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tv   Fast Money Halftime Report  CNBC  March 3, 2015 12:00pm-1:01pm EST

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>> we'll have to see if there is fallout from this. if it prompts any actions from iranians, if it prompts any action from isis. somebody might be opportunistic, the fact that the speech is over doesn't end it. >> john harwood in washington, thanks so much. let's get over to headquarters, ♪ >> okay. thanks so much. want to take you to our wall and show you what the markets are doing at this hour at the lows of the day. perhaps reacting to that rousing speech by the israeli prime minister before the joint session of congress. you do have the dow jones industrials down 127 points. it is the worst day for stocks since the end of january. you can kill the music. since the end of january. this is a day after, of course, when the major averages, at least the dow and s&p, hit
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record highs. the nasdaq touching 5,000 for the first time in some 15 years. we have much on our plate today. of course we're going to talk about all of the moves in the market and what could lie ahead. the rest of ouôó game plan look like this. rise of the machines. are you better off with a robot making your investment picks? the man that says yes is here and he's got $2 billion under quote/unquotep: forest through the trees, the analyst that says the lumber liquidator sell-off is overdone. that stock down more than 40% as you know in a week. i do have the traders in front of me. stephen weiss, jim lebenthal, pete najarian and michael block of rhino trading joining us for 6awell. steve, what do you make of the markets here. it seemed as though perhaps yesterday was as strong, maybe sell signal for some people as we've had in a while, just for sake of reaching the milestones? >> i don't think it's unusual after the market hits the psychological levels, for it to sell off or retrace.
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people say let me take my profits off the table, let me, you know, can't go much higher. this was a tough point, 15 years ago. but having said that, we're seeing this volatility which strikes me as how cheap vol has gotten and risk has gotten. there's no excuse for anybody out there not to have risk to protect their portfolio. the volatility we've seen called down a little bit in february, but i dot think it's gone. it's going to continue to be with us the rest of the year. i'm not alarmed by it. i don't think there's major values out there. some areas maybe energy higher price target, david ruben stein was great on squawk this morning. i'm staying with the market, moving more into europe, dax at an all-time high, uk at an all-time high, starting to look around there not at those stocks. this is nothing drawing -- >> i want to know is there more -- >> i don't think netanyahu's speech had anything to do with it. >> sure. >> maybe i mean look maybe it impacted oil on the margins,
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though other things already happening. if nothing else, jim, the speech, the stirring nature of it, because it was political in nature reed us and reminds us of the political tensions that still exist in parts of the world and it may be there flaring up again, at least worthy of taking note of. >> i think you're going global in your question. i would go local. i mean the politics here, the fact that he is addressing congress, when president obama did not want him to address congress. i mean that is so emblematic of the years that this government has had at odds between the executive branch and the legislative branch. i don't think that netanyahu is saying anything new in terms of his saber rattling, but the fact that he has gone direct to congress i think does on the margins. i disagree with steve on this. i think it does contribute to the market's decline. >> what i want to know is there a better reason today to buy or
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sell stocks? >> well, i think when i'm looking at right now, i would say the opportunity is right now. what's getting hit the most right now and does that make sense. i'm looking at some of the industrial names getting hit significantly today, some of the big health care names as well getting hit today. maybe there's some opportunities there. i mean the market was actually going down be6x"1%ñ netanyahu g in front of everybody. let's be honest. >> that is true. >> the s&p down about 11 or 12, now down about 16. is that significant? i don't know necessarily that that's made any more significant. i think the one thing steve did bring up, volatility, we got into the 12z yesterday. we were talking about volatility going into february in the low 20s. significant sell-off, great opportunity for people to protect portfolios. want to remain a bull, great, i tend to be in that category. why not have protection even now today with the trading 13, maybe 14, great opportunity to buy if you want to buy and have that protection at a low price. >> get ourí%nd guys to pull up biotech index, ibb, biotech
