tv Fast Money CNBC November 16, 2016 5:00pm-6:01pm EST
where it was several weeks ago. i don't think it's a disaster. but you do want to hear what's on the call, plus the morning. >> in a word, dennis? >> when secretary of state nikki haley is named. >> you had to drop that in there. >> this is a report from nbc. we have no idea what will happen yet. >> short term rates. that's the important thing to look at. dennis, mike, thank you guys so much. >> "fast money" begins now. yes, it does, kelly. live from times square, brian sullivan in for melissa lee. welcome to the aforementioned "fast money." your traders are pete, golden gopher that jairian. dan quaker nathan and guy number one, because you're older, not because you're better adami. tonight on "fast money," shares of cisco shrinking after hours. the stock reported their numbers. we're going to hear from the ceo on what drove the quarter and what's ahead. plus, president-elect donald trump promising to cut taxes. so our traders show you how to make even more money from your tax cut. and later, snapchat on its
way to what might be a $25 billion ipo. will investors be as excited about the stock as users are about snap's new spectacles. we've got the specs right here to see. we're going to find out what all of the fuss is all about. that's all ahead. all right, everybody. welcome. we start with the markets and your money. looks like the trump bump may have been dumped. like that? the dow falling just a bit. much of it had to do with fears of this, the dollar index. at its highest level in more than 13 years. here's why you care. the huge amount, 44% of sales from american companies come from outside our borders. thus, a stronger dollar, could hurt u.s. multinational earnings abroad. the big question, will a rising dollar and rising rates put a lid on stocks? pete najarian. >> rising dollar if it continues and a pace where we can't keep up, i would say yes. i don't know where we're going to see that pace and i don't know necessarily the dollar continues to climb to the upside.
so under that circumstance, i am saying i think the trump rally can actually get reinvigorated. i think the financials just took a pause today. did they really get hit that far from the 52-week highs that we had seen just the other day. no, they pulled back. you can look at technology. how about the way technology bounced back today? there are areas in the market and consistent rotation we see within the market itself. i think that's actually the key to why this market can continue. >> tim seymour. there is a school of thought out there -- thank you, by the way, good to be here. there is a school of thought that a higher dollar is automatically a bad thing. but i call our viewers' attention back to the mid to late '90s. the dollar consistently rose from '94 all the way through 2000. the stock market went up, as well. what is the connection between the dollar and stocks? >> well, if you think that the dollar is rising because also our economy is -- if you think about the rally we have had in a lot of stocks, it's on the basis of infrastructure, reduced regulations, it's going to take this economy up a notch. that's dollar positive. it also means the fed is going to be more active.
it also means the same deflationary forces people took as a given are falling out of the market, which means i think some some of the other currencies aren't going to be oversold. bottom line, if the dollar is stronger, there is no question that that is a headwind to oil, that is a headwind to commodities. it is a headwind to emerging markets and something you've got to watch. >> and two things. i want to talk to you -- >> don't point at me. >> a cisco report, we know cisco gets 50% of its sales from outside the u.s. here's the problem right here, okay? the americas were down, okay? year over year, down 1%. they're sales so relying on overseas sales and that much more interconnected than the period you were just referencing when the dollar went up and stocks went up. right now cisco is down, 4, had 4.5%. >> and then cisco, by the way, their big problem based on the numbers i read after hours is d.c. i mean data centers. data centers starting to slow down. >> i know you're diving into la
jolla. i've got to take you into the banks. you were so well-positioned for a bank rally. >> and i did pretty well. >> and it did. my issue with the trump, which is your first question, is that nobody was positioned for that. no one was positioned for rates to go up the way they did in such a short period of time. and i actually think -- to assume that bank stocks are going to continue after they have had this massive rally in one week, based on this notion of deregulation that may not come, just may not come any time soon. so to me, i think you're chasing -- if you're chasing a bank of america up 20% or goldman in such a short period of time. >> may i effort to answer the original question? can the market rally? >> thank you. >> because i do pay attention. von tech cokie, saturday night at notre dame. no? >> what do you guys play when walking into the stadium. >> extra sand man. >> i appreciate the shoutout? >> a few months ago, would have been devastating for the market. but with the hope of fiscal stimulus and repatriation of dollars, a renewed interest in
financials, i don't think a dollar rally is nearly as detrimental. and by the way, the russell which we have talked about for a while is now at levels where it appears to want to break out, the 130 level in the iwm is critical. we're right there, a couple days takes the s&p to the next level higher and by no means am i some raging bull. >> i love the fact you guys admit. very few people saw the rates coming. you're going to go to a bar and every guy with us is penders will tell you he saw the trump win coming. what did you buy today, if anything, pete? >> very little today. yesterday the xlf. the reason i continue to like the xlf, i continue to believe in the financials. we actually talked to some bankers today. dan and i were together in the green room talking to a gentleman about how the deregulation or pulling some of the regulation is going to actually loosen things up and they will be able to be much more profitable. i think at the other levels, at the mega bank levels, the
