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tv   Fast Money Halftime Report  CNBC  February 2, 2017 12:00pm-1:01pm EST

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by looking each other in the eye, shaking hands and firmly resolving to hammer out a solid solution. we'll see if that's the tune they take today. >> that's optimistic. we have also got amazon earnings after the bell, which we will be watching after facebook did well and apple, as well the day before. >> what a week for tech. let's get over to the half. back at hq. ♪ guys, thanks so much. welcome to "halftime report" i'm scott wapner. we begin with the markets and whether the trump rally is at risk from rising global tensions to uncertainty over the fed's next move. a lot for investors to consider today. with us for the hour, joe terranova, jim labor en that will. also, paul richards, the president of medley global advisers. so doc, you tell me. i'm just wondering if investors are complacent, too much so, to some of the risks that seem to be out there.
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look at the vix at 11. >> yep. >> the vix is at 11. yesterday somebody came into the s&p 500 pit in the last hour of trading, and bought a whole bunch of protection that expires monday next week. these are s&p 500 puts at the 2250 strike. they have already lost a pile of money on that trade. put up $4 million, lost 5 or $600,000. so the big money is still protecting. is not complacent. they have been doing similar things in the vix pit. putting on protection ahead of the jobs report. and/or whatever might be tweeted or happen over the weekend. with the interview, for instance, with the president before the super bowl on sunday. all of that could impact the markets, and some people want protection. so i wouldn't say it's complacent. i would say that it's right where it should be. >> you've got the missile launch in iran. you have the -- what's termed the tough call with the australian prime minister. comments about mexico.
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and oh, by the way, a fed that could move in march as rick reader told us yesterday. are we able to deal with all of that? are we paying enough attention, joe, to those risks? >> well, i think tomorrow is pretty important. i think the jobs number, if it comes in as strong as expected, i think that will telegraph to you. i'm not necessarily sure the federal reserve moves in march, but we'll worry about that when that happens. i think you need the financials here to participate, once again. and i think that's truly the story. if we are going to take the market from where it is right now, which appears to be pausing on the absence of any economic priority for these policies. doesn't seem like the economic policies are a priority right now to the administration. we need tomorrow to reengage the financials once again. they have to participate to take the next -- >> when was the last time, pete? when was the last day? because i certainly can't remember the day where we spent the majority of talking about the president and his agenda in
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terms of taxes and regulation and infrastructure. >> well -- >> we're talking about tough talk with a prime minister. >> right. >> we're talking about comments he makes about x, y, z topic. >> yeah. i think we have been so focused on the right thing. and quite honestly, the earnings. actually, about a week or so ago, i remember sitting around on the desk here and next to me sat stephen weiss, talking about how much cash he is in at this time. and we were both around the same thing, 35 to 40% cash. we have gotten through a big chunk of earnings. it's essentially one or two big names a day since that time. the focus is now going back. we have gotten through the big financials, much of the big technology names and now all of a sudden more focus on when's going on in washington. and phone calls. >> i'll use this phrase that david tepper used some years ago. is it nervous time? >> nervous or cautious. >> some of this constitutional
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constitutional going on in d.c. that's a risk. >> i think it has been nervous time for quite a few weeks here. we talk about the s&p 500. and the vix, which measures s&p 500 volatility. underneath that, individual stocks are moving so much more greatly than the underlying indic indices. what that tells me, individual stocks, whether it's financials, cyclicals, retails, doesn't matter. each are responding with much more nervousness, caution than the overall markets. they're balancing out. some up, some down. individual stock volatility is much higher. >> let's listen to bill miller from this morning on "squawk box," who had some interesting comments about the landscape and how he sees where people should be putting their money to work right now. here is bill miller. >> the great 35-year bond bucket ended this summer with a double bolt. and i think we're looking for a long bear market that's going to be a benign bear market, i believe. but still a bear market. to stocks are underpinned well by the fact there isn't much
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else to do with your money at the short end of the curve. >> okay. so -- that's the flip side of all of this. >> but that's the could ca co nun drum, stimulating growth towards 3 and 4%. you're not getting that when you have a u.s. ten-year treasury below 250. to you have question, why is that occurring. you've also lost a participation in the correlation between higher crude oil prices and energy equities. again, you have to ask yourself, what is that telling you about the market? >> and we lost the correlation, or is that -- >> yeah. >> really? or has it flattened out? >> no it hasn't flattened out. >> i disagree. >> energy equities -- >> ektsz. when you look at oil -- where is it sitting right now? >> pete, that's what i just said. i said energy equities lost the correlation with the price of oil. spot price of oil is unchanged over the last five days. energy equities are down 5%. that correlation is broken down. what is that telling you? >> can i just point out to your
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comment that you say the question about 3 to 4% growth. that question is going to linger for a while. there is a short-term answer, the atlanta fed came out and put its q1 gdp estimate. we're halfway through -- not halfway through. they put it at 3.4% s. that going to be accurate? i don't know. but that's just one data point. you put that on top of the ism survey from yesterday, which was very good. and i think we all agree would be a jobs report, at least tomorrow we think it's going to be very good, as well. >> well, based on what adp was. >> huge. >> but what about the other issue, paul, of the dollar? goldman has a note out today that says this is not, and not in all caps, the end of the dollar bull run. say after all, fiscal stimulus and protectionism is hard to reconcile, even with the new administration wants. >> one of the many people in december that said euro is going to break parity this year, scott. i took that view on strongly.
