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tv   Fast Money Halftime Report  CNBC  January 13, 2015 12:00pm-1:01pm EST

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on kb home. that's dragging the entire sector lower with it. >> seeing other headlines from various sources about q1 earnings guidance but wait until we have that pinned down. certainly not a good picture shaping up for home builders this afternoon. does it for us on "squawk alley." to wapner and the halftime. thanks very much. let's meet our starting lineup for today. stephen weiss, managing partner of short hills capital, getting situated okay. >> yes. got the phone book under me. >> good. joe terranova, adver tis investment partners, josh brown. >> no phone book. >> pete najarian the co-founder of option munster who should have listened to me before last night's game which he picked wrong, our game plan looks like this, loco for loco. the ceo of the fast growing food chain with us today. do traders have the appetite for
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the stock. why pharma is leading the way this year and which ones to buy with billions under management. we begin with a look at the markets, stocks climbing after alcoa kicks off with a bang. the company reporting better than expected numbers bringing investors a sigh of relief and that's our question of the day. whether earnings which are able to kick into high gear will keep this rally going if oil falls. what do you think? >> i think expectations are relatively low for this earnings season because of what's happening in europe, china. i think we're okay. i think it will continue to drive the market. however the volatility is here to stay. the other major issue that overshadows earnings in the near term because you will be in the heart of the season what mario draghi does on the 22nd. that's the most important event that we're going to see. oil which dan will talk about is already in the framework that people say it is supply and demand but a lot more supply than demand. so i still like the market. but i think you have to be more careful where you go at this
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point. >> joe, i'll give stephanie link credit. she said on the show that earnings were going to be the thing. >> yes. >> to cause that next catalyst higher for stocks. so far looks good. one big report in, but having a good impact on a week that's going to get a lot busier right in front of us. >> if you think about falling oil prices, so obviously that's good for the consumer and consumption lifted by lower treasury yields but profit margins will expand because the input costs will not be as expensive. i think the orientation that you need to have on the upcoming earnings is who has the domestic focus, what sectors are specific to u.s. revenue, derivation, that takes you to health care, to consumer discretionary and financials. i'll share three flames i think are going to do really well, zero exposure outside the u.s. first in health care, express zips. i expect that stock to reach 100 bucks financials, charlie schwab, a stock that could be $35 in a potential m&a target
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and lastly, when you look at consumer discretionary, ross stores. the stock around 96, i think the stock goes well over 100 again. zero revenue exposure outside the u.s. >> are you worried ate the kb homes deal taking down the builders. scheduled to report earnings tomorrow or today whatever today, disconcerting the news that's coming out. what do you do with it? >> i think it's overdone but i wouldn't rush to jump in because no matter how that thing closes, you're going to have a red candle that sticks out like a sore thumb. a lot of guys that are momentum traders that aren't going to want anything it to do with it and you can't say it it's so dirt cheap the value guys will raise in. i like names like home depot and lowe's than companies building low-end homes. i don't think kb should be slaughtered for this degree for a couple quarters of margins that aren't what people expect. i want to go back to what steve said quickly. that's the most important point.
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you have to be more selective. there are swaths of this market that are just not involved in the new high machine. and it's very different from what we've had over the last couple years. the percentage of s&p stocks above their 200 day is in a downrend. it's been down trending since about the middle of 2014 july and i don't see that changing any time soon. so you can stay in, but it's not just hey, show up and we'll hand you $100 bill every day. >> i wonder, should we make more of the kb homes deal? pulled the market off its high. the builders are rolling over. if housing doesn't start to participate, pete, what are the ramifications? >> they have participated. when you look at the names, the itb, actually today hit the highest level since 2007, so they've been participating and then all of a sudden we get news a couple minutes ago about the margins and maybe there's further news we're -- we aren't seeing, we haven't had a chance to go through it that pushed this. kb homes was moving to the upside nice. you look at the new orders, the prices, those prices going up, double digits once again.
