Need to have the bond market going with with you. Right now Interest Rates are headed down. You need to see Interest Rates shoot up into this quarter. You also need to see more fed governors saying, listen, we need to do four because thats how jpmorgan gets the additional 3 billion. I like the call. I dont know if i like the call this week because these stocks have gone parabolic. When you see stocks parabolic. Which one has to go . Wells fargo hasnt done anything. Jpmorgan, very high. Thats the biggest issue. Jimmy raises it right there. Should you stay or should you go . The stocks have had tremendous run since the election. Bank of america is 32. Jpmorgan is 23. Citi, 21. More january stanle more. Who would have thought that can happen . I know. But i think you have to i think you stay. I dont think you add. I agree with jim, i think there will be a tactical opportunity to gel out of these names a lot cheaper. Why not take profit in this space . You cant be that kind of trader. In the end what happens, is lets say bank of america, where is it going to go . Down to 21 . Remember how long it took to get are 15 to 17. Its their topic on the note . Its the one that you buy if you think rates is going to go up. Theyve got that great consumer base. I like the note. I want people to be ready, like you said, joe, to be able to buy them if they just let down for a couple days. Josh . I guess i take issue with parabolic because they did go parabolic but topped on december 9th as a group. Now you have a month. Today is january 8th, 9th . I dont even know. 9th. January 9th. Listen, this ask a month of consolidation. Its what you want to see. The buyers did take profits. Exchoose me, sellers took profits. New buyers come in. Flat line for a little while. Thats what has to happen in order tort runs to continue. Maybe the buyers bailed and went to tech, went to fang. Health care actually. Rotation. I think theres morme money coming into the market. We can talk about that later. But last week i had a conversation, we were on the 2 00. We were talking about how the regional banks have moved up too much. Now you start to see upgrades the regional banks. This is the train leaving the station. My problem with that is that as soon as you get all these guys onboard, then you have too much hot money. I agree with josh that the group hasnt done anything of late but i also think that i just want you to be able to buy bank of america 21. Im not saying its going the 18. So the wells fargo call, basically saying if a lot of what the Trump Administration wants to do happens from deregulation to repatriation, tax break, they could sell ten times forward earnings. Look, we know that there are many i read too many arms about how trump is already everything in his agenda a lot of wishful thinking. If the regulators choose not to regulate they go higher. You get the commentary and the numbers later this week. Whats this story going to be . Lets listen to president elect trump and jack ma. And he loves china. Loves china and loves america. Mr. President elect, you recently wrapped up your meeting on friday. There were questions about your relationship well talk about that on wednesday. Who do you trust more though, Julian Assange or the nsa . Well talk about that soon. Russia was in the hacking well talk about that at another time. Were going to be yes, we had a great meeting. Its jobs. You just saw what happened with fiat going to build a massive plant in the United States, in michigan. Were going to be very happy. And jack and i are going to do great things. Small. Small business, right . Focus on Small Business. When are your confirmation hearings going . Going great. I think theyll all pass. I think every nomination will be theyre all at the highest level. Jack was even saying, i mean, they are the absolute highest level. I think theyre going to do very well. There is concern about Jeff Sessions in particular. No, i think hes going to do great. High quality man. Thank you, jack. Thank you. Talk more on wednesday but about that is the president elect and the chairman of alibaba, jack ma, in the lobby of trump tower. Lets continue to listen in here. To china and to asia. We may talk about Small Business, young people. American agriculture products for china. And we also think that china and usa relationship should be strengthen strengthened, should be more friendly. Imported goods i think we always open that we can open discussing the relationship on trade issues. Are you worried other countrys will do the same thing in retaliation, higher taxes on American Products . I thinking that the president elect is very smart. Hes very open minded listening. So i tell him my ideas about how he improve the trade, especially supporting Small Business, cross border trading and business. President elect during the campaign was clear about his concerns about working with china. Has he expressed Something Different with you just now . He has concerns. He has solutions. And he wants to discuss with china and ask how to do better and i advise and suggest that we can go through the Business Community to understand the situation better and doing it in a better way. Thank you. Talk about investment no, we specifically talking about we will create, you know, supporting 1 million Small Business, especially in the midwest of america. Small business on the platform, selling products, agriculture products and American Services to china and asia, southeast asia. Where will those jobs be bases . A lot of midwest and the agriculture products and also some products like garments and wine, fruits, yeah. Thank you. Did you discuss any tension over the u. S. And china. We had a very nice discussion. Thank you. Thank you so much. Thank you, jack. Thats jack ma, of course, fresh off his meeting with the president elect in trump tower saying the two men talked about the relationship between china and United States and also of course Small Business, as you heard jack ma discussing there. You know, jim, its so interesting that people have looked at this rally