tv Fast Money Halftime Report CNBC November 14, 2018 12:00pm-1:00pm EST
shares are down about 2.5% right now. and how about one that's up, survey monkey, better than 15% on a strong earnings report. possible it has to do with more than that. this is one of the main competitors of quaultrix >> don't forget powell speaks after the bell and cisco tonight on "mad money. over to the judge. i'm scott wapner seemed like the unthinkable, didn't it? apple in a bear market it's getting dangerously close to happening this hour which could be the most ominous sign yet for your money in this market it is noon and this is "the halftime report. down 15% in a month. how far can apple fall from the tree citron researcher andrew left is here live with market moving opinions on key stocks including netflix and nvidia and sales force ceo marc benioff goes after facebook comparing it to cigarettes. "the halftime report" starts
right now. good to have you with us on this wednesday here to debate and trade the biggest stories of the day jim lebenthal, steve weiss, kevin o'leary, the chairman and cnbc contributor, amy raskin with us from chevy chase trust, andrew left with us as well for the hour he, of course, the founder of citron research. stocks reversing after opening higher it is apple where our focus remains. the world's most valuable publicly traded company under significant pressure yet again down five straight days for the first time since april, raises the question whether that one stock holds the key to the entire market. kevin o'leary, your opinion of apple, why it continues to trade the way it does, and how important it is to the overall market right now >> judge, we were together when the print came the night before about taking units off the roster and not telling investors anymore how many iphones or
ipads were sold. i sold the stock after that on the comment by the ceo that it was just like looking inside a grocery cart it didn't matter what was inside they are based on selling units to buy more services if you are an analyst you have a little cell in the spread sheet that has the forecast. you can't fill that box anymore. that narrative changed in a dramatic way the stock will continue to trade down i don't own it i think it'll make it to $160. i don't know what the floor is >> you know what, look, $186.78 is bear market territory for apple. >> guaranteed you'll get there might get there today. might get there during the show. >> weiss, what do you do with this name? why does it continue to trade so poorly how much further do you think it could fall >> should i wait for you to play
the clip of my saying they're going to be down on units? >> that's right. >> never say i told you so >> i didn't. i just asked if they wanted to play the clip. look, you have to rerate the company when the transparency story changes. you do with every other company. apple is not immune to that. i've maintained that the ceo is a caretaker. he's not an innovator. this company is not an innovator. air pods have been the best thing they've innovated. they're a follower now you have a mature market where you're raising prices while units are going down usually you say i'll make it up on volume. here they're going the other way, raising prices in what's a commodity market where you don't have to change your phones because the upgrade features doesn't warrant $1,000 you're also anniversarying the first two years when the telco companies cut back on subsidies. people are saying this $50 a
month, which is half my bill, so i do think apple will go down. this happens to every single consumer products company, consumer electronics company nobody has been away from it it's expensive still in my view. i sold some. unfortunately, i sold my puts as well >> amy, you own apple. >> i do. >> what do you do? >> we trimmed it before the quarter. we took a big chunk of our position out i still own it it's still up for the year i think it got ahead of its skis everybody was rerating it saying it was a services business now, not a hardware business. i think that was a little crazy. i think it's still a good company. they're still a huge ecosystem i don't think the innovation is dead you're right, it hasn't been here recently, but it could happen again >> ten years >> they're still the leader, still the market share they're still the company to beat >> jimmy, you took your position down as well >> yep did it two days after the quarter. i did it on the news
and kudos to you, steve, because you did get that right looking forward, you have to decide, are you an investor or are you a trader you come up with two different decisions. amy said this is right, you're focused on services. i still think they are innovating in terms of the services and the product let's not argue about that it's a good hold in the short term, this is going down the narrative is awful right now and it's about the phone, steve. you got that right and the narrative isn't going to change until one of two things happens. either the china story turns around, which starts to get emerging markets growing again for iphone demand, or you get a good holiday season. guess what, neither of those two things will happen in the next two weeks. it's just not going to happen. the trend is down. if you're a trader, this thing is going down. scott, that's why i took a position off when will i add to it? i can't give you a price target. it's when it bottoms i don't know if it's $180 or $160 >> you can be an investor and take a position off. i haven't sold all of it to me, it's changed.
