importance of content. i was reading in "variety" that at one point apple music was interested in big machine for $250 million >> you could call this bad blood. >> ooh, i like that. that will do it for us here on "squawk alley." david, deirdre, thank you for joining us we're going to send it over to scott wapner for the half. >> thanks so much. in this hour, is this the beginning of a summer surge? it's 1:00 noo2:00 noon. this is "the halftime report." >> announcer: is this a case of sell the news? and should investors be more skeptical? plus a brand-new scloef "haexpl "halftime report" stock survey see where our committee stands on the second half of 2019 "the halftime report" with scott wapner begins right now.

good to have you with us on this monday. our investment committee, joe terranova, jon najarian. we begin with the markets. the number of sectors hitting new highs today as the china trade talks are set to get back on track the scenario which we sort of laid out last week was likely. you come away from the g20, get some nice talk, get no new tariffs and the market was likely to enjoy all of that. >> yep and we certainly did anybody long in the market overnight and into this early morning was very happy about that, judge. and since it's a trading market, pete pounds the table for that all the time, i believe it's a trading market i've liquidated more than 50% of my portfolio today that's not a buy and hold portfolio, that's trading. i did that, scott, because we had explosive moves in baba, in

a bunch of these stocks. wonderful to see these moves and it was foretold >> josh, you look at the names, sky works, micron, broadcomm, amd, you go down the list, this is the area we told you to look at if you were going to get favorable headlines for the weekend. >> correct they're global and more important than things like dow transport, divergences, and the things that people in the '80s used to obsess over. that won't help you over the next ten years if you want a real read of global spending, global growth, on and on, you're looking at things like the semis. if that continues, it will be an important leg to the stool

i just love this environment we're in because so many narratives are being shattered left and right here's something interesting the s&p 500 gapped to an all-time high today. not one of the faang names is among the top five people say all the money is passive, wrong, wrong again. another thing that's important as well, shb, all time highs right now. it's a read on the u.s. consumer the u.s. consumer is on fire >> you've got apple, the best outperformer today these stocks have some runway to go, to josh's point, to get back to the highs that other stocks have enjoyed in recent weeks some of these faang names, can they get back to those levels? >> we saw breakdown in some of the tech names, the semis. that's not surprising given the

overhang we're seeing this resurgence back to apple, for instance. apple is a great example tons of china exposure also has seen the run-up from the faangs if you look at the next six to it's weeks or so, they're really going to be looking to go back to those names that served them well a year ago. >> stay with me, let me go to sue herera at our breaking news desk, who has some incredible video coming out of hong kong. sue? >> yes, and this is in response to every july 1st it's the anniversary of the hand-over of hong kong from the chinese to the british. this july 1st, you see riot police coming in thousands of protesters broke into the legislature, protesting china's douminion over hong kon. they're asking top officials to step down and are continuing to protest an extradition law that

would have allowed china to extradite hong kong residents to china if convicted of a crime, so they would be tried in china and not hong kong. riot police had stayed out of the situation up until now so as you look at these live pictures from hong kong, that's the central part of hong kong by the legislature. and riot police have been moving in we haven't seen them fire tear gas quite yet. the expectation is that they are going to try and keep their response as low as possible. but this is the first time that we have seen live pictures of riot police moving into that particular part of hong kong and thousands of people were in the streets earlier. we continue to follow this very fluid situation in hong kong right now as the anniversary, the july 1st anniversary officially passes. but as you can see, the

protesters are not going back and they are not backing down at all, scott back to you. >> so we'll stay with this, and stay with us, if you would >> yes >> because it looks tense enough there that we don't know fif these riot police will be moving forward or not >> exactly >> so i thought we would stay with this video as we're watching it unfold >> it started, as i said, a couple of weeks ago. and this has been building steadily for the last couple of weeks, as you see the riot police advance with their shields up we haven't seen tear gas deployed but they are forming a strong front there against the protesters the estimation earlier this morning was several thousand protesters outside the government buildings they did break in. they're demanding the resignation of the top hong kong officials. it started with this extradition

bill but now it has escalated. they've spray painted pro-democracy slogans on the government walls this morning, that continued well into the evening. the protesters made it clear, they've asked for those officials to step down and made it clear that in their estimation, they're in this for the long haul. and they have followed through with that. we've seen daily protests for at least a week or so on several different fronts it started with the extradition bill >> you can see at one point, i saw what looked like a metal door was pushed open by the protesters there >> yeah, they broke it down. and they basically -- there were thick glass windows as well. the door that you saw was leading actually into the government building. they broke that down they broke down some very thick glass as well. that got them into the chamber where they basically tried to

