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tv   Fast Money  CNBC  October 19, 2015 5:00pm-6:01pm EDT

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moments. what is on tap. >> one trader made a $2 million bet that microsoft will hit a 15 year high by the end of the month. we'll tell but that trade. >> that sounds like daily fantasy. >> i'm kidding. >> and the ibm call to get to. >> "fast money" starts right now. overlooking time square i'm melissa lee, your traders are tim, steve, karen and guy. tonight on "fast," a smack down of epic proportions from the cal government hitting back at steve wynn's criticism over policy sending shares tanking. we'll tell you whether the billionaire ceo should be worried. plus big pharma play. valeant away from what attracted shareholders to the stock. and what it could mean for shareholders in the long run. and opec hosting a special meeting and dennis gartman is taking notice. find out how he is playing ole ahead of the headlines. but first the story this hour ibm falling after a revenue
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miss. josh lipton has all of the details. josh? >> reporter: another quarter of falling retch. this time $19.3 billion. the cfo was just on cnbc talking about some of the points of pressure were in this quarter. take a listen. >> we continue to see price pressure, in our storage business and we continue to see price pressure in our global services business. so when we put all of that together with a weak -- a weaker transactional exit than we had expected we put all of that together and we see it is prudent for us to recognize, as we go into our largest transactional quarter, that the transaction flow is a bit slower than we would have liked. >> now ibm, like i.t. venters, moving as quickly as it can to corporate commuting. so putting billers to work in the cloud and analytics and
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security and that was up 17% and ibm saying cloud business up 45% but investors skeptical of how quickly and ably they can make this transition. i'm going to hop on the conference call that just started and bring you headlines as they cross. back to you. >> thank you, josh. and for the bulls out there, and there are fewer and fewer, they say cloud is big and growing and making great traction from this quarter but it is a $9 billion year-to-date and a $19 billion revenue line for the third quarter. >> the problem here is you have an offset of the core which is 15 to 20% and the strategic imperatives which is growing 30% annually but it is not enough to offset 5% of revenues decline. and you push down guidance where the stock was already so low and you wonder if people will take the point of yes, it is truly broken and there is more going on and it is a multi-year recovery story, which before the
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numbers, when is irrelevant now. and the sentiment was where people were starting to nibble. >> and guy, you say it is not a value at this multiple. >> and we've been sighing that for -- saying that for quite sometime. and you start doing the math. and you asked the question. what is the right multiple with a company with reducing revenues. the reason i old ibm in the old days is there was clarity, and they could give you four-year forecasts which is why they had the premium multiple. no longer the case. i would submit a nine multiple in this environment is right and take the midpoint of their guidance which is 15.25 and you get about $138 stock. i'm not saying today is the day to sell it. you hear tomorrow that people love it when stocks going down saying they are buying more and you get the bounce. that said what is the right multiple for a declining business like this and i think
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it is nine. >> and rbc market analyst, joining us on the "fast" line amit you caught december quarter and 2017 estimates. did they reflect the guidance that ibm announced today? >> in hindsight, we did not see enough from ibm. doing the right stuff from the strategic imperatives business the business is lower but it is lower margin and cash flow. so not only are the revenues and the cash flow gets worse and it is hard to call a value when you don't know when the end point is going to be when the mix optimizes for them. >> is it fair to say things would have been mucher if it were not for fx? are they trying to make an excuse for what are deep declines in the core business? >> i think fx is part of the
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issue but they have, to your point, deeper challenges in the legacy assets. this head wind they have is part of a transition from legacy to strategic assets. i would say that fx is a small challenge. the underlying business transaction is the bigger head wind. >> this is karen. i'm thinking they should be out of the guidance business. it would be a hit in the short-term. but they haven't been able to meet it. how would you look at that if they were to say, beginning in 2016, we're no longer going to give annual guidance? >> you know it wouldn't be the worst thing for them to do. and to your point two years ago ibm, you take the guide to the bank and you would hit it and they would come up with five year guides that were very accurate. they stopped this process this year. and if you look at hp and apple and everyone else they give you quality guide. i think it is the new reality for this business and more
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prudent versus 365 they have. >> do you think they are doing the right things but it is like turning the titanic around it will take a long time given the size of the business or could they be doing something else that would expedite the process or give a floor to the stock? >> so we've said this. i think they are doing the right things. the transition to the strategic imperatives, it is a reality, they have to do it. i believe they are doing all of the right stuff. which is why you don't see headache from that perspective. the one thing that i would submit they could do different, instead of using cap allocation and free cash flow for buyback, for acquisitions, to accelerate the transition to the strategic imperatives. that is the one thing to do differently. but other than that it is sound. >> if they didn't do the buyback for the next two years, that would be what? $20 billion. >> probably bigger if you go over a longer time.
