ariel, thank you quarter billion dollar round, 4 billion overall valuation. impressive great to have you with us. >> thank you so much and we head toward noon, the dow just about flat, the s&p slightly higher. guys, david, great to have you as always. let's get to the half. all right. i'm scott wapner, front and center, new reporting on whether a trade war truce is in the works and what that would mean to your money as the g-20 gets under way in osaka it's 12:00 noon this is the "halftime report." >> the moment the market has been waiting for, the g-20 and meeting between president trump and chinese leader xi. is a deal in the works today, new reporting on what china wants and what the u.s. is willing to give. if there is a deal which stocks and sectors are most likely to pop. the investment committee is ready with their ideas

"the halftime report" begins right now. >> welcome good to have you with us on this thursday our investment committee at our table, joe terranova, jim lebben thal, john najarian, jenny harrington harringt harrington ceo and portfolio manager. let's begin on the markets stocks higher on reports of a possible detente in osaka. kayla tausche on the ground in japan with her own reporting on exactly where things stand right now. kayla? >> scott, both the u.s. and china are trying to manage the narrative of exactly who would stand to get what if there were a truce or a potential deal that emerges from a meeting between president trump and president xi this week. in a call held earlier this week on monday, between the u.s. trade representative bob lighthizer and the vice premier of china, china was said to ask

for a balanced deal, something it has asked for in the past and i'm told by two sources that ambassador lighthizer responded a balanced deal is not possible because of all of china's past transgressions today we saw reporting first in the "wall street journal" that china wants certain things as part of its deal negotiations. it wants the u.s. to roll back a ban on huawei business in the u.s. and roll back all of the tariffs that the u.s. has already put in place it also wants to lower the dollar figure of goods that it would buy from the u.s. as part of a deal. donald trump, the president, has said that he actually wants to double or triple the amount of goods that china would potentially buy. there's a lot of ground here to make up, scott larry kudlow, speaking for the administration earlier this morning said that there are are no preconditions to talks this week and he said there's still a plan b if the two sides don't reach an agreement, that the u.s. would still go forward with the tariffs. hear it in larry kudlow's own words. >> if the talks fail he has said

we will go to plan b which is another round of tariffs if the talks do better than that, then perhaps, perhaps, we might avoid that >> reporter: although we should note everyone involved in the talks knows that it's ultimately up to the president and what he decides to do behind closed doors in this meeting. of course there's always event risk associated with the president at events like this. we know the base case according to ubs, citigroup, deutsche bank, goldman sachs is all a cease fire, but no deal this week back to you. >> all right kayla tausche on the ground in osaka, japan, for us, at this hour jim, i throw it to you if you come out of this weekend with some sort of tariff truce, no new tariffs for some period of time, six months, three months, who knows what, however many months is that good enough for the market to move higher? >> a simple answer yes how much higher? can't tell you

eventually you do have to have a deal eventually. if you get the absence of a cease fire, of a truce we're in trouble. let's use this anecdotally there are stocks i would like to buy today, we will get to boeing later and don't want to steal that thunder, i would like to buy boeing today, but there's no way i can knowing that this weekend is somewhat random, somewhat a roll of the dice. i don't know what president trump or president xi is going to do. very good reporting but what is said one day can be reversed the next day i'm not placing any faith in mnuchin's 90% there comment. i look at that comment kind of like charlie brown running up to the football and lucy is about to pull it away. i need to see the results of this weekend's meetings before i commit new capital. >> jim wants to buy boeing if you think there's going to be a de tent coming out of this weekend, what else do you want to buy do you want to stay with the semi trade that's worked buy some industrial stocks

look in the cyclical space >> so if the question is, do we have to make an all-in bet, do we have to bet one way or the other the answer is no, we don't have to bet there's a deal or no deal, because there are other places to go i think we've talked about this before on the desk you can both own some of the growth stocks, some of the names like facebook or amazon, paypal, visa, that have worked but you can also own stocks that have nothing to do with china so we own waste connection, sher wynn williams, zoeta, a v veterinary company all names that are not related to the china deal growing earnings 10% and hedge your bet there. it's too tough to do. >> s&p tech sector up 26%, the top performing s&p tech sector over the last six months and year to date technology has a lot riding on the outcome of osaka. >> we talked yesterday about the my kron call where they said if these issues persist with

