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tv   Fast Money  CNBC  November 1, 2016 5:00pm-6:01pm EDT

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of deals, $500 billion in the month of october. are these meant to be confidence-building things or basically cost-reduction exercises. unfortunately, the answer is the latter. they're cost-reduction exercises. again, i say this every time. the economy is relatively stuck, and the earnings will probably sew that. >> we'll leave it on that hopeful note. thank you both. that does it to be "closing bell." "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. pete najarian, karen finerman, guy adami. shares of gilead. what does it mean for the biotech bloodbath. we've got the details. and elon musk speaking to investors right now about his planned acquisition of solarcity. phil lebeau will bring the latest. and apple taken to the wood shed on worries of the mac pro and iphone 7 sales. first, we start with the big
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selloff on wall street as we are one week away from the u.s. election. the dow down as much as 200 points at the low. the s&p 500 closing at its lowest level since july 7th. and the nasdaq locking in its sixth straight day of losses for the first time since april. you have the vix soaring, gold jumping, high yield down in the last six and small cap stocks getting hit the hardest. so are election fears finally taking their toll on the market? are things only going to get worse? ahead of next tuesday? guy. >> things only going to get worse. that implies the market continues to sell off. i'm not convinced it's election fears. we're going to have that conversation. to me, more technicals. why is it technicals? i'll give a quick example. last night you've got great data in china, right? great data. what i thought was pretty good data here in the united states this morning. we would have rallied a month and a half, two months ago, in a meaningful way in the s&p. we didn't do it. tried early, failed at levels we talked about this 2130 level in the s&p has been critical.
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steve talks about levels. now the onus is on the bulls to recapture that. jeffr jeffr jeffrey gundlach talked about that. i'm not certain about that. but what i do think you could see is a move down to 2050 or so in the s&p and the thing that really concerns me quickly is the fact that the russell never made an all-time high. a double top at levels we have talked about at 128 and has been rolling over for the last couple months. >> decent data overseas. i know everybody in the whole world is discounting this. does that put the fed actually in play this week. >> you would think. what happened to the dollar? the dollar actually fell off a cliff on an intraday basis. you would think the fed now is back on the sidelines. that's the way i read it. you looking for crude. the opec effect off. the s&p, guy talked about levels. 2134, the old may 2015 high. breaking through that for me, extremely bearish. the next level, 2050, ultimately. flat on year, 2043.
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you have to look through the prism, are we giving back the whole year. bulls weren't ready to do it just yet. i think it does get worse. >> as much as you're seeing the technicals now, i think it's far more political. the reason i say that, when we start looking at the poll numbers and donald trump getting closer, closer, it was all but guaranteed last friday that hillary clinton was going to be our next president. now there is a little bit of a question. doesn't mean she's not in the lead. she certainly is. but i think there is enough of a question mark right now. look at the spike we have seen in the volatility. a week ago, we were in the 12s. today in the 20s. when you look at what got hit today, it wasn't financials, wasn't technology, other than apple. overall, technology, the slk gives that technology read, that tells you we're just off the 52-highs. i think those are the areas to be. last week we talked about if we started to get hit, where would you want to be? i still say financials and technology. >> i agree with pete. i think the election was the number one thing moving the market today. there's a convergence of a
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number of different events. the china thing, maybe the fed, certainly higher odds on the table for december. right? so i think the market doesn't love that. and that to me -- the election thing is the most closely watched, i think. i feel like if pete is right, we'll see if -- if momentum slows or even turns, be then i think the market will come back. for me, i covered some uso, which i don't love doing in a down market, but it sort of feels like the time -- that's why you have it on, if it goes down. and then apple sort of on my list of i didn't buy any, but -- >> almost there. >> it's almost there. i mean, it didn't trade well today at all. and i thought it was sort of overdone. >> i think the p.m. -- real quick on apple. i know everyone talks about iphone sales. i think it's more of a testament to samsung's head wings were apple's tail winds. i think it's becoming obvious. >> we had the survey saying the iphone 7 demand was not as great as they expected in china and also a report from kgi
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securities, the korean -- research firm, one of the most well-respected apple analysts in the world, supposedly, saying that mac book demand wasn't as strong either. we had a confluence of things, on top of the risk-off day. guy, in terms of the sectors that sold off the most today, we saw it in utilities, telecom, reits. >> to me, that makes a little bit of sense. you saw the bond market bounce back, maybe rates -- bk put that chart up a couple weeks ago where 2% in a ten-year the top end of a very long-term down trend in terms of where yields are going. maybe we finally have bottomed out in terms of the actual tlt and maybe top down in terms of where yields are. real quick, i hear what pete and karen are saying on financials. take a real good look at jpmorgan, where they traded to last year and failed. basically 70 bucks. look at the high today. i think it was 69.88, give or take. i think that bears watching over the next couple days to see if we can recapture that 70 level or give up the ghost here. >> so all of you say there's a confluence of things.
