tv Fast Money CNBC March 21, 2016 5:00pm-6:01pm EDT
adds supported it's not really working for the entire media industry so they are looking for the alternatives. >> especially with ad blocking coming up, too. >> that does it for us on "closing bell." f-money begins right now. "fast money" starts right now. live from the nasdaq market site overlooking new york city's times square i'm melissa lee. our traders on the desk are tim seymour, karen finerman, brian kelly and dan nathan. tonight on "fast." are you down for the year? we may have stumbled on a wonderful way to beat the market that could save your portfolio. are the perma bears ready to throw in the towel? one of the biggest bears is here with a surprising call and gas prices have been falling for the past year but why aren't restaurant stocks representing the benefit? a surprising answer from the ceo of one of the largest companies in the united states. we start with apple, is biggest story on wall street and main street. the stock is losing gains after the company announced updates of several key products earlier today in cupertino.
josh lipton is on the ground there with the very latest. josh. >> reporter: new products announced today, including a new smaller version of the ipad pro. remember, apple executives billed the ipad pro as the future of personal computing and said for many people the ipad pro can replace the pc. take a listen to what apple's paul schiller had to say. >> there are over 600 million pcs in use today that are over five years old. this is really sad. it really is. these people -- yes. to really, really benefit from an ipad pro. >> reporter: we know that the ipad faces real structural headwinds and consumers moving, for example, to smartphones with larger displays so the question for investors, do they think what was announced here today can change the trajectory of that ipad product line? in addition, of course, we saw the new iphone se, 4-inch display and faster chip and
support for apple pay and shoots 4k video so who does that appeal to and a lot of people want that 4-inch display and apple sold 30 million iphones with 4-inch displays. it could appeal to those folks who could be on a 5s and looking to upgrade and at $399 how they can appeal to more price conscious consumers and we know it was about the products today and top of mind was also just this ongoing fight between apple and the fbi and ceo tim cook actually addressed that at the very start to this event. take a listen. >> we believe strongly that we have a responsibility to help you protect your data and protect your privacy. we owe it to our customers and we owe it to our country. this is an issue that impacts all of us and we will not shrink
from this responsibility. >> reporter: now, tomorrow apple will actually face off with the department of justice in court in riverside california, and we're going to be there and bring you headlines as they come. melissa, back to you. >> all right, jellyfish lipton, thanks so much. start off with the iphone because at the end of the day a s&l an iphone company ant smaller responsible priced at 399, much lower than what a lot of people expected. what happens now, one with margins and two with the possibility that people might decide to buy this phone instead of a higher priced phone. tim? >> i think that's what we've all been waiting for. what we can sell around the world where there's a lot more price sensitivity, all about china where in fact 50% of the phones were bought, 4-inch phones and they can see what the appetite is there. i think it's very good news. good for the company and may squeeze margins and something that people have fought against for a long time but i don't think they are caving in here and i think they are going to a marketplace that really they have to compete in even though for a long time they said they didn't. >> karen?
