tv Fast Money Halftime Report CNBC December 4, 2018 12:00pm-1:00pm EST
as well. the markets are closed tomorrow. the traders have to keep that in mind at the close today. >> transports, worst performers today on that u.p.s./fedex note, the impact of amazon from morgan stanley n. general just a down day. >> thanks to jon let's get over to "the half. carl, thanks i'm scott wapner stocks are falling for the first time in three days did enough really happenat the g20 to keep this rally going it is 12:00, noon. this is "the halftime report." is today's drop a sign the market's goodwill from the china talks has run out of steam or should investors keep gearing up for an end of the year bull run? plus, a big call on the tech giant. "the halftime report" starts right now. welcome. good to have you with us on this tuesday. here to debate and trade the big stories of the day
joe terranova, stephanie link, managing director. let's begin with the markets stocks and bond yields are falling. the ten-year hitting its lowest level since september. doc, what's this about today are we questioning what really happened at the g20? >> we're waiting the question you posed right at the top, are we responding to the g20? was there enough at the g20? we don't know. >> gone already? >> we don't know all we know is what the united states has said. what our surrogates for the president and what the president has said that's all we know so far, judge, and that's half a picture. we need to know from the chinese side, and that's what we have not heard yet and why we bled off after being up 500 in the pre yesterday and why we're bleeding again today >> so, josh, where are we? what do we do? >> i wasn't on the show yesterday. i was eating a trough filled
with sushi was anyone all bulled up on this g20, going wild? i don't think the market, you had a plus-400 point gap yesterday faded within 15 minutes. i don't think anyone was like, well that solves the china trade issue, what's the next thing now, look today, big underperformance in the russell 2000 that's not what you expect to see. how is it wrecked almost every day but today another 3% what do you want to tell me now? bigger icture, look at eem versus spy this is now three months of outperformance from emerging markets versus the s&p who is looking for that? who is even talking about that that could be something that's a major, major inflection point from a huge underperforming asset class to a huge outperform
and then having those two things switch gears this is a big surprise for me. that's where we are and i am not surprised by any of the other stuff. >> we're right back to where we were before, worrying about the economy, what the flat yield curve is telling us. that's what the conversation has developed into today >> i think it is digesting the trade commentary for sure and limited details that we have i would take the other side and say i thought the deal was a positive because earnings can now be modeled a little bit with a little more visibility because we're not going to get the 25% >> kicking the can down the road at minimum is enough that's all that we got >> i really do i don't have to slash numbers. doing their businesses like they should while we don't have a lot of
detail, i think today is about inversion. and that is very disappointing >> is that because there are questions about the strength of the economy or is it because yield is everywhere, it's so discourted that you don't know what to make of it >> it's a little bit of both i think it's more the distort n distortion cycle highs is a leading indicator for the recession. that's the best reading. >> which is at a cycle high. >> the leading economic indicator index. >> oh. >> at cycle highs. it doesn't tell you you're in a recession. >> cruel oil and housing tell me the other thing. >> it absolutely is slowing. we expect it to slow, hit a weak in the second quarter. >> here is jpmorgan on the g20,
quote, doesn't seem like anything was agreed to and white house officials are contorting themselves into pretzels to reconcile tweets which seem grossly exaggerated with reality. that's jpmorgan. >> we started to see the sell-off take shape after earnings that was fundamental and they were at highs, trading well and then they started to issue poor guidance last i looked they don't have a lot of bearing on technology stocks i think when we see those res pits, those bounces are to lighten up those positions and go elsewhere >> unless you think, and people -- very well respected
investors saying investors are making mountains out of mole hills. things aren't that bad at all. a point this morning on "squawk" that people are trying to talk the economy down more so than the economy says >> most investors have closed the books and the year is over where we are right now 2752 on the s&p. we're below friday's high before we have the announcement over the weekend. >> the dow is down 325 we're falling as we have this conversation this to me was about rates i felt the sell-off had to do with the normalization and rate process. the u.s. was growing but it wasn't transcending into the
rest of the world. the rest of the world slowing. you have a culmination of events that gives you no clear place in the marketplace. josh talked about eem and the opportunity. if you have assess classes the strategy is to rebalance and you have to look at rebalancing as an opportunity if you're an investor >> i think there were other bright spots it's minor for a u.s. investors. growth is now underperforming in things like dividend growth. you think about companies that are growing their yields and then you think about high
