tv Fast Money Halftime Report CNBC August 18, 2014 12:00pm-1:01pm EDT
if others can latch on. >> jon fortt, thank you for letting me ride along. ben willis, appreciate your perspective on the markets. on a strong session. that does it for us here on "squawk alley." as we hit noontime on the east coast with the dow up 160 points, we'll hand it over to "fast money halftime report." scott? >> kelly thanks so much. big day on the street today. welcome to "the halftime show." let's meet today's starting lineup. joe terranova, stephanie link runs jim cramer's charitable trust. jim is the president of asset manager. pete najarian and managing director of douglas c. lane and has $3.9 billion under management. great to have you all with us. we begin with the markets. stocks are surging today as at least for the moment, tensions in ukraine appear to have cooled slightly. still the global markets remain volatile and capable of moving on headline from a number of different flash points around the world. how should we be feeling about a marketplace that can be
whipsawed around by a headline from almost anywhere? >> it can. i think geopolitics are playing such an important part today in the short-term market. i think longer term, we are still bullish on this market and i think we end the year higher and you'll get opportunities along the way to get good companies and invest in good companies. >> that sounds like you're saying ignore the noise. >> i am. >> buy what you like and ignore the noise. >> and pick your spots because days like this, you don't really want to pick the companies you want to go into. but two weeks ago it was down 4% or 5% and some of the good stocks were down even 10%. that's when you put more capital to work. >> steph, you guys are putting more capital to work, didn't you? >> we raised cash ahead of earnings. >> you talked about having powder dry ready for action. >> i'm encouraged that we've seen lower commodity costs, earnings were quite good at 9%, 10% bottom line, 4.5% top line. i think you have to look for opportunities like on friday to be buying. it didn't make a lot of sense why so many stocks had fallen.
i understand the fears. i understand we've rallied a bit. but i think on these pullbacks, we've bought some financial, some tech, some industrials. and we're not doing anything today. but we're enjoying that we actually bought some on friday. >> pete, is that the way to play this market? i mean, you're going to start to have a debate. i can already hear it. of whether the market and not that it hasn't been going on already, mind you. of whether the market's expensive here or not. if there's opportunity knocking or not. >> well, i think there's always opportunity, but you always obviously have to uncover that, scott. we talked about a couple of weeks ago when the market was really getting hit. we looked at some of those airline being sos. look at the rebound. you look at american, united, delta and some of those names. then all of a sudden you look through some of these filings recently and you see something like a mr. tepper who added 3 million shares over the last quarter to his american airlines position and added to united, added to delta. so there are opportunities i think on some of these selloffs to add into some of these names or jump into some of these names. i look across the board. i still have yet to get excited
right now about the financials, steph, but i do think that will be something in the second half we'll start to see but probably not until after september. but i think a few dynamics need to change. but there's always opportunities, scott, every time we have selloffs. but look at the performance still of big-cap tech. look at intel, microsoft, some of these names that a lot of people felt like didn't have anything behind them. hewlett-packard. look at the performance of late. these names continue to move to the upside. >> i'm glad you went there. goldman sachs gets cautious. they downgrade semis. an area you've been saying, you know, look at the semiconductors. they're downgrading them. i'm not suggesting that this report is correct. >> right. >> because you'll point to intel and say wait a minute. this guy's had a sell on intel and intel's been one of the best performing stocks. >> right. and nothing against this particular gentleman, but he's been wrong the whole way up. look at the way they've performed the entire way up. i still look at most of the names in that sector and i still look at them and i look at the valuations, the balance sheets. they're cheap. there's upside, still growth
there. obviously we've got everybody excited about apple. you're talking about the iphone 6. that feeds into this whole story as well, as well as the rest of the competition. so i completely disagree with this call. you know, we always talk about this, scott. which of the analysts do we listen to? in the internet space, it's going to be mark mahaney. across the board there are different people in different sectors that i think are the go-to people. i'm not saying this not doing all this homework, but i'm not sure he's the go-to man. >> joe, your boys are watching this show from courtside. >> they are. >> they're waiting for an intelligent answer here. they want to know what is dad going to tell us to do with our money right now. >> yeah, and what they don't realize is they're not making a lot of money because i've made some mistakes and the mistakes that i've made is being underinvested. so you cite the goldman sachs note. i read the goldman sachs note, and it talks about how components of the semi industry are outperforming gdp by 11%. where? on the industrials side and the
