facebook, post-crisis high s&p hanging in well above 50 today. >> it's like the tech investor has a freakout a couple weeks ago about all of the things that could go wrong and it's like now, ah, it's fine >> and this is despite the fact that you had the ads released on the russian bot just earlier today. >> let's get to the judge and the half welcome to "the halftime report." i'm scott wapner the top trade this hour, tech's great, return, sector certainly surging again on the market's most important stocks really to resume the run with us today, joe terranova, the brothers, and josh brown and let's begin with the return of tech, the sector up for a sixth straight day from chips to the fangs to almost all points in between

it sure looks like the space, pete, has found its mojo, nasdaq up 4.5, amazon, netflix, google all. >> for whatever reason, scott, they were crushing the chips we've got invidia in front of us you look at these chip names they were selling them off for any reason now they're back >> they're up seven days out of last eight >> yes, we've seen a little paper in some of these names as a matter of fact, i'm going to tease that one. we're going to have one for unusual activity later on, one of these chip names. what's really important to me, when you go back to thursday and listen to warren buffett and what he said about apple and the economy, i know i said it yesterday, i'm going to say it again today. that gives everybody a green light to say technology is not good we've already gotten it from a myriad of companies out there.

it's about the cloud and the cash that these guys are generating all of these things tell me me that tech has the upside >> it's on that with buffett on thursday night that he had put more money into apple. and we've been off to the races. apple, guys, new market cap high into today >> heading towards a trillion. i'm wrong. i thought amazon was going to get there first but it looks like apple's going to. what's good about today, it's not just about technology. you're seeing performance from materials and reits participate. there's as good a broad based in the s&p rally as we've seen in weeks. >> if tech reacts the way it does it would not be surprising to see a new high. but if tech reverses, it's going to be very hard for the rest of the market to make that high and

make a good advance. >> but, tell us -- well, here the good news. >> -- do you think it has staying power, is the comeback for real >> i mean, the trend is up the path of least resistance for the most important stocks is obviously higher but again, anything can happen i think big picture, it's nice to see the slf very quietly, financials up five days in a row. really everything working today other than staples and utilities. also that makes sense. and then i think, just look at what's getting us here, it's not just tech although slk is about 2% off an all-time high. the russell is 60 basis points from an all-point high not particularly tech-heavy. so, it's nice to see that trend broadening out and getting other things involved. but tech still remains the general. that has not changed i'm telling you, scott, i think it will not change >> so the thing that lifts it. it's amazing how much better the

market looks and feels with tech performing all of a sudden the way it has over the last handful of days. >> yeah. i think that's absolutely right. what was really interesting this morning in the cpi print we saw a weaker thank course expected cpi and the market rally what we're seeing here the markets are fearful -- earlier in the year, they were fearful of a growth slowdown and then changed it and more fearful of the inflation pickup. and now the inflation gradually rising and we're not seeing the fed reaction change. i think that gives people comfort that we're back to the races, this goal goldilock environment. >> that inflation is not front and center today how do you see it?

>> the xlk to pete's point at the top was right around 65.5 near the end of april. it's pushed to 70 today. >> 6.5%. >> i was going to say 7. >> dow, nearly 200, and nasdaq doing its thing, too >> first time since january, we hit a 12 handle in the vix as well that tells you an awful lot. because obviously, at the tail end of january, right after we were up there with josh and everybody with the super bowl we so that blowup in the vix. and then the s&p it's down to the low levels, judge, hit 1293 today. i could easily see us trading in a range that's more like 12 to 16 rather than 16 to 22 >> nothing reverts like the vix. >> because that's really important, because not only are you seeing equity volatility

