tv Fast Money Halftime Report CNBC October 7, 2019 12:00pm-1:00pm EDT
outhgh >> yeah. apple flirting with an all-time high what a defrps a few reports and positive rumors about an iphone, when is the last time we had that, it's been years. >> now we want to believe nikkei obviously the week is going to have a few earnings sprinkled in we'll get domino's tomorrow. >> i'm scott wapner. what all of it means for stock it's 12:00 noon. this is the "halftime report." >> stocks coming off the third straight weeks of losses get ready for another volatile week the best ideas for this market straight ahead. the fangs off their highs. is there value hiding in the names. what analysts are turning their attention to uber down 30% since its ipo this year it got a huge upgrade. is the bottom in for the stock in our call of the day the investment committee ready to go.
"halftime report" starts right now. >> good to have you with us. our investment committee today, joe, josh, john, steve and shannon. the chief investment officer at boston private wealth. let's begin with a look at talks. the major averages off their third straight down week a bit volatile in the green as we speak. weiss, your note said you were a net seller and you will sell on any strength you get in the market why is that? >> theres has to be significance to it. >> i'm not selling anymore i took advantage of the lift if in friday to sell some stuff there hasn't been a lot of selling but shaving here and there. i think what the news the came out today and over the weekend has set the bar a little lower for what could come out of the china talks. as long as they make some sort of progress we're okay and the market lifts my bigger concern is the
earnings season. we're trading 16 times next year's number right now, that's not cheap. the market generally is about 14 times. if we see continued strength in the market and it hassen to measurable strength, i will continue to take down positions. i will what i will be left with are boeing, which i still like, mastercard and visa, i took a little mastercard off because i had too much exposure, microsoft not selling, target i love ual i think that bounces up to 90 i added to that last week. so, you know, i'm not going to be out of the market, just lowering my exposure. >> the problem, joe, i thought carl made a good point from earlier nothing in the market to please the bulls or the bears. why we're sort of stuck where we are. belski was on the shows saying it's an impossible market to predict. 5% upside on a potential tweet, 5% downside on a potential tweet. >> very confused market.
we highlighted that on friday. underneath the surface there's something that has happened since october 1st giving a little lift to the s&p 500 that is the value of the dollar that seems to have topped out on october 1st. you're seeing a lift in the euro currency quiet, not being discussed very much, but if you can get a little bit of a retreat in the u.s. dollar will lend itself favorably to equities. i agree with your assessment, this is a clouded environment we're in right now i will say i'm pretty surprised to see the s&p 500 sitting at 2950, given that lack of visibility and that generally foinz a continuation higher. >> shannon, maybe you had a couple days to end the week in anticipation of maybe getting some good news trying to get ahead of that? what are you doing weiss is a net seller. clouded picture from this side of the desk. we go in the middle. what do you think? >> i think joe brings up a great point. look at what's happened in international and emerging markets there seems to be a little bit of strength here, almost some positive optionality
in the markets right now we have potential deal in brexit i think we're still buyers of equities here. there's no catalyst to move on mass into bonds or cash right now where interest rates are we're trying to look and say are there areas under valuation and a potential catalyst we're seeing that in some of the economic data out of europe. >> josh, what do you make? >> the consensus for s&p 500 earnings for the third quarter right now is about $40 and change and that is down from $44 where we started the year. the s&p 500 is precisely flat with where it was one year ago if q3 earnings are down 1% or so from the same q3 a year earlier if that's the worst we see out of this decline that we have in earnings right now i think there's room for the market to bounce because the market hasn't done anything. it's not like we've frontrun this softer earnings period.
