More concerned tom joining us now on the phone. Tom, you there yeah, im here. How are you guys what prompted you to take down your earnings estimates, which theoretically leads to a lower market in your mind . Well, i think part of it has to do with a lot of folks recently talking about how low inflation is good for stocks, because its helping the multiple but what were starting to point out and what we want to point out to investors is lower inflation means Revenue Growth pressures, but with labor costs rising, we know this is going to result in a profit squeeze so were really adjusting our estimates to reflect, especially into 2028, this potential squeeze on profit margins. Youve thrown in your towel on the trump agenda altogether i think theres elements that are going to survive and be very important for markets, especially deregulation. And i think because it doesnt require acts of congress, but i think its tougher to bet on tax reform and stimulus and infrastructure and even a proper change to Health Care Reform, as well so, in other words, the answer is yes. I mean, i get that we could see some movement in areas of regulation, but in terms of all of the major policy initiatives, whether its infrastructure taxes or whatevers left, health care, et cetera, you say its not going to happen . Its you know, i think that the longterm yield curve is telling us its not going to happen you know, thats the spread between the 1030 its now flattest since 2015 so its really retraced any widening postelection tom, i dont i mean, you do have the lowest s p target on the street 2275 are you sticking with that today or is that about to come down, as well . Scott, you know, its low and frankly, its a pretty big drop so i think it may be too low, because i think this market is supported by the notion that the premium is falling, which is supporting multiples and as long as volatility stays low and Corporate Bond yields are supportive, i think stocks dont have to drop to 2275 so im looking at something that says you recommend fang, you recommend materials, technology, industrials, financials, and energy is that right . Am i accurate in what im looking at yes, it feels like a barbell. Because i think you want to buy secular growth, which is fang. And we like fang this year but we think theres a lot of reasonably priced what we call core Growth Stocks and materials, tech, industrials, financials, and energy where they have pretty decent Earnings Growth profiles, but their relative valuation is still pretty cheap i just dont get it financials, if you like financials, presumably, you think the yield curve is going to get steeper that flies in the face of at least one nugget of your thesis. Industrials, if you like them, theoretically, you think that the economy is going to continue to improve and fang, i mean, if fang continues to go occupy, how is the overall market not going to march along with it . So i think as you know, fang has been really one of the most important trades for active managers if you dont own fang, youre really having a tough year but it is less than 5 of the total market cap its not a big weight. And so i think, you know, you can like fang and not expect the whole market to go up. But banks, i think, are a really important story of rerating the safety regulation. But how can you like fang materials, industrials, tech, industrials and energy and think the overall market is not going to go up were looking at selective stocks is within each of those, but i think theres a lot of expensive stocks out there i mean, you have to keep in mind, the median p e is now 19. 4 thats the 91st percentile meaning theres only a handful of months where the markets ever been higher in the last 30 years on a median p e basis. So there is a general problem with 50 of the market hey, its josh brown. Historically, a flattening yield curve, obviously, if it gets worse and inverts, were talking about Something Else but just a flattening yield curve has actually coincided with midcycle economic expansions and bull markets. So were not early in this, obviously. By calendar year, certainly not. But cant we just kind of have these conditions, low and slow, have a flat yield curve, and have it not necessarily mean anything economically and continue the way weve been continuing and wouldnt that be normal for this point in where we are josh, thats a good point i think you cant look at the yield curve in isolation i think when you look at the past cycles of a flattening curve, lets say in the mid90s, level of Interest Rates was higher so i would think of it as the yield curve is real growth but then you have to think of the nominal growth on top of that from inflation. The problem is, we have low inflation and a flattening curve. So its low real growth, plus nominal growth being weak you know, outlooker l weaker becaus the so we have a nominal problem. So unless inflation picks up, this flat yield curve is pretty bad. Are you worried about a recession in any way no. I think the Business Cycle is a little out of whack, because Capacity Utilization is still low. I think the incrementalreturns on capital sanctions should be high, but the only thing thats really tight is the labor market so we have labor inflation coming, but not overall Producer Price inflation. So i think thats the margin squeeze we see coming. Tom, i know you jumped out of a meatmeeting to jump on with ud i sincerely appreciate that. Lets begin the debate on this desk the only question i didnt get to ask him, but hes saying theres this Pincer Movement on profit pressure, where you have low inflation is keeping a lid on revenues, but wage pressure is picking up. You know what . Weve been waiting for wage pressure to pick up for years. And it hasnt. You cant tell me that 2. 