Transcripts For CNBC Fast Money Halftime Report 20170222 : v

Meg is starting us off with the late sgles bristolmyers has been seen as vulnerable to potential activism of even takeover. You basically pinpoint the day this started if you look at it stock price over the last year. Look back to august. It had Clinical Trial results around august 5th that were very disappointing to the street on big lung cancer drug that investors saw as putting it as a slight disadvantage to competitor merck in the space. So carl icahn reportedly taking this stake, reported by the wall street journal yesterday. And Jana Partners wrung so new directors out of bristolmyers yesterday and 2 billion buyback. Icahn apparently think that bristolmyers is business and pipeline make it a good potential takeover targetnd in addition to opt divo it has several multibillion drugs as well as Rheumatoid Arthritis drug. A lot of people raising eyebrows about this takeover because it would be a gigantic deal. Bristol has market cap of 90 billion. Any premium would put it above 100 billion. A small number of companies that could do that however carl, i kano stranger to pharma mchlt and a. Several years ago orchestrating several larger deals. Yeah, meg no, doubt. Pete, youve been in this stock before. Yep. Do you follow the money here, follow icahn in . I think the premise behind why carl is getting involved now makes sense. 100 billion just brought ups well, thats a huge number. But when you look at the pipeline, we love the pipeline. This is a stock trading well and then suddenly its 90 above. Well above 100. Figure at east 10 to 15 premium minimum after this drop. I did, i agree with you. Do you follow the money . Yes. Do you guys agree . I follow jon in. Carl is fine but jon i how about both . Yeah. Both. The more the merrier. Jon had it right. Acquisition could happen. Never say never. The reason why i bought the stock after jana bout it is this was just a very, very crowded trade. Everybody loved it. Pure momentum. Phase threes couldnt fail. Drugs would be approved. Guess what they did . Everybody exited this. Favorite large cap pharma. Now with expectations completely out, the risk was out. So 2 billion buyback, why not . Y r. You basically buying it just because someone will buy the company not at all. Abs lootly not. Right. Because who really could bite. Gilead or pfizer or someone like that . The issue with this size for activists is not only do you got to convince the company to sell, you then got to convince a limited pool of buyers to buy. Limited. Its not like even a hertz which carl has had issues with which is a smaller midcap company. This is just a much different deal. What then can the activists do in an environment where were talking about creating immune no therapy and cancer drugs. That comes from bristolmyers. What else can the a carl icahn or jana do to increase the value of the company, if not execute a sale. Ill give you some answers. Take a look where theyre allocating their r d, huge expense. Look at management. Look at the heads of the different sciences that they have and say this person just hasnt been doing their i dont know. Why are you still married this them and replace them. Push them to making a question situations of Smaller Companies that will build out. The potential buyout pool may be small but that doesnt mean that its nonexistent. Not to mention the fact that the stock is down 15 since may of 2015. Its been an underperformer. Increasing the opportunity for somebody to come along and think theyre getting a discount over what they may have gotten in the past. Try to put together 145, 150 billion deal, right . So to say theres nobody out there who would do 100 im not saying buffett is interested in a drug stock. But i mean, this stock, judge, went from the moment you were talking to icahn and this stock was down around 53 1 2, whatever, popped 4 to 57 an change. Pulls back. Barely finishes better than unchanged on the day. But people were looking for an opportunity to pick something up. Top of the show yesterday you were saying is there anything out there thats not over extended or something to that effect. This is one of those stocks. Ralph lauren is one of those stocks. Restoration hardware is one of those stocks. Do they all get picked up and does an activist get involved in in many cases i think they do. Meg . A number of variables here with bristolmyers. Some folks think, yes, the stock is down and has been down significantly since august. Depending on how future quarters go, are we at the end of the decline there in terms of what bristolmyers growth looks like. Thats interesting. Another variable people mention is of course u. S. Tax reform. That could impact Decision Making potential by for a potential fiers like pfizer which is the one i see cited most often as potentially looking at a deal of this size. They of course have tried to make some before. As for carl icahn in conversations ive been having this morning with folks they have a lot of confidence that carl has gotten a lot of deals done in this space. But when he was doing deals in bio pharma it was with his former Hedge Fund Guy alex den whole started a new hedge fund now and activist investing in health care and left carl. So some questions about how carl will orchestrate the strategy here with him. Interesting. Youve had alex on the air before. Meg, thanks. So why are activists apparently back . Leslie pickard follows hedge funds for us and ken squire is the founder of a fund that has returned 40 p in the last year. Its good to have you both with us. Leslie, i turn to you first. This is no i mean, not a surprise but why do you think abo activists are back . We wanted to dig into the data to see how present they are. We asked for pem from kens firm. It showed that 13 d filings which only indicate Companies Investors who have filed to show positions in companies with a 5 or greater stake are way up this year. 12 this year versus 6 last year and 6 the year to date. That indicates investors have been buying into maybe smaller Cap Companies where they can take these bigger stakes. We looked at activist inside data as well which shows that, interestingly, large cap stocks, the proportion of large cap stocks that investors have been buying in to are the largest this year than they have in the last three years. And so why are activists back, is what you wanted to know. Activists are Value Investors at heart. When the market took a step down last year they started looking into some of these names, according to sources that i spoke with this morning. And they said, okay, this would be interesting when the opportunity is right. When the opportunity presents itself. So now were starting to see them deploy some of this capital they were able to raise more aum. The winners of last year wf able to raise au mchlt and were starting to see some of those activities play out this year. Were not imagining things here. Right . It does feel like after a bit of a hiatus hanging out on the beach that activists are back and getting involved again. I would say a very small bit of a hiatus. It was the end of 2015 and beginning of 2016 where there was a little bit of a lull in activism. Part of that was as leslie said, Value Investors and now a risk. On environment than last year. But guys like jeff smith of starboard and jesse didnt get that memo. They were very actist last year. As some of the most active years ever and they did very well in their activism. Maybe some of the largest investors looking at putting extremely large amounts of money to work, a point i guess both of you are making its a risk off environment for some period of time. I mean, if you look at the market now, a lot of Companies Feel emboldened, maybe they will wait for tax reform to do so but they feel emboldened