tv Fast Money Halftime Report CNBC April 8, 2019 12:00pm-1:01pm EDT
share for the first time since november it is up 26% year to date back on top, remaining there. market capwise ahead of microsoft by -- >> hasn't seen 200 since november less than 80 cents away. let's goet to the judge and the half >> i'm scott wapner. stocks march toward new highs. does a deluge of downgrades mean it's time to take a rework of your own portfolio it's 12 noon this is the "halftime report." >> boeing, ge, micron, roku, starbucks, southwest, clorox, harley-davidson, all get downgrades what does it say about the stock market this is the s&p comes within 50 points of an all-time high plus, widely followed and very influential former fed man richard fisher on the president's call for quantitative easing, rate cuts and whether herman cain and
steven moore are good enough to be part of the federal reserve plus, the big call on snap if you are looking to make a buck, is this a good stock to trade? our investment committee weighs in the "halftime report" with scott wapner starts right now. it is good to have you with us on this monday. here joe terranova, jim leventhal. and mr. wonderful, kevin o'leary, the chairman of o shares etfs and an nbc contributor. he's all smiles today. stocks are trying to extend a seven-day winning streak a slew of downgrades weighing on the markets. big names getting cut across the board. kevin, you look all happy. you like boeing still? >> in the big downgrade names are some of my beloved stocks. boeing, i had it at a 5% weighting. it's down to 1.5%. i'm waiting for the real bad
news to come out i want to get guidance or lack of there >> downgrade to neutral from buy. target cut to 420 from 480, bank of america 737 delay could last longer than expected now estimate 6 to 9 months of disruption versus 3 to 6 was their previous lower margins. could delay buybacks >> a lot of these things -- but my concern is -- >> shareholders' worst nightmare for a stock that -- >> there are two groups of things to consider one in the company's control and ones out after the fix occurs, as long as it's not a mechanical fix, it's a software fix, how long is the process going to take? the stocks personalities, bulletproof at 365 i've been watching the stock for two lifetimes. if it breaches that hold period because i want to get back on the stock. the best manufacturer on earth if it breaches 365 it's going to go down into the low 50s you know, who knows where. >> that's the problem.
weis, you own it what about this call >> the only thing that worries me about the call, there are two issues with stocks primarily one is the fundamental story change and the other is their timing issue causing disruption, dislocation. here it's really a timing issue. what i'm worried aboutis if they start to lose share that's about a 10% worry i'd love for kevin's view to come true. because i'd like to buy a lot more of it i haven't touched my core position i've traded around it and that's been a good opportunity. but there's really nothing there that we don't know >> well, okay. i mean you say that, but what if, as the downgrade says, the reputational loss causes some more issues that the market is underestimating? no one wants to entertain that is it possible market share could go down? >> here's the problem. you have two providers of the 737 or a320. those are identical planes almost boeing and airbus.
airbus is sold out for the next six years. if you are an airline and want one of those two identical planes your only choice is going to be to buy from boeing once the 737 max comes back online. this is not a fundamental change this is something the company needs to work through and there will be some charges there will be some reparations to various airlines, but they'll get through this in a couple of quarters >> 372 and change. stocks currently trading are you going to be able to get it for meaningfully cheaper than it is now, or do you use this opportunity to take the point of view weiss and jim, duopoly, nothing really fundamental is going to change. there's not a big reputational risk here and you buy the stock. >> this is where i miss out a lot of times when i set the price target, and then i miss out because it never gets there. i'd want to buy it as a market multiplier lower i don't know if we see that, but -- that's why i'd be comfortable buying it.
>> why would you think this would be a market multiple given its duopoly position, given its manufacturing and it's sold out for years and years, past your investment horizon why market multiple? >> there's so little clarity to the earnings for the next year to two because of this that murkiness in earnings gives me the pause that says i need a market multiple because that's where it builds in the margin of safety >> maybe in a perfect world it's above market multiple. but maybe that world looks differently. >> that's a very sobering idea she has there. very sobering. anything under 350 is a screaming buy on this name having traded it for years but you -- if you are right, that's going to be one hell of a sell-off >> guys, an important point here boeing right now does not trade on earnings per share. it trades on multiples of free cash flow. a very specific reason for it. contract accounting with planes that have long lives the 787. where all the cash is up front when you develop it and then when they're churning these out, all the cash comes in.
