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tv   Fast Money Halftime Report  CNBC  June 20, 2019 12:00pm-1:00pm EDT

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really close guys, back to you. >> no one knows this process better than you. >> what a treat to be here >> meantime, settling into this range here of 170 let's get to the judge and the half we'll keep our eye on slack as well and get down to miss% as soon as it does open front and center for us a new record for the s&p 500 after federal reserve signals rate cuts are coming. this is your "halftime report" >> announcer: record breaker the s&p pops through hitting an all time high. the dow less than a percent from breaking its record high the nasdaq less than 1.5%. and the russell is out of correction territory i want to play offense >> he made that call two weeks ago. is he sticking with it or have stocks come too far too fast
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halftime investment committee is lining up with their buy list. and richard fisher, and blackrock's rick rieder are with us live. "halftime report" with scott wapner starts right now. >> welcome good to have you with us our investment committee is at the table today. let's begin with that new milestone for your money, stocks surging to a new record high june now the best month in almost four years. joe, there's a lot in the market now. considering 100% prediction for the fed in july. how high can stocks go >> stocks can continue to go higher and they continue to go higher because west diversification story. we don't have the overattraction to the momentum equity oriented
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type names you're looking at apple and amazon and netflix that are still below their highs from last september, so last time that we visited these levels, okay, what we experienced was that momentum is where everyone was and it was crowded i think what's you anything and the reason we can propel high they are time the market is focused on quality, on utilities, on reits, high yields so that's why we're moving higher >> do you agree, josh? now that we hit these new highs, come off a little bit of the newest highs >> you got some very big and important sectors that got us here and not all tech. consumer discretionary has been very important reits andites have been very important. i think now you got these other sectors where you say okay are they going to bring up a rear, is there a rotation at these
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highs where if we pause that sustains us. is that energy oil is having a huge day today what i find interesting is two things that maybe not a lot of people have been mentioning, massive gold rally five year highs for gold lot of people are talking about that what is the meaning? is it purely what's going on with the fed are there other issues banks. kre is down 1% today and half of the 20 worst performing s&p 500 names today are banks. >> worst day of the month for regionals. >> yeah. look like oh, no everything is bad but we've been selling since the open pretty much straight up selling. now we're closer to the low of the day than the high of the day. you have no participation whatsoever from the big financial firms. i think you combine that with the big gold rally and you just say to yourself will this be a replay of last september where
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we barely peak out and make a new high above the old february '18 highs and then pull the chair out from under our feet. >> we think the stock market may be a little bit ahead of itself. it's gone almost as far as it can go on the fed alone. what we're interested in is a bifurcation in the market. interest rate markets are signalling a very pessimistic scenario with basically three 25 basis point rate cuts. sign the next six months whereas the stock market on the other hand is hitting all time highs, and we think is pricing in a soft landing engineered by the fed. so that might happen for that to happen we need to see growth pick up a little bit we think that trade needs to be something that comes to clarity. >> we've been following slack waiting for it to open down at the new york stock exchange. let's get an update on bob pisani who has he some new
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information for us >> reporter: 38 to 39. joe mccain who is running this, i know we've been talking about getting close. are we exhausting all the buying and selling? >> we're getting there we indicated 38, 39 and the hope is to open pretty soon in that range. >> reporter: we started out with 26 as a reference price. early indications, 33 to 36 and it went up in dollar and $2 increments and now it's going up in 50 cent increments. there are indications to people in the crowd, he's in touch with morgan stanley and goldman sachs. they are part of that process. those people up there, upstairs are in the process very collaborative you should see the yelling that goes on. the question was do we have enough liquidity >> i think we have enough. >> the float was 250 it's available to trade roughly. we're talking north of 20% of
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the shares that might trade that are available to trade at the open >> very strong >> that's much higher than normal typical move would be 10% float at the open would be successful. 100% close of the day. you opened at 20%, 25% >> unless something large and unexpected comes in we'll see. >> we'll see -- pete is the one who control it after he collaborates with morgan and goldman and they are waiting to get the final indications from them that they got their buyers and sellers in line. theology give a two-minute warning, say the book is closed and in ten seconds we'll open it >> i've seen it before >> i've seen this play for many years. looks like pete is not ready we're close. when we start moving at 50 cent intervals that's a sign it will open soon. >> it feels imminent as soon as you toss it back to us fully it will open.
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we'll get back to you as soon as we get that moment that's bob pisani. josh, you've had your eye on this one for a while >> i'll buy some today i don't know if i get hit. not the end of the world if i don't. i'm a user of slack. i'm one of the earliest. i brought it to my firm when we first launched >> let's go back down to bob bob? >> reporter: they are saying they are good to go here we're trying to -- this process is collaborative man on the floor says we're good to go. he yelled to the crowd this is it final bids the other people out there have to go in there you're hearing people saying hold on, wait a minute, we have more bids or more offers and that's how this gets right on top of everything and it's happening. it's a poker game. people are sitting at the very end i want to see if it will go down by half a point i have 50,000 shares i want to buy. that's a big difference.
