tv Fast Money Halftime Report CNBC December 20, 2012 12:00pm-1:00pm EST
wii-u. they are reducing estimates for act vision -- they also reduced hardware and software estimates for gamestop. the focus from and concern about console sales a big issue as well. double whammy. >> thanks a lot, brian. stay tuned for bill ackman's interview. he'll talk about his position on herbal life, having just made this presentation. and then we think speaker baining is going to talk in the 1:00 hour. for now we'll turn it over to "fast money halftime" over at hq. >> thanks very much. welcome to the halftime show. it's a mixed day thus kwar on
wall street. the s&p is hanging on to the flat line, just ticking positive. ackman unplugged. the hedge fund manager speaks to us live after sending herb al life shares plunging. we're also going to reveal one of the worst trades of 2012 coming up. first our top story, the markets and the cliff. all eyes on the nation's capital as the house is set to vote on speaker boehner's so-called plan b. it comes as the two sides seem to be moving apart and it your money caught in the middle. john harwood has the very latest on what could happen today. >> we've got the house of representatives preparing to vote on what speaker boehner calls plan b, to ins lut it it
has also spending cuts to win over republicans who are reluctant to go along. democrats say it won't go anywhere in the senate. president obama says even if it does, i will veto it. but leader cantor said at least it something. >> absent a balanced offer from the president, this is our nation's best option. and senate democrats should take up both of these measures immediately. >> now democrats in the senate say they're not coming back to work until after christmas. it appears that the house may leave town after passing this esh it appears that if we got a deal struck that can stick, we're not going to get it until next week. >> john harwood for us down in the nation cap there will be a
news conference at 1:15 eastern during power lunch. keep it here to watch for that live coverage. murph, how are you trading the market here? a couple triple digit gains in a row for the dow. now we pulled back a little bit. kind of a wait and see. >> the market is pricing in right now. i think you stay long. can you look at -- you have to have puts under your holdings. why? if we do not get a deal, i don't think that's priced in the market. but you have to have protection underneath the market. >> what are people to do with their money today? >> depends if you want to create or are you going to -- right now it's december 20th, so it all about chasing. i'm buying goldman sachs again
today. i am buying morgan stanley again today. my that's are the beta chase type of trades. in terms of creating alpha, there's a plan b on the cliff and also a plan c. i think something does happen. >> do investors all need b i think sustaining whatever advance we get off the fiscal cliff is going to need some other fundamental cast a list but even on a pullback i think you might the pasht. >> what's surprising to me is how resilient the mark is in here.
you get the sense that this market does want to have a rally between now and the end of the year, it wants to see santa come down the stock exchange's chimney. what would you buy today. if joe has made some moves on financials, what would you do? >> to be frank, i'm not doing anything today. we've taken some profits and have a big pile of cash sitting on the sidelines. we're being cautious. if you are being aggressive, i'll put some pits under there and be very, very cautious. >> stephanie. >> i thit the market wants to go higher. because the underlying fundamentals are getting better. >> look at the existing gdp and look at the housing. it's across the board. so that continues to really help. but even manufacturing. the philly fed, not as bad as expected. i sew i think the sus in a little bit stronger of a position and i would argue in a
better position to handle a fiscal cliff problem. then you also have china that we talked about. i thinks that really what's going on in under lying market. >> bill ackman is laying out his short case against herbal life. >> are we into hour two and a half now? >> we're well into hour three. >> ackman is back up as it were. >> it not terribly unusual for ackman. there's a lot of history about looking at what is a pyramid scheme, et cetera. the up shot that herbalife is a
pyramid scream and should be treated like one. here's how ackman speaking about an hour ago described it. >> i believe herballife products general dili do what they say they're going to do. the problem is you're commodities. but key to all of these of these games is deception. you have to skrons unwitting participants this is really an attractive opportunity. >> not a great quality of video but you do see him speaking of hits own words. and it was ackman and it would have his associates who walked through this thesis in great detail.
sold at a deep discount, making claims about its sales figures tough to believe and how they're almost certainly outstripped by royalties, but he also alleged the emotional appeal of this country with limited education or both jb. arguing that by praying on financial hard times with big promises of windfalls that can't be met. he talked about the history of pyramid -- we've asked herballife for comments this morning and so far no direct response to his laters try we don't pay to and they believe the sec should be investigating
ackman for allegedly using the options market. >> say they reacted strongly yesterday, it was a near unpress date od -- is nearly unprecedented. they've been under the gun for a long time. ackman comes out with this big presentation and they were fighting back. >> absolutely. you have ackman accusing them of being fraudsters, running a pyramid skaem acheme. then we have michael johnson coming on air saying short sellers are using the options market to manipulate us. they accused ackman of trying to move the sock lower so they would be in the money because of the expectations tomorrow. >> ackman denied that.
