Panel. Pete najarian to you first. Down over the past year. Worst performer of large banks. Kbw indention down ten. Whats the problem . Everybody puts banks in the same pocket right now together, and i think when you look at Morgan Stanley, goldman sachs, theyre separate and particularly Morgan Stanley. Focus and emphasis put on Wealth Management and thats what i think value act is lookingality now, where the focus should be. Give you a small example. How many quarters in a row did we hear when Dicks Sporting Goods reported everything was actually pretty good, golf galaxy awful and everybody started selling that stock. Look at Morgan Stanley. The focus, Wealth Management. Where theyre moving themselves into that field more and more and more, getting more exposure and because of that, people need to focus on, is that the right thing . I think it is. I think that bodes favorably for Morgan Stanley. Joe, the point of making. Focus on the low captain intensive businesses like Wealth Management, investment business, Investment Advisory and the like and the market seems overly focused on other issues, fixed income, currency, commodity, regulatory trading, saying feels like missing the forest for the trees . This is an incredibly interesting position that hes taken, because, really, this is unique. You dont see a lot of activism in the financial space in particular a time when you have to get Regulatory Approval to increase your dividend and buy back. I think he goes after Morgan Stanley because 0 on a market cap size its the smallest of the six bigging banks. The question becomes does this open a larger narrative surrounding what over the past seven year has been the position for many, including myself, banks need to hoard cash and leave it on their Balance Sheet . Leaves it open to conversation. Morgan stanley is in transition. Stock went from 20 to 35, from 2013 to 2015 and fell back. Talk to many in the Wealth Management division, which i do. Right now a little bit of uncomfortableness with a lot of the loss of what they did. And greg flemings is not there. Hes a rock star on wall street. The fact hes not there, problem for the Wealth Management division. A lot going on there right now. And golden goose. Steph, how do you view this now that value act even though not saying that gorman is the problem. Their point of view, at least at this point is the market is the problem. Theyre the ones getting it wrong. Not gorman . Seems like a friendly activist, certainly, for sure. So i dont know how much pressure hell put on gorman or the board for that matter. The problemsy Morgan Stanley, its been inconsistent. The ceo has been inconsistent. The businesses inconsistent. I think the strategy has been very good. Getting more Wealth Management, more feebased businesses, improving cost structure, Balance Sheet is very good, but its been every other quarter where the companys been able to deliver versus Something Like goldman, which is consistently delivered. You can see why this stock trades as a discounty. That said, though, scott, this stock outperformed the big five year to date. I think sure, the big picture view is what were looking at over the past year. Right. Its lagged and lagged somewhat dramatically, especially looking at the broader kbw index . And just be kircht and deliver a couple quarters in a row and div good guidance, i think that will go a long way. Im going to be very contrarian here and say that this focus on Wealth Management may be a little bit looking in the rearview mirror. I dont think the Wealth Management franchise is at the wire houses will be anywhere near as dominant at the brokerage businesses that these things used to be were. And sure as heck where the moneys going and investment which is paid off. But its not. Handsomely for morgan stan think, at least until the stock wept down. Done an excellent job. Cut costs moved in the right direction. The right thing to do. Going forward, i dont any that business will be as good as it has been. I think barriers to entry in Wealth Management fall a little every month that passes, and im in this industry. Take my word for it, theres nothing going on at Wells Fargo Advisors or Morgan StanleyWealth Management or bank of America Merrill lynch that proprietary. Shift from focus to lending, its a lending business, where all Revenue Growth is coming from. Securitiesbased lending is huge at these firms. Theyre making a ton of money. I think a lot of the money thats been made you wont see those growth rates stay there. Take the conversation then this way. Looking for a catalyst to invest in the banks, obviously higher rates are the thing everybodys been waiting for. Get that net interest marge margin up and you hear until year crazy, red in the face. Right . Is this the catalyst to buy Morgan Stanley today . Knowing that value act will be there. Even though theyre not in a Critical Role of the management and the leadership and the way that theyve run the business. Is this reason enough to buy the stock . Because theyre, now you got somebody really paying attention . There has been enough of a pullback and hes getting in or you can get in here at basically ten times which is a strong valuation point. Unless josh is right. The raa business obliterates. Its already happening. Unless the raa business obliterates the Wealth Management business on a longer term basis, then all of these Wealth Management businessless have a problem. For Morgan Stanley itself i think and the stake taken here, i think correct on it and