most people looking at boeing when talking about market multiples are talking about a multiple of free cash flow on that basis right around now it's not bad the problem is, and kevin, you've been hot on this. there's more bad news to come. somebody in washington is going to make a name by grilling the ceo or the head of commercial planes is over hearings. you have to get through all that noise. and it is just noise the company will be fine but you do get it cheaper here >> stock stuck between $350 and $400 when you look at secondary names, i gave spirit aerosystems on this network about two wieeks ago. that stock is down today that's a name telling you this story in terms of the public relations element of it, to your point, is going to remain with us for longer than we initially thought. but when you look at boeing, it's a stock that's going to be in a range, it's going to be similar to facebook and i think that, yes, longer term it is about free cash flow and that's what you are buying. and is there going to be that dramatic a change in the free
cash flow story? >> you think a company has a -- you think the company really has a grasp of what's going on >> i don't think so. >> look, they are the best manufacturing company on earth the best engineering firm on earth. it's the very best of what it does on earth. >> that doesn't mean it's the best at everything >> there are things outside of its control right now. if this stock trades to 350, i start putting it back on if it goes to 300, grown men are going to weep in the streets of new york >> where's muilenburg. he hasn't been on tv anywhere talking about it maybe he can't say the worst is over >> i was surprised they were so positive that this wasn't the same issue between both planes and advocated to keep flying the fleet. to me, that was a major mistake. so i lost a little confidence in management, but not enough to sell i was surprised the stock got up over 390 i didn't buy any lower because i thought they were still down sides. >> is it going $350? >> i think there's too big an appetite to buy it lower than
where it is right now. >> you guys know that, we're no longer doing 52. >> look how resilient this stock is 372, 373 that's where it was -- >> for all the reasons everybody on the desk laid out the question is, are we overestimating its resiliency and making ourselves blind to some of the real risks out there? >> that's what i wonder, too >> maybe it doesn't deserve the benefit of the doucbt >> this has almost tripled over the last three years no small part bumped up by share buybacks over the last three years. so it's not just great management it is great management but not just great management and earnings that's driven it up let's go to downgrade two if you want to call it that there's a deluge today there really are in some big name and popular stocks many of you undoucts undoubtedly have ir portfolio. general electric downgraded to under weight
steven tuza is the guy believe many investors are undermating the severity of the challenges and underlying risks at ge while overestimating the value of small positives is that right? is that what's happening did the bump in the stock cause everybody to lose sight of the issues >> three years ago at this desk we had an analyst telling us $2 of free cash flow on ge. it's been straight south since then i just -- i would say one thing, we've had three management changes now. each one has lost about 35% to 38% of value for shareholders. the current team, these are great men and women working so hard it may be beyond any management's team to fix this company. the stock should be viewed as an option, not an investment. it's an option on it not going to zero. i finishing you can own this company you own the debt because it's equal to the debt it has basically if you want to include the $15 billion of shares.
no one can read this balance sheet. i've tried it's impossible. >> the stock had a heck of a jump still up 28% year to date. >> nobody is making money on this in the last three years, the money -- >> if you bought it at the price target, you were making money in it >> the institutions were getting out of it. got replaced with retail hands, and most people unless you got in at 6 and change ran it up to past 10. >> i just don't understand the buy case for this. i mean, you've got businesses that are still under pressure. you have a balance sheet you can't make heads or tails of you've never been able to analyze this business. it's always been a leap of faith because the business was so diverse. and they have sold the growth elements they've sold health care what's always left when you're trying to repair your balance sheet are the assets that nobody else wants so i would not own this stock. and, you know, you are betting on a ceo the ceo has nothing to lose. he's a great ceo
yeah it was a different business did a good job but he's got a free option as well if he saves it, great. if not, no harm, no foul >> everything you spoke about is about lawrence culp. that's the reason for the bounce in the stock the street believes he's been transparent, and he has, about what troubles this company on the accounting side. and that's the real challenge. i agree with kevin the opportunity in this is not on the equity. it's on the debt if you believe that this stock is going to be able to resolve itself in terms of debt issues it has, and it's going to do it in a 2020 time frame, then you want to own the debt it's three notches above junk. go at it on the equity side, wouldn't touch it micron we're hitting some of these stocks that have had these big runs since the december bottom micron up year to date downgraded today to perform. price target goes to 45 from 46. our analysis appears to suggest, they say, the duration of
