Transcripts For CNBC Fast Money Halftime Report 20170130 : c

Pete at least one of the reasons why i say its a 40 cash last week. Petes in cash, too. The market has been looking past it. Things keep popping up and eventually the market is not going to look past it. I dont know if this is the big one, so to speak, but you have to worry. There are these kneejerk tweets, so to speak. I know jim says you cant govern by tweet. But yet theres not a lot of follow throughs. The scary thing to me was what he did with the security counsel which was taking off national the joint chiefs of staff and putting on bannon. Are you changing the way that youre thinking about the market as a result of that or is immigration executive order . Its actually the way i thought about it, which is again why im in cash. Is that theres complacency and that youve already discounted the tax bill, youve discounted infrastructure. Life is going to be smooth sailing. Even under the most i should say rational presidency, those things take a lot of time. There are bumps along the way. I continue to point out in the senate its not a huge majority. It was 5148. So these are the issues. Its got to go back to center. I think the prioritization was also wrong. The wall shouldnt have been the first thing. Immigration should not have been the first thing. The first thing should have been taxes and infrastructure. Whats the risk here . You get some battle on the hill as a result of some of this stuff and you cant get, jim, the agenda that the market is banking on through as fast as the market expects that it will be . Thats exactly the risk because what youve seen over the weekend is an actual court battle. Judges are coming out against what trump has done with regards to immigration. So that worries people that agenda many of us thought would sail through with a unified congress and president might be held up by court action. Having said that, lets put this into perspective. The market is not down even 1 . Yes, its close but not even down 1 . This is not that big a move for the events over the weekend. And i think its just more wind in the sails that this is a new regime, new presidency, and hes going to break the rules and continues to do so. Maybe, josh, this too shall pass and people have been saying any pull back is a buying opportunity are ultimately going to be right and 1 pullback albeit small in relative terms is worth buying. Sure. But hard to say this too shall pass because every president , every fouryear term theres a massive drawdown at some point. No president has been immune to the fact that stocks have risk. And i think what very smart people are talk talking about or starting to think about is this idea weve got a premium multiple in u. S. Stocks, primarily because this is a great economy and theres a rule of law. Right . The stock is basically a contract between shareholders and management. What happens when theres a perception that whoever is in power at a given moment unilaterally, do whatever they want, executive order, pull norms that have existed for decades and just throw them out the window. The question becomes, what should the market multiple be in those conditions . And, scott, theres a reason why russia trades at five times earnings. China trades at seven times earnings. These economies are growing faster than ours but theres not as much faith on the part of the International Community that contract low will be special. Weve got a 26 cape ratio in the u. S. Thats on ten years earnings. 21. 8 on trailing 12 months. I dont know that thats a guarantee that we get to keep that. If Investor Confidence in the rule of law is shaken. And thats something we havent had to worry about for a few years but maybe thats a tlu new risk that is underpriced with a vix of 12. Investor confidence in the rule of law down 8 i think we will be okay. I said it could be shaken. Go back six years. I dont mean to be in your face on this. Dont worry. Youll lose. Gm and ford, debt holders were wiped out. We were saying the same thing then. I dont know if it was seven years or six years ago, basically the president came in and said the debt contracts we have, totally a do gating them, moving into a new regime. What happened after that, six or seven years of the markets rallying. Im worried as well, josh. But im just saying that that one thing might not be difference situation. Jim, what was the s ps multiple at the time it happened . It was ten or 11 times earnings. This is not the first time a president has a no galting the rule of law. It was isolated for companies in south at the time and going to bankruptcies. Very focused and who did you have there at the time . You had an administration that was well steeped in finance, right. Here you dont even have the administration i totally disagree with what youre saying. Tell me why. You say obama was well steeped im not saying obama. Thats the administration were talking about. Im saying the people under obama. Obamas guys are robert. Theres nobody in the administration yet. Let me ask it this way. Are you checks getting slammed today, to bring the visa. Are you not going to buy tech because of the visa issue or is this theyll figure it out . Let me answer that question with a question. Its rhetorical but maybe he has an answer to this. Do we think its positive for the economy to take the most successful industry by far, the thing we do best in the into irworld, technology, and make that the goat in order to promote the wishes of the coal industry . Is that where were going to go . Coal and steel . Why do you draw that connection . Pass laws that will rip out environmental regulations to benefit coal, steel, things like that. And then were going to make it harder for companies in Silicon Valley that have done an exceptional job at job creation and growth. How do you draw a connection between the two . Hb1 visas. Are you saying that only that only people from iran, iraq, syria, et cetera, can create in the u. S. . That has nothing to do with the issue. Its the overhang, guys. What is your connect. Technology companies that absolutely require Foreign Workers in order to be able to do what they do. Okay. Okay. Those industries i dont necessarily agree with that either. Thats what the ceos literally are saying. You can disagree with the people that run google but i think they know more about their company than they do. Over reaction of things. Im not supportive of trump or those policies for sure. But i think thats an overreaction. I think that denigrates the american the american people, say, hold on, we cant do it. We need people from outside. So apple, google are incorrect about their staffing needs and you know better . A thousand . I think there are people here that can do it. Scott, to your point if the stocks keep going down its a buying opportunity. I dont think i agree with josh there are going to be see people but its not going to stop the growth the of the googles of the world and if these are opportunities to buy, facebook, google, this is what i you would use. I dont think this is the big one also in terms but i think that the market, we saw with the vix was, volatility was. Its a selloff market will reset. I think if it keeps happening you lose that confidence in the market and it will be a natural selloff which we sorely needed. So i think its let me correct one thing because our executive producer came in my year, majority is 5248, thats true but a stinbstention which it 5148. Thank god we have somebody looks after what you say. I was right. Politely telling him who is behind me, im in front