we're where we started off when you think about yields being materially lower, bonds being materially lower, there's room to the upside. >> even if you have negative earnings growth. >> i think you're going. >> you still could get moved to the upsnide i'm not the only person that knows this. >> bank of america with a note talking about the same thing >> so i agree with all of the things being said about uncertainty. the belski stuff, what joe is saying, totally agree. when in doubt, focus on price. let's look at what's going on. uber, work, lyft these things were anchors on the nasdaq bull market trend now they're lifting. apple is at a 52-week high right now 2% away from the all-time highs last summer. biotech bouncing from over sold conditions the ibb still looks incredible that's a consumer read nvidia up 3% today, massive upgrade this morning keep in mind nvidia fell in the fourth quarter of last year in
three months, 56%. that bottoming process took a long time, but that now looks complete and nvidia looks excellent. these are important stocks sentiment wise these are the names that people key off of to decide what they want to do. >> can they withstand -- good points can they withstand the names and those moves, no moves, from the trade talks this week? if i tell you we're going to get nothing done of substance what happens to the stocks you said or key bellwethers for where the market is going? >> i would imagine if there's a market downturn they could go lower. which stocks do you want to own? these are now going from being some of the worst stocks to looking like some of the best stocks it doesn't mean it will continue and not every name will continue macy's nord troms, kohl's, gap they are bouncing hard i don't want them but somebody
does the names i'm describing in my opinion are the names that were introduced in a lot of negative sentiment into the market and now they're bouncing hard. again, i agree with all the comments about uncertainty, when in doubt focus on price, not commentary whar people literally doing with dollars? they're going back into these stocks. >> and i think last week, judge, when we were in the midst of the three day harsh sell-off josh called it then and it was right. we were overdue. we were over sold. and we were down 335 points. we flip around and go up 150 that day and then rally big time on friday. i think right now you're seeing a lot of money flowing back in on the nasdaq names, tech names in particular, whether it's crowd strike, whether it's nvidia that's why the nasdaq is trading 700 million shares at mid session today versus the nyse at 200 million shares nyse shares almost like a buyer
or seller's strike nobody is really trading that. 200 million shares is the kind of number those guys put up in an hour or hour and a half it's well -- but the nasdaq -- >> the other day i was down there the volume was pathetic. >> and i think -- >> full day like a half million shares. >> half a billion. >> half a billion. >> i think what these guys are -- you know, you always say that pete and i love volatility. for the most part that's correct. i like trading volatility and volatility is bleeding out across the board in particular in those stocks on the nyse, but as far as to josh's point with apple for instance we'll talk about it later but i have a lot on apple. netflix the same firm with that unusual alternative data we've talked about that said last quarter, hey, netflix, not looking so good international subs, people are cutting on their apps, not spending as much time on the app. this is from a scraping firm that takes exactly how much people do on their apps as well
as web traffic today, netflix is up $8 over the lows of just thursday last week and friday when this data broke, the stock jumped $6 in about maybe it was 16 minutes. i mean just went from 168 to 175 like that. those are the kind of moves you're catching because we've got a lot of folks sitting on short positions or a lot of folks looking for the next move to the upside. >> i just want to give a little more substance to what i said. my views, i don't look at it as a positive that the market is where it was a year ago despite earnings declining i look at it as a negative that the market multiple expanded in declining growth economy i don't see the good news in europe i see german numbers again today were down 6.7% you have new orders down 0.6%. both disappointing and the bazooka that inspired in the past has done anything
relatively speaking. >> i don't think people are satisfied in the fact that the market has done nothing in 18 months or whatever. >> but my -- apparently that's what i'm hearing that's a good sign, despite the fact that the s&p earnings have come down 10% from 45 to $40 that's a good thing because the market is where it is. i'm just maybe paraphrasing what josh said. my view the market -- >> you agree that if the actual q3 number is not 40 but 42, the markets will rally on that >> of course >> because that's been happening for ten years now. >> i'm -- no disagreement. okay if you come in better than expectations you should rally. that's true of any -- >> my point was there is room for that to happen again. >> my view is that ceo guidance is going to be more disappointing than we've heard in prior quarters that's going to pressure earnings going forward. >> josh's point you can still rally with negative earnings growth no great surprise unless, of course, it would be way worse than people are expecting. >> q4 we went down 20% and
earnings were blockbuster. there is absolutely zero linear relationship between the earnings of a given quarter and what the stock market does within that same 90 day window. >> i take a look at what else has changed over the last few months and i see now we've had just pure acrimony in washington before, but what we didn't have was impeachment hearings, which you can talk about, you know, clinton and how the market did then, but you were coming out of a different situation. we have really now the frontrunner, the huge frontrunner, elizabeth warren when you combine her numbers with bernie sanders. >> wait. you don't have to go there what we have now what we didn't have then, we have job growth slowing, we have services growth slowing. >> i was going to get to that. u.s. economy -- >> why didn't you get there? >> instant fed as well. >> we're going to do the analysis and compare this time to last time right? >> no. >> the difference is the federal reserve. that's the difference between
