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tv   Fast Money Halftime Report  CNBC  March 10, 2015 12:00pm-1:01pm EDT

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also sandisk is down. so quite a few names. memory down 20% for the week and down another more than 4% today. >> qualcomm today in the red, despite the different hikes and buyback. back to headquarters, scott wapner and the half. all right. thanks so much. welcome to the halftime show. meet our starting lineup, stephen weiss the managing partner of short hills capital. josh brown the ceo of ritholtz wealth management and jon and pete najarian co-founders of optionmonster, kenny is on the floor of the new york stock exchange. our game plan today, it looks like this. an activist speaks for the first time on cnbc, mercado's mick mcguire is here live with a new campaign and so much more. the apple aftermath, ceo john sculley on the watch, the stock and whether a trillion dollar market cap is in the cards. we're also live at the
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shareholder meeting today kicking off at this hour. we begin with this big sell-off in stocks. you can blame a number of factors today. the dollar at its highest level in 12 years. weak global economic data fears that the fed will raise interest rates this summer before many investors are hoping for. josh brown, you have the s&p below its 50-day moving average and that's just one of the negative things that i can cite when you take a look at the action today. >> but it seems to have stopped around the 50-day. it hasn't closed below yet, not on the week. this is actually still a fairly normal shakeout. we're about 3% away from the all-time high. s&p now up 30 basis points year to date. the dow is actually negative. i think what really is probably the most notable thing in the eyes of traders right now, you've got the dollar, now over bought for 30 straight weeks. technically over bought for a really, really long time. and i think that that's something that probably, if you're looking to make a bet in one direction or the other, you probably say that reverses, you
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know, much more quickly than it goes parabolic from these levels. so if that happens, that could lead to some bigger shifts than what we've seen so far. i think all in all, there's nothing out of the ordinary. this is actually the biggest gap down that we've seen in 30 days. since january 29. again we've seen stuff like this all along the way and it's not that crazy. >> kenny on the floor, we've debated whether we're going to see some sort of pullback of any scale if we just have take an pause in the market, you say that yesterday, was a dead cat bounce. you expect to see more selling? >> friday, the market technically got broken tested, bounced yesterday on nothing really new. what happened over the weekend to change the mindsets from friday. nothing really. today you see it again. the dollar is strongly, not helping, you have concerns once again out of europe. you've got fisher, fed president fisher even in his last speech kind of calling for higher rates, the fed next week and
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everyone starting to speculate on what fed is going to do. i think it's a little overblown because i don't think the fed is going to do anything yet. technically once you've broken the levels it has to find a new level. 2065 the s&p 50. we're boo he below that. if we don't rally and close higher today, down 25, 2030 to see if it finds the next level of support there. >> how much is about the fed and fears of a tightening tantrum that is already showing its face? >> i think a lot of it is about the fed but i also think that's very misguided. i believe with the dollar strengthening as it is you're seeing a readjustment in -- on the buy side with the mutual fund and other investors before the sell side gets there in terms of ratcheting down their earnings scenario as an -- >> it's a good point. earnings estimates are coming down, the systestimates are neg year over year for q1 and q2.