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the problem with the dollar, we all reacted to trump, and that's fine. but when you buy the dollar, you sell something. and then that case, it was selling the euro. euro is actually doing well. the fact that there is so much liquidity out there, the low currency, and this whole european political situation that everybody was so worried about is not an issue, in our opinion. so the euro back to 108, i rec on will go to 110 and then think about selling it. they might be right, but i think that people are trying to play with the view. >> there it is. just about 108. joe, meantime, we're having this conversation about whether you should be nervous or cautious or whatever. you're buying some banks today. >> i had bought some puts the other day, overall for the russell index itself. and i think, listen, as i said before, do i know with certainty it's going to occur? if economic growth is going to accelerate, we're going to get a good jobs number tomorrow. what has been underperforming lately, that's been financials. gold back into my goldman sachs situation, added to bank of america. strong number tomorrow. i would think the most sensitive
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should be the financials. i could be wrong. wouldn't be the first time. >> joe, when you look at european financials, i don't think they're in position for q4. u.s. financials did. and that's why the u.s. financials are outperforming. you look at the deutsche result today, and ubs the other day. this is why i think u.s. financials are doing better than europeans now. >> u.s. financials up 17%. >> i love them. they have been stuck -- look at the xlf right now. 23.20 to 23.80. that's where it's been. so you're just looking and it's kind of in this grind. and the rotation now seems to be rotating into other areas right now, scott. they're going to get a little more bang for their buck. i love bank of america still, still own it. but i don't see it necessarily going anywhere very fast at this point in time. >> and as far as the tlt and bonds in general, when you see a breakout above 260, for instance, then bill miller will be right. but until then, he might be right about a double bottom.
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but we could tread water between 2 and 250, 260, for the entire year. and one of the reasons is, catalysts like the repatriation of money. the tax changes, which kind of plays into that. that is a second half story. so that is not going to be the big inflation igniter in this first half of the year. in my opinion. >> so you're not nervous at all about where we are in the market? >> no, sir. >> right now? >> no, i'm not. >> why not? i'm not suggesting you should be. i just want to know why you're not. >> well, i'm not saying massive bets, for instance, on tail. tail is, of course, right out here, the black swans, we call that. tail risk, as well. i'm not seeing the bets out there. i'm seeing smart people hedging, whether they're big vol funds, whether they're hedge funds and so forth. i see them hedging. but i don't see them making massive bets out on the tails. when i see that, that tells me that people are really nervous and they are thinking, boy, we could open down, you know, 800,
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1,000 points. that's not happening right now. so i'm not as nervous. >> scott, let me answer the same question a different way. there are so many stocks out there that are still trading cheaply. yes, the overall market is at 17 times. and even if that's not the right price, google is well below its historical multiple, and you strip out the cash, it's right at the market. that to me is nuts. there are many industrials and cyclicals well below the multiple. we could go across the board doing this. a lot of cheap stocks out there. >> let's discuss facebook. it is in focus this hour. the company reported strong results, as you know. 70 million new monthly active users. ad revenue up 53%. however, one of the big questions out there today, is peak facebook. i've seen some notes, articles rain about that. dow jones had one, questioning whether this is peak facebook. how much better can it really get. >> well, facebook live is an explosive success for these guys, right? i mean -- and the amount of
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folks that go on that when they do have martha stewart or any of these other folks that are big draws on facebook live. i heard from one of her people last night that i was out with. she said martha has been on about 60 times on facebook live. and each time the numbers are through the roof. obviously, advertisers want to reach those folks that are on facebook live. so this is not instagram. this is not what's app. this is facebook live. and it's yet another lever they can pull. i still like the up side here. but i am -- not so much concerned, but i'm noting that each time they have blowout earnings, the stock trades up in the after hours. and it gives it up by the regular session. >> so what does this mean, then? what does it mean they had what most people would be consider to be blowout numbers? it was a great quarter. why is the stock down 1%? >> maybe the conversation as far as spending. but for a company like facebook, i'm okay if they're going out and they're actually going to spend. and i think maybe that's some of
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the trepidation of advancing the stop further than where it was in after hours. >> and the lawsuit joke. the 500 million -- >> the fact that 85% are global digital advertising either going on facebook or google. that's really hard to ignore. they're getting bigger. >> so what if i tell you, monthly active users up 17% year over year. great number. but growth in revenue per user decelerated to 29% versus 35% are sequentially from the prior quarter. revenue growth slowed in the u.s. and canada. >> well, i think what you've got to look at is zuckerberg put out the ten-year plan which i think is absolutely fell. he's focused on acquisitions and how to monetize. look at instagram. it is blowing the doors away against snapchat. although everybody wants to talk about snapchat. they got 600 million users right now on instagram. so they are winning in that game. also, if you look at the video side of it, scott. the video is the growth. john talks about live. video is the growth, they're going after youtube. absolutely and directly. right after them.
