tv Fast Money Halftime Report CNBC June 26, 2017 12:00pm-1:01pm EDT
floating with years for the year >> what does that flattening yield curve mean i think the jury's still out that what we saw in the tech sector when people were so terrified, is that over or still sniffing around out there? you know >> we'll see i think it's still out there the tech stock is doing well at this hour. fitbit, blackberry and pandora, not exactly safe let's get to the half back at hq and welcome to the "halftime report." i'm scott wapner welcome to f.a.n.g. week over the next five days, we're going to discuss and debate the stocks that have driven the markets to record highs. facebook, apple, amazon, netflix, and google. >> so i like to believe that mark zuckerberg is the steve jobs of my generation. >> amazon just bought whole foods, and so i think they're just like taking over. >> i was watching netflix probably an hour and a half ago. >> it's like life. >> the question now is how long
can these stocks keep surging. with us for the hour, pete najarian, steve weis, also with us on set is tony dwyer. weis, i'll begin with you. you like this group? you own netflix. >> i do. >> you say you may buy facebook today? >> i would love to buy facebook. i've been talking about it for a number of days, a couple of weeks. i agree that mark zuckerberg is one of those unique individuals, like a steve jobs, who is creating an entire new asset class, as we look at it, and technology, of course. look, the nasdaq is not expensive. and if you -- it's like 18 times earnings as you go forward, you're still going to have this low inflation. i mean, we looked at durable goods orders today it was a disappointing number. the revision was disappointing if you have that low inflation, you'll want to go for growth you're not going to get the ten-year moving much above where it is. so growth is personified by the f.a.n.g. stocks. so they will keep going. there's no doubt in my mind in this environment >> you've been, tony, somewhat
negative of late the last many months that we've been talking right here, and you've gotten run over by these names. >> well, i've been market neutral these names. and typically, a couple of weeks ago, 44% of the s&p technology sector made a new 52-week high historically, that's only happened twice, where it's been that broad you typically get a little bit more upside, which we've had and then you get a 20% correction, in both of those occurrences. so i won't buy that correction >> but my point is these stocks in particular have helped to thwart your thesis on where you think the market is going to go, in the near-term >> how so? >> well, you were looking for a pullback >> no, i got -- about a month and a half ago, i actually upgraded our view of the market and upgraded our view of the more cyclical sector so i would say, or i would debate where steve would be. if you're in an area, i'm kind of on the pro-trump trade. i think there's going to be increased economic improvement -- >> you were looking for a correction and you said you would buy the correction you totally changed that view? >> i did, about six weeks ago.
>> why what made you change it? the market had got toten to defensive. the yen were strong, bonds were strong, the vix had bounced back at the time, up to 16. so the yen, bonds, and gold was overbought so youed that h macro trade put on, you never, ever get negative in a fundamentally bull market without an inversion to the yield curve, ever. if you're going to get defensive, it would only be from a very tactical perspective p d i would say right now, i would be a little more defensive because of that stat i gave you on the tech stocks and also, the no-growth trade. the bond surrogate trade is long in the tooth with the c-group economic surprise trade index at 74 within i want to be a buyer, not a seller of cyclicals. >> what about this group, these f.a.n.g. stocks that have played such a large role of these
stocks >> is it f.a.n.g. or fang man? >> we can put that out there >> microsoft >> if you've got microsoft -- >> and fa.a.n.g. now has two as it's a long a >> i think it fits in exactly the kroir we've been talking about. you have valuation with growth i'll throw microsoft and apple in with these two names. if you want to be in the other f.a.n.g. names, even facebook, when you look at the valuation and the forward valuation and the growth that they continue to have, each and every quarter, and it's not just facebook itself, it's everything. zuckerberg is like a navy s.e.a.l. he comes out there and smiles, looks like this nice guy and all he does is attack, attack, attack look at what he has done to s.n.a.p. since the day he tried to buy them for $3 billion and they gave him the hieisman, look at what he's done he went after them, he's aggressive, and beaten them the entire way along >> no one's going to dispute that it's the reason why facebook is in part up 35% year-to-date. >> so it's great growth.
