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tv   Fast Money  CNBC  October 26, 2016 5:00pm-6:01pm EDT

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really strong performers for separate reasons. >> we should have had the cheesecake here onset so we could wish mike a happy anniversary. >> one year at cnbc. went fast. >> we hope for many more. >> happy anniversary. >> the kenny and michael show. >> we'll work on it. >> maybe get you an action figure, too, if you're really lucky. only carol gets one. "fast money" starts now. "fast money" starts right now. live from the nasdaq market site overlooking new york city's times square, i'm melissa lee. traders are pete najarian, steve rasa, karen finerman and guy adami. $160 million in assets, a market collapse coming. he'll explain why he is so nervous and where you can run for cover. ibm shares up more than 10% this year and ceo ginny row metty here with why even better days could be ahead. later, nearly $1 trillion in the market at stake tomorrow and google and amazon report
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earnings. how traders are profiting. first we start off with tesla and a shocking quarter. the stock up nearly 4%. phil lebeau on the call at 5:30 p.m. eastern time. here now with the most surprising thing from that report. hi, phil. >> well, it's really three things we point out, melissa. let's start with the top and bottom line, not one of the three things we're going to talk about. but yes, the bottom line beat to a certain extent unexpected. in 2013, earnings coming in at 71 cents a share. that is way above the expectation which was for a loss of 54 cents a share. tesla earning $111 million in the third quarter. revenue was a big part of the story, coming in much better than expected at $2.29 billion. you can see the estimate from the street. this is a reflection of them delivering more cars than expected in the third quarter. now the three points i want to make. first with liquidity coming in
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at $3.1 billion at the end of the third quarter. that's down just $100 million from where liquidity stood at the end of the second quarter. that's a pretty good piece of information in terms of how quickly they're not burning through their cash, if you will. operating cash flow, they were calling for a positive one this quarter. they got it. $424 million. and finally, when you look at deliveries, and we want to show you what their guidance is for full-year deliveries, remind you again, the company has said for some time, they expect to deliver between 80 and 90,000 vehicles in the fourth quarter. they expect to deliver at least 25,000 vehicles, which means they are on target to meet the expectation of delivering at least 80,000 vehicles. as you take a look at shares of tesla, remember, the conference call starts in about 25 minutes. we'll hop ton. and we want to hear what elon musk has to say about guidance for quarter three, capital expenditures, where the company is headed and not only in the fourth quarter, melissa, but for
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2017, which is a huge year as they ramp up production and get ready for the first deliveries of the model three. >> just going through this investor letter, phil, they're talking about cap x for the full year. operating expenses on both a gap and nongap basis growing approximately 30%. they're looking at $1.8 billion in cap x in 2016 total. versus the three prior quarters, which told about 759. so that leaves $1 billion in spin for the fourth quarter. that sound right? is that what was expected? >> i think so. and as i looked at those numbers, most of those were in line with what previous expectations were. so there was nothing that jumped out at me and said, oh, boy, people were not expecting this. i talked to a couple analysts who said, look, generally speaking, this looks like one of those quarters where you come back and say, hey, they are delivering on what was expected, exceeding expectations. now let's see what their guidance is. >> phil, when they use the term operating cash flow, what does that mean?
