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tv   Fast Money Halftime Report  CNBC  July 29, 2013 12:00pm-1:01pm EDT

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>> fair guess. remember f you get your guess in sooner, that bumps you up in the case of a tie. >> what about auto shutdowns, not as bad as some think. >> and you get to call into the show and that way you're like the other icons as well. >> with the market down 65, let's get back to headquarters and scott wapner and the halftime. four hours to go until the close right there on the wall is where we stand on the street today. a bit of a defensive day. here is what we're following on the half. the battle for herbal life with earnings looming and the stock surging why today's results mean everything. debate it. it is link versus baker in a halftime street fight and our top story after a great run for stocks this year, it all comes town to this. what we're calling judgment week for the rally, the fed, ecb, boe all meeting, 135 companies
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reporting, and critical economic data coming. it all adds up over the next five days to mean everything for your money. we're trading the markets today with john and simon and stephanie and joe. as i said, a defensive tone today. what's the best strategy with so much going on? >> the best strategy is completely ignore the tape. are you not making a decision based on what we're seeing. there are weakness but as you cited before, correctly, there is a lot ahead right now. we also have the month of september coming and we have the back to school season, so you're going to be making your decisions once you hear what comes out from the ecb and what comes out from the fed and then obviously what the labor report is on friday. i am remaining committed to being long risk assets because i believe we have seen enough earnings growth, not too impede the appreciation we have had since the end of june. >> are you buying stocks today? >> i am doing nothing. today is not a day to do anything. nothing at all. >> you are remaining long. >> i am remaining long and financials weak today and i am still long and morgan stanley,
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goldman sachs, american express, i believe in the longer term story. i like what i see in energy. energy is having a horrible day today. yet i am staying with it. >> dr. jay, what are you doing? are you long risk, too? >> yeah, i am sticking with a lot of stuff, judge. i mean, overall i believe it is not as defined a directional trade today as far as to just jump on one sector. solar is hot. some of the silver stocks, and if you look at those two sectors by the way, solar and silver, each up about 13 to 15% over the last two weeks, and over the last month about 31% so a good time to be in those two and other than that, judge, i think we're going to be faced with the two-day fed meeting that means we will peak on wednesday in terms of interest because we have got that fed meeting and the adp report and we'll have various people positioning ahead of the jobs report on friday, but wednesday i think will be
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more or less the high point of volatility for the week and we ebb a little lower going into the jobs report but certainly not selling off into that jobs report. >> definitely. you really do have a make it or break it week for this rally given where stocks have come and where they could go, it is all going to be defined by what the fed says, what the jobs number is and then everything in between. >> yeah. tons of earnings, right, and we actually took some profits. we have been selling some things. i want to have cash for this kind of week because i think you can see the volatility increase, so we had a 25% gain in hartford and sold some. we sold some key. we told out of tjx, and we sold out of stanley black and decker and we although are looking on the bad days and today there are ugly performers, where sticking with the themes we like like aero space and auto and when those stocks come down those are the ones we're gravitating towards and still like
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technology looking at name that is come down like ebay and we like the consumer, especially into back to l skoo like joe mentioned, so we're buying yum and we still like gap. >> looking to rotate a little bit, right? you're not looking to get in lower at the stocks you took profits on, you're looking to rotate that money into other better places in the market. >> earnings season, this is when you learn a lot, and so we heard from honey well things are good and margins are sustainable and can go higher and we're going to hear a lot this week, too, something like eaton corp on friday when they report, a great story, cooper transformation and really going to happen and if that stock were to weaken, i want to have a lot of cash so i can redeploy the profits i took into some of the names where i like. >> simon baker. >> i am with stephanie. massive macro and we're selling out further and this month will be the best month of this was back in i think october of 2011, so the market has gone higher. i think people are looking for reasons to take out profits
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right now. i think it is actually going to be anti-climactic on wednesday. i think the fed is going to say tapering isn't tightening and economic depend end on the tapering and i think september 18th is the really day it is going on. facebook was up massively last week on 25%. >> looking for more reason to take profits than are you to buy stocks. >> why would you want to do it ahead? let me finish. if you're going to be trading in the market, it is not just buy and hold. this is definitely a market where there will be clear winners and losers and the stock that stephanie was talking about, have you a big up and actually where is the upside over the next couple weeks? i think there will be opportunities lower than we are today after this week. >> i am the last person you can cite as buy and hold after i wrote a book about buying and holding. >> today specifically? one of the things i am concerned with going forward for the remainder of the year is we're now probably 30 takes close to the conversation of the chase performance, and we're getting
