quite a number of breaking news headlines while you're there i'll be manning the desk here. >> yes, not bitter at all. i got it meanwhile, session highs, even though goldman has a note out saying they do not expect a rate cut in 2019 so watch the afternoon session and let's get to the judge >> carl, thanks. i'm scott wapner stocks are surging bond yields rising as the tariff threats against mexico won't happen is another run at record highs possible it's 12 noon this is the "halftime report." >> stocks rally on a u.s./mexico trade deal and looks for progress on a resolution with china. the federal reserve is meeting next week. and president trump is targeting the committee again. >> they certainly didn't listen to me because they made a big mistake. they raised interest rates far too fast >> two big deals being emerged today. we'll debate these megamergers our investment community is

bringing you their strategy on all these stocks the "halftime report" with scott wapner starts right now. >> welcome our investment committee at the table, joe terranova, josh brow and pete najarian. shannon sakosha is back. we begin with the markets. stocks are building on their best week of the year. tech continuing its outperformance hard to believe that one week ago, we were getting ready to batten down the hatchs thinking we were going to have a mini december event or perhaps even worse and here we are. less than 2% from new highs on the s&p. >> if one thing gave you a little signal of some sort, i would have to say we talked about volatility last week it's been somewhere near 15 and 17 and on the days we're down we're not seeing the spikes to the up side we couldn't even get close to 20 on the most recent sell-off. when we had the sell-off and yet last week all we did was

go up, up, gup, up the names under the antitrust issues we bounced right off of that many of those names are up significantly now. it's been an amazing ride. it's not just about volatility volumes are there. last week we had that going back and forth thing about volume volume is there. in the leveraged world of options, friday we traded over 23 million we're average $21 million a day so far so there is something to be said for the volume is there to support what we're seeing going on in the stock market >> josh, 50 or so points from the new high on the s&p. all is well in the world again >> i don't know that i would say that i'd just say that the narrative changes based on whatever the market just did over the prior three or four days the dow went up 1,000 points of course people feel better today. and they tend to emphasize the things that are positive and then if we go -- >> make it 1200 points in five

days >> fine. if we go down another 1,000 points over the next week, three weeks, five weeks, whatever the case may be, people will then come back with all the negatives. that is what this machine that is the market does it drives people crazy the one big mistake, the two big mistakes you can make, number one, to get all bulled up or be beared up, everyone falls victim to that. amateurs, professionals. people that have been doing this for six months or 60 years, we all are prone to that. the other thing is, and no offense to anyone that does this as a chief strategist for a living it's to try to assign a linear meaning to any one day's action or one month's action. and one example of that, scott, real quick, had a conversation with somebody over the weekend i've never met them before they are a fan of the show let me get this straight the market first started to go up because they thought the tariffs would go into effect and

the fed would act. and that was bullish now the tariffs won't go into effect but that's bullish, too and i said, listen, if you're trying to figure out how the market feels about any one thing and that's what your job is at an investor, you're done you're going to fail that's not what this is about. so i think bigger picture, we never really sold off tremendously and now we're right back at new highs in the blink of an eye look at the nasdaq today up 2%. more than double what the dow is doing. so you have this huge move up in the interest rate sensitive stocks those are backing off today. and now the momentum names come back to the fore just like you'd expect after a huge run >> doesn't this underscore the risk is getting too negative we didn't learn our lesson from what happened in december. got very negative and the market shot back to new highs in may. the very beginning of may. and then we had the big swoon again and here we are. here we are. five straight up days. going for more than that 1200 points, as josh said, in the dow.

in that period of time >> i think that, to your point, i think last week or the week prior, the mexico tariffs were a huge distraction and i think when it comes back to this period where we are now, we're continuing to see accommodation from -- not only from the fed but out of the ecb, the boj last week. we have more tools we'll use them i continue to think the market is fueled on the basis of the fact we'll continue to have accommodative monetary policy and liquidity provided to the markets. i think the equity markets are overstating the benefit that a rate cut will give to them in the back half of the year. they're understating the amount that the point that the economy slowing would be why you would get a rate cut and not because the fed is overly supportive of asset markets as it relates to equities right now we're back to this story of accommodative policy. the story of, where else do you go with your money >> unless you don't think the economy is really slowing as bad as some feared and you get a

preemptive rate cut of sorts from the fed to make up for the mistake that some say they made in december. that's like the best of both so they're cutting rates and the economy is actually doing pretty well what's wrong with that picture what's bearish about that? >> i finishing you lothink if y >> growth expectations continue to come down i don't know how the market continued to factor in a continued rise in equity prices when we're expecting growth to continue to slow >> okay. so, joe, it's not necessarily just sentiment that's improved mkm has an interesting note out today. the internals are firming up in the market as well the market is just looking better if you look across the whole thing. a surge in the ratio of advancing to declining volume has been a good indication the market is ready to push higher on june 4th, the a/d ratio was

