tv Fast Money Halftime Report CNBC May 31, 2019 12:00pm-1:00pm EDT
david rosenberg, appreciate having you with us, sharing those thoughts obviously, no one's going to be sad to see may go away. we'll talk early next week about june and whether or not that typically underperforming month lives up to par. right now, we're down 226, get to the judge carl, thanks, i'm scott wapner, trump's tariff shocker sinking stocks this hour, is a major correction now more likely than not it's 12:00 noon, this is "the halftime report. >> announcer: stocks sell off after president trump's threat to slam mexico with tariffs. 10 of 11 sectors now negative for the month. 7 out of dow 30 stocks now at or below christmas eve lows is it time to put some money back into the market the halftime investment committee is lining up with their picks. plus, a man who made the right call last year on what will happen in 2019 see what morgan creeks' mark
sees now and we'll get to ahead of what could be the big movers from the asco cancer fighting conference this weekend "the halftime report" with scott wapner begins right now. >> welcome, good to have you with us on this friday, our investment committee at the table today, josh brown, gym lebenthal, steve weiss, jon najarian, shannon is here, the chief investment officer at boston private wealth. with us from raleigh, north carolina, as we said, mark, the ceo and the cio. good to have you back with us. let's begin with the markets stocks are lower on this final trading day of may president threatening new tariffs against mexico, leading to another down day. what's been an ugly month for investors, steve weiss, the ten year is collapsing down to 217 that's a fresh 20-month low. dow's going to have its sixth straight weekly loss, the first time in eight years. dow, s&p, nasdaq, their first monthly loss of the year what do we do with all this? >> i tell you what i did today today, i bought a lot of stocks this morning i bought some indexes but only
because of the rebalancing that's going to occur at the end of the day and i think that's what drove the market into positive territory yesterday so for funds that run balance funds where they need to have so much in fixed income and so much in equities, this is the fifth biggest dijer venice between the forms of those two so they've got to buy equities to balance it i'll be out of those positions if i'm wrong so if i'm right, but i'll be out of those positions, i'm using tight stocks >> are you saying is that putting a better face on how the market truly would look today? >> absolutely. absolutely dramatically better face that's why some stocks are up, that's why it's uneven performance today. however, get past today. i think what trump did with mexico, with tariffs, is -- forget about the lunacy of it. it just doubles down on the negative impact on the economy and the instability in the market it's an impossible environment to invest in so you talk about the multiple coming down, i don't think we should have ever been at 17 or
17.5 because the economy was flattening if not declining at that point so it was undeserved. it was like nvidia going from 150 to 200 it didn't deserve to get there now it's coming back so i think the market goes lower. i'm much more worried about the market trading down significantly than hissimissing upside if it goes down, i lose money. i hate losing money so i would be a better seller in today's strength than a buyer. >> josh, are these new tariffs the straw that finally breaks the bull market's back >> like the bull -- the secular bull market? i don't know look, it's obviously not good and i agree that there's a lot of sentiment issues and then that's offset by rebalancing on some things like technical buybacks but right now, if you talk to people that are allocating assets for a live, i think most of them are saying, look, we have been in an environment where we thought this was going to be a 3% gdp growth united states story and you'd have commensurately the
fed either on hold or even raising rates as the employment picture gets better but when you've got these kind of fears that continue to surface about the effect on the economy from tariffs, just the threats of tariffs are bad enough in some areas of the market, take a look at the automakers right now, some of the more cyclical things, when you've got those concerns continuing to surface, the hit to sentiment goes from being temporary and wearing off after a couple of days to becoming something more permanent, hanging in the air like a miasma above the types of decisions that people are making so, the good news is, and i've said this before, when you hear about rates plunging, what's actually happening is bonds are going up in value, diversified portfolio that's got something like tlt in it, for example, has a 1.3% gain this week while the s&p is off 3%. so, if you're building durable portfolios, obviously it's not a fun week but it's not the end of the world. >> mark, unpack this for me. what does somebody like you make of all this? >> yeah, look, i love josh's
word, miasma, i'm going to use that more today. i think that's exactly right there's this cloud hanging over the market and, look, we made the case that the bear market started last september and bob ferrell, the famous merrill strategist said there are three phases, the sharp down, the reflexive rebound, that occurred in the first quarter, and then there's the protracted fundamental down trend and i think that's what we're beginning. and it plays out as we've talked about the last couple times we've been together that like 2000, 2001, 2002, where we had the tech bubble, it burst, and then you had the credit bust in 2002, we think we're in 2001 just like, you know, 2019 is 2001 there are a couple 20% bear market rallies, you still finish down double digits, and it was really the credit bursting in 2002 where you had the real pain so we think the bear market's really just starting to warm up. >> let's be clear.