to do things like m a, stock buy back, tax repatriation coming back into the tax reform bill. Those are things that activists look for and they want to take stakes now in advance of th happening to feel better down the road. One other thing i would mention is, you know, valeant, people underestimate the effect that valeant had on them. It was a bad advertisement for six months on activism in general and a lot of people that invested on the fringes are fled for a short time and now people realize, you know what, that wasnt the end of activism. It was just one situation. Didnt the scc relax the governance rules and make activism easier and expect the new administration, any of that to be reverszes . I dont know if the scc relaxed the governance rules. There were effortses to change of 13 which they didnt do. And how people handled swaps which they didnt do. But i think in this environment, especially where President Trump has carl icahns ear and more companies with lower taxes and repeatriating money activism is poised for a very big year. Proxy, this is all sort of happening again ahead of proxy season. Its a sweet spot from an activist standpoint in terms of disclosing the stakes because we had 13 f filings last week. If youre going to file a 13 f, it discloses the stake anyway. You may want to get ahead of that and explain what your position is and then, also, in the spring, if these activists do think do believe its going to come to fight as opposed to a settlement, it benefits them to disclose it now to use that leverage later on as proxy season really gets under way. Except for some of the financials youre talking about, they dont get filed when they cant hold those filings until the proxies get filed quarterly. Right . Theyve got to do it when they breach the threshold. Interestingly, the question we pose sort of at the top and we related it specifically to icahn is whether, you know, you should follow the money. Sometimes you should, sometimes you shouldnt. If you look at the data it would seem to show that if you do follow the money from the time that the stake becomes public youre doing to do decent as an investor whether its peltz and p g or icahn and b and y or other names weve discussed. But by definition you cant just cherry pick the ones to follow. Okay . Not their its not like theyre up 100 in their portfolio. Thats why squires got the fund he has. Exactly. I dont think activism was on vacation. Sure, there was a little hit with valeant. But otherwise in that, you know, theyve got to wait for investments to mature. Core vex had their hands full and not putting 100 of their capital into activist situations. None of them are. No, but, right icahn neither. Theres got to be a correlation to the fact that, you know, icahn had been very vocally concerned or whatever you want to cautious on the market and you didnt have him out with a very big splashy position that i can recall. Apple. No, recent history. Im not talking about within the last year. He keeps buying herbalife. Within the last year. He keeps buying hertz. He keeps doing it. I would also say the other issue is, and positive one, weve seen massive flows go from public equity hedge funds, okay, and credit funds into private equity. And all you also have the old vintage of private equity funds rolling off. So theres going to be and we havent seen a lot yet. Weve seen some of it because i look at the 14s which are the m a filings every day, because whats that we do. Youre going to see a massive, massive pickup in m a activity from private equity firms. That it is where youre going to start to see the activism pick sgl. Thought . Last year was the first year they didnt have a 13 d activist at all. We lulz like to criticize or people like to criticize activists for being shortterm investors. But to steves point theyre in these company tors a loies for term now so some of these are less likely to have as many activists 13ds as they may have in the past. So is the opportunity for the investor at home maybe not to follow some of the larger activist investors but maybe some of those who are managing lets say 5 billion in assets in the smaller stakes that theyre taking . I think you need to follow, again, as steve said, a portfolio. Thats a portfolio of different activists. You cant cherry pick. Out cant. For instance, our fund last year, 13 best positions represented ten different activists. So other than two activists there wasnt another one that had a second best position better than the next ten. Guy, good conversation. Appreciate it. Thank you. Thanks. Thanks for having me. Heres what else is coming up on the half. A big call on big name chip stocks. Micron, intel, broad come, nvidia and demonth all on the move. Plus, which do you do when the bond market says one thing and the dollar another . Buy, hold, or sell . The Halftime Report with scott wapner is back in two minutes. The greatest population shift in Human History is happening before our ey. Sixty to seventy Million People are moving to cities every year. At pgim we help investors see the implications of long term megatrends pinpointing opportitiesme ofto capture alpha in real estate, infrastrucre and emerging markets. Partner with pgim the global investmenmanagement businesses of prudential. All right. Welcome back to the Halftime Report. The smh up 55 over the past year and mkm partners think the stocks have more room to run. That firm initiated on the chip sector today. Pete, this is right in your wheelhouse. Micron assumed buy. Yeah. 30 price target. Yep. Caveom buy. Intel buy. Bro broadcom buy. Youre seeing sky works as well and alltime high yesterday. Theyre talking about margin expansion. If you believe in the apple store, then, yes, i think this is the right call. I think these chips for the most part, not all of them, for the most part they either trade at very low levels in terms of pes or their Balance Sheets are incredible or they have growth somewhere in that chain, whether its expansion growth or growing others areas where its earnings, revenue, whatever. There is enough growth here in the chip space. Thats why i went to you first. Courtney gibson with us as well. President of luke capital. Good to see you. Do you like this space . Absolutely. We were bullish in december. You had our analyst on betsy who came out that day. As a matter of fact, i think we moved amd 8 or 9 . Bev within bullish on this sector. I think consolidation, 35 companies have left the sector since 201. Youre looking at the price leverage that those companies have at this juncture. I think were still remaining to be bullish there. I think were going to see next week with broadcom some interesting things. You talked about apple. I think were going to get glimpses into whats going on at the 8 next week. It should be very interesting. What about these other names on the list . Doc . Courtney mentioned amd. Stock is up 45 a month. Yeah. And obviously josh and joe had a great call on nvidia last year, judge. And i dont blame them for having a neutral on it here after the furious run that its had. But when you look at samsung obviously and the problems they had with their note and so forth and recall and ultimately illumination of that phone. Speaking of activism, sort of plays into that. It does. Fell off as far as peoples satisfaction with the company and everything from being right at the top to basically at the bottom. All of that though plays into these stocks have a lot more room because samsung was not selling those phones bu s becau the note. If they can start working back into this, demand for these chips also in samsung products are going to be tremendous. It was about ces 2016 when we started talking about and really when chip stocks regathered the momentum. Jon, i remember and you and talking last january and mentioned