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index because if you're looking michael block at an area you may see some pressure start to build in the parts of the nasdaq that have risen the most being biotech maybe that's where it is now, down 1.5%. the biotech, the ibb is up 11% year to date, it's up 300% in some five years, carried a lot of the weight. >> yeah, sure. you know, the thing is a couple weeks ago sitting next to pete and made up my own term, biotechs a year ago got dudleyed. he talked about how?$hb biotech overvalued and sell-off in social media stocks. looking at the action i'm looking and saying this is nothing. this is -- there's nothing helping here. we just now a few minutes ago broke yesterday's lows in the s&p futures. not a lot happening here. we're getting a hiccup. want to buy dips. hopefully more of a dip to buy here. if so i'm looking to the sectors that gave leadership yesterday, things like consumer discretionary tech health care
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and biotech and protection is cheap. you want to do something, do something as a one by two on a put spread of a major index, nasdaq, russell, s&p, that's the way to go because there is a floor here and that's where we are. >> i had a conversation last evening at an event for charity i was at with big investors who suggested that the best opportunities today lie outside, excuse me, lie outside of the united states. i want to let you listen to what stan said yesterday on the closing bell and want to react with dan greenhouse of btig and the gang. can we listen to stan, please? >> i'm not all that excited n japan and europe. both those markets are not only cheaper than the u.s. they havep on the front y end, they're doing qe. one thing we learned in the united states about qe is
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definitely inflates financial asset prices. >> there's stan echoing what we've heard from other folks the liquiditity driven rally has the most gusto now elsewhere because of the fed likely raising interest rates sooner rather than later. >> i'm not sure i totally buy into the liquidity based argument. this has been something i've been debating with clients for some time now. no one has been able to fully articulate for me exactly how the liquidity purely based argument drives stock prices over a cycle. listen, you look at the relative valuation of japanese stocks, the u.s. stocks, at the bottom end of their range signifying more upside for japanese equities even though the top picks has been soaring, europe on a relative valuation standpoint more attractive than the u.s., something we've advocated for a while now, i think the bias is still to the upside. the problem you run into,
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particularly in the united states, is you're getting to the upper end of the valuation metrics that suggest forward returns are likely to be less appealing than we've seen previously and that comes alongside the same arguments we've heard for several years now, the high profit margin argument and so on and so forth. >> steve, you really in the hedge fund world often. you hear the views of many big and smart investors. what about what stan is saying, does that jive with what you're hearing the best plays right now don't lie in the united states? >> yeah. absolutely. for those that can play, aqwm&v of hedge funds have mandate to be just in the u.s. or don'tf4 know europe but those)iv that c play europe and japan are 6"ñ making money. the dax up 16% year to date. one of the best performing names has been al tease has been actually consolidating telecom. i bought it recently. so i do think there are great opportunities there. i just don't think you can buy the index there because it's
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weighted down by financials. you have to be select. seamens i was looking at today on the bottom. ñ opportunity there. as opposed to the u.s. where there's a tendency to sell industrials. >> i want to show you what crude oil is doing as well today. maybe moving a bit on the netanyahspeech. other headlines as well, perhaps driving the crude trade and ijñ bring it up because i want to look at the chart as kate kelly joins us with breaking news regarding one of the most successful oil traders ever. he is making some big and potentially market-moving news today. what do we have going on? >> thanks so much. oil trader andy haul out with his investor letter and the headline he closed out his bearish bets because he suspects the lows are more or less in in the market. the cure for low prices is low prices and the only question is how long will it take for those prices to work their magic. we think it might happen more quickly than many expect he
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says. adding analysts projecting 40 to $50 for this year and next are likely to be wrong or at least wrong sooner than they expect to be. as a result he says his fund has turned bullish. we might be premature, he says, but think the chance of seeing new lows for oil prices other than possibly at the very front of the wti curve is relatively small. volatility, though, he notes will remain and that's a factor to consider as you're positioning. hall says he expects year over year production growth to turn negative by the end of 2015 and notes applications for well permits in texas have dropped 60% since october and expects slower production in brazil and russia and says that seasonal and secular growth in demand will improve oil fundamentals by later this year. he has a full throated thesis there. known for being a bull and it seems he's returning to that posture. >> appears he's calling a bottom in some rcoe have t the chart this conversation as well. give people some context who may not know this name.