4 wage pressure, wage increases lets just stick to the point were discussing, though i thought that was the point were discussing i dont want to get into a deep economic weeds question i mean, answer or discussion. Is the market overvalued or not . No. Its not are we going to have a pullback the likes of which tom lee thinks were going to have he makes a good point about the median p e being 19. Yes, there are a lot of stocks that are expensive there are a lot of stocks that are cheap right now. The market overall cant be painted in a broad brush there are plenty of stocks to buy, simply put. In this growth paradigm, the market is fairly valued. Historically, its been 20 times at this growth and expansion paradigm no, its not expensive i agree with jimmy, theres parts of the markets that are cheaper. But i also agree with tom that you need to barbell because you need to have that secular growth in your portfolio. So citi today says, is there a stock growth bubble. This has been the leadership group. Kate moore, whats the answer to that question . I dont think theres a growth stock bubble. As much as it pains me because the positioning is so ko concentrated in some of these High Conviction secular Growth Stocks, the earnings are coming through. Its a section were seeing consistent upward revisions, companies are generating a lot of free cash flow. Its hard to call it a bubble. I want to go back to another point, because when were talking about valuations, we cant look at the yield curve in isolation. We cant look at we couldnt multiples in isolation we need to compare the opportunity set across Asset Classes and say, is everything rich or is everything cheap except for equities . In this case, multiples and valuations in other Asset Classes recall really at the upper ended of that you are range. Let me put it to you this way. What if tom lee is right what if the pillars of the Trump Presidency and agenda arent going to happen . And they certainly arent going to happen anywhere close to the time frame people they are and if you put it together, youve got a cocktail for a correction well, i would say a lot of that is baked into markets already. With all the news that weve been talking about over the last three or four weeks, i think you would say that the trump agenda is in slight jeopardy and that the delta is probably to the positive side. A slumping economy is not along those lines, when you look at the citi surprise index, its its lowest level in a few years. So Economic Data has gotten soft but its primarily on the investment side softer. Its primary on the investment side when you look at the consumer side of the ledger, its actually gotten stronger, which coincides with better wages. You have better wages, low inflation, financing costs down, i think growth can sustain and mar margins can stay protected what if i suggest, josh, that oil remains weak, bond yields remain depressed, no agenda within site on anything thats going to spur earnings and increase the multiple in the market and the economy is going to muddle along. Is that good enough to maintain where you are in the s p today youre talking to the person 24. 39 youre talking the person for whom that was the base case and never believed in any of these agenda items being a slam dunk and never believed that, oh, this is easy, well do it the first 100 days on day one, on day two, two weeks from now so im not sitting here like waiting for repatriation of cash or a slashed tax rate. I actually think some of those ideas are really helpful in my limited experience but i never thought it was a slam dunk. Heres what you actually have in terms of price the russell 2000 had an explosive 17 move on the news that we had a clearcut election, trump won, and he was going to be probusiness okay, thats great from december 9th through today, its 135 days, zero, nothing the russell 2000 has delivered exactly zero but now thats starting to change and the advanced decline line is getting better, and small caps are starting to move higher. And youre getting participation from areas like materials that nobody has been paying attention to at all. These are good things. Youre seeing the same setup, scott, in the transports the transports are starting to roar railroads. Look at them airlines, take a look. So, now, youve got these sectors that have done nothing in a very long time, seven or eight months, that are starting to break out i think thats much more worthwhile to Pay Attention to than any one particular persons take on the trump agenda price is telling you that were set for the next move higher so, pete, some people say its fear of missing out that has kept the market where it is. These incremental gains, because you know, we still expect key parts of this agenda to come through and we dont want to miss the boat, if, in fact, it does and if it gets better than we even think when is that eclipsed by fear of being in that we start to think that maybe this is not going to materialize the way we do. Thats a great question, scott, but i certainly dont have the answer to that. What i would say right now, though, is when you look at the trump agenda, weve seen nothing, i dont know how much people expect the First Six Months of the protest or not, but probably a lot of people are absolutely