Thats where we stand now. It is red across the board. Turn your attention to the far right of the screen. That remains the story. Crude oil down 5 , joe, giving back gains we got last week. Are you sticking to your call that last wednesday, around this very time, was the bottom in stocks and crude . Shortterm bottom, yes. And i am sticking to that. About 1 30 in the morning, a call comes out with news regarding not pulling back on cap ex that sends crude lower. A pullback in oil. I think there is a tradeable rebut coming. I think youre going to have where youve had absolutely no tail winds, the Federal Reserve is going to give some tail winds this week. I think the buybacks returning in early february gives you some tail winds. Were going to get some Companies Reporting here in the next week or so that i like. Kenny, on the floor. Are you a believer . Like joe . Or no . Listen, i am a believer that i dont think its going to completely collapse, but i absolutely think we are going to test lower again. Im liking this 1850, 1900 trading range on the s p. What did it change . Other than Mario Andretti coming out. Whoever is jaw boning a little bit. In the end, what has changed in terms of the overall fundamentals. What has changed with the oil story, with the economy story in this country. Not a lot. And jim, maybe if nothing has changed, maybe it was overdone on the other side. Maybe not. Maybe there is more pain to come. Are you a believer in a bottom of last week . Or you still think were going lower, and potentially substantially so . Number one, im a believer. Number two, that doesnt mean we go up in a straight line. There may be some giveback. I think last week was the bottom. One thing i have to say here, im waiting for the disconnect between equity markets and crude oil. The connection between the two of them, the correlation, is based on the belief that this is a demand problem, that there isnt enough Economic Activity to support oil prices. I think its quite the opposite, an oversupply condition, which is so positive for consumers, the equities should be rallying on the news that oil is lower. Of we havent seen that yet. Im waiting for that. That will confirm this rally. What about these assets under management, where are you putting them to work, if anywhere . I like where the market is now and i think there will be opportunity. I do disagree with the folks here. I think we retest and there is no catalyst now other than if the fed says something which everybody will say there will be a short term blip. But longer term, im with jim. I think the positives of oil, so supplydriven at this point, has such a long tail wind for the consumer for an economy dependent on the consumer. So its a debate. We retest or dont. The first three weeks of january, you have to remember, everything is algorithmically based. A lot of passive investing, money not being allocated. Whats happening here the next couple weeks, youre finally getting some things that could be the catalyst. You point out the Federal Reserve. They could bring some language and verbally walk the u. S. Dollar a little bit lower. Lets say the fed this week says, you know what, march is unlikely. Just because the market turmoil whats going to happen . I dont think they would say that. But i think in their language they could say it in their own way. They would send a message to the market. What happens to the stock market. First question, what happens to the u. S. Dollar. The u. S. Dollar, i think, would correct. First off, i dont think theyre going to say that. Its too soon, even though this volatility has been very painful. I dont think its enough to get them to reverse course which is what that would be doing. Later in the year, they might. But heres another catalyst were not paying attention to. Earnings have actually been coming in okay. In fact, a little better than okay. And were really just this week getting into the heart of earnings. So lets see how apple does. Lets see how some of the industrials like boeing or caterpillar does. Lets see how qualcomm does, and next week even more earnings. Those could be very positive catalysts. Kenny, how much is hanging on what apple reports and more importantly perhaps what the company has to say about conditions in china and its overall business . Listen, i think theyre going to pay very close attention to what they say about asia and china and whats going on over there. And i think theres a short term trade based on how apple reports. But, you know, to jims point, or everyone elses point, i dont think the fed says march or june my sense, it was more of a june story than a march story anyway. I dont think so many people are expecting a march increase. I think she very well could talk the markets through the first quarter, well into the second quarter, and thats going to fuel this rally that they have that you guys have all been talking about. If you think the Stanley Fisher ballpark of four potential hikes this year is real, then youve got to get on some time. I dont think its real at all. No way. Look at the financials. The financials are acting like there is no rate coming. They have compressed their multiples, 20 down for the year. So if the market actually believed rates were going up, you would see that sector performing. The world is digesting whether there is going to be a recession here in the United States. While having that debate, youre not going to have four rate hikes. If you think a recession is coming, you sell now, because the s p