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tv   Fast Money  CNBC  May 23, 2012 5:00pm-6:00pm EDT

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close and reversing a 191-point decline into a loss of just six points as you can see. the s&p managing to edge into positive territory. the nasdaq advanced late in the day partly because of strength in apple. that will do it for me and closing bell. follow me on twitter and google plus. fast money begins right now. looks like another day lost. >> we are off the low levels, but weakness on wall street, take a look at the dow. they have not had a two-day winning streak since late april. >> something sparked the torch. maybe our new-found friend. >> facebook is up by 1.9%. >> the market and the facebook story has new surprises every day. >> the banking committee is looking into issues surrounding the facebook ipo and seeking to learn about issues raised in the news regarding the ipo.
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>> don't worry. you have a friend in karen and you can sweet me. time for fast money. >> oust new york's times square, we want to talk about-face book and another new development potentially in the after hours. reporting that there may be talks regarding a switch and a transfer and we will have the latest from his end and finding that there is no discussion right now. let's just say facebook is considering this. . >> it's a sentiment shift. if the perception is this deal didn't go well and as much for the clients as much as the issues, there is pressure. this is talk.
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this is opportunistic behavior and why wouldn't you attempt it. this is the most high profile deal ever. >> let's go to bob pisani for the latest and what he found from his sources there. bob? >> we have been talking with the officials. remember something, in china and scott cutler and the two people who would be involved in any direct pitches are in china. they released a statement and there had been no discussions regarding switching the listing in light of the events of the last week. no discussions. that doesn't mean that some low level listing employee in san francisco may not have said no to someone. we don't know. the point is that there is no direct pitch by the leadership. i think you have to take the statement at face value. >> that are statement is from cutler some. >> no discussions from the nyse and no discussions with facebook regarding switching the listings. >> thanks for clarifying the story. we appreciate your reporting.
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when any company said nothing has happened that really seems to underscore the point that nothing happened. we are not saying no comment. they are saying no, no story here. move along. >> i will take them at face value and no story. move along. what do they snead a new listing process. that doesn't seem like a good idea right now. i'm skeptical. >> in terms of how facebook is trading, i'm curious. the bounce that we saw, will that have interesting to do with sort covering going or lift in the stock? >> the news was so bad, there was so much really weird selling that went on due to the fact that a lot of people didn't know what they had when they came into the trading day monday morning. to me, i think facebook did the first good thing since they went public and helped put a floor on stocks like apple and google when the market was down over
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1%. google and apple were putting up a big fight and that had to do with the strength of facebook finding a floor there. >> you are giving facebook too much credit to be honest. when you look at facebook itself, 570 million shares the first day. 130 some all million day two. today 73 million. the nyse hope this is trajectory you are seeing doesn't stay in place. otherwise there is a lack of interest right now on facebook. when i go back to apple and google, apple continues to bounce off the levels. when the market is getting punished, the money out of the market and out of apple started going back in and google held that 200 day moving average and look at the 200 day in google. that 600 level is where google seems to bounce. >> back to bob pisani. maybe there is talk of a
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transfer, but this may have impacted the marketing colors going out to other listings. >> you can bet that you almost don't have to mention it. just because there is no discussion, doesn't mean they don't want it. they would dance a jig because they highlight the differences. there is a single market maker and nasdaq has multiple and the people down here feel when you have one guy, somebody watching, things can be kept closely under wraps and watched more carefully. >> let's be clear on the first day that facebook had the delays and you are clear in saying it's not a difference between the nyse or nasdaq and it would have happened on either exchange. >> i have been here 15 years and seen plenty of technological glitches. everybody can have technological glitches. the nyse people felt that when the stock opened in the first few seconds and they had no confirmations, the designated