stabilize, you're seeing it being led by bond market volatility if you look at the move index that's below 50. it spiked all the way up into the upper 70s. we've seen that be the leading factor that's driving equity volatility down. >> if we get back to apple for a minute too, j.j., i mean, if ever you wanted an example of how important, if you want to use that word, that stock is for overall sentiment and the overall market, i mean, if we haven't learned something since last thursday, i don't know when we ever will >> absolutely. scott. particularly number one held stock for three years in a row number one traded stock. people take a cue from apple overall, as much as you want to look elsewhere plus, it feels like the psychology of the market has completely changed over the last week where i look at things now i almost look at i'm looking at things like mid-january. not only do you see technology, as josh mentioned, financials,

energy so every day you're getting, besides the two big ones having to be tech and financials. you're getting other sectors of the economy to come in and pick up the slack i think that's the most important thing you're seeing. people are willing to go out i think the fangs will be the leader for the next coming of week we got above 2700 today which psychologically is better than technically. >> i think this is the point where you'll get the buybacks. and 100 from apple, at the tech space, now that the space is open for them, a lot has come from technology. i know josh has talked about it and this is the moment >> tell me what upsets this, right? is it rates all of a sudden getting out of hand. >> no. there's already too many people looking at that. >> i was going to go geopolitics. >> we got the summit on the

calendar in early june >> well, listen, defense stocks are telling us -- >> that was one of the biggest risks to the market, five, six months ago north korea, north korea, missiles here, missiles there. >> the retail stocks have to come out with earnings that could be -- >> people won't care >> see, i think people still will >> i don't agree >> it's a segment that has been a failure for so long i think people will overlook that. i absolutely disagree with josh on the interest rate side of it, though if the velocity of that movement rates, if it jumps -- if rates go up and the velocity of that move is extremely -- >> i don't think he necessarily believes that it's going to go up >> well -- >> i believe -- i believe that 3% ten-year brings out buying power like you've never seen in your life, young man that is not something that's going to change anytime soon

you have oceans of cash that are thrilled with a risk-free 3% rate >> what if it jumps from 3, suddenly you're at 3.2.3.3 >> that's godzilla -- >> we already know what happens -- >> we already know how goodzi a ski godzilla gets smashed. >> and around july, based on the fact they're going to pull higher, probably closer to the mid-2s i don't think that's a level that people should get concern will you see stock volatility on the back of that probably but as we said reinjected into the fed statement does respond to the fact that the fed is not likely to react to variations in underliking cpi. i also agree with josh there's a very strong contingent, particularly from the pension fund -- >> insurance companies >> insurance companies on the ten-year >> and how noisy is monthly cpi.

>> yes very if you look at the standard deviation of one year forward it's .4% that's pretty noisy for inflation. the fed is looking at this >> it's easy to -- it's easy to dismiss a number as being noisy. but remember, it didn't take much to cause that whole february upset in the stock market from a little read, in a one-month read of the jobs report about wages and everybody, all of a sudden, was running for the hills -- >> finish your thought -- >> no, no, then the market spends three months digesting the reality that rates no longer zero around the world. and then the next time you see us approaching those levels, people are saying, oh, that's a good thing, a good sign that the economy is good, et cetera et cetera the price point can be the same but the narrative very

different. >> dow is positive for the year. the highs for everybody, dow, s&p, nasdaq. >> from february to april, the reaction to price in the treasury market was the ten-year did not move it just sat there around 2.80. on april 2nd, 271. do the quantitative analysis when you move 25 basis points in a direction where treasuries are failing you will impede the appreciation ability of the s&p. we got that in april to everyone's point here, if the ten-year treasury is going to 3.25, and it's going 3.25 in november, fine but in the next 30 days if you're going to 3.30, the s&p, the appreciation we see now that gets halted. >> can i add one thing to that what does change, however, that growth stocks as much as they've

led over the last few years, that's when they really separate themselves from the rest of the market i'm not arguing that's a good thing. i'm just pointing out it's a reality. when you get that narrowing spread and you do get a situation where the rates are going up to that degree companies, a, don't need to bother, or b, doing business all over the big global high -growth companies start to really separate in the rest of the market we've seen that phenomenon this year in multiple cases. >> and with the energy stocks that you're such a believer in -- >> yep >> -- once tech reinvents itself with the money -- >> i don't know how much have flowed into some of the energy names. >> stocks are up 10% in the quarter. >> there's been money. >> well, there's been some money. we talk about how small that group is versus technology and it's not the same dollars going back and forth

