Skip to main content

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

12:00 pm
used to. >> most valuable company on earth, a cultural phenomenon and mixed opinions. mostly positive but questions about supply constraint, questions about the next iteration of the phones and how many they'll sell. i think the coverage is due. >> we'll see what they break out in terms of units. >> good to be here. >> jon steinberg. to headquarters, wapner and the half. ♪ all right. thanks so much. welcome to the halftime show. let's meet our starting lineup for this friday. stephen weiss, managing partner of short hills capital, jim lebenthal, president of lebenthal asset management, jon najarian the co-founder of optionmonster, and christine short is director of media and pr at estimize. former met tronnics ceo bill george blasting the billionaire and activist investors saying they're putting american companies at risk. he's going to join us live to explain. biting apple, another downgrade
12:01 pm
as the watch goes on sale today. is now the time to worry about america's most loved stock. we begin with the markets moment of truth, earnings kicking into high gear next week. with some of the biggest names on the street reporting, just as estimates continue to come down. raising the question of whether stocks can really rise if the numbers are as bad as some people think. jim lebenthal, you want to answer that question. you have another earnings cut today. jpmorgan cutting 2015 s&p 500 earnings to $123 from $127 and it is due to the dollar. >> yeah. and i think the big question, scott, is whether the earnings estimate reductions that have been going on for several weeks now have been deep enough. what's the answer? i think in some companies they've been too deep and other companies they haven't been deep enough. so this is going to be a stock picker's earnings season. you will find those companies that were cut too much in terms of their estimates outperforming and find some companies that maybe people didn't realize they had as much overseas exposure as te do, getting hit.
12:02 pm
but i think overall the markets are going to stay where they are. the individual stocks are going to move all around. >> we're so happy to have christine short with us today. this is what you do for a living. >> this is what i do. >> tell us what to expect next week. >> you have to be living under a rock not to know that estimates are very tepid right now. we're looking for s&p 500 growth of negative 1.5%. that would put us back five years. that's the lowest since 2009. revenues similarly down 1%. it's exactly as we've all said here, the stronger dollar. you will see everyone mention that. i feel like even domestic companies will find a way to work that in there. energy, last quarter we were able to stave off some of the energy pressure because we had the benefits to consumer discretionary and industrials. this quarter looking for energy profits to be down r59%, getting a little harder to offset that. again, but i think to your point, stronger dollar, everyone's going to say it. i think everyone pulls down their estimates purposely. >> there you go. that's where i was going next. i don't want to ask -- i want to ask steve weiss, have estimates
12:03 pm
come down enough on purpose that companies will be fine, yes, the dollar headwind is going to exesist from here to who knows how long, and we'll get over it and the market can still go up? >> we will get over it. i think sentiment has come down more so in greater magnitude rather than estimates and to me, that's the critical juncture. now as i look at how i'm going to play this i'm not going to do anything different. i'm not going to sell the stocks i own and not going to buy anything in front of it, hoping that sentiment and estimates have reached rock bottom. stick with the fundamental cases, see how it works out and we saw what it really is, it's the -- it's the rate of change in the dollar. in such a compressed period of time. going forward i think companies would be smart and most of them are, to give themselves a little curben in terms of currency. like a freebie. a kitchen sink quarter for currency. the market looks very bright going forward. >> doc, you have big names next week, tuesday, j&j, jpm, wells
12:04 pm
f fargo, intel, big time names to set the direction of the table for the next snoonz true. just as christine has said, this is an earnings recession, judge. and the question is, have the earnings been -- has the outlook been set too low? i would say yes. i've heard -- i heard your numbers just now, christine 1.5 or 1 point something to the downside. >> and we're better than most. >> i've heard as much as 5, judge. i think that's too much. i think companies will, yeah, they'll kitchen sink it and in many cases just as steven said, the acceleration which we talk about here on this show a lot being fast money you can't stay ahead of it. in particular, right now, it will be interesting to see a company like apple here with depending on how the watch does, this is not going to be a make it or break it for apple, we know that, we'll talk about it, but the issue, that's one thing that they unlike mcdonald's don't know how many of those they're going to sell. mcdonald's knows on a day by day basis what their exposure is to
12:05 pm
the mcroyal or whatever it is over in france. >> call pete. >> that's right. they just call pete and say how many are you going to buy. >> christine, you've taken a look at stocks you think will beat the street expectations. >> we're looking at between our estimatized consensus and wall street ken senses. we don't just use sell side estimates but buy side independent research shops and nonprofessionals. a little more representative consensus. the companies we think that will beat first is priceline. a company known for sandbagging their guidance. they always take it down very low, sell side listens and then beat and i think over the last four quarters or so they've beat by 7%. the second is gilead. this is another one the street is a little too conservative. we know they tend beat. their profits have grown triple digits the last several quarters, slowing down though, only expected to grow 77% this quarter, a lot of competition in the hep c market. >> amazon another one, they like stopped their losing streak in the latest quarter. we expect that to continue,
12:06 pm
taking everything on from the traditional i.t. companies by offering cloud storage, streaming music, they're offering their alternative to pandora and spotify so that's one we like as well. and then i would look at another health care company, intuitive surgical, their robotics system that is more cost effective than laparoscopic that they've cornered the market on. and then the last one whirlpool. household durables in general expected to be up 20%. housing data has been mixed but we see consumers buying larger ticket items now and whirlpool is one name. >> one last look at the wall, so you can see who is coming out next week. far beyond the companies that i mentioned and even far beyond the likes of the citis and goldman and american express and ge and honeywell, industrial flav flavor, schlumberger, sherwin williams. >> j&j is the most at risk in the currency. >> all right. apple, big story today.