and they sort of bypass some of the risks that dpexists out there. We mention them but its mostly lip service. What if theres a trade war with china, what if this, what if that. How should we be thinking about this topic as a man with jack ma goes up to speak with the president elect . I find that the media has Mainstream Media has really created an image that trump is almost a failed presidency. I think that whats happened is that if inany one of the three you dont need all three. Repatriation, Corporate Tax reform. Hod honestly, if you get anything having to do with taxes going lower no matter what, then we can all set the strong dollar. Im not talking about infrastructure. I find these upgrades today, cummings, emerson upgrade, these are all predicated upon the idea that hes going to get something done. And i think that he is. Is some kind of trade fight with china the biggest risk that we see . Wet didnt know. We acted like we didnt know we were at war. Jack ma,hes very close to the communist party. I mean, he comes out of there and talking agent midwest jobs. I mean, thats not the type of thing youre talking about how we have to have listen, if the United States continues to do this were going go off the track. I find these conversations somewhat somewhat comforting in the sense that its obviously trump is not going to say things are not going well. We know from his apprentice days things are going well. But i find that, look, there are many reasons to believe in the animal spirits. I dont know if you where you guys are on animal spirits but theres a belief that something is going to happen in washington and its not going to be bad. Hence the stock market is show me the progression by which show me the progression by which alibaba entering america in any form of the various businesses its in creates jobs. I cant even imagine it. Well distribution. We need another amazon . Distributions centers to keet with amazon. We have one amazon with hundreds of thousands of employees most of which theyre trying to replace as quickly as they can with automation. Show me another scenario where another online marketplace comes in and creates jobs. You think there will only be one online marketplace though, josh . No. Neither do i. Why wouldnt it be alibaba . I think its more therial than that. I need something to tell me that theyre not going to have a fight with china that is not going to pull out Procter Gamble that is going to be against caterpillar. I have used alibaba. Its another way to disenfranchise stuff in america because they make it so cheap over there. This css cloud over its head. People question how they do their accounting. People questioning whether or not theyre adhering to nyse exchange listings. Does that now go away . Well, attorney involved with alibaba is going to be head of the css. It will be interesting. If youre an investor in alibaba youre saying, okay, thats one less. I dont think this is forget the fact that jack ma walks in representing alibaba. Jack ma i think part of jims point is he represents china. Yes. Its he was talking about the selling its a sign and symbol more than anything else. Why . Not so much food but food itself back to china through Small Businesses in the United States. So just like hart land is, that started out as Small Business within the United States. Sort of a coop. And then they begin selling across the country. Same sort of proposition mr. Ma is proposing to sell back into china. I dont know why that doesnt work. Look, the conversations, you can view them as good or bad, photo opportunities, but all the conversations are centered around the economy which we should all like. Everyone thats walking into trump tower is talking about, okay, lets look at the economy. Lets look at the domestic economy, how can we get job growth to accelerate even further. Lets look at the groebl economy. Thank you. Its important. Next week, okay, were going to have earnings Conference Calls which are going to be incredible important. The analysts are going to ask two questions. Whats your tax rate and how much cash do you have over seas . Have they been asking that question the past . Look at financials. You look at charlie schwab. Wouldnt get out of that for a second. 38 tax rate. Thats coming down. Thats going to benefit the bottom line. Now, there are a lot of people saying, listen, this is going to be pushed off. Remember, you can do things retroactive. This is something that its not a wave of wand but there is a cone census in the media their going to be bogged down on obamacare and russian hearings. Trump does not impress me as a man easilying whoed down. Anyone . I agree. And i think, judge, when youre looking at the Interest Rates as well, Interest Rates, josh and jim both talked about, these have bottomed or, you know, the bond itself bottomed, Interest Rate topped out, at about 260. Its been coming down aggressively since then. We talked about the huge buying in that particular contract. That keeps coming down. You get the repeat tre asian that we talked about here on the desk. You get tax taxes coming down for regular joes as well as big corporations. Thats more assets, chasing the same number of product, that pushes prices. Apple with 40 overseas. I think it can happen. Its not like trump is going down to florida and doing some sort of rap video. No. Yeah, im sorry. On a yacht before a Football Game is that what youre talking about . Come on, guys. This has been a tough season. Troy aikman brought it up in the first 30 seconds, mr. Dallas cowboy. Lets jump to these two calls i wanted to get to and what your take, is jim, on both. And thats the downgrade Procter Gamble and cocacola. Whats your view here . Is this a broad call that staples are out of favor, dividend payers are going to lose their luster so see you later . I think they tried to make it more permanent than that saying that proctor cannot maintain that growth and cocacola headwinds to the product. I do. I think this is the lets get out of clorox. We really cant trust colgate. My problem with this theory is that for people at home, individual investors trading prakter has been a suckers game. This Great American company. If youre a hedge fund, yes. When are you going to buy cat . Are you going to come in here and buy rockwell at an alltime high or emerson . You have to finance those purchase with these stocks. I just really want, if youre at home and you have that 3. 