Transcripts For CNBC Fast Money Halftime Report 20240713 : v

Highest on the street. Well debate in our call of the day. Plus ten Growth Stocks that look attractive right now. The Investment Committee is ready to go. Halftime report starts right no now. It is good to have you with us on this wednesday steve weiss, carrie firestone. Also with us on set is mike wilson, the chief u. S. Equity strategist at Morgan Stanley we begin where else . The market stocks are reversing significant overnight losses to be mostly positive now, s p and nasdaq hitting new alltime highs clearly this seems is the marke making a bet, that while tensions with iran may continue, the conflict will not. Lets see if we can simplify a complex situation. Obviously the geopolitical tensions cause volatility. What keeps the market on stable footing is liquidity and the fed and everything its done to increase liquidity and give stability. Where you go in the short term is a balance between those two were seeing struck right now. In the long term, we know what we need. Earnings growth this year over last year. We need that 6 to 8 Earnings Growth in the s p 500. I think you only get that if you get Capital Expenditure picking up Fourth Quarter earning season starts next week. Is it time to relax, look at the big picture, gold is lower today and as we said the nasdaq goes above 99100 for the first time time to look back at some offense . I think so. Im pretty sure of it. Im longer than ive been since i dont remember when. Weve got a new paradigm in the market what we see with tesla, microsoft and others and it doesnt come to valuation. It comes to momentum of fundamentals as long as the fundamentals continue to move to improve, as long as Companies Continue to meet and beat their targets, youll continue to see the market rise because youve got liquidity, the fed and every central bank in your back pocket and the knowledge that youre slow and not picking up. Asia is picking up that replaces valuation. Again not completely because that would just be foolish you can tell me things never change, theyre always the same but i think were seeing a change here and have been seeing it i remain positive on the market and i like when others are negative i agree with you, if we have negative earnings. Or flat. Or flat that will take it down a little bit but thats an opportunity. There was no volatility in iran. I dont call the market being down 1 after the major move weve had volatility. Futures last night were pretty bold. Right. Instead of us arguing about that, i think well probably agree on this. Opportunities are going to arise. We can talk about those momo stocks the apples and microsoft. Mike santoli just said at the end of last hour, they continue to be bought. They do but here is the thing, after the runs those have had, its reasonable to trim, take that dry powder and say when another attack occurs i hate saying it but im saying it when another attack occurs, put that money you trimmed from those high flyers into a great opportunity. Theyre all over the place. I think what were really seeing is the momentum isnt just earning a valuation theres real momentum in demand. We looked at overnight fear and people thought i thought the market would open down today its obvious a lot of people who put in buy orders because they thought the market would be down and they would get to buy more attractive prices, theyre pushing the market up. Its many of the same names. Lets face it, there are people who have been very bearish on the market, have been trying to plow back in Fourth Quarter up 9 they are still buying when they think they have an opportunity, even if the market is making thelma pay higher. I think we expect when the calendar changes each asset class going to change. It feels as those theres nothing different about 2020 from 2019. It did 12 hours ago. It felt that way. 24 hours ago, it sure felt like it could be on the precipes of something. It highlights and really underscores the lack of relevancy that oil has to the s p. Its 4 of the s p its something that ten years ago, 15 years ago would have been so dominant in the conversation where the s p was going to go on that day. Crude is down 4 . Crude is over 5 . Gold is down 1 . So crude is off 5 from the high last night. Energy equities are down 1. 5 on the day and the s p is totally fine with that predicting the price of oil, which is something that i spent the better part of my career doing has now become as challenging as figuring out who the giants next football coach is going to be, okay crude was down 8 on Christmas Eve of 2018. Do you know what crude did over the next two weeks it went up 20 in the last ten years, crude has had a 5 decline from an intraday high over 50 times that would obviously extrapolate that its going to go lower . No it was 2 higher. Thats my view that its no an investment class. Its become something different. Real quick, because i shared this with you before the show. Its a great observation i spoke to mark fisher, a friend of the show, before the show he mentioned something thats really true. Gold has replaced oil in portfolios, for traders. It has become what oil once was. To your point its only down 1. 5 today thats the right trade if you think theres more volatility coming. I totally disagree with that. Im sorry. Me, too. Gold has become even more irrelevant i remember 20 years ago, those managers you talk to, you got to own gold doesnt yield anything its getting competition from things like bitcoin and other crypto currencies. Its losing its relevance. Was that reality in terms of price from 20 years ago . You know the answer. Hold on. Okay. I would like to get to mike wilson, who is sitting here patiently listening to you guys. Welcome back happy new year. Happy new year. 3200, 3250 is your bull case for the s p. So, were going nowhere, according to you, this year. Isnt today a perfect example that youre on the wrong train and maybe its time to get off at the station and get on to the train thats actually going somewhere s p well, we did. As you know, 3250 is our yearend target. Weve been explicit that we can trade 3500 in the first half because of the in the market we raised our target and said well have a liquiditydriven bull market into the first half of next year and so we raised our target to 3250 and said we would get there in short order we got there faster than we thought, quite frankly last month and a half ago we talked about as a target for the first half of this year. Were concerned about the back half of the year that the liquidity will be drained because it wont be on the Balance Sheet with other Central Banks and looking forward to 2021 where there will be more uncertainty about a sustainability of a latecycle environment. Theres no recession the late cycle extension has been extended. The fed got in front of it, has been very aggressive the curve steepened and we changed our view on that it doesnt mean that the fundamentals are driving this momentum the fundamentals improved. Its hard to argue theres going to be enough Earnings Growth to justify the move weve had in the last three or four months. To me its about liquidity and the fact that the fundamentals stabilized. What kind of Earnings Growth do you need . I think you need 10 to see the 3500 to be sustained. 