not just technology. it will be broadly -- these are people who are changing the world, and it's a diverse world. it's a global society where innovation is just absolutely the name of the game. we're going to be talking about how they are handling that. >> fort knox, binge. >> dvd. >> it's a good topic. >> the world is our oyster. >> it's good stuff, jon. see you this afternoon. let's get back to headquarters. wapner and the half. >> welcome to "the halftime report." i'm scott wapner. top trades this hour. the state of the trump rally and why the rising u.s. dollar could doom stocks. joe terra nova, josh broen, najarian brothers as well. we do begin with stocks pulling back after their post-election run. you might just blake the surging greenback, and that continues to rise. the dollar index now at its highest level in 2003. joe, you have been talking about

this now for at least a couple of weeks. how big of an issue is it? >> it's a big issue when we get into january, and we hear from corporations what the impact has been and what the impact going forward could be. secondarily what will the chinese do as it relates to deappreciating their currency. >> why do you have to wait until january? >> no, it's not. no, it's not an issue. you are not going to get the headlines from the companies who are going to cite the appreciating dollar. >> you don't make the moves now? >> you have to have the reality of it in the upcoming quarter. right now you have to focus on a market that has clearly reversed the expectation that president-elect trump coming in would be bad for stocks. it's about fiscal policy finally being put into place. lastly, i just asked why is it that we are always looking for

the exit sign when the market advances? that's been the mentality over the last seven years. it hasn't worked. >> whether the trump rally to the magnitude people have gotten it to is justified. justified and rallying this much before mr. trump even gets into office? >> with the anticipation of what is he going to be doing, yes. i think giving you a great opportunity to start looking at some of those. whether that means it's apple or some of the namsz, amazon, the fang stocks, if you will, those stocks have absolutely been taken out to the wood shed recently, and that's where i think if you are looking for opportunities, to joe's point, if you think this market has any legs to the up side, i think those are the areas that have been beaten down.

>> we were in the 19s before this. this is a pretty staggering move to the up side, and you would expect to see a pullback after a week like that. >> kevin o'leary. merrill lynch says the yield dam has broken. others are talking about bank of america also downgraded. barron downgraded bank of america today. they say the book profits are in the banks. >> i agree. i actually think that one of the underperforming sectors for 2017 will be the banks from here. let me explain why. let's go out and look at that ten-year. yes, had a big move. 2.26. whatever it is right now. let's give it all the way to three. we end up at three. that's still miserable for the

banks. if you have bank profits because of the massive deregulation, which will be more to replace. don't get so happy. i think you take your profits out of this. i'm going to call it a bit of a head fake in financials. this will be the sixth time people have said please make it stick. please stay up this time. please grow from here. guess what, they're going to break your heart one more time with feeling. >> this time seems to be different, though, right? rates are going up. they're expected to go up more. at least dodd frank could be changed just a bit to help out the banks. >>. >> but it's always different this time. until it's not. because i argue that dodd frank change, that is not on the first 1 00 day agenda. remember, we're going to repeal obama care first and then clean up the tax act. that's his hands full for 2017. if you are telling dodd frank inside the tax package, i don't think so. you're going to have a lot of push and pull within congress on that one. this is something people are still scared of deregulating

banks. i think we're way too optimistic. hey, listen, that's the way i'm playing it. i'm taking my prochts on financials, and i'm banking on another sector which i think has been beaten up even more. >> some of the preceps of that. you actually get to that. it might be six months. might be a year. might be a rollback and benefits those guys as far as regulation. is it the same true about obama care? >> you're absolutely right. meanwhile, i'm picking up north of 3% dividend waiting for these wonderful things to happen. you can't say that about any of the financials or at least the bulk of them because you have the risk of a turndown on your valuation. you've had a 16% move in some of these regional banks. they could break your heart by losing 5%, 6% next week. i think there's too much volatility. give me the diversification of medical supplies, of biotech, pharma instead of just one thin

needle of financial center banks. that's my argument. >> who is taking the other side? >> he is wrong. the regions are going to pull back. rsi has exploded to 77. that's way over bought. there will probably be a pullback, but this is a historic break-out out of a ten-year range on the kre. these names are going higher for reasons that are not limited to the fact that ten year rates are higher. that's where the bulk of those books are keyed off of in ermz it of the loans. >> when you look at full employment and lending come back, all of these play back into the hands of of the regionals. i would welcome a pullback in these names as an opportunity to reload or to get involved if i missed them. the break-out is for real. it's convincing. the volume is tremendous. i think it's got legs. it's not just about, oh, president trump or, oh, the two-year note is now yielding over 1%.