18 to one. the strongest reading since january 4th. then on thursday last week, 16% of the s&p made new highs. the strongest reading since january of '18 that says internals are better, market is primed to go higher. >> we could all see that with the market up 5.5% for the month. we're reacting to the last three or four days i'd love that note this time last monday. that would have been a valuable time to have it. we're talking about the market, okay and i think what the lesson so far of late 2018 and 2019 is this there's a high correlation between what federal reserve intended policy may or may not be and the high momentum mega cap type of names in the market place and those are the names that are reacting and getting whip sawed all over the place when you look at your portfolio and all these asset classes, high yields, investment grade. they did not flinch. high quality momentum names like

a microsoft. like a mcdonald's, a motorola solutions. they have held firm. so i think you have to look at that and say, okay, now looking forward and understanding, we're taking the headline off the tablg, wheth table, whether we ever believed it was going to be there where's the sensitivity if the market continues to move higher? for me it's possibly the emerging markets if this is real we've got a cut coming, then the emerging markets which have been underperforming might be a place of opportunity >> so you talk about high quality momentum because that's the second part of the mkm note. when they discuss, you know, how do you play it they say stick with those names. and they mention the microsoft and motorola solutions as joe just said. they throw in disney, merck, cme group, starbucks, proctor & gamble, verisign, ross, aeon do you own those >> i own disney, microsoft those are high quality companies. those are not sensitive to what

is going on, a, with the fed and, b, what's going on in the white house. so those 24 things you have to be careful about because as everybody here has talked about, the whipsawing that's going on, oh, fed is going to cut. what's going to move up? white house is going to come after tariffs. what do we play? if you look at where you want to be today, if you can find good companies that are growing that are not really a function of kind of, a, antitrust or, b, you know, are they going to be cross border, these are the companies i think you want to own through this period. but on the other hand, when we get through this, where are the tariffs go you want to some companies that have global expose slur. high quality companies in that area, are companies you want to own. >> do we agree with these names? proctor & gamble, starbucks? people agree with microsoft. we'll not go there again merck? pete >> i own it. i don't think it's defensive it's just a great performer. how about pepsi, pfizer.

there are names that can perform and not just because there's this whole momentum story going on they have a great fundamental story and growth behind it those are the names you want to have if you have great fundamentals and have that working for you, those are the names that people are definitely looking for in terms of what can go from here are those solid, quality names >> the other point that shannon sort of alluded to is that, and mike wilson talks about it,s too whether you think despite the trade deals, whether it's going to disappoint. he says to stay defensive in all caps growth is going to disappoint whether there's a trade deal or not. and then we can go through some of their strategy picks. risk assets look less appealing in the u.s >> if you're looking at it in terms of -- i mean, this is -- if you're talking about utilities and consumer staples, there's ways to become constructive at the same time. so if you look at some of the names, you think about a visa, for instance you think about those companies insulated. those are the companies you should be looking for now.

i don't think we need to run for the hills and go into what i think is consumer staples where clearly there's going to be compression in margin. you only want to hold consumer staples during a recession it's oerl thearly on that. >> let's go through some of these calls. we can debate them risk assets in the u.s. look less appealing japan represents a unique bargain. the dollar smile becomes a frown. we can start there what do you think of that? >> look, mike wilson is somebody we have on the show. i have a lot of respect for him. it's important to remember there's a human element to these type of calls. he made a bold, almost recessionary call on the u.s. economy. a very bold call about u.s. stock under performance. and he's made bold calls before. some have been good. some have been bad but a lot of the commentary that comes after a call like that is colored by what you originally said it's very hard to change your