huawei, that it's going to affect their income out into 2020 and yet we had a number of firms upgrade or move targets up in my kron i think that reflects some optimism that something is going to get done. i will say as i have said before, that i believe, scott, you're going to see the chinese stocks react bigger to positive news out of this summit than you're going to see u.s. stocks. maybe, you know, you'll see the ones that carrie named do very well on monday if, indeed, that's what we get, but i guarantee you, alibaba, jd, a lot of those stocks will rock and roll -- >> buy some of the names ahead or wait and see. >> i'm in jd already, i have some unusual in alibaba and so forth. tlae there's a number of stocks that move bigger and if nothing happens or just a delay of the process, i think they still hold the gains more than some of the u.s. competitors might. >> is, jenny, a keep talking, no

new tariffs or moratorium on new tariffs, is that good enough to get stocks moving higher >> i think it's good enough and i also think what jim said, there might be upside but how much is the bigger question. when you were talking the other day about the melt up scenario, i think a lot of that is baked in and people to a large degree are expecting some kind of truce, some kind of status quo, you know, trump maybe backing away a little bit. i think that's in there. i don't think we've got like -- we're up 18% on the year i don't think we've got like, you know, up 10% from here based on any -- >> that's great debate to have because i think there's a differing view on the desk doc, you've made the case on numerous occasions you think there's considerable upside. >> i think there's more than 10%. >> you do? >> if, not just to exactly what jenny is saying, i think that we're not likely to see that 10% pop all at once. i think we could easily bleed up 10% on a, a positive outcome and

then putting some details to that agreement, whatever the agreement is, if it's struck i think between here and first quarter of next year, 10 to 12% is what i would be looking for based on it not being priced in right here. >> it's a big question, joe, as to the market has moved higher on expectations of the fed coming to the rescue, maybe some positive expectations out of the g-20 as well who knows how much upside is there if any. >> so the question is, you sit at basically all-time highs and you're asking can we continue to make all-time highs over the coming months. the challenge is to look at all the potential headwinds out there and to stay invested i would argue the hardest thing to do right now is if you have been playing offense and you are invested, whatever your allocation to equity, specifically equities might be, whatever cash you're holding, i'm not going to speak to that,

invested in the marketplace right now the hardest thing to do is stay invested in the market and not give into the temptation that we potentially could have a 10% decline because scott, it looks so obvious. it looks so obvious that things could fail this weekend. we could go to plan b. it looks so obvious that potentially the federal government doesn't give the market its quarter point cut all these things look too obvious and everyone sees it and everyone is positioned defensively and that's why for me the hardest thing right now is to stay committed. >> so position defensively okay staples have been going up bonds have been going up gold has been going up the bond proxies you got to have something come out of that and into more offensive sexectors, don't you, jim? >> many of us have been talking about the barbel approach, taking the defensive names on the one hand and adding to it on the more agrees severe side, the f.a.a.n.g.s or semis i think that's the way to play

it right now but i have to say this of those barbels what's getting really expensive is the defensive names in a low interest rate environment. it's hard to commit capital there. so i do think there's probably some places in the middle of the barbel you may not like these names, but joe, i think you make a great point, hard to stay invested and you have to some of the sectors you might not like to look at the health care, beaten down by the talk about medicare for all, democratic debates don't help in that regard, great value there if you can't stomach the relatively low yield of the defensives and you can't handle the risk of the au gressive growth names, bristol-myers. bristol-myers has a decent yield. merck has a tee cent yield it's impolite in proper company to mention the financials but i will be impolite today. >> they're up today. >> that's today. look that's -- the risk there is that it's dead money it's hard to lose money at the big center banks when they're trading below book value or at these multiples and you may get

higher returns of capital on there than expected. that's an idea in the middle of the barbel to play >> this is going to sound insane and i almost hesitate -- >> go ahead. >> almost to ask this question if the fed cuts rates, okay, in july and, you know, continues with this dovish language, and you get a big leap towards a major deal with the chinese, the dow is at 26,500 is 30,000 in the not that disney futu -- distant future -- >> it's not crazy at all. >> if you look at a chart from the end of january, put up a chart from january or the dow, of year and a half now, for a year and a half, the stock market is up 5%, i mean it's really not -- it's not been much of a market, 2018 it was down 3%, we regained that, but over this period of time if you say we're sort of flat almost flat,

for 18 months. >> 18 months. >> then it's not -- >> you haven't been able to get out of this great big range that you've been in like a mountain range. you set to the top here and then you've got these peaks an valleys and then back at record highs. we've been asking what is it going to take to firmly get out of that. >> sure. >> that's the blow off top that some are starting to talk about if all of these things fall into place. >> okay. 30 -- >> blow off top takes you to the -- >> 30,000. >> unthinkable point. >> 30,000 for the dow. the question at that point can you step away from the bathroom for a moment or do you need to stay tethered to the screen when it hits 30,000 is it sustainable, durable, are we at a point where it's going parabolic at that point. the last part of the equation in getting to 30,000 that i think gives you the answer is earnings. >> that's what i think. >> valuation. >> that's got to be a contributor to getting to 30,000. >> you have to have some otherwise -- >> you have to have earnings growth, not just earnings

