For investors. We begin with the first trading day of february. Heres where we stand. The dow has made a triple digit move for the ninth straight day. Volatility continues way off the lows of the day. Down by more than 100 early on. But thats where we sit. Dow is down 50, 16,416. And go far right of your screen there, the look at crude oil, which is getting crushed today. It is down 5 , just shy of 32 a barrel. Tom barrett, good to see you again. Hi. The backdrop doesnt look good. Its bumpy, everything you have been talking about the last couple weeks, very little transparency, tremendous nervousness, a rush to liquid y liquidity. China, qe, japan, europe, all things that we knew and were priced in all of a sudden cause even a more sudden return to liquidity. And that heads the hedge funds. So redemptions are increasing at an exponential pace, and that has an effect on everything. Its a great time for us. Its a moment to look at really illiquid alternatives in a meaningful way. You think were overdoing it . A way you answered that question, we knew about this stuff, it was priced in, but now were having more of a fit about some things that we should have already known about. Well, look, its a gigantic macro question im not equipped to answer. So the way we look at t its impossible to make long term decisions in building businesses on short term cycles. So is it overdone . We fixed the banking problem. So there is no there is no liquidity issue in the banks. The banks have at least not u. S. Banks. Yeah. And european banks on a different level. So the opportunity for distress in europe is something else. But at home, the capital has increased by 50 over the last six years. The problem is controlling growth. So the illiquidity isnt in the banks, but moves someplace. So the question is, where is it . Right . Where does that vault of illiquidity lie, and as investors are running to a flood of liquidity, what happens . What instruments are within the system that could cause havoc . And in our industry, if you took the global credit industry, credit is probably the best risk adjusted investment at the moment. Because when they threw the baby out, they threw all the babies out. And within that bath water, tremendous opportunity. Youre looking at blackstone trading at 10 returns. You have ex term vdcs at 13 or 14 . Mortgage reits trading at midte midterm, long term assets, theyre not subject to those cycles. Real estate has always been subject to supply demand. In the lowgrowth environment, its fine. A 2 growth was nirvana in a way, because it stopped overbuilding. In 2008, we had overbuilding and these Nuclear Disaster derivative instruments. It doesnt exist any more. Everything is filled up. Europe, on the other hand, has the other opportunity, right . So farming debt in europe when you buy something at 60 cents down and its half full, and you underwrite it to a 16 yield and then you fill up that building and get to a 25 yield with a little bit of leverage, then you get rental growth three or four years later and get to 35 returns. Thats a pretty interesting business. But you cant do it on a prompter or meter. Lets bring in our first guest and continue the conversation. Adam parker, equity strategist, a 2175 target on the s p this year. Adam, welcome back. How are you . Good. So we put a lousy month in the books. Here we go with a new month, starting with data for the u. S. Economy. Is the worst over for the stock market or not . Well, i think its hard to call, but i do think that a higher probability of a recession in the u. S. Is in the prices than i think is realistic. I think the market is down too much. And the reason is, i dont think earnings have been impaired that much. And youve got a lot of stocks that are down, you know, 20, 30 . So im definitely more optimistic than i was two or three months ago about u. S. Equities. Guys, lets kick this around. Should investors be more optimistic, pete, than the price averages of the market would tell you they are . Probably. I mean, i think ann would agree, the biggest thing people are trying to grapple with are the lack of growth and are we going to see the growth. We see it in the earnings, adam, but what were not seeing is revenue. So is that something concerning to somebody like you as you look ahead and try to figure out where the s p is headed . Obviously, you need Revenue Growth. Im a little bit confused about, you know, the whole consumer versus manufacturing sector. I dont think youre going to see Revenue Growth in the manufacturing side, so im not as worried about that. I think you do need on the consumer side. But you guys know this well. What matters even more for stocks than revenue is margin expansion. And to the extent you have another quarter here where youre seeing about inline revenue with expectations but 4, 5 earnings expectations, it means margins are still in a lot of areas of the market hanging in better than people thought. I thought the earnings season was decent enough to assuage some of the fears. And i do think of the some of the more acute part of the down turn is behind us. You guys dropped a note essentially saying go big or go home when it comes to stockpicking, right . What we do is look at all the stocks that are 100 billion market cap or larger. A lot of times, people arent really focused on those. The biggest 42 stocks theres 42 stocks in the u. S. , 8. 6 trillion market cap. Thats half the s p. And a lot of managers i talk to dont think they can generate alpha or think i cant gather assets saying i own ticker abc, a big company. We did some work showing you can generate alpha there, and systemic ways to do it so thats the advice were giving clients this morning. Heavily financial led dock. Bank of america, jpmorgan, citi are the ones that adam says his team at Morgan Stanley says you should be betting on. Well, you look at them in the first few weeks of the year, these stocks are down 20 . And adam, what we got last week, of course, was that gdp as anemic as anybody could have unfortunately expected. So are they wrong . I think we were worried, judge, they were going to overshoot. That the fed thats the they im talking about. Are adams and the picks here ones you agree with or disagree with . I agree with, but i dont think that were going to see the rapid acceleration, the four, for instance the dot plots saying we were going to see four rate hikes. Its a matter of time, adam before the fed gets a dose of reality. Thats hard to say about people, obviously so deeply versed in reality. On the other hand, there is nobody thats betting in this trilliondollar debt market, virtually nobody. That thinks theyre going to see four rate hikes this year. But the fed was still saying that. So after friday, i think theyre going to have to come back, walk that back and say that, you know, whether its that theyre sending fisher out or bullard or whomever they are, theyre going to have to get the message out there that were not going to see four rate hikes, because thats one of the markets were so concerned about. How about the fed backing off . You know, not as much as you think. I think whats priced in is Something Like 1 to 1. 