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tv   Fast Money Halftime Report  CNBC  July 22, 2013 12:00pm-1:01pm EDT

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>> on power lunch the great divide. while the stock market is soaring, many people who support the industries on the rise are actually hurting. it is a look at the two very different american economies and when it will start to impact stocks and send your comments to and watch at 1 p.m. >> you can argue it already is this morning. >> let's get to headquarters during the halftime. thanks. welcome to the halftime show. four hours to go until the close. up day thus far. there is the dow good for 12 points and nasdaq s&p higher as well. here is what we're following on the half. golden moment with the precious metal above 1300 is the worst over? boo hoo for yahoo! as dan loeb's sales signals you you this do the same? th the biggest week for earnings is upon us with one third of the
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s&p 500 reporting results and with stocks hitting new highs yet again today, what do the numbers say about where you should be putting your money? we're trading with mike and jeff stay and joe. joe, what did these results tell you about what the best plays in this market are right now? >> the results continue to suggest you want to own financials. the financial earns are the story. a lot of folks will talk about the guidance, the overall guidance being slightly negative. i would offer it is really not any more negative than the historical meat on it but what's most important has been what we are seeing from financial institutions. you are seeing a little bit of a transition from the mortgage banking revenue side of the investments and into the capital markets and goldman sachs and morgan stanley and american express on the dip last week and i think that's the name you could own and now you will get some of the insurance companies, and i think the results you will see are long travel as i think they will be incredibly favorable and financials will lead us here. >> so it is more of a citi,
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chipotle market rather than a microsoft/mcdonald's market. >> yes. i think what joe said about the financials is spot on. i think the financials we talked about for some time, it is a place you can be and you want to be and i think the quarters they put up, no one had any miss steps and you go to the overall market and look at a name like mcdonald's and ups, you are getting microsoft, too, as of last week and you have big misses there. this is 100% a stock picking market. you can't throw a bunch in any one sector. i have been along the financials and i want to stay long the financials here. >> where do you want to be here? you have oil stocks at new highs and i can rattle off 20 names in the space. you have food stocks, herr she's of the world, the generally mills, the krafts at new highs, financials are ripping, materials are leading the way. where do you want to be? >> the one group was industrials. i was actually pretty impressed last week on the margin story if
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you look at honeywell and g.e. they're all doing really well on the margin side and the guidance hasn't been as really gloom and doom as we were expecting and in fact if you go and listen to something like honey well they think china has turned, so i think it is interesting we're hearing the guidance of u.s. is okay, europe is kind of steady as she goes, kind of stabilizing and china is not nearly as bad. i think the industrials are pricing in and china will have a hard landing so i think the valuations are pretty a tract active in that particular segment. >> okay to buy stocks? the market keeps ticking higher. we hit another record today. are you feeling good about where you are in this market and where you think people should be? >> i am. i mean, again, at the end of june when everybody was throwing out the baby with the bath water, look at the xlu. you have an 8% run out of that broad measure of the utilities and number of stocks in that sector did extremely well.