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>> the other issue with that, productivity, nobody is looking for increase in productivity anymore and a lot being played out of that. wi without productivity increasing you lose the lever. the way you invest you look through the nervousness, now two months away from the third longest period without a 10% correction. so look, nobody is surprised, nobody here in this desk, i don't think anybody watching the market if we go down 5, 10% it's a good time to recalibrate. i've taken off a little exposure, not a lot, just looking to put it back the at better prices. >> you look, pete, the eem is down 8 straight days. >> yeah. >> that's directly related to fears the fed will hike and the impact that will have on emerging markets. weakness in our market today, largely in tech, an area you've liked, financials as well, leading things to the downside. if you look at the that are strength we've talked about that will weigh on earnings maybe overweighted on tech because of the outside --
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>> earnings from overseas. >> i mean i think you tabbed it well. you talk about the stronger dollar and obviously whether or not the rate hikes are going to come as soon as june. i think a lot of folks are looking for something like that. a lot of people have been talking. we heard from drunkenmiller and tepper when talking about the idea that they're going more and more towards europe. when you see that it does cause pause. you see 5 billion coming out of funds here, 4 billion going to europe, another billion towards japan, that really does make a statement right now and i think that's what we're seeing is some of that nervousness, some of the pressure coming to the downside. we had it the other day, had a slight bounceback yesterday and now here we are once again. >> judge, the jobs number on friday, of course, caused the spike up in rates. rates got up to 226 or thereabouts. now they're pulling back to 214. you have crude oil down about 2% today. >> rates have moved up like 30% over five weeks, something like the biggest jump in that period of time. >> giving back a lot -- >> while the german seven year gone to a seven yield. >> i think it was the
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overreaction on friday to steve's point at the top, that's what i think people are looking at right here. but clearly, without this major correction, without this 10% correction, when protection gets cheap, judge, we buy it. i bought it as i said, two weeks ago, was a little early, but now take a look at it, up another 12% today. that's just the vix. some of the levered etfs on volatility are exploding to the upside. i think based on the activity we see in vix calls today, that it does go higher still. i think we're going to see a 20 reading on this move. but it doesn't mean that you should be scared out. you should have protection if you don't shame on you. >> pushing through 60. a lot of vol is in the em trade. it looked better at the start of the year. look at the last six days, fxi, a china proxy, down about 7%. >> the eem down eight straight
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days. >> look at brazil, about 15% away from penetrating the '08 lows. >> we've seen this movie before. >> what we've seen before, but t velty has gotten people's attention. it's been a while -- >> part of the reason we're seeing that velocity we saw volumes evaporate since the start of march, judge. when you look at the volatility index, trading underneath 200 day moving average, no volume, people not buying the production under the circumstances that's why we see moves like monday and today. >> protection still historically very cheap. >> kenny, last comment to you, velocity is maybe the word of the day. sara eisen tweeting i think this is perfect for this conversation that the weak euro was expected but not this much so soon, right? >> right. >> take that from the euro perspective and dollar strengthening perspective. >> i think that caught everyone
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a little by surprise which only adds to kind of the angst and anxiety and like the other guest said, the buyers are going to pull back. they're going to test the level of angst from the sell side, see how nervous they get and then buy stocks at lower prices. >> euro is going to go under 10 maybe as we're speaking here on the other side of the break. thank you so much. coming up, activist investor mick mcguire of mar caddo is here. his first ever on cnbc launching a new activist campaign today. he's here to break the news and tell us about it after the short break. then will the iwatch be a history or bust? we're asking former apple ceo john sculley and how the traders are playing at the shareholder meeting set to get under way at this hour as well. so much surrounding apple shares. much more straight ahead on the half. sometimes romantic. there were tears in my eyes.
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and tears in my eyes. and so many little things that we learned were really the biggest things. through it all, we saved and had a retirement plan. and someone who listened and helped us along the way. because we always knew that someday the future would be the present. every someday needs a plan. talk with us about your retirement today.
