tv Fast Money Halftime Report CNBC March 13, 2014 12:00pm-1:01pm EDT
sickest feeling in his life? bottom line, who hasn't had their phone crash. not good for samsung, at least he maybe got his data back? i don't know. >> sounds like it. he says they will be doing new and innovative things it sounds like. they've been giving it back to him. >> of course he's going to say he got his data back. >> let's get to wapner and the halftime who is going to talk more about basketball in the hour. >> carl, you guys had faber on and maybe that interview has had a little bit of an impact in the market today in that you've got this sell-off now, what started as an up day. did you notice bond yields as well? they've been pushed lower in the last hour as well. >> yeah. europe did close down close to the lows and i think the dow's 50-day is 16161. not that much farther to go. >> we're going to follow that. you guys have a great rest of the day. here's today's game plan. breakout. why the u.s. market is about to do just that. the top street strategist who is make that call is with us live. fuel froth, as plug power
surges on earnings. we ask the traders at the stock and others like it are about to short circuit or hit the gas. herbalife with the company now dealing with the ftc investigation. outspoken investor robert chapman is here live on what the play is now. let's meet today's starting lineup. jon and pete are here with murph and josh, kenny is on the floor of the new york stock exchange. steve suttmeier is technical strategist at bank of america, merrill lynch, global research. pete, i'm going to begin with you. in the battle between breakout and breakdown, there are many signs as we are battling over valuation, whether the bull is raging or aging. you've got better retail today. what's the story? >> i still think it's a little bit of both. it's both raging and aging. i think there's still a breakout to the upside. the reason i say that is when you look at the financials, broadly, you don't really see valuations that are extremely stretched. i look at the energy space as well. yesterday the refiners had an explosive move to the upside and yet i think there's still plenty of moves to the upside yet for
energy. then you look at the chips. we've talked about this as well. you look at some of the semiconductors. when you look at qualcomm and intel and the various names, they all still trade within a very, very low valuation. is there room to the upside? yes. i think any pull backs or opportunities. >> josh, the bulls are going to point out, hey, if you get a pull back in some of the high flier names or some of the out performers, look only to the financials for the stocks that are going to pick up the slack. they're leading this month. >> i think it makes sense. financials are a pretty big slug of the s&p. but techs are bigger. and i think psychologically techs are more important. the nasdaq is certainly taken the steering wheel recently. i think it's important to point out that there has always been a segment of the market that's been frothy even during bear markets, number one. we could always point to something that looks absurd. if today it's fuel cell stock, so be it. number one. number two, at the end of the day there is no one stock that's the leadership stock. we used to think that about
apple and apple fell apart and the market kept going. >> i hear you. there are some stocks out there that seem to be emblematic of the froth that exists. >> but they're tiny. >> scott, they are tiny. they're not even mid caps. we're talking about $8 stocks that have gone to $13. irrelevant. nobody owns them. >> tesla is not an $8 stock going to $13, josh. >> tesla is one example of a large stock. >> bioteches that have gone a long ways as well. that's the point we're trying to make here. there are select pockets of this market that are no doubt stretched. >> there always are. >> doc? >> i believe and i think most of the viewers would agree that the decision about crimea is pretty much made already. none the less, we do have that election, that referendum, if you will, this weekend. and i think it's telling, as pete said, because we're not seeing volatility blow up ahead of this, judge.