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>> maybe having to -- i don't know what the deal is in the call, but maybe give more incentives to drive traffic. >> if you look at where the strengths are today as you come in and the market up 200 points on the dow and the s&p up over 20 points when you look at where it is, the strength is in the financials. a lot of these names get hit to the downside on days with violent moves in oil. we talk about it all the time. the ovx, that today was lower by 4% earlier, now down about 1% or something like that, with oil down 1%. when the oil moves aren't violent you see the market start to focus again on what's the fundamental story, are they making money. >> what is the fundamental story? >> for the banks right now, we're going to hear from jpmorgan tomorrow. look at what's been going on over the last quarter or so, how many m&a deals have we talked about since the beginning of the year. those that have been involved in those. the sharp move in goldman sachs. morgan stanley. jpmorgan.
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all moving to the upside. yesterday they were getting hit. today going to the upside. financials are going to surprise. >> bold case on banks selling at less than book value. >> right. >> they will all be raising their dividends over the next few years. >> if we would have rewound that -- you would have said the same thing, could have said the same thing a year ago. >> and they're up 15%. >> nice runs, though, scott. and look at where some of these names are right now. jpmorgan right now, pushing on that $60 window. if jamie dimon and that crew can put up numbers tomorrow that are impressive and analysts on the street taurg about these numbers beating on revenues and earnings, tomorrow we are going to see where these financials -- >> let's talk about oil's move again another down move for brent, dan dicker president of merck block back with us. why does oil keep going down? just tell me that. i mean it's one thing to ask, where do you think it's going. why does it keep falling in the manner in which it does. >> no buyers, simple as that. i can't give you a thesis for
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buying front month oil. >> not like we woke up in the last two months and realized there's all this oil supply out there. >> it's not entirely supply issue. that's not what's going on here. >> everybody staz says it's a supply issue. >> it's partially a demand issue, it's partially a dollar issue, partially what the saudis are doing, what opec is doing. it's partially what the banks are doing to try to enforce some really bad lending that they've done to some mom and pop shale players in the united states. it's what's going on in the arctic, chevron decided to disappear from the arctic following shell out the door. it's about a lag that's going on, between production that's still cranking along at full speed because all of these products were undertaken during the spring and summer of 2014, and now that production won't come off line until april at least. right now front month oil has only one way to go and it's not up. whether it stays here or goes further down i don't know, but it can't really rally at least for the next several months. >> i say it like tongue and cheek too.
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i mean nobody wants to believe that it's a dramatic decline in demand that is causing oil to deteriorate the way it is. >> that's partially it. clearly we expected more growth or at least a bigger acceleration of growth globally for crude barrels than we've gotten over the last year and that we're going to get for the next two or three years. the market is now trying to readjust. that's one of those things five or six things that sort of hit the market at once, dropped prices 50%. >> dan, i hear what you're saying about all those factors. i don't disagree with you. if the saudis came out today and said, you know what, we've had enough, okay, we're cutting production, oil runs. so the reason why i think that oil is down where it is, saudis say 35, let's have it, let's go. >> i disagree with that, steve. i think the saudis are an important factor but not to be overplayed in the factor for dropping oil prices. it's mattered. if they said we're going to cut production by a million barrels
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they might stop the slide. i don't think it would cause the market to rally back to 75 or 80. >> brent and wti the spread at parody since july of '13. >> a moment in time. i don't know that you can extrapolate that. >> that's a surplus coming from what the saudis and uae is saying about happy to see prices slide here. there's a lot of production coming in that's not going anywhere inside that brent market. >> joe's voice here. >> the real story right now is the high yield market. what companies within the high yield market as oil continues to move lower and they're not hedged and have heavy debt, they have to sell to hedge production. which are the companies that right now when you look at high yields have that heavy debt and are in for selling situation. >> i think there are four or five of them. the question becomes, who's going to find the new finance to keep them alive. they're under such pressure from the high yield position they're going to face bankruptcy risk and default risk and we saw lynn
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energy go to blackrock and get really what really was a very, very bad deal. they had to give away 85% of the production. we saw southwestern, for example, do a terrible secondary because they really need the cash to survive the next twos years. so who are going to be the -- >> private equity. >> one of those. >> and stress players. >> one of those you might look at trading or at least the bond side are those where someone is going to come in with financing over the next year, your friend ford wilson is one of those players, tremendous trouble in debt, tremendous, but good asset. >> hedged out for 15 and most of 16. >> where is the next stop of debt in oil? are we going to get a 3 handle? >> it's possible. why not. we saw -- >> call it. >> 35. >> you call it. >> i'm not calling it. >> okay. >> like calling a bottom. tough to do. >> people are learning that almost every day. dan, thanks. >> thanks. >> coming up two of our traders have been crazy for el pollo loco. >> when you look at the
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revenues, the numbers they produced, i own this stock and think they can go higher. >> growth characteristics reminiscent of chipotle. i will probably buy some of this today. >> of the chicken or stock? >> both. >> the chicken for sure. after the break we will hear from el pollo loco, the ceo in an exclusive interview. what's his plan? are the traders still on board with it? then health care having a huge run this year in one major investor in that space is going to show us how he's playing it and that's all coming up when we come back on the half.
