Halftime report starts right now. Welcome. Its good to have you with us on our wednesday. Jim lebenthal, Pete Najarian and from naples, florida, lizann sonders. Highs of the day, approaching big numbers, dow 30,000, nasdaq 10k, not that far away and cooperman weighing in on the state of stocks, telling us its not time to worry, yet. I would say were in the early stages of knocking on the door of euphoria but not quite euphoria certain parts of the market, like tesla, are in euphoria. Other parts, like energy, are in pessimism. These big numbers not all that far away, pete. All good, the market depends on what were focusing on. Are we focused on the coronavirus . If so, we go down. Generally were focused on earnings and we go higher. Thats where the market has been trading. Yesterday was interesting because apples with a little bit of both, right you look at apple. It was getting pushed down because of their guidance about what they were facing right now, what they were seeing Going Forward and they were being very forthright because of that, you had a push down in apple. It was down a little lower in the premarket but it absolutely rallied toward the end of the day along with the rest of the Technology Names nasdaq, we were down early it rallyed back to finish in positive territory that said a lot, i hink, about the appetite that we all have in the markets and people are willing to say, you know what . Yes, temporarily, well focus on this coronavirus right now the economy is doing really, really well. Knocking on the door of euphoria, words from Lee Cooperman. Not there yet. What do you think about what he said one thing thats interesting about this sentiment environment, for much of this bull market there was nothing but skepticism you couldnt get any sentiment issue on the attitude or behavioral side to anything approaching extremes that changed heading into 2018 you did start to see some extremes in the beginning of 2018, which perfectly set up the shortfall implosion, same thing happened into september, which set up the near bear market in the Fourth Quarter more recently when youve gotten these spikes in optimism heading into midjanuary, you were seeing recordalide. Then you have corona virus step in in and of itself when it gets excessive, it sets up vulnerable to the extent there was a catalyst all it took was a 3. 3 drop in the s p and most of those sentiment markets moved down at worse into territory skittishness comes back much more quickly relative to the late 1990s era. As Ricky Sandler told us, bifurcated market. Its like euphoria versus pessimism. Tesla today, Virgin Galactic today, energy today playing off one another. You could make a case for euphoria and then Lee Cooperman says theres pessimism and good value to be had in energy. Im going to parse those words a bit. He was talking about sector on one hand, and on the other a stock, two stocks, virgin. I dont see knocking on the door of euphoria in any real sectors. Sure the semis have done quite well theyre getting a rerating because theyre not what they were theyre not pure commodities they go into virtually every walk of life from cars to tvs, everywhere i dont see it knocking on the door of euphoria those are isolated instances. You can do that, keep that as isolated, boxed up on one side of the market and then look at Everything Else as a whole i dont know why we leave chipotle out there weve had chipotle thats been at unbelievable valuation levels since we got a new ceo there you can box those if it gets widespread like we saw in 2000, which i dont think well get to, thats euphoria. Cooperman said go up 5, 6 from here in a short period of time then youre not knocking on the door you broke the door down. Then maybe thats the time to worry. Between now and then these round numbers waiting for you, dow 30, nasdaq 10,000. Up 5 or 6 in a short period of time when i hear that, scott, i think a short time ago we were 5 or 6 below where we are now i heard him say that yesterday i understand what hes saying. Hes looking for the opposite of what hes saying, going from isolated incidents of mania into the Broader Market im not sure that looking at the overall market is where youre going to gauge that. What i would like to see before you get to euphoria, is some spreading out of enthusiasm that lizann is talking about. Its not just energy its financials. Its industrials, its health care that woefully have underperformed the hot sectors of the markets, software, social media semi conductors, et cetera we talk about and question the narrowness of this market. All i will say is there are wide swaths i just named four huge sector who havent really performed. Is it time to play the pessimism trades, that jim cramer said are uninvestable one says great, one says dont touch. I heard jimmys comments. This is one of those cases where ive got to say it is investable, energy, that is. Its not tradeable i look for in an investment, and most investors look for, is return on their capital. Free cash flow you look at energy and see dividends going up, share buybacks that are shrinking the share count, roich touch shell, buying back gobs of their own shares the point being those are investments. They return capital on what is invested what they are not, scott, is tradeable. I cant tell you when they start to perform we thought they would start to perform as at the end of the quarter. They are, as kramer said, uninvestable who cares about the dividend and the buyback . Eventually those lead them to you cant say when that happens. At end of the Fourth Quarter i thought we would start rallying. Then you have this corps own cameravirus and oil demand is negative on this year. Those are the things you cant predict. Investment means youre in for a while. And ill take those dividends along the way. Lizann, what do you make of that do you think its time to buy some of these, quote, unquote, pessimism trade,rs, stocks in the case of energy i would keep an eye n the inverse coordination between the dollar and oil prices and, of course, the continued move up in the dollar