>> but all of these other names, apple is at 27% and amazon at 35 and netflix is 29, google is 25. nvidia, 43 >> skperand everybody's looking the pullbacks. >> s&p, 9. >> yeah, right well, these names -- when you've got the kind of growth that they've got, scott when you look over at microsoft, all of a sudden you see what they're actually doing in terms of their growth, each and every quarter, it's pretty amazing, isn't it that's where you're looking. if you're looking at apple, you're looking towards the services and what they can do off of those service numbers so there are other places, geographically, that apple can go but look at facebook, still. facebook has plenty of room to still grow >> i'll make the argument that facebook is the cheapest in the group. >> yes >> we're talking about growth skboo and we're all going to agree we all agree there's great growth in these names. the question is, what is the price you're paying for that growth that's where the price-to-earnings growth ratio comes in or the peg ratio.
it's a very simple way, how much money are you getting for a $1 you put into these stocks. the cheapest is facebook at 1.28 1.28 is a very low peg ratio in comparison with this to your point, google is about 1.5 apple is about 1.5 those three are actually really attractively priced within the f.a.n.g. space, the others, you know, you get into netflix and amazon, they get into the multiples, 2.5, amazon is 5.5 times. nobody is going to deny that amazon is a fabulous company, it's just what price are you going to pay for it. peg ratio is what we should look at >> here's another interesting stat when the yield curve goes from where it currently is at 100 basis points between the six-month and ten-year, the tech sector outperforms in both of the last two cycles, meaningfully when you go from where we are today, to where the curve actually inverts it would make the case of why you want to buy any kind of weaknesses >> see, there's a damg nger of k at what happened the last two
times tech corrected and that danger is, you've never had low rates for such a long period of time and other parts of the economy, not working. there's no inflation and what i mean by that, if i were you, i would be sitting here talking about how expensive industrials are. because you see no commodity inflation -- >> haven't seen any commodity inflation. >> right and no signs of that continuing. you could sit and wait for a correction here. i haven't bought facebook yet. and you could say, you know, let me buy some here and if there's a orrection, i'll buy some more, rather than being on the sidelines, continuing to miss it >> let's continue with the tech trade and bring in eton vance, four-star portfolio manager who focuses on growth opportunities. his top three holdings are alphabet, facebook, amazon lou, welcome to halftime nice to see you today. >> thanks, scott do you think these stocks still have plenty of room to run >> i do, over the long-term. i think the growth prospects for all three of those stocks are tremendous valuations still remain very,
very reasonable. i view these three stocks as kind of today's blue chips for growth investors so we're still pretty comfortable owning them for the long-term. >> you think alphabet -- what about valuation, right we're having this debate on the desk here. if you take each one, sort of individually, make the case for your best in class, best in f.a.n.g., if you would >> well, i think facebook is probably at the top of the list from a valuation perspective i mean, if you look at their growth prospects, you know, $30 billion in trailing 12-month revenues it's less than 5% share of the global advertising market. they've got an opportunity to double that over the next three, four, five years so, again, you know, very, very strong growth prospects. and the beauty of it is, you don't need a strong economy to make that growth happen. stock trades around the 24, 25 times earnings you know, probably a 20, 30% premium to the s&p 500 it's not a lot to pay for that kind of growth >> how about alphabet?
>> yeah, same story there. not growing as rapidly, but again, i think, you know, you've got paid search continuing to chug away, youtube has been a strong growth, grower for them you've got strong financial discipline and again, just huge free cash flow generation in this company, as well. but still growing at like 20, 25% premium to the market. so still very, very reasonably valued >> i thought it interesting that you're not that bullish on apple, when so many other people are. that's a conversation in and of itself but why not? >> it is -- well, we do own a little bit it's a much, much smaller position within the portfolio. my issue with apple is over the long-term, it's hard to really get your arms around what -- you know, what their growth rate truly is you know, they're benefiting right now from a strong iphone cycle that's coming in the next few months but at the end of every cycle, there's a cliff. and, you know, we saw it with the iphone 6 and we're likely to see it again the numbers will be strong for the next couple of quarters, but there'll be a time where things
are going to slow down and decelerate and then you'll have a negative earnings revision cycle from there and frankly, we don't see the services side of the business kind of picking up the mantle after the new phone starts to slow so we're a little bit more uncertain on that one. >> lou, it's jim leventhal i want to talk a little bit more about apple with you obviously, the iphone 8 is coming out it seems to me and i'm asking you the question, this is just a question of opinion on how strong the iphone 8 is going to be i heard what you just said, we're putting services to the side at least for this discussion right now it comes down to the bulls really think the iphone 8 is going to knock the ball out of the park it's the ten-year anniversary. the bears or the not so bullish think, eh, it's just another cycle. is that the right way to look at apple today? >> i agree with both of those statements i think the new phone is going to knock it out of the park. but again, there is going to be execution risk it's a new form factor and they're pricing it at a huge, huge premium to all of their competitors. >> i like that
