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tv   Fast Money Halftime Report  CNBC  October 12, 2022 12:00pm-1:00pm EDT

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>> we're going to see, john. i'm sure as some of those reviews came in yesterday you were probably sitting back nodding uhapprovingly. don't forget the fed minutes coming up at 2:00 p.m. eastern time welcome to the half. the state of stocks is another read on inflation remains red hot. what it might mean for tomorrow's cpi, the fed, and of course your money. the very latest on a big options bet on the ten-year yield. we'll ask the committee about all of that. joining me for the hour today right here on set with us today. let's check the markets five and negative days in a row for the s&p. we're doing an okay job of that. good for 16.
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we'll take it. dow is up for 175. the yield on the ten-year note is 1091. the read on the ppi nasty and we're looking for that relief but can't seem to find it. >> maybe we're getting just comfort or what's the right word, scott, where you don't care anymore i'm surprised how resilient the market is today given what we thought. maybe we're psychologically there which is saying we all know the fed is raising 75 basis points we know eventually it'll get better we know what the fed's terminal rate is expected to be and now we just need to live with it and maybe that's what we're getting to it's interesting i bought a new stock last week and i realized as i was driving here today i didn't think at all about
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inflation and investment actions in that process. i just figure we might have a 4.5 feds fund rate, we're going to get there so i'm just going to buy the stock and look at the fundamentals of that company >> jenny's right, it's eventually going to get better the question is how much worse does it get before it gets better i think that's what we're trying to game out. >> and i think the market cpi numbers tomorrow are going to be important to that. i think it's a really good point the markets have been resilient today despite a disappointing ppi number we know the fed is going to keep raising rates this year, so i think we'll have to see something substantial they'll have to go further than they are right now to sweep the markets at this point. i don't think we're going to necessarily see that but i think tomorrow is going to be telling. >> you've got lori as our producer put it cut, cut, cut. you cut the 2022 and 2023
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forecast, cut the s&p price target a couple hundred points higher than we are now for a reminder she was at 4,200. so it was kind of obvious something had to happen sooner rather than later. but how about this ppi today and if you want to take that word that curtny said resiliency of the situation into it. >> the market has been resilient since q3 earnings it all comes down tomorrow what we're going to get for the inflation reading. i think jenny is correct i think ultimately at some point the inflation will moderate and the fed will pause in the interim it's whether or not they'll be able to quickly recognize there's a hard landing under way in risk assets and you can't ignore that. you can't ignore the
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financialization of the economy. you can't ignore what's going on in the u.k. bond market. you can't ignore what's going on with the chinese currency. you can't ignore how relevant bank earnings are going to be as they begin this friday when we're studying what are reserves look like, how much are consumers draining it? so i think we're at that moment, scott, the federal reserve is going to have to step in and have some form of acknowledgement that they have broken parts of the capital market >> i'm going to push back on you for a minute in terms of this notion it sounds good, but this notion of we're already in a hard landing for risk assets, i mean the s&p is down 20%. that's not a hard landing, right? that's kind of a soft landing. a hard landing is the kind of thing that jamie dimon is potentially talking about right, joe, for risk assets don't tell me we're in a hard
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landing for risk now and then we're going to go down when we're in what's that called >> that's not a hard landing that's a crash and that's a crash that doesn't recover for five years because you go down another 20%, scott, you're talking about the 1970s where the market went down 48% and it took nine years to recover. you're talking about the 2000 or 2007 scenarios where the market goes down 50% and it takes five years to recover so i do believe this is a hard landing and the reason i'm saying it's a hard landing because i'm looking beyond the s&p. the s&p is benefitting from having apple and microsoft and alphabet who have had resiliency >> microsoft at a new 52-week low today. >> more recently you're seeing under-performance, scott but you're not going to acknowledge there's a hard landing in the entirety of the 60-40 portfolio.