if it starts to get year to year appreciation and depreciation, like what happened in the second half of 2014 into the beginning of 2015, that sets up a fairly negative earnings outlook, not just for the energy sector, but more broadly i think currency is important in that overall trade you talked about bifucation. Theres been a lot of focus on technology as leadership year to date, and in particular since the coronavirus, tech is still at or near the top so thats a very unique pair, leading the market right now and i think it points back to some of what i talked about. There is that momentum dollar that is chasing the names that have done well theres also a combination of an interest in having a bit of a defensive offset and or money that is chasing yield, which were seeing in other segments of the market, too that is a very unique environment were in right now. This notion of playing this tech its not like cooperman says go all in on, you know, deep value, pessimism. Look at the big names theyre all high growth stocks. Alphabet, amazon, microsoft, facebook. Yeah. Big money is still there. Temper adding to micron, amazon in the Fourth Quarter. We talked to him yesterday in the we talked about his new intel play i spoke to him on the phone about that big money is still going where lizann said, the top heavy part of the market, the performers. I think its explainable. Its an unusual pair but its unusual to have free money and low Interest Rates you have virtually no inflation, high ppi number today. So youre going to want to go to companies that can still get Pricing Power and still grow in a noninflationary environment. I own crown castle i love it. Now i think those valuations are stretched but im not selling them the coronavirus was not a big deal yesterday apple barely budged. It did nothing, down less than 2 the lows. You could say, well, i saw that coming. Right. Its not like it was unexpected. Exactly but what it masked is the debate in the white house about not selling to huawei. To me, that will be a much bigger issue for the leadership in the market. Its not aif this desk is overwhelmed with pete, i lock at your holdings, those, quote, unquet, uninvestable stocks, chevron. Why, why, why why . Because theyre trades. What am i trading with options and what am i doing with stocks . Stocks are investments and options are trades, truly trades i look for beta trades. You have chevron stock. Ive been selling calls against that one its held in there well. Its down about 7 yeah, stock is down about 7 thats not that big of a worry for me im selling calls against it in the energy space you can find, the at times but i will tell you this when youve got oil going under 50, i look for those beta names and when do i see unusual activity into slumberje or names that i consider to be the beta names . Those can be trades, fast rushes and then i can get out and move on in terms of longer term holds, absolutely take a look at i look at technology yesterday, sitting on this desk, market is going down everybody is focused on apple to the downside in apple, in facebook and i brought those up yesterday im already out of that particular trade. You have a completely different view of energy jim says yes, you can invest in these things in the long term. Youre saying heck, no cramer says theyre uninvestable. Hes saying theyre untradeable. Reporter i think theyre tradeable zblun investable. For the long term yes. Obviously for the long term. You have sea change and younger investors are not going to buy those stock. Because of esg. Right. Okay, so wait lets talk about this, because that is overhanging these stocks, esg, and the push away from fossil fuels. Wait, scott, this is important number one, esg has been with us this has been building for more than a year, the effect of esg on these stockholdings Pension Plans divesting from fossil fuels thats been going on for over a year here is the reality of the world, folks we still drive gasguzzling cars we still fly by the way, when youre building a giga factory for batteries, you have to build those factories. The fossil fuel Energy Intensity in building Renewable Energies is intense bottom line, fossil fuels are not going away you can continue to Different Things here, okay no one is saying that those companies arent going to make money because, as you said, fossil fuels arent going away that is completely different than investors shuning the stocks regardless of whether the Balance Sheet looks great. They may not want to buy the stocks, thats the bigger point that theyre making, that they are uninvestable because of that. Thats one issue. I would say theyre uninvestable for a couple of years, because theyre unanalyzable a huge, speculative market that underlies the commodity and we have some of the allegedly Smartest Energy investors of the last decade that cant get money and factor out of business so the yield has been no protection unless theres a yield of 21 in these stocks, youve lost money with 3 and 4 yields. Ill give you a name that does work in the energy space and obviously were talking about a lot of oily stocks right now. How about kmi . How about looking at the pipeline i continue to own it. And i appreciate that because its been an absolute monster. Richard kiter continues to tell us, when it gets too cheap, im buying more. Last year he increased his position by an incredible amount when he bought Something Like 180,000 more 180 million more shares added to his position so this is the stock again, today, 52week highs. This is a name that i think you can own. You get a dividend yield and not have to worry as much. Youre not buying it for the yield. Thats the bonus on top. But the reality is 4. 5 dividend yield its going to be close to 6 steve, you just said it. I hear you 6 dividend yield doesnt make up for a stock that declines 7 . Weve got to escape to where the puck is. The damage is already in, in these sectors. If you look, kinder morgan, Marathon Petroleum trades at book value i dont think its going down further from here. I think its going up. It could easily trade and should trade at 1. 