Transcripts For CNBC Fast Money Halftime Report 20171117 : v

More turbulent if not volatile period for stocks or yet another blip on the road higher . I think you have to look at it two separate ways yeah, the seasonal patterns which will take you higher into year end i believe, but whats added that element of volatility is clearly the tax plan. If its going to happen, its not. The market trades up and down on that, and my personal view is that that volatility will persist. They gave a christmas deadline for getting it done. I dont think it happens so these are buying opportunities that we saw with tech, alibaba, for example you have an opportunity to buy them down, and i still think that the underlying trends specific to these companies is so powerful thats when you want to get the buy. We mentioned this quiet correction, josh, that doesnt seem to be getting much attention at all 184 companies out of the s p 500 are in correction territory or worse. 36 of the index. Where i come from we call that rotation, and let me give you something that may have been missed in the conversation all week just as the russell 2000 was starting to get some momentum to the downside, this week it had a pretty good bounce, up 1. 2 on the week, and thats with the s p up only. 05 right now thats an example of people going out and finding value elsewhere and the s p taking a little bit of a pause. This is precisely what you want to see give you something else. Take a look at the xrt, the Retail Sector that cant get arrested meanwhile, the best week of the year for the retail index, up 3. 3 a lot of the individual charts still look like death, but youve got to start somewhere. Now lets take a look at apple apple lost 2. 5 this week. What did the xlk do, it went up regardless, so i think its too you have to to call this something anything other than whats buoyed us all year which is a very healthy rotation, some of the laggards getting some love and big winners taking a pause and amazon pennies from an alltime high,ette, et cetera, on down the list. Tom lee, why dont you answer the question in terms of youve had some turn lengths this week. People got a little bit uneasy we had a big snapback yesterday. How are we going to look back at this week in the stock market . I kind of agree with both steve and josh that, one, the seasonals are probably the most important thing to think about until the end of the year because, look, unless the fed makes some announcement before the end of the year, Central Banks arent really changing their stance so you think the fed is going to raise rates next month, right . Trow, but its been well communicated, so unless theres a real abrupt change in Monetary Policy i think its positive seasonals, but i think on the margin the one thing that has changed is credit markets arent rallying as strong as they were most of the year so i think thats the one thing that were watching on the margin. You think the movement is in high yield are concerning, more so than people are maybe focusing on . Because it has been a topic of conversation certainly this week and last. Thats right. Well, you know, for most of this year high yield has been rallying relentlessly, and european high yields spent six weeks where the yield was below the u. S. Tenyear so its unprecedented how much the european high yield rallied. In just the last two weeks the selloff in the european high yield is a four standard deviation move so its got like less than half a percent of time its happened. The moves were august 2011 and september 2014 so they really historically signal markets starting to derisk. But you have to look at that where its happening and those occurring specific. Specific to a couple of sectors. Right, and telecom in particular, and altise really levered up to buy cablevision and Everything Else so they are having issues there. So youre saying no concerns there . I dont have a concern. High yields affecting equities. I might add a little nuance to that. The three sectors that have led the high yields down, healthcare, staples and media. Healthcare and staples have been a bigger drag than media its interesting, because this is only one month in if you look back in mid2015, that selloff initially was led by energy, materials and industrials, and that was a pretty good signal to avoid those. Dont you think people are looking for something to talk about in the absence of any kind of volatility or any kind of major developments so people seize on this hiccup in high yield that really hasnt meant much in real terms dont you think theres some element of that right now in. Yeah, absolutely. One, its too early to say that high yield is nothing more than just a ripple because its a small market, but its important because, you know, basically 98 of the time high yield in equities in moving the same direction, rarely designingnized so the lack of sink nation is thats a good word, hiccup. Whether its hiccup or fullblown. It could get worse. What are you talking about . Theres no other macro indicators here that are really saying that youre in danger you know, you look at where gold prices are theres no spike there you look at volatility it crept above 12 early this week and now its well below 12. The tenyear really isnt doing anything i mean, this high yield market and steve touched on this, not just altise, the blowup of the sprint tmobile deal verizon and at t with the pricing that they are having its idiosyncratic, not global across the board. Earlier this week we were asking the question and rightfully so people were beginning to think that the question, again, as to whether were on the cusp of a correction of some kind of magnitude of anything substantial, much more than weve had in the last several months at least, and then we had a big snap back yesterday, so it leaves us on a friday to make sense of whats happened in this week and wonder if its the the forecasting of whats to lie ahead. More volatility, more turbulence or not. And i think, you know, from a more secular perspective, everything thats been in place remains in place thats Global Economic moment mum accelerating, lower inflation, supportive policy, right . That still exists, but weve moved through Third Quarter earnings and now were into an area where macro news matters, and i think you have a number of things on the headline front that can move markets. Steve talks about tax reform and how quickly that gets done and implemented. We have a new fed chairman, while hes going to be dovish clearly, his Communications Style might be slightly different, and then as we move into 18 we have earnings comps that are going to be more difficult, so i think thats really likely that we see a downshift in returns and a pickup in volatility with the same so youre seeing some things rights now that tell you that everything from a macro per spebive remains in place however, theres some subcurrents out thereto. But youre not worried until 18, right i agree with him. Think seasonally this is a good time. Okay. We have, what, six would exleft in the year, so, yeah, seasonally it sets up nicely, historically. Right, so the setup for positioning is this. You would like to see rotations into fundamental sectors, cyclical sectors like energy, financials, but i think thats a little too early for that because youre going to have yearend tax selling that lets a lot of those sectors have a tough time catching up right now. I think when you go into next year, i read some of your stuff, tomorrow, and i think youll want to seat setup of rotating into that next yore and then maybe