>> well, i agree with what tim is saying. they can't see that business. they shouldn't and it sounds like they won't. i think that for -- for the -- for the diehards, this is -- i don't think they are going to feel the need to go from, you know, success or success plus or certainly not a plus to this. i think the 7 is still the story here, i think, so i don't -- i was sort of u.n. whelmed you with the whole presentation and i'm long, long the stock. >> karen makes the big point. this was never expected to be the event which will come in the fall. but for a stock hasn't done well for the past year do you hang on leading up to the fall event for that catalyst? >> the stock rallied 15% into the event which the expectations on the product fund were not high and investors are thinking about what tim and karen are saying, that this is a device well-positioned for the emerging markets. we know they don't have any market share for all intents and purposes in massive and that could be a massive market
because even believe it or not china is a much more penetrated market than india at this point so the device makes sense. the problem is that you have a very voweded field in developed markets and there is potential for cannibalization and asps across the entire product line that comes down. i know that's been the case for a long time and i think that's probably something you see as upgrade cycles stretch out a bit. >> is apple too late to the game at this point? >> they are not too late. >> this year that android phones will be 83% and apple shares are declining. >> yeah. here's -- here's what apple has always been as a company traditionally very good at. they take an existing product and make it phenomenal. make it easy for everybody to use. the smartphone area is fairly well saturated. yes, can we get india, can we get china? certainly, but this is not game-changing necessarily for apple and the stock absolutely reflected that today. really went nowhere. sure, we had a 15% run up into it and to hold on to the stock here, hoping for some kind of
fall event where everybody is going to upgrade. i just think there's way too much risk for the reward here. >> i'll tell you what. i think it's a case where if we talk about apple and been at it for the last six months people have all been freaked out about the supply chain and implications of what it means for the orders and looks like the supply chain is overshot. this is a big, big issue, a big issue for you. china was falling apart. >> well, listen, china was down 12% last quarter year over year and the u.s. was down 4% year over year. it's a very mature product all over the place. when you think about ipad. tim cook has said it will replace the pc. the ipads last quarter were 9% of sales. so were max, okay. so if they are going to destroy each other, that's going to be a lower number overall because we know that people are going to be, you know, moving up to just one device all together, so to me i think apple has a problem that they have too many skews and this is one thing. if you read steve jobs' book and he got back in 1997.
he saw dozens and dozens of skews, the same products confusing customers and they run that risk right now with all the different sizes of ipads and tablet and iphones and smartphones and the that's a risk. >> let's bring in jean munster, piper jaffrey. great to have you with us. >> hello. >> to that point of having too many skews, all these different phones are sort of incremental, there's a big one and medium-sized one and now a small one. there is a 7, but at this point are you concerned there's too many products and too many offshoots here? >> this is what they have been doing for a long time and they are rounding out what's already been their traditional approach which has essentially been a three-phone lineup and this is largely expected. i don't think there's many skews compared to the number of android skews out there which number in the 50 to 1 is hundred range. >> to the point of trying to compete in emerging markets at a price point of 399, gene, and considering a lot of other
competitors made a full force at capturing the emerging markets, a name like shamley which went hard into latin america and india and samsung already there and others, i mean, how does it stack up? >> well, from a functionality standpoint it's very similar. it has about 90% of the features on some of those cheaper phones. if you look at the price and iphone 10s to be about 50% more so the math would say that they would be losing share in china. i think some of the numbers quoted earlier were some of the sequential numbers about the decline from -- from september to december that apple reported, but their iphone business and some of the emerging marks in china was still up 18% year over year in the december quarter. the overall smartphone market in china probably grew around 10%. apple says it's flat. in other words, even though that the price is significantly higher they are still gaining shares so there's some flight to quality going on in china. >> hey, james, brian kelly. we're curious. talking china and penetrating in
india. is that the story for india? do i then need to go what's the chinese economy going to look like and india for it to be a catalyst for apple stock to be higher? >> i think that's a big part of it. 100% of cat lifts, that's probably 60% of it and specifically they still have in china about 8% total market share and smartphones. worldwide they have about 17% so there's room for that to increase, and separately is that as we kind of go through with india as an emerging market, that's one -- that's 60%, the other big important part is the pace that people are going to be upgrading phones. we believe that this iphone upgrade program and what has happened with the other carriers in the u.s. and ultimately with programs outside the u.s. is going to accelerate the pace that people upgrade their phones and create a tailwind so the combination of those two we think is going to lead to more sustainable mid to high single digit iphone growth which will be welcome by investors. >> gene, got to leave it there, thank you. gene monieser of piper jaffrey.