but the point i'd like to make is the people we've seen there is short term. i trimmed a bunch yesterday. the names that i continue to hold are the names that haven't moved. equity has not moved with the commodity price enough that's why we're seeing an outside move with something like exxon. >> what did you trim yesterday >> i sold quite a few small names. baker hughes of the world. mro. >> do you think it's topping out? >> i don't think it's topping out, but i'm trying to be disciplined. i actually trimmed a bunch of technology names facebook, you said, hey, pete, are you still holding t ining o those calls after the cambridge analytica, yes >> commodity play, because commodity prices influence solar energy and it's a tech play. bought it yesterday. trade now about half of it today. it's up over 6% today. the stocks that are reactive

with energy. i also talked about u.s. silica on the fracking side and cj, and things like that halliburton. these are all plays that would continue to work and many of them were so beaten down that you had a real opportunity here >> well, one thing i wanted to add, you talk about something that could slow the economy down it would be crude going to 8 if crude continues up, you say the energy stocks, the energy stocks are a reaction to crude oil having a great quarter also so, as we continue there, we have seen some pressure. 270 was really big for crude oil overall. if it continues up to 80, the money is going to continue on the money stocks it will certainly hurt the airlines and transportation businesses i think you can argue one of reasons amazon raised their prime is because energy is going to work as a hedge for them. >> i disagree on that. i don't think 80 is a magic number you that start to see

where you crimp. what's interesting what we saw this morning, we didn't see significant in recreation, in transportation, you didn't see a significant increase in the cpi, in those sectors i also think, though, that energy is the place to be. you're seeing real cash flow discipline from energy stocks and nchltsgo companies and as oil goes up -- >> you got to admit, though, $80 oil starts to change the narrative around this entire conversation about energy. the consumer, this recovery. it's going to be a different ball game if you start talking about 80 and even higher >> 70 to 80 is where you started to see last time all of these transcription that did hedge actually start to hedge. so, that tells me this is the year they start to really take it seriously in terms of what it's going to do >> let's move and talk about, since we started with tech, and we think that may be the key, the lynchman to the whole thing, in video, tonight after the

bell, you're going to get another good read on where tech may be going the stock hits an all-time high today. do you still own it? >> i do. i do >> okay. does it have a lot of room >> well, it's actually pretty rare to see a stock break out and start crimping fresh highs into the number. it's not what we've seen this season from a lot of tech giants and this is one of the giants now. so expectations are very high. and the think about nvidia's earning reports. even the blowups, and i say blowups meaning 10% or more drawdown on the day of earning hasn't been reversed fairly quickly historically even if valuations got a little shady or complementary towards the rest of the year is not as exciting as many people want, and you saw that drawdown, this is a stock that people are looking through for whatever short-term negativity. i'm not adding to what i own,

going to the numbers and i really don't care if there's a negative reaction. you look at the last eight quarters, probably three times you've seen a negative reaction but then the stock clears itself up very clearly. by the way, it's been a very good indicator for the refuse the chip stocks. >> almost for the rest of tech in a strange way over the last seven earnings -- >> i didn't get a lot to talk about. i think what's going on with gaming is incredible right now they always downplay the crypto stock. i don't really care that much. the analysts seem to be into how many graphics cards are being brought for crypto they almost never want to talk about it i think people will have questions on the automobile stuff. there hasn't been a lot happening there. the server business. >> that's where it's at. the only thing is it's up 11% this week. >> does that stop? >> it hasn't i would say if you're long in