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>> absolutely. >> from a door knob. who is this guy and why should we be listening to him calling a bottom. >> he has been trading commodities many years. one of the most successful long-term track records. manages about $3.2 billion. the fund called aston back capital. andy hall may be closely associated with fi bro the commodity firm german when it started at the turn of the 19th century, mark rich and others came out of the school. hall recently parted ways with them, but he's got a long and noted track record. blackstone one of his keystone investors. people look at what he says as sometimes a litmus test for where the market is going. >> how about this call? >> i agree. 100%. you know that we've been calling the bottom for a few weeks now. if you look at west texas intermediate or brent, it has been at $50 plus or minus call it $3.50 for several weeks and that is in the oil markets rare that you get something in that tight and flat of a range for
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this long. that is the classic making of a bottom. scott, you know that we've put bp, that's our way of betting on it. but we think oil goes to 65 from here. we can't pick bottoms. you're not picking a top longer term. do you want to gamble the bottom? i say no. don't put a full position to work. leg into it. you will get a better opportunity. >> let me weigh in on the drillers per andy hall. he likes eog a stock he mentions in the letter and i understand he likes people with good assets
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in the permian. >> they will do well initially but systems have to come down if he's right about the price. >> steve is right on this on the drillers and i take exception with mr. hall at my peril. if you look at the national oil companies the saudi ramcos petro bras. world canceling contracts and we are weeks away from seeing smaller drillers go out of business. that one is too early to make the call on. >> eog as you're speaking and kate mentioned andy hall an investor in the stock -- >> he was as of the last filing period and mentioning it in the last letter. still bullish. >> a stock joe terranova has traded, had in his portfolio as well. you want to weigh in on the conversation before we move. >> concerned still about the demand side with respect to andy. steven mentioned the drillers. i'm worried about the enps. strong dollar and how that might ding up industrials. what will it do for the cost
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structure for some of the, you know, some of the enps even. i haven't heard anyone really address that. that's something i'm thinking about. >> both the price of oil you mentioned talking ability this grind between 48 and call it 52, but also the ovx look the volatility it has sustained above 50 now since mid-december scott, so until we see that break, i don't know necessarily -- to your point, steve, you don't have to rush in there but start feeling your way into some of the positions. >> kate gets the last word. >> i was going to raise another question but speaking of the cost structure, a huge capex cut across the industry. it's north of 30% since the peak i think. huge downturn in rig count. i think people are moving toward the more productive wells. you actually see production still going up. the argument in the letter is that's going to table off within 2015. >> consider the cost structure, haven't heard the answer, come down 20, 25% for the enp companies, renegotiated
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contracts with the service companies that have way too much capacity. >> right. an argument going on it's cheaper to drill in the permian than six months ago because of the service costs going down. >> kate, thanks so much. >> great stuff. coming up man versus machine. do you trust your money more with a human being or a robot? the ceo of wealth front had 2 billion reasons why investors don't need people. he's up after the break. then, we're hitting the links with jason day and justin. we're talking masters prep to tiger woods, so much more. and be a huge drop for shares of lumber liquidators down over 40%. an analyst says now is the time to buy. we're going to debate on that coming up too. see you in a few.
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sometimes romantic. there were tears in my eyes. and tears in my eyes. and so many little things that we learned were really the biggest things. through it all, we saved and had a retirement plan. and someone who listened and helped us along the way. because we always knew that someday the future would be the present. every someday needs a plan. talk with us about your retirement today. constipated? .yea dulcolax tablets can cause cramps but not phillips. it has magnesium and works more naturally than stimulant laxatives. for gentle cramp free relief of occasional constipation that works! mmm mmm live the regular life. at ally bank no branches equalsit's a fact.. kind of like mute buttons equal danger. ...that sound good? not being on this phone call sounds good. it's not muted. was that you jason? it was geoffrey! it was jason. it could've been brenda.
