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tv   Fast Money  CNBC  January 5, 2016 5:00pm-6:01pm EST

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seem very business-like. >> if you can't smoke it, you can only consumer it, that is potent stuff. >> thanks for the tip. >> that does it for us here on "closing bell." thank you both so much. "fast money" will start in moments. over to melissa lee and the gang. >> "fast money" does start right now. live from the nasdaq market site overlooking times square. i'm melissa lee. your traders are tim, steve, david and guy adami. tonight on "fast," jp morgan and then citigroup, and now bank of america, selling rally. what has them afraid. the man behind the call. plus it could be a tough year for stocks. goldman sachs is calling for a 50% upside in one name. we'll tell you what that is and if it is worth your money. and check this out. the car of the future could be closer to a reality than you think. and there is a number of stocks driving the emerging trend. we have a special "fast money" report.
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but the two most popular companies in america, seeing stocks in a freefall. apple, closing below the flash crash and the lowest close in more than a year and now disney breaking below $100 hitting a three-month low on the heels of a downgrade. are these two stocks broken. let's start off with guy adami. >> disney feels like it might be broken. "star wars" came out and the big run-up into the aefrend of the was based on the "star wars" phenomenon. and get it and where they will be in four years from now. but the cable business, which is about 50% of the revenues, is in -- it is changing, let's put it that way. it is not broken, but it is clearly changing. they addressed that two quarters ago and i think they are running into the same issues. so is it a broken stock? it feels that way. i think steve would agree. it is imperative that it holds 95 levels after the first disastrous quarter a few months ago. you trade it against the long
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side right there. >> i think the downgrade today was interesting because despite all of the upside from "star wars," and we knew about that and the box-office records and this leads the problem plaguing disney which is cord cutting subscribers. >> they have the cord cutting but the issue of tough cut from the film side. it is a price industry. we have been saying that at cohen. i think the stock will continue to go lower. it is not a stock that is investable right now. >> i'm in the stock. and guy talks about the cable side. i had that being espn and the cable size of it being 30% of ebidta. so what you are getting from the "star wars" is not even close to what might be a secular issue for cable tv. when you get into the whole lucas portfolio which is now the disney portfolio, people can acrete more value than necessary. and that is why we are talking
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about these two stocks. in the stock market, not in terms of apple, but disney is very expensive relative to piers. both companies have seen peak possible ebidta. so i'm long both stocks. but i guess where we're going with this. and you have to be in a place where the valuation has to make sense to the name. in disney's case, it deserves a premium, but how much. >> and this is your struggle. you were in disney from higher levels. >> right. >> so at this point do you add to it? what do you do here? >> i bought disney below 100. sold it in the middle 1-teens and then i bought it back. and now i'm struggling with do i buy more here. and i think my line in the sand is par. i need to have it hold these levels before i start to add anything more from now. so $101.70, huge retracement level. 618. and if you look the athe revenues, you have the studio entertainment and media. but you also have parks.
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so when we say how much money will you garner from "star wars," there is two more films and three more spinoffs so it is not in the price yet. >> so you think that is an off-set to the cable. >> i understand the problems with the cable but i still stand strong and say even with the cable, when people cut cords, i think disney will garner the biggest spreads and biggest margins when people cut cords. >> i think from a long-term standpoint, you can't invest in the stock right now. i think it is a trading vehicle right now. near term you could trade it. it is not something you could buy and put away. there is too many head wiwinds this company. the parks aren't enough to support the story. it should not be trading at a premium. >> but you act as if there is a no-touch because there is something very, very broken. but what steve is saying, parks is somewhere below -- probably 60% of what the whole cable empire is, meaning it is a very important component.
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>> $16 billion arks and you are getting a huge opening up in asia. there are other drivers for this. and then studio, clearly this proved that the films to follow, they might have more momentum. that is the issue. >> before we move on to apple, a show of hands who thinks disney is a broken stock, ie, do you not add to here. >> it feels broken to me. >> desk sand a half here. moving on to apple. report from nikkei saying that apple will cut production by 30% in the current quarter. so the january through march quarter. which has nothing to do with the january 26 earnings report that will come out. >> people try to continue to defend the stories coming out saying it is in the stock. it is in the stock. well clearly, it is not in the stock. because if i think disney is a broken stock, i have to admit there is clearly something going on in apple. now i tried to say 105 is a level you trade around and it traded back to 105 yesterday and held. and it is trading right around there now.
