tv Fast Money CNBC December 29, 2017 5:00pm-5:30pm EST
small. anapt anaptysbio roku, 115% >> i feel like with roku, canada goose, the skepticism was out there in those deals and they've surprised to the upside, bomth o them >> then there's blue apron, we've talked about that enough that does it for "closing bell." "fast money" starts right now. >> live from the nasdaq market site overlooking new york city's times square tonight on "fast," the shorts are piling in on some of the biggest tech names in the market are these high fliers in trouble? plus the worst, the first? energy has been lagging all year about the chart master satisfits about to take off. so-called vice stocks have been surging but if history is any indication, it may be time to call it quits
s&p, dow, and nasdaq closing at dead lows, dow dropping 100 points after what has been a record year for stocks, surging 25%, seeing 71 record closes, the u.s. gaining $4.5 trillion in market capitalization investors all over the world have reason to celebrate germ germany, europe, japan, even brazil getting in on the action. global stocks are booming. where should you put your money in 2018? tim? >> one of the reasons global stocks are booming is because the dollar was weaker. if you invest in germany, you're investing as a dollar investor the euro strength, while it's bad for the market, it's not bad for you as a european. it's not great for you as a u.s. investor because your dollars are going down ultimately it was a big year about the dollar the dollar closed today 40 basis
points, down 1.34 percent this week the fed just hiked, we just passed a fiscal bill we got all kinds of enthusiasm in the business community. it's quite shocking. and really, i think this is a bit of a head fake i don't think the dollar goes to 98 immediately in the new year, it may not but i do think the dollar is oversold here. >> so a bounce in the dollar, and what happens in u.s. stocks? >> u.s. stocks are going to bounce with the dollar or the global stocks. ultimately you'll get a major shot as a guy who has been investing globally for 20 years, the fundamentals around the world look extraordinary europe will grow in 2018 ultimately the euro will be stronger by the dollar by the end of the year. it's a great environment, valuation-wise it comes down to that, and eps growth europe and emerging look better. >> the dollar can cut both ways. obviously if you have a lot of international sales, if you have
a weakening dollar, things can look better. we often talk about dollar strength as being a pressure you're talking about international revenues, obviously you have it sort of both ways. when i take a look at the market right here, things we typically look for, options traders in particular, how is volatility? if volatility is rising as the market rises, that's a warning sign if volatility is relatively stable and the market continues to rise, there isn't an indication, for us at least, that it's going to roll over immediately. >> the big bet that has to be made is whether you overweight the u.s. again in the year ahead or whether you favor emerging markets or developed markets in western europe because of the underweighting in tech, europe almost by definition will lag the u.s., there's no way out of that we might have some charts here on the screen. over the last year or two, if you look at the msci all country world index versus the msci all country x u.s., they're the same but if you look long term, all equities are still below where they were in '07
the stock below 600 was still below what it was in 2000. >> these are long cycles emerging underperformed for 5 1/2 years before it's double bottomed in the last year. are you looking at the longer trend? because we're not talking about single stocks. we're talking about entire decisions. . >> emerging markets are still cheap relative to where they can go from here we're definitely betting emerging markets over the u.s. for 2018 >> that means robust growth. defense is saying, idiosyncratic tech will prevail or idiosyncratic i sell the best coffee, starbucks, unless you get a real robust economic cycle, are we late in the cycle or is it a new cycle >> we're late in the cycle global trade is expanding.