declines in dram fundamentals will be more pronounced than what investors have contemplated how about this call, mr. eiss? >> where people sometimes get micron wrong is they look at it. oh, six times earnings is that cheap? it's a commodity stock where they don't control their own future so you had a competitor samsung come in that's going for market share. part of what the analysts talked about. and also still major inventories. so there's a love affair where everybody wants to buy this thing. i think it's a good call i'm surprised the price target is not lower >> you've owned it >> i've owned it but sold it a lot higher i traded around it before. i'm just not tempted to go in there. >> you are absolutely right. the quintessential cyclical stock. it's commodities i don't care if it's chips it's a referendum on a pickup in growth globally in the second half of this year. everybody knows the sia, the semiconductor industry association's naum bers are terrible this first quarter. it's like demand has fallen off
a cliff. semis are up and have been up the first quarter because of the perception growth is coming back in the second half it's most likely to do so, and micron will benefit. >> one of the best performing sectors to have been in, the chips. >> smh is the play that's the way you get the broad diversification for all the semis. it's within a whisker of the march 2018 all-time high at 113. when looking at micron, the stock is sitting well below the 62 high from last may. so i think, listen, maybe i acknowledge i'm not smart enough to identify which is the individual semi i want to own. i want to play if there is going to be a recovery i want the whole space, and i want it through that etf >> next downgrade, roku, to sell jim's favorite stock >> i have fun with this. >> target cut to 50 from 53 at citi trading at a 70% premium to comps and 80% to 90% above its lows difficult to quantify, they say. the platform segment, revenue growth could be impacted due to tough comps. >> everything is totally legitimate
>> you've given great advice on this stock tell me what to do today >> just wait when this stock starts going down it really doesn't stop for a long time. everything that the analyst says here is correct. there is heightening competition. and it is overpriced that doesn't mean that you throw it in the dust bin of history. just wait for it to continue going down and find a bottom and then get back in preferably before the first quarter earnings report which should be mid-may. don't do anything here don't buy it here. >> when are you going to buy it? >> when it bottoms it's worked twice. >> when is the bottom? >> that's $40 from here. >> it's a long way >> if it's $40, if it's $14. the problem is, scott, i can't tell you the price you look at the chart. it's down 6% today two weeks ago, three weeks ago, i sold it at $67 that's what this stock does. goes down like a knife please don't try to catch it >> customer acquisition costs are getting much more expensive. >> that's true, right? >> it's true but in a minimal
sense. there's still -- you are right but they are growing the top line and growing their users and growing their arpu like crazy. try to get into this before the first quarter earnings which will be may. >> i've looked at this stock three times to add it. it just adds vol to your portfolio. >> just have fun with it >> it's not going to be fun for people who rhodes it ode it up. >> i told them when to sell. >> if the stock has been up 95% year to date >> follow me i sold it at 67 three weeks ago. you're asking me if i should buy today. i'm saying no. >> you sold it at 67 the stock is at 60 now and you're telling people not to sell it. >> no, scott sell it. it's continuing to go down sorry if i'm not being clear when this thing starts going down, it doesn't stop. sorry, thank you for allowing me to clarify >> thank you for clarifying. starbucks. i want to keep you honest. starbucks downgraded to neutral. that's from buy and that's at ubs. the target goes to -- they
raised the target from 72 to 78. this one bothers me. >> no way. >> i understand this downgrade >> from 72 to 78 72 to 78 stock at an all-time high. the consumer is on fire. >> that's the thesis >> it's not just starbucks it's dunkin brands consumer spending is going to increase they have same-store sales momentum they've got it all why do this? >> exactly to me it was a blah downgrade, just based on valuation. it's up a lot. it's trading at 25 times whereas the ge and boeing, those are interesting company specific downgrades this just has a high multiple right now so i'm going to downgrade something. >> not so indifferent to what jim was saying on roku wait for a pullback in valuation or visibility into comps and earnings up side before getting more constructive again. >> comps have been good. comps have been fantastic. management has been great on execution. they're doing a fantastic job in asia why down grade this?
