tv Fast Money Halftime Report CNBC March 22, 2019 12:00pm-1:00pm EDT
points tech stock down the most >> thanks the nice to have you here on a day like this. let's get hoto the halftime and the judge. i'm scott wapner welcome where we're watching a gathering sell off on wall street investors growing more concerned about the slowing global economy and whether the u.s. can avoid the worst of it. we're discussing it this hour with our panel joe, steve, josh, and shannon. we begin where we star ted. new data confirming weakness in several markets.
japan downgrading its look u.s. yields sinking as well with the part of the yield curve inverting for the first time since '07. how concerning is this stocks are at the lows of the day and the sell off seems to be gathering some steam >> inversions are not good you could go two years before an inversion turns into a full blown recession. if you stay inverted, you will get a recession. banks aren't going to lend to lose money this just facts. however, i would ask you this question, don't you think the inversion is more of a new story than a functional real story if we're saying that we have gone from positive spread to negative that doesn't dhachange anything other than sentiment it's not like banks behave differently. loans are still being made i think a will the of what's
going on now is people are looking at the activity and extrapolating that things are accelerating to the downside the one piece of good news is it's a good thing when expectations get downgraded and the economic surprises start to come out to the downside it vresets the table we had a big run s&p, low vol tatility names are holding up well. it's fairly orderly. >> we showed you the global slowdown in the worries in the wall we made let's put it back up there japan cutting the outlook. germany is getting weaker. our bond yields are falling. there's concerns about where growth will be here. how can the u.s. possibly avoid what seems to be this gathering storm overseas >> we can't. we are feeling that. a lot of our slow growth is a
lot we're importing from overseas we're in this slow growth world. a lot of it is the resul quantitative easing. we have saved ourselves from this huge depression the thing that surprises me scott is when markets react like it's a shock we don't really have, really to josh's point, any dramatic new data hear. the basis point vs chans have ca little bit it's still a good thing. we're in the growth environment. it's going to be around a 2% number i don't think that's awful >> shannon, we have been making the excuse, if you want to call it that, for falling bond yields it's because of what's going on with global central banks. you have yields that have been negative or around zero for ever that's been depressing bond yields everywhere more so than
the bond market telling us something we're not realizing. the bond market is getting it right and this stock market and huge rally we got from the end of december is ahead of itself and now getting it wrong. maybe michael was right but maybe he's wrong maybe this is suggesting we have an economic issue we need to worry about. >> i think it's been difficult as far as being able to tell when we're going into recession. you think about it in terms of what does it look like over the course of the next 18 month, there's a clear sentiment coming out of fed that the softening outside of the united states is going to happen here and that over the course of the last couple of mon months there were
these outlier numbers. i think the fed is acknowledge that rick, it's good to talk to you >> good to talk to you >> it's not an inversion in the traditional sense but how concerning is it to use. >> i thinkit's a piece of news i don't think there's a lot of technicals driving up demand i think there's -- i do think there's something really important around it. i think there's a demand for bonds now. you're seeing it in all the flows because bonds make sense now you have a dynamic where inflation is not scary of a fed that's clearly asymmetrasymmetrc bonds work real. there's not enough bonds in the
world. i think rates work really well that's why you're seeing this demand come in for it. i don't think the bond market is telling an ominous sound i think there's technicals and work really well >> if japan's outlook is weaker for the first time in three years, the germany economic numbers were horrible and if growth, gdp now from the new york fed for the coming quarter is 1, 7. maybe the economy is worse than people think, rick >> i think everything you say is right. i also think when you tlookt dad look at the data that came out, you see something that's quite real you see manufacturing that's starting to slow
you see trade data that is clearly slowing. you have to keep in mind that the u.s. is of the 20 largest economies in the world trade is important but it doesn't drive the economy. i think when you get underneath the surface, the asian data, there's sentiment, the chinese data is soft it's something we're watching. i think we are slowing closer to potential or under potential in an economy that grows a potential at 2% or so, i think we're slowing. i don't think that's a devastating dynamic after you had significant growth last year >> can you ask the questions is it fair to ask as to whether the fed has made a terrible policy mistake by hiking all along the way. not realizing the amount the glow was slowing they hiked into a tariff and trade war that they fully didn't understand the impacts of and maybe they
killed what was a good economy here i'm not the only one suggesting that hello, president trump >> i think the chair has been pretty clear about we are liable to make mistakes i think we talked about it that rates should start to come down and we have a dynamic where fed shouldn't be tightening. we see it in housing, parts of the auto data. i don't think they should have done it. i don't think that move was necessarily at the crux of an economy that is moderating off of what was a tremendous tail wind of fiscal stimulus. i think the economy should move closer to potential. i wouldn't blame it on the fed i do think that move in december was right. i think what they are doing now is 100% right. >> i wonder if that is an add