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there. we keep second guessing the rally throughout 2013. we're getting late in the year now and now have you this big macro week. if they don't get what they want, look out on the upside. you will begin to see all of these pms under performing once again and and not looking at fundamentals. >> and totally to your point and when you can find stocks down 2 and 3% in a day or week that had the themes that you like, aerospace, auto. >> you want to have a little bit of extra cash. especially if you expect to see -- >> especially if you expect to see s&p higher by the end of december, not enough cash? goldman sachs came out with a recent note saying all of this stuff is on the macro and the reality is it is louzing earnings and outside of financials s&p growth have come through 4.1% growth in earnings back in march to 1.1%. i think now is the chance to really pick the winners because
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once it goes back to stocks, purely momentum and sold off and now is the time to too research. the second half, to your point, some of those areas and long and over wait those areas >> let's bring in erin gibbs, the chief investment strategist. what hasn't happened, you see that as one of the headwinds going forward for the remainder of the year. >> our big concern is about this negative revenue growth. the revenue growth for q2 is negative.6. it is the first time we have seen negative since we came out of the recession in 2009. it now means that all of that revenue growth has to be made up in the second half of the year. that is again where we're looking very carefully. obviously earnings are still increasing. we still have positive earnings, but you can only cost cut so much. and a few of the companies we're looking at are looking at if the economy isn't doing so well which companies when you do cost-cutting will do well?
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price conscious, outsourcing, temp resourcing, those type of plays for the second half of the year. >> you have to admit that margins have held in and been much stronger than what most people have been expecting. most people are talking about the peak for a couple quarters and they remain high in my opinion. i think it is a big positive. >> we're still like 9%, 9.8% for margins, but i think the bigger concern is just how much more can you cost cut? that has been an argument. now we're the fifth quarter into revenues declining and margins still holding up and they have been able to cost cut. >> commodity prices are coming down and it is also a positive, too, right? >> yes. >> maybe margins can actually just stay elevated and they don't have to expand and that's how will you get your earnings and eventually if the economy improves you can see some revenue growth. >> right. and our concerns is that we're just not seeing that. we're just not seeing it. this for us really getting that negative revenue growth is sort of one of those first initial flags. it is top line. it is still top line. i am not saying that earnings
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are going down. it is definitely one of those early warning signs of seeing revenues go down and people literally spending less money. >> specific plays on where you want to be between now and say the end of the year? what are the opportunities? >> so one of the companies that i really like that i think is a great story going into this is robert half international. it is actually a temp resourcing for accounting and financial firms and we see this with the jobs reports. we see part-time employment increasing and not as much full time and this is one of companies that can take advantage of this. it is all about cost-cutting, outsourcing, and also just with increased regulation and increasing complexities, we really like them. >> one of the points i think we can debate here is you can knit pick as you talk about earnings and revenue growth you can knit pick a lot of different areas of the rally. there are a lot of things that the naysayers will hang onto when it comes to why stocks can't continue to go up. i would only throw out what about the flip side? fed meeting this week.
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ecb this week. highly accommodative and two words that will override almost everything. as long as the fed is in the game, as long as the ecb is doing what draghi pledged it will, why don't stocks go up regardless of whether revenue growth continues at the level you want to see it or some of the other issues? >> i think stocks, look at the inflow into the equity funds over the last couple of months and look around at alternatives with the bonds. they will continue to go up. the question is which stocks will go higher and which quicker, so i think it still looks good and it is really like taking a temperament of the market now. if bernanke comes out and his line is 6.5 unemployment, we're not going to go there and get the job numbers on friday. either way it is good for the equity markets really. i think you want to be along the equity markets and clearly if the technology stocks in the first half of this year very disappointing, at our firm we believe it will be stronger than the next half.
