tv The Claman Countdown FOX Business February 17, 2021 3:00pm-4:00pm EST
are many of us out here who will carry on the principles of conservativism. and -- charles: right. >> we need to make sure we do it the way he would. charles: david webb, thank you very much. the markets are mostly sideways as i hand it off to my if colleague and friend, liz claman. over to you. liz: thank you so much, charles. we are fewer than 24 hours away from the event in d.c. that will, no doubt, have just about every stock investor, fund manager and ceo of a public company rivetted. the key players in the reddit-gamestop short squeeze to testify before the house financial services committee facing questions from lawmakers about that age-old question, whether the markets are rigged existence the individual invest -- against the individual investor. our panel has a preview. they both have great knowledge from two different sides. markets mixed at this hour but
definitely off the lows. in fact, the dow still on pace for its third straight record close. we've got it up 84 points. any gain for the dow will do the trick. oil and nat gas still rising as a deadly winter storm still paralyzes texas and now heads east leaving millions without power amid rolling blackouts and subzero temperatures. we're going to have a live report on the ground from the lone star state. and now that warren buffett's mystery stocks have been revealed, we are about to deconstruct why he bought or added to those positions and why he sold two names that are considered best in their class. you've got to hear about that. in the meantime, fox business alert, winter weather still causing severe issues across the u.s.. more than 4200 flights have been canceled, at least 20 people have been killed and millions of people are without power from texas to kentucky as snow, ice and then throw in tornado
damage, really? that's crippling power lines. the same storm now on its way to the northeast with more than 100 million americans under winter weather advisories. this weather is crippling energy production in the oil patch, and that is really what has sent natural gas up. remember yesterday it had jumped pretty dramatically? well, it's up another 3.5% right now to $3.24 per million british thermal units. let's flip it over to crude oil. crude is also moving higher as more americans are turning their boilers on to heat their homes. of course, heating oil, derivative of crude. we're looking at crude right now above $61 a barrel for west texas intermediate. this weather's also canceling shifts at four general motors plants. the company has closed off shifts in missouri and texas with workers unable to get to work due to dangerous driving conditions. and then look at this, tesla tweeting out this photo of construction being forced to halt at its gigafactory coming
as it is covers in snow and ice. that is in, of course, texas. and mother nature also slowing coronavirus vaccinations in the lone star state and elsewhere. let's go straight to the heart of the area where this is happening. casey stegall live in dallas. casey, what are you hearing about the power outages? and i'm sure businesses are just crippled as well. >> reporter: liz, everything really is. and making matters worse on the ground here in texas is that the energy providers cannot provide customers with a timeline in terms of when they will get their power back on. and what's more, aside from some of the wind farms that are being frozen, the helicopter pilot who shot this video for fox news said that it appeared as if oil was leaking from some of those wind turbines. so it's likely that repairs could have to be made. governor greg abbott says that a mix, however, of wind, coal, natural gas and nuclear power
plants are offline. but at one point wind production dropped from 42 to 8%. abbott has directed the state legislature to investigate, and federal regulators will too. meantime, many local leaders have joined the chorus in the lone star state angry and upset saying that they were warned only of rolling blackouts that would be temporary, but had they known this, preparations would have been much different. listen. >> we would have ordered evacuations, we would have warned people that they need to make other plans, but that's no what we were told. we were told short bursts, a little bit of discomfort and that's it. >> reporter: a lot longer than short bursts. last night part of the state got hit with another 3 inches of snow over parts of dallas/fort worth and more than a quarter inch of ice further south of us throughout austin. dozens of communities, community warming stations, warming