staying in technology but maybe differently, old world technology, not necessary lit f. A. N. G. S. Goldman has the top ten themes and trades for 2018, and its far from let say america first. Its almost exclusively away from the u. S. , talking about risks that are here but also a heavy lean on emerging markets where theres more room to grow than in the u. S. Markets. Thats the reap for the bias. As we were going into 2017 everybody was talking about america first, emphasized small caps, dollar will gun, you want domestically Oriented Companies and it turned out to be the opposite case so now youve had the huge rallies in overseas markets. There are markets up 40 this year, 50 there. Ren tire regional indices that are up 25 , 30 so now, of course, people are focused again on the idea that you can make money outside of american stocks, and thats a healthy thing, but i do think that when they came up with these lists what have to watch for next year what, we think is going to happen, a lot of that is extrap late whats happening right now. The central tenet of that though is were they are two to three years behind us in terms of Monetary Policy and profit recovery. I think its more developed than it is emerging right. Isnt there more room to go arguably in their market 100 , of course there is. We agree go global. Its just a question of where, and i think the eurozone is where we find the most opportunity. The authors of this particular piece are mostly the International Goldman sachs Asset Management Research Analysts yes, there are some u. S. Analysts theres nine different authors of this piece. Im not saying that they are wrong. Let me tell you why they are right. It shouldnt be surprising that they came out with this international piece. Let me tell you why you can do just as well in the u. S s p put out their report card for Third Quarter earnings, 90 of companies reported. The average Earnings Growth was 6. 1 and Revenue Growth 5. 8 however, internationally, companies in the s p have more than 50 of their earnings or revenue outside of the s p, they grew 13. 4 and so versus Domestic Companies growing 2. 1 and 4. 2 so thats where the growth has been. I think the dollar continues to weaken as goldman said because youll have draghi probably leave the leave there at some point, number one. Number two, they have got in to start tightening. Supportive of this, too im sorry, weve got a weaker dollar because of the tax plan. Right. So supportive of this, if you look at valuations, valuations in the u. S. Are a little stretched. Grant, not given this growth anyone flakes paradigm however, Global Equities trade in line with their historical averages from a valuation perspective so the setup is nice. What do we make of the fact that the russell has sort of disconnected itself from the other averages of late in a month the russell is down nearly 1 whereas the dow is up 1. 5 , the nasdaq has outperformed. Weve looked at, that and it turns out it happens all the time, so theres nothing particularly abnormal about a divergence between small caps and large caps it happens hat market tons, market bottoms and market middles. I think its instructive to look back at the 1415 period had you massive underperformance and i think almost a 30 drawdown for the russell 2000 and the s p didnt budge that could just as easily go the other way, and even for a prolonged period could you have large caps take a pause and small caps take the lead i think thats very important we dont focus on one month. I hear you. I could also say the same thing about financial. Right. If people are looking for a potential red flag within the market or the real, it is the area of small caps, financials are basically flat. So heres the thing when you think about where large caps do well typically its late psych. I think investors are telling were later in the cycle than we may actually be. We feel like were more midcycle so you do get some tax reform and see the pickup in m a activity, i think smallcap stocks will do well. Were neutral on the u. S. And if these things happen, you have to pivot that direction. Tom i think part of the reason the rouse el hasnt rallied is a lot of the rally this year is f. A. N. G. , right . Its been largecap secular growth stocks, and they have left Everything Else in the growth index in the dust its left value in the dust, and, you know, its going to outperform the russell, but, yeah, i agreement i dont think it necessarily has nefarious implications for the market broadly. I think small caps can do well because they will track aaa spread they can do well and this year they are not tracking emerging markets. Does leadership continue to lead in 2018 i mean, is tech going to continue to be the place to be, not only largecap growth like the f. A. N. G. S but the other names, the ciscos, microsofts, the intells . I think one of the big changes next yearsy think f. A. N. G. Is going to really disappoint investors i think that, you know, weve got really stretch multiples so we like f. A. N. G. As a fundamental story, but i think valuations have gotten stretched. Some of those f. A. N. G. Stocks are still cheap. Some of them are. True, but believe it or not, since 2006, you only you only outperform the market if you bought f. A. N. G. In odd years so f. A. N. G. Doesnt work in the even years. If we forget that though. The last time you said that on our show, i mean, the tweets were so fast and furious surely your thesis on 2018 has much more to do with fundamentals than the calendar. Yes, but i think next year it may make sense that investors, you know, pause and say, hey, look at valuations and global growth. And why should that change though i mean, valuations, if youre a value person, valuations have been stretched for a while so the question is unless they if they dont disappoint in terms of their forecast, in terms of street consensus, do you think the stock still disappoints . I think theres yes. I think its going to be theres more to that story. Theres a rotation to fundamentals and active management. Yeah. If we see, that f. A. N. G. Will disappoint simply because of the construction of the indices. Or you think about labor markets are going to get tight, and they have been tightening, but if inflation picks up, everyone is going to start thinking about automation play so its more old tech and less f. A. N. G. But youre not going to want to own the Consumer Companies because you cant bushy know, the innovation we see in tech and google and so forth, thats there. Yes. Labor is not issue. Yeah, steve just to add to the point i think techs weight in the index five years from now will be at a alltime roar. If the previous peak was 24, it gets to 40 but its not led by f. A. N. G. Next year. Tom, you said something that was really quick about inflation. Really quick. With Wage Inflation if that actually comes up that would catch everybody by surprise, and this 18 times multiple on the s p 500 would be 16. 