auto side. that's incredibly favorable. i get nervous when i read that. i see the snapback like we're having this morning, okay. the market is much smarter than all the geopolitical concerns. so i think i'm in a large community right now who is underinvested and feeling rather concerned that once again we're accelerating to new highs and i'm not fully on board. >> jim, i've got money coming out focused on u.s. equities. outflows of $26.6 billion in may, june and july. >> well, look. i think what we've got to look to is what happens after labor day. and joe just made this point about being underinvested. anybody who's on the beach and comes back after labor day says oh, my god, i'm behind the index. this happened last year in a big, big way and caused a fourth quarter rally in my opinion. for you, we're not up as high on the s&p 500 right now as we were this time last year. but there still could be people who come back and feel like joe, no insult intended, but they say i've got to get in, catch up with the benchmarks. i think that's going to happen
in the fourth quarter again. now, what to do about it because, you know, doug and others were all talking maybe there's a correction out there. you buy the cheap stuff. buy the value so you don't have to worry about a correction. buy big tech. ibm. pete, you didn't list ibm but you should have. buy energy, buy retail. we're going to talk about target maybe later. there's a great opportunity. >> sirat, back to you. if you were to put money to work in some industrial-type companies, delphi, harman. >> right, i love the auto suppliers. i think to your question, when you look at where the semiconductor sales are, the auto components are going through the roof. and you've still got huge demand not just in the u.s. but globally. so those companies are trading at below market multiples, balance sheets that are improving. they're starting to pay dividends. and at the end of the day, one thing we haven't talked about is commodity costs which look at oil. as oil keeps on coming down, you've got auto sales, airlines. to pete's point, airlines are doing well and oil is below 100 bucks. look where they were when oil was over 100. you've still got the largest expense for airlines coming down.
i think that's an opportunity that you've got to look at. >> one of the bright spots at the banks have been the auto and auto lending. that's one of the things you really did see along with cni growth in their last quarter. you saw a very strong auto loan growth. i think that's definitely a place. >> sarat was talking, i was channeling link. you were talking about auto suppliers, i was hearing stephanie link for months. >> i know. >> on, what, the delphis and the other players? >> i really like leer. and delphi, too. we mentioned a whole bunch of them. and own gm. but i think the suppliers really have the leverage because they have many different customers, right? so you're not just depending on one products cycle. leer has lagged the group. i think like trw is an interesting takeout candidate. i think this one is also an interesting takeout candidate. meantime, they're fixing some of their problem businesses. >> how about steel which continues? pete's talked about it, i've talked about it, steph's talked about it. steph, steel continues to rise. what does that say about the global opportunity? what does that say about
earnings? what does that say about a steel dynamics and u.s. steel? it says you've got to buy them. >> sarat, thanks for coming in. let's hit our trader blitz now. four trades on four stocks making news today. first up, target. announcing plans to keep more than 900 of its stores open later in hopes of drawing more customers. jim, is that going to work? >> i think you're supposed to hold target. i think you're supposed to own it. if you don't own it, buy it. first off, it's trading at 15 times next year's earnings for a company of this quality. and i know people are going to say what quality with the data breach. that was last year's news, folks. at this price, you're supposed to own target. it's got a good dividend yield. and the consumer is picking up. all this talk we're having about autos gives a lot of credibility to that statement. >> all right. steph, a lot of people you know are holding some ge stock somewhere within their investment portfolios. >> yes. and we own it, too. >> credit suisse goes to outperform. talk to me. >> yeah. so yeah, it's been a laggard. it's down 7% year to date. industrials are up 2.5%.
we know what the market is doing to, right? it's just been inconsistent results. so they have to get back more consistent. but i do think this call makes sense because it's been a laggard, you have some catalyst in terms of the september analyst meeting, then a december analyst meeting. they typically raise the dividend in december. it's a catch-up trade. i like it. >> releasing a note saying home depot and lowe's are both names to buy ahead of earnings. the stocks are trading at all-time highs today, but lagging the market along with lowe's. both up only about 2% year to date. so which name is the better bet? >> you're going to make me pick one of these, i imagine, right? >> well, i want the people to pick. logon to cnbc.com/vote to cast your vote. you can vote while joe is making his argument. lowe's, home depot or both? they say both. >> and i don't disagree with the both, but if i have to pick one, i think in the second quarter lowe's is finally going to make that acceleration and it's going to be on stronger numbers from the outdoor business. weather was much improved. i think that's going to benefit.
