tv Fast Money Halftime Report CNBC January 10, 2014 12:00pm-1:01pm EST
nasdaq, by the way. nasdaq expects options trading to restart at noon after an earlier halt. we're still sorting through some of the detail on that story. that's the latest from ndaq. have a great weekend. >> have a great weekend. >> see you next week. let's get to headquarter and scott wapner and "halftime." >> our starting lineup today is pete, joe, mike murphy, and stephanie link. let's get sdrtraight to our gam plan. moving target, the staggering new numbers have just how many customers were effected. playbook playoffs. which traders portfolio is in the lead now and what picks is the panel giving up on already? buzz kill of the employment report. only 74,000 new jobs created. stunning disappointment for those looking for more than 200,000 jobs. so the question now is what does all of it mean to the markets and your money? pee pete, to you first. >> i think in the case of the
names that are getting beat up based upon what this number is, i think those are the students to buy into. i think look at what's performing today. and what's performing is homebuilders, exploding still to the upside. you talk about the ten year. it was 3%. now closer 2.9%. i think the concerns there are starting to dissipate because folks are starting to realize that maybe we'll taper, maybe we won't. we did taper but will we taper more? i think that's back in question. you love the way those homebuilders are trading. >> biggest one day decline, murph, on yields on the ten yield since october 22nd. the jobs report that saved the housing trade. >> it's amazing. 2.88 is the last trade on the ten year. so to see the way the builders -- i've been watching them all day. to pete's point, they have a huge move. the knock was not going to move until we got stron jobs numbers. we have a weak jobs number and the homebuilders are taking off. they break off, i think they can
get some legs. >> joe, so much for lower rates being good for stocks. >> first of all,ic they do continue to taper in january. you will see another 10 billion come off. right now what the report today shows is maybe they don't taper as quickly or the runway doesn't end as quickly as we thought. this is about a lower u.s. dollar type of trade. merging markets are rallying. i'm still selling to that strength. buying u.s. centric names. when you take the jobs report and really get into it today, there's a large weather component that you must understand and basically dismiss this one sglort let's bring in our all-star panel now. resident fedex pert steve liesman. black rock cio, fixed income, rick reader and paul richards. great to have you with us. steve liesman, you first. serious setback or anomaly? >> i don't think the fed is going to really make too much of this number. i think it will take it under advisement as one potential
inp input. i don't think it's going to make a big deal of the decline of the employment rate. 70 some odd people left the workforce. i don't think the fed is going to see the labor market as gettingneeding a rise in interest rates or policy because of that. we had several months of better numbers. one month of a bad number and a lot of other indicators that seemed to contradict this as a sign of the strength in the economy. >> what is the best way to move rates today and how they were moving as a result of this report? >> i think they're reacting the right way. i think is exactly right. i think you have to reflect though the fact that the number was weaker. for the next month the number is going to be until we get to the next number. it's a weaker number. i think it reflects the fak that the employment in this country, that's why you're creating on economy that's growing quite well. look at the data from retail sales. housing good. industrial production. we just don't have, it's job mismatch, productivity and
technology. what i agree with steve is quantitative easing, the fed continuing down the path of tapering. >> paul richards sitting here as well. how do you take this? what's the fed going to do? >> i think first of all the number introduces two-way risk into what was a linear risk market. that's probably a good thing. it could be an anomaly and i don't think one number makes a trend. the fed does nothing. they continue to do what they did. they started tape iring. another 10 billion. steady as she goes. >> rick, do you buy treasuries today? >> i think one of the things you have to factor in, quef been -- we've changed our posture a bit in terms of the trade that was fantastic, that worked last year. it was a front end of the curve in volatility and the long end. i think actually things have changed with the fed quantitative easing tapering which will continue. you've actually normalized interest rates. we like the long end and volatility will continue on the front end of the curve. that's where forward guidance is