>> thank you. >> the old quick growth, will that increase the share price? >> well, i think it will. when you think about apple, i don't view it as having rallied 15%, in lock step with the market within 25 basis points, and to me not a lot happened and i don't think it was overdone going into today also. i mean, that 175 would be nice in it could get there, but -- but i could go half that way and i'd be happy. >> right, so, yeah, and jean is saying be concerned about apple if you're concerned about china. that's fair, and i -- i think people totally misassess the chinese economy as being the chinese stock market and also again looking at component orders where they slowed them down and they slowed them down and may have overslowed them down. you know, 3 million apple pay cards sold in in the first 72 hours. >> this is the apple anywhere. >> last quarter, tim cook came out on the call and said
something happened at the end of the year that we didn't expect. now, that hasn't changed in a couple weeks just because markets have rallied, so to me if this is a china/india emerging market story this makes me want to less buy apple at this point in time. >> gene is right and i actually misspoke. china was up 14% year over year in that quarter just estimated and had been growing 100% year over year so it was a massive deceleration so the only thing i'm going to say about the china thing. maybe there's a chance. the whole trade into the iphone 6 into the bigger phones was that the chinese phones wanted bigger phones. that's what the korean phones were and that's what was selling well there, now if you're telling me that the chinese want four inch phones, i'm not so certain about that. i'm telling you there were people who would buy the iphone 7. >> 8%, they dominated. they dominated every other carrier. every other piece of hardware in china. you and i have been speaking about this for six months.
no doubt is that that the shanghai composite went to 25,000 and a lot of people went out and bought iphones. >> you know how many people there are in china, 1.2 billion people in china. >> how many -- last year during that run-up, didn't they have 100 million accounts open. >> you're telling me the chinese stock market is the chinese economy. >> that's what you just said. >> you say that all the time and i've never heard anyone on the desk ever saying that. there's a wealth effect created. when you have an equity index go double in a year people have money and they go and they buy stuff and when the market goes down they don't have money anymore and they still have the stuff. >> everything i'm hearing from the ceo in china doing business is china is not falling apart. >> intel told us that in january, tim cook told us something happened and on their call in late january so there's two guys that are selling those products. >> they are taking market share in china from every other hardware maker, apple.
they are dominating china. you tell me. >> any other comparisons to other luxury goods sold, like a louis vuitton or a burrberry, does it matter if those sales are slow also? >> doesn't help, that's for sure. >> think about where the dollar was also six months ago and the headwinds coming from the currency which have totally collapsed. i'm not telling you that china isn't an elastic economy but the consumer is not dying based upon what's going on in the stock market. are you buying or selling apple after today? let us know what you think. obviously very strong opinions on this desk. coming up, gas prices are falling for the past year and why aren't restaurant stocks representing the benefit? a surprising answer from one of the biggest restaurant ceos out there. the saga of valeant and what it means for valeant investors and mr. wonderful himself says he's found a way to beat the market. exactly what he's doing later on
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man 1: do you know how many vendors have access to our systems? man 2: no. man 1: hundreds, if you don't count the freelancers. man 2: should i be worried? man 1: you are the ceo. it's not just security. it's defense. bae systems. ♪ no, you're not ♪ yogonna watch it! ♪tch it! ♪ ♪ we can't let you download on the goooooo! ♪ ♪ you'll just have to miss it! ♪ yeah, you'll just have to miss it! ♪ ♪ we can't let you download... uh, no thanks. i have x1 from xfinity so... don't fall for directv. xfinity lets you download your shows from anywhere. i used to like that song. welcome back to "fast money." the price of got lean has fallen nearly 20% and restaurant stocks
like ruby tuesdays and others which should benefit from cheap gas are down double digits so what's going on here? ceo hand chairman of landry is joining us which owns and operates one of the largest restaurant corporations and is the host of the new cnbc show "billion dollar buyer." we'll goat that in a minute and first to what's going on in the restaurant industry. what are you seeing at your restaurants in terms of gas price savings? >> everybody is saving 6,000 per year and there's definitely more disposable income. now down in texas it's a little soft right now but what's amazing is we're on like a five or six-year growth since 2010. the economy is slowing up and anybody that tells you it isn't isn't telling you the trout, and i -- i see it from all markets. i see it from california, to new york, from the high end, may have tos all the way to the
bubba gumps and rain forests. it's not bad, don't get me wrong, but it's just soft a little bit. not getting that positive 2%, 3% and 4% of same store sales force and with all the states implementing the $12 and $15 minimum wage. >> how has this lined up with what you've seen in the past in terms of how the economy actually is and getting all sorts of other reports saying the economy is doing well and what you're seeing is a little bit different and i'm wondering how your view lines up with what we're being told by the government and economists out there. >> i kind of disagree with the government, but i've disagreed with them for years. you know, it's kind of like they say there's no inflation but go out there and -- and can you buy anything cheaper today than you could three years ago from an airline ticket to a hotel room to a -- to a quart of milk, to bread to anything you buy, to a shirt, to a coat? so -- but yet i've sat there and gotten into it bernanke before