margins are under pressure it's undeniable. >> actually, that's categorically deniable >> no, it's not. they lowered their guidance on margins. >> margins are terrific. the average selling price has exm is volume, steve i mean, this is -- >> did he not -- did lower his margin guidance or not? >> steve, the average -- >> did he lower or not >> you have to think this through, baby. >> it's a yes or no answer >> he lowered it for one quarter, i don't care. average selling price -- >> only forecast that one quarter. >> steve, you have to think harder about this. average selling prices are going up every time they add more memory to a phone -- let me finish. let me finish. every time they add more memory to a phone, their margins go up. the cost of that excess memory is like nothing. and the price of the phone goes up their long-term trend in margins is terrific. short term it's a disaster >> which leads me to citron's andrew left.
good to have you here. thanks for being here. i look at the positions you currently hold and i don't see apple among your holdings. is that correct? you don't have a position? >> i personally cannot look -- i can't find any edge owning apple. it's a wonderful company i agree with both of you as an investor or trader where am i going to find my edge i would rather look for the collateral damage from the apple fallout or what other companies look ridiculously expensive now as apple goes lower. so it's easier for me personally to gauge that. >> i don't think people even, you know, the broad sort of audience understands what you do for a living you run citron research which you founded. >> yes >> you're not only short although that's what you've become known for >> then a ten-year bull market, short stocks, i would probably be living in a refrigerator box. i'm long all the time. i find great stocks. some of your best stocks you
find to own is when you're looking for a short. sometimes you find stocks as recently as tesla that used to be short and now you want to own. what is very difficult is when doing research and trying to gain an advantage over the market is to handicap an apple for an investor i think i make a decision, do i want to own apple or not own apple as a trader for me, the way i invest, i need to find something i believe i can have an informational advantage. >> how important right now is apple to the overall market, kevin? >> i don't think it's that important. >> you don't think it's as goes apple so goes the market >> for a decade now value or quality stocks have trailed and they haven't performed all these value managers have been slaughtered by indices that moved ahead on stocks. apple was part of the narrative though it wasn't a company that was trading in a crazy p/e the history of giant consumer electronic companies that have failed is long the bone yards are full of great names, the nokia, motorolas.
i'm not saying apple is one of those. can this stock go to a $12 or $13 p/e? >> it's there. >> i can't say enough as an investor why in the world would you take information away from me why would you do that? and are up not getting punished for it yes, you are and so the message to the company, and i'm just a single investor, but it drives me crazy when you have a business model based on trojan horse sales on phones and you take that data away from me i have no idea what will happen next quarter i don't know if they're selling more or less phones. they won't tell me you're paying for that mistake in a big way billions of market cap being erased you find an investor that thinks what they've done is a good idea >> the idea the faang trade is over and the market can't go up, even come close back to record highs without the faangs, do you believe that how are you investing and trading? >> can we knock on some wood around here? >> i hope so what's interesting about apple
compared to the other companies for years, you could have liked the product, bought the stock, and made money right now you can love amazon, think it's the greatest product in the world, sit there seven years from now and say, oh, my god, what happened there are not many companies including all the things you could have done besides apple. so you'd have to give the company credit is the faang trade over? the easy money momentum looks like it's over how much are they going to bring the numbers down are you talking about the trade or the underlying companies? having analysts move targets every week i don't look at as being the underlying company the trade is over. >> if i say, okay, facebook is down 34% from its high, apple 16 and falling, netflix 29, and alphabet 18, you look at any of those -- >> i'm short netflix i think i look at all of them and i say apple, facebook and a.m. a done can do what netflix does i have two reports coming out, one says netflix will raise prices >> don't they have -- aren't
