gold also off its highs, so perhaps the market settling down a bit after those initial revolutions. >> it was a quick reflux, it's come back. 4220 on the s&p has been the level it's hung around for a while now. bottom of the range. >> that is it for "squawk alley. we're watching the major averages, still not doing great, but off their lows again we're going to hand it off to halftime back at headquarters. and welcome to the "halftime report." i'm scott wapner our top trade this hour, fed fears. the big warning today from jamie dimon that every investor needs to hear. the are the markets ready for the end of easing? with us today, joe terranova, stephanie link also with us, steve liesman, and from chicago, our own rick santelli let's begin with those comments today from jpmorgan boss, jamie dooild, te diamond, telling a gathering in

europe, the unwind could catch the markets by surprise. mr. diamond saying, quote, we've never had qe like this before we've never had unwind like this before when that happens of size and substance, stit could be a litte more disruptive than people think. we act like we know exactly what's going to happen and we don't. steve liesman, i go to you first. what do you make of dimon's comments >> jamie's on the front lines there. he's going to be part of the process of unwinding the balance sheet. and i think his words of caution should be taken seriously. i think two things, though i think the fed has kind of preempted these concerns, if you look at how they're doing, balance sheet, they've sort of put it on auto pilot, but they have a switch where they can turn it out if things turn out badly. i think what the fed wants to see is wants to see the market behave in this process and not be disrupted by the process. and i think they'll turn it off, if they do so jamie's right to be cautious.

he's a guy who's going to -- and his bank are going to feel the effects of this. but i think the fed has this very slow ramp-up that allows the market to, yes -- and the only other thing i would say, ma scott, is that the market has been told about this repeatedly. its reaction has been really benign >> joe, the chances that this gets ugly and rates get away from all of the central banks and the stock market pays the ultimate price what's the likelihood of that? >> if there's a surprise so the federal reserve has done a very good job in communicating the strategy whether you agree with the strategy or not, they've been very transparent about it and telegrafd what they were going to do. if they were to surprise markets, and that possibility does exist, then you could see dislocations >> i think we're taking this the wrong way. i think dimon is saying, i don't think we're worried about the fed doing anything to surprise the market, the fed's going to do what it does, but the market reaction could be a little different than people think. those are two different things >> if the fed does what it intends to do, which is one more normalization of rates before the end of the year, and then

begins to reduce the balance sheet in 2018, it's already telegraphed to the market. the market should be prepared for that the one area of the market where you would have concern is the mbs market, nothing to do with equities thelsy ies themselves if the federal reserve get a little bit hotter, see asset prices rise a little bit more and come forth with a little bit more of an aggressive strategy, then i think you have to be concerned. >> rick, this seems to be dimon saying, look, you can scale the summit, but that doesn't mean coming down the mountain is a walk in the park you could still fall >> you know, i think the best way to understand this is to actually look at what they've done and what they've accomplished i think that's a good place to start. and then to ask, if the federal reserve or the ecb or the bank of japan or the bank of england would have done it all again look at their balance sheets, look at their percentage of ownership in the securities markets outside of the fed, look at the ownership of other central banks and corporate securities and equities and

etfs and after all of that, what did we end up with the last ten years? okay did we get to the level of pricing they wanted? no did we get anywhere near the level of growth they wanted? no did the banks do okay? yes, with an exclamation point >> they didn't have much help, though >> not much help at all. they got interest on reserves, they kept the cash, and the federal reserve now owns all the securities that are going to be for sale i don't know >> the big fiscal policy helped, though they were on the island all by themselves, right? they were on the island all by themselves >> listen, i hope it turns out well, but i think it's naive for any other rationale other than the one jamie described. we have no idea, it's the first mercury capsule and we don't know where it's going to land. >> this is a sobering sort of view from dimon, in some respects, jim, we just don't know what's going to happen. >> that's exactly right. >> and investors in the stock

market need to be paying more attention than they are. >> that's exactly right. and the key word he used is "could." the markets could get caught by surprised by this. i think the markets have already digested that. think about this they know we're going to get probably one more rate hike this year, maybe two next year. that takes the fed funds rate to # the% if you had a modestly steep yield curve and 125 basis points between the fed funds rate and the ten-year, that would give you 3.25, maybe even make it 3.5 on the ten-year. that's not going to stifle this economy. that's what the moain point is and 2013, we touched 3% on the ten year, narcotics fl sthe mar out, but the world kept turning. and the last thing i want to point out is on inflation, joe, i think you alluded to this, you just don't have it, right? and it's not so much wage inflation. wage inflation, i think you've got a reverse phillips curve going on here. because commodity prices are so

