The Halftime Report with scott wapner starts right now. Welcome, good to have you with us on this friday, our Investment Committee at the desk today, josh brown, stephanie link, jim lebenthal, the chief Investment Officer at Boston Private Wealth is here, liz young is bny melons director of market strategy, anastasia from Jpmorgan Private Bank and lets begin with the broadcom story. Its one heck of a buzz kill today. Price targets cut across the board, lots of stocks in that space are down shortly, not jus broadcom, amd, lam research, micron, you pick it in the chips and its getting hit pretty hard the chips have two things working against them the first is theyre like one of the last true global cyclical sectors that exists that have any real market cap and any real size so you see a lot of people express their views about the Global Economy in those equities and obviously, the tariffs are an issue because of how much cross border work needs to be done in order for chips to be manufactured, shipped, et cetera so there are huge question marks and thats happening at the same time that were getting a slowdown in cloud spending at the enterprise level as ive said on the show before, its highly likely that corporate capex peaked for this Economic Cycle in the Third Quarter of 2018. Everything so far thats come out since then has indicated that we are not going to see a resumption of that level of spending and a good deal of that spending happens at the cloud, at the server and so chips are both economically sensitive, theyve also got the secular thing going on with Companies Spending less on the hottest areas within chips and look, theres no pity in this group. Theyre high beta names, they get punished relentlessly when one of them is bad news, they all go down, amd is a great example. Heres a stock that hit multiyear highs. I think it hit three or four year highs on monday, its down 12 in the 4 days since and thats in a good tape so thats like what you can expect Going Forward for the semis and thats why im not, like, racing in to buy the dip in Something Like broadcom so, liz, the ceo says were currently seeing a broad based slowdown in the demand environment which we believe is driven by continued geopolitical uncertainties. This is a wakeup call on how destructive the trade war has been to certain industries, is it not absolutely. I think the real question here is are we getting to a point where weve raised tensions so high that theyre hard to reverse . And i dont really know the answer to that on an individual security basis i think other people on the panel can probably answer that better than i but we are getting to that point where as an industry, as a sector, were we cant reverse all of the damage thats done and even if we get a deal by the end of the year, it doesnt fix any of this so, cramer, this morning, calls it truly depressing broadcom call and he had such high hopes going into it because hes such a fan of the job stuff that hock tan has done truly depressing, a solemn hock tan, not good for the group, obviously, i thought he would have something up his sleeve, it turns out he did not this company also didnt lower numbers last quarter when everyone else did so they hadnt seen it yet so i actually added to it today because and this is a new position for me and im slowly legging in because i realize this is volatile todays day one of the buy. Exactly so its a very small position to start and by the way, i sold intel a couple of weeks ago and im using that money to buy this because i think this truly is quality on sale and thats my style. I want to buy quality when it gets hit this is the number one Management Team in the industry by far and they just derisked numbers. You think they still have cred, though you said they didnt take down numbers last time when everybody else did, they wait until now. And then they cut their guidance and get smoked i think they thought they could probably make up for wireless and storage weakness which is what we thought with better synergies from c. A. , which they actually did see better synergies from c. A. , they raised their operating margins by 3 in the quarter and that got overlooked the most important part is 60 of this business is networking and data center and enterprise and that business remains strong, going to grow double digits and already did grow double digits in the quarter thats 60 of the business, you still have synergies from the c. A. And i think the valuation is absurd, 30 discount to the group, Free Cash Flow yield of 9 , dividend yield of 4 , buying back 7 of their shares outstanding this year alone so i feel like down here, the risk reward is pretty interesting so, shannon, you own it and you bought it at the beginning of the year. You stay with it or you bail on it today steph makes a compelling case as to why todays a good entry point. It is and i actually agree with a lot of what youre saying, the reason we bought it back in february is we were becoming overall less constructive on the economy but we felt like if you wanted to have some exposure to a cyclical space this was, you know, you have to sort of take your bet within the semi space and we bought this based on the Free Cash Flow, based on the dividend yield i think from an execution standpoint, i think we looked at last quarter and said, well, this is management just being a better Execution Team than what weve seen in the other parts of the space so we still want to buy it i would say we have a full position already wed actually like to add to that but we want to wait a few days to make sure we get some of the sellers out of the market. Jim, we highlighted a note, june 12th, couple days ago, probably saying we told you so the chip space is messed up and its going to take more than longer than people think to get back on its feet to the point where it can really Start Performing again so, where are we now for somebody who owns not broadcom but other important names in the space intel and corvo, intel is my safer way to play it the chips, that is but theres some great data out there and i think we all know this the Semiconductor Industry association puts out monthly and quarterly figures and when you look at the trajectory of sales over the last 6 to 9 months what you see is that 2018 was a great year, it was up meaningfully the Fourth Quarter of 2018 was flat the First Quarter sales were down 15. 