Fund strat energy, industrials once again leading, less than 20 points away from dow 25,500 tom, you just raised your yearending s p target to 3,025. How did you get there . Well, its just a simple matter of e growing 13 and some expansion gets you to 3,025. So a 10 upside to the market do you think its high enough . You know, our technician was thinking about how he thinks the base case is 3,000 so the s p could do something several hundred points higher than that. I think 3,000 is a good base case. So weiss, weve gotten buffett talking about the benefits of the tax plan seemed to be very positive on stocks last week it was tepper, the other day rosenstein saying hes more invested than hes been in a long time. Are we getting this right . Are we bullish enough to match what these other investors are seemingly thinking i think we are bullish enough, but theres that haunting feeling that weve seen this before and it doesnt usually end well however, then you go back to what are the fundamentals driving it you talk about 13 growth in earnings we havent seen that in maybe forever. So i think the fundamentals are in place to take the market higher, but i also think some of the valuation that we see are ludicrous. Caterpillar. Now, you talk about the growth, but caterpillar right now, do you really want to pay for it . Well talk about netflix in the blitz. Barclay is recommending it now, i dont know on what metrics i think were getting a little head of ourselves. On some its tougher to find value which is why i believe if you want to play some of the etfs you dont have to take that single stock risk. If they disappoint, there is no parachute or resting place below. You know what stock almost epitomizes this market and where we are now, its one we dont talk about all that often and its Delta Airlines. You were fairly negative on the airlines last week. Yeah, missed it. And delta comes out and raises their outlook and the wall street journal has a story on how the airlines are a prime beneficiary, if not the biggest from the tax plan. Were already getting a view on what the tax plan means. People are underestimating what its going to do to earnings. So i did buy delta. I sold united, had a great trade in it, but of course left a lot on the table, so i sold it about 68 the issue with the airlines is that theyre not really talking about fuel now, delta bought a refinery not that long ago, so theyre somewhat hedged. American doesnt hedge so you have to be very, very careful of that because they just dont look its like the government with energy and food. Its the same thing with the airlines right now if your income is going to be taxed overwhelmingly domestically and youre going to go from 35 to 21 its going to really help your bottom line i agree with weiss in terms of the oil, but i think the offset is that capacity is so full right now and you get any increase in price, business demand, consumer demand are all high the one thing people really dont talk about, a lot of demand destruction happened when oil was down at 40, 50 because people werent really flying, worried about what was going to happen in the Global Economy this is going to push the Business Class and first class seats pricing even higher. I use this an example not specifically to get into a conversation about the airlines themselves, but an overall sentiment view that im not sure people are taking into full account, rob, the jolt, the energy boost if you will, that this tax plan is going to give to corporate earnings. I think earnings momentum is the fundamental that supports all of us being in the same consensus. Thats the big fear that everybody has. Its the duration of this economic expansion, its the duration of this bull market run. And when you look at the central tenets of what might cause a pullback, most of them dont exist, other than that geopolitical risk that might happen and markets consistently climb walls of worry im happy to be in the consensus so long as the earnings support it. If you had the goal posts, so to speak, narrowing why is he looking at me the tax plan changed the goal posts. It moved the goal posts on the market and it went from maybe closing down the bull market, now its like this. Yeah. A field goal is much easier to make. Im going to be on the comments on the Delta Airlines ceo when he came out and said 800 million in impact we see from taxes right now thats about 200 million more than most people were factoring in at that point number two, he said corporate spending, which you talked about first class, Business Class, things like that, judge. He says the highest in years theyre projecting that to be the highest in years thats over at delta then you look at ual for steve or me over at american, and you see that, you know, i think that youre going to get this impact. Its a very of does one of them break ranks and not hike rates along with seat prices along with the jump that weve seen in energy this year if one of them does that, southwest is the usual if youre valuation sensitive, youre talking about stocks that are ten times earnings delta has a Balance Sheet thats