10 10 this year i think well get lower digits, 2 or 3 . Thats what the markets have to deal with in the back of the year somewhat defensively oriented stocks microsoft and apple are the highest quality stocks in the marketplace. We love microsoft. We raised our price target today. Its expensive. But so what if theres liquidity. Its the highest quality name in the moorkt place people will continue to buy. Apple is a defensive name now . Its a highquality name not defensive. The market is paying for quality. Quality growth and thats what we want to pay for too we think high quality, large cap growth is what the market wants. By the way, apple as we speak hits 301, thats a new alltime high for apple as well. The fed you say, okay, qe or whatever is going to end theyre still going to be there, thoug though. How do you know well we dont but who cares about the back half of the year. Were bullish on the next six months for lots of different reasons, fundamentals have improved globally more than in the u. S. Right now most of the improvement in the pmis has been in china and europe, not so much in the u. S. Yet. The u. S. Will be a laggard in the recovery globally. Valuations are cheap and weve corrected that thats where we are now. I would argue that the market is fairly priced today but we think it will overshoot because of liquidity. What happens if it looks lets say first half of the year, most people agree, is the more sanguin part of the year, you dont have much in front of you. Into the summer you have to start thinking about the election thats when you think it can get a little rocky potentially. What happens if it looks like the president will get reelected its positive. You deal with base and bull. Right. Base case right now is that the president gets reelected. Dont you think . Yes, thats right, with consternation in the back half not knowing what the answer will be if the president gets reelected, yes, in december we have a rally on that 2021, we can agree that the economy is late cycle. Wouldnt we agree with that . Unemployment is at 3. 5 , lowest in 50 years. It could fall lower. If it falls to 3 by the end of the year, does that raise the risk of unemployment cycle or lower the risk i would argue it raises the risk again. Multiples come down. Thats all were talking about, comes back down to a more normal level from 17 times to 19 times. If youre assuming that your base case is that the market by the end of this year is down 7 thats what the numbers said you must assume that the economy weakens, that were in a recession or heading into a recession. For earnings to grow 8, 9 this year at that price, the market would be trading at 15 times earnings. In order for there to not be an attractive buying opportunity, earnings have to come down you have a much more negative look on the economy than i do. The economy is decelerating this year from last year the consensus view flat earnings we have flat earnings 2019. Correct. Youre assuming flat earnings in 2020, isnt it more negative than were assuming 2 to 3 growth this year from last year. Last year were predicted 0 earnings and it was. The model now is saying 2 to 3 . Congratulations. Whats the progression on that 2 to 3 per quarter . Is the First Quarter going to be up 5 , Second Quarter 7. 5 and then were down in the next two quarters its going to be flattish throughout the year unless theres an acceleration in growth beyond the 1. 8 , so we get more top line or costs get under control. The bigger question we have, and the way we think about the market is basically theres not income inequality in individuals. Theres Corporate Income inequality, okay so its predicated on small, Midcap Companies were not focused on were focused on the next six months, whats the market going to like right now and not going to like right now . At that point thats exactly where i wanted to go i dont understand how you think the market can get to 3500 but youre underweight the biggest part of the market, which is tech. Yeah. That doesnt make sense to me. Were not underweight the entire sector, right we own high quality tech within that for example, microsoft, which is a name weve had on the list for 18 months. So, underweight, overweight, doesnt mean you dont own anything, okay you could own the better performers within that, as an example. You dont have a wholly positive view on tech . No. We think tech has a higher propensity of risk because its crowded. The average company. Once again were talking about the average company within the sector equal weight versus market weight is very different whats the best like Fertile Ground for picking stocks from an average stock perspective where is the risk reward going to be good for the average stock within that sector you still have a defensive vent as well in terms of your sector determinations. Because rates are going lower, which they have, by the way, held up over the last 18 months even though they underperformed the last three or four months. So, for example, were here in the summer saying we think the old curve starts to resteepen and financials, and that worked. First of all, we look at things from the global standpoint our global weights are outside the u. S. The best way to take cyclical exposure is outside the u. S. , europe and asia, and you take more defensive high quality exposure in the u. S. Thats how were barbelled. What i dont understand, mike, is that youve got such a negative view in terms of, you can see that coming out in First Quarter conference calls. Not necessarily. You think the companies will be more optimistic than they have a right to be i think thats the Way Companies are. They dont like to lower the bar until they have to stock prices are up, emotions are higher and spending is up too. But not in cap x. It continues to disappoint consumer, yes. Market leaders, microsoft or apples, et cetera, are you Still Holding on to your price target because of small and midcap which are of less importance in the s p . Im not focused so much on yearend price targets but whats going to happen in the near term. So am i. Well have time to do that. Right now were not planning people being out of the market. Youre talking about next year, referencing 2021. Right thats the way the business is. Why do you think, if youre constructive and you feel like things are pretty good from an economic standpoint, why do you think rates are going lower . A, first of all, the rate differential between the u. S. And the rest of the world and growth in the u. S. Is slower on a rate of change basis than it is dploeblly the recovery so far has been more reserved in international economies. The rates are still very, very low externally if you want duration by the way, people still want yield, right . There are natural buyers of yield. Youre still too bearish. I love you, love talking to you. I vibe with you. But youre try ing ing to say ts a button hook coming, that the economy in the markets are going to come up and back down youre making it too hard. The big get bigger in terms of large caps and that money has to go 5 to google, 5 to apple why not keep it that simple . Why make it so hard that its going to go up and come down its not so different that its a front loaded year potentially. Have you to get two things right, the out and come back in. Why not time it wrong why not focus so much on yearend price targets and talk about whats happening right now . Were aligned very much with what you just said. What if you didnt have a price target at all and simply said the money will be wrong i like what you just said i think this is easy to say that the flows and forces get you to 3500 come in with the