Lets begin with the earnings story. Pete, im going to you. We said its the busiest day. Numbers are coming in. What are you doing as a result . I think the most important thing is when you look to the start of earnings season, we look at the financials. Weve kicked more and more into overdrive when you look at whats going on in technology, and technology sticks out. Texas instruments last quarter great report, stock jumped up and its maintaining where it was, scott. Is it moving much . No. Had a great number but theyre not moving a lot. Part that have is because they ran into the number. Intel, on the other hand, when they reported they missed on certain areas that were very concerning to people and thats why that stock has sold off and now it is wavering around. Western digital today, look at june perfect yesterday, technology continues to be very, very strong and that stands out big time this week in the earnings. Wow, look at wdc up about 7 1 3 percent. How does the market here look to you . Earnings have been pretty good yet it feels a little uneasy. The major averages feel uneasy now. It feels like were at an inflex point. We think the status quo weve been living through of rates going down and stocks drifting higher and being led by the defensives and yield chasing stocks we think theres a change coming. We see a little inflation and you see it in a lot of different sectors and in the way stocks are reacting in the Earnings Report this season. You look at whats happening with the tenyear yield today at 185. You said you were short bonds. You told me youre massively short right now. Today its probably our biggest position as a collective group, and it is really a swaps trade, so its not what a lot of people who watch this but its short european bonds, u. S. Bonds, and japanese bonds. We think the concept, though, is understandable by everybody watching, however. And low yields have infiltrated everything, right, so whether its 500 stocks that do m a deals or share buybacks, its everywhere. You look at Big Companies that are even great, Simon Properties group. This trades at a sub 3 yield because people have chased it, because theyre come pg it to government bopdz. When the yields start to go up, people are treating stocks like bonds and if those yields go up, you could see the equity prices get killed really. You guys believe that . Uty, the utility index had a massive correction and sort of consolidating now but it will go down. And i agree with you. It wasnt that long ago, it was the beginning of the year, we were at 215 on the dump. Anything where people it will take a while. Its going to be gradual. Well see the fullon dump. It depends on the rate of change in the ten year. We had japan come out and say, you know what, we dont have to necessarily increase our buying of sovereigns because we think we can get to where we need to. So central bankers are finally getting it and theyre saying its more important for us to have a healthy Banking System and to have a consumer thats earning money on their Bank Deposits than it is to keep driving zero Interest Rates or negative Interest Rates because they really havent worked. Theyve actually been a negative. So thats the trend. So well see a ten year back over 2 as i pointed out on the show before the ten year was at 3 in 2013. We can get there. Joe, what jumps out at you today, the it teslas, the twitters, the fords, barclays, you have some big names that came out with numbers. Listen, the bond conversation is a good conversation. I think the yield curve obviously needs to steepen. That would have a positive impact. The one thing i dont think you want to get caught up in is the macro call. They are having a field day right now anytime the market gets up to 2165, 2170 they slam it right back down. You think it will break through for the 5 to 10 correction and it holds these levels. So im in the camp of what pete is talking about. I own texas instruments. A couple weeks ago i sold off some of it because i was concerned coming into october. Im going to keep what i have because i like what im hearing for technology. Im coming back around to financials and a couple names ive added today, usb. Usb to me could be the winner in the wells fargo saga because now that becomes the trudee domestically oriented bank. Staying with my bbt. Some of the regionals are performing well, still think thats a potential m a target and the earnings that havent been good it like yesterday i wasnt here but pandora to me below 12, thats a gift. I still think that stock is getting bought 18, 19 when it does. You have an activist always talking about that. Judge, when you look at the fixed income trading and you look at what happened after brexit, look at jpmorgan, citi, the big banks, bank america, merrill, those are the ones that made the money from that, right . Each one named exactly that and said their fixed income trading was through the roof. What steve is talking about with rates going back up perhaps even over 200, 215, the short position jon has in bonds, that would benefit these guys in a huge way not just from what people think. Not just from the interest going up. Thats a minor piece of it. Look at how well they did in basically a flat Interest Rate environment when the fixed income trading went nuts. That will be huge for these guys going forward. Let me ask you, jon, about tesla which posted a profit, sort of gave the bears a sucker punch yesterday. Are you short it . Yeah, yeah. Its a tesla quarter, right . That Free Cash Flow is not Free Cash Flow you can take to the bank. They extended their payables by over 600 million. They worked out some inventory, dropped their cap dramatically. That was a one quarter blip. Its still tesla. Elon got pressured by the street calling him out that it hes never going to make a profitable quarter, and so he fab ricated one. Fabricated is a strong word and thats not where i wanted to go with the analogy. He manufactured a positive free flow quarter. It sounds like the same you heard about besos. Hes going to go back to running the business how he wants to run it. But thats losing money is how he wants to run it. Payables has cost of goods doubled from 15 to 36 . Its been 15 forever. It was clearly