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but it is rather obvious that there is something going on right now in terms of how the stock is performing. i still think you try to get long against the levels we're seeing right now. this is what we've talked about for quite sometime. but there is no denying that now on good days the stock doesn't trade particularly well or on bad days it doesn't trade particularly well. >> i didn't make a profit in this one. i own higher and i'm getting hit in the face. 102 is the line in the sand for disney. that doesn't mean where i will sell it, but i decide whether i want to add more or ride out your position if you are the home gamer. having said that, the iphone 7 is where i think you will see the pent-up demand come forward. and we've heard a lot of analysts say this. i think they have to work through the iphone 6 but i don't think, with a cash stash like apple has, that anyone is going to be throwing this away. >> i get that argument. i'm going to play the other side because that is my job. >> that is what you do. >> the iphone won't come out until 2017.
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why do we ride out a stock for six months in anticipation of a possible pop in the second half of the year. >> what is the difference between a line in the sand and if it is going down. if you don't want to own it, why not sell it. but with apple, i will stick to an important point and i made it yesterday and we joked about it, the installed base is 27% of the existing phone owner so there is people that need to refresh. how much different is it? is the 6-s what you want to upgrade to. and there is possibly an apple watch 2 event in march and talk of a 4-inch apple phone. to assume the company has nothing up its sleeve and we don't need anything massive to hold at this multiple with this dividend, i think, is not doing it right. >> in my opinion, i think the stock does go lower. i think it breaks 100. i think there is issues with the q1 calendar shipments. they could be around 35 million units. that is a disaster for apple.
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the stock won't fall off a cliff until gross margin gets hit. there is a problem with supply chain and pricing. near term you have to sell the stock or stay away from it as far as adding positions. >> one last time, is apple a broken stock. show of hands? >> is the market broken. >> i'll tell you if apple is broken. >> you think that whatever the market does is what apple does. >> this side of the desk goes with tim. >> it is a proxy stock. you can't tell me it is not. wall street biggest firms are sounding the alarms on stocks in 2016, citing numerous home winds. banks making bear calls. and steven sat meyer said you should sell the rally as he joins us now to discuss this bold call. steven, great to have you with us. what do you see in the charts that makes you think, you do sell here? >> what is going on with the s&p right here and right now. it is stuck in the trading range. that itself is not the negative
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part of the market. it got support roughly around 1995 to 1965. and that is a very important level to hold. you have resistances, 2038 to 2044 which is the gap from yesterday and levels up to about 2070, 2080. the big risk for the market though is the headwinds of the technical indicators are presenting. we have weak breath indicators, the advance decline line is lackluster and volume not confirming the rally. if you look at the on-balance volume, it hit a new year-long low yesterday. this market is under distribution. that tells me we have short-term oversold and get tactical rally. i think those should be sold into toward the resistance levels i mentioned. we've been stuck in the range for about a year. most people are not used to a range. they are used to markets going up. so the best case is probably 2100. and then lower.
