shark is with us. bob, kick it off to you about netflix. missed subguisens three of the last four quarters. is the story changing? >> the real question on the price value allegationship for the consumer. blaming this, the grandfathering price basing basically going up. saw an unexpected amount of turn. interesting there, it wasn't actually on the people that had their prices raised. it was on other people that were their prices would be raised and in turn -- >> before that -- >> yeah. odd explanation. people scratches heads, what was going on there? more importantly, international also underperformed expectations. that's the big growth driver of this stock. street looking for around 2.6 or 2. 7 million. >> back to the original question. has the story changed for the worse? >> i think more question marks what their growth trajectory can be and why we're neutral and stayed neutral until they actually show the churn is under control and can add grows adds and internationally a price value relationship there, versus the competitors incumbents in those areas. >> joe, sounds like a reset for the expectations what netflix will deliver and that's represented in the way the stock is trading today. >> yes. now it's two consecutive quarters. talked about this yesterday. to me the international component is the one most troubling because you have the january 6th rollout, to 130 companies. obviously, no stickiness to that. you have one credit card, international credit card, in those 130 companies that have to be used, and not really multiple languages in the content. problematic. international was supposed to be the story. remember, the guidance was 2 million, came in at 1.5 million but already taken down from 3.5 million. to me, the international is the real focus, and that's where, if this stock's going to reaccelerate, scott, that's where it happen to happen. it's not doing it. >> paying are to the international growth. right? what people have been paying up for. but the domestic story, it's stunning. 160,000 net adds versus guidance of 500,000. that is a textbook definition of a miss. >> of course, third quarter guidance also down. 6% -- 66% domestically. bob mentioned pricing, joe, international. my biggest concern is competition. comcast x1 is huge, competitive disrupter. i think hulu, amazon, apple, throw in any name, google. throw in any name you want. biggest question, my mind, what is the total addressable market? >> 120 million or so users. they pointed out last night china may not ever come, and as we know, there's not one u.s. internet company that ever has been successful in china. it may be a long road to get to what we're talking about. >> how close to downgrades the stock today? >> can't talk about changes. luckily right so far. took the target down $10 to about $100. >> kevin o'leary what do you read in the story? that's the narrative, what will it be going forward? >> i think what people ignored about this story the last two years, an attribute i always found disturbing. talking spending $6 billion on new content and making the assumption that somehow netflix can be better at doing that than everybody else in hollywood has been for the last 62 years. the average return of all talkies in color with sound since the beginning of town is a 7% irr. it's a crappy business. it's hard to make hits day in, day out. why would netflix be any better at it? all of a sudden instead of being a subscription model where you're feeding other people's content through your tube, as an internet structure, the way i look at it, subscription service that everybody pays to play, you take on the additional risk of making content. i don't like that story at all, and i think people ignored it. i think another reason the pe in the stock is going one direction, south. >> bob peck. someone looks at this stock at $84 and change today. down 14%, you see one of the worst days its had in the last few years. >> yeah. >> somebody else licking their chops wanting to maybe do a deal with netflix? >> yeah. >> take this company out? at a more attractive price. >> constantly speculated by investors could be taken out. top two, apple and google. both of those companiesing whoing to diversify. particularly apple. could happen. tough to do for an investor to bet on that particularly trading around 40 times or so ebitda even numbers. tough. obviously cheap. >> do you think it's more likely? or less likely, then? sort of pin you down. do you think it will happen, or not? >> we honestly, no insight whether m & a for this company. >> i got it. >> we get why the companies would be interested. could happen, no increment's insight. >> sarat, buy it? >> no. stay away from it for a while. inflection point. getting closer and closer, steph talked about it. competition. how many more users? organic growth can you get? start fighting for the same user and pricing gets cut. when the stocks take a beating. >> paying too much for content? >> we looked at that versus other content providers, cbs, nbc news, et cetera. in line where the other players are, with disney, espn, sports, fair amount, what they're paying. >> no one on the panel today looks at this decline? i had folks, you know, in front of me right here yesterday suggesting that if the stock had a big pullback it's a buy on the dip? no one thinks it is