this time last year and today. you have a friendly fed versus a hostile fed. all the economic conditions. the earnings conditions, global conditions the federal reserve has come in and reversed their policy. that's why you have a market that's basically sitting at the same level >> right i agree. my belief is that what they've got to do, what they can do now is going to be -- going to have no meaning on the economy. anybody that wanted to borrow, borrowed and corporations borrowed at 25 bits. >> shannon wants to get in. >> corporations don't matter, though what matters is the consumer we're riding low unemployment, technically rising wages and still in a position to joe's point fiscal stimulus that can counter act the weakness in manufacturing. >> you're going to get earnings -- >> you don't think -- >> if the earnings begin to come out and they come out next week, again to come out negative and you have nothing substantive from trade, what happens to the
stock market >> the stock market goes down. >> if we head into a recession the stock market will go down. >> the dialog -- when you talk about the consumer the consumer -- >> status quo on trade which is nothing. >> right. >> and earnings trickle out disappointing. >> it's -- >> that's different. that's not necessarily recession. >> always a dialog that accompanies the no action, right. if the dialog is negative, if trump comes out and says, i'm slapping those tariffs on that i delayed, then the market is going down that's what it's going to be in terms of the consumer we keep relying on consumer. the consumer sentiment numbers have been coming done. you saw them pop in september and i bet they will come down more because of all the acrimony in the headlines you've seen job growth is slowing. yeah, we're at full employment now, but the market knows that i think you can't rely on the consumer so much going forward that they're going to weaken. >> that's an obviously big question is whether the consumer
which has been the pilar of strength, will weaken. >> there's an argument that household formation as telegraphed by what's going on with the housing market and the housing etfs, there is an argument that the millennial, that postponed household formation because of things like a bad economy and student debt issues and lack of rising wages, now that a lot of those issues are -- seem to be getting better, there's an argument that all of this household formation that's been passive for ten years is starting to happen at a rapid pace and we hope that continues. it's good for america. i would argue it could sustain in a way that maybe is hard to foresee. but i agree with steve you've probably seen the best headline employment numbers you'll see. doesn't mean they have to reverse immediately and start getting negative we could be in a stay sis between employers and employees. >> let's go to d.c. and bring in kayla tausche who will tell us what we can really expect if anything from the trade talks
this week to the best of your knowledge and sources you've been speaking with. >> scott, so far we have had some messaging from either side, chinese officials are telling u.s. officials that they want to narrow the targeted list of things they're willing to discuss and they want to leave intellectual property, the source of this whole dispute, off the table. this morning you had peter navarro trade adviser to the president saying on npr there will either be a big comprehensive deal or no deal, but then this morning larry kudlow in a separate entire saying he sees the opportunity for progress this week and some of those investment limits or protections as he called them, on u.s. investments in china that that's at an early stage but that is definitely under consideration. it seemed to tie those two ideas together so you do have members of the administration who we should note do not put those messages throughout lightly, saying that there is an opportunity for progress scott,friday is approximately 100 news cycles from now and
there is a question of whether the president is going to feel like making some sort of small handshake deal with china is too small and he wants that grand bargain. you do have this being the 13th round of talks, a venue for a potential bilateral with president xi next month and you have the iowa caucus is four months away. that is a difficult calculus the president and his principals will have to make this week. more than half the principals believe having tariffs on $250 billion in chinese goods and keeping these talks open they feel that is a viable place to land for the next year, year plus the question is what happens in the coming days and whether they feel like they have enough wins to roll back some of the other tariffs to get there. >> we appreciate it. thank you. we'll be paying attention. we certainly will. because of all of that, maybe you're not expecting all that much and people like oppenheimer say keep the faith the valuation is back at its
five-year average suggesting equities are attractively valued versus fixed income. >> fair point. it's a reasonable point and again, i go back to you telegraphed what the movie was going to look like but didn't get to the ending. the ending is october 29th and october 30th earnings disappoint. china and the u.s. don't come up with anything. what does the fev do on october 29th and 30th. >> they better cut the market -- >> they continue to create an insatiable demand for risk assthaetsz goa assets that josh was talking about before i'm surprised the market is where it is. that's telling you something. >> focus on certain risk assets within the market. josh talked about the stocks that were people were buying and deutsche bank deutsche bank had an interesting list out today fresh money list, fresh money, what would you buy and short lyft, josh talked about uber and lyft, netflix on there, general
