tv Fast Money CNBC April 25, 2012 5:00pm-6:00pm EDT
highs off 89 points. check it out. rising for the third day in four days and the s&p was higher by 18 points advancing 1.4%. that will do it for us on closing bell. see you tomorrow following twitter and google plus. have a fantastic night. here's fast money. >> i'm scott wapner for melissa lee. we are tracking all the big movers in the after hours and trading tomorrow's big earnings tonight. the !ed sends gold on a wild ride. what should you do now? the stock is set for another leg higher. doug cass joins us live to make that case. let's start trading and get to the market. stocks hanging tight after the press conference and closing near session highs. you knew it was going to be a good day given what apple did after the bell.
>> we knew the nasdaq was going to be up and we had good bonds out of europe. i think a lot of the anxiety and the tone in markets have been europe. down below 50% for the year and that takes it out right away. earnings continue to be good and people will focus on that. what's interesting is they told you everything he wanted to hear and they have been upgrading and he had a downgraded unemployment and inflation they are watching it and do what they have to do and act if necessary. for a month ago, this is what threw a ton of anxiety in the markets and they peaked going into the number. i think tomorrow is going to be good because a lot of the world didn't react and the places that are under the most pressure, i mean even asia where i think china likes that stimulus and jargon talk. >> i am glad you made that point. the statement was word for word of what it was last time. march 13th was the last and
march 14th the day after they had a gain. that's the kind of thing you are talking about. >> you take the other side and i think bernanke was too positive. it will have a negative impact. he is jaw boning and talking up things. the labor rate -- >> he doesn't want to do that. if anything he has been more pessimistic. >> he said today that the job growth would be slower than expected, but in general i thought he was pretty saying win if you head the minutes. >> would you want to validate that the market needs all of this fed support and therefore at least it would be a guy who would try to point out the negative tone to markets here and the stresses that were added back into the statement for march where at least the previous five, they mentioned the stress of global financial markets. this left the last statement and
came back. >> let me rephrase. this will make a good healthy debate. >> a split screen? >> i think that the rally of 200 points on march 14th, i do not predict that happening. i think there is a lot of head winds still. yes, the spaniards of almost done, but the labor participation rate is not where it needs to be at this point in the cycle. a result of which was a lot of macro traders here that are getting very defensive. >> bernanke is saying you want to sum it up, they won't hesitate to do more. that's what the market wants to hear. >> i guess so. i don't love to hear it. i think they should be done already. >> for a market that is hanging on every word. >> i was surprised we didn't see a bigger move in gold. i don't own gold and get theç whole thing, but i was surprised we didn't see much. >> i took it very positively
that there is a limit to quantitative easing and we are reaching that limit. maybe there is more if we need it and there other things. to me four things bernanke said. is unemployment coming down a bit. i agree that we need to get a bigger rate. number two, europe. adding on to what tim said, europe is slowly creeping like a glacier going to talk about growth in europe. both said today. housing appears to be bombing and the cliskal click that bernanke can't do anything about. in an election year, hard to believe that any po politician will want to be the one and we will let it go and crash the market. bernanke, not necessarily. he said that only congress can deal with the click. there is not effective about it and i can't imagine a politician
saying i want to crash the economy. >> and it's all on my shoes. i'm the one. >> and even if you move slowly towards that austerity and growth, i think the market reprices that and do all right. >> let's find out what the contrarian is thinking. what are your thoughts? >> to about half today it looks like. i think two really important points. the first tremor we saw in the market came as a result of headlines crossing and a couple of theç guys we thought were coming over, that reverse would sell and it's obvious there is no typing in sight between now and the end of this year. they don't have the right to even think about hyping. the market took off when they realized this doesn't mean anything. foreseeable future will remain. that's the key. the other thing i mentioned is the goldminers looked atrocious
on the heels of this news that there is not any easing coming any time soon. that is a group that i think even can go lower. i understand on a basis of keeping them, but they do not like what they hear. >> gold and speaking of it went on a wild ride. he started taking questions. let's talk about the trading all day. chief market strategist at ii trader. gold was an interesting story. gold spiked on nearly the same commentary from the fed. why a different story at least initially? >> most gold traders are giving myself and the bigger guys on the floor that trade hundreds of contracts to date came in with the strategy because you were burned last time and you react to the news and trade accordingly. a lot of us felt like if there
