Belated happy new year. Just wondering what you think about where we are today given the year weve just finished and people are talking about this move in rates. You said everything when the ten hf year goes up to 272, the First Quarter is going to be a powerful earning lift. The market hasnt overly discounted that. The non u. S. Part is strong. Currencies are going to provide a tail wind. The second part which is more confusing is that in the Fourth Quarter in the last two weeks of the december, a lot of companies did a lot of things like putting extra money into their Pension Plans and were still working our way through that secondly, the the analysts are just adjusting i have 40 analysts that work in my team and theyre still figuring out what theyre doing on the team and the tax rate now youve got earnings are going to be good good the second quarter. Then what happens is the multiple thats a function of psychology, which is powerful. Rates. Then the flow of funds to buy the same stuff then youve got to last three day of the month, which who knows what happens with all the various dynamics that occur m bottom lip, im still very optimistic over the next six to nine months. Looking into 2019 and tomorrow night, youll get infrastructure military spending, which is long overdue and a fair trade which helps a lot of my companies, particularly in the industrial world. Its really hard to argue with the case that mario makes stocks have discounted how much of that i dont think we truly know to your point, marrimario, the r of this tax reform, which is transformational it is going to lead to higher cash flows to higher earnings, mario hit the nail on the head though its a question of what multiple you think stocks deserve right and that is the only issue that we have to determine. How much of stocks discountried. T not going to be news to anybody that the tax plan and cutting back on regular lations helping earnings roughly 80 of the companies had beat on the top and bottom line. To me as i look at it, theres an expectation youre going to beat, but its really about the guidance Going Forward look at caterpillar. It was a nice quarter. The stock is trading down after they reported it to me, thats a r very, very lofty valuation. So its always, i think the president will stay on script in the speech, which will be good for infrastructure talking about it for a couple of months, im there and i think it could run. I dont know if you get a pass or not but i think you have to start think about when easy money like this is going to hit what we saw on friday was as close to euphoria as were quoing to get. The market closed on the highs it was a ridiculous move weve seen that often. I dont know if its in a quarter or two quarters, but the buying without penalty is going to stop. Do you feel, mario, that we are in this euphoria stage, which is traditionally describe ed as the last or final stage of a bull market . You know, its not like 1999 when doctors were looking at their quote machines while operating. But it is not dissimilar because of what part with crypto curr currency, you have really stoked the animal spirits and the question is how far along have you gotten are we see iing fish com go pubc like you did in may of, february of 2000 . No you know, but you see a flow of funds. Is it too much not yet. Its still in progress i dont think so far in 18 is the in terms of a portfolio strategy maybe youre look at the bond like proxies because of the rate move ewe toilties rates. Its playing out as we have talked about youre seeing the rise in volatility the lower dollar momentum is still in charge. Maybe you have a bit of concern about the way apple is trading i think its now lower on the year modestly maybe thats a mild concern. But the year so far is playing out as scripted and you have as weve talked about the fundamental Drivers Behind it and you get more tomorrow night, probably thanks for raising the apple point because thats whats on my mind. Were talking about the markets and i think theres a little bit of hammering in here are they going up too far too fast i like looking at individual stocks apple is down. Could be a buying opportunity. I know well talk about i, but the point being, there are other stocks that are not up as much as the markets theres still value in individual stocks. You have to know where to look for them we got mario, a great stock picker here today. Hell help us with that. But the point being, i dont think we need to hammer him so much about the overall market. If youre pennsylvaniaive vin toes r, maybe, but if youre active, there are opportunities out there. Mario, do you feel as though volatility is going to pick up in a more meaningful way you know, the market volatility as measured by all these five guys, the vix, yeah, its going pick up but independent of that, volatility and individual names, look what happened on friday just with michael bels companies. One was up 20. Other one one down 15. The problem however is that theres lack of liquidity in the overall market for reasons we all know and its exacerbated by the fact you eliminated the uptick rule to accommodate these atfs what does it say to you when the vix as