Brothers najarian. Investors are bracing for a week of uncertainty. Both the dow and the s p just posting declines for the Third Straight months. You have session lows. The vix is hitting its highest level. What do you do here . Whether or not it contributes to a done side move in the market, we will see, but we have seven days now at least until the voting is completed and then well see whether or not the process is completed. Thats one of the wroerz, judge. Thats why theyre buying up side calls in the vix is because theyre worried that maybe the process doesnt end on november 8th. Are you starting to see that the market is looking at numbers and saying, hey, were getting more nervous about exactly where this market is going based upon where he stands in the polls. Weave talked about it time and time again. How much would donald trump mean in terms of the uncertainty of the market . Far more than hillary. I think were seeing that priced in right now. Dollar index has been on the rise. What do you do . Youre running a big portfolio. What are you doing . I do think there are certain sectors and certain styles that will work. You mentioned telecoms not working. On the flip side, you have the cyclicals working. You have financials. You have technology working. You have energy to some extent. Its lagged in the last month, but its had a nice run off the lows. Industrials having a tough time of it this week. Again, off the lows in a substantial way. I have to step back. None of us know what is going to happen with the elections. What if trump wins . You have to come look at the macroand the global pmis that are doing much better than expected. Our ism number doing okay. Earnings 70 better than expected. Fundamentals arent so bad. I think you want to make a shopping list. Youre asking me what im doing. Im making a shopping list. All of the companies that reported good earnings, i would be buying if we get a pullback gauze of the election uncertainty. Air products. Mattel, bank of america, jp morgan. Anadarko. Those are names that i this i the fundamentals are sound. What does the market do . Look, i think trump i think trump has a very good chance of winning. I just dont think that you laughed at me the other day when i suggested the market wasnt prepared for that. The market is not prepared for anything. We can have unbridled chaos. Anything can happen. The idea that somebody has a very, very heavy bet in one direction to me is laughable. Its not my style of investing. I think the Bigger Picture thats going on here, scott, is th that. I want to give you that when they added 87 billion. The swing that were talking about is enormous. Then you have the s p 500 down six days in a row. Not a big drawdown only 1. 4 . Make no mistake, youre talking about people taking risk off ahead of the election. I think theyre more worried did zploosh. What about the december rate increase. Universally on the desk are we all saying its going to be that you would give it a 9010 or 9055. Do you just take profits in financials. Things that have worked . Why would you if numbers are going higher for the first time in a couple of years . For the first time in a couple of years the numbers are actually going higher . Thats fine and good until the markets come down. I would say in a stocks where earnings are going higher tend to outperform those than the stocks where numbers are going lower, and earnings the reason why the stocks have done so well is because every one of them reported better than expected numbers with a yield curve where it was. Right . Now you have the tenyear up substantially. 40 basis points in october alone. Thats like the best number since june of 2015. We were talking about the fixed income trading, and its going to be tremendous for these banks. Now, there are banks that it wont be tremendous for. Wells fargo and probably u. S. Bank corp are much lower on the scale, the ones Immediate Impact jp morningan. Going to have an Immediate Impact from that. Suppose he does with global trade as he throws away currency and remember, it took until 2010 to get that done. Doesnt take time to scare the heck out of the stock market, though. What do the Insurance Companies and Health Care Companies do in two years . They were one of the great they were the bet into it actually happening. The most important thing at the top is you put out a list, scott. Look at the earnings. I mean, the focus we talked about right as this started off, look at the earnings. Jp morgan kicked it off people have their pads and pens ready. Ill put the list out there right now. Jm pouringan, says city, bank of america. They get hit. Thats where you buy. I think the other area you look at is lakeeffect at these tech names. They absolutely crushed it, right . Too many other things going in the market. You look at some of the names in the tech space where you have a dividend yield, you have a reasonable level of a p. E. , and you have growth. Those are the names you want to own. You kr a Union Pacific thats down 10 . They are okay earnings, but just higher expectations. Our chief washington correspondent is in north jersey today. John harwood at the wall. Want to find out where we stand one week before election day. John. Scott, ticktock on the clock. Less than six and a half days until election day. Lets take a look at where things stand. First of all, from the standpoint of the big picture, weve got the National Polling averages. Those are tightening. Real clear politics had been over six. Now down to 2. 