yeah, europe closed near the lows of the day. down half a percent. i meerngs these aren't bing moves. and our market is not making big moves. i expected a little more fear into something like this because of what the president said he would do, because of what the european claims and nato claims that they will do. >> let's do this. marc faber was on as i referenced with carl. he was on "squawk on the street." he sounds pretty negative. let's listen to him. >> when doesn't he? >> all right. >> these type of bull markets without the correction usually lead to more than just the correction. they lead to usually a decline of 30%, 40% as happened after march 2000, as happened after october 2007. so i will be very careful here. >> is careful the way to go? you see the market turn around today, go negative. you see bond yields get pushed down as money goes into drae
sureries? >> listen, all the arguments are valid. but like jon said, we're not really crashing. we're down half a percent. this is not a sell-off that anyone needs to get worried about, right? a sell-off is if we get through the 50-day and you pick up steam and you keep going. >> yet. >> that's right, yet, but the sense is every time we go low there's plenty of demand, right? there's no panic here today. plenty of buyers around. picking this for short. but listen, i think the point is, this weekend there's a lot going on in crimea. tomorrow though i think the market is giving it a little bit of a rest until tomorrow when kerry meets with his counterpart there in london. we get more news coming out of there. industrial production in china was no good last night. retail sales missed the mark. china was up 1% because they're expecting to stimulate and our markets are not reacting and this china story has been the story for the last three months. china, china, china. our market continues to go higher. >> i have steve suttmeier with us. steve, what do you make of the faber comment? what do you make of the comments you've heard around the desk
today? >> very interesting comments. i don't see any major divergence in this market. the client does appear or fairly corrective. this rally occurred with confirmation from market breadth. look at the index, that rally concerned with confirmation. to me i think the s&p backs and fills. it's really more jittery than topee. i think that's the take away. if you look at the support level, prior resistant at $18.50. spike low. right around $18.34. shongs the s&p holds that left, we're fine. we can trend up toward the 1890 to 1900s. as far as the sector stuff that were mentioned earlier, semiconductors look fantastic. huge bases across the board in many semiconductor names, those are emerging from trading ranges. that's a bullish sign. refiners were mentioned earlier. we put a note today out for refiners. refiners look fantastic.
energy, not so much. the bigger picture for energy doesn't look that great for a relative basis. within energy, refiners look strong. >> i agree with you exactly on this level of the 1850 level being key support for the s&p. but i'm just -- today's action i'm not very pleased with, to be honest with you. i'm bullish on the market overall. as we sit rear here right now at 1858, i'm concerned. if we take that 1850 level out with a lot of kind of complacency on the market, i think this could -- not saying it's going to but it could start to heat up to the downside. >> right. if you look at what happened today and draw a short term down term lines a week ago the market stalled into that. we're still in this little corrective period. but i mean, you're right. if there's some complacency and market accelerates on the downside, that's where 1834 becomes important. when you break out you have to pick your spot where you're wrong. 1850 may not necessarily be the
end all and be all level. that's the most idealistic place to hold. 1834 is more important because that's where the fear was elevated a couple monday's ago with the russian/crimea tension. i think the whole zone is important. >> steve, i talked about the breakout and i don't know whether it's appropriate to call it a breakout yet in the financials, frankly. they they got started going last week. best performing sector this month now, is that the place to hang your hat in this bull run? >> well, put it this way. put out a note talking about financials last week. tactically bullish. why did we do that? financials were underperforming and then they went down and tested a relative price low versus the s&p from last november. bounced off of that. so tackically we're quite bullish on financials, especially the banks. the banks, for instance, when you look at the s&p 500, level two bank irch decks, not a lot
of people look at, it broke out. volume confirmed the breakout. and a lot of those bank stocks look solid. for me, i'm more tactically pullish on financials. if it becomes bigger further out in time i'll go with it. right now tactically bullish financials, relative low from november of last year, for the s&p 500 versus -- s&p 500 financials versus the s&p 500, continues to hold. >> all right. >> i'll stay there. >> josh brown, last word in this discussion. button it all up. >> in your note at the end of february what i thought was f fascinating, it's not just the s&p. you looked at basically the msci all country world index and you looked at that versus the advance/decline globally and you saw strength coming from almost everywhere with a large number of issues participating. could you just speak to that briefly? >> sure. i like looking at that. one reason why there's a lot more investors out there
starting to use the aqki as their benchmark. second reason, it is a very broad based -- >> it's the all country world index, right? >> correct. all country world index. >> i want people to know what i'm talking about. never heard acwi on this show before. >> acwi, i use the one that includes emerging markets by the way. even includes emerging markets, the advance/decline line for the acwi did break out and confirm that last rally. if you just looked at develop, chances is the ad line would be stronger. emerging market index, for instance, this whole little rally that wave see've seen in occurred. even with that -- for the esci, the acwi was strong. meaning to me you have a confirmed rally not only in the u.s. but also for the world.