was a shift, gold breaks 1600 to the downside. early on the market broke and ran out of gas and as you see traders sitting short on the news, they start to cover. buyers came in to market and this was a day traitor's paradise. if you back out a couple of months, we were basically in a $100 trading range. in the commodity complex, they are under pressure. i have to get crafty and design trades short-term to bring in a capital and yield. otherwise i am sitting here losing. the commodity index, they were down 2%. i have to trade the market. essentially 16 is my cutoff. if you break that, it's a bear. if you back the chart out further, we are in a beautiful uptrend. the market is bearish and they break out and they are bullish. >> what are the guys saying are the drivers of gold at this point? i see a lot of legs of the stool
coming out. we don't have inflation and i don't think we will have it soon. currency defacement, i would argue that it's coming close to the end. what else is there to drive the market higher? >> i think there is a part of commodities and gold if you will, the dooms dayers that will stay that long. i think they are against currency and we don't know the magnitude of the euro zone. we don't know about the fed. the fed is saying nothing from the last. if the stock market takes a downturn for the next couple of months, we are going to do it. people don't necessarily want to get out of gold. this is a 10-dwreer long storye story. i don't see any reason to get out until the market breaks down a little bit.ç >> i think rich brings a point that i would take the opposite side. you have a 10-year run in a weaker dollar.
i am not sure that trend continues. you talk about the yield thaw need to get and i do it with the goldminers achl number of them are trading at two or three times ebitda. i do look at the miners and i say i think these guys were a momentum trade that got destroyed at the end of the and they can get a good yield and they are cheep cheap and living off production. >> that's not a bad place, but also if you take a look at crude oil, we are in a tight range there. there is ways to make money without having to go in and sit in the launch. i think that's what the guys are doing. they are not just sitting that long or short because there is so much risk and it's nice going home today. flat coming in tomorrow and reacting to the market. if they go up, jump on the wagon and take money. >> talk to you soon, buddy. >> thanks, guys.
>> caterpillar reporting weaker than expected revenue, but the company's ceo is optimistic about further growth in china. take a listen to what he had to say with the closing bell a short time ago. >> overall we have been less than 2012 and 2011. i was just there and no one there is miss mystic about the medium and long-term. i think the program for the next couple of years is like it was aier or two ago. >> the stock getting bulldozed today.ç you embarrassed? that's good. >> more than 4%, dragging do you the dow as well. they tried to temper maybe the commentary that came out earlier in the day. they said sales in china obviously were off in the first quarter. they are likely going to be down for the full year and the economies in europe and china and brazil have slowed. what's the trade? >> the most important markets are the u.s. and canada and
europe. what he said is they were getting -- two years into a replacement that more than makes up for the slow growth in china and brazil. that is not going down the tube. this is a pull back in china. he talked about 7.5 growth that is life for china. i think people overreacted and the markets are where they are. china gave to apple and took for caterpillar. in both cases people reacted. >> there is no reaction here and they become that proxy. it's not anything about the valuation. the valuation basis, it's very attractive. i don't think people want to go through with that and they did with apple. they are doing it now with cat and probably will take that for a while. >> the options desk? >> i think it's interesting to go along with what karen was
saying. we stepped in and saw the most active with the weekly 105 and they expire on friday. they are opening buyers forç t particular contract and they were suspecting that people were throwing it out prematurely and there was a chance for the rebound. >> 75% of companies that beat earnings estimates. they proved resilience and headed to new highs. the partners and contributors, it's always good to have and 735 long before the market strarted the trade. i have been slowly expanding. did you have anything to do it? >> if you go back to april the last time i was talking about the market, you will probably face the direction by 5%. that's the low on monday. we got close to that. what makes me more constructively now is we had
this concern and the market is only bent and have not broken. you have a crisis in spanish and italian that shows no signs of stabilization. we have the questions regarding austerity and french presidential victory by the socialist and we have a cut in the outlook and the sudden ominous drop in the yield in the ten-year to 190. finally we have the technical break down in the s&p that got everyone nervous. it's important to remember it's not how stocks react, it's as important and it's important to remember it is how stocks react to news and sometimes more important on the news. i wowl conclude that the correction that they discounted the market head winds. >> is it because the earnings came in better than expected.