haul out all of the officials that were trying to hold court in there they did not succeed in doing that, i should add, because police did come in and pulled them out but they did spray paint various pro-democracy slogans on the outside of the building and on the inside of the building before they were removed since then, more and more protesters have gathered and there you see i believe that is tear gas that is now being fired as you see the riot police moving in against the protesters, who are behind a barricaded wall but they've been jumping over those barricades at various times during this evening. let's listen in and watch this for a moment. and as you can see, there's a

very heavy police presence behind the protesters as well. if you look at the bottom part of your screen, that's where you will see a lot of the protesters a lot of them have umbrellas they had that earlier this morning. and i'm trying to take a look at what that is, i believe that is more police and protesters moving in. and it sounds like we heard a shot fired there we'll wait and see >> looks like what the riot police are doing in certain instances is trying to spread the barricade forward as they move forward as a group, the barricade then moves forward towards the protesters as well you can see in fact some throwing something toward the riot police who have moved into the scene. the markets have been so preoccupied with the events in osaka and just the general trade environment that's been, you know, sucking the oxygen out of

the room in the conversation, that the markets haven't paid all that much attention. >> no, they've largely ignored what's going on in hong kong, you're right, scott. now, it's also interesting,i saw in some of those protesters, perhaps you did as well, they do have masks on. so -- gas masks in particular. so obviously they were anticipating some sort of response from the police that would have included tear gas but it is interesting to me that given the scope of this protest and the length of time that it has been going on, on a much smaller scale, obviously, last week, but as we continue to see tear gas being fired into the crowds, that the market has not responded to it. it will be interesting to see if it does after this, because this is i would say probably the most intense protests that we have seen in the past two weeks between these two separate groups >> just past midnight there, as you can see from the clock we

had up there on the right hand corner of your screen. you continue to see the riot police moving forward, protesters running back, and it ends up in a standoff, as we saw, sue, then it picks up in activity again as the riot police continue to move forward. >> exactly it's not -- i don't think it's quite reached its peak yet, from what we can see with these particular photos and this live shot that we're getting out of hong kong. it is a very heavy police presence, much bigger than we have seen in the past. last week we did see a small number of police outside of government buildings but this is the largest response that we have seen so far and the most physical response that we have seen so far against the protesters the protesters basically want the extradition bill withdrawn, which china has refused to do, and which hong kong leaders, who, by the way, are employed by china, have refused to do. so the issue is the hong kong

leaders -- and the protesters feel that the hong kong leaders are aligned with china and not with them. but china now governs hong kong. so it is a complicated measure the protesters have said repeatedly that the officials are not responding to them they want the extradition bill withdrawn. and we should note that that extradition bill also applies to foreigners so if you are a foreigner doing business in hong kong and you are accused of wrongdoing, you could be extradited to china for trial, not in hong kong. and that is what began this protest. and as i said, we do have these marches every july 1st but this is the first time we've seen this kind of response to that anniversary, scott >> it's the 22nd anniversary, in fact, sue, of the hand-over by britain to china they've been calling for the resignation of the chief executive of hong kong, that's at the center of all of this, as

you were, sue, describing it moments ago, the unrest and unhappiness with the government there. it has how it has sort of spilled into the streets and appears to be getting even worse than it's been >> it does, it seems that way from the pictures we're seeing carrie lam is the hong kong official that the protesters want to resign she has steadfastly refused to do that. she has said she understands the concerns of the protesters, but that she is beholden to china. and chinese officials have doggedly refused to back down on the extradition bill and i do think from what our reporting has indicated, that the extradition bill was somewhat of a surprise to hong kong residents it was ushered in quietly, but then when businesses and individuals heard about it, they started to coalesce in these protests and i think people basically are scared of what that extradition bill means for business, for the

government, for their individual freedoms, and their individual rights and we are increasingly seeing pro-democracy slogans being spray painted not only on government buildings but around the city in various areas. i have not seen casualties yet i'm looking at the same live feed you're looking at, scott, and our audience is looking at and so far, i have seen tear gas and i've seen the police advancing but i have not so far seen casualties, i don't know if you have >> the only reports i see are reports of several injured, perhaps dozens of people, maybe some of those in more serious condition as these protests have taken a more violent turn, and appear to be heading in that direction, not in any way a cooling-off feeling. some are injured, some in serious condition.