3 yield for proctor and cocacola is gown 7 points from the high, dont feel scared. Hedge fund, yeah, you need that cap. I feel like cocacola is the perfect stock so ask yourself am i a trader or investor. If youre a trader youre not low on this name. Its got a series of lower highs. Textbook definition of a downtrend. Really going back almost a year to last march. However, if youre an investor, heres a stock with very low expectations. New ceo. Right. New ceo. A lot could go right. And youre getting paid almost 3 1 2 to wait for something good to develop. P. If you listen to the macro guys theyll tell you to expect return for stocks very low, 0 to 2 . Heres 3. 4 , sit on cocacola. Am i a trader or investor when you look at a name like this and it might be a buy for one and not the other. I totally thats a way to approach it for people at home. To tell them to blow out of cocacola down 7, new ceo, given an asset like model, is to say, hey, listen, maybe it goes to 39. 80 but youve got to get back in there. People cant do that. Proctor is easier. Really nice rising 200 day, act as perfect support since december. Also a three and change percent yield. This one is headed in the right direction. So if you want to go against these call on the staples that might be the best one. Youve made some calls in the past about the staples as theyve gotten so beaten down. If youre looking to make longer term call, are there names you would get into as a result of the beat down theyve taken . But we know kimberlys challenged because of china but clorox is doing so many things right. Im not saying, listen, go all in clorox. Im just saying that you dont go wrong if youre a broker at a major wire house from the old days. Buy a little clorox here, goes down another five points, goes down some more. Thats a comforting call. This is the level to go in sand buy ingersoll rand. They dont know who ingersoll is and they dont know who rand is. Morgan stanley says one of americas most favorite stocks is undervalue bid 26 . Well tell you what it is, next. Wherer g outy s re usu e. L were back on the halftime report. We made it our call of the day. Pete najarian is going to join us from minneapolis. Pete, youve owned it for a long im. Everybody is jumping on the bandwagon if they were off. Of course they are. Except for katie, the woman who did up grade today, scott. When you look at her resume, she was at Morgan Stanley in 2000 and not long after that she started to coverage on apple. I believe in her. I hold on because of some of the statements she has made in terms of why, where the growth is going to be coming from, the transition with the phone. All of that. Theres a lot of Different Reasons right now why i think her call today makes a lot of sense. The only thing that she left out, she had three reasons, right, for her upgrade. Yep. Super cycle, china, cash repatriation, u. S. Tax reform. Was there a fourth . One of the things she points out about china, scott, is the fact that they have an incredible loyalty to this company. And not only do they have that loyalty but the 80 share of that upper end smartphone category. So when you look at that and any potential of a rebound at all for china, i think theres a lot of reasons why this call makes a lot of sense. We already knew the tax idea, repatriation idea, those are probably out in the future. The most important thing she left out is services. Take a look at the growth of the Services Last year. Ive been pound it is table on this and i will continue to pound the table on this because when you look at the growth, yes, its a small section of apple right now. Its becoming a bigger and bigger part of the apple story every single day. Why are you scoffing when you talk about it . Im telling you. I felt a scoff. I felt a scoff. Jimmy wouldnt scoff me but i felt like maybe you were. No scoffing. He thinks that people scoffed at him when he brought up the idea of the services. No. I do think that what was important i like petes analysis and katie, i felt schefs a little bit unruly on the last conference call. She was part of that kind of gang up on tim cook basically saying come on. So this was a big call. I dont know about you guys though. I hate the term sub super cycle. The fracking sand super cycle. But i do like the services call. Why . Remember, tim cook said it was going to be a fortune 100 company. I wish he had bought sirius and netflix and anything, harmon, to augment that service because ive got to tell you, virtual reality, pokemon go, thats going to help but you need all the time you need new apps. The app number was good. Did they miss their chance to do a transformational kind of a deal, not that they need a transformational deal. But you know what i mean. A big deal of scale, magnitude that really matters. I think its never too late, frankly. You said forever they should buy harmon and lost out. Samsung bought them. They did benefit greatly from the combustible samsung. I still cant believe it. I was on the plane the other day still making the announcement. We believe some people have a samsung here. Holy cow. Its like, i want them taken off by marshals. I think what apple has to do in this next phase, they really have to get ai right. They cannot see this entire thing to amazon. With amazons echo and the alexa which essentially is voice operated but its becoming the operating system for all of amaz amazon. Apple cannot, if theyre going to be a Services Business they need to have the right product to generate Services Type dem d demand. So they cant have everyone using amazon central in the home to order things, refill things, check on news, check on weather. So i think siri is going to play a part of it but siri is not the leader in tech. They have 200 billion to say that have one. Drexel is coming out today, bryan whites neat today. 