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this is the worst return we've seen in multiple decades >> i hear you on that, but, steph, the scenario of a jamie dimon is going to feel a heck of a lot worse than this is in fact a hard landing for risk as joe has eloquently laid out why it's that way >> look, nobody knows how much further this market has to go down is it 20%, is it 5%, is it just going to stay choppy like i have been talking about all yearlong? i think it's more of a chop in my opinion look, that ppi number was hot. the cpi number tomorrow is going to be hot. it may not be hotter than expectations, but it's going to be hot just think about new car prices are up, education is up, rents are up those are all sticky parts of inflation so the number's going to be ugly tomorrow. it just reinforces what we've been seeing and talking about
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for the last several quarters, that there is a lot of inflation. the fed is going to remain very hawkish and rates are going to go higher. they're going to stay higher for lo longer, and that's going to frustrate a lot of people and that's going to lead to a lot of rotations within the marketplace, right we've seen a massive rotation out of growth into value value's outperforming growth year to date by 1200 basis points that is huge growth managers have been crushed, and so people already feel like in certain parts of the market it has been a hard landing because in those sectors like growth and technology, they've just been hammered i don't see those sectors coming back and unfortunately, i don't actually think now earnings are going to save the day. it's not going to change the narrative that the fed is actually drawing liquidity out of the system and that we're going to see slower growth is that recession, is it stagplation ini don't know what it is, but it's slower growth and we're trying to price this
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in right now because we're a forward looking indicator. >> everything in the market -- we've suggested at least one reason why the market's resilient today is because as one of the ladies in front of me said, that it's all in the market, right? the market kind of knows so is everything in the market at this point but for a fed mistake? is that why the market can be calm like it is today with a hot ppi? the two-year at 430, right where. it's there so that suggests there's a lot in the market. now, fears have been ratcheted up recently about a mistake being made by the fed or breaking something or systemic issues we look over in the u.k. and we say, okay, what is the run on effects here in the united states if anything people don't seem to be too worried about that at this given moment, but you never know how that develops. >> well, i mean today -- one day of green doesn't get me all that
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excited. we're super oversold the oscillators are going to tell you that, so maybe we know the fed is going to be hawkish and rates are going to stay high for longer, but that problematic for risk on assets to be honest, right. and then you have the b.o.e. who can't get out of its own way china open close, open close we have no idea when they're going to get their act together. you have a war, by the way, which we have no idea what the outcome is knowing to be and you certainly have problems in the currency market if the fed continues to do this and they break something, maybe they may change their mind but until something breaks i don't expect any change, and the rhetoric continues to be hawkish from all the fed governors so i think you have to be careful in this environment look, you know i own stocks. you know i have a little bit of cash on the side lines because earnings season gives me an opportunity. i'm always looking to add to stock. in the next six months we have
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no idea what the outcome is going to be, so i think it's prudent to be careful and diversified and find big best blue chip companies truly on sale if you can have the patience to hold onto them through this uncertain time. >> so you've got the ten-year note yield at 391 as we just showed, and we talk about the idea of something breaking, which is those concerns as i've said have been ratcheted up of late there's an interesting i wanted to call your attention to that john turned my attention onto, an options trade and we've enlisted scott nations to help us with this he's the founder of course of nations indexes, a familiar face to those who watch "options action." scott, this was interesting it's a call spread we're told targets have dropped in the ten-year yield as low las 2.9% before november 25th expiration
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can you take us into this trade and what this person is actually thinking >> sure, scott, there's actually a couple really interesting trades this call was purchased and also somebody bought a bunch of outright calls they besides the contract is bigger and the prices are different, but really what this is somebody is betting -- they're making a very low cost, very low probability bet that bond prices are going to spike significantly. so the generic ten-year note right now is about 111.5 they're thinking it's going to go up to 118 by the time these options expire and there's only a couple ways that happens the first would be good news and the if inflation eases and we get the fed is going to let up a little bit the second is much more dramatic and i think this is probably
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what they're shootding for. if things were to get really bad in the equity world we see prices spike because people don't care what they're paying for ten-year notes in that case. they just want some safety so this call spread purchase is really somebody just taking a very low cost, low probability wager that things may get very bad. >> yeah. i mean consider, you know, what would -- and you use the word dramatic, and i'm thinking you used that word correctly what would have to happen for the ten-year to drop 100 basis points from here right, to go down to that level in a reasonably short period of time in a month. you would have to think that something would have broken, so to speak, to get you to that level. it's the latter rather than the former of what you suggested of inflation justdropping like a stone and then the fed would have to ease off the likelihood of that happening in that time frame is unlikely to say the least