>> all right. over to dominic chu for a "market flash." >> another couple companies to keep an eye on, valiant pharmaceuticals. first off, the stock falling after the drugmaker said it's going to extend its offer for allergan until december 31st. it had been due to expire last friday at 5:00 p.m. also shares of valiant you can see trading, again, down on the session about 2%. as for allergan, can you see here, allergan shares also here trading down by about a percent on the days to the saga again, scott,en its for allergan and valiant. back to you. >> saga is the appropriate word there, dom, because that doesn't feel like it's going to end any time soon, does it? nope. >> not at all. coming up, janet yellen could rock the bond market when she speaks on friday in jackson hole. we're digging into that space today with blackrock's jim kenan. and will electric cars take over in the next 25 years? phil lebeau has a peek into the future of the auto industry. then, the billionaires and the dollar stores. a new bid and we're breaking down all of the big-name players
involved. and today's worst trade is a movie that bombed at the box office this weekend. could it have been a seller, though, if someone here had a role? that and much more is straight ahead on the "half." 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. [ dog barks ] ♪ [ male announcer ] imagine the cars we drive... being able to see so clearly...
2.8%. we got to 2.3% today. if we can make it down below that breakout level. if that's the case, i do think we're going to 2.20%. >> that was bond king jeffrey gundlach. if that's the case, then how should you play it? let's bring in jim keenan. he received more than $50 billion in assets under management. good to see you again. what do you make of what he just said? >> i caught the tail end of it. the rally in bonds has been for a variety of different reasons. >> let's say if you break below 2.3% and we're in 2.3% and change, right? that you could go down to 2.2%. does that sound below maybe to 2.20%? maybe below that. i don't know. you tell me. >> i think there's a lot of room. certainly you've had the g geopolitical ricks between russia as well as israel and gaza. also deflationary pressures in some of the weaker data coming out of europe and that's put their pressures on bonds. one of the things that we've
liked a lot has been the high yield space and the loan space over the last several years. this year we still think it's attractive. it's not cheap but it's still attractive in a means where the world is getting a low stable, slow growth. there's not a significant amount of inflationary pressures. getting 5% to 6% in high-yield banks or bank blown loans. >> wait a minute. wait a minute. why, then, was everybody running for the exits in high yield if that's the place to be? >> i think if you look at this, in the equity market, we call it a pullback. in may and june, you had a decrease in volatility that went on because there was a lot of certainty in the market. meaning everyone is very comfortable with the risks. and all of a sudden you entered in july, you had the uncertainty and escalation of the events in gaza as well as in russia, ukraine. it's just market -- investors
pay up for certainty. and the level of uncertainty, everyone took a pause and you're seeing that right now. >> jim, everybody's got this debate on why are yields so low if the economy is going up. and one of the ways that people are playing it, at least at the bigger firms, are these unconstrained bond funds. they take multiple sectors. they may even use futures to get negative duration or really bet against interest rates. it strikes me, just as a casual observer, that the proliferation of these funds probably is not a good thing. that if everybody's moving in one direction, it could be the wrong direction. how do you feel about these so-called unconstrained bond funds? >> i don't agree with that. when you think about the size and scope of the fixed-income market, many of these investors are moving -- or the managers are moving towards these unconstrained. and so as you're saying, these structures, these unconstrained structures are coming out. in a world where cash is getting you zero and most fixed-income assets are getting you less than 2.5, many of these are the ones that are allocating across.
