Skip to main content

tv   Fast Money  CNBC  March 13, 2019 5:00pm-6:00pm EDT

5:00 pm
the fed meeting next week and bond yields remaining very subdued. >> you know what's not quiet, is the british pound which is actually having its best session in two years celebrating that the parliament today, in case you missed it, voted against a no-deal brexit. >> the focus briefly will be on parliament again tomorrow, but then on the eu to see if they agree to an extension. thanks for watching. "fast money" starts right now with breaking news boeing 737 max planes are now grounded around the world including here in the united states the stock ending the day slightly higher, still having its worst week in three years. >> the faa says it got newly refined satellite data that led to the decision to ground the boeing max aircraft. the grounding is temporary while the investigation continues. this is a dramatic reversal from the support the faa was voicing
5:01 pm
even late yesterday about the safety of this particular aircraft the acting faa administrator just talked on cnbc about how new information led investigators to see similarities between the two deadly crashes, a likeness in the aircraft movement between the ethiopian airlines crash and the lion air crash. >> the full track of the ethiopian flight was very close to lion air. the initial track that we got on sunday and monday morning was only three minutes long, the first three minutes of the flight the new track data we looked at was almost for the entire length of the flight. also the evidence that we discovered on the ground actually was even further evidence that the flight was very similar to lion air. >> in the order to ground the boeing 737, both max 8 and max 9, the acting administrator has determined that an emergency exists related to safety in air commerce the data recorder, the cockpit voice recorder were damaged in
5:02 pm
the crash and special equipment is needed to extract the information from them. so now those data recorders will go to france ooethiopia is leading the investigation with assistance from the faa and the ntsb. flight aware sent out a statement saying it and its partners have provided the data on flight 302 as part of the information they use to monitor these planes globally that is now contributing to the investigation. we now know it was potentially instrumental in having the faa ground these flights boeing has also given us a statement. basically it says that boeing continues to have full confidence in the safety of 737 max. however, after consultation with the faa, the ntsb and aviation authorities that they are going to soert out of abundance of caution and to reassure the
5:03 pm
flying public, they're going to support the grounding of their planes boeing's share price closed up half a percent the airlines all say they're working with passengers to facilitate rebooking there might be some short-term pain on that front, melissa. >> zblanalysts on wall street saying the long-term impact could be minimal you gooeft to ask yourse've gotg bottom for this incident in? >> i think the short-term bottom might be in. the stock traded pretty well today. i think president trump did the right thing and i think we did boeing a big favor by doing this it takes the degree of uncertainty out of the equation. i do think it's going to be short lived in terms of how the stock reacts we had a huge volume day
5:04 pm
yesterday. we had a huge volume day today that typically to me says capitulation the boeing story fundamentally i don't think has changed. still a huge free cash flow story. plus, are people really going to try to back out of deliveries for this plane and get into an a-320? it's just not feasible i think they'll straighten this out and in a couple of weeks we'll be talking about boeing being a $423 stock again. >> i think they made a mistake not doing it themselves. however, they can draft under the cover of the faa and the president. i think because this is now contained -- i think it's contained, and so either for boeing or for the airlines some increased expenses because you have to swap planes. that's always expensive. maybe they have some insurance if they have to do that. that will be short lived
5:05 pm
i think the bottom is in. >> what is the short-term? to put this in perperspective, still don't know the cause of the lion air crash and that was nearly six months ago. here we are onto our second crash. what is short-term, because we've been six months and we didn't know the cause of that one. this could be another six months we don't know how long these planes are going to be grounded. what are some of the unknowns? you're a boeing investor and you like it and stand by it, but what are the unknowns? >> go back to 2012 and 2013 during the lithium battery incidents and back to 1988 when the 737 was a new airplane and the first couple deliveries within the first year there was two fatal flights. but the reality of the faa cycle and grounding the max 737s is something we have seen before. it's something that is protocol. we don't have the black box yet. i think you have to point out,
5:06 pm
though, for boeing this comes at a time when this stock has been on a heroic run. the last two times they had these kind of recalls, the jury was really out in terms of their production, in terms of how efficient they were in effectively getting things off the assembly line. this company's had a phenomenal safety record for decades. the stock on valuation wasn't terribly cheap at this point i don't think you have to chase into this one. do i think there's a major selloff coming no when i think that demand for commercial aircraft globally continues to get better and the order book is not really going to fall apart here airbus is at all time highs right now and is rallying not just because of boeing's breakness but a-- weakness. >> we look at boeing at 377
5:07 pm
here it's also close, about 40 bucks off of the low shortly after the lion air crash you're back to them. >> if you go back to christmas'christmas eve when it was under 400. i think the president did do them a favor i also think you were pointing out karen that there seems to be a little bit of stability at this point you talked about some of the volume as well, guy. when you look around right now what is the vix trading at 12, 13, something like that. you look at implied volatility in boeing, for all the right reasons it's very high but if you like the stock right now, you buy that stock amid you're selling calls against it. you're getting almost $20 for an april at the money call right now to sell against that the implied volatility has gone from 16 to 40. these are the opportunities that a guy like me lives for.