5 spread for Hillary Clinton over donald trump. The Electoral College is where it gets decided. We have a whole bunch of Battle Ground states looking across the country. Challenge for donald trump is he has to go from 206 which was mitt romneys total up to 270. How does he add some . He has some strong prospects here. Florida, ohio, iowa, nevada. All of those are states where he is very competitive with Hillary Clinton. He could win all of them. However, if he does win all of them, he still is only at 265 electoral votes. He needs to win some other states. What are those other prospects . Well, Hillary Clinton is leading in all of them. Colorado, virginia, pennsylvania, new hampshire, michigan, and wisconsin. Tough road for donald trump, and we have one or category, which is two states that Hillary Clinton could take out of the republican column. North carolina where shes had a consistent lead,ing and arizona where shes been running neck and neck with donald trump. She wins one or both of those states. His path gets steeper. Now, of course, we also have the battle in the senate going on. Lets take a look at that. Democrats need to pick up four if Hillary Clinton wins the presidency, and they have a couple of strong prospects. Do you start out in the midwest with illinois and wisconsin. Those are two states, mark kirk of illinois and ron johnson are both vulnerable incumbents. Democrats win those. Just like donald trump on the electoral map, they have a tougher road to hoe in the other races. Florida, missouri, indiana, pennsylvania. All of those are competitive. No guarantee that democrats win any of those states, and theres one more. If he wins that race, harder for democrats to take control. And really hard for democrats to take control in the house of representatives. Democrats 188 where, that means they have a net gain of 30 to get to a majority, which is 218. As donald trump gets closer in the polls, thats harder to do. This underscores what john just did, the kind of uncertainty thats still out there. He will likely be there until the morning of november 9th if not beyond. Top of the show i was talking about that unusual activity in call buying. That is extreme. Its all the way up to the 40 strike, judge. If there isnt an outcome next tuesday and it takes until wednesday, thursday, friday, maybe even much longer, that is why theyre buying strikes all the way up to there because im with you. There are people with big portfolios buying insurance right now in case that happens. You look at whats not worked over the past month. Telecoms down 8 . Utilities are flat over the last month. Its the financials and the earls that have been the winners. I dont get the whole allegedly thing. Look at what the stocks are done. As trump gains ground in the wake of the comey letter friday, you think you would see a bounce. Youre seeing the opposite, in fact. This is a seconder now closed. You have g to back to 2004. A lot of that is e. T. F. When its that widespread and indiscriminate. That creates opportunities. Absolutely. The opportunities are created, and i think youre right. Two weeks for the last two weeks as we are in the fifth anniversary, how many times do we have people sitting on this desk talking about passive versus aggressive. Its the etf, world. The piling on and the piling off and how that thing holds slosh and all that moves. I think the reality is youre seeing some of that volatility. The fact john and i both just we see volatility to the vix getting over 19. Its interesting to watch this. If they continue, you have to be careful. If you are a longTerm Investor, heres an opportunity, and thats why i listed a whole bunch of names at the beginning of the show. I think you asked which sectors do well between now and the he wanted of the year, there will be massive chase. There are so many people behind their benchmarks. I would say if the Economic Data gets better, which weve been seeing globally, those you have to look at those pmi numbers and the underlying details from those reports. We all know its not a brexit vote. There are individual states that have electoral votes. Again, you could have a popular winner and not have a winner of the election based on how we calculate these things. The issue could still be brexitlike if you a sweep of trump and a bunch of folks next week, you could have a brexitlike reaction in the market, says and it would be the exact buying opportunity that stephanie and josh and pete are talking about. Lets take a quick break. Heres what else is coming up on the halftime report. Health care, dropping hard in the last three months. Thats how markets work. With a week to go before the election, how much lower can it go . And what happens after november 8th . Plus, another big drop for valeant. Whats bill akmans strategy . Were back in twoments e minutes. Ive never liked marijuana. But im voting yes on prop 64 to legalize marijuana for adults 21 and over. It has important safeguards for families, like strict product labeling and childproof packaging of all marijuana products. And banning edibles that would appeal to a child. Raising a teenager, that regulated system makes a lot more sense than what we have now. Plus, 64 taxes marijuana to Fund Priorities like afterschool programs. Personally, marijuanas not for me. But my minds made up. Im voting yes on 64. Were back on the halftime report. Shares of valeant hitting another rough patch after a criminal probe about the ceo and wcfo were reported. Heres more on mr. Akmans tough career. Hey, kate. Hey, scott. A few early performance numbers suggesting that the predicted hedge fund wash out may be on hold temporarily. Bill ackman continues to suffer. The fund was down 3 for the month and 21 for the yeartodate, which was october 25th. Yesterday another large head wind in the form of reporting to suggest that this accounting Fraud Investigation into the Pharmaceutical Company, valeant could lead to federal criminal charges against two former company executives. Possibly even in the coming weeks. Valeant shares down 80 for the year and fell hard on that news. Ackmans fund, which has a publicly traded vehicle and will discuss its quarterly Performance Vehicles on a call, hasnt commented on the bad news for valeant. As the number one shareholder for the company in stocks and economic exposure by the Options Market of 30 million, its clearly an issue. One Silver Lining to the stocks protracked drop. The overall value of the position shrinks to less than 500 million in stock. Making it less important perhaps to ackmans overall portfolio. Interesting story. Kate, thanks so