Investment Grade with a 2 defensive den dividend yield. Keep in mind, they have continued to add capacity over the last number of years and they always say more Efficient Capacity too, though. No, no, no. Yes, yes, yes jon, thats wrong. The new boeing and new airbuses are more efficient than the old ones, right . Thats not the point. The point is they added more seats and thats hurt earnings over the past few years. I think weiss raises a good point not so dramatically about the airlines themselves but the valuations ge is up yet again today, boeing is up again today. Caterpillar is up again today. Are these stocks getting a little too ahead of themselves, josh, or is this just right and not even as good as it can possibly get just given where we think we are with earnings and rates, infrastructure and other things that are being tossed around i mean, look, you can find stocks that have gotten ahead of themselves, sure, and some big ones and very popular ones and thats by design the way people invest these days, they shovel money into indexes that feed that beast the biggest stocks get bigger. That phenomenon has been present in this market for at least five years and maybe getting exacerbated this year. You actually saw another record being broken in the first seven days of this year, the first week of this year. Etf flows way outdid what they did in the first week of last year which is a record so i wouldnt count on that going away at this point bigger picture, scott, yes, you have valuation issues but a lot is caused by earnings estimates revooised higher due to the tax cut. When you look at whats leading the market, its hard to be upset about it youre seeing leadership in energy an incredible start to the year for a sector that a lot of people feel is a highly important signal about the overall economy, and then you look at transports also leading. Financials up 3 this week this is what people have been waiting to see they got bored an thats not whats been going on the last few months. Is the market rich to you, tom . Buffett says no, tepper says no, others say no. If you look at the earnings projections visavis where rates are, global synchronized recovery i think pes are definitely expanding. And we talk about this look, i think it has a lot to do with demographics. When the boomers started making their money in 82 and that peaked in 99, you saw the s p rerate huge the millenials, which is almost 30 bigger than the boomers, are just starting their prime income years. So thats going to be runway until 2036 so i think pe expansion plus them buying houses and cars through the next decade are why well see faster growth and higher pe. Do you still like industrials . Yes, we upgraded those in december so our theme this year is icrap. Last year we liked f. A. N. G. And c. R. A. P. And that outperformed by 538 basis points. We took f. A. N. G. To neutral and added industrials so its i. C. R. A. P. So youre still antif. A. N. G. . No, we liked it last year but downgraded it this year to neutral because i think if Interest Rates are rising, then high pe stocks dont do as well. How are you going to have this recovery all around the world, earnings are going to go up the market is seems like it wants to go up and youre telling me that all thats going to happen and f. A. N. G. Is not going to participate in that. F. A. N. G. Can grow earnings 25 or so but the pe could derate but industrials benefit from a boost in cap ex and Energy Materials are hugely sensitive to inflation the financials should do really well and cable and media and telecom do well with block chain. So its entirely possible because theres an idea out there that a lot of people have which is that when we had a slowgrowing economy, people overpaid and flocked to the relatively few companies that had secular growth and thats the f. A. N. G. Names quite frankly. To your point but to your point, you could and i hope you do because that means fundamentals would start to take over and it would be a more fundamentally oriented market. But what josh talked about i understand is important is the structural nature with which people invest today. They invest using etfs and by renting beta you have this situation where it pumps up things that shouldnt get pumped up and the fundamentals dont matter as much when you get into a market thats a little more rocky theres a little more to worry about and fundamentals matter. Id love to hear your take on this so we know markets are forwardlooking and we know that we are now looking forward to the tax cuts hitting Companies Bottom lines and celebrating those Earnings Reports when they hopefully exceed what earlier expectations were. But the market being forwardlooking is very much what have you done for me lately and comps next year, theres not going to be another tax cut. So what are we to say about generational highs in multiples given that youve got this onetime event it should be beneficial for the next four quarters but then what do we think about Going Forward and how soon to markets start to discount issues with 2019 comps, or are we way ahead of having to worry about that i think tax cuts are just a level set. Its raising earnings but not boosting forward growth. I think that the forward growth story, though, is housing could hit 2. 