An end. The Investment Committee is ready to go. Halftime report starts right now. Welcome. Good to have you with us on this monday. Our Investment Committee at the table. The managing partner in houston, home of the astros. Im throwing you a Little Something there. And cnbcs jim cramer. Jim, you heard carl run down the list, 12 dow components. You want to tell us what you think is at stake this week . I think its an interesting week because there was a lot of pin action today. We had a couple of Companies Report very good numbers. Lets look at let me give you one that people should be talking about dov. These were very good numbers. We also had what i regard as being an important tell again. I wish stephanie were here. We both feel United Rentals is a terrific tell of the economy. It was very strong. I use those as the weakest part of the situation has been the industrials. Then you look at coke and pepsi co. You and i both know the ceo. That Company Reported a great quarter. They didnt do enough homework. What stock is leading this market its jp morgan. And jp morgan is perhaps the best leader you can have. Given what jim just laid out, you can easily make the case that earnings have been pretty good from some pretty important companies. Is that enough to carry you to get to these new highs less than a percent away on the s p and more importantly to go beyond that i think we are in trading rampgt it will remain until we get greater resolution on china or more positive movement. That could be at the g7. It could be the g20. It could be a tweet. It could be a statement by the chinese media. But thats what we need to see. Thats keeping the living market. What were seeing in earnings season is pretty much typical in other earnings season which is that they manage down during the earnings season. You see the same number of companies, not the same companies necessarily, but the same number of Companies Come in and beating the top line or bottom line. Thats fine. But weve also got the fed out there. I personally dont think the market if the fed does not go and i know the market expects them to, i dont think its i continue to lighten up my positions. I sold mastercard because i have visa. I didnt need to have so much. Visa is a pretty decent size position. Boeing has caused me some issues. I actually bought more boeing on friday when it was down about 14 bucks. I still think im okay. I heard your comments today on air. I agree with you completely. Boeing does report this week. Were going to do it a little bit later. Lets do it now. Im concerned about the report. Jim this morning said ive been had. Boeing wasnt a good actor, really important that they take action. Can you be a shareholder in boeing today not without action that distinguishes the fact that there is a past and a forward. And one of the things that i think made us feel comfort was we were told over and over again if the government would only let us tell our story and let us show what was going on inside, we would feel so much better. Well, the government showed us what was inside, and frankly it was much worse. So what you have to do is come up with a story line which says thats all the past. What matters, you have triple redund daens. This is ready to take off. Did we screw up . Yes. If there are lawyers that really control the narrative, then the board has to take action and say were going to override the lawyers. We will take the bullet. Maybe we have to spend billions to make up for what we did. Its important to go forward. The company is looking backward. This is a Great American company that is being let down by its own people. This is a brand and a company and a history and a story. Anyone at the World War Ii Museum in new orleans, the company that made the b29 that made my father live and not die in the 6th army was the boeing. The dow would be a better performer today if boeing wasnt having one of its worse days in an awfully long time. I think we have to look at we actually bought boeing earlier in the summer with clients with cover calls attached to it. We felt that this, too, shall pass. What was interesting for us when we decided to get out of the position is when garycalliy came on and said we thought this was going to be a nineweek event. This is now a ninemonth plus, plus, plus. We said as it says when the information changes, we change their minds. I think this is just a continued narrative that we dont have all the facts. I think as an investor, we didnt feel it was responsible. I want to go beyond can i disagree with that . On one hand, if youre saying that when you go to a stock under the premise or under the anticipate facts of x and they change, thats legitimate. I also believe that when you know the facts when you know all the facts when everything comes out, then its too late. The way i look at it is i have two companies in this business, air bus which is already under delivering and i have boeing. Boeing is not going out of business. I have to wait three months longer to own one of the greatest companies in the world or wait three months to realize my gains. I think from our