185 price tar got. A lot of my people who have the amazon device feels amazon has become big brother. They keep track of everything and they know too much about you. Now, i mean, theres a privacy issue in the end. I dont know. But i was with someone this week who felt that amazon knew more about them than their wife. So then think about facebook because if we think amazon knows about us, facebook knows things that wet don even know about ourselves. So i think weve kind of seeded our pry vasly permanently as a species. Do you have a alexa at home . No. Or echo . My whole life is basically verizon and apple. Im not like amazon waiting for something that will work with all of my other devices. I got the sonos thing. It wouldnt work with itunes yet. I went a year without it. I know. Yes. So like im not going to go and do the amazon thing and then all the media and stuff i want is on apple. Big hit. Remember when they first put the woman on the trunk, make the left. That was a big deal. My kids ask siri for everything. And i was with some people asking amazon to do things this weekend with their lights and, i dont know. To me i get up and i turn the light i turn the lights off and on myself. I guess thats that older generation. All right. We do have a news alert for you. Sue herera has the headlines for us today. Hi. It concerns abbott labs and the st. Jude heart devices. Abbott labs says it is releasing Cyber Security updates for its st. Jude heart devices following the u. S. Governments investigation into claims that the products were vulnerable to potentially lifethreatening hacks. The u. S. Food and Drug Administration has released its safety communication on those devices. It is confirming claims that cyber vulnerabilities could allow hackers to remotely access st. Jude implanted devices. There have been no reports, the fda says, of patient harm related to cyber vulnerabilities in those heart devices but the f fda does say that Health Benefits to patients from continued use of st. Judes devices outweigh the cyber risks. But abbott is none the less putting in place Cyber Security updates for its st. Jude heart devices. Scott, back to you. Sue, thank you so much. The market moving Jpmorgan Health care conference on under way and the ce okay of celgene has news that moved his stock today. Youll talk to that gentleman next. Plus our desk and jim cramer give their top plays in the Health Care Space when we come back in two minutes. , at g . Welcome back, everyone. Im sue herera. Heres whats happening at this hour. At least eighths policemen were killed in an attack on a checkpoint in the northern sinai. A video uploaded to social media purportedly shows a plume of smoke rising in the aftermath of that attack which was launched with a car bomb. After the bomb exploded the attackers fired guns and rocket propelled grenades at this check point. Syrian president bar shah alassad says his military was justified in bombarding eastern aleppo. He said the alternative would have been to leave civilians to the mercy of terrorists. Aleppo has been devastated by six years of civil war. China repeating its 07 position to any contact between american officials and taiwanese government. This after a meeting between Texas Governor greg abbott and senator ted cruz with the islands president in houston on sunday. And one of californias famous sequoia trees has toppled over. The pioneer cab bon tree succumbing to the heavy rains. The trees trunk was hollowed out 1880s. We have breaking news. Heres the president elect. Mr. Trump, talking about the role that you expect this to have in your administration. Who . Bashar. Well talk about that. The same. Any specifics one of the great men. You know that. Right . They all love this country. Will we be involved in the inaugural where are you right now on the did you deliver a package to mr. President elect trump . What are you going to discuss . What did the two of you discuss . Were going to do wond 23erf things in this country. Such as . Are you expanding lbmh here at all . We may expand our factory that we have in california and in carolina. What do you make in that factory there . We build some Retail Products for 25 years for california and we are going to expand the product and we are going to go to North Carolina or texas. Looking at two cities. Some republicans now are concerned theres no replacement plan to put in place. Are you worried . Not even a little bit. Thats going to all work out. How . Thank you all very much. Will it be in place when this is repealed . Well talk about that on wednesday . Is there a plan now or will there just be a plan on wednesday . All right. Thats the president elect of the United States with the chairman and chief executive ufser of lvmh, what amounted to a photoop down in the lobby of trump tower after meeting the two gentlemen had. Jim, you know, you could say a lot of things about these meetings, whether its ceos coming by to simply kiss the ring to meet the president elect or to actually have some sort of substantive idea or plan in place to create jobs, to try and create jobs or at least to have a relationship with the president elect. Its a great question because what i see is ceo after ceo, executive after executive, thats a very good ceo. Youve got labor, like him or not in terms of labor, hes a good ceo. You have people who are probusiness. This is just incredible. When i see these these are not just people involved at other ends of the spectrum. These are businesspeople. This executive, hes an excellent executive. Theyve done well. Jack ma,theyre talking business. Are they going to create jobs . All i know is theyre creating a tone and the tone is, hey, get onboard, man. This pie is probusiness. Havent we talked about that every day that more than anything else, the market and i know youve scoffed at this before. Scoffed . I agree with you. The market has rallied hold on. Because