stations have been opened at community centers and the like with covid protocols in place to give people a place to go who don't have power. and the numbers really do keep fluctuating wildly. earlier this morning outages were under 3 million. not by a lot. then throughout the morning we saw them pushing 3.3, 3.4 million. and just checked before we came on the air with you, liz, and it's now down to 2.9 million. so back under 3 million texans caught -- without power, but that's still a whole lot, liz, when it's this cold outside. back to you. liz: yeah. casey, it's rough. i don't know if we can take some of those wind stocks one more time, but part of the problem we were hearing was that texas opted not to buy the carbon-made wind turbines, those blades which, of course, reject ice. you don't have any stoppages or problems in canada with those wind turbines. are you hearing anything about
that? >> reporter: there's a lot of discussion about how the grid was winterized, and that's something that's being talked a lot about on the ground here. keep in mind texas is the only state in the country that has its own grid, as you know, and so we don't get power from other places. and that means that federal regulators don't play with texas grid either. it's run at the state level. so to there are a lot of discussions going on right now, obviously, about why this is so prolonged. and, clearly, this is an historic storm, but still questions being raised about why not only the wind farms but also the natural gas wells that froze and other winterization things, you know, why that wasn't done. liz: yeah. well, it's an epic situation. we're watching it. thank you for that report, casey. from texas to nebraska, it may be very cold in omaha, but the hot hand of warn buffett is
still -- warren buffett is still sizzling. berkshire hathaway just released through its 13-f sec filings some major changes to its holdings. first up, buffett's jumping, at least it seems, on the 5g bandwagon, adding to stakes of t-mobile, doubling it, but also a very large stake in verizon. that's not the only trend he's following, health care companies were a hot ticket. he added to bristol-myers squibb and merck. berkshire also began investing in chevron. elsewhere most notably berkshire cut its position in apple and and wells fargo but dumped out of jpmorgan altogether. let's bring in our traders to deconstruct what's going on here. teddy weisberg and scott bauer. teddy, what jumps out at you? i think it's very interesting he buys a whole basket and may or
may not be him, he's got his two traders as well helping him, but he buys a whole basket of health care names and then he adds t-mobile and verizon. >> well, we don't have the privilege of getting inside his head, but clearly, you know, he's thinking what i think a lot of people are. if you go back, liz, i've been doing this since 1962. the only thing that changes over time are the names. the psychology is always -- [laughter] if you go back to 199 9, 2000, you know, it was the same crazy kind of markets. a a little different backdrop. you know, i can remember when we bought the rails back in 19999 and 2000 because we wanted to own stocks that weren't going to be replaced by the internet. so fast forward to today, you know, his move into the drugs, i think, is music to our ears. we've been buying drug stocks for a couple of years. i certainly don't even remotely compare myself to warren buff
dependent. but i think the -- warren buffett. but i think the tech stocks have been terrific, a rising tide is floating a lot of other ships, if you will, a lot of crazy ipos. and i think what we're seeing is a shift away from perhaps what we would call the high fliers and the tech sector into more stable the, you know, solid balance sheet companies, good dividends. just that's where the value is. now, will it merge tomorrow? no. it might take two or three years. in the case of the rails, we still own them, and that was 20 years ago. you know, these things take time. but i think you're seeing a not so subtle shift away from what has been popular to what is sort of out of favor. liz: well, you were ahead on the rails. i think it was, what, 2005 -- correct me if i'm wrong, '5 or '6 that buffett jumped in bigtime and, of course, ended up outright buying burlington
northern. scott, there's an interesting play, i look at abvi, obviously a very interesting pharmaceutical. great, okay, a health care company. you find a lot of those, but it's got a dividend of 4.9%. >> yep. liz: and while buffett won't pay out a dividend on berkshire hathaway -- at least not yet or never has -- you know, he likes 'em. he likes to get paid while waiting. >> and with many of these new purchases, liz, he's going to. so something that i was looking at, kind of across the board. like you said, it's almost a 5% dividend. merck, you know, same field, 3.5% dividend. bristol-myers, 3.3% dividend. then you move to verizon, okay, maybe it's a 5g play, but also they have one of the -- [inaudible conversations] 4.5%. liz: right. >> and then look at chevron, right? i know he wanted to get into that space, 5% dividend there.