>> and he reiterated that at the top this morning. he also said he's never spoken to another short sellers about this. there' -- he got on an earnings call in may i believe. of course there's lots of speculation about it. >> let's go to one of the traders. stephanie, what do you do with a stock like herbalife here? you have ackman on one side and the ceo, both using public airwaves to state their opinions. the bottom line is ackman says the product goes from distributor to distributor. what do you do? >> i'm always looking for a value opportunity. the problem is is that it's a he
said/she said kind of thing. multiple level companies have always been sort of tainted, if you will. so it's not so surprising to me this is back in the fold. i just don't think the visibility is there at this point and i think there's too many question ps. >> though i don't want to state the obvious, ackman is singling out herbalife. he was did the same thing with avon and had to come back and say it's much more transparent and it's not the same. >> is there anybody here who would buy -- >> he's the one who got the started on may 1st by asking the questions. we didn't find anything but yet the stock still went down. today i think you cover the trade, and the reason you cover the trade now is because i think
ackman used a mistake in the language that he used. the language implies the stock going to zero. now to your point, stephanie, you've got everyone pointing in different directions defending the stock. i think you cover the stock here if you were short. >> i agree. so david went out there, bill ackerman went out, cited -- i think the short interest is over 25%. i think could you get a short covering rally. >> let me also say we're waiting on bill ackman, who is going to be live on this program during this hour from the conference where he laid out that whole present ago. so you're going to hear directly on what bill ackman thinks about the country.
you'll hear about what he thinks is the president's response. i also want to let you know that harry reid will join us momentarily to speak on the fiscal cliff. there's the podium on capitol hill where senator reid is expected to speak momentarily. kate, i'm going to thank you and we're going to send it over to the market flash desk to look at a name that's moving right now as we continue to watch the markets. sully, what do you see? >> the numbers come out tonight. i'm not going to call them earnings because the consensus is for a loss of about 80% for sure. however, the it's up 80% in the last couple of months. they think had the suns they've kp gained in subscribers. consensus for a loss of 35 cents a share. will it be enough? i don't know. by the way, since i'm here, i'm going to tease my own show at 2:00.
>> please. >> barney frank. last time congressman frank and i interviewed together, it got interesting. he's coming back on. good man. >> >> the best i know, he's going to want to be on squawk box. he's done nothing since he took over that job. we look forward to hearing from the blackberry coo this morning? >> if free exchange is free to. ♪ but we can still help you see your big picture. with the fidelity guided portfolio summary, you choose which accounts to track and use fidelity's analytics to spot trends,
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we are not taking up any of the things they are working on over there now. it's time for the republicans to get serious. it's very, very, very unfortunate the republicans have wasted an entire week on a number of pointless political stunts and that's what they've been. it's obvious that the speaker working with his republican team can't get enough votes together to pass much of anything. that's why they worked all day yesterday and started the day before trying to get the rules committee to come out.
understand the rules committee is a tool of the speaker. and i don't mean that in a negative sense, that's the way it always is. if he has trouble in the rules committee, he has real problems. so he has reprobabal problems. let me be absolutely clear. speaker boehner's plans are nonstarters in the senate. the latest thing we've seen that they're going to vote on tonight will raise taxes on 25 million american families by more than $1,000 while giving millionaires an average tack brex break of a additional $50,000 each. so if what they now have gotten out of rules, what they've gotten out of rules is not going to pass the senate. president obama said he will
veto it. the house republicans know that the bill has no future. if they don't know it now, tell them what i said. we all agree, the four of us here. but they still decided to waste a week while middle class families edge closer and closer to the fiscal cliff each day of that week that they were wasting time. the senate has already passed a plan to extend tax cuts for middle class families. republican want to ensure that taxes don't go up january 1st, they should simply pass the senate bill. the senate bill is the only one that would be signed in law. we could protect middle class families tomorrow if the house would pass our bill. but instead of protecting middle class families, the speaker refuses to bring our bill to the floor because it would pass. there are so many things that would pass if he would simply let democrats vote.