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time for trades. four trades on four stocks making news. amazon is higher after a buy at citi and the company announcing it signed woody allen to direct a series for prime instant video. there's the stock up 3%. why it's a good upgrade or what? >> the stock seems to have a flow around 300. possibly trades higher and kind of -- it's kind of the time of the year where it could do that. you don't have to worry about christmas. there's issues here. bezos great ceo and company but still think it's expensive. >> they say margins are going to go up, the investment cycle is not going to be as dramatic. >> i've heard that before. that may be true. what's left for them to spend money on? >> margins are a key thing. >> absolutely key but they keep finding way to spend money and the marks is getting more
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competitive. >> best buy an upgrade from to buy from neutral. >> when you look at the upgrade, target of $45 a share. store within a store concept has been killing them. on-line sales up 21%. very, very healthy quarter as they start to look back towards the holiday season. apple products in demand and recycle or excuse me the new fresh cycle in tvs, high def hitting right now for best buy. >> we mentioned what's happening with kb homes. where are we going? the teleprompter is spastic at the moment. we're back. >> there it is. >> kb homes in case you haven't heard falling hard despite beating expectations. joe? >> the gross margins -- >> hey did you hear about kb homes. >> the gross margins is the story and looking forward into 2015, where is it exactly that you're seeing price in growth and that takes you to florida, sarasota, miami, whether it is tampa. who is well positioned geographically there? that's lee nar, your best home
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builder trade. >> like the teleprompter -- >> we're on this not that one, no on this one, not on that one. we're back to kb homes. >> that's the way oregon's defense felt last night. >> josh some. >> doing improv? as a young man you did? >> every time he talks to you -- >> i'm available for parties. >> that was incredible. props. so let me just tell you one thing about this, i think it's one of the most mispriced securities in the entire market. sun power is down 40% in the last four months with oil makes absolutely no sense. what they do is not in competition with oil. it's in competition with nat gas and coal. the thing with sun power today, credit suisse coming out and saying valuation call, stock needs to be bought, it's worth mid 30s, last week deutsch bank said it's worth mid 40s and remember total owns almost all of the common stock and ultimately they can end up taking it. >> you have knowledge you're trying to drop on josh. >> what's with the jes tick cuelation. >> i'm going to tell you one thing that was like five things.
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>> >> five things that converge into one main point. >> yeah. >> the point though to the point? or no. >> i think it was to the point. >> i feel like you weren't absorbing all those bullets. >> i was listening for the red cannedle. >> coming up inside the record-breaking rally in health care. sam eisley has more than $9 billion under management and he's going to tell us the names he likes. names like gilead and biogen have more room for growth after big gains in 2014. you might call it a gold rush. the metal touches highest level since october. could there be more where that came from. we'll try to get answers when we come back. opportunities aren't always obvious. sometimes they just drop in.
