Really a macro call based on valuation and you have to consider the dollar as part of it. I just think yen has more potential upside. The its a pair trade, as you said, its not that im short the s p, bearish, its a relative performance. Thinks the s p could still outperform. This is like a mid year trade. Sure, if you were thinking about mean reversion and the huge gaps in valuation and performance thaend youre looking at the recent trend that shows a big reversal from what weve seen in the last few years. For contest, were overweighting em. Ive been flogging this horse for months. So its nigs to hear him agree with it. Eem is up 16. 5 year to date. This is the key to outperformance this year i think is to be in europe, even japan, nikkei looks like it wants 20,000 badly. As were talking, is breaking a level to the upside that it isnt seen since may of 2015. If you look at spy you can see a change in trend, thats coinciding with better economic news. And i genuinely think that whats gone on in the first three to four months is going to be exacerbated further into year end as everyone chases this, so you may not have seen nothing yet, as they say. I thought it was interesting as part oz hf thesis was that so much money has been flowing into passive investing, index funds and what have you, that its pushed the valuation of the s p 500 too high. Has that sort of unbind, as you get a move back towards active, that this is why this pair trade is going to work. You doebt dont have mch on t the High Frequency side. Youve got south korea in here in the eem swelts brazil and so forth and if you can link those two up, well, good luck to you. As far as manipulating that and im not saying manipulate in a bad way. As far as money flowing in there and grabbing chunks of the s p 500, lifting stocks like amazon and apple and Goldman Sachs and the stocks that weve talked about ad nauseam here, i think its good call by jeffrey. And it underperformed for years. Last year, the outperformance started. Bottom line, is this the time and to really consider values elsewhere . Whether its eem or europe. The answer is yes. Even as jeffrey says, the s p could still outperform in the near term. Most of the time, you are supposed to have a diversified portfolio. Particularly if you are High Net Worth investor. Youre supposed to have international stock, including emerging markets in there. My only problem with this call is if hes right on both side of the pair trade implying he thinks the s p 500 is going to come down, the problem with that is that as the s p 500 comes down, they get a little scared and theyre going to take money out of the riskier assets like emerging markets. This is a case where this is very correct and i think josh you used the concept, if this is your type of trade. Youve got to realize investor behavior in the retail space is not thinking about pair trades. Theyre thinking about absolute returns and if you get something crazy, which happens in emerging markets like a bank of cyprus going belly up, thats going to get outflows on the retail emerging markets. I understand if you say the s p sarts to come and people get nervous, its not like theyre going to be in the mood to buy. I dont disagree, but for Something Like this, you have to think bigger than just what goes on in the next election. During the this time frame, european stocks did well, emerging markets did great. If were starting to think in chunks of three, five and ten year, you are correct that investor behavior might yank assets from foreign markets, but if we have a lost decade for the s p, which is possible from sxwl why is the vix as low as it is . Why is the s p trading in such a tight range as it has been . Whats the message in that . Hold on, are we complacent or trying to figure out where the best bang for your buck is, and thats why people are reluctant to put money into the s p 500. They are investors such as jim simons sitting out on long island and there are scientists and pafds who have developed and we have developed efficiencies in the marketplace and what we are witnessing is mathematics at work. We have a volatility index at a 24year low and understanding that, the relationship the correlations are all mean reverting intraday, so if you know volatility is not going to be expanding, ranges are not going to be expanding further, then what youre sitting there doing scientifically during the course of the day with these is is when something is getting outside of the range statistically, where it should be based on volatility, you bring it back in again and its really about that top that spins that is not spinning that much. The last thing i would say is think about where wurp a couple of years ago and the conversation with High Frequency trading. We were so concerned about it, were now witnessing the efficiency of it. Joe, i want to respond to this. Something ive been saying from the beginning of the year is i think its wrong for us to look at a market like the s p 500. Im bringing a new facet in it. The out performance this year of growth versus value has been tremendous. The russell 1000 growth is up 12. 3 . If youre in those growth stocks, which includes apple, facebook, et cetera, youre feeling like this is a bull market. The russell 1,000 value is up 3. P 3 and if thats where you invest, you dont feel the s p 500 reflects where your market is. When were talking about the markets, whether its flows like youre talking about or fundamentals, this is a tale of two cities youre talking about investing and i agree with your classification. Josh was talking about market exposure. Youre a longterm investor. You always have that exposure. The near term, oil prices could create a risk to edm. Mike fell off. Imt to jump ahead and do some reporting. New at noon story and developing one related to pandora. Last night along with earnings, you may have heard by now, that pandora announced it was considering strategic alternatives, including pursuing a share, which some of the largest shareholders have pushed through. Some involved kkr making a 150 Million Investment in pandora. Its a Financing Deal that will close in 30 days. David faber has been doing a lot of great reporting op this story. I just want to add some of my own. Im told from sources that pandora is not only actively trying to sell itself, but it believes that