they one of the few companies who actually does have pricing power? >> i say they will lower for mobile devices i read today. when you say pricing power, unlike an apple who has created an ecosystem, netflix has to continually create those hits. just keep going. >> so does amazon or anybody who will compete with them >> amazon doesn't make the hits. they have a great system they don't have to constantly -- >> they have been creating content. there's no question about that i agree content is more expensive. >> it's a hamster on a treadmill. it's the biggest hamster one of the things i read that you said, maybe it's not you, hey, there's a problem with debt here now i'm thinking of you as a short seller and thinking you need a catalyst. you don't just want to short things on valuation because they can be overvalued for longer than you can stay solvent. is the debt issue with netflix what your catalyst is? >> in this market, i was short netflix maybe four months ago and i wrote a column why netflix is going to $300 i think i came on this show and i was completely -- not this show, this network, as if i was
crazy. it happened so fast. the catalyst is never just on earnings >> i didn't say earnings, i said debt what is the catalyst to get it lower? >> the catalyst is when you see stocks like apple going lower and as people rerate the market. now they're not just buying faang. there are stocks underneath that and you say what do i want to own? when people strip that down they may not want to own netflix. they would rather own an a.m. a done -- amazon. >> do you all believe that the faang trade as a whole is dead and that these stocks are going to trade individually from here forward? >> i buy that premise. facebook has been beaten up badly and yet i can't find another platform for all of the small cap companies and prip vat companies i invest in that can get you advertising. it's a valuable service, it's the only one that does it. the next two quarters, they're upping their spend up to 19% on facebook the stock has been slaughtered
no one seems to care >> the same type of advertising. >> you can't geo lock the same way. you can't go down to a city and say i will price a product test in seattle at $19. >> they tell you they can do that >> before the show i said i don't want to see the content on instagram. i like the ads >> they do a great job >> they know me so well. i forget about the content and i buy a pair of golf shoes at 2:00 in the morning >> google will do that, alphabet >> you need the content. >> you're long facebook which surprises me a bit >> the edge on facebook. >> you're right. i don't have a concentrated long it's not the part of facebook. as i keep a portfolio, i'm long facebook as much as i might not like the trick and i think my children spend way too much time on
instagram and see my privacy invaded, i also see the ability to advertise they deliver the micro focus of the advertising. no one else can do it. >> i have visibility through quarter one and two next year and we're up 19% >> not gradually >> their top line is not going to shrink. >> it's all about the money. >> you're looking on the screen as apple has now fallen into bear market territory. >> it's your fault, scott. you did that >> why don't i have anybody saying this is ridiculous, the stock has come down way too far and this is absurd you should be a buyer. the whole thing cramer says, don't trade apple, own apple >> you have to respect the
chart. this is a falling knife. it's that simple >> why, why, why >> there are fundamental reasons, and we covered them at the top of the hour. >> lack of transparency? >> why aren't you buying it here >> they're not going to give you iphone numbers so you're going to run for the hills >> yes it's empirically based. >> he's right. everybody talks about the middle class and china. making less than $10,000 a year. it's not the middle class here i've even seen $3,000 a year you have competing phones. you don't have the ecosystem you could buy a phone, one with more features on it for $200 >> and as a trader you might say i'm not buying apple because i don't see it go higher
why will it turn around tomorrow and go up 10%, 15% is not there. >> i have no intention of selling my whole position. i do look out a few years. >> didn't you just criticize me for saying that? >> no. i criticize you every chance i want >> i have to say this conversation isn't making me more bullish on apple. >> there is a point of view out there whether it's those who think we'll have a year end melt in the market and you're going to have growth stocks that have gotten so poorly punished have a rebound and you have to believe that if those are the stocks that will lead knew a year end rally whether it happens or not. you don't think apple will be up with the other growth and momentum names >> tim cook can say we're buying back a part of the market >> buybacks are not moving the market you can look at qualcomm
stocks are down something like 25% in the last month. >> the dividend is what i would look at. these buybacks don't serve you well when this happens >> the whole tech trade in general, do you think, andrew, there's growth trade that you've had a meaningful shift into value and that's lasting some of you are short nvidia >> discussing the stock went from $170 to $280 and i think in the past 45 days it's gone from 280 to 135 so there's no -- once -- once this came out of the market and apple starts going lower, that's what people look at.