going to try and be. this is definitely, as i said, this is going to keep rates at least for the next month, this will keep rates. it has to bring the range down of where we're going to be for the next few weeks. >> guys on the desk, that's good news for stocks, is it not? may not be reflected today or were we so ready for this news to continue that we wanted it so bad? >> listen, i think it was good news either way. i still think you have to look overall at all of the economic data. i just think it changes the focus of where it is exactly going to invest. it gives the emerging markets a lift. ironically enough, it gives the housing story a little bit of a lift. but again, i think we're still in a very favorable position focusing on growth opportunities. >> scott, we have earnings coming up. let's listen to what the companies have to say. if you look at the data, you had a better adp number. you had a good trade number and good gdp number. you get one questionable unemployment number and everyone is saying, okay, it's all over
and rates are going to come down. maybe ten-year goes to 27, 28 but i don't think you're going to see much further downside. just given you have a lot of momentum that has been building. again, let's listen to what companies have to say. it's going to be a great week next week. >> if people are that nervous why is the vix trading underneath 13 right now. i think people are looking at the report and jill brought up a good point. weather. this is the one time, i mean, most of the time you would say weather, are you kidding me? this was an extreme weather pat person that's been hanging around not for couple of days but for multiple weeks. i think it's been a huge influence on what's going on. >> steve liesman, right, the weather has been bad. >> really bad. >> we've known that. how did everybody get it so wrong? >> weather explains a bit of it. partly because, scott, the weather did not show up in the other da that that i spoke of earlier. i saw ubs report that suggested that maybe 55,000 was the number that we were under because of the weather. it doesn't explain all of the softness and really it is
something you have to do -- you do have to look at the report where wages rose very small, in a very small amount. the average workweek decline. all of those things suggest a softness around this report that cannot be totally explained by weather. >> steve, what about the temporary workers? that was up 40,000. that was better than expected. that's normally a leading indicator that the job market is stronger. >> it can be. that's right. i think the trade here, if i may, is whether or not you're going to be diverted from your feelings about the economy based on this one report or do you go back to this notion that, hey, we averaged 3 1/2% growth in the second half of last year which krae eighting a different trading dynamic from one presented by this jobs report today. >> hang on for just a moment. we're going to go to sheila at the nasdaq with breaking news on the developing situation around options trading there. sheila? >> yeah, here's the sigsz, scott. at 11:42, options trading here at the nasdaq for stocks beginning with a through m did go down for about 18 minutes. they are now back up and
functioning at about 1:00 p.m. we do have a statement from the nasdaq only thing they're saying is they experienced an issue with data and one of the three options exchanges. things are back up and running right now but they are fully investigating the matter. if you experience an outage for stocks a through m, it is back and functioning and the nasdaq is investigating the matter. of course,this is just the latest string in woes here at the nasdaq when it comes to technical issues. >> sheila, thanks. back to you, rick, before we wrap this up. buy municipal bonds today? is that a reasonable way to look at this? >> yeah, i think when two years from now when people look back and see what's happening in our environment today, people are going to recognize you have growth in the economy. you can't drive employment fast enough because of technology and productivity and extraordinary dynamic that's structural. what it does mean is the fed is going to keep forward guidance down and we normalized interest rates. we think municipals makes sense obviously they're doing well today on the back side of it.
>> paul richards, stronger dollar? oh, well. >> i still like the dollar. if you're selling the dollar on lower interest rates, you're buying the euro, draghi doesn't want it. >> rick, thanks to you. paul, good to see you. we'll talk to you soon. let's hit our trader blitz now. making news today, first up, alcoa shares in the red after earnings came in below estimates. steph? >> the bottom line was a surprise. i was surprised by revenues. better than expected job. the miss was because of higher cost. stock up 30% from lows. trading in 36 times forward estimates. expectations were high. i liked what they said about auto, truck, and nonresidential construction. i would buy ingersoll rand. >> microsoft, barclays today is upgrading to overweight saying the company is better positioned in cloud services than peers. >> it's like what i was talking about on wednesday. everybody wanted to bash it. i couldn't find a bull on the desk on wednesday. yet when you look, $80 million in cash.
