need to have the bond market going with with you. right now interest rates are headed down. you need to see interest rates shoot up into this quarter. you also need to see more fed governors saying, listen, we need to do four because that's how jpmorgan gets the additional $3 billion. i like the call. i don't know if i like the call this week because these stocks have gone parabolic. when you see stocks parabolic. which one has to go? wells fargo hasn't done anything. jpmorgan, very high. >> that's the biggest issue. jimmy raises it right there. should you stay or should you go? the stocks have had tremendous run since the election. bank of america is 32. jpmorgan is 23. citi, 21. more january stanle more. >> who would have thought that can happen? >> i know. >> but i think you have to -- i think you stay. i don't think you add. i agree with jim, i think there will be a tactical opportunity to gel out of these names a lot cheaper. >> why not take profit in this space? >> you can't be that kind of trader. in the end what happens, is let's say bank of america, where is it going to go? down to 21? remember how long it took to get are 15 to 17. >> it's their topic on the note? >> it's the one that you buy if you think rates is going to go up. they've got that great consumer base. i like the note. i want people to be ready, like you said, joe, to be able to buy them if they just let down for a couple days. >> josh? >> i guess i take issue with parabolic because they did go parabolic but topped on december 9th as a group. now you have a month. today is january 8th, 9th? i don't even know. >> 9th. >> january 9th. listen, this ask a month of consolidation. it's what you want to see. the buyers did take profits. exchoose me, sellers took profits. new buyers come in. flat line for a little while. that's what has to happen in order tort runs to continue. >> maybe the buyers bailed and went to tech, went to fang. >> health care actually. >> rotation. >> i think there's morme money coming into the market. we can talk about that later. but last week i had a conversation, we were on the 2:00. we were talking about how the regional banks have moved up too much. now you start to see upgrades the regional banks. this is the train leaving the station. my problem with that is that as soon as you get all these guys onboard, then you have too much hot money. i agree with josh that the group hasn't done anything of late but i also think that i just want you to be able to buy bank of america 21. i'm not saying it's going the 18. >> so the wells fargo call, basically saying if a lot of what the trump administration wants to do happens from deregulation to repatriation, tax break, they could sell ten times forward earnings. >> look, we know that there are many -- i read too many arms about how trump is already everything in his agenda -- >> a lot of wishful thinking. >> if the regulators choose not to regulate they go higher. >> you get the commentary and the numbers later this week. what's this story going to be? let's listen to president-elect trump and jack ma. >> and he loves china. >> loves china and loves america. >> mr. president-elect, you recently wrapped up your meeting on friday. there were questions about your relationship -- >> we'll talk about that on wednesday. >> who do you trust more though, julian assange or the nsa? >> we'll talk about that soon. >> russia was in the hacking -- >> we'll talk about that at another time. we're going to be -- yes, we had a great meeting. it's jobs. you just saw what happened with fiat going to build a massive plant in the united states, in michigan. we're going to be very happy. and jack and i are going to do great things. >> small. >> small business, right? >> focus on small business. >> when are your confirmation hearings going? >> going great. i think they'll all pass. i think every nomination will be -- they're all at the highest level. jack was even saying, i mean, they are the absolute highest level. i think they're going to do very well. >> there is concern about jeff sessions in particular. >> no, i think he's going to do great. high quality man. thank you, jack. >> thank you. >> talk more on wednesday but about -- >> that is the president-elect and the chairman of alibaba, jack ma, in the lobby of trump tower. let's continue to listen in here. >> -- to china and to asia. we may talk about small business, young people. american agriculture products for china. and we also think that china and usa relationship should be strengthen strengthened, should be more friendly. >> -- imported goods -- >> i think we always open that we can -- open discussing the relationship on trade issues. >> are you worried other countrys will do the same thing in retaliation, higher taxes on american products? >> i thinking that the president-elect is very smart. he's very open minded listening. so i tell him my ideas about how he improve the trade, especially supporting small business, cross border trading and business. >> president-elect during the campaign was clear about his concerns about working with china. has he expressed something different with you just now? >> he has concerns. he has solutions. and he wants to discuss with china and ask how to do better and i advise and suggest that we can go through the business community to understand the situation better and doing it in a better way. thank you. >> talk about investment -- >> no, we specifically talking about we will create, you know, supporting 1 million small business, especially in the midwest of america. small business on the platform, selling products, agriculture products and american services to china and asia, southeast asia. >> where will those jobs be bases? >> a lot of midwest and the agriculture products and also some products like garments and wine, fruits, yeah. thank you. >> did you discuss any tension over the u.s. and china. >> we had a very nice discussion. thank you. thank you so much. >> thank you, jack. >> that's jack ma, of course, fresh off his meeting with the president-elect in trump tower saying the two men talked about the relationship between china and united states and also of course small business, as you heard jack ma discussing there. you know, jim, it's so