tv Fast Money CNBC November 30, 2017 5:00pm-6:00pm EST
the tree wasn't the only thing lit today. the dow surging more than 300 points, cross that go key 24,000 level. the s&p and russell also closing at record highs. and it all began with hopes of tax reform as the senate seems to be on the fast track to passing its tax cut bill within the next 24 hours. in fact let's go right to washington, d.c. on capitol hill our ylan mui is standing by live with the very latest details ylan >> reporter: scott, the tax bill is gaining momentum in the senate it got a big boost when senator john mccain said that he will back the tax reform bill he put out a statement saying that even though this legislation is not perfect, he does believe it will provide relief to american families. however, in just about the past two hours or so there was a new wrench in republicans' plans
when the jct, the joint committee on taxation, released a dynamic estimate of how much growth they expect this tax plan to generate. and it's a lot less than republicans were hoping for. the jct estimating the tax plan would generate $407 billion in additional revenue over the next decade and that is not enough to cover the $1.4 trillion cost of this tax plan. the senate finance committee putting out a statement saying that this analysis is curious and deserves further scrutiny and they emphasized that the final version of the tax bill is not yet complete it is still being hammered out on the senate floor. another important thing to note is that the jct assumed a very aggressive response by the federal reserve to a strengthening economy. that is also very different from what we have been hearing from jay powell and janet yellen over the next few days. so even if you discount that, however, there is no way,
according to the jct's analysis, that the republican tax plan will pay for itself. back over to you, scott. >> ylan mui, thanks so much with the latest in washington, d.c. the trump trade is reborn, that's what the harps mean. financials, small caps surging, all the same groups that were high after the election are being bought hard again. >> scott, great to have you, thanks for coming in for mel, i hope she's enjoying herself. the short answer is it never went away. we'll talk about the financials. tim, karen, david have all been bullish. let me explain why i continue to be bullish in financials goldman sachs, for example the height of the financial crisis, banks were trading 2 1/2, almost three times price to book i would submit we won't get back to all time highs but 1.8 times
price to book is not unreasonable in the environment we currently find ourselves in what does that mean for goldman sachs? a stock with a book value at 190 gets you to a $340 stock >> when you ask yourself questions, i don't have to do anything >> you have to see when he stumps himself sometimes >> i agree with guy and i think the one thing that's important, the theme we've been watching, the whole rotation people have been talking about, out of technology into some of these more value trades. i think the incremental dollar goes to value. we talk about that on the desk all the time we talked about it this week incremental dollars go to value names. you can make the argument, guy made it very well, these are more value oriented names. i don't believe you'll have core holders of these names selling stocks and liquidating >> you're not a full believer in this rotation that started to
take hold over the last couple of days? because there was not much of a bounceback today in tech at all. >> not talat all the new dollar coming in is not being allocated to tech right now. i can tell me you right now, when you look at a facebook growing earnings, they're going to grow earnings 70% this year, next year 30%. there's no reason to take your foot off the gas every technology specialist knows that >> the comps get difficult for these companies in the next quarters at least where valuations are at least i think somewhat challenging, then you get back to retail and financials and even the transports. again, guy and i talk about this all the time with the airlines delta is priced in a recessionary economy at nine to ten times earnings and that's just not appropriate in this environment. we've had these bouts, three or four of these allocation bouts the xrt, the three major etfs
trading in those sectors, they're all trading at momentum. we'll have rich ross on in a second these etfs actually look a little overbought here, i don't think you need to jump in tomorrow >> on that note, karen, does that market make you want to buy object beware? an icon on with me at halftime today used the word "euphoria. >> it's worked, but i think it's in a frenzy in the last few days, right? so i don't want to sell but i'm going to take some money off the table, sell some calls in jpmorgan >> which in its own right is up 7% in the last couple of days. >> and that's jpmorgan, it's enormous it's not cheap anymore it's getting expensive the yield which used to be great because the stock was a lot cheaper, 2% now. and it trades in a not inexpensive price, as it should, it deserves that however i think this run is too far. i think the exodus out of
technology is overdone as well i think we'll see a bounce there. >> here's one of the things with financials, and i agree with everything you said, maybe a little overbought. people will look now to a ten-year chart on the financials look at the xlf. mid-2007, we were around $27.50 right now, we're within 10% of the all-time highs are these better balance sheets, companies that are better exposed to the economy than ever we've got a housing market that's not really priced into these banks. people talk about the yield curve, we try to push back on that fed hikes in the next year, or at least the next 15 months, is very, very good for these banks. when you're looking around for value or places to look for relative value to what's moved, financials are still pretty good right now. again, these are big companies jpmorgan's $360 billion. we talked about the market caps and the tech sector. >> unless this is rotation that's one big head fake and people will sell some of these