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>> what do you mean by what does it mean? in terms of the final figure there, in terms of -- >> yeah. i'm wondering if it's sort of addresses some of melissa's question. operating cash flow. i have been confused sometimes when they use that term. you know, whether that's the marginal cost, or the marginal, let's say, revenue. or the marginal cash flow. >> you know, we can get you more specific answer on that one. we just -- one of the key metrics, you were looking at this quarter, they have said all along, we want to have positive cash flow. positive operating cash flow. so going into this, the big question a lot of people have was, look, you're going to probably come close to exceeding deliveries. they did that. so they expected the operating cash flow to be better than expected, and they come in at $424 million. >> yeah. phil, thank you. we'll let you jump on the call and check in later on. phil lebeau. tesla shares up 4% in the after
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hours session. it's interesting, because they gave a third quarter delivery already, came in better. they reiterated their guidance and yet this quarter still had surprises in it, in that they have missed 20 parths in the fast five years. almost an expectation -- even though they reiterated the surprise to the down side. >> expecting to look for that -- the chart on this, i know you guys talk about it for more than me. the 200-day moving average, held on to that almost forever with the occasional dip for one day, beneath the 200-day and moving up. i think this number and the fact they think they can get 25,000 by the end of the year and get that 50,000 number, that's pretty impressive. i think most of us probably looked at this when he gave out these numbers and said there is not a chance. and then the 500,000 by 2018, not a chance. elon started to show -- expectation wise -- >> expectations got to a place, where the fact ehe's getting a
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benefit of the doubt -- look, it's fantastic. up 93%. the gross margin on the auto productive size up 200 basis points. maybe they're slightly more profitable, the cash costs more under control. it really is about the capital and how much they're burning and right now the two models in production are the ones that are essentially suffering the price of all these other distractions, and the cash burn. and that's the problem of this company. all fantastic stuff. the giga factory in nevada. that's really to me the best part of the story. but i think it's full valuation. and that's what you get. >> have they showed discipline? phil made the point the liquidities practical unchanged. we have 3.1 going into the fourth quarter, they're going to spend, if you back out what they have spent already for the first -- >> $1 billion in the final quarter of the year and got $3.1 on handled. >> i think he's done just enough. pete touched on it. they have done just enough. tim was talking about it.
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i think what we have forgotten, there is a 24% short interest. in the name. this is always going to buoy it just a bit. even if he misses, this will buoy it. depends how much he misses by. but deliveries the number one concern. liquidity. he did just enough, i think, to really keep the shorts at bay. 25 or 24% short interest, the stock is going to pop. but still down a chunk. >> he knew this quarter had to deliver, especially on the cash side. i think there are probably ways in which they could have reeled in some expenses. i'm not saying there is anything funny going on. there is an opportunity to essentially take some of your costs from -- or push them out to the future to deliver when you have to raise money from investors. it's really important they did that. >> so you made an interesting point about posting this good quarter. what could happen next? >> a week or two ago -- recently, he said we don't need to raise money before -- i think it was the beginning of '17. and so that was sort of a potentially a tell.
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i know this quarter is going to be good enough and i know next quarter is going to be good. and so the stock will be higher and we'll be able to raise better prices if we need to go back to the equity markets. but to me, the debt markets -- i mean -- they're still wide open. >> they're open now. >> and i wonder -- >> elections -- a fed rate hike. >> rates moving, maybe. >> the interesting thing that hit today that drew my attention late in the day was solarcity. the reason i say that is, you don't expect to see options trading at solarcity going into this with tesla. 6, 300 in two days. they expire friday, buying in solar city of the 20 strike. where was the trading? just around 20. here we are now trading at 21. those are already starting to pay dividends, if we hold it into tomorrow. >> if i'm an investor, am i worried elon musk is going to go back on his tweet, that's where we got the news there would be no capital raises, he's going to come out to karen's point with
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news of a capital raise with the stock up, with the good quarter down, with the libertity good, debt markets open, why not now. >> the best time to do it. >> and -- >> how has the stock reacted after past capital raises? it's held in -- held and gone. >> every time you bet against this stock, you've always -- just -- it's like spinning in the wind. and i think that's going to be another case. he's done just enough. tim talked about the factory. we still don't know how to look at this company. i don't know if it's a tech company, car company. >> solar company. >> stock down over two years. i'm not that worried about this name. as you said, the short interest -- i don't think you've been hurt by this getting away from me. two years. >> we'll have much more on tesla. the conference call under way in 20 minutes' time. meantime, we do have a news alert on the latest polls out of a couple major battleground states. let's get to john harwood for the details. john.
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>> melissa, two polls. the first in new hampshire with hillary clinton with a nine percentage point lead over donald trump, 45 to 36. gary johnson, jill stein below that. the two keys for hillary clinton in this poll are 25-point lead among women and 20-point lead among white college graduates. that's a group that republican nominees have always carried in modern elections. on the other, better news for donald trump in nevada. he is tied with hillary clinton, 43 all. gary johnson, jill stein not on the battle. and the keys for donald trump on the flip side. a 12-point lead among men. a 20-point lead among noncollege whites. that reflects the demographic patterns that apply all across this country. problem for donald trump, he needs to carry nevada, he also needs to carry new hampshire, and most of the other battleground states, because a new national poll out this afternoon, melissa, showed that it was a nine-point lead for hillary clinton. donald trump has got to get a lot closer. >> all right.