thinking, wow, its going to accelerate, this is going to happen faster all i can tell you is fundamentally, look at boeing and united technology. Their profits are up 20 then you look at the microsofts of the world, the apples go through technology and to the financials, what have we done . We have seen the fundamentals and the facts actually playing out the way they should be, and thats why i think were seeing a market where there is value with growth and the opportunities are still in front of us. Oh, by the way, when youve got the volatility index, because you put that up there when kate was speaking a minute ago, its under ten. Are you kidding me its incredibly low. Its an incredible time for people to protect. So those that are jumping in very late, considerably, considering where we are right now, if you consider that to be too late, well, they can protect themselves now with as little cost as possible so youve got to like the opportunities that still exist in front of us oh, by the way, if we see some deregulation, doesnt that seem to be something, and i think tom would have agreed if he was still on but doesnt that seem like something that really does affect financials, and that would be the next catalyst to push them a little bit higher . I certainly think so if youve built the foundation of this market house, youve got all these bricks in there, and one of them is for taxes and one of them is for infrastructure and one of them is regulation and one of them is the economy, et cetera, et cetera, et cetera. If you have to start pulling bricks out of the foundation, can the market hold up i think we need to separate actually whats been priced into the market by analysis and consensus expectations, where tax reform and Health Care Reform and infrastructure was not really in earnings expectations for 2017. And what was in some Peoples Trading portfolios at the beginning of this year, which to joshs point, has largely been faded out over the last six months i think both the earnings estimates as well as positioning are not suggesting that anyone is forecasting this to happen in 2017 i would argue, and although there is not my base case, i would argue if we actually got movement on the policy front, if d. C. Actually started to move and we got, god forbid, some sort of bipartisan agreement on a big part of legislation or on policy reform, we could actually see upward revisions to earnings expectations and the market could hold or perhaps even go higher on expectations so, bmo has an interesting note they sort of give you a halftime checkup, thank you very much for that while we remain steadfast in our secular bull market stabs fnce sox, were concerned entering the second half of 2017 given the fundamental wherewithal of the market we believe a majority of investors are increasingly managing their portfolios as if they need to be invested rather than want to be invested people are in the market because they have to be. Now theyre questioning whether they should be they do have to, if youve made it to 65, you have a one in four chance youll make it to 95 do you think bonds yielding 1. 5 are going to allow you to eat human food in your retirement . So without a doubt, and you can point to the fed or you can say, its demographic, whatever you want to do there is a necessity to be invested now, do you have to have a portfolio thats all s p 500 absolutely not nobody with any sense is doing that do you have to have no hedges, no insurance absolutely not but let me tell you, its very difficult to get people to be excited about investing, when they have to be investing. And if you have a Financial Planner whos building you a portfolio, that Financial Planner is conveying a message to you, which is that, hey, unfortunately, you may think you have a lowrisk tolerance, but thats not up to you anymore you need to be taking a certain amount of risk or youre going to run into problems funding the things that youre saying are important to you, whether its college education, retirement, future medical costs so theres a big element of that happening. The other thing thats happening on a simultaneous track is that professionals are not excited about this market. They are also just ritualistically putting money in, because theyre losing their jobs to the indexing and algorithmic craze. So you dont have euphoria as a result of that i completely agree with him youre seeing it right now look at whats happened. There started to be a rotation to the areas we talked about financials and energy at the beginning of this month. Theyve given a lot of that up this week and its gone back to tech i start to think about, why is that happening well, probably window dressing going into the end of the quarter so the pms can show what they own they can show theyre invested the way their clients expect them to be invested. Youre willing to continue to pay up for areas of growth in the market from a perception standpoint, theyre willing to do that what i suspect what happens is value reereemerges its earnings based, but when you think about fundamentals, where are those earnings going to be most attractive second half of the year its going to be financials and energy can you have it both ways what do you mean by that . Sort of the tom lee scenario. Buy fang, buy tech, oh, by the way, buy energy and buy industrials. Right why are you choosing im saying, perceived growth versus value if youve ever looked at a quilt of sectorbysector stock market returns year by year, two things jump out at you number