motors salesforce june juniper, honeywell, target >> i was hoping to keep that one a secret. >> no longer >> secret is out. >> the secret is out what about this list >> salesforce, any of the software names, if we're going to get a higher market you're going to see money come back into those names look at the bottom last week around 106 that's where you and i discussed at that point. that's getting a lift. i like salesforce off that list. names on the list that i already own but i want to focus on software. >> one on the list you don't own that you think people should buy? play that game >> i would say target. >> okay. >> what's the list again what is it >> fresh money list. >> josh brown, what on the list that you don't own that you would buy or recommend >> i don't know them. >> i bought netflix. >> i'm not a buyer. >> because of the data i talked about. >> netflix looks like it's bottoming and a lot of the damage has been done and the buyers did come in where they should have, but to me it's
not on a buy signal. >> if you don't own honeywell add honeywell. >> take any strength in lyft to sell it. they still have the same problems. >> i still hate it. >> i wouldn't own that i would like that list to work because i would love to put a couple shorts on it. salesforce, consolidating here they've had minor bumps and always recovered i think that's a great area of strength in the market and target, you know, i like i would like target to come in a little bit to add to it actually. >> axp is interesting. you almost have to make an economic forecast. some of the recent data on auto loan delinquencies and at the worst edge of the spectrum for credit card borrowing some is starting to turn sour for anyone and they're probably a little more immune than the discover financials of the world because they have a higher credit quality. you almost have to say like, do i think 2020 is potentially recession before you want to add
more credit card exposure. i own mastercard currently so axp is interesting that depends on what your read is on the consumer for sure. >> we own a lot of names on that list royal caribbean, netflix, salesforce, sold walgreen's at the end of august and one of their new short ideas. >> we felt like it's just, you know, the independent pharmacy market, margins continue to come down and they're getting compressed from all sides. i completely agree with short on that stock. >> crowd strike not on that list but this is one that's down from $100 a share, slammed all the way down into the high 50s, 60s, something like that, making a huge move during our session today. $7 move when we came on air, up 3.5, 4 something is going on in this stock. >> like cyber security s.w.a.t. team basically. >> yes, sir. >> those stocks have crushed investors hisser to scli the wave that came after the
sony hack. why is this different? >> i don't know why it's different. i'm seeing fast institutional money flow into the name as it got down to the critical levels. take it for what it's worth. looks like institutions are taking it. >> a quick break here's what else is coming up on the "halftime report." >> uber shares falling 30% since its ipo. one firm is seeing opportunity in the stock our desk debates the upgrade in our call of the day. plus, legendary investor charles schwab joins us and we'll talk about commission free investing e alimrebook and more. th"hfte port" with scott and the traders is back in two minutes. the lexus es...
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can we continue the conversation about the show is that okay >> uber. >> okay. >> uber. >> stumbled 35% from the all-time highs this summer, city thinks the time to get into the name arrived and upgraded uber to a buy, 45 bucks the price level. josh brown, i'm going to give it to you because you were in the shares and then you were out >> yeah. >> still snout. >> out >> i'm not in. >> i would get back in but like for me, i want to own this thing in an uptrend. it's such an uncertain situation. the valuation is so insanely
large, even despite the fact that it's come down $30 billion. >> did you tell me it was in an up trend >> no. has not been in an up trend since it came public. >> what you said it's up and that's why the market looks good because -- >> it's up today yeah stock is up today. >> that's why i was coming back to you on it you thought this was the beginning of some sort of trend. >> well too soon, but possible the chart -- >> tell me after the trend is intact >> yes it reduces risk. >> i know. >> the chart remains a crime scene. for about the chart. the critical things that have to be answered and they're not going to be answered this year or next, is whether or not this is really a logistics av network kind of business, which is what the citi analyst hinting at or a fancy limousine app. we don't know the answer it won't be answered until enough time elapses the strategy
can play out i think like the only thing you can say intelligently for sure is that there's going to be wild swings and a lot of volatility that would work in both directions this is for short-term traders than long-term investors my view will probably change over time, but right now, that's how i look at it. >> shannon >> i think this is going to fall into the same trap as all of these quote/unquote failed ipos we've seen people will move away from them, trade on momentum and you have to take a step back and say which one is going to be the failed facebook of seven years ago. and it's going to be difficult for investors to figure that out in the next six to nine months. >> i've heard that quite a bit too. the parallel to facebook but it's different facebook had these defined catalysts which was mobile advertiser where they could show it here, they have catalysts, getting closer to profitability, a long way off, but going town the path you could see a pop on
it when they report quarter to quarter. >> i mean mobile may have been a catalyst to use your word from facebook, but there were legitimate questions about whether it was going to be a catalyst it wasn't an automatic. >> no. >> well, i think that if i remember the narrative, say if they get mobile right, then the stock is off to the running. you had to make the bet. here i'm saying they don't have those same defined catalysts to get into profitability and improve it and have regulatory pressures on them as well. >> so you want the stock above 35. >> do you still own it or no >> no. i bought the stock and i actually made a small profit on the stock. the reason i bought the stock had nothing to do with fundamentals it had to do with price and momentum and quantitative minimums that was during may through june the lift, people thought it was going to get back above 45, the ipo price, it got ever so slightly above 45 and it fell.
