Microsoft. They are all reporting their earnings after the bell today. Joe, if you had to pick one name that could be the more important one, the market mover of those three, could you identify one . Now the market mover . Amazon and google have been the market mover all year. Is it the donkey driving the market cart . For someone like myself and many out there right now, youre hoping for an earnings miss so you finally get the whoa, youre hoping for an earnings miss . Yes. Why . Because you want to get into these names. Cheaper. You want to get in cheaper. Thats the opportunity. Youre waiting for a pullback. A lot of people, myself included, have stepped out of some technology names. They have continued to appreciate. And youre happy with that . Major money, moved on. Now you look at these names reporting this evening and youre hoping for an earnings miss. You dont want them to keep going higher and higher unless youre long. Im going to qualify what youre saying. I generally agree with it. Thank you. But specifically to alphabet wait a minute, wait a second. If amazon has a big miss and its down 20 . 20 . Just hang on. If they decide to value it on any reasonable metric, that will scare the heck out of this market. Now, i do hope actually for a miss at alphabet because i have a half position and i think this whole thing about the ad placement could cause a little selloff if earnings are a little light and i pick my other half up. But amazon, you want this to stay in this incredible, heavenly aura of nobody cares about value. You dont want people thinking about earnings. Do you think amazon could fall 20 tonight . No, i dont. What i do think, joe, is at some point and i dont know when and josh will tell me im wrong, at some point valuation will matter for amazon. Im going to Say Something ive never said and may never be said again on this network, josh brown, bring some sanity to this conversation. No, i think youre right. At some point people will Pay Attention to the earnings multiple on amazon and thats precisely the moment you dont want to own it because that means something is very wrong. Its been 20 years and nobody has cared. So you want to make the bet theyre going to care tonight . You can. It doesnt sound like you are. To joe, please stop wishing ill on my stocks, earnings misses. Im long google, okay . I dont know what tonights results will be. However, i think the big report is probably going to be amazon. Just in terms of sheer how much were paying attention to whats going on, what are the readthroughs to the economy, et cetera. So i think thats the big one. Theyre expected to do an earnings number that is a 25 improvement over this quarter last year and i think its 33 or 34 billion in revs. Anything short of that, specifically on the rev side i think will hurt the stock. Again, if youre not in this name and youve been praying for a pullback, look what happened with netflix. They didnt like the earnings number the next day, they beat it up. The stock is now higher than where it was before it record. Same outside of tech. Look at goldman. They didnt like the quarter. 48 hours later, nobody cared. Higher. If that happens with one of these names, probably its more of a gift than it is a curse. John, its interesting and i think josh makes a good point, which is the momentum right now is so strong in this market, if you look at amazon, lets say they have a slight miss or slight disappointment for next quarter or alphabet does that, do you think it will impact the overall market . First of all, im long all three stocks. Amazon is up 23 year to date. Options are up five or six times. Ive rolled and rolled and rolled. This has been just a fabulous stock to be in. Same thing with alphabet. Its up 12 and those options have more than doubled. Microsoft is up 9. An those options why not pull a terranova and pull some profit . You could, you could. Hes missing upside. You never lose money by locking in some profit and youve already made a bunch of money on these stocks. Before the market closes tonight, i will be out of those positions. I liwill likely be in new positions in these same stocks. Just what jim said, we talk about it all the same. If i say i like it but id like it after a 10 correction, i can find plenty of strikes in amazon puts that you can sell and bank some big coin for taking that risk on, because youre obligating yourself to buy the at those lower prices, but youre getting paid for it. Youre Warren Buffett when you do that. Any view . I think the most important one of all of them is microsoft. Everybody is looking at amazon, who cares. They dominate in ecommerce an its all about aws. If they keep growing in there, we know the story. We know how people will react to that. Look at the googles of the world. Its still a search company. As much as we want to talk about youtube and everything else, their revenues are search and obviously the ad campaign has done very, very well. Weve heard some of the previous earnings. Microsoft is important. Their Cloud Business . Its old school, right, and the fact that how about sas sashi nudella. Yes, the focus is on cloud. Its also on surface, on a. I. He is looking at everything. Those are the pulls. Look at that stock. Look what its done year to date over the last 52 weeks and what i think will lead the market from here. John, are you short any of these three names . I cant pretend to add value on these stocks this big. I think these stocks are just an effect of the passive wave and the things like the qs. I agree with pete, microsoft is the one nobody has talked about. They have got linkedin. They have a lot of things. Let me ask the same question in a slightly different way, john. Even if you thought amazon was the