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since going public last summer but cooling off recently. our courtney reagan joins us now with the ceo of that company. steve sather. an interview you will see exclusively right here on cnbc at this lunch hour. take it away. >> that's right. i am here with steve saitser, the ceo of el pollo loco. let's get it kicked off with the dining out recovery. i'm hearing a lot about it. do you think it's happening, and b, because of lower gas prices? >> well, first of all, i think
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the lower gas prices clearly are helping the -- whether it's at fast casual, qsr, i think it's a positive very positive influence. our comp sales were very strong even when the gas prices were higher. but i think it's more dollars in the consumer pocket and it's got to be helping at all levels. >> you hear a lot about changing consumer tastes, consumers wanting more natural or organic or nongmo products. what are you doing to respond to that? is it something you're seeing change demand for your company? >> we've seen certainly a trend towards that. our chicken is a natural, it's fresh, we flame grill it. it's not deep fried. it's citrus marinated flame grilled. it's always been haels healthy for you. last year we introduced a five under 500 calorie menu. trend for consumers to get to healthier products, fewer calories. we added four more items to ha. to trend towards healthier,
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natural products. and also i'm seeing a trend in the consumer is they want higher quality products. from qsr, they want that fast casual, high-end fast casual. we deliver that with our qsr plus. high quality, but still speed, convenience, value of quick service. we're in the middle at that qsr plus. >> pete, you a question and you are long the stock so go ahead. >> i am. steve, quick question for you, you talk about the quality and i agree, i think you have quality. the pricing power, what kind do you have against the food inflation and some of the costs you have to deal with on a day in and day out basis? >> you know, pete, very good question. the -- some of our strongest attributes are price value relationship. and we're very careful on that and we want to maintain. we're just a little bit above about 10% above qsr pricing but significantly below what you would pay at the high-end fast casuals. so we have that pricing power. we think it's -- we think that's
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important to the consumer, the price value relationship. we're reluctant to raise prices. chicken inflation, there is a little bit of that this year. we're -- we've -- we're going to take actually in february about a 1% price increase to cover that. but that's well within what our consumer will accept because we have the high price value relationship. >> are you sir -- >> what about expansion, expanding beyond the west or southwest? >> expansion in the southwest we have a strong southwestern footprint. we've gone into houston, texas, our newest market. we entered it last fall down in the sugarland area. we opened up copper field last week. we opened up our third store in katy, feel good about our houston expansion and will do 7 to 8 more units next year. >> scott has a question as well. >> i do. >> are you at least tempted in the current environment that we are in to bump prices up at all as you're seeing inflation on your side, but as consumers are continually getting more money
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in their own pockets because of what's happening with gas? >> i think we know we have that there. but we're very reluctant on the increasing prices. we want that price value relationship. we want that positioning of qsr plus. even though we think we have that pricing power, we don't want to move it into the high end of fast casualty. >> what about the quality of food? as you look into expanding and providing consumers with the taste they want or natural are you making sure the quality is still there? it's a crowded space and you to make sure -- >> important question. you're seeing consumers that grew up with qsr, they want a higher quality product and 2011, we brought in heather garrdeya, a culinary institute trained person, very strong, and she's developed those entrees in our menu and really it if you look at the entre side, the growth that we've had there, as well as our bone in chicken growth, that's due to the higher
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quality. and we're able to charge a higher price for that. if you look at our comps which have been very strong over the past three years, about a 1.5 to 2% of that is price each year. the balance is more people coming into the store and what we call people selecting higher priced items because they're a higher quality item. >> well, we wish you well. >> quality counts. >> counts very much. we wish you luck going forward. thank you for joining us. >> stay loco. >> stay loco. fellow miami university alum here. >> go miami. >> that's right. >> go red hawks. >> all right. guys, thanks so much. josh brown? do you like the stock still? >> i do. >> like the story from the ceo? >> i actually really like the setup here. obviously i think the stores are great. the stock, the company comes public at 15, immediately almost triples to 41, expectations are very high, maybe too high, then they come out, they do a secondary raise a little money and then they give you a quarter that's just in line, like chipotle does, a lot of momentum
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guys get flushed out and cut in half. now you a chance to buys this thing at only a minimal premium to some of its peers in terms of valuation. with a lot of growth ahead of it. i like the setup. here in the low 20s the stock is very buyable. >> all right. let's turn now to gold because the yellow plettal hitting a 12-week high and jackie deangelis and the futures now crew has more. >> good afternoon to you, scott. it's been a rough ride for gold by all accounts but gold up 100 bucks in the last two months. so jim, is it safe to sort of wade into this gold trade now? >> i think it's much safer than it was. yes. safe i think, yes. mildly safe. i think if it settles above 1250 i like it more. some things definitely change where gold has been able to rally a little bit even though there's been dollar strength. so if anything happens to that dollar strength, for instance, if people have piled into the short euro trade too much and that reverses gold could scream higher. it's a pretty decent buy.
