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tv   Fast Money Halftime Report  CNBC  October 13, 2021 12:00pm-1:00pm EDT

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looking for a partner in technology i remember goodell told us that when julia brought him to us. >> yeah. in terms of ratings i think through game four, if i'm not mistaken, nfl ratings are up high double digits, up 17% what a morning and blue origin it's time for the half let's get to the judge all right. carl, thanks so much welcome to "the halftime report." i'm scott wapner why the chip stocks are not viable and why it could be more concerning to the overall market than you think you will hear from a closely followed guest today who says that we'll debate it with the investment committee joining me, liz young, michael farr, farr miller and washington, by the way, his firm ranked number 57 on this year's cnbc adviser 500 list, congratulations to you steve weiss here, and joe teranova, as well. let's do what we always do at the beginning of the program and check the markets today. it's a mixed picture
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dow and s&p are in the red nasdaq and the russell are in the green and the ten-year note yields at 155. we do want to start with this weakness in chips, weiss, i want to know how worrisome you think it is and you're right in the center of it because your sky works and core vote and two stocks you've talked about on this program are in bear market territory. they're down 23.5 and 20% respectively some of the other names because you've got a lot of company. taiwan semi is down 23%. teradyne is down 26.5. micron is down 21, a new 52-week low. should we be more worried about this than we potentially are >> no. i don't think so look, they've been in bear market territory for sure. there have been no events and it's ironic there is a chip shortage and put micron aside and it's a different story and
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they're in dram and nand and it's a completely different cycle with completely different supply/demand characteristics and too much supply and let's separate those in terms of what i call the smaller chips which is skyworks and their business is great however, there are obviously wrinkles in the supply chain the third quarter to me will be the reset quarter where the companies will either come out and say, look, we're missing it. here's our guidance going forward. missing it through no fault of our own and i believe that i'm always skeptical when companies say that and i believe it this time and that will be the buy signal to go forward while it went to sky work because the position has gotten too big, it's still been very, very bruising because they're core positions, but you can't look at semis now as you looked at it in previous cycles they're no longer dependent on just one or 1.5 industries and
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by that, i mean personal computing or phones. they're in every single industry and the applications are only growing. so this is a completely new sector from that standpoint without any historical precedence in terms of how they act. >> you're not buying the weakness >> i will be not right now. i will be buying weakness. actually, let me correct you on one thing which i didn't tell our noted producer patty i did initiate a small position in teradyne. >> you did >> no matter what happens to the supply chain, this testing still goes on. it's an initial position it's not core. i hope to build it up. i don't want to really buy any more in front of the quarter, and i think the future is very bright i sold the stock in the 120s, mid-120s so i'm getting back in. >> that one's down, as i said, 26.5%. you make sure you tell patty everything, all right, weiss >> some things i want to keep just between us, scott some things are just you and i. >> thank god we brought it out
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thank god we mentioned it. >> joe, i don't know why you're laughing amd, lam, nvidia what are you doing with the chips? >> what's wrong with amd amd is in the right. a lot of the chip names there's differentiation, steve mentioned before, micron he's 100% correct and those are memory chips and right now they have no pricing power and demand is incredibly weak western digital and texas instruments will struggle in that environment and you look at nvidia and you are talking about exposure to graphic chips whether it is nvidia or even to a certain extent amd any i think th those are the right chip names and overall it will be an impact from the smh declining from the 2 200-day moving average and that will have an impact on the s&p 500 itself because the chips are so incredibly important.
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semis really are what the transports used to be to the economy and to the markets so you need the smh to move above the 200-day moving average and you can selectively pick winners in the industry and that's what i feel i've done with my holdings of nvidia, amd and lam research >> part of the issue is is it more of a worrisome sign of the overall market like you just addressed? maybe weiss is suggesting that right here it's not, but if it breaks even lower, the sox and the smh, then that may cause further weakness within the s&p 500 and then dragged the overall index down liz young, what do you think about the overall market here as it relates to weakness that we've been witnessing within the chip stocks? >> i think the chips are the warning sign that this isn't over yet and i think what we want to do is september and october have been volatile and we all expected that and this
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all means that november and december will be nice and if you look at what happened last year, we went through a similar pattern and september and october were tough months and we rallied through the end of the year i have to sit back and ask myself, does it make common sense anymore to rally through the end of the year and when you take the weight of the evidence the chip stocks is just one piece of that. growth continued to be revised downward both in the public and the private space. we have washington not yet resolved we've kicked the can down the road nothing's resolved yet and we have supply chain issues that we all know about, and i think the big question there is how much stamina do people have how much stamina do consumers have to continue paying for it how much stamina do corporations have to continue passing it through. i think they'll run out of stamina. we're in the sixth month of inflation, between 4% and 6% it causes multiple contraction and we're seeing that in the market right now.
