I feel good about it. Steph and i talked before the show ive tried to be cute at times, did in the beginning of september, if you remember i thought the market had a lot to overcome from a trading standpoint you have put a small position on, but listen, this is a market that punish eds you. You need to get out quickly to see where we are today i love whats going on with technology the software play is the play that i have. Its the the three big names. Its microsoft, its s. A. P. , its red hot, and im not looking to get out of any of them. Steph, you know, we mentioned mike wilson who is the the gentleman we were alluding to at the very top of the show i of Morgan Stanley. Sat right here hat the desk recently saying theres greater risk of a correction than hes seen in a while. Points to the Balance Sheet reduction from the fed uncertainty around the next fed share. Negotiations on text legislation. Counter trend dollar rallies is he wrong . Those are all real risks, no. For sure, and i think expectations are clearly high headed into earnings, but i think earnings are going to be very good. I think the Economic Data has been pretty good look at that empire state number the best number since 2009, and it was shipments, employment, new orders underneath the surface the numbers are strong, so if the question is valuation and the expectations, again, are elevated, but thats why if you have a little extra cash around earnings, if you see sell the news, i think youwant to buy the strong fundamental stories, particularly the ones joe was just mentionings. Cramer, october 6th welcome here, good to have you back. Thank you. Heres what we said on october 6th. Im a little less constructive the last part of the rally on the on sense of news when all we were hoping for was a fed rate hike and a tax cut nobody is worried as i am. Im worried. Im worried. Stocks are higher today than they were then. Yes, they are, and maybe im too worried about some retailers and some of the consumer packaged goods stocks and not really that the coloration of the market has become cleveland if its from cleveland its good, okay ill give you a classic example of what im seeing ilgo over the charts in the weekend and tend to know a lot of stocks. Theres like ten of them saying, well, gee, ive got to really a avatar group, acute names that come around and then i look at illinois to works, one of the Great American companies, and if you take a look that stock was at 150 and then it dropped to 136 and then it went back. What im saying is as much as i like the work of the Morgan Stanley wilson, what you have to do is look for individual breakdowns in stocks that shouldnt have broken down Lamb Research after the last quarter, the stock with endown the. It shouldnt have. Im looking for situations that make no sense versus the fundamentals. So, are you saying that the correction that were all looking for in the overall market is actually happening in individual stocks . Exactly. Weve had this rolling correction. Its positive. Yes. But thats in sectors. But the market keeps going up regardless that have. Remember when amazon went down, was well off a thousand, amazon have decided its an investment year. Its amazon. Right. And the only things not working are something where you hear amazon and another amazon cosmetics, amazon sports power, amazon, i mean, amazon. Sorry, costco. Dont you think its interesting that energy has actually started to catch up and also kind of the material stocks chemical stocks have done well yeartodate but steel and iron ore and copper and that to me is very encouraging because that suggests the global synchronized growth stories. Were out of stocks, steph. How many what i was saying when i was saying those word cat florida kept going up because theres not a lot of cat flars when we got in the business there were like 25 companies that liked caterpillar and now theres like united rental which doesnt use caterpillar. This might have been the day of the microsoft throw in the towel. I cant take it anymore. Im waiting, waiting, waiting for a correction hell, were not getting a correction. Turned out to be right. That was a good call what was weird about that microsoft call was that he said i think its going to keep going higher so ive got to get on, and thats what i dont like i dont like the socalled multiple expansion but if stephanie is wright and the earnings are better, youll be left behind for good. Apple is a classic example of what hes talking about. Yes. What did we have, a 10 decline in apple right back to 160. Traded down to 150 and people freaked out. The it actually dipped below 140, 150 rather and everyone got excited. 149 and now back toward 160. But i think energy is indicative to what jim was talking about when you mentioned before the show about japan and you have to look at the flow no one has energy right now. No one is long energy. Because it its been painful. Its killed you. A lot of people same as japan. Ive got a lot of people long tax cuts, tax reform. Taxes. Should you be tax reform or long yes, short tax reform because what matters is once again when he cuts the subsidies to the states puts health care front and center behut health care right front and center again, he being President Trump. I called him trump last week and people were fearious its President Trump. Came after you on twitter its lincoln, no, president lincoln. You cant make a move. You cant make a move if you talk even if you put mister in front of it. Youre a bad guy youre a bad guy, but i do think that the apple piece is so right because what they are seeing is listen if you give us a is a multiple it deserves to trade radically higher it was at 150 and nobody liked it again, thats the intra, you get these different declines, and you either buy them or you miss it and they come back. Alphabet. Unless youre taking about ge. Right down to 135 and back above 1,000. It was because you didnt want to put your ad next to cryptonazi contempt. At 1,000 suddenly theres no cryp crypt nazi content mark penn, a very noted pollster and he said the amount of money that that the russians like threw in versus say like what hillary threw in, he did raise some interesting point i used towork with mark, Money Management mark had some great ideas, but the idea that you suddenly sold down facebook because of content now people are saying why did i sell it . Because theres a lot of potential risk around it all of a sudden, no well you know what lets hold the thought President Trump holding a Cabinet Meeting today. Right now well, hes out from it now. I would like to basically provide you with an update as to how were doing for the american people, and were doing a lot of great things