tv Fast Money Halftime Report CNBC February 23, 2021 12:00pm-1:00pm EST
showing that -- that these innovations will have much of an effect on velocity or on transmission, for that matter. we should talk about this online it's a very interesting question, actually we only see the premise, but i'd love to hear more. >> i look forward to those conversations. one more question. do we need a central counterparty for the clearing of treasurys? >>. >> interesting question and that's a proposal. we're doing a lot of thinking these days along with colleagues of other agencies about the structure of the energy market given what happened during the acute phase of the pandemic when there was so much selling pressure and there wasn't the capacity to handle it and one way to do that would be to have central clearing and it certainly has benefits and i've been a big fan of central clearing in other parts of the economy and it's something that we're looking at i don't know that it will wind up being a part of the solution,
but it's certainly worth looking into another very interesting analysis and question. >> well, thank you senator sinema who previously spoke and i founded a financial innovations caucus in the senate and these are some of the things we want to explore plus many other things so we will look forward to addressing some of these questions through the financial innovations caucus, and through this committee so thank you so much, chairman powell, for being with us today and for your insights. i yield back >> thank you, senator lummis sen senator ossoff from georgia. you are recognized. >> thank you, mr. chairman and chairman powell for joining us it might not be widely known that the rpoa was is based in atlanta and the rpo is
responsible for checking accounts and direct debit. this is critical introis structure vital to the functioning of our economy do you have concerns that cybersecurity threats to the rpo could pose a systemic risk to the u.s. economy and would you commit to working with my office to review the cybersecurity of the atlanta-based rpo and to improve it, if necessary >> i would agree with you that those are very important issues. i do think that the atlanta fed's very focused on those issues, but would be, of course, delighted to work with your office in that respect >> thank you so much there is no doubt, chairman powell, that the covid-19 pandemic is the most significant drag on economic growth and job creation, but could you step back, please, and comment on what you assess to be the most significant, systemic threats to global or financial stability? >> well, i -- clearly, bringing the pandemic to an end in the
united states and globally, a real decisive end would take so much risk to the financial system and the economy and to the people we serve off the table. so you really can't overestimate the importance of getting that done quickly and we can do it. just remember, we haven't done it yet, but we really can do it as a country and it has to happen all around the world or we'll keep getting echoes of this, possibly next winter, but this is where we don't want to be we want to get this done and have it be decisive. >> beyond, that the advanced economies have issues around growth, around an aging population, and low interest rates, low inflation, low growth and low productivity world the united states, to a lesser extent than other advanced economy, but those are issues that we face that threaten different kinds of stability those are big, big issues that we think about and we have to address to some extent, with our
policies so i can go on >> thank you, chairman powell. recognizing that as a matter of policy and not commenting on the fiscal measures that congress is considering, can you please guide us through what your thinking would be if congress were to engage in more ambitious fiscal expansion with more sustained or fiscal support for low or middle-income households without commenting on any specific lgegislation, how migh that change the fed's policy outlook? >> well -- so, we take fiscal policy into account. it's completely -- we take it as a given, whatever fiscal policy is and it's one of many, many factors that will affect the economy. we are focused entirely on the state of the economy and the path to maximum employment and price stability. that's our focus anything that affects that can affect our, you know, what we
see, but we'll be looking at the actual data in our forecasts we won't be reacting to specific policies if that's what you mean again, i would say over the longer term -- >> chairman powell, you've acknowledged the extreme difficulty of conditions for low-income households and what would provide the most relief for low-income households who do not own businesses direct fiscal relief or monetary expansion whose effects are mediated by money markets and the banking system >> well, i would say without commenting on a particular bill, fiscal policy, if we're targeting certain groups, monetary policy is really not designed to do that. >> that's right. so if trying to relief the suffering of people who are in economically precarious
situations in their household who, again, don't own stocks, don't own businesses, don't have mortgages, direct, fiscal relief will be a more effective means of relieving their suffering than a broader intervention of the fed through monetary policy. is that a correct paraphrasing of the statement >> yes that's really been the story of this recovery. fiscal appr fiscal policy has stepped up and we've done what we can, too, but fiscal policy. >> i've got just 20 seconds. >> chairman, i want to return to systemic risk and the liquidity to the financial system and not just since covid and the '07 and '08 crisis of asset bubbles that could pose a systemic risk to the banking system do you believe that we have sufficient surveillance and management capacity right now to identify those risks before they threaten financial stability >> i do. we monitor the markets very
carefully and stow do do many os and it's not a lack of capacity. >> thank you, chairman powell and thank you, mr. chairman. >> thank you, mr. ossoff senator danes from montana is recognized or perhaps not here. senator cramer from north dakota has not spoken yet he interjected earlier is he here senator warnock from georgia is recognized i understand people are voting -- yeah let me ask one question. hang on a second i apologize. i wanted to ask the chairman something about climate, and i mentioned i would do this question in writing and i would obviously do it now while we're waiting and i won't keep you