treading water and not sinking like we not that long ago thought we might do. you know what i mean. >> yeah. you have to have growth over 5% a year. >> gentleman asked me on twitter yesterday about whether or not the reason for the fed dovishness right now is the stock market and i said no, it's they're finally hearing what a lot of us were saying in december, that was that economic conditions not going upside down, but they certainly had changed and we were in a slowing sort of mode and if that continues, that's why i think powell said about being preemptive with, you know, that he's willing to be preemptive. didn't say i am preemptive and i gave you the june cut because, obviously, they didn't do that none of us really expected it. but he has enough wiggle room between july and september to get us back to where the economic conditions hopefully to your point are much better and if we get a trade deal or at least the beginnings of one that is one of those factors. >> the risk is the

disappointment, of course, that you -- you really don't get the grand deal with the chinese and then you don't get, as joe said, the rate cut that the market has now examine come to fully expec >> where does the multiple, what's the right multiple on the s&p. wasn't long ago we were at -- >> lower. >> wasn't too long ago we were at 16 times, now at 17 if we went to 30,000, it would be 18, 19 times multiple it's hard to figure out what the right multiple is given the super low rates. one could argue almost for 20 times. or you have the disappointment i think the whole emotional behavioral side is really critical not only with respect to trade like the numbers from trade are okay, but it's the business sentiment that's the problem the number is driving the market up more like that could -- it could but the disappointment could be overwhelming. >> you can't get an erosion of business confidence and consumer confidence at the same time. joe has made the case that the consumer has been the one holding you in large part and

now you're starting to see the numbers come off a little bit as well which you did earlier in the week. >> that's your worse case scenario. >> right and there has been fraying and with that fraying if the federal reserve is not going to come in an support the consumer and give them the confidence to go out and spend again that's problematic. i also thing and i know it's a little bit out of left field but let's not take the situation with iran off the table. >> right. >> just yet. that is probably the biggest risk to the market >> so if -- let's broaden it out. we said okay, here's what we think the scenarios could be coming out of the weekend, what sectors you would want to play if, in fact, this unfolds as some say it's likely to do then let's go down another notch to individual stocks that could see a bump apple has been moving higher again. >> because of this. >> north of 200, it was like 201 the last we checked. pull up apple as well. it's sitting around that 200,

233 i think is the high. >> yes. >> we got a chance to take that out. >> october 3rd, 233, may 1st, 215, the figure you have to get to i think a lot of the reason that apple is moving high as well is that they're making this purchase of drive.ai, the autonomous vehicle talent that they're capturing there. i think that's gaining the interest of a lot of investors i also think let's not mistake for one second that there is going to be extreme volatility surrounding apple on whatever the outcome might be of the g-20 you're talking about the stock has the ability to move $20 in either direction favorable or unfavorable. keep that in mind, but from a fundamental stand-point i think the recovery in apple is warranted. >> i think you have a nice back and fort between apple, keeping me in it but not adding to it. on the one hand we know the services part of the business is growing rapidly and with great margins. the ying to the yang is the fact that cell phone, smartphone

business is not great right now and we can rationalize that any way we want. we can say it's trade tensions or waiting for the 5g rollout, but it's factual that there is a smartphone slowdown that wasn't anticipated here and they are still largely an iphone business. >> that's known. >> so is the -- >> it's a ying and yang. >> 17.5% of apple's revenues squarely coming from china >> right and let me point this out then, scott, so january 10th, just after tim cook basically sent the letter to the troops saying, you know, hey, this is going to be a real problem for us, that is that they were going to cut prices in china and all the rest, 17% of sales all that sort of thing, they were both the same price alibaba and apple were both give or take 152. now apple is roughly $50 higher. the other is half of that. alibaba. so i'm saying that, you know, despite all these headwinds, apple is already here. alibaba has got a lot of catching up and it will do it i

think quickly if, indeed, they get this deal. that's why i keep pointing to this one as one of the top ones that i would buy if we get positive outcomes babb. >> you think you get catch up. >> from alibaba. >> i do. i think that outperformance like crazy over the next quarter if we get positive outcome right here if it's just a stretching out of this, apple continues to just outperform. >> somebody paint me as alibaba is moving higher, somebody paint me the perfect scenario for apple it take out that old high of 233. >> here's what apple has going for it it's a low p/e stock 15 times earnings. it's growing, continues to meet expectations they can beat expectations now for next year if there's a deal. you've got the f.a.a.n.g. risk on trade with the added option of the china deal resolution which matters more to them than any of the other f.a.a.n.g. stocks. >> it's momentum i'm sorry. >> i agree.