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that's $25,000 >> they are seeing if they can get the price down a little bit. >> a tendency to wait until the last minute to see where things level out. again, we're getting there >> think of it as an auction where you're trying to buy a painting are we ready, pete no not ready yet. that's the bottom line we're here, guys >> bob, we'll just keep you up let's stay with you and bring josh in the conversation who, i'm not sure if you can hear him bob. josh said he was an early adopter of this product. he's going to be a buyer today >> reporter: guys the book is frozen slack has opened at $38.50 slack opens at $38.50. the volume here, 45 million shares that's probably -- that's 22% of the shares available to trade. certainly that's a very successful in terms of liquidity.
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finally we have a price here $38.50 >> definitely very strong interest we'll keep an eye on it during the course of the day. >> does this vindicate the direct listing model or a very particular thing that would apply to particular companies? >> i think the model has prove convenient itself to a viable path and it's a question for the company if that's a right fit for their objectives >>we see behind us, various officials from slack that are ringing the bell there's an old tradition down here of ringing the bell locally. official officials -- the ceo's mother just rang the bell all family members are down here as well as the shareholders of slack. one of the aggravate things of watching people go public. has it amazed you what we've been doing this year good ipo price would open 10%,
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15% above. we've seen the average price of an ipo open 22% higher so far this year with an avalanche of ipos this one opening higher. it's a reference price >> strong demand a testament to the businesses of these companies. >> reporter: the ones that do best are strong growth, even with losses uber and lyft are the exception even with losses they are willing to pay a lot of money for companies that have growth that's out there. >> business models like i said slack has been a very successful company. we're proud to be associated with them. it's a good testament to these entrepreneurial models >> reporter: this is all nice and well what if we have some kind of a downturn what if the s&p is down 10% in august will these companies come down >> we've seen a lot of
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volatility even this year. we've seen companies continue to have success in the public market so remains to be seen. >> reporter: before we go a reminder of what a direct listing is there has been no shares underwritten >> that's right and no shares sold by slack themselves all the shares that came to the market came from the hoerlsd >> reporter: the company has not created new shares people that are selling are people that are already in the company. as we noted before there are six shareholders that own 60% of the company including the ceo -- >> all the beltwayers and sellers got 38.50. >> reporter: the question was, was there going to be enough liquidity. >> that was the question >> reporter: you answered it >> trading higher now. >> reporter: we got more than 100 other ipos sitting out there for this year including airbnb what is this telling them?
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>> they are all watching this and paying attention to how it trades seems like a good indication >> reporter: can't ask for a better environment for ipos. historic high with an avalanche of interest in high growth companies. all of them performing better than historic norms for the ipo market i can't help but ask, i know this is a tricky question. are we at peak ipo at this point? how much better could this get >> i don't know how to call that one. it's not like we're not seeing strong demand. today's performance was a good indication that it just continues to attract investors >> when you see what happened at the beginning of march and skeptics were out saying we'll have 200 ipos, including massive names like slack that will dump an awful lot of stuff on the market they have to push the prices down and they are going to have trouble sustaining prices and a lot of people saying this is great for ipo buyers we're going to buy low >> we haven't seen it yet.
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>> good time for the ipo market. the question is now peak ipo or not? i have not seen this -- joe you've been covering this north of 20 years. >> we were paying a lot of attention to today's message and it was a good one. >> markets haolding up well i'm going to talk to the ceo's mom. it's a little mushy but i like this part of the business. >> nobody does it better than you. thanks so much we'll come back to you if we need to. that's bob pisani down at the new york stock exchange. josh, i come back to you you had your choices bob has been saying there's a lot of ipos. why this over some of the others >> first i did get filled pretty much the second it opened really orderly process on the new york stock exchange they should be congratulated for it they did a great be job. a very big deal. so now you have a company with $600 million in revenue for the fiscal year.