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john, thank you. john harwood in d.c. with the latest poll numbers. steve grasso. do you think that people are assuming -- foregone conclusion. president hillary clinton. >> i think it's obvious. and john talked about what states he has to win. i think you could add on ohio, pennsylvania, florida. i think -- how about every other state. i think he's got to win. it's such a land slide right now. the market has established that. it's hers to lose. >> all right. still ahead, more bidding rumors circling twitter. could oracle step in? we'll hear what mark hurd said. and big trouble for stocks. we'll explain. and making a big bet on artificial intelligence. the ceo of ibm joins us to tell us why it's about to really pay off for the tech giant. much more "fast money" still ahead.
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r welcome back to "fast money." oracle's co ceo mark hurd. >> i'm sure you're expecting me to get into m & a discussion. no, we're not making a bid for twitter right now.
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>> it's interesting that even oracle would be in that -- >> one of the names. >> trying to go after net suite and facing shareholders revolt. >> sort of like salesforce and just about everybody who has been thrown into the area of probably bidding on twitter right now. i think, you know, there's enough problems. i think if there's probably a number that people are willing to spend. the $20 billion is probably not the number any longer. and so for that reason, i think people are going to have to readjust to see who actually thinks and what is twitter going to really be worth to the acquirer? >> and plus we saw it trade up to the mid 20s. twitter was in the mid 20s when the takeover expectation was there. when we played the dating game, guy's choice was disney. >> we have no idea what the valuation was. maybe 23, maybe 25 bucks, maybe -- >> 28? >> maybe dorsey was saying no way, we don't do a deal for less than 30. i don't think we can make an assumption on what that takeout
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number is. >> the trade higher on the rumor of the takeout or in anticipation of the earnings tomorrow morning? >> i say rumor. >> no. >> i say it's -- >> expectations for these numbers are that the fourth quarter is going to be so weak, and that you have very little to get excited about. if anything, why would they move that forward? i mean, i don't think that they have to do much if things are -- and if anything, wouldn't you rather see that trade through the day, let the market respond and have investors -- come to the rescue. >> rumors and speculation. i think it's too -- nobody takes -- >> outside from -- >> if i think it's about earnings, you'll see a late bid in the -- no one going to prevamp this ahead of earnings. i think this is on all speculation. they'll wait to be surprised. >> mau growth -- >> i mean, so isn't that the thing that drives the stock? the actually actually finally delivers. >> they have to figure out who
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to you monetize. that's the key. so i don't even know the metrics -- >> so you don't care if there is successful nfl streaming in this quarter or the rio olympics happened -- >> does anyone else care? market doesn't care. >> maybe worked in its favor. >> nobody cares. could be one of those names that we all look at that are a great product and a terrible stock. that's what this is turning out to be. >> i doubt everybody left the process, because earnings were fantastic and the momentum is great. >> ah. >> great call. >> very good point. time for our "move of the day." check out the xal, down by more than 1%. this in the back of southwest airlines giving weak guidance. the airline said its revenue from each seat flown a mile could fall between 4 and 5%. tim. >> they marked down the fourth quarter by 20%. so for all of the airlines, it's about capacity discipline, and to what extent are they able to pass along higher prices in the form of airlines and other services. if you think about what loves
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business is, they are a mass market and low-price carrier. that's not the same business as american or delta. to read this across the entire sector, if anything, their fail lure to take market share or operate well at cheap cost levels or prices is not a reflection on the others. as you know, i'm long delta, long american, the airlines look attractive. this stnlt scare me. >> i agree. long delta, united and american and the low-cost carrier differential is the difference and why they traded okay, the others. and love got hammered. >> which if you look at the reaction -- if you look at the reaction today, look at the dip they all took on the news and suddenly they all moved but then came right back. delta was positive. >> yeah. >> if you look at say, spirit airlines, it's up 20%. the mirror image of a lot of these. i know you weren't grouping in the same space. but spirit seems to be a stock that whenever the sector gets pushed down, this one responds
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quicker than the rest. still ahead, tesla shares up 5%, right now. we'll hear from tesla ceo elon musk and what drove that quarter. you're watch "fast money" on cnbc, first in business worldwide.. here's what else is coming up on "fast." >> here's what one of the largest fund managers thinks is going to happen to the world. and he'll be here to tell us what has him so worried. plus, the ceo of ibm will be here. in a first on cnbc interview. >> we're not worthy! >> and will tell us what investors are missing about shares of big blue. when "fast money" returns.