a different quarter in the way he completed it. Anybody see this on the other side that have . No. The posting of profit doesnt sway anybody . No. I was actually thinking the same thing. He needed it. Hes got solar out there which makes no sense to me, and i dont know who it makes sense to. I think hes run out of funding mechanisms for solar city as a Standalone Company because spacex cant do it anymore. So what do you do . You buy. He needed to make sense. So its just stark how all of a sudden this quarter when its at its low they come out with a profit. So i do not think its susta sustainable and competition is picking up markedly in the in it his space plus, also, what youve heard on their latest car is just stark. Consumer reports has gone from tesla being the top car, the model s to being the worst car. He need ed it now more than eve. So if theres anything in the kitty, bring it on. Halftimes resident shark is live with us today from toronto. Good to see you again. Thank you very much. We were on tesla. Lets go there. This profitability quarter change your view in any way . No, it doesnt. I have a different take on tesla. I understand why people are short it but i see the tension in the market. All the young guys around me right now own this stock personally. We dont touch it within any of our mandates and my reasoning for that is this. One day gravity will strike on multiple. This is a car company. Bmw has an equivalent product Getting Better and better all the time and i understand the amazon argument but let me explain the difference between the amazon years when they never made money and the besos story versus this one. The rouen reason gravity will strike tesla it makes one thing, a car. The platform amazon has become and defied gravity for a decade is it is a tremendously diverse platform of income, all kinds of products, the cloud is a big part of business, many of my Small Businesses use it now. It tesla makes a car. One thing. Cars. And why it can stay is beyond me. All around me we have this bull and bear debate with my people at work here. They own it. They love it. Its bart of their culture. They want to own one one day. This does not trade at multiples. They wont listen. What we node to give them the lesson they deserve because all these young guys have never faced the down side of a stock that collapsed 30 , 40 , its coming and big daddy will be right. Right now theyre smiling and laughing at me. It defies gravity. Youre endearing yourself to your workforce. I just want the truth, judge. I just want the truth. Tell me why this can trade at a crazy multiple in perpetuity and it doesnt make a single dime of Free Cash Flow on anything it makes. I need these guys to learn that lesson. Otherwise all the things ive learned over my decades of trading means nothing. So then what are you buying today, kevin . Im taking a counter trade on health care. Im going in i had an anecdotal experience i want to tell you about, some of you have heard this. A couple fridays ago i went to philadelphia and this is a democratic strong hold, a big spread in the differences between what they think will happen and 400 stores in the area taking my wine so i went for two hours about 1,000 people there. Coming up to me im signing wine bottles with a felt marker. After 20 minutes i get bored. I want to take an informal poll. I start asking people, who are you voting for . Half of them wont it tell me. 525 of them did. And i would have expected a wide margin going for the democrats because that is their country. Thats their zone. Hillary won by two votes. Thats it. When i left there i realized maybe the polls arent right. Maybe we all have it wrong. I dont know. I decided to put on a health care trade. Im going to venture into four areas i think will spring back just in case trump wins. I dont know. I dont have a horse in the hunt. All im saying is something is awry. Its not right with what i saw because many people told me we dont talk about it. Im not willing to tell you who im voting for but secretly i cant tell my husband im voting for trump. Youre a woman, youre voting for trump . That was the kind of thing i saw there. I went into it four health care positions. I said im going to go ihi, which is medical devices. Its been pounded down as a result of hillary and all the things negative on health care. I also went into pjp, my pharma play. These are all etfs. One that no one has ever heard of gnfx, just generics global, and i think it will respond positively, and ibb. I put that on 25 cents on the dollar, and im just going to sit through the next 90 days. If trump gets in, i think ill make 7 to 10 on these trades. Even if he doesnt, these things have had the you know what pounded out of them and i like to hold them. The market will come back saying were through the election. Hillary cant get the stuff done against the pharmas. First question is do i want it to short oleary wines if clinton wins, away from that the second question is banks have acted counter intuitive to the trade because theyve moved up. If clinton gets in, now with warren attached at the hip, theyve been going the other way. You were short banks. Is that still a trade you have . I still am because my thinking is we have a 30 chance now. Look, the banks are moving up because everyone thinks they will do the 25 bit. That may be 72 saying that will happen. I actually think theres a chance, more than 30 that they wont. If that happens, youre down 7 to 10 , this it will be the sixth head fake on financials so i am short. Im definitely short the regionals and the main names, and, look, i could be wrong. This is a trade but i dont like the balance sheets, the return on assets. Dont worry, the fed will rescue us. This time for sure theyll rescue us. I guarantee a fed rate hike, i say sixth time we get the head fake. Long pharma and short financials. We havent even talked about twitter yet. I want to ask you, john, daily active users up 7 , cutting the workforce. Are you short that name and, if not, why . We were. Were not. I think its an interesting asset. I love using the product. Its an Unprofitable Company and somebody might buy it and maybe somebody wont. I sit on the sidelines and watch and occasionally send out