i mean, i want to keep you fully accountable, okay? you were with us in december where you, you know, you got the near term direction of that pullback correct, but you said at the time that 2019 would be, in your words, a dreadful bear market, stocks would be down most days, you'd get some bounces but it would be a terrible year and that would continue into 2020 i mean, let's be honest. we had a sharp rally, we did hit new highs this year. that has not come to fruition that we've been in this dreadful bear market where stocks have been down most days. >> no, look, i said very clearly that we would have bounces and i said -- i used the rubber ball bouncing down the stairs analogy, that each bounce would be higher. that's just kinetic energy go back to 2001. we had -- >> we're up 10% this year, sir it's not -- it's not a rubber ball we're up 10% this year that's a better than average year for maybe not the post crisis period. >> it's only may 31st. >> okay. >> i said by the end of the
year, we'd be down double digits it's may 31st and the trend right now is very negative the sentiment, as you both have just said, is very negative, and it, look, long bonds are now within a cat's whisker of outperforming stocks year to date it's not there yet by the end of the year, bonds will outperform stocks just like they did last year remember, in september, we had a debate on air, on this show, actually, about whether stocks would outperform bonds they didn't. stocks underperformed bonds in 2018 they'll underperform again we can't make a decision on the year based on may 31st we got a lot to go >> but let's be fair you didn't foresee stocks hitting new highs the way they have you did not foresee the s&p 500 being up 10% even though it's just may >> oh, no, no, look, i absolutely didn't think that we'd hit an all-time high for four and a half seconds, no.
but what i said, actually, on the friday before christmas eve, before the ppt call, i actually did say with melissa that we would end -- they would engineer a pretty significant rebound in first quarter. look, it went further than i thought and that's a reflexive rebound, but that's a bear market rally there's a difference between bear markets and bull markets. bear markets, the markets go down most days and they go up sharply on good news or perceived good news. bull markets go up most days and go down sharply on bad news or perceived bad news you can debate which we're in. i think we're in a bear market i think we've been in a bear market since september and we'll see how it plays out the rest of the year >> fair -- i mean, you're entitled certainly to your opinion, you're not the only one that has it. jeffrey gundlach if he was here would say we're in a bear market as well looking at many of the internal factors of the market but what happens if we get a trade deal first of all, what happens if these tariffs with mexico don't even go into effect and what happens if we get a trade deal with china >> look, well, couple things
one, the tariffs are just a symptom, right they're not -- it's like when you're sick and you're coughing. the cough's not the problem. the virus in your body is the problem. the problem we have now is deglobalization, populism, nationalism, and a just absolute collapse of global trade you had david rosenberg on the previous show, i was with david a couple weeks ago at the s.i.t. conference in dallas >> that explains everything. >> no, if you look at global trade numbers, they're absolutely atrocious look at global growth. europe is on the verge of recession. japan, verge of recession. the u.s. is going to have a one handle maybe for gdp growth in the second quarter third quarter rebounds not going to happen. i'll bet anyone on the panel, on the investment committee today, that the gdp this year barely has a 2 handle forget the 3 handle that everybody's talking about. so you've got a real problem when global growth falls, global equity prices fall because
global profits fall. profits this year, six months ago, when we were together six months ago, global profits were supposed to be up 12%. u.s. profits were supposed to be up double digits tech profits are going to be negative this year that's not bull market stuff >> jim lebenthal >> hey, mark, look, bear markets to me, historically, you have to have a financial crisis. you have to have stress in the financial system i'm just not seeing it i know credit spreads it wide a little bit but that's not a red flag, not at the level we're at yet. i don't see the financial stress and that goes hand in glove with what you're saying about profit growth not meeting expectations but it's still going to be positive you're not talking about the losses, the goodwill write downs that you see in a bear market. i think you have to have that. how do you -- do you see a bear market without those things happening? >> look, i think you make a really, really important point, that you're not seeing the normal credit stress and there's a reason for that and it's a
very nuanced point, but it's a really important question and i think an interesting answer, which is when you have a buyer of last resort, right, central banks buying anything with a yield and not making economic decisions but making noneconomic decisions to buy those assets you do get an obfuscation of the truth, which is that credit stress if you look at the average company in the russell 2000, small caps, 40% of companies in the russell don't make money they have no earnings. over 36% of them won't be able to service their debt this year. forget paying back the debt. they can't even cover their interest with their ebitda so you have a really serious credit stress, now the zombieification of the markets has been kept alive by free money, when you have free money, zombie companies can stay alive that's starting to change as you
see short rates tick higher, now we have that inverted problem. the fed did raise short rates, that's what most people borrow in, libor based loans so all of those are starting to increase look at adjustable rate mortgages, it's gone up 25% this year in terms of payments. that's going to hit the consumer so you're absolutely right that yields don't reflect the stress but the underlying economic stress is there. >> mark, those companies are tiny it's a very, very small slice of u.s. equity market capitalization you're talking about the three or four -- >> how about exxonmobil, josh? how much is exxonmobil down? >> is exxonmobil not going to be able to service its debt that's the point i'm talking about. you're talking about a credit stress that we're not seeing because it's in smaller companies in the russell i'm not saying it's unimportant or should be blown off on an individual company basis, of course it matters to those investors. but the largest companies in the market, the ones that actually do matter, have incredible