nvidia i actually think this is a yawn tonight it shows $150 billion company. and think to yourself what this company was five years ago, their gpu conference, five years ago, 5,000 people in attendance. the recent one, they had 25,000 in attendance. there's a certain maturity that you want to achieve and nvidia is getting there the sign of that would be when you finally get the earnings reports come out and you lose the volatility that immature tech companies generally have. >> i'll push back on this sense. i don't know stock with 40 pe that had this kind of return, hoe hum gets it done >> but pe is significantly -- >> a stock that's up 30% does hoe hum get it done? >> yeah, i think hoe hum does. >> how many $150 billion companies in tech or any other sector have the ability to grow earnings by 40% or 50%, year

over year, for almost as far as the eye can see. how many have this runway, and more importantly in this quarter's earnings how many have some like the crude or sulfur platform and that is the standard that everything ai will be built on for the foreseeable future.theo the market gets that hold on, this is important for me people say earnings expectations are x cents and they did y cents. and that disappointed me and i can't see past my nose and i'm going to take myself out of the stock. okay, that's fine. that's going to happen until any company. but the investor base in nvidia is different than other stocks because of these inherent advantages that are going to be important for five years, maybe ten years. i don't even say that about a lot of other companies >> josh, other stock long in that space that i actually like is intel because intel has made some

roads into the artificial intelligence where nvidia does lead obviously the other thing is their pe ratio. they haven't had the 127% move over the last year i like intel >> i own both. i like them for different reasons. intel does not have this definitive ai platform that nvidia does on the software side >> they made a lot of inroads. >> i'm sorry, we've made the case, certainly, it's been made on this side of desk, in many ways, nvidia could hold the key to not only chips and a good cross-section of tech center attempt wise hoe hum -- i don't know -- hoe hum get it done? >> i'm not so sure we all know, longer term, nvidia is sitting in a great position of power right now however, i still prefer intel

over it anyway which i own and i understand josh owns it as well but they have that team humming. they've done acquisitions that have worked. they aren't just going to buy something and change everything about it and they don't do what they intended to do. they've done everything right. data center, gotten there. cloud. ai is the next level they're going to get to. so, they're doing everything right on a base that continues to still grow. >> and at 14 pe, so it's light years. >> yes >> it's a whole different world. >> it's a whole different world, but the point is when you think of nvidia, and on yufrbviousobvu don't think of it as an intel or a texas instrumentses, nvidia is on its way to being -- >> i don't, i don't. i only think of it in the context -- >> you don't trust the rally >> no, i do. stocks that rally with a high pe have -- hoe hum doesn't generally get it done.

>> can you tell me me where nvidia sold that would be acceptable that people look at pes? >> forget the pe give me stock up 100%. forget the pe. the stock is up over 100% for the year a hoe hum quarter doesn't keep it -- anywhere near that >> fine. that's probably true i don't understand the significance of that >> joe said, volatility after the earning. joe head a hoe hum quarter can continue to get it done. >> i hope he's right growth managers who are not in the stock and are instead underweighted have had a platform over the last few years. so if it pulls in on i ho hum earnings report and they do get downside volatility. >> you both understand, i'm not saying ho hum earnings report, ho hum in terms of volatility

itself >> you said it >> gross ea >> post earnings, you want the stock to lose the volatility that shows the stocks as a mature company that's more in line with the texas instruments. more in line with intel. i'm not saying that this stock turns into that i'll kill myself >> here's another question for you -- is the market returning to a new normal? mike santelli at the new york stock exchange with a new report on that. michael. >> scott, i wouldn't say new normal i think we're back to normal i think it's been rounding into shape this way in the last couple of weeks. especially from a couple different angles one is you guys talk be about individuals stock and market digesting it without much difficulty that tells you with the volatility index as a cheap

indicator when it went below 13 since january at that level. i don't think there's any magic to that level, but it's very telling that the market seemed to get a lift, ticked below that level. it seems as if the market has been comfortable, kind of put something distance between itself and the recent lows and i think the vix is one indicator and to stray headlines. when you had the president announce a withdrawal from the iran deal. also, by the way, i would argue, other times in the last few months, if a delegation to china on trade comes away literally empty-handed as they did, we might actually have an excuse to go down. we haven't had that this time. the credit markets didn't really get too agitated over the last few months that's the credit spread back to where they were in january as well then you're seeing the sector rotation in this very familiar