12:07 pm
watches the preorders beginning today. you can go into an apple store and check them out and that's where we've sent jon fortt, he is in new york city at the flagship. hey, jon. >> hey, scott. we've been collecting impressions from people throughout the day. most of the people who are in the store today, they are apple loyalists. some of them have preordered their watches already, just come in to get a chance to touch and feel what they've already purchased. the response has been pretty good. i did run into one guy, salt of the earth from north michigan getting a look didn't realize this was the first day that the watch was on display. he said not quite enough for me. i was expecting that kind. maybe in a couple years, year and a half, the price comes down to 199 and then everybody will buy it. keep in mind, i did a count, since the iphone 5 cycle through now, about 450 million iphones have sold. if you figure even 1% of people who did that also buy a watch, you've got 4.5 million right there before you get to the
12:08 pm
holiday season. you have to hope apple is looking for slightly better penetration than that. looking down at the store and how they've got the watch displayed, some are under glass, some are in a try on area and some next to the displays where you can touch the watch, turn the digital crown, touch into apps and a screen that describes what each piece is doing. clearly apple knows they've got a different story to tell in terms of how to navigate this device and how consumers will connect with it. from what i saw in there, it's working. people are getting the explanation. a number of them are going with it and some are saying not for me quite yet. >> thank you so much. jon fortt outside the flagship in new york city. apple getting its second downgrade of the week. raymond james cutting the stock today to market perform. that's from outperform. is it time to worry about apple stock? you shake your head no. let me give you -- >> go ahead. >> notes about the downgrade itself. they warn about comps, says the
12:09 pm
watch is more risk than reward. >> well, frankly, i see no risk to the watch because i couldn't care less about it. i think we've talked about this on the show. i don't know really any analyst or portfolio managers who are counting on the watch to drive earnings on this. now to the other point about comps that's a fair point. they do have some hard comps but you know what, all the channel checks we've been doing show that they're up to the task of meeting those comps. let me put it another way, scott. we sloonts be focused on the watch. we should be focused on apple pay. that's the ecosystem driver that is driving people to pick up iphones and even ipads still. more iphones. we see those comps as being meetble. >> they question, christine, the slowdown in the iphone cycle itself. we here on the desk and everywhere else for that matter, apple, obviously, it's bread and butter is the phone. >> right. >> is this an issue or not. >> i don't think it's an issue. this is not going to make or break apple. i'm bullish on the wearable
12:10 pm
space. i question a watch. i prefer what under armour and nike are doing with smart apparel. i think that's makes a little more sense to include the technology in clothing something you wear every day. i'm not a fan of the watch. we've seen customers excitement fall. customers seem bored and the price point might be a little hard to justify, but overall for apple, i don't think this is going to have a huge negative impact. >> doc? >> i agree. not a huge negative impact is the way i would describe it, judge. >> you think it's going to have a huge positive impact? >> no. >> you've been down on the watch. >> i'm still down on it. >> jim hit it, that's right, i got it right there, judge, see, you know, the apple watch. >> phony -- >> it's not phony. it's from china. >> as jim said, this is about returning capital to shareholders which is probably going to happen in a big way in apple. it's about apple pay. it's about the 6 and the 6 plus. and how important this is for apple. far beyond the watch.