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so if you look in the last 12 months and scale back the buybacks aggressively but they returned $9 billion back to shareholders, so over two years that is 20. >> amit thank you, of rbc capital. obviously buybacks bolster the stock but at this point it needs more -- obviously that is not working. so is that the right strategy. >> so amit said where they want to go is crypted and the legacy business is holding them down. this was my secular short. it is down year-to-date against amazon with aws that is sneaky little transfer play where the corporations do their cloud computing through amazon that everyone thinks is a retail play. would you rather be with the new companies rather than the old legacy companies. >> there is amazon and dell and that could put more competitive
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pressure when hewlett-packard is more focused. >> i think people need to think about this at all. we've played this game on the desk, where they could get a turbo charge to the growth and turbo charge in terms of the hit to their wallet because that wasn't going to come cheap or will come cheap. but we're saying this is a company that is disappointing for the last three years but everybody knows that the financial engineering in terms of the earnings profile is why they would say for the last two years been able to be so easy to forecast. so it is still a no touch. >> the conference call is 8 minutes in. we'll bring you the latest. let's stick with tech. san disk is soaring in the after hours session. dom is at headquarters with that. >> we have the stock up 8% on half a million shares of volume. they are higher in the after hours trade. the stock is spiking on a bloomberg report saying they will be acquired by western digital. the two companies could reach an agreement on a deal as soon as
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this week. but the normal caveat is that a deal has not been inked and it could fall apart. and last week bloomberg said mike ron was interested in evaluating san disk for a probable buyout. and there is a note that any potential deal if it does happen between western digital and san disk would be more than triple the biggest acquisition they ever made and that was for the hitachi hard drive business back in 2011. they bought that for $4.5 billion in cash and stock. and can you see the shares of san disk up by 7.5% right now. back over to you. >> dom chu, thank you. guy, does this change the fundamental of a d ram business where there is too much capacity. >> maybe it is a deal that has to be done on their end. if you look at c gate it traded low. and western digital is closing
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in on a two and a half three year low. but you just hit the nail on the head. when pricing goes the wrong way, it is hard to turn it around and that is what happened with both sea gate and western digital. jim chanos one of the two stocks, now that is coming to fruition. that said, they better be right on this one because this is a significant deal here. >> like at mike ron. that is d ram dependent. up 38% from the bottom. so maybe you could form a bottom without the d-ram question being answered. because the chart is terrible and mcron is a name that people are willing to take a shot at in the high teens. >> i think this is what we're saying. there is consolidation that needs to get help and then we'll get into a space where it has regulators involved. so not a reason to buy. >> the oprah effect making a big bet -- excuse me bet on
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weight watchers. on whether she can bring healthy returns back to shareholders and what it means for the beaten down stock. and valeant pricing controversy behind the headlines that sent the stock shifting today. and big news for dennis gartman, who is playing the move on oil when "fast money" returns. .
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big day? ah, the usual. moved some new cars. hauled a bunch of steel. kept the supermarket shelves stocked. made sure everyone got their latest gadgets. what's up for the next shift? ah, nothing much. just keeping the lights on. (laugh) nice. doing the big things that move an economy. see you tomorrow, mac. see you tomorrow, sam. just another day at norfolk southern.