standpoint, there are so many wonderful companies. We dont have to just own air bus or boeing. We can move on and buy apple or goldman or cisco. With us, though, we dont know all the information. When gary kelly is the number one purchasers of 737 and the 737 max, when he says he doesnt know, we have the humility to say if he doesnt know then how do we know i think it was ridiculous. I had no idea when i bought the stock. I knew there was a major cloud over it. It worked out well for quite some time. I have every confidence that it will continue to work out. For anybody to say i knew this would be back in line in three months is ludicrous. There is always another shoe to drop. This was a big shoe. The statement that came out today, it said that this test pilot sent the texts while the simulator was still being tested for it in 16. Its not dispositive of the situation. Lets move beyond it. I dont want to spend anymore time on the innards of whats going on with boeing. The points i think were made. You mentioned that you bought cisco. Of your entire list of stocks that you own, and you own a lot of very big names, apple, bank of america, bristol, cvs, delta, disney, goldman, microsoft, nvidia and recently added cisco. Why . I think what happened last quarter when they reported earnings, they have a great ceo. And time will tell. I felt he was somewhat overly negative and overly cautious. You know, he came out and said, you know, china is potentially not letting us bid for our services, and theyre going to be more nationalist approach. The stock was at 58 two months ago and now it is around 46. Now it is bouncing. We entered the position around 46. Its probably going to form a base here. I think when you have the old guard tech company thats pivoting from a hardware to a software, theyre getting to cyber security, love the management. Well be patient here and have an entry position into the stock. I totally agree. He is a devout fan of the atlanta falcons. Theyre struggling. I do think that theyre down 17 in three months, too. Exactly. Is cisco going to make the playoffs its not clear. I do think that chuck was overly negative. There are very few companies at a discount in technology with that kind of level of quality. I share not your optimism, but i share what we regard as a constructive situation. Im curious, how do you know when to trust what somebody says versus when you dont trust . You are trusting gary kelly, but youre not trusting the ceo of a company that you just bought. How do you make that determination . Thats why we have a stock market, first of all. You have all sorts of opinion and views. We were coming in with boeing and saying we think he has really good insights. So well just move on. I think with cisco, we think its a Great Company. I think he is a good, smart ceo. China is a really small part of their business. I think its an under valued stock. Its not binary between trust and not trust. This is art and science and we were weighing that we think cisco is a Great Company to own. Im trying to figure out what youre trying to get at with this. You bought the stock. She sold the stock. Whats the big deal . I dont understand. Agree with the same methodology that you use. Heres what im saying. Whats the problem with that . Ill answer if you let me. I mean, i dont know. Do you want nee to answer or not . Go. Based upon im throwing a flag. He doesnt know whats coming online, they sold the stock. There are probably other issues, too. What are you doing ordering a pizza i am checking in to see judge, youre losing control here. Can we come back for a second to something incredibly resilient . That is the market. We were talking so much about a 10year treasury yeerd and who knows where it is going to go . German 10 year is negative 34 basis points. There is a story being told right now. How about the value of the u. S. Dollar. The dollar is down two percent month to date. The stocks you are buying for the very first time in years is the financials. The morning of jp morgans report i bought more jp morgan. When was the last when was the last time 100 i will buy jp morgan. That report was fantastic. It was beautiful. Usbs report breaking out months ago. When was the last time we come on the show and can talk about financials up six percent . Morgan stanley. Bank of america is breaking out now. That was a fine quarter. Bank of america up six percent. Financials, small caps. I think also you see like everyone is so there is such an overwhelming pessimism in the market that everyone is focussed on what can go wrong. The reality is when you start thinking about what can go right, i think you hear what joe is talking about with jp morgan with the financials. Look at apple. How many people said apple was done with and not going to break out again . I dont want to mention tony because its not fair. But you just did. Did i im so sorry. My wife tells me i make those mistake all the time. We talk about the individual company performance. Were looking down the earnings list of who is reporting what next week. Does any of it matter . I saw a survey this morning from