low, because gasoline and heating oil prices are so low, that's why workers aren't demanding higher wages just a thought steve? >> i don't know where rick's been living the last ten years, i guess, chicago but almost certainly the fed would do it again. they feel like they would stabilize bond markets -- >> oh, sure, they would. >> -- in a crisis, they feel like they stabilized growth, brought down the unemployment rate >> at 1.6% no productivity. >> they stabilized inflation >> not only that, rick >> and balance sheets taller than the empire state building >> guys, don't talk over each other. it's like a word salad one at a time. steve, go. >> i thought i had the floor the fed feels like they had accomplished their goals with quantitative easing. not only that, with europe followed the fed in 2015 japan in 2013. europe followed in 2015. it is part of the arsenal now. and plus, there's an advantage they have here when you buy securities in a

crisis, you have a big effect. when you sell them not in a crisis, there's a lesser effect. jamie dimon may be right there may be a lot of uncertainty right now over this process. but we think that the idea that they would be reducing the balance sheet, not in a crisis, selling into liquid markets would have less an effect than the positive effects when we bought them. >> i think our point -- >> this is like thelma and louise central bank style without the t-bird >> i think, steph, we're trying to figure out, a, are investors in this current stock market too come pla complacent, to the risks that could exist by virtue of not what's happening with the fed, but what rates could potentially good >> sure, there's risk. and this is such a new situation for everyone we don't know how it's going to play out jamie dimon is pretty accurate in what he's saying. but the one thing identify he'v over the last several years from the fed is that they're data dependent. and they're looking at the economy, they're looking at the markets and at inflation and jobs and rates

and i don't think that they are so quick to put the brakes on after they just spent many, many years trying to take the brakes off and stimulate growth >> look at disruption or maybe in certain sectors, okay, that happened over the last few weeks. rates ticked up, right and everybody started selling, you know, certain areas of the market and piling into other areas. >> that's okay what's wrong with that what's wrong with rotation do you think it's really healthy to have maybe five or six stocks in the market and the s&p 500 account to 60% of the year-to-date returns, like we've seen i don't think that's healthy i think rotation is very healthy. and the rotation that we're seeing into the cyclicals suggests there's better global and that the market can embrace higher rates, not really super-high rate, but gradual rates and you have a fed that's very controlled a to the moment. we don't know how it's going to turn out, but at least they're not completely hawkish and they're going to -- they're really at these dire straits >> i would agree with that rotation is a healthy thing for the market i think the real question here is liquidity >> i'm not suggesting it's not a

healthy thing for the market i'm simply pointing out it took not a humongous raise in rates for people to all of a sudden being looking at their portfolio saying, maybe i shouldn't be in this area, maybe i should be in the banks. rates stofort of stopped there d people are all of a sudden buying tech back >> right, but a lot of the moves that people have made have been incorrect because things that sold off have come right back again. i think the issue and the concern is liquidity and are you in liquid-type instruments, because when these central banks take away the sea of liquidity that's been provided to the capital markets, you have a situation, potentially, where you have an absence of liquidity and i think that's a risk for the market place that just boils down to the individual investor. what do you own? do you own something that's deeply a liquid. know that now ahead of what could potentially be a liquidity crisis >> pete? >> scott, what's done is done. i know rick would agree with me on this. we have to trade or invest within the markets that we are

delivered, right so you go back, the financial crisis and all of the easing and everything that's going on -- >> but don't you have to anticipate, pete -- >> yeah? >> don't you have to anticipate -- i know this is so overused, but where the puck is going, not where it was. >> yes >> not what the ice looks like now, what it's going to look like a year from now >> right it's always -- you're always forward lacking. and i think when you look at the fed right now, they are going off of the data and they have been very transparent, as the rest of the panel's all talked about. i think we have a fed that actually has a pretty decent handle on where and when they want to do some of this rate and all the tightening and all the things that everybody is expecting from the fed going forward at this point in time. but i think the interesting thing is, yes, scott, and that's why when we sit here and continually talk about low volatility in the market, can you be in? should you be getting out of certain sectors as we're going through the rotation, i think the healthy market has been rotating steadily throughout the last couple of years, from one