it can get a deal done before that 30daytime period ends. In which case, it would have to pay kkr 15 million basically in insurance policy as david was saying, certainly as im hearing, thats how the company views that 15 million payment. Giving the company a 30day option to sell itself, which it thinks it can do, im told. The companys adviser are actively working to get a deal done. According to my source, pandora is confident that the investor makes it more likely to happen and thats why they were will be willing to spend the 15 million for an insurance policy, much more to come on that, but again, my reporting is that pandora is confident that it can get a deal done in the next 30 days before the Financing Deal with kkr would close. Pan doria said no to 15 a share and the belief was they found a private equity firm thats going help them with the losses theyre bleeding until either the strategy starts to work out or somebody else comes along willing to pay more than 15. If what youre saying pans out, this is the opposite outcome from consensus on the name. Were getting no comment from pandora on o news. I think david mentioned sirius. I dont have any reporting on that. There was unusual activity in the name yesterday. Most thaukt it was probably related to earnings or Something Like that. Given the time frame, your reporting saying within 30 days, which i did not know last night, but now that were hearing that, the upside calls, thats something they can still cash in on even though the stock dipped to 950. The 30 day financing isnt by accident. They think they can get a deal before its over and they are actively working to make that happen. Scott, it provides a much needed safety net. You know ive been in and out of this name multiple times and talked on the air incorrectly about a deal occurring. I believed it was going to occur. At one point, i thought it was going to occur at 18. That would be fantastic if it happened at that price. Were talking about a xhaen that when you look at its cash and shortterm investments, just two years ago, it was approach iing 400 million. It now sits at 200 million. It is a deteriorating balance sheet, make the entry into the music space. But they get the financial safety net and i think even better, they get the expertise they need on the board. They did announce the Board Changes as well. Its money well spent, worth the insurance. This falls into the category of great service, great product. Terrible business. Streaming music. Its just not a good business. Probably will become a worse business as you see the op ls of the world spend more and more money to be in streaming et cetera. Almost no ones making money here. Pandoras got great global ads, but its not an ideal client theyre serve iing those ads to. Thats the client not paying the subscription fee. Its the kint that doesnt spend the money and then the subscription business, its not great and theyre not really doing a lot, you know, in terms of innovation, so i think like its tough to make the case that theres going to be some dwraet deal for this company. Never good on a short time frame. That empowers the potential buyers. Not seller. I know its only its not the first time that were either hearing about the possibility of pandora doing a deal either. Not really defending your story well enough and recognizing how quickly the competition is coming on. Heres a classic example of a business that has a tremendous amount of o competition. Really wasnt prepared for it. Well follow that. Its going to be active obviously throughout this this day minimum and certainly over the next many weeks as we understand it. Lets stick with tech. We mentioned apple. That amazing run continuing today. Another all time high. Like a broken record. Market cap now above 800 billion and social capital founder, appearing on cnbc earlier today, he had this to say op why hes changed his mind on the tech giant. I think whats misunderstand is is that there is an emerging business that none of us are paying enough attention so, what is the ios business, so all of the business of apps and selling subscriptions is misunderstood, including by me. I think whats interesting about what he had to say is that he views this story as a software and services story. The iphone is what it is. Obviously, its an incredibly powerful hardware device for apple, but the better part of the story and maybe the most misunderstood and maybe for him is software and services. Right and that software, the ios he called out there, thats interesting because not a lot of us focus on that, scott, a lot of us on this desk including pete focuses in on services, services, services. And every time scott scoffs at it, pete just nails it again and says services. Obviously, the growth there is amazing and just last week when they reported, we said look at the device sales as well. Watch sales doubled year over year. Double digit growth in an installed base of a you know, that a knowledge that a billion units and things like that. These are all things that play to apples strength and i think thats part of why the gentleman change d his view based on this new analysis hes made. One of the big mistakes with apple that ive seen is people trying to put it into a box. Is it consumer tech. Is it hardware . Is it software . Its such a, its such a distracting and in the end, irrelevant conversation. The question is, is apple going to do better or worse in the future and nothing, nothing thats gone on in the last few years would lead any sane person to say that apples Competitive Position is not great. Or apple somehow doesnt have the where with all to continue to do well in services and in addition, none of that has happened, so this idea that im not going to pay x multiple because its a consumer hardware, you dont know what this is. Its a unicorn. There is nothing else like it its ever existed and the cash they have has always given them the ability to get into new markets, to do pretty much whatever they want and beat up any competitor they need to. I think thats been missed in the conversation. Feels like at this point, everybody on earth owns stock, either outright or through a fund. What if you dont . 