Theres volatility and a lot of talk about volatility right now, but if were being honest, the 200 Day Moving Average is 16 on the vix right now. Theres volatility. Maybe pick up a few names here or there, but were going higher from here. Zroo does it feel, though, steve, as though were at an inflexion point . I dont think were melting up. For all the volatility weve had this week, were going to finish slightly down a week if we close right now where we are. We keep going back and forth. One day were up ten handles on the s p. Next day were down. Whats the market looking for . Whats the key right now . You know is it the dollar . Is it oil . The key is to get through the uncertainty. Oil is look, the back drop is were still driven quite a bit by the qants and passive investing. Thats the reason why we keep going back and forth like we do, in my view. Its reversion to the mean. Theres a big part of their model. Theres so much money that has flown into that, you cant understate it. Oernt on the other hand, theres no reason to go all in and make the big bet right now. Particularly with the uncertainties. Everybody is very conscious. I talked to investors. Whats the key . The dollar freaked people out a little bit this week in the speed in which it has risen. Is it oil . You see oil today tracking right along with stocks. With respect to the dollar and oil, which you just referenced, both of those are positive impulses going to this earnings season. The dollar has been relatively flat. Its actually down a little bit on a yearonyear basis. Oil is starting to inflekt more positive whats important is that for the first time in over six quarters were now going to have revenues up on a yearoveryear basis. Thats a tremendous boost going into earnings season for bottom line as well. Do we need to be cautious or tune itsic . We. You talk about that passive move. This is the time for active managers to really shine finally. Weve seen our portfolio up 2. 6 of the hedge fund managers. If you being look at earnings revisions, i think weve got all indications something blows up in the next six weeks, that is the time where you have to say im going to take a bet or i can be passive. I would rather take the bet. Are you buying stocks this week . Yes. I bought honeywell because i think its not broken, and its a good story. Well talk about it later. Celgene, you have up side there, and i went after illumina again because i think thats a good longterm story. These are shortterm broken, but i think longer term i like them. I started buying more financials yesterday because i really thought that yesterday was a reaction to china, and today you have seen jp morgans numbers, and as we go into the quarter, youll be better off there. You buy anything . I did. I did. I like it much higher than many analysts do for the longterm. This week im buying fxi and eem. Im buying the emerging market stocks that have underperformed over the last month, and the reason for that is we saw the china data that came out overnight. Ppi is now turning positive. Its the first time in almost five years where ppi is actually positive. Thats a tremendous earnings power behind the chinese corporates. I think you at the inflexion point. I thi its in the emerging market stocks. Thats whats going to start to do better. Particularly as were looking into next year. Were starting to see growth. You didnt see anything in the numbers yesterday. The trade numbers scared me. If we get more than one of those, this is just one. If we get a second one zplool you are sitting at 100 cash. I have some in money that we manage for clients, we are in the market. We bought ebay this week. We bought Tenant Health care and a number of stocks. Im not totally in cash. Lets talk about the export numbers. If you look at it on a threemonth moving average, theyre flat. Doesnt that scare you, though . No. The output numbers are improving really markedly. While, yes, the external environment is pretty flat lining, the internal environment within china is inflekting more positively, and thats what im buying. Theyre going to afford less and less of things from outside their borders. Even though theyll export more, right . The strength of the consumer is improving within china. Thats what im focused on. Buying the domestic consumption play, domestic cyclicals within china, those will be advantaged. The activity data, the alpha data is telling you thats improving on a macrobasis. Its great they were able to extend the definition of what a nonconforming loan is. Foufr. Well never know the truth because theyre corrupt and dont give you the right numbers. Hey, hey, hey. The other idea is what roles could play . Rosengren is on exclusively today, and heres what he told our steve liesman. This is the boston fed president , eric rosengrin. There is a higher probability in december that seems appropriate. The market seems to think theres a high probability. Well see how the Economic Data actually comes in, but i think it is priced appropriately. So the market is okay. You would have thought after the Economic Data came out that the banks would have taken another leg up. They actually didnt. They came down somewhat. The high of the day for the banks was after jp morgan reported and then after after the Economic News came out and rosengren maybe its the word crossselling that comes up again. These words crossselling, and it scares people a little bit. The Regulatory Environment over the banks is fairly prohibitive, people would say. Its more of a variable than where Interest Rates go. Rates have backed up. Banks have not performed. Nobody believes the fed is going to go through with it until they do it now. Theyve got so many of these fake moves. Oh, were going to something happens in november. Im not saying it will, but until they do it, nobody is going to believe it. I dont think it matters for markets. If a fed hikes one rate hike in december and then pauses for another six months, i dont think that matters in terms of how equities are going to be valued. What matters more is if you look at the long rate for where the fed thinks the neutral rate is, that will continue