Procter gamble, at t. I cant help but notice whats happening in the financials, as well. Well get into the down graids. But the financials, pete, kbe down more than 2 right now. Some of these regional names. Im not going to run through every name with you. But if you look at the kbe, it tells the story. Yeah. A lot of these regional names today are down more than 3 . Some as much as 5. And even the big names arent jpmorgan and some are down 1 . If you really look at the xlf, the bigcap financials, you get a nice picture of whats going on. Were still in that same range, scott. For the last month and a half or so, weve been in this range, and now we are pushing towards the lower end of that range. You look at the xlf pushing towards 23. I understand, i think the market right now, the selloff being started with when you look at some of the metals, pushed to the down side. The financials, absolutely, because they have performed extremely well, so there is profittaking. We have earnings tomorrow. We raised the question yesterday when we were talking about the dow downgrades at Goldman Sachs was cut. I think to a sell. Because of where the stocks have gone. And nobody on the desk said that now was the time to sell any of these financials. And i still dont think it is time to sell these financials. And i think you have to look longerterm. I think whats going on right now is healthy and i think its good. We have all complained for many years about the absence of volatility which really does not allow you to go out and achieve some rhythm in the marketplace. Economic uncertainty, policy uncertainty. Thats a good thing. Dispersion which has been low is going to move higher. Opportunities are going to be i welcome this volatility. I think its good. So you could do some hedging around the edges, have a longerterm perspective. Pete talks about financials. You mentioned the regionals. Take the regional etf, the kre. The regional etf still at the upper end of the range. Moved from 42 up to 56. Its at 54 right now. So were still at the top half of the range with a moment of truth coming. We have talked about playing the super bowl. Tomorrow we get to play the super bowl. A lot of bigname financial institutions. Kevin oleary, you said there were going to be crying eyes around some of the banks, specifically the regional ones we see getting obliterated today. Right. The truth is, and you know, 2 down is not a catastrophe. But its the beginning of a dose of reality. As you listen to trump and watch the campaign end and now the actual governance start, you realize, its going to take a long time before these regulations pass through any benefit to earnings. Particularly q4, q1 on regionals. Heres the bottom line. Regionals have really ugly Balance Sheets. They have got horrible Capital Requirements still there because of regulation. Theres nobody out there increasing their earnings estimates for 2017. And we had a lot of optimism. Look, i dont have a problem with the financial sector. But you want to own a Goldman SachsBalance Sheet, not some crappy little regional bank, which doesnt have any relief yet, and i think its going to correct much further than where it has. As you know, im on the record for the last 60 days, im short these regionals. I havent made any money yet, until it started today. I also think theres risk in the russell 2000. It had a great run because a lot of these small cap junky Balance Sheets, including energy, really got the 25 lift on the trump bump. But now youve got to pay the price, because nobody followed through the earnings bumps. I would be derisking, going for quality Balance Sheets on every mandate, because hold on kitty, were going to have volatility going forward. The derisking taking place in other parts of the market, too. Its not just the bank story. Its the one that we led with, with these big blue chip widely held down names. If you look every single day this week, whether its monday, p g and cocacola, wednesday with exxon and at t, now today disney and boeing. Whats going on . Let me just simplify the bank story first. Weve got the tenyear back down to 2. 31 . So number one, a gear to the tenyear. Number two, you have a steepening yield curve with 2. 6. 2. 31. So you see two things. The safe haven trade coming back into treasuries, when they should have gone back up, yields should have gone back up, particularly with the fed out there saying maybe well have three hikes. So you go to the downgrades. At this point i mean, there are individual businesses and individual industries. Do you see the pattern . No Growth Industries that had inflated multiples that should be coming off and also seeing a race to downgrade. So no analyst wants to be last. Research they want to get their names out there, so this is the way to do it. In terms of disney, thats not a research downgrade. If you take a look, its almost a ridiculous downgrade because youve got a fundamental analyst saying, my my riskfree rate, which right now in standard models is going to actually over 20year, which doesnt really exist, of 2. 