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the problem is the indicators are rolling over and that is a big risk for equities as we enter 2016. >> so steven, let me ask you this, because i'm sure viewers at home are thinking this very question. if you are selling the rally, that implies that you are buying the dips. what is different about this market compared to past markets when investors were told to buy the dips? >> what the market looks like right here, the indicators are suggesting a late-stage cyclical bull run. that is the difference between now and 2011 when the market had a similar price pattern. >> so the bull is dying? >> when the breath narrows to the extent it has, think about where we were four years ago. you have advance decline lines breaking out and the market had not broken out yet. here the indicators are new lows. so the risk to me -- the number one thing you need to do right now is be more defensive. look at the relative reform for staples, breaking out of the
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s&p. utilities and retracting a lot better. but two of the names you mentioned earlier in it discretionary and tech, when you look at those relative price charts versus the s&p, you are finally seeing signs of relative weakness, meaning they are breaking important levels that go back months. so you are losing leadership. >> sorry to cut you off. you are obviously not bullish. are you bearish? you telling me the market can't go any higher, you are telling me it is going lower. >> for me to say that we have a top in place, 1965 needs to be broken on the s&p. that is significant for me. because that is where the price structure differs vastly from the price structure of 2011. 1965 is a 61.8% retracement level. if you remember back to 2011, you had a pull-back that retraces 61.#% of the rally off the low and held it precisely. that is why i'm still looking at that particularly. but if we lose 1965, you are
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probably heading back towards those 1870 to 1820 lows. and if those can't hold, that is when the risk of a deeper, more traditional cyclical bear market would be in place. this is something we talked about last year. and in some of the notes. the cyclical run from '09 is extremely mature. and we're seeing signs of risk as we enter this year. >> all right, steven, we're going to leave it there. thank you so much for joining us. from bank of america, merrill lynch. >> i talked to christopher on trading nation today and he highlighted the same exact number and his point was similar. you have can't make a bottom when you are so close to the highs. we are five away from the levels of the s&p 500 at this point. >> and everything he said in terms of technical levels are spot on. if we do break the 1820 level, then we'll talk about s&p levels we haven't seen for four or five years.
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that is a huge if. and the 2135 level in may stands out like a sore thumb. yesterday you asked, is it time -- is the bottom in or are we going to retest the lows and my answer to you was, i think we'll see both. i think we'll see a bounce and test the lows later this month. and i would still maintain that. >> wrapped up in steven's commentary was commentary about the two stocks we were talking about at the top of the show, which you hold, grasso, a lot of people are in the same position, but the leadership about those companies. >> this is a problem. and i base my opinion on the individual name saying that as the overall market goes, they are going to go. so disney and apple are going to go with the over all market. so i have to believe the market is truly broken. i've been negative on the market but i'm not ready to throw in the towel just yet. >> i'll say simply, watch out for fang. because disney and apple have been leaders for so long. it is all in the technology, if that breaks down, we're in trouble. >> coming up.
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goldman sachs sees 50% upside in one beaten-down stock. and we'll tell you what that is and if you should jump in. and plus you think stocks are cheap. think again. stocks are the most expensive in almost ten years. but that may not be such a bad thing. we'll explain. and later, something is happening with airfares and it could be good news for you, but terrible news for airline stocks. we'll tell you what that is, when "fast money" returns.
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welcome back to "fast money." we have a news alert on twitter. let's get to julia boorstin in l.a. >> that is right, melissa. jack dorsey, ceo of twitter, confirming the company is expanding beyond the 140 character limited reported over the case of the day today. dorsey saying they have been spending time observing what people are doing on twitter and taking them taking screen shots of text and tweeting it and saying if it was text that could be searched and highlighted and that would bring it more utility and power. he thinks people will continue to send short messages and people like the fast that it is fast -- that is fast and public conversation and they like the different options to the different elements of twitter.