>> you mentioned with the f.a.a.n.g. trade but that's the only way i can justify it and it will probably happen. >> justify what? >> the rally to 233. here's the deal. if people come back into the markets, retail or otherwise, but primarily retail, doing passive investing and buying spider and russell 1,000 growth, the biggest component in each of those indices is apple the money just naturally flows there if confidence comes back to the markets. >> that's fair but why is apple not at 233 >> because there's actual fundamental reasons. >> i disagree. >> china. >> china >> that's it. >> okay. >> if we solve that riddle this weekend, then you're at 233. >> i'm going to channel my inner weiss here because i like to do that when he's not own, throw him a bone, i'm going to do it, they are not as innovative in the smartphone area as they used to be. they have services, the drive a.i., that's getting to be a

crowded space between waymo, tesla, gm with cruz, we can go on and on. that drove it yesterday but i don't think that's the long-term driver services it, but it's still 17% of the business. it's not enough. >> i don't think it's all china. i know every time scott feels sorry for me i don't own up and it's up a lot, back to the reason we don't own it which is that most of the earnings growth has come from increasing prices. hasn't come from natural sales growth services hasn't picked up enough you have basically flat earnings growth for a while now you have 10% earnings growth coming which is good, but it's not wildly amazing so to me it's more of apple is at 200 because of the fundamentals 15 times is not terribly expensive, but it's not dirt cheap, not ten times -- >> 10% earnings growth is like fine so just looking at it as a company, i agree with you on the momentum it gets lifted with that it might be it's a company not delivering that great growth >> to jenny's point -- >> your biggest position is apple. >> still my biggest position >> and straight equity.

>> if we get a deal it doesn't -- >> not talking options >> it doesn't go straight to 233. could it migrate there yeah they're not just going to ramp up prices on everything in china because it would be sticker shock like crazy in other words, they're not going to recapture all of the sales at a higher level, but i do think they continue to grind along. this really shows how great a manager tim cook is. back to steve weiss for a second, he's always saying he doesn't innovate or do this, he might be one of the greatest managers of a business in the history of american business because can you imagine, he's doing this with china being basically shut down virtually for a lot of their product and he's had to cut prices so significantly and yet the stock is right back to 200, not back to the highs, scott, but right back to 200 and pushing higher and from all accounts this is looking like a very solid quarter for hem. >> let's hit that other stock which jim mentioned a touch

earlier boeing weighing on the dow. new reports of a potential risk to its 737 max jim? >> so look it doesn't seem like it's that big of a flaw here it's more software it's in the cpu it sounds like not a structural problem aviation geeks will remember several that broke up in midair, the difference between boeing and halvelin basically out of business, because they had square windows which tore the air frame apart at the high pressurizations of altitude. that you can't come back from. but a software problem you can come back from this would be a buying opportunity if you didn't have the roll of the dice about what comes out of the g-20. i'll wake up on monday and see where the price is and may add to it. >> you would rather buy it at $10 higher >> i will take that risk so i don't buy it today and have it

$30 lower on monday. that's the tradeoff. you asked the right question i give you the answer. >> so i think what's amazing about boeing is that this stock has held in there since the crash, the crash is -- i mean it's amazing how little it's gone down. so there's a lot of confidence built into this. >> confidence that they're going to get it right. >> get it right an they're doing their best to comply with investigations and to go through testing. if there's anything that examines out over the next few weeks that suggests the delay is going to be several months further that would obviously be a negative it doesn't look that way means it's poised -- it looks, the chart, looks like a stock that wants to go hooifr. >> the dow would be up 80 points if not for getting out -- >> it's only down 2.5%. >> once you get past the headlines this is a free cash flow munster. >> duopoly. >> that's all we talked about in the last 18 months. >> see, i'll go back to like my

wa-wa on this when we started talking about boeing a couple months ago at 365 held me back was so much of the earnings growth has been driven by share buybacks and wonder how much of the free cash flow that could support the earnings flow that was driven by buybacks would be eaten up by the fact that they're on the sidelines so long and their focus is off the growth and they have to invest so much in fixing that until where i can see where that cash flows shows up in the same way and earnings grow then i -- >> underneath the 737 max are a ton of other programs, the 777 x is going to examine ocome out s. the military side of the equation where they're selling things like the f-15 and f-18 supposed to be superseded by the f-35 but they're not those plane models were supposed to be shut down, production lines shut down years ago. they're cranking them out. a lot hr than the 737. >> how about the supersonic. >> you still have china risk in