who is really swimming out there naked. >> over the last few months, you've killed the momentum players. take a look at tilray that's come down from $240 -- >> we'll get into that later with andrew. >> and you killed the valuation umbrella that lifted everything equally. nvidia i thought was overvalued. i was wrong. i sold my stock at $80 that's hurt the others do i think it's an expensive year, yes. selling at half its growth rate. >> who thinks we're at or near the end of the correction we went through do you, jim? >> listen, the honest answer is i don't know because, to me, it is all keyed on negotiations with china and it could go either way, scott. the buenos aires meeting, we'll probably get some hot air. >> i'm positioned for it
i have 10% cash in my portfolio which means i'm 90% invested if i see things getting worse in china, i'll raise the cash it's data dependent on what goes on with china. >> if not tech, what will lead, kevin, if you do have a run? >> the narrative is changing this is my call, what i've been doing. stocks have trailed, and now the quality of earnings, now cash flows, now reduction of debt starts to matter all of a sudden the most boring names are outperform the j&j, that kind of thing, a mobile balance sheet in energy the most boring names are outperforming the indices. value and quality of earnings and names we never talk about. who is excited about j&j >> an area of the market that you like >> and i still -- susceptible to
the trade issues >> it corrected badly along with the rest of the market yet there are many names in there if you take the reits out they are heavily levered and big issues around interest rates you take the reits out of the russell 2000 that's an interesting index. i stay long that space for two reasons. not affected by china that much. secondly, p/es are getting down to 12 and 13 times that's a lot less than 14.9 on the s&p 500. >> the big companies are better than in the past the top 100 companies is now 80%. that number was 50% 20 years ago. much higher free cash flow margins. i brought a chart if that's of interest to you. i don't think we go back to a
value market if we do come out of this, which is entirely possible, i do think it will be those high quality growth companies that are leading again. >> let me jump away from this conversation for two seconds, go over to leslie picker who has a news alert former position, scott, mondelez speaking on an investor call about exiting the stake in mondelez which was worth about $722 million 16 million shares, a 1% stake in the business speaking about the position in their decision to exit he talked about the opportunity to improve operations as well as a potential combination with a company like kraft/heinz the stock is no longer pricing in the potential for a
combination there. the boards are more receptive. he believes that opportunity has since passed and so they decided to exit the mondelez investment, that the company does well, and was tied up in that investment. >> we'll be back with you in a little bit to another stock it plays andrew right into the conversation of tech names that have gotten crushed and that is snap it's down 46.5% over three months i would expect you to say i'm short because this, that, and the other thing and you're actually long. how? why? >> i can't help myself >> make the case for snap. >> going back to the facebook and going back to shopping on facebook and commerce on facebook, and i just wish evan spiegel didn't say he's going to stay private before that i thought it was a no-brainer purchase for amazon to go ahead and incorporate. you have 180 million new
customers. you put yourself in right there. integrate the visual search and the visual commerce that will come out of it you can't look at corporate defections i don't even care about that, that's noise i said, you know what, 180 million users for what you got compared to facebook, it's extremely cheap, can somebody come in there or make a strong partnership. and i thought evan spiegel will look up to mr. bezos and say, okay, i'll sell you my company it's never been an issue with snapchat it's been an issue would he sell the company not find a buyer for the company >> it's a twitter dialogue they would have to be a new story.
>> why wouldn't you own twitter instead of snap? >> i have owned twitter. snap is so beaten down should be trading much slower. >> except for the s.e.c. >> the news keeps on getting negative if you have kids you snapchat, how much they do use snapchat. and you still can't say it's dead 180 million people out there, young ones, who are using snapchat >> he has to be open i think it makes a strong partnership. obviously they're redesigned for android is terrible and they're coming off that. when you take a company that everyone is ruling for dead like a snapchat, if i said one of
these companies up 25% in the next three months, facebook or snapchat, what would you say >> i think snapchat goes lower they both have governance issues except zuckerberg has shown, not lately, but an ability to grow the revenues facebook and working on instagram. i would rather own that without a doubt. i worry whether snap will be around >> the bar is so low >> for reasons >> one piece of good news -- >> you have governance issues. >> the stock will look different. >> guess what, he controls it. you have a guy who hasn't been able to run the company correctly. if the s.e.c. issues are correct, they just underscored the lack of governance there, a
lack of monetization >> they'll find out when he's no longer a billionaire and has billionaire envy and then he'll sell the company >> is there any cash flow right now? >> that's not this story i know you love the free cash flow story this is the story of 180 million of theright users getting your attention. >> they don't have credit cards. they're too young. >> but they can integrate it with an amazon don't forget at one time -- at one time everybody from google to facebook has looked at this company to buy it. the governance issues are real but the stock price, look where it is now. >> it's a hope and pray stock. >> it's not a retirement stock definitely not but as a contrarian, where it is right now and i woke up this morning with the s.e.c. thinking it's going to be down another 15%. let's see. >> but in this market if there's no cash flow, you should not go. >> i love that >> i will step away for two minutes. we'll come back and here is what else is coming up on "the
halftime report. the big debate over tesla. >> i kept upgrading my tesla to one that had a camera and radar and one that would have eight because the first would never do it then i gave up and said it's not going to happen. >> andrew left has been on both sides of the trade weighs in next before the break, our data partners at kensho on black friday's top performers. watch the retailers. healimre go to cnbc.com/kensho "t hfte report" with scott wapner and the traders is back in two minutes ♪ ♪ the new capital one savor card. earn 4% cash back on dining and 4% on entertainment.