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you have a big sell-off on the street today. the s&p down 1.3%. utilities are in the green. everything else is in the red. the decline led by tech and financials as we said. so that's where the bulk of the selling. the s&p 500 is below its 50-day moving average as well. all right. institutional investor named him one of the country's rising hedge fund stars and he's here for a first time exclusive cnbc interview. mick mcguire the founding and managing member of marcato
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management with big news to make as well and joined by our kate kelly. >> thanks so much, scott. mick, thank you so much for joining us today. it's a pleasure to have you for your first cnbc interview on the air today. you've been one of the up and comers as scott mentioned with compounded annual returns since founding your firm in 2010 more than 14%, strong february, you tend to hold a limited number of long side positions and your biggest position bank of new york mellon is one you've never spoken about publicly. tell me what you think about it and why have you held your silence this time? >> thank you for being here. big fan of the show. obviously watch it regularly. bank of new york is our largest position, been our largest position for several months and we've had a pretty extensive dialog with the company, with the board, and several shareholders as well and i think shareholders are frustrated and we are also. the company is not achieving its potential. we think that, you know, meaningful change is needed there and unlikely to be
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experienced without a meaningful change in leadership. we actually have sent a letter to the company today asking for them to seek the replacement of the ceo. >> so you want the ceo gerald hassle to step down even though he was installed in september of 2011 and since then the stock price has doubled? they're giving credit by some analysts for having trimmed expenses. you disagree. talk about the metrics and why they need such a drastic change just a few years into the new ceo's tenure. >> sure. we do think that a change is necessary and i don't think we're a alone in that regard. as i said we've had a pretty active dialog with a number of large shareholders and all shareholders are frustrated because despite what has been a rise in the share price itself, a lot of the key performance metrics of the company have not been moving in the right direction. the company is losing share in its core custody and administration asset business, revenue growing slower than competitors, expense levels in
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particular are growing at rates that are truly unsustainable, and what that leads to is declines of margins, declines in returns on equity and earnings per share shah have gone nowhere over all of the current ceo's tenure. kind of making matters worse despite some of the frustration that we and others have voiced the company put out new three-year targets in october that in our view really only suggest more of the same and that to us was really the moment where we thought this management team does not have the commitment or the sense of urgency that we think is appropriate in leadership. >> i had a chance to review your letter and the lengthy presentation you have accompanying it and you're going to make that available to the public, correct? >> that's right. so we are a significant shareholder in the company. we own just under 2% of the business. it's a $45 billion company. >> right. expensive to buy shares.
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>> that's right. but it's a large investment, about $725 million in this one position and so we want other stake holders to review the research that we've done. we've not come at this point of view lightly or without a significant amount of research, so we're making this presentation available to all stakeholders. they can access it on-line the website is a better bank of new and today, shareholders and all stakeholders should be able to download that presentation and a letter as well and review it. i would encourage people do that. review the materials and if they share our point of view that case is compelling to reach out to the board and voice that as well. >> so a couple of your key points. i've seen this from other critics as well. overly high infrastructure, ballooning head count, you think the head count needs to be dropped and you look at some comps from over the years where you've seen 30, 40% head count
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reductions at major companies that have led to better returns. roe, falling year over year despite the company's own target of 10% by 2014. >> right. >> i'm curious trian fund manager has a larger stake, they are known for being active and very tough but so far they've been cordial which is generally your reputation. >> sure. >> they have someone on the board ed garden joined in december. do they agree with your point of view here? >> we have shared our point of view with trian and i have a lot of respect for trian. they're smart. ed is very smart as well. we're glad to see him on the board. you know, i think it's telling that two, you know, very research intensive change oriented investors arrived, you know, essentially at the same time at the same place to a business that has a very good franchise but for a persist the, you know, period of time has
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really been failing to deliver on its metrics. i think a lot of shareholders have felt that way, but have reached a point where they can no longer push any harder which is where people like trian and people like ourselves can really step in to advance the ball one step further. >> we have to take a quick break. we will talk about this more in a minute. scott, back to you. >> we're going to take that quick break. we will come back both cakate a mick will join us about this story and so many more as well. former apple ceo john sculley joining us the day after the watch was unveiled. what he thinks of tim cook's leadership. the stock the latest devices, the whole story, you get the picture, right? all right. the market still under pressure today, really at the lows of the day, down 250 points on the dow, the s&p off 1.3%, right about the lows of the day. we are back after this.
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its effects on society really came about because, not because i was selfish and wanted one for myself, which i did. its because i had, had a passion. my whole life i wanted to teach myself to build computers. i wanted to build these things for free. i just wanted to do it for the world and you know, when you want something, that's what you do the best. ♪ ♪ we are back now with mick mcguire of marcato capital.
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kate kelly has joined us. so i saw the presentation, i read through, like 150 pages. is bank of new york really that bro broken? i say if you look at the stock performance, it's up 17% over the past year. it's outpaced it years. the company puts out a key fax sheet the data end of january where they go through metrics where they show 2012, 2013, 2014 total shareholder return at bbby melon outpaces its competitors. >> what's broken if you look at the core operating metrics itself, particularly the expense base of the company, look back to the merger of bank of new york and mellon in 2007, from 2007 to today, core revenue has increased 4% in total. that's not a compounded number. that's 4% in total. head count over that same time is up 22%.