12:11 pm
so the watch is an afterthought because it's not waterproof, because it's more expensive than most of the other fitness app things you would wear. the wearables. i would say yeah, it's not going to be a big deal but it's a big first step for apple. the second and third iterations they could be big, especially if they're as jon fortt said 199. >> speaking of big steps, coming up, ge's major restructuring of ge capital. the stock one of the portfolio managers sarat's top ten holdings. he'll join us next on the $50 billion buyback. the asset sale and who maybe could be next. plus former medtronics ceo going after billionaire investor nelson peltz reacting to his dupont proposal. bill george will join us live on the half in just a few to explain. plus the final day of our halftime energy summit. is now the time to buy oil stocks? top analyst paul sen ki joins us. plus which big energy deals
12:12 pm
could be president pipeliin the. back after this. sometimes romantic. there were tears in my eyes. 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. i take prilosec otc each morning for my frequent heartburn. because it gives me... zero heartburn! prilosec otc. the number 1 doctor-recommended frequent heartburn medicine
12:13 pm
for 9 straight years. one pill each morning. 24 hours. zero heartburn.
12:14 pm
jute business model of the financial services has changed. we have a fantastic industrial portfolio, but we were a large wholesale funded finance company. the wholesale funding model is tougher. we felt like we were disadvantaged versus banks. at the end of the day the way
12:15 pm
investors view financial services versus industrial assets is starkly different and we kind of felt from an investor standpoint that this was the right time to make the move. we've been working this way since the financial crisis. >> all right. ge stock getting a major bounce today. new 52-week high as the company unveils the massive plan to restructure ge capital selling most of its assets and institutes a $50 billion stock buyback. we happen to be joined by serat, managing director at douglas c. lane and associates ge one of his firm's top ten holdings. good to talk to you. do you believe that the most significant strategic step in many years as this is being called is a good one? >> absolutely. i think this is a great investment. they're selling from a strength, real estate is probably close to its peak or getting there. they're getting a great amount of capital. more importantly what they're doing now is, if you look today, 42% of their capital structure
12:16 pm
is financials. it is going to go down to less than 10%. what that does is now people can look at ge as a pure industrial. it was getting no value, if probably negative value, for its financial services. it allows them to buyback shares, probably going to see a growing dividend, focus on industrials, health care, energy, really verticals where they can grow and i think what you're going to see then also is an ability for ge to go back to the regulators to say look, take us away from what they call the significant financial institution. >> right. >> the title which i think will then also allow them to keep whatever financials they have in place and really support the verticals like the health care and ipd strils. >> right. i haven't heard anybody come on and say they don't like it and that's jack welch, all the way down the line. the question i guess is, so take me inside where the stock goes from here. 52-week high, having a huge day, the likes of which you don't see
12:17 pm
that often in a stock this big. where does it go? >> i think now if you start looking at some of the parts, right, industrials and health care are doing fine, energys is not, but i think when energy starts picking up they're going to get value for this piece that they never got and they have a great aerospace piece. i would be -- i won't be surprised now, you're going to get new investors coming back into ge. people looking at it in a very different way. you're going to have analysts on the sell side who will understand the company because truthfully a lot couldn't understand it. when looking at financials and industrials and health care you don't have people really focused on that. i think the stock has more room to go. they did the right thing. you're going to get more investors now interested in a company that has global growth, top line growth, great balance sheet and a growing dividend. >> we'll talk to you soon. thanks for the time. >> thank you. >> all right. sarat. >> if you take a look at the stock it's at 50% of its all-time high and the reason is,
12:18 pm
financials. right. so financials became a bad thing. it's impossible for industrials analyst to really have confidence in this company even though they virtually all have or a significant percentage had buys. you're supposed to. it's market stock. i think it is a very, very positive thing. what i would like to know more about, though, is why they didn't have a competitive auction for the real estate. reported that they didn't. that's a little troubling. having said that, though, $50 billion buyback, that's 25% of the market cap, you do simple math, and you adjust for the credit portfolio coming out, i think it's a pretty good buy. >> does it change the way you have your long-term view of ge stock? >> absolutely. >> is today? >> absolutely. and i agree with the move. it has decongom terrorized and sarat -- >> i'm surprised i got that out fluidly. how about props for that. carrying on, scott, you can understand the company, but now you simplified the company into an industrial which is very
12:19 pm
cyclical. let's consider this. a luge backlog in jet engines because boeing and air bus have something like 5,000 i think i've underestimated it, 5,000 planes in backlog. there's a lot of turbans for the lectry klg power arena and health care. what you have to worry about when the cycle turns and it will, i don't know if it's one or two years from now, there will be a time where you have too back out of ge. it's no longer the market the way steve was pointing out. it is an industrial purely. >> doc, you had unusual activity on this name. >> we did. we talked about it on the show. >> in the winter. >> it was february 27th, we talked about 127,000 calls trading at the 30 strike in january of 201, judge. that's the right to buy it at 30 with the stock trading basically 25. 5, 26 bucks. this big move to the upside the people that bought those calls are happy today. but we're keeping an eye on this one. we bought it for wealth management clients. i bought back into it myself
12:20 pm
today. i bought stock and options and i think that jack or not jack, i'm sorry, that jeff immelt is also making a move as far as repatriation of $36 billion, there is nobody the else who's doing that. this is throwing the gauntlet down there. i don't think it's going to make tim cook move on it, judge, but i think a lot of other companies are going to be under pressure because of this. >> i don't think so. >> no? >> i don't think so. >> i don't think -- >> $36 billion, though? >> i don't know if that's a good move frankly. >> i'm not saying it is either necessarily, steven, but i'm saying, we've talked about all this money overseas. >> right. >> and now here you've got one of the biggest companies in the world. >> yeah but tax laws -- >> we're bringing this back in. i think this is jeff going activist on the other companies to try to force moves. >> i think he would have been better off using the capital overseas to buy cheap assets on funding that costs you nothing. so instead of giving half to the government when the government may be the next administration
12:21 pm
tax advantages that money why not have waited. you're paying big taxes. >> coming up, are activists like nelson peltz killing innovation in america? that's what bill george suggests in an op-ed. he will join us next to explain. plus the asian stock frenzy. a few of the markets seeing strong gainsp. how it trade the rallies and the major averages and how they are fairing on this friday. dow 18,000, s&p takes 2100, nasdaq backs closer to 5,000. back after this. woman: it's been a journey to get where i am. and i didn't get here alone. there were people who listened along the way. people who gave me options. kept me on track. and through it all, my retirement never got left behind. so today, i'm prepared for anything we may want tomorrow to be.