5 april, which is the most recent data down 14. 5 and yet think about this semis are up on the year take a look at the socks or smh, its been all over the place but what thats telling me, at least, is that the market believes that this selloff is due to inventory pull forward, inventory stuffing in the advance of tariffs okay if thats the case, then we go one of two directions. We either get a china trade deal in which case demand picks up and that inventory gets run through and were all fine or we dont, and the demand that we see now, down 15. 5 , year over year, is where we stay and chips are in trouble so the reason im pointing this out is that the market is telling us, again, through the chip space, its telling us that it expects a china trade deal sometime soon. If not, the chips would be off far more on the year so the interesting point, i think, liz made a great point in raising the question of whether you do so much damage and destruction from the trade war that you cant reverse it immediately. The markets got this view and weve heard it on the desk too, you get a trade deal, market rips higher and everythings great again and and the businesses can just snap back in ways that theyve already made adjustments that they have been unsure about when theres going to be a resolution definitely two parts of the story. First of all to your point about disruptions already in place in the markets, companies are seriously thinking about their supply chains and even if we do get a china trade deal this is not going to be a quick fix and going back to status quo because were hearing from Companies Like iericson noek ykia, for exe theyre relocating so i think that damage, so to speak, is irreversible however, if we think about a trade here, if we do get a trade deal with china, or trade detendeten detente, if we get a rollback of some of the huawei restrictions we could have a snap back in Semiconductors Semis before today were up 9. 6 because the hopes for a trade deal were starting to build once again. So i would actually be looking to pick up some of this secular semiconductor stories on the pullback i mean we talked about cloud datacenter spending, weve hit a soft patch a little bit from the 50 growth rate last year but i think thats going to start to come back up 5g, artificial intelligence, these are all Semiconductor Enables businesses so i would look at those names. I think thats a really great point. The volatility is not in the earnings the volatility is in the sentiment and so if you have a deus ex machina that comes along where all of a sudden you flip a switch and say you know what, trade tensions are off, look at this signed piece of paper i have which is probably a chinese food menu but whatever, all of a sudden its not that the fundamentals have changed so much for these semi companies but its like a cloud lifting and that reaction could be instant. It could be algorithms first and then people coming in once theyre already up 10 and taking them up 15 even if youre including short cover so i think thats a great point so do you take any of whats happening in the chip space and say, you see, i thought maybe the tech trade was a little ahead of itself in the to begin with and this is further evidence of that well, the big thing that youre seeing in tech is this bifurcation of businesses that are, i would call them asset light, recurring revenue model businesses that have not lost a step at all. Theyre all at alltime highs, you want to talk about service now and workday and crm and i can reel off 30 of them at this point. Those stocks have not been trading on tariffs they move a little bit with the nasdaq but theyre doing their own thing and then the chip stocks are right in the cross hairs so if all of a sudden you have a rotation and people say, okay, i just made 50 straight points in the software company, i couldnt even tell you who the ceo is but now all of a sudden theres action in the semis thats positive and weve taken trade off the table, yeah, you could see the nasdaq continue to roll but with a whole new group of stocks hitting the 52 week high list while the prior winners take a pause weve seen that throughout the post crisis period time and again in different areas including tech so thats not out of the realm of possibility so the implication is, yeah, you should be looking at some of these semi names that are down 20 points or 12 this week as in the case of amd and say, this is an interesting way that i can add some potential upside to the portfolio. Thats just the point, actually, because i thought i would walk in this morning and the stocks would be down 5 , 6 , 7 and theyre down its not pretty, right, i mean, i own a few of them but its down like 2 or 3 and the really secular stories, the ones that you want to own for the longterm are down like 1 so you know, i think that these stocks have already had a correction, they rallied huge off the december lows, but theyve already had a correction and yeah, maybe theyre anticipating a trade deal or some sort of reds lusoln there but i think the valuations are already capturing so much negativity and the good Quality Companies are getting thrown out with the bad i take your point you look at the overall market and you could say, on another day, boy, a company like broadcom, which is so important, and they really cut their guidance and the nasdaqs down 0. 