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welcome back to "fast money." we have news here on the latest poll numbers in the republican presidential race. john harwood has the news. john? >> well the news is trump has not fallen in this race. he draws 25% in our poll. still in first place. that is up four points from september though within the polls margin of error for the republican sample of 4.9 percentage points. carson is second at rubio with 13%. and cruz at 9 and jeb bush at 8 and everyone else below that. so the outsider candidates are still dominating the field and that sets up the cnbc debate next week on october 28th in boulder and we'll see how many
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can hang on of the lower ranking candidates after that. >> john harwood. interesting. it was the summer and then the fall and now maybe the winter of trump. thank you for that update. john harwood in d.c. shares of wynn starting off lower after macau strikes back. steve wynn last week said he was extremely frustrated with the policies in china, take a listen. >> it has become a major issue in macau, as to the impact of government policy on planning for employment promotions hiring and compensation. none of us are really clear on what our environment is going to be like going forward. and it makes planning and adjusting almost a -- a mystical proc >> and according to reports. >> macau's government responded by calling wynn official news a private meeting yesterday and
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telling them they won't be making any changes. tim. >> you don't mess with big brother over in macau. when i thought things were starting to thaw in terms of macro. last month down 4.5%. less bad than we've expected and what we've seen and if you look at the core china names, m pell, for example, you have seen the stock recover and people believe you have seen the worse. the win, as much as i don't want to mess with big brother, i think they are okay. and if you look at the macau palace, this is a big deal for these guys. those are not good numbers they announced an the expectation was you could see a bigger pop. if you are a long-term player watch the balance sheet. this is where they start to get player. >> 16 months of revenue declines in macau and in recent weeks we said analysts come off the side line and say maybe the worst is
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over but isn't this from the macau government confirmation of what is bad, is that there is no policy changes to help the industry. >> i definitely see it more that way, that you just stated. wynn down 54% year-to-date, las vegas down 18% year-to-date. but i go to mgm, down 1%, year-to-date or go boyd or pen gaming. they are up 30 to 40% year-to-date. get out of macau. >> and i wonder if it is good for everyone else in macau but wynn. i wouldn't be shocked if there was punitive action. >> some skate getting here. and i think others could do better. >> you could play macau without the unique relationship with the government. >> up next go pro seeing two stories. transportation official as announcing drones need to be
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registered with the federal government due to the rise in close calls between drones and airplanes. and also the company nabbing a key hbo exec as it looks to double down on couldn't tent and they focus on sports. >> interesting. >> which is the go pro bulls, of which i've been wrong. but go back to july 21st, that quarter was good. not only on eps and revenue side margin side was excellent and the stock traded in kind. it went from 60 in the post market to $65. you have a $29 stock coming down to 27. i think there is a chance the stock continues to rally into earnings. if you want to play it i think you can. play it from the long side today. i think you are finally getting some tail wind of good news. i think the shorts will cover end of earnings on the 27th. >> i think the exec hire is interesting. but if drones are the next leg of business and now the department of transportation is saying you have to register the drones and making it harder for
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people to buy one and start using it that would seem like a head wind. >> that is the problem with the stock. you are investing in a company that gives you promise in high growth areas that are not clear. the media one is even less clear, let's be clear. with regard to drones it is exciting. but to pay on the multiple the stock is starting -- it is starting to be interesting. i would not le leaning on a short here. shares of weight watchers doubling after oprah will take 10% stake and get a seat on the board. her personal experience is what drove her to invest. but even with today's stock move the stock is still down 60% in the last two years so is this a good long-term investment, you've been taking a look at the balance sheet, karen. would you invest in this company? >> well if you were short and 57% of the shares apparently were this is about the worst news you could possibly wake up to. i mean the power of oprah winfrey, i think, it enormous. in a product like that. she's had so much trouble with her weight.
