tv Fast Money CNBC May 12, 2016 5:00pm-6:01pm EDT
basically amazon that sector. if that doesn't show growth, we know there is problems with this, too. we'll look forward to that. stephanie link, mike, thank you. that does it for us on "closing bell." "fast money" beginning right now. "fast money" starts right now live from the nasdaq market overlooking times square, karen finerman, dan nathan and guy. roger mcnamee says there is a technology to own that will eat google and apple's lunches. plus, look at nordstrom. the latest retailer to tank on earnings. ubs says it doesn't matter which one of these two people becomes president, the market no matter what is going to see a major shakeup. the strategist behind the call is here to explain. two mega cap tech giants but not apple or google. we are focused on facebook and amazon. check this out. both companies near all-time
highs today and both companies near equal and market cap. are these tech stocks the ones you need to have in your port follow -- portfolio right now, guy? >> steve has been all over this but given the valuation and run and the stability of earnings, facebook is the name for me. >> what do you say, dan? >> if you're picking a would you rather, i'd say facebook -- >> if you didn't have to pick. both? >> listen, i have a lot of fundamental issues with amazon. if you k llook out five years, facebook will be more valuable. i can't tell you what will happen from now and then. amazon, karen and i were talking this company had a cumulative $500 billion in sales and $5 billion in net income in generally accepted accounting principles. that's 1%. they have used investors money.
their willingness to invest to take market share and we're going to get to that but to me thanks is a bit of a shell game and i don't like it. what facebook is doing is they are front of a secular. >> they built things other people can't do and the leader, the leading first moving advantage, easy for me to say, is something that i don't think even facebook can claim at least in terms of what is required to run the business. look at amazon. amazon is starting to dominate possibly shipping. a deal with atlas worldwide and fashion with the department stores. in other words, people are making fashion decisions on amazon and will dominate media space. when i look a company with room to go and great job to steve on this one. you have a case where this is a company that the valuation i have to tell you i'm not going in to buy this tomorrow. when i look at the company and who was dominating and more disruptive than anybody, it's absolutely amazon. >> karen? >> i just look at the business model.
facebook to me is far more interesting for a lot of reasons. they don't have any physical -- they don't have distribution centers. it's a very different model and i think when -- i'm very focused on valuation, amazon very difficult for me to get there. facebook, the rate it's growing is really not that crazy of the whole thing universe, i'm more google and facebook and none of the other two. >> once upon a game, guy, i'm sure you remember -- >> i don't know. >> the days when apple was the must-own stock, the growth stock in technology, the leader in invasion, the stock everybody had to own, everybody loved, has it given up the mantle forever? >> the stock price indicates that it's given up that mantle forever but i don't think the sentiment indicates it's given up the mantle forever. people still believe in apple and what apple has lies in front of them. apple can go the way of somebody or some variation of that and
echo system but facebook is dominates on so many different m metrics right there and dan would argue against it but given the reach it had and scope, the stocks, facebook to me is the most reasonable. >> i reason i ask that question is we're watching facebook and amazon and on a difficult day hanging around the 2050 level, facebook and amazon still manage to hit high levels. >> we have market leaders and ten large cap tech stocks driving so much performance over the last couple years and now we a couple. that's not great. when you see the breath, if you look at google hung in there but net flex is down 37% and apple is down 37% from the high. now you have these two left and i don't like the concentration of bullishness. the sentiment around the names. they do set up no differently
than apple of net flex. >> so they are in for a big decline. >> they would be off. >> i don't know when from where. >> look, i'll not going to argue because i'm not chasing facebook but is your point the market is a scary place -- >> i think we lost a lot of leadership. >> because these two. >> this is a demographic thing and nothing to do with the economy and i mean, i'm not going to defend that one to the hip b hill but retailers problems are a problem. not just a vil beverages, produ core defensive names that continue to do very well and in this tape, i wouldn't run too far from the names. >> i'm long apple but clearly trades horribly, horribly. >> at one point you say i'm going to start letting go? >> you know, flirting with that idea today, i probably would buy
some. it's very difficult to control emotions, right? you don't want to say god, i used to trade at x and now it's 85% of x. if we just buy some puts, i probably there will stay in the seven, through the launch of the seven. >> when you say too bullish? >> in apple. >> it would imply a long-time high. >> the people with apple have tremendous conviction about the company and are puzzled by the performance of the stock but haven't given up the ghost. tim was right. go back to january. what bottomed out? transports. a tremendous run. the huge run but look at the performance today and over the last couple days. now you're flirting with levels that should give you concern. transport back in january, i wonder if they are leading us back down now in may? >> so we're in per car use