min stan admittance of wrong. now this week they did a double down >> i'm pretty surprised at how they pivoted and financial conditions were under some pressure i do think they are getting aggressive they would ease into something i think the fed going away for a year, maybe longer i think that is the key point for a while. let the economy recalibrate. i think that's what they will do >> that wasn't really the knife that killed this i don't think they killed it the jury is still out. by the way, the fed now really
still is still selling their portfolio. they have more they can do to get more dovish if they want to be they can still add to the economy. the feds told us they will be accommoda accommodating. that's the most important message i heard. >> i asked on what he thought. rick, stay with me, please i asked whether the fed has already made a policy mistake. the fed should operate in consideration of global conditions too maybe the fed misjudged those. >> listen, last year it was obvious we were unable to export growth to the rest of the world. the federal reserve is out there. they are fighting against it that's the reason for the dramatic pivot for the investors watching the show, the realization comes back once again this is not just
about economiquities. it's about portfolio rates, utility to rick's point think of where municipal bond ts are. the principal verve reserve is t there. that's what's going on rick >> i think that's right. i think the fed has a multitude of tools at their tdisposal you can do more qe the fed has a lot more room to go and they will use it. i think we need to see for data before they do it. the data in europe and the tools left in europe and japan maybe it really difficult. that's one of the the things that jay powell talked about
it's the flow ball dynamic that's really tricky >> i think a lot of it does center our trade you can't rely on that as a predict predictor. it's 50/50 at best case. we saw positive up there that's sort of pre-stages what could happen and what couldn't happen i don't believe anymore stimulus in the u.s. will drive growth.
multiple expansion >> changing tax policies will sieve everybody what are we missing? >> when they talk about. you keep giving antibiotics and eventually they lose their effectiveness. i think they are there with cutting rates and easing in europe and japan >> it's the most foreseeable outcome you can damage then you see, etf bond sales go crazy for almost a deck indicate and then accelerating furthering buy backs grow
they don't have a politically powerful constituency that knows how to get into the white house and lobby for that no one should be shocked it was very easy to perceive >> rick, does the fed cut in '19. >> i think the fed is going to stand for an extended period of time i think it would take an awful lot for them to do anything significantly different. i don't think so >> can you revise your targets. >> where do you see the ten year
trading at >> one of the things important bonding really work in a portfolio. i think the ten year note works well rates carry well they do great things i think rates can still move up. it will take time before you get more visibility. >> really good hearing from you today on a big development day in the market. thanks so much >> next guess has been talking a lot about the yields surve inverting. >> i have a note from a couple of days ago where you say and i quote, absent and inversion of the-year-old surve that shuts down credit. the market following a new-recession crash continue to set the stage toward your target
of 2950 on the s&p 500 what now >> i have the same opinion i thought rick i's comment was interesting about the technical factors. i'm not going to say that's a great thing, scott let's say the armageddon happens and you invert the 210 curve even over the last -- i would challenge steve a bit where he said the yield curve predicted the last 450% of the recession 100% for the inversion of 210 spread has predicted a recession over the course of the last 7 years. the problem is you get stroot volatility like we're seeing around when you're kind of inverting the curve but it's a
by signal. it's not led to the peak other than in 1973 when the market peaked two months prior to it. >> i understand what you're saying i made the distinction at the out skrn set this is not a tra tigsal inversion we're talking three months versus ten year, today i get it did the fed screw up >> totally they totally made the mistake. this is the thing that droives m crazy, we think it will be different every cycle. when the yield curve inverts, that changes but it changes with a significant lead i think that's the most important significant lead
i think it's in middle where the home builders are up and terrible because it's what creates that lead time is its stimlative to economic basic acy >> i talked about the fed, what happened and where he thinks the stock market is today. i asked if he was surprised by the double down. he said i think you have to be hoe ca he called in the ability to forecast where the economy is. it's not at all reassuring i also asked him whether he still thought we were in a bare
mark market he mentioned a couple of trends. historical ones i wanted to raise with all of you at the desk stay with me he mentioned the double top in '07. the fed made a policy move stocks had gone down they went back up. i'm holding it up. you see it he's asking the question now as to whether history is in effect repeating itself you're going to see now and you'll see a circle of one top and a question mark on the other suggesting if we're heading towards another double top >> i can show you 50 of those. he's not suggesting a crisis like '08 he's suggesting where you are in a stock market cycle
i think jeff would agree with that statement i think that's the key point you can have a recession that doesn't turn into 2007, 2008 second of all it's now at the same level where it was at yesterday's open what are we talking about? what's really going on it's a day where more sellers than buyers showed up. that's it. does it coincide with a yields curve? >> it does >> we've had so many yield curve inversions >> no biggie
>> let me put some numbers on something josh just said in the 1980s and prior to that e recession, it's not yet inverted was 19 on the may 1998 initial day of inversion, 34 months the point -- also this is something really important for the viewer the bond market is broader than the treasury market. either way it's flat it will go negative. to josh's point, there's not going -- you don't want to be a net seller when it happens because it works with lead.