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but the thing about the stock though is i look to the debt. because the debt is smarter than the equity investors. even though the debt rallied, it is still telling you, this is a problem credit. they have tons of debt. which is why the whole enterprise didn't move that much. the stock was up but the value didn't mole up that much as a whole. i tried to get a borrow to see if it was possible. no we couldn't. and it is dangerous on both ends. you have short coverings still to go. but the valuation is too high. >> are you saying the balance sheet is a little bloated. >> yes. >> wa-wa. >> and is it enough to offset what could be a management team that may not be up to the task of turning this company around. the ceo has been on the job for what two years or so and the stock is down 80%. 80% is a lot for the ceo and the board to stand by and say, that is the way the business is. >> well and it is. but one thing about the business
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though, it is very very quarter one heavy. so i don't know how many chances for him to have effected -- if they don't sign up people for new year's resolution they don't have a big year. so they have one big oprah chance now. >> thoughts on the stock? >> the thoughts are this. back in the day, weight watcher was the only game in town. it is no longer the case. >> apps. there are apps. >> what worked for you? >> good old-fashioned hard work getting in the gym. that is what i'm talking about right there. >> gee is an iron man. >> show that iron man clip. i thought it was photo shopped, for real. you were looking great. >> big tech earnings on deck. what has one trader making a $2 billion bet that microsoft will hit a 15 year high this month. i'm melissa lee and you're watching "fast money." here is what is coming up
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valeant getting creamed today despite a big earnings beat and now the company is looking to switch up the business model but is it too little too late after a 30% deck like line in the stock this month. and ferrari, as it gets set to price the ipo tomorrow phil le beau has a special report of what it all could mean for the grand plan for fiat/chrysler. all of that ahead and more on "fast."
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welcome back to "fast money." shares of valleyent a major buzz kill after the ceo made surprising comments about the business strategy on the earnings call. meg tirrell is all over this story. she joins us on set. and meg, this is specifically a company in the cross hairs because of drug pricing and he comments on drug prices and isn't optimistic. >> no, that is right. they said that given the environment and their shift in strategy, they're probably pursue fewer deals based on acquiring what they call mispriced products or products where they could raise the price of drugs after acquiring them. they laid out three strategy shifts on call. the first one is they will
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consider spinning off or selling the neurology division which accounts for 10% of the revenue but analysts say it accounts for the drug pricing for the older products. so they are considering options for that business. second they are focusing on r&d and newer higher growth products and that is what surprised a lot of folks. and finally, they said given the stock suppression, down 30%, they are considering a stock buyback right now. so those are three things they are considering. come ago way from the acquisition -- coming away from the acquisition strategy and how much debt they have they can't be in the acquisition game quite as much. >> it seems like this is a different company going forward than what the hedge funds were attracted to before. >> that is a good point. >> which is high acquisition, low r&d spending and the focus on price increases versus sales value. and no they are saying we're going to focus on sales volume instead of price increase for our growth. for the hedge funds that got
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burned out there, i would feel even worse because they are saying we're going to back away from our core strategy before. >> that is a great point that you mention the hedge fund holders. i was looking at a story i wrote at the beginning of september where i spoke to mike pearson when they are looking for assets with hair on them and pay a discount and get the other thing people don't want quite as much. they had did the acquisition of sprout the female dysfunction drug and some hedge fund investors didn't like the deal and they didn't like it and it was selling on the news and they did see the stock decline. so as early as september, before they got hammered for high drug prices, they were signaling a shift in strategy. >> thank you, meg tirrell. what does this mean for -- it was very valeant specific today.
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>> forget about the comments afterwards. i thought it was a good quarter. a quarter, if they said nothing i think it would have traded higher. jp morgan came out with something about that. they changed themselves into a different type of company. maybe we test the levels we saw a few weeks ago 152 and a half or so. >> if they spin off, someone else won't pay a big price for it. if the strategy whoever owns it, can't be the same going forward. it has to be someone hindered. and i don't know how they can announce anything really positive because it is such a political risk to put out good numbers. >> real quick, kite pharma this whole space, it is up 17% year-to-date. it is the only one that has figured out how to navigate the waters we're in. immunotherapy and the cart treatment plans but the only one
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that i see people are still buying. coming up. dennis gartman weighs in on what the opec meeting could mean this week and find out how he is trading the oil. look at the after hours session. the kwaer was all right but it took full year guidance and the stock is down 5%. the conference call about to wrap up. we have the latest headlines from the call when we come right back. stay tuned.