greatest short, would you ever short it . I just or is it too much risk on momentum and to josh browns point, nobody has cared for 20 years. I think this is an artifact of the wave into passive investing of etfs. The stock will pop right back up. You do have a tech stock that you do like to short. Guys, hold up. Weve got a market flash now with dom chu. Shares of Anadarko Petroleum are down. They are going to shut down more than 3,000 colorado wells. Those closures are in part due to an investigation into a deadly house explosion that did kill two people. Now, in a statement, anadarko said it is cooperating with investigators and state regulators to figure out what caused the blast. But thats one of the reasons apc shares are down that big. Dom, thank you very much. Well, Technology May be the best performing sector this year, but health care as a group is not far behind. In fact that sector is up nearly 10 . Meg terrell focusing on four earnings movers for us. Meg. Weve got quite a bonanza in biopharma earnings and its been a mixed day. Lets start with amgen. They reported after the bell. While they did beat on earnings, they missed a little on revenues. Thats being driven by one big drug so the stock trading down today. It wasnt the same for abbvie and thats why the stock is up almost 3 . They have humira, their biggest money maker. That one not seeing the same pressures. Bristol myers also being driven by opdivo. That beating expectations driving that up 3 . Celgene being driven by one drug, really missing expectations. That was otezla. Seeing some pricing pressure which is a big question for the whole class right now. Politics, will we see the government step in or is it just the focus from the private side, from the payers driving all this pressure. Meg, thank you very much. Josh brown in chicago, you own both amgen and bristolmyers. I do. Its a little bit of a bar bell. Amgen is a darling, very close to alltime highs almost all the time. And then on the other side of that barbell is bristol, which really looks like somebody dropped a piano on it a few months back, but its starting to recover. The technicals are getting better, the news flow is getting better. So i like both holdings a lot. I dont expect them to act in the same way but i think both can work. I want to make a very quick point broadly speaking on the sector. On the show i spent a few months arguing with people should you get out of health care because of trump tweeting. It was the most ludicrous thing ive ever heard until the next day i heard Something Else ludicrous. This is why you dont do this, because people forget about the tweet that happened one day and they come back and look at fundamentals and they realize it doesnt matter if trumps agenda goes through this quarter or later in the year or its a 2018 story. There are some areas of the market where theres secular growth completely untied to anything thats going on with gdp estimates or tax rates or what have you. And health care for the foreseeable future, drugs, equipment, whatever, is going to be in that camp. Were an aging society, not just in the u. S. But around the world. And a lot of these companies are going to work higher regardless of somebody sending a tweet about the price of tylenol. So its very important you tune that kind of stuff out and you dont miss out on moves like these. I agree. Josh, one of the things i did on that big drop was, of course, broken record, i sold puts on that big drop back in january when the thing hit 46. I put on call spreads thats why youre my hero, john. I put on call spreads after that. Thats why youre my hero. Me too. Thats why im petes hero. Im his older brother. But i think, josh, youre spot on. Any time you get like yesterday you had a tweet or not tweet, we had information that the president was asking for some executive orders to take us out of nafta, right . Courtney gibson was on the show. It was a negotiating tactic, it actually was. Courtney called it. Stock was down two or three bucks. Today its up four. Youre not making investments surrounding these tweets, youre making investments when you look at health care and understand its the second largest sector in terms of cash overseas and the potential for repatriation. Right. Thank you, josh. Youre also making because of the eps growth that we just are seeing right now and the Revenue Growth. Eps growth is 27 for health care. Youre talking Revenue Growth of 6 . So the medical devices names, which i know, josh, you have followed as well as i have and pete, youve got striker, youve got med tronics, pki, these names have all worked well so you really didnt have to go for the high beta biotech trade, you could go with the devices but health care is working. Meg terrell, thank you very much. Josh brown, well see you in just a bit. Weve got a rapid update from steve liesman. Weak Economic Data this morning, especially the durable goods number, reinforcing the idea that the First Quarter which we just finished is running at about a stall speed. Were now down to a 0. 8 gdp for the First Quarter. Thats down 0. 2. The range 0. 2 to 1. 5. Were looking for a rebound in the Second Quarter up to 3 . Bank of tokyo Still Holding out hope here, 1. 5 . Goldman sachs 1. 1, barclays 0. 8. Theres atlanta fed at 0. 2 . Fourth quarter was 2. 1 and this quarter now is 0. 