you just mentioned, its been rising on days when the stock market has been going up not when stocks are selling up some of my best friends are clients and ill let you guys talk to them do you feel people are too complacent about whats happening . No, i can see theres a cult saying im only wup 22 i want to be up 40 those are the same individuals that were afraid of losing money. Theyre starting to get in and the individual investor is losing his patience with discipline thats not good. Who sasz the easy money has been made its not a new thought e h he had yesterday. Hes one whos more sanguine over what returns will be. Why is that wrong . Nothing wrong with that when i started the firm . January of 1977, stocks were selling three or four times ebitda duh. Its hard to have a margin of safety when you want to claim that the tenyear is going to go to 272 and if it pops up to three brauz draghi changes, you have a challenge nothing to constant, but if you keep one element constant, raise Interest Rates at three and a quarter quickly. You got a problem. I wonder if the risk is to the upside i keep thinking about the ina e inability for people to have a real good handle on where earnings are going to be. Are they really going to get out of hand that quickly i think given the tenyear, the risk is more imbalanced. The risk is not necessarily youre going to miss out on the upside i think well see 3 by mid year thats troubling liesman had a good point youre trouble d by that . Im not if we get there the right way. The yield curve is telling you Something Else to worry about. Just looking at the numbers. About 60 basis points. Steven is making a great point because hes underscoring were getting there the right way. And i agree let me be clearment im happy were on the march to 3 plus on the tenyear the 60 basis points, i think thats what im reading there. Thats troubling telling you the economy is not growing as fast. We can explain it away by international rates, which are not moving higher. So i think this is all good. Youre right still at eight bips on the jgbs still at a 12 long the vix. What are we worrying about i think that the risk is very much in balance now. Could still go to equity, but if theres better value in europe i dont think so. We can buy a Company Located in atlanta, georgia, that youll make 50 in the next three years. And the question is, why not own it its a unique asset. Should by buying it or going and looking for a comparable business in london Live Entertainment is hot. Last night, you had people watching this funny music thing. Where do i make money. I walked in today, never did i think dr. Pepper was going to get this kind of a kiss. Were seeing a lot of that then west rock comes in and buys a Company Calls capstone so youre going to see a surge of Merger Acquisition activity and what is that underscoring and where are the bargains those are the things we look at, scott. You u dont have that much supply relative to all the other bargains 19 1u9, you had supply coming on weve got Company Buybacks shrinking stocks massive m and a that were start ing to see really pick up. That was on pause. But you have apollo raise a record fund 24 billion kkr behind them raising record funds. They dont generate fees until they deploy that cash and were starting to see it so with companies being rich isnt it harder to find value given the kind of market environment were in but theyve got to grow its getting better, but supply has been shrinking, so i think that could keep you going more you got to be careful about the sectors. But if companies see the opportunity in terms of the tax plan were all seeing here, you want to take advantage of it well, i think jay clayton with all the companies, the problems with the rules. Whats the problem with regards to Suing Companies on ipo. Even think iing about why bother in the u. S. When you have all this contingent teammates out there. Looking to do deals youve talks about the massive see ofly quickty now youre adding upon that all this excess Free Cash Flow does that that not suggest what steve is talking about the only place youre going to see this i have companies that put extra money into their Pension Plans. Why . So they get a 35 deduct a 7 earnings on that cash and theyre going to pay less in 2018 so you, when you look at the numbers in the rearview mirror, its not good. This year, 2018, the cash flow is going to be extraordinarily powerful, so where do they put the money . I have an article here in the New York Times where people are going to buy aircraft, private planes and get 100 of reduction so they dont have to pay the soft tax theres a loft things that are going to happen that will create great opportunities so one of the stocks ooip looking at, who makes private aviation in business gifts and how do we play that . Theres a lot of Companies Like that lets talk about chashares o apple. A report in nikkei says theyll cut simply lets bring in tony who has a new note out tony, welcome back thanks, scott you asked the question front and center today what the impact on the stock is going to be. Whats your best guess look, numbers are coming down for the remainder of the year and the question