Transcripts For CNBC Fast Money Halftime Report 20170209 : v

CNBC Fast Money Halftime Report February 9, 2017

Recordhighs. Goldman, nike, cat, chevron, jp, having the most impact today. President trump came out, talked about that well have a tax plan in two or three weeks. That will be good to see. And heres what you have to say about President Trump. Hes lived up to everything he has said. I think theres been a major turn in that he could have gone after the chinese, but he didnt. So he sent a letter, and so then that gives, i would say, some respect for in terms of how hes dealt with his counterparts. You think thats in part for the gain today, along with his comment hes going to get to taxes in a couple of weeks. Hes going to have something on taxes in a couple weeks. Yeah, i think were on the same show. I just said that, right . Hes going to do taxes. Lets listen to it. Were going to be announcing something i would say over the next two or three weeks that will be phenomenal in terms of tax. Yeah, so its going to be half the things you say go in one ear and out the other when it comes to me. Right. Which is why im on this side of the table. So in any event, yes. So taxes have gotten mark was looking up already. Weve been in a holding pattern, up and down, the market hasnt done that much lately. And frankly, a lot of going forward. In terms of names going up, its been a mixed earnings period. Some of the guidance has been i would say a little shaky. High valuations. Im still sitting on a good amount of cash. Seth carmans letter, increased risk. So its good to have worry in the market. Im not uber bullish. Im waiting for opportunities, finding some things to buy but not a lot. Jimmy, were making the point and really asking the question over the last several days, whether the market had gone as far as it could go on hope and aspiration of actual policy. And that it needs to see some steps forward towards actually putting them on the table to have a debate over taxes. The president says, hey, im going to have something in a couple of weeks. Which to me, scott, is hope. Because we dont have anything. Its very reminiscent the guy has been in office two weeks. What do we expect, a whole tax bill to be passed in two weeks . No, lets look at what he has focused on. The immigration work, the wall, the ban. Thats easy stuff. You say its easy. What i would say its not pro growth the tax battle you asked me a question, i want to answer. Im trying to help you answer it. Just stop for a second. Ill answer it. Hes not gone after the things that are pro the economy, pro growth. He hasnt actually done the repeal of frank dodd. He says hes putting out taxes, but as i hear that, the same thing from two weeks ago, were going to replace obamacare, Something Better but no details whatsoever. So your question was, can this market still continue to go up on hope, or is it looking at fundamentals . I say today is just a melt up on the bases of hope. Because there is nothing to really sink your teeth into as far as a tax plan. Josh, werent people waiting to get away from some of the noise and some of the executive order stuff, and get to the substance of the rally in the first place . That is the agenda that leads to better growth, that leads to better earnings, that leads to better stock prices. Or higher stock prices. So i think i think whats really interesting, pointing this out. Were now in a situation where and i dont know for how long this will last. The Favorability Ratings for donald trump are now positively correlated are you on speakerphone . Hello, are you on speakerphone . Im going to stop you. Are you on speaker, because if you are, can you get off of it. . No, im not on speaker. Yeah, now youre not. Im on a Samsung Galaxy note 7, so if something happens, you know what it is. So right now, we have crude oil, u. S. Dollar, u. S. Stocks and the tenyear yield, all positively correlated with trumps favorability rating. Which is a really weird situation. But thats whats going on. So to steves point, if we do get something on taxes, and we get positive commentary on the way there over the next three weeks, which is what i think he said, thats going to be supportive of stock prices. And by the way, when you look at the internals of the most important sectors of the market, you have price moving up, and then under the hood, you have the advanced decline line for each of those sectors, also moving up. So as financials are about to take out a new high, you also see the advanced decline line of financial stocks, meaning more stocks participating than not. You see that in health care, you are seeing it in tech, in industrials. I dont know what else you would want to see. Buy owe to joshs point, biotech on space for its best day. Steve, retail up more than 1 today. Second day greater than 1 led by abercrombie. So its fairly broad. Yeah. After biotech sold off, because we heard spicer come out and say, look, this phrma battle is not over. Its still going to be price. But, you have to exceed the details. There is movement. Let me go back to my point. Trump came out, and hes come out and done everything he said he would do. So what the market is saying is, hes going to continue to do it, and that means a tax plan. We dont know the details of the tax plan. We know whats been bandied about. Which is that a tax rate of 15 to 20 , called 20 . We know hes going to do away with all the inductions. Whats it mean for private equities, real estate prices come down. But we also know that Elizabeth Warren has risen to more prominence in the Democratic Party and that could be troubling. So it may not skate so easily through. So there will be lots of debate, republicans, of course, have a majority. So thats where the hope is. But the devil is always in the details. So i think that youre not going to see the smooth, smooth sailing ultimately it will pass. That will be positive for the market. But you dont know in terms of the sectors how theyll respond, and thats where youve these details are going to be very important. I think we all agree on that. The border adjustment tax, if it goes through in any form, is going to hurt some of the sectors were