jpmorgans of the world and wells fargo and citi and bank of america, i do think that's going to actually add to them, as well. so i don't know that we're done. yes, we have had a rally. but the banks were rallying because of earnings. they rallied in post trump. >> i've got to push back. please help me understand. there are two types of banks. a lot of stuff, right? morgan stanley -- morgan stanley, bank of america, 41% in six months. many of the regional banks, the names we never talk about on "fast money," up 70 and 8% over the past six months. they're still deposit-taking institutions. >> except for the fact if their core business is really about buying -- excuse me, borrowing money and lending it a little bit higher, that's only gotten better. it also is an environment where people have jobs. also an environment where we learned that lending is actually ticking higher. also an environment where the housing market is giving a lot of people a lot of home equity from which to draw from. so that explains it. quickly, the reason the banks have more room to run, the discount they were trading at was a function of the expected
pushback that was coming down. well-said in that i think fiscal deregulation takes some time. the pressure on the banks -- a lot of people whose comments by the san francisco fed saying they still want to push on too big to fail. but banks trading at a major discount to book value. >> and did you buy the banks? >> listen, i just want to make one point. i know the ten hadden year treasu treasury yield had a massive rally. right before the fed raised interest rates for the first time in nine years. i think if you were not -- as sure-footed as you were prior to this move, i'm not saying you run into it. and as far as i'm concerned, i think as far as what's going on with the dollar, what's going on with crude, i have said it a couple times, i think oil stocks, big oil stocks, have traded very, very well. xle, in particular, 40% of that is exxon, chevron and schlumberg schlumberger. they just show great relative strength and i think that is breaking out, xle. >> today we saw target and we'll find out if it was
target-specific. if you look, they seem to be doing a lot of things right very quickly. but we find out tomorrow on the back of walmart, if, in fact, it was target-specific. i think that's really interesting. will it be a teller in the consumer or a tell on the individual name, because look what the decoupling going on in home depot and lowe's. will the same decoupling go on between target and walmart. >> a stock-picker environment. giddyup! >> more on lowe's and rates. the financials saw the biggest surge of any group in the post election rally. your next guest days too far, too fast. let's get off to the charts and find out why with chart master, carter worth and tell us why you may want to stop banking on the financials' gain. >> nice pause. >> so it's -- you have to know who you are in the market and what your time frames are. obviously talking approximate buying financials here. you will presumptively have a chance to buy them lower. long-term, anybody's guess. in terms of a trade, "fast money," you want to wait and try to buy these lower, and let me talk about the stats we have.
this is the bkx, bank index, over a two-year period. and this is the 150-moving average. all the moving average is an automated trend line. there is no trend here. what we know is that you can at certain times examine how far below or above you are trading from your 200, 150, whichever you're going to use. so this current circumstance now on monday, we exceeded 20% above the 150-day moving average. here is a long-term chart going back since the inception of the bk index. there are only six times when this circumstance has happened. you are trading some 20% above the 150 moving average. this bottom panel draws that line. and then it begs the question, what happens on an intermediate basis going forward? does it continue to trade higher or pull back? it pulls back. several columns a little bit busy. let's look at it. i have on the first column all the instances, all six. it's a two handle so you have to go to the next page so we look
at the average and median. all instances where this circumstance has been triggered. 20% above the 150 moving average and the next two columns are the one month peak and the month trough. what you're trading off in terms of upside versus the risk to the down side and number of days it took to hit the up side versus the number of days to hit the down side. let's go to the summary table. and here's what you have. so this is the seventh time on record, and the average, it goes 2% higher. and yet the average in median, it drops 7 to 8%. 9%. and it takes place the high within four days. and the low within about three weeks. so what we know at this point is that we're already down 2%. meaning anyone who bought on monday is already down. 2%, 2.5% and the presumption is you take another of or 7. so if you're not in, you can wait. if if you are in, i think you came in a little early, because
you're going to have to endure, presumptively, a give-back. if we were to use those median and mean statistics, right here, down 7.9, down 8.7, where does that imply this might go? here's the chart. here's the first line. isn't that convenient? what's so funny about that is, that's a very technical level. not only is it the statistics, but often after breakouts, you get checkbacks, so that would be -- and there's the other. we're looking at 79, 78 on the bkx and also something interesting, guess what a 50% replacement from the low to the high is. exactly to this level. whether you call it a checkback to the breakout and those who want to be longer-term possibly get this. it's about here and now. if you're buying the banks now, i think you're buying a little early. you can own them lower. >> all right. carter worth, thank you very much. all right, guys. >> whoa, whoa, whoa. whoa. >> what? >> you've got -- he can't just leave on the island. we've got to bring him in, man. look at ashley over there with the chair. we're bringing him in.