traded at 12 to 13 multiple. look at mobile and the cloud, that's where they're attacking and that's where their growth is. 42 target. i think that's low. >> next up, five below, the discount retailer forced to cut guidance for the quarter after the holiday sales failed to meet expectations. >> the right strategy here, wait until monday. the cfo will be speaking at an investor conference. let's hear what he has to say. >> intercept pharma, jumping again nearly after quadrupling yesterday. the stock getting a big boost from upbeat study for a drug used to treat liver disease. now speculation the company could be a takeover target. murph? >> baby, $70 two days ago, $450 today. someone going to take them out after that type of run? i don't know. one of the analysts came out, raised their target from 80 to 840. this drug better be really, really good to support this kind of a move. i don't know how someone would come in and buy them out after this type of move. >> there's some big money possibly making some big money
in this move over the last couple of days. scc capital, one of the bigger holders. there you go. orbimed, number four, $600,000 shares. this is the end of september according to filings. but take a look at that list right there big hedge funds in this name. and likely making some big money if they're still in there because of this move we've seen. coming up on the half, retail stocks are coming up today. sears and target are in the red, is joe still short sears? we have the traders favorite shopping plays next. and week two of the playoff playbooks comie coming. we're checking the leaderboard when we come back. when you have diabetes like i do,
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welcome back. we're a little more than a week now into our playbook playoffs. let's look at our leaderboard. mike murphy in the lead over josh and pete. murph, no doubt helped by micron this week. >> yes. >> blowout earnings. raised, beat, and raised. stock off to the rices as a result. it's got to be helping you out. >> micron is helping. general worth has been a big help there. if you look at it, one of the names that hasn't helped is petro, getting a pop today. that's been a laggard so far. i think when it gets back to
$15, $16 range, there's going to be a couple calls from these guys to buy me out. it could be over before it gets started. >> anybody making any moves? >> i made some moves yesterday. ual has been an unbelievable performer. it's right up there with micron as far as just the expositive move to the upside. yesterday on that pop, up several dollars. i decided to take some off. i jumped in later in the day into delta and ual on the long side because they sart started to pull back. i think the airlines people don't understand how much leverage they've got. with lack of competition i think there's a lot of upside. >> joe, tempted to do anything? >> added pxd today. it's been lousy this year. down almost 8%. i like it longer term. that's what we're playing for here. i think we're battling with simon minute by minute for last place. >> steph, you've got a big week coming up. you've got citi as part of your playbook. you've got earnings right ahead of us. the banks are going to kick i off. >> we're overweight in a big way on the financials in the
portfolio as well. so i think the quarter is going to be good. i think that you're going to see a little bit better capital markets, a little bit better m&a on banking. i think the guidance should be okay. if you get a steeper yield curve from the economy continues to mull along here, i think these companies can become more profitable. i like the financials on weakness. i'll be buying today. >> what's hurting some of the portfolio, joe and i specifically, is apple and the lack of anything out of apple so far. so when you look across you see what's doing well, what's not, everybody seems to have a strong winner. no, i'm not -- i'm not looking for sympathy. it's amazing how poorly that's trading right now. i think a lot of weak hands that chased it at the end of the year, because they chased it late, are starting to get shaken out and that's the pressure on the stock. >> and trying to understand why apple is underperforming and looking at it going through the research, you look at these performance of the emerging markets and you think about when apple talks about where the growth company opportunities are, it's in the emerging
markets. emerging markets underperform, apple seems to underperform. >> you like the set up going into the quarter, right? they just do what we think they're going to do, the stock can ease by pop back. >> you can track the traders and their performance by going to cnbc.com/2014-playbook. tweet us using the #playbookplayoffs. i hope nobody has sears in their portfolio because that stock is plunging. dismal outlook. joe was ahead of that trade yesterday. >> this is going to be a trend for 2014. i truly believe shorting sears potentially could be as rewarding as shorting jcpenney was a couple years ago. saersz is in big trouble. >> i'm staying with it. i'm sr. surprised the stock is trading where it's trading right now. 3775. i thought the tremendous short interest you have in the name, you see buyers come in and left
this stock. you're not seeing it. i would sell more if they did that. i'm surprised that the stock is trading so weak today. i'm staying with this. like i said, this is a trend. you want me to put a price target on it. i'm looking for 20 bucks for this name. >> for the shorts that were leaning on jcpenney throughout last year, for most of it, anyway, now is that going to switch to sears? >> cube. wasn't the risk in shorting sears that lambert comes in and takes the whole thing private? >> listen. is there that inherent? yes, possibly. but i'm not looking at that in terms of what i'm modeling right now for the decline. i think the decline, mike, has to happen first. i think that lampert -- and let's not make this about lampert because he's a great investor. his stake has diminished. he's turning around. as investors are pulling out he's giving them shares in sears. it's not about lampert. i think there's tremendous frustration that now in 2014,
reality of the problem, decline continues, underinvestment in the company. something has to give. before it does it's going to be motivated by lower price action. >> let's stick with retail trade now. more bad news for target. courtney reagan, what's happening now as if they needed anything else to go wrong. >> just when you thought it couldn't get worse, it has. target says now not only is the state of breach impacting more shoppers, as many as 70 million up from 40 million. the time frame actually has been shifted a little earlier, too. target saying it is possible that even if you did not shop at target during the holidays season but you shopped before thanksgiving that your data could have also been stolen. the data, too, is now a little bit of a wider net. possibly could be in the hands of the wrong folks. p it could also now include your phone number, your mailing address, your e-mail address, in addition to your debit and credit card information. target says the guests will have zero liability for any fraudulent charges that result in this. they're offering a year of credit protection as well as other identification services.