one, the best sector in any given year is completely unpredictable because you cant figure out post expost, why it was the leader. Number two, theres no rhyme or reason whatsoever. So the prudent investor doesnt say, you know what, this year im just not going to have any energy you might be able to predict an energy crash, but probably not so ting whats really going on is a lot of the trading that were seeing day to day is algorithmic. And within algorithmic, a lot of it is momentum driven. So theyre continuing to buy the winners. And fundamental driven, actually sure. Because you have a lot of these quantity models that are focused on fundamentals. And i think thats why theyve been able to broadly be able to ignore some of the noise from a macro standpoint i think what were talking about, though, is a preference for what people to be safe havens from a fundamental perspective or brands that they know or companies that are forecast strong earnings and expected to produce better its almost like fang has become defensive well, its showing up in some peoples screens exactly for that reason. And i would also point out, and this is a theme thats coming up as well. Everybodys a little bit uncomfortable with the broad market at this point yes, theyre putting some money to work. But were not really getting a huge amount of the enthusiasm. If we got a lot of enthusiasm and huge krocrowding in these secular growth names, i would get really uncomfortable the screen you see all the time is value and momentum together especially like, the smart beta money. So theyre all saying, like, into own the cheapest decile of stocks with the best charts that are going up and that continuously leads people back to apple youre making me very nervous. I have a value and momentum call on right now maybe the crisis killed enthusiasm its been the most hated bull markets in the history of bull markets. Which is why its going to last for a long time the enthusiasm is absent because the people who work on wall street are not sure whether or not theyll have a job and the more this bull market is led by indexing, the less likely it will be that therell be big bonuses, therell be expansion of business for these people and i think if you cant get the pros excited, its tough to get euphoria amongst the amateurs. Like, what, if i work on wall street and im worried about my career, its hard to celebrate rising stock prices. So maybe, thats actually prolonged this bull cycle, not having that euphoric burst but all of our enhanced by the market going up, because our clients are happier. Tell that to the active managers who are losing fund flows every single month im one of them, im actually getting fund flows because youre handsome, jim. But for the viewers out here, heres the important point youre asking the question, can the market go higher from here or is there some sort of trap door ahead of us theres not a recession anywhere near in the u. S. Or any of the developing markets its very hard to conjure up the reasons for a bear market. You havent had the overinvestment that usually proceeds a bear market and gets the fed to go higher you can have a correction at any time, we know that if it happens, just stick to your knitting. Keep investing pete, the citi note thats out today talking about, is there a stock note bubble, is almost greenspanesque in the sense that they point out, you know, while we found okay, they say, back then, when people try toll compare the market to 1999, and the late 90s, the first big daily growth selloff happened in august 98 it marked the beginning of the bubble, not the end. And remember his irrational exuberance saying, the market continued to go up for another three years. So maybe some of these stocks are in a bubble, but the bubble can get a heck of a lot bigger before it bursts bullish and i think the other mistake the other mistake, i think, sometimes, quite honestly, scott, is people look at the chart and they say, well, the stocks already up 25 , so i cant go any higher because of the fact its already made a 25 move there are names out there that have fundamentals, that actually have growth, that you can still own, even though they might be bumping up against presently, or three months ago, 52week highs. They can go higher because of the fact that there is a Value Proposition there, with that growth ill give you a great example. Western digital. Not the most exciting name in the world, of course, i understand that. But take a look at that name it still remains a singledigit p e with incredible growth theyve done the right thing in terms of acquisitions mo s mog forward and you can pull out all kinds of different names in the financials and obviously in the industries and other areas of the market place right now, where you can find names out there that might be butting up against 52week highs, but thats just the number on the chart. The difference between now and back then. I was on the market back then, trading on the trading floors in chicago. I can tell you, very, very interesting times. No doubt about it. But also look at the p es, look at the values, look at Something Like a cisco back then and tell you what the valuation was back then versus companies now and the valuations that have the incredible Growth Prospects that they have in todays market. So theres a huge difference between what we called that tech bubble back in 98 through 2000 to where we are now. And i would agree with him on that difference. Back then, there was a healthy degree of skepticism about what