in the bank stocks what one firm just said about the business and why it could have big implications for your portfolio. with us, joe terranova, stephanie link, josh brown, and jon najarian also with us on set, suneeda, bank of america's head of u.s. equity strategy. stocks are lower on political concerns in italy and now the new worry for investors here at home the banks, the xlf dropping below its 200-day moving
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average. a good part could be because of what morgan stanley just said at a conference that stock having its worst day in a couple months wilfred frost with us at the desk with those details. good to see you. all right, already jittery market, we know. yields over in europe a big story. the co-head of wealth management makes some comments that unnerve bank investors yet again >> i think we'll come to the moments at the end because u.s. banks opened low and they continued to sell off through the day. this, of course, started with the story in europe. if we look at the half screen with some banks around europe, you can see the italian banks are down, german banks down sharply, french banks down sharply. now u.s. banks also down sharply. why is that, even if they have not got bigesh poe exposure to y they have seen yields spike in the bond market, but the yield
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curve has flattened. that's affected banks more broadly from the start of today's trade. if we move on to morgan stanley, the head of wealth management, two main things he's saying. one, pricing in the deposit pressure within wealth management it's been a big driver for them, so maybe it's not as pretty as the past quarters and low transaction revenue during the quarter, particularly march continuing the quarter where the strength came january and february last quarter. that's affecting trading, but this is a yield story that started this morning >> accentuates the point, investors like the folks around this desk continue to look for bright signs in the banks. and reasons to buy bank stocks all of you don't want a headline of a transactional revenue questions of a bank like morgan stanley, where here we're watching all the banks sell off at the lows of the day as we're having this conversation >> this was the co-head talking about transactional revenues
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within wealth management i have seen a couple flashes extrapolating that to banking management on a days where banks aring off, perhaps an overreaction to the morgan stanley headlines anyway. but the vast majority of the move today is not that morgan stanley conference performance it's what's happened to bond markets globally safe havens have seen yields - >> you have to have been living on mars to think that there is a future for transaction-based revenue within wall street wealth management. literally what planet do you have to have been watching the state of the industry to think the whole thing is not fee-based in the next two ear three years. to me, that's not shocking at all. i agree that's not what's driving large cap u.s. banks today. >> talk about european banks as well >> a good point. i wanted to point out, european bank stocks are having their worst day in a year and a half >> they hold a lot of italian dent that's the third biggest bond market in the world. if the prices of the italian
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bonds are falling and they hold them, that's going to hurt some of their returns more importantly, has this massively pushed back the chance of the ecb raising rates that's an issue in the third biggest country of the eurozone. banks haven't been able to make profits for years because yields are so low you're having questions about their ability to get back to a profitable start >> that's a good point because then you look at the federal reserve here which risks getting even more off sides to where the europeans are in terms, doc, of their rate momentum and the moves that could happen >> right you look at the june meeting that we're talking about >> coming up a couple weeks >> right in front of us. now we have a 385-point selloff. not that one day is going to affect the complete fed and their vote as to whether or not we move up rates, but nonetheless, the european banks, eufn is an etf that tracks those
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banks. and this thing is just decimated in the last few -- just in the last few days. >> right >> it's accelerating to the downside the yield on the italian ten, as we know, went from about .21 to 2.5% in three days i mean, that's that kind of acceleration that when we talk about speed, you know, that's speed, you know, that indy doesn't get up to. >> the italian, too. >> putting the speed aside, where should it trade? >> not at 2.5% >> if a ten-year treasury is 3%, is italy a better credit >> ten to two? >> the italian ten is 3.1 right now. >> that's the one that's off, not the 2. >> but actually, that move was more tame. that was only about 43 basis points from low to high in the recent range and so the question becomes -- >> the two >> no, the ten-year yield. >> i agree with you on the ten >> where should that be priced italian debt to gdp is 100%.