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market maker would have likely called the stock immediately until the trades cleared. that's one thing that people down here are trying to point out. that would be up to the discretion of the market maker. >> thanks a lot. bob pi san fret nyse. let's talk hewlett packard and moving higher. after the bell, the stock trading down in the session because of dell's news after the bell. a nice spike in the after hours session. we are looking at hewlett packard and the layoffs are 27,000. a surprise that there was a bounce. were there people playing more bounce? >> the stock at five-year lows and got decimated. you can't even put your finger on what it should be. in some ways, this was set up to pop. we got a preview. they are looking to save 300 to 400 billion a year. this company is going to get much smaller before it gets bigger. they will give up business
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opportunities and market shares. this will be a dicy story for the next couple of years. meg whitman got her hands full. it's very oversold. >> this is a turn around story that will take years to turn around. they don't begin until 2014. it's nice to see. the stock has retaken technical levels that i think are important. in the after hours, if you hold the levels, you are back boost 20 and the striking of the 50. this stock lost any type of a technical range on may 10th. these numbers are reassuring and there is a beginning of a plan. despite the fact that they are failing badly in the services business where they will be cutting back, they are losing to people like ibm and this is a story that people can start to electric at again. there is no real constituency. this was one of the most widely held stocks at one point and value means zero when you don't know whether the company is
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brecken or not. does anything change for you in. >> obviously in the face of the dell earnings, it was a lot of fear today. this was the first good news we have seen out of them in almost two years maybe? i think there is a lot of people on the sidelines there who said i would rather buy it higher when there is better news than cheaper when i don't know if we have seen a bottom. the valuation is ridiculously compelling in the mid-single digits with a balance sheet in great shape. i hope it is. a long suffering shareholder in and out of the name and every buy was a bad until today. i hope. >> did you buy today? >> i did not buy today. >> let's go to john on the company's conference call to see why the stock was hitting session highs. john? >> a few interesting things. one thing i point out in contrast. dell said they had execution issues and they need to retool.
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meg whitman said you can put it under dave and essn. it's doing well. perhaps some of what happened to dell was hp hurting their execution there. also talking about europe and how the macro environment is causing the caution to come in and the reason why they took up the full year eps guidance was because of layoffs. they just said they won't be able to reinvest that amount for coming in q4 that they will get from the lay offs that they plan to do. that will show up in eps and implied that won't continue into the coming years and will reinvest that amount. overall not as bad as people feared with dell for yesterday. particularly the asia business is down just 1%. dell was flat based on a stronger market in asia. you might have feared it would be worse than that. >> we will check in with you
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later on. pete, you have been a long suffering share holder and this is a rarity because you don't top the keep long positions. >> the shareholder, it will be more like a -- >> i will tell you what. this is what i took away. the numbers were awful because they are so tied to the pc market. 70 to 75% is pc-related. you look to ibm. they are mirroring each other except that hewlett is exposed, the most in the european markets. what i loved hearing is meg whitman said look, we have a point and a purpose. we are cutting 27,000 people. i am not happy, but it makes the company that much more efficient. 8% of the workforce is gone and they can retool and focus is on big data and security. that's the focus. now we know where they're going. i like the direction. that's the direction of growth where the margins are and i like that for the reasons i have to hold on. >> contrarian.
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you don't like this stock. >> it's not terrible and obviously cheap, but you can only own so many stocks. why would you own something like this? everyone hates it. i'm here to be the contrarian. why would you own something like this where we don't know what this company will look like in a year or two years. it's great to have meg whitman and great that they are doing layoffs, but a 10% pop in this kind of downtrend, i would give it time. there is other things to own. this thing is not going to run away. they are not to go anything well. maybe they will. it's got a lot of employees and it's important for the country. there is no reason as a share holder to sit in this thing when you could be doing other things. >> you have been selling calls against them. >> and i would continue to do so. you are getting a 2% plus and on a valuation basis. that's where i would argue. you have a 10% pop already today. there is a reason alone and
