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tv   Fast Money  CNBC  May 1, 2017 5:00pm-6:01pm EDT

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talking a re pa tri aation. >> how much of it would they expect to come back? and what plans might they have for it? there's not necessarily a compulsion to bring the cash back, even if they do pass a law. >> apple after the bell tomorrow, up 2% today, some 25% in recent weeks. that does it for the "closing bell" today. "fast money" begins right now. "fast money" starts right now. live from the nasdaq market site overlooking new york city's times square. tonight on fast, financials taking a midday dip after president trump is talking about breaking up the big banks. dick bove said there will be one big clear winner. later, steve grasso one stock he says could be one of the most overlooked stocks in
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tech land. first, we start off with the nasdaq hitting a record high, and tech stocks continue their record run. check out the fab five, all these names either at or near their all-time highs. boasting a combined market cap of more than a $2 trillion. the question is simple here, facebook retail and professional traders alike. if you have fresh money to put to work right now, which one of those names is still a buy? guy? >> valuation you have to go with google, alphabet, whatever they're calling themselves now. that's probably the safest out of them all. if i were to answer the question honestly which is what i typically do, it's tesla. the new slow behind tesla in the last week has been extraordinarily positive. negative news for them doesn't take down the stock. positive news sends it soaring. look for the stock that has the most upside. >> even ahead of earnings. >> yes. >> increasing the gasoline tax,
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that bodes well for des la. guy's been right on this name. it's got a short interest of 26% or somewhere thereabouts. so i think that could keep the wind at its back. consistency si, apple, google. i think apple is the story. you're talking about taxes at this point. so they have a boatload of cash offshore. i think if we get close to the 10% we patriation, i think that creates a little upside vacuum to an otherwise conservative apple. but there's nothing conservative about being up year-to-date. >> is it the reality it doesn't make a difference for a company like apple? they still have cash here that they generate in the united states. 10% tax? who cares? >> it's a great headline. it was the headline today. i get it. i think they've effectively done swaps by doing these $50 billion bond deals. i think investors have already been given back a lot, frankly. a company that could be
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incentivized, when we get back toe-this is a hardware company, not so cheap anymore. it's been anywhere from growing 25% to 30%, that's great. got to mention google. and to me, their numbers were so far better than everyone's relative to what you need to see at this level of valuation. in other words, it's a company trading 22, 23 times. they're giving you that kind of growth. pay clicks was up 41%. this is a company to me that is executing across a few landscapes, and the youtube business and digital ad space, they and facebook are so far ahead. this is how people are executing. >> exactly. look at the time period we're going through. we're going through a disruptive time. and those five names, maybe not so much apple anymore, but they're all disrupt es. google disrupting media. you look at tesla, disrupting cars.
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actually, disrupting the whole electric grid. if i had to pick one name, fresh cash to put to work, i would put it in tesla. in the long run i think that's where you'll get the biggest bang for your buck. on apple, you better hope the services are going to increase. after the ocho comes out, the iphone 8 or whatever they're going to call it, there's not much left again. we're in the refresh cycle. they better have good services. >> challenging time for me as tesla is like 100 bucks in my face. to feel the most comfortable, it seems crazy to me that tesla is the one. especially it's a trillion dollar idea with a trillion dollars worth of risk and execution across four, five different platforms. i'm not even going to get into the fundamental story. but in that rally -- >> first of all, you can't, obviously, not pie tesla on fundamentals. it's just not there. this, again, i'll go back to the more of a venture capital type of thing. bet on the big theme that the
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electric grid in the u.s. is going to be decarbonized. we're no longer going to use oil or coal, despite what the president thinks. >> you're buying elon musk and a vision. >> exactly. >> buying on the chart? >> exactly? if you're not using coal, it's all sol ar? >> that's it. >> i don't think it's happening next year, but that's the bet you're making. you're betting on more than a car company, that will grow into a disrupt of force. elon musk is a steve jobs-like character. you had a bet the iphone was going to be revolutionary. that's the bet you're make on tesla right now. >> based on what? >> elon musk, what brian just talked about, the fact that they're getting headlines now potentially moving into china. all things that are extraordinarily positive. the thing that i take away and i've said it for a while is, i don't think the institutions that own this stock in earnest will sell it here $100 down side from here. if they sell it, and trading
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$80, not $280, that might not make sense. but they have bought into the story, like bflt k. has, this stock is one -- i don't know who the inkr emental seller is. >> for this conversation, we're talking about the fab five stocks. isn't that true for all of them? there probably won't be too many incremental sellers. >> here's my understanding of how something like amazon is trading. if you talk to core internet players, i think it's the crossover guys keeping the stocks at valuations that are -- i think much higher than they probably should be in the case of amazon and tesla. you get to a place here where if you have positioning in the market right now, the market is moving higher, think about the capacity that big funds and hedge funds can put in these names. they're massive market caps. >> passive versus active management, there's a lot of money that's being put
