Transcripts For CNBC Fast Money Halftime Report 20170113 : c

Transcripts For CNBC Fast Money Halftime Report 20170113

J jim, a remarkable quarter, best quarter ever for a financial. All i can say is there will be many more many better quartequarte quarters ahead. Heres what i think. Whether its the jpmorgan or the financials in general, its a barometer for the overall market. When you look at the chart for the banks or overall market we stabilized for the last month or so after that tremendous trump rally. Does it get given back before we go higher . I submit to you, no. Based on these earnings and granted were really early in the earning season, but based on these earnings this is going to be a stair step pattern through the year and what weve had over the last month is just the pause that sets up for the next step higher and earnings are going to be the catalyst that makes that happen. Josh, some wiare wondering a the banks had a great run and, if you want to use the word, they stalled because thats what seemed to happen, maybe you know. Youve called it consolidation of the gains. Yes. Does this then set them up for that next level and, thus, because theyre such an Important Group in the market, help propel the trump rally onward . So my answer would be that there is no evidence currently that the up trend is over of that trs any kind of internals rolling over. Momentum rolling over. Everything hats been in place on the way up is still in place. Other than the fact that price action has cooled off. Thats not a negative. If youre an investor thats a positive. You do not want to see Empire State Building charts at this stage in the game. Bank of america is up 112 from the 16 lows. Jpmorgan is up 70 . Goldman is up 60 some odd percent. Thats good enough. Now youve got the results coming in that justify those moves. The question is, how do we move higher from here . Net interest margins are expanding. The consumer business at all of the companies that reported is getting better, not worse. And youve got Securities Markets now helping out. Trading is getting better. Look, im not saying like this is the bottom. These stocks have made big moves. So lets look at whats the next group. I mentioned Huntington Bank shares is other day. This one is on the verge of a breakout. Look at regions financial today. Stock is up 3 . Should probably be up 5 . Zions bank corp. , stock could not get arrested for years. Now its becoming a momentum darling. These are new names that traders, Growth Investors have not considered for years and years and years. What a difference a day makes. Yesterday returning through the list of these regional banks that had gotten crushed. Its important not to focus on one day. Take a look at what these stocks are doing over weekly, monthly, time periods. Youre seeing positive crossovers. 50 days going above 200day moving averages. These are the stocks that are currently under accumulation. And when you look at relative strength you look at underlying momentum, its confirming the upside. Its not just that the stocks are going up. Its that the buyers continue to come into these names. All right. I think theyre going higher. I got to step to phil lebeau. Lets call up shares of fcau. Theyre under pressure on a bloomberg report the companify at chrysler will face a u. S. Criminal diesel emissions probe. Whats interesting is that yesterday sergio during a Conference Call with reporters and when we talked with him said, yeah, im expecting a doj investigation. Usually goes hand in hand with an epa investigation. Yesterday they an founsed the charges into the diesel emissions of 104,000 Fiat Chrysler models made between 2014 and 2016. You see the stock under pressure today on this headline even though the news actually kind of came out yesterday. And sergio mar shon said, sure, im expecting that probe, that type of an investigation. They usually go hand in hand with the epa investigations. Thanks so much. Phil lebeau with the latest on fiat. Willford is with us today. We expected good just given the environment and how its improved. Did we expect this good for jpmorgan . I think jpmorgan showed that they were very strong across the board. I mean, the real positive for all of the banks was a positive outlook for 2017 that weve still got the benefits for rates to come. Jpmorgan said across the board perform maance as well. Bank of america lagged and that wasnt the case for jpmorgan. They had a great quarter as well. Stocks are up today for outlook for 2017. That was the most important thing were looking for, right . Not backward looking. Give us your view. Nobody cares what they reported. Theyre buying because regulations are coming off. Interest rates are going up. And there is just a massive amount of money thats been underweight financials for years and years and years. Thats not even market weight. Its not even close to market weight yet. This group has a lot of room to run. When you talk about derivative trades i would mention the Financial Services Companies Like cognizant, fis, these companies are highly levered to financial spending and these could be derivative plays off the financial. Is this pause then, just simply that, the pause before the next sort of ladder step . I think so. One of the things to focus is the tenyear treasury. You see this correlation when the ten year comes down all the banks comes down. That could be your next opportunity to get in the banks. The tenyear could move for other news. Buying the banks and weve been buying the regionals and jpmorgans, that i think is going to be the way to make money. Great point. I totally agree. Thats how theyre trading these. Like the etf guy, when the ten year comes down theyre selling baskets. Fundamental investor the smaller names that were mentioning thats your opportunity. I want to make a plug for the bigger banks. The bigger banks and investor banks have Something Else going for them. This market activity is going to relate in ipos and the continue yags of debt issuance. Thats going to be positive for the big money banks. You can own them all. This is america. Trumps america. You can buy both. Its going to be interesting. We