Transcripts For CNBC Fast Money Halftime Report 20160729

Lets put on the fang trade. I think each of these companies specifically scott had something idiosyncratic and important an its own road map that sparked interest beyond just the last 90 days. Doc, facebook crushed it. Alphabet, mobile search driving. Amazon, the obvious thing, plus the cloud. These are not small revenue numbers were talking about here, judge. When looking at alphabet or google, up 25 year over year, the revenue side. This is a huge amount of revenue. This isnt like, you know, some of the stocks we talk about that, oh, it was 100 million and they beat by 1. 2 million dollars. No. These are in the billions. This is like appleesque kinds of numbers, and as people come on the air and like to say, the law of large numbers says they cant keep doing yes, they can, and yes, they did. And take a look at amazon. One important point on that, jon. We used to talk about these names, reverently, we would say, these are the companies that are going to figure out the future, and you would be right, its different now. Big momentum growth drivers. But its different now. These are the Companies Creating the future. Amazon is deciding what the futch sir goiure is going to lo. Google and facebook too. Different than a visionary getting his way. Jimmy, wall street is back on the gravy train big time today. 20 analysts raised price targets on amazon. 20 on google. You now have 7 price targets on google, or or on google up more than 1,000. Let me say this i really dont believe that fang is a useful acronym any it more. It was useful in 2014, these four stocks leading the markets. All the markets gains in 2015. To what josh is saying, each idiosyncratic companies and good reasons why amazon is have be 20 upgrade. Right one thing quick. Netflix, example, taken out of this mix . I agree, totally agree. Taken out. The business is starting to peak. The stock rolled over. To your point, josh, i dont think theyre creating the future the way they were a year ago. A replacement for netflix and happens to start with an n. In my opinion, the most Important Company that we almost never discuss. And the company is called nvidia. When you think about everything thats happening over the next three to five years in Virtual Reality, augmented reality, whats going on with video games and pokemon go and beyond that, whats happening with beta centers. Nvidias graphical processing unit chips are involved in every one of these stories and not just involved, creating what the future looks like. This stock has been on an absolute tear. Yes it has. The stock is 1 away from its 52week high as we speak. As is amazon, facebook the low is 19 because only very smart investors know whats going on here. We dont talk about the stock enough on the air. They are involved in everything. When you talk about creating virtual worlds, what you really need are incredible graphics and you need deep learning, ai that teaches itself on the job. In these environments and this companys platform, pascal and the new chips at titan will be the building blocks. This company could be the intel of ai and verch wirtual reality becomes less of a geek fascination and more of what everyone reacts with in the world. Two questions. Is it big enough . Throw that out there. In fang. Right on the number, 30 billion on the number. And chairman of the reserve, im goin to say its big enough. And second question is why doesnt facebook have a much bigger advantage in terms of going out and Building Hardware themselves . They dont make chip. Its the chips. Whats really going on ramping as were talking about it, by the way. Going on with graphics cannot be overstated. I dont suggest the stock will go straight up in a straight line. Its already had a huge run, but i do believe its being discovered. I think Virtual Reality as an investment theme at its infancy and a company thats pretty important. By the way, look what amd has done. This is a stock that couldnt get out of its way for almost 20 years. This thing is like tripled. This is also involved in the same kind of graphics and some of these new markets. So i think its important we move beyond netflix, yeah, struggling a new breed of big Growth Stocks youre willing to pay up for. I think there could be. Pe of like 48 . On these these are companies that have Growth Potential that gets investors willing to pay those multiples. How about this . You stop at the multiples with with amazon and with google all of these year, but the businesses justified it. So nvidia, high of the day. Facebook year to date up 20 . Amazon up 13 . Over the last month, and nvidia up 59, call it 60 now. Alphabets up 3 . More muted. S p up 6 . Most stocks far outpacing broader market. The past 24 hours. This point, too trying to think of next. Back to what i was saying. Frank was appropriate in 2015, basically ten stocks in the s p 500 positive, and the rest laggards. These four at the top of the list. This is a much broader based rally this year than in 2015. Yes, still laggards like the financials, but what im saying is, if were going to make it fang or bagel or any of these