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they don't want to be shy about building utility as long as it is consistent with what people want to do. that is a quote from his tweet there. and he ends it saying i love tweet storms. those won't go away, indicating that even if people could tweet longer tweets, they may still be sending a lot of them. melissa, over to you. >> that sounds like a nightmare. to have a tweet storm of 10,000 characters each tweet. >> but the key is tweets will look like they are 140 characters. but if someone posts more you have to click to see the rest of it. >> okay. julia, thank you. julia boorstin in los angeles. >> disaster. >> why? >> it sounds like e-mail. because i could see my e-mail as it comes into my mailbox. and i don't want to read half of the e-mails i get in my mailbox. >> agreed. >> but twitter's value is a place where it is this rapid fire. and i think it is a place for attention deficit. but for fast media and
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real-time, which is where twitter is universally accepted as being valuable, that is where it is valuable. >> twitter had a terrible start to the year as well, does this move the needle at all and i think the answer is no. and that is the problem. >> not at all. no. and i said, break 20. it is going to $15. there is no reason the stock will stay at these levels. here is my opinion on it. they need to grow mau's and get engaged and get that tracking measurement to a level where a growth investor feels like they could pay the premium multiple for something in the future. it is not there. not getting there. they are not utilizing the current user base to make it work. and this isn't going to do it. just like tim said, it is like having e-mail on your news now. >> they need to extend vine. vine to me, i think that one is pathetic. >> does anybody vine? >> it is on you tube. you need to have a source. you tube is the golden gem of google. that has to be the same thing for twitter. it should be you tube and they
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can't figure that out yet. >> i have to tell you something, david seaberg has been spot on since on this show. >> and gotten more handsome. >> that is a question for another show. >> that made me uncomfortable so i'm going to move on here. let's check out shares of first solar, soaring today. and goldman sachs calling it one of the top ideas for 2016 saying the stock could jump as many as 50% this year. and it has a great balance sheet. could be poised for m&a, one of the main beneficiaries of the tax credit. >> and that is on top of a move, a $40 stock in september and trading $72 and now goldman sachs said it is going to $100. and they have the best balance sheet in the industry. which i don't think you could dispute. it is true as well. not a big valuation. 17 times forward earnings. and that is gun power. so what is the trade. a few people talked about how that is the best in breed.
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i like sun power. i still stay with sun power. they raised the price target to 35. i like it more because it has a larger short interest i think sun power goes to $35. >> i think the difficulty people might have with this recall after the run-up in the stock and isn't that reflective pretty much in the shares. >> it could be. but when you want to buy stocks in the space, it is first solar, as guy always talks about as sun power, and i do think you could stay with either one. markets are made up of momentum and trends. and the trend now is to stay with these two names. >> next up, yahoo shares moving higher. the ceo mayer facing increasing pressure from shareholders and those alike. efrl major shareholders want the core internet business sold before it deteriorates in value.
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shares are down. tim, you're a shareholder. >> let's not be concerned about the tax implications, not that it will go to zero. this was probably leaked intentionally and this publicity is good for the stock because agitation gets it going. but at the end of the day, people were applying zero value to the core. there is zero valuation. you want change. i want management change. forget the core. it still has a model. i think tumbler is doing something. and they are flagging major peers but doing fine. alibaba is way more priced in. >> so this fear about deteriorating core business as a reason to sell right now, that is faulty because it is valued at zero. >> valued at zero. and some people think don't worry about the tax implications, just sell it now. i agree with that. >> let's say there is a press release tomorrow morning, marissa mayer is out, what do
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you happen happens with the stock? >> i think the stock goes higher. i think the initial reaction is the stock goes higher. people look at the valuation of the company. core, again -- it doesn't really have -- there is no real value there. the shareholder basis change, i listened to mike santoli make that comment on air earlier today, that will get the momentum going here. they will sell this core off. >> coming up, hoping to buy the dip. not so fast. why stocks may be too expensive to jump in. that is later. i'm melissa lee, and you're watching "fast money" on cnbc, first in business worldwide. here is what is coming up on "fast." >> traffic is up and fuel is cheap. >> are you telling us absolutely everything. >> not exactly. airline stocks are in the gutter. but a top analyst says one is poised to take off and he'll explain which one. plus, your car is closer to talking than you think. and there are a number of stocks that are ready to cash in on the craze.
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and we'll tell you which ones, when "fast money" returns. lem ae got the solution. well, we have 30 years of customer records. our cloud can keep them safe and accessible anywhere. my drivers don't have time to fill out forms. tablets. keep it all digital. we're looking to double our deliveries. our fleet apps will find the fastest route. oh, and your boysenberry apple scones smell about done. ahh, you're good. i like to bake. get expert advice for your small business at business.
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welcome back to "fast money." i'm seema mody with a market flash. drive and chain sonic's first
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quarter results beating on the top and bottom line. comp store sales showing a 5% gain versus the 3% anticipated. the ceo cliff hudson said improvements in core menu items drove sales. they see comp sales for this year up between 2% and 4%. >> seema mody. burger stocks hot so far -- well last year. mcdonald's up 29%. sonic is up 19% and wendy's up 17%. red robin is the big loser. that is down 22%. >> what do they do? what do they make? could you buy a red robin burger. i would lose the name. >> it is red robin gourmet. you think it applies it is made out of robbins. >> i don't want to sink my teeth in a red robin. >> you haven't heard the commercial -- red rosin. >> we just gave them ad time. >> that is what we do here.