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welcome back to "fast money." here's what's coming up in the second half of the show. tesla shares surging. the company conference call just getting under way. we'll bring the headlines moving the stock. tomorrow marks the busiest day of the season with alphabet and amazon reporting. we'll tell you how to play for what could be a very volatile session. but first, the storm may be brewing in your portfolio. u.s. markets quiet and that could be a red flag for stocks. one man who is never a red flag, dom chu, back at headquarters, with all of the details. hey, dom. >> hey, melissa. thanks very much. plenty of market takes and superlatives. one floating around has to do with just how uneventful things are. lpl research note that since the wednesday after the brexit vote back in june, the s&p 500 has
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closed within 3% of its record high every single day. and it's been a 51 days since the last high we have seen and still just 2.5% below that level. in other words, very, very quiet. we're not really moving anywhere these days. lpl financial senior market strategist ryan dietrich notes how rare it is for markets to be this quiet and likely the unelection uncertainty behind a lot of the urge to say on the side lines. history says september is one of the more volatile months of the year, but not playing out this time around. the vix up for two straight days, but way below the highs we saw just in mid september and that's worrisome for some traders out there. you have a backdrop where economic data around the world isn't coming in with strength and the absence of real market pullback. the case can be made stocks are due for a fall after consolidation. the bears saying that after the emergence. the reality is, dips have been
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consistently bought and the earnings picture shows signs of improvement. according to thompson reuters, if we continue to this earnings season as expected, we're going to break that fourth quarter streak of year over year earnings declines. melissa, the bottom line, there is a case to be made that improving corporate fundamentals could be the fuel for another link higher in stocks. back over to you at the nasdaq. >> dom mentioned the volatility. he mentioned way off the highs of 32, which was the 52-week high. 52-week low at 11. >> and the other day in the 17s. but we were just 12 just yesterday. i mean, we were -- in the 12s. it's absolutely amazing. here we are back to 14. what does 14 mean? 14 means we're back into the no man's land kind of thing. i think what we're seeing in the market and why we're seeing the market trade, we have rotation, churn, and when you see that -- we're seeing -- look at the nice bid since it started with
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financials. we're seeing the rotation with utilities. steve has been involved. and probably very smartly -- taken some off. but i think this rotation will continue away from -- >> financials led to that. >> they think rates are going higher. but even if rates move higher, i think that takes away any earnings power that you see in the market move higher, as well. >> actually, there's a ton of sectors that would do very well if rates go higher, including the industrials i think gives them pricing power. can i get back to dom? dom was saying this is the calm before the storm. but is it an upward storm? is that the point? >> i think -- tim, here's what i would -- guys. here's what i would say. i would say you mention the interest rate picture. if you want the more bear side of the equation, go to cnbc.com, for our listeners and viewers, a notable bear at times notes a bunch of different reasons why this particular market is due for at least a bit of a fall. he says the late stages, late innings of a game for the
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markets and economy says a flattening yield curve is part of the story and capitalization rates, that kind of thing so maybe a case that the interest rate picture along with the economy is saying that the resolution is to the down side here. >> got it. >> all right. >> i think that's interesting. and all i would say to that, first of all, rose see knows what he's talking about, good at calling bear markets. we went from april/may of 2015 to july of 2016 doing nothing in terms of setting highs and people talked about the impact of that kind of sideways action. >> come december, the market is going to sell off. opec out of the way, m & a leading up to that. you'll see the market sell off december. >> thanks, dom. let's get to the markets here. our next guest says they are heading lower, a lot lower. and you want to listen to him, because tad representative develop manages $160 billion in fixed income. tad joins us today from los angeles. tad, it's a pleasure to have you on "fast money." thanks for joining us. >> thank you. thanks for having me.