waving him in. >> if you're so interested in charter worth, we should have a chair. >> hi, carter. >> ashley, thank you. these guys wouldn't get up from the desk to bring the chair over. thank you,. >> that in the business is by the way -- >> is that georgetown? >> somebody get me a chair! and a velvet crown. >> carter, thank you. >> it's a mac and fill is what he's talking about. and if, in fact, this does happen, pete najarian will be waiting with both hands out, because he still believes in the banks. dan thinks this may take place, but then accelerate to the down side. that's what makes markets. either way, i think you'll see the move back to those levels that carter talked about. >> in overbought condition, whether you use an oscillator, i don't use that -- optics of it. shear lie. in which you started the show. at some point, you have mean reversion or said differently, what we might not be discounting two years out, in the bank move, we are surely discounting a great deal of what's coming in the next, let's say two to three months. >> for a technical question, very quickly to help our viewers
get educated, why don't you use mac dnr and those are things a lot of technicians love to use. >> guess how many there are? about 140. each one has a name. which one should be used? that's a jungle of lines. don't like it. >> but carter, as we think about this, there is no disputes these things were overbought. and only a couple instances you pointed out. when you look at the valuations of these banks and this is my issue. i'm not here to necessarily go buy these banks tomorrow. but we're looking at a sector that when people were complaining about the s&p, they were complaining about a place to play. and the banks overall s&p, it's way down from where it was four or five years ago. tells me this allocation in the banks is something that can continue, and that institutions are still under way. >> we know it's the second biggest sector by waiting after tech. >> but down 2 or 300 basis points. >> also, if we look at history and what the roes are at the peak, that's presumptively not going to happen any time soon.
they're not going to have -- >> totally fair. totally fair. >> and they're never going to trade -- >> they trade at book. >> they trade at book. so, again, it's who you are in the market at what time. here and now as a trade, buying is wrong to do. >> well-said. carter, thank you. shares of cisco systems lower after hours. we're going to tell you how much and why investors are worried. plus, snapchat may be gearing up for its massive ipo. the company with its first wearable, as well. the snapchat spectacles onset. and one group of stocks have posted super tanker gains this week. some up more than 1,000% in six days. traders say stay away. that group and its amazing returns coming up.
it is earnings alert time on "fast money." cisco systems, ceo speaking on the conference call right now. let's get to josh liptop with all you need to know. josh. >> well, brian, heading into this print, cisco stock up 20% over the past six months. clearly some disappointment here in the after hours. cisco ceo chuck robbins talking
about the quarter with analysts. take a listen. >> delivered a strong q1 with an environment that continues to be challenging. we executed very well in the quarter with revenue growing 1% and nongap earnings and continued strength in nongap gross and operating margins. this quarter total product orders declined 2%, largely due to service provider orders declining 12% which was worse than our expectations heading into the quarter. >> so clearly some real points at pressure in this quarter. you look at switching revenue $3.7 billion down 7% year over year. wanted to see $3.9 billion and then you had this conservative guide which robins in part is chalking up to weakness and service provider orders. so phone carriers and he talked on the call here about consternation actually about the election, he says that telecom regulatory environment and in his words now in flux, due to this election, and that could have robin saying implications for service providers.