the Unemployment Rate is at an almost 17year low the stock market is soaring to record levels. We just hit a new high on friday and i think were hitting another new high today because theres tremendous amount mitchell having to do with business in our country. Gdp growth has reached more than 3 last quarter and other than the hurricanes would have done phenomenally this and i think well still do very well but something will have to be taken off because of the tremendous problems of the massive hurricanes that weve had to endure, and now i guess you can probably add the wildfires in california, but the economy cannot take off like it really has the potential to do unless we reduce the tax burden on the families, businesses, workers of our country, and well be able to do that i think were getting tremendous receptivity from the people i hope we get the same receptivity from coming, but we are getting tremendous accolades for what were doing having to do with both reform and with the massive tax cuts it will be the largest tax cuts in the history of our country. Were one of the highest taxed nations in the world, right now costing us millions of jobs and trillions and trillions of dollars. Its time to restore americans Competitive Edge one point in gdp would be 2. 25 trillion, think of that, revenues we go up from 3 to 4, and when i began, we were in the 1s, and now the last quarter were at 3. 2 , and were going up higher, but if we went as an example from 2 to 3 or from 3 to 4, talking about 2. 25 trillion, and were also talking about many millions of jobs so we want to also reduce excessive government spending, and thats what were working on at our Cabinet Meeting today as we head no next years budget season, ive asked director mulvaney to come up and find various savings in all of the departments that are gathered around the table which is everybody. I need my cabinet to work with director mull vein toe fight these spending cuts, fight for them and make sure that they happen, and we want to make the department as lean and as efficient as possible. At the same time well be departments with lots of heart, lots of heart. One thing were going to be looking at very strongly is welfare reform thats becoming a very, very big subject, and people are taking advantage of the system and then other people arent receiving what they really need to live, and we think its very unfair to them, but some people are really taking advantage of our system from that standpoint, and we are going to be looking very, very strongly, therefore, at welfare reform its going to be a very big topic under this administration, and it started already, and we have a lot of a lot of recommendations that were going to be making, and youll be hearing about them very shortly. The other thing were doing that relates to peoples lives is the Prescription Drug prices are out of control the drug prices have gone through the roof, and if you look at the same exact drug by the same exact company made in the same exact box and sold some place else, sometimes its a fraction of what we pay in this country meaning as usual the world is taking advantage of the United States. They are setting prices in other countries, and were not the Drug Companies frankly are getting away with murder, and we want to bring our prices down to what other countries are paying or at least close and let the other countries paying more. They are setting such low prices and were subsidiesing other countries. Thats not going to happen anymore. Thats been going on for years where our people are paying so much more for i dont mean they are paying 2 more. They are paying double, triple, qua group. They are paying so much more that its very unfair to the United States, as usual. Last week i also sent a letter to congress outlining my administrations Top Priorities for Immigration Reform this was a bottomup effort driven by dedicated Law Enforcement professionals, and they took a big oath to protect our nations. The Justice Department is doing a fantastic job on the border and with regard to immigration, more than anyone has ever seen before from a Justice Department thank you very much, jeff. Its really had an impact and a very positive impact and now were going to take it to five steps further. Our proposal closes dangerous loopholes hand vulnerabilities that enable illegal immigration, asylum fraud and visa overstay tsz. The slicea overstays, youre talking about numbers that nobody even knows what they are they are so out of control and were going to take care of that when you look at whats going on in mexico, mexico is is having a tough time right now in terms of crime more than ever we need the wall. We have drugs pouring through on the southern border. They are literally pouring through, and we have to have the wall were going to have the wall, but if you look at just whats happening on the other side of the border with the tremendous crime and the tremendous problems going on. We have a very Good Relationship with mexico, but there are a lot of problems, and we dont want the drugs and we dont want the crime but we need the wall weve asked congress to ensure that any proposed Immigration Reform ends chain migration. One person comes in and then brings everybody and his family with him or her, and we have to end chain migration which is critical for creating a system that puts American Workers and the american taxpayer first. Last thursday i proudly nominated Kirsten Nelson to serve at department of Homeland Security and i urged the senate to quickly confirm this tremendously qualified nominee i asked them to confirm the other nominees the democrats have terrible policy, terrible, and they are very good at really obstruction, and one thing they do well their policy is no good and im not even sure they are very good politicians because they dont seem to be doing too well. That could be because of their bad policy but they are great at obstruction and we have half the nominees that president obama had at this time which is very unfair they are taking everybody right after the final moment and in many cases confirming them with tremendous majorities, but they are bringing them out purposely, right down to the final. We have people that are totally qualified, are going to pass and have to wait a long time and its total obstruction can i say the same thing with our judicial nominees, our judges we have some of the most qualified people the wall street journal wrote a story about it the other day that this is some of the most qualified people ever, and they are waiting forever on line, and it shouldnt happen that way its not right, and its not fair i want to thank acting secretary elaine dute for her leadership