today? >> first of all, the problem i had with the stock yesterday, implied volatility over 10% for the move we just saw, and that's exactly what happens. for an s&p 500 company, that's a little a too much of a risk asurpgs assumption to make in the near term. more of an options trade. long standing on equities, tell me it's going to change. the fundamental story completely changed for this company. >> move the conversation to twitter as well. ross lievinsohn on yesterday. listen to what ross said about twitter's future. get you to react. >> sure. >> i don't see a chance that this is an independent company within 24 months. it's such a great brand, such an important asset in the world. not just domestically but the impact twitter has culturally in the world is tremendous, and you know, you're looking at some tech and media giants that are sitting on 10, 50, 100, 200 billion dollars of cash. how do you not pick up this asset? >> okay. so i go to you, bob. twitter, sort of ripped on that comment. >> yeah. >> first of all, congratulations to you and ross, moved the stock. up yesterday. interesting, look at twitter over the last month, one of the best names, period, in my space. up over 33% since the linkedin acquisition made a lot of these names come into play. we do not think m & a is eminent meaning in 2016. the ceo hasn't been there a full year. new product people. don't see it happening in 2016. >> how about the 2016 timeline? >> inevitable, that twitter gets acquired if current trends continue and could happen as early as '017. >> maybe the next quarter or two, right? you got to think that the people putting in place, the name brand equity they have, got a great ceo, maybe stretch eed a little bit, but think they're giving it their all to get the fundamentals right. >> exactly right. >> can they get it right? >> we look at data daily and great data from the consulting team. see users, engagement. unfortunately so far declining. looking for the inflection point. >> kevin o'leary, when you look at the twitter future what do you see? >> you know, we've seen this movie before. it's called yahoo!. the whole story, great new ceo, great product people. new board. i don't think this has a future. maybe you can play it with the idea that someone who would pay a premium as an acquisition for a news feed, but millennials working in my companies don't use this product. they've moved on to other ways of communicating. those of us that are involved in the news, and in news gathering, or report business news, yes. we'll use it. this is not a magnet for a whole new generation, and i don't know that i would buy this stock on the assumption of a huge premium on a take-out. i totally agree as a stand-alone it's gone nowhere. the story's always the sail. every two quarters there's a new ceo. a new vision, a new feature called moments or whatever it is. nothing works. there's no growth. so either you tell everybody, you know, we're going to completely change this platform, and we're going to compete with a brand new platform. look at pokemon go. it has more user and what is it? 60 days old? pooh pooh happens and it's not happening for twitter. >> thinking about buying the stock, joe, do you buy it for the kinds of things that steph mentioned? fundamental improvements? or do you simply buy it on m & a or just stay clear altogether? >> hoping a tech giant like make apple or google, get two for the price of one with netflix and twitter, gets aggressive and goes after both. a reason to buy it. bob points out, this stock performed very well recently. there has to be a reason behind it, and you wonder if the reason behind it could be possibly similar to what we saw years ago with facebook. finally a positive quarter and everyone rushed in. you mentioned inflection point for twitter. do you see that inflection point coming in earnings anytime soon? >> that's what investors hope for in the back half. the data we see clearly doesn't show it yet. >> your price target on twit. 18. >> correct. >> stock sitting there, above it. >> yeah. >> albeit fractionally. >> yeah. that's what the predicament. take the higher up, use a higher multiple? >> you tell me. >> actually downgraded on it. couldn't justify taking up the target further, even if you implied linkedin's multiples that twitter has, only get to a low 20s target. tough to justify for us. >> how long can dorsey manage to do both jobs? >> my guess, has until the end of this year to prove himself in both of those things. >> another prediction? >> then make more of a choice at that point. may to decide to go to one towards the other or activist investor involved. hoping in the back half you see metrics inflect. >> do you think he will be the ceo of twitter in 2017? >> we haven't made a prediction. >> i know. that's why you're on today. >> we'll see how he executes. doesn't execute on issues in the back half of the year a good year-plus of their initiatives not working and we'll raise though questions. >> thanks for trekking across the river. great to have you. bob peck, suntrust. a story new at noon. the battle between top banking analyst mike mayo and comerica taking a heated turn on the earnings call. joining us now with exactly what happened. mike, welcome again. good to talk to you today. >> thanks for having me. >> what exactly happened