of it. President trump turning his attention today to a Campaign Promise to cut regulations he believes are hurting business. Eamon javers live at the white house for us on the north lawn today. Scott, the president delivering on that Campaign Promise that you mentioned to eliminate two regulations for every new regulation thats imposed. Heres how white house officials explained to us today how this is going to work. Theyre saying that each agency head who proposes any new regulation at all will have to come up with two specific regulations that that agency will eliminate and theyre going to cleliminate and create a sco on the cost of the eliminations. Make sure the two regulations eliminated total up to the same cost on the economy that the regulation thats being imposed will impose on companies and businesses that are trying to do business in this economy. Heres what the president had to say explaining all that at the white house earlier today. So essentially were getting rid of regulations to a massive extent. Could be as much as 75 . Could be even slightly more than that. Great protection for the consumer. We have to. But we dont need 97 different rules to take care of one element. Guys, i want to draw your attention to comments from President Trump today. Here at the white house talking about the stock market. Its just not something you typically hear president s do at all really. Heres what he said and well talk about on the other side. Big businesses are thrilled with whats happening. The stock market has gone up massively since the election. Everyone is saying, oh, the market will go down. I say, the market is not going down. The smart people know me. The businesspeople know me. They know what im about. So the market went massively up. In fact, when i was elected a lot of the really smart people went out and bought a lot of stock. And theyve been rewarded. You heard the president there saying the markets not going down. Now, in the context of these comments it appear whats the president was doing was going back to Election Night and talking about the predictions that the market would tank if President Trump was, in fact, elected. And we saw that in the overnight futures but then we saw this massive trump rally through the next 30 to 60 days. So clearly that sort of on his mind. But you just dont hear president s say that the market is not going down really ever. Typically white houses when asked about markets say, you know, markets go up, markets go down. Were not going to comment on daytoday movements because politically while theyre tempted to take the credit for market rallies they also dont want to take the political blame for any market fallout. So they avoid saying anything. This white house obviously has a very different approach. Were getting used to the unconventional, thats for certain. I bet those comments from the president have reaction on this desk. I wonder if the stock market will still be used as a scoreboard if and when we have the next 10 or 11 correction which typically we average one a year. I wonder that will still be the metric thatting the administration wants to be judged on or maybe there will be a different one at that point. We are just to follow up on that. We are due for a correction. If you look at investor sentiments, whether its retail or institutional, those surveys are clearly in tpullback to a correction zone. When its going to happen, nobody knows. The scoreboard will go away at that point in time. One thing is true, all op these things that trump is doing, particularly with regulations, bode very well for the longterm future. So a correction is something you just have to get through and buckle your seat belts for. I agree. If you look t where we were a year ago, up 20 . There is the opportunity now for after earnings to see a pullback, maybe even through the next couple of weeks. Youve got dry powder, hold it. If youre holding your stocks i wouldnt sell. I would just wait. What if earnings justify a further move higher rather than a need for a correction . Youre still going to get a few stocks. The nice part about earning season if youve got cash is youre always going to get a couple of fallen angels you can buy. It is setting up to be a another huge week for earnings with 100 s p 500 Companies Reporting this week. Lets start with apple. Reports tomorrow after the bell. By and large favorable in terms of the feeling here on the desk. By the way, Pete Najarian is joining us from napele, florida. Great to have you. Your expectations on apple which you have a personal buy rating on. Yeah. Personal buy rating. I still think theres an incredible amount of upside. I think its going to come down to what everybody is focused on. We have gone through this time and time again through earning season and over the last couple years. When you look at what people are focusing on, if the focus does go on, the growth area for apple, were going to see a positive report. If you look at the suppliers so far that have reported some of the apples suppliers have put up incredible numbers. Even look today. You look at Something Like a skyworks or chip suppliers for apple and you see huge moves that have actually continued to hold on to some of those gains. Im talking about massive moves in the last week or so. So i think things look very favorable right now for apple. I like what theyve been doing. I think the Search Services have been the area that everybody should be concentrating on because that is where were going to see the growth. No one is scoffing at that today, pete. They shouldnt be scoffing at that. I know youre not, scott. I never did. I never did. Others did. Yes, you did. You scoffed. Weiss, you wouldnt buy it. No. Look its a hardware company. You just said its a Services Company now. Its not. It is. Most of the money comes from hardware. Yes it is. Thats what the hold school was. What youre missing and what so many people have been missing and why they missed it when it was in the 90s and now at 120. Today its not getting slammed like most of what were seeing in the nasdaq. But the focus has to be on the right area. Services now was the area where you have to look and see. Can they continue the grow, steve . We know the hardware story. We know theyre going to be coming out with x phone later on in the fall. Up until that time the focus should be on the services themselves. And then when phones start growing well go to phones and then when they stop growing again well go to services. How about the billion plus users, the users actually part of the apple eco system, steve . Dont you see where that Growth Continues to come from and the huge gains it follows the install base. Now theyre talking about now theyre talking about funding original content like netflix. So theyve been late to the party on everything. But theyve always been late to the party and look at what that stock has done for the last ten years. Theyve always been late. As innovative as we like to think of apple of what they have done oftentimes theyve been a copycat. Im not a hater. Im telling you the truth. The stock where have they innovated aside when as long as they do it bet sgher are who says theyre doing it better . Yeah. I dont know. How are many millions of iphone buyers. Theyre not going better. They have an eco system that people are buying in to. Prices are coming down. Lost share in china. Share in india, 4 to 2 . So the new economies arent buying on to it as much as the old economies. One big concern i have and theres scoffing going on on the desk right now. Margins. Okay . Legitimate analysis and following of the stock. You have to look at their margins. Thats what the streets are going to focus on. One of the things that worries me about margin, gross margin, is this lawsuit against kaul co qualcomm. I wonder theyre being proactive because they know margins are going down and they want to go after their key suppliers. Qualcomm is the one who has resisted. Its a hold. Its not going to go down as much of the market. Jim says its a buy. Fine. He the k. Buy it. Its a hold. In my view. I dont hate it. Im just not putting new money there. The last four times apple reported it had a move up or down of greater than 6. 