>> steve, i'll make that the last word. thanks to steve suttmeier, kenny on the floor. market flash now with dominic chu. >> watching shares of movie studio lyons gate. it's going to pay $7.5 million to settle s.e.c. charges it didn't accurately disclose to investors a key aspect of the hostile takeover bid. the s.e.c. says lions gate held information that didn't allow them to maik crucial decisions. it will pay $7.5 million and admit wrong doing. coming up, we heard from outspoken herbalife investor robert chapman in july. >> making money in a stock is a lot of fun. making money when bill ackman is losing money is like a ride in the circus. >> he's back, after the break to tell us what he has to say now about mr. ackman and herbalife. and look around, chans you're living next to the next
millionaire, or that you are one. greater than ever. is this a tradable trend? that and much more is straight ahead. [ bagpipes play ] make it happen with fidelity active trader pro. it's one more innovative reason serious investors are choosing fidelity. call or click to open your fidelity account today.
more. he's the managing member of chapman capital. he joins me on the phone live. bob, welcome back to the show. >> thank you, scott. >> so what's your reaction here that we've come such a long way now and now we have an ftc investigation? >> the investigation needs to be looked at in the framework of what the mandate is at the consumer protection bureau at the ftc. that mandate essentially is protect consumers against unlawfully unfair or deceptive acts or practices. and unfair is defined as something that would cause or is likely to cause a substantial injury to consumers which is not reasonably avoidable by those consumers and is not outweighed by the counter veiling benefits to the consumers. so in order for this to actually escalate to an enforcement action the ftc is going to have to determine that this is not reasonably avoidable by the consumer and given the company's policy for distributors of allowing the return of product purchased in the 12 months after they sign up, it's going to be
very difficult to prove that. >> right. just give me your reaction broadly. i was reporting yesterday based on obviously my sources that herbalife was surprised, if not blind sided, that this happened. what about you? you've lad a long history history and association with this time. >> i was surprised as well. i will say that the 15 months that passed since ackman made his first presentation in september put me into a position where i felt they probably were going to get through with an informal inquiry and not t go formal. what i underestimated how cheaply consumer activist groups and politicians could probably be bought. i'm referring specifically to senator markee. that action that took place in january was, i believe, the pivotal move that got the ftc to move into a cid status. >> how much stock do you own? >> my exposure is based on the percentage of the portfolio at this point, 28% of my portfolio.
it's done through derivatives mostly. the nominal amount is an enormous amount but the dollar amount is much lower. >> and you say you're looking to buy more. you're getting an opportunity today, i guess, with the stock's pullback. have you done that just yet and when would you? >> i did. i actually added to my position today in the 58s. a little bit in the 57s. and before that i had actually initiated my position in the low 60s. so i've been in and out of the position for the last 15 months. i essentially have a rule that i only want to own it when there's substantial fear in the stock. between the china situation and the marky later and ftc and cid, you the face the fears and get back? >> do you know of other so-called big investors who are trying to nibble here and who still believe in this story? >> i do, actually. i wouldn't want to disclose that just out of confidentiality. i wouldn't be surprised if others are thinking the same way i am.