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did that fact sneak up on us, or are we aware there's chronic volatility there in 30 years, and a high debt to gdp in a not substantially growing economy. nobody should be surprised that yield is where it is >> italy has an 11% unemployment rate 1.4% gdp growth. private investment, public investment very weak across the board. contrast that to in the u.s. where we're probably going to print a 3%, 3.5% gdp number in this quarter maybe it's not sustainable, but we're growing more than where italy is growing at. we have double-digit earnings. revisions are up by 9% while multiples are down by 7%, and business was up. >> you're painting a scenario in why the u.s. is the best place to be. similar comments this morning on squawk >> italy is trading where it is trading, and the reason why their rates are where they are is they're in a bunch of bigger
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problems than where we are >> they never belonged as low as where they were. >> yes, we have seen contagion across european banks today. you haven't seen the same level as we saw in 2010, 2012, across individual sovereign european bond markets as we have already said, germany is moving in the opposite direction. spain, greece, portugal, they have seen the risk level rise a little bit, but nothing like the level of contagion we saw in 2010 to '12. in terms of whether this is a deraili ising issue for the u.s. economy, so far, it's not. it's worrying if you're holding italian debt, but it hasn't spread across. >> is it a derailing thing for the u.s. stock market? >> it's not. here's what i think the market is getting wrong any time there's a hiccup in credit or any sort of risks of contagion, financials sell off we think of financials as the most toxic sector of what happened in 2008 the truth is financials looks
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nothing like it did in 2008. it's probably overcapitalized. the highest quality sector in the s&p 500 by a lot of measures i think that's what the market is getting, this muscle memory trade where financials is the risk and that's what we all associate with the pain trade. >> the one way this could become systemic is if we have another election in italy, these two populist party improve their results and form a coalition and have a majority. now, we have seen the polls increase how they might do if we have another election. but last time around in march, they promised that they would not form a coalition, and they also dialed back their anti-euro rhetoric those are two big questions they have to answer if we go into another election to turn up their base again at the moment, markets are betting they'll improve their results. >> why are we so sure, though, that the result of them improving their situation, whether the elections are in the fall or next spring, why are we so sure that an italian exit is
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necessarily a clear negative for all risk assets? look at the result of how assets traded in england, whether you want to look at the pound or english stocks or english debt after brexit >> because the british economy in its own right is a lot stronger than the italian, spanish, portuguese. as soon as one leaves the euro, the sudden reaction you have seen across yields in europe would be astronomical, like it was unin 2010-2012 all of the people, banks globally, not just in yourm, own plenty of debt across europe that is currently at 2.5%. that could go to 15% overnight, if people felt the euro could break down so that would be a cataclysmic event, but that's not the base case it would be a huge step to get to iterally leaving the euro >> i was going to ask coming in today, whether this was the time to buy the banks because you have to figure with the c carr
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results coming up in the not too distant future, bank stocks traditionally would go up. and now we're wondering about the risk and fear in the sector when it could be a buying opportunity some would look at because of what's just around the corner let's get joe in >> it could be a buying opportunity. i think we're getting way ahead of ourselves you have to think of contagion, and since 2012, the ecb has put in far more safeguards to protect the system that's first second of all, as it relates to the comments josh was making, with where italy is pricing right now, it comes down to fiscal policy. that's the resolution for all of is which party is going to come in and enact the fiscal policy that's going to be a spending fiscal policy, which is problematic, or driven by tax cuts, which is less negative so as it relates to europe, we're getting far ahead of ourselves, coming back to the united states. stephanie is right the economic and corporate picture looks good but the problem for the market has been the problem since january. we're searching for momentum
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you're asking about is it time to - >> i thought we had it back. >> exactly we thought we had the momentum back again it was basically driven by technology and apple and the buybacks and then we handed it off to the small caps and thought they were going to work, and then it was financials, a little health care, and we have never been able to sustain momentum that's the story of '18, and it's going to remain that way. it's a difficult environment it's a sideways market that's in a time correction. >> a few weeks ago, we didn't even have italian yields on our plate. we had not discussed that for one second on this program we discussed trade and all that stuff, and yes, there's more stuff today with china and the white house and these 25% tariffs on $50 billion worth of goods. where do you come down now across the board on the u.s. market >> i love the u.s. market. i mean, our year-end target is 3,000 on the s&p i think the u.s. market looks great. i think that if you think about what's going on right now, the