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technicals, politics. is there a reason to put fresh money to work in the markets right now? >> no. no. i think you have to wait. the catalyst right now, are the election. it's fomc. and you have opec. opec seems to be waning a little bit. but ahead of fomc and the election, i think it's just throwing darts at a dart board. >> there's got to be something you're active in, pete. >> i still believe in the energy trade. when you look where oil has been. 51, 52 and then pulled back. got back under neegd 50. are we in a new range? i think there are areas, whether it's metals or in the oil area right now, where those are some of the opportunities. i love the financials. i'm waiting for the pullback. we're not seeing it. that's near the 52-week highs, the xf, the tech trade and financials continue to be strong. if the market sells off because of a donald trump victory, or concerns of if hillary wins and they're concerned about the fbi probes, on a sell like that, i think there's opportunities.
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>> what else is on your list? >> you or i had a terrible day today. i've been on this for a while. i think we could see infrastructure spend, i know it's one of steve's sort of planks of the thesis. i think it was overdone today. it's getting -- it's -- i could see buying it right here. >> i'm basing mine off of earnings. i look at jpmorgan and citi and bank of america and juniper and microsoft. they were great numbers and the forecasts looked pretty good. that keeps me on that bullish side. >> let's look at the markets. one top wall street strategist is laughing in the face of fear. after charlie turning bullish last month, he says the s&p 500 is going higher. here to discuss his positivout look for stocks, adam, great to see you. >> thanks for having me. >> higher, no matter who wins. >> i've been bullish for five years in one month, close enough. we'll take the last month. but i would say, yeah, i'm -- i don't want to give a political answer, but i'm 60% with guy, i think there was a lot of technicals first day of the
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month, big blocks being moved around and sort of who% with pete and karen, there was some politics and stuff going on. but in terms of today, i think -- i'm bullish, because i think earnings are okay. guidance is holding up okay, broadly. generally. so i think the expectations are achievable. i don't think the valuation is crazy versus other regions in the world. you've got 72% of all the stocks in the world that trade $100 million or more in the u.s. people want that liquidity. i have fundamentals, valuation, liquidity positioning. >> that's calling the overall markets. are there sectors you would actually say, it does matter who wins. it does matter what the outcome is. and we might stay away or invest based on that. >> all you guys are trading in much shorter horizons. you're talking about waiting until next week. like you're a lot better than me. i'm thinking about kind of 12, 24 months out. in that context, i don't care that much. i could create an argument that it's good either way. you just get -- uncertainty over with and get back to normal business. it would be quicker if you get a democratic sweep or republican
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sweep, it creates a higher probability things could change. and that's not our base case nor are we recommending a position for that. i like karen's idea, industrials. i haven't been overweight in industrials for five years. our biggest underweight in 11 and '15. i think you have the highest probability of action there that could really, you know, spur incremental enthusiasm that's not in the numbers. so i like that trade. >> let me go back to one thing you said. people being on the sidelines, not fully invested. what exactly did you say and what did you think? >> morgan stanley, net beta adjusted, net growth exposures. look at futures, surveys, options, maybe their rhetoric is big in their positioning but not in a position for upside. that's what i mean. one more thought on the election. i think we might have talked about this in 2012, september. we would have said, well, if romney wins, that's good for the market. if obama wins, that's terrible. the corporates are telling you that, delaying spending. 2013, not -- saying up, bottom
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left up for s&p. i just think it's hard to predict what's going to happen. >> more to do with the fed policy versus any -- >> not -- i think there is cycles and rates that have -- the politics just don't always override. >> adam, go back to industrials. you've heard the commentary out of honeywell, triple m, utex, has not been good. and coming back into the space after being away for a while. are you coming back understanding there might be another down draft? >> i think part of it -- let me give a few reasons. part of it is most of that bad news is in the numbers. when you think about things that have slowed business jets or i think you mentioned energy metals. i think most -- we call second derivativ derivatives. most stopped getting worse, you have a little better momentum. nobody is positioned for big up side in industrials. that's definitely not where people's heads are. when i talk to them, i feel like when i look at it, there are seven or eight stocks, $70
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billion or larger that a lot of them trade at discounts to the market and have above earnings growth. so i'm looking at names at 15, 14 times earnings. that kind of have a 10% earnings profile and a tape closer to fat earnings at 17, 18 times. and so i have kind of a little bit of a valuation support. most people know the bad news is out there. and, you know, i have big bets in some of the airlines which are six, seven times earnings. i think you've got a lot of action in the defense sector, not cheap, but good shareholder return. so things i can own i feel excited about and interested about in that sector. >> adam, thanks for coming by. appreciate it. >> good to see you. good luck. >> adam parker of morgan stanley. something for everybody here in terms of adam's picks, right? >> really good. >> bringing it. >> a laugh in the face of the skeptics. >> i like the industrial call, really interesting to me are for the reasons he just mentioned. and the name that when he talked about the metrics he looks for, the name that sort of resonated in my head is honeywell.