>> when you were -- to say you were critical of ackman the last time you were on would be an understatement. you know what i'm taking about. you called him sank a moan use. making money when bill ackman is on the other side is like a ride in the circus. i wonder what you think now. he probably feels somewhat vindicated, though i can't say for sure, but what are your thoughts now given where we are? >> definitely i'm on other side of the circus wheel in the last couple of days. pretty normal in these investments to have this kind of volatility. i've invested ins a boasts to, tobacco, huge investment on the bp oil spill where they showed it gushing out into the gulf live. it's not normal to go straight up or down in any of these highly emotional stocks. so the movement from 83 down to 58 and change to me is somewhat normal. it's not something i would expect to happen as quickly as
it did in january and february and now march, but it's normal. so it takes a stomach that's made of steel and iron to deal with these things. and obviously ackman has the strongest stomach out there and mine is pretty strong as well. >> what do you think is going to happen, bob? my last question, then i've got to go. what do you think all mautly happens here? >> i can answer that rather confidently. what will happen here is herbalife will not be shut down. there will be a clamp down. on the clamp down will result in tighter compliance requirements for the entire industry. there will be a change from the 2004 guidance level to a 2015 letter. it will all happen probably in the next year. in that time the company will shrink the shares outstanding dramatically. what you're going toward here is a company that probably will trade between 2 and $300 a share if it stays public in the next five to seven years. >> you think ultimately it doesn't stay public though from what i gather. >> i think it stays public as
long as icahn don't want to join with somebody else and make a bid for the company that the board will accept. if it stays public, i think going private at $50 per share a year ago would have been actually great for persian square. now instead it's eight points higher. >> bob, it's good to have you on the show. looks like herbalife shares are moving a bit, perhaps on your word that you bought more stock today and that you continue to believe in the story. bob chapman, thanks so much. >> thank you. sticking with herbalife and the trade, jon, you spotted some unusual activity before the news. >> we've had it several times. >> before the ftc news. >> ahead of marky's massachusetts senator, of course, back in january 23 when he said, hey, we've got to do something about this, and prompted, of course, by mr. ackm ackman, just ahead of that there was massive put buying and the stock made a significant correction. yesterday of course the day after mr. ackman's presentation where he laid out his alleged
smoking gun case that day, by the way, that he laid out that smoking gun case, 12,000 puts traded. yesterday pryor to the halt, 22,000 puts traded. this is more than three times the average daily volume of the past week. and that was just ahead of the trading halt. overall, 100,000 puts traded yesterday. this wreaks to high haven that somebody thought this action by the ftc of this investigation, civil investigation, was leaked. >> maybe the biggest surprise of all yesterday was the action of the stock. >> yeah. >> i for one didn't think it was going to close at 60 bucks. i can tell you that. >> yeah. >> 68 just ahead of the halt, right? >> and there was support that came in there though. when they originally opened the stock $55. some people were in there buying the stock. very interesting situation to see how this plays out. but you know for certain there are big players on both sides. >> it makes sense the way bob is playing this though and i think
that's important as well because the capital is far less than if he's actually going out there the way ackman is doing that through the stock in a lot of ways. a lot of capital being tied up in that way. coming up, amazon increasing the price of a prime membership. but will people pay it and is that enough to boost the bottom line? then your chances of picking a perfect bracket for the ncaa tournament are 1 in 19.2 qui quintillion. the buffett thing. we're going the get pointers from dallas mavs keach, rick carlis carlisle. he led his college team to the final four and he played under rick pitino. i think he's only one of 11 guys who has one the nba title as a player and coach as well. look at the stocks that hit all-time highs today. more "half" is straight ahead. d. with all the opinions about stocks out there,
how do you know which ones to follow? the equity summary score consolidates the ratings of up to 10 independent research providers into a single score that's weighted based on how accurate they've been in the past. i'm howard spielberg of fidelity investments. the equity summary score is one more innovative reason serious investors are choosing fidelity. call or click to open your fidelity account today. no two people have the same financial goals. pnc investments works with you to understand yours and helps plan for your retirement. talk to a pnc investments financial advisor today. ♪
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declines today. that is the lows of the day. there is the s&p 500 at 1857. a loss of a bit more than one half of 1%. maybe some of it due to marc faber on "squawk on the street." within the last hour, said to be very careful in the market, that he could foresee a pull back in his words of some 30% to 40% given the fact that we haven't had a meaningful correction in some time. so we're watching that story. tough week for crude as well. global concerns and rising inventories are sending oil down 4%. for more, let's go to futures now host jackie deangeles. >> crude trading around one-month low at this point. jim, i want to get your take on what is happening in the pits here when we look at the crude trade is this all about the rising inventories yesterday and over the last few weeks? >> no, i don't think it is. i think if you look at crude and copper, both hit hard in the last two weeks. i think it's a question of emerging markets. i think that's priced in at this point in time. as are the inventory numbers.