those are the earlier reports we've been watching, sue >> indeed. and scott, as we continue to monitor the situation -- i'm just trying to listen into what that police officer was saying to the cameraman there are several camera people down there as we see this latest flank of police move in. that's a shot from up above, from one of the roofs of a nearby building, shooting down into the square. the other shots that you have been seeing are from our camera people or the local affiliate there, down in among the police. that's a wider shot earlier this morning -- i mean, just a moment ago. all right. that flank of police officers moving in now.

so as we watch this group of police moving in, we should note that this is a different shot than we had before so obviously from what i'm seeing, you're seeing police at different positions in the square move in and as scott mentioned earlier, they're trying to keep the protesters back and cansxand cos much as possible, which is why you'll see flanks of police officers moving in, as we continue to look at this live picture. as scott mentioned, there are apparently injuries. some of them may be serious. this protest started on july 1st, which is the anniversary of the hand-over of hong kong to china. it is linked to the extradition bill that was put in place by

china. hong kong protesters obviously are against that hong kong officials are standing firm in implementing that. carrie lam, who is the exclusecv in hong kong who is basically charged with putting in place this extra didition bill, has refused numerous calls to step down officials in the uk have urged calm, have urged china to reconsider putting in place the extradition bill that was a spokesperson for the uk prime minister. carrie lam said no, she will put it in place because she's beholden to china. that basically triggered another round of protests. this is the second week of protests, scott, this is the most intense we've seen so far >> we'll keep an eye on it and we know you will as well, we'll

probably hear from you again this hour. we appreciate it we continue to watch clashes between protesters and riot police in hong kong. let's stay on that before we break off, i hesitate to move off of that. you see what's taken a violent turn in hong kong, reports of perhaps dozens injured, some serious, as protesters clash with police there. we'll keep our eye on that you can see some of the protesters there in the yellow hardhats throwing things towards the police they have tried to set a barrier, they've moved their barrier forward. as you have seen these riot police moving around, you know, around the flank of these protesters there have been reports of some tear gas and rubber bullets that have been used in that area as well so all of that unfolding just after midnight in hong kong. we're going to keep our eyes

there, if we need to come back, we will. sue herera is continuing to follow that for us let's bring it back to the desk. we were in the midst of our market conversation, which seems like a hard right turn after what we were watching over there in hong kong >> we watched this in 2012, '13, and '14, you had the same level of protesters, not seeing the violence then that we're seeing now. the month of june, the hang seng was up over 6% you saw the largest inflow into honoring tongue stocks, we had over $3.5 billion put in there so there wasn't any concern prior to what we're witnessing here today we've seen it in the past. but the violence leads you to believe maybe something is different. >> i was kind of going to, in the sense of, you know, we had our general reaction to what took place in osaka. obviously these events over in hong kong are closely followed by us and there are other

geopolitical things we're watching as well but you start to move ahead, steve, to your point, to he mentioned to earnings. and then the fed, of course. >> right my scenario coming in, and i got more bullish on friday, i had already been well-positioned coming in too, because i thought something would come out, but then when apple made that announcement and moved production of the max to china, i didn't believe they did it in a vacuum because tim cook makes a number of trips to the white house, has a good, open dialogue. clearly to me trump was authorizing a payment in advance to ensure a positive outcome we got what the market was looking for, basically, as seen where the indices are right now, which they spiked on the news this morning they've traded down. we could cover -- you know, we could end the day right about here however, going forward i'm much more positive on the market, because i didn't believe the fed would go i was in the minority. if we got more of a deal

i didn't expect a final deal but if we got more details in terms of what the deal would look like, the final deal, which i didn't expect, because they met for an hour, hour and a half, i didn't think that would go now there's still enough uncertainty where i believe the fed will go 25 bips. never thought 50 was a possibility. if you have got an easing, you've got a p in the s&p of 17 times, there's no reason it can't be 20 or more in that kind of environment s&p earnings will be down for the second quarter in a row. that won't be any surprise we had the highest number, in terms of five-year average, of companies preannouncing. >> the question on earnings is not so much now, because i agree, we know things are going to be down it's do you get a reacceleration into the second half of the year >> so what they're saying is -- >> everything really depends on that >> -- third quarter is going to be flat. that's known all you need is the fourth