brian, back to you. >> all right, josh. thank you very much. guys, let's go ahead and trade cisco systems here. a little beat. concern about the guidance, stock down -- pete. >> go ahead. the guidance for these guys is always conservative. i don't think this is that bad. if you look at the router business, we know it's in decline. the data center not big enough to move the needle. but it's going to be north of 12.5%. chuck robbins probably one of the first ceos that can opine on what this business environment means for his company who has $60 billion offshore. that's what you want to know. >> it's about the fundamentals of the company. i mean, this was a pitch for me not that long ago. 31.25, something like that. now below those levels. if you look at them -- look at the fundamental side of it, you look at the cash, what their forward is, and you just take a look at what the transition process is. and that's really what i think you have to focus on. and obviously, the guidance -- it's been historic for cisco to have that kind of guidance. so because of that, i think this is going to be a buying opportunity on the sell. >> so pete, let me ask you, they have that cash -- i know they talked about security.
that is one of the only groups they have growing double digits. what if they make a big expensive acquisition. >> you asked me exactly that question when i did the pitch up there. i think they could make an acquisition of some sort. it wouldn't have to be big, though. it doesn't have to be a mega acquisition, something like a fire ride. i think if they do something in the security area -- not too big, i think it would be the right move. >> i get it. and forget about politics, we get into the trade war thing here. cisco has been a disappointing stock forever. 15 years ago -- >> not in the last year. 80 bucks, 100 bucks a share. and 2007, 32 bucks a share. nine years, back to where it was -- >> let's talk about the -- >> the point is, the stock goes down as much as it goes up. over the long-term. >> that's -- all fair. we can talk about banks. but look when juniper preannounced, i think six or seven months ago, cisco traded down in the aftermath to 26, 27. and since then, until today,
it's been sort of off to the races. they're decoupling. why? because they moved in a different direction. and you want to look at one thing in this quarter, beyond guidance, look at the operating margins, better than expected. all of last year, the stock had trouble at $30. it's trading there now. past resistance becomes support. one last thing, quickly. i know we've got to go. one of the big reasons got into cisco, the dividend yield. and now with rates going higher, that sort of rung is off the table. i don't think that's the reason to sell the stock. >> we've got -- you mentioned juniper. juniper got added to goldman's conviction buy list, because they have a new product cycle that's been delayed that may help in the past. it's now coming out. juniper got the -- i don't want to call it an upgrade. we sort of like i like you, i really like you. >> and a quick program -- elbows to wrists. a note. do not miss chuck robbins live on "squawk on the street" tomorrow morning, a first on cnbc interview.
they're going to ask him about the election, currencies, about china. about data centers. you name it. . still ahead, facebook down 10% from its highs. the bad news keeps filling up investor feeds. is the stock becoming more of what your money should unfriend. >> come on. >> i'm sorry! in the meantime, here's what else is coming up on "fast." >> every bit as certain as death and taxes. >> but with trump changing the tax code, nothing is certain. and it could have big implications for how you manage your portfolio. we'll explain. why are people willing to pay $5,000 for these glasses? why snapchat is worth $25 billion. and the biggest threat to facebook and twitter. that's when "fast money" returns. or two about trading. so i trade with e*trade, where true traders trade on a trademarked trade platform that has all the... get off the computer traitor! i won't. (cannon sound)
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for stocks, apparently 8 was too much. the dow snapping its seven-day winning streak. the nasdaq outperformed a bit so here's what's coming up in the second half of the show. president-elect donald trump maintains he will lower your tax when he takes office. if he can get it done, how will that impact the way you trade? we have got your tax cut playbook. plus, consumers are buzzing about snapchat's new spectacles. are they worth the hype and money or just another google glass? our very own guy adami will put them to the test. but we begin with another black eye for facebook. first, it was a flood of fake news infecting users' profiles. now facebook saying it has uncovered what it calls miscalculated metrics, guys. related to how its users interact with content. in other words, ads may not be seen as much as facebook thought it was. in other words, maybe advertisers won't be too happy
with this news. all this as the stock has fallen. so america, the world. should you sell facebook if you own it, dan nathan? >> here's the thing. i'll say this about facebook. you can say it about amazon and google. these stocks might have overshot on the up side and may do so on the down side, too. especially when you take a shift of momentum like we have seen in the fang stocks over the last week and then you sprinkle on some news like we have just had. this is the second bit of news in so many months. it's the sort of thing that may cause you to rethink this story as being infallible. >> 8 is too much, by the way. reminds me as 8 is enough. adam rich or the brady bunch. dan says it could perform to the down side. 1.7 billion users. their engagement, everything that advertisers want. facebook is in the seat. maybe not what themd. who is doing a better job of engagement than facebook. we don't know what the valuation