unadulterated and then come back down . The timing aspect of it is difficult. Were not telling people to worry about that right now lets be perfectly clear last two months, the market has a big liquidity surge in it, were going to 3500 and keep it at that. What do you want to own . We think small caps, because thats where the earnings risks is the greatest. Ill agree with you on that. I think its early, too early to do that why should you, if you can make money in these big cap liquid names theres no need to do that its a much more important menl for the audience than trying to figure out whats going to happen between the first and second half. Who cares . The suit is itching to get into this conversation. It sure is. Nice to see the suit again. Mike, i dont know whether it was the middle of december in 2018, middle of january 2019 you gave what i thought was probably the strongest argument to be invested, and that was client cash balances one year later what can we extrapolate from that perspecti perspective . A lot of that cash, mainly in institutional land and systematic strategies, etas, passive players and the individual has come in but not all the way. Remembrances of 2008 and i think they participate d. I always say people miss the rally. They didnt miss the rally our average client was up a ton because they were fully invested so i think the cash will stay hi high it may come down a little bit. The idea that theyre going to go back to normal levels immediately, i think thats misplace misplaced. We havent said the word trade until right now. Economists change their forecast base ond that the first year, that Global Economy will improve. World gdp all being driven by emerging markets the u. S. , we think, will go from 2. 3 last year to 1. 8 this year still decelerating but clearly not going to slide into recession. Trade wont escalate any further. Thats good. Its probably not going to be the kind of drive people were hoping for three or four months ago. Its not going to be the main driver of markets. Overall you think the days of multiple expansion, carrying the load for the market are over no. I think thats going to continue we get further multiple expansion. And youre going to cut that off . We dont know we dont know. Sounds like you want to be both bullish and bearish what we see, if you look at that base case, is a lower number so, there was no lower number there, and maybe its not yours and maybe its your firms, but you are both bullish about the market a 3,000 number is bearish, no matter how you cut it. Its hard for individuals to time that. To say bullish now will suddenly be bearish. Were saying that the risk of a revaluation is there. Of course. Assuming theres always risk there. Not because of some geopolitical event we can predict that the fed has told us theyre going to stop expansion at some point this year, assuming the repo market calms down and we think thats some time in april knowing that, we have to be prepared that that could be a potential harbinger of contraction. Thats all were saying. How would you put the last several days in perspective in the way youre thinking about the market with these geo political tensions the market did not believe for one second that this was going to be a sustainable move in oil prices. So we felt like that means the oil stocks probably arent going to go up that much here. Thats our view, were still neutral on energy, not because were positive on energy but theres so much short that could happen thats so volatile. This is not a group to be short or long necessarily. Its just there and its very small. The market is still very suspicious about the longterm price of oil thats what stocks are, Growth Stocks<\/a> that look attractive right now. The Investment Committee<\/a> is ready to go. Halftime report starts right no now. It is good to have you with us on this wednesday steve weiss, carrie firestone. Also with us on set is mike wilson, the chief u. S. Equity strategist at Morgan Stanley<\/a> we begin where else . The market stocks are reversing significant overnight losses to be mostly positive now, s p and nasdaq hitting new alltime highs clearly this seems is the marke making a bet, that while tensions with iran may continue, the conflict will not. Lets see if we can simplify a complex situation. Obviously the geopolitical tensions cause volatility. What keeps the market on stable footing is liquidity and the fed and everything its done to increase liquidity and give stability. Where you go in the short term is a balance between those two were seeing struck right now. In the long term, we know what we need. Earnings growth this year over last year. We need that 6 to 8 Earnings Growth<\/a> in the s p 500. I think you only get that if you get Capital Expenditure<\/a> picking up Fourth Quarter<\/a> earning season starts next week. Is it time to relax, look at the big picture, gold is lower today and as we said the nasdaq goes above 99100 for the first time time to look back at some offense . I think so. Im pretty sure of it. Im longer than ive been since i dont remember when. Weve got a new paradigm in the market what we see with tesla, microsoft and others and it doesnt come to valuation. It comes to momentum of fundamentals as long as the fundamentals continue to move to improve, as long as Companies Continue<\/a> to meet and beat their targets, youll continue to see the market rise because youve got liquidity, the fed and every central bank in your back pocket and the knowledge that youre slow and not picking up. Asia is picking up that replaces valuation. Again not completely because that would just be foolish you can tell me things never change, theyre always the same but i think were seeing a change here and have been seeing it i remain positive on the market and i like when others are negative i agree with you, if we have negative earnings. Or flat. Or flat that will take it down a little bit but thats an opportunity. There was no volatility in iran. I dont call the market being down 1 after the major move weve had volatility. Futures last night were pretty bold. Right. Instead of us arguing about that, i think well probably agree on this. Opportunities are going to arise. We can talk about those momo stocks the apples and microsoft. Mike santoli just said at the end of last hour, they continue to be bought. They do but here is the thing, after the runs those have had, its reasonable to trim, take that dry powder and say when another attack occurs i hate saying it but im saying it when another attack occurs, put that money you trimmed from those high flyers into a great opportunity. Theyre all over the place. I think what were really seeing is the momentum isnt just earning a valuation theres real momentum in demand. We looked at overnight fear and people thought i thought the market would open down today its obvious a lot of people who put in buy orders because they thought the market would be down and they would get to buy more attractive prices, theyre pushing the market up. Its many of the same names. Lets face it, there are people who have been very bearish on the market, have been trying to plow back in Fourth Quarter<\/a> up 9 they are still buying when they think they have an opportunity, even if the market is making thelma pay higher. I think we expect when the calendar changes each asset class going to change. It feels as those theres nothing different about 2020 from 2019. It did 12 hours ago. It felt that way. 24 hours ago, it sure felt like it could be on the precipes of something. It highlights and really underscores the lack of relevancy that oil has to the s p. Its 4 of the s p its something that ten years ago, 15 years ago would have been so dominant in the conversation where the s p was going to go on that day. Crude is down 4 . Crude is over 5 . Gold is down 1 . So crude is off 5 from the high last night. Energy equities are down 1. 