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>> unlikely in the extreme that the fed would say, okay, we're done -- we've done everything we need to through the end of the year given what charlie evans, the fed had ipchicago and leah what she said yesterday. again, what is much much more likely you see this ever since what happened in 1987 when we saw bond prices spike, again, dramatically after the crash in 1987 we had a huge rush to quality. so what happens if things get really messy, really ugly in the equity world, then people are worried about return of capital not return on capital, and they rush into the fixed income, the treasury bond markets, and that's what would have to happen and, you know, this is really -- scott, even though this is a trade in the bond world, it's really an equity tail risk trade. >> interesting well-put, and thank you for
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joining us, scott, on a trade people are starting to talk about today. and we thank you again john highlighting it and send it onto us joe, you want to comment on that it's a pretty interesting albeit dramatic take on one person's at least view of what may go down >> somewhat chilling, isn't it somewhat chilling from the sense of does someone need that much of a tail on their risk? somewhat chilling in the sense of what's ahead of us that's going to be troubling for the markets. that's the only thing that comes in mind for me >> we keep saying somewhat, a person when i hear this i wonder is this really a human or an algorithmic trading program based decision and has it taken human out of it? because for me this is dumb trade. even if it's cheap it's a waste of money, so it sounds to me it might be an ai-based decision
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rather than a human thoughtful input. >> who knows i do want to get on before we take our first break into what's taking place in tech and court, we talk about semis every day. why? because they hit new lows every day. and i'm wondering when that trend is going to stop, whether you think we're close to a bottom are we there >> i would venture to say we're getting closer the valuations are significantly lower than their longer-term averages are at this point, but they do face some significant headwinds. there's deterioration happening with the semis and all the risk in china right now i don't necessarily want to jump into it, but i do think you're getting closer there, and they are looking much more attractive than they have previously. >> steph, you know there's another note out today for b of a, and they have some stocks on their list, and i believe
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broadcomm, they say we remain defensive and maintain their top picks and a few other names. i bring it up because you own that >> i do, and i'm watching it very carefully to add to it. i cannot believe the stock trades at 11.6 times earnings with a 3.5% dividend yield and it's now down 35% on the year. it's not been spared at all maybe it's a little bit better than some of the higher flying names, but it's still gotten crushed. i like it. it's enterprise, ai, it's cloud, data center. i like what they've done in terms of mna and risk. and that's going to help margins and they already have industry high operating and gross margins. and there was annalist that recently spent time with the management and the management saying that customer leave times still at 50 weeks, so very, very
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sound. sounds good to me. doesn't sound like you're going to see excess inventory like i believe you will see in other pockets. and oh, by the way they're generating about $16 billion in free cash flow per year. it gives them a lot of flexibility and also continue to do mna so that's definitely one i like, but as you know i'm still a bit cautious on the overall growth because of the double triple ordering and the inventory issues i believe are happening >> a reference on the secondary note out on the semis from bank of america where they asked the question what's priced en. cyclical downturn and no recession. if you think it's bad now they're not even pricing in a recession yet. what do you think about that >> i think that semis have already been in recession, so one of the things we've been hearing about from -- is this idea of rolling recessions we could have a broad economic
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recession. i'm not sure we will, but we could. and i think semis have already had their recession. my bigger concern right now -- well, not bigger the department of commerce's restrictions on them selling to china. and i think that's really concerning when you were asking me two weeks about these, i can live with that but a whole other wrench has been thrown in here, and we just don't understand what those repercussions are >> are they investable right now these stocks >> i'll tell you as long as you have a time priced in. >> what is very long >> couple years because i'll tell you why these are necessary to our every day life so this is noise china is noise things will reroute. but when you have a company that makes something absolutely essential to us being on the air right now and everybody's daily life, they will thrive, they'll continue to exist. this is a blip
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>> doesn't mean you have to pay top dollar >> nope. and i think, too, you know how people say don't let perfect be the enemy of good enough you don't have to buy them now if you do buy them now and they go down a little bit, just wait three more years >> we talked about microsoft for just a moment but not in any great detail target was cut today from 315 from pooat wells people are trying to defend apple these days, although you do have more caution around that stock than i think you've had, you know, in the last handful of years. where -- how should we be thinking right now of megacaps nasdaq's been at a two-year low. the chips are getting all the headlines for all the right reasons, but these stocks can't get out of their own way either. >> so jenny talked about there being a rolling recession. i think it's more of a valuation recession. and take the semis as an