quarter. right now, analysts, strategists, the consensus is you will, you'll get 70%, then double digits in 2020. whether it happens or not isn't important, at that point the market will be higher. i'm positive on the market with the fed in the backdrop and with what's going on in trade >> today is the perfect scenario for those concerned about favorable news coming out of the g20, taking the rate cut off the table. the way the market is trading today, the fact that the ten-year is still trading somewhere around 202, 203, the economic weakness that we have been concerned about, the suggestion that the damage has already been done. look at the manufacturing figures that were reported domestically here. the new orders index, below 50 go overseas, look at what was reported in the uk, in germany look at the german ten-year, trading negative 36 basis points >> it may take 50 off the table and keep it at 25. and maybe if you had a more

negative trade outcome over the weekend, you would have the potential, a 50-basis-point cut. now it's almost a foregone conclusion you're going to get 25 basis point the market is pricing in 100 points >> let me tell you, like jon, i cut half my sky works position this morning i used baba to get into more of a chinese play i sold those calls i did, however, add to zgnx, zogenix, last week >> we do this exclusive stock survey, we told everybody that we ask all these strategists on wall street for their opinions on really the state of the markets. let's go through some of that. as we're watching the breaking news in hong kong, i didn't have a chance to do that, i want to do it now. we asked everybody their

results, where are u.s. equities, are they overvalued, correctly valued, or cheap two-thirds, correctly valued, two-thirds of those we asked on wall street said stocks are correctly valued 54% have a positive outlook for now until the end of the year versus 8% negative, for largely the reasons we discussed here. no new tariffs at least right now. maybe when we asked this question of those they were expecting the fact that we get no new tariffs knowing they had the fed in their back pockets as they were answering that question too. so only 8% what should the fed do, 54% of those we asked on wall street said the fed should cut. 46% said do nothing. it's not like a runaway that everyone we talk to thinks the fed should come in and cut rates. >> right my primary reason for thinking we were going to see a rate cuts, you say know, scott, was because when we went to that three-month ten-year inversion and held it as long as we did, i

said they're shouting from the rooftops that we need to get this rate cut. it wasn't to support the s&p 500. it wasn't, you know, to do anything other than try to get that curve in a different direction than, you know, the inverted direction that it was in i think they'll do that. i think it will have an effect we'll see if they need to make more of a move in september. >> i don't think they should i think that they will, because the market is calling for it, because inflation is so benign that, why not? in my view they shouldn't because it won't stimulate anything >> i'm not surprised at the results in terms of what sectors you should be playing in right now. tech, 84% of those we asked said that was the space, and that was overwhelmingly the space recommended by the folks we talked to. 84% said tech. 48% said financials. 40% health care. 32% industrials.

>> i think you're clearly seeing the effect there, you're seeing it in terms of what people still feel confident about in the second half of the year. i think i'm actually surprised that financials is as high as it was because i feel like there's little catalyst for financials i feel like we're in a situation where if you're looking to buy defensive stocks right now, you kind of missed that boat, if we're expecting the fed to come in and save us whether it's 25 basis points or 50 basis points, i also agre that doesn't make sense. the question, though, did say should the fed cut rates and i think there are those of us who are economists by background, and we don't think they should cut rates, but i think the expectations are baked in for that. >> what do you think about some of these responses, particularly that the sector buys tech, 84% said that's going to be the top sector for the rest of the year. >> yeah, i think it's a mood ring i think it's the availability

bias people's biggest winners in their portfolios in the first half of this year have been tech stocks people are loath to sell their winners. they come up with reasons to hold them or add more. price targets get thrown out the window, evaluations not mattering. if tech had been down in the first half of this year, you would not have 84% of people saying that would be the place to be in the second half, you would have 10 or 20% i think there's a lot of that going on and we have to take it with a grain of salt as far as market participants' opinions about what the fed should do and not will do is another thing you should go out of your way to not trade as a result of, and completely ignore i don't think most market participants, myself included, should be listened to about what the fed ought to do. as far as what the fed will do, this has nothing to do with the mandate. this idea of insurance cuts has absolutely nothing to do with what the fed is set up to do

