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tv   Fast Money Halftime Report  CNBC  March 13, 2020 12:00pm-1:00pm EDT

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his facebook page says he's tested >> i don't know if we'll be parsing these things for days and weeks to come. >> i don't see how we can avoid it. >> yeah. >> as we get closer to the fed statement and presser. try to rest this weekend because we need you all back here on monday let's get to the judge carl, i appreciate it so much the final day of a tumultuous week sees stocks trying to bounce i'm scott wapner good to have you with us in a little while we're going to be joined by the billionaire investor carl icoahn. joining us here today. keith banks. bank of america. vice chairman. head of the investment solutions group. let's start where we always do our eyes anymorely on your money again today.firmly on your money
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again today. right now it is a positive day for the dow. up 400, following the biggest decline for stocks since the great crash of 1987. the russell has gone negative. josh brown, it's been one heck of a week. what are you thinking about today after we've given, you know we gave up almost all of the 1,000 point bump we're still hanging on to a few hundred. >> so couple things. one of the points i've been trying to make on the show recently is that security selection is not going to be the answer to how much pain you are going take in a moment like this and that was proven this week. the xlu, which is the utility sector, which normally in any market correction is not going to be disastrous, was absolutely disastrous i'm not even giving you the draw down from the peek i'm just going tell you this week the xlu is down 19% there really has been nothing save and yesterday of course,
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historic day at 3:30 there was ant single green s&p 500 stock. security and selection has not mattered i come back to owning diversification, stocks and bonds, and only portfolio construction is going to be the answer the other thing i want to tell you is what i told my clients last night, in a letter which since we founded the firm i've only written one three times what i basically said was that without a doubt we know the headlines are going to get worse. they are not going to be better. like this weekend they will be really bad and no one will be able to access their investments and move things around and they will be worse when we start testing more which hopefully happens. you want to see higher totals. i hate saying this but then you know there will be more tests what is the thing you need to ask in you need to ask at what point does the market stop
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reacting every time a negative headline comes out only then will you know we're getting closer to the end and we are not there. >> very good points. i want to read some commentary from the street today and get your reaction to it. to the point of how much downwards is really left, joe, in this market.side is really li this market. we're now trading slightly below our downside case. and belief it is time to start adding to long-term equity risk for. and put money to work. the risk reward now appears more attractive i follow up with one more point. from howard marx in a letter from clients all great events begin in disconservate. one thing we know is there is great discomfort today what do you do with that >> what you do is think you begin to understand this is
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going to be a process which equities are going to be bottoming. which that i think you begin to slowly buy into that market. ask, can i endure another 15-20% lower for the equities market. if you can, you then ask yourself, will i get that back and i believe the answer to that unequivocally is you will get that back. one of the most important conditions in the market to watch for scott is the positive correlations between oil, yields, the u.s. dollar and equities in the last couple of days you are beginning to see those correlations break that's positive. you are seeing a lifting in yields the other thing is that understand this is as we've said a biological crisis that needs an economic activity freeze. you are beginning to get to that point. you are getting to a very cathartic moment i think it was very real and personal last night as i said to you before the show. no sports on television. just kind of sitting around. now everyone is understanding it i think you are going to be
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getting a much-needed coordinated communication response from fiscal policy makers from global central banks and healthcare officials so if you can endure the potential for more downside, yes, absolutely. i believe you want to buy because you are going to get it back. >> all right so jenny barclays asks "are we there yet? are we near a bottom >> i think we got to be close. s&p started the year turned them in house and stress tested with multiples. goldman put out a call where we also said we accepted this point and earnings on the s&p will be down five percent. if you take that start of the year cut it by 5% put a multiple where we bought at 2018 at 14 1/2 times. cut a little off that. we're pretty near a bottom in the 2400 range on the s&p 500. >> j.p. morgan says we're going to have a recession. in fact we're having one going to get minus two this quarter and growth and minus three next so if that comes to fruition,
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does your calculus change? >> not necessarily and this is where i go to one of my fair strategists who says we may have a recession this quarter, next quarter, the quarter after but then we could have serious rebound in the fourth quarter so if something like that plays out, the market is going anticipate 6-9 months in advance and could actually -- >> even if you don't have a recession statistically it is going feel like one. >> it is going feel like one >> you are going to have one and to jenny's point, quickly, you are absolutely going to have industries that are already in recession and what feels like depressi depression, that's no matter what the national data says. across all regions across all industries. that is already in progress. it is not something that could happen and everyone's expectations have to now factor that in. you cannot have the expectation that even if the stock market rebounds, the country is not going to be feeling it >> so keith banks. you have heard the commentary. we're going lean on you now for
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your years of expertise in the markets to tell us what you are thinking and what you think the average investor needs to think about and do today. >> well look, scott. i think the biggest challenge right now for investors is we're still dealing with what we call the known unknowns we don't know. and i think josh made some of this point, how much longer the coronavirus will be spreading you know what the number of additional cases will be what the death rate will be. that's number one. until we have a better feel for that we don't know what the impact on the global and u.s. economy will be and until we know that, we're not going to know really where the earns picture comes to pass. so i think we have to get more insight. we are in a bear market now. by, you know, technically speaking, and so i think it takes three or four months typically for a bear market to find a bottom. so i think we're getting closer. but i think there is still some time to come and we're going to have to pray to some bad news