interesting that people have looked at this rally and they sort of bypass some of the risks that dpexists out there. we mention them but it's mostly lip service. what if there's a trade war with china, what if this, what if that. how should we be thinking about this topic as a man with jack ma goes up to speak with the president-elect? >> i find that the media has -- mainstream media has really created an image that trump is almost a failed presidency. i think that what's happened is that if inany one of the three -- you don't need all three. repatriation, corporate tax reform. hod honestly, if you get anything having to do with taxes going lower no matter what, then we can all set the strong dollar. i'm not talking about infrastructure. i find these upgrades today, cummings, emerson upgrade, these are all predicated upon the idea that he's going to get something done. and i think that he is. >> is some kind of trade fight with china the biggest risk that we see? >> wet didn't know. we acted like we didn't know we were at war. jack ma,he's very close to the communist party. i mean, he comes out of there and talking agent midwest jobs. i mean, that's not the type of thing you're talking about how we have to have -- listen, if the united states continues to do this we're going go off the track. i find these conversations somewhat -- somewhat comforting in the sense that it's -- obviously trump is not going to say things are not going well. we know from his "apprentice" days things are going well. but i find that, look, there are many reasons to believe in the animal spirits. i don't know if you -- where you guys are on animal spirits but there's a belief that something is going to happen in washington and it's not going to be bad. >> hence the stock market is -- >> show me the progression by which -- show me the progression by which alibaba entering america in any form of the various businesses it's in creates jobs. i can't even imagine it. >> well -- >> distribution. >> we need another amazon? >> distributions centers to keet with amazon. >> we have one amazon with hundreds of thousands of employees most of which they're trying to replace as quickly as they can with automation. show me another scenario where another online marketplace comes in and creates jobs. >> you think there will only be one online marketplace though, josh? >> no. >> neither do i. why wouldn't it be alibaba? >> i think it's more therial than that. i need something to tell me that they're not going to have a fight with china that is not going to pull out procter & gamble that is going to be against caterpillar. i have used alibaba. it's another way to disenfranchise stuff in america because they make it so cheap over there. >> this css cloud over its head. people question how they do their accounting. people questioning whether or not they're adhering to nyse exchange listings. does that now go away? >> well, attorney involved with alibaba is going to be head of the css. it will be interesting. >> if you're an investor in alibaba you're saying, okay, that's one less. >> i don't think this is forget the fact that jack ma walks in representing alibaba. jack ma i think part of jim's point is he represents china. >> yes. >> it's -- >> he was talking about the selling -- >> it's a sign and symbol more than anything else. >> why? >> not so much food but food itself back to china through small businesses in the united states. so just like hart land is, that started out as small business within the united states. sort of a co-op. and then they begin selling across the country. same sort of proposition mr. ma is proposing to sell back into china. i don't know why that doesn't work. >> look, the conversations, you can view them as good or bad, photo opportunities, but all the conversations are centered around the economy which we should all like. everyone that's walking into trump tower is talking about, okay, let's look at the economy. let's look at the domestic economy, how can we get job growth to accelerate even further. let's look at the groebl economy. >> thank you. >> it's important. >> next week, okay, we're going to have earnings conference calls which are going to be incredible important. the analysts are going to ask two questions. what's your tax rate and how much cash do you have over seas? have they been asking that question the past? look at financials. you look at charlie schwab. wouldn't get out of that for a second. 38% tax rate. that's coming down. that's going to benefit the bottom line. >> now, there are a lot of people saying, listen, this is going to be pushed off. remember, you can do things retroactive. this is something that it's not a wave of wand but there is a cone census in the media their going to be bogged down on obamacare and russian hearings. trump does not impress me as a man easilying whoed down. anyone? >> i agree. and i think, judge, when you're looking at the interest rates as well, interest rates, josh and jim both talked about, these have bottomed or, you know, the bond itself bottomed, interest rate topped out, at about 260. it's been coming down aggressively since then. we talked about the huge buying in that particular contract. that keeps coming down. you get the repeat tre asian that we talked about here on the desk. you get tax -- taxes coming down for regular joes as well as big corporations. that's more assets, chasing the same number of product, that pushes prices. >> apple with $40 overseas. i think it can happen. it's not like trump is going down to florida and doing some sort of rap video. >> no. >> yeah, i'm sorry. >> on a yacht before a football game is that what you're talking about? >> come on, guys. >> this has been a tough season. >> troy aikman brought it up in the first 30 seconds, mr. dallas cowboy. >> let's jump to these two calls i wanted to get to and what your take, is jim, on both. and that's the downgrade procter & gamble and coca-cola. what's your view here? is this a broad call that staples are out of favor, dividend payers are going to lose their luster so see you later? >> i think they tried to make it more permanent than that saying that proctor cannot maintain that growth and coca-cola headwinds to the product. i do. i think this is