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tv   Fast Money  CNBC  September 25, 2012 5:00pm-6:00pm EDT

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melissa and the traders are chatting with governor jerry brown who just signed a bill to allow california's first driverless cars to hit the road. it all begins right now. have a great night. see you tomorrow. stocks post the worst loss in three months is. a federally dying? >> i think the fed has been absolutely stupid the whole time, but that's neither here nor there. >> but the bulls and the bears are still duking it out. >> you expect things to be down much more than they are, and they either don't stay down or they find buyers midday. that is saying i've got a chance. >> google and apple are still competing for top text stock, but can the underdog stage a turnaround. >> the board of yahoo! in that process -- i mean, i don't know what i would do if i had my hands around their scrawny necks. >> going global for value. still fuming for "monday night football." fresh from the trading floor, in is "fast money."
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stocks sliding as unrest keeps up in spain. thousands of spanish protesters demonstrating in madrid as a new government prepares a new round of austerity measures. the s&p 500 -- take a look at this -- falls the most in three months. so what do you do at this point? what was it like on the floor? was it these pictures in spain of the intensifying unrest there that really facilitated the selloff? >> i think it was comments we heard from placer. we haven't seen the markets sell off more than three or four handles. we're right at 14.42-ish. but this is where you sell them or buy them. everything else, people sitting on their hands, you have to make a choice. that footage does not help. i'm bearish. >> what charles plasser said was that qe-3 won't help hiring, won't effectively help boost growth. so is anything new? i feel like we have been saying
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this ever since qe-3. >> i'm not sure we really needed to hear this to give more credence to the argument that qe-3 works. it certainly has been something that i think the open-endedness, we've dealt with, and more on its impact on acid prices, but this was the frustration that day. this is not going to do anything to help the employment story. so it has been stated, an almost 25 point entry day is an extraordinary move. it's almost -- we got the reverse of the turnaround on tuesday. what should have happened is we should have sold off this morning. as europe closed, we should have started the rally. this is option hangover coming back in on tuesday into the month end. and i think -- you know, i don't see a whole lot to help people on the news front because we had very good news in u.s. housing. we had decent news continuing out of the european bond auctions. and a little bit of bad news has people selling. that's a concern for at least some of the crowded trades. apple -- let's not discount the move on apple.
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i know we'll talk about that later in the show. but technically, that's a big part of today's move. and don't forget about that. >> you also had the performance of equities auz y ies as of lat. you see that trade flipping and guys are getting ahead of that. to tim's point, the reallocation trade ahead of it. >> let's talk about $20 billion at the end of the week. equities sold to even out allocations. >> pete, spike up 9% on this selloff. what were you seeing? >> definitely there was a change of everybody's sentiment today as we started to see, especially in the last hour or so. that's when we really started to see the spike in the volatility index. but to ken fisher's point, he was talking about being very critical on the fed. but he also talked about some of the mega cap stocks and that's where he'd be looking. a lot of those names actually performed pretty well, excludeing apple today. but overall, he was talking about google, he was talking about apple, some of the integrated oil names. you look at a lot of the performance of some of these names and i would seau still want to take a look at these big
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farmer names. all they do is hit new 52-week highs every single day. today, fizer, they were buying a little bit of time, going up a little bit and going all the way out and reaching for the december 26 calls. the trades that are working seem to be the ones that people continue to want to see work. they weren't going near term, though. >> just to your point about going to the mega caps. if you take a look at the equal weighted s&p 500, it is the equal weighted s&p 500 that actually underperformed today. it was larger stocks that fared better in this selloff. >> but the valuations for the larger stocks, if you look at a microscope or something like that, much more down to earth. even with this 9% move -- >> it's low. >> yes. >> on an absolute basis. >> i agree with you. i think if anything surprised me at all today, it was while we started to push to the downside, we had some weakness out of apple almost down to the gate. you really started to watch google start to sell off after all of the performance to the
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upside and the way it traded towards the end of the day, the way almost every one of the equities traded, i would have expected it to get a lot more juice behind it. it didn't, which gives me a bullish sentiment even though the market looked awful today. >> we'll talk more about the weakness we saw in apple as well as the transforce. meantime, we want to go out to california here because the driverless car is here. california governor jerry brown making it legal for cars that drive themselves to hit the road. google has made a big push into self-driving cars, so the bill was signed at google headquarters a short time ago. the governor is with our john fort in an exclusive cnbc interview. john, take it away. >> thanks, governor. thanks for spending some time here. driverless cars used to be a technology of the future. it's here now. will this kind of technology pull california forward because there's so much pessimism about the state of this state's economy. >> well, there's pessimism in new jersey or texas, but in california, there's unbounded