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welcome back. a look at your market picture. the dow jones industrial average sitting around the lows of the day, 125, s&p pulling back too after hitting an all-time high yesterday. nasdaq below 5,000. they call this the stock picker's market but what if the person picking the stocks in your portfolio isn't a human at
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all? so-called robo advisors are becoming popular including our next guest's company. wealth front has $2 billion under management. adam nash is the ceo with us live. it's good to see you again. >> great to be on here. >> we make the thing, if this is a stock picker's market and humans aren't picking the stocks, how can you be successful in what most say is a stock picker's market than the last couple years and robots picking stocks for you? >> wealth front has grown to be the largest auto plated investment out there because the fact is that professional investors have a hard enough time beating the indexes and individual do even worse. turns out having a good diversified portfolio keeping costs low being smart about taxes is the best way for most individual investors to invest their long-term money. >> who picks the stocks? is it an algorithm? >> no, i think that's one of the
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misperceptions. we have a great team of ph.d.s and cfas led by the renowned princeton economist who picks out the portfolios and does the research on the strategies. what wealth front does is automate those so everyone can have access at an exceptionally low cost. >> i'm confused about a couple things. so how is that not active management if you have ph.d.s and a research team picking out the stocks? why would you be better than active managers that have outperformed? there's always mediocrity but 25% does outperform the indexes each year. >> yeah, but which 25%. the research on this goes back four decades. burt wrote the book "a random walk down wall street". >> [ inaudible ]. >> well, there's back tests and then four decades of tests over rolling periods. the truth is what our ph.d.s do is look at the academic research
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evaluate asset classes balance them out strategies like tax loss harvesting when to rebalance your portfolio, but it's passive. like all the strategies are purely based on market data, market prices. there's no picking of which sector is going to be hot this year or which asset class will outperform. we believe you can't predict that but what you can do is keep your fees low, stay diversified and be smart about taxes. >> before we go, we say in the intro $2 billion under management. who is give you that money sp? >> most of our investors in the 20s and 30s young people focused on their personal lives an careers. they like the idea of an an automated investment service. we were less than $100 million two years ago and now over $20 billion. 20 times in two years. >> good to talk to you. thanks so much. >> no problem. thanks for having me. >> coming up bullish on lumber lick daters. the analyst upgrading the stock
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welcome back. they call it the all mighty dollar and today the dollar index touched an 11-year high. jackie deangelis has more on that. >> good afternoon to you, scott. taking a bit of a breather right now but you're right this morning we saw the dollar index hit a level we haven't seen since september of 2003. remarkable. jim, what's driving the dollar right now? how much higher do we go? some telling me 100 not far off. >> i don't think you can talk about the dollar without talking about europe that's the primary driver and the question is, are there too many people short the euro and is -- does europe have the ability to paper over their problems and push them off to later? i believe the answer to that second question is yes, and there could be a short squeeze in europe. the dollar and euro are in a
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range right now and unless the euro settles under about 111ish the dollar takes a break from here. >> jeff, i'm curious to get your take on this, usually when we see dollar strength we see commodities go down. oil bucking the trend. will a stronger dollar long term give commodities the next leg lower? >> i think so, jackie. the same way i'm going to give him a four, in the on-line show, look what happened when the dollar spiked crushed copper. big move in copper. suddenly a global undercurrent out of china but the rise in dollar will continue to hurt commodities. win for the u.s. consumer. >> for more on the dollar tune into the on-line show at the top of the hour and talking to oppenheimer's chief economist jerry webman joining us as well, the trades for you, 1:00 p.m., futures now.cnbc.com. >> coming up alibaba shares falling to their lowest level since the ipo. up next we have the trades and this is our very own steve
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weiss. said his swing is a little unorthodox. >> wow. >> gets the job done, baby. gets it done. >> there it is. call your chiropractor. two pro golfers on the half. maybe they have advice for mr. weiss. a retail edition of the trader blitz. four trades on four stocks making news all coming up next on the half. at ally bank no branches equals great rates. it's a fact. kind of like shopping hungry equals overshopping.