orders for wide body jets like the one you've talked about. >> the triple -- >> you don't want to think about the risk of losing orders to airbus as a result of what's happening with the china trade dispute. >> if we're going to talk about the risks and we should, that's actually not the risk on the 777 x. they have something like 250 planes on order. that's a lot of planes and a lot of planes, big planes too. >> isn't the risk the customer risk, that customer does not step back on the plane, that there's this social media firestorm where people look at it and say we're not getting back on the plane. >> it's a minor risk it's a risk. >> i don't think it's a big risk. >> i think however you cut it there's so much risk in there that it doesn't deserve a market multiple and that's where it is now. >> let me jump over to dom chu for a news alert on twitter. >> all right so scott, this is really interesting because it's going

to reverberate in the political halls across america twitter is going to put together a framework by which it will hide certain tweets from political figures based upon an assessment of whether it meets the public interest. what they are in essence going to do on the rare occasion where something happens where it does not appear to be in the public interest they are going to put a notice hiding the tweet from the public unless you actively click into it. it will still keep the tweet up and not delete them but give you another layer to get to the tweets who does this apply to any politician representing a government official, running for public office, have at least 100,000 followers and also be a verified account who determines whether tweets should be hidden >> a cross-functional team at twitter involving trust and legal, public policy and regional teams to see if they will keep that up and in instances where tweets violate the rules explicitly they will be asked to take the tweet down. so an interesting layer here, it

adds to the debate and conversation about whether social media sensors certain accounts this is sure to stir up debate, nonetheless as you can see the stock did move toward session lows and bounced off since then. an interesting development on twitter with regard to political discussion on social media back over to to you. >> no doubt about that as the election season about to get hot and heavy with the debates beginning on the democratic side last night and tonight, you used to own the stock. >> i gave up on it, frustrated by it. i don't see the visibility in terms of a strategy that's going to accelerate revenue and to me that's what matters most. >> coming up, morgan stanley's james gorman, he is the ceo, launching a broad side against facebook you got to hear this one we're going to have more straight ahead on "the halftime report". >> a big call on another member of the f.a.a.n.g. group is our call of the day. see why this analyst is convinced netflix is going

higher john najarian seeing unusual options activity in the housing sector before the break how the market fares after the president meets with chinese leader xi the numbers show the major indices trade negative after the two meet, 75% of the time. for more go to cnbc.com/kensho the halftime report wi sttthco and the trader is back in two minutes. is where people first gathered to form the stock exchangeee, which brought people together to invest in all the things

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i'm contessa brewer. here's your update at this hour. we're looking at a 5-4 vote on the supreme court forbidding the trump administration from adding a citizenship question to the 2020 census, at least for now. the court ruled the administration's explanation for adding it was insufficient chief justice john roberts joined the four liberals on the court in the ruling. the cdc says the flu vaccine turned out to be a disappointment that didn't work with a strain. figures released today show the vaccine was only 29% effective overall. protesters rallied outside hong kong's justice department to protest extradition legislation demanding the government withdraw the now suspended bill and release all arrested protesters without charge and want an authorization for an independent investigation into allege police abuse. german chancellor, angela merkel appeared unsteady and shaking for the second time in ten days in a ceremony it appears she was fine when she

arrived in parliament a half hour later and set to travel to japan for the g-20 summit. that is the news update at this hour back to you. >> appreciate it very much. morgan stanley's ceo james gorman apparently not a fan of facebook's libra cryptocurrency, at least that's what he told wilfred frost today during an exclusive interview. >> i'm personally not that excited about new exchanges for cryptocurrencies or new forms of cryptocurrencies i've said this many times and may be proven to be dead wrong i don't get it or see the need for another form of stored value. we have kwurcurrencies an precis metals and reserve notes apparently there's a need out there. but the fact that we're not in that doesn't bother me at all. >> wilfred joins us now with more a skeptic i suppose you could say the least, wilfred. >> yeah. absolutely, scott. i asked him, whether facebook

had approached morgan stanley to be a part of the initial 28 partners he said no i asked him whether he felt that morgan stanley could lose business because of facebook's libra coin and he just smiled and said, anything that has 28 partners doesn't sound like a very focused initiative. it doesn't sound like he felt threatened at all by that. scott, much more to come from that exclusive interview on "closing bell" at 3:00 p.m. >> are you surprised he was as dismissive about cryptocurrency in general makes me think back to when jamie dimon dismissed it out of hand as well. >> i was times have changed and i think some of the banks who initially were skeptical have shown some signs of coming around to that even if it was just to cover their own bases in case they end up being wrong a light softening of the tone. the interesting thing for me here going into that was, were the banks excluded by facebook