5:08 pm
i'm always looking for opportunities as long as the story is skbakintact we don't really have the full story yet obviously. that's still to come if you want to take a shot here, that's the way you do it. >> i wonder if the dream liner incident is fully comparable in that it was something mechanical and there weren't fatal crashes involved with the batteries. >> absolutely. >> which completely changes the equation, no >> we haven't seen this before again, going back to their record, yes, i agree i'm really talking about a stock that would have some kind of overhang and how it's tended to behave in the past after you've had a grounding. look, in 2013 i believe it took two months, maybe three months before you actually saw the faa put them back up in the air. yet, the stock did most of its damage within the first six weeks of that. that was really a sideways trade. it wasn't a trade down it even started to rally before it went back up. >> you know what's going to
5:09 pm
happen senate hearings. the senate's going to call them to capitol hill. dennis mullenberg is going to be up there. >> going to be nasty. >> is that bad for the stock >> sometimes it's good >> when facebook went and testified, that stock was 152 at the time i think it was last march or so. obviously that stock rallied at $205 and you saw what happened subsequently i think it could be a great entry point. do i think it can go low from here maybe. there's clearly headline risk. you go back and say has the fundamental story of boeing changed? i don't think it has clearly these are tragic incidents, but are people going to totally change their order book i don't think that's going to happen if you're going to go from this plane to an a-320, the backlog for the a-320 is longer. >> five years. >> exactly i don't think you can feasibly do that. if they say there's something fundamentally wrong with the
5:10 pm
aircraft, then it's a completely different conversation. >> what's the impact on the airlines who have to swap out the planes, who have to lease new aircraft >> for the u.s. airlines it's less than some of the others around the world in terms of how they're going to shift the mix of their fleet i think for southwestern, that's probably the biggest one that will be impacted but i don't even know if we're going to see any big impact here. i think if there are senate hearings, boeing does have an outstanding record so they do have -- plus, you know, they're big supporters of the administration so i don't know how difficult that will be, actually. >> just rif airlines have capac issues when they start to get aggressive, this isn't going to push them to be more aggressive on capacity. if anything, it pulls them back in i don't think this is a image deal. >> for more on what this means for the airlines, let's bring in david vernon great to have you with us.