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there are going to be more cases once the kits are available. i think companies have to still come out and adjust earns downwards and i think economic activity will still be adjusted downwards also we're probably a bit early but i would also say you got to remember if you go from the 30s on, if you had missed the ten best performing days in each decade, your return over that period would have been 91%. had you stayed in, your return would have been 15,000%. so trying to zig and zag in and out of the markets doesn't work. i wouldn't be selling. i may be holding off a bit to put money in but i wouldn't be trying to do the day trade game doesn't work. >> the majority of people should not be out there thinking they can play the zigs and zags the only place people with successfully do that miss the worse days and still do really well is probably on twitter. i know they are really good at it there i want to ask you about bear market rallies because i think this is the big
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danger for mom and pop if for retail investors who are important to everyone on wall street so when you think about let's say the 2000 to 2002 example we went back and looked. there were six separate bear market rallies the weakest one was 7% three of them went up 20%. and even having the bear market rallies you still ended up down 50% in the s&p before the final bottom we are going to have those face-ripping moments in the market going forward, even if it is recession, even if it is a bear market. but wouldn't you agree the big danger is taking those moments and getting all balled up as though the worst is over >> yeah, i agree, josh right now you have to fight the national gravitational force that comes from a market in this mode when it is zipping around, you almost feel like you are being pulled in to do something. and that is usually the worst time to in fact do something
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i agree with you you got to figure out how you start to get a sense of where we are from economic standpoint what are the translations of the earnings going to be and decide when are you getting close enough some underpins are forming whether you look at the yield on the s&p versus the yield you know on the ten year treasury. the earnings/risk premium looks good multiples coming down further. i think the stage is starting to get set but i think it is early for the play to begin. and i also want to see more from the fiscal policy standpoint and the monetary policy standpoint to make me feel better. >>s that the thing we're still waiting. still waiting on a lot to come to make people, jenny, better about getting in lot of the investors i talked to don't sound like they are ready to jump in i don't even know with a full foot thinking about a toe but even that's skiddish. >> i think the feeling is interesting and was so interesting and hit me strongly yesterday when the fed announced this huge passackage of money
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i think we just want information. we all know as investors, if you have information, if you have data you can trust, if you have stuff you can move on and you can move forward with respect to investors getting in one of the interesting things is because this happened so quick, i don't even think it is a question of getting in i think it is a question of not getting out. so i spent the last week and a half talking to every one of my clients personally and taking the time with them and the conversation has been very different than this conversation was in 2018 or 2008, 2009. i'm down so much what. can you co-? and. >> there is a legitimate question as to whether at some point you are a long-term investor joe as some of the notes suggest today, that you do get in, even if you risk seeing more downside. so maybe it isn't the bottom but at some point you have to
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have that conversation with your financial advisor. >> how most are investing. dollar cost average and retirement accounts. that is the lived experience of most of the viewers watching this program now are doing. >> exactly at the top of the show what i said if you believe that you could endure another 15% lower, then you are going to be getting in at these levels. you are going to be looking apt a historic day yesterday where the market is down 10% and finding opportunities. i also understand the lot of the economic numbers in the coming quarter are going to look distorted. >> and they are not going to be actionable to trade off. if you would think the labor figures contract significantly you might not see those figures contract significantly if you get a fiscal response that shows you are going to get support for small business you might not see that >> such a great point. >> what would price again right now is freezing economic activity and that's actually the right
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behavior from a healthcare standpoint to mitigate this. so how much of the market has already been priced in in terms of understanding that economic activity is going slam shut? that is the question. >> you know how you know that is the right move to make by the way? canceling south by southwest, pushing off coach la, no boston, st. patrick's day, on and on do you know how that is the right move because it would cost people billions of dollars. and anything that painful financially. no one is doing that for no reason so if we're putting ourselves through that to joe's point, you are going to see comps that look ridiculous almost like somebody splatter painted on the spreadsheet but those will be healed relatively quick they are not a forever situation. >> keith banks, you do at some point have to make a calculus. right? everything is based on a calculus or a probability when
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you are buying or selling a -- where do you think things are going? off the try and decide whether you think there is a quick snapback after the pain for maybe a couple of quarters and maybe more and nobody knows but you have to decide at some point whether you are going to buy the market or not. as to whether you are going to get a v shaped snapback or a longer period of time because the pain is going to be deeper than people think. >> that's right, scott if you wait until you have too much certainty the market will have well discounted that and you would have missed it no one is going to pick the bottom you can't try to be clever enough to try do that. you have to take a long-term point of view. but look, what you got to do my guess will be it will be more like a u shaped recovery than v. because i think there is going to be a lot of additional information coming out over the course of the next couple of three months a lot of it will not be very positive back to coronavirus cases.