5 million starts because of millenials starting to form households now and auto sales will be strong, so its a nominal gdp story. So i think you want to be betting on cyclical growth and not betting on the pes i think its more of an eps story in the next ten years. Tom, thanks for coming out here tom lee, fundstrata. We are ten points or so away from 25,500. You have mostly starts and then maybe you have a fit you take a day off and weve had the first down day of 2018 yesterday. I dont know how we got through that. Here we are right back, better than 100 points on the dow. Lets not mistake that. When youre talking about exceeding were in a momentum market, so the toughest things is what is fundamentally driven, and there are plenty of fundamentals to support the Market Driving higher and what is momentum driven i think thats a difficult equation were not going to know that answer hopefully for a year or two years. But for such a long time, people dismissed this rally in some regards because they said it wasnt fundamentally driven, it was all driven on the sugar high of Central Banks, the fed and others now that you have a tax cut and you may youre obviously going to lose a little bit of the sugar from Central Banks in a slow drip youll lose it. But thats what drives fundamentals those low rates. Right but now you have real fundamentals of real expanding earnings for the first time in a long while. Exactly those people were dead wrong, b, disastrous for their clients and anyone else that paid attention to them. They seem to forget the fact that the last two years of the 82 to 2000 bull market greenspan took rates down to effectively nothing in 1998 because of the currency crisis the rally in the last decade, greenspan took rates down in 2003 and left them there they were about 1 for almost two years. So its not like the fed hasnt shown a benefit to companies before and this particular recovery is the first time we had activist Monetary Policy its totally a lie that this is anything different than prior. But you have it globally where you didnt have it globally before. I recall Central Banks reacting in 1998 around the world. They did, right to the crisis but not where it is negative rates. Agree that qe agree that qe took it to the next step, totally agree. So the other Central Banks have pumped in, since we started our normalization reducing qe, trillion and a half. Right theres still massive expansion in the Balance Sheet. Lets turn our attention to the financials, bank stocks once again on fire. The question is will tomorrows big Earnings Reports and the move in Interest Rates keep that sizzle going wilfred frost covers the banks for ugs as and is kind enough t join us. Bank stocks themselves have gotten a jump start. They have picked up because of rates have gone up. As we look at these earnings, i think we could be in a position where the numbers themself for the past quarter actually disappointing, possibly quite significantly, but the guidance is very bullish. This is one instance of who cares what happened in the past, i want to know whats happening in the next six months ahead. And tax reform is the big swing factor because there are these big oneoff writedowns thats coming out in this quarters numbers versus the guidance Going Forward will be really crucial, again, the swing factor being tax form, whats their effective tax rates and how much will it benefit them. Didnt they also guide to lower trading revenues also . So they plant that seed of disappointment in there. The trade revenue could be fractionally worse than expected the consensus is down about 16 but most of the u. S. Banks were guiding either late november or early december since then, Deutsche Bank last friday guided down 22. Now is that a Deutsche Bank itself issue or was december particularly weak, in which case we could miss further than the guided 16 . I think the market will overlook that. Jpmorgan will look and say what are your customers saying . Are they more active in m a or lending . If your rates are going up, youre going to make more money too so i think that will get discounted, plus your tax rates globally you can see banks, multiples actually, if youre going to look at multiple expansion, theres a sector in Financial Services thats below the market thats where you could see the growth coming from, especially to drive this market. In terms of what you say about the clients, agree, absolutely crucial slightly under the radar was loan growth. The second half of the year it really slowed. If we look at loan growth overall, it gained so much in 2016, up 9 year on year it could be around 1 or 2 . Commercial industrial loan growth is the one area the ceos have been saying once it has passed, thats when it picks up. Do you remember an earnings season where the actual reported numbers could potentially mean less to investors than they do this reporting period . Simply because its about the