acronyms all were doing is randomly picking letters and tickers out of a very large spectrum of stocks going up. Is there a lock . There will be. Somebody came up with bagel, you remember. I do. It wasnt me. The amazon numbers were stunning. I bring up the appleesque kind of revenue numbers, these are like 30 billion. You take a look at that revenue, which is up i think 30 or so year over year and you look at amazon web services. That side of it up 58 . That side alone of what amazon does, you know. Again, on this desk we talk about it all the time. The website and the cloud, amazon is just killing it, and up 58 on a huge number. They just are owning this space. So i think what you said at the top, josh. Take a look at facebook. Whos their competition, judge . Nobody. In my mind. I mean, some kids are going to be on snapchat, but snapchat doesnt make money lie facebook and Mark Zuckerberg make. Same with amazon. Amazon building 18 fulfillment centers. Not talking about software. Talking logistics powerhouse that you could start seeing not only in their own earnings but in the deleterious effects in other companies earnings. The problem, people cannot get their arms around the valuation. Other than exactly right. Our next guest. Stephanie link. Buying alphabet and amazon over the past months and joins us on the phone. Steph talksing about fangs, wondering if theyre back. Whats your take . Scott, how are ya . Good, thanks. Yeah back. Never really went away. Pockets of opportunity to buy them, but growth is impressive. Lets just start with amazon. You said, the valuation has always been a hard one. Deal with some parts. The only way to kind of get a higher level, but i just stress that not only was revenue and margins better than expected in every single segment, you had this Company Really focused on operating leverage, and i know everyone kind of is poo, pooing guidance, the only reason why the stock is not up more, in my opinion, but this company was able to produce the kind of growth both top and bottom line, margin expansion, while at the same time theyre aggressively spending. That growth Going Forward is really going to continue. And i would just throw out two things. Cloud, only 8 of overall spending is in the cloud at this point. Youve got a long runway on the cloud side and on online retail, they prime, growth, only 10 penetrated internationally. Its 40 penetrated here in the u. S. , but youve got a long way to go in terms of this growth. So happy theyre spending, seeing operating leverage and can get to some of the parts number. It is higher than where you are. Absolutely i would buy that. Give me something on alphabet, too. The streetious obviously likes number. Hardpressed to see another cfo, applauded on wall street, ruth when she does a call, the street eats it up . Totally turned this company around as well. Growth was always there, scott, but the execution was always kind of spotty at best. So you had 25 u. S. Growth. Thats the best in five years. And along with facebooks results, it totally dispels the notion that digital dollars are decelera decelerating, that is key. Money to going to both of these companies and that is going to continue, and that is why you need to be involved. In terms of kind of the headline numbers were really great. Go through the surface, operating margins expanded 100 basis points from last quarter alone. Free cash flow over 2 billion year over year growth. And their own bets revenue actually better than expected. So a really good quarter, and this ones lagged. Right . So the expectations were kind of muted and you can get around valuation. Ten timeses to 16 ebitda but growth midteens. You can get your hands around and why i think people will continue to buy the stock. Steph, thanks for calming in. Perfect day to get your insight on that. Have a good weekend. You do the same. Stephanie link joining us. Talk about apple up more than 5 this week. You know about the numbers beating expectations. Price target again. Brian white reiter ha eerating been a positive view on that stock. How should we look at apple now, doc, Going Forward . From what we heard from Hillary Clinton last night, as well as donald trump, theyre both going to be talking about the tax ramifications of companies that are leaving all of that cash overseas, judge. 215 billion of the 235 billion theyve got are overseas right now. To the extent we get not just rhetoric but proposals from each of these two candidates about how they would address that, that could be either a big positive for stocks like amazon, or could be a big negative. Depending if they want to use a carrot or a stick with how they get that money back here. Brian white at drexel takes apples price targets to 1850 saying as the dark clouds of doom begin to part here comes the sun. Good luck. Im long the stock. Not going up 80 . Hes been highest target on the street forever. S that his schtick. The report was a low bar they cleared, if you want to sink your teeth into something unmitigatedly positive, the Services Number at 6 billion. Put it in perspective, about 15 of total revenues. Going forward, looking whether