>> they're talking about a $1,000 phone can you reach enough of the masses to pay that kind of price. i've got three kids, you know, i'm not paying $1,000 per phone for each of my kids when they need a new phone again, i think that could be an obstacle for them with the 8 i think it will be a huge success. again at the end of the day, once you cycle that and anniversary that, what's next for them what's the next big innovation for that company i'm not so sure what it is right now. >> you better hope your three kids weren't watching this segment. they're awfully disappointed right now. >> they already know, believe m me >> we'll talk to you soon. >> f.a.n.g. week rolls on tomorrow we have the number one tech fund manager josh spencer of t. rowe price right hear on "halftime" tomorrow at noon eastern speaking of noon, new at noon now. and some more reporting on that massive new investment dan loeb's third point has taken nz the largest packaged food
company, nestle. loeb taking a $3.5 billion position, through its first-ever dedicated special purpose vehicle, raising $1 billion to do it. why nestle and why now i'm told by sources of loeb viewed the investment of having the most upside versus downside than any investment ever and at worst, nestle will execute some of the things it wants the company to do, and with the best-case scenario, it will do much more, which could lead to significant upside in earnings it's been reported that mr. loeb wet with mark schneider a couple of weeks ago in switzerland. sources tell me nothing in that meeting let loeb to immediately believe that mr. schneider is averse to doing many of the core suggestions laid out in a letter it is notable that this is also mr. loeb's first activist campaign in europe i'm told from sources that he currently views valuations as more attractive there than in the united states, which he said recently in investor letters and continues to believe, i'm told
this is an interesting story, leslie you were following it yesterday, along with all of us i've heard people, at least from their point of view, it's one point, 1.25% stake what can he really do? history suggests a lot >> you can, especially if you're a evacuate and outspoken activist with a lot of credibility, as loeb has i did take a look at some of their largest shareholders, though and they have a lot of passive investors up there with blackrock, vanguard. it's going to be interesting
to see what the remaining shareholders do in response to this, but as you mentioned, i mean, a lot of it seems to be different suggestions that are there are in line with what the ceo is thinking anyway i think it just depends to what extent they agree to enact some of those policy recommendations. >> and part of my point, i guess, is people say, well, you own a small stake, relatively speaking, in such a large company, but yet, you know, they would probably counter and say,
well, it's not like we had a massive percentage stake in dow. look at what we were able to do there? what's trident's percentage stake in ge? look what they have already accomplished, at least certainly in their minds, you know, you can debate sort of who is most responsible for what's taking place. but you get my point >> yeah, at the end of the day, it's not like any activist is going to hold over 50% of the shares that would just make their proposition a guarantee. so, no matter what the situation they're going to have to
get other investors on board and if the proposals are solid enough, and if it looks like, as loeb said in his letter, that these are -- you know, the type of -- a type of activist situation one could only dream of, then it should be easy to get other activist investors or other investors onboard. it's just a matter of do they have enough active investors to want to go along with them >> you're missing one point. i think the point is, on this, that it's not a u.s. company >> mm-hmm. >> and this is new to them
dan loeb tried the same thing swoeny >> that's the point in part that i made he's done like three campaigns in japan, sony being one of them, and this is his first foray into europe as an activist >> right so undoubtedly his suggestions were excellent and right on the mark and undoubtedly, he's one of the best investors i think in history. but you don't know how the personalities happen, and particularly over there, where nestle's is, and just the culture there, i would say -- >> could you have a bigger sort of cultural difference than, in many ways, the u.s. and japan. and look at a guy who wasn't afraid to go in there multiple times for multiple campaigns >> but what are we looking at with sony? the biggest one. and there's really been no results from that, have there been >> i think the key is, you have to get the shareholder recommendation services, the isss, the glass lewises of the world, you know, i think you pointed out that a lot of these
investors are passive indexes, right? they're going to vote the proxies whatever the recommendation is. it sounds like dan loeb got som very good recommendations. that's the path to get this done >> i was also curious, just given that it is a swiss company, you know, what these -- what the laws look like over there. are they very shareholder friendly, especially relative to the u.s. and they actually did change recently, to make it so that, you know, investors could replace the entire board, in one proxy contest. if it gets to that point, which, of course, it appears based on your reporting and based on the investor letter which praises the new ceo, that they're getting a aloget getting along right now. it will be interesting to see what happens with this one >> and he's certainly done awfully well leslie, thanks >> thank you >> let's get a check on the markets now. stocks are mixed bond yields, man, they just continue to drop there is the ten-year note yield, 212 volatility index is under 10