12:22 pm
every someday needs a plan. let's talk about your old 401(k) today. if you have a business idea, we have a personalized legal solution that's right for you. with easy step-by-step guidance, we're here to help you turn your dream into a reality. start your business today with legalzoom.
12:23 pm
12:24 pm
♪ all right. welcome back. the dollar is rallying today. it continues. jackie deangelis at the nymex with the futures now crew. jackie? >> good afternoon to you. that's right five straight days of gains for the dollar. the dollar index over 99. scott nations, do you think that new highs are ahead for the
12:25 pm
dollar? when are we going to see 100? >> that's a great question. we're almost there as you mentioned the dollar index, we're almost below 106 in the euro currency and the dollar index the interesting thing it bounced really hard off the 50-day moving average and the chart shows higher highs and higher lows. looks like we're going to get above 100 and the target the recent high of 100.78.5. >> brian we're going to get a lot of earnings next week and the question is how the dollar is impacting companies. how do you think companies are managing this and what do you think we're going to hear? >> well, i think ge actually gave a little insight an how companies should be managing it going forward. ge clearly saying hey the dollar strength is hurting our balance cheat here and we'll repatriate and turn our money back into u.s. dollars. the first lead into the charge of more companies doing is this. i think you will see news where dollar strength has hurt earnings for this company and maybe now this is a which for companies to takes the money back and do something with it
12:26 pm
back in the united states and play with the dollar strength that is going to continue above $100 on the index. >> certainly a lot to watch for. meantime for more head to and join us tuesday for our live streaming show. >> coming up attacking the activist. last week jeff sonnenfeld had negative things to say about nelson peltz. peltz joined us on the air to defend his record. >> the background of trian is building and fixing and running companies, it's not just buying and selling stock. >> all right. now former mettronnics ceo is being after belts saying he and activists are putting companies at risk. bill george joins us to explain. visit for the trades and analysis from our team. we'll be right back. when the world moves,
12:27 pm
futures move first. learn futures from experienced pros with dedicated chats and daily live webinars. and trade with papermoney to test-drive the market. all on thinkorswim. from td ameritrade.
12:28 pm
12:29 pm
i'm courtney reagan. here's your news upcate for this hour north korea showing photos of kim jong-un with a bandage on
12:30 pm
his wrist. state run didn't mention the bandage or why wearing it. french president hollande unveiling the replica of a cave innence from. the original discovered in 1994 and contains what is thought to be the oldest human cave drawings known to man dating back 30,000 years. goldman sachs awarded chief executive lloyd blankfein $24 million in compensation for 2014. a 4.3% increase from a year earlier. the stock up about 10% during the year. goldman will report first quarter earnings next week. and a sad story to report. mount st. joseph freshman lauryn hill has died of brain cancer, she was 19 years old. she made national headlines last year when the school successfully petitioned the ncaa to move its season opener to an earlier date so that she could play. she scored two lay-up during the game. that's a cnbc news update at this hour. back to you. >> all right.