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i do think that the s&p has more room to go down from here. i think we sniff at the 200-day moving average and i don't know that we make a new high before the end of the year. >> joe, by the way, i was too hard on you, man i apologize. amd has been good. the other ones, not so much, but i'll give that one back to you, just make sure for accuracy's sake we're all on the same page. michael farr, i'll get to you in just a second and i want to bring in somebody that says this is no time to buy the big stocks jonathan krinskybecause he has thoughts on the s&p 500 as well. how worried should we be, mr. krinsky. >> let's start with the semis and i think there is some bifurcation going on and we actually like amd as an outright stock, but i think if we're talking about the semis as a group i think there is a false sense of how well they've done they're up about 15% on the
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year, but all of that gain happened in the first few weeks of the year. they're actually flat since late january. so if you look at the relative performance of semis to the overall market, it's been weakening for, you know, eight or nine months now, and i think that's the crux of it. if we look at the relative performance of the semis versus the s&p, that relative performance was above the rising day for two years from the middle of 2019 until the middle of this year, but the 200-day and i'm talking about the ratio and the relative strength and that's starting to roll over a bit and we haven't seen that since the fall of 2018 so there are a couple of things that we don't like about that. semis, if we're talking about the absolute weighting and how it impacts the s&p 500 it's about 5.5% of the s&p which may not sound like a lot, but that actually would make it the biggest sector if it was its own sector
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it's not insignificant i think to some of your guest's point, it's more of a sentiment gauge. i think a lot of people look to the semis and look to their performance or relative performance for the sentiment of the market if we were to spend some time under the smh which we haven't really seen in quite some time, i think that would be, you know, a bit of a warning, certainly for the group, but maybe, possibly for the market. >> how closely, michael farr, are you watching this situation for the chips and wondering whether that will be the thing that breaks the back of the s&p and at least causes somewhat of a deeper pullback? >> right you know, they had a heck of a run since 2018, and as jonathan points out, kind of flat for the rest of the year yes, we have to watch this as a
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sector because it's creating a headwind for the s&p 500 performance and there are plenty of others and liz correctly pointed out when you get inflation higher, multiples come down a little bit and key for me, though, is the consumer who continues to be strong and when you look at the j.p. morgan report, the credit card activity was up 26% loans were up only 2%. that loan growth in that credit card portfolio tells me that the consumer still has a lot of cash, then we get that social security increase, cola bump-up of 5.9%. it certainly shows the inflation that liz is worried about. >> right >> and rightly so, but at the same time we're going to have a number of all of our senior citizens are going have more money and the consumer is fueling two-thirds of economic growth so i'm more constructive on the markets longer term. i am watching everything about which i worry all of the time, but overall i still -- the path of least resistance longer term continues to be up. >> krinsky, i mentioned the
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pullback in some of thes
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i'm not disagreeing, the charts are too usually to look at and that's what i'm saying, let's see what the third quarter does. the third quarter is a bad quarter and stocks get smushed, well then right now i have skyworks at 14 times next year, and i don't know what jonathan's reference is in the cycle, but we're in year one and a half of a ten-year 5g cycle that's much
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more ubiquitous than it was before it's not just homes. it is unbelievable and we're seeing that everywhere in warehouses i'm more concerned about valuation, and the stocks are doing well that have these valuations that are just much, much higher. if you're patient and take the long-term view i think you'll do better buying cheaper than buying higher price. >> okay. >> i'm not saying going in i'm going in when the price and the timing is right. >> i've got you. i've got you >> krinsky, thank you. interesting note teed us up for a good conversation jonathan krinsky, you talk about corvo and apple and there are those reports of possible production cuts and those are making the rounds today and the street is weighing in, joe, and led by katie huberty, buy the dip on the supply-driven disruptions and overweight, reiteration 168 is the price target
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j.p. morgan production headwinds change timing of the upside and not the magnitude. evercore isi and iphone production cuts and you want to make sense for all of that for a stock that was below 140 it had a nice move above that and let me check on it as we speak about it here and we'll throw it up on the screen and it's at 140 trying to get back to 157 which was its 52-week high >> yeah. so very critical to the direction of where the s&p is going to be is all these mega-cap equity names. what ultimately they're going to do i agree with most of the j.p. morgan note. i think now the question of how quickly how the magnitude of the upside is rallyiealized and thas the way you have to think about getting into apple i'm not going to get out of apple and you have a return to the previous all-time high if you expected that to come soon i think this is more really about broadcom, more about texas