the big question is, what's the impact on the stores? so far, it does matter. target issuing some new guidance this morning for the fourth quarter saying sales were pretty good until they announced the data breach and they did fell off. target is expecting fourth quarter eps nongap for u.s. 120 to 130, down from 150 to 160. fairly significant. they are expecting a negative 2 1/2% for comp sales. they say, look, i'm neutral and staying neutral. so far the stock has shaken off a lot of the stuff. but now it comes into question. how much is target going to have to pay for legal counsel, for updating i.t. systems, how many consumers will say, hey, there have been fraudulent charges and i need you to take care of that for me. does that mean target will not be able to repurchase shares? we need to look at shares of target here. scott? >> courtney, thanks. down on the floor of the new york stock exchange. how do we trade this here?
this is going to wear off? look back at this as, you know, turmoil that was a good buy? steve wise has been buying there. >> trading at 12 times earnings. they had problems before these problems for sure. the stock has hung in well. i've been concerned about it, and walmart, too. i think the action today is interesting. i think i would be taking a look. >> i'm on b the other side. i think with target, legal fees, becky pointed them out. legal fees are going to weigh on this game. 52-week low breaks through. i think there's more downside. >> i think this really lie hi lights something very important which is cyber security. i was going to go there next. >> this year that is the -- i think you're looking at several different areas. but i think obviously the cloud is one of them. i think security is just as big of a factor. you look at a ft. net. why did somebody just the other day buy call spreads on ft. net. they look at this security
stock. this stock has upside. you look at the gen20 calls today. see the size comes in buying there as well. it tells me folks are looking at the security names. >> and they replaced their cfos quickly. that story is interesting to me, too. >> joe, pal to at to. >> yes. finally performing. one performing stock in my portfolio for 2014. i add to it. i like pete's strategy. i like stephanie's strategy. pal quick programming note. becky quick is going to interview target ceo gregg steinhafel coming up on monday exclusively on "squawk." look forward to that and see you on monday for that interview. all right, mcdonald's versus yum. what is the he thinkest stock? terranova versus link. someone is going to have egg all over their face. and later, abercrombie enjoying their best day since november of 2012 of better than expected ol day sales. top analyst who upgraded the
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i'm mcdowell's. >> huh? >> they got the golden arches. mine is the golden arcs. >> that never gets old. it's not mcdonald's versus mcdowell's. it is mcdonald's versus yum though. forget the food, what's the healthier stock now? bull link is our yum bull. 1:30 on the clock. joe, you got the golden arches. >> three come pope nebts of the story. one i know you and i disagree with, that is the ability of the emerging markets to recover. i think yum is too heavily exposed to the china story. i actually like mcdonald's. with their exposure to the u.s., their exposure to europe. i believe in the recovery in europe. secondarily, i think we've already priced in the worst mcdonald's. the analyst meeting they had in
november told that. yum's got a lift already from the acknowledgement that you're going to see same-store sales in china go back to double dinlg jipts. i think people are underestimating the po eshl the for mcdonald's to introduce this new initiative of packaged coffee. i think it's going to be important over the next 18 months. i think it's going to be rolled out and be beneficial. >> both horrible stocks in 132013. i think that the positive operating leverage that yum is better and is more than mcdonald's. i think there's a chance you can see 20% in earnings growth in this year at yum and 11% sales growth at yum and that would be double what mcdonald's is estimated to grow out. that's fixed in china, as you mentioned. the stock, i don't think, is reflecting an improvement yet in china because we haven't really seen it. maybe negative five comp. seen the most recent in china. that's versus negative 40 comp about a year ago. i think that's going to slowly improve. easy comparisons in china. new products.