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optimism. apple started right here when i was governor, is now biggest corporation in the world. here we have at google. can save on energy. enables people who otherwise couldn't drive to be in that car. it can bring a greater efficiency to the roads because cars can be closer together, as things were perfected. we have automatic pilots for airplanes. we have drones. the technology is always changing, and california is changing with it. >> talk to me about the state of california a little bit. prop 30, we're going to have on the ballot in november. a tax on the wealthiest californians. i think it tops out at 12.3% for individuals making more than a half million dollars. is that going to really helm turn this thing around, or is it growth that's going to have to come and do that? >> well, you've got to have both. and we're getting growth. california the last 12 months has grown 50% faster than in the
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nation as a whole. so we're coming back, but we got into a big hole here with the mortgage meltdown. and proposition 30 is pretty simple. those who have been most blessed, people making a million, five million, we're asking them to pay 1%, 2%, or 3% more on their income tax and that money goes into the schools. our schools have been devastated over the last five years. we've cut 30,000 teachers, we're cutting librarians, counselors. we want to go forward. we want to take some money temporarily, seven years, put it into the classroom. that's proposition 30. i've looked at it, i think it's a fair deal. >> make sense on the face of it, but is this as far as we can go? can you go back to that tax bracket and say we need more from you if that doesn't work? >> well, look, it's far as we can go. it's getting up there. but remember, 30 years ago, when i was governor last time, the top income earnings took 1% of the total income in california. now it's more like 22%. so i think in terms of fairness and ability to pay, proposition
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30 is designed for the most effective way to get the job done. >> california, the biggest state, can't help but see some parallels between it and what's going on at the federal level. federal level we got the budget sequester. basically, if action is not taken, horrible things happen budget-wise. in california, if prop 30 doesn't pass, there are drastic cuts in education and some other areas. what does it say about the state of our politics as a nation that we've got these sorts of things going on? >> well, the nation, it is screwed up. and the inability to either cut or find new taxes has just paralyzed the place and we're getting deeper in debt and our credit rating is at risk. in california, we've had problems the last decade. inherited a budget deficit of $27 billion. we've whittled that thing down. we're almost at balance. to get over the finish line, we need more income. that can come from the highest income earnings and one penny on
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a $4 purchase. that's the small sales tax. what's good about this, people get to choose. they can say no to those taxes, then we've got to cut. you can't take blood out of a turnip, as they say. we need the revenue to put into the schools or else. the people say no, i get it, and we'll manage austerity and we'll do it the best way we can. >> last question. so you say that gets us over the finish line, but doesn't the whole system need to be fixed in california with costs rising that got us here in the first place? >> oh yeah. that's why we have pension reform. we just had a dramatic change in reform in our workers compensation, and yeah, there's plenty. you find a lot of people in businesses, in churches, in universities and schools. they got flaws. and guess what, government's got some flaws. so the problems are never fully solved. got to keep at it. i've been at this business a long time, okay? i was governor in 1974.
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so i know the problems with government. i'm here to get them solved the best way i can. but i want to make sure we get just a little bit more money for our schools so we can educate the kids and get more people working at google and places like this changing today's problems with the technology of tomorrow. >> a twinkle in my parents' eye at the time. thank you, governor, for spending the time with us. back to you, guys, at the nasdaq. >> thanks to the governor of california, jerry brown. we've got some changes at two big text stocks. >> let's start with the first one. yahoo! announcing that ken goldman will join the company as chief financial officer effective october 22nd. it says goldman will succeed tim morris. goldman does join yahoo!. in the past, goldman has been named among america's 15 most connected capitalists. moving on, ibm announcing its president and chief executive, she will take on the added title
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of chairman. that's the news. melissa, back to you. >> thank you very much. the one and only barry diller thinks google is in a league of its own. >> the idea of thinking you can compete against what is the verb, google, is stupid. >> but is diller actually right? we're settling the score in the bat of the tech titans. that's next. one of our very own trade sers finding new life in a stock many thought was dead. we'll teach you a thing or two. stay tuned.