nvidia at the time and that ces was about the inclues, ai, chips, what they cube doing for the technology, the industry, the globe in its entirely itself. Theyve been strong performers throughout the year. I would also add Texas Instruments which pete and i have talked about quite a bit, have had a very strong performance. That is a very solid name. A Core Portfolio holding. Back to nvidia, thats fallen off. After earnings, fell to 105. I did buy some last week. Its something i would be holding on to for a trade more than anything else. But this really started at ces in 2016. I remember discussing it. And barcelona. Yeah. You go down the list. Are there names here that you hold now . Caveum. Typical wall Street Research story. They were transitioning from one product to another. Major cat bag. Areaings were destroyed. No analysts really liked it and thats when i get involved because customer stop buying the old product and they havent started buying the new product because it hasnt been released. I bout it in 40s dp i sold a little bit of it the other day because it was up 50 from where i bought it. I bought a ton of stock in the 50s. Made an acquisition last year. Stock has had a good run from where you bought it. 11 bucks higher from here. Yeah. Lets also take note that this an analyst initiating coverage. So in order to get people to listen to what hes saying hes got to have targets up there that may be more aggressive than what the rest of the street has. Its like putting products on a shelf in a supermarket. Youve got to get mind share somehow. Im not going to say he doesnt believe in the targets but i dont think its unreasonable for cavium to get there. Were a dollar higher than where he initiated as far as our price target at luke capital. Pete, do you still own intel . Yes. I think thats the sleeper name. It is. Im thinking about that new cfo and shhh. If you already hold it its going to go up. With the new cfo and keeping expectations low and i think intel has some really, really interesting things if they can execute on it with bringing in that new blood and see what they can do there. I think thats a good one. Youve got to expanding global economy. So the spend is going to go to technology. Arguably theres been a hold back in spending in investing in businesses. Weve seen that over and over. As business continues to spend and i do think that youre going to see more productivity, where does it come from . Comes from increasing technology. A name thats not on this list, xpi, come back nicely, ge be longs on the list, back above 100. Further room to the upside. In terms of intel, it doesnt hurt to have the ceo in the oval office talking about new plants, new products and all that other. Hey, where is the golden elevator, right . All right. We have lots of big name stocks on the move. Next up we are hitting dupont, toll brother, t. J. , walmart, facebook. In the blitz as well, facebook, now high . Yes. 2 through the old high just screaming to the upside. Good stuff. Were going to talk about the broker s as well. One trader thinks schwab is a good bet right now coming up on the Clinical Trial<\/a> results around august 5th that were very disappointing to the street on big lung cancer drug that investors saw as putting it as a slight disadvantage to competitor merck in the space. So carl icahn reportedly taking this stake, reported by the wall street journal yesterday. And Jana Partners<\/a> wrung so new directors out of bristolmyers yesterday and 2 billion buyback. Icahn apparently think that bristolmyers is business and pipeline make it a good potential takeover targetnd in addition to opt divo it has several multibillion drugs as well as Rheumatoid Arthritis<\/a> drug. A lot of people raising eyebrows about this takeover because it would be a gigantic deal. Bristol has market cap of 90 billion. Any premium would put it above 100 billion. A small number of companies that could do that however carl, i kano stranger to pharma mchlt and a. Several years ago orchestrating several larger deals. Yeah, meg no, doubt. Pete, youve been in this stock before. Yep. Do you follow the money here, follow icahn in . I think the premise behind why carl is getting involved now makes sense. 100 billion just brought ups well, thats a huge number. But when you look at the pipeline, we love the pipeline. This is a stock trading well and then suddenly its 90 above. Well above 100. Figure at east 10 to 15 premium minimum after this drop. I did, i agree with you. Do you follow the money . Yes. Do you guys agree . I follow jon in. Carl is fine but jon i how about both . Yeah. Both. The more the merrier. Jon had it right. Acquisition could happen. Never say never. The reason why i bought the stock after jana bout it is this was just a very, very crowded trade. Everybody loved it. Pure momentum. Phase threes couldnt fail. Drugs would be approved. Guess what they did . Everybody exited this. Favorite large cap pharma. Now with expectations completely out, the risk was out. So 2 billion buyback, why not . Y r. You basically buying it just because someone will buy the company not at all. Abs lootly not. Right. Because who really could bite. Gilead or pfizer or someone like that . The issue with this size for activists is not only do you got to convince the company to sell, you then got to convince a limited pool of buyers to buy. Limited. Its not like even a hertz which carl has had issues with which is a smaller midcap company. This is just a much different deal. What then can the activists do in an environment where were talking about creating immune no therapy and cancer drugs. That comes from bristolmyers. What else can the a carl icahn or jana do to increase the value of the company, if not execute a sale. Ill give you some answers. Take a look where theyre allocating their r d, huge expense. Look at management. Look at the heads of the different sciences that they have and say this person just hasnt been doing their i dont know. Why are you still married this them and replace them. Push them to making a question situations of Smaller Companies<\/a> that will build out. The potential buyout pool may be small but that doesnt mean that its nonexistent. Not to mention the fact that the stock is down 15 since may of 2015. Its been an underperformer. Increasing the opportunity for somebody to come along and think theyre getting a discount over what they may have gotten in the past. Try to put together 145, 150 billion deal, right . So to say theres nobody out there who would do 100 im not saying buffett is interested in a drug stock. But i mean, this stock, judge, went from the moment you were talking to icahn and this stock was down around 53 1 2, whatever, popped 4 to 57 an change. Pulls back. Barely finishes better than unchanged on the day. But people were looking for an opportunity to pick something up. Top of the show yesterday you were saying is there anything out there thats not over extended or something to that effect. This is one of those stocks. Ralph lauren is one of those stocks. Restoration hardware is one of those stocks. Do they all get picked up and does an activist get involved in in many cases i think they do. Meg . A number of variables here with bristolmyers. Some folks think, yes, the stock is down and has been down significantly since august. Depending on how future quarters go, are we at the end of the decline there in terms of what bristolmyers growth looks like. Thats interesting. Another variable people mention is of course u. S. Tax reform. That could impact Decision Making<\/a> potential by for a potential fiers like pfizer which is the one i see cited most often as potentially looking at a deal of this size. They of course have tried to make some before. As for carl icahn in conversations ive been having this morning