tv Fast Money Halftime Report CNBC December 30, 2016 12:00pm-1:01pm EST
>> that's a great call. >> i had something really good to say, and then look what you did. >> wow. >> no gel. no suit. no tie. >> let me say a couple of things then to divert attention from what you just said. so the stock pickers and the active management community, which has been thoroughly trashed this year in terms of flows, really don't have any excuse going into the new year because the new trend in force is dispurgs. you have 265 of the s&p 500 up more than 10% this year. 68% of them. there was a lot of opportunity to avoid big losers or to catch a wave and grab big winners that solidly outperformed the index. i know that's welcome news to people that are lying to differentiate themtsz in terms of stock picking. i think that will continue. that's a reasonable expectation to have given the fact that we have an incoming administration that clearly is going to be
doing things that are preferential for some groups of stocks and negative for others. the interest rate rising picture is also good for dispertion. >> paul hickey, we always love reading your research. the very first line points out something that i think a lot of people probably have forgotten just given where stocks have gone since the election, and that is that we did have the worst start to a year on record for stocks in 2016. and how we ended up. >> it seems like a long time ago in january that no one even remembers it. you know, we're looking -- we're coming into a environment in 2017 where it's very much different from where it was heading into 2016. valuations are still lofty with -- that's the case always. that's not a big deal to us. they're not usually a catalyst for a market sell-off. it's usually you need something else to fuel it.
if you look in terms of the economy, washington, the credit markets, it's an entirely different picture now than it was last year at this time. >> you say people were sort of set up for a disappointment. >> well, so why? because of what we've done since the election? with all of the optimism that's in the market? >> let's take the one by one. we'll look at the economy. last year the economy manufacturing was in a funk due to the oil bust. there were legitimate concerns that we were on the verge of a recession. now at the end of the year manufacturing has rebounded. employment remains strong. housing is at the highest for the cycle. sediment has surged. it's a completely -- people are expecting, you know, rainbows, sunshine, and lollipops right now, and we're going to get some of that, but we're not going to get anything. we have gone straight up since the election. haven't had a pullback of 2% yet. post-election in 2008 when obama was elected, it was going to be horrible for the markets. we saw 33%, 32% with the market
going whipsaw, and the market was down 10% at this point. what happened after that? eight straight years of gains for the s&p 500 on the total returns. semis up 30%. transports up. up 28%. all of these things historically have been indicative of a market that's betting on not just a good market, but a good economy, an expanded economy however, we tend to have these minirecessions every january and february. the weather gets bad. people don't go out shopping. then everyone calls the end of the market, the end of the expansion. if if you are looking at the first thing i brought up, which was the way we're betting now and you see a correction that's driven by something that historically over the last eight years has been temporary, why wouldn't you go back to that well and say, all right, but there's a bigger trend here, let's ignore the smaller trend that's more recent? >> i think you're right.