>> you gave me a four out of five chance to make money, most will take it i think the market is fully valued you can't ignore the slowing global economy you can't ignore the lack of stabilization in the administration politically and i believe you should have some cash there's certainly stocks that are extended the biggest surprise will not be if we -- the biggest price to me will be the recession. everybody expects earnings to recover.
>> you want to wait 12 to 18 mont months >> it's always on the horizon. >> about the last foive years. >> recessions are fact of life we have to have a long and extended cycle not a lot of people enjoyed it because they spent the last ten years predicting the next recession. sorry for you with a 400% total return in the s&p over that period of time recession will be on the horizon for as long as you live. stop predicting them every time you see a 300 point and you'll be way better off than people who are. >> the fed always causes it. always because they always work a lag in information >> tony, stay with me one second speaking of the fed, i want to jump down to washington with breaking news. we have been expecting the
official word on a potential nomination of stephen moore for the federal verreserve board of governors. president trump said he does expect to nominate him >> i will be nominating mr. moore for the fed. you know what i'm talking about. he'll be great on the pefed. >> i'm told that steve moore has been officially offered the job but has not been vetted. that's a process that has taken months depending on what they need to look into. one thing we know is the president is a low interest rate guy. steve moore is also a low interest rate guy. he made comments about how the fed had been tight and too tight and previous rate hikes had been a major blunder in his view. he was an adviser to the
president's campaign on economic issues on tax reform and the likes are something that people will try to be figuring out exactly what the composition of the the fed going forward will be and what steve moore's addition will be >> thank you interesting in and of itself that in the last 24 hours you had the president take another shot at powell saying if it wasn't for the rate hike, the economy would have hit 4% last year that's stephen more getting the nomination shannon, you have been waiting to speak s >> similar to what josh said inversions precede a res reregistratirecession. there's no time lag. what we have been saying is if you look at your portfolios and you have enjoyed the equity market gains we're in a decelerating economic environment. you should be thinking about adding classes that insulate better during that type of vi m
environment. that's on the fixed income side. the fed gives you great opportunity to enter into that it's not about the decision of whether you're out of equities or not today >> to all of your points, part of the point was with the tax cuts, the idea and the you put forward from the administration was the economic cycle, which was seemingly late in the game, got extended by how much? who knew we wouldn't know until it all filtered through the economy i'm suggesting the way bond yields are reacting, the way earnings have come down and gone negative in the quarter are suggesting that that point of view was wrong and you are now truly at the end or nearing the end of what has been n an an incredible cycle >> everything was validated in 2018 when we had the decline at the end of the year. add i said before, we're clearly overwhelmed with the deflation
outside the u.s. versus the potential growth lift we got in '18. let's go back for one second and understand something a recession does not dekuwaiteq peak in the equities market. some form of a financial market and balance. if you go back to '07 and '08, it was the bursting of the tech bubble i think it's important to understand that over the last three months, we have probably had four or five conversations about the s&p 500 either crossing below or crossing above the 200 day moving average what does that mean? we are in a market right now that is in a sideways range. we're in the month of march. we expected this to be a period that was kind of a vacuum. the s&p is 80 basis points higher in the month of march until we get to april and see what the earnings will look like, we won't get it. >> which i think is reasonable to ask whether the 20% pop that
you got from christmas eve until now was a great gift and that if you're worried about where the economy is or heading, what is wrong with using some of that to remove some of your exposure to the market in the face of what has been on this desk, lately, bullishness. 3,000. sure we can get new highs. josh brown, you said we were going to have a retest now you've changed >> we're 5% off the high. we're in slow growth environment. i think you listen to shannon and say aisi'll look at my
portfol portfolio. when the music stops, the music always stops, you want to make sure you have it >> you're not the first person to have an idea. those defensive assets have been bid up especially over the last year especially when you look at the equity side. every one has already been doing that >> do you really want to go into fixed income with a 240. >> tony, if yields keep going down, can stocks keep going up >> for the time being, yes you were set up for -- there was a big move market was wicked. at the end of the day i'm
looking at the data. say the 210 inverts in the next five minutes in the last cycle the pebest performing were the sicyclicals. there's no structure we have extraordinary moves that hadn't happened. >> i think that's really the bottom line, scott >> appreciate you coming to the phone. >> i think the important point is what you have been correct about. we look at the last five days of trading. you look at all the sectors in the s&p. there's no sector that's higher
or lower than 1.5%. down 5% in the last five days on a day like today >> the fed killed the financial you have bank of america down nearly 5%. you have citi down nearly 5% i'm low on justice of the peapm. it's fully on what do you do with financials. >> i disagree. i think financials has been an underperformer for the entire ten years. i think you should have cash now. i don't think you trigger taxes.