so-called trump trades and go right back, as karen said, to buying thetried and true, you dance with who wrung you and it's technology. >> that's a great point. i think you're 100% right. the question is what's the theme into year end, right and what's the theme startin next year. i think the regional banks are going to outperform, you know, other pockets of the market on a relative basis i look at tech and say, again, i don't see incremental sellers there blasting out of positions, corps ho core holders i see buyers putting -- >> other names in the last couple of days, some of them got a tiny bounce, not all you have some names at the top of your big run list, nvidias, microns, things like that which got obliterated this week. >> you look at the say -- and right, buyers will step aside. but there's no reason to take your foot off the accelerator of
things that are working. and every institutional account in the country understands that the theme now. the winners are going to continue to win and the losers will be underperformers period let's go off the charts with rich ross of evercore isi. >> thank you, scott, very much i'm a buyer of the breakout in banks. the pullback in tech and the resurgence in the trump trade. let's start with the transports. this is a multiyear base of support. so when we talk about the potential for euphoria, i don't know how you can have euphoria when four years ago, we were at 9,000 and today we're at 10 five so four years, gone up 15% that's not euphoria, that's a multiyear based breakout we've taken out this line of resistance here. and mother-in-limportantly, letk to november 7th, the day before the election last year we break out in the transports and we lead the market higher.
into year end, history repeats itself transports are a great place to start. small cap stocks have been similarly resurgent. once again, very similar to the transports, big multiyear base of support you can see this breakout here in textbook fashion. so the small cap stocks really coming up big lately, up 9% off recent lows. that trend continues by those small cap stocks finally, the banks, the financials we talk about, the xlf just passes the s&p on a year to date basis we're a little bit more, 18.5 percentage verse 18.3 for the s&p. that's what we like to see you can see sort of this ascending wedge here you want to buy those financials here's a great one for you, you know the name, this is bank of america. we'll look really long term here bac, you know i don't speak spanish but i'm amazed what's gone on in bank of america you break below it, it sets the stage for the financial crisis pretty good sell signal there.
what's happened today? we break back above it for the second time in its history i'm buying that big multiyear breakout once again, you can see this ascending triangle, massive multiyear. bank of america is great way to play it. so the trump trade is back buy the breakout, scott. >> come back over here, rich >> usually we take a vote. is that how you play >> no, i have that power i hear you making the case that this is rational exuberance, not irrational >> i think so. bitcoin, as we all know, is the poster child for exuberance. it's making people think that the gains we've seen in the stock market are i willustrativf euphoria when we see gains of 20 points on the s&p, we think it's euphoria it's not, for those of us who have been around the last few cycles >> do you guys agree with that >> the transports, to me that
looks like there's a lot of -- it's far from euphoric >> i would agree and the airlines have held that trade back, as we know, the xal up 4% to date. you look at your truckers, your rails, your low where i say particulars, fedex, et cetera, xpo., those have been uniquely strong it's telling you that the synchronized global recovery is intact and it's just the airlines masking the underlying strength >> how much is this a rotation back and forth no matter what, they're buying something. it's not as if people are selling technology and actually that's a barometer at one point we thought, if they sell tech, there's nothing else to buy, because if it was a year and a half ago, this is where there were -- >> they're buying retail, they're buying industrials, things they haven't been buying of late. >> this has been going on unabated since the lows of jan 16 it's a great question, it's
probably the number one question we get, this talk about about a rotation this is not macroeconomics it's not guns or butter. there have been times the market has been very binary in recent years, okay? >> guy, you thought it was guns and butter >> it's not 1752 here. there have been bull markets where you've had growth and value, banks and tech working together the '90s, the oughts >> i thought of guns and money, of course, the late warren zevon. [ simultaneous speaking >> i think he's allowed to do what he's supposed to do >> mel leaves, he asks himself questions, he intros the guests
>> look at a name like all state since september, october off to the races that's the hidden financial trade. >> i'm going to throw you a bone here say goodbye to the guest >> rich ross has been great, you're the zenith of the show, back to you, scott >> thank you, guy. breaking on cnbc.com moments ago, amazon in exploratory talks with generic drug makers, mylan off 3% on that news, meg terrell broke the story and she'll join us blue apron stock up after hours. we'll have much more on that developing story and later on, tech guru dan niles will tell us the one stock in tech that he says is a screaming buy. another day of work. why do you do it? it's not just a pay check, you actually like what you do. even love it.