or did the banks decide not to partake and he said that morgan stanley wasn't even approached doesn't sound like they would have said yes if they had been on both sides there's a disagreement about the future of payments and curn. >> i appreciate it very much we'll see the rest at 3:00 and look forward to that wilfred frost at the new york stock exchange. jamie dimon has softened his tone. >> oh, yeah. >> this is interesting to hear gorman speak this way. >> it is but shows he doesn't understand what he's talking about, judge this is -- libra is not a stored value. libra is a tethered coin to the u.s. dollar. all it is is a transaction mechanism at much lower fees the way that they intend to roll it out. the real risk here isn't that people buy this thing hoping that it does like bitcoin and does that hockey stick to the upside and goes from 3500 to 14,000 or whatever no it's tethered to the u.s. dollar so it is going to be something that people would use based on

what zuckerberg and sandberg have told us to buy things on instagram as well as a host of other places, even uber rides and things like that and you can do so with a lot less friction because the 3% that credit card companies get goes away with libra. it just goes to more or less a much lower fee to the people processing that. so this is a processing and not an investment vehicle, not a store value. >> the comparison would be to visa or mastercard >> this would -- i mean this is a potential crusher to anybody in that space, joe, yes. visa, mastercard they don't go away because you're not going to buy big ticket items necessarily with libra. but the more libra there is out there, tethered to the dollar, not a bet on the upside for a cryptocurrency, it's a much smoother, less frictional way to trade ands to pass things from one person to another. >> interesting, though, that facebook's mere entre has kicked

up the conversation, if not the controversy about the space itself and now you have, you know, leaders on wall street weighing in and interesting to hear gorman weigh in in the manner if which he did. >> miss waters weighed in saying she wanted, you know, them to put it on hold i don't think they will. >> all right netflix is the top performer of the f.a.a.n.g. names over the past six months after gaining 44%. there could be another 20% rally ahead. that is according to piper jaffray. today they reiterate their overweight rating and their $440 price target on the stock which is why we've made it our call of the day. i almost want to peg this as a netflix versus disney. >> don't do that. >> the negativity around netflix seems to be with the optimism around disney whereas others suggest why do you have to choose that they can both work in the current environment what say you, jenny? >> i took it a little more as a

netflix versus at&t, right i can't buy netflix because i have really strict disciplines around how i invest. free cash flow yield, dividend yield and valuation. i can't buy something with no yield at 133 times earnings. looking for 20% upside and like that space i can own at&t, a 20% move brings it to 15 times, 32.5 dollars would put it a at $39. you have really good assets there too like hbo an "friends" and "seinfeld. it's a neat way to play it without taking the valuation risk so i love that you said disney versus netflix i would take a different spin. >> that's fair >> if you go back and you look at netflix in 2018, you're basically talking about a stock that had nearly a $200 range from july to december. the best thing that has happened to netflix in the last six months it's trading in a $40 range. this is a stock that was viewed

as highly volatile, a momentum name, finally what's happening with this stock is it's losing a lot of the volatility, it's maturing, it is becoming a company that you're able to rely more on what the fundamental forecast is, less about the momentum behind it and i think longer term that's a positive. overall i absolutely agree with your assessment. i don't know that anything that's positive for disney has to equate to a negative outcome for netflix. i think both of them -- >> heat whi think that's the narrative -- >> they survive -- >> it's not just name -- >> the streaming -- >> who can you buy that fits your portfolio does disney fit, at&t, netflix fit. we're consuming so much. they all should survive and thrive. >> suggesting wall street's narrative is almost trying to pick sides after the announcement of disney plus and one potentially hurting the other or not. >> well, there's obviously a narrative that disney has

reinvented itself after wondering what they're going to do with their library and giving it to netflix or having their own service. you know, taking that aside, netflix has been the original nater and leader of the streaming concept and there are going to be several participants in the market. if netflix's stock which has been flattlined for a year, if the company can show better than expected growth in the next couple quarters, i think it can break out. if it can't i think this trend flatline or down is more likely. >> netflix to your point is up 38% or thereabouts year to date but still 60% off its 52-week high. >> correct. >> all right next your trades on software that area of tech surging 25% this year. we'll dig into it next let's get an s&p sector check. much more green than red on the board as you will see from our wall financials are leading the way 'rba aerhithat often wee ckft ts.

we're back software has been one of the biggest drivers of the rally over the past year the software etf has been outperforming both the tech sector and broader s&p