we're working to make things simple, easy and awesome. welcome back to "the halftime report. we want to call your attention to what's happening with shares of pacific gas and electric corporation. they are now down 25% off their worst levels of the day. this is one of the california utilities that's at the epicenter of a lot of the fire concerns in california right now. just to reiterate what's happening, the company did say that if its equipment is determined to be the cause of one of these raging fires in northern california, that it could be subject to significant
liability in excess of its insurance coverage it said that it could be on the hook for more if determined it is at issue. something to watch there, scott. back over to you >> dom, thank you very much. to sue herera who has the headlines for us hi, sue. indeed, i do here is what's happening this hour, everyone the incoming chairman of the house oversight and government reform committees is pledging to be judicious with issuing subpoenas. elijah coming says even trump supporters want accountability >> even in trump country if you look at the results of this election, they're saying, we like trump, we like what he's doing, we want the congress to make him accountable ford is partnering with walmart and online delivery service. testing will take place in florida's miami-dade county starting next year and the christmas tree at rockefeller center is getting a beautiful new star workers started to place it on
the 72-foot-tall norway spruce it was designed by daniel leibstein, the first redesign of the star since 2004. and it is beautiful. you are up to date that's the news update this hour scott, back to you >> sue, thank you very much. it's been a tough year to ylan mui with breaking news that's right maxine waters, the ranking member, making some incendiary comments about banks during her opening remarks ahead of the hearing for the fed governor >> make no mistake come january the days of this committee weakening regulations and putting our economy once again at risk of another financial crisis will come to an end >> that is sending bank shares on the s&p etf lower there
and her comments are in line with some previous statements she has made we got a copy of a letter she sent to colleagues in which she has said she has been on the front lines of pushing back against republican ideology that rolls back wall street reform and pursues an anti-consumer, anti-investor, low and moderate income family agenda she is going to be important because she is likely to take over as the chairwoman of the house financials committee lots of changing dynamics. >> interesting thank you very much. ylan mui at our bureau in d.c. will this be yet another issue for the financials >> they've had enough issues >> a constant drumbeat of hearings about this. regulations here, there, and everywhere else. >> this was supposed to be panacea for the banks. a cutback in regulations, arguably, the strongest balance sheet you've ever had. the ten year got to 3.25 and yet
the stocks can't perform i think the models are damaged loan growth hasn't been great to direct lending it's not going to grow in that environment. i don't know if it gets better it's another value trap at this point. i do own them. i did cut back on b of a not on citi. i bought more. >> here we are in november and the story was financials will be the transition to leadership that they would now be the sector that would take us through the roof on the s&p. i think the singular is the loan growth loan growth on the big names, goldman hit a new low. it is trading at new lows. >> citi is $64, so far below book >> and buying back a ton of stock. >> by the way, the banks have the best ceos in the s&p
they are battle tested, have had to live through the worst of times and are not reaping the best of times. >> i never understood the call of loan growth was never going to accelerate with interest rates going up i think these are value trapped. >> the spread is why i own them. >> i want to get back to a story we were going to talk about before ylan gave us the breaking news tesla, ceo elon musk describing 2018 as the most difficult and painful of his career. i spoke to apple co-founder steve wozniak about the challenges at tesla. here is what he said >> tesla has no autopilot. they call it beta. i'm sorry, what company puts out a feature and calls it beta. tesla has made so many mistakes, it really convinced me autopiloting and a car steering itself is not going to happen. i don't like it when i feel duped.
>> interesting from wozniak who owns a tesla and bought it on the expectations it was going to be as grand as musk sort of laid out everything to be you heard his thought there. you were short >> yes >> you are now part of a class action lawsuit regarding his now infamous -- >> i'm the lead plaintiff. >> you're the lead plaintiff >> yes >> is it a class action now? >> yes >> and you're long the stock >> yes you appreciate that. i want my money. he lied and i want my money. he took my money how that is relevant to the story now -- >> how much money did you lose that day >> that was like $2 million. and, believe it or not, whatever it was with the class, okay, honestly i sent my paperwork in and i had a cnbc alert on my phone, looked down, saw my name. uh-oh, what happened i'm the lead plaintiff okay, well, that's true.