in responding to the catastrophic storms that have struck our nation and our territories. Weve also issued a disaster declaration in california in response to the devastating wildfires like weve never seen, and we mourn the terrible loss of life. We have fema and First Responders there we have our military helping its very sad to watch how fast, how rapidly they move and how people are caught in their houses its its an incredible thing, caught in their houses, so we have a lot of people helping government in california and made a lot of progress in the last couple of days, but were a little subject to winds and what happens with nature, but its been a very sad thing to watch we also continue to pray for the victims of the mass shooting in las vegas. We cannot erase the pain of those who lost their loved ones but we pledge to never leave their side were working with them very much so with the fbi and Law Enforcement, department of justice, and i guess a lot of people think they understand what happened, but he was a demented, sick video, wires crossed extremely badly in his brain and its a very sad event. In each of these tragedies weve witnessed, however, a tremendous strength and heroism of our people each up of these tragedies that weve had, weve witnessed such strength and such heroism. When americans are unified, no Destructive Force on earth can even come close to breaking us apart. We have a lot of work to do on behalf of our magnificent country and our extraordinary citizens a great trust has been placed upon each member of our cabinet. We have a cabinet that there are those that are saying its one of the finest group of people ever assembled as a candidate, as a cabinet, and i happen to agree with that. Of course, i should agree with that, but i think we have an Extraordinary Group of people around this table. This is a tremendous amount of talent, and i wouldnt say i was necessarily looking to be politically correct, although i ended up being politically correct because that was right thing to do in every sense of the word however, we have we have just gotten really, really great people im very proud of them, so were going to work on all of those things i just outlined and many more you know we have the iran deal that right now is being studied, and i think a lot of people agreed with what i did i feel strongly about what i did. Im tired of being taken advantage of as a nation this nation it is a been taken advantage of for many, many years, many decade frankly, and im tired of watching it, but the iran deal was something that i felt had to be done and well see what phase two phase two might be positive and it might be very negative. Might be a total termination thats a very real possibility some would say thats a greater possibility, but it also could turn out to be very positive well see what happens i thought the tone of the iranian leaders was very modified, and i was happy to see that, but i dont know if that means anything they are great negotiators they negotiated a phenomenal deal for themselves and a horrible deal for the United States, and were going to see what happens the health care, as you know, is moving along knocked out csrs that was a subsidy to the Insurance Companies. That was a gift that was frankly what they gave the Insurance Companies, take a look at their stocks take a look at where their stock was when obamacare was originally approved and what it is today youll see numbers that anybody if you invested in those stocks, youd be extremely happy, and they have given them a total gift they have them, you could almost call it a payoff, and its a disgrace, and that money goes to the Insurance Companies. We want to take care of poor people we want to take care of people that need help with health care, and thats what im here to do, and im never going to get campaign contributions, i guarantee you that, from the Insurance Companies, but a lot of other people got them take a look at the democrat. Take a look at how much money has been spent by the democrats and by the Health Companies on politicians generally, but take a look at the coffers of the democrats, so the csr payments has actually brought republicans and democrats together because we got calls, emergency calls from the democrats, and i think probably the republicans were also calling them saying lets come up at least a shortterm fix of health care in this country, and the gravy train ended the day i knocked out Insurance Companies money which was last week. Hundreds of millions of dollars a month handed to the Insurance Companies for very little reason, believe me i want the money to go to the people i want the money to go to poor people that need it. I want the money to go to people that need Proper Health care, not to Insurance Companies which is where its going as of last week i ended that we have a lot of interesting things to do im meeting with Mitch Mcconnell in a little while for lunch. I think were going to say a few words on the steps after that. I know you wont have any questions, and and pretty much thats it enjoy yourselves, nokes, and ill see you out there with Mitch Mcconnell. Thank you very much. Mr. President , do you Steve Sbraccia bannons war on mitch mick conley steve is very committed, a friend of mine and is very committed to getting things passed despite what the press writes, i have great relationships with many senators, but in particular with most republican senators, but were not getting the job done, and im not going to blame myself, ill be honest they are not getting the job done weve had health care approved and then you had a surprise vote by john mccain weve had other things happen, and they are not getting the job done, and i can understand where steve bannon is coming from, and i can understand, to be honest with you, john, i can understand where a lot of people are coming from im not happy about it, and a lot of people arent happy about it we need tax cuts we need we need health care now were going to get the health care done in my opinion whats happening is as we meet, republicans are meeting with democrats because of what i did with the csr because i got off the gravy train. If i didnt cut the csrs, they wouldnt be meeting, they would be having lunch and enjoying themselves they are right now having emergency meetings to get a shortterm fix of health care where premiums dont have to double and triple every year like they have been doing under obamacare. Obamacare is finished. Its dead. Its gone. Its no longer you shouldnt even mention it. Its gone. There is no such thing as obamacare anymore. It is and i said this years ago. Thats a concept that couldnt have work, and in its best days it couldnt have