8 and theres the third quarter, 3 . Average the three and it all comes up to 2 over the three quarters. Steve liesman with a rapid update. Thank you very much. Time now for our call of the day. American airlines downgraded to neutral from jpmorgan chase. The companys new labor deal establishes a worrying precedent for that airline and the entire industry. Cutting their price target by 9 on American Airlines. Jamie baker the analyst buying call and he joins us now. Jamie, welcome. Looking at your report here, you use the term harmonize, American Airlines because of labor pressure raising pay to match delta and united. You think thats going to jack up cost for available seat mile. Is that the main thing behind this downgrade today . There are two parts of it. One, its simply a modeling exercise. It removes close to 50 cents from our earnings and that puts downward pressure on our price target. But its more worrisome from the perspective of the uncertainty that it injects into the marketplace. You know, we believe that Airline Stocks are worthy of higher multiples. To get higher multiples, you have to attract longer term investors. To get longer term investor, you have to show as much earnings durability as you can. Fuel cost savings never got much of a multiple because of the effemorality of that input. You were good for four, sometimes five years. Unfortunately the american move has emboldened unions probably across the entire space. Its led them to believe that you can come back midcontract, ask for whatever you want, and that in turn makes that march towards higher multiples not impossible, but a little bit more challenging. But heres the thing, though, j. B. American airlines was in many ways behind the pay curve against united and pilot. A friend of mine is an american pilot. Believe me, he told this all the time. So now that they are matching that, dwhy is the rest of the industry spooked . Arent they now bringing it up to where everybody else is . Sure. We have cited cost harmonization. Its really the message it sends to other unions. There are other airlines with open contracts. One of the most common questions ive taken from investors this morning is who now has exposure as labor is more emboldened by this effort. Setting a precedent that contracts are only as good as one party to that contract feels for some uncertain, you know, period of time is potentially damaging to the industry. I certainly get the cost harmonization aspect, but its the precedent that it sets that we are worried about. Jamie, stick around. Well come right back to you. American airlines not the only stock drawing fire in this sector. As jamie noted, United Airlines also making headlines, but perhaps for different reasons. Phil lebeau is joining us with that story in chicago. Phil. Brian, united still trying to work its way out of this situation involving how it handles bumped passengers. Today it announced new policies when it comes to overbooked flights. Here are the policies announced by United Airlines. It is authorizing gate agents and flight attendants to offer up to 10,000 so people voluntarily give up their seat. If you are seated on a plane, you cannot be bumped unless there is a safety or security issue. Finally, united says that it plans to reduce the amount of overbooking. All of this in addition to the fact as you take a look at shares of united, they are going to be increasing the training for their crews, working with them so that they have the technology, the apps to handle these types of situations in the future. Heres Ceo Oscar Munoz talking about the approach they are taking and whether or not this has had an impact or the incident a couple of weeks ago had an impact on the bottom line. I havent looked, and our team hasnt looked. Weve been so focused on the review and action report that youve seen and how were going to move forward that we havent put pen to pencil. Were in the middle of a month and watch our numbers normally and so well see. But that hasnt been a focus for me or for us during this period. One other note regarding overbooked flights. Earlier today gary kelly, the ceo of southwest airlines, told us on squawk on the street that his airline will stop overbooking seats. So this continues to be an issue for the entire industry to a certain extent. Which boggles the mind. You have 200 seats, you sell 200 seats. Phil lebeau, stick around. Jamie, a dead rabbit on United Airlines. You had the assault on dr. Dao. Is any of this its terrible pr, but have you modeled or seen or done any channel checks . Is this impacting uniteds business at all . Look, weve not adjusted our models because we havent seen any data to suggest a need to do that. Let me make something very, very clear here. I am that guy. I wake up in the morning with two, three, sometimes four different tickets, four reservations. I come out of a meeting in denver not knowing if im going to seattle or los angeles. Overbooking is pro consumer, okay. So let me make that patently clear here. How . If you eliminate overbooking, it drives higher ticket prices. Overbooking helps keep ticket prices low. Now, i absolutely think we should debate how airlines should enforce policies in regards to overbooking but make no mistake, overbooking keeps airfares low. Jamie, just one quick question about that. When they say, well, we have to overbook because people dont show up, isnt that a happy problem for the airlines . You dont show up unless you buy that refundable ticket, which has to be less than 2 of the people on any given plane. Why isnt that just a gift to the airlines, because you walked away from money. Because the seat is perishable. Who cares, somebody paid for it. When i dont sell an f150 this afternoon, i can still keep it on my lot and try to sell it tomorrow. When i dont serve but they did sell it already. Its perishable. Look, theyre walking away from revenue. They sold it already. They sold that seat. You sold all 200 seats. How many of them are refundable . Those are the only ones that it matters to the airlines bottom line, because somebody could get some money back. Sure, but refundable tickets tend to carry