tech might mean for the prospects of business going forward. Today, there is universal adoption based on the implications that tech has had for brick and mortar businesses and so on and so forth so theyre in an entirely different place in terms of all of our predictions, by the way, in 2000, were right we were just early all of that transformative stuff that drove the nasdaq to a 96times earnings level, it was not wrong, it was just 15 years early. Those dreams that we had back then are actually being manifested now now, does that mean we should go back probably not so a 25 multiple on the nasdaq versus 70, maybe its more reasonable than it would seem, and i think thats a really good point. Like, its no longer a technology sector. There is no sector of the economy thats not being transformed by technology. All right pete, you have to stay with us well see you a little bit later in the show. Heres what else is coming up on the Halftime Report. Announcer next up, a cut for cat. See why Deutsche Bank made the move next in our call of the day. Plus, our man of steel, Pete Najarian, sees some unusual activity in that sector. See which may drive the stock. Before the break, our partners an kensho show that its happened 23 times in 12 years. When sold a month after the big jump, merck picks up another 1. 79 . Bristolmyers, 1. 74 pfizer, 1. 48 . For more kensho, go to cnbc. Com pro pn a talftime report with scott waerndhe traders is back in two minutes baby crying fly me to the moon elegant music and let me play bell rings looking from a fresh perspective can make all the difference. It can provide what we call an unlock a realization that often reveals a better path forward. At wells fargo, its our expertise in finding this kind of insight that has lead us to become one of the largest investment and Wealth Management firms in the country. Discover how we can help find your unlock. All right. Were back caterpillar in rally mode over the past year, but Deutsche Bank does not see more upside ahead the firm downgrading cat to hold, cutting the price target well, it is our call of the day. Josh, you own deer yeah. Deutsche says that cats out of the bag, downgrade time. These two get lumped in together, because theres some overlap with Industrial Equipment and capex in various segments of the economy. But deer is very much more an agricultural story and cat is much more mining and heavy construction time to pull the rip cord here or no i think youre going to see that with some of these industrials because of what we talked about in the last segment, which is that the longer we get into 2017 without any kind of movement on infrastructure by the way, i dont think well see anything this year the more enthusiasm will come out of these names even if it doesnt hit the bottom line, to kates point, there werent a lot of those estimates baked in, it still hits sentiment and historically these are not cheap stocks, traditionally what you would call cheap for the industrials so they say, jimmy, that the risks now seem skewed to the downside, at least for the second half of this year they reduced their price target by 12 , as well. Yeah, i actually agree with this call. Cat has a very specific story thats been going on for the last two years actually for three years, dealer inventories. And they have very supersized dealers for whom they process their product. Dealer inventories have been going down, down, down to just bonethin levels the reason cat has rallied over the last year and its been up big is because of the supposition that those dealer inventories were too low and would start going up because you had the trough. How much is really based on fundamentals, what youre saying well, thats all in the stock right now. Youve got nothing to propel it higher from here and the slightest whiff of disappointment like no Infrastructure Spending has this thing coming down easily 10 so pete, they say what was once anticonsensus has now become consensus maybe its time to take a second look there are some notable bears in this name who were sort of miffed at how this stock has done what its done. Mmhmm. Well, the interesting thing is, one of the better analysts, i think, in this particular stock has been Goldman Sachs, who actually put in a conviction buy back in very early april and has continued to reiterate that ever since, scott and what theyre hitting on right now is construction, theyre talking about different areas, including the mining area thats strong. Theyre seeing demand there and jimmy was just referencing one of the larger dealers. One of the larger dealers was forecasting 20 to 25 sales growth for 2017. That was on may 29th there still is a very positive feeling within, and that was taken away and goldman still remains at 120 price target. So, do i think that this is a smart downgrade to actually downgrade . Sure im not so sure, necessarily, that moving that price target down really made as much sense, though, because to me, it seems like if that demand is truly there and they see the sales growing like they are over at Goldman Sachs and this just came out of an investor meeting, that makes a lot of sense to me theyre having the same conversation in their note that were having on this desk and people across this network are having every single day on their shows. We have no idea, if and when, they say, infrastructure stimulus aids public spending. They cant forecast when the agenda is going to happen that would be so favorable to a company like cat, so why should the market take it