i look at some of the bigger purchases that he made, and it seems to me like you just mentioned, he's looking for that stable dividend and dividends on companies where there could be some upside on the equity side as well. in terms of what he reduced, it was a purge across the board in the bank sector. it was a full-blown purge. but then to you look at apple and people say, oh, why is he getting rid of apple? well, you know what? his apple he reduced by 6% if what he did in quarter three. he still holds almost 900 million shares, $118 billion. so he's cut the apple not because he doesn't like it anymore, but just because it was the getting too big a percentage of his portfolio. it's still 44% of his portfolio. liz: yeah. he just skinned it a little bit. >> exactly. liz: took a little bit of skin off there. and i remember, too, when he sold j&j, i said, wait, dude, you said you'd never sell. he said when i see something i want more, i need to raise the
cash to buy it. so maybe that is what's happening happening. apple is down 2% right now, so we'll be watching these and much more. teddy, scott, so lovely to see you. thank you very much. >> you too, liz. liz: dow is up 102. that is the new session high at the moment. we're watching this very closely. general electric claims to bring good things to life, but its balance sheet still needs a little bit of rejuvenation after years of tinkering. charlie gasparino on the lingering liabilities at ge even as so many investors think can i catch the bottom here and will it go up? charlie breaks it next. closing bell ringing in 489 minutes. the -- 48 minutes. we're coming right back, don't go away. ♪ ♪ liberty mutual customizes- wait... am i in one of those liberty mutual commercials where they stand in front of the statue of liberty
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cut, done everything imagine if bl, and the stock keeps going down. but i want to get into the ge turn-around situation because i think larry culp is telling investors there's going to be a turn-around. tomorrow, as you know, the house financial services committee on the gamestop trading friend, all the major players involved in that crazy trading of amc and gamestop are going to be there. you know, it's been described to me as feeding time at the zoo, so i just think it'll be really wild tomorrow. the tough questions, from what i understand, are going to be directed at citadel and robinhood, robinhood the trading app. it's bracing for questions on the gameification of trading, investors' disclosures and potential arbitration clauses, whether they're disclosing that. citadel's likely to get grilled on conflicts of interest between
its hedge fund and securities firm. so tomorrow's going to be a big day in terms of regulation of the markets from this maxine waters-led committee. let's get to ge. the company's problems -- despite where the stock is, it's off its lows, but it's still, look at a two-year chart, it's hardly recovered over the two years since larry culp took over at ceo. the problems, though, have bottomed out. the significant downside e in shedding half of about 80 units, cutting jobs, cutting costs, it's now starting to matriculate to the balance sheet. they may burn some cash this year, but going forward they're going to be fine, they believe, in terms of cash. i will tell you this, some major ge investors do remain skeptical. they think maybe that insurance business, that was the big losses they took a couple of years ago. they had a reserve for that. whether that's going to crop up again, and that's one of the overhangs of the stock.
we should point out that ge in a statement says that that's not the case, that they have plenty of reserves for any problems going forward. be that as it may, i can tell you that investors are worried about this. one interesting note, liz, jeff immelt, the longtime ceo, worked at a unit of ge back in the bay has a book out telling his side of the story, there's been two ceos, at least one ceo left, his replacement was larry cult, as you know. and he has a book trying to give his side of the story. what's interesting in this book, there's a section where he says he knew his days were numbered and that nelson peltz, the activist investor, was going. to target him to get rid of him because he watched our reports on fox business. so i guess i could say, liz, congratulations to you. and me. back to you. liz: that's right. that's right.