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>> sounds like you're hedging there. brian sutsman speaking of the dollar. >> as always. >> we talked about this before, traders are projecting we could see the dollar index at 100. having said that if the dollar strengthens worried about gold? >> i would be a little worried about gold but like we talked about the downward momentum seems to shift and stopped and at the beginning of 2015 we allocated 13% to our macro model in gold. there's a place in your portfolio. we have to keep an eye on the dollar. it's got to get through the 1250 level like he talked about. i agree with him there for it to go higher. it probably takes a little sell-off in the dollar for that to happen or a reversal in the bond market where people look to another asset class to allocate like gold. that will be one of those that they will allocate to. >> rough time getting through 1250 before. thanks so much. of course they will be joining me on the on-line show where we will be talking about the market and also crude but joining us on the s&p is david rosenberg, always an interesting perspective.
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scott, that will be 1:00 p.m. eastern, futures >> thanks. see you there. do a market flash for a look at a name that is moving. dominic chu? >> all right. so scott, we're watching shares of what's happening with gopro. the stock is falling down near session lows on a report that apple has been looking to get patents and has been granted patents for a possible sports or wearable camera type system that can be controlled via a it phone or perhaps a watch. gopro shares off by about 8%. as for apple shares the big upgrade at credit suisse as a result those shares up in today's trade. back to you. >> thanks. bear case usually starts with low barrier to entry, somebody is going to come out with something that will challenge gopro. what do we think of the news maybe it's apple? >> we saw at ces a number of companies coming out, we knew that going into it. if it's apple it's a category killer for gopro. maybe they have to be acquired. i don't know who the buyer is it's simple technology to
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replicate at this point. >> you have to mention apple and how good they are in allowing others to successfully go into a marketplace with a product, achieve the success and apple comes in, recognizes the success and comes and follows with that product. >> by the way -- >> the company is built on? they're great at doing it. >> the walkman a little bit. >> i mean go back to the walkman. >> nobody owns -- >> anybody own gopro on the desk? >> i did. i'm not in right now. >> i owned it for a brief trade and got stopped out rather quickly. >> this stock is about to break if it closes here, the christmas low, from which it had rebounded almost 20 points. the stock is down in half from its high and it's already down 11% year to date. really tough name. >> since talking about apple in the context of this story credit suisse upgraded saying there's going to be a $200 billion buyback, upping of the dividend. what do we think of that story? >> we've seen the bottom in apple is at 100. safely buy it there and trade
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up. it's going to trade near term you see with phone numbers, in the next earnings report, but i think you can get through that. if you want to get exposure in the market it's a good place. not going to double your money there anymore. >> look at the success at the app store. record days there. the pc sales and idc examines out talking about pc sales everybody expects them to continue. they are not dead yet. we hear more about that, hp and apple killing it. >> the next two quarters should be the strong quarters. 120, 125 and if you look looks like supply catching up with the demand. you go on-line and get the i phone in one day. couple weeks ago three to five days. next two quarters will be strong, solid numbers. >> coming up woody allen heads to the small screen for the first time and only get it in one place. the streaming wars heating up. and pharma mergers heat up valent's ceo joins us. is his company itching to make
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another move. is there more room to run? we will ask sam eisley and find out what he thinks next. the competition for trader of the year continues. six halftime traders, one epic battle. who will reign supreme? keep up with every move on the halftime report and go to cnbc pro for real time trading alerts and exclusive insights and analysis. sign up at for your limited time free presprup the portfolio challenge on the halftime report. noon eastern week days on cnbc.
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welcome back. there's the early leader board. what a difference a couple months make. the najarians are bottom. >> yeah. >> john's made bets on energy. that's been tough to deal with. >> yeah. >> leeben thal in the lead up 5% on the year in large part to jc penney. >> two through five pretty
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tight. a tight swing. look at lee benle that up top. >> one person absent not going to mention names, weiss. >> as you can see i've turned to a consulting role with john. >> i'm calling the shots. >> doing a fine job. >> well played. [ crying ] >> sound effect. all right. we kid because we care. remember, you can all follow the action at all right. the health care sector hitting a record high as the biggest names in the business meet in san francisco for the jpmorgan health care conference. after years of outperformance are we finally seeing a top in those stocks? sam eisley, manages more than $10 billion at orba met advisers which invests in health care. welcome back if thank you. >> like the third year in a row or the fourth year in a row that health care has been in the top three of performing sectors.