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noise to signal ratio is super high i mean, u.s. banks are trading off on italian sovereign risk. i don't think that's necessarily a justifiable relationship i mean - >> u.s. ten-year has come down too. >> it has come down a smidge that's fine, but if you think about the u.s. equity market, we're at a p.e. ratio not in the stratosphere anymore we had earnings growth of 16% this year penciled in, which i don't think is out of the question we've got earnings revisions in the u.s., so the u.s. is actually this bright spot in this sea of pain right now because the revision ratio for the u.s. is above 1, whereas for every other region of the world, it's below 1 >> just two weeks ago, everyone was concerned about rates going over 3%, oil being over $80 a barrel, and those things have pulled back. they're coming back because there's more fear in the market, more volatility. >> isn't there a risk of a
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synchronized recovery we have been harping on for so long becomes unbalanced >> the data international is not negative, by the way >> to joe's point, it's way too early to think this all of a sudden is going to lead to this massive contagion. and by the way, china data points have been pretty good last i looked, that's a pretty darn big country in itself i think it comes back to the u.s. where what you have just said about earnings, about not freaking out about financials, our countries are so in much better health. but it's not just about financials industrials have done well energy had a really bad week last week, but i'm really impressed they're not totally collapsing today and oh, by the way, there are pockets in the market you have to trade around. staples got so beaten down, they look attractive, tech is still great. there are pockets here >> there's two things i would be doing. first, if you're a trader, you have your expectations very low and your profit horizon short. second, if you're a longer term investor, you're looking at the portfolio, your dent side first and foremost
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you're seeing your exposure to emerging market debt, which coming into 2018 is where a lot of people wanted to be you look at your exposure there. >> i don't know how many of our typical person who watches this program, whoever right now, is most concerned about emerging market debt. i would say a larger majority of your viewers hold emerging market debt in their portfolios than we might suspect. and i would also think that there is a corollary effect in terms of what you're holding and the impact it could have on corporates here in the u.s investment grades and high yields, and both of those are trading today in a relatively calm fashion >> just on the u.s. banks as well, very quickly if you put the move in the u.s. ten-year aside, if we move forward and don't have a serious issue come out of italy, whether that's in a couple weeks or month, i think people will step back and say do i want to hold european banks or u.s. banks because we have talked about the problems, the market share the european banks have lost
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deutsche bank's issues we're reminded of some of the issues europe banks faced. u.s. banks will shake this off and continue to grab market share as and when this settles >> that's a really important point. i want to take it a step further. i have a couple charts ready because if you then think about u.s. focused banks and there's two categories of those. you talk about small cap financials, there's an etf, pscf i wanted to show you guys. and what you're seeing is a new all-time high on friday. these banks have literally nothing to do with anything going on in europe or emerging market debt or any of those things we could pile on a list of things to worry about in the meantime, you're getting a better yield in this than you're getting in the xlf. paying about the same price to book, about 1.6 times book you're getting entirely u.s. focused. the other is kre we know the regional bank etf. we had people on the show six months ago calling it toxic
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waste. new record high last week. trades much better than many other midcap segments of the market and here's another example of u.s. focused financial companies that are doing very well, very low unemployment, demand for housing, demand for commercial projects these are the areas that if you want to be in financials and you don't want to listen to italian debt stories, very, very accommodating sectors to be. good valuations. good yields. >> maybe there are those who don't want to listen to italian debt stories, but wilfred, what's the reality, though, of italian debt stories becoming across european debt stories, and here we are worried about a giant sized brexit that affects the entire eurozone and then contagion is something to really worry about? >> one crucial factor that could come next, which the market today is saying what happened over the weekend when the president in italy rejected the new government's plans and particularly their financial minister, the market today is saying this means a snap
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election is more likely and the two populist parties that outdid all expectations in the march poll will do better still and could even come close to their own majority if you get to that situation, you have the third biggest economy in the eurozone with two populist anti-establishment parties forming a coalition. while they campaigned in march having dialed back their anti anti-euro rhetoric, the risk is there. and you have a risk of the economy differing starkly from what the french and germans want to do. >> it doesn't sound far-fetched to reach that scenario, does it? >> it doesn't sound far-fetched. the hurdle is you have a left leaning policy almost with policies like bernie sanders and a right leaning party with policies like donald trump suggesting they're going to form a coalition. in march, they both promised they wouldn't form a coalition so their bases turned out to support them will they do it again if voters know they're form a coalition.