guidance the tax plan happened. We all know now its about what the boost is going to be from that all right. So the past three months, whatever listen, people ignore the tailwinds for a long time. Last year the financials really did not participate till midway through the year when you saw the rotation in the sector we knew there was going to be regulatory reform. We thought there was going to be higher rates and you saw nothing. Now we know theres going to be a tax plan we know the Economic Impact of that tax plan. What is leverage to the economy perhaps more than anything, leverage to the consumer, leverage to the business, it is the banks, the more domestically oriented banks. So youve got jp and wells tomorrow what do you think well hear from jamie and the wells deal . Well, hes been the main man, jamie dimon, in terms of talking up tax reform so its going to be really interesting to hear how much that will deliver Going Forward. Wells fargo, the crucial thing for them this year is efficiency rates. The ratio of revenue to costs. They havent been performing october costs. We could get a big announcement from tim sloan on this because in early december he sort of suggests we are going to really pick up a target for cost reduction, which is a big area they missed on last year so well look out for that to the two of them. You remember when we were saying jpmorgan could go above 100, its primed to go through 100, its now at 110 how do you view jpmorgan theyre the bellwether for the group because of jamie dimon. Hes the most visible one out there. We dont see moynihan much, we dont see citi at all. I own citi i wouldnt say i doubled down, but im also short the 20year and im short the midend of the curve, the seven to tenyear so thats doubling down. Im in jpmorgan and this is one of the most flawless weekly chart, one of the most flawless charts in the entire market, banks or otherwise the problem is, everyone agrees on jpmorgan and, you know, this is now a stock thats trading 18 above its 200day moving average. Historically investors piling in at 20 above a 200day moving average typically arent rewa d rewarded in this sector. Its not a biotech, its not a chip company, so i would actually if im not in it, and im not selling it, if i did not own it, scott, to answer your question, i would probably let the Earnings Report come and go and maybe do something in the wake of that if they are not sufficiently enthusiastic on the Conference Call maybe id be buying then. I bought jpmorgan today upside call spreads. Theyre buying all the way up to the 120 and 125 strikes. Not saying it gets there on this report but i hadnt been in it since 103. I got back in today. Im in wells fargo and ive said that for months now. That stock continues to work and today i also added bank of america because of big upside call buying. Bank of america, despite its outstanding performance last year, was the outperformer jpmorgan is still the most premiumly priced stock its 1. 9 times book. If you look at the big six banks as a whole, only two of them are trading below their tenyear average price to book. And that ability for wells fargo to turn around, particularly on simple measures, when we talk about rates going up, theyre geared to that possible cost cutting, theyre geared to that thats why the analyst has put that on his conviction list buy. Goldman sachs and wells fargo are only up about 6 . Dont discount the regionals. Iusg, the tax and they have had a nice move this week. They have and that will continue because the tax plan is much more beneficial for domestically focused companies, particularly the small and midcap everyone i talk to that owns a mediumsize business is putting more money into it so theyll go to the regional banks also why, if i say okay, over the last three months the banks have gotten this jump start and a lot of it is more recently jpm is up 13 as is wells, bank of america is up 18. Citi is only open 1. Whats going on . Citi is a fascinating one because middle of the summer last year they did their big announcement and the stock started taking off, off the back of that. This was the big turnaround that finally things are coming together then the following quarter they slightly missed that and that spooked a couple of people saying, gosh, they have just given guidance and slightly missed it so they need to put that recent plan back into action you talk about valuations, two are below their tenyear price average. Citi is bang on its tenyear average so has some room to perform in that sense one it proves that the plan is achie achievab achievable. The thing thats underlying all of this is consolidation banks can actually acquire each other. We havent seen that yet but once you start seeing it in some of the small regional banks, you could see multiples again expand. Will they do that versus buying back their own stock . Isnt that more risky for management i think if you look at now how banks can grow and cut costs and efficiency, youll have them doing that the second one we havent talked about is Asset Management firms. So talk like a schwab or morgan