tv Fast Money CNBC October 6, 2017 5:00pm-5:30pm EDT
boards please. michael, you go first. what are -- >> bananas >> he's right. chicken wings. mike, you blew it. you had your chance to have won this whole thing and now -- >> it's an engineer tie. >> you're a great sport, thank you very much. >> thank you for watching everything >> i hope you keep kicking butt. >> i love being here at the home of the oligarchy >> we love it too. "fast money" begins right now. >> adami got that one, right "fast money" starts right now, live from the nasdaq market site i'm michelle can a bruceruso-caa
there's one stock that traders are piling into ahead of the event. we'll give you the name. and then later, has the beer bubble finally burst we'll tell you what's taking the buzz out of brews in a very special report first, we'll start with the f.a.n.g. resurgence. facebook, amazon, netflix, google, all surging after a slow month. nasdaq closed at a fresh record high today do you keep buying these stocks? if these names can get going again, just how high can the market go? what explains this we had all this good economic data, in theory rates should have been higher that's usually good for the deep cyclicals. instead, it was good for f.a.n.g.'s >> that's what was per president-electing the fact that the economic news was so good, people were buying f.a.n.g. stocks in the past because that was the only place you could find growth. now in theory you should be able to find growth elsewhere so why are these up?
one reason might be people think the fed is going to stomp on the recovery that seems to be what the market is telling you i don't know whether it's true or not >> there are some very positive notes on the facebooks of the world, the netflixs of the world. netflix raised their prices. you say the setup there is for that stock to continue to move to the upside. i would be buying netflix ahead of earnings. that stock is going to continue to work into earnings. i think they'll have a great quarter. the setup for them at least for the first part of next year is the trajectory is higher i also like facebook >> the most interesting out of that group, tim has made this point, the data suggests that the fed is probably behind the curve, might have to move quicker than anybody wants them to move, which might be somewhat detrimental to the market which might make these -- i don't know what the explanation is. i'm not even certain that my explanation matters. i'll say this, out of the four names that we've just discussed, i think google sets up the most
interesting. we talked about google earlier this week, held a pretty important level for the last a couple of weeks. now it seems to be breaking out to the upside into earnings valuation, it's the most fair, in terms of upside, it has the most upside. >> michelle, welcome, it's great to have you here >> thank you >> we had massive is hm numbers. nobody expected that we had payroll numbers that showed the american worker is starting to make some money. tear wages are the best week over week gain we've seen since 2009 it tells me we're in an environment where first of all the sickcyclicality, google hasn dead in the water until it looked like they started to make a move this week facebook and google, basically the book ends of the f.a.n.g., i don't see the moat around their business as the competitive landscape gets up and going. valuation, we talked about this
yesterday, the ad growth at facebook, despite what's going on out there, they continue on attribution, creativity. they are the ad model. they're growing 40% a year on ads. >> so on netflix, and i've been wrong on this too, because i figured that as they raise prices and as competition came in, it would be a problem for them here's the thing it's at such a price point that i think people just keep it anyway you could raise it a couple of bucks and nobody's going to get rid of netflix it's going to cost them a couple of bucks a year, that's all. >> the margins for netflix, it's like a hockey stick, it goes straight up in the air we're looking at ten bucks for earnings, that's on the low end. it's a $250 stock. in a couple of years, you look at it and say the setup is beautiful right now. i don't think the wheels fall off the truck. >> you have a multiple on it >> of course they do, you're going to see things. they spent a lot on content. they've paid forward for content. they now own the content they're burning cash, raising
prices, growing in europe. you'll see gross margins ramp significantly, starting basically -- >> there was a discussion here, though, about the possibility that interest rates could go up if the fed is behind the curve, if they have to deal with -- the payroll number was good. that's the thing that's going to make the fed more active to what degree, when you get a high multiple stock like netflix, interest rates are deadly for those stocks. >> we talked about the equity risk premium, what price you're going to pay for stocks given a certain level of interest rates. area not at that certain level of interest rates. but moth people i have talked to, this is where consensus matters, 3% on the ten-year is where that starts to take some of off of the stock market you're not willing to pay as high a pe. what we saw today with bugs, they ripped right after the payroll and reversed and closed basically on the lows for the day. that's why people rotated into f.a.n.g. >> they looked at everything
that happened this week and said, interest rates still aren't going up so it's safe to buy these things >> interest rates have gone to 240 for a very short period of time some of that was north korea, and i'm not sure that was appropriate. look at the curve, look at the ten-year over the last five years. we're smack in the middle of the range. this is not going to be easy, folks. again, those ism numbers are indicative or you could attribute to a 4% economy. who things we're going to 4% nobody we're growing at 2%, it's going to be difficult for us to break out of that range. i do think the fed is the biggest risk, i think the fed is behind the curve >> 4% -- >> back up the truck and buy the heck out of this market. i don't think they're going to fumble the ball on this. >> you don't think the fed is going to fumble the ball on this >> i don't >> wow >> i think they're going to be -- the process of normalization is going to be incredibly patient, incredibly slow and sevennsitive.