5 . So if youre somebody that is not in the name you want an opportunity, the last two earnings reports they killed the thing and it came back relatively quickly but maybe thats a better opportunity than buying into the numbers if youre concerned about that shortterm risk. If youre longterm bullish on apple though probably you dont care that much and able to withstand the company not having its, quote, unquote, greatest quarter ever because its probably not going to. Jimmy . Look, its 12 times earnings. Strip out the net cash, nine times earnings. Steve, ive heard you. You make a good argument it should be valued as a Consumer Electronics company. It is. And its valued a little bit cheaply at nine times x cash for Consumer Electronics company. Youve got the upside aft services. Iphone 8. This is a call option here. Ive been hearing those arguments and forever. For what, 90 to 120 . X cash. X cash. X cash. Its up in three months. Josh, heres what im really worried about. Weve got a new president. Hes come out with an immigration policy. If he keeps that policy theres no way apple can succeed because they wont be able to hire people to create new products for them. Is that what you just said . You said that. You just said that before. When . Why are you down playing the visa issue as if its some bs issue . Im not saying its a bs issue. Its a are ridiculous assumption. Half the programmers in Silicon Valley are here on some sort of visa. Shortage of workers. U. S. The cant program. Hewlettpackard is going to lose that. Nobody said the u. S. Cant program also. He said the visa issue is an significant enough visa. Many of whom come from overseas. Not from those seven countries. You just came up with that part. I mean thats whats wrong. Is it by accident that tim cook, zuckerberg, nadella, hastings and other tech ceo rz the ones whose voices are lou at sn . I dont agree with trumps policies. Lets get that out there. We can also find baristas that can make a hell of a cup of coffee, okay, in this country, americans also. So to say that we cant find programs here, programs here that are americans, is ridiculous. Theyre doing support of their position, which is antitrumps position. I agree with that. The the employers are having trouble matching their needs with the available skill set amongst the u. S. Labor force. There are many causes for that and it is fixable. But it requires a lot of years, a lot of education, a lot of investment into education. I dont particularly think thats going to be a hallmark of this administration. So between the bridge now and then, there is a need on the part of hightech companies to hire programmer, developer, engineers and a lot of them are coming from around the world. Not from those seven countries. I dont disagree thats where they come from now. Thats an issue for tech companies. Thats all were saying. Were saying thats how they feel. All right. Glad we got that straight. Heres what else is coming up on the International Community<\/a> that contract low will be special. Weve got a 26 cape ratio in the u. S. Thats on ten years earnings. 21. 8 on trailing 12 months. I dont know that thats a guarantee that we get to keep that. If Investor Confidence<\/a> in the rule of law is shaken. And thats something we havent had to worry about for a few years but maybe thats a tlu new risk that is underpriced with a vix of 12. Investor confidence in the rule of law down 8 i think we will be okay. I said it could be shaken. Go back six years. I dont mean to be in your face on this. Dont worry. Youll lose. Gm and ford, debt holders were wiped out. We were saying the same thing then. I dont know if it was seven years or six years ago, basically the president came in and said the debt contracts we have, totally a do gating them, moving into a new regime. What happened after that, six or seven years of the markets rallying. Im worried as well, josh. But im just saying that that one thing might not be difference situation. Jim, what was the s ps multiple at the time it happened . It was ten or 11 times earnings. This is not the first time a president has a no galting the rule of law. It was isolated for companies in south at the time and going to bankruptcies. Very focused and who did you have there at the time . You had an administration that was well steeped in finance, right. Here you dont even have the administration i totally disagree with what youre saying. Tell me why. You say obama was well steeped im not saying obama. Thats the administration were talking about. Im saying the people under obama. Obamas guys are robert. Theres nobody in the administration yet. Let me ask it this way. Are you checks getting slammed today, to bring the visa. Are you not going to buy tech because of the visa issue or is this theyll figure it out . Let me answer that question with a question. Its rhetorical but maybe he has an answer to this. Do we think its positive for the economy to take the most successful industry by far, the thing we do best in the into irworld, technology, and make that the goat in order to promote the wishes of the coal industry . Is that where were going to go . Coal and steel . Why do you draw that connection . Pass laws that will rip out environmental regulations to benefit coal, steel, things like that. And then were going to make it harder for companies in Silicon Valley<\/a> that have done an exceptional job at job creation and growth. How do you draw a connection between the two . Hb1 visas. Are you saying that only that only people from iran, iraq, syria, et cetera, can create in the u. S. . That has nothing to do with the issue. Its the overhang, guys. What is your connect. Technology companies that absolutely require Foreign Workers<\/a> in order to be able to do what they do. Okay. Okay. Those industries i dont necessarily agree with that either. Thats what the ceos literally are saying. You can disagree with the people that run google but i think they know more about their company than they do. Over reaction of things. Im not supportive of trump or those policies for sure. But i think thats an overreaction. I think that denigrates the american the american people, say, hold on, we cant do it. We need people from outside. So apple, google are incorrect about their staffing needs and you know better . A thousand . I think there are people here that can do it. Scott, to your point if the stocks keep going down its a buying opportunity. I dont think i agree with josh there are going to be see people but its not going to stop the growth the of the googles of the world and if these are opportunities to buy, facebook, google, this is what i you would use. I dont think this is the big one also in terms but i think that the market, we saw with the vix was, volatility was. Its a selloff market will reset. I think if it keeps happening you lose that confidence in the market and it will be a natural selloff which we sorely needed. So i think its let me correct one thing because