500 which is why dom chu is here to tell us more in sector economics. >> over the course of the last 12 months the tech sector has been a big outperformer with the broader etf in the s&p 500 the software industry, the huge part of that story, the ishares fund has more than doubled the s&p during that time frame and a handful in particular that are powering the excess returns. if you take a look at the arguably four most important stocks that has software as their main line business, you're talking about microsoft, also oracle, adobe, salesforce, the four biggest purer play software companies in the u.s., microsoft shares have gained over 30%, oracle around 27%, adobe 29% and salesforce, the underperformer around 9% on a year to date basis. these stocks have been upside momentum machines. there's a reason why some analysts and straj gists are becoming more cautious it has to do with valuations

when you look at forward price to earnings ratio or how much you pay in stock price for next year's forecasted earnings at one point last month that tech software etf traded at nearly 32 times forward earnings that's according to data from facts set. to put that in context roughly the same forward price to earnings ratio that it traded at during the early 2000s as the tech bubble was deflating so valuations certainly a cause for concern for some software investors. back to you guys. >> thanks so much. we talk about this space all the time. >> that's concerning the valuation standpoint, that's concerning looking at the economic environment you have to understand that technology itself and what software brings is a recessionary element to it that is resilient. so in a recession nary environment the last thing that capx will cut back on in technology is software and that's why there's the resiliency towards it. also, listen, you want to sell

software after the salesforce deal there's a lot of m&a interest in the software space it's the reason why i have three names, keyside technologies, guide ware and sticking with microsoft. >> okay. >> doc >> i like it like it. i think that this is a sector i should have been overweighted in but i've been jumping in and out and haven't been holding sadly. >> we own crm. the stock has been an under performer. you can't live your life anymore without software >> really? >> yeah. >> you can't >> can't >> okay. i mean, i can't. i can't. coming up, options bulls are betting on a home builder down 10% in a week. plus, viewers are asking questions about iron mountain, paypal and the autos we'll get to those you still have time to reach us, go to cnbc.com/halftime and reach thus or tweet us we're back after this.

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hi, everybody. here's what's coming up on the

exchange trump and xi come face to face, the one meeting everyone will be watching at the g-20 but with this list of terms now will anything get accomplished? we'll dig into that. fannie mae releasing projections for home sales this year, it's not that pretty. the chief economist will join us to break down the numbers. and forget facebook, there's something else most of us use every day collecting data on what we do and what we like. that's ahead in rapid fire we'll see you then back to you. >> look forward to it. see you in a bet options traders betting housing giant lennar is poised for a double digit rally so says john. that's what the options market is suggesting. >> still not a bad year so far for this one, scott. basically began the year just under 40 and now it's approximately $48 a share. they came in here perhaps because of the kb homes numbers which were great overnight as well as we talked yesterday about dr horton and the strong buying in that name. in this one, lennar, they're

coming in also, this time they're buying august options, though buying the august 52.50, ended up selling the 55s higher against it over 10,000 of each of those traded and now pushing up towards 12,000. like the trade as you know i believe rates will be lower for longer good for these guys so i'm in this trade probably four to six weeks. second one, take a look at what's going on right now with the activity in summit this is a materials stock. things that are used to build homes among other things summit, sum, it's up almost 6% today. that's a big move. it's also a really big move in the options because this one doesn't necessarily trade heavy on the options side. but today, they did. they bought right away 3,000, then moved it up to 4,000. they are approaching at the 17.50. now these are in the money calls. as you saw, this thing has just crossed to be in the money i think it keeps pushing higher.

and i'm in this one probably the same 4 to 6 weeks >> okay, doc, thanks >> i think on lennar >> i think we've all been disappointed in the home builders for some time and in the housing numbers. and there's reason for that. but i think we're missing something on the bigger picture going back to the top of the show consumer confidence. look at you over there you know, adjustable rate mortgages have been adjusting down a lot over the last six months doesn't matter where the fed has acted yet or not whether they've cut yet or not the curve has come down. that's going to help consumer confidence it's going to make joe right >> what has to happen, to scott's point, think about why home builders are struggling they're struggling because the value of land continues to appreciate it costs more to acquire the land, and you reach a tipping point, a critical mass where you cannot pass through in the structure of a new home to the consumer the necessary price increase and i think we're at that point right now in housing that's why you're seeing