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>> what makes it strong in the second half of the year. >> i think clearly if you believe in the recovery in the harkt which we do, technology company will be better as the spending continues to go up. in that particular area in terms of telecom equipment space, they're doing very well and those companies will benefit. i think it is much better a stock picking market over the last couple years. i think it is a good time and pick good stocks. >> same exact thing. there isn't one sector we're looking across the board and saying carte blanche buy the whole sector. even with financials, we really didn't like the bigger bank that is drove the financials. a lot of that earnings growth is coming from visa and western unions and a lot what we 234esly consider the big banks. it is very much bottom up and that's why we don't say buy the sector across the board. we're looking for those opportunities.
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>> let's go to josh lipton for a market flash with a stock on the move today. >> we are watching facebook here in the green today. of course last week facebook reported and analysts talking about catalysts ahead and more mobile ad penetration and video ads and so how do the technicals looked? i checked in with mark newton. it does look quite over bought in the short run and he is still bullish and likes fb technically and use any pullbacks down to 32.75 to buy. scott, back to you. >> simon baker, that's right in your wheelhouse. you're a facebook guy. >> i like it. i think the easy money is being made and i like the story. when the stock is up 25%, over night, up about 35% in the stock, i think it will pull back a little bit and i think this price and with the new upgrades along the way, more buyers and this week i am looking at the portfolio and saying money in the short-term, take the money off the table and redeploy after the last week or so. >> did you buy more after the
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earnings blowout? no. we sold it. i was on the show saying we were buying early before earnings and afterwards we sold out. when the stock is up that quickly and that much momentum you have to take money off the table. >> pause for a little while and i think the momentum is there in terms of your mobile monetization. that was the question for everybody. they answered that question. now they have a whole slew of new product that is will lead to positive earnings recisions going forward and revenue growth and it is important. >> coming up, retail detail. sacks scores a deal. china slowing, the ceo changing and coach is under performing. why is one of our traders willing to fight for the stock? we'll find out in a halftime debate. in today's markets, a lot can happen in a second. with fidelity's guaranteed one-second trade execution, we route your order to up to 75 market centers to look for the best possible price -- maybe even better than you expected. it's all part of our goal to execute your trade in one second. i'm derrick chan of fidelity investments.
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stephanie is our bull. simon is the bear. buck 30 on the clock. >> this is not a play on the quarter. in fact, tomorrow i expect the new management team probably to be pretty conservative in terms of guidance. it is a great new management team and i am very excited about it. the ceo, the new incoming ceo, has international experience. he ran the international business which is actually the one positive bright spot in the past couple years but there is a lot of ways to win. you have lifestyle products, womens and footwear and ready to wear and men's and a creative guy running the men's piece, and
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there is a lot of upside there. that business grew 50% last quarter. international, i think there is more momentum in japan and china and the stock carries high margins and actually industry high operating gross margins and evaluations of 14 times forward estimates well below its 19 times average. >> i agree with all of that. i think the earnings tomorrow will be lousy and i think they will be lousy a couple quarters. i think management is brilliant and who they brought on is great. no brand has ever successfully moved up from a single brand into an aspiration lifestyle. michael kors, a designer, very difficult for coach to do that. we mentioned the international sales. in terms of their branding overseas, the new york firm, not a u.s. company. gwyneth paltrow is the face over there. it will be very difficult to get the brand going. you talked about margins which are high. they have to come down. if they go into footwear, jewelry, apparel, it is lower
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margin business. the coach thing, 60%, 40% and just one other point is i think the earnings will be difficult tomorrow because the effects in japan is challenging. >> i agree. >> longer term it is a good company. >> you made my case. i expect the quarter to be not bad. i just think guidance will be concerning because you have a new management team that can lower the bar and i want them to do that and at the end, wait a second, numbers already come down and expectation of that and you have all of these new products which you have a lot of ways to win. it is not just new products. it is e-commerce and remodeling the stores and getting more stuff in the stores. >> i think it is the perfect time to get all the bad news and exactly what we will do and the stock will be down. >> i agree. >> dr. jay, who made the more compelling argument on coach? >> given that last assessment, i agree that i think the stock does trade down into the lower
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50s and then i do think it is a buy down there. >> i don't think it gets to the low 50s. >> 52, 53. >> you're looking like a 10% move then, doc, you think it will be that ugly. >> i am. if we want to call that ugly. >> 10% is ugly, doc. >> i think the run into the earnings over the last little bit made a nice recovery. that's what i worry about. >> they have a 1.4 billion buyback left on their reauthorization that they can still use. they'll generate a billion in free cash flow, so they can announce another one. i don't see 10% would be a huge move, especially at 14 times forward estimates. a lot of bad news priced into this thing. >> i look at this one versus ralph lauren and they're both like flat lining right here like this and i would much rather own ralph lauren. >> tell us who you think won. tweet us. speaking of retail, sacs shines a bright light on retail stock
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that is have enjoyed a nice run and the etf that tracks the sector is up 30% and is there more room to run? there is a look at the xrt. joining us, steve of durbin capital. welcome. good to talk to you. >> nice. >> is this deal more about retail or real estate? >> i think it is more about real estate. it is a unique franchise. they own the property in beverly hills and the fifth avenue locations and so i think hudson bay is looking for a way to expand and also to monetize that retail. >> what do you think of the stock here? >> i think hudson bay is a different case. sacs has under performed and under earned for a number of years and made a lot of investment. it is an interesting franchise. i don't know what it will had to hudson bay on a long-term basis for the hudson bay stores or the lord and tailor stores. >> what about retail in general? we talked about the xrt up 30% and discretionary second best performing group behind financials on the rear. more room to go or are we starting to get concerned here?