quality stocks i think that mix beneath the surface looking very different is something people are starting to take notice of. >> eamon javers with us. i guess we're searching for the trade truth truce. what happened? >> reporter: that's right. and wilbur ross, you were mentioning his comments from this morning on "squawk box, he talked a little bit about some of the big unknowns that are still in place even after ben owes areas >> i do believe if they live up to the indications they had with president trump everybody will be very happy. what's unknown is whether that was between two presidents and
how much is real at ground level. >> so the question is how much is real in terms of the china owes promises and the president tweeting today, scott, a much different tone, whether or not a real deal is possible and calling him seven the tariff man. that's in stark contrast from the weekend. what a difference 48 hours makes here at this white house and we've been spending the past day and a half or so trying to get at what exactly was agreed to. i asked will you be putting out a piece of paper with the list and he said no it's been challenging to try to pin down the different pieces of this and what the commitments actually were that were made at
that dinner table. >> if their heads are spinning, in one minute the president's tweeting about an agreement over auto tariffs you have kudlow coming out saying nothing has been signed, sealed and delivered on that front. the victory he scored in buenos aires and i'm a tariff man you can clearly see by the activity in the market as we're now -- you can't see it where you're standing. whether anything of real substance came out, eamon. >> questions about what the follow-up would be, the agreements actually made at the dinner table and then what is the follow-up. yesterday we had a couple of little odd moments where it was reported that the u.s. trade negotiator would be the lead negotiator then we saw larry kudlow down play that and suggest, no, it's
really a team effort all of us are involved and then the weird thing when does the 90-day clock kick in. it started when the dinner ended over the weekend and we had larry kudlow say in a transcript, no, no, no, it's january 1st. there's more time to negotiate an additional month and they put out a revised transcript of the conference call and struck through the word january and replace it had with the word december no, that was the director misspeaking and the clock is already ticking. a lot of the follow-up is confusing who is running it, where it will last >> eamon, thank you. eamon javers, north launch the white house. it felt the risk was to the upside after powell had the moment back. stocks liked it. >> no question about it.
look at the financials today the financials were short-lived. it was beyond technology they have lagged they continue to lag and they have been in our opinion their price action alone is concerning to us >> that's all we had >> you look at today, u.p.s. and fedex when you look at those earnings should they be down 7% today? the market right now there was nothing about this weekend that attracted liquidity. liquidity continues to come out of the market. >> if you actually thought that there was some semblance -- >> who thought that? >> any kind of framework >> but who thought that? >> did ceos, did cfos walk in and make an announcement to everyone that r&d projects would
be accelerated >> let's put on a show, everyone places >> you are not going to see that happen this year you might see it next year because i think to wilbur ross' point it's actually very good and good for main street in a way that it has not been good for wall street this year. 2018 might be the first year since the gfc that main street did better than wall street. >> steph's point is well taken the can was kicked down the road even if you want to say, so what, the can gets kicked down the road get out of the fog that's a quarter's worth of fog to get out of. >> i was worried i would have to cut numbers to something like 3% to 4% next year. i may have to shave them a
little bit but i don't think i'll have to cut them that draconian and we expected earnings to decelerate maybe that number is seven and that to me at a 15 multiple -- >> wait a second and at 15 times i think it is actually very attractive and you can pick your spots. i am not as anything tiff about the trade talks and short covering i have been pruning the portfolio to what i like for next year, and that's my strategy at this point companies had strong earnings and the valuations are attractive >> it took me a while to get any words out. >> it's all good everybody take a breath. now go ahead >> okay. ready now? >> i don't know. are you guys >> listen -- >> i'm fired up. >> i'm curious, do you think that we are in an entirely
different mind-set as investors given that for a couple years nobody would use the term do i have to cut nemumbers doesn't that put a krelg on the multip multiple >> buy on dip has not worked this year. that's the first time since 2008 that hasn't worked and that has been frustrating i do think we've seen enough multiple contraction that's actually good for earnings >> the 30 fell below its average. some people say as that has happened the sell-off has gotten more severe. all of you know as long as yield remain where they are or continue to drop albeit slightly from here, as long as the yield curve looks like it does right
now stocks are not going to get out of their own way the conversation will permeate everything >> it is a big part of it. the lack of clarity if we had the nod from the chinese president which we have not had. yeah, he's right, 90 days and we'll be negotiating i have my surrogates out here doing this but we're just hearing from the one side we've heard nothing from the chinese. >> maybe there's nothing to say. >> the guy from china about to lose the house, now emperor for life and they control their own banks. >> jamie dimon spoke and is getting no press whatsoever.