sector to the next that's been very healthy for it. and that's why i think you still need to protect, though. you protect when you can you don't wait for the storms to come jamie's saying, this could happen this could be a storm. well, you've got to prepare for those kind of storms and that's why you protect your portfolio. >> i think another thing to think about here is the market -- i think this is the point you're making, scott the market is being very come pla complacent and benign about the risks that may come. that's a fair point. but i think what the market may also be doing, i certainly am, is looking at these rate hikes as a healthy thing something that -- we've got to think about how long this expansion is, seven years. at some point, i think tony dwyer was on two weeks ago and he said some time in 2019, you should be looking at a recession. when that happens, you want the fed to be able to cut interest rates far enough that it doesn't have to embark upon quantitative easing again, but if it did, having a lower balance sheet will help them do that the point i'm driving at is i

think the market wants the fed to have some ammo in its quiver when a recession does happen >> i think maybe people think that the fed's going to land the plane just perfectly and maybe it doesn't happen that way >> listen, i'm sure rick's going to yell at me for this >> there are a lot of people talking about a summer rally, stocks are going to go up to, you know, 2,800 next year. that's a dwyer target. >> yep >> not taking into consideration a crash by the fed that the plane doesn't come in perfectly. >> look, rick's going to yell at me for this and it's fine. i think the fed did a very good job over the last eight years. i really did they pulled the fat out of the fire when things were really going foor poorly and they haven't crashed the plane after many potential red wi headwinds of raising sbrrinteret rates. >> they've only started -- >> you can make the argument we were talking about that first rate hike for how long it was torturous we were tortured by it >> and they pulled back last year they thought they were going to

raise last year four times and they only did, what, once? >> that's a good point >> the point of it is that they're looking at the data realtime and they've made it very clear that that's what they're doing. i'm not saying they're going to be perfect -- >> they were wrong before. >> i agree but they're not going to go really and push and put the pedal to the metal >> steve >> i want to make two points one is to add to stephanie's idea the fed is going to be data dependent and also going to be market dependent if this process ends up going badly, wias jamie suggested it could, i think the fed will pull back and reconsider the idea of balance sheet reduction. the second thing, i think it was joe who talked about drying up liquidity. let's remember, europe and japan, they're talking or thinking about possibly stopping this but there's a sea of liquidity from that. the fed is still going end to up with a lower -- with a lower balance sheet, but still a very large balance sheet. if you got 2 feet of water in the basement and you bring it down to a foot, there's still a lot of liquidity in the

basement >> you still need to call in the folks at servepro. good to have you on. we're watchi ining the markets today. stocks are well off their lows if you were just tuning in right now, you missed a lot of the action in the last hour. after taking a sharp move down after donald trump jr. released e-mail exchanges he had with a person promising damaging information about hillary clinton, stocks have come almost all the way back dow's only down now five points. we're down triple digits our john harwood there with the very latest there. what a story this is in and of itself, john, but certainly the market reaction we've watched in the last 45 minutes, too >> well, it's interesting, and who knows what the market is reacting to or whether there was an initial shock and then people thought about it and said, well, maybe this isn't that big a deal but as a political matter and an investigative matter for the senate committees and investigative committees, this is a very big deal because it confirms exactly what

the trump white house has said did not happen they talked about no indication of collusion with the russian government well, in this e-mail -- set of e-mail exchanges, donald trump was told explicitly that the information that the lawyer was going to be giving him was part of the russia government's attempt to help donald trump further, another of the e-mails described natalia ves l in its cayya as the russian government attorney and donald trump said, if this is what it sounds like, i love it you had the eagerness of donald trump's jr. part to accept the information. he roped in paul manafort and jared kushner, and it was described as coming from the russian government donald trump and donald trump jr. in 2016 ridiculed that idea. said there's no evidence of it here's some evidence >> john harwood, thanks so much. there's the story in the stock market big, big turnaround as we're coming on the air.

dow is only down 9 i say, only down, because it was down 100 points in the last 30 or 40 minutes. here's what else is coming up on the "halftime report". >> deutsche bank downplays apple's next iphone and says expectations for the tech giant aren't too high. our traders take on the stock in our call of the day. plus, it's day two of the quarterly report the big wins and loss from our desk in the second quarter the "halftime report" with ott pn a t tde iscwaerndherarss back in two minutes.