nothing that i've evthey've eve is part of their mission the only thing you should look at to know this is political is the financial conditions index and the financial conditions index, it has never been easier to find money. you could trip over a pile of $1 million on wall street anyone could raise capital with their eyes closed. people are throwing money at every startup imaginable there are 150 companies around the world that have a valuation of $1 billion before even going public this notion that we need some sort of insurance cut because there's some kind of financial tightness, show me where it is it's nonexistent your economic model is useless, it has nothing to do with what's about to happen. >> i don't agree with that the fed has a mandate, inflation and employment inflation has just not picked up it was there a little bit. >> it's at the same levels as it was when they were tightening

rates. >> exactly but now they're focused on the economy. it's their dual mandate. >> i'm sorry >> they don't have a dual mandate? >> their dual mandate is stable prices, not higher prices, and full employment. we've been in full employment for six years and prices are at the same level, whether you're looking at wages, you're looking at commodities there is absolutely no difference in where they are now from where they were in '14, '15 while they were tightening >> i somewhat agree with josh because there are three or four huge data points that will happen between now and the fed meeting that are inconsequential. if jobless claims go here or there, the fed is on this path where there's 25 or 50 and -- >> there are 7 million open jobs and only 6 million people looking for work right now you know when the last time that happened was it has never happened. this is the environment that we need an emergency insurance rate cut? it's bananas >> it wasn't an emergency. >> so why do it?

>> it's certainly not been an emergency or they would have done it in june. >> why -- >> because a deal with the inverted yield curve, that is why they're going to do it >> the inverted yield curve is an indicator it doesn't cause a recession it's an indicator. >> correct but because it's been this far, steve and i went back and forth, when you go 15 to 20 days of an inversion like this, you have always seen a cut. and you're going to see a cut. >> with all due respect, we had cuts in -- >> i'm not saying it's going to change things. >> -- 2007 and it didn't matter. >> last week, as i said, the only reason the fed is going to go is because the markets believe it should go 100%. you typically don't see that so i agree with that however, they're going to say it's because of inflation. they're not -- >> they're going to say disinflation >> that's the point. but it does nothing for the economy. >> so the other point of

contention, i have a feeling we can get into on this desk is, when we asked people the best place to invest, right now two-thirds said the u.s. and a third said emerging markets. >> for what time frame for the second half? >> yeah. >> i mean, it's very hard to time so i would say -- >> you're talking about outside the u.s. more than most. >> correct and i can point to ten different individual country markets that have gains on the year of almost 30% or more. and they're some of the most surprising countries, because these are countries where there is no great economic story, there is no political catalyst, at least not so far, and i think that good things have a habit of happening to cheap asset classes. and cheap asset classes can remain cheap for a long time that's been the story with international. but if you look at the degree to which we're stretched, u.s. stock performance versus international, i don't know what the reason's going to be maybe it's a sudden fall in the dollar or a prolonged downturn in the dollar versus the basket

or versus the euro or whatever but at a certain point, good things will happen to cheap assets you have international assets selling at 10, 11 times earnings with 2 to 3% dividend yields and a lot of the same characteristics in place, low inflation. i think it's important to not just go with the herd and focus on the recent effect and think that will go on forever. >> i cited last week the funds that we manage and the flows we've seen it's been on the entquity side, not on the debt side it's got to be a currency catalyst, a change in the global currency dynamic changing that global currency dynamic, we're having a question whether the federal reserve should be cutting, an emergency cut. the larger question is, josh is right about what he's saying, and jon is right about what he's saying josh is mentioning that inflation has not changed. well, you know what, inflation over the last ten years hasn't

changed. the annualized rate of inflation is less than 1.5% over the last ten years. so maybe the real question was, is this digital economy the type of economy that the federal reserve can even think about raising rates and maybe that was the problem. >> the last question came down to the biggest threat to stocks right now. it plays into what we've watched in some regard to the relationship between the united states and iran as that has bubbled up less so these protests in hong kong when you speak about geopolitical risks to investors here in the united states. geopolitics, only 15% said that was the biggest threat you had over 80% if you combine the trade war and the global slowdown being the biggest threat that makes complete -- >> so 46% are already wrong, because the trade war is going to be with you through the 2020 election i think that's the one thing we can certify from what we witnessed this weekend it's not going away. >> i don't know about that i don't know if i agree.

