tv Fast Money Halftime Report CNBC November 13, 2013 12:00pm-1:01pm EST
>> anyone who's been to a conference lately, understands the social media standpoint. reggie, good to see you again. we'll keep tabs on the progress. by the way, the dow continues to struggle here, down about 47. of course, cisco after the bell, jon, you'll have an interesting after-the-bell session, and now, back to headquarters and scott wapner and "halftime." >> thank you so much. here's what we're following today. retail shocker, after macy's big beat. is the holiday in for a big surprise? on the homefront, pulte's ceo and "halftime" exclusive on the state of housing right now. and stocks in jeopardy of posting back-to-back loss for the first time this month, and all of it coming as investors renew their concerns about the fed pulling back on its easing efforts. so as rates continue to move higher, is another taper tantrum on the way? and how can you protect your money? it is "halftime." let's play the action. josh, i'll begin with you. what happens if the fed continues to talk taper? >> you know, scott, i really
doesn't think we're going to hear a lot in the way of taper, to be honest with you. my outlook is that really no one says boo about it until we get into at least january. >> lockhart said something about it yesterday, josh. the market didn't like it. >> well, there's 12 or 1 6 of these people crisscrossing the country, but pay attention to yellen, dudley, maybe two others. we don't have to look at every individual fed heads' remarks and make a trade based on them. what i would tell you now in terms of stocks, more important than any taper rumor, is we're looking at a tired tape. it needs to rest. that's what it's been doing for the last week and a half. what you're seeing, the percentage of stocks has declined from the peak of 85% last month, where we made new highs, now about 61%. so a lot of names that were in bull motor are dropping off. that makes perfect sense given the run we've had. that's what people should focus on, the period of quiet. rearrange the portfolios and find the stocks you like, get rid of the stuff you don't.
>> steph, if you have enjoyed the big run we've had this year and you're worried we could get some form of a taper before the end of the year, why not just take things off table? why be in the market? >> well, you can. and we actually continue to kind of take some profits along the way. for example, today, we just took money off the table in aig, but found some places to put it, into hig. and i think that the problem with this week is that we don't have a lot of economic data, right? last week, we had a whole bunch of data, and the last couple of weeks we've gotten good data, in terms of gdp, ism, new-order backlogs, et cetera. and this week, the market is giving you a chance. the financials are interesting, because they got hammered yesterday, and today kind of lagging. so i think if you do think the fed will taper eventually -- whether that is sooner rather than later -- or i still think sometime in february or march -- you want to own the companies and the industries that are going to benefit, an that's financials, industrials. and i still think that even some technology, beaten-down technology looks interesting,
too. >> pete, i'm not sure we've seen the last of the taper tantrum, i really am not, when the lockhart comments were made yesterday, and the dow is down another 50 or so points today. how do you protect yourself? >> i think part of the protection we've talked about for a while, scott, has been involved with the idea that, hey, look, take some of the stock positions off, and have shorter term with the options themselves. i am probably at the lowest possible stock holdings i've been in an extremely long period of time. i started this a couple of weeks ago, started moving more and more into the options, looking for they up side. i agree with steph with the financials. i know we're in a bit of a pause as far as the s&p. but look at the financials. they've been in a pause for the last quarter. i actually think that's the area that will take the next leg up and push us in towards the end of the year. look at the way bank of america is trading on monday. monster activity. people buying the december 15 calls. look at the way the stock is starting to react, over 14.50. it's not all of the financials lagging. there are certain areas that are exploding. look at the derivative plays,
the assured guaranties of the world. you mentioned insurance names. there's pockets in the energy space and in the financials that have lots of upside still to go. >> i want to break away from it, and go over to dominic chu for a "market flash." what are you watching? >> we're watching shares of crocs on bloomberg headlines, that the company had explored leverage buyout with the likes of kkr and possibly a blackstone. the talks have reportedly failed and now the company, crocs, is evaluating strategic options. you can see from the headlines the stock is up about 12% on the news, scott, so we'll keep an eye on that as the day progresses. over to you. >> all right, thanks. big day for retail, m&a news with crocs, guys, and macy's another. what do we make of the crocs story? >> crocs has been being bought out for three, four, five years, and i think at some point it will happen. but the news that's out there now, if you're in the name, take profits here. if you're looking to play specialty footwear, look at dck,
ua. take the money and run if you're in there. >> if stocks are looking for another catalyst to extend the bull market, could falling gas prices be it? prices are now at a two-year low and our next guest says the impact is significant. paul hickey is the spokes co-founder, and good to see you again. >> good to be here, scott. >> i love the data you brought, because it does, in fact, show the performance of the s&p on a one, three, six-month period, following a big drop in gas prices, is positive. >> yeah, what we did is we looked at the current bull market in equities, and when we saw a 10% decline in gas prices over a three-month period, looked at how the market did. you would think this would be priced in, and the market would rally, but we've continued to rally going forward. three months later, each of the four times the market was up over 8% over the next three months. so the market may be pricing it in a little bit here, but, i mean, we should rally going forward. >> it's kind of weird, forever there was this correlation with