89 , 2. 69 , i dont want to get too technical in terms of valuation models. If youre looking at your cost of capital, youve got a higher cost of capital. This he talk about that. But fundamental reason, too. Soft tb audience trends, ongoing erosi erosion, subscriber base. My view of disney, im not buying disney here. Its gone with the stocks moving up. Im not going to sell any seller. Im waiting for a better entry point. Espn is, i think, still atrophying a little bit. So many more viewing options for sports. Theyre going to sell you cant ignore the studio and disney. You cant ignore the studio. Were going to get to disney in a second. The broader story were trying to tell, youve got the street pulling the plug on some blue chip names. Sure do. And to me, scott im wondering whether investors should be doing the same thing. Two things that matter to me. Weve touched on some of these. Policy uncertainty. Lets think about this with regards to the financials. A lot of the financial thesis, deregulation. But note that in the first week and a half of the new congress, nobody has brought up deregulation or easing regulation on banks. What have they had. They have had their plate full with confirmations and the only thing discretionary they have done is to start taking down obamacare. So i think the market is looking at this and saying, whoa, maybe we got a little ahead of our skis on deregulating banks. Lets see what congress does. The other the second thing that is most important to me is earnings. And it really starts in earnest tomorrow, thankfully with the banks. Well get to see what ceos are saying in terms of the environment, whether there is any enforcement going on. And next week well get more diverse earnings. Thats where we really need the proof the earnings recession over the last two years is over. More so than that, we had a press conference yesterday which you would say was more reality tv, right, than president ial. And then you get the budget vote yesterday to remove obamacare. And its not what you would think by listening to how do we have this powerful republican conference. Exactly. Thats exactly right. You have 5148 with paul dissenting. Thats not an overwhelming majority. So youve got to be a little worried and i dont think its coincidental between those two events, the press conference and the vote, youve got the market down today. Because that 5148, that could be the other way very simply. I dont hear anybody talking about the dollar, you know. Yeah, well, i was going to actually get to the dollar. The dollar is incredibly important, one of the reasons why oil is up. Above 1200 for the first time but the dollar and these blue chip downgrades. The dollar down for the year so far. And kevin has got a few. My view might be a little bit different than kevins. We both could be right, both could be wrong. Thats how the market ultimately will play out. Kevin is 100 correct. If you dont like the financials, you dont like the russell 2000 index and thats the place exactly you want to attack. Also, to your point, if the dollar is going to correct with what its doing, boy, you dont like the russell 2000 index and the environment, as well. You go to petes gold and look at some of the energy names. Kevin . Heres the thing. We have this tax reform proposal, which if you really drill down, and i think this is really worth watching, if youre an owner of large cap stocks that have 48 of their earnings outside of america, thats basically where the s p big caps are right now, almost 50 . If these proposals get there through with this concept youre domestic, you dont get taxed on you input costs, but taxed at 30 , netnet, that drives up the dollar skyhigh. Thats on my radar screen. I dont want to get too technically complex. These proposals are trying to accommodate the vat tax that every other country has. Talk about canada, europe. They all tax value tax on transactions. And were trying to get out of that, and never impose it in america. Bottom line, its going to cause the dollar to go up. Youre not going to like the outcome of that in terms of how uncompetitive it makes america products. So im a little worried. I would rather see tax reform done without such manipulation around something called a border tax. I dont know what that was until 48 hours ago, and i dont like it. Lets jump to Michelle Carusocabrera with a news alert. More on Marine Le Pen. She was seen in trump tower and may be there in the grill eating with her team. But we now have a statement from Donald Trumps team, be sean spicer specifically, saying that Marine Le Pen is not meeting with donald trump or any member of the Transition Team today. So why she is eating in the grill at the trump tower at this point, is a mystery, scott. Maybe its those taco bowls he likes so much. The nike store right there. Is that the same place that vanity fair had not so nice things