is do they come down more than what most people are thinking and i think thats the debate so apple reports thursday after the close. We think the december quarter will be fine there has been so much noise out of the supply chain that iphone unit, particularly the iphone 10 are being cut from a production perspective. Its difficult to know apple has underperformed since its last Quarter Report by 13 last two weeks, by 8 . So clearly, folks are bracing for top numbers going in the question is where will the guidance be relative to that expectation and thats really where investors are wringing their hands now. Are you afraid that the guidance could be below some of the more cautious expectations our sense is that theyre thinking about iphones and maybe march quarter iphones will be 50 to 55 million to give you a sense. Consensus now is at 62 million we think that kind of haircut is what investors we talk to are thinking about apples not going to say how many u iphones they expect for march. If you are thinking 50 to 55 million phones, that translates to around 62 to 64 billion so my sense is look, if its that number or better, the stock is probably fine and thats what expectations is thinking about and if its lower than that, we could have more of a downdraft youve mentioned the shares over the last several weeks if not month or so and you asked the question today, is it in the stock . Is the lowered expectation in the stock you think it is or no . Its difficult to say because theres lot of different twists and turns that can happen. Were assuming the rate goes to 18 . Engineer earnings will come county bert than the street and when we look ahead with a lower tax rate, we think fiscal 19 earnings could be over 13 and expeck tastations are abl 12. Thats before apple using a buy back of its repateuated cash every 25 billion in extra share repuchlss rchases is is anothero earnings if possible, apple could do 100 billion. In extra repurchases that would push earnings for fiscal 19 well over 14. Again, expectations are at 12. So a lot of sentiment is going to be based on not only what the guide is, but apple says its tax rate is going to be and how its outlook for other businesses are doing as well. Cant wait to see what happen this is week super bowl is on subd, but thursday night after the bell is going to feel like our own super bowl thanks so much what do we think here . Stocks an underperforming and a singular story not trying make a Broader Market call this is not a market call. The question is, are you supposed to sell it. I think what happened here is they reach nd the average selling price with the iphone 10 they havent sold as many iphone 10s or at least the supplier rs saying that q2, the quarter win is not going to be as many sale. The reason im not that worryie about it and the reason im till holding a large position in apple is is because whatever you think about the reach of the arch selling price of the iphone 10, those selling prices are not going down what is happening is that consumers are taking longer to get used to but theyre taking a four digit price on their iphones, but theyre getting used to it theyre selling. I dont see that. I dont agree with it. You think the prices are going down i think theyre being accepted he said the average sell iin price, hes raising. Six week, guess what, my daughter got hers in a week. Theyve got two shipments. They said you looking for an iphone ten i think theyre a company in transition 6 Revenue Growth last year. Looking for a big uptick this year they need new management 345 per speaker. The leader in technology youre getting new management at apple do you own the stock . Yes buy more then. Apple is an 850 billion market i brought my own after its done, im going to still drink dvp. You know whats interest sg that for prior years, its been a product story for apple. 2018 if the stock continues to appreciate, its a cash story. What do they do with the cash theyre going to have this year . So all the growth players leave it to people like jim to buy it. The stock is selling at a 15 multiple, which is a ben fair y beneficiary of the price stocks up 38 over a year. They need new management terrible. I cant believe i own it exactly i barely want to entertain that. But i feel guilty letting it go hold on so many times. I own it. I own it i sold all my calls and im glad i did, but you tell me, what have they done fundamentally tell me what they have done fund men matally versus microsoft, versus microsoft, am sop x versus netflix to deserve that first off, the 15 multip mul. Youre insinuating apple trades too high . Thats a premade to historical valuation. Is apple expensive i want you to buy the Atlanta Braves because i can tell you what the value is. Msg theres another one. Theres an opportunity i want to be nor more in the big apple. Has management done a good job managing the cash . Thats not my favorite compliment im still waiting to see what they do with the cash but for me, thats an opportunity. They do one of the biggest buybacks of anybody. So do you pay, what multiple do you pay for a company thats buying back stack versus one thats growing revenues . Whats an appropriate mull principle for apple . I think ratio on the stock, the peg ratio is 1. 