i think that's purely on the whims of trump if he sees himself not doing so well in the polls, continuing to flounder in the polls, he's going to put -- i think he's going to put a deal up on the table and sacrifice the end goals to do that i think it's kind of dangerous to make that statement >> the geopolitics people, i think that was -- those people should get a history book. geopolitics probably the least likely -- >> it's always been opportunity. >> 100% of the time. the market went up the day it opened after jfk was shot. the market rallies when we go to war. look at the '03 war in iraq. if you're saying geopolitics is a reason to be out of the market, you should read more books and read less news and it would probably be better off for you because that would be the least likely scenario to represent a prolonged threat to u.s. stocks. >> for the results of our stock survey, go to cnbc.com/halftime.

we will continue to monitor the breaking news out of hong kong today. after midnight, riot police charging protesters there. you can see that's another live picture there, streets are clear, at least at that moment, in that specific spot but it's been anything but that in the moments over the last 30 minutes or so, in the last hour, no question we'll keep monitoring that on "halftime report." we're back after this. >> announcer: before the break, our data partners on stocks in the month of july. over the last 20 years, all three major indices are up, with the dow leading the way. for more, go to cnbc.com/kensho. "the halftime report" with scott wapner and the traders is back in two minutes are you so good a? had a coach in high school. really helped me up my game. i had a coach. math. ooh. so, why don't traders have coaches? who says they don't? coach mcadoo!

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welcome back, everyone i'm sue herera with breaking news out of hong kong. as you look to the left of your screen there, there's a live picture as riot police move in against protesters at various points in the city there are protests in different parts of the city, protesting not only the extradition bill that china wants put in place but also an incident at a june 12th protest the protesters want an independent inquiry into a police incident that happened at one of these protests that was

much less violent. police have not responded to that carrie lam, the hong kong representative who is not democratically voted into her position, she's appointed by chinese elitists, she is refusing to withdraw the extradition bill, she's refusing to put in place an inquiry into that june 12th police incident moments ago, that was the seen as police moved in against the protesters we have seen tear gas being fired at and into the crowd of protesters it started about 24 hours ago on july 1st, which was the flag-raising ceremony and the anniversary of hong kong's return to chinese rule the protesters feel that china is chipping away at their individual liberties, which underneath the treaty put in place some 22, 23 years ago between hong kong and china and between the uk and china, it guaranteed civil rights for all residents of hong kong for 50 years.

the protesters feel as though china has been chipping away at those individual rights steadily for the past year. and so the tape at this point shows the riot police moving in. but it is an escalating situation. and there are protests breaking out at different points in hong kong there is one report by reuters that they are moving towards the financial district but keep in mind, it is about 12:40 a.m. hong kong time. so we are continuing to watch what is a very dramatic and very fluid situation in the central part of hong kong. i'll keep you updated on that. i'm going to throw it over to leslie picker right now and she has the etf update leslie >> thank you, sue, dramatic pictures indeed. i'm leslie picker at englewood cliffs stocks across the board rallying today on the back of g20 check out consumer discretionary hitting an all-time high, up more than 20%. joining me now to break this all

down, mary ann bartells and navy naudic mary ann, what is this telling you about the rally? >> well, despite, you know, all the volatility and trade noise that we've had, consumer confidence has remained very high and based on the bank of america credit card data, we've seen consumer spending to remain really strong. so it's not a surprise consumer discretionary is hitting a record all-time high it's been a leader in the market and with it hitting a new all-time high, it's confirming the high that we're actually seeing in the market today as well >> now, dave, as we look toward the second half of the year, can this rally sustain itself? or do you see the sector being overvalued at these levels >> i don't think it's overvalued we've seen some incredible earnings just mcdonald's a few days ago, and almost no matter how you want to play the consumer story, it's clear that consumers are actually more confident in this market than investors are.

and so i think there are a number of ways to play this. the distinction between whether you're looking at staples or services or discretionary or nondiscretionary, those don't matter so much consumer stocks are poised to keep running >> mary ann, do you see any major headwinds that could pose a threat to the rally we're seeing in consumer discretionary? >> not at this point and it's both the high end and low end consumer, so it's the consumer across the board. >> dave, how do you see volatility play a role in what's going on with consumer discretionary right now? is this a steady move to the upside or should we expect some kind of rough bumps along the way? >> some of the bellwether stocks are big names like amazon or