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forget about the gold miners for a moment. they killed it. things thrown out, baby with the bath water at the end of the quarter have come back with a vengeance. one laggard that has not and i don't really anticipate will come back until the fall, judge, that's housing. you have the materials coming back and you don't have the housing sector coming back big yet. >> when you say housing are you referring to the builders themselves? >> i am just referring to the builders themselves there. i think the materials have already made as you guys have said a nice comeback, and i think they were many of the ones people did shun at the end of the second quarter, but the builders we just really haven't seen that surge like when you called it so well in la nar, for instance, we haven't seen that come back here yet. i do think we could be getting that into the fall if we get more of a stabilization and interest rates over these next two months. >> stocks hit another record and
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even as this new read on housing is doc is talking about disappointed, the new data raising new questions about whether the taper could be in jeopardy. let's bring in steve liesman with more. from your understanding, how fluid is the taper as the fed watches data like today and on housing? >> i think it is fluid. i think the fed wants to taper. i don't think the metric is all that high to make it happen. i think we have to be solidly into a rebound, but in the second half but if we're not, i don't think it happens. >> is the taper in jeopardy in september? you say what? >> i would say yes. if the economic data continues the way it has been in the second quarter, the taper is predicated very specifically on second half rebound. if that is not convincing to the federal reserve, i don't think they would do it. >> what do you make then? >> i do think the taper is going to happen and i think a lot of the regional manufacturing figures are coming back. >> what you are disagreeing with
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is not really what i said, right? i am saying that the fed is going to taper if the economy shows it is convincingly on a rebound. if you are saying you believe the economy will convincingly on the rebound and therefore a taper, you are agreeing with me. >> correct. >> what about the economic data we have seen recently? it hasn't been that bad is what you are suggesting. a push back on housing, nehb and permits on single-family homes, cycle highs, so they're underneath the currents and industrial production and a lot of things are going on here that actually are pretty good. >> a lot has been made. a lot has been made of the retail sales and the "wall street journal's" piece about the economy being in the toilet was predicated on that one piece of data. you are correct, the end of last week, looked like we got better data and especially in the manufacturing sector so i like to see that. the other thing that's out there is this puzzle that i know the fed is interested in. strong job growth, relatively
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strong job growth and weak gdp and we don't know how it will settle with a big revision in gdp, revision down in the labor numbers. what we do know is if we print another sub 1% i would have my doubts the fed would taper into that. >> let me come back to you for a second. a lot of this is theoretical. i have to invest in the marketplace as most people on the desk do. i have to make a decision, a concrete decision right now on which way i think i am going to lead. in the economic data that you have seen over the last couple of days and what you expect to occur here, as we head to august, why is it that i should not keep going with this all-in go for the equities, get out of fixed income, yes, they are going to taper in september, what do you see that pulls back? >> i don't like what i saw in the second quarter. i do not like seeing a second quarter gdp that will be below 1%. that concerns me. i would very much like to believe as i do and see happen that whatter would seeing is
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outside effect of the is he quest we are noise in the data. >> it is transitory. >> it is transitory. >> health care and sequester. >> if steve liesman that talks to a lot around the fed tells you he goes from 80% certain that there is going to be a taper in september to now 50, isn't he telling you it is okay to buy stocks? that data point, if you want to make it a piece of data, if it is less likely that the fed tapers in september, do you feel better as you sit here to buy stocks? >> i think what you are saying is really the goldilocks environment that has gotten us to the all time highs right now. if the data does not getting better, then the fed continues the qe, there is no tapering on the table and the markets should go higher. if the data gets better, then the markets holding up on its own. >> isn't there a big difference between whoo the private sector is doing and what the public sector is doing in terms of the
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underlying growth rate? could you make a case a 3% trend, 2, 2.5% in the private side and the public side is what is keeping us held back? >> that's one of the things that's concerned me is we had a step down by about a percentage point in the private sector in the second quarter. not all the data is in yet. i know you need an answer yesterday. i am just saying i am a little circumstance couple sprekt. i think it continues. i want to buy stocks because i think the economy is improving. i do not want to buy stocks because the fed will do lessor more or whatever. >> while you debate the industrial earnings are more of a sign the economy is moving in the right direction or the housing data and the retail numbers and say we may have a potential problem? >> you look at the retail numbers and auto sales and they remain really strong. >> they were strong. >> and a case that weather in june, a little weather in the spring kind of thing and i do think that you are seeing underlying. >> let's keep steve in here and taper or not our next guest
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continues to believe the stocks will go higher. the chief equity strategist with s&p capital q. he will talk to you. >> good to talk to you. >> you listened to this conversation. where do you think the market is going relative to corporate america through earnings season thus far? >> i think we'll head higher. my expectation is we would move up to the 1740 to maybe even the 1800 level before we experience another digestion of 5% or more and i think the market while it is looking over its shoulder at number that is are coming out today, it is still looking six months down the road and has the expectations that economic data here as well as in europe and in asia will likely be ticking higher. >> do you care much about the taper at this point or have you moved on in the way you are thinking about the market and where it goes? >> i think the taper is important. whether you take your foot off the guess on are put it on the break, you are still engaging in a slowing process.