is going to 1600. If you think the u. S. Is able to avoid a recession, then whether its 1800, 1815 or 1900, your buys 12 months from now are good ones. If you look at the compression on cyclicals are we testing your waiting . Im buying stocks because multiples on auto parts, airlines, industrials, all come down to a recession. To financials. Were trading like were in a recession. Kenny, dovish from the fed this week does what to the stock market . I think the market goes higher. Just like mario did last week. He was fairly dovish and look what happened. Europe exploded, asia, and the u. S. Rallied on the back of it. I dont think it can sustain, right . Half the s p 500 stocks are already in bare market territory. Down more than 20 . So is there value there . I think there is value there. Especially if you think that this is going to turn around in the second half of the year. Well, depends maybe what oil does. Kenny, thanks, as always. From the floor. Well talk to you soon. Lets get the oil story from the nymex. Jackie deangelis has that story. Good afternoon. The declines are increasing, trading just over 30 a barrel. And as your guests have pointed out, that has come back to the supply demand story. Remember, the action we saw late last week was shortcovering, not necessarily new buyers in the marketplace. And today were seeing a little bit of a selloff, thats because iraq is back at its record production levels here in the United States. Were still over 9. 2 Million Barrels a day. Not a record, but still fairly high and increasing on a weekly basis. On the demand side of things, were looking at demand to be flat to slightly higher this year. Everyone is still worried about the china story on the sidelines there. And exxonmobil is out saying were going to see a 25 demand blip. By 2040. Still a while away. When it comes back to the dynamics of this market, there still could be pressure to the down side. I also want to note the dollar is a big part of this trade as well. All eyes on the fed on wednesday. And thats why there is a little bit more of a cautious tone here. Scott . Yep, jackie, thank you so much. Joe, we continue to watch where oil goes moment by moment to decide whether the stock market is going to be up or whether its going to be down. Yeah, thats going to stay with us for a little bit. And while were doing that, natural gas oriented E P Companies are quietly leading the s p higher. Natural gas is not experiencing what oil has, whether cabin oil in gas, rrc, swn. Theyre higher, 5 to 10 on the year. Our folks have been crunching the numbers to try to get to where the correlation between stocks and crude is like 100 . Eric chemmy is here, one of our own. Good to see you. You have looked at this. Not that its breaking new ground saying the market is trading in lockstep with oil. But what did you find . Thats right. Its almost at 100 . Looking at the 20day and 50day. 96 and 90 . It cant go any higher, rate . And when we looked at what happened in the past, generally correlations spike up when they both go down. And what broke the correlation, almost in every case we analyzed, s p started to go back up. Oil didnt necessarily go back up. So there you go in the last year, were basically at the maximum end of the chart. This wasnt the case any time in the last year. You have to go back four years before the 20day and the 50day for both. And there is your evidence that a lot of whats going on in the first three weeks of the year is all algorithmically based. Youve got funds and not just on the active management side, its on the passive side as well. They recognize the correlations, while they work. They play the momentum with the correlations. The machines are locked into them. Once they dont work, well find another correlation. But the evidence tells you, thats what is going on rights now. As oil goes down, liquidations from sovereign funds. This is liquidity, the easiest. Tell me what breaks the correlation, then. U. S. Dollar. What breaks it . U. S. Dollar. Thats the key to the whole thing right now. I think there is actually a secondary effect, youve got to see retail sales coming up. Thats if you believe, as i do, this is an oversupply condition, it should be positive for consumers. So far in the last year, since we have had lower energy prices, we havent seen retail sales pick up at all. There has been all this talk about experience buying and things like that. I really think you need to see outright purchases with extra money consumers are saving. You havent seen it yet. Last word. There is another chart we have showing at 2 30 every day when oil closes the concession trading, stocks starting to back up. Theyre only in line until 2 30 and then people try to break out of the psychological impact. There it is rights there. Thank you so much. Eric chemmy. Coming up, flying the cooperate. Twitter execs fleeing the company, and now a bullish analyst throws in the towel with a downgrade today. What will turn twitter around. Plus, mcdonalds or chipotle. Were going to debate which is the more appetizing for your portfolio at their current prices. And caterpillar under pressure after a down graid grade to sell. Youre watching cnbc, first in business worldwide. We want to hear your crowd noise. Tweet us halftimereport. More halftime after this. Theres a lot of places you never want to see 7. 