you've got two quality assurances programs under way. i think the momentum is going to build into 2014. and in addition, margins have been very strong in china. even with all the collapse in the segment. so i think you're going to see 40% operating margins -- operating profits in china. >> i'm taking notes, pete. it seems to me mcdonald's, they can do little right. okay? yum seems to be doing less wrong. at least when it comes to china. numbers are at least not as bad as they were. >> very accurate. >> tough call then. what do you do? >> here's the thing. i like both names. if you're asking me which one has more upside i'm going to go with yum. the reason i say that is i think they've recovered a lot of the losses and the issues they had over in china. you look at the performance. it's reflected in the stock versus mcdonald's. i think they both work. i just think yum has more upside right now. i think 2015 will be the year for mcdonald's to really take off. >> respectfully disagree. packaged coffee. it's going to happen at mcdonald's. >> needs to happen big time.
tell white house you think won that debate. tweet us at cnbc, use the #mcd or the #yum. we're going the give you results at the end of the show. coming up next, time to bet on the teen retailer. upgrading shares of abercrombie and fitch to a buy. the stock is seeing hun gains today but can it last? shopping for retail stocks with an analyst when we come back. tr mortgage didn't start here. it began on her vacation in europe. someone stole her identity and opened some credit cards in her name. checking her experian credit report and score allowed her to better address the issue...and move right in. experian.
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welcome back to the halftime report. we've got three trades to highlight on the heels of the worst jobs report. gold prices higher because of bad jobs numbers means better stimulus numbers for longer, increases the attractiveness in gold. gold miners, newmon, all higher. emerging markets higher for more prospects of cash chasing those investment returns in emerging markets. and then there's the homebuilders. bad jobs data means lower interest rates, lower rates help home affordability. check out lennar, all the
homebuilders higher today as well. back over to you. >> things so much. mike murphy,i said earlier, right, that jobs report that saved the housing trade, working today. >> absolutely. >> and the gdx, you bought the gdx. >> i thought that it was so over sold but using the recent lows right above 20 as a stop level and having a nice move today through 22.30, 22.40, it i think it can get some legs. >> big rally today for shares of abercrombie and fitch. the teen retailer raising its profit forecast for the year after better than expected holiday sales. and those numbers were good enough for one firm to upgrade the stock today to a buy. adrian tenet made the tough call. she's on the phone. >> thanks for having me. >> i think the criticism of these numbers from abercrombie is when you lower the bar so much you can merely walk over the bar, you don't have to jump over it. >> that is how, you know,
earnings that go up, stocks tend to go up because the stocks were already valued for the very, very low, below expect takeses. it causes the stocks to move. >> is there credibility in this story though? i'm wondering what you're hanging on here, right? it seems to be at least a lack of kreshltd in the c suite and a lack of credibility on the rack and the criticism at least for some people that follow this company, i think we've heard it from our own retail reporter, courtney reagan in the past, is they don't need to know what the customers want. >> i think it's a legitimate criticism. one of the things that we've talked about is if you have a premium brand as abercrombie and fitch is, how do you get people to pay full price if you have excessive discounting. that remains to be seen. having aid said that over the next 12 months they had a lot of levers to drive eps. their model is incredibly sent tive. every 100 basis points of up margin expansion is 31 crepts to
the bottom line and 21% share repurchase authorization out there. so there are ways for them to make this. so long as that comp is showing sequential improvement. >> what about the international strategy? that was a big focus point for investors? are they going to have to pull that back now? >> the international strategy continues to be robust for them. they are expanding into the asian market now. and the overall international business still has four wall margins north of 40%. the of domestic margins are in the low single digit range. even as international continues to come into the overall business mix it's mixing the margins up. so it's still net positive. >> how come in five pages of a note unless i'm missing it and forgive me if i am, how come you don't talk about the ceo? >> you know, it wasn't -- it wasn't deliberate, quite