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>> in terms of stocks. >> which one comes out of the race, mcdonald's feels like it wants to go higher. sonic had a big move from 24 to 33, pulls back to high 20s. mcdonald's is clearly the winner. and i do say this, collectively on the desk, i think we're done a good job steering people away from -- >> shake shack. >> no, the shack. >> chipolte. >> chipolte. let's get it straight. but it comes about ak to valuation. and some of the mega-growth stories that looks good going into the ipo and almost cherry picking numbers and saying we're going to impute this across the entire growth path has proven to be faulty. and you can't pay 45 to 50 times on a burrito or burger company and it gets back to value. >> so shake shack is out. >> i've been saying that for a long time. as far as mcdonald's or wendy's. i think mcdonald's is a
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financially engineered story right now. the guidance is at the far end of the range. i would rather own wendy's. >> i never thought that there was a problem with the red robin name. >> tim had a bb gun growing up. >> and this is a would you rather, you know how i make up the rules, i'm going yum. upside is 90. forget the burgers, go to yum. >> red robin. >> auto sales are up again. could we finally be hitting peak ooxt the ceo of ford says no way. we'll hear from him after the break. much more "fast money" still ahead.
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don't settle for u-verse. x1 from xfinity will change the way you experience tv. welcome back to "fast money." stocks stabilizing today after yesterday's big market route. the dow and the s&p 500 ended slightly higher while the nasdaq dipped into the red.
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apple and disney down each about 2% today. here is what is coming up in the second half of "fast money." airline stocks are stalling out but a top analyst has a bold call on the stock that is about to take off. the big reveal later on. and stocks are trading near decade-high valuations but one market watcher said stocks could be a bargain right here. what he is looking at. but first the auto sales. automakers, sales rosing 8% in the month of december and mark fields said the industry shows no signs of slowing. take a listen. >> i think the next couple of years are going to be pretty good for the auto industry. i think '16 is going to look a lot like '15. and you look at the economic elements, the health of the income market and wage and income gross margin and the latest rise by the federal reserve was very gradual and that is an indication the economy is doing well. >> well, of course, he's going to say that. he is the ceo of ford.
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and ford stock, down about 8% over the past 12 months. so peak auto or not, it is not being reflected right now in the stocks. >> but peak transaction prices, mel. and when i look at what these guys are doing, the knock on the autos is that they werin -- invent vised away all profits. and that could be a problem if you get a down-tick in credit. but ford is selling cars more profitable than ever. the f series were up 6.9 and 4.9% for trucks. the most profitable thing they do. i'm a ford shareholder. i'm frustrated by the share price. it is not a $20 stock but it is a $17 stock and there is value here. so i feel comfortable in this environment even though we are in an industrial revolution. >> toyota is down, and only fiat chrysler and honda did okay over
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the past 12 months. >> i think the autos are going to be challenged but the tail wind of lower gas prices is a much bigger benefit than the head wind of the economy. >> we haven't seen it. >> but we have. people were worried rates would move higher so they thought that was a net selling event in ford and that is why the stock went down. people got ahead of the curve on stock. >> so lower for longer, you think that the stocks will finally catch a break. >> you will catch a bid. but there is going to be a pent-up demand as technology gets pulled together. you will see a pent-up demand. because i drive a suburban. i'm waiting to see the autonomous drive characteristics with my car. >> that is the key. you hit on the head it is technology. technology is going to be the driving force here within the auto industry. they are embracing it and starting to embrace it the right way. i think mark fields is a phenomenal ceo and taking the right steps. but the millennials have a buck in their pocket and if they are going to spend the car, they want to invest in technology.