>> you're the lead plaintiff and now you're long the stock. you put a note out on october 23rd in which you write as much as you can't believe you're reading this, we can't believe we're writing this so how do you go from your position and your feeling about what happened and now you're long the stock >> for the past three, four years, hated tesla you looked at it, every car company goes out of business when are they going to make money? only looked at the small bumper sticker meme like thoughts on tesla and not the deeper ones. as a short seller the most important thing you have to do is check your thesis all the time and see when things changed. when they started with the model 3 and the launch and the production and the numbers how they were eating from the top to the bottom, it wasn't a revolution in this country it was a tesla revolution. people want to own the teslas. and if steve wozniak doesn't like his tesla, that's fine. plenty of people want them and they're turning things upside-down the way it's being sold, and then you start saying,
how can they make the margins on the cars and you see, go ahead, it's not me there's a consulting company that breaks down, do a teardown of the model 3 and show it even if you don't want to buy it, when the stock was 265, heavily shorted, knowing they're going into a quarter, the first production quarter, with bailey gifford, fidelity, and trowe owning all the stocks. they didn't stick by him four years, fraud, ambien -- >> can i ask you a question as an investor. i have a simple question all the car companies around the world that have a long history of making cars and making money traded between 13 and 17 p/e when and if this company ever makes money why isn't the stock going down to $42 and it will join its compatriots it's different this time >> it is different this time >> oh, yeah, sure. this stock is going south.
>> how about this, i can tell you right now something. the dealer network is a ridiculous concept i would never let my wife or my daughter -- let me finish -- go ahead and buy a car. the way tesla sells the cars, not only are they generating more margin, they're making it better if you look at the nonunion aspect of it all, the less outsourcing of parts, they can start making money the other companies, unfortunately, can't just change their whole business models. when you want to start a company you can't be half pregnant you're there or not there. how about this, i'm not saying with my report, i'm not saying tomorrow you wake up and the shared mobility, i'm not buying any of those stories could they happen? maybe. i'm saying it was an overcrowded short, and you look at the people who own the stock, the big shareholders who own a lot more stock than anyone i know short, and what do they know what models are they looking at? once you cross out all your prejudices against the company and against musk, it's different. >> hold on one second. fundamentally, though, do you
think they need money? they need to raise capital >> i thought so. >> musk. >> it's so hard to say, yes, i believe musk but, yeah, i believe musk right now. he doesn't need capital, he doesn't need capital >> i think the issue is overstated all the shareholders that own it, that have believed in it, will re-up if he has a secondary and he should and the stock will move higher. here is the issue, one of the issues with your argument is fidelity is a page one sha shareholder on every single stock and it hasn't stopped any of them from going down when their time is due. you said snap, you don't care about them losing people it's not even been announced yet but i've heard their head of procurement left to go to lyft who followed another senior guy who went to lyft and then you've got rolling off and arguably it drove sales last quarter the tax abatements or tax gifts, the credits, which are substantial.
>> he's a difficult man. i'm not doubting that. what you're saying all the reasons i was short the stock. how many they're selling forget about all the noise how many they're selling what's the demand for it who are they eating from that they're not eating -- they're eating from the top and from the bottom >> we're talking about car companies that have -- that generate different margins you're looking at old car companies. >> one at a time, please >> do you think this will change the metric margin by so much that it should trade at a 50 premium to the rest of the car companies? >> if this was the only company in the whole stock market that we could have that argument we could put it here and have that. we're going to pick on the one
that's probably one of the most disruptive companies, that's ridiculous >> you brought it up >> on tesla they can't possibly meet the demand that you expect them to have, number one >> that's a good problem >> it is except you're seeing so much capacity from the other cars thinking any day -- >> they happen slow. >> i have breaking news i have to get to. i'm sorry. dom chu, you have a market flash for us i do it's the currency markets, the british pound taking a leg lower. this is comments from uk prime minister theresa may's cabinet according to reuters citing a source, a source saying may will not deliver a brexit statement to the media on this wednesday evening so the idea possibly
that there may not be any new developments in this effort to sell the new brexit plan to members of their own government is what's taking those pounds lower, something we'll be watching shares of ewu moving to the lows of the day >> you see the chart interday that theresa day at 10 downing was going to make a favorable comment about the brexit negotiations and that's why the pound had been moving higher off of the proverbial cliff, if you will >> even yesterday that we would see a positive development this idea that we were going to wait to see if theresa may as prime minister could just get her own government, her own cabinet ministers to get and huddle around this potential deal if this were not to happen, the question whether or not it would be broader accepted by members
of parliament there. >> the deadline fast approaching to try to come to some agreement between the uk and the eu. that's dom chu i want to move past tesla and get to another name mentioned earlier but we didn't go into any great detail tilray >> never heard of it >> you're not long that, too, are you? >> these stocks are under pressure today as a result of some earnings. and you have an interesting history with some of these names. >> the stock not the product >> what is your current position >> i'm short >> you have been for a while >> yes >> you have your face ripped off for a little bit >> yeah, i had a bad 48 hours. i have no problem saying this. i probably lost more money than i think they've spent on r&d since its inception.