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what's expected? this is a company that managed to get to 100 million in annual revenue in one three years almost never happened in any kind of enterprise software company. the typical company has taken six years. so it's viral. this thing is spreading. not spending money on advertising. companies hear about it, ado i want and their employees get addicted to it immediately the total market is tremendous one estimate, $28 billion. and there are people talking about this being potentially as disruptive in term of what it can do within the workplace as sales force was a decade ago so those are very lofty expectations this is not a cheap stock. about 40 times revenue you look at zoom, zoom which had another huge open and continues to roll higher is 50 times revenue. i know it sounds ridiculous but in these stocks we play a relative game. none of them cheap
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the last point, spotify is the last monster direct listing similar to the way slack just went public. spotify had a reference price of $130 a share, i believe. opened up close to 170 back down a little bit right now still 145, 150 so still at a premium to where it opened even after all this time so this model does work. i know it cuts out a lot of underwriting fees. traditional wall street doesn't love it although they did play a smaller advisory role here i think you'll see more of these among companies that don't need the push from a traditional investment banker because everyone already wants in and that's just a new reality of the markets that we have right now >> you let the market set the price and they will discuss today -- >> this is trading >> is there enough volume to have real pricing. >> the ipo was a formality these things are changing hands every day. up to and including the week before the -- i mean we know what these things are valued at
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before they come out >> anybody else on this one? >> to josh's point spotify is up 13%. >> are you a buyer >> i'm going wait. i want to hear the earnings call that's been something i've always done. i agree with josh, it's a fantastic company. most of the users of this company are using a free version so it's basically from what i one you've got 10 million users and only about 500 to 600 that are paying but paying in excess of hundreds of dollars >> let me make a key point for people thinking about investing in slack the model on steroids. so we started off using it we were a firm of five people then seven people. we started off using it casually we got to a certain number of users. we got an alert. now you're an enterprise customer if you want to keep using it's dollars a month not thousands.
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we're 31 people and living on slack and. not doing emails with ccs and baseline ccs but additionally i use it for my little league team so i have a travel baseball team with 12 parents and the coaches and rather than there being emails and text, when is the game, when is the practice that's a free version that i use for the long island tiger, god bless and then i use the enterprise version and it has distipgt u distinct usages. everybody will be on slack and internal email morass is at an end. they think they can get rid of emails in about seven years. >> what i think is interesting it has a very loyal user base and it's been up to now, it's my understanding, more or less concentrated in the tech space, software developers and media and growing into other areas
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so there is an opportunity there, you know with financial industry we know regulation some health care, some more heavily regulated industries might have to get their arms around this. it does have a very loyal user base >> let's use this as an opportunity to bring it back to the overall market you have peak ipo as first in business worldwide suggested great time to go public. we hit a new record high on the s&p 500. are we going to step into the realm of a euphoria period where some say marks the end of a bull market or the beginning of the end. >> if we do go into that phase and get another 5% to 10% rise i would be careful i would be pulling back. at this point i'm invested i'm looking at ideas you go to the next, you get out of the valuation range, earnings are coming down, just because we do have a fed put and potentially might have something better in tariffs that would make me pull back.
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>> thanks for bringing us up the euphoria comment was our friends made earlier that the next rally will be euphoria. this doesn't feel yeuphoric now why is that one has to ask oneself? you look at the international economy. it's been slowing. but the u.s. economy is hanging in there not so much. look at the philly fed, empire state fed survey earlier this week they are not good take a look at truck orders. this is a little bit microscopic but it's important >> hold the thought. i promise i'll come back to you. we want to note what's happening in the market right now. as you can see a little bit more steam is coming out of stocks. let's go to eamon javers who is at the white house this having to do with some comments the president just made regarding iran >> reporter: a couple of comments
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the president was welcoming the canadian prime minister. with relation to action towards iran he said you'll soon find out. he's with the prime minister inside the west wing he's made a couple of more comments the president said iran made a very big mistake in terms of shooting down that u.s. drone. that echos his tweet from earlier today. he said the drone was over international waters and it's all been quote scientifically document ee eed according to th president. trudeau said he's very concerned. but he looks forward to work with the international community to find a way forward on the iranian situation. that's what we know so far as the two leaders are still meeting inside the oval office that meeting is ongoing right now. >> we appreciate that. you can see what the stock market is doing. s&p is only good for about five points and we're 20 point below the intraday high.