welcome back to "fast money. breaking news on amazon. cnbc.com reporting that that company is exploring talks with generic drug makers. meg terrell breaking that news, and joins us now on the phone, meg, what can you tell us? >> reporter: hi, scott amazon has held preliminary sort of exploratory talks with makers
of generic drugs like novartis and mylan about a potential entry into the pharmacy space. this is a story i just published with christina farr from cnbc.com she's been writing a lot about this people have been wondering what amazon is going to do in this space. what we've learned from these conversations, it appears amazo amazon's plans are not clear these are high level discussions about exploring, getting into the space, but that they are taking place across drug makers in the industry. and so people are watching to see whether this is going to impact distributors like cardinal health. it's unclear what form if any amazon will take >> we're wondering what impact there could be on stocks like cvs, which is down perhaps on your reporting, meg. what do you make of that >> reporter: absolutely. it's interesting, because cvs
and walgreen's have been very impacted by amazon's potential move here. walgreen's ceo at the healthcare summit where i've been today, last night said he didn't expect amazon would get into this space. a lot of people think pharmacies should be nervous about amazon potentially making a move there. everyone knows the health care industry is changing, whether it's amazon, and of course amazon being the biggest factor. that's weighing on the stocks heavily. >> meg, quick question, just about the licensing side of it you look at amazon making an acquisition of one of these, a cvs or even a rite aid or something like that. they get to acquire the licenses to build it alone, it takes time to gather that without making an acquisition and just going -- of a pharmacy and going after a mylan, what's the license structure, do you know anything about that >> reporter: you're making a really good point. of course there was that news recently that amazon had
acquired state licenses in a few states, and the speculation was that was an initial move what we learned after that is those licenses weren't for potentially distributing pharmaceuticals. they were for existing businesses that amazon had people expect they would have to beef up their licensing in all the different states in order to be able to get into this business in a bigger way a lot of people think the regulatory environment, the regulatory structure of this industry is too complicated for amazon other people think they can absolutely figure that out and do it, it's a huge market, obviously. >> meg, great reporting, we appreciate you calling in for us, we'll talk to you soon our meg terrell with big news on amazon's preliminary talks with generic drug makers like mylan >> for walgreen and cvs, you look to them first, it's really bad news for them. you see what happens when amazon goes into an industry, it can be terrible for a while cvs has the aetna situation. and i think that could be a good deal for them. walgreen's, for me, would be the
purest play. or long generics >> right >> and so this is the distribution, essentially. that looks very dangerous. and you think about the generics, this is an environment for generics that's not good, it's not going to get better anytime soon it's largely reflected in the size of the stocks think about mylan, this company has just bounced back in the last couple of months from trading lows some of this is politics the fact of the matter is pricing is still a headwind. i don't think it changes i think it's absolutely reflected in these share prices. i think this kind of a deal is a catalyst, not a negative >> i think what's interesting, we just put a big report out about this a week ago. i think to do it alone, for amazon to do it alone, the opportunity in the pharmacy business is roughly a $3 billion opportunity in 2019. if they were to make an acquisition, we suggested rite aid, it's a $20 billion opportunity, it expands great. the opportunity to go it alone isn't necessarily that great it makes sense for them to look at a mylan they've got to get these licenses
i don't think they've scratched the licenses yet or pulled any that's going to take time. maybe they acquire somebody else like a rite aid. >> they can. so if amazon is now in this space, does this force the hand of some of the big cap pharma names to do something to counteract, does teva pharmaceutical now come into play that stock has been a disaster >> they should be. >> they should be. i understand teva's valuation, it's been a difficult stock to own for the last two years for this valuation, if amazon is going down this road, does it force the hand of somebody else? >> that stock is up now 1%, perhaps on some of that speculation off of meg's report. blue apron stock is higher after announcing a ceo change. our aditi roy is in san francisco with more on that developing story >> reporter: hi there, scott, that's right shares of blue apron in the after hours now spiking a little less than 2.5% after news that the company has a new ceo.