we are that wall street hour. they like you. kind of hate me but -- no, i'm kidding, they hate me and like you. i'm just kidding. [laughter] charlie, thank you. thank you very much, my dear. reddit, robinhood panel, that's coming up. charlie just talked about news he's gotten on that. in the meantime, shop pie tapping the brakes on its electrifying 2020 run, down as much as 6% earlier today, it's lower by 3.9% right now. shopify warning it could see slower revenue growth in the coming year with. shares, though, still up 174% over just the past year. but could a slowdown in e-commerce signal new life for empty malls? .coming up -- coming up, international council of shop ping centers tom mcgee takes us inside the new foundation being laid by brick and mortar for life post-pandemic. closing bell 40 minutes away, dow jones industrials up 101
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liz: fox business alert, the crypto stampede bull running to the top of today's pop stocks. take a look at bitcoin. it is moving higher once again. it is right now blowing past the $52 the,500 -- 52,500. the crypto rally a major boon to digital currency exchange coin base. not public yet, but the valuation now stands at $77 billion. that according to crypto news site coin desk. if this value were to hold, the exchange would be more valuable than nyce parent intercontinental exchange. let's flip to news corporation, capping off ten
straight days of record closes with a new all-time intraday high of $24.22 after signing a global news content deal with google. the partnership also includes a subscription platform, shared advertise thing revenue, new audio journalism offerings and content via youtube. today's announcement featured on the tech company's news sites. the palantir tug-of-war pushing back into the between at this hour, shares climbing higher by as much as nearly 7%, up just two-thirds of a percent now. but after yesterday's loss, jold goldman sachs jumped and and upped it to a buy rating, also nearly doubling its price target to $34. palantir right now, $28.01. and it's an all-out laser battle in the market. lidar maker a.i. joining forces with cf finance acquisition
corp. in the street's latest spac attack. the coming competition already hitting awe on the mown driving sensor drivers luminar and velodyne which are both moving lower. luminar down 3.6%. a is a retail recovery for real in sight? if a huge upside surprise this morning, jumping 5.3%. that's the first increase in four months. consumers snapped up furniture and electronics at a pretty heavy clip, but that number's obscuring a crucial part of the story. shopping malls, which were already struggling due to the retail ice age, getting hit hard as numerous an color stars and mall staple chains filed for bankruptcy over the last year. the latest, french beauty giant. what is the real story behind retail and the stocks that promote retail and commercial
businesses? we turn to tom mcgee. his international council of shopping centers counts70,000 members with malls of all sizes. tom, it would be easy to look at this january retail sales beat and say the worst is behind us, but consumers still have $600 stimulus checks in their hands. much of that has now been spent or saved. what is the true state of retail right now as you see it? >> well, you know, first of all, good afternoon and thank you for having me on. you know, retail has obviously been at the epicenter of the pandemic and the crisis around it. you know, i think there is cause for cautious optimism. you know, obviously the january sales numbers are a great sign. and you're right, obviously the impact of the stimulus checks was quite positive. but, you know, we recently add had a survey of 400 executives in the retail and commercial real estate space and all indicated a level of optimism if
you look out over the course of the next 12-24 months that, you know, the industry would return to pre-pandemic levels. there is a lot that has happened over the course of the last 12 months. i often say that there's been about ten years of change that's taken place in about the last year. and i think the biggest change and the biggest trend is just the convergence of physical and digital world. it's easy to look at the growth of e-commerce and say, well, that's the demise of physical retail. i think what's really happened, and you see it in curbside pickup and click and collect and the additional investments that retailers have made in digital interfaces to really engage and drive consumers to stores and make that shopping experience more effective that has really tacken root during the pandemic -- taken root. and i expect that to continue. i'm cautiously optimistic. there are some things, particularly, you know, the pace of the pandemic. the most important thing that could happen right now is make sure that vaccine gets deployed