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is that going to continue? >> i think it will continue. surely the outlook for health care this year is very, very strong. keep in mind as well that for something like a decade up to about 2010 health care had lagged. there is a little catch up in here. it doesn't keep catching up for five years. >> we've learned again this week with the morgan conference out and san francisco that m&a is going to be the narrative in large part as we go forward. is that a significant driver for investors? >> indeed, it is. but it really starts before that. the -- there's been a acceleration of research output by both the big pharma companies and the little discovery companies. research output means product on the market means more profits means something that someone else wants and that's ther and acquisition that drives it all. just earlier this week we saw that npc pharmaceuticals is dropping into the hands of an english based company called
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shire. that's going to continue all year long. there will be a dozen takeovers in this area. >> you mentioned shire which leads me to one of your stock picks, abbvie. >> abbvie tried to buy shire and that failed because the treasury department made tax policy in the united states more difficult. >> but i mean, it speaks to the fact, are you saying that you're picking that stock because if they fail to buy shire they're going to find somebody else sp. >> no. we like abbvie for other reasons. >> okay. >> they may, in fact, do some business development but we like abbvie for the power of their hepatitis c franchise, a long futures still for their drug that the threes rheumatoid arthritis. called humira. >> are they better with or without shire? >> i think they are better with shire. they're not going to have it. but they'll look around. they'll do more business development. >> how about a company called insight which you're picking as
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well? >> insight, they might as well have. insight is already a partner up with novartis. we think it would be a great buy for novartis, would cost close to $20 billion. incite has drugs to treat sort of pre-cancer and also candidates that treat cancer drugs, they are technology leaders in the area and know var tis is not ahead of the world and this would be into it. >> i agree with your view in health care. demographics are outstanding and what's happening with r&d budgets with big pharma. when you look at the smaller cap companies that are just in phase one or have compounds and the valuations that things -- these things are getting, hasn't that typically been a sign that there's a top coming near term in small cap biotech some? >> the indices could be divided into several parts but there is a small cap biotech index and it didn't do remarkably last year.
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the big cap biotechs did just as well or even a little better. we're not worried about valuations on the small fellows. if they have something another company wants they will get bought. that supports the valuation. in addition they move to profitability. i mentioned incite a moment ago, incite will be profitable in 2015 for the first year of any consequence but profits will triple or quadruple or go five times 2016 over 2015. they will move into the big leagues and be attractive to somebody then. >> we appreciate your time very much. thanks for coming on the program. >> thank you. >> sam eisley, orba med. >> one of sam's calls surgical, i like this company, but i tell you, it's also a play on the economy of when the economy is strong, everybody's willing to spend because it's not a very inexpensive thing they have to put out million dollars to get one of these devices to use the robotics. it's a play on the economy. >> what's interesting today, hospitals are getting crushed today and they got hurt
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yesterday when tenant preannounced. to me i mean they're the cheap stocks but yet fundments seems to be going in their favor. >> you heard from an investor in health care. coming up hear directly from a ceo. that man, right there, the ceo of valeant. mike pearson will join us live. how will he factor into the industry's m&a bonanza? we will find out next. >> the halftime report, with scott wapner, is the place for market moving interviews. >> when you see large currency moves, and large price moves in a commodity like oil, you have to be worried. >> real money. >> what makes things cheap is uncertainty. >> real debate. >> my bet you should buy every canadian oil stock there is. >> the most profitable hour of the trading day. >> do you think dick costolo will leave that job? >> we think there's a good chance he's not there within a year. >> the halftime report weekdays at noon eastern. eet...