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these trends are things that are barely showing any signs of abating and that is signs of really poor execution on the part of management. >> so you said -- again, they'll say okay, we have exhibited strong expense control and your argument is, yeah, that's great, but not enough. you say more drastic measures are needed. >> i think the underlying evidence doesn't really support the idea that they have exhibited strong expense control. the management team has described efficiencies that they've achieved but the implication of that is that had they not achieved those expenses would have grown at truly an alarming rate. they've only brought the growth rate down from truly alarming to unsustainably high. >> i just want to jump in with a quick note. we asked the company what they thought about your argument that they need ceo change. they have no idea response to that other than sharing some of what their consider to be recent groegs.
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why is ceo change required as opposed to doing a top to bottom expense review? is there a culture problem as well? >> i think probably. a company part of our presentation, we release a third party marketing study we commissioned to gain kind of more general perception of the businesses as a brand matter and -- >> you went so far as to sort of redesign their logo and recommend an outdoor campaign as one way of changing the brand? >> that's right. that's right. but, you know, the point that came back from our brand consultants the company is perceived as an old bureaucratic slow moving company and it's perceived that way because it is and most of the executive leadership has been at the company, the ceo at the company for over 40 years, the average tenure of the top five or six executives is over 30 years and this is a leadership group that if they wanted to, they have all the information to act more aggressively but haven't done
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that. >> you shared this with trian. have you spoken directly to ed garden who is on the board of bank of new york? do they agree that company should replace its ceo? from a critical mass standpoint your position is obviously relatively small to the size of your fund, they're much bigger, the size of their position is bigger. >> yes. >> you two coming into agreement this could happen could force change faster than not? what's that story? >> we have shared our point of view with trian. and we've shared our point of view with a number of other large shareholders. i don't want to speak for ed but i think he's made some comments to the effect that he thinks expenses are a key focus of their investment and i think our view is, that meaningful change and meaningful progress is unlikely to occur without a meaningful change in leadership, that you do need to set the tone at the top and we don't think that this ceo has done an
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effective job of creating that sense of urgency and efficient. >> i want to switch the conversation to sotheby's if we could. you're the second largest shareholder behind dan loeb's third point. >> yes. >> he's on the board. are you adversaries there? >> i wouldn't describe us that way at all. we're very glad to see dan on the board. very pleased with some of the people that he brought with him to the board. we do think that the company -- well, and i would say that we're happy with the changes that we've been seeing. new chief executive we think will also be a meaningful positive -- >> which they're looking for, obviously. . trying to replace their ceop. you want them to do a buyback now. >> that's right. >> you said there's willful neglect in your words. >> i have said that. >> you want the replacement of the cfo as they're looking for a ceo as well as at least a half billion dollar buyback. >> that's right. i think, you know, in terms of our philosophy is that in order to drive real value for shareholders you need to not only have a coherent business
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strategy that's driven from the leadership, but you need a cohesive financial strategy and i would say over the history of sotheby's the financial strategy has been essentially nonexistent and what we have started -- what has started to emerge from the information we've been gathering even their more recent financial actions were really driven more by kind of technical considerations to forestall last year's proxy contest as opposed to some more thoughtful, you know, exercise in what makes sense for the business itself. >> their response is kind of, you know, you're trying to put the cart before the horse. let us get the ceo figured out first and that will probably force some sort of change of path at the very least, why not let them get the ceo in the chair first? >> potentially. there's some reasonableness to that point of view.
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our point of view the amount of excess capital this company has is staggering between the excess cash it has today plus the cash likely to generate over the course of the year they could easily return in our analysis, $500 million of capital and still retain close to another $500 million to be able to put towards growth investments with their new ceo. >> we're going to take a break. we'll come back and talk more. the traders want to get involved as well. our exclusive chat continuing on the other side of the break and more on activism and the markets. what it was like to work with bill ackman. show you the markets again. the s&p 500, is down. there are the laggards. at least 5% at the top and almost thereabouts for avon and allegheny tech. more halftime up after this.