5 hikes this year. I agree with you, the fed is not representing the reality of what people are participating in markets think is realistic. This club is a threeyear outlook. So were not really focused so much on the next month or two in the fed action. I do think your broader question, though we think earnings are going 4 this year, on top of that a 2. 2 net buyback. And about a 2 dividend yield. That would be 8 total return for the s p. After that, you guess at what happens to the multiple. I think with sentiment so low, with expectations so low, people may look around and say 8 total return is pretty good. And i think u. S. Could turn out to be a better place to invest and all the reasons of the world as the year unfolds. I think thats the view we heard from lee cooperman, 7 total return. Adam, i appreciate you coming on. Well talk soon. Take care, scott. Adam parker at Morgan Stanley. Is the worst in the market . You think things get materially better or we go back and have some damage done . I still dont know what its going to do on a daytoday basis. Frankly, there is also risk. The market seems to be technically driven. I dont believe that much technicals. I look at fundamentals. I look at some of the fundamentals like whats happening in health care. I like them. So if you look at the ibb, that thing has gotten crushed, draded down 400. Right now 263. Some people still suggest you fade any pop you get. Well, if you trade in the ibb, thats true. If you trade underlying securities, like mature biotech, yielding less, or im sorry. Trading at a pe much less than big cap phrma and exponentially more growth, with product lines already there, you want to own them. So as tom said, the baby is being thrown out with the bath water all of the time. There are some values there. However, you just cant buy the market. Youve got to pick your spots. And when china comes out like they did, and they report yet another purchasing manager index declining to by the market numbers, i would say the market held up fairly well. So the banks to me, i like them. I own citi, i think theyre incredibly cheap. But until we get the energy book straightened out and what the Energy Exposure is, which i think is diminishous, i dont think they lift. Tom, you made a statement that the baby was being thrown out with the bath water. But in were talking about a lot of different areas. High yield, for example. You see opportunity in a space thats gotten a lot of conversation for the damage thats been done there relative to energy and a lot of other places . Sure, its probably high yield in general. Commodities in oil and gas is probably the single largest opportunity that we have seen for pricing arbitrage since 2008. Is that right . Yeah. But its got to be curated. So if you look for me as a contrarian, if i look and say, okay, ive got to be in an efficient market. How can i compete with monster options, right . Its not going to happen. Its just not going to happen. Too much information, transparency, homogeneous exchanges, everybody is trading on the same information. Curated pioneering into these highyield instruments, if you have the resolution strategy and the guts to loan to own, is the greatest distortive opportunity there is today. Ive heard from mark laz re sat in the very seat youre sitting and saying it was the opportunity of a lifetime if you have the guts to do it and the time horizon to wait. And hes been one of the kings at the industry. Worked for bob bass. Hes the best at being able to have the fortitude to drive through. You would agree with that kind of 100 . And look, mining in oil in gas, if you looked at the contrarian its difficult to find the contrarian theme. Everybody is running to liquidity, everybody has the same information and everything is core rated. So oil, which was supposed to be low correlation ends up week onetoone. Reits. We talk about credits or mlp ands ask you look at reits and its supposed to be co variance. What happened . Right . Everything is related. Its one of the few areas thats not. So you look at the mining stocks, the big ones, are unbelievable. Fall and equity mark cap and debt trading at 50 cents. Diamonds, gold, copper going nowhere. All of us are in these nano seconds of baby step monitoring. We have to be aware of some of the leverage in terms of debt. You mentioned all those names and when you look at those names, were talking about massive debt to equity, correct . Huge. Glen core. Right. And the problem is whats inside the box and is it repo debt. If you have short term is your asset liability mismatched . Thats whats freaking the market out. But for great guys like lazer, you can see the Balance Sheet and match asset. Lets take a quick break and come back. Much more with tom bar rec. Coming up, twitter is on a tear today. Is there a white knight in the wings . Get ready to should you buy the social Media Company . Plus, our call of the day is a downgrade for highend retail. How slow growth and trouble in china are lathers the luxury markets. And dejavu all over again. Youve got to come back with me where . Back to the future lots of stocks are back at levels we havent seen since 2014. Are they better the Second Time Around . Youre watching cnbc. First in business worldwide. Theres a lot of places you never want to see 7. 