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i think when investors realize that we are taking the foot off the gas because we are growing organically, then i think investors say, look, it is going to be a fundamentally driven bull market no longer a liquidity led bull market. >> where do you want to be in the market now if i could pick off the top of the show so many sectors hitting new highs whether it is oil or food stocks, financial stocks doing well, where do you think your best positioned here? >> i think you go with the earnings growth and you go with the momentum and right now the financials as the other members on the team have been saying are the place you really want to be in terms of very strong earnings growth, s&p capital iq is projecting about 19% increase in this quarter and we are seeing positives behind those numbers. also you do want to continue with consumer discretionary. >> sam? >> yes. >> you're looking through the retail tales report. you think the consumer hangs in and that's why you like discretionary. are you not like me. you are not worried about this. >> i think we do have higher gas prices. that's going to slow things a
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little bit. i would be more concerned with valuations. discretionary is trading 19 times projected 2013 estimates versus about 15 or so for the s&p 500. i would be a little more concerned about the valuations and investors looking to rotate and do more of the middle cycle performers like industrials and maybe even nibbling. >> do you think it is concerning if the emerging markets specifically china does not come back in the second half this year and the recovery, can the equities appreciation continue to be u.s. centric and small cap in orientation? >> i think that if china does not really drag us down but rather just stays as a floater out there, that the markets can continue to do relatively well. the focus i think will be on europe and whether we will actually get the troughing as a lot of people are anticipating in the third and fourth quarter of this year. they're almost waiting for the rebirth of the euro as they are
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for the birth of the next in line over in england. so i would tend to say keep china offering us government supplied data in the 7 to 7.5% range. people will feel pretty good. if we do start to see the troughing and projected recovery in europe, then that can help to keep this u.s. economy and stock market advancing. >> sam, good to talk to you as always. thanks so much. >> in terms of the time frame, does bernanke's longevity or lack thereof going forward in this job theoretically, does it have anything to do with the time frame of the taper? >> i think as a human being he would like to begin the windown before he leaves but i think as a policy maker it is not going to affect him. i think what will affect him more is what happens in the fall with the fiscal cliff and the debt ceiling debate and i think it is more consequential to the federal reserve. >> you said in the fall.
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not in the summer anymore. the deficit is beginning to shrink. we have time. >> it is a fall fight. >> better. >> thank you. coming up next, netflix, the best performer in the s&p in 2013. reports earnings after the close. why is one top rated and analysts still not a believer? activist investor dan loeb cuts his stake. should you sell? two battle it out in a spirited debate when we come back. golden opportunity sales event and choose from one of five lexus hybrids that's right for you, including the lexus es and ct hybrids. ♪ this is the pursuit of perfection. the most free research reports, customizable charts, powerful screening tools, and guaranteed 1-second trades. and at the center of it all is a surprisingly low price -- just $7.95. in fact, fidelity gives you lower trade commissions than schwab, td ameritrade, and etrade. i'm monica santiago of fidelity investments,
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welcome back. i am josh lipton. we're watching the home builders existing home sales fall unexpectedly by 1.2% month over month and analysts tell their clients this certainly is not a sign that the housing recovery is in trouble, but sales activity could come under more pressure in the months ahead. they say dhi and lenar and all lower right now. >> josh lipton. mike murphy, are you starting to get nervous about these home builder plays have you have been on so for a while. >> not at all when you look at the data that came out you are talking about existing home sales which make up roughly 80% of the market. when you talk about tolls and lenares you are talking about new home sales. yes, they're intertwined but look at the toll and the lenar story and look at the quarter they put up and the guidance they gave you. this slight blip in the data from last month isn't going to have an effect on them. you buy these home builders on the 15 and 20% pullbacks and
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they worked every time. >> what if rates simply at 250, even incremental creep from here. >> i don't think that's going to happen. i think what you saw, though, is when rates were up over 2.7% and you saw 30 year mortgaging up at 4.5 and higher, i think it slowed the story down a little bit. today the ten-year is back to 2.47. i think that story is now off the table for the time being. >> i don't know. where was it this morning? somebody wrote about how the higher interest rates are affecting the more expensive cities. the northeast. california. >> i think it depends on the speed at which the yield goes higher. if you can gradually go higher, that's indicative of a better economy. if you go from the 110 basis points off the throw that we saw in a month's time it is a shock to the system. there is a company lenox international that builds hvac systems for residential. they were up 16% in the quarter.