today? >> well, comerica made some tough moves. announced reducing their bank branches by 8%, head count by 9%, and their expenses by 9% or 10%. they're making tough decisions. come up with a, a plan b. for this tough revenue and interest rate environment, but, wow. it's just not enough. i've been doing this, scott, for 25 years, and they're doing some of the same old tricks we've seen by banks for a long time. one, they have aggressive accounting, big restructuring charges. two, this is a management team that's underperformed more than a decade, and we have to wait until 2019 to see the full benefits of what they, you know, laid out today. >> this is their profitability program, but what happened on the call? you tried to ask them questions and they were giving you talk to the hand? >> yes! my question was in the q. made sure about that. they wouldn't take my question. i had lots of questions. that's what i do. in fact, i testified to congress in 2002, part of sarbanes-oxley, and testified about situations like what happened today. where you have analysts who sometimes contest management's plans, and then they don't take questions from the analysts. after, you know, everything we saw with eliot spitzer and with the analyst conflicts of interests and sarbanes-oxley and the financial crisis, here i am 25 years later, and they're not taking my questions on these earnings call. >> dissed you altogether. other commentary i heard today, sandra o'neil, core eps better than expected. loan growth stronger than expected. credit costs below expectations. piper jaffray comes out, better overall trends. the stock is only $5 off its 52-week high. so maybe they should have taken your question? >> well, we still recommend the stock. we upgraded the stock, first time in two decades, you know, scott, we went to the annual meeting and spoke on your show after that. but they should still consider the idea of a takeover. the ceo said, all options on the table, but the issue here is not just the quarter. there are only one of two banks in their peer group that failed to achieve double digit returns on equity for every one of the last eight years. one quarter does not make a trend. and for them to go ahead and say, well, we'll see you in 2019 and let you now how our plan did after eight years of really poor performance and by the way, the only one of the 20 largest banks not to have added any new directors this decade. so a company like this, underperformed with the same old directors should at least try to have better governance and today they had, showed some of that same old bad governance tweev seen by them and banks are the last few decades. >> appreciate you calling in, mike. interesting story. we'll continue to follow it. mike mayo, and reached out to comerica for comment and not yet heard back. when and if we do we'll let you know. kevin o'leary what do you make of this? >> you know, it's a big mistake when you get an analyst that's a hammer on your stock. ignore their questions on a conference call. particularly when people have got to know them over a long period of time. and then he comes out and says, i'm not happy. that's never a good outcome. that starts attention with other shareholders, which raises questions. he has valid questions. he's a hammer on the stock, answer them. i've never liked management that can't take the heat on a quarterly call. it always bothers me, and by the way, it always ends badly for the company. never, ever, ever, ignore an analyst. even if a short. answer their questions. >> joe, you know, they're cutting workforce, closing 40 locations. they've been exposed from a fairly high level to the energy downturn, especially in texas. >> yep. >> maybe the story's changing? >> it's mystifying, i agree with kevin's why not take mike's questions? things are actually getting a little better. your answering questions from a perspective where we've seen improvement in the business model. mike is suggesting a possible ta takeover, i don't know if any of you seen banks taken over recently. it's not exactly happening. comerica could have defended the story well, created p.r., an environment you you sab, the stock is actually doing okay. >> wrap it up. one of the reasons why some reasonal banks are bigger plays, anton schutz will tell you the reason he likes this a winner, m & a. >> correct. hearing it the last four, five years from myself and many others on this desk. >> the problem. you don't even have a buyer at this point. seems to be off the table at least in the short term gmplgts stuff. a lot more ahead on the "halftime report." >> announcer: you could call it wall street civil war. active management versus passive management. fees versus low fees. loan wolves versus the index average. which is your best bet? we're debating it, next. plus, big blue chip move, and decisions on dow components. we're talking j & j, goldman sachs and ibm. this is the "halftime report" with scott wapner. and we're back in two minutes. [click] man: ♪ you're beautiful [click] ♪ i'm coming back to you [click] we're back on the "halftime report." u.s. stock picking funds inundated with redemptions. those actively managed funds saw outflows in june according to morningstar, biggest exit since the financial crisis. active voersz passive battle isn't new, of course. two of the world's most successful