the iphone 7 will have good pickup and frankly youre not going to know until it comes out. Hear analysts saying their channel checks say its going to do well and other analysts say exactly the opposite. Youre not going to know until the iphone 7 comes out. Treads water until then. Im still in it because it generates a ton of cash. Josh . Yeah. Im long. And i dont really need it to go to 185. As a total return story, buying a stock with a below market multiple during a cyclical trough, incredible iphone business, the worlds fare again, releasing the 7ened every falls back in love, funny to watch it go higher. Meantime i sit. They buy back shares, a decent sized div dentidend, less upsid. Thats okay. A big marx chure company in a maturing industry. To be clear, scott, you can see another 10 rise easily in this stock. Thats a reason to be in it. I want to touch. So nvidia quickly before we go to break, guys . Looking a the that stock up now 1. 25 . Take a look at thats again, the 52week high on nvidia, 57. 22. The stock is currently just shy of 57. Well get you a chart. There it is. Full disclosure, no position in the name yet. I am looking to add. I probably shouldnt have said anything nice about it today, but at some point i will be long the stock. No position currently. Good stuff. Up next, reasons to worry. The Halftime Report, just getting started. Announcer youre updates a hero. Are the bank ready for a crisis . If not, how bad will things get . Were just a few hours from getting Key Information on the health of europes Financial Sector that could move Global Markets. Plus a big setback for biotechs and pharmas next frontier. More halftime with scott wapner coming up. Watch us as noon eastern every day. Tokyostyle ramen noodles. Fresh ingredients, stepbystep recipies, delivered to your door for less than 9 a meal. Get 30 off your first delivery blueapron. Com cook. Its time to discover that in a lexus suv. Theres no such thing as adverse conditions. Come to the lexus golden opportunity sales event this is the pursuit of perfection. Welcome back to the Halftime Report. A major event happening in three hours that could move Global Markets getting a glimpse into the health and stability of the european banks. Josh brown started prepping us last week. Wilford sfrofrost is here. European stress results 4 00 p. M. Eastern time. Banks are the sector down year to date, worst s p sector. In europe the situation is even worse. Stock 600 banks index is down 27 year to date, actually despite turning in a 6 gain for july. The stress test results come at a time when the banks are already beat up. Late on a friday . Delayed until close of the u. S. Market. Read into that what were we will. Just this week a good glimpse of how bad the situation is as well. Deutsche bank results, poor, ubs and barclays, surprise, very low expectations, all three ceos making it very clear the situation of european banks is rough. And the european Banking Sector in challenged. The question josh is, if these results come in sort of more dire than expected, what sort of rollover affect could you have from europe over into the u. S. Market early next week . Look, heres my take on this. The best case scenario, a nonevent. That would be fine. However, the big market events weve had in u. S. Stocks have already been currently related going back to august with beyond valuation, what went on earlier this year with the dollar ripping and then reversing. These have been currently issue, the brexit episode. I think the concern here is the Fivestar Party in italy, even with a comedian running it, and all of the things you can say that, oh, its a nonevent, rensi basically bet his government on this. If it looks like italian moms and popless have to take a hit. Politically hes toast and then germany is faced with yet another possible exit in country, or a country thats going to be bellicose of that exiting and probably not so great for, a, risk appetite, b, the currentcy situation. Watching to see if theres going to be another political firestorm. And our watch list, five here, the best performing one year to date is down 37 . Thats the thats the winner. The winner. The winners down 37. The loser, down 81. Right. And the italian banks have been very unprofitable, loads of mpls. A chart showing how much nonperforming loans they have relative to much bigger economies, and only about half provisioned against, you know, brexit made that worse but hasnt caused the problem. The italians are in a difficult position. European doesnt allow a state back bailout, clearly what they need. They could do it. They could, but spun politically by likes of the fivestar movement saying germanys stopping us from fixing our economy. They stopped greece. Look where they are. We have to pull out. Adding a police spice to a brexit moment which they wont want to have. Potential of a backstop eventually . Do you take a look at potentially investing in some of these european banks . Scott, i cant european blue chips, nonbanks, if there is some kind of break im talking about bavnks. Starting with this. Not in italy. A great trade a month ago, getting absolutely destroyed. For a few week period had you to nail the exit quickly, though. And donelock said on the show that day, well, judge when we talked about it, the 23rd and 24th day of the vote and the day, friday after when we actually had the reaction, we jumped in, bought a lot of stocks, bought hsbc, barclays for clients and things like that. Both played out very well, versus what i should have done, of course, was shorted Deutsche Bank against it. Deutsche came down wilford, 17. 