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back to economic data probably showing weaker than not. i don't think, we're not forecasting recession yet at bank of america. but i think this is going to set the stage, especially as you begin to move money from fixed income into equities look what the s&p has done the last 21 day. by the way it took us 21 days to go from a bull market to a bear market that is the fastest move ever. the last time even record. the closest was 1929 when it took 42 days to go from a bull to a bear. so i don't think we're gonna -- it is nice to think we're just going to bounce out of this. we have a lot more information to process some will be better. some won't be so good but it is going set the stage to a point you can increase equity exposure and at some point safe to go back in the water. >> what do you make of a tremendous rebalance opportunity here
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if you have a portfolio coming in and at the end of the quarter you look and look and whoops, 52 in equities and 48% in fixed income and the need is going to be there just like the nature of the construct of the portfolio to rebalance. >> yeah, no, it is a great point. and i think a lot of investors are looking at that right now because that is the math i think people would have begun that process already, joe. but i think what's happened up until yesterday there was no liquidity in fixed income. you couldn't transact in size if you needed as liquidity comes back and hopefully through the treasury actions that will be starting sooner not later i think you can begin to do that so to your point you need to make a lot of shifting from fixed to equity just to get back to a level where you thought you were, not to mention if valuation becomes much more compelling on the equity side to begin to make even more of a bet potentially. because the other thing to think about. assume we don't go into a deep recession. what this can do is almost reset the clock again.
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so we got a couple of down quarters, maybe. but if this is the pause that refreshes. why can't we go where rates are, where inflation is and is going to be and why wouldn't we go on then for another few years and with valuation coming in and monetary policy, fiscal policy hopefully coming in powerful way this could create another very significant buying opportunity that people look back and say boy, i wish i -- i was fully in when that began to happen. >> yeah, just the tricky part of that is paradoxically, stocks have come down 24% from highs. they actually could be more expensive today than they were three weeks ago depending on what window you are look at for earnings not over ten years but over -- >> that's key though. >> we know -- is nowhere near reality even though we've seen constitutional rights come down. ebitda it's interesting how far can you look as an investor. >> keith, thank you so much for being with us. talk to you again soon stay well.
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my pleasure. >> thank you. >> see you soon. i know we will and goes to the point howard marks is making and people who say things like this and have tons of experience looking at markets that are disjointed and maybe become even more so. and maybe we look back a few months from now and okay, howard marks said this. all great investments begin in discomfort one thing we know is that there is great discomfort today. put some reality to perhaps where we are, perspective on how to think in the big picture as the great ones tend to do and they do well or they wouldn't be considered great. >> i think that is a great observation. and again, i look at yesterday and just the amount of communication personally that i received from people wanting an explanation of hey, what went on today. i think yesterday for the very first time the fire alarms were really going on off. and i think even today the construct of the market lends itself to policy makers understanding this weekend they have to be aggressive in their communication. we came out. the dow was up 1200.