investors pushing investors towards passive for years. >> anybody that owned a cross-section of american business over the last ten years, 20 years 30shgs years, 40 years, 50 years, 60 years, has done fine. now, if they think they can dance in and out, you know, and buy and sell stocks, i mean, you know, they ought to head for las vegas. >> investors should not be traders. a matter not of short-term speculation but long-term investing. buy and hold. >> morningstar's numbers show year to date 236 billion dollars come out of actively managed funds. $229 billion gone into passive funds. the gang has a lot to say about this as you might imagine. especially joe terranova and kevin o'leary. kevin, to you first. >> so about three years ago i was watching pisani on the floor of the new york stock exchange, because i always turn up the volume when he's walking arranged the room talking about what's coming out. he mentioned a new index a single factor etf. low vol etf. can't remember when company issued it. i asked a researcher, what the hell is this thing? the first time i saw moving away from market cap weighted indices. we all know qqq, sby, tools we use as investors. the first time i turned on to the idea to create multifactor rules that govern how you invest across a wide swath of stocks. i get to intrigued. give bob credit for this that i got in the business. today the only way i invest large amounts of capital is in multifactor indices. built by ftse russell, the largest player in the world now. you can say i want stocks that are 20% less volatile, that don't use debt to increase their dividends, that don't do any sales accruals like worldcom, for example, they built and indi indice, that ticker, i involve heavily. outperformed the s&p in the last year by 1100 basis points. this is the future. this is where we're going to be going. market cap weighted, sayonara. i'm multifactor from now on. i don't want multicap. i agree with warren buffett, owning a wide swath of america but i want the good, quality balance sheets and can get that in an index now but with multifactors. i'm onboard. >> kevin, you want to be more active, sounds like to me, i'm fine with and happen to agree with. the dynamic i'm trying to explain, hopefully you can help me out with this what is going on in 2016? everyone is asking the same question. why is that bond yields are at historic lows and equities are trading at historic highs? the large dynamic is, the movement into passive funds versus active funds. look back ten years ago, bond funds had 9% passive-type funds. it's now up to 26%. on the equity side, you looked at 16%. that's up to 42%. passive funds don't care about brexit. they don't care about an earnings recession, baton rouge or nice. the market is trading where it's trading now because of that. i don't know i agree but understand what's going on in the market and how long it will persist for. >> you want a passive market. you don't. >> more active. i believe in an active model over the course of a three-year period. i can outperform. but i am a professional, hope to be, what i am doing. >> there are professionals running kel purrs. i don't need to go through the hedge fund performance numbers. obviously haven't been good, say the least, the last few years. what does that tell us? >> look, i would give money to a goat if it could outperform. bottom line. what i like about these new multifactor indices, it's like finding the best portfolio manager in the world, crystallizing their very best years, and having no style drift. for example, when people say to me, well, on the ousa index from ftse russell, why stay in that forever? i believe that that index is designed to only own high-quality balance sheets in perpetuity. tell me when in the future under any market conditions where i won't be in love with a high-quality balance sheet? that's all i care about. so i don't own any netflix. why? it's terrible. volatility crazy. gets blown out of an index like that. i want quality, quality, quality, until the day i die. i love these new indices. >> i have, in steph, an active manager. of a portfolio. >> right. >> make your case. >> well, i believe in buy and hold and i believe in the long term and i believe that you can own a little of both, actually. personally i do, professionally i totally believe it and advise it. you do want some stability, low cost, etf-like, that mocks the, or mimics the s&p, big blue chip quality companies with some dividend yield, low cost, i mentioned. to add alpha to your performance, you have to have stock picking and that's goir to be good years and bad years. you have to have a longer term horizon, i think to outperform over the long term. >> what does active mean? active does not, in my view, and steph's view, mean trading every day, every week. it means holding for a period. the other thing people misunderstand, taking a contrarian view. could be a passive index or kind of, i'll just label around it, but when active, taking a very different view and today i look at the indexes. i don't want to be in so many stocks that are leading this market higher. talked about it for months. if i want in staples pay 23 times earnings, utilities at 20, not where i want to be. that's pushing the market up. contrarian, going to areas, autos, all the others, where i think, and a