we've seen a little bit of a pop today. after a $7 break in two weeks' time i wouldn't be a seller of it. i would be more inclined to buy it if these rumblings from the ukraine turn into concrete stories going forward. i think it's a buy here. >> jeff, i want to get your take on this because we got news yesterday of a 5 million barrel test sale from this spr, strategic petroleum reserve. what could that do to the market? >> well, jackie, it could push prices lower. although the administration is stating this is a routine test, and a planned test, a lot of folks and traders here in chicago are suspect of that call because what is it? it's a political jab towards russia. it just happens to be that the 5 million barrels are sour crude, more appropriate for the refiners in the gulf coast but that's what we import for russia. this political tension is on the rise. we have to see what moving forward the prices look like. they could go down to $93 a barrel in the light crude wti. >> we will watch closely.
meantime, for more on crude, check out the live show futuresnow@cnbc. we're going to be talking to art cashin of the show. he's going to tell us what worries him about this market. >> always good to hear from art. you can catch that on cnbc.com in half hour. still ahead, yesterday mike murphy and pete najarian battled over biotech. today it is round two. up next, find out what stock these guys can't agree on now. ♪ [ cows moo ] [ sizzling ] more rain... [ thunder rumbles ]
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what a shocker in europe earlier today when we learned that ireland actually contracted in the fourth quarter 2 3/4%. that dismal reading is why so many investors are still pouring into fixed income, into sovereign debt in europe. again you see, for example, the yo irish yields moving down. bond higher as ireland returned to the debt market. italy, the yield is falling away there. there is optimism at the new administration as well. a lot of italian blue chips are higher in a sea of red you saw just now. there is a big problem in the supermarket sector in the united kingdom. a huge price war that today morrison's announced -- this is one of the big four, it's going to have half the operating profit that it had this time last year. watch for that in this country potentially in belgium. they have problems of its own. one bright spot today and a very interesting trade continues to be the european airlines. they are going to triple the
operating profit in two years. lufthansa stock on two years is up 83 brs. if you looked at ual here, stock, a 35% over-performance on ual. the question is will these guys catch up and is there now more money to be made on the european plays? back to you. >> simon hobbs, thanks so much for that. guys? josh brown, give me a comment here. continued concern about ukraine. we mentioned yesterday and threw the question out as to whether we're paying enough attention to china. those two issue clearly more than anything that marc faber would say are having more impact on the market here. >> with all due respect to mr. faber i don't think he moves the s&p. i think you're right when you mention china. and i think you can actually pinpoint the weaker economic report that we got the first week of march. now he starts to see this pattern where markets open reasonably strong and then sell off. we've been fading late in the day. that's not a pattern that people like to see.
the european stuff can be tied to that as well. i really think that, you know, this notion that china is going to grow at 7%, that's a given, is being rethought all over the world. that has consequences for every market and the munlt approximately more importantly that people are willing to pay. does it have a huge impact on the fundamentals of european equities or european stock or u.s. stocks? no. but again, this is about sentiment and sentiment gets a little bit sour when people start to question is china really 6 1/2, is china really 6 this year. that's what's going on. >> that's why, guys, it surprises me that i think the majority of the table, if not everyone, is bullish. unwaveringly bullish. >> you need to be but cautiously bullish. >> why do you need to be? >> because the market followed a trend on the market for the last two years. any dip in the market, scott, should have been bought. if it was bought you profit i'd from that. we hit 1834 on the last time we had major concerns over the ukraine and china.