there's a lot more happening here. >> kevin. >> i want you to save that tape. i'm going to make him eat those words. it's coming to -- >> like you did with long facebook or long apple? we'll play all the tapes together on a loop. i think you and i will probably have a tie. >> absolutely, but my point is don't get sucked into this financial move just yet. move made 16% in a week. take some profits. put them in the bank and diversify. i don't think this is a secular move yet. it's going to break your heart when he finally gets in and says, look, we can't completely wipe out dodd frank. it's going to take us two years. i have other things on my plate i have to work on first. >> kev, the regionals are not as affected by dodd frank as the money centers and investment banks. you agree with that, right? >> i do, but even if we get to 3% on the ten-year, that's not enough meat on the bone for these guys to actually get to play ball because the regionals are lending to businesses, and they still have massive capital requirements. they got to keep tons of cash on the books. you have a repeal those laws

yet. you have lousy spreads, and they have crazy capital requirements. >> they have too much cash where, there hasn't been enough demand on the lending -- that's been the problem. they already have the cash. the issue is nowhere to put it where there's a rate of return. that could change if the economy stays where it is, and you get some juice. >> it happens. i'm just telling you for all of this excitement about trump, let's admit one thing. this -- >> i'm not excited about trump. >> this happened real fast. by the way, did i not call it on the wine index out of philadelphia? those guys in philadelphia told us trump was going to win. remember that one? >> you did. what about the overall rally? i mean, kevin makes a point. you are getting too optimistic about the banks? are we getting too optimistic overall? some suggest not. >> how about the fact that we already -- >> is this going to go up in per pet out? >> it wasn't just a trump rally.

we were moving before that because the earnings that we had gotten, scott, were phenomenal. there was some great earnings. oh, by the way, kevin, you were talking about yields. you look at jp morgan. you are getting 2.5%. you talked about 3% elsewhere. you are getting yield. you've got -- all you have to do is all of a sudden start seeing that yield curve, and all of a sudden we all are starting to hear more and more whether it's rosengrin or whom ever talking about december. now they're talking about 90% the fact that they're starting to raise that. there's a lot of reason the banks have room to run. >> the rally has room to run or not. hold on. here's what gary cohn of goldman sachs -- here's what gary cohn of goldman sachs told us yesterday. >> the question to me is how strong can the dollar be inle that starts having unintended consequences in the u.s. economy? >> we have to be careful that we modulate the value of the value, and that we can continue to grow jobs in the united states. >> okay. >> yes, sir. >> mr. dollar. >> yes. >> i answered that. january. the time is not now to worry

about it. the time right now is the same nar joe that we had in august. the banks began to rally in august. september, everyone said the same thing. they're going to pull back. the story is over. what is different now? i don't understand why ken support excited about this. kevin is going to see a loosening as josh cited of all the liquidity that's been trapped on bank balance sheets. you're also going to see a surge, kevin, increased dividends. i know that's something you get excited about. >> we're talking about the banks. i'm trying to talk about the rally. >> because the banks -- >> i'm talking about the rising dollar. >> the banks itself are the story. the rally itself in the marketplace is not so much the story as it is right now. the fixation that institutional managers have on banks. that's the opportunity right now, and that's the opportunity going forward. if you want to talk about the market again, we'll just become closet indexers, and we'll just take an index fund and trade the index fund. i don't want to do that right now. >> banks are the only trade then for you.

>> right now banks are the trade. the trade. not the only trade. >> we've -- we haven't had earnings increases on the banks. we've had p.e. expansion. that's all we've got so far. all of this excitement is about the fact that earnings will be subsequently quarter after quarter in 2017 getting better. if we get deregulation, a loosening of capital requirements so all of a sudden those regionals we talked about are going to be freer to make money wherever they're going to lend it. all of this is pe expansion. >> kevin, why has the russell gone up 10%, far exceeded everything else in the last ten days? >> i'll tell you why. because all of those small businesses, all of those shark tanky deals, all of those small guys that had have been buried in regulation in every sector did. >> strengthening dollar does nothing to hurt them. >> and, kevin, the reason that it's gone up 10% in the last fwo weeks is because financials have 27% weighting in the russell index. that identifies for you how