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think it goes higher. >> oil taking another hit and dipping below $90 a barrel. the next guest said growth prospects are the bleakest they have been in quite a while. let's bring in the director of market research as well as cnbc contributor. great to see you. what's the next level of oil that we are watch something. >> it all depends on whether to sustain this momentum to the downside. we have come off fast and far and i would like to see consolidation. it electrics like 8855 which is the 61% retracement of the october to march rally. >> in terms of the major driver here, are we watching the euro dollar? >> those trend lines between the euro dollar and crude have been cemented over the past two weeks. as the euro sinks below 126,
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that's very a very negative factor for oil as well. also the market is very much trading sort of situational risk here. it's almost like the market is long and the baghdad talks about iran and short the talks of brussels about the eu. >> to what extent did you see more acceleration in the price down when we get the news that iran is finally going to be -- hold on. you inspectors, have we gotten the missiles out of the kitchen? they let us in after five years and i wonder why. they are teaming up with the navy to take down somali pirates. we have this place where iran looks like they are engaging westerners and you have a place where the other trouble spots in the oil supply trade eased up. that to me was $20 in the price. >> sure. >> do you think that's more important here? it seems like the market played
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a depressed demand and i don't know that that's new news. >> i agree and it's the outliar on the demand side. as long as we keep getting deteriorating statistics that, is in play. certainly the premium they have put into the market from december into and through march and april was really all about iran. we had our moments of coming off on that, but that is the main driver so far this year. >> thanks for your time. >> china reports the flash pmi and the numbers, you get china data to see how real this falls. >> i want to go to mike who is on the options desk today. we see them go from april and go along with it. you will get strengthened in the oil names. what is behind that strength? >> a couple of things going on
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here. for one thing, there was a lot of conversation about supply disruptions in the mideast and demand, destruction in china and europe. don't forget that we have a lot of production going on here in north america. kansas is saying we have 15 billion barrels of reserve there and this can fuel the oil services companies even if it's not great for oil prices. that's one of the reasons you see relative strength versus the integrated oil. >> 1 and 1/4%. going to break here. pressure is mounting for the underwriters of facebook, but they are raking in big profits. how much after the break and labor on lisa harper, hot topic's ceo on why it could be a bloft buster for the company. #
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> i wish for you four things. first that you keep in touch via facebook. this is critical to your future success. we are public now so can you click on an ad or two while you're there? >> they will have to click on a bunch of ads. that was cheryl at harvard business school giving the commencement address and the fiasco was not all that bad for everybody if you were an underwriter. $100 million with the underwriters. >> a bit of a silver lining on the deal. the stock going down so much is a black eye for the banking part of it, but they have made about $100 million directively through trading and what's known as the
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green shoe to stabilize the shares with buying up a lot of the shares and trading them for a pretty decent profit for three days's work. >> let me ask you, this was not on commission, but taking a position? i wonder if they were supporting the stock and it's nowhere near there now. were there losses associated with that? is that included in the 1 hundred helped million? >> that's a good question. the details are not super clear, but the general information is that the profits are $100 million and on commission and not on fees. that is involved with stabilization and suggests that the stabilizing took place below that offering price of 38 and maybe in the mid 30s. a lot of firms were wondering what the position was on friday because of the glitches and the opening of the stock. that would explain why they waited until monday and tuesday when they slipped below that
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level. >> when we laundry list the pros and the cons, $100 million shared with the other underwriters is in the pro column, but the cons have the reputational risks and the reimbursements that may not have been executed in the proper way. the lawsuits and the lost business there, correct? >> one of the biggest problems is this huge retail business they have and all the investments they have. if morgan stanley was too friendly with facebook and not cheap enough, that's something over the long haul that what they thought would be a favor to retail investor clients turns out to be you have explaining to do situation. >> thank you very much for your time. you have the purnl. although facebook is a negative and the stock is still a bee.