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there is activity certainly there and i think there is pockets in housing where you can make money. >> housing inventory is at its lowest level since 2001. this is a supply story. i think this stays with us over the next couple years. i don't know that home builders are necessarily the right place. i would really look towards the resource that is go into buy buying a home. this is more of a secular turn. this is not cyclical in nature and the evidence is there in the actual figures >> number prices are up quite a bit in the last couple weeks. >> switch gears to netflix. shares have almost quadrupled. let's take our position with one of the biggest bears on the street, michael fact and analyst at we had bush securities joins us on the phone. welcome back. >> thank you. >> have you changed your story on this yet and if not, why? >> one more quarter of big success, and so they're going to be good again. i think they had a great quarter and huber us on is having a south side analyst moderate the call that happens to have an uber strong buy in and
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comparison to hbo is a signal necessity will crush numbers. i think they got a tail wind with "arrested development" and that will turn into a head wind as i think the younger people attracted to "arrested development" are likely to turn out this quarter. i am serious to the guide for subscribing addition this is quarter, my bet is a million to a million and a half and it is enough to make the stock go up. if they hit the number, i have to reconsider. >> i think you maybe have said that in the past. as long as netflix shares keep climbing, as long as the earnings story keeps growing, your argument and those other bears who keep sort of making it becomes less compelling. >> that's right. and as the net income grows up, their cash flow turns even more negative. so eventually that has to come back and come through the income statement. i am kind of shocked that investors overlook the gap
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between positive net income and negative cash flow. so blithely. they ask as if it is no big deal they're building a library. the library has a two-year life. they're building something that will amortize quickly and amortizes by turning into negative earnings pressure. i don't see earnings growth the way the $260 share price suggests >> i want to play a sound bite and react on the other side. when you mentioned shareholders, here is one. >> one share, i told you that, and telling you that. he doesn't believe me. the credit goes to the two guys that run that fund, run that account. and they're both great, both have a huge success. one is my son and when i want to to sell 100 points ago i really wanted to sell it and my son threatened to leave. it is my son. i really helped that kid all my life.
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>> i mean, mooirk he will, this stock is even defied the great expectations of karl kahn. it goes up and up and up. >> a me is smart investor told me he made more money selling on the way down than the way up because he never knew where the top was. that's always been my mistake. always too early and i have been way early on this one. i am convinced i am right. i like i am had. i think he is a smart kid and i hope he doesn't leave. i hope they make a lot of money. they're going to be sellers on the way down, and if you start to see weakness in domestic subscriber additions, i think you will see him sell along with everybody else and the stock will come down hard, not this quarter, probably next. >> michael, it is john. i do disagree with you. i happen to believe that you are beginning to see the turn here, the mobile side, the unique visitors, up 68%, and the minutes up 123%. my real question would be this. you mentioned sellers coming in.
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will it be enough to reach your price target which i believe is $65? >> probably not. i get to roll my target forward when i establish next year numbers. probably go up to something like 80 or 85. >> that's still pretty low, though. >> yes. i think it can come down that hard. netflix trading, in the best cases 20 times sustainable earnings, so the market is telling you they think they will earn $13 a share at peak. i think they will earn probably 8 or 10, and i think they're a no growth company trading at eight multiple. that's really where my target is. >> what do you see for the margins? i think the streets not tonight but what do you see for the margins on 4.1 i think is the estimate? do you think it is on or do you think it is coming in above that? >> they can manipulate it as i said by just deferring expense and that's why the discrepancy between net income and cash flow. they spend money. they just don't run it through their income statement. they can do whatever they want on an accounting basis and it is not illegal and they can assign a life to the assets and not run
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it through quickly. i think it is going to catch up with them in the next six quarters. >> we'll see who ends up being right. thank you for coming on. >> pleasure. >> biggest pops and drops in midday trading and fir up is navistar. >> navistar up about 3% today. up in the last week. up about 20%. karl i con raised his stake last week and g week. all told you have about 40% large people holding the stock and i think there is a lot more upside here. >> stef. >> trailing three months orders up 2 to 3 pretax, the first increase since february led by process controls which isn't surprising. what is surprising is industrial automation was very good and hvac climate bodes well for rockwell. >> hasbro, doc? >> well, just like mattel, these guys missed on earnings. the stock traded down about 60 cents and now turned it around and it is up 80.