and me and carl beat up on him, carl icahn one night at rich handler's house about he said, you know, we do a million skus and there's nine flakes out there, and it's an ivy league school that does it and i said you better get a new ivy league school and don't tell me there's no inflation out there because there is. >> have you backed anybody for president, tillman? >> gosh almighty, this is interesting. >> let's just leave it at that right now. it's very interesting. >> that's it. >> you're going to withhold. >> i'm going to withhold today, but i think it's definitely as everyone knows it's going to be a good battle between hillary and -- and donald, and i know them both, pretty darn good so it ought to be interesting. >> all sorts of prognostications from various types of people that a trump presidency will mean terrible things for the stock market or for the u.s. economy. i know you're not endorsing anybody but do you see those sorts of effects? does that matter, i mean, for
your business? >> if you elect a republican president and you have a republican senate in congress, you are going to get a lot done, okay? i don't like when people say that donald trump is not a republican. when you're in business and you do business all over the country, you're friends with everybody, okay? >> right. >> you give to democrats, you give to republicans, there's no reason for you to be a hardliner if you're -- if you're in business because all it's going to do is hurt you. donald trump is a republican. hillary clinton is a democrat. >> right. >> okay. >> and if you keep congress the way it is you're going to get a lot done in washington. >> we want to trade the restaurant stocks while you're sitting here, one last question before we do that and before we talk about "billion dollar buyer." in terms of the range of companies and range of restaurants, do you see the slowdown the most in any one part, the high end, the low end? >> you know, that's what's interesting. you really aren't. >> okay. >> and it's not bad.
i don't want to panic anybody, but what you've lost right now and everybody knows it's hard in the retail industry to have positive 3% and 4% growth year after year after year, and there was six really good years and i think you're just -- everybody is taking a deep breath right now and just kind of seeing what's happening. >> right. >> it's not bad, but we are not growing the same and the whole retail industry isn't growing the same right now. >> let's quickly get a couple of trades out there. this kind of lines up with your feelings about the economy. >> that's the big question here is where have all the gas savings gone to, and most of it has gone just to savings and we talk about, well, maybe there's cash on the sidelines. my rue is maybe this doesn't come back in. exactly what tillman is saying. it's very hard at this point to get excited about stock prices up at these levels when you know that the underlying economy, we know that corporate earnings have slowed down for the last several quarters and for me it's very difficult to get in there. in terms of restaurant stocks it
makes it even less interested in buying them now. >> all right. >> we're trading at -- and i'm not public. >> right. >> but i still -- i still know everything about it, because i was public for 20 years, but restaurants are trading at a pretty darn good multiple right now. >> darn good. >> hold on, tillman, because we do want to get to the clep of your show, "billion collar buyer" which starts tomorrow and tillman is the star and we've got a buyer. >> we built on a 5,000 square foot commissary space this past july. that's where do all of our production. >> that has to cost a couple hundred thousand a years with lights, water and gas. this is scary for me, for y'all. you already have a commissary so you have a non-income producing. >> two key yosks in the galleria. >> the key yosk doesn't do what this store does. >> absolutely. >> the idea is to open up other stores but have our commissary be where we grow because we can produce a lot out of that xhomsry. >> this is the mistake everybody
makes. successful with one store and go to three stores and they are not making any more money. they just have more work. >> again, billion dollar buyer premiers tomorrow at 10:00 p.m. eastern time right here hon cnbc. looking forward to watching it. we do have breaking news and we've got to cnbc's scott walker in the newsroom with the details. ? >> this is more about this wells notice that omega advisers and lyon cooperman have received. i just spoke with mr. cooperman who told me, quote, we believe we have done nothing wrong. that was in response to a question about the wells notice. his firm did receive last week. he said it centers on trading in atlas pipeline. it's a stock that they had owned for years all the way back to 2007 but are no longer in. in fact, mr. cooperman had just wrapped up a conference call with his investors and according to those investors who were on the call, mr. cooperman said the following, that the investigation that's ongoing
won't have a meaningful impact in the firm's ability to serve of its investors, that the lawyers will vigorously fight charges if in fact there are any. the wells notice is not saying that there are charges. it's the expectations that -- that may be brought against mr. cooperman and his firm. he also said that the wells notice concerns the untimely s.e.c. filings in a handful of companies and, again, according to that are on the specific call, he called that, quote, piling on. he said he offered to meet with the s.e.c. enforcement staff a year ago but they refused. remember, it was nearly a year ago in the spring of last year where we learned that mr. cooperman's firm had received subpoenas from the u.s. attorney's office in new jersey and also the s.e.c. again, he offered to meet with the staff a year ago. they had refused.