effectively. liz: well, nowhere near the foot traffic that we used to see is what's happening at malls whether they're indoor malls, i would imagine outdoor malls look better. but to the point about indoor malls, you know, about two years ago it was you will survive if you provide entertainment. you know, mall of america, american dream in new rutherford, new jersey, you know, these are malls that went big on entertainment with merry go rounds and ferris wheels and, heck, you know, american dream they even built a ski slope indoors. and yet those, most of them owned, i believe, by triple five group, they're having trouble now making their debt payments on, you know, commercial-backed mortgage security debt. and it makes you wonder what's going to happen to these spaces. >> well, we've always been under the, you know, taken the position that the government should lean in and support the
industry of retail broadly including, you know, we were instrumental in the introduction of something called the hope act to help the industry as it related to commercial mortgage-backed securities. not just retail, but hospitality and other industries that have been impacted by this. but i think it's important not to get too caught up in, you know, the impact of the pandemic and say that's -- what's the long-term trend from that. obviously, entertainment by its nature has been exceptionally hard hit. but if you look and you take a step back and say, well, there's a lot of pent-up demand, a lot of folks sitting at home, a lot of savings that, you know, is waiting to be deployed, i actually -- i think you can build a brittle compelling argument -- a pretty compelling argument that when the vaccine are rolled out, the mall sector's actually going to do quite well and those things that
were emphasized pre-pandemic, experiential, will again be important to success. liz: we've got this litany of names, you know, nordstroms, lord and taylor, j.crew, so many of them filed for different levels of bankruptcy, obviously. nieman marcus, gold's gym, i mean, the list goes on. and i wonder, you know, what replaces them? we have heard that amazon fulfillment centers are taking over some of the anchor spaces. but, you know, that can't be the answer for every empty space. are you seeing any conversion to office space? >> well, i think it's any and all of those things. i think that it depends upon, you know, the property, it depends on what the needs in the local community are. you know, retail is a fiercely competitive business. it always has been and it always will be because it's the ultimate consumer-facing industry. but, you know, i think you can point to, obviously, challenges of individual retailers, but there's been a lot of successful retailers over the course of the
last decade and are well positioned to succeed into the future. i just think it's really hard to make broad-based judgments on what's taken place in the last 12 months. generally speak, those retailers that entered into the pandemic in a challenging spot struggled. those that entered into the pandemic in a financially stable position have been able to sustain their position throughout the pandemic. liz: i can't wait to break out the plastic in person. >> well, you and me both. [laughter] liz: i suppose it all depends on that vaccination station. we'll be watching it. thank you, tom. >> that's the most important thing, the rollout of the vaccine. liz: yeah. indeed. couldn't agree more. thank you, tom mcgee. all right, as we look ahead, we are talking about the latest chapter of mistaken stock identity. clubhouse media dropping 27% right now right after some
investors finally realized, oh, wait, this isn't the chubhouse chat app. e -- clubhouse khat app. note how we said some investors. the stock is still up rather dramatically since the day elon and vlad had their little audio chat on clubhouse which is not publicly traded, people. yeah, the other clubhouse up 139% over just the past couple of weeks. the reddit rebel also down, picking out their ties and their explanations as to why gamestop buy trades were suddenly halted three weeks ago. coming up, the day trader suddenly silenced in the wake of that short squeeze frenzy and the asset manager who works with one of the top financial industry watchdogs. they are both here on what they expect and need to see from this battle royale. closing bell ringing in 26
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♪♪ liz: breaking news, robinhood ceo vlr tenev will apparently tomorrow before a house financial services committee telephone that he had any involvement with hedge funds this clamping down on trades of these reddit stocks. he is, in essence, going to say trading limits we put into place on gamestop ask other stocks were necessary to allow us to continue to meet the clearinghouse deposit requirements. but what really happened to gamestop which less than a month ago hit $480 a share, and why did individual investors get shut out of buyingsreusre jt jtj tenyyante wte w to t t m 'rwe1 hrsou aouywawa fmm tms t t arheghehehehend a phapsdi finin, e ryonvee froro oine
brererer rho thoheo the shortrtt llersese whohooteequ to the t t heehe fee invesnvr wnv wnvnvle l ilbeilbeil tbeilheheheheheosts anpatean han comsettsese hen yrs. ititwirlwisrosdhis t tim te. tit on tring ainuninddd $.86.as dden,en o o ory 13t 1ss the mththent beg in vestor-fstocededditt roomo f tha fer fg or betting against the stock, trading volume skyrocketed more than 1,900%. by january 25th the stock breached the $100 mark sending wall street into a panic. melvin capital, whose huge short position on gamestop began flailing, nearly buckled into ken griffin's citadel fund and another fund called point 72 rescued melvin with a $2.75 billion bailoutment gamestop