way start to be orchestrated again and other groups it doesn't mean we race, extrapolate this move from the highs. we're still down s&p from the late january highs but i do think we're back in this mode where the tape is not overextended in any way. and it can kind of pull in the information as it needs it, as opposed to being very skittish and having people feel essentially back on their heels. >> back to normal say euphemism for back to 17 >> i wouldn't say -- >> nothing bothered us, right? we're talking about that sort of a scenario look past any kind of perceived negative headline. money flows into big name growth names like tech. and seems like nothing can grow into the market until volatility in february? >> that's the best case

scenario i'm not saying we're back to that by any stretch. i don't think we're getting to a 9 vix very soon. maybe we're going to sleep for the summer but by the way, being back in normal condition could mean the normal choppiness ahead of the election i do think at least we're in a range that the market is adjusting to whatever comes its way in a manner that is not as jumpy as it was a while ago. maybe we're at this magic moment when we've got goldilock macro data points. >> i think that's right. what's interesting you're seeing the volatility emerge in foreign markets. even in you look at italy overnight or look at malaysia, yes, these are not big impacts to u.s. economic growth but you're seeing that type of volatility in those markets not spilling at all over into the

u.s. i think that's instructive, what is driving that you're going to see the prints from the first quarter, this narrative that we're going to see a snapback in the quarter is going to play out and i think that's giving point to investors to get long again >> mike santelli thank you. here's what's coming up on "the halftime report." next, the big call on a key retail player. the stocks had a 43% run since the holiday shopping season began in november but this analyst says look out below. before the break, key stocks, netflix up the 4% amazon, 7.3% alphabet, 3.2% apple just over 2% want more, know problem go to cnbc.com/kensho.

"the halftime report" with scott wapner and the traders is back in two minutes mom you called?

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morgan stanley downgraded it to underweight ahead of its earnings next week it's the "call of the day. what do we think of this call, joe terranova. >> and i dispute the call. i think the worst has past for macy's november it was somewhere around 18 bucks 29 now i understand she's probably downgrading on a price more than anything else. i also think the real estate value that this company holds, obviously prime ones. >> one of which is here in new york city. i do think they're stabilizing with a decline with things that they're doing in their business model. that being said, am i overly excited about retail no, not takparticularly >> you have some company, here's what jim cramer said about this call and the macy's ceo and the job that he is doing >> i disagree with this.

i think that jeff kennett has reinvented macy's. i think it's an exciting place to shop, bloomingdale's fifth floor, the shoe floor, has cost me a fortune and i do think in general, kennett is underrated here >> #analysis >> their ceo, as jim said started this nordstrom strategy a year and a half ago. taking the real estate and getting full value for it. and actually making it a compact place to shop when you go there. quarter over quarter, the same store estimations coming outside lower so their target is not as high i'm in joe and jim's camp. >> now, the stock is up 46% in six months, it's up 20% in three months

maybe kimberly greenberger looked at this and said i didn't like this run before, it's time to get off the ship. >> it was hammered before that >> i still think this is one -- if you have a longer holding time, i think this is a nice hold let's get to the headlines from sue herera. >> hello, scott, hello, everyone here's what's happening at this hour a spokesman for israeli prime minister netanyahu says israel's attack on dozens 6 iranian targets was in response to an iranian rocket barrage in golan heights. >> just at the early hours this morning, iran launched 20 missile missiles at israel and also sponsoring hamas and hezboll hezbollah, billions and billions of dollars to anile light israel we will not let that happen so the israeli army responded in kinds. italy says it has broken up

a terrorist financing ring police say a network of syrians and moroccans can expected of funneling money. an aid boat brought 500 migrants off the coast of sicily the migrants were rescued sunday off the coast of libya you're up to date. that's the news update, scotty back to you. >> thank you so much, sue. jon and pete, they're coming up, following unusual options moves into tech today. and gaming stock we'll get their trades first, the s&p sector check on what's shaping up to be a pretty good day for stocks. s&p up 26 points health care leading the way along with telecom. discretionary, pulling up the caboose today. 0%en this, 2 we'll take it, right, pete >> absolutely. "the halftime report" is back after this alerts -- wouldn't you like one from the market