stanley. Youve had a nice tailwind in the last 12 months of asset growth going up. Thee stocks have moved but havent moved like they really could, especially when they focus on their products. Good stuff. Hey, thanks, man, for being here youre a good man for sticking around for us. Heres what else is coming up on the Halftime Report. Oil soaring. One wall street firm says it knows the stock that will benefit the most thats the call of the day plus, bill actmans big move, changing some of these hedge fund fees. The Halftime Report with scott wapner and traders is back in two minutes. Whats team spirit worth . cheers whats it worth to talk to your mom . Whats the value of a walk in the woods . The value of capital is to create, not just wealth, but things that matter. Morgan stanley you or joints. Something for your heart. But do you take something for your brain. With an ingredient originally found in jellyfish, prevagen is the number one selling brainhealth supplement in drug stores nationwide. Prevagen. The name to remember. Were back on the Halftime Report. Theres chevron today. Bmo upgraded that stock to outperform its our call of the day i guess this comes as Oil Continues to move higher wti is above 64. You talk about guidance for the banks Going Forward, forgetting about the past. Look at energy look at where crude pricing is so they should have some of the same dialogue going on look at the future, look at where prices are, look at our leverage and where weve hedged. So momentum should keep going here. Their big exposure is why this is such a great play too. Obviously up in willston, north dakota, its pretty cold right now. Permean is not having any impact really of pulling this out of the shale down there the fact that the prices are moving up, i think that is one of the big reasons down here they also cited 7 impact for the tax cuts and jobs act. If you look at the performance of crude oil, the outperformance has been almost 21. Its been an unbelievable run for the commodity. The stocks have not done nearly as well, which could change. The other thing, its so fascinating. I remember on this show talking about chevron being in a position where they had to start selling assets and is the dividend safe. Now were talking about literally, it could only have been two years ago, i probably had the same amount of hair, now were talking about a company it was less than two years. Less than two years so now we were talking about these Big Oil Companies cutting their dividends. Theyre saying that chevron could generate 7 billion in additional cash flow after, after paying one of the highest dividends in the s p 500 after. Its just so incredible how fast the turnaround. So anyone that says, oh, the integrateds arent that levered to the price of oil. Lol, they are totally levered to the price of oil look at this turnaround. Who was it that bought conoco, was it pete, doc, after they cut the defensiividendividd what about you at this point. Pete has been ahead of me on it, so god bless you, pete. Pete is here, hes with us. You were about to steal his thunder. Oil Services Look at that. Drip and gush. Let me cut you off real quick. Dow jones industrial average is above 25,500 for the First Time Ever s p is another record high and really across the board, whether its the transports, the industrials. Pete, its good to have you. Sorry, i didnt realize you were still with us. Yeah, scott. Let me get your comment on this just where we currently sit. Again, another new record high for stocks 25,506 is where the dow is. Yeah, pretty incredible, scott. Its a combination of so many things im sure the guys on the desk would agree with this. A combination of tax reform, was it priced in, wasnt it . Obviously much of it wasnt priced in in my opinion, still isnt. Weve seen a lot of these revisions since we started the first of the year, revisions to earnings because of that then all of a sudden you start to kick around infrastructure. Weve seen the big push in energy obviously the market continues this rotational pattern which has been far more healthy, scott, as well we dont want to have f. A. N. G. Leading the markets, we want a much broader leadership role from everybody, different sectors. I think thats really the positives that were seeing right now and these financials i know you were talking about jpmorgan and bank of america and some of the underperformance of citi, i think some of those underperformers still have plenty of upside again, we talked about it with wells fargo. Nobody loved it. You had to like it because of the fact that i think a lot of what was in the news was already priced into the stock, so the upside was there thats actually turned out and now all of a sudden were finding people coming out and upgrading that stock, which is interesting to me. Now the stock is starting to get back to where its normal valuation levels are so, you know, i think its a very strong market and i think youve got to be very, very selective every single day. Was i right about you and c. O. P. And conoco . You are right about that one. That was fortunate obviously everybody