tony, what -- you threw in the towel on your sort of more neutral negative point of view, whatever you want to characterize it. >> i'm glad you bring that back up it was actually april 27th i want to be clear to the viewers that that's when we made a change to the market and again, the fundamental backdrop, we've had 50-basis point drop in the ten-year mortgage rate that has helped mortgage rates we had gone neutral in the market in mid-december, because rates were ripping you were at a 262 on the long end. and the citigroup economic surprise index was above 50. it was ramping it was on the pro-trump trade. it had got,en too nuenthusiastic the ten-year note yield at 212 those stimulative expectations are too important. if there's one message i can ever give to the viewers of the network, that is you never want to get out of stocks sustainably until well after you invert the yield curve and shut credit down
in the u.s these guys are traders and can trade around it. i would never take a negative position until you see economic recession, because you don't get market peaks until you invert the yield curve, shut down credit, and end up in an economic recession >> and that's sort of the point, as you know, as anybody -- as well as anybody sees, that's like lee cooperman, you know, traditionally makes, too it's recessions are the killer of bull markets. >> they are. but it's stuff to bet on them. and when you bring an inverted yield curve, which has always led to recession wi, i believe. >> since 1954. you've had a flattening of the yield curve, oftentimes more flatter than others. and yet the market has still moved up >> i've got some great stats on that because this is -- i did a myth buster piece on the yield curve, because it was making me want to gouge my eyes out. because people come on all time and say the curve is flattening and that's a negative thing. the opposite is true when you go from 100 basis
points to an inversion, you're median gain for the s&p is 11% when you go from an inversion to a bull peak, 23% and from 100 basis points to the bull peak, 35% so in other words, yes, it can cause corrections. it can absolutely cause corrections to some sector shifts but it is not a negative for the market when you flatten the curve to 100 basis points on a six-month ten-year spread, it's not even a negative when you invert >> there's another point here. let's not get too scared here, all right? the inverted yield curve has predict eed something like 15 o the last 10 recessions that's the old saw there's a lot of reasons the yield curve could be flattening, besides a recession. and notwithstanding the citigroup surprise index, the overall level of economic activity is so high, we really shouldn't be worried about a recession in the immediately -- >> global economy, too >> your target end of year is 2470 >> correct so we're at 24.40.
let's call it now. massive upside between now and the end of the year. >> because i'm not a trader. my job is to advise institutional -- >> i'm not a trader, also. >> as it said in the note when we upgraded, we're focused on 2018 >> so 2720 >> also said i'm too conservative on this year's number i want to see what the second quarter numbers look like. i made 130 in estimates for this year the current consensus is about 1.32 >> so we're going up 300 s&p points between now and the end of next year >> i think that's way too conservative >> well, that's your number? >> i think it's too conservative maybe i should hedge a little bit more, scott. i am without question -- >> what's the right number, then >> it depends on what the erpgs a earnings are it's a minimum of what my 2720 >> so what gets us to -- >> let's -- trump agenda -- >> no. we have -- >> for the first time we have a
synchronized global recovery from 2009 to early 2016, we had negative impact for the global economy. the global kbeconomy is now expanding. we were at 2% because we've had a weak global economy. the global economy is getting better upside to earnings can come from increased global -- economic activity and increased u.s. domestic economic activity if the trump agenda gets pushed, and you get a 20% tax rate, forget about the 15 he's proposing. let's go 20 percent. according to thompson ivis, who i had run the study for us, the numbers next year are 9.7% too low. so you could end up with something north of 150 in earnings, if you get a 20% tax rate by corporate america, throw a 20 multiple on that and you're at 3,000, and i think a 20 multiple with the current inflation rate and interest rate environment is very doable >> so is your case for -- >> how is that for a hedge >> i just want the answer. >> it's a good hedge
>> there's no hedging that >> well, there is, if you get the trump -- anytime you put "if" in there -- >> no, my case has nothing to do with trump for -- >> but you're only conservative then, just so i'm clear, when you say you're skrconservative that 2720, you're only conservative if the trump agenda comes true >> partially, for sure >> the economy is strong enough to carry the weight, most of the way? >> it is strong enough to carry the weight and i think it's really super important to remember that you have -- this is a quick study that the philadelphia fed did. they found nominal disposal personal income is underestimated by 8.4% per year since 1965 we don't count the numbers, right? they're always too low payrolls are always too low. we're full employment. we're the good global economy. >> so you're going to be bullish on the market until the yield curve inverts? >> i'm going to be bullish on the market until after the yield curve inverts. >> until afterwards. we're making the same point.