the highest ticket price which is why i use the example of myself. Thats why nobody buys them except you. Sure, and other business travelers in fairness. Its a real small number, though. Industry revenue trends, if overbooking were legislated out, if it was regulated away, revenue trends would initially go lower and ticket prices would have to be increased and that would come out of consumers pockets, out of the vacationers pocket. Not out of my pocket when i play on jpmorgans name but certainly on jamie bakers time. But so far youve seen no noticeable impact correct. Jamie, the airlines have done a spectacular job of creating these regional monopolies. So you may be ticked off in united, but if you live in new jersey like i do, youre pretty much going to have to fly united. If you live in minneapolis, pete, youre pretty much on delta. Doesnt that provide a giant monopoly moat around many of these names . I think one of reason the industry is as profitable as it is today and one reason that were long term as bullish as we are on Airline Stocks is the oligopolization that you cite. But the longer the flight and as soon as you introduce a connection, chances are you have a choice of four, five, maybe six different airlines. In the local market, i hear you. Youre a captive to your hometown provider, but of course you are rewarded with status and that sort of thing. If im flying out of white plains and want to fly to seattle, gosh, practically every u. S. Airline can get me there. Jamie, i followed you from ten years and owned continental from before the last flood. This idea i want to push back that were going to get a higher multiple here. Sure. Look, they have done capacity rationalization. That was key. Were no longer empire building. Youve unbundled services. Okay, thats done. These things are long term already in the stocks. Now youve got the warts coming out when you think about what traditionally has turned people off. Youve got labor issues, youve got oil is still there, regardless of whether youre flying fuel efficient planes or not. Its still there, and youve got the regulators, and by regulators with this dr. Dao thing, i mean the senate coming in and looking at this. It seems to me the warts outweigh whats already in the stock as far as a longterm positive. Sure. Look, near term risk reward doesnt look as favorable as it did in midsummer. Theres no question in our minds about that. Thats one reason that as an advocate i think we might have been the very first ones to say its different this time and thats why i felt a responsibility to point out the American Labor reality, because it does speak against our thesis. Having said that, we do believe that the risk profile of the industry is meaningfully lower than it has been in the past. If this industry can withstand and remain profitable in a recession, you know, that alone justifies materially higher multiples. Its how scary things get in a downturn, thats where we think the greatest fundamental change has taken place. For a lot of investors, they do need to see us pass that recessionary test. American airlines down just under 7 right now. Jamie baker and phil lebeau, that you both very much. Next up, three short sale ideas, including a major u. S. Automaker from todays guest, jacqu john pickthorn. Also ahead President Trump wants to put an end to one of your biggest tax breaks, your state and local deduction. Coming up, see how you will be affected. Plus, one of wall streets top ball investors on where fixed income goes from here. Then at 2 00 p. M. , the power lunch stock draft. The Halftime Report is back in two minutes. Hey gary, whatd you got here . This bad boy is a mobile trading desk so that i can take my Trading Platform wherever i go. You know that thinkorswim seamlessly syncs across all your devices, right . Oh, so my custom studies will go with me . Anywhere you want to go the markets hot sync your platform on any device with thinkorswim. Only at Td Ameritrade im dr. Kelsey mcneely and some day you might be calling me an energy farmer. Energy lives here. Hey youve gotta see this. Cno. N. Alright, see you down there. Mmm, fine. Okay, what do we got . Okay, watch this. Do the thing we talked about. What do we say . Its going to be great. Watch. Remember what we were just saying . Go irish see that . Yes im gonna just go back to doing what i was doing. Find your awesome with the xfinity x1 voice remote. Welcome back to the Halftime Report. Short seller john pickthorn is still with us. Is ford an automaker that sells loans or a finance company that happens to sell cars . I think thats the key question. Whats the key answer . Theres 130 billion of net receiverab receivables on their Balance Sheets. Theres seriously leveraged car loans on this Balance Sheet. So today ford looks cheap, but if car prices go down, every 1 they lose 120 million out of their finco income. Repeat that. 1 drop in the price of a used car. Used car. A twoyearold f150. Their finco earnings go down by 120 million. So 10, 12 drop youve got zero in their finco. Their finance company. Yes. Its about 20 . If you look at the total exposure and look at Morgan Stanleys scenario where used car prices could drop 50 Going Forward because of technological changes and safety changes with the auto emergency braking systems that basically are going to make it so that insurers will charge you a lot more to own a used car than a new car, then you have a real crisis on your hands. I dont think ford is just a core short for your retail consumer, but people need to be aware of the risks there. Maybe its a tail hedge. If used car prices start to k kra, ford could be the gm. Should the retail audience, should they be shorting anything at all. Only with options. Or anybody at all. No, im just telling you. Were going to come back. Thats a very important point. Well talk about your book in a minute. Theres 22 rules, by the way. Dont short stocks . Yes. What youre saying is very important, though. Every 1 drop in used car prices should bring down finco 20 . Youre saying a billion two in finance Company Earnings could be wiped out, which is onefifth of fords business effectively. And thats not really considering the negative effects that you have in terms of deterioration of the existing loans on the books and everything else. You know, the fact of the matter is you have nine months in a row of used car price drops according to nada. And so this is a trend that is firmly in place. You have current 60day delinquencies for subprime loans at 4. 