with folks they have a lot of confidence that carl has gotten a lot of deals done in this space. But when he was doing deals in bio pharma it was with his former Hedge Fund Guy<\/a> alex den whole started a new hedge fund now and activist investing in health care and left carl. So some questions about how carl will orchestrate the strategy here with him. Interesting. Youve had alex on the air before. Meg, thanks. So why are activists apparently back . Leslie pickard follows hedge funds for us and ken squire is the founder of a fund that has returned 40 p in the last year. Its good to have you both with us. Leslie, i turn to you first. This is no i mean, not a surprise but why do you think abo activists are back . We wanted to dig into the data to see how present they are. We asked for pem from kens firm. It showed that 13 d filings which only indicate Companies Investors<\/a> who have filed to show positions in companies with a 5 or greater stake are way up this year. 12 this year versus 6 last year and 6 the year to date. That indicates investors have been buying into maybe smaller Cap Companies<\/a> where they can take these bigger stakes. We looked at activist inside data as well which shows that, interestingly, large cap stocks, the proportion of large cap stocks that investors have been buying in to are the largest this year than they have in the last three years. And so why are activists back, is what you wanted to know. Activists are Value Investors<\/a> at heart. When the market took a step down last year they started looking into some of these names, according to sources that i spoke with this morning. And they said, okay, this would be interesting when the opportunity is right. When the opportunity presents itself. So now were starting to see them deploy some of this capital they were able to raise more aum. The winners of last year wf able to raise au mchlt and were starting to see some of those activities play out this year. Were not imagining things here. Right . It does feel like after a bit of a hiatus hanging out on the beach that activists are back and getting involved again. I would say a very small bit of a hiatus. It was the end of 2015 and beginning of 2016 where there was a little bit of a lull in activism. Part of that was as leslie said, Value Investors<\/a> and now a risk. On environment than last year. But guys like jeff smith of starboard and jesse didnt get that memo. They were very actist last year. As some of the most active years ever and they did very well in their activism. Maybe some of the largest investors looking at putting extremely large amounts of money to work, a point i guess both of you are making its a risk off environment for some period of time. I mean, if you look at the market now, a lot of Companies Feel<\/a> emboldened, maybe they will wait for tax reform to do so but they feel emboldened to do things like m a, stock buy back, tax repatriation coming back into the tax reform bill. Those are things that activists look for and they want to take stakes now in advance of th happening to feel better down the road. One other thing i would mention is, you know, valeant, people underestimate the effect that valeant had on them. It was a bad advertisement for six months on activism in general and a lot of people that invested on the fringes are fled for a short time and now people realize, you know what, that wasnt the end of activism. It was just one situation. Didnt the scc relax the governance rules and make activism easier and expect the new administration, any of that to be reverszes . I dont know if the scc relaxed the governance rules. There were effortses to change of 13 which they didnt do. And how people handled swaps which they didnt do. But i think in this environment, especially where President Trump<\/a> has carl icahns ear and more companies with lower taxes and repeatriating money activism is poised for a very big year. Proxy, this is all sort of happening again ahead of proxy season. Its a sweet spot from an activist standpoint in terms of disclosing the stakes because we had 13 f filings last week. If youre going to file a 13 f, it discloses the stake anyway. You may want to get ahead of that and explain what your position is and then, also, in the spring, if these activists do think do believe its going to come to fight as opposed to a settlement, it benefits them to disclose it now to use that leverage later on as proxy season really gets under way. Except for some of the financials youre talking about, they dont get filed when they cant hold those filings until the proxies get filed quarterly. Right . Theyve got to do it when they breach the threshold. Interestingly, the question we pose sort of at the top and we related it specifically to icahn is whether, you know, you should follow the money. Sometimes you should, sometimes you shouldnt. If you look at the data it would seem to show that if you do follow the money from the time that the stake becomes public youre doing to do decent as an investor whether its peltz and p g or icahn and b and y or other names weve discussed. But by definition you cant just cherry pick the ones to follow. Okay . Not their its not like theyre up 100 in their portfolio. Thats why squires got the fund he has. Exactly. I dont think activism was on vacation. Sure, there was a little hit with valeant. But otherwise in that, you know, theyve got to wait for investments to mature. Core vex had their hands full and not putting 100 of their capital into activist situations. None of them are. No, but, right icahn neither. Theres got to be a correlation to the fact that, you know, icahn had been very vocally concerned or whatever you want to cautious on the market and you didnt have him out with a very big splashy position that i can recall. Apple. No, recent history. Im not talking about within the last year. He keeps buying herbalife. Within the last year. He keeps buying hertz. He keeps doing it. I would also say the other issue is, and positive one, weve seen massive flows go from public equity hedge funds, okay, and credit funds into private equity. And all you also have the old vintage of private equity funds rolling off. So theres going to be and we havent seen a lot yet. Weve seen some of it because i look at the 14s which are the m a filings every day, because whats that we do. Youre going to see a massive, massive pickup in m a activity from private equity firms. That it is where youre going to start to see the activism pick sgl. Thought . Last year was the first year they didnt have a 13 d activist at all. We lulz like to criticize or people like to criticize activists for being shortterm investors. But to steves point theyre in these company tors a loies for term now so some of these are less likely to have as many activists 13ds as they may have in the past. So is the opportunity for the investor at home maybe not to follow some of the larger activist investors but maybe some of those who are managing lets say 5 billion in assets in the smaller stakes that theyre taking . I think you need to follow, again, as steve said, a portfolio. Thats a portfolio of different activists. You cant cherry pick. Out cant. For instance, our fund last year, 13 best positions represented ten different activists. So other than two activists there wasnt another one that had a second best position better than the next ten. Guy, good conversation. Appreciate it. Thank you. Thanks. Thanks for having me. Heres what else is coming up on the half. A big call on big name chip stocks. Micron, intel, broad come, nvidia and demonth all on the move. Plus, which do you do when the bond market says one thing and the dollar another . Buy, hold, or sell . The Halftime Report<\/a> with scott wapner is back in two minutes. The greatest population shift in Human