that's going to be your first warning sign >> but it's going to be dependent on what the fed does, how aggressively and quickly the fed acts not a lot left to do >> the market peaks on average eight months prior to recession. >> but i would say that that's typically, when you get the inversion, you've got rates a lot higher than where they are now. so i'm not sure -- i would rather go with jim, that it's called 15 of the 10 recessions, because money is still so easy easy >> i love jim, and there's only one time that the curve has inverted since 1954 that it hasn't led to a recession once 1956 came close and it did in the early '70s >> at any rate, if we boil it all down to a headline, it's that tony dwyer thinks that the bull market lasts for at least another year, minimum. >> oh, yeah. the bull market is notgoing to peak, okay and it's media, you can go to -- you can go to cnbc.com and see it the market makes its ultimate peak this cycle after you invert
the yield curve. that's probably not even going to happen until mid- to late 2018, 15 months of mean inversion means you don't go into recession until 2020. call it another year and a half to two years >> all right get out the party hats eamon javers has some breaking news from the white house now. eamon? >> scott, that's right we've got a fairly effusive statement here from president trump, reacting to the supreme court's announcement that it will take up the travel ban case later this year. but in the meantime, the bulk of it will be allowed to stay in place. here's what the president said in a statement put out by the white house just a few moments ago. he said, today's unanimous supreme court decision is a clear victory for our national security it allows the travel suspension for the six terror-prone countries and the refugee suspension to become largely effective. as president, i cannot allow people into our country who want to do us harm. i want people who can love the united states and all of its citizens and who will be hard-working and productive.
he goes on to say, my number one responsibility as commander in chief is to keep the american people safe. today's ruling allows me to use an important tool for protecting our nation's homeland. i'm also particularly gratified that the supreme court's decision was 9-0 so the president here heartened by the supreme court decision. ultimately, though, it will go back to the court later on this year and it will be up to them to decide where this all lands and we'll see whether or not they look at this the same way the lower courts have looked at it, which is that the president's comments on the campaign trail about a muslim ban should be read in as sort of predicate to the law in interpreting what the intent of this law was and whether or not it was constitutional. so the president's case not out of the woods yet, but the white house very much regarding today as a big political victory, scott. >> eamon, thanks so much eamon javers north lawn of the white house for us a lot more ahead on the "halftime report." >> announcer: next up, goldman sachs' big move on a stock up 180% in a year the call of the day is next. plus, hedge fund titan dan
loeb makes a huge play do you want to follow him into nestle before the break, our data partners at kensho on what happens after a russell rebalancing. we've seen 17 of them since the year 2000. a month later, the s&p is up more than 1%, while the russell falls 0.57%. for more kensho, goo to cnbc.com/pro the "halftime report" with scott wapner and the traders is back in two minutes
the cnbc qwikstiq 100 it's an index tracking big cat companies that get most of their revenue from their own intellectual properties. today's leaders include microron, hp ink, teva pharmaceuticals, johnson trolls and target we are back on halftime. we sent pete najarian to the te telestraiter he's looking for unusual options activity and you found it in >> i'm looking at lowe's scott we talk about home depot all the time, a little bit less about lowe's it's interesting to see. if you take a look at this chart, it looks absolutely fantastic. if you get here towards may, you start to see a little bit of a breakdown. where i'm putting this line right here, that's give or take close to about the 50-day moving average. in other words, it broke through that moving average, it continued down, it did test it again, and then pulled right back down once again
you can see that maybe the stock is struggling a little bit right now. i talk about calls all the time. today i'm going to talk about puts i don't think they're protecting i think somebody's out there and thinks this stock actually has some downside. they came out and fairly aggressively, these july 75.5 puts you can see, over 5,000 of these were bought today. they were trading for about 1.20, scott. so it's a pretty significant trade. a fair amount of money put into this trade, expecting to see this stock actually move to the downside i'm normally very bullish on this particular group, the home depots, the lowe's and those guys and the home improvement world. this one, i'm not so sure. i think there could be a pullback i bought these puts. ais i'll probably be in there about 3 to 3 1/2 weeks i'll be in there for probably the entire time to see if we break down farther >> so it's the level and the volume of put buying, alone, makes you negative on the near-term direction of this stock. >> on this particular stock. and actually, if you put up this one against home depot, there's