global trade expanding, given how the u.s. has been negotiating, we'll be getting out of trade they'll have another good year next year because of that. global trade is massive. >> i agree the one thing we see, after we knew the tax bill was a reality, when the u.s. markets look good, frankly it's very difficult even though that should be good for the world, it's been difficult for the other markets, even europe, to outperform when you consider the size of it allocations. look, if a tax bill cuts most u.s. domiciled companies from 37, 38% down to 21, 21, and analysts are able to push up their earnings, look, it's very front loaded i think the next couple of quarters could be good what's so good will be bad because it will bring in the fed. >> carter, it sounds like you're leaning towards the u.s. but you're questioning the growth overseas. >> i think basically the sort of rock sort of large cap or super
cap growth names that dominate the index are actually in sustainable up trends that are neither too steep nor are they burdened with some of the things that might be coming in 2018 >> i'm supportive of that too. one of the things we have to think about is whether we see any real legitimate fundamental pressures that could harm u.s.-based companies right now whether you like basically the regulation trends, whether you happen to like our new tax policies, these things are basically positive for business on the whole. and you put those things together with no real warning signs on the horizon, and i think that's positive for u.s. equities >> you would lean towards u.s. that's two votes for u.s >> in emerging markets we're looking at the trade story like one of the stories we'll talk about later is alibaba, but at the end of the day i want to trade malaysia, indonesia, korea. these are trading stories, right? and we think global trade continues to expand.
>> first of all, i think you've had enormous recoveries in places like south africa, eza, turkey, etr. i still think china tech is going to outperform. if you believe in u.s. tech, you believe in china tech, and samsung, these have been the best performing companies in the world. >> you can't have international exposure outside of the u.s., take a look at caterpillar >> that doesn't scare you, the steepness of the -- the valuations here? >> this is really interesting, because caterpillar has been a favorite short for quite a while on the story that we were never going to see anything like the emerging market story we had before, that the commodity boom was over, once and for all if you took a look on a trailing basis you would see the company is not that expensive. of course you have to recover, you basically have to see the proof come out and we haven't seen that yet. >> as we've mentioned, tech has
been rallying across the globe, including the popular faang names in the united states the chart master says one of the groups is overdone >> their relative performance to u.s. tech is quite poor for the fourth month in a row. let's look at a few charts and try to have a thesis here. i think you want to stick with u.s. growth, tech growth versus let's say chinese tech what i've got here are the names you know and there are six of them. and they are big and important and they are all appreciating aggressively let's go to the next slide here are six others, you know them five of these, the largest five stocks in the s&p. then there's this smaller guy, netflix, but important nonetheless. six u.s. tech stocks worth $3.4 trillion those asian stocks were worth $1.2 trillion. now, let's look at a few charts. here is five years what we've got is just what we
were discussing as a group there. chinese tech, massively outperforming this u.s. basket take a look at the past two years. again, chinese tech, outperforming. let's bring it in a little closer here is the past 12 months, almost a double. this is where it gets interesting. i'm going to do a one-year chart. instead of two lines comparative, i'm going to look at relative performance of chinese. what we have now is not two lines. simply the six chinese tech stocks this is relative performance to the u.s. basically what we have is the following situation. these have gone higher and their relative performance peaked in september and has gone lower. i think that's not over yet. and i want to favor u.s. tech over this high flying basket
which has been such an outperformer long term >> carter, come back over, we need you here on the desk tonight, no dawdling here. >> when you see rapidly rising prices and increase in volatility, if we brought one of those charts back, one of the things you would see if we take a look at some of these chinese names is rising prices, rising volatility risk adjusted rates of return, that's one of the things that also suggests you would favor the u.s.-based stocks. you're basically getting paid, you know, very good rates of return but have considerably lower risk >> just as a setup, it's like a one-two punch. if you're somebody that has massive outperformance, that circumstance is in effect, you saw the five-year spread, that then starts to show underperformance, that's how some things begin that ends up getting lower speed. you have the precondition of too good and then you start to actually lose that too good. >> it was too good this year, it wasn't too good for the previous couple of years before that.
alibaba was -- >> as a basket, as a theme, as a concept, they are true winners and blowing away the u.s. businesses >> they were coming from such low numbers. there's a massive population that's a pure numbers game, and that numbers game isn't over >> do you think the relative underperformance of the last four months means they're getting ahead of themselves? >> i think they had singles day. i think they blew away numbers and i think it was the most crowded trade on the street. you didn't have to be an emerging markets guy to be long baba >> hedge fund holding. >> it's now in the top 15 low shorted stocks by concentration of hedge funds on the street that tells me guys made their money and it's unsustainable i don't feel the need to defend this all the time, but i will say, on an earnings basis, on a peg basis, it's cheaper than the big cap tech in the u.s.