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apparently willing to look past the earnings miss out towards transformers in 2014 which of course should be a huge driver for hasbro. >> and juniper, joe? >> it is going to be good. the street knows this. it has been a good trade, up from 16 to 20. the question is now do you believe the capex rebound will sustain in the third quarter? you want to listen to the guidance. i don't think it will. you better trashd cisco. halftime is headed to the futures pits and find out and plus who stands to win with oil nearing $110? we have the winners and losers from one of the fidelity's top portfolio managers when we come back. i've been doing a few things for a while that i really love-- tdd#: 1-800-345-2550
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get the blow off bottom for gold and i think we go higher. >> yes, i am a taker on gold. i have said it for weeks with you, scott. i have been buying gold and i said at the end of the quarter you are going to get a washout in gold. >> well, gold is posted its pest two-week gain since november 2011. what do you do now? good call? >> thank you, sir. i can't blame anybody for taking some off the table here, scott. i think it was a blowout because of the volumes. again, that's something guy talks about all the time when you see the washout. you saw 52 million shares trade of the nugget and ugt. it is the triple levered gold miner's etf, traded to $4.55 and now it is $8. 60% move over the last little bit here. i think if you are somebody who bought physical, did i, down below 1200, and or bought gold or the miners, i think you layering in calls in there, in other words, just covered writings, over write that
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against your holdings, scott, and i think it is a prudent way to go. if somebody did it for a quick trade, i think you flip it. we did burn through 1300 today, a 42-point gain per ounce in gold today and that's huge performance. >> that's a massive move. let's get more into it by the way with jackie deangeles in the futures. >> well, best day in three months gold retaking all of its losses over the past month or so and the question is is this reversal for real? let's start talking futures now. jeff and scott at the cme. let's start with you. do you think it is safe to buy into gold? zf last thursday we laid out on cnbc futures to buy this technical breakout, so, yes, the answer is yes. we bought 1305 and that's why they invest to capture the non-correlated alpha. we saw the move up here and you can't take them off the table if you want. 1338 is the moving average. what we see is on the chart
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1355. that's the next stop. it will fall back in that range of 1355 with su bush resistance back up at 1420. right now we're very comfortable and still long position. >> you still might and obviously this is a big move today. is this short or seeing investors back in the market? >> until today it was new positions and we saw that from the cftc data. for the most recent week new bullish positions increased by over 50%. why is that? fundamentals are nothing but positive. interest rates around the world are staying low or going low are, whether it is in china or japan or here and so up until now these were new positions. today we just saw a huge move and i think finally we're seeing some short covering. shorts are still wrong footed in gold because of the big move we had lower in june. until they see the sorts of levels the killer is talking about, i think people want to stay short but it is going to be
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a ton of pain. >> sounds like it is a little both and you think it is going higher. that's what jeff and scott think. what about you? are you buying or selling the gold? vote on futures now. >> jackie, thanks. i want to know what the other traders think as well? >> here is what i think. i think in the next 30 days by labor day gold peaks and drops 25% from that point before the end of the year. >> why? what's the catalyst? catalyst is better u.s. economic data, number one, and more demand for the paper asset of oil, that's going to take these commodity funds which are beginning to see into energy, and i just don't think, i think gold is broken. >> the right trades in gold was buy it when dr. jay bought it. i don't think you start a position in gold now. if you're in it as doc said, hedge yourself, otherwise the minors as well. >> the whole caboodle. >> they will trade along with the underlying. yes. >> freeport, at least you get
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10%. >> another commodity is crude and it is causing many oil stocks to hit new eyes today and the list includes big names like chevron, and anadarko and halliburton. what are the best to own now? john dow oversees 5 billion at fidelity investments and joins us from boston. >> welcome. good to talk to you. >> thank you very much. thanks for having me. >> we mentioned how many of these stocks have hit new highs. the ones that i mentioned and there are so many more whether it is the exploration of production names, the oil and gas names, the equipment and services, take your pick. do these gains continue? can they possibly continue? >> i think we're living through an exciting time, one of the biggest developments that i have seen in the past 20 years is this renaissance in the u.s. oil patch, and, yes, it is creating lots and lots of opportunities. >> what do you like? where are the best places still to look? i can throw out whether it is a
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chevron, or a hess or a schlumberger or halliburton. which is the best place to be right now? >> i think the best position space is the u.s. e& companies, the oil and gas producers driving this energy renaissance in the u.s. one of the most surprising things to me is over the past two years the u.s. s&p, e& p index is flat. essentially all of the economic return has been going to other companies. that's the space and today it looks very well positioned. >> john, if that would not case and this is joe by the way, do you believe the expectations, the earning expectations of the street for energy equities are basically too low? >> i think the expectations are too low. i think it is difficult to make a giant commodity call. i think that's dependent on the overall economy.