welcome back now to the two biggest stock stories of the day snap falling below its $17 ipo price and blue apron simply falling like a kitchen knife pete, what do you make of these moves today? we can take snap first, which, by the way, the lead underwriter, morgan stanley, downgrades today what does that tell you? >> yeah, well, it's pretty interesting. i mean, you know, we talked about this the day of the ipo, though, scott. we sat on the set and talked about, when you go out as an ipo and you're already beginning the deceleration process, that's an issue. i actually had a piece of this stock at $17 or wherever the ipo price was. and suddenly we got that big lurch forward. now, i didn't get the full amount, but at the same time, anytime you go up against incredible competition and you're already decelerating, that's a problem whether it's blue apron or you look over at snap. i mean, snap is going head-to-head with facebook and we all knew that going into

this whole thing and suddenly, we see this stock start to move to the downside. it's understandable. i think there's further downside i actually think we see single digits, at some point. >> we haven't even had, jimmy, the lockup expiration yet. >> right >> that's coming next month, right? >> honestly, i'm not in the stock -- >> can you get in front of that? >> no. and look, you have some other problems, too, including the valuation combined with user growth which just isn't meeting what the expectations were if you want to have the valuation that you had immediately after ty po, you have to have the user growth you can see it, they're starting to flatten off that's just not where you're going to support this stock. >> part of the note today says the ad product is not evolving or improving as quickly as we expected instagram competition is also increasing duh! >> i think we've talked about this >> they missed the quarter right out of the gate. that's all you need to know. when any company does that, you sell >> so that's the point that ross levenson made right on this program. >> you break price at 17

and have another wave of selling. this is in addition to all the competition fears that people have, the lockup, like you guys were just talking about. so there's no reason to get in front of this and be a hero. i think you wait until the lockup and see where the dust settles. and then i think it could get interesting if you pull back enough but when you miss the quarter right out of the gate, you are in the penalty box for a long time >> you need to have a good quarter at some point in the future facebook came out of the gates and it finally had that quarter -- >> they were growing -- >> facebook had the messy ipo. >> yes, they weregrowing their user count >> that story may have started differently had the ipo gone smooth >> it might have, but you still, once they reported that solid quarter, that's when it got its footing and it began to really accelerate higher. i think what snap, first of all, it's instagram dominance more than anything else they're getting crushed by instagram. and you need to see a quarter that provides visibility and growth and profits >> yep how about this blue apron thing, too? >> ugly. i think someone put a $2 price

target on it today at sell >> pick your descriptor. >> i can't believe they got the deal done with all of this going on with amazon and whole foods the fact that they were able to get it done with all the uncertainty about what's the end market, what's the competition, and you have this big behemoth that's just getting into their space. so, i -- >> that's exactly right. this has the feel -- look, everybody's going to see their own patterns, but this has the feel of groupon, which came out of the gates, hit the ground hard, but then competition there was no barrier to competition. i think, unfortunately, it's the same thing with blue apron that's what we're talking about here >> let's talk about apple. street expectations for that company may be too high. and next year's super cycle is more likely to be just a cycle, says deutsche bank that's our call of the day today. the analyst is sherri subscribensubscribkribner and joins us from deutsche bank. welcome, joining us on the phone. you say first line of your note, we believe expectations are too high and we believe investors will be disappointed by iphones growth in fiscal year '18 and

'19. why so >> well, if you look at the install base of apple and the potential for apple to grow in fiscal '18, basically, we think the number for ifophone use in fiscal '18 is somewhere around 230 million units. if you look back to the best cycle that apple has ever had, the iphone 3 cycle about six years ago, that's about what they did in fiscal '16 the market is much more competitive than it was three years ago. if you look at china, they're losing share in china, there's much more competition in china, and the install base includes a lot of these secondary and used phones and those are not phones that will potentially upgrade to the new phone when it comes out in fiscal '18 if you look at all the variables, it's hard to see how they outgrow their best year, which was fiscal '18 >> it just doesn't seem to you that you're about right now for an upgrade cycle to take hold strongly, if the phone has the kind of advancements that people expect >> well, we are modeling that

they have a good year in fiscal '18, right but again, it's somewhere similar to the very good year they had in fiscal '15 you should have a refresh, roughry every 2.7 years as phones, so we're at three years now, so you will see that refresh. the market is baking in that we'll add an additional 13 million users to that install base, which seems optimistic, given the smartphone market's not growing, they're losing share in the biggest markets that are china and the rest of the world. and the price points are very high you mentioned the new features on the phone those features are available on other phones, including snuamsug and some of the chinese phones already. features aren't really driving people to upgrade their phones anymore. people are upgrading their phones when they need a new phone. >> what do you make of these reports, i think we had one yesterday on our own website, cnbc.com saying the new phone could be $1,200. >> well, i mean, basic supply/demand suggests if the