the let's get out of clorox. we really can't trust colgate. my problem with this theory is that for people at home, individual investors trading prakter has been a sucker's game. this great american company. if you're a hedge fund, yes. when are you going to buy cat? are you going to come in here and buy rockwell at an all-time high or emerson? you have to finance those purchase with these stocks. i just really want, if you're at home and you have that 3.3% yield for proctor and coca-cola is gown 7 points from the high, don't feel scared. hedge fund, yeah, you need that cap. >> i feel like coca-cola is the perfect stock so ask yourself am i a trader or investor. if you're a trader you're not low on this name. it's got a series of lower highs. textbook definition of a downtrend. really going back almost a year to last march. however, if you're an investor, here's a stock with very low expectations. >> new ceo. >> right. new ceo. a lot could go right. and you're getting paid almost 3 1/2% to wait for something good to develop. p. if you listen to the macro guys they'll tell you to expect return for stocks very low, 0% to 2%. here's 3.4%, sit on coca-cola. am i a trader or investor when you look at a name like this and it might be a buy for one and not the other. >> i totally -- that's a way to approach it for people at home. to tell them to blow out of coca-cola down 7, new ceo, given an asset like model, is to say, hey, listen, maybe it goes to $39.80 but you've got to get back in there. people can't do that. >> proctor is easier. really nice rising 200 day, act as perfect support since december. also a three and change percent yield. this one is headed in the right direction. so if you want to go against these call on the staples that might be the best one. >> you've made some calls in the past about the staples as they've gotten so beaten down. if you're looking to make longer term call, are there names you would get into as a result of the beat down they've taken? but we know kimberly's challenged because of china but clorox is doing so many things right. i'm not saying, listen, go all in clorox. i'm just saying that you don't go wrong if you're a broker at a major wire house from the old days. buy a little clorox here, goes down another five points, goes down some more. that's a comforting call. this is the level to go in sand buy ingersoll rand. they don't know who ingersoll is and they don't know who rand is. morgan stanley says one of america's most favorite stocks is undervalue bid 26%. we'll tell you what it is, next. ♪ wherer g outy s re usu e. l we're back on the "halftime report." we made it our call of the day. pete najarian is going to join us from minneapolis. pete, you've owned it for a long i'm. everybody is jumping on the bandwagon if they were off. >> of course they are. except for katie, the woman who did up grade today, scott. when you look at her resume, she was at morgan stanley in 2000 and not long after that she started to coverage on apple. i believe in her. i hold on because of some of the statements she has made in terms of why, where the growth is going to be coming from, the transition with the phone. all of that. there's a lot of different reasons right now why i think her call today makes a lot of sense. the only thing that she left out, she had three reasons, right, for her upgrade. >> yep. super cycle, china, cash repatriation, u.s. tax reform. >> was there a fourth? >> one of the things she points out about china, scott, is the fact that they have an incredible loyalty to this company. and not only do they have that loyalty but the 80% share of that upper end smartphone category. so when you look at that and any potential of a rebound at all for china, i think there's a lot of reasons why this call makes a lot of sense. we already knew the tax idea, repatriation idea, those are probably out in the future. the most important thing she left out is services. take a look at the growth of the services last year. i've been pound it is table on this and i will continue to pound the table on this because when you look at the growth, yes, it's a small section of apple right now. it's becoming a bigger and bigger part of the apple story every single day. >> why are you scoffing when you talk about it? >> i'm telling you. i felt a scoff. i felt a scoff. jimmy wouldn't scoff me but i felt like maybe you were. >> no scoffing. >> he thinks that people scoffed at him when he brought up the idea of the services. >> no. i do think that what was important i like pete's analysis and katie, i felt schefs a little bit unruly on the last conference call. she was part of that kind of gang up on tim cook basically saying come on. so this was a big call. i don't know about you guys though. i hate the term sub super cycle. the fracking sand super cycle. but i do like the services call. why? remember, tim cook said it was going to be a fortune 100 company. i wish he had bought sirius and netflix and anything, harmon, to augment that service because i've got to tell you, virtual reality, pokemon go, that's going to help but you need all the time you need new apps. the app number was good. >> did they miss their chance to do a transformational kind of a deal, not that they need a transformational deal. but you know what i mean. a big deal of scale, magnitude that really matters. >> i think it's never too late, frankly. >> you said forever they should buy harmon and lost out. >> samsung bought them. >> they did benefit greatly from the combustible samsung. i still can't believe it. i was on the plane the other day -- >> still making the announcement. >> we believe some people have a samsung here. holy cow. it's like, i want them taken off by marshals. >> i think what apple has to do in this next phase, they really have to get ai right. they cannot see this entire thing to amazon. with amazon's echo and the alexa which essentially is voice operated but it's becoming the operating system for all of amaz amazon. apple cannot, if they're going to be a services business they need to have the right product to generate services type dem d demand. so they can't have everyone using amazon central in the home to order things, refill things, check on news, check on