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>> in terms of one of the reasons why you are concerned about where we are in the markets, it is corporate debt. you have said that corporate debt is at levels where we were leading into the great recession. >> that is one of the major risk factors that the market is confronted with. i don't need to i think tell anybody that a combination of high asset prices, high leverage and the low growth environment that we have been experienced is a toxic combination. and indeed when you look at the debt ratios in the investment great credit sector, that is to say the level of debt as compared with the earnings, the ebitda, the levels are now in excess of where we were in the 2008 period. it suggests that the overall stock of debt in the economy is quite excessive. and but for the fact that the fed has kept rates at an artificially low level, we probably already would have seen a substantial increase in
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defaults and delinquencies in that record. >> how does the music symptom in this scenario? the companies aren't earning enough to cover their payments? borrowing costs sky rocket because their rates are not locked? what is going to trigger the down turn you're predicting? >> well, the nature, of course, of a late credit cycle dynamic, one we are arguing for, is one in which there is a lot of tinder and a lot of ways, so to speak that the fire can get lit. one obvious catalyst could simply be that we already have an equity market with stretch levels of valuations, according to a recent goldman sachs report, the p/e ratios in the equity market are now in excess of 85% of their observations over the last 40 years. so x out the late 1990s and you're probably in the top observations. if you were to get some kind of garden variety, 10, 15%
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correction in the equity market, that could cause the rating agencies to take a look at the elevated levels of leverage and start downgrading some of these debt-laden entities out there. were that to happen, you would be transitioning debt from the investment grade into the high-yield market. we pricing it. and reinforcing a dynamic. perhaps somewhat along the lines of what we saw in the 2001/2002 type of experience. so that is certainly one way it could end. there is a number of others, as well. >> so how are you positioning your portfolio for this sort of scenario? i mean, are -- is it through the overall markets through high-yield, or is it by betting that certain sectors will face default? >> well, i think that, first of all, i'll give maybe the 10,000-foot look and then answer more specifically to how we're structuring it now. the 10,000-foot look is this. is that the nature of business
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cycles, the nature of asset price cycles is that 80% of them are characterized by relief rajjing. and during that 80% of the cycle, you want to be owning risk. in its myriad forms. could be in the corporate market, in the mortgage market, by having less liquidity and equities, lots of different ways. but ultimately, all cycles do end, at least they always have had. and when they do end, they end very messily, and they end in a -- in an ugly deleveraging. as you start to approach the end, the real question is if you think you're in the last couple innings, to use one metaphor or the last to% of the cycle, your choice is get defensive now or after prices are already in free-fall when typically you don't have a choice. so answering the question most particularized to this period, we look at fixed income this way late in the cycle. you've got basically three cohorts of assets. you've got your safe assets, your treasuries, your agency
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mortgages, low yielding, low volatility type assets. you've got breakable assets. which don't typically advertise themselves as such. but those are the types of assets that come along at the end of every cycle. and if you own them, you're going to suffer permanent impairment of principle. they will go down in many cases and not recover by definition. but there's also large cohorts of bendable assets. solid investment grade companies, top of the capital structure, aaa, cmbs, that's aaa commercial mortgages, aaa asset backed and that stuff is going to survive. 90, 95% of everything out there is going to survive to live in another cycle. so you own the bendable assets, you own reasonable yield in your portfolio, and then you are extremely wary, for the possibility of admitting any type of breakable assets into your portfolio. you keep them away, because you will be sorry for owning them. >> all right. tad, we're going to leave it there. thanks for joining us. we hope you'll come by "fast"
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again soon. >> okay, thank you. >> tad rivel with tcw. who agrees with him? >> they're scary to look at. one of the problems of making a macro call, part of what tad is doing, the time horizon that trade is very difficult. but if you look at what hyg high-yield, emb, emerging market bond have done the last few months, have had a huge rally. to say they're not vulnerable -- look at em bonds over the last ten bips, already pulled back. telling you that people are concerned. and it's just a question of really to me very difficult to make this call on a timing basis. >> karen? >> no, i agree with timmy. it does -- i mean, he is going to be right at some point. i don't know what happens between here and there, but i would -- i wouldn't advise getting long corporate debt in the interim. that netflix deal, so amazing, sounds like the kind of thing he
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wouldn't be a buyer of. and it comes after a tesla thing, also. the markets open for those kind of deals, why not do it. >> very dire scenario he paints. but it is impossible to thread that needle. and you can never underestimate how much. >> yeah. >> lots of people are struggling right now. we don't know what the timing is going to be. >> since we don't know, why not use an easy method. buy when you can -- look at the 200-day moving average of the vix, talking about that earlier with dom. 15 and a little bit of change. 15, 20, call it. still almost a dollar below that. just 12 yesterday. buy protection when you can or roll out of positions. let's look at shares of tesla in the after hours session. the stock is off its after hours highs. it is still, though, up by more than 4%. elon musk, the ceo, speaking on the company conference call right now. we'll bring all the headlines you need to know. plus, $53 billion.