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through -- exactly, through etfs. that keeps the bid to the monster mega cap powerhouses that are -- >> until it doesn't. >> well, no, it goes the same way. to tim "point, if the market turns around, these guys get hit. >> google, we saw it after the election, it was used as an atm machine. people used it to cut their position down and get into financials. i'm not sure google is necessarily bulletproof. but i think in this environment if you get a dip on some atm type of event, google is the one to get into. >> joining us now, chief u.s. equity strategist at citi. >> if all you're doing is performance chasing, you know, going with the price momentum and never sitting back for a second, and think about if the economy is gathering some steam, rates are going up. growth stocks said to be hit. tech is the single largest component of the growth index.
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let's go even beyond that. if you look at tech relative to energy, for example, just on a performance basis, you're almost at levels in terms of the energy underperformance to tech that you saw in the bubble back in '99. you're not quite there, but almost there. that's kind of where the concern is. it's not fundamental. we track over 730 companies, capital spending trends, 16.5% in capital spending about i tech. they're the biggest buyers of tech. >> so that happened, then you revert? >> well, you worry about if the economy is growing, one of the reasons people buy tech, think of it this way, it's cyclical and it's growth. i don't even have to make that aggressive bet either way. >> why is energy an alarm bell for you? >> i'm just using it for an example. you used the comment of taking somebody out as an atm. so everybody decides their financials look a lot more interesting because rates are moving up, because ten-year
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yields are moving higher, the curve steepens. they've got to get it from somewhere. you love to see it coming in from other places. in other words, all of a sudden everybody fell in love with stocks. that's just not happening yet. >> the 16.5% capital spending growth you just flagged, where is that historically in terms -- in other words, do they increase towards the end of a cycle, or is it more towards the middle or hard to say? >> i think it's hard to say. what are the hottest areas in tech? cybersecurity, cloud, things like that. the last couple of years it wasn't like saying, okay, we won't invest in our cybersecurity, we'll do it next year and in the meantime we get hacked. it was nondiscretionary tech spending. it's less about product cycles and sustaining your ability to compete in today's market. >> so you mentioned rates and how that might impact tech. is there a level on the ten-year that investors should be watching out for? 3.5% where all of a sudden that
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could trigger a sell-off? >> if yields move higher, they're inversely related. the bigger question, which is more profound than just tech is, at what level do you worry about the general market? i would say you can get up to 3.25%, 3.5% just being offset with stream comes down if people believe in the reflation of the economy. you can probably get it in the second quarter, strength in the gdp numbers, you're coming off such a low base. so we do like the reflection trade. financials, we like energy. we like consumer discretionary, you've got to be a little careful. there are potential minefields. media looks good. consumer services. and industrials, particularly capital goods. you've got business improvement really happening. i did this for many years as an industrials analyst. all the lead indicators, out of duke university for capital spending, the senior loan officer survey for commercial and industrial lending, all of
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them are indicating a much better trend. even the ism trends you should be seeing higher industrial activities. you don't have to be a rocket scientist. >> tobias, thank you for stopping by. >> thank you. >> what's interesting about what tobias is saying, he's talking about positioning, also talking about some kind of reverse in the main trade. you can make an argument if you look at the global allocations which people think are way overdone, they're nowhere relative where they were historically. you've taken out the entire golden able of emerging markets. now here you are. if there's growth, all those things he said will come true. it's not an even trade. you've got to be in it for a longer haul. >> you have industrials, xlis, etf, and you've seen those year-to-date rally 7% already. is that front loaded to what was perceived to be future growth? and is energy the leading
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indicator right now, and maybe the market follows energy down instead of inversing and starting to rally? >> why would energy be going down? i think we know the answer. >> well, it's oversupplied. >> i also think that maybe that's too easy for us to say it's just oversupplied. maybe it's hinting at something as far as global growth. >> but demand is not going down. demand especially in the oecds is stagnating a little bit when you get into the developing world, demand 2%, 3% a year. india is crushing it. to me, that oil is moving lower. i think we keep trying to paint the oil trade as being some kind of negative harbinger for a market that we're missing something. >> i definitely have been saying it's been oversupplied. i think maybe that's too easy at this point. maybe it's just indicative of something future that's coming down. we're always looking down the wrong way and the train hits us from behind. maybe the s&p follows down that crude train. >> if you like technology overall as a sector, do you then have to like industrials and the other cyclical trades?