underinvested institutional money managers are right now. they're racing. they're scrambling. the next highest weighting is 15%. that's why the rally is occurring right now. that's your evidence why this is really the turn back. >> i don't agree. there's an optimism coming into the market, and the other 70% of the russell 2000 that feels that all of those companies that have been held back by an overregulated environment and overregulated market and just those animal juices that we're all talking about, that wonderful feeling of optimism that president trump has brought back into this market, even though people thought it wouldn't happen, that's why you are getting that action on the 2000. i think the russell 2000 is going to outperform the s&p next year, because it's going to unleash small business, which has been waiting for for years. >> i agree with kevin 100% on that. he is absolutely right. the russell is breaking out right now, and i think when you look forward over the next couple of years, i think it outperforms the other major s k indexes. >> judge, when you look at what you asked at the top of the

show, other than saying let's drill down into one sector, i know kevin likes health care a lot more than financials. i do think financials could see a bit of a pullback here. i wouldn't liquidate out of all of them, and certainly for our clients we're not, but, judge, we've moved 1.5% since november 8th, election day, says through right now. 2,174 for the s&p. it was 2,140 when we closed, and we all know we've made that v-shaped after hours weird move. well, it's a 1.5% move to the up side. the market itself as far as the rally doesn't mean it's over. as far as over extending -- >> at some point -- >> -- 16% move, that is a lot. >> we ask whether at some point rising rates and the rising dollar kill the rally. >> well, right now, right now, tech is in the middle of a two-day bounce. you are seeing the eem find support of the rising 200 -- >> a bounce because it got obliterated over the prior however many days in a row.

>> i don't know about obliterated. it's down. >> bank stocks got obliterated. >> true. true. the in a case, the big names, cisco is going to report tonight. they're having a little bit of a bounce. the eem is finding support at the rising 200 day. that's very important if you want to be conduct constructive on risk assets. you can't have a freefall in e. m. again. that precipitated the flat market here in the u.s. it was just that risk off sentiment from elsewhere that we experienced for two years. i think if you can get some constructive action in areas away from, you know, what's been working the cyclical trade, i think that -- you have got the grounds to say we have a leg higher into year-end. >> i'm looking at the technology stocks that we're talking about here, and if -- whether you want to have the fang stocks, how about even just looking at just broadly. look at microsoft. look at some of the names that were taken out. a couple of dollars down, scott. unjustified i thought. so i think there are opportunities in the market. we look every single day for opportunities. you look at what was being sold off.

is facebook really $114 stock this morning and suddenly it's $117 now? there are opportunities in the marketplace each and every day. >> do you buy the fang stocks back? >> yeah. i told you, i sold puts in facebook right there as it broke through 200 day here, scott. i'm short the 115 puts now in facebook. in amazon, i shorted them at the 200 day, which was approximately 700 -- >> why did the fang stocks go down so much? were they a source of funds to put into the banks and other areas? >> yes. >> well -- >> they were -- they were one of many sources. >> then if we think the banks are going to keep going up, where is the money -- why would we go to the fangs if we think money is coming out of them, fund trades and other areas. >> to josh's point, i think that move has been made. emmoo, i don't think facebook keeps slamming to the down side. this is $135 stock. down to $1 14. >> can you imagine a serious professional investor admitting to anyone, yeah, i liquidated facebook so i can chase the banks that have just run, you

know, 12%? no one in real life is actually doing that. i think it's a little bit more subtle. >> i totally disagree with that. in real life they are in portfolios doing that. >> no one is admitle it and saying this is my big trade. i just got slammed in the fangs. now i'm going to sell them and go chase the bank rally. i think you have a higher probability of not a rotation back, but a little bit of a seesaw affect. >> i wish -- they were pretty close friends, do you think? i would say no. all of a sudden trump gets in there and what was really leading the push down? >> i am sorry. i just -- i reject that. >> i totally disagree with you. when amazon goes down, what else goes down with it? the fang stocks in general go down. >> facebook, amazon, apple, netflix, they all went down because trump got elected? >> so we -- >> it's because he called them out during the election? >> maybe potentially he will go after them. you can laugh all you want. if you own amazon, you wouldn't be laughing watching this thing go bang, bang, bang, bang to the down side. the second trump gets in there.