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example. the semis are far ahead of those megacap companies in those valuation decline. you know that they are far ahead of it because you've seen earning estimates for the semiconductor industry fall by the largest amounts since 2008 scott, you haven't seen that yet in the megacaps, and you candidly we all know my positioning in the megacaps. you know, my largest position is apple. i am long microsoft. i am long alphabet, but i will also acknowledge the reality that now this valuation recession that's been rolling from hypergrowth to other areas of the market is now coming for megacap technology, and that's exactly what's unfolding now, are earnings going to be resilient enough to support the premium valuation for these megacaps that's tbd, and we'll find that out over the next two weeks. >> steph, it's interesting
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putting out a note today concentrated meta is one of his top picks speaking of big names that are in 52-week lows he talks about a fight to quality, helping a stock like that along with google that make sense to you i mean i know you own it, but give me the honest read on this kind of a call >> well, i think their core business is real i think their core business is quality. i think they have size and scale with 2 billion and 3 billion daily active users, monthly active usersrespectively i don't know if they're going to be able to fix reels i'm of the belief they will and that they are making progress, but that remains to be seen and that's the show me part of the story but the balance sheet is very strong. they have free cash flow of $20 billion, and this cost cutting program, that's going to take $6 billion out of opx
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they have a lot of levers they can pull-on that front maybe revenues are going to be lower because we know what's happening in the macro with digital advertising slowing down and competition. but i think at 11 times forward estimates for the base business being a solid base business, i'm -- i just think it's too attractive here. and i'm not paying for meta for this stock at all. i am not giving them any bit of credit, but that means we're not getting much credit for the base business at 11 times so i agree with him but i don't know what the catalyst is other than to say they've got to get reels fixed i think for people to be interested again >> let me ask you this real quick. if you're not paying for where the future growth is alleged to be why are you paying up for the part of the business where growth has slowed? >> i think their base business
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is worth more than 11 times earnings, scott. >> okay. >> scott, can i ask. >> no, i've got to bounce joe. we've got to talk about financials many are sitting at new lows ahead of their earnings. on friday they begin the committee takes their positions next we're back in two minutes. - [narrator] if your business kept on employees through the pandemic, can qualify you for a payroll tax refund of up to $26,000 per employee,
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a number of big bank stocks hitting new lows jp morgan, bank of america all the names we're looking at jp morgan eight times. citi, 6, key corp 6.7. pnc 9. is that enough to get you excited about these names. >> i do like how much cheaper they've become recently and your banks do tend to be your category that tend to rebound the fastest. i do think your banks have been very smart here to keep balance sheets very strong this is probably one of those if we go into recession one of the most anticipated and i think they're prepping for that. i would definitely look at some of these as opportunity. they pay a good dividend and have a good value. especially if you're an investor
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you want to have a piece of these. >> wells fargo, bank of america you call this super friday >> it is super friday because you throw in citi group and jp morgan they report on friday as well the positives are going to be net interest income, and nest ininterest margin. those are higher interest rates especially at the low end, those companies that have exposure on the low end. you're going to have really good expense control and you're going to have great capital positions. you're also going to probably have decent fees especially on fixed income but on the negative side you have sales and trading and investment banking are going to be horrible, mortgages, horrible so what i'm watching, the most important thing is liquidity because it's tightening up you've got loans growing at 12% but only have deposits growing at 2%. that's going to be a big discussion for all these companies. that being said you mention they're very cheap morgan stanley yields 12% and wells fargo has held up the best
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but trades at one times book i can kind of get my head around some of these things by valuation. >> is wells most at risk because of the mortgage origination business and given where rates have gone? it's such a significant part of their business >> they have been shrinking that business over the last year, year and a half. and on the flip side they're the most sensitive to net interest income and net interest margin, so they should benefit from the rate structure >> oh, good, thank you for that. joe, bank of america, morgan stanley, you have any enthusiasm at all going into friday >> they benefit from the wealth management division, and as stephanie pointed out that's a fee-based business, so you're seeing a little bit of interest in fixed income right now. i know it's not popular to talk about a 4% cd, but that attracts
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am candidly listening to jamie dimon the other day i'm just wondering if he's wearing his heart on his sleeve a little bit and he's frustrated with the overall environment jp morgan, very aware how restrictive the earnings growth potential is, and maybe a lot of his comments were really the catalyst was that frustration >> maybe so. it's at a 52-week low as well as jp jenny, for someone who cites valuation a lot you say, oh, i don't really like them here but if you're a long-term investor the multiples are too good to ignore i read you some of the multiples on some of these names are they too good. i'm talking about jp morgan 8, citi 6 >> but this is where you have to pay attention to valuation but