Global Fund Managers from bank of America Merrill lynch, and 40 of people that actually manage money, not just people with opinions, think that the trade war is now a permanent feature of the landscape, will not be resolved either this year or before the election. That is more than a third of people manager money not hung up on that issue. They might buy more aggressively. In general, that is becoming almost 50 of fund managers. I would bet by the end of the year saying it is the new normal. If we get a resolution, hooray. Ill change my mind. Lets focus on whats happening right now in price. I think thats the story. You dont think the comments were important on saturday. I dont follow him on tiktoks. You know who revealed that it was a chinese enterprise Mark Zuckerburg, four years ago. It was called musically. Who is this company that my daughter is spending all her time on the app . Chinese not russian. Thank god. Here is the big picture. S p 500, you have rates. Look at the 10year. 1. 74. A month ago it was 1. 5. Big, big difference. What joe said about the dollar also true. More record highs for the worlds biggest company. Apple. Look at nvidia. You got a breakout. It falls back. It retests the point of breakout and bounces up 2. 8 today. Small cap stocks were the fly in the ointment up 4. 5 in 7 trading sessions. Transports on a massive tear. Now the banks, joe is right. Im long jp morgan. Absolute wildebeest. When you have banks working, you have all these things happening, i know the rhetoric is negative, but price is not paying attention to those things. Price wants higher. Small caps working, transports working, banks working. These were the things that we said we needed. Now you have them. What are you going to tell me now, tough guy what dont you like . We cant move without the f. A. A. N. G. S. Not that important it turns out. How about that how about Software Stocks trading awful, but yet the market is moving. With right now right here trying to make a stand. It everyone was an expert on the relationship. Negative 55 basis points. Today its positive 13 basis points. You got the steepening in the yield curve that no one wa afraid of. Everything you just said paints a scenario. 60 of global stocks right now in the world index according to my friend. 60 of global stocks are now above their 200 day. In many large markets around the world that is inflecting. Its positively sloping. So were not just talking about dead cat bounces. When you have 60 of global stocks in a definitional uptrend combined with all of the other stuff i spewed out, all im saying is trust price more than you trust the next guys narrative at least for right now. So that means if boeing wasnt acting like a dog with flees, you would probably have a new dow high right now. So great scenario. Lets bring in Michael Santoli who is looking at the things that need to happen to carry us to new highs and beyond. I think you probably heard josh go on his riff. Do you add to that do you confirm where do you go . I would pick up right there and really just reframe it. Im pretty much in tune with the whole idea. I think if you really wanted to make an aggressively negative case, you have to say the credit markets are wrong. By the way, theyre very strong, very firm, they never panicked in august. Everyone is talking about the record level of corporate debt. Any of the credit market indicators, theyre very, very firm. You would also have to argue that the skeptical crowd psychology is somehow going to be right. So basically people were within one percent of an alltime high and seeing sentiment readings that suggest people are not positioned psych logically or with their portfolios for much good news for the rest of the year. You have the calendar. Its no magic. You cant rely on it. Its not the only thing you want to be trading off of. You have that turning into tail winds. Last year it didnt help you at all. By the way, last year, all we heard about was how it was a cant miss rally because you had the mid term elections and the market is always up after that and the Fourth Quarter is always up after a ten last year it didnt work. So i think all else being equal you have to ask is it going to fail two years in a row. All of that boiled down. I think you have to give the benefit of the doubt to those who say that market is well supported here obviously can work higher. Its not necessarily sputtering. Its been resilient by hovering in these levels. I think what everybody is saying is rather amazing that there can be so many people who are negative. Ill tell you who leads the negative people. The people who come on and talk macro. These are the people who told us to push even though we see so Many Companies are doing well. These are the people who have created a bearish sentiment. Im going to throw a real bomb here. Some of them are so antitrump they cant help themselves. And theyre throwing grenades all over the place. Because they cant bear to see anything happening positive to this man. I like to think i can separate the man from the policies. There are people everywhere whom i feel have a