long if the other members don't show up. in the -- we know in low and moderate community, black and brown communities suffer climate change disproportionately. when a hurricane hits and always has suffered weather disasters are way out of proportions to their numbers, when wildfires ravage entire towns and spring planning washes down the mississippi, local residents need government agencies to beage nil response what policy changes will the fed implement to do community development and do things like ensuring access to cash and other means of payment when these more frequent weather events devastate already distressed communities or whole regions? are you coordinating on this with the federal reserve banks among the 12 banks >> yes so that's a good example,
really, of the way to extend climate change leads to increased episodes of severe weather. we need the banking institutions that we supervised to be in a position to perform really critical functions in the aftermath of those to see that by the way, the federal reserve system itself, our reserve banks get the cash they take the actual physical cash and get it to those affected areas it's something they do very well and we need to be resilient and available to do that and able to do that, rather, and then we need the banks to be able to perform the function that they perform with their atms and their branches to get that cash out to people who may be in pretty dire circumstances in the wake of a natural disaster >> senator danes from montana is recognized for five minutes. >> thanks, mr. chairman. chairman powell, it's good to have you here.
i was being looking at the t-bill chart and noticed since the first of february the one-month rates have dropped in half from .06 to today .03 and two months from .07 to .02 we are starting to get into the realm of possibly negative rate which is we saw, of course, briefly a year ago, march. i just want to get your thoughts on that. is there any issues here of shorted collateral what's -- what's driving this as you're watching some of these short-term rates approaching zero >> so with t-bills in particular this would really be a treasury issue, but i would say, you know, it's a lot of demand for short-term -- there's a lot of liquidity and people want to store it to some extent in t-bills and there's demand and it drives it down toward the rates that people are getting paid or receiving for buying those assets from our standpoint, we control
our policy rate is the federal funds rate and to the extent there were to be downward pressure that because for example, the treasury general account is shrinking in size then we have tools that we can use to, you know, to keep that rate in the policy in our intended policy range, and we will do that that should -- that should also, you know, limit the extent to what others like t-bills would go even lower or perhaps negative >> do you have -- many of us were surprised we saw negative rates here a year ago. these rates are getting awfully low in the short term. is it a concern of yours or not? >> again, our principal concern is the federal funds rate be in its intended range and intended by the federal
committee. we also -- we do see that there is the possibility that other money market rates could look down and to the extent we are able to keep the federal funds rate in its range, that should ameliorate the downward pressure and that would appropriate >> in mr. chairman, we've seen volatility in the gas markets that to a degree, have spread out to the other markets if there were other special circumstances all happening at the same time might this lead to a shortage of collateral in the form of t-bills as seen to be the case that we saw here last march? >> it's possible, and i don't really see that happening, but it's true that there's tremendous demand, and again, the issue of supplying the demand across the curve is really one for the issuer which is treasury.
>> is there any merit or might it be a good idea to waive the supplementary measure regarding the recovery from the pandemic in the past and when, perhaps, we'll have less possible need for some of the dealer mediation in the repo market with the short-term markets >> as i'm sure you know, the temporary relief that we granted the slr expires at the end of march. >> right >> we are right in the middle of thinking about what to do about that i have not gotten any news for you on that today, but we do expect to make a decision on what to do about that exemption, that change we made of the slr back last year >> shift gears in looking at some of the prospects of the asset bubbles and you're seeing signs of speculation across the economy, and the stocks trading at very high prices to earnings
ratios and ag commodities moving up economically sensitive materials such as copper, nickel, they're soaring and bitcoin is up 80% this year alone. chairman, how do we know -- i guess to quote, i think greenspan, as irrational exuberance which might become subject to unexpected and perhaps prolonged contractions >> as we look at those things that you cited, what many of them have come common that they're related to expectations of -- and greater confidence in the stronger economy that's the metals and not so much the bitcoin, but it's the metals and inflation expectations and other securities they're really related to, because of the factors that are out there right now and an expectation that the recovery is going to be stronger sooner and
more complete, and so that's okay you know, we saw commodity prices moved up a lot in 2008 and '09 and people were worried about inflation and inflation never came it's a healthy sign, i think, there. we're focused -- honestly, we're focused on providing what the economy needs to get back to stable prices. we have 10 million fewer people working and it's much worse than that among the workers in the lower -- or focus has been to have a banking system and financial structure that's highly resilient to shocks and -- i'll change the order of this. mr. chairman, i'm over my time at the moment. thank you. i yield back >> thank you, senator daines.