had to react in a different way and some of those guys wanted to hold on to that dividend. When you see the performance of conoco, you can understand why they made the right decision doesnt mean at some point in time if the cash flows are right, and i heard josh talking about some incredible cash flow numbers, i think some of those numbers if they are coming back, conoco can start feeding back into that dividend at some point in time. Remember it was i think it was jeff curry who sat with us and it was many, many months ago at this point who said that the commodities super cycle wasnt over, it had just entered a different phase. Now you have gundlock talking about commodities being a place, josh mentioning that as a place you want to be do you agree with this trade we really like energy one of the things thats interesting about energy is the c catalyzers are different than other stocks a lot of stocks are benefitting from the tax plan. In energy youve had this enormous value opportunity with price to book trading at 40year lows you had nothing to unlock that value and you need something now youre seeing Energy Prices start to creep higher. The catalyzer is because demand is outstripping supply simple theres other ways to play energy theyre leveraged to infrastructure and whatnot, but heres a sector that has a different set of drivers that i would say is really healthy from a market perspective the one downside i would look here, not to throw water on all this, is we know shale comes back at these prices and how fast production comes back and then what that does to supply, what weve always talk about, you can abandon energy depends on if you can export it. And russian elections in march. Thats one of the reasons that i think they keep production minimized until then and that might hit in march. Did these people in oklahoma learn anything well finding out stay tuned that adds to the volatility of the sector. The other part of this is the dollar and if you do believe that the dollar will be weaker over a longer period than maybe people are expecting, that plays right into the commodities trades. You look at inflation and obviously inflation is being seen in the commodities. The faster that rises, well see inflation feed into cpi, ppi but weve got a while, its priced so low. Yeah, we havent seen it yet. Well, your ten year is at 25, so could be an indicator. Up next well get an energy play well finding out how jon and pete are using unusual activity to trade that. First, though, a look at whats coming up on power lunch less than 30 minutes away hey there, thank you, scott. A lot of power lunch will be live from wenatchie, washington. 1800 servers here. Why are they all coming to the small down in Central Washington three hours east of seattle . Well explain coming up on power lunch and also talk earnings, markets and oil. Dont move, halftime is ckba right after this commercial. Power lunch starts at the top of the hour. What we do every night is like something out of a strange dream. Except that the next morning. It all makes sense. Fedex powers Global Commerce with vast, farreaching networks. Deep knowledge of industries. And, yes. Maybe a little magic. When it might be time to buy or sell . With fidelitys realtime analytics, youll get clear, actionable alerts about potential Investment Opportunities in real time. Fidelity. Open an account today. Welcome back, everybody. Im sue herera heres whats happening at this hour stunning new cell phone video reveals the critical situation that unfolded as a wall of mud headed towards a home in montecito, california. The family who decided not to evacuate were able to get to safety Santa Barbara county is now saying eight people, not 48, are missing from the mudslides it was a clerical error on that bigger number. An aero mexico plane nearly landed on the wrong runway at San Francisco airport yesterday. The pilot, per instructions from the traffic controllers, did pull up, circled around and landed safely, but it follows two similar incidents at the airport in just the last nine months according to u. S. News and World Report Software developers have the best job in america. They make a little more than 100,000 a year and are in high demand dentists, physician assistants, nurses and orthodontists round out the top five. A man in naples, florida, is lucky to be alive after being attacked by a bear walking his dog. He has significant cuts on his head and chest, receiving 41 stitches after a fourhour surgery. Thats the news update this hour scottie, ill send it back to you. Wow, a gasp from everybody on the desk here. And bears are not all that common in that neck of the woods. Where did you say, naples naples. Time for unusual activity. Doc, youre up first at the telestrator. What do you have for us . Got a twofer for you, judge. Kinder morgan, we talked about it when they slashed their dividend, as you recall, last year everybody said, well, thats when you have to sell. Thats when you had to buy this one has been running up its 19 now they come scrambling in and buy a bunch of calls today i bought those calls, probably