disposition in this election. I think it is coloring their thinking. I think they should rethink their policies of how they present their views and focus on the facts as articulated by you, as articulated by rick santelli. Y by Michael Santoli i thank you for not having any idjaueoiy Elizabeth Warren is now the front runner plus or minus the margin of error. Lets assume that this trend continues. There are areas of the market that in my view are already discounting not only that shes going to be the front runner, but that shes going to win. Lets talk about the health care sector. This is one of the only s p 500 group sectors where you have Earnings Growth because they dont need a great economy. They have 74 million aging american baby boomers. Thats even better. They are the second cheapest sector right now. Banks are the cheapest sector on the s p. Why is health care the second cheapest sector and one of the only sectors thats growing earnings on a secular basis . There are outstanding situations in the health care space. Look at the chart of bristolmyers looks ridiculous. Look at medtronnic. A stock we almost never talk about on the show with almost no fanfare. This stock has broken out, retested and wants the next leg higher. These are stocks that i think have been thrown out because of politics and they deserve a second look because theyre doing really, really well. Michael santoli, to get a last comment from you, its almost as if what josh just said and what jim just said, maybe you dont need much of the three things on your list or a lot of what josh said. Its about people realizing that things are actually good. Focus on whats good. Those things on my list are kind of the atmospheric conditions that allow for the positive things to come through. I do agree with that that essentially we weathered another one of these scares about growth, about the yield curve and all of that. From here on out, we have been prepared for worse and better will seem like an upside surprise. I dont think its a matter of catalyst. Its a matter of a lot of conditions working together. I think trade has been the huge mcguven for the market. You feel like its been the only story. Its been helping to build the wall of worry, creating and now maybe its just the way it is and the market and the economy have to adapt. You dont know what to believe when it comes to the trade stuff. Youve gotten false fits and starts on were close. We could have a deal. Things are going great. Thats been the narrative for more than one year. Thats why over the last week until i started cutting back positions like mastercard and got out of work or slack, my exposure was the highest. But i like to have cash because you get blips in the market. What were all saying here is nothing new. Markets go up 80, 85 of the time. However, they dont typically go up for 10 or 11 years in a row. To me joes point is the most salient point here which is that the market is taking its cue from credit. I dont mean credit in terms of corporate credit. We have seen a real backup in rates. The spread between the 10year has narrowed. Thats whats driving it. Thats what drove it with everybody talking about a recession. I also think that the overriding narrative is negative and bearish. I think those might be some of the loudest voices. You cant tell me that is overriding narrative when trading at new highs. Clearly the majority of people and commentators want to come on the desk here have targets higher than where we are. To say everybody is negative is folly. I think whats interesting about china and going back to your question about trade is when you look at markets in a trading range, apple is the center of china. Tim cook has threaded that needle between the leader of china and president trump. I think that when you look at apple breaking out, that should definitely give you good comfort about the market being able to potentially break out of the channel that weve been in for months. If you are concerned about the trade war, apple should be ground zero. Off 20 if the rhetoric is as bad as the reality. Boeing was never hit. 25 minutes of the most sophisticated thinking i have heard. Were happy to have you, man. Heres what else is coming up on Halftime Report. Apple shares surging 50 this year and Raymond James thinks the stock is near 20 upside from here. The desk debates the tech giant in our call of the day. Plus, we want to hear from you. Submit your questions by going to cnbc. Com halftime or tweet us. Well answer them straight ahead in ask hfte. Alim Halftime Report is back in two minutes. cos i know what it means to walk along the lonely street of dreams here i go again on my you realize your vows are a whitesnake song . I do. If you ride, you get it. Geico motorcycle. 