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♪ welcome back to "fast money." tech stocks today. this is a mover you don't see too often. rim versus am. rim up 4.7%. the ceo saying that he promises carrier testing for the blackberry ten operating system in the next month. but take a look at shares of apple, meantime, down 2.5%, continued weakness after disappointing on the number of iphone 5s sold in its first full weekend here. is there any point, pete, is there any point which you would say, you know what, maybe rim on a flier? >> no. >> never? >> i do like the fact that this new operating system does provide great security and gives great features as far as the navigation throughout the whole system and the ability to do multiple tasks at once. i think all of that is really great. i think unfortunate they have to understand they're not really competing against apple any
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longer. they're going against the rest of the competition. i think apple is in a league of their own right now and the rest of folks are there to fight over that. >> what happened to the patent argument? >> it's got a lot of intellectual property. >> i think it is worth the flier. six months ago, i brought some set 15 calls that actually last week went to zero, so no. which should have been the answer. i'm very skeptical that now they're ready. the operating system will be out on time now. i don't know. >> right, exactly. what are you seeing when it comes to rim or apple for that matter? >> well, taking a look at rim, the top two most active option -- put the weekly five and a half puts opening buyers, maybe trying tyke advantage of the fact that the stock rallied here. it's going to take a lot for a company like this to get its mojo back and i'd be pretty skeptical. people start to invest themselves in their technology and that investment in rim is
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over. >> all right. well, let's move on and talk a little bit of google, because 2012 has been a fantastic year for shares of google. the stock was up more than 16% year to date. today's session hitting yet another record high. is it time to take some profits? for more, let's bring in the portfolio manager of the jacob internet fund. great to have you onset. >> thanks for having me. >> so you are taking profits? why now? such momentum now. >> we definitely have reduced our position over the past month or so and it hasn't been the best move so far. there's just a lot of question marks surrounding the company. i don't think existed a little bit ago. the biggest one, in my opinion, has to do with the relationship with apple. clearly apple is beginning to push them out of their own ecosystem. we have seen what's going on with the maps application. i think over time you'll have to start seeing that the potential for that kind of move within
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search in the mobile space as well, and now google is getting 30% of their searches from mobile and it's a big deal for the company. so that's one of the major risks. there's also the motorola acquisition, an overhang that's going to be there. there's the question about management and the things they've done to retain control over the company. there's just a bunch of things there that we think the risks are a little bit high we are goolg than maybe some of the other companies we own. >> when it comes to being pushed out of the apple ecosystem, why can't it survive in its own android ecosystem? if android is actually gaining share and there, what's the big deal? >> it's a great question. they probably can coexist, there's no doubt about it. but to be excluded from the apple platform i think would be a negative impact for the company going forward. we're talking about growth rates going forward. i agree with you. right now they're kind of basically 50/50 and android is beginning to get a simultaneous possession given what happened last night, is a good way to
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describe the environment, but to not is potential for 50% of the market, if something happens there, that could dramatically impact results. >> darren, in terms of some of the chinese internet, very bullish on cena. talk about valuation, though, and where people -- you see a myriad. cena actually is a value play in the my of a lot of these guy that is are grossly overpriced. but again, give us an idea of where you see kegger both on earnings, but more importantly if you're worried about the corporate governance. >> corporate governance is by far the biggest risks in china. we've seen stories in the small micro cap side. largely the bigger companies have avoided some of the stig ma -- stigma attached, but it's a risk. there's no way you can fully know what's going on. >> but isn't that absurd as a fund manager to say i don't know what they could do?