5 and 18, all the way down to 12. 5. Others recovered. Hsbc is back where it was on the 23rd prior to breck it. Potential. And let me spin it to your interview with jamie dimon on monday, were looking so much forward to at 1 00 eastern time. The main issues you hope to hit with jamie are what . Listen, definitely touch on the divergent performance weve seen from european banks to u. S. Banks. U. S. Q2 earnings were pretty good and the results of the banks stress test here got lost a little bit, because they came out the day after the brexit result and were pretty strong. I dont think weve grasped on that. And isnt as bad as european banks. The woert sector. Look at that. And brecxit is a big topic. Is the fallout as bad . Pull people out of london . The political situation here as well. Interesting, as we look at the debate, both sides of the political debate unite on beat antibanks over here. Getting perspective from here will be fascinating. Not to mention following gdp today. The first half of the year in the u. S. Growing at a rate of 1 after the revision downward to q1. Interesting to sort of get his perspective on what the real economy looks like from his vantage point. Absolutely. Particularly when we look at the first half of the year. Particularly the first quarter. January, february, terrible. Since then, actually results have been strong. Both with jpmorgan and other banks as whole. Is h2 going to be like the first two months of the year . Crude oil doing a rollover again. Not to mention. What do we worry about barks and their exposure to that. Cant wait for that monday. Wilford frost joining us today. Big interview on monday. Jamie dimon, the jpmorgan chairman and ceo, an exclusive interview and only on cnbc and its 1 00 eastern time. Look forward to that. Oil hovering. Talking about it in a bear market territory. Exxon and chevron painting a gloomy picture. Is the big runup ending . The number one analyst will tell us. Is the bottom falling out of pharma and bio tech . By the looks of this stock, the answer is yes. Wheres the stock . Well, well show you. Show you when we come back. The impact of one failed test may go far beyond seroares therapeutics. Halftime back in two. Its here, but its going by fast. The opportunity of the year is back the mercedesbenz summer event. Get to your dealer today for incredible onceaseason offers, and start firing up those grilles. Lease the c300 for 379 a month at your local mercedesbenz dealer. Mercedesbenz. The best or nothing. This clean was like pow. Everything well . It felt like i had just gone to the dentist. It just kind of like, wiped everything clean. My teeth are glowing. They are so white. Crest [hd]. 6x cleaning, 6x whitening. And at two weeks superior sensitivity relief to the leading sensitivity toothpaste. I actually really like the two steps crest [hd]. Step 1 cleans, step 2 whitens. Its the whole package. No ones done this. Crest healthy, beautiful smiles for life. Welcome back to the Halftime Report. Merck shares slightly higher. Fractional move. Looks like trying to move back to flatline posting a Strong Quarter company beating on top and bottom line raising lower end of full year guidance as well. Focus on seres therapeutics, the stock getting hammered down more than 70 after its toast start a new class of drugs to beat infections failed. Covering biotech you know with us again on the desk. Whats going on with this one we dont talk about often and most people may never have heard of before . A relatively new company, fairly big as of yesterday. Nearly a billion market cap. Isnt too small. Trading under 500 million and because of this Clinical Trial failure. Essentially collection of bacteria that live in and on our bodies. People are interested in this space. The idea, give donor bacteria to replace causing disease you can cure infections. A big infection affect s 250,00 people in the year, in the u. S. 50,000 people die of this every year. It did not pan out. An earlier study was positive for seres, and youre seeing the stock react strongly. Not contained just to seres. Earlier in the month, merck announced an initiative in the micro and across the industry from pfizer, Johnson Johnson and with partners in Small Companies in this space. New frontier, science and medicine and unfortunately the first Clinical Trial here of the stage didnt pan out. We often talk about the rewards of investing in these Smaller Companies that are sort of shooting for the moon and this sort of juunderscores what the risks can bes talked about others as well in this space. Seeing a lot of these in unhappy surprises in biotech underscoring the risk of investing in this