>> you want to go into these sectors. it's not necessarily a fed driven market all sectors going up right now. you want to go into energy and materials, into more of the cyclical sectors like financials. consumer discretionary. those are sectors that we like. on the flip side sectors to avoid consumer staples, it's defensive. the attractive dividends are no longer as attractive. health care is a bipartisan issue in washington. both sides hate the health care companies. what trump is showing us is if you are relying on federal government money for a lot of your revenues, you may run into trouble, and the health care stocks get a lot of their money -- >> paul, should we expect to see morrowtation just like we did this year, but are we expecting to see 2017 to be just as fast as this year? in terms of every month it seems like there was a different leader across, and we see rotations throughout this entire cycle. >> our base case for the year is basically we'll probably -- we could finish up just where we
finished -- we're finishing 2016 and 2017 at 2,250. i think we're going to see more volatility in the market. again, like josh what you were saying before, first quarter you tend to see this weakness in the economic data. right now the market is set up for very strong data, and if you get a disappointment, you are liable to see a pullback there. >> the chicken comes home to roost. the opec agreement while it's great in principle is not adhered to, and even if it is adhered to, you see the rig count continue to tick up here in the u.s. and elsewhere, by the way, and that a supply of oil increases overwhelming any production cuts, real or imaginary. >> you wouldn't be a buyer of he energy stocks? >> exactly. >> is there a possibility that just because of this run that
we've had since the election, some of the stocks are up 25%, 30%. that rates don't go up as fast as people think they might. the regulatory side may take time to flush itself out, and financial stocks may not do as well as people think they will. >> i'm in the camp that i think you're exactly right. i don't think it's going to be the fastest thing in the world. i don't expect to see this regulatory thing kick in it until maybe at the very best probably second half of the year. at the very best. i think in the meantime, scott, if you just go back to q3, and the numbers, we're talking about this just yesterday, but look at the jp morgan numbers for q3. they were spectacular. there were record numbers across the board. every single category you look at, they seem to be killing it. what did they do this quarter? i think that continues, and i think any kind of good news just that much more gas thrown on the fire to give these things more up side. when you look at valuations, they aren't extremely -- usually you look at financials based upon price to book. price to book they're rnd 1 or
less, and then you start looking at the p.e.'s. most of them are 13 to 14, maybe 15 on the higher end of the big financials. >> let's remember the s&p financial sector is the only sector that is annualizing over the last ten years at a negative number. it's 0.02% negative each year, so when we think about the recent run, we have to keep in mind over the long-term, these stocks have done nothing yet. there's plenty of room and opportunity. i'm with pete. i don't think you need dodd frank to be wiped off the books tomorrow. >> you don't think that part of what could happen in 2017, doc, was pulled forward? >> part of it was. >> maybe the entire market -- >> no, not the entire market. not at all. because not everybody on wall street is an iidiot. there are some, but not everybody on wall street is an idiot. they haven't put -- >> that's a quaint slogan. >> not everybody here is an idiot. >> so, in other words, judge, as you know, which is a setup
really -- >> john najarian capital advisors? >> not everybody is an idiot. >> we're not all idiots. >> they are watching the same thing we're watching play out, judge. the men and women managing trillions of dollars here aren't betting that, oh, yes, is he going to get absolutely everything, and it's all priced in right now. no. they're handicapping it. what are they handicapping it? probably 15% whaf they think could happen in the first six months. they're not projecting out for the full year yet, but i'll just give you one when you asked jim, what could be something that is a surprise, an out liar. we've already had a 7.5% correction from the 2.6% ten-year yield. down to 2.46 or something like that, and the yield peak came two days after yellen and the fed moved rates. it's been coming down ever since. i think, and as you know gundlach said the same thing, that we pull back towards 225, maybe even 218 or whatever as far as a ten-year yield, judge.
i think that playing out could be a very positive thing for the markets, but it could put a little crimp in some of the financial that is you are talking about. >> you would -- >> next income trading and currency is through the roof. >> do you have to get josh's mini-recession that has been right on this, and in january and february. you have to have lousy economic data for the ten-year yield to come down from here. paul, one thing i want to come back to you on. you think basic materials. i don't agree with you. here's the thing, though, i'm looking at. a lot of this is based on demand from china. this whole one belt, one road concept that they're going through. it just seems to me that when you look at the industrial production numbers out of china, they just aren't high enough to justify where prices on basic materials have gone. >> well, two things. for starters, just looking at the political makeup, best performing sector. only sector that has outperformed the s&p under all three post world war ii environments where republicans have been in full control is the materials sector, and i think