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we blew through that on the good feeling on what the fed said yesterday. joe, you have a omment >> this is a perfect example of why you want to be invested because you have a situation the way the market is trading today where it's backing off and it's giving you the impression there are still tremendous amount of concerns, we got a trade squabble, we now have an issue with iran and that gives the pause and the defensive mentality more energy and i think that's something that you have to highlight where we are in the market right now. that's why you have to have a longer term vision and understand you need to be invested because to jimmy's point this is not what euphoria looks like euphoria is you open up 200 and close 700. >> euphoria doesn't happen in a day. >> that's my point i'm simply suggesting if you get into a period now where you continue to have a ramp up and a
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ramp up and a ramp up because you believe the fed is your friend again, then you get a trade deal or you don't even need a trade deal, any positive development out of the g-20 next week and then months from now you say we're in a per of euphoria not suggesting this is an hourly thing. >> let's talk about what's happening today. what would be is that period of euphoria would begin to build and to your point the perception of the trade deal. the presentation of economic data in early july that indicates the fed is going to go, softening of earnings. that's a period of euphoria that builds and i don't see the genesis of that based on today >> i'm going to finish the thought from earlier because it plays into this. classic truck orders, cancelations are at a very high level. that's a reaction. that's an indication of
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corporate confidence where people say you know those 20 trucks, 20 diesels, we're not sure we're going to cancel the hope isn't that fed will cut next month when they do cut that operates with about a six month lag usually. so we got a problem brewing here and when you think of bullets flying in the strait of hormuz, by the way history states we're going to go back middle east politics is one of image and if you get your nose bloodied you're supposed to punch back this is not turn the other cheek. i expect you'll see bullets flying not over tehran but naval assets that iran think is important and find themselves on the sea bed. this is a way of saying what clears things from here. it's not the fed >> they might coil you back in >> i'm an ancient mariner at
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this point what could clear this is a trade deal not talk about it. not we'll meet next week not we're starting negotiations. actually clear the decks with china. then we can handle iran. one other thing on the persian gulf, west texas intermediate. >> i'm looking at it literally as we speak. wti is up almost 6%. >> but it's at 56. i hear you on 6% you know what it's saying? 56, 57 is saying shale oil production continues to go through the roof this is not 1973 if opec places an embargo on us you won't see the same lines at the pump it's not just as relevant. >> the euphoria question is a good one here's something we need to square we're looking at strong ipo performance, valuations for the s&p 500 above their ten year average but then on the other hand you look at something like
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the aaia bull bear sentiment and it's showing much more bearishness. the bank of america fund survey. in my view those sentiment indicators are not bearish enough to be a contrarian indicator. they are more of an indicator of the fragile sentiment out there. i worry about a self-fulfilling prophecy from businesses if you look at the duke cfo survey, 50% of ceos expect a recession in the next 12 months and about 70% cfos expect a recession in the next 18 months. this is concerning these are people who hold the purse strings for cap x and have potentially a self-fulfilling effect >> also what the fed is likely thinking about that's how we got here new record high for the s&p 500 right out of the gates today because of what happened yesterday with jay powell and the federal reserve. does the market have it right on the fed?
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let's ask our next guest richard fisher the former president of the dallas federal reserve mr. fisher, welcome back >> hello >> markets counting on a move in july should the fed cut >> i mean the markets are already -- if you look at financial conditions they are highly accomo dating mortgage rates have come down. interest rates have come down. the 10 year is trading around the two level. you have to ask yourself what would be the benefit of a rate cut? in term of impacting of real decision business making not financial markets. is this going to lead nor cap x, more drive to employ more people, et cetera? i would say that has to be weighed right now because the be markets are giving us a huge gift in term of the cost to money. the cost of money has been coming down. libor has been coming down
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so, you're going to have to weigh what it's going to actually achieve in terms of impacting the real economy, not just the financial markets while women and men that run businesses, cfos will they be encouraged to do more to add to production, to add to cap x, to add employment that's the kind of decision-making that has to be made here. i thought they were very careful yesterday in the way they articulated themselves i didn't read into this we would automatically have a rate cut in july or two more rate cuts for the rest of the year they will watch the data the unemployment claims that just came in are not that bad. so what counts as powell pointed out yesterday and i hope people are listening, consumption is still strong consumption is what drives our economy. one thing i learned -- >> let me interrupt you for one
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second i want to go back to the white house where eamon javers is standing by with more from the president. >> reporter: that event just wrapped up from the president. this is an interesting comment from the president who says he suggested he believes that the shooting down of the u.s. drone by iran may have been a mistake. the president saying that someone under the command of the iranian government made a mistake with the drone strike saying i fine it hard to believe it was intentional could it have been somebody who was loose and stupid he says that it could be a general or somebody inside the iranian government the president here suggesting, apparently that this could have been a mistake or unauthorized shoot down by the the iranians of that u.s. drone the president reiterating that this was definitely over international waters and says it would have been a big difference if the drone had been mandatory. so perhaps that's the president ratcheting down tensions and looking for a way out of this