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you had that terrible announcement, the stock has recovered a little bit since then. if it can recapture that 110, 111 area, honeywell is interesting, especially after what adam said. >> i'm going disagree with the industrials. i think global growth is going to sit on those industrials. i do agree with his utilities overweight on thamplt i don't think anyone's position for upside in utilities right now. >> pete? >> i am sort of baffled that he doesn't have technology as one of the three legs. i look at technology right now, the earnings so far that we have heard have all been absolutely phenomenal. by the way, he was wrong on that percentage. i think he meant karen and i 60% and guy on that side of the desk was 40%. >> oh. >> where did you go? come back. >> he said where it was weight you said but i think it was miscued. you being i still look at low multiples and great growth and getting a yield. what else do you want in this environment than that? i think that's great. >> check out shares of gilead, volatile in the after showers session. we'll hear from the ceo later
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and yum's china unit soaring on its spinoff into its own publicly traded company. are the company's china problems behind it? we have details. and tesla getting ready to tie the knot with solarcity. elon musk speaking right now. we'll hear from him later on in the show on a very busy "fast money." stay tuned.
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welcome back to "fast money." we've got an earnings alert on electronic arts. julia boorstin in l.a. >> melissa, electronic arts reporting a slight beat in revenues, $1.1 billion, a hair better than wall street analysts expected. the shares traded lower on a lower than expected outlook than the stock turned around and now trading slightly higher in after hours on light volume. now ea raised its annual guidance in the strong performance of fifa '17 to date. but that outlook for the company's fiscal third quarter and the full year is still lower than wall street analysts had been looking for. the company stressing its success with battlefield and two and progress with east and virtual reality experience in the works set it up quite
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nicely. >> we had a holiday season with more mobile device, electronic arts is in an outstanding position. with battlefield one and titan two, we have two of the top rated shooter games engaging a broad audience of players. >> ceo andrew wilson stressing on the call that e a's games have an audience that is truly global. he talked quite a bit about interest in e sports for various games, particularly madden saying there is a madden competition and big championship coming up in december. melissa, back over to you. >> thank you, julia boorstin. grasso, i think you liked active vision. >> active vision the underperformer. year-to-date, up 26%. ea is right spak in the middle. but battlefield one, a lot of positive commentary on that. so maybe you play it middle of the pack. >> guy making positive commentary about battlefield one the other day. >> first of all, i'm not big fan
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of these first-person, third-person shooting games. it ain't my thing. but hash tag smooth, went to madison square garden last week with tim seymour, and the place was sold out and i made fun of those people, got a lot of twitter hate. but clearly, something is going on here. and i've got to tell you something. electronic arts at 19 times forward earnings, given the fact they have eps growth at 12% or so, and hard to replicate, i think it's sort of interesting right here. >> and who are they stealing it from? honestly, we just had this last night. espn, we talk about all these ratings and sports and all the rest of it. people are going to devices and playing games somewhere. >> this is good for best buy? as we approach the holidays season? >> i suppose it could be. i mean, it's obviously -- i think ea raise their guidance and maybe it wasn't exactly what everybody was looking for. but still, this is where people are. this is where we're getting stolen. the platform that people are watching, it's not tv. it's other platforms. and this is the winner. >> maybe it's good for game stop. think of it that way. >> i -- karen?