5 and the overall market isnt down all that much either, im wondering if its because it seals the deal for a rate cut and the markets taking any bit of bad news as a positive because it may not seal the deal today but it could help, you know, wet the envelope at least to seal it i dont think it seals the deal for a rate cut. I still hope that the Federal Reserve watches Economic Data more than it watches Stock Movement however maybe this is both, right maybe this is maybe a further sign and maybe the clearest one, you know, most recently that the trade war is having a really negative impact. Well and what it could do is bake through into Consumer Sentiment and then that becomes an economic number but what i think were seeing here is stocks are number one expecting that the fed is going to prop us up in the meantime and then eventually we get a trade deal so, its like were just expecting the next six months to be kind of preventing a nose dive in the s p from the fed and then we get a trade deal maybe late in the year and everything takes off again. But the data today was actually really good right i mean, right right thats whats youre in the conundrum. Manufacturing is horrible but the consumers actually theyre showing signs of life and then even the Industrial Production numbers and the Capacity Utilization numbers, i mean, were not going down i mean, after the numbers today, gdp could be for the Second Quarter 2. 5 instead of sub 2 thats a big change. Its the great conundrum. Why should the fed cut rates when the stock market is 2 from a new alltime high and the data continues to come in pretty good and you can easily make the case that if you and liesmans going to be here in a moment, that if you combine the gdp for the first and the Second Quarter, so if youre doing, maybe, 2. 5 , you need to cut Interest Rates liz hit on something really important. Just real quick. I think what you said is really important because youre talking about how the consumer loses a little bit of confidence and that becomes an Economic Data point. I feel like the transmission mechanism of the stock market is faster than ever to hit the consumer, especially when you look at umish where people are upper middle class that are answering these surveys and they do know whats going on in their portfolio. The transmission mechanism from weakness in a Semiconductor Company to consumer could take six to nine months stock market, could be a onemonth story. Before you guys answer that, Steve Liesman has a rapid update for us, literally right now. Which plays right into this conversation steve, great timing on this. What do you have for us . Yeah, scott, put all the data together, the strong retail number sales, decent Industrial Production, business inventories, were now at 2 for the Second Quarter remember, this is a number thats had a one handle through most of the quarter and the data thats come in and its up 0. 3 from where we were before. Heres some of the forecasts, bank of america agreeing with stephanie, theyre up 0. 4 atlanta fed comes up 0. 7 to 2. 1, action economics, 1. 9, Deutsche Bank and joe at 1. 5 and 1 respectively there you go theres the forecast out there and then the Third Quarter is running 2. 1 so First Quarter was 3. 2 we put it all together, the Fourth Quarter at 2. 2 and if w do this one and the next one its a 2. 4 economy and i think your question is a good one. If you have a Federal Reserve that believes the potential of the economy is 1. 8 and were running 2. 4 , do the math, does that auger for a cut and i know we were talking about that interesting stuff there, whats happening from trade and whats happening in the Manufacturing Sector and Capital Spending which have all been on the weaker side but its the consumer that seems to be pretty strong here and at least for now, holding up the economy with stronger wages and plenty of employment thats out there, scott. Amorosa appreciate the point about the gdp tracking now 2 but i think as the fed you have to look at the preponderance of the evidence and sort of the other indicators, the forward looking indicators so if you look at global pmis were just on the cusp of 50, if you look at new orders they do not look good and then you couple that with a payroll story that we got last week, if you look at employment, the cyclical sectors of the economy are basically created no net new jobs for the month of may. Then you couple this with the inflation story, core pc inflation for the duration of this Business Cycle has undershot the 2 and on top of that throw in trade uncertainty, Business Confidence that is starting to pull back and i think its thats whats ultimately driving the economy, so i think the fed is certainly not a done deal to lizs point but i think the preponderance of the evidence is starting to build. Steve im going to go out on a limb and say that the fed, and you know better than me, that the fed doesnt think it made a mistake in december and if it cuts rates now, you could say its an admission that it did. And theyre going to come back and say, well, we could hike in december because the economy was Strong Enough to do so and you just told me that were going to do 2. 4 in the economy and thats evidence that we made the right move and now youre calling for a rate cut im going to agree with about half or a little bit more of what you just said, scott. I dont think the fed thinks it made a mistake, especially if you had that First Quarter gdp number at 3. 