3 if dwryou strip out the cash, cs tore 1. 1 think about the brand name how many of these iphones theyre selling. A great exercise. The bottom line is that cash is ive said many times is a pe penalty for them they could have bought netflix at 50 billion. Theyve done nothing youre right. Ive got a ceo who has been late with every Product Launch has not innovated at all since hes been there and has been a terrible stuaeward of the cash. So you tell me, does it need new management or not . It does not back at hq. We have a market blast for us . I do. We want to call your attention to whats happening with shares of vn where the Technology Company is off its session lows, but still down by about 8. 5 this on the heels that the company could be a way that dell becomes a public u company again. Theres a reverse merger being contin contemplated where by dell would be acquired by vm wear in reverse merger a lot of share to buy up what have you know, dell has to offer there in terms of its merger consideration. That is having an adverse affect on those shares. Down by about 8. 5 certainly a stock were going to watch in the trade iing. Back to you guys no doubt. Thanks so much that stock down nearly 9 . Wynn shares under pressure today on the allegations against the chairman and ceo, steve wynn mr. Wynn resigned from his role as finance chair of the Republican National committee over the weekend mario, you own wynn. Large position we own approximately 300,000 shares the stock has been terror rick 2. 5 million shares of mgm. We want you to buy it. The question is suitability in massachusetts. So i think its okay, i think las vegas, theyre going to go through the same suitableties and sfooef is going to be a very practical guy and figure out what hes going to do. He owns 12 million shares at 160 or 70. Elaine owns about ten million. In a power struggle as to what the stock is and theyve got every massachusetts is a question mark and thats one of the reasons who is every wants the indians want it. Indian tribe jim of mgm is located in western massachusetts and then sheldon wants to be b in that market soz so what does he do would you want to own wyn without wynn i have no problem with that. I think steve has left his mark. The Belagio Hotel has done extremely well it flourished. Steve is brilliant in terrors of his conceptualization. He went public in mccow when he needed to jumpstart the stock mgm followed that. Theres a lot going on do i want to own, another company with the ceo change iin . Theres a 2 million cap do you think he should step down no, the question is what are the rules in massachusetts, hes got a major project. Thats going to generate 4 400 million of ebitda. How do you solve that problem in massachusetts . Hes got a challenge then in addition to that, you have the same suitability standards for the license holder the burden of proof is on steve wynn in massachusetts, not in las vegas. So you know, well see if he resigns, does that not lead to the the stock could i, the okay i dont think you have a problem with mccao, in las vegas i think unfortunately, you have the suitability issue. All right, i mentioned earlier that howard marx is going to be with us tomorrow from post nine at the New York Stock Exchange were lookinging forward to that interview as well. 12 30 tomorrow, its a cnbc exclusive. Heres what else is coming up on the Halftime Report today. More with mario as the legendary investor talks tech. High on our list, what does mr. Gabelli think about amazon at 1400 a share . Plus, big news from bill ackman on stocks, fees and more before the break, our data partners on what happens to industrials after a 10 plus run in three months. Twothirds of the time, the run continues at least for another month. The Halftime Report is back in two minutes. I think that shes a very nice girl. Live from the New York Stock Exchange oh yeah. No. At cognizant, were helping todays leading manufacturers make things that think and do automatically. Imagine that, a world of new Digital Products and services all working together for you. Can i borrow the car when its back . Get ready, because were helping leading companies see it and see it throughwith digital. Of emerging markets obsolete . At pgim, we see alpa in the trends, driving specific sectors of out performance. Where a rising middle class powers a booming auto industry. A leap into the digital era draws youthful populations to mobile banking and ecommerce. Trade and travel surge between emerging markets. Everyday our 1,100 investment professionals around the world search out opportunities for alpha. Partner with pgim, the Global Investment management businesses of prudential. You know whats not awesome . Gigspeed internet. When only certain people can get it. Lets fix that. Lets give this guy gig really . And these kids, and these guys, him, ah. Oh hello. That lady, these houses yes, yes and yes. And dont forget about them. Uh huh, sure. Still yes xfinity delivers gig speed to more homes than anyone. Now you can get it, too. Welcome to the party. Welcome back im eamon javers at the white house where we are getting reports