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>> i would have been short game stop forever. i can't believe it's still here, to be honest. yet it is. >> yeah. >> i've go to game stop all. time. i like seeing what's going on in there. in the short hills mall, i dig it. >> i'm sure you do. let's get to yum brands, officially finishing off its china unit and that kicks off top trades. earlier today on "squawk on the street," greg crede, ceo, said its road blocks in china are behind it. >> i think all issues are behind us. i think the big story is it growth. whether it's urbanization in china, the infrastructure, which the thing about infrastructure, it's railroads, airports, train stations and malls. all of those are opportunities for us to build new restaurants and grow our footprint in china. so we think there's unlimited growth potential in china. >> grasso. >> so you know where i've been in the space or where i've liked in the space. dominoes up 50% year-to-date. but if you look at the yum spin, it's positive for a number of different reasons. or at least they'll spin it, to
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be positive for a number of wircht different reasons. now yum china can concentrate on yum north america here. that's the positive forum. and yum china is the growth engine. it's going to be unlimited growth. he says unlimited. it's going to be aggressive. store openings. it's going to be aggressive digital. it's going to be aggressive everything when you look at yum china. if the headwinds are out of the way, as he said, which is a big if, it seems like it's pretty positive. >> if it's unlimited then it's clearly great right here. but it's an interesting instrument in that you really have this pure play. you have a great company. pure play. and that should have some premium. just to be able to use the instrument. >> it's probably one of the only pure play -- aside from china -- chinese adrs, the only pure play. because we've talked in the past about a nike or a starbucks. obviously, that's not pure play. finally, you've got this -- >> it's a significant size that it's not going to be -- >> can be traded.
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>> and i think the differentiator, you're going to have far more volatility in the china market than you are in the u.s. and rest of the emerging, which is where the rest of yum is. so you have to discern who you are. are you willing to put up with the volatility you're going to see in yum china, versus the volatility -- >> are you? >> i think you own both. keith myster one of the startest guys on the street. if he says it, i believe it. i think he has been right on this name. when you look at taco bell and the refresh they have done there and kfc, there is franchising on one side and the other side, emerging growth. >> you do get the both if you own yum. because it gets a percent of the china sales. >> which is probably -- to me -- >> is that the better? >> that i think is the safer of the two, right? and both -- great job with the interview this morning. comps in china were actually down, i think, month over month or year over year. there are growing pains associated with the unlimited growth we talked about. right now you have one restaurant for every million people in china. clearly, that can grow.
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but there are going to be some hiccups along the way. and remember, there was some -- remember about the health concerns that cropped up. you don't think that's going to happen again. i'm just saying. >> all right. still ahead, tesla ceo elon musk speaking right now about the solarcity deal. i'm melissa lee and you're watching "fast money" on cnbc. first in business worldwide. in the meantime, here's what else is coming up on "fast." that's what's happening to health care stocks in the last month. but a top technician says he thinks it's about to get worse. he's here to explain why. plus, facebook getting ready to face wall street. >> it all comes down to a few moments. this is one of them. and we'll tell you what has shareholders so nervous about the big report. much more when "fast money" returns. uys a little lamb. one of millions of orders on this company's servers. accessible by thousands of suppliers and employees globally. but with cyber threats
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welcome back to "fast money." election jitters hitting stocks today. the s&p 500 closing at its lowest since july 7th, while the dow dropped 100 points. here's what's coming up in the second half of the show. traders are fleeing shares of facebook ahead of the earnings release tomorrow. we'll tell you what's got them so nervous. tesla releasing new information about its proposed merger with solarcity moments ago. we start with an earnings alert on gilead. meg terrell is in the newsroom. >> a bit of a mixed quarter for gile gilead. reiterating guidance for the year. everybody always watching the hepatitis c number for gilead, that came in light, $3.3 billion, versus estimates of $3.7 billion. on a brighter note, the hiv franchise helped by a newly approved drug that did do well
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and people happy about that. on the call, as always, the management team getting a lot of questions about m & a, given just how much cash they have. here's how john milligan, the ceo agencied one of those questions. >> we're going to remain disciplined and keep the bar high. you don't want the sense of urgency to overwhelm your discipline. then you'll do things that don't make long-term sense. that's one we play apply here. so we're currently very active. we'll do things when they make sense for us. >> you can sense some federation that gilead hasn't made a move. milligan saying things are too early and sometimes just too expensive. so that will be something people continue to watch. of course, gilead has always been a name that's in the cross-hairs of the drug pricing debate. but we saw some of that earlier today with eli lilly. that company coming under fire from bernie sanders. looking at the price of their insulin drug.