5:11 pm
you're out with a note on march 12th outlining the exposure of the u.s. airlines to the max 8 specifically as we all know, southwest has the most exposure. it's got 34 max 8s in its fleet, i believe. what does this cost? presumably they're going to have to reroute planes, cancel routes and/or lease aircraft. >> yeah. i mean the challenge you have with this type of issue obviously is when the aircraft are parked you've got to scramble and pick some capacity up from other parts of the network. this time of year you might have a little bit more reserve capacity than in the peak summer months, so that's going for you. the only variable cost would be the flight cost. the pain on that lost revenue could be pretty significant kind of day one as you get through the next bidding cycle and adapt the
5:12 pm
network, you'll be able to catch up a little bit of that. in the short-term, it could be low millions of dollars a day. it's not a large impact on these businesses which are 3.5 billion dollar pretax. ultimately how much of an impact will be down to duration if it's a 90 to 180 day event you've got a much bigger problem. >> let's say it's a 90 day event. if we're going to use the dream liner example to the fullest, and that didn't even involve fatalities, that was a grounding for three months let's say it's three months minimum. what is the impact >> earnings are going to go down in the low to mid single digits. just on a pretax basis there will be some offsets to that the airline dos has do have somi sharing in there united has the 737 max 9
5:13 pm
it would be a meaningful number. i think the network guys will be a little bit more resilient. the point to point carrier, it may be tougher for them to scramble aircraft into those holes in the network it's not an insignificant event if this lasts a quarter. that said, the next year you probably get it back in the interim, you might also get a little bit of an uptick. this is capacity that's going to come out of the system demand is going to go up in other markets. i don't know that the airlines will try to maximize profits by raising fares on that. but the way the algorithms work you will see a little bit of consequential risk given the supply in the market in the near term. >> i think most analysts would plan to ignore what happens in the next quarter or two if the companies can give us a good picture of what were the costs associated with this and what
5:14 pm
would it have looked like without it. >> yeah. look, i think this is something you can holook through provides there is a path to getting the aircraft back up in the air. missing one-quarter doesn't knock the value of your stock down 5%. i think you can certainly look through some of that provided you have a path. you still have to deal with some uncertainty around this. if it's 90 days, could it be 120? maybe it's 30. you don't have that certainty of the duration that's where the real risk is investors will look through the long-term and trade on the rate of upward and downward earnings revisions over time. it will take a little bit of an impact it seems like it's in the stock. today the share price reacted negatively on the faa announcement, then they kind of
5:15 pm
came back a little bit i think the market is getting a little bit more comfortable with looking at this. obviously there's new information as they analyze the recorder there's no knowns here. >> at what point do the airlines decide we're going to lease aircraft to stopgap the planes that were take n out. >> i think that will be an aircraft specific decision they're going to be working for a while on this. they're going to be trying to figure out where they can that extend the life of some assets, what aircraft might they be able to get on lease. they're also going to be working on probably trying to figure out when they can get the crew bids. it's not just the aircraft you've got to have the pilots trained up on that new type of aircraft that you have available. there's a lot of moving parts in this thing there's going to be a lot of work trying to accommodate this for the next couple of weeks. >> david vernon the analyst at
5:16 pm
sanford bernstein that covers the airlines there are publicly traded companies that lease aircraft. they for this past week have been sharply higher. air cap as well as air castle. >> in terms of the airlines and effects, delta is probably the least affected the fact that they actually moved into the green, that's pretty impress i havivempressive people are somewhat comfortable with the idea of where this goes it seems like the public didn't want to completely exit and leave president seem leave. seems like they're seeing there is value here. >> southwest, which has the biggest exposure, their entire fleet is close to 800 planes it's 5% of these planes make up their fleet. so 34, i think, of these planes are going to be taken out of service which obviously is a big deal we're not talking about a catastrophic number of planes taken out of service
5:17 pm
southwest has moved from 58 down to 51, traded well today and you ask yourself did this selloff create an opportunity and i think the answer is yes. >> let me speak to valuation on forward earnings delta is below nine. the analysts talked a little bit about some of the dynamics the sector to me trades like there's a major problem going on in fact, i think these planes are ultimatelyridiculously cheap relative to the economy. if you've been trading airlines for the last five years, you've had enormous opportunities to trade the range. but effectively you've gone nowhere. delta to me is the best of the breed and i stay long. >> stick with the trade. still ahead, more on boeing's problems with the 737 max. the market rally marches on, the s&p 500 closing above. later, check out roku's big run.