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the eastern analyst, toug, always great to speak with you. in terms of the headlines, aren't we at a point where we can't quantify the impact at this point? is it too early to say it's not a big deal? >> i actually think if you talk about the laundry list of issues for morgan citily in may, the only one that is company-specific is this facebook issue. i am not sure it's an issue. the company indicated they followed all the procedures from an ipo process. clearly it is a black eye and cannot perform well out of the gate and is so hyped up and they may be liable for give back on client trade that is the next q correctly. i just don't think it will be that much of their business from a heptational standpoint. if the investment banking industry had a great reputation,
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i would be more worried. the whole industry is a big ugly mess. underwriters botch ipos all the time. this has a bigger profile, but some have done terrible that competitors haven't done. i think in the mere term, the perception hit for sure and the money they have to give back. i don't think in the bigger picture it impacts the banking business that much. >> i agree, doug and this is not a goldman sax public scrutiny for the next year and a half. this will be forgotten quickly. i am more worried about what's going on in in sales and trading. they were one of the prime brokers and they were fantastic. one of the top prime brokers. this business is if you talk to any of the brokers that come around to the by side, they electric like they are about to kill themselves. where do you expect to get excited for these guys? is it on the wealth management
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side where in the short-term it might be under pressure and that's the best out there? where do you get excited? >> you hit the nail on the head. we are not there yet, but the future of the company is gaining more access to fee-based revenue streams and both in the retail business and in the asset management business, obviously they are working towards acquiring the greater percentage of morgan stanley and smith barney joint venture, but that is probably the best outlook for the industry over the longer term. obviously rising interest rates would help that. in terms of the institutional business having worked in it and gone through for the past couple of year, it is tough. i think better opportunities to make money with retail and fee-based revenue streams. i don't think they are there yet. >> let me ask you quickly. does it change the book value and we are trying to understand why if the facebook issue is the
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only company and the rest are faced by the others, why you would still say to buy morgan stanley? . >> it's a great question and it's very true. they have what they have muscle memory. they did almost go out of numbers november of 2008 and they survived. some would argue they are the weakest ones left. if you look on a valuation basis, they are just about trading at the same multiple they did in october of 2008. the liquidity profile and the company if you are better, they have 2.5 times the common equity and the leverage is more than half. they have half leverage than they used to at 13 times. i think it's the weakest name. they can't buy back stock and you are fighting the macro head winds that are the biggest factor. >> doug, thank you for your time.
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>> with the facebook ipo, this is the worst performing large bank. if you want to look out, look to july. if you wanted to buy july 15 call, it's a defined risk and a cheap way to play. >> we are trading the space and a reversal for stocks, a reason to be bullish. here's the melt down that will get worse. why a fund manager sees upside for the troubled region when we come back. #
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> an interesting reversal that seems to be the opposite of what happened yesterday. headlines out of europe and
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there were a lot of things flying around. either that or somebody has come on board. the euro bond train that arrives against merkel. what is going on here? >> we were laughing about the bank deposit. there is no deposits left and no big guarantee there. there has been a policy even communication vacuum and it's interesting that this summit might have delivered something when they expected nothing. it's not insignificant that they closed positive and it fought back from negative tape to finish positive. it's really great strategists that are calling for a turn here. there is a number of different factors. 38% and it's 1295 that is held. they have seen major reversals and in brazil any russia, these are bear market territory and that's how i would play it and we see this relative to the
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developed markets and some of these are so oversold that you can take a shot here. mar are what did you do today? >> he mentioned geographics. the small caps, that thing started to hold and rally before the large caps and that is signifying that they are willing to take more risk. i are going to miss the rallies and it happened quickly. if you don't have the reasons, you can't shoot yourself and you will get another shot. >> what did you do today? >> it's possible we see more window dressing for the end of the rally. a horrible month. that wouldn't be surprising. i really didn't add a lot. i am skeptical with a solution that is crafted timely enough. we will see more headliners out of europe for sure. >> also that spiked today.
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>> spiked good and no one talked about at all. if you look at last week, do we see the most activity? where do we see the first couple of days? the goldminers. they bought 15,000 january 15th calls and doubled today. people were getting out and there has been great opportunities in the goldminers and despite the fact that we were down 1220, the gdx is one of the first to go positive followed by many of the names that have been brought out back. take a look at the energy getting down to 4750. there was a huge move today in some of these coals and steels and at least that prevented me from cutting out of the positions i held for a while and assurance that these have more upside. >> you are certainly weighing on the market and the next guest said grease's woes are to germany's benefit and that could strengthen the euro. joining us now is the port noelio manager of two bonds rated number one by morning star
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and the leader short-term bond fund and the leader total return fund. a pleasure to have you with us. the silver lining is what? it helps germany in the end? >> our view of europe is really straight forward. you have to take a step back and look at it. the ecb's debt to gdp is only 85% different from the u.s. at 102 and with obama in charge headed for 104%. they have plenty of room to print money. germany wants to stall as long as they can and it driveways the euro down. germany is having roert exports. germany is running the show. so we think that fundamentally europe is good. we think there is headline risk for sure, but i think germany has done a great job for themselves, but not for the rest of the euro.