for the digital ad space is. i think at this pullback, you start to take a look. i think the move is -- >> we have a company here as i pointed out on "power lunch," a company whose market cap is more than exxon or jj. because advertisers betting on the fact the stuff they put on there is going to be seen and utilized by the billions of users. and if there is any crack in that thesis, shouldn't it crack -- >> i don't think so. at least they're out in front of it. where do they have to go? number two, they don't have that many options. i don't think this is as catastrophic as the headlines suggest. i know it makes for good headlines, good television. but, again, valuation, dan has said, might be a little bit stretched. but they have so many things in their arsenal, so many things coming down the pipe. virtual reality is -- it's happening. and they're going to be at the forefront of it. so i think this pullback in facebook -- it is an opportunity along the name. absolutely. >> i would say so as well. you look at the 200 day moving average where it rests right now. just near -- just a little bit
underneath the 200-day moving average. >> it broke for the first time sings january. closed below. >> a couple days. >> title news. a potential threat to facebook is snapchat. because we know anybody with a kid knows, all the teens would rather snap than friend you. snap is the company's official, gearing up for its ipo. julia boorstin in los angeles with what is next for snapchat. julia. >> well, brian, snapchat is in los angeles. today i'm actually in san francisco. and snapchat has its work cut out for it to convince investors that it will be a long-term rival to facebook and won't end up like twitter, unable to find a buyer. snapchat has confidentially filed with the s.e.c. to go public, according to a source close to the situation. expected to ipo as early as march. which would value the company at between $20 billion and $25 billion. now to demonstrate the company's long-term potential in light of twitter's stagnating user base,
snapchat has to convince investors that it can continue to grow its $150 million daily active users and keep them engaged. two, prove its ads work for brands and three, show it has a stable management team that can lead the company over the long-term. and contrast the upheaval twitter's team has seen. >> snapchat has already been showing its ability to diversify, launching its first hardware, snapchat spectacles that went on sale last week, drawing a flurry of interest. and even more important for snapchat's long-term revenue, last month launched its ads enable the sale of inventory using automated bidding algorithms, which will help the company scale its ad business far more quickly. e-marketer projects the company will generate $370 million this year and $940 million next year. that brian, i really can't wait until we get that s1 document
and i getting to through these numbers. backs over to you. >> i bet you cannot wait. and how can i mistake that beautiful golden gate bridge for anything in los angeles. he had editor at large joining us with the spectacles. >> happening right now. >> what exactly is happening in those glasses? >> i'm wearing these snapchat spectacles and grabbing a snap right now. you see the little rotating -- >> disturbing. >> l.e.d. there, that's what let's people know -- >> it looks like a hypnotize -- >> that let's people know you're recording. they're $130 in really short supply. you only get them by going what's called a snap bot, a giant vending machine that appears out of nowhere like a robot. people have lined up, broken down. it's very hard to get. they don't -- they don't send the video that i'm capturing immediately to your snapchat account. in fact, it's like a weigh station, it goes there, to your
phone. then you go through your phone, it's in your memories. then you decide to share it. so it's quite a bit different than google glass. because i know everybody is like, oh, this is another google glass. obviously these look like sunglasses, google glass did not. they are not trying to provide you any information back to you. the only thing i see when i'm snapping, if i do this ten seconds, is a little flashing light. little light that lets me know it's happening and it will flash when it comes to the end. no information, nothing like that. but, you know, i'm letting people know i record, because people could find that creepy. another thing, they're sunglasses, right? not so great for indoors and that was -- with google glass, nothing over your eyes if you wanted and people didn't know if you were recording, which freaked people out. this is for the snapchat set. 42% of 18 to 34-year-olds. they have a lot of people out there. >> lance, may i borrow your glasses? please? >> yeah, sure. sure. pass them on -- i can't see a thing. by the way -- this is -- this is
the case. so you get about 100 snaps per charge. the case -- also charges it up. that is -- there are four basically four full charges within here. so you put it inside of there. it's charging. and you can charge it in the case or outside of the case. if you want. priced at $130 means that these are for everybody. as opposed to google glass, which was for the rarefied few. and hopefully you don't become, you know -- you know, you don't get picked on for wearing them. you're done recording, by the way. >> just -- >> you can go longer if you want. >> anything that could enable you to record somebody -- if you do this, that's one thing. you know. but it's kind of still -- even with the spinning thing -- >> you don't know he's recording? >> you do, but i'm saying -- you don't know. maybe it just looks like something weird going on. here's the thing. guys, we talk about -- you know that snapchat is probably going to go public and everyone is going to clamor for it. how do we know that snapchat is
not just another twitter. >> i have to say, right now they're facing -- >> snag natured for years. >> they're facing stiff competition from instagram, just like snapchat's stories. that does not seem to be killing snapchat. in fact, snapchat steaeems to b getting stronger, pulling themselves together, changing their name, launching something like this which puts eyeballs on the brand and obviously facebook doesn't have hardware for its instagram product right now. so they don't have that kind of heat. but, you know, whether or not these actually fly, whether or not all the kids really want them because that's what they've got to get to buy them, i really don't know. still recording? >> jim cramer -- jim, recording again. jim thinks -- he went -- i think he bet carl today, a 40 it is billion with a "b" dollar valuation for snapchat, which to me only makes instagram more valuable. we can argue whether or not it's one is taking share from the other. but begin, goes back to why facebook is a valuable property.