854. Heres the thing. I think you buy it here. The next 12 percentage points, if if you are one of those few who dont own it, the next 12 guarantees the ten after that. I would never say that about a stock. This isnt even technical analysis, t not fundamental. Its specific apple trading analysis. You get the next 12 percentage points, youre at 900 billion on the market cap. I can guarantee you every news channel out there is going to have a little box in lower right that has an apple 1 trillion watch monitor on it just like we watched dow 20,000 or the bp oil spill. It will gain so much hype at a 900 billion that youre almost guaranteed to get it. How does this not a sell on the news come the eight in the fall . It might be. You could have a 10 drawdown in apple overnight. Theres absolutely no reason to believe that just because theyre an incredibly successful company, the stock will lose all volatility its ever had. This is a name thats endured 20 and 30 drawdowns in most of the years since the iphone was originally launched in 2007. Its a decade of this product becoming bigger and better and more refined an more iterative and in the meantime, investors havent been able to tuck it under their pillow. Do you buy it at 154 or think its going to be a sell on the news later in the year. Quickly, it is sell on the news but thats much later. Youre talking october. When the iphone launches, you do sell the news, its may, weve got a few months and i think this thing will get sucked up to 1 trillion. I think you buy it here. Absolutely. Heres what else is coming up on the Halftime Report. Next up, rage and returns. The stocks are soaring while the passengers are fuming. How high can the stocks run if all the customers seem so unhappy . Plus, the winner of this years sohn best idea contest. Back in two minutes. In two min. Online u. S. Equity trades. You realize the smartest investing idea, isnt just what you invest in, but who you invest with. When a fire destroyed everything in our living room. We replaced it all without touching our savings. Yeah, our insurance wont do that. No. You can leave worry behind when liberty stands with you™. Liberty Mutual Insurance violence at ft. Lauderdale airport after spirit canceled nine flights. Spirit says the fligtss were canceled because pilots in a battle with the airline refused to fly. The stock by the way is up. 35 or there abouts over the past year. Air raids also in australia, check this out. The ceo was address iing a business breakfast when a man came in and hit him in the face with a pie. I dont know if id be okay with that. Buffett said it was a difficult business, used to be b suicidal. Everyone with a cell phone is going to be recording whatever actions they view as being antipassenger, discontinues throughout. We talked to brad yesterday despite the backlash. Not backing away from stocks at yesterdays sohn investment conference. He pitched yupted as his top idea on stage, say iing the sto can nearly double. Hes sticking with it. The company made the right steps. He said yesterday we thought it would double, right . He said by the way, he bought more. Well hear later when warren updates, but i bet you he added to it. Negotiated, debated with pete while you were gone, i was taking the bull case on united and if warrens not selling here, if ch he did in the case of ibm, i think that goes higher. They were buying at the 78. 50 strike b and selling at a strike above it. Theyre defining the risk the same way. I wouldnt go out and buy either of these stocks. Id do a call spread. I think its ironic seeing the meeting and then return from sohn and theyre being contrarian. So i find that youre a little cynical there. Im in jet blue, the only one buffett doesnt own. I think its too small for berk shirks but this is the most interesting because its obvious if theres going to be more consolidation, this would be the play. Even if there isnt, they have such an ironclad lock on their base. When they put out their flights for christmas time last month, theyre doing just fine in terms of their ability to raise price. The regionals have been the play and im wrong because i thought that the large aircraft carriers would struggle through the publicity surrounding what happened with united. I never expected them to come back this quickly. The southwests, alaska, hawaii. Jet blue. They have the ability to grow the footprint. I i think thats the most critical thing right now. Coming up, were going to hear from the winner of the sohn idea contest. The stock idea that impresseded david ireinhorn so much. And one is here, well have a double dose of unusual activity. The retailer and miner that options traders say are heading higher. Higher. Brian, i just need to know if the customer app will be live monday. Can we at least analyze customer traffic . Can we push the offer online . Brian, i just had a quick question. Brian . Brian. Legacy technology can handcuff any company. But yes is here. Youre saying the new app will go live monday . yeah. With help from hpe, we can finally work the way we want to. With the right mix of hybrid it, everything computes. Deartheres no other way to say this. Its over. Ive found a permanent escape from monotony. Together, we are perfectly balanced, our senses awake, our hearts racing as one. I know this is sudden, but they say if you love something. Set it free. See you around, giulia im dr. Kelsey mcneely and some day you might be calling me an energy farmer. Energy lives here. Thithis is the new new york. E . Think again. We are building new airports all across the state. New roads and bridges. New mass transit. New business friendly environment. New lower taxes. And new University Partnerships to grow the businesses of tomorrow today. Learn more at esd. Ny. Gov what . Pony neighing] hey gary. Oh. Whats with the dogsized horse . Im crazy stressed trying to figure out this complex trade so i brought in my comfort pony, warren, to help me deal. Isnt that right warren . Well, you could get support from thinkorswims inapp chat. It lets you chat and share your screen directly with a live person right from the app, so you dont need a comfort pony. Oh, so what about my motivational meerkat . Inapp chat on thinkorswim. Only at td ameritrade. John at the telestrator as usual with unusual options activity. Doc, you want to kick it off with a retarial. It is macys. Giving you two of them today. Retailer, macys, they started buying may 30 calls aggressively. This is the year to date graph. Ta