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that's how much market cap could be at stake when amazon and apple report earnings tomorrow. we'll tell how to play both stocks when "fast money" returns.
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aditi roy in san francisco with the very latest. >> hi, melissa. that's right. buffalo wild wings posted a third quarter earnings and analysts missed estimates. the stock up for the year. the chicken wing franchise forecasting earnings of, quote, slightly below the low end of the prior 565 to 585 range while analysts expect $5.70 a share. franchise restaurants have same-store sales fall 1.6%. ceo sally smith said that sales were boosted about i their 15-minute lunch guarantee and loyalty program which they continue to roll out. meantime, cheesecake factory surging, the stock up 7% after posting a third quarter beat on both the top and bottom lines. the restaurant chain also has strong comps for the quarter, up
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1.7% versus the .8% estimate. the company continues to ex expect to open as many as eight company-owned restaurants domestically in fiscal 2016. back to you. >> thank you aditi roy in san francisco. let's trade this, karen. we had a mixed bag, so far, from this space. panera good, but the stock -- >> yeah. >> lost its after hours gains and chipotle bad. >> hopefully very specific to chipotle. it's interesting to me, because it really did seem the restaurant space at large was really having trouble. and you wonder where was that consumer and then we saw that curious data with masco sharon williams. it seems like if you're executing -- if you're doing a good job at your specific restaurant like cake seems to be doing, expanding sales, leverage -- margins, rather. that is good. they're doing something right in the casual dining space, which has been difficult. and sounds like buffalo wild wings is, as well. i think the expectations were low. to me, they're still kind of expensive. i probably wouldn't jump in right now. but good job to them for
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executing. >> to me, that's what it's come down to. buffalo wild wings was at 40 pe. you get to this place where you can't support it with higher labor costs. higher wings costs. the activist story, pushing for more franchising, gave the stock a little bounce. i don't think the stock is terribly attractive. 1.35 has held and i think that's an important level. >> traffic across the board is down. in this whole space. and plus, we talked about it minimum wage, that debate still on, hurts them the most. let's stick with earnings. alphabet amazon report after the bell tomorrow. traders expecting big moves for the stocks. mike coe breaks down the action. hey, mike. >> hey. so alphabet, yeah, they're implying a move of about 5%, 25% greater than the 4% they have averaged over the last four quarters. and amazon looking for a 6.5% move. slightly above the 6% move that we have seen over the past four quarters. if you take a look at the size of the companies, $556 billion market capitalization for alphabet, aka google.
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that translates to $27.5 billion swing and amazon with its $390 billion market capitalization, that's looking at about a $25 billion swing. how much is that? well, that would be bigger than more than half of the s&p stocks. that's each of those. the two of them together bigger than 420%. 420 of the names in the s&p 500. pretty big swings tomorrow. >> more "options action," check out the show, 5:30 eastern time on friday. pete, quickly. amazon and google. alphabet -- sorry. >> alphabet. you know, you're talking about two really interesting companies where you're both talking, in my opinion, at ecosystems. i like both of them. it's interesting, though. tesla expecting a 10% move. right now moving at 4 or 5%. you just wonder right now, is the anticipation in there, and is there so much of an aggressive play towards these that people have a hard time, i think, right now figuring out bullish, bearish. there is a fight going on that's pressing up volatilities.