he won't let them vote. there's 435 members of the house of representatives. let them vote. we have other important things to do here in the senate. we have -- we're going on almost two months now without giving relief to the northeast who was struck by that violent storm sandy. 700,000 or 800,000 homes destroyed in new jersey and new york alone. when irene struck, we acted very quickly. we didn't look and say, well, let's see, alabama has two republican senators, mississippi has two republican senators, texas has two republican senators -- >> while the political ping-pong in the nation's capital continues, senate majorities
lead are reid says we're not going to take up the bill, calls it a nonstarter. and the plan b vote could come at any time. stephanie, what the heck is going to happen here? you're getting more of the same out of dc. >> i think the market will continue to be volatile. you'll continue to see this political jockeying. and you either have trade this by it minute or you have to take along are term approach and you have to focus on the fundamentals of the u.s. economy, global economy and company specifics. >> i think there's a plan c that allows to extend the middle class tax cut for those making $250,000 or less. and we angsed the amt question
as well. there is this plan c and i think you fall back on that. >> the worst trade of 2012. we're looking back at stocks that have brought some pain this year. the first up on our list is jcpenney. ceo ron johnson remains on the hot see the saet. can he turn the company around in 2013? welcome. it good to you have. are we overstating ourselves to call this one of the worst trades of the year? this certainly has ban disaster. >> it's been a disaster and it will continue to be a disaster. they've made every misstep can you imagine. >> you have no signs of light out of this company? nothing there you look at and say i can get behind this guy? >> the only signs of light you have is he's getting more realistic where he's out of promotions now. again, when you walk through the
stores and we've had team go to the scores and you need traffic. though the combination of those two make it devastating. >> we can talk to the traders -- >> at this point i don't. you really need to see fundamental changes. >> and a store concept is not getting any traction sh. >> the store within the shore showed that the sales doublinged in the new jcpenney versus the old jcpenney. they show sales per square footer like $260. macy's who has store within a store but they have coach, great brands, they do less than 200 skirls per.
>> macy's got three times the traffic aspeny's does so it would be in leave eye's interest to do that. >> i think the biggest mistake johnson made was overpromising and underdelivering and saying that he wasn't -- if i was going to take a position here, it would be to the long side versus the short side. i think now you take that negative out thereof, there is some up side and he can recover ofle the losses he had. >> i a psychology. he could recover and it's very possible it's going to have positive comp store sales next year. it used to be a $20 billion retail and now it's $13 billion retail. but can they make numbers? if they have the of day low surprise, are you going to be
talking about another he or she running this company in. >> i think ron is there for the long term. >> how do you see this playing out? >> i think it's going to drift. could it trade up from this range? it can. but they'd have to kang their fundamental business and you don't know how their business mod sell going to work. >> the trade has been in 2012 to play this market share deterioration. that seems to be losing momentum. is that late cycle? >> i think tjx and other players have gained market share. i think that's going to continue. i think if penney's starts promoting. again, it's till a little twbl.
>> so if you're sitting at home, you like retail, where is the best place that you'd put the money in right now? >> in terms of where i'd put my money, i'd put it in american eagle, chicos, very low inventory, very controlled strategies and they're in a niche. >> happy holidays. we'll take to youin. >> two stocks moving in opposite direction. should you sell the winners and by bye the losers? and metals are a mess. how can you steve clear of the madness. we're heading to the pits.
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there is big news in the exchange business today with word that the intercontinental exchange is buying the new york stock exchange for $8 billion in cash and stock. what's it mean for the way you trade? bob, is it going to mean anything to the folks who are sitting at home who are trading stocks or guys and girls sitting on our desk? >> if you're talking about diversified businesses, the nyse and ice is clearly the big cahuna in the room right now. that may have some effect on trading. certainly futures and derivatives is where the world is going. to the extent people are trading that and they can make that business more efficient and stream lined, it does opportunities here. i think it will put the exchanges back in play. for a year and a half they haven't been in play because regulators have squashed a lot of these deals.