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military cul-de-sac that he finds himself. he doesn't like foreign entanglements. perhaps done have the appetite here for further military action he also said you'll soon see what the u.s. response is. so something of a mixed signal but definitely a possible signal here that the president is looking to ratchet down those the evenings by suggesting this may have been an accident by the iranians >> yet another variable for investors to think about back with richard fisher it sounds like you're saying the fed should not cut in july >> i'm not saying because i don't have an opinion on this. >> you don't have an opinion >> no i don't have an opinion because i'm trying to figure out what the cost and benefit analysis is here there's a cost to cutting rates. you're hammering the banking system you can go down the path of japan, the european central bank look what's happened to stock
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indexes for banks. theev hurt that affects in the end small business operators that are not listed that can't access markets. so at the same time those that can access markets are seeing low rates driven by the markets. you have to just weigh the cost and benefit of what you might do and i'm saying right now it's a little confusion not as clear cut, i think, as the markets are discounting for july and for september >> you raise an interesting point as to the benefits of a cut and how the fed will think about this, whether it's the real economy versus financial markets. asset prices do matter, though maybe more now than ever is that fair >> what asset prices are telling you because yields are solo on f fixed income i want raises the question do you have to cut rates in order to achieve greater accommodation? this is the kind of analysis you
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go through at the table. i don't think anything is clear cut. you're waiting to see what the data, what the conditions are, what the feedback you get from different people you talk, to different sources, different databases and i think they just left the door open there and we'll have to see what happens i wouldn't saw it's a lock that we'll have rate cuts and i think too much the conversation right now makes that assumption. it's not clear >> because if you look at the dots, it sounds as though they didn't just leave the door open, they have a full foot through the door >> yeah. i think there's a balance on the dots and you have to realize who may be plotting those dots you're trying to figure out -- of course we never knew internally after the fact to show they were correct we have to see i'm just saying you have to remember that exercise and powell is very good about pointing this out is the way you're thinking at the time and the leaning right here is if the
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economy is weaker and the data shows it the real economy, then we're going to be tempted to move to add accommodation. but, considering the context of how accommodating financial markets are you have to do that in order to make your designate. >> let me add a voice to the conversation and bring in rick rieder rick, you're there with us now i'm not sure if you had a chance to hear richard fisher or not but is the market ahead of itself thinking it's a done deal next month >> i sort of disagree with anything richard said. the economy is in pretty good shape. one thing that's important and am i certain that the fed should go or not go it's not a question of what i think they should do it's a question of what they will go. by the way there's something really interesting the data that
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will come out in the next month or two is supply chain is getting cut off or concern about supply chain, inventory, cap x is tricky. it will show weak data and get people thinking we're going into the recession. the economy is in good shape can rates move lower i think they can because the data in the near term will not be that terrific in manufacturing trade particularly >> well certainly based on the activity today in the bond market it would suggest that rates, in fact, are ready to move lower you go below 2% on the ten year. haven't seen that in a while so that's the market picture you're dealing with now. you got the fed to deal with and now you have iran and geopolitical issues. let's listen to president trump. we'll come back to our conversation in a moment >> iran made a big mistake the drone was in international waters clearly
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we have it all documented. it's documented scientific cally not just words and they made a very bad mistake >> mr. president -- >> how will we respond >> you'll find out you'll find out. you'll find out. >> mr. president -- >> obviously you know we're not going to be talking too much about it you'll find out. they made a very big mistake no concerns. we'll be discussing that right now. >> the fed made no change in interest rates >> what are you going to do. can't win them all should have done it southeastern can't win them all eventually he'll do what's right, perhaps let's see what he does
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>> we're very concerned with the escalation by iran we have significant presence in the area i look forward to discussing it with our ally and how to move forward. >> i don't know if he's -- >> we have a lot of things to discuss. >> we have a meeting set up with president xi obviously on the big transaction we're talking about and negotiating. our people are speaking now. we'll see what happens with that anything i can do to help get it i'll be doing. i will absolutely bring it up. >> when.
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>> don't say when because so far i have to get democrats to approve it i like your positive thinking. but if and it's up to the democrats. i believe that nancy pelosi and the house they will aproiprove t it will be very bipartisan great for farmers, manufacturers. really great for everybody and unions we have tremendous union support too. it's a tremendous -- it shows a partnership between free countries and free countries that are competing with the european union, competing with china, it's really good for all three. it's something that's very popular. i hope politically they can do what they have to do the day after theelection they would win with tremendous support but we have an election coming up. i think nancy pelosi will do the