the big issue with baba is do you trust big brother. that's what people are worried about. coming up, president trump going postal on twitter today, putting amazon on blast. we've got the details. and the chart master says the chart looks right for an even bigger rally. sin stocks is getting a boost but the buzz is about to wear off, we'll explain. much more "fast money" after much more "fast money" after this [lance] can we get a shot of this cold front, right here. winter has arrived. whooo! hahaha [vo] progress is an unstoppable force. brace yourself for the saudi sa. audi will cover your first month's lease payment on select models during the season of audi sales event.
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welcome back to "fast money. president trump going postal on twitter as peak shipping season wraps up earlier he tweeted, why is the united states post office which is losing many billions of dollars a year while charging amazon and others so little to deliver their packages making amazon richer and the post office dumber and poorer should be charging much more, exclamation point, "more" in all caps amazon was down 1% today will the usps make changes to their prices how will this impact amazon, fedex, and ups >> the secular trends for amazon remain intact regardless of who will be delivering the packages. by the way, when i order from amazon, it's usually coming from ups and fedex. that said, what's he making a
case for, that the u.s. postal service should raise rates that's going to be good for ups and fedex and not have any impact on amazon at all. i'm not going to get in the car and drive to get something >> i'm not sure who has the leverage in this situation the usps needs the business. >> we're talking about an up trend that's intact. if he h fedex breaking out to new highs. this is nothing. >> international paper is an amazing stat, it makes one of every three boxes that's delivered by amazon. so there are -- one of every three. this is a fantastic company. there are a lot of other players in the chain, certainly a very late cycle sign of the economy >> quite frankly, amazon is getting beyond just delivery you look at how they've expanded their business model, this is a massive segment right now. it is going to become and
continues to become a bigger and more diversified company the new tax bill will reduce earnings for goldman sachs partly due to its repatriation of cash under new lower rates. can investors expect to see losses from the other big banks? we've seen this from citibank, a bunch of them. >> first of all, there's no free lunch. where you had offshore benefits you'll certainly have to now pay for them but pay a lot less than you thought. citibank, this hit the tape two weeks ago, would have an enormous deferred tax hit from a benefit that they get. but if anyone can smooth this over multiple quarters, we mentioned this about ge right now, a company struggling to pay their dividend has a $9 billion tax hit. they'll probably hit them for a billion threeevery year until then it's more important that these banks are going down to 21%.
>> from a shareholders perspective, as your basically deferred tax assets go down, that's good news for you, that means your future tax liability will be decreased. >> goldman, independent of this particular -- this has been a tremendously bad investment. you're talking about a stock that's only up 6, 7% of the year, underperforming every major bank all of the online brokers. there's something specifically not right about goldman. >> if we are to believe that m&a picks up next year, deregulation >> if the rates will move -- >> that's goldman right there. >> we were at 264 to start this year here we are at 239, 24 rates aren't moving. >> goldman or jpmorgan here? >> for the next 12 months? i think it's goldman not an indictment on jpmorgan, it's best in breed >> i think it's because it's fees it's m&a fees. the curve is not only not
moving, intt's not steepening the shorts are fighting apple heading into the new year. time to buy a little i-protection i'm melissa lee. you're watching cnbc, first in business worldwide meantime here is what's coming up on "fast. it feels pretty good >> it sure does because sin stocks have been surging this year could it be time to call it quits? we've got the details. plus -- hear that? it's the sound of volatility this year. but there's something in the charts that suggests it could be 'll t to pick up weexplain. much more "fast money" right much more "fast money" right after this so, they get their shows... let's go, girl! you're gonna love this bit! and you get yours. h however you want. on your phone, tablet, or tv.