talk about specific stocks. This is where the zions come in to play. Some stocks have been so beaten down, zion because of the energy patch. The regionals because of rending and where they are. Pick the areas that will do well in terms of just geographic location. Do you want to be in the southeast . Or lines of business. When you mentioned like a Huntington Bank. Heres the stock thats trading at a discount to peers because they have a big auto loan book. Everyone says, the next subprime is going to be automobiles and theyre shoveling these loans out to consumers. And so as a result they dont deserve the trade at the same multiple that pick another regional bank. Probably thats a story thats been going on for too long. Everyone is well aware of it. Thats the kind of thing that creates opportunity, that type of misperception. Do you just simply buy the others . Im wondering from wilfred what you get to the other flood of Bank Earnings that are come. Thats interesting because i think on the investment banks, bank of america we were worried about the trading revenues. Then jpmorgan didnt do that. That leaves that open for other more like jps performance or bank of americas. I think across the sector everyone is positive. A bounce back from yesterday. I want to say you said do we now get the next ladder step in bank shared prices . I dont think we do. We had the next ladder step. More than one. Wevewrungs at one time. Weve had the multiple expansion. Now through 2017 we have to see the earnings deliver. I think its more steady from here. But what weve seen today is a reassuring outlook for the bulls across the balance. I would agree with you. Look, when you have a rerating, the move is so sudden, its so fast. Thats what we saw really right on the heels of the election when you got yields tickup and all of a sudden people said, you know what, its time. And it seemed to have been a collective decision. You have this huge spurt. Probably you dont get another one. So if youre a momentum trader only, maybe you will disappointed. Think about this, too. Think about this, too. If youre playing the trump trade the deregulation trade, if youre playing that what better space in the financials. So to me europe not going to sell financials to buy some other sector at this point if you own them. Youve taken pain for eight years. To me theres going to be a lack of supply and keep going higher. Encouraging today, as well, deregulation is not necessary to now start to see the banks doing well. That was clear on the bank of america call with the cfo because they boost share buybacks by 1. 8 billion. Theyre boosting capital returns. Still cutting spending. Exactly. The operators and leverage from here is very good. Cost run and control, shareholder is going up. If we do that its a further boost. Stick with us for a second. Lets bring in anton and runs the Financial Services fund. Anton, do you buy the financials today . Youve heard the debate on the desk. Do you get another ladder step or have we already had so many weve got to take a pause for a bit . I think weve kind of normaliz normalized. I think weve hit a level where you can actually pick stocks. I think a lot of the buying has been gone through etfs, through the carry, xls, i think everybody has been waiting for a pullback doesnt get the pullback. Consensus is we want to buy in a pullback, too many guys are waiting. Theres a floor underneath the names and you have to get down to basic stock picking. We saw some things today. We saw margin guidance, you know, raised for bank of america. So they didnt have the best reported quarter but the guidance was positive for landers. We saw reserve releases in energy. Again, thats some really good positive guidance. Somebody mentioned zions earl r earlier, emergency exposure, or regions bank has energy exposure. They could have reserve releases. I think theres positives out there. I do think that the regulatory side has a lot of pieces to be yet released. But you know, the volcker rule could go away. That could be great for guys with big trading books. Take it away from the retailers. That was a transfer of wealth. So i think theres a lot of positives that could still happen here. I do think we get m and a at the smaller names as soon as guidance and clarity. Do you concur with jim cramer that what jpmorgan delivered was the best quarter ever for a bank . You know you get the point hes making. Yeah. I mean, the point is, you know, it was a very good quarter. I mean, you know, credit is good. You know, you can pick at any little piece of business. They were conservative and guided only a 10 long growth for this year when it did 15 last year. I think they exceed the 10 . I think gdp, you know, gets up. I think the trump trade continues to be positive for the economy. I think we will be better there. So, you know, i expect even better quarters in the future. I think the thing to keep watching is credit and credit is benign. You own jpm . I dont right now. Why . I love well, because i love consolidation. Thats been my core, my performance over the years. You know, i love owning smaller names. But you own bank of america. I do own bank america. Bank america has a lot more upside in terms of the way their Balance Sheet is positioned. Theyre cheaper. Im more of a value guy so jpmorgan is more of a growth stock. Nothing against it. Its a Great Company. They do very well. I do a lot of business with jpmorgan. But, you know, im a more of a value guy and i see Interest Rates being a bigger driver for bank of americas earnings than jpmorgans earnings, the way the Balance Sheets are positioned. Anton, thanks for calling in. Wilfred, thank you. See you on the other side of the long weekend frkts lets bring it back to the markets. Dow and s p essentially flat at this hour despite the Bank Earnings weve been speaking agent. Financials are the Leadership Group today. Real question is where does trump rally go from here . Lets bring in michael farr, the president of farr miller and washington. Hes joining us today from what looks like sunny florida. Michael, welcome back. Thank you very much. Great to be with you guys. What do these results do for the overall trump rally . I think they help support it a bit. Particularly the time when the overall trump rally seems perhaps to be running out of gas. Im wondering if were beginning to see sort of that history rhyming thing with reagans first few months in office, or before he got in office, from reagans election to reagans inauguration. Markets went up about 8 . And then six or seven months later we were in a recession. In 1982 we hit one of the biggest bull markets ever. Theres a lot of hope that can get built up at the beginning of someones term before they are actually able to do anything. So i think these Bank Earnings help support some of the enthusiastic rally but theres a lot more left on the table. Michael, its josh brown. Is it a little bit of an oxymoron to continue to call this the trump rally when, in fact, the s p is up 1. 