frankly. i think there is a lot of korch tro controversy. >> i agree, to the shock of many. but you know, to the extent that, you know, he still does have this merchandising prowess, he still does have a very keen eye for the brand, having obviously, you know, constructed kind of the abercrombie that it is today. so it still remains to be seen what actually happens there. just because the contract is renewed doesn't necessarily mean we've seen that before, that things don't happen. but i think that if the business fundamentals continue to improve, and remember, these guys put up an upside d on comp and bottom line in the worst holiday season i would say even more promotional than the recession in 2008. it does say the brand still resonates to a certain degree at a price but to a certain degree with its customers. >> we appreciate you very much
coming on to talk about this as we say, tough call today. stocks up. getting talk on the street. thanks so much. have a good weekend. let's trade abercrombie. anybody buying on it? >> i wouldn't. i would fade it if i did own it. it's a tough name. we all know teen retail is a very tough space to be in. i read adrien's nose this morning. great she had the gufr shun to upgrade it. >> i think you want to look at american eagle. even when they disappointed on comp, down 7%, they didn't have to lower numbers below the ploe low end of the range. that speaks to having a really good sense of their business. and their margins are holding up a little bit better on a relative basis. that's the one i would look at. >> another bold call today from rbc capital upgrading blackberry to sector perform. the analyst citing the new analyst's move to move the balance sheet. any trade here? this analyst is apparently --
likes what john chen is doing thus far. >> yeah. >> very young tenure. >> yeah. because you're not finding a lot of bulls on the street when you're talking about blackberry. occasionally you will get the upgrade that i think oftentimes based upon the fact that the stock has sold off significantly over the last year, three years, five years shs seven years. when you look at this name all it's done is go to the downside over the last couple of years. it's gone there in a brutal way. i don't know if you want to waste your time here other than just trading. i don't look at it as a long-term perspective. >> price target gets a bump from $6 to $10. >> it does. >> in a relative move. that's huge. >> it is. i'm with pete on this. i don't know why wow you want to spend your time in this name. if you look at the price action today, the stock popped on this news early. it's trading down near near the lows of the day. if this turns south and goes red on the day you can see increased pressure. up next, the stock seeing
some very strange moves in an energy stock. is it making pete a buyer or a seller? we have the unusual act tufity next. plus, with big bank earnings on deck, what's the best play? our next guest as the etf trade of the weak and it's not the xfl. [ telephone rings ] [ shirley ] edward jones. [ male announcer ] with nearly 7 million investors... oh hey, neill, how are you? [ male announcer ] ...you'd expect us to have a highly skilled call center. kevin, neill holley's on line one. ok, great. [ male announcer ] and we do. it's how edward jones makes sense of investing.
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good afternoon, everybody. coming up on "power lunch", the latest developments on the target data breempes. it keeps getting worse. we're going to talk about what it means for consumers and the company. stocks down yet another day. is it time now to break out your shopping list? we have must have stocks for 2014. plus, the disappointing jobs report p what it means for the economy, who is hiring, where the jobs really are. now back to scott and the halftimers. >> thanks so much. resident stock pete is buying a big energy name after spotting some unusual options activity. pete, what do you say? >> oil service sector hasn't been on our systems as much as many other areas in the energy space. when you look at this name halliburton it stands out. right out of the gate today, scott, when we started to see the buying of the next friday expiring. there are the monthly januarys. when you look at the strike, over 7,000 traded the first 45 minutes of the day. 26 cents were some of the biggest trades. if you're curious in how long,
you've got one week for this to perform. in this particular case i would say you've got a week. normally, if it doubles i'm going to take off half. if it gets cut in half, i'm going to oh we. >> either way you don't plan on sticking around for a long time. >> in the max, a week, and then out. >> joe, give me a quick trade on that one. not only that name but oil services in general. >> it's good to see. again, it goes back to a lot of the emerging market story when you look over the course of a couple of months they have that exposure to the ems. i like the trade obviously. >> the context is oil is at a six-month low. >> but let's separate for a second the price of oil versus energy equities. pete and i were talking before the joe. there's a complete disneconnect. it's completely bifurcated from actual energy equities and the ability to grow earnings. >> several banking giants reporting earnings next week. our next guest says to get into a certain etf ahead of the data.