mind when you've been that vocal pounding the table, either bullish or bearish that's a tough gig >> once you put on the bear suit, the zipper gets stuck. it's hard to take it off >> or you have to take it off gradually. we're not doing tariffs. it's tough to undo six months worth of commentary you've made from the start of the year the other thing that's really important is there is not a linear connection between the state of the economy and what risk assets do because there's another piece of the puzzle which is, well, great. i understand your take on the economy. what are the pre-existing expectations does anyone at this table know what the greek stock market has done this year probably not it's up one-third. up 35% is that because greece has a good economy no it's because the expectations are trash. nobody expects anything good can happen with, for example, greek stocks and so they go up 35% the shanghai shenzhen market is up 20% year to date. that's mainland chinese companies. not hong kong.

nobody would have said tariff war on china means good for chinese stocks >> i would have said to all of you a week ago today, do you agree with the notion that u.s. risk assets look less appealing, i would be surprised if i didn't get some agreement there's a lot of negativity at the desk we were questioning whether we were going to have a december-like pullback >> sentiment is a function of what we're seeing in front of us at any given time. >> are we saying the u.s. risk assets look less appealing does everybody disagree with that from mike wilson? anybody agree with that? who agrees with it i don't see anybody agreeing with it. >> a week ago, i didn't agree with it. i don't agree with it now. and i said i didn't agree with it last week and there are a lot of other people that didn't agree with it as well. >> everybody wasn't all bulled up a week ago today. >> if you are a trader and stocks are acting the way they're acting right now, of course you disagree with that. if you are an investor, you understand that forward returns rise as asset prices fall.

it's not a function dove you agree or disagree monolithically depending on what you do in the markets and how you invest, that's how krooyou'd answer tha question no doubt for traders having an expanding 52-week high list and 90% of the market breaking back above important moving averages, that would make you bullish. if you are a trader, it should as an investor, you prefer to buy when the market is down 10%. these are two different animals. >> he's using two words that don't belong risk assets. risk assets encompass reits. >> let's make this simple. u.s. stocks. >> no, you have to make that distinction. i'm sorry. >> you're trying to be too cute with it. he's talking about u.s. stocks >> it doesn't say u.s. stocks. it says risk -- >> do u.s. stocks fit in -- >> i said a week ago they did. i said it a week ago

>> so do junk bonds. >> it's an interesting point that got lost in this. everybody is looking at tech, tech, tech that's all we heard. oh, boy, look at this big run. this huge run back did anyone watch how energy traded, the fact it bounced off those numbers when you look at where oil was or the xle or exxonmobil w which was 70 and now it's 75. chevron as well? there is something to be said for, if it broke through those certain levels in terms of what everybody was -- everybody's got their different points and different days they want to use and everything but a lot of people talked about oil being at a level where if it breaks, now we have a problem. but it didn't. it seemed to have found support, scott. take a look at the oil chart you'll see it moving to the up side those oil names are moving to the up side at a rapid pace. >> they may be oversold according to technical names out there and notes that have been passed around, too >> i think at the -- to be fair, at the beginning of the year, this is the year we were going to get oil at 100. and so it's been a very

challenging space for those people who have bet on energy this year. i still think there's some value in it, but i think you need to be careful getting too excited given the backdrop of what we see from an economic perspective. >> quick >> i would add, energy will be one of the first things to go down if you get into a recessionary fear. >> i think part of our point here is to say -- >> you're not seeing that. >> did we go overboard again in thinking that we were having these recessionary worries bubbling, bubbling up again? remember we put the wall of worry on -- >> but that's a productive -- you want that. >> yes, i'm not saying it's a bad thing. >> i love that we have a wall of worry. we always should there should never be a time when every market participant says, three sheets to the wind, this thing will never -- we want that to happen we want people shaken out and multiples having a tamp down on them do we want to be in a market that sells for 30 time earnings? >> insert the word faangs into

this that's where the risk is where the high beta and volatility is and faang from 17 into the middle of '18 was the place to be maybe faang is not the place maybe instead of risk assets -- >> apple was a laerkts ditite ao the faang. that's pushing back to $200 after having a 170 handle again. nasdaq is doing well facebook is 176. you can throw up -- there they are. amazon up 4% the market is going up why -- >> don't be surprised. throwing money at spy after -- >> and i'm arguing if you want to be very conservative and thoughtful with your risk, maybe the faangs are the places you look at and say i'm not comfortable to assume the risk there. >> okay. anybody want theother side of that before we move on faang, stay away >> stay away >> too risky >> i would disagree. i own facebook i'm going to continue to