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>> well, i understand what he's saying. it would make sense. i think you can like industrials and not necessarily like technology. i like industrials here. i think industrials ex-caterpillar make a lot of sense. honeywell, down today. but just a percent or so off the all-time highs. i think the valuation in caterpillar is ridiculous. i think the valuation in honeywell is still attractive. >> i still think you can buy it. ben bernanke taking on president trump when it comes to the state of the economy under his administration flgt the comments that raised a lot of eyebrows this morning on cnbc. president trump said he is considering breaking up the banks. and if that does happen, top analyst dick bove said it will be a big boon for one stock in particular. steve grasso greering up to pitch his favorite stock. 40% in 2017 already.
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might have a bump because of the increased demand and consumer spending. >> over 3%? >> probably not. i would take the under on that. >> that was former federal reserve chairman ben bernanke on "squawk box" this morning. sounding very skeptical about trump's promise with the tax cuts on the way. will trump's tax plan be enough to p cause growth? >> i'm on trump's side if he can get any of these policies through. if you get the tax cuts through, and depending on what rates that we see, how much demand that actually spurs, or do we see an infrastructure plan. it's got to hinge on those two things. because i think the 3-2-4% gdp that was stipulated by trump's camp was on the -- with the premise of those two things actually happening. >> okay. by the way, you'll be happy to now that i refer to it as the grasso gdp growth rate.
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>> thank you. >> but to get either of these two things over your scenario, i appreciate the caution there. either way, that is not stuff that happens in 2017. we had trend growth looking okay. second quarter 4.3%, giving you grasso-like numbers. i don't see how any of this policy -- >> i think it's probably going to be loaded. the stuff that's needed with an infrastructure plan has to be bought earlier. those orders put in earlier. i think paid for earlier. to the stest it's pushed off, i hear you. it's not going to be a tomorrow thing. but i do believe it comes sooner than we all think it's possible. >> yeah, maybe, maybe 2018. i think it's going to be difficult to get to the 4%. the one thing i would say about the leaned fed, the survey comes out and it's been high in the beginning all the time. i think the last quarter came out in the 3.7%. it tends to decline. so we're in an economy that's 2, 2.5% growth. you might get a tiny little bump
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from the tax cut. about you without a comprehensive plan, it will be difficult to get there. >> bernanke or trump? >> i can't stand bernanke. >> oh, come on. >> oh, he'll go down as one of the biggest ville lanes of 2016. >> we'll be able to exit monetary policy that we've been in. >> you know, this is what i think. i think anything that president trump pushes through is far more market friendly than economy friendly. i don't know if that makes sense. i don't think it necessarily means gdp will go higher. i definitely think it makes the market go higher. >> the choice of two names you big bernanke as the biggest villain of all-time. >> i wasn't comparing the two in the villain category. >> they're smart enough to know history and not repeat history. now, the big debate is, did they stay at the party too long. but guess what, we've been
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saying on this desk, it's interesting we're having a conversation where we're hemming and hawing over 2.5, maybe 3, most people say this place was falling apart a year ago. the economy has taken a lot of time to eradicate a credit cancer that ripped through the entire world. i don't think he's a bad guy. i think actually he did a great job. >> casinos up today, after another rise in the gaming revenue with april marking the third straight month of double-digit gains. mgm resorts up 7% year-to-date. wynn, an astounding 46%. do you keep gambling on casino stocks? gambling? is that too much? >> quick witted there. >> april, gaming revenue up 16%. tim talked about the favorable trends there. to answer your question, yes, you do. i still think wynn is the best one out of the lot.