History<\/a> is happening before our ey. Sixty to seventy Million People<\/a> are moving to cities every year. At pgim we help investors see the implications of long term megatrends pinpointing opportitiesme ofto capture alpha in real estate, infrastrucre and emerging markets. Partner with pgim the global investmenmanagement businesses of prudential. All right. Welcome back to the Halftime Report<\/a>. The smh up 55 over the past year and mkm partners think the stocks have more room to run. That firm initiated on the chip sector today. Pete, this is right in your wheelhouse. Micron assumed buy. Yeah. 30 price target. Yep. Caveom buy. Intel buy. Bro broadcom buy. Youre seeing sky works as well and alltime high yesterday. Theyre talking about margin expansion. If you believe in the apple store, then, yes, i think this is the right call. I think these chips for the most part, not all of them, for the most part they either trade at very low levels in terms of pes or their Balance Sheets<\/a> are incredible or they have growth somewhere in that chain, whether its expansion growth or growing others areas where its earnings, revenue, whatever. There is enough growth here in the chip space. Thats why i went to you first. Courtney gibson with us as well. President of luke capital. Good to see you. Do you like this space . Absolutely. We were bullish in december. You had our analyst on betsy who came out that day. As a matter of fact, i think we moved amd 8 or 9 . Bev within bullish on this sector. I think consolidation, 35 companies have left the sector since 201. Youre looking at the price leverage that those companies have at this juncture. I think were still remaining to be bullish there. I think were going to see next week with broadcom some interesting things. You talked about apple. I think were going to get glimpses into whats going on at the 8 next week. It should be very interesting. What about these other names on the list . Doc . Courtney mentioned amd. Stock is up 45 a month. Yeah. And obviously josh and joe had a great call on nvidia last year, judge. And i dont blame them for having a neutral on it here after the furious run that its had. But when you look at samsung obviously and the problems they had with their note and so forth and recall and ultimately illumination of that phone. Speaking of activism, sort of plays into that. It does. Fell off as far as peoples satisfaction with the company and everything from being right at the top to basically at the bottom. All of that though plays into these stocks have a lot more room because samsung was not selling those phones bu s becau the note. If they can start working back into this, demand for these chips also in samsung products are going to be tremendous. It was about ces 2016 when we started talking about and really when chip stocks regathered the momentum. Jon, i remember and you and talking last january and mentioned nvidia at the time and that ces was about the inclues, ai, chips, what they cube doing for the technology, the industry, the globe in its entirely itself. Theyve been strong performers throughout the year. I would also add Texas Instruments<\/a> which pete and i have talked about quite a bit, have had a very strong performance. That is a very solid name. A Core Portfolio<\/a> holding. Back to nvidia, thats fallen off. After earnings, fell to 105. I did buy some last week. Its something i would be holding on to for a trade more than anything else. But this really started at ces in 2016. I remember discussing it. And barcelona. Yeah. You go down the list. Are there names here that you hold now . Caveum. Typical wall Street Research<\/a> story. They were transitioning from one product to another. Major cat bag. Areaings were destroyed. No analysts really liked it and thats when i get involved because customer stop buying the old product and they havent started buying the new product because it hasnt been released. I bout it in 40s dp i sold a little bit of it the other day because it was up 50 from where i bought it. I bought a ton of stock in the 50s. Made an acquisition last year. Stock has had a good run from where you bought it. 11 bucks higher from here. Yeah. Lets also take note that this an analyst initiating coverage. So in order to get people to listen to what hes saying hes got to have targets up there that may be more aggressive than what the rest of the street has. Its like putting products on a shelf in a supermarket. Youve got to get mind share somehow. Im not going to say he doesnt believe in the targets but i dont think its unreasonable for cavium to get there. Were a dollar higher than where he initiated as far as our price target at luke capital. Pete, do you still own intel . Yes. I think thats the sleeper name. It is. Im thinking about that new cfo and shhh. If you already hold it its going to go up. With the new cfo and keeping expectations low and i think intel has some really, really interesting things if they can execute on it with bringing in that new blood and see what they can do there. I think thats a good one. Youve got to expanding global economy. So the spend is going to go to technology. Arguably theres been a hold back in spending in investing in businesses. Weve seen that over and over. As business continues to spend and i do think that youre going to see more productivity, where does it come from . Comes from increasing technology. A name thats not on this list, xpi, come back nicely, ge be longs on the list, back above 100. Further room to the upside. In terms of intel, it doesnt hurt to have the ceo in the oval office talking about new plants, new products and all that other. Hey, where is the golden elevator, right . All right. We have lots of big name stocks on the move. Next up we are hitting dupont, toll brother, t. J. , walmart, facebook. In the blitz as well, facebook, now high . Yes. 2 through the old high just screaming to the upside. Good stuff. Were going to talk about the broker s as well. One trader thinks schwab is a good bet right now coming up on the Halftime Report<\/a>. music plays heigh ho heigh ho heigh ho heigh ho its off to work we go heres to all of you early risers, whats up man . Gogetters, and shouldbe sleepers. From all of us at delta, because the ones who truly change the world, are the ones who cant wait to get out in it. Benow on the next page youll see a breakdowhat . Costs. Its just. We were going to ask about it but we werent sure when. So thanks. Being upfront is how edward jones makes sense of investing. To err is human. To anticipate is lexus. Experience the lexus rx with advanced safety standard. Experience amazing. All right. We are back. You know major averages have been setting new highs almost every day. The dow is 20,761. Virtually flat. S p and nasdaq not doing too much. Courtney, what do you think about where we are and where you think we could go . Scott i know you probably surprised a little bit on this continued move in the market based on the conversation we had last time you were on. We did. But you know, you remember and i think you coined the phrase a slow melt up and i think thats what weve been seeing. I got some stats from my desk before i walked out here. Incredible. Yesterday was the 50th straight session where the s p did not move more than 1 in either direction. 90 consecutive sessions without a decline in excess of 1 . Do you want to know when the last time that happened . What would you guess . 2000. 2006 and, before that . 1995. 