3. Youve got recoveries at 45 . They used to be in the high 50s. This stuff is all back to the peak of 2009 and were early oar this is supposed to be a great economy. So i think lower Interest Rates arent going to fix it. This has happened. We have borrowed as many sales from the future as we can as a society, as an economy, possibly globally, and i just think youre looking at a trend thats not changing and rates are probably going up. Your next short idea is a smaller cap stock. It is one other people have talked about. It is usana health sciences, a Salt Lake City based company which is in some ways a multi level type marketing, correct . It is, it is. Sort of an herbalife type model. Correct. Why this short, though . There seems to be other people in this trade as well. Im a wellknown i didnt know actman at the time. You hate the model generally. I think the model damages poor people and desperate people globally. Whats interesting about usana is true about the entire industry. I dont think the industry was a great short a few years ago because they had this china phenomenon. China is 50 of usanas exposu e exposure. It started to roll for even herbalife in the last quarter which is surprising. But they filed an 8k saying they are conducting an internal investigation with regards to their china business. They bought baby care a little while ago. What weve discovered in the Chinese Press recently is that actually they had 13 people suspended and three arrested. Their executives arrested in china. Now, theyre conducting oh, an 56 million frozen. So here youve got this company thats 8k. No, the 8k is were doing an investigation. In the Chinese Press in chinese, so you have to have somebody out there looking at the Chinese Press who can read chinese. This has come out that they have had three executives arrested, 56 million frozen. One source, however. A couple of sources. You can call that reporter and do your own checks. I would love for the company to deny this has taken place. Those executives have not shown up at recent ribboncutting ceremonies and u. S. Executives have. So theoretically theyre doing their own internal investigation and yet they had a few executives get arrested and didnt feel the need to file an 8k about that. Last time in nuskin had that happen the stock dropped 50 . Once that bubble which is half of their business and 75 of their growth cracks, we believe it is our research that shows these guys dont have a lot of the licenses they need, unlike some of the other guys. This could be a huge problem for this company. And obviously we are going to reach out and do our due diligence, cnbc reach out. If theyre watching, anybody from usana is watching, youre welcome. Wed love to have you come on this show or power lunch which isnt too bad of a program either. You talked about your book you brought up the book. Lets talk about your other ideas. Its not one company, its a sector. Now, its canadian. I dont know the short rules are different and some of the float might be different. Canadian banks, canadian imperial, genworth canada, its rather an securobscure. We have been focused on the canadian bubble. Three or four years weve been saying theres a Canadian Housing bubble and they say, no, its different up here, you dont get it. It is our contention the setup is identical and statistics are identical. The houses, the affordability, the prices are all very similar to the u. S. Most importantly, the mortgage fraud, the Mortgage Application fraud is maybe more pervasive than it was in the u. S. Something that has not been discussed until now. In vancouver they tried to pop the housing bubble because houses were unaffordable for people that lived there. It cracked vancouver transactions 40 to 70 . Still it didnt break the market. Now, last week heres what happens. Home Capital Group gets an osc investigation on three of their executives and they come out and Say Something fascinating. The fraud that they admitted in 2014 with 95 brokers perpetrating fraud on over 1 billion in mortgages wasnt just 95 brokers it was actually, quote, systematic fraud inside the organization where they allowed fake Mortgage Applications to not be checked. Sounds like america in 2006. Exactly. We believe this is everywhere across the market. Home Capital Group is the first one to have this happen. They go down 60, 70 yesterday because this suit is filed. Its up 19 or 18 right now. In fact Td Securities upgraded the stock to speculative buy. So youre starting to see some of the canadians defend this name. Its down from 35 to 7. Lets just say the news has been bad. Granted me that. And youre still shorting it . No, no, no, no. Weve covered most of home Capital Group. That isnt the story. Thats just important because now this fraud expose is going to expand. They announced housing restrictions on toronto. If youre a landlord and youre renting it out, youre going to be capped at what you can make. Correct. Half