for granted that its gonna . Well, theres no if you talk to people who are like actually in these discussions, with Trump Administration people, theres not even consensus on how this type of thing would be funded. Is it Public Private partnerships is it a gasoline surtax theyve floated . Theyre still at the phase where, forget about what the plan might look like and where the money goes, they dont even agree on whats the right mechanism to fund it so its so ludicrous for somebody to think like, next month, theyre going to roll out a 1 trillion infrastructure forget it forget it. How much of cats 22 gains since the election is due to the election itself . Probably a little bit but, will be whats a little bit ha half more less it doesnt matter it does matter if you dont think things are going to happen ill tell you what to do if youre in this stock youve had a really nice run its up big, now its kind of blowing off. Very, very, very simply take a look at the technicals, take a look at a candle chart you can see an explosive move after that april earnings shock. They totally shocked the market. Had a great move the gap is at 97 to 98 a share. Now theyve successfully retested that gap on low volume and then it rallied again. That is where you want your stop in other words, if youre long, you like caterpillar, like the company and management, whatever your story is, you can stay, but thats where you would put your stop, below that level to own this, you have to have a positive view on u. S. And china construction, mining activity and oil and gas capex thats just the basics of owning the industrial sector right now. If you have a negative view on any of those, which you could if you dont think the infrastructure package is going to get promoted, passed through, whatever, then you cant own the stock. Im sorry, kate, 20 sometimes this stock traditionally is 14, 15 im not talking about the stock, im just talking about the space. I think the bigger thing is not just about an infrastructure package coming out of d. C. , which we agree is going to be delayed. And also, which we have to understand, will take a lot of time for my kmouany money comino d. C. To actually flow through the sector this is about business sentiment. And if we have a followthrough from a lot of the sentiment voi surveys that have come out through the roof. But Small Business owners dont mobilize huge pieces of capital and machinery. Small Business Owner sentiment is great and i agree, they love trump. Theres no question. Im actually referring not just to Small Business sentiment, but also cfo surveys is, which are fortune 100 and fortune 500 kind of companies. They lie. This is a big improvement in intentions, but the followthrough is yet to happen. Right right. If that happens, that could be, i think, a nice tail wind for the sector if it doesnt its their job to be positive, the ceos Courtney Reagan has the latest headlines for us. Thank you very much, scott. Heres whats happening at this hour former president george w. Bush addressing a summit in washington, focusing on veteran transition, hosted by the george w. Bush institute. This to improve the lives for veterans and their families. You know, i tell people all the time that were a fortunate nation to have had millions volunteer in the face of danger. And i view it as a tremendous National Asset these are folks that got a ph. D in life without having had to go to college theyve seen a lot jurors in the retrial of ray tensing, the white Cincinnati Police officer charged with fatally shooting an unarmed black motorist say theyre deadlocked after deliberating for more than 27 hours, but the judge told them to keep going. Sears holding is set to close another 20 stores, according to an fcc filing the company will close down 18 more sears stores and two more kmart stores the number of closings for the year now adds up to more than 260. Thats your cnbc news update at this hour. Scott, back over to you. Courtney reagan, thank you so much next, our man of steel, Pete Najarian is tracking unusual kuft activity in a steel stock. Plus, the blitz halftime repor. Reporter next week is fang week on the Halftime Report. Our focus is on facebook amazon netflix google. Announcer have these names run their course or are they about to ochew their way into ne territory. Just imagine if all the machines at work were constantly thinking. Always on the lookout for patterns and connections to make everything work better. I call it the internet of everything, but its really the internet of everyday life. The partnership between Dell Technologies and sap helps make the promise of the internet of things a reality for our customers. We know how powerful live data can be. We use sap at dell to run everything from finance to procurement to travel expenses. And thats the same kind of live insight we can now start offering to all of our customers. And as we get better information, better insights, it can improve virtually every aspect of society and the economy. Thats the opportunity of our generation. The next industrial revolution. Thats why Dell Technologies runs live with sap. Deartheres no other way to say this. Its over. Ive found a permanent escape from monotony. Together, we are perfectly balanced. Our senses awake. Our hearts racing as one. I know this is sudden, but they say. If you love something set it free. See you around, giulia as promised, pete has some unusual options activity in a steel name pete, what is it its mt, arcelorim mrkarcelol upgrades all over the