>> senator warnock is recognized for five minutes >> thank you very much, chairman brown, and i look forward to working with you and also with ranking member toomey and other members of this committee. i am grateful to chairman powell thank you so much for taking the time to talk to me two weeks ago. i look forward to working with you as we work on a recovery that embraces our whole country and i, speciaespecially look fo to working with you and rafael bostic to help georgians over the next two years some have suggested that our covid-19 challenges with unemployment, with homelessness and poverty will be solved if we simply lift up -- lift all local restrictions, and open up the
economy, but since the beginning of this crisis, i've heard you stress time and time again, and something along it even today as you offered your testimony, that the path of the economy said on one occasion continues to depend significantly on the course of the virus. would you mind elaborating on why this is the case will the economy fully recover if people don't feel safe and comfortable that the virus is contained? >> i would answer your question in the negative. it would not we know -- actually in the beginning of the pandemic and if you look at the plummeting leve levels of travel and going to restaurants and opentable, and all of that shows that people stopped doing those things
because of the coronavirus before there were governmental restrictions at the state and local level to do those things so it really is, to a significant extent, just people wanting to avoid catching, you know, the coronavirus. it's also the -- you know, the restrictions that are in place in some cases on the part of governments. it's not a role for us to express views on whether they should be listed or not. that's for state and local governments. if you look at the 10 million people who were out of work. a great number of them are in those sectors of the economy that have been so badly affected by covid and those are the ones where you gather closely and where people are still -- not every person, but many people are still reluctant to go to indoor restaurant, for example, and you see sporting events and they're not having crowds and those are the people who worked in those areas and those are the ones who were affected and it's going to be hard for them to go back to work until people are
confident, as you say. >> so we want the economy to fully recover, but we've got to get the virus under control and those things worked together which is why i'm glad to see $20 billion in the vaccine rollout funds and the covid-19 stimulus package and i'm going to do everything i can to make sure that we get those funds approved and out the door so that we can re-open and do so safely and permanently. you're also tasked -- you're tasked primarily with looking at the whole economy, and with the big picture guiding our country forward. one of the things that you have to look at as you do that is systemic risks you and the other governors over the fed board have to ask, what risks are systemic and in that regard, i'm curious how broad is
your definition of systemic risk my definition of systemic risk includes a cycle of poverty and it includes disparages, that women make less than men, and it includes food insecurity, h housing insecurity and these limits opportunity and limits upward mobility and people's ability to reach their full potential which then has implications for the whole economy. how do you factor these kinds of things in as you take stock of whether the economy is working or not and for whom is the economy working? >> so you've heard us increasingly in recent years talking about these longer-run disparities and why do we feel
that we can do that? it is because they weigh on the economy in the sense that if not everyone has the opportunity to participate in the economy and contribute as much as that person can contribute given his or her talents and abilities and willingness to work and all those things then the economy will be less than it can be. in our country and every country faces challenges and we do face persistent deferentials that are hard to account for and that weigh on the economy and those are racial lines and gender lines and in other lines and i just think it's -- i would say it's widely understood now that we need to do everything we can to bring people into the economy and let them contribute and let them share in the broader
prosperity >> thank you, chairman powell. it's clear that the bottom line is that poverty, systemic inequality, wealth inequality are risks to the entire economy, and have implications for all of us, but these issues cannot be siloed which is why we've got to take this into consideration as we push forward covid relief and then pivot to address longstanding issues of -- thank you so very much >> thank you, senator warnock. for senators wo ho wish to subm questions for the record these are due one week from today, tuesday march 2nd. chairman powell, based on the change that we made to the committee rules, you have 45 days to respond to any questions. i appreciated the dose of reality. we heard from chair powell today, 10 million fewer jobs and we're only creating 29,000 new jobs a month that's unacceptable, mr.