15 minutes could save you 15 or more. Welcome back, everyone. Im sue herera. Heres whats happening at this hour. Drug distributors settle as Opening Statements were just about to begin in a federal lawsuit. The executives of Summit County leaving federal court in cleveland this morning. At the end of the day, this is about getting the resources to the people of our community that need the help and the settlement in this case is allowing us to be able to move forward rather than perhaps years and years of litigation and whatever it would take to get to where we are today. Canadians began voting to determine whether Prime MinisterJustin Trudeau will remain in power after two major scandals. Trudeau accompanied by his wife and children. His liberal party is in a tight race with the conservative party. Nearly 6,500 pounds of ready to eat turkey and sausage patties sold under the great value brand at walmart have been recalled. So check those freezers. That is the news update this hour. We appreciate it. Thank you. Apple hit agnew record highas Raymond James says theyre boosting to a street high of 280 based on strong iphone sales estimates. Its our call of the day. Is apple ahead of itself given the move that its had is this overly optimistic . I think there was a story that no one thought could happen which is the 11 turned out to be a far different camera and a far different battery life than people thought. In a good way in a very positive way. I got there at 8 30. They really couldnt take care of me until 9 30. Its just the lines for this i went there at night figuring it would be the easiest thing. My sources indicate that this phone is selling far better than people thought. And you thought that you had this luxury of waiting to 5 g. It turns out that you dont. I think that apple can tell a good near term story. I know a lot of people are skeptical about apple tv. They dont have anywhere near the programming of netflix. When you have the money that apple has, can you look at it statically. They can get the nfl and the s. E. C. And i just think that there is a short sidedness about what apple can do when it comes to entertainment. I dont think that really matters. I agree with you, but so far they havent gone at it as they should have perhaps. I think its ahead of itself, the stock based upon the sales of the 11. It doesnt matter, either. Im not selling anything. 5 g will be the biggest upgrade cycle in my view of any technology ever. So thats why im in it. If it comes down, i would love it to come down. I would buy it more. I think its a good thesis. Staying long. Im staying with it. I have argued that the reason to be in apple is because over the last ear, there really is nothing that stands out on a singular basis as being a fundamental catalyst. I respect what youre saying about the 11. Think of what this company has endured over the last 12 months. What phone do you have . I have the 10. I urge you to go tonight. Its open 24 hours. This is the remarkable thing about the iphone. You know me better than that. This is the remarkable thing. The remarkable thing about apple is the retention story. So we just did the software upgrade. So the compatible with the mac, frustrating for me. Yes. If you have an older mac, are you going to switch . No. I said were going to buy new backs. Were going to take our hardware and were going to make it compatible with whatever the new Software Apple is delivering. Who is we to the taranova we as well as all of those who are retaining you are sure changing in your family. Unbelievable. So the thing with apple that maybe sometimes people have been frustrated with is that they dont do big splashy deals. They did the beats deal and people screamed and yelled about it. This is a company that has so much money they dont know what to do with it. They pulled off this really stealth yjujitsu move with appl music. They killed itunes able to pull that off. They took the biggest Music Service on earth, cannibalized it with a subscription model away from purchasing songs. No one is saying anything and they did it. Think about how Many Companies have been able to take the version of something most popular and bury it for the new thing. Netflix comes to mind. Apple is very good at things that dont get attention. So with tv when you look at the lineup that netflix launched with, they have a handful of thin things they made themselves. It didnt matter what they started with. Its where they ultimately go. Could they buy cbs sure. Could they spend 10 billion without blinking they can do that, too. Rome wasnt built in a day. I wouldnt sleep on apples entertainment efforts. Its not sexy to slowly develop Something Like apple music into a global competitor, but they have done this time and again. I wouldnt want to be on the other side of that. Not bad for a ceo who is terrible and for a company that doesnt innovate. I didnt say terrible. I never said terrible. I said a terrible steward of capital sitting with money earning nothing when he could have bought netflix and other things. Belichick was a bad look how among rings hes got. Belichick is not an innovator. Belichick has made acquisitions. He just wins with what he has. You tell me where the innovation is. He gets the job done. What josh just said whats the innovation. Stocks up 50 something percent year to date. I have yet to see you want to walk around i walk around with these white things in your ears. At one point it was as if i were the