cheaper gas is good for the consumer. and then, after 2008, it flip-flopp flip-flopped. we saw higher oil as a good thing for stocks, because it meant, hey, there's economic activity. is that now going the other way, or what are your thoughts on that correlation? >> i think what we're seeing is we've seen dollar strengthen, so that's having a negative impact on commodity prices, so that's helping things. we have talk in iran, some talk that we're going to see some, you know, thawing of the tensions there. so, i mean, that's a negative for oil prices. and it's great for the consumer. and, you know, when you have 10% decline in oil prices, i mean, it's not a lot of money. but, i mean, every little bit counts, and collectively, it makes a big impact. >> it's interesting for the consumer, but interesting that the energy stocks have held up relatively well, is that a surprise to you? >> yeah, you wouldn't think that. it's counterintuitive to think that. yeah, they are one of the leading performing sectors of the ten we looked at, and including transports overall. but, you know, the consumer
discretionary has been one of the top performing sectors, so that just reinforces the point, more money in consumers' pockets equals better performance of the stocks. >> what's your general thought on the market, as we sit here today, in the context of the discussion that we had at the very top about whether we're really ready for any sort of pullback from the fed? >> you know, i think, you know, we're always talking about that the fed is just on the verge of tapering, and it never comes. now we're talking about it again. and i think, you know, in the opening discussion, we're talking about, you know, maybe raising a little bit of cash. we have more cash than we normally have. but, you know, what we're seeing is everybody's feeling that way. if you look back historically, had a 15%, 20% gain in the market, in the first ten months of the year, the last two months have been strong. the year's most correlated to 2013 so far and 1995 and 1954. we saw 4% and 7% declines respectively in those two years. so the history suggests that these strong markets continue being strong. >> well, all of the money that's still sitting on the sidelines,
these little taper tantrums, or whatever you want to call them, and some that have been a little bigger than little, have been buying opportunities. >> yes. >> every single time this year it happened, people have jumped into stocks on the pullbacks. >> right. everyone is waiting for a big pullback. we never get as big a pullback as anyone wants. we've been seeing sideways action here. one of the things, the dow is trading in the record territory, and every time it gets to that, it pulls back. in the most recent period, new highs, and we haven't seen the immediate pullback. i view that constructively as a sign that hey this could be the stage to break out. >> stick with us. we'll continue to talk about maybe the impact of lower gas prices on retail. macy's certainly sending a parade of ininvestors into its shares today after a big earnings beat. so is the report an outlier or a sign of things to come for the holidays? stephanie link? this was a blowout report. don't bet against terry lundgren is the message. >> don't bet against two quarters of disappointment from
a really good ceo. last quarter was horrendous. weather got cooler, so it's better for them. and going forward, they said that october ended strong. and then going forward, you have easy comparisons. hurricane sandy last year at this time. so do you have some -- very good setup for the fourth quarter. we started buying it on monday and thinking maybe you would get the lowered guidance, they didn't lower the guidance, a big surprise. an that's a tribute to the company able to execute well, especially on margins. >> can you buy macy's at 50, almost 51 bucks? >> the stock is still actually lagged the groups. the group's 28% year to date. and the stock is 25%. you don't want to chase it per se. the stock is not expensive. and they do have good initiatives, particularly in ecommerce, a growth driver for them. >> if this is a macy's or lundgren-specific story, guys, what does it mean -- >> it's a management-specific. it's those that actually know how to run their companies the right way and be able to navigate through difficult times. terry lundgren is one of the folks. i think carol over at tjx does
the exact same thing. they know how to adjust to the value customers and keep that traffic coming into the door. and by doing so, they're able to profit from it. >> are you telling me the holiday season will be better than maybe we thought? >> sure. >> check the notebook, you wrote it down about a week ago. i said we'll have a much stronger holiday season than what people are expecting, and one of the main reasons i said that is everyone was talking about how we're going to have a shortened holiday season. and i think the bar was set very low. i think macy's, though -- macy's-specific store, or at pete said, management specific story, certain names will have a great holiday season, but not strong enough to lift every single boat. >> you heard a lot of companies talking about october getting better. and that is specific to weather. the weather got cooler. people came out. >> look, even jcpenney, right? >> jcpenney, carter's, a couple of them did say the same thing. so then, all of a sudden, he says the same thing. and that actually is very -- a confidence booster. >> are you telling me that an area that everybody was saying stay away from in terms of retail, the department stores is now a place to actually look to