that's when it collapsed and momentum and volume came out of the name it's trying to find the momentum it does that above 35, above 35 everyone saying time to get back in, looks great on the chart, here comes the volume once again. it's funny the price target, this is 45, where this ipoed, so you can get in at 35, you will look for somewhere towards 45, see if it breaks out there once with again this is all technical. >> all right good stuff we are going to take a quick break and up next investing legend charles schwab joins us live on halftime for a rare interview to talk commission free trading u nyodoot want to miss it we're back in 30 seconds ♪ ♪ ♪ ♪ ♪
♪ ♪ welcome back i'm sue herera your cnbc news update at this hour energy secretary rick perry holding a news conference saying he will not resign after reports alleging president trump told house republicans it was perry who teed up the july call with ukraine's president and said his dealings in ukraine were connected to boosting confidence in his energy market and economy. >> absolutely. i asked the president multiple times, mr. president we think it is in the united states and in
ukraine's best interest you and the president of ukraine have conversations that you discussed the options that are there >> climate protesters took to the streets of london blocking roads and hindering traffic. police say they have arrested 21 protesters over the past few days as the demonstrators attempt to draw attention to global warming. back here at home harbor freight tools is recalling gordon folding knives. the locking mechanism can fail to engage on the extension of the blade posing a laceration hazard more than 1 million of the knives have been sold. that is the the new update at this hour back to you. >> sue, thank you so much. the investing world rocked last week when charles schwab announced the firm would go to zero commissions on equities and etfs what's next. bob is on the floor with mr. charles schwab himself and a new book as well take it away. >> thanks very much. the ipoing legend charles schwab
has written several best sellers prior to this, his book "invested," it's terrific a memoir of the company's history that's been released today talk to chuck as the add used to say joins us on the nyse floor. >> thank you, bob. >> when was that 2005? >> yeah it was >> that helped put your face out there as the face of the firm itself did that give you a competitive advantage? >> you said so i think it did we'll never know i think people were familiar with me in face and they knew that we would be honest people at least i looked honest at the time so we delivered. >> i have to ask you about the zero commission last week on equities and etfs. it rocked the world. you moved all of your competitors and moved your own stock. what was behind that decision? >> well, you know, we joined the new york exchange in 1981, many years ago, and so prices then when we first came on were about half price we kept coming down every year to now, sort of the final
solution for investors we have a great deal for investment you can buy and sell stocks for no commission. that's what i really want to do. i thought just like other companies, we make our money on other relationships you might want advice and might want to have a fixed income or things like that. we'll make a little money there. but commissions on stocks now are free >> yeah. so where does this end commissions are an important part of your revenue but a huge banking division that is much more important revenue wise and you have wealth management what happens next? so do you go into your high -- your interest rates and say, okay, we're going to offer you a higher interest rate on the bank how do you keep -- where does this end >> well what we try to do is offer things that customers really want and definitely want lower prices we've been a company that's been involved with that using technology for many, many years. the benefits and efficiency of technology
one of the lowest cost companies in the financial services. so therefore, being very thoughtful about how we spend our money, we can deliver great value on to our clients. >> this aggressive move on your part is sparking a lot of talk about more consolidation in the business. >> it probably will happen. >> is there going to be three or four competitors, you, ameritrade, robin hood, it could be. >> we don't know how that will unfold but that's very logical conclusion that that will occur. >> is schwab a potential buyer of anyone out there. >> the a the right valuations we would do it, but we are really strong and very independent the way we do things if it happens, appropriate for our shareholders, we'll do it. >> let me move on to thep ipo market you have seen what's been going on a strong first half of the year. a little trouble recently. wework had to withdraw over valuation issues one of the most interesting parts of your book your ipo in 1980, most people don't know this, you withdrew the ipo when
you couldn't get the valuation you were looking for. >> that's right. >> you had to wait another seven years and went public in 1987, successfully, but you pulled it initially like wework. >> we did. >> do you have any advice for wework. >> no one came to me for that advice but i live where all this stuff is occurring in san francisco, so i see all these dream boats going on in terms of valuations and some are so unrealistic. companies are losing lots of money. when we went public we were making money it's a different atmosphere today a lot of losers, wework or whether some of the other companies, uber, will they make money, i don't know. >> is it fair for them to be pushing back for the people the cnbc viewers buying these ipos is it fair to push back on the ipos? >> i would never buy a company like that that has huge losses and no sight ahead of it, how you going to make money.