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>> i think there is a lot of noise out there in retailing now and one of these amore fuss periods, where we finish the clearance season and back to school starts and there is a question, the wealthy people are doing well. there is a wealth effect, all-time high and consumer confidence all-time high and it is really good and you are seeing the wealthy spend. how the mass market is doing is questionable and the only data points the public really has is names like costco and gap that reported very strong sales and their best of class retailers. you don't know how most are doing, how walmart, target, macy's are doing and there could be a lot of noise out there. does seem to be slowdown where the autos have sold, have done well and the housing market has done well and restaurants have done poorly and i think consumers are event driven and so i think there is noise. you won't get clarity until you get to labor day and a good read on back to school. >> you discount entirely the strong consumer confidence number we just got or consumer
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sentiment? >> it is one thing to say to a survey that you feel good but to another question whether or not you want to go out and spend and consumers are more and more event driven, so they're not spending until they have the book to school need. that's the question. retail sales, the government retail sales have weakened a bit from where they were holiday 2012 all through the last six months so it is a question are they going to pick up? you would think with consumer confidence and the stock market where it is consumers would be spending more and right now there is noise there. i wouldn't read costco 7% sales and gap 7% sales as the read of the general economy. >> it is joe. retail environment that you are talking about right now, one of the first names we would have went to a year ago was lululemon. however, the under performance, you have to highlight, what do you do? is it an opportunity or you continue to avoid it. >> i think lululemon has a management turnover issue that you have to get through and you don't know who will run the company and i think gap has the
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business that jumped into the void there and they're expanding stores and doing great and having great numbers and price the goods 20% less than lululemon. i think that's a threat and under armor pushing into the women's business. i would stay on the sidelines. >> good to talk to you. thanks for coming on. >> my pleasure>> we own gap and costco. i am happy to hear them say that. i think the gap story is about restructuring and they have right sized the stores in the u.s. and have international expansion opportunities and i think that restructuring is in early innings and costco continue to deliver results. no one is putting up 5, 6% comps in this segment like these guys are. they're seeing traffic growth, too, so those we add to costco this morning. >> doc. >> i like gap for the same reasons and from what the gentleman said about athleta because i think those stores when i look at the traffic in those stores it is pretty
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phenomenal, and to joe's point about lululemon, this has a lot of that juice that lululemon had after the ceo departure and so forth, i think this is the one to watch gap with athletic. >> i am with these guys on gap. >> getting in was. >> looks great. i know john spends a lot of time in the gap. >> absolutely. >> more detail. >> and athletic. >> and athletic. >> limited brands, great performance, further appreciation ahead. >> coming up on the halftime show, shares of herbal life up 80% this year alone. how much has bill ackman lost on his best? herb greenberg breaks down the battle as the company heads into a crucial earnings report. that's this evening. we'll be right back. ♪
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the future belongs to those who challenge the present. welcome back to halftime report. i am josh lipton. we're watching caterpillar, the news cat saying it agreed to repurchase 1 billion in shares from stock gen, the deal
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involves 11 million shares. the ceo saying the continued strength of the company's balance sheet and strong cash flow puts cat in a good position to reaffirm its commitment to stockholders and cat up today and down for the year. remember, our delivering alpha erence saying short wrong products at the wrong time. scott, back to you. >> thanks so much. i don't know, you know, short if anybody on this desk but i know i don't think anybody likes cat here, right? >> by the way, everyone always criticizes management for buying high, right? and announcing these programs at the highs. this is nice the stock has under performed and they will buy at this point. i think the low 80s -- >> i know he would say this could be the buy. >> they could. the balance sheet is stronger than it was in the last down cycle and there is more to this story than just mining. there is a huge commercial construction business they do well and taking market share and