95, guys. Do you think its melt up as we call it and people say keeps going . You know, i do. Because its not kind of something based around, you know, the expectations of this, that, or the other. Thats in there but were seeing strong earnings. Were seeing growth. Were seeing global recovery. Were seeing emerging markets doing better. I think this is something that is sustainable and i think all of the bears at this point are just waiting for a chance to kind of come in because ive been sit to think sidelines. And i think it ultimately were going to continue to see this, especially if we keep seeing what were seeing out of the white house this is were getting done what we said were getting done. So i think it will be an interesting time going forward. The question we debated yesterday is whether theres an overload of optimism in the market. Whether this move is justified. I agree. Well, depending on the media outlet you pick, scott, you get just a steady just shoveling of bad news about how the cover of Time Magazine<\/a> last week. The nothing going on here with the president here going on a tornado or a hurricane, whatever it might be. Very sensitive. Im very sensitive about hair. But theyre telling us how bad things are and how out of control things are and yet the market just keeps going march, march, march, higher, higher, higher. At some point though, its a show me story, no . It is. Were coming up to that. Hold on. What do you mean ugh. I mean, yes. I dont know why its a show me. Hasnt it been a show me story . Hes been showing. 90 consecutive without a 1 move to the downside . It is because the earnings have been impressive in the last three months and people are going, things look good. Do you think their earnings have been impressive enough for the dow to be at 20,700 and change . Why not . There was this thing called a earnings recession we were in. Were not in that anymore. Financial earnings, technology earnings, thats leading the way. If we had a drag right now obviously energy, joe has talked about the equities themselves have been going opposite right now at least with energy itself. Be you look at oil, oil is still hanging there . Improved earnings, improved Economic Situation<\/a> are certainly part of the story. And trump is a large part. Optimism. A large part huge part of the story. Weve made that point every day. Im not saying its not. At some point if you want to either stay at these levels or extend these gains, youve got to see real stuff on taxes, real stuff on regulations that matter. Let me frame it for you. Hold on. My point is getting tired of holding. Okay. But thats six months from now though, scott. What if its 2018. That has nothing to do with what the backdrop is currently with earnings, with the growth. Do the housing number come out today . Did you see housing today . Yes. Look hold on. Im just kidding. Heres the story. Show us how the market runs. Up 11 . Come on. The economic backdrop was well in place before trump took office. Of course. So we were on this ramp up anyway. Yes. But i think you are whistling past the graveyard and ignoring things if you think that trumps presidency hasnt added anything to the acceleration a n. Bringing it forward. It has. Of course. None of his policies though have done anything in terms of the economic in terms of the economy right now or executive orders that hes done. Nose are yet to come. Well have that big day in a week or two weeks when he promiseds a terrific tax plan. So if they fall down that, if they push it out, no big deal. But if it falls down in some ways the market is hoping for, the market doesnt even know what its hoping for because no details have been revealed. So thats where you can see some giveup but its only temporary because not only is the u. S. Working better, the whole economy in the global is working better. Its not all there are two minds. The mind that focuses on social issues and the mind that focuses on the fiscal issues. So if youll only focus on the fiscal issues, everything looks great and as investors thats all we should focus on. Economic issues. What jon appropriately said. Were not paying attention, pete is talking about earnings and everyone seems dismissive of earnings. Not dismissive. Great guidance. Its simply a debate as to whether earnings leaving an earnings recession are now just so amazing that it justifies your stocks or trading. Youre combining that with an unexpected faster recovery in europe than anyone imagined or was positioned for. No one was positioned for that. Steven is talking about the possibility for private equity to step in for, many and a. I gave you the statistic yesterday. Up 132 in north america, m a activity, after a down year of down 13 , up 75 globally. Why is that happening mysteriously . There is a degree of optimism that has accelerated incredibly. You and i were at a dinner where we were told by a billionaire how much confidence he was seeing, right, in the business world. I think people are dismissing that. Mark cuban is one of those people dismissing it. What joe is talking about, the animal spirits that kevin oleary and mark were debating last friday on this show, scott, those are clearly here. The animal spirits. Can we get too far ahead of ourselves . Yeah. But and this is a big but the regulation rollback that i believe is going to happen. Thats a certainty. The tax plan we dont know. And well get a clearer look as kevin said yesterday, february 28th or whatever when the president comes and delivers whatever is the package. The speech. Yeah. I think thats going to unleash further spirits. So priced in, no way. Diss counted right now. You price that thing in, were out there like i said yesterday, through 22,000 year end. Lets talk about some individual names then since weve debated the more macro picture of the market. Dupont, give me something on dupont. Its been a long process to get this merger together. Looks like europe is going to go ahead with it. The stock is jumping today. And this is well positioned for the recovery. Toll brother, joe, was up 7 last time i looked. That one is mine. Jon. Im sorry. Thats all right. Delivery, fantastic. And this one almost triple the price of the other homebuilders as far as the sort of luxury home theyre delivering. 118 to 140,000. The stock is at the highest level since 2015, judge. Fantastic turnover. Great performance here. Pete, no scoffing at walmart. No scoffing at walmart. I know you saw that. I saw you look down. At the tweet . Yeah. Youre king of the scoffers. Youre a king scoffer. No. Oliver chen has said this. Bank of america goes to buy walmart. Everybody seems to be jumping on the walmart bandwagon for the right reasons. Sams club is killing it. Traffic numbers, grocery. This is a stock that will go higher. Big box stores, right, pete . You cant do the whole big box, joe, im on scotts side of that one. Im not scoffing. You go to big boxes. You got to individualize them. Ticker, big box. Joe threw that out yesterday. Tjx. Disappointing on guidance. This is a stock i think i bought the top tick of the stock in august 2016. I think i paid like 82. 50. Top tick was 82. 