to say about it. Isnt that right, michelle . Thats right. Im sure a french woman would love to eat place so poorly recommended. Let us know what else you find. Thanks so much, michelle carusocabre carusocabrera. Back to disney, the analyst to dropped the hammer on the mouse house. Brian weiser joins us on the phone. Welcome back. Thanks for having me. I with one person on the phone calling it ridiculous. Do you want to defend it . I think the market is not accounting for risks in the Broader Market and that is going to hurt companies more broadly. Uncertainty should normally be considered a bad thing and anyone who thinks were going into more certain market rather than three months ago is well, thats not a view i would agree with. That said, i recognize it. We are not market strategists. We are not political analysts. Were just paying attention. And i think the opposite of not accounting for those uncertainties would be disingenuous for any analyst to not consider them in their price targets. Just to be clear, im saying its ridiculous as a research call. Youre making the call on rates there. The cost of capital. Youre making a call also basically on a discount rate and what their cost of capital is and the equity risk premium, the erp in terms of your call. What i read through all of your calls, not just focused on disney, but your entire universe. Thats absolutely correct. There is this is not a fundamental change. And, again, its not the kind of call that i think most analysts want to spend their time on. Because, again, i think most of our clients, Institutional Investors, come to us for to talk about the fundamentals. But, be again, if were going to be in the business of having price targets, which i think a lot of people still expect, certainly even Institutional Investors still want to hear where the stock is at the end of the year. If you dont incorporate a view. And a consistent view. As long as our process is consistent, you can look at our numbers and see where we are. So we reported gdp of 1. 5 , next two quarters, what happens to and the fed comes out next few meetings and says, you know what, we dont see any rate increases over the next year. Whats your disney price target going to then . Again, you know, its as the year changes and the cost of capital changes, our price targets change. Right . I mean, we could talk about the fundamentals. You know, i have a question for you. We should talk about fundamentals and we can do it with kevin oleary, a disney bull and long a stock. I am. I appreciate your information and your looksee at this stock. I have a basic question for you. Lets say i go with your recommendation and sell disney today and want to keep an allocation into content. Show me where i re deploy that capital. Where do i go . Fox is interesting, the one name, very positive about on a fundamental basis, and at a pure valuation basis. I think the sky turns action which i think a lot of investors are really concerned about, because of the leverage it will apply as well as the potential to pay more than they have bid so far, the regulatory issues. And suspending a buyback. I know thats concerning to a lot of investors. But there are a lot of real synergi synergies. This is not the same as time warner and at t which i think has very limited synergies, also still a buy, by the way. If you can get the price at t is offering and the deal goes through, thats do you think that deal goes through . I do. And, again, i think that the at the lower levels of government, i think you probably will get a lot of the optimism that a lot of investors are expecting at the ftc, the fcc, i think you will get more of the lets call it conventional orthodox republican appointees in a lot of places. So i do think that goes through. Despite the rhetoric at the top. When it comes to fundamentally driven value, i think when i look at what sky is doing, and trying to develop distribution platforms in europe, above and beyond the satellitedelivered properties and what fox wants to do in the united states, certainly where they have put a lot of resources and time and effort, whether fox wants to apply sky and appoint a parallel tool for direct consumer platforms, there is a lot of synergy there. Sky by itself, both sports rights and nonsports alike. They want to compete with netflix throughout northern europe. I think you look at their content, a good shot at doing so. So having a common content packaging business between those two is i feel a lot of value created there. So very optimistic about fox. Im going to run. Thanks for your time today. Brian weiser. Lets kick around disney. What point do you want to make . At 85, which is his price target, that would put the multiple on this years earnings somewhere around 14 to 15 times, below any multiple disney has traded at in the last five years. I wanted to see him defend, going to a low multiple, especially one in the studio, which none of us talked about, doing so well, whether its