singapore and australia was squashed. i'll tell what you is really interesting. they haven't named the company yet. the big question is are they going to keep the stock trading business, which hasn't been doing well. if they call it consolidated trading or international global exchange, does not have the word nyse in it, that will be very telling. my bet is in a year, two years now-from-now, they're going to spin off or sell the cash stock trading business. typical buyer might be london stock exchange. i want to see what's in that name. >> the optics of not having new york stock exchange as the name of this company is going to bring out some anger on capitol hill, wouldn't you think? >> yes. but here's what would happen. if they called it global consolidated exchange or something like that, nyse would be a subsidiary of that group. then down the road they could
spin the whole thing off because it not in the name and have it literally another stand alone companyis company. >> silver getting tarnished today. the lesser metal is plunging 4%. let's go to jackie deangelis. >> it's not just silver. check out this chart. silver is down some 8% this week and gold is down over 3%. the moves have come amid dollar weakness, which is usually good for medals. s so what's behind the selloff? let go ahead and start with you. a lot of people points to tack selling as the culprit? >> this is tax selling, this is profit taking.
you -- when you saw today when the revised gdp number came out and we saw that the safety or the play on that was kind of washing away, they accelerating got stronger. >> we've broken through some really key levels. what's the next stop for silver? >> well, silver broke the average just below 31 at 30.98, this is going to be a follower. if you're trading silver, you got to -- the lower we go i think there's going to be more selling pressure through today and possibly tomorrow. what i'm looking for here in silver specifically is if we close on the low and until we close above that 200-day moving average, which is going to be resistance, i this i we prets lower. >> if you had to own either
silver or gold, which one would you pick? >> jackie, if we survive the mayan prediction tom, no doubt about it, i'd -- >> log on and vote in our poll. we'll give you those results on our show today at 1:00 p.m. eastern time and we'll also be talking silver with jeff burns, the ceo of pan american silver, one of the world's biggest silver producer. you definitely don't want to miss that. >> thank you, jackie deangela. coming up, bill ackman making his presentation at the conference in new york city. you'll hear from him coming up. also, nike is on the table today. herb al herb
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just wound down. they took a quick break and they've restarted with a q & a. ackman said his short position in equities here on herbalife is enormous. he also says effectively all the after tax profits from this trade, if there are any, will be going to various charity foundations. he expects to put this to good use if he wints. >> you're going to hear from become bil ackman on cnbc as soon as he gets off the stage. we'll bring the interview to you live as soon as we can. sometimes it's tough to buy the losers and sell the winners. let's do a little "hold 'em-fold 'em." >> i've talked about this throughout the year. this is your best correlated
trade to the u.s. housing recovery. i think you stay with it but you take your equity position now and move it into options. the potential is there if there is a larger entity that believes of playing the u.s. housing inregular it. >> at stock is trading at 52-week low, down 11%. hold it or fold it, stephanie? >> this should be the fast fire of the day. certainly for me. i was wrong on this name. the quarter was disappointing. i thought they would do a little built better on the margin side, a little better on the comp side. some of it was superstorm sandy related so i don't think it -- the stock is down about 3 --
30%. i think housing could bail them out. >> first up, merck. >> the cholesterol drug failed a test. could take a big hit. >> and if it goes to 22, i'm a buyer of greenier. >> what a story aig has been this year. >> i think now that the government is out and they've sold aii. they have $11 billion here and you can focus on fundamentals? >> it's excellent for mid-couldn't fent refiners.
>> and a pop for the good old us of a. 20-year-old olivia copa of rhode island wins the miss universe pageant. she says she's turned off by ghies we guys who wear sneakers on the beach. >> and two traders and one stock in a very heated debate. but first, van guard's gus sauter offers words of wisdom. it's his final interview before retiring. and we're waiting for bill i always wait until the last minute.
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>> thanks so much. van guard is on track for a record year. the company's largest mutual fund manager took in $130 million so far in new money in 2012 and most of it into equity funds. is this a sign the retail investor is making a come back? gus, we're grateful you decided to spend some time with us before heading out the door. >> thanks for having me. i'm glad to be here. >> your outlook for 2013, let get right to it. are investors going to be happy? >> we expect volatility. obviously what's decided on the fiscal cliff will have some significant impact on that. but, you know, more broadly i think we're reasonably optimistic. certainly with a longer term lens we are optimistic about equities. we think that they have reasonable term prospects over a five or ten-year time horizon.