space. Until something is proven over and over again, cant count on it. Biotech having its best month in three years . After a terrible year. Be honest. The rally in bio tech doesnt seem to be lasting. Id like to ask you a question, meg. Think of the study, traditionally areas like vaccines, antifungals, those have not been moneymakers for pharmaceutical and biotech companies. Why most stayed away and try to go for oncology, thats where you make the money. What about resources devoted to this area not a moneymaker . A desperate search to make money even though chances are slim . A desperate southern to try to solve the soourn bug problem. Cdiff and other bugs, starting to get recognized as a Huge Public Health concern and the government has started to Incentivize Research into this area and tried to speed drugs to market. So more and more companies are being founded around this. More Companies Including merck are getting back into antibiotics and targeting bacterial invections. Its a growing area, and even broader in the future, still early days in the science. Raise an interesting issue. You dont think the biotech run weve been on, as i said, best month in three years is sustainable . Is that because we think now that the conventions are over, and were really going to get into the throes of campaigning, that these are once again going to be targets . Price action says the opposite. Look at the ibb. This is the etf, predominantly large cap bio tech. Triple bottomed at 240. There arent quadruple bottoms. Now above the 200 day, which is flattening out. Had been in deep decline. Above that level, finishing above that level, First Time Since august 2015. This etf, this sector has paid its dues, and now you have buyers back in control. 50 day already turned up. Tell riv strength look goods. This sector looks better than its looked in almost a full year. Scott looking at it again, i dont think hillary attacks these guys the same way. Already made her points. Got the nomination. Who was she trying to run to the left of . Its over. Yep. All about taxes Going Forward as far as, you know, the platform and so forth. I dont think its going to be about biotech and drug pricing. I dont think thats the winning strategy. Are you on the other side of that . I dont have a position in bio tech. No. Just saying. You dont think theyre sustainable why . A couple things. Josh, looking over your shoulder at the chart. Youre more of a chartist than i am. Triple bottom . Could well about triple top. Looks like its gone, third time gone to that level. It did break through. Okay. The other point i want to make is, this most recent rise is in lockstep with the market overall. So if this market has been going up on the basis of earnings. Youre still negative on where you think the markets going . Marginally. Not calling for a crash. I didnt say that. Its hard to go higher from here. And caps in the space are now 20 more reasonable in earnings than a year and a half ago. A true statement. So looking at it, forgetting a charts. Looking at it from your perspective, a high quality company, theyre here, getting them as a discounty. Getting Health Care Overall cheaper than a lot of sectors in the market that dont have nearly the Growth Potential. Its hard to find a negative here. And tie back into what meg talked about. You dont want the one trick pony, though, judge. I mean, that really is all chips in on black. If you want to put it that way, because these companies that dont have multiple tests on multiple treatments. Live and die by one trial. Yeah. It it is rolling the dice. Thanks as always, meg. Meg terrell. Now to sue herera with the latest headlines. Whats happening this hour. The computers are the House Democratic Campaign Committee have been hacked. Details are unclear about exactly who tapped into those computers and what information was accessed. The organization raises money and provides other assistance for the partys house candidates. Florida governor rick scott says that state likely has the first cases of zika transmited by mosquitoes on the u. S. Mainland, while no mosquitoes tested positive for zika, one woman and three men in the miami area likely contracted the virus through mesquitosquito bites. Gop president ial nom mi mike pence riding a motorcycle across indiana today way National Guard charity group. Pence waving, wearing a white helmet leading a pack of about 100 riders down the highway. And Consumer Protection bureau proposing new rules to overhaul the Debt Collection industry requiring collectors to have more documentation to prove a debt is owed. Consumers no longer receive multiple calls each day from debt collectors and would have more ability to dispute their bills. Youre up to date. Thats the news update. Scott, back to you. Sue, thanks. U. P. S. , cigna, expedia seeing red. Trading todays biggest movers. Just ahead. And before the break, the dow 30 heat map been down at much as 8 appoints earlier today. Some tracking what oil is doing. More Halftime Report is back, after this. I sleep extremely hot. 