2 times. Lizann, back to big tech conversation, does it bother you at all that you have such a top heavy market you have six stocks, maybe less than that, that account for such a huge percentage of the s p gains for the year. The concentration does bother me a little bit. I think the comparisons to 1999 and 2000 are a bit off because these are legitimate companies with revenue and earning streams. In addition, you havent seen either their multiples get to the same kind of extreme nor have the overall multiples for the s p 500 reached anywhere near those extremes. I think in a momentumdriven market youre going to continue to see money move in that direction. Large caps still have hands down the better positioning, relative to small caps on a fundamental basis. Youve got financial conditions still incredibly loose, which represent still a bit of a tail wind under multiples but in a Perfect World i would like to see, you know, broader breath. But weve had this environment for some time now and it hasnt prevented the market from continuing to go up. I think rebalancing, pairing back gains, its a real simple ph philosophy its not terribly exciting to talk about, but man it saves investors at the end of the day. Jim, thats the gospel to you right now. Thats what youre doing with google and others . Lizann well try to talk some excitement into what you consider unexciting. It is exciting winners get much too big i trimmed google stock has been great i own a big position in it but its prudent management. I did this earlier in the year with apple corgos. Youve been doing this for weeks now. You recycle them. This is Portfolio Management i added to green briar i started a position in disney you buy low and you sell high. Thats all the Portfolio Management is. Trim your winners, add to the ones who havent done as well but you still believe in. Why do you have a new position at disney i bought it after the initial coronavirus, the stock got down to 135 picked it up there as the news came out that they closed disney shanghai my belief is that the coronavirus will have an effect in the first quarter, second quarter. After that, youre off to the races and youre getting disney plus, the creme de la creme in the space. Micron in the Fourth Quarter. You bought micron today. Not today. You bought micron you own micron yes. When did you buy micron just last week. Talk to me. Weve been looking at it for a really long time forget the inexpensive side of it or whatever where do you think micron is going from here . Youre friends with david temper, big advocate of this name for a long time we know the name very well i looked at it and said were seeing this unusual buying to the upside so that tells me a lot about what the perception of it is Going Forward. Why wouldnt i want to continue to own this stock, scott, be able to tell calls against my position when i buy stocks im looking for opportunity to sell calls against it, absorb that cost i got into it for and continue to roll on to that. I like where micron is going from here. I like the chip space. Ive been an intel buyer forever. Speaking of the chips pete just talked about, youve been a proponent of that space, even though you like individual names in it. Micron, i had a long conversation with the company. I got involved with micron a while ago. Major consolidation, capacity responsibility thats why its going higher in terms of the smh, if you recall i said i bought a position over and above what would be a normal as a trading position i was looking for an opportunity to get out of it frankly, i got a little worried when the tweet when the conversation came out in politico a week ago and friday in the journal about the white house limiting whats going to happ happen, what they can sell to huawei and to other foreign manufacturers. We tend to talk about some of these apple suppliers as a group. We dont necessarily separate them in the way we all talk about them but you buy a small position in corvo. Right. But you trim part of sky works. Right. Explain. I trimmed sky works i actually got out of it and went back in after have iing a conversation with corvo, after speaking to a taiwan company, media tech, that partners with them they sell the qualcomm chips to lower end phones in asia so the story on im still really worried about what the white house does i take no comfort in the tweets yesterday. Here is the story on the rf companies, qorvo and sky works the content they had in the 4g phone was roughly 9 per phone content on the 5g phone which may be delayed is 19 per phone. Thats a very powerful story so youve taken estimates down, media tech took estimates down to 5g phones in 2020 to a range of 170, 200 on february 7th when they announced, before apple got there. So thats why i like those i think the stocks will pull back a little more trimmed at 1. Youre picking it up at 104, thats fine. My advice to you, not that youre asking for it but ill give it to you anyway. Stick to your qualcomms. Those guys are going to get squeezed like heck by apple and samsung. Qualcomm has Pricing Power, renegotiated as of less than a year ago with apple. Thats where your Pricing Power is thats where your margins are. Well, ill disagree about the getting squeezed because you need to get the phones out there. Theres only three companies that do what they do broadcom is unsteady we dont know what their business is going to do. Sky works, in fact, might buy their business im fine with where i am qualcomm stands as much danger as getting squeezed because everybody hates doing business with qualcomm. Thats been true for 25 years. It has been. Lizann, whats the most attractive or under appreciated sector in the market today i think you could probably, within tech, maybe move down from some of the hot stocks and find some opportunities. We still an outperform rating on health care. In political season youre probably provided some opportunities there. And think if it moved down, near term it puts pressure on financials if we exit this environment you get more tract