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instruments which both of those names are so critical, whether it's the wireless component contribution or the oled display contribution from each of these names. the second derivative trade is impacted here. i don't know if steve has skyworks on, but that certainly is going to be impacted here so i think it's the derivative of apple by the way, scott. i don't think this news is surprising to anyone i mean, we clearly have a very critical challenge here for the entire country and the world as it relates to the supply chain disruption to these semis and they are so integral in everything that we're doing. so i'm not going to sell out of apple from this. i understand that this is certainly going to create a little bit of a pause element. >> it's having a pretty good dd day. it's up 60 points. these mega-caps, apple included, are correction territory i mean, they're 10%. most of them off of their
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52-week highs whether it is apple at 10% which is down 5.5% in one month and facebook's down 15.5 and its had its own issues. i totally understand that, but nonetheless, we keep them within the group. alphabet's loss and microsoft's loss has been less severe. we've talked about the importance of these stocks to the overall market if you're going to avoid the deeper correction that the likes of mike wilson continued to call for, you better not have a further breakdown in these names. >> that's right. and that just further proves the point i made earlier i don't think we'll make new highs. we can't really make new highs unless we have strength in the big-cap names and i don't think we'll see that through the end of the year and the fed still tapers regardless of some of these headwinds and when tapering occurs that will raise the long end of the curve which continues to pressure these names, but it does bode well for the things that are sensitive to the shorter end of the curve and
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financial and we're talking about buying the dip and i would buy the dip on financials in this space, but those big-cap tech names over the long term, still positive on tech still positive on health care, but over the next 90 days i don't think that this is a buy the dip scenario i think this is a scenario where we need the average stock to come back and drive the indexes to a point where we're still positive on the year maybe we go down a bit more from here, 4% or 5%, and we make it back by the end of the year and i don't think we'll see anything astronomical by the end of the year >> why did you buy the dip in facebook that's interesting i bought it as a trade, and i think it's weaker, probably a week ago when i sold my position and i sold the second half on any list we got the opposite. the stock traded down another 20 points or so it was down 2.5% in the open and i added to what i had left as a tactical trade so i'm still keeping that a little bit and i think it moves up.
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the company that i'm worried most about in the big-cap tech is apple and the reason i say that is i would have sold part of my apple position until the last remaining telco came out and said we'll give you a $1,000 subsidy to buy a new phone if you recall it had only been t-mobile and at&t when verizon finally joined the crowd but you get my point, because the features aren't there enough to drive that kind of spending so you've got a company that's seeing their multiple almost double and my view is i agree with liz i'm probably getting there ten minutes earlier because i'm driving myself and taking an uber, but i agree that we're not going to make new highs. i think that you'll see a multiple compression and i'm worried about the third quarter, so i remain in a lot of cash on the side lines and hoping for a massive plush and hoping it will be painful as well and apple is one, if it gets back up there, i believe i'll sell and the products last longer and you
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just don't need to tee up another iphone for over 1,000 bucks with just an improvement it doesn't make sense. >> i find it interesting though, that you're most worried about apple, but most in, so to speak, on two of the stocks that play into the ecosystem of skyworks and corvo. >> yeah. so corvo and sky works business has gone from 70% up to 50% and they made an acquisition earlier this year that helped with that transition so, yeah s skyworks continues to grow with apple and keep in mind that their content by phone goes up dramatically with each new innovation that used that sort of tongue in cheek that apple comes out with i'm not worried about sky works. i'm worried about it right now, when the news came out and it was rumored and i sold a little bit, not a lot and it's still a
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healthy position as is corvo >> michael farr, apple, most valuable company in the market you own it >> yeah, i own it, and i would add to it and i disagree i think that this is the supply change short term. i don't think this demand for new iphones gets destroyed i've already ordered my iphone 13 and i ordered it a couple of weeks ago and can't wait, actually i am using the 10. i like my 10 and looking forward to the 13 and longer battery life and all of that sort of stuff that we need, but if you look at apple for the next couple of years. i don't know what apple will do this quarter, right? but over the next few years we see apple growing earnings and they'll grow double digits and 11%, 12% earnings growth and 24 times next year. this is a solid company with a huge cash position, liquidity and i think a great deal of this ability. so for a long term hold, i think this is kind of a core name. we've also seen several cycles,