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as far as greece goes, it's a lost cause, but whether you send them food assistance or keep them in the euro, i don't see i difference. >> the exporters benefit, but the top pick would be ing. why is that? >> ing gone to clean up their problems in l.a. they have a 4% exposure to the banking system in europe in total. what you have to appreciate is they are trading at 36% and about $6. we see them traiting to 50%. upside at about 10. if you don't like equities, if you like the bonds, we like the fix to floats that pay you about 4% current yield can they're paying about 80 cents. whether you are fixed and you like them both. >> for the longer term fund, do you have a yield that you are
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trying to hit and how far out do you go? >> the yield on the return fund is 7%. duration is about 4. we do not have a target where we are more opportunistic in nature. we are playing that and adding coal names. is btu, 4 and 3/4. a 5.2% current yield and 90 cents on the dollar. the upside is 120. if we are more opportunistic than tactical in that fund. >> thanks for your time. a leader in capital. yes, a weaker euro helps exporters, but i think that germ knowy's exporter problem is the trading partners are within europe to sell. >> i think he is right. first of all, germany needs to see the year work. i don't think they are lobbying, but it has been good for them. he is confident on the banks because i believe in the
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netherlands it's a different story. you will see the bank recaps. that's good for bond holders and not good for equity. i get while y he is going down the road. the ways of deleveraging that are killing markets. >> going to break here, one of the hottest tickets in retail right now. the boss at hot topic will talk about if summer will bring more momentum for the stock. the ceo is up after this. [ laughter ] ♪ [ female announcer ] each one of us is our own boss.
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>> look at shares of kcg filing at 8 k in the after hours session. it sees 30 to $35 million due to facebook ipo issues. they submitted claims for accommodation from the nasdaq. ceo tom joyce did say 30 to 50
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so it's more clarity there and he will be exploring compensation. confirmation of this that the stock is lower in the after hours session. meantime, numbers for new home sales better than expected today. if you have been playing the home builders, it could be time to protect the position. we have a trade on dr horton. >> good home numbers and good numbers. this is a space that has seen gains since early october. most of the stocks are up about 100%. what is usually the case when you see more clarity that, hasn't been the case because both concerns have people a little bit concerned. you can collect a lost premium by selling the calls if you have been fortunate enough. i was looking at the august 17th calls. at the time i was looking at these, you can collect about 1.35. they were closer to 1.50 and
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better than an 8% stand still and 10% upside if you had the stock go through that short strike. this is a nice way to try to collect the yield and you had excellent gains so far, but there clouds. this is the way to take advantage of perhaps getting to a stress point. >> josh brown, do you like to play the derivative plays and are you in builders themselves? >> sticking with the trade and home depot and low's have gone against us here. i am not in low's, i'm in home depot. that's the one you want to play. i like it better like the further off derivatives. the val spars and the stocks should still work all year long. again, the rental trend and the fick in the foreclosure is ongoing. the home builder stuff is important, but i have chosen to play the rental trend more with those. >> you can catch more options action and follow the show on
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twitter to get constant trade updates. shares of hot topic are on fire. up 40% this year. the company has been tightening up and focussing on licensed products. banging on hunger games and the avengers. what is the retail chain's strategy for the second quarter? let's bring in hot topic ceo lisa harper. >> thanks for having me back. >> the last time we were talking about hunger games. the spike associated with the box office release happened in the weeks before. it you see that same pattern with avengers given with continued success? >> they follow the same pattern. the primary week for sales are always the week prior to release. >> when have you seen compared to hunger games? are we expecting an additional pop because of better than expected sales and how well the movie did? >> avengers is a different product.
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it was widely distributed. state farm specials and a different property. hunger games was more focused in our retail space. we have two coming on the heel of avengers that should be a bigger play for us. spider man over the fourth of july weekend and the biggest play for the quarter is dark night. that being said, we think dark knight will be the winner. it's the end of the trilodgey and important for the customers. we were able to even eliminate that important piece and the blockbuster license sales. we are comping positive and that is driven by the fashion apparel business. we are happy to have the blockbusters and happy to have the improvement in the core business. >> let me ask you something. cotton as i'm sure you well know has come down a lot. how significant is that to you?