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big north america business so i think in the low 80s it is more interesting versus the upper 80s. >> balance sheet outweigh what the market perceives in some quarters and lack of credibility among management. >> lack of credibility. >> here is the thing about the problem with short investing and seeing classic all the way through earnings season. every time there is something structurally wrong people don't like it and a lot of cash on the balance sheet and management come out back and do a share repurchase and really it is i don't look over here, look over here, still a really bad problem and i think long-term it will be protect and the stock will be lower later on in the year. >> i think it is a sentiment issue right now more than anything else. i think when you correlate it to what's going on over at apple it seems to be the same thing and they seem to be pulling out the type of capital allocation strategies again what apple is doing and i think for a long time for an extended period of time it will suffer. are you going to get the significant appreciation back towards 95 without having the
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emerging market growth come in again? i don't know you will see it. >> i think you can trade around the position and in this stock really is a trading stock. you can buy in the low 80s and i think the upper 80s and low 90s is when you sell it until you get more confidence in emerging markets and the top line growth certainly and there could be money to be made. >> in addition to the emerging markets and the construction and/or china play, there is also one of the big impediments there, labor contracts and that has been resolved for caterpillar, so i think some of the uncertainty removed means that that's why people like steph and i are more comfortable buying at 81 and then perhaps selling it again at 88 and because i think you do get that range because that bit of uncertainty was removed with the labor contract. >> you would be a buyer of the stock. >> and i have been. i was the bull case with steven weiss when the stock was exactly there at about 81. ran up to 86 to stef's point and then has now pulled back and in more or less the middle of that range. it is not the most exciting trade in the world, but i think
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that is a range you can trade. >> let's do the biggest pops and drops now in midday trading. southwest energy, joe, a drop. >> they report on thursday. it is pulling back today basically because of natural gas prices. i will probably buy once i hear the earnings story. marcellus shale, they have a great presence and i don't think natural gas is going to go much lower from where it is now. >> you talked about hartford earlier. >> it is 40% year-to-date. who would think from an insurance company. they have about 35% of exposure property/casualty. if you looked at the travellers number and the ace limited numbers last week, property casualty was weak in terms of premiums. i think that may extend to hartford. we took profits and look to reload in the mid-20s. >> simon, horton. >> upgraded to a buy from fair. all of these housing stocks shocking in the short-term. this is evaluation fair play and after the earnings call they said gross expansions, gross earnings better than expected and it is a good entry point if you're not in the space already. personally, i would avoid it.
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>> doc, elan. >> they'll be acquired and that's probably not a surprise to anybody. the carrot hanging out there wasn't just the research and so forth the company has done and some of the intellectual property and also tax situation and that was one of the attractive things dangled out there, finally somebody bit and basically it is a $16 takeout. >> coming up on theful that, whole foods cut canter right before earnings. we'll break down the rare bold call on the street and herbal life and tonight's earnings putting the hurt on karl i can? we break down the battle of the billionaires when we come back. weekdays are for rising to the challenge. they're the days to take care of business. when possibilities become reality. with centurylink as your trusted partner, our visionary cloud infrastructure and global broadband network free you to focus on what matters. with custom communications solutions and responsive,
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first up, investors don't know how to bet wynn resorts as the stock rolls over on earnings. >> i am not sure about this one. they came out with good earnings, the macro property that everyone likes, 3% and the las vegas non-gaming revenue was strong. you have to be careful particularly with the slowdown in china stocks had a nice move and take profits off and stay
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away. >> whole foods getting cut right before earnings. what do you make of that. >> you should be incredibly scared and take the cantor report and throw it in the garbage. honestly, i think they will beat. starbucks told you last week the strength of the high end consumer, house surprises continue to rise and we have greenberg coming to join us soon and he is talking about california strength and that bodes well for whole foods. i think they will raise guidance. the margins are lifting. the stock is going up. throw cantor's report in the garbage. >> not surprising, ad stocks at new highs after the big ad deal we saw today. >> the number two and the number three player emerging and i am not sure it will get regulatory approval and why it is surprising, the top five have 75% of the global revenue. it is very surprising that you are seeing further consolidation is my point. ipg is interesting. have you a restructuring story happening at this company. they have pretty good north america auto exposure which is helping the bottom line, and then maybe you have wpp coming in. we'll see. i would hold onto this one.