95. [ beep ] but youll be glad to see it here. Fidelity where smarter investors will always be. If only the signs were as obvious when you trade. Fidelitys active trader pro can help you find smarter entry and exit points and can help protect your potential profits. Fidelity where smarter investors will always be. Performance. Reimagined. Style. Reinvented. Sophistication. Redefined. Introducing the allnew lexus rx and rx hybrid. Agile handling. Available 12. 3inch navigation screen and panorama glass roof. Never has luxury been this expressive. This is the pursuit of perfection. We are back with our call of the day, and it is twitter downgraded to hold from buy. Scott debit is the analyst and says the recent departures of Key Executives are not a positive for the companys turnaround story. What do you guys on the desk make of this what appears to be just a continuing mess . Stocks down another, i dont know what it is, 4, 5 today . I think youve got to look at twitter and say how are they going to make money down the road and thats what everybody is trying to figure out. You have facebook, amazon, google. Until you can prove that you have a model that can make money, this stock is not going up. I would really like to know if they were fired or if they left of their own accord. Thats not clear yet. If they left of their own accord, these are four rather senior people, including the head of hr. That would indicate some sort of some sort of rot in the system that these guys really wanted to jump overboard before it gets worse. That would be troubling. Defrt makes the point, how can you have highprofile departures when youre supposed to be in the middle of a turn around. Hes like were not the sharpest tools in the shed but we dont see how thats a positive. We downgraded, sorry. Ill make the analogy yahoo . I dont mean to interrupt you. He upgraded after q3 results to a buy. He was on the train and now is off. All their Senior Executives have been leaving over time. So at the end of the day, at least yahoo has a colonel, value for their sights. That is still being debated, joe. The yahoo example is the one that jumps out clearly to me. Executive departures, in the middle of a turnaround. Investors dont know what to make of it, and thus the first reflex is to sell. So the business is in the midst of a turnaround . Did i miss something . I think theyre attempting to. Whats the turnaround . It gets boring saying the same thing over and over again but i think for a year weve had this conversation. Of i still wouldnt buy twitter. I dont think the Business Model is properly aligned with growing revenue. Even at 17 bucks . Even at 17 bucks nobody on the desk is telling me your head of engineering. Finally worthy. Down 25 this year alone its not going completely down the toilet. One of the key operational positions, head of engineering, head of media. How do you replace those with enough talent and enough backing to really keep this moving forward . I dont see it. Its not even how do you replace them. Its how do you not recognize that a very troublesome time for your corporation, you need to reinvest in your important employees. Thats the dynamic of what you have to do. You have to retain your intellectual capital. How do you allow them to leave . On the other side, how do you attract talent now to say weve got a ship that is potentially sinking. You guys dont think the risk at this point is more to the up side than the down side from the share perspective . Its already come down so much. Youre going to get some new board members. What happens if and maybe it becomes a growing crescendo that dorsey cannot run both square and twitter, he needs to make up his point, because Neither Company appears to be performing well, relative to what their stocks have done. Thats the performance well judge it by. Because thats how investors are judging performance. Whats to say he doesnt go with square in that condition . You know, square the stock hasnt performed well, but the business is doing better than twitter is, and then you have to look for another ceo in addition to the four positions that just left. There is risk to the down side here. The one good thing i will say about twitter, ive said all along, twitter is the ultimate realtime news feed. Once that is recognized and they are able to monetize the value, then its time to buy twitter. Financials will shift to that discussion, among the worst performers today. Dom chu has those details. Good afternoon, scott. Even though the earnings season and the big banks are just about over, theyre continuing those big banks to be a big focus for traders because the down draft is getting worse. Some are actually hitting fresh multiyear lows. Now on the money center or aka, the big bank side of things, bank of america is on that list. Among the regional banks, check out comerica, and sun trust hitting fresh multiyear lows as well. The move is helping to push financials to become the secondworst performing sector in the s p 500 yeartodate, down 12 . To put it in perspective, thats worse than the Energy Sector in 2016. The only sector performing worse in the financials right now, guys, materials. So financials, the second biggest, and s p weigh in big this year. Back to you, scott. Thank you. Dom chu. Are you surprised that the financials cant get out of their way . Cant get out of their own way. I can understand with the big financials, yes, because they have so many other things. But the regional banks still lending, consumer strong, housing strong, auto strong that was a trade a lot people got into the end of last year thinking rates would go up four times. Its probably not going to