they came down so much going into earnings season and they have been great. >> it's not only the price action that is bringing me back to the land of the limit, but it's that overall earnings and forward guidance is far better than i and others expected. the earnings thus far in the first quarter is 550 basis points above consensus and this is squishing it is macro numbers. i call this the nba market. apple remains a pivotal stock and it's contributed to aggregate. they can't be overstated in consequence and on investor sentiment. the interesting thing is you look at the bond market that went up in the face of the weak durables. we might be seeing this reallocation with the bonds and the stocks that some of us had
been looking for for several months and it could be powerful and a catalyst to the market going really high. >> it's tim. i agree with your call and the pull back is a great call. how much of that was just markets as you say or the ultimate barometer. the players it seemed to me that global macro guidance was trying to press the replay button on the fall of 2011 and you saw that in the ten-year too. it went back around the 190 to 238 and the big pull back to the barometer and they haven't pushed around the euro. at some point, this has been a painful trade. when they get out of the way, markets again have the data points to go higher. >> i agree. i think what happened is they had all these events that i mentioned that you just mentioned that conspired to make people think that the domestic economy was weaker than it really is.
to me the first quarter real gdp is tracking close to 3% and for the second quarter, close to 2.5% and that's well above my base line expectation of muddling through with a 2% real growth. >> i want to get to your picks because i'm sure people want to hear where you put money to work here. i know financials are on your list. why do you think financials have under performed in earnings season and where else do you put money to work? >> the financials are discussing lower short-term interest rates and lower interest rates across the board. and the growing concern, there was net interest margin contraction in the since the returns. the earnings returns. housing is going to launch a durable multiyear recovery and that interest rates can arrive substantially the largest position is short with the bond and the tlt.
with interest rates going higher, it's a perfect environment for companies like bankç of america and citigroup and goldman sacks and morgan stanley. >> broad com and intel. >> i'm a glutton for punishment and i bought back yahoo. the industrials, i love general motors and fort given the average age in excess of 10.5 years. i would like to stay within the area of chlorox and pepsico and proctor. >> thanks so much. >> bye. >> talk to you again soon. >> cash again on coin star and amazon and the trade to those companies's earnings and those who lose the market tomorrow.
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. >> let's hit after hours action in the big cloud name. topping estimates on the top and the bottom line. stock plunging after hours after initially rising. they had a blowout quarter last quarter. it was another beat this quarter. i'm not sure why the stock is selling down the way it is. they are worried about a seasonal slow down. >> or that is stepping down and they have to find a replacement. it's growth and i think people are having a tough time thinking they will get past. the trafficking of digital media has been a boom for these guys. videos and all of the movement across the media is something that right now i think they have done what people think they can do. this is a big disappointment for numbers that were positive and i have to speculate some of this. >> you have a view on why the stock is reacting the way it is? it's not like it had a ginormous run in. >> with the earnings number, the
initial reaction was popped. i think traders knowç not to hd it through earnings and you talk to people in the past with a great company. earnings tend to be great or really surprising to people. today the numbers were good, but the ceo shocked everyone. this thing might get constructed. i like the company and the client list is second to none. they serve video for the big companies. i think it might be a good thing to pick up. i want to see how it opens tomorrow. >> i would agree and think you are looking at a demand for change and they had earnings and is it sustainable? i would be on the same side as josh. >> 36 times earnings and around 18 or 20. that's a problem. josh is the contrarian and i am wearing a pink shirt and you
are. >> he is not wearing collars. >> we're are both wearing a form of purple. >> you have time. >> you have the problem that they gave weak q2 guidance and you are seeing the reaction. >> it is. >> 36 and threat sends is what they say and the street was looking for 39. we can pull up the chart again. the second straight quarter of good earnings and you can see once that call started, the stock started to slide on that guidance. the next trade is tomorrow and amazon is set to report earnings and analysts are expecting growth in media sales. amazon heading higher and should you buy it ahead of results? let's bring in the senior research analyst. what's the word here? what should we watch out for? kindle, we don't get that much detail. margins are important and we have been spending a lot of money. >> the top line is important and they will be just fine based on
the results. we cannot bet on amazon and i would not be long in the stock. the reason is this. the march quarter was 38%. it jumps to 52% in the june quarter. you look at the numbers and they are not going in. they are looking for 29% growth and 29% in q2. this is going to be a great story to own, but look out for the top line guide coming tomorrow night. >> i am shorted through put spreads. i do not get it. it's a fantastic company and the valuation, i feel like this level of sales, they should be starting to see some margin leverage and that really has not happened. $60 billion and $70 billion. whatever the top line is going to be.