1850 you can mark against 1834, you can mark against. but i would argue u.s. fundamentals are improving as this data comes out from overseas. i want to be long this market if it holds its key levels. >> vix about 330,000 calls have traded to just 80,000 puts today, judge. obviously as the vix goes up that's because people are either fearful or looking to protect. and i think that, as i said at the top of the show, is what we expect into this referendum in crimea. >> pay attention as well for ref the program to the ten year. earlier today it was at 274. it's at 266 right now. that's a sizable move for a half of a session. keep an eye on that. look at the drop in yields. as our market drops you have people going into fixed income. buying treasuries. you've got the yields falling. safe haven, fear, whatever it is, that seems to be developing at 1230 here is certainly showing up on the street. new developments today on general motors faulty ignition
switch recall. cnbc's phil lebeau has the very latest on what's another headache for this company on the coo, phil. >> more headlines today, scott. some coming from capitol hill where the transportation secretary anthony foxx was before a senate committee talking about budget issues. but one of the first questions asked was about whether or not general motors vehicles in this investigation is it safe for people to be driving these vehicles and what went wrong with the investigation. we caught up with him after the hearing and we asked him that very specific question, is it safe to drive gm vehicles right now. here's what he had to say. >> i'm encouraging folks to follow the request of gm at this point. i think that's the smartest thing for folks to do. and folks should be safe if they follow what gm has told them to do. >> the other development is the new timeline out from general motors in terms of what happened when they knew about it and now what the federal government knows when gm knew about it. according to general motors, remember when they first announced this recall, guys,
they said they didn't notice any problems until 2004. these were 2003-2007 models. well, now, general motors after filing new information late last night it said that the first indication of a stall happened in 2001. then in 2003 there was a dealer technician who observed a stall. changed out the ignition switch. these developments along with the continuing questions that are out there regarding the handling of this recall explains why shares of general motors once again under pressure. we're seeing this stock potentially dropping below $34 for the first time since last october. scott, back to you. >> phil, thanks. exactly why we want to debate this stock. what does this mean for shareholders? pete najarian takes the bull case. mike murphy is the bear. 90 seconds, pete, make your bull case. >> i've been battling everybody on this being the bear. all this time until now. and i think you're just waiting for a catalyst that would push you not downside. unfortunately the catalyst now is this investigation. but this is literally over the
last couple of trading sessions. now push the stock down 10%. so we're finally getting an opportunity i think to take a look at this. was this under the president ceo? no. is she doing absolutely everything that needs to be done and making this priority one? absolutely. she's addressing this. she's in front of it. she's got her top lieutenants on it. going bag to what happens at gm in their production, look at how well they're doing in the china and the jc going over over there and the growth they've got. look at the cadillac sales. again. in february, during all of this terrible weather that we've talked about time and time again -- >> can i get a minute here? >> -- sales are only off 1%. >> if you look at european numbers though, pete, europe last quarter missed. gm isn't doing as well overseas as they could be. but you need to focus right here in the u.s. this probe is huge and it could be getting bigger. gm, great company, great long-term story. but there's no reason to jump in here and grab a falling knife right now while we still don't know where the story ends. if you want to buy, own an auto,
buy ford on this because people are going to go out and be effected when they're in the store whether they're going to buy a gm or a ford. they're going to lock at a ford. right now there's no need to be a hero on this. let the dust settle before you buy gm. >> ford does not have the growth i'm talking about. specifically, 255,000 automobiles in china. they don't come close to those numbers. because of that i think gm wins. >> if gm's u.s. numbers drop precipitously the stock is going to go lower. >> i don't know if they're going to see everything suddenly fall off the cliff. >> josh brown, who made the more compelling argument? >> sorry, pete. murph's right. the stock technically is broken. you will be able to buy it at 30, the next level of support if you want it. ford is the better buy. and just to refute something pete said. we already know gm is killing it in china. ford is first starting to. gm has had a decade head start. if you want to play asian growth you're going to get that this from f, not from gm.
>> tweet us at cnbc fast money. >> disagree. >> use either the #bull or #bear. pete is not going quietly on this one. >> no. >> we'll have the results at the end of the show. a number of american millionaires just hit a record hi. and if you're not one of them, but you want to be rich, don't worry, there could be a way for you to make money off the trend. we're naming names for your millionaire portfolio. take a look at the major averages right now as well. we are at the lows of the day as this sell-off gets a bit worse within the last 15 minutes. dow down 150, almost 1%. s&p closing in on some technical levels that some guests have cited today as ones to watch. 1852 is where we currently stand right now. tech and energy are leading us lower. are you still sleeping? just wanted to check and make sure that we were on schedule.