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welcome back to "fast money. sin is in with booze and cigarette stocks some of the biggest winners in q4. but it may be time to take profits now. landon dowdy is live at headquarters with more had hi, landon >> reporter: hey there, melissa. those sin stocks may be a hard habit to break but maybe you should looking back at the past 20 years, these stocks typically perform well in q4:00. ambev is up, slides half a% in january. molson slips 4% in january diageo down about 2% on average in january tobacco stocks turning up smoking results in q4 before burning out in the new year. altria drops a third of a
percent in january philip morris up 2% in q4, sliding 3% on average in january. casino stocks a little bit more of a gamble, with wynn up 5% in q4 and managing to hold on to those gains in the new year, while churchill downs has 7% average returns. mgm resorts pulling back 2% in january. again, while sin is in right now, you may want to dial it back a bit, mediclissa, happy nw year >> thanks, landon, same to you >> this is actually something i think people revel in. it's seasonal, chilly out there, snuggle by the fire, put on a suede vest, grab your honey. sin stocks, look what's going on in the cannabis industry, these names have been ripping in the last couple of days as california goes online if you invested in diago, the
whiskey, you're up 40% this year when you consider the impound annual growth rate of these stocks, because of the global trade in spirits, if you're an emerging markets investor, you know these markets are killing it there you stay in these trades >> the alcohol trade gets helped by the tax plan. and it actually hurts tobacco at the same time. so i do actually think alcohol gets traded. and on the emerging markets theme, if you believe in gambling, you have to believe that macau will be a big component of that. >> and wynn. >> and you believe in sin, carter, a guy like you >> that just rings hollow. >> constellation brands, stz, is bar none risk adjusted one of the best performing equities there is diago is double the performance of apple, mcdonald's, boeing if you had to pick one sin, also it's not bad stuff they sell, this is the one to do.
>> the population is always growing. but in addition to that, we've seen consumption of a lot of these things also grow that's a secular tailwind. take a look, there's hardly any industry as stable as these are through good times and bad >> cigarette stocks, again, three months ago you had the fda hammering these companies, altria, i've been long it for a long time, went from 72 to 60. >> that's domestic >> that's their domestic arm in fact, again, they get a major benefit from this tax deal that stock crawled back, that is a great dividend yield these guys, they're some of the smartest players in the world. they've survived through essentially what's probably a great thing, the tobacco industry has been taken apart. these guys have not. >> do you worry about these stocks being dividend paying stocks in a rising interest rate environment? >> not yet interest rates are so low, they continue to remain there it won't make that big a difference these dividend stocks will be perfectly fine in this cycle >> i'm with you on rates i just don't see the environment
changing a lot i know the short end has moved at what point, when you start getting tinto two plus percent money, we're getting there as we ring in 2018 this weekend, what better way to welcome the new year than when our traders who picked stocks to cheers in the new year let's start with carter. >> my pick, if you can only pick one, is fedex. this is a name that has all sorts of structural tail winds it is also best in class, if you will and also its chart is good, i'm in the chart business. and if you're into fundamentals, it just put up one heck of a quarter. >> gina? >> i'm into alibaba. i know it's been going strong. if you believe in e-tailing, you believe in alibaba they deliver to 29 different countries so you're trading that global story >> mike? >> general motors. the stock is incredibly cheap and they're selling a lot of cars overseas, over 400,000 in
december alone in china. i like general motors. >> tim >> i'm going to raise my glass to new year's eve, we talked about diago, thank you all for watching in 2017 >> thanks for making it a great year here on "fast money." have a happy and safe new year's "options action" is up after the break. stay tuned are you raising your hand? good then it's time for power e*trade the platyou need.ce and servicee alright one quick game of rock, paper, scissors. 1, 2, 3, go. e*trade. the original place to invest online.
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hey there, we're live at the nasdaq market site for the very last show of 2017. it's absolutely freezing outside but the guys are warming up behind me. while they're doing that, here's what's coming up on the show crude oil just hit its highest level in two years the char master says it could create a boom for big energy stocks he'll break it down. plus, that's what volatility was like this year it's created a phenomenon in the options market we'll explain. an