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>> it is really a digital play, right? >> sure. there is a lot of synergies. i think they're low balling and it is surprising that you have the number two and the number three player so it will be interesting and something has to happen with ipg. >> hedge fund tight and bill ackman bet big and shares soared more than 80% this year. herb greenberg joins us for a preview of what to expect today. closely watched given the big personalities involved. >> the personalities nothing more to me than a side show, to this whole thing, the things that really matter, when i am looking at the numbers i will be looking at sales growth. has been declining over the past few quarters and that would be one of the indications if it continues to decline that something is getting in the way of momentum of this company. you have several things going on. you have second of a very large distributor left the company, this past quarter, and that is
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potentially impactful, even though the company says the impact is minimal and you have the company changing rules. here is a summary. >> we talked about that over the last few months. >> it is actually something again. if it is not just window dressing and real tightening up here that could have an impact on the business. we'll be looking at that and tomorrow morning is the earnings call. you want to look at the earnings call and listen and see if they give any indication of any -- that especially about the changes and what they can mean. >> two things. what do you make of what the stock has done lately because last week there was incred i will moves in the stock and i think today it is beyond 60 or was at the highs of today back above 60. it pulled back just below that. there is that. then there is also are they going to say anything about the buyback? the debt deal they want to do with shell is because of the auditor situation that they were messed up in and now maybe they will talk about what lies ahead for that. >> i think it is what people are expecting and what they want to hear, today, something about the
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buyback and you talk about the stock and why is the stock -- i don't know. is it a short squeeze? people use all of these terms. what i know. >> about a week and a half ago calling it the daughter of all short squeezes at this point after at the end of january said it could be the mother of all. >> as i look at it, based on our documentary here, selling the american dream that looked at heshlg life and the multi level marketing industry, aside from the numbers still the elephant in the room is is there something broader under pinning this company and the industry that needs to be addressed by the official trade commission? i want to say something. bill ackman and carl icahn, neither of these guys can tell you if it is a pyramid scheme until the federal trade commission, i said this numerous times on air, does an economic analysis, a very serious -- if they don't do that analysis, it is what it is. >> one man has based his entire position, billion dollars, on the fact that it is. >> and another man bet a very
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big position that it isn't and neither of those -- >> do you think this management understands they need to simplify and make these changes and particularly the preferred customer list, if they came out and changed that and you got more visibility and more clarity, don't you think the stock would just shoot to the moon, especially with 27% short out there? >> it depends how that impacts the business, stephanie. they need to definitely simplify the way the business is because it is a difficult business for the average person to get their arms around. we haven't even talked volume points which when you get into the nuts and bolts of the business it is so complicated for a simple model so to speak. >> it is a very difficult business to model and to understand the fundamentals, but i think for tonight i think right now that mr. ackman's position is clearly in a very perilous place. if he does -- say he gets the earnings report he wants and the stock doesn't go down, that bodes incredibly poor going forward for his position on where the stock is going. unfortunately right now you talk about, well, we don't care what the price action may be, we want to focus on the fundamentals,
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right now the fundamentals really don't matter. this is just a battle between two men. >> and let me tell you something. you have traders here because people are looking at earnings and longer term investors trying to have a position. when you to want look over the longer term, i don't care if you see the stock goes to the moon if they make changes. in the end it still comes back not just for herbal life, the entire multi level marketing industry, including a bunch of private companies, that the herbal life distributors are going to to try to take business away from them, that there is -- there needs to be a level of reform and regulation that could impact all of these companies going forward and have them all reset their business models so if that stock went to the moon, stephanie, and that happened -- at that point i expect there could be vulnerabilty. >> the fundamentals are driving this, though. >> absolutely. the numbers at all of these companies the numbers look great. that's why so many people own them. how often do you see an industry where there are underpinnings,
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where the very model itself is somewhat suspect. >> by merely saying they look great, you have such a suspect tone to your voice. they have been great until someone proves otherwise. >> that's right. until a regulator decides they want to come out and issue new guidelines or do something along the lines that makes people realize someone is overlooking this industry. >> and it trades at 13 times forward estimate. >> why doesn't anyone on the desk earn herbal life. i want to know why don't any of you own herbal life? >> a mistake. i should have owned herbal life because i talked about right now what's going on between the two and obviously we disagree. i don't know if mr. ackman has been covering on the way up. say he hasn't. if he starts to actually cover, what happens to the stock? forget the fundamentals. what laps to the stock when he goes in there and starts to cover and if this is trading, 60, 65, it is going a lot higher and you're clearly going to present an environment where i should have had the position on.