whatever iteration of Marvel Comics coming out or the star wars franchise. I dont see it happening. Is that in the stock, is that the reason the stock is up at 107 . I think it is. You know whats also in the stock, scottie, everything he was saying about tv viewership. I just dont know how you get to that im going to call it at least for five years, passed, historic low multiple on disney. Kevin asked a question in terms of portfolio management. You take disney out, what do you put into it . To where it is now. A lot of Portfolio Managers tried that game. The issue you have going forward, is if disney continues to go higher and now you have moved out of it, you created an environment where disney goes to 125, 130, just on that process alone. Thats the scenario, far more likely. Thats the scenario. Also, when he talks, and hes not on the phone with us right now, so its tough to address this. But when he talks about the absence of certainty and surrounding the succession, thats a finite moment. Thats going to happen. Youre going to get an answer to that at some point. Not the only one raising that issue. The guy to my right, pete najarian, talked about that as being one of the reasons why he has been apprehensive over disney, over time, is because of the lack of clarity on that. You know i doubled up not only got in there in the 90s, but added to it because of the optimism. Youve been thinking about it. Absolutely. Is and the other thing to consider right now, how about jpmorgan . Today, by the way. Today, the same day. By the way, if you go back three or four days, thats where disney was in the high point in the last quarter. And now all of a sudden yesterday you hit the highs. Whats going on right now, this is an analyst who has been wrong, lets be honest. Hes had this thing at a hold. Now its above him. So now hes trying to double up with the sell on it right now. I want the analysts ahead of the curve. And i think there are multiple analysts out there right now ahead of the curve. And the Healthy Trends that jpmorgan speaks of, the reason i continue to hold on. Lets move to another dow component now being thrown into the doghouse. And it is apple. Shares are lower following comments by investor, peter thiel who said the age of apple is over. Hes right. Look at the latest announcement. Theyre going to get into original content. Who hasnt, right . I mean, even the individuals have gotten into original content on youtube. Their own channels. Apple is late to everything. The Second Generation of theyve always been late to everything, steve. I think thats the one thing that no one picks up on. When you look at what steven jobs did, he made everything better. They have always been late. They have always been last the iphone was new. Let me tell you something how about this. How about in china, they got 80 of the highend market right now. And china is they didnt come up with the mobile phone first. They just came out with the best. The best, right. And always make mobile phone was much better. Technology was cuttingedge. They have not grown their Service Business really . They havent . 11 , 14 , 20 , 24 . They have not grown the Service Business the Service Business alone would be one of the fortune 500, one of the top numbers. The Service Business extended past their user base. So wrong. A billion users. I dont know what youre not seeing in this stock. But its pretty interesting. Im looking at the stock there is a reason why the stock goes higher. Im looking at the lack of innovation. One quarter in which phone sales declined. When they report, i bet you see a bumpup, the iphone 8. Thats not the best part of the stock. Thiel says we know what a smartphone looks like and does. Not the fault of tim cook, but not an area where there will be any more innovation. The apps, the watch is a bust. The watch does nothing. Fit bit does more. So you have these siycophants right here that love it and its great. Otherwise, no innovation. Do i have to grow a beard to say that . The phones lag in technology. Lg, samsung, had better technology, better camera, waterproof. They have pissed customers off with the jack, with the buds. They couldnt even get ear buds out in a good time. Theyve got this cash selling like crazy. They go buy scott, youve got an iphone right here, ipad right here, and hes like everybody else. Still buy this stuff and use it. If youre buying it and youre using it, shouldnt you want to use that . Its a peter lynch. You buy the stocks you know. They had to replace tim cook is throwing ate iphone at the screen right now at your face. I cant believe what im hearing. Replaced three times, because it kept breaking. I couldnt get email, couldnt get texts. Were going to be battling on this. I love the emotion when we talk about apple, because this is why you make a market. Youve got half the guys not liking it. Let me tell you why im still long the stock. Taking it down to one thing. Service business is an 80 gross margin