we're entering more of an inflationary environment, and in an inflationary environment, energy and materials are two sectors that you want to -- that you want to hold, and getting back to the financials, similar to tech coming out of 2000, there was a lot of overhead in the tech sector, and it took years for that to get worked off. same thing in the financial sector. we've seen a lot of overhead worked off last few years, and so in addition to regulatory relief and interest rate relief, you could -- the fact that there's less overhead in the sector now should help those companies on their bottom line. >> all right. let's move ahead and talk about tesla now. it is down double digits this year. pacing for its first negative year since the ipo, but the street still believes in that company. be barren with their top pick of 2017. we've made it our call of the day. is this a good call? >> it's an interesting call based upon what the numbers are that the baird analyst is looking at. they're talking about production numbers, scott, and production numbers probably exceeding what everybody is expect at this point in time. he is talking about the supply chain as what the read is really
coming off of this right now. that's why they've got such a high target. now, tesla, i still think is going to be volatile. i know this year was a difficult year. i it was up and down, all around. 180 to the 230s. it's going to continue to be an extremely volatile stock. i think the only way to play a volatile stock like a tesla is through the options because if you are in the stock, it could be a widow maker, and you could be chasing this thing up and down. >> we're going to go to kate rogers who has a market flash on apple where. >> we're keeping an eye on shares of apple. down by half a percent. this a report from nikkei that it's going to be trimming production of its iphone family by about 10% on the year in the first quarter of 2017. once again, apple right now falling by around half a percent on this report. we're going to keep an eye on it and send it back to you. >> kate rogers for us. watch the stock in 2017. might as well talk about it now. >> you don't want to see it fail at 118 and roll hard because then you're going to start hearing double top, double top. that's where it had trouble
going back to late september. couldn't get above that level. this time hopefully today is just a blip. if you are long, then it continues back up into the 120s. you know, that's not necessarily a given at this point. >> they can't sell enough of that because they just can't make enough. that's not a happy problem for tim cook because other guys are going to be filling that gap. if they could have taken advantage of much bigger advantage of samsung, if they had enough units to sell, they haven't, and now with the -- these wireless ear buds, i think that's a problem as well. even though, as he said, you can't keep them in stock. >> irony is that tim cook was the head of logistics for apple. this should have been either something he saw coming or something that he was quickly ready to adapt to. i don't know if it's a disaster, but it's definitely something we'll keep talking about. >> apple has cut production. these stories have come out over the years. they're going to be launching a new whatever the ten-year
anniversary model, whatever it's going to be called, so these kind of issues come up over time and cause us a short-term sell-off. long-term apple. it's valued -- there's pros and cons to it, but i don't think this story is a real big game changer. >> let's go back to tesla. again, we're talking about the note from ben over at baird who says it's a top pick for 2017. pete, what are your thoughts? >> stocks up 42% since the so-called diamond bottom. it's still down 10% year-to-date. >> you've got the battery production. i mean, there's all kinds of different elements that this analyst is looking at here, and can you understand, like i said, the 338 target, scott, that seems pretty lofty. 56% move to the up side. that's a big move expectation-wise. if they are able to produce, the way that it seems like the supply chain is leading them this analyst to believe, this could be a very, very interesting stock. i'll tell you what. the shorts, that will be the other element that actually helps push this stock even higher at a faster rate. >> you have owned this before. >> tesla has tons of potential. the one question with tesla in
this report is -- >> you put it out like it's the ze. have we agreed to tezla? >> it's the donald trump pronunciation. >> tesla according to the style book. it's tesla. tezla. go on. >> that's my westchester accent. it's got a lot of potential. no bringing up of the need to raise capital. they're going to need to raise capital at some point, so that's an overhang on the stock. to play on tesla with the batteries is the lithium. a name that's in direct play on that or somewhat of a direct play is sdm de chile. they're the biggest publicly traded miner of lithium. this they're going to be amping it up, it's going to need a lot of lithium and it will come from companies like sqm. >> price target sound right? ambitious? no? >> it's ambitious, but, judge, here's one of the things -- >> i guess everything when you look at tesla has to be somewhat ambitious. >> yes.