>> he sees firsthand might not even see it in 2020. inflation stays tame >> i agree with everything that you are saying i understand earnings are good, the economy is good. i like what chairman powell did. the environment as it is right now, and a point brought up before where -- >> he thinks we're going into a long and prolonged market. >> i disagree with that. money came out of technology money came out of technology, okay, and what you're witnessing right now is when the world is draining the liquidity you can't on this show for the better part of six years talk about a sea of liquidity it's a sea of liquidity. don't fight the fed. you're draining in the month of december when people are beginning to close the books
yes, the market will go down to 430 in the course of 20 minutes. >> that's fine you pumped the economy full of stimulus >> the technology stocks until we started talking about apple and a potential tariff they don't have anything to do with china and the trade agreements and they are the leaders, up 26% before we rebalanced >> you don't want to get in a tit for tat phone war in china >> that's a good point >> literally only apple phones >> we see a major shift. when i see utilities and consumer staples up at highs that is not a healthy market it takes two sides you have to have somebody who is willing to go in and buy value my problem is when these
multiples are no longer attractive 12 times forward for apple is cheap, right, until the e drops and that stock is over owned and a value play buffett gave it an excuse to be this value tech. it has been funneled into. we're going to see the flow outward. >> that's why it's actually important to focus on earnings and who had good earnings and where they did not go down earnings actually went up, right? intel, earnings went up. yeah, i understand what you're saying in terms of earnings are vulnerable certain companies and sectors for sure there are certainly opportunities. >> isn't the market telling us when that happens and then they sell off the change in character is totally different that's my concern. people say when will you turnbullish? when i see positive news followthrough.
my concern is exactly what you said, these positive reports but what's baked in is uber positive when they don't deliver, they're sold and that's a changing character. >> when they don't deliver is a different thing. >> dlifrn the upside >> i've had followthrough. >> last week with the powell statement and the surge we saw, we were talking that we didn't give it back we saw that 600-point rally. they tried but it came right back that's why i'm pointing once again to how important choin is to this discussion we needed a nod, like i said, anything shy of a negative would be a positive. we didn't get anything out of china. they're completely opaque.