to move down. The slope is very shallow. Whether they hike once in december, that to me isnt a big deal. Are you more inclined to be short the s p here today, doc . Yes. Oh. I am. And i am because i think as i have said for months now, this is not a change. Going into the election, volatility will keep moving from the lower level to the upper right on the graph, meaning higher. Were going to see higher volatility. Higher volatility is going to scare some investors. That will create the opportunity. This is probably a good idea just given where the markets are to remind you of whats coming up next week to help us celebrate our five years of. We have assembled a lineup of allstar investors to give their opinions on where we are in various parts of the market. David tipper, carl icahn, jamie dimon well talk some football at the end of the week as well. Well get his perspective on his own business in and out of football. Its going to be a fun week to hear from these Great Investors on where they see the environment in the months and certainly the year ahead. Lets talk more about financials. They beat on the top and bottom line. I cant tell you the ten because the environment isnt really supportive of that, but you got to put in kind of the six, seven range thinking they could be more upside to come. If rates back up you have the Regulatory Environment, which is the overhang. How do you make sense of all of that . Its tough to make your money betting on what the fed is going to do or what Interest Rates are going to do because its been surprising people forever, but i do look at some of the uptick in inflation were seeing kind of cpi and stuff. Were seeing that increase. Yet, the tenyear is down a lot over yearoveryear, and i think to some extent the picture might be suggesting we could get higher rates coming here certainly good for the banks. You loo being it he big guys. Theyre growing loans. Theyre getting more efficient where are Capital Markets has become a tail wind as opposed to a drag. Credit quality is remaining pretty good. I mean, i dont see kind of troubles developing. Its a matter of whats going to give us the next kind of kick up as opposed to a kick down. What bank stock would you buy today, if any . I think looking forward, i think what were seeing today is strong trading results are nice, but they dont necessarily push the stocks up. I think kind of growth in citis core consumer nonu. S. Business is something that the market will look more sustainably on. Sarat . One of the big bears on all these stocks is credit quality. Do you see that turning over in the next couple of quarters, or do you see it still firming up . I dont see it get worse. Most of the metrics we kind of look at to get an idea of what credit is doing are things getting better. Its hard to say things are going to get better than they are here, but theres a flat line and then gradually deteriorate. As far as the leading indicators of stuff we can keep track of, theres no sign of showing up with kinks in the armor yet on the credit side. Thanks for calling in. Appreciate your time today. What do we think about the banks this side of the table . I still love financials. When we talked before about jamie dimon, and i bought it when he was buying the stock. You are getting it with the Asset Management businesses and wealth mlgt. It was incredible, though, to see the improvements that we actually saw in the Capital Markets in jp morgans numbers to help assist the cyclicaliy. I do see them picking up clients on the retail side with the shakeout of wells fargo, and citi are probably see it as well. Thats why i like bank america. A lot of those loans are instantaneous. Doesnt take any paperwork. Takes a signature for you to get a margin account. Are you Still Holding wells . I hope i get a chance to buy it on a bigger dip, judge, but nope. Took profits on all the puts, and i dont have any stock. Dont have city or b of a. The asset manager business is on these banks are under siege. So much has gone to pass for investing, and those margins dont exist. They dont make money on them. I think that will continue to be the trend. We get major market correction. Then we take a look at Capital Market activity. A lot of that is rushing to the window to raise raise debt. Were seeing m and a peter out. The money center banks, i dont feel much love on the desk, right . No, theyre i really feel you have to steer clear at this point. If you want to go in right now to kind of close your eyes and hold it for a little while, thats one thing. They dont have a sales issue, and i know people might think of this and say what are you talking about . I dont think its sales or cross selling. Its ethics. Weve all worked at an investment bank. You could work at the finish line store and you know you have sales goals. The question is are you going to compromise your ethics to achieve those goals . They have an ethics issue they need to address. Its such a small part of their business. And it is. Such a small portion. You cant indict 260,000 people for that they have to get over the perception. The government let me give you an example. A lot of issuers from a rhetorical standpoint, its there have been deals pulled from these guys, and i think the Third Quarter numbers, it was exactly. They came in, and they thought they could have done worse. Fourth quarter, those are the numbers to watch, and lets see what the impact actually is. It gets better, but this is where the active management comes into place. Exactly. For sellers here, and youll have buyers on the other side. That will put pressure on the stock, and why not fick a jp morgan that are cheap . Zplool one wall street firms bold call on a big cap internet stock. They say its about to outperform kneveryone else in tt sector. Also ahead. Its got to be the shusz. Shoes. Shoes. It used to be. Now its the shoes, the pants, the shirts, the sport bra, the hat. A big call from one wall street analyst that could shake up the sports wear sector. Game on, the stocks poised to win christmas. This is the Halftime Report on cnbc. With scott wapner. Were back in two minutes. We need to be