of the tone and the change of tone. Yes. Okay . Optics. Fine. They matter. Heres a big positive. Jamie dimon was not a trump supporter. The fact that hes been brought into the fold, hes as good as you get as an american ceo, someone bullish on the country, employs hundreds of thousands of people, someone who does business around the world. The fact that he was brought into the fold is positive. When Warren Buffett shows up at trump tower i will say, this is great, you know, weve got this, because youve got to see more of the people who criticized him be turned to. I think thats the biggest positive. So if those types of things happen i think its good. I think its brilliant. All the tech guys that showed up and then elon musk getting onboard, the lady from oracle getting onboard, i mean, these are titans that, as we said at the time, and thats why we criticized kyra swisher when she was ridiculing them for going in there. These people have millions of jobs in their control and now you throw in fiat, chrysler, and ford and lvmh and these other, jack ma potentially doing some things. I think this is big news. So i agree with that fully. Nonsarcastical nonsarcastically. I think thats what you want to see if youre an investor and frankly an american citizen, is you want to see, even the people who were not Trump Supporters be thinking about whats the best thing for my workers, for my company, for my customers. Looks like thats whats happening. Remember, lvmh, were going to talk about cosmetics later. Thats sephora, thats the only niche right now killing it. Theyre actually urtingestee even though they havestee as one of the people on the rack there. Youre talking about companies that are superior, that are doing a great job. And theres the ceos talking. You want that conversation occurring. If youre a stockholder. Is it what you want if you are concerned about anything . I always feel like the mad money man that i talk about how i feel about certain issues because i have no value to them. When i see these people come up there, these are people i want him talking to if i own stocks. Jim, jon, you, myself, and jon, probably old enough to remember back a few president s, youre a little bit younger than us. Has there been another president that has conducted these meetings prior to inauguration like this . Maybe higeisenhower. Whats wrong with the optimism . Whats wrong is the Mainstream Media is all going to fail. So you have this kind of really weird dichotomy where the front pages are filled with how the republicans that youre going to see mccain stop him. And then you see these these cameos and i dont think that hes as easily stopped as mccain. Mccain will get bulldozed. I think there are going to be big, big media events. Tons of headlines. All right. Also this week, big news, the Jpmorgan Health care conference kicking off today in fact, in san francisco. This is boy biotech stocks coming off 30 biggest weeks in two months. We have celgenes ceo, meg . Scott, thank you so much. Joining us now is mike olli, is. You always kick off the conference. First presentation monday morning. How would you describe investor mood . I think theres tremendous excitement. Investors are looking after a tough 2016 to come back into biotech and to celebrate the innovation that this conference for 35 years has been the premier showcase. One of the ceos here, alex gor ski, talking about the super bowl of biotech investing. Thats really whats happening. One of the things we were just talking about off air is the idea the tech ceos have gone and met with trump. Pharma hasnt had that meeting. If you could silt down with the president what would you tell them about the industry . I would love the opportunity to sit down in a similar way the tech ceos have had with the president elect and talk about the issues facing the cupped. We need to look into the future and recognize some basic facts, pharmaceutical spending makes up onefifth of the total drug spend. The country spends 2. 7 trillion a year on health care. Most of that is dealing with chronic diseases. The pharmaceutical industry is inventing medicines that bend that confident curve by making acute diseases chronic and chronic diseases are being cured. On top of job creation and other benefits the economy derives from it. So i think if were vir choose, forward looking it would be a wonderful discussion with the president elect and i would welcome my other ceo nasdaq bio pharma to be there as well. At the same time, the only thing weve heard donald trump say about the drug industry is he wants to bring the prices down. Its such a populist issue hes embraced it. Are you holding your breath worrying hes going to tweet about you . I think were used to it now, right . The president elect goes straight to the American People by tweeting. And at least for me, its a normal condition now. This is the new reality, the new norm of bypassing a lot of filtered media and going straight to the American People. I think in the context of drug pricing, its educated the american population. Im happy about that. When an average consumer now understand that the retail price they pay for a pharmaceutical is actually layers of costs and added distribution and management by pbms, insurer, et cetera. They are a mored indicated consumer. From an inventor point of view in medicine, we get to come back to what we do well and we will always be in a positive position if we remember what our mission is is to change human health by inventing the medicines that we all talk about. And price is just one component of that and i will talk to the president elect in that context. Mark, so much more to talk with you about. We will have to leave it there. Thank you, meg. Great stuff. Look forward to everything youre going out there this week. Jim cramer, ibb is up 6 . Xbi up 9 1 2 year to date. No tweets. I did expect there would be some tweets about health care and costs going up. Celge celgene, as much as i like celgene, they raise the price every year. Golden globes were last night. Hes going the start