2 , hiking that quarter point did not seem like a mistake to them. Whether or not that would make them more reluctant now to cut from a it sounded like you were talking about a kind of bureaucratic inertia idea which is we dont like to admit publicly or its just we dont think we mad an error by raising so why do we need to cut now, six months later i think what you need to have and i think the last speaker there was spot on, a meaningful change in the outlook and i think this is a time the feds going to get together next week and theyre going to take a look at their outlook and theyre going to see if its worthwhile to mark it down or not, both their unemployment outlook, narrow inflation outlook and their Growth Outlook and right now i dont think they can mark their Growth Outlook down meaningfully in terms of what is out there in the economy and the existing data. If the fed is data dependent its a tougher hill to climb to cut rates. However, if its going to say, we have all these prospective issues out there and challenges to the economy and its going to kind of move away from the data dependence, then i think it could make that case a little better certainly not in june but perhaps in july. Steve, thank you for that rapid update appreciate it. Fits so perfectly into the conversation the next question then becomes, liz, is the market hads ahead of itself, the market way over its skis in thinking the feds got our back 100 and as early as july, if not before. So, two parts to that answer. I dont think the markets ahead of itself in thinking that the fed has our back i think the markets ahead of itself in thinking that the fed needs to have our back i dont think that theres enough data telling us that theyre going to need to prop this up throughout the year and now i think weve got three cuts priced in through the end of the year thats right. And the probabilities of which keep going up. Right right, the percentages keep increasing that absolutely is ahead of itself so the fed funds futures is almost the markets wish list. The market would love for the fed to cut rates three times and just prop up stock prices but thats a shortsighted goal if you break the markets heart, if the fed does that, it doesnt get the wishes that it has, what happens to stocks . I think they pull back. I think this is clear, at least a couple of cuts are clearly priced into the back half of this year. I think the market continues to look at things like when Consumer Confidence is negative or declining we look at that as a good sign for the fed to move. If its positive, we attribute it to everything else. So each Economic Data point is given a rationale why the fed should discount the positive ones and only focus on the negative ones because the equity market is very much focused on the fact were going to get those rate cuts in the back half of this year i think the economy is deteriorating and i think theres rationale to potentially cut rates but next year, and not as a result of what were seeing in the economy right now the july meeting is going to be bananas can you imagine the anticipation at that moment to get powell and the message from the fed i cant even wait for that theyll have to message starting next week but still and theyll message for a month, thats what theyll do. What happens if we dont get the message . What happens if the message that the market wants doesnt come through . Do you agree that stocks pull back can the market i just dont understand what problem what problem with 25 basis point rate cut is addressing i literally dont understand access to capital is fine. There are no stresses in the system look at credit spreads its a joke. What are you doing what do you think is going to change in the economic picture from a quarter or a half a basis point . Absolutely nothing if anything, you could actually make the argument that this prolonged period of Endless Endless capital it would be a new era it would be one of preemptive rather than reactive you do the cut. All right. Then what are you watching to say this cut helped . Probably stock prices. You definitely not watching wages because wage growth is not a problem right now. And they know theres a 6 to 12 month lag between Monetary Policy changes and coming through into the economy so its going to take a long time to figure out if it did affect anything how many will they do while they wait to see if the first one worked were talking about the fed and china trade deal we dont have to put up the wall of worry but a host of rather big bricks in the wall of worry but the fed has its eye on the middle east and ive been around, ive seen the middle east heat up and cool down, its a lot hotter than usual. The last time a mine went off in fact persian gulf or the gulf of oman, a few days later we had destroyers shelling iranian platforms. Im not saying thats going to happen but history is a guide here things are hotter in the middle east than usual and you take a look at great britain, okay, youve got the polls leading to boris johnson, thats not going to add stability thats going to remove stability. These are things that add to the conundrum. And yet, stephanie link is not concerned overly or you wouldnt be adding to positions like you chevron. G. E. Verizon. Aptiv. Yeah. Youre a buyer. Yeah, i am a buyer but im a buyer on the bad days, right every other day its like one day the cyclicals work, the next day the defensive works. You could be a sitter on the bad days but youre not. Youre a buyer i am a buyer but im buying balance. Im buying a little bit of offense and a little bit of defense. Offense would be aptiv because its down 17 from its highs and trades at 14 times earnings and theyre an Industry Leader in the auto parts sector. G. E. , ive been talking about this for a long time, this is a twoyear nontrade for me because its a turn around story led by a very strong leader and i think they have misexecuted for so many years, theres so much hello hanging fruit there that you dont necessarily need the power business which is a big part of the business and big part of the company, dont need that to really recover so on the defensive side is chevron and verizon. Chevron is a 4 dividend yield and they have a great Balance Sheet and theyre buying back 5 billion of stock this year and next and its a fabulous Management Team and then verizons trading at 12 times forward estimates so i dont know which way trade is going to go i dont know which way the fed is going to go but i think theres value out there and you cannot ignore when stocks get hit so hard. Thab that said, i am trimming l 3, up almost 40 on the year, its a Great Company and theyre merging with harris and i think its time to take the chips off and google, i was so upset by that quarter that now you have regulation on top of