5:18 pm
why is wall street turning against the streaming service? we've got the details. your brain is an amazing thing. but as you get older, it naturally begins to change, causing a lack of sharpness, or even trouble with recall. thankfully, the breakthrough in prevagen helps your brain and actually improves memory. the secret is an ingredient originally discovered... in jellyfish. in clinical trials, prevagen has been shown to improve short-term memory. prevagen. healthier brain. better life.
5:19 pm
i that's the retirement plan.e, with my annuity, i know there is a guarantee. it's for my family, its for my self, its for my future. annuities can provide protected income for life. learn more at retire your risk dot org.
5:20 pm
want more from your entejust say teach me more. into your xfinice remote to discover all sorts of tips and tricks in x1. can i find my wifi password? just ask. [ ding ] show me my wifi password. hey now! [ ding ] you can even troubleshoot, learn new voice commands and much more. clean my daughter's room. [ ding ] oh, it won't do that. welp, someone should. just say "teach me more" into your voice remote and see how you can have an even better x1 experience. simple. easy. awesome.
5:21 pm
check out shares of roku getting rocked today, down more than 14% after getting two analyst downgrades both notes pointing to valuation and increased competition in the streaming space. roku is out performing netflix which is up a mere 30% this year is roku's run done >> we talk about the insider buying all the time. why not at least look at what's going on with the selling which we're seeing a lot of from board members automatic wll the way te c sweeuite there's a perfect way to deal with this stock right now. loop has a $45 price target on it that's where it dropped to last time when you look at the overall
5:22 pm
growth of this company, it's something that i think needs to be considered when you look at it i'm looking at this stock anywhere near 50 or below i think it has to be a buy look at their growth hours watched and the real numbers of what they're doing right now. this is a company that's executing and they're absolutely taking space from somebody else. >> what happens when a little company called apple comes out on march 25th with a tv streaming service. >> which they will >> that's part of the combination of the secondary, the selling and the valuation was just so high they've been great they've been in absolutely the right place to be, executing really well, the growth 27 million users. it's been extraordinary. the stock reflects extraordinary growth, though even here, even down ten bucks and we haven't yet seen the competition. it's a great company but too expensive for me here. >> i don't have a great memory,
5:23 pm
you know that. i'm getting older. >> it comes and goes. >> one thing i do remember is before i had left roku had a big move to the upside in the after hours on this show and we had a whole conversation about all the things we talked about i remember saying there's a very good chance this stock makes a run to the old highs back in october of last year it turns out that's pretty much what happened. now you have this huge double top, now people are worried about valuation. insider selling probably puts the stock back to the level that it broke out from a couple of weeks ago, $50. >> i don't think that anybody in the space and i would go to netflix which has been flat for 15 months folks. ho look at the move it had from the december swoon and even before that you buy a new tv, there's like 19 streaming services.
5:24 pm
i can't even figure them out i just hooked up one that had been in a box in my room for four months. i'm thrilled because i can watch reruns of this, that and the other thing. i think the entire space is getting crowded. i think the entire space is trading heavy. there are no earnings so there is no pe. >> for more on roku, go to cnbc.com the s&p 500 closes above 2800. one strategist says there are still major risks to this market live from times square, much more "fast money" still ahead. duncan just protected his family with a $500,000 life insurance policy. how much do you think it cost him? $100 a month? $75? $50? actually, duncan got his $500,000 for under $28 a month.
5:25 pm
less than a dollar a day. his secret? selectquote. in just minutes, a selectquote agent will comparison shop nearly a dozen highly-rated life insurance companies, and give you a choice of your five best rates. duncan's wife cassie got a $750,000 policy for under $22 a month. give your family the security it needs at a price you can afford.