people -- i'm telling you, scott, what you don't understand is people who own amazon as that thing is going down, they're selling facebook and the -- >> this is a guy who has a list of political enemies, and he has been vindictive throughout his life. he has been involved in thousands of lawsuits. jeff besos is tweeting at him congratulations. it probably killed him to do it, but he was looking at his stock price. >> first of all, kevin made great calls. to a lesser extent -- the one name i think you buy aggressively is netflix. netflix is the one name that is not owned as much. >> okay. does trump like netflix? >> yes. >> fang goes down together.

fang goes up together, right? >> that's why they're fang. >> yeah. >> yeah. >> sometimes. >> if amazon is leaving -- >> that's why they -- >> if amazon is leading them to the down side, the rest are coming with it. that's why the stocks are coming down with it. >> kevin is sticking with us. here's what else is coming up on "the halftime report." >> one of the biggest investors in the travel space on whether the sector is right for investment. brad gerstner is one of united's biggest shareholders. where does he stand on the new bare bones overhead spaceless tickets? plus, a big call on disney. will the magic return for the stock? more halftime with scott wapner and the gang two minutes away. alpha seems more elusive today. is it because so many go after it the same way? chasing after short term returns. instead if getting caught up with the crowd, the investment managers at pgim take a long term view, teaming specialized active investing with risk-management rigor, to seek out global opportunities. we manage over a trillion dollars this way, attracting many of the world's leading investors.

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such good and important work for the environment. together, we're building a better california. welcome bah being to "the halftime report." united airlines announcing several changes at its investor day yesterday, including lower fares called basic economy. well, brad gerstner the founder and ceo of altimeter capital. brad, welcome back. good to talk to you today. >> hey, scott. thanks for having me. it's good to be back, and congrats on all the incredible anniversary coverage. >> thank you so much. it's good to have you on. let's start -- before we go to the investor day, which certainly is getting a lot of conversation, the buffett investment, how surprised were you to hear about it? what do you think it says about where the airlines are today? >> you know, i would like to say that i was terribly surprised,

but i, you know, had suggested on twitter back in april i wouldn't be surprised to see brookshire invest. this industry has been transformed through consolidation. it has incredibly strong balance sheets. much more durable earnings than they've ever had, and they're trading as cheaply as ever. when you look at those industries that they've invested in with strong competitive notes, strong pricing power, strong balance sheets, and trading at five times, you know, ebida for this industry, frankly not that surprised to see them get involved. >> these initiatives that united announced yesterday, i mean, let's just call them what they are. they're customer unfriendly. the ceo, mr. munos, came on our network yesterday. my colleague kelly evans tried to push him. i thought it was a lot of spin, to be honest with you, that she got in return. these are customer-unfriendly initiatives from an airline that has had issues with customer service.

how should that be factored in to what they're trying to do and what it will ultimately mean for their bottom line? >> i respectfully disagree, scott. you know, what they announced yesterday was basic economy. there are plenty of people who choose to fly on no frill carriers where they have to pay for their bags, where they have little to no seat pitch, where they don't earn miles. united has given them the opportunity to do that on united. it's allowing them to segment the cabin. imagine this. imagine an industry that historically has had people who get the exact same product paying radically different prices. you had people paying $800, and other people paying $100. now they're segmenting the product in which most other industries take as common place, and i think it's a good step forward for the business. >> guys. >> well, i -- >> is that spin? >> what's that? >> i said does that sound like spin to you?

>> but he gave the example of somebody had flown to their investor day from, i think, los angeles, and he paid $100 round trip, which sounds a little far fetched, but if that's the case,ing so be it. i don't know whose fault is that, whether that's the customer's fault or the airline's fault or however these things are factored in. it just -- i wonder if there could be any sort of consumer or customer backlash against some of these type initiatives? >> well, listen, i think at the end of the day it's the obligation of the airline to deliver on the core promise of the skurmds. to fly great hardware on time, predictable wi-fi. predictable, you know, charging at your seat, et cetera. to give consumers what they want. for some consumers they're willing to pay for more and for some consumers they frankly just want the lowest fares, and i think the leadership team that's been approximate put in place here is truly extraordinary. since we talked in april, they have six new directors, a new chairman of the board, a new president, a new cfo, a new head

