The way up into these numbers. I think well start to see some of the numbers actually come back into these financials theyve lagged, they havent performed. They had that great run after the president was elected and theyve basically poaused. I think its ready to finally start to break to the upside weve seen the kind of option activity that tells us right now, its not just the individual names, the entire xlf. People come in there and buying huge numbers there, looking for more upside. And it doesnt headquarter that yield curve have been cooperating so far this week in just the past week, were up about 0. 1 on the tenyear yield curve. But its not even just about where rates are going with the financial names that were in. Theres so many other reasons to own these big banks, and especially with ccar coming later on today, its a situation where youre going to start to see some of those buybacks potentially coming back. You already heard yellen talk about the strength of the banks already. So she kind of gave you a little foreshadowing into what were hopefully going to see later on this afternoon theres so many reasons to be in financials, whether its the big banks or some of the Asset Management firms or even some of the boutiques like the moles that are out there theres lots and lots of opportunities in financials. And heres the biggest reason, that goldilocks im not talking to you, pete i thought he was thatsmy pet name for him im trying to figure out who has more goldilocks. Im not that bad. The story here is you had pending home sales declining, right . You had somewhat of a weakening in t economic data. You may not have a fed thats in the hurry. On the other hand, draghi yesterday giving hints that hes finally going to reverse i think he overstayed his welcome on qe. But thats what got the market down yesterday and got bonds going. The tenyear had a huge move as that happens, now we go to a steepening yield curve the banks will make more money the banks in europe which had to invest with a negative yield no longer will have to do that, hopefully, as you look forward so thats very, very positive for financials i dont think therell be any surprises. Youre a buyer of financials . Which one . I own them p i own citi im not adding to them theyre nice positions why not . I mean, theyre still cheap. Look, im in them, as well. Im in citi, as well im looking at blackstone, but not for any of the reasons that you guys are mentioning. The tenyear has gone up the last couple of days. Its still at 222. That spread between 2 and 10s is paltry its less than 100 basis points. Its hard to say at this exact moment in time that the steep yield curve is propelling these higher as for the ccar, i think thats an asymmetric risk to the downside everyones expecti ining glowin colors in terms of sell the news, in other words. Not necessarily sell the news what i mean is, the only reason that somebody would be surprised, if one of these banks doesnt get approval to do what theyre expecting. Im not saying thats whats going to happen. What i am saying is, i dont think this is a sector play, per se i like citigroup probably for the same reason you guys like it, right it trades at a nice discount to stated book value and tangible book value i look at Something Like blackstone with a 10 yield that i think is sustainable and could get propelled higher if they change their corporate structure. My point being is that its stock by stock, not necessarily sector i think the move is maybe 10 stress test and the other 90 draghi thats what i think. And a tightening cycle thats going to occur slower here than we thought, because the economic data, and then it will pick up i think thats the reason for it jim, im 100 right with you on blackstone. Im looking at it as well right now for a slightly different reason if you look at asset flows within the pension plans, whether its public pension plans, foundations, endowments, corporates, what are they doing . Theyre investing in alternatives for their active strategies and who is one of the largest Asset Managers in the alternative space . Its blackstone. They are knocking the lights out. You talk about fundamentally strong, financials are strong, Business Trends working in your direction. I hope im not too late at this point. I see it running today some of the lights if they change that corporate structure, so its no longer an lp passthrough and you dont have the k1 issue, thats a quick pop in the stock as well thats not on the radar screen, but it will happen mel, ive been only in the xlf here in and out of a couple stocks in the financial space. Goldman, when it gets sold off too hard you think its a sector player i do think so, because ive been burned trying to pick individual stocks in this space. Because well see unusual activity for a day or two, and then it fades. But now, with the i dont know that the tenyear low is in for the year, but its been awfully close down there what is it, 211 on the lows here now were 222. I like the xlf, huge paper, huge tens of thousands at a clip. Thats a million share block at a clip theyve been buying into the xlf. So i think whats going to happen is that even after the fed has made all of its moves, mel, and the market or the bonds have actually rallied, yields have gone down, now i think were about to reverse those pete, im curious your brother says, okay, the unusual activity in individual names will be very active and then theyll fade. For you, though, that was convincing you to actually be a buyer for some of these names. Why the difference here . Every time i see the option paper come into there, thats strictly going to be the trade for me im owning the stock and trading the options in bank of america and the moves you get out of a stock like that, and you look at whether those options are bought, oftentimes 20 cent option goes to 50 or 60 cents. Im out. I love the trade and im getting out. Those trades my longerterm holds bank of america has been one of my longer term holds ive had that stock for a couple of years now but i think you can trade the xlf, you can trade bank of america, citi, Morgan Stanley, blackstone, and many