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it's not everything. last week when i was on with steve liesman he said something so perfectly and i wrote it down he said shadow banks were thought to be risk and they weren't. the reason these guys got crushed in '08, '09 was because the balance sheet. things we as investors couldn't figure out those risks are too great for me my job for my clients is create a dividend income stream when things get really nasty there are unpredictable elements and they'll be the first to cut their dividends if they're nasty. i steer clear because i cannot assess the risks >> let's get headlines now here's what's happening at this hour, russia's intelligence service has arrested eight people in connection with the blast that damaged a bridge to crimea the russian fsb said ukraine was behind the attack and that
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ukrainian and russian citizens had been arrested. russia had stepped up a deadly bombing campaign in retaliation for that explosion kyiv has dismissed blame for attack with a spokesperson telling nbc news, quote, we are not commenting on the statements made by terrorists to venezuela now where the death toll from deadly landslides in the north of the country is growing at least 43 people have been reported dead with at least another 50 still missing heavy rains caused landslides earlier this week and search and rescue missions continue and nasa says that they hope to launch the moon mission artemis some time in mid-november the launch of the uncrewed rocket was called off in august for repairs and delayed last month because of hurricane ian this first launch is the beginning of a years long nasa mission to send astronauts back to the moon. scott? >> that's bertha coombs for us
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check out this mystery chart up more than 15% so far this month. you can't say that about a lot of other stocks. it's up nearly 40% this year the stock just got a bullish call, too. and one of our committee members owns it best of all. we'll reveal the names in our call of the day. wee ghba 'rrit ck ♪ ♪ we all need a rock we can rely on. to be strong. to overcome anything. ♪ ♪ to be... unstoppable. that's why the world's largest companies and over 30 million people rely on prudential's retirement and workplace benefits. who's your rock? i was having challenges with my old bank. lots of red flags. fees, penalties. so i broke up with bad banking and moved on with sofi checking and savings. now, i earn higher interest on all my money, and pay no account fees.
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all right, before the break we showed you that mystery chart. it is slb, adding that stock to its signatures picks list today. why it's our call of the day and stephanie link owners it >> i do. >> sorry i'm excited for you. >> i think it could go higher. i'm excited for me, too. but you know i was buying this at 13 so it's had a heck of a run right off the lows, but i think if goes higher than 51 look, this is the number one services company in the industry and i've said for a very long
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time it's a hidden technology play, and it's very under-appreciated in terms whf out they do and what they're focused on especially on the digital side they make their customers more efficient. they have pricing power as a result, and that's why the company has been able to grow margins, and they're going to see a margin expansion this year alone up 200 basis points. i don't know very many companies that are seeing margin expansion at all let alone 200 basis points so i like it we haven't even begun to see the international recovery, and that's the real gem, and that's going to happen next year. at 21 times forward it's the cheapest of the big four, and i think it's definitely on sale. >> court, you own the etf, the mlpx which has enterprise, williams, energy transfer, one oath, magellan and you also own a couple other etfs, so you're clearly in the energy camp >> it's been your one reprieve as an investor i think that's probably going to
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continue as you look later this year we have your mlps and companies like exxons and chevrons even if energy prices or oil prices come down, they can come down significantly and these companies are still going to be profitable and there's a huge supply demand constraint not going away so i think as a space it's definitely you want to continue to be in >> which you are also enterprise products, which is part of the etf but you own it individually. chevron, kinder, a lot of cross over between the individual stocks you own and energy transfer, et cetera. >> if you want to take commodity risk you own the exxons, the vefb rons, the devons, the pioneers you can own the pipeline companies. i'm really jealous of steph that
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she can, but all the message we've gotten over the past year we need fossil fuels for a very long time, like it or not. and i think you pointed out they've had to get more efficient. they're paying back to shareholders >> joe, eog, pioneer, vulairo. >> absolutely. it's the sector i've long advocated overweight the one thing i think you need to keep in mind -- and before i say this let's acknowledge energy is up year to date and up 10% for the month. so i'm probably going to make this call and it's going to drop 15%, but i truly believe energy is in the beginning stages of a secular bull market. one of the reasons why is it's not policy or an election is going to change production in this country what really was behind the growth in production, scott, was