5 on the day and the s p is totally fine with that predicting the price of oil, which is something that i spent the better part of my career doing has now become as challenging as figuring out who the giants next football coach is going to be, okay crude was down 8 on Christmas Eve<\/a> of 2018. Do you know what crude did over the next two weeks it went up 20 in the last ten years, crude has had a 5 decline from an intraday high over 50 times that would obviously extrapolate that its going to go lower . No it was 2 higher. Thats my view that its no an investment class. Its become something different. Real quick, because i shared this with you before the show. Its a great observation i spoke to mark fisher, a friend of the show, before the show he mentioned something thats really true. Gold has replaced oil in portfolios, for traders. It has become what oil once was. To your point its only down 1. 5 today thats the right trade if you think theres more volatility coming. I totally disagree with that. Im sorry. Me, too. Gold has become even more irrelevant i remember 20 years ago, those managers you talk to, you got to own gold doesnt yield anything its getting competition from things like bitcoin and other crypto currencies. Its losing its relevance. Was that reality in terms of price from 20 years ago . You know the answer. Hold on. Okay. I would like to get to mike wilson, who is sitting here patiently listening to you guys. Welcome back happy new year. Happy new year. 3200, 3250 is your bull case for the s p. So, were going nowhere, according to you, this year. Isnt today a perfect example that youre on the wrong train and maybe its time to get off at the station and get on to the train thats actually going somewhere s p well, we did. As you know, 3250 is our yearend target. Weve been explicit that we can trade 3500 in the first half because of the in the market we raised our target and said well have a liquiditydriven bull market into the first half of next year and so we raised our target to 3250 and said we would get there in short order we got there faster than we thought, quite frankly last month and a half ago we talked about as a target for the first half of this year. Were concerned about the back half of the year that the liquidity will be drained because it wont be on the Balance Sheet<\/a> with other Central Banks<\/a> and looking forward to 2021 where there will be more uncertainty about a sustainability of a latecycle environment. Theres no recession the late cycle extension has been extended. The fed got in front of it, has been very aggressive the curve steepened and we changed our view on that it doesnt mean that the fundamentals are driving this momentum the fundamentals improved. Its hard to argue theres going to be enough Earnings Growth<\/a> to justify the move weve had in the last three or four months. To me its about liquidity and the fact that the fundamentals stabilized. What kind of Earnings Growth<\/a> do you need . I think you need 10 to see the 3500 to be sustained. 10 10 this year i think well get lower digits, 2 or 3 . Thats what the markets have to deal with in the back of the year somewhat defensively oriented stocks microsoft and apple are the highest quality stocks in the marketplace. We love microsoft. We raised our price target today. Its expensive. But so what if theres liquidity. Its the highest quality name in the moorkt place people will continue to buy. Apple is a defensive name now . Its a highquality name not defensive. The market is paying for quality. Quality growth and thats what we want to pay for too we think high quality, large cap growth is what the market wants. By the way, apple as we speak hits 301, thats a new alltime high for apple as well. The fed you say, okay, qe or whatever is going to end theyre still going to be there, thoug though. How do you know well we dont but who cares about the back half of the year. Were bullish on the next six months for lots of different reasons, fundamentals have improved globally more than in the u. S. Right now most of the improvement in the pmis has been in china and europe, not so much in the u. S. Yet. The u. S. Will be a laggard in the recovery globally. Valuations are cheap and weve corrected that thats where we are now. I would argue that the market is fairly priced today but we think it will overshoot because of liquidity. What happens if it looks lets say first half of the year, most people agree, is the more sanguin part of the year, you dont have much in front of you. Into the summer you have to start thinking about the election thats when you think it can get a little rocky potentially. What happens if it looks like the president will get reelected its positive. You deal with base and bull. Right. Base case right now is that the president gets reelected. Dont you think . Yes, thats right, with consternation in the back half not knowing what the answer will be if the president gets reelected, yes, in december we have a rally on that 2021, we can agree that the economy is late cycle. Wouldnt we agree with that . Unemployment is at 3. 5 , lowest in 50 years. It could fall lower. If it falls to 3 by the end of the year, does that raise the risk of unemployment cycle or lower the risk i would argue it raises the risk again. Multiples come down. Thats all were talking about, comes back down to a more normal level from 17 times to 19 times. If youre assuming that your base case is that the market by the end of this year is down 7 thats what the numbers said you must assume that the economy weakens, that were in a recession or heading into a recession. For earnings to grow 8, 9 this year at that price, the market would be trading at 15 times earnings. In order for there to not be an attractive buying opportunity, earnings have to come down you have a much more negative look on the economy than i do. The economy is decelerating this year from last year the consensus view flat earnings we have flat earnings 2019. Correct. Youre assuming flat earnings in 2020, isnt it more negative than were assuming 2 to 3 growth this year from last year. Last year were predicted 0 earnings and it was. The model now is saying 2 to 3 . Congratulations. Whats the progression on that 2 to 3 per quarter . Is the First Quarter<\/a> going to be up 5 , Second Quarter<\/a> 7. 5 and then were down in the next two quarters its going to be flattish throughout the year unless theres an acceleration in growth beyond the 1. 