our executive producer came in my year, majority is 5248, thats true but a stinbstention which it 5148. Thank god we have somebody looks after what you say. I was right. Politely telling him who is behind me, im in front of it. President trump turning his attention today to a Campaign Promise<\/a> to cut regulations he believes are hurting business. Eamon javers live at the white house for us on the north lawn today. Scott, the president delivering on that Campaign Promise<\/a> that you mentioned to eliminate two regulations for every new regulation thats imposed. Heres how white house officials explained to us today how this is going to work. Theyre saying that each agency head who proposes any new regulation at all will have to come up with two specific regulations that that agency will eliminate and theyre going to cleliminate and create a sco on the cost of the eliminations. Make sure the two regulations eliminated total up to the same cost on the economy that the regulation thats being imposed will impose on companies and businesses that are trying to do business in this economy. Heres what the president had to say explaining all that at the white house earlier today. So essentially were getting rid of regulations to a massive extent. Could be as much as 75 . Could be even slightly more than that. Great protection for the consumer. We have to. But we dont need 97 different rules to take care of one element. Guys, i want to draw your attention to comments from President Trump<\/a> today. Here at the white house talking about the stock market. Its just not something you typically hear president s do at all really. Heres what he said and well talk about on the other side. Big businesses are thrilled with whats happening. The stock market has gone up massively since the election. Everyone is saying, oh, the market will go down. I say, the market is not going down. The smart people know me. The businesspeople know me. They know what im about. So the market went massively up. In fact, when i was elected a lot of the really smart people went out and bought a lot of stock. And theyve been rewarded. You heard the president there saying the markets not going down. Now, in the context of these comments it appear whats the president was doing was going back to Election Night<\/a> and talking about the predictions that the market would tank if President Trump<\/a> was, in fact, elected. And we saw that in the overnight futures but then we saw this massive trump rally through the next 30 to 60 days. So clearly that sort of on his mind. But you just dont hear president s say that the market is not going down really ever. Typically white houses when asked about markets say, you know, markets go up, markets go down. Were not going to comment on daytoday movements because politically while theyre tempted to take the credit for market rallies they also dont want to take the political blame for any market fallout. So they avoid saying anything. This white house obviously has a very different approach. Were getting used to the unconventional, thats for certain. I bet those comments from the president have reaction on this desk. I wonder if the stock market will still be used as a scoreboard if and when we have the next 10 or 11 correction which typically we average one a year. I wonder that will still be the metric thatting the administration wants to be judged on or maybe there will be a different one at that point. We are just to follow up on that. We are due for a correction. If you look at investor sentiments, whether its retail or institutional, those surveys are clearly in tpullback to a correction zone. When its going to happen, nobody knows. The scoreboard will go away at that point in time. One thing is true, all op these things that trump is doing, particularly with regulations, bode very well for the longterm future. So a correction is something you just have to get through and buckle your seat belts for. I agree. If you look t where we were a year ago, up 20 . There is the opportunity now for after earnings to see a pullback, maybe even through the next couple of weeks. Youve got dry powder, hold it. If youre holding your stocks i wouldnt sell. I would just wait. What if earnings justify a further move higher rather than a need for a correction . Youre still going to get a few stocks. The nice part about earning season if youve got cash is youre always going to get a couple of fallen angels you can buy. It is setting up to be a another huge week for earnings with 100 s p 500 Companies Reporting<\/a> this week. Lets start with apple. Reports tomorrow after the bell. By and large favorable in terms of the feeling here on the desk. By the way, Pete Najarian<\/a> is joining us from napele, florida. Great to have you. Your expectations on apple which you have a personal buy rating on. Yeah. Personal buy rating. I still think theres an incredible amount of upside. I think its going to come down to what everybody is focused on. We have gone through this time and time again through earning season and over the last couple years. When you look at what people are focusing on, if the focus does go on, the growth area for apple, were going to see a positive report. If you look at the suppliers so far that have reported some of the apples suppliers have put up incredible numbers. Even look today. You look at Something Like<\/a> a skyworks or chip suppliers for apple and you see huge moves that have actually continued to hold on to some of those gains. Im talking about massive moves in the last week or so. So i think things look very favorable right now for apple. I like what theyve been doing. I think the Search Services<\/a> have been the area that everybody should be concentrating on because that is where were going to see the growth. No one is scoffing at that today, pete. They shouldnt be scoffing at that. I know youre not, scott. I never did. I never did. Others did. Yes, you did. You scoffed. Weiss, you wouldnt buy it. No. Look its a hardware company. You just said its a Services Company<\/a> now. Its not. It is. Most of the money comes from hardware. Yes it is. Thats what the hold school was. What youre missing and what so many people have been missing and why they missed it when it was in the 90s and now at 120. Today its not getting slammed like most of what were seeing in the nasdaq. But the focus has to be on the right area. Services now was the area where you have to look and see. Can they continue the grow, steve . We know the hardware story. We know theyre going to be coming out with x phone later on in the fall. Up until that time the focus should be on the services themselves. And then when phones start growing well go to phones and then when they stop growing again well go to services. How about the billion plus users, the users actually part of the apple eco system, steve . Dont you see where that Growth Continues<\/a> to come from and the huge gains it follows the install base. Now theyre talking about now theyre talking about funding original content like netflix. So theyve been late to the party on everything. But theyve always been late to the party and look at what that stock has done for the last ten years. Theyve always been late. As innovative as we like to think of apple of what they have done oftentimes theyve been a copycat. Im not a hater. Im telling you the truth. The stock where have they innovated aside when as long as they do it bet sgher are who says theyre doing it better . Yeah. I dont know. How are many millions of iphone buyers. Theyre not going better. They have an eco system that people are buying in to. Prices are coming down. Lost share in china. Share in india, 4 to 2 . So the new economies arent buying on to it as much as the old economies. One big concern i have and theres scoffing going on on the desk right now. Margins. Okay . Legitimate analysis and following of the stock. You have to look at their margins. Thats what the streets are going to focus on. One of the things that worries me about margin, gross margin, is this lawsuit against kaul co qualcomm. I wonder theyre being proactive because they know margins are going down and they want to go after their key suppliers. Qualcomm is the one who has resisted. Its a hold. Its not going to go down as much of the market. Jim says its a buy. Fine. He the k. Buy it. Its a hold. In my view. I dont hate it. Im just not putting new money there. The last four times apple reported it had a move up or down of greater than 6. 