5:26 pm
does your wealth manager a cfa charterholder does. you've worked hard to grow your wealth. make sure you're working with a wealth manager who can grow with you. cfa charterholders have the investment expertise to unlock opportunities other advisors might not see. learn what a cfa charterholdr can do for you at therightquestion.org
5:27 pm
the s&p 500 managing to close above a key level today despite global growth worries still swirling around wall street hey, bob >> hello, melissa. this is a very important moment for the markets potentially. we are finally breaching the 2800 level in the s&p 500 and we've even got a shot at getting over 2820. we got close today this is where five rallies have failed in the last six months, in october, in november, in early december, in late february and early march. a break above 2820 may drag in more investors because a lot of people are still sitting on the sidelines. despite the concerns, the vix has dropped to 13. that's essentially the lows for the year friday is quadruple witch iing
5:28 pm
exploration. it has been noted there's a slight upward bias in this week. it's been up 24 times since 1983 and only down 12 times the key to the long-term is the global growth outlook. we had good data today with news on economic goods in the united states earnings may not turn negative for the first and second quarter, maybe but to keep the rally going we need more meat on the bones. that's why investors will be watching key chinese economic data overnight retail sales and industrial production what traders need is better visibility facts that recently pointed out the companies with earnings outside the united states have much lower earnings expectations than companies that have the majority of their earnings inside the united states and this is the s&p 500, not the russell. that means that china and european need to stabilize to get better visibility on
5:29 pm
earnings elsewhere, brexit is another mess the british pound is nearing a two-year high. what the street wants is for the deadline to be extended and then another referendum that might result in the u.k. remaining in the eu we go to tim here. emerging markets still overall the most crowded trade on wall street. >> it's about time they actually have been out performing now for four or five months china's going to have a much of macro data tonight that i think could scare people all of the main barometers of realtime less i think so than the pmis which you get which are a little cloudy. machine orders in japan last night for terrible bottom line is no one's going to be blown away by global pmis and the global growth dynamics question is, did we take the stick out of the spoke and have
5:30 pm
a place for markets to reaccelerate a little bit. i think data has bottomed. >> your next guest says there are big risks to this market that could put the rally on hold so on the u.s., you're cautious for now. >> on the u.s. we're looking at this growth slowdown but i think there's a case for optimism here. we are seeing some of these leading indicators showing signs of troughing not only in the u.s. but in china as well. what we've seen are things like business confidence in china starting to improve, new orders actually in china starting to improve as well. i think what we've experienced here is a bit of a growth slowdown but my guess is it stabilized in 2019 i think one of the big themes for all of 2019 is going to be central bank liquidity which is a sharp contrast to what we saw in 2018.
5:31 pm
i think the good nuz fews for markets is the ideathat we're going to run into a recession, which has been pushed off, we're running to a profits headwind in 2019 in the first and second quarter. that's likely to cause markets to pause in the short-term but the reality is with this lower growth profile, our cycle is extended out and i think we can get another profit cycle here i think the corporate profit story would improve. analysts are pretty negative on corporate profits. >> for china, that's a place that you're over weight. we're seeing this influx out of china and still waiting for the full effect of the stimulus already put into place, not even counting the stimulus that could still be put into place. >> i think the upside is that you've had almost the equivalent of 2.2 trillion puts into the market from the people's bank of
5:32 pm
china through reserve cuts and thinks like that you've got the ecb europe continues to slow not obviously is gdp growth in germany and france really weak the upside to the markets is global central bank easing last year 56% of central banks hiked rates and the monetary base contracted. the last time that happened was in 2011, a really tough year u.s. cyclicals, things like energy, materials, technology, they're all 200 to 300 pe points lower than in september's peak even if we pause in the short-term, 6-12 months from now i think we're higher because valuations are more attractive and we do have the central bank easing in the short-term it's a tug of
5:33 pm
war between fundamentals and an earnings problem. >> where is china if we don't see a trade deal there's this optimism that's really been accelerating is that all predicated on a trade deal >> i think a lot of it is. i think if trade deteriorates from here, both the u.s. and china lose there is no good outcome from a trade war. i think the big risk to the markets is that this trade war is not resolved. that's risk number one let's say we resolve the trade conflict with china and decide to turn and engage europe or european autos i think that is a risk of the markets. the way we see it manifest is not through the s&p 500 necessarily. rather, i like to look at small business confidence. if the trade does deteriorate from here and we end up in a trade war, a worse one with china or one with europe, what happens is the small business confidence deteriorates, so goes