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scott, where we've seen folks that want to call the death of the tech sector -- death of tech it's pulled back a few times and then it holds up so all tech's not the same some of these companies have really strong fundamentals that are growing. you can buy them at a reasonable value. i can't tell you about the trade for the next quarter, but long term i'm going to keep my microsoft. i'm going to keep my apple and my facebook, too i'm happy with all of them >> you know what i'll steer the conversation back towards the overall market because, you know, weiss is sitting on a lot of cash, joe. you've had more calls than not probably for some sort of pullback in the market except for larry fink who runs the biggest asset manager on planet earth, and he told the gang on "squawk box" this this morning it was kind of a little surprise and here's what he said and we can take it on the other side.
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>> i'm very bullish over the long run, but could we see a period of time like we've seen in the month of september and even now in october? this rotation, this -- this consternation in the marketplace. i think that may be longer than people estimate, but i think at the back end when we have more understanding of how this is all going to play out. i truly believe we are going to see high are highs in the equity markets. >> joe, i don't know about you, maybe i expected mr. fink to say valuations are a little stretched. we have all of this stuff going on higher highs in the equity market that's the part that will stick with me. what about you >> i agree with that we're not looking at the onset of a bear market any time certainly over the next 12 months, so can we continue to have a collective type of pattern which is what we've had since september? the answer to that without question is yes. you know my feelings surrounding this upcoming earnings season. i've said it is the single most
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important earnings season since october 2018 when at that time you had to hear about tariffs and ppg and caterpillar and utx told you how bad they were going to be in terms of their guidance it's the very same scenario now. rising input costs and what will that mean to margins if we are unable to have strong guidance and overcome a lot of these input cost challenges that we're facing in this quarter, then guess what, scott? a lot of the calls for all-time highs to return by the end of this year, they're going to be incorrect because we'll sit in the sideways to lower pattern, but ultimately, no, we're not at the onset of a bear market >> i'm not suggesting that we are, but we're still not talking about the delta variant, and i don't know i think that still is more important than earnings. i don't know everyone keeps saying the consumer's flush they've got all this money and i
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know you can have turbulence continuing for the remainder of the month, just seasonally things aren't particularly great in september and october, but the market's going to anticipate the other side of a pandemic becoming covid being endemic and the world's going to move forward, and be in a better place. the stock market is going to get that, isn't it, liz? >> i don't know that the stock market will be propelled by suddenly deciding that the delta variant is behind us i think we found out pretty quickly that delta pressured us in august and it did come behind us pretty quickly in september, so that's done and gone. what i am concerned about is even the seasonality factor which i do not like that as an explanation, but even if you just look at that, compared to last year we had pretty big aces in the hole last year. we were trying to get past an election and we got past it and that was a positive and within one week we had this huge vaccine news and we don't have
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those kind of aces in our hand this year so there needs to be a bigger catalyst that would drive us to new highs by the end of the year long term maybe there are some of those aces next year as earnings recover, but to joe's point, third-quarter earnings is a very important season. i think second-quarter earnings are an important season and we have so many revisions upward the market didn't care and i don't know what makes us think that the market will care so much about third-quarter earnings even if they come in higher than expected fourth quarter earnings will be pressured by supply chain. i think we have mud to slug through before we get to a new high and i don't think that new high happens until 2022. >> you have to feel in some respects, inflation concern, supply chain concerns are in the market what is someone going to tell us at this point that we don't already know that the market hasn't already anticipated or worked in is there going to be such a huge shock? i guess it's possible, but you
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have to believe that some of that is already in the market or we would have had a correctional ready of a major magazine. i know we've had a below the surface -- i'm sorry i don't mean to lead you into a question we'll take a break more reports tomorrow and 'lwel trade the financials with the committee next we're back in two minutes. today, things can be pretty unexpected. but your customers, they still expect things to be simple. and they want it all personalized. with ibm, you can do both.