5 . So if youre somebody that is not in the name you want an opportunity, the last two earnings reports they killed the thing and it came back relatively quickly but maybe thats a better opportunity than buying into the numbers if youre concerned about that shortterm risk. If youre longterm bullish on apple though probably you dont care that much and able to withstand the company not having its, quote, unquote, greatest quarter ever because its probably not going to. Jimmy . Look, its 12 times earnings. Strip out the net cash, nine times earnings. Steve, ive heard you. You make a good argument it should be valued as a Consumer Electronics<\/a> company. It is. And its valued a little bit cheaply at nine times x cash for Consumer Electronics<\/a> company. Youve got the upside aft services. Iphone 8. This is a call option here. Ive been hearing those arguments and forever. For what, 90 to 120 . X cash. X cash. X cash. Its up in three months. Josh, heres what im really worried about. Weve got a new president. Hes come out with an immigration policy. If he keeps that policy theres no way apple can succeed because they wont be able to hire people to create new products for them. Is that what you just said . You said that. You just said that before. When . Why are you down playing the visa issue as if its some bs issue . Im not saying its a bs issue. Its a are ridiculous assumption. Half the programmers in Silicon Valley<\/a> are here on some sort of visa. Shortage of workers. U. S. The cant program. Hewlettpackard is going to lose that. Nobody said the u. S. Cant program also. He said the visa issue is an significant enough visa. Many of whom come from overseas. Not from those seven countries. You just came up with that part. I mean thats whats wrong. Is it by accident that tim cook, zuckerberg, nadella, hastings and other tech ceo rz the ones whose voices are lou at sn . I dont agree with trumps policies. Lets get that out there. We can also find baristas that can make a hell of a cup of coffee, okay, in this country, americans also. So to say that we cant find programs here, programs here that are americans, is ridiculous. Theyre doing support of their position, which is antitrumps position. I agree with that. The the employers are having trouble matching their needs with the available skill set amongst the u. S. Labor force. There are many causes for that and it is fixable. But it requires a lot of years, a lot of education, a lot of investment into education. I dont particularly think thats going to be a hallmark of this administration. So between the bridge now and then, there is a need on the part of hightech companies to hire programmer, developer, engineers and a lot of them are coming from around the world. Not from those seven countries. I dont disagree thats where they come from now. Thats an issue for tech companies. Thats all were saying. Were saying thats how they feel. All right. Glad we got that straight. Heres what else is coming up on the Halftime Report<\/a>. One retailers drop is capturing the attention of goldman sachs. The firm is calling for investors to buy the stock. Also ahead, how do you know when you can trust a wall street analyst . Former new york governor and the original sheriff of wall street Eliot Spitzer<\/a> is backing a service that rates them stock by stock, call by call. See who is dependable and who is not. The Halftime Report<\/a> with scott wapner is coming back in two minutes. You do all this research on a perfect car, then smash it into a tree. Your Insurance Company<\/a> raises your rates. Maybe you shouldve done more research on them. For drivers with accident forgiveness, Liberty Mutual<\/a> wont raise your rates due to your first accident. And if you do have an accident, our claims centers are available to assist you 24 7. Call for a free quote today. Liberty stands with you\u2122. Liberty mutual insurance. Did you know slow internet can actually hold your business back . Say goodbye to slow downloads, slow backups, slow everything. Comcast business offers blazing fast and reliable internet thats over 6 times faster than slow internet from the phone company. Say hello to internet speeds up to 250 mbps. And add phone and tv for only 34. 90 more a month. Call today. Comcast business. Built for business. All right. Lets continue our earnings conversation. Wednesday facebook after the bell, varied opinions here. Jim, you you buy it . Wooe woo weiss, you hold it. I think at 31 times earnings, if you want to be in this space this is a price at which you can buy it. 31 times is really cheap for this stock. Go, please. I actually like it. I like the space. You know, its my view is this company, like amazon, is just unanalyzable. Facebook is unanalyzable . Sure. How do you predict the earnings . My point is that i like them because i like management. I like the market share they have. I like their business model. I cant go out with some other companies and do channel checks, see what they have. So its somewhat of a leap of faith. So i own facebook and weve owned it for a while. I havent bought it in the last couple of weeks. Nice runup from 112. I think you look at facebook and you look at google and ive said this before. Two companies that i want to own. Great cash flow. I understand about the channel checks but you can look at most of the advertising online is concentrated between these two. Okay. There are Research Firms<\/a> that can tell you what the trends are. I think with facebook the thing to keep in mind here and i saw this way too early but this is a stock only missed earnings once since it came public five years ago and revenue once and that same quarter. They havent done it again. 18 earnings reports and the average day after move of facebook is plus 4. 