the market is investors. And we think youre going to see this in cibc. These guys are massively levered to uninsured mortgages. A bunch of ideas there. Usana health sciences, ford and some of the canadian banks. Now lets get to sue herera with the latest headlines. Heres whats happening at this hour, everybody. British police say a man with knives has been arrested Near Parliament on suspicion of terrorism. The man, in his late 20s, was arrested as part of an ongoing operation. Hes being detained under the terrorism act and held at a London Police station. German police have arrested an army officer suspected of plan an attack. He was arrested on wednesday in the german town of hamelburg. He is a 28yearold lieutenant, a german citizen and serves with a German Army Brigade in france. The pentagon has opened an investigation into whether former National Security advisor Michael Flynn violated the law by taking payments linked to foreign governments after leaving the military. Flynn was reportedly warned against taking any foreign payments without advance approval from military officials. And a diary from john f. Kennedy was sold at auction for nearly 719,000. The 61page diary included both handwritten and typed pages during kennedys brief time as a journalist in the summer of 1945. The original estimate for the diary, 200,000. Thats the news update this hour. The Halftime Report is back after a quick break. Its an important question you ask, but one i think with a simple answer. We have this need to peek over our neighbors fence. And once we do, we see wonder waiting. Every step you take, narrows the influence of narrow minds. Bridges continents and brings this world one step closer. So, the question you asked me. What is the key . Its you. Everything in one place, so you can travel the world better. With e trades powerful trading tools, right at your fingertips, you have access to indepth analysis, level 2 data, and a team of experienced traders ready to help you if you need it. Its like having the power of a trading floor, wherever you are. Its your trade. E trade. Start trading today at etrade. Com i did active duty 11 years. My in july of 98. And two in the reserves. Our 18 year old was in an accident. When i call usaa it was that voice asking me, is your daughter ok . Thats where i felt relief. It actually helped to know that somebody else cared and wanted make sure that i was okay. That was really great. Were the rivera family, and we will be with usaa for life. Usaa. We know what it means to serve. Call today to talk about your insurance needs. Welcome back to the Halftime Report. We want to call your attention to whats happening with shares of whole foods. The upscale grocer is up about 2 . This on the heels of dow jones headlines saying one of its top shareholders has called on whole foods to possibly explore a sale, that they sent a letter to the whole foods board urging a review of a possible sale or joint venture. This of course comes after an activist investor, the second biggest shareholder, pushed for certain kinds of strategic reviews as well, so watching those shares very closely. Volume starting to pick up just a hair here in the midday. Well have that story and more coming up. Stocks near their session lows right now. Well have more on Halftime Report coming up right after the break. The power of 100 of the worlds top companies. The power of an etf. The power of qqq. The thinking we put in, clients get out. Power your clients portfolio at powershares. Com qqq. Before investing, consider the Funds Investment objectives, risks, charges and expenses. Call 8009830903 for the prospectus containing this information. Read it carefully. Distributed by invesco distributors inc. Containing this information. Read it carefully. I cant wait for her to have that College Experience that i had. The classes, the friends, the independence. And since we planned for it, that student debt is the one experience, im glad shell miss when you have the right financial advisor, life can be brilliant. Ameriprise mr. Secretary, would you be willing to raise your right hand and look at the American People and say, i steven mnuchin, promise you that this will be revenue neutral and deficit neutral . Again, our objective, matt, is to pay for this with economic growth. No hand raise. Treasury secretary mnuchin not taking matt lauers pledge that the tax plan will not raise the deficit on the today show this morning. Now, part of the plan getting perhaps the most attention, the plan to end one of the biggest deductions americans take on their returns, in fact by the number of deductions, it is the biggest one, the state and local tax deduction. Robert frank has more on what it means for you. But first the epic battle shaping up over taxes in d. C. Brian, this deduction is one of the biggest. It is the biggest actually itemized deduction that households can take. 1. 8 trillion, thats the estimate of how much its worth over the next decade according to the tax foundation. That makes it even bigger than the mortgage deduction. This hit will primarily be felt in blue states, mostly california and new york, but its also big in new jersey, connecticut, maryland, democratic strongholds with high property or income taxes. The fight over this deduction has already started. New jersey senator bob menendez called it double taxation and he said middle class families would be paying the price and new York Governor Andrew Cuomo brought up this with the president back in january at trump tower. It is a proposal being susd that would end the deductibility of state and local taxes, for example, which would be devastating on the state of new york, california, et cetera. But its not just the white house thats behind this, its also baked sb ed into the tax p with House Republicans with kevin brady arguing that the federal government shouldnt be subsidizing state taxes. The politics are murky. 