balance sheets they have an almost unlimited ability to both buy back stock and raise money at very low interest rates and if you're saying that's changing now, that they won't be able to, well, then, why is the ten year, then, dropping precipitously doesn't that affect the rates at which the biggest companies in the world are able to borrow at. >> look, we had the greatest debt for equity swap in the history of the markets the fed sucked $4 trillion, with a "t," trillion dollars of safe assets out of the market and those were replaced with risky assets we had the highest percentage of noninvestment grade rating bonds in the history of corporate america. that ends badly. the credit crisis that we're going to have in 2020 is going to make 2002 look like a walk in the park >> mark, let me -- >> so -- >> let me help you a little bit. >> yeah. >> i don't think -- i don't think we look at the way we looked at past cycles in terms of what can go wrong
why? because this is completely different. you can quote phrases like, it's never different, but it is if 11 years ago i told you we're going to have a bull market that's going to go for 11 years, if i told you rates would stay at historically low levels forever, you would say you're out of your mind but here we have it. we have so many things that are different this time. if the fed cuts rates it's not going to matter. companies are going over to europe to borrow money and they're borrowing at zero. >> wait, steve are you seeing a credit crisis coming >> no, what i'm saying is -- i think there will be one but i'm saying that doesn't matter in terms of upsetting this economy. that there are different indicators, different factors at play that are going to upset this economy and in fact, are doing it >> you are welcome -- >> and you don't know you're in a credit crisis until you're in it, until the market's already dead >> you're welcome to have that opinion. i'm going to stick with the, it's not different this time, that you do have to see signs of financial stress time will tell who's right but i will say this, we're missing an
important point. we've been talking for a long time about how much triple beat debt is out there, companies are actively delevering right now, that is a new phenomenon, not getting much mahead line press. you look at at&t, for instance, what do they want to do? their biggest concern is paying down the debt from time warner other companies are doing the same thing >> passively >> that's the point. it reverses. >> the other point is i want to talk to shannon right now. >> me too. >> is yusko right? is scott right who says you're going to hit new lows in the summer is gundlach right that we're still in a bear market or are the bulls right who say feds on your side, they got a trump put under the market, earnings have been good enough, all is well once you get a trade deal >> i think the trade deal, as we move through the year, i think the trade deal becomes less and less important to the market because i do think that we're going to continue to see economic deterioration i think that we're going to continue to see the economy
soften and so that when we do get the fed continuing to be on our side, they're going to be on our side because they're worried about a recession, not on our side because they want to keep this goalldilocks phenomenon continuing >> so you're negative on the market weiss is negative on the market. doc, where are you on the market >> i'm not terribly negative on the market, scott, and i've done trades similar to what josh said about his tlt trade. i did and talked about it here on the show tuesday, bought the gld as a bit of a hedge. now that's up 2% over the past 4 days the market's down 3% or thereabouts so you've got a 5% spread there just like josh was saying with the tlt. i think there are a lot of things you can do to mitigate some of these issues, judge. now, you can't, obviously, be positioned for -- if you're in car manufacturers, which i am not, you couldn't have seen the president offering this tidbit this morning that ended up being, you know, a feast for the bears with general motors and
ford falling as hard as they did as well as some of the other, you know, transmission, some of the engine companies and so forth. but i think there's still plenty of places you can go today, i was buying -- steve and i were already in crown castle, cci, the tower company, amt, i think those are tasty at this level, really tasty and they'll continue to work, especially if amazon gets into the bid for boost mobile >> mark, how do you factor in what i said earlier, described as the trump put and a fed put, because thus far, they've been good enough. >> well, look, the problem with those puts is they always expire worthless, right the old stat that 85% of options expire worthless so if you feel like buying a put, you should buy a call >> we've had a decade of the fed put. >> think about it. they never work. in 2000, we had the greenspan
put and it was supposed to keep the market up and the market fell 58%, peak to trough, over the next 2 years then in 2007, we had the bernanke put and the market full 65%, peak to trough. now we got the gellen/powell put and everybody thinks it's going to work. it's going to expire worthless and when it expires worthless, it happens really fast why does it happen really fast because of the delevering from margin calls because of excess margin debt. >> i know, but if you say -- >> the largest margin debt in history bouwould start to go awy >> but what are you saying i'm going to miss the ten years of a bull market because one day the put's going to be worthless? so you know, screw the bull market because i'm going to be right, you know, when the pot of gold's at the end of the rainbow. >> wait a minute what are you talking about, ten years? been fully invested until we said that the market would peak at 2,800, we said that in 2017, we were off by 4 months.