kept climbing, squeezing that short position even more before finally hitting its all-time high january 28th, $483. that same day robinhood and other brokerages stopped allowing day traders to buy the stock. with only sellers allowed to trade, the price of gamestop plummeted to just $100 on february 2nd. and, as we look at gamestop trading today nowhere near that, around $46. and the reddit rebels cried foul. enter congress. what will tomorrow's hearing bring? if let's bring in individual investor alan travel who found himself on his facebook page squashed in the vortex and ceo eric nole who sits on the board of finra which regulates robinhood. alan, i want to begin with you. what will you be listening for? >> oh, my god, i am so kite
excited to see vlad's statement. really want to see him in front of everybody and really show who he really is to the whole world, because everybody will be watching, and everybody will be analyzing every single little thing he does. and everything is just going to be blown up that he does. anything he says wrong, anything he says slightly incorrectly that people don't want to hear just will absolutely go viral. and that that's the biggest thing i'm the most excited to watch tomorrow. liz: well, you have his facebook page, and in it you've spoke a lot about robinhood. you found yourself around that very moment shut down by facebook, not by reddit, which everybody thought was really strange. they made some wild accusation, you denied it, and then suddenly without any warning, it went back live again. where does your facebook page stand right now? >> so as of right now, we are all very excited to watch this trial and just see what happens
because as of right now, you know, we really can't make much judgment or -- and really we really can't make much impact on anything that's going to be said. so we're just kind of sitting in the back watching and anticipating, watching vlad and seeing what he says. liz: well, let me get to eric. i'm sure it's not vlad you'll be listening to. you will also be waiting to hear what ken griffin of citadel has to say. you know, citadel's an interesting position here, eric. they've got both the citadel market making operation and then they've got the hedge fund, two totally separate things. what will you expect to hear from tomorrow? what do you need to hear? >> well, first of all, thank you, liz, for having me on. second of all, i just want to make clear whatever comments i make today, i do not represent finra. that just happens to be a public trust that i have. so my comments are only my own. liz: got it. >> i think what i'd be looking for from citadel and ken and the
rest of the panelists are really an understanding of what drove their trading. but as you pointed out, the flow coming off of retail platforms like robinhood is primarily interacted with by firms like citadel, by other large market-making firms. there is no way from at least that side of the business they would have any desire or intention to shut that flow off. those are longstanding, lucrative business arrangements that i think they would not want to put at risk by doing anything untoward. liz: do you see it as a conflict of interest, eric? >> a conflict of interest meaning having two sides of their business? liz: well, just that they're actually getting paid by citadel securities, and there's obviously a reason that citadel likes to know the order flow that's going on there, and suddenly the that order flow was shut down at least in part. >> yeah.
order flow and payment for order flow has been part of the u.s. markets for a very long time, and it's been looked at by regulators in very different ways with different opinions. and i think it's always useful for us to have another relook at that. but i think one of the things that's important to remember about it is payment for order flow for retail flow is very transparent. it is available on reports that are available on broker-dealers' web sites, what they pay, what the bid offer spreads are, what the price improvement is. and that's very different than some of the other incentives for order flow in that may exist that are not transparent in the marketplace. liz: allen, we've just got a couple of seconds left. to you still believe that the market is rigged against the little, individual tradersesome. >> yes, unfortunately, i do. i believe that when a lot of situations like gamestop, amc and this hype having to, unfortunately, halt trading and halt purchasing of these equities is really impacting a
lot of the small retail traders while large institutions were able to go in and make a large short position before crashing the hype of these organizations. liz: yeah. you know, there we go. we'll be watching it tomorrow. big hearing tomorrow. we're coming right back. eric, allen, thanks. the gold standard, so to speak ;) at t-mobile, we have a plan built just for customers 55 and up. saving 50% vs. other carriers with 2 unlimited lines for less than $30 each. call 1-800-t-mobile or go to t-mobile.com/55. good morning! this is where everything started.