30 republicans from the house come from new york and new jersey so theyll be facing a lot of pressure to keep this alive. Now lets get to robert frank. Robert, its a big deal here. What do you think is going to get hit . She laid out some of the states. If the hightax states like new jersey and new york and connecticut where most of us live, where are we going to go . Its not where most of us live, but its certainly where most of the wealthy live. Now, we know that the top 1 pay about a third of federal income taxes and they are the biggest beneficiaries of state and local tax deductions. Removing that benefit could create huge moves in capital and people. Lets take a look why. Right now the top 1 account for a third of all benefits from deducting state and local taxes. They save an average of 30,000 each year. To be a 1 er, its around 400,000 or more for a couple. The top earners in high tax states like the ones youre talking about, they account for by far the lions share. New yorkers who make more than a Million Dollars a year average over a half Million Dollars a year from this benefit. And californians who earn seven figures, they save an average of 497,000 a year. Again, the average income for that group much higher than a Million Dollars. Now, if this group loses that benefit, the wealthy could have another incentive to move to florida, arizona, texas or some other no income tax states. Realtors in florida tell me this morning they have already been on the phones with clients saying they have yet another reason to head south. But get this, guys, even taxpayers in florida and these other states stand to lose something. Florida taxpayers taking an average of 14 billion a year in deductions from deducting their local taxes. The average deduction for a florida millionaire earner is 133,000. So even the guys in low tax states, if theyre high earners, are going to lose something if this goes forward, guys. I think its a little bit of a gift perhaps for the Trump Administration and some of the wealthier blue states. But why would anybody leave the northeast . I mean we got high taxes, bad roads, crowded airports, trains that dont work. Dont forget bad schools. Schools, weve got that. I dont understand why anybody would leave that. Oh, by the way, a lot of snow for about six months of the year. Its a perfect storm. Robert frank, thank you very much. Power lunch live from nashville forever. With the next fed meeting coming up next week, how might the president s tax plan affect the bond market . Joining us now, joined exclusively from the morningstar conference in chicago. Rick, do you expect the fed to raise rates on wednesday . So, no, i think youre going to get a dynamic where the fed will raise a couple more times this year. We think theyre going to go in june, probably going to go in september and then probably start to talk about the Balance Sheet being reduced but i think thats where were going down for the foreseeable future. What do you expect or do you want to hear from the Federal Reserve on wednesday . Listen, i think the markets have adapted to the fact that this is a fed thats communicated pretty well recently and has described a dynamic where you can start reducing the Balance Sheet, which makes a lot of sense, and you can be predictable around where rates are going. I think the economy is growing. Youve hit the feds targets. As long as the fed keeps talking about were in and around a 2 , as they said last time, with 2 inflation with symmetric risk around that, thats predictable. Thats what the markets want to see, continue down the path of normalization and thats where markets will react well. I think people misinterpret the fed has to be easy for markets to do well. Thats actually not right. The confusion ive got is the dow is down a little bit today, but the dow near record highs, the nasdaq over 6000 and the tenyear yield is at 2. 3 . Why . So we are living through what is the most extraordinary demographic demand for income that anybody has ever seen. We are still in this dynamic. Not only is the demand for fixed income continue, the flows in fixed income continue to be profound but you also have the ecb as you already heard is going to take some time in terms of moving and the bank of japan will be behind the ecb. The demand for people that need cash flow is extraordinary. Until the ecb starts moving and the bank of japan starts moving, its very hard for u. S. Interest rates to move higher and inflation is not pressuring rates of any significance. So were going to be here a while. I think rates can drift a bit higher from today but were not going very far. Rick, its joe. Many investors are using high yield spaces and equity replacement. Do you think thats the right strategy given where we are in the cycle right now . So you ask what is one of the best questions today. The demand for income, and this is part of why the fed has to move. If you start normalizing Interest Rates, what people are doing, theyre looking for all places to get income and its pressed high yield spreads to aggressive levels today. So do i think high yield will continue to do its job . It will because of the yield youre getting but i do think normalizing this is why money will continue to flow into equities. Not only is it priced fairly relative to the credit markets and fixed income markets but does actually get you some income. I think thats what youre seeing play out this year. Money will flow into equities because youre pressing down some of the levels in fixed income. Rick joining us from chicago. Rick, a pleasure, thank you very much. My pleasure, thanks for having me. Well, a lot going on. If you havent paid attention to oil, you should be. Oil prices dropping again. Well give you the energy trade as crude is off another 1. 