>> it's odd. you think about snapchat, we'll see if the stock goes public. snapchat is effectively like twitter, an empty store. we're the product. if a company is not selling anything, they're selling you. so don't you have a -- do you worry at all about investing in a company where the product literally is people feeding the machine for free. >> and that's what twitter -- >> without you and you and you and your kids and my kids and whatever. >> again, to me, it's about engagement and how long are people going to be locked into this, and really what's the medium in which they then can appeal to an advertiser. >> this is -- this is -- called user-en generated content and the frontier everybody wants to own. behind us, running in continuous loop, a facebook ad for facebook live, right? all content generated by the user. get on it, you want to be a part of it. and that's really -- snapchat -- this is life casting, because this is not just -- oh -- >> use your content. >> look at my face. this is making potentially shows, you know.
cooking shows. >> something catches fire outside, i stabbed stand there, here are the fire trucks. they use that as their tv show. stuff you film. i'm just saying, isn't there a risk to a company -- >> not right now. here's the thing. this is a company that had no sales a year ago, and a billion sales next year when twitter went public in 2013, about $650 million in sales, kind of topped out here. it's been about 2.5 or something like that. they are not growing. these are the ones to watch, if you're facebook and own instagram, those stories, they're not doing it on instagram. i know, i have a 13-year-old daughter, obsessed with the snapchat, the stories. she's going to want these. and this is a really ambitious move, making apple look like chumps and wearables. too ambitious. >> i think you're seeing it -- >> just being a foil -- how many money -- how much money does your daughter give snapchat every year? zero dollars.
>> looking down the barrel of a snapchat ipo in march of 2017. this is genius marketing. >> genius marketing. >> i really just want my glasses. >> i'm sorry, lance. >> that was the strategy the whole time, lance. >> pass them down. >> i'm just waiting for the next snapchat. >> we know that snapchat was the next twitter which was the next facebook. still ahead. they are the penny stocks at the bottom of the ticker that are going nuts. they have been going nuts for days. they are the shipping stocks. some up as much as 15% in a week. what's behind this insane run for a group that gives investors a sinking feeling? one trader betting nearly 4 million that oil stocks could tank in the next few weeks. we're going to tell you what has them so nervous when "fast money" returns. caroline. so corporate put you up in a roadside motel. but with directv from at&t, you can download then binge watch your dvr'd shows from anywhere.
♪ ♪ ♪ all right. welcome back to "fast money." shipping stocks have gone nuts lately. some gaining more than 1,000%. dom chu is here now with more. dom, i know we've got to have this sort of qualifier at the beginning. these are tiny stocks with market caps we normally avoid like the plague. i didn't talk about them on "power lunch" because they're so
small. i guess we've got to talk about them, just be careful. >> exactly. brian, this is one of those stories that is one of the caveat emptor, buyer beware. the recent surge in very small in some cases and some cases make micro cap shipping stocks. the question is, what is actually fueling the parabolic moves. traders offering theories on why shippers could see possibly brighter days ahead. maybe that a trump presidency to lead to a surge in roads and bridges and other infrastructure projects. now, if that were to happen, hypotheticalcally, there could be demand for things like gravel, concrete, steel, et cetera, which could lead to more activity in sales, possibly, for these cargo shipping companies. others believe, though, the move in some of the smaller and micro cap shipping stocks has to do with technical market factors like traders rushing to buy stock in order to close out short positions, possibly.