when you say faang, you're encompassing all of those. there are names within there -- there's probably a risk profile there, absolutely. but when i look at the cash position in some of the possibilities still in front of facebook right now because everybody again is facing -- all they look at is the facebook and engagement people were leaving. no, they didn't. people aren't on there as much yes, they are. all kinds of different verticals. when you look at the cash they throw off and the cash sitting at that company. yes, they're under scrutiny all the toime and it's going to continue but that's a name i'm willing to headacang on to. >> what about this antitrust thing about to drop on them. what happens when they drop that antitrust thing people say okay, and they go buy google it's emblem attic -- >> one of the classic names is the nvidia the faang names, and i appreciate you have owned these

faang names for a long time. i can find and accomplish what i'm looking to do -- >> it's not a faang stock. >> i understand that but it traded like a faang >> it was like a faang on steroids >> and the reason i do, i think they still have that moat around it and i think disney is going to make some moves on them i own disney as well they are in front of disney by a long shot right now. that will be made up by disney at some point but not right now. it's the greatest buy right i've had in my portfolio. >> there are other technology names to accomplish the aim same mission if the market is going to trend higher. bullish toward technology. whether it's adobe, texas instruments, semis, whether it's microsoft, motorola solutions. i just think you can get to the same place without having that hypermomentum name >> is the fear the momentum or the regulatory part of it? >> the fear is, again, we keep inserting all these headlines into the marketplace

and to josh's point, they are the atm for the market, the faangs and the first place when sentiment shifts that when it comes out, money goes right back in i just don't want to be part of it >> the focus is on the faang stocks regardless of what the story is in order to insulate yourself to joe's point, you either have to be very sure they'll continue to move higher or you just take a step back. >> they are a big chunk of the s&p's expected earnings growth the focus is not unwarranted they're big market caps and the central products and services in everybody's lives and the a lot of the earnings are going to come from the faangs if they deliver. stocks marching toward new levels and the mexico deal over the weekend. the president once again taking aim at the central bank during his appearance this morning right here on cnbc >> we should be entitled to have

a fair playing field but even without a fair playing field because our fed is very destructive to us. even without a fair playing field, we're winning because the tariffs are putting us at a tremendous competitive advantage. >> all right that's the president this morning. our senior economics reporter steve liesman joining us with more others are sort of opining on what the fed may do. goldman has been way off sides on what the fed was going to do. now they say no cuts this year what do you think about what mr. trump had to say >> i think what he's talking about when he says the fed has been destructive i think he means in context of his attempts to grow the economy faster but also the trade negotiations with china. he contends the fed hobbles the administration because it doesn't cut interest rates which weakens the dollar and eliminates the ability of china to offset the effects of the tariffs through the weaker currency >> okay. so we get this deal with mexico.

you can debate what actually changed or what didn't change or what was agreed to doesn't matter the market is up big sentiment is -- >> it actually does matter, scott. a lot of guys are trying to figure out what lesson the president learned from this deal with mexico because if -- >> that's not difficult to figure out if you ask him. he believes tariffs work they're a beautiful thing, i think is what he said this morning. something like that. >> one thread is, if he really believes these tariffs work -- >> he does, obviously. >> if he really believes that, then you follow that through it means people are more concerned about more tariffs down the road. that the president -- >> that's a separate debate. >> that's the debate >> that's why i'm bringing it up if he knows in his heart that really he didn't get much out of this and, let me finish this thought, and if the chamber of commerce and the senate republicans and big u.s.

