tv Fast Money Halftime Report CNBC August 31, 2012 12:00pm-1:00pm EDT
i'm proud of that. making real things... for real. ...that make a real difference. ♪ that does it for us. have a great labor day weekend. see you tuesday, let's get to headquarters and the "fast money halftime report." ♪ this is what it sounds like when the doves cry ♪ when doves cry! why would we be playing that today, four hours to go until the close, here's where we stand. rally across the board. all of yesterday's losses erased and then some. the dow higher by 123 points, the s&p higher by ten points, the nasdaq higher by 22 1/3.
here's what we're following, when he talks, the markets listen. we'll turn to a top technical strategist for post-fed reaction. what his readings are telling us about a potential selloff ahead. here's a hint. he thinks the big one's coming, elizabeth. facebook investors take profits as shares hit an all-time low, blame it on the blue moon or is there something else in the heavens going on? first, though, of course, our lead story, fed chief ben bernanke gives his key jacksonville speech. we're trading all the big movers with janoh john and pete, and wd you see? >> they reached for metals right out of the block, you know as he starts to lean to more dovish talk you want to be a buyer of those names. to still be a buyer of toll, nobody knows what to do with a lot of these names but the truth
is we have to hear him get more dovish as he moves in to actually doing something about qe-3 instead of just the rhetoric about it, so i wouldn't be a buyer today, because if you see them all, they moved about 1 1/2 percent to 2 1/2 percent to the time he started opening his mouth to basechy right about now. but they're starting to give a little bit back. wait a couple of days. go for high beta the more you hear about qe-3. >> steve. jon? >> well, i think clearly when people heard ben and actually were able to read his words, which is what most of us did, of course, rather than hear him, it was a big reaction. it was a big reaction as far as the sell off in the market and then a v-shaped bottom in particular out of the likes of gold, the gld, frior instance, u sell it selling off and eight minutes, nine minutes later it turns and burns to the upside. we're at the highest levels since april 12th, we broke through 163 to the upside on the
gld contract and the volume was extreme. they just came in flooding in with big blocs of stock and options in the s&p 500, in the gld, and in crude oil. >> we have two of you on the set. >> you're right. >> have you got the fire department standing by? >> way too much handsome on the show today. way too much handsome. >> and two guys that went high school with prince, you were playing with "when doves fly." minneapolis central. >> let's get to steve liesman standing by in beautiful jackson hole to talk about what bernanke did or didn't say. the markets are acting like they got the go signal on qe-3. >> definitely, he left his options open and promoted the idea that the fed could do more and doing more would do good for the economy. i think those are some pretty key takeaways from the speech. saying we shouldn't rule out using nontraditional policies. saying the fed will actually
promote growth as needed and the cost of these policies are all manageable. he does go through a pretty exhaustive cost/benefit analysis and i think that's pretty critical. i'm not saying it's a done deal and i would not expected him to make it a done deal at this meeting. but if the committee sits down and decides it wants to do more, bernanke has laid a foundation for doing it. >> at the same time he gave us the history and defended the policies, right? do i read correctly, steve, when they did an analysis, they think they helped create 2 million jobs as a result of monetary policy? >> i've seen that result, and it's sort of multipliers and stuff that they use to figure out, you know, if they -- if they raised gdp by "x" and "x" number of jobs according to those multipliers would be created. >> what other thoughts should we be paying attention to in the near term and short term? >> i think next week's data is very critical. i don't think the federal reserve is going to ease into strong ism numbers and strong
unemployment reports that bring down the unemployment rate. that's not necessarily the forecast right now, but if those numbers end up being outside of expectations on the upside, the fed won't ease. although i think it's, like, a two out of three chance for doing more, and i'll tell you why. if numbers stay the way they are, say in the 100 to 150 range for jobs, 8.3 higher on unemployment, then i think the fed can go ahead. i think there's a general feeling around here that things are not good enough given the forecast and that 1.5, call it 2% growth range, that's not enough. also look for ecb and the market reaction to the ecb next week. i think that weighs on fed policy, even though i've asked everyone and they say it hasn't. i think if the ecb does more and the markets like what they hear from the ecb, the fed can do less and i think the reverse is also true. >> i got to imagine global economy, those things are connected. all right, steve, thank you so much. see you later on today. pete, how would you trade today? >> i'm always looking for opportunities and i think the opportunity has been listening to everybody who has been