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>> it is tough to own a stock when you can't just the purely fundamentals, a lot of ego and other stuff going on and you don't want to be earning that long-term. basically what you are saying, similar to the educational companies and corrine than, a change in regulation. >> that's when you get the hard reset i talked about on the for profits and could happen in the industry of multi level marketing in general, not just one company but all of them. whether that happens is anybody's guess f. if it doesn't, he is right. >> and to herb's point, that's why it is not about the earnings tonight. as joe said, what if they have relatively bad earnings and the stock still goes up? there is other things other than karl that are squeezing this stock here. >> you guys are talking about -- you guys are talking about -- >> it is not about earnings. >> it is not. >> think about what you just said. we're talking about a company. it is not about earnings. it is about a stock. it is about two guys fighting each other. no one is coming back and talking about what i spent nine
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months investigating on selling the american dream which aired on and looks into the issue under pinning the companies. no one seems to care about that which by the way at some point is an issue. >> you are getting a 13 multiple. any other company with a clean background and none of this issue would trade at 20 times. >> maybe the real conversation, the serious conversation should be about the fundamentals not being allowed to be presented because what's happened with herbal life has its -- and john can back. it has become a futures contract. that's all it is right now. it is a futures contract and nothing to do with fundamentals and nothing to do whether earnings are real or not and honestly your reporting which might be excellent in the near term is not going to impact where the stocks go. >> i agree with you 100%. totally speculative gain and
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unless you are a value investor and look the way are you and believe everything is fine and potentially great company. i sat face-to-face with the ceo of this company. i know how emphatic he feels and i know how passionate he is about it. i get it. i i have done my own work and know long-term no matter what happens this quarter, this story will continue and this stock whether it goes up or down or whatever is going to be volatile until he get some sort of read from the regulators. >> if i can, your original question to me, why don't i own it, the uncertainty that herb is highlighting, the fact it is a futures contract, it takes away a lot of the passive money that would generally it end to invest in the stories and that creates an incredibly volatile environment i don't want to be part of unfortunately. >> could it have made a lot of money, i want to be part of it. >> it is not sticky, that's for sure. >> still ahead, amazon's amazing rally putting a trader on the losing end of a big call and find out how joe is managing
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this one in just a minute. plus, what is going on inside the walls of sac capital? one person may know. that is kate kelly. >> scott, sac capital trying to maintain a sense of normalcy after a legal event that proved a debt flow for other companies. more on what they're doing and how they're doing it when we come back. go to e-trade and roll over your old 401(k)s to a new e-trade retirement account. none of them charge annual fees and all of them offer low cost investments. e-trade. less for us. more for you. you'd do that for me? really? yeah, i'd like that. who are you talking to? uh, it's jake from state farm. sounds like a really good deal. jake from state farm at three in the morning. who is this? it's jake from state farm. what are you wearing, jake from state farm? [ jake ] uh... khakis. she sounds hideous. well she's a guy, so... [ male announcer ] another reason more people stay with state farm. get to a better state.