5 in a big hurry, and that would rerate stocks. Look at the nfib survey labor quality is about to take over taxes and regulation has the number one issue for Small Business the last time it happened was 98, and you youve got to watch that. Two years of will Wage Inflation. The republican tax plan crossing two key hurdles yesterday, passing the house and making it out of the Senate Finance commit, but biggest challenge still lies ahead ylan mui is live in washington and waiting on pins and needles to see what happens next. Reporter scott, washington does not normally move this fast not only did the house pass its tax bill with a very comfortable margin, but senate also got its own plan out of committee a day ahead of schedule. Now, republicans know that they are racing against the clock here to try to get a tax bill on the president s desk before christmas, and the treasury secretary Steve Mnuchin was on cnbc this morning hammering home that deadline. Yesterday was obviously a huge day in terms of having the house pass the bill. Thats a great move forward. Were going have the center as soon as they get back from thanksgiving, vote on the bill, and and our expectation it will go to conference right away and we have every reason to think well get it to the president s desk before christmas for him to sign. So the ball is in the senates court here. Majority leader Mitch Mcconnell did confirm his chamber will bring this up after thanksgiving calling this must pass legislation. Scott, republicans really see this has their best chance to get some points on the board before they have to head into an election year. Back over to you. Thanks so much. Ylan mui in d. C. With the latest tom lee . How much of this tax plan is already in the market . Its hard to tell i mean, i think our clients unequivocally believe its important and positive for markets because its going to reset the level of earnings higher what i think isnt discounted is whether or not tax policy is actually good for markets. So, i mean, i think that theres a belief that its positive, but, you know, whether its good policy. Good for markets or good for the economy . Or it may be good for peoples wallet, right i think people tent tend to view a tax cut as resetting a higher base of earnings so it will push stock prices higher, but does it actually improve future growth rates . I think thats the uncertainty. The stock market is not going to wait around for future quarters worth of gdp to make its decision on whether its going higher or not. Its going to make the bet much earlier on. Thats right. I might even say its going to be help until for us to see if and when the plan is passed, how markets react, and i and i suspect that theres going to be winners and losers established i mean, one, youre allocating capital across the board, right . Youre giving cash to every sector ive think its going to create negative return for some industries and secondly itsration the aftertax cost to debt so im curious to see if highly levered industries start to weaken. This may seem like a silly question and if it is, whatever. Is there any chance that theres a sell on the news i was just thinking that exact thing. Theres a great chance that that could be an interim top in the market not the day they pass it but within a week because you have a lot of people for no reason that i can discern trade on these types of birks you know, Upcoming Events as though they are somehow game and so, yeah. And then you have to work through it what happens in the states, new york, new jersey, california its not a positive for states where the states where quite frankly a lot of wealth is held its not a positive. Broadly speaking as it relates to the s p, its an unambiguous positive for s p profits. It just depends on degree. You dont get anything our forecast is for 8 profit greet. You get something thats 11, a best Retail Sector<\/a> that cant get arrested meanwhile, the best week of the year for the retail index, up 3. 3 a lot of the individual charts still look like death, but youve got to start somewhere. Now lets take a look at apple apple lost 2. 5 this week. What did the xlk do, it went up regardless, so i think its too you have to to call this something anything other than whats buoyed us all year which is a very healthy rotation, some of the laggards getting some love and big winners taking a pause and amazon pennies from an alltime high,ette, et cetera, on down the list. Tom lee, why dont you answer the question in terms of youve had some turn lengths this week. People got a little bit uneasy we had a big snapback yesterday. How are we going to look back at this week in the stock market . I kind of agree with both steve and josh that, one, the seasonals are probably the most important thing to think about until the end of the year because, look, unless the fed makes some announcement before the end of the year, Central Banks<\/a> arent really changing their stance so you think the fed is going to raise rates next month, right . Trow, but its been well communicated, so unless theres a real abrupt change in Monetary Policy<\/a> i think its positive seasonals, but i think on the margin the one thing that has changed is credit markets arent rallying as strong as they were most of the year so i think thats the one thing that were watching on the margin. You think the movement is in high yield are concerning, more so than people are maybe focusing on . Because it has been a topic of conversation certainly this week and last. Thats right. Well, you know, for most of this year high yield has been rallying relentlessly, and european high yields spent six weeks where the yield was below the u. S. Tenyear so its unprecedented how much the european high yield rallied. In just the last two weeks the selloff in the european high yield is a four standard deviation move so its got like less than half a percent of time its happened. The moves were august 2011 and september 2014 so they really historically signal markets starting to derisk. But you have to look at that where its happening and those occurring specific. Specific to a couple of sectors. Right, and telecom in particular, and altise really levered up to buy cablevision and Everything Else<\/a> so they are having issues there. So youre saying no concerns there . I dont have a concern. High yields affecting equities. I might add a little nuance to that. The three sectors that have led the high yields down, healthcare, staples and media. Healthcare and staples have been a bigger drag than media its interesting, because this is only one month in if you look back in mid2015, that selloff initially was led by energy, materials and industrials, and that was a pretty good signal to avoid those. Dont you think people are looking for something to talk about in the absence of any kind of volatility or any kind of major developments so people seize on this hiccup in high yield that really hasnt meant much in real terms dont you think theres some element of that right now in. Yeah, absolutely. One, its too early to say that high yield is nothing more than just a ripple because its a small market, but its important because, you know, basically 98 of the time high yield in equities in moving the same direction, rarely designingnized so the lack of sink nation is thats a good word, hiccup. Whether its hiccup or fullblown. It could get worse. What are you talking about . Theres no other macro indicators here that are really saying that youre in danger you know, you look at where gold prices are theres no spike there you look at volatility it crept above 12 early this week and now its well below 12. The tenyear really isnt doing anything i mean, this high yield market and steve touched on this, not just altise, the blowup of the sprint tmobile deal verizon and at t with the pricing that they are having its idiosyncratic, not global across the board. Earlier this week we were asking the question and rightfully so people were beginning to think that the question, again, as to whether were on the cusp of a correction of some kind of magnitude of anything substantial, much more than weve had in the last several months at least, and then