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with all due respect, that seems like a huge risk to take. >> i think if you are willing to take -- like you said, it's a little bit of a value play. there's a discount in the name, in my opinion, for the potential growth. you'll see the largest internet market in the world. so i think the opportunity is such that you take the -- you do the due diligence you can, but you know that in the end, just like enron or world com, there could be an example of something out there that you never really have firm control of. we've met with management as many times as you can. we feel comfortable with the company. but it is china. >> e-bay, is that a market part of the business or the pay pub part of the business? >> the pay pub is by far the most attractive. they've turned around their core marketplace. we had very low expectations for that business, but john donahue has done an excellent job regaining share and stabilizing that business. fig they can do to stabilize and
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grow that part of the business is gravy in our opinion. papal -- talk about a company that has a big opportunity in mobile, e-bay and papal are definitely two of the biggest beneficiaries. >> your top holding is apple at this point. what do you make of how it's been trading the past couple days? pretty weak in terms of trading. have you been trimming? have you been taking some profits at this point? >> no, when they reported last quarter, we were a little bit cautious because some of the macro situations they were describing, every time we've seen this kind of selloff, it's been a buy-in opportunity. we've owned apple at $7 a share. we sold all the way up. every sale has been a bad one. i was not disappointed at all with the $5 million. that's a few billion dollars of revenue in a week and not a bad job. it seems to be a supply issue. i think demand is strong. my main concern with apple remains the fact that steve jobs is obviously no longer with the company and i'm a little concerned about the longer term vision of the company, but in
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the short term, not much concern. >> okay. darren, thanks for coming by. we appreciate it. portfolio manager of the jacob internet fund. let's head back to ec, watching another big tech company that has had some big moves today. >> dell continues to hit new lows. it's been down four of the last five trading sessions. evercore cutting its price targets on shares of dell, highlighting the weakness that we're seeing in the pc market. that continues to be the big overhang on the stock. >> all right, thank you very much. we were talking google. we were talking cena. we were talking apple. >> to finish up apple, the 20 moving days major. guys are talking about the 90-degree price action from the highs. this is the kind of move that indicates there's a lot more to go. >> the breach of a 20-day moving meaning that it's losing short-term momentum. >> in addition to that, the severity of the move just off the high is a major reversal.
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so i think there's a lot of danger. we talked about this yesterday a little bit when we talked about who might want to show apple and say we had a great job. darren and his guys have known this company and followed it for a long time. there's a lot of guys that know nothing about apple. it's not their mandate and actually want to get it off their books. i know some emerging market global funds that i'm learning have done very, very well this year because only apple. i think there's that quarter end selling pressure as well, but again, there's a lot of great news price sbood into this. i think apple looks topee here. >> you could also make the case that everyone's got profits and they all have profits in the same names and a lot of these names are very crowded. the first time you see any type of sale, people will want to lock in those profits because it has been such a difficult time outside of the last couple weeks in the marketplace. >> quickly on apple, i'm sure that 2.5% decline is very concerning to a lot of people. >> i look at it as a great
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opportunity. i think right now when it sells off, you're looking at that 675 level. last time when it got down to 660 was my buying. i thought it was a great opportunity. i'm looking at it again as another great opportunity. casino with some luck today. we've got the trade of the day and all of today's big movers. later on, this chart could mean a wave of selling is on deck for stocks right now. we'll explain why later on in the show. a little bit of trepidation, not quite knowing what the next phase was going to be, you know, because you been, you know, this is what you had been doing. you know, working, working, working, working, working, working. and now you're talking about, well you know, i won't be, and i get the chance to spend more time with my wife and my kids. it's my world. that's my world. ♪ silverado! the most dependable, longest lasting, full-size pickups on the road.
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time now for some movers you missed. >> we just had a drop for deckers a couple days ago, but things seem to be getting worse. a big report out today saying that maybe uggs is over. >> guys will be destroyed by that. >> what are you going to wear now? no idea. >> caterpillar down 4%. >> what a difference a year makes. we can't get enough. we're going to be under rate this year. although this is not a disaster. i don't think they're making
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that much of a structural call. >> pop today, move 1%. >> basically right around a 3%. goldman sachs has actually upgraded it today. it's a favorite. probably still be a buyer. >> pop for williams company is up 1%. pete? >> we're talking about oil and gas. this name continues to perform very, very well. the january 40 calls were extremely active so people expecting to see more heavy volume day two. >> drop here for pulte. >> barclays suggesting they might be more attractive. basically they downgraded the whole sector. otherwise on inventory, this is a sector that looks pretty stretched here.
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>> got a drop here for mondelez. it appears there might be an utterly hilarious controversy. the name of kraft's new global snack business shares a similar pronunciation with a vulgar sexual word in russian. it is a combination of the latin worlds for world and delicious and now it's generating a world of delicious jokes online. you actually did on-the-ground research. >> i had to do some channel c x checks. i got affirmation that -- check your urban dictionary, folks. you might be a little startled. >> if you're over 18. >> i'll leave it there. >> a drop for staples. down 4%. >> maybe on another day this would have been received better, but staples announcing the restructuring. they will continue their dividend. but they're going to close some stores in europe and the u.s. all of it together made people afraid the quarter is going to be bad, which it probably is.