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you could argue it's a tad more expensive than it should be. i think it trades at 23 times forward earnings give or take. this is a stock that to me now has the wind at its back in a meaningful way, and breaking out to the upside in a meaningful way. i think out of all the names, you just mentioned, wynn still works. >> like the pmi report we got overnight which is lower growth than expected? and you think, oh, this will catch up with the sector? >> no. >> why? >> pmi growth in china does not equate to consumption. china is winning the consumption war. we want to see actually tpi go up because they stopped production on a lot of stuff. i think the sloppy big brother tactics are necessary. i think they have control of their current account because they never lost control of their current account. to me, back to melco, the pure play there. >> you're back in? >> i am back in.
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this isn't a question of when things are actually significantly better. >> melcro is the leader. up 52% year-to-date. that is definitely pure play as tim said. but if you get that re version trade, then you look at mgm. so if you're looking for that little slip and slide type of trade where it's overdone, you go mgm. >> if you listen to any of the casino conference calls, they were all very positive on china. steve wynn put his money where his mouth is. >> check out shares of amd, tanking after hours, stock up nearly 300% in the past year. is this the end of the big run. here's what else is coming up on fast. tom says he's considering breaking up the banks. and if that happens, dick bove
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says there could be one big winner. he'll explain. plus, steve grasso is bringing the heat. serving up what he says could be the most overlooked tech stock in the s&p. and he'll give us the fast pitch when "fast money" returns. listen up, heart disease. you too, unnecessary er visits. and hey, unmanaged depression, don't get too comfortable. we're talking to you, cost inefficiencies and data without insights. and fragmented care- stop getting in the way of patient recovery and pay attention. every single one of you is on our list. for those who won't rest until the world is healthier, neither will we. optum. how well gets done. we've done well in life, with help from our advisor, we made it through many market swings. sure we could travel, take it easy... but we've never been the type to just sit back...
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to be a nightmare! does nobody like the future? c'mon, the future. he obviously doesn't know intel is helping power autonomous cars and the 5g network they connect to. with this, won't happen in the future.
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welcome back to fast money. we're live at the nasdaq market site. the nasdaq closing at a record as amazon, apple and facebook surged to all-time highs. the dow closed slightly lower. here's what's coming up in the second half of the show. advanced micro tanking 8% in the after-hours session. one of the hottest stocks in the last year. could the run be done. we'll explain. later, the one tech stock that
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steve grasso here is calling a screaming buy into earnings. it's not apple or facebook. he'll deliver his fast pitch. a developing story as president trump's latest comments have some people feeling very nervous. john? >> reporter: well, melissa, for the most part since he's become president, donald trump has assured banks and world of finance, and did that again today to community bankers today. take a listen. >> i have taken action to roll back burdensome rel lagss that undermine community banks, especially, i know you're going to be very disappointed with this, dodd/frank. it's out of control. by the way, not only for community banks, for banks period. >> reporter: now, the president also, though, made some remarks to bloomberg about the possibility of a new glass sieg siegel. that generated a real glur ri of
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attention. sean spicer tried to put the brakes on it in his speech this afternoon. >> he mentioned it before, this idea of a 21st century glass siegel. we're not ready to roll out details of that yet. >> reporter: as much turbulence of that caused, sean's signal they're not ready to roll anything out ought to give people an excuse to exhale and not to take it too seriously. we also had a comment today from jamie dimon of jpmorgan who said donald trump's economic agenda is spot-on right. we will see if jamie dimon feels that way, if they actually do introduce a 21st century glass seagal. >> thank you, john. the interday reaction to financials was there. take a look at the chart and you saw the reaction, the s&p financials, it felt sort of like algorithmic trading. we bounced right back. >> like you read the headline,