a disparity, as well home depot has really been hitting on all cylinders we all talk about it all the time this one is doing okay, scott, but not doing as well. their numbers are not quite as good normally they move together. it seems like right now, it seems to me that home depot is actually moving much better to the upside lowe's has some downside >> all right, come on back over. do you want to ask question? >> pete, you've got a couple things going for you the housing stats all came out last week. you're not going to hear anything about housing for the next three weeks and earnings aren't going to really come up until three weeks, either. you're kind of in a quiet phase, where the trend is your friend >> yep, yep. and right now that trend that as not been looking so great to the downside >> pete, come on back over, i want you to play in our knicks conversation amd is under pressure today. that stock is falling after goldman sachs put out a note this morning the analyst says that the current valuation multiple difficult to justify they reiterate their sell on a stock that is up 24%
year-to-date valuation, 80 times forward pe pete, why don't you weigh in on this one, first? >> sure, when you're looking at amd, scott the one thing interesting here is, i look back at the analysts and i look at each individual analyst. and there are some we talked about last friday, as well how accurate have analysts been. mark mahaney has been spot-on where he's been in netflix and amazon and some of these names i think katie huberty has been absolutely unbelievable in apple. they have had a sale on this stock, for goldman sachs, in what seems to have been forever. i believe goldman, a different analyst had a sell on this stock when it was under $2 a share it's not quite as meaningful this is a different analyst, now. it's not as meaningful when i see this sell rating because of the fact, there are plenty of people on the street when you start looking around on what's been active lately, i look at the chip sector and it seems that amd is making great strides forward in the competition. >> is it time for a reality check? track record doesn't speak to everything >> right >> right >> but i'll tell you what, i
think there's a decent number of analysts on the street who have been far more accurate and that's probably where i would like to hang my hat. >> if you look to the track record of the analyst, why not look to the track record of the company. this company has never been a quality company, never had a quality -- >> they were just around because everybody said they were there to compete with intel. >> exactly >> seems like things have changed, though, don't you think? don't you think they have had some partnerships that you've never had in the past, that are real partnerships, where they are contracting amd to be not just competitive, but actually be a part of the company >> it depends if they're going to make money. this company has historically been a money-losing proposition, both on the financial side, as well as the stock investment side so i think you're already overpaying for that potential. >> the stock's up 465% in two years. >> right and it's got negative cash flow, i believe. i would have to go back and check that but you want to make sure that now that you're more than paying for what that possibility is, i would say it's a very tough bet to make. i get what you're saying about
goldman. and when you're short a stock like goldman theoretically is, not in their prop desk, the analyst, then they're the last ones to play around. i think there are easier ways to make money >> there's other names -- >> there are easier ways to lose money. easier ways to make money. >> the smh is up 18.5% year-to-date do you like chips a as a place to be. >> on a pullback, remember when you get such broad participation in one sector, namely technology, when you get it to more than 40% of their components, make a 52-week high, you want to wait for a pullback to buy but ultimately, i believe our analyst, matt ramsey, has had a buy on amd >> what is the most attractive part of the market to you today? >> banks so if you went and asked somebody if the yield curve was going to go from flat where it's currently flattening to an inversion, what would be the two
sectors that consistently outperform most wouldn't say financials and info tech, but those are the two. >> but you're not looking for the inverted yield curve until 2020, so -- >> no, the curve inverts in mid-'18 and it has a 15 months of inversion >> so 12 months away >> so that's what -- >> i don't think we should take that as a given. >> i said the banks out-perform as the yield curve flattens. >> why are the banks going to do anything right now >> our call is that rates are going to bounce. >> where do you see the ten-year in two months? >> closer to 250 i would sell bonds >> you think rates are going higher you don't think the yield curve is going to invert look, you've got the feds about to stop buying bonds here at the end of the year -- >> the fed always inverts the curve, jim they always do >> forget always, because we're in a different world right now they're going to start -- >> i don't know if i would agree with that. >> well, you can't disagree -- >> your whole thesis on the
banks is built on rates going up sf up >> it's built on an expansion, which it's in, and expectation for economic activity -- >> what happens if all of that happens, but rates stay where they are for a variety of other reasons? >> you ready for this? i'll be wrong. >> okay, well, it's all been happening. but i want to be clear you think we can do 250 in the ten-year in ten months >> i think we're going to hit 250 in the ten-year in the next three to six months. >> wow, a big call >> i'll use a duration hedge and think about this think about this the conversation we had in december on set when rates were at a 2.62% and the citigroup economic surprise index was ramping and everybody thought donald trump was going to get everything single agenda item done now no agenda items are ever going to get done. rates are going down because the economy is weak. well, duh, that's the citigroup economic surprise. >> you made a couple leaks thether there. >> how so. >> i don't think everybody