waters. >> a lot of the stocks they considered to be, you know, very strong companies, pretty good balance sheets but maybe valuation that's expensive, netflixs of the world should be selling off. i would be watchful for ibb and other parts of the same playbook that worked but to say that we're in a place where the market is about to get destroyed, i just don't see that. >> sells outputs and not sell amazon here. let's say facebook for instance, i know people say growth at a reasonable price. on a gap basis, that number is 253 in 2016 and trades 50 times. okay? that's a massive, massive multiple. >> i can defend amazon's business model and leadership. >> you should -- >> no, i never -- >> not you. not you. >> to be clear, my point is i think net flex has an enormous competition. netflix is something where not
only the barrier is entry but cash burn and cost for content, i think they had a couple great quarters, not growing domestically. >> people forget with facebook. they have a near monopoly but this is one of the most cyclic l things that exists. not tangible. it's add revenues and we saw this and we know how this went. at one point in the year 2000, somebody jammed one too many banner adds and these stocks lost 90% of the value. they are owning so many parts of digital advertising and sponsored this and it's not -- it can't last forever. trees don't grow to the sky. >> both can have an echo system. people are cooked to facebook and connected -- >> you know, i'm just saying apple has an echo system and stock down 30% and lost $150 billion. the same arguments you can make on every single one of these. >> you got to think about also
advertising pie. the question whether the pie is growing or shrinking, i actually think it is growing as you find more people that have access to advertise because it's cheaper and targeted. you pay for what you get. that'scbss of the world, abcs of the world. >> they are seeing money come back their way. i don't think it's a straight road to -- >> let's settle this. what is a better investment, facebook or amazon? we'll bring in roger of elevation partners and also a -- >> roger, always great to see you. >> melissa, great to be back. that was a fantastic discussion. >> thank you. >> really fantastic. let me give you a little context on the driver. the point about the leadership narrowing from a dozen stocks down to two i think is a really, really important point and the thing to understand is we've just come off the mother of all
product cycles related to smart phones. it was the biggest product cycle in the history of tech by a mile and made apple the largest cap out there and gave an extra boost to google and huge boost to amazon and huge boost to netflix and leadership companies but we've hit the point where everyone who can afford a smart phone is on their second or third one and so they -- the pace of upgrading has slowed. there is nothing we can do about that. it doesn't make apple a bad company. it doesn't make anybody else a bad company. it's the product cycle is over and they have l have a period of consolidation and maturity and nothing coming that can possibly replace what we got from smart phones. so now you're looking at a situation of a narrow basic company to work from and against that backdrop, amazon and facebook really stand out because for different reasons they have enormous opportunities. in amazon's case, the retail site is one as one of your
panelist said never generated material net profit but super, super clear their online services business, aws is an enormously valuable and very rapidly growing infrastructure play that they have a tremendous advantage in. so i think that is attractive. on facebook, i totally agree with the valuation point. it is 50 tyimes the current run rate and not a cheap stock. what it has going for it, they were the absolute big winner from advertising in the mobile arena and that is not done. you're not -- you're done selling growth in terms of new units but it's raising and advertise and opportunities there. the big opportunity at facebook is video. that is just beginning and will propel the numbers for another two or three years. >> roger, you clearly like both of the stocks and making the case they deserve premium. at what point would you say valuation works against these stocks? >> to clear, melissa, for the last year, i've been in a
position where i thought the number of issues facing the market was the number was great enough that i personally was going to be much more causotiou than i've been. i'm carrying more cash. i retain in facebook which dominates my portfolio. my mix right now is very low on my percentage invested. so i'm perfectly comfortable of hanging in there because i've taken so many chips off the table. i think the fundamental momentum at facebook and at amazon helps those stocks because if you're a growth stock investor, you have to put the money somewhere and apple is now decisively a value stock. it's trading at ten times trailing earnings and has a 2.5% yield, you know, in a negative t bill environment and 2% bond yield environment. it is a really attractive stock on a value basis but again, i
just don't think you're going to get more than little blips up and down and every once in awhile, people will pay a higher valuation for value. that's the argument for apple. on that basis, apple really stands out but the notion that apple will be a big growth stock driving the economy i think is unlikely for at least the next couple years. >> all right. roger, great to speak with you. thank you. roger mcnamee of elevation and our latest fast master. >> fourth. >> series of many. >> so many fast masters, let's be clear. >> everybody is a master, exactly. >> yes. >> interesting point. [ laughter ] >> would you agree with roger on apple? sounds like he's essentially saying the best days are over for now. >> they are. the point about the smart phone history, we're waiting for the next level of invasion and apple is trying to invite and that's something that look, apple is a different investment story. $67 billion in free cash flow a year is something that you can still invest in and something that's probably going to be sustainable for a long time.