happen. Thats the only reason you would buy a financial stock because the Net Interest Margin alone, that is it . I would buy because i like them, because their Balance Sheets are strong, good dividends and really good businesses now. Im talking about the regional banks here. But i think what happened was you had a really crowded trade, and thats probably coming out right now. Joe, you have liked the regionals. No more . No, i dont think you can like them here. Unfortunately right now, an economy appears to be contracting somewhat, and youre not having that interest margins going their way. I think you have to look at the transaction on the financial side in terms of our industry. You have to look at the exchanges. I. C. E. , cme outperforming yeartodate. And it goes back to the ability to market, make a volatile market and theyre doing well also. Im going to take the contrarian view here. Right now this is pricing in about one fed rate hike this year, also a growth scare here that is not i dont think playing out. Certainly not here in the u. S. These things have been beaten down way more than they should have been. And i see catalysts for more Economic Growth and even two rate hikes will propel the stocks higher. Coming up, josh brown catches some rays down in florida right now. Hes attending the biggest etf con inference in the world. There he is. Were going to go live for the inside scoop with the movers and shakers in that 2 trillion business. Plus, two dow stocks, American Express, and cat are on the move. Those stories ahead in the trader blitz. When a wildfire raged through elkhorn ranch, the sudden loss of pasture became a serious problem for a family business. 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Savvy investors check their financial pros background by visiting smartcheck. Gov time now for the trader blitz. Four trades on four stocks making news today. First up, whole foods downgraded to underperform at bmo. You own the stock that walked out the door. We do own the stock. It is a total value stock now. We still think this company demands premium pricing. They actually have the consumers. Its auto cult, very much like starbucks. I think time will tell. They understand. The one thing management knows is they know they have an issue and theyre trying to turn around. They argue the valuation, premium valuation, they call it, may be more at risk than ever. I wouldnt argue against that. But i think this is up to management to show they can turn it around. This is a turnaround story. Joe, caterpillar, downgraded to a sell over at goldman sachs. The interesting thing about this is he didnt even wait for earnings on thursday before the bell. He put the note out today, a 51 price target on it, a 58 price now as it currently exists. Thats a lot of confidence in whats going on right now. The stock has been in the deceleration mode since 2012. A lot of confidence or lack thereof. Lack thereof, correct. A lot of confidence in his call though. Could you almost hear what doug is going to say . Hes going to have to Say Something about cap e ex expanding. And since 2012, this is a stock that has been in a significant down trend. Kimberlyclark missed. They missed due to exchange. Thats a common theme in the earnings season. Heres the problem with kimberlyclark. Were expecting flat Revenue Growth over the next year. If youve got flat Revenue Growth, everything that hurts you on the cost side is going to be a killer. And thats why this thing is not getting out of its own way today. The good news, the ceo is going to be with one jim cramer tonight, exclusively. Tom falk. Right here. Cnbc, 6 00 p. M. , eastern time. Lastly, American Express has been upgraded over at opi. Was downgraded at Morgan Stanley and arguis, though. We can debate a stock here is another one that hasnt been able to get out of its own way. It hasnt. And since the costco incident, the company is trying to refocus. Its going to take 12 months, at least. 18 months. But its such a great brand. This goes back to right now the market is telling you anything consumer related is getting sold off f. The consumer is coming back, this stock will do well. Any buyers of amx . I would be a buyer at these levels. At these levels are you getting, what, a 15 discount over a week . 15 last week, wasnt it . Down 15 down 30 the last six months. Great cash flow. Theyve got to increase the return equity. I think hell do well the next 12 to 18 months. Coming up, are etfs to blame for the volatility this year . Were in florida. And the Home Builders under pressure today. But stephanie link has an under the radar housing trade she thinks is heading higher and will join us to explain. And as we go to break take a look at todays biggest s p losers. Here they are. Were back after this. Good morning, everyone. Im sue herrera. Here is your cnbc news update this hour. Local initials say four suicide bombers attacked a down in cameroons Far North Region killing at least 28 people and wounding 65 more. Nigerias islamic extremist group, boko haram, is believed to be behind the attack. The Supreme Court ruling that people serving life terms for murders convicted as teenagers must have a chance to seek their freedom. The court extending a ruling from 2012 that struck down automatic life terms with no chance of parole for juvenile killers that. Decision could affect more than 100 inmates. Russian president Vladimir Putin telling his government it should carefully use its rainy day reserve funds now when oil prices