i would disagree >> their market is crashing. >> i hear you. i agree with you in one aspect we're not getting anything out of them. the president comes back here and says we got a great victory and the facts suggest that's not true >> the market gets him everyone knew no matter what happened in china it would be a great victory. we all know. you look at square the stock is down 10%. what did they do nothing. they are getting hammered. >> trading at 900 times earnings >> that stock is down. >> what did square do? zero
companies that had good earnings and have been slaughtered and are 20% to 30% off their earnings >> these one-day wonder rallies are indicative of a down trend they don't happen in uptrending markets. >> the biggest come in bear markets. all talk surrounding the dinner, the santa claus rally. it was difficult to stay short in this last bounce. coming away from that dinner and china there was no meat at all in the dinner. >> it was probably steak, well done the santa rally, i'm with you on
that being an important nuance if you are trying to close out your year. the market hasn't given people much data but there are some opportunities to say, all right, we have, what, 24 days left. >> i feel that's off the table now it's protection. >> maybe it's too early to say that it could be. december seasonally i think it's the fourth best month on average. there are people holding out maybe they will. i agree with the point scott and joe made which is that if you're word yid about rates, the best cure for fears are high rates. that's a fluid situation, too. that in it and of itself could be a positive backdrop to say we're not raising to 3 1/2
>> you disagreed with thinks thesis >> i do. >> let's get it on then. >> i think for the viewers it's important to understand and i know i keep talking about this on the show and -- >> well, don't make the same point 5,000 times. >> why is it wrong >> they don't go from a bull trend into a bear trend. they go from a bull trend into an incredibly confusing trend. it looks like when we were at 2650 everyone was playing for it that way it did retest. then you had to move higher. you fell short >> you fell short on the retest five days later. yesterday you tried to get up to
2815 you needed to break out. that was a november 7 high they failed then they're losing money again it's important to explain that's the environment we're in square was up 15%. the net of that is nothing the difference i would say this time is the action in the financials it's not in the technology stock. they're brutal the financials they have lagged it's huge to follow that as your lead when they are showing that they have problems as they are look at a morgan stanley look at a goldman, even a wells fargo today. they're all trading off and they broke lows they broke lows in october when other sectors were retesting
>> mike santoli is frequently with us down at the new york stock exchange to join the conversation mike, what do you make of this >> reporter: you know, on one level coming into today, the s&p was up wouldn't it make sense to back off even if you didn't see any other news flow. i think you also got this sense out there much like after the one-day pop following the mid-term elections that people were kind of forcing a rally yesterday because we got mostly what we expected and we've been thinking that we just needed to get a few things out of the way, these nuisance items which could be a big deal, any one of them. the perception of a very aggressive fed, the election and then some kind of a deferral the late cycle anxiety hasn't gone away. i think tactically today it got too high pressure in a hurry
the transports and the banks together tanking, apple falling on a pure pile-on downgrade showing yesterday's bounce was not much of anything in that stock. there's a weird day tomorrow where you have a midweek market holiday. a lot of it is noisy that yield curve is getting too much attention but i understand why. up 6% in six days, you're down 2% at the moment off of that level. i don't know that you want to draw conclusions except you had "the wall street journal" saying powell didn't really change his story if you look inside of it a lot of this stuff is on people's mind and the reaction is more than the news itself don't take the transports down this much. >> it feels, though, like we've gone from an environment where you get 20% plus earnings growth to looking ahead to next year
almost assuming we'll get nothing. this whole notion that everybody is all of a sudden gotten so negative mountain when the reality is mole hill. any truth to that at all >> going to zero from up 20 is more plausible than from up two. it's not that crazy to think -- i'm not saying we have zero but when you have a deceleration and perhaps for the s&p 500, within that wildly different among sectors. that's why i think the rolling bear market theme has been happening here i agree it seems people are saying, yield curve is saying recession. in terms of what it means for
stocks with the s&p up 5% year to date, 6% total return, year to date is the only thing in the entire world, asset markets up year to date you're not jessly working off abject weakness. >> just below neutral and a long way from neutral are two different things i mean, i don't know why there's such disagreement on that. >> i don't want to relitigate the whole thing. >> the market made a determination something dramatic had changed. >> right but not enough to change december december you get a hike and maybe it's wait and see.