buy some names? >> -- got really low. and now -- and again, it's the fourth quarter setup. not so much the third quarter. it's the fourth quarter sit-up, because you have the easy comparisons. >> and macy's is a quality name. it's a name we've been in for. we watched it sell off from 48 to 47 to 46. we got a little greedy, wanted to buy it closer to 40. but you can buy macy's here, because after the report, you should expect the stock to continue to move higher. >> what about nordstrom's, jwn, josh brown? >> the stock has come all the way back. it dropped off early fall. it's back into that resistance level. if it takes that level out, you could have the potential for this stock, making the macy's-like move. it looks like a huge move on the chart, but only a four or five-point range. this is not a very expensive stock. it's 15 multiple. they're growing, doing a lot of the same right things, as pete mentioned, that macy's is doing. so i like jwn. >> they need to see operating leverage, because they've been
putting a ton of money into the business. so that's the key for that story to work. if a stronger-than-expected holiday season is a boon for the stocks, could another rollover be a problem for the stocks? they've rolled over the past ten days or so. what now in. >> if you look at the peak of the relative strength of the emerging markets, it coincided right with the agreement on the debt ceiling and the government shutdown. so what you have to look for going forward here is u.s. equities are more attractive than international markets, as long as washington can stay out of the way. and so, we're coming forward to the end of january, february 7th, the next debt ceiling debate. the big worry is washington, can they -- can miraculously -- excuse me -- get an agreement smoothly without causing all of the tension and debate? if that's the case, we would stay away from emerging markets as long as we don't have to worry about washington. >> we've seen this before. it's not just -- it's not just washington.
it's not just the folks on the hill. it's taper talk. rates go up. emerging markets sell off hard. >> right. >> so we've seen this movie before. >> right, as long as the u.s. economy is showing strength and growing, we want to be out of emerging markets. and more broadly, international markets overall. >> all right. >> i would go the other way. i think that story is a very well-known one. what i would point to is there are a lot of different emerging markets. we should not just be looking at these as a monolithic block. the countries with the most trouble -- and obviously their stocks -- are the ones with current account deficits where they've been funded with the cheap money, they haven't done the right thing fiscally internally. that's not every emerging market. you can put together emerging market dividends or etfs, and there's a great trade to be had here. some of the nations are trading at under 10 times earnings, versus developed markets, which are much more expensive. >> all right, paul. >> as an asset class, broadly speaking, there will always be winners in a down group. but broadly speaking, like the
eem or the -- >> i would avoid that, i agree with you. >> paul, good to talk to you. >> thanks for having me. >> paul hickey. cisco reports after the bell. ceo john chambers' salary almost doubled last yearment we've got that story coming up. then, don't miss our exclusive interview with the ceo of the pulte group. he's up next with our diana olick. we'll get the latest on his business and where he thinks the housing sector is heading next. [ bagpipes and drums playing over ] [ music transitions to rock ] make it happen with the all-new fidelity active trader pro.
all right. welcome back. when cisco reports after the bell, it's not the quarterly numbers that ceo john chambers will be scrutinized over. our josh lipton has more. hey, josh. >> hey, scott. yeah, the main question about john chambers, is he worth it? remember, he joined cisco in '91, became president and ceo in '95. named chairman of the board in addition to his ceo role in 2006. chambers has enjoyed the perks of c sweet life, the compensation doubled to $21 million in 2013 and billed for jet expenses. as for performance, cisco stock has climbed 20% this year. over the long term, more mixed
picture. in the past ten years, the stock is up 6%. since january '95, when he became ceo, it's up 1,200%, way more than the major indexes, and has grown the company from $1.2 billion in revenue, to $48.6 billion. he would like to leave on a high note. the question is, how bright is cisco's future? analysts say the cloud is an obvious threat, but cisco is making moves to adapt its portfolio, and the tech bellwether has the potential to return a lot more cash to shareholders. chambers has reportedly indicated that he could step aside as ceo as soon as next year. scott, back to you. >> all right, josh, thank you so much. josh lipton for us out on the west coast. pete, you trading cisco? >> i am. i like it. i think the name is going higher. they've had great performance. when you look at the sector they basically are building themselves into, scott -- and you're talking about the virtualization and security as well as the network itself -- i think that there's plenty of upside room here. now, the government issues, that's something he'll have to deal with, not just this past quarter but going forward in some of the projections for
cisco. because they're so dependent, and so many clouds on the horizon there. but the stock is still too cheap. >> yeah. so it's down 10% from last quarter. last quarter was a disaster. we talked about a ceo. how many times do they disappoint in a row? >> right. >> i think the headwinds are pretty real. they have federal, which is a big part of their business, enterprise. china problems. we own it, sold some yesterday and i'd be happy to sell it at 25. >> selling ahead of the numbers. from tech to real estate, and one sector feeling the most pain from the rate hike talk is housing. it has underperformed since the middle of september. diana olick is at the new york stock exchange with a very special guest. it is a cnbc exclusive interview. diana, take it away. >> thanks, scott. you talk about rising mortgage rates, we talk about rising home prices. both roadblocks for the homebuilders and who better to talk about that been the ceo of