place, mostly towards u. S. Steel, aks, weve seen other names involved as well, arcelormittal, very unusual. Someones out there buying the call stock was trading around 21. You can see if this stock is able to break through that 50day moving average, theres a little bit of an air pocket there that could go all the way up towards 26. Someone came out there and bought 11,000 of these calls to the upside, expecting something. The stocks started to move already from the time those calls were bought until now. Theyve already moved. They were trading about 35 cents when the 11,000 were bought. Really interesting to see this steels have been on fire as of late take a look at u. S. Steel and some of the other names. This one recently an add, just this morning justified, this run in steel again . I think so. And ill tell you what, it seems like the Analyst Community seems to be all over this. Theyre taall talking about all the various reasons on the why right now. But theyre out today and they make a call today on letter x exactly right theres been an interview move towards this entire sector, scott, for the last couple of weeks. It was Deutsche Bank, i think just last week or earlier this week but it seems like were seeing a steady diet of this, as well u. S. Steel has been cut in half from february, so it looks like it wants to make a stand here youve had multiple attempts so break down below 20 and the buyers have come in. I like that risk reward for a shortterm trader. Take two points in risk. So deutsche upgraded u. S. Steel and ak steel yeah. Bea, well have the analyst on who did that, the second hour of power lunch. Ill stick around for that, scott. You should. Between 2 00 and 3 00 p. M. Today. Speaking of, Michelle Carusocabrera doesnt he stick around every day . He does, he was just saying i never miss it excellent good answer. Thanks, scott. Coming up in 19 minutes on power lunch, investors seem to be waking up to a new reality on the Health Care Stocks that sector is now the worst perform. Yesterday, the best. Were taking a closer look at the bill from the senate and breaking down what the actual impact is. Plus, a brandnew report out showing that cord cutting, picking up weve got the details. And in honor of this years ugliest dog competition, were looking at some of the ugliest stocks on the street are they worth a shot . Are they dogs of the street, like the dogs of the dow that and more ahead at the top of the hour when power lunch starts now in 18 mutines Halftime Report, though, dont move, because its back right after this but theres no business track record. Well, have you seen her work . No. Is it good . Good . At cognizant, were helping todays leading banks make better lending decisions with new sources of data so, multiply that by her followers, speaking engagements, work experience. Credit history. That more accurately assess a business chances of success. This is a good investment. Shes a good investment. Get ready, because were helping leading Companies Lead with digital. You realize the smartest investing idea, isnt just what you invest in, but who you invest with. Our 18 year old wase army in an accident. 98. When i call usaa it was that voice asking me, is your daughter ok . Thats where i felt relief. Were the rivera family, and we will be with usaa for life. All right. Time its for our trader blitz, positive guidance sending finish line higher today. I think it was simply, scott, the expectations were so low for this stock that it was hard for it to not outperform it wasnt look, not a great quarter in an industry that clearly has pressure with nike moving to amazon i was going to bring that up. Why not the same pressure on this one that footlocker felt when the announcement came out honestly, im surprised the stock is up as much as it is today. But i think that simply says that expectations were so low, particularly after the amazon news with nike that there was only one way to go i wouldnt own it. Health care, best weak of the year its a great week, but i have to say, were much more selective when we come to the sector altogether. We think its going to be a trickier story of who wins, who loses, and whether or not we actually get reform this year in the Affordable Care act. So you cant buy the etfs, youve got to buy look, i think there was a rebound from extremely bearish sentiment following that initial failed vote or almost failed vote in the house. I just dont think were going to have enough extreme catalysts in the sector to say, its a buy without regard to fundamentals all right bed bath and beyond, pete, sevenyear low amazoned is that what this is and this is a name that i think theyre getting amazoned and unfortunately, we actually had some unusual activity the other day. They got that wrong, as well they were buying the july upside calls. They got it wrong, but at least the risk reward is not quite as bad. This is a name that missed on the top and the bottom theyve had a very difficult year, already. Obviously, amazon, i think, would be exactly where you would put the bullseye on where the bullseye down 15 in one week along. High yield, rob . Within fixed income, we still like high yield. If argentina is able to issue 100year paper, a country thats defaulted four times, it shows the epic demand for yield in the marketpla marketplace. Corporate Balance Sheets are strong i still think within fixed income, you can buy high yield josh, Restoration Hardware upgrade to a buy at Deutsche Bank stocks up more than 5 on that. I cant believe im saying