>> right? are they going to meet their sales targets? >> it seems like they're likely to. >> they've presold so many much these through that program that they put out, but one of the issues here is that they don't have the legacy cost that a jern motors and a ford have. jim and i have gone back and forth about this, but when gm makes a car, they make that margin that's that thin because of that carry on their back of all those workers. i'm not saying get rid of it. i'm just saying you have to recognize the tesla does not have those costs. when they start printing money with the model three and all the rest, that falls a lot faster to the bottom line, judge, no matter how you cut it. >> would you be afraid to buy -- >> they make money on that model 3? the bear case and people who are aggressively short would say i hope he does come out with the model 3 at the price he is talking about because it will wreck the company financially pretty much forever into the future. do they have to say, all right, that wasn't a reasonable price, here's what it's really going to be, or can they really make
money there? >> i guess supply and demand is going to set it. i know what he has said. you're right. i do think that was priced too cheap when he is talking about a car in the 30s. >> what about just simply getting ahead of a capital raise that almost everybody expects despite what elan musk has said. >> those share offerings have not been a huge negative for the stock. they've done them repeatedly. they said we're not going to -- here is what they say. it's so clever. we have no plans to do, and then a few weeks later they have plans. when they do them, here's what's weird. it's not weird. it's actually -- should be expected. here's what they do. they come out with the share offering, and then the bears get all excited. oh, this is it. it turns out the bulls get even more bullish because the company is able to raise money at that valuation. >> you don't have that overhang. >> then you don't have the big threat. oh, they have to raise money. it's a little like brexit, the election. you know -- >> ian weinert is e-mailing asking a question. i love your thoughts on this.
will they as tesla continues to book revenues on refundable down payments. that's another interesting way to look at the story. >> had a problem doing that. they've been called into question. >> because they've gotten a huge demand for their models that have yet to be produced, and they've taken in the down payments and counted as revenue. >> people have looked at that, and they've said this is questionable. every company in the past who has done something like this is running through revenue issue. it hasn't hurt the stock. i guess the best guess i would have -- i don't know if you agree -- is if they can get away with it, why wouldn't they keep doing it? >> it hasn't paid to bet against them at this point. >> it's down this year. first down year as a public company. it's had a good run. it hasn't paid to bet against them yet. that may change. if things go successfully for tes loo ten years down the road, you would be looking at this price. i'm not sure everything will go successfully. there's going to be bumps in the road. you look back, and people will look back and say, wow.
>> you know i'm coming out with this, right? we all know i'm going to do this. >> you mentioning gm? >> control yourself. >> amazon -- >> no, no, no. >> value investor. >> right now it trades at this price at 300 times enterprise value to ebida, okay? now, i am going to go to gm. pick another company. that's the highest enterprise valued ebida i've ever seen, period, stop. now, we're saying it's going to go 50% higher from there. it's going to be 450 times enterprise value to ebida. yes, look, i get that the company is growing. maybe that ebida will go up ten fold and then 45 times enterprise value to ebida. you can't get away from it. it's the highest measure like that i've ever seen. >> we'll make that the last point. paul, happy new year. >> here's what else is coming up on "the halftime report." >> marissa myers pegged as yahoo's ceo. one analyst gives us his tech
predictions. plus, josh brown opens up his playbook for next year. the area of the market he says is universally despised. it's now a buy. from the last trading day of the year. here's a look at the top performers in the cnbc iq 100. amd, computer sciences. applied materials. for more on the cnbc iq 100. go to cnbc.com iq 100. more halftime with scott and the gang coming up. myusineswas t wi passi... bukeep iow byakery llar count. that's w i have the ark cash card from pital one. with it, iarn unlimite2%2%casha frrk mnsng.anthat unlited% ca b adds fl to dollarsar otm linento my business...