andrew is the managing director of etf trading. he joins us now from new york. welcome to the show. it's good to have you on for the first time, andrew. >> thank you. >> we're talking about etfs and the financials all the time on this program. it's the xl that comes up. you have another one. >> let's look at aia. the i shares dow jones broker dealer itf. the first distinction is if you want to be in financial services of course xlf is a beast. it trades a lot. very liquid. it does what it's supposed to do. this is an investment services etf. clear distinction. look at the top five holders you can see the difference in that. right? you have goldman sachs and morgan, of course in the xlf as well. then you have schwab. there are a couple of things this year that line up for this to continue to do well. if you look at last year's performance of course, it way out performed xlf. i'm not saying it's going to do
that again. you can see they're not that correlated. >> you don't think that potentially if rates keep going up, now, maybe they both benefit, but if rates keep going up the xlf gets catch-up for what the aia had last year? >> great question. but regardless of whether the rates go up or not, we just came up a year where the spy was up above 30%. xlf as well. a lot of companies focus on trading. if you have more trading, there's more chances to make money. to give you an example. research flows down through the banks. their holders and the aia. then you have a trading system like e-trade. trade goes through e-trade. then you have the exchanges and the custodial bank. i think there's a chance for more volatility this year. if rates go up, that also causes for trading and this etf would stand to benefit more from that, i think. >> andrew, thanks so much. >> you bet. what do you think of this?
>> the one concern i would saynd it's important to point this out, this trades on the volume. 77,000 shares per day. so you have to know that going in, scott. i'll give you an example. the xlf, 36 million shares per day. that just shows you the volume. what that really means is you can get trapped in certain trades, believe it or not, because if the volume is not there it's a roach motel. it's the one thing. i'm not saying that's the case in this name but i'm just saying you have to be careful about the volumes. >> making a nice move there. joe? >> i agree with what pete is saying. the alternative is to go out and do it on your own with the goldman sachs and the morgan stanleys. the creation has to do with the kce, which is a similar type of product, having less volume than what we're talking about here. >> i was just saying in terms of just thinking in terms of a basket, if you wanted to do it on your own instead of doing an etf and you can do a money center, a regional, a credit card, but that's really hard to do. so i would just stay with the
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cook doing everything right. joe, we talked about this at the beginning of the show. stock is not doing much. nothing. >> it's touching the low for the day as we speak right now. listen, i mentioned before, the emerging market growth stories, a necessary component of this. let's wait and see what comes out in earnings here at the end of the month. >> we got to wait a couple weeks before we find out if this trade's going to work, at least in the first half? >> yeah, why not? sure. listen, in my case -- >> what happened to the momentum that picked up in the second half of the year? pete's second half story? >> there was nothing wrong with pete's second half story. it worked fine. where we are right now is still above where we were six months ago. again, i'm looking for 2014 to evolve into an overall bullish trend for apple. i think it will be a great year for them. i'm just not looking for a quick flip on it. >> next, the retail traders asking if tiffany has more room to run. pete? >> there's plenty of room to the upside. steph kept her eye on this trade and has been involved in this name as well. when you look at their sales growth, that's been strong.
they had a monster holiday season. i can even tell you, the lines when i was in hawaii recently, the lines outside the tiffany from folks that were not from the united states were absolutely -- it looked like an apple store. unbelievable. the demand worldwide for tiffany is strong. >> aren't you supposed to be on the beach when you're in hawaii? >> i happened to walk by at night. >> finally, john is asking about the big solid dividend payers. they seem to be doing well. the year hasn't gotten off to a great start. it has a more defensive tone to it. >> absolutely right. i wouldn't go out and buy a name just because of the dividend. if you like a name, buy it and use the dividend as one of your final pieces of the puzzle of why you want to invest but look at names like verizon, at & t, those great dividend payers just haven't performed. i would look, if you're looking for a good dividend, some of the old tech names like cisco, intel, if you want a dividend and potential for growth, look there. >> let's go back to dom with
another stock on the move. >> check out what's happening with tesla. it will upgrade its wall challenger adapters amid report they are overheating. if there are concerns, they will put up a new wall adapter with a thermal fuse to help prevent those kind of things from happening. the tesla shares toward session lows. back to you. >> i don't know how we did it but ten days into 2014, this is the first time we have mentioned tesla. shockingly so. >> it is. this seems to be popping up here and there. i know that the management will dismiss this and say well, all the different auto companies have got their various issues. i think when you look at the number of vehicles that tesla produces and you look at the number of times we've heard stories like this, it is slightly concerning. you can understand why the folks that have been long it would want to be out of this name. i still think there's downside. >> from a trading standpoint it looks like the stock wants to go lower. it will go up for a day or two, then is getting hit hard. i would also stay away from tesla.