village idiot. The new good . I like google glasses were embarrassing. Apple did it right. Whoever thought we could walk down the street nobody even cares. There is an innovation. Thats not innovative. Where is the innovation how about the watch. I love the watch. I love the watch. I love it. This is like maxwell smart. Its incredible. Next thing is a cone of silence and you wont care about it. The narrative is to own apple and not to trade it. You said that a million times. I think today for the people trying to trade it, you got moved out of that position because its moved above 230. So its like an investment. Its like this is an investing show. There are companies that you should have as a long Term Investment. Apple seems to be a long Term Investment and has been a good steward of clients capital. They havent optimized the balance on the return sheet. You made the key point. Maybe steve jobs would have been a horrible ceo in this moment because think about what he would have to do. Kowtow to both beijing and trump. Can you picture in a million years steve jobs threading the needle in the way tim cook has. He literally is in a position where chinese carriers are the life line for his business in the second biggest economy in the world and they manufacture a lot of the phones there. He has to live with that reality while simultaneously convincing mad dog trump that he will hire more people here. Hes done it incredibly well. Could you imagine steve jobs pulling that off i really cant. Maybe what was needed right now is not this beacon of innovation. Maybe its competence and logistical savvy and calmness. And that is what tim cook has brought to the table. Thats why he has added about 600 billion in market cap to the stock. Its not been perfect. No ceo is going to be perfect. Lets not forget. Im saying that. You have anileiated this guy for no reason whatsoever. I dont think there is no reason. When you are Mark Zuckerburg you by they bring buybacks and dividends. We are going to break now. We are going to go to break. We have to. Because its a big week for industrial earnings. The sector is up. The smart way to play the group is next in etf edge. Were back in two minutes. Now pr workflows in the cloud, huh . Mmhm. Your employees must love you. Thank you. Ah, you could say that. So how are things with you guys . Great. Thank you. Thank you, sir. Lunch next week . Terrific. Say hi to the team. Will do. Call my office, i will. Sounds good. Alrighty. Servicenow. Works for you. Thats what happens in golf nothiand in life. Ily. Im very fortunate i can lean on people, and that for me is what teamwork is all about. You cant do everything yourself. You need someone to guide you and help you make those tough decisions, thats Morgan Stanley. Theyre industry leaders, but the most important thing is they want to do it the right way. Im really excited to be part of the Morgan Stanley team. Im justin rose. We are Morgan Stanley. Earnings season is ramping up with 12 components reporting this week. Joining me now for a deeper dive, dave who runs etf. Com and founder and ceo. Great to see you both. The industrials really tied to the china growth story. How should investors play it i think you have to think about industrials as being the canary in the coal mine. Its one of the portions where were expecting positive earnings. The rest of the season is weighed pretty heavily down. I think you need to be looking at the space. If you were going to chasz, i would look at Something Like aero space and defense stocks like xar, equal weighted, spread the bets out and probably looking at a goodearnings quarter. From a valuation perspective, do industrials like i agree its cheap. I think its cheap for a reason. When i look at indicators, oecd, lean Economic Indicators have rolled over. I think that on a return per unit risk basis, i prefer other sectors more so than industrials. Were still very defensively positioned. Until those indicators stabilize, i would avoid industrials. Ideas of what would happen for the industrial space if a trade deal does come together between the United States and china. I think there is a lot of hope that that will be more of a buoy for earnings. You have to take a picture of what do earnings look like and a trade deal. If both things come out positive, i think its a great play. Thank you for joining me today. For more etf edge, sit tight, our live show online starting at 1 00 p. M. Eastern. Well lkta to blackrocks head of investing. Were back. Many point to buybacks. Our next guest says they dont work as well as many investors think they do. The ceo of levin capital strategies. Welcome to our show. Great to be here. You have been thinking a lot about this. You would agree that buybacks have had a tremendously stimulative effect on the stock market absolutely. Whats the problem . A lot of people disagree with what im about to say. It is big just as you say and the numbers are really bigger than people realize. 