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i wouldn't buy it. >> resources were changed today. definitely one of the worst performers in the s&p. i think the iron ore price is a story. i think they do a little bit better here. 6% yield keeps cliffs interesting. >> drop here for pandora down 4%. >> last year they paid 50% of revenues to labels and to artists. there's a bill yesterday that came out, the internet radio fairness act that's being introduced to congress. this has the ability to cut what they paid out of their revenues in half. it's very bullish. a lot of green ahead of them. i'm a buyer. i have owned it. i'd own it again. >> do you feel blessed? >> i'm a little blessed. like the governor said. >> pop here for the vix. >> it makes some sense. here we are surfacing somewhere near the lows. 1350 area was the lows. we're trading closer to 14. now you get a nice big spike. a very big spike on the call
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side. may get a little bit higher. about 2-1 on the calls. >> pop here for safeway. up 2%. >> ironically named analyst karen short actually upgraded the stock at bmo today with a $25 price target. this stock is down over 20% on the year and was very cheap. she was looking for basically some kind of a turnaround on the sales end. interestingly, they rolled out a personalize ed digital coupon program associated with their loyalty awards program. that's an interesting development. i think the stock looks cheap also. might be a good pipe. >> finally a drop for the nfl. call it the green bay tragedy or the seattle sensation. last night's touchdown brought the nfl referee controversy to a head with replacement refs fumbling the final call of a big monday night match-up. even the president is weighing in at this point, taking to twitter to call for an end to the lockout. of course, pete is a former nfl linebacker.
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>> unbelievable call. now they're starting to get run over by the players, the coaches, and the last two games, the sunday night game determined by the referees on that field goal by baltimore. this at the end of this game, that was absolutely 100% an interception, no chance that was a catch. it was a terrible decision. roger goodell has got to do something. >> does it speed up the end of the lockout? >> you would think so. but roger goodell artszed this and said everything went as exactly as it was supposed to when they reviewed it. >> right. >> that might mean another week of these refs. coming up next, why transports could be spelling trouble for stocks. we'll tell you just how worried you should be about the slowdown in that sector. our guest after the break just came back from beijing. he's not buying into all the china slowdown hype. china expert john rutledge will reveal why after this. we're sitting on a bunch of shale gas.
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welcome back to "fast money." you will never know what you find in a given day. looks like the wheels are coming off the dow transport. the index is down almost 4% over the past month, while the industrial average is up more than 2%, so is the divergence a
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sell signal? let's bring in the editor of dow theory forecast. richard, it's really great to have you with us. so many people are pointing to this diversion as the reason why the broader rally is in jeopardy at this point. what do you find in terms of the historical effectiveness of this as a prediction -- a predictor of the dow's move? >> well this is historically a very long period of divergence. we haven't had new highs in the transport since february. industrials hit new highs in march, april, may. and then again after the selloff to come back and hit new highs. so it's a long period of divergence. the dow theory doesn't categorize this as a sell signal. it's more of a yellow flag. for sell signal, you need both averages to reach significant lows. those are those june 4 lows. until the transports confirm and go to new highs, which is above
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53.68, until that high is surpassed, on the downside, you're looking at the transports below 48.48. that would be a sell signal. those are those june 4 closing lows. the averages -- the market is bearish in both the industrials and transports are reaching significant lows. we have not had that as of yet. >> richard, it's steve. just to be -- there's a couple of different waves that are in the dow theory. so if we do indeed get to your points, where do you see the s&p? i don't want to put you on the spot, but do you see us retracing a third of the move, 50% of the move, and where are you starting the move from just for the viewers? is it 12.60 in the s&p where we bounced? where do we start that move? >> well, i mean, a typical kind of retrace of about 1/3 to 2/3 of that move that we've had since the june lows, so i think you're talking in that range of 12.50 to 13 if you're just doing the rough math. one of the cardinal moves of the
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dow theory is you can't tell -- it doesn't tell you the duration nor the extent of a move. it tells you the trend. when we're going to new highs, you kind of assume that the trend is your friend. when you're going to new lows, you know, you assume that the trend is down, and what we're seeing now is massive divergence. we're kind of -- i would rather not put words in the mouth of the averages, rather listen to the averages and see what they're going to say. obviously until we goat new highs in the transports, those june 4 lows remain bear market points. i would be concerned if we were to see the trance continue to sell off and industrials get down near that june 4 low. >> you mentioned trend. can you just clarify again how long can this trend -- can you be waiting for confirmation? in other words, as we know, the transports haven't confirmed the move and the dow, etc., etc. but at what point do you almost start your count all over again, or sit really until you get
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there? help people understand the timeline for making this call. >> right. well, there's nothing that says you can't move ahead of the dow theory. let's seau think stocks are rich, you don't think the trends are going to go above, so you sell now. and if you get proved wrong, if the transports do indeed go above that level of 53.68. but if you're going to just follow the strict dow theory of selling when the lows are reached, then who knows? i mean, for actual sell signal, the industrials would need to come down 11%, so you could be in another long period of kind of waiting for confirmation. the one rule of the dow theory is the last major signal remains intact until proved otherwise. in february, both averages went to new highs, and that is the last confirmed signal. so we're kind of looking at this as a yellow flag, not a red flag. we have 10% to 15% of equity prt folios in cash as part of a partial hedge. that's how we're weight on confirmation. >> richard, great to speak with you. thanks for your time.