worked, but were working on some kind of a shortterm fix prior to the republicans getting together, maybe with some democrats. Again, its obstruction, but maybe with some democrats to fix health chair permanently, so i think well have a shortterm nicks with republicans and democrats getting together, and after that were going to have a successful vote, because, as you know, we were one vote short, and i think we i think we have the votes right now whether thats through block grant or something else, block granting the money back to the states, which does seem to make sense where the states run it because its a smaller form of government that can be more individually sensitive, so that will happen fairly shortly, as soon as we have the next reconciliation i feel well get the vote. I think we already have the vote for health care. Sadly the democrats cant join us on that which will be the longterm fix but i do believe well have a shortterm fix because i think the democrats will be blamed for the mess. This is an obamacare mess. When the premiums go up, that has nothing to do with anything other than the fact that we had poor health care, delivered poorly, written poorly, approved by the democrats it was called obamacare, but i think well have a shortterm fix and then well have a longterm fix and that will take place probably in march or april. Well have a very solid vote it will be 100 republican, no democrats, but most people know that thats going to be a very good form of health insurance, so that will be it okay any other questions. No thank you. Ill see you in a little while [ inaudible question ]. I know how he feels depends on who youre talking about. There are some frankly republicans who should be ashamed of themselves but most of them, ill tell you what, i know the republican senators most of them are really, really great people that want to work hard and they want to do great thing for the American Public but you had a few people that really disappointed us they really, really disappointed us so i can understand fully how steve bannon feels okay thank you very much. Thank you. All right that is President Trump meeting with his cabinet today at the white house saying there is tremendous optimism in the country. He cited the stock market, record run doing a lot of great things, he said, but then, of course, you did notice that the markets did come off of those record levels when he took dead aim at the Drug Companies drug prices are out of control they are really going through the roof, said the president the Drug Companies are getting away with murder, he shade eamon javers at the white house, john harwood as well the Market Reaction was swift, and it was severe. Saw the president talking about Drug Companies last winter, even before he was sworn in as president. United states, so this is a return to some of that rhetoric that weve seen. Hes going after really two sectors in these comments today, the Drug Companies and also the Insurance Companies. He cut off the socalled csr payments last week that would go to Insurance Companies to subsidize health care for lower income people. The president saying that was nothing more than a political payout to some of those Insurance Companies who benefited greatly from it, but in return for almost nothing, the president said, so the president here has two sectors in the crosshairs, Drug Companies and Insurance Companies, and well see whether the action to follow backs up some of the rhetoric he was talking about today. So john, the president wants to do tax reform, but he seems to be taking great pride in what hes done to what the Washington Post has described as throwing a bomb into the health care system. Well, thats right, and it was very interesting on a couple of levels. First of all, he said were first going to do a shortterm fix. That seemed to be blessing the effort by lamar alexander, the republican, patty murray the democrat, to provide some shortterm relief for those same Insurance Companies that are not going to get those costsharing reduction payments that, of course, is going to take time and attention away from the health care effort. The other problem was he seemed to be in a backhanded way embracing Steve Bannons war on republicans in office right now, including in the senate. Going to make that 12 30 lunch hes got with Mitch Mcconnell pretty awkward because he talked about how i understand why steve bannon wants to go after republican senators. He said im not going to take the blame on myself on what happens. Its the congress thats nailing and some of the republicans are not, you know, pursuing my agenda, so steve bannon is talking about funding primary challenges to many of the people that donald trump needs right now to pass his tax bill this is not an auspicious political sign for the prospects to get tax reform done. Eamon, lastly to you. Youve got 41 people now dead in california businesses that have been burned to the ground and no mention at all by this administration, the president , about whats taking operation there. What do you make of that reporter we did hear the president talk about it. The president said he felt it was a very tragic thing. People were caught in their houses, the fires burned so quickly that they werent able to escape. He said that there are people out there helping the government, so the president focused on that tragedy and sort of to my eye seemed a little bit in awe of the power of nature here and what it does to the United States presidency because you saw the president has been dealing with the hurricanes and natural disasters, and now these fires in california, so this is a president who is realizing the scope of the damage that can happen in just a short period of time, and he did sound a sympathetic note there, and well wait for more details on what the federal response is in california from the white house later on today. Thanks so much. Scott, the other thing that he said was that the wildfires, along with the hurricanes that weve been having, are going to depress the gdp numbers that hes looking for in the next quarter. That was an attempt to use those to shield any disappointment of course, Second Quarter was positive but over 3 and he was touting that and saying we may not do as well in the next quarter. If he did in fact say that, then i in fact missed that my apologies then for mishearing what the president was saying there about whats taking place in california. Guys, thank you very much. You bet. Jim, you want to comment on whats taking operation in the market. Well, look, i think that this is that rhetoric we havent heard in a long time we kind of got a really nice period where the president didnt do anything to hurt his