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we are back. and jon and pete are at the telestrator with unusual activity and a pair of tech stocks and gaming. up first, bmw? >> exactly, these guys make that car you drive, fantastic -- no, wrong one. vmw. rally, 143, just shy of -- >> that was my first car >> your first car. >> totaled it. >> i'm going to try not to total the segment, though. >> too late, too late. >> i know. they're buying the 155 calls out in july, judge big numbers here like this one, i bought it to answer some of the folks that always are on twitter out there. i cut my fate of time by selling some calls above it. >> got to watch that time decay. what else you got, pete? >> i've got a gaming stock this time, i go to mgm

mgm has hit seven times in the last month we had upside buying. now, one of these days they're going to be right because the stock has hedged up higher up about $2. but it's starting to move up nicely today, they're buying the may 33 1/2 calls they actually sold downside puts as well to manage that looking for nice palm out pop o resorts. and another one, micron technology it broke under $50 a share take a look at where it's going over the last couple days, the smh and the chip movement on the upside this is one of those names they're buying at the 54 1/2 calls expiring on may 25th they're also buying the june 1 strike calls at the 55. i'm in these calls, i'll be in them for about a week, maybe

two. >> all right come back here coming up, we're trading the cloud ahead of dropbox's first earning report on "the halftime report." first, michelle caruso-cabrera has more on what's coming up next on power lunch. >> in 20 minutes, scott. an investigation conducted by the u.n. into north korea sanctions. they say north korea is still violating sanctions and international companies need to do more to stop it pluss, we're going to tell you about the absolute best day to put your house on the market if you're looking to sell. and what was it like to grow up as a rockefeller. we have a air and exclusive air rocker fel er feefelle rockefeller.

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welcome back to "the halftime report. dropbox is higher ahead of its

first earnings report since going public march 23rd. deirdre, a preview, i would think the stock is high given the ipo. >> that's right, scott here's itself what analysts will be using one paying user. as dropbox needs to show that customer convert the free service to ones that pay for its premium tools. out of 500,000 registered one, two, we're looking for gettics, and the sales force of the sales force and dropbox the network of the sector dropbox has been moving deeper into the enterprise space. but that would put is up against not just box, but giants, behuman mob

bebehemoths. and look for a beat. and first quarter earnings after an ipo and it's in its quarterly debut it has yet to recover. so, the pressure here is on he and his team to justify the nearly 50% spike from its $21 ipo price. also having to earn the trust of wall street which is a different beast from silicon valley. and dropbox currently has buys or holds and one sell immune target price of 33.15. representing the upside of nearly 5%. ahead of its first report, dropbox trading up about seven times, up 1%, after a spike of more than 3% yesterday scott, we're talking to ceo and co-founder drew houston tonight. >> deirdre bosa out with that

report who wants this one, success has to be high >> and we've seen that big ramp in the last whatever, judge, ten days i think he's basically put a line in the sand here and obviously a lot of people followed him into the stock after that rah rah call that he had. if they put up the right numbers today, this is going to continue a lot higher >> all right i think the two primary questions there, number one, the free to paying is big. a lot of companies have had trouble doing that in other areas, trying to get people to do that. number two, amazon and microsoft are giants in the industry microsoft a 13% market share from 10% a year ago. >> you guys, by and large, like the cloud plays. we talked sales force the other

say, you're in box which has done incredibly well did you pull the rip cord too early on that name >> no. you just can't own everything. i'm in stocks that have done as well the whole market is going up so it doesn't really matter. >> listen -- listen -- >> no one is going to hate on you for selling a stock that's up 39% in a month but if there's more run to go -- >> i'm watching out for it >> in cloud, i'm in service now, i think that the freemium -- >> the newest? >> yes, i bought the breakout. the breakout as clear as a bell, above 177. stock in above 170 above these levels, i think you led the trade ride servicenow, i think is going to be a very exciting name for years to come. it's already gone up a lot but what they're basically doing is becoming kind of an internal sales force.