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hello, everyone. i'm sue herera. here's your news update. israeli prime minister benjamin netanyahu spoke before a joint meeting of congress this morning. he made an impassioned case against a nuclear agreement with iran and also thanked president obama and america for its continued support for israel. former cia director and u.s. army david petraeus has pleaded guilty in federal court to a charge of unauthorized removal and retention of classified information. the charges stemming from his personal relationship with a biographer. a spectacular group of pictures from southern chile where one of south america's most active volcanos erupted
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this morning spewing heavy smoke as lava surged down slopes. thousands of people were evacuated. chile's president announced she will travel to the site and ask residents to remain calm. it seems even former vice presidents get called for jury duty. al gore reported in davidson county, tennessee, ready to serve but was dismissed because he had a scheduling conflict if the trial ran long. he waited if line 5efyu all the 167 other people who reported as well. you're up to date. that's our cnbc news update this hour. back to you, scott. >> thanks so much. let's go to dominic chu now for a market flash. look at some tech names moving. >> that's right. let's look at some of these here. start with apple, oppenheimer lifted their price target to $155 a share and maintained their outperform rating. oppenheimer was citing strong potential for the apple sales watch when reese load -- released later this month. alibaba falling after report of
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fake accounts used to help vendors pad their sales numbers and the company facing fines in taiwan for breaking investment rules. google shares the internet giant announcing shares to create its own wireless service. for now the company says its service will be small, not meant to compete with four major carriers but many expect google service will grow over time. back over to you. >> thanks so much. take these one by one. joe terranova made big news on the show when he sold out of apple enwhat he called a short-term trade in his portfolio. what do we make of the stock here? might not have been a bad move? >> i still like the stock. it's not in my halftime portfolio but it is in the core portfolio that we run for clients. however, i think joe made the right call. basically what he was saying it's gotten ahead of itself not his top five trade. >> even if it hasn't gotten ahead of itself if the market he said was going to take -- was going to become a little more
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volatile, if the market was going to pull back, it would be more than likely apple would pull back with it, right? >> yeah. i heard that argument but don't think i agree because if you look at eog or pioneer some of the things he's been in those have high betas relative to the market. i'm not sure i agree with that part of it. >> alibaba, weight going on? >> there's a bad news story. >> the investors have lost some level of kf sdmeens i was one of the bigger bulls and continue to hold this along with apple. they're starting to shake me in the alibaba because first they came out with the news that government was looking into things right in front of earnings which wasn't very great time timing ins terms of alibaba's delivery and hearing about fake customers. >> the chinese government came out and said we have an investigation into alibaba or we had it, but we didn't want to talk about it before they priced the ipo. you're not invested in alibaba. >> i invested in alibaba. invest in the chinese government
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with opaque accounting and fraud -- >> yes. >> why don't you vote with your feet? >> i like the original story, but now i'm -- i am starting to shake a little bit. i'm not totally shaken out of this name. this is not a company that just started in the last two years, three years, four years. this is a mature company. it's one of the reasons i liked it so much. it's interesting the timing of the government and some of these investigations. >> all right. let's turn our attention to the big business of golf. jason day dustin johnson in miami facing off against other pro athletes and dominic chu with us to set the zone. >> so we talk about this and what dustin and jason and host of tailor made adidas athletes do is bridge the gap between golf and other sports and show off the new products. i guess maybe we'll start with you guys, a couple questions about where you guys sit with your respective careers right now. dustin, maybe you first. you're on the comeback trail
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right now. when it comes to golf and what's happening with the game, what are you doing right now so that you can be a top performing athlete in the game of golf again? we know you've taken a bit of a break from the game overall? what do you say? >> well, you know, right now i'm focusing on the physical aspect. i'm in the gym a bunch. i'm concentrating on that. it's something in the past that i -- i worked on, but not quite as hard, so i think that's something that's really important nowadays in golf, being a lot more athletic, more physical, you know, being stronger and stuff. so that's one thing that i'm working on. i can definitely see an improvement in my game and, you know, definitely my physical fitness. >> now jason, the question then goes to you here. you are on a bit of a hot streak. you've had a bit of momentum behind you here. a win now going towards the masters, about a month away. what are you doing to try to maintain jason some of the momentum, positive stuff going for you right now?