you want to buy companies that have great values. that means number one, they have to be a growing in revenue and making money and that pretty simple formula. >> yeah. >> a lot of companies don't make money yet. >> we talk about etfs here schwab has muscled into the etf space in the last five years you're number five from nowhere. >> i don't know if we muscled in we offered a great value we reduced the oers to something near zero, not quite zero, and people are attracted to it >> how do you feel about the active versus passive debate a lot of people complaining too much are in the pass spavs but you have been an advocate of that years is there too much money there. >> >> i don't think so at all. i think there's always price discovery going on all over the place whether venture capitalists or wall street, here in wall street right here, where i am right now in new york exchange price discovery going on all the time and analysis. always some people who like myself when i first began
business, will try to evaluate companies, make assessments and judge it and see if the price is right. passive investing is clearly a path for most people it's really easy, great diversification and low cost. >> you've been an advocate, started the schwab 1,000 fund. you were way ahead of that josh brown has a question. >> hi, mr. schwab. i'm a big fan of yours and also a client on the custody side i appreciate everything you've done to lower the costs for investing. i wanted to ask you about one of the things people mentioned when we talk about commission free trading that to some extent it's being subsidized by cash rates for the end clients that maybe are not optimal or are lower than regular market rates and if investors really just end up paying the same toll booth a different sort of toll, what would be your response to that how should we think about that when we use schwab and other on-line brokerage providers?
>> obviously we as a company do make money in different or very large companies so we have many kinds of services to offer and some we charge on for sure now in terms of interest rates if you want the highest maximum rate in terms of liquidity, complete, you buy a money market fund or you buy a fund that is -- which we have some nearly 2% in terms of interest rate if you want to be in our bank, fdic insurance, all those things, free checking, free atm cards all those things, it's a very valuable service too. so that examines sometimes with a little bit lower rate than you might find in a money market fund it's up to you to make that choice. >> the average investor, though, one of the great parts of your book talking about what it was like in the 70s for the average investor to buy and sell a stock, what a better deal. back then 100 shares of a $20 stock might have cost you 50,
$60. >> i was looking at it yesterday. five years ago, you would be paying 10 times more in commissions and all the costs that go into buying than it is today. it's unbelievable the proechlts. >> you led that revolution. >> took us about 15 or 20 years. didn't happen overnight. >> joe terranova has a question. >> good afternoon, mr. schwab. i want to go back to the active passive debate how much of the debate do you think is about cost, active management has the need to lower fees, and do you think the passive argument has been emboldened by this continued bull market higher that never seems to correct itself? >> well, i think it has to do with the robustness of the american stock market. we are such a great place for capitalism and success of free enterprise i think every company that trades is always thinking about growth new innovation, new service, new whatever it might be
so companies on average do grow every year and so an index fund, a passive fund, you can participate that very low cost and it's easy to do if you have the time to spend on analyzing companies which takes a lot of time, you may want to pay for the service which will be active managed funds. me for the average guy i think passive funds, we start a fund in 1991, schwab went average of about 9.9%, compounded growth rate, compounded, for those all those years since '91. it's whatever you want >> now there's a great chapter in your book you talk about the financial crisis in 2008 you talk about your concerns about housing in 2007. too much credit sloshing around. is there anything that raises your radar right now, any bubbles, any suspicions? anything that makes you nervous about the markets based on your 50 years of experience >> it doesn't seem like there's excesses at any portion of the