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hi, everybody. hope you join us at the top of the hour for "power lunch." triple digit rally but it has given up earlier gains. earnings season under way. alcoa a good number yesterday. the stocks that will help and could hurt corporate earnings growth the very most. plus, oil sliding. the price difference between west texas intermediate crude and brent narrowing. a big deal for investors. we'll explain why and why it
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matters as we take a look at some of the energy stocks that may now be worth buying and the trouble with twitter. u.s. central command's twitter account hacked. not the first example and at what point does it not make sense anymore for companies to be on twitter? now back to scott and the fast half, or the half fast, report. >> whatever one you want to call it, ty. >> all right. >> we'll call it whatever. let's call that. decent market but certainly not as good as it was. dow up 282. at its best levels or less than half that now. s&p is up a half percent. nasdaq is up. at one point the dow an nasdaq were positive for january and now are not. how much of this is due to yet more questions about the strength of the economy relative to kb throwing some cold water on the housing picture? >> i think it's a contribution but i also think it's evidence it's a volatile market and i think that's what's going to be the story in 2015 volatility is going to be back again and i think you need to incorporate
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that in whatever your plan is. >> throw up crude oil as well. i just want to see what crude is doing. >> down about a percent. >> coming in a second. that's part of the narrative that we're going to be following and talking about daily, crude starts to move lower, the market goes with it, pete. >> right. and the violent moves have pulled us violently to the downside the triple digit moves and we get these fast rallies to the upside when it at least stabilizes like today, down in crude, and yet the market was able to fly to the upside unit ill this itb we started to see housing roll over, the housing stocks really turned in seconds literally to the downside. that's been pulling on the market. that's a weight. >> you know, i think earnings are in focus and stephanie link is correct to think that's a bullish catalyst but steve's comments at the beginning of the show, a lot of uncertainty in europe as we approach the end of the month not only with the ecb do they give the markets what they want on the 22nd, but also with the greece vote. >> and also alcoa. >> what the euro has been doing. alcoa turned down, leadline
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great number beat and traded down before kbr started trading. >> to health care which we have been discussing. biotech m&a is on a tear and our next guest on the front lines of the deal-making boom. mike pearson the ceo of valeant pharmaceuticals and he may have lost the fight for allergen but his stock continues to be a winner for investors. he's with meg live in san francisco. take it away. >> thank you so much, scott. joining us mike pearson the ceo of valeant. thank you for joining us. >> thank you for having me on? a lot of action with allergen activists came in and bought the company out from under you guys. what's next for valeant? >> i think we're on a bit of a mission to prove that many of the allegations about our business model and our r&d are just not true. and i think there's a real silver lining in that we'll have a number of clean quarters in a row in terms of we've -- 18 months since we had a big acquisition and i think the true
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strength of our business will begin to show. >> but a lot of analysts are saying because you didn't buy allergen your leverage situation is looking pretty good and expecting more m&a. that's your business model. can we expect more big m&a from you guys. >> our business model is organic growth of our base business which is critical. when you make acquisitions you need to demonstrate that what you buy you can operate. so a big part of our business model is that. which has gotten a little overlooked. in terms of m&a, we will absolutely start getting back at m&a. we're probably more smaller to mid-sized deals. and we're just not going to predict the timing of when the next large one is going to do come. >> is there a limit? can you go as big as allergen again? >> sure. we raised over $20 billion in preparation for the allergen deal and there was more to be had. i think we have access to capital. >> we had activists and ceo on halftime report with scott yesterday, brent saunders, you know well, you guys worked on the bausch & lomb deal today,
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criticism about ac ttivists it'a rollup, what do you say to that? seem as if he was defending against being a rollup. are you guys a rollup? >> there's two parts to our business moodle. the assets we can demonstrate improved performance under our ownership than who we bought them from because of our greater distribution and our decentralized model. unless you can clearly demonstrate strong performance of what you've bought, then you do become just a rollup. but if you can and then you can also do good acquisitions to create shareholder value then that's the combination is what really, you know, creates the most shareholder value. >> will you continue to work with bill ackman in a similar way? >> i find it unlikely we'll work with bill. he's a great guy. congratulate him on -- and he made -- you know, he wrote us a big check too. we appreciate that.
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>> so this conference is really big not just for the presentations that companies make and you guys gave guidance that made people happy but for the business development meetings that go on, potential partnering and acquisitions but there has been criticism of valeant because you cut research. how do those meetings go when you're surrounded by scientists and folks who love research. are they afraid to meet with you or find they're excited about it? >> i don't think people are afraid to meet with us. i think we have a different approach to r&d but we believe in innovation. we launched 20 new products in the united states last year. we got four new drug approvals from the fda, products that came out of our labs. so i think our track record speaks for itself. in terms of our approach it may be different but it's more similar to the way smaller companies approach r&d. from that standpoint, i think, you know, there's some attraction on the part of potential partners. >> mr. pearson, thank you for joining us. >> thank you for having me.