>> there it is, down about 3.25% today. >> earnings being reported next week. pete, you first, the most important one on the board is what? >> well, i like the industrial names. obviously the financials but i'm still looking at intel because i think the story for 2014 is all about the recovery of spending in the i.t. space. i think intel is one of these names, i have loved this name for a long time. i think it's finally poised and ready because of their mobile and all the rest. i think this goes higher. >> joe? >> financials clearly. wells fargo, citi, goldman sachs has it on the conviction buy list, you look at all the financials, get a read into what the mortgage banking revenue is all about and how is it exactly they are being affected in terms of trading volumes. it's expected that trading will
improve. financials first and foremost. >> i would agree. jamie dimon starts it off and he is very candid and you always learn a lot. that's very important. i would also look at fastenal, a midwest industrial company that gives you a read on the manufacturing part of the economy which we have been seeing an improvement. of course, g.e. >> i was going to say, any time you get a chance to hear from him on the global economy, that's good. >> fastenal is more u.s. so there's a nuance there. >> what will you be watching? >> watching the banks. we are underweight the financials. i would love to see a pullback there and kind of load up on the financials. also, united health announces, want to see how this obamacare stuff has affected them. we're long united health. i think there's upside. >> before we move, so much positive sentiment on the banks on the left side of my left and murph, no. why the disconnect? what don't you like that everybody else seems to like? >> i'm long bank of america. that's my one holding in the
financials. also for the playoff playbooks, another name i own is new york community bank, nycb because they have a great dividend. i think right now, i don't like the price action in the financials here recently. they have been hitting up against highs and rolling over, names like citi, for instance. i see citi under 50, i'm all over it. >> not so fast, pete najarian and joe terranova, a double dose of fast fires in october. both made a bullish call on green mountain. let's take a listen. >> they've got too much competition. i don't think right now that they can actually combat what they've got from a competition standpoint. they should have incredible margins. this company should be knocking it out of the ballpark. i don't see that happening. >> green mountain coffee, david einhorn has talked about it. he's staying short it. i think that's the right play. market share, pricing pressure, that stock is in trouble to me. >> that hasn't worked out. >> not at all. i don't have a defense -- >> lots of pressure at that point. >> it was. my only defense is we were
talking about the fact that i think it tastes like garbage. hats off to you, garbage coffee, i don't like the machines and i'm sort of surprised that after they've been around for as long and the competition is coming, i'm sort of surprised they haven't been slapped around. >> i'm waiting to sell it. i will sell this short. i said that before. i would not buy it here. the only thing supporting it in the near term is coffee prices. coffee futures up 9% year-to-date. lot of big shorts in the name and as we all know, if the shorts start to get out and this price action could lead to that, you're going to see continued upside. you don't want to be so harsh, though, pete. those are pretty strong words about the coffee. >> that it's garbage? i'm a monster coffee drinker. you know me. >> man's passionate about his coffee. >> it's all right. >> final trades up next.
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packaged coffee is coming. >> i think mcdonald's will do fine. >> they thought your argument was a lot of bull. final trades. stephanie, kick us off. >> johnson controls. >> love the pharma names. bristol myer. >> old tech. buy cisco. >> see you monday. "power lunch" starts now. lace them up. "halftime" is over. the second half of the trading day starts now. >> indeed it does. scott, thank you very much. the december jobs report, not sure what this person is doing, but there are a lot fewer of them doing it than we expected. 74,000 jobs created. that's just a third of the average over the past four months. our attention will zero in on the participation rate. 62.8% of the potential work force is either on the job or looking for one. that is a 35 year low and troubling to many. one key fed governor says taper, schmaper. we need more stimulus. forg t