6 , about 2 1 2 weeks into the year but the nasdaq is up over 4 , biotech equal weight biotech up over 11 . Tech, nasdaq, biotech, these arent, quote, unquote, trump stocks. Maybe we should all just drop this and focus on the fact that stocks are going up because earnings are growing again. And thats really what weve been waiting for since the First Quarter of 2014. I i dont know is the answer, josh. Me, either. Thats why im asking you. Yes, great. I should ask you. I mean, you know, we can go through some of the things that would have happened with some of these growthier stocks like Immigration Reform and whether perhaps that doesnt seem to be as severe for the tech stocks when they originally got knocked down over immigration issues and maybe theyre rallying back a little bit here. I mean, the real meat of what trump is proposed is stuff were not going to see until 2018, you know . Actually start to hit numbers and real change. So were still kind of trading on anticipation of wonderful things happening in washington and yet were seeing the confirmation hearings kind of how they can take time. Let me were seeing what can happen when the president says that the pharmaceuticals have been getting away with murder. And how theyre going to have to start kind of redoing the aca act with as part of a new proposed tax bill. So washingtons messy and i think theres room to disappoint wall street here thats trading at all time highs. Right. So i think caution. Look, with all due respect, youre being too technical. Were not saying that every single sector of the market that picks up or joins this rally is the trump rally. The trump rally started on the morning of november 9th when investors woke up and realized that some of their worst fears about a possible Trump Presidency may not come to fruition, his policies and agenda could be pro growth and pro market. Thats why we call it a trump rally. Okay. Heres the problem with that. Everything that goes up is because of the president , then what are we going to say when we have our typical First Quarter its just a rally. Rally started on the wee hours. All im asking you are we going to have a trump correction when he sends the one tweet thats too far. Maybe so. Maybe all the good feeling about the agenda how about because the fundamentals its only the good stuff that weve talked about. Think about that. All we budgeted in are the most bullish scenarios in the market for this administration. No regulations, no taxes, were going the repatriate everything but nobody talks about are we going to deport 11 Million People . You know, are we going to put up all of these trade barriers, are we going to keep all the entitlement program, cut taxes and spend like drunken sailors and nothing is going to happen . Nobody ever talks about thility that. Deficits dont matter anymore because theres a republican in the white house. Were over that. Were fine now. And rand paul and ted cruz are suddenly going to agree with deficit spending all of a sudden again and theyre going to go along with trump and that the republican fight isnt going to be somehow as ugly as it has been . I mean, these are things we should kind of be concerned about. Were missing the point the economy actually was picking up speed well before trump was elected. Yeah. And that speed continues even before any deregulation has occurred, even before anybody has had their confirmations confirmed. You know, and labor market is extremely strong. That should beget consumption. A lot of other reasons to believe other than trump for this rally. I dont think anyone is saying get out of the market now. We all understand how far and how quick weve come and the time i dont know if were say questioning whether you should get out. Maybe even more questioning whether you should get . I would say you should get in but you can actually wait for the next couple of months to get the talked about pent up selling thats going to happen. You know i guess the right answer the right answer is why does it matter. In other words, if your time horizon is ten plus years what does it matter if you buy in and theres a 10 or 12 correction and you say, oh, i would have gotten what happens if you dont get that correction . Think about how many people are still waiting from 2014, 2015, 2016 to see some type of a revisit to, you know, levels in the dow. Were talking 14,000, 15,000. You just didnt get it group may never get it. I dont know. I think its sffair to questn whether the honeymoon is even over or soon to come to an end or whether theres going to be another leg to the trip. I think and this is probably to michaels point that is a market of stocks and this is where stock picking should excel. We talked about the overall market multiple is. Whether its 17 or 18. Its not cheap. Not terribly expensive but not cheap. You can find a lot of good highquality wellknown names well below that market multiple with nice dividend yields and you can go across many sectors. Pharmaceutical, technology, cyclicals. Pretty much all the banks are trading below the market multiple. And a lot of them are trading below book value, too. A lot of market is factored in this enormous Corporate Tax cut and the additional 12 or 1 or 14 in s p earnings and thats part of the m

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