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the low cost of debt, the low cost of capital. and that funded the growth at the well head. and now we've changed that cost of capital, and we're not going back so those companies are not going to be going to the debt markets like they did in 2015, in 2016 to grow their production they're going to turn away from that, and they're going to do what they're doing now which is prioritizing using technology as steph said and then focusing on the dividend and shareholder returns, and that's exactly why this is a secular bull market for the sector >> okay. also a bullish streak note out today on health care, calling for that sector to outperform on the year end we'll get the committee's take and their picks. and we'll do it next
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welcome back morgan stanley looking for opportunities in health care the firm has its top investment ideas, and the committee has ownership all over the place their ideas, abvi, joe, you own it >> i do, own it for the
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dividend, pricing power, fantastic company that's re-created itself in the last several years. there's a variety of missteps. not selling out of it. >> zoetis on that list and also on stephanie's list. >> also down 40% of the year i like it a lot though they have pricing power about 5% they have a great portfolio. revenues are growing high single digits, low double digits, so i like this name for the long-term. >> thermo fisher on the list jenny. >> what a great company. they have all this testing equipment, but i think the bigger story here is that health care compared to everything else has a degree i think of economic insensitivity as compared to all the other sectors, so i think this report makes sense. we've got aging population that drives certain stocks like zimmer and medtronnic. we've got regeneron and bristol with huge pipelines and it's a
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nice place to be in hideout. >> what about let's say the remainder of the year. >> energy and health care are the two sectors. as covid is getting out of focus and a lot of this is getting into the headlines now a lot of these larger pharmaceuticals are also getting into that pet space, which is one of those categories as people are cutting on their spending they're going to spend on their pets. stay with us mike santoli will join us next with his midday word we're right back - oh, the stock market is doing that fun thing again. news from the future: you're going to live through that about 10 more times! (laughs) no stress. i just discovered yieldstreet. they vet investments that don't ride the stock market rollercoaster. - [narrator] yieldstreet: private market investing.
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we're back senior markets commentator mike santoli joining us from the new york stock exchange as always for his midday word. we're hanging in there despite this hot ppi >> you know, the market wants to seem to really just idle ahead of the cpi if at all possible to try and square things up now, we are trading at the lows. i think that's a big distinction from where we were heading into the cpi report a month ago where you actually still had that rally into mid-august and then a decline but another bounce attempt. and the point is it was another hopeful spot there i think anyone has disabused to the idea you should outguess the cpi or get too bullish ahead of
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it thinking we're going to see a lot of down side momentum. but the makings are there, right? if the ten-year yield is bumping up against a bit of a ceiling at 3%, oil down 3 ers, stocks at the lows everyone knows sentiment is awful and expectations for earnings are pretty beaten down nicely at least for the current quarter, it makes for an interesting compressed situation i think across asset classes, maybe potential release of energy after we get that report tomorrow >> i'm looking at yields on the long end they're all down today, so maybe that's helping, too. also some relief out of the u.k. bond market, as you look there, mike, not an explosion -- continued explosion higher there, and maybe some of the more dramatic concerns easing. >> yeah, you can never prove a negative in a sense and you can't prove there's not something really treacherous brewing out there in the markets. but, you know, this is a very watched pot. everyone expecting it to boil right away and the fact it doesn't probably
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at least is a nonnegative if not on outright positive >> i'll see you in a few hours that's mike santoli. consumer staples the best performing sector of the day and week so far. so we'll find out how the committee is playing that group next and to celebrate hispanic heritage cnbc is featuring our teammates. here is the board member of both ulta beauty and univision. >> latinos are bringing even more new energy to our country they're the fastest growing segment in a fuel for growth in nearly every industry you can think of and we're not slowing down, so it's important for you to think about is how am i unlocking the power of this very important and significant community? being a latina everything there is about you is an absolute gift it's a competitive advantage the way i think about it, so never hold back from being who you are
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consumer staples, the best s&p sector today and the week, lifted on the back of pepsi's earnings steph, i know you wish you owned it, because you said as much for the most part to our producers and you tweeted about it, too. >> pepsi and general mills, they're really both champs
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i often wonder why pepsi trades at 24 times forward and it always deters me from investing in it, and this is the reason why. they beat and raise no matter what they've actually beat on earnings over the last decade. that is just huge. they had a total organic growth of 16% led by frito lany north america up 20% they have the products, simple gross margins not as bad as feared they have pricing power, and when commodity prices come down and the prices continue to stay high, there's going to be a lot more operating leverage to the bottom line. this is absolutely on my short list to watch if it sees a pullback >> what do you see of stamos >> joe t. carries it at an overweight, at slightly less than 10% hormel, pepsi, hershey, monster beverage, these are all names. they have the pricing power exactly what steph said is the reason you own them. >> cisco's yours, jenny? >> that's right. >> syco.