we had a big snap back yesterday, so it leaves us on a friday to make sense of whats happened in this week and wonder if its the the forecasting of whats to lie ahead. More volatility, more turbulence or not. And i think, you know, from a more secular perspective, everything thats been in place remains in place thats Global Economic<\/a> moment mum accelerating, lower inflation, supportive policy, right . That still exists, but weve moved through Third Quarter<\/a> earnings and now were into an area where macro news matters, and i think you have a number of things on the headline front that can move markets. Steve talks about tax reform and how quickly that gets done and implemented. We have a new fed chairman, while hes going to be dovish clearly, his Communications Style<\/a> might be slightly different, and then as we move into 18 we have earnings comps that are going to be more difficult, so i think thats really likely that we see a downshift in returns and a pickup in volatility with the same so youre seeing some things rights now that tell you that everything from a macro per spebive remains in place however, theres some subcurrents out thereto. But youre not worried until 18, right i agree with him. Think seasonally this is a good time. Okay. We have, what, six would exleft in the year, so, yeah, seasonally it sets up nicely, historically. Right, so the setup for positioning is this. You would like to see rotations into fundamental sectors, cyclical sectors like energy, financials, but i think thats a little too early for that because youre going to have yearend tax selling that lets a lot of those sectors have a tough time catching up right now. I think when you go into next year, i read some of your stuff, tomorrow, and i think youll want to seat setup of rotating into that next yore and then maybe staying in technology but maybe differently, old world technology, not necessary lit f. A. N. G. S. Goldman has the top ten themes and trades for 2018, and its far from let say america first. Its almost exclusively away from the u. S. , talking about risks that are here but also a heavy lean on emerging markets where theres more room to grow than in the u. S. Markets. Thats the reap for the bias. As we were going into 2017 everybody was talking about america first, emphasized small caps, dollar will gun, you want domestically Oriented Companies<\/a> and it turned out to be the opposite case so now youve had the huge rallies in overseas markets. There are markets up 40 this year, 50 there. Ren tire regional indices that are up 25 , 30 so now, of course, people are focused again on the idea that you can make money outside of american stocks, and thats a healthy thing, but i do think that when they came up with these lists what have to watch for next year what, we think is going to happen, a lot of that is extrap late whats happening right now. The central tenet of that though is were they are two to three years behind us in terms of Monetary Policy<\/a> and profit recovery. I think its more developed than it is emerging right. Isnt there more room to go arguably in their market 100 , of course there is. We agree go global. Its just a question of where, and i think the eurozone is where we find the most opportunity. The authors of this particular piece are mostly the International Goldman<\/a> sachs Asset Management<\/a> Research Analysts<\/a> yes, there are some u. S. Analysts theres nine different authors of this piece. Im not saying that they are wrong. Let me tell you why they are right. It shouldnt be surprising that they came out with this international piece. Let me tell you why you can do just as well in the u. S s p put out their report card for Third Quarter<\/a> earnings, 90 of companies reported. The average Earnings Growth<\/a> was 6. 1 and Revenue Growth<\/a> 5. 8 however, internationally, companies in the s p have more than 50 of their earnings or revenue outside of the s p, they grew 13. 4 and so versus Domestic Companies<\/a> growing 2. 1 and 4. 2 so thats where the growth has been. I think the dollar continues to weaken as goldman said because youll have draghi probably leave the leave there at some point, number one. Number two, they have got in to start tightening. Supportive of this, too im sorry, weve got a weaker dollar because of the tax plan. Right. So supportive of this, if you look at valuations, valuations in the u. S. Are a little stretched. Grant, not given this growth anyone flakes paradigm however, Global Equities<\/a> trade in line with their historical averages from a valuation perspective so the setup is nice. What do we make of the fact that the russell has sort of disconnected itself from the other averages of late in a month the russell is down nearly 1 whereas the dow is up 1. 5 , the nasdaq has outperformed. Weve looked at, that and it turns out it happens all the time, so theres nothing particularly abnormal about a divergence between small caps and large caps it happens hat market tons, market bottoms and market middles. I think its instructive to look back at the 1415 period had you massive underperformance and i think almost a 30 drawdown for the russell 2000 and the s p didnt budge that could just as easily go the other way, and even for a prolonged period could you have large caps take a pause and small caps take the lead i think thats very important we dont focus on one month. I hear you. I could also say the same thing about financial. Right. If people are looking for a potential red flag within the market or the real, it is the area of small caps, financials are basically flat. So heres the thing when you think about where large caps do well typically its late psych. I think investors are telling were later in the cycle than we may actually be. We feel like were more midcycle so you do get some tax reform and see the pickup in m a activity, i think smallcap stocks will do well. Were neutral on the u. S. And if these things happen, you have to pivot that direction. Tom i think part of the reason the rouse el hasnt rallied is a lot of the rally this year is f. A. N. G. , right . Its been largecap secular growth stocks, and they have left Everything Else<\/a> in the growth index in the dust its left value in the dust, and, you know, its going to outperform the russell, but, yeah, i agreement i dont think it necessarily has nefarious implications for the market broadly. I think small caps can do well because they will track aaa spread they can do well and this year they are not tracking emerging markets. Does leadership continue to lead in 2018 i mean, is tech going to continue to be the place to be, not only largecap growth like the f. A. N. G. S but the other names, the ciscos, microsofts, the intells . I think one of the big changes next yearsy think f. A. N. G. Is going to really disappoint investors i think that, you know, weve got really stretch multiples so we like f. A. N. G. As a fundamental story, but i think valuations have gotten stretched. Some of those f. A. N. G. Stocks are still cheap. Some of them are. True, but believe it or not, since 2006, you only you only outperform the market if you bought f. A. N. G. In odd years so f. A. N. G. Doesnt work in the even years. If we forget that though. The last time you said that on our show, i mean, the tweets were so fast and furious surely your thesis on 2018 has much more to do with fundamentals than the calendar. Yes, but i think next year it may make sense that investors, you know, pause and say, hey, look at valuations and global growth. And why should that change though i