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>> welcome back to cfra out tay with its list of 17 internet predictions for next year. scott kessler, the analyst behind the predictions joins us live from new york city. hey, scott, welcome. >> thanks a lot, scott. >> not going to run -- thank you very much. not going to run through everything, but start me with albauba, which you have high expectations for. >> yeah. i think it's pretty obvious that alibaba has been punished, in part, related to perceptions associated with the incoming trump administration, but the reality is that they've been executing well. the growth is strong. we're looking for a 30% increase in revenues in fy-18, and the stock trades at a forward multiple of about 20, so we see the risk already accounted for in a lot of up side to the stock. >> you are looking at about
another $20 for the stock over the next 12 months. >> yeah. our 12-month target price is $102, and really if you look at names that have performed and have not performed especially since the election alibaba is definitely one that i think is worth taking a look at. especially given the fact that so much of what they do is centered in and around china and especially with elections coming up next year in that country. we really don't see some of the, let's say, trouble in the economy that some anticipate. >> so if i said what is your top internet name for 17, what would yours be? >> so our top internet name for 2017 is alphabet. the class a shares, gogl. we see some challenges for them, but this is a stock that continues to, i think, confound some naysayers with strong growth and a multiple that is slightly bottom of the market,
and then, of course, if you account for the fact that we could see the taxes at least tax rate on repatriated foreign earnings coming down substantially on alphabet is really poised to benefit as a result. >> in a week where we've heard from other analysts that say that amazon is the top internet pick, it's not in your universe, and that's why it's not, correct? >> exactly. so we have coverage of amazon and netflix, but they're not within my perview. they are buy recommended stocks. we also like facebook. we also like, you know, some names of people that they don't like as much. we just upgraded alibaba as we were discussing. we also have a buy opinion on yahoo, which i think is pretty controversial given some recent goings on. >> tell us why do you have that rating on yahoo? >> right. i think a lot of people are really concerned about the recent revelations related to the major data breaches both in september and earlier this
month. the company came out and said literally hundreds of millions of user accounts were breached. the reality, however, is they have a standing agreement for their core business to be acquired by verizon for $4.83 billion, and we don't see those developments as likely to trigger the material adverse change clause, which is necessary for verizon to be able to get out of that transaction and, frankly, we don't think they want to exit that deal. >> they might not want to exit or get out of it, but they may want a better price. now, you can only believe that they would love a better price. >> sure. they would absolutely love a better price. whether they're able to get that in a mutually agreed to fashion, i think it's a big question. sure, i think they could get a little bit off the price, but think about it like this. for every billion dollars that we're talking about for the yahoo core business, if you will, that's less than $1 in the
stock price. we don't see that as material, and we see a lot of the other assets, including the substantial stake in alibaba as well as yahoo japan really carrying the day in terms of the valuation. >> before i let you go, twitter and square, you have thoughts on jack dorsey? you think that he gives up one of those roles? >> absolutely. >> that is your belief which role does he give up? >> so it's our belief that if i had to choose one of them, if you would give up, it's probably more likely to be twitter. i think that he is consistently running square, and i think has done a very good job. twitter, i think, the jury is still out. especially as it pertains to the live strategy and the live sports strategy and the live broadcast sports strategy. we'll see, i guess, when they report early next year, but that's the one where i think there's more pressure given the performance of the company and the stock. zoo also believe, if you look at twitter, there could be m&a, and if you look at some of the other stocks in your world, angie's
list, pandora, yelp could also be acquired. i mean, we know about, you know, pandora, you know, said to be entertaining ideas as well. already. >> sure. basically what we put out there is of those four companies, right, angie's list, pandora, twitter, those companies, we are seeing -- and yelp. we are seeing that at least one of them will announce its proposed acquisition next year. we're not sure which one. it could be twitter. i think of the four it's probably among the least likely. we don't cover yelp, but that is a name that seems like it's gained momentum recently, some management changes, and some renewed momentum from a fundamental perspective. that makes that kind of interesting. when it comes to local advertising, yelp seems to be doing a very good job. >> happy new year. >> thanks a lot. take care, guys. >> scott kessler for us.