of these names. But in terms of the hold, bank of america has had the most to gain right now im curious, anybody know wells fargo . Todays results are qualitative results. And if theres a bank that could possibly fail the qualitative results, it could be wells fargo because of their sales practices. Yet theyve been outperforming the overall Regional Bank sector for the past week. Weve talked about this name a lot for obvious reasons. And i think there is going to be a time to buy it i dont think its yet, mel. Usually when you have a big issue like this, and think about target with the credit card hack from a few years ago or gm with the ignition suits from a couple of years ago, it usually takes a solid year before thats in the rul rearview mirror. I think its the right place to look, just not the time to buy theres nothing wrong with your tv, its just johns shirt and tie. So, why go wells when you go elsewhere . But go back to blackstone, blackstone is hitting the cover off the ball its nice to have that pipeline directly to the present, but a couple of hedge Fund Launches theyve had, some very, very noticeable hedge Fund Launches have been disasters. They launched a multimanagement product last year. It was down, i forget, teens the first year, teens the second fo. So the private equity cycle has been a little delayed. M a activity has been a little slow but theyre also huge in secondaries. Its the management is incredible. And you know, ive been always really big on it its why i love j. P. When you have someone strong at the helm sitting that vision it, takes the firm you need to go. You can buy the others, too i want to go to another sector, which may be perceived these days as a value sector, oil stocks that sector has now seen six straight months of losses. That is the worst first half of the year ever, down 14 this year so im going to start off here show of hands, who would buy xle right now . None probably the reason to buy it, though if youre going to you know, you talked about liking the sector i think if theres a time to buy, and i am not i own two of the individual names, but buying the xle right now gets you broad exposure where its cheap. If youre going to be in it for a longterm play, this is absolutely win absolutely, i think, the time. And i think the second half of the year, you might actually miss some of the run that may come everybodys trying to pick the bottom and its been going on for quite some time and its about to find risk. If you look at the markets, where have been the most active plays for options right now . Outside of the financials, its energy everybodys trying to buy the bottom and theyre not getting it, but at least theres a defined risk they know exactly how much money they can lose to the downside, and theyve been losing it and ive been along for part of that ride at least its a defined risk you know going in, when you buy calls, when they come in and buy 10,000 callsing in Something Like a weatherford, you know exactly how much you can lose on that trade but its interesting to see, there have been nothing but buyers coming in looking for energy to bounce theyve just been wrong. This is an area where its been better, i think, anyway, to be in the futures contract or futures options the than actually in these names. So its one of the rare times that ill be in those. Like gold, with for instanfor ie youve got 300 billion or 400 billion in equity in the gold miners and so forth. And i dont like trading gold, the futures contract as much as i like trading the gdx or the gdxj so what are you my range is 4248 and ive been making money when it rallies i sell but that range has got to have been moving lower and lower and lower. You bet it has, but im trading shortterm, trading 20 day out, 30 day out. Roughly the front month contract for the crude oil, thats what ive been focused on, selling buts at the 42 strike, ive talked about that a lot, or selling calls as we rally to the upside i want to get a little bit agnostic to the price of oil, okay you guys have heard me say this, i really Pay Attention to the rig count. And its probably six weeks at this price six weeks away before you see the rig count rollover and that will start to curtail production and youll see prices rise in that time frame, what im seeing is oil has come way down. Gasoline has come down, but not nearly as much what does that mean . That means crack spreads for refiners are doing really quite well a company like marathon petroleum, my favorite in the space, valero is another good one. And its not just the crack spreads. Its the fact that these guys all have associated mlps into which theyre dropping down assets and unlocking values if refinery space is good for two reasons. Its detached from the price of oil and has something specific going with these mlps. Quick thought on oil . Everybody is talking about oil, nobody can figure it out on i was at a macro conference of whos who of investors, except for me, it was a, whos that and nobodys really investing in it i think its too tough to pick it out and you didnt have natural bloodletting and death spiral of a lot of companies, so they were all bailed out i think the pricing powers in the u. S. , and thats no pricing power, i dont think i have to be involved in oil i mean, to jims point, rigs are at threeyear highs at this point. Production is up 10 year on year in u. S. Shale and iran is pumping as fast as they can. And everybody else will be cheating i want to take a check on fedex here still halted the stock was halted a little bit ago on pending news. This is something were watching very closely, but it got halted at the highs of the day up about 2. 1 as soon as it starts trading and we know the news, well bring that to you. Meantime, lets get to shares of General MotorsMorgan Stanley resuming coverage of the automaker with an overweight rating. This is our call of the day. Adam jonas is the head of the global Auto Research at Morgan Stanley and joins us live. Adam, always great to speak with you. Thanks for having us. Part of this sb youre expecting a rerating because of the exit of european operations. But you also make it seem like this, perhaps, could be a precursor to the exit of other businesses or other operations what are you thinking of, specifically we think that some of the optionalty, the importance of General Motors, and perhaps its peers into the auto 2. 