3 . So this is a company that has a very long history at this point. Not only understanding what the street needs to see, but delivering on it and then some. So this is not a name i would want to feed into earnings if i have to be one of the other id rather be them. Amazon thursday after the bell. Pete, youre a buyer. Yeah. Jimmys a seller. Pete, you go first. Well, i tell you why i would be a buyer, jimmy. None of us get our arms around this valuation level and this is nothing like facebook when it comes to that. One thing i disagree with 31 times, thats nothing when you look at the growth rate and cash fles and acquisitions theyve made. Amazon, on the other hand, i think the focus has to be on aws. Aws is exactly where the huge b growth is going to be coming from from amazon. Ecommerce is great but thats not where the margin is. Margin on the other side. And i think that when you really look at where their growth is coming from its cloud, theyre the owner of this space real lit right now. So for that reason i wish i was in amazon. I just havent pulled the trigger to own the dag gone thing and i continue to miss it. On a big pullback i wait for that opportunity. A pullback that doesnt make any sense. If we get that thats the opportunity. Amazon sold off over 7 the day after the last time they reported, so that would be in line with what youre looking for. Yeah. That dovetails with what i want to say which is were all going to agree that amazon is an amazing company. The problem that i have with it is a combination, its not just about a valuation. Its a valuation combined with the earnings volatility. I looked at the last four quarters. The average difference between the estimate and what they reported excuse me, the minimum was 33 . In some cases it was 85 . Of those four quarters two are misses, two were beating. My point is and deep breath here, i agree with steve. This is an whatever the estimates are right now you really cant put faith in them. So theres a 50 50 chance they not only miss but miss big. And if that happens the stock comes down. Not because its not a great company, its a great company. But this is not the price at which i would buy it. Lets go under armour. Tomorrow before the bell, a controversial, a battleground stock. Jimmy, you would sell it. Sarat, you sell. Pete, you hold it. This has been a tough stock for me. I have not historically been right on this thing. I would not be a buyer here. I dont like the technical setup. I do like the company. I like its products, et cetera, et cetera. This is a stock for sale on every rally. No percentages here . Whats that . No percentages . On what . On like what theyve traded down . No. Ill come back to you on that. This is a stock thats been in a downtrend for a while. Until its able to break that, its not the kind of thing that i want to be involved with. I bought nike recently, reverse that downtrend. Stocks has been heading higher. The setup is just a little bit better. Coming up on the Halftime Report<\/a>, pete sees some unusual activity in a tech name and he is buying in. Well tell you what it is. Stephanie link making changes to her portfolio. Shes buying a big name in defense, dropping one big tech name and buying another. And the original sheriff of wall street, Eliot Spitzer<\/a> is here on the stock analyst you can trust, the ones you should ignore. The ones you should ignore. Hes backing a business that 90 of the Worlds Largest<\/a> supercomputers run on intel . That means you can take a universe of data in your case literally and turn it into medical discoveries, diagnostic breakthroughs. Proof that black holes collapse into one singularity. I dont know what that is. But yes. Innovation runs on supercomputers. And supercomputers run on intel. You are super smart. And super busy. Ooh ufo false alarm, eyelash and her new mobile wedding business. Tte at first, getting paid was tough. Until she got quickbooks. Now she sends invoices, sees when theyve been viewed and tada, paid twice as fast see how at quickbooksdotcom. Welcome back to the Halftime Report<\/a>. Im morgan brennan. We got news about arconic. Investors are pressing to oust ceo cline feld according to a report from dow jones. This headline just less than three months since arconic spun off alcoa. The separation between arconic and alcoa. Shareholders are concerned about spending, missed forecast. Among the investors that are looking for the ouster of ceoklaus is elliott management, top shareholder. Elliott management has been increasing stake pretty steadily in recent months now having more than 10 in the company. So again, as i mentioned, this happening less than three months since arconic and alcoa split into two. Its happening ahead of arconic reporting Quarterly Results<\/a> for the first time as its own stand alone company tomorrow after the bell bell. If you look at arconic its down 0. 4 . Alcoa up about 69 . Scott . All right. Morgan, thank you so much. Sarat, you own the stock. I do. And actually i dont disagree with that. I think weve 18 alcoa through thick and thin. It has not been a good own for us. Is there a klienfeld problem . No, the ceo problem because he was there when they cut the dividend in 09 and hes the one that has been through everything with them and when we look for this company and reasonably really owned it was because of the arcoi inic. Now youve got elliott in there and hes looking at this is owned company and if we can get value out of it, why not . Ten years ago wall street analysts came under fire for lagging the market and trading excess for ratings. Has anything changed . The numbers say no. Heres eric. The market at alltime highs one thing thats probably not changing, big bank Equity Research<\/a> ratings. Data from the s p 500 going back 20 years shows analysts rarely slap a sell on the companies they cover. Only about 5 of all analysts ratings are a sell. It doesnt matter if were in a recession or not, it doesnt matter if the market is flying or tanking. The ratings almost never changes. The last two times there was a noticeable change was 2003 and 2009. After the markets hit bottom. Even then only 9 of stock ratings will sell. Not all things are equal. Morgan stanley and bachk of america give out a whopping 16 of the s p 500 stocks they cover. Deutsche bank and wells fargo have sell rating on only 2 of the ones they cover. Studies show the banks that lose stocks the most are the ones with a range of ratings. Maybe because investors dont trust firms who are not critical of the companies they analyze. All right. One longtime critic of wall Street Research<\/a> is here with a look at how much has really changed and what hes trying to do about it. Former new york governor Eliot Spitzer<\/a>, states attorney general, earned the nickname sheriff of wall street for targeting and partner in a business called tip ranks which rates and ranks analysts. Spitzer is here with cofounder uri. Thanks for coming here. I guess the point of erics piece which led into this conversation is the more things change the more they actually stay the same. Indeed. Unfortunately that may be the history. Theres a difference between the cases we made ten years ago premised upon illegality. Put that aside. The issue were talking about is are the analysts good or bad, should an investor rely upon them. What uri created was a company that tarks the data and crunches it. The best metaphor is when you watch a baseball game a batter is at the plate. You get a batting average. You know is this batter good or bad against lefthand pitching, righthand pitching. All the data is there. He created tip rinks ranks that per hips you to look at any analyst and look at how has this analyst returned equity to you. How has he or she performed . Is he good or bad . That is what should happen. Whether or not the person is good. In fact, weve been promoting to cnbc the notion that any time an analyst is here put a number beneath the analyst. How is that man or woman performed just like a batting average . Uri, you take all of this data and crunch it and youve designed an algorithm essentially is what youve done to come out with a ranking, a number as the governor says. Absolutely. So we use technology such as Machine Learning<\/a> and natural language processing to aggregate and analyze any piece of advice being published online. While this segments maybe focus is analyst were able to do so for much more complicated such as financial blogs as well. Recently we released a feature also released on nasdaq that