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that is not a good recipe. you actually want to see the dow fade today and get policy makers uncomfortable and not just looking at that tape and saying okay we think things are going to be okay put the pressure on them to communicate quick, do it this weekend. >> so let's drill it down to exactly what y'all are doing as we speak because you guys are doing stuff in the market. g jenny. you sold general mills. >> yep. >> and bulked up existing positions using the selloff to your opportunity so where >> i went across the board the board portfolio by portfolio but on monday i sold general mills, which has held up completely it faded the last couple days so thankfully i sold it monday and i used the cash from that bulk up positions and i know this is controversial like sab ra and dow. and lamar advertising, and the big billboards you see when you drive down the jersey turnpike
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you can look back to 08, 09. the revenues were down 12 1/2% and the stock is down 35% right now. so too me that was a good trade. what i did yesterday was i tee up positions and i didn't put that money to work i have another position already been sold, trading at its sale price. like having cash so i put in the sales for that and got ready to buy two this mathi new positions. i think it is really to howard mark's point you make good investments when you are at maximum discomfort i bought general mills a in 2015 when i look back to the investments i made when i started they have always been at the point of the maximum discomfort and when i was buying things on monday, the word in my head was scared but courageous. >> i don't think i've heard anybody on this show today, you know, say buy stocks today now is the time to buy stocks today. you may pick some individual
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things here and there but nobody is suggesting. >> we're talking to millions of people that have all different requirements for you know future savings. and it is hard to just like give blanket advice to anyone that could be watching. >> well i think we're trying to you know discuss maybe what the strategies are >> i'm a buyer. >> in this sort of situation. >> this is what i do i glance in the rear view mirror which is to say, when we set the allocation n allocation for this client, was it set correctly yes. and did it effect my portfolio in the worst of times? yes it did and then i look very far out to the future and look two or three years down the road and i know that we're going to be okay and the positions we're adding are going to be okay and then it doesn't matter if we hit the bottom or not. no one rings a bell when we hit the bottom but what i do now the pricing are compelling now and to joe's point doesn't rita matter if you are down -- no it does matter. if you can handle being down 10
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or 15% be courageous. >> very interesting. as alook at the snoets today you initiated a position in delta airlines which is one of those businesses and sector at the epicenter of all of this where you are going feel maximum pain for a while pictures of flights or empty dr. fouchi last night said he wouldn't go on a leisurely flight right now. >> nor wooi would i. >> others as well. so why delta >> in looking at the airlines it was either of united or delta. i did want to take a small position on the belief that there ultimately will be a recovery and in an odd way you look at your portfolio and you analyze it and you continue to say where is the risk. and actually when i look at my portfolio right now. the risk would be a sharp recovery and i am underinvested in that recovery and in particular i think a lot of that could potentially come from the airlines. the airlines have done an
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incredibly good job just positioning themselves for this moment in terms of raising cash. cash levels are at very strong levels so i think they have done a good enough job and to me, delta and very small position is a right way to do it there were some other moves that i made there as well but a lot of the moves that i'm making, again it is on the belief that i'm observing what was a very healthy patient that very quick went into the icu and i'm looking at the vital signs and saying okay, there are some things i think the vital signs are getting better doesn't mean the patient is going to get out of icu. but i do see some improvements. >> goldman sachs >> that's a position as you know in january when financial errors deteriorating i was talking about yields coming down i hat god had gotten out if you are getting out of o goldman sachs after earnings 230, buying is 160 i'll take the pain in there is further downside on that position >> josh you have been doing a
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bunch. putting in orders. some things are gotten hit some not. >> still wait on some. i got filled on berkshire hathawayway yesterday. right around where it is today never thought in a million years it would happen. put that in probably around 225 on the initial dip in late february hey, imagine you can get berkshire hathawayway under 200. i got it almost under 180. i think there is a tremendous amount of optionalty given the balance sheet, given how much cash they are holding. and to joe's pint, if you want a call option on banks and airlines, well you are getting them both by owning berkshire hathaway he's the largest sharehold ner many of the major banks and all of the major airlines. i bought starbuck's yesterday at
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70 and today it hit 60 it was 100 dollar stock. got out of huge up grapd. i don't care if it goes to 50. i'm 43 i'm pretty sure people twenty years from now will be drinking quarter. will it be a rough couple of quarters yeah are you going tell me none of that is -- >> and a good point. doesn't matter if you nail the bottom directly. >> so that's important and then there are, look, then there are opportunities where slack is a good example. reported a great quarter last night. nobody cares they threw it out this morning i got a chance to own more good for me, i'm a long-term holder shorter term trade in gilead i'm not a biotech person in general. i think it is interesting technically. this is one of the highest rsi stocks in the entire market right now. this is a company that continually comes up in terms of being part of the solution
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i have a fairly tight stop here. maybe i'll be it nor a cup of coffee maybe it works out and i hold it but that is the type of things i'm trying to do imagain i'm in my early 40s. i'm not using this money next week what am i going to do? sit here and cry no i'm vvsing for my future with money i don't plan to be using the next few years and every time i've done that over the last twenty years i look back and they thank god i did. >> i like to think of myself as a risk manager right now no energy exposure at all. oil should be $25 it is not. i took a small position in hess so have that energy exposure. >> we'll talk to somebody coming up with investment in energy.