economy to the extent you talk about. some of the ipos we've seen is very large valuation based upon no earnings. that's an obvious place to look at avoid buying into those things overall i think the country is very diversified east to west coast, central part of america i think we have great valuations >> scott, i'm going to throw it back to you. we are going to continue our discussion with charles schwab on cnbc.com live let's -- a lot more to talk about including his thoughts on baby boomers and the state of the retirement business and how to stay the course on investing and why panic is not an investment strategy one of my favorite parts of the book live on cnbc.com. back to you. >> bob, thanks so much thanks to mr. schwab for being with us today. coming up most of the f.a.a.n.g. stocks are stuck below their highs. is there still value in those
names? mike santoli is coming up with an interesting look about the stocks and the way some investors are looking athe tm and do that straight ahead on "halftime. coach saban we have health insurance. did health insurance pay for everything? no, we still have bills. aflac gives you money directly to help with those. aflac! and your deductibles, knee brace, whatever you choose. aflac sounds like a winner. umhum... umhum... we try. get help with expenses health insurance doesn't cover. get to know us at... duck: aflac! dot com
investors can look from the nba's china backlash when it comes to trade talks that has everyone's hopes up this week. buying a home has become more affordable thanks to lower mortgage rates but something new holding buyers back what it is and means to the overall economy. plus elon musk sounding off again not in the way you might think. that ahead in rapid fire scott, back to you. >> thank you facebook, amazon, alphabet, between 7 to 15% below their peaks set more than year ago wall street increasingly turning to some of the parts analysis suggesting the stocks have potential upside mike santoli joining us with what this says about sentiment, it's come to that? that's what we're looking to say these are under valued stocks? >> yeah, i think it represents a little bit of a change of an analytical playbook. if you think back to what made f.a.a.n.g. f.a.a.n.g. initially and what was the virtues of these companies people wanted to ride plug into these dominant platforms, they have huge
addressable markets, their network effect cannot help but spin faster profits in the overall market for as far as the eye can see, right the stocks have stalled out. obviously there's regulatory pressure questioning some of the premises of that business model and i think that has led investors and analysts to look at a potential sum of the parts. i think it mostly applies to alphabet lesser degree amazon and facebook look at the run of research notes out there, last week deutsche bank saying that google cloud could be worth $225 billion, well if you buy into that math, then what is amazon web services worth it might be worth all of the market cap of amazon right now and then i think it's also become conventional wisdom if you were to break facebook up into instagram, messenger, whatsapp, whatever you might think, that, in fact, it would be worth more than the current market here's the thing, none of these companies want to do this and nobody really thinks this is a likely scenario so what you're doing is pushing this idea there are hidden assets you can
surface at least on an analytical basis and have people greater appreciate the companies, but it's to the clear that market ever wants to do that more complicated story. >> i'm wondering, i want to get the perspective of the committee if you will on this, the way -- i mean all of you own at least one of the f.a.a.n.g.s, i think. is this -- >> i own three of them. >> the premise is ridiculous to break up these companies i don't understand why we're thinking about that, because there was some privacy issues in some of these companies over the past few years are you going to break up all the competitive global technology companies at the same time because if you're not you're going to disadvantage the strength of what the u.s. has. >> those are two different arguments, whether you argue for or against breaking the companies up, if you think it's a possibility and you think that ushd look at the valuations based on some of the parts, cloud service of one company needs to be spun off, for example, gook google. >> it's a different debate.