we said it would be october of '17, it happened in january '18. we hit 2,850 and it's basically where it's been for the last 17 months so i don't see what you're talking about >> mark, that margin stat is misleading because it has no denominator. so, it's easy to say of the largest margin amount in history but you also have the largest market cap for the stock market so margin -- >> the percentage is the same, josh >> hang on margin debt does grow commensurate with overall market cap just as day follows night. if you actually look at it and normalize it, it's not an extreme. i would argue a lot of the leverage, the quote, unquote leverage in the system and here's where i think i have more in common with you than on these other topics, a lot of the leverage, fortunately, is not being borne by mom and pop in the way that we saw in prior market bubbles or manias, a lot of the most aggressive money right now is in silicon valley, is the vision fund, is saudi
arabian, you know, venture capital adventurers. that's not going to be good when it unravels. that is not the same thing as 100 million american households recklessly speculating on margin in stocks like excite and lycos and yahoo. it is not the same thing so, i'm not saying that there aren't excesses in the system. of course there are. we have had fed funds rate under 3% for 12 years. all i'm saying is, every statement that you have made could have been made in 2009, '10, '11, '12 and no offense, i think you did, as did rosenberg and several others so at a certain point, it will be disastrous because every expansion ends in disaster however, that's not a reason for people not to have a sensible asset allocation and invest. and of course, expect some pain along the way. this is the reality of investing. it's risk. that's why we get paid for the risk that we take. >> look, we agree with
everything you said, josh, especially about being in a diversified portfolio. the key is, i came on this show with all you guys in october of last year. >> dude -- >> actually -- stop. >> it is going to be it's going to be negative for a decade >> okay. >> and the -- it's just math, right? the last time we were at this level of extreme overvaluation, you had negative returns for a decade it will happen again and look, you don't have to agree with me and we can fight about it and debate about it for the next ten years, which would be actually kind of fun. but here's the reality we talked about it then, that it was prudent to lighten up on exposure to u.s. equities. we are lower than we were in september of last year, okay, that's fact. there are better places to put your capital, like long bonds, which has been much better performer, by far, like emerging markets, which have been a better performer, not by far but quite nicely our emerging market fund is up this month it's not down.
it's up. so, if you look at where there are places to put capital, and my favorite thing to talk about is bitcoin, a 1% to 3% position in bitcoin has increased the value of your portfolio by 200 basis points per year. >> you think we'll have a financial crisis in 2019 and emerging markets and bitcoin will be a safe haven >> yeah, absolutely. because they're priced for it. they're already priced for it. do you know how far down most of the emerging markets are today >> do you know how much worse they did during the last financial crisis >> from -- >> in 2008 >> i'm not talking about global financial crisis from 2000 to 2010, the u.s. stock market compounded at minus 1.9 per year >> reads went up, e.m. went up, we know. >> emerging markets went up compounded for a decade. that's where we are in valuation. >> bitcoin are you just saying that's a
safe haven >> absolutely it's a safe haven. >> okay. >> it's sound money. >> i want to be clear on that. i'm going to disagree. >> absolutely. we -- i'd love to talk about it at any time. >> it wasn't exactly sound when it went from, you know, $20,000 back to $3,000 or $5,000 >> but that's like talking about nvidia at the high look at the low every year of the ten years of bitcoin it's been higher it started at pennies, it went to dollars, every annual low is higher than the previous annual low. that's the thing to look at. don't look at the peaks. there's volatility, of course, because speculators got involved in 2017. >> it's different than volatility in nvidia >> not true. volatility of nvidia is far higher than bitcoin over the last two years far. it's not even close. >> we're talking about a single stock versus, i don't know, an asset class. >> it's not an asset class it's a network it's no different than any other network company. it's like an amazon or a facebook those are networks their value grows by more users
using the network. that's how networks work >> but there's no cash flow. amazon generates cash flow has a board of directors has an executive steering it by the way, this is not an anti-bitcoin argument but if there's a huge difference between comparing a public company that's profit seeking with computer software that talks with each other. i'm not saying one's better than the other but it's a terrible analogy for that reason, right >> i didn't compare them i said they were both networks and their value is derived by increasing use of the network. the value of any network increases by the inverse of the sum of the squares of the participants that's how metcalf's law works >> mark, i'm going to let you run. i appreciate you spending time with us. >> thanks, mark. >> thanks, guys. >> mark yusko, we appreciate it. okay i don't think we need to recap that he's entitled to his opinion he's not the only one who shares it and the other day we went
through sort of, you know, a wall for investors that was adding bricks to it, that, you know, appeared to be getting harder and harder and harder to climb over there's a lot of risk out there. why would he be -- why is he necessarily all wrong, doc >> well, because of some of the things shannon mentioned, i mean, you could have -- >> he was that wrong for that long, he wouldn't be in business >> i guess that's true i've not seen what mark's returns are. so, i don't know josh seems to have a better insight into that, but if he's been short for the last decade, it ain't been a good decade. >> i don't think he's been short. nobody is net short for the last decade, like, in real life >> if you're taking the other side, and i don't think even people who are negative on the market think that we're going to have, you know, a negative decade coming up are you buyers >> it's not the other side it's what he -- it's an orientation toward investing that's different so, i would never say that we couldn't have a 20% selloff in
the market i would never say it's out of the realm of possibility that we could have a crushing 30%, 40%, 50% bear of course any of those things could happen no one who's been in the business long enough would ever say, could never happen. the difference is what do you do about it if you're somebody that's delusional and thinks not only can i tell you how bad the bear market's going to be, i know the exact thing that's going to trigger it and when to sell ahead of it, and i'm going to be able to get right back in at the bottom, if you're one of those people that thinks you can do that,more than once, like, it' almost like you belong in a mental hospital. so if you have an orientation that says, look, horrendous things will happen, which is why you build a portfolio that can survive these things and more importantly, build your mindset so that you don't sell at the bottom or get really greedy at the top, that's the orientation difference there are people that are walking around saying, i got this, we're about to be down 15%, here's exactly what you do. i just think that that's insane.