disney and these names can move quite a bit. we don't get into some of the more techie plays but there is a lot of tech baked into what we see in consumer discretionary right now. if we do get choppy markets, these stocks will move >> mary ann, as we're seeing news come out over the weekend with regard to the trade truce, is consumer discretionary perhaps able to withstand some of the potential impacts of tariffs more than other sectors, especially as it looks like things are now progressing forward? >> well, it's really interesting, the market is hitting an all-time high, consumer discretionary is at all-time high, tech is at all-time high. we've been at these trade negotiations for over a year leadership is still strong despite some of the headwinds that the market has had, despite the volatility, despite the bear market that we had in the third quarter of last year i think what people are missing is that earnings growth rate, since we've started this whole

trade negotiation, is up 27% consumer discretionary has been a strong sector based on the consumer what's very interesting about the sector is that amazon does dominate the sector. it's almost 32% of that sector but despite that, we continue to see strength >> all right good stuff thank you, dave and mary ann and thanks for joining us today. for more "etf edge," our live show starts at 1:00 eastern time at etfedge.cnbc.com. we have a packed show, talking trade, energy, and china with the man behind a suite of china-based etfs "the halftimrertisacine po" bk one minute with call of the day and unusual options activity it all started under this buttonwood tree. twenty-four people came together to sign an agreement

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best month since january options traders are jumping into the xle etf that tracks that space. jon at the telestrator >> they have been jumping into the space over and over again. this is another time they're jumping in, scott. they're buying with the xlf up about half a percent today they've driven it to those levels by basically buying lots of calls they're stepping in and buying the august 67 calls that might imply that we go back to the highs of the year. that's the first one they did. those are august 2nd expiration. i bought these as well and i'll probably be in these 'til right around july expiration, maybe a tad past that watch this one, though it's kind of related r.u.n., r-u-n. big buying in this one the stock is just shy of 20 bucks, trading 19.50 right now, $19.60 they came in buying calls. they've now bought over 6,000 of

these calls. initially it was about 2,300 they've doubled up on that and then some. they're buying calls at the january strike when they do it further out in time it's more of an investment than a quick money trade nonetheless, i like this the stock is pushing up 6% right now. last one, take a look at twitter. a lot of folks out there, because of what happened last week, it was soft. it didn't exactly getslammed but it was soft last week. they're coming back in stocks up a buck today and they're buying the july 12th expiration calls at the 36.60 strike love this one, bought these, i'll probably be in these 'til right around that 12th of july if it moves quickly, which short dated calls usually do, i might be out of it quicker than that, scott. two quick updates, take a look at baba. this one has popped by better than 120% since we talked about it it's had multiple hits

it's just kept moving. it's up from 165 to 178 in the last 15 days second one, take a look at k web, also of course related to what's going on over there this one is up 250%. we're not talking about little 3 and 4% moves, scott. we're talking about options that move 250%. i've taken my profits on this one. and as i said at the top of the show, i've liquidated an awful lot of ones. our call of the day comes courtesy of josh brown who did downgrade msg. >> oh, come on >> and the new york in this caser in this case knickerbockes >> in 2000, when vince carter

torched us, that was when i downgraded we crushed it, we signed three power forwards in one day. >> in kevin durant, no kyrie i think. >> no disrespect, julius randle is good player nobody wants to be here. it's the most pafembarrassing my son, i have no son, he wants a kyrie irving, i don't know how to talk him out of it. >> you balked on paying durant >> you know why? this is the most disgusting part it doesn't matter how bad the team is. this place is packed every night. they have absolutely no problems selling merchandise, selling food and drink, selling tv rights it's always packed one of my partners actually bought season tickets this year. and not only was there a huge waiting list for the good seats, he actually had to put up a

$3,000 bank fee, they call it, for the first time ever they're doing that to initial season ticket holders he asked why and there is no reason why, because they can actually that's the disease with this team. they could lose 82 team. they can lose 82 games in a season and sell the place out. there is no other franchise in the nba that's quite like that, and that's why the incentive is not there for the team to get sold or for someone to get serious about doing this the right way. they try and fail. they don't really try that hard. they don't have to make the same amount of money no matter how bad they are. >> what would the stock look like today if they got kyrie and k.d. >> well, kyrie probably -- kyrie probably alone would have been okay k.d. i'm not so sure about, because he's not even going to play for a year. so i don't know. >> then you can't disagree with dolan's decision not to give them a max contract because they were worried about the fact he

probably won't play a whole year and whether he's worth the max with the achilles injury. >> four-year deal. now they're just signing people for the minimum. what's better? >> people don't like the management, i'm not sure they like the coach won 17 games two years in a row. >> good coach. we want them to do it because they would have a good stock value. what would that stock look like today? >> if they signed kawhi, that probably would have been best for the stock. >> all i know is iguodala was here last week, he went on "power lunch" and they said who are the knicks going to get? and he said they're not going to get anybody. >> no, i don't think they got bad guys and r.j. can play it probably won't be as bad as last year but they're not in contention. >> that's a low bar, my man.