he says now, according to those on the call, thatty will will respond to the s.e.c. by the end of the month. he said we can definitively prove that we've done nothing wrong. we're not going to let s.e.c. change our reputation, one that he told the group that was gathered that he spend 50 years building. he said there was no pattern of insider trading, that he believes everything will be resolved favorably. those were the words that he used, and that he was very comfortable in his position, but, again, speaking directly to mr. cooperman myself just a few moments ago, he told me, quote, we believe we've done nothing wrong and that it centers on atlas pipeline, a stock they had owned for years beginning in 2007 but one that they had sold as of 2015 so mr. cooperman is speaking out tonight to cnbc and calling his investors, hoping to reassure them that he will in fact be cleared telling them
that he believes that they have done nothing wrong. melissa. >> all right. scott, thank you very much. scott wapner with the details there on the wells notice served to omega. karen, what's your reaction? we had the news cross initially that they were served a wells notice and you stayed could be nothing. >> it could be nothing. you know, where there's smoke there's fire. the s.e.c. threw a smoke bomb in there and there real el night not be nothing to it. i don't know if it's the duty that he has to report. remember, this is a civil action. i'm inclined to believe it. >> coming, valeant shares are jumping after a big shake-up and is there something fishy happening at the company. i'm melissa lee, first in business cnbc. >> here what else is coming up? >> i'm going to kill the bear. >> so are we. "fast" is talking to the player haters asking the biggest bears if they are about to change their tune.
welcome back to "fast money." shares of embattled pharma giant valeant losing 6% after news that michael pearson has announced he'll step down and board members announced actman investor bill ackman of pershing square will join the board. valeant is also accusing the person who had been the interim ceo and cfo of wrongdoing. >> yes. >> of nothing that something fishy was happening. >> that to me was the most important piece of information that came out today and it raised more questions than it answered this release because i don't recall seeing a time when a board has asked someone to resign and they said no. so that in itself is extremely interesting. it's looking like they are pinning the accounting irregularities on him. he's saying no, that's not the right place. would i guess he does not want to be made to leave the company
and assume that he's going to be the fall guy and would much rather stay in. that to me is the most disturbing thing but it doesn't address. the filledior thing that they came out with today addressed the accounting issues but doesn't address what they have been subpoenaed for is the payments on where you get a coupon back if you're the customer and so you don't pay the deductible, so that to me is far more of a big issue soon to come. the thing about pearson leaving, that's not so shocking. he was the man to build this, this platform is no longer the way the company is going to operate. that seems very clear, so it's not so shocking to me that he wouldn't be the one to take it from here going forward. ackman joining, i don't know, he already has somebody on the board, a very senior guy, and -- but he's just okay more embed now in the situation. the whole thing reminds me of tyco where had done a number of acquisitions, put on a lot of
debt and build a huge conglomerate and then there were accounting irregularities and they threw out the ceo and kept the cfo in there for a while, mark schwartz and ultimately he was arrested and spent time in jail, got out on parole in 2013. >> what ultimately happened with tyco is survived? >> and then got broken up. survived barely. >> the stock popped today, just short covering. >> my sense. there's still really very little you can do here with the accounting and uncertainty out there. what i filth is that the filledior business and arguing against that part of the business that had been so profitable and everything else being equal this, company actually looks like it's cheap but that's in a world where we understand the accounting and the issue we're up against. >> still ahead, the turn of the calendar month could have major implications for the recent real. how to protect yourself and mr. wonderful is here in the
welcome back to "fast money." let's get to the markets because first time in a number of years investors are rotating out of growth stocks and into value. more from headquarters and the story. >> reporter: they have liked growth since the bull market began and look at the russell 12,000 index versus its growth counterpart. it's outperforming. we look to see what happens with the index, the iwd, ticker code, rises 10% or more in one month and it's up more than 8% already in the last month. know, financials, they account for a big proportion of value indexes and are far the best performing sector. on average it has returned 17% and traded positive in every single instance when the iwd is