of commercial operations. i truly think that this company has gone from, you know, the back of the pack to the best board and the best leadership team in the industry today. >> hey, brad. one of the things going on in the economy this seems so emb m emblematic that the middle class has been hollowed out, and you have this biforcated world where airlines of jetblue are doing mint and more for the first class or just below first class passenger, and then on the other end of the spectrum what we're talking about today, which it looks like is essentially geared towards millenials who really just want to pay the lowest fare and not be bothered with things like reserving seats, et cetera. what about the regular flyer that just wants a good experience? maybe not the best, but not no frills. are there any airlines addressing that flyer going forward sf. >> i don't think there's any changes going on. in fact, you know, if you have come to expect good service in the economy cabin out of these airlines, i think you're going

to get it. in fact, what they're saying is it if you want to fly no frills, then you don't get to carry your bulky carry-on bag on the plane and slow down the entire boarding process. i think the experience gets better for everybody as you segment your customers. there are people who like to stay at the four seasons, and other people like to stay, you know, share a couch on air bnb. i think that united is simply segmenting their audience better so that they can match what people are willing to pay with the product that they're delivering. >> let me perhaps take a second here and go back to the brookshire question, scott. >> sure. >> and really walk you through what i think they see as an investment case here. you know, the stock hit $60, where the company yesterday announced $5 billion in incremental annual profits. let's assume they get $3 billion of that. at five times ebida, that's an incremental $45 a share. over the next three years they're going to generate $9 billion to $10 billion of free cash flow. that's another $25 a share. that's $70 of up side on a $60

stock. now, add into that this trading at one of the lowest multiples in its history and the lowest multiple in the industrial category. railroad companies trade at eight to ten times. they're currently trading at five times. let's say they go to seven times. at seven times that's another $60 a share. just from the operational improvements they announced yesterday and a rerating to seven times, which we think brookshire understands that they should be trading at seven times, that's somewhere between $140 and $180 stock over the course of the next few years. the investment case here is incredibly compelling. at the same time the airline is doing more to invest in the product and consumers than they've ever done. >> i've got kevin -- >> let me ask you a question. >> kevin o'leary has a question. >> i'm dying to ask you this question. the reason the airlines traded at discount multiple, and they have not for an eternity.

when things get good, all of a sudden they go a ton more aircraft from the manufacturers. that's why many people would rather own bowing that i any other aircraft operator. the whole industry has overcapacity, and they blow their brains out again on margins giving their seats away. tell me why it's different this time. >> very simple. ten years ago 12 carriers controlled 60% of the market. today four carriers control over 90% of the market. massive consolidation has led to the rationaleization of an industry, says and, frankly, the investment opportunity exists because of the -- we've had four generations of business school students educated that the worst place to invest is in an airline, and you and i both know, kevin, that it takes skepticism to create opportunity, and there's massive skepticism in the airline, which is why, you know, brookshire has invested, and we've made it over the course of last nine months the largest holding in our portfolio. >> hey, brad, let me ask you quickly -- >> i like the brookshire. i love the brookshire. remember, they also bought ibm.

>> you know, the story is yet to be told on ibm. you know, perhaps outside of their zone of competence, but when it comes so industrials, levered businesses of this sort, i think their track record speaks for itself. >> if you hit 300, ken, you're in the hall of fame for a career. you know, it's gotten most of them right. brad, before i let you go, let me ask you about netflix. i know it's one of your holdings, and you have tech holdings as well even though it's the airlines and the travel stuff that seems to get the most attention. what's your thought on what's happened in tech since donald trump got elected president? >> well, i think, you know, you guys chord overed it well today. dollars are rotating out of tech. fears about multi-nationals in the wake of, you know, in the wake of global trade wars. concerns about a strengthening dollar. the fact of the matter is for these major tech platforms, netflix included, the increasing economies of scale, the benefits

of these networks has never been greater. in this world post-surge where people are really focused on apps, big platforms, machine learning, and now quickly moving into a.i., they're frankly, you know, fewer than ten major tech companies that have the ability to leverage those trends, and so, you know, i agree with ken and some of the others who have commented earlier that these will be buying opportunities. certainly more volatility because there's a lot of questions as to what's going to happen over the course of the next 100 to 300 days, but my sense is we'll look back at these opportunities whether you are talking about amazon, google, netflix. we'll view these as buying opportunities. >> i appreciate the time, as always. hope you come in the studio sometime soon. >> i look forward to it, guys. >> brad gerstner. ahead, an analyst that thinks disney is bringing magic back to that stock. the call of the day is straight

ahead. the dow is now off the lows of the day as well. take a look as we go to break. there's the dow down 73. we're back after this. ♪ guyhey nicole, happening here? this is my new alert system for whenever anything happens in the market. kid's a natural. but thinkorswim already lets you create custom alerts for all the things that are important to you. shhh. alerts on anything at all?