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the immediate polls have suggested they will, largely because they see what the president did over the weekend as being such an establishment move, anti-populist, that they feel like they have been rejected and they might turn out. a lot could happen between now and a poll, which would be the fall at the earliest >> it sounds from the commentary on the desk that all of you, most if not all, agree with the scenario in which stephanie link laid out that there are so many good reasons to feel good about the u.s. market. and the earnings environment, and everything else that was going on that we're distracted for a moment by what may be a lot more noise than reality today. but keep your eye on the ball. >> one of the big reasons, real quick, one of the big reasons to me is when you think of europe and the troubles they have, and you think about really the absence of growth, and they have been so competitively challenged in lacking that growth over the last decade or so, and then think about why we like the u.s. it's because europe is deficient in technology.
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and u.s. has such the predominance of technology, and we could turn back here and you could look, i think at the top of the show, you said it names like micron, the technology names that are higher in this tape today i think that's probably part of the problem for europe is that it does not have that blessing of technology like we have here in the u.s >> you know, i think that -- i think you're absolutely right, but i don't think it's as easy as just buying the u.s. and shorting everything else you know who's doing really well this year? active managers. finally, for the first year in many, many years - >> hello volatility, right >> it's partly volatility and partly the fact the market has gotten a lot messier we don't know who's going to benefit from tax reform from just a broad sector perspective. you have to look at the stocks and figure out which ones will retain that benefit, which ones will compete it away same with trade. all of these risks that are presented, em debt who knows what companies have em debt exposure, but the experts
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on stocks will come into play here and provide value added calls. >> i think that active security selection is the way to make money this year. it's not just about buying and selling sectors. >> that's if you get it right. >> and they're getting the right. i think that's what's remarkable >> to that note, you said an important thing, hello volatility it's back. yes, we had comments out of morgan stanley, but that was out otwealth management. if you're goldman sachs or the trading part of these investment banks, you're less bothered by the yield curve. you're looking at val oums days like this increase trading volumes. >> they're facilitating. >> they're facilitating. we talk about particularly goldman sachs as not having been in the right place today is a great day for the fixed income trading business and i imagine unless they're doing something really wrong, they're having a good day. you look at the u.s. banks
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selling off. provided they don't have blow-up trades, it should be a decent quarter for them >> just to wrap it all into, again, the prism of the overall market outlook, if i told you that, okay, we've gotten to where we are now, in part, because of the synchronized view of where the global economy is going. but what if muhod alarian is right that it was just a coincidence of what was going on, but the u.s. is only one with legs. it's not as strong around the world as we would like to believe. >> i love muhammad, and he's 100% right, but the question is can you make money from that view that view is currently priced into all of the world's stock markets. no one is unaware of those facts. >> i would flip it can you lose money because of that view. we have a rozier view of what it looks like >> if the dollar spikes, that's your problem situation
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in my opinion. it's already causing some issues with certain sectors energy, materials, that kind of thing. if the multinational companies, i know a lot of them hedge, but they actually, this will be a headwind that kind of offsets the good i do still think there's enough good in terms of the fiscal policies and i have said this many times, i still don't think the fiscal policies are all put in place and all in the numbers just yet >> only eight quarters ago, if you remember, we were citing how many ceos on s&p 500 conference calls were referencing the dollar usually to guide lower >> yeah. >> to your point, let's keep in mind something that europe and the chinese are significant trading partners we haven't really spoken about the chinese and what's going on with trade and tariffs and any form of a slowdown from the chinese in an environment where europe already has a sovereign debt flare-up, that's a problem that i don't think the u.s. could withstand >> you're sticking with 3,000.