0 or the future of transportation might be undervalued the race to autonomous driving, melissa, is a race for miles, quantity of miles, and quality of miles. And lets say tesla does about 5 million miles per day. Uber does about 100 million miles per day. General motors cars, collectively, 2. 5 billion miles per day. So the challenge for the Management Team and the opportunity is how do they harvest those miles, process them, and create a market place through which they can monetize. They may not be the best ones to monetize, theyre not going to do paid search and advertising, but perhaps through negotiation they can get in touch with some of the tech firms who are desperate to get into that ecosystem and learn from the miles is the new eyeball of market sure. Do they have to acquire something in order to better utilize those miles or better understand those miles you also make reference in your note into interesting strategic combinations you mentioned samsung, harbin, mobileye these are all acquisitions are you thinking the same for gm no, were not those transitiactions that you mentioned, those are symbols and examples of this industry is undergoing strategic change and there are Many Companies that are assessing what do we have thats part of the future of the industry we call that gm revolution what do we have thats part of the existing industry . We call that gm evolution. And how do we create transparency for investors and for potential Strategic Partners to get paid for that and that might involve some difficult decisions like getting out of europe, paying for some businesses to go away. And then other reconstituting creating new entities, perhaps, that can create a currency to direct and retain human talent, which is probably the single biggest challenge the Auto Companies have its not so much acquisitions, melissa. Its more creating structures and currency hey, adam, its jim leventhal. Im a gm holder. I like the way youre thinking you have some edge to what youre putting out there im going to keep it real simple if i look at your note today, i see that 18 earnings are wel below what youre estimates for 17 is that your call, that peak autos obviously, peak autos is a topic and the question is whether we plateau somewhere around 17 million or do we really falloff . It seems to me like youre saying we really fall off. Im glad you brought that up. Lets be clear here, folks we think if gm and some of its peers are run as business as usual, lets hold the ship together and not think outside the strategic box, these are probably not going to be good investments, okay . At this point in the cycle, year eight of the biggest out cycle weve ever seen, we pointed out used car obsolescence and what that doeses to the Consumer Credit in a used car tradein environment, gm is part of that. So our message to the Investment Community or a prospective gm investor is if they dont do anything, this is not a buy. We are giving them some benefit of the doubt to the opportunity they can seize, but vision without execution is hallucination. So its up to management to take advantage of these opportunities right now. Otherwise, the destination i think they can tell you do you think they have it in them we do we do, but again, its up to execution. Yeah, and if they run their business as is, according to adam, its a 30 price target. Adam great to speak to you youre a holder, so i want to get another perspective. Im a holder as well. It is about execution and its a value trap how long have we talked about both ford and gm but when you look at whats the pe 7. Youre talking about between 4 to 7 . Theyve been value traps and thats what sucks so many people in its about execution if adams right, that 40 number does seem reachable. Im going to probability weight that. And you do have autos peaking. Now youre onboard, because you say they still hit a peak. Stocks go down when production schedules go down. Ford jumped in with microsoft years ago, 2012, 2011, whatever, and i think the first person to really get something done here with apple, if its gm or whatever, that could be huge for that brand something done with apple you mean some sort of partnership or just using their software some sort of partnership on the ecosystem inside the car, not on making cars sure. A lot more ahead today on the Halftime Report. President donald trump taking aim at amazon and jeff besoutheabesos. Should investors be worried or just keep buying amazon . Plus, f. A. N. G. Week. Do these stocks, facebook, amazon, apple, netflix, and alphabet have more bite . Were also talking about the tech stos tse ckouidof f. A. N. G. That may offer some opportunity. The Halftime Report is back in two minutes. At johnsons we care about safety as much as you do. Thats why we meet or exceed 15 global regulations for baby products. And where standards differ, we always go with the toughest. Johnsons. The future isnt silver suits anits right now. S, think about it. We can push buttons and make cars appear out of thin air. Find love anywhere. Hes cute. And buy things from, well, everywhere. How . Because our phones have evolved. So isnt it time our networks did too . Introducing americas largest, most reliable 4g lte combined with the most wifi hotspots. Its a new kind of network. Xfinity mobile. I have respect for jeff besos, but he bought the Washington Post to have political influence. And ive got to tell you, we have a different country than we used to have we have a different he owns amazon he wants political influence so that amazon will benefit from it thats not right and believe me, if i become president , oh, do they have problems theyre going to have such problems that was donald trump on the campaign trail back in february of 2016. Today, hes taking new aim at amazon and ceo jeff besos, firing off an Early Morning tweet. Cnbcs eamon javers is live at the white house with the story reporter heres