business. Let me give you why im staying long. Still huge. No matter when you try to buy one, you have to wait. This is an application product that really builds service. In canada. Were advancing no, not so. I was just over in geneva. You know what they use iphone 7 pluses for . Im studying in a studio that costs a half Million Dollars talking to you. You can take an app, sticking on a 4k version, put it on a tripod and get the same broadcast, highdef you get on any 30, 40 camera. Not iphones. Wait a second. That is an enterprise business, and the margins on that are huge, because in order to do that, youve got to buy a ton more memory from apple. Nobody else you can buy that memory from. Thats not true. Cnbc uses other phones to do it. Nobody wants those phones. Outside dubai. Sales are down the numbers speak. Cheaper phones. Okay. If we Grow Services on this stock, if they continue to grow and get up to 20 and 30 in the next three years, youll be crying because you dont own a product and a company thats building huge cash flows. I would be in the nba. If i were 68. No, he wouldnt. No youre making me laugh. My jersey has been hanging from the rafters. The most thing ive heard you all talk about right now is and the retention rate for this company. Excellent. Fantastic. Sticky. Okay . Over 90 . So what does that allow you to do if youre sitting ace ceo . It buys you time. The cash overseas, hopefully some favorable policies to bring it back over. They sold one 1 million watches in the third quarter. They have a record, by the way. Its a record. I think its a bust relative to what apple is. By the way, what is a bust still a huge number. Thats the point youre making. Tim cook didnt get beaten down. Im with you. Im refuting the fact. Heres what im saying youre right its a bust relative to what iphone sales have been. Its a bust because you put an unrealistic number in the sky. Of what the company has done in the past. You cant get your polls. Fitbit, you look at it, you get it. George jettison come back to one final hurry up. When you have 90 retention, your customers are willing to wait for your next product. And you know what theyre also willing to do . Pay for it. Pricing power is the most important dynamic in this market right now. There was no other company that has that like apple does. Loyalty. And one day the Wireless Companies will wake up and say, like other industries and say, were no longer subsidizing it. Of we will subsidize a cheaper phone and you watch what happens with that point. And as far as the cash coming back what happened to the last point and one more second . I dont know where youre going. And as far as cash coming back, they have 25 bits. Hes yelling at a stock sitting im not saying short it. Im not buying it. Its perpetually a 12 multiple stock, maybe. Thats it. And the final point, scott. One thing five words. Blackberry, zenith, rca. Ive got two words for you, okay . Shut it wasnt those two. Im thinking that. Shaving cream. Shaving cream. The other one im just going to keep that up here. Kevin is kevin oleary leaving or staying . He can stay. Staying the next block . Kevin, thanks for joining us. Night, kevin. See you soon. All right. Lots more ahead on halftime report. Weve already talked about this weeks big down downgrades. Seven and counting. One big player under attack, just picked up three upgrades today. Thats next. Before the break, our partners at kensho say the nasdaq is the top index in the week before an inauguration. Up 78 of the time since Ronald Reagans 1981 inaugural with the average of. 8 . In the week after inauguration, the nasdaq returns. 99 . And has been up four out of five inaugural years. The dow,. 96 and the s p just better than 1 . But theyre up only twothirds of the time in the week a new president takes his oath. More halftime with scott wapner and the team coming up. Ra hiboutradi de wwhererradede tplhathof r ra nolipoant to mobs llmo, i iitobyleplhathof r the drug industry is a disaster. They are getting away with murder. President elect donald trump yesterday during his news conference. Merck is higher today on news the drug maker could be on the math for a new fda approval for its lung cancer treatment. Youve got three upgrades on merck today. Morgan stanley goes overweight. Guggenheim buy, piper overweight. Price targets raining from 70 to 72 bucks. I like the idea of what potentially every analyst hit on the same thing. The potential for 2017, 18 and to 19. One went to 2020. So when youve got something that people are that excited about, scott, in terms of whats the pipeline. We talk about pipelines all of the time. If this thing actually can give them what they expect, the stock remains very cheap right here in the middle to low 60s. Very cheap. 16 times earnings. 3 dividend yield. They have stolen from bristolmyers. The lead drug in that oncology. And merck has all the momentum right now. A great scientific product. Whats not to love about this . I dont know. President elect called out the industry yet again yesterday. At 16 times, ill take that risk. Thats a risk worth taking at 16 times and a 3 dividend yield. I talked about this with jim cramer monday. 