price is that expensive, there'll be less demand. that'ssome of the issues that people are expecting lots of good growth and that the asps will be even higher than they are in fiscal '18. and if the fiscal will be higher, there's going to be less buyers there are less people able to afford a $1,000 phone. >> interesting, for certain. appreciate your time today >> thank you >> sherri skribner with deutsch banks. what are we dwoigoing to do with this >> first of all, i'm long -- >> reality check >> i don't think so. one, it's an opinion and she's entitled to it my opinion is that this is going to be a big cycle. it's an anniversary year, it's an even-numbered year, which generally have been bigger having said that, let's assume that she's right for a second and assume it's a normal cycle and not a super cycle. at 2 1/2 times next year's earnings, and back out the cash that puts it more like 11 1/2 times next year's earnings, i think you have protection on the downside with this name at that valuation, that if it does come in to be a punk cycle, you're not going to lose money on the stock. >> when can you not make that

argument, though, jim? no matter what the bad news, there's always going to be somebody who says -- the valuation is low, it's cheap >> you're right and you've been right for let's call it a year if you go back a year ago, i may not be getting the date exactly right. think a year ago, it was $96 and today it's $144. we have been making money in the stock. i think we will continue to. >> pete? >> yeah, you know, i think when you look at the u.s., you talk about loyalty, right you talk about attention that's something that katie huberty at morgan stanley has pointed out. she not long ago, i think in the last month, raised her price target i think it's 17 # n7 foul fonowf these reasons. and when you talk about china right now, yes, they've lost some share, but there's an upgrade cycle. people have either been pent-up demand, waiting, or you may start to see this grow a little bit more, because unit sales have been on the rise. so, yes, losing, but you've got unit sales rising. so i think this is sympathetic

that really could be bigger and probably impress and if that price is right and if people are still willing. we have to understand this, your plans have come down, your data has come in, you build this into a monthly payment, which most people have done already with the iphones, very few people buy it outright because of that, i think people would be willing to buy a $1,200 phone >> at some point, don't you price people out of the market >> i would have agreed with you have we not seen those data rates come down extremely fast over the last couple of years. we've watched them come down, down, down, and so that phone price doesn't feel as painful for people, especially when they're starting to do this whole monthly process. i would say at 1,200, they could still get away with it at this point. >> if a mercedes is like $45,000 and all of a sudden it becomes $55,000 and you're leasing it, the monthly payment goes way up and prices some of the people out of the market. >> but what if your insurance

comes way down >> what if your margin's side to the upside because you're selling a more expensive phone, you may not sell as many, but you have the service component which is much higher margin. three times the size of salesforce.com, by the way >> up next in the blitz, the trades on exxon, michael blitz, jcpenney and the home builders we're back after this. ♪ if you could book a flight, then add a hotel, or car, or activity in one place and save, where would you go? ♪ expedia gives you the world in your hand, so you can see more of it. ♪ expedia.

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welcome back we have some breaking news now federal reserve governor lionel brownard giving the keynote speech at a conference being held at the federal reserve bank steve liesman live with the details. >> fed gov. saying if the economy firms and the labor market remains strong, it will

be appropriate to commence balance sheet runoffs. she says once the balance sheet runoff begins, she'll want to reassess the process normalization of the fed funds process is well underway, one of the criteria it's hard to exactly what she means. she doesn't say when, but it sounds possible that she could support beginning the balance sheet runoff as soon as july most folks think it's september, but also saying, hey, i'm going to assess the inflation process after the balance sheet runoff begins saying she's not too worried about t, right now, and could potentially support it a couple of other items, she says if the neutral rate remains at zero, where it remains right now, she says the fed doesn't have much work to do when it comes to raising the fed funds rate the idea being many people think it's been 3% maybe she thinks it could end up being a little bit lower the global economy, she says, is experiencing synchronous growth, little until recently, how little bond yields have reacted to what the fed has been attending to do.

but she says foreign central bank policies could be turning the tide here, and could be -- could have been holding down u.s. yields. and now they've been talking about higher yields, those foreign central banks could be responsible for the recent rise we've had in global bond yields. she goes, the tide on yields has turned recently, with foreign central bank discussion of withdrawing stimulus scott? >> so, in the wake of these comments and, you know, the warning from diamond that we discussed at the top of the show, makes tomorrow, yellen, the next couple of days, really, with the fed chair herself on the hill, steve. >> yeah, really good point, scott. i think the next couple of days of testimony from fed chair yell rn going to be decisive as to whether or not the market starts to price in a july beginning to the balance sheet runoff, as well as that third rate hike this year, that you guys were all debating at the top of the hour here. it's about a 50% chance right now, and i think also, people ought to be prepared for the fed later this month to announce that balance sheet runoff, i think, it's probably 50% chance, too, but i think it's nearly a