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so as gilead down in the after hours, we saw lilly shares getting hit during the day, as well, melissa. >> yep. we did. and meg, we did also see a reversal in shares of valiant. quite a different story today after the bell in terms of the potential sale of one of its units versus yesterday's headlines. >> that's right. the news today that valiant may be close to selling its sail i think so unit for as much as $10 billion coming out from the "wall street journal." our scott wapner matching that reporting. they did buy last year for a lot more than that. several billion dollars more than that. so a lot of people saying they overpaid there, but obviously, investors taking this as good news, up more than 30% today. as they anticipate, valiant will use proceeds to pay down its more than $30 billion in debt, mel. >> thanks so much, meg tirrell. where do we want to go from here? how about the move in valiant? >> i mean, given how levered it is, the enterprise value didn't move nearly as much as the equity value. i don't know, i'm afraid of
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valiant. i can't get on board there. gilead is interesting to me. and think back to the summer of '15, where everybody was falling all over themselves to do a deal at a disciplined good price and the market was super hot. they've gotten a lot of flack for not using that cash, and they're looking pretty smart now. so, you know, i think the guy deserves a pass. i know that the -- that hepatitis was a little weak. i mean, everyone thought it was going to be weak. so i don't think it was -- i like it, actually, right here. >> how do you feel comfortable buying anything in the space? i know pete said it yesterday and this was my pushback. you had bernie sanders, not even the top two candidates right now, talking about eli lily, tweet -- exactly, and took it down. >> and this is specifically about the pricing of humalog, and i talked on pow we shall lunch and i said did you ever think it would be in the cross-hairs of bernie sanders or anybody else railing against
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drug pricing and he said no. and that's just how maybe unpredictable this whole situation is. >> i could be way off base here. i think the biotech rhetoric is going to die down in a major way post election. you know, you might hear about it. but i don't think you hear about it anywhere near the magnitude you've heard about it into this election. i think it bottomed out at 68 in 2014. we could talk valuation all you want. the reality is, i think some activist has to probably dip their toe a little bit and that balance sheet sticks out like a soar thumb. yes, i understand they were right not to make a drastic move a year-and-a-half, two years ago, although they probably could have used their stock which might have been a good deal. with that said, they're going to be forced quickly to do something that i think could be transformative tore the company. >> for a variety of reasons, health care stocks have been getting hit hard in the last month and a half. the next guest says it's about to get worse. let's go off the charts with rich ross and evercore isi. >> i'm going to have to disagree with guy here. health care is a very convenient
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target, the worst performing sector in the s&p year-to-date, and almost all of those losses, 7%, come just last month alone. now, i'm open to the possibility that this is just one last exhaustive selloff ahead of this rally and we're going to get this election, a relief rally. i don't think the technical support that notion, i do think it gets worse. let's look at the chart in the s&p health care here. here's your big top forming all year. keep in mind, this comes at the tail end of a very strong seven-year bull market. the 50 crosses the 150. and now you've broken the neck line of this entire topping pattern. as we know, that's all bad. here's where it gets really interesting. try to guess what i am now. i'm a reit. that's what health care has become since brexit. the two trading in tandem. this tells me everything i need to know about the market. bond prices going down, yields going up, bond proxies like reits going lower and defensive plays like health care going lower, as well. so insofar as that dynamic persists, health care likely to go lower along with the
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defensive bond proxies. look, when i look at the constituents, look at biotech. if you're looking for a bounce, i'm not sure i would be looking here. look at this purple line. the two-one week moving average six and a half years going back to 2010. and we violated it. there is the double arrow there. we violated on a weekly closing basis. you see this multiyear top. look at this, phrma, same formation here. you've taken out the neck line. this is a seven-year trend line. boom. not a bad line. and you've broken it. that's not good. and finally, managed help. this is sort of the star here. think united health, one of the strongest stocks in the dow, we could be running into a double top at the tail end of that move here. there we go, back to the magic of television. this is the 100-week moving average be. if you broke that 100 week for the first time in six and a half, seven years, with health care more broadly sort of eroding around you, what are you supposed to do, just sort of hang around and wait for this post election bounce which would probably be a seller of, the
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answer is no for my money. >> should we ask rich over? >> the answer is yes. you didn't see the way he snuck that in? >> i saw that, the magic -- >> go ahead, rich ask what i am now. >> it's from animal house, guys. >> how would i catch that? >> she liked it, though. still liked it. >> i've never seen it. >> political headwinds is no way to go through college, melissa. >> actually, i have a question for you, rich are there any components which trade better than the overall index or is it too highly correlated amongst the constituents. >> >> i don't want to say that every chart within health care is a sell. but what we have seen in recent weeks -- health care equipment, one of the strongest groups. >> like st. jude. >> and alumina, and now extended into services, as well. even where we have seen health care names hold up, you're
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starting to see that erosion. so once again, this could just be an overreaction and we could get this relief rally into the election. for the time being, i don't see it in the charts. >> what about money that needs to be in health care-related industries? >> sure, look, i hear this from a lot of clients, the valuation is starting to provide support for the group. and i get that prospect. but i think as we know, valuati valuation in the short term can be a poor timing tool. i take the technicals over valuation any day, and keep in mind, this not a new trend. we're talking about a seven-year bull market. health care and defensive names have outperformed the cyclical trades. those seem more attractive. i'm not telling you the sector is toxic. for my money, going into next year, there is better places that i would rather be. >> rich, thank you. thanks for coming over to the desk. rich ross, evercore, isi. >> i dig rich ross.