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saw it come in. you know the spin. if you break them up, maybe they're worth more, some of the parts issue. who knows what the true play is here. the regionals probably shouldn't be hurt as much by that. maybe the kre regional banking index. xlf, treat as suspect at this point. even if you remove all regulation, you go back pre-crisis, trading at $33, now it's trading at $34. >> you have to compete with much bigger players. but glass/steagall was repealed in 1999. that to me is everything, where this administration wants to get back to. you know, effectively a place where you let banks be free to innovate and there's a lot of buzz words. some are good, some are bad. there are a lot of people who think glass/steagall's repeal was essentially the leadup to the 2008 financial crisis. i'm not going to opine on that, but to say this administration
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would seek to recreate a glass/steagall light, i don't think there would be any way they would do that. >> you have the treasury secretary, the national economic visor, what does this do for goldman sachs? >> it's positive for goldman sachs. in general, actually, i think it will be relatively positive for the banks. think about it, you have a president who is going to do nothing to hurt the financial system or stock market. he said the stock market is my scorecard. no matter what, if he does some kind of glass/steagall-like, whatever you want to call it, it's going to be presented in a way that the banks really aren't that hurt. if you get another dip like that, you boo i it. >> if the banks ever do break up, our next guest says one name will emerge the big winner, goldman sachs. dick, why goldman aside from two cabinet members who are ex-goldman sachs guys? >> well, i think very clearly that if you take a look at the
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structure of each one of the large banks in the united states, you can see that goldman sachs does not have a traditional banking business. in other words, you have morgan stanley that has gone into traditional banking. you have clearly major capital market positions in jpmorgan, bank of america. you know, citigroup. even wells fargo. so if you were to break up the banks, the only bank that would be untouched, completely untouched would be goldman sachs. therefore, goldman sachs would see all of its competitors, you know, put in a position where it would take years for them to work out what their new business models should be. in that point in time, goldman sachs would be increasing market share. >> overall, though, dick, you see that the banking sec tore, you say it's in pain. why is that? >> you know, because if you take a clear look at the first quarter, you'll see very clearly that the product that banks sell is not interest rates. the products that bank sell is loans. if banks don't sell loans, they
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don't make money. in the first quarter, you saw a decline in commercial industrial loans. you saw weakness in residential mortgages. you saw clear problems in auto loans. you saw problems showing up in credit card loans. it was virtually no category of loans, other than commercial real estate, that went up. they went flat to down. so the net effect is, these companies not only are dealing with the fact they weren't selling their primary product, but they were getting recalls. in other words, loan losses were increasing. loan losses are going to skyrocket in the automobile sector. they've already started moving up. loan losses are going up in credit cards. loan losses are going up in virtually all personal loan categories. mortgages are not expanding, because as interest rates go up, the refinance market dies. so, you know, you've got this theory that just because interest rates might go up, that they should be some increase in bank earnings which is a joke. it's a joke because basically
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the margins of the banks in total may not have gone up at all in the first quarter. citi bank's margins went down. wells fargo couldn't even increase its margins. the whole theory that interest rates drive earnings is fallacious. >> i think capital market trends are fantastic. this may be playing to your goldman point. when i look at the return of these banks, jpmorgan essentially about 13% return on tangible equity, this is above trend growth. this is a guy -- a bank and a firm and institution that's never been more efficient. never more positioned for operational leverage at a time when the fed will be raising rates. the yield curve doesn't need to steepen. net interest margins improved in the last couple quarters because they're raising rates. but think about the world these guys exist in now, i think it's
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a pretty exciting time. >> margins did not increase across the board. >> what did? >> the increase in interest rates drives down the value of the assets in these companies. 92% of their balance sheets are made up of financial assets. interest rates go up, the value of financial assets go down. the value of financial assets go down, common equity goes down. that goes down and then the future growth rate of the company goes down. if the future growth rate of the company is going down, when interest rates are going up, the present value of the business has gone down. now you listen to people say, if interest rates would only go higher, i would love to buy these stocks, because the value of the business is going down, but the stock should increase in value. makes no sense. first off, second off, the whole theory that there is some link between bank earnings and flatness, or the steepness of the yield curve, is totally ignoring the facts. in other words, from 1966 to