8 , so we get more top line or costs get under control. The bigger question we have, and the way we think about the market is basically theres not income inequality in individuals. Theres Corporate Income<\/a> inequality, okay so its predicated on small, Midcap Companies<\/a> were not focused on were focused on the next six months, whats the market going to like right now and not going to like right now . At that point thats exactly where i wanted to go i dont understand how you think the market can get to 3500 but youre underweight the biggest part of the market, which is tech. Yeah. That doesnt make sense to me. Were not underweight the entire sector, right we own high quality tech within that for example, microsoft, which is a name weve had on the list for 18 months. So, underweight, overweight, doesnt mean you dont own anything, okay you could own the better performers within that, as an example. You dont have a wholly positive view on tech . No. We think tech has a higher propensity of risk because its crowded. The average company. Once again were talking about the average company within the sector equal weight versus market weight is very different whats the best like Fertile Ground<\/a> for picking stocks from an average stock perspective where is the risk reward going to be good for the average stock within that sector you still have a defensive vent as well in terms of your sector determinations. Because rates are going lower, which they have, by the way, held up over the last 18 months even though they underperformed the last three or four months. So, for example, were here in the summer saying we think the old curve starts to resteepen and financials, and that worked. First of all, we look at things from the global standpoint our global weights are outside the u. S. The best way to take cyclical exposure is outside the u. S. , europe and asia, and you take more defensive high quality exposure in the u. S. Thats how were barbelled. What i dont understand, mike, is that youve got such a negative view in terms of, you can see that coming out in First Quarter<\/a> conference calls. Not necessarily. You think the companies will be more optimistic than they have a right to be i think thats the Way Companies<\/a> are. They dont like to lower the bar until they have to stock prices are up, emotions are higher and spending is up too. But not in cap x. It continues to disappoint consumer, yes. Market leaders, microsoft or apples, et cetera, are you Still Holding<\/a> on to your price target because of small and midcap which are of less importance in the s p . Im not focused so much on yearend price targets but whats going to happen in the near term. So am i. Well have time to do that. Right now were not planning people being out of the market. Youre talking about next year, referencing 2021. Right thats the way the business is. Why do you think, if youre constructive and you feel like things are pretty good from an economic standpoint, why do you think rates are going lower . A, first of all, the rate differential between the u. S. And the rest of the world and growth in the u. S. Is slower on a rate of change basis than it is dploeblly the recovery so far has been more reserved in international economies. The rates are still very, very low externally if you want duration by the way, people still want yield, right . There are natural buyers of yield. Youre still too bearish. I love you, love talking to you. I vibe with you. But youre try ing ing to say ts a button hook coming, that the economy in the markets are going to come up and back down youre making it too hard. The big get bigger in terms of large caps and that money has to go 5 to google, 5 to apple why not keep it that simple . Why make it so hard that its going to go up and come down its not so different that its a front loaded year potentially. Have you to get two things right, the out and come back in. Why not time it wrong why not focus so much on yearend price targets and talk about whats happening right now . Were aligned very much with what you just said. What if you didnt have a price target at all and simply said the money will be wrong i like what you just said i think this is easy to say that the flows and forces get you to 3500 come in with the unadulterated and then come back down . The timing aspect of it is difficult. Were not telling people to worry about that right now lets be perfectly clear last two months, the market has a big liquidity surge in it, were going to 3500 and keep it at that. What do you want to own . We think small caps, because thats where the earnings risks is the greatest. Ill agree with you on that. I think its early, too early to do that why should you, if you can make money in these big cap liquid names theres no need to do that its a much more important menl for the audience than trying to figure out whats going to happen between the first and second half. Who cares . The suit is itching to get into this conversation. It sure is. Nice to see the suit again. Mike, i dont know whether it was the middle of december in 2018, middle of january 2019 you gave what i thought was probably the strongest argument to be invested, and that was client cash balances one year later what can we extrapolate from that perspecti perspective . A lot of that cash, mainly in institutional land and systematic strategies, etas, passive players and the individual has come in but not all the way. Remembrances of 2008 and i think they participate d. I always say people miss the rally. They didnt miss the rally our average client was up a ton because they were fully invested so i think the cash will stay hi high it may come down a little bit. The idea that theyre going to go back to normal levels immediately, i think thats misplace misplaced. We havent said the word trade until right now. Economists change their forecast base ond that the first year, that Global Economy<\/a> will improve. World gdp all being driven by emerging markets the u. S. , we think, will go from 2. 3 last year to 1. 8 this year still decelerating but clearly not going to slide into recession. Trade wont escalate any further. Thats good. Its probably not going to be the kind of drive people were hoping for three or four months ago. Its not going to be the main driver of markets. Overall you think the days of multiple expansion, carrying the load for the market are over no. I think thats going to continue we get further multiple expansion. And youre going to cut that off . We dont know we dont know. Sounds like you want to be both bullish and bearish what we see, if you look at that base case, is a lower number so, there was no lower number there, and maybe its not yours and maybe its your firms, but you are both bullish about the market a 3,000 number is bearish, no matter how you cut it. Its hard for individuals to time that. To say bullish now will suddenly be bearish. Were saying that the risk of a revaluation is there. Of course. Assuming theres always risk there. Not because of some geopolitical event we can predict that the fed has told us theyre going to stop expansion at some point this year, assuming the repo market calms down and we think thats some time in april knowing that, we have to be prepared that that could be a potential harbinger of contraction. Thats all were saying. How would you put the last several days in perspective in the way youre thinking about the market with these geo political tensions the market did not believe for one second that this was going to be a sustainable move in oil prices. So we felt like that means the oil stocks probably arent going to go up that much here. Thats our view, were still neutral on energy, not because were positive on energy but theres so much short that could happen thats so volatile. This is not a group to be short or long necessarily. Its just there and its very small. The market is still very suspicious about the longterm price of oil thats what stocks are, Long Duration<\/a> plan on the price of oil. What has to happen for you to come back on the show and say to everybody, you