corporations prevailed on the president to not do these mexican tariffs, that creates a different scenario for tariffs down the road. it means he'd be less likely to use it >> politically, not economically >> let me put the -- >> the tariffs against mexico would have been, you know, destructive for hiring, for employment for texas and places like that >> such that he believes that there is indeed a negative consequence to the tariffs and the reason i bring this up is in the context of the question you asked, which is the fed. so will there be mortariffs? is china more or less likely now which is the game people are trying to figure out right now are the 25% tariffs on china more or less likely today? i've got a calendar to the cut you can take a look at let's go through what we have. next week the fed meeting. and i expect some affirmation from the fed of the positioning of the market but not necessarily confirmation, if you might. and then you have this potential

trump/xi meeting -- did i say that wrong >> you did >> trump/xi. >> trump/xi. that's in japan. now the president said today that if that meeting doesn't happen, the tariffs go on. and then you have the jobs report which will or won't confirm the weakness that we had in may q2 gdp between 1% and 2% and then the july 30th fed meeting where you might get that first cut. there's a ways to go >> if the stocks hit another new record high -- >> that removes a reason for the fed to cut >> and then some animal spirits maybe returning. >> that removes a reason for the fed to cut >> plus deals happening. >> you know where i'm going. >> yeah. >> they're going to cut in the face of that >> just watch the most important indicator which is beyond meat's stock price and ask if it needs

a 50 basis point cut at this point in time. i think we'd conclude no i also don't think trump is saying he thinks tariffs are beautiful for the economy. they're beautiful for a different reason they work for him politically. and that's number one. number two, this is also a person that thinks we lose money when we trade. he said they're taking money from us. not -- >> he said stealing. >> he says -- >> got the numbers wrong >> the good comes over here. we give them cash and he thinks we get screwed we have an economy worth $100 trillion and we're somehow losing to china with per capita income a fraction of what ours is how do you reason with that? you really can't >> what if the economy is slowing, regardless of trade, like mike wilson and some others are suggesting, as he says the fed could cut as soon as july but it may not halt a slowdown or a recession >> i think i take exception to

that question. i'll tell you why. i don't think you can say regardless of tariffs. i think that we have this slowing that was baked in, and i think the economy was fine to withstand that and i think if you had a slowing from a 3% kind of tax incentivized growth in 2018, and you slowed down to 2%, 2.25%, we would have been okay it would probably be sufficient, would be okay. but you layer on top of that the tariffs, and then you have a need for cuts. >> good thought to take a quick break. i want to have more discussion about what the fed really is going to do after the break along with those deals i want everyone to weigh in on these two big deals that happened today utx and raytheon, tableau and salesforce here's what else is coming up. >> our call of the day why loop capital says a lower rate environment will benefit this area of the market. stay tuned for their picks in outlook. plus, pete najarian is

finding unusual activity in the options market his trades are straight ahead. before the break, stocks have bounced back to kick off the month of june. the s&p jumping 4.2% in doing so crossed back above its 50-day moving average. according to our data partners at kensho, since 2009, the s&p has crossed above its 50-day moving average on ten other occasions. two weeks later, stocks tend to be consistently higher up 90% of the time for more go to cnbc.com/kensho the "halftime report" th sttwico wapner and the traders is back in two minutes ♪

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that was weird. oh sister it's gonna get way weirder. welcome back, everybody. here's what's happening in the cnbc news update house judiciary committee shairm gerald nad bjerrold nadler out statement saying he's reached an agreement over obtaining key evidence in the mueller report reported to possible obstruction of justice by president trump. the congressman from new york says, as a result, he'll, quote, hold the criminal contempt process for now. the u.s. supreme court rebuffed a bid to expand legal protections for gun silencers. justices declined to hear appeals by two kansas men

convicted of failing to register the devices as required by federal law. they wanted the court to determine whether silencers are covered by the second amendment. the vietnamese government plans to crack down on chinese companies it claims are using illegal made in vietnam labels to avoid the tariffs imposed by the u.s. vietnam's customs department says textiles, steel and plywood are among the products being labeled and exported to a third world country. and there will be a game seven in the stanley cup finals. the boston bruins avoided elimination with a 5-1 victory on the road against the st. louis blues. knotting up the series at three games a piece. the deciding game will take place wednesday night in boston. you're up to date. that's the news update this hour back to our conversation dow jones industrial average good for 153 points. building on what was already the best week of the year. there's been optimism that the fed was going to come to the

rescue if necessary. what do you think, what if the fed, as they say, is going to do nothing. what if the fed steers clear of all of this noise and just does nothing? >> i think the market is going to have to make an adjustment. >> lower >> right look as josh said, the market could trade either way but in a normal world, not josh's world, you could -- >> my world is the only world that we all exist in >> you're right. >> that would suggest the economy is okay. >> it would be okay. the market was wrong animal spirits are pretty good >> do you notice that i interviewed three fed officials last week. i gave every one of them multiple opportunities to push back against the market expectations none of them took it >> because they didn't know what was going to happen with mexico. >> it wasn't so much that. it was that they are just not uncomfortable with where the market is priced and what worries me about that is that the market will then