talking about right now that are going up. Retail should be badly damaged by a border adjustment tax. Refineries, which are also going up today, should be badly hurt by a border adjustment. Apple should be badly hurt by a border adjustment tax. Lets move to the twitter takedown today. That stock getting ripped on the companys disappointing outlook. Josh, i dont know. Do you still own it, and if so, why . Yeah, no. I still have shares, and i still think the platform has potential. The problem is, thats all there is at this point, is potential. Very little progress. You did have an uptick in daily users, which is nice. You did have an uptick in overall users. At the end of the day, youve got a couple of things working against the company that either they got worse or nothing got better. The first, and im sure your analyst will fill you in on the details. The first is that conversation is completely out of control. Stockbased comp. As a percentage of revenue i dont know if ive seen anything like it in any other tech company. And then the second and its gotten a little bit better but still stratospheric. The second thing, really quickly, youve got a big problem if you run an advertising business that is struggling in the middle of a political a National President ial election. You know, if you are not minting money in that time frame, i dont understand what you need to have that happen. So steve and i were right about this yesterday. Contra bernstein basically did not see what he saw, and i think thats fortunate. And im not a buyer of more shares, even though its down 10 today. Well, im just wondering, you note that as being such a negative for twitter, and yet what gives you the confidence that they can turn your potential into actual real benefit at this point . Im losing confidence by the quarter, scott. Josh, ive got a question for you. Just you rely heavily on tech goals and thats a big part of your investment discipline. And it serves you well, obviously. Because you built not in this case. The technicals on twitter from shortterm, intermediate term, longterm perspective are pretty terrible. I got involved with this when it became public. I was wrong from the start. I pretty much never looked at this technically. And i havent really traded it at all. But steve, to that point, if you look today, its putting in a decent candle. The fact that its not on its way to revisit the old lowes, maybe is a positive. And if we close out the day with a good hammer, which looks like its trying to do, maybe its not as bad as the last couple of quarters where they disappointed. Thats the best i could tell you, technically. Look, im not in the stock, and josh, you can respond to this. What i look at is the growth in the users. Im going to use the top line users. 300, 2 million, two years ago. Now 19 million. Call that a 6 rise. If i compare that to what i think we would all agree is a great company, facebook, theyre up about 50 in the number of users. I know the active users have gone up a little bit higher. But it just seems like a dea death knell, especially after this quarter with the president. Josh may not have thrown in the towel yet on this name. But one wall street analyst did a long time ago. Scott devitt joins us on the phone. Reiterated his sell rating. Scott, you there . Scott devitt, are you there . Lets put a picture of him hes been im reiterating too. Hes been negative for some time. Josh, let me ask you. What finally pushes you over the edge to actually sell the stock . Well, i mean, i dont have enough that its, like hurting me or crazy meaningful. But i do still see potential, and the potential is that this was never going to be facebook. And i think people that got into it with that idea made a miscalculation. I think the real potential of twitter is probably some kind of a deeper connection with a company like google, or something where very, very capable people on the advertising side take a bigger role. I have no idea what that will look like. But the main difference between this and twitter and facebook, i think, is the realtime nature, the fact that when news breaks, this is where everyone is. More so than facebook, even. And i think ultimately, somebody will be able to come along and find a way to make that enormously profitable. Hasnt happened yet. They have been through several iterations on the product side, on the advertising side. But i do still think theres a lot of potential there, around events like award shows and sporting events. World series is a huge traffic spike. Debate night. There are huge events throughout the course of the year that twitter absolutely owns. Somebody is going to come along and figure out a way to benefit. Yeah. Scott devitt, do we have you now . Yes, can you hear me, scott . Yeah, i can, thanks for bearing with us there as we fought through some technical issues. Whats your read on the quarter . Obviously not good if you just reiterated sell. I think that josh and others have, you know have made very good points. And the lifeblood of a business like this is starts with product. And that leads to users and engagement. And this company is on the very end of growth cycle in terms of driving growth and users. It discloses Monthly Average users, which have barely grown over the past two years. Daily active users have begun to grow again. But its disclosed figure on an absolute basis. And its hard to determine how much of that daily active usage is driven by single events in recent quarters versus being sustainable. We think this stock, potentially on a fundamental basis, excluding joshs commentary about potential m a still has significant down side. The midpoint of the 1q guidance was 22 below consensus estimates for revenue in the First Quarter. And for the full year, our estimates are going down close to 10 on these numbers. Let me ask you this. If twitter seemingly cant fix its own problems, what would give anybody a belief that somebody else could come along, buy it, and then somehow fix it . Its hard to believe, unless its potentially at this point being bought for reasons other than economic in nature in terms of driving activity on a larger platform or that larger platform