>> let's kick these he around. twitter, our top shareholder on the desk. >> i watched jack yesterday going on twitter and solicit user feedback, what should they do in 2017, which might be a first -- we're going to get why he is doing it, and i don't hate it. people are making good suggestions. personally i would like to see some -- >> other people have good suggestions too. >> ultimately it will be a commodity, and it will be owned by the credit card interbank kind of consortium. i don't know what the answer will be there. i don't think you'll buy this hoping for a better ceo, a one ceo plan. i just don't think that's the story. >> judge, i thought it was
interesting. >> if you want to read a 17 stock portfolio that he is talking about or 17 lines, not 17 stocks, facebook shows up there at least three or four times. whether it's with what's app, whether with pay pal or whatever. obviously his focus on pay pal -- rather, on facebook ask like a laser, and i would say that says a lot about where he sympathies that company is going. >> don't forget, yelp was, if i recall, mark mahaney's top small cap pick. >> i'm with scott on google. google wants 1,000 like i want a shrimp taco, which is to say very badly. this is a stock that we very rarely talk about because people tend to say, yeah, it's a jienlt company. it's boring. 90% something comes from advertising. they have come a long way in a lot of areas that we don't talk about. there's still massive potential in things like youtube that as a
stand-alone company could be an absolute giant. i think google is probably the large cap to own for this year, and maybe has more potential upside than facebook. just given the valuations. >> i agree with you, but what about the moon shots? >> it's $4 billion in the context of google. it's not like, you know -- >> it's $4 billion, but in the context of a company that has been successful at doing things with billions of dollars that people originally thought were crazy, like acquiring you ks tube before it was even a business. >> let's go to condition ttessa the latest headlines. >> some pictures to show you out of centerville, maryland, where we're seeing russian diplomats at the compound leaving the property. all this happened about an hour ago. they were given until noon to vacate the facility, and as you can see, they're doing it. the white house also forcing russians out of a compound in glen cove, new york. of course, those sanctions were imposed on russian officials and intelligence yesterday after
evidence showed their hacking interfered in the u.s. presidential election. president-elect donald trump is making plans to meet with more potential advisors with 21 days until the inauguration. tru trump's transition team said he will meet with -- as wrl as susan combs. she aeved as agriculture commissioner in texas. >> president obama plans to meet with congressional democrats to try and protect obama care. they're scheduled to convene next wednesday. the incoming trump administration and, of course, the republicans on capitol hill have been rallying around this threat to dismantle obama care. oh, and the mannequin challenge. it's reaching extreme heights. new video shows astronauts aboard the international space station taking it all in. they're floating in microgravity. these guys are genius. the mannequin challenges, of course, if you have never heard of it, a viral internet movement which shows people posing as if they're frozen in time. i mean, you try that with gravity. it's hard to do.
in zero gravity, come on. that's the cnbc news update at this hour. scott -- >> i'll give you that. it's very impressive. >> what if that's not just a viral video. >> let's move it. >> contessa, thank you. >> you've heard a lot of stories about 2017. outlook is probably this week. you haven't heard what josh brown has to say. you will next. also today, we're crowning the winner of the 2016 portfolio challenge. who is going to get that belt? we'll find out in just a bit on "the halftime report." at's the value of capital? what's critical thinking le? a basketll costs $14. what tm spit wor?hinking le? er wh'sworth to wor?hinking le? taa ithwoods?om? wh's thef the value of capital , just wealth, but thingst matter.
ings. >> coming up on "power luvlg" a ton of money has piled into etf's in this recordbreaking market. the funds that are expected to outperform in 2017 will be named for you. russia responds. vladimir putin says he will not expel anyone because those u.s. sanctions imposed yesterday. what could be ahead for russia-america relations ahead? plus, inside the home of tomorrow. it's one of the hottest housing trends for 2017, and it's a lot more than just robot vacuum cleaners. we'll show it to you on power lunch. halftime report returns right after this short break.