this, but i like the setup double bottom, 25 bucks in 16 and again in 17 now its going higher, 42 of the flow short are you people bananas this stock probably goes higher. I would be a buyer before i would be a seller. Pete, have a good weekend well see you back here soon, okay thanks, scott absolutely good stuff, Pete Najarian all right, coming up next, well get a look at earnings straight ahead next week, Halftime Report is back right after this all right. Some big earnings ahead next week weve got darden, general mills, and look at nike thats where you guys want to start. Josh, jimmy . We both bought the stock at the same time, and ive got a half position, and im thinking about adding it to it, front of. Theres nothing to indicate it was very good. Not that it was bad either lets get the results out of the way. Historically thats right in the middle of the range. Sort of 18 to 22 that it trades. Im going to be in with both feet. Josh. Right so we bought it last winter. Had a great rally into the spring, went up 8, 9, and gave it back for all the fundamental reasons. Lack, youve got pretty substantial reports. 29 bucks, i thought it was very tradeable. If we get below that on a disappointment, this is not going to be a good name to hold, so im not going to be telling people to run to nike ahead of the earnings i would be more excited if i werent in it, if they miss, giving me an opportunity to accumulate. I agree. Thats my whole spiel go. I was going to say. Thank you very much. The salute w rllaseay good and in and of itself well take a quick trade and do final trades next. Can make all the difference. It can provide what we call an unlock a realization that often reveals a better path forward. At wells fargo, its our expertise in finding this kind of insight that has lead us to become one of the largest investment and Wealth Management firms in the country. Discover how we can help find your unlock. Its not just a car, work sfx its your daily retreat. The es and es hybrid. Lease the 2017 es 350 for 329 a month for 36 months. Experience amazing at your lexus dealer. upbeat dance music dance music abruptly stopping dance music starting then stopping so, how are things cartheyise . Youre fired [ screaming ] its time to get back on top. Were going back to villainy. So bad so good that im so bad. [ maniacal laugh ] dont try to fight the feeling of somethin thats so organic. [ pop ] despicable me 3. Rated pg. Welcome back to halftime. In a new documentary cnbc goes to china to follow young super achieves its all part of a program funded by billionaire Steve Schwartzman whos concerned conflict could break out between china and the west hes focusing on a few new leaders. Eric goldman is one of them. For as long as i can remember, ve been an entrepreneur in high school i had a couple of companies. When i got to epennsylvania, i knew i wanted to. He was named entrepreneur of 2014 i cofounded the company fever smart which makes a temperature monitoring device. Aaron and his cofounders were inspired to create the device while one of them was undergoing Cancer Treatment during their freshman year. I sort of saw an opportunity to help a large group of company. Thats something i wanted to act upon in beijing hes been checking out the startup scene and making contacts more than 6 million smartphone users into a tech is exploding. And when aaron finishes the program hes heading for the real estate unit in Steve Schwarzmans own company blackstone other scholars are going in Different Directions with some even planning political careers. Yoinlt want to miss it, a billionaires bet the best brightest. Right here on cnbc, sunday at 10 00 p. M. Eastern pacific have these names run their course or are they about to chew their way into New Territory f. A. N. G. All next week at noon eastern. Welcome back to halftime. Yesterday we con grad graduate lated josh and his first making it among the top 300 advisers list today we con a great late another one of our own. Thanks, scott im in good company. Its important to point out. You know they dont rank them theyre in kate moore to start us off. Im still excited about the banks. I think a lot of people have been obsessing about the flatter yield curve. A very solid macroenvironment and a Great Potential for cash return is a safe bet. Rob. Agree with her. However, next week is f. A. N. G. Week its about window dressing the things that have done well are going to get going in the end of the quarter. Stay with whats working. Correct. Mum. For a week. You know, boeing, its something we talked about a lot this year. I got out at 185 its now at 200. Im thinking about getting back in they had a great paris show. Theyre rolling out the 797. Everything going right the stock, josh, i know you look at it from time to time, the chart is tremendous. I know you think im messing with you. No, not really. Jcp is leaving the s p. Really . Seriously jcp leaving s p. Do you want to give it a eulogy its happening today. The bad news is amazon is already in there. Can i say i bought more schwab yesterday, 50 days turned up, i think its going up. Power lunch started now. Thank you, skochlt im Michelle Carusocabrera. Were going to separate the fact from the fiction straight ahead. And shut the front door. New home says, have you seen them they surged last month were going to tell you. Theyre on the move right now p were going go inside the numbers and were just hours away from this years ugliest dog competition, but we here at power lunch arent down with fashion kay