that to me is why you own apple. >> roger made a point about needing to put money someplace and that would be amazon. karen, as a facebook shareholder, does that concern you there are is certain amount of not bubblishous. >> he talked about aws, dan and i talked about this. it's a great business but i see margins competitive -- >> they actually were down quarter over quarter. if you see a string of that, you want to get the heck out of amazon, even you steve. >> check out shares of nordstrom or dillard's. are major department stores about to become the next newspapers? >> and brian speaking to cnbc about the broader market and impact of oil. we'll bring you comments and later, if history is any indication, this election year could set up for a massive move
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welcome back to "fast money" nordstrom and dillard's tanking. >> tumbling after profit fall short of expectations. revenue is slightly short but comparab sales fell 2% and as a result of it, nordstrom cutting the full year sales and earnings guidance. what is really telling is the difference between the performance at nordstrom's regular stars and website and rack outlet stores and website. nearly exactly opposite. with comparable sales down 4% at nordstrom but up more than 4.5% at outlet stores. on the call management said the weakness was broad based across categories and said jewelry and handbags were notably tougher. beauty was the best category and nordstrom called out strength in young women's most notably nordstrom president's noticed the change is increasing and
tried their best to keep up. take a listen. >> we're working to best serve our customers. this means continuing to make the tough but necessary decisions that will ensure we're set up for continued success. we are confident that through our initiatives, we are competitively positioned to deliver the products and experiences our customers want. >> confident but the retailer noted it's not satisfied with results. inventory too high and puts pressure on margins and means additional mark downs. dillard's another family run department store reporting a wide miss for earnings revenue and comps. dillard's noted weakness in furniture and women's lingerie. there is no call for dillard's, so all the info we get is in the press release and shares are down 6% after hours. melissa. >> thank you, courtney regan.
the terrible numbers out of nordstrom brings us to the question whether department store retailers are going the way of the newspaper industry in that retailer wills have to merge or close. >> yeah, i don't know what merge will mean. i don't know what merge will do for any of these guys and gals. if you married two laousy comp y companies together, you still have a lousy company. creating a scarcity value will help. this is a level we bottom the out in at the end of 20111. if there is a level, this is it. short interest going into the day was 22%. my guess would be as that approaches 30% we would jump in on the long side. >> how do you view what is happening in retail now as something changing permanently or a fleeting thing? >> we talked about potential. it's like newspapers.