chairman, when it comes to our economy, the job is not done, talk to any mother, essential worker or mayor and much of it is want fine much of what i heard of the republican colleagues sounds out of touch with the reality that a great majority of american families are living in it's the same message we heard all last summer, last fall the stock market's up and everything is fine we heard it again today. certainly the wealthiest americans are doing just fine just like they were before the pandemic, but our job isn't to work for them, and it is to work for all of us, as we discussed, chair powell the federal government has to create the economy that works first vast majority of people who work from a paycheck and not an investment portfolio. you, mr. chairman, have the responsibility to use all of those tools and i continue to look forward to continuing to work with you to do all of that. with that, the hearing is
adjourned. thank you so much. >> thank you ♪ ♪ our breaking news coverage continues now. that was fed chair jerome powell testifying on the economy before the senate banking commit tee. welcome to "the halftime report." i'm scott wapner in particular, high growth and high multiple technology stocks have been falling sharply yet again today. big names and all of the tried and true names falling, apple among others and the faangs. tesla, for example, is down 15% in about a week. we will kick all of it around with our investment committee by my side yet again today, josh brown, jim lebenthal, pete najarian is here along with megan shue at the wilmington trust. we do want to begin with steve liesman and he'll distill what the fed chairman had to say today, and i think the bottom line about this, steve was about stay the course, dovish, don't
worry about a taper as the fed chair could possibly be if that's what you were looking for. >> i think that's a good way to put it, scott. for sure, powell addressed the two major issues that we're debating almost every hour on cnbc the issue of inflation and the issue of higher yields and he definitely sounded like someone who is not concerned about the inflation dynamic that's coming. let's hear what he had to say. >> we've averaged less than 2% inflation over the last 25 years. inflation dynamics do change over time and they don't change on a dime and we don't see how a burst of fiscal support or spending, that doesn't last for many years, would actually change those inflation dynamics. of course, the fed sees inflation going up in the next couple of months and sees that as temporary and not as
persistent finally on the issue of yields you have to ask why they're going up and he's not concerned. >> we look at the whole range of financial conditions and it's very important to ask why are rates moving up? so if you look at why they're moving up, it's to do with expectations of a return to more normal levels and more mandate consistent inflation, higher growth and opening economy in a way, it's a statement of confidence on the part of markets that we will have, a robust and ultimately complete recovery so those are the reasons that are behind it. >> scott, chairman not flinching. he's feeling the pressure of what's going on in markets and seeing the ten-year yield rise and hearing the talk about inflation and he's not flinching when it comes to his plans to keep policy pretty much as it is now for the next several months. >> you feel that he all, but shut the door, steve, on this idea or even a fear if there is
one, and even in small quarters of the market of a taper he used the words, and it was the most powerful thing he said today in terms of market direction. the bond buying program would continue at least at the current pace now, i'll remind you, steve, that the market was down pretty sharply heading into the testimony. the nasdaq at one point had dipped by 500 points and it was a 3.5% decline we've had those losses so it seems as though the market was at least comforted in some respects by what the fed chairman had to say and that was part of it what i read to you. >> yeah, and we've been reporting for several weeks now that the fed is very much holding the line and not really responding to what's going on relative to markets for now. you're right, scott. they have this phrase that they -- that they use in order to say when they'll be changing the bond for substantial further progress and he's saying weir
qu we're quite a ways from inflation. you might say high bond yields and the fed chair will say we're short jobs and he's concerned people won't have a place to go back to work and that's the focus of the fed, the underperformance of the economy and not the potential of overperforming >> inflation is still below the fed's 2% target. steve, thank you it's good to hear from you after we heard from the fed chair today. let's kick this around, guys josh, what are we to make after we've witnessed technology biggest two-day decline since september and the nasdaq below the high since november. i could go through a list of big-name stocks down sharply over the last week what do we do? >> i just think you're in this situation where a lot of people got on to one side of the boat, and i think we have a lot of different trades that all at once are really one big trade and i've written about this
extensively on the blog over the last couple of weeks it looks more freprescient than really happens all toward the same con scept where there wouldn't be cash flow, and you don't have to worry about current earnings and all you have to worry about the addressable market and the market share that you attain and turning on the profit spigot five years from now, ten years from now that worked last year when the fed took it to zero, but we have an economy that's growing and we have people going back to work and we have people that are vaccinated and/or immune and they're back in the real economy and when you look at the hotel stocks when you look at the entert entertainment companies and the airlines and you see that, people are recognizing that. so then you say to yourselves, it's unlikely that we'll be at 0% interest rates forever
regardless of what the fed says. so you see a little bit of v vigilanteism at 3%. i was look at 2013 the rate on the ten-year doubled that year. it started at 3.7 and went to 3% and the stock market still went up 30% so i don't think it's a threat to stocks. i think it's normal. i think it's natural that there is some interest rate attached to treasurys and one last thing i want to say here this is a question about portfolio construction do you want to get rich now or do you want to stay rich forever? if you want to stay rich forever you're not all in those technology, you know, tam trades you have a mix of stocks the dow is in a 1.1% drawdown. so if you're in distress right now in your portfolio. you have a very serious portfolio construction problem. >> right >> ark is down 20% not the dow.