have been denting budgets. He says thats what the reserve funds are meant for. And british astronaut tim peak sharing his breath taking view of the Northern Lights from space. He took this while on board the International Space station and called the view of the Aurora Borealis magical. Seems an apt term for it. Take a look at the markets now and a look at how things look at half past 12 in the east. Dow down 76 points. The s p with a loss of 12 points. Nasdaq down one half of 1 . Inside the etf conference, more than 120 finance Industry Experts will be discussing vesting strategies and managing volatility. Josh brown joins us live from hollywood, florida. Josh, youre just out of jeffrey gunnedlocks presentation. What did he have to say . Oh, my god, scott. Of he was growling. Ive been watching jeff gun lock speak for five years or more and this is the most bearish ive heard him. In particular about emerging markets and whats going on with junk bonds. And he really had nothing good to share with the crowd today. Yeah, im wondering, hes shared those very same views. I think its fair to say right here on this set. With us. As you have been on the program at times. I dont know how much of it is truly new. Maybe sounding a little more, you know, dire. Well, i think i think a lot has gone on, really, just since the beginning of the year. And i think the main gist of what hes trying to say is that junk bonds with the key to whether or not the stock market can rally and recover. And theyre sending all the wrong signals. And the biggest problem with that, scott, is that junk bonds trade off of oil. And a lot of the charts he was able to put up show a really nasty correlation that doesnt seem to be changing. The other issue is, spreads. Junk bonds versus treasuries and its really the widest its ever been during a time when the fed is first beginning to embark on a rate hike cycle. He doesnt believe the fed is anywhere even close in terms of the economic outlook. He likened what janet yellen did, similar to pete carroll, and just like that scenario in the super bowl last year, it was a major mistake. Yeah. Look, hes been 100 correct in his stocks whistling past the graveyard comment from when he was on with us at the end of 2015, because as we all know, what the equity market has done since then, its been right on the money call. Of what about the other conversations being had there, josh . Whats the word of the day . Sure. So i think the big discussion, and keep in mind, the audience for the conference is primarily Financial Advisers. And Financial Advisers adoption of etfs obviously breaks records every quarter. The problem is, etfs tend to be plain vanilla, tracking the index, and the index has now gone nowhere in 23 or 24 months, meaning the s p 500. Global indices have gone down over that time. So the mood is somewhat dour, a much tougher game to make money with just the beta trade. Oil is on everyones minds. Obviously china, as well. And the big debate seems to be whether or not august 24th, the events of that morning, where we had a blown out spread between bids and asks, and we had the difficulty opening up etfs at reasonable prices. Whether or not thats a sneak preview of much, much worse to come. Talking about the bank loan etfs, talking about these liquidity mismatches. And really, the ballooning in size of junk bond etfs, way, way bigger than the last financial crisis. And whether or not these vehicles will be able to weather a scenario where 1 Million People all want their money back at the same time. You want to give me your own i dont think anyone has an answer yet, scott. Do you want to give me your own personal view as to whether you think etfs are adding to market volatility as some have suggested . Well, i dont know that theyre adding to it. But they may exacerbate it when volatility comes along. Its a little bit of a chicken and egg debate, because in some markets, etfs are the market. We dont necessarily quote junk bond indices any more. We quote jnk and people look at these things as interchangeable with the indices themselves. Im not sure there is a concrete black or white answer that is correct or incorrect. But i can tell you the advisers here, the people that work behind the scenes authorize participants, market makers, this is the hot button issue and there is still a lot of debate. I dont know that were going to walk away at the end of the week with any kind of consensus on the issue. Allstar cast down there. And josh brown. Of you didnt let me get there. I was getting there. I saved the best for last. Enjoy. Well see you back here soon. All right, guys. Take care. All right. Josh brown for us. You want to weigh in on these topics, guys . I think its large in the high yield sector but less clear that volatility is added by etfs in it some of the bigger stock indices such as the s p 500. The problem with the high yield sector, if one sector of the high yield sector goes bad, theyre selling across the board. Youre not going to see that. If one stock blows up in the s p 500, thats not going to cause all of the s p 500 to go down with it. Liquidity end of the day. Investors use etfs as proxies and the whole sector is sold off and you have that issue a little bit in the s p too. If the Semiconductor Index is doing badly people start selling intel, the whole etf goes down. As a stock, it benefits us. But in the short term, it can hurt you. I think one point i would make, and this is not to disagree with serat. It can be. Its okay, scott. I