12:31 pm
thank you so much. former medtronic ceo bill gorm o george-out with a scathing article. mr. george says the following the peltz proposal is troubling because it mirrors a disturbing trend in which financiers are gutting american research labs that develop tomorrow's innovati innovations. they want to increase short-term innings see an uptick in the stock price and close out petitions. they are speculators not investors. bill george the senior fellow at harvard and a former ceo of medtronic. thanks for coming on today. >> thanks for having me on, scott. >> i think scathing is an accurate word to describe what you wrote. >> i'm concerned about dupont, a company around 212 years, at the backbone of american science and chemistry for all that time, they invented rayon and nylon
12:32 pm
and kevlar and teflon. this is a company that has done great science. when i hear proposal break up science labs in threes pieces, breakup the order of the day i think it's wrong. if this happened seven, eight, ten years ago i think the company had a lot of problems. but alan komen has come in -- ellen komen has come in and put the company just right. she's returning to shareholders, $14 billion, another $4 billion when they spin off, they're going to spin off their commodity chemicals business. already spun off their commodity coatings business. they will have the high-end of the spectrum, high margin, high growth businesses and that takes investment and research and product development and i think she's making all the right moves and the stock market seems to appreciate some 266% since she took over. that's far better than the s&p and far better than the chemical field. >> you could also -- >> kudos to ellen and i hope
12:33 pm
that she'll be sustained and will keep the board in place. >> by the way, you know, dupont is up 50% since mr. peltz got in. you could make the case, couldn't you, the stock has moved like that as a result of nelson peltz being there and the fact that expectations are that he's going to do something. i should say at the same time looking at the numbers it's not like dupont's earnings have been gang busters over the last few years. they're flat or down since 2011. >> well, i think the case should be made that she is putting it right and putting the moves in the right direction. cyclical markets and seeing it on all the ag companies. i think that -- >> but those are three years. >> it's true. >> activists get in and there's expectations. this will sustain far beyond the proxy vote which i hope gets sustained by the 97% of other investors that this is a terrific board, scott, and i think it deserves to be
12:34 pm
sustained. but i think the case to be made is that she's doing the right thing and you need to support it. it's a long-term plan. just like pepsico, a ten-year kind of plan and she's a little over halfway through it and got to complete the plan. but continue to the invention. when i hear talk about not doing central research that's been the science lab like bell labs used to be and is gone, that's fueled all these great break through ideas. i think they've had 27,000 patents. we got to keep that going in america otherwise we will not have long-term sustainable companies. we'll have little companies that will do new products but won't do the break through ideas that have made america great. >> peltz would say -- >> i feel strongly about. >> peltz would say i'm a long-termgy. you make a charge here in what you've written about activists saying they want to increase short-term earnings, close out their positions, their
12:35 pm
speculators not investors. i read that and i wondered respectfully if you're going after the right activist because based on mr. peltz's track record he's not a short-term guy. when he gets on a board they stay in the stock for an average of 5.6 years. he told me he's told the mutual funds that are already in the stock that they'll likely be there longer than they will. his track record in names i could go down the list. in wendy's since '05, pepsi, kraft, mondelez, leg mason, tiffany, not fly by night investments from a guy who shows up and bales ten minutes later. >> we'll see. >> the track record -- >> i honestly don't think he's qualified to be on the board. they've got a very strong board and i think the kind of leaders on this board are just what they need and i think there is a tendency of a lot of the activists to close out their positions within months or less than a year andic that their
12:36 pm
profits off the table and make money and -- >> bill, i say this -- >> some of them do good things. i would rather see mr. peltz go after weak companies not performing, there are other companies out there that are not performing. why go after the strongest companies in america? that's what's distressing me here. go after the ones not performing. you know, like bill ackman went after canadian pacific. it's performing well. okay. it wasn't performing. a lot of companies indeed. let's not go after the best companies that have built this country. >> he will also say that he has no plans on cutting r&d or capex. the fact of the matter is as well as in the stocks that he has been involved in, capex has gone up not down, in all -- nearly all of the cases and again, i could cite the names for you, i mean the record speaks for something, does it not? >> well, his initial plan was to eliminate the central research labs. dupont has a central research labs that fuels all of its
12:37 pm
businesses. it's the science base that makes a dramatic increases in a company's stock. that's the big pharma companies like novartis and merck that have a science base have really found that. you can always develop new products. but that's not where the break through come. the idea you're going to split the research and science up and just do product development i'm not sure he understands between research and product development. it's true 90% of the expenses of dupont which are only 7% of the revenues, are in product development but i think it's the research that does the break through work and that's ten-year kind of stuff maybe longer. and we need to nurture that and by breaking it up as he originally proposed i think we would put the company very much at risk and this great laboratory at risk and that's what worries me and i'm speaking out here because i want to see this company sustained and other great companies sustained who are doing the right things and performing. if ellen kulemin and the team
12:38 pm