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but the problem was last night, during the call, when they started talking about all the spending they have got to do, to build this thing out, that's when the stock went from 137 to 135 to 134 and then to flat. a lot of concerns are there because of the spend. >> let's bring in josh brown, calling in on the phone for us. josh, are you there? what's your read here? it was a good quarter, but enough to justify the valuation that facebook currently trades at, which is 25 times forward? >> yeah, well, 25 times forward in a market that trades 21 times forward, and this is a company that just reported total revenue growth of over 50% year over year. you can count on just a couple of hands how many other companies there are in the s&p 500 anywhere close to that. so stock is a premium multiple. it has for about four years now. i would say that they have justified it. and to john's point about facebook live, let me just point out one thing. unlike netflix, but very similar
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to youtube, they're pursuing a revenue share model for content. meaning, yeah, they're spending money, but they're not spending money on content, like making their own shows. they're coming up with a model that has been very successful for google, with youtube. which is, look, there's going to be ad revenue. and a portion of that will go to the people creating good content and bringing viewers on to the platform. but they're not making these monster investments that people might be nervous about or afraid. it's just not what's happening. >> it seems there is a good battle today in the market questioning whether the valuation is worth it. >> look, it's a $385 billion company. so does it deserve to be $485 billion? probably not right away. but if you think they're going to earn 7 or 8 bucks next year, be then you're probably willing to buy it here. and frankly, look where the stock stalled out. exactly at the late october, early november highs. it's a natural place to see the price momentum stall a little
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bit. that's the last time people bought in at that level. and then they had a couple months where they were down and out. you get back there, people psychologically, all right, when i get back to even, i'm going to get out of this thing. this is how stock charts tend to shape up. so i wouldn't be surprised that it stalled here. there's nothing overtly negative happening with price action today. it just had already rallied huge into the number. everyone knew it would be good. it was good. so the age-old question on this read is, now what? >> joe? >> josh, when you look at facebook's numbers, i know that you're an active user on twitter and i know in the past, i don't know where you stand now and whether you own it or not or support it. do you think there is any read-through here on twitter, and do you believe that twitter can actually recover when you see the growth and all the momentum with facebook? >> so twitter last -- facebook last quarter added the equivalent of an entire twitter. think about that. i think it's like 267 monthly
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daily users. 267 million monthly users facebook added. which is about the size of twitter. so they signed up approximately nine people per second in the fourth quarter. why is facebook able to do that and twitter isn't? the primary reason is the content itself. people feel more comfortable on facebook. everyone there is posting under their own name. there are no anonymous accounts, there are no eggs, no -- very little nazis. that's been twitter's problem. i don't know how they correct it, because the platform is built on the idea that everyone can just talk to each other. so i think facebook and twitter should not really be compared. it's not fair. they're two very different animals. and i don't think there is any read-through here, joe. i think, if anything, advertisers have opted to do more of their spending on facebook. and not on twitter. and that's why you see the huge disparity of results. and i don't think that changes
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this quarter. >> josh, appreciate it. we'll see you back here on the desk. >> thank you, handsome. i miss you. >> likewise. average price target is 158 bucks on the street. 41 buy ratings, 4 hold, only 1 sell. >> right. a lot of that makes sense. but i think that right now, you're going to see a pause for a little while, scott. josh talks about all these technicals and so forth. so we broke down at the technical levels and the rest of that. this sharing agreement is such a different way of approaching it. very similar to youtube. and that's what we were talking about before, is very similar going right after the youtube audience, and it's a smart way to go. zuckerberg, this is all part of their plan. now the monetization process, can they do that through all of the acquisitions that they have made so far? and i think they can. >> scott, i'm going to tell you, i think the valuation is very compelling. you said 25 times forward earnings. i read the morning research reports. most people calling now to earn about $5.85 this year. that's 22 times. it's getting into value territory, believe it or not. >> all right.