pulte, richard dugas. we've seen a pause, the first half, hot for builders, for home price, but now seeing a pause. how long will it last, and what will jump-start things for the builders? >> the pause has been caused by a combination of rapidly rising rates a few months ago. the government shutdown, i don't think helped anything. and then, concerns around affordability as home prices have risen quite a bit. having said that, we are still far below long-term averages, and i actually think we need good job growth in the country to help the housing market. so we're expecting better things come the spring selling season. now's not the traditional best time to sort of evaluate the market. >> you talk about that affordability. pulte homes, the average home price jumped 11% in q3 from a year ago. we're seeing prices up across the board. but some of the builders are now starting to talk about concessions, incentives, things we saw during the recession. do you expect to see that in the early part of 2014 to be offering that, to get more buyers in the door? >> you know, we did an
announcement on the third quarter call a couple of weeks ago we had introduced the incentives for the first-time buyer category in select communities. so far, it's not really widespread. about two-thirds of our business is either move-up brand, which is pulte, or the active adult brand, which is dale webb, so i would say we're maybe more insulated from some of the concessions than other builders may be. nevertheless, we'll have to see where the market goes from here, as to whether or not buyers need that inducement in order to get into the market. >> do you expect to lower prices any, or at least slow the price growth? >> no. as a matter of fact, we are seeing expanding margins. our margins have expanded 11 quarters in a row. we're very proud of that. and we projected that we have further margin growth from here. so i think we're a ways from seeing prices actually go down. >> okay. i want to give it over to scott for a question. >> hey, richard. thanks for being here today. appreciate it very much. >> hi, scott. >> what happens when the fed tapers? >> you know, that's a great question. everyone's sort
krystal ball in that regard. i hope it's accompanied with stronger environment in the economy, and better job growth. to be honest, one of the reasons that we are not overly aggressively investing in land is because we're running a very return-based model, and i would say the housing market right now has got long-term upside, but we're not expecting things to go back to the -- you know, back to the days of '04 and '05 anytime soon. >> right. >> we're trying to be cautious with regard to that. >> is the market strong enough for the fed to taper, in your estimation? >> you know, i think it will depend on what happens with the jobs. we got a good jobs report last week. if things continue in that 200,000 a month range or better, i would say probably so. it's a little difficult to say. either way, we're running our business with the focus on return as opposed to growth, growth, growth. >> and i just wanted to ask you one more thing. are you seeing a real slowdown in the entry-level market? because you talk about that focus on dale webb. is the entry level market dead?
>> i would say not. actually, we saw a bit of a pause, is the way i would characterize it. we still saw good activity. it just wasn't as robust as it was, say, in 2012 or '13. we are seeing accelerating demand in the dale webb. >> but the syntex. >> it's the area of the business that's slowed to some degree. i would not call it ab problem at this home. >> richard dugas, with pulte homes. scott? >> all right. thank you very much. i heard a ceo, while optimistic, is somewhat cautious. murph? >> absolutely. that's why we've been out of these names for sometime. we're still playing housing through home depot right now. but i think when it's time to get back into housing, i'd be looking at a company like toll brothers, which is a higher-end company. he talked about richard dugas, mentioned the low end was seeing some problems. i think when we get back into this, i expect it to be in toll, and under $30 a share. >> can you explain, or someone
on the desk explain, when we talk about housing mostly these days, it's all of the other ancillary plays. hardly anybody says, "i'm buying k.b. homes, i'm buying pulte." it's either, "i'm shorting pulte," or "buying home depot, lowe's." why? >> it's not been a good trade for the second half of the year. yeah, you get tradeable rallies. but when you get the 12%, 15% rally, you need to take the money and run, because there's been pressure on the sector, and a lot of it has to do with taper talks. >> they report the fiscal fourth quarter at the same time. revenues grew 65% year over year, and the stock hasn't done much. and for that very reason, it's a hard trade. while there might be an opportunity long term, it's a hard trade, because they're very focused on interest rates. interest rates go up, the stocks go down. it's as simple as that. >> we know rates are going up. all right. coming up, shares of macy's hitting all-time high after hitting solid earnings, but that's just the beginning of the
retail earnings parade, and after the break, the traders will reveal the other retail stocks they're stuffing their stockings with. and fedex smackdown, shares up 45% so far this year, but someone on the desk doesn't like it heading into the holiday season. we've got both sides of the fedex debate, and much more, ahead on "the half." 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
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to enjoy all of these years. ♪ welcome back to "halftime report." i hope you're hupgry. let's kick off with potbelly, posting the first earnings as a public company. it beat expectations. the shares are on the rise. and speaking of, that's what yum brands is doing. the owner of pizza hut, kfc, taco bell, really good china news. same-store sales fell by 5% in october. that sales drop was less than expected. remember, china is yum brands' biggest market, and a programming note here.