lot of this today is technical. correlated with a ten year. as the ten year went down, more push to higher companies. three to five years from now, i'd be rather active and position myself as a contrarian where i think there's opportunity. >> kevin, do agree -- >> kevin, last word. >> yes. on the trend, currently exists? seeing flows going to passive versus active or do you believe this is something that is temporary and when revert back once we see consolidation in the number of active managers 0 ut there? >> look, i think there's always going to be a role for an active manager because the issue at the end of the day is money flows to the path of least resistance around performance and low risk. right now these new indices, multifactor indices are garnering huge flows, reducing risk and outperforming. the challenge i found over a long period of time in hiring managers into my own shop is, i pay millions for them. millions. they go soft, flat, or blow up every seven to eight years. my personal experience. i've watched them use indices like this within their own funds. i've become far more scrutinizing in terms of what i'm using and liking multifactor indices. a huge advocate, pounding the table around performance but i love people, too. i don't want to sit alone in front of a computer all day. i want to talk to somebody. >> something i respect, e-mails me now saying if central banks ever stop a clown act of manipulation, you'll outperform. and then have to be a real stock picker. anyway, this will continue another day, week, month, a certainly year. coming up, microsoft reports earnings after the bell. what do you do ahead of the numbers? we're going to give you the playbook just ahead. plus jim cramer says, analysts tony saginami responsible for in of the moves today. what does tony think about that? we're going to ask him. he joins us, next. 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kevin you first. remember the day you were sitting here said you got out of apple and intermicrosoft. are you still there, and what do you think's going to happen? >> yes. i'm still there. i think microsoft -- i think microsoft is going to deliver on this quarter, particularly around the subscription service. i'll tell you what i'm finding so fascinating. again, anecdotal. under $400 million in sales, above $5 million. three years ago, majority using apple laptops to run their businesses as using quicken on the mac version, for example. today about 70% moved over to 365. the whole suite, from microsoft, because it provides a real interesting platform at a low cost per seat to share data. not just within the company, but intercompany. in small companies cust more acquisition is the whole deal. now we have a platform across 30 of them where they can share the data as part of a monthly subscription fee. microsoft has nailed it in terms of how they've iterated these products for small business and lost their way just five years ago. i think they've come back and i think we'll continue to grow and the cloud business is growing for them, fantastic new team in management. love the balance sheet. i think there's a dividend increase coming, and licking my chops for that. i think -- i'm an optimist on this quarter. >> i can certainly tell! sarat, what kevin said. transformational, transactional. >> i absolute aagree and we've owned that stock for that reason and i will buy it if it dips. i don't really care, i mean, i do. it gives me an opportunity to buy more because i want to own this company the next three to five years. they're doing everything right in the space, i think. recurring revenue, growing margins buying back shares, increase dividend. what else do you want? >> i own it and trimmed on a tactical business. >> when did you do that? >> today, actually. i think the stock is in an arrange from 48 to 55, 56, call it. and you're at the kind of close to the upper end of the range. 20 times forward is not exactly cheap. i'm concerned not so much the quarter. actually set the bar low last quarter in terms of guidance. probably fine, but the guidance going forward could be a little disappointing. again, you have to look at when these big companies -- >> talking about the cfo? >> yeah. when you look at these big companies transitioning to the cloud, take as very long time to see that transition work its way through on the gross margin side. the gross margins have been under pressure, because they're investing so much. makes sense. growth is there. but you need profitable growth to rerate. starting to see it with something like an oracle. where i'd rather put more money. that said, i like the long-term story for microsoft as well. sue herera, latest headlines. what's happening this hour, iraqi army units continuing to make advances towards the islamic state south of mosul. the city held by isis since 2014. iraqi ini forces with an aim of cutting the militant's supply lines. the department of defense releasing video shows coalition air strikes on isis targets in iraq on june 25th. this on a staging area near al baghdadi. on monday releasing films on targets in syria. four people arrested after hanging an anti-trump banner outside cleveland's rock & roll hall of fame. the baern called for a ban or fracking and for new yorking down the proposed wall with mexico. the cleveland fire department