their cfo, brad dickerson, is stepping into the chief executive officer role, replacing matt salzberg, one of the co-founders of the company that's effective immediately dickerson has been with blue apron for a while now. he comes to blue apron from under armour where he was for 11 years. for several years he served as the company's cfo. he says matt salzberg will be staying on is the company's executive chairman and in that position he's going to be focusing on the long term and strategic goals of the company while he deals with some of the day to day challenges there have been a lot of challenges for that company on a day-to-day level shares have plunged about 70% since the company went through their ipo. they've also had a lot of l layoffs as well as challenges of transitioning to a new fulfillment center in linden, new jersey we've heard about those troubles as recently as the last earning
call of the company. that linden fulfillment center is now on par with other fulfillment centers when it comes to customer service. the metric they look at is whether those meals are on time and in full. as the new ceo he'll be focusing on improving those margins but again, shares up about 2.5%. back to you. >> all right, aditi, thank you so much for that breaking news, aditi roy with that story. tim, it's been a disastrous existence as a publicly traded company, to say the least. is this worthy of buying the stock? >> this is now a $500 million cap company. this is a pitbull, relative to other guys in the space, this is a competitive story. certainly for the first round of investors, that ceo is a hero. how he got this deal off at those prices and who bought that, i don't know i know that's easy to say that now. but think about the guidance that was lowered over the size of that deal, the pricing of that deal. to some people, that guy was a
hero because in fact this stock is not worth that. >> it never should have gone public that was a failure of wall street they shoved that out there knowing, i think, that it was a terrible deal, then came out later to support it in terms of, you know, analysts it was ridiculous, never should have been public >> this company has got problems their customer acquisition costs are huge the only thing that could save this company is a takeout, somebody coming in to acquire them the competition is fierce. i don't think they have a chance i wouldn't be investing in the stock. ahead, general motors' self-driving fleet could hit the streets sooner than you think. what has investors pressing the set button on that stock meantime, here's what else is coming up on fast >> it's alive! it's alive >> that's what traders are saying about retail's remarkable rally. we'll give you the one name traders think you can still buy.
plus f.a.n.g. is losing its bite but dan niles says now is the time to buy. he'll reveal what name he likes best when "fast money" returns you always pay your insurance on time. tap one little bumper, and up go your rates. what good is having insurance if you get punished for using it? news flash: nobody's perfect. for drivers with accident forgiveness, liberty mutual won't raise your rates due to your first accident. switch and you could save $782 on home and auto insurance. call for a free quote today. liberty stands with you™ liberty mutual insurance.
intersectio indexes. apple, facebook, google, and amazon were negative drags on the s&p this week. collectively the five f.a.n.g. stocks have a market capitalization of $2.8 trillion. how much is that the entire value of the u.s. stock market is about $28 trillion so the f.a.n.g. stocks are about 10% of the market cap of the entire stock market, five stocks that was the end of last week. today, total value of f.a.n.g. stocks, $2.75 trillion facebook and apple alone lost $17 billion each followed by google the good news that this group stabilized today, that's the big question after gains of as much as 56% for amazon this year and with google the smallest events are up 32%, every one of them has at least doubled and in some cases tripled the s&p 500's gain even with outsize revenue growth, how much longer can that continue back to you, scott >> bob pisani, thank you so
much i was going to jump in there but bob was on a roll, figured i would let him go >> you don't want to interrupt bob in a situation like that, scott. this pullback means almost nothing, especially when you consider the run they've had that chart they think showed, amazon still up on the week slightly, so big deal. if you think of the valuations there, it's not surprising at some point people should have to people -- let's take amazon. this is a company, if they're going to try to disrupt the generics, they can cojoin five industries that they're trying to disrupt the fact that it's pulling back, and the rotation we see is not only appropriate but actually something i encourage. >> google being down on a day when the market is up 300 points is concerning. google, 28 times forward earnings when it's growing close to, you know, 30% eps growth give or take, i think it's a pretty compelling argument on the valuation side the other three names you can't
say the same about if you made me play the game would you rather >> he's doing it again >> that's a theme. >> who's going to play it? >> the other voice in my head. you're watching the graphics there. >> bob pisani will get it done >> alphabet or whatever they call it. despite the big tech selloff, our next guest has one tech stock to buy. dan niles is founding partner of alpha one capital partners, he joins us on the line, thanks for being here good to talk to an again >> good to talk to you too, scott. let's be realistic this isn't much of a selloff, right? i mean, these stocks are all down a few percentage points and i think it speaks to the fact that we haven't had a real selloff since joanuary of 2016