nielsens, being the stock market he kind of just said, listen, take profits in the drug stocks, take put that money in the industrials. I mean, he kind of gave you a game plan, right y hads telling you where he rotate. He wants you to row thought. Hes calling for a rotation just like the fellow from Morgan Stanley. Pretty strong words though, jim, about Insurance Companies and the Drug Companies. I mean, look, the Insurance Companies i think it is very funny to listen to a president who really attune because those stocks have just been incredible and its because they got a big gift he doesnt say anything that we say this stuff on the desk. Its very fun toy listen to the president. Most of the hmos have gone out of the exchanges. Correct. And theres molina and santee and a few still in there. Cigna got out of it unit health care got out of it when they sell these stocks down this is exactly what were talking about at at top of the show you buy some of the names especially when the fundamentals are strong and will remain strong. If unh gets hit, obviously, when unh reports tomorrow, the president is like a quarter behind in the rhetoric, right . I mean, these guys have already pulled out and not making is as much money except for santin at the and moved big in new york. The president says these things and obviously j j goes down and i is that right thinking, okay, so jamie rubin is going to be on thesell of the j j the president has to back his words up with tweets, i mean what does he back his stuff up with these days . Tweets. Hes obviously getting the information from his Economic Team the stuff that were talking about on the desk, gary cohn and all of them. They know it. Pete najarian is joining the fun. Great to see you, brother. You know how hard it was. I mean, weve been following him for literally from the airport. Tracking me for the last week. The fact that you are here is fantastic. Pete tracker. You are nan taftic. Washington isnt the only risk investors have to keep their eyes on these days Jeffrey Sherman is ceo at Doubleline Capital live with us on the set good to see you. Thanks for having us. How do you generally feel about where you are, new record highs every day . You mentioned the top of the program, strategist on wall street starting to say the risks are bigger than hes seen in a while. What say you weve had a great run its been a voracious rise in risk assets across the board, equity market, credit markets on the bond side and what you have is actually a growing global economy. I heard earlier at the top of the hour, coordinated Global Growth seeing commodity prices. There is an exuberance are, i dont want to use it in the negative context about markets, but its because youre getting this coordinated growth. When you talk about the risk side of the equation, ultimately a lot of the balance hangs in the central bank behavior globally as we face a new phase of actual global tightening and so its likely warranted in some capacity given the rise weve seen in the economies globally and while you have a control level of inflation, so it is this kind of very tepid type of growth environment and done on the backdrop of not having inflation out of control. We can take rates globally rising incrementally always, can we not yes. At the same time that Global Growth as you cite is improving. And profits are improving. Correct. Hand they came off very low levels. We leveled this profit recession where we have five consecutive quarters of profit decline, and weve turned that around i think the fundamental case for raising rates is there its just the idea of this Balance Sheet unwind and the quantitative tightening, things we dont have a lot of historic data points on the ecb still having a negative 40 basis point rate across the board, overnight lending rate, excuse and the negative Interest Rate has not went away the last time we calculated it, its 8 trillion still sitting in bonds with a negative yield on them. To lose money by investing securities unless the yields go down even further, and so to have this environment that we need some form of this tightening i should say where we dont really need stimulus in the eurozone for instance, when you look at gdp across the eurozone, its very comparable to usgdp and look at german bunds, sub 40 basis point on the tenyear whereas we have a 2. 29 tenyear so what you find is there is a disconnect in policies, but we are moving in the direction of this global coordinated tightening carney was talking about leaning towards tightening next month. I think its hard i think thats hard because youve got an austrian election thats too reminiscent of people that of another election that occurred a long time ago, but its like yesterday for them, so, i mean, on the one hand, i think europe is incredibly strong i think the europe euro is still a great buy. Get an austrian election where the right wins and people suddenly say listen, i dont care what you think about the growth we have to put more money to work because we have an immigration problem. Right. Now thats not its not in the textbooks that theresin aim gracious problem but thats what they have. And negative yields arent in the textbooks. But at the same time what happens is ive been saying that they have to raise rates in europe, got to raise rates in europe and they look at the election this weekend and say we really dont care about this stuff. What we care about is the social fabric and it could be going the wrong way and saw it happen in the 30s, and they dont think about negative rates they think about they think about the end. Negative rates are bad for the consumer at some point you get the frustration of keeping money in the bank and they are losing their money. They think war is bad from the consumer thats where they are from they think totalitarianism is bad for consumer, that fascism is bad for the consumer, but this look, in an economic world youre right these people believe that fascism lurks in hungary, that fascism is lurking in poland, that theres the possibility of a totalitarian right wing shift, so weve got to just figure out ways to put more money in peoples hands they are not thinking about weimar, but does qe put money in peoples hand and i think the consumer doesnt feel that way. They are more worried about guns in peoples hands than they are money in peoples hands. Thats fair. Jeffrey, are you cant be too sort concerned about or too worried about where we are given the fact that you like discretionary, tech, industrials and health care. Yeah. Ultimately our strategy is systematic it does essentially look at the back Earnings Data and uses the cape ratio so were looking at long term histories relative to the