on a tear. over the last month the stock is up 8.5% and the data suggests there could even be more room to run. when values are in favor, consumer industrials, also posting double digit gains. the dow components with the highest average include caterpillar, ge and jp morgan and traditional safe havens such as the dollar and gold tend to underperform. we also want to know what a big boost in value stocks has brought for the markets and other assets after such a real. the iwd itself is higher. only about 60% of the time but here is where gold really outperforms. the precious medal along with silver have likely climbed an average of outsized returns. >> thanks so much. for more let's bring in a familiar face. kevin o'leary is the co-founder of ollie funds and the star of "shark tank.
"thanks fork here. >> thank you. >> where are you finding the value right now? >> i like value and earnings are slowing and bottom line you've got the dividend yield. on the s&p you're getting 2.3, 2.4, but if you really mine for the better names domestically, look at a thousand stocks and ask what does the balance sheet look like? can i test it for crude ref now? remember worldcom, wouldn't touch it, i look at asset turnover. the reason i don't like apple right now is the productivity is slowing in the company, margins are slowing so i don't own that name. if you go through those kinds of rules and thank goodness ftse russell does this for me with an etf called ot usa, you get 140 names. very low vol, 20% volatility and 50% div yield. that's something i'm buying. >> you take out companies that are using debt-to-finance. >> yeah. >> isn't everybody under the sun doing that? >> not everybody is doing it the
same way. the more leverage being put on the balance sheet the riskier it is down the road and i hate names that are using debt to up the div. that's a disaster waiting to happen. frankly right now you should care a lot about debt because if we're at beginning of the cycle, no one believes it and when everybody says rates can't go up is when you get it in the hiney one day. >> the hiney. >> i'm just trying to be nice when i say that, but i think you should be concerned. >> that's why they call you mr. wonderful. >> you love europe? >> incremental dollars for me are going to euro. here's why. two weeks ago we got the news if you keep cashing euros 100% probability negative interest rates. if i was a european guy sitting there with a lot of cash and knew the government would steal 4% from me i might go looking for a large cap dividend paying stock that have a yield of 3% and ftse russell has done that, too, on a hedged and unhedged
version. you can buy europe hedge the american dollar and get about 1350 names yielding 3.8%. i think the euro guys are going to be taking their cash and going into large cap. i predict and i could be wrong, but by the end. year euro will outperform domestically but the companies like lvmh and other big ones are selling domestically and they have the winds behind the backs. they are selling the purses here. right, new york? >> they are selling into a u.s. economy that's slowing that you just talked about. the earnings here are slowing and the u.s. economy is slowing. tillman on talking about that so it would seem to me that if i'm looking at the rest of the world i would only want european companies that are selling internal throw europe. why would i want the exposure to the rest world that's slowing. >> i'm going global. i want the biggest market cap names and that's what i'm doing. the fact that they sell mostically doesn't turn me off and at the end of the day they have the advantage of a lower currency. here's the thing. tell me if you're sitting with
money in europe and you knew with certainty that the government is going to steal 4% from you. doesn't that get you thinking about maybe looking at some other assets, maybe large-cap dividend-paying stocks. that's my investment theme and i'm sticking with it. >> dennis, what do you do if the ecp is not really different than the fed. >> i hope they are the same as the fed, pouring the liquidity on, until the cows never come homer. >> the argument is some day soon, and they are pulling liquidity out and if they do and the ecb and fed are more aligned or less divergent the euro should rally. . the euro rallying has not proven to be very good for any companies, the ones you're talking about. let's talk about the innings of the game and do the baseball analogy. if you're in the eighth inning and the fed will slow down they are still in the fourth so you might as we will look at what happened to us and we were seeing how great we are. pouring liquidity on forever. seemed like we're never ending and now we're thinking we might end. meanwhile you have liquidity with certainty in the eurozone.