a tweet. Kevin, whats your view on twitter post earnings here . Is it any more attractive to you or can you just not get there . No, i cant get there. Im coming to the conclusion that twitter is a feature. Its not a business. It cant get more promoted than it is. Its part of the psyche of the election, but they cant seem to monetize it. Something i call the shark tank ind index, the 32 small cap privates that use social every way they can to garner customers, twitter has fallen out of favor there. They are using snap chat. They use instagram. Theyre using linkedin, facebook live. So when i talk to those 32 ceos, whats up with twitter . They cite no growth. And there is no growth. There is no growth there. And so they have not been able to use it in a way to monetize it in consumer goods and services. And so maybe this thing gets attached to something as a news feed, but weve already heard that story. The stock went people that bought that thing in the 20s a 20s are hurting. I dont know how you monetize it. The night when grown men cry over amazon . Amazon i used to own the shares when i could get yield out of it years ago. Ive not owned the stock since then. It is part of everybodys definition of a unique company that flies in a different around a different planet. It doesnt have to trade off multiples to cash flows. Thats why i dont own it. But one day, my friend, one day it always happens because you cant trade in perpetuity. You cant trade against nature forever. And i just believe in multiples of free cash and it will affect twitter, tesla. Tesla is the one that just me off. I dont get it. These buckaroos every day i come in this office they laugh at me. Theyre going to pay a horrible price and daddy will teach them a lesson. I dont know when. This trading for good deal today, its iex is hosting a charity to support wings over wall street. Here is a look at what theyve raised, more than 31,000. Doc, youre involved as well, and kevin is involved, too. Kevin is the guy that when i reached out to kevin he said, doc, i never do this, but kevin was nice enough to say, yeah, ill go out to dinner with three folks. So thats going up on the bidder for goods site you see there on the screen. And you can go out to dinner with kevin. You can pitch him or you can tell him why hes wrong on tesla and hell take it, but he might end up being right on tesla so be careful about that, folks. Anyway, that you could bid for, that dinner with kevin and ocean prime. It will be great. And as you see iex has run up 31,000 just from the share trade of 1,000 shares or more through their exchange today so thumbs up to brad, all the guys over at iex for the great donation. Thanks so much for doing that. Thanks for being here today. I know well see you again soon. Take care. Thank you. Wings over wall street. Org is how you can donate if youre interested. Next up, new short ideas from john fichthorn. Names in the health care industry. Michael ovitz, one of the entertainment industrys players in the media and where he is looking for new stars out in california. It may surprise you. Hey nicole. Hey i just wanted to thank your support team for walking me through my First Options trade. We only do it for everyone gary. Well, i feel pretty smart. Well, were all about educating people on options strategies. Well, dont worry, i wont let this accomplishment go to my head. Im still the same old gary. Wait, you forgot your french dictionary. Oh, mucho gracias. Get help on options trading with thinkorswim, only at td ameritrade. This is the new comfort food. And it starts with foster farms simply raised chicken. California grown with no antibiotics ever. Lets get comfortable with our food again. Were back on the Halftime Report today with john fichthorn. I want to talk about new things youre doing and express scri s scripts. This whole drug price craze where they are ramping drug prices. This is the next phase of that. People do what youre paying them to do. Buying cheap drugs and marking them up 500 . They are not managing drug prices for the people they should be. Theyre managing for themselves because they get paid a percent on the drug price. So guess what they try to do . They try to keep the drug prices high. You have this case with express scripts and cvs and the pressure, people are figuring out the joke, right, they announced earnings the other day you have a company thats at flat revenues for a number of years and yet operating margins have basically doubled, and we know where thats coming from. And so anthem, one of their biggest customers, sued them about a year ago for 13 billion of over charging. When anthem went into the lawsuit and started investigating, all the errors are to you. Youre either making a prescription thats for too long, for the wrong drug, whatever it might be. And so on the latest earnings a couple days ago we had a couple of department of justice, attorneys general say they wanted to call u. S. Attorneys office for the Southern District of new york, september 12 a subpoena from the department of justice and the u. S. Attorneys office for the district of massachusetts this is about subpoenas over a drug company and their fapharmacy ties. And these guys i think it plays embolden you . I think it plays out like valiant. Somebody will be sitting in it front of Congress Talking about what theyre doing and its a black box, and you can look at their financials and figure out theyre making a whole lot of money, and that money is coming out of the u. S. Taxpayer and out of Insurance Companies. People are starting to fight back. Knowing you were coming on today, they obviously sent a long list of reasons why they were in defense of their company. They say the following regarding the subpoenas i would like to read and ill quote. Given the ongoing focus of drug pricing its no surprise the pharmaceutical industry and by extension our industry will receive inquiries like these. We generally do not comment beyond our filing but as always we intend to fully cooperate. So just put that go out there on the record is what express scripts is saying. I look forward to their full cooperation as well. How new is this short position . Its something weve been fiddling with for the last six months