13 of the s p is health care. Youre talking about large Balance Sheet type of phrma names that should be okay. If you want to diversify you have to be in merck and pfizer . No, you can be wrinkles wh e elsewhere. Whether a strike theyre probably less in the target and that has been my strategy, to be in those type of names, and its worked well. But you have to be in health care in some capacity. 13 of the index brings you there. Youre going to get, you know, the samer rattling every so often. Diversify the strategy away from names that appear to be most vulnerable. Biotechs. So at first we couldnt govern by tweet. Now were not governing by press conference. And pretty soon were not going to govern by legislation. The facts are, the Drug Companies do not have to negotiate price with largest buyer of prescription drugs in the world. We have seen the financials go over time from whatever, 16 or 18 of the s p, down to 9 or 10 mercedes. I just made those numbers up. But i think its pretty accurate. So unfortunately, josh isnt here, he with know them exactly. Are you getting to a point here . So the point is that, yes, ill go slower so you can catch on. The point is that theyre right in the target of trump. And i think hes right. They should have to negotiate. And it will happen. So i dont have to own the Drug Companies. I agree, merck is very cheap at this level and i agree the pipeline is there. There is risk to the pipeline as we saw before with bristol and others. I would like to own it, but im going to wait. Diagnostics and advises. Were going to phil lebeau. The stock way off its lows now. Hey, phil. Hey, scott. Just got off the Conference Call with sergio marshion. I have seen him when hes not happy. He is steaming mad. He was vehement in denying the allegations from the Environmental Protection agency. Before we get into the accusations. We should point out a piece of news. Sergio marque marquetion. This is not an epa accusation and investigation. The doj is likely working on a case, as well. As to these accusations from the Environmental Protection agency, comes down to this. 100,000 diesel vehicles that are being accused here of having incorrect emissions. 104,000, to be correct. 2014 to 2016 Jeep Grand Cherokee pickups. Essentially what the epa is saying, there is software in these vehicles that allows the emissions to be different from testing than in realworld conditions. Similar, but not exactly the same as what we heard with the vw case. Here is sergio marshion saying this is nothing like vw and saying the epa is way wrong on this case. There was never any intent and there has never been any intent of creating conditions that were designed to defeat the testing process. This is an absolute nonsense. Anybody who draws a parallel between us and vw is illegal material. Listen to that. Smoking illegal materials. He went on later in the Conference Call to say he believes the epa is essentially throwing fee at chrysler under the bus, and ease confident that as his team works with the epa team of the upcoming trump administration, they will be able to prove that these are not defeat devices when it comes to these diesel models and the vehicles are in compliance with the regulations that are out there. As you take a look at shares of Fiat Chrysler, down more than today. What you have here are the questions of compliance between Fiat Chrysler and the epa, negotiating to are a long time. It has now bubbled up and thats part of what has Sergio Marchionne so upset today, saying it went from discussion phase to filing charges against the company, charges that, again, he says are not true. Guys, back to you. The stock phil, i know you cant see from where you are, still down 12 . Phil, thanks. Phil lebeau on the very Important News that all over. Our next guest is calling for a correction coming. Plus, the wells fargo retail analyst saying the stock is uninvestable. Back in two minutes. Rx hybd. Geo ,0usr s. Lus welcome in, another voice to our market conversation. Someone calling for a correction. Nearly gilbert, good to see you again. Happy new year. Welcome back. Thanks, good to be back. What is wrong with the market . Why do you think a correction is coming . When were forecasting the market, we think about two main things. One is, what is the underlying Macro Economic reality. Then we want to understand what is investors perception of the reality. And if its the case that the reality may even be good, the future may be right, but investors are expecting for the future to be bright and they have already discounted that the current prices, then even if things go as well as expected, theres really nowhere else for prices to go. So you say the optimism over the trump agenda being pro growth, pro market, et cetera, is already in the