thought trump was going to get everything done? >> you don't think the citigroup economic surprise -- >> maybe rates are going lower have nothing at all to do with current economic conditions. >> well, part of it is -- part of it is commercial banks are using the yield curve as a carry trade. i'll give you an example in 2013, any told you -- >> maybe because there's so much stimulus from global central banks in the system. >> there is, but -- >> overriding -- >> the main buyer of u.s. treasuries over the course -- since the end of 2013 are commercial banks china and japan have sold $250 billion of treasuries. so at the end of 2013, if i told you that the two major shareholders of u.s. treasuries were going to not only not buy, but sell and the fed was going to stop expanding the balance sheet, would you have made a call that you would be at a 212? >> i don't think you can take it in isolation >> we're out of here >> tony, thanks. >> it's so great thank you very much for having me >> no, you -- i like -- like mixing it up
>> i should hedge more >> the cut man -- >> coming up on the half, the u.s. versus martin shkreli, are jury selection beginning in the case against the former pharma executive. we'll take you leiv to feredal court in brooklyn for an update, straight ahead only t-mobile gives you 4 lines of unlimited data for forty dollars. taxes and fees already included. that'll save you hundreds. plus, right now get a free samsung galaxy s8 when you buy one. hurry in to t-mobile today. the power
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hi, everybody. i'm sue herrera. here's what's happening at this hour two major announcements from the supreme court this morning the high court letting the trump administration mostly enforce its 90-day ban on travelers from six muslim countries the court says it will hear arguments in the case in october. president trump called it a victory for national security. and the court will hear an appeal from a colorado baker regarding services for same-sex couples. back in 2012, a same-sex couple filed a complaint against jack phillips for refusing to make a cake for their wedding reception. phillips said it violated his libl religious views. overhill farms is recalling more than 54,000 pounds of its chicken bites after consumers reported finding bone in the product. the recall includes yum my spoonfuls brands shipped to retailers nationwide and struggling series is
trying something new it has opened its first of a kind store that sells only appliances and mattresses, the two categories that sears says are its strongest. the store is located in texas. last year it opened a store in colorado that only sells appliances we will see. th'she ns daat tewupte this hour the "halftime report" is back after a quick break. oh. what's with the dog-sized horse? i'm crazy stressed trying to figure out this complex trade so i brought in my comfort pony, warren, to help me deal. isn't that right warren? well, you could get support from thinkorswim's in-app chat. it lets you chat and share your screen directly with a live person right from the app, so you don't need a comfort pony. oh, so what about my motivational meerkat? in-app chat on thinkorswim. only at td ameritrade.
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we're back jury selection beginning today in the case against embattled former pharma executive, martin shkreli. meg terrell outside the federal courthouse in brooklyn with the latest meg? >> reporter: hey some call him the pharma bro this is the first day of martin shkreli's trial. he arrived here at federal court in brooklyn along with his legal team he's been charged with eight counts of securities fraud, conspiracy to commit securities fraud and conspiracy to commit wire fraud right now it's going on this morning, jury selection. a little bit of a slow process the judge started out by saying, it's okay because this case has received a lot of media attention. if you have an opinion already about the case, as long as that opinion doesn't mean that you can't be fair when you're reviewing the facts of the case. that ended up dismissing a few jurors, at least ten that i was able to count while i was in
there this morning the reason why martin shkreli has nothing to do with this case, which has to do with two tech funds he ran. the government alleging he used retrofin to pay back investors he used in that hedge fund while a lot of people are paying attention to this case because they know martin shkreli as a public figure, he is closely tied into the fates of the biotech industry if you look back over the past three years, the performance of the ibb, he became famous in the summer of 2015 that is when the bubble in biotech really seemed to pop, when hillary clinton started paying attention to drug pricing on the campaign trail, tweeting about martin shkreli, really impressi in depressing biotech's stock we will continue to watch jury selection. we expect the trial may start tomorrow, if they're able to get a jury today we'll bring you anymore updates. back to you, scott >> meg, thank you so much. we will be watching throughout the day. coming up, the trade's on children's place, av, isand
costco, all coming up next in the blitz. hey, i've got the trend analysis. hey. hi. hi. you guys going to the company picnic this weekend? picnics are delightful. oh, wish we could. but we're stuck here catching up on claims. but we just compared historical claims to coverages. but we have those new audits. my natural language api can help us score those by noon. great. see you guys there. we would not miss it. watson, you gotta learn how to take a hint. i love to learn.