much. Lets stick with valeant. David marris is the senior analyst. Welcome back. These reports of a criminal probe into mike pearson and the former cfo, chiller. Are we talking about more risk or just the who elthing in total . I would be really careful on how its portrayed. We dont know if charges will be limited to the two individuals or to the company. Some people have characterized it as its not the company, its just the individuals. I wouldnt be to sure about that. Lets just take the prospects from either side. If it is just mr. Pearson and shillor, then how do you view the stock Going Forward . I still think that the best case of whats going on with the business is the single most important thing. When you look at the debt, 30 billion, how about the refinancing aspect of this . How does this company with stand what theyve got to put up with right now in terms of that debt considering where this thing has actually shrunk down to in terms of its market cap . Yeah. There are two aspects to that. First is if you were going to loan some money to a trend, if they just if theyre a newspaper article came out and said, well, they were under investigation, you would be a lot less likely to give them money. Refinancing debt becomes more expensive when you kr an investigation like this. Secondly, remember, its not positive billion. Its 32 billion of longterm debt, but their overall obligations are Something Like 40 billion. If you include things like rent or leases where. Its interesting. Bill miller was on our show and he thinks that valeant could double over the next three years. Is it nearly as dire as many of the worst predictions are . Well, i dont like to comment on individuals who have appeared before. Lets be straight. Someone that says i think its going to double, and the stock drops, in order to double, it would now have to triple. He didnt say that. Are things dire . I think theyre very serious. The stock has been beaten down so much theyll deal with the debt overhang. If youre a longer Term Investor in the name, you can make money here. Its possible. We think that the risk to the down side is still there. The company is reporting next week. Theres a large group that believes theyre going to reset guidance lower. Some of the prescription trends look so bad that probably will happen. Lets see what happens next week. Theres no rush, no reason to rush into a burning building. They have the detd overhang, and then whatever remedy is there, or the simple fujss of the company that you cite in your note of the inability to put through price increases which have really driven the train over the last many years. The two biggest and most important things are that the business is not going very well. The prescription trends look weak. They have a large amount of debt that comes due over the next few years. Now, accounting fraud, if it is against the company, could be a large, large potential liability. On top of that, you have these class action suits where remember here what were talking about. This is one of the largest declines in market value of any company in Public Company history. The company has lost Something Like 70 billion plus of market value. The fact that some mutual funds have decided to sue the company, i wouldnt dismiss that as, oh, theyll settle and walk away for 100 million. These could be very large liabilities. Ho do they get paid, though . What do you think is more likely at this stage in the game . A giant dilute of equity secondary of some sort, or an asset sale . Whats the next thing that they do to save the company . Its funny you brought that up because you are one of the only people thats ever brought that up, and i think thats the easiest im very clever. Its one of the easiest ways to solve things, right . A giant equity offering. The company views that as off the table because of where the stock has come. That is one way to solve things. I dont know if there would be an appetite for that. When you have 40 billion of obligation, you have to do much bigger things than selling off bits and pieces i think theyll have to sell core assets. Theyll call them noncore, but then theyll get down to selling the important things. Bausch and lamb. I dont know if thats the koor asset. There may be big tax liabilities with that. There are things like xiphaxon. Maybe they sell that. Thats one of their crown jewels. David, thanks for going to a camera for us. David marris, wells fargo. Judge, whatever happens here with valeant, its going to happen relatively soon based on the shake that you see going on in the Options Markets because the normal volatility for this, which is very high volatility because of the selloff that weve seen is normally about 90 . Right now its 160. Theyre telling you through the future of calls and puts, trading thats going on, something is going to happen in the next two or three weeks. It could be pretty scary. More broadly health care has been hammered of late. 7 over a month. 11 over three months. The arrows are red across the board. Its gotten worse just when you thought it couldnt get worse. From a political standpoint, you have certainly suggested this is not but this is not a typical situation. Lets keep in mind, there are other things happening besides election risk that are driving these stocks. Bristolmyers just had a major setback with the drug. Pfizer this morning after telling the street theyre not going to do this split, which everyone wanted to see. More bad news. Theyre all paying above market yields, and many are below market multiples both on trailing 12 month and forward. I dont know what happens next week. What im saying is i think a lot of these names are the fat pitch one, three, says fiveyear time periods. The world is aging. These are the companies that have solutions that will help them live longer, better lives. I think theyre going to work as investments. Coming up, a tale of two retailers. L brands sinking on weak sales. Coach moving higher on its earnings. See how the desk is playing those movers next. The two upgrades in two days. Chevr