>> and what sucks is probably 25% of the teams in the nba based on what we've seen in the last 24 hours actually could see they're competing this year. it's a really, really big year for a lot of teams we're just not one and we should be. >> stock price, classic example. let's do q&a for our viewers. you're asking about walmart, blue apron and adobe we will do those straight ahead. there's still time to reach us on our website or tweet us first, kelly evans has a look at what's coming up. >> stocks may be getting a lift on the trade truce between the u.s. and china but is the market getting ahead of itself? plus, first the 737 max now the 787 dreamliner we'll have the details on boeing's latest trouble. and taylor swift's $300 million she said music showdown. that is ahead in rapid fire. wait until you hear the details.

"the halftime report" is after this

one third of americans say they're cutting spending most say it's because they lost an alternative income source, taking on new debt, or due to investigation fears. much more on that on "the exchange" at 1:00 p.m. get a full report online now including who in the average american household is more likely to buy on impulse the answer will surprise you cnbc.com/investinyou welcome back let's answer some of your questions now. josh, for you, from ron in los angeles. josh, has walmart made the breakout you were looking for? >> yes. >> and what happens next >> it broke 105. it's working what else do you want? >> from larry in chicago blue apron, do you think blue apron will come back >> no. this one for 15 reverse split, it's down 30% since they did that customer acquisition costs still take forever, 12 months or more for them to pay off, so i don't

see how these guys survive >> from seth in kentucky, is adobe a good-bye or should you wait for a pullback? >> i think you could probably get it at a little better price but it's a great stock and good entry. >> great stuff let's go through the trades. there's a lot. number one, mcdonald's highs back to 65 lowe's trading at all-time highs, back to 1972. striker, ingersoll, rand, lock he'd, pfizer, oracle to name a few. feel free to pick anyone on that list. >> mcdonald's own it, staying with it. like the digital transformation striker. there's opportunity. remember the health care sell-off a few months ago. >> yep josh brown, who do you like on this list? >> ingersoll, there's a lot to

like i think disney though for me is the most obvious setup had a really nice breakout which we were highlighting the week before it happened then it spend time consolidating. now it's going to make another run above that high and i think 150 is reasonable. >> visa haven't sold a share it with stood the cryptocurrency from facebook, though we don't know how it turns out. got a little nervous on. but i think it will continue to work and brand names like mcdonald's and walmart and so forth. >> jen >> we like visa. some of the industrials are interesting too. if you think about trying to pick the best of the best so ipger sol rand is a great buy here. >> all-time highs? >> disney, disney, disney love it. think it goes higher. >> let's go final trades. >> i will start with american express, making a high and showing the strength of

consumers but fortune brands fphs got into that, second directive on housing. >> josh? >> i will reiterate disney i think this is their year they had a good start to the year so far. there's so much more potential as the new films come out and the app hits and i really feel that it's an entire rerating of the business it will go from being a low multiple consumer discretionary to being thought of much more than the way it should, which is a media company with a lot of potential of growth around the world. >> so the stock got crushed because the fda said we don't want to see your results and now it's back on zonenix. >> honeywell, this is an industrial company. >> j.d. because of the shopping fe festival they created. before we go, i want to take

you back to hong kong. live pictures there. thing as peer to be a bit more calm but an hour ago you saw riot police clashing with protesters there. things seem -- the violence seems to pick up a little bit. we will continue the follow the story. i know "the exchange" and kelly will and that show begins right now. thank you, scott hi, everybody, and yes, here's what's ahead we're closely following the breaking events in hong kong police clashing with protesters. how much does this complicate china's deal making with the u.s. and do stocks get too excited about the trade truce at the g20? we'll ask. and new reports suggesting the doj is seeking documents on other boeing production issues, this time involving the 787 dreamliner we'll have those details plus out of tune a shake-up in the music business has a major star crying fo