the s&p is downly. >> it underscores the title of cramer's books, "get rich carefully. it speaks to the economy we're in pete, you sold airbnb stock. you've got names and i said i can go down the list of some of these names because a lot of people are invested in these high growth technology names, internet-related names whether they're faangs or otherwise that have really suffered over the last week alone. apple is down 7.5% you've got, you know, netflix is down 3.5 facebook's down, but then you have the kathy wood stocks, i'll call them through ark and her funds which a lot of people, especially younger investors have piled into because she has been investing in all of the hottest and tried and true names, the zooms, the docusigns and the shopifys and the spotifys and it is down 10.5% in one week and the next generation
down is down, and the thintech is down 8.5% so what are we telling our viewers who are in these names now and maybe have too high of a concentration in them, and are wondering what to do >> you just hit the nail on the head, scott, when you talked about this concentration because that is the issue. it's okay to have some of these stocks in your portfolio, whether you're using them as trading mechanisms or you're actually trying to invest in companies, but the clearer thing that stands out for me still, scott, is when i look at a lot of these various names you're talking about names that have no valuation or extremely high valuations. there are so many names that are on these lists that have no p-e and when are they going to finally have any kind of earnings and people have to self-examine, do they want that much risk because that is an incredible amount of risks and these are the sharp moves you're
going to get so it's all about how you want your portfolio and how much you think and your tolerance levels you mentioned airbnb i've sold call against it ever since. it came at a point in time when i looked at that particular stock, and i said, you know what this is still years away it's been a great run. adios, if i missed the next however many points to the upside that's okay. i tend not to look at stocks after i've sold them so it makes it a little bit easier quite frankly, there are so many names right now on the lists for everybody that are names that do not have earnings or if they d they're absolutely in the stratosphere and they better re-examine that because who knows, scott is this sort of the beginning of a pullback a serious pullback i don't know the answer to, that but we were down 500 points on the nasdaq earlier today it sure felt like we were in the midst of something especially given how we started off on monday >> so, megan, you have a lot of
the tech stocks pulling back and as josh rightly said earlier, you do have a lot of the get your life back stocks going up and going up sharply mgm is up 38%, las vegas sands and wynn resorts and the casino stocks, and the cruise ships are moving higher and the live nations of the world which josh has talked about on the program and msg have been moving higher. you're a macro person and you don't talk individual names and you certainly need to be positioned in the right places for your fund, so where are you? >> i think what we're seeing in the stock market in terms of the rotation as well as what's happening in the bondmarket an the interest rate market is really a realization that the global economy is on the cusp of a very important transition. we see -- excuse me, covid cases coming down very rapidly hospitalizations are coming down rapidly. there's a tremendous amount of pent-up consumer demand.