allows you tou measure your own performance and compare yourself to more than 100,000 similar investors. And so what we do is bring datadriven Decision Making<\/a> into wall street. We talk about this kind of stuff every day. In fact, on the show we have something called the call of the day. Yep. And rarely is the call of the day a sell rating. Right. Why do you think analysts in this current environment are still reticent to slap that rating on a stock . What you highlighted on the intro, access. Its very hard in any environment where youre critical of the people whom youre covering to maintain the access you need to get the information you need to provide insight. Thats an unfortunate truth. What were trying to do is provide a datadriven answer to what should be a regulatory problem. Its very hard. We all found that out. Its hard to create a regulatory answer to this. You cant regulate inequality or integrity but you can give the data to the investor so the investor will know is the analyst at Morgan Stanley<\/a> bad . And if you do measure their performance their buy ratings or sell ratings it doesnt matter if they issue more buy than sell because its all out there. You can see how they performed. And you mentioned Deutsche Bank<\/a> and you mentioned the bachk of america and others. But if you see who are the Top Performing<\/a> analysts of 2016, ironically enough it was actually Deutsche Bank<\/a>, around the the ten of the list. The you take into account their earnings estimates . No, we look at the individual investor. If an analyst said buy the stock we will start measuring what will happen if i listen to that analyst and buy that stock. We dont look at the standard deviation and difference between his earning estimates and what the Company Actually<\/a> reported. Over the last two years i think its Something Like<\/a> 93 cents of every dollar going into an Investment Fund<\/a> went into an index or a quantitative strategy that pays absolutely zero attention to wall street analyst ranks. When you look at hedge fund side all of the net money being raised is going to places like shaw, citadel, these are programatic traders also not listening to analysts. Should there be other things youre looking at not just the buy and sell calls on the street given the fact that people just generally are definitely. One thing were also measuring is the performance of hedge funds based on what theyre reporting to the s. E. C. And later this year were going to measure the advisers you see popping out. You dont know who is good and who is bad. You only know who is advertising and where. Uri, given the clumping we all acknowledge happens with analyst, they all pile on in one direction or the other. Are you able to get the signal out of the noise here . Is there that much discernment amongst analysts . 10 to 15 of the analysts are consistent with them outperforming the markets year over year. There are some that are good. Majority of them its random. A lot of noise. Some that would be good at a specific year. I was going to ask you about that. Is there a significant amount of turnover or do you generally find the same folks popping up on these lists for the various stocks every year . If you look at the top lets say 100 or 200 over the last five years, right, since 2011 until now, i think that the turnover is going to be at around 10 to 15 . Its not significant. Its not high. Majority are still there. Also depends on how you measure their performance because if you really want to see who is good and who is not you need to benchmark them to their own sectors because obviously you have sectors that are going to go up and go down. If you track the best ones in each sector then there is consistency. Just on the buy said and were in a hedge fund, i really dont know anybody who really used at the professional level analysts for their buy and sell recommendations. Every analyst we thought that was worth using was good for something. Sure. Two particular parts. Whether its used or not is not interesting. We are also talking to the largest mass, not hedge fund guys. Retail consumers who do listen to the analysts and we want them to have the objective data set that permits them to understand whether or not they should. Youre more sophisticated i presume. Thats the utilities because theres a habit thank you. Thank you for that presumption. Theres a habit leap of faith. And thats what its good for. All of a sudden you hear im not talking about wor senting your rates. All of a sudden you hear Morgan Stanley<\/a> recommended this stock. Wow, Morgan Stanley<\/a> did it, that might be right. That separates it. Its probably the reason you havent been using it because you dont have templates to show you who is good and who is bad. Making analysts great again. If you can get through the airport. We have many hedge funds that are hooking into our epis and trading on what the best ones are saying. Part of our business. What programs you do use what analysts are saying. Just so its clear. Not to shamelessly promote the company but i will. Some of the largest banks and trading platforms in the country have hired us precisely because they want this data to factor in to the algorithms. They may fade it but they at least want to know. At least they pay us. Guys, thank you. Thank you. Good stuff. By the way, apple these are names all familiar to you and your viewers as well. Sue herera has the latest headlines. Hi. Heres whats happening. Mohammed abrinis one of the key suspects in the november 2015 attacks in paris was transferred to france to be indicted. The 32yearold has been in detention in a prison in central belgium and according to french tv will not be spending more than 24 hours in paris. As the Israel Legislature<\/a> prepared to vote on a bill that may legalize dozens of west bank settlements, demonstrators protested outside the israeli a knesset. An israel Civil Rights Group<\/a> accused ahmadinejad to distract them from allegations against him. Amazon customers in ten more states will be paying sales taxes on amazon purchases for the first Time Beginning<\/a> wednesday. This will leave only six states still not receiving tax revenue. The father of the mash hit video game pacman has died. Nakamura passing away at the age of 91. Founded the giant Video Game Company<\/a> namko, the driving force behind the his arcade game. And thats the news update this hour. Ill send it to Michelle Caruso<\/a> cabrera on whats coming up on power lunch. All quarters that we put into those machines. Me, too. Coming up on power lunch, the immigration whoa rage on and President Trump<\/a> signing a new executive order cutting regulation for business. How is big business november gating all the uncertainty right now . Major averages having their worse day of the year. Dow is back below 20,000. What should you be doing with your money . Disney just got an upgrade, the analysts who made that calaiss out his bullish pace. Well be on in 16, 17 minutes on power lunch. Whats Critical Thinking<\/a> 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 Companies<\/a> across the state are york sgrowing the economy,otion. With the help of the lowest taxes in decades, a talented workforce, and worldclass innovations. Like in plattsburgh, where the most advanced transportation is already en route. And in corning, where the future is materializing. Let us help grow your companys tomorrow today at esd. Ny. Gov. Welcome back to the Halftime Report<\/a>. Unusual activity. You know who has that. Pete, stock is up almost 15 year to date. Tell us what it is. Salesforce. Com. I love