the ism was 60 yesterday who knows what the jobs number will be, is not taking hikes off the table in a hurry the fed keeps looking at the data points that still stay strong like ism and employment >> the dow is down nearly 520 points now, by far the lows of the session. there's your market picture, utilities the only sector in the green today. we mentioned financials, the sell-off there stocks like caterpillar and boeing that is not the picture at this moment let's bring in ron inis a in a what is this about >> i think there's disappointment on multiple fronts
a not to the fact it didn't fail, nothing was achieved with relations as they stand. they were going to reopen negotiations is a potential positive the tariffs are still in place and so in that regard upon further reflection given the conflicting comments on what happened in buenos aires you can take the positivity off the table. i've been talking about the prospects for the need to raise cash throughout the year the transports are rolling over and mike alluded to this, coupled with the reinterpretation of rates, and i
happen to be more bearish in terms of global growth, claims have been going up you are getting market signals and this fuzziness in the yield curve that says we should take a pause. >> the dow is down nearly 600 points mike santoli, i have a note in front of me. they're talking about overwaits versus u.s. stocks for the first time in a decade are we at the point we've had a full paradigm shift? >> i think it does reflect what some people have been thinking you can lock in 3% i don't think that's usually the immediate catalyst for why bull
markets turn into bear markets i do think that when the market has already been volatile for a year, that kind of thinking can come into play i don't know that's ringing a bell but there's a higher threshold to get risk appetites rolling again to take a chance we've been talking about how valuations don't look demanding this year. if earnings don't fall apart it doesn't look like the market is expensive. i do think it's a more complex environment. you have multiple choices and people are itchy as they look toward what looks like a very mature economic expansionable bull market, to feel they want to anticipate when it might end. >> steph, the nasdaq back in
correction the market feels like it's trying hard to sniff out a recession, maybe sooner than a lot of people think. >> it is but then i look at the data and i don't think it shows recession. as i said, it's slowing. we knew because the fiscal program peaked in the second quarter. we knew that was the peak of growth >> we didn't expect we would be talking about an inverted yield curve on tuesday of this week. >> definitely not. as i said earlier, it's part of the curve not the entire curve i look at other indicators that show pretty healthy growth still. let's see what the fed has to say, what happens with opec, what happens overall in the marketplace. one day is not going to freak me out into frong fundamentals. >> ron >> let me clarify on the yield curve. the man at the new york federal reserve did a lot of the
research what he corrected me on was that the curve they scud yid most at the fed was the ten-year note to the t-bill when that gets flat or inverts, you have an average of 9 to 15 months before recession with the average duration, the average signal time about 12 months. now he told me at the time and the bill was 100 basis points when we spoke. it's now down to 50 basis points it's becoming more and more of a yellow caution sign. remember, also, that bear markets precede recession. that will happen in the real economy later. when we say we don't see it next year if the markets see it, if the yield curve does flatten to
invert, you have a year to prepare for what's happening in the economy. you doan have as much time in the stock market >> that's a good point and let me also say that the gentleman you just spoke about, ron, is not the only one who looks at that measure. >> he got that from my piece >> what you're pointing out to us, it may be trying to tell us now. the dow is down, joe >> not surprised by the inversion of the yield curve this is something six months ago we talked about. i think what's happening and, ron, if you could add some comments here, parts of the economy, the interest rate sensitive part contracting so significantly that's having the
economic impact we're seeing right now. would you agree with that? >> housing and autos >> they're just brutal right now. >> when you get a print of 60 and a labor market tight as a squeaky wheel, it's a complete 180. >> that's where the uncertainty is felt. >> i think the focus right now when you are looking at the yield curve is on the interest rate sensitive part of the economy. that's what bond pricing is reacting to. >> i think market prices you have to respect and, again, i'm not an economist nobody is going to argue with that as ron is saying, the market will give us the indication of what's coming down the pike. it did that in 2009 and 2010 everybody said this can't be an improving economy.
it is bearish and is telling us things are changing. respect that and go into what's working. >> but things that are working like utilities and staples are at astronomical valuations >> i understand that but they have been working over the last ten years and will not be the same the next two or three. that money will find a new home and it is in utilities and staples. >> to echo something ron said, the stock market peaks eight months before the yield curve itself inverts february/september, pick your poison, represents a near term
peak the question is not whether or not we have a recession next year it would be weird not to have one after ten years of expansion. can we have a cyclical bear mark without a crash? the last two we had ended up being 5% crashes in the s&p. can we have a run of the mill slowdown in the economy and corresponding 20% or 25% bear market the thing people are pointing to why that would happen and be important, you have $3 trillion in carpet debt $3 trillion. and a lot of that triple b-minus. how much of that if we have a recession becomes fallen angel debt >> mike wilson has made that
point as well. thought this was nothing more than a cyclical bear market within a longer term bear market you've been going through it since the beginning of the year. it's been painful at times it can last who knows? >> can we have it without a debt crisis i don't know the answer. when you see these huge gyrations one day to the next, that process is healthy. >> ron >> i agree with josh entirely. it's something i've talked about as well. credit standards are getting looser if you've seen mailings in your mailbox.