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1982, you had 47% of the time when the yield curve was inverted. in every one of those years, bank earnings went up. from 2010 to 2016, you had the lowest interest rates in the history of the united states. and bank earnings went up in every one of those years. and they hit all-time records in 2014, '15 and '16. so why do people care about interest rates. it's what these companies sell. >> dick, last question here. given all of what you've said, are bank stocks a sell right now? >> we've said that you're not going to make money on bank stops between march and october. i still believe you're not. you haven't. these stocks have not come back to where they were at the end of february and early march. they're sitting flat. no one's making money in them. people are still melting off of interest rates and forgetting the fact they're not making money in these stocks. >> don't own them between march
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and october, and what happens in october? >> in october, hopefully, we'll get some movement out of the government, which would suggest that we will get some type of fiscal stimulus, or some tax cut or some change in regulations. none of which has happened to this point. if you listen to what the bank management said over the last ten days, they're telling you that the economy is in freeze, because no companies -- every company is out there saying, this is going to be wonderful, this is going to be great. then you ask them the question, are you going to do anything now? the answer is no. we're not going to borrow money, we're not going to expand, we're not going to do anything because we don't know what's going to happen. maybe by october we'll know what's going to happen. >> dick, thank you for joining us. always good to see you. >> thank you. >> dick bove, capital markets. do you agree with dick? >> he makes a lot of great points. there's been underperformance since effectively early january, give or take. he's spot-on. october, don't know if it's out
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to october. but i'll say this, valuations are still compelling. even if president trump were to get a quarter of the stuff he wants to ratchet through, i think it's supportive for banks. >> you made the point earlier he might do something that may not be good for the economy but good for the stock market. the same thing's happening in the banks. dick is 100% right in terms of whether or not interest rates matter to them. but as long as everybody believes in this environment that it's going to get better, you can get a rally in the financials. >> first of all, the fed funds rate has gone up twice in the last four months. that's very good for banks. i don't know what we're talking about. loans and a lot of floating note debt is pegged to this. a lot of households felt that. >> the other side of that is the assets that they hold, the value of the assets are going down, that's what dick's saying. >> i understand that. but look at the commercial and consumer loan books are up 11%, 12% year-year. there's nothing wrong with these businesses. they're doing very well. >> the part about the loans going delinquent, every area
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kind of student loans, freezing. that is a leading indicator, that concerns me. we had a discussion at the top of the show about 3%, 4% gdp growth. if that trend continues, we won't get anywhere near 3% to 4%. >> how can you explain jpmorgan has never been more profitable? >> those are the business these guys are in. we've got to look at the whole thing. jpmorgan's numbers to me were impeccable. they hit it across all levels. long growth was good. we all know commercial growth was down. there are probably seasonal effects for that. but i think the banks are as well positioned, if all the things we're talking about how policy is at least positioning, with an administration that will take the levers off of banks, or the shackles off of them -- >> that's not -- >> how can we say they're poorly positioned. if the economy is growing -- >> the banks are going higher, really simple. >> we all agree the regional index or regional banking segment is probably where you see the most bang for your buck
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if we're looking at regulation. dick bove is not often negative on banks. i can only remember this time. truly, i don't remember him being negative on banks very often. but cit group is the number one holding in the index, up a little over 8% year-to-date. >> all right. still ahead, apple shares hitting a fresh all-time high ahead of the earnings report tomorrow afternoon. the stock has added more than $160 billion in market cap this year alone. something happened in the market today. that suggests there could be more gains to come. we'll explain. not just apple, there's another tech stock reporting this week that grasso said could be a major home run for investors. will the other traders agree? what's grasso doing? he's warming up for his fast pitch. things are headed.nowing whe because as we live longer... and markets continue to rise and fall... predictable is one thing you need in retirement to help protect what you've earned and ensure it lasts.