pent-up cash on corporate balance sheets and all of that has to go somewhere, and we really think that this is the beginning of a transition from a focus on your stay at home purchases of online goods toward deploying capital into a lot of other parts of the market. last year's stock market run was not a healthy market what we see happening today is a broadening of leadership, a broadening into those areas of the market that really represent better economic health and so for our part, we are eyeing -- i totally agree with josh. you have to be diversified and i don't think you have to get one side of the boat and get to the other side of the boat kind of market and be in the tech-related name. we have an overweight in financials, energy, industrials and all these areas that could really utilize the operational leverage and an improving
economy. >> one of the issues, though, josh is to megan's point, playing off the sides of the boat, you had a lot of people on one side of the boat and if a lot ofpeople move to the other side of the boat at once you're offsides you're overweight on that side jimmy lebenthal, i'll get to you in a second, and i want josh to get back on this you have these technology names and i'm thinking of someone like kathy wood if she makes considerable moves in the stocks that she has because they're so heavily concentrated in these areas, some of her positions are very large. you could have continued weakness on one side of the boat that's not going to feel very good >> look, there are a very specific subset of investors right now who are absolutely losing their minds and it's not -- it's not all their fault. a lot of this is behavioral stuff. they've been thrown into an environment where the riskier the stock they've bought the
more it's gone up. they've been relentlessly rewarded in the succession of trades where the hard it is to explain the company to someone the more assured you are, and that wasn't enough so this is the point where, okay, we've had a few drinks and now let's take things up a notch. let's start doing shots. so now you see them speculating in things like holograms of zion williamson and all manner of coins and things they heard of that morning and throw 20,000 in i think a lot of what happened here is you have people who have made obscene amounts of money and are fairly inexperienced and not in control of their faculties at this point. it's estimated that 100,000 people have more than $1 million worth of bitcoin right now, and almost 10,000 people have more than $10 million worth of bitcoin. that's where a lot of this money's coming from. so that's -- when you see this
level of concentration and it's all the same stocks and it's this confluence of things where you wake up in the morning and they go on clubhouse and spend 90 minutes convincing each other to buy the most insane things and they get off clubhouse and go on stack, and jot out a letter and tell their subscribers and they're selling them coins and it's the same money and it'salmost like a race to lose it. when you own stocks in arc, they own huge innovation. this is not a diss on her. >> no. >> she's made put ims on that money, but you'll have days like this because it's all of the same people crowded into the same trades. >> that's my point. >> again, the underlying premise is zero percent interest rates and a treasury bill with no yield and when that changes people have to re-think some of that stuff. >> jim lebenthal, you know, i'm looking flew and thanks to john spalanzoni for putting this all
together in an e-mail. the five-day drawdowns through the ark etfs, and i just bring it up because again, these are the names that people own. the rokus down 13% in five days. crowd strike, josh named down 13, paypal, widely talked about stock on this program, and elsewhere. peloton's down 18% i mentioned zoom down 17 you could go down the list i could keep going the point is clear though. what's your take on that >> so those stocks that you've named and whether we call them innovation stocks, kathy wood stocks, they woere very, very expensive stocks and now they're just very, very expensive stocks it's still not a space they want to play in, but what i find more intriguing, scotty and you led the intro with this are the apples of the world, all right the faangs of the world because
they were expensive and now they've become, i think, rationally priced, and this all has to do with interest rates, if you ask me. if you think about the math that's involved with a multiple. it's basically you take the ten-year rate and you put the equity risk premium on top of that and you invert it and get the multiple it's probably 250 basis points and when it went from 1% to 1.5% the math involved took you from a 30 times forward multiple on apple to about 26 where it is today and that's right where it should be. so we have gotten the interest rate rise catalyst that has corrected the faang stocks, and i mentioned apple. you can take a look at google which is 25 times forward earnings and take a look at facebook which is 19 times forward earnings and the ten-year treasury, those are attractively priced. the problem becomes what if we go shooting between 1.5% or head to 2%.
now those multiples have to in down further and you have to wonder, will the fed at some point act whether it's 1.5%, 2% low, i don't know. where the faang starts are right now they're accurately priced. >> let's take a quick break and let's talk about the other moves being made by our committee members. we'll do that next save even more. some things are just better together, aren't they? like tea and crumpets. but you wouldn't bundle just anything. like, say... a porcupine in a balloon factory. no. that'd be a mess. i mean for starters, porcupines are famously no good in a team setting. geico. save even more when bundle home and car insurance.