>> right. >> i thought that's absurd. thinking about it more, i actually think it's not so crazy when you think about the newspapers that shut down the foreign whatever desk and now they don't have -- there is no duplicity -- that's the wrong word, duplication of many jobs like the web. i think we'll see consolidation here and more purchasing power but i also think that if they substantially decrease the footprint, that actually is a little bit problematic and macy's says we can't just close stores because it will affect the online revenue near the store. people like to buy online and pick up in store and return. so that is a difficult thing to manage. i would rather be a kors than nordstrom our macy's because people want kors. it doesn't matter where they get them. but this is troubling. >> i think it's especially
troubling for a nordstrom. they separated and traded at a premium to the peers and something that ultimately i think investors said hire iorc and i should say this should trade seven times. do you really need to? the best part of nordstrom's biz is the rack -- >> the rack is awesome. >> no issues with the rack. that growth is firming up the rest of the business. >> nice. we have a little graphic here, which i thought was interesting and really why i think -- >> what's so funny? >> nothing. >> you can't have, you know, decreased demand in bricks and mortars and continue with the capacity. i believe you have to see some formal consolation. look at that there. they are expected to have $134 billion in sales and they have 230,000 employees and no stores. when you look at macy's, they have one-fifth the sales of amazon's expected and have two-thirds the amount of employees, something has to give. when you look down the line and look at j.c. penneys, they have
100,000 employees, they are of sating zombie stores. the only conclusion that i can draw to so capacity needs to be taken out massively. this is the year to do it. maybe try to maintain the best of two brands and merge. it will happen whether they like it or not this year. >> i'll say this quickly for the georgetown folks, this about to be -- the retailers find themselves in a la gub use situation. >> you come to where we came to last night, the real estate. if that happens, if we start to see footprint number of stores get smaller, what happens? >> bank of america ceo has choice words about the impact of the collapse in oil prices on the banking business. we're bringing those comments exclusively next. i'm melissa lee, you're watching "fast money" on cnbc. in the meantime, here's what else is coming up on "fast". >> no matter which one of these
welcome back to "fast money." brian speaking on closing well and wilfred is here making his "fast money" debut. >> welcome. >> excited. >> wilfred. >> what did they have to say? >> great to be here. thank you for the welcome. we know from q 1 earnings we started to see improvement in march from those depths of january and february in the
banking sector. i asked him if that continued improvement occurred in the months since april and may. >> if you think about it from market activity, trading activity with these guys out there, it's the strongest margin continuing to improve. if you think from investment banking, you can read papers. it's coming along but takes longer to restart the engine. >> the other big issue of course from the first quarter was asset quality concerns. i also asked whether that had spread from the first quarter to the second quarter and also from the energy sector to other sectors. >> we see nothing. the activity in our commercial portfolios is still strong. the activity from a credit quality is still strong and oil and gas, frankly, is mitigated somewhat because of the obvious issue of prices have changed but you are working through things. the call in the company is strong and continues to remain so. >> resounding response on the asset quality there. he said we see nothing.
shares closing today at $14.15. they have bounced quite significantly of course from the february. still down, though, about 14% year to date. the next big item on the agenda will be the rules as it is for the sector as a whole in june. >> was there actually an acknowledgement that asset quality wasn't that challenged because so many ceos said you stress test the portfolios, exposure is limited. >> back to the earnings, the did i have differentiations was guidance for the rest of the year as to seeing it improving. jp morgan more confident and bank america not confident. that's a nice improvement in terms of sentiment from bank of america on that particular issue. >> so particularly for bank of america is a big issue given the history of stubbing their toe a couple times. any sense on how confident he feels? >> he said they were confident on that and the living will.
are you 100% sure? he seemed confident. he said we spent a billion dollars in recent times getting ready for these both -- both these issues and say they are ready and they have done all of the work they need to do. >> i want to bring guy in here. >> bring me in. >> all this is fine and good. the stock is still not trading well. >> stock hasn't traded well and another that hasn't traded well is morgan stanley. look at the performance. bounced off the recent lows but again not particularly well and i'll say this, you're from over there, brother. those european banks are not trading well at all. tim and i had a conversation about them. they might be specific to european banks. i get it. but there is clearly something going on with banks and a like that concerns me. >> the point on that, the themes in banking so far this year have been pretty similar for all of the banks in the u.s. and europe much more differentiation on stocks specifics. we had the swiss banks credits bounced up higher and ubs four