you listen to europe, they talk about pulling back on pe >> what happens with janet yellen >> i don't think there's expectations that we're going to get somebody in there that's too aggressive >> i think the gentleman they're talking about taking over that spot is a pretty well-documented hawk and i think you could make an argument that a number of reasons led to this move that we're seeing right now, not least of which the next potential fed chairman my pushback on netflix, netflix tried to do this five or six years ago and it failed miserably. >> when they tried to raise prices >> right now, i think they have a stickiness factor. >> since then they've added a lot more value >> they're going to be $535 million in earnings this year. if they take that dollar uptick in pricing they just put through, it's $750 million in earnings it's insane.
they have the leverage and the model to do that that's the part of the equation that people are missing, the leveragibility of that model >> how can you leverage it >> it's flexed the model >> it's not a model that's based on commerce. it's a model that's got some limitation i see saturation in the u.s., i see a lot of competition, content is costing them more and more >> they say they're going to be more subs this year than last year >> you're not worried about disney >> no. >> most of the netflix subscribers i know, they like it because their kids sit there and watch the same thing over and over and over again. >> that's me >> disney is the one product out there that could take all of those people who get it for their kids >> i said it on the show before, if anything, disney will buy netflix at some point in time. >> why does disney needs to own netflix? >> let's be clear. the restructuring of the content they had with disney, when netflix restructured that, don't i think that was done for a reason
netflix is happy that's off the table. it was too costly for them the reality is -- >> what does it get for netflix? >> the platform. >> a lot less money. >> all right >> i don't know. >> don't move, everybody we've got a lot more to talk about here coming up, moments ago elon musk tweeting about what he called production hell for the model 3. stock is taking a hit after hours. we'll bring you the details, next plus no fear anywhere. volatility index hitting historic lows. but that may not be a good thing for the rally. we'll explain. later, a number of big banks gearing up for he mentionearnins we'll give you the details muchor"ft ne sait me asmoy"trgh ahead.