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here is your cnbc news at this hour. looking to expand stimulus and fight the coronavirus. japan's government plans a third emergency economic stimulus plan that could be worth more than $95 billion and implemented as early as april >> roiters is reporting canada is considering a multi billion dollar aid package for industries hardest hit twi
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coronavirus. tourism and hospitality. canada' parliament shut down now more than a month to slow the spread of the outbreak and prime minister justin trudeau and his wife remain in self quarantine as sophie tested positive for the coronavirus became sick when she returned home from a trip to the uk and apparently even the top of the world isn't immune t.o. coronavirus. nepal has closed everest scott, back to you >> let's welcome in our special guest. carl icahn is the billionaire investor back with us from florida today by phone carl thanks for being here >> yeah, okay. scott. good to talk to you. >> its been quite a while. we have not heard from you in a long time. and i know you have been bearish for a long time. now that we've had this
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tumultuous week and what is a tumultuous time. how do you feel about the market today and what does your positioning look like? >> yeah, look i've been pretty bearish the last few years so i've kept most of my stuff pretty well hedged but now i think its reached the point where you know some companies, they just sort of give it away, you know they are -- you know i just think it is a state of collapse. but some of these companies. i like to think of some of the ones that i'm in, i don't like to think of them, that are awful cheap. they are very cheap. so i'm not quite as bearish as i was. even though i do think it probably has a longer way to go down >> by how much more do you think it has to go down?
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are you already putting your toes in the water looking at opportunity you see and buying some stocks? >> yeah. i'm certainly adjusting my
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hedge. >> a i said you are still pretty accurate we sort of had i had a cartoon with larry fink. >> we remember it well >> pushing the party bus over the cliff. and i think part of this is definitely from the fact that there is just too much money flowing around so all that money floating around over these years is there waiting for some match to ignite it and the match has sort of been this coronavirus. so you have what you have here is a situation where you have a lot of companies lot of companies out there that overborrowed and to some extent people have overborrowed so you have this money and with that money they went out, say, bought stock lot of buy back. and then what happens to'em now
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when they can't even, you know, make the earns when you can't make the earnings to pay back all this money they borrow so i was at a party and remember having that argument with larry fink and i respect larry fink but he was saying that can't happen nothing can happen i think part of this is the index funds. where you have a lot of people, you know think in 29 where you had margin calls and they just threw the stocks on the fire nobody cared the guy who is gave the margin want tote get their money back now you think of it in a different way. so you got people across the country. that bought the index funds. etfs, don't blame it on one index fund bought etfs not really knowing and the neighbors were buying skpem they can't really make any money putting their money in treasures. and so they buy them and when they get panicked they
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don't even know what they owned. my next door would be when i was young he would know. i was in a relatively poor middle class neighborhood but they would know what stocks they have they wouldn't throw anything here you have a machine that goes and sells the stock and they have nod idea whether it is good, bad or different and this is one of the problems that i think we have today is coming to fruition ed and by the way, you still have it. my biggest position by far, my biggest position is a short. on the cds, is something called the cmbx and the cmbx, it gets a little complicated. but just sort of -- >> those are assets that back mortgages on office buildings and shopping malls
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>> exactly so what happened was what happened is it got always happening all over again there you have mortgage backed securities that blew up. here you got stuff like the cmbx, and other stuff too, that i think are going to blow up you have a bunch of mortgages. so the banks, you know, five, six years ago, seven years ago what not they went out. low money. against a lot of shopping malls. office buildings, hotels, at retail and they sold -- they sold mortgages on them. they gave mortgages on them. and then when they did those mortgage, sliced and diced them. and put themselves the cmbx. index. so i'm work on the cmbxx and it's incredible. that you got these -- you have these mortgages, and so they
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sell bonds they sell bonds. i don't want to complicate them. but they sold bonds against these mortgages. now you have cds in 08 got the same thing you got the cds now. collateral debt swaps. that's sort of an insurance policy so it is almost a little bit of a gambling casino. and you got insurance policies on these bonds that the bonds and they buy and sell them now you have credible institutions putting their customers, the customer comes into a bond fund and then the bond fund says well, we -- we're fighting another bond fund. we're competing. we're going the get you better because -- and they say we take prudent risk we take some prudent risk. when they go out and sell insurance, they sell insurance on a lot of these bonds that now