>> all right let's do this. let's take a quick break i want to come back and find out what you guys are buying, if anything i know there are some stocks on the shopping list. here's what else is coming up on "the halftime report." >> announcer: ahead today, the stocks poised to move on news out of this weekend's cancer fighting conference. we're going through several big names. plus, another analyst weighs in on uber. this could be a great trade. the call of the day is next. our partners at kensho on what happens after the nasdaq 100 falls 8% or more in a month. it's happened 22 times in 9 years. the numbers show a month later, the index is positive 82% of the time by an average of 3.5% with xylinx and analog devices leading the way. for more, tgoo cnbc.com/kensho. "the halftime report" with scott wapner and the traders is back in two minutes we're the slowskys.
we like drip coffee, layovers- -and waiting on hold. what we don't like is relying on fancy technology for help. snail mail! we were invited to a y2k party... uh, didn't that happen, like, 20 years ago? oh, look, karolyn, we've got a mathematician on our hands! check it out! now you can schedule a callback or reschedule an appointment, even on nights and weekends. today's xfinity service. simple. easy. awesome. i'd rather not. hey, everybody, jim lebenthal here you know what my favorite part of "the halftime report" is? it's when you send your questions in and we get to answer them. please, send us a question, cnbc.com/halftime and we'll answer it on air i can't wait thanks >> announcer: go to cnbc.com/halftime or get us on twitter with #askhalftime.
welcome back, everybody, here's what's happening at this hour acting defense minister patrick shanahan meeting with singapore's prime minister when asked, he said he's looking into reports that the white house told u.s. navy officials to hide the uss mccain so president trump wouldn't see it during his visit to japan. >> when i read that this morning, it was the first i heard about it but in terms of ship movements, the only ships i've moved is the "uss abraham lincoln. i need to find out a little bit more we just had the first glimpse of it this morning. italy's mt. etna led to rivers of smoking lava streaming down the southeastern slope of europe's highest and most active volcano. the last major eruption was in 1992 and some of the most popular prescriptions are now coming with a heftier price tag
a new price tag analyzed 49 of the top selling medications sold from january of 2012 through december of 2017 it showed nearly all of the drugs increased in price during that time. some of them by more than 50%. you are up to date that's the news update this hour, guys >> we appreciate that very much, sue. traders have the shopping list ready. we've been talking about, obviously, how much stocks have come down. some are suggesting that buy signals are flashing as a result of oversold conditions, seven stocks in the dow, by the way, are at, near, or below their christmas lows i don't know if you've realized that walgreens, 3m, intel, dow, united health, pfizer, coca-cola, at, near or below their christmas eve lows >> stocks that have huge exposure to global gdp for the most part. maybe walgreens is an exception there. but you think about pharmaceuticals, consumer staples, big industrial companies, they require a better
growth environment than what the world has in order to see their share prices advance contrast that with companies that don't need anything like that, vivo, service now, in this software as a service group, companies like lulu that have a growth story that doesn't rely on what chinese gdp is going to be next quarter. so, it's a bifurcated market i think often it is. and investors that are looking for companies are growing earnings and less economic cyclicality are finding them and those stocks are working better. >> weiss, for someone who has sounded decidedly negative on the market you're doing an awful lot of buying. the xpi, ilumina, visa, united rentals, the semis >> smh yeah, but i'm sure i'm stopped out of all of them and the market trades down this is a rebalance and i typically don't that but the rebalance as i mentioned earlier at the beginning of the show, was so off, was so one-sided
>> so this says -- these buys say nothing about your midterm belief of where the market's going to go. this was simply a short-term trade into the end of the week and that's it? >> short-term trade today. however, with the exception of the smash, smh, they're all core positions so while i've cut back united rentals, i haven't cut back on visa, i haven't cut back on some of the others, but it's just trade for today i still think the direction of the market is down we've got trouble ahead. we've got trouble now and to me, china can withstand -- they're in the pole position on the trade dispute, not trump, not the u.s. and they'll go on for a hellot longer we're under the gun here trump's facing 2020 elections. he's got to do something so, look, once you start the wheel going, then it's kind of tough to stop it >> what if the mexico tariffs don't even happen? >> i don't even think mexico
tariffs will happen, to tell you the truth, i think that's easy but in terms of other things that could happen, we've still got -- i equated trump to the ceo of the s&p he is. i can't buy companies who have such a bad ceo that's so troubled >> someone's going to tell this guy, though, there's 6 million u.s. jobs tied to trade with mexico so forget about just automakers, it's like $500 billion worth of cross border -- like someone's going to get ahold of him and be like, why are you doing this >> the uaw, the auto workers, they're not going to be working boyfriend t >> the ceo has his stock up 10% year to date >> negative last year. >> we've seen other ceos that are -- i wouldn't say worse but a it would be tough to find one, that have stocks with major moves. if you go back to dunlap, he was a savior, right? he came in, fixes one company, next company goes into bankruptcy so, look -- look at algan. he can do no wrong for the early
part of his tenure, now he can do no right. that stock's cut in half >> jim lebenthal, you have some interesting names on your list apple. >> you want to keep going? >> let's start there >> well, yeah, but it's still going down i'm with steve on this >> are you buying apple today? >> not today no and i was very specific before the show, those names on that list are all in the -- >> i was told you may be buying these stocks today >> yeah, but i'm not, you know why? because the stock market is going down you just look at the market today. >> the market was going down when i was told this >> well, instead of you and i doing this back and forth, let me be specific all of these stocks, i'm going to list them, okay, apple, boeing, c.a.t., goldman-sachs, marathon petrol-ueum, they're continuing to go down. just wait until next week, folks. you don't have to buy today. this is an ugly day and it's because of this mexico news. but let me make this point this is important. forget apple for a second. take a look at goldman and