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paul, thanks. >> pleasure. >> paul richards, medley advisers. here's what's coming up. >> clearly, it's been a tough line for retail. today, though, wall street analysts are turning some calls around, picking new winners and new losers. we'll tie it all together. plus, how are hedge funds changing their strategies in the age of president trump? this is the halftime report, with scott wapner. stt intoryappl
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all right. we're back on "the halftime report." shares of foot locker on the move today. guggenheim uprated it to a buy. the stock is up by nearly 2%. all right, pete, what do you do with this? they say, we upgraded because shares are down 14% from 52-week highs. we believe ongoing concerns on mall traffic are overblown as it relates to foot locker. >> >> right. >> do you buy that? >> i do buy some of that. but i think that -- it's also gone down for the right reasons. probably because some of the foot traffic probably has slowed down. i think there is the other read-through. if things are that bad for underarmor, maybe that pushes on to foot locker, as well. that's where i think the analyst is right. the idea that they have a great supply chain going into the foot locker world. and it's not just under armour, it's nike and the various brands. because of that, i think at this valuation level, this makes sense to move to a buy. 85 seems like a tall target,
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though. >> 69 and change today, doc. >> well, finish line just had some horrific numbers, as well, judge. that one and under armour, i still can't -- you know, pull the trigger on those two stocks. this one, foot locker, like it. >> what's the difference? >> well, the difference is, the guidance has been so horrific. >> other than this stock is down 14%. >> right. >> fundamentally, what's the difference? >> i want to hear more about the cfo departure over at under armour. that to me was worrisome, as i told you on tuesday, i think, when we were talking about it and saw that. that is still worrisome to me that friday is this guy's last day. see other people replaced like the ralph lauren ceo today. that one is going to be replaced in may. you don't often see it, just three or four days after the report. so, again, i'm focused in on it for that. >> i've got two reasons i'm against it. one is, look, we talked about under armour ad nauseam the other day. the thing is, when you take a
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look at foot locker and under armor, they have high domestic exposure. i correlate the two. it's a reason i like nike, because they've got international exposure. the other thing is, domestically, we've talked a lot about dick's sporting goods. i do believe there is can bollization going on that people are going to dick's for shoe needs as opposed to foot locker. you know better than i do, if you want a specialty shoe like a soccer cleat or turf shoe, you're going to dick's. i think that translates over into the ath leisure. that's what my concern is. >> i still think -- listen. when you look at retail right now, it's confusing to me how you could have such a disparity of views coming from whether it's a ceo suite or earnings themselves. listen to the foot locker ceo talking about the sneaker culture that they have, talking about brick and mortar working. talking about its customer, yes, interacting digitally but yet wanting to come into the store, wanting to look at the shoes,
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wanting to try on the sneakers. it's very difficult for me right now, retail, to establish any type of position, let's say, at overweight. we talked about adidas the other day. for me, foot locker still has the international exposure. >> all right. i have to interrupt real quick. we want to show you some tape from the white house of president trump meeting with executives from harley davidson. there's the walk over to meet with the executives. the vice president there, chief of staff, reince priebus, along with the president, meeting with executives from harley-davidson. some union leaders there walking outside, presumably, because we think the executives drove up on their harleys. so that's a pretty interesting photo op for certain. but there's vice president pence and the president. eamon javers at the white house, as usual, for us. eamon, you want to give us some color as we're watching these pictures? >> reporter: yes, what you're looking at here is the south lawn of the white house. the president did indeed just a few minutes ago meet with the
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harley davidson executives who rolled in on their motorcycles. i could hear them. the top executives from harley-davidson. there you can see greeting the president and the vice president. this is the kind of photo op, candidly, that white houses, democrats and republicans, love. any kind of interesting visuals. any kind of unusual meeting they can show. but particularly for this president. you remember, there was that group, bikers for trump, that was so active out on the campaign trail. they had a seal they actually wore on their jackets, on their biker jackets, and that seal featured a harley silhouette. so harley and the brand, the company, the customers, all pretty well identified with the trump campaign out on the campaign trail. i guess if you talk to some people on the trump political operation, they could give you a venn diagram of how many bikers they believe voted for the president. but the bikers for trump group put up on its website they believe that nine out of ten bikers supported donald trump during the campaign.