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are in great danger. a lot of the bonds that were done in '08 and 9 are are in great danger so they sell insurance simplified like selling insurance on someone going to the electric chair in a couple of months. so you go in and somebody comes to you and says i got a great insurance policy for you but he doesn't really explain it and nobody quite understand what is the insurance policy is. the manager of that fund selling the insurance policy, he says, he's making his fees or whatever this guy is now i'm giving insurance policy and geez, i'm going to give you 8, 9% return on it. >> so i'll simplify it even more basically you are betting on a further problems with shopping malls, perhaps exacerbated by what we're going through with the coronavirus and office buildings. is that accurate >> exactly
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and this short i'm doing, i'm selling -- i'm buying the insurance. or selling cds in other words i'm short the cds, which means i'm buying the insurance. so that short, that cds, not to complicate too much is selling today for 86 or 87 but it is ridiculous for anybody to sell that insurance to me i mean it is really -- going to the electric chair and -- and -- and i buy insurance on his life and somebody selling it. so you got these institutions today that are selling this insurance before getting the good return. so they put it in and they just shohei lo show, hey look we're getting 8 or not% for you. and put that out every quarter and oh we're great and nobody quite understands they are going to be facing
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it -- they are going to be facing it already. they are already under water i think on a lot of this stuff so theoretically the people that are doing -- that are getting to sell the insurance, theoretically they can lose all their money to make their 7% run. so make the 7 percent return and okay well we're. but they don't -- i don't think they understand. now the little print when they sell them the fund, i don't think they are doing anything illegal. the big mutual fund. sold billions of this stuff. and others too so this is same kind of warning i was talk about before. you are going to have this blow up too and nobody is even looking at it and who is going to suffer again. do you know who's going to
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suffer the individuals or maybe the wealth manager put the money in are going to suffer just like they did in '08. and i don't know if the government is going to bail them out. but -- and now, yeah you rear right. right now these shopping malls could not pay back or restrsh their loans. so they are going default. i really believe almost definitely they are going default. anybody that would do this trade. nobody in their right mind if they understood would do it. look at the shopping malls, they can default and now they also have a lot of office buildings in there office buildings today by the way that he has malls are sort of, they are not the a malls. they are the b and c malls and then they got office buildings. all over that we are buying and insurance aren't but they are selling. and these office buildings, for instance, are now -- they now have tenants
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okay look we got all this lease payments but a lot of the people that pay these lease payments, a lot of the companies are the ones that are going to suffer, that are suffering because they shouldn't have had the money in the first place to rent that stuff because it went out and borrowed this money at low rates. now, some of them are okay a lot of them are okay but that is my point >> the more though that these things suffer, the more money you will make by holding the insurance that you do. >> yeah. well, i don't like to think -- >> well i'm trying to simplify it as much as i can for our viewers. >> it is a ridiculous trade. i'm only talking about it because you know there were people i think like myself that warned about the stuff in '08. nobody listened. i hope somebody will listen because we're really going down it is a bargain slide with the cmss today i think so you are looking at
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these companies today that are overleveraged with high yield bonds. you are look at it all today and we now keep pumping money out there and pumping money out there and pumping money out there and there's a price to pay for that the price to pay for it is that the people like to borrow that money, the people that go out and take the money they are not bad people. there are no bad people. i don't think putnam is necessarily bad. i doubt putnam and elias are even top offices even really understand what they are doing there. i think they just got people doing it because everybody makes bonus and it's human nature. >> let me do this. let me move on and talk about oxy. because you made big news the week and i mean in a big way too. you went from 2.5% in oxy to 10%. you have been in the stock a long time. how much of that was to try and capitalize on the drop in oil prices >> well when you are capitalizing on the drop of oil prices. >> you bought more -- you took
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advantage of the drop in oil prices to buy more stock >> well you took advantage of a lot of things there. it wasn't just the oil prices. it was just that the company is a terribly run company the company is just terribly run. they haven't cut the dividend. the oil price is again match that ignited it. it is a great i think a very good company very good. with an awful board that really shouldn't be there and yeah you know something, i'll tell you this, scott. you know, and another culture, the board, the people on the board would have the dignity to resign but okay one guy maybe was fired, the chairman are, or maybe resigned you still got the same damn board. they should have patrolled their ceo. as much as vicky hollub is
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involved they should have controlled her. went out and put the whole company on a transaction that may -- you know at the price she was paying, she was paying the company and then got the money from buffett i said one thing i've learned in life i've said maybe you heard it i learned in life, "you shouldn't give your money to a manager that thinks they can outsmart buffett and outbid chevron. and that is just what they tried to do. they ran into a wall it was one of the dumbest trades i've ever seen so now you got this company. and yet they are still there and it is still going to be -- one of our problems, corporate governance today and still going to be hard to get them the hell out of there. >> what do you co-now though do you want the company to consider selling itself? frankly i was wondering whether you would consider try to take the company private with other