so, again, it doesn't have to be the end of the world it doesn't have to be a crash. the internet bubble were almost generational events separated by seven years. maybe the fed could cut back >> ron, do you think that powell changed the game last week >> i do. i do and i think right now either interpretation is bearish for the stock market if you assume they're going to slow down, you assume the economy will slow down the three pieces, and steve pointed this out, rising rates going too far too fast
the china trade and one other piece that is still in play. to me it really doesn't matter all that much whether we interpret it properly or didn't. i think what he said and what's been said -- although john williams said rates were going up one implies a slowdown and that's a lose-lose as far as equities are concerned >> as traders, we were watching and really thought it was just going to be this huge dislocation between powell and trump and they would take their sides and twoshl horrible for the markets. i think he just reiterated what the fed's posture has been the fact he came out and said something was enough to have everybody go, whoa, wait a second they are obviously in teen with the market we have to take a step back.
>> doc, as closely as you watch the options market, it's not been, you know, shoveling calls on the s&p into their books. >> right >> it's not like sentiment had completely shifted, right? >> right i'm trying to wrap my head around this, judge we're looking at a vix of 19 19 on a 600-point sell-off that just doesn't jive at all. i mean, i can't remember something like that. >> you think it should be higher >> significantly >> you do have a day off tomorrow, jon. >> i know. >> the market is closed tomorrow the index won't move >> one day >> that's why it was sticky before we made a trip to the lows >> we both know a 2% move out of the market like this, i'm not saying we move 32 points but
there's somebody pricing it at 19 that doesn't jibe even that we're not going to be trading tomorrow somebody is holding this down. we know what happened when they released the balloons the last time >> come into the week there was a lot of talk it seemed as if most of the big money, which seemed to be hedged. we've been in this range for a couple of months now it's not as if you didn't have your shot to go to cash or be very hedged, and i think the whole discussion about cyclical bear market and what you should expect are good for kind of resetting people's view of what kind of environment we might be in >> true. >> it might lose sight of the fact the s&p is up and it's 7% from an all-time high. i do think there's a very good chance we're swinging around in this range and it seems, you know, like you never get anywhere and it seems anxious. >> somebody is betting it will
swing right back >> somebody is betting we're going to swing right back. >> where are the buyback programs we have a lot more authorized than we've seen so far this year >> look, you have three weeks left where is that ammunition is that coming into the market >> i have two answers to that. one, every ceo wants to say a strong balance sheet is a priority of mean and i want to pay down debt. two, i don't think buybacks were jacking the market at all ever it was a placebo >> we want to thank ron insana joining us >> i think this event today is largely a technical event and not fundamental. i know jeff was making xhenlts an hour ago that the inversion of the yield curve signals the economy will be weakened
this is when things fell apart and the volume picked up that's the 200-day moving average. we know this year several times in the past when the 200-day has been breached the market reacts that way this is some representative of the market's current state of health and mind. the minute we hit 2750, that's when we dropped dramatically this happened before if we can pull up about a month and a half ago, 2750 on october 11th, right here when we hit the 200-day moving average, remember that day october 10th was a bad day down almost 2%. the next day, october 11th, at exactly the same phenomenon happened, the market dropped dramatically and the volume spiked up seriously.
you can argue about how valid technicals are but obviously the market is coming to view the 200-day moving affect as an overall sign of the market's health and is reacting to that scott? >> no doubt. bob, thank you very much back to you as needed. let's bring in chris who joins us on the phone, the chief investment officer at bank of america global wealth management chris, what is this about today? is this more about rates and what we've seen on the curve or is this more about doubts of what happened at the g20 >> hey, scott. no doubt in our mind it's about rates, the term structure of rates. i would argue they don't matter. the fact they did invert is causing some havoc with some of the program trading that goes on and the hedge funds. so to piggyback on what bob says, bob is right this is a technical move being
extrapolated by something out of the g20 that talked about the short-term band-aid solution the reality is tariff and trade and all of the good news out of the weekend won't hit us for quite a long period of time. this selling is sell first and react later. this so-called inversion as steph and ron were saying, the most important part of the curve is three months and the fed fund to ten year. >> as long as rates remain here and our conversation remains centered around the conservative, are stocks in trouble, chris >> stocks have a low ceiling on them because of that trying to signal to the federal reserve let them filter through. we don't have the data to see what the hikes have done already.