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i have to wrap this all up 3,000 for the end of the year. >> i think the u.s. is, i hate to call it decoupling, but i think the u.s. has grown more equipped to deal with a strong dollar, with trade friction, than we have seen in years every ceo thought this dollar was going to strengthen meaningfully into this year. i think companies have prepared for this they're ready. >> the only way we get to the bottom is if "halftime report" does a trip to tuscany and we can really work out what's happening. >> i agree >> i'm in. >> thanks for being here great to get your insights good to see you again as well. >> all right, here's what else is coming up on "the halftime report." straight ahead, the analyst who says ford is about to put the pedal to the metal and you want to get in now >> before the break, how the financials fare after a 3% drop in a week. according toour data partners at kensho, you see a pickup over the next two weeks for more, go to "the halftime report" with scott
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welcome back to "the halftime report. i'm dominic chu. we want to call your attention to shares of monsanto, which are trading higher in this down tape this comes as the u.s. justice department has green lit and given its okay to its deal for buyer to acquire it for $128 in cash per share they will, the combined companies, sell about $9 billion
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worth of business and assets to german chemical company basf as a result to get cleerms for the deal this does represent one of the biggest hurdles it has to overcome it's still looking for some anti-trust and clearance from regulators and other places like canada and mexico. that's the reason the shares are trading up towards the $128 per share bid. >> thanks so much. >> ford is up more than 7% in the past three months, and jeffries believes the run is just getting started it upgraded the stock to a buy raised the target to $14 we made it our call of day what do you think of it here on the desk up for grabs whoever wants it. they say so many levers, so little love. cramer was saying he loves the call what do we think >> i think that a lot of the negative concerns regarding this company are already built in we know about the impact domestically here in the u.s. with sardeclines that's well understood we know about the problems ford had as it related to brexit and the chinese jv there was a lot of bad news
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priced into ford over the last year or so it has a modest recovery i would say i would be blended between gm and ford. and i would not be very aggressive in all of this because, again, the consumer is the one that's going to drive ford's pricing power ultimately, and the consumer is going to be dealing with rising energy costs and rising consumer private sector borrowing costs as well >> steph, you gave me a look of like, i don't know about that. >> you own gm, right >> i own nothing i own te connectivity, which goes into the car. i think the parts companies have been much more interesting because you're not dependent on the sales. you're just dependent on your relationships and contracts with the oems gosh, this stock has been cheap forever. i mean - >> give me a scenario where cramer goes on the air earlier today. he says he really likes the call give me the behind the scenes if jim comes to you in your former life and says, steph, i love this call. let's do this. you tell him what?
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>> auto sales have peaked. if they have peaked here in the states and they're kind of all over the place internationally, ford is getting out of some of the businesses they still have stranded costs the stock is cheap, i don't know, the balance sheet's okay, but i think if interest rates go up, and also, yeah, energy prices go up, you have headwinds. i just feel like both gm and ford have been value traps forever. i mean, like i said, it's almost a 10% free cash flow yield 7.5 times multiple on earnings that's cheap i get it, but what is your catalyst to get it higher. >> you don't trust that all that news is built in already >> no. >> and fitch, and whether or not this is built in, fitch today says rising used car inventories are going to hurt all of the automakers and that just came out this morning. so if that's already priced in, okay but if it's not, that's an issue that these guys need to be worried about as well. >> ford has been selling at the same price within the same five