thinks it has tools and capabilities that can fix the problems that twitter has. We have said this, and i think on your show previously, as well. When the m a speculation was very heated in prior months that we thought it was a stretch. And we continue to do so, at least at prices anywhere near current levels. Yeah. Good to have your commentary, scott. Thanks so much. Thanks so much. Scott devitt joining us, a full analyst and a certain bear on twitter. Lets bring in the biggest bull now on wall street. Brian weezer on the phone, as well. Brian, are you there . Yes, i am, although i dont know that im the biggest bull at the 17 price target on a hold rating. I have 26 price target thats old. Maybe we havered and apologize. Nonetheless, you dont have the sell. When was the 26 price target . From around the time of the m a speculation, when it seemed very heated and given the volume of potential bidders, seemed not implausible. 17 its been remarkable how much the business has just decelerated even recently. The biggest problem twitter has had ive never been an uber bull. When the stock was up in the 70s, whenever it was up in its highs, the business has always had Something Real and very important. It was never going to be a ubiquitous platform. Its not clear to me the Management Team appreciated that ever. Its not clear that they have appreciated it even now. It may be that if they do come to appreciate that being a niche platform and super serving a niche audience, they have a durable business. But its not clear to me yet that theyre there yet. And that might be whats necessary to make business something thats more valuable. Youve helped us make even the greater point by pointing out, you know, that youre not, in fact, the biggest bull and your price target, in fact, was only ever as high as it was on m a speculation. Not anything based with the fundamentals of twitter whatsoever. Correct. At that time. I think i might have had a higher price target, but never that high. Right. So the bigger point is that there is a business there. And the Company Business has not been able to figure itself out. The the line from Mark Zuckerberg that twitter is the clown car that fell into a gold mine has always been something thats been difficult to for the company to live down, i think, in some respect. That said, there are certainly a lot of great people there. Certainly a lot of very capable people there. But its never been pulled together. And thats always been a bit of a challenge for them. Brian, i appreciate the time. Pivotal research. Twitter was made for the kind of action we saw last night at Madison Square garden in the First Quarter of the knicks clippers game, when Charles Oakley got into a fight with security. Heres the call from the game. New York City Police there. Thats security. And apparently theres a Charles Oakley in a fight in the stands. Charles oakley involved in something. They need security in a big way. Well, we show you that, because twitter still buzzing over the incident. Reports say oakley was yelling at knicks owner james dolan sitting nearby and was asked to leave the game. He was arrested and charged with assault. Jim lebenthal, the other reason were showing that, you have said that Madison Square garden is a value play. I think this is a very interesting stock, scott. Dont look at the earnings right now. They recently spun off the networks, msg networks and hard to project what the earnings will be. Look at the Balance Sheet. A 4. 2 billion market cap but 1. 3 billion in cash. Its enterprise value is 2. 7 billion. And that is against an array of assets. I think we can talk about and really come up to more value in 2. 7. It opens the knicks. Look, any publicity is good publicity is what i say about Charles Oakley. It owns the rangers. I know youre a caps fan and youll indulge me and say the rangers arent terrible. The knicks have gotten a tremendous amount of publicity lately all for the wrong reasons. Thats not good for the value of the brand, period. How about this . The l. A. Clippers, right, they were sold two or three years ago for 2 billion. Do you think the knicks i mean, l. A. , new york, similar markets. I think the knicks could probably, if they were on the block, theyre not, could easily get a 2 billion valuation. Not going to argue with you on that. Okay. So then youve got 700 million of the market cap thats left for the rangers. Its left for the rockettes, its left for the liberty, Madison Square garp deny itself. For the forum. A lot of assets out there. This is the Balance Sheet play. The one risk, youre investing with jim dolan who does have a certain mercurial aspect to him. He also owns at least 20 million by my count, dollars worth of the shares and is not going to let that get decreased in value. So thats a risky would be willing to take. Youre betting, as well, steve with a guy like abely, too. Hes owned this stock. Forever. Forever. It is a value play. Dolan is good enough for gabelli, got to be good enough for lebenthal, no . I like gabelli. A smart investor. This is what mario does. Good endorsement. Absolutely a good endorsement. This is what mario does. Wait out dole terrible stuard of the franchise. Knicks have been horrendous. The thing about oakley, that was not a fragrant foul, it was below the head. So he should still be in. So one quick comment. The knicks have been terrible for a long time. Imagine if they actually got good. Im not a basketball expert, i dont know what it takes to make that happen. Do you think the knicks dont sign any carmelos josh, you buy Madison Square garden stock . No, this is not my kind of thing. I get the pro and con. And i do agree that there is probably a lot more value here than what the share price is reflecting. But that assumption is that the dolans think theyre doing anything wrong, which [ inaudible ] that. So for me, thats not somewhere i want to be. All right. Heres what else is coming up on the Halftime Report. Food fight. Whole foods, Dunkin Donuts and a bold call on grub hub. While our correspondent is caught in the snow, he still has a lot to say about food and food st

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