talking about being short the market at 1,300 and 1350 and 1400, it seems like we're consolidating well, and when you look at the volatility index, we're up since august 3rd about 15% on the volatility index and off the lows, but if you look at the 52 week we're near the lows of the volatility index. that's telling me that right now you can still get the protection and that's why i think you're stopping. every time we tell down, we hit 1400 and that's the support and there's still potentially much more upside and steve was talking about some of the housing stocks. i'll give you the derivative of the housing stock and i think it's even a safer play right now. i look at names like jpmorgan and wells fargo and some of the banks right now, i think there's great opportunities there and i'd even look if you're looking for more yield and a little more stability maybe even going up north to the canadian banks as well. >> real quick, though, the only problem i'm having with the qe-3 discussion is that his hands are pretty tied because we've seen what happens to oil right off of him talking about qe-3, oil spikes. doesn't that make it -- i know there are nonpolitical agency at
this point, but do you know what, it's going to lower president obama's re-election chances if oil spikes. so, i think that's why he's purposely being cute about qe-3. >> all righty, mohamed el erian from pimco joins us for a first on cnbc. good to see you. >> thank you, michelle. >> do you agree with the market assessment that qe-3 looks pretty much baked in? >> yeah, i do. i would put it higher than steve's two-third. why? bernanke has a robust defense, and he told us the problems were cyclical and not structural and finally he told us the costs are containable, they're manageable. so, in my opinion he is laying the ground for more activism from the fed. >> do you believe that the fed helped create 2 million jobs? >> i have some problems with the number. what i do believe is the fed is repressing interest rates, keeping them artificially low, and that is having a mainly financial market impact
differentiated, much more differentiated than what the reaction is so far today. but it is having a financial market impact, transitioning to the real economy is more problematic. >> based on what he said today, what is pimco's view what to do today on the treasury curve? >> we would say be very careful between his willingness and his ability and effectiveness. willingness, huge. ability more limited because his tools are imperfect and effectiveness, even more limited. so, if you want to bet on the fed, you looking at the short end of the treasury curve. you looking at related high-quality corporates. you looking at mortgages and related sales of volatility. you also should recognize that the market will protect itself from the inflation threat, so hard assets especially gold will benefit. if you want to go all the way up to risk assets, equities and high yield, remember that you are dependent on china and europe when you go all the way out this.
so, be much more differentiated than what the initial market reaction is. >> when you are talking about some of the metals, i've got one i'm curious what your thoughts, the slv, silver explosive to the upside, this has been going on now for the last couple of weeks. the steady move to the upside and you now it seems it's breaking out above 30. is that one of the assets you'd look to as well? >> that's a high beta version of gold, hock? you got a lot more oomph on the way up and a lot more fall on the way down, but view it as the high beta version of the gold. >> okay. >> a question about bernanke, the way he played his hand today, i think he played it perfectly, sit back, wait for the ecb to react and i think that's what is going to push equities even that much higher, so when we get on thursday the ecb comes out, they have to make a move here because they said they would, i think that is why bernanke sat back. so, i believe and i wanted to know your opinion on this that the best thing bernanke could
have done is sit back, let the economy take care of itself and if not needed that would be the best-case scenario. do you agree with that? >> i agree with the fact that he was right not to give specifics, right? so, he took you all the way to hinting it will happen but didn't tell you how and when, okay? that was very eloquently done. i also agree that today's equity rally has a lot more to do with europe and this notion that overnight we got better signals out of europe. i'm not sure we did, okay? i would just caution it's not a done deal that will move next week. they have a really important german date on september 12th on the constitutional court. there is still divisions within the governing council, so we may not get all the action that you hinted at next week. >> so, we should just show our viewers your partner bill gross tweeted out bernanke to go with his guns blazing, a near certainty. it will be open-ended but increasingly impotent. that's a tough word, impotent. you got a question, jon?