know what i didnt look at this as bullish as i should have before it happens, not after the fac fact. We have been very explicit that we underestimated the fed we were the first to say we were too conservative last year on the price of stocks. We were not too conservative on our orecast. Fundamentally we were probably the most accurate of anybody on the earnings projection last year and then too conservative on basically liquidity we already changed that view now the question is, can that liquidity persist or is there Something Else<\/a> going on that could make multiples stay without that liquidity injection . Well see. It is 10 or something in that range and broadening out to the small and Midcap Companies<\/a>. The risk to the economy is due to these small or Midcap Companies<\/a> decide theyre losing money or earnings are shrinking and they have to cut back on cap x or labor we dont know. Theyve not done that yet. That would be the biggest switch if we saw small to Midcap Companies<\/a> start to improve their earnings picture, that would be something that would get us structurally more bullish. Thanks for coming in. You bet thanks for having me. Appreciate the debate as always here is whats coming up on the halftime report. Another bullish tech call straight ahead number one apple analyst Toni Sacconaghi<\/a> joins us as he ups his price on the stock plus, ten Growth Stocks<\/a> that still look attractive right now. Halftime report with scott wapner and the traders is back in two minutes welcome back, everybody. Im sue herera israeli Prime Minister<\/a> Benjamin Netanyahu<\/a> says President Donald Trump<\/a> should be congratulated in connection with last thursdays attack that killed irans top commander. He classified Qassem Soleimani<\/a> as a dangerous terrorist at an event in jerusalem. The ntsb is monitoring developments surrounding the boeing 737 crash in tehran it crashed early this morning shortly after takeoff and then burst into flames. All 176 people on board were killed families in puerto rico are camping outside, a day after the strongest quake hit that island in more than a century the 6. 4 magnitude quake killed one person it destroyed hundreds of homes and businesses as well and the takata air bag recall is widening, recalling an additional 10 millionaire bag inflaters that could explode with too much force. You are uptodate thats the news update this hour scott, ill send it back to you. Sue, thank you. Mike wilson mentioned that Morgan Stanley<\/a> is raising its price target on microsoft to 189 from 157, a new street high. Morgan stanley saying microsoft remain remains the best name in tech. Widely held. Joe, you own it. Steve, you own it. The stock put in a banter year, we all know that, of 55 a lot of these stocks in that universe had great years. They did. Too bullish very logical premise on your part im going to let the market or an earnings quarter that does not look like the prior eight quarters for microsoft dictate what my actions are going to be in the stock and until i see anything negative, its not going to reverse my commitment to being long on microsoft. The other thing about microsoft, its been very enduring in the privacy and Regulatory Technology<\/a> conversation. Theyve not really been exposed to that. The diversification story of microsoft weve all known and talked about on the show the cloud component is particularly the strength. And theres no reason, just because you suspect that maybe high is too high in terms of price to move away from it, until you get that actual evidence. 29 times earnings, everybody cool with that it seems a little pricey. And microsoft has beena fantastic stock. We didnt own it, we wished we owned it there may be other names out there. We think there are other names out there. Were talking about low teens, eps grower, 29 times this years earnings, 26 times 21 earnings. So perhaps it needs to pause and grow into that price. How do you deal with that i disagree and ill tell you why. Its very well managed and manages the street very well they meeted or exceeded, very important for a stock, in my view as i said earlier, about valuation. I think its cheap it deserves a premium multiple on both of those then you get to their dominance in certain areas this is just a great stock for the market so i look at others, like adobe, who is much more expensive than this to me, this multiple should move up toward adobe. Im not saying i expect it to get there. As long as management continues and lives up to what they promise. Who is going to buy twitter could someone buy twitter . How about what microsoft did with linkedin. Phenomenal. And the value thats now realized. 10. 5 waiting in the triple qs, in the spdrs any time a dollar comes into those etfs and theres a huge wave to investing, it comes to microsoft. Like apple. Like apple, which hit another high record today. Toni sacconoghi joins us now happy new year. Happy new year to you, scott. Youve been a chaser. Man, have you been a chaser. October 23, 205 to 225, and today 250 to 300 but the whole time you keep your rating the same at market perform you have to explain to our viewers how you do that, because people are throwing their arms up in the air and saying when is toni going to get it when is he going to get it, that this stock is just going higher and hes missing it . Well, we have missed it we dont deny that we believe investors are looking at fiscal 21 13 in fiscal 20 to 16 in fiscal 21. If we apply a similar relative to the market on 21 earnings, where people are now looking towa towards, thats our price market tech sector was up 30 plus percent during the year. Our target prices are always linked to where market levels are. And so if we start the year 200 in the tech sector, the market rent goes up 30 , our price target for all our stocks would go up, you know, all else being equal, 30 as i said i do believe that people are looking forward in the 5g cycle and we see significant Earnings Growth<\/a> for apple. Our prior guest, mike wilson, mentioned apple as an example of how investors are looking for quality. Theyre looking for quality names and even things that could have a bit of a defensive bent if people want that narrative around apple that its kind of a defensive name the stock just goes up. Yeah. Look, clearly the stock has feels like its gone up every single day over the last quarter or so in particular. Or year. Yeah. I think theres truth to what youre saying around quality the market has put a premium on quality weve soon a backtoback of a rotation the last six months out of more expensive stocks to less expensive stocks and apple ticks both of those boxes. As you were all discussing prior to my joining this, they buy back 5 of all shares traded in a given quarter. And so thats also provided a technical boost. Now look, nothing goes to the moon forever and thats the dilemma that we struggle with. Were well above consensus for fiscal 20 due to air pods and well above consensus for fiscal 21 the question is, is the buy side and the average investor ultimately already there and thats the difficult part about gauging if and when the music might stop right now, we see numbers going up and thats generally pretty good many people on the buy side already believe that thats a tough call to make. I feel in some respects, though, youve backed yourself into a corner in that the stocks appreciated so much, you have a perform rating on it how can you upgrade it even as shares continue