and they want to be very employee friendly. and they are landing monster deals all over the world with the 2,000 biggest corporations around the globe servicenow is penetratie ining they are doing this in the opposite way of dropbodropbox. dropbox is freemium and consumer this is starting with mega deals and landing one after another, private companies. i really like the setup here and hope it goes higher. >> in the space of a cloud, if you're not going a conservative route like microsoft, one that doesn't get talked about enough, red hat. this has been an absolute monster. take a look at that chart. it's gone up, up, up their growth continues the fundamental story is there all they do is crush every single quarter, scott.

occasionally, they'll bring it up but this is a well-oiled machine that's either going to get bought or get so big, bigger than the bigun'. and roku, issuing strong guidance, shares higher on the day. joe, it's yours. >> within that guidance, they talk margin compression. i think the reaction to the stock is actually a little un r underweunde underwelunde underwholing >> and another pick. alb. >> earnings per share jumped 2.5 fold year over year. you had a beat on earnings the thing is the stock was 86 bucks and had run up to 100 in the report so maybe you see some people take something sproprofits but s

a commodity related stock and lithium, it's going to have volatility, but i'm sticking with it. >> pete, amc networks. >> they beat out pretty well this is a stock that's been stuck in this tight range for ns broken out towards the higher end. you just wonder can it hold on to this. the numbers they put up this quarter were great so the reaction makes sense do you want to jump on this or look for a pull back i'd say look for a pull back. >> doc, talk to me about allergan what's going on? >> there's a rumor out there that people are acting on that pfizer might be kicking the tires. it was enough to send the 150 calls that expire tomorrow from about 30 cents to $4 or $5 so the rumor spiked the stock. it's a very interesting chart and, obviously, this is one that we frequently hear takeover rumors about. >> j.j., ford suspending production of the f-150, pete's

truck, due to a fire at a factory. earnings could be affected short term the company thinks. >> right, short term this quarter i would expect to be affected by it but moody's came out with something today saying they're going to get past this, it's a temporary glitch. stocks are actually up 1% on the news. >> industrials are up this last week. >> yeah, they're up 4% the last week but still down 1% year to date and off 7% from their high in january we're starting to see the dow industrials average go into the green. i think the industrials are the next sector to go back in the green for the year the institute for supply management put out their semiannual report earlier in the week suggesting that 10.1% of companies expect to increase cap ex this year that's up 2.5% from their latest report back in december so we're starting to see that cap ex kick

in i think that will help the industrials. >> home depot shares are up 7% in a month and now the gloves are coming off because we have a bull/bear debate j.j. is not afraid of you, you know chicago guy. >> yeah, chicago guy we've been out to the rse ho thing before. >> j.j. versus pete on home depot when we come back. - i love my grandma. - anncr: as you grow older, your brain naturally begins to change which may cause trouble with recall. - learning from him is great... when i can keep up! - anncr: thankfully, prevagen helps your brain and improves memory. - dad's got all the answers. - anncr: prevagen is now the number-one-selling brain health supplement in drug stores nationwide. - she outsmarts me every single time. - checkmate! you wanna play again?