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the fact you had no idea it was in "animal house." >> i don't think i've seen the movie. >> it's amazing. do you want to tell the folks at home -- >> i did, two times. i have never seen "animal house." >> health care drug pricing is the only thing that both sides of the aisle agree on. this is going to be a major headwind, not just up until the election -- >> isn't this just a rotation from the time when hillary first put out her tweet -- a year ago, though, she put out that tweet on biotech. and eventually it starts to catch up with the rest of health care. and obviously -- >> not in the sector any more. it may or may not be a value sector. >> they're growing earnings. they're losing earnings, rather, actually growing when it looks at revenue right now. and i think when you look beneath the sector right now, how about the fact that pfizer has already made two acquisitions in the last few months. and meanwhile, we're waiting for gilead. i agree with you guys. maybe it was a top before. they shouldn't have bought at the time in 2015. >> sure. >> how about now? according to rich ross, when you
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look at the charts, these things are getting hit, right? now is the time to look around in the mess. >> all right. coming up, shares of square spiking, ceo jack dorsey and what drove the quarter and later elon musk posting a webcast to discuss plans for his proposed acquisition of solarcity. phil lebeau will bring us all the details. hey, phil. >> hey, melissa, i have the quote of the day. and it's from elon musk. how's that for a tease? when you hear what he has to say for those doubting the merits of tesla buying solarcity? you'll sit there and say, that's elon musk. we'll have that quote and a few details in the conference call when "fast money" returns. valu? what's critical thinking like? a basketball costs $14. what's team spirit worth? (cheers) what's it worth to talk to your mom? what's the value of a walk in the woods? the value of capital is to create,
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to help you keep rolling with confidence. go long™. ♪ welcome back to "fast money." tesla ceo, elon musk hosting a web cast with investors to discuss his plans for the solarcity merger. cnbc's phil lebeau in chicago with what is supposed to be a titillating sound bite. >> well, listen, melissa. so many of these conference calls, when you have executives talking about a merger, it's very much we have synergies and our companies will work together. well, that's not the case when you have elon musk in a conference call. in fact, he didn't wait long to talk about why this deal makes sense. we talked in the 4:00 hour about some of the synergies and some
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of the benefits that are going to be coming to tesla from acquiring solarcity. let's talk about the three bullet points that really also come up. they believe it will be generating cash that will be going to tesla in the fourth quarter. and that over the next three years, solarcity will add to tesla's cash position, adding at least $500 million in cash. oh, but you say, this deal makes no sense at all. to those of you skeptical, here's what elon musk had to say. >> for those that predict a bad outcome, how good have they been at predicting the outcome for tesla in the past? and if they have been uniformly -- a batting average of 0, you should really question whether the future predictions are going to be better. >> that is the kind of quote that immediately will have people saying, oh, i'm doubling down on my doubts about whether or not this deal makes sense. remember, the vote happens on november 17th. the conference call is still going on, melissa.