600 billion a year of stocks being bought and actually affects the quarterly trading. I believe 80 , 400 of the S P Companies are buying back their stock. And through august, 50 of those companies lost money doing it. Now with the rally, a third have lost it. So the facts are it is huge, and it is big. The problem is that i believe there is a policy question what American Companies should do with their money. We were just having a debate as to whether Companies Like apple are good stewards of their capital. Politicians want investment. My problem is what the shareholders get is the dividend. They buy the stock. Ten years later its 20. What the shareholder got over the 10 years is the dividend. Thats the return to the shareholder. So companies over and over again total return to the shareholders is the buyback plus the dividend. The return to the shareholder in my opinion is that i would have a multiyear disclosure of what the companies bought back at what price, which i think is nothing wrong with disclosure. And youll see the Great Success and then the great setbacks. And i think that will change the policy. Now, i actually go further. I would also disclose what executives have been selling when the companies have been buying back. And i would show that over a 10year period. And i also would show how much stock is being granted to employees and executives. My belief is the top executives are not leaving. The stock grants need to go to attract the young talent coming along. Is this a binary thing . Youre not taking the stance that its either good or bad. There are good buyers back of their stock and then maybe bad ones. Is that fair to say . I would say, and i meant to say this, in my opinion, there are positively good buyers which i can identify. But i would not call it a return to shareholders. The classic good buyer to me is a company thats deeply under valued, run by an entrepreneurial or Ownership Group that knows if they buy their stock theyre adding value to the shareholders who hold their stock. That is fine, and that happens. And thats desirable. Dont forget, its not a shareholder return when you know the stock is worth 100 and you buy is from 60. The return is only for the shareholders who continue to hold the talk. You say apple, microsoft, oracle, walmart are Success Stories of the year according to you in terms of buybacks. Ill tell you in ten years. My view is that we have to take a long term view and the long term view will let me take the other side of that. I understand what youre saying. I disagree when you say theyve lost money buying shares. The few companies where the share price has gone down. Theyre raising earnings per share. You might say its artificial. They are legitimately returning capital to shareholders and doing so in a way that has a tax benefit relative to dividends. Dividend taxation is terrible. The return of capital through buybacks is tax free until the investor decides to sell. And what were seeing now in the industry is a preference for longterm investing, a preference for indexing. So the investors that sit tight, they do realize the benefit of that return of capital and they dont pay for it every time they get a dividend check in order to receive that. If you want to change things u arguably change the tax law in favor of dividends and against buybacks. You make a great point that i meant to make and a great point that i didnt think about. The dividend point of changing tax point, id love. I did make the point it is and a colleague said make sure you say that this morning is there is a tax free payment to the shareholder. But a Counter Point to me of this is, for example, if the political structure of the United States changed and taxesh high higher and i can envision the tax should go up, it would be very unclear what the tax rate would be when they receive this supposed money its always unclear, though jim, what do you think john, its so great to have you. John is the deacon, we should point out. When i first left goldman sachs, john was so kind to lend me advice and office space if i wanted it. I agree with you in the sense i used to debate larry kudlow of kudlow and cramer. He wanted to lower the capitalgains tax. I said lets keep Capital Gains so that we encourage companies to do this longterm thinking. I had david farr on. I know emerson is under attack but hes a dividend aristocrat and to me that means you have a company that is solid, that people can be in i think individual investors have been driven off because they dont understand the point of the mark. They thought it was dividend you can say theyre unsophisticated. If Elizabeth Warren comes in, i hope she keeps a dividend tax low so you feel it is worth taking a dividend check. You cant both be true so she hates amazon because theyre getting into these industries and outinvested everyone else. Okay, so you dont like that amazon does no buybacks. Thats one model of what to do with excess capital. If you dont like that, what do you like better . Do you like dividends . Okay lets not have a tax rate that confiscates money that has been taxed at the corporate level your example, emerson earns money, they get taxed, they pass it on to steve y shareholder and he gets taxed. Do you want more wouldbe amazons who