so it's somewhat removed. >> do you trust those managers? that's the key question. >> many of those managers i do. at blackrock, we have fantastic funds that are unconstrained and allow portfolio managers to really make those decisions about where you want to be. >> much faster growth here? is it going to be more stability overseas? a combination of both? when do you think that's going to occur? >> i think it's a combination of both, right? where are you talking about rates? and obviously you're seeing, you know, a bigger slowdown in europe. so rates -- general bonds hit 1%. within the u.s., obviously we've had slow and stable growth. we haven't seen that acceleration. but that's hard to get to because the world still has way too much leverage in it. right? and so that is a headwind. the demographics, the leverage. these are what's slowing down the overall economy. so the level of rates, rates can go up, but the level of rates is still going to remain low because of these reasons for a long period of time. >> jim, back to scott. >> joe terenova, you got a
question? >> i do. back to scott's question before regarding the significant outflows that we saw in july, it seems to me that investors utilize high yield as a proxy for their belief that the equity market is going to go down. do you believe that's accurate? do you think that's mistaken on their part? >> i don't think it's necessarily a proxy. i think it's about the correlation. i mean, if you think about the high-yield market, it's generally still tied towards the health of corporate cash flows. it is lending to credits that are in the riskier end of the spectrum, right? and so the same fundamentals that would drive equity multiples, the certainty of future cash flows are the same fundamentals that are going to drive whether or not the corporate high-yield space is going to be healthy. so when you saw the markets sell off and spreads gap and outflows happen, they were very similar to the correlations of why the equity market was selling off and you saw a pullback. and as those ebated, you saw
spreads thriving. >> jim, it's good to see you. thanks for coming in. till rick reeder we said hey, would you? >> will do. coming up, details on dollar general's offer for family dollar and how it compares to dollar tree's bid from last month. then, the future of the auto industry. a look at what tesla, she have skpri bmw have to offer right thousand and what's next. more "halftime" is coming up from the new york stock exchange. the "2014 playbook playoffs." seven traders locked in a big battle to prove whose portfolio will come out on top. taking profits, adding to their positions. all in the quest to be named trader of the year. find out who's leading, who's lagging, and who's ready to make a move. track the trades online at
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welcome back. transports are on track for their best day since june 18th. there's some stocks hitting 52-week highs. let's look at some transports right there. union pacific, southwest airlines and jetblue. well, the nasdaq is breaking records today. seema mody has more on that. hey, seema. >> at a 14-year high, the nasdaq trading at its highest level since march 2000. investors taking a breather when it comes to ukraine which really has been the market mover over the past couple of weeks. but the nasdaq rebounding here. internet and biotech playing a big role. take a look, though, at some of the biggest winners over the past one week. we saw that big pop in monster beverage after coke announced that it's making a $2.1 billion investment in the energy drink maker. and other big winners are in biotech. celgene, gilead, biogen. it's up about 1% in today's trade. now, outside of biotech, apple still has the largest room here on the nasdaq, steadily rising
over the past one week ahead of its iphone 6 launch. in fact, rbc notes that most supply chain data indicates that apple is gearing up for 70 million to 80 million iphone 6 units which is a substantial increase from last year's ramp of 50 million to 60 million units. so apple up about 1%, nearing the $100 mark, scott. let's trade some of these names that have been rocking the nasdaq. >> absolutely. >> this year. >> yeah. >> what do you like? >> i was just going to say look at the risk appetite and how many times did we talk about that over the last couple of weeks. a market that's getting hit even and yet the risk appetite is out there. look at tesla, netflix moving to the upside. look at amazon bouncing off some of those lows off of support levels. so you're seeing a lot of this. and then the solar names they've been picking up steam over the last couple weeks as well. gtat, a name that's both solar as well as with apple. there's a lot of different variables right now, scott, in the whole space of nasdaq. if you look at trying to break it down, you can get into mobile chips, solar, into the biotech
as well. >> you've got micron, year to date, as one of the leaders. green mountain today. yahoo!'s having a good run at it. jim? >> well, listen, i think everything you've been mentioning is an unabashed positive. i'd like to start at the top which is the transports. it's very positive for the market and the economy. i'd like to see the financials participating a little bit more, but there is some action there. everything we're talking about, though, whether it's biotech or thes th nasdaq bodes well for the nasdaq. this is boding well. >> steph? >> well, back on transports, i'm just encouraged that following united technologies have caught a bid. >> today. they're among the best outperformers today. >> but they've gotten hit so hard. and a lot of it is because they were priced to perfection in the caug quarter, and they were sloppy quarters. in terms of the nasdaq, some of the technology stocks, i still like google. i think that that stock has lagged all of its peers. and it's trading at 19 times forward estimate. so i still like the growth and the risk reward here.