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folks given the valuation as the stock has gotten slaugtdered. >> we know each other. i'm not going talk about some of these ideas. they are all good ideas we're talking about. but i'm not going to discuss those on the tv. i think it is a very good company but what has to happen in that industry i think is consolidation. what happened was that, and i'm just being cynical perhaps but this company knew that somebody wanted to buy them when that stock was $70 you can't believe the stock. you have the stock at 70 that is now 12 as bad as this market is, this
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is the poster boy for this market i mean, this one, as bad as its done this is one of the worst actors ever. and at 70 i believe there were bids around for it because there are companies, a good company should be consolidated and to get away from those bids, they went and did this ridiculous deal and the board permitted it because they were just they had their own agenda. and we've gone and tried to get the information. and normally you should be able to get it in a proxy fight but we've had trouble with the courts and delaware. we're still there trying to get the e-mails and whatever to see if indeed that happened. and if that happened, then i really do think -- then it is really reprehensible. >> they adopted a bill today i'm sure you saw they are going to give shareholders a chance to vote on it what's your reaction >> well you can vote on it after the meeting, right in other words they are going vote on it after the meeting if i want to buy stock, i got to
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wait -- well i 15% i have at 99 now but if somebody wanted to go to 15%. you can't go over 15 so if somebody wanted to go out and buy 20% of this company and 25%, you couldn't do it. they stopped that. >> would you go up to 15 >> well that's not the issue we're talk about i'm saying where you can vote on it you can vote on the bill and put it out but that is a little like the horse is left out of the barn and then you kind of close the barn door. the company is just, when you look at it, it is a study in what shouldn't be done in corporate america and makes a travesty of corporate governance. >> so let me ask you another about situation you are involved in you have a stake in xerox and hp and today right before we came on the air, a xerox said it was pulling its efforts around the deal because of what's going on in the coronavirus >> but that's -- hold on i have to be careful here.
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i got to be careful. why i don't like come on to your shows too often. i don't think do it once in a while. because you got remember that i'm recused from that board because i own hp and own xerox so i'm recused however i don't you are reading that right, scott. they are just saying we're not pulling out of anything. >> not pulling out of the deal and i don't mean to subject. they are pulling out of, not the deal, but just efforts to talk about the deal, to do any -- the groundwork or the paper around the deal because of what's going won the virus. >> i think you shouldn't take much from that they are just saying with the coronavirus and all that going on they don't want to go on a road show now to go visiting people all over the country to talk about this deal where everybody untss the deal anyway ands a -- >> why shouldn't hpjust take the money and run at this point? >> why don't you call them and
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ask them it is a great question i don't know why because as anybody else, like any other board, these guys are the board and in many cases they can stay a company and look, if you are a board member, in many respects you have a real good deal, sit there, four meetings, paid $100 grand sometimes. you ever go to the board meetings, it's sort of a - >> i haven't had the privilege. >> i'd like to take you to one you won't go back. it's not that they're bad people they're not bad people f. you get away with it, they do it they let all this happen here they have a company and what has it done for the last 20 years? and they keep talking about this or that and this if they get a bid for the company, they should take it seriously and they should say, okay, let the shareholders
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decide maybe they will. >> there's some suggestion, a report i saw the other day that said you floated the idea of buying hp yourself if it didn't happen is that true would you still do that? >> yeah. look i think it's taken out of context and the i can't even remember the conversation, scott, but i didn't make any bid for it or anything like that but that's not even the issue here the issue is, the cities are tremendous. the company admits it's tremendous and admits it and i think the thing i have said publicly is if it goes together as far as i'm concerned as a shareholder i would watch who's running xerox to run the company because i think has shown
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already his ability at xerox and that's, of course, has done many great things hp hasn't done a great thing for five, six years. i said, put the companies together as far as i'm concerned. i own stock in both but i want him to run it. that's all i care about. >> lastly, because i'm running out of time and something that our contessa brewer is very interested in, this casino situation. el dorado and caesar's, is that deal still going to happen revenue's falling. is it going to happen? >> well look i, again, i'm on the board you know i have representation on the board on cesar's and i think it's a great deal. i think it should happen it's a tremendous synergies there just as they are and hp so i really think, yeah.