longterm averages, so its not out there that were making the full discretionary call, too, but from the same standpoint, i mean, with the level of valuation across some of these the market those are the cheapest sectors of the market, and so thats the key thing. I heard you that you canning about energy as well we had this momentum filter that kicks out the thing with the worse breath in it and energy has been out of there. Does seem like energy should be catching up as weve had a stability in the oil price from around the 50 level, too. Remember, its a systematic nondiscretionary type of strategy. Thanks for being here. Jeffrey sherman, Doubleline Capital cio. Appreciate him being here today. Big call on financial citi cutting the price target to 65 a share, 10 lower and where the stock is now its our call of the day steph, you added to your position today this keeps like a very peculiar call to me its so against the grain, the crowd, this desk explain. Yeah, and i do worry that this is kind of a crowded long for sure the stock is up 2 1 , absolutely the best name in the space to date but i dont think the story changed after the quarter. Nim was disappointing, and at the same time jpmorgan, their nim was much better than expect the but the expense story and the capital return story, which is why i like the position, that has not changed at all in fact, in the quarter they did better on expenses you got operating leverage, so you just have some other puts and takes, and i think thats why the stock trade at a discount they cant continue to execute flawlessly like jpmorgan can and thats why jpmorgan gets the premium, right so this one they have their work cut out but i dont think the story has changed so ive beenic pentagoning at it. Im with you. The capital return story. Yeah. If you look at the piece, the downgrade, hes using a 645 target price now you know 68 tangible book, mike will sit there and buy every single share hes not going to let this thing go down because its too good for earnings to buy back stock. We wanted to speak with the a lift on the air today, and we werent able to do that. This analyst has been on the wrong side, offside on this one for a while. Yeah. The stock is up 52 since this analyst downgraded the stock to a sell in september of 2016. So dont we always and moved it back up to a hold. Right. And then cuts it to sell again. To sell again. And did get a little bit of a run, but a run on a hold for at stock. Im not so sure i even give him credit for that. The reality is every one of us know sittinging on the desk there are analysts you listen to on each and individual names mike mayo is my guy on citi and mike mayo and i have talked about this being a 100 stock in the not too distant future jim has even ached around the 19 number though. Yes, yes. But i think its not that far away from being a 100 stock look at the Revenue Growth what they are doing in consumer banking. We all knew that trading was going to be bad, bond trading, that was an absolute stock his 76 for a reap yes, its pulled back a little bit because of the run it made steph is doing the right thing ive not add it had yet but ive been considering it because after being at 76, here in the 71s i think thats an opportunity. They have done all the right things, and i think this is about trading. I think pete hits t. Fixed income trading is very important to citi, and it was a disappointing quarter, but tell me something i dont already know we knew i think nim was disappointing given given where Interest Rates and what they have done. It goes to 68, thats a buy hes talking 6 45 its a buy it all day at 65. Wnc, everyone, again, knows thats the best one now. Its now the best one, right, and this multiple is half of pncs multiple its crazy. You have to bring in the credit card concerns, too. Like, again, like on the margin there were things to pick at, and when stock is up 21 yeartodate and its fairly crowded you can see why it pulls back but i dont think the story has changed. Pnc is getting all the credit for having a strong Mortgage Business and i think the Mortgage Business is accelerating are you telling me that citis Mortgage Business is not going to benefit as well. Were just forgetting that . And i think suntrust will actually do quite well on the market. Regionals yeah. Regionals will do better. On the mortgage side. One thing that is certain is that the group has a bit of a tough lon going for it than it used to have jpmorgan, when the number comes out, pretty good i went over the wells fargo thing again this weekend they are literally just starting to look at and coming out of view come on. Bear with me. Youre looking at a Home Equity Loan hand Mortgage Loans and how much people pay and they are starting to look lock in, and im saying this is such a negative story is, and this is all that goes down right. Holy cow. That tells you a lot. Thats the story, and the stock has gone from 50 to 55 and only down this much, into the mid53 range that. Tells you alo about whats going on. Not like people pulled a lot of money out people just said okay, i got crosssold. Lets not get out of conversation without pointing out jorg answer, 97, well on its way. Thats right, triple digits. Hand how about bank of america today. Bank of america, best quarter. I would have stock and calls, keep on loading them. I just want to be sure. From the call of the day, to the worst call of the day. This may be the worst call of all time i have no idea jim, what do you think happens in the Patriots Jets game they played great. Two things that it could have been down with the one or could have been a touchdown how did it become a fumble and then the ball i mean, this is was biggest steal this game, it should be redone. We should get a replay. They did give up a 14point lead, come on. Im a jets fan. I was there. Thats why ratings are down. One more reason on top of many others. I wish i knew what mike thought. Hand not to mention more potential pr problems. Former 49ers problem Colin Kaepernick filing a grievance against the nfl alleging the teams colluded in not signing him following his decision to kneel during the National Anthem in 2016. Were joined by Mike Francesa on the phone. Mike, you there . I am. I do want to talk about the business fallout to the league because of the kaepernick thing but i gather your radio showers, i hope you have extra time devoted to what were calling the worst call of the day in the jets patriots game. It was a very up popular one. I cant tell if it was a good call because if the ball is not in possession when it hit the pilon it is a touchback. They called it a touchdown and to review it when we cant see that its possession the problem with