be in them ten days. Second one, take a look at u. P. S. U. P. S. , big shipping play. Also with the higher fuel costs, u. P. S. Up 375 today, almost 3 they come in buying the upside 40 calls out there in i believe, april, judge i bought these as well and called it into a call spread ill be in that about two weeks to a month. Pete, what have you got for us today im taking a look back at the banks, scott about a week or so ago i was sitting in the same exact chair talking about the march 30 calls being very, very aggressively bought just a week ago. Now all of a sudden today again were seeing a roll up from january call options up to the march call options again, going out to march, 75,000 of these calls were purchased again today. So it looks like folks are taking some profits off the table, taking some of these began calls off the table, made a lot of money in those as the stock is now at fiveyear highs. They have done really, really well but they have got to stay in the trade any time we see folks making money on trades but still wanting to be involved, that tells me the stock will continue to go higher i would not be surprised if by the time we get towards march, we start to see bank of america somewhere in the 33, 34, maybe even pushing the 35 range. Im in these calls, im in the stock. I added to my call positions today. I like what im seeing going on in the financials right now. Yeah, well, youre going to get a real good look under the hood starting tomorrow jpmorgan and wells fargo doc, come on back. Coming up well do the trades on Xpo Logistics and the transports whatever y cl em ldohenextalth welcome back its time for the blitz. Xpo logistics hitting a new record high and it happens to be one of the top holdings. It has and its been a good stock, especially in the last three months this is a stock that potentially could be in play home depot and amazon looking to it, its a last mile delivery. Kb reports better than expected earnings. Up 11 . They should continue to go because most homes are going to be subject to the mortgage interest deductions. Doc, speexpedia . Our friends were positive on them going into the disaster now youve got an upgrade coming today right as the stock looks like its breaking out to the upside great move i like it. Pete, dollar tree initiated buy. Guggenheim, you own it. Yeah, its a growth story, its a turnaround story its the Family Dollar story as well that plays into this. Margin improvements, great cash flows. All of that puts them at a price target of 125. I was lucky to get in this name around 93 back in november i dont know if ill be able to hold it that long. It seems like its had a great run. I just wonder if its starting to plateau at this point. Its not luck, its talent, pete talent. Thanks, man another alltime high. Airlines are getting a boost from demand, great from a strong Global Economy and tighter trucking environment boosting rails, so i think that will continue in that subsector. Netflix, initiated overweight at barclays. 245 is the price target. Yeah, theyre not adding anything new to this story we dont already know multiple seasons for shows keep people continuing to pay people tend not to cancel once you get them but they are amping up in the superlatives department. I just want to read you the last sentence of the summary. In our opinion, in the next three to five years, netflix is likely to become the second biggest Media Company by revenue next only to disney. I mean the second biggest Media Company, this is a big deal. Youre holding that thing out to like the newsroom. 20 10 vision. I was doing that for dramatic flare. It was a little theatrical. Well be right back. Well see you soon, pete. All right, look forward to it. Well see you back here shortly. Coming up, bitcoin is lower on worries south korea could ban owl crypto currency trading. Well get the latest from the futures pits well do it next stocks are at the highs of the day. Dow jones industrial average above 25,520 nadia white the moment a fish is pulled out from the water, its a race against time. And keeping it in the right conditions is the best way to get that fish to your plate safely. dane chauvel sometimes the product arrives, and the cold chain has been interrupted, and we need to be able to identify where in the cold chain that occurred. tom villa we took our world class network, and we developed devices to track environmental conditions. This device allows people to understand whats happening with the location, but also if its too hot, if its too cold, if its been dropped. Its completely unique. dennis woloshuck if you have a sensor that can keep track of your product, it keeps everybody kind of honest that way. Who knew a tiny sensor could help keep the food chain safe . Welcome back to the Halftime Report. I am jackie deangelis. We are watching Bitcoin Futures sinking today. This following reports that south korea is preparing a crypto currency trading ban. Whats your outlook on the price action from here you know, jackie, it looks like the pressure is on it right now. Bitcoin couldnt hold the 16,000 level. Im sure