shot below. there is more stock specific. here similar themes across them. for bank of america, the real theme is interest rates. such deep sensitivity. we know the cost cutting. descent but cost to revenue ratio high and without interest rate rises thanks needs to come down if they hit the target which is 10%. >> thanks for coming by. >> pleasure. >> such a tight turn around. catch wilfred frost at 5:00 a.m. >> early. >> plenty of time. we have time for a drink in between. shack shack surging. the company raising the full year guidance. what's the shack doing differently and a look at net flex? one trader that has gotten much low tore go from here. how low? we'll tell ya when "fast money" returns. ♪
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welcome back to "fast money." stocks ending higher with apple falling 2%. the s&p announced ending lower and tech and health care were the two worst ending sectors. netflix taking a hit today and one trader is betting the best days for the stock are behind it. we'll explain why later. plus, check out shares of shake shack. they are jumping after hours following the earnings report. can the stock make a come back? details on the conference call later on this hour but first, we'll start off with the presidential race. must-watch meeting between donald trump and party leaders took place as the party attempts to unify. john harwood is in d.c. with details. big strides made today, john? >> some strides, melissa. last week donald trump and paul ryan, the house speaker were saying they couldn't support each other and today were sitting down at the republican national committee and donald trump came out tweeting it went great. said things are working out really well and that matched the
message from paul ryan at his news conference at the capital afterwar afterwards. >> i was very encouraged with what i heard from donald trump today. i do believe that we are now planting the seeds to get ourselves unified to bridge the gaps and differences so from here we'll go deeper into the policy areas to see where that common ground is and how we can make sure that we are operating off the same core principles. >> that still is not an endorsement and that reflects the risks paul ryan faces on both sides. if he pushes trump away, you risk a backlash from the base and hurting the entire ticket to the detriment of house and senate candidates alike but if you embrace him too closely, you raise the potential that groups that he is alienated, women, latinos could turn out in force against members in vulnerable districts in the house and endanger the majority and of course, republicans need those going forward like in 2020 when paul ryan himself might be a candidate. it's a tricky process, paul ryan
said it just started today, to be continued, guys. >> john, thank you. john harwood in washington. >> no matter what wins, the market could be in for a big shock. the executive director is with us here onset. julian, you say we're going to be at an inflection point in the markets. >> we are. so the one thing we've learned obviously from watching politics for the last seven or eight months is we're rightly to be confused and by that token, that may or may not have been dissipated somewhat today unlikely that it was but what it means is that the markets are going to be volatile, continue to be volatile and that is typically what we see in these sort of changed election years and if we haven't been confused about one thing, the voters want change of one form or another. >> the volatility is just simply because we don't know what will happen between hillary and donald or is it because there is all this disarray in the republican party and threat -- i
mean, is it just because it's an election year or something more to it? >> the election year is certainly the biggest part, but literally every aspect of it seems to be uncertain and i think you could really make the argument that whatever clarity we may have seen in washington today doesn't really resolve the picture that much more. there is going to be on going, you know, political hot air on both sides of the isle. >> what do you see as the race goes on, both trump and hillary moving towards the center? does that give the market any comfort? >> potentially, potentially it will and it goes back to these changed election years. very often you see them rally. you know, this, again, is something when we think about the upside tail risks looking out towards the second half of the year and into 2017, you could argue that you could see tax reform regardless of the outcome and that would be a distinct market positive.
>> julian, you mentioned volatility. the s&p is levs we started in 2015 and but for a couple 4 as lower back where we started a year and a half or so ago with the vix around 14. >> it's basically if you look at those two years, especially, we've gone absolutely nowhere. if you haven't been looking at the markets, you'd sort of be yawning. with within that plunges in january and february and this really bad rally. earnings haven't been growing but we expect them to grow in 2017. we're in the wait and see mode and liquidity is not great and we're coming into the summer. so that's the type of volatility. >> okay. julian, thanks for coming by. appreciate it. tim? >> julian and his team do a lot of work on positioning and it's
very clear what is happening over the last couple days is really reallocation of money. you see yes, we've gotten terrible numbers but the reality is this is also about funds moving out of the consumer sector and into more defensive sectors. the question is obviously, where are they going. despite the rally and materials and energy, not energy but ma f ter yells, they don't need to be in the sector for fears of missing out on earnings. such a low waiting. where is the next rally? i think we're sideways and i think the key thing that julian said is volatility and risk is mispriced right here and that's very important. you have to be protected going into the next six months. >> i mentioned he talked about from the start of 2015, like guy said, the s&p in the exact same spot. when you think about it, we had a lot of side way action but two 10% plus sharp corrections here and those are really what troubles me when you go back all the way back to 2014.