were not doing the right things i would be critical. >> some will say look a former ceo sticking up for the establishment. not surprisingly going against activist investors. you're on the board of goldman sachs. goldman advises dupont. goldman advised kraft. how do you respond to the charges? >> well, i don't get involved with who goldman advises. they don't let us know those things as board members. i think it was a mistake to break up kraft. a great global company a lot of issues that needed to do a transformation and any more than i thought -- i think it's good pepsico has been kept together and so i -- i think that it's really -- of course -- but i am not the establishment ceo i'm the person critical of a company not well run, okay, like a mcdonald's and they had to make a ceo change there, but i am going to be very supportive of companies playing it for the long term and i think that's what with we need in this
12:39 pm
country. sigh a lot of downward pressure on long-term investment and that's a worry right now and we don't have their research funds. the n.i.h. cut back 15, 20% in the area and not getting the investment in this country in science and research for the long term. and does -- will the shareholders stay with it long enough. that's what worries me. that's where the huge increase of shareholder value come from through the big break through and that's what -- that's what i'm supporting here. >> don't you think that in many respects, and maybe not in all, activists at the minimum, force a company to keep its collective eye on the ball, to work as hard as possible and push as hard as they possibly can, for the betterment of all shareholders, not just themselves. and again, not in every case, but in many, and certainly if nelson peltz were sitting here he would tell you that that's
12:40 pm
what he is after, and his returns which certainly and do speak for themselves? >> i think that these ceos that i'm talking about are doing everything they can. you can't do it overnight. but ellen kulemin's accomplished a remarkable amount in six years against a long-term strategy, very long transformation strategy and so i don't know what more she could have done. frankly this could be a huge distraction. she can't spend her time in the research lab. she has to worry about a proxy vote coming up. scott, that becomes a huge distraction. you can say well, he only holds 2.7% of the stock but that's not what i'm concerned about. a lot of other investors may go with him. i hope not. her record is there and i think they're going to vote the other way. i've seen for a lot of companies the distraction this can be and that's not good. if you take a weak company it may need that but if you take a strong well-run company they don't need distraction. they need to focus on running the business. a big global company. they have tough competitors,
12:41 pm
great global competitors like basf that, you know, are very, very strong companies and buyer and they've got to compete with companies around the world and the japanese and chinese as well. so you got to stay ahead of the game or america won't be ahead of the game and won't be providing break through consumers want and create long-term shareholder value. i'm very much a shareholder value guy but for the long term. that's what we did at medtronic and it's paid off very well. >> i do want to ask you one final question. because you do -- i guess aside from taking issue with mr. peltz himself and ac itty vists in general, this conversation certainly is larger and it's what's best for america, what's best for corporate america. you used to run a company that is now inverted. how would you respond to someone like nelson peltz saying or anyone for that matter, how is that good for america? how are those companies making their decisions to do that good for america while at the same
12:42 pm
time criticizing these sorts of things done by activists? >> well, i think, scott, pointing out a big issue right now. very serious problems with the u.s. tax code and i think we need to go to a territorial tax like virtually every other developed country in the world has. and i think that will take care of this problem with inversions. i don't work at medtronic. i haven't been there for 12 years. i did support the inversion because it was necessary d it was part of an overall strategy to expand the mission of medtronic. i think the strategy was right on the money, fulfills the mission of medtronic, adds another 5 to 6 million new patients every year and gives the company the heft to serve the global marketplace. i'm sorry that, you know, that there's these pressure on inversions and, in fact, at lot of them are coming about from activists, a number of big deals are done this way, but i think that's more a reflection of not the activist, of the tax code. i'm not optimistic it's going to
12:43 pm
get solved in the near term but wouldn't be hard to solve. we know what needs to be done and u.s. can't sit up there with 35% rates and have everyone the rest of the world below 25. other countries like germany, have come way down. i think that we've got to fix the core problems to keep america great. and that's my goal to say that the competitive edge america has scott is innovation. that's how we create jobs. we're not going to do the low cost labor. that's left to developing countries, indians, chinese, emerging companies in africa and as asia. the well paying jobs come from companies like dupont from medtronic, from exxon, from these companies, that have the science and push the technology. and give us the base to be great in the world and great exporters and global companies. >> i don't know what it is about the ivy league but sonnen feld from yale, bill george from
12:44 pm
harvard i don't know if peltz needs to watch out for princeton next, thanks so much. >> thanks for having me on. good to talk to you. thanks for challenging questions. >> likewise. have a good weekend. >> coming up the traders reaction to the interview with bill george and trading asia's rally, big stock moves in the far east. the best ways to play it. plus oil higher heading for a weekly game. the halftime energy summit rolls on with stock picks from a top analyst. we are back after this. "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 be worried. >> real money. >> what makes things cheap is uncertainty. >> real debate. >> interest rates are going to go up, they can't drop as much as they did last year to this year. >> the most profitable hour of the trading day. >> if a stock has doubled you haven't missed it. >> the "halftime report," weekdays at noon eastern. the most sound way to go. let's talk asset allocation. sure.