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most of the questions from analysts have centered around a couple things, such as free cash flow and cash generation. they're not getting into too many deals -- details, aside from what they have said about the $500 million. they have talked about their belief that eventually when the two companies are aren't that customers who buy a tesla vehicle or who are solarcity solar customers will eventually have all three parts of the equation, which is the solar roof, including what they just outlined last week, with the new solar roof shingles, as well as the tesla power wall, energy storage unit inside the home and a tesla vehicle. they are of the belief that eventually, almost all of the customers will have that triple play, if you will, and then they can expand the business from there. again, this is sort of their way of saying to people, here's why we believe this integration of these two companies makes sense. and, be again, the vote happens on november 17th. melissa? >> you know, phil, the whole
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comment about having those naysayers who have gotten it wrong every time in the past is sort of ironic, considering it's coming from a man who himself has missed something like more than 20 targets over the past five years. his batting average isn't exactly stellar either. i'm just curious, phil, in terms of the projection of adding to tesla's cash position, was it in the fourth quarter? how does that work? i mean -- do they go through how that works? >> they did not walk through specifics, melissa. they did not walk through specifics. what they said is, we believe that it will add to the cash position starting in the fourth quarter. and that over the next three years, you're going to have $500 million, at least in cash added to -- to tesla's cash position from solarcity. but, again, this is why you have these analysts on this call. and there have been a number of questions here saying, okay, explain to me, you know, what you're expecting in terms of those customers who are with solarcity, who are eventually going to upgrade to the new solar roof shingles, who are
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going to opt into having the other tesla products, as well. okay. phil, thank you, keep us posted. phil lebeau on the tesla solarcity call. the skepticism is there about the financial projections, because year-to-date through june, solarcity has actually outspent what it's made in sales by 42%. >> also, the stock was 50. so the naysayers -- okay, i think one for the anyway sayer column with the stock at 50 and the deal being worth, whatever -- 21 -- >> short interest in solar. i'm sorry, solarcity is 35%. short interest in tesla is 25%. so every time this thing gets beaten on, guy and i have talked about this, there is always an underlying bid. 190, 188, has been the place where it's been bought. one day that's not going to be the case, but it's been the case thus far. >> to build on that, if solarcity doesn't rally, given the short interest steve just said, maybe these naysayers
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might be right. maybe the stock does have another leg. to me -- listen, i'm not saying i know anything about the financials of tesla and solarcity. but if seems a lot like sleight of hand going on here. to me. and i'm not -- >> you're not alone. in terms of wall street. >> and will be good for them to have this behind them. the merger done, closed. >> even if it's closed successfully. >> the spread has come -- it seems it will most likely happen. >> the oddest thing about today, though, when you look at volatility going up to 20, what happened in tesla? volatility has been coming down. it's actually below the 30-day average. so that says something about what people's perception is right now in the stock. >> still ahead, alibaba ceo yakima teaming up with steven spielberg. what it could mean going forward. plus, could facebook earnings rock tech stocks tomorrow? we will tell you why some traders are bracing themselves for what could be a very volatile move. you're watching "fast money" on cnbc, first in business
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what are you doing? getting your quarter back. fountains don't earn interest, david. you know i work at ally. i was being romantic. you know what i find romantic? a robust annual percentage yield that's what i find romantic. this is literally throwing your money away. i think it's over there. that way? yeah, a little further up. what year was that quarter? what year is that one? '98 that's the one. you got it! nothing stops us from doing right by our customers. al. do it right. let's get out of that water.
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welcome back to "fast money." the conference call for square, the payment processor's third quarter earnings just wrapping up. here is ceo jack dorsey discussing the ecosystem, social
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commerce and the company's growth. >> the philosophy has always been to utilize the data so we can provide deeper insights directly back to the seller about how their business is doing and how their customers are returning and what they like, and, you know, if they were able to add another item on the menu. you might make more sales. and that's consistent with our really simple model of if we help sellers grow, then our business grows, and if our business grows, we can have more sellers. >> of course, the company best known for its white hardware. the payment processors that it sells to merchants. that was $8 million of revenue of the $439 million in net refuse few the company posted. it's helping sellers try to make more sales. and to do that, it is now offering cash advances to the merchants that use the products. and in the quarter, the company
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put forward 35,000 loans. it legended $208 million to these customers and that's a 70% increase from a year ago. so certainly that is a growing part of the business. but certainly the largest part of the business continues to be the revenue that it gets for each transaction that gets processed. the company also talking up its larger sellers. so these are retail outlets that have more than one store. that was up 55% year over year and interestingly better payment volume for those larger sellers than for the smaller sellers all of this combined together for the 2016 full year. both for revenue and for adjusted profit which the company expects to come in between 31 and $33 million for the year. melissa? >> all right, kayla, thank you. kayla tausche on square's earnings. square up in the after hour session. what do you think of this payment? stock? >> well, i kind of like it. i think it's interesting. i thought the quarter was good, better than good. it was a beat.