>> i do. fars get i as far as getting the oomph here don't they get rather than a qe or twisting at basically a zero percent interest rate. >> you're absolutely right, jon, the problem in today's world policy coordination globally is as low as i've seen it. and i've been around for quite a long time. each country seems focused on its own internal issues. there is very little in terms of multilateral coordination, so, yes, a coordinated approach not just on monetary but on fiscal and structural reforms would be a big deal. >> but, i feel like maybe they're not coordinated but everybody's weakening. >> right. that correlated rather than coordinated. >> okay. >> there's a big difference between correlated and coordinated. correlated you don't get the multiplier effects you do
correlated. they are correlated because we're in a synchronized slowdown but ironically some of what we do hampers other what they do hampers. look at china's currency policy, that's a perfect example. >> got it. all right, guys? anybody else? what is your colleague telling folks about equities? >> he's saying what he said before, this is a very differentiated market. this is a market for stock selectors and focus on strong balance sheets, exposure to growth, and the ability to buy back debt or give out dividends. >> always a pleasure, happy friday to you. >> thank you, miss caruso-cabrera. let's head over to kayla at the market flash desk. >> we're watching shares of us airways ticker lcc rising just shy of 3% on an announcement this morning that they signed a nda or nondisclosure agreement with american airlines to explore a possible merger. this would be opening the kimono on behalf of american after nearly a year ago entering
chapter 11 bankruptcy, but if you look at lcc shares in that time, they are up 91%. my worry is what do the shares do if this doesn't happen, send it back over to you, guys. >> thank you very much, kayla. who is trading the airlines, anybody? >> we've had bearish shares on delta and continental, pete, that have shown up because the price of crude oil has made that move. i wouldn't be surprised if crude oil can adjust and come back down although it did make that v-shaped move i spoke of earlier today. i think if it does come back down, the airlines can rally, otherwise i think kayla's exactly right that there's a real risk here that american if they don't move forward with lcc that's a bad move by lcc and the pop will wear off quickly. >> all righty. coming up on the "halftime report." don't blame it on the blue moon, the gold etf is spiking as bernanke began speaking. we'll look at the new found luster.
this is the spdr gold eft, as bernanke started speaking, zoom. first, though, facebook investors taking a zoom as the shares hit a new all-time low. what is the call and the move of the day when we come back. how do you know which ones to follow? the equity summary score consolidates the ratings of up to 10 independent research providers into a single score that's weighted based on how accurate they've been in the past. i'm howard spielberg of fidelity investments. the equity summary score is one more innovative reason serious investors are choosing fidelity.
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all right. welcome back. we the s&p pares its dwaygains, gold holding on. the intrasession decidedly lower. any idea what we're getting a fade here? >> yeah, i think so, michelle. when you look at what's going on in the market right now, there's really no volume out there, most of the people aside from the crew here, most people are away in the hamptons or away somewhere, you have very light volume exasperating the moves up and down. >> i'm sorry, mike, finish. >> look at the levels and see if you can probably speak to this. the market's been holding true to its levels for a very long time. i'm in the camp that we break above the 1422, 1425 level and go higher. but let's watch, 1397, 1392, that's very key as well, so i
think the market staying in this range right now and i wouldn't expect much more for the rest of the day. grasso? >> 1397 as mike just said was yesterday's low. 1398 was last friday's low. you want to keep an eye on those two levels. we dropped about a percentage point from there if we break through. the risk to the upside is 13 -- i'm sorry is 1442. so, if you're a bull in this market, you're really playing it for 3% upside and you have a dramatic difference when you're going lower in the market. so, i would still be lightening up on a lot of positions here. >> do we see people taking protection or buying protection just in case this kind of thing was going to happen on a day like today where you have volatile moves, guys? >> we have in the past, in other words, just as they both said, steve and michael, we've seen the market when it does pull back like that, michelle, they do the call-stupids in the vix, they buy out-of-money calls and stack money on top of it, they're buying both and not spreading. they're giving themselves massive upsides in the vix
protection which is, of course, against a downside meltdown. they've been losing lots of money on that trade lately. >> is that what you call it a defense? >> that's why it's called a call-stupid. >> why was it named that? >> it was originally named after me, grasso. thank you for bringing that up. >> let's get to the call of the day, facebook continues to deliver anti-social returns. hitting all-time lows after bmo cut its price target to $15. anybody jumping in here yet? >> unfortunately i'm already in this pig. we started off with when "doves cry" and this one is when pigs fly. maybe that's the next time this thing going to move to the upside. >> at how much? >> well, i mean, look, i think that this is kind of the opposite of what grasso was talking about, though, because steven was saying, you know, if you only think you have 3% of upside, shouldn't you be lightening up here? if i'm only thinking i got downside to 15, i would love this stock. the problem is you don't have downside to 15, you have