have to adjust for the lack of fed rate cuts. >> if the fed does nothing as was said moments ago, is the market needing to make an adjustment lower shannon, is that what happens? >> yes, i agree with that. you look at anywhere between 2 and 4 rate cuts for the second half of the year we were sitting at four rate hikes. the market has clearly priced this in. i think if we get even a hint of language from one of these fed officials that we're not -- that they're not going to cut this year, the mark set going to reset. >> if you would put up a chart of the ten-year, it's one of those things, the market is just fine with all these tariff things there has been a major adjustment in the interest rate outlook and a major easing to financial conditions it's like saying, you know, there was a war and yada, yada, it was over. that's not exactly what happened there was a threat of tariffs.

a major downward adjustment in yields and then stocks >> 3% -- we were talking about a 3% ten-year going to four. now we're talking about 2% going to 1.8 i mean that's -- >> the bond market was wrong >> i bring that up in the context of let's now put the stock market outlook in context of a ten-year that goes the other way. would everybody be quite so happy in that context? and i think the answer is no >> we'll be talking about, what's going to go on with rates, if rates continue to rise is that a big headwind for stocks >> what about a 2.5% ten-sgle yr is that going to hurt the economy? >> oppenheimer has their note, don't get fooled again maybe the bond market was the one getting it wrong the near record low treasury rates might not so much smal a recession but another bond market misread of the economic landscape.

is that fair >> can i ask then, how do you explain friday how do they think about friday >> i think the market, as it often is, was smarter than i was and than many people were. i think they saw -- by the way, as, at least as smart as scott is, which is they saw the mexican deal was not going to happen that there was not going to be these tariffs on mexico. i took them seriously, rather than what is to take trump literally not figuratively or whatever it is i had people saying -- >> not literally >> if these come into being, there will be all kinds of negative fallout i guess the market must have sused out this was not going to happen >> i'm talking about the jobs report >> the jobs report is part of a weakening of the economy and there may be some negative trade impact in there. if you look at tech and trade-related sectors, there could be some negative trade effects already. >> that supports scott's point what if the economy is already slowing and the federal reserve has to react to that either in

june, not likely, or july. >> there may be trade negativity within that. so you're not 100% certain >> let's talk about -- how does it work in def con 1 is the highest or 5 is? >> 5 >> you sure about that >> yes >> so let's say chinese -- >> i'm trying to remember back to war games >> let's say we're def con 2 right now. we think -- i think china tariffs brought us to 3. i think additional tariffs bring us to 4 and then you have additional weakening on top of that that's when you get recessionary >> mexico -- >> mexico got you to 5 >> but he rode to the rescue of his own reason that -- people were saying the fed has to come in and do an insurance cut he rode to the rescue. it's like if you own the local glassmaker and you send a kid around the neighborhood to smash car windows. i'm not ever saying i did that but you create this issue. make it a huge media story for

two weeks and then say it's off the table. >> you see what happens, scott this is one of my overarching points all of these political issues make really smart and sane stock pickers insane, okay i got sarat over here looking for companies with no cross border and no antitrust, right >> no tariff issue >> i recommended al's tackle shop that's one he can invest in. this is what happens you guys are all in the unfortunate position having to gain out political outcomes in a way that was not true -- >> the reason sarat is as good as what he does as he is is the fact he thrives and wants these situations we want this volatility. >> you don't want unpredictability that's the difference. >> the unpredictability does create opportunities, right? you get that uncertainty, a sell-off -- >> sometimes it wrecks it. >> that's always uncertainty >> do you really want to be

picking political outcomes >> political outcomes? no >> you want to -- you want to wake up in the morning and figure out if you'll have tariffs on china that's where you want to be? >> i wouldn't want to be i'm saying it creates opportunities that so many people will miss because you'll get so many people that will see that move and sell it and that creates those opportunities. just like we saw a week and a half ago when we had that huge sell-off look at those faang stocks look at the recovery they've made since then. those are the opportunities if you have whatever it takes to buy those things at that time. >> someone on twitter says def con 1 equals -- def con 5 is happy face >> if we had jim here, he would have known >> the guys in the control room will check it out. go through war games tell us what it is def con 1. another one says that equals war. >> that's what i thought >> the whole conversation now is