coming up, two discount retailers pushing to consolidate with another stuck in the middle. the latest proposal for family dollar and the next step in that courtship process. and what will the auto industry look like in 25 years, phil lebeau? >> reporter: you know, scott, there's lots of talk about electric cars right now, whether it's the chevy volt, the tesla model "s." the bmw i-3 is getting a lot of attention right now. but did oes all of that talk translate? the numbers will surprise you when "the halftime report" returns. in real time. ♪ the shell brought him great fame. ♪ but then, one day, he noticed that everybody could have a magic seashell. [ indistinct talking ] [ male announcer ] right there in their trading platform. ♪ so the magic shell went back to being a...shell. get live squawks right in your trading platform with thinkorswim from td ameritrade. and cialis for daily use
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♪ welcome back. all ten sectors in the s&p are green today. led by industrials and financials. the tesla model "s" and tesla stock continue to prove critics wrong. but will electric cars ever successfully make it mainstream? in mondayer of our 25th anniversary, phil lebeau joins us with a look at what will dominate the roads 25 years from now. >> reporter: despite all the cars about electric cars being the future of transportation, right now we are still a world powered primarily by gas-powered vehicles. the got old internal combustion engine. look at vehicle production
numbers worldwide this year. the industry is going to make somewhere around 85 million vehicles worldwide. and look how many they're going to make that are electric vehicles. 142,000. that's not even one-tenth of 1% of all vehicles around the world. but 25 years from now, it is estimated by navigant research there will be about 8 million electric cars here in the united states. however, the key to boosting those sales by 2039, it's going to be major government subsidies. in fact, there's an m.i.t. study out that says evs could be 50% of all new vehicle sales by 2039 provided there are a number of investments and subsidies by the federal and state governments. former vice chair of general motors believes the electric car is coming. >> well, where we're going to see in electric vehicles in 2039 is basically a revolution because huge gains will have been made in energy storage. basically by 2039, my guess is
most of all private surface transportation will be by electric vehicles. >> bob's a little more optimistic than most other people in the industry. and the reason is because the infrastructure right now. it's just not there. right now there are about 1 million ev charging stations worldwide. it will be 11 million by 2020. the key, according to experts, it's expanding that infrastructure and increasing that demand with consumers. >> i think 25 years in the future, gas-powered cars are still going to be prevalent. it may not be the near 100% penetration that we see now. it might be somewhere more between 50% and 75%, but it's still going to be the dominant power train in cars in the country. >> reporter: and there you have it, guys. despite all the talk about electric cars, we are still a gas-powered society and likely will be because of the infrastructure and because there's the convenience factor. it's going to take some time not only here in the u.s. but around the world for people to say,
okay, i'm ready to charge up instead of going to the filling station on the corner or just down the road. scott? >> phil, i want you to stick around because we have herb greenberg now joining the conversation. and he is raising the alarm, or raising the red flag, ringing the alarm. all of the above on tesla. >> well, no. >> i know. it's shocking. >> don't put words in my mouth. >> i'm reading what they wrote, man. that's what they say. i believe them. you know it's true. >> no, it's not. what i'm saying -- what i'm saying -- look. what i'm basically saying is that the company has stretched earnings quality. look, back in may of 2013, i wrote a piece for cnbc.com where i pointed out the earnings quality issues. at that point i was quoting a forensic accountant who was saying, you know, they're underreserving for their royalties. and what happens? the company comes out, elon musk comes out after the close on friday in a blog post saying you know, we're going to create this
infinite warranty for not just our batteries but for our drive trains, basically eight years, and at that point also saying you know, we're also going to increase the t-reserves that's going to impact earnings going forward. the point of this is the company is very aggressive, and it shows how aggressive the company is with its financials. it strikes to the culture of when it comes to the financials. and here, you know, they could have been more conservative. they weren't. one of the points we made then was that this would and could hit earnings. it is. there is the issue. >> everybody is so broken up about that today, the stock's up. >> which is the point. when it comes to earnings quality, it doesn't matter till it does. and for a company like tesla, and i have this in a piece today on real money over at the street, they won't care. but you have to keep your eyes on it because it strikes to the culture of the company. when it comes to reporting to wall street. >> but herb, my answer to that would be what you're focusing on
right now is it accurate? yes. at the same time, that's not what matters in the future when it comes to tesla. what matters right now is how well they do in terms of reaching their production targets. not only with the model "s," but then model "x" next year and then generation 3 vehicle in 2017. i understand what you're saying. at the same time, there's part of me that sits here and says well, you're really nit-picking here about the future for tesla. i understand what you're saying about it being a cult stock. that's separate from what the company is doing as far as its development of electric vehicles. >> phil, i understand exactly what you're saying as well, and i think that, you know, i could argue you're pointing out the broadside. i appreciate it. but i still -- if you're with a company like this, you have to pay attention to what goes into earnings. especially when tesla's out there saying hey, we're profitable, as they were saying a year ago which got the stock boost in the first place. if they were more conservative with their warranty reserves, perhaps they wouldn't have been as profitable.