going as i said at the top of the zhao, introduce a conversation that we really havent had in the last seven years. Do these banks need all the captain on Balance Sheets because of regulation or not . Find out more what this means for Morgan Stanley. Bring in now the bank analyst my mayo joining us today on the phone. Mike, welcome back. Thanks for having me. You heard news of this like we all did. I suspect. What was your reaction . I think this is great news. Its great news for Morgan Stanley. Banking sector, what it needs. Im not blaming the market, though. Im quoting Morgan Stanley accountable. Holding them accountable. They have an excellent franchise. Three mergers, two in Wealth Management, one in equities. The glass is threefourths full with good businesses but execution has fallen short. This should be the third year of flat earnings. The last year, equity write downs and most important issue, single digit need to get to double digits going from value destruction to value creation. And if they dont, then i think we need to have another conversation. You are saying that its not so much the market getting it wrong, that gorman hasnt executed to the way that the street would like . More unnoticed today . Well, you have a friendly activist involved, and that friendly may not be so friendly if Morgan Stanley misses their 2017 targets. So i think this increases the pressure for Morgan Stanley to achieve targets in 2017. By the way, scott, as you recall, i went to the annual meeting, in new york, and i talked to Morgan Stanley and asking questions. I asked almost all the questions at the annual meeting and also got the lead director erston boles to say he expects Morgan Stanley to achieve their targets next year. Friendly activists because the ceo and lead director of the board said next year we think were going to get our targets, but if you dont get the tarts, absolutely look out. By the way, the consensus for Morgan Stanley expects Morgan Stanley to miss their targets next year. So if the consensus is right, look out. If the consensus is wrong and were above consensus, then, you know, gorman is fine. What do you make of the fact, i guess my understanding from people i spoke with last night, as trying to report on this story, that inside Morgan Stanley there was a concern at the very minimum since the beginning of the year that this could happen. That an activist could actually be taking a look at Morgan Stanley, because of the way the stock traded below its book value and the fact its underperformed to peers over the prior year . Truth to that . Absolutely. I mean, i talked to, you know, most of the largest shareholders. In fact, four years ago we went from negative to positive on the stock ats 13ds. We said either the stock prize goes up or Morgan Stanley needs a new ceo. Stock price went up. Morgan stanley repositioned their business more aggressively than any other of the largest u. S. Banks. Theyd gone from onethird to onehalf wealth and asset management. Theyve gotten that part right. Now you have to get the job done. Think about the olympics. If we had great in balance beam and floor exercise and uneven bars and vault and the u. S. Gymnastics team didnt bring home medals, you say, whats up . Maybe we need a new coach. They have the ingredients. Get the job done now and the target next year. Stay with us. Pivot to yoanother bank. Jpmorgan. Down grades jpmorgan today, mike. He says the big banks are stuck between hope and fear. Weve made it our call of the day. Youve said, i believe, that jpmorgan is the lebron james of banking. So what do you make of this downgrade today . And how it fits into the prism of your own view . Well, you have to talk to some investors who want to take some money off the table with jpmorgan, and i think thats absolutely the wrong move. Feature jpmorgan as lebron james of banking because jpmorgan is good on both offense and defense. And on offense they continue to gain share in their businesses, especially with the europe poon banks trading. This is a market share grab for jpmorgan. On defense, you have this dividend yield of 3 and management down side risk awe you saw with the Second Quarter earnings with the brexit concern. Wrong time to take money off the table with jpmorgan. The best performing of the global whole sale banks this year, its still underperformed the s p 500. Youre kind of leaving before the partys gotten started. They say, look, agree with you. They view it as best in class. Say those words in the very note they put out, but sat the same point saying less upside over the last 6 to 12 months in this name in particular that maybe some of these names at this point are better at rentals, so to speak, than longer Term Investments at this point. Absolutely long. You know, this is ive been doing this 25 years. This is one of the best times, rewards well up to the level of risk. Focus on the level of risk at the bank. Record capital. Record liquidity. The best Balance Sheet in decades. The best earnings stability in a decade and the markets ignoring itted. And they can, and the markets wrong. Just like it was wrong on potential down side a kedecade ago. As banks management through incidents likes brexit and dislocation, everything we had in february when theyre concerned about european banks failing, banks continue to chuck through earnings, increase dividends, return capital, youll see steady eddie bank return more through bond proxy performance. Mike, appreciate the time. I know its personal time youre taking. So