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♪ ♪ ♪ welcome back to "the halftime report. i'm rahel solomon and here's what's happening at this hour. flags at the white house are flying in half staph and that's in remembrance of american lives lost to covid-19 president biden has ordered flags lowered through sunset on friday president biden and the first lady will travel it houston where residents have been experiencing mass power outages and the clean water crisis amid decades. former security officials in
charge of the capitol during the insurrection are blaming bad intelligence for the violent mob. the congressional hearing is the first time lawmakers are hearing directly from those involved at security so far they're point the finger at other federal agencies and also at each other. iran welcomes steps from the u.s. to ease tensions. iranian government officials says the two countries are on a, quote, constructive path after former president donald trump pulled out of the iran nuclear deal in 2018 at the same time iranian state tv is reporting that the country is restricting international inspection of its nuclear facilities scott, i'll send it back to you. >> appreciate that, rahel. thank you. i want to get back to this impact on the market and specifically the nasdaq, megan here's what i want you to do let's listen to what kathy wood told us less than a week ago about if rates continue to rise and a reckoning that could
happen throughout some of the stocks that she owns let's listen >> i agree with you, scott there will be a valuation reset. there will be fear, i'm sure, and we will use it to our benefit, concentrating our portfolio to our highest conviction names, but i think longer term especially given the powerful growth trajectories that the five innovation platforms around which we resolve all of our research that those trajectories are so powerful that these multiples -- that these companies are going to grow into their multiples a lot faster than most investors are now expecting. so that's a source of confidence for us >> okay. so that's cathie wood. maybe the biggest takeaway there is the word she uses we will use it to our benefit suggesting if there is a meaningful pullback and they will buy more of the stocks on the pullback is that the right move >> well, i think that's always
the way you should have been thinking about these technology names which are truly going to be revolutionizing the way we live, work, do business, but over a multiple-year timeframe so these technology names are part of a multi-year secular story and you have to take a multi-year investment horizon to those and i think that's what you're hearing from her is that she's going to be taking that long-term approach and reposition in the short term for hopefully longer gains to be had looking out further, but i think as it pertains to rates it always comes down to two vectors, the level and the speed with which you get there and the higher you go and the faster you get there, those names with the higher valuations more growth priced into the future are going to be impacted more to the downside >> the reason, josh, this is potentially so important and it is so funny and however timely
bob pisani has a new trader talk entitled is this the start of the cathiewood sell-off? go to cnbc.com and you can read that as you listen to us discuss this she, according to bloomberg, owns 10% or more, josh, of at least 24 companies, okay that is a lot concentrated in a little you know, a lot of the biotech names and she mentioned invite on our program, there is therapeutics and you've had a boom in those stocks and you've had a boom in the kind of stay-at-home stocks that we talked about driven in part by the tremendous amounts of money through those funds going into those stocks so what happens if some of that money now pulls out? >> so there's a couple of things here that i don't think post of the people watching the show understand about money management and i'm not going to, like, do a class, but look at
the concepts value weighted returns versus time-weighted returns. some of the traded hedge funds in history have destroyed more capital than they've earned for investors and it's not the person running the funds' fault. it's that they raised most of their money from investors after the big trade that made them famous i'm not saying that's what's going to happen with ark i'm just illustrating the concept. paulson and company was barely managing any money during the greatest trade ever shorting the housing market and then he went from being a billion dollar merger arbitrage fund to a $40 billion fund, to which point you couldn't make money, a lot more money was lost there than ever made and the book is still in the line ware, and you you have an actively managed etf, and
fabulously successful and she crushed it and unfortunately, most of the money invested in the fund and 26 billion in the flagship etf didn't come in prior to the massive explosion in gains and it came after, com cathie wood can continue to buy her innovation favorite names, but fortunately that is not how the money management industry works because most people allocating to funds and not just retail, advisers like myself, we invest in the rear-view mirror, so if there is a bad month or three-month bad stretch for these categories whether it is g-net or whatever they are doing now, and replacing the people's heads, these funds will have a track record that makes it harder to find new money to come in. >> that is right. >> and to come in. >> and double-edged sword. >> and when you are talking about the double edged
concentrations and she is going to have to sell her stocks if she has double redemption, and the thing about ark, you don't have to wait for 90 days to find out, because you are getting almost realtime notifications of the realtime sales because of how transparent they are, but they are concepts that people need to understand. >> i am glad that you bring it up. pete, i am turning to you now, because i honestly cannot remember -- >> sure. >> -- another day when you had this many moves to discuss with us. air bnb we mentioned and amex, and we threw these names, bj wholesale and b.j. wholesale, and the numbers are astounding, boeing, bp, carnival, and ford, and iron mountain and jetblue,