9 . Were back right after this. [vo] quickbooks introduces rodney. He has a new business teaching lessons. Rodney wanted to know how his business was doing. So he got quickbooks. It organizes all his accounts, so he can see his bottom line. Ahhh. Thats a profit. Know where you stand instantly. Visit quickbooksdotcom. Welcome back to the Halftime Report. Crude oil falling 2 today in trading near onemonth lows on reports that production has picked up in libya and thats weighing on black gold. Jeff, how are you trading at these levels . Well, we arent price discovery mode, youre right. But i think the conversation between the opec members, talking about continue those 1. 8 Million Barrels per day cut past june will come into factor. Right now the price discovery, the bears want to poke at the lower end of the range. Weve been stuck from 48 to 54 all year. Jim, on a technical level, crude has been below 200day moving average, 50day moving average as well. How are you looking at this . Whats more significant in the yearlong trend it seemed to be bounce off trend support at about 48 1 4. You know, i would say 56 to 48 is the longterm trend. I think risk reward is to buy it instead of selling it right now. I dont think youre supposed to catch a falling knife or anything. Look for a basing pattern and look for strength from here. Today on futures now, keep the crude oil conversation going and plus were joined by former director of the office of management and budget under president reagan and discuss why he thinks trumps tax plan will be dead on arrival. Thats all at the top of the hour. Halftime is back after this. This is where i trade andrs. Manage my portfolio. Since i added futures, i have access to the oil markets and gold markets. Okay. Im plugged into equities trade confirmed and i have Global Access 24 7. Meaning i can do what i need to do, then i can focus on what i want to do. Visit learnfuturestoday. Com to see what adding futures can do for you. Im dr. Kelsey mcneely and some day you might be calling me an energy farmer. Energy lives here. Welcome to holiday inn whether for big meetings or little getaways, there are always smiles ahead at holiday inn. You are looking live or listening on the radio live at the stock draft floor right here on cnbc. Thats our lobby. This is will be very 00 cool coming up on power lunch. The rutger student allstars, former new york giant, many more will pick two stocks oil, gold or oil, hold them until the super bowl. We are going to crown just one winner. Kevin oleary is involved. It will be fun. Could be a little crazy. Give you stock pick ideas as welcoming up on power lunch 2 00 p. M. The show is at 1 00 p. M. But the draft starts at 2 00 p. M. Eastern time. Lets get unusual activity. Pete, youre up. Take a look at snap. 4,500 of the may 22 calls being bought up today. 1. 50. The stock is just under 22 right now. This thing moves in the next couple weeks, youll have a real winner here. I like this name and bought into it myself today. John . Well, i was going to go with snap because i liked that one so much, but since i cant go with that one, brian in the same trade . Yeah. Im going to go for how long would you hold . Ill be in the snap trade with pete until may basically end of the earnings here even though i hate the stock overall. Hate the stock. Hate the stock, but may be in it infn. They bought it like crazy today. Im in that one. May is monday, you know . Yeah, well the earnings this is may 12th expiration for snap. Two weeks. Lets get our final trades. Joe . Teradine. I think it goes higher. Semiequipment strong. Jim . Brad, how are you . Intel. He was distracting me with the light he has some powder that wore off so the light from his head got right in my eye, like an ant. Thats not right, man. Magnifying glass. I cant break you guys up. Im the smallest guy on the desk. Intel, we were talking tech stocks. Intel. Here is a great value player, coming out with earnings after the close today. Watch that going higher. Al those cuts at disney mean the stocks go higher, brian. He is right on intel. Keep an eye on these various names, unp the rails are continuing to rock. They bought all the way out to may 2019. Keep an eye on these rails. John, the last final trade, another short idea for audience, please. We just merged our firm with b. Riley associates theyre a leader in shutting down retail stores. I have a front row seat at inventory liquidations and we see retailers closing at a faster rate than ever before. We know that. Understand. But seritage. Run by eddy lampert. He runs a retothat is involved with the store sears which he also controls. Sears has a bankruptcy problem then seritaga has to do a lot of revamping. Srg short seritage. Thank you for joirning us. Pete, john, jim, joe, thank you very much. Ive enjoyed being with you. We have the big power doctor up. Thank you, john. Buy your book. Power lunch with the great melissa lee begins right now. Thank you, brian. Here is whats on the menu. The nasdaq hitting yet another high but the dow, s p 500 struggling today. Flood of earnings meantime, where is the value in this market . And we have the outline now. Can washington get a tax deal done . Plus, why the elimination of a key deduction could trigger a massive flight of wealth. Tackling concussions in football, how one company is reinventing the helmet. Its incredible stuff youve got to see. Power lunch starts right now. Melissa, thank you very much. Lc
comparemela.com © 2020. All Rights Reserved.