dont like to just disagree with you. I like to spread it around a little bit. Just making sure. In the high yield sector, you want active management, people who can say on any given day, im staying away from all of the Energy Sector. If youre in the etf, you dont have that choice. Thats really a point im driving at. With the s p 500, if you want to be a passive investor, thats an easy way to do it. In the high yield sector, youve got to avoid the giant potholes, just like active managers were able to avoid the auto stocks serve years ago when going bankrupt. Do you want to wrapup what josh was saying about high yield correlation with energy . Stock market . Gets a whole lot worse if high yield continues to get worse. The thing im thinking, its the trading lessons of the past 100 years. Usually great traders are right, but theyre often early. And i just wonder if he is going to be right, but early on his call for oil to have a shortterm bottom. I think he was probably a week ahead of what happened on wednesday. Right. Speaking of volatility, its been rough sledding in our halftime portfolio competition so far this year. I want to give a look at the leaderboard. Maybe folks on the desk want to turn away. Jimmy, you are making some trades today with a portfolio thats off to a rough start, like the overall market itself is. Right. So it is earning season and this is a stock portfolio that only lasts for one year. So youve got to look for catalysts. There is a couple of companies that are going to be reporting next week. But im actually getting out of them, because i want to put the money into companies that are reporting this week. In particular, im selling gm and marathon petroleum. I still like those companies theyre reporting next week. But weve got qualcomm reporting this week and i did put in a trade to buy that while on the show. Im not sure if thats gone through the teleprompter yet. Qualcomm is reporting on wednesday. And one of the things you have to remember here, they got blown out during the last earnings call, mainly because of a lack of clarity in china. That china clarity has increased the last several weeks. They signed with several oems and also buying could have beeno, a supplier to apple. Apple coming out with earnings tomorrow. Corvo has been beaten doan one apple. Looking for a relief rally, probably not as bad as everybody expects. Comments . I agree with the qualcomm. I have had it since it was probably 65. And i think you know, the catalysts there are there. The royalty payments are coming. I think this is a company that has great Balance Sheet and youre going to see a couple more catalysts. You might even see potentially some Management Movement going around, because i think they do need some new leadership in there, as well. All right. Follow all the action, cnbc. Com pro. Coming up next, investors are loving mcdonalds, thanks to allday breakfasts. How do experts feel about the stock now . It hit an alltime high today. Plus more than 100 companies in the s p out with earnings this week. Apple, amazon, baba, microsoft, so many more. Were going to tell you how to trade them. Straight ahead. The Halftime Report with scott wapner is the place for interviews. I see really bright spots. Real money. There is no question, Home Building stocks have the most up side. Real debate. The s p 500 is whistling through the graveyard. The most profitable hour of the trading day. Im holding on, because i do believe there is a growth scare rather than a bare market. The Halftime Report weekdays at noon eastern. Hi, everybody. Coming up at the top of the hour on power lunch, if you believe we have hit a relative bottom in the market, and it might be a good time to buy stocks, wall street has some names they think you should take a look at, and we will name them. Smart beta is the hot buzz word right now in investing. But what exactly is smart beta, and how can it help you . We will explore that one. And a 2 trillion industry. Etfs, a bigger part in many individuals portfolios, but regulators now ask, whether some funds should be banned. Well explore the dark side of investing in certain efts. Power lunch, top of the hour. Thank you. Mcdonalds is on the rise today. Allday breakfast helping the company beat earnings in revenue expectations. Should you stick with the stock or is there a better play . Lets just debate this here. Because allday breakfast the stocks hit alltime high today, by the way. Up 25 in six months. If i was to say to you, what is the better proposition for a stock Going Forward, mcdonalds at an alltime high or chipotle, which gets pummeled every week . Chipotle still trades with a regular ratio of 2. 0, and its not clear to me that consumers are coming back to the name yet. They will, but its just not yet. And they will only as long as there arent more food squares like they have had. Would you want to buy ahead of that . Not yet. Not at 34 times earnings. Nope. I agree. I mean, having lived through yum china, these things take three to six months and at 34 times earnings, 32 times earnings, i would wait for a 20 handle on this stock. I think they have a good runway but i dont want to get in too early. Ive been burnt too many times. Management has not told the consumer what has happened here. So we havent begun to rebuild the trust. Stock hanging above 400. I was incredibly wrong on mcdonalds. I didnt like mcdonalds at 95. Mcdonalds is 119 today. You look at the numbers today, though, why is yum doing so poorly in china but yet