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>> syy consumer staples are interesting. i think pepsi is really a bellwether where you saw 20% topline growth so what that's telling us is the consumer actually can deal with this so i think you also see commodity prices like wheat and soy coming down 10, 20, 30%. it's most likely that the staples will be able to keep the pricing increases as their costs come down. i think they trade at these huge multiples, they deserve to, but it makes sense i think also as we think ahead for s&p 500 earnings and what might support them, this might support them, even though we haven't talked about them a lot. >> should we talk about them more, courtney >> i like the fact that you'll look at these here and they have really had that pricing power. that's what you want in this environment is companies with pricing power. when you look at pepsi, a lot of their revenue beat, they increased price by 17%, 1% down in volume. people are still spending. my only hesitation here is that's exactly what the fed is
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trying to mitigate against, people are willing to pay these prices and it becomes a self-fulfilling prophesy, wages are high, and people are continuing to spend. that's going to be their biggest headwind, is the fed is trying to bring down this demand. but i think that pricing power is positive. >> all right we'll take a quick break and come back and do final trades, next - [narrator] if your business kept on employees through the pandemic, can qualify you for a payroll tax refund of up to $26,000 per employee, even if you got ppp. and all it takes is eight minutes to find out. then we'll work with you to fill out your forms and submit the application. that easy. has helped businesses like yours claim over $1 billion in payroll tax refunds. but it's only available for a limited time. go to powered by innovation refunds.
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that man right there, marc lasry joins me in overtime we'll do that. josh brown is with me as well. so we'll catch up on all things markets with the reform broker, too. all right, let's do final trades courtney garcia, we have some time, so what do you have? >> we've talked about health care today and i think that's going to continue to be one of your outperformers here and i think it's something you should look at you can look at the i-shares as an etf i think it's a good way to get that exposure. as we're seeing cpi numbers coming out tomorrow, this is something you want to be in. >> good having you for the hour. >> joe, what have you got?
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progressive copper financial company, own it. >> ayou're in connecticut today. you just pitching it because you're in the state? >> no, you know i enjoy doing that going to talk to the students about this environment investing. >> glad you plugged that we should have done more of that good stuff for that, joe say hi toe everybody stephanie link >> dollar general. it's a discretionary name and a staple stock, it's a bit defensive. they offer a value proposition for their customers. 80% of their revenues are consumables, so i think they'll benefit as consumers trade down. gross margins have been steady due to pricing, as well as mixed shift and products i like it. it's not cheap at 23 times, but it is definitely a staple and a defensive name in a really challenging environment. >> okay, thank you seagate must be yours? >> that was my new buy from last week earlier, we were talking about hard and soft landings i think that those are happening asymmetrically and
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asynchronously i think some things have already bottomed and this is one that i think have bottomed. we have 5% dividend yield, you get to buy it cheaper than i did last week, 11 times in a business that just has insatiable demand for hard disc drive storage. >> that's to your point earlier, you might be able to get things a few dollars cheaper, but if you're a long-term investor, it's not going to make much of a difference see you later on today, everybody. "the exchange" now >> welcome to "the exchange. inflation does not seem to be going anywhere just yet. the consumer price index rising more than expected consumer prices, the big one that's due out tomorrow. all while signs here point to more than fed tightening as the bank of england still easing, trying to pump more money into the system we'll examine the fallout and try to connect the dots. the nasdaq once again underperforming, but trying to snap a five-session losing streak the index near two-year lows what will it


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