but buyers should proceed with extreme caution here. the mind boggling move isn't just catching the eye of traders. it halted trading in dry ships early on wednesday morning, because it was requesting more information from the company about what's happening with its own stock. prior to the election, dry ship stock had traded below $5 a share. had a below $10 million -- $10 million market value. it and many other bulk shipping companies had seen their stocks fall -- remember, very dramatically over the last few years. and many are still down a lot. since their highs even in that span with this big rally. now, regardless, guys, of the possible reasons behind the big moves, any time you see trading action like this in small and micro cap stocks, many experts quote, caveat emptor, buyer beware. many traders getting possibly sunk here. so yes, brian, the caveats here, trade at your own risk, trade with caution. >> all right,dom, thank you very much.
would any of you buy these stocks right now? >> look at the ones with the balance sheet. so additional part of the lesson here, look at the balance sheet, see what's sustainable. what's happening in the sector, you've seen significant scrapping, a lot of ships moved into scrap and taken offline. the market actually build because the iron ore markets and what china is doing right now in terms of their fiscal policy. this didn't take the trump presidency to see these things tried higher, folks. just so you know, this move has been going on for months. >> do you recall back in '08, you were probably in '08 high school-ish, something like that? do you remember that. >> 1808. volkswagen, porsche, do you recall the short squeeze where volkswagen was worth more than exxonmobil? i encourage you to harken back and look -- >> harken back? >> what are you, a pilgrim? >> we'll talk more about the shipping stocks -- >> thanksgiving joke. >> it's not thanksgiving. >> it's not cool to be a jive turkey, so close to thanksgiving. that's what i'm talking about.
>> all right. now on to oil. crude is slipping about 1% today. one trader, though, making a $4 million bet that oil and gas could fall even lower. d dan nathan, what do you see? >> xop. that is the s&p oil and gas -- >> apparently he's seen enough. >> an equal weighted basket of energy stocks here. and one of the things that's really interesting, sully just quoted, what crude oil did today, one thing that's interesting about oil and gas stocks, they have shown really great relative strength, crude oil down 12% from its mid october highs. the xop very close to its recent highs here today. put volume was four times that of calls and there was one very large out of the money put purchase when the stock was trading about $38.20 of the december 33 puts. those break even down at $32.58, bought for 42 cents. down 15% between now and december expiration. that's a long ways away here,
people. especially when you consider how well these stocks are acting. that's very likely to be possibly a hedge against a large portfolio of energy stocks. i want to look right here. this is that consolidation i've been talking about here. it's kind of banging up against the higher end of the reign. look how important this is on a five-year basis. it's been in this massive down trend from the 2014 highs. it's broken out here, and now it's right up against that 40 level here. so, again, this may be way out of the money, protection against a portfolio of energy stocks, looking for a breakout. >> dan, i look at that, and it tells me that first of all, oil stocks have done a lot better than the underlying commodity. and if you think about it -- i've been constructive on oil. if i look at oil stocks here, i say valuation is at a 46 to $52 oil. i think it's capped and they're probably sideways. >> well, i mean, are you asking me a question or making a statement here? >> you tell me. >> wow. come on. >> one of the things i think is
interesting about the xop, it is an equal weighted basket of stocks, 40% exxon, chevron and schlumberger. this is really interesting here to me, because you think about it. most oil companies' earnings are down at least 50% from their peak, about -- in 2014. i know you're valuing them right now on current earnings and they look expensive. if we were to see earnings come up pretty quickly, you're going to start valuing them on those other levels and they could look very cheap, in my opinion. so -- >> question or statement was all beautiful. >> great job, dan. thank you very much. >> the pilgrims have those. >> for more "options action"s, check out the full show 5:30 p.m. eastern time on friday. coming up, donald trump promising to cut taxes when he gets into office. so if he doesn't, how will that change the way you trade as we head to year-end? tim seymour will give you the tax cut playbook. you're watching "fast money" -- the old "fast money" on cnbc, first in business worldwide.