5:34 pm
gdp. small businesses in the united states employ 50% of the private work force if their supply chains are interrupted or their prices go higher, then take any optimistic forecast and throw it out the window. >> it's interesting. obviously boeing was a big story today without question but the president had this press conference one of the many things he said is he's really in no hurry to do a deal with the chinese. i think that got lost in the noise with boeing. i was surprised the market didn't sell off more i've been in the camp this market is going to roll over here at 2800 last week i would have looked smart and here we are right back the fact that the market hangs out here as long as it does, is it giving you that much of an opportunity to sell what has at least been a high for the last couple of months maybe we do grind a little bit higher here. coming up, it is the big story of the week. all of boeing 737 marx airplanes
5:35 pm
now grounded on track for its worst week in more than three years. plus, aurora's new bud that stock soaring after the ratec s hired nelson peltz aa stgiadvisor. ♪ (butcher) we both know you're not just looking for pork chops. you're searching for something more... ...red-blooded. right this way. you thirst for adrenaline, you hunger for raw power. well, you've come to the right place. the road is yours, dig in.
5:36 pm
5:37 pm
5:38 pm
welcome back to "fast money. aurora cannabis hitting its highest levels since october as the company announced it is bringing on hedge fund manager nelson peltz as an advisor >> a budding friendship, indeed. who knew the word strategic advisor could have such an effect on one company's stock price. aurora says peltz will advise the company. in exchange peltz has been granted options to purchase 20 million shares at a price of 10.34 per share. but having peltz aboard is also a strong vote of confidence for aurora he said in today's release that
5:39 pm
the cannabis company is strongly differentiated from its peers in that it's well-positioned to lead the dwolt of tevelopment o company sbrainternationally. peltz is a director of wendys, proctor and gamble peltz's connections may have appealed to aurora gordon haskit believes today's news makes cannabis stocks more investable a analysts have noted that shares would have to triple for peltz to reach the price >> the wealth of expertise in consumer products, you can't
5:40 pm
ignore that. >> when i think cannabis, this is truly a consumer products story. it makes total sense now, people think about nelson peltz, they also think about an activist that's not what's going on here. aurora has arguably been the most aquiztive or or stock on the ak decisi the acquisition trail. >> i think it's a great opportunity for people this is a name that you need that's a great front man there are so many stocks to look at, so many different choices. i think the diversity of what this company offers and nelson peltz being the front of it, boy, that certainly says a lot >> this also underscores the institutionalization of this sector when you have a big, well-known,
5:41 pm
well-respected investor like a nelson peltz get into cannabis -- >> every conference i go to, the institutional investors, the consumer products guys, the biopharma guys, they're there. >> he understands brands he was the snapple guy back in the day. he gets the brands thing. >> did you work for snapple? >> i never worked for snapple. >> i would have had you for a snapple guy. >> i feel like you would have had -- >> i should have they made a mint snapple it was tremendous they've taken that off i digress. now nelson peltz has had a roughly 2 1/2, 3-year relationship with proctor and gamble i think proctor and gamble is way over its skis here. >> they really need a guy like this in terms of the brand, the
5:42 pm
partnership. to have a national brand in cbd -- >> the farm bill, which had the hemp component which made it federally legal for people to set up hemp and cbd businesses we still have the fda that has put a little bit of change although the new appointee is very cbd friendly. the bottom line is for anybody that's looking to immediately have a u.s. footprint in a consumer brand, they don't have to worry about the federal restriction. i think that's very important. in fact, aurora can come here and do it. it's listed on the new york stock exchange if they started dabbling in u.s. businesses in the cannabis market, that would be a problem for this company but they don't need to think of all the big consumer products companies this guy has -- >> they all kind of go together. >> we've had some great option
5:43 pm
paper in that world as well, and particularly in that stock, in aurora it's interesting to see what's going on in that space. boeing having its worst week in three years as the company grounds its fleet of 737 max planes we'll tell you how much worse it can get for the stock. plus, health care lagging in the market this year there's one under the ray ddar indicator that could send shock waves across the pate. & he's got wide feet. & with edge-to-edge intelligence you've got near real time inventory updates. & he'll find the same shoes in your store that he found online he'll be one happy, very forgetful wide footed customer. at&t provides edge to edge intelligence. it can do so much for your business, the list goes on and on. that's the power of &. & if your customer also forgets socks! & you could send him a coupon for that item. with a $500,000 life insurance policy. how much do you think it cost him?
