Yeah, scott, weve been talking about this on the show a lot. I think, i think most of us were excited about the possibilities of the jet. Com acquisition this takes it a step further and walmart and google, if both are going to be successful at what they obviously have to do in the next five to ten years, they kind of need each other googles got to figure out the voice internet because if display internet starts to become a dying incumbent thing, where are they going to put the adds . So if voice and virtual and things like that are going to be next, theyve got to have an answer to it and Google Assistant has to have some utility thats where shopping comes in same for walmart obviously, ecommerce, if that starts going toward voice, sitting in your house and saying, you know what, i think i need new paper towels, having your digital assistant say to you, how many would you like me to order or what brand is a little bit cumbersome. So having Consumer Preference stored, walmart already knows what that household buys, in what quantity, what brand they like, what flavor, size, whatever i get it, but why is the market hohum because its an initiative. Its not a product thats on the shelf yet. So i just think, you have to look at both companies as saying, its not just about amazon this is what the consumer wants to be able to do we need to Work Together we have the data, you have the logistics. I love it for both companies jeff, is this much ado about nothing . Or is this just further evidence that walmarts here to play . And here to stay in a way that other retailers arent yeah, i think theyre here to stay, for sure and i definitely think this expands their Digital Strategy not that were suggesting theyre not here to stay you get where im going on that . Of course i get where youre going in terms of the Digital Strategy and expanding a lot of different initiatives. I get all of that. This is a strategic move this has nothing to do with numbers. And oh, by the way, amazon is a closed loop. So, where else was walmart going to go for that this type of a transaction . Google makes a lot of sense, but googles a distant player at this point, in this particular area so this does not move numbers at all. Strategically, a good thing. But i totally think much ado about nothing. Doc somebody needs to step up and take on amazon, right . Sure. And this is a good step towards it weve been having this conversation, walmart, amazon, and everybody else, right . Maybe its just amazon and everybody else and were making too much of walmart. Target and best buy are in there. Best buy on, obviously, a specific vertical. But, to this deal, google stepped up in 2014, beginning of 2014, bought nest, 3. 2 billion. They start incorporating that into google home now just like josh says, if youre going to be talking to these Digital Assistants and so forth, why wouldnt it start ordering or reordering for you . And so they needed a partner for that who better than walmart, especially now that they have jet. Obviously, google could have gone towards amazon, but then theyre more or less thats like when yahoo put them in charge of their search that would have been a bad move. I disagree with the much ado about nothing premise. Take a look at walmart versus the xrt, which is the Retail Sector etf the xrt since a year ago today is down 16 . Walmart is up 15 . There are not many retailers that have a chart that looks like that, even on an absolute basis. Forget about compared to the sector so this idea that its much about nothing, i think, is incorrect. But the stock is not up because of this news i mean, the stock is not up because of jet. Com the stock is actually up its a bit the stock is up because ecommerce comps are good but if you look at targets ecommerce comps, they were amazing. If you look at coachs thats right. Its a distant third. Any of these companies are doing quite well in terms of internet thats not the issue its the overhead that these companies have walmart, i would argue, has rallied this year, part and parcel because its a defensive name by the way, their last quarter wasnt anything great, actually, quite frankly. But its a defensive name in a very difficult retail take and i think a lot of people, p. M. S, are kind of hiding in the name not to say they dont deserve some of the credit, but i dont think theyre hiding in the name theyre not hiding in this because of jet. Com theyre hiding in the name, because, right now, whats important is who can survive thats where we are in retail. So walmart is doing things, whether they pay off today or why are we using the word hiding. Why arent we talking about simply playing offense in walmart because of jet. Com i think totally because of jet. Com, because its the only one. And josh, youve said this a lot. Its the only one that has competed successfully with amazon, thus far i think whats interesting, though, is jet. Com, walmart, whatever you want to call it, you know, they obviously have shown that you can compete with amazon and target is the one that ive got the eyes on. Clearly, their ecommerce is picking up if they can go from a distant third to a legitimate competitor, then i think what youve got to really wonder is whether amazon has a mote to competition. Its a legitimate question we dont know the answer to it but if target really moves up the ranks there and has ecommerce numbers that start to compete with walmart and amazon, then youve got to worry about the current multiple on amazon and a lot of the f. A. N. G. Stocks assumes a future where each one of them is their own monopolistic fifdom. Exactly and there are no competitors. There is not going to be a single ecommerce giant that serves every customer in the country and no one else gets to play against them. Now, i dont suggest its definitely the walmart jet combo, but the fact that walmart has a ceo with blood in his eyes and is doing deals with