yums chairman and ceo, david novak, will be jim cramer's guest on "mad money" tonight at 6:00 p.m., 11:00 p.m. eastern here on cnbc, guys. back over to you. >> you have to watch that tonight to get the real story from jim and mr. novak. so let's trade those. let's trade those. >> i think potbelly is interesting. they surprised the street on the first call. what's great, this is at the same time that noodles & company and panera bread both were rather disappointing. i think if you're a long-term growth investor, you got the green light on this name. it's only 280-some-odd stores, only in 18 states. they have a lot of room to grow, both in regional, to being a more national chain. i like the story. >> is yum finally safe to buy? >> who knows? we don't know. >> i mean, just based on the fact that the comps are at least starting to trend back towards the flatline. maybe going positive in china. it's a game-changer, right, to where they've treed recently in. >> certainly. and so, last month, what a difference a month makes, last month, the stock pell to 64 and
change. that's where you wanted to buy the stock. i'm not sure you want to chase it here at 72 and change. if they can continue to see better-than-expected numbers out of china, the operating number is a powerful story. from stuffing the bellies to stuffing the stockings, the official holiday start of the shopping season is just a couple of weeks away, and which retail stocks belong on your list? courtney reagan is joining us for this segment. stephanie link kicks off with a trade. and then courtney gives the lowdown. steph, what have you got? >> going with the contrarian coach. i know it's hated. 22 neutrals or sells on the stock now. down 5% year to date, trades at 10-multiple point discount to cour kors, and it should. we have the new ceo, new creative director, new products. the spring line looks fantastic. i don't know if you've seen it. >> i have. >> it looks much better, and i think the momentum in 2014, so maybe not a 4q kind of trade,
but 2014 trade. >> i like what they're doing in men's. we know that's really popping. it's a good place for shoppers to go looking for something unique for men. that's what i like. don't love what they're offering in the women's. i like the placement in macy's, and the center court very strong there. i'm sure not naughty, not nice, neutral for me. >> is the men's pop enough to offset the course market share drop? >> it's really hard to say. i don't think so, not in the short term, but potentially in the long term when men get used to the whole man thing. it's catching on, but not great there. >> kors has been doing great. >> pete? >> williams sonoma, looking at last quarter, q2, earnings up 14%. when i look at what they're doing, they have so much business in the e-commerce world, 50% of the revenues now, that's why the margins are improving, as well. when you look at this can, they're clicking on all cylinders. they still are very small internationally, only 5% of the revenues. i think there's plenty of growth there. that's why i put them in the
category of a kors, unfortunately, versus a coach. because they're still that growth there of where i think there's plenty of expansion on the upside. >> why williams-sonoma versus restoration hardware? >> restoration hardware is a nightmare, and why is everybody there deciding to get out. every insider for the most part started piling out of the stock. it has a monster short interest, and that's a cliff people will fall off. >> a lot going on at restoration hardware. the management team is trying to shift it from the high-end furnishings to the lifestyle luxury brand, which everybody is trying to do. it's not working. that's a wait-and-see. the stock has really popped, especially in the last six months. i'm not real comfortable with restoration hardware, because a lot of question marks there. and pottery barn, big gift-giving sites, things you can order en masse level, and get personalized with monograms. i know it sounds silly, but people like that stuff. >> josh, what do you like? >> i love kors. this is the play for the holiday
season. i think they have a ton of mine share from the higher-end consumer. quite frankly, it's a machine that sells bags and produces stock gains. new all-time high yesterday. if you're going to own just one name in your stocking, this is the one i would go with. >> court? >> of course, i really like it if you talk about the lifestyle thing. kors, it's working for them. accessories are still hot across the board, from young women all the way up to the older women. teens really liking michael kors for the holiday. so that could be a strong point for them. really not a whole lot not to like about michael kors. >> how about teen retail? how awful will it be? >> american eagle is doing better than the others, they're actually getting a night digital footprint with teens, trending well socially when you look at the different surveys and consensus. folks are liking what they're doing. a new innovation center out in california. i don't know if it's enough to move it. >> unless you get a tide rises all boats, then maybe it helps. >> exactly. >> murph, what you like?