67. Crushed on it. Disappointing ive since. The guidance this morning was weak. Facebook in talks with mlb, major league baseball, live stream games. You own the stock . I do. You know im a huge facebook fan. Yep. I dont care about the whole facebook streaming thing. Im more interested in kind of what theyre doing around what theyre doing, how its affecting snapchat, whats going or snap, let me drop the chat. How its affecting snap and other things. But facebook, nobody is competing. Lets be clear. Its going to crush snap. Whats snap . Instagram. No. Guys, guys, guys, its instagram. The gram. Its the gram and going live and its the gram with recreating what snap snap is going to have a product issue and theyre going to have an advertising dollars issue. You bet they are. Part of the move in facebook is from investors, Institutional Investors<\/a> who had money on the sidelines to put in money in snap and ipo. The brothers najarian tracking unusual activity in the options market. Well give you their plays just ahead. But first, Michelle Caruso<\/a> cabrera. Power lunch starts in 24 minutes. Watching more on President Trump<\/a>s big budget neating under way at the white house. Americans for tax reform founder and president Grover Norquist<\/a> is with us. Is the batdow . He doesnt think so. Eely lillys ceo and the markets from the last fed meeting. Yes, we still talk about the fed. Not as much since President Trump<\/a> but we still. Theyre still important. Those minutes out at 2 00 p. M. Eastern time. Busy two hours of power lunch at the top of the hour. Come back after this break because theres more Halftime Report<\/a> after this. Okay, lets call his agent. Im coming over right now. The newly advanced gle can see in your blind spot. Onboard cameras and radar detect danger all around you. Driver assist systems pull you back into your lane if drifting. Hi chief. Hi bobby. And will even help you brake, if necessary. It makes driving less of a production. Lease the gle350 for 579 a month at your local mercedesbenz dealer. Mercedesbenz. The best or nothing. Guyhey nicole, happening here . This is my new alert system for whenever anything happens in the market. Kids a natural. But thinkorswim already lets you create custom alerts for all the things that are important to you. Shhh. Alerts on anything at all . Not only that, you can act on that opportunity with just one tap right from the alert. Wow, i guess we dont need the kid anymore. Custom alerts on thinkorswim. Only at td ameritrade. Hi, everybody. Im Contessa Brewer<\/a> with your cnbc news update. Syrian opposition and government delegations are arriving in geneva to resume peace talks. It happens tomorrow. The United Nations<\/a> will broker those talks. Potentially the best opportunity here to resolve a long deadly conflict at a time when the syrian army has regained many key areas. Protester of the dakota pipeline are preparing to leave the camp before this afternoons deadline. Pray prayed and set fire to a handful of wooden structures as part of a departure ceremony. The army corps of engineers has given them until 2 00 p. M. Local time to vacate. Vandals badly damaged a Jewish Cemetery<\/a> in suburban st. Louis and now volunteers and donors from many faiths are contributing to the cleanup. Investigators are reviewing Surveillance Video<\/a> trying to identify and then arrest those responsible. Ups is testing drone delivery this week in florida. The drone was launched from a specially outfitted truck before returning. The company says its looking at ways those drones might be used in rural delivery. And thats the cnbc news update at this hour. Were talking to Asset Management<\/a> ceo Kerry Firestone<\/a> coming back and look at the stock on her buy list. Sion. But i keep it growing by making every llar count. Thats why i have the spark cash card from capital one. With it, i earn unlimited 2 cash back on all of my purchasing. And that unlimited 2 cash back from spark mea thousands of dollars each year going back into my business. Which adds fuel to my bottom line. Whats in your wlet . But at t. Rowe price,ar. We can help guide your retirement savings. So wherever your Retirement Journey<\/a> takes you, we can help you reach your goals. Call us or your advisor t. Rowe price. Invest with confidence. Itthat can make a wodences, of difference. Expedia, everything in one place, so you can travel the world better. Were drowning in information. Where, in alof this, is the stuff that matters . The stakes are so high, your finances, yo future. How do you solve this . You dont. You partner with a firm that advises governments and the fortun500, and, can deliver insig person toerson, morgan stanley. On whamatters to you. Report. The najarians have made their way over to the telestrator for some unusual activity. Doc, what do you have today . Cree, judge. Stocks starting to move up a little bit more and now we see basically some rumors of activity maybe even, ma m and a activity in the stock. Playing the options that expire this week, judge. 2750 cats. See where the stock is trading just below 2750. These are almost at the money calls and theyre buying them in big numbers. I think 6400 of them so far. They expire in just two days though. So be very aware of that. This is going to happen or not by friday according to these buyers. Im in there with them. Well see what happens here, judge. Yes. We will. Pete . That one is short term. Interactive is where im looking. Liberty interact i. Its a name that doesnt come up often. If you went back a little bit further, this stock was trading in 26, 27 range. Dropped, fell out of bred. Now, with the stock trading around 20, buyers came in, over 20,000 of the april 22 calls were bought. 40 cents up to 60 cents. Extremely aggressive. Earnings on the 28th. Im in these. Im going to carry it through earnings. But i think that this name looks like it wants to maybe return to where it had been and thats liberty interactive. All right. Guys, make your way back. Thank you. Jon and Pete Najarian<\/a> with the unusual activity. With stocks near record highs what looks at trative here . Kari firestone, ceo aureus Asset Management<\/a>. Live from boston. How are you . Great. What is your pick of the day . Its schwab. So weve been looking to add another financial. And we chose schwab which weve been adding recently. And the reasons are several. Lets start with its u. S. Centric. Its growing 15 to 20 a share. You have no problem with border adjustment taxes. Theyre gaining market share in a number of areas including individuals which is their big business. We all know schwab doesnt discount brokerage but also registered investment advisers. So firms who do what my firm does and theyve used platforms before with bigger banks as custodians and theyve moved on to the lowest cost, platform available right now, which is schwab. So theyre gaining market share. Offering a very high quality product. And theyre increasing the number of advisers who move toward them. We also like the fact that they make a lot of money on the sweep of cash into their bank. And as Interest Rates<\/a> rise, of course schwab benefits. If you move 10 billion in to the bank at schwab, that adds over 100 million of net interest revenue. It can add another 5 to 10 to the growth rate over the next several years. Is this the best name do you own other names in this space, other brokers or is this the only one . We own other banks. We own Silicon Valley<\/a> bank. We own first republic. Its only broker that we own. All right. Kari, thanks. Thank you. What do you think of this pick . I like it. I think theyve got to grow out of the they of course threw a basically a grenade at the rest of the discount broker, judge, when they cut fees so dramatically. You saw what happened the d. Her trade and e trade and everybody else. Those guys are recovering. Schwab, it will take a while but this is pretty aggressive move by schwab and a pretty aggressive move by kari. In the Asset Management<\/a> space they have a high tax rate, 37 , tax cut down to 25 . Reason enough to own it. Somebody on twitter is saying interactive is cheaper and platform is better. And is underperforms relive to to schwab. I like what e trade did. When they bought our former firm that gave them active trading. Thats what these various firms need. Amr trade has their. E trade is just getting this in the fold now. Leucadia owns jeffries. You sewn the stock. I have owned it for a while. I think it will continue to do well. 28 tangible book value. So still a big discount to book trying to find financials that are doing that. What bond yields are telling us about the next move for the stock market . Well talk about that next. First, the s p sectors, though. Or not. There you go. There you go. Halftime report back after this. I cant