mean, valuations, if youre a value person, valuations have been stretched for a while so the question is unless they if they dont disappoint in terms of their forecast, in terms of street consensus, do you think the stock still disappoints . I think theres yes. I think its going to be theres more to that story. Theres a rotation to fundamentals and active management. Yeah. If we see, that f. A. N. G. Will disappoint simply because of the construction of the indices. Or you think about labor markets are going to get tight, and they have been tightening, but if inflation picks up, everyone is going to start thinking about automation play so its more old tech and less f. A. N. G. But youre not going to want to own the Consumer Companies<\/a> because you cant bushy know, the innovation we see in tech and google and so forth, thats there. Yes. Labor is not issue. Yeah, steve just to add to the point i think techs weight in the index five years from now will be at a alltime roar. If the previous peak was 24, it gets to 40 but its not led by f. A. N. G. Next year. Tom, you said something that was really quick about inflation. Really quick. With Wage Inflation<\/a> if that actually comes up that would catch everybody by surprise, and this 18 times multiple on the s p 500 would be 16. 5 in a big hurry, and that would rerate stocks. Look at the nfib survey labor quality is about to take over taxes and regulation has the number one issue for Small Business<\/a> the last time it happened was 98, and you youve got to watch that. Two years of will Wage Inflation<\/a>. The republican tax plan crossing two key hurdles yesterday, passing the house and making it out of the Senate Finance<\/a> commit, but biggest challenge still lies ahead ylan mui is live in washington and waiting on pins and needles to see what happens next. Reporter scott, washington does not normally move this fast not only did the house pass its tax bill with a very comfortable margin, but senate also got its own plan out of committee a day ahead of schedule. Now, republicans know that they are racing against the clock here to try to get a tax bill on the president s desk before christmas, and the treasury secretary Steve Mnuchin<\/a> was on cnbc this morning hammering home that deadline. Yesterday was obviously a huge day in terms of having the house pass the bill. Thats a great move forward. Were going have the center as soon as they get back from thanksgiving, vote on the bill, and and our expectation it will go to conference right away and we have every reason to think well get it to the president s desk before christmas for him to sign. So the ball is in the senates court here. Majority leader Mitch Mcconnell<\/a> did confirm his chamber will bring this up after thanksgiving calling this must pass legislation. Scott, republicans really see this has their best chance to get some points on the board before they have to head into an election year. Back over to you. Thanks so much. Ylan mui in d. C. With the latest tom lee . How much of this tax plan is already in the market . Its hard to tell i mean, i think our clients unequivocally believe its important and positive for markets because its going to reset the level of earnings higher what i think isnt discounted is whether or not tax policy is actually good for markets. So, i mean, i think that theres a belief that its positive, but, you know, whether its good policy. Good for markets or good for the economy . Or it may be good for peoples wallet, right i think people tent tend to view a tax cut as resetting a higher base of earnings so it will push stock prices higher, but does it actually improve future growth rates . I think thats the uncertainty. The stock market is not going to wait around for future quarters worth of gdp to make its decision on whether its going higher or not. Its going to make the bet much earlier on. Thats right. I might even say its going to be help until for us to see if and when the plan is passed, how markets react, and i and i suspect that theres going to be winners and losers established i mean, one, youre allocating capital across the board, right . Youre giving cash to every sector ive think its going to create negative return for some industries and secondly itsration the aftertax cost to debt so im curious to see if highly levered industries start to weaken. This may seem like a silly question and if it is, whatever. Is there any chance that theres a sell on the news i was just thinking that exact thing. Theres a great chance that that could be an interim top in the market not the day they pass it but within a week because you have a lot of people for no reason that i can discern trade on these types of birks you know, Upcoming Events<\/a> as though they are somehow game and so, yeah. And then you have to work through it what happens in the states, new york, new jersey, california its not a positive for states where the states where quite frankly a lot of wealth is held its not a positive. Broadly speaking as it relates to the s p, its an unambiguous positive for s p profits. It just depends on degree. You dont get anything our forecast is for 8 profit greet. You get something thats 11, a best Case Scenario<\/a> thats 15 those are wildly different names. Let me ask you a question do you think this is a general question does anyone really believe that they wave a wand and restatation goes through as its currently being discussed and all of a sudden the possibility of 800 billion or whatever the number is can come back to the country. Does anyone think that happens within the first year while the ink is still drying, a, and, b, does anybody think that that money actually goes into like building plants as opposed to as opposed to buybacks agreed, but its about expectations its about resetting expectations at what point do you pivot from focusing on this paradigm to the next paradigm and whats possible markets are forward looking. So the answer is no what do you think i i think that i think that most investors are thinking more of a headline benefit of a tax cut and actually havent thought about how so weve kind agreed that this is not necessarily theres corporate derivatives. Each company is not planned contingencies. If this happens. All of a sudden they are not going to start thinking about it they say if we repatriate. Of course. Well bring it back some will go into development, okay, and that will perhaps take the development to a newer level. Development of tools to further automation probably more so than anything else. Youre forgetting theres one other thing that comes from this in terms of expectations. This is the last point. It is what empowers the Republican Caucus<\/a> after this and they will try to get Health Care Reform<\/a> and why they put the individual mandate repeal in and Infrastructure Structure<\/a> so for all of us who think were late in the cycle these are things that can perpetuate the cycle further and the market is not thinking about anything like an infrastructure plan right now. If the republicans are empowered by a win on tax bill, that will send the market higher because of what comes next. Why dont you put a button on this one and im looking at a bank of america comment and they are skeptical that all of this comes together before the end of the year. I think they have a small window to let this slide into early 2018, but i do want to go back to the repatriation point companies do have an eightyear window to take advantage of those lower repatriation yates, so i dont think anyone is expected all of that to happen in the