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it is the number one thing a ceo could do right now. >> if they are a driver's license and not taking uber. >> if they are not gaming. >> speaking of technology and cars. cars just got smarter. thanks to new technology that allows them to talk to each other. cnbc phil le beau is live in las vegas with that story. hey, phil. >> hey, melissa. vehicle to vehicle communication is the next step for autonomous drive vehicles. they could survey the road and see where the traffic is at. but in the future, thanks to delphi and the technology in this vehicle behind me, you will see vehicles communicate with other vehicles and even pedestrians. >> here we go. >> auto supplier delphi said this is the brains behind the next generation of in telegent cars and trucks. cameras in this test vehicle allows them to talk with other cars to avoid collisions at blind intersections -- >> changing lanes. >> so we are changing lanes
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because there is a hidden driveway up here. >> it goes one step further. communicating with stoplights about changes in traffic. and with the smartphones of pedestrians, so they could stop or slow down and avoid crashes where pedestrians could be hurt or killed. >> the car has let us know, he's right there. >> the opportunity to get that advanced information before the car is there, before the anybody is put in danger, is -- it would just be an incredible improvement in safety. >> vehicle to vehicle communication is a crucial step in the development of autonomous drive cars and trucks. like the google car. delphi's technology will be in the first gm models with super-cruise control, which come out later this year. the next step for smarter cars which will hopefully lead to fewer people being in accidents. >> and again, the first vehicles that will have this vehicle to everything technology, cadillac models that will go on sale later this year. delphi technology will be in those models. but we'll see this quickly go
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throughout the entire industry. remember, the federal government wants vehicle to vehicle communication within the next three to four years. by 2019 or 2020 you will see almost every new vehicle have a vehicle to vehicle or vehicle to infrastructure communication. >> bill, how do we think about this? is that cars equipped with delphi technology could speak to others or is this like an android where multiple cars could speak to each other regardless of the software in the vehicle? >> right. well, right now, they are only talking with other delphi vehicles. but eventually you will have one standard established by the federal government and that is the standard that will be used by all vehicles. so that they will be able to communicate with other vehicles on the road. so even if it doesn't have delphi technology in it and from another company, another supplier, those vehicles will be able to, in essence, communicate with each other. >> phil le beau, joining us from
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vegas. self-driving car down the strip. >> can't wait. could you imagine. >> i can't wait, personally. but that seems like a great lane grab for delphi in terms of at least right now able to supply the technology. >> delphi, you talk about a great story. a company that came out of bankruptcy. look at the stock in the last four or five years. i think it trades 14 times or so forward earnings. not a great day today. it is a good stock. in this space. since 2011, the s&p has gone up, 1500, 2,000 and ford has gone from 13 to 18 on either side of 15 for the entire time. the place to be continues to be names like delphi and auto zone, which is up demonstrably over that period of time and names like manny, mow and jack. >> and i think of autonomous cars and why on the chip side. and inindividualia, there will be an announcement from volvo
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from a pc chip to an autonomous that could do it all. these guys control the self-driving autonomous self-car route. and i think google and ford will announce something i think in a month ago. it comes down to the technology. because what is the difference otherwise. >> are the chips going to benefit from the slide-in smartphone sales. >> so the off-sets. >> that is a big off-set. >> a massive off-set. because the insurance premiums and does that change at all. that is an interesting segment. >> i believe the margins would be better on the chips for the cars as opposed to the deteriorating margins. >> not as many. >> yeah. still ahead, a battle for the sky. airfare prices keep flying low but it could be a good thing for airline stocks. he'll explain why after the break. and fitbit launching a new fitness tracker but investors
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are not impressed. on why things could get worst for this stock later this hour. equals great rates. it's a fact. kind of like ordering wine equals pretending to know wine. pinot noir, which means peanut of the night.