sometimes the downgrade makes no sense and the stock is telling you that >> we look at some of these names up a lot since the bottom year to date are any of these or collectively a referendum on the market itself a lot of stocks have gone up a lot since the lows of december is it time to sort of re-evaluate, not only them, but the names that you own right? people have ridden some names up a lot. now we're wandering if we'll hit these new highs or not >> the only thing -- bigger picture -- >> to me, ge is intick dcdyicatf what the economy isn't ge is the old economy. >> no referendum from these analysts on the market they don't look at the market. >> i understand from them there's not. can we, ourselves, on this desk make one and say, okay, x stock up 95% that's way outpaced the market another one is up 40%. that's way outpaced the market is it time to take a look at some of those names like the
analysts are today and say, you know what? maybe it's time to ring the register on some of the high flyers >> not yet not yet. i think we're going to get some up side surprises on earnings in the next cycle i don't think we're in trouble yet. >> i think it's very stock specific as your portfolio always should be i don't have a big problem with starbucks downgrade to tell you the truth. the analysts have made money in it he's had a run you take profits it's selling at a significant premium. 50% premium almost to the market and you are comfortable owning it, uncomfortable to downgrade but i've got boeing that to me is a duopoly versus all these other coffee companies i see that there's an inconsistency there but i get this is forming boeing's not for now. >> kevin says an interesting thing. not yet. >> i don't see the slowing -- >> you think we're going to new highs and beyond >> i think what's going to happen and this may be because i focus on small cap/mid cap >> 2% away on the s&p. >> i get it, but the slowdown that people are concerned about globally is going to affect the
s&p guys with 50% of the revenues in other markets. but our domestic companies are still pyfiring on all pistons a are going to have interesting outcomes into the back end of the year maybe it's time to get back into small cap stocks because they haven't had the full benefit of tax reform yet and i'm really liking what i see in this quarter. i got a big index of these things 50 private companies in almost every state and hitting the best cash flows i've seen in four years. i'm feeling good about america right now. >> mike wilson, morgan stanley, beginning of earnings recession. moment of truth has arrived. earnings kick off this friday with wells and jpm >> don't use financials as a bellwether they stuck they're terrible and they'll just break more hearts >> are earnings going to be better or worse than expected? the market has assumed they're not going to be as bad as some feared >> credit suisse came out with a report saying the opposite earnings recession likely avoided. the way they look at earnings
expectations, they measure it on the weighted expectations and median expectations. if you look at median expectations after earnings surprises, we could have some up side >> i think you'll get a strong read into just how much the global economy has contracted. that's where the struggles for earnings are going to be you'll look at energy, materials. >> i think if we get a china deal, or the -- or more positive news, ceos will be more optimistic in their guidance going forward. so that could help you, but overall, i just see the earnings recession at least for this report >> let me ask you this then. does the rally get validated or spat on in earnings season are you suggesting that the market should not be where it is by virtue of where earnings are going to be? >> the market right now is pricing in that expectations for earnings are too low i think momentum in a buzz lightyear infinity and beyond can carry the mark toets new highs. that can occur if earnings just come in kind of at or near where the expectations are
if earnings come in worse, then i think, obviously, you'll see a pullback >> while you have a ten-year sitting where it is, you don't have many alternatives you're not going into the european markets >> 250 today all right. so now to the latest on the fed under fire the president has been stepping up his attacks on the central bank and its interest rate moves. on friday mr. trump call for the fed to cut rates and then go even further >> i personally think the fed should drop rates. i think they really slowed us down there's no inflation i would say in terms of quantitative tightening, it should now be quant tative easing >> so joining us now with more is former dallas fed president richard fisher he's with us from dallas mr. fisher, welcome back qe4. that's what we need. do you agree >> qe infinity, right? back in the old days >> some suggested that's what we should have done all along what about the president saying
we should do quantitative ease again? >> the balance sheet as of last thursday when they update the h41 filings is now below $4 trillion they are taking it down, probably to 3.75 should be done as per their last statement around september you've got currency in circulation $1.7 trillion on one side of the balance sheet. also on that side of the balance sheet, bank reserves at $1.6 trillion add the other factors on that side of the balance sheet. you really can't get this balance sheet below where they plan to be in september. i don't get it i think it's very short term thinking because you want the fed to be able to ease when the economy does turn down right now it appears to keep moving forward we'll see what the earnings season is like this is kind of like you just had this long discussion about downgrades and downgrades in expectations this market has moved now from being fed centric to being earnings driven. is he as president going to
announce that companies cannot reduce their forecasts of future earnings this is a very silly process but i do think what it tells you is this. the federal reserve chairman is appointed for four years if you are looking down the road and you should always be looking down the road here, we're getting a good signal of what's likely to happen when this fed chairman's term expires. and i think you should start thinking about that in terms of should the president be re-elected, it's pretty clear he's going to want to try his utmost to politicize the fed if you think that way and you're chairman powell and members of the committee, you want to do your very best to make sure the system is in very good shape before -- if it does get politici politicized, it gets politicized. >> some think he's doing that already with herman cain and steve moore. >> those guys are not going to get confirmed. i won't eat this camera or a hat, but i do think that's going to be a very long shot keep thinking about this
when you are driving on a highway, the shortest distance between two points also has construction between those two points and i think this is what's going on here. he's building a case of what he wants the fed to look like longer term. i don't think he really, and his staff, expect to have changes in the short term because, again, that would be cutting off your nose to spite your face. no one expects this psychele to go on. he's going to need the fed to ease longer term and he needs to get the people he needs in there and is setting up the process. i'd be personally very disappointed if moore and cain -- i don't disagree with cain's economics he's certainly a republican oriented business leader but neither of them has the right stuff to be a fed board governor and i think the senate willer iffet -- ferret this out >> it's not just the president saying you should cut rates. it's mr. moore suggested 50 basis points kudlow backed that up on this
network in the last week or so should the fed -- >> i'm very fond of larry. i think he's doing the bidding of the president i don't sense his heart is in this moore, i don't pay any attention to he's a politician, a political -- not a well-trained economist, by the way. we're talking about the board of governors, not a federal reserve bank president i came out of the market side. i'm not a ph.d. in economics i was running a bank the federal reserve bank of dallas and participating in policy discussions the board of governors is a very serious matter they get a permanent vote. they usually very well trained either in economic theory or in financial practice, like the current chairman is, jay powell. and as the vice chairman for regulations supervision has been exposed to through his legal practice this is serious stuff. and it represents a threat to the independence of the most important central bank of the world. i think the markets would really go into a frenzy, and our allies, other central banks go into a frenzy if he succeeds with moore and cain.