first year. The other question i would bring up is how much do markets care about the potential delay in the corporate rate to 2019 after the midterm elections take place . My sense is thats very likely to stay in a final version of the bill conservatives are not going to put up a big fight over that if they get the individual mandate repeal in exchange, so that is potential x factor that i think Many Companies<\/a> havent been paying attention to. Just so were clear you based on your your own understanding of where this all is and your own reporting, you think that the that the delay in the Corporate Tax<\/a> cut is going to happen until 2019 in the final version of whatever passes i think thats very likely. I think thats very likely thats in the Senate Version<\/a> of the bill if it can pass the senate, then we know that the republicans in the senate are willing to accept that the question then becomes are conservatives in the house who have been the ones pushing for that immediate 20 rate, will they swallow it and its really hard for the Freedom Caucus<\/a> and conservatives to vote against a bunyear delay in the Corporate Tax<\/a> rate if they also get a repeal of the individual mandate in addition to that, so that is a sweetener to ensure that house conservatives stay on board. Interesting good reporting there thanks so much have a great weekend ylan joining us from washington, d. C. Here what else is coming up on the halftime report. Moneys got to be the shoes. The shoes. It is today footlocker hopping nike up 13 this week. Are the shoes back in style . Thats next. Before the break, our data partners at kensho say buy retail before the Christmas Shopping<\/a> season starts rhett tail sector s up 5 on average when bought one week before black friday and sold the week after the halftime rertpo with scott wapner and the traders is back in two minutes your brain is an amazing thing. But as you get older, it naturally begins to change, causing a lack of sharpness, or even trouble with recall. Thankfully, the breakthrough in prevagen helps your brain and actually improves memory. The secret is an ingredient originally discovered. In jellyfish. In clinical trials, prevagen has been shown to improve shortterm memory. Prevagen. The name to remember. Not rebalancing your portfolio. Focused on what you love, not how your money will last through retirement. We make it easier to plan for retirement with day one target date funds from prudential. Look forward to your 401k plan. All right. Were back on the halftime report. Facebook locker seeing its best day in 40 years. Surging Comp Store Sales<\/a> still fell less than expected. Not lesion, Deutsche Bank<\/a> upgrading the stock on the heel of those numbers its our call of the day and joining us now is Pete Najarian<\/a> live from minneapolis. Pete, good to see you again. Good to see you. Stock up 26 . Deutsche Bank Upgrades<\/a> it, and even with the move in shares today, the stock can sustain momentum do you agree with that i would absolutely agree with that, i mean, this is a stock thats been absolutely punished all year, scott, as weve heard more and more about the slipping of nike and under armour, thats been the weight around their neck if you look at a valuation perspective and you get samestore sales and growth and ecommerce, theres a lot of reasons to like footlocker i prefer nike, and weve talked about this on a couple of occasions, but just a couple of months ago nike was getting absolutely pounded down. It was trading in the low 50s, and the opportunity for nike was several Different Things<\/a> one of which is the International Growth<\/a> where in china its 9 and the rest of the world outside of the u. S. , growth of about 5 now the u. S. Did slide its interesting to see that in this call today from footlocker that they pointed out what was their best areas and who was it . It was nike and running shoes, and it was nike also in the apparel market. They say i mean, they say footlocker is back, pete. Yeah. They say this company is back a stock thats gotten obliterated this year and even with todays huge jump its still an ugly chart. Right. Youre agreeing with that you believe that they are back i do believe that they are back, and i think that they can compete. I mean, when you look at nike right now, scott, what are they really pushing towards, direct to the consumer, the dtc those numbers are off the charts thats where the growth is for nike and where the growth will be coming more and more probably from footlocker, so they have got to compete in the space. We talk about this all the time. We talk about walmart trying to compete with amazon. I know josh was talking about that very heavily yesterday in terms of they have done the right thing. They bought jet. That has helped out walmart. Hes trying to get in on this conversation to tell you youre wrong. I wish you were here on the desk guys are about to jump through the camera. Bring them on. These are the same guys who hated nike down at 51 so bring it on. Not josh and me. Go ahead. I didnt hate it 51. You dont believe the hype today. No. Look, i i agree with them mostly i agree that its cheap. I dont think footlocker is back because they are still having even in the Deutsche Bank<\/a> report they have down earnings next year thats not bad comps are down 3. 7 , so, yes, it did get oversold with this quarter. Dont forget Williams Sonoma<\/a>, right. Everyone thought it was back last quarter, it went through the roof and look where it is today. You dont think its an inflection point. Thats a short squeeze. 12 of the flow going into this. Everyone hates the sector. Its a very good company in a sector that at best, at best is looking at a muddle through 2018 Sports Apparel<\/a> itself is not a great category, and Retail Stores<\/a> not a great category. Add the two to go. You have a stock that starts off down 55 , and then comes in and says, hey, same store sales were supposed to be negative 4. 5 only negative 3. 5 and people go crazy. I dont buy. It look at the hammer being formed here. Already falling apart. You probably have a nasty candle at the end of today. Got into the middle of the gap and started to fade. Dont cry if you see this thing go out on the day lows and dont think that one slightly less horrible quarter than what was expected means that anything is back i think its way too premature to start celebrating. Pete . Its too inexpensive. I think its a great opportunity. The shorts are getting squeezed, no doubt about it. Thats absolutely the reason its up this significant amount so i dont disagree with that, and it certainly could pull back, but when you look at growth and you look at the prospects going forward, i still think that youve got some interesting levels of growth they have made a partnership with nike, and because of that partnership, i think can build out. When you talk about where their growth really was and they actually did define it as nike were talking about the upper Single Digits<\/a> of growth in running shoes. Were talking about the midSingle Digits<\/a> of growth when youre talking about the apparel so there is growth there, and if we can be a part that have. Nike is nike is a much better chart its a better valuation relative to where it usually is i think nike is an easy 10 up from here and then you sell it the thing about footlocker is this thing always trades at a low multiple because, you know, theres so many avenues of competition. If nike goes up 10 from here, why would you sell you ill tell you, one very big convenient that seasonally youre