>> i like under armour, and it's had a nice run. they're moving into the shoe business, and i think that's what's really going to help them. they're taking off. if you look at any athletic event, i did the spartan race, the marathon, which i didn't do. >> i did. >> did you see a lot of under armour? >> i did. >> that's the difference. people are saying they can't compete with nike. they don't have to. there's room for both of them. >> what i really like about under armour, it will go along with the rising tide lifts all boats. many folks are saying activewear is the new accessory. and they're going after women. lululemon could be losing some of the women that don't want to pay high prices for see-through pants. >> great stuff. courtney reagan. crude oil bouncing more than 1% off of a five-month low. let's get more from jackie deangelis and the "fortune" crew. >> good afternoon, scott. oil moving more than a dollar higher today, but only closing after the lowest level since june. jim, the long decline here, is it finally over? >> no, i don't think you can say that yet. the fundamentals story still
holds, and that's domestic supply story. plus a lack of any real headlines out of the middle east. if you were short this, and you got the 15% run, i'd have my hand on the button quick. if it trades at 96, that's an indication it's over. until then, i'm negative on crude. >> richard, what's your take? has oil found support? >> after the 9% to 10% decline, we're at trend line support at $92. any pop here, i would consider a bear market rally. and really we're not looking for price. this is a process. with the capitulation, the market points higher, looking for a draw tomorrow of about 800,000. anything less than that, and the market goes up. >> all right. we'll be watching closely. for more on crude, check us out, futuresnow.cnbc.com. >> all right, jackie, thank you very much. shares of fedex got a nice pop yesterday after dan loeb revealed his stake in the company. so should you follow along? we have both sides of the debate after the break. and mr. loeb making another bullish call yesterday.
>> we remain very bullish on japan. >> well, barclays jim mccormick agrees and he has five reasons why he thinks you should stick with the japan trade. ♪ [ cows moo ] [ sizzling ] more rain... [ thunder rumbles ] ♪ [ male announcer ] when the world moves... futures move first. learn futures from experienced pros with dedicated chats and daily live webinars. and trade with papermoney to test-drive the market. ♪ all on thinkorswim from td ameritrade. the ocean gets warmer. the peruvian anchovy harvest suffers. it raises the price of fishmeal, cattle feed and beef. bny mellon turns insights like these into powerful investment strategies.
all right. welcome back, shares of fedex got a big boost when third point's dan loeb revealed on cnbc he has a position on the stock. should you follow the hedge fund manager into the name? stephanie link's our bull, mike murphy is the bear. steph, you're up. >> the restructuring story, in the fifth inning, and they are focused on going from a decentralized system, delivery system, to more centralized, not as much as u.p.s. the big story, trying to fix the express business, 60% of total revenues. cutting costs. more price aggressive. or they're being more rational, i should say, on the pricing side. and for every 100-basis point improvement in margins, it's 55 cents share to the bottom line. and i think 17 times forward estimates growing at 17%, double what u.p.s. will grow. >> so i love the business of fedex, but looking at the stock from a purchase, whether or not
i would buy fedex here at 135, i definitely would not. it's rallied 15%, up 44% year to date, and a lot of that is cost cutting. there's only so much costs they'll be able to cut. i'd point to the fact that the stock didn't have a huge reaction to loeb. you know, moving two, three points on $130 stock, i think -- i'd love to buy fedex in the low 100s. >> you've been focusing on the cost-cutting story, certainly, next year is the volume recovery, and as the global economy starts to improve, you have strong operating leverage as a result on earnings. >> you do, if they can keep up with the demand. that's one of the things they talked about on the calls. and now, going against amazon, who is an ally, and now amazon hired the usps for sunday delivery, and another person they'll have to battle against. i think the stock is priced to perfection, and not whether you would tight it at 136. the answer is no. >> pete, who made the more
compelling argument? >> with murph, the performance is so much, you could go to u.p.s., ready to break out to the upside. if you're looking for bait tarks u.p.s. has more upside. >> tell us who you think you won. tweet us @cnbcfastmoney and use #bull or #bear, and we'll give you the results at the end of the show. and drew loeb told us he was still bullish on japan. it's been one of the most successful trades, but is it still a winner? jim mccormack is head of
research at barclays, live in london. welcome to the "halftime" show. good to talk to you. >> thanks for having me. >> still a winning trade, or no? >> yeah, i think it is. if you look at the underlying story, there's big changes going on in japan. so far, it's the economic indicators are telling you it's working, and i don't think it's valued yet. >> yeah, i mean, it has been one of certainly the best and most crowded, i guess, trades, it's
fair to say. is there any danger in the number of people who seem to be in this thing? >> yeah, i think the indicators suggest there's still a lot of interest, although i'd argue it's a lot less than it used to be. and i suppose the big risk here is that the next leg of this trade is probably going to need some government policy action, and you may need the market to force them into it, which means maybe the first move is lower dorian and lower japanese