the South Koreans want to regulate it a little bit more or guess a little piece of it. Weve regulate it more or get a piece of it. Bitcoin was 90 of the market at 2017 now only 36 of the market theres a lot of other cryptocurrencies investors are going into. All right your view and outlook on the levels the whole time weve been talking about it for the last six or seven weeks, weve outlined risks number one, regulation by government guess what government doesnt like decentralization of something theyve had centralized and went through there. Maybe more in the future technically looks weak might be a spot to get short in. Meantime today on the live show joined by rob raymond, rch energy, telling us why the recent oil rally is just getting started. Plus, bank of america, breaking it down all top of the hour on the futures now. Now back to the Halftime Report. Eet guy. Whats the hesitation . Eh, it just feels too complicated, you know . Well sure, at first, but jj can help you with that. Jj, will you break it down for this gentleman . Hey, ian. You know, at Td Ameritrade, we can walk you through your options trades step by step until youre comfortable. I could be up for that. Thats taking options trading from wall st. To main st. Hey guys, wanna play some pool . Eh, im not really a pool guy. Whats the hesitation . Its just complicated. Stepbystep options trading support from Td Ameritrade dynamic performance, so you can aggressive styling, so you can break away from everyone else. The bold lexus is. Experience amazing. Theres the market 25,516 for the dow jones average off its highs of the day fresh s p record high, though. Up more than 14 points 2,762. Nasdaq just about 7,200. Everything feels like its in the green today on the screen. Russell as well. Back after this. Back upon halftime. Lesley picker following money for us live in new york city whats going on . Right Pershing Square lower egg Management Fees by about 15 a discount for investors makes sense after three years in a row of losses, but thats not exactly what this is about this has to do with the settlement announced end of 2017 with allergans shareholders attempted acquiring it together, a plan some allergan shareholders hinted was against insider trading. That settlement amounted to almost 200 million. An expense that caused a dent to performance and expense limited partners paid for. Now Pershing Square views this as essentially a rebate to investors. It all comes down to Hedge Fund Accounting bear with me, guys Pershing Square made about 2. 2 billion in frost from its allergan trade in 2014 the last time lps were required to pay a performance fee, but the Incentive Fee was on a 2. 2 billion dollar base. Now with this large settlement, that profit is lower closer to about 2 billion meaning, lps essentially overpaid Incentive Fees in 2014. So as a way of compensating those lps, ackman decided to lower his Management Fee from about 1. 5 of assets to 1. 27 of assets this is the case for about eight quarters or two years and amounts to about a 32 expense for the firm now, keep in mind, Pershing Square hasnt been able to create any kind of rebate, per se, because the firm hasnt been profitable for three years. Thank you stay with us steve weiss . What do you think . Most firms cant survive three years of down numbers, particularly given what the markets done. Number one number two, theyre not going to pay an Incentive Fee until he recover the losses. Of course does it have more to do with performance or more to do, redemptions, or more to do with allergan performance. Frankly, its not attracting assets there hes got i think a threeyear lockup could he keep assets from leaving . No. Hes trying to build up goodwill to allow that to happen and some performance recovers it may happen tough to explain. If youre an institutional investor, tough to explain the only reason youre saying, youre not paying Incentive Fees until you cover your capital you cant go to your boss running pension money and say, hey, im putting money here down three years quick. You know him very, very well. The way he articulates the story and communicates with his investors, the way he understands his companies, you can convince people to stay through that, if they believe there is an outcome thats positive. Les, let you run. See you soon thanks for doing that on the program for us thanks, scott. And final trades in the time left josh brown, first . I want to mention mastercard. A sftock stock that makes fresh highs, i like the name. Jacobs engineering, buy it. And nrg bought it today. Delta. Keep on buying it. Both, buy them today. Thanks for being here scott, thank you very much im Tyler Mathisen here is what son the menu this day. Rally ho stocks surging to new highs as we kick off earnings season. Could this be a recordbreaking quarter for Corporate America . Wee debate that one. Call it tax law euphoria americas biggest employer raising wages. Walmart boosting hourly pay giving bonuses what was supposed to happen. Created new benefits how many more Companies May follow walmarts move . And bitcoin backlash cryptocurrencies