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or six-point range, take out the 2008 crisis, since the year 2000 >> exactly >> this stock, you could have bought it for $11 in each of the last 18 years. i don't know why all of a sudden people should get excited because someone puts a $14 target on it it's been to $14 several times in the last ten years and it fades. either this thing trades and eventually pays a 9% dividend or i don't really -- like i don't know what makes it out of this thing it's been in by the way, as far as the auto sales peaking thing, they might have peaked like for life. if any of the predictions about sharing and fleets of autonomous cars, any of that, if any 10% of that comes to pass over the next five to ten years, you may never see another auto upcycle ever again for u.s. oems. >> let's bring you up to date on where we currently stand on wall street 12:30 on the east coast. you have dow jones industrial average down by 430 points
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those political concerns out of italy are certainly weighing on the minds of investors today you can see it through the yield complex, and obviously through european stocks. the banks there and banks here which have gotten more under pressure in the last 30 minutes since we got on the air. >> i was going to say, scott, that when we lead into a holiday and we have the kind of disruption that we had in turkey, which we spoke of last week and so forth, and i'm not linking turkey directly to this. i'm saying if you're smkd on one of those trading desks on wednesday and thursday and friday, when you know you're going into low volume and difficult liquidity issues, and those issues yet with the ems are hitting, how do you not see just a buildup and then a smack on a monday? i wasn't positioned for it but none the less, when the italian yields made that move as dramatic as they did, there were a lot of folks on thursday and
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friday who wanted to pull the trigger but they didn't want their job on the line for pulling the trigger while everybody is on the beach. >> in terms of the environment, not investing, there was a lot of talk on trading desks this morning that you wanted to buy the market ahead of the european close, because at the european close, that's where you would see the bottom, and you haven't seen that so far that's interesting to point out because we have accelerated to the downside, which is contrary to what you would have expected to occur when europe closes. >> let's jump over to sue herer with the headlines >> here's what's happening at this hour. santa fe high school students returning to class this morning less than two weeks after a gunman went on a shooting spree killing ten and wounding 13 others students from the nearby alvin high school lined the outside of the school to show their support. >> at the united nationals conference in geneva, the u.s. staging a walk-out to protest syria's turn to preside over the
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conference this as they opened the latest round of that conference >> the united states is outraged at syria's actions its blatant disregard for international obligations, and its temerity in assuming the presidency of a body committed to advancing disarmament and nonproliferation >> the fbi is urging consumers to reboot their internet routers, explaining that russian hackers are targeting hundreds of thousands of private home devices as a way to get into networks and see data. that reboot will disrupt any malware being sent through the router >> and that is the news update this hour. scott, back to you >> sue, thank you very much. next, jon is following unusual options moves today in a jewelry stock that's falling 25% this year. where is it going next >> first, though, tyler mathisen has a look at what's coming up on "power lunch. >> thank you coming up on "power lunch," hope you're joining us top of the hour worried over italy hitting the
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markets here and abroad. we'll tell you how to position your portfolio if the woes begin to spread. plus, the ceo of one of the biggest shale operators will join us on where we go from here, what it means for the u.s. economy, and the death of big brands can american staples like kraft, campbells, and others make a comeback, and if not, what does it mean for the company stocks all that and more ahead on ower lunch." "halftime report" right back after this this scientist doesn't believe in luck. she believes in research.
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all right, we're back. we said dr. j. saw unusual actiffty a moment ago in a jeweler. what is it >> signet. these guys have earnings coming up next week on june 6th and if they follow on the heels of that great report out of tiffany's, this stock could see a very significant pop if you take a look at it, it's just been kind of marking time down here between 40 and 42 dollars where it is right now, but they came scrambling in.