that quarter and then theyre probably going to do a Cloud Acquisition on top of that no i prefer facebook in that. Theyre basically trading at the same multiple, by the way. So i you sold your entire google position im market weight now but i was substantially overweight for a while. What do you think you should be doing now, buying on the dips like steph is or not theres a couple of things that we should be doing. So, well, actually, three things first of all, if you hold equity exposure i would continue to hold it but i wouldnt necessarily chase the upside here in the cash equity markets. I think theres the concept of renting the upside for the prospect of the rate cut from the fed. I think the fed probably ultimately will have markets back because historically when the probability of a rate cut was more than 85 the fed tended to deliver on that so i think sometime in the next three to four months we could see some call options outperform. The last idea i would share with you is gold. I think gold is one of those things that could play in many different scenarios to stephanies pointed, we dont know which way trade is going so gold is the hedge against some of that Geopolitical Uncertainty and weve seen that play out so far month to date and if the fed does end up cutting rates its the real rates that should be trending down, what is a positive for is gold last but not least, if growth is actually fine, but inflation picks up because the slump in inflation is transitory, what is that good for . Lower real rates and higher gold prices so thats probably the highest conviction gundlach is on the gold play as well. Good company. Yeah. What do we think elsewhere . About gold . Just buying weakness in the market or not. Well, thats a function of what kind of strategy you run. There are people that dont have to be fully invested at all times and probably theyre not right now but if there are people that do have to, then what stephanies talking about makes the most sense youre looking for a balance of companies that stocks that could really work if the tariff cloud is lifted but you dont want to put all your eggs in that basket because who knows with this guy and who knows with china and who knows how long this could go on or whether or not it gets worse. I own verizon, i think its a great call heres a stock that is giving you roughly double what youre getting in a ten year, is not involved with chinese tariffs except maybe on some small equipment issues, but you dont have to worry that that story. Its a primarily domestic story. And as rates plunge, that could even that could even work in your favor for the people that own it for the dividend components so i think thats smart. We will continue this after this break heres what else is coming up on the Halftime Report. I think chewy may be it. Reporter cramers call on this brandnew stock is our call of the day. Announcer do you want to bite into chewy . Before the break, our data partners at kensho on what happens after broadcom drops 5 or more in a day its happened four times in five years. When it does, the stock trades positive 100 of the time a month later. By an average of 8. 39 for more, go to cnbc. Com kensho. The Halftime Report with scott waerndherarss ckpn a t tde iba in two minutes [sfx turntable needle scratching record] [music plays throughout lack of afro recipe for love] whoaahoooo oo yeahhh aa aa aye ive got so much love to give ive got so much more to give, baby this is a moment you plan for. To start your retirement plan, find an advisor at massmutual. Com [sfx mnemonic] wanna take your xfi now you can with xfi advantage. Giving you enhanced performance and protection. When devices are connected to your homes wifi, theyre protected. Helping keep outsiders from getting inside. And if someone tries, well let you know. So you can stream, surf and game all you want, with confidence you can get coverage where you need it most. Thats xfi advantage. Make your xfi even better. Upgrade today. Call, click or visit a store. Hi, im receistephanie link the Halftime Report and we want to hear from you. Send us your questions at cnbc. Com halftime and well get to your questions at the end of the show. Announcer go to cnbc. Com halftime or get us on twitter with askhalftime. Welcome back, heres whats happening at this hour european authorities are blaming russia for using social media to influence the European Union elections last month based on a preliminary review, russian linked groups and other nonstate actors made an effort to spread misinformation and also depress voter turnout. Airline prices are increases according to an expert at jpmorgan jet fuel prices have decreased Strong Demand and the Summer Travel season is whats pushing fares higher and new data from the bureau of labor statistics Shows Americans with a graduate degree spend nearly 1,000 per year on alcohol. That is nearly ten times as much as high school dropouts. Lot of questions about that study. Rory sabbatini kicks off the u. S. Open with a hole in one its the first ace at the open since 2014 he becomes the first slovakian to make a hole in one at the u. S. Open. Congratulations. And that is our cnbc news update for this hour. Scott, back to you rahel, thanks so much the latest highprofile ipo making its trading debut today online pet retailer chewy coming public on the New York Stock Exchange in what has been another busy week for ipos leslie pickers following the money for us lessly, this one was very well received it certainly was, scott chewys shares soaring today up about 60 after just 2 hours of trading. Chewys ipo was priced at 22 apiece that was a buck above the range that chewy had already hiked earlier in the week so tons of demand here. Petsmart, which acquired chewy two years ago will be taking home the bulk of the proceeds raised in the ipo, about 900 million worth chewy itself will retain about 120 million to invest in the business now, chewy is an online retailer for all things pets, offering food, medicine, toys, and beds on its website the company says its differentiator, though, is customer service, but that, of course, comes at a cost. Chewys operating expenses totaled about 1 billion last year, contributing to a lack of profitability. Chewy was acquired by pet smart two years ago for 3. 