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40% of the streetlights in detroit, at one point, did not work. you had some blocks and you had major thoroughfares and corridors that were just totally pitch black. those things had to change. we wanted to restore our lighting system in the city. you can have the greatest dreams in the world, but unless you can finance those dreams, it doesn't happen. at the time that the bankruptcy filing was done, the public lighting authority had a hard time of finding a bank. citi did not run away from the table like some other bankers did. citi had the strength to help us go to the credit markets and raise the money. it's a brighter day in detroit.
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people can see better when they're out doing their tasks, young people are moving back in town, the kids are feeling safer while they walk to school. and folks are making investments and the community is moving forward. 40% of the lights were out, but they're not out for long.they're coming back.
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european markets closing for the session in negative territory but if it's one area winning the currency war it's the eurozone. the loss is half of what we have in this country. a lot is driven by oil. fitch warning on the lack of overhead for some of those big oil majors as the price of brent comes below $55 a barrel.
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the euro continues to track towards parity. that is a successful outcome for the european central bank. deutsch is warning there will be 4 trillion euros of excess reserve that will have to leave the eurozone why it's calling the our down to 85 u.s. cents by the end of 2017. greece is finally going to start serious in depth talks tomorrow. with the troika about easing its cash supply that it has but you can see that the greek banks are mixed. they were talking about bny mellon. credit suisse has -- on the lang standing ceo is out. taking a new ceo from the uk insurance giant the prudential. a view there that maybe he will be able to get a better relationship with regulators in this country and, indeed, clear the air on a capital increase. that's how europe stands. a news update from sue herera. >> thank you very much. we'll have more on that story in a second for you because here is
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your cnbc news update for this hour. it target laying off 1700 workers and eliminating another 1400 open positions. it's all part of a restructuring plan aimed at saving that company $2 billion over the next two years. the cuts will mostly be made at the company's headquarters in the minneapolis area. meanwhile, in january, u.s. employers advertise the most jobs in 14 years. nearly 5 million. according to the labor department the number of people quitting their jobs increased 3% to 2.8 million. apple is investing in diversity. for tune says the company is donating $50 million to organizations that aim to get more women, minorities and veterans working in tech. as simon mentioned credit suisse does have a new ceo. becomes the first african to lead a global investment bank. back to you. >> thanks so much. we are back with mick mcguire of marcato capital. kate kelly here. you want to tie something up. >> yes, thanks. quick question, mick.
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give us news on your request with the delaware chancery court to get some unredacted documents in this juicy case from last year, third point versus [ inaudible ] the outcoming ceo of sotheby's. you wanted to see more disclosure in terms of what occurred with sotheby's board and management. what happened? >> that's right. that's true. no, as you point out, last year there was litigation between third point and the company as part of their proxy contest and we sought the release of documents that were filed in that and the reason why we wanted to understand that better was, we want to make sure that the decisions that are being made at sotheby's are decisions that are truly in the best interest of the business and the shareholders and not being driven by other motivations that shouldn't be, you know, factors in board level decisions.