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they bought the 44 calls in june they sold the upside 50 calls against it so this is somebody who thinks the stock could make a nice pop. there's about 3500 of those that traded somebody thinks the stock could see a nice pop over the short term on that earnings event, and with the stock down as hard as it is, and a 15% short interest, i think it's a decent possibility. again, following on the heels of the nice report out of tiffany i bought it. i'll probably be in here somewhere around two weeks >> come on back over here. get you up to date once again before we take a quick break on the market dow down nearly 400 points it's off the worst levels of the day. it's still a 1.5% decline for the dow. some of the big banks within the dow are leading that index lower. the s&p down by more than 1%, you can see across the board, a weak day for stocks on those political concerns out of italy specifically we'll have much more on the markets when we come back on
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we have one to two fires a day and when you respond together and you put your lives on the line, you do have to surround yourself with experts. and for us the expert in gas and electric is pg&e. we run about 2,500/2,800 fire calls a year
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and on almost every one of those calls pg&e is responding to that call as well. and so when we show up to a fire and pg&e shows up with us it makes a tremendous team during a moment of crisis. i rely on them, the firefighters in this department rely on them, and so we have to practice safety everyday. utilizing pg&e's talent and expertise in that area trains our firefighters on the gas or electric aspect of a fire and when we have an emergency situation we are going to be much more skilled and prepared to mitigate that emergency for all concerned. the things we do every single day that puts ourselves in harm's way, and to have a partner that is so skilled at what they do is indispensable, and i couldn't ask for a better partner. all right, we're back with our trader blitz first up, ralph lauren hitting a
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nearly three-year high doc, you have calls. >> yeah, got calls it's working out okay. credit suisse has been right on on this one, judge credit suisse has been overweight on this virtually everyone else has been neutral or basically not in it i like this one. i'm sticking with it and i see more upside still. >> marathon petroleum got upgraded to outperform wells >> that's based on the new fuel rules going to go in place as we head into 2020 overall, lower crude environment is good for the refiners if i'm not mistaken, i think you gentlemen had some unusual activity in marathon a couple weeks back i like marathon. >> mkm raising its netflix target to $390 however, for the first time in five years, it is no longer their top pick had quite a run. i can't fault them what do you say? >> yeah, no. it's only up, i don't know, 20,000 percent or whatever
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i think for people to put this in perspective, this is the equivalent if it goes to their target, the equivalent of a $35 stock going to $39 which is not really that exciting it's not like the upside expectations have been severely ratcheted up here. another update on a company from an analyst who followed it and covered it fairly decently, and a lot of analysts have been on the right side of this and it continues to want to go higher >> steph, j & j, new 52-week low. down 2%. >> yeah, there's not really any news out there, but medtech is quite week weak, and that's the surprise, that health care is so weak today i would have thought it would have held up better. i actually added to j & j this morning. >> on the pullback >> it's off 14% year to date, yields 2.5%. it's below its five-year average. all of those check the boxes why do i want to own it?
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their pharmaceutical business is growing and i think it's going to continue. they're making changes to their consumer franchise, pretty big ones they announced a couple weeks ago. and i think their tech business is slogging around at 1% organic which is nothing really to get excited but they're packaged into the growth and the value age makes sense to me. >> oil is sliding to its lowest level since mid-april. we'll find out how the future traders are playinthg at as a control enthusiast,
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all right. welcome back you saw morgan stanley on the list there it's one of the worst performing bank stocks today. i heard chatter on the desk. >> i had morgan stanley, lyon, i traded morgan stanley over the last couple years. it's been a good name to trade it's broken down technically, and i will probably be out of morgan stanley at the end of today. it's clearly losing its momentum when you're looking at financials, the capital market story, wilf mentioned before that yes, the trading environment, the increased
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volatility is good, but josh and i were talking with steph and jon during the commercial break about it a lot of these capital market quote/unquote institutions that we knew of the past are trying to identify who they are all over again i think goldman sachs clearly fits into that category. who exactly are they >> i wanted to hit this topic again. i heard you talking about goldman sachs during the break >> i just think, like, i think it's going lower it's purely a technical call, but this is a stock that bottomed exactly a year ago at around $200. it looks hell bent on revisiting that level, which sounds like a lot, but really would be less than a 10% drop from here. you don't have a huge yield here supporting it, and at the end of the day, yes, you'll get the benefit of volatility, in goldman, and they'll report some really great trading days and that's fantastic they're really good at that, but what is going on with the rest of the bank, you know, and that has been a concern that's been hanging over the stock for five
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years now. i don't know it's fully been addressed. >> doc, you want to comment on the banks here i don't know what to make of it. the headwinds are so obvious and they have been so, and yet those of you on the desk continue to tell me that you like the banks and this is the place to be, and if your brother was here, i know he would say he still likes the banks. the yield environment is terrible we're at 3.8% on the ten-year. now we're maybe worried about growth in some other parts of the world. is this trade ever, ever going to work again? >> for sure. >> i mentioned c-carr coming up, which has been stimulative for bank stocks. >> you have that and the possibility that 2.8, which is where we got to on the ten-year today, in fact, broke through it briefly and then came up above it, you have a fair amount of activity by a fair amount, i mean tens of thousands of puts trading in the tlt, so somebody is putting down a bet that we don't go a lot lower than that 2.8% yield, and instead we move back up towards 3%
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if we see that on a relatively quick basis, judge, you're going to see a lot of the financial stocks do much better than how they have done lately. >> jpmorgan is the one name i would be watching here february was they are done laty >> j.p. morgan and 1.6 today j.p. morgan is still at the 200 days moving average. you are going to have the wants. i would we watch j.p. morgan >> i think there are a lot of good things happening and a lot of individual companies. so the whole goldman discussion, we know they're d disseray. it is down 10% and the only that's worse is citigroup.