downside to zero, that's the way it's been trading. and i'm very frustrated. i'm long stock here. i'm short those one by twos above, but it's not working. >> the one name we've seen in the space is pandora, we talked about it for the last couple of days. it spiked up, it was a flagpole to the upside. it's holding in here, up another 2 1/2 percent, but those are the only ones that seem to be able to monetize mobile and no one is giving facebook the benefit of the doubt the way they did with the ipo. the perception is reality and it's turned. it's 180-degree difference. >> the reality of that ipo there's been nothing really from management other than the earnings call. other than that we hear nothing. we don't ever get any kind of updates on what is our plan going forward. they're not really laying it out very concrete for any of us, and that's been the real problem. that's why we just sort of we have the occasional bumps to the upside and then we sell off. to jon's point, i'm in there as well. i'm in at a lot higher level than jon, i continue to sell the
calls against it because i fear i have less risk to the downside but the downside might be zero as jon said. the way it's trading it's not acting well ever. >> if you don't have the company talking to you, the vacuum gets filled by analyst reports when bmo said we're doing channel checks and people are cutting advertisement on facebook and it's going to be a negative. >> facebook are talking to investors and institutions, the problem is they're not coming on this network and they're not speaking to the general public. because that's what dictates perception, not just your top three or four or five or six holders. >> that's right. they should be right here on "fast money" that they come on, right? smart. commodities are rallying following expectations that qe-3 is coming, gold trading near five-year high, let's talk with dennis gartman with more on the commodity trade. everyone seems to think qe-3 was given the go signal by bernanke, do you agree? therefore, the rationale or the reaction from commodities is rational today? >> i think the last sentence of
the speech summed it up. i didn't think that they'd make any statement or i didn't think dr. bernanke would make a definitive statement that qe-3 was coming immediately. but he certainly told us it was on the table, that pending any further economic weakness, it shall be used. they used the term accommodation several times, so it's on the table. i think it's not on the table or not going to be put into effect until after the election but everybody now knows it's there. the gold market was fearful it might not be, it is, and up it went. and it's strong in all currency terms this morning, so it's really quite impressive. >> is there time to buy gold here now? >> if it is indeed breaking out to the upside, isn't it? and it's breaking out in dollar terms. it's broken out in yen terms a while back. it's breaking out to the upside in euro terms. i always want to say that gold is nothing more than another currency. it's just another reservable asset. and it's -- it's a currency cost. so, yes, it looks like it's going higher and i think one needs to own gold in euro terms,
yen terms, and even dollar terms now. >> what about oil? >> that's a tougher one as far as i'm concerned. and it depends upon which oil. i hate to get sticky like that, but there's a big difference between what's happening in wti and what's happening in brent. >> wti being west coa intermediate here in the united states and brent being over in lond lon london. sorry, being didactic for the local audience. >> there's plenty of crude bidding for storage in the midwest. if you're bullish in the crude oil market, far better to be bullish of brent that wants to go higher. wti, not so much. >> dennis, real quick, as far as the ag trade right now, where do you stand with that? because obviously with isaac and the rest of the news stories out there, this has been a very, very volatile area. how do you stand on the various commodities? >> it's interesting. if you look at isaac, it's expected to drop some rain which is probably well past what's needed in corn. nothing's going to save the corn market. it probably is helpful to the
bean market. and we could use a little rain as we're getting ready to drill the winter wheat crop, so it's probably -- isaac is bearish of wheat. isaac's probably a little bearish of beans. isaac doesn't have anything to do with the corn market. corn is just -- that crop is gone. today you've got weakness, however, because of isaac, because certainly there's some benefit to be derived from any kind of rain that you get. but, again, not for the corn crop. >> dennis, good to see you today. thanks for joining us on this friday. >> thanks, michelle, be well. cheers. coming up, we'll reveal our top three trades for the day. and later why the markets may be positioning for a selloff, what you need to know for the long weekend when the "halftime report" returns. looking for a better place to put your cash? here's one you may not have thought of -- fidelity. now you don't have to go to a bank to get the things you want from a bank, like no-fee atms, all over the world. free checkwriting and mobile deposits.