that Andrew Mccabe has stepped down officially as of today. Mccabe had been a frequent target of criticism by President Trump who was skeptical of the fbis role in the russia investigation. Mccabe said he would be likely to step down as early as march this appears to be b a stepped up timetable for that resignation. Nbc news reporting that mccabe will remain on the fbis payroll on terminal leave until eligible to retire with full benefits in march. So this appears to be ab acceleration of his already existing plans to step aside at the fbi. This will be seen as a Welcome Development here at the white house where President Trump has been a critic of mccabe in the fbis investigation into the russia matter. Of course, he was most recent ly in the news on those reports that the president had a meeting in the oval Office Asking him who he voted for in the election. Thats right. Mccabes role here will not end apparently with his stepping down at the fbi because he may be a witness to some of the conservations with the president. Some of the conversations with james comey. Mccabe was comeys right hand man before he was fired last year if the Mueller Investigation is looking into issues of potential obstruction of justice by the president of the United States, mccabe could play a role in that as a witness to any conversations that he may have been a part of so the story is not over for Andrew Mccabe, but his tenure at the fbi apparently is. Thanks so much. On the north lawn of the white house for us lets talk about Pershing Squares bill ackman hes giving a presentation in london today talking a bt the stocks in his portfolio and big changes hes making. Leslie is following the money. It centers around how Pershing Square plans to try to right the ship after three consecutive years of losses. He says we have learned from our mistakes and carved our investment principles in stone thats one of the bullets on the slide. So he also says we have created a strongearly roots. They will focus on growth from return abandoning this idea as for stock picking, they plan to focus on predictable businesses and low leverage. Stocks like hilton, nike and s p global, all three were Pershing Square investments in 2017 hes already exited hilton and s p global and all three produced decent returns for the firm nike is eck pecxpected to be a v stake. And as for those lps still skeptical about the turn around, well, ackman revealed a High Water Mark of 50 meaning investors in Pershing Square hold dont fees until returns surpass 50 . Now ackman hasnt seen positive returns since 2014 when the firms portfolio gain ed about 40 . Herbalife, chipoltle and in the recent settle lt the winners, restaurant brand, the boost the portfolio got from Pershing Squares own buyback Share Program over the course of the year thank you so much. Steve, youre the resident hedge fund u expert. Weigh in on this its so tough to turn the tide when youve had three down years and before that, while 14 was a great year, 13, i dont believe was a good year. Made money, but market of course flew you could talk b about green light. Corvex the bottom line is investors arent that patient anymore. Even thee heough hes got a High Water Mark that was the same bet he had to make after the first year loss to get back to the High Water Mark so i think they say why dont i just be in an etf. Why dont i just go to a long only fund . If you were a hedge fund investor, isnt he doing the right things that you want to see . Hes not, he he doesnt have any choice. Hes letting go of people because hes lost assets he wants to keep probability up. The High Water Mark he said to only pay the Management Fee is in the documents the last couple of investments hes made, theyre more liquid type investments investments we would all agree upon his desire to be less in the limelig limelight. To me, america is the land of Second Chances you didnt invest in bill ackman for that reason so now youre seeing im investing in him for a different reason mario, what do you make hes got 8 billion you can run a business with 80 million. In addition to that, hes made big bets and hes on the wrong side and hell turn it around. He was not hopefully doing other the mistake was why go after adp, why not pick some easier targets and theres so many of them hes going to regroup and figure u it out. Hes going to have big wins. Heres another. I believe it would take you three year to get out of his fund completely. I know i dont want to tie up into liquid funds. Theres no reason to give somebody three years two years say two years. One year is standard yeah. What did you say okay. Were going to washington, d. C the president is speaking now. President trump. Including the denuking of north korea. Very importantly countering irans destabilization activities in the middle east. Ending the syrian conflict and confronts terrorism. The success of the United Nations depends on the independent strength of its members and these are very strong members some of them are new to the council. Were leading on the global stage to renew this founding principle of sovereignty the United States has done a lot over the last year i appreciate all the congratlation, were