to appreciate . Even though the stock is at new highs and repeatedly hits them, to buy it. Yes and no. As an analyst, you have to be honest and true to your work we did some work in december where we did a deep dive into air pods and the street is mismodeling that, that people dont understand how big air pods could be. They could grow 150 in fiscal 20 thats new and incremental and positive to our model. I think fundamentally, we have no quams with the fundamentals of the company i think the issue is really gauging, you know, at what point is that all priced into the stock . Because we have consensus, which is analysts like myself. But we have investors and ive spoken to many longterm investors who have been bullish on apple that say look, i think everything is great but were seeing a valuation that on a relative basis is higher than its been since 2009, which is when apple was in the peak of iphone growth. Were seeing apple trade at a valuation thats at a tenyear high when the company is fundamentally a different and lower Growth Company<\/a> than it was ten years ago. And i think we and many investors struggle with that and thats the dilemma. As an apple shareholder, do i have a full sense of comfort here i read your note in december a lot of fundamental momentum is the ability to grow revenue for air pods i think its 6 billion in 2019 and i think you cite it could go to 15 billion over the coming year is there a false sense of comfort there that potentially the company could bundle it into some form of subscription or the purchase of a phone . I dont know that its a false sense of comfort im not sure that many investors have really put very precise numbers around it. I dont think theyve been lulled into this false sense of security theres a 5g cycle that should lead to potentially better units but also higher asps, which i should help. And, you know, apple has shown that it can come out with some new hardware products that matter and whether we think air pods are 10 billion or 15 billion, i think theres a confidence behind the fact that maybe apple can also create products on the hardware side. Collectively those things plus the quality factor we talk about are propelling the stock upwards. Also knowing to when to go with your hand and when to capture the majority of the gains. Thats what we struggle with our outlook has become more positive on apple. We see the market sort of agreeing with that in terms of the shares going up. Thats the bigger dilemma, i think, that we face. Toni, we always appreciate your candor. Thanks for having me. Good to have you back on the show. Happy new year. You as well talk to you soon thats Toni Sacconaghi<\/a> want to quickly wrap it up theres a difference between being a Company Analyst<\/a> and stock analyst. He is clearly focused on the company. The company has not performed extremely well cook actually got paid down. If you look at it as a stock, you cant look at it as a vacuum, have you to look at whats going on around you tesla, adobe its going to keep going 5g already started ordering components its going to be the biggest product. Its going to dwarf 2009. This is why kramer advises people i know we say it 1,000 times and he says it it 1,000 times. Own apple. Dont screw around with it its too hard. Agree 1,000 . You can trim it. You know what im saying. You want to take some profits because of a tremendous gain, so be it. Its going higher i added to it before christmas. Trying to find the sell and the end point on a stock like this becomes unbearably difficult. It is the market, scott im sorry. Thats what i keep trying to say about these etfs sorry about my throat. A lot of it goes to apple. Its the biggest weight. Its 11 in the qqqs, 4. 6 in the spiders. The money flow comes to t forget the fundamentals i dont like the multiple. I still own it its going higher because of the etfs. Deirdre boeza has a news alert for us out in san francisco, speaking of tech. Zume is laying off 360 positions accounting for half of its workforce and shutting its r robotic pizza business alex garden tells me while today is difficult, the changes being made will focus the startup on packaging, an area where theyve seen some momentum Softbanks Vision Fund<\/a> invested in zume, valuing it at 1 billion. Previously it was valued at just 218 million these layoffs really represent another black eye for the vision fund which has seen a number of its Portfolio Companies<\/a> announce layoffs and executive changes the past few months. Back to you. Deirdre bosa, appreciate that cant have the robot making the pizza. Do the tossing part, isnt that a little thing you and i go to some places in Lower Manhattan<\/a> thats real pizza. Ten Growth Stocks<\/a> that still look attractive. So you can quickly check the markets . Yeah, actually im taking one last look at my dashboard before we board. Excellent. And you have thinkorswim mobile so i can finish analyzing the risk on this position. You two are all set. Have a great flight. Thanks. Well see ya. Ah, theyre getting so smart. Choose the app that fits your investing style. Whoh no, that looks grossit. What is that . You gotta try it, its terrible. I dont wanna tray it if its terrible. Its like mango chutney and burnt hair. No thank you, i have a very sensitive palate. Just try it hey guys, i think we should hurry up. If you taste something bad, you want someone else to try it. Its what you do. I cant get it out of my mouth if you want to save fifteen percent or more on car insurance, you switch to geico. Its what you do. Dog, dog, dog. Doprevagen is the number oneild mempharmacistrecommendeding . Memory support brand. You can find it in the vitamin aisle in stores everywhere. Prevagen. Healthier brain. Better life. Its almost like a mywchallenge everyday to seeey. How well i can eat and still enjoy myself all day long. I wake up every morning to see how much weight ive lost and how much better i look. Myww join today with the ww triple play hi, everybody im becky quick. The president imposing new sanctions on iran but offering a backtoback of a peace offering the very latest on this and whether this deescalates tensions in the middle east. The market seems to think that the risk is off the table are investors getting ahead of themselves well take a look at the crisis trade. Carlos ghosn may have escaped japan but what legal predicament could he be facing now . More on the exchange. Back to scott. Thu thanks. Well see you in a few. Goldman sachs is out with a list of high Growth Stocks<\/a> alphabet alltime high today, dominos, costco, microsoft, which we already talked about, dollar general, lowes, lockheed what do we think, Kari Firestone<\/a> . I like some of those names. We own charter, amazon and booking, three of the names. And we own them for some of the reasons that i read that goldman does weve owned charter for years since they we owned Time Warner Cable<\/a> they bought Time Warner Cable<\/a>. That integration took years. Its finally behind them they really have a strong cash flow the subscribers theyre losing, theyre making up on broad band. We like charter. Google has been an underperforming, was lagging, a relatively low piece stock given its growth rate. It started to outperform like that one. Booking holdings has moved fast into the space of ticketing and particularly overseas as the dollar comes down. That should be good for their Earnings Growth<\/a>. Joe, dominos own dominos and microsoft on the list i talk about those a