there's no way that any of these things are oversold. if you're thinking about it for over a day, you're looking out over the next year, this was brought up earlier, if you look at amazon, the stock's up over 50% this year. so is facebook so is apple. if you look at the revenue growth, amazon's revenues this year are up 30%. facebook -- sorry, apple's revenues are only up 9% this year, that's against 50% stock growth facebook has had the top line up about 46%. it's actually one of the few names, and by the way, facebook's earnings are up 66% this year. it's one of the few names that are cheaper than it was before these stocks all advanced. so you know, from an at some point -- from a standpoint of risk/reward, it's one that we really like. >> you don't think what we've witnessed over the last, you know, two sessions or so is in any way the start of a more
meaningful rotation away from high growth tech and some of the other names within the space >> well, i think it depends on which names you're talking about. if you're talking about the internet names, i think you're going to start to see the market become more selective. there's a big difference between an amazon at single digit operating margins and a facebook at 50% operating margins or a netflix that has negative free cash flow for the next a couple of years you'll see more selectivity. semis is not a space i'm particularly fond of now for a variety of reasons there are still really good buys in technology like facebook, where you've got some really good reasons to own that name. >> dan, it's tim, thanks for joining us you've been playing in tech for a long time. can you drop into context where you see valuations now relative to where they should have been five years ago we're arguing obviously a global economy and we're certainly arguing guys that are taking
market share and we're actually seeing it get bigger and crowd a lot of people out. how much of a premium should these multiples be trading at? that's what i hear you saying. >> that's exactly right. if you look at a facebook and you say, okay, i'm getting 50% top line growth, or 46% to be exact, and i can buy it at a 25 multiple, that to me sounds a lot more inviting than buying the s&p at a 20 multiple the s&p certainly isn't growing revenue at 46% it does all come down to valuations if you look at from the start of this bull market back in '09 to now, you've seen the ten-year pe of the market double over that period of time there's no way you can say valuations are low for the overall market but, you know, if you can buy a 50% grower a 25 pe, that seems appealing. google is growing at 20% per year, you can buy that, that's pretty appealing i think it depends on which
parts of the environment you're talking about. some of them like facebook i still view as pretty cheap and you've got an extra 2.6 billion users of whatsapp and facebook messenger that they haven't really started to make money off of yet they're only making money off 2.8 billion users between facebook and instagram there are other areas within tech like 3d sensing that will be really exciting as the iphone x with that technology goes more pervasive, like momentum. and ibm, which i've stated the stock for five years, that's trading at 11 times. the new mainframe cycle is probably the biggest cycle in ten years because it's all data encryption at an 8% dividend yield, that stock was actually up yesterday, believe it or not. i think that has some more room to grow. rightly to your point, some of these stocks are expensive but there's a whole bunch of them that aren't.
>> i have to go, but did you buy ibm shares >> believe it or not, after five years of not liking the name, yes, we own ibm shares we think it could be one of the better tech stocks next year especially if the market is rougher, which we think it will be >> interesting stuff thanks, dan, appreciate it very much, dan niles. what about ibm >> that is not so interesting to me but facebook and google i think, you know, we talked about valuations, are very reasonable here and all the things that are making this market go up could also be good, you know, a tax deal could be good, repatriation could be excellent we've seen this several times since the trump election where they got sold off a few times. >> have they come down enough? >> have they come down enough? they've come down not that much but the market has gone up so i think if i were putting new money to work, i would be buying facebook and google right now. >> he's 100% right, i think the
facebook -- the argument but any of these is still there. that's exactly why this isn't a rotation this isn't why you're seeing tech investors moving out of this space they're not. they understand the valuations, they're sticking with the story. i would be buying facebook here. the one stock that concerns me a little bit because of a gross margin issue potentially for next year is amazon. >> you guys are only buying these stocks in an up market if this market was in a different place, you would have less conviction to say facebook. the valuation is okay, but you're not buying amazon in a down market. you're buying cisco. you're buying a name that's at a valuation. you might even be buying intel what am i buying here? i'm not saying that i think we're going into a down market if we're all at this point of the market, especially on a show like today where we're saying, what do you do here, you go for a cisco. you go for a cap tech at a multiple i feel safer there >> we brought up ibm i think ibm is okay, an interesting play
there's no growth there right now. and this ai, that's the buzzword around every company right now i want to see it sort of take hold and move. >> the reason i bring it up, yesterday on "halftime," jim leventhal bought it after five years, now dan niles after five years takes a look at ibm and buys it. >> i don't think there's downside risk to the story but i don't see it shooting up like a rocket and having a trajectory path to the upside that's meaningful until they start to execute. execution is huge. >> and i just think people are buying stuff, i'm not saying this is the case with ibm, i prefer to be agnostic on ibm, people say i have to buy something. they're not saying that. ibm is ridiculously cheap if you want to look at where their multiple is relative to themselves but i don't see what changes there overnight. ahead, retail -- what's that >> i guess i'm not agnostic after all. apologies, scott >> thanks.