maybe more than the revenues for the quarter. >> why are you still short >> like i said with tesla, if the premise changes, you go. tilray went public at $18 a share. it's only gotten worse, the landscape of it. $103 a share that's a joke. this is not a stock. it's an instrument, not a company. it's getting this much airtime which is unfortunate you take companies like tesla, apple, these are companies tilray is a stock operation. keep a low flow. retail investors won't know. it hits cnbc for a while they had a side box on the side as if the company cured cancer or something and where did the stock price go it will go lower they put out their quarter you don't even want to read it
>> i know these stocks and i have two questions >> this particular one is the worst. >> the issue around this industry is i have been offered this stock and many others at a fraction of these prices in the option days and i called my guy in washington who does my compliance for me and he said one thing to me, are you out of your beep mind this is a schedule one narcotic with rico implications for you as an investor are you crazy? >> i believe these stocks are not held by institutions but by retail investors and hedge guys. you can't buy the stuff. you could go to jail for 26 years. >> it's held by retail investors. >> any professional would look at this and say -- this has been the largest transfer of wealth from private to public
a lot of institutions owned private and it goes public and you have millennials >> hang on, why this -- why do you single out this specific name >> i'm also short kronos i'm short a basket of the names. >> you're short the sector >> yes >> what's interesting about that, now that sounds interesting because i did a little research as i was longingly watching the stocks go up 500% and i can't own them the most expensive place to grow this is in an arctic climate it has to be done in a hot house. it's crazy it should be grown in colombia, venezuela. this isn't going to sustain itself it's too expensive to make in canada >> 12 months ago we were talking block change bit coin, maybe it's going here. maybe here
it's 12 months later, cannabis, this trade once people see it, the faster it becomes legal in the u.s. the quicker the canada names go lower these are publicly traded names that are canadian names. they won't get the exposure. i don't care how many press releases, they're not going to ship cannabis to australia >> i think valuations are still in a massive bubble that they're commoditized the tax implications on revenues we don't know. i just think it's not a space i want to be in. >> in case you're asking, i checked with compliance. i thought about shorting them because i was so envious of the 500% i missed, that also is aiding and abetting the rico of a schedule one narcotic across state lines. do you know cocaine is not a schedule one narcotic? cannabis is. who knew i don't use any of them. it's a schedule one narcotic
if you short it, you're still subject to the rico statute. let me move to what's been taking place in crude oil. it's making a comeback today but it's been a 12-day losing streak jackie deangelis and the futures now crew have more it's been ugly but crude snapping a 12-day losing streak. let's do "futures now. brian, does this signal an even bigger bounce coming ahead >> i think what it signals here is an oversold condition when you look at the conditions in crude about over a year ago we saw a nice bottoming process up to $54 and then it took off from there the shale producers will shut off, have more trouble getting enough margin to produce out of the ground that will take some supplies off the market opec has to probably consider making some cuts to get the boost back up. traders are trading this even if
demand slows down, the global picture slows down at these levels, it's maybe a buy supplies will come off the market >> jim, do you think they have more wriggle room? what are the levels you're watching >> i don't if you have to look at a five-year chart to find inspiration you're in deep water. it's the high of the channel that encompassed about a year and a half up through 2017 that's what's begun around as far as this trend, i need to see a couple settlements i think it will bounce off that level. >> thanks, jim and brian for more on crude oil head over to futuresnow.cnbc.com scott? thank you very much. all right, despite the rebound in oil there's still blood on the street for hedge funds leslie picker is back with us following the money as usual >> hey, scott.
>> pain all the way around >> it's like they can't catch a break, right year to date returns going into october in the black and then all of a sudden october happens and it's a complete reversal we're seeing a lot of red on the screen for hedge funds this note from credit suisse showing hedge fund losses in october largely correlated to their positions, crowded positions in technology and crude oil. they went into the month long and levered to those two areas since then credit suisse says they've been repositioning taking money off the table it's not quite clear how they're trading these crude numbers we've seen the last couple of days >> do you want to weigh in >> i don't think the poor performance is any different among hedge funds or lots of long only managers we make too much of that look, to me, crude was a one-way trade and despite my pnl not showing it, everybody was so bullish.