marathon petroleum, both of them selling at 90% of book value when we talk about classic value investing, we talk about margin of safety by buying companies below their intrinsic value, let me just finish >> i'm confused, though. if they're in the buy zone -- >> because it's still going down, scott. i mean, i can't make it any clearer. if i buy it right now, it's going to be cheaper at the end of the day >> how do you know when it's going to stop? >> you don't >> you never going to buy it >> you wait for it to start going up it's really that simple. wait for it to start going up. you're getting these companies -- hang on you're getting these companies at a negative value to their operating business do you know when you're buying a company at 90% of tangible book value, which is goldman-sachs, tangible book value, that means if they close their doors to business today, monetized all their assets, paid off their liabilities, you would get 1 hundred cents for the 90 cents you're paying. that's ridiculous. >> apple right now is sub-177. it's $176.84 i'm looking at it right now basically realtime
if that stock goes to $180 >> yeah. >> then you're going to buy it >> yeah, exactly that's exactly right if it turned on a dime right now and went to $180, fine, i'm in but right now you have to respect these charts all five of those names that i just pulled up, look at a one month chart it's like a parabola going down stay out of the way of that. it's called catching a fulling knife. >> if it went to $180 without any positive mooucht on the trade agreement, you would still buy it >> yeah. >> really? what if china comes and says, we're not going to let you sell any more apple products in china. >> my belief is it's not going to go to $180. that's why i'm not buying it today. you've got the rare earth element potentially restrictions, you've got talk of an iphone ban. yeah, this is the reasons that i think these stocks are going to continue to come down, but when you look at a year from now, i think you'll see apple back over $200 >> i thought like the time to, like, buy some of these stocks that have pulled back a lot is
when there's a lot of blood in the street >> you're not done, baby you're not done, scott look, you could have said -- >> are you selling >> i have 18% cash right now you know i sold qualcomm you know i sold starbucks. i've got a nice cash kitty right now. having cash is king. you could have said what you just said yesterday and we would have woken up today down over -- >> you never know what the day is going to hold but if you liked apple at $180 you're not going to buy it at $177? >> hey, scott, it's still going down i don't know if i have to say that a sixth time instead of a fifth time >> i'm saying it could be any stock. >> i can relate but i'm in the friend zone, not the buy zone. >> shannon, talk to me >> you know, i think -- one of the things i want to touch on is josh's point and even if you have a not so rosy outlook for the market in the second half of the year we're going to still want to own some equities so i think a place that's interesting
is healthcare. healthcare's going to have an immense headwind as we think about changes to managed care and drug pricing, however there are companies that make sense that have, you know, good competitive advantage, whether it's a company like anthem or unh in managed care, i also like constellation. i think that a company like that, where you're looking at focusing on core brands, where you're looking at expanding out into cannabis, they also have a ventures part of their business that's incredibly interesting and thinking about driving growth in a space that other competitors are not. >> down a lot today for obvious reasons with the mexico news >> so if you ask me, like what do you do on the mexico news, you know, i'm probably going to take the side that i don't think the tariffs actually go through on mexico because of the points that have been made here by my colleagues so i think that would be an opportunity to add to that >> there are a lot of stocks in that universe, chipotle, ford, gm, constellation, kansas city southern, union pacific. >> i bought some of the canopy
recently look, i think, like, one of the things that is most frustrating about this business but it's the life blood of performance or it's the reason why we're all here, is that you could be, like, dead right on a stock and have a great idea and have everything lined up fundamentally and then this insane tweet comes out and it wrecks the chart of the stock that you wanted to buy and you have to have, like, the fortitude to be able to distinguish between this is a market issue versus this is an issue with my company. and then even further, you have to understand the difference between the climate and the weather. so, the climate right now is a good climate for business. it's a good climate for growth, for publicly traded companies, for investing in equity. it's a good climate. >> i disagree. >> but it's bad weather today. it's been bad weather for a few weeks and it could get worse and being able to distinguish between those things in realtime, it's really hard, and most people can't do it every day or every month or every
quarter but that's why there's a game >> that's -- that's probably where we disagree. i don't think it's a good climate for companies. i think there's way too much uncertainty. i don't think -- >> because of tariffs. >> the period of max certainty is the worst time to buy, do you agree with that? we had a lot of certainty. >> we're talking about two different things talking about the markets, i don't think it's maximum certainty. i think there's a ton of complacency about a china deal happening and they're focused now on june 20th so i don't think it's maximum like we saw in '08, like we saw -- >> just lost 15% off the multiple in a month. you think this is complacent >> i don't think the multiple should have been where it is >> that's fine but we lost it. >> that's fine but i still think there's a lot of complacency out there, absolutely. >> i think people are terrified right now. >> everybody i hear come on, aside from what's here -- >> 20 minutes with you we just did 20 minutes with yusko who thinks the u.s. dollar is going to vanish >> do you think he speaks for anybody but yusko and maybe david rosenberg?