and not being in debt for it for the rest of our lives. but we're only as strong as our community. who inspires and pushes us to go further than we could ever go alone. sofi. get there sooner. welcome back to "fast money. remember at the top of the show we talked about the trump trade being reborn retail is also enjoying a bit of a resurrection itself.
there's the harp again stocks like nike and foot locker have surged 9 and 4% respectively, along with big box retailers like costco, up 15%. michael coors is up 20%. department stores like macys, up 26 company kroger has staged a comeback, that name surging 25%. retail is marking its best month since october 2011 if you missed that move, is it too late to get in >> i don't think so. kroger might be a little too late we talked about kroger's valuation after the whole foods thing went down. it languished for a long time. you hear that? >> that's not not languishing, that's blossoming. >> i thought it was just me. nordstrom's, earnings about three or four weeks ago. we talked about it before earnings you have a nice double bottom in the stock. you have positive momentum into
the holiday season big short interest a lot of these names, although they have run to the upside, i still think there's further room >> one of the things that's happening there, this isn't just peeping buyi people buying. this wasn't never a trump trade. the border adjustment tax, a lot of things going wrong for department stores and big box retailers has been largely left out of the trump trade this is retailers that were oversold that got too cheap, having their best holiday season in four years. they came into this year with better inventories macy's is going to pay a 6% dividend yield, december 15th it goes xdiv. everybody was on the wrong side. i'm not saying macy's is going back to 60 bucks but this is a stock that's now up 35% off the lows. people want to own it. >> look, there's no question people are offside on the street it absolutely is a trump trade when you think about it from a tax perspective, there's 15-ish percent boost to earnings.
you look at a macy's, they're trading ahead of that on expectations maybe 50% baked in but you've got to weed out the names that have brand. >> i get that, and that's a great point, except for the fact that we've been pricing department stores as if they're going out of business. as if they have no reason for living >> they're garbage they're terrible investments and everybody knows it the reality is they're trading on the -- >> buying macy's at 20 bucks is a good trade it's not the dividends they're having their best holiday season in four years >> it's tax right now. it truly is that the real estate value, you can go through it and do the numbers. >> i don't own it for real estate >> so the value there in my opinion isn't necessarily that great. i look at it and say, there's no doubt it's a tax trade, no question >> you don't think that -- i don't think it's short covering, i don't. but you don't think, though, that perhaps the pendulum swung
way too far? >> i think it did, that's why you'll see a vacuum in price action >> 35% >> this isa group you trade. this is not a space that you invest in right now, especially these legacy names that have all this real estate and you're seeing what's going on with these mall-based stores, it's not going to end. it's only going to get worse >> the reason why something happened this week, i'm choosing macy's because it's a name i own and i know a lot about it. and he keeps doing that, that's fine, because nobody is listening to me right now. macy's, part of the issue was people think they have a major hole in their balance sheet. they're buying back longer data maturities they led a credit rivevivals ths week they've been buying back credit for an a lot of these retailers. that's to me for equity. >> karen you get the last word. >> i would rather own brands it's been a very nice
pushback -- nice run for macy's to the upside after a gigantic move to the downside i would rather own brands. will gm's new fleet of cars drive profits? baba sinking this week, down 7% from its recent high. was there something in the chart that suggests now could be the time to buy it we'll explain when "fast money" comes right back
welcome back to "fast money. general motors unveiling its new self-driving vehicles this week. phil lebeau is in chicago with more, hey, phil. >> reporter: hey, scott. we had a chance to go for a ride in one of these vehicles in san francisco this week. today in san francisco, gm unveiled its strategy when it comes to autonomous drive vehicles it's a bold strategy in fact the company expects to make billions of dollars once it launches a self-driving ride hailing service. that's right, ride hailing service with self-driving gm vehicles they expect to start by 2019, targeting urban markets where they believe they have a strength right now, especially given the work they're doing in san francisco. and they believe that this business could be bigger than gm's core business right now take a look at shares of general motors, it's worth noting once they announce this plan and start holding this analysts day meeting, look what happened to the stock, it tanked