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i am not making big bets on oil prices or gas prices. what i think people are missing are the cost structures. in 2011 and 2012 we saw the refiners substantially out perform everything else in energy because their cost structure was falling. now i think we're on the precipice of these e& companies that are moving to factory drilling seeing their cost structures come down and these companies gaining >> forgive me, i am sorry, like eog. >> yes. i think when you -- there have been three big surprises when you look at the e& space. the first is the returns came down with all of this development of oil and gas production. the second is for the entire space costs have been going up and the third is there are a handful of companies and regions where the costs are under control. as these companies shift from exploration to development of a shale resource in the u.s., they're seeing their costs come down as they turn to factory drilling mode and so far for the
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companies it has been great for earnings. it has been companies -- go ahead. >> you finish your thought. >> i was going to say that so far we have seen that transition take place in the mahrcellus an it was the single best performing over 2011 and 2012 and even as natural gas prices fell because of their superior cost performance and because of their superior volume performance. i think going forward we're looking at companies in the bakken and companies in the permian and companies in the eagle ford and, yes, eog is a company well positioned in all of those places. >> good to talk to you. thanks for coming on. >> thanks. >> coming up next, last week's tech wreck put a dent in a lot of stocks and our next guest reveals which is the one you must buy right now on the dip and later yahoo! jumped 80% since marissa mayer took over a year ago and with the stock near five year highs and top hedge low leaving the board, is the
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welcome back. billionaire hedge fund investor dan loeb selling the majority of his stake in yahoo! and resigning from the board of directors. shares soared 77% since marisa meyer took over. is now the time to book broofts on yahoo! like mr. loeb is doing? let's debate it now. doc, make your case. >> i think you get a great opportunity here, scott, to pick yahoo! up on this dip. i think you target more or less around the $25 area to be very aggressive with it. marissa mayer is doing almost everything right, and not just saying that mobile is her top
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priority, she is going out and buying all of these app makers and getting the talent and the engineers and as well as helping integrate things like tumbler and the growth from smartphone as far as the number of people hitting the yahoo! page versus google, they're growing faster on that than google is and tells me they're doing things right with the strategy. >> i think, doc, the jury has to still be out on what marisa is doing and the reason is twofold. one is looking at what went on with the way the stock sale went down with loeb selling his stock at friday's closing price, you know and i know it is a secondary. there should be a discount on that huge block of stock, agreed? >> i would agree with that. i would have seen that discount. >> now i look at what the current board head up by marisa when i take out loeb and his two partners, what have they done? i am questioning whether or not this massive increase in yahoo!'s price is due to the increase in al alibaba's price so i think that loeb is gone
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they start to judge marissa mayer's performance starting today. >> they do buy back an awful lot of stock all the time. i think second quarter may have been 600 plus million dollars worth so they do it from time to time but i agree that this is the one port i don't like, the fact they pegged it on the highs like that and i guess it is what it look to get loeb and his group what they want. >> who made the more compelling argument? who is a buyer of yahoo! or a seller? >> i would be a seller. >> do you think loeb getting out substantially is -- >> not all the way out. >> and i heard someone on the network headacmake this point. why is he ahead of the ipo? that was basically his catalyst for being in the stock. i think he is telling you alibaba is fully valued at this price. >> and display is down in revenue and down in pricing for the second quarter in a row and at $28 not a lot of good news. you have to see the fundamental turn to buy the stock.