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you know, i like the momentum that they have. i think, you know, the jack dorsey question is out there, of course. everybody wants to know how does he do both, and might he end up only doing one or the other. i like it. i think it's interesting here. i like the space, too. >> seems like he's only doing one right now. seems like he's putting -- >> ooh, that was a takedown of jack dorsey. >> good we're not on-air. >> oh, sorry. >> but i will tell you, the street price targets are anywhere from up 10%, 20%, up 30% in the name, down 15% year-to-date. might not be bad to take a look at it. >> all right. sticking with tech earnings, facebook gearing up for earnings after the bell tomorrow. will the last of the fang stocks exceed expectations? a preview. mike. >> hey, so the options market normally we see about a 7.7% move. the options market expecting about 5.5%, translating to a $20 million market cap swing. most of the bets were actually bearish, but i will point out that 65% of the time the stock
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actually trades up, including the last four quarters. if you are looking for a way to make a bullet facebook, check out dan's bullish call fly. >> nice love. >> dan is bullish? >> why. >> we just teased -- i love to. you know that. >> what's wrong with that? >> you see the way mike just teased dan? that's fantastic. >> collegial, right? >> collegial. >> spell it. >> mike coe. thank you, mike. >> thanks, mike. full slow "options action"s, 5:30 p.m. eastern time. >> 5.5% move in the stocks. what does that make it, a $7 move. a $7 move on the down side gets you 122.5. you get 122.5, the highs we saw in may. if it gets there, you buy with both hands. good job on the math by me. >> you've got to love the ecosystem. the only problem right now, it's off the 52-week high. what does that look like? it looks like apple going into earnings. everything went right. even if things are great, if the numbers are phenomenal, which they should be, the election and
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all the other things going on, i think you could be hesitant and wait until a guy gets down to that 122.5. >> if mike math is right. >> work from the nest. alibaba in the spotlight tomorrow. the e-commerce giant making a bet on china's hollywood ambitions. julia boorstin in l.a. with the story. >> a couple weeks ago, chinese internet giant, abee baba, bought a stake in steven spielberg through its alibaba pictures. today the companies came to the u.s. china film summit to talk about why they're teaming up to co produce and co finance films for global, as well as chinese audiences. this is china's box office is poised to surpass that of north america in the next year. >> we want our pictures to have global scope. and again, we can't do that without including china in that. and i know that's the way that alibaba looks at the world, too.
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globally. these are -- we're going to tell stories in all shapes and sizes. and we want to have global reach. >> alibaba pictures is publicly traded in hong kong. its largest shareholder is alibaba group. amblin is looking to tap into alibaba pictures, digital marketing and distribution capabilities, including online ticketing, as well as merchandise sales and has the ability to reach alibaba's $434 million active users. >> we believe in building a platform where we can build partnerships and allow people to create content, reach audience on our platform. so since we established the company, we really reinvented our company in a way that we tried with technology. >> amblin plans to make up to six films a year under its dreamworks brand and three films under the participant label and wants to make as many as possible chinese co productions for even better access to that
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valuable chinese market. melissa, back over to you. >> thank you, julia boorstin. i think that is the key in terms of u.s. movie studios having true access. much easier as in many different industries to actually have a partner on the ground. you like alibaba for different reasons. >> i like it. jim chanos was on, talking about accounting issues. when you look at the cloud and you look at the e-commerce and the domestic growth we're seeing right now in china, i think this thing is going higher. giddyup. yeah. >> still ahead, "final trade." stay tuned. [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. isn't that right warren? well, you could get support from thinkorswim's in-app chat. it lets you chat and share your screen directly with a live person right from the app, so you don't need a comfort pony.
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♪ time for the "final trade." pete. >> we've got some great people over here from bay area keep an eye on that. get those donations in there. that was easy for me to say. vxx, volatility going higher. >> karen. >> >> yes. i always say, if you're long and it's the same as if you bought it, i am long going into facebook earnings tomorrow. like fb. >> steve. >> under weight. peter parker, almost spiderman, adam parker said in the beginning of the show, xlu. utilities. >> guy. >> we're going to watch "animal
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house" now. >> i think you're going alone. >> >> that's news to me. >> he'll go. >> electronic arts, mel! this quarter might be good enough to make an all-time high in a stock which i think is 86.5. >> i'm melissa lee. thank you for watching. see you back here tomorrow at 5:00 for 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 just want to make you some money. my job isn't just to entertain you but to make you money. sometimes the market just deserves to go down. today was one of those days. deserved to plummet. with the dow


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