100% chance by september >> keeping our eye on rates, the ten-year moving down to 1036 steve, thanks, appreciate it very much. steve liesman outside the new york fed it is time now for the trader blitz. barclays today upgrading exxonmobil to overweight joe, you get that one first. >> exxonmobil down 10% year-to-date i like the combination, though, of rising nat gas prices, which we're seeing above $3. we spoke to mark fisher about that last week oil prices generally stabilizing. big balance sheet exxonmobil has. no problem with this energy trade. i think it's a good one. >> all right, jimmy, j.k. pen jf stepping down? >> it's clearly an amicable departure. both are saying good things. but they report the timing of his departure coincide with demonstrated sales performance improvements we continue to report significantly improved topline improvements this quarter versus

the second quarter that's why the stock is up today. >> so you're reading from the jcpenney press release what is that >> yes i was reading from the jcpenney press release -- >> it's an e-mail from the public relations person. >> investor relations. >> if that's not objective, than there's a bigger problem at jcpenney than i want to deal with >> all right, mkm partners initiated michael kors as a sale stocks down almost 8 you own it >> yeah, i do, unfortunately and part of the problem has been innovation that's exactly what this analyst talks about. they have a price target of $26 a share. the stock has come down from like the mid-40s, scott, to this level now. it feels like it might break a little bit more. great cash flows, but the earnings projections do look like they're decelerating. for those reasons, you can understand why they are negative on the stock i'm a bit negative on the stock myself, even though i own it i'm not sure how much longer i'm willing to own a stock that doesn't want to actually address the major issues in front of them about innovation of their product. >> okay. let's go to the home builders.

barclays downgrading a number of them lenna lennar,. >> the group is up 29% year-to-date earnings are actually only up 1% for next year. so rather than roll up their multiple and try to have to push up the target practices, it's taking some profits, which i kind of get. he does like the product guys, like mohawk. i like stanley black and derek i've been recently adding to stanley black and decker, i think you get the home side of it, home depot and lowe's exposure and the cyclical part of the economy and m&a so if it's weak, with especially under 140, i like it >> pete, yesterday you said, take a look at the home builders you noted the gains these stocks have had is it time to reassess >> well, they've had incredible dp gains, stock and in the most recent past, you could see exactly what was going on with lennar and kbh, we've heard from some of these home builders we know what's going on in terms

of inventories, as well. if you've wanted to trim some, we've had a great run. d.r. horton had a nice week yesterday. i think there's reasons to still be in these names. but i could totally understand if somebody said, you know what, they've had a great run, let's take some off the table or all off the table because of the fact they've had this incredible move to the upside, so fast. >> and on toll, they went to underweight. that's a straight up sell. >> right, absolutely and that's the higher end when you're talking about toll. >> sue herrera has the latest headlines for us >> scott, thank you so much. here's what's happening at this hour, everyone the u.s. and qatar have signed an agreement samed at shoring up the shoring up the gulf terrorism efforts. it was signed this morning by secretary of state rex tillerson. >> the memorandum lays out a series of steps the two countries will take over the coming months and years to interrupt and disable terror-financing flows and intensify counterterrorism activities globally.

>> former mt. gox ceo marcus pellas pleading not guilty in tokyo. he was charged with allegedly inflating his account by operating it computer system unlawfully and embezzling about $3 million 7-eleven celebrating july 11th by officering customers free slurpees until 7:00 p.m. today. the giveaway marks the company's 90th birthday. it plans to give out about 9 million free slurpees. and it's hot in a lot of parts of the country, so it might be nice to get a free slurpee that's it. you're up to date. now to tye with what's coming up on "power lunch" >> i'm going to go get a slurpee, right now >> excellent >> we'll serve then on "power lunch. >> it's also national cow appreciation day >> national cow appreciation day? >> yeah, chick-fil-a, free chicken. >> free slurpees on "power lunch. a closer look at the developing story, folks, on "power lunch," getting back to more serious stuff, of donald trump jr.'s preelection meeting with a russian lawyer

the question we want to know, did he do anything legally wrong? plus, is the retail destruction overdone we'll tell you the names that are being punished unfairly and could be worth buying right now. and is amazon getting too big for its own good could it be on the verge of a backlash for its growing size and fluent and the way it plays ball that and more ahead on "power lunch. free slurpees! halftime report back after this. think again.