market. Thats right. When we look at certain sentiment indicators, for example, surveys of the writers of Investment News letters, were seeing readings of bow ligsists, and that suggests if the agenda goes well, a lot of the trading thats to be done behind that is already in place. So everything youre saying is factually correct, particularly things like the sentiment survey. However, corrections are notoriously difficult at times. I dont try to do it. If we saw a recession coming, try to get ahead. How do you handle the risk youre calling for this correction, it doesnt happen, the market rally and maybe youre not fully invested. How do you deal with that . Thats right, jim. One is, lets say you cant go short, really focused on beating a long benchmark. Then you want to look at where are the risks in the benchmark that have gotten stretched, and just try to match it. You were talking betop of the hour about financial and the way they have reflected political risks not only related to changes in regulation but rising Interest Rates. If we look a benchmark with 15 financials, rather than saying lets not hold any financials or lets go allin, well see lets look like the benchmark but focus on the stocks we like. We also run hedge funds where we can go short and in that saying we want to be long and short financials in equal amounts. Were not betting on what the direction of the political outcome, were betting on our own ability as stockpickers to do well. So what type of correction are you looking for, and when we do get it, assuming we do, would you be a buyer . Were thinking about a correction in the 10 range. A big correction. Yes. So in our strategies where we have the option to hold some directional market risk or none at all, were now at 0 market risk, completely hedged. Is this happening soon in your estimation or what . And whats the trigger . Were really the most negative thing for us is a sentiment and does tend to be a shorterterm signal. If there were a correction for us to become more positive is not just a change in sentiment which does come with a pullback in the market but also some changes in the macro environment. Weve got the fed increasing rates, weve got Interest Rates rising, even despite the recent pullback, corporations paying more to borrow, a headwind for earnings. Earnings momentum in the u. S. Not with a sign of turnaround. Even if there is a pullback, we want to see some evidence that the underlying Macro Economic reality is improving, as well. What do you make of the fact no one seems to be going in right now as it relates to the vix and volatility and its so cheap . Its below 12, be down 100 today. Does not seem to be appreciating. Thats right. Well, this is exactly what were talking about. There are so youre saying its complacency . We talked about the sentiment surveys. Youre talking about the vix. Theyre all telling us the same thing. Investors arent showing the kind of caution you would expect, even in the context of a pullback like were seeing today. Good to see you again. Thank you. The co founder and portfolio manager. Dow 30. Merck leading the way, along with verizon. Disney the drag. The downgrade we discussed at the top of the show. Speaking of the show, were back right after this. And theyre absolutely right. They say that its hot. When really, its scorching. And while some may say the desert is desolate. We prefer secluded. What is the desert . Its absolutely what you need right now. Absolutely scottsdale. Welcome back to halftime report. Shares of drug maker eli lilly moving higher on a Favorable Court decision regarding a closely watched patent case. The ruling says eli lilly may block one of the totp selling drugs for a certain type of lung cancer. Yeartodate down 4 over the last 12 months. More news coming up right after the break. Keep it here on halftime report. Wng in i. Hi tffthreghuryo f y t. R wi f e thd,sonsn ttto ymo. Welcome back. A rough month for the Retail Sector and now wells fargo thinks the pain is far from over. They say the sector is close to uninvestable in the nearterm. Lots bre in ike borachow. Welcome. You say that at a conference this week, quote, Investors Sentiment was as bad as we have seen since 08. Yeah. Its a little disappointing. Look, we came into 2016 with a great set justify for holiday. We had a disastrous 15. We had more favorable weather. Inventories the best in four years. Decent healthy consumer. And 25 have given us their holiday updates and 19 of them missed. So at the end of the day, youve got the backdrop of a really choppy fundamentals when they should be improving. And you layer on border tax questions and whats going to happen to these companies as they import all of their product and it makes it difficult for investors to get comfortable on the majority of this base, i think. I dont know how many of your names are in the full universe but you say the only ones worth making a investment are lulu, tjx, burlington and ulta thats it . Those