5 billion its now trading upwarts ds of r times that valuation to quite the return on investment there, scott. Another big winner. Leslie, thank you very much. Thats leslie picker at the New York Stock Exchange. Heres what jim cramer had to say about this ipo earlier on squawk on the street. I like chewy. I never get take these hats, ever this one, im actually going to wear i think chewy may be it. This may be the best of them other than beyond meat this is so exciting to people. All right so, cramer gets the hat. Should people get the stock . So, like, the the curmudgeon in me wants to be like, here we go again, another highprofile pet ipo at the top of a web bubble but when you actually look at whats going on here, the stock probably goes higher this company was bought by petsmart they didnt start it for 3. 4 billion and then they did 3. 5 billion worth of revenue two years later and actually i think petsmart will look back and say i cant believe we sold this thing so, i think its going to be a winner and the main reason why i like it is that twothirds of those revenues are auto ship so they did like 2. 5 billion in revenue of people that are just, like, my dog is not going to become a dragon, its going to eat the same amount of food roughly every three weeks so this is what im going to have auto shipped every three weeks thats an amazing business its a great business. Thats how my wife should feed me so, if they can get that same customer to also buy medicine from them and other services in addition to that autoship theyre calling it, like, who wouldnt want to be invested in a business like that and i also agree with what cramers saying, we are getting surgery for pets, we are treating them like family members. Thats not going to reverse on a dime either. So its going to be a high margin business. So i like it for those reasons no buyers anybody else on this today i love the company. If not, why well, actually, the valuation is trades at a discount to its competitor, which is amazon, its amazon trades at 3. 5 times ebitda sales to it could creep higher i think its a Great Company and im just not going to chase it here but i mean, theyve got the distribution, theyve got 45,000 different products, theyve got the service. That is what differentiates them to anybody else. So if you own a pet, you probably know this company quite well theres that peter lynch effect too. I just feel like its up so much, i dont want to chase it anastasia, any thoughts about ipo froth, josh alluded to, you know, the pets. Com of the world, the last time we had theres no sock puppet here so thats good i think the ipo market is definitely supported by the macroenvironment which is now okay but what you see is the outperformance in the secular stories, talk about the beyond meat ipo, earlier that month, we were talking about the pork supply disruption in china and as we were having this conversation, you realize that the demand is moving from the pork or the meat protein to nonmeat alternatives so its not surprising that some of those secular stories have performed very well. I think software is another place to look for potential success of Software Ipos or maybe acquisitions because if you think about the biggest trend out there today, its data and the growth in data and all the Software Companies that are helping you manage it and make sense of it and so forth do we Pay Attention to these in terms you break it up into enterprise like anastasia said, versus consumer . Versus pet. Yeah, versus pet, consumer. Pet tech so hot right now when you look at it, its a good point about the ipos that are coming down the pike, theres slack, i think, thats slated for next week that falls into the enterprise category and some of those, you know, the bulls look at and say, well, you know, these are the ones that are more profitable, you can see a road map to profitability whereas the ubers, the lyfts and some of these other names its much more opaque i think its really important to not solely focus on profitability but to really think about what is that next three to five years look like and is this going to be a secular growing market and i think what you see with the chewy, despite the fact that it might have some headwinds as pet smart reduces their share count because they havesome debt on the Balance Sheet that they do need to pay with some of this cash but i think when you look at that, we look at Enterprise Spending, were talking about, you know, the potential differentiators that are offered in the ipo market. I dont think you have to necessarily have a clear road map to profitability but you have to be able to convince people convince people that you do thats a great point thats what youre looking to buy right now, is there a road map. Coming up, some new reporting on third points dan lobe and sony there you go, s p is down about 7, defensive utilities are leading the way today. Were back in a little more than two minute s. indistinguishable muttering s. That was awful. Why are you so good at this . Had a coach in high school. Really helped me up my game. I had a coach. Math. Ooh. So, why dont traders have coaches . Who says they dont . Coach mcadoo you know, at td ameritrade, we offer free access to coaches and a full education curriculum just to help you improve your skills. Boom mad skills. Education to take your trading to the next level. Only with td ameritrade. Tthis is where i trades. And manage my portfolio. Since i added futures, i have access to the oil markets. And gold markets. Ok. 