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and people don't have any idea. and then all of a sudden the news comes out. and you see these moves. even apple. you look at the move on apple. not that significant, really, post earnings. >> would you short that volatility? >> that's always a dangerous play. that's why i stayed away from saying that. for the people at home, i would say do not do that. >> in terms of technology overall, we didn't see too much reaction overall when you take a look at the xlk or the qqqs on the back of apple's declines. for these two stocks, these two stocks have actually powered tech higher. apple is largely absent from the run until the summer. >> right. so it comes down to which company is most vulnerable. not only the expectation is so high, but so is the multiple. google in 2017 and 19%, top line growth, is very defensive on some level. and i think about amazon, i think the expectations in this quarter are extremely high. i actually believe that amazon gets the benefit of the doubt, by the way. unless there is something structural they announce to their business that we don't know about right now, i -- despite the inherent volatility in these names, i think it's
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limited. amazon gets the benefit of the doubt but google is the defensive name owning into the nuns because they're going to tell us about unmonetized business that we might have more insight into. the valuation makes sense and getting better and better. >> i've been bullish and constructive on amazon from way low, but i can't get on board here. for the last 200 points or 150 points, i can't really get on board. i think trying to pick your moves here, where you're bullish, where you're bearish, i think aws is not a commoditized business yet but moving that way. google, yeah you have youtube. up 5% year-to-date. i i think i would much rather be a buyer of google. >> you're doing a "would you rather." >> if you're not going to do your job, someone has to. >> oh! that is a takedown on me. >> i love how, by the way, no one has referred to as alphabet. >> i can't get over that. >> i don't know -- how will we ever -- >> how long did it take for us to say altria?
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>> rfk bridge. sorry. >> your mic is going to be turned off, by the way. tesla shares surging after its earnings report. phil lebeau has the headlines. >> melissa, despite the stock moving higher, despite what appears to be a much better than expected earnings from tesla in the third quarter, why is one analyst saying, you know what, i'm not crazy about what i'm seeing in these numbers. and he moved the stock to a lower rating. we're also on the tesla conference call. we'll have all of that when the "fast money" report returns.
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welcome back to "fast money." under armour getting hit for the second day in a row after warning investors sales growth would slow. kevin plank spoke to scott wapner earlier today and painted a picture of a company bucking industry trends. >> we have a great growth story and i can't speak to what the competition is doing. i can tell you that it's not easy out there. i tell you that in our business alone, where you have seen the consolidation, where the previous five years before 2016, we had a total of $170 million of sales revenue disappear from the sporting goods channel. in the last 12 months alone, we have had over $4 billion
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disappear. so in order to continue to grow and put that kind of positive metric on. >> they've got the growth, just not as much growth people wanted. >> and it's where they have the growth and the price. there is a lot they have to spend. they're building out the direct to consumer. footwear huge for them. that's still in the beginning stages, which means a lot of money has to go over towards that, as well. and then you look at international spend and the international growth. it's great. when you look at international and footwear, you're talking about about $450 million out of what they actually reported. it's still a significant number, but it's not significant enough for the people that are there short-term. i think if you're long-term, you like what kevin plank said today. you look at the company, but it's still the multiple is the problem. you've got incredible growth, and you trade at a 45 times in this environment, people tend to want more. >> straight up p/e, but you've got to look at peg -- you're getting much more growth, 22% in the latest quarter. >> right. not that there is anything wrong with that yesterday but for the stock price going into it. had it not had that run up, i
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think those -- that's a pretty impressive story, i think by any measure. if you look -- for me, foot locker, a safer play to play it. so much cheaper, it does participate somewhat with under armour as they grow. and then nike also up today. so -- >> nike up almost 2% today. the question is, what happened to the secular story that everybody said was so bulletproof. whether it was the agent leisure story -- >> leisure -- >> where are you going right now for that type of growth? so it might not be the growth the analyst committee was going for. but they're going back in honor -- where are you going to go? >> nike. why not go to the best of breed? first of all, if you believe that trend -- these guys are one of two players that dominates the distribution and all channels. they have pricing power, dtc, most of these guys don't have. >> they said when under armour came on board, there was no way you could compete against nike and they have. >> nike hasn't had a great