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summer breeze. does larry summers really have a shot at becoming the next fed chief? steven coen throws a big party over the weekend. what is he trying to say to the government? and a pro pot ad tries to turn up in an unlikely place. we have all of that and more top of the hour. back to you. >> tyler matson, we'll see you at the top of the hour. sac capital trying to stick to business as usual despite insider trading charges announced last week. kate kemly is here with the details on what's going on inside the firm. kate. >> scott, sac is trying to maintain a situation normal mentality when things are anything but. since the night before the firm was indicted for alleged insider trading last week, founder steve cohen and the firm's president held a couple of calls and sent memos to staff urging them to hang in there and not be cowed by peer pressure or family pressure to leave the firm which believes it is not guilty. staffers expect to see some departures as they prepare for
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the possibility of it turning into a family office running just steve cohen's money or decide they can't handle the pressure of being shut down by the government but sac lawyers are forging ahead on a protective order with prosecutors that would ring fence a large part of the prote. that would enable to give brokers and parties confidence that the assets are safe. goldman sachs, morgan stanley and credit suisse appear to be standing by them for now and s.a.c.'s deal documents with them, i'm told, provide a little more wiggle room than a standard prime brokerage agreement would provide in a time of adversity. so, trading is occurring more or less or usual with s.a.c. accounts and cash. one insider pointed out to me though as a long short equity firms s.a.c. deals in situations where they take one day to settle, a situation far different than besterns and others with big mortgage space back in 2008. the perot prospect of 10 billion in assets being seized by the government, scott, is making
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people extremely nervous, and they want to know what the details are of this agreement. >> what are they doing to deal with their nerves? they are partying, apparently, kate. people are talking about it. the optics of everything matter. >> so. what you're referring, to of course, is steve cohen held a party at his east hampton estate on saturday night that involved reportedly $2,000 just in tuna delivered from a local caterer. ostensibly the party had some connection to an ovarian cancer event being held nearby in water mill earlier that day. no official connection, but i'm told that steve had bought a table there and was maybe hosting some people who attended afterwards. in any case, it's the latest example of cohen doing something that kind of reflects his net worth and his largesse at a time when he's under scrutiny and public opinion really matters. i'm a bit surprise that had he went forward with this two days after the indictment. >> one more point. do you think as you say staffers are trying to make the decision now whether to stick or to go? do you think people who want to
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leave s.a.c. and who are some of the, you know, more top dog kind of people, the bigger producers also, have trouble hitching on elsewhere? >> that's a great question. i think the hedge fund industry has seen record inflows and not so long ago in the month of may they had a two-year record so there's clearly still a lot of business in the industry. there has been a little bit of a winnowing out in recent years and the top jobs will be harder to get than they were say five years ago. the question as to whether there's a stink on somebody that worked at sachs, time will tell. the firm strategy is plead not guilty and say perhaps we've had some bad apples, former employees who have pled guilty to former insider trading charges. they can't deny that. >> and one of the larger hedge funds relatively speaker. >> bridgewater is bigger, but they have about 1,000 employees, north of 1,000. they manage now about $14 billion in assets. that number is going to go lower because of receptions obviously, but even with just steve cohen's
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money and a couple of insiders they are managing close to 10 billion. >> kate, thanks. >> kate kelly. coming up, we're taking your tweets, from energy to media and internet stocks, the pros are turning all of your questions into winning trades. more "half" is back after this. 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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look at this stock on the move. ddd. that would be 3d, systems, stock up. >> yeah. they had an upgrade earlier but
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the stock moving up much faster and stronger since, basically a lot of august 50 calls in the money. that's august 5-0 calls. target set at 60. a lot of fast money setting into both weeklies and august expiry. >> our traders are quick but not always raid. joe made a bearish call in april on amazon. let's listen. >> underperformed since earnings, a series of lower highs in the marketplace. this is heavily owned in the institutional community. you break below the 200-day moving average at 51. would be very problematic for this. >> short amazon, short am zorn. >> i'll tell you what's problematic. >> i was wondering how long it was going to take for you to get me on that. i knew how bad it was the i lost money and got crushed on it pretty good. i haven't touched it since and clearly it's going to the upside. you're seeing the right things happen there. clearly in terms of e-commerce growth and ebay is underperforming which isn't good. >> final trades next. ♪ [ male announcer ] it's a golden opportunity
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>> scott baker? [ no audio ] > . runs across the floor to me. the balloons you see in the air, trial balloons. they have been floated. larry summers, is he still a legitimate contender to take the place of this gentleman, ben bernanke? also today, indictment. s.a.c. capital's steven cohen hosting a big party this weekend. is he sticking it in the government's eye? and a new way to do a lot of things without a lot of people knowing. it's called ap


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