firms like google it, sends a signal to investors stephanies right. Were not talking about this being additive to roi next quarter. No, but i hear stephanie almost, and maybe im wrong, i hear you making the case for target shares today over walmart. Am i wrong no, no, not target. I think they have a long way ahead of them. I will say, i think costcos decline is an opportunity. I would say that tjx, that quarter was a thing of beauty. And i think that could be bought i do think nike is going to be at a point where you buy it. I actually think some of the stocks that have gotten hit because of the fear of being amazoned, when its not exactly going to play out, to joshs point, exactly that way, you take advantage of some of these stocks that are down i just dont find a lot of value in walmart at these current levels i understand why its rallied. I dont think its because of jet. Com. But i do think they are doing the right things i just think theres better value elsewhere. But wait, im hearing from the control room that we have an image. This is my first personal sighting of a jet. Com package in the wild, ladies and gentlemen this is my garage in nassau county, long island. So i asked my wife, i said, sprinkles, why did you order from jet. Com when every day, its piles on piles of amazon. And she said, it was easy and cheap, ill probably do it again tomorrow look, this is not to say that, oh, walmarts going to trade 80 times earnings theyre not in cloud and doing a lot of the things that amazon is doing. They dont need to be the next amazon. They just avoid to being amazoned they need to be the walmart of the future, not the walmart of the past. Shares of ibm down 14 this year, but today Morgan Stanley is sticking behind big blue, bigtime the firm reiterating its outperform rating, calling for a nearly 35 upside from here. Its our call of the day weve also asked Pete Najarian to call in from somewhere on the road across america. Pete, are you there . Im here with you, scott. Katie huberty says, overweight, reiterates that, and 192 is the price target. Thats a big, big jump from here are you buying it, or no well, im already in it, scott. And actually, part of the reason im in that is because of Katie Huberty. But actually, shes been the go to when it comes to apple. I think with ibm, shes been like everyone else shes taken the head fake, because the transformational process has taken so long, unfortunately, at ibm. Which really means, you wonder right now if genie ra mometty the clock is actually ticking. The execution shes been performing, it has to happen thats why when you see Warren Buffett trimming his stake by 30 . When you see the Institutional Ownership down at eightyear lows, there are some potential opportunities there. I mean, the improvements in the gross margin, services, cloud, those things are starting to happen but is it a little bit late and can they continue and build upon that theyve got to get that recovery and if they get the recovery and the processes in place and shes saying for the Fourth Quarter 2017, then, yes, if they can return to gross profits and get that strong, yes, the transformational process will be in place and i think jenny will still have her job heres the problem, right buffett trims a third of his stake. Buffett says, im not a believer anymore anywhere near the way i used to be whereas Katie Huberty says the stock can go to 192. Who are investors are going to, with all due respect, believe in that larger narrative about where this company can go . Pete najarian or Warren Buffett. Is that the choice youre giving us ive got to go with pete. Im giving you the analyst over well, yeah. Over buffett. As well respected as Katie Huberty obviously is, this is not a knock on her this is simply a fact that buffett is Buffett Buffett is buffett. Im sure he wishes he sold the rest of his stake up there where he sold that 30 petes talking about. Because i believe it was a disguise between 160 and 170, where he basically took his l p lumps at about that level. But i dont think microsoft and amazon can just keep killing each other in pricing for the cloud like they have been. Because i think in the previous quarter, they cut prices five times, judge ibm cited that on their call, as to one of the reasons they had such a disappointing quarter now, katie is saying that she sees a return, a growth in profitability, both the cloud and in services. And i certainly dont think that the cloud can get any worse for ibm than its been over the last six months and that leads us back yet again to amazon. Everyone is worried about amazon web services, cloud there, salesforce, the stock is up 36. 5 yeartodate theres microsoft with azure or whatever you call it azure wouldnt do that one today . If Joe Terranova were here, we would we would have a fun time. He was right, though. You asked the question you wouldnt believe, how about believe your own eyes. And ive been in this trade, thankfully i sold it two years ago. I know what its like from your point of view. If you werent in it, i think what you would say is, you know what, i with wait for the turn Katie Hubertys note is not going to be the turn the turn is at least, of course you have to start to see revenues grow again. Its 19 quarters in a row. This is a huge fakeout. Because ibm had a sick year last year, the stock price, not the company. And its already now giving back half of last years gain from february through december, it went straight up. Thats because the earnings Katie Huberty says that shes in a deep dive on gross margin increases. The deep dive on gross margin, increases our confidence in ibm achieving a backend loaded year i would say at ten times earnings, margins are depressed. Its very tempting, as a value manager, to want to look at this the problem is, the growth area at this company, strategic imperatives. Thats cloud, analytics, and data, actually decelerated to only 7 growth last quarter. The quarter itself, in the last couple of quarters, have been helped by taxes and buybacks and so they dont even benefit from a repatriation story, because theyve already had a very low tax rate. The quality of the earnings is not good if you would think that the story has legs, i agree with jim. You have until the Fourth Quarter, because thats when the mainframe cycle starts the Fourth Quarter of this year. Youre not going to start to really see momentum until next year so, you have time. And in the meantime, you know but you want to get ahead of it, right . I dont understand your comment. Why wouldnt you want a back endloaded year if you havent had any front end . The stocks down 14. 