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and the -- you know, the litigation uncovered a significant amount of correspondence and deliberation on behalf of the board, and so it's an opportunity to really get a really unique window into the logic and kind of motivations of the board members. >> your request was mostly grant sfds. >> that's right. we saw the release of four principle documents, three were not challenged by the company, one does continue to be challenged by the company and we're going to continue to seek the release of that as well. >> you cut your teeth so to speak with bill ackman. >> indeed. >> what was that like? >> i was there four years. joined in kind of the early days, early '05 and moved on in '09 to prepare the launch of marcato. it was, you know, a truly formative experience. bill is a brilliant guy, extraordinarily creative, and the vel it lossty of ideas that bill comes up with and the team there, move through, is a really
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powerful place to get up to speed. >> bill has had this controversial short position in herbball life. i'll ask you maybe it to owe bine on the stock, but do you take short activist positions? >> we do not. we do short when we find good standalone short opportunities, but the activist short landscape is shorting is very, very difficult on its own, and activist shorting has all sorts of additional, you know, challenges to them and so we -- we don't really pursue that as a strategy. i don't myself have a point of view on herbalife but i am familiar enough with bill when he has this much conviction he is not going to stop. >> you're kidding? >> right. >> i think we've all learned that. steve weiss has something for you. >> mick, we met ormgly when you
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were chairman of borders group. not only does he have hedge fund experience you ran boarders group. you know both sides. couple names in your portfolio are interesting. lifetime fitness you own that. >> yes. >> every position is decent size position you're concentrated and they announced they're looking for private equity. what do you think that's worth in terms of your analysis? >> i think you're right, we are the largest shareholder of lifetime fitness and we built that position about a year ago and our initial thesis was that they owned a substantial amount of real estate, that the analyst community was focusd more on the income statement metrics and neglecting that real estate was worth as much as the entire cap of the company at that time. we were pursuing a separation of the real estate from the operating business and our view if they did that, the value of kind of the sum of the parts could be as high as $75 a share. >> 65. >> yes. probably in the high 60s. >> 65 and change right now. >> and we think that that is the
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point at which, you know, these two independent units would likely trade and the company announced in august that they were pursuing that which was a nice step and we've been looking for the results of that conclusion. it takes six months or so to usually get through that process. and now the journal is i guess has mentioned they may be taken private. there hasn't been price talk yet. it's unconfirmed. but i could very easily see it being, you know, here or north of here because the assets are very, very financeable. >> i want to go back to bang of new york mellon because volume seems to have picked up in the name and a new position you're talking about for the first time today. should there be any revenue growth given what's going on with banking, regulation, where interest rates are? isn't this a business that maybe should be biding its it time until the environment changes, other companies spin off assets
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and buy them or do you think that they could be doing something other than what they've been doing? >> yeah. so there's two sides to that equation. no question that the interest rate environment and volatility environment as well, they have a securities lending business and fx business. >> and feed pressure on money manager. litany of ten reasons why there isn't revenue growth. >> and other financial institutions are suffering, you know, challenging revenue trends as a result. what we see when we look out again at state street or look out at other major financial institutions they have been taking much more aggressive expense actions to maintain margins and returns on capital, in what has been a very challenging environment. and we don't see bank of new york being as responsive to the challenging revenue environment to maintain profitability. >> the other side of that is actual revenue growth by finding new opportunities in what is a new environment and we do think that bank of new york's market position as a custodian
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positions them to be able to offer many more services that they could be earning fees from and treasury function, risk management functions, kind of essentially being the bank to the buy side and we don't see them moving as opportunistically into those areas either. >> we got to wrap this up in a second but in light of the market sell-off that we're witnessing today, dow down 250, a lot of it probably has do with concerns the if fed is going to hike maybe as early as this summer. do you have a view on when you think they will and should? >> well we're mostly bottom's up guys. we don't tend to operate with a macro view, but a lot of the activities that we're observing in our portfolio indicate that the u.s. economy is strengthening and so the idea that the fed would be looking to raise rates in, you know, the next 12 months makes a lot of sense to us. we think that's one of the reasons why we're attracted to bank of new york in a higher rate environment this business is going to generate quite a bit more income than it currently is today given the structure of its balance sheet.
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>> we got to wrap it up. >> little one? no. >> we have to wrap it up. >> i want to get more on the sell-off here. thank you so much. >> sure thing. >> for coming in. kate, thanks to you for facilitating the whole thing and making it snehappen. >> coming up calls of the day including an upgrade for urban outfitters that has the stocks soaring on a down day. this is the apple watch, the tech titan revealing more details on its much anticipated device a day ago. shareholder meeting ongoing as we speak. former apple ceo john sculley is going to join us with his thoughts on all of it when we come back. ask. the halftime report with scott wapner is the place for market moving interviews. >> when you see large currency moves and large price moves in a commodity like oil you have to
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be worried. >> real money. >> what makes things cheap is uncertainty. >> real debate. >> interest rates will go up, they can't drop as much as they did last year to this year. >> the most profitable hour of the trading day. >> do you think dick costolo will leave that job. >> we think there's a good chance that he's not there within a year. >> the "halftime report," weekdays at noon eastern. boy: once upon a time, there was a nice house that lived with a family. one day, it started to rain and rain.