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time for the "halftime report's" top three trades. the s&p hitting a new record high today. the sector is up 10% since early june. are you a buyer at record highs, dr. j? >> no, i am not. i think you've seen a little bit of fluff built into this one certainly because of the dividends and so forth that
these guys have and people viewing it as a safety trade. but the fact that it made the 52-week high today doesn't scare me off, but i wouldn't add to positions. >> michelle, i would add to that that i'd take the opposite side, the brother versus brother thing we do once in a while. but mohamed el erian addressed this thing talking about evaluations and dividend yield and i continue to like niece names and i think we've got 5% to 10% upside from here and i don't really view the downside as much of a concern. >> yeah, you see the intraday chart, and one of the reasons the market is pulling ba back, almost to zero. take a look at intel, one of the other top three trades the stock has been down all week but today it's the best performer in the dow. take a look. what's the trade here? marshall mathers? >> intel i think is a buy here. love the eminen analogies, by the way, but intel trading at ten times earnings, paying a dividend over 3.5% and really this is one name you don't have to chase because it's not up
anywhere near its 52-week high. it's been down i believe because of the slowdown in pc sales, but i think intel's a great name to own. it's a great quality name for a dividend and i think it does trade higher from here. >> groupon touching lows today, down 70% since the ipo, how fall can it fall, grasso? >> i guess you don't have to be a genius to look at the chart and tell you it's a broken stock. but amazon can do what they do. barriers to entry are extremely low to this space, i wouldn't be a buyer of groupon. >> the biggest pops and drops in midday trading. jon? >> who thought exploring caves would be this exciting, but they blew it out on top and bottom line, they gave positive guidance. anytime you can get the trifecta working in your favor, you will see a pop like this. this one has perform admirably.
>> a 15% pop in navistar. >> the stock is up because the epa can continue to sell their engines noncompliant with new emissions standards, however, they have to continue to pay a hefty fine to so. the way to play this space if you believe in the engine replacement cycle is through cummings cmi, not navistar. >> a pop for corning 3%. pete? >> oppenheimer upgraded with a 15% price target. they talked about the buyback and the dividend, that's been the story for this company. i still think you could own it but expect to see 16 for quite some time. >> u.s. steel, a pop of 1%. >> they have headlines with the word strikes involved in it. 75% unionized workforce, if they do strike that would be seen as supportive of steel prices. that would be a net beneficiary of that would be letter "x" and nucor as well as metals not getting up too bad. i would stay away even if you
are getting a little pop. >> a drop for cows, who do you call when one of your calves gets stuck up a tree? an english farmer faced that very question when his cow buckle wandered over an embankment and got tangled in limbs. luckily firefighters were able to get the firefighter down. sparkle is now recovering and milking her internet fame for all it's worth. ah, she's cute. coming up, what's behind the notion that stocks are poised for a selloff? we'll turn to a top technician ahead of the weekend. first, though, let's get to bob pisani with a tease of what's coming up, bob? >> it's quiet now, michelle, but not for long. september will be a big month. i'll tell you the two most important events that will happen when "halftime report" continues. insulin users test often. freestyle lite can help you test easy.