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>> right. yeah. i mean i got off to a great start this year, off to a great start last year and then injuries derailed my year. off to a good start this year. looking forward to playing this week. just really the process getting -- making sure the little stuff is handled right. working hard and then really trying to prepare the best i can for each tournament i'm playing. i've been doing a lot of work, a lot of preparation for this week. it's going to be tough kps here this week, but we're up for the challenge. >> it's funny, guys, this is scott, you're taking part in this multisport challenge and, you know, you guys must scoff at the notion that golfers are not athletes and by the way, dj, i'm not buying this nonsense you didn't work that hard if the gym because you've been jacked as long as everybody on tv has been watching you play and i know you've been doing stuff too, jason, don't give me that
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nonsense. >> no, i did. i was in the gym, but i was not really religious about it. now i'm definitely a lot more where i'm going, you know, every day pretty much. i take one day off a week. but, you know, like during tournaments, i wouldn't work out. i would just kind of do warmups and stretch and stuff like that, but now i'm starting to where i lift every day, whether i'm playing or not playing. it doesn't help. i feel a lot better and i'm getting a lot stronger. and then, obviously, today we're out here playing in competitions against some of the other athletes around the area and we had a good time and i definitely could say i did win my three-point shooting contest against shane battierer so that was cool. >> good for you. thanks for joining us. we appreciate it and good luck the rest of the way and in the masters which we can't wait for. if nothing else, it will mean that spring is here. jason day and dustin johnson and dom chu. >> thanks for having us. >> they will be in action on
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thursday on the gad kadsedy lack championship. we go under the radar, one of the traders is flagging a run up in firearm stocks and hard hit lumber liquidators getting an upgrade to buy. the analyst that made the call is coming up to defend that position. >> the halftime report with scott wapner is the place for market moving interviews. >> when you see large currency and price moves in a commodity like oil you have to be worried. >> real money. >> what makes things cheap is uncertainty. >> real debate. >> buy every canadian oil stock there is. >> the most profitable hour of the trading day. >> do you think dick costolo will leave that job some. >> we think there's a good chance he's not there within a year. >> the halftime report, week days at noon eastern.
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coming up on "power lunch" sop of for nasdaq 5,000, the biggest loser of the three major averages this hour. if you are in this market should you be in growth or value? a tale of two retailers this by beating earnings target announcing a major move to bring younger shoppers ahead of a big investor meeting where the street stands in these two stocks and bonds in a bubble? you have to hear what one five
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starr bond investor is saying. back over to scott. >> thank you so much. time to go under the radar. three things traders are watching you might not be focused on today. >> one of them when you look at the certain area right now and you look over at smith & wesson specifically, but both two categories here when you look at the ammo producers, scott, something going on there and what's going on is, the president certainly going after these two companies when talking about ammo. some of the most popular used ammos in the rifles caused a run on those stocks. we saw those elevate rapidly over the last couple weeks. they've had a great year to date up nearly 50%. i think it's something you want to be paying attention to right now not trading off earnings. these are trading off news headlines and concerns going forward from here. >> steve? >> we've got supreme court arguments tomorrow on the affordable care act. i don't expect any decisions but people have been trying to read into the line of questioning by the supreme court justices. this has put incredible pressure on the hospitals who have
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started to recover. wait for a decision in a few months. tough to roll it back. that's not going to merit. i still think there's value in the sector except i'm cautious on mid-cap and small cap biotech. >> everyone talking about the nasdaq an tech but no one is talking about the transports. they peaked the end of last year and have not kept up. ups not being up to snuff but it's been the airlines getting the stick end of the energy trade and even the rails are wagging. not a lot of strength or leadership there. it would be good to see transports pick up and add to market strength. >> coming up, pete najarian seeing something unusual in one casino company. what it is. and how about the upgrade for lumber liquidators. the analyst who made the call, the stock up 13% today. of course it was down 40% over the last week. this analyst says fears are overblown. that's not what short seller
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whitney had to say yesterday. >> you would actually short more of it if you could? >> if i could. i believe this will be a short i never to cover that it will go to zero, the company will collapse in a wave of lawsuits. >> the bull case for lumber liquidators coming up on the half. say you're a finance guy. a farmer. a researcher. you used to depend on experience. the internet. your gut. today you can use ibm watson analytics. it can make sense of all kinds of data. uncover hidden correlations and new opportunities. and give recommendations with more confidence on who will buy. what to make. where to plant. which helps you make smarter decisions. there's a new way to work and it's made with ibm. we are the thinkers. the job jugglers.