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 your Online Broker today, to learn more. The cloud i need . It has to keep up with sales, supply chain, inventory it needs to track it all, from cincinnati to singapore. Ooo and protect it all. Customer records, our financials, they better be secured. But i also need easy access, to manage data across my clouds no matter where it lives. So if an auditor shows up, i can be a step ahead. Thats the cloud i want. Is that to much to ask . Expect more from your cloud. Ibm cloud. All right, welcome back, we want to begin this block we have new at noon today. Third point, the hedge fund run by daniel lobe is going public now with its latest campaign against sony, its second in the past six years in a letter sent to the firms investors last night, third point urges the company to spin off its Semiconductor Business third point says sony should consider selling its stakes in other businesses third point making that case in a more than 100page slide presentation that the semi business, which mr. Loeb said is treated as an afterthought could be worth as much as 35 billion within 5 years. My sources tell me the firm started building its stake back in february when the stock sold off sharply into the low to mid 40s, its also worth noting that because the position was taken in third points main funds and through a special purpose vehicle, a dedicated one, that lockup is typically two to three years, which means third point likely sees this as a longterm play the firm notes in its presentation that it sees this situation much like nestle, which third point pushed to spin off underperforming businesses to better enhance value. Third point still owns that stock, has made a profit of more than a half billion dollars in two years as shares are up 47 and one last note, it was reported that mr. Loeb and sonys ceo met last week interesting from a high performing activist investor yeah, and you cant argue with him he makes two very important points first, the people covering this stock are like people that cover casio wristwatches because theyre Asian Electronics analysts but this company is so much more than that but because its a conglomerate, its got this conglomerate taint or discount as they call it and thats not going to go away while it has stakes in all these far flung businesses and its tough to analyze and say what is the pure play, whats the story and the only evidence you need that thats the case is that its selling 11 times next years earnings and it should not be because the business is actually running well and doing well in it core businesses so why is it 11 times forward how could you argue with him of course thats the reason. And then the second thing is, its actually at a lower valuation than where it was trading when he first got involved in 2013 so theyve listened to him, theyve streamlined somewhat, but they have to go all the way and i think that will be good for shareholders and the nestle example is a good one. So, i agree with what hes saying and i think other shareholders probably will too yeah, they you know, obviously point to the similarities to nestle and they sure hope the Stock Performance is similar as well we said up 47 since they took that position and started their campaign against nestle, which they still hold, steph the reason it trades at 11 times is because its a conglomerate so their entertainment assets are actually top of the line Sony Pictures yeah, and its and the whole gaming aspect too, that is getting underappreciated because its mirrored down into all these other things like the financial business, which also could be spun out, olympus could be spun out, semis could be spun out. Semis a Good Business but its not getting any credit they say its going to be a 35 billion business in 5 years, yeah thats why its not getting appreciated in this conglomerate structure so i think theres a lot of value to be unlocked even now. Good stuff. Coming up, viewer questions are coming in on fedex, nike, Dunkin Brands and winnebago go to cnbc. Com halftime. You can tweet us hfte po bk ac right after this feel that . Thats the beat of global markets, the rhythm of the world. But to us, its the pace of tomorrow. With ingenuity, technologies, and markets expertise we create the possible. And when you do that, you dont chase the pace of tomorrow. You set it. Nasdaq. Rewrite tomorrow. Your daily dashboard from fidelity. A visual snapshot of your investments. Key portfolio events. All in one place. Because when its decision time. You need decision tech. Only from fidelity. All right, were back. That means were answering your questions now. First up, stephanie link jeff in boca raton, nike appears to be going nowhere. What do i do with it it was one of the best stocks last year so its taking a breather, only up 12 but it is a compounder this is exactly the kind of name that i want to own in this environment, the quality, good Balance Sheet, global brands, and i think it has lagged and i think thats the opportunity, actually i prefer under armour because i think theres more upside to that but i like nike for the longterm holding. Shannon,for you, fedex. Thats a good one to do right now. What do you do buy on the dip weve been trimming this stock. We think the integration of tnt in europe is not going well. We think theres going to continue to be serious competition in this space, not just on amazon but from other firms that are looking to expand distribution, so were trimming the stock right now. Okay. Anastasia, for you from mike in new york city, builders. Definitely look at home builders, add to home builders, i think that is the trade to look at at least for the summer. Mortgage rates are down significantly from 4. 