we had three 10% plus declines and now we have a situation where the path of least resistance is no longer high. talked about sharp rallies that happens when we sell off 10 or 12%. >> weren't we complaining of most in the bull market forever and ever and ever and setting up for some volatility -- >> talking about sector rotations when i look at utilities as the best performing sector, that's not bullish to commit new money to u.s. stocks especially when you see staples up there. >> earnings are awful. you know, it makes sense. i guess what i'm saying is you're talking about pull backs being negative. i remember a time people said this market was in a scary place because we hadn't seen real pull back. >> the s&p is down 2 t.5% and rustle 2,000 is down 14%. there is really bad action under the hood. that's my opinion when you bring it back to the a block. the narrowing of the leaders
that are such big stocks in the market losing most of them. so i guess the point is, if you feel good about the s&p being close to 2100 here, don't feel great. when you look under the hood and see the shots we've had since september of 2014, it means that the next time we have some external force or the fed really screws up, we're going much lower through 1800. >> still ahead, shake shack scoring. details after the break. netflix having a rough year. this is one stock that won't rebound any time soon. we'll tell you why later. much more "fast money" straight ahead. with creative new business incentives, and the lowest taxes in decades, attracting the talent and companies of tomorrow. like in buffalo, where the largest solar gigafactory in the western hemisphere will soon energize the world. and in syracuse, where imagination is in production. let us help grow your company's tomorrow - today - at business.ny.gov
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welcome back to "fast money." shake shack, the latest on those numbers, hi, susan. >> hi, melissa. looks like chicken shack with warm weather in the market, the biggest contributor which came out ahead of analysts estimates. randy a ceo of shake shack saying chicken could be a long-term game changer for the company going forward and that's why that are accelerating store openings. initially maybe 13 store openings in 2016. they will up that to 16 locations each and every year domestically in the u.s. but when they highlighted
weaknesses, they really zeroed in on the middle east and energy dependence markets. with the currency head winds, pressures could persist. we took a look at cost for shake shack and food and paper costs went down 1 .7%. labor and other related costs were flaked and when it comes to new product introductions, get this, guys, they want to launch the bacon cheddar shaq in the second half of this year that will cost you $6.89 a piece. >> sounds nice. >> thank you susan lee. bacon cheddar shack. some call shake shack the tesla of burgers but others compared it to a one-trick pony like krispy kreme. what's the deal? >> it's clearly a one-trick pony? >> why, it's got a chicken shack and bacon cheddar shack and regular shack.
>> it's a great product and when you think about the fact they have less than 100 stores, i think there is a tremendous runway for this. the valuation makes -- >> is this the chicken. >> if you think they will be around and have thousands of stores that some -- >> do you guys mind if i get in here? >> no. >> there is two chicken shacks. >> one thing, i would say that if you own in here, it's up in the aftermarket, i would use -- >> oh, yeah. >> the 30 is a hard stop. >> that's nice. >> good news, this is a company growing revenues, revenues have grown 250% or so over the last three years but net income is going down. why? because operationally they are not running the stores, the restaurants that well. margins improve this quarter. that is a good sign. yes, valuation is rich. yes, mcdonald's, if they wanted to, could crush them. i think there is a little more room to the upside in this name. >> i think this whole better burger category that these guys obviously maybe have created but the five guys, there is a lot of competition again. so chicken shack, i'm digging it
but it gets back to evaluation and i continue to say that they have grown in places where they are going to -- where they are founded, new york airports, key high concentration levels. they are not going to find this growth everywhere and the whole qsr space needs to be worried about wage gains and things they can't control. comes back to valuation. this is pretty good. >> if we have a consumer out there now questioning whether or not to buy a sweater or blouse or new shoes or what, pocketbook and gas prices substantially going up because oil prices are firming up, is that going to impact the likes of a shake shack? >> not initially. i think oil is low enough on an absolute basis but still, you know, we're heading into summer. gas will be still cheap. >> mel? >> i was waiting until you pass the box down. are you guys going to eat the whole thing? >> speaking of gas, mel, have a
burger. [ laughter ] >> see, you crack yourself up. >> best joke ever. netflix down 23% and traders betting times can get tougher. dan is at the smart board with the latest. >> net flex down 23%, down 35% from the all-time high last year. when you think about what is going on here, competition, the quarter, some of the subgrowth didn't come in as expected and out of favor and evaluation thing and competition think and these are things that are fairly well televised for months now. i just want to look at the stock. you know, you have a situation where you have a little bit of a, you know, you can call it whatever you want. it looks like a head and shoulders top. that's the chart here. this will be really important, this 85 level and 80. that was the february low. as far as call activity, it looked like traders were getting out of longer dated bullish positions they had giving up a bit. that's maybe an okay sign. to me, what i see is a really bad technical setup. it really needs to hold $80
here. there is no valuation support. if they miss again when they report in july, this is going much lower. >> for more, check out the full show tomorrow at 5:30 p.m. eastern time right here on cnbc. the company fails to follow through on a major promise but can it really afford to? details next. you're watching "fast money" on cnbc, first in business. >> what do you need? >> a fry. >> one time. 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.