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we're told from this event, scott, that the president is joking with the executives here about the harleys themselves. he refuses to ride on one and jokes with the press, boy, you would love to see me get on one of those and fall off on camera. so we're not going to see the president riding a hog here today at the white house. but we are seeing him talking to a company that's been important to his campaign, and a company that obviously has a lot to talk to him about, both in terms of tariffs and trades and immigration. all of those issues important to the harley davidson executives. so beyond the photo op, you can imagine some substantive discussions with these ceos, once they get inside the white house. >> beyond the votes, you would figure it would be a friendly meeting to begin with, considering from a manufacturing standpoint, almost all of the heavy lifting or the heavy manufacturing, if you will, of harley bikes is here in the united states. >> reporter: that's right. harley is a famous for producing its bikes in the united states.
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and there's a history here that goes back to the 1980s in terms of tariff protections done by the reagan administration, designed to protect harley-davids harley-davidson. there has been a long-running controversy over whether the tariffs were the right things to do or whether they simply cost consumers more money than they were worth. but harley-davidson and the u.s. government dealing with each other for decades. this is more of it. but obviously, you're seeing the harley executives having a little bit of fun here, riding into the south lawn. i don't know how you get a motorcycle cleared into the white house complex. i have never done that myself. but i bet the inspection is more thorough than at the dmv. >> i'll tell you how you do it, send the president outside to welcome then in. >> bring anything you want if you have the president on their side. >> sometimes you have to send a guy outside to welcome them. eamon, thanks so much, as we look at these pictures. the president, vice president, reince priebus, chief of staff
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greeting these executives outside the white house. you have a comment here? >> no, not on that, sorry. i was going back to retail. >> that's where i was going. >> you want to switch sheets? >> i'm respectful. i patiently just sit back and wait for scott to dictate what the next move is. >> okay. >> nice. >> thanks, joe. let's talk about some of those other retail names, as joe wants us to do. ralph. ceo unexpectedly out. dana tellsy out today, down grades the stock to underperform as a result of the surprise departure. what do we think of the stock? >> short-term, judge. the stock opened, let's say at 80 bucks. down $6 or something like that. slammed another $3 or more to the down side. right after it opened, they were aggressively buying out of the money puts that expire tomorrow. so a very short term trade. people were very upset. and i can only imagine if they would have been told that the ceo was departing this friday,
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how far they would have taken the stock down. ten bucks for an $80 stock is pretty bad. but if it was an immediate departure like in under armour, would have been worse. >> macy's in the news as well today. maybe looking for a buyer, maybe up for doing some kind of deal. what do we do with the stock today, jimmy? >> i would have thought macy's would be the acquirer. i think they're the strongest house standing on a pretty dilapidated block. maybe this is a little head fake by the ceo, sort of putting it out there, hey, i'm for sale, get my stock price up and use that stock price to acquire somebody else. that's what i would do, frankly. look, there has to be m & a in the space. you've got to reduce the footprint. there are too many stores still. >> joe, you're chomping at the bit to get to the retail conversation. >> yes, i am. and i want to go back to it, and what is what we're hearing from whether it's under armour. we're talking about foot locker, the impact possibly of a border adjustment tax. and now, yeah, the conversation
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relates to ralph lauren. what is the state of retail telling us? i think that is an incredibly important conversation underneath the market right now that no one is really having. >> we're talking about it all of the time. retail stinks. >> it's distinctly different than the economic atmosphere in this country right now, with consumer confidence rising, with employment approaching full levels once again. >> apparel right now is a dud. people are spending it elsewhere. >> so then amazon's earnings should just blow away everything else. amazon should be stellar. >> and they likely will. >> okay. >> no matter what the reaction is might be a different story. but they likely will. record quarter. can i hit lulu -- >> breaking news we're learning about, as well. that the treasury department is now easing some of the sanctions against russia. we're going to get our john
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harwood in front of the camera in just a moment. you can see the spike right there in the rsx, which trades russian stocks in a basket, is up about two-thirds of 1%, as we speak. again, we'll get john harwood up in just a moment. this just goes to the whole story we started at the very top of the program today. on all of these other things that are happening around the trump administration, except for a real debate and action on taxes, infrastructure, and -- >> that's out there -- it's out there. that's always going to be -- we're pretty early into this thing. >> at this rate, we'll get there by tuesday. >> maybe the acceleration rate. >> a policy per day. so you can see the move there again. now it's up more than 1%. probably active on higher than normal volume for the rest of the day, as well as investors react to that news. you'll hear from john harwood. our chief washington correspondent, in just a moment. say again? all right. we're poring through the documents right now to get more