95. [ beep ] but youll be glad to see it here. Fidelity where smarter investors will always be. If only the signs were as obvious when you trade. Fidelitys active trader pro can help you find smarter entry and exit points and can help protect your potential profits. Fidelity where smarter investors will always be. Welcome back to the halftime report. Breaking news. Its officially over. The cdc closing its investigation to the e. Coli outbreaks linked to chipotle. Closing both ecoli outbreaks. The investigation was unable to identify the contaminated food or ingredient that caused this outbreak that affected more than 50 people in multiple states. And that the most recent illness reported to the cdc started december 1st of 2015 so two months ago today. If you look at shares of chipotle, theyre up more than 4 . And chipotle also offering a statement, saying theyre closed the cdc has concluded its investigation and that in light of this investigation over the last couple months, they have taken these measures to increase their food safety. So we get this news, the cdc closing its investigation into the ecoli outbreak tied to chipotle. A little more than 24 hours before the Company Comes out with its earnings Quarterly Earnings tomorrow after the bell. Scott, over to you. Morgan, thanks. We see the stock moving green light to buy the stock now . I think this is something we have been waiting for. We have talked for a long time, how long before we stop getting news stories causing the negatives. Youve got it now. And that would be one reason to be excited about this stock. That does not mean, despite this w big fall, though, this becomes an incredible play. When you look at valuation, it still is rich it got cheaper. Still cheaper than six months ago, steve. Well, when it loses momentum, momentum cuts both ways. Then you get close to, okay, whats reality . My guess is it consolidates i dont think anybody is running in. Cdc made the claim, but you still dont know. And what you worry about, of course, when cdc is looking at it, judge, was there a coverup by the company . Is there criminal liability and so forth . And the fact that this is as morgan just detailed, not being not moving ahead with that investigation, that theyre satisfied, thats a positive for the company. So you should see more lift, because of that. Lets mover on to twitter. That stock jumping at this hour on speculation that a deal could be in the works. News website, the information reporting today that private equity group silver lake and Mark Andreessen have looked at buying the company. The stock up more than 8 now. But pete, it was up by better than 10. Right. Early on today. Although it did take a dip and now we see it swoop back up over 1. This is a very, very strong move. Everybody has been speculating for a long time, who would be potentially a suitor . Would it be google, facebook . Theres all kinds of different names that come out all of the time. Pretty interesting to see the names coming up now, private equity and Mark Andreessen with some interest. There is ways they could see you can understand, when you look at what that quarter was this most recent quarter from facebook and you see the ad spend, scott, theyve got to be drooling thinking theyve been stuck and have to find growth. But ecommerce is something they havent even really attempted, quite frankly at twitter, and thats a direction they could go as well. And maybe these smart folks push them. And a new segment were calling new at noon. Suntrust told me a twitter deal is getting more likely, but with a bigger player like a google or a facebook, as has been long speculated, there was this notion in the story that a socalled pipe deal may be considered where private investors buy a piece of public equity through new shares being issued. He told me that was, quote, odd. Quote, unquote, odd. That a larger strategic they dont need the capital. Right. Martin certify rely was on squawk box and he went through his numbers and said he pace google in advertising 3 to 4 billion a year. Facebook a billion. And these guys went from 150 to 2 and a quarter. He doesnt view them as branding. He views it more as pr. So that could get a much lower multiple. To me, translates to the value. Do you buy this stock simply for the takeout possibility . There are a lot of people doing that, judge. The last time they did it, of course, was wednesday coming up on two weeks ago when news corp. Was rumored to be the buyer. The stock jumped on 70 million share turnover and then news corp. , of course, denied it. And the stock came right back down. Today we have only seen turnover of about 24 or 25 million. Thats about average turnover. So despite the fact the stock has hopped up over 18 like pete said and held in there, it doesnt have the same kind of oomph of it did back on the 20th. So a deal would need to be announced fairly soon or its just going to continue to filter back down. Any time you buy a stock only because you wait for a takeout offer, if youve done that every time with every rumor, youre going to be sweeping floors at one of toms properties. Thats a sure way to go broke. Sure maybe youre hopeful that a barrack comes in as part of a private equity group and looks at Something Like twitter. When you look at this situation, does it seem like the kind of private equity play that would make sense or has been suggested by the analysts and others that its a bigger player . Sure. I mean, silver lake is in that space. Nobody better at doing that. For traditional private equity, its a very difficult play. Its better taking long, dated, contractual flash cash flows that need to be in a private setting, breed them back to normalcy and then take them public which is not a twitter or a chipotle. I would rather be the triple net lease owner of the real estate than the burritos. Uhhuh. All right. Coming up, a downgrade for two highend retailers. Is there trouble brewing in the luxury markets . Our call of the day is next. And take a look at the s p sectors at this hour led by utilities, telecom, discretiona discretionary. One half of 1 percent. More after this. We were born 100 years ago into a new american century. Born with a hunger to fly and a passion to build something better. And what an amazing time its been, decade after decade of innovation, inspiration and wonder. So, we say thank you america for a century of trust, for the privilege of flying higher and higher, together. Welcome back. Our call of the day is a downgrade for tiffany and