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With a 100 night low price guarantee, sleep trains love your mattress money back guarantee, same day delivery, plus helpful advice from the sleep experts, its no wonder more than a Million People fall asleep each night on a sleep train mattress sleep train [train horn] your ticket to a better nights sleep we are back on the Halftime Report. Look at the nazback 100. We are at a 16year high. A big week for a lot of tech earnings. Certainly helping give that a boost. And there are the leaders. Theres alphabet, google up 4. 5 . Tesla, quietly having a good week, up 2 . There is amazon at the bottom. Those big earnings numbers, 1. 5 gain and regeneron a good go as well. The s p as a whole is hanging out with a gain of about 5 points. Up 5 points today. Turmoil in the energy sector, exxon mobile, chevron, phillips 66 posting earnings missing street expect igs as by a wide margin. More than 20 cents, and crude is in bear market. Bring in top ranked oil analyst on the street and joining us now on the phone. Doug, welcome back. Hi, everybody. Hello, doug. So from november of 2015 through this past early part of july, youve been recommending exxon and chevron sort of without waver on this program. Im wondering if you feel today as though you were out a little over your skis . No. Were not wavering at all. But listen, youre right. Most of these Companies Reported really poor results, and not only were they poor but the worst results weve seen in a decade. And so were glad this ones in the history books but the next through quarters may not be much better if brent is 45 to 50 by the end of the year. After having said that, were still overagt and for several reasons. One, sentiment is awful, a two event on short rest means investors short only 5 of are time. Companies are making progress reducing break evans now near 50 per barrel. Still think oil prices will rise in 2017, and i also have valuations near 25year lows on price to book, with dividends yields near 5 . I concur theyre bad news, abundant in this space and much is well known and a new Strategic Plan announceed by shell and conoco phillips, and in terms of valuations can rise for a multiyear period. No, were not wave arying. Still overweight for big oil. Well known or not, you must have been surprised by the weakness upstream and the writedowns, et cetera . It wasnt pretty. The next couple quarters might not be much prettier, but the companies are making progress. Again, big dividend deals, unless youre really bullish on the stock market, they should provide support and think theyre safe dividends, too. Doug, its jim lebenthal. I want to push back on you a little here. Okay. Most of the rally, seems, over the last few months in crude oil has been on the assumption supply and demand are starting to come into balance. When i look at inven stories in Refined Products, theyre so darn high that it just screams to me refinery runs need to come down and further depress demand and keep supply demand in balance going. Whats your feeling on the Refined Products inventory right now . First of all, jim, rur unite. For both crude and products increased significantly. But after having said that we felt all year we would peak with crude Oil Inventories around midyear and for the most part we they will happen. Demand and supply second half of 16 and 17 and crude Oil Inventories decline. The point you make is an important one. And demand for crude oil, margins for refiners, if theyre below variable cause they dont have to buy the additional barrels, thats why inventories are starking occu ingstacking u side. Thats the beginning of the end. We are going to have weakness during next quarter and Refined Products related to crude oil, but at the same time, lower prices, stronger demand. Think well work through it at 50 brent end of the year. Hang on one second. Im glad you go Refined Products. Ask about refiners, frankly, ive heard a lot about on the show in the last week or so, and mostly in a positive manner. Phillips 66 is one of them, werent of our traders likes. You have a buy on it. Valero, though a hold. Make the distinction between the two calls on those two stocks. Sure. So earlier this year we thought that it was pretty likely that earnings for refiners were way too high. Unfortunately had to come down 50 . For that reason we havent wanted to have as much exposure in refiners. Having said that, refiners awful this year. Underperformed in the market significantly. The concern i have, take those present in the curve and run through the earnings models for refiners, estimates to be too high next year as well. Still on the sidelines with refiners as a whole. We are Getting Better valuations, though. Valero close to a 5 dividend yield recently and when i started to get interested. I got to run. Before i do i heard you say today and want to be clear, that even if exxon mobil and chevron have another nasty quarter, in the current quarter, and three months from now were talking about the same kind of story, you sound undeterred that you wouldnt change your rating on these stocks . I am undeterred. I think that these companies are probably likely to make turns. If they follow shell and