i really appreciate you taking the moment and calling in. Sure. My pleasure. Mike mayo on the hot line on this story. What do we do now with jpmorgan . Talked Morgan Stanley what this could mean. Interesting note from the number one ranked analyst . Stock is down. Interesting, too. Banks caught a bit and a lot because of Interest Rates have backed up, but this stock is always going to be expensive as long as jamie dimon is running the company and the Balance Sheet strong as it is and 3 dividend yield. Mike said all the thing ice adegree with. What i have done is bar bell. I own jpmorgan. The steady eddie, then i also have citi group and bank of america, a little more beta. It we get a bank ral toy continue they will outtomorrow jpmorgan but i can sleep at night owning this company for sure. Pete . From the beta perspective, a bank of america along with you, painful, sooner or later well get rewarted i think. Morgan stanley today look at whats going on with the value act, that gets more and more attractive to me with the potential of if the execution isnt there theyll act. For now, more passive. Jpmorgan, though agree completely with plik. Look at the name, what its done. Im not in the name, because because i see less up side. Somebody easy got to be in bank and three, jpmorgan woulden one because of the Balance Sheet what they look like right now and i get a 3 yield in terms of execution nobody is better than jamie dimon. Look at financials now, takes me away from jpmorgan and sort of the big banks, and i want to look more at the exchanges. Look at asset managers. Black rock is having a fantastic year. Up 8 . Rewarding the investors with Strong Capital allocation returns. Thats a place i want to look. Look at a name like ice. Cme. Exchange working well. Look there, look at regionals, bb t. Would you be concerned in exchanges . I bring it up, just yesterday talking about volumes, thaw theyre going into this june, july, now august being really awful, when i see volume starting to come down, i think id be a little more concerned with the exchange. I would say over the last four to six quarters that was a concern that weve now lapped i think, a lot of the exchanges are learning to live in an environment of low volumes and looking at earnings and the earnings producing, strong earnings and again reflected in the stock prices. Now 27 days without a 1 move in either direction for the s p, which is the longest stretch back to late summer of 2014. History suggests these periods dont go on forever. Volumes will come back. The vix is dead as a door nail right now. Even 0en a down day for the market still under 13. But thats not a forever thing. Thats a now thing. Id would be not crazy concerned to joes point with volumes on exchanges. On Morgan Stanley, secular things afoot that no activist hedge fund or ceo for that matter can really do much about. And then on jpmorgan, i think steph nails it. This may nob have the most upside. This is the name to own. Inverse head and shoulders in the chart, breaks above 68, resistant back to early 2015, say goodbye. Stock could be high 70s. Good stuff. We are just getting warmed up here at the Halftime Report. Announcer some pain doesnt taste right. Shares trashed after the company missed guidance and announced possible accounting concerns, and one of our traders got caught in the celestial trap. She what hes doing next. And also ahead, a stock that fits your portfolio . Several big names reporting today, tomorrow and thursday. And two big calls on energy. Is the sector worth the risk . More Halftime Report with scott wapner in two minutes. Welcome back to the Halftime Report. Shares of hain celestial downward, saying it doesnt expect to reach its anticipated sales and profit levels for the year. Jon najarian pointed out unusual activity in hain friday. Bought calls thinking a buyout was possible. Listen. The calls are up 45 just on a very small upside move in the stock. So thats a big bet. Theyre betting that a deal happens and happens pretty quick. Jon najarian is with us now from chicago. Always accountable. Doc, what you are. Its a tough one, at least options. Yeah. Thats the only good news here, judge. Yeah. This is you know, we saw unusual activity in white wave. Wwav, that was a takeout. This seemed to fit exactly into that mold as far as the way it was trading into the weekend. Normal activity, 1,300 contracts, trades into the 30,000 and 40,000 contract range, a feedy frenzy. Should have been buying puts, i guess. George sorrow got fooled, we got fooled. Soros, 14f admitted he was in this thing too. The read i believe was correct, judge. Unfortunately, the reasons that people were buying anticipating a takeover or something else, it was a take under, and you know, here it is basically took about 10,000 out of my account today. Wow. You say luckily i had options, and the point being, sort of these, teachable moments we have every now and again on this program, you make the distinction between options versus equities, and how this one i suppose worked in your favor by doing it that way . Well, yeah. Again, it lessened the amount of exposure. They are a Risk Transfer vehicle. Options. The reason all of those folks behind me trade them every day is because of that, but what i did, judge, i bought the 55 calls i cited out in september and i sold 60 calls against it, paid a net of about, whatever, 1. 20 for that spread. Unfortunately, that spread went to 15 cents today. So thats that 10,000 im talking about. It i were in 10,000 sh