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goldman on the other hand, you have to believe the restructure announcement is going to work. i don't know if i will believe it but at least they have a program and a plan in place. i would also add that i like sun trust because they think their new cfo totally gets it. if i am right, you will want to own some of the regionals tchlt other one i own a lot as well is credentials. they have done a good job in terms of -- >> the goldman of the late '90s. think about what would the old school goldman and environment like this and s&p went up 30% last year and unemployment nonexistence goldman should be feasting >> they really, really -- it is not set up to that >> they are hurt much more because of low volatility.
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>> banking and new issues and none of it is goldman. >> investment in london has been great. the problem is you don't get a multiple for it. that's the problem >> great >> the last quarter the only problem was thick. everything else was quite good and they have not gotten credit for that if you can think if they can kind of change their business mak mix a little bit it will go higher. >> we are keeping our eye today on crude oil >> it is lower on that, jackie. >> good afternoon to you crude oil is tumbling for a fifth straight session continuing a slide below a dollar mark. crude losses of 8% of the last week alone >> i would be buying it pretty soon last week, it got crushed on news at the saudis and the russians agreed to produce more oil. now, even they have to think it has gone ftoo far.
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the saudis, they're going to talk about the crude oil situation and given how far it is fallen, they can only be talking about pulling the production back. >> all right, our trading wti is a little bit over $6 level what level are you watching? >> to support scott's case here. the technical line is perfect for this we had a break out above the $66 level. that break out will act as support now. i would be a buyer right here at 66 and a quarter and 66 level. you can buy one and i would be willing to double down and buy it back down at $60. crude will would hold at $60 on the low end. this is one part here where you can dip your toes and start to get in the crude market. >> thanks guys we'll have much more on the oil trade today on the live show online and plus stocks are selling off the god father technical analysis, ralph
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but we need the help of experts. pg&e is an integral part of our emergency response team. they are the industry expert with utilities. whether it is a gas leak or a wire down, just having someone there that deals with this every day is pretty comforting. we each bring something to the table that is unique and that is a specialty. with all of us working together we can keep all these emergencies small. and the fact that we can bring it together and effectively work together is pretty special. they bring their knowledge, their tools and equipment and the proficiency to get the job done. and the whole time i have been in the fire service, pg&e's been there, too. whatever we need whenever we need it. i do count on pg&e to keep our firefighters safe. that's why we ask for their help.
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welcome back, stephanie, you are up first >> new buys. american express and coke. america is barely down but i like the company is doing. a little less rate and sensitive of my other financials coke has done a great job and totally restructuring the
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company and getting simpler. i like that story, too >> john and jerry, wake up >> dsw buying calls ahead of earnings which i believe wednesday. >> josh brown. >> we were talking about the banks, i am in j.p. morgan >> joe. >> store capitals. thanks for watching. "power lunch" starts now >> i am melissa lee here in the midst of the markets sell off for the turmoil, italy's deepening political crisis rippling around the world. investors facing another moment. how much lower could crude go from here, the key levels we need to watch and battered banks, financial stocks falling across the board and down anywhere from 3% to 5% bha what's taking them down? buckle up, "power lunch" starts right now. >> welcome to "power lunch," i am sar


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