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welcome back to "fast money." all three major indices ending the day in the green. the s&p is on track for the best month since october of 2011. consumer discretionary took the stogs and crude oil settled down 3%. in the second half of "fast money." ferrari trading this week. and phil le beau talks about the grand plan later on. plus yahoo could be in for a rough earnings report tomorrow but one analyst thinks the stock is still a buy. he explains coming up. the ibm conference call just about wrapping up. josh, what is the latest here? >> no surprise on this conference call the company's executives want to draw attention to the new biez lines. so cloud, analytics, security
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and take a listen to what the company's cfo had to tell analysts. >> as we invest where we see higher value over the longer term. we draw growth in the areas where we are investing and others areas decline as we expand the business and we expect margins in the move to higher value. that is how we traps form from one era to the next. our third quarter results reflect the progress we're making in that transformation. >> and melissa, schroeder pointed out the new business lines up 27% highly cloud revenue $9.4 billion over the last 12 months. the growth in the new business lines not winning back investors. but bulls, given the declines in the major business lines, including hardware down nearly 40%, schroeder is saying the ibm recent execution shows the company is on the right path. stock down in the after hours and on track for the third straight year of declines. back to you. >> josh lipton thank you. i want to trade this.
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so i'm going to ask you, with the conference call over show of hands who thinks ibm is dead money? >> oh, come on. >> it is a great game. >> no why is it dead money? >> a very dramatic show of the lazy hand getting up there. intentionally to say at this point there is so much bad news in the company to the extent we know they are making the shift. we knew the margins would be weaker because the top line is lower. emerging markets are a major part. international is 52% of the business. we know that is bad. there is so many bad things going on here and we know the transition wasn't going to be over night. so what defining dead money. i think this stock has a lot of dead moves in it. i i'm not running into it tomorrow. but nothing here scared me. there is nothing here that should surprise anybody. how about that. >> that is a good answer. >> what do you think about the next year? >> let's do would you rather.
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>> i love this game. it is my favorite game. >> so you so vociferously endorse the game. ibm or hewlett-packard, and just before the spin. >> and if you said red sox -- >> you don't like either. >> i don't like either. that is red sox. and congratulations -- going to chicago. my gosh those mets. >> congrats. moving on here. check out today's action. crude falling 2.5%. the move ahead of a special opec meeting that will take place this wednesday at the headquarters in vienna. dennis gartman is with us now in virginia beach. good to have you with us. and will this meeting do anything to your view of oil and what is your view of oil at this point? >> well first of all, this meeting is nothing but a technical meeting. the venezuelans hoped to make it
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into an important meeting. the saudis have made it clear. they want nothing to do with this meeting. it will be a look at the qualities of crude oil, the availabilities of crude oil but no statement as to the production of crude oil. as to my view. i have liked crude for the last few weeks. i thought once we got to $50 with spot wti, at that point, spot at 50 and one year forward at 54 45e dollars, there should be and there has been a fair amount of hedging going on. so at this point crude oil is a boring circumstance for the next year or so. i think at the top, we might -- we might be able to get back to 52 or $53 for spot wti. i think the 37 on the bottom side will hold. i think on balance that is going to be very good for the economy because i think you'll have much more stable west texas and brent crude prices for the next year and a half or so. so at this point, we just talked