ready for whatever weather may come our way. My names Scott Strenfel and im a meteorologist at pg e. We make sure that our crews as well as our customers are prepared to how weather may impact their energy. So every single day were monitoring the weather, and when storm events arise our forecast get crews out ahead of the storm to minimize any outages. During storm season we want our customers to be ready and stay safe. Learn how you can be prepared at pge. Com beprepared. Together, were building a better california. Welcome back to the Halftime Report. Want to show you the markets. We are steadily losing steam. In fact, the s p 500 is just about to go negative. Major averages really across the board are following suit. Nasdaq, all of the charts pretty much look the same. If you throw up oil as well, its going to look almost identical to what the overall market is doing. In fact, as oil started to come down a little bit, the market started to lose a little bit of luster as well. You could satisfy almost the same thing for the financials. Financials sort of deteriorating a little bit. Even the ones that reported earnings today. Jp morgan, wells, citi. Some of them going into negative territory or at least threatening to do so. Theres the xlf. You put an overlay of the xlf, the s p 500, its going to look like a virtual identical chart there. Thats the story right now. New at noon, though, a bullish call for alibaba. Mkm partners saying it will be the best performing sb ining in name over the next year. It has a buy rating. Anybody own it on this desk . If not, why . We own it for clients. Pete owns it. I dont own it right now. Unfortunately, i got out too early. I owned it. The stock exceeded what we thought it would do. I know mkm here is talking about the cloud in particular, and none of us think that anybody two from outside of china will run chinas clock. This is not a surprise, but its a good call by the analysts because in the United States theres going to be a big competition for the cloud. China, theres zero competition for the cloud if alibaba gets in there hard right now. Theyre expecting a solid quarter. They say theres going to be noise into the results. All right. I dont have a lot of owners of that stock. You give me your large cap swnt name. I would buy it. In terms of the u. S. , says i like netflix at low prizces. I still think it would be a phenomenal acquisition campaign. For apple i think still it should happen. Im looking to pick up these stocks when they miss. Not when theyre the apple of everybodys eye. Google is the one i want to own the next year. I agree with that. I would own that, even if it does pull back on an earnings basis. Its the cheapest. Whether it pulses back or sht, facebook still has so many different arrows in their quiver right now. They have not monotized whatsapp or instagram. We talk about snapchat thats out there right now. Lets be honest, they just created something with an instagram to compete with snapchat, right . What could be interesting i and know we are not talking about twitter just yet, but twitter as a part of facebook could be interesting to tap a different channel that they may not actually be working with right now, and a lot of that premium is coming out of twitter. People are wondering who is going to buy them . That could be an interesting opportunity if the numbers could work. Its a tainted franchise and tainted brand. I dont see them doing it. The business usage of twitter, facebook does not get through their currently current channels where. Heres why somebody else agrees with you. Somebody really big. I mean, i agree with you, with that assessment, but somebody really big in the option market today bought 10,000 of the march 16 calls, so thats 2 in the money, that call. They sold 20,000. Thats two million share equivalent at the 20 strikeout in march. All along ive been saying takeover happens in the low 20s. This is somebody who is putting a million shares where their mouth is buying this thing, and they did it one by two for even money. Wow. The stock got blasted this week. Yep. Almost every day. True. That stock price gets cheaper, then perhaps it becomes more and more and more attractive to whether its salesforce or whoever. Wait until after october 27th. Everybody knows right now i dont personally, but theyre sitting here and going through this whole process right now and word on the street is the institutional investors, theyre looking for someone to kind of take them out before earnings. Well, to me then everybody thats buying is going to wait until after that to figure out why the stock goes. This is a march trade. Beyond the election and all this fluff that weve been hearing about about five different suitors and all of a sudden everybody says not interested, somebody is going to be interested, i think. Still happens in the low 20s. Talk about the market oil. Losing a little bit of steam. Still hovering near 50 a barrel. Its having a good year. Its up 35 . Should you get into the oil and Energy Sector . Well discuss that coming up. Plus, honeybillion moviwell mov. What dave cody told jim that is making investors bullish today. Whats Critical Thinking like . A basketball costs 14. Whats team spirit worth . cheers whats it worth to talk to your mom . Whats the value of a walk in the woods . The value of capital is to create, not just wealth, but things that matter. Morgan stanley is it because so many go after it the same way . Chasing after short term returns. Instead if getting caught up with the crowd, the Investment Managers at pgim take a long term view, teaming specialized active investing with riskmanagement rigor, to seek out global opportunities. We manage over a trillion dollars this way, attracting many of the worlds leading investors. Partner with pgim. The Global Investment management businesses of prudential zbriefrmts were back. All three of the major average says have lost steam. Theyre still in the green. S p and nasdaq barely holding on, but all three are negative for the week. It would be the second straight week, in fact, that the dow, the s p, and the nasdaq would be negative for the week