this industry. I love this particular ceo. I think hes fantastic on. January 11th jon talked about turn usual activity in there, scott. The march 82 1 2 calls as well as march 85 calls. Aggressively being purchased. Stocks up about 3 since that time. Again today, theyve got earping at the latter part of february. This fits into that earnings time frame. But the march 85 calls again today, scott, over len,000 of those were bought. Around that dollar range. That was adding to what was already bought previously. So theres been some monster buying in there. Im in this thing. Im in the march calls as well. I dont know how long ill hold it but ill probably have it at least up to earnings and see from there. Pete, good stuff down there. Thanks for joining us. See you back here. Thanks, man. Always. Pete najarian on the beach joining us from naples, florida. Looking for some new stock picks. Stephanie link, equities Portfolio Manager<\/a> at tiia has been on a buying spree and joining us from new york with her missing link General Dynamics<\/a> trade. Its a new position for you, steph. Why did you add it . Hi, scott. Around earnings season i look for opportunities. I always make my shopping list. This is just a great blue chip, defense company. And they actually had a very good core. All four businesses were up for the first time in several years. But you also get a cyclical kicker. 25 on revenues is business jet and i think at the end of 17 into 18 youre going to see a recovery in business jet. I dont think youre people are i pag for that just yet. Low single digit sales, growth double digits growth, small margins, underlevered balance sheet, trades at 6 discount to the group. Trump trade in any way, shape, or form . I guess with the tail winds in defense for sure. Thats certainly will help. But i like this execution. And i like the fact that you do have that business jet opportunity as well. And that its trading at discount to its peers. Defense stocks have been great stocks over the last several years. Im just trying to find one that maybe has something thats not as well discovered. And the execution on friday when they reported earnings really good quarter. Very strong. Air products got smacked last week. And you bought it. Yeah. Yeah. It was down at one point it was down almost 8 on friday. It was ugly. I own it. So i added to it. After listening to the conference call. I thought the guidance which was lowered was really very conservative on the macro and very much conservative on currency. This is a company and Management Team<\/a> that has beaten raised for many, many years in the tough times and in t. Good times. Very rare for them to guide down. I like the margin story. Theyve done a good restructuring. They have 3 billion in cash ready to put to work because they did a whole bunch of asset sales last year. Youre going to see m and a and youre going to see dividend increases, buy back, et cetera. I think a Blue Chip Company<\/a> truly on sale. See you back on the set again soon. Ong . See you tomorrow. Next, a top rated bond fund manager on how to play that space right now. 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<\/a> 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<\/a> management businesses of prudential so beautiful. What shall we call you . Tom name it tom studies show that toms have the highest average earning potential over their professional lifetime. See . Uh, its a girl. Congratulations two of my girls are toms. I work for ally, finances are my thing. You know, im gonna go give birth real quick and then well talk, ok . Nice baby. Lets go. Here comes tom 5 nothing, stops us from doing right by our customers. Ally. Do it right. Whoo look out. I am benedict arnold, the infamous traitor. And i know a thing or two about trading. So i trade with e trade, where true traders trade on a trademarked trade platform that has all the. Get off the computer traitor i wont. cannon sound were back on the half time report. Investors have been focusing heavily on stocks since the election of donald j. Trump, were talking about the opportunity in bonds today. Manager of the fivestar rated fund for new fleet asset management, that has beaten 98 of its peers over the last ten years. Wherew so much focus on what we call this trump rally. Tenyear treasury remains right where it started the day, 2. 48. No reaction in the Investment Grade<\/a> market. Our opportunity is what it was last year. We got in, back in february, when we saw the huge selloff in oil. The market got the recessionary levels. We aggressively bought oil, minerals and mining. Chemicals. Capital structure trade. In the financials we did Morgan Stanley<\/a>, pnc bank. Got involved in ubs, jp morgan. Got down to the preferred stock. Those trades are still working. High yield at 17 last year, up 1. 5 this year. Merging markets. So that trade is still working. You say bond markets are saying im reading from the notes we got from you. Getting ahead of themselves in terms of the economy. Exactly. A lot of things were priced to perfection. Tenyear treasury yield, dollar, risk markets in general. This year started we saw a flattening of the yield curve. Tenyear was up to 1. 65. Now its up to 2. 48. Creates opportunity. What if the bond market is telling us nothing because its so distorted by the activity of the fed that you cant get a good read on anything . That the equity market deserves to be where it is based on the economy being better than where people think and on the agenda of the president. The economy is starting to improve. It will improve gradually. I think the fed wabts to move but theyll move fwradually. No move tomorrow or at the fed meeting in january. Most likely positioned to move in march. They came into the year. Missed the opportunity this year. I dont think theres not enough data right now. Probably pushes them out to march. David, good to see you today, dave albrycht, newfleet management. Liberty mutual stood with me when i was too busy with the kids to get a repair estimate. I just snapped a photo and got an estimate in 24 hours. My Insurance Company<\/a> definitely doesnt have that. You can leave worry behind when liberty stands with you\u2122 Liberty Mutual<\/a> insurance the markets change. At t. Rowe price. Our disciplined approach remains. Global markets may be uncertain. But you can feel confident in our investment experience around the world. Call us or your advisor. T. Rowe price. Invest with confidence. Lets talk about american express. Why . Jim cra mechlt r calls it the cheapest stock in the dow, upgraded by kbw to outperform. Cheapest on what metric . On earnings. Great dividend. You had the costco issue and jp morgan that was competing with it saying now were backing off. You have some potential there. Dicks Sporting Goods<\/a> upgraded by goldman, up 30 in the past year. Quick, one comment. Its down more than that, three months from the peak. They sell the same issues. That does it for us. Power starts now. Im melissa lee. Here is whats on our radar right now. President trump gets back to business, signing executive order to cut regulation after meeting with the host of Small Business<\/a> owners. Were live at the white house straight ahead. Wall street is getting hammered with stocks having their worst day of the year. Is the president putting fear back into the markets . Were minutes away from White House Press<\/a> Secretary Sean Spicer<\/a> taking the podium in the briefing room. His comments could move these jittery markets. Well bring you there live. 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