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by now you know when something unusual happens one of the najarians finds it tries to make money on it. pete, what do you see today? >> when you take a look at this chart you can see what's been happening to this stock up around be $28. had a significant drop down here. and now today we're seeing the stock lift up a little bit started to see a move. why are we seeing that move? well because there are numbers, they reported casino numbers for february off 48%. that doesn't sound great, right? they're expecting them to be off 53%. it was better than the absolute disaster they expected. they're off 30% when you go back to the december numbers as well. but then today suddenly we started to see huge buying in april. the april 26 calls, suddenly 0 5,000 lot trades out there, several thousand since that time started trading as well but started buying around calls at the 80 cent level. see the spike from yesterday. so very aggressively positioning, buying a little time, looking for the stock to
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make a nice jump up. all of these names have been hit. all these names hit basically because macau numbers have been weak. >> open order here. i is it have an open order. i'm not filled. if i get filled i'll let you know. i have no position. >> let us know. thank you. >> yep. >> let's move to the latest in the lumber liquidators saga. one wall street analyst out today with what we think is a bold call. saying the fears raised by short sellers including whitney tilson on "60 minutes" are overblown, upgraded the stock to a buy. dave strausser of jenny is the analyst behind the call and joys joins us live from new york city. welcome. >> thank you. >> what leads you to believe that they're overblown? >> well, i think what we have is different testing, different types of testing, that the testing they did on cbs on "60 minutes" is not the testing that you need to do to get certified under the regulations.
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you know, just to give it to you in a second the testing gets done at the plants in china and it's based on the fiber boards. that's where the reg -- how you get compliance. that's where the compliance issue is and that's where -- that testing lumber liquidators has done and done effectively they've done it by, you know, the way that they're supposed to having a third party certify or do it as well as then having do their own random checks which are not necessary but do it as a second check, and then they do it again as a finished product. so, you know, whereas what they did on "60 minutes" they broke it in half and did a different type of test which is pot what the compliant issue is about. >> you sound like a company spokesperson. >> okay. >> if the wood itself has higher levels of formaldehyde than are permitted under california law, and this company is hit with --
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as they are, with a wave of lawsuits, caught up in litigation, have to rip up floors in the hundred thousand or so homes that the lawyers in that piecethere? >> of course, there's risk. the stock is down $25. no question. i'm not making an argument that there's not risk, but you just gave what "607 minutes" said. there are -- there is a very different -- you know, if they're compliant with carb, then they're compliant. you look at the osha standards. they're six or seven times more. >> it's more than what showed up in the testing on cbs. osha is the one that protects the insulators of this, telling you to some degree what probably, you know, the level of fear is. i mean, i spent a lot of time yesterday reading these carb initiatives, and i did speak to lumber a fair amount yesterday about it as i was reading each time i was reading through the different, you know, regulations, and, you know, at
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some point you do a commonsense test, and you think are these guys really willing over a $4 million or $5 million which is -- maybe $6 million, which is essentially what the cost differential is which they brought their entire company risking jail over $5 million or $6 million at the same time they've had six or 800 basis points in marshallingin improvement. >> first of all, i'm disapointed. i hired you as a business school student to intern. i hired you -- >> i made you -- >> for better or worse, dave. >> those lessons that i taught you have seemed to, like, left the house. let's look at it this way. does anything really have to be wrong? right now we've got a very damaged brand. >> yep. >> that the consumer is going to go to other brands in a very competitive marketplace. home depot is not standing still. does it really matter if lumber liquidators was compolice it in this?