getting into instant replay the slow mo cameras are changing so many calls, youre seeing it in baseball. Seeing it it they are saying they see the ball move. We cant see the ball move so its going to be a hard thing to legislate from that standpoint and instant replay, they will have to come to more definable terms because the level of slow m ho they can use. They see things we dont even see on television. Like i said, i know thats going to take day lost your time today, but i guess more serious issues the nfl was hoping to sort of move on from this this whole anthem deal, and now they have a grievance by kaepernick to deal with how do you think this plays out, and how difficult do you think its going to be for kaepernick and his folks to prove this . I think thats going to be very difficult to prove, but i think the timing is no coincidence. Number up, the nfl is meeting this week, and the owners have moved to a position now that they feel the anthem protests are killing their business, so they want to make a change, and they are going to try to get the players that can see that the get off the anthem tell us what you want tell us how we can help in moving the conversation forward, but get away from the anthem because its killing our business, and its killing their ratings. Its killing them in the stadiums the backlash has been so enormous that the owners are going to meet and the first order of business is to get away from this national an hem protest at any price, so what the price will be, i dont know. Now here comes kaepernick knowing that that is going to happen this week hes back in the news now, and theres also a lot of ramifications here he files a grievance inside the collective Bargaining Agreement. If he ever wins, he can strike down the entire collective Bargaining Agreement by that judgment, so the ramifications of this could be enormous. They dont want to even deal with that. He hires mark geragos to represent him. Its going to be very hard to win. He waited for a team where it was a team that played with a style that he was very much part of so he could fill in for mariota because they are the same style of quarterback. He went and signed a bad guy, a real bad player in weeden which helps his case its about the best scenario that he can have, but i still think its almost impossible to prove that he was in any way that there was in any collusion, so from that point i dont think hell win but i think he could get a settlement the other part of this is hell never play in the league again because now that he went after of the league this way, i cant see an owner giving him a job under any circumstances. They might pay him to go away, but hes not going to get another job. Jim cramer is here with us. He has something for you. A great honor that you called on the show. Jim, i know you want to talk about the eagles but dont bore me with the eagles im not going to do that. I wanted to get your feel about why constellation brands, pepsico, dominos, on last week, they still feel that the best bang for their advertising buck is the nfl will that ever change . No, it wont. Remember this. The nfl is still hundreds of Percentage Points ahead of every other league and every other property the nfl is the number one television property in the world by such a wide margin because it is, first of all, its live action, and its unscripted live action, and that is the number one form of content over any other kind of content, so its the rarest form of content, so sports as a content is never going to be cheap. Its always going to be expensive, and its always going to be exclusive, but the nfl is so used to being so far ahead of everybody and basically just deciding to hit numbers that are so outrageous that when they see any fallback in their business and they are finally seeing a fallback in their ratings, and they are getting complaints by the thousands at every stadium and letters from their fan base, they know they have to move on this as it has become a very unpopular stance, and theres no win on either side they have to convince the players that they are not winning with their stance. The owners know they are not winning with their stance. They want this protest to go away, but dont ever forget the fact that the nfl is still light years ahead of everybody else in terms of how important they are as a property. They are still worth a fortune. Yeah. Indeed mike, thanks for calling in. We appreciate it my pleasure. Well see you soon sitting here with us look forward to that. Im looking forward to it thanks very much. Mike francesa, wfan calling in lets move nelson peltzs battle for a board seat at p g is still too close to call. Its now in whats known as the snake pit stage where each contested proxy vote is being investigated the fight itself bring on what yale school of managements Jeffrey Sonnenfeld calls a sea change in activism hes live with us in new haven jeffrey, welcome back. Thanks for having me. Whats a sea ching in this peltz Procter Gamble fight i think what were seeing its inspiring such a number of boards such as at adp, athena health, to have sock backbone and to stand up against the assault of activists when its not justified. There are times where, of course, they make an awful lot of sense, but whats happened now is weve seen a huge jump in the number ofthese activist campaigns, and and its hard to see whats justified in the oh, so troubling years, you know, the mid2010s that suddenly were seeing this jump. Weve seen a 40 increase in activist campaigns, and roughly 50 of them get settled before we actually have the proxy vote. When the boards battle it out to the proxy vote, scott, the management tends to prevail. Last year 2016, of the 37 campaigns that went to a vote, management won 27 of them, but they tend to exit capitulate too soon i thought dupont was a big mistake. Two bad quarters and the place is dismembered and i know todays issue is about proctor and gamble where they did need to make this some changes and i think there are some majors changes afoot there 37. You say you on hope this will be a harbinger of mores losses and of mr. Pelts oig, hes not going away because he has the patience of hum belt still skin. He is given to tantrums over losing and he wont be happy about this these are strong words, jeff he has i recall didnt have a tantrum as you would describe it about dupont he didnt have a tantrum about pepsi. In fact has pretty Good Relationship given all that happened there so this sounds especially personal well, when hes challenged, he got quite personal challenged on rational grounds looking at the performance. And asking issues about their own performance. They have dramatically underperformed the s