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he says this is the right time to bring in a new cfo to guide ge's ongoing efforts to improve our performance and enhance shareholder value. vice chairs beth comstock and john rice will be retiring at year end the announcements come soon after ge's board elected john flannery as chairman of the company. >> thanks for the rundown, seema. >> general electric could bring thomas edison back to run this place, i say that respectfully to mr. edison. they've missed, they bought things when they should have sold things and they've sold things when they should have bought things. >> but now we've got a new guy >> that's great, but they're fundamentally way behind the curve, in my opinion look at what honeywell has done, look at what general electric has done people say ge is cheap on valuation. i think that valuation gets cheaper. >> we're talking about free cash flow generation that comes from cost savings and that we're going to bottom on essentially
the eps trough in 2018 this is nothing to get excited about. >> correct >> ge has core assets that are in better position than the market is pricing them for remember, this is a turnaround these going to take some time. >> it should be doing well in this environment it has the pieces, parts to do well in this environment it just hasn't >> power and energy. >> next we're
following a developing story on tesla's production woes, the stock taking a hit after hours following this tweet from ceo elon musk. diverting resources to fix model 3 bottlenecks and increase battery production for puerto rico and other affected areas. musk added the company is in, quote, production hell "the wall street journal" says parts are still being produced by hand, away from the assembly line wow. >> elon musk, god bless him, is
tweeting good and bad. he's out there, making statements on the company, gm was throwing some shade in the direction of tesla saying some of their assertions on autonomous are not necessarily -- look. the gm versus tesla story is go we talk about. for people who want to call tesla a tech company only, the delivery story is still a relevant topic >> bottom line, we've seen delays all the time historically from tesla, and it's never dented the sentiment
in the stock. >> in the long run you have short term moves based on these long term delays. i've been a fan of tesla, don't have any position in it, because it appears the market is focused on these production delays to me, tesla is not just a car company. but until the market starts to value it again as not just a car company, you have to be hands on >> call it the amazon affect check out shares of costco
getting crushed today following its earnings report. the cfo talked about the pressure from amazon on the conference call last night >> as relates to, you know, the publicity in the news and the noise around, you know, amazon and whole foods, all we can do is perform when we look at the value proposition, our view is our value proposition got better you know, you read about hope foods having a giant increase in member shops or customer shops that first week. i would hope they do i would expect them to >> are these just online growing pains for the big box retailer anybody buy this stock today everybody is worrying about competing against amazon with delivery >> no. costco, walmart, target, they're all in trouble it's all about scale in this business to get to scale, it's incredibly costly amazon has a lead that is leaps and bounds ahead of these guys they're all playing any sort of investment they're making as catch-up, they're playing defense, trying to make any
smoke and mirror they can to suggest to the street and investors that they're doing the right things to figure out a way to catch amazon's tail they're not going to catch it. they're way too far behind again, scale wins in this game >> did you see express scripts down as well amazon may decide to do pbms as well >> it's clear that jeff bezos wants to eat everybody's lunch he's decided he has a window in time that he can go after multiple different industries. maybe it's because the stock price is up and he has that firepower. but he's coming for you. it's going to be hard to beat. that being said, i don't think walmart has the scale. i would be a buyer of walmart. >> he's like a pacman of margins, where he cease margise he wants to eat them >> at some point the market is going to demand profitability out of this company. they're competing on a number of
levels god bless them, their investments in logistics are paying off in spade. people are over the benefit of the doubt of amazon in terms of their ability to take on these industries >> he's right, they don't have margins now, but it's the one stock that people don't seem to care >> the expense here, the expense side of the equation is massive. to play catch-up if you're a target or a whatever is incredible the cost is incredible you look at the partnership that walmart is doing with google why are they doing that partnership? it goes to show you, if you're smaller than them, you're in super trouble. >> i'm not a big fan of walmart. calling it a tech play because they have a little e-commerce mo mojo, is crazy but to say they're behind amazon -- >> it's totally different. their solution is to have emplo
employees drop them off on the way home from work >> as brian sullivan talks about all the time, amazon is about 10% of the retail market 10%. the other 90% is still brick and mortar stuff >> but it's getting smaller, dude >> i get that it's getting small. to their point, you can fight a war on many fronts at a certain point, you're fighting too many battles on too many fronts and it comes back to haunt you. when do they raise margins when they put everybody out of business and they can make the margins whatever they want to be the pbms are in a lot of trouble if amazon comes knocking ahead, how traders are betting ahead of big bank earnings next week meantime, here's what else is coming up on "fast. >> the only thing we have to fear is fear itself. >> well, maybe not because wall street's so-called fear index just flashed a sell sign we'll tell you what it is and how to protect yourself.