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>> the latest and greatest new vehicles on display out in los angeles at the auto show. our phil lebeau is there with a first on cnbc interview. hey, phil. >> thank you very much, scott. the head of measure s mercedes . it's the day after you showed this incredible vehicle. let's take the tarp off of this. >> let's do it. >> this is the new mybach cabriolet. when you showed it last night, a lot of people were saying, wow. tell me a little bit about it. >> well, it's a great car. thanks, first of all, for having us this morning. greatly appreciate the opportunity to be here. for us at mercedes 2016 is the year of the dream car. we brought coupes and roadsters, and we had the s cabriolet. for the customers looking for something a little more exclusive. >> just a little more exclusive. >> it's our brand that stands for luxury, exclusiveivity, for

hands craftsmanship. it's the top of the line car. it gives us the opportunity to show that we can flex our muscles across every segment. dploo wh >> when you are looking at something that is ultimatery luxury, and you are charging what you are charging for this vehicle, how much demand is out there, and will ma mostly come in the u.s.? >> we keep that vehicle fairly limited. we are only building 300 worldwide, and we're only bringing 75 to the u.s. we will have a situation that we already see where we have more demand than we actually have cars available, but i think that's the right strategy. you know, if you come in on the top end, you don't want to flood the market with the product. you want to have a product that's highly reliable and somewhat limited. >> talking about the broader luxury markets -- we don't know what's going on. >> hopefully it's not a fire alarm. >> in the broader luxury market, you've been able to raise your sales, when some of your competitors have not. are you worried that we're enclose

close to a peak. >> i'm not sure. we have to see how the overall industry develops. i think the luxury market will deny slowly to grow and take share from the overall industry. we've been very fortunate to have product lines. >> i have to ask you this question as the alarm continues here. so many people saw the pickup truck that you guys unveiled over in europe. i think about three or four weeks ago. any chance we see that in the united states in. >> well, you know, we are taking a look at the segment. each and every month. see how it develops. we're taking a look at the car, and we'll see what we're going to do in the foo ut. the pickup truck will not come 2017, but i wouldn't rule it out for the years afterward. >> i want to see you -- >> we'll get away from the alarm. guys, back to you. >> all right. phil, thanks so much. mercedes pickup, all over that. that has -- >> that's a big -- >> i'm a big f-150 guy. >> that's about to be big. >> that will be a seller, though, for real. why have they taken so long to finally introduce that?

>> that's so sweet. sue has the latest headlines. >> i want the red convertible. >> i hear you. us too. >> here's what's happening this hour. everybody, secretary of state john kerry arriving at the climate conference in morocco. in his speech he praised the paris agreement as a framework that is built to last. >> no one should doubt the overwhelming majority of the citizens of the united states who know climate change is happening and who are determined to keep our commitments that were made in paris. >> a recall to tell you about. some grated cheese brands are being recalled nationwide due to concerns of possible salmonella contamination. the recall involves the four sea grated cheese, home style grated cheese and cento grated cheese brand. no illnesses reported so far. >> the swedish academy says bob dylan is not coming to stockholm to pick up his nobel prize for

literature at the december 10th ceremony. the academy says that dylan told them he wishes he could come, but other commitments have made it impossible. we wish him the best nonetheless. that's the update this hour. halftime report back after a quick break.

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coming up in 19 minutes on "power lunch" we've taken a wrong turn, says janus's bill gross, who will join us with his big warnings for the country following donald trump's win. >> mexico's former president not a happy camper either. the president of cadillac will show off the automaker's next hot rides, and the new war on drugs. we have exclusive data on drug pricing in america, and you will see it first on power lunch with stocks at the top of the hour. don't move, though, because the "halftime report" is back after this commercial break.