p you take a look at research that fortune did for the prior eight years is that only in two years did they beat the did these activist funds beat the s p. In fact the target firms generally outperform the performance of these activists themselves but we usually put all of our attention on the activists on the target firms and not on you how the activists are performing im glad we went there. And pardon me for for entinterrg but first of all the average holding time since you take on this whole notion of short termism, and this is according to 13 d monitor, not according to nelson peltz or anybody involved 44 months is the average holding time for the funds returns from the actual time that they their costs since buying the stock at their cost, their average return 61 you could go down the list whether its cisco, pent air, i think ger sole and, their well, since you if you want 85, 82, 74, 28, 132 if you want to go down that list, Andrew Ross Sorkin had a piece in the times taking a look at two years of performance. Through this whole period of time, they were underperforming by the end of that two year period of their own holdings and you remember at the time we looked alwat dupont, nobody was taking a look at the continues of their underperformance. People make a big deal about heinz when they never got the margins that they said they would get. And kemchura, throw they loadedp with so much debt, they dove it drove it into bankruptcy if this was any other director, they voonts hahavent supportedn of a track record. Im on the board of the National Council on aging i saw bob dylan in concert and i saw paul mccarts any ccartney it i dont know what their age limits are,but why should it b lifted uniquely for this man why should he be able to go above the New York Stock Exchange limits on numbers of boards in which you can sit . And in fact if he wants a seat, why didnt he buy enough stake if he wants to be one of is 1 1 people, then he has to have but these are huge companies. Why he has 1 how does 1 give you why should the amount of stock one owns has anything do with whether they have a good idea or not . If you have a goodidea, publish it, we can hear him. You dont have to sit on the board like a dripping faucet for the idea to be heard i think his idea has been broadcast pretty loudly. He can continue to put them out there. There is no secret to his ideas. Is there some reason he can only whisper to a fellow director let him continue to say it in the media. But you dont have to have a disproportionate representation if you have only 1 or 1. 5 ownership, how do you pretends its 9 . And hes not the only activist who does that. Sometimes they have 2 3 or 3 . He wanted a seat. What is so bad about putting nelson hes not asking for 50 people on the board. What is so bad about having one man with the name of nelson peltz on the board earn is through the vote which he apparently is not getting. Or at least buy enough shares. He didnt have the representation to claim that some somehow he is justified more and what does that one seat do what it does, you have a dripping faucet. The management, time, attention, distraction of someone who is on there keeps hammering away, it can become quite dysfunctional look at his past performance tell me where is that argument any one is reason enough for i would think an investor to ask a question where is the good idea coming from here . I dont know i dont see it i think its a shame what happened to so many of these we have to go okay. My apologies, but we have to go appreciate it just a little that nasty. Made a lot of money on wendys, heinz. There was a weighting that well exceeded all the other weightings to try to make it look bad which was not accurate i think. But geez, ive known jeff since he was five. We were five and at a certain point you have to say hey, i got to be nicer. And this is from me. Im saying he has to be nicer. Why is the conversation about nelson peltzs track record . Yeah, unilever would have told it was i have the numbers from 13 d that i got today in anticipation of doing this segment. And as i said, the return in Cisco Corporation which is not an exit is 31 i thi inger sole and is 65 family dollar, lake mason, dr. Pepper, wendys, twice, tiffany, heinz. Not saying these are barn burners. Tiffanys down heinz is flat. But i gave you eight other ones. I think that long term that income hasnt been great at proctor. They could have picked any of those three men that i mentioned. Instead they picked mcdonald he leaves, they should could have i dont know to me it adds confidence when you know that nelson peltz has stepped in there i wish he had gotten on the board of ge. If garden had been on the board they needed to accelerate whaefrt heck they were doing at ge is this a sea change, do you agree . No, not at all. I think ackman is asking for too much, but this is one of the largest countries in the world how is it sea change 44 months average holding time there were a lot of things about nelson that i didnt think were accurate as they could have been do you disagree . I just dont know we both like proctor. And i think dave taylor has done a really good job at restructuring the company. I just dont know how much more juice there is in this particular stock in terms of lowering the costs, streamlining it even more i think that they need to work on distribution. I think they need to fix china ic they nei think they need a lf other places to fix and thats not exactly what peltz was talking about. The idea of getting the smauld brasmal brands and building them up i dont know i just think that the judgier stuff about how the i think there is mischaracterizations of nelson that you correctly nailed that is not a Short Holding period, 44 months. No. And those are very good stocks 44 months is the average holding time for all of his 13 depositions. Some people have different definitions of the definition of long term has shrunk down from what it was. We have 15 seconds. To what, to leave paydirt raytheon, its going higher jpmorgan is still cheaper than bank of America Emerson great stuff thanks for being here. Power lunch starts now welcome to power lunch. Here is what is on the menu. President trump lunching right now with the veep and the Senate Majority leader Mitch Mcconnell with whom he has had some collisions let us put it mildly. The president sounding off today on soaring drug prices, the iran deal and more. A live report from d. C. Is minutes away major averages breaking records again. 23,000 in the crosshairs for the dow, this on a day when apple gets another big bullish call. Where to put your money to work in this seemingl
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