>> i don't see the complacency that you see >> i see it everywhere, complacency, there will be a trade deal the u.s. is in the pole position u.s. controls it trump will do it, he's got to do it before 2020, mexico won't happen it's everywhere. but the meantime, rates are historically low, ceos, we saw a pvh, pvh came out, you don't think you're going to see more of that without a trade deal >> i think you look -- >> absolutely. >> obviously, the consumer space, you know, i think maybe the bloom is off of that rose too. if you look at kohl's and pbh and abercrombie and the gap and you can go on down, you know, that list. >> isn't this a better time, though, to josh's point, to think about it in terms of companies, to think about it in terms of management who can navigate difficult weather, weather or climate, this is a great time to be trying to find companies that you want to hold for the longer term because you can become insulated during a period of recession, they can take opportunities during that time to strengthen their
companies so they have appropriate balance sheets so i think it's even more important to think about the companies that you want to own longer term and take advantage of these, you know, whether it's weather or climate, you need to take advantage of these opportunities. >> what determines what your returns are, your point of entry. my point and this is exactly what you're trying to say, i think you get a much better point of zbroentry than you getw >> woer we're on a friday in the summer, traditionally not a great time to buy. we've got a guy in the president's office who is acting out. this reminds me of bill clinton in 1998 trying to take everybody's eye off the ball by sending tomahawk missiles into sudan. what president trump could do is blow up millions of jobs and supply chains. when this comes out on a thursday night, you don't buy on a friday this is the tactics, yes, shannon, you and i are in complete agreement >> i think this whole thing was a change of subject. >> i was channeling you on that.
>> what was a bad 24 hours that was threatening to become a bad 48 hours i'm looking at a headline here that trump's top trade advisor opposed the mexican tariffs according to dow jones so -- >> what's he changing the subject from, the john mccain boat thing >> mueller, mccain, the second book coming out, the north korea -- >> i don't know. can you, like -- can you seriously with a straight face say that your investment proces is i buy the chaos from a trump tweet when he's trying to sow distraction? like, in other words, i think we have to acknowledge -- >> this has change the subject written all over it. >> i'm not disagreeing with you but as an investor, whatst the takeaway, you're going to have this supernatural ability to anticipate ridiculous -- >> the investor's reaction is you're crippled because just when you think things could be going one way -- >> you could make a decision that i like that the s&p 500 is
17 times earnings, i respect the fact that there are headwinds, i respect the fact that there is this really big risk that's unquantifiable >> confirmed on the bottom of your screen that lighthizer, president's top trade man and the treasury secretary, steven mnuchin, were opposed to the mexican tariffs. kayla tausche at the white house. >> reporter: we're learning more about where the personnel with the white house stood exactly on this mexican tariff decision i learned from two sources, including one who is close to the white house, that the idea for this strategy originated with steven miller, the president's immigration advisor who was traveling with him on his trip to japan over the weekend. and according to my sources, the president returned from that trip riled up about the surge in border crossings because steven miller had had his ear on that trip but i'm toldthere wasn't broad support for the rollout of these tariffs, including, as you just mentioned, opposition from the treasury secretary and the u.s. trade representative, two
officials whose ideological views on tariffs are not normally aligned but in this case, they were. i'm also told that ustr staff was not in support of this because they felt that it would jeopardize the usmca deal. of course, the vice president was in canada. we've learned that larry kudlow, one of the loudest free trade voices in the room at the white house was recovering from a hip procedure this week so it certainly seems this is steven miller having the president's ear and many of the other voices around him opposed to it >> interesting stuff, kayla, we appreciate your conversation >> that's great reporting. that's really great reporting and doesn't surprise me. i don't think it surprises, basically, anybody here. but look, it's not just the tweet that i worry about it's the whole -- it's the whole combination of events that we're seeing here that gives uncertainty. and i know ceos are uncertain. >> what do you think -- steve, what do you think of this -- the most intelligent point that i
heard today, somebody was saying this is the first time that tariffs have been mentioned as a threat over something that has nothing to do with economics, meaning, like, explicitly, this is about the border stuff and yes, it's an economic weapon, but this is not about the economic -- like, at least the china stuff is about, hey, they're not fair, economically like, if this is the new phase and i agree with you, it's not about a tweet. it's about this whole circus that now seems to be going in a very different direction >> and i agree with you and that's my concern. >> and you want to invest in that environment as a ceo, probably not >> there's nothing rational here nothing whatsoever rational. how do you invest in an irrational environment where you don't know what your downside is you're still at an elevated level in the market so while the multiples come down, the troubles picked up so i'm not so sure we've discounted it >> what if the whole calculus has changed anyway and you have to face the reality, doc, that what we thought was a president
who cared first and foremost about the dow jones industrial average and the performance of the stock market as a barometer for his own performance, now suddenly doesn't care about that anymore and cares about -- because you march closer to the election, he cares about trade and he cares about immigration and he's going to hit both of those as hard as he can and the stock market be damned >> i don't think he's going to go there with the stock market be damned but i think if people were counseling the president on what the reaction would be and perhaps, according to kayla's reporting, perhaps lighthizer and mnuchin were both telling him, hey, there could be some severe fallout from this, sir. not just fallout from mexico to us but fallout from the stock market reaction to this, to steve's point. so, i think that was probably counsel that was brought to the president and he thought this was more important, apparently, to go after this because of the,