monopolize and get into industries they were never even in and dont do dividends, dont do buybacks that you think were artificial or do you want people to get to a point where they say i dont want to pape the taxes on all of this investing . So i think you have to decide that its going to be somewhere down the middle and, john, your point is well made but i think we all can differ on how far to the left or the right of that middle well be. I would like to take a crack at the math to your point. Lets say dividends are yielding 3 if i am right, twice as much money has been paid out tax free if that were all paid out at 6 . If i paid a 20 tax and all paid out in dividends, a 5 yield i think the stock market would trade higher if stocks yielded 5 with a tax. I never thought about that until you pressed me on this discussion but what if we say the s p 500, lets say the average stock has shrunk its shares outstanding so we got there anyway well, the fact is the fact is that corporate issuance is, i think, running at a 3 , 4 , 5 , a very big number. Take out ipos, i think its negative were still shrinking. Board accountability. I agree with that you have half the number of stocks trading but more than half of acquisitions that Companies Make fail so thats a bigger issue than buybacks in my view. To be continued we have to run a great discussion. Thank you i appreciate you being here sir thats john len. Vi final trades straight ahead on the Halftime Report. But in my mind im still 25. Thats why i take osteo biflex, to keep me moving the way i was made to. It nourishes and strengthens my joints for the long term. Osteo biflex now in triple strength plus magnesium. Wiyou can see relationships. Y, connections. Patterns. You can see what others cant. Welcome back lets talk about mad money tonight, jim you have this ceo exclusive right here people have a lot of exchanges for things that are not stocks, old clothes, sneakers you have to stay current you have to understand that there are people developing stock markets away from stocks, and i love that. I saw their headquarters in detroit. Unbelievable operation its dan gilbert. Oh, i hope dan is doing fine when dan called me, i was talking about quicken loans and how they didnt have the best record this is dan gilbert, and i said, no, this is the guy who owns the cavs i couldnt believe it. Dan gilbert would call me. The call that you want to get, right, dan gilbert, the man who saved detroit. What a guy so were going to talk about that, and well talk about what we learned today my whole topic will be devoted to this show because youre so brilliant. We love having you. Lets do some q a. We have questions from our viewers. Jay, a. J. , twilio, buyer im going to wait for the october 30 reports guide Wire Software is the name im in right now brynn, for you, amc, interesting buy . I think i would skip this one. I know theyre going into streaming but i feel its a little johnnycomelately. Look at the other companies as a better longer Term Investment. Josh, i will give you a bonus one, jim in florida wants to know about disney. Disney, after that april earnings report, its been holding that level ever since. And that level is about, lets say, 128 if youre a trader, you want to use that as your stop, be my guest. As an investor im not going anywhere i just got one in from willie who wants to know about slack. Because the stock has been hammered recently. Its part of that high multiple, High Growth Software group. Im not going anywhere i bought in the low 20s. Im sticking around with the stock. I think this is a three to fiveyear hold for me as they realize their full potential thank you for taking that other question jim, from john in new york, abbvie you get these two together and theyre a monster stock, bristolmyers and look at that thing run. From gary in massachusetts, utx. I think utx is fine its like an annuity they can look long term because the contract is long term. I dont own any of these stocks and thats a miss on my part selfflagellation dont deserve it its so rare. You hate to see it. Lets do final trades brynn, its nice to see you. You go first perfect microsoft, own it, dont trade it they come out with earnings. Love. The jedi pro yeject is out tr and the beta testing for their xcloud taking all their games online you think that should be a faang . Completely. Joe, what have you got . Copart. Jpmorgan, refuse to sell. And, steve weiss . Adobe i hope its bottomed do you think it has i think that whole group has today. Its been so good having you. Advanced micro. The exchange begins right now. Thank you, scott hi, everybody. Heres whats ahead, fed up, a double downgrade for boeing as analysts warn it could be a while before its back in the skies days ahead of earnings and the ceos appearance on capitol hill the latest plus a bold prediction for how southwest may be forced to keep with these delays plus, slacking off, why that supposed email killer slack has been slipping, and its not the only one well dig into the cloud crash ahead. And wall streets love of peloton. Zuckerberg wants to be understood, and amazon may b