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>> we really think that loeb getting out of the way will have anything to do with marisa might haver's ability tore where she will take this company going forward. >> no. >> but the trend over the last two quarters in terms of display pricing were disappointing. >> nothing wrong with the fundamentals of the company. the rate of appreciation and stock price, die think that's on pause now. >> correct me if i'm wrong. didn't the stock go up that day? i may be wrong. i don't know. yahoo! on earnings. >> yeah. >> well, nearly up to 30. >> it had a drop and then it rallied and i think at 28 to $30 the stock is fully valued given the fundamentals are not accelerating. you have to see accelerating growth. >> i like what she has done, scott, and like i say you take the people that made tumbler and a lot of these sports apps and all the rest she has been bringing in, that's what you are getting here. it is about apps. their mobile strategy will be hitting it hard for the next two and three years. >> tell us who you think won the
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debate. tweet us. use either the hashtag bull or bear and we'll give you the results. we always do at the end of the show. bargain hunters could be helping microsoft regain lost ground today. last week the stock was the worst performing name in the s&p, dow, and nasdaq 100 after reporting a huge miss for the second quarter. should you be buying this dip? specializing in tech investing and managing more than a billion dollars in fort capital, welcome back. nice to see you again. >> thanks for having me back. >> i thought it was one of the most interesting things about the note today is you say you would be buying microsoft mere on this weakness. i don't know if a lot of people will agree with you there. why? >> sure. i know. i am looking way into the future. i think most of the negative commentary is completely right. if they miss the boat on mobile and i am betting that they can do something about that and that is what this whole reorganization is for. i am also not looking at this company as a consumer oriented
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company, and that's what the big news was in this last quarter that they had to write off some hardware that was securely targeted at the consumer which they just have been terrible about getting. their big push, i think, will be real business is going to do real business on mobile devices and i think they're going to have to do that on the software that microsoft provides. >> when you talk about looking into the future, way into the future, i don't know if you are talking 20 years from now. >> not that far. >> are you buying this stock on the hopes that steve balmer will not be around in the future, that the value act has enough juice to either get somebody on the board or initiate some kind of change? >> no, but i really like the value act is doing what they're doing. i think dissatisfied board or dissatisfied shareholders should make their dissatisfaction
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known, and i think value act is doing that well. i think if i look at the components that microsoft has, and their prior ability to go after segments of the it market, not the consumer market, that's what i am basing my evaluation of the company on. >> the other name you would be buying here is sandisk. why? >> yep. well, there is something really interesting in the nand market which is what they produce. we think they have at least 18 months if not more of producing very high value, high margin products before the whole industry is going to have to move into something called 3d nand, so we're looking at the margins and thinking they can hold up in that environment. >> good to have you on the show. thanks for coming back. >> thanks so much for having me. >> we'll talk to you again soon. we're going to have a little debate here on our own. you bought microsoft this morning. you agree with kim. neither joe nor steph would
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stuff this. >> i bought it for different reasons. i bought the stock, i think that -- >> hopefully to make money. >> to make money and looking at the pullback, the selling on friday was completely over done. i don't know if the tab microsoft's tablet will work. i think the restructuring could actually unlock some value, so to see it get dropped about 15% in the course of 24 hours, i think there is value there. i think we get a bounce. >> you see a catalyst in the near term, pcs are under pressure and the business segment is going to subscription only. >> the pc story is old. that's been out there. >> if it was old -- >> pc lagging? >> the windows. >> hold on. >> i think it is old news and that's why i think the stock dropping 15% was over done. i think that's why you see a bit of a bounce today and over 32. >> do you want to row tart the chair this way. >> windows revenue is lagging pc shipments. >> it is. we know the story at microsoft is not a great one. that's why you get the