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information on that. again, we'll hear from john harwood in a second. let's move back to retail for just a moment. goldman sachs has also sort of restacked their ratings on a number of names, including coach, lululemon. they downgrade vf corp, nordstrom and urban outfitters. >> lulu, as much as i like the idea, listen to dana, oliver chen over there at colin. but this goldman analyst had a sell on it at $50 target and now today coming back and he's nervous, and suddenly it's a $65 price target. that's concerning to me. you want to follow the analysts who have been right and continue to be right. the story with lulu, they're not only women, we heard something about that in under armor. it's about men, children, growth, and they do a great business online, as well. >> what about these calls, doc? upping coach, upping lulu, downgrading nordstrom, urban and
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vf. >> i told you yesterday, i like the coach move. i did like the coach move, so i support that here, as well. what pete said about lulu, i'm not surprised, that's a very positive. vf, no interest. and some of the others like nordstrom and things, judge, i think they're going to be challenged, because the same things that work against ralph lauren. >> march of 2015, i think nordstrom was $82. it's $43 now. and now we're going to go to a sell. nordstrom -- i mean, nordstrom at $43 is a sell. again, back to the conversation that yes, you were having about retail. we've got a big problem. >> all right. coming up, new insight today on what top hedge fund managers are doing with their strategies under a trump presidency. also ahead, something unusual. the najarians looking at stocks they believe are set to move based on activity in the options market. again, more on the news about russia sanction, as well, when we come back in a couple minutes. erbb
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we're back. the brothers najarian at the telestrator for some unusual options activity. doc, you're up first. what have you got today? >> well, judge, per rego.
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johnson had the takeover of the merger approach today. and this one is not in the exact same space. not enfamil or any of the baby food. but nonetheless, this one is a name that people have been talking about for potential m & a activity. today we note some very strong buying. somebody stepped in and bought 5,000 calls at the 85 strike out there in march. and sold puts to pay for it. they sold the 70 puts, which are close to the money. i mean, you know, the stock was 76.50. stocks made a nice pop of almost $2. i bought upside calls here, and sold downside puts, as well. probably in the trade in about a month, judge. >> pete, restoration hardware. >> take a look at the chart, scott. when we get this up there. you're not going to like it. you go back and see where the stock was trading. great earnings and great revenue. the guidance was absolutely awful. the stock has been declining ever since. actually, up from here. look at the decline right there. now here we are, sitting there, just a little bit around the 25,
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26 area. the march 27.5 calls aggressively were purchased today. about 6,000 of those trade for $2. somebody looking for potential bounce, maybe there is a bounce coming, maybe it's about the economy. we'll see if their earnings call can actually move this stock again. but you can see where that stock was coming from. big move today. >> all right, guys, make your way back here. >> thank you. >> let's talk some hedge funds. third points, dan lowe bullish on the trump trade and what it means for active managers like himself. in his fourth quarter investor letter. the regime shift to fiscal spending will create a very different investing backdrop. cross asset class correlations should fall and even within equities, there will be much greater dispersion of results. this environment is undoubtedly better for active ion vesting, just as active investing was considered to be on its death bed. ron insanaa joins us on the phone. good to talk to you. >> i agree whole hartedly. when i had my funds way back when, i was invested with him and we kept in sporadic touch.
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i would say that's a spot-on analysis of what's going to happen with respect to active versus passive. >> so why so? just the new environment we're in, more volatility as a result of the environment? all the above? >> yeah. to the extent that from the period in which the fed began to intervene heavily, we have basically had a one variable market. and that was fed policy. obviously, there were other things at play. but the largest most overriding variable was monetary policy. now with fiscal policy, with trade issues on the agenda with both politics and gio politics becoming more of a risk factors in the marketplace, you are going to get this dispersion of results and stock correlations already have fallen to a ten-year low. so if you're a long short equity manager or in dan's case, opportunistic or activist, these opportunity sets are going to make themselves i think more well-known in the marketplace. and so instead of buying beta, the performance of the market, you're going to want to look to
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a manager who provides alpha and can take advantage of an environment where long shorts are going to work far better than in the last several years. >> so do you personally think, ron, that passive investing was in a bubble? as a result of this one-way market and fed intervention and that now it's -- we're in the beginnings or we'll soon be in the beginnings of the unraveling or popping of that, and is that what mr. lobe is alluding to? >> i'm not sure what he's identifying. i can't speak for him. i'm not sure he's identifying in this as a passive bubble. etfs and other low-cost, tax efficient bench mark oriented investments. and so i think to a certain extent, it went too far when it was hitting every newspaper and being talked about everywhere as the wave of the future and that active was dead. yeah, you get that point in the cycle, where it's going to correct.