mcdonalds is doing okay in china . You buy mcdonalds here then . I think you have to, yeah. The market is telling you. You may not want to. You may look and say at 22 times its rich on a valuation basis, but the market is telling you, that is the right trade to make right now. Cant do it, joe. I wish i could. Im going to wait and probably be wrong. So you would rather buy chipotle. No. Thats the debate. Which one would you you can look at another one you want to buy shake shack. That stock is down 38 in six months. Were going back to the friday chicken conversation. No, thanks. I dont want any part of that. Listen, you showed four stocks up there. Yum, shake shack, mcdonalds and chipotle. Clearly the momentum is behind mcdonalds right now. And for me, over the next 12 months, its the one i would want to own. Im going to wait for a 10 pull back on mcdonalds. Ive gotten this wrong. I didnt think they would turn around this quickly. We need to see whats going to give you that edge . We need something to succeed allday breakfast. Im surprised how well thats done. We need to see what the next thing is. That halo from allday breakfast isnt going to last forever. Your entry point will be when the comps come out and all of a sudden that surprise effect of having the allday breakfast is not baked in the stock. Coming up, a deeper dive on the housing market. We heard the take last week. Stephanie link joins us with her thoughts on the Home Improvement stock she is bullish on right now. Our conversation with steph right after the break. Here at td ameritrade, they work hard. Wow, that was random. Random . No. Its all about understanding patterns. Like the mail guy at 3 12pm every day or jerry getting dumped every third tuesday. Jerry every third tuesday. We have Pattern Recognition Technology on any chart plus over 300 customizable studies to help you anticipate potential price movement. Theres no way to predict that. Td ameritrade. Despite low Interest Rates, the housing related stocks have not been performing well. Housing expert ivy zelman gave us her take on the Real Estate Market on fridays show. It would really be hard to be at peak housing, given the lack of recovery we have had so far, and lower have been recovering since 2012, Housing Starts for Single Family are up 50 , we still think weve got about 35 to 40 below normalized Housing Starts. Plus, inventories in the United States are at 30year lows. All right. Tia, manager stephanie link joins us with how she is investing in that space. Steph, what did you think of what ivy said, do you agree, and what do you think the best bets are in housing, if any . I do agree. I think that the supply demand dynamics are very favorable. I think the Interest Rate environment is going to remain very positive, and a nice tail wind, and affordability, therefore, is also a tail wind. So i like this. Household formations continue to improve, as well. I like the group, the builders, but the Building Products companies and the name i was going to talk about today is Stanley Black decker. Okay. Go ahead. So basically dont stop there. Stop there. Sorry. That was supposed to be a tease. No. The reason i like it is it is down 12 year to date. And i like the risk reward here and the pullback. Tools and storage is about 80 of their total revenue. I think that business is positioned to grow upper single digit organic growth. Maybe even low double digit. Remember, that 30 of this particular segment of the company is home depot and lowes. We have gotten very favorable data points from those two companies. And, of course, they have an industrial business where i think their margin story continues to improve and security is the wild card. Security has been a business at this company that has not done well, but the company said they plan on selling it or spinning it out if they cannot fix it. I think thats a win win part of the story as well. I like the risk reward. What do you think of her calls on both masco and mohawk, which she likes . They play into your story. They certainly do. Absolutely. I just think that with Stanley Black and decker you have a couple of ways of winning, you get the tools and storage business to grow substantially above the market and as a result of market share gains and then you also have this other piece where there is a margin upside potential, and of course the security business. So i just think there is maybe some more catalyst, but i think masco is a great story, good job in restructuring the company as well and mohawk is best in breed, for sure. See you back here soon. Thank you, scott. Stephanie link. Guys . Reacts . We have been talking about housing for a while now and most of us are fairly bullish on the sector. One thing i want to point out is you have to have jobs continue to grow here where the labor market in general. One thing worrying me is the last few weeks of initial jobless claims have been ticking higher. Theyre not at a danger level yet, but going in the wrong direction and thats what im keeping an eye on. That matters for housing. It matters for household formation. I like Stanley Black and decker. I think thats the right area to be. Youre hedged there. Even if Housing Starts come down, the consumer is going to use some of their products to improve their home, especially since you had formation going on. Ill take mohawk, less of the global exposure, more domestically oriented. I think we need that right now. Coming up, 100 s p Companies Reporting earnings this week. Find out which