right at the start of the seasonal retail trade. Its happened every year for the last five years. You get about 10 in most of the retail names. And then you fade it . Absolutely. Absolutely listen, im not, but i can see this. So its terrible. There are gaps all over this thing. By the way, theretail trade the seasonal trade which always starts a week before black friday and end in middecember, its probably going to be more pronounced this year because of exactly the moves youre seeing in footlocker where the thing got obliterated. All of these things, Williams Sonoma<\/a> why is tough any up 2 , same as nike because they are serving breakfast in new york now. No. Thats not like people are buying their vapor max hat foot store and then going next door to buy an engagement ring. Had you a great day for the xrt. Great day for it. I think were all making way too much of essentially dead cat bounces in stocks that are very obvious downtrends they all have big short positions and poem have made money, and they are covering they are covering. Big deal. I agree with, jo. Youve got to decide whats transitory and whats secular, and whats happening right now in retail is a story of haves and havenots. Under armour doesnt benefit from todays trends at all though, right, because their footwear, kevin plank even said has been underpressure and not worked out i would take a move to short this. Headwind is amazon . The transitory factor is discounting. Those that have discounted and gotten share, done well. Walmart, best buy. Those that havent, target, have not done well. Look at stocks. Heres why this is an important week walmart did well up 10 justifiably so if you have a strong brand target did not. Thats my point. Williams sonoma got a double downgrade at jpmorgan. Absolutely right. Target is a better managed company but the point is if you have Brand Recognition<\/a> so as you have with nike, and you can go direct to consumer such as nike and give them the return policies for 30 days and discount price, you do better than amazon. Amazon is not a pleasing shopping experience. Youve got about 4. 5 , 5 back on the slide on target today. Take it, pete. Yes. I enjoy it and love what im seeing i think it goes higher i disagree if anybody is pushing against that when you look at the digital side of target the numbers are not like walmart we talked they are several quarters behind in terms of the digital and how much they are able to offer there right now which is still an issue. If target was based in memphis would you like it at as much if it was in memphis would you like it . Id be going down there and eating some ribs and loving it, yes and Brian Cornell<\/a> is doing a great job. Their new launch that they are putting out in both electronics and magnolia, what they are doing right now i think is transforming them, and the online is the key. They didnt embrace it early enough but in the next couple of quarters people are going to see it, scott, and this thing will be higher. Walmart will be lower. All right. Head of the travel and visitors bureau, pete farmingian joining us live. I love that guy. Pete, well see you back here next week. Grat to see you guys, man see you monday. Have a good weekend. Lets do our blitz now. Square is hitting an alltime high today, josh want to take this one . Got an upgrade from evercore. They like it even more new target is 521. From a technical standpoint this thing has been up, up and away all year. Viacom, jimmy, bouncing back today in. After a not so good Earnings Report<\/a> viacom and the content sector have been obliterated whether its viacom, cbs theres no catalyst and while time warner is held up in its merger with at t, no hurry to get into the stock. Cummins is down and tesla looking to roll out their new semis. Cummins is down 5 . A lot of this is with some disappointing news come out and the other part, is yes, you have a new and viable competitor as far as the market is concerned. Rob, utilities are lower. I think you want to be careful. The rate is not down risk aversion not up tax plan went through and utilities pay high taxes i think they have rallied from very expensive to alltime expensive, and you want to be really careful right here. Do you have something in the blitz, tom we didnt give you one why did we short change tom weve got crude. Crude is on pace to break a fiveweek winning streak you still like energy . I do. I still think its tough it feels like were fighting the tape but energy is a big fat pitch the next five years. Forget thanksgiving the earnings parade rolls on and weve got several big names including deere, salesforce and Palo Alto Networks<\/a> well step away for two minutes and before we do that, the s p heat map staring at backtoback negative weeks for the fstir time since august if it doesnt get its act together today were back after this. Not rebalancing your portfolio. Focused on what you love, not how your money will last through retirement. We make it easier to plan for retirement with day one target date funds from prudential. Look forward to your 401k plan. And welcome back to the halftime report, everybody. Im sue herera heres whats happening at this hour the u. S. Representative for north korea policy and his south korean counterpart meeting in south korea. They agree to keep working for a peaceful end to the north Korean Nuclear<\/a> crisis i think there is no doubt that both president s want to find a peaceful way in regard to north Korea Nuclear<\/a> issues, and so we discussed those, and and really we agreed that Pressure Campaign<\/a> has to be the central element. Mitsubishi recalling nearly 84,000 small caps in the u. S. Because the air bags may not inflate in a crash the recall covers certain mirage models from 2014 through the upcoming 2018 model year a British Military<\/a> dog that saved the lives of troops in afghanistan is being decorated for bravery. Molly is an 8yearold belgian shepherd, and she received a medal, the eke vefquivalent of e Victoria Cross<\/a> shes a beauty congratulations. Thats the news update this hour scotty, back to you. All right, sue, thank you so much biotech nearing a drop of 10 in the past money as you know, that would be correction territory is this your chance to get in though alimreport back in two minutes with that very answer. I love you so much. Were going to be best friends forever. Let out your inner child at the lexus december to remember sales event. Experience amazing at your lexus dealer. Upeace of mind. S we had a power outage for five days total. We lost a lot of food. We actually filed a claim with usaa to replace that spoiled food. And we really appreciated that. Were the webber family and we are usaa members for life. Your parents have been ittalking about you for years. Theyre all about me saving for a house, or starting a college fund for my son. Actually, i want to know what youre thinking. Knowing that the most important goals are yours. Its how edward jones makes sense of investing. Were back biotech, the index is down mor than 8 in a month closing in on that dreaded correction territory. Meg tirrell joins us now and covers the sector, as you know why has this sector been pulling back like it has it wasnt doing so badly up until this earnings season, and then in the last month its approaching correction territory after pretty scary earnings. A lot of people in the space are pretty skookd. Citi just put out a note this morning laying out a couple of things driving negative sentiment in the space pointing out a lack of major cat lifts for the rest of the year we