on an economic and financial front its been incredeible whats happens. Its booming and its going to continue its been doing really well, so we appreciate i. I think were taking the world along with us. Were helping the world. Thats why many of the countries throughout the world are doing much better because of what were doing so my administration is proud to work with you. Weve done a tremendous number of coalition buildings and unit ed Nation Security u counsel in particular is very important to us the power and the respect that it has all over the world is very, very excellent but theres much work that we have to do earlier today, the ambassadors viewed a display of iran u yan missiles an arms that the regime has transferred. To its militant allies in yemen. And later today, theyre going to view syria atrocities exhibited at the Holocaust Museum o theyve seen the missiles from iran theyre looking at some of the atrocities taking place in syria, well also discus what more we can do to defeat the taliban. I dont see any talking taking place. I dont think were prepared to talk right nouchlt its a whole different fight over there theyre killing people left and right. Innocent people are being kills left and right bombing in the middle of children and families. Killing all over afghanistan so we dont want to talk with the taliban. There may be time, bu its going to be b a long time. Were all out and thats taking place right now. And its a whole new front and its a whole new set of principles that were being governed by. We see what theyre doing and the atrocities theyre committing and killing theyre own people and theyre women and children many, many women and children that are totally innocent. It is horrible so theres no talking to the taliban. Were going to finish what we have to finish what nobody has been able to finish, were going to be able to do it so thank you all very much were going to have a tremendous discussion about that and other subjects thank you all for being here thank you. Thank you. Thank you. Thank you thank you. Thank you. Thank you. Thank you. That of course the president of the United States there at the white house meeting with u. N. Officials not answering any questions b about Andrew Mccabes resignation, which came across the wires just a few moments ago. Eamon javers at the white house once again with us look for a minute there that the president might want to Say Something about that, but did not. Yeah, you heard him being asked has he been informed that mccabe is stepping down. Nbc news reporting is resigning effective today. The president didnt take the bait there in terms of answering the question we may get some reaction from the white house later on this afternoon. We expect to hear from the White House Press secretary about 1 15, so maybe well get the official reaction then but the president has been an intense critic of mccabe take a look at this tweet from back in december when the president tweeted out how can Andrew Mccabe, the man in charge along with leaking james comey of the phony Hillary Clinton investigation investigati investigation including her deleted emails during an vest fwags this focusing on a criticism of mccabe that his wife australwasr candidate for Political Office an took Campaign Cash dpr folks connected to the Clinton Campaign during her bid for office thats the central focus of mccabe personally. Also the white houses broad stance that there are people at the top of the fbi who are biased in favor of Hillary Clinton and against donald trump. Well wait and see what the official reaction is here, but the tweets from the president toward mccabe have been intense in the past. And just to make sure people understand, eamon, mr. Mccabe was leaving the fbi this date just moves owl of that up this is not a stunning surprise given he was slated to leave he was expected to reion sign as early as march. Given the pch hes been under. It seems like thats been steps up one of considerations, his full Retirement Benefits would vest and when that date would be triggered. Looks like hes going to take accumulated leave and stay on leave until the official date at which he can vest his full retirement so that will happen for him. So looks like today is day where he can step aside really and move on from his fbi career. But clearly, he will still be involved in the russia investigation, potentially as witness to any conversations between himself and james comey. Between himself and President Trump last year. All of that still to be explored, so Andrew Mccabes role here not overwith appreciate that information thanks very much meantime, pete is tracking the Options Market as he always does for unusual activity join us today from minneapolis what do you see for us today well, we talked for a long time about how weve been see ing paper in the energy space, but it wasnt working. In the last month, it did flip the paper weve seen, you look at exxon, halliburton. Today, its folki infocusing ons themselves the oih and 23,000 of the july calls being puchlsed for about 85 to 88 cents pretty aggressive buying its interesting because energies had this great run. A lot of folks looking obviously today saying