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i believe it will happen but i can't -- unl, iyou know, o going any further than that. i'm not on the board of el dorado there's a great manager and i have, you know, and i believe that he can make all those synergies happen. >> if vegas takes a significant hit because of the virus, which is likely, i mean, one has to assume that they will, as i said a deal that's heavily financed, is there an issue in your mind with being able to service debt, a large amount of debt, a tt a time revenues are declining? >> everything is unique. there's too much debt in the country but looking at the s synergies of the two companies, this is public, look at the great synergies and caesars not a well managed company by any
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means. tremendous amount of money that could be saved i think the debt will be serviced and there's plenty of room in it so that's my opinion look at the numbers. not speaking as a board member but anybody else to look at the numbers. >> leave me with one last thought before i let you go. i get that you're maybe less bearish than you were because the stock market has come down by a tremendous amount it's been a hell of a week we are all sort of feeling the pain of where we are and where we may go from here. leave with us a last thought of really how much more selling do you think needs to be done and how much more advantageous do you feel like you want to be in the weeks ahead? >> when you see selling that you want to be -- what do you mean by advantageous? >> if the market goes down more, will you be less and less bearish willing to buy more and more stocks? >> let me say it a different way. i still think my hedges are
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good you know i've been hedged for three years so i'm not getting hurt nearly as much as a lot of other people but my point is that there are stocks here that i look at as companies. these companies are good companies. occidental is a good example hewlett-packard. good companies, good value, good assets the oil is still in the ground the country needs oil even with the war going on with russia and saudi arabia so you're going to need these things so there are companies that should be bought on the other hand, they're way overpriced there are many, many overpriced companies and high multiples with too much debt on those and should be sold i think they're coming a realistic price, the dream companies, sure, some of them hit and come up with dreams but with them you're paying very high multiples in my mind for
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dreams so you got a tale of two cities and on the other hand, some of the crazy derivatives, i think it was buffett once said the derivatives are weapons of mass destruction and what i explained to you and you can find them, the risk/rewardare crazy in those so you still have a lot of problems in this country and i think you can't get out of it by printing and printing money. it is just -- you print and print and print that money and that money is in many cases run by the wrong people and you got too much debt on many companies now you say caesars. i don't think that's true of caesars with the great synergies and great management you can't answer it with one answer. >> i understand. carl, i appreciate you coming back on. be well. we'll talk to you soon. >> good talking to you, scott. >> let's go to david farber.
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>> so many companies are changing the way the workers work at&t 245,000 employees around the globe and little more than an hour ago, the at&t chairman and ceo said in an internal memo if they can they should get their job done from home now, that obviously does not necessarily apply to some of the members of at&t. the employees there who serve directly and interact directly with customers or be out in the field and it is notable talking about an enormous work force here and globally. 245,000 people around the world and mr. stephenson, the company's leader, is saying if you can work from home and they are also making and taking contingencies to help protect people not able to work from home. he said, i'll leave you with
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this we cannot control what's happened but we do control how we respond from here as you well know, scott, so many employers done similar things with their employees a lot of people going to be working from home. >> real quick, two minutes to go you have a reaction to anything icahn said you follow the deal market closer than anybody. certainly xerox hp. >> yeah. i do i think, listen. we know what he wants at xerox hp and will continue there's so many things he's involved with right now it is fascinating. what you spent a lot of time on, of course, the purchase or essentially shorting and shorting the credit of and the insurance he was buying on the mall operators was fascinating apparently as we heard enormously profitable trade for him. curious who is on the other side of that, scott he sees stuff that's cheap
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we know that but interesting he didn't see necessarily a market bottom. >> less hedged than he's been. thanks so much. >> sure thing. >> it's david far berhe. go to phil lebeau with a news alert of delta. >> a memo that the ceo has just sent out, taking a look at it now. one, reducing capacity over four months by 40%. on tuesday at an analyst conference they said 15% reduction so that is a dramatic increase there the other thing, ed bastian said they're seeing negative net bookings think about that they're seeing more money going out than money coming in over four weeks and ed bastian saying he will forego the entire salary this year. three bullet points of delta trying to react to the growing problem of people not booking flights because of the concern about coronavirus. scott, back to you. >> appreciate that very much new investor joe says what >> feels lousy for a while but
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will be okay. >> josh brown? >> i agree expect bad headlines and watch the reaction of the markets. >> coming out the wind will be at the backs low oil prices low interest rates. >> see how this day finishes up. the dow good for 600 have a great weekend try to "the exchange" begins now. thank you, scott hi, everybody. welcome to "the exchange" on this friday. i'm kelly evans. the market desperately trying to hold on to the gains following the single worst day drop since 1987 we were up over 1300 at the highs. we've been losing steam into afternoon trading and still on pace for the worst week since twagtd and the capstone to the week the president's 3:00 p.m. press conference to reportedly declare a national emergency bob pisani on the floor of the new york stock exchange. bob, again, as i said as we try to hang on to the gains. >> drifting lower in the morning

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