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now every little "thing" can provide even greater value. ok, so can it tell the doctor how long you have to wear this thing? the answer is yes, it can. so, the question your customers are really asking is, can your business deliver? coming up on power lunch, a sell-off on the street but there
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are still opportunities to make money out there. fears about the soaring dollar are part of today's drop. three stocks, the dow immune to the strong dollar you should be looking at. plus the one stock in the struggling teen retail sector that is looking really good right now. and five restaurant stocks you need to for the next five years. >> looking forward to that. thank you so much. stocks are selling off as you know. we are near session lows. hit the movers on this day. citi has raised gm's price target to 50 bucks after its announced buyback program. josh? >> yeah. look the sentiment around what they said they are going to do seems to be universally positive so it's not surprising to see the sell side. a lot of firms that have hold off or neutral ratings warm up to the story. i wouldn't be surprised to see the stock go higher. i think 50 is probably a stretch in the near term. but citi is being realistic in terms of what they said. >> urban up huge? probably the biggest gainer by
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far. >> exploded through the 52-week high. it gets upgraded from janney, from i believe barclays and credit suisse, upgrades galore. it deserves it. the stock is obviously being richly rewarded today. >> pete, ubs upgrading hewlett-packard to buy. >> sum of the parts and looking at this from a risk/reward standpoint, less about the fundamentals, talking about the potential of the split and how that value plays out. also the buy and how that works into the server market. some of the parts around $43 a share. looks cheap. i like hewlett-packard at these levels. >> tenet health care. >> downgraded by deutsch bank. the stock and other hospital stocks had a great move. i guess they want to take profits. i still like the story long term, still think they're some of the cheapest stocks in the market. >> former apple ceo john sculley weighs in on the watch, shareholder meeting and the
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stock and about everything else around that company as well and on the 15th anniversary of nasdaq hitting its all-time high, why he says there's no tech bubble and the nasdaq could actually go much higher. halftime back after this. of active management. every day, our teams collaborate around the world, to actively uncover, discuss and debate investment opportunities. which leads to better decisions for our clients. it's a uniquely collaborative approach you won't find anywhere else. put our global active management expertise to work for you. mfs. there is no expertise without collaboration.
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now with the you can watch live tv anytime. it's never been easier with so many networks all in one place. get live tv whenever you want. the xfinity tv go app. now with live tv on the go. enjoy over wifi or on verizon wireless 4g lte. plus enjoy special savings when you purchase any new verizon wireless smartphone or tablet from comcast. visit to learn more. downer of a day for shares of that company right there. they have the biggest market cap, but today, it is decreasing by more than 2%. this as tim cook meets investors at its annual shareholder
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meeting. also the day after the big watch unveiling. john sculley is the former ceo of apple, he's live today for us in new york city. welcome back. nice to see you as always. >> thank you, scott. good to be back. the day after the watch, what stu thi did you think. >> it's an extraordinarily impressive product technically and design wise nothing in consumer electronics this sophisticated as a product. it's part of a long game that tim cook is playing smartly. think of this in terms of an ecosystem expansion. the analogy i think back to is, when walt disney created disney land, he created the concept of a theme park. when he created a decade later disney world he created something that was dramatically different because it became a destination not for a day for people in southern california but it became a destination for a week vacation for people all over the world who would come to orlando. i think that's what tim cook is
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doing. he's taking the apple watch, int grated back into the iphone 6, it's the only smartphone it works with and he's starting to build out new ways to separate apple from samsung and google and android >> put us inside the mind of a ceo, if you would. what should his expectations be for what this watch could do in its early wrest stages? >> well, i think the key thick is not to be embarrassed because apple is in a great cat bird seat. it's got great cash flow. it's going to continue for several more years as the refresh cycle continues on the iphone, and knee got plenty of cash. they had distanced themselves from samsung. cool thing for him is to make sure that people don't say, hey, what's this watch all about? so it's -- whether it sells a lot short-term or doesn't sell a lot short-term, the key thing is how it fits in longer term and what are people starting to say about it two months, three