show me "previously watched." what's recommended for me. x1 makes it easy to find what you love. call or go online and switch to x1. only with xfinity. welcome back to "fast money" shares of valeant, about the discounts the company promised in the april hearing in front of congress. if there is one thing this company needs, it's therapy. stock therapy. biotech reporter, meg, this is awful. really. >> yeah, it's just sort of on going, never ending. we keep hearing from them, they will change this and we find out they are not changing it. it goes back to the two little old drugs. they are heart drugs.
they are very old. valeant acquired them and raised the prices and as they got more and more attention from multiple government committees, they promised they would offer hospitals the volume based rebates of up to 30% on these and as they were dragging from congress again just two weeks ago, and the senate committee on ageing showed that none of these big hospitals were getting discounts, bill ackman who just joined the board promised he would do more to provide this discount. take a listen what he told congress. >> instead of individually negotiating these discounts, why not just make the 30% price decrease on them across the board? that was my suggestion. >> even if i use the drugs as an example instead of two wellson disease drugs, a 30% decrease -- >> i totally get it. >> okay. >> so we're going to come up with an appropriate price and
based on an appropriate rational. >> we raised the price by 500%, cutting it by 30% isn't going to do it. valeant says it formed the committee and joe papa, the new ceo -- i love that you're still eating fries, guys. >> guy is going to need some of the heart drugs, soon. >> sorry. >> the company then putting out a statement today in response to the new york times article, the mayo clinic, cleveland clinics aren't getting discounts. this is not coming through and there may be gaps in the process and the patient access and pricing committee is working to identify the gaps as well as develop solutions. any hospital eligible for discounts on nitropress and i
isuprel will have them. >> there are gaps. >> for the biggest hospitals of the two drugs. one more thing we should mention. hearing about this stuff, making promis promises, the debt is the big thing that's looming over valiavalu valeant now. the debt holders are ones in control here and they are the ones valeant is going to have to look to. maybe they have to sell assets to take control of the debt. the 2023 bonds, you can see how they deteriorated recently. >> i was talking to david who has a cell rating on valeant rating on power lunch and said this could be a case where they are holding on to price increases for as long as they can so they can still generate the cash. >> suck the cash out of it for as long as they can. that seems short sideed to me. we were talking in the green room, how is it they can't implement those quickly enough?
i don't know if hospitals buy them once a month or something. i'm wondering if there is such disarray there and also at the same time have subpoenas and, you know, trying to compile with all of the different regulatory issues they have to face and investigations they have to face that it's sort of chaos. one other thing about the debt, as big as it is, it doesn't include any penalty from the federal investigation, the state's push investigation, zero. >> anything could be -- yeah, thank you. meg terrell. coming up next, final trade. thank you. tatement... make sure it's an intelligent one. ♪ the all-new audi a4, with available virtual cockpit. ♪ but they demand the best shopping experiences. they may want the latest products and services, they're your customers. and by blending physical with digital, cognizant is helping 8 of the 10 largest u.s. retailers meet their demands with more responsive retail models... ones that transcend channels and locations,
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it is time for the final trade. >> nike can control the destiny even in a world with amazon. nike's sell off is getting to a place where valuation is interesting for this marketplace. >> chairwoman? >> yes, we have anthem and the number on the sell off today and another obamacare trehreat, thi will pass, too. >> real tail, the s&p retail etf. the main event is next week and that's big box retailers, walmart, target and costco and if you get bad results, that's when they cover. >> guy, have you stopped eating
french fries? >> i finished the box. it will be an issue. >> i warned you. >> just saying. it's not an issue, defense stocks, segway, that's a segway. rtn. >> i'm melissa lee, thanks for watching see my mission is simple. to make you money i'm here to level the playing field. there's always a bull market somewhere and i promise to help you find it. "mad money" starts now. hey, i'm cramer. welcome to "mad money." welcome to cramerica. a lot of people want to make friends. i'm trying to make money. my job is not just to entertain but to educate and teach. so call me or tweet me. on day one of an onslaught, every stock in the sector that is under fire gets slaughtered. everyone. machine gun style.