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restructuring. from a fundamental basis, i wouldn't go out there based on the surface. >> i was going to say i love how we're having a fierce debate over a company that laid such a huge egg. worst one. >> you don't near term. >> the jury is still out. >> i think the restructuring that balmer will put through will unlock value and it is why the stock ran to 36 and over sold on the downside and it is a buy. >> i think it will unlock value. it is going to take a lot longer. >> doc is smirking and laughing. >> i think he likes microsoft. >> on the dip, the 3160, i did get reloaded a little bit. i will reload more like murph says. >> thank you note to heather? >> i did send heather a thank you note and a bunch of flowers and chocolates. >> coming up, investors aren't loving it, shares of mcdonald's
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falling on earnings. we'll tell you whether you should buy the dip or just the fries. we're trading your tweets from solar to financials and the play on all the stocks. millionth cus. would you mind if i go ahead of you? instead we had someone go ahead of him and win fifty thousand dollars. congratulations you are our one millionth customer. nobody likes to miss out. that's why ally treats all their customers the same. whether you're the first or the millionth. if your bank doesn't think you're special anymore, you need an ally. ally bank. your money needs an ally. the world is changing faster than ever, creating new opportunities for those who stand ready to seize them. in a time when the biggest risk is playing it safe, we believe outshining the competition tomorrow requires challenging your business inside and out today. at cognizant, our flexible, collaborative approach
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today on "power lunch," in addition to the usual menu of market coverage and more, we'll explore the great divide in our economy. stocks are at all-time highs but many of the jobs lost during the downturn just aren't coming back. at what point will a divided economy affect the markets, and at what point might it affect the social fabric and capitalism itself? top of the house, the fed's plan. new insight on when the stimulus gravy train may dry up. "halftime" report will be right back after this. covered call strategies to generate income? with fidelity's options platform, we've completely integrated every step of the process, making it easier to try filters and strategies... to get a list of equity options... evaluate them with our p&l calculator... and execute faster with our more intuitive trade ticket. i'm greg stevens, and i helped create fidelity's options platform. it's one more innovative reason serious investors are choosing fidelity. now get 200 free trades when you open an account.
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>> all right. time for top three trades. first up mcdonald's, missing on second quarter earnings and revs reporting a 1% spike in same-store sales, not a spike but a drop in asian and european pacific sales. >> the u.s. was really disappointing and europe and the asia-pacific and middle east regions were better relative to expectations. i think the company has good new products coming out, focusing on value. let the dust settle. mid-90s or below i'd be buying it. >> not a buyer here? >> no, mid-80s or below. i think it needs to settle. >> newmont getting a downgrade at bmo capital, expected to
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release earnings or the bell. doc? >> this one makes big moves when it makes them and this is one of those days. big move to the uniside even on the downgrade. 6%. i think you take that opportunity, as i said, and you override it with calls. >> halliburton, what do you do? stocks in a new high today? you buy it. $5 billion share buyback just announced, love energy, buy it. >> new high, no worries. >> all right. final trade and our yahoo! debate winner when we come back. ♪ norfolk southern what's your function? ♪ hooking up the country helping business run ♪ ♪ trains! they haul everything, safely and on time. ♪ tracks! they connect the factories built along the lines. and that means jobs, lots of people, making lots and lots of things. let's get your business rolling now, everybody sing. ♪ norfolk southern what's your function? ♪ ♪ helping this big country move ahead as one ♪
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♪ all right. at allied the results, doc, murph, mr. murphy won the debate on yahoo!. final trade time. doc, because you lost, you're up first. >> all right. thank you. mclean, virginia, sai, an intelligence firm. >> all right. joey? >> i like that one. that's a good pick. starbucks. i think people are a little sheepish on mcdonald's, going starbucks. >> michael? >> i like sony and some of the money loads coming out of microsoft could find its way into sony.
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sny, a buy. >> stephanie link? >> i like cennametal. >> that does it for us. more "fast money" tonight at 5:00. follow me on twitte twitter @scottwapnercnbc. stocks hit another high, up across the board. "power lunch" right now. >> "halftime" is over. the second half of your trading day begins now. well, despite all the communicating from the fed, they do seem to be bending over backwards to make their message clear. still lots of questions though about the bernanke plan. our senior economics reporter steve liesman with real solid insight. he's going to explain. that is straight ahead. netflix reporting quarterly numbers after the bell today. our julia boorstin is going to moderate netflix's analyst call and see what they will ask the executives when we talk to her in three minutes time, a big point. 1:30 eastern time, a "power lunch" special. we'll focus


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