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while the attention today is focused on bernanke there are plenty of market-moving events to look forward to next month. bob pisani joins us now with your september preview, bob? >> the important thing is tell me what will happen with europe and the nonfarm payroll numbers in august and i'll tell you what dw will happen with the stock market. the first big event september 6th is theique, michelle, and
the key point is the staff there is working out details of a bond-buying program, they want to use that in conjunction with the eu bailout fund but i think it will be unhike i had to be ready at the meeting. i think there might be d disappointment. september 7th, will set the tone for what the fomc does at their september 12th meeting on the same day, of course, as some of other things that are happening in europe, and that's going to be the big thing for the federal reserve. september 12th the german court ruling on the bailout fund. most people think it's not a major problem, that they're going to support it. if they don't, if they declare it unconstitutional, that means the whole bailout will be on the ecb, and that will be a big issue. a minor point, but i think it could be important. we'll get the dutch general election on september 12th. right now the left wing parties are leading that election. if they come in they'll support draghi and monty for an aggressive bond-buying program that will isolate germany even further. i think the politics of what goes on in europe is very important right now. >> wow, there's a lot coming up
in september. let's trade some of these events, mike, "cleaning out my closet" murphy, what is the most important. what should you focus on? >> i think the ecb meeting on thursday is the most important. but i agree with the points that bob is making with the external factors that could affect the market. but i'll go back and not to beat the drum but the fact that i am playing the eminen role today, you look at the technical basis and it will give your lead on how you should play it. the market is on a bull trend and i'll stay long and bang the bullish drum. >> grasso? >> i think the market is breaking the bullish trend right now. we have to see a little bit more softening in prices, but to mr. pisani here, don't you think that at a certain point the inevitable has to happen, you have to see a lot of the euro zone just break-up, all of this is smoke and mirrors basically right now. and everyone's waiting for the inevitable thing where greece drops out, then spain drops out, then you just see a whole -- a
whole -- the whole euro zone just totally falls apart. >> not happening. >> while we're waiting -- >> not happening. while you're waiting you lose a fortune, people underperform because they keep buying puts to protect against the inevitability of the you're row breaking up. it's not happening. they'll do everything they can. >> hold on one second. >> everybody's losing their shirts betting against it. >> bob, i would disagree the guys are not performing because they're buying puts. they're not performing because they're not in the market. >> it's the same point, though, they are arguing there's no reason nor them to be in because of the inevitability of the break-up. >> how about something so forecast that it starts getting discounted in and people start moving their money way in advance but when the event actually comes, ie, greece, it was nothing. >> i disagree. how could everything be tremendously forecast. you just had roinle bet against what i just said, so that can't be tremendously forecast. it can't be factored into it. what is factored into this market is qe-3 and at this point you have to be a seller of it
because we bang against certain levels in the s&p and we fall off. people don't believe the rally, point-blank. >> can we get any more volume in september hopefully, finally? >> we'll get some modest volume. we were on a four-year downtrend with -- >> i thought all the evil high frequency traders were in the market? it doesn't matter. >> what happens is the volatility drops, high-frequency traders can't make any money because they only make money exploiting little moves in the market. if the market is flat, literally, literally, the machines turn off. trust me, the high frequency traders are not happy with this volume either. >> that would defeat the whole notion that the high-frequency traders caused the volatility. thank you, bob. >> okay. when it comes to september and beyond, one top technical strategist says he's seeing a strong sell right now, joining us is tom fitzpatrick. good to see you. why do you see such big sell
signals, why are they? >> a couple of things we're looking at, michelle, the long-term overlays that are closet to what we're seeing today. and in particular while there are differences, a lot of similarities with the buy action today and what we saw in the 1970s particularly into that period around 1976, 1977, both in terms of the market, housing, the economy, and other asset markets. but more close to home, one of the things we're looking very carefully at is the vix and in particular, the pattern we've seen in the vix since the s&p hit highs in october of 2007. >> what about the vix? it's too complacent, it's not doing enough? >> i think complacency is probably the right thing. if we look back at the highs in october of 2007, the vix is a volatility indicator but when we did, we traced lower on the vix and ever since then we've had significant pullbacks on the vix that have been traced back to the same trend line all the way down on six occasions now since the peak in 2007. so far it's five or five when the vix trades back to this trend line on balance which is
what it did this month, you've seen a multimonth downmove in the s&p in the months following. >> if you see this move in equities what are you seeing, for example, in the ten-year yield? >> our bias is very firmly, we haven't hit the lows yet. >> we haven't hit the lows, going back to 1.6% and then how much? >> going down somewhere between 1 and 1.2%. >> holy smokes. there that fits both the long-term trend and goes back pretty much 30 years particularly the period from 1993 to date and also the short-term pattern which is following a pattern amazingly similar to 1993, the summer of 1993, which was the savings and loan crisis in the states and the crisis in europe. if we continue to follow that pottern, then we should be looking at somewhere between 1% and 1.2% by december-january. >> tom is scaring me to death, stevie grasso, how about you? >> the question i have for you i'm still long on gold minors. do you see the inverse