5:44 pm
$100 a month? $75? $50? actually, duncan got his $500,000 for under $28 a month. less than a dollar a day. his secret? selectquote. in just minutes, a selectquote agent will comparison shop nearly a dozen highly-rated life insurance companies, and give you a choice of your five best rates. duncan's wife cassie got a $750,000 policy for under $22 a month. give your family the security it needs at a price you can afford.
5:45 pm
5:46 pm
. welcome back to fast money boeing dealing with the fallout from its second deadly crash involving one of its 737 max planes countries around the world responding by grounding the planes president trump announcing that the u.s. would follow suit. >> we're going to be issuing an emergency order of prohibition to ground all flights of the 737 max 8 and the 737 max 9 and the planes associated with that line any plane currently in the air will go to its destination and thereafter be grounded until further notice >> well, it's been a rough week for boeing options traders are betting
5:47 pm
there could be more pain ahead in case viewers didn't know, mike knows a lot about aircraft and eairplanes and how they wor. i'm curious to get your take on top of the action. >> sure. so probably unsurprisingly the options activity has been elevated significantly this week i mean, we've seen over 400,000 contracts a day trading on average, monday through today. that's well over four times the average number and we are seeing a very sharp increase in the implied volatility although we can see a little in the options market that tells us when we might start to find some answers and see the volatility on the stock come in a little bit. the weekly 360 puts, 15,000 of them had traded for just over 3 bucks. it's not surprising that you're going to see people who probably have positions in the stock
5:48 pm
looking to potentially hedge their downside however, i would point out when you look at the price of options going through time they're going to be announcing earnings in late april they probably will have some additional color that the time on basically what the featureuts going to look at when you're looking at june, july, august and so on, it seems like the options market right now is basically going to expect this to be news driven as it has been but after that earnings period we probably are going to have much better clarity on how things look for the company going forward. >> knowing what we all know right now in terms of what the situation is and just having the base knowledge that you have about aircraft and boeing, would you be inclined right now to go in long boeing in any way shape or form given the action we've seen in the stock today? >> that's a question not only about a specific aircraft but also what their potential competition is this is the most popular single
5:49 pm
aisle aircraft in the world. their direct competition is going to be the a-320 obviously. with that huge order book they have, think about how meaningful that is, 5,000 aircraft, $120 million per aircraft you're talking about $600 billion in revenues. it's a pretty staggering number when you think at it what are airlines going to do instead? are they going to run out and buy a-320s, are they going to cancel their orders? i doubt that's the case. the real question people ought to be thinking about is what's the company's liability. that obviously is going to be a permanent knock on the stock they're going to have to obviously off some compensation. >> mike brings up a lot of good points he and i were talking about similar things implied volatility has gone through the roof when you go from 16 to 40, these implied volatilities, you don't get an opportunity to see that very often
5:50 pm
to see people buying and paying up so much for the puts is quite extraordinary obviously. this is going to go all the way too earn i to earnings, get a little bit more clarity then on what some of the impacts might be. you might even say volatility stay even past earnings into play. >> don't you think the market is going to start to work through this even after the black box day? would you be trading these things hard over the next couple of days? >> absolutely. i stared at them yesterday, stared at them again today didn't make a move but very much considering owning the stock and finding some nice juicy ones to sell still ahead, health care rallying this year but still lagging in the markets there is one under the radar indicator suggesting the sector is falling ill
5:51 pm
what do you look for when you trade? i want free access to research. yep, td ameritrade's got that. free access to every platform. yeah, that too. i don't want any trade minimums. yeah, i totally agree, they don't have any of those. i want to know what i'm paying upfront. yes, absolutely. do you just say yes to everything? hm. well i say no to kale. mm. yeah, they say if you blanch it it's better, but that seems like a lot of work. no hidden fees. no platform fees. no trade minimums. and yes, it's all at one low price. td ameritrade. ♪ and everyone i've ever opioloved away from me.thing everything. i blew my ankle out and i got prescribed pain pills by my doctor.