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the issue is it's got chemicals that are harmful to you that res scaping. if i buy wood flooring -- >> that's not a true statement. chemicals that are harmful to me that are escaping. that's not a factual statement, steve, just for the -- just to get it straight. there's no fact. listen, of course, there's competitive issues here, and if you are home depot and lowe's, those are great companies, and they're going to go very aggressive at this, and i highlighted this as a risk. i don't know what the sales impact is going to be here, but looking at it as a stock, if these guys do anything but a disastrous turn, they're going to be fined as a stock. i mean, there's -- if they don't lose sales, it would be nothing short of a miracle. this f they don't lose a decent amount of sales, it would be nothing short of a miracle, but the stock is trading as if they're on the verge of these contingent liabilities which i just don't think are going to happen. >> you know how the shorts are going to be, david. there's blood in the water, and they press it. >> you know, it's down 40% since last thursday wrush know, they are pressing it pretty
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aggressively right now. if you're going to make moment, this is a moment you have to do it here. it's not without risk, this -- you know, this call. i get that. i mean, the more work i did yesterday, i came out and said these guys are compliant. if it turns out -- ultimately they'll get through it. >> of the issues raised in the "60 minutes" piece factor in the upgrade. i mean, i -- they definitely helped me get along to this point. trust me, i feel as i'm as cynical as any person in the market when it comes to talking to management teams or anything. when i got off the phone, having read -- spent an hour beforehand, an hour after hand
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afterwards reading the various carb regulations, the things that they said seem to coincide with what i was reading giving me some confidence that they were saying is legitimate. they definitely help me along. fairness a year ago, two years ago, i did not trust -- i did not -- it's not trust. i didn't agree with these guys. i never upgraded the stock. i missed a big move in the stock because i was worried about a handful of things, and i've had it with a lot of companies, but my belief is you trust a company or management team until they betray that trust. >> does he look a lot older than me with all that gray hair? >> he is still there. >> i know he is. >> you can tell us all the dirty secrets about steve weiss. >> i have a lot. >> you do. everybody who comes into contact with him does. we'll talk to you later. >> i don't want to do it in person. >> all right.
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we'll talk to you again soon. >> i do want to note that, yes, the stock was up, obviously. take a look at the chart and intraday. certainly moved off of where it was during our interview. i don't know if this gentleman is making what the market perceives to be too much a leap of faith or what. but maybe there's some lack of conviction at least among investors as to this upgrade today. >> once you hear from the analysts themselves. >> i mean, what i want to hear from him is i want to hear from home depot and lowe's. he talks to them. whether it's short-term or long-term, that's a huge affect on the stock. i don't see -- i wouldn't be jumping in with both feet before i know what those guys are thinking. >> look at how long it took young to recover. that was china from tainted chicken. it just -- if you have a choice, why go there? >> all right. we'll take a quick break and do final trades on the other side. plus, the worst trade if you are
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the united states population is going to grow by over 90 million peoplever the next 40 years and almost all the growth is going to be in cities.
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what's the healthiest and best way for them to grow so that they really become cauldrons of prosperity and cities of opportunity? what we have found is that if that family is moved info safe, clean, affordable housing, places that have access to great school systems, access to jobs and multiple transportation modes then neighborhood begins to thrive and really really take off. the oxygen of community redevelopment is financing and all this rebuilding that happened could not have happened without organizations like citi. citi has formed a partnership with our company so that we can take all the lessons from the revitalization of urban america to other cities so we are now working in chicago, and in washington d.c., and newark. it's amazing how important safe affordable housing is to the future of our society.
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>> today's worst trade. old single people. >> i've had older. >> all right. those characters from "the grand budapest hotel" will have to pay an extra fee for tinder's premium services. tinder plus users under 30 have to pay $10 a month while users over 30 have to pay double. >> we're all paying double here. >> right. >> it's going downhill. get it back. >> not going to comment on that. >> thanks. >> let's just do final trades. >> i think it's been moving up nicely. it's still not that far off where it was in 2008. >> citi? >> citi. never sold a share. >> this is dangerous. he just took my final trade or
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at least we're in agreement. what do we do about that? citi into the fed stress test next week, long. >> pete. >> i like the financials as well. citi being one of them. aal, these airlines are going higher. >> why the tlt? >> everyone is going their own way on it. everyone hates them. i am going to buy them. next week i squash the banks. >> halftime is over. power lunch and the second half of the trading day start right now. >> scott, folks, thanks very much. so much for the nasdaq 5,000. one day wonder there. stocks selling off a bit at this hour. the nasdaq, the biggest loser. the dow down triple digits as you see right there. >> well, if you are in this market, where should you be? growth stocks or value stocks in the u.s. or in yump europe. >> best buy beating earnings estimates and announcing a special dividend. the stock up 50% in the past we're. >> and is the electronics retailer back? is best buy a buy? >> and auto sales taking a

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