conocophillips, could are multiyear stocks and we think downside support with big dividend yields. Good place to end this. Have a good weekend. You, too. Doc. Like the psx trade you spoke and asked about, i like that a lot. Tso i like. Those two more than valero, in my book, but i was glad that he mentioned phillips, of course. I think he does a good job pointing out the risks in the refiners and im long marathon, fwhout without nervousness estimates are coming down, multiples above average. I think actually where the value is in the whole sector is in the pipelines space. Theres been a slow, steady recovery. Particularly in the mlps. Look at kinder morgan, not an mlp, it ill in the sector. Bridge energy, slowly coming back. Earnings reports coming in show they have fought only enough money to cover distributions but to grow them going into the rest of this year. I dont hear anybody saying that he, that you agree with doug, that exxon and chevron are buys right here . I agree with doug and say that he made the most important point last. Which is that the dividend coverage makes it so it doesnt matter what the earnings are next quarter. Vanguard has a dividend appreciation mutual fund. Yesterday issued a press release saying they were closing the fund to new investors. Capping it at 30 billion. An enormous amount of money for an activity managed fund to take in. 180 billion in inflows into dividend funds, balanced funds since 2010. Whiles 3ds 00 billion came out of all stock funds total. What investors are looking for. Through that prism, exxon is trading with a 3 yield. Chevron has a slightly less good balance sheet. So like bonds, theyre discounted trading a at 4 yield to kindy look at this as Investment Grade and then junk, and that will continue to be the way to look at these names. If oil doesnt crash or double. So are you prepared even as you make the case, are you prepared for what could be another 6 to 12 months of pain watching those stocks either sit where they are or potentially go lower, because Doug Terreson told thaw could absolutely happen. I can earn a riskfree rate of 0 or look at a name like exxon where i have a total return potential between buybacks, a hefty dividend yielding above the tenyear treasury and potential for oil dynamics to get better. I like those odds. I dont suggest its a trade into next earnings report. This is a smart place for investors looking for total return, meaning yield plus capital appreciation, to have some money. All right. Still ahead on the Halftime Report, jon najarian is tracking the market. A bullish call a 2016 high, just reached it. First, tyler mathisen. Top of the hour, hope youll join us for power lunch. Amazon and facebook topping exxon mobile in market cap. The top five now all tech names. The tech names wall street likes now. Explore that, and exxon badly missing profit estimates. Is the stock still worth owns for its dividend . And the battle for your living room. Set top box. Is it heavy handed . Backfiring . Were explore that. Halftime report, back right after this. Announcer the Halftime Report with scott wapner is the place for marketmoving interviews. You dont call a company a sewer because the company made a mistake. Announcer real money we are short both tesla and solar city. Announcer real debates. People think that globalization has hurt businesses. Its not. It is technology thats hurt businesses. Competition is a good thing. I dont want to go back to a single marketplace. Announcer the most profitable hour of the trading day. I love this show all i do is get to tweet about this show im on the show. Announcer the Halftime Report. Weekdays at noon eastern. Wack bok to the Halftime Report. Jon najarian seeing out of the ordinary options trades in yelp. Doc what do you see . Jump, if you look at this chart, year to date. Look at that. 14 in february, take a look where its run to now 32. 26. Hitting new highs and setting that 52week high. Its got about a 15 short interest, judge. So what were looking at here is the potential that this one goes significantly higher. People have been rolling their call bets up. Thats another trade that i love to follow when theyre right and they move those bets up yet again. Today they were buying the november 38 calls. So this is out there a ways into the future. Like i say, 15 short interest. That pain could continue significantly for these folks. So what i did was i sold puts in here. I was chasing it trying to get the calls. Couldnt. So i sold the puts. Those puts shrink in value as the stock moves up. Ill probably be in the puts two weeks, judge. I was going to ask you why i tried. I think a bunch of our subscribers were chasing in ahead of me and got them and i didnt. Im glad you explained it because that was my first question. Thanks, doc. Thank you, sir. I want to go to d. C. Eamon javers has some news for us. Thats right, Wire Services and politico reporting some news here that might have some impact on the election cycle this year. Wires reporting that a federal Appeals Court has found a North Carolina voter id law was enacted, quote, with discriminatory intent and must be blocked. So