using a ladder truck to remove that banner. the funeral for one of the police officers killed by a sniper in dallas two weeks ago was held in his michigan hometown. officers carried michael krol's casket into the church outside detroit. this family says being a police officer was his life's dream. that's the news update this hour. more "halftime" in just a moment. narrator: the best place to find adventure... kubo: come on, this way. narrator: ...is in the forest. kubo: wow. narrator: so grab your loved ones monkey: don't even. narrator: and explore a world of possibilities. kubo: it's beautiful. narrator: visit discovertheforest.org to find the closest forest or park to you. real is touching a ray. amazing is moving like one. real is making new friends. amazing is getting this close. real is an animal rescue. amazing is over twenty-seven thousand of them. there's only one place where real and amazing live. book a seaworld vacation package and eat free. some neighbors are energy saving superstars. how do you become a superstar? with pg&e's free online home energy checkup. in just under 5 minutes you can see how you use energy and get quick and easy tips on how to keep your monthly bill down and your energy savings up. don't let your neighbor enjoy all the savings. take the free home energy checkup. honey, we need a new refrigerator. visit pge.com/checkup and get started today. all right. back on "halftime report." time for the blitz. four trades on four stocks making news today. first up, united health beating on the bottom line. steph, your read? >> ex-leapt quarter. this stock up 20% headed into the quarter. so kind of flat today, but they did a very good job in terms of cost trends. exchange is still fighting them. getting out of that business. ignore that altogether. bigger call, overall blocks transactions, all getting hit. united the safe way to play it. not involved in the m & a. if sigma gets hit, that's the one you buy. i like that story for the long term. >> and sarat, better traffic, chipotle. talking about this stock the other day, challenged for good reason. >> this thing is, like a roller coaster. one day some analyst down grades it, because think negative traffic. the thing to hear, wait until the earnings call to see what management says, what the strategy is it nerms of growth and what they're seeing in stores. >> philip morris, steph, missed. >> i own this one, but we're buying it here. >> rubbing it in. >> a great story. up 17% year to date. down because volumes look a little weaker than expected. missed the number. did miss the number, but the lower end -- >> both numbers. >> volume number is what people care about. >> okay. >> lower and volumes. lower and products is hurting them. not the profitable products. distinguish between the two, but i say this. this is a quality company offering great yield and great growth. i like it. buying it on the weakness. >> lockheed. >> wow. >> joe? >> the entire sector. >> why is the stock flat? >> steph has been on this. because it's trading near all-time highs basically. 256. up to 259 today. fast and delivery, acquisition of sikorsky, the helicopters that is obviously a tail wind for the company. i like the name. stay in it. i like the sector. >> safety of on tautonomous vehicles. live at the automated vehicle summit where he just finished speaking with transportation secretary anthony fox. phil? >> and what's interesting, when we talked with secretary fox, scott is that we asked him a few questions regarding the tesla investigation. he said, look, i can't talk about that, because it's an ongoing investigation but made some key points. first of all, technology in autonomous driven vehicles is not perfect but it's crucial the development of this technology continue. however, he believes that there needs to be greater public education about this technology, and the use of this technology. here's the transportation secretary talking with us. >> i think it's a, a new form of distraction. people being distracted by the coolness of the technology, but in many cases they are going well beyond what the technology is capable of doing. so we have to, as industry, as also government, and as consumers, have to listen and read the directions. not go far away from where the directions are, and doing crazy things that are going to put your life at stake and other pee people the lives at stake. >> transportation secretary fox a few minutes ago. look at tesla. tweets from elon musk saying he'll be working tonight on the tesla master product plan. scott, i imagine that means tomorrow or the next day we will hear about what he sees for tesla's future in terms of the next master plan for tesla. back to you. >> phil, we'll have a new administration in the new year, but that's not exactly a ringing endorsement of the government's yew on autonomous vehicles. a new form of distraction is the phrase i'm remembering from that sound bite. >> i think he's concerned about how the public views this technology, and uses this technology. he's a big believer in autonomous driven vehicles becoming much safer and cutting down on accidents and fatalities on the road. now doubt about that, and doesn't want to curb innovation, but does want the public to understand how it works. an interesting point. i asked, look, no shortage on youtube of