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>> scott, back to you guys. >> thanks. thanks for bringing that to us. >> comment on the desk. do you think investors want valeant to be more quistive or not? >> that was the initial story. they kept now there are some questions about that we are fixated about. is it a roll-out? what's going on there? >> he said they're going to do more mergers. >> yeah. what i never liked is that he came out and said we're going to be $150 billion company going out a couple of years spshgs when you make that kind of claim, you've got to live up to it. now they're backtracking. there's a company, endo, which the ceo there was a protege of his. they're doing much better. seems to be a cleaner story. >> it looked to had he like the stock moved a little lower when he answered meg's question with yes, we're going to do more deals. they're going back and forth. i think that's the issue.
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>> all right. well, coming up, even though the rally is losing a little bit of steam today, you've got some dow stocks hitting new highs, and we're going to give you the trades. just after the break. lly has no hidden fees on savings accounts? that's right. it's just that i'm worried about you know "hidden things..." ok, why's that? no hidden fees, from the bank where no branches equals great rates. if you're running a business,
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multi-years for of them. those six blue chips, they're trading at very, very high levels. multi-year levels for some of them. wal-mart shares, for one, are at a record high. merck, its highest level since december of 2001. disney shares, let's cycle through that one. that's a record high for them. cisco at its highest level since december of 2007, and united health shares also, scott, at a record high. blue chips making a real mark in today's trade. back over to you. >> pete. >> i would say on disney, buy this before it's a three digit name. they have incredible amounts of catalysts in the coming year. everything from star wars to some huge new animated movies over the summer. the avengers comes out, the sequel to that. there are so many things happening with this company. i can't imagine a scenario where it's not at least market performance, but i think it's going to be better. >> you didn't even mention the content from espn and the fact that they bought that national championship series all the way
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through 2026. that was a steal for $7 billion. >> massive numbers people are talking about with that game. >> low gas traveling to the parks. >> in terms of the parks. espn is really a huge driver for them. that merck number -- >> that's where i wanted to go. pfizer and merck, you own both still? >> yes. it's all about growth. it's not about defense. everybody loves to call these defensive. they're not. it's about growth. you look at merck and you look at the hepc area and lung cancer where they're showing much more in the pipeline that could come to the market soon. it's why these stocks are going higher. >> you fade the cisco high? of all the names that you mentioned, that's the one i'm most suspicious. >> that's what i thought. >> but why? >> it's not an all-time high. >> until you look at cisco, you look at big cap, you look at some of the -- >> all right. so it's -- >> the bubble days, i mean, this thing has had much, much higher valuation in price. >> all right. coming up, if you want to get your hands on an iphone, this is not the way to do it. it's our worst trade and it's
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you've heard about the good. now it's time to talk about the bad. mobile armor. check out this man who reportedly tried to cross the chinese border with 94 iphones strapped to his body. customs officials say they noticed him because he was, in their words, walking strangely. when they investigated, they found the hardware valued at nearly $50,000, weighing in at approximately 30 pounds. maybe a new record. the previous reportedly set at 66 i phones. >> i could have done that with ipads. >> moving on. all right. let's do our final trade. steve weisst, tell me what and why. >> awkward. i'm short. so short. california came out today, and they said, hey, we're going to look into taking away their license to service mortgages here. >> that stock down 32%. >> it's going lower. >> wow.
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o'reilly. >> o'reilly has been pulling back. i still believe in the company. i think they're going to have strong earnings. the orientation dpesic focus. >> sun power. >> i was going to say that, but i want to switch mine and say disney. that's the one. >> heath. >> everything runs on duncan. >> power starts now. halftime is over. "power lunch" and the second half of the trading day start right now. hey, everybody. good afternoon. welcome. the dow rallying, but still well off its high. giving up now more than 100 points. tech among the big winners, though, so far today. oil sliding six-year lows for it. the price spread between west texas crude and brent has been narrowing. this is an important factor, and we will tell you why it matters to you. earnings season underway. the stocks that are going to help them hurt the most. we'll take it apart for you. real estate stocks starting the year with very big moves.


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