anytime you see we're so bullish, you get overbought. so clearly the saudis will try and manage the dialogue and jawbone it up. i am seeing so many more hedge funds closing, sizable >> it's been amazing we discuss that had routinely. >> and steve cohen was at the y yesterday talking about how he predicts more hedge fund closures a lot of managers saying it's good for the industry to see these closures and consolidation and the prime brokerage notes because there's too much competition. chasing alpha and the same trades you see the trades unwinding and everybody feels the burn >> a lot of the supposedly next generation of managers that left big firms like viking, they
haven't put up the numbers and yet they've raised $3 billion, $5 billion better off going tried and true. >> leslie, thank you retail stocks are on the move we have the number one analyst, jpmorgan's matt boss is with us. macy's is having an interesting day after earnings at that poi so lionel, what does being able to trade 24/5 mean to you? well, it means i can trade after the market closes. it's true. so all... evening long. ooh, so close. yes, but also all... night through its entirety. come on, all... the time from sunset to sunrise. right. but you can trade... from, from... from darkness to light. ♪ you're not gonna say it are you?
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welcome back let's talk about macy's. under pressure despite an earnings raise, number one analyst, jpmorgan's matt boss is back with us are you there? >> i'm here. thanks for having me >> you have a neutral rating on a brand-new note what wasn't to like? >> the fundamentals are intact merchandise margin expansion and they raised the outlook by 4%. i think the problem with the stock is looking forward, comparisons are a lot tougher and you have the larger picture of volatility out there whether it's housing, rising costs of doing business, which are wages in freight and the stock is up 42% on the year. the raise was solid. we liked the fundamentals. excluding tax and credit, the numbers aren't changing a whole lot. >> it is down, though, 17% over three months it has come back down-to-earth digital growing double digits.
inventory looks good that according to jim cramer talking about it earlier who is a great fan of yours and the work that you do >> yeah, so we like the moves they're making in fact, everything that the ceo talked about on the call supports our more bullish outlook into holiday and the fourth quarter i just think the retail sector right now is a show me story you're getting the 3q results. i think it's going to come in well across the board. you have these tougher comparisons in the fourth quarter and this uncertainty as you move to next year. so i think the entire sector is setting up as a show me. our view is that we think november is off to a pretty good start. i think the consumer will show up closer to christmas i think we end up having a good fourth quarter and the front half of 2019, this stronger consumer narrative, is going to continue >> what's the number one pick you have in the space? >> we like value and convenience. the off price retailers and discount, tjx, burlington, ross stores i like five below and dollar general. i think that's where you get the
combination of value, convenience, and that low to middle income consumer that's really the consume earp that's benefiting in this backdrop right now i think that consumer could get stronger as we move into 2019. >> matt, i have to split i appreciate you understanding i have some breaking news to deal with today. we'll have you back soon the other call interesting, a take on macy's, if you like, is this tapestry upgrade. overweight, $54 is the price target we can look to see where that's trading. who wants it and what do you think? >> it's a little too speculative for me the long-term stock chart of any of these companies, they go up and down every quarter with the trends in fashion. i can't predict that it's too speculative for me, scott. >> i want yours to be wayfair. >> never heard of them >> you've been short for a long
time what's your current view >> the numbers came out last quarter worse than ever. it's the anti-macy's if you look at people going to omni channel, retailing, this is the opposite of that selling furniture, a sofa online and shipping to my house for free delivery is not and will never be a business. >> i agree i was a share holder in furniture.com. nobody remembers that. and what killed us was the returns. you bring in an 1,100 pound sofa in the room and the wife says, it's the wrong color and it has to go back we went out of business. i lost a lot of money on that. i don't think the sector will be the same as other consumer products that are online in nature >> having bought some stuff off wayfair, i agree how do they make money and they don't that's the issue i don't know of any furniture companies that have done well over time. >> thank you for being here. >> my pleasure >> 30 seconds left amy, kick us off with final trades >> my final trade is grub hub.
we've been buying back at $80. $8 billion market cap company. >> farmer jim. >> starbucks has good momentum and is safe in this market >> shareholders will fall in love with cash flow. >> achc. >> good stuff. thanks for watching. "power lunch" begins right now i'm melissa lee. here is what's on the menu volatility is back and in a big way. a 600-point drop on monday 300-point swing yesterday. and now the apple is big dog the dow is the big dog apple falling into bear market territory. should this put fear in the hearts of investors? a look at why new york and virginia won the coveted amazon hq2 and the reaction from a number of cities that ended up as big loseers in that competition. plus, oil bouncing back from its longest losing streak ever is this the turning point, or is there more pain to come? and snap get