>> how much of this is trying to protect against a down turn in the economy heading into the election you said earlier this is very short sighted. this seems to be longer sighted. they say the economy is really good now i could show you a whole list of times where the president has said the economy is the best we've ever had and getting better and that starts from last fall and leads right up until even the other day on friday where he said the economy is doing great. i'm paraphrasing his exact words in that instance but that we need to do quantitative easing you think they're worried about a downturn into the election >> i don't know, but i'm sure they think politically they are politicians, he's a politician like every other politicians thinking about the future and themselves and their re-electability. but the fed is a serious business there's plenty of precedent people forget this the worst federal reserve chairman in history was arthur burns. he gave in to two presidents there was mcchesney martin who
president johnson invited to his ranch, physically beat him up. my boys are dying in vietnam and you won't print the money that i need martin says, in his memoirs, he went to his death bed ashamed of himself. he gave in to the president. this is part of the hallowed fed history. i know jay powell well i think he and the committee are just going to do what is the level best thing to do and they'll not heed the president of the united states he'll do what's right for the real economy and i think that's their mandate. i don't think they'll deviate from it no matter what the president says >> stand by. we'll take a quick break a couple minutes we'll come back and continue our conversation mr. fisher is going to answer the question of whether the fed made a policy mistake in december when it raised rates in the face of what appeared to be a slowing economy. he'll answer that question, and we'll discuss much more. here's what else is coming up. >> before the break, our data partners at kensho on what happens after ge loses 5%-plus in a day
it's happened 12 times since 2017 when it does, a week later, the fall continues with the stock down on average 3.15%. for more go to cnbc.com/kensho "the halftime rertpo" with scott wapner and the traders is back in two minutes dear tech, you've been making headlines. smart tech is everywhere. but is that enough? i need tech that understands my business. i need tech that works at scale. dear tech, dear tech, dear tech, we're exploring quantum to develop next-generation energy. we're using blockchain to help make sure food stays fresh.
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to give every american the right to remove old, inaccurate search results by going to righttobeforgotten.org. vo: if you have search results that are wrong or unfair, call reputation defender at 1-877-492-6705. mno kidding.rd. but moving your internet and tv? that's easy. easy?! easy? easy. because now xfinity lets you transfer your service online in just about a minute with a few simple steps. really? really. that was easy. yup. plus, with two-hour appointment windows, it's all on your schedule. awesome. now all you have to do is move...that thing. [ sigh ] introducing an easier way to move with xfinity. it's just another way we're working to make your life simple, easy, awesome. go to xfinity.com/moving to get started. welcome back we are joined by richard fisher, the former head of the dallas fed. richard, i want to ask you
something. somebody just tweeted something which leads into my next question i'll never understand the richard fisher mentality, we must destroy the economy so we can fix it perhaps suggesting that the fed made a policy mistake in december, shouldn't have raised rates, was blind to what was going on in the real economy, not the data and is now forced perhaps to try and fix that mistake what do you think? >> well, first, i'm sorry to disappoint your viewer, but it takes a hell of a lot to destroy the u.s. economy the u.s. economy is in good shape. it may not be growing quite as fast as it was before and i'm sure that commentator is a fan of current fiscal policy i agree. it helped extend the cycle the better treatment towards regulations extending the cycle. it's not just monetary policy. and as regards to december decision, i have no problem with it we had a -- what it shows, my friends, is it shows dependency we've developed on this opioid
of cheap money we created, and i was part of creating we knew that would be a cost had it on for over ten years it's propelled the markets we had fiscal policy come in behind not just monetary policy. we've been relying on for so long we have a better attitude towards regulation of business right now thanks to this administration and the leaders in congress. particularly republican side and we have the longest business expansion cycle in modern history. more than march of '91 to march of 2001 which was the previous long and we're going to exceed that in june. so the economy is in very good shape. we're not going to destroy the economy by not cutting rates the object is to save as many nuts in the tree for when the winter comes winter hasn't come yet let's judge the fed longer term rather than these emotional reactions we're having right now. >> i know i have a bunch of folks in front of me who want to ask you questions have, richard. who wants to go first? jimmy? >> mr. fisher, i think you hinted at the answer to my question which is that in the federal reserve discussions