are the names that are momentum heading into holiday. So i think the key thing you saw for holiday was businesses that were struggling because compares are easy. Compares dont lead to easy compares dont lead to results. So the problem with that, you start to take the word cyclical and replace dit with the word secular, mainly in the mall and that creates valuations that continue to impress and it makes investors that impress. Hey, ike, jim. I totally agree with you. The sentiment in the space is horrible now. But this time last year, the sentiment almost as bleak, probably was as bleak, setting up for a run in the spring. Is there a term of seasonality . Its been beyond just the last year where people sell between black friday and christmas. That seasonality proven time and time again. Is it a season and a buying opportunity . It could be. To be fair, looking at myspace, underperformed the s p last year, first time that happened since 2007. Again, remember, this is late cycle retail. Eight, nine years out of a recession, a lot of the companies that were best of breed in super high quality businesses, which they are, these are organic growth rates the lowest since 2008 and 2009. To be fair, look, things out there are not great. A lot of the great businesses, beating numbers for years, things need to rebase and a lot of the guys are going to take some time to figure it out. Sobering view, for sure. Thanks for the time, ike. Thank you. Senior analyst over at wells. A quick comment, is it really that bad . Yes, it is. I think right now apparel has an opportunity to work well for you in a portfolio. Brick and mortar having tremendous problems. Sears is the post child for it. Jcpenney closing a thousand stores. Brick and mortar in trouble. Just a thousand stores, by the way. The way to play the retail, to me, is the transportation, the transportation, thats ups, fedex, amazon, or the apparel itself. Okay. More halftime right after this. Welcome back to the halftime report, this is the futures now, traders, gold touching a sevenweek high today, break iing through the turks mark. Gold rallying against a weakening u. S. Dollar. What else is pushing us higher today . Well, its started because three weeks ago is when i bought it, the incoming commerce secretary rail against the fedss plan to tighten rates and rail against the strents of the dollar. Thats still in play. Yesterdays speech did not help. There was a little bit of worry about Donald Trumps relationship with the Intelligence Community and the fact that hes talking about terrorists more than hes talking about a Good Business environment. I still like gold at these levels. Brian, the charts for us, where do you see gold headed from here . A close over 1200 is key, right . It definitely is. What you see in gold is a trend. We broke down after the election when the dollar strengthened, Interest Rates went higher. Now gold is moving higher. We closed above 1200, and it looks like the breakdown level, the support we had, we may go retest that 1275 level, but overall, sell into any major rallies at 12001275. Head winds ahead for gold and dollar holding above 100 is providing head wind for gold. Back to the trend of the upside for gold at the 1275 level. All right. For more, go to cnbc. Com. We have a big show, mark eibel, what he thinks about honeymoon period weve been seeing in stocks may be fading, and todd colvin is discussing where he sees a unique buying opportunity. More halftime after the break. Y ne . Ga. Oh whst thget ppt omthinsorougomfd ndreonpony oh ohon matpp cnk. D thoutel . Th re llde c. Did d t whsont get ppt omthinsorougomfd were back. Were going around the horn for final trades. All right, ill start it off. We talk about gold, and just a couple weeks ago, joe asked about silver. The slv hit the other day on january 6th, huge upside buying in march. 24,000 on one, and 20,000 on the other. April 16 puts, aggressive. Whats it mean in it all means bullish, the bummishness continues, and look for the slv higher m im in the trade from the calls, own the calls, and well see where it goes, but its a ride. Gold today was above 1200. Gold, too, the gdx, unusual as well. Active. More safe haven. Gold. I got bva. Three quarters of the desk, guys making money in financials who own is, and they reported tomorrow, so im staying with bma. Who owns it that doesnt . Oh, theres somebody that doesnt . I have citigroup. They are meaningfully different . No, no, no, i didnt know it was you. Well do a blind taste test. Lets go. Time warner has reached maximumpessimism. Ups, on the pull back, buy it. Thats all for us. Happy thursday, heres what we are watching at this hour, the stocks with the worst day of the year, what to do with your money straight ahead. A busy day on capitol hill, hearings, tax reform, obamacare, and taco bell on a hiring binge. Prepare for the naked cahlupa, america. Well explain that. Power lunch starts right now. Welcome to power lunch, everybody, im tyler