equities, but then go up quite significantly. >> it's josh brown, jim. i'm curious to your thoughts, the best way to get exposure to japan. do we want the exporters like the sonys of the world? or does it make more sense to look at something, for example, like a dfj, which is the japanese small-cap dividend etf? should we be thinking more about the consumer plays in japan? >> yeah, i think the initial trade has clearly been most -- most benefited by the exporters,
and i think that's -- that's pretty reasonable, given that it's been mostly a darrian story, but if you think abenomics will work, you have to bet on the domestic stocks, as well, so that is a way of positioning for the next leg of the trade. >> yeah, jim, a good one, for certain. loeb still likes it, among others, we know that. thank you so much for joining us today. >> thanks for having me. >> jim mccormick over at barclays. steph? >> i like japan, and i like what he said in terms of the monetary stimulus in the country. >> what are you buying -- >> dxj, although 48, 49, we trim, we buy 44. >> murph? >> yeah, i think sony is a great way to play it. they had the huge win after the initial loeb new, but the stock pulled back down into the 16s. here at 17, you can buy it and get a push into the low 20s. >> pete? >> the problem is, there's not too many great ways to play this, right? i mean, unfortunately, as we stick to something like the dxj, along the lines you're talking about, seeing plenty of activity. a lot of people are interested.
one of the more active as far as relating to japan. >> nobody said toyota. >> no. i'll take gm every day of the week over toyota. >> agreed. >> all right. >> taper is the talk of the street ahead of tomorrow's confirmation hearing ahead of the chair janet yellen. we break down the trade ahead of the great taper. twins. i didn't see them coming. i have obligations. cute obligations, but obligations. i need to rethink the core of my portfolio. what i really need is sleep. introducing the ishares core,
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goldman employees are sweating it a little today. it's the day that bankers find out whether they made the cut to become a managing director. we'll tell you a little bit about goldman's new class. plus, the highest-grossing art auction of all time. we brought it to you first yesterday on "power lunch." who bought what and what did they pay? meantime, scott, back to you and the "halftime" team. >> they bought a lot, paid a lot. we'll find out at the top of the hour. we look forward to that, maybe who's behind that. let's hit some unusual activity. speaking of a -- >> yeah, you talked about toyota and look at gm. had huge paper in january. but the march 39 calls, and gm hitting on the 52-week highs, and looking like it will go further. >> let's get back to the top story. the impact of taper talk and rising rates on stocks. gemma godfrey is live in london, and joins us now. gemma, nice to see you. >> hello.
>> are 3% rates a bull market killer? >> well, 3% is the level that investors are looking at. but where most of the risk has been stored up is in emerging markets, especially the areas that have the highest foreign ownership. because when liquidity is withdrawn, the economies, if they haven't done enough in terms of actually looking domestically to support their markets, they are the most vulnerable. and the term that's being bounded around at the moment from the likes of morgan stanley is the fragile five. so that's indonesia, india, turkey, brazil, and south africa. and we saw from indonesia just today the third rise in rates since august. so we're talking about rising rates, and now there already is a problem of inflation. so i'd be very concerned and very cautious in the way i would trade this type of market. i wouldn't say it's about being a bull or a bear. but about being eagle-eyed and going in and being much more particular country-to-country within this type of area. >> what about the u.s.? i mean, do you think that we're
capable of handling more and more taper talk? >> well, i'd say it's less of a taper tantrum, the word bandied around before, and more of a taper tease. the reason is that the fed is really leading markets on without enough reason to commit. the reason is there's talk about certain, you know, level of unemployment. what that misses out on, the participation rate, and you have people underemployed. so even if they're in employment, they're not consuming as much as they would have done, you know, pre-crises. so there isn't going to be enough economics to be able to support the fed in tapering so early. and if they do, it'll be because they want to benefit from the momentum in stock markets that could protect them from any negativity, but it would be a mistake. >> quickly, before we run. so what do you think we should buy if we're worried about all of this? >> well, we still do like arizona market, slightly less owned, so looking at, for
example, biotech, which is moving from defensive to defensive growth. we are actually still quite concerned about the financials. i know there's been a lot of talk about how actually because they've lagged, they're potentially a catch-up, but it depends on the time horizon. if your time horizon. if you're looking to catch up with the markets or weather the storm we're slightly more cautious. >> thanks as always. >> thank you very much. >> gemma god freed, see you soon. it is easier than ever to invest like a billionaire. an index tracking investors but are the traders buying into it? they're going to weigh into it next. tdd#: 1-800-345-2550 trading inspires your life. tdd#: 1-800-345-2550 life inspires your trading. tdd#: 1-800-345-2550 where others see fads... tdd#: 1-800-345-2550 ...you see opportunities. tdd#: 1-800-345-2550 at schwab, we're here to help tdd#: 1-800-345-2550 turn inspiration into action. tdd#: 1-800-345-2550 we have intuitive platforms tdd#: 1-800-345-2550 to help you discover what's trending. tdd#: 1-800-345-2550 and seasoned market experts to help sharpen your instincts.