isn't it late to hope that the expansion is there and it reflects not growing to the moon, but half the way there. i don't know hom puts are here. >> in theç u.s. it's 6% and th rest of the world is lower. ultimately the numbers are probably going to be in the next years, 20 or 30%. this is just a clear focus. our belief is that that number is going higher and they will be the dominant retailer in the world. we are able to get in a lot of free passes on valuation for the next couple of years in anticipation. to be clear, the stock will be down after the report. >> the current retailers in the world trade at 12. a lot of good things have to come and why should they get 50
or 100 multiple when the current ones, wal-mart and apple are at 12. >> in fairness, the reason is that the opportunity is just that big and that easy to get your head around. they're willing to pay up even for apple. there is skepticism about how long that can continue in terms of amazon. it's an open ended and evaluation. you look at the pro forma numbers and i am not trying to defend the valuation, but just to put into perspective and it trades about 30 to 35 times. it's high and that's why we think it holds back here. ultimately, our belief is that high multiple stocks are the result of long-term opportunities and amazon fits that. >> i always side with karen, but i think it's amazon's turn to be in the fashion spot. it will replace apple in that fashion zone. you and i agreeç with each oth.
i don't think it warrants multiple, but it will gravitate and now that we are in the post steve jobs era. >> good stuff. we will talk to you soon. a good trade and wonder when it will hit $200. >> you have a six-month range. i own the stock around 180, but i don't need to run in and buy that. >> coin star is getting set to report earnings around the closing bell. it has been on fire. do you have an options trade ahead of the numbers. i don't know if you extrapolate from what netflix had to say. >> netflix has plenty of their own business models. coin star has been proven many times over. i'm not sure it is fair to compare it to netflix. >> okay, don't. >> i will say one thing about coin star. it moves quite a lot on earnings, close to 7% and
declined slightly more now. when these circumstances come along and you want that big move, a good way is to try to sell options and hedge by buying longer. i am looking at the may-june call spread. we will sell the calls and looking to collect for those by the junes. that's a net debit of 85 cents. when you look at an option with a month's expiration and another with two, the difference there being 85 cents of the total ç $3.70. you are going to capitalize when the front month kicks in and that comes in sharply after earnings. >> more options actions with mike coand the kang and follow the show on twitter at cnbc options to get constant trade updates. coin star, a name that jim is
public. >> i don't get the coin star model. in this day and age, video downloading, it's not good. >> coming up, you don't need to go big to find big returns. it might be worth a look when fast returns. >> we had a terrific quarter at the end of the first quarter of last year and went to $41 million. [ male announcer ] if you want a luxury car with a standard power moon roof,
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63. that's the q2 guidance. revenues were down and the problem is there is popular names that do well and once the stories break, they are hard to get back in. i personally would stay away and not a name i would trade for a month or two. >> it's a stock that has gone from 16 to 22. major momentum and it's not cheap at 18 times. are you wearing crocs this summer? >> be careful on the stock. >> what's going on with them? >> first of all, positives in the quarter. asian growth was up like 40 some ought percent. as someone pointed out, the stock is run up. a bit of a pull back is healthy.