the negative is like herding cats, when you are talking euro, talking england, switzerland and germany. you're not worried about spain outerly. you're talking about the biggest companies on earth. we love our big caps here and we're talking about how great value is here. why not go look at a company selling at a 20% discount. cash flows at 10% higher and the div yield is 50% higher. we're all agnostic and we should be looking at large cap wherever we can find it if we can hedge out of currency risk. >> would you rather large cap euro or large cap u.s.? >> i just want to say one point that when you think about all the liquidity you talk about, some of the worst performing equity indices, japan, china and europe. >> that's last year. the point is we never know till the year is over who is going to outperform. i went back and looked the last 20 years at heat map of what these market caps did. the biggest investment zones, asia, europe, domestic. we're only beating those countries 50% of the time so you don't know with certainty what it's going to look like the end
of the year and i'm only pointing out and here's where i'm putting my own personal money to work. 15% stays here, 25% in europe and 25 in asia and that's the biggest basket 5,600 names i think i can get with an average yield of 3.9%. that's my equity portfolio so i'm mott scared to go to japan. negative interest rates. japan is 20% of my portfolio in asia and the government hates cash. where the japanese going to put money? back into exies? what everybody hates had a market you've got to throw had a little bit into it. that's the way i look at it. >> thanks for coming by and share your big basket. >> we'll see. >> i know i'm on the record with you guys now. >> yeah, you are. that you are. >> see you soon, kevin, kevin o'leary of "shark tank. "coming up, stocks are at year-to-date highs and what are perma bears saying about it now? we'll talk to one of them and see if he's ready to throw in the trial and where some traders see nike going next. we've got the trade when "fast money" returns. the heirloom tomato.
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was on the show here's what he said about the market's value. >> i think we have a dead cat bounce in no-man's-land around -- around 1870 on the s&p. we've been there now for 700 days, if you can believe that. first crossed in february 2014. by my count we've had something like 35 attempts at rally. all of them have failed. >> david stockman is the former director of the office and management and budget under president reagan, widely followed voice on wall street. david, great to have you back. >> glad to be here. >> the markets have certainly gone in a more positive tone since the last time were you here. >> i think we're still in no-man's-land. the only thing left, we've had a dead cat bounce and it's been strong. the only thing left is to bury the cat. there is a global deflation seriously under way. there is a recession heading in this direction, maybe by the end of the year, maybe next year. the earnings in the market are
dropping rapidly. people don't look at gap earnings but they should. the year is over. it was 86.44 per share on the s&p 500. that's down 18.5% from 18 months ago when it peaked in the september 2014 ltm. so when earnings are down 18.5% and this quarter looks even lower, when you're facing the kind of headwinds we have all around the world, when you have central banks out of dry powder, when you have, you know, the display that we saw last week -- everything you say i can certainly agree with on some level, but first of all, how deep do you want to by the cat because at some point i believe equities should trade expensive here because of where yields, are because of central banks, so, i mean, they should be trading at a premium even without earnings, no? >> no, i don't think so unless you're in a safe world and i think we're in an extremely unsafe world. we've never been here before and now the central banks can't even
make a decision to normalize after 77 months of zirp in march and it means, and i don't mince any words, but would i liken the fed to a blindfolded arsonist who is armed, dangerous and lost. they can't possibly believe that they are going to wait out this cycle at zero interest rates in an economy that's at peak debt. the zero interest rates are doing nothing but fueling one more ignition of speculation. that's all this has been, and i say, tim, and i see your point, that 86.50 and going down times 15 is a 1300 market. it's not a 2,200 market. where we're heading is through 1,300 from the top before we ever penetrate 2,200 from below. that's where were. >> can i drill down on that 86. how much of that is energy