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amazon prime pay for themselves? we'll tell you the best three retail clubs to join and three to avoid. it's considered the most powerful address in the world. the biggest names in business live there. the inside story of 15 central park west, the author of the new book joins us for some seriously juicy gossip. you don't want to miss this. scott, back to you. >> okay. thanks so much. guys want to get dom right now? you're there, right? >> i'm here. >> what do you make of what's going on here? it's the stock story is one thing, the bond/yield story is another thing that needs to be watched closely because it's been a dramatic intraday turn. >> it has been. and it's very interesting how it turns so quickly like you said. the reasons abound. traders we're speaking to say it's everything from the china concerns to just this idea we came close to this record. we've been hitting this resistance level as we hovered around the records for the s&p. maybe just shy of those records for the dow. but if you put all of that resistance together one of the
old trader adages has been the more and more you bump up against resistance, the more significant it becomes. the same amount of downside for support. as traders start to look at what's developing here in the u.s., certainly turned only -- not only rather to what's happening here on the domestic front but also to what's happening in china as well. corporate bond defaults there. you may have concerns about growth. all of those things perhaps taking their toll. again, not pan nirk sell-off but just a reason to take that risk off the table, scott. >> josh and dom hits at this first domestic bond default a couple days ago. you have rumors out there that banks are cutting loans to certain companies by a decent amount. enough fear starting to develop about what this china slowdown really, really means for our market. >> well, tinge shadow banking sector in china has to contract but the only way it can responsibly do that is if the government is going to pick up the slack and encourage the banks to make loans to non-government entities, which
they are basically refused to do. that's why you have all of this lending and all of these wealth management products if constructionist view is to say, okay, huge misprice in the risk in china. maybe if they allow a few of these things to default, people get religion and start making all of these ridiculous loans backed by copper wire and coal mines and what have you. so i'm not saying it's going to be a pretty process. but it's probably better for it to deflate in slow motion and have the government watching over how it deflates than to have it get bigger and then really get out of control. >> guys, copper has been in a free-fall. iron ore has been hurt. we've been watching oil. soybeans are getting hit as a result of what's happening in china. >> scott, i think one thing you have to -- >> can't ignore it. >> you can't ignore it but we're 2% off our highs. 2%. until something -- i think you need a lot more -- murph, my goal here is not to alert people to a problem when we're 10 % off the highs. it's to call attention to the
problem before it happens. >> attention, agreed. i'm just simply saying i don't believe the market's about to roll over. there's nothing out there to tell me the market is about to roll over. calling tops, very tough thing to do. >> i agree. i think what we've seen here from what's happened, judge, with investments in copper and things we've talked about the leverage over and over again for that. and yet you don't concentrate on the folks actually benefit from copper prices coming down so significantly. homebuilders, auto parts, for instance, a lot of airline parts, loaded with copper. a lot of those big inbuts for all of those companies coming down is positive for those three groups in particular. >> murph, you've been taking advantage of some of the pullbacks here, right? you told us yesterday you bought freeport on the pull back. you see opportunity. >> absolutely. right now, just to be clear, you know, this could turn and it could get negative but right now i don't see it as that. i see the china news giving yun
opportunity in certain names like the homebuilders we talked about and doc just touched on it. pete and i debated on dr horton when it was 23 and change. stocks pulled back now. and remember, in the last few months whenever yields dropped as you've pointed out they're doing today, that's been a positive for the homebuilders. that's an area, if you believe this is a temporary pullback, that's an area you should be looking at. >> pete? >> look at these opportunities. i agree with you. homebuilders would be one of those. we talked about it yesterday. we said, is it concerning the copper dropped underneath $3? it's concerning but it just dropped under $3 and still trading around that $3 level. is it something you've got to keep an eye on, down 2%. you don't have to wait for it to be down 10% in the market but keep an eye on the trigger points that would get you a little bit more bearish on the market. >> something we're keeping an eye especially closely on, as i've mentioned, bond yields. rick santelli in chicago watches them closer than anybody. rick, this has been a dramatic turn today, and it seems to me to be pretty swift, pretty severe in half of a session.