stocks are crucial to keep an eye on. Apple is tomorrow. Everybody will be watching that one. Many other es on that board as well. Halftime back after this. Weigh wa want to hear your noise. Tweet us halftimereport. [ male announcer ] fedex® has solutions to enable Global Commerce that can help your company grow steadily and quickly. Great job. mandarin cut it out. See you tomorrow. I apprecabsolutely. Ing by. The markets been pretty volatile lately. There is a lot at stake here, you know . Look jim, weve been planning for this for a long time. And well keep evolving things. So dont worry. Knowing whats on your mind and acting accordingly. Multiplied by 13,000 financial advisors. Its a big deal. And its how edward jones makes sense of investing. These are the hands, the hands that drive commerce, that build business across borders. These are the hands of pitney bowes, the craftsmen of commerce. These are the hands that sew the seeds of business growth, that weave the data, and find the perfect spot to thrive. These are the hands of pitney bowes, the craftsmen of commerce. There is your market picture. The dow remains in the red. Down by 60 points, a third of a percent. The s p and nasdaq, half a percent for each market. Check out what is happening now with some of the big computer memory and chip stocks. Sandisk taking a dive thanks to an analyst downgrade. They see weakening fundamentals in parts of that flash memory market and more risks with the proposed acquisition. Western digital and other Storage Companies taking hits as well including micron and sea gate technology. All of those guys lower. What do you think of the chips, sarat . I like aside from qualcomm. You have to be careful. I think the chip sector itself is so correlated to the industrial sector right now, and you see what is going on with the industrial secretary, the lack of demand. Youre going to get negative earnings. You own intel . We own some intel. We havent chased it at these levels but that would be interesting to go after. A few minutes left. I want to get to as many big earnings look aheads as we possibly can. Lets begin with the one, the elephant in the room, apple. Yeah. Guidance, to me thats the key. What are they going to talk about looking forward as it relates to the following core. If they say anything on apple about the second calendar quarter, we know theyre in trouble. There is no way they can have visibility into the second quarter, if they say anything about it, theyre worried about this quarter right now. The next 15 points in this stock likely to be up or down . To me it is up. Having said what i just said, i think the expectations for this stock are so low that it is easily beat. Thursdays amazon. Give me the view there. I think one of the fangs. I think amazon will come off strong, coming off really good clen tialendar time for them. Theyll show they made money. Theyll show the Cloud Computing business. I wonder Going Forward how they keep that momentum going at 100 times earnings. Chevron. On friday. Chevron. Interesting one. Big oil. Defensive oil. It is going to be tough. Youre talking about people wondering about dividends. Capex, dividends, and projects. And where do they see oil going. Microsoft on thursday. I think thats going to be okay. I think the trajectory for microsoft continues to move higher. They have done a phenomenal job transitioning the story away from what they were into more of a Cloud Software type of the next ten points higher or lower for microsoft . Higher. I dont have a position in the stock, so ill punt on that. Can i bring up one name, though, i think you skipped over . Yeah. Big mac row naro name, boein. If you see good orders didnt we get a look into boeing late last week . 747 news . Yeah, cargo driven story. But the problem with it is not just a pure cargo. It is more a comparative thing about the 747 versus the 777 which is also has a freight aversion selling very nicely. So thats more specific to the 747, but, you know, there is always concern about emerging market. Thats where growth from boeing comes from. Any guidance they give is key. How about this one, American Airlines . Later this week too. Talk about the airlines a lot. You had united, delta come out. What theyll talk about is the inability to raise prices because of oil. So the question is how do they actually increase their revenue . 30 seconds left. What do you want to see for the rest of the day for the thesis you put forth on the market. I think the market needs to do what it is doing now, which is not following through on the decline. Ill take the market down where it is right now. Thats fine. Wednesday i think what about oil . Same thing. Same thing for oil. Oil above 30 and a half. Thats fine. Wednesday, a big day. Left out facebook. Facebook on wednesday. Thats a big one. See you soon. Thank you. Have a good one. Thanks for watching as well. Power lunch begins right now. Scott, gentlemen, thank you very much. Along with Brian Sullivan and Michelle Caruso cabrera, im tyler mathisen. Welcome to power lunch. Rally smally, not today. Industrials giving back a bit of the faux rally we had from wednesday afternoon on as the dow is down about a third of a percent. The nasdaq and s p 500 are also up a quarter percent now. The s p 500 off a little more in percentage terms, nearly a half percent. Half of the stocks in the s p 500, little more than that, are now in bear market territory, meaning they are more than 20 off their most recent highs. And even though we saw