relationship? i know you're bullish on crude and gold, but do you see that? sometimes you see it correlated and it's uncorrelated? do you really see that or do you see people running for the door once the market starts coming in? i think people sell any and all assets but you see it as an inverse correlation, correct? >> yeah, i think obviously when you look at the miners, you are looking at the gold price and equities. if you have a situation with the gold prices moving up and equities moving up, that could be quite good for the miners. but at the moment our bias very much is we're on the cusp of a breakout of gold and we'll go significantly higher, but at the same time the overall equity market may struggle for a little bit. so, on that basis, we feel probably that gold itself is a better way to play this than necessarily the mining stocks themselves. >> for the folks listening on radio, let's underline the targets, the euro is going to $1.10 and the gold is going to $2,400, and equities 20%. why do i think that conflicts? why do i think the euro would be
lower in an equity selloff of 20%? >> i think the euro will go below. we had a 20% down-move and the euro went in the opposing direction. it has the tendency to go where it wants to go but at the end of the day the underlying bias is the euro will go lower and probably much lower over time. if you asked me 18 months to 2 years out, i think the euro will be at 90 cents. >> wow. >> but in this dynamic what will probably happen we're getting an equity move down and things aren't so good. as a consequence, europe may capitulate more and instead of talking, talking, talking, and turn to talking, talking, acting and if they do, in that instance it will be a knee jerk reaction and the europe will bounce. it will go down initially as part of the problem but eventually it will go down as part the solution. >> thanks for talking to us today. >> thank you. >> let's trade it. pete?
>> i would have to say i would want to be on the opposite side of most of this. primarily when i'm looking at the volatility index of these levels and i know the folks missed the run from 1350 to 1,400, i would rather own the cheap premium that bob was talking about because frankly those guys buying the verience andive premium, that insurance policy is extremely low. it's near the lowest levels of the 52-week range so why not own that protection? be able to get the ride to the upside rather than be betting on the downside and missing what could be on the upside still to come. >> rabbit, how would you trade this? >> i agree with pete 100% here. i think the market has a lot of upside here, you stay long in your positions and you have the vix at such low levels, there are so many different options strategies you can employ to get insurance there. i mean, come out and call for a 20% pullback in the overall market? sounds great, and could it happen? yes. but i think right now the market is not calling for a 20% pullback. you do have some movement out of europe that's calling for things to be somewhat stabilized.
i think the market goes higher. corporate balance sheets are in some of the best positions they've ever been in. i think you definitely stay long. but buy your insurance. >> all righty. thanks, guys. when "halftime report" returns, zeroing in on the dollar's direction. hours after fed chairman bernanke's key speech. we'll be right back. ♪ think about direction wonder why you have it now ♪
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coming up today on "power lunch," an important hour to help you prepare your financial life after the holiday weekend. the key dates the fed will be watching that will determine what happens with interest rates and whether they decide to do more easing. and the tech avalanche, a dizzying number of new products from the biggest players unveiled in the next few weeks. which ones will be the breakout must haves? we'll talk about it more on "power lunch." currency markets reacting to bernanke's speech today, dollar herky-jerky. a lot of volatility while the fed chairman spoke. it's now trading lower by more than half a percent. let's bring in kathie lee of bk asset management for her reaction. what do you make of the herky-jerky movement, were they parsing through the speech or do you think what we're seeing now is the right reaction from the
market? >> we're seeing tremendous volatility and unfortunately we're not only getting headlines from bernanke this morning but also quite a bit of news out of europe, i think right now the market has already digested and factored in what they believe bernanke will do and say in september, but we're seeing a lot of movement in the euro dollar as a result of the downgrade of s&p by catalonia, and banking sector issues in spain where they could need a bailout as well as pacific bank, and i think overall that's reingesting the need not only action from the federal reserve but more importantly, ecb next week. >> catalonia being one of the regions of spain, and that looks like it will need help, and bankia is a hope that keeps getting bigger and bigger and bigger, they just posted a huge loss for the quarter. what are you focused? >> europe is still very uncertain. i think we'll probably get action from the ecb, but that's not really the clear-cut trade. i think the one here that bernanke what he told us today
was that they're getting ready for action. and so, i'm looking to sell dollar yen. on a little bit of a rally to 79.10 with a stop at 79.65. and a target of 78. and i think this plays the possibility of almost near reality that we'll get additional easing from bernanke as well as my belief that the knock on payrolls this month or next week is not going to be as good as the knock on payrolls report we had in july, for the month of july. >> do i understand your rationale directly, you don't want to do dollar-euro because the other side of the trade is also deeply affected on what's going on in europe, in order to isolate the u.s. effects you do dollar-yen? >> that's right. it's the purest on the u.s. dollar and economy trade. euro-dollar is bad news. mario draghi will probably come save the day on thursday and that could lead to undue volatility in the fx markets.