weather. so i think siri is going to play a part of it but siri is not the leader in tech. they have $200 billion to say that have one. >> drexel is coming out today, bryan white's neat today. >> $185 price tar got. >> a lot of my people who have the amazon device feels amazon has become big brother. they keep track of everything and they know too much about you. now, i mean, there's a privacy issue in the end. i don't know. but i was with someone this week who felt that amazon knew more about them than their wife. >> so then think about facebook because if we think amazon knows about us, facebook knows things that wet don even know about ourselves. so i think we've kind of seeded our pry vasly permanently as a species. >> do you have a alexa at home? >> no. >> or echo? >> my whole life is basically verizon and apple. i'm not like amazon waiting for something that will work with all of my other devices. i got the sonos thing. it wouldn't work with itunes yet. i went a year without it. >> i know. yes. >> so like i'm not going to go and do the amazon thing and then all the media and stuff i want is on apple. >> big hit. remember when they first put the woman on the trunk, make the left. that was a big deal. my kids ask siri for everything. and i was with some people asking amazon to do things this weekend with their lights and, i don't know. to me i get up and i turn the light -- i turn the lights off and on myself. i guess that's that older generation. >> all right. we do have a news alert for you. sue herera has the headlines for us today. hi. >> it concerns abbott labs and the st. jude heart devices. abbott labs says it is releasing cyber security updates for its st. jude heart devices following the u.s. government's investigation into claims that the products were vulnerable to potentially life-threatening hacks. the u.s. food and drug administration has released its safety communication on those devices. it is confirming claims that cyber vulnerabilities could allow hackers to remotely access st. jude implanted devices. there have been no reports, the fda says, of patient harm related to cyber vulnerabilities in those heart devices but the f fda does say that health benefits to patients from continued use of st. jude's devices outweigh the cyber risks. but abbott is none the less putting in place cyber security updates for its st. jude heart devices. scott, back to you. >> sue, thank you so much. the market moving jpmorgan health care conference on under way and the ce okay of celgene has news that moved his stock today. you'll talk to that gentleman next. plus our desk and jim cramer give their top plays in the health care space when we come back in two minutes. , at g? welcome back, everyone. i'm sue herera. here's what's happening at this hour. at least eighths policemen were killed in an attack on a checkpoint in the northern sinai. a video uploaded to social media purportedly shows a plume of smoke rising in the aftermath of that attack which was launched with a car bomb. after the bomb exploded the attackers fired guns and rocket propelled grenades at this check point. syrian president bar shah al-assad says his military was justified in bombarding eastern aleppo. he said the alternative would have been to leave civilians to the mercy of terrorists. aleppo has been devastated by six years of civil war. china repeating its 07 position to any contact between american officials and taiwanese government. this after a meeting between texas governor greg abbott and senator ted cruz with the island's president in houston on sunday. and one of california's famous sequoia trees has toppled over. the pioneer cab bon tree succumbing to the heavy rains. the tree's trunk was hollowed out 1880s. we have breaking news. here's the president-elect. >> mr. trump, talking about the role that you expect this to have in your administration. >> who? >> bashar. >> we'll talk about that. >> the same. >> any specifics -- >> one of the great men. you know that. right? they all love this country. >> will we be involved in the inaugural -- where are you right now on the -- >> did you deliver a package to mr. president-elect trump? >> what are you going to discuss? what did the two of you discuss? >> we're going to do wond 23erf things in this country. >> such as? >> are you expanding lbmh here at all? >> we may expand our factory that we have in california and in carolina. >> what do you make in that factory there? >> we build some retail products for 25 years for california and we are going to expand the product and we are going to go to north carolina or texas. looking at two cities. >> some republicans now are concerned there's no replacement plan to put in place. are you worried? >> not even a little bit. that's going to all work out. >> how? >> thank you all very much. >> will it be in place when this is repealed? >> we'll talk about that on wednesday? >> is there a plan now or will there just be a plan on wednesday? >> all right. that's the president-elect of the united states with the chairman and chief executive ufser of lvmh, what amounted to a photo-op down in the lobby of trump tower after meeting the two gentlemen had. jim, you know, you could say a lot of things about these meetings, whether it's ceos coming by to simply kiss the ring to meet the president-elect or to actually have some sort of substantive idea or plan in place to create jobs, to try and create jobs or at least to have a relationship with the president-elect. >> it's a great question because what i see is ceo after ceo, executive after executive, that's a very good ceo. you've got labor, like him or not in terms of labor, he's a good ceo. you have people who are pro-business. this is just incredible. when i see these -- these are not just people involved at other ends of the spectrum. these are businesspeople. this executive, he's an excellent executive. they've done well. jack ma,they're talking business. are they going to create jobs? all i know is they're creating a tone and the tone is, hey, get onboard, man. this pie is pro-business. >> haven't we talked about that every day that more than anything else, the market -- and i know you've scoffed at this before. >> scoffed? >> i agree with you. >> the