people going, whoo-hoo xlv i'm taken my hands off the wheel. that's what worries him. people looking at it as an interesting technology or gadget. it's none intended for that, but intended for making the drive safer. >> thanks for bringing that to us on the "halftime report." kevin o'leo'leary, what's t trade on tesla? >> i'm not in favor of slowing down technological advancement and i think they'll solve this problem and the tragic loss of life in may is part of the story. i have a 19-year-old son in engineering school loves this product. drove it a couple of months in miami. the car's amazing and found myself one day about to pull the trigger and buy some of this stock for myself. just to appease him, because i got to listen to tesla. he's a tesla-ite, wanted to buy stock. then i looked at the pe. it's again everything i believe in. it is a car company trading at a stupid price, and at some point gravity's going to strike and grown men are going to weep, and then to make it even more interesting, and i love i lon mulon -- elon musk. he's like dr. storm out of the '60s or something. bottom line is, he just bought a solar panel company. what the hell does that have to do with his car company he's trying to tie in a green element? >> i got you. in fairness, though, a lot of people are buying these cars, signing up for the cars, buying the stock. thinking it's going to grow into the very valuation you question. >> scott, i forbid you to buy this stock on its valuation alone. i forbid you. >> well, luckily i'm not allowed to buy individual stocks, kevin. your advice will be well heeded today. >> good. >> thanks for joining us. appreciate it today. >> take care. bye-bye. >> kevin o'leary joining us from up in toronto. talk about the dollar, hitting a four-month high today. jackie deangelis at the nymex with the futures now. >> good afternoon, scott. right. the dollar index up against a basket of major currencies it's measured against. the dollar index stable post-brexit and with fed expectations baked in. what's moving it today? >> yeah. it's called king dollar for a reason, jackie. as the bad news came out of germany, buyers came in, bought the dollar. not a reflection of fed policy. more reflection of weakness overseas, you brought up and traders looking for a safe haven of the dollar. >> jeff, do you think the dollar index will continue to move higher from here? >> i think the trajectory is higher, jackie. above 97 here. a big, critical resistance level. i want to see two consecutive days of a close above. last december 3rd traded up 100 a brief amount of time spent there. the fed is losing control and the ecb, meeting this thursday, most likely not doing anything this thursday, but have to consider the true ramifications of brexit. that ep hads the dollar go higher and retest that 100 level. >> much more on the show. we're talking to pete bookvar about the market and also we've got vim rickers, making a bullish case for gold. back to you. >> jackie, we'll be there. thanks. deja vu for big blue? ro reporting a 17th drop in revenue. tony sagami is coming up. and "the" place for market-moving interviews. >> you don't call a company a sewer because the company made a mistake. >> announcer: real money -- >> we are short both tesla and solar city. >> announcer: -- real debates. >> people think that globalization has hurt businesses. it's not. it is technology that's hurt businesses. >> competition is a good thing. i don't want to go back to a single marketplace. >> announcer: the most profitable hour of the trading day. >> i love this show! all i do is get to tweet about the show. i'm on the show. this is the greatest moment of my life! >> announcer: the "halftime report." weekdays at noon eastern. back on the "halftime report," ibm shares in focus this hour after its earnings report. the company beating on eps. revenues declining for the 17th consecutive quarter. our own jim cramer saying this morning that our next guest top analyst tony sagami may be influencing buy blue as much as the company numbers. >> a lot of people involved in ibm. i think, tony, i want to salute him. his work is great. i've followed him for years and he is very rigorous and hurting the stock, absolutely nothing going on other than the rigor of his work telling him they can't make the next, the second half. why ibm is down. the quarter not that bad. though i disagree with tony, he's hard to disagree with. does more work than i do. >> welcome back, after the cramer seal of approval. >> thanks, scott. happy to join. >> what is the read here? cramer went on to say, a real tug-of-war, quote/unquote. who wins that tug-of-war? bulls or bears today? >> look, i think there's something for everyone. if you look at the numbers, they beat relative to consensus on revenues and beat on eps. i think investors, some investors were happy with that'. there was a 14-cent one-time gain on the eps effectively from the sale of the software business. if you take that out, they were a little light on eps. in revenues we think consensus really didn't capture the acquisition on numbers. and when we look at revenue growth, it declined minus 4.6% excluding acquisitions in currency. last quarter declined only 3% and the comparison was easier this quarter. so when you look at it that way, yes, they beat consensus revenues, but