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there are extraordinarily important uses for passive investments and exposures to sectors or to the market overall. as a component of investing when you're doing kind of a hub and spoke type operation, the hub being your passive exposures and the spokes being more active exposures that can get you greater returns, away from the market. so i think that's the way passive should be used, and active and particularly in hedge funds, which i think will have a good year this year. if you have the opportunity to access those funds, it makes some sense to get some long/short exposure, global macro exposure, where i think a lot of the opportunity sets are going to arise this year. >> it's funny, ron. not a handful of months ago, we were holding up headlines from the -- "wall street journal" and other newspapers questioning whether stock picking was dead. lobe goes on in his letter to call this market a brave new market and says the following. while the markets have moved since the election, we do not believe that investors have digested how different things will be.
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do you agree with that, as well? >> yeah, i absolutely do. i think, again, in a multivariable setting where -- listen, if indeed president trump moves forward with a variety of initiatives that would be net positive for the market overall, which is tax reform, deregulation, infrastructure spending and more military spending. that's a -- that's a beta mover, if you will. if things start to break down on trade, if we pull out of multilateral organizations, whether they're trade-related or security-related, things are going to change. brexit looks like it's going to go through. we don't know who is going to win in france. markets are going to be much more disperse. so big global macro players who are adept at this. long/short managers who are good at this. what's really key for qualified investors, people with $5 million in assets, along with their asset selection and allocation, stock-picking skills is going to be critically important.
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>> good stuff. >> you need those guys who are very good at what they do and have been good for a long time. >> lobe certainly among those who have a good track record over the long-term. ron, thanks, appreciate it. >> thanks, guys. >> guys, you have a comment on this, active versus passive? we have debated this topic so often on this program, and maybe now we're going to see a turn. >> i was with an investor in los angeles last week and talked about that he had pulled money out of hedge funds. i presented to him the argument, well, a lot of political uncertainty, economic uncertainty, dispersion is going to widen. his response to me was, okay, great. show me the volatility and i'll get back into hedge funds. >> it's there in the individual stocks. you're not going to show it to him in the overall vix. but individual stock volatility is way, way higher than the overall market volatility. i hope you said that to him. >> doc? a comment? >> i agree. and i am always a guy that says stock-picking works, judge. >> so we sort of debated this in the context of whether it was a secular -- >> and whether or not they could justify the --
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>> and cooperman said it was cyclical, and that, in fact, it would come back. maybe it's going to come back faster than some people had thought. but clearly, lobe is among those who are betting and betting big, perhaps, that it will. >> i think dan lobe is going to be right about that. >> tyler mathisen has a look at what's coming up on "but we are lunch." >> i'm an index guy. i think ron had it right. that's the hub of your portfolio. >> hard to pick individual stocks when you're not allowed to own them though. >> that's why i'm an index guy. coming up at the top of the hour, harley-davidson ceo meets with president trump, a host of ceos headed to the white house tomorrow. we will talk about what the agenda is. and what it's likely to wake up to every day and go head-to-head with the president. the ceo of the "new york times" will join us today for an extended conversation. and the black swan in the oil market. "halftime report" back right after this. . geponcfuheri e
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welcome back to "halftime report" i'm jackie deangelis. the dollar index falling to its lowest level since mid november. investors worried about a strengthening dollar and now a weakening dollar. what's the level of concern here? >> well, i think it's all political. and that means it's not going to be answered quickly. i mean, i think the long trades,
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the dollar bulls unwound the trades now. the problem is political. unfortunately, that means it can't be solved by the federal reserve. that is, the bulls won't get momentum to the up side just because the federal reserve speaks. so now that we have seen that it's political, this is going to take much longer to solve. disappointing that the dixey is now below 100. >> brian, would you be a buyer, seeing weakness in the dollar at these levels or a seller at this point? >> well, i thought we did break some critical levels below 9960. so you've got to be careful are here. certainly 100 is a big number for us to trade back and forth, i think before there is a break. one thing i disagree a little with scott. i think it's more than political. i think it's also look at german boon, the yields. they're rising. ever since those have taken off and moved higher, we have seen the dollar weaken. the euro is strengthening. that's a thing to keep an eye on here. i think that will play more of a part on the dollar coming up, whether we break lower. we've got to watch the 99 level. we break that level down there, we could be heading lower than the dollar. >> thank you. meantime today on
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futuresnow@cnbc.c we've got tom lee, and why he sees new market highs ahead. louise yamada will break it down all through the charts. that's at 1:00 p.m. eastern. more "halftime" right after this. s.ths e trany po i vevetoan
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the dollar.