about monetary policy, is there ever a discussion of, hey, we need to get rates higher for the inevitable recession that will come your comment about nuts in the tree may have been a premonition of your answer on this >> yeah, look, your job is to be a good squirrel. you want to have the wherewithal later to preserve the economic expansion and particularly job creation at its optimal level without giving rise to inflation or deflation so i'm personally disappointed that we don't have more than eight rate increases in the tree i would like to see a couple more, assuming the economy comes back in this current quarter it appears to be doing so. we'll see. but i'd like to have some nuts in a tree for when the winter comes. it's your job to be a very wise squirrel and store as much as you possibly can but -- and also on the bps sheet, you know, you've reduced it now it's got further to go we did establish the principle of using the balance sheet as a tool you don't want to do it unless
you have to. that's another tool that could be used to expand that balance sheet if we get into a downturn. so i would just ask that critic who tweeted that point earlier, you know, be patient long term think long term. if you sbrd in supporting this administration or certainly interested in supporting this economic expansion, you want to have the tools available to help you later on and not get rid of them and spend them needlessly now. that's my point. >> kevin o'leary has a question for you. >> i, too, am a squirrel i'm trying to make money in the market i have respected -- >> you've done better than i have i haven't been in the markets for so long. >> i respect your opinion because you've been watching the fed. i have a simple question i want to look out 18 months and get you to give me a probability of another, a single fed hike in the next 18 months just give me that because i actually do care about the fed raising rates. it's not always good news. and i'd like to know what you think from here on in for the next 18 months which is as far as i'd ever ask anybody to forecast >> well, i won't forecast 18
months no one is good at it, including the fed. but if the data shows, and anecdotal evidence shows that the economy remains strong and you know the key variable in that is consumption, which is a function of employment, the employment numbers and unemployment claims are low. unemployment numbers are till quite strong as good as we've seen since 1969 if the economy warrants it, i try to get as much in there to help in the future when the economy slows down and help the expansion continue i'm not going to give you a specific number. if the economy warrants it, want to see a few more increases there so we can spend them later to mitigate a downturn that's common sense. >> as good as you say things are, ruchare mitchard, the markl is forecasting a rate cut -- >> they've always forecast fed fund futures have never been accurate as you get closer to a meeting, they change. we'll have to see. the market is not infallible and
neither is the fed we have to see what the data shows. and i don't -- it's just like, look, placing all your eggs in a basket you don't do that as a good investor you may use it to hedge and discount the probabilities, but i'm not going to pay attention to that. i would just use it as one variable, but i don't think that gives you certainty. >> it does sort of bring up the issue of whether the market is leading the fed, right it's not something new that you have heard that discussion, but maybe now more than ever, given the pivot, and the market got all upset and perhaps caused that pivot so what do you make of that? >> first of all, i don't think there was the powell pivot it's illitrative i don't think it's the case. you had a dramatic pullback. had i been on that committee, even though i'm a hawkish type of guy i would have urged me not move in january or march is the market correct or not but let's remember, the purpose of the fed is to do what's right
for the real economy, not for the market itself. the market is one of the indicators of what's going on with the economy and if you spend your time worrying about underwriting the market, you'll get policy wrong. so they have to deal with the real economy what's consumptsion, investment, government spending, net exports, et cetera and all those that go into driving what you do, create conditions for optimal employment and ward off inflation and deflation. that's your job and the market will adjust around it. >> that's an excellent point the real issue and we're probably not spending enough time on this is we're focused on the monetary policy and the markets are reliant on the monetary policy. the fiscal policy, right so we had the lift in 2017 markets got excited. finally had some good fiscal policy is it time to go back and readdress why the fiscal policy stalled out? maybe we need to look again at what the impact of the salt deduction is and the impact of lowering the corporate tax rate
as much as we did. some form of compromise. but we can't just be reliant on monetary policy. it has to, to your point, come from the fiscal side and i guess the reality is, and the question is, are we at a point where we really need to focus on addressing what's gone wrong in that direction >> yeah, look, monetary policy provides the fuel for the engine of the economy what is important is who, in sense, economic operators to step on the accelerator and move the car forward, move the machine forward. and that's what fiscal policy does it either incents or disinsents. now we need to figure out whether it's really helping with cap ex or not or fueling more share buybacks and moving the pegs around. the part not quantifiable but it's a big deal is the attitude toward business regulation
preventing it from expanding further which it did under several presidents before. that's a big deal. i applaud this senate and this house and particularly this president for doing that so i do think there's some good stuff going in the economy now, you all live on the east coast and i understand the tri-state area preoccupation with the s.a.l.t. area, but remember, wherever it is redirected stays within the united states. we don't worry about the s.a.l.t. deduction in texas, sorry. >> we'll see what -- >> you can always move to dallas or houston or austin we'd embrace you fully >> we'll see what the true impact of s.a.l.t. is in the next quarter >> richard, we always appreciate kicking it around with you thanks for your time today richard fisher, the former dallas fed president what do you think about what he said in. >> i thought his historical perspective was personally really reassuring to me. i wonder if in this era of