do have a couple of medical meetings like the hematology meetings and some stockspecific cat lifts but they say its not expected to be huge in terms of fdadriven catalyst. A stall after gilead made the acquisition. I was going to ask you a question about m a, whether that is the biggest catalyst. There are some wondering why it hasnt opinion bigger sort of waiting tax reform is thats what is stopping it and people expect Big Companies<\/a> like pfizer are waiting for tax reform to pull a the trigger on a big deal and people are worried about pricing, drug price, always a problem and increasing competition from generic and similars in the space. Weve seen from ce lg ene, the stock that scared people away from the space as they pulled back their 2020 guidance disappointing pipeline update. Thats really kind of scared people away. Weiss, you sold your xbi. I did i went into the xbi as more of a trade to have exposure because the sector wasnt doing much i thought growth players would do there and you kept getting bad news ce lg ene is a darling right now i just want to preserve capital i think there will be more tax selling at the end of the year and the end of december is when you want to get involved because youre getting from the Jpmorgan Health<\/a> care conference beginning of january which is huge and thats when the market will start making bets on it. And up think the issue of drug pricing is enough theres a new nominee, as you know, that trump came out with to replace tom place i dont think the issue is going away trump has made sure it doesnt go away. However, on the other side like Scott Gotlieb<\/a> doing the right things and pushing generics a lot more which in its own way will hit pricing so you dont have the dynamics. Big pharma maybe more impacted and the prices they come out with and can sustain the biotech level will be take a look at the ibb. Back in june broke below its 200day moving average everyone said thats it. Its done. That was actually a gigantic false move and technicians talk about this concept from false moves come fast moves when everyone is convinced of something and then it reverses you see a landslide of peopl trying to get back on to the right side of the trade, in this case the primary trend were witnessing that right now. Broke below the 200day. I should point out its a rising 200 day and then ripped right back above it as we speak so i would not be shocked if weve seen the worst for the fall and this trade is about to reverse itself i think the ibb is probably more important to follow than the xpi just to get a sense of where the sector is going only because the top ten biotechs have such an outsized influence in the index. So thats what i would keep an eye on, but these are big gigantic secular growth stories. Some of them are paying dividends. Very, very Healthy Companies<\/a> that have had a tough couple of months id be more apt to look at them for a buy than for a sell. You saved the whole riff for the end of the conversation. I just crush it every day, dude i dont save anything for anyone. Youve got to work on your timing its the timing. Got to work on the timing a little bit. Meg, thanks have a good weekend. You, too. May be a short week coming up due to thanksgiving, but its going to be a busy one filled with earnings galore some Good Companies<\/a> on the list. Well discuss those next [vo] progress is an unstoppable force. The season of audi sales event is here. Audi will cover your first months lease payment on select models during the season of audi sales event. We are back on the halftime report. We told you about the earnings we looked at last week lets hit some of these. Sales force, what is the read here they preannounced last week so i would be shocked if they disappointed, but clearly on a good trajectory. Deere on wednesday, josh, you still on it . Yes, deere. This is a name i have a double on it at this point im holding on to it this is a stop that the last time they reported in august, it got hammered for like a week and then it came all the way back within two weeks from then. It is not particularly forward on earnings. More of the cyclicals are more expensive. Im going to stick with it. Lowes and palo alto. Palo alto is where the interesting thing is this whole sector, Palo Alto Networks<\/a>, splunk, symantec, they have fundamentally unrpfoeddeerrm we need to see if they see any final growth here. All right well take a quick break and be back with final trades is the miw of emerging markets obsolete . At pgim, we see alpa in the trends, driving specific sectors of out performance. Where a rising middle class powers a booming auto industry. A leap into the digital era draws youthful populations to mobile banking and ecommerce. Trade and travel surge between emerging markets. Everyday our 1,100 investment professionals around the world search out opportunities for alpha. Partner with pgim, the Global Investment<\/a> management businesses of prudential. Your kids go to college and you start trading. Yeah, 5 years already. 5 years, hmm. You ever call your broker for help . Once, when volatility spiked. And . By the time they got me an answer, it was too late. Td ameritrades elite service team can handle your toughest questions right away with volatility, its all about your risk distribution. Good to know. Thanks, mike. We got your back kate. Does he do that all the time . Oh yeah, sometimes he pops out of the couch. Help from real traders. Only with td ameritrade. You myour joints. Thing for your heart. Or your digestion. So why wouldnt you take something for the most important part of you. Your brain. With an ingredient originally found in jellyfish, prevagen is now the number one selling brain Health Supplement<\/a> in drug stores nationwide. Prevagen. The name to remember. Were back, final trades we start out with tom lee. Thank you for being here nice to see you for a full hour. And so handsome, always. Bill girly on the last hour said bitcoin is legit going higher. Hes got money there, others do as well. Then you have a whole bunch of other people saying its a fraud. What do you think . I think bitcoin is going to be one of the most important developments over the next ten years. So i think investors really need to get educated on this. Its were really we really like it, but the reason to look at it is its negatively correlated with every other asset class. So its a good hedge. You have money in it . Yes you know, we write about it pretty regularly its become an important focal point of our business. How do you think about bitcoin, rob listen, i think currencies need to be of store value. I dont think its proven that yet. My bad, were almost done give me a name i brown bitcoin. Xl retail. Have a great weekend. Power lunch starts now im michelle carusocabrera. Teslas ceo elon musk unveiling the companys first big rig, already has its first orders, but tesla also unveiling another pretty surprise. Is it enough to blow away investors minds owning a home, long the american dream, but it may not help you build wealth. Surprising new data to make you think twice about buying a","publisher":{"@type":"Organization","name":"archive.org","logo":{"@type":"ImageObject","width":"800","height":"600","url":"\/\/ia903206.us.archive.org\/28\/items\/CNBC_20171117_170000_Fast_Money_Halftime_Report\/CNBC_20171117_170000_Fast_Money_Halftime_Report.thumbs\/CNBC_20171117_170000_Fast_Money_Halftime_Report_000001.jpg"}},"autauthor":{"@type":"Organization"},"author":{"sameAs":"archive.org","name":"archive.org"}}],"coverageEndTime":"20240630T12:35:10+00:00"}