>> absolutely. i'll tell you what, judge, the big story i've been speaking of for most of of 2014 is if you want to know what bonds and interest rates are going to do, think about there is no alternative the stocks. when stocks look dicey look for yields to move lower. today is an exception. after extensive calls to people all over the globe that trade fixed income in a variety of areas, including treasuries, here's what i've come up with. about 70% to 75% of the drop in yields after the retail sales data, they believe was crimea and they believe the remaining 30% is due to china, and that many, including myself, watch it second by second, this move was actually led by the interest rate sector with rates moving lower, unlike much of the move that we had in january which was completely led by the equity markets. >> rick, your know, 274, i think is where this day started, or thereabouts in the ten-year. and you know, you've pushed down
as low as 265, i believe today, or right about that. >> that's right. yeah. and i tell you, the 74-75 area, that we can understand. right around 2 3/4 is just a significant technical area. but to me, significant technical area. to me moving under 270s. yields closed between 271 and 276 in february. slice through that like a hot knife through butter really let's you know there's more to the story than the normal fundamentals of the fixed income market or the relationship with the equity market. it really is, as i said, mostly geopolitical, but also a healthy dosage of anxiety regarding china. >> good stuff, rick. thanks for running to the camera for us. appreciate it. rick san tell any chicago. coming up, how should you play one of the biggest ipos in history. alibaba, one of the traders think he has the winning strategy. using it trader of the year, up
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aliba alibaba. 95% it will bring its ipo to new york. soft bank one of our playbook stocks but one of the worst performers year date, and josh, it's in your portfolio. >> yep. >> what's the bull case here? is it all resting on ali babob . >> be in the stocks for the coming year unless you trade out of one. think of wurn with a back half catalyst and this was the play. so i'm not necessarily surprised it's down 13% year to date, because it's really been trading in sympathy with the nikkei, but i want you to think about softbank, beyond japan. think tab as combination of verizon and berkshire hathaway. one of the largest mobile carriers in japan, also has an 80% stake in sprint here in the states, which is something really interesting might happen with, either a turnaround or a transaction of some sort. it's also got 34% of renren, a big social network in china and
37% in ali baba, bigger than amazon. could be a $150 billion ipo. almost double the amount of yahoo! but not tied to a slow growth, boring business. i think there's a lot that could work out well here, and i did long the stock and intend to stick with it. wish i could buy it twice. >> can you call it a millionaire boom? robert frank joins us now with a high net worth report. a lot of millionaires and stock market's gone up. >> we have an all-time record for the number of millionaires in america according to spectrum group. the u.s. added 640,000 millionaire households last year. these are households with net worths of $1 million or more, not including the primary residence. we have more than 9.5 million households, this is the first time we have topped that 2007 peak, 9.2 million before the crisis. the number of households, at 5 million or more, hit a record to 1.2 million. those were 25 million or more,
talking real wealth. that's now at 132,000 dollars, highlighting growing inequality and offers investment opportunities. my question to you guys, if this is something structural, at the top of the economy. this is where the money is moving, how do you trade it, how do you make money from it? >> i can hear what, tiffany? companies like that? >> tiffany, lgmh, ways as listed. many of the things we'd like to buy, graph, for instance, the higher end, than tiffany, i can't. >> just go out and buy shatter to pop. >> buy wine futures. >> hold it. >> cars and the other stuff. a direct correlation with the stock market i assume. >> absolutely. direct correlation. more corollated than ever. you know, my advice, people are e-mailing me, couldn't we just buy stuff wealthy people want to own? that's the way to invest. >> robert, thanks. coming up on the "half" final trades and the winner of the debated and more on a sell-off, that's straight ahead.
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you know what they say about baik? sorry. murph won the debate. final trade, josh? final trade? >> softbank. buy. >> pete? >> merck. >> murph. >> ingersoll. >> mcr. >> "power" starts right now. scott and team, thank you very much. the market's taking a beating you see there. the dow jones industrial down about 1%, even nasdaq more than 1% and the s&p about 9/10 of 1% lower. a wave of fear. is it coming from china? new numbers and fresh reporting about the economic situation over there. steve liesman and michelle caruso-cabrera analyzing everything from shipping data to copper for insight on what's really happening behind the great wall, and the transmission mechanism into the global economy. first, though, checking in with sue at the nyse. >> it's a down day. triple digit decline in the dow ne