tweeting right in the middle of when Swart Schwarzenegger is on. Seriously, about these names. You mentioned the tweets. Can you buy these stocks or is the tweet thing always an overhang because of the drug prices . They are going to speak later today,all al elergenallergen. I think the companies that have are really going to be on the other side of health and human services. I still fear the group a little but the valuations got low. Valuations got low but coming into 2016 there are closet indexes and you have a lot of people overweight health care. There was room for them to pear back the holdings at the end of the year. Coming into this Year Health Care is 13 percent of the s p. You have to own health care in some form. You do. You may not like the volatile biotech space. Big allocation to it, what do you mean you have to do it . If you are running an Institutional Fund and mimicking basically the s p 500 which is not the right thing to do but is what a lot of Portfolio Managers are doing, if health care is 13 , scott, you have to have health care ownership. You avoid the highly volatile biotech names. We talked about mckesen, abbott labs, we just talked about abbott labs before. Fell from 50 in 2015 down to 40. 70 billion market cap. Thats stay diversified company. Thats a name im okay with you owning here. Judge, since the december 7th with trump on the Time Magazine and so forth youve seen xlv was 56 that day, 71 now. Pushing higher, 4s dts. Same thing with ibb. You didnt talk biotech as drthly but biotech also rallied. 260ish, now its 280 i think or Something Like that. Ibb is up 6 year to date. Xbi is up 9 year to date. Very tough to be a vocal bowl on these names in the last two months of last Year Health Care was the only sector of the s ps ten sectors negative. These stocks are being back to being the belle of the ball. Youve got technical resistance at 75. Double top in the charts going back to 2015. But if it gets through, the juice is loose. Yeah. Josh, look, this deem for aria today, they took a real header because they charge a lot of orphan drug company, not just traditional. And tecada paid a gigantic amount for it. They are comfortable with the pricing nape dont think the government is going to crack down. Josh has went on that riff but do you agree with it . Look, i just think that i think that joes right to have some health care. Im worried it could be faux health care, like united health. The faux health care, the visa, mastercard of the banks. I do think that when i look at merck and pfizer, these stocks are still theyve got some room before they get back to their highs. I just find them unexciting. What i didnt like celgene did not guide up today. I thought that celgene would guide up and that did not occur. I do want to hear about amgen, which is nonpromotional, positive. Pete, you heard the conversation. Weigh in. Yeah. I know you like the space and you hold many of these stocks. However, youve also voiced concerns about the possibility of the tweet. Yeah. Right. I think ill have less concern it is we have the opportunity to actually do exactly what mark alles was talking about, educating the president more about the exact process and how much the innovation needs to be there and they need to have that innovation to be able to push health care and these pharma names as well as biotech names to the next level. I think its all about just making sure that people fully understand how the process works. And i think because of that, we had seen some of the pain and some of the names pmts bristolmyers comes to mind. I know this is a name you and i have been in very, very long period of times. We love this name. It got murdered jimmy just sighed when you said bristolmyers. Move from 50 to 60. It has. Restructuring. Didnt you think they might have to do layoffs there . Theyre going to be speaking. Yeah. And there might be. I mean, i think if we hear some of that i think well all understand, well understand why and i think thats why theres still room to the upside. That stock was hammered. There are other names out there. If gilead finally gets off what weve all talked about, about all that cash, theyve got all that cash, incredible company. But theyre kind of a one trick pony. Theyve got to expand. Theyve got to make an acquisition. Maybe 2017 is that year. I own that stock because i think theyre going to make a nice acquisition this year. Lets move to an investor who has made a big name for himself by going small. Matthew is the ceo and Portfolio Manager of northern right capital. Activist firm that car tets companies with market caps between 100 million and 3 billion. Fund was up 16 last year. Matthew is live onset once again. Nice to see you. How are things . I guess things are good. Great. We had a great year. We continue to find a ton of idiosyncratic interesting opportunities in the market. Given the fact youre focusing. The russells ripped. Do the Good Students still exist as they did six months ago . Absolutely. Peer finding a tremendous number of great names to buy. I would make a distinction between the russell and what were finding. So what ive heard you guys talk about theres been a shift from active to passive. Now, in our minds whats happened is thats distorted some of the indexes. So the russell has had a record high. Trades at 22 times earnings with implying 15 gross. Were short the russell. But against that short were looking in the universe of the 5,000 names in our space and finding great opportunities. Hold your thought. I do have breaking news out of washington, d. C. Eamon javers has it for us. Yes, scott, were learning more now about the plans for Donald Trumps soninlaw jarrod curber in in the Trump Administration. Nbc news saying that he will be named Senior Adviser to the president. Thats per a senior transition official. We had a statement earlier in the day from a spokesperson for mr. Kushner who is taking steps to divest himself from some of his holdings and comply with ethics regulations here in washington, d. C. The statement said mr. Kushner is