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couple months, destroyed under armor. i would rather -- >> i'm going to do my job. "would you rather." >> i'm going to give it a couple days to breathe but rather be under armour handled down. they're the wolf on the hill. >> actually, the best of the best is not nike. not under armour. it's adidas and we have been saying for a long time. adidas is kicking butt and taking names. doing it in europe and they are the winner right now. >> you went outside the "would you rather." >> i'm not going to get shut off. >> tesla stock jumping in the after hours session. ashley beak, conference call under way. hi, so what happened? >> a couple things, melissa. a lot of people asking questions about the zeph credits, zero emission vehicle credits. most people are familiar if they have invested in tesla. it's a fair amount of questions about whether or not the quality of the earnings are as good as they should be or they appear to be. because they got $139 million credit if you will from selling
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those zev credits. much higher than many were expecting, basically saying, hey, look, most of this beat driven by these zev credits, and therefore, he wants to look at the underlying performance of the company. in regard to the profitability of the third quarter, just a few minutes ago, elon musk talking about where he sees the third quarter performance relative to where the company has been. and more importantly, what they're expecting in the fourth quarter. here's what he had to say. >> currently believe that q4 will be profitable experience. i think there's actually a chance we will be -- there's a chance that we'll be profitable, even including stock and noncash stock base expenses. >> so there you have elon musk saying there is a chance at being profitable with those stipulations in place for the fourth quarter. the conference call has been going on for about 15 minutes,
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melissa. we're going to hop back on it. it goes for another 45 minutes. that's part of the reason why the stock is pulling back. people saying we knew there would be some zev credits but didn't expect $139 million worth. >> phil lebeau on the tesla call. >> credits coming back to bite you. chbls let's be honest. this stock was a little over 212, now 111. >> that's the 200-day. and the stock trading up and running out of gas. the bottom line, they can make this story look better and whatever. the credits, if they're there, use them. but it doesn't change the fact -- mel, you said, hey, is it suddenly a profitable company. >> do we believe those numbers, though? we actually look at the 71 cents and go, oh, suddenly they figured out how to change this whole thing? i don't think they did. >> i agree with you. >> the deliveries are what is impressing people right now. the 25,000 to get over 50, that's what's impressive. >> the estimates are so, so wide. >> so -- >> to drive a truck through.
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beating consensus is almost meaningless. >> plus trying to get closer to a pure gap number. >> in terms of the pressure on the rest of the auto industry, is there some pressure involved? i mean, if they're outfitting every single car with self-driving capabilities, even the model 3, doesn't that make gm, doesn't that make ford, all of the other automakers rush a little faster toward that? >> sure. but we have to know, is it going to be a fleet of uber-like cars? is this a car-sharing opportunity? for everything. then the overall numbers -- there's less vehicles. then you have seen peak autos. if i'm using a car and it's picking you up when i'm at work, then there are less vehicles needed. you need to understand the ramifications of that self-driving. >> again, what's the technology why people are buying teslas? is it the giga battery? the whole eu story versus internal combustion or the amenities, like self-driving, which they're all going to have. if anything, isn't that a refresh opportunity for the
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automakers, if there is all this new technology, almost like we're seeing in other commodities. so i don't think the autos troubles right now are related to tesla disrupting. >> i'm not saying they're related. just at a time when they are pressured, already, you have this additional pressure. >> well, again, i think -- back to tesla. again, it's great what they're doing. their technology is fantastic. no disputing that. it comes down to what you're willing to pay for a stock that can't deliver that is going to have to dilute you to go after this entire empire of things they're trying to build. >> really quick. show of hands. who would buy tesla today. nobody. all right. coming up, "final trade." [pony neighing] what? hey gary. oh. what's with the dog-sized horse? i'm crazy stressed trying to figure out this complex trade so i brought in my comfort pony, warren, to help me deal.
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puppies! ooh! i love puppies! so do, i. actually...pets can teach important lessons abou- dancing! elmo loves to dance. okay then, let's dance. (everybody cheers) yeah baby! earlier on the show, we talked about the interview on cnbc.com. "final trade" time. pete. >> love the energy space still. devin energy. >> monsanto. i believe the deal gets done. >> karen. >> google, alphabet about. i'm long it. see what happens tomorrow night. >> tim seymour. >> time to get back into
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earnings next week. what's interesting now. i'm melissa lee. thanks so much for watching. see you back here tomorrow at 5:00 for more "fast money." meantime, do not go anywhere. "mad money" with jim cramer 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, and 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 make you some money. my job is not just to entertain but to educate and teach you. so call me at 1-800-743-cnbc or tweet me @jimcramer. >> what's driving the stocks that are working in this market? and what's causing other stocks to plummet even as on the surface it looks like nothing's wrong at all?

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