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about the fact that ibm might be dead money and i think wti crude might be dead money. >> last time you were in the studio and i was on the desk i said it is hard to call a bottom in crude when you have golden week. and now it is not just one week. i think china is offline indefinitely as far as the growth of the world is concerned. so if that that environment, i don't see crude really getting above 50 for an in definite amount of time. where do you go and what do you buy at this point? is it refiners or metal? >> i think there is an easier trade. there is plenty of crude out there. the saadudis moving it for the first time to poland and looking right at the russians and saying we're faking your -- taking your market away. i think you can buy the same thing i've spoken about on this program before buy the tankers. to me that is the easiest and the best trade. tanker stocks not container
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ships, tanker stop stocks are up 50, 60, 70% over the course of the year and most of them move strongly today, even on a rather tepid sort of stock market. so all of the trades i'll go with the tanker stocks. that makes the most sense. >> dennis good to see you. thank you. >> thanks for having me on. >> you're not in tankers. >> i'm not in tankers. >> we had a couple of data points. halliburton was out this morning. >> they indicated that when oil comes back. and whatever that means, stability, north america will come back faster. so there is more operating leverage in north america. i still thing eog and hal will move the best. and i think saudi, agree with what dennis had to say but they have a budget deficit for the first time since '09. there is a lot of pressure on
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these guys. i think there could be more cooperation. and i think goble demand -- global demand -- forget gdp. >> and what surprised me is capacity cuts. even halliburton, for the rest of the year it will still cut its budget. it is not seeing any relief. >> slumber jay said the same thing a week ago. and exxon, a day before halloween on a friday it reports. it is not a -- >> is it spooky? is it going to spook the markets. >> see where i'm going there. boo. just saying. >> that is scary. especially with that hair cut. >> you know, something -- >> don't go there. >> it is nice. don't go there. >> still ahead. on deck for tomorrow another stock investors are watching
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during the yahoo report. and plus is microsoft about to soar to a 15-year high. one trade ser betting $2 million it will happen by the end of the month. we're breaking down that trade later this hour. much more "fast money" state ahead ahead. you like that pretzel? yea. 50% more data for the same price. i like this metaphor. oh, it's even better with funnel cakes. but very sticky. get 15 gigs for the price of 10. and now get $300 credit for every line you switch. now at at&t can a business have a mind? a subconscious. a knack for predicting the future. reflexes faster than the speed of thought. can a business have a spirit? can a business have a soul?
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shares of sonic moving higher today. dom chu has the details. >> we have shares moving up 5% on 53,000 shares of trading vol. but sonic coming out with that in response to earnings at 43 cents per share beating the analyst average of 42 cents. same-store sales up 5%. they did raise the fiscal year 2016 erjs guidance from up 16 to 20%, it was previously up 14-18%. so a beaten raise and that is why the stock is reacting the way it is. up by 5% and 62,000 shares worth of volume. >> i've never been to a sonic. do they mention any cool products as to why they are seeing this jump? because they have all interesting product rollouts? >> they do. they have the different menu items. the last time i was at one, i
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had to go down south, but they put nerds, in their drinks. so i had one of those. >> they just game them to you, dom. >> i did have -- yes, i know. no it was -- i opened myself up to it. so that is the reason why. but yes i was on a sugar high for a while. but we'll see if the mini chili dogs did anything for the sales. >> timmy is so proud, he's going to go home and tell lea. >> some of the best material in a long time. >> it could have been anybody. sorry about that. >> we don't trade sonic too often but mcdonald's was added to the global focus at credit suisse. so another endorsement in the fast food trade. >> all day breakfast, people will be surprised by the results. >> you have been to a sonic? >> no. i would love to go to sonic. but if you find them. they hide them. >> they make ice cream cake zones. they advertise --
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>> i used to make fudgy the whale shakes. >> and some cookies. >> and it is also santa -- >> it is a great malt. >> see what you learn on "fast money," sonic the stock. 15% correction is 30 drs. this should be good enough to get it to 30. >> what was the cookie? >> it was a st. patrick's day thing. yahoo will take center stage in the tech space after they report after the close. we caught up with kneel doetschy to find out the key things he'll be watching from the report. >> this is neil doetschy. one the bally baba spin. can they get this down in the fourth quarter. secondly, can they show they are continuing to grow mobile video, native and social ad revenue while above a billion dollars