>> all right, thank you very much, kathy lien. mike murphy, that's your real name, would you do anything with this? >> i would, as a matter of fact. i think the best way to play this here is long u.s. dollar. . the u.s. is the place and has been the place and long u.s. dollar i think is still gong to get you where you want to go. >> stevie grasso? >> i'm going to take the other side for the main reason why the u.s. dollar is so strong is that it's been weighed against the euro and if you guys on the desk feel that the ecb is coming in, you know, riding a white horse, that's going to be a negative impact for the u.s. dollar. it's going to be a negative impact for the s&p. >> against me all day. >> usually with you. you're so damn handsome. how to bet against you? >> the post-bernanke buzz on twitter. we'll be right back. [ male announcer ] while many automakers are just beginning
time to hit the "fast money" twicker. seema? >> instant reaction to ben bernanke's speech, michele. we asked you to tweet us if you're more or less confused. lewis tweets i'm less confused the market wants another financial fix and the chairman reluctant. let's get to the next one. it's pretty clear the powers that be are firmly behind 2%
growth and 7% unemployment. lastly, the final trader says the fed says it is not ready to buy more bonds so i'm buying more bonds. traders based on the development do you put more money in equities or bonds? >> what do you think, guys? >> equities. >> absolutely. yeah. just like we talked about last night with warren buffett. virtually every stock is big dividends between 2% and 3%. and like pete said with murph, buying protection here, how do you not own them and protection? you could make a little bit on both sides of that trade? >> eight mile? >> yes. i'm not afraid because i'm the real mike murphy and cross the 8 mile and say stay long equities here but buy and protect. >> nice. >> all right. guys, final trades next. we're sitting on a bunch of shale gas. there's natural gas under my town. it's a game changer. ♪ it means cleaner, cheaper american-made energy.
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trade like a monster? join john najarian and washington, d.c. for his invest like a monster conference. excellent. sounds good. >> yeah. that was god-zilla introducing. >> excellent. final trades. mike murphy? >> yeah. hov, we're long the name. earnings on thursday and one third of the float is short. i think it can be a good short covering rally. >> stevie i'm so jealous michele didn't make fun of me all day grasso? >> nov. holding the bernanke bounce. michele, great job. i enjoyed it. >> pete najarian? follow up with that kind of praise. >> it's wonderful to be with you. apple ecosystem. sky works is a name that just broke through the 52-week highs. option activity out there. i think it's going higher. >> great job, michele. and to grasso's point, huge call
buying but i like another energy play. ultra petroleum again. last time it popped four bucks. setting up nicely again. >> take a quick read on the market. look at the intraday move. this is a herky-jerky. this is the s&p intraday right now. bernanke, you can see exactly when he started to speak. the market sold off and rallied sharply an now midway through this. the 10-year yield and gold, as well. 10-year -- decidedly lower on the interest rate. that's been less of a reversal of a move. >> that looks like your heart rate when you're talking to mike murphy. unbelievable. >> wow. oh. >> i was thinking it was more like the price of gold that shot up rapidly all day today. this's the shape of my heart beat talking to mr. murphy oil. so it's higher by now 26 bucks. again, 1.5%. 1,683. when's didig