plus "fast money" is hitting the beer garden in search of a cold brew and maybe a hot beer stock. the name when "fast money" returns. this is a power plant. this is tim barckholtz. that's me! this is something he is researching at exxonmobil: using fuel cells to capture carbon emissions at power plants. this is the potential. reducing co2 emissions by up to 90%... while also producing more power. this could be big. energy lives here. your bbut as you get older,ing. it naturally begins to change, causing a lack of sharpness, or even trouble with recall.
money. life is as it should be. why? because thousands are gathered at the annual great american beer festival this weekend however, there is a dark side. the bubble could be bursting let's get to landon dowdy in denver for the details hey, landon. >> reporter: hey, michelle i haven't found the dark side yet. this is the super bowl of the beer industry, the great american beer festival they're ready to get the taps flowing this weekend in fact we're expecting 60,000 people to attend the event it all kicked off last night beer lovers lined up around the below block to taste more than 3500 engineers. >> we have so many different people that are trying their hand at different types of things, bringing a whole new generation into loving beer. >> reporter: and despite the crowds that you see, the beer category is actually struggling, sales are down so far this year. a lot of that has to do with wine and spirits but brewers are adapting,
they're getting creative and innovative that's what we've really seen at the festival >> the consumer wants more flavor, more variety than ever before we're seeing more companies respond. there's more options people are experimenting with brands that change constantly with the season. clearly beer lovers want that experience, they want to connect with brands. ways that you can engage with your lovers rather than just offering them a product. >> reporter: trends haven't been positive, but don't count beer out just yet some did show signs of growth year over year more than 800 brewers here are pouring their beers, a record 5700 breweries nationwide are betting on beer's turnaround it's 5:00 on your show, not here, but i've been working since this morning, time for a little blue moon cheers to you. >> cheers, landon, enjoy that beer >> that was a rough venue.
>> that's really bringing her lunch pail to work didn't ben franklin say beer is proof that god wants us to be happy? >> what beer stock would make you happy? >> inbev is the best run beer company out there. beer has a lot of competition from craft liquor, from spirits, which is growing, from substances, which a lot of people are -- >> are using >> i'll just say that, there's an impact on beer. david writes all about this, writes great stuff at the end of the day, the beer stocks are stretched i would prefer to be in spirits. >> anybody buying a beer stock >> constellation brands, beer margins were up 420 basis points they raised guidance for their beer sales so you can say it's an expensive stock. but all the analysts now raising their price target on stz. >> we raised ours at 243 bucks that's the one that, you know,
we're just referring to. she's amazing, she talks about the trends in the industry shifting when you talk about cannabis, taking away from beer sales. >> in honor of the great american beer festival and final trades, let's get some stock picks that will give your portfolio a buzz >> diaggio, growing spirit sales, they become aspirational. diageo, happy birthday a train >> knenetflix, the quarter comi up is going to be a good quarter, they're going to exceed expectations this stock is going to continue to work long term. >> bk broiler. >> international business machines, ibm, it doesn't stand for business anymore, it's blockchain machines, that's the one i like, ibm. >> really? >> have you ever seen a show -- great to have you here >> oh, it's a pleasure >> did you ever see the show "three's company"? >> jack ritter
>> always having a few cocktails, buzzed, mr. roper that makes me think of roper industries check that out, it's on fire >> that does it for us here on "fast money. catch you back on monday don't move, "options action" starts right after thibrk.s ea t-mobile's unlimited now includes netflix on us. that's right. netflix on us. get 4 unlimited lines for just $40 bucks each. taxes and fees included. and now netflix included.
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we're live at the nasdaq market site. the guys are getting ready behind me. here's what's coming up on the show >> life comes down to a few moments. >> it all comes down to earnings for the banks next week. we'll tell you which stock traders see having the biggest move right now we're the best gm ever >> right now gm shares had their best week in five years. but there's something in the charts that suggests now might be the time to tap the brakes. we'll explain. and -- so just how