immediately. guys, there's a fair amount of skeptici skepticism, not just that general motors will be able to make money at ride hailing, but let's be honest, uber dominates this market and it hasn't made money there. if you take a look at video of us in the waymo self-driving minivan we tested in the last month, gm has started up a ride hailing service and waymo plans to start probably early next year with its own ride share service in the phoenix area. so we see this race beginning, scott, into self-driving vehicles cutting into what is a growing business, this ride sharing business the question is whether or not it will be as profitable as general motors said it would be or could be today when it met with analysts. >> thanks so much, as always, phil lebeau up in chicago for us let's trade this one >> i love gm i like gm. these are tectonic shifts. and that scares me a little bit. it's not frothy, it's not priced
like a tech stock, even though there is a tech element to it. but i think they're doing a great job. i'll hang on to it even with the tectonic shifts. i like the valuation and i like the ceo's stewardship. >> i like the tectonic shifts. tesla is priced as if -- they've got a trillion dollar opportunity and they're burning cash like a drunken sailor gm has never been more precash positive it's all about the exciting stuff that tesla gets on their multiple, gm, if they get half of that, it's a hundred dollar stock. >> now you're pat ronni patronie that's not nice. automation why do you say automation? glad you asked they announced a quarter billion dollar stock repurchase plan, not insignificant for a $5
billion market cap company we've talked about it then they seem to have turned the boat around in terms of their business model, getting into the service business, which is good, and valuations are compelling. they've had a huge run up. i think there's more room to go. coming up, chinese internet stocks go from hot to not. [vo] when it comes to investing,
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mewy me -- ylan mui in d.c. >> reporter: the fiscal trigger is not allowed under the rules of the senate. what this means is that republicans have to go back to the drawing board to address the concerns of deficit hawks like senator bob corker i just spoke to senator john cornyn who is a member of the republican leadership. he said one idea that they are considering is a stair step increase in the corporate rate to address those concerns of the rising deficit from the tax bill so again, the idea of a fiscal trigger is not off the table because it does not comply with senate rules >> and remember, the vote out of committee yesterday was 12-11. one of the principal reasons if not the only reason that senator corker was a yes, ylan, was because of the trigger, correct? >> reporter: he had said he had
assurances from leadership that this was something they would work on. but the senate parliamentarian told them the plan is not going to work and is not allowed >> ylan, thank you so much for the very latest there. there's the question how all of this will unfold for the market today. maybe the headline here is, "not so fast. >> the debate about taxes have any impact on macy's i do believe there's been a lot of tax inflation and a lot of different names. we'll see it start to come off a little bit or pause a little bit. there's no reason to chase these things if you don't believe things are going to get done >> definitely. i mean, four two reasons one, if they have a solution that's not as good, and two, if we start to see cracks, and then, you know, the republicans can't get to 50. >> it's remarkable, 55 minutes ago we begin the program saying it looks like it's on the fast track. and here we are, 55 minutes later, saying not so fast.
>> some things are defendable in even a nontax environment. i think some of this has come too far. no question, today's rally and yesterday's rally were very tax dominated. it doesn't mean this mark has nothing else to stand on certainly banks have a lot to stand on let's talk about alibaba, that stock surging 100% this year one trader is making a big bet that there's even more room to grow mike khouw joins us at the plasma >> hi, scott we saw some activity down here close to 180 they're using options to make a play what they did was buy the january 180-180 call spread for $3.75, risking about 2% of the stock price to make a play that is going to go back and retest those highs byjanuary expiration >> a big run for that stock, mike, thanks final trades next. i think it's terrific.
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i mean that. teva pharmaceuticals on the back of this mylan news, cowboy >> what a day on the markets today. aliml see you tomorrow on the "hfte" show and "options action 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 money. my job isn't just to entertain but to educate and put it in context. call me at 1-800-743-cnbc or tweet me @jimcramer. what happens when the economy here and around th