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♪ ♪ welcome back i'm rahel solomon and here is our cnbc news update at this hour william shatner, captain kirk on "star trek" has made it to space. he and other passengers were on a rocket on jeff bezos' blue origin shatner is now the oldest person to go into space >> you have done something -- i mean, whatever those other guys are doing, what isn't -- they don't -- i don't know about them what you have given me is the most profound experience i can imagine. >> fda staffers sounding a positive note on the benefit of johnson & johnson's covid vaccine booster shots. although the agency did acknowledge it has not verified the company's data, it also questioned whether a test used by j&j, to measure immune
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response was sensitive enough to produce useful results and in georgia, a judge his dismissed a lawsuit alleging voter fraud during the election. it calls for a review of 150,000 absentee ballots and searched for illegitimate votes in the state's most populous county and on the news, the supreme court considers to reimpose the death penalty for the boston marathon bomber, the cases for and against tonight at 7:00 eastern. scott, i'll send it back to you. >> i appreciate that very much, rahel, thank you steve weiss, dick's sporting goods. okay top pick at bank of america. it's been one of your top picks. price target is 160. that's big from here 37% upside you like it as much as you have in the past? i do i do the stock trade up to 140 on earnings and i had bought some more and i mentioned on the show
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the last couple of weeks >> it's down because nike came out and they said we're having some supply chain issues dick's sells nike. so that's the issue and those are temporary. dick's is under new management, the new ceo of the last couple of years and she's done a phenomenal job they have plans there to change the business a little bit and the smaller stores i think it's a phenomenal stock and very cheap it was so much cheaper at 140 with the increase with earnings estimates going forward and this year than it was when i bought it originally at 95. so yes, i still like it and it is a core holding. >> we were just looking and it is up better than a double this year that doesn't factor in here? i think it was 110% on the year if i looked at that right. we'll show that again, gang, please weiss? >> you have to look at where the earnings are now and where the stock price is versus where the earnings were when it was down
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at that level, and if the earnings continue to go up, and if you're feeling better about going out to stores and they've got a great pickup at the curb process, then yeah, it's cheaper now. stocks can be cheaper as they move higher than they were when they were lower. conversely, because the stock drops 50% if they get cut 75% and some more expensive stock. i still like it here >> joe, i'm pulling up shares of monster beverage which are down close to 3% today on a downgrade by way of jefferies. they go to hold from buy they slashed the price target to 92 from 113. this is one of yours so they take a hard look at it and say, it's time to downgrade. what about you >> this -- this is an important stock to touch on. i bought this stock at 8360 back on march 5th and i proclaimed at the time it would trade above $100 it got to 99.89 on august 10th
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and unfortunately, my ego and probably too much huberus at the time, what i failed to realize is rising input cost, what i was talking about before was going to impact margins. monster beverage, i understand the innovation surrounding flavors and coffee and that's why i'm there, but if we're going to continue to see rising input prices, guess what, scott? they're going have to raise prices and they're not doing that and that's disappointing to the street that's yet poor performance is reflected in the stock price and candidly, it's one of the reasons why i cannot let a winning trade turn into a losing trade and i'm going to pay close attention to where this trades over the coming days and might even liquidate the position. >> what's going to be the deciding -- again, it's down 3% today. do you have a number in your head for our viewers who may have joined you in this?