for me, the business actually got a little bit worse this quarter. revenues were down on a like for like basis despite the fact that the comparison was equal. i think you're seeing some of that tug of war in the marketplace today with the stock, you know, trading around flat on the day. >> yeah, you're at a market perform kind of waiting around trying to see where the story's going to turn. i hear you perhaps taking a negative view about the future now. >> well, look, the second half is very back end loaded. so ibm provided guidance for q-3. and for ibm to make its full year guidance, q-4 needs to be the best ramp in the last 14 years. it's certainly possible, but those aren't great vegas odds. >> that's a high bar. q-4 needs to be the best in how long? >> in the last ten years in terms of sequential improvement from q-3. so i think that, you know, on net it's going to prove to be a tough bar for ibm. in the last two years a similar pattern has played out where the year got more and more back end loaded and then ultimately numbers came down in each of the last two years. and we see a little bit of that deja vu as you mention, scott. >> sobering view, toni, i appreciate the time. as always. >> my pleasure. >> from bernstein today. coming up, our stephanie link is considering sinking her teeth into a fang stock. where does she see a buying opportunity? she'll tell you next. your insurance company won't replace the full value of your totaled new car. the guy says you picked the wrong insurance plan. no, i picked the wrong insurance company. with liberty mutual new car replacement™, you won't have to worry about replacing your car because you'll get the full value back including depreciation. and if you have more than one liberty mutual policy, you qualify for a multi-policy discount, saving you money on your car and home coverage. call for a free quote today. liberty stands with you™. liberty mutual insurance. thank you. ordering chinese food is a very predictable experience. i order b14. i get b14. no surprises. buying business internet, on the other hand, can be a roller coaster white knuckle thrill ride. you're promised one speed. but do you consistently get it? 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[announcer] is it a force of nature? or a sales event? the summer of audi sales event is here. get up to a $5,000 bonus on select audi models. back to a story we hit towards the top of our program today, update you on the coamerica piece of news. we did hear back from coamerica, they do have no comment in response to mike mayo, saying earlier today he was in the cue ready to ask a question on the call and they didn't come to him. and he's been highly critical of coamerica as you may know. and for those of you who've been following that story. let's talk some johnson & johnson. we did not talk about that yet. they raised their guidance, raised your interest. you bought some more today? >> yeah, i owned it. but it was really a good quarter. the pharmaceutical business grew 12.5% constant currency. that was 3.5% better than expected. devices grew better. gross margins and operating margins also expanded. the key to the story i think is the marginmargins. you're going to get operating leverage, and i don't think that's what is expected in the multiple at this point. i think the reason it moved from 100 to 120 was more of a defensive trade, people looking for quality and yield. i think the next leg goes higher as the operating leverage kicks in. >> it's been a heck of a year so far. >> has been. >> up 22%. >> i think it keeps going. >> it's been a squeeze and as the stock traded we talked about this before stock trading around 95. myself and others are very skeptical of the move. and i think you're seeing also in addition a move from 100 to 125 is a re-rating on sentiment as the bearishness comes out of the marketplace. combine that with strong fundamentals stock 125 could easily be 135, 140 next time you take a look. >> united as well, reports after the bell. >> it does. >> it is one of your holdings. >> it is as delta and american. delta had good earnings last week. focus here on united is free cash flow. what are they doing? are they converting the free cash flow? and what cap x is going to be? and lastly going to start improving. >> renewed hope that the airline stocks are going to have a little comeback? they have made a bit of a move. >> well, off the bottom that was really low bottom after brexit. they really sold off. but oil stabilizing below 50 is a really good plus for them. >> they back? >> i think they're back. i think if they keep capacity, which delta said they're cutting and they raise prices, that's where you want to be. >> good stuff. thanks again. see you all, "power lunch" starts now. welcome to "power lunch." i am brian sullivan. he is tyler mathisen. we have a jam packed two hours of tv coming your way. we kick it all off with michelle who is live at the republican national convention in cleveland, ohio. michelle. >> hey there, brian. hi, tyler. day two of the republican national convention ready to kick off the theme today is the economy, make america work again. tonight we're going to hear from paul ryan, he's the big headliner. and speaking, we're expecting right now mike pence. this is the first time we're going to hear him speaking by