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right thing. [ inaudible >> we'll see they have to do what they have to do. we one that. can't have tremendous shipments of certain products. we understand that >> we were very pleased. >> they have been lifted, as you know, there won't be transshipping. if there's transshipping i'll call justin and ale take care of it if he doesn't then we'll have to talk i think that situation very well taken care of. very important for both countries and for the farmers very important more so than us and canada but the farmers are really happy with it, the manufacturers are very happy mexico is thrilled it's a lopsided in a positive way vote great vote something very special again, the largest trade deal by far ever entered into and we're
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very close to having it fileized creates a lot of jobs for our country. a lot of wealth for all three countries. we're competing against the world. we're not competing with each other so much. this brings us in a position where we're not competing against each other we're kbeeting against the world that's what we're doing. we're kpeegt against big sections of the world including asia and other areas and i think it will be very special. it will be a very important deal but the biggest ever made. >> that's an interesting question they play phenomenal basketball. i watched a little bit of it they were really terrific. congratulations. that was a great job by a great team we'll think about that if they would like to do that we'll think about it we have a lot of other folks doing. the presidential medal, we'll be presenting the presidential
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medal of freedom to roger penske roger penske is a great gentleman who has won 18 indianapolis 500s. he's won -- just won daytona he won't daytona, indianapolis he won more than anybody in the history of racing. i can't imagine anybody even being close. roger penske will be getting the medal of freedom and he's very thrilled to be getting it and that will be announced over the next little while. we'll be putting some out in a little while he's very deserving. a great gentleman. i've known him a long time and a very brilliant guy when you think of all the people that want to win daytona and indianapolis and even canada they spend a lot of money. when a man wins indianapolis, when he wins it 18 times and he just won the daytona and he won
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many things over the course of the year and has become a very successful man we've talked about electric cars nobody knows more about that than roger penske. he'll be getting and receiving the presidential medal of freedom. >> when i came here iran was with 14 to 18 different sites of confliction. they were hostile. they were hostile when they signs the deal they were screaming death to america. i think probably iran made a mistake. i would imagine it was a general or somebody that made a mistake in shooting that drone down. fortunately that drone was unarmed. no man in it clearly over international waters we didn't have a man or woman in the drone. we had nobody in the drone would have made a big difference i'll tell you would have made a
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big, big difference. but i have a feeling, could be wrong, i may be right, but i'm right a lot. i have a feeling it was a mistake made by somebody that shouldn't have been doing what they did i think they made a mistake. i'm not saying the country made a mistake, think somebody under the command of that country made a mistake. >> you talking about iran's leadership >> we'll see what happens. let's see what happens it will all work out >> are you saying it was not intentional? >> i don't know. i find it hard to believe it was intentional. i think it wassomebody who was loose and stupid we'll report back and you'll understand what happened it was a very foolish move that i can tell you >> your administration -- [ inaudible >> not at all. in fact in many cases it's the opposite i'll say, look, i want to get
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out of these endless wars. i campaigned on that i want to get out of afghanistan. we've been there for 19 years. we've reduced substantially in afghanistan. we beat the caliphate. beat 100% of the caliphate when it was 99% i said we'll get out. everybody went crazy because it was 99 we got 100% and we're pulling that back out of syria we're pulling a lot of people back but this is sorry this is a new wrinkle, a new fly in the ointment shooting down the drone. and this country will not stand for it thank you very much. >> thank you.
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>> i heard she was terrific. >> thank you, sir. >> thank you >> we're leaving now cnn thank you. >> that's the president as you see there inside the oval office with canada's prime minister justin trudeau on a wide array of topics led by what the united states may do in response to iran shooting down that drone. the president saying you will soon find. out. could be a mistake and he's still open to talk with iran on the topic of trade, thinks congress will pass the usmca he's having that bilateral today with justin trudeau. on the fed, can't win them all should have cut rates sooner on that richard fisher i come back to you and i wanted to get to you on what you think about the president's criticism of jay powell and the federal reserve can't win them all should have cut rates sooner what do you think? >> doesn't matter what the
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president thinks key not get rid of the chairman. he has no support in the senate for that whatsoever on both sides of the aisle and, you know, i think he's talking to his base. one thing i want to come back to what impressed me in his comments look at the movement he's made on north america and trade that was a very strong endorsement for tri-lateral relationship so different on what he campaigned on to become president of the united states i was very encouraged by that. of course, if we go back to previous conversation we were having about what would the fed do and the problem with supply chains and so on, if indeed he can come to a deal with xi jinping even though it doesn't solve the long term problems we have in developing 5g and intellectual property. but if they get a deal on goods and the market is relieved by that and rallies even further than where it has been it has