market has rallied -- >> hold on. >> -- because of the tone and the change of tone. >> yes. >> okay? >> optics. >> fine. >> they matter. >> here's a big positive. jamie dimon was not a trump supporter. the fact that he's been brought into the fold, he's as good as you get as an american ceo, someone bullish on the country, employs hundreds of thousands of people, someone who does business around the world. the fact that he was brought into the fold is positive. when warren buffett shows up at trump tower i will say, this is great, you know, we've got this, because you've got to see more of the people who criticized him be turned to. i think that's the biggest positive. so if those types of things happen i think it's good. i think it's brilliant. >> all the tech guys that showed up and then elon musk getting onboard, the lady from oracle getting onboard, i mean, these are titans that, as we said at the time, and that's why we criticized kyra swisher when she was ridiculing them for going in there. these people have millions of jobs in their control and now you throw in fiat, chrysler, and ford and lvmh and these other, jack ma potentially doing some things. i think this is big news. >> so i agree with that fully. nonsarcastical nonsarcastically. i think that's what you want to see if you're an investor and frankly an american citizen, is you want to see, even the people who were not trump supporters be thinking about what's the best thing for my workers, for my company, for my customers. looks like that's what's happening. >> remember, lvmh, we're going to talk about cosmetics later. that's sephora, that's the only niche right now killing it. they're actually urtingestee even though they havestee as one of the people on the rack there. you're talking about companies that are superior, that are doing a great job. and there's the ceos talking. you want that conversation occurring. if you're a stockholder. is it what you want if you are concerned about anything? i always feel like the "mad money "man that i talk about how i feel about certain issues because i have no value to them. when i see these people come up there, these are people i want him talking to if i own stocks. >> jim, jon, you, myself, and jon, probably old enough to remember back a few presidents, you're a little bit younger than us. has there been another president that has conducted these meetings prior to inauguration like this? >> maybe higeisenhower. >> what's wrong with the optimism? >> what's wrong is the mainstream media is all going to fail. so you have this kind of really weird dichotomy where the front pages are filled with how the republicans -- that you're going to see mccain stop him. and then you see these -- these cameos and i don't think that he's as easily stopped as mccain. >> mccain will get bulldozed. >> i think there are going to be big, big media events. tons of headlines. >> all right. also this week, big news, the jpmorgan health care conference kicking off today in fact, in san francisco. this is boy biotech stocks coming off 30 biggest weeks in two months. we have celgene's ceo, meg? >> scott, thank you so much. joining us now is mike olli, is. you always kick off the conference. first presentation monday morning. how would you describe investor mood? >> i think there's tremendous excitement. investors are looking after a tough 2016 to come back into biotech and to celebrate the innovation that this conference for 35 years has been the premier showcase. one of the ceos here, alex gor ski, talking about the super bowl of biotech investing. that's really what's happening. >> one of the things we were just talking about off air is the idea the tech ceos have gone and met with trump. pharma hasn't had that meeting. if you could silt down with the president what would you tell them about the industry? >> i would love the opportunity to sit down in a similar way the tech ceos have had with the president-elect and talk about the issues facing the cupped. we need to look into the future and recognize some basic facts, pharmaceutical spending makes up one-fifth of the total drug spend. the country spends $2.7 trillion a year on health care. most of that is dealing with chronic diseases. the pharmaceutical industry is inventing medicines that bend that confident curve by making acute diseases chronic and chronic diseases are being cured. on top of job creation and other benefits the economy derives from it. so i think if we're vir choose, forward looking it would be a wonderful discussion with the president-elect and i would welcome my other ceo nasdaq bio pharma to be there as well. >> at the same time, the only thing we've heard donald trump say about the drug industry is he wants to bring the prices down. it's such a populist issue he's embraced it. are you holding your breath worrying he's going to tweet about you? >> i think we're used to it now, right? the president-elect goes straight to the american people by tweeting. and at least for me, it's a normal condition now. this is the new reality, the new norm of bypassing a lot of filtered media and going straight to the american people. i think in the context of drug pricing, it's educated the american population. i'm happy about that. when an average consumer now understand that the retail price they pay for a pharmaceutical is actually layers of costs and added distribution and management by pbms, insurer, et cetera. they are a mored indicated consumer. from an inventor point of view in medicine, we get to come back to what we do well and we will always be in a positive position if we remember what our mission is is to change human health by inventing the medicines that we all talk about. and price is just one component of that and i will talk to the president-elect in that context. >> mark, so much more to talk with you about. we will have to leave it there. >> thank you, meg. >> great stuff. look forward to everything you're going out there this week. jim cramer, ibb is up 6%. xbi up 9 1/2% year to date. >> no tweets. i did expect there would be some tweets about health care and costs going up. celge celgene, as much as i like celgene, they raise the price every year. >> golden globes were last night. >> he's going the start