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>> i like the story. numbers are going higher >> i think it's easy to just ride winnebago here. >> all right earnings season already underway we are taking a look back now at some of the trader's most memorable q2 calls joe, we start with you we heard it there, fedex shares up 12% taking out that $200 level >> yep, trading at $217 right now. >> this is an ia play. the freight management business is really being enhanced you're seeing a tremendous benefit to a company like fedex, on the usages of ai. compliment that with what we're seeing with ecommerce and amazon i think it continues to go higher i'm not changing the trajectory, up >> steph, we'll get to you in a moment with csx, but what about fedex. stay with it >> i own it, i like it, i've been adding the last two weeks or so. they had a great quarter and i think it just got overlooked, actually they have a great story to tell in terms of tnt and synergies. but they're also doing a good job on ground margins and improving those marks. and if they can get those up, your earnings power is

substantially higher >> one of your big winners was csx, up 14.5% since the middle of april >> yes, since hunter harrison was announced to be the new ceo. and he's just a proven winner, a proven restructuring guy >> from pacific. >> yep and he's going to do the same thing at csx there's no question about it he's got a huge cost-cutting program, operating ratio to get down below 60% this is an earnings power story of $3 to $4 a share. it's still cheap i prefer union pacific, because it's lagged, but i do like csx >> all right, pete, give me a read on the rails here you like stephanie's play here ump, csx, which is better? >> absolutely. i'm also in ksu. i kind of run the whole thing here i like ksu for a variety of reasons. csx, as soon as hunter harrison, that name comes up, you have to all of a sudden start looking at this even closer, right? and i think that was partially what really drew steph towards this because we all know the rails have actually started to move a

little bit better than probably expected but i think when you look for who are the leaders of some of the top-run companies out there, his name would be one of them. >> winnebago, your top winner up 29% since just the first part of june >> nice. >> well, it had taken an earlier swoon. they had a series of very good quarters here. and the first one, it went down to the mid-20s, now in the mid-30s. i think you've got another 15% in the name here they're really firing on all cylinders, of course, bad pun. but, of course, this is hypercyclical, right with labor picking up, you have to have a very strong labor market to get extra purchases of $200,000 rv sks and that's what you're seeing. >> we gave you a lot of the winners, not all the trades, worked out, at least not yet >> it's a company that's kind of reinvented itself, cleaned up the balance sheet, some nice acquisitions over the last couple of year i really like this name. >> all right, symantec, down 7%.

>> sometimes this game is puzzling, because after that, may 10th, it peaked at 33.22 on a great earnings report and reversed and has now gone lower. i would continue to hold the stock. they're going to report earnings the beginning of august. let's see what they say on that earnings report and make a decision from there. >> oil prices up on the day, falling 1 ining 15% this year a goldman sachs warning it could head below $40 a barrel. we'll head to the trading pits for futures on crude and we'll find a bullish bet on te sck e veal next on the half. ware of what's happening right now? we're facing 20 billion security events every day. ddos campaigns, ransomware, malware attacks... actually, we just handled all the priority threats. you did that? we did that. really. we analyzed millions of articles and reports. we can identify threats 50% faster. you can do that? we can do that. then do that. can we do that?

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the cnbc iq 100, up more than 20% for one year. it's an index tracking big cap companies that get most of their revenue from their own intellectual property. today's leaders include western digital, microron, sony, target, and applied materials. for more, go to cnbc.com/iq100 all right. we are back on the "halftime report." pete najarian watching the options market, as always, for unusual activity what have you got today, pete? >> taking a look at yelp, scott. it's not a name that comes up a lot for us, but it did come up today because somebody came out there and bought 5,000 of the july 30 calls for 50 cents, up to 55 cents. pretty aggressive buying there it's an interesting company. they have some earnings, they're not huge but when you look at the balance

sheet, they've got $6 in cash but zero debt. so interesting company obviously, we all, you know, many people who travel a lot, like i do, you use yelp a lot in the different places you're going, just trying to investigate around so it's interesting to see that this paper, this was a $43 stock, pulled back, and here it is trading around that $31 level. so somebody betting in the next couple of weeks, we get a rise up through there not a very expensive shot, but 5,000 of those trading today >> you're in >> i am in i like it. i'm in these julys i'll be in there probably up through expiration but fif it moves fast enough before that time, i'll probably be hitting the exits as well very short-term trade here crude seeing a big reversal today, up about 1.75%. jackie deangelis and the futures now traders have more on that. good afternoon, jackie >> good afternoon, scott crude reversing its earlier losses, rising nearly 2% as the eia expects a smaller than expected rise in u.s. production next year. still, crude now trading just a

few dollars above its 2017 lows. so bob, what else is sending oil higher today >> well, i think a couple of things in the face of the goldman note we'll talk about on the futures now show, as well as a couple of other things, you've bank of am talking about a stealthy demand increase that should happen toward the end of this year and more in next year. i am personally more in the golden camp. there was a strategic reserve draw of 2.6 million barrels. a lower than expected draw is seasonal for the fourth of july. this is also some short covering prior to tomorrow's numbers that are going to disappoint the longs. >> so many little data points. let's talk about the goldman note, it was a warning that crude could fall below $40 a barrel if opec fails to have further inpact on the market or u.s. production keeps rising is the trend going to be lower