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by phone israeli prime minister -- with israeli prime minister netanyahu. the conversation, which lasted about an hour was, quote, trendily and warm. the biden administration -- friendly and warm. does team biden want tariffs or free markets or somewhere in between? larry kudlow joins us now ahead of his show "kudlow" at 4 p.m. eastern. larry, you've got former u.s. trade rep robert lite his oren the show -- robert lighthizer on the show today. he had to negotiate through tweets and comments from president trump. where do you think the biden administration is headed when it comes to trades and tariffs? >> well, it's a little am ambigs right now. i talked to my friend bob lighthizer before the show, and i'm not going to reveal all of his views -- much as i love you, liz -- [laughter] but we don't, we don't really think, i mean, i could be dead wrong here, but i don't think they're going to back off the
trump trade policy, be tough with china. now, bob lighthizer, who was probably the best trade negotiator in the business, he'll talk about phase one china deal, how that's working or not working, we'll talk about the new lady who's going to run the world trade organization. but one key theme, donald trump's trade policy was about working men and women. middle class, lower middle class working men and women. we're going to talk about that. that's what the whole republican party should be about right now. so i think that'll be great fun. we're going to give some remembrance to my friend rush limbaugh, and we're going to talk about -- this is for your subject, because you're my favorite tree-hugger, liz, you always have been, what happened to renewables in texas? that's all. just a simple -- liz: yep. okay. larry, just make sure you understand that the carbon
blades prevent ice from building up on those wind turbines, and texas didn't order the carbon or heated blades. okay? get the full story. larry: you should probably come on the show and debate the energy secretary. i think he has a different take. liz: he's been on my show. [laughter] we like each other. larry: you should. you and i like each other. you're the best of the best.are. liz: great to see you, top of the hour. larry: my favorite berkeley tree-hugger, free marketer -- liz: i am all those things. robert lighthizer on "kudlow," 4 p.m. eastern, only on fox business. we are coming right back. ♪ ♪
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away. the s&p just turned positive. it's up a third of a point. it needs two .25 to see another record. let me get to ford, announcing that their european cars, all of them by 2030 women be electric. stocks pulling back just a bit. but it is up 30% year-to-date if you look at the cars they are so electrified in so many ways, they will need chips, microchips. morgan stanley anticipating the semiconductor shortage hitting the auto industry will last through mid-year. today's "countdown" closer says i got your trade. he has the name. he is cofounder of applied capital management with a billion in assets under management. good to see you, rafael. what is the name because there are so many chip companies out there? >> rather than the actually maker of the chip going back to the good ol' days sell the denim and pants to the miners, we'll
go with kla corp, semiconductor equipment-maker. a lot of interesting aspects to this story. one, typical value investor would never touch this with a book to price, price to book multiple of 17-x, versus six for the industry but it is not a cheap stock it is very undervalued. one of the things that we learned at applied finance doing 20 million valuations since 1995 is valuation trumps cheapness every time. in fact we published a report on that today at applied finance.com that goes into that in detail. there is a lot of interesting tailwinds for the stock. it is moving beyond the manufacturing aspect of the story. it is working hard to be a consultant and be is service provider to customers. after the sale is made, it sticks around to help these guys, helps the manufacturers, the chip-makers actually increase their yields, strengthening relationships
which is a good persistent sign for the cash flow. geographically, looking to diversify out of china and taiwan. of given the geopolitical problems. that is strong tailwind for the future. we expect the company to generate sales of 20% this year. last week it had great shareholder hygiene, great stewardship hygiene. it is targeting to return 70% of its free cash flow to shareholders through buybacks and dividend. if you sit down to do the geeky, nerd crunching stuff, you're paying this company to grow at 1% sales for its current market price. we think it represents a strong upside value but also provides you a strong defensive stock. though you wouldn't necessarily run into it screening on something price to book, price to earnings multiple, that doesn't account for the ability of this company to generate huge economic returns. 20% above its cost of capital.
one of the most profitable firms in the country. [closing bell rings] liz: nice move. kla-tencor is rafael's pick. i like it. i like your thinking. thanks for doing research for us. that will do it for "the claman countdown." third straight record for the dow jones industrials. ♪. larry: hello, everyone, welcome back to "kudlow." now today tough day. america lost a titan of conservatism. broadcast legend rush limbaugh died at the age of 70. last february limbaugh told his listeners he had been diagnosed with terminal lung cancer. president trump awarded him the medal at the state of the union address shortly after that announcement. i knew rush personally, for a long time. i along with his legions of his fans and conservatives will dearly miss him. he was a patriot that fought for