tweeting right in the middle of when swart schwarzenegger is on. >> seriously, about these names. you mentioned the tweets. can you buy these stocks or is the tweet thing always an overhang because of the drug prices? >> they are going to speak later today,all al elergenallergen. i think the companies that have are really going to be on the other side of health and human services. i still fear the group a little but the valuations got low. >> valuations got low but coming into 2016 there are closet indexes and you have a lot of people overweight health care. there was room for them to pear back the holdings at the end of the year. coming into this year health care is 13 percent of the s&p. you have to own health care in some form. >> you do. >> you may not like the volatile biotech space. >> big allocation to it, what do you mean you have to do it? >> if you are running an institutional fund and mimicking basically the s&p 500 which is not the right thing to do but is what a lot of portfolio managers are doing, if health care is 13%, scott, you have to have health care ownership. you avoid the highly volatile biotech names. we talked about mckesen, abbott labs, we just talked about abbott labs before. fell from 50 in 2015 down to 40. 70 billion market cap. that's stay diversified company. that's a name i'm okay with you owning here. >> judge, since the december 7th with trump on the "time" magazine and so forth you've seen xlv was 56 that day, 71 now. pushing higher, 4s dts. same thing with ibb. you didn't talk biotech as drthly but biotech also rallied. 260ish, now it's 280 i think or something like that. >> ibb is up 6% year to date. xbi is up 9% year to date. very tough to be a vocal bowl on these names in the last two months of last year health care was the only sector of the s&p's ten sectors negative. these stocks are being back to being the belle of the ball. you've got technical resistance at 75. double top in the charts going back to 2015. but if it gets through, the juice is loose. >> yeah. josh, look, this deem for aria today, they took a real header because they charge a lot of orphan drug company, not just traditional. and tecada paid a gigantic amount for it. they are comfortable with the pricing nape don't think the government is going to crack down. >> josh has went on that riff but do you agree with it? >> look, i just think that -- i think that joe's right to have some health care. i'm worried it could be faux health care, like united health. the faux health care, the visa, mastercard of the banks. i do think that when i look at merck and pfizer, these stocks are still -- they've got some room before they get back to their highs. i just find them unexciting. what i didn't like -- celgene did not guide up today. i thought that celgene would guide up and that did not occur. i do want to hear about amgen, which is nonpromotional, positive. >> pete, you heard the conversation. weigh in. >> yeah. >> i know you like the space and you hold many of these stocks. however, you've also voiced concerns about the possibility of the tweet. >> yeah. right. i think i'll have less concern it is we have the opportunity to actually do exactly what mark alles was talking about, educating the president more about the exact process and how much the innovation needs to be there and they need to have that innovation to be able to push health care and these pharma names as well as biotech names to the next level. i think it's all about just making sure that people fully understand how the process works. and i think because of that, we had seen some of the pain and some of the names pmts bristol-myers comes to mind. i know this is a name you and i have been in very, very long period of times. we love this name. it got murdered -- >> jimmy just sighed when you said bristol-myers. >> move from 50 to 60. >> it has. restructuring. didn't you think they might have to do layoffs there? they're going to be speaking. >> yeah. and there might be. i mean, i think -- if we hear some of that i think we'll all understand, we'll understand why and i think that's why there's still room to the upside. that stock was hammered. there are other names out there. if gilead finally gets off what we've all talked about, about all that cash, they've got all that cash, incredible company. but they're kind of a one trick pony. they've got to expand. they've got to make an acquisition. maybe 2017 is that year. i own that stock because i think they're going to make a nice acquisition this year. >> let's move to an investor who has made a big name for himself by going small. matthew is the ceo and portfolio manager of northern right capital. activist firm that car tets companies with market caps between $100 million and $3 billion. fund was up 16% last year. matthew is live onset once again. nice to see you. how are things? i guess things are good. >> great. we had a great year. we continue to find a ton of idiosyncratic interesting opportunities in the market. >> given the fact you're focusing. the russells ripped. do the good students still exist as they did six months ago? >> absolutely. peer finding a tremendous number of great names to buy. i would make a distinction between the russell and what we're finding. so what i've heard you guys talk about there's been a shift from active to passive. now, in our minds what's happened is that's distorted some of the indexes. so the russell has had a record high. trades at 22 times earnings with implying 15% gross. we're short the russell. but against that short we're looking in the universe of the 5,000 names in our space and finding great opportunities. >> hold your thought. i do have breaking news out of washington, d.c. eamon javers has it for us. >> yes, scott, we're learning more now about the plans for donald trump's son-in-law jarrod curber in in the trump administration. nbc news saying that he will be named senior adviser to the president. that's per a senior transition official. we had a statement earlier in the day from a spokesperson for mr. kushner who is taking steps to divest himself from some of his holdings and comply with ethics regulations here in washington, d.c. the statement said mr. kushner is committed to complying with the federal