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we're back on "the halftime report." magic in the house house. deutsche bank upgrading disney to buy. that's after three months on the sidelines with a hold rating. shares, there you go, up nearly 1% this hour. it is our call of the day. kevin, i'm going to go to you first because you made this call probably ten days ago. >> yeah. the investment thesis here has been where can i hide out in content where everybody hates the name and that people haven't looked at the diversification of revenue enough? remember, this whole decline in disney started almost a year ago when eiger got caught up in the espn unplugging issue and skinny bundles and all the rest, and,

you know, it merits discussion. no request he about it. overlooking that was the diversification of in being that they company has remember when we went over to china, and it was much bally-hooed opening of the theme park, and then we had that tragedy in florida at the same time and he his team flew back 48 hours later. we never talked about shanghai again. the fact is my guys tell me over there the place is swamped. they're going to beat their numbers. that's my own assessment in that area. box office has been great in 2016 and looks just as good in 2017, and, yeah, there's a lot of nay sayers on the espn thing, but i think disney is going to be a 7% home run if you hold it. we may get a big portion of that in 2016, but my thesis was where can i make -- where can i get a dividend and make 7% in 2017? i think this name, which i gave a full weighting to in my portfolio is doing exactly what i had hoped it did, and i'm waiting to hear from eiger again, of course, because there are still nay sayers on the espn thing. >> you heard from them, right?

you heard from him after earnings. the reason that the stock was up is because the market deemed some comments that eiger made on the call were more positive about espn. the stock was up. >> what i want him to -- what i want him to tell me is he is not buying netflix. that's a diluted deal, and he doesn't want it. >> it's time to be constructive on disney, and kevin lays out the fumgts case. i'll give you the technical. stock back above its 200 day for the first time since may of this year. it spent a long time in exile, and now i think you're seeing some bullish sentiment return. it's about 9% off the low already. very, very far from its high. i like it under $100. >> to josh's point on sentiment, i'm just looking. analyst recommendations. deutsche bank today, our friend anthony declemente. you're going to see so many that have had this at a held on. there's 18 out of 36 analysts at a hold. that's the lowest bullish -- >> it's a lot of fuel. >> recommended -- a lot of fuel. a lot of bullish recommend dags

that were there previously lowered. >> that will be a tell. >> at 120. >> i know he is listening. i hope he is. thanks. see you soon. >> thank you. >> all right. our resident shark kechbl o'leary. unusual activity in a big name tech stock that's making john najarian buy today. back in two. alpha seems more elusive today. is it because so many go after it the same way? chasing after short term returns. instead if getting caught up with the crowd, the investment managers at pgim take a long term view, teaming specialized active investing with risk-management rigor, to seek out global opportunities. we manage over a trillion dollars this way, attracting many of the world's leading investors. partner with pgim. the global investment management businesses of prudential

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>> welcome back to "the halftime report." i'm jackie deangeles. big moves in the bond market. we saw global yields get crushed with the u.s. ten-year note rising notarizing over 2% coming off the session highs today, though. given the state of the bond market now, are you a buyer or a seller? >> you know, that's funny, jackie. i would still be a seller because i think yields could climb higher from where they are right now. what you're seeing the climb in yields is a reflection of the smooth transition of so far of the trump presidency, also the election itself. and also the data points. economic data points aren't good for the fed to raise. right now we're seeing that all happen. the yields could get to a point where they're attractive. but they climb a little higher. >> brian, do you agree it is time to continue to sell and what are the key levels to watch? >> i think when you look at key levels, the ten-ten trend has

changed. ten years of higher or lower highs in the ten-year neote. i don't think we get above there by the end of the year. going out to 2017, i think rates get between 1.5 and 4.5 we saw in august of 2007 when the housing market crashed. let's say 3%. that's what i'm envisioning 2017. right now, money will come in and buy bonds if we see it get to 2.4%. but i think we crack that and move higher. >> all right, for more on the market, head to the website futures now.cnbc.com. back with the live show tomorrow. scott, back to you. >> jackie, thanks so much. brothers najarian scanning the options market all morning long and we sent them to the telestrator for unusual activity. >> we got some big stuff coming at you, man! a big one. >> when is the last time we talked about apple for unusual activity? >> i can't remember. >> see? >> i've been long it, a little too long for a little too long,