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>> yeah. so 83.60 is where i am in. this stock needs to reverse by the close on friday from today's -- it cannot trade down below $84 by friday. if it does, i'm out, but for me to stay in it, i need to see a significant reversal and what viewers would know to be from our fresh josh brown an island reversal and we need that type of a formation to stay in. >> i appreciate you staying as specific as you can with people. >> chipotle and lulu their top millennial picks by cowan. they're the ones that have done it and it's the fourth annual genz and millennial survey and they come out as chipotle and lulu as three of the tops and since you own chipot and lulu, i'll get you with those. >> does that make me a millennial >> i hope it does. >> in your dreams. in your dreams. >> yeah. exactly. listen, i hope you have --
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>> yeah. exactly. to the smoked brisket at chipotle is absolutely phenomenal i've spoken at length over the past couple of months about these companies. i wear lululemon, i eat at chipotle and both phenomenal management staff and the last couple of weeks is simple. they're longer duration assets and you will see in the a pause and appreciation of the stocks under those circumstances, but the secular story, no way. that's why you own the stock it's fantastic >> weiss, you're nearly a millennium don't lose sight of that >> i have a question for joe >> we have to go >> i have a question for joe >> if it's a joke, i'm going if it's serious, go ahead. >> you better go. >> exactly the the investment committee is making moves in the market michael farr gives us his. we'll do that next
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we've got some moves i want to get to. michael farr, you bought more ross stores? >> i did ross stores is an off-price treasure hunt retailer
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they change their inventory all of the time. they've been under some price pressure the store is very well managed they've got almost 1900 stores open and they're going to take that to 3,000 stores over the next eight years or so so i get 6% growth from the store growth i've got a company now trading at around 20 times earnings, growing earnings at 12% with a 1% dividend. the stock pulled back a little bit and i've liked it for a long time so we've added to it. i think that will work out very well for us. >> okay. >> something that has not worked out very well for you, michael farr, nor steve weiss, fedex weiss, it's your core position >> i was going to get on steve now. i'll give you a pass >> you know where -- >> oh, that's very nice. you're not going to upset me, but thank you. people are talking about it on twitter, guys. fedex, you add it to your
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position it's a dog it's down 25% in the last three months and i'll cut michael some slack and put it all on you, weiss. >> yeah. well, michael put me into it no, only kidding look, this is what joe talks about -- >> you guys both put people into it >> here's the problem. here's the problem you guys put people into this thing. now it's a dog >> yep >> right right. it is a dog, but i have haven't abandoned those people and i more recently got under 220, 218, 219 so i add more then. look, this company's selling at ten times next year's earnings and i can't tell you what the latest news is which is today in terms of the greens operate in the ports to l.a. with 24 hours and they can further pressure their costs and margins and the world's moved exponentially further towards online and that's what fedex does
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so i would say they've had missteps and they've been in the guidance on the labor cost and if you recall revenues last quarter, we're a lot higher in beat expectation and the margins got hurt and this is temporary in my view and i've got a company selling five terms what the historical valuation is ten times next year's earnings and next year's earnings, i believe, will be excellent. so, look, i've tested my bounds of my personal stupidity by continuing to add to this as it trades lower and i'm confident that going out a year, two years, three years i'll be richly rewarded. >> fair enough >> it's not a huge fault to management here either it's been a hugely difficult operating environment. it did catch me by surprise, and i own it, but i did add to it. this is a long-term, core position a couple of years from now. the next quarter could be tough, too. so don't expect this for a trade, i don't think, but long term i like fedex and i'm
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sticking with it i'm very disappointed in it. >> ups has done better than fedex. what one was able to manage better than the other has to be taken into consideration, too. don't we think >> big difference in the customer mix, too. big difference in the customer mix. >> very different -- don't forget, fedex said hey, amazon, we don't want to do business with you because the margins are way too low and there's been a transition in the business there, as well and ups has a yield that's been supportive of the stock, but we'll see what happens. i'm very comfortable with fedex and typically sells at a premium. you can defend your position coming up, we're set to get some new clues about the fed's view on the economy that's right are rate hes cinikomg sooner than we think? we have new reporting on that. you'll hear it next. sco is commd to achieving net zero emissions by 2040. and we believe our smart buildings solutions can help. providing power to reduce emissions,
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kohler is an expert in bathing, so you can count on a deep soaking experience. are you seeing this? the kohler walk-in bath comes with fully adjustable hydrotherapy jets and our exclusive bubblemassage. everything is installed in as little as a day by a kohler-certified installer. and it's made by kohler- america's leading plumbing brand. we need this bath. yes. yes you do. a kohler walk-in bath provides independence with peace of mind. call... for fifteen hundred dollars off your kohler walk-in bath. visit for more info. about an hour until we get the latest fed minutes and it comes after inflation and the cp iran hotter. our steve liesman has new reporting on when the first rate hike could be. maybe sooner than people are prepared for at least think could be the case? >> yeah, scott the probabilities are definitely creeping up. two things are happening