ethics laws and consulting with the office of government ethics although plans are not finalized he would resign from his position at kushner companies and divest substantial assets in accordance with federal guidelines. he would recuse from matters who have a predictable affect on his remaining financial interests. so clearly some divest difficult chur to be done for jared kushner who will be senior adviser to president-elect donald trump. back to you. >> more big news on what is already a busy day regarding president-elect. bag to matthew drapner with us. you're short the russell. >> yes. >> however, you were saying? >> however, we're long a series of group of i'd you sin krat tick names and of 20 plus names six are in the russells. we're finding lots of opportunities that out perform the index. >> let's go through some of the names. >> sure. >> let's go liongate's first just given the globes and the films that the company has done. why this name in particular now? >> lion'sgate ee. >> disappointment in stock. >> we made a lot of money. however, we think there's a good 30%, 40% upside. lionsgate mer lionsgated with starz. now it's a very fast growing high free cash flow tv business. stars has a million over the stop. lions gate has a robust tv production like" orange is the new black" and people lost faith in them after "hunger games" rolled off but last night they had "lala land" which dominated the golden globes. but you have huge free cash flow. tomorrow is their first investor day. it's not in their offices it's at liberty's. liberty global owns a big stake. we think you're going to see exciting things there. >> you follow this? >> if viacom can have a big move, lions gate can. i like this call because content is becoming king again and when i see where this stock has come down i say, geez, other than discovery, there's really -- it's really ready, it's ready. i like it. it's ready. good call. >> why do you think these picks are not going to come down if the overall russell is so overvalued that it's due for, i don't know, 30% pullback? >> lions gate is not in the russell. >> right. small caps in general i'm saying. russell decline, don't they all come down? >> not necessarily. so, you know, that's our job, right, to buy really good cheap names and short the index or names that we think that are expensive. we think in that mode we will perform. >> how short are you? >> we're significantly net long. i'm bullish on the market. >> a name that people may not be familiar with because of the headline name, xo group, probably familiar with the underline names. >> $525 market cap, substantial net cash, over $100 million. ebitda north of 100%. great ceo. they dominate the wedding space online. and the crown jewel is 50% of their business is local marketplace listings. and that's 25,000 vendors who pay $2600 a year. however, only 10% of the vendors on the site pay anything. and so they're transforming the business but they've made heavy investment in the last few years into a marketplace model. that opens up it dramatically. they talked about in the last earnings call, added 3,000 new venues, new vendors who have never paid on that site, that model. 25,000 venue tours just recently under that dramatically opens the tam and number of potential acquirers. >> what's it like being an activist in the current market space? i mean, when the market was going up, activists were all the rage. >> yep. >> activists, activists, that's all we heard about. then things got more choppy, volatile. where are we today? >> we're a little different. i consider myself a value investor who does activism when it suits and makes sense. i've been on eight boards, been the chairman. i've never had a proxy fight. the way i get on board is buy a stake and get references from all the previous people. private equity in the markets without a premium. for bigger activists it's -- and then there are a whole bunch that are totally inappropriate. that's a difficult space to be in. in our space not so much. >> i'm sorry to interrupt. i like what i hear. yoor a small cap nelson -- nelson is a deed -- >> i aspire. >> you aspire, right. he calls an engaged shareholder. you're an engaged -- activist almost means that here is the line and you're the enemy. engaged, you bring things to the party. i like what i'm hearing. really like it. >> absolutely. we don't strip the cash, lever the company. we try to create value and leave with investors, friends, references. that's how we find new deals and opportunities through those. >> do you find there's more concentrated ownership in small caps or -- >> not necessarily. it depends on the specifics. >> other two names i want to get to quickly, hostess. >> yep. they went public with a merger. hostess owned by apollo and dean metropolis. they reduced it from 11 bakeries to 3. they automated a lot, invested heavily. 29%. 7% free cash flow yield, growing at double digits at a 16% share versus 22 to the old company. we think there's a lot of room to run there. >> you don't want to talk about the specific names in which you are short you? do have some short names. >> right. >> but as a space you are short five fast casual dining. >> yes. >> establishments. >> yes. >> so you're negative on the space? >> we're very negative on casual dining and fast casual. and that's because we think that since the election, the average stock in the space is up 12%. meanwhile if you look at december, comps are negative 2. such that traffic is actually negative now and when traffic is negative and you had increasing prices, increasing gap out of home and gas prices are up year after year, we think you're due for a pretty ugly correction. >> i don't particularly like the group. i think it's linked with the mall and i think there's kind of a, we're going to start going out post election. you had a little bit of bump. but i'm not crazy about the group because of labor costs. look, i run a restaurant. it's a bar. i've got to tell you -- >> that's neither fast nor casual. >> that's very true. but when i look at my little p & l, i'm surprised at my costs. they've gotten -- look, 17 tables to have your costs out of control. we've reigned th reined them in common sense. in other words shall my