>> wouldn't there be significant activism in these companies already if you thought there was a reason for them to extract value by breaking up the companies. there would have been the activism already the only acty vifl you have seen is from carl icahn the cash that apple had sitting on its balance sheet they needed to do a better job with it. >> some of the parts is for conglomerates, disparate businesses rolled up under a holding company structure. there's no way you can assign a specific amount of value because there's overlap bean tween the businesses in these tech companies and they feed off of each other the thesis doesn't make a lot of sense if you're valuing the stocks that way. >> it's great hypothetical discussion to write about before earnings season gets started i come back to the fact that if you impose stiffer regulations on these companies, you're making it tougher for the smaller competitors to come in and you'll essentially strengthen further we saw that with the banks, right, where the big banks could
handle the additional cost pressures from regulation and the small banks suffered and they consolidated at no premium to themselves. look, it's going to be an overhang in the stocks going forward unquestionably and it's going to limit how they do you'll see periods of volatility when earnings come out and maybe takes it to a new level. we get in the election and i don't think this is going to be a visible election issue which politician wants to say we're breaking up amazon so you pay more money for all your goods and services. >> and mike santoli wants back in. >> sorry a lot of people have used the threat of breaking up these companies as like a reason not to own them. historically, first of all they don't self-break up, they get forced to by market forces or regulatory forces. when they do you make even more money. look at ebay/paypal. you did so much better with the paypal piece tripling in value from where it was spun out carl icahn forced that to
happen it was not going to happen voluntarily. when it did everyone was like we should have done this ten years ago. the baby bells, classic example. tons and tons of shareholder value created. they fought it tooth and nail and then spun them off and people made an absolute fortune. if you are saying regulatory wise elizabeth warren will be bad for google or trump after facebook, whatever they're going to say, that actually historically works out to be a positive catalyst for these stocks after obviously a period of time of fear. >> which is why, mike, i suppose and please, you opine on it, this is your story that people are attempting to look at these in the manner in which they are? >> yeah. i honestly think it's really just another way to slice up the thesis so i don't think it's anybody predicting, in fact, they will get broken up. it's another way of saying -- by the way i think you can look at alphabet as a conglomerate of sorts. >> it's youtube and maps and search and --
>> exactly. >> way mo. >> interactive corp if you want an example of incubate these on-line concepts and spin them off, expedia, lending tree, it's match.com. they're all lead generation engines and at one point you could have said they belong together and they've gotten a v. >> we appreciate it very much, mike coming up, options so says jon. she wanted a roommate to help with the cooking.
but she wanted someone who loves cats. so, we got griswalda. dinner's almost ready. but one thing we could both agree on was getting geico to help with our renters insurance. yeah, switching and saving was really easy! drink it all up. good! could have used a little salt. visit geico.com and see how easy saving on renters insurance can be. so servicenow put your workflows imm-hm.cloud, huh? your employees must love you. thank you. ah, you could say that. so how are things with you guys? great. thank you. thank you, sir. lunch next week?
mgm shares are in correction territory from their 52-week high options traders are betting the losing streak is about to be over that's what jon says in "unusual activity." >> they're buying both mgm and wynn calls maybe they knew what casinos pete was hanging out in this weekend. take a look at the november 1st expiration for mgm because they're buying the 28 calls there. they paid 70 cents bought a bunch of them really fast this is, again, the first of november expiration i bought those calls probably be in in about two weeks, judge this one also 28 strike. they're paying 55 cents but these are regular november expiration, so they're buying those in pretty good numbers, also, about 5,000 of those very quickly. i'll be in those probably a full month. a quick update, this is pcg, the
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the law of large averages, lululemon is much smaller. 45 times earnings for lulu both up significantly year to date coming off their all-time high i will stay with lulu but i think they will both work. >> you can't start wearing lulu like the abc pants, right? >> sure. if you say so. >> can't upset the suit. josh, you next doug, canopy down 50% since he purchased it >> me, too >> what do you do? >> i haven't added to it i'm not planning to add to it. i would just say that the canopy and marijuana stocks in general are giving the gold mining stocks a run for being the absolute worst companies in america.
please prove me wrong, anyone who has an issue with that view. these companies are largely disastrous, turnover at the top, selling commodity product, not selling particularly well, miscommunication with the market, regulatory issues. i don't even like the funds that own these stocks i wish i weren't in it i am in it i may get out. i am highly unimpressed. >> from mike in chicago, what about abbvie >> the deal is fundamentally sound and we still like the stock. >> doc, from carlos, home depot, buy more or no >> yes, i like it. wells fargo has moved up a target from $2.35 to $2.50 >> visa or mastercard? >> either one. i own them both. same trading patterns. you can buy either one >> okay. let's do final trades. shannon, you're up first >> home depot. >> all right >> twilio. >> josh? >> slack bang
bang >> doc >> tesla bang i like tesla >> i'll give you a reprieve, i agree the stock is recovering. >> good stuff. thank you. >> thank you, judge. >> thanks for watching "the exchange" begins right now. thank you, scott hi, everybody. here is what's ahead white house adviser larry kudlow says it's possible progress can be made this week on u.s./china trade talks. markets trading higher on such hopes. with china reportedly playing hardball and lashing out against the nba is the deal really in sight? we will ask. plus, general malaise, ge says it will freeze pension plans for thousands. we'll look at what changes still need to come for these iconic american companies >> and wall street shares one of the worst ipos of the year and roku rolls out more advertising. that's all ahead in rapi