welcome back to halftime the s&p and dow are still modestly positive. for more, let's bring in carrie firestone. welcome back >> hi, scott >> this is f.a.n.g. week give us your view on where these stocks can really go from here >> it's interesting, scott today i looked back on an article "the wall street
journal" published two years ago, two years ago saying that the predominance of five names, including facebook, apple, google, were enough to drive people crazy and we should be very, very careful that was two years ago and loo and look what's happened the market has gone up these stocks have gone up. and if you go through, again, the last 25 years of data, it suggests that the top five outperformers, five market cap leaders account on average for 2.5% of the gain per year of the stock market where are we right now 2.6% year-to-date of the s&p gain, from the f.a.n.g. stocks so let's not get carried away and think that we're at extreme levels and, therefore, it's the major risk to the market of course they are a risk to the market but they have always been overweight we all know most of these names. >> you do have contribution from
other areas. health care is up 16.5%. >> very big. >> utilities are up better than 10 many other names, whether it's sta staples or industrials, they are up 8%. they are like on the marquise. >> right of course they are. >> so they dominate the show but there are a lot of other players in the performance >> yeah. absolutely and what we really must be fully aware of is that technology has allowed these companies to create more dominance. that's what we would expect to happen and it's global it's not just u.s. >> okay. >> and you have to be there. >> we're going to do our blitz now but we'll come back in just a minute children's place is upgraded over at telsey. >> the activist here got going on the right track after years of operation one of the efficiencies, data
firm upgraded telsey given the new operational facilities, better able to withstand. >> there is an agreement for self-moving cars. >> very good move by avis. they have been in a downtrend for quite some time. what do you do if you can't beat them you join them. if avis is going to stay relevant in the next decade, they've got to get in with driverless cars. it's not clear who is going to maintain the cars or even if they will build them >> hertz was up on this news as well costco upgraded at raymond james to outperform. >> right this is on the whole foods deal. amazon trying to bid whole foods. some people wonder if they will have competition it doesn't really matter costco is down 13% because
amazon decides to do this deal with whole foods i think it's too much. i understand the upgrade it's a value issue, though 24 times forward, this is a stock that's a little bit pricey right now. i think we'd be better with a pullback still. >> carrie, first time we've talked about a technology which is mtsi. it's up 4% you own the name tell us about it. >> it's going to become the one stop shop for data center chips. and that's hard to say if you're from boston. so we like it because it's built to bring technology. amazon just made a deal with fabrinet the companies building data centers make more money and can invest and they will buy
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that's why we meet or exceed 15 global regulations for baby products. and where standards differ, we always go with the toughest. johnson's. we are back. it's time for the final trades mine, darden what's your take on the desk >> wow, the competitive invirnmeinvir environment is really good. >> that's why i bring it up. >> because of where they are and where they sit, it's not necessarily the higher end. >> gutsy call. >> it's a great call if you're saying it's going higher, scott.
>> what's yours? >> financials. it's going to be a second half of the year story as we get to the end of the first half. second half. >> in a downtrend, it continues down. >> i'm going with xpi. >> good stuff. thanks for watching. "power lunch" starts right now. welcome, everybody i'm tyler mathisen great to be back the supreme court allows president trump to enforce parts of his travel ban with some restrictions details on that, plus wall street's whipsaw reaction today. and washington waiting for the scoring from the cbo on the senate's version of a health care replacement bill. controversial topic that we're going to debate today. should older americans pay more, maybe even a lot more, for health insurance. and super-condo stress is one monument to the ultra rich flashing red