you know what, theres more to come and the services might be the place to be i use this as an opportunity to take off many of my Energy Trades that id had on, but i likeded this one, so i added the oih today. That way my exposure is still in energy at least to some degree so i like what were seeing here its way out to july part of a spread i liked seeing that, so im in this trade and probably be in there all the way to the july u eck appreciation thank you very much mario, what do you make of energy recently . Is this oil come joaquback for . Part of it is preparing the pipeline for your ipo. Youve got the russians and saudis getting together. Cutting back production. Induce iing the pipeline its like pipeline stuffing when you had ipos but on balance, the economics are working, its powerful the 60 oil. Fracking is powerful part of Americas Energy independence moouchl muallem. Theyre much more virmly sensitive than ever. The price of nat gas is still a bargain relative to other sources. Im a bir. Many minneapolis, i hope he sees quinn disc they make pressure pumping transmissions, but theres a whole array of companies, whether its halliburton i own or one of the companies that has acreage in canada. That owns fracking reservation so yes what kind of market cap does twin disc have it is huge. What is it. 12 million shares the stock is 27. 300 million market its a mighty might stock. You want to talk about apple just moving higher because mario just said. I own it. I think i file it 13b. Family run my first visit when did you buy snit. 1968. No, on and off. Come on. You know the rules about what you can say on television more than most given your ownership i own 600 stocks. All you have to do is file a 13f and look it up im not a short seller that hides my shorts. Im not somebody buying derivatives. Out there in open oh, boy. Amazon did that really happen amazon is hitting another new high today after a positive note from citigroup theyre raising to 1600 from 1400 its our call of the day kevin is with us as wechlt well good to see you. Thanks. All right amazons price target. What do you guys think i think we had one last week for 1800. This focusing on the advertising business although its relatively small this analyst believes its being undervalued and could add to amazon thats not whey focus on when i think of amazon. Not going to question the call certainly the upward momentum is there for amazon i know kevin is with us. Probably doesnt like the absence of the Free Cash Flow and dividend, its pretty rich ooit not fighting the momentum ill point out one thing. Its an interesting call on the advertising, but Something Like 60 of every Digital Advertising dollar goes to two companies ch facebook and google. I might have the exact number 60 wrong, but im in the ballpark the point im driving is youre going to make an enroads here, sure, amazon is a competitor, but youre going to drive down price. Thats not you know, when you have a duopoly, thats a great business kevin i think this call falls into the category of how can i just call a higher number and get lost in exposure on my call. Because betting on Momentum Works until it doesnt and leclearly, this name is own by everybody that likes the internet and what amazon has done if youre just a Value Investor deploying new money today, which is what i do every day, i didnt spend any of my morning worrying with amazon. Its not a great value if you start to think about America Today and the opportunity for the First Time Ever in our life, amazon didnt pay any tax. So it doesnt have the big 20, 30 upside on free cash. That lots of companies that have been around a long time. They give you the, give you an example of a company i did spend time with. Jack henry small cap company. Paid 25 tax 35 tax last year. Its dropping to 21. Thats a 21. 5 increase in cash flow all of a sudden, i love jack henry. Information Technology Company another one, olin in materials 35 tax. Its now 21. 21 increase in cash flow. Boring names with cash flow thats interesting this call on amazon, if you get it wrong, amazon corrects up to 30 . I dont want that headache love the company just got more stuff today from them dont own the stock. Kevin hit the nail on the head the stock was 1400 now its 160 he wants to stay involveded. Talked about this time and time again. The analyst had a choice do i go to neutral because i hit my price target or find a way to i dont have anything to add. Small caps, though, versus big caps you highlighted a stock for us the companies that will be bought aggressively in the next six months are those that can add growth to their existing companies, or theyre transacting small a transforming transaction, these are important. In industrial america. We have 30 companies, oar nfled february 22nd. Where is it right here in manhattan at a fancy hotel called the palace. Heard of it i know, you only stay at those fancy places independent of that, the notion of a depreciation accelerated earnings, rise in demand, gdp will be up 3 real in the First Quarter, just down in the Fourth Quarter, because companies i know stopped shipping. Why ship and pay a 5 tax on gains when you can book it at 21 . So a lot