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months, four months after the product was introduced. >> tim cook has said he will return more cash. that's no reason to believe -- they have over $170 billion. unless they have a big acquisition in mind and they've never done a big acquisition, i suspect that they will and should return more cash. >> appreciate your insight coming on the heels of the watch and the shareholder meeting ongoing. >> among other things, he
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demanded the ceo gerald hassell step down as a way of improving cost cutting and returns of the company. here's what bny melon has to say by way of response. we welcome input from all of our shareholders under gerald hassell's leadership. bank of new york melon has continued to increase shareholder value, reduce costs, improve margins, and streamline the organization which our results clearly demonstrate. a strong response scott from the company and the immediate aftermath of those comments that we just had on the halftime report. >> all right, kate. thank you so much. let's get back to apple and trade this for a moment. it certainly looks like for the short-term tactical move that our friend and colleague joe made the other day getting out at 128. looks fraet good. looks pretty good. you guys think this stock if the market itself has a bigger issue, pete, people are going to be ringing the register on this? >> i think if the market has a bigger issue, certainly apple will be following along with the market as well. >> doesn't have to be a huge
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issue. >> the market goes down a few more percent. >> if it drops down to the 50 day moving average, it's 118 right now. e whoo wha they did on the refresh because the pc was told to us to be dead, and it's not dead. those numbers are strong. it thinkically has had a pretty good run into an event. after it's over, people bail for a little bill. >> is it a pause or is it a correction? i think this is just a pause for apple. do i think it could make a 10%
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correction. sure. i've said all along, i don't think this first it rags to pete's point is going to be the significant driver. second, third it rags of this watch, maybe, but not this one. i don't think this is that 14 million to 20 million sale product. i think it's much smaller. >> i have taxes to worry about you don't think about. >> if are you buying and selling, big blocks of apple stock, based on the watch launch yesterday, make it up as you go along we have no idea what this product will or won't mean in
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the future, and i don't think it's a good reason to buy or sell. sdmroog all right. coming up, final trade. first, a look at how stocks are fairing right now and they're not fairing all that well. you know it's a down day on the street. you have the s&p for its 50 day moving average. it's down one and one-third percent. nasdaq off as well on the 15th anniversary of hitting its all-time high. we're back after this. i'm type e.
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>> the buyers are going to pull back. they're going to test a level on the sell sight. they're going to see how nervous they really get, and then they're going to buy stocks at lower prices. >> the company is not achieving its potential. we think that it's unlikely to be experienced without a meaningful change in leadership. we actually have sent a letter to the company today asking for them to seek a replacement of the ceo. >> really it's been nothing in consumer electronics that has
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been this sophisticated as a product. >> some people say dead cat. >> historically the markets bounce off the lows into the close, and it may not be any different. i just think it's too early. i mean, i'm only putting money into work if i see compelling buys right now because i think i'll get a better opportunity. the bull trend is still intact. >> the longer this drags out, want to look at percentages stocks. you want to fwet some sense that there's separation between winers and losers, and i agree with steve, it hasn't quite shaken out yet. >> or getting a bigger number of new lows than new highs today out of the s&p. do you look at this as a buying opportunity or no?
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>> well, at all times, so we're managing 30 and 40 year money. it's always a buying opportunity for some pocket of the market or even for a broad swath. >> i'm going to do final trades with you two fellows. >> imax, bought it today because of unusual activity. >> intel based on this new apple lop top. >> josh on deer and the s&p vix. that's it for us. power starts now. >> halftime is over. power lunch and the second half of the trading day start right now. >> good afternoon, everyone. welcome to "power lunch." the markets are falling hard along with mandy drury. i'm tyler mathison. >> let's get up-to-date on what the markets are doing. there's a lot of red out there. let's bring up the board and show you the score. the dow is currently off. it's off by 1.4%. the nasdaq is down by the same amount percentage terms. the s&p is hitting a 2052 down by 1.3% as well as the russell 2k. the little guys, the small caps off by 1.1%. >> there are three plausible reasons for this drop. we're going to


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