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airline ticket prices sliding even lower. trip advisor tracking for cnbc,
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average january fares for travel, if you book a new york to miami ticket 3 months ago it would cost $20 more than today. and you now pay $55 less from new york to l.a. and $100 less from new york to paris trip. so we are taking a look at how much further fares could fall. the stifle airline analyst joe dennardy. great to have you with us. >> thanks for having me. >> it is a little confusing because we have those stats, that were pulled for cnbc. and a report from fare compare that there is an airline price tike war going on with four carriers matching a price. so what is going on with prices? >> yes, so i think what you're seeing this year is an excess of supply. at the end of the day, it is a function of supply and demand. right now supply is in excess of demand and that is putting pressure on pricing. and i think that probably continues until the second half
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of the year is when supply is expected to come down. so the pricing volume right now is somewhat soft. i wouldn't call it poor for airlines. and with oil at $35 a barrel, the amount of free cash flow that the group is generating and returning to shareholders is incredibly positive for long-term investors, i think. >> what is the root problem or the root cause of the supply issue? is it that airlines did, in fact, increase capacity because they have the luxury of low fuel prices. this is exactly what investors had feared, with low fuel prices airlines would go on a spending binge, add capacity and fares would come down. >> i think it is a function of -- obviously southwest growth this year. it is a lot higher than last year. i think that had very little to do with fuel prices. they had opportunities to grow in dallas that were there regardless of whether fuel was
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at -- oil was at $30 a barrel or $100. that is clearly one driver. i think on the margin, when oil is at $35 a barrel, it is incrementally more attractive for airlines to add supply because they could make money doing it. so i think that has hurt pricing to some is degree. but i think in gem the behavior of the group has been fairly positive. but relative to initial expectations about what pricing could be, and a lower fuel price environment, it is missed expectations. and that is part of the reason why the group underperformed to some extent last year, particularly on the international side where you had fuel surcharges that are explicitly included in fares. those surcharges have been coming down in line with oil prices. and they haven't been off-set with higher base fares. so you are definitely seeing a divergence between domestic and international airfares. i think in addition to that, you've seen more aggressive competition, particularly from american against some of the ult rae low cost carriers in the
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u.s. and that is surprising investors and put additional pressure on pricing. >> joe, it has been a rough seven months for spirit airlines. i know it is one of your favorite names. but today announced a new ceo. how big of a deal is that and how high could the stock trade given the selloff we've seen in it since march? >> yeah, look, i think it is important to recognize that the former ceo, ben, did an outstanding job creating spirit from a very small carrier into the most successful ultra low cost carrier in the industry. they've obviously come under pressure based on american choosing to compete with them more aggressively. and i think some investors viewed mr. bald ansa approach to dealing with that not as proactive as it should have been. i think the departure is largely related to some personal issues that ben wanted to relocate. i think the new ceo is going to have a number of opportunities
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at his disposal to improve sentiment toward the name and improve the way they compete with american. and i think that is why we like the stock going forward. they've pursued a really aggressive growth strategy. i think they could slow that down a little bit. and i think that would improve the competitive dynamics that they are seeing. >> joe, thank you. >> good to see you. joe dennardy at stifle nicholas. fare wars, he mentioned american competing more and more with southwest and some of the other ones. >> right. >> does that necessarily mean a bad thing for american? >> for american. >> or for the ones embroiled. >> he was talking about spirit, s.a.v.e., and he hit the nail on the head. they spent money and grew this company to an extent where investors are concerned about it. now they are going to basically -- they are growing into their growth strategy. so i think save is going to work out very well for investors. the stock was down 33% last year, i believe. >> 47% in 12 months. >> so there is a stock that i think could work out well.
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as far as the rates and the discounting going on, there is no question there are discounts but they aren't as broad-based against them. >> for spirit, one of the reasons the stock rallied, they replaced the ceo. and there was miscues from the ceo chair, this is about m&a. bob at airtran has been very involved in the m&a of discount airlines when he was there. this is a place are ultimately you have a place where the new ceo could oversee what may be an m&a strategy. spirit looks to me, like a place where the competition is going to start to hurt them. again, ultra-competitive industry as joe pointed out. >> two places i would go. jet blue is a favorite. it rolled over. buy that at a discount. or southwest, buy that at a discount. if this is truly supply and demand, watch priceline and expedia. >> we have ten seconds. would you rather. >> spirit airlines or jet blue. >> spirit airlines. gentlemen blue. it is rolling over, 12.5.