that's how you play it >> you hope you have a position in apple that's been on tear. that's a bullish sign for the market >> long bonds at their highest level in almost two years. you're not having the greatest day of your life you probably don't even feel it. >> nor should you care. i feel like that's a really key point. that's my big take away and what i try to communicate to people it's not the sexist advice i think it's more salient to
tell people take the apple after your phone we're going to take a break. here is what is coming up. >> upgradesing the retailer to out perform. shares have surged 35% this year and the firm thinking it has room to run. our desk will debate it in our call of the day. plus, see what pete just found in the options market before the break, regional banks falling more than 8% this week according to our data partners at kensho, since 2010, the space adviser to bounce back an average 2.91% the next week. for more go to cnbc.com/kensho the halftime report is back in two minutes. ♪ (butcher) we both know you're not just looking for pork chops.
is history about to repeat itself as some suggest mike, interesting point of view about '07 and the double talk and what could be developing here you've been looking at history this week. >> absolutely. obviously when we're talk about is the cycle kind of running out of sands in the hourglass. that's the year you're going to
go back to is 2007 obviously the stock market structure that you pointed out hasn't done anything to disprove the idea just yet. roughly where we are now in terms of the s&p you did finally get above that it was largely that way until september, october of 2007 when the fed cut and really was the start of a recession right now, you can say, credit markets don't look too upset that's not selling you a recession is right here. unemployment claim, unemployment rate the leading indicators are not
giving you reason to worry they didn't give you a tremendous amount of lead time in 2007 either they started to turn in the wrong direction but from very positive levels. the one thing is you can't get away from the idea there was such massive imbalances in the house market the credit markets in general in 2007 we knew about them for two years. by late 2007, nobody was saying everything is great. every one was saying the real economy is walled off. i don't see the similar smoldering fire now. >> i want to be a thousands percent clear. i'm not suggesting by bringing this up that those i talked to are suggesting an '08 like event is around the corner
i'm with most of the folks are saying, like, what was i saying yesterday, scott if you took the fact that the s&p was up three quarters of a percent in the middle of the day yesterday. everything got perfect the market loves it. that wasn't the reaction >> mike, appreciate your patience thanks for sticking around options bulls making big bets on a basic tech stock pete is with us next let's give you a check of s&p. dow is down 400. utilities are the only s&p sector in the green. we're back after this.
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it's down another 2% today options traders thinks a turn around is coming that's what pete says in min l minneapolis. hey, pete. >> take a look at where the stock has been moving from over $90 a share to over $80 as a matter of fact that's when we started to see some of these bulls step in. we talked about this short term paper. this is a bit longer term. what we're seeing today is the september 90 calls being bought. paying about $2.70 for these fair amount of premium expecting this move to maybe come and return back to where
this stock was giving out some time and going to september they are buying calls and some of that is being financed by selling down side as well. an aggressive strategy by somebody who is looking for the stock to rebound back to those numbers and maybe even to those december highs you talked about. i got a second one as well i got twitter for you. the twitter one is back to what we're talking about. all this rapid, fast paced options looking for something to happen quickly if twitter they are buying next friday's expiring 34 calls the stock has been in this 30 to 33 range for a little while now. as it's been pushing today, as a mart of fact, it did push up they were paying 20 cents for those 34s. i love when i see this it's a one week option gives me a great opportunity for a risk reward type of trade. i bought those i already own united it's going to be interesting this twitter is expecting a
sharp move to the upside over 34 >> pete, you have a comment. i want to talk about price action this has done better than facebook in recent weeks it's done better than square which a lot of people thought was this big jack dorsey trade that it was going up twitter has been on the upswing. i think people are coming around to this might be the best play on the upcoming presidential election in 2020 the advertising spend is ramping now. obviously, i would agree with that tape. i think this has just been really, really strong stock in a sea of stocks that have been selling off. >> 15% today have a good weekend. see you next week. send your questions to us because we'll be answering them in a few minutes go to cnbc.com/halftime.