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welcome back to the "halftime report," i'm john
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harwood in washington. president trump's press secretary characterized the sanctions order issued by the treasury department today as a routine development, a carveout that traditionally happens after sanctions are issued. they reported it's a significant easing of sanctions. staffers on capitol hill are going over this in both parties, and i'm waiting for their analysis of how significant this carveout is, but spicer characterized it as routine in the briefing, guys. >> yep. john, thank you. maybe investors jump the gun on what the news may have been if you look at the reaction in that etf we were taking a look at. john, thank you. i know you can't see it, perhaps, but it was a spike, and then a drop, you know, perhaps once the realization it was as the press secretary called it routine. all right. from the cancer center, kicking off the 11th annual cycle for
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survival this week in boston. the indoor cycling event raises money for rare cancer research, and we're join today by dr. william, the chief of memorial savings and loan hpb surgical service. >> thank you so much for having me. >> it's not just because of the cycle for survival, but you have a special relationship with our own joe, which we are grateful to you for, explain that in a moment, but tell us about cycle for survival. >> it's part of a memorial for the cancer center. it's in cooperation with their corporate founder, equinox, raising money for rare cancers. although they are considered area, these cancers, in total, account for over 50% of all new cancer diagnosis and 50% of cancer deaths. >> you have a finance ride next
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month, march 9th, new york city. companies taking part, jp morgan, carlisle, pimco and more. raising how much money as a result? >> well, cycle for survival had incredible growth over ten, 11 years since they've started. initially, a couple $300,000 in the first year. last year, $30 million. every dollar of that goes to research. not a penny goes to ad min straitive oversights. >> we wish you didn't have a relationship with joe, but you do. >> yes. >> joe, you want to tell us a little about that? >> it's sometimes not what you do. it's not what you don't do, and dr. jarnagin was wonderful, thoughtful, a scientist, and his continued care with me, and my concern was we were going right in right away to get the knife out, do some things, but we didn't. i appreciate that, but if i could ask you about the research itself, and the need for
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research, we've talked in the past about the issues and challenges for the health care industry. you have the trump administration talking about pricing right now. is it more a funding crisis that we face in the health care industry? >> yes. i think definitely so. particularly in research. you know, the cost of doing this kind of research has exploded. it's so expensive to do high quality, high impact practice changing research, and the government has continually cut back, and they continue to do so to the point thousand where they just cannot keep pace with the developments and the costs of doing this research, which, really, unfortunately, what's needed, this is -- i mean, as an investment show, you can certainly understand, but the money that cycle for survival raises provides investments for new researchers to get the data, the premim their data needed to compete for larger, federal grants. without that, there's no way
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someone like new researchers or established researchers can do something novel or break off into a new pathway that yields practice changing developments or insights. >> doctor, i appreciate your time, thank you so much. >> thanks very much for having me. >> we'll be right back. beyer rt et.d ti up th
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tment nesspry , wh thvea. bradidi ta madreveyoosururict?sostwill g th's's! ncncou on anviitwi around the horn, final trades, you're up first. >> well, costco, we didn't talk
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about that talking retail, but what about the numbers, absolutely unbelievable. >> yep. you own it now or no? >> i do not. >> it was abrupt. >> you gave me the look, like, get done, i got done. no, the numbers were best in two years. >> cost onco, good. >> says a lot what nay are doing, and amazon, they are supposed to kill everybody. they are not killing. >> anything else? we'll get to amazon. >> are you scoffing him? >> one minute. >> not getting to amazon. >> oh, i am scoffing. after i scoffed you too. >> with the idea they may put themselves up for sale, macy's out of the money calls, at the money, out of the money, lot parading today. >> all right. >> cisco systems doing what intel did, stumbling last quarter, but outperformed. cisco does that in two weeks. >> financials, long, goldman sachs, bank of america, go higher.
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>> amazon buy ahead or no? >> crushed it in the holidays. i think you can. i think the aws is the real story. >> okay. >> they are buying all the way up to the 955 strike right now, judge. that's 120 bucks out of the money. >> bullish there. >> would not buy it, not with the volatility and price. >> depends on who wins the super bowl. who's that going to be? >> oh. >> patriots. >> scoffing again. >> that's a scoff. ♪ hog in the white house today, meeting with trump, latest iconic brand to meet with the president. we're talking big plans for big business. also ahead, a sign of the times. literally. what it's like to wake up every day and go head-to-head with the president, the ceo of the new york times will join "power lunch" exclusively, and going mall in on shoes. why one firm says, calm down, the mall is not dead


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