7 to 4 and were starting to see an uptick in mortgage activity already because of that. By the way, next week is a big week for housing data, housing permits, existing home sales, so i think definitely one to look at ahead it. Liz young, matt in New Hampshire has a question for you about emerging markets whats your view given the global slowdown. E. M. Is still an important piece of a portfolio from a Growth Perspective by definition, e. M. Is always going to be a high beta trade so its something in the shortterm while we have trade tensions, youll feel those bumps but over the longterm we do think we get to a trade deal and we think that its better than international developed. All right josh, from don in hawaii oh boy. Hey, don. Thanks for the question. Aloha thats true sorry, don sorry, don. Im sorry for scott. I mean, it was so obvious and i still messed it up for downtown josh brown, is Dunkin Brands a buy. Im glad you asked me that question, don. Ive been long on this stock for like seven years and i have no plans to sell it i think theres two things with dunkin worth pointing out. The first is while its ubiquitous on the east coast and somewhat in the midwest its in nowhereland in the west coast, its not a slam dunk theyll be able to expand there but i would make the bet that they would and i dont think youre paying up for that bet its a great royalty asset light business, they dont own any of the stores, all they do is print money and drop it to the bottom line okay. Mahalo, dan. Don. See, i fixed it. Did i fix it thats up to don. I dont know if you fixed it don, tweet us, let me know. Jim lebenthal might as well have said howdy. Its bad. It really was bad. Its so obvious. Im blushing now from john in illinois. Keep buying winnebago . Yeah. John, thanks for asking the question i think the last time a question came in on this was the beginning of the year and this was one of my top picks for the year so heres the good year heres the good news its up 60 year to date heres the bad news. Its up 60 years to date. Earnings are coming up next week theyre already baked in because competitor thor came out with earnings last week this is not the time to go whole hog on it. Longterm, this is a agreement investment. All right thank you to everybody for your questions. Straight ahead, the stocks to watch ahead of next weeks earnings there are many stay with us for those trades. Well do it next s. Plants capture co2. What if other kinds of plants captured it too . If these industrial plants had technology that captured carbon like trees we could help lower emissions. Carbon capture is Important Technology and experts agree. Thats why were working on ways to improve it. So plants. Can be a little more. Like plants. Who used expedia to book the Vacation Rental that led to the ride which took them to the place where they discovered that sometimes a little down time can lift you right up. Flights, hotels, cars, activities, Vacation Rentals. Expedia. Everything you need to go. We are back. Theres your earnings calendar for next week. Adobe, oracle, darden. What do you like on this list . I dont like oracle, but im going to watch it. Also adobe i do like its too rich for me ill be listening to the call. Overall macro conditions around the world. So i think those will be very telling and important reports. Josh . Youre going to hate watch oracle i will. I do that i own canopy growth. I dont think this is a stock that really trades on earning. I know it moves on earnings. Thats not really the thing here its got much bigger raks on headlines. New initiative strategy, et cetera i dont have a lot of it, but thatll be the one i pay most attention to yeah. One on your list i actually own oracle well be watching that one generally lagged downafter earnings looking for some support that Enterprise Spending is better than expected for them we are going to take a quick break and then we ce ck d fal trades. It all started under this buttonwood tree. Twentyfour people came together to sign an agreement that created the stock exchange. Just the right elements coming together. It started when scores more people came together, just down the street and traded bonds that helped pay for the revolution, and the nation it created. It started in an office on the corner where the right people witnessed the telegraph and brought information and humanity together forever. It started with the markets, bringing together steel and buildings and silicon and medicine and rockets. We believe the possibilities of life and investing are greater when we come together. Its why for eighty years weve connected ideas with technology, data with inspiration, investors with solutions. So that every day together, it all starts again. Major options action in disney watch options action tonight at 5 30 and check out tyler baileys article now. Its online. Go to cnbc. Com optionsaction who says our bank isnt tech enough . Everyone, look at your phones. The design thinking, the digital engineering, security, blockchain, and we will be first to market yes. When we do we launch . Unfortunately, in 2 or 3, hours. Why the delay . Cognizant is helping banks use Digital Technologies at scale to advance speed to market. Feel that . Thats the beat of global markets, the rhythm of the world. But to us, its the pace of tomorrow. With ingenuity, technologies, and markets expertise we create the possible. And when you do that, you dont chase the pace of tomorrow. You set it. Nasdaq. Rewrite tomorrow. Around the horn for final trades anastasia, start us off. Im going to start with housing. It is a trade to watch and add to over the summertime in addition to lower mortgage activity, higher activity. We see this as a domestic play as well. In a world with a twoway trade risk i think its also a good thing. Liz industrials thats because if the market is watching the fed, fed cuts they go up. Fed doesnt cut, theyre still okay constellation brands. Blackstone. Walmart all right great stuff. Great weekend. The exchange starts now. Hi, everybody. Heres whats ahead of pups busc blockbuster ipos police a 2 billion hit. Shares of broadcom are reeling today after the company says thats how much business it will lose this year because of the huawei ban whats it all mean for the economy . Well ask kevin hassett. Thats coming up and 1,000 too many at a time when colleges are losing students all over the count country, Virginia Tech has too many the president tells us about their plans to dea