no good. >> it's all good we got the point retail stocks are on pace for their best month since the start of the year. the etf edge is coming up. first your sector check on the s&p and what is a big day for stocks discretionary and tech leading the way. the s&p just below 2900 after getting over that level earlier. that's a gain of just about 23 incomparable design makes it beautiful. state-of-the-art technology makes it brilliant. the visionary lexus nx.

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the united states postal service makes more e-commerce deliveries to homes than anyone else in the country. e-commerce deliveries to homes feel that? that's the beat of global markets, the rhythm of the world. but to us, it's the pace of tomorrow. with ingenuity, technologies, and markets expertise we create the possible. and when you do that, you don't chase the pace of tomorrow. you set it. nasdaq. rewrite tomorrow.

welcome back to the halftime report i'm bob pisani time for etf edge. the trump administration made a deal with mexico to avoid tariffs. retail etfs, including the popular spdr s&p ticker heading higher on the move after getting hit hard the last few months tom liden and chris. tom, it's been rough on top of all the usual problems for retailers. then they had the tariff issues with china the xrt which is an equal weight index, dropped 11%, 12% in may making a comeback but hasn't done much this year. what should we do assuming we

get resolution down the road on mexico and china >> we used to hang out at the mall all the time. you go there, our friends aren't there anymore. these are one of the things more and more we're using online purchases. the amazon boxes are showing up at our house all the time. you're doing the same. this trend is continuing one thing, though, we're seeing more auto buyers that are falling into this retail index which is interesting that whole model about buying cars was broken. now retail buying and cars, i think, is one of the bright stories. >> your answer is to stick to online retailers you founded an etf, ibuy that is online retailers shutterfly, stitch fix, etsy, paypal and that's outperformed, up 20% so far >> we thinks it's clicks over bricks ibuy has been out a little over three years. it's delivered about a 95%

return brick etfs, xrt is down during that time period this is where the growth is happening. it's moving from brick and mortar to online it's not just happening in the u.s. it's happening around the world. growth is about 20% on average in the online retail space >> tom, back to the equal weight versus market cap weighted xrt is equal weighted index of a lot of companies >> right >> rth is only the 25 largest by market cap that's really done better this year because amazon is up 24%. you get that in there. it drags the whole index up. market cap versus equal cap, we always fight about this. >> you always do so you live and die by the sword what christian has done here is by having a select amount, by having them equal weight, you aren't taking any big bets and then as we talked earlier, there's a clicks etf which is long online and actually short big box which is -- >> that's done better this year.

it's up 30%. there's the one on the bottom there. 30% for the year so that's really the big winner. the clear is to short these stores and go long the online guys >> there's sentiment in the brick and mortar that goes too far over clicks shorts it and has profited at times from it. >> thank you, guys tom and christian. appreciate the input for more etf edge, our full online show starts at 1:00 p.m. eastern. etf edge.cnbc.com. we'll talk how u.s./mexico dealings are affecting the etf space and a new fund keeping its portfolive cseo e sto rylo tth it all started under this buttonwood tree. twenty-four people came together to sign an agreement that created the stock exchange. just the right elements coming together. it started when scores more people came together,

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>> look at this. >> well, we had to go straight to the source, right, to confirm we were wrong, obviously defcon 1 is when you know what is hitting the fan >> by the way -- >> farmer jim? >> farmer jim confirmed it, too, before the clip as did several on twitter we've cleared that up. >> i'd love to see farmer jim in a defcon 1 shares of marvell have more than doubled this year >> they're going ultra short term on this they're going, this ride is expiring the 24 1/2 calls which were out of the money. they were buying those calls very aggressively. and i continue to hear these volumes just keep going up, up, up if you remember, since march, we've had buying and the stock was trading $18 a share. they just keep on rolling, keep on rolling they want to be in this name and they expect it to go to the up