committed to complying with the federal ethics laws and consulting with the office of government ethics although plans are not finalized he would resign from his position at Kushner Companies and divest substantial assets in accordance with federal guidelines. He would recuse from matters who have a predictable affect on his remaining financial interests. So clearly some divest difficult chur to be done for Jared Kushner who will be Senior Adviser to president elect donald trump. Back to you. More big news on what is already a busy day regarding president elect. Bag to matthew drapner with us. Youre short the russell. Yes. However, you were saying . However, were long a series of group of id you sin krat tick names and of 20 plus names six are in the russells. Were finding lots of opportunities that out perform the index. Lets go through some of the names. Sure. Lets go liongates first just given the globes and the films that the company has done. Why this name in particular now . Lionsgate ee. Disappointment in stock. We made a lot of money. However, we think theres a good 30 , 40 upside. Lionsgate mer lionsgated with starz. Now its a very fast growing high Free Cash Flow tv business. Stars has a million over the stop. Lions gate has a robust tv production like orange is the new black and people lost faith in them after hunger games rolled off but last night they had lala land which dominated the golden globes. But you have huge Free Cash Flow. Tomorrow is their First Investor day. Its not in their offices its at libertys. Liberty global owns a big stake. We think youre going to see exciting things there. You follow this . If viacom can have a big move, lions gate can. I like this call because content is becoming king again and when i see where this stock has come down i say, geez, other than discovery, theres really its really ready, its ready. I like it. Its ready. Good call. Why do you think these picks are not going to come down if the overall russell is so overvalued that its due for, i dont know, 30 pullback . Lions gate is not in the russell. Right. Small caps in general im saying. Russell decline, dont they all come down . Not necessarily. So, you know, thats our job, right, to buy really good cheap names and short the index or names that we think that are expensive. We think in that mode we will perform. How short are you . Were significantly net long. Im bullish on the market. A name that people may not be familiar with because of the headline name, xo group, probably familiar with the underline names. 525 market cap, substantial net cash, over 100 million. Ebitda north of 100 . Great ceo. They dominate the wedding space online. And the crown jewel is 50 of their business is local marketplace listings. And thats 25,000 vendors who pay 2600 a year. However, only 10 of the vendors on the site pay anything. And so theyre transforming the business but theyve made heavy investment in the last few years into a marketplace model. That opens up it dramatically. They talked about in the last earnings call, added 3,000 new venues, new vendors who have never paid on that site, that model. 25,000 venue tours just recently under that dramatically opens the tam and number of potential acquirers. Whats it like being an activist in the current market space . I mean, when the market was going up, activists were all the rage. Yep. Activists, activists, thats all we heard about. Then things got more choppy, volatile. Where are we today . Were a little different. I consider myself a Value Investor who does activism when it suits and makes sense. Ive been on eight boards, been the chairman. Ive never had a proxy fight. The way i get on board is buy a stake and get references from all the previous people. Private equity in the markets without a premium. For bigger activists its and then there are a whole bunch that are totally inappropriate. Thats a difficult space to be in. In our space not so much. Im sorry to interrupt. I like what i hear. Yoor a small cap Nelson Nelson is a deed i aspire. You aspire, right. He calls an engaged shareholder. Youre an engaged activist almost means that here is the line and youre the enemy. Engaged, you bring things to the party. I like what im hearing. Really like it. Absolutely. We dont strip the cash, lever the company. We try to create value and leave with investors, friends, references. Thats how we find new deals and opportunities through those. Do you find theres more concentrated ownership in small caps or not necessarily. It depends on the specifics. Other two names i want to get to quickly, hostess. Yep. They went public with a merger. Hostess owned by apollo and dean metropolis. They reduced it from 11 bakeries to 3. They automated a lot, invested heavily. 29 . 7 Free Cash Flow yield, growing at double digits at a 16 share versus 22 to the old company. We think theres a lot of room to run there. You dont want to talk about the specific names in which you are short you . Do have some short names. Right. But as a space you are short five fast casual dining. Yes. Establishments. Yes. So youre negative on the space . Were very negative on casual dining and fast casual. And thats because we think that since the election, the average stock in the space is up 12 . Meanwhile if you look at december, comps are negative 2. Such that traffic is actually negative now and when traffic is negative and you had increasing prices, increasing gap out of home and gas prices are up year after year, we think youre due for a pretty ugly correction. I dont particularly like the group. I think its linked with the mall and i think theres kind of a, were going to start going out post election. You had a little bit of bump. But im not crazy about the group because of labor costs. Look, i run a restaurant. Its a bar. Ive got to tell you thats neither fast nor casual. Thats very true. But when i look at my little p l, im surprised at my costs. Theyve gotten look, 17 tables to have your costs out of control. Weve reigned th reined them in common sense. In other words shall my wife is behind