>> the question is whether the profitability, phil, is sustainable or not. i mean, ultimately, that's the question that is going to have to be answered. >> reporter: you bet. >> by investors. >> reporter: you bet. and at this point, your guess is as good as mine. we won't know until we have these next three vehicles out. then we can say, okay, tesla was not on the mark not only in terms of production and demand but also in terms of keeping its costs in a relative check. at this point, we have nothing more to go on than the projections from the company. and i understand what you're saying. >> i got you, but herb's point may be look, that's all well and go ahead except this is a stock that is trading so high now relative to where the performance is now. >> reporter: you bet. you're absolutely right. >> all of this should be taken into consideration now and raise the flags now, not later after you miss the boat. >> reporter: you are right. and i have talked with a number of people in the auto industry, and they all say the same thing. the stock price makes no sense at all. at the same time, they all say i would get in. and that speaks to it being a
cult stock, a momentum stock, but also the possibilities for the future. you don't want to miss out on this thinking that it's going to pay off. but you certainly don't have that guarantee. >> herb? >> he makes -- phil makes a great point. and i'm going to sit here and basically say i think you have to still pay attention to the fundamentals, but i understand cult stocks. i understand amazon.com. i understand what it's like to go against them. i have seen short sellers carried out on stretchers try to be short tesla a year ago, but i still think, you know, you want to pay attention when you see what the culture of management is when it comes to the way they -- >> the traders want to get in, too. joe? >> herb, phil, the question is for either of you. do you believe, when the doors close at gm and ford and toyota, that they truly believe the future is what tesla believes in the electric vehicle story? and if they did, would they really be putting more assets into developing it? >> reporter: yes and no. and i hate to qualify my answer.
do i think that they believe the future is in electric vehicles? yes, way down the road. near term, they don't believe that. and they have to manage earnings to their shareholders near term. and that's why you don't see a greater investment. and look at toyota. toyota, they've come out and said we think the fuel cell has greater promise than the electric vehicle. and that's where toyota is headed with ford and with gm. they will put investments into electric vehicles, but they're certainly not going to be going away from what's managing earnings right now, which is the internal combustion engine, hybrids. and that's going to be the focus here next ten years, minimum. >> guys, that was a fun discussion. who was making a point? was that you, herb? >> no. >> i thought you were reaching for a green flag. guys, we'll talk to you soon. herb, thanks. phil, thanks to you as well. how about the other traders on the desk, quickly on tesla. >> listen, i think elon musk is a visionary. i think he's going to build a great company and a great car, but i don't think he cares about
public shareholders. i think if you're in this stock, you'd better just be careful because he doesn't care about shareholders. he cares about a great company. >> all right. is that any different than what bezos seems to be doing right now? >> probably not, to tell you the truth, but it is different, and i think this was herb's point from a gm or a ford. and gm at eight times next year's earnings and a 3.3% dividend yield with a lot of growth in front of it looks attractive to me. >> but a lot of us are tied to growth, right? they see the growth in something like tesla, and that's the attraction. obviously we've got to see the rest of the fundamental story really start to play out, but that is the attraction is that -- yeah, i had some coffee. i will say this about tesla. the protection or speculation, however you want to term it right now, the volatility is that the lowest level it's been in tesla trading thus far. so for that reason, scott, there is opportunities to either protect your position or put on something speculatively to the upside. coming up, is bigger better in retail? we're going to look at potential target's in that space as consolidation gains momentum. and if something unusual is happening in the market, pete
najarian usually finds it. up next, he's heading to the telestrator, coffee stain and all. >> yeah, i got some coffee. >> pull back the curtain on a steel name. that and much more straight ahead. >> cutting back to five cups. from 2000 to 2011, on average 17 manufacturers a day shut down in america. there's no reason we can't manufacture in the united states. here at timbuk2, we make more than 70,000 custom bags a year, right here in san francisco. we knew we needed to grow internationally, we also knew that it was much more complicated to deal with. i can't imagine having executed what we've executed without having citi side by side with us. their global expertise was critical to our international expansion
into asia, into europe and into canada. so today, a customer can walk into our store in singapore, will design a custom bag and that customer will have that american made bag within a few days in singapore. citi has helped us expand our manufacturing facility; the company has doubled in size since 2007. if it can be done here in san francisco, it can be done anywhere in america. [ jackhammer pounding, horns honking ] [ siren wailing ] visit tripadvisor miami. [ bird chirping ] with millions of reviews, tripadvisor makes any destination better.