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still ahead, the highest valuation in nearly a decade but one market watcher said that might not be so bad. we'll explain why when we're back right after this. it's hard to find time to keep up on my shows. that's why i switched from u-verse to xfinity. now i can download my dvr recordings and take them anywhere. ready or not, here i come! (whispers) now hide-and-seek time can also be catch-up-on-my-shows time. here i come! can't find you anywhere! don't settle for u-verse. x1 from xfinity will change the way you experience tv.
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welcome back to "fast money." stocks are the most expensive
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they have been in ten years. our next guest says that might not be so bad. the yahoo finance editor in chief. andy, not so bad? >> not so bad. because the average p.e. over the past 15 years is 15.85. forward p.e. on the s&p 500. we're at 16 right now. that does not give me conviction to sell stocks. they could go higher. the p.e. has been 25 at a lot of times over the past 15 years. so who am i to tell someone to sell stocks and not buy stocks. and when you drill down and look at good sectors, there is good stuff out there. >> it would not give me conviction to buy either. >> it would give me conviction to buy, to put it under the mattress or in the bank or anybody where else. tech stocks, p.e. of 100 on facebook and that is where you are fangs are, timmy, i feel like they are getting whittled down a little bit. >> and we're at a place where earnings are being revised downward. so if you listen to people that
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are 125 to 130 on the s&p. but every quarter they are getting ratcheted down. and in this environment where we have a recession where it looked like the stocks have had peak margins, it might not be that cheap. >> an earnings recession will make the p.e. go up even more. but that is not what i'm looking at. but if you look at upside, look at the techs, the oracle and the apple, i know the broken stock here, i've been watching the show. but you have to buy when they are cheap. and these are quality companies that are cheaper. energy is what really scares me. exxon at 16 is a scary stock. >> devil's advocate because that is what we do here and i'm not suggesting this is '08, but valuation wasn't the reason the stock market sold off the way it was. there were other events then. do those scare you now? >> spell it. >> thank you. >> iran versus saudi arabia scares me now.
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and that is exogenist. >> big word. >> we're going to leave it at that time. >> got some candy. >> andy, from yahoo finance. we're watching shares of fit beet mane time, plunging more than 18% in today's session. new low here. some traders are betting that the stock falls lower. mike kuo has the action. >> disappointing with the release today. and the options markets were quite active where we saw about five times the average daily options volume. they started by buying the january 32 puts but then it was the 2r5 27 and toward the end of the gay it w-- the day it was c that it would be below 2360 by the end of the week. so significant disappointment. and those traded for 3 cents at the beginning of the day. so somebody made more than 40 times their money. >> you said twitter to 15 and so fitbit to what? >> it is another one we talked
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about. under armour is going to have wearables. and nike exited the fuel product they had which was very successful, they did it because they were creating products that were wearable technologies. shirts, pants, whatever it may be. too much competition, lights out. >> thanks, mike, for that. check out the full show of "options action" on friday at 5:30 p.m. eastern time. coming up, the final trade. 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 3:12pm every day or jerry getting dumped every third tuesday. jerry: every third tuesday. we have pattern recognition technology on any chart plus over 300 customizable studies to help you anticipate potential price movement. there's no way to predict that. td ameritrade.
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tomorrow, check out steve liesman's interview with stanley fischer. that is 8:30 a.m. eastern time on "squawk box." must-seeton. final trade time. tim, what do you say. >> one place emerging markets is working for kimberly clark. hygiene. stay in the name. it works. >> grasso. >> nvidia. it is a favorite in chip space and media. >> and burlington. i think it is on the down side. i think it is a buy here and you could make some decent money. >> guy. >> andy brings a certain energy
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to the show which i like. >> the kind you should bring. >> wow! >> we're talking about the move in macy's today. >> nice energy. >> i'm melissa lee, thanks for "mad money" starts right now. my mission is simple -- to make you money. i'm here to level the playing field for all investors. there's always a bull market somewhere. i promise to help you find 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 and to teach you. call me at 1-800-743-cnbc. or of course tweet me @jimcramer. have you noticed how quickly everyone wrote off 2016 already? after about nine negative hours of tr


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