2017 outlooks with theme music for josh brown, for obvious reasons. >> god. >> what's your outlook? >> i don't even -- >> you do it. >> exactly. exactly. >> first, let me -- >> your outlook first. >> the target is 2244 give or take, and i think we're getting a little bit close to that level. i'll congratulate myself. i don't really feel like i have a good handle on what the s&p does from year to year, but i do think i understand trends really well. the first point i want to make is that the trend that's been happening since the election into year end was already in force prior to the election, and i think the certainty that returned over the situation after the election just really sped things up or maybe borrowed from the future, which is fine too, but i think the idea that rates are going up, that there's
going to be a concerted effort around the world to do more fiscal stimulus as well as relying on central banks, that's going to stick with us going into the new year, and i do think that there's a lot more confidence, and i think that benefits some areas of the market that previously have not gotten a lot of love. industrials, materials. i don't see any reason to say just because we turnover the calendar year those trends will stop on a dime. >> but the trends you see going into the new year gradually rising interest rates. economic data continuing to -- >> why do we think that's going to stop? >> and investing into those themes. >> sure. >> i think that's a good idea. and the other thing that i'll say is if you diversified this year and if you took advantage of volatility, specifically early in the year or in midsummer and you rebalanced and you added to what was getting hit the most and maybe you took some gains out of things like long-term bonds that had been flying at the time, you had a really good year this year. i mean, it was really hard to
mess up strategic asset allocation this year. people have gotten themselves into trouble was on the tack technical side thinking that some of the powerful moves involved directions were going to keep going, and it didn't work out that way. we talked earlier in the show about retations from group to group. that's another look at where i look at the 40 act funds that are doing sector rotation, one disaster after another. buying at the end of a month where semis were the biggest winner, selling health care right before that recovery. i think that's an area where people will still get themselves into trouble this year because as we've pointed out, those rotations are no longer six-month affairs. they're two, three, and four week. you're really, really good at it, and super focused on it, or you shouldn't do it at all. >> so your big idea, what you call your fat pitch heading into 17, european stocks. >> yeah. yeah, fat, phat. european stocks trade at comparably speaking -- the s&p
is a 25 or 26 cyclically adjusted pe ratio taking earnings and putting a multiple on that. it's extraordinarily high. >> deutsche bank and some of the more troubled banks. it will get the benefit of lower euro currency and doing business -- >> take a look at reets where. >> even though you think that one of the key themes is hoping to be rising interest rates. >> yeah. rising interest rates are not a knockdown drag out negative for real estate investment trusts.
in fact, reets have been a better -- listen to this. a better -- >> reets last year are one of the only two sectors to be down. health care too. if you think about the four biggest winning sectors of 2015, scott, all four of them were negative in 2015. the biggest winners of 2016. it would not shock me to see some big winners come out of these areas that did not do well in 2016, and that's investment. >> okay. it is the last trading day of the year, and we are crowding our halftime portfolio challenge winner today. the 2016 top trader and the new owner of that belt will be revealed next. t. retiring retired tires. t. ani veget t red of it. are u entire preparo tire? pl your never tingetirg red rere
up. sarat's was -- and our winner this year our value investor pharma jim with a portfolio of 32.1%. ♪ >> that's congratulations. >> thank you. >> awesome. [ applause ] >> yep. >> you tripled the s&p's gain. >> yeah. >> how did do you it? what was your strategy? >> two-prong strategy. one, hit a lot of singles. there's a lot of large cap stocks that gave me 5% to 15% returns. a lot of them we talked on the show. gm, cisco, qualcomm, apple. then there were a couple of long balls that i hit. jc penney was one. this was a stock that a lot of people hated, but there was value there, and i ran with it. >> you got mocked on this one a lot. it was a winner. >> it was a double winner because i was in it three times. made good money twice. lost a little bit the third time. averaged up 30%. then orbcomm up 47%. the biggest point i would make this, scott, and i think the
team would agree, is this is what stock picking can do, and this has been a year, josh, you mentioned it earlier, that active swersz passive has been an ongoing debate, and the passive investors have been trouncing the active investors. don't give up on active investing. if you know your companies, if you know their balance sheets, their magt management, their competitive position, you can make money in the market. any day. >> we brought in the big share -- >> i would like to give you a gift before we have to go to -- >> our version of the big show is going to give you the belt. >> that was important. >> listen, as you -- as you would say, listen up. >> let me tell you, we're really proud of you, and let me tell you -- i took the liberty of taking this in a few inches. i hope you don't mind. >> it's still a heavy weight belt. >> congratulations. >> thank you. >> thank you, guys. >> we have three hours to go before the trading day ends. the final one of this year. stocks right now you'll take a look there. modest losses across the board.
yo quiero breakfast. they write it. they write it. >> why is my name in the teleprompter next to taco bell? >> so you don't want him to do his unusual activity then, scott? >> the unusual activity is me putting pete down outside. >> don't worry about that, big fellow. >> i don't know if the course was ever really high end product. we have different views of what is high end. >> national doughnut day? >> josh? >> can't believe you didn't, like, dress me up as a doughnut or something. you're a jets fan too, right?