refinancing strong but new home build construction, that land value is too strong. >> let's -- doc, come back over. we'll answer some questions now while you're on your way first up, one for jenny from donald in westberry new york on iron mountain, irm buy, sell or hold? >> buy and hold. >> buy and hold? >> i love this company i just saw the management a few weeks ago at a conference and they completely increased my confidence in the dividend the dividend is 8% it's grown 4% a year it will continue to do so. after increasing the dividend and paying down debt they have $300 million a year and one fun fact, every 15 minutes, 5,000 boxes come in. 5,000 boxes come in. and that adds 200,000 to ebitda every year >> thank you jim, for you, autos from jp in nebraska ford, gm, fcau

fiat, chrysler >> one pick there is general motors we've been talking about peak autos. it's not peak. it's plateau autos so the current business is good. what gm has is the cruise division which is where the future of automotive is going. autonomous, electric vehicles. that's the reason to be in gm. >> your thoughts on paypal >> i like it, nathan 80% of global transactions are still done by cash or check and venmo gives paypal the option of growth over the next many years. bitcoin is dropping more than $2,000 after a recent surge. seema mody and the futures now team tackling that right now >> bitcoin taking a tumble in the last 24 hours. let's bring in our traders scott nations and jim. scott, starting with you bitcoin peaked just under $14,000 yesterday afternoon. then as prices started to pull back, there was a major outage

on coin basis site, a crypto currency exchange. does this bolster the case for trading the futures? >> absolutely. listen, you know the cme is going to be open and yesterday we talked about that price action, how it was not just a short covering rally but seemed to be a short squeeze. when either of those happens we know that prices get above value and i think in the case of bitcoin, it got way above value. to your point when the exchange goes down, that shouldn't change the value. shouldn't affect the value of what's traded on it. and maybe that points out bitcoin is not everything that the longs hope it would be >> now down 20% even for the futures contract what levels are you watching now? >> first i'd like to disagree with scott some, too if the exchange that it's traded on goes down this is a crypto currency and that's a key element of it. to me, i said yesterday, as long as it stayed above 10,000, i think it had decent up side. i didn't think it would go back and test that 10,000 so quickly.

i'm still looking for some constructive pattern for it to go higher. first, i think it will touch that 10,000 level. >> just underscores how volatile crypto currency can be 1:00 p.m. show we'll look at whether crypto exchanges are taking the right steps to keep up with demand plus medley global advisers joins us as they await headlines from the g20 more futuresnow.cnbc.com the halftime report is back with final trades, next this is my headquarters. this is where i trade and manage my portfolio. since i added futures, i have access to the oil markets and gold markets. okay. i'm plugged into equities - trade confirmed - and i have global access 24/7. meaning i can do what i need to do, then i can focus on what i want to do. visit learnfuturestoday.com to see

what adding futures can do for you.

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life. to the fullest. online now, read stephanie's article about one major warning spot in this rally go to tradingnation.cnbc.com today. check this out that's wayne rooney. look at that >> wow >> we use that as a metaphor for the g20. >> yes >> is that what it's going to take for a deal between the u.s. and china? the soccer equivalent of a hail mary that's a sick shot there >> that is >> we wanted to show that just for the sake of showing it because that is just sick. you did that back in your soccer days >> love that >> all right let's do final trades as we take a look we hope it's not going to come to that, doc >> we hope it doesn't have to be

a hail mary. no preset notions. >> what do you have for me >> caterpillar caterpillar is up from the end of may 119 to 136. like it. i have unusual activity. at the 150 strike. >> glad you did that it really does play right into what we talked about with wayne rooney >> a wayne rooney kick >> one of those names, cat >> you like cat, too >> i was saying during the break it doesn't go down on bad ews. an analyst downgrade earlier this week. it rallied on that any time there's been china bad news, it continues to rally or hang in there at least that's a good sign for the stock. >> monday will be an interesting day to check it out. >> abbv. >> questions about whether they paid too much, assume too much debt that was an interesting debt >> another health care stock healthequity, hqy. went down on a deal to buy wage work we like the deal we think it's too cheap. i'd buy it here.

>> farmer jim? >> i'm going to say this softly. it's time to take profits on roku i don't want to freak people out. it's just been good. let it come down and buy it again. >> flo >> pgr, progressive corp >> okay. good stuff "the exchange" begins right now. thank you, scott here is what's ahead of us laying down their terms. the chinese are heading into this weekend's meeting with president trump with a set of terms for a trade deal what are they demanding? will the u.s. give in, and what demands might we have? we'll get into that. also, boeing's fresh woes. new uncertainty about the 737 max return hitting shares today as the faa finds yet more issues now at least one major airline is pushing back its timeline for that plane getting back in the skies. we'll have the very latest plus, amazon has a surprising new partner for deliveries a fizzy drinkmaker falls flat and is your cable coan