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revenue run rate. and the third thing we're looking for is the ebidta margin which we are expecting 22%. if yahoo can expand margins, we view that as positive. we believe that shares should trade up after q3 earnings and for that this is neil doetschy. >> yahoo is just the tip of the iceberg when it comes to this week. time to take your position. it is up 9% in the past month but down 33% year-to-date. so tim, you like this? >> i'm longing it into earnings. it is all about the baba spinoff. and when you talk about mavens this is mobile and video, this is search where they are getting some growth. the first growth in probably six quarters. i think the honeymoon is over for marissa meyer but i do think there is value, right here at a full taxable value after the stock right now. >> carol swisher had an article today talking about the high level exec it departures at yahoo and the stock price is a
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problem, in terms of luring -- >> and for comps. >> yes. she has to pay more up front instead of having the options. where do you stanton it?-- stand on it. >> i know tim is long. and there is risk because there is so many unknowns. but you have the spinoff and the tax treatment of it. but i'm just worried about margins. he listed as one of this three. i think margins might suffer and that is the key to everything. and next up chipotle reporting tomorrow after the bell. so stack gains for the year expected up around 4%. so guy, our chief burrito correspondent. >> and i'm happy to have the title. no question about it. you hear that moo. >> i thought it was homer simpson. >> excuse you. >> cmg, at 35 times forward earnings it sounds expensive but it is not given the growth. the problem with the stock is it is volatile. we've seen good quarters where the stock is down $50, up $50.
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here is how you play it. hope they miss and say something negative about growth and hope it trades down to 670 which is a possibility. we've seen it before. if that happens, you buy it. if it gaps the upside you missed it. but that is the only way to play it going into earnings. >> and last up verizon quarters before the open. so grasso what is your trade. >> down 4% year-to-date. you look at telephone which is flat year-over-year. t-mobile, up 52%. that has been the one that people are looking for. and maybe there is some m&a. it is john ledger there. and he is the trump of the dell tom space and i think you stay with t-mobile. >> is that good? >> it doesn't matter. he is still polling well. >> got it. >> coming up ferrari revving up for the ipo and it could mean big things for another auto company. phil le beau explains next. plus shares of microsoft are up 10% in the past month and
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traders are betting millions of dollars that the stock is about to head even higher. a very special "options action" coming up next. your watching "fast money" on cnbc, first in business worldwide.
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let me talk to you about retirement. a 401(k) is the most sound way to go. let's talk asset allocation. sure. you seem knowledgeable professional. would you trust me as your financial advisor? i would. i would indeed. well, let's be clear here. i'm actually a dj. [ dance music plays ] [laughs] no way! i have no financial experience at all. that really is you? if they're not a cfp pro you just don't know. find a certified financial planner professional who's thoroughly vetted at letsmakeaplan.org. cfp -- work with the highest standard. welcome back to "fast
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money." ferrari is expected to start traying this week at a valuation of $10 billion but could another auto company reap the benefits. phil le beau is in chicago with the story. >> we get final pricing tomorrow and the early indication is that there is heavy demand for the shares of ferrari when they finally go on the market on wednesday. 17.2 million shares will be sold in this ipo. the range. 48-52 is what we're hearing today. final pricing tomorrow and final trade on wednesday. and so much attention is focused on ferrari. this man is going to get a lot of attention as well. in part because this is part of his play for growing fiat/chrysler. this ipo is part of several months offer the last several years to raise $5 billion toward a $53 billion expansion of feot and chrysler. the target not $6 million, but 7 million vehicles annually. that is the goal. they want to get there by 2018.