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ba been a euphoric territory. if we get some relief on supply chain, and then it doesn't happen overnight, it will reduce the need for the fed to necessarily act. again these are the kind of inputs one has to look at to make a decision in july or september or whenever they decide to make their decision and i was very encouraged by what the president just said on trade. what a difference from what he ran for of it shows he's learning a great deal and the value of this tri-lateral relationship we have i for nafta for president clinton and it was in need of update they updated it. it's the biggest deal in the history of the world he will say the chinese deal is the biggest in world. these economies are so large we'll have to watch and see. >> you moved off a topic i want to have another crack at
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>> okay, go ahead. central bankers are good at not answering questions. >> you don't put much stock into this story that the president thought about trying to demote the fed chair. >> i'm sure he's evaluated it. he had his staff brief him what can i do. can i demote him and i'm sure the answer came back you can it doesn't work that way now i said this before i'm willing to bet my home on the fact he'll not reappoint jay powell in jeb february of 2022 that's a given if you're jay powell and he's a dear friend of mine, i'm assuming this, he hasn't said anything you do what's right. he's only going to be there for a total of four year and you won't give into political pressure or whims or what the market is asking you to do you'll do what's right to ensure
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your legacy for the real economy. so i think it emboldens the fed, emboldens jay powell i know this man well he can't get rid of him. >> you fully intend powell to serve out the remainder of his term in full >> he said it yesterday. i expect him to. i don't think anybody will push him off the ledge. he's comfortable in his own skin i'm very fond of this man because i know how comfortable he is with himself he's not arrogant or competitive. i do expect imbut i don't expect he'll be reappointed i don't think the president wants him. that's his chance to move away i don't think he'll stay on the board of governors after that. >> who would make sense to be the next head of the fed >> rick santelli >> rick will get a kick out of you saying that. >> no idea obviously -- i think it's
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another important point. whoever he wants to be chairman or whoever he appoints to the board and we've seen this recently has to be confirmed by the united states senate that's where the power is. it can't be some yahoo!. it has to be somebody who is acceptable to the united states senate, particularly to the moderates on the republican side and have some democratic support. so it is not going to be an easy reappointment. powell was supported by both sides. >> kevin -- >> kevin is no longer at the board of governors neil is the bank president never know could have affected the way he voted if he voted for a rate cut or plotted his stock so you would have to back out those that you think are ambitious to get this job. who have been campaigning for
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it does that make sense i don't think so we'll have to see. that's all speculation we have until 2022 in february i expect jay powell and the committee to do what's right going forward. >> richard i appreciate the time and i certain lie appreciate you sticking around after your breaking news. >> it was worth it to hear the president talk about north america in that way. that's a big step forward. >> we'll talk to you sure. rick santelli i'm sure sends his regards. i want to get back to rick rieder you thought bond yields were poised to go lower how low will they go >> it depends on the curve we were talking on your show for a long time front end of the yield curve was attractive if the fed wasn't going to raise rates and if the fed moved, you had some upside in terms of a down side in terms of yield in terms of where the front end
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would go the front end is basing 80 basis points that's aggressive. i could see a dynamic with the ten year i said it a couple of days ago on that the ten year can get down to 180. one thing is important for thaty important for the fed and investors to think about we live in a global monetary policy world we live in a global investment world. what mario draghi said earlier this week lifted the bar for every central bank around the world including the fed and where european rates are going and other including emerging market rates are going is where the fed could potentially move a bit more for the first time in a wheel, actually taking off the short end and a maybe a bit longer on the turn. >> rick, that's an excellent point on the rest of the world, and it does put the pressure on chairman powell, but i think when you're looking at the world and looking at the collective global negative yield debt that is out there right now, we know
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that it has accelerated significantly since the fall, at a certain point how do you arrest that growth in negative yielding debt? >> you know, i've been pretty aggressive about i think the ecb when they talk about opening the tool kit, you have to get alt a part of a capital structure that is priced wrong or the fact that equity is too cheap. somebody made a comment in one of our meetings today that you buy bonds in europe for upside and you buy equities for carry because you pay big dividend yields in equities it is the most distorted dynamic i've ever seen i do think that the ecb, you have to create aggregate demand, bringing rates more negative i don't think does it. providing a bit more liquidity of the system through quantitative easing. i think you have to think about where the capital stack is and where rates are today is going to get more negative it's not helping velocity in the
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system. >> i'm going to let you go, but lastly your gut tell you if you get a cut in july, and if so, by how much >> i think they're going to go -- so we assume where we are you can't get -- you get a moderate trade deal and you still have some weakness, i think in terms of supply chains, et cetera, i think you can get 50 i definitely think you can get 50, and you know the fed cuts tend to be more aggressive and faster and i think you can get the 50 in july yeah. >> interesting, rick, as always we appreciate your insights. i know we'll talk to you again soon that's rick reider at black rock. >> president on iran and these geopolitical tensions which are bubbling who's buying what and why? anybody making moves in the market opt miimistic about wher stocks could go or a little tepid about what's in front of us i agree, i think we're going to get some kind of a rate cut. i don't know if it's going to be 50 one of the stocks we've been buying is black stone.