5:52 pm
if making my detox public is gonna help somebody i'm all for it. i just wish i would've had a warning. how business gets done is changing. energy, success, the face of entrepreneurship is changing. see how we're changing. at bankofthewest.com/change bank of the west. the bank for a changing world.
5:53 pm
energy is changing. transpotation is changing. at bank of the west we're helping our customers drive that change. with lower rates on a car loan when you use it for an electric vehicle. find out how much you could save. at bankofthewest.com/ev all of you. how you live, what you love. that's what inspired us to create america's most advanced internet. internet that puts you in charge. that protects what's important. it handles everything, and reaches everywhere. this is beyond wifi, this is xfi. simple. easy. awesome. xfinity, the future of awesome. welcome back health care under performing this year in the broader market. big pharma stocks could be about
5:54 pm
to face a new set of problems. s&p ratings assigning the pharma industry a negative outlook for 2019 citing the company's balance sheets could weaken as shareholders demand higher payouts for moderate decline in profits. those same companies could make large debt acquisitions as companies face lawsuits on top of all this for marketing distribution of opioid products. so how bad could this get for big pharma >> i mean if the debt markets get bad for big pharma, that's really bad but that has to happen not just in a vacuum within debt markets being shaky as well. if that happens, there's a lot of reasons, whether it's that do big acquisitions, take on a lot of debt, whether they have big liability or do big repurchases. if you think all those things are true i'd be short the equity
5:55 pm
or some index. i think the risk/reward for that -- i mean, what happened to bristol meyers >> i'm still inclined to be bullish. e eli lily and even pfizer have done well. brist you had an opportunity a couple of weeks ago when cellgene got nixed. we talked about it being an over reaction here it is now i hear what baron's is saying. i still think big cap pharma works. >> there's an interesting cocktail in terms of the drug pricing. if you have a combination of these big pharma companies like a bristol myers. you've got these two really detrimental factors working against you all at once as an
5:56 pm
investor. >> right but i think you've real separation in big cap pharma bristol myers has done nothing where eli has been a horse someone like pfizer to me in an environment where people are concerned about earnings growth and valuations, i think pfizer is straight up the middle. i have to think that drug pricing noise is what it always seems to be, which is noise right now. i think if anything, that's an opportunity. big cap pharma and the balance sheet at pfizer to me is actually something i'd been encouraged by. >> i agree with now in terms of some of the noise. merck has an incredible pipeline still with unbelievable drugs now in the market with ten more in finalta sge got to love it. up next, final trades. a cfa charterholder does. you've worked hard to grow your wealth. make sure you're working with a wealth manager who can grow with you. cfa charterholders have the investment expertise
5:57 pm
to unlock opportunities other advisors might not see. learn what a cfa charterholdr can do for you at therightquestion.org
5:58 pm
5:59 pm
time for the final trade >> tell you what, play the range. macy's went long in the calls. giddy up, big buyers. >> delta is best of breed. >> i love the economic data. want to stay long, but with the vix i've got to buy some puts to protect my longs
6:00 pm
s&p puts. >> fun show. great to be back. >> great to have you back. >> other than my face, you know what's breaking out there? >> no idea. >> look at the screen. 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" upon welcome to cramerica. other people want to make friends, but my job is not just to entertain you, but teach you, call me at

15 Views

info Stream Only

Uploaded by TV Archive on