they have been making the same product for 150 years. why does management need 100% of the voting you have to bet this company will keep getting fashion trends right. they have done well with skinny jeans and pivoting towards women. even lulu has had massive multiyear stumbles this is not my type of thing i don't think you need to own it let them report one quarter of earnings and see what they are made of. it's like you don't buy this at a 30% premium. i don't think you do it. >> joe from jim in new jersey. what do you think of cbs >> single digit pe you can buy comcast which over the last four quarters has an average revenue growth near 5.5% or cbs same time period has growth of
2.5% i'd rather go with comcast >> damionbuck starbucks, still a high? >> i own it. it's pricey here 2% dividendividend i think you can go with it but i'll tiptoe in >> al in texas what's the outlook for the cruise industry. he wants know about carnival given where we are in the economic climate >> we like cruise lines. we like that consumers get more out of their value on a cruise vacation we think bookings are going up and yields have remained pretty consistent we like cruise >> oil prices are pulling back we'll have energy trades straight ahead on the halftime report plap welcome back to the
change to get it back on that uptrend? >> well, dom, yesterday on futures now i said there would be a technical pull back on this market, that it was overdone, it was up 10% in less than two weeks. i'm not ready to throw in the towel. i would be a buyer down there. the first time because we've seen large draws in this market and that's where we'll pull it back towards 60. continued large draws. >> jimmy, we just heard one level. what other levels are you watching right now to see what this trade will do >> crude has been remarkably well behaved technically and once i want traded above 60 it hit an upper resistance trade line make no mistake, it started its rally from december 24th the same as stocks topped out yesterday like stocks crude is trading as a risk asset. as long as stocks have to shake out crude follows. down to 57
our thanks to you both for more futures check out our for more futures check out our website @futures what do you look for when you trade? for more futures check out our website @futures i want free access to research. cnbc is back after this break. yeah, that too. i don't want any trade minimums. yeah, i totally agree, they don't have any of those. i want to know what i'm paying upfront. yes, absolutely. do you just say yes to everything? hm. well i say no to kale. mm. yeah, they say if you blanch it it's better, but that seems like a lot of work. no hidden fees. no platform fees. no trade minimums. and yes, it's all at one low price. td ameritrade. ♪
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outperform at open ppenheimer. >> i say the ceo belongs thainl. to turn the company around like he has you can bet against him. i'm not buying it here but, you know, got to give the guy credit >> we got that comment thank you. nike, what do we make of nike and their outlook which was not great. stocks down 6% so their sales growth in the u.s. and china is not going to be they say what it was. how concerning is that i >> i still this the overwhelming fundamental trend for nike and foot locker remains positive i think there will be continued selling pressure over the next couple of days but i think there's an opportune to present itself in both of those stocks >> i like the company. it's my kind of company. i like the balance sheet just too expensive for me at this level >> a lot of people feel they missed this run. i don't think it goes out at the
low. i would take advantage i'm with michael and joe the bigger picture for nike is way brighter than any other stock in the category. >> digital business is growing leaps and bounds that's higher margin >> what's your twitter handle? >> michaelkfarr. >> i like bb and t bank. it's contrarian we'll do the big merger with suntrust i like it. >> alphabet will hold up like a battleship >> pfizer. pays a great dividend. >> xp below 50 always trades up. >> many reasons to own verizon >> dow is currently down 380 that does it for us. "the exchange" with kelly evans begins right now
thanks you, scott. hi, everybody. here's what's ahead as markets sell off bond market warning as yields fall around the globe should investors be fearful a recession ahead. apple has been a market darling this year rallying 22% will a global slound put a halt on that rally or will the company's new ventures help keep it thriving? >> will europe's faltering economy give restaurants here at home indigestion how weak are they or aren't back home we begin with