this is a relatively small company. i would not count this out yet. i think it could be in the penalty box for a little while if they sandbag the guidance, maybe you want to own it halfway through the quarter instead. >> a guy with pink shirt and no tie has to have crocs on under that desk. >> a jordans. >> what season? >> what's that? >> what season air jordans. >> the fours. they came out like five minutes ago. >> i want to see them. most of the attention goes to big names bike starbucks, mid-caps are beating the street and making strong moves to the upside. joining us is michelle stevens, senior manager with baird investments. welcome to the show. why is now the time to own a segment of the market that under performed with small caps? >> if you are going to be a long only buy and hold investor in this market, you need to own not
only earnings growth and revenue growth as well. we are finding that in spades in small and mid-caps. right now is the time to own in our opinion. you have less exposure and more to the domestic economy. >> for you are making a bet, the best way is through mid-and small caps. which names would you put money to work? >> we are always looking for businesses that are experiencing an inflection point. one of the names we like is rent a center because they have a business model they have been rolling out in the rack acceptance stores. these are kiosks that they put in furniture and electronic retailers and it's the consumer can't get credit to buy the merchandise they want, they can rent it through rent a center. they have double the traditional line of business and just turned
profitable. it will contribute over the next couple of years. >> one of the concerns investing in the stocks during periods like it appeared we might have been going into a week ago, people are pressing a button and these stocks react violently. i think so far in 2012 and what points as a great one, there is real dispurgz and an opportunity to pick the stocks. how do you deal with the moment when is they get spiked up and the stocks are thrown out the window and manage risk when sometimes it's indiscriminate. >> we try to close our eyes and not look at the day to day and tend to be long-term investors and one of the interesting things out of the recession is the risk on trade was so popular that a lot of these steady eddie high margin businesses were not in favor. we are seeing siresurgence like we own in the portfolio.
the volatility in the higher quality names is lower than the cyclical. >> can you tell us what increased the dividend today? >> they are another company we own that beat the street in this quarter's earnings this week. they posted 25% revenue growth and they blew the numbers away and raised guidance and what we like about the name is the opportunity they have in the utility segment. they build the large polls and structures that are part of the upgrade of the electric grid and as we see the backlog in the business, we think it can contribute to the earnings. >> thanks so much. great to have you. michelle stevens. >> thank you. >> do you have small mid-cap trades? >> i like the idea because the small mid-cap is u.s.-focused and i am bullish on the u.s. i generally like it. the big cap value like a microsoft with more. >> love the sector. bought iwm. you take out any problems in
europe and with global growth. >> we are continuing to trade the big events that could move the market tomorrow. get the set you up out of two energy power houses after the break. ♪ ♪ [ female announcer ] you're the boss of your life. in charge of long weekends and longer retirements. ♪ ask your financial professional how lincoln financial can help you take charge of your future. ♪
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>> welcome back to fast money. i want to retouch shares and after earnings down 6% in the after hours market. you can see the drop there. >> i tell you what and looking at the numbers over the break, the gross margin was weaker and the capex will be higher than expected. >> maybe the management change is better if they can't have the gross margin. >> people were concerned until they realized it's probably poor guidance. >> until mark let us know that the biggest news was the margin guide down for the june quarter. the interesting question is whether margins are down due to acquisitions that they made or
due to com at the time 55 pressur . >> let's hit the playbook. where has the fear gone? the vicks dropping 6% and falling below the 50-day moving average today. >> gone to the tails. if you look at the puts further out, some of the lower outdated puts, the volatility there is 21% and 22%. hedging out the armageddon risk and bid those up and they are not necessarily playing the volatility here even if you look further out on the curve, you are looking at a 26-27 volatility. people are expecting the drop in the market that told me as a trader it's not going to come. it's probably the most crowded trade in the market. >> mikey, what do you see in the vicks? >> there is two good points
there. he just a duded to one of them. the forward volatility is higher. the one thing is that it can drive the vicks higher. partially because the way they are calculated depends more on the valuation push than the money or the upside calls. one of the other things that might be reducing is dispurgz. you see caterpillar come back, that's what we are talking about. it reduces the volatility of the index and if fot individual stocks. that's what we are observing. it's not that tocks are not moving around. they are. it's just that the counter effect moving in opposite directions. >> michael, do you think this is fed-induce and there is so much liquidity in the markets and people think there is a bernanke
put which is why they push out the risk trades and the longer turn? >> one of the things it's important to understand is that if it's true, it's exhibited in the s&p itself. the vicks as the volatility has an anti-correlation. it's negatively correlated with the direction of the s&p. they will fall because there is volatility slope. i think that's true. you will see the vicks drop if people are looking at a fed put. >> all right. coming up, we go straight to the vegas strip to break down the after hours action in one of the casino stocks on the move after hours. stay with us.