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welcome back to "fast money." time for the fast pitch where we have one of the traders vote on whether they're buying or selling that pick. >> square, a big fan of this. i've spoken about it on air. i think the ride still has some innings left, still has a lot more going for it. than what we've already seen.
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what we've already seen is pretty impressive. let's look at it. it's got a niche market that it created, i might add, in the microbusiness of america. microbusinesses make up 92% of all businesses in the usa. exponential growth from here. we've seen 30% payment processing growth year over year. they're coming out with earnings this week, hopefully you get another print just like this. we've already seen the value, $50 billion, with a b, dollars worth of payments in 2016. let's take a look at the chart. so if we look at -- we know the fundamentals behind it. if we look at what the stock has done, it's up 36% year-to-date. i've caught roughly 30% of that ride. i do believe that this stock can move drastically higher from here. let's call it another 30% from here, having a banner year. because they have that much growth ahead of them.
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it's in the services part of the business that no one is accounting for just yet. >> who's got a question for steve grasso? >> i do. >> i do. >> oh. >> steve, i have to say right now, i like the story a lot. i'm long the stock. but i'm very concerned about the valuation. we goat to a place here where it's a problem about the down margins. what is the proper valuation of this stage of their cycle? >> i don't think you could slap a valuation on it. it's considered a growth stock for good reason. year's seeing the exponential growth, and you'll see future growth. you're not looking at it as a pure payment processor. they're doling out to a third party, lending of loans based on their algorithm. what i mean by that, if you're a small microbusiness owner and you're hitting your oms, your owner management system, they have a track record of how successful you've been. they know you're going to be able to pay back those loans. so at that point it's for risk-free, almost, loan. you can't put a number on it. >> so, steve, i'm curious about
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that algorithm. it concerns me. because the major banks are seeing loan losses increase. we've just had dick bove on talking about that. i can't imagine that the basic banks have the loan ability to look at delinquencies any worse than square. is square really that much better and does it concern you that there are delinquencies out there? >> i do believe their algorithm is that much better, b.k. when you go into a bank and apply for a loan, you bring that paperwork. and we know unfortunately you could make that paperwork sort of say or appear a lot better than it really is. you can't lie about sales with your computer. if you are a coffee shop, or you're a widget shop, saying that you're making for the last two or three months this amount of sales, they're getting paid on that transaction cost as well. so they know exactly what you can pay. as soon as you take their money, they're taking a percent of each sale from that point. >> time to vote.
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here's the question. buying or selling grasso's pitch on square? guy adami? >> hughey lewis is a fan of the show. he sings a song it's hip to be square. spot-on with this one. outside of apple trying to disenfranchise these guys and gals, i think square goes higher. >> b.k.? >> for me, i agree with steven. especially if you can get the small business tax breaks that you're talking about. this is their sweet spot. >> tim? >> i'm not sure it's hip to quote huey lewis, but i would stay long in the stock. anywhere above 15, i think the stock goes higher. >> the traders have spoken. now it is your turn out there, did grasso bring enough heat to convince you to buy square into earnings? vote in our twitter poll. we'll reveal the answer later on in the show. plus, apple's world we're living in. the stock surging nearly 30% this year.