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and a big part of getting there is growing jeep. look at how much sales have grown worldwide under fiat chrysler. in 2009 the bottom for the auto industry, just 276,000 sold worldwide. a little over a million last year. which is phenomenal growth. but look at 2018, up to 1.9 million, due to a new plant in china and the first vehicle rolled off the line this weekend in clooinhina and a new plant in brazil coming online and just expanding the production and sales efforts worldwide, they believe they can get there. take a look at shares of fiat chrysler. and final pricing tomorrow after the bell and then trading starts on wednesday. very highly anticipated ipo. >> phil le beau, thanks so much for that. joining us from chicago. when you think about ferrari, what sort of comparison would you make? >> a lot of people make the lou
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louie vitton comparison. i think fiat is the most interesting play. they own 90% of it and what they are trying to do if he is right, there is upside there. >> it is all luxury and prestige. it should be well above an auto trading at a full multiple. i think they should be trading 21-25, but the one thing that concerns people is they will grow production, almost 30% over the next couple of years and that might affect the after sale value. >> a 30 year low for tiffany and that has not traded well the entire year. i also think about tim seymour in the righteous sunglasses. >> those were porn. those were my mavericks. >> em and enzo. >> it was a special time for both of us. and looking forward to the ipo. >> there is enzo.
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fiat-chrysler or gm or ford. >> i think we are at peak autos. i think things are so good you have to back off this trade. this could be a one off. but would you be a seller on the deal. >> from autos to tech. one trader bet $2 million that shares of microsoft to soar by the end of the month. mikeco has the options trade. >> so it traded 2.5 times the average daily call vol and we saw a big buyer. 49.50, call stupid. they bought the 49 and the 50 calls both. 19,000 times. and the reason you do that by buying the 49 calls you get a lower break even if you only bought the 50s. but by buying more of the 50s you get leverage to the upside and they bet it will be above
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$50 by the end of the month. >> so a call stupid. does that reflect how you feel about this particular trade? >> no. actually i think this is a smart way to make a bullish bet on the stock. >> mike, thank you. mike kuo in austin. coming up on "mad money," cramer is diving into the ceo of six flags. plus sharing his top advice on how to make the most out of the earnings season. all of that and much more tonight on "mad money." meantime, the traders will tell you what they are watching for tomorrow right after this break. stay tuned. here at td ameritrade, they work hard. wow, that was random. random? no it's all about understanding patterns like the mail guy at 3:12 every day or jerry, getting dumped every third tuesday. this happens every third tuesday. we have pattern recognition technology on any chart, plus over 300 customizable studies to help you anticipate potential price movement.
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there's no way to predict that. for all the confidence you need. td ameritrade. you got this. it's more than the cloud. it's multi-layered security and flexibility. with centurylink you get advanced technology solutions. including cloud and hosting services - all from a trusted it partner. centurylink. your link to what's next.
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40% of the streetlights in detroit, at one point, did not work. you had some blocks and you had major thoroughfares and corridors that were just totally pitch black. those things had to change. we wanted to restore our lighting system in the city. you can have the greatest dreams in the world, but unless you can finance those dreams, it doesn't happen. at the time that the bankruptcy filing was done, the public lighting authority had a hard time of finding a bank. citi did not run away from the table like some other bankers did. citi had the strength to help us go to the credit markets and raise the money. it's a brighter day in detroit. people can see better when they're out doing their tasks, young people are moving back in town the kids are feeling safer while they walk to school. and folks are making investments and the community is moving forward. 40% of the lights were out, but they're not out for long.they're coming back.
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time for the final trade. around the horn. tim. >> not a big more for me. i'm long for yahoo. i think you can own it into these numbers. >> 386. >> household formation is leading indicator of housing starts. kb, i'm still long. >> karen. >> weight watchers look at the menu, but don't buy or sell. it could be zero or go to a short squeeze. who knows. >> gee? >> a lot of fun tonight.
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>> har har. >> bio gen on wednesday. biib gets you done. >> see you back here tomorrow at 5:00 for more anywhere "mad money" with jim cramer starts right now. my mission is simple. to make you money. i'm here to level the market for all investors. there's always a bull market somewhere. i'm here to help you start it. "mad money" starts now. hey, i'm cramer. welcome to "mad money." welcome to cramerica. other people want to make friends. i'm just trying to save you money. my job isn't just to entertain but to educate you and teach you. but to teach you. call me at 1-800-743-cnbc. orb tweet me @jim cramer. you can always tell when you're in earnings season. it's when people shoot
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