and michaels, and oracle, and pitney bowes and tanger factory and so many, and what is going on >> well, it is as we got through the expiration, and a lot of the names were expiring either this past friday or this coming friday. if they gave me the move, i take it. we talk about the discipline all of the time, and you were talking about at the top of the show the different people, and the new people maybe gnew into the market and involved in the trade, but the problem is that they don't understand the concept of when to sell. you have to have a plan a you go in with the plan good or bad. so there are some that are obviously not going to work. yot vu the sell them at the right time. and there are others that do work. yeah, you want them to run, but, yes, you have to be disciplined enough to say, enough is enough, and that is great. that is the story quite frankly with a lot of the stocks there is nothing wrong with well tower, but i decided to get out of it because the springtime to
now, that is on the absolutely tear to the front side and health care reit and so it should not move like a tech stock, but more like a reit. well, it seem like it was time to take it off. and american express, the great example there is that it was a single-digit p.e. when i invested an now up to 20 or higher than that, and so i feel like it is stretched. i think that it is kind of the case with almost everything that i was looking agent that ti decided, you know what, some of the names have to come off. sleep number was one of the fastest ones to move and i bought nit january, and the stock was around 90, and i have no idea, scott, because i bought it on fundamentals, but the earnings were extraordinary and that is what spiked the stock and now the pe is stretched and i had to get out of it. >> and i have to get out and take a break, and pete, we have a truncated show thanks to the hearing. we will do the futures outlook now. the dollar is bouncing off of the six week low, and brian stutland and scott nations have the trade there. and brian, to you first, what is
the next move in the dollar? >> well, the dollar is kind of sitting here right above the 90 level and kind of back and forth over the last few weeks, but looking at the dollar going backwards a little bit, it has had a bad run and the reason being is that the flow, and the u.s. dollar is tied primarily to the euro and to the yerngs and those are two major currently with the fund flowing,ed a deficit spending is increasing, and faster than the other parts of the world, and that is having an effect on the dollar and inflation, and money getting pulled out of the u.s. dollar and 10-year note and into the currencies an investing in those infrastructure, and the pandemic impact has been bad for the u.s., and the high gdp and huge bad impact for them, and that i a negative for the u.s. dollar, but it is going to hold at 90, and not ready to short, but the 90 is going to hold. we will see what happens. >> scottie >> i am going to look at the levels for the eurocurrency futures and they make up 70% of
the dollar index and simpler to trade. because you are just talking about one region. the euro currency has rally and gotten into the band and then rallied to a new band, and right now 123 half to the upside and 120 even to the downside, but once we break out of that range, i am going to jump on. if it breaks out to downside then the target is 116 even, but the breakout is the trade. it is a trade to jump on. >> all right. good stuff. guys, thank you. we will do it again soon and a quick break and final ad atresnd see if pete can throw in an usual as well. we are back after this.
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so bounce forward - with comcast business. get started with a powerful internet and voice solution for just $64.90 a month. and ask how to add comcast business securityedge. call today. all right. final trades in a moment, but pete, unusual activity first if we could. >> all right. zip through them. disney is the first one. and it has topped four different so far in the month of february and today, they are going right at it again. buying the 195 strike calls that expire friday. those are between two to three dollars and 6500 of them traded, scott. and interesting that in the beginning of the month the stock was 181 and so you can get where it is now and on a run to the upside. second is sonos and we know about it, and know the product, but the stock is on fire as well. in november, hit after hit, and the stock to the upside and today the stock was trading 3780
and out to june and buying the june 45 calls and paying 270 and up $3 for those and about 10,000 of those trading and i'm in both of the trades and disney expires friday and these other ones from sonos giving me time so i am in those for multiple months. >> a quick final, too? >> cool. i'm going to giving you dish, and we have activity there, so i jumped on that one in the calls and during the show. >> megan >> we like the global sector and global economic recovery and lagged, but trading well. >> farmer jim? >> hey, i think that interest rates are going to burrable higher, and play citigroup. obvious choice. >> josh? >> i'm with jimmy, the yield spread between the 10s and 2s and now 1.62 and highest level since jan 2017, and look at how jabari parker morgan is reacting is where i want to be. >> and twitter question, what if
you are in the long haul for jpmorgan and -- >> i did not hear those to be honest. >> all right. we will do it again another time. the big story is the nasdaq down 342, and that is 2.5% down, and we will do another question tomorrow. "the exchexchange" begins now. federal reserve chair jay powell wrapping up the testimony before the senate banking committee and his words are calming the markets. and this is "the exchange" and the stock averages may be lower, but they are far off of their session lows. at one point the tech-heavy nasdaq was off 4%, and incredible slide for thane t in, but it has recover and nearly biggest loss in a year and half.