12:45 pm
you seem knowledgeable, professional. would you trust me as your financial advisor? i would. i would indeed. well, let's be clear here. i'm actually a dj. [ dance music plays ] [laughs] no way! i have no financial experience at all. that really is you? if they're not a cfp pro, you just don't know. find a certified financial planner professional who's thoroughly vetted at cfp -- work with the highest standard. it begins from the second the pursuiwe're born.ier. after all, healthier doesn't happen all by itself. it needs to be earned... every day... using wellness to keep away illness... and believing that a single life can be made better by millions of others. healthier takes somebody who can power modern health care... by connecting every single part of it. for as the world keeps on searching for healthier... we're here to make healthier happen. optum. healthier is here.
12:46 pm
mileageplus® explorer card. we're saving our united miles... ...for a trip to hawaii.
12:47 pm
we love free checked bags. i've saved $75 in checked bag fees. no foreign transaction fees means real savings. we can go to any country and spend money the way we would in the u.s. one of the best things about priority boarding is you can just get on the plane and relax. i put everything on the explorer card. i really want my united miles. coming up on "power lunch" at the top of the hour a tale of two dow components ge and apple. big time today. watching those. ge announcing a massive buyback in asset sale. what is ge and how does the stock look compare to rivals and do stock buybacks really work? time for apple to deliver on the watch. it goes on sale today. we are live coast to coast and across the atlantic. and check out the guy on the right of the photo. we're going to pull up a photo. think he would wear a suit if
12:48 pm
meeting the president. what was he thinking? find out when he joins us live on power. the photos. two hours of "power lunch" ahead. back to you for the "halftime report." >> i love that story. it is so good. so stay tuned for that. you got to see that. guys, what do you think about the conversation with bill george and activism? we don't have to talk about sort of peltz directly. >> right. >> but activism in general. >> i think you made some great points which are due popts stock has moved up despite the fact that their earnings are down significantly from the peak. and that's troubling. i think activists serve a very, you know, good role. i get what bill is saying about innovation and r&d budgets and that is a concern but if companies are doing the best that they could, the activists wouldn't be attracted to them. peltz in particular is one that's stuck. he stayed there. ackman stayed there. still in cp. so look the market ultimately decides what the market is.
12:49 pm
if activists bring an idea to the forefront, seen it plenty of times, and shareholders don't agree then it doesn't happen. so i think it's capital markets. >> scott, i think there are plenty of activists who mr. george could have gone after. nelson peltz is a questionable one to go after because as you made a point, he is absolutely a long-term investor with a long-term track record of success. having said that, i have to say, i have a question mark in my mind as to why go after dupont. this is not like intuitive surgical or netflix something you're expecting growth from. this is a dotty old cyclical chemical company. it's never been clear to me why that's a good target for nelson peltz but he's the wrong guy to go after. >> his view you can improve the business, you can improve margins to the point where they get best in class, but the business in the hands of the actual people who know the business best, run the individual units et cetera. of course the fact about the
12:50 pm
stock going up, relative to earnings doing nothing. >> yeah. and my only point is everything you said is accurate. i just think there's bigger targets out there, there's companies with bigger problems out there than dupont. >> but they have relatively steady cash >> to steve's point, we've had an issue with r & b spending. buying back shares and -- so i do think that puts a company like dupont, they are driven by science. you know, the core of them is what they spend in r & d, and so it's making it harder for them to compete globally by taking away those expenses, and i think that would be problematic. >> well, the latest weekly rig count numbers are less than 15 minutes away. the newest numbers could mark a decline in oil drilling rigs for the 18th week in a row.
12:51 pm
last week the number of u.s. rigs came in at 802. half of what it was just six months ago. joining us to discuss the impact on big oil is all-star analyst paul sanke of wolf research. >> we think it's much less relevant when we were initially cutting so many rigs. the rig count, in fact, now . >> i think it's more emotional, their own strategy, that really worries us, and how much more of oil we're going to fwet into the second half of the interest rate being bearish on the outlook for the second month. >> so we're looking at wti for the macon track at 51 and 47.
12:52 pm
are we going to be looking at 20 something a barrel, $30 a barrel? what's your best guess? >> we might be in canada. that's a real possibility. oil is now backing up off shore nigeria. that's what happened last year. it's a function of u.s. emports being substituted. it's a function of whether or not libya is produce, but what we know is the oil is backing up on ships off shore, west africa, and that's very worrying. i don't think you'll get that low in wti as such, but as i said in canada, you could lies get down below 30. i think over the next six months. definitely. >> paul, just real quick question as far as with things going upside down in venezuela, do you see the possibility that that that is additional pressure coming our way with the elections that are likely to be held, that are supposed to be held the elections that i believe will be held because of the turmoil going on down there? do you think that's -- that additional pressure also it takes crude oil down, wti perhaps even as well, to that lower 40 or even high 30s?