quite honestly we're more concerned about bonds. we think there's a bubble in the bond market, not necessarily that it will burst in the next year or so but at some point the bond market will experience significant difficulty. >> david at ttepper earlier in week said stocks are cheap, bonds are rich. you agree? >> yes. particularly if you have a longer term viewpoint. if you are thinking five years, ten years, the spread on stocks and bonds is historically wide, stocks really are quite cheap relative to bonds at this point. >> we mentioned some of the statistics coming into the segment. it would seem to paint a picture the retail investor may be coming back. are we reading that correctly? >> well, yes, i think it's mixed. we've had mixed results here and it's certainly mixed across the industry. where we've seen a lot of strength on the stock side is on index funds and part of that
being in fetfs. our active equity funds have been about flat. relative to the industry they're strong. but the big flux has been into index funds. >> what do you think it will take to get the retailer into fund funds? >> i think it is a cyclical thing that turns. at some point we'll see active managers have little bit better fortune relative to indexes. the other thing that will be required on a more secular basis is for active management to become lower cost. clearly investors are focusing on costs nowadays. that's not just focusing on low-cost indexing but also low-cost active. there will be a tendency to
really go after low cost active. >> we there's been a lot of quantitative type of fund. do you believe that's going to be the trend going forward? >> yeah, there's a wide variety of quantitative fund that are basically rules-based types of funds. a lot of people are calling them index, sometimes they call it smart beta. i have mixed feeling about that. there is an active bet being taken, it's not an index fund. and i find it difficult to find that something that you establish at one point in time is going to outperform consistently in the future. i do think there's another type of active quantitative management that is really almost the computerized version of what we think of as traditional management and we quite honestly prak this here at van guard. i think this is a movement that will continue into the future, but it is just like other active management and it's having
difficulty attracting cash flow. >> gus, you've been at this game a long time. we mentioned this is the final interview you're going to do before you head off for retirement. is there a final tip, some piece of advice you would give to investors who are watching us right now? >> yeah, you know, i think it would be to really focus longer term. there is so much noise going on all the time, you know, trying to predict what's going to happen in the future is impossible. you know, who knows what's going to happen with the fiscal cliff. nobody wants to try to predict washington. so i think focus longer term and establish your asset allocation, your portfolio based on your own needs, your own time horizon, your own risk aversion. don't get caught up in the moment because investors that do that get whip sawed. >> thank you. it's great talking you. we wish you the best. >> it's been great talking to
halftime report. this is herbalife's bill ackman's statement. mr. ackman has been quoted on cnbc saying be weary of companies that restrict or cause access to their earning calls. but when we ask to participate in today's conference he pointedly refuse us access. now we know why. had our executives been there, they would have been able to tear mr. ackman's business model apart. his mistakes are too many to address immediately. so scott, this is probably not unexpected considering the tough words and doled out today by bill ackman who, by the way, is still in a q and a session. >> quickly, it is not up to ackman to grant or deny access to the conference. >> i don't know whose decision that was.
i know that request got to his offices and he participated in the decision to turn them down. what is the process, i'm not certain. but it is talking apples and oranges for earnings call versus a conference. >> we are expecting bill ackman to be on cnbc when he gets off that stage. we will do final trades next. that's what way is trying to say. [ female announcer ] if you care for someone with mild to moderate alzheimer's,
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publicly that he believes you have puts that expire on friday. >> sure. very clear, we own no puts on herbalife. we are short the stock, only. we are not short any other company in the industry. just herbalife. we shorted the stock, i would say, seven months ago or so, and we've had our position since then and have built it up over time. >> at what point would you consider the success in terms of getting out of the position? >> success here, look, the company can survive in a middle grout. if it is found to be a pyramid scheme, it is a zero. >> at what point, if you succeed, you are donating money, by the way, to charity. you called it blood money. >> yes. i don't want it make money o 06 of this. because -- >> it is not a happy thing. all right? you've had millions of low income people around the world. who've gotten their hopes up that there's an opportunity for them to become millionaires or
hundred thousand-aires or something like that and they've been duped. one thing i've learned, particularly in short selling, if you go public, you can't trust him. so by taking the economic part out of the investment and giving the money away, it is harder to make that argument. >> this presentation is much less, almost aimed at investors as it was aimed at the public. this was almost deceptive marketing, almost like a public safety presentation. >> correct. >> why not go directly to the ftc about this. >> oh we will. >> why not go to the ftc with this before going public? why not go to the scc with this before going public? >> sure. first of all we are in the investment business, not regulatory business. but secondly, we think the way to increase the way the regulators pay attention to the coy