lot let me give you a name that i talked about recently thats on this list. Owe ri oreilly automotive. Stock is up 150 since early 2017 they reported a fantastic quarter in october based above the 400 level you can buy it here, using a stock below 380. It has the fundamental momentum and all youre going to do to get out of this stock is wait to see if they report a bad quarter, which they havent multiple quarters. Jimmy, i dont want to hear about alphabet necessarily, because i get that what about some of these other names on this list this is a good list its diverse its not just taking the high flyers. Which others . Tractor supply. Sorry, dont own tractor supply. Im looking at it. Besides the parody, this is a stock, a Company Rather<\/a> thats defensible against online retailing. Lockheed martin, this one you have to chip away at its risen so much over the last five years but the f35 is in the sweet spot of production right now. Other countries want it. Theyre big in satellites. This is where the money is going. Defense am budgets are going up. Expedia is one of the ones i disagree with. I sold the stock 1 1 2, 2 years ago. By hotels, by airlines, theyre going direct, meeting the prices, putting less inventory on the site. Thats one i wouldnt own. All right if you have questions, we have answers. Next in ask halftime, alibaba and more well do that after this quick break. Intuit,al b intuit, alibaba after this quick break. A great rate. Thats why fidelity leads the industry in value while our competition continues to talk. Talk, talk while our competition continues to talk. Oh, your shes landed. Ed. And shes on her way to our house. What. I thought she was coming next weekend. I got it. Alexa. Start the coffee. Set the temperature to 72. Start roomba. We got this. Dont look. What . Dont look. Lets move. Mom. The lexus es, eagerly prepared for the unexpected. Lease the 2020 es 350 for 389 a month for 36 months. Experience amazing at your lexus dealer. Woi felt completely helpless. Hed online. My entire career and business were in jeopardy. I called reputation defender. Vo take control of your online reputation. Get your free reputation report card at reputationdefender. Com. Find out your online reputation today and let the experts help you repair it. Woman they were able to restore my good name. Vo visit reputationdefender. Com or call 18778668555. I can. The two words whispered at the start of every race. Every new job. And attempt to parallel park. electrical current buzzing each new draft of every novel. typing clicks the finishing touch on every masterpiece. newborn cries it is humanitys official twoword war cry. Words that move us all forward. The same two words that Capital Group<\/a> believes have the power to improve lives. And that, for over 85 years, have inspired us to help people achieve their financial goals. Talk to your advisor or consultant for investment risks and information. All right. We are back. Lets answer your questions. Rob in toronto for joe intuit, still into it . I dont hold the stock, stock fallen back 18 from august. Reports on february 21st come back a little bit traded a rich pe back in august about 43 times, down to around 34, 35 times right now i potentially would buy it lets see the quarter. From brian in chicago, your thoughts on marathon considering the expected spinoff of speedway in 2020 and the move in oil. The spin is not priced into it the oil price move, when the oil goes up, inputs go up but then what happens is margins go up. They raise gas line and refine product prices which is going to happen here. A lot going right for Marathon Petroleum<\/a> in 2020. Theyll split it up. Weiss, from dan in asheville, North Carolina<\/a> is there a breakout for baba above 220 . I believe there is. Look in order for Insurance Company<\/a> in china to be able to invest in stocks, theyve got to have a listing over there and n hong kong you continue and the liquidity is good and foxcom with the second best quarter ever two days ago, 25 growth in the quarter, an indication of how things are going in china so i love this stock. I dont think its too late to buy it and break out. Zach in nebraska, buy more visa i think you can buy visa. It had a good year and 83 of payments globally cash or checks so theres a long runway and Consumer Spending<\/a> in the United States<\/a> particularly continues to be good and could go higher. I hope we have time to do this can you grow up shares of grubhub, please . Grub before break real quick, this stock is surging higher. Theres a dow jones report that grubhub hires advisers for sales or acquisitions, a possible sale, that follows the big decline in those shares. That stock up more than 12 . It is relevant to the conversations that we have had on the show with the likes of jim chanos at delivering alpha saying why he was shorting this name a crowded space. Right . Many names are in there. Its been a sort of dog eat dog world this that space but apparent will theyre discussing strategical ternives the stock up better than 15 2. That was on the move final trades are next. 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The whole marijuana business is not worked out as well in the marketplace as expected but we are encouraged that maybe theyve turned the corner and management know what is theyre doing and they continue to have a good year. All right you own it, as well, quickly been a dud, dead money nor a year thats consolidation and looks like its poised to go higher. The ceo on mad money tonight at 6 00 eastern time okay lets do final trades quickly and then grub again. Go ahead. Keyside technology, a ces presentation that went real well. Electronic arts, consolidated and breaking out. Charles schwab. Finally starting to perform. Interest rates higher could be good for them. United airlines sold off. Should recover that and more planes are full. Consumers full pockets of cash. Throw grubhub shares up once again. Highlight it for you dow jones reporting yet again that grubhub is in talks considering its Strategic Alternatives<\/a> will anybody buy them . Right . They have a struggling business. The stock has gotten hammered throughout the better part of the year jim chanos publicly short on the name is it a recognition that their business is that bad they need to put themselves up for sale . Who if anybody will actually buy them yes thats a big spike on rumor. For sure. The exchange with becky begins now. Thank you, scotty hi, everybody. Im becky quick. Heres whats ahead. The president tries to ease tensions saying iran appears to be standing down we are following the developments. Plus, stocks moving higher despitd uncertainty out there. Nasdaq an s p at alltime highs today. Can anything hold back the rally . And then the great defense carlos ghosn gives a very candid and long News Conference<\/a> vowing to clear his name. Can he do that after fleeing the charges that he was facing in japan . Before all that, lets focus on the markets with seema mody i would not have bee","publisher":{"@type":"Organization","name":"archive.org","logo":{"@type":"ImageObject","width":"800","height":"600","url":"\/\/ia903100.us.archive.org\/32\/items\/CNBC_20200108_170000_Fast_Money_Halftime_Report\/CNBC_20200108_170000_Fast_Money_Halftime_Report.thumbs\/CNBC_20200108_170000_Fast_Money_Halftime_Report_000001.jpg"}},"autauthor":{"@type":"Organization"},"author":{"sameAs":"archive.org","name":"archive.org"}}],"coverageEndTime":"20240716T12:35:10+00:00"}