here >> i think the trend remains lower. if you look at the chart, you see an impressive series of lower highs and lower lows crude oil would have to get to $47 to break that. if we get to $42, it's look out below. i am with goldman. i think that the saudis, who were supposed to be the adults in the room when it comes to the production curve, they produced more than 10 million barrels a day in june. that's an increase from may. if they are the adults, how are they producing more than anybody else in opec >> that's what a lot of people have been wore rid about on the live show, we are joined by michael judas to break down his gold bullish call on gold and chip flory tells us what likely trade should watch now. goldman sachs, jeff curry,

over there, say oil could go below 40 >> he highlighted the need for short-dated oil versus long-dated oil to remove the cantango he talks about the need for opec to further cut its production. scott, it is really right now about the u.s. shale and the dramatic increase we are seeing here how do you limit that increase in production here you have to eat up some of the supply the way you do that is weather or some form of a geopolitical shock. absent that, oil stays in that range. >> can you buy one of these big oil stock sns. >> you can from the dividend on that note, you might want to think about some of the internationals >> it is worth the risk. >> good point. i don't think oil is moving

minkfully from the $min meaningfully from the $45 level. you were talking about saudi arabia pumping above their limit. the rig count came down. there are all these puts and takes. i think we are staying right where we are i don't think we are going to 40 having said that, right where we are, you can get a 7% dividend yield at royal dutch shell that's not a bad one-year return if the stock stays constant. >> i have been buying all year every time i do, i get hit i do think there are certain company that is can make money at $40-45 oil. those are the bess in the breed, eog and concho chevron needs more like 50 i like the growth better than exxon. there are special situations you can own in oil that doesn't mean i haven't gotten hurt. i think over the long-term, you can buy some quality names and a few years out, you will be glad

you did. >> it has been very frustrating. i am trying to find special situations williams, some of the msps i am willing to bide my time a little bit >> that's 6% exposure in the s&p 400. carry some smaller namesment wait for a strong confluence of indicators i don't know if pete has any unusual activity seeing a very strong day in energy you are seeing strength today. wait for something to really be telegraphed to get in. >> not to put you on the spot. i don't know if you have looked there. have you >> here is the problem if you want to get hurt, try to buy the bottom in any of these energies it has been absolute widowmaker of late. that's been the problem. everybody is trying to find the

bottom nobody has been right up to now. the dividend yield is dangerous. with that thr3 or 4 or 7% divid yield, if it stays here. you can give up 7% in a single trading day. you don't want to buy necessarily for dividend you are looking for these quality names. you have to see a turn that's meaningful for any of us to feel positive about energy. >> you look a lot of other places for a sexy dividend >> it is a valid point >> remember, the price of oil is $45. it is not $55. we have to remember where we have been. are we likely to go below 40 >> why is curry and the goldman people say-say we don't get every call right, obviously. >> jim, wait a second.

>> oil has fallen back with the economy rebounding >> why can't it continue >> it is already priced in a. >> we haven't made every great call in the world. >> we have to go, so hurry up. >> youreor a me luckily to get 50 than 40 >> final trade is next i'm here at the td ameritrade trader offices. steve, other than making me move stuff, what are you working on? let me show you. okay. our thinkorswim trading platform aggregates all the options data you need in one place and lets you visualize that information

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we're back markets closed three hours ago time for final trade >> i'm going to stick with some technology for you, scott. we have had so much paper in western digital over the last couple of weeks. i own the stock already. i see buyers in there again rolling up i'm going to give you western digital. >> joey? >> i'm going to give you concho that will survive. >> stephanie >> dow chemical. they got the dupont deal i think they are going to split into more than three and you have the best ceo running the company. >> goldman sachs, the first quarter trading fiasco was a one

quarter thing. now is the time to get in in advance of next week's earnings. >> you dump on curry and the gang and pick the stock. >> is it just me >> unbelievable. you are good s&p is down five that does it for us. thanks for watching. power lunch starts right now jeff curry on the show tomorrow we'll get jim back on. here is what's on the menu, russia agenda and e-mails. are we finally at the tipping point for investors? amazon is flying high. traditional retail stocks are being decimated. is all that fear and loathing being overdone could the retailers be your best money-making idea ahead? >> one analyzer says this stock is become amazon proof that name and more as power lunch starts right