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welcome back to "the halftime report. home depot is down 10% from its january high is this a buying opportunity ahead of earnings or not we'll debate it. pete is the bull, j.j. is the bear pete, you get to go first. >> well, i was in this stock for a while, actually liked what happened with the stock but i wanted to take some of the profits. i sold the stock and now own calls. the fundamental story is there their growth continues online continues to grow, now at 6% which is a very small piece, i understand that. it's also 20% of their profits going forward. so their growth is coming from some of the online they also have the pro division. there's a lot of reasons that i think home depot continues to win and they are the king in the space. >> pete, i will agree with you on a great management team however, as we come into earnings, their expectations are up 25% year over year.

i think they'll have trouble meeting those and particularly beating those. one of the things we've seen so far in the earnings season is just meeting, particularly for old line companies has not been enough their margins i think will decrease because they spent a lot more money to get to where you're talking with in terms of the online sales. >> but when you look at their traffic numbers, margins might compress a little bit but the most interesting thing with home depot is there are so many different levers they can pull to compete the pro division does stand out for me, but this is a really interesting company. let's not forget it's christmas in april at home depot so those guys deliver because everybody starts going in april. now you get to mother's day. this is the time of year to own the stock. >> why aren't you in the stock anymore? >> i had a nice run and i am disciplined, so i sold it and own the calls. >> this should be a good season, but again you started off with they may not beat on margins one of the things i think we're learning is that where you get punished in this earnings season. >> we'll see, but people are

digesting the margins. >> they have outperformed all their peers for sure higher p.e. than lows. >> but a better company. >> a better management team. >> are you shorting this thing >> yeah, i am shorting in terms of outperforming their peers, over a year depot is up 18, lowe's is down 2 >> which is why i actually own lowe's stock for that reason i own lowe's as a stock, i own calls on home depot because i think lowe's has a start has a much better chance to catch up. >> are you saying you win no matter what happens? >> no. no if home depot catch's lowe's, i'm a loser/loser. >> it's a nice pairs trade idea, short home depot, long lowe's. overall as i said, the bar is very, very high for them right now. the last thing, if you're a believer that interest rates are going higher, that's traditionally a time people cut back for a little while. >> except for -- i disagree. >> they will spend eventually once interest rates head down

but just like housing itself, in the short term they do tend to cut back. >> let's credit jeffrey gunlock with a great call on the xhb and look at what it's done do either one of you want to play recovery in the xhb >> no. >> not right now. >> looks pretty awful. >> all right then. do you want to throw it to final trades too >> sure. let's go to final trades pete, you're up. >> have we done it am i up? >> pete, you're up first. >> yesterday we were talking about brazil and now we're seeing some paper in the eem as well so globally we're seeing more and more positive bulls coming in. 80,000 the september upside calls being bought in there. i like eem i'm not in it yet but i like the paper we're seeing from it. >> we didn't talk about it, brazil etf it's up 3.3%, near the high of the session. mexico, i know i saw earlier, mexico was having a great day. i was looking for the number but i can't find it this fast.

doc, your final call. >> juniper, june 27 calls about a buck out of the money. i bought it during the show. >> erin brown. >> this is a great lead-in because mexico is a big producer of oil i like xle you're seeing real momentum coming back into the energy stocks i think i talked about it earlier, operating leverage, better use of capital, discipline in terms of their cap ex i think you may come into a period of tightness in the oil market in 2019 i like xle for the long term right now. >> coca-cola is an interesting one to me, especially the way it's been beaten up the last month or so. it usually gets the pop from berkshire hathaway didn't necessarily get it this year today it is up 1.5%. >> is that a pardon the pun, pop, guy >> it was quiet. >> what about the bud call didn't bud get upgraded today? >> i believe it did this morning, yes.

>> it was initiated. do you like bud? >> are we talking as a stock >> product >> yes, all the time but the stock is not bad either. >> josh brown, ten seconds left. >> twitter up 9%, up every day the last seven days. >> joe. >> palo alto networks. thanks for coming to me. >> erin, thanks for being here j.j., thanks i'm michelle caruso-cabrera and here's what's on the power lunch menu your money up five days in a row trying for six are the bulls taking control of this market again. there's a new big call on apple. three reasons why you may want to hit the buy button. and it's on. president trump will meet with kim jong-un on june 12th the date comes just hours after the president welcomed three u.s. detainees released by the rogue state. and as both sides gear up, north korea is still violating sanctions with covert actions. it's a cnbc exclusive you have to see "power lunch" starts right now