wife is behind the bar. >> under pouring. >> she's overweight -- i mean, all these things are coming out wrong but she's in europe, so okay. you know what i mean? you see the cost goes up and you don't see them raising prices for food. i can't raise the price of guacamole to save my life. >> thanks for being here, matthew. matthew drapkin, ceo and portfolio manager as well. >> good work. >> retail down 8% over the past month. stephanie link, global asset management sees a buying opportunity in one of those under pressure. she's live with us today from her weekly missing link segment. hi, steph. >> hi, scott. how are you? >> what did you find? >> estee lauder under performed the group by 12% last year, trading at a 10% discount to its european competitors, typically trades at a premium. a lot of this is concerns about the department store exposure. i think that's way overdone. these guys have very great products. all premiere products, very good distribution, diversified distribution and diversified geographic presence. one place where consumers continue to spend is in cosmetics, is in creams, is in making yourself look good. and i think they can overcome this department store exposure with margin expansion and mid signal digit organic growth. this is one i like for the year. >> it's funny. when we saw the president-elect with the chairman and ceo, jim, i've got cramer here with me. >> i'm concerned that sephora is trying to cloud everybody else with their own private label. i happen to love the guy but i have to tell you, some of the skin care is not doing as well as the selfie oriented products. i still worry about it 23 times. it's come down so much that i feel that the risk works better. it is true that they disappointed couple of quarters. >> no doubt they disappointed in a couple of quarters. that's your opportunity. this is a great management company. sure, sephora is -- [ poor audio ] >> -- they cater to different customers, and do a lot of different things. i think it's overdone. you get quality consumer staples in that index, trying to get the same multiple of procter & gamble. i think mid growth at this valuation with these low expectations, that's why i'm a buy. >> we'll see you on the set. >> thanks. >> tia's stephanie link. watching the options market as they always do for signs of unusual trading. you're up first, pete. what do you see today? >> disney, we've talked about this name a lot. back in december we had huge option activity in the february 110s. what's happening today, somebody has taken profits there. they're selling those. 10,000 of those trading. they bought it for 90 cents, trading now almost $.50, paying $1.60 for 10,000 of those. if you think the run in disney is over, it might not be. we had stan hubbard on earlier, before this show. he is a monster in the media world. he is a guy who was talking about ad revenue will follow along with a growing economy. that's good for disney. >> disney again. >> yeah. >> you've seen unusual in disney before. >> right. >> angling for a job there, i think. >> clearly. clearly. >> i already have a job there. >> he already has a job there. >> jimmy, now i've seen multiple firms, almost one after another, come out and either make disney their top pick, a top pick. has the entire tone -- speaking of tone changes, the tone has completely changed. >> you might have money out of time warner. feeling more bullish about espn. ever since then, you felt maybe he has a card up his sleeve. february 10 is his birthday. i think we'll get a resolution to espn by then. >> i'm old enough to remember when all those analysts were downgrading the stock, 15 points ago, six months ago. the longer you're doing this, the longer you realize you want to be a buyer on bulk downgrades after a stock has already been -- >> yes. >> which i think was the case with disney >> what do you have, doc? >> 3d systems. it has exploded to the upside. you don't want to chase the stock, folks. you want to be in the options. i'm in the february 15s. they're running like crazy here. something is going on. 8 million shares trade. 2 million is normal. >> follow on 3d? >> i don't like the business model. it's very crowded. a lot of people felt so many different competitors. if i ever get in the way -- i was thinking when you said urban outfitters could have a breakdown in the stock. so i'm not going to get in the way of that option trade but do feel strongly that people who are chasing this better do some homework. the business isn't that good. >> do you want to give us a final trade, pete? >> final trait trade, call of the day, apple. we saw activity in there, scott. apple still has plenty of room to run and option markets are telling us the same story. >> joey? >> adobe. stock continues to move higher and higher. i believe in it. at some point they get acquired. >> you like it? >> bought down low i think it's great. i'll come back with yes, dca. this is the pet store where they were in the basement, then they were in the bedroom and now they're in your bed and you can't get rid of them but you love them and they cost a fortune. yes, pet care. >> ceo on squawk this morning? was that the ceo? >> i've got to tell you, having had to deal with bug and everest, the dogs in the bed, when my wife is away, i kick them and then have to pay their vet bill. >> doc, what have you got? >> ford net, ftnt. >> own jp morgan at 86 i think it's on its way to 100. look at a regional, like hban, huntington bank shares, probably the next regional to make a big move higher. >> sweet. >> matt, what have you got? >> jci. i'm interested in every one of these industrials. alex is live. let's get on, figure out if there is a story here. want earnings, not just on trump. >> we have mario gabelli tomorrow. looking forward to that. by the way this means hurry up, hry up. let's g next show starting. speaking of, "power lunch" starts now. >> i thought that was -- >> scott, that's just how i talk normally anyway. it's fair enough. i'm brian sullivan. we've got a parade of high-powered ceos topping your menu today. first up, more than band-aids and baby shampoo. in a rare and exclusive interview with ceo of dow component johnson & johnson. then we're headed to the detroit auto show.