wait for her to have that clege experience that i had. The classes, the friends, the independence. And since we planned f it, that student debt the one exrience,m glad shell miss when you have the right final advisor, life can be brilliant. Ameriprise inheriting, essentially inherit something a mess. Were going to clean them up. Things that weve been doing, including negotiating deals that have already been negotiated. So you call it renegotiating on airplanes and lots of other things. Military items. End up getting many more planes free or save a lot of money but weve already saved a lot. Billion and billions of dollars are being saved. Debt has doubled over the last eight years, our debt has doubled over a short period of time. I want the American People<\/a> to know that our budget will reflect their priorities. Well be directing our agencies to protect every last american and every last tax dollar. No more wasted money. Were going to be spending the money in a very, very careful money. Our moral duty to taxpayer requires us to make our government leaner and more accountable. We must do a lot more with less. And we must stop the abuses and negotiate better prices and look for every last dollar of saving. Weve already imposed hiring freezes on nonessential government workers and part of our commitment is to continue to do that for the american taxpayer. We have appointed a cabinet that knows how to manage dollars wisely. Ive known the people a long time and have been tremendous winners whether its steve or larry or another steve here. They will manage the countrys dollars and your dollars very wisely. We wont let your money be wasted anymore. Were going to run money smoothly, efficiently and on behalf of the very hardworking taxpayers, something that the taxpayers havent seen in a long time. I will be holding everybody accountable for that. I want to congratulate Steve Minuchin<\/a> as our new secretary of the treasury. He will be outstanding. Tremendous track record. He has a tremendous track record. I have great confidence in him. Were going to continue on and were going to take this budget, which is, in all fairness ive been here for four weeks so i cant take too much of the blame for whats happened. Its out of control. We have to take care of our military. We have no choice. We have to take care of our military. It needs work. Its very depleted. We have to take care of a lot of other things. Health care is moving along nicely. Its being put into final forms. As you know, before we do the tax, which is actual ly very wel finalized. Were moving along well, maybe early to mid march well be submitting something that i think people will be very impressed by. With that, the press knows pretty much all the people at the table. Thank you very much. That was the president , moments ago from the roosevelt room, speaking about the budget. President trump saying we need to make government leaner and more accountable, that well have to do more with less. Thats the president s comments there. You saw Steve Minuchin<\/a> at the table as well. He will be on this network at squawk box 7 00 tomorrow morning. Eamon javers is with us. Ive seen reports that you could get a budget within a couple of weeks but then the real fighting is going to begin on exactly what the final draft will look like. Thats right. Sitting alongside the United States<\/a>. V knows the political situation on terms of up on capitol hill and getting a budget passed and how tricky that will be. Conservatives up on capitol hill who do want to slash the federal budget and cut spending and also want to boost defense spending. You heard the president talk about all of those things. At least thats an encouraging first sign there. Jared kushner sitting there, interesting utility player, discussing the federal budget. He has been taxed with peace in the middle east. He seems to be emergeer merging as one player that the president wants in just about every key meeting the president has. A lot to come here. We got a sense of when this will all roll out. He said health care first. The obamacare plan, whatever it might be, in early to mid march and then tax reform after that. We will wait and see what happens ahead of his address to the joint session of Congress Next<\/a> week. Typically you get some leaks ahead of an address like that. Well see if we get those toward the tail end of the week. The head of the tax plan calling it very well finalized. Yes. Do not miss a first on cnbc interview with the United States<\/a> secretary of the treasury Steve Minuchin<\/a>. Jackie deangelis joins us now. Rising off earlier lows, tenyear hovering just below 2. 5 . The bond market, dollar index seem to be telling two different stories about where Interest Rates<\/a> are headed. So, tell us why. Thats absolutely right. Dollar index is higher the last few weeks, back up to nearly 101. 50 from well below 100. Interest rates should be going higher. Weve seen Interest Rates<\/a> actually going lower. Traders love to Pay Attention<\/a> when markets dont do whats expected. What does this say . It says something about inflation. Inflation is the only thing we havent addressed yet. What i think it says is that the market expects inflation be much more tame than the 2. 5 weve seen from cpi. If thats the case, this diverge enter move makes more sense. Tenyear yield tested that at that 2. 5 level. Retreating since then. How are you trading bonds right now . Weve been stuck in quite a range. 232 is the low end. 2. 52 is the high end. You have to play that range. The fed has been historically dovish. I know theyve been talking more hawkish, but the fed fund rate behind me only a 17 chance they will rate hike in march. Thats the same probability that scott nations hair color will go back to brown. Those are fighting words. Check out neuters now tuesdays and thursdays at 1 00 pm eastern time. More half time after the break. Hey gary, what are you doing . Oh hey john, im connecting our brains so we can share our amazing trading knowledge. Thats a great idea, but why dont you just go to thinkorswims chat rooms where you can share strategies, ideas, even actual trades with market professionals and thousands of other traders . I know. Your brain told my brain before you told my face. Mmm, blueberry . Tap into the knowledge of other traders on thinkorswim. Only at td ameritrade. We need your password so we can lock down the system. My passwd . Yes, sir, we need your password. The password that i use . Yes, sir, your password. Theres been another breach sir right. Okay. Iha. Temyjob1. Ihatemyjob1 . Wanna get away . Now you can with southwest fares as low as 59 dollars oneway. Yes to low fares with nothing to hide. Thats transfarency. Sfx clap, clap, ding Companies Across<\/a> the state are york sgrowing the economy,otion. With the help of the lowest taxes in decades, a talented workforce, and worldclass innovations. Like in plattsburgh, where the most advanced transportation is already en route. And in corning, where the future is materializing. Let us help grow your companys tomorrow today at esd. Ny. Gov [phi anne. G] so those financial regulations being talked about . They could affecyour accounts, so lets get together and talk, and make sure everythings clear. Yeah, that would be great. Being proactive. Its how edward jones makes sense of investing","publisher":{"@type":"Organization","name":"archive.org","logo":{"@type":"ImageObject","width":"800","height":"600","url":"\/\/ia804707.us.archive.org\/24\/items\/CNBC_20170222_170000_Fast_Money_Halftime_Report\/CNBC_20170222_170000_Fast_Money_Halftime_Report.thumbs\/CNBC_20170222_170000_Fast_Money_Halftime_Report_000001.jpg"}},"autauthor":{"@type":"Organization"},"author":{"sameAs":"archive.org","name":"archive.org"}}],"coverageEndTime":"20240627T12:35:10+00:00"}