side i jumped on these calls. they expire friday this is a very short-term trade. one more as well aggressive buying in snap. snat we've had buying as well. ever since earnings and the stock was buying around $10 a share. it moved up to 12. they continue to roll up this is the furthest out somebody has gone. they're buying in the july 26th expiring, but right at the money, 14 calls. aggressively buying those 5,000 of those as well trading for about $1.10 or something like that. so you have to keep an eye on these names. i'll be in that one for about a month and a half i'm in a snap trade as well that expires here in june >> thank you, pete coming up, viewer questions are coming in on adp, walmart, restaurant brands. maybe some others. we'll get to them. we'll do it next, and you have time to reach us go to cnbc.com/halftime. tweet slus as well brian sullivan has a look at what's coming up on "the exchange" in for kelly >> there will be no tariffs on mexican goods. a deal was reached with the

united states. but a mexican diplomat will join us on what will happen next between the two countries. is a deal really going to happen it's the death of the power lunch. no, not the show they're fine the four seasons closing less than a year after reopening. it's your rapid fire topic of the day. in and the housing market had an underwhelming spring but summer could heat up thanks to low mortgage rates all that and more on "the exchange." the "halftime report" is back after this $4.95. delivery drones or the latest phones. $4.95. no matter what you trade, at fidelity it's just $4.95 per online u.s. equity trade.

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we are back on "the half-time report." own a lot of share, curtis says. good or bad thing? >> company has a great barrier exit in the current range it's a little bit on the top of the technical range. trimming here would be the worst call. >> here is a good one. tp at north carolina for josh and pete, he wants to know about walmart or target, okay? josh made a big case for walmart last week. you always make a big case for target. >> you know where i stand there. >> josh, walmart over target why? >> walmart is on the verge of breaking out

i like both stocks fundamentally. i'm talking about pure technicals now target has had a nice run. walmart has been consolidating for a long time now. it's a similar setup to what we saw with disney a couple of months back. 107, 108, that's where it peaked last time. it spent all this time trying to get back there you have this nice pattern of higher lows each time it sold off, it sold off to a higher level f it takes that 108 on good volume on a weekly chart, there's no resistance, no reason it couldn't roll up to 125 i'm talking purely on technicals i like both stories, though. i think target can also work. >> you like both stories or only the target story >> i definitely prefer the target story walmart for trades but i look at it -- right now target has something like -- it's actually pushing against those $90 highs it hit not that long ago yet trades at a fraction of the pe multiple from walmart.

from a fundamental -- i know josh is talking about breakouts and the rest of that from a margin standpoint, this is the name to be in i think they delivered it st arr and proved it. >> quick break final trades are on the other side

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what do you look for i want free access to research. yep, td ameritrade's got that. free access to every platform. yeah, that too. i don't want any trade minimums. yeah, i totally agree, they don't have any of those. i want to know what i'm paying upfront. yes, absolutely. do you just say yes to everything? hm. well i say no to kale. mm. yeah, they say if you blanch it it's better, but that seems like a lot of work. no hidden fees. no platform fees. no trade minimums. and yes, it's all at one low price. td ameritrade. ♪ feel that? that's the beat of global markets, the rhythm of the world. but to us, it's the pace of tomorrow. with ingenuity, technologies, and markets expertise we create the possible. and when you do that, you don't chase the pace of tomorrow. you set it. nasdaq. rewrite tomorrow.

is where people first gathered to form the stock exchangeee, which brought people together to invest in all the things that move us forward. every day, invesco combines ideas with technology, data with inspiration, investors with solutions. because the possibilities of life and investing are greater when we come together. ♪ we're back don't forget about merger monday raytheon, shannon, you own both raytheon and utx. >> nice balance mix of business. salesforce side you need to have your analytics otherwise what are you doing with all that data >> two stocks up, two stocks down

that's often how it works. >> i like this name. i own the calls. >> shannon >> trex. love the move from wood to composites. >> jp morgan this is the stocks you want to own. >> watching to see if walmart can break out. buy more citi. >> "the exchange" starts right now. >> that's right, scott, thank you very much. here is what is ahead. getting decimated. that's what the president says about china's economy. and he thinks they'll be forced to make a deal but is he right? with one trade battle seemingly over and the market posting their best of the year this week, buying stocks heading into the summer and beyond belief 600% return not in ten years or ten months but in 27 days. the stock and why it's been sizzling ahead all right, let's kick off your monday with more on today's rall