nearly 1% as well. well, when something unusual happens, one of the najarians finds it and tries to make money on it. pete, what do you see? >> well, it's newcorp. if you look at the six-month chart, it's been churching for quite some time. between about 49% and 52%. we talked about under the radar. steel, iron ore. really starting to move. in the last month, scott, take a look at how in august we've watched nucor move to the upside. the calls have already doubled. then on wednesday they started buying the september 55 calls. october 52 1/2 calls. today they're buying the october 55 calls. so this is really interesting to see. three times in the last week, scott, we are seeing upside activity. stock has been moving to the upside. now the stock's up and through 53. can it break through those
52-week highs? somebody's betting that it can. are you doing it? >> i am in this name. >> equity? options? >> just the options, i am long calls. i expect the stock to continue over the next couple weeks. i think it looks to me like the steels are breaking to the upside. joe pointed out u.s. steel, all kinds of names moving to the upside. >> what about the holding period? >> one to two weeks, but if they double, i am gone. >> that's usually the caveat. thanks, pete. another american companies are attempting to lessen their u.s. tax burden by using tax inversions. motif investing that builds baskets. weighted stocks based on an idea or theme is offering a way to invest in that practice. the newest motif just released is tax inversion targets. that's right. its top holdings include gw pharmaceuticals, icon, vistaprint, logitech and silicon motion. jim, you first. what do you think about this? >> i think you're supposed to make hay while the sun shines.
i think congress is eventually going to close down this -- i'm not going to call it a loophole. it's bigger than a loophole. but some companies are going to make money on it, and you're supposed to get in it. >> joe? >> i fully agree with jim. i know steph earlier on a call mentioned the other side of this trade which i happen to agree with fully. i'll let her disclose what she's been doing. it made me think and it actually made me consider one of the names probably to add to my portfolio rather soon. >> oh, okay. so the names -- >> fire away. >> thank you. >> steph, the floor is yours. >> thank you. so we've taken the other side. those stocks that have gotten really hit hard because people had bid up these shares expecting a tax inversion. and companies have announced they're not going to do it. so walgreens is one, down 18% from its high. very high-quality franchise and it makes sense to us in terms of synergies and global scale. eaton is another one. it's gotten hammered, down 14%. rightfully so, really bad quarter. i think a lot of that stock was fluffed up only because people
thought they were putting to be a takeout because they are domiciled in ireland. one stock i would buy, ad v. and scheyer even if they don't have a tax inversion. i like that combination. it expands ad v.'s pipeline. that would be one on the other side that i would be buying. >> guys, where we going after this? where do you want to go? we're going to a tease. coming up, upping the ante -- well, it wasn't there -- in the bid for family dollar. thank you very much, steph. >> sure. any time. >> get in my ear any day. speaking of consolidations, should we expect to see major retailers getting into the action? we sort through the noise and make some of our own next on "half."
♪ there are some of the names leading the s&p 500 today on a nearly 1% gain. there you go. dollar general, family dollar, nucorp, valero and southwest airlines. those dollar stocks on the move today thanks to a new offer for family dollar from dollar general. courtney reagan has that story. courtney? >> yes, scott, this is actually the deal that wall street originally expected. t it seem it seems to make the most sense. much more similar. dollar general officially offering $78.50 per share in cash for family dollar. dollar tree had offered $74.50 and cash in stock in july. additionally, dollar general's estimated synergies with family dollar are double the amount of
cost synergies estimated by the dollar tree combination. now, a dollar general/family dollar would have 20,000 stores in 46 states with sales of $28 billion. dollar tree/family dollar combination revealed 13,000 stores in 48 states and canada with steals of $18 billion. now, dollar general ceo says if the deal goes through, he would wait to retire until 2016 rather than 2015. he also said dollar general has expressed interest in a merger with family dollar multiple times over the last few years and was surprised by the dollar tree announcement. noting he wouldn't have announced his retirement if he knew that all of this was coming. scott, this deal is far, far from over. we could get a counterbid from dollar tree. the ftc would have to approve it. we have to wait and see but there's a lot of activity left to go. >> no doubt. courtney, thanks so much. as somebody put it to me well in the know on this today, joe, it was this is only the beginning. >> absolutely. >> there's a lot still to go. and there are big ramifications all the way around such as, you