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gaining more than $160 billion in market cap. can the incredible run continue after earnings tomorrow? our traders will weigh in. you're watching "fast money" on cnbc, first in business worldwide. worldwide. you do all this research
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welcome back to "fast money." we've got an earnings alert, falling more than 9% in the after-hours. let's get to dom chu in the newsroom. >> like flipping a coin and having it land on its edge, the revenue numbers came in line with estimates. and the current quarter revenue guidance was better than expectations as well. so the move lower in the shares after-hours is kind of what happened with intel, which reported results from its data center unit that didn't meet some analysts' estimates. in amd's case, the unit that makes chips in servers and gaming consoles, that's where sales came in lower than estimated. i stepped away from the conference call here. lisa sue said she's happy with the pc chips. the stock had more than tripled in the last 12 months or so. expectations were high going into the report. they're still putting a lot of
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emphasis on the desktop chip. >> dominic chu at headquarters. guy, what do you make? >> they got it higher for the second quarter. not the full year. if they gave decent guidance for the full year, the stock would be at least unchanged, not yunward. i see why people might want to downgrade the stock. you have to take a little bit of leap of faith for amd here. i'm willing to take that risk. >> i think it's always a little bit weird when they don't raise it accordingly for the full year. >> i'll tell you what, it might take a little bit for this to work itself out for that exact reason. it will be a show-me, prove it to me stock. as long as it holds above $12, i think you're okay getting in about that level, maybe give it 10 more krepts. but i think you're okay there. >> apple reporting earnings after the bell tomorrow. we break down all the action. hey, mike. >> hi there. we saw about two times the
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average daily call volume in apple. over 400,000 call options, trading the most opening activity within the weekly 150 calls, over 22 1/2 thousand traded just over a clar. the historical move is about 8.4%. that actually would represent a $26 billion swing in market cap. given where it is right now, if it does rise by that amount, the market cap tomorrow could be as high as $795 billion. just less than 1% from $800 billion. that's a pretty big market cap swing we're expecting in apple. >> what are with eworried about, if anything, out of apple's release, into the earnings-the past two months? >> i think ultimately it gets about the guidance, and where they are on the product cycle. to me, the risk is actually to the down side in the stock. i strive for consistency on this show. my view on this stock has been for the last 30 bucks that i think apple is a fantastic
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company. but i'm waiting for the next couple of quarters. these are not the quarters that excite me. the quarters are late fall into the end of january. >> these particular quarters going into a new launch, you always see drawdowns in terms of inventory, and sales, because people are waiting to buy the new phone instead. >> right. the biggest concern you would have, is there any hint whatsoever that the phone is delayed. there was chatter a couple of weeks ago that that might be happening. >> overnight there was more. >> right. so you need to be concerned about that. that would be the biggest thing coming out tomorrow. >> iphone shipments and average sel selling price, they crushed it last quarter. >> i think you nailed it, up 26% year-to-date, it could be preloaded performance. we really started this ramp up when you had samsung ramp down with the exploding phones issue. not that it was based solely on that, but that was the -- that was what instigated this whole move higher. >> mike, thank you for the
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action. check out the full show on friday, 5:30 eastern time. did grasso have what it takes to convince you to bet on square ahead of earnings? there's still time to vote in our twitter poll. go to cnbc "fast money." stay tuned. hey gary, what are you doing? oh hey john, i'm connecting our brains so we can share our amazing trading knowledge. that's a great idea, but why don't you just go to thinkorswim's chat rooms where you can share strategies, ideas, even actual trades with market professionals and thousands of other traders? i know. your brain told my brain before you told my face. mmm, blueberry? tap into the knowledge of other traders on thinkorswim. only at td ameritrade. the power of innovative thinking. the power of 100 of the world's top companies. the power of an etf.
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welcome back to "fast money." the traders unanimously gave steve grasso a buy for square. but what did you guys on twitter say? it was close, but 54% of you said no. >> oh! >> i don't care. >> seller of grasso's pitch. >> i'm up 30%. they're all idiots. >> oh! >> that wasn't very gracious, grasso. >> time for the final trade. tim seymour. >> breaking out, malaysia ewm. that's right. the currency is dirt cheap. and emerging markets are now taking the next leg. >> malaysia. wow. b.k.? >> most of you are not idiots. buy the walmart. >> grasso? >> it would be weird if i didn't say square. my best idea ten minutes ago, and it would be weird if i -- >> yeah. >> square.
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>> unbreak my heart. they're going to play it louder and louder. >> twtr will get it for you. >> i'm melissa lee. see you back here tomorrow at 5:00. 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, and of course welcome to cramerica's west coast outmepost at cnbc station. call me at

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