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21 club last night with a very simple message. >> we'll get your taxes down. >> but what exactly will lower taxes look like? and what might it mean for your investments? eamon javers first in d.c. with the details. eamon. >> yeah, hey, brian. you're not going to like this answer. but it's probably too early to say what specific lower taxes are coming here under a trump administration. but as you heard at the dinner last night, donald trump's broad thrust here is lower taxes overall for everybody. so what does that look like? well, break it down into two categories. one for businesses, one for individuals. for businesses, trump's plan that he advocated out on the campaign trail would lower the rate from 35% to 15%, would include repatriation of offshore revenue, which would involve a 10% tax on that revenue from companies coming back into the united states. that tax revenue could be spent on infrastructure spending and other things. also manufacturers under his plan could fully expense plant equipment so that might be a
boon in the manufacturing sector. now in the individual side, the tax brackets would be cut from 7 to 3. the rates under trump's plan would be 12, 24 or 33%, depending on how much you earn. it would also eliminate the carried interest loophole. that's one that some people on wall street have looked at as an advantage. that would be gone under donald trump. but overall, clearly the thrust here is lower taxes net-net. the question is, what's is going to look like once this plan gets put through the meat grinder on capitol hill? even though republicans control both houses of congress, brian, they are going to have to do some negotiating on this. no president gets everything he wants. and remember, republicans on the hill are going to be very concerned about deficits, as well. and so they're going to have to balance a lot of this with some spending cuts. if they can't find those spending cuts, that's going to make an overall deal a lot more tricky. >> so how might potential changes in the tax code impact the way you trade and invest. tim seymour at the smart board,
breaking down the tax cut playbook. >> so it really comes down to two questions. we have been fielding questions about taxes and your portfolio for 2017. how convicted are you in your position? is this a stock i actually feel comfortable carrying into the potential environment of 2017? where you actually have stocks that could be seeing a lower tax rate? so we're in an environment here where folks, if i feel very good about a stock i want to hold, i'm really probably investing independent of what i expect trump's tax plan to be. so let's talk about something that i actually feel a lot of conviction about. because frankly, i won't trade this or overtrade it, based upon whether i think taxes are going down or not. it's the banks. we talked about this and i gave my conviction. i think banks are ultimately trading at a discount due to a regulatory environment that also won't change overnight. my view on banks, it's high conviction. it's, yes, i think that there's a tailwind from reduced regulation, and there's more profitability in the yield curve for them. i actually think these are banks that are trading cheap to their peers, cheap to the s&p.
if i thought banks were actually going to pull back and i wanted to be smart with that trade, i might take a little chip off the table. i don't want to be too cute so investors, if you think about this, if you have a stock, airlines, which have run a long way, i took some profits in the last couple days. i think after a 30% move, i don't care about the tax i implicatio implications. i'll take my 30% now. it's similar to what we talked about with dividend policy. the same thick we talked about. a 5 or 6% dividend stock. if i'm buying it at the highs or structural something is changing, i don't want to buy a stock just for the dividend. i don't want to hold a stock just for the tax policy. >> yeah. tim, i'm not going to make a statement or a question. i'm just going to promo a show at 530 on fridays, "options action"s. and i mean this seriously. your point about conviction is a really, really important one. if your conviction changes, then you sell and don't really worry a heck of a lot about taxes. but if you are actually one of these people who want to hold on to something, but your conviction is actually winning a little bit, what can you do?
maybe collar that stock. that's how mark cuban became a billionnar back in 2000 by selling a call against your long stock and buying a down side put and not paying a heck of a lot for it. that keeps that position -- >> oh what's the risk? >> the risk is that you're giving up up side between the price of the stock where it is right now and the call strike that you sell. i don't want to get too complicated. that's not a particularly complicat complicated strategy. but if you had bought facebook in january and it rallied 50% to its highs and now it's down 14 -- >> exactly. >> good stuff, tim. thank you very much. great option strategy, as well. dan says that one sector is about to break out the new highs for the new year. find out which one when "fast money" returns. who are you? i'm vern, the orange money retirement rabbit from voya. orange money represents the money you put away for retirement. over time, your money could multiply. hello, all of you. get organized at voya.com.
hard to believe it's already time for the "final trade." not tirade, trade. gets go around the horn. pete. >> arthritic stocks beaten far to hard. nike. >> huge run for apparel stocks. ralph lauren more just a story. it's back on track. >> dan. >> yeah, xle and the xop, i think they're going higher. >> xle and xop. guy? >> we got you for two more days and i'm digging that and i know you're digin it too.
"options action"s on friday. it's a fricassee, pete. >> he can't wait. >> cisco holds 30 bucks. giddyup. >> i'm brian sullivan. "fast money" tomorrow "fast mon" "mad money" with jim cramer begins 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 teach, educate, put in perspective. so call me at 1-800-743-cnbc or tweet me @jimcramer. there are wacky bids underneath all over the place, and they're making for far more orderly stock market retreat than you might expect after this rema