of stuff going on that people dont think about. You mentioned industrials, and now im thinking ge. Are you a buying on this pullback yes. Where you want 16. Thats where it pulled back to. Why did you think that was the right price . Because i think they have a wonderful management in the business i dont know if it was the right price, they happened to be a nick on accounting issues, and i felt that was not material relate toffee to what flannery is going to be doing. Within that 850 million shares, its bigger than i like, but they have a couple other things theycan monetize, but they hav powerful business remaining. Two years from now theyll sort it through, and i think i have a stock in the low 20s march, in 60 daze theize are march is not good you have to starred doing what is right, youre going to innova innovate, but its not a company that i see being taken over. They will be doing they have great cash flow. Like after a and they spend 100 million over cap ex, so i like that ability. You think ge cut the dividend enough youre not at all worried we revisit that i am well, look, youre asking where is the stock in two years . And hue good is the and you have a new sheriff in town and as dylan said, the times are achangin i dont care about the dividend. Kevin oleary, you have a thought on that mario clearly saw what he thought what us a floor. I like it at 13. I think its going to get there i dont think its flushed out all the bad news theres no rush its very expensive here 16 times the company has to go through a lot more heartache i like it at 13. Thats the number i put on our table. It may even good to 12 its a dog, but at the end of the day i agree on the engine and the health care. Theres some advanced health care stuff, the rest is a dog. Were in complete agreement dont forget, im trying to hold things for two or three years. We are longterm holders the problem is with dr. Pepper i lose a long embedded knowledge when i have to figure out what the guy is going to do at the company. How big of a position do you take in ge probably a tiny position, were just starting. Eventually we would love to own the company. Its not going to happen hypothetically, if i could buy a whole company at 12, thats 90 billion. I would back up the truck, so be patient. That will be in the papers tomorrow. Oh, gee, g ge, guest, keep reading the paper. We appreciate the conversation well do final trades with mario after this quick break mvo with everything that is going on around us and in the nation, we need to work together. We need to do it more often to help people that need help. Ill stand by you. Fvo hes encouraged other people to look around and notice one another and take the time for each other. Thats his gift. Ill stand by you. Where can investors seek pin an uncertain world . Pgim sees alpha in real assets. Like agriculture to feed the world. And energy to fuel its growth. Real estate such as ecommerce warehouses. And private debt to finance transportation and infrastructure. Building blocks of strategies to pursue consistent returns over time from over one hundred fifty billion dollars in real assets. Partner with pgim. The Global Investment management businesses of prudential. I thyou never got the brakes looked at . L. Oh yeah. No. At cognizant, were helping todays leading manufacturers make things that think and do automatically. Imagine that, a world of new Digital Products and services all working together for you. Can i borrow the car when its back . Get ready, because were helping leading companies see it and see it throughwith digital. We are back, final trades, our last few moments with mario gabelli. What is the one stock that most excites you today. I would like to own private big jets, and good management, id like to own my baseball team, the Atlanta Braves the stock is 22, 58 million shares its going to be sold in three years to some rich guy like scott wapner basketball, i like Madison Square gardens. Showing some promise. 212 stock, i think its worth 300. Well see what happens. And this twin twin disk. I many that i call, because of what you are talking about in palestinian accomplice minneapolis thats why we love having you. Steve. Engineering construction sector still i like kbr and gva farmer jim . Winnebago got knocked down 20 last week thats not what it was, and for mercilessly pounded it, it will continue to do so, this is a great buy here. Joey . The onetime charge for Lockheed Martin was not that bad. These defense stocks have so much momentum, plus you add the defense spending deal. Whether its Northrop Grumman or general dynamics, theyre all going higher. What is in the Beverage Food world . Dr. Pepper is going to buy fizz howard marks here tomorrow that does it for us. Power lunch starts right now thanks, scott. Heres whats on the power menu. Dude, youre get adel, an audacious move,s and possibly bring dell back. The wynn resorts scandal it slammed shareholders, that stock is down again. Coming up, were going to talk about the future of wynns casino. The proud new owner of an mls team in miami, none other than David Beckham well talk about the big business of football in america. Game on. Power lunch begins right now