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>> it will be great. the second concept is a large size fashion concept is much more dependent on the cotton market. hot topic is bought out of the market and we are changing the strategy and doing vertical development. we are designing in house and contract manufacturing with fact reece around the world. we are starting that policy in the back half of the year and going to be able to capitalize on the lowering cotton prices. >> when you say highest levels in about years, is the primary driver cotton prices? what else is behind the increases? >> the gross margin increase in the which was 140 basis points and the highest gross margin we had in the in over ten years, the good news is we have to fill a lot of upside related to that. it's due to improved merchandise focusing on the fashion apparel areas and inventory management. we are diligent in how we manage
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the inventory and the improvements in those areas. >> one item out of the dark knight lineup. what is the one item that you are most excited about. >> that are people bought. >> bat man is always a good license. as a dark edgy version, it's the third in the trilojsy. we love the trailers and we love the product. we think it's going to be where hunger games was an a plus, this is solidly an a license. >> good to see you. >> thanks again. >> lisa harper is ceo of hot topic. >> the goth and the an ark lift i think. >> that's a lot of boxes. >> in terms of what you said, take out licensing. that's a good thing. this seems like gravy on top. >> it's not expensive. it is interesting. >> the valuations look good. >> on an ebitda basis.
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motion whitman will break down the company's earnings in an exclusive interview you won't want to miss. tune in at 9:30 a.m. still higher in the after hours session. slamming stocks around the world to the lowest level in 22 months. what is your best way to play euro zone woes? we have the "money in motion" trade. has your view of the euro and how low it goes changed on the headlines you got lady in the afternoon? >> i have always thought it could go much lower than it has. my view has not changed. i see further downside for the euro. investors have been very nervous and the various comments from euro zone officials debating
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whether or not they were having contingency plans for greece lefing the euro. that made the market nervous. we hit technicals and support at 126 to figure and broke through. we had the downside slide which was the lowest in about 22 months. >> you are looking to sell europe and you choose yen. >> i do. overnight last night, the boj had a meeting and they did not use the policy. the yen is a safe haven currency. i prefer to take data out of the equation and take the euro short across against the yen. this is around the level. i would have thought it was 101.35 area. that could send the dollar lower. >> we have payroll that has been quite mixed on to lower than expected in the next couple of
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weeks. we will see another payroll read ahead of the greece election and i would like to keep that out and play another currency at the end. >> thanks for your time. friday is "money in motion" and currency trading every friday at 5:30 eastern time. the traders make the call on the top three things you should be watching on thursday. stay tuned. [ wind howling ]
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>> coming up next on "mad money," fresh off of earnings and a day of tech weakness, jim has the ceo of lsi corp coming up at the top of the hour on "mad money." we are bringing you the top three trades for tomorrow. you are looking at that specifically. >> we're are long jacks and tomorrow is the last day to trade before they have to announce or said they will announce a tender offer. a self tender for their own shares and i expect to have that happen on friday. how much they will purchase and at what price. i think they will begin that on friday. we have oak tree still out there. they are interested in buying. i don't know if we can see a
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deal and the other thing is oak tree may not tender their shares. i like this and think it's interesting right here. >> we are watching tiffany out with earnings and i am sure you are watching international sales. >> 50% of the sales come from overseas and when the consumer on the high end has been there for this whole economy, i think you want to get a sense for what it looks like in asia and if you see a drop off and the stock is down a lot, in a lot of ways, i think that a disappointment in asia could send the stock lower. >> pete is looking to start the day with starbucks. maybe the coffee as well. what do you see there? >> i like what bank of america had to say. i see that and they like what's going on. they like the story from china and the stock is oversold. it was up above 60 and towards 62. they got all wait underneath 54. here at 55, it's a great opportunity and think there is upside when you look at the
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growth. the same store growth they have shown in china and the expansions, i think this stock has a lot out. >> i heard that and i don't understand the defensive side. when you pay $5 for a latte, i don't know how defensive that is. it is an addictive quality. >> as we head to break, take a lock at this. a twist on the phrase party animals. a guy walk into a war with a baby zebra and a parrot. the wild night began when he tried to bring his pets into a dole saloon. they were pulled over by police and a wreeb what ra and a parrot were in the car. the man was charged with drunken driving. no word on what happened to the animals. >> a nice use of to to. >> more on tomorrow when we come back. #
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> they threw out the dividend stocks since may 1st. they have high deals in there. >> the supreme court will be ruling on health care reform. we like unitedhealth. >> tim


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