5 yeartodate give me a second, okay . Heres the problem with going for Gross Margins right now. What that really means in a company like ibm is youre doing two things youre trimming heads and trimming r d budget. Think about the Technology Sector whats the biggest asset you have its your people, right . Where are people going to go work theyre generally not going to go to work at ibm. But ive talked to people who work at ibm. The reason they go there is specifically because of the size of the budgets because they know, if its watson or whatever project it is, there are going to be billions of dollars spent on it. Now if youre telling me Gross Margins are going to be controlled, theres only two ways to do that. Cut head count and cut r d and thats not good for getting good talent into r d if you want to play services, this dxc technologies is far better they have so much more that they can do in terms of cutting costs, growing the Services Business they have 10 of earnings power ahead of them. So there are other areas, you know, that you could look at act s accensure is another one there are other places to place that have already proven they have the clients and the relationships and the execution. Heres what Warren Buffett told our becky quick back in may. I dont value ibm the same way six years ago when i started buying it. Ive revalued it somewhat downward i think if you look back at what they were projecting and how they thought the business would develop, i would say what theyve run into is some pretty tough competitors. Ibm is a big, strong company, but theyve got some big, strong competitors, too you know, the service is moat, thats like a thing of the past those people that used to say that are retired i think it takes time when these big companies, these Legacy Companies have all of these Legacy Assets on their books, i just think it takes a really long time along how long it took oracle to see an inflection. Look how long its taking cisco. Those, at least, are kind of ahead, at least in their transition a little bit farther ahead than ibm. Pete, last word to you and then ill get you get back on the road you know, Katie Huberty was early, and i think she, obviously, clearly, shes been wrong and the stock has gone to the downside i agree with the panel theres no reason to jump into this thing its been all about execution. So if Jenny Rometty actually can execute and prove out what everybody is looking at, particularly katie right now talking about being able to improve those dprorms and grow in the services and the cloud, then you actually are finding a nice bottom. But theres no reason to be the first guy in i agree and understand what you guys are saying. Scott, last thing ive got to tell you you had that great conversation with walmart dont forget, best buy is beating walmart at their own game and nobody brings it up enough best buy has been winning that game on online and competition, just take a look at what that stocks done yeartodate. All right and we will. And we are right now, in fact. It is its up 57 over the past year. Pete, thanks thanks, man, take care. Heres what else is coming up on the Halftime Report. Straight ahead, jon najarians watching unusual activity in the Options Market to predict which stocks will move and which way theyll go. His list is straight ahead plus, stephanie link with a whole list of new buys and additions to her portfolio see where shes putting her money to work. The Halftime Report with scott wapner and the traders is back in two minutes for your heart. Your joints. Or your digestion. So why wouldnt you take something for the most important part of you. Your brain. With an ingredient originally found in jellyfish, prevagen is now the number one selling brain Health Supplement in drug stores nationwide. Prevagen. The name to remember. Track your pack. Set a curfew, or two. Make dinnertime device free. [ music stops ] [ music plays again ] a smarter way to wifi is awesome. Introducing xfinity xfi. Amazing speed, coverage and control. Change the way you wifi. Xfinity. The future of awesome. What a difference a day makes. Yesterday at this time, our focus was on a rising market, amid reports tax reform could be on its way today, markets falling as President Trump talks about the possibilities of a Government Shutdown our eamon javers is live in washington eamon, what a difference a couple of days make. Reporter thats absolutely right, scott i think whats going onhere, you guys are the market experts up there, but i think the market is reacting in different ways and different days to sort of these two simultaneous inputs that were getting at the same time and weve been getting at the same time throughout the year. Heres what i mean by that so, monday night, the president had a relatively establishmentstyle event at ft. Meyer, virginia, talked about afghanistan strategy, stayed on prompter, stayed on mentssage. And tuesday morning, we had this headline that the markets seemed to latch on to in politico suggesting that there had been some agreements possibly made between white house staff and people on capitol hill about tax reform and last night we had the president