welcome back. have you ever wanted to invest like warren buffett or carl icahn? you can track their portfolios and monitor their performances. robert frank has the details. robert? >> thanks. it turns out that investing like a billionaire could be a lucrative strategy. question is whether there are hidden risks. ibillionaire and the new york stock exchange today launched the ibillionaire index, tracks the 30 large cap stocks in the s&p leading the billionaire investors that allocated the most funds to those stocks. the list includes carl icahn, david tepper, john paulson, david i horn, dan loeb, favorites of this show. the billionaire index has outperformed the s&p over certain periods since 2005 it's posted annual returns -- annualized returns of 12.5% compared to the s&p of 7%.
ibillionaire is planning to launch an etf. becoming rich by investing like the rich may not be simple. the holdings based on the 13 fs and they have all kinds of hedging strategy, options, risks, stops the average investor does not have not to mention much better information. but for chose who want to vicariously invest like a billionaire without putting in the money they can buy the app which is only 99 cents. only lots a buck. >> we always sort of put this warning out of what these are backward looking but you could always buy berkshire stock, you could have bought iep, which has done incredibly well, carl icahn, of course. >> and the other point they're backward looking but based op the assumption you bought the stocks as soon as it was publicly available they bought them. they're not back dating these things. if you bought the stock as soon as it was disclosed they bought them you can still get this return that's better than the s&p. >> easy for me to say you can
buy berkshire, $171,000 a share. >> you could. all right. robert, thanks so much. >> thank you. >> robert frank. let's speaking of billionaires, i don't know what that is? hebe stock is gaining ground but losing an investor. nelson pel -- >> sotheby's. >> all right. >> it red hebe's on the prom ter. >> thank you very much. >> who am i going to? >> i'll jump in. the stock after loeb got involved a lot of talk that stock was going to really take off from there but it's been tigts sigts in this low $50 range. when you look at all the money the guys are bringing in from the auctions there's a lot of upside in this name and one of loeb's main points in inning in this company was the fact that they had so many receivables they could monetize. there's upside here. >> you never heard hebe's?
>> you have to be crazy bullish on the market and on the economy to be buying into this kind of a stock. this is really a bull market ultrabull market kind of stock. i don't know that that's where you want to be allocated at the moment. >> i kiss agrdisagree. when you look at the sotheby's these guys are lending out money, housing your artwork and lending you mun wee yi. they could be keeping their money and earning interest and bore rot the money at 2%, 3% to pay you your loan on your rate. if that happens the value of the stock will go higher. >> what we're seeing it's getting so competitive to get the good stuff that the auction houses have to spend a lot of money for guaranteeing. sotheby's has $150 million in guarantees out there. because art is selling well doesn't mean the auction houses do well as well. >> thank you very much for the latest on sotheby's, christie's and everything else. final trades are next. (vo) our new planes don't fly any faster.
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murphy won the debate. final trades. pete. >> kfn. >> stef. >> red hat. >> murph. >> wfm. >> josh. >> pfe. >> my final trade. >> hebe. >> "power lunch" starts right now. >> strong buy. >> "halftime" is over. the second half of your trading day begins now. >> thanks very much, scott. and the guys and girls over there. several stocks at the nasdaq are now in bear market territory. we will name the names. and ask and answer whether you should get in or wait before you hit the buy. but that bear looks sick i would say. goldman sachs making big changes naming the next generation of managing directors mds. a big day there. what's their take on the market? and a new argument breaks out. is your