higher social media and higher understanding of what's going on, it's different i think it's probably not. i was grateful for those comments >> liesman's fed survey says neither cain nor moore should be confirmed according to his survey fisher says he doesn't think they will be what do you make of that point >> that's the best news i've heard today, frankly i'm just hoping he doesn't put up alex jones next so, look, you don't want to politicize the fed you want people there that are very steeped in economics, in the history of monetary policy and right now we don't have either of those. >> we'll leave it there. let's get the headlines with sue herera >> hello, everyone here's what's happening at this hour forces loyal to libya's internationally recognized government regaining control of tripoli airport. this as violent clashes continue in the libyan capital. a rival militia seized the airport two days ago triggering fears the country could be dragged back into civil war. former president obama held a town hall in germany over the
weekend. he discussed how the next generation of leaders can work together to advance important issues and he also talked about the current political climate. >> nationalism, particularly from the far right, has re-emerged a politics that divides us into us and them. and we know where that leads europe knows better than anyone where that leads to conflict and bloodshed and catastrophe. >> the postal service is issuing a new commemorative stamp honoring the late president george h.w. bush the forever stamp will be released on june 12th, the late president's birthday he died at age 94 last november. you're up to date. that's the news upteda this hour "the halftime report" is back after a quick break. numbers to examine investment opportunities firsthand. like a biotech firm that engineers
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♪ the united states postal service makes more e-commerce deliveries to homes than anyone else in the country. ♪ because the future only happens with people who really know how to deliver it. welcome back to the halftime report lyft is threatening legal action against morgan stanley accusing the firm of supporting short selling. leslie picker following the story live from jpmorgan as
investors gear up for the next big ipo, pinterest, of course. les? >> hey, scott. that's right specifically, they are accusing morgan stanley of creating a special product that would help investors that bought into lyft's ipo before it happened who are subject to specific lock-up agreements skirt those agreements to reduce their economic long exposure to lyft by engaging in short selling or swaps or some sort of security like that. now morgan stanley for its part is denying they were actively out there marketing such a product that would help free ipo investors skirt this it's a very interesting case of, you know, a dispute between underwriters for one ipo, which is lyft's, and underwriters for another ipo, which is expected to come in the next few weeks, which is uber's. and i say this specifically because we reviewed this letter and copied on it are the
investment bankers from -- that are managing those two deals, scott. >> then morgan stanley to be clear, they weren't one of the underwriters they weren't part of a syndicate on lyft? >> correct they were not. all of the people who were bankers on lyft's ipo are not expected to be on uber's ipo and vice versa that's due to issues within the banks regarding conflicts and so forth. so morgan stanley is only on the uber ipo, and then you've got jpmorgan and credit suisse leading the lyft ipo >> leslie, thank you weiss, what do you think of this >> i don't think it makes any sense for morgan stanley to go out and do this. you want a pricing umbrella that's going to increase the pricing on uber. that's their immediate concern market share, letting jpmorgan have a successful offering on lyft, that's a secondary concern. right now they have business to do so, look, collaring or hedging out your position when you are a pre-ipo investor is something that's very common
assuming you're allowed to by documents. that's probably what was going on we saw carl icahn sold his shares, 2.5%, i think, is what he had i don't think it's endemic they were out there saying let's short it >> does it explain in any way in your mind why the shares took such a beating in the manner they did >> possibly because if you are setting up a synthetic short on it because at the time you couldn't do it you couldn't borrow the shares -- >> still can't borrow the stock. >> there's borrows -- there's some same-day -- >> a lot of people want to short the stock but can't. >> right but i think that's a little part of it, but not a lot of it not a lot of it at all >> what about pinterest? any interest >> to me, it's interesting that they came out and said, look, we're below the range. >> maybe they learned their lesson that's the chatter they saw what happened with lyft and they got the message >> i would just caution -- >> they got the message. >> that could change because to
lower the price range before you go out there, i mean, you know, you're talking about $450 million i think is what they raised in the last round, $12 billion valuation. now coming out lower that could be damaging but that story is yet to be told >> speaking of ipos that were big. the aftermath not so much. big call on snap is coming up. and your questions there is time to reach us. go to our web, cnbc.com/halftime. you can eeuss lltwt awe we're back after this. that's the beat of global markets, the rhythm of the world. 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. ...or trips to mars. $4.95.