scott. but today, big pop, on the calls. the stock basically got down and filled a gap that was created on september 12th, i believe. so today with the stock now back to 109, yesterday, traded through 105 to the downside to fill that gap. so today people came in and they were aggressively buying december 115 calls. how aggressively? look at that number, scott. 160,000 of those calls, they bought them from 28 cents all the way up to 70 cents, perhaps higher now. and like i say, 160,000 of these, that is huge, one of the biggest trades in equities we have seen this week on a very active week, so i bought the calls, i actually bought the 110s. i'm not asking apple to go as far as these guys are but i'm believing in the trade, i'll be in it for two weeks. >> seems like apple got caught in the tech downdraft. i wonder fairly or unfairly? >> part of the fang. not in the fang, but part of the fang. that fang trade. those guys own those fangs. i know you were laughing about

that earlier, scott, but a lot of the same investors in specific names are in across the board and looking for areas. i think that's why apple is getting slammed as much as anything. >> now you're stealing my point. >> no, it's not. you and i are going at it later on. we're going to put a -- >> right now. >> right now. let's do it! >> oh, my god. >> you don't want him to do his unusual activity then, scott? >> the unusual activity is me putting pete down outside. >> you're wrong about that, big fellow. i got twillo, cloud computing. look at this chart. look at what the run really looked like here. absolutely unbelievable. after topping out, it actually plummets down to 30 again. today, somebody came out buying the december 40 calls, very large, relative to what had already been traded there. almost double, not quite yet, but buying aggressively, about 1.50 average price call, something like that. stock around 35.50 something.

keep an eye on this name. if this continues to move to the upside, these things could really pay off. >> you know what is so interesting, pete, a tease for a segment we're going to do on the other side of the break, twillo is the number one shorted stock on the new york stock exchange. 63% of the flow is short. >> that's one of the reasons why i would not touch the stock, but i'm okay having these options. i have risk control that way and the reward could be very great if we go to the upside. and if it short squeezes. >> one of the other big names on the list, we'll tell you after the break.

we're back, talking about the fang stocks and number one fang, the f, facebook, down again today after reporting new errors with its measurement metrics. >> i think facebook is doing the right thing here, though. they're bringing in third parties, not just nielsen, but others, to verify not whether or not people are clicking the video, but if they're watching all the way through. and to audit some of the traffic statistics because this whole story falls apart if there is any doubt on the part of marketers that this is not a reliable advertising medium. i don't think they're willing to risk it. i think facebook is doing the right thing here. >> quickly, before we move on, just because you're a minneapolis homer. target is up 8%.

>> how about the move on that thing and some of the numbers they put up. >> you were bullish the day before. >> i think brian -- there was probably too much focus when everybody was focusing on grocery versus walmart and all the rest of that. look at the transition they're making and the growth and the way they're moving, i think eventually, scott, quite honestly, the way they did with the cvs thing with the pharmaceutical, i wonder if they might eventually spin off the groceries aspect of this. >> i like they're using the stores as distribution centers, taking a page out of, you know, the walmart and the amazon playbook. >> really smart. and i'll tell you what, also, the repurchase and the dividend, they continue to work on that, that's why this company -- >> what about invidia? up 6% today. >> what are you going to say? the best stock of the year. >> trying to tell people. >> josh called it. >> you can lead a horse to water, scott. i think this one rolls up the triple digits, but it had a huge -- >> let's roll through some of these shorted stocks, nyse, i

like this list. we talked about twilio, 63% of the flow short, that's number one. mentioned the positive, the call buying in that. weight watchers is number two. fit bit, restoration hardware and shake shack, shake shack is one of the most high profile names on that list. 38% of the flow short. >> you can put weight watchers, fit bit and shake shack all together into one little category. >> jcpenney, penney's, transocean and herbal life. >> i wouldn't be short jcpenney. >> under armour? >> there is enough people pushing against it. that's why eventually when he gets this, i think it will take some time for under armour to get the turn in place, when they do, that's going to be part of the extra fuel. >> shake shack? >> what? >> why is it so short? probably the most expensive stock in the sector. it is walking on a razor's edge in terms of expectations. they have to continue to crush or the stock is going to be low

three handle. thankfully they had a good earnings report. just opened up the one in penn station, good for me, strategically. >> or bad. >> i get why people are short it. it actually worked as a short since it became public. >> good stuff. we'll see you tomorrow. >> scott, thank you very much. i'm tyler mathisen. here is what is on the menu of "power lunch" on this day. we have taken a wrong turn. so says bill gross, janus' big bond guy. you'll hear from vicente fox. a tale of two retailers. a pair of household names making two different moves. "power lunch" begins right now.