>> i am a jets fan. >> it is like a personality thing almost. >> i am a value person. >> to our pork aficionado for comment. >> pete is actually our pete expert here because pete wrestled them. >> i forbid you to buy this stock on its valuation alone. i forbid you. >> luckily i'm not allowed to buy individual stocks so your advice is well heeded. >> we're not going to break jason. >> the analyst is overweight since january 30th of 2014. >> i've been overweight since the '80s. this is an analyst who drank the guacamole. >> don't complain when you don't die for your life insurance policy. >> some others do for you, but not you. >> three hours left. cut his mike. your final trades are next. >> that's some package there. well done. >> yeah, maurice, well done. final dose of unusual options activity for the year. doc, you're up first. >> all right, cal main foods.
these guys are the biggest egg producers in the united states. a lot of activity in this name, may 45 calls. is it because the atkins diet? because if you look at the last two years, judge, people getting on that, you know, high protein diet have certainly driven prices up and the stock is up over 45% on average. they're buying out of the money calls on this one. i had to jump on it as well. >> pete. >> u.s. steel. look at u.s. steel. we know the run this thing has had. the materials have screamed to the upside. is it starting to pull back now? people piling on to the idea maybe it pulls back further. keep an eye on these. i think this thing is going lower. i own it as well. >> you have good final trades for me, farmer jim? >> i'll take it easy and simple here. apple. long apple. the valuation is there. the cash is there. the economy is expanding and it is going to spread overseas. they're getting into india. there is a lot to like here in apple. >> josh? >> i'll reiterate on google. facebook has a lock on social
advertising. times like less and less competition by the day. web advertising is turning into a duopoly and google is part of that, mobile too. this is the big tech name to own for 2017. >> doc? >> mastercard, judge. there is strong activity. i won't say it is unusual because it hasn't overcome the open interest yet. but strong activity in the name. holiday shopping season, a lot of people pulling out the plaque t plastic. i think these guys, american express, visa, all of them did well. i like mastercard. >> pete? >> the one head wind that concerns me going into 2017 is the dollar. does it continue to strengthen and today we're seeing some massive upside buying in uup, bullish on the dollar. i think i just want that out there so there is an understanding. i say massive, over 06,000 contracts being bought on the option side, on very -- on very slow tape, scott. so pretty interesting to see this kind of paper coming in.
>> give me props as well on the invidia pick. talked about almost every day now for the performance that it had. when you recommended it on this program, it was ma monny months. i think the stock is up 1100% since when you recommended it on this program. >> way beyond what i expected, by the way. i'm still in it, still own it. i know that citron is talking about it could drop to 90. it could happen in a day. this is a high beta traders favorite name. however, that's good news if you believe in the longer term potential of the markets that it plays in and maybe take advantage if this thing gets below a ten handle. >> that's the best s&p stock year to date, up 231%. of the best dow stocks, caterpillar is up 38, united health up 37, goldman, 33, chevron, 31. jpm up 31. which is the best performer in 2017 do we think out of that group?
>> united health followed by goldman. i think the exchanges are going away. >> i say jpmorgan. >> okay. >> i think cat will be the worst. the valuation there, way, way ahead of itself. >> josh, a thought? >> i would not be surprised to see jpmorgan heading to 100. >> okay. >> happy new year. >> happy new year, scott. >> thank you for watching. "power" starts now. i'm melissa lee. here's what's on your final "power lunch" menu. russia retaliates about the may not be in the way you expected. we're live in moscow. inside the home of tomorrow today. we'll tell you about one of the hottest housing trends for 2017. final mystery chart of the year, can you name it? it is the worst performing dow stock in 2016. if you've been paying attention, i'm sure you know what it is. if not, stick around. "power lunch" starts right now. >> happy almost new year. i'm brian sullivan. here's what el