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pete, in terms of the transports, if you take a look at the action in fedex and ups in the rails, it's been terrible. there's been no bounce whatsoever. nobody willing to step in and say this is my buying opportunity. what do you make of that? >> well, i'm a little bit surprised, just because the divergence right now. when i look at these rails, i would expect that if you were willing to step into the rails right now -- and right now, i'm not in any of the names, but i'm looking at unp trading around 120. i would use this as a great buying opportunity if i get convinced that this hasn't been enough of a pullback. i'll have that protection in case i'm wrong or too early. and then i've at least protected myself for a few praercentages. >> can you be a buyer of the rals and also at the same time believe that coal is in secular decline? >> we're moving towards chemicals and a lot of the construction projects and all the rest of it. they have done a nice job of mixing and matching. >> i think the biggest problem is the highest margins are on
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coal, so when they're transporting -- if they have the highest payouts on coal. i don't think you can be bullish on it. maybe it's the chemicals. but the highest cargo margins are on call, so it's impossible to be bullish on rails without that. >> china stocks dropping for the first time in three days with s&p cutting its growth by half a percentage point. but is the chinese slowdown as bad at it seems? joining me is join rutledge, he's just back from beijing. some boots on the ground. it's always good to see you. what did you see there right now that makes you believe that maybe the slowdown isn't so bad? >> well, whenever i come back from china, the first thing i feel is humility. billion and a half people working like crazy there. the economy there is slowing a little bit, but not really very much. this is not a crisis. this is 2011 policies to end the property bubble. infrastructure, investment, residential real estate fell. both are now rising again.
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they're going to do 7.5%, 8% in the next six months, and for some time after that. so this is not the end of the world. it's just a slowing there. >> john, give us an outlook you have on october. tons going on in the next couple weeks. golden week coming up, which has historically been a time that policymakers want to do something. it also happens to be about ten days before they actually have a transfer of power and there's been a lot of intrigue and kind of political machinations going on. but to me, this is a time policymakers need to step up. last night, they did record amount of reverse repos. we're not getting the knock you over the head type of stimulus that we got in 2008 and 2009. but i think when i look at china on the charts, technically this is a great time to own it. i think it's way oversold and there are some buy signals. i think going into this period, it's a great time to be getting along despite the fact that
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there are structural problems. >> i feel the same way. there are many, many structural problems all the way from air and water pollution to jobs problems and so forth. but basically, china is growing. and china is growing in a way that's moving up the food chain in the sense of investing very heavily in higher tech manufacturing facilities, precision machine tools, things like that. so i think that the rumor that china is dead is greatly exaggerated, and at these price, i like it. the problem win vesting in china, though, is if you do it normally through the chinese stocks and the chinese marngtke you never make any money. the cumulative return is 22%, less than the s&p. the way you make money in china is to buy the stocks of companies that sell things to china but live other places where there are long black roads, property rights, audits
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and all that. >> and we're going to show a screen of your top picks as ways to play china. karen's got a question in the meantime. >> i think in your notes, you talked about heavy handed policy at the end of 2011 as being the cause for the slowdown. did they give you any look, any insight into major policy shifts? >> well, you know, the policies that hurt china in the first half were the end of the stimulus infrastructure spending. the government really squeezed that tight at the end of last year. and policies that were designed to slow down real estate prices. both were dramatically successful. both have been reversed. infrastructure spending has now turned the tap back on again, and it's showing up as rising fixed asset investment and the thing that people need to realize is that 2/3 of capital spending in china now done by private companies, not by the big state-owned companies. but asset spending is rising again.