the opinion issued today from the threejudge panel of the Fourth Circuit court of appeals in richmond reverses a lower courts opinion that upheld the law, the 2013 rewrite the a. P. Says to voting laws in North Carolina require photo identification to cast inperson ballots and made other changes as well. So this would seem to have some potential impact. Well see whether this gets appealed and where this ends up in the Legal Process by election day. But obviously all of this stuff is being watched across the country as were entering a very, very tight election season nationally, scott. Thank you so much, eamon javers for us down in d. C. Up next, a breakdown of todays earnings movers. Were talking u. P. S. , cigna and expedia. There they are. Theyre all in the red, could now be the time to jump in . Thats the question. Ahead on the blitz. Youve wished upon it all year, and now its finally here. The mercedesbenz summer event is back, with incredible offers on the mercedesbenz youve always longed for. But hurry, these shooting stars fly by fast. Lease the gle350 for 579 a month at your local mercedesbenz dealer. Mercedesbenz. The best or nothing. Your Business Needs Better Technology to drive better performance. So you need it to be reliable and fast. Really fast. Introducing the comcast business Summer Savings event. Fast Internet Speed to drive performance, plus cutting edge wifi for your employees and customers, and voice mobility so your calls find you wherever you are. Get some of our most advanced products at a great price with over 500 in savings. Call today and ask how to get these savings plus a 250 prepaid card. Comcast business. Built for business. Lets do the blitz now. Three trades on three stocks making news today. First up, u. P. S. Beat on reve e revenues posted inline earnings. Stock down 0. 5 , josh. This has been a really tough stock for a couple years now. And it didnt appear that Forward Looking Statements were enough to get people excited even though it was a decent quarter. I would avoid it from price action standpoint. Nothing happening here. Cigna, jim, they missed, they cut their forecast. Lets kind of keep this simple here. You know, the merger with anthem is in deep trouble. And you want to stay out of a stock that has a troubled merger. I know this from personal experience. Staples and office depot last year, just stay out of the way. Let the dust settle on the merger and then we can talk about the stock. Expedia, josh, whats your read on this stock . Well, they have do you want to talk . No, by all means. They told me in my ear, jon, its your stock. Well, thats part of it. Its also spending. They spent an awful lot of money. The stock opened almost 3 lower than where it is right now though, judge. Its rebounded from there 116 and change now instead of 113 and change. So theyre not reading it as badly as they did three hours ago. Do you have a comment on it . If you think the european home grown terror situation and refugee crisis gets better any time soon, then maybe its a buy on these headlines. I personally dont. So no thank you. Were going to look ahead to earnings next week including pfizer, fitbit and tesla, thats after a quick twominute break. Its time to discover that in a lexus suv. Theres no such thing as adverse conditions. Come to the lexus golden opportunity sales event this is the pursuit of perfection. Were back on the Halftime Report looking at that stock once again it is nvidia just off the highest levels of the day but we had a big bullish call right here on the desk. Josh brown made it. Give me quick, quick as to why you like this so much. I just genuinely feel that their semiconductors and platform generally speaking are in the sweet spot of some of the Biggest Technology breakthrough areas of growth, augmented reality, Virtual Reality. Gpu chips. All right. Keep our eye on all that. Keep our eye towards next week as well. Pfizer, tesla, fitbit. Jimmy, quickly. This stock recently has in the last weeks hit a 12year high and that was a long time ago. That was back when it had lipitor. It will be curious to see if the oncology drugs which is really what its been focusing on power it to alltime highs. Mgm next week when you look at results delivered by win that could get tesla, scotts miracle gro. Tesla im definitely going to be interested to hear what they have to say and if they have to guide on the production numbers, judge. Yeah there. Guys, have a great one. You too. Well be keeping our eye on the market. Theres the dow in negative territory. S p is positive. Have a great weekend. Power starts now. And welcome to power lunch. Im michelle carusocabrera. Heres whats on the menu. A 1 economy and a stock market running out of steam after a hot start to the month. So should investors fear these dog days of august . Well debate. The parties are over, the convention parties that is, now the dog fight begins. Were going to go inside the race to the white house, the road war in the swing states. All that plus a biotech disaster du jour, stock down almost 80 today. Tyler. Nice to have you back. Welcome everybody. Im tyler mathisen, heres whatspe