12:53 pm
>> well, i think in venezuela, again, the rates of change is fairly slow. you know, exxon has been nationalized twice in venezuela over the past 40 years. they're out today. if exxon were in, and they've been allowed to do what they do well, venezuela production should be six million barrels a day. they're currently running two million, 2.5 million. the u.s. rig count, we're only talking about now change of 100,000, 200,000 barrel az day. if you look at what saudi has done, they ramped up 100 million a barrel towards record highs. that's where we're really focused. >> so bearish overall, obviously. not necessarily bearish overall on all of the names in the space. anadarko, devin, and eog. >> i was going to say long-term, we're incredibly bullish on oil because of what saudi is doing here effectively is launching a
12:54 pm
major under investment cycle. it's really a question of your timing. the names that we've chosen are all exposed to the u.s. unconventional oil theme which is a huge theme for the future. we like anadarko, as you mentioned, on top of that. their exploration globally has been -- eog is a pure play. along side his all the names have the balance sheets to survive the second half and into 2016 with a very rough oil price environment. beyond that, i think at $100 oil by 17, 18, 2017, 2018, so equity investors are staying long oil equities and toughing it out. we just think they're too optimistic on the next six months to a year, and that's what concerns us and why we're so defensive. >> i have to run. please answer quickly if you could. shell, bg get together. what's one name, one name we should keep our eye on that could be next? >> hess, no question. oxy in the permian. >> good to talk to you, as always, paul.
12:55 pm
>> thank you. >> coming up, just three hours left in the trading day. in the trading week for that matter. the game plan for the second half of this day, maybe a peek towards next week is up as well. yoyour friends have your back. your dog's definitely got your back. but who's got your back when you need legal help? we do. we're legalzoom, and over the last 10 years, we've helped millions of people protect their families and run their businesses. we have the right people on-hand to answer your questions, backed by a trusted network of attorneys. so visit us today for legal help you can count on. legalzoom. legal help is here.
12:56 pm
12:57 pm
♪ help northern china reduce its reliance on coal fire heating plants and prevent 60 million tons of co2 emissions? when emerson takes up the challenge, it's never been done before simply becomes consider it solved. emerson.
12:58 pm
>> we have about two minutes left in the show. three hours left in this week. christine short, again, given this is your bread and butter, your whooil wheelhouse, earnings. how should we be thinking about what we hear from some of the biggest companies in this country and then builds up to when you really, you know, get the bulk of all of the numbers coming out? >> next week isn't necessarily a peak week. it's really the week afterwards. we know all the banks are coming out next week, so i'm going to be looking at -- >> set the tone sdwloosh they really do set the tone, and we've got jp morgan first out on tuesday. they've downgraded their guidance, so that's something that we're going to be looking at.
12:59 pm
we're expecting them to report dlash 1.37. we're looking for a miss here. i would expect those numbers to drop a little bit, you know, in reaction to the guidance as we come into tuesday. >> guys, again, you know, i went down the list, and maybe the financials are the place that this conversation should stay because it's an area that you guys have talked about. we try to make decision on whether we're going to invest there or not and seeing all the financials as an umbrella is, you know, obviously not that helpful. you have to look inside the financials for the best areas to be. what do you think? >> i don't think the financials have anything to do with how the earnings season is going to go. i'll disagree. that's been true time and time again. >> i don't think -- i don't think we're suggesting by any stretch that, you know, so go the financials so go earnings season. >> yeah. that's a fact. >> they are first and that means something. >> i think j & j is more important. they have the currency issues. they've got the consumer demand issues. they've got the health care issues there. all positive to the dollar.
1:00 pm
>> i'm just interested to see if the financials can buck this trend of being entirely tied to what the fed does. that's what we're looking for. >> doc, quick point. >> it may be covered on 60 minutes. the rumors are sparked by interest. i bought that stock. >> thank you. thanks to all of you as well. great weekend. see ow the other side. power lunch begins now. >> halftime is over. power lunch and the second half of the trading day start right now. >> all right. thank you very much. welcome, everybody, to power lunch. along with sar why eisen. a major move by one of the world's most widely held stocks. general electric soaring by 8% after unveiling a massive restructuring plan unloading billions in assets and announcing a big stock buy-back. what exactly is general electric now? how does the stock compare with its rivals? is the stock a buy? >> the other dow component we are watching closely, apple. time for the tech giant. time to deliver on its watch. it goes on sale today around the


info Stream Only

Uploaded by TV Archive on