earnings or even negative energy earnings and if you pull out the energy sector where does that least rest of the s&p and what multiple would you be looking at? >> that's a good question. if you take "x" items that the street likes, "x" everything, only 100 items and we're still looking at starting the projection of 137, the consensus and by june last summer it was 118. when all was said and done and 97% of the companies are in an it's $1,100, the same is happening next year. on your question for 215, gap earnings came in at 780 billion for the whole s&p 500. ex-item earnings came in at 1.4 trillion. there's a 150 billion gap. "x" items are being reported and discussed at 33% higher than
gap. now, it's more than energy. it's materials. it's energy. it's -- there's always kinds of writeoffs. >> i think, dan, you would agree with those points. >> for some reason investors have this obsession with "x" items and everything, and if you want to drill down and to your point about multiples is a really important one and i'll say the technicals, haven't even talked about this. something that happened this year. in 2016, that's not happened throughout the entire bull run since tarp and qe and zirp is that the s&p made a lower low. it happened last month, made a lower low. we're in a rolling top. that's just a technical fact here, and the fact that we've lost steam on his dead cat bounce on a lower low, if we lose it here, i think we're going back to 1800. >> what's the catalyst that you say the take the market there, we're talking about black swan events, like i don't see the catalyst? >> if we look at the world, the -- the bellwether economies
of asia are telling you we're going into recession. japan's exports in the first two months are down 13.5%, china two months average down 18.5%, korea, south korea, down 20%. the world economy is drifting in a recession and we are not decoupled. we are not exempt and so i look at, for instance, total business sales. they are down 5% in jar from the peek a year and a half ago. look at inventory to sales. it's at recession levels. >> we're out of time and thanks for stopping by. david stockman. trade remembers running into shares of nike ahead of tomorrow's big earnings report. how high some see the stock going and what has them excited. more "fast money" straight ahead. cut. so i'm gonna take this opportunity to direct. thank you, we'll call you. evening, film noir, smoke, atmosphere... bob...
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welcome back to "fast money." shares of nic rallying and earnings come out tomorrow after the bell and some are betting the stock could surge even more. dan is breaking it down on the smart board. hey, dab. >> option markets ran hot. call volume three times that of put and three times that of average daily volume. today when the stock was about 64.5, it looked like a trader
did a weeklyration call spread, owning 65 and selling two of the 67.5s and this is leveraging up an existing long position into this earnings event and really targeting a move to 67.5 looking to get a little enchlg here. just want to look at the charts. this is the six month chart in nike. goes back to when the company announced in november that they were going to be buying back $12 billion worth of stock and that the stock would be splitting on december 24th. look at this six-month chart. the stock is getting back up to that prior level. i just want to make one point. the stock massively reversed after earnings and you could see a move up to the high 60s and then consolidate a little bit. >> full show on friday, 5:30 p.m. eastern time. coming up next, final trade. here at the td ameritrade trader group, they work all the time. sup jj, working hard? working 24/7 on mobile trader, rated #1 trading app on the app store. it lets you trade stocks, options, futures... even advanced orders.
including an industry leading broadband network, and cloud and hosting services - all with dedicated, responsive support. with centurylink as your trusted technology partner, you're free to focus on growing your business. centurylink. your link to what's next. president obama on an historic trip to cuba and in lieu of the final trade we'll go aron to see which benefits. >> the recovery of this airline is starting to happen in margins. stock on fire this year. take a lock. >> karen? >> i just picked coca-cola because i think it's interesting that it doesn't sell in only two countries, cuba and north cree a. i don't know if it makes dividend. 11 million people. maybe they drink a lot of coke. >> b.k.? >> carnival cruise, new cruises going down there, an incremental
revenue to carnival. >> dan nathan? >> paypal payments are down there this week and hope to be servicing cuba soon. >> i'm melissa lee. thanks so much for watching. see you back here tomorrow at 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 some money. my job isn't just to entertain but to educate and teach you. call me at 1-800-743-cnbc. or tweet me @jimcramer. can stocks be undervalued even when the market appears to be overvalued? well, we have had a monster bull run since the bottom of th