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residential asset prices are finally rising again. those are the keys to getting that construction equipment back in use again, to getting the steel demand up, aluminum, copper, and all those things everybody has been worrying about. >> john, always good to see you. >> pleasure. >> we had a rot of picks there. a lot of the ones in the resource areas. bhp, rio. >> i think the bigs thick that he mentioned s it's not buy and hold anymore. if you look at these charts, on a lot of them, you could have got killed on a lot of these name. he's investing on western sentiment. and i don't know how -- you know, that's what i wanted to ask him. i'm sorry we ran out of time, but i wanted to ask him where do you sit when you say how bad is the sentiment. i guess it's pretty bad right now. this would be trough levels at a certain point. i guess you want to be buying some of these names, but technically it says no. >> i would also be careful about
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the sxi. it's not the best way to play the china market. i think you have to pick selective names. if i was going to take a grab on some stuff that i do think you buy here and it's very liquid, and i think china mobile is one of your best places. we talked all the time about am engaging and how china mobile is the lynch pin to that. as darren was saying earlier, who's on talking about some of his picks, cena, valuation-wise, they monetized. they're in a great place to continue to find ways to actually extract out of that asset. >> some news about the pending spin-off of kraft foods, which will replace alpha natural effective october 1st what. is the name? mondelez. >> do your own work on this one. >> we'll take you to the water, but we're not going to make you drink. a crude reality, a slide in oil prices. we'll get to how you should pay it. so stick around.
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welcome back. oil having a nice run in september. is there more room for the stock? what did you see in the options pits? >> we saw a very substantial seller of the october 29 putz. they sold them for about 29 cents. this is a mildly bullish bet that the stock is not going to fall below, because that's where they would be a willing purchaser of the stock, since there's a little bit less than a month to go, this is somebody that's collecting that 1% of the current stock price to put this trade on or about 12%
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annualized. this is the underperforming e&p. the other part is mpc, the refining end, which has materially outperformed it. >> you like marathon? >> i do. i actually like the refining space. as he said, substantially has outperformed the whole space. now it's been downgraded because people think it got ahead of itself. refiners are probably still the spotlight. >> follow the show on twitter and check out the new facebook page. facebook.com/options action. coming up next, one of our traders has a textbook play to make you money. get educated on our trade of the day right after this. [ male announcer ] the markets keep moving. make sure the news keeps coming with thinkorswim by td ameritrade. use the news links breaking stories with possible breakout stocks,
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it is time now for the trade of the day. today, the chairwoman has the honors. >> i do. one of the things i like, when dead money comes to life. >> i love that. >> yes.
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but here's some dead money coming to life, and the name is mcgraw hill. months and months ago they announced they're going to do something with the education business, and in the longest filing reform ever, i have no idea why it took them so long, but they finally are getting it together. reform ten to spin off education, they've had an amendment that they filed a couple days ago. we're getting very, very close. or they may even sell education. so what does that leave? the rest of mcgraw hill, which is great. they have some very high quality information service businesses. they have a very strong balance sheet. they traded a discount to peers. these are great name. some are very recognizable. the s&p business. they have also the bond business, which a few years ago had some taint on it, but haven't lost any cases. and the number of bond issues this year has been huge. this that business is doing very nicely. they have plats, aviation week. these are fantastic names and we will see them sprung from the overall mcgraw hill structure shortly. >> what is a peer group for the
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education business? >> there's fds, which is fact set data, trades at north of 20 times. these guys trade at 15 times. there's bloomberg, but that's not public, but that is a great example. capital iq, which is one of their names. great business. these are really high, high quality properties, they should be trading higher. dead money coming to life. >> mhp at 5406. coming up next hour, cramer's got two earnings exclusives. the ceos of pay chex and red hat. plus, seeing where apple could go next, all coming up on "mad money." we'll be right back. [ male announcer ] you are a business pro.
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a rare one-on-one interview with twitter ceo dick costolo. the ipo potential. all day tomorrow beginning on "squawk box." time for the final trade. >> this was a pullback to buy the

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