know, one of the things that was raised, like what if dollar general came in here with the sole purpose of trying to make it more expensive to inflict some pain, if you will, on dollar tree? >> yeah. >> now dollar general finds itself almost stuck. >> right. >> in that its almost stuck in that shareholders probably want the deal to happen. >> and i think it makes sense because there seems to be the synergy between the customers. i don't know if the dollar tree customer is the family tree customer. the dollar tree customer seems to be shopping at a little more of an expensive level. to me it made sense for family dollar and dollar general to be together. most people thought this was coming. for family dollar i think this was favorable. you will see more competing bids happening. i think ultimately it will be dollar general. >> steph, you guys used to own dollar general. how do you think this plays out
on a lot of moving parts to consider? >> i think you are going to see a higher price for sure. >> stock movement would tell you that is likely. >> dollar tree comes back but i think dollar general will come back, as well. they have more wherewithal to increase that. as the deal stands right now it is about a billion dollars. it is a buck to two bucks per share in incretion. they can afford to raise the number. most importantly the ceo is going to be staying on board. he is the mast r. if he stays on board and they get the deal you want to own the stock. >> this deal could be viewed as being fraught with risk given that dollar general will have to divest some stores. what happens if the number gets taken up? are they willing to do that or do they walk? where the other deal was sitting on the table for $4 cheaper. >> i think there is a lot of risk. let me give you another one
which is that as the consumer finishes deleveraging maybe they want to migrate out of the dollar tree/family dollar stradda and up into the targets and other higher end, not very high end but maybe they aspire to go to nordstrums to buy things. these are stocks you want to own whether you are an investor or a company buying them going into a recession. >> you have a quick thought on this? >> we talked about this when we were talking about wal-mart and we talked about the neighborhood stores. it gives you an idea of what wal-mart is doing to try to counter act this pressure they are getting. >> which is why you may say what are the regulators going to think about a deal like this and then say maybe they won't have a problem with it because wal-mart is getting smaller to compete more effectively with those types of stores, the dollar stores.
>> what other retail names? >> the dollar stores perhaps you look at some of the off priced apparel retailers, ross stores, tjx. tjx more than twice the value of ross stores. ross stores trades around 17 times trailing earnings. that's less than a 20 time average of the s&p 500 consumer discretionary index. a bit of a discount there. how about on the department store side. perhaps a mid price chain maybe dillards which trades at a discount to the sector overall at 15 times earnings or maybe a specialty retail type company. is there a chance that a larger player would want to take a gander at possibly buying a best buy. now they are trading at ten
times earning. no predicting the future here but the dollar store combination has some thinking about where the next wave can come from, from any part of the price spectrum. >> guys, thoughts? >> dollar tree. that's my thought. what happens to dollar tree in a scenario where family dollar and dollar general gets together? what i mean by that is do they then allow themselves to be looked at by a wal-mart or target? could be. >> possible. certainly it is possible. obviously wal-mart has to find a way to get back into the market place to compete. that is something that hurt them as the financial crisis hit they had to get into the competition. that might be another venue. >> wal-mart has had all the time in the world to make an acquisition on dollar tree or family dollar. family dollar really under performed and they haven't taken action. >> let's not make the argument
about what wal-mart is going to do. how does dollar tree stand on their own. i think they have to strategically consider allowing themselves to be with someone larger. >> let me throw one last name at you, j.c. penney. >> what? [ laughter ] >> j.c. penney? the equity and the debt can be digested for $6 billion easily. you get the real estate. >> why do you want the boxes? why do you want the real estate? you want the internet. you don't want the big boxes. we are over stored as it is. >> you okay? >> i'm okay. >> freaked out. >> i think you want the shoppers. i think the shoppers are coming back there and you saw it last week in the earnings report. coming up, an unimpressive opening weekend for "expendables
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time for the worst trade of the day. it's the "expendables 3". the installment opened this weekend and pulled in $16 million at the box office. it featured stallone, schwarzeneggar, mel gibson. there was like 20 high profile stars. lion's gate had taken in more than half a mbillion on the franchise. >> natural. >> i would be the young man there. i would be the young guy there. that is a 60 plus crowd there. >> natural fit. >> looks like your hair now.
>> i can pull the sucker out. >> that's like wwe in there. final trade. >> i like it. i think it is going higher. >> long j.c. penney. >> texas capital bank shares. >> u.s. steel. >> power starts now. "halftime" is over. "power lunch" starts now. what a sporty dow jones we have at this hour. the dow as you see up about 170 points at 16,831. this after another big development in the deal space. dollar general now coming in as many expected into the bidding for family dollar. will this mega deal environment be the tide that lifts all boats? one firm making four bigls