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portfolio. two energy heavy weights. they are set to report before the bell. they announced a dividend increase. the best way to trade ahead of the numbers. give me the trade on exxon. i heard a technical analyst saying technically the stock looks broken and under performed the broader market as well. >> i like that here. if you are talking about an economy. exxon does well and they become less oily and more gassy. >> they increased a bit and will probably buy back another $5 billion in stock. ubs had a note about that this morning. the problem is it takes a lot to knock people's socks off. they missed and the stock has been stuck around $86 and stuck for a long time. this is part of the problem.
when the oil is perceived to have a premium and not a real demand attached, people don't believe it's real. they have not done well in this time of an environment. i think they do better when oil gees to a sustainable level. that's not far from here, but i don't think i need to own the stock. >> where are you on exxon mobile? >> it's more like a bond than a stock and several companies are in this group. it does take a lot. the guidance and the earnings before jumping in. the energy group is terrible. great guidance and one of my names is down off of a weak earnings report. there a lot of similarities. i would not be a buyer. let's get a quick thought on oxy as well.
>> i like oxy ands on the contrarian, but 11 times earnings with a 2.4% dividend yield. it's safe. >> we are trading the after hours action at the las vegas sands after the break. it's very important to understand how math and science kind of makes the world work. in high school, i had a physics teacher by the name of mr. davies. he made physics more than theoretical, he made it real for me. we built a guitar, we did things with electronics and mother boards.
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>> welcome back to fast money. sands settling after hours despite a strong earnings report. they rallied up 4% on the day. at the resort in vegas with highlights from the conference call and i heard you talk about this earnings report that you termed a huge beat. >> it was. sheldon on the call was quick to point out the analysts and revenue estimates and pointed out that this was the first time any company has brought in over a billion dollars in a single quarter. earnings doubled whether you looked at the gap or adjusted numbers. revenues hit 2.76 billion. that ebitda quadrupled and he talked about a few things going on now. a lot of the strength came from singapore that surprised the
streets. it was much stronger than expected. he talked about they are surprised at the players that come out of the woodwork and he thinks that will continue to happen and we haven't reached all the vip players. he was asked about the new resort opening on the kow and started opening. is that going to cannibalize the other properties and he cannot talk about the numbers right now. he said we are intending to cannibalize the competitors. he said look at the history. when there was talk about reallocating tables and he said we move tables around all the time. a lot of questions about spain. he said they plan to open a big resort. euro vegas. the number said it might cost $35 billion and that it is not true. it might cost 8 to $10 billion. the actual investment might be $4 billion because he expects
each to finance the next. he expects 20% return on cash or he will not open the next phase. he is saying the cost to open this place in europe will be much less. also he talked about apple and he is comparing the companies at apple and the las vegas sands is a value in comparison. japan and vietnam. he is still pushing and also taiwan. they are lobbying very heavily. >> let me ask you quickly, what's the headline of what he had to say? when you put up the numbers, it's interesting that singapore is nipping at the heels. >> yes. they talked a lot about it, but in this report, singapore had the big surprise that came on so strong. you will have more coming up and the season is kicking in.
there is a big 83. will it be organic growth or steal share from other player or is it going to cannibalize his own properties. allison saying they don't think it will happen. he would not give any numbers. >> i hope they were holding your seat at the black jack table. jane wells for us out in vegas. give me one comment on casino stocks. >> nine lives. i think he is growing and the growth they are seeing, i like mgm. it's a value play. i know this is not sexy and i know it's 95% u.s. the business doesn't seem to be growing and the margins had value in the space. >> a programming note, the fast money halftime report is heading to vegas as well. we will broadcast live from the conference on may 9th and 10th. a very big name investor. details to be unveiled soon. he is excited about that.
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