welcome back here's what's coming up up on "the exchange. the former nasdaq chairman and ceo will join me with his take plus, amazon is making a big move into the health care space. we're also going to talk about how alexa could become your home health aide in today's rapid fire create another round of billionaires will we see our first creative unicorn so to speak?
that's pyz this is a price momentum fund. how should you play the materials and todd of cfra regulars both of you todd, this is a play on the global economy and your owner in new corps and new mining and right now the stocks seem to be saying the global economy is bottoming. do you buy into that >> we do think we're positive on a number of the stocks that are in xlb we have strong buy recommendations on many of them. you have dupont and mack mu ran and companies that are dominating very well we think this is a good way to play the materials theme. >> john, this is the classic problem we have on the etf show. how do you oep theo yo you own e 70% of the fund is ten stocks. you can equal weight it if you want go with 40 or smaller stocks does any of one show any outperformance
>> i think they're performing to date and if you want more risk in a portfolio you buy mark cap weighted and less contribution then the equal weight is fine. from our perspective. >> the entire market seems to be on the bull side right now the bull seems to have won this argument the argument is very simple. europe and china economies are bottoming. the earnings picture is low single digits for low 2019 and maybe flat for the first vicks quiet overall. still choppy overseas to me. >> investors are uncomfortable taking risk with the fed on pause and global economy doing well enough. i think investors are comfortable taking on a more cyclical slant these are some of the areas performing relatively well and better than the staples and other defensive parts of the market >> the global economy is bottoming and we'll keep an eye on that and see if it is true.
and let's answer one of your questions for you, jimmy from paul in staten island thanks for the question. still on orbcom? >> personally my favorite investment this is not a trading vehicle, a long-term investment you can buy all you want at this price, but don't look at it for a year the market did not like the fourth quarter earnings report some turnover at the cfo level the market doesn't like that either but the fundamentals of what this company does satellite telemetry is fabulous and growing like a weed. >> thank you for the questions here's something we haven't said very often snap got an upgrade which is why we made it our call of the day rbc capital markets and they take the price market 17 highest on the street. >> 12-month price target $9.57
and the analyst community will react to that and raise the target and not sure it indicates very much different about the fundamentals of the company. >> any takers on snap? >> no. >> wow let's do final trades. mr. wonderful, why don't you start us off >> exxon mobil the best balance sheet in energy. >> five-month high for oil today. >> yep if you are going to buy into the state, you need the best balance sheet. you need exploration and cost of doing so >> remember we did this as an upgrade in the last week or so >> i bought exxon last week. watch out for a presidential tweet soon, though >> what have you got >> navient a cash cow with a serious image problem and almost 6% dividend yield in trades. >> even though i own some individual stocks, i buy the xbi. >> farmer jim, what and why? >> starbucks we talked about the downgrade
this thing bounced off the downgrade early and has done nothing but gone higher. >> like kevin, exxon mobile, wednesday you're going to have before the house the five big banks appearing and as a jp shareholder, that's going to be big. >> earnings from jpm and wells fargo, as well "the exchange" with kelly starts now. >> thank you, scott. hi, everybody. here is what is ahead. shaking up the fed trump considering two highly political candidates as fed nominees we'll talk about what it could mean for policy and for these markets. also, a lesson learned from lyft pinterest pricing below estimates and that might not be so bad we'll explain. the teens have spoken and one brand is king and it may surprise you alexa is getting into health care and we'll tell you about the $3,000 movie rental that is all ahead in rapid fire. we begin with th