i think, just last night, they showed that video of a thousand people being rounded up in el paso and the acceleration of folks coming across the border illegally, i can understand that this is something he's focused on and that is why he took a drastic step >> you can imagine larry kudlow trying to get it out of stephen miller's hands before too much damage is done and you hope somebody rational wins that power struggle or at least that he switches from fox news to fox business and sees look what my remarks have wrought in the markets. and you hope all right, he won't go all the way with something that clearly is being voted as negative by the markets. >> the scariest thing is that he is listening to stephen miller you should read about him. he is out there. >> sue herera, you have a market flash? >> i do, on johnson & johnson,
which has touched session lows according to bloomberg and other sources, it has been told to pay $300 million in a punitive damage award in a new york case that concerns its talc, its baby powder plaintiffs alleged that the talc in j & j products caused various types of cancer specifically in some cases ovarian cancer. and this is related to a may 21 verdict. this is the punitive damage side of that. the expectation was that they would pay at least $25 million but the verdict came in at punitive damages of $300 million. that moved the stock to the lows of the trading session j & j just gave us a statement and it says in their opinion this trial had many legal and evidentiary errors which johnson & johnson believes will warrant reversal on appeal further, there have been several
trials where jurors have concluded that their products were not responsible for the cancer and in other instances judges have dismissed cases outright based on their own review of the facts. so they will be appealing the latest punitive damage award of $300 million back to you. >> appreciate it thank you. also on the health care front, the world's largest cancer conference kicks off today in chicago and meg tirrell has a preview. >> this is one of the biggest event of the year. three stocks to highlight for you. let's start with a small biotech company, one of the biggest movers out of the initial update moving more than 30% in one day. they will have another update at the conference tomorrow morning. they fight different kinds of cancer they did put out an update today and initially that was perceived
as positive, but the stock has been selling off so interesting to watch and we'll have the ceo on bright and early monday morning and we'll also point you to amgen and moratti, working on the same research. so people are very excited about this amgen could move 4% to 5% this either direction on the update monday morning and mirati could move based on amgen's update so keep a close eye on that >> we will doc, you had enough activity in myl. >> yes, i believe it was close to 20,000 now up side calls being bought in that one so meg is right, they -- >> you're in on that >> yes, i am there is aggressive speculation on that name right now the desk is answering your usoustig aadndhe a pl yr final trades
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welcome back do to the halftime report. we have a question for shannon and it is from mark t., you wala can it make it back to a 5 5 bucks? >> great best, but technicals are not supportive i think that you will probably have to get to the 45 range to hit support. >> doc from ryan calhoun, dow dupont, should i buy the stock >> well, they had positive things to say about strategic options at the burnstein conference this week so will the stock react on days when the market is not down 250 points i think it will. so i'd stick with it >> josh, just out of the blue, do you still own uber? >> i do.
>> what did you think of the quarter? wwhelmed by the call, but i think that they are doing that deliberately. dare are dara was clear that there won't be a lot of cheer leading or glowing forecasts coming from the company and i think that he is setting the tone responsibly. the stock is hanging around 40 i think a an update today would be a better reaction, but it is not a large position for me. just a toe in the water. i am paying attention and listening to the calls and reading what people have to say and learning >> nobody else upgraded today in atlantic equities? >> and lyft certainly had -- >> upgraded to overweight. >> and since lyft punched through 50 on the down side, it is basically been up or holding ground ever since. so i think both are sort of out of the funk that they were in
two weeks ago. >> and also supported by the short positions which were huge. >> let's do final trades >> j & j, we saw the news on the settlement and still think it is a great stock. >> steve >> cash. i'm staying in cash. >> okay. >> can i have that >> it is a little dangerous when you have a lot of me and -- >> if you're pulling out cash -- >> yeah, pulls on ulg s out a dr what is up with that >> i didn't want you to feel left out >> the circles in which he rolls, he pulls out a buck >> is that for the valet outside? >> no, i have coins for that >> so i won't pull you out a bitcoin, but it is a dangerous day when i'm growing with steve as much as i am. but i'm not buying anything today. we got next week i'll be here we'll buy next week, not today >> josh brown.
>> if you like market volatility and investing in the future of wealth management, schwab gives you a way to play both it has come down and so i think you buy it >> mgnx looks like it could pop. >> good weekend to all of you. "the exchange" begins now. >> thank you, scott. here is what is ahead. president trump slapping major new tariffs on mexico unless they stop letting migrants into the u.s. business groups so furious they may sue over this, but peter navarro says investors should look at it calmly. and an ugly month on wall street, major averages all down more than 6% in may. bond yields are slumping too the 10 year below 2.2% we'll look at how best to position your portfolio. and retail stocks are having their worst month since the great depression all bad news