the bar. Under pouring. Shes overweight i mean, all these things are coming out wrong but shes in europe, so okay. You know what i mean . You see the cost goes up and you dont see them raising prices for food. I cant raise the price of guacamole to save my life. Thanks for being here, matthew. Matthew drapkin, ceo and Portfolio Manager as well. Good work. Retail down 8 over the past month. Stephanie link, Global Asset Management sees a buying opportunity in one of those under pressure. Shes live with us today from her weekly missing link segment. Hi, steph. Hi, scott. How are you . What did you find . Estee lauder under performed the group by 12 last year, trading at a 10 discount to its european competitors, typically trades at a premium. A lot of this is concerns about the Department Store exposure. I think thats way overdone. These guys have very great products. All premiere products, very good distribution, diversified distribution and diversified geographic presence. One place where consumers continue to spend is in cosmetics, is in creams, is in making yourself look good. And i think they can overcome this Department Store exposure with Margin Expansion and mid signal digit organic growth. This is one i like for the year. Its funny. When we saw the president elect with the chairman and ceo, jim, ive got cramer here with me. Im concerned that sephora is trying to cloud everybody else with their own private label. I happen to love the guy but i have to tell you, some of the skin care is not doing as well as the selfie oriented products. I still worry about it 23 times. Its come down so much that i feel that the risk works better. It is true that they disappointed couple of quarters. No doubt they disappointed in a couple of quarters. Thats your opportunity. This is a great management company. Sure, sephora is [ poor audio ] they cater to different customers, and do a lot of different things. I think its overdone. You get quality Consumer Staples in that index, trying to get the same multiple of Procter Gamble. I think mid growth at this valuation with these low expectations, thats why im a buy. Well see you on the set. Thanks. Tias stephanie link. Watching the Options Market as they always do for signs of unusual trading. Youre up first, pete. What do you see today . Disney, weve talked about this name a lot. Back in december we had huge option activity in the february 110s. Whats happening today, somebody has taken profits there. Theyre selling those. 10,000 of those trading. They bought it for 90 cents, trading now almost . 50, paying 1. 60 for 10,000 of those. If you think the run in disney is over, it might not be. We had stan hubbard on earlier, before this show. He is a monster in the media world. He is a guy who was talking about ad revenue will follow along with a growing economy. Thats good for disney. Disney again. Yeah. Youve seen unusual in disney before. Right. Angling for a job there, i think. Clearly. Clearly. I already have a job there. He already has a job there. Jimmy, now ive seen multiple firms, almost one after another, come out and either make disney their top pick, a top pick. Has the entire tone speaking of tone changes, the tone has completely changed. You might have money out of time warner. Feeling more bullish about espn. Ever since then, you felt maybe he has a card up his sleeve. February 10 is his birthday. I think well get a resolution to espn by then. Im old enough to remember when all those analysts were downgrading the stock, 15 points ago, six months ago. The longer youre doing this, the longer you realize you want to be a buyer on bulk downgrades after a stock has already been yes. Which i think was the case with disney what do you have, doc . 3d systems. It has exploded to the upside. You dont want to chase the stock, folks. You want to be in the options. Im in the february 15s. Theyre running like crazy here. Something is going on. 8 million shares trade. 2 million is normal. Follow on 3d . I dont like the business model. Its very crowded. A lot of people felt so many different competitors. If i ever get in the way i was thinking when you said Urban Outfitters could have a breakdown in the stock. So im not going to get in the way of that option trade but do feel strongly that people who are chasing this better do some homework. The business isnt that good. Do you want to give us a final trade, pete . Final trait trade, call of the day, apple. We saw activity in there, scott. Apple still has plenty of room to run and option markets are telling us the same story. Joey . Adobe. Stock continues to move higher and higher. I believe in it. At some point they get acquired. You like it . Bought down low i think its great. Ill come back with yes, dca. This is the pet store where they were in the basement, then they were in the bedroom and now theyre in your bed and you cant get rid of them but you love them and they cost a fortune. Yes, pet care. Ceo on squawk this morning . Was that the ceo . Ive got to tell you, having had to deal with bug and everest, the dogs in the bed, when my wife is away, i kick them and then have to pay their vet bill. Doc, what have you got . Ford net, ftnt. Own jp morgan at 86 i think its on its way to 100. Look at a regional, like hban, Huntington Bank shares, probably the next regional to make a big move higher. Sweet. Matt, what have you got . Jci. Im interested in every one of these industrials. Alex is live. Lets get on, figure out if there is a story here. Want earnings, not just on trump. We have Mario Gabelli tomorrow. Looking forward to that. By the way this means hurry up, hry up. Lets g next show starting. Speaking of, power lunch starts now. I thought that was scott, thats just how i talk normally anyway. Its fair enough. Im brian sullivan. Weve got a parade of highpowered ceos topping your menu today. First up, more than bandaids and baby shampoo. In a rare and exclusive interview with ceo of dow component johnson johnson. Then were headed to the detroit auto show
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