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black stone's accumulating assets head over heels they're getting paid 2% just to manage and a nice fat dividend and the rates are coming down. that's a company you want to own. >> josh, are you a buyer or seller >> i don't think that anybody should make top-down decisions based on how the market reacts to one fed meeting the next day, and i want to come back to all this talk about euphoria and all these comparisons. you know, in 2014 when fortune first did the unicorn issue and we said holy cow, there are 50 companies worth a billion dollars that haven't gone public yet? and there were all these conversations and follow on subsequent articles and tv segmen segments, it's euphoria. last year 39 of those unicorns went public, six of them got acquired this year another six went public, today is the seventh, slack, so you can't have six years worth of euphoria. if that was euphoria then, did it die down and go -- so euphoria describes this one
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moment where nobody cares about risk anymore correctly, the bank of america institutional portfolio manager survey was referenced in the last conversation here, and it was supremely not euphoric a lot of people were offsides for the market making a new high, and we're not ready for that we're not positioned for that, and these are pros the retail, the risk on risk off, that goes up and down every day. you can't pay attention to it. only matters at extremes there is no signal in aaii polling. maybe once a decade there's a buy or sell signal forget it, throw it out. big picture, technically we have a new high i don't know if it lasts today i don't know if it lasts next week, but nobody should say powell's going to do the right thing on buying. powell's not tgoing to do the right thing, i'm out that's not how adults comport themselves managing money. >> if you think by virtue of what the fed said and what you believe now they will do and that stocks going to have a meaningful move higher, another
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leg if you will higher -- >> scott, six months ago with all due respect, 12 months ago the consensus was 3.5% rates and higher so 12 months later now we're wondering if we can key a two handle it doesn't matter what people think. it's totally irrelevant about the future course of interest rates. nothing intelligent can be said about where rates will be in six months now, if you say will i get a better market opportunity to buy these stocks that i want to buy if powell doesn't give in and do a cut in july and makes the market wait until september? absolutely that's a thing that could happen, and if that's the basis upon which you want to decide, i'm getting in today or i'm getting in then, be my guest. i'm not the police, but i just don't think that that's how you should structure a retirement portfolio. you get the cut. you have to wait a month for the cut. maybe you don't get the cut. you have to deal with the market that's in front of you right now. >> talk to me, joe, what are you doing? >> so i think the message from powell that gave you the motivation to go back into
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equities once again at a very overweight condition was in january. i think that was the message, that was the moment. as far as what you do right now, goldman sacks, i have too much financial exposure out of that today. uber, added some names, fortune brands, home and security. i know ser rat likes that name as well. that's a second derivative housing play, guide ware, software, gwre, that's a small cap software name that is exhibiting phenomenal growth in technology you can compare it somewhat to a twilio like company. lastly, the cash flow bought gdx, pete and john did a great job highlighting early that capital constitutional flow was going in there >> u i think you've got to be patient. i think the market is preoccupied with this idea of insurance cuts from the fed. in our view, we think that that's a little bit misguided. you don't know if it's an
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insurance cut until after the fact, until it's too late, and to josh's point, he alluded to this, the initial reaction from the stock market after the first fed cut is often wrong in 1998, the markets one-month return was down. 2007 after the first cut, the market was up about 6% one month later, so the economy is what matters. what we know about the economy is that it's decelerating, and we need to -- >> the '98 cut was like uh-oh, the whole world's currency system is melting down let's get an insurance card. >> it ended up being an insurance cut, but my point is if you look at the commentary from the fed around both of those cuts, it was very similar to each other and to today, so we won't know if what the fed does if it does move will be an insurance cut until down the road. >> anybody got a take on oracle, new all time high, up 8%, we haven't even talked about it. >> we've been buying for the last two years, and the reason -- what do you do now do you stick with it >> yeah, they're actually transitioning. the cloud is actually doing
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better that's the reason i bought it. it was dead money for a while. now as soon as you get that transition, an inflection point, similar to what adobe did in the past you've got to wait -- >> two weeks ago -- >> sorry i'm just saying like this is the last of the old large cap tax that hasn't made a new high. this is it. >> cash flows they're turning it around right. >> two weeks ago i gave you guys a basket of stocks, sorry you're getting out of it joe, intel and cvs, the only one that isn't working yet is cvs, give that time, but caterpillar i added to on tuesday this is a core holding it's already pricing in a recession, okay? but the reason to add overweight to it now is very simple keep it simple, sailor you're in the tracks for a china trade deal this is ground zero. it's entirely trading on china right now. it's a good place to be. >> if you like caterpillar, do you like deere. >> i don't like deeror ag co
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i don't want to be worried about the weather flooding in the great plains, which is a great tragedy, i don't want to be worrying about swine flu. >> you're out of goldman. >> it's went nowhere. >> are the banks a no touch? fisher talked about about what the impact is going to be by further rate cuts by the banks. >> i have significant exposure, american express, citi, jpmorgan, i had to reduce my allocation, and goldman sachs was the name i got out of it. >> it's deep value it's hard to get excited about it they trade below book value. that doesn't mean they're going up tomorrow. it does mean that over the course of the next year the return on equity should continue to promote that book value -- parody on book value, you've got a great return. >> at a certain point we're going to have to have a conversation about whether these stocks are held down by massicr forces or man isz dif zbl-- i te
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trading on competition. >> the way rates are going they certainly don't go up. >> let's leave it there for the moment let's touch the market before we go it was a new record high for the s&p 500 earlier today. it's faded a bit stocks are still in the green, and that's where we will end things thanks so very much for watching let's go to "the exchange" now and kelly evans. thank you, scott hi, everybody, here's what's ahead today. wall street's post-fed euphoria is fading this afternoon the market's starting to worry that tensions with iran could reach a point of no return we've got the very latest. plus, working it out, slack takes its shares public without ra raising any fresh money. is slack a unicorn in that record, we will explore. and deep discount darlings, goldman hits the brakes on tesla. we'll get to all of that in rapid fire we begin with today's record breaking rally we're starting to head back up there. dom chu with the


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