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one is that we're getting closer in time to those times when it was already priced in. the other thing is that the market is moving forward the probability of near-term rate hikes, if you take a look at our chart here, about a 62% of a september 2022 quarter-point hike ratcheting up to 84% by december, just a couple of months ago the odds-on choice for the market was december so it's come forward by a few months about a quarter, and there was some probability of a second rate hike being built into the december contracts of a 50-basis point move by that time and this is happening along with the rise in the two-year yield and if you can take a look, scott. the two-year has been very well behaved with the post financial prices period and it was above 50 basis points and most of that time, and it is now just creeping up at 36 basis point
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and the fed has had the two-year well under control and now the market with tapering, is both to come in that rate hike some time next year and increasingly bring it forward into september right now. >> i wonder how much of this has to do with the fed's hand being forced which moves it up because inflation turns out to be more dramatic and last longer than people have expected including jay powell or if this is a representation, too of just a stronger economy and maybe it's a combination of both. i don't know >> yeah. i mean, there's a lot of truth to what you say and the first thing that the fed's hand is being forced and if i can put more precise language on it, scott, the market betting on the probability of the fed's hand being forced down the road and there is some chance and here's where the bet is that inflation does not control itself and that what the fed will have to do is turn from tapering to rate cuts -- sorry, rate hikes more
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quickly than is currently priced in it's all down the road i think the belief is that the fed is going to give it some time here. early next year, the first quarter, second quarter of next year and if that doesn't do the trick then i think we'll be talking about a faster time scale for the first rate hike. >> freudian slip on the rate cut thing, i get it. totally. all right, steve thank you. >> diagnosing. >> steve liesman joining us, our senior economics reporter. ask halftime is coming up next send your questions by veo we'll play them on the air e-mail us ask we're back after this.
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all right. let's answer a question. from twitter, when you asked steve about moderna, my average price is at $190 and i'm debating pulling back. what's your advice here? >> it's my largest position thus far. i look at this as two, three-four year story. it's going higher. however, here's the caveat they go in front of the fda tomorrow for the booster and it's sort of like the good news/bad news. the vaccine is, that the e
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efficacy is only dropping 35% against the delta variant. so they need the booster the fda may say, hey, wait, let's wait longer to get more data to see if we really need a booster more than a year, rather than six months. i think at the end of the day, the fda did approve the booster. then on friday, they'll talk about mix and matching given the much superior profile, the profile, moderna versus pfizer, and j&j is not even in the running. if you have a choice, you're going to take the moderna booster. and that's going to be, by the way, at half the amount that you're getting now, but at any rate, that increases the earnings the pipeline very, very robust so if you don't care about a possible dislocation over the next few days, i think the stock is extraordinarily cheap, based upon the fundamentals right now. and incredibly cheap, as you go
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out and the technology goes on this is not biotech. this is technology good stuff thanks for the answer. "final trade" coming up next and twice as fast. if i could, i'd ten-x everything. like a coffee run... or fedora shopping. talk to your broker. ten-x does the same thing, - but with buildings. - so no more waiting. sfx: ding! see how easy...? don't just sell it. ten-x it. it's another day. and anything could happen. it could be the day you welcome 1,200 guests and all their devices. or it could be the day there's a cyberthreat. only comcast business' secure network solutions give you the power of sd-wan and advanced security integrated on our activecore platform so you can control your network from anywhere, anytime. it's network management redefined. every day in business is a big day.
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so you can focus on what matters most. that's how we've become the leader in 5g. #1 in customer satisfaction. and a partner who includes 5g in every plan, so you get it all. all right, let's do "final trade. >> dividend pairs if i'm right, the market will continue on the downside and a yield above where the ten-year gets at 3.4% >> joey. >> if i liquidate monster beverage, i will use those funds and buy docusign
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>> i feel like that's coming you better tell us when. joey, thank you. michael farr >> donaldson i like it on the pullback here. razor, razor, i own it >> weiss >> gxo, the first day it's gone up in a while. not only scarcity, but logistics is where you want to be. >> all right guys, thank you very much. "the exchange" starts right now. >> thank you very much, scott. welcome to "the exchange," everybody, i'm kelly evans a busy market ahead of us, the dow and s&p on the fourth straight day of losses ahead of the fed in the next hour what economist is getting messy -- with an i, we're not talking about the soccer player. and apple with chip production shortage, if semis are in short supply, why aren't the stocks acting better we'll talk to to


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