we probably have another 300 so that's about 500 impacting the rates in economy break even inflation is down on the five-year basis. from that standpoint, the yield curve is suggesting the market should pause >> do you think the credibility of 1600 pennsylvania has anything to do with this you say things were great, you have this great deal and the reality appears at least now to many to be far different >> if you look at the action prior to the weekend we closed up 200 points on the dow, yesterday 500. down 530 today i would suggest the credibility is not the factor coming out of
the white house. it's more or less what the signal is from the yield curve >> i don't know how it can be helpful. >> it's josh brown i want to ask you about this yield curve thing because, in my opinion, this the yield curve thing. in my opinion, this will be the story for regular investors who have not been exposed to this concept for a long time, now they'll be bombarded with research and tv sentiments like this one and newspaper articles. so there have been nine instances since the 1950s where you had the 2s and 10s invert. in each case, that was eventually followed by a recession. however, when you look at the average rate the ten year traded at in those nine instances, it was over 6%. we're at 3%. so shouldn't that account for something? if we say there might be the need for an exclusion or exemption from this track. maybe that's it, that we've had such push down rates for so long
that it might not quality as one of those nine prior instances. what are your thoughts >> put it simply, josh, absolutely correct this hasn't been seen in quite some time. i would argue, most people don't know what the yield curve is that has come into investing recently if you have to put it out there as a story, you think about it the issuance has been mostly at the shortened. >> that puts the supply up >> that pushes yields up the shortened follows the fed. the back end of the curve, say the ten and the 30 years the supply has stayed static or gone down by default, that you have gone down, i'm not suggesting that's why the yield curve has flattened. at the end of the day, we are looking at 3% here i would say this, the market is still pricing in one, maybe two for next year. the average economist out there is suggesting that we go 4 if not 5.
>> that alone is suggesting an inverted yield curve so we have so much data between now and next year and now in the first quarter and second quarter to go through. it doesn't necessarily matter how many times the fed goes. what matters is, why are they doing it >> yeah. >> chris, i appreciate you junk on the phone for us, we'll talk to you soon. >> you bet >> chris hyzy joining us there as if all of this wasn't enough, we are watching the dollar pound per trade. will ford ross is standing by -- wilford rosz is staross is stang by tell us about the defeat >> she suffered four out of four wilfred frost. >> it's parliament, this never happens before this comes after the government called to publish the brexit
plan the british pound has fallen sharply. it was up and down 0.4%, recovered a little since then that 1.4% swing to the down side why? because the legal advice will be published in full. it's thought that won't help may in her quest to convince mps to vote for her brexit deal, which happens next tuesday the 11th of december guys >> before i let you go, you have spoken with two big bank ceos today, wells fargo and money hasn't at banc of america. the message that they convey to you on where we are right now in the world, how the economy looks to them was what >> very, very positive i asked both of them as my first question, the tone from the market's very, very bearish. when you speak to your customers and the data you see, does that match up both were very, very relaxed about the state of the u.s. commitment whether that was in relation to trade or interest rates. tim sloan even said that even if
gdp growth went to zero, unemployment rose 1.5% rates went up a full percent he didn't expect credit costs to spike in his business. so they are very positive about the underlying u.s. economy, clearly valuations, market sentiment can move separate to that as we're seeing today. >> maybe this is a gross scare >> wilfred, i would say, they may be positive now f. they have to borrow at 2% and lend at 10 and they're going to lose money on every loan they make, that's going to change their sentiment in one case. and in the second case, there is some political stuff going on there. you can't be a ceo of a major bank and say i'm bearish it will never happen in the history of the world we get it. things are cautiously optimistic >> before you answer that, c'mon. >> they can come out and say that you know the sky isn't the bluest tint it's had >> have you heard it >> we have heard it.
>> will. >> i'd say on the yield curve shape, i'd put that specifically to brian moynihan. he talked at quite some length about the other technical aspects that influence the yield curve shape, whether that's the german end, that sounded like a middle ground answer, i agree, kind of avoiding the warning sign that it suggests we are headed into a recession. listen, they were answering questions about the data they see in the fundamental economy they were pretty relaxed about that >> thank you thank you for jumping in big interviews on the network. more coming later as well, steph, in a sort of this whole storm of worry, you've managed to somehow cut through the fog and find some bright spots in the market >> it's because we're long-term investors for sure also, i focus on the fundamentals if i focus on the day-to-day the macrothe vix, the activity, all of this that's happening, i would lose money
i really would because i can't predict day-to-day action. i just, i'm looking at strong fundamentals i'm looking at valuations. they're very, very important i'm also looking for a catalyst. you can't just earn a stock because it was cheap, certainly. >> they can get cheaper. in the kind of environment that we're talking about where you know the deepest fears lie >> right >> stocks can get cheaper. >> so i've always focused on themes, too, right i mean, let's just take tech, for example. cloud as i mentioned before, software, as i've mentioned before. >> you mentioned intel before, too. which, by the way, cut to a cell today. >> yeah. >> that was nothing new. the stock is already down so much on ten nan ometer competition and amd competition. please that's ridiculous. the stock is trading 8% free cash flow yield. data center is doing just fine oh, by the way, we will 'get a new doctor eo announcement in
the next couple weeks, months, i think that could be a catalyst that's just my point there are specific stocks with specific stories right. there are themes that kind of overlay what i'm looking to buy and buildout so i'm looking at this i'm not whistling past the grave yampltd i know there are iss-- . i know for issues you can get bargains >> i want to talk about northrup and goldman. goldman it feels like it's going down every day >> i think the malaysia issue is a big problem, it is a big overlay. >> that is where i can't figure out where the fundamentals will be so i really do like the 19 story eventually when they get this behind them this reminds me very much of wells fargo, the sales practice and it will be an overhang, oh, by the way, i have banks that have fallen just as much i think their valuations are interesting. northrup i think it will be
difficult to fight the defense budget peaking story that's why - >> france is even commenting on that right? that's somewhat of a change. >> so it's interesting it's cheap it's a good management team. i really do like it longer term. but i think some o. other industrials, where i put the money? union pacific. i think those stocks are about to accelerate. >> josh? >> disney you bought >> i did most of what i have been doing is selling stocks. i think it's really interesting here i think from a longer term investment perspective, this is a stock that if you look at a ten year monthly chart, you look at it, it's been consolidating for four years, back to 2015 i'm early. 120 is the breakout. i'm okay being early because i want to be long term for traders, risk-reward is fantastic. 111 is probably your swing if it breaks below there, you want to be out from a shorter
trade perspective. there could be a ton of upside if it breaks above 120 i thought it was one example of the dow in the stock holding up better than most of the market it has a lot of potential if things stabilize >> i think investors can queue in, back to bob's point, the technic also it did accelerate. watch that level it has operated now as a ceiling for months this is a no touch market for me until we see that overtaken. >> doc, what are you watching most >> that vix. i really am. i'm looking at the calls yeah, they've bought a bunch of calls. which, of course, it's inverse to the market. so those calls go up on the vix a and the market goes down i'm still surprised they have drawn this line in the sand, judge, saying this is a one-day event. they're not saying this thing slams down through if rethe res this week so quinn's point, maybe we come up over the 200
day. >> markets are closed tomorrow obviously, you got if t jobs report on thursday >> what are you watching >> liquidity maybe watch